microsoft word apostoaie constantin marius_eng.doc reality and contemporary economic classification of expenditures of public institutions in romania carolina daniela soroceanu, “alexandru ioan cuza” university , romania abstract in our daily existence, troubled and changing, economy occupies a large space. increasingly, more economic concepts such as public budget and public expenditures enter within our daily language. increasingly, we are assailed with data information about the sustainability of expenditure, about how and when budget allows us to make certain expenditures. thus, an insight into the functional mechanism and a public institutional budget is always a topical issue. about the budget, as a financial and management tool of a public, we can not discuss without reference to economic classifiers public spending. budget public institution acquires through economic classification of expenditure substance and reality. keywords budget, public institutions, economic classification,public expenditures jel code: h60, h61, h83 extending the scope of economic phenomena, the complexity and diversity of the expenditure requires rendering financial data tools, in order to facilitate access and processing information. from this perspective, statistics, and especially the financial one, there can be limited to a quantitative description of phenomena but had to provide tools for analysis and interpretation. among them, economic classifiers public spending has grown with the company whose financial information has played. classifieds economic costs presented over time, or physical terms or in combination with the real monetary terms, reaching far, the form we know, monetary. one can say that each period of development have complied with certain classification criteria that reflected what was important and of interest to the community. for this reason the classification criteria experienced different forms, from natural classification, where the clustering criterion is chosen objectively as intrinsic features of the units surveyed, to artificial classification, which is specific the choice of conventional or subjective criteria starting from several distinctive features of the entities studied. the two classification methods are not excluded, at present economic classifieds and public expenditure are in connection. subjectivity and conventionalism are particularly deep as the default budget and economic classifieds is a working tool for the ”laity and experts” after the words of friedman. whatever the period we refer to, economic classifieds of public spending follow-up to meet economic realities. classifications grouped a significant number of information in a systematic and standardized way. preparation of a classification means creating a comprehensive and structured set of categories well described and mutually exclusive, most often through a hierarchical structure which is reflected by alphabetical or numerical codes assigned to them. the current economic classifiers have a horizontal structure in parts that are then developed analytical vertical in titles, articles and paragraphs. parties are sub-grouping for general studies and scientific researches economic edition, no. 15, 2010 161 purpose expenditure policy, like current expenditure, capital expenditure and financial operations. titles group expenditures which show common purposes in the party for the staff, supplies and services, interest, grants, reserve funds, transfers between units of government, other transfers, social assistance, other expenses, non-financial assets, financial assets, loans, repayments of loans and finally reserves, surplus / deficit. titles are detailed in articles and these turned into paragraphs. all these subdivisions individualize real destinations of public spending. when we refer to the completeness, uniqueness and homogeneity of the economic classification of expenditure, things are more complex. there are articles and redundant lines that confuse and are subjected to a large extent to arbitrary and interpretation of the employing expenses. the problem is not only invalidity of statistical principles but also to the extent that statistical statements are based on data collected in these articles reflect or not the true economic process. for example we will treat a few articles and paragraphs of economic classification of public institutions expenditures. budget item 20.01.06 ”spare parts” is the new introduced in economic classification in 2005, because there already existed and exists the budget item 20. 02 ”current repair”. we make this observation in the context in which it is known that all the spare parts are acquired to carry out repairs to fixed assets and inventory objects. on the other hand, keeping the current classification of budget item that refers to capital repairs finds no justification. this, especially in conditions of market economy where prices are variable and the appreciation of the value that encircle a repair to the inventory objects or fixed assets in the category of capital is difficult to realize. if before 1989 there was a classification which established thresholds at which discusses capital repairs, then at public institutions has not been developed such an overarching normative setting of this value. this approach can be made for several items of the budget in condicions which both range of products and services that are necessary for carrying out public institutions and their benefits to beneficiaries people diversified. what is meant to be stressed is that, because of inertia of the past and the enthusiasm of the presnt some budget items were retained from the existing economic classifiers before the year 1989 in romania and others were introduced by classification translating used in practice of other states. putting the principles and mechanisms, ideas and facts, ignoring romanian institutional molds, taking applicable concepts with ten or even five years ago in practice and economic theory to say the burden of the past and desire accelerated progress can degenerate into mistakes. standard statistical classifications is a subset used to organize and present financial and economic statistics. when adopting or adapting a classification, norms are necessary for consistency procedures. if economic classification applicable to the year 2006 methodological norms are still awaiting methodological clarification. for existent items was used the tutorial from 1995. moreover, at the introduction of the current classification the legislative act contains a table of transposing the old positions in the new articles and budgetary paragraphs.but, even so, employment difficulties and mismatches of spending can be encountered in practice. from another perspective, from the role fulfilled by the statistics in the economic life, classification can be built to support the implementation of regulatory policies of the state. these are also used to standardize the concepts of public services and to describe social and economic phenomena or social nature. we refer here to recent legislation to reduce public spending. it was specified in regulations in place that the reduction of twenty percent to apply the title ii, that goods and services. studies and scientific researches economic edition, no. 15, 2010 162 beyond fiscal theories on the role of state in conditions of crisis, we want to dwell on the following considerations. as long as that legislation focused only on certain categories of expenditure there is a risk that, in the absence of clear financial rules to witness the growth of expenditure. it is the situation of inventory objects. it is known that a good falls in the category of inventory items if that has a value below the limit set by law for fixed assets, regardless of duration of use or duration of use less than one year. to meet the reduction of costs may exist, in practice the situation where there will no longer be purchased goods that make the subject to the budget item of inventory items but will be classified under fixed assets. of course, we discuss in this situation either about the purchase of a landmark with superior technical features or of a undesirable situation, located at the limit of legality of artificial increase of the purchase price. both versions are presented hypothetical, but still may appear more serious, can generalize the practice of public financial institutions. to remember that the investments article does not subject to reduction of expenses. the same approach can be extended to the budgetary position of the current repairs. in this case, we could witness the fit of current repairs, under the category of those that are capital or even of investment category by increasing acquisition values. we do not want the presentation of these considerations to speculate that it may reflect a negative image of the financial management of public institutions but only to emphasize the importance of quality work tools. we refer here to economic classifieds expenditure of public institutions and mechanisms that fulfills a primary or secondary role. therefore, a reconsideration of budgetary articles and positions that make up is a laborious but necessary step. these are just some of the considerations on the impact of economic classification of budget romanian public institutions. always in the beating of subjective and objective waves of the researchers and practitioners, of specialists and ”neophyte”, economic classification of public institutions costs will be regularly reviewed, subject to approval and denial, also, to get the right balance between continuity and response to new challenges and the opportunity for public expenditure budget to be managed efficiently and effectively. references 5. constantin jitaru accounts of government institutions, didactic and pedagogic publishing house, bucharest, 1996 6. constantin topciu budget accounting, didactic and pedagogic publishing house, bucharest, 1970 7. constantin topciu evidence budget, romanian writing publishing, craiova, 1977. 8. constantine topciu budget and budgetary records, didactic and pedagogic publishing house, 1981 legal documents 44. ministry of finance plan accounts for state institutions and its implementing instructions, second edition of the revised and updated, approved by the order number 324 of december 21, 1984. 45. mef instructions on the organization and functioning of the treasuries of public finance, 1992 ministry of finance mof order 1394/1995 budget classification of income and expenditure of state and public institutions. ministry of public finance omfp 1954 / 2005 46. www.biblioteca-digitala.ase.ro 47. www.unibuc.ro/classica 48. studies and scientific researches economic edition, no. 15, 2010 163 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro about possibility of usage methodological approaches to bankruptcy prediction ruslan druzin taurida national v. i. vernadsky university druzinrv@gmail.com abstract analysis of the most common foreign methods showed that they were designed to analyze enterprises in the sustainable economic development with low-shadowing of the economy. the most appropriate retrospective analysis results were obtained using springate model, lis ratio and beaver ratio. domestic methods analysis allows us to conclude that they make it difficult to account criterion of insolvency using a number of factors. ukrainian researchers, as well as foreigners, use indexes for bankruptcy prediction that are based on convolution values of different insolvency signs. however, we believe that usage of a single indicator as a result doesn’t allow us to make an insolvency diagnosis. the reason is high probability of an erroneous calculation because of the unreliability of the data used. also, one of domestic methods problems is their orientation to the official statistics that increases the error due to significant domestic shadowing economy. keywords bankruptcy; crisis; enterprises; creditor; ukraine jel classification c53 1. introduction insolvency prediction on early stages is one of the main goals of financial studies of bankruptcy. this problem has principal place in the economic studies of bankruptcy. international and domestic scientists, such as altman (1968), beaver (1966), andrushchak (2004), tereshchenko (2006), chepurko (2000) and others worked with this problem. the aim of this work is to determine the methodological approaches of bankruptcy prediction in ukraine. the object of research is bankruptcy prediction of enterprises in ukraine. the subject of the study is methodological approaches for bankruptcy prediction in ukraine. 2. main task in this work were used such research methods as analysis and synthesis, system analysis, graphical method, the method of modeling cause-and-effect relationship, the method of approximation. results of the study company’s incapability to ensure compliance with the requirements of creditors for 3 months from the due date of payment is the main feature of bankruptcy. when this period is ended, creditors have the right to sue the debtor for bankruptcy. in the international and domestic practice, the most common models for assessing the financial condition of the company and its propensity to bankruptcy is following economic models that are built on the basis of financial ratios (altman, 1968; 177 druzin andrushchak, 2004; beaver, 1966; bernstein, 1996; chepurko, 2000; druzin, 2009; harutyunyan, 2002; kizim, 2004; tereshchenko, 2006): determination of bankruptcy probability based on altman z-score; conan and m. j. holder model; lis’ model; taffler’s z-score; r. saiffulin and g. kadykov discriminantfive-factor model; universal (general-purpose) model based on the discriminant function; chepurko’s v.v. measure for the degree of financial stability; beaver’s ratio; the bankruptcy prediction based on the springate score; model for bankruptcy diagnostic of agricultural enterprises (sumy, ukraine). let’s calculate these models for bankrupt firms in ukraine (sample 15 companies from different regions with different organizational-legal forms). to calculate bankruptcy probability of enterprises in ukraine that were selected as the base of this study, we chose ten models. it was made to level subjectivity factor, because different models are adapted to the specific conditions, branches, periods etc. it is possible to provide an objective assessment of businesses bankruptcy probability only in the case when we would base our researches on number of models and synthesize these results to present an overall assessment of bankruptcy possibility. direct bankruptcy risk determination of analyzed enterprise on these models is carried out with marginal aggregate ratios. each model has its advantages and limitations. let’s analyze it with table 1 which contains synthesize basic parameters of different models of bankruptcy probability determination. we are going to calculate basic indicators for the three years before the crisis for enterprises that were chosen as a base of research to determine the selected methods degree of applicability (validity). to interpret the obtained results in terms of bankruptcy risk we’ll assign the corresponding index value of 1 if the method predicts bankruptcy, in other case assign 0. for a number of techniques intermediate values are possible (0.25, 0.5). based on the table, we can make the following conclusions. enterprises, which showed extreme values on set parameters (maximum reliability of bankruptcy prediction jsc «predgor’e», minimum reliability jsc «primor’e», jsc «named chkalova»), that predict bankruptcy, do not show reality of prediction and illustrate some facts. for the maximum values it confirms protracted crisis in a company, whichbegan more than three years before bankruptcy initiation, for the minimum value confirms coming to bankruptcy. table 1 bankruptcy prediction model type resume altman z-score as ukrainian enterprises operating in different circumstances, we cannot mechanically use this data model. conan and m. j. holder model all considered foreign models have several drawbacks when used in ukraine: on the performance of ukrainian enterprises strongly affected by non-economic factors, many indicators do not have the same influence on the financial stability of enterprises in ukraine, as they have in the developed world, and vice versa, the proposed boundaries of stability often unattainable for domestic enterprises. lis’ model taffler’s z-score springate’ score r. saiffulin and g. kadykov discriminant five-factor mode the model is applicable to national enterprises. 178 about possibility of usage methodological approaches to bankruptcy prediction universal (general-purpose) model based on the discriminant function chepurko’s v.v. measure for the degree of financial stability the model developed by ukrainian economist. therefore, it is fully adapted for ukrainian companies. beaver’ model analysis of ukrainian enterprises showed that the assessment of risk of bankruptcy may not coincide with the actual financial condition of the company. model for bankruptcy diagnostic of agricultural enterprises (sumy, ukraine) reflect the actual probability of bankruptcy of agricultural enterprises. source: druzin, r. v. (2009), methodological approaches to the prediction of insolvency in developed countries, problems of economics and management: international research and production magazine, 4955. we have to exclude enterprises with extreme values on the set of indicators to select the prediction techniques (jsc «predgor’e», jsc «primor’e», jsc «named chkalova»). next step is to sum up the degree of forecast verification with shared coefficients for the first year 0.25, for the second year 0.5, for the third year 1.00.also we have to bring the calculated indexes to the total denominator (the maximum value of the index – 21) to analyze the degree of bankruptcy prediction indicators reliability. results are represented on figure 1-2. figure 1 sum score of verification bankruptcy prediction methodological approaches of the ukrainian enterprises source: by author for the analyzed methods the minimum value (agricultural enterprises bankruptcy diagnostic model-the cumulative value 0) indicates inability of usage this technique for the crimean agricultural enterprises. also, low values were obtained using altman-score (9.0625), tafler’s model (8.25) and the universal discriminant function (6.0), which was built on statistics american and european companies. this is due to their focus on capitalization rates businesses and official data reporting. the maximum value of bankruptcy procedures verification indicators (springate model, the second-highest rank beaver ratio, the third lis ratio) allows us to select methods for bankruptcy prediction of agricultural enterprises in ukraine. 179 druzin figure 2 degree of verification bankruptcy prediction methodological approaches of the ukrainian enterprises source: by author on the basis of this analysis jsc “plodovid” (negative values for three years 20082010) was justified by the need to improve the company to sanitation. 3. conclusions analysis of the most common foreign methods showed that they are intended for use by businesses in the sustainable economic development of low-shadowing of the economy. the most appropriate based on the results of the retrospective analysis were obtained using springate’ model, lis’ factor, factor beaver. analysis of the domestic procedures suggests that they use a large number of factors make it difficult calculation criteria of insolvency. ukrainian researchers, as well as foreign ones, are used to predict performance, formed on the basis of the convolution values of different signs of insolvency. however, we believe that the use of a single indicator as a result cannot make a diagnosis of insolvency, as it is likely due to an incorrect calculation of the unreliability of the data used. also, one of the problems of domestic procedures is their orientation to official statistics, which increases the error due to significant shadowing of the domestic economy. references altman, e. i. (1968), financial ratios, discriminate analysis and the prediction of corporate bankruptcy, journal of finance, 589-609. andrushchak, e. m. (2004), diagnostic of bankruptcy of ukrainian enterprises, finance of ukraine, 118-124. beaver, w. (1966), financial ratios as predictors of failure, empirical research in accounting, selected studies, 71-111. bernstein, l. a. (1996), financial statement analysis: theory, practice and interpretation, finance and statistics. chepurko, v. v. (2000), economic risk of agricultural production: theory, methodic management, simferopol, tavriia. 0 0.2 0.4 0.6 0.8 1 altman z-score conan and m. j. holder model lis' model taffler’s z-score r. saiffulin and g. kadykov discriminantfive-factor mode universal model based on the discriminant function chepurko’s v.v. measure for the degree of financial stability beaver' model springate' score 180 about possibility of usage methodological approaches to bankruptcy prediction druzin, r. v. (2009), methodological approaches to the prediction of insolvency in developed countries, problems of economics and management: international research and production magazine, 49-55. harutyunyan, a. b. (2002) experience with models and fulmer springeyta in assessing hungarian agricultural enterprises, audit and financial analysis, 200-204. kizim, n. a. (2004), assessing and predicting insolvency of enterprises, publishing house inzhek, kharkiv. tereshchenko, o. o. (2006), financial crisis management in the enterprise, kneu, kiyv. 181 taffler’s z-score; microsoft word apostoaie constantin marius_eng.doc the role of the service profit chain inside the interaction between the service supplying company and the client florin lucian isac, ,,aurel vlaicu” university of arad, romania radu cureteanu, ,,aurel vlaicu” university of arad, romania sergiu rusu, ,,aurel vlaicu” university of arad, romania abstract the paper analyses the role of the service-profit chain inside the interaction between the service supplying company and the client. the service – profit chain proposes a relation connecting the profitability and the client’s loyalty and satisfaction to the employees’ satisfaction, capability and productivity keywords service, profit, chain, satisfaction, customer jel codes: m 31 one of the features which make services to be unique is the client’s active participation to the services production process. each and every “moment of truth” involves interaction between the client and the supplier of services, each of them playing a distinct role in a “play” directed by the services organisation1. bateson2 considers that the meeting for the services supplying appears under the form of a triad containing the relationship among the service supplying organization, the contact staff and the client. the managers of a profit-oriented service supplying organization are interested in supplying the respective service, as efficiently as possible, having in mind to protect the profit margin and to remain at a competitive level. the non-profit service supplying organizations should choose for effectiveness instead of efficiency, being obliged, in their turn, to operate within the limits established by the budget. in order to be able to control the service delivery, the managers tend to impose, to the contact staff, rules and procedures meant to limit their autonomy, in the moment they serve the client. the same rules and procedures try to limit the consumer’s degree of non-satisfaction. the interaction between the contact staff and the client owns the element of control perceived by both parts implied. in order to make their own job easier and less stressing, the contact staff wants to control the client’s behavior; at the same time, wishing to get a maximum of benefit, the client seeks to obtain the control of the meeting. the service – profit chain proposes a relation connecting the profitability and the client’s loyalty and satisfaction to the employees’ satisfaction, capability and productivity. profitability, as well as, the growth of income originates in the clients’ loyalty. the clients become loyal as a result of their satisfaction, which, in its turn, is influenced by perceived value of the service. the satisfied, efficient, capable and attached employees will create the 1j.fitzsimmons, m.fitzsimmons(2005), service management, tata mcgraw-hill, p.198. 2j.e.bateson, perceived control and the service encounter, în j.a.czepiel., m.r.solomon şi c.f.surprenant(eds.)the service encounter, lexington books, lexington, mass.,1985,p.76. studies and scientific researches economic edition, no. 15, 2010 380 value of the service. the employees’ satisfaction and loyalty begin with their selection and training, but they need an investment in information technology and a support from the organization, which will aloe them the decision to serve the consumers. if we look attentively upon every link between the previously mentioned matters, we will be able to understand how the service-profit chain operates in its wholesness3. the client’s loyalty determines profitability and growth in order to maximize the profit, the managers aimed at being the first, or, at least, being put on the first places, from the domain or from the industry they activate in. recently, it has been discovered that the consumer’s loyalty is the most important determinant of the profit. reicheld and sasser4 estimate that a 5% improvement of the client’s loyalty can determine growths of the profit of 25% up to 85%. the two authors believe that the qualitative market share (measured function of the clients’ loyalty) is as important as the quantitative one. the consumer’s satisfaction determines his loyalty the leading services supplying companies have constantly tried to quantify the consumer’s satisfaction. for example, xerox corporation, using a five-point scale, has researched 480.000 consumers per year, measuring their satisfaction regarding the product or the services. the corporation has come to the conclusion that the relation between the scores and the loyalty differ a lot, function of the situation in which the consumer acknowledges himself as being very satisfied (number 5) or only satisfied (number 4). the consumers which have marked the number 5 had a six times greater probability to buy again, that those who have marked 4.5 the value determines the consumer’s satisfaction nowadays consumers are strongly oriented towards value. the consumer’s value is measured by means of comparing the results obtained with all the costs used to obtain the service. the employees’ productivity determines the value for example, the clients of southwest airlines company have a very high perception of value. the clients value the frequent flights, the services supplied in time and the friendly employees. the employees’ capacity of obtaining a superior productivity involves a growth of the value delivered to the consumer. the employees’ loyalty determines the productivity the traditional measures, regarding the losses due to the employees’ fluctuation, focus only upon the costs of recruitment, employment and training of those who will replace the leaving employees. in many of the services sectors, the real cost of fluctuation is a slow down of productivity, as well as, a low satisfaction of the consumer. the employees’ satisfaction determines loyalty a study performed in 1991, in usa, has revealed that 30% of the non-satisfied employees intended to leave the company. this percentage regarding the potential ratio of fluctuation is three-times greater than in case of the satisfied employees. the inside quality determines the employees’ satisfaction the inside quality of the working environment and condition has the greatest contribution to the employees’ satisfaction. this inside quality is measured by the employees’ feelings regarding their work, their colleagues and company. at the same time, the inside quality is characterized by the employees’ attitudes one towards another, as well as, by the manner they serve one another in the organization. 3 isac,f.l.(2009), management în servicii, ed.mirton, timişoara,p.204-206. 4 f.reicheld, w.e.sasser jr., zero defections: quality comes to services, harvard business review, octombrie 1990. 5 james heskett, t.o. jones, g.loveman, w.e.sasser şi l.a. schlesinger, putting the service-profit chain to work, harvard business review, martie-aprilie 1994. studies and scientific researches economic edition, no. 15, 2010 381 an audit of the service – profit chain helps the company to establish what determines their profit and to suggest actions which might lead to a long-term profitability. with this view, the managers of the service supplying companies should have responses for the following questions: 1. how shall we define the loyal clients? 2. which is the ratio of expenses and incentives directed towards the preservation of the existent clients? 3. why are our clients giving up the services of the company? 4. are the information about the clients’ satisfaction collected in an objective, consistent and periodic manner? 5. which are the instruments used for obtaining the feedback from the organisation consumers? 6. how is the information about the consumers’ satisfaction used with the view of solving the clients’ problems? 7. how is the external value of the services measured? 8. how is the information about the clients’ perception of value disseminated towards those who are responsible for the projection and design of the products or of the services? 9. do the organization efforts for improving the external quality of the services reinforce the recovery of the previous errors? 10. how is the employees’ productivity measured? 11. in what degree the measures for productivity identify changings regarding the quality and quantity of the service obtained per entry unit? 12. how is the employees’ loyalty obtained? 13. did we make enough efforts in order to determine the level of preserving our employees? 14. is the employees’ satisfaction such a way measured as to allow a connection with similar measures regarding the consumer’s satisfaction? 15. are the employees’ selection criteria adjusted function of the clients’ perception about what is important? 16. in what degree are the measures for consumer’s satisfaction and loyalty used in order to recognize the employees’ merits and to reward them? 17. do the employees know who are their clients? 18. are the employees content with the technological and personal support they receive at their working place? finally, we present, here, a synthesis of some empirical records regarding the service – profit chain. table 1. empirical records regarding the service-profit chain year study description source of sample size of sample the main findings 1994 heskett et al relationship between the employees; satisfaction and loyalty, the value of the service and the consumer’ satisfaction and loyalty organizatio ns and services 20 a model of service – profit chain is proposed 1995 jones & sasser a study upon the relation between companies 30 satisfaction is positively correlated studies and scientific researches economic edition, no. 15, 2010 382 consumer’s satisfaction and loyalty, in five domains of services with loyalty 1996 hallowell empirical study regarding the relation among the satisfaction, loyalty and performance, in a commercial bank divisions of commercial banks 59 there is a relation between the consumer’s satisfaction and loyalty and the profitability 1998 loveman empirical study testing the service – profit chain, in retail branches of a regional bank branches of a regional bank in usa 450 positive relation between the consumer’s satisfaction and loyalty 1998 rucci et. al empirical study regarding the relationship between the employees’ attitudes and satisfaction and the financial performance, at sears sears shops 800 a model of the relation employee – client – profit is proposed 2000 spinelli & canavos empirical study regarding the relationship between the employee’s and the client’s satisfaction, in hotel industry hotels in usa 6 the employee’s satisfaction is positively correlated with the client’s one 2002 silvestro study of the relation between the employee’s satisfaction, loyalty and productivity and the profit, in supermarket with several locations locations of a supermarket in great britain 15 the employee’s satisfaction and loyalty are negatively correlated with the profit (source: processed after yee, r.w.y., yeung, a.c.l., cheng, t.c.e., lai, k.h. – the service – profit chain: a review and extension, total quality management, vol. 20, no. 6, june 2009, pages 621 – 623) bibliography 1. fitzsimmons, j., fitzsimmons,m. ( 2005), service management, tata mcgraw-hill. 2. heskett,j., jones,t.o.,loveman, g., sasser, w.e.,schlesinger,l.a., putting the service-profit chain to work , harvard business review, martie-aprilie 1994 3. isac,f.l.(2009), management în servicii, ed.mirton, timişoara, 4. reicheld,f.,.sasser jr ,w.e., zero defections: quality comes to services, harvard business review, octombrie 1990. 5. yee,r.w.y.,yeung, a.c.l., cheng,t.c.e., lai, k.h., the service-profit chain: a review and extension, total quality management, vol.20, nr.6., iunie 2009 studies and scientific researches economic edition, no. 15, 2010 383 the company accounting evaluation – preliminary phase of the proper analysis of financial statements 70 the company accounting evaluation – preliminary phase of the proper analysis of financial statements păcurari doina, assistant university of bacau muntean mircea, associate professor, phd university of bacau abstract: the problem that the accounting information do not always reflect the economic reality may affect the analysis and forecast based on financial statements. this is due both to the accrual accounting limitations and to the fact that this type of accounting allows the result management. in spite of some disadvantages, the accrual accounting is considered superior to cash accounting in measuring the performances and determining financial position as well as in the predicting of future cash flow. in order to limit the negative effects on the results of analysis and forecast based on financial statements, the analists should evaluate the enterprise accounting and if necessary adjust the financial statements so they reflect the economic reality. the enterprise’s accounting evaluation represents an important pre-condition in effective financial analysis. this aspect is due to the fact that the quality of the results of financial analysis and of the influences established through it depends on the quality of the accounting correspondent information, row material of analysis. it actually deals with a process of evaluation of the measure in which the reported accounting data reflects the economic reality. this analysis supposes a number of different tasks, such as: the risks evaluation in the accounting of enterprise and the quality of the accounting results, the estimation of the result’s information power, as well the realization of the necessary adjustments on the financial situations both for a better reflection on the economic reality and in order to serve better the financial analysis. the accrual accounting offers important clues regarding the enterprise’s performance and financial situation, but its imperfections may distortion the economic contents of the financial reports. these deviations of accounting information from the correspondent economic reality, named accounting distortions have on their basis factors such as: the accrual accounting standards, estimation errors, the balance between the relevance and the credibility of information and attitude in accrual accounting application.  the accounting standards may represent the cause of some accounting distortions from two main reasons: the former refers to the fact that the accounting standards are the reflections of a political process, where different groups of users make lobby in order to protect their own interests, and in this process the standards flow sometimes in demanding the most relevant information; the latter is pointing some accounting methods and principles that standards base upon and that may affect the quality of the reported information. one example for this case is represented by the historical cost principle that may reduce the relevance of the balance sheet by the fact that does not reflect the assets and the liabilities at the current market values. another principle, the one of conservatism, leads to a pessimist side in preparing the financial statements, the accountants registering in most cases the depreciations afferent to assets but unregistering the extra-value concerning the controlled assets. this prudence, even though is benefic in analysis for crediting, may constitute a problem in analyzing the equity. another example refers to the stocks evaluation methods. this methods influence both the balance-sheet’s and the profit and loss account “reality”, but on a different studies and scientific researches edition: economics, no. 13 (2008) the company accounting evaluation – preliminary phase of the proper analysis of financial statements 71 manner. the fifo method, for instance, ensures the presentation in the balance-sheet of the unsold stocks to a cost more close to the current cost, but it does not allow a good reflection of sales and of commercial margin in the profit and loss account, such the lifo method does.  estimations errors. in accrual accounting certain predictions and estimations concerning the future cash flows are imposed. these predictions and estimations realized by the accounting information producers, that know better the enterprise’s situation, may increase the utility of the reported data. in the same time, the estimations may cause errors that will influence negatively the relevance in the accounting information. it is the case of both provisions and adjustments for assets’ depreciation.  the balance between the information’s relevance and credibility. a bigger stress put upon the information credibility prevents many times the recognition in financial statements of some sure events and transactions before the corresponding cash to be estimated reasonably. an example for this issue is constituted by contingent expenses. another example of deformation is represented by the credibility stressing is the accounting of the research and development expenses. even though it represents an investment, the present accounting standards demand their registering as an expense because the payment made for this are less “secure” than those for known investments expenses, such as plants and equipments.  attitude in applying the accrual accounting. it is probably, the most problematic among the consequences of the accounting appliance. the use of policies and specific methods of this type of accounting may allow managers to manipulate the accounting data and to use their own experience in order to obtain accounting information as much useful for them as possible. the indicators most appointed by managers with the purpose of manipulation are those of profitability, especially the accounting result. the result management may appear form reasons such as: the increase of managers’ income in the case of obtaining superior performances, the avoidance of obligation contracts, the reduction of profit taxes, the favoring of analysts’ forecasts and the influencing of shares’ prices etc. it may be realized either through the change of accounting methods, or by means of the changing of estimations and accounting policies. the accounting politics application must be relied on the professional judgement. however, sometimes the professional judgement leads to the discloused result and financial position deformation and we can talk in this situation about an aggressive application of the accounting politics not about a result management. unfortunately, if the information producer still pick out certain politics for reflect a specious image of the enterprise’s financial performances instead of using the flexibility in accounting options choosing for reflect a faithful image, we can talk about a creative accounting. no matter the reason for which it is used, the result management affects the financial information credibility. in spite of all this mentioned disadvantages, the accrual accounting is considered superior to cash accounting under the measure of performances and financial position as well as in the predicting of future cash flows. in order to limit the effects of such disadvantages upon the financial statements it is recommended the following of the next two phases: 1) the result’s quality evaluation taking into consideration the result management’s implication upon the analysis, the following aspects are checked in order to establish whether the enterprise’s result was affected or not by certain manipulation techniques: the existence of reasons for result’s manipulation; the managers’ reputation (the last financial statements, the audit reports, auditor’s change during time are taken under consideration etc.); consistency in applying the accounting policies and methods; the opportunities for application of result manipulation’s technique (certain fields of activity suppose more situations where the professional reasoning and estimation are studies and scientific researches edition: economics, no. 13 (2008) the company accounting evaluation – preliminary phase of the proper analysis of financial statements studies and scientific researches edition: economics, no. 13 (2008) 72 imposed, and as consequence, may favor the wiling change of information from financial statements). 2) the adjusting of financial statements the second phase of the enterprise’s accounting analysis points out the filling in or the correction, if needed, of financial statements on the basis of supplementary information that can be usually found in the explicative notes. these adjustments include: the operational leasing capitalization, with the correcting of both balance-sheet and the profit and loss account; the recognition of stock-options expenses at the result determination; the correcting of registered adjustments and provisions; the recognition as liabilities in the balance-sheet of retirement funds and other advantages post-employment; the replacing form the balance-sheet of passives and actives concerning the delayed profit tax. the financial statements therefore adjusted allow a better analysis through flows and facilitates the financial forecast. the evaluation of the enterprise’s accounting system, for financial analysis and diagnosis, should also take under consideration the accounting settlements that it applies upon. it was noticed that in the countries where the accounting settlements are very strict, the forecast based on financial analysis results are more precise. if a financial statements drawing based on strict reglementations facilitates the comparative analysis the situation may be different if we refer to the prospective analysis. this later type of analysis depends in a more large measure on the presentation in the real values of the balance-sheet and the profit and loss account elements. actually, the adjustement of the financial statements in this preliminary phase to financial analysis aims just at the correction of the balance-sheet and of the profit and loss account, the main components influenced by the accrual accounting application. the external users’ information referring to accounting methods is very useful in interpretation and valorization of financial analysis results. this is reason for the increasing of informational role of the explanatory notes in last years. moreover, the voluntary information supply regarding the previous activity and the business prospect represents a solution for more and more companies, especially for listed companies. the voluntary information supply addresses mainly to the investors and analists, supporting them in forecast and investment decision foundation. the enterprise’s accounting evaluation phase accomplishment, having as result the removing of the effects of the accounting distorsions on the financial statements, allows the analists to use more accuratelly the financial figures and ratio and to achieve the financial previsions demanded by the users. references: [1] bae, k.h., tan, h., welker, m., international gaap differences: the impact on foreign analysts, the accounting review, vol.83, no.3/2008 [2] helfert, e.a., tehnici de analiză financiară: ghid pentru crearea valorii, ed.bmt publishing house, bucureşti 2006; [3] petrescu, s., analiză şi diagnostic financiar-contabil: ghid teoretico-aplicativ, ed.ceccar, bucureşti 2008; [4] vâlceanu, gh., robu, v., georgescu, n., analiză economico-financiară, ed.economică, bucureşti 2004; [5] wild, j.j., subramanyam, k.r., halsey, r.f., financial statement analysis, 9th edition, mcgrow hill, n.y.2007. microsoft word gorcu cezar engl. banking activity management by the risk assessment and measurement cezar augustin vasile gotcu, ph. d. summary: rapid innovations in financial markets and the internationalization of the financial flows have created opportunities for developing some new products and supplying a wider product and service range to the banks . liberalization of the financial markets , the severe competition and the diversification of the offered products expose banks to new risks and provocations . this new approach confirms the fact that the banking management generally and the risk management especially represents essential concern for the security and the stability both of each bank and the entire banking system . key words: management , risk , banking market , credit , foreign currency , interest , financial , capital , operational . the main characteristic of the last decade is the fact that the rapid innovations in financial markets and internationalization of the financial flows have modified the bank sector , making it almost unrecognizable . both technologic progress and liberalization have offered new opportunities for banks and non-banking institutions, putting increased competitive pressure on these entities . the growing of the international financial markets and of a wider diversity of the financial instruments allowed banks a greater access for financing . at the same time the markets have expended and came out opportunities of developing new products and providing a wider range of services . since the rhythm o these changes seems to be faster in some countries comparing to others, the worldwide banks have became generally more engaged in the process of developing the instruments, products, services and technique . the traditional banking activity based on making deposits and granting credits – is nowadays only a part of the typical bank activity , being often the least profitable . the new activities based on information, such as trading in the financial markets and generating of the incomes through commissions , represent major sources of profitability of the banks now . liberalization of the financial markets , increased competition and diversification of the offered products expose banks to new risks and challenges , which leads , in order to keep the competitive activity , to the necessity of continuous improvement of the management way of an activity and including risks . also, a wider targeting of the banks to the market required changes in approaching of the rules and banking supervision . this new approach confirms the fact that the banking management generally and the risk management especially represent essential concerns for the security and the stability both of each bank and the entire banking system . the credit risk assessment process in a competitive market environment represents a complex process . the guarantee security of the banking financial institution and stability of the financial systems and markets implies , besides management and 44 studies and scientific researches ‐ economic edition, no. 14, 2009  banking super-vision also other factors such as sustainable and healthy macroeconomic policies, and a well developed legal framework . the risk increases exponentially with the rhythm of change ¹, this means that most that in the most cases , the market ability to transform itself is greater than its capacity of understanding and appropriate adaptation to the risks involved . so far, banks have considered activity in credit risk management as their most important task , but considering that the banking environment has become more complex and volatile , it has appeared awareness of need for management exposure to other operational and financial risks . it also must be considered the risk of the activity in cash, process management components of assets and liabilities (liquidity risk, interest rate risk and currency risk) and also market risk and the transactions generated by its own. risk management requires, usually crossing of several steps for each type of financial risk. it is necessary to identify and assess exposures to specific risks of each banking activity. _____________________________________________________________________ __________________ 1.hennie van greuning, sonya brajovic: analysis and banking risk management: assessment corporate governance ; irecson publishing house, bucharest , 2003 , page 16 also, decisions should be made on acceptable levels of exposure to risk and on basis of methods and tools to cover excessive exposure. it is also required the appointment of responsibilities for different aspects of risk management , and check to comply with designated responsibilities. generally, banking risks fit into four categories : financial, operational, business risks and risk of occurrence of events. financial risks , in turn, contain two types of risk. pure risks – including liquidity risk , credit risk and risk of solvency – may result in a loss for the bank if they are not properly managed . speculative risks , based on financial arbitration , may result in a profit if the arbitration is fair or a loss, if the arbitration is unfair. the main categories of speculative risks are interest rate risk, currency risk and price (or position) the market. financial risks are also subject to complex interdependencies that can significantly increase the overall risk profile of the bank . for example, a bank engaged in a activity that involves the use of exchanges is normally exposed to the foreign exchange rate, but will be also exposed to liquidity risk and interest rate risk. operational risks are associated with the organization and operation of a bank’s internal systems , including computer systems and other technologies ; they are associated also with compliance policies and banking procedures and with the measures directed against poor management and fraud . business risks are associated with the environment in which a bank work , including macro-economic and policy concern, legal and regulatory factors and also infrastructure and the existing system at the entire financial sector . the risks of events include all types of exogenous risks, if they would materialize they could jeopardize the operations of a bank. market risk is the risk that a bank to record losses due to adverse fluctuations in market prices. exposure to such a risk may arise as a result of taking, deliberately, some speculative positions by the bank (trading on own) market risk results from changes inn the price of equity instruments, the goods, money and exchange . market risk management involves : defining the risks that a bank intends to assume ; defining of financial authorized instruments ; 45 studies and scientific researches ‐ economic edition, no. 14, 2009  establish control strategies and risk coverage ; -establish the assumed limits of exposure to risk and monitoring their observing.. the main components of the market risk are: -afferent risk of position to stocks; -afferent risk of goods; -interest rate risk; -foreign exchange rate. stock risk reffers to taking or possessing positions in the register of transaction afferent to stocks and their derivatives( futures, swaps on individual stocks or stock ratios). goods risks reffers to possessing or taking some positions to the goods transacted at commodity exchange, futures and other derivatives. interest rate risk is defined as being the risk of deterioration of the bank assets situation under the influence of some adverse modifications of the interest level on the market. depending on each bank stategy the interest risk can be: -substantial risk of interest rate-namely net interest margin and the market value assets in stocks presents high fluctuations depending on interest rate modification. -low risk of interest rate changes that result in a reduced performance of the change of bank interest rates. the components of interest rate risk are: -income risk, namely the risk of making some losses of income in net interest determined by the fact that changes in interest rates on loans taken are not perfectly synchronized with the loan. -investment risk is the risk of loss in net assets as a result of unexpected changes in interest rate. entire banking system faces interest rate risk. when interest rates fluctuate, the income and expenses of a bank changes corresponding with changes of economic value of assets and liabilities. the net effect of these changes is reflected in gross income and bank capital. currency risk is the probability that the variation of the exchange rate on market to lead to reduction in net income of a bank by influencing negative margin bank interest rates. the appearance of currency risk is determined by variations of the national currency exchange rates of a bank compared to other currencies. when these variations of the exchange rates are bad, it leads to losses for banks. the phenomenan of relaxation of exchange controls and liberalizing cross-border circulation of capital in recent years led to on exponential growth of international financial markets. in the conditions the volume of global foreign exchange transactions far exceed the volume of international trade and capital flows, contributing to an increased currency risk. currency risk is generated by non-correlation between the amount of capital and assets and liabilities stated in foreign currencies or non-correlation between claims and term external debts stated in local currency. depending on the meaning evolves exchange rate, foreign exchange rate may give rise to profit or loss, as the bank has a net long or short position in currency. in case of a net long position in currency, the national currency depreciation will give rise to a profit for the bank, and in case of a short currency position, will be a loss for the bank. the main cause of the domestic currency value fluctuation of a country that creates currency risk arising from changes in interest rates abroad and the country which, in turn, are given by differences in inflation. 46 studies and scientific researches ‐ economic edition, no. 14, 2009  these fluctuations are ussually caused by macroeconomic factors and accours on long time periods. these macroeconomic factors that influence the value of national currency are the volume and direction of the country trade and capital flows. on the value of national currencies operates also short term factors such as political events, expected or unexpected, or speculative currency transactions purposes. currency risk exposure of banks lead to different approaches in the sense of serving currency operations of the clients. these, small banks limit client currency operations only at the sale or purchage of currency an behalf of clients, process in which the open currency positions that create are liquidated in some minutes, limiting the currency risk that the bank is exposed to avery short period of time. banks that sustain customer currency transactions and those that maintain correspondent relationships with foreign banks are exposed to a high currency risk. this is because these operations are ussualy performed by medium and large banks. earnings or losses depend on the meaning evolves currency exchange rate and the net long or short position which the bank has in that currency. currency risk occurs after the execution by the bank of some operations for it clients or in its own name. operational risk is the risk of recording losses or the risk of unfulfilment the estimated profits, which is determined by the internal factors (inadequate conduct of internal activities, maintaining an inappropriate personal, etc) or by external factors ( economic environment, competitive banking environment, etc) each commercial bank, through its own management of operational risks, aims identifying, evaluating, monitoring and adopting measures to decrease losses due to operational risks. the main categories of operational risks are: a)internal fraud or attempt of internal fraud, represents illegal/illicit acts of the employees( directly or in collaboration with third parties), done knowngly and with the intend to cause the bank a loss or to earn unproper sums. b)external fraud or attempt of external fraud is illegal/illicit acts of the customers, third parties, directly or in collaboration with third persons, made knowngly and with the intent to cause a loss for the bank c)registration of some bad practices related to customer by: -misuse of data on customer; -operations of money laundering, suspicious transactions, the financing of terorist operations or actions of financial crime, etc. d)damage to assets and persons as a result of events such as: fires, earthquakes, landslides, floods, etc; e)off work and malfunctioning of the systems. f)improperly applied treatment on clients and business counterparts, and fault data processing related to them: -wrong, fault recording, processing, administration of customer data by employees. -wrong transmitting, communication of data in system or outside it. -making (unintentional) accounting errors, etc. g)information security risks, the occurrence of events such as: -failure level of classification assigned documents (secret service, strictly confidential, confidential, etc); -change the level of classification given by the issuing person for the received documents, etc. legal risk is a component of the operational risk arising from a failure to apply or wrong application of legal or contractual provisions that affects negatively the bank’s operations or situation. 47 studies and scientific researches ‐ economic edition, no. 14, 2009  legal risk components are: -contractual risk that is followed in the ongoing and closing stage of the contacts and which damages operations and transactions of a bank; -legislative risk arises in the field of classification in legal regulations as well as in internal. at the banking company level are elaborated proceedings for forming provisions for litigations, to cover possible losses that would register as a result of jurisdiction of litigations in which the bank has the status of the defendant. bibliografie 1 danilă, n. (2004), retail banking, editura expert, bucureşti 2 gotcu, c. a. v. (2009), evaluarea şi prevenirea riscului în activitatea de creditare. metode financiar-contabile, editura tehnopress, iaşi 3 hennie von greuning, brajovic, s. (2003), analiza şi managementul riscului bancar: evaluarea guvernantei corporative, editura irecson, bucureşti 4 isărescu, m. c. (2001), reflexii economice. pieţe, bani, bănci, editura expert, bucureşti 5 keynes, j. m. (1970), teoria generală a folosirii mâinii de lucru, a dobânzii şi a banilor, editura ştiinţifică, bucureşti 6 mihai, i. (2003), tehnica şi managementul operaţiunilor bancare, editura expert 7 pxino, d.o. (2003, politica valutară şi managementul riscurilor în tranzacţiile internaţionale, editura economică, bucureşti 8 treapat, l. m. (2006), impactul acordului basel ii asupra activităţii bancare din românia –revista bcr nr.1, 2 48 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro a simple model used in software quality evaluation for the economic applications anamaria şiclovan1 al. i. cuza university of iaşi agapin_ana @ yahoo.com abstract it was noted that, over the time, in the field of economic informatics and economy, most people have become dependent on software applications. do economic applications reach a high threshold of quality such as to satisfy the customers who are dependent on them? this study proposes to present a model that analyzes the quality of economic applications. by applying this model, we could tell if an economic application which is submitted to the analysis reach a certain quality threshold or not. thus, by analyzing the factors and sub-factors that characterize any economic application, we can analyze the software quality. keywords model; software quality; evaluation of software quality; quality factors jel classification c02; d20; d11 introduction quality culture is an important component in the society we live, which justifies the choice of this subject in the presence of research topics. quality management is an integral part of the management science. therefore, the quality is a vital part when dealing with products and services. quality tends to be one of the key points of the economic success in our world. the concept of quality in the economy is based on the theory of meaning developed by joachim von uexküll (ioniţă, 2002). according to this theory, the image of a product is represented by its features. the feature is a quality product which distinguishes it from others and derives from its value in use, so from the product’s property to meet a social need. total quality management (total quality management tqm) is an integrated effort at the organization level meant to improve the quality at each level of it. the historical development of total quality management comprises four stages: quality inspection, quality control, quality assurance and, finally the tqm process itself, quality is obvious in human actions. according to christian potié (2001), total quality management includes “all the priorities and characteristics of an organization that gives the aptitudes to meet internal and external quality requirements, searching for all the competitive advantages." total quality management is viewed through an additional competitive advantage for the company and not only, through searching the customer’s satisfaction. and this is particularly more appropriate as almost all the companies practice or claim to practice total quality management. thus, the customer’s satisfaction is not a discriminating factor if it provides a competitive advantage. ensuring the product quality is achieved gradually, as it progresses in the process of obtaining it. the quality of a system is created starting with the creation period of the 1 phd at al. i. cuza university of iaşi 147 şiclovan product and is manifested, is highlighted when in use. in software engineering there is a dependency between the quality of the software development process, between the quality project and product. in the current competitive context of the new technologies (the calm technologies), the performance of an organization requires the development of the applications to take place at a quality level that can ensure the quality of their operation, both in terms of enterprise management and through the technologic process of their development. ensuring the quality in an economic application involves accession to a large amount of current information regarding the quality and to a complex process of analysis and synthesis. the ability of the organization to choose an economic quality application is an important step in the development and the proper functioning of this structure, because the quality refers to the level at which the application manages to cover the maximum number of requirements. in the early development of an economic application, the customer’s requirements, of the recipient are on the first place and, of course, at the end of it. between these two moments the application development takes place. with the development of information technology, the concept of quality, quality analysis and quality improvement has become a strong area to be analyzed. thus, in the field of quality of the economic applications there have been quality assessment models for the informatics applications, marketing ones, and communication ones (bezes, 2009). for the determination and interpretation of the software quality it was necessary the software quality evaluation analysis. the software quality assessment process means to identify the quality objectives, the product component selection, choosing appropriate techniques and instruments, measurements and reporting. nowadays, the software applications prevail in all the fields: business, education and, especially in the informational one. targeted to support changes so as to keep up with the quality issues, the economic applications are on the first place. thus, while respecting the factors conducive to meeting the needs of the customers, there is a successful e-commerce. many organizations are forced to abandon traditional applications in favor of modern applications, to adopt the current economic applications that meet the quality standards and that are subject to development and competitiveness (liu et al, 2007). literature review we can confirm a software as being of quality if a user’s desired features are incorporated into the software so that performance of the software is improved. regarding the above analysis, we can say that a soft reaches quality if all its components such as: programs (codes), procedures, data and documentation meet the quality criteria. the effort made to analyze the quality of a software application dates from 1970. mccall, richards and walters (1977) were among the first researchers who analyzed the concept of quality for the software applications and had given quality factors to software systems. the quality factors for a software application indicates the behavior characteristics of this application. according to the ieee standard (1991), the software quality is regarded as (galin, 2004): the degree to which a system, component or process meets the specified requirements; the degree to which a system, component or process meets the customer’s or the user’s needs and expectations. 148 a simple model used in software quality evaluation for the economic applications these two alternatives of defining the software offered by the ieee package standards, represents the starting point for researchers such as crosby in 1979 and juran in 1988. in order to understand the process of software quality assurance, we had to accept and understand what the quality of a software application is. the quality assurance of the final product is achieved gradually, while it advances in the process of obtaining. the quality of a software application is being formed from the product’s development process and it is emphasized in the process of use thereof. firstly, the overall theme of the quality treatment issues positively influences the understanding of these issues by consumers, web designers and evaluators of the application systems. moreover, the attention focused on the consumer who wishes to receive quality influences the quality issues. we will schematically present, in the following figure, the importance of the quality assessment, since the quality assessment and the correction of these aspects lead to the customer’s satisfaction, increased motivation of using the application and even the proper use of the software. figure1 the economic benefits of the quality assessment applications and their relationship we can mention that a good use of the application, a deep understanding of all that is the developed functions of this application, represents the increase of dependency of the application use and, therefore, the qualitative assessment of that application. next, we will present some results on a timeline in the field, to motivate the proposed model that we consider suggestive in this research: • aladwani&palva (2002) developed a tool that captures the key features of a quality web site from a user's perspective; • olsina (2002) evaluates the quality of websites by applying the webqem method. • chen, tang & cheng (2005) developed a quantitative evaluation index system of quality for the b2c sites, index which does not focus on the income’s site, but on the quality synthetic evaluation. it is hoped that this index improve the quality and help the managers to take good decisions in the operation site. • parasuraman&zeithaml (2005) developed a model that consists in synchronizing the other two models: es-qual and e-recs-qual. • djajadikerta&trireksani (2006) developed an instrument by assigning responses to 23 items. the 23 items can be used as a basis for designing and developing a more efficient site for a university. • alhelalat et al. (2008) showed the interdependence of the main conceptual components specific to the accomodation site. the following factors are analyzed: the quality of information, the quality of services. the quality assessment of the software applications increasingthemotivation of usingthe economic application the efficientdevelopment of theprocess of usingthe economic 149 şiclovan • khawaja & bokhari (2010) test and classify the factors contributing to adding quality to the website of the university and measures the development degree of satisfaction. the purpose of this research is to explore which factors determine the quality of the university's website. the purpose of this study continued with the application of the servqual instrument leading to measure the quality of university websites. • karim (2011) developed its own model. this model was implemented to test the factors that disrupt the user’s satisfaction. the research combines three different methods: the exploitation which selects from the group of factors only those factors that influence the consumer’s satisfaction, the second method was the descriptive one which shows the profile sample and the third one, in which has been analyzed the relationship between dependent and independent variables. • elangovan (2013) – the methodology is based on webqual-4 tool developed for the purpose of the article, for the software quality evaluation. this presentation of models and tools presented in the field explains our tendency to propose a new model of software quality approach. as we can observe from the centralization of results in the literature, the development trend of a new instrument to measure the quality attributes had the highest degree. the researchers’ idea was that, through their own vision and using a new instrument, they will be able to find the perfect method of measurement. proposing a simple model to assess software application the model that we propose will be called an int-application ec. this model is especially designed to perform an analysis of the influence degree brought by the quality factors when interacting with the economic application used. for this, two important indicators of interaction were proposed, namely: i1. does interaction helps to input / output data? i2. does interaction helps orient the application? in the second stage, the quality factors were grouped, taking as reference their presentation as in olsina’s model. the factors were grouped into four categories that contain specific sub-factors. table 1. the factors analyzed in interaction factor subfactor value for i1 value for i2 usability global understanding 1 feedback characteristics 1 interface and aesthetic characteristics 2 different characteristics 1 functionality search and retrieval problems 2 navigation problems 2 functionality and specific content 1 confidence lack of deficiencies 2 efficiency performance 2 accessibility 2 150 a simple model used in software quality evaluation for the economic applications in preparing the model we applied the pareto principle which led to the following applicable index: the questions related to subfactors are grouped by categories to which they are addressed. in the next section, we will present the questions that help us to ensure the verification of the degree to which the quality factors influence the interaction. questionnaire on quality issues for the economic application: 1. usability global understanding -does the economic application have a global organization system? -does the economic application have a quality labelling system? -does the economic application have an oriented audience guide? -does the economic application have a map of images? characteristics of feedback: -does the economic application have features of help? -does the economic application contain folder sharing? -does the economic application have a feedback-based links? -does the economic application have any form-based feedback? interface and aesthetic characteristics -does the economic application have cohesion by grouping the main control objects? -does the economic application have a performant presentation and stability of the main controls? -does the economic application have issues of style? miscellaneous features: -does the economic application have support for foreign languages? -does the economic application hold an indicator for the last amendment on the site? -does the economic application hold an indicator screen resolution? 2. functionality search and retrieval problems: -does the economic application present mechanisms search? -does the economic application have the ability to take the mechanisms for search and retrieval problems? problems of navigation: -does the economic application present navigability? -are there any control objects found in the navigation? -does prediction appear in navigation? -are there the search mechanisms present? 3. reliability lack of deficiencies: -are there in the economic application any incorrect links? -are there in the economic application any mistakes in spelling? -does the economic application present errors or diverse disadvantages? 151 şiclovan 4. efficiency performance -does the economic application have static pages? accessibility -are the information in the economic application available? -are the windows of the application available? conclusion this theoretical model will be applied in the future research on the ums software, software used by 25 universities in the country and abroad. this model through its own application determines the management support of the organization because it leads to a strict quality evaluation of the ums application. with this model we can assess the degree to which the quality factors influence through interaction the use of this software. the interaction with an educational software is particularly effective as the quality factors are better implemented in that application. the quality evaluation for this economic application-ums is a landmark for all the universities which use this portal. references aladwani, a.m., &palvia, p.c. (2002). developing and validating an instrument for measuring user-perceived web quality. information & management, 39, 467476. alhelalat, j., ineson, e.m., jung, t., & evans, k. (2008). the evaluation of hotel websites’ quality, usability and benefits: developing a testing model. proceedings of euro-chrie conference. dubai, uae, october. bezes, c. (2009). e-commerce website evaluation: a critical review. chen, m., tang, b., & cheng, s. (2005). an index system for quality synthesis evaluation of btoc business website. proceeding icec ’05 proceedings of the 7th international conference on electronic commerce. 75-77. djajadikerta, h., & trireksani, t. (2006). measuring university web site quality: a development of a user-perceived instrument and its initial implementation to web sites of accounting departments in new zealand’s universities. elangovan, n. (2013). evaluating perceived quality of b-school websites. iosr journal of business and management (iosr-jbm). 12 ( 1), 92-102. galin, d, software quality assurance. from theory to implementation. pearson education, england, 2004, p 24. karim, a., j. (2011). evaluating the influence of reability, usability, usefulness and websites design on the satisfaction of online consumers. research journal of economics, business and ict, 2, 28-32. khawaja, m., k., f., & bokhari, r., h. (2010). exploring the factors associated with quality of websites. global journal of computer science and technology, 10(14), 37-45. liu, y., kwon, y., & kang, b. (2007). a fuzzy ahp approach to evaluating ecommerce websites. proceedings of the 5th acisinternational conference on software engineering research,management & applications (sera2007) (pp. 114 124). ca, usa: ieee computer society, 20 – 22 august 2007, busan, south korea, los alamitos. 152 a simple model used in software quality evaluation for the economic applications mccall, j. a, richards, p. k., walters, g. f., factors in software quality, technical report radc-tr-77-369. u.s. department of commerce, washington, dc, 1977 olsina, l., & rossi, g. (2002). measuring web applications quality of webqem. journal ieee multimedia, 9(4), 20-29. parasuraman, a., zeithaml, v. (2005). e-s-qual a multiple-item scale for assessing electronic service quality. journal of service research, 7(10),1-21 153 microsoft word apostoaie constantin marius_eng.doc competivity and management activities in die production systems mariana cristina răşină, university of braşov, romania abstract currently for a production system to act on a global market must have a policy-oriented performance management to increase competitiveness. performance management should be focused on improved performance by operating rules and principles, techniques, operating methods and tools for improving business performance. to track progress of production, performances should be a system of indicators, well made and systematically followed up. keywords production system, competitivenees,management activity, measurement indicators, obiectives, waste, aidded value. jel codes: m 11 general management and bussines competitiveness for die making production systems the mold making production systems competitiveness and competitiveness of any production systems, are measured on the same way, as measuring each departments activities competitivness. some activities are more important than others, depending on the activity of the production system and in this way the important departments have a greater role. organizing the production systems that made casting and forging molds, organizing the supply, production, delivery, business activities and how it intervenes with the concept of sustainable development in business activities can make the production system competitive, or the contrary. competitiveness of a production system is influenced by the applied management policy, the adopted management style and managerial skills of managers at all levels. the management activity has a center mission, the management of production system. depending on the type of mission, the objectives, strategies and policies are established according to it. all are made with instructions, rules and programs. die production systems charachteristics for an competitivenees production system it is very important how the management objectives are set, if is it taken into account when is set and where the production system will be by setting those objectives. the objectives of production systems have to be smart1: • specific: clear about what, where, when and how the situation will be changed; • measurable: the ability to quantify the targets and benefits; 1 www.scn.org studies and scientific researches economic edition, no. 15, 2010 443 • attainable: capacity to achieve the objectives (knowing the resources and capabilities available to the production system); • realistic: the ability to get the change reflected in the objective; • time bound: determining the time period during which each objective will be achieved. to be satisfied that objectives need to be: • communicated to every level of the production system. management need to ensure that each person understands his the role in achieving the objectives; • systematically tracked through indicators and then centralized in a database. after achieving all shown above, an action plan should fix or at least decrease the problems. the measures from the action plan should be pursued until the objectives are achieved, and then the actions should be maintained. there must be guided by the pdca principles2 . a central role in achieving the targets has the time management, usage of the know-how at every level and the amount of money. to overall regularly all activities that may lead to the achievements, relevant indicators need to be established. depending on objectives, the indicators for a system that produces molds are: turnover, profit, cost, percentage of turnover spent on research development. to choose which aims are increasing the competitiveness, must known the current status of the production system. this requires conducting. these tests take as the flow of material and information. increase of competitiveness through calue diagram and production management material flow analysis is a value analysis which purpose is to achieve value stream map. by this analysis the goal is to obtain an overall picture of all processes from raw material to delivery to customer. it begins with the realization of current map then is improved the achievement chart and finally determine the action plan. before starting to analyze and draw the current diagram values, it is necessary to choos the representative family product. this matrix product must be made a process. the product family is identified by using abc analysis (pareto), but will take into account the value of the total budget. chart analysis and performance necessary to start with the customer and the customer's perspective and take account of the steps exactly its product through the production process. for representation are used the standardized symbols. as result of the analyze is the production flow, the added value, waste, time that mold crossing through production, cycle time or better said, the proportion / disproportion between them. information flow analysis can be done by the "swimlane – swimming line. by this analysis it can be seen how are the all functions of a production system, which roles and which documents are needed for each stage. following this analysis can reduce the documents, you can see and remove activities "backed" by some departments may be achieved at all stages / activities. production process directly affects both the competitiveness of production and product competitiveness. competitiveness of the production system is influenced by transition during production. for greater competitiveness, it is desirable to pass production for a short time. short time of passage through the production is achieved by reducing all forms of waste in the process. in 2 www.hci.com.au studies and scientific researches economic edition, no. 15, 2010 444 any production system are forms of waste that can be removed, but there are not forms of waste which can`t be eliminated, can only decrease. to see what types of waste is essential to have the process diagrams. these diagrams are looking like – one axis passing the time, the time duration equivalent to completion of each activity. then work directly involved in product realization turns green (andon principle) and the activity that generates waste turns red (andon principle). actions needed to be taken from this analysis are focused on the reduction of the red actions. decreased passage time through production has positive effects on customer tact. the customer tact is the customer wishes during matrix. a production system is competitive when the tact is respected. product competitiveness, in this case the mold one, is influenced by cost, quality and deadlines. the mold cost must be lower than what the competitors are offering, but to reflect the actual value of the product. from this point, the competitiveness of the production process is reflected by the value added product. value added steps in the process are those which raise the value of the product to the customer (see figure 1.). forms of waste only raises costs, don`t produce any value. in current market conditions, the customer is willing to pay only what adds value, the system pays the waste. examples of types of waste and value added production process can be found in figure 2. figure 1. activities that bring value and of non-value to the mold studies and scientific researches economic edition, no. 15, 2010 445 figure 2. examples of activities that bring value to the mold and examples of forms of waste in the production process in a production system that produces molds. all these forms of waste can be more easily observed and waste reductions can be achieved in a shorter time, if the principle which underlies the production process is clean, in good order and discipline. in this case the method is 5s3. it is necessary that production activities should be continuously measured and monitory. measuring manufacturing activity can be done through indicators such as: overall equipment effectiveness (oee), maintenance response time, the frequency of failure, the cost of production, parts per million (ppm), the quantity produced, the production to customer takt, productivity4. all these makes the manufacturing process, whether or not a competitive process. management of technic activity for systems producing molds, the technical work also has an important role in defining the system competitiveness. this work is the first which are offering a feedback to the customer. designers are those who draw the product required by the customers and can tell if the current production facilities can or cannot perform mold on the takt required by the customer. a short time in which production system can provides a response to customer demand, has an important role in a competitive system. providing a response in a short time depends also by which software is used. for example, a fast response is made by the designers using drawing programs and simulation programs. for these programs the production system pays the licenses and this cost is recovered in the final price of the mold. but if the system don`t uses an appropriate software (program), the customer response may come too late, which could lead to customer loss. management of logitic activity the role of logistics extends from suppliers to customers and is a support for production activities. logistics activities are decisive through production system cost competitiveness. results / accreditation of the most suitable suppliers (cost, quality, time) for the production purpose is finally to optimized the network of providers, which can bring significant savings to a competitive system and implies the product through a lower cost. the same is happening with the transport activity of molds to customers. logistics activities can influence the product cost and safety stocks dimensioning the ancillary materials. for a production system which has the object of obtaining a molds is indicate that to have no materials in stocks because molds have vary dimensions depending on the product that is desired to obtain. but to have a continuous production flow without interruption, there should be a limited stock of ancillary materials. raw materials will be ordered only when the production system receives a firm offer from the customer. the role of logistics is to find suppliers that deliver everything necessary, when is necessary, in place and in the required quality. the logistic activities are reflected on the manufacturing activities by providing materials required for production in time and when is required. the logistics activities can be analyzed in terms of: • quality: the absence of defects and nonconformities; • deliveries: time to short deliveries are complete and to decrease delays; 3 www.graphicproducts.com 4 www.investopedia.com studies and scientific researches economic edition, no. 15, 2010 446 • cost: to obtain minimum quantities of stocks at current production and auxiliary materials, zero stocks for raw materials, to have no lack of materials, to work continuue / linear flows, no waiting times and everything is based on a flexible management. indicators: on time deliveries, reliability of deliveries, changes in safety stock, safety stock level, was saving in material cost, number of rejects due to defective material, cost of purchased materials, number of suppliers4. process and product quality management quality is reflected in the work of any departments / services and is divided in quality and process quality. quality of processes is the quality of any activity of the production system and includes: 1. product design and quality compliance. principles that therefore may reduce the occurrence of errors and can improve the quality of the product: • minimizing the number of components used; • use of common components; • using standard components. 2. quality compliance and designed processes through methods such as poka yoke, taguchi method, design and ergonomics of work places, organizing the workplace and empower employees5; 3. manufacturing operations and compliance of quality: quality of inputs are provided by the system, the level of staff and it`s training, monitoring, testing the response of production system from quality point of view. product quality does not necessarily refer to the best mold, ie the mold made from the most expensive materials, the newest machines, the newest methods, etc., but refers to the fact that molds should be able to incorporate all properties to meet the needs of users at the lowest production cost and on the quality required by the customer. activities are conducted by the department as pdca cycle (plan, do, check, act). the plan is the quality management function, determining quality objectives, resources needed to achieve them and the conditions referring how to apply the quality system elements. quality planning refers to: • planning the product realization,which presume identification, classification and determination of the importance of quality characteristics and setting goals, conditions and constraints on quality; • management and operational planning, consisting in which preparations to be made to implement the quality system, including organization and planning; • establish quality plans and measures for quality improvement; the quality plan is the document that specifies practices, resources and sequence specific to quality activities relevant to a product, project or contract. the process of quality planning include the following steps: quality diagnosis, forward planning, establishing basic quality objectives, determining resource requirements, establish actions to be undertaken by the quality strategic plan. the second phase is “do", means activities undertaken by the quality department to ensure the quality. in this phase: • poka yoke devices are designed and made (error identification / failure identification) for poka yoke production programs for department activities / services; • to plan and implement andon signaling problems; 5 militaru, g. (2008), managementul producţiei şi al operaţiunilor, editura all, bucureşti, pp. 95-113 studies and scientific researches economic edition, no. 15, 2010 447 • is processes standardizing (standards exist to answer the questions?, is it the current standard?, do everybody knew all the standard?; works are done according to standards?); at phase "check" the checks are done. for this stage works are done with tools such as: • data collection sheets; • graphs; • histograms; • control charts. all these data are analyzed through the pareto chart (for mistakes) ishikava chart, and fmea 5w. monitoring work is done through process audits, products are controlled by controllers and raw materials and supplies are made by controlling the reception / reliable suppliers. following the analysis performed and results obtained follows an action plan will be implemented in the fourth phase "ackt. this plan usually includes cost reduction measures by waste reduction, measures to reduce the number of complaints, training / training of employees. the most used quality measurement indicators are the cost of scrap, the number of complaints, number of rejects, the cost of rework. conclusions any of the activities described above if has a inappropriate management may adversely affect the competitiveness of molds production. for any production system to know where they are going to it should have clearly defined objectives. each objective must be smart and communicated to all employees. is necessary, before the neede action to achieve objectives are determined, the management to ensure that each employee understood correctly what are the objectives. after the objectives are communicated an action plan should be carried out (which contain completion dates and responsible). competitiveness of production system is found in every production activities, on every product made and each process. to see what the results are, indicators should be measured for each activity, product or process. by these indicators it will be seen the competitiveness development and by variables which are creating the indicators. those can act to increase competitiveness by improving the business. bibliography 1. militaru, g. (2008), managementul producţiei şi al operaţiunilor, ed. all, bucureşti, pp. 95-113 2. www.scn.org 3. www.hci.com.au 4. www.graphicproducts.com 5. www.investopedia.com studies and scientific researches economic edition, no. 15, 2010 448 microsoft word mironescu roxana engl. change management and its effects on organizational resources roxana mironescu, ph.d., "alecsandri" university of bacau, romania abstract change is a factor of strong impact especially on the managerial functions related to coordination and training of resources. change management has a broad spectrum of interpretations, referring to several types of changes, but is generally used in the management processes, in strategic management and the management of information, including the electronic function of information. human resources change management can be reactive or proactive, in the latter case the conditions for initiating changes that are part of the strategic objectives of the organization. keywords: change management processes, resistance to change, performance, organizational resources. change, as a condition to adapt the organization to the environment. managing change relates to the adoption of change in a planned, structured and organized environment. in the middle of change management lies a set of questions like: how do we make this problem become more innovative, more competitive and more productive? what are the needed changes? what performance measures are we trying to adopt? why people feel the need to be more creative? an important question relating to organizational change is "why organizations change?", and the answer may be: -for having poor performance; -to adapt to changes from the external environment; -to achieve or maintain a competitive advantage (better price, high quality) from the competition; -to exploit an innovation. we can further say that there are two sources that determine organizational change: external sources the change is initiated or imposed by the actors, interest groups from outside the organization; internal sources change starts from groups or individuals such as shareholders, management, employees. another fundamental question concerning the subject of change can be: "what can we change in organizations?” there are frequently changing the following: -objectives and strategies; -technology; -human resources; -organizational structure; -environment. professional practice concerns the reaction, the response to the changes that the organization can not control or it can do it only to a limited extent, such as, for example, changes occurring in law, in social or political climate. the necessary expertise of change management is made of : methods, models, techniques and other 53 studies and scientific researches ‐ economic edition, no. 14, 2009  tools taken from sociology, psychology, economics, industrial engineering, systems engineering, the study of individual and collective behavior. the adoption of specific methods for managing change emerges as a difficult but necessary continuous process, despite all the difficulties encountered. an important task for the manager of a group is to determine the group members to agree on what is expected to do the group, how things must be done and till when.the group must work together . an important function of management is to drive change, because the environment is in a constant change, and the competition appears to be intense. increasingly more, management is oriented to stimulate change and encourage adaptation and innovation in order to improve products and services, to meet new pressures and demands. change is stressful. processes involving organizational change involve individual changes, too. in the middle of efforts, incertitudes and tensions implied by the change, it must be found a small pause to reflect that change may be a good thing, a factor driving the advance and progress. change is, according to paton and mccalman's "an ongoing process of confrontation, identification, assessment and action", in which its managers find themselves to have a significant role, both as promoters of critical mutations, and as individuals invested with authority and status of implementation any mechanism of the future organizational and ideological configurations. kurt lewin believe that change is a process in dynamic equilibrium, in which various forces are pressing to change the parameters as set out in the formal organization, but at the same time, creates a strong resistance to any system transformation in its whole or in its partial components. the most important determinants of change may be the following: technological change, high rate of aging of the products, improving working conditions, the flood of new information. and resistance to change is induced by: obsolete mentalities, individual or collective mental blockages, disinterest, fear of the unknown and new, fear of possible failures, the low level of professionalism, destructuring jobs. to act, the manager must have a good control over the critical situation. undergoing a stage that involves diagnosis of situations becomes imminent. the main phases of diagnosis are: identify the type of problem, which involves finding all critical events that may cause change, action that can be done through the list of issues, ideas box of ideas etc. the complexity of problems related to the possibilities of their solutions,which are available for the organization, there are the proper factors affecting the implementation of changes; formulation of positive and negative symptoms that cause problems; the causes that generated the problem and the effects upon their facts or they may have effects for each type of problem. it is essential to understanding the nature of those factors which have caused the problem and generated the positive or negative effects. the causes may be direct, indirect, primary and secondary, the effects can be identified as the immediate, medium and long term.; specifying the ways problems can be solved and also the resources involved in this process. the main ways of action will lead to the decrease of the negative effects and they amplify the positive effects, with emphasis on resources needed and there are available for such actions; the estimated results that will be reached by achieving change. in this last phase we can estimate the expected measurable and quantifiable aspects of efficiency that will arise from solving the problems of change. organizational change process is often a complex one, accompanied by risk, uncertainty and disorder, it involves the browse of several stages, and often, the final results are not up to the expectations and even often put under question the efforts. 54 studies and scientific researches ‐ economic edition, no. 14, 2009  adverse reaction to change is determined by several factors, of which we can mention: the fear of losing the income any change is likely to stir up fear about the loss of jobs or a considerable reduction of revenues; the fear of destroying interpersonal relationships people feel they have a greater psychological comfort when they work with people that they know. unwritten rules of a group have a large effect in mobilizing individuals in achieving objectives, and that is why the strong groups show a great opposition when managers seek a change likely to modify the group composition; the need to learn change force people to change their mode of action. for them it becomes necessary to assimilate knowledge, methods and new procedures, which require additional training, with an additional intellectual effort; the fear of the unknown the changes are accompanied by uncertainty over their purpose, which determine the individual / team / group / organization to be withheld; -conservatism low tolerance to change; -lack of information; -lack of understanding the changes benefits. in order to accept the changes, theory suggests that management must consider the following issues: -creating the trust for the individuals undergoing change; -preliminary discussion on how the change will be achieved; -direct implication in the process of change; -ensure that the change is reasonable; -avoiding the threats; -proper timing of change. there are many models of organizational change and reflecting the process stages, but one of the best known is that of lewin in 1951, which suggests that any change or innovation can be understood through three successive stages: unfreeze, change or movement (turning) and regelation . lewin believes that organizations are essentially stable in structure, and change is the process by which organizations move between different stable states. this model was criticized for its"static” view of organizations. lippit (organization renewal, 1982) speaks about the organizational crisis phases: shock, defensive, awareness, adaptation and change. elizabeth kübler-ross (1970) establishes similarities between management change model and people's reactions when they are suddenly informed that they are sick with incurable illness: denial, rebellion, bargaining, depression and finally acceptance. organizational transformation involves changes at three levels. the first level is the change of employees’ attitudes and behaviors in the organization. the second level refers to the change management system, and the last level concerns the deep layers of the organization, belonging to its culture, i.e. in the systems of values, beliefs, affectivity of community. another feature of the organizational transformation is that change are not resuming to the simple maintenance of functional organizational system, but they aim the renewal of the organization as a whole. any change requires the various exploratory and consultation, a preliminary analysis and a plan for implementing change. it is very important in a change approach is the employment of a specialist / consultant from outside the organization. change can be approached in a variety of ways. there is not an optimal strategy in all circumstances, sometimes it is useful the combination of strategies for successful change process. next we describe several strategies that can be used in the process of change. the approach was made according to the degree to which it is imposed to the change subjects: 55 studies and scientific researches ‐ economic edition, no. 14, 2009  dirijiste strategy: the right allowed to managers to manage change. when this approach is used, managers are claimed to use their authority to impose change. the advantage of this strategy is that change can be implemented very quickly, as required, involving a small number of people. the disadvantage is that it takes not account of the views or feelings of those affected by change, thereby losing the valuable information, information that can lead to lower implementation rate of change, or even undermine them; strategies based on expert: change management as a way of solving a problem. this approach is applied when the change results from a technical problem whose solution requires a solution given by experts (eg introducing a new information system). such a change is implemented by special project teams with precise instructions and guidance from managers, with little involvement from those who bear the change consequences. the advantage:the use of the experts’ knowledge,it requires a relatively small group, the implementation is relatively fast. disadvantages: change subjects might have different oppinions face the experts and they do not accept the legitimacy of the solutions adopted by the experts. therefore, resistance to change can occur; negotiating strategy: the enforcement of negotiations on the change. approach supposes a desire to negotiate, accepting the idea that it would take some adjustment and concessions.all this do not absolve the responsible managers, but recognizes that people affected by the change are entitled to express their oppinion on this regard, or they have the power to resist to changes (if not persuaded to join it). the advantage of this approach is that the change subjects have the opportunity to make public their oppinion, so they will be less likely to resist. the disadvantage is that implementation might take some more time, and the results are provided as easy as it is estimated; educational strategies: change management is to attract emotional and rationalist subjects. this approach involves changes in the system of values and beliefs of people, so that they are supportive for change and adhere to a common set of organizational values. the emphasis is on emotional and rational conquest by a combination of activities, such as persuasion, education, training and selection. the advantage of this approach is the involvement of people in implementing change (people are convinced of its necessity). the disadvantages are that this approach requires a longer period of time for implementation and resource consumption can be relatively large; participatory strategies: we are all involved in the change application. the subjects are involving in change (directly or through representatives), managers are determined to initiate change, the groups involved in carrying them out (less dominated by persons with management authority) and even some organizational development consultant (to facilitate the conduct this process). advantages: more likely the change is accepted, people engage in persuasion for implementing change, a better chance of individual and organizational learning. disadvantages: implementing change is relatively slow, change management effort is complex, it is likely to require more resources. the five strategies described above have affinities with other aspects of management, such as power and influence strategies and leadership / management styles. when opting for a strategy we take into account not only the circumstances we face, but also the prefered managerial style. each strategy may be appropriate in different circumstances and the factors affecting the choice of the strategy there are: -the urgency of the situation as the threat is more pressing and more important,so the strategy is more rapidly chosen; -the degree of the expected opposition as the opposition is greater, the more appropriate can be a slower strategy which may overcome resistance to change; 56 studies and scientific researches ‐ economic edition, no. 14, 2009  -the power-base of the change initiator if the developer is strong enough, it is possible to apply a rapid change, even if there is a risk of a strong opposition; -the need of information and responsible engagement -a rapid change means that the developer knows very well what it is necessary to be done, otherwise he would be forced to involve other persons and to advance more slowly. change management can be a stressful and demanding work. the way people relate to change can be affected by the position they have in the organization and the attitudes they adopt face to change affect the role that they assume most easily in the process of change, but also the opposite is valid :the attitudes can be shaped by the role played in the change process. there are identified three different roles in the process of change: strategists and initiators of change, initiating and determining the direction of change; implementers of change, responsible for coordinating and implementing change; subjects of change, which are deeply influenced by the change and its implementation. these roles are not mutually exclusive. strategists may be involved in implementing change, the subjects, although they have less power control on change may have some influence in changing strategy or its implementation. when we consider a change we should consider the following questions: "it is the change necessary ? ” is the change feasible?” and “what is the level of sustainability of the change process? " it is possible that change must be essential, but it does not mean that every possible project must be put into practice. new and different things are not always better, and even if they are so, the costs of introducing changes may be too high. based on these considerations, it was conceived "change equation" theory as a tool to highlight what it should be done to initiate a change. the basis of this equation lies on the assumption that people are not interest in changebut rarely, if the supporting factors are not exceeding the costs of change. the “change equation” is the following: a + b + c > d, where: a = level of dissatisfaction of the individual or of the group to the existing stage; the dissatisfaction we refer to, may be not shared by other members of the team / group. if the others consider the existing status quo suits them, it is unlikely that they will support change. b = individual or group view on a better future; in order to support a change, individual or group in question must have a well defined and clear vision, on a better way of doing things, otherwise people will not try to implement it. there are several risks about the possible existence of several oppinions and then, people will scatter energy debating contradictory; c = there is a first acceptable and risk free step ; the first steps are acceptable if they are small and likely to succeed, or it is clear that in case of failure, the situation can be easily and without problems resolved ; d = costs that the individual / group / organization have to bear; the considered costs can be expressed in money, resources, time, energy and adverse psychological and personal effects. we suppose to be important the charged costs, not necessarily the real ones and what is trivial for some people, may prove to be stressful for others. consequently, the problem of change is, a dimension of content, but also, another dimension, the process one. therefore, it is creating, at least, three theoretical and methodological approaches of change management, such as: its management in a reactive or proactive way , the existence of areas of expertise and professional practice (with the dependent variable skills and abilities of practitioners of change) 57 studies and scientific researches ‐ economic edition, no. 14, 2009  and the confirmation of a methodological set of tools, consisting of models, techniques, methods and other instruments, able to accurately reveal the causes, effects and the manner to maintain a favorable change process climate. references 1. scullion, h, linehan, m. (2005), international human resources management, palgrave mac millan, new york; 2. bennis, w, benne k.d., holt, r. c.(1969), the planning of change, rinehart and winston, new york; 3. ***,(2002) managementul resurselor umane, “înţelegerea schimbării”, codecs; 4. ***,(2002), putere, conducere şi schimbare, “managementul schimbării”, codecs; 3. http://en.wikipedia.org./wiki/change management. 58 microsoft word apostoaie constantin marius_eng.doc customer complaining behaviour – its effects on companies’ evolution gabriela ştefura, „al. i. cuza” university of iasi, romania abstract now days the role of the consumer in the economy is taken very seriously and, in some cases, we can easily talk about the consumer’s “supremacy”. all the efforts of the companies are concentrated on the consumers and finding the best way to attract them, but gaining their trust and building a longterm relationship is even more difficult now due to a very intense competition on all the markets. client service can always help a company to differentiate itself from the others, this including the management of customer complaints. the subject is still very sensible because many consumers are not aware of the complaining system or are shy in displaying this kind of behaviour, so companies can develop strategies to educate and council clients regarding the complaining process, managing in this way to gain trust and also to increase profitability. keywords behaviour, complaints, consumer, satisfaction, politeness, service quality jel codes: m 31 introduction the most common goal of companies worldwide is increasing their business and, of course, increasing their profitability. one way to achieve this goal is learning as much as they can about consumers and their behaviour on the market. the older, more selfish view of certain companies does not represent anymore a direction to be followed by the ones who want to meet success. the study of the behavioural process of consumers has revealed a very important subject: the complaining behaviour of the consumers and its effects on businesses. the consumer complaining behaviour refers to the set of actions and attitudes that a customer relies on when confronting with a problem caused by a product or service that he has acquired a problem associated with the manufacturer or seller. once he acknowledges the problem, the consumer decides how to solve it, by expressing his situation to the provider, or worse, to other potential clients. academics consider that the complaints of the consumers can be a very useful source of information for companies in making strategic and tactical decisions with the purpose of improving their business.1 further in this article, the development of complaining behaviour will be described, including the different types of this behaviour and also the factors that influence its release. an interesting point of view which will be detailed is the relationship between politeness and the complaining process. another point taken in consideration will be the relationship between the complaining behaviour and the degree of the customer’s satisfaction. 1 apud nyer, u. p. (2000), an investigation into whether complaining can cause increased customer satisfaction, journal of consumer marketing, vol.17, nr.1, p. 9. studies and scientific researches economic edition, no. 15, 2010 487 last, but not least, some pieces of advice to be taken in consideration by companies will be offered as a conclusion of the complaining behaviour theoretical approach. the development of the complaining behaviour in the specialized literature, complaining behaviour is defined as „ a set of possible responses to perceived dissatisfaction, regarding a bill of sale or during the consumption/use of goods or services.”2. this type of behaviour arises when consumers are faced with the inconvenience caused by an item that does not work as it should, or a faulty service without fault. most of the times, the blame is cast upon the manufacturer or vendor who supplied that item/service. the complaining behaviour can take many forms, depending on what the client decides to do, in order to remedy the situation. the first type of behaviour is exactly the absence of it. some clients, because of the time shortage or the fact that they do not have the courage to approach the seller, prefer not to take any position regarding the specific situation. most of the times, the reason for the lack of attitude is represented by the fact that companies do not encourage their customers to express their grievances, and the latter prefer not to remedy the situation, in order to avoid an embarrassing position. a second type of behaviour relates to the so-called „private action”3. consumers are clearly dissatisfied with inconveniences produced by a certain company, but, for various reasons (which will be examined below), they prefer to boycott the company, from a personal level, by means of negative advertising towards friends, family, other potential customers or seize to purchase products/services from that company. the last, but most complex category is represented by the customers’ decision to make their dissatisfaction public. this action can, itself, take two forms: the customer’s willingness to remedy the predicament (by replacing or repairing the product), or simply reclaiming the situation. this second form refers to the desire to make their discontent public, only to free themselves from negative feelings (may be the most dangerous, by using the press, authorities etc.) experts have identified two categories of people who carry the complaining behaviour: complainers and non-complainers4. the complainers are always eager and more aggressive both in language, and conduct. non-complainers are shy and calm. studies have demonstrated that the applicants have a better control of situations, while non-applicants perceive such control as very low. linked to this type of people that make complaints, a strong mitigating factor which influences the consumer’s behaviour in general, is the image of him self. many aspects of a person’s self image can be found in specialized literature5: • current self-image • ideal self-image (how the consumer wants to see himself) • social self-image (how he thinks others perceive him) • ideal social image (how he would like to be seen by others) these hypostasis of the self image, especially the ideal social image, lead to a restraint in expressing the complaining behaviour, just for keeping an image they want in society. some people perceive this conduct as being rather embarrassing, due to a very low self-esteem. 2 apud phau, i., baird, m. (2008), complainers versus non-complainers retaliatory responses towards service dissatisfactions, marketing intelligence and planning, vol. 26, nr. 6, p. 588. 3 apud twigg-flesner, c. (2003), consumer product guarantees, ashgate publishing ltd., p.74. 4 bodey, k., grace d. (2006), segmenting service “complainers” and “non-complainers” on the basis of consumer characteristics, journal of services marketing, vol. 20, nr. 3, p. 179. 5 statt, a.d. (1997), understanding the consumer: a psychological approach, macmillan press ltd., p.72. studies and scientific researches economic edition, no. 15, 2010 488 of course, the complaining behaviour may be influenced by a multitude of other factors. one of these factors is the function. the predicament is considered short-termed and then does not require too much effort to move it. if dissatisfaction is attributed to the manufacturer, the client will express his desire to remedy the issue, using one of the forms described below. another category of influencing factors is represented by the ones determined by circumstance. some of these factors can be: • the price of the item • low life • severity of the problem • perceived inconvenient of a complaint mechanism • perceived willingness of a seller to provide a remedy. according to experts, the intention of making a complaint is significantly influenced by three factors6: attitude toward complaining, perceived value of complaint and perceived like hood of success. the attitude toward complaints can be positive or negative. the consumer may consider that the claim will solve the problem, and then, will adopt a positive attitude, asking the manufacturer/seller to resolve the situation. but when the consumer has a negative attitude, this is not beneficial either for business, or the consumer (does not eliminate the cause of frustrations that might arise). the perceived value of the complaint relates to the importance given by the consumer to the caused dissatisfaction and default, to the complaint he should do. if the importance is not very high, it is unlikely for the complaining process to be followed through. but if the sufferer attaches more importance to his gesture to claim, he will surely choose a method whereby to express, public or private. the chance of success for his approach or its perception as being likely or not to turn up right, often appears as influential in the development of complaining behaviour. an important part is played by the company, on how it encourages its customers to voice their complaints. how the company responds, or not, can determine the direction for the consumer’s display. in terms of area segmentation regarding the complaining behaviour’s display, demographic factors (age, income, level of education) can significantly influence this conduct. the complaining behaviour is in inverse relation to age and directly proportional to income and education7. young people with high incomes and a higher level of education are more likely to make public their complaints. other recent studies have proven that women are more interested in how the company handles complaints, while men are very keen to reach a quick result8. cultural factors can not be ignored, as it has been shown that cultural influence exercises its role on the complaining behaviour. in some studies, conducted between 2000-2001, has been found that those consumers from collectivist cultures (such as in south korea) are more prone to action than those in individualistic cultures (usa) 9. so, we could say that consumers from collectivist cultures tend to be more timid in regard to public complaints, but this could be related, psychologically speaking, to the image they would want to project in society. 6in kim, c., kim, s., im, s., shin, c. (2003), the effect of attitude and perception on consumer complaint intentions, jorunal of consumer marketing, vol. 20, nr. 4. 7 apud phau, i., baird, m. (2008), complainers versus non-complainers retaliatory responses towards service dissatisfactions, marketing intelligence and planning, vol. 26, nr. 6, p. 590. 8 gruber, t., szmigin i., voss, r. (2009), handling customer complaints effectively, managing service quality, vol. 19, nr. 6. 9 liu, r.r., mcclure, p. (2001), recognizing cross-cultural differences in consumer complaint behaviour and intensions : an empirical examination, journal of consumer marketing, vol. 18, nr.1. studies and scientific researches economic edition, no. 15, 2010 489 the complaining behaviour may be also influenced by the consumers’ degree of politeness. people are characterized by a civility level which, in some cases, by their desire in not insulting their peers, may prevent the display of the complaining behaviour. politeness can be seen through two different aspects: positive politeness and negative politeness10. positive politeness occurs when people truly appreciate and feel solidarity towards others. negative politeness concerns formalities, confinements and the desire to maintain appearances. the relationship between complaining behaviour and customer satisfaction between a company’s profitability and a customer’s satisfaction lies a close and directly proportionate relation. with content customers, the company’s reputation and profitability will increase. generally, firms must turn their attention to maintaining the consumer’s satisfaction, both for profitability reasons, as for cost-related reasons. attracting a new customer can cost five times more than keeping an old one. satisfaction may be seen as the result which derives from an activity of consumption of a good or service, some experts considering it as a real process11. satisfaction can be interpreted as a sense of accomplishment, once a need has been covered. as pressing the need is, the greater the satisfaction will be after its fulfilment. researches have revealed that satisfaction is differently interpreted by any person. some perceive it as an emotion, others as a phase of evaluation of what they received after the consumption (if it amounts to expected standards)12. regarding the link between satisfaction and complaining behaviour, customer’s satisfaction level is one of the determinants of such conduct. even if the original situation is an unpleasant one, that prompted the client to engage in making a complaint, he may ultimately obtain a settlement of the issue and will, implicitly, be satisfied with his complaint’s positive consequences. dissatisfied clients adjust their negative feelings by means of the complaining behaviour. they are even more motivated, when sensing that this gives them a kind of emotional relief, if they do not see the issue which triggered the dissatisfaction as still pressing. most of the times, the employees’ attitude, especially of those that deal directly with complaints, determine customers’ perception towards the quality of a company. if coldly or indifferently treated, it is likely that those customers take their complaints elsewhere, to other potential clients or even to the authorities. consumers who are encouraged to express their points of view, even complaints, and receive a positive feedback from that company, are more likely to buy again from that firm, due to the appreciative feeling. a few tips for companies many multinational companies have understood the meaning of maintaining customers’ satisfaction, and try, whenever possible, to keep a good relationship with them. the key to any small or large business is the correct and effective implementation of relationship marketing principles, in order to build a sustainable relationship with its customers. by developing appropriate marketing strategies, an increase in customers’ satisfaction will be obtained. 10 lerman, d. (2006), consumer politeness and complaining behaviour, journal of services marketing, vol. 20, nr. 2, p. 93. 11 parker, c., mathews, p.b. (2001), customer satisfaction: contrasting academic and consumers’ interpretations, marketing intelligence&planning, vol. 19, nr. 1, p.38. 12 idem, p.43. studies and scientific researches economic edition, no. 15, 2010 490 all entrepreneurs should provide, within their organization, a more effective customer dissatisfaction post-purchase management, as in designing and implementing management strategies for complaints. also, customers’ education regarding the operational mechanism for the complaining process is very important. one can send messages through different media, to encourage clients in expressing any dissatisfaction towards the company. sometimes, the best way for preventing problems and maintaining a good relationship with the clients, is after-sales service. telephones or letters sent after a purchase can make customers feel valued, and the fact that sometimes their opinion is required can lead to a positive feedback, even when faced to the need for a complaint. customers coming directly to the seller will partially eliminate the risk of negative advertising or calling in other undesirable ways. however, a correlation should be made between this feedback request from customers, and the solutions offered by the company, in case of complaints. if the company itself does not provide the expected customer support, the latter may feel cheated, so the consequences will not be positive for the firm. companies that develop a reputation based on seriousness with which they treat their customers and the effectiveness in redressing unpleasant issues, will surely attract a loyal clientele. it should also ensure that those customers, whom they want loyal, perceive a high degree of success, regarding the complaining conduct. an important role is played by employees in direct contact with the clients and their grievances. often, on them and their attitude depends the smooth solution. therefore, employees should be well prepared to deal with these situations and to treat it with seriousness and responsibility. it is harder to relate to an impatient person, but if employees participate to a specialized course, and realize the importance of their role, can adjust the predicament to favour the company. more delicate are situations where consumers are rather restrained regarding the complaining behaviour, so they feel intimidated or simply are not familiar to such situations. the company should carefully design its message to the customers, emphasizing their opinion or advice rather than the complaining process. maintaining a good relationship with current customers and a positive image for potential ones, represent successful factors in increasing the profitability of any organization. attention and seriousness regarding all problems which might arise should be a motto for all companies in search of long term prosperity. references 1. blodgett, g. j., wakefield, l. k., barnes, h. j. (1995), the effects of customer service on consumer complaining behavior, journal of services marketing, vol. 9, nr. 4, p. 31-42. 2. bodey, k., grace d. (2006), segmenting service “complainers” and “non-complainers” on the basis of consumer characteristics, journal of services marketing, vol. 20, nr. 3, p. 178-187. 3. gruber, t., szmigin i., voss, r. (2009), handling customer complaints effectively, managing service quality, vol. 19, nr. 6, p. 636-656. 4. kim, c., kim, s., im, s., shin, c. (2003), the effect of attitude and perception on consumer complaint intentions, jorunal of consumer marketing, vol. 20, nr. 4, p. 352-371. 5. lerman, d. (2006), consumer politeness and complaining behaviour, journal of services marketing, vol. 20, nr. 2, p. 92-100. 6. liu, r.r., mcclure, p. (2001), recognizing cross-cultural differences in consumer complaint behaviour and intensions : an empirical examination, journal of consumer marketing, vol. 18, nr.1, p. 54-74. 7. nyer, u. p. (2000), an investigation into whether complaining can cause increased customer satisfaction, journal of consumer marketing, vol.17, nr.1, 9-19. studies and scientific researches economic edition, no. 15, 2010 491 8. parker, c., mathews, p.b. (2001), customer satisfaction: contrasting academic and consumers’ interpretations, marketing intelligence&planning, vol. 19, nr. 1, p. 38-44. 9. phau, i., baird, m. (2008), complainers versus non-complainers retaliatory responses towards service dissatisfactions, marketing intelligence and planning, vol. 26, nr. 6, p. 587-604. 10. statt, a.d. (1997), understanding the consumer: a psychological approach, macmillan press ltd., londra. 11. twigg-flesner, c. (2003), consumer product guarantees, ashgate publishing ltd. 12. white, c., yu yi-ting (2005), satisfaction emotions and consumer behavioral intentions, journal of services marketing, vol. 19, nr. 6, p. 411-420. aknowledgements financing by the project posdru/88/1.5/s/47646 studies and scientific researches economic edition, no. 15, 2010 492 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro influences of the purchasing power change on the evolution of the agroalimetary markets on european union level laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract this paper aims to identify the manifested connection between the dynamics of the population purchasing power and the dynamic of agroalimentary markets in general as well as by product types on european union level. based on the last data supplied by eurostat 2013, using the specific methods for studying the correlations, we have detected that increases and decreases of the purchasing power generated similar changes on agroalimentary markets level from the point of view of achieved sales in most of the poorer countries of the european union, but not in those states which got beyond the average gross domestic product per capita of the european union. this relationship has been noticed only on the agroalimentary markets as a whole (respectively on the amounts spent by the population for purchasing agroalimentary goods, beverages and tobacco), but not on the level of markets of various types of product (“meat and meat products”, “fruit and vegetables”, “dairy produce, eggs and edible oils and fats”, “beverages”, “sugar and chocolate and sugar confectionery”, “tobacco products”). keywords agroalimentary markets; sales; economic development; purchasing power; european union countries jel classification m31; o11; c10 1. the relationship between the purchasing power and the agroalimentary markets evolution the population demand for agroalimentary goods is determined by endogenous and exogenous, objective and subjective factors. the main formative element of the demand is the food consumption needs, which are the result of physiological impulses. a determinant of the demand for agroalimentary goods is the household income. the demand for agroalimentary goods being triggered by primary needs is very little elastic to both price and income changes, at least in quantitative terms (except the population who lives at the subsistence level). income fluctuations (over a certain level that ensures a decent standard of living) lead mainly to qualitative changes on demand (reflected in value indicators). thus, the economic growth and implicitly the increasing of purchasing power determines the orientation of the population (who has a decent level of living) to more expensive products, with a high level of processing, qualitatively superior, while, in recession times, the decreasing income generates a migration from more expensive products to inferior goods. therefore, this paper seeks to find out the reactions of agroalimentary markets from the point of view of value in the european union countries as a result of the general economic expansion / recession and implicitly of the fluctuations in the purchasing 355 țimiraș power, the analysis being based on the latest official statistical data from eurostat 2013. 2. the relationship between the purchasing power and the agroalimentary markets evolution on the level of some eu countries after 2000 the european union agroalimentary market had an upward trend until 2008 from the point of view of the food, beverages and tobacco sales. along with the onset of the economic crisis and thus with its impact on the purchasing power, the european agroalimentary market had a fluctuant evolution. the sales evolution in the eu retail market in the period of time 2003-2011 is presented in table 1. table 1 retail sale of food, beverages and tobacco in specialized stores and nonspecialized stores in 2003-2011 in the european union (except croatia) year retail sale of food, beverages and tobacco in specialized stores (millions of euro) retail sale in non-specialized stores with food beverages or tobacco predominating (millions of euro) 2003 120,476.56 743,532.40 2004 122,791.43 772,512.23 2005 126,841.90 800,000.00 2006 130,000.00 n.d. 2007 136,000.00 900,000.00 2008 136,000.00 920,832.71 2009 134,727.58 900,000.00 2010 136,585.08 900,000.00 2011 134,000.00 n.d. n.d.no data source: eurostat, 2013 the wholesale markets of agroalimentary products were also affected by the economic crisis, so we can notice that immediately after 2008 there was a decrease in market size in terms of sales, followed by a slight recovery in the coming years from 2010 to 2011 (figure 1). 72 1, 04 8. 99 72 9, 02 9. 17 77 6, 98 3. 65 81 6, 07 7. 91 85 9, 32 2. 50 91 1, 72 2. 97 87 3, 00 0. 00 91 0, 00 0. 00 94 5, 92 5. 20 0.00 200,000.00 400,000.00 600,000.00 800,000.00 1,000,000.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 m ill io ns o f e ur o figure 1 evolution of wholesale of food, beverages and tobacco on eu level (except croatia) source: eurostat, 2013 356 influences of the puchasing power change on the evolution of the agroalimetary markets on european union level in almost all eu countries, the dynamics of agroalimentary markets followed the trend registered on community level. thus, there was a positive trend until 2008 and then, in 2009, the markets experienced an involution, followed by a slight recovery during the next years. though along with the onset of the economic crisis the influence of the decrease in the purchasing power on the sales evolution of agroalimentary markets was a direct and immediate one, manifested in almost all the eu countries, we have studied the relationship between the two variables over a longer period of time (2000 -2010), not only for the period that marked the economic crisis. this has been done in order to see whether the connection between the dynamics of purchasing power and the dynamics of agroalimentary markets which has been noticed immediately after the onset of the economic crisis is valid for a longer period of time. thus, it has been found that the intensity of reactions in agricultural markets as a result of the fluctuations in the purchasing power were different on the level of the eu countries according to their level of development and implicitly to the standard of living of their population. it has been noticed that decreases or increases in the purchasing power were accompanied by similar changes in the agroalimentary markets, especially in the poorest countries of the european union and only slightly in the countries with a high living standard of the population. based on the information presented in the table 2 we can see that on the level of the retail markets, the influences of changes in purchasing power on the evolution of sales of food, beverages and tobacco have been noticed in those countries which are below the average gdp per capita in the eu (23,100 euros / inhabitant in 2010). table 2. the corelation between the the dynamics of the retail sales of food, beverages and tobacco and the dynamics of the gross domestic product per capita on the level of european union countries country real gross domestic product per capita in 2010 (euro per inhabitant) value of correlation coefficient degrees of freedom calculated t value significance of the correlation coefficients for significance level α = 0.05 bulgaria 3,500 0.65 8 2.419 significant romania 4,200 0.60 8 2.121 insignificant latvia 5,900 0.84 8 4.379 significant lithuania 7,100 0.81 8 3.907 significant poland 8,000 0.13 8 0.371 insignificant hungary 8,800 0.48 8 1.548 insignificant estonia 8,300 0.65 8 2.419 significant portugal 14,900 0.05 8 0.142 insignificant slovenia 15,300 0.67 8 2.553 significant cyprus 18,500 0.60 8 2.121 insignificant spain 20,600 0.83 8 4.209 significant european union 23,100 italy 23,500 0.33 8 0.989 insignificant france 27,400 0.57 8 1.962 insignificant belgium 29,600 0.78 5 2.787 significant germany 29,100 -0.49 8 -1.590 insignificant united kingdom 30,500 0.60 8 2.121 insignificant finland 30,600 0.01 7 0.026 insignificant austria 31,300 0.02 8 0.057 insignificant netherlands 33,100 0.02 6 0.049 insignificant sweden 34,500 0.67 8 2.553 significant ireland 36,500 0.52 8 1.722 insignificant 357 țimiraș (source: personal processing after eurostat, 2013) n.d. – no data note: the correlation has been determined based on previous year indexes for the real gdp / capita and cumulative value of retail sale of food, beverages and tobacco in specialized retail stores and nonspecialized in stores with food beverages or tobacco predominating indicators. we have studied those countries wherefore we have had statistical data for the two correlated indicators for the period of time 2000-2010 (2010 being the last year for which official statistic data supplied by eurostat has been available for non-specialized retail stores with food beverages or tobacco predominating indicator). for some countries (belgium, finland, netherlands) we have taken into consideration a lower number of years to determine the correlation coefficients according to the available official data. in order to study the correlation we have determined the pearson correlation coefficient. the testing for the significance of correlation coefficients has been done using the t test. thus, in 6 out of the 11 countries analyzed (50%) which have a gross domestic product per capita less than 23,100 euros, there have been registered significant correlation coefficients for a significance level of 5% between the dynamics of sales retail food and beverages and tobacco and the dynamics of gdp per capita, the values of those coefficients denoting medium or strong relations between the two variables studied. also, analyzing the registered values of the correlation coefficients, we have noticed that only 2 out of the 11 countries (poland and portugal) had a very weak connection between the correlated variables. on the other hand, on the level of the 10 countries analyzed, which have a living standard over the eu average, only two out of them (20%) had relationships with significant correlation coefficients and in 50% of them (germany, finland, austria, netherlands, italy) the correlation coefficients have attested a very weak, a weak or even an inverse connection between the purchasing power dynamic and the agricultural markets dynamic. therefore, it confirms that fluctuations in the purchasing power put their mark on the evolution of agricultural markets, especially in countries where the standard of living is lower (and only accidentally in countries with high living standard). 3. the relationship between the evolution of the purchasing power and the dynamics of the agroalimentary markets by types of product on the level of some eu countries after 2000 having official statistic data on the sales of agroalimentary products by categories only for the wholesale trade, the analysis below is based exclusively on the information concerning this indicator. given the fact that the agroalimentary products marketed on the wholesale markets are largely distributed on the retail markets and, after that, they get to the final consumer, the trends reflected in the sales evolution on this level can be an indicator for the trends of population demand. the agroalimentary markets by large groups of product (“meat and meat products”, “fruit and vegetables”, “dairy produce, eggs and edible oils and fats”, “beverages”, “sugar and chocolate and sugar confectionery”, “tobacco products”) had different trends. for example, in the case of the product markets such as "meat and meat products", "fruit and vegetables", "beverages", along with the onset of the economic crisis we have noticed changes in the positive trends registered until 2008, while on the level of the markets, "sugar and chocolate and sugar confectionery" and "tobacco products", the evolution was upward both before and after the onset of the economic crisis. 358 influences of the puchasing power change on the evolution of the agroalimetary markets on european union level 20 03 20 03 20 03 20 03 20 03 20 03 20 04 20 04 20 04 20 04 20 04 20 04 20 05 20 05 20 05 20 05 20 05 20 05 20 06 20 06 20 06 20 06 20 06 20 06 20 07 20 07 20 07 20 07 20 07 20 08 20 08 20 08 20 08 20 08 20 08 20 09 20 09 20 09 20 09 20 09 20 09 20 10 20 10 20 10 20 10 20 10 20 10 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 meat and meat products fruit and vegetables dairy produce, eggs and edible oils and fats beverages sugar and chocolate and sugar confectionery tobacco products figure 2 the wholesale evolution by types of agroalimentary products on the eu level (except crotia) in the period of time 2003-2010 (millions of euro) source: eurostat, 2013 studying the relationship between the dynamic of sales by product groups and the evolution of the gdp / capita in the eu countries, we have noticed that, unlike the above-described trends which were registered on the agroalimentary markets level as a whole, we haven’t found any influence between the purchasing power dynamic and the dynamic of the sales of agroalimentary products by categories (the correlations registered are insignificant, have low intensity and even different directions). there are a few exceptions some states where significant correlations have been found (considering a significance level of 5%) between the indicators analyzed, but we haven’t noticed a manifestation of these connections only in certain categories of countries according to their level of development (table 3). the very small number of countries in which the relationship between the variables studied has been verified attests that these are purely coincidental therefore we have been unable to draw any conclusion on how various agroalimentary markets react as a result of the changes in the purchasing power, in general (regardless of the level of development of that country), or by categories of country according to the level of development / purchasing power of their populations. table 3. the countries which registered significant correlation coefficients (for a significance level of 5%) between the gross domestic product per capita and the wholesale of agroalimentary products by categories agroalimetary product categories meat and meat products fruit and vegetables dairy produce eggs and edible oils and fats beverages coffee, tea, cocoa and spices sugar and chocolate and sugar confectionery tobacco products countries with the gdp / capita under the eu average poland hungary lithuania poland lithuania hungary portugal romania lithuania poland romania hungary romania 359 țimiraș countries with the gdp / capita above the eu average united kingdom united kingdom united kingdom netherlands sweden (source: personal processing after eurostat, 2013) note: the correlation has been determined based on previous year indexes for the real gdp / capita and the wholesale of food, beverages and tobacco. we have studied those countries wherefore we have had statistical data for the two correlated indicators for 2000-2010. for some countries we have taken into consideration a lower number of years to determine the correlation coefficients according to the available official data. in order to study the correlation we have determined the pearson correlation coefficients. the testing for the significance of correlation coefficients has been done using the t test. conclusions in the european union countries the fluctuations in the purchasing power made their mark on the evolution of the agoalimentary markets from the point of view of the sales, especially in those states where the standard of living is lower than the average of the eu (respectively a gdp / capita under the eu average). thus, beyond the immediate impact which the decreasing of the purchasing power generated by the economic crisis had on the evolution of the agroalimentary markets in almost all the eu countries, this connection was verified for a longer period of time only in most of poorer countries of the eu. so, while in the first part of this paper we said that the decreasing of the purchasing power generates an orientation of the population towards cheaper agroalimentary goods and, implicitly the agroalimentary market tends downward from the point of view of value (and not quantity) in those countries with a standard of living which ensures a decent life, however this statement is not valid in the case of countries with a very high standard of living (in this case the agroalimentary markets are not affected by changes in the purchasing power, of course if these changes are not so big as to seriously affect the standard of living) at least in the countries in question. we must mention that the influence of changes registered by the purchasing power has been noticed only on the agroalimentary markets as a whole, respectively they affected the total income allotted for the buying of food products (especially in those eu countries where the standard of living is not too high), but not in the various markets by product categories ("meat and meat products", "fruit and vegetables", "dairy produce, eggs and edible oils and fats", "beverages", "sugar and chocolate and sugar confectionery", "tobacco products"), in this last case just a very small number of eu countries, both poorer and richer, registering significant connections between the correlated variables. references diaconescu, m. (2003), marketing agroalimentar, ediţia a ii-a revăzută, bucureşti, uranus publishing house. eurostat (2013), available on http://epp.eurostat.ec.europa.eu. harja e., ţimiraş l.c. (2009), metode statistice utilizate în cercetarea de marketing, bacau, alma mater publishing house. malhotra, n.k. (2004), marketing research an applied orientation. fourth edition, upper saddle river, new jersey, pearson education. 360 influences of the puchasing power change on the evolution of the agroalimetary markets on european union level ţimiraş, l., nichifor, b., zaiţ, l. (2012), particulars of demand for agricultural products in the domestic market, international conference risk in contemporary economy, 243-250. ţimiraş, l.c. (2007), evoluţia marketingului agroalimentar din românia, în contextul extinderii uniunii europene, bacau, edusoft publishing house. voineagu, v., lilea, e., goschin, z., vătui, m., boldeanu., d. (2002), statistică economică. teorie şi aplicaţii, bucureşti, tribuna economică publishing house. zahiu, l., dachin, a. (2001), politici agroalimentare comparate, bucureşti, economic publishing house. 361 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the audit of financial statements prepared by the beneficiaries of eu grant dănuţ rada drăgan european university of lugoj radanutdrd@yahoo.com doina rada “eftimie murgu” university of reşiţa doinarada@yahoo.com abstract the patrimonial economic entities public institutions or economic agents, beneficiaries of eu grants, are required to maintain separate accounts situations of the use of these financial resources and also to prepare financial statements in which to be reflected the fees occurred by implementing of projects. the audit of these financial statements is specific and is based on the provisions of international audit standards isrs 4400 “international standard for related services” and isae 3000 “international standard for certification measures”. in some cases, considering the request of the audit beneficiary, can be applied the provisions of isa 800, international audit standard “special considerations-audit of financial statements prepared in accordance with special purpose frameworks”. keywords patrimonial entities; grants; european union; audit; financial statements jel classification m42 1. european funds accessing, between needs and responsibilities currently, european funds represent an opportunity for romania, but at the same time, directly, they also represent an opportunity for businesses and public institutions, that can access, by the projects developed, significant amounts of money for development, modernization, structural changes and cooperation. in order to know and to use in the self-interest the european funds, it is necessary to be aware of the laws, values, operational tools, business opportunities and also economic and geostrategic lines of action. these funds are an expression of freedom and european democracy, based on cooperation and initiative in each country which wants to highlight their cultural values and economic initiatives, supported by the financial resources of the european economic community. for a better success it is necessary the knowledge of structural instruments implemented by several regional operational programs (seven in all), plus eight new programs of cooperation with other states. for this purpose, in romania, has been appointed the managing authority among the ministries, which deals with the program implementation at a territorial level, while, in addition to these, it also operates other intermediary bodies at a central or regional level, depending on the programs adopted. in collaboration with the european community, in order to coordinate national programs, it operates the authority for coordination of structural instruments (acis), an institution created in the interior of the ministry of finance. the total amount of structural and cohesion funds allocated to romania is 19.668 billion euros, of which 12.661 billion represent funds under the 'convergence' 205 rada, rada objective, 6.552 billion euro allocated to the cohesion fund and allocated 0.455 billion euro allocated for the objective of "european territorial cooperation" . to access these important financial resources made available by the european union, it was necessary to create a programmatic framework that includes a number of strategic documents for the implementation of structural and cohesion funds in romania. these are: the national development plan 2007-2013; the national strategic reference framework 2007-2013; operational programs; framework implementation documents. the necessity of these strategic documents was claimed by several factors: the need to systematize the multiple requirements of the romanian economy, to eliminate disparities and gaps to the european union; creation of a national strategy in order to absorb european funds; ensuring the most efficient use of these funds; ensuring transparency of the destination for european funds; establishment of a charge for those who access and use the european funds, establishing powers and responsibilities to ensure the integrity of european public funds and lack any possibility of fraud. the later objective also contains the organization of audit activity of expenditures regarding grant funding sources, obtained by applicants, which can be both public and private entities in romania. the audit activity, as an external financial control, made by an accountant, a member of a professional union, affiliated to the european accounting bodies comes to provide the assurance for the management authority of european projects that funding sources were used on the purposes determined by the project (legal), they are related to the implementation period and were used with maximum efficiency. 2. the eu requirements regarding auditing activity of european projects audit of the expenditures realized from sources of eu funding like any public funding, those with funding which comes from the european union funds, should be subjects of financial control to ensure their safety, efficient use and allocation according to established objectives. in addition to its own control of users of such resources, the sponsor (eu), by managing authorities of structural and cohesion programs requires that costs incurred to implement these projects to be checked (audited) by an external expert, independent member of the national professional body. requirements are formulated in terms of reference that are transmitted to the auditor and that record the documentation procedures agreed by the contracting authority to be applied in order to ascertain the quality of expenditures, to be incurred on the project (the reality), to be accurate (accuracy) and eligible. ethical requirements which need to be applied in carrying out the audit mission are, integrity, objectivity, professional competence, confidentiality and professional conduct. independence is not a requirement invoked by isrs 4400, but if it is affected, the situation will be referred in relation.audit engagement is based on the international standard of related services isrs 4400 commitment to perform agreed-upon procedures regarding financial information, as promulgated by the international federation of accountants (ifac). the ssris are addressed to missions related to financial information and allows the auditor to apply specific procedures agreed by the customer, in order to find some 206 the audit of financial statements prepared by the beneficiaries of eu grant facts that can be communicated through a report which in the case of the auditing eu funds, is called "report of factual findings". since this report only provides feedback on the quality of information in the financial statements of applicants for eu funded projects, it expresses no certification. procedures applied were determined solely by the contracting authority and serve it to assess whether the costs claimed in the financial report prepared by the beneficiary are eligible under the terms and conditions of the financing contract. financial situation over which goes the audit engagement is called claims for reimbursement of expenses (crc) or financial report. regardless of the name, this summary includes all costs incurred by the customer in order to achieve the project objectives. the mission of the auditor is to verify that the expenditure presented by the beneficiary refund application has been made in the interest of the project and that they are correct and payable. the object of an audit of the type in question is the auditor to perform specific procedures agreed by both sides, but, with the report prepared, the auditor does not express any assurance mission since it is not an audit (review). this report is strictly addressed only to those parties that have agreed to the procedures to be performed. since contracting audit work is not done by letter but by contract assignment under the provisions of the civil code, the auditor is unable to formulate in accordance with isrs 4400 audit requirements. the basis of the procedures to be applied are the terms of reference for an expenditure verification, emanate from the beneficiary and complying with auditing standards impugned by paragraph 12. audit mission planning will take into account both the provisions of isrs 4400 and the terms of reference, the role of planning is to streamline the mission, to order it so as expenses to be checked for the most part (materiality threshold being 60%). proper planning will help identify important areas of mission and treat them accordingly to the identifying potential problems with time management and organizational mission; also, adequate designating the tasks of the team members, coordination of work done by other practitioners and experts. at the beginning of the engagement, critical issues will be analyzed. for instance: terms of the mission; characteristics of the problem and identified criteria ; the mission and possible sources of evidence; understanding the entity and risk; identify users and their needs; analysis of materiality and risk assurance engagements; personnel and experience requirements; nature and the degree of involvement of the experts. documenting of the auditor will aim to obtain sufficient appropriate audit evidence and fair at the same time, able to support the auditor's opinion on the quality of information contained in the application for reimbursement or financial report. the practitioner (the auditor) will use professional judgment and he will use professional skepticism in the evaluation of the amount of evidence, quality of evidence, credibility of the information. obtaining a sufficient evidence is a systematic and iterative process that involves: obtaining an understanding of the problem, including the internal controls; assessment of the risk of distortion of information received; developing overall responses and determining the nature, timing and extent of procedures; 207 rada, rada appropriate risk-carrying procedures identified as for example, inspection, observation, computation, interviewing, testing the effectiveness of controls. documents to be checked by the auditors will be in all areas of accounting and financial records of the applicant and in this respect the terms of reference transmitted by the contracting authority to collect samples refer to: accounting books under l.82/1991, accounting law and subsequent amendments; the budget of the beneficiary into chapters, subchapters, paragraphs and titles; checking balances, both analytical and synthetic; cards account various operations; accounting notes; public procurement files developed in accordance to oug no.34/2006; contracts and order forms; invoices; statements of work and payment conditions; takeover process; bank statements and orders; contracts of employment concluded between the beneficiary and employees; times – sheets with the actual time worked on the project; payrolls. regarding the procedures to be applied both isrs 4400 and terms of reference, indicate two categories namely general procedures and analytical procedures. in the stage of appliance of the general procedures the auditor verifies that: the request for reimbursement is in accordance with the terms of the financing contract; the beneficiary shall keep accounting records for the project using different analytical accounts and accounting system is in accordance with national legislation it is possible to evaluate the efficiency and effectiveness of expenditures included in the request for reimbursement; information contained in the request for reimbursement is reconciled with the accounting and beneficiary records. in the second stage, of analytical procedures, the auditor performs a thorough check of expenditure categories in the request for reimbursement, analyzing if: categories of expenditures from the refund application correspond with the categories of expenses of the project budget; costs incurred correspond to those of the project budget; costs incurred are in accordance with the grant agreement; the total amount requested by the crc does not exceed the grant provided for in the grant agreement; budget provisions were modified by reallocation between budget lines of the same chapter and if they have undergone a memorandum to the contracting authority. sampling for an audit of eu funds is a very important issue given the diversity of activities for a project. after a preliminary risk assessment accompanying each category of expenses, the auditor will select those who are at a high risk. a special note for this type of audit is to check public procurement operations as required by the contracting authority issued terms of reference, which should be checked at 100%. feature of expenditure on projects with european funding, to be eligible, it is a prerequisite that these expenses be reimbursed by the contracting authority. checking the features (eligibility) costs begins with documentary evidence of 208 the audit of financial statements prepared by the beneficiaries of eu grant expenditure performance, or payment for the purchase made. such bills are reviewed in terms of quality of documents (form and substance), then the corresponding payment orders or other documents of equivalent probative value. the next step in this line (to verify eligibility) will be the highlight mode control in accounting transactions: transaction accounting note, registration card or register warehouse inventory numbers, drawing an acceptance report, preparing a bill for the commissioning etc. for an expense to be considered eligible for funding under the agreement, it must meet the following conditions: it needs to be designed and provided in the grant agreement; it needs to be made and paid by the beneficiary or his partners before the deadline for submission of the final reimbursement; it needs to be recorded in the accounts of beneficiary / partner based on evidence that can be identifiable and verifiable, and be original. an important issue arising from isrs 4400 and standard provisions of the terms of reference is to verify the accuracy and reality reflected in the request for reimbursement operations or the financial report. it is in this case to determine whether transactions / operations were recorded chronologically in the accounting system and the application for reimbursement and then systematically different analytical accounts of the project. it also verifies that expenditure for a transaction were correctly classified in chapter (section) cost of the project budget and have been used correctly currency exchange rates. to establish the reality of expenditures, the auditor uses the work procedures as following: verifying the receiving of goods delivered, in terms of indicating the place and date of receipt of registration and accounting management, specifying management and accounting note recording; verification of work performed and services rendered; verification of shipping documents (delivery note, invoice) notes the reception and operation. finally the auditor shall express its opinion on reality, legality and accuracy of transactions / operations carried out by project grant of the findings. the following assurance report shall refer to: significant limitations, inherent problems associated with the evaluation; identify the party responsible for producing the information contained in the audited financial statements; performing the mission according to international isae audit standards. in the report, the practitioner will record, the adequacy of communication as well with those charged with governance, on the relevant aspects of governance interest arising from the assurance engagement. the practitioner should obtain written statements from the responsible party, regarding authorship accountability for audited financial statements, the request for reimbursement and the expenditure. in case a written statement might be missing, the practitioner will be able to: draw a conclusion with reserves; declare the impossibility of expressing a conclusion because of the limited area in which the mission can be applied; includes a restriction on the use of the assurance report. the elements of the report of factual findings are the following: a) title: report of factual findings; 209 rada, rada b) the recipient (usually the client who engaged the auditor contracting authority); c) identify specific financial information on which procedures have been agreed; d) a statement that the procedures performed were those who agreed with the client; e) a statement that the mission was performed in accordance with international standard on related services; f) a statement of compliance with auditor independence although isrs 4400 – does not require it; g) identifying the purpose for which it was performed the procedures agreed; h) a statement that the procedures performed do not constitute either an audit or examination and therefore do not express any certification; i) a statement that the report is limited to those parties that have agreed procedures agreed; j) date of report; k) auditor's address; l) signature of the auditor. the report containing factual findings above items shall be prepared in duplicate and accompanied by a record receipt for the beneficiary. as can be seen from the articles, the task of auditing the expenditure for the eu grants is a reasonable assurance engagement, the objective of which is to reduce the mission’s risk to a level low enough to allow the auditor to obtain a basis for a positive form of expression of an opinion. references batude, d. l. (1997), audit conptabil et financier, editions nathan, paris. c.a.f.r. (2006), norme minimale de audit. c.e.c.c.a.r. (2007), manualul privind standardele internaţionale de audit, certificare şi etică, bucharest. law no. 82/1991, with subsequent amendments (ro). munteanu, v. (coord.) (2003), control şi audit financiar contabil, lumina lex publishing house, bucharest. o.m.f.p. 3055/2009 for the application of accounting regulations in accordance with the accounting directives, with amendments and supplements (ro). o.u.g. 34/2006 on public procurement, with amendments and supplements (ro). peres, i., bunget, o., peres, c. (2006), audit financiar contabil, mirton publishing house, timişoara. rada, d. (2009), auditul situaţiilor financiare anuale. teorie şi practică, mirton publishing house, timişoara. 210 microsoft word apostoaie constantin marius_eng.doc social responsibility at the academic level. study case: the university of bucharest paul marinescu, university of bucharest, romania sorin-george toma, university of bucharest, romania ionuţ constantin, university of bucharest, romania abstract in the last decades the corporate social responsibility (csr) has been a major subject both for universities, civil society and businesses. although the csr concept is especially promoted by large multinational and transnational corporations, it has become also a prominent issue for universities. social responsibility represents more than a challenge for universities. it has to be a purpose of the universities, taking into account that young people formation also means creating a high level of awareness about the need to involve members of society in solving social problems. our paper contributes for better clarifying the csr concept and presents as a study case some of initiatives of the university of bucharest related to the social responsibility. keywords corporate social responsibility, university, social responsibility, team work association, university of bucharest, faculty of administration and business jel codes: m 14, i 21 introduction a global phenomenon, the corporate social responsibility (csr) aims to solve economic, social and environmental problems in order to increase both the benefits for society and for the companies. on the other hand, the csr aims to educate people to become fully engaged actors in the change of society they live. education in general and higher education in particular, teaches people how to respond to the postmodern society challenges abiding by legal constraints and ethical principles, how to accomplish tasks to society and how to be responsible global citizens. helping people become more socially responsible represents an essential objective for today’s universities (giancalone, thompson, 2006). in this respect every student’s/graduate’s attitude has to be centered on the ultimate goal of acting only with complete social responsibility (sawasdikosol, 2009). as the universities have become more socially engaged their role in society has fundamentally changed. they accept “their public responsibility for promoting social equity and an inclusive society” (eua, 2007, p. 2). the paper contributes for better clarifying the csr concept and presents as a study case some of initiatives of the university of bucharest related to social responsibility. our paper is structured as follows: in the first section, we analyse the csr concept and its relationship with businesses and universities. in the second section we show how the team work association and the scientific circle “business, ethics and social responsibility” have implemented social responsibility projects within the university of bucharest and in partnership with other institutions. finally some conclusions are presented. studies and scientific researches economic edition, no. 15, 2010 404 from the social responsibility of corporations to the social responsibility of universities in the last decades the csr has become a major subject both for universities, civil society and businesses. corporate sustainability, corporate citizenship and socially responsible behaviour are other terms which have been used more or less as synonyms in the literature. since the end of the second world war, academics and practitioners have tried to establish an agreed-upon definition of the csr concept. in the last decade these definitions have pointed out that csr is a global concept (table 1). table 1definitions of csr no. author, year definition 1. kotler p., lee n. (2005) csr is “a commitment to improve community wellbeing through discretionary business practices and contributions of corporate resources”. 2. world business council for sustainable development (2004) csr describes “business’ commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life”. 3. mcwilliams a., siegel d. (2001) csr is “a set of actions that appear to further some social good, beyond the interests of the firm and that which is requiring by law”. 4. european commissiongreen paper (2001) csr is “a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment”. 5. dessler g. (2001) csr refers to the extent to which companies should and do channel resources toward improving one or more segments of society other than the firm’s own stockholders. the above mentioned definitions show that they are to a large degree congruent. in essence the csr: • constitutes an inclusive concept, embracing the entire spectrum of socially and environmentally beneficial activities of businesses; • is an eclectic and multidisciplinary field broadly focused (carroll, 1994); • combines the contribution to economic prosperity with environmental quality and social capital; • honors ethical values and respects people, communities, and the natural environment (white, 2006); • represents an interactive and continuous improvement process, including internal (e.g. employees) and external (e.g. shareholders) stakeholders; • imposes the company to behave not only efficiently, but also environmentally and socially responsible; • is treated rather as an investment, not a cost, and is linked to profitability; • comprises four components (carroll, 1991): economic, legal, ethical and philanthropic (figure 1). studies and scientific researches economic edition, no. 15, 2010 405 figure 1the four components of csr the csr concept is important in the business world because consumers want to buy products and/or services form companies they trust. therefore, csr represents today a crucial element to maintaining success in business. due to several factors as globalization, changing social expectations or increasing affluence, more and more organizations are interested in social responsibility. although the csr is especially promoted by large multinational and transnational corporations, it has become also a prominent issue for universities. there are several reasons that explain the application of csr towards universities as follows: universities are the main contributors for the formation of forthcoming employees both in public and private companies; universities play a major educational and research role within the communities in which companies operate; universities help people to find a balance between their personal needs and wants and those of the society; as the higher education market changes, building deeper strategic relationships with their stakeholders (e.g. the students, the employers, the state, the society etc.) has become central to the competitiveness of universities; universities contribute to regional lifelong learning and employability; the corporate involvement in universities has increased due to the broader marketization of higher education services; the rising of the collective awareness of students and professors creates the need for implementing initiatives related to csr; universities are called to play an important role in meeting the environmental challenges by integrating the sustainability concept in the curricula etc. all these emphasize that by their contribution to the prosperity of the society universities have an increasing social responsibility. this is why universities play a critical role in creating responsible global citizens in the postmodern world. in this respect the university of bucharest represents a valuable example. the four components of csr philanthropic responsibilities“be a good corporate citizen” legal responsibilities “obey the law” economic responsibilities“be profitable” ethical responsibilities“be ethical” studies and scientific researches economic edition, no. 15, 2010 406 the social responsibility of a romanian university. study case: university of bucharest social responsibility in academic environment represents more than a challenge. it must become a purpose of the academic environment, taking into account that young people formation also means creating a high level of awareness about the need to involve members of society in solving social problems. identifying these problems and their resolution means attitude, effort and competence. the creation of this state may be in an organized setting in which students, teachers and practitioners can find solutions to serious social problems existing in society. in this paper we consider the presentation of two initiatives at the university of bucharest, in which students actively participate in solving specific problems of disadvantaged social groups. these initiatives have been translated into the achievement of a scientific circle and a professional association team work. because on the university level we cannot separate the quality of a process from the moral actions through which it materializes, it was created the scientific circle "business, ethics and social responsibility" of the faculty of administration and business (faa), which contains two directions of development. within the business component it was founded a business incubator through the ideas of students, teachers and researchers can become businesses after a process of evaluation of their usefulness. market research will demonstrate if the selected idea can become a product or service attractive for the market. if it is possible that the idea will materialize it appears the necessity of registering this idea at osim to become a trademark. we can speak of a laborious process in which we use the concepts of management, marketing, public relations, advertising, entrepreneurship, organizational and individual behavior, sociology, communication, commercial law. in this coherent mixture of research are involved specialists from the domains above mentioned so the result will be of great accuracy. in achieving this scientific circle we start from the principle that successful businesses mean morality, but also social involvement. therefore, the other components of the system created in the framework of scientific circle refer to ethics and social responsibility. "doing the right thing" becomes a way of action in the businesses but also within the social actions. we cannot separate this kind of sets of values which we apply in the two areas. ethics and morality are thus normal components of a common operating model in business but also in the social involvement. in october 2009, the faa, university of bucharest and the school of arts and crafts (sam) no. 3 bucharest had become partners in the national project "we are not indifferent, we are your friends", which runs from 2009-2013. sam no. 3 is a special school, where more than 600 poor youth with disabilities aged between 14-22 years study. among the objectives of the project it counts: • to provide help to the pupils from sam no.3; • to carry out pedagogical activities by the students of faa for the pupils of sam no. 3; • to participate in social and sport activities etc.. in december 2009, university teachers and students donated 42 food packages, each worth 100 lei, during the christmas holidays. at the end of march 2010, teachers and university students participated in the commissions of the contest organized by sam no. 3. on this occasion they again donated 46 food packages, each worth more than 85 lei. this national project has become part of the activities that have been developed within the scientific circle "business, ethics and social responsibility." in the age of globalization it emerges a close relationship between companies, communities, and local, national and international institutions. university becomes a bridge between these entities. from the perspective of the ethical principles creating a complex of behavior skills, values and beliefs about what is and what is not morally correct is the mission of education. this is why ethics and social responsibility can be an answer to the challenges that are rising from the current economic crisis. activities of the scientific circle and the association have studies and scientific researches economic edition, no. 15, 2010 407 shown us that among the major causes of the current crisis, we mention the lack of ethics in business firms and non-involvement in social action. since 2002, the team work association has developed its actions within the university of bucharest. it appreciates basic values as professionalism, teamwork and volunteerism. the objectives of the association are to: • promote among students a positive attitude towards volunteering and teamwork; • familiarize students with diverse organizational environments by carrying out projects; • valuate the theoretical knowledge of students. team work is based on the organizing principle of a company, comprising departments coordinated and composed of students, each one with its own projects in progress: human resourcescommunicationresearchinternational relationstrainingteam work school. the association's mission is to enable students to gain through volunteering, the experience needed effective employment in the labor market, offering students the opportunity to put into practice the theory taught in college. in all projects we have in our view to respect the basic principles of business ethics and social responsibility. permanent consultation among the association members, guidance through mentoring, support through tutorials help to maximize the potential of each student. the facilitation of a participatory and active training contributes to support students in presenting problems, solving projects, and changing mentalities. projects, debates, team work are ways to stimulate interest for real problems and to generate the needed competences to solve them. within the association there is an existential path: to know – to do – to be. in the framework of events realized in 2009 more than 4,000 young persons had participated. in the school team work department, which has the motto “to form us by forming the others”, students develop activities to help children from poor families or children without families. their skills (mathematics, romanian language, informatics, foreign languages etc.) are important elements in children's education. this is why the action is a way to take responsibility, but also for assessing the values of ethics and social responsibility. the development of youth, extensive training programs and partnerships are so many opportunities to check virtues that social responsibility in finding real solutions for the social groups. the partnership with day care centers and orphanages allow team work association to address several students and a greater number of children. through team work school students have the opportunity to share their knowledge of young children from families with financial and social situations more difficult. thus, the association becomes a laboratory in which are built new partnerships, where are clearly define and apply principles of ethics and social responsibility in economic, academic, and social activities. setting up branches in cluj-napoca and craiova and developing projects in these centers are important objectives of the team work association. the activities carried out under the "the botanic garden – the garden of my town" program have involved more than 800 students. the projects of the program have facilitated the acquiring of essential skills in human relationships by the students involved. the environmental issues, the problems related to organization, the best use of resources imposed to find solutions at the project teams’ level. the leadership proved to be the essential element in completing the projects coordinated by team work. thus, the team work members learned how to run a system (project / team / organization). within the department open amphitheatre were held meetings with representatives of business environment, personalities of cultural life, and participants to social projects. all these experiences have shown that participants' involvement is an essential spring social activities. youth exchanges, summer schools organized for and with youth are funded by international programs. this project enables the possibility of young people to think economically. writing and submitting projects, obtaining financing and implementation of a project are activities made by several students’ project teams. studies and scientific researches economic edition, no. 15, 2010 408 non-formal education is focused mainly on soft-skills development within training programs. the objectives of the development of these trainings are to increase students' professional potential in order to provide them employment opportunities in the labor market. companies define another image on the graduates and can actively contribute to their training before embarking. the national and international summer schools have contributed to the development of projects and activities that facilitate development of interpersonal and communication skills essential in running all programs of the association. the partnerships with companies and non-governmental organizations facilitated the creation of needed competences in the business field. research activities carried out within the research department provided answers about the educational needs of young people and suggested courses of action on integrating them into practical activities. the projects carried out within departments have pitted academic and business environments so that students, teachers and business people can build a positive relationship for both academic and business environment. social responsibility has become a way of action in which participants can be involved in social projects. from this inter-human relationships system the firm as an economic engine cannot be absent. thus, we can say that the amounts allocated for social activities can educate groups about the initiative and action required as essential factors in achieving organizational performance. the two initiatives at the university of bucharest (the scientific circle "business, ethics and social responsibility" and team work association), demonstrate that only through active involvement of major stakeholders (e.g. students, teachers, researchers, businessmen, nongovernmental organizations) the spirit of social responsibility can live in each event. conclusions starting from the second half of the 20th century many debates and discussion about csr have been taking place. in the last decades the csr has become a global concept that embraces multiple stakeholders or partners of organizations (e.g. the employees, the environment, the society). this is why there is a generalized recognition of the importance of csr in the postmodern society. the changing dynamic of the relationships among companies, universities and society emphasizes the need for a strong partnership among these main actors. as business cannot succeed in failing societies so do universities. being more aware about the impact that they have upon the society within they are located the universities have fully understood the importance of their social responsibility. references 1. carroll a. b. (1994), the pyramid of corporate social responsibility: toward the moral management of organizational stakeholders, business horizons, july/august 1991 2. carroll a. b.(1994), social issues in management research: expert’ views, analysis, and commentary, business society, vol. 33(5), pp. 39-48 3. dessler g. (2001), management: leading people and organizations in the 21st century, new jersey: prentice hall, second edition 4. european communitiesgreen paper (2001), promoting a european framework for corporate social responsibility, http://ec.europa.eu/employment_social/soc-dial/csr/greenpaper_en.pdf 5. european university association, the lisbon declaration europe’s universities beyond 2010: diversity with a common purpose, 2007, http://www.eau.be 6. giancalone r. a., thompson k. r.(2006), business ethics and social responsibility education: shifting the worldview, academy of management learning & education, 2006, vol. 5, no. 3, pp. 266-277 studies and scientific researches economic edition, no. 15, 2010 409 7. kotler p., lee n. (2005), corporate social responsibility: doing the most good for your company and your cause, new jersey: john wiley & sons 8. mcwilliams a., siegel d. (2001), corporate social responsibility: a theory of the firm perspective, academy of management review, vol. 26(1), pp. 117-127 9. sawasdikosol s. (2009), driving universities’ collaboration toward the new era of sustainable social responsibility, http://www.usralliance.org 10. white a. l. (2006), business brief: intangibles and csr, business for social responsibility, february 2006, http://www.bsr.org 11. world business council for sustainable development (2004), corporate social responsibility, http://www.wbcsd.ch/templates/templatewbcsd studies and scientific researches economic edition, no. 15, 2010 410 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro equality of opportunity between men and women on the labour market – the gender pay gap within the eu member states oana ancuţa stângaciu “vasile alecsandri” university of bacău anca_stangaciu@yahoo.com abstract the actions taken for the promotion of the equality of opportunity between men and women and for eliminating the direct or the indirect discrimination apply to the field of employment as well as to the field of education, health, culture, information and the participation in the decision making process. starting from one of the objectives of the strategy for the equality of opportunity, being aware of the real situation of women participation compared to men participation to the economical and social life, this analysis offers a perspective on the equality of opportunity between men and women in the field of employment, seen based on the statistical data. thus, in order to quantify this phenomenon using methods specific to the statistical analysis, we used the gender pay gap indicator pertaining to the eu member states per total economy, as well as per economical activities, and the research results show that on the eu level there are still significant gender pay gaps. keywords gender pay gap; earnings; nace rev.2. – statistical classification of economic activity jel classification c16; e24; j70 1. introduction most of the times, in equal work conditions the salaries of men and women are the same; however, the inertia of tradition and the degree of difficulty concerning the physical or intellectual load required in performing certain jobs lead in fact to discrepancies between the earnings of women and men, on the level of all the eu member states as well as by economical activities. 2. methodology in assessing the gender pay gap, we used the unadjusted gender pay gap (gpg) indicator. according to the eurostat methodology, the gpg represents the difference between average gross hourly earnings of male paid employees and of female paid employees as a percentage of average gross hourly earnings of male paid employees. the data are broken down by economic activity classification nace rev. 2 from reference year 2008; that is the reason why the analysis of activities for the gender gaps was performed starting in 2008. the gpg is calculated at member states and eu level, by aggregation to the total level of nace rev. 2. (except for public administration, defence, compulsory social security) using the arithmetic mean (eurostat). we must mention the fact that for the period of time subjected to the analysis there is no data available on national level pertaining to the gpg values for greece, and consequently this country was excluded from this study; in the case of ireland, data is missing for the year 2011, and for italy and latvia the data are not broken down by activities for 2008 (in order to ensure the continuity of this analysis, 95 stângaciu instead of the missing data we took into consideration the data existing for 2010), while for austria the distribution per activities nace rev. 2 is available only for 2010. 3. gender pay gap in the eu member states in 2011, on the level of the european union (ue-27) men had gross hourly earnings 16,2% higher than women, decreasing by 1,5 percentage points compared to 2006 when there was a gap of 17,7%. according to figure 1, we can notice that this decreasing trend existing on the level of the european union pertaining to gender pay gap between 2006-2011 can be seen in most of the states except for malta, where the gpg increases by 7,7 percentage points the highest increase registered on eu-27 level -, romania, portugal, hungary (in these countries, the increase is around 4 percentage points) and in italy, belgium, bulgaria, where there is an increase below 1,5 percentage points. the most accentuated decrease of the gender pay gap on eu-27 level was registered in slovenia, netherlands, cyprus, slovakia and lithuania (a decrease of over 5 percentage points), while the lowest values, under 1 percentage point, were recorded in france, sweden and germany. on territorial profile, on the level of the eu member states there are significant gender pay gaps is 2011 existing gaps of over 22,0%, much above the eu average, in countries such as germany, austria and estonia, as well as very slight gaps, under 6,0% in slovenia, poland and italy. on this ranking list, romania is on the 7th place out of 26, with a gender pay gap of 12,1%, value situated below the eu-27 average, romania being among the countries in which there are no significant gender pay gaps. 2, 3 4, 5 5 ,8 8, 7 1 0, 2 11 ,9 12 ,1 12 ,5 12 ,9 13 1 3, 6 13 ,9 14 ,7 15 ,8 16 ,2 16 ,2 16 ,4 16 ,4 17 ,9 18 1 8, 2 20 ,1 20 ,5 21 22 ,2 23 ,7 27 ,3 0 5 10 15 20 25 30 s lo ve ni a p ol an d ita ly lu xe m bo ur g b el gi um li th ua ni a r om an ia p or tu ga l m al ta b ul ga ria la tv ia ir el an d f ra nc e s w ed en e u 2 7 s pa in d en m ar k c yp ru s n et he rla nd s h un ga ry f in la nd u ni te d k in gd om s lo va ki a c ze ch r ep ub lic g er m an y a us tr ia e st on ia % 2006 2008 2011 figure 1 gender pay gap in the european union member states (eu-27) in 2006, 2008 and 2011 source: processing of the data collected from eurostat analyzing figure 2 and comparing the histograms concerning the gender pay gap in 2006 and 2011 on territorial profile, we can notice that on the level of the eu member states there is an increasing trend in the degree of sequence symmetry, respectively the migration of the pay gap towards the average values. in other words, the states which at the beginning of this period had low gpg values now have higher values of this indicator and the other way around, in the countries in which the pay gaps were great, there was a decrease during the last 5 years. as to the evolution of romania, we can state that our country is one of the countries which migrated towards a higher 96 equality of opportunity between men and women on the labour market – the gender pay gap within the eu member states interval (while in 2006 romania was among the 6 countries situated between 5,010,0, in 2011 our country is listed in the following group, 10,0-15,0, the group with the highest frequency). we can also notice in the boxplots included in fig.2 that the absolute amplitude of the sequence decreases, which means that the differences on territorial profile between the member states are lower and lower, leading to a certain convergence, and that slovenia does not conform to the other states, having a very low gender pay gap. figure 2 the histogram and the boxplot for gender pay gap in the member states ue-27 in 2006, 2008 and 2011 source: processing of the data collected from eurostat 4. gender pay gap by economic activity in eu member states the evolution of the gpg by economic activity in the eu member states (fig.3) shows that during the last 3 years there were great gender pay gaps in different activities of the national economy. thus, as we can see in fig. 3 and 4, while in 2008 in 6 (slovenia, portugal, ireland, hungary, bulgaria and italy) out of the 7 states in which the construction activity offered women higher earnings than men (up to 24,1%) this activity was an outliner of the gpg distribution by activities (fig.4), in 2011 only 2 out of the 6 countries listed above (slovenia and portugal) maintained a high pay gap, marking a discrepancy compared to the other activities, while in france and romania the gender pay gap in constructions increased even more compared to the other economic sections. other activities in which women earned more than men (up to 27,5% in 2011) were mining and quarrying (-18,2% in hungary in 2011); water supply; sewerage, waste management and remediation activities (-12,2% in france in 2011) and administrative and support service activities. in romania, although the gpg in constructions increased from -10,9% in 2008 to -17,1% in 2011, this activity is at present the second outliner of the romanian economy, since there was a higher pay gap in another economic activity: administrative and support service activities – the women who work in this field earned 27,5% more than the men. we can also notice the fact that these 2 economic activities are the only ones in which women have earned more than men. 97 stângaciu belgium -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 bulgaria -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 czech republic -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 denmark -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 germany -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 estonia -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 ireland -20 -10 0 10 20 30 40 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2010 2008 spain -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 france -20 -10 0 10 20 30 40 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 italy -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2010 cyprus -20 -10 0 10 20 30 40 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 latvia -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2010 lithuania -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 luxembourg -20 -10 0 10 20 30 40 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 hungary -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 malta -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 netherlands -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 austria -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2010 poland -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 portugal -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 romania -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 slovenia -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 slovakia -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 finland -20 -10 0 10 20 30 40 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 sweden -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 united kingdom -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2011 2008 legend: 1 mining 10 financial activities 2 manufacturing 11 real estate activities 3 electricity, gas 12 professional activities 4 water supply 13 administrative activ 5 construction 14 public administration 6 retail trade 15 education 7 transportation 16 human health 8 accommodation 17 arts, entertainment 9 communication 18 other service activ. figure 3 evolution of the gpg by economic activities for the ue-27 source: processing of the data collected from eurostat 98 equality of opportunity between men and women on the labour market – the gender pay gap within the eu member states as to the positive values of the gpg, the situation in which men earn more than women, the highest values among the eu member states are recorded mainly in financial and insurance activities. while in 2008, in 11 out of the 26 countries subjected to this analysis, this activity had the greatest pay gaps, and in 3 of them (hungary, sweden and france) this field was even an outliner, in 2011 romania was added to the 11 countries; however, the great pay gaps which are in contrast with the other activities of the national economy are recorded this time in the united kingdom, finland and sweden (fig.4). other activities in which men earned much more than women (up to 57,0% in 2011) were arts, entertainment and recreation (in portugal in 2011); electricity, gas, steam and air conditioning supply (in the netherlands) and other service activities. in romania the trend existing on the level of the other eu member states was maintained, even though in 2008 the highest value of the gpg was registered in administrative and support service activities (25,8%), in 2011, since in the case of this activity there was a significant decrease, the men working in financial and insurance activities earned 25,8% more than the women. 2008 2011 figure 4 boxplot for gpg on each of the ue-27 member states according to the distribution per activities source: processing of the data collected from eurostat speaking of the gpg discrepancies among the activities of the national economy on the level of the eu member states, we can notice the fact that the netherlands stands out due to a high homogeneity of the sequence, which means that the gender pay gaps among the economic activities are very low (up to 17,5 percentage points in 2011, if we exclude the highest value which shows discrepancy with the sequence – 48,3% in electricity, gas, steam and air conditioning supply). the same high homogeneity of the sequence can be seen in the countries in which there are the lowest discrepancies among the economical activities (determined by the absolute difference between the highest and the lowest value of the gpg) in 2008 as well as in 2011: denmark (up to 20,5 and 16,3 percentage points respectively) and spain (with 21,5 and 21,3 percentage points respectively), while in the countries in which the absolute amplitude of the sequence has high values we can notice a high heterogeneity of the sequence, with great differences from one activity to another: portugal (up to 70,0 and 99 stângaciu 78,8 percentage points respectively), slovenia (up to 60,5 and 53,7 percentage points respectively) and hungary (up to 49,5 and 55,4 percentage points respectively). 5. conclusion the principle of equal payment for men and women for an equivalent amount of work is written in the eu treaties; however, the reality is that there are gender pay gaps on the level of the eu member states and among them (arulampalam w et al, 2007). even though in all the countries subjected to this analysis men earned more than women, this situation improved during the last 6 years, a slight convergence of the pay gap occurring among the eu member states. one of the causes for the pay gap is the segregation of the labour market, since women and men still tend to work mainly in certain economic fields, so that most activities in which women earned more than men (e.g.: construction, mining and quarrying, water supply; sewerage, waste management and remediation activities) are in fact fields in which men employees are dominant, women employees having very low total percentage and having, in general, administrative duties in companies, while in financial and insurance activities, where the percentage of women employees is quite high, the greatest pay gaps were registered in favour of men. on territorial profile, the gender gaps also reflect other types of inequities on the labour market specific to each particular economy (blau f & kahn l, 2003), so that in countries such as the netherlands, denmark and spain, where there is a certain social and economical stability, there are low discrepancies among the economic activities, while in slovenia, hungary as well as in romania (former communist states) the adaptation of the economy to the eu space still causes great pay gaps among different activities (newell a & reilly b, 2001). references arulampalam, w, booth, a, bryan, m (2007), is there a glass ceiling over europe? exploring the gender pay gap across the wage distribution, industrial and labor relations review, cornell university, 60(2), 163-186. blau, f, kahn, l (2003), understanding international differences in the gender pay gap, journal of labor economics, university of chicago press, 21(1), 106144. newell, a, reilly, b (2001), the gender pay gap in the transition from communism: some empirical evidence, economic systems, elsevier, vol. 25(4), pp 287-304 harja, e, stângaciu, oa (2009), analiza datelor statistice folosind spss, bacău, editura alma mater. eurostat – gender pay gap statistics available on http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/gender_pay_ga p_statistics . 100 microsoft word apostoaie constantin marius_eng.doc the financial behavior of the banking services’ consumers regarding the creditcontracting for the crisis-period in romania laura olteanu, universitatea babes-bolyai, cluj-napoca, romania izabella krajnik, universitatea babes-bolyai, cluj-napoca, romania abstract the knowledge of costumer behavior can be interpreted as a provocation in the current economical conditions, however in conditions of crisis it becomes of vital importance. consumer behavior is influenced by a series of factors. in the present conditions of economic-crisis, the consumers’ financial behavior regarding the banking services is strongly influenced by the economic environment. the psychological factor makes itself known, and consumers become more attentive with their financial resources, those owned or attracted. keywords credits, overdue debts, credits in ron and currency, tendency, crisis-periods, influential factors, cash jel codes: m 31 in an economic market the banking system fulfills the functions to attract and that of the concentration of the society’s economies and its channelization, through an objective and impartial processing of allocation of credits, towards the most efficient investments available. in the fulfillment of these functions, the banks, by providing the basic links of the system, pursue the methods in which the debtors manage their credited resources. banks assure and facilitate the effectuation of those payments, offer their risk-management services and represent the main channel of transmission in the implementation of monetary policies. by means of the acquisition of financial resources, simultaneously with their placement on the market by means of credits, the operations’ discount and that of other opportunities on the financial market, banks play the role of intermediate agents between stockholders and its users. by prosecuting this diversity of operations, banks operate in their name, on their own, the debtors and creditors having none of those related rights among them. banks manage deposits and the resources of payment from the economy; collecting deposits, banks have the responsibility of their efficient management with a maximum of efficaciousness, in their own benefit and that of the depositors. in present, banks offer a wide range of financial services. banking activities are based on two main aspects, that of attracting resources from the exterior/outside or on the other hand, offering financial resources. the price that the bank is paying to attract resources must be less than the price of the financial resources on-offer. in this sense the rate of interest for the filing of deposits gets lower than the rate of interest levied by the bank for the credits. the financial behavior of the banking services’ consumers regarding the credits’ contracted for the crisis-period in romania, offers an image of the dynamics of credits in ron and other currencies contracted by the population, but also by the economic agents in the period of 2007-2009. moreover it accentuates the modifications, which occurred in regards of current credits and back interests, and also for those types of credit that were contracted by studies and scientific researches economic edition, no. 15, 2010 421 individuals and legal entities. the final conclusions obtained from the analysis are the results of a desk research. credits are negotiable banking instruments.1 banks lend for their clients sums of money for the financing of their businesses.2 banks offer credits for individuals, but also for legal entities. credits offered for individuals can have a great variety of application. to procure a loan, the solicitant has to file an application for credit. the creditor, according to the interests and possibilities, can reject the application for credit or gets on with the evaluation of the potential client. the main provisions regarding the specifics of a credit’s contract are: destination of the credit, the volume of the credit, the period of lending, the form of credit, rates and costs, the coverage for resources, time limits, indemnification, other elements (provisions). all of the above mentioned elements are enclosed within a contract. for individuals, banks offer credits for diverse applications: credits for vacation land purchase real estate purchase, vacation homes purchase of durable goods auto vehicle purchase other destinations credits can be lent in ron and other currencies. banks lend credits due to the fact that these represent the main source of income. in this sense banks are interested in offering credits, but have to take a strict evidence of their baleful clients. table no. 1 the evolution of current credits and overdue debts in ron for the period of 2007-2009 ron dec 2007 dec 2008 dec 2009 credits ron 67 800 198 434,77 83 746 142 914,49 79 787 539 998,27 current 67 038 054 772,55 81 934 048 636,53 75 444 725 505,52 overdue debts 762 143 665,36 1 812 094 278,14 4 342 814 491,41 source – www.bnr.ro credits in ron registered an increase for the analyzed period, from 67 800 198 434,77 ron in 2007 to 79 787 539 998, 27 ron in 2009, representing an increase of 17,68% in 2009 in regard to 2007. within the precincts of credits in ron it can be observed that although current credits/loans have registered an increase for the entire period, as a ponderosity in total of credits in ron calculated for each year registered a decrease of those in company with default credits of which ponderosity has registered meaningful increases. thereby overdue debts registered in 2007 a ponderosity of 1,12 % of total of credits in ron, in 2008 this ponderosity has increased to 2,16%, as in 2009 to 5, 44%. 1 dardac nicolae, basno cezar, operaţiuni bancare. operaţiuni şi tehnici de plată, 1996, editura didactică şi pedagogică, bucureşti, pg. 140 2 ionescu lucian (coordonator), fundamentele profesiunii bancare. băncile şi operaţiunile bancare, 1996, ed. economică, bucureşti, pg. 210 studies and scientific researches economic edition, no. 15, 2010 422 graphic no. 1 source – www.bnr.ro it can be found that at the end of year 2008, the value of contracted credits has been bigger than at the end of year 2009, but concerning the analyzed period, increases can be highlighted for all analyzed categories of credits. regarding the ponderosity of credits lent for every year in part, on total value of credits, individuals have moderated their upsurge to credit contracts. as in 2007 individual consumers held 49,52 % from the total of loans credited, in 2009 the value of those was reduced to 48,65 %. for the analyzed period, the value of credits contracted by individuals registered an increase of 15,61%, and the value of contracted credits by legal entities registered an increase of 20,35 %. table no. 2 the evolution of credits lent in ron for the period of 2007-2009 ron dec 2007 dec 2008 dec 2009 credits in ron 67 800 198 434,77 83 746 142 914,49 79 787 539 998,27 economic agents 32 597 434 201,35 40 967 023 648,72 39 232 528 620,79 population, of which: 33 573 657 459,45 40 940 105 712,03 38 815 780 449,48 consumer 31 283 859 162,54 37 897 327 162,23 36 046 162 271,55 real estates 1 463 981 011,30 1 647 989 725,66 1 705 225 222,04 other applications 326 413 007,50 684 646 905,73 383 503 216,49 other 1 629 106 774,39 1 839 013 551,75 1 739 230 927,28 source – www.bnr.ro analyzing the situation for credits lent to the population it can be determined that individuals have been inclined especially towards consumer credits and have been less interested of those destined for purchasing real estates. though consumer credits detain out of the total credits lent to the population over 90% in each year from the analyzed period, as for the credits for real estate purchases is situated below 5%, consumer credits lent in ron to individuals have registered an increase of 15,22% for the analyzed period, while those destined for real estates registered an increase of 16,47%. table no. 3 the evolution of credits lent in ron for the period of 2007-2009 % ron dec 2007 dec 2008 dec 2009 credits in ron 100 100 100 economic agents 48,08 48,92 49,17 population, of which: 49,52 48,88 48,65 98,86 1,12 97,83 2,16 94,55 5,44 0 20 40 60 80 100 2007 2008 2009 the evolution of current credits and overdue debts in ron for the period of 2007-2009 current overdue studies and scientific researches economic edition, no. 15, 2010 423 consumer 93,18 92,57 92,86 real estates 4,36 4,02 4,39 other applications 0,97 1,67 0,99 other 2,40 2,19 2,18 graphic no. 2 source – www.bnr.ro granted credits in currencies have registered bigger values as those in ron, which reflects the consumers’ preference toward other monetary units over that of the national ones. credits granted in ron have registered bigger values at the end of year 2008, and in 2009 although their value had a decreasing tendency; it was situated above the registered value at the end of year 2007. credits in currencies have registered an increasing tendency for the analyzed period, thereby in 2009 they registered an increase of 49,06 % in 2009 in regard to 2007 and an increase of 5,26 % in regard to 2008. it can be observed that the rate-of-rise was a lot bigger in 2008 in regard to 2007, of 43,80 %, than in the second part of the analyzed period. as for the default credits in other currencies it can be said that as ponderosity they have increased in every year analyzed. if in 2007 they detained a ponderosity of 0,40% of total credits in other currencies, in 2009 this ponderosity has increased to 2,86%. table no. 4. the evolution of current credits and overdue debts in currency for the period of 2007-2009 ron dec 2007 dec 2008 dec 2009 credits in currency 81 461 466 302,82 115 360 662 075,02 121 423 852 981,49 current 81 131 240 341,80 114 372 241 380,10 117 949 550 392,62 overdue debts 330 225 957,95 988 420 694,74 3 474 302 588,66 source – www.bnr.ro regarding the evolution in the analyzed period, the increase is extremely high, therefore overdue debts in other currencies have increased from 330 225957,95 in 2007, to 3 474 302 588,66 in 2009. the rate-of-rise for the overdue debts values has been bigger in 2009 in regard to 2008, compared to the previous period. 0 10 20 30 40 50 60 70 80 90 100 2007 2008 2009 the structure of credits in ron for the population in the period of 2007-2009 population, of which: consumer real estate other applications studies and scientific researches economic edition, no. 15, 2010 424 table no. 5 the evolution of current credits and overdue debts in currency for the period of 2007-2009 % ron dec 2007 dec 2008 dec 2009 credits in currency 100 100 100 current 99,59 99,14 97,13 overdue debts 0,40 0,85 2,86 credits granted in currency have registered an increase for the analyzed period not only for individuals, but also for legal entities. the rate-of-rise has been bigger in the first part of the period, therefore credits destined for legal entities have registered an increase of 32,73 % in 2008 in regard to 2007, and an increase of 6,64% in 2009 in regard to 2008. regarding individuals the tendency has remained the same, thus in 2008 in regard to 2007 the growth has been of 53,64%, and in 2009 in regard to 2008 the growth has been of 5,37%. table no. 6 the evolution of credits in currency for the period of 2007-2009 ron dec 2007 dec 2008 dec 2009 credits in currency 81 461 466 302,82 115 360 662 075,02 121 423 852 981,49 economic agents 40 777 915 333,56 54 127 863 274,08 57 725 183 378,23 population, of which: 38 126 333 332,95 58 577 508 116,30 61 725 254 654,47 consumer 23 955 156 808,80 35 977 804 517,76 36 977 831 260,92 real estate 12 782 621 978,92 19 342 714 838,70 22 622 922 261,30 other applications 1 191 104 854,94 2 892 165 660,09 1 724 791 352,91 source – www.bnr.ro concerning the ponderosity for different types of credits granted in currency for every year in part, consumer credits detain the highest ponderosity, being followed closely by credits for real estate purchases. compared to the credits granted in ron, the population opted mostly toward the credits in currency destined for the real estate purchases. table no. 7 the evolution of credits in currency for the period of 2007-2009 % ron dec 2007 dec 2008 dec 2009 credits in currency population, of which: 100 100 100 consumer 62,83 61,42 59,90 real estate 33,52 33,02 36,65 other applications 3,13 4,93 2,80 for the analyzed period the value of credits in currency granted for real estate purchases have registered an increase for the entire analyzed period. the financial behavior of the banking services’ consumers regarding the contracting of credits for the analyzed period has been influenced, for the most part, by external factors of the consumer, factors that have originated from the environment in which he/she lives and proceeds with his/hers daily activities. thus the economic environment of the country, being influenced by the international environment has had a powerful impact over the consumers. studies and scientific researches economic edition, no. 15, 2010 425 graphic no. 3 source – www.bnr.ro the consumer’s behavior for banking services is influenced by a series of factors such as cultural factors, social factors, and personal factors, psychological and economical factors. the culture represents the assembly of standards, beliefs and values, of the collective representations of the majority of subjects from a group. the cultural factors can be associated to language, morals, ethics, traditions, personal values, beliefs.3 these factors influence the individuals still from their childhood, through family and through the way it develops. therefore it can be appreciated that in fact that culture is deeply ingrained in the human behavior. its modification requires a longer time, a reason for which, from marketing’s point of view, it is beneficial to be working considering it how it is, without trying to modify it. social factors have influence over the consumers’ behavior within the buying and consuming process, reference groups of the client, social classes. the most powerful factor of influence is family. the role of the family is defined as being various throughout the world, and the marketing operators must determine the characteristics of the particular markets.4 the attitude for saving has to be cultivated from childhood, hence in the family. banks approach the youth through specific offers, which can attract and make them faithful clients. thus they can offer a series of banking products and services specific for different segments of consumers. from marketing’s point of view, the notion of social classes leads to a segmentation of the market, which offers an operational potential. social classes are determined in general by the origin, family conditions, occupation, and source of income, home and type of home, education and educational level.5 the analysis of the utilization of banking products and services can be made on segments of consumers dependent on the occupation, education, life style, etc. the consumer’s behavior is also influenced by personal factors such as: age, life-cycle stage, lifestyle, personality, and auto-concept. on different ages and stages of the life-cycle, people have different needs. over the lifetime of an individual, his/her needs are continuously modified. a young person is interested in style, traveling, entertainment; he/she 3 olteanu laura,serviciile în românia şi comportamentul consumatorului de servicii bancare-persoană fizică, 2007, risoprint, cluj napoca, pg. 102 4 dubois pierre louis, jolibert alain, marketing. teorie şi prectică,vol. i, 1989, ed. economică, imprimeria ardealul cluj, cluj napoca,pg.97 5 dumitru d. lazar, marketing pentru studenţi, 1998, ed. continental, alba iulia, pg. 50 0 20 40 60 80 100 2007 2008 2009 the structure of credits in currency for the population for the period of 2007 2009 credits in currency population, of which: consumer real estate other applications studies and scientific researches economic edition, no. 15, 2010 426 isn’t inclined to saving money; an elder person, that doesn’t spend much on clothes, prefers to deposit its money for safekeeping. age. age-groups represent, for the marketing operators, distinct life-segments that are accosted with different policies and strategies.6 another factor of influence of the consumer’s behavior is its occupation. through its occupation the individual integrates itself in a group, that being a primary or secondary group; concurrently it belongs to a social class of which characteristics imprint particular features into their behavior. occupation. in terms of occupation, the individual has or hasn’t got free time. consumers are strongly influenced by their rate of incomes, in the buying process, that they dispose of. the existence of the requisition is conditioned by the existence of needs, buying capacity and the possibility of choice. the absence of one of these elements deters the manifestation of proper requisition.7 practice has demonstrated that the rate of income is inter-conditioned with the occupation, the individual’s free time, and with the lifestyle. a need satisfied, generates new needs. the increase of the rate of income determines the satisfaction of a new need, unsatisfied due to the absence of certain financial availabilities. moreover the increase of incomes determines a change of the lifestyle embodied by different solicitations and different consumes. we can determine the consumer’s change in orientation from quantity to quality.8 the attitude towards savings alters; if, at small sums the detainer isn’t tempted to deposit at banks, in the situation of the increase of financial availabilities it will be tempted to make savings through deposits in ron and other currencies and also to purchase other banking products.9 within the factors that have influence over the consumer’s behavior there also can be distinguished psychological factors. those are perception, motivation, learning, attitude, appreciation and opinion 10. the multitude of factors that influence the consumer’s behavior must be taken in account within an expertise/analysis. in case of a crisis-period the consumers react in different ways. the attitude, the experience, the education, the rate of income, social classes, the perception, the attitude toward risks conditions the consumer’s behavior referring to credits that can be contracted. bibliography 1. dardac nicolae, basno cezar,(1996), operaţiuni bancare. operaţiuni şi tehnici de plată, ed. didactică şi pedagogică, bucureşti 2. dubois pierre louis, jolibert alain,(1989,) marketing. teorie şi prectică, vol. i, ed. economică, imprimeria ardealul cluj, cluj napoca 3. dumitru d. lazar,( 1998), marketing pentru studenţi, ed. continental, alba iulia 4. ionescu lucian (coordonator),(1996), fundamentele profesiunii bancare. băncile şi operaţiunile bancare, ed. economică, bucureşti 5. olteanu laura, fazakas jozsef,(2005) interdependenţa dintre comportamentul consumatorului şi valoare de întrebuinţare a mărfii, presa universitară clujană, cluj napoca 6 olteanu laura, fazakas jozsef, interdependenţa dintre comportamentul consumatorului şi valoare de întrebuinţare a mărfii, 2005, presa universitară clujană, cluj napoca, pg.35 7 olteanu laura, bazele marketingului, 2009, risoprint, cluj napoca, pg. 112 8 olteanu laura,serviciile în românia şi comportamentul consumatorului de servicii bancare-persoană fizică, 2007, risoprint, cluj napoca, pg. 111 9 olteanu laura, fazakas jozsef, interdependenţa dintre comportamentul consumatorului şi valoare de întrebuinţare a mărfii, 2005, presa universitară clujană, cluj napoca, pg.38 10 olteanu laura, bazele marketingului, 2009, risoprint, cluj napoca, pg. 113 studies and scientific researches economic edition, no. 15, 2010 427 6. olteanu laura,( 2009), bazele marketingului, risoprint, cluj napoca 7. olteanu laura,(2007), serviciile în românia şi comportamentul consumatorului de servicii bancare-persoană fizică, risoprint, cluj napoca 8. www.bnr.ro studies and scientific researches economic edition, no. 15, 2010 428 “prima casă” – produs bancar sau produs social studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro “first home” – a banking product or a social product? diana magdalena prihoancă “vasile alecsandri” university of bacău dianaprihoanca@yahoo.com abstract under the conditions of the economic crises, the “first home” program was launched on the banking market in romania in 2009 a banking product with strong social implications guaranteed by its advantages. in this paper, the “first home” product is presented through the legislative aspects that regulate its presence on the market, as well as its evolution from the launching moment to present. keywords banking market; banking product; social product; guarantee fund; collaterals granted jel classification m31; m38 the product is approached in marketing as a response for a certain need or problem which the client faces, an activity whereby a services is rendered to the consumer. a simple presentation of the physical characteristics of a product is not enough. it is important to highlight the competitive advantage it ensures (cetină, 2007). defined in the specialty literature as representing the entirety of elements triggering the consumer’s demand, the product concept finds a great confirmation in the service sector marketing. the classical sense within which the product appears as “an amount of attributes and tangible physical and chemical characteristics reunited in an identifiable form” correlated with the intangibility of the services led to the extension of the product coordinates beyond the usefulness perceived by the consumer, to the process of creation and delivery of the service and of all elements contributing to its development. from such point of view, some authors suggested to replace the term “product” with “service offer” (olteanu, 2001). the banking product – an element of the mix of traditional marketing – is that product/service which the banks must identify, create and make available to the clients, product/service which must correspond to their needs. in the banking institution, the product and service concepts have become interdependent and interexchangeable, being used to describe what the consumer is being offered (cetină, odobescu, 2007). therefore, the financial-banking services include within “the product” the elements of the performance process: the contact persons, buildings and equipment, the client as a participant in the performance, the technology of the creation and delivery of services (olteanu, 2004). as regards the social product, philip kotler believes there are three categories of social products: ideas, behaviors and tangible objects. a characteristic found in most of these products is their immateriality: the social organizations offer services, try to enforce ideas or to change behaviors and, only in few cases, offers material goods to the target groups (zaharia, 2001). this paper reflects the evolution on the financial banking market of a product which, by its characteristics, has had and has a role, at least at psychological level, both on 348 “first home” – a banking product or a social product? the real estate market and banking market. the “first home” product may be defined as a product initiated by the government of romania with the purpose of supporting the priority economic sectors, the main goal being to unblock the crediting activity and to give an impulse to the housing construction sector. the “first home” product was launched on the banking market in the summer of 2009, thus: may 20th, 2009 – the government of romania approved the “first home” program, whose purpose was to offer a support to those clients who wanted to buy a dwelling but didn’t have enough funds or didn’t have collaterals – and here originates the question whether this is a social product; june 4th, 2009 – the emergency ordinance no. 60/2009 on certain measures for the implementation of the “first home” program was published in the official gazette; june 14th , 2009 – the implementation rules for the “first home” program were approved, being defined the conditions which the beneficiaries of the program must meet; june 25th, 2009 – the list of the banking institutions involved in the program was completed. the beginning of sales was the apogee of the entire preparation and launching process of the new product on the market, the beginning of its decisive confrontation with the users (balaure et al, 2002). in the “first home” case, the first credit agreement was concluded on july 8th, 2009. the credit for purchasing a new two-room dwelling in colentina district in bucharest was granted by brd. the dwelling cost eur 54,000, the credit value was eur 43,000 for 30 years with eur 307 monthly rate. in order to obtain a dwelling through the “first home” program, the clients must undergo seven stages (web source): submission of the financing application; analysis of eligibility, according to the banking rules; application for the guarantee from the national credit guarantee fund for small and medium enterprises (fngcimm); analysis of the application for the guarantee by fngcimm; grant of the guarantee to the bank by fngcimm; approval of the client’s file; registration of the mortgage, by the bank, on the behalf of the state. four stages of this program have developed until now and the fifth stage is in progress, according to the following table: table 1 development of the “first home” program on the banking market item year, month stage 1. 2009, june „first home” 1 program 2. 2010, july „first home” 2 program 3. 2011, january „first home” 3 program 4. 2011, june „first home” 4 program 5. 2013, january „first home” 5 program 5 source: data operated according to www.imopedia.ro the dwellings for which “first home” credit agreements may be concluded are: finished dwellings, intended for purchase, including those built and put into operation through nha programs; not finished dwellings, under various construction stages, intended for purchase after being finished, including those built through nha programs; new dwellings, intended for purchase after being finished, including those built through nha programs. 349 http://www.imopedia.ro/ prihoancă once the fourth stage started, the following types of dwelling add to the above mentioned ones: dwellings that are to be built by individual beneficiaries, including those that are built through nha programs; dwellings that are to be built by associations without legal personality consisting of minimum two beneficiaries. the mandatory condition is that at least one of them must be the owner of the land which the collective dwelling is built on. in legal terms, the “first home” program is regulated by the following regulatory documents: government emergency ordinance no. 60/2009, mention above; government decision no. 717/2009 on the approval of the implementation rules of the “first home” program, as further amended and completed; government emergency ordinance no. 30/2010, which amends and completes the previous ordinance in order to implement the second stage of the program; government emergency ordinance no. 33/2011 amends and completes art. 1 of the government emergency ordinance no. 60/2009, by adopting measures in order to continue the “first home” program; government decision no. 40/2011, which amends and completes the implementation rules of the program; government decision no. 566/2013, on the allocation of a new ceiling of ron 1.2 billion, out of which 500 million are destined to the purchase of dwellings built by national housing agency. the funds allocated for the first stage of the program were eur 1 billion and they were fully used. out of the eur 700 million allocated for the second stage, only eur 500 million were used, the rest of eur 200 million being allocated to the third stage. the table below shows the indicators defining the development of the “first home” program. table 2 number of collaterals granted and their average value item program ceiling established mil. euro collaterals granted average value of the collaterals euro “first home” 1 1,000 18,554 41,574 “first home” 2 700 16,414 40,133 “first home” 3 200 5,114 39,015 “first home” 4 (june 1st – december 31st, 2011) 771 15,034 38,000 source: data operated according to www.businessday.ro from the total of the collaterals accessed until the end of the third stage of the program, most of them have been in bucharest, 30.2% of the total number of collaterals, with a collateral average value of eur 48,516. it is followed by cluj county, with 7.5% of the total number of the collaterals (table no. 4). each of iasi, brasov, sibiu and dolj counties has approximately 4% of the total number of collaterals granted, with a collateral average value under eur 40,000. 350 http://www.businessday.ro/ “first home” – a banking product or a social product? table 3 top of the counties according to the number of the collaterals granted item. county collaterals granted % average value of the collaterals -euro 1. bucharest 30.2 48,516 2. cluj 7.5 36,912 3. timis 5.6 41,764 4. ilfov 5.1 49,165 5. constanta 4.7 42,319 source: data operated according to www.fngcimm.ro according to the granting value of the “first home” product, the distribution thereof is as follows: credits between eur 50,000 and 60,000 – 31% of the total of the concluded credit agreements; credits between eur 40,000 and 50,000 – 20% of the total of the concluded credit agreements; credits between eur 30,000 and 40,000 – 24% of the total of the concluded credit agreements; credits under eur 30,000 – 251% of the total of the concluded credit agreements; the actors acting on the banking market in the case of the “first home” product are as follows: ministry of public finances, ministry of economy, commerce and business environment, which sign a joint order for the program implementation; fngcimm, romanian association of banks and the partner banks, which set the content of the frame collaboration convention, so that the program develops in optimum conditions; the clients. fngcimm role on the banking market consists in calculating the maximum value of the collaterals in the following manner: a. for finished dwellings, intended for purchase, including those built and put into operation through the programs implemented by nha and for the unfinished dwellings in various building stages, intended for being purchased after completion, including those built through the programs implemented by nha: maximum 95% of the purchase price provided for in the pre-sale contract, if the purchase price of the dwelling is lower than or equal to eur 60,000, but not higher than the value resulted from the evaluation report; maximum eur 57,000, if the purchase price of the dwelling is higher than eur 60,000, but not higher than the value resulted from the evaluation report. b. for the new dwellings, intended for being purchased after completion, including those built through the programs implemented by nha: maximum 95% of the purchase price provided for in the pre-sale contract, but not higher than the value resulted from the dwelling evaluation report, if the purchase price of the dwelling is lower than or equal to eur 70,000; maximum eur 66,500, but not higher than the value resulted from the evaluation report, if the purchase price of the dwelling is higher than eur 70,000. c. for collective dwellings, which are to be built through associations without legal personality, consisting of minimum two beneficiaries: 351 http://www.fngcimm.ro/ prihoancă maximum 95% of the value provided for in the dwelling building contract, lower than or equal to eur 75,000, but not higher than the value resulted from the works cost estimate, an appendix to the dwelling building contract; maximum eur 71,250, but not higher than the value resulted from the works cost estimate, if the value of building the dwelling is higher than eur 75,000. within the “first home” 2 program, 21 banks sent offers to fngcimm, the total value of the ceiling requested by the banks exceeding with almost 50% the total approved ceiling for 2010 of eur 700 million. the over-subscription of the allocated ceiling imposed the distribution of this ceiling through a progressive decrease, adequate to the subscription. the amounts distributed to the participating banks are presented in the table below. table 4 the amounts distributed to the banks within the “first home” 2 program item name of the bank allocated ceiling euro 1. bcr 215,633,423 2. brd 161,725,067 3. banca românească 53,908,356 4. alpha bank 45,822,102 5. piraeus bank 37,735,849 6. banca transilvania 26,954,178 7. cec bank 21,563,342 8. millenium 18,867,925 9. raiffeisen 16,172,507 10. banc post 16,172,507 11. unicredit 16,172,507 12. intesa bank 13,477,089 13. garanti bank 13,477,089 14. volksbank 10,781,671 15. otp bank 6,738,544 16. emporiki bank 6,469,003 17. leumi bank 5,390,836 18. credit europe 5,390,836 19. banca carpatica 4,312,668 20. ate bank 2,156,334 21. rib 1,078,167 22. total 700,000,000 source: www.fngcimm.ro even if in the fourth stage, the partner banks within the “first home” program will guarantee 50% of the value of the credits granted, a number of 21 financial institutions have concluded the collaboration contract with fngcimm: the clients who can purchase a “first home” dwelling can be (web source): natural persons who don’t have a dwelling, individually or together with their spouses or other persons, regardless of the way the respective property has been acquired, except for the shares of the dwellings acquired by inheritance, and who have not purchased a dwelling after this date, regardless of the acquiring method; persons who don’t have a valid mortgage; persons or families who comply with the terms imposed by the financier; persons who have a minimum of 5% advance of the purchase price of the dwelling; persons who, within this program, purchase a finished dwelling, which is on our country’s territory, registered with the land registry and unencumbered; 352 “first home” – a banking product or a social product? persons who undertake to constitute a collateral to guarantee the interest, equal to three rates of interest; the tenants who have lived for at least one year in the dwellings built through nha will be able to buy them. the “first home” program has a maximum ceiling regulated, in terms of legislation, and this is as follows: eur 60,000 for an old dwelling; eur 70,000 for a new dwelling; eur 75,000 for a collective dwelling built from scratch; the clients who wish to purchase a more expensive dwelling will have to pay for the difference in full, at the signing of the contract. also, besides the 5% advance from the value of the estate, the client must pay a fee of 0.49% per year to fngcimm. in the first three stages of the “first home” program, the collateral granted by the state was 100%, and once the fourth stage was launched, that collateral decreased to 50%, and the participating banks will assume in proportion of 50% the risk of failure to repay the credit. in this variant, the “first home” product can be bought also by the owners who possess a dwelling of a useful surface smaller than 50 sqm, provided they buy a dwelling of a bigger surface. the fifth stage of the governmental project required the granting of the loans in national currency only, romanian commercial bank being the first who adopted this new program. even if, from the moment when the “first home” program has been launched until the present moment, the price of the dwellings (both old and new) has decreased, the product enjoyed further demand. the bidders from the new built real estate market adjusted to the credit criteria of the governmental program, and the two and threeroom apartments can be easily found at prices under eur 60,000. comparing to july 2011, in july 2012 the old apartments at the national level were cheaper with 5%. the increasing trend was felt in the big cities, as one can see in the tables below: table 5 the evolution of the prices of old apartments in bucharest and clujnapoca apartment type bucharest cluj-napoca july 2011 euro sqm july 2012 euro sqm evolution 12 months % july 2011 euro sqm july 2012 euro sqm evolution 12 months % 1 room 1,181 1,089 -7.8 962 1029 7.0 2 rooms 1,128 1,095 -2.9 994 987 -0.7 3 rooms 1,080 1,010 -6.5 972 938 -3.5 source: www.imobiliare.ro table 6 the evolution of the prices of old apartments in constanta and timisoara apartment type constanta timisoara july 2011 euro sqm july 2012 euro sqm evolution 12 months % july 2011 euro sqm july 2012 euro sqm evolution 12 months % 1 room 946 917 -3.1 922 854 -7.4 2 rooms 944 857 -9.2 830 786 -5.3 3 rooms 966 883 -8.6 758 759 0.1 source: www.imobiliare.ro the growth on the real estate market of the analyzed cities was registered only on the segment of one-room apartments in cluj-napoca and 3-room apartments in 353 prihoancă timisoara, even if it is only of 0.1%. the biggest price decrease, during the analyzed period, took place in constanta for the two-room apartments. the credit distribution for the “first home” product, according to the number of rooms of the purchased dwelling is as follows (web source): three rooms – 26%; two rooms – 51% one room – 23%. although in the launching moment, the “first home” product aimed to stimulate the building of new dwellings during the economical crisis, that aim was partially reached, because only 28% of the total of the credit contracts are concluded for dwellings built after 2008, and only 3% of the purchased dwellings are new, built “from scratch”. the national housing agency sold only 320 dwellings within all stages of project implementation. even if the “first home” product cannot be defined as a social product, according to the definition given within this article, we can say it is a product with an important social impact, because through its advantages (5% advance compared to the standard advance of 25% for the mortgage credits, the collateral granted by the state) it was especially conceived for a difficult economic period and offered the chance to buy a dwelling to the social categories with an average income). references balaure, v. et al (2002), marketing, bucureşti, editura uranus. cetină, i. (2007), marketing mix in banking industry, revista de marketing online, 1(4). cetină, i., odobescu, e. (2007), strategii de marketing bancar, bucureşti, editura economică. data sets available on www.businessday.ro, www.brd.ro, www.fngcimm.ro, www.imobiliare.ro, www.imopedia.ro. zaharia, r. (2001), marketing social-politic, bucureşti, editura uranus. 354 http://www.businessday.ro/ http://www.imobiliare.ro/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro strategies for small enterprises negotiating with large firms ştefania anca stan “vasile alecsandri” university of bacău anca_stan68@yahoo.com abstract all around the world business is changing. all traditional business practices have been called into question as markets, customers competitors, problems and solutions have changed. as a result, business practices we once took for granted, like traditional negotiating approaches are falling by the wayside in favor of more collaborative, equally beneficial, win-win strategies. a new negotiation paradigm away from negotiating a deal and toward negotiating a relationship is needed for the twenty first century. business can no longer stay on top by negotiating short term victories. the key to winning unbeatable, long term results is to negotiate solid, long term relationship. smart business owners are trying to find ways to leverage their assets, and one important way is to negotiate for long term relationships. traditional knowledge and skills remain important. yet global managers can better respond to global demands by learning continuously managing diversity, and developing a global mindset. keywords negotiation; small business; win-win strategies; cross – cultural negotiation jel classification m10 1. introduction negotiations occur for several reasons: to agree on how to share or divide a limited resource, such as land, or property, or time; to create something new that neither party could do on his or her own; to resolve a problem or dispute between the parties. a new negotiation paradigm away from negotiating a deal and toward negotiating a relationship is needed for the twenty first century. business can no longer stay on top by negotiating short term victories. the key to winning unbeatable, long term results is to negotiate solid, long term relationship. negotiating has changed because the definition of customer and competitor has changed. in today’s world, yesterday’s competitor could be today’s customer. today’s is important that competitors are creating new markets by joining forces with former competitors in intense cooperation, creating shared visions, forming alliances and managing complex relationships. the definition of customer has also changed and with it the process of traditional negotiating. customers have traditionally been the purchasers or users of products and services. now customers may be partners sharing costs, ideas, people and risk in an effort to find new markets and solve business problems. traditional negotiating put the customer in the role of opponent. the new world order requires each party come to the negotiating table exploring new ways to work together to create wealth. business requires undertaking a variety of transactions. today companies of all sizes increasingly complete in global markets to seek growth and to maintaining their competitive edge. 255 stan 2. the secrets of successful negotiating in recent years, the trend among large firms has been to merge, to form large or to outsource to remain competitive in the global market – place. large firms, by contracting out value added activities to smaller outside suppliers, create greater contacts between large and small enterprises. because of their size and resources, larger firms tend to obtain more favorable agreements in dealing with smaller ones. one of the major weaknesses of smaller firms is to allow the bigger party the control of the negotiating process in the faint hope of getting sizable contracts. larger companies, being well aware of this, encourage smaller firms in the illusion of securing substantially lucrative future business by making them accept major and immediate concessions in current deals. unfortunately, these future orders might not materialize, or if they do, might easily turn out to be unprofitable for the small firm that has been persuaded into giving a way too many concessions. in the long term, these small companies may go out of business because of financial insolvency. but the facts, there are many elements to the negotiating process that need to be understood by smaller companies if they are to give themselves a fighting chance against tougher ore more experienced opposition, these includes: knowing how to properly prepare; understanding the stages of the negotiating process; knowing how to create and exploit bargaining power; effective bidding and bargaining; knowing how and when to close. 2.1 planning and preparing for effective negotiation negations are part and parcel of small business life. the first and the most important step toward successful negotiation are planning and preparation. negotiation is often defined as three “i”-s – an interaction between two ore more interdependent parties who perceive incompatible goals. negotiation parties enter the negotiation because they depend on each other to fulfill some needs but also perceive the other party’s interests as conflicting with their own. to reach a mutually acceptable agreement, negotiation parties have to cooperate with and understand each other. an essential component of effective preparation is to conduct a well-rounded analysis of the bargaining situation, to understand not only one’s own positions, interests, priorities and alternatives, but also those of the counterparts. in a typical business negotiating, parties come together to attempt to exchange resources, or make a deal. negotiators use distributive bargaining strategies to claim greater value for themselves, whereas they use integrative bargaining strategies to expand the pie for both parties. negotiators who are better prepared have numerous advantages, including the ability to analyze the other party’s offers more effectively and efficiently, to understand the nuances of the concession/making process, and to achieve their negotiation goals. good preparation means understanding one’s own goals and interests as well as possible and being able to articulate them to the other party skillfully. it also includes being ready to understand the other party’s communication in order to find an agreement that meets the needs of both parties. good preparation also means setting aspirations for negotiation that are high but achievable. negotiators who set they sights too low are virtually guaranteed to reach an agreement that is suboptimal, while those who set them too high are more likely to stalemate and end the negotiation in frustration. negotiators also need to plan their opening statements and positions carefully so they are especially well prepared at the start of negotiations. it is better that negotiators prepare by understanding their own strengths and weaknesses, their needs and 256 strategies for small enteprises negotiating with large firms interests, the situation and the other party as well as possible so they can adjust promptly and effectively as the negotiation proceeds. 2.2 clear objectives effective strategy and planning are the most critical precursors for achieving negotiation objectives. the first step in developing and executing a negotiation strategy is to determine one’s goals. negotiators must anticipate what goals they want to achieve in a negotiation and focus on how to achieve those goals. there are four aspects of how goals affect negotiation. first, in negotiation, wishes are not goals. a wish is a fantasy, a hope that something might happen; a goal is a specific focused target that one can realistically plan to achieve. second, goals are often linked to the other party’s goals. the linkage between the two parties’ goals defines on issue to be settled and is often the sources of conflict. third, there are boundaries or limits to what goals can be. goals must be attainable. fourthly, effective goals must be concrete, specific and measurable. the less concrete and measurable our goals are, the harder it is to communicate to the other party wants and determine an offer on the table satisfies our goals. negotiation should never occur until specific goals have been formulated carefully. never the less, although goals have been carefully planned, the negotiation may still fail if the parties’ goals are incompatible, while the parties remain inflexible. 2.3 negotiator experience and abilities negotiators influence the negotiation process with theirs own experience and negotiating skills. negotiators operate within two limits: firstly, they act to increase common interests and to expand cooperation among the parties; secondly, they act to maximize their own interests and to ensure an agreement valuable to themselves. smaller companies especially may lack the resources to outsource negotiations, meaning their funding, licensing, supplier and distribution deals are done by executives without the necessary negotiating skills. if such people learnt to negotiate smarter it could make all the difference. everybody needs to make deals in order to succeed. yet negotiation skills are seldom taught or practiced. skilled negotiators have observant minds; sound judgment; they are always ready to listen with attention to those whom they meet; have an open, genial, civil and agreeable manner of speaking; can discover how their counterparts are feeling and thinking; and have sufficient mind control to resist the temptation to speak before thinking. negotiators should thoroughly understand the purpose of the negotiations before going overseas. good negotiators should also know the history, culture, laws, customs and government of the country they are dealing with as well as have some knowledge of the particular counterparts they will be working with. good negotiators need to be adaptable. they do not become wedded to static approaches or strategies. they remain vigilant on the real issues from start to finish, all the while absorbing information about their counterpart’s habits, speaking and presentation patterns, and personal style. they monitor themselves as well, making sure to avoid mere reaction to choices the other side presents. this level of performance, not easily achieved, is at the heart of what separates the skilled negotiator from the amateur. great negotiators often go unnoticed. they are not interested in winning or glory. they have an attitude of mind which is focused on the hard work of building agreements and protecting the work through the necessary confidentiality which follows. 257 stan 2.4. responding when the other side has more power other things being equal, when power is unequal, the more powerful party can achieve his goals more readily. power imbalances in negotiation can represent clear dangers to the satisfaction of the needs of booth parties and to the collaborative process. first, large firms tend to pay little heed to the needs of small enterprises, which either don’t get their needs met ore use disruptive, attention – getting tactics that make collaboration very difficult. second, small enterprises are not usually in a position to trigger and advance an integrative process. integrative negotiation requires a tolerance of change and flexibility, which often requires negotiators to give up some control over outcomes. when dealing with large firms, small enterprises have at least four alternatives. they can: protect themselves; cultivate their best alternative to a negotiated agreement (batna); formulate a “trip win alert system”; correct the power imbalance. negotiators can protect themselves by keeping in mind that they have real interests that negotiation may be the preferred approach of achieving those interests, and that excessive accommodation to the highpower party will not serve them well over the long term. in other words, small firms should remember their resistance point and try to stick to it. that said, while knowing the resistance point will provide a clear measure of minimum acceptability (lower price), too strict adherence to it may deprive negotiators of creativity and flexibility, which are critical components to the design of an integrative outcome. it may also limit their ability to use information that emerges during the exchange. thus, large firms need to be protective of their bottom line but also open to creative approaches that may allow them to achieve their interests in other ways. when in the low-power position, it is very important that small firms cultivate their batna, which represent the best outcome that they can accomplish without the current negotiation. one alternative, the best alternative to a negotiated agreement (batna), is especially important because this is the option that likely will be chosen should an agreement not be reached. negotiators need to be vigilant about their batna. they need to know what their batna is relative to a possible agreement and consciously work to improve their batna so as to improve the deal. negotiators without a strong batna may find it difficult to achieve a good agreement because the other party may try to push them aggressively, and hence they to forced to accept a settlement that is later seen as unsatisfying. a clear batna may also be reinforced by additional measured. low power negotiators are advised to formulate a trip wire alert system that serves as an early warning signal when bargaining enters the warning zone close to the walkway option or the batna. the trip wire tells the negotiators to exercise special caution and pay increased attention to the negotiation in progress. given that negotiations often become intense and engrossing at such points, it might be appropriate to assign a conegotiator to attend to the warning zone and to notify the involved negotiator at the critical time. the fourth option for dealing with more powerful parties is to correct the imbalance. three approaches to this are possible: low-power parties taking power, high-power parties giving power, and third parties managing the transfer and balance of power. the first approach, power-taking, is typically not feasible in negotiations. using disruptive or attention-getting actions to try to assume power typically contributes to a distributive exchange, generating in-kind responses from the high-power party. the second approach is for the high-power party to transfer power to the other party. such actions include sharing resources, sharing control over certain processes or outcomes, focusing on common interests rather than solely on the high-powered party’s 258 strategies for small enteprises negotiating with large firms interests, or educating the low-power party about what power she does have to use it more effectively. 3. negotiation in international market as everything is becoming globalized so small companies are also interested in expanding their business outside the country to make them globalized. companies of all types and sizes, and in all types of industries, enter into international business transactions. small companies are becoming increasingly active in international trade and investment. the reason why small companies are preferring for doing business across the country is that they have good opportunities and incentives and also they can obtain foreign currencies, they can beat the competition, and also they can achieve the economies of scale. all international transactions are the product of a negotiation – the result of deal making. an international deal is a continuing negotiating between the parties to the transaction as they seek to apply their contract to unforeseen situations and to adjust their relationship to a changing international environment. international negotiations are influencing by the environmental context. small business need to identify and controlling the factors in the environmental context that make international negotiations more challenging that domestic negotiations. those factors are: political and pluralism; international economics; foreign governments and bureaucracies instability; ideology and culture. • legal pluralism. firm conducting business in different countries is working with different legal and political systems. there may be implications for taxes than an organization pays, labor codes or standards that must be met, a different code of contract law and standards of enforcement. negotiators should be fully briefed about relevant legal aspects of the countries involved before coming to agreement. this will ensure that the final agreement does not contain any provision that cannot be implemented because it is legally prohibited. • political pluralism. a thorough review of the political environment of the party’s country witch whom negotiation is planned must proceed the negotiation process. an agreement may be negotiated that is legal in the countries involved and yet may be not politically prudent to implement. • international economics. a global negotiation may involve financial transfers across national lines to deals. the exchange value of international currencies naturally fluctuates, and this factor must be considered when negotiating in different countries. the risk is typically greater for the party who must pay in the other country’s currency. any change in the value of a currency can significantly affect the value of the agreement for both parties, changing a mutually valuable deal into a windfall profit for one and large loss for the other. • foreign governments and bureaucracies. countries differ in the extent to which the government regulates industries and organizations. • instability. the challenge for international negotiators is to anticipate changes accurately and with enough lead time to adjust for their consequences. therefore, small business facing unstable circumstances should include clauses in their contracts that allow easy cancellation or neutral arbitration, and consider purchasing insurance policies to guarantee contract provisions. this presumes that contracts will be honored and that specific contract clauses will be culturally acceptable to the other party. 259 stan • ideology. ideological clashes increase the communication challenges in international negotiations in the broadest sense because the parties may disagree at the most fundamental levels about what is being negotiated. • culture. cultural diversity has become one of the most critical issues in negotiation. doing business across national boundaries requires interaction with people nurtured in different cultural environments. people from different cultures appear to negotiate differently. in addition to behaving differently, people from different cultures may also interpret the fundamental processes of negotiations differently. for example, people in some cultures approach negotiations deductively (they move from the general to the specific) whereas people from other cultures are more inductive (they settle on a series of specific issues that become the area of general agreement). in some cultures, the parties negotiate the substantive issues while considering the relationship between the parties to bee more or less incidental. in other cultures, the relationship between the parties is the main focus of the negotiation, and the substantive issues of the deal itself are more or less incidental. international negotiators needs to be familiar with the cultural traits of the country with which they want to negotiate. 4. conclusion being small companies is not easy, especially when most of the dealings are with much larger companies. expansion into new markets, access to resources, knowledge and skills, and financing opportunities are just some benefits a small firm can gain by successfully doing business with a big company. for the small business owner or entrepreneur, skillful negotiating can mean the different between staying in business and bankruptcy. in is important for small business companies to understand that the negotiating process does not end with the agreement, instead it is the beginning of a business relationship. success in the long run does not result from one single deal, but rather from a continuous process of maintaining a co-operative business environment. the key to winning unbeatable, long term results is to negotiate solid, long term relationship. references cellich, c., joein, g., (2012), global business negotiations across borders. practical solutions, new york, business expert press. hendon, w.d., (1996), cross – cultural business negotiations, london, greenwood publishing group. lewicki, r.j., saunders, d.m., barry, b., (2006), negotiation, new york, the mcgraw-hill companies, inc. o’neil, j.m., (2013), negotiation strategies and tactics for small business, london, raging zebra publishing. 260 the influence of the integration in the european union on the romanian fiscal legislation 56 the influence of the integration in the european union on the romanian fiscal legislation muntean mircea, associate professor, phd university of bacau păcurari doina, assistant university of bacau abstract: fiscal policy constitutes – within the state's economic policy – a system by means of which the taxes and duties owed to the country's consolidated budget are established and collected. taking into account the role fiscal policy has been playing since romania's admission in the european union, one of the goals ceaselessly looked for is its adapting to the international community's acquis through the implementation of the european directives in our context. the eu directives make reference to direct taxes: dividend tax, interest income tax, assets transfer, shares exchange, income taxation for the non-residents, and so on, along with the indirect taxes: valueadded tax, excise duties, etc. the paper approaches the main provisions within the contents of the european directives as well as the means of their implementation in the romanian fiscal legislation regarding various types of taxes. the implementation of the european directives has been simultaneous with the establishing of measures concerning fiscal fraud prevention, frauds liable to have a negative impact on the state's consolidated budget. fiscal policy constitutes – within the state's economic policy – a system by means of which the duties and the taxes owed to the country's consolidated budget are established and collected. roughly speaking, both theoretically and practically, fiscal policy represents the system of principles, rules and norms concerned with: the contributors situation and administration, the evaluation, recording and redemption of debts, complaints checking and solving, specific assistance to the tax-payers so as to enable them to acquire knowledge about and to appropriately make use of fiscal legislation. considering the role of the fiscality, once romania entered the european union, its putting up with the community's acquis has become a steady pursuit. the community's acquis consists of the body of laws, rights and liabilities common to all eu member-states, is meant to match this territory' s conditions, and refers to: the contents, principles and political goals of treaties; the legislation required in order to put them into practice and the law court's jurisprudence; the statements and resolutions adopted by the european union; the measures mutually accepted regarding both the external and the security policy; the measures concerning the judicial and home affairs systems; the international agreements the community concludes with the member states as far as the eu's fields is concerned. the transposition of the community's acquis in romania affected both the direct taxes and the indirect taxes. the direct taxation refers to the fiscal policy on the profit tax, particularly to the fiscal policy on the dividends coming from the eu's member-states and the common fiscal policy on the mergers, the divisions, the partial divisions, the assets transfers and the shares exchanges between companies belonging to different eu's member-states. in keeping with the directive no. 90/435/cee and the article 20, paragraph 1, letter a)., stipulated in the fiscal code, the dividends received by a romanian legal entity the parent-company – from one of its subsidiares located in some other memberstate are tax-free provided that it pays the studies and scientific researches edition: economics, no. 13 (2008) the influence of the integration in the european union on the romanian fiscal legislation 57 profit tax with no exception and no other option and possesses at least 15% out of the registered share capital of a legal entity in any member-state, and at least 10% respectively, beginning on the 1st of january 2009, and, by the time the dividends are recorded, it has held that minimal share for over 2 years. the same conditions are required for the dividends got by the romanian legal entity by means of its permanent establishment (situated in a member-state) to be free of tax. the provisions mentioned in the directive 90/435/cee can also be applied to the dividends received all over romania by the permanent establishments belonging to foreign legal entities from member-states – the parent-companies in their turn distributed by subsidiaries located in other member-states, so long as the foreign legal body gradually answers conditions stipulated by the article 20, paragraph 1, letter a). from the fiscal code, such as: its setting up corresponds to the law available in the specific eu member-state; it is considered a resident of that particular member-state, and its establishment, according to a treaty for avoid duble taxation struck with some third party, is consequently not excluded from the eu region; it pays profit-tax or some similar tax to a member-state with no exception or other option; it owns at least 15% from the share capital of the subsidiary located in a member-state, 10% respectively, beginning on the 1st of january 2009, capital held for over 2 years by the time the permanent office in romania records the dividends. in accordance with the provisions stipulated by the directive no. 90/434/cee, article 27, paragraph 1, in the fiscal code, it is established the mutual fiscal policy to be applied to the mergers, the divisions, the partial divisions, the assets transfers and the shares exchanges between companies belonging to different eu's member-states. companies of member-states are said to entertain general partnership providing they are gradually coping with the following conditions: they are constituted according to the law valid in the specific eu member-state; they pay the profit tax or a similar tax with no exception and no other option; they have the office in a member-state and, on the grounds of the treaty signed with a third party – concerning the double-taxation avoidance, they are not considered outside the eu. the directive no. 90/434/cee stipulates that the mergers and the divisions do not constitute assessable transfers for the difference between the market price of the transferred assets and liabilities and their ratable value. these directives are valid on condition that the beneficiary companies record the depreciation and any profit or loss concerning the above-mentioned assets and liabilities according to the provisions supposed to have been applied to the assigning company unless the merging, the division or the partial division had occurred. as for the provisions or the reserves previously deduced from the taxable base by the contributing companies, without coming from the permanent offices abroad, the provisions of the directive in question indicate that these very commissions or reserves could be taken over, within the same deduction limits, by the beneficiary permanent office in romania, the latter thus assuming the rights and the obligations of the assignors. the fiscal loss is not to be recovered by the permanent office of the beneficiary company located in romania as far as the mergers, divisions, partial divisions, assets transfers and shares exchanges involving companies of two or more member-states are concerned. according to the conditions imposed by the directive no. 90/434/cee, the beneficiary company's incomes, deriving from the revocation of its share in the subsidiary companies' capital, are taxation-free only if its share exceeds a rate of 15%, 10% respectively, with the 1st of january 2009. with regard to the shares exchange, the provisions of the directive no. 90/434/cee states that, for mergers, divisions or share exchanges, the share-certificate allotment staying for the beneficiary or acquiring company's capital to some assignors' or acquisitions' member, in exchange for share-certificates representing the value of this company's capital, does not mean assessable transfers. studies and scientific researches edition: economics, no. 13 (2008) the influence of the integration in the european union on the romanian fiscal legislation 58 this free-taxation is available providing that the share-holder does not supply the acquired share-certificates with a value higher than the one they had before events such as mergers, divisions or share exchanges had happened. this free-taxation category excludes the allotment having as its object the partial divisions of the assignor's share-certificates, that are making the interest of the beneficiary's capital, unless the latter gives them a value higher than the one it used to have when it was taken over. if, later, the share certificates are transferred, the revenues or the income acquired are subjected to taxation, in accordance with the conditions imposed by the fiscal legislation. similarly, the provisions of the directive no. 90/434/cee, amended by the directive 2005/19/ce, are applied to the shares transfer. the mutual fiscal policy stipulated in the directive no. 90/434/cee and amended by the directive 2005/19/ce, liable to be applied to mergers, divisions, partial divisions, assets transfers and shares exchanges between companies belonging to different eu member-states, are not valid in case of the particular actions whose purpose is fraud, tax evasion or lack of employees' representation in the administrative board of the company as the community's norms ask. enforcement of the directive 90/434/ce leads to fiscal advantages through: the postponement of the additional value assessment; the possibility of taking over the reserves and the provisions, without their imposing; in case of shareholders, lack of the obligatory character for the additional value assessment resulting from share exchanges. the income taxation for the nonresidents in romania was regulated through the adaptation of the fiscal code to the requests mentioned in the directive 77/799/cee, that established the incomes liable to stand this type of taxation, the ways of determination, withholding and paying of the taxes, which is the concern of the income payers. in romania, the type of income taxation, corresponding to the savings got as interests, was regulated by the provisions stipulated in the council's directive no. 85/611/cee, approaching the way the payment is made and the beneficiary of the amount. in order to prevent fraud and money laundering, steps were taken for identification and determination of the residential place for the real beneficiaries, by applying the provisions of the directive no. 91/308/cee. thus, for the interest payment and tax application, the sum's beneficiary must carry out the provisions stipulated by the directive no. 85/611/cee, that is to say the economic operator who makes the payment must inform the specialized authorities in the member-state where the sum's beneficiary have the domicile about the sums paid. the taxation conditions for the interests and dues payments from romania to a company registered in other eu memberstate was regulated by the implementation of the provisions of the directive nr.2003/49/ce in the romanian fiscal code. an important part in the application of the eu directives is played by the information exchanges as far as the direct taxes are concerned, according to the agreement concerning the avoidance of double taxation, as implemented by the directive no. 76/308/cee about the mutual assistance regarding the recovery of particular tax liabilities, duties and other measures. the information provided to a member-state is considered state secret and it is to be used only for fiscal purposes. indirect taxation refers to the valueadded tax (vat) as well as the excise duties and it is reflected in some complex eu legislation. as for the value-added tax, the main source dealing with it remains the directive no. 77/388/cee as well known as the sixth directive concerning vatincluding provisions about the persons and the taxable transactions as well as the exception or exemption for deliveries and services, about the location of taxable operations, the standard rates of taxation, the deductions and the appropriate mode of calculating them, studies and scientific researches edition: economics, no. 13 (2008) the influence of the integration in the european union on the romanian fiscal legislation 59 about the persons in charge with the valueadded tax paying, etc., all of it meant as a gradual, transient process in all memberstates. after the abrogation of fiscal boundaries, on the 1st of january 1993 (by order of the directive no. 91/680/ce), two other directives were promulgated, namely the directives 92/77/cee and 99/49/ce by means of which there were settled the rates of the value-added tax, and, subsequently, there were emitted ones more directives such as no. 2001/04/ce, no. 94/5/ce and no. 98/80/ce, which regulate the value-added taxation for particular goods (antiquities, collection items, gold coins with no numismatic value, etc.). the electronic commerce as well as the carrying out of public services (such as radiotv broadcasting and telecommunication) had as a consequence new regulations regarding the value-added tax, as they are mentioned in the directives 99/55/ce, 2002/38/ce, 200/38/ce and 2002/792/ce. putting the community's acquis related to the value-added tax into practice implies recording of all legal entities operating acquisitions inside of the community, before they take place, and obeying the ceiling established by the corresponding regulations. the allotment of the recording code on vat-purpose is done according to the international standard iso 3166 – alpha 2. this code is to be reported to suppliers whenever intra-community acquisitions of goods or services occur. the intra-community acquisition of goods means “getting the right of employing and exploiting – as a possessor – the tangible assets sent and transported to the destination mentioned by the buyer, by the seller or by some other person, at the buyer's or the seller's expense, to a member-state excepting the sender. to the category of intracommunity acquisitions is also supposed to belong the overtaking – by the romanian army, for personal use or for the use of the civilians within the armed forces – of goods they acquired in a member-state and whose acquisition was not subjected to any taxation rule in force in that particular state, when the importation of goods was not duty-free as the fiscal code stipulates. it is essential to be established, within the intra-community acquisitions, the exact location of the goods the moment their sending or transportation is over. exception to the rule makes the case of a buyer reporting the seller a valid vat identification number, a number that was emitted by a member-state, excepting the state hosting the acquisition, the place of the transaction being this time considered in the emitter-state of the very number. if the intra-community acquisition was subjected to taxation in another memberstate, the taxation basis in romania is reduced accordingly. the intra-community acquisitions also include triangular transactions in a member-state, other than romania, transactions done by the reselling buyer enlisted for tva purposes in romania; in this very case, the value-added tax is to be paid in that particular state, providing that the abovementioned reselling buyer could prove his having done the acquisition in order to be later delivered to that member-state where the beneficiary is registered and obliged to pay the tax. the obligation to register this operation is honoured by the reselling buyer recorded for tva purposes in romania. the chargeable event influences the delivery of goods to the member-state hosting the acquisition, but the tax exigibility arises once the invoice is emitted for the whole equivalent value of goods, not later than 15 days in the month following the one in which the delivery took place. the right of deduction corresponding to the intra-community acquisitions is exercised by the taxable person, if the invoice or other documents demanded by the current legislation (that makes reference to the tax exigibility) are completed. the directive 92/12/cee enlists the goods subjected to excise duties; according to the current legislation, the goods in question are: mineral oils, pure alcohol and alcoholic drinks and processed tobacco; moreover, the directive is applied to any member-state by means of the treaty stipulating the founding of the economic european community. the romanian fiscal code includes a series of provisions concerning the studies and scientific researches edition: economics, no. 13 (2008) the influence of the integration in the european union on the romanian fiscal legislation studies and scientific researches edition: economics, no. 13 (2008) 60 appearance of shortcomings or straitened circumstances throughout the intracommunity traffic, in suspensive regime, of the goods subjected to excise duty, stating the following: the real loss of goods is considered dutyfree; in keeping with the rules specific to the destination member-state, the excise duty is to be also applied to both registered and unregistered operators during the transport, in suspensive regime; in case of shortcomings and strained circumstances, during the transport, also involving the excise duty exigibility, the excise duty will be the concern of the physical or legal person from the country of origin that warranted the excise duty payment to the member-state where the shortcoming or the disorder appeared; if the goods liable to pay the excise duty do not reach the destination, and if the exact location for the inconveniences is impossible to find, they will be considered to have taken place in the member-state that delivered the goods, the supplier being the one charged for them. if, within 4 months from the date of delivery, real evidence meant to warrant the validity of the transaction or to find out the place where the shortcoming or the disorder appeared – is produced, then the supplier is exempt from the excise duty, and the payment is to be made in the memberstate where these inconveniences were determined. the romanian fiscal code stipulates the way in which the simplified document is made up, the way in which the payment and returning of the excise duty for the goods intended for consumption are done, in a member-state, only if they were paid on delivery. the transactions between companies from the eu member-states might cause fiscal frauds resulting in the diminution of the tax liabilities owed to those states' budgets. for the triangular transactions, the frauds in question could be generated by means of:  missing traders that do not perform real activity and are managed by phoney persons. they could buy goods from suppliers throughout european union, without paying the value-added tax, and they could resell them, tva included, without transferring the funds;  buffers, with or without authentic activity, whose role is buying and selling large amounts of goods, with no value added. their part consists of giving the transactions and the invoices the appearance of validity, thus making them credible and making the attempts to track down the frauds more complicated. apparently, these companies do not commit frauds;  international conduit companies, resembling the buffers, but unlike the latter – settled in a state different from the customer’s location and encouraging the fraud in states where their customers belong. this type of companies does not commit frauds in the states where they have offices. these means of tax evasioning are considered frauds of carusel type and could be tracked down with the help of the information got via the central trade connections service and its local departments for international information exchange. the role of the accounting appraisement is to determine the incongruities between the delivery papers’ data, the bookkeeping and the fiscal situation of the companies operating intra-community supply of goods or services, as requirements coming from the penal investigation and judicial bodies, on account of facts ascertained by the fiscal authorities. references: [1] brezeanu p., simon i., celea s., fiscalitate europeană, editura economică, bucureşti 2005 [2] florescu a.p.d., coman p., bălaşa g., fiscalitatea în românia, editura all beck, bucureşti 2005 [3] ***, codul fiscal aprobat prin legea nr.571/2003, cu modificările şi completările ulterioare, editura c.h.beck, bucureşti 2007 dimensions of the social risk in the contemporary economy 28 dimensions of the social risk in the contemporary economy danu marcela-cornelia, associate professor phd university of bacău abstract: the role of risk and its implications in the societal life causes the systemic approach in the triad consumer firm environment. one of the types of risk that the company always supported but in periods of crisis, a known multiplied size and gravities, is the social risk. this paper highlights, mainly, two types of social risk faced by the demand, supply, the economic system exponents, as a whole, respectively the risk of poverty and social risk to the organization. the conditioning and the interdependencies of them are generated and maintained by the state of development of national economy, the quality of the business environment. in the current global economic crisis, marked, mainly, by the phenomena and processes with financial and economic conditionary, the system of risks is involved in the transformation and the social dynamics. in the system of risks, some of which are riskcauses, the other risk-effects, but by propagation in time and space, each of which becomes the cause, effect, etc. since the magnitude and the severity of forms of realisation of the current crisis are the most profound of the economic great depression of 1929-1933 period, the understanding the relationship causes consequences of the movement of the system of risks has new motivations and valencies. one of the types of social risk-effect, with the risks causes economic, social, psychological determinants, is the risk of poverty [danu mc, dimensions of risk of poverty in the current economic crisis, iecs 2009, industrial revolution, from the globalization and post-globalization perspective]. the poverty is considered a multisystemic problems complex interact in the socalled "pentagon of poverty" whose sides are: employment/ income, costs/ consumption, social network, maintaining the social biography/ personality. in classical language, the poverty means the difficulty of the ensuring a minimum biological subsistence relative to the income level or the volume of goods strictly necessary; beyond this approach, the poverty must be seen through the social criterion, of the social subsistence since the reporting indicators are different from one country to another, from one culture to another, from one period to another. in the european union, according to statistics [http://epp.eurostat.ec.europa.eu/] the risk of poverty is calculated as the proportion of people whose disposable income is below the level of risk of poverty, set at 60% of the available income at the national average, after the social transfers; in 2006 this indicator was the amount of 16%, while on a relatively linear trend since 1998. the situation is presented, however, different from one country to another but the overall continental europe does not reach high levels of this type of risk and neither extremes and negative situations (tab.1). tab.1 – the proportion of the people whose disposable income is below the level of poverty risk year 2000 2001 2002 2003 2004 2005 2006 belgium 13 13 ... 15 15 15 15 denmark ... 10 ... 12 11 12 12 germany 10 11 ... ... ... 12 13 irland 20 21 ... 20 21 20 18 greece 20 20 ... 21 20 20 21 spain 18 19 19 19 20 20 20 france 16 13 12 12 13 13 13 italy 18 19 ... ... 19 19 20 luxembourg 12 12 ... 11 12 13 14 studies and scientific researches edition: economics, no. 13 (2008) dimensions of the social risk in the contemporary economy 29 netherlands 11 11 11 12 ... 11 10 austria 12 12 ... 13 13 12 13 portugal 21 20 20 19 20 19 18 finland 11 11 11 11 11 12 13 sweden ... 9 11 ... 11 9 12 great britain 19 18 18 18 ... 19 19 czech republic ... 8 ... ... ... 10 10 estonia 18 18 18 18 20 18 18 cyprus ... ... ... 15 ... 16 16 latvia 16 ... ... ... ... 19 23 lithuania 17 17 ... ... ... 21 20 hungary 11 11 10 12 ... 13 16 malta 15 ... ... ... ... 15 14 poland 16 16 ... ... ... 21 19 slovenia 11 11 10 10 ... 12 12 slovakia ... ... ... ... ... 13 12 bulgaria 14 16 14 14 15 14 14 romania 17 17 18 17 18 18 19 source: eurostat, may 2008 for eu-15 countries in 2006 risk of poverty varies from the maximum of 21% in greece, 18-20% in ireland, portugal, great britain, spain to the values of 12-13% in denmark, sweden, germany, france, finland, to the 10% in the netherlands. in terms of variations recorded over the period we observe the following: increases the risk of poverty in almost all eu-15; decrease of this type of social risk in france, ireland, portugal. regarding the evolution of risk of poverty in the new eu countries, the situation highlights that, in general, the risk of poverty does not fundamentally varies, in terms of share, in these countries, compared with the developed countries in european union. the best statement made a czech republic, with a risk of poverty by 10% and the worst, latvia with a risk of poverty by 23%. in our country, both the risk and the progress in the 20032006 period, designates a worse situation than the european union. among the developed countries, non eu, iceland and norway recorded the lowest levels of risk of poverty at the level of our continent in 2006 and earlier (in 2006, iceland 10%, norway 11%). as regards the risk of urban poverty, expressed as a share of population living on less than $ 2 per day, an estimate made by the world bank in july 2008 reveals that, for some european countries (developing countries in transition and ex-communist) [dessus s, herrera s, de hojos r, p.23] for high levels moldova 14.2%, turkey 9.4%, albania 8.5%. romania presents a risk of urban poverty, estimated at 4.3%. according to assessments made by the european commission in the last quarter of 2008 [social protection and social inclusion in europe and key figures, 16.10.2008] on the entire community, although the risk of poverty is to some extent held in check, is facing problems such as: the number still high, namely 9.3%, of the capable of working adults living in households in a situation of unemployment and 8% of the employed population living below the poverty line; although, on average, the social transfers reduce poverty by 38% in the eu, their impact within the eu varies from less than 10% to almost 60%; increased the rate of elderly occupancy reached 45% in 2007 versus 37% in 2001; has reduced the poverty among the elderly, based on the current pension systems, but the single older women continue to pose a higher risk than single men (28% vs. 20%); on the future is expected that a greater share of the revenues will come from the retired private pensions; although the life expectancy has reached 82 years for women and 76 years for men (won 4 years for women and 5 years for men, the last 20 years), the difference studies and scientific researches edition: economics, no. 13 (2008) dimensions of the social risk in the contemporary economy 30 between the european countries in terms of the life expectancy is 8 years for women and 13 years for men. the total health expenditures in the eu have increased in the past 20 years. today, they range from 10% of gdp or more in some countries to 6% or less in the others. the poverty of the employment population in the eu, highlighted the risk of poverty rate for employed persons aged over 18 years, 2006 (tab.2) reveals an extreme minimum of 3% in the czech republic and a maximum of 14% for the greece. dangerous values of the risk of poverty are in poland, latvia, lithuania, estonia and even luxembourg and italy. tab.2 the risk of poverty for the employed persons, over 18 years in the eu ue25 cz be dk nl fi mt si bg de ie fr at sk cy hu se ee uk es it lt lu lv pt pl el source: eu-silc (2006), reference year 2005, except uk (ref.2006 year) and ie (2005-06), bg: study of national household budget 2006, missing data romania. even if the situation on our continent is in some cases severe, causing the achievement of the other types of risk (with effects on the persons concerned the national societal environment variables), of which the risk of damage to health, the risk of delinquences, the risk of the economic and the social discrimination, etc.. the forms of accomplishment, the severity of their shortterm consequences, but especially on medium and long-term, the psychological impact on individuals, reached alarming rates in countries on the african continent, where the share of population living below the 2 $/day is 65.9% in ethiopia, 73.2% in madagascar, 88.9% in nigeria, etc..; also in asia, the situation of a considerable part of the population in the developing countries is the serious risk of poverty, achieving the economic and social existence of 53.2% of the population in bangladesh, 51% in india, 67.3% in cambodia, 55, 1% in pakistan, etc.. if at the macro and the global level the risk of poverty, with the dimensions severity, urban poverty, polarization, etc.. is the expression of the deficiencies in the macroeconomic policies of the world countries, mainly, to micro level, in the universe of business conducted by companies and organizations, the social risk, through the different forms of accomplishment and their consequences can be even the generator of the risk–cause for the risk of poverty from the macro or regional level. at the company level, the social risk is represented by all the internal factors and/ or outside thereof, of human, social, economic, legislative, policy, likely to affect temporarily or permanently the sustainable operation. among the types of the social risk faced by companies, including [landier h, merck b, detection, analysis and quantification du risque social: le modèle m @rs]: the social conflicts, the strikes, the degraded social climate, the poor internal communication, the loss of confidence of the employees in the management company, the poor management of the crisis, the alteration of the company image, the deficiences on the control of the working conditions, the studies and scientific researches edition: economics, no. 13 (2008) dimensions of the social risk in the contemporary economy 31 deterioration of the relations with customers and other business partners, etc.. the reality that the individuals and the relations established between it and the others gives the tone and the strength of the economy’s mouvement, make responsibility the business managers and the managers of the organizations producing tangible goods and /or intangible to create and deliver the value desired by the consumer; it is necessary to optimize the established relational at the company as a prerequisite to optimizing relational system developed between the economic entity and other economic entities, social customers, suppliers, etc.. to make relevants assessments to the social risk is required the identification of the risk-causes, respectively the "irritant factors" contributing to the degradation of the social environment and to the development of the social tensions. "irritant factors" are different types of problems, sources of anxiety, frustration, which can pollute the environment of the firms. according to the authors of the model m@rs, the research quality of the social environment of a company should consider a reference composed of the 32 factors defined into 5 distinct families; based on surveys conducted in-depth it was found that these factors are the most often, the origin of the significant damage working relationships. the 5 families of social risk are: 1. risks causes generated by the top managers activity; 2. risks causes from the middle and inferior managers; 3. risks causes due to the characteristics of employees; 4. risks causes due to faulty methods management; 5. the incorrect perception of the future and of the relationships with the environement business. 1. a first family of risks causes are placed at the top-level managers. from this perspective, the risks that may generate risks effects are: the lenght of the decision centres, the unrecognizing work value, the inability of the presentation of projects, the lack of consistency of decision making, the lack of the sufficient visibility of the policy applied. for example, the unrecognition work has effects on long-term employees on and on, the consumer services sector where staff contact will receive this behavior and it will send (via attitudes, behaviors, overall dissatisfaction - the consumer; the personnel in the area of the organization's internal business services, largely invisible to the consumer will send the dissatisfaction by propagation effects in the benefit system, helping to reduce overall quality of promised services. 2. the risks causes from the middle and inferior level management, which are subject to the direct employees, the impact and the gravity able to cause large failures. among these risks causes, are notable: the lack of respect for employees, the authoritarian behavior, the overlapping decisions, the lack of clear information, the lack of job definition, the absence of response to questions raised, etc.. for example, the activities in which the company use to the personnel of contact in relation with the consumers, the kindness, the verbal and nonverbal behavior thereof are determined largely by the relational internal environment quality; the sensible consumer will perceive the quality vices established in the relational between employees, between employees and managers. 3. a family of risks causes placed on the identification elements of employees, namely, the sociological composition of the company personnel, have special meanings in the transition economies, by economically, socially, politically, mentally sight. of these social risks, are significant: the dispute between "old and new”, the social discrimination on an ethnic, social, professional, the low representation of personnel in decision-making level, the competition among the trade union tradition in terms of the social confrontation. if the developed economies, each of these risks are accomplished at the level of the firms in different weights in the assessing the overall social climate, in the recently released of the economies of transition, as is the romanian, the dispute between "old and new" is still among the most visible and the most serious risks to the companies. 4. another criterion for demarcation of the risks causes on the company is the studies and scientific researches edition: economics, no. 13 (2008) dimensions of the social risk in the contemporary economy studies and scientific researches edition: economics, no. 13 (2008) 32 managerial methods. from this point of view there are the following social risks: the insufficient information of general, the misunderstanding of know-how of the company and the specific powers, the negligence with regard to the new employees, the wage differentiation unjustified, the insufficient posibilities for the personnel evolution or the incorrect forms of the rules, or their lack of transparency, each situation can lead to feelings of injustice or inequity. these risks hurt the social interests of the company both short term and in perspective; the gravity of these risks is dependent on the type of activity, the stage of the life cycle of the company, the marketing environment of its, the degree of interaction with other types of risk. for example, the deficiencies in the wage policy have effects, primarily in the short term; the policy of recruitment, the employee selection have effects in the short term but may involve serious effects in the medium term and even long. 5. the incorrect perception of the future and on the relationships with the environment constitute potential for social tensions and poor quality social climate. among the types of risks notable causes are: the anxiety regarding the future business/ employment, the uncertainty regarding the intentions of the company, the unfavorable development lifecycle of the job/company specific professions, the fear the downgrading of skills related jobs, the difficult relationships with users or customers, the unwanted developments in relations with the business partners, changes in the legislative and institutional environment. for example, the negative developments of the relations with the business partners is due mostly, the managerial vision of the company in question on long-term; but is not excluded, nor the magnitude of changes in the law which make the survival a business partner, possibly where tradition, or even the ceasing temporary interruption of relations with it. the reality reflects that more and more types of activities are developing and growing its market where the competitors can find and exploit the opportunities, identifies and takes calculated and aware risks. but they understand that in order to provide high quality products, the strategic approach should be based on the optimizing the employment, the preparation, the motivation of personnel, applying the vision of the internal marketing. the performing companies, focusing on marketing have realized long ago that the classical structure for organizing a business as a pyramid, have shattered almost immediately given on top the consumers, followed by the "first people in line" – the contact personnel, who serve customers and satisfy their demands. follows the executive leadership which must support the contact personnel and on base – the top management must support the executive leadership to help the contact and further to ensure the consumer satisfaction. regardless of the level at which is, risks are dangerous to the social evolution of the economic system; moreover, even if the generic name of social risks, the nature and their consequences give the social, economic, psychological, political, cultural character; on the information on possible complete and accurate, the deciders can operated the treatment and control strategies of them. references: [1] danu mc, riscul în afaceri, editura plumb, bacău, 2001 [2] danu mc, dimensiuni ale riscului de sărăcie în economia contemporană, în condiţiile crizei economice actuale, iecs 2009, industrial revolution, from the globalization and postglobalization perspective [3] ph. kotler., marketing management, editura teora, bucharest, 1997 [4] landier h., b. merck, detection, analysis and quantification du risque social: le modèle m@rs [5] www.worldbank.org/ [6] www.worldbank.org/, commission for social development, world summit for social development "the global crises and their impact on social development, 4-13 february 2009 http://www.worldbank.org/ microsoft word apostoaie constantin marius_eng.doc ethics and corporate social responsibility a strategic approach within the organization carmina simion simescu martinho nunes, university valahia targovişte, romania alexandra simion simescu, university of philosophy, bucharest, romania abstract today, all organizations in the world should recognize the importance and need to take into account concepts such as: ethical, moral, ethical programs, ethical behavior, social responsibility, equity and also try to implement in their organizational culture. so tackling business ethics and social responsibility is an issue today, not only theoretically but also in that of practice. this article explains how several important dimensions of organizational culture may influence the effectiveness and ethics initiatives in the corporate responsibility shock. keywords ethics, ethics programs, ethical dilemmas, ethics, global business ethics, ethical behavior, corporate social responsibility jel codes: m 14 ethics and morality ethics is one of the main branches of philosophy and can be called the science of moral reality. it tries to elucidate moral problems through cognitive exercise. ethics can also be understood as a philosophy on morality, good, evil and duty. etymologically speaking, the word „ethics” comes from the greek words ethos (homer) = primordial, country, home, reunion place, natal place, habits, character; ethike (aristotle) = the science of knowledge. from "ethos" derived the word "ethicos", meaning " from off for moral", used by greeks when they were discussing about the principles of human behavior. for start, we may consider ethics as being the science of ethos (moral), of good and evil (socrates, platon, cicero), of happiness, virtue (aristotle), of pleasure (aristip), of social ideal. many specialists think – also peter drucker – that there is no difference between day by day ethics and business ethics. an outgoing person, an ambitious one or a liar behaves the same way in the office, as well as he does outside of it, therefore we can not limitate or differentiate clearly this conduct, hence the necessity of business ethics must not be proven. thomas w. dunfee, business ethics teacher at wartin school, univ. pennsylvania, considers this practice can be suggested by information confidentiality respect of the employee towards the enterprise, contractor towards the clients, a so-called sensibility to conflicts of interests, detecting them, and if possible avoiding them, respecting the rules by outside businessmen with a professional conscience and prudence, cultivating this professional competences, limiting decisions, loyalty and good faith which aims the equity of our actions, a high sense of responsibility, respecting the rules and the freedom of others in behavior, opinions, respecting the human being. few people doubt that the good is the center value of ethics or the fact that practical good means the embodiment of values such as justice, courage, sincerity, friendship, altruism, etc. studies and scientific researches economic edition, no. 15, 2010 467 even though, to answer questions such as: what is good and evil? what is justice or courage? we have to appeal to philosophical investigigations – the only instrument we have to enlighten this essential question for our own destiny. ethical theories applied in management an ethical theory is a conceptual assemble that explains one way or another moral phenomena and usually finalizes thorough a test. so, it is important to know the main ethical theories to which appeal business ethics books and to suggest the solution to some ethical dilemmas, using this theories. these are the ethics of virtue, utilitarianism and the ethics of duty. in aristotle’s vision1, three things are the object of free will and three must be avoided: good, morals, utility and pleasure and their contrary: bad, useless, unpleasant. the definition which says that virtue is a habitus is not enough, we must show which kind of habitus it is, the virtue aims toward the instrument because it has to do with affects and actions, in which there is an exaggeration, a lack and middle. the virtue is a habitus of choice, which is determined by the mind. but as well shown by nicolai hartmann, in ethics2, virtue is not only a way, but also a peak. the virtuous man is not a mediocre man, but a superior one. ethical virtue is a way, out of two evils, the one of exaggeration and the one of the lack which aims towards the affects and middle actions; this is why giving the right amount of money is not so easy. whoever wants to find the way must leave behind his contrary, which is why the object and the purpose of the action is very important, because judging by the way we choose goes or evil we have a certain moral trait, but not after by our opinions. the purpose is an object of desire and the means are an object of free will, as we can see that the actions aimed to this means are freely chosen. the ethics of virtue proves to be relevant in many contexts for the analysts of specific business ethics problems. in the way that happiness is the result of a life of trying, likewise solid profit can be obtained only through long-term strategies. from another point of view, in the same way that happiness can be accomplished only through brave, just, honest actions, profit can be accomplished following some criteria: products and services that are needed on the market, satisfaction of the clients, stimulating the employees, stable relations with the contractors and creditors, the acknowledgement of the community, respecting the law, paying state fees and taxes, protecting the environment, etc. business ethics of aristotelian inspiration focuses on developing positive traits of economical agents, building a set of values centered on social responsibility and altruism. in money business, the middle is the ability to give, and the exaggeration and the lack is waste and avarice, because both show the extremes. the waster can give too much and take too little, and the greedy takes too much and gives back too little. in business exists also other traits: willingness as middle, then the tendency to spend money for show, and then soul-tightness as a lack? for example, the specific virtue of a manager assumes competence, authority, flexibility, tact, strength in decision-making, but above all, a good businessman is the one that accomplishes good profit through his inititiatives. but nobody can be just a manager; a full human being implies other qualities than market success. this is the motive why searching profit, as an economical agent, mustn’t leave out any other value criteria from the life and activity of a businessman; as a full man, he must build this attitudes and traits meant to give him dignity and happiness. good cooperation is the one that guesses everything which is exact for our life goals, whilst good council hits the exact point for a certain business. hence, the prisoner’s dilemma emphasizes the fact that everyone could be in a worse situation than it could be in the 1 aristotel(1998), etica nicomahică , editura ştiinţifică şi enciclopedică, bucuresti, p. 23 2 hartman, n (1926), ethick, walter de gruyter co., berlin, p. 56 studies and scientific researches economic edition, no. 15, 2010 468 situation of cooperation, meaning that everyone would lose if we were to follow only our own interests. for the ethical virtue it is important that a human being manifests to certain things feelings of love or hate. these feelings influence all the events in life because they are so full of meaning and decisive for virtue and happiness. the man becomes virtuous after an opinion from nature, another one from custom and the last one through learning. so, business ethics after aristotle emphasizes the building and the developing positive traits of economical agents, improving a set of values centered on social responsibility, with traditions and values unanimously accepted. can it be that a return to aristotle’s ethics, where ethical behavior is primordial, in this troubled times could be a good thing? utilitarism, iniated by jeremy bentham and restructurated in his classic form by john stuart mill3, has a consecventialism perspective, according to which, a good deed is not defined by the intentions than originate it, nor by the goals followed, but through its effects or consequences. whilst aristotle believed that good deeds are those done by good people, defining the character man, the utilitarists claim that a good man is the one that always or almost always does the right thing, trying to give an answer to the question „what is a good deed?” or „ when can our deeds be considered good?”. their answer is immediate and apparently simple: moral actions are the ones that through their consequences increase the quantity of good in the world, while the immoral ones increase the quantity of evil. for them, happiness means „obtaining pleasure and avoiding sufferance”, while unhappiness, associated with evil, means lack of pleasure and intensified sufferance. bentham and mill were raising a soar of „social hedonism”, based on the following principle: „ the conception that accepts as a fundament of moral utility or the greatest happiness principle claims that actions are right if they tend to propagate happiness and wrong if they tend to produce unhappiness. through happiness we understand pleasure and the lack of pain, and through unhappiness pain and the absence of pleasure. we must add that the greatest happiness principle acquires his utilitarism semnification only when it says that the maximum of pleasure is morally right when it comes upon the largest amount of people, not only one. assuming that a company with the premises on the outskirts that pollutes the environment over the acknowledged limit is pursuing the selfish goal to maximize its profit in the long run and to distract the community from the main issue (that it pollutes the environment). the company does generous deeds for the stakeholders (employees, clients, local community). utilitaristic speaking, this generosity is ok as long as a large amount of people receive a certain benefit: employees get bonuses, they take their kids to the company’s kindergarten and practice sports on its premises; local community gains money for football team, museums, hospitals; this things offer, if not a certain guarantee of ethical value, at least chances of approaching it. hence, in mill’s view, to decide and act to the good of the many persons means respecting the rules of behavior that were proven to assure the maximum of satisfaction. still, this theory applied to business leads to some circumstances in which may appear social injustice, an inequity share of resources, so to some moral restraints. for kant4, the intention, and not the consequence of the acts matter in establishing its moral values. the autonomy of will is its capacity of not being influenced by affects or feelings. duty is the center of his theory: any action in order to acquire moral value must be done from duty, relying on a categorical imperative like: „ you must...” in order to be moral, the maxima of our action must be necessary and universal, that the person should always be regarded as a purpose and never as a mean. many authors think that the most influent theory nowadays is the one that continues kant’s moral philosophy, with the question: why should we be moral? if aristotle said that the only virtue, specific to the man of character, leads to a true deserved happiness – the goal human existence, utilitarianism claimed that the idea of 3 mill, j. s.(1994) utilitarismul , trad. rom. valentin mureşan, editura alternative, bucureşti, p. 18 4 kant, i(1972),critica raţiunii practice, editura ştiinţifică, bucureşti, p. 39 studies and scientific researches economic edition, no. 15, 2010 469 morality is in everyone’s benefit, because decisions and moral acts lead to the maximum happiness of more people. kant offers another view: the consequences of our acts are lacking any moral value if they are the effects of some accidental gestures or if we make them animated by motives and selfish intentions. for kant, the intention and not the consequences matter in establishing moral value. the next question is: about what kind of intentions are we talking? we are moral as long as what guides is not the selfish desire, but the desire to act after certain rules or moral rules. in this theory, there is only one categorical imperative, to which kant finds three different approaches, each one of them stating another aspect of moral condition. the first one: „ act only by that maxima that may become universal law”.5 kant asks us to first establish the principle after which we act – called maxima. then we take the consistency test to see if our maxima can be followed by everybody. in business, universal imperative is applied in many situations. for example, if in a commercial we deliberately state lies, the principle would be: „lie to increase your business profit.” can this become a universal principle? of course not. if everybody would make cheating commercials, nobody would believe them. kant exposes and argues the most profound of his ethical ideas: morality means respecting your own rules, imposed by you, on the conditioned that they are validated by a reason as general universal laws, because by applying them, the humanity in every person is respected. aware by his innovative idea, kant said: „it could be seen that the man was tied to the laws by his duty, but nobody knew he was only obedient to his own legislation and that this legislation is still universal, and that he must act by his own will, that due to its purpose is universal law-giving”. so, moral kantian philosophy is one of the most important moral theories not only for its intrinsic qualities, but also due to its interdisciplinary. the theories that i have analyzed are not the only ethical constructions that try to elucidate the specifically problems of business ethics. the best approach is the analysis of different ethical problems in all these perspectives, to search the complementarily of these three views as categorical references on which you can found a coherent personal decision, that takes into account concrete aspects of business environment, especially in this time of crisis. ethical dilemmas in organization can be expressed as less clear situations, problems that put managers in difficult positions, wanting to take the best decision for the society’s performance. „ethical paradox” can be per submitted to interrogation by the businessman: should he assume responsibility and risks of his economical activity or to remain to the moral, abstract judgment, lacking responsibility? this dilemma responsibility/morality moves the emphasizes towards ethical theories and their application, behavior and ethical programs from „moralist” to responsibility ethics. the interest for an ethical business conduct isn’t new, but only now the interest for moral actions in order to maintain competitively is acknowledged. social responsibility lately, a new dimension of ethics is growing romanian market: corporate social responsibility. do companies operating in debt or have turned up and that responsibility means of manipulation and persuasion? in the classical view, "the only social responsibility in business management is to maximize profits"6, but in terms of socio-economic, "social responsibility beyond profit management, including protecting and enhancing the welfare of society as a whole”. the most developed and most widely accepted model of corporate social responsibility is quadripartite model originally proposed by archi carroll in 1979 and later refined in 2000 in cooperation with buchholtz. 5 ibidem 6 friedman, m.(1970) the social responsibility of business is to increase its profits , new york times, p. 89 studies and scientific researches economic edition, no. 15, 2010 470 table no.1 model of corporate social responsibility philanthropic responsibilities desired by society ethical responsibilities expectations of society legal responsibilities incurred by society economic responsibilities incurred by society (source: carroll, a. b., buchholtz, a. k.(2000) business and society: ethics and stakeholder management , 4th edition, cincinnati, southwestern college., p. 102) the concept of corporate social responsibility means and responsibility to be a bear to public organizations, but also required companies to comply with legal and ethical standards both in the public and private. accountability requires tools to ensure compliance with legal and ethical standards, such as codes of conduct and principles, performance indicators and quality management, reporting patterns, guides implementation and manifested in policy and practice responsible office. at the international level have been developed a series of documents that include principles of corporate responsibility practices. thus, the united nations global compact is a set of principles, which intended to promote global social responsibility and to stress the importance of local networks consisting of ngos, private companies and governments to solve social problems. he is an international network of national networks; to facilitate dialogue companies, individuals and organizations who share the same ideas and values that have committed to promoting socially responsible corporate citizenship. another tool is composed of the oecd principles of corporate governance. under that document, companies must comply with policies established by the countries where they operate. corporate governance principles were first published in 1999, becoming an international reference in corporate governance. to take account of developments after 1999, the principles were revised in 2003, of a larger process of regional consultations. the new principles were approved by oecd governments in april 2004. the oecd principles, implementing an effective system of corporate governance should lead to transparency and market efficiency, consistent with the rule of law and to define clearly the distribution of responsibilities between courts on supervision, regulation and application of laws. tripartite declaration on multinational enterprises and policy ilo governing board initially adopted this statement in 1977, reviewing it in the 2000. the document is a directive with non-urgent application in areas such as: employment equal opportunities and treatment safety at work training working and living conditions amounts of increasingly tough question on the establishment of mechanisms for implementing the rse, that building a system to ensure social accountability. in this regard, amnesty international maintains that the most effective means of ensuring that companies assume legal responsibility would be its national legislation in terms of world economic integration, the international legal framework needs to be echoing the ethical rules of conduct applicable internationally. they may not invent; they are contained in the universal declaration of human rights. thus, international law would not come to replace national laws, but would act as a reference point and palliation where national law would be impaired. given that the social responsibility is the enforcement, to the company unable to dissociate the legislation governing its activities, the legislation under consideration may be structured on various criteria. romanian legislation is extremely rich in this respect, providing a studies and scientific researches economic edition, no. 15, 2010 471 legislative framework appropriate and sufficient covering. at 7-8 of november 2006 first edition held in bucharest international conference on corporate social responsibility. organized under the high patronage of the world business council for sustainable development and the un global compact is the first event csr addresses corporate social responsibility in an integrated approach, treating and youth involvement in the concept. there are certainly a number of other questions that can be made and that should be answered. moreover, the refinement with which such questions are explored is the difference between success and ethical reflection credible. we live today in a hurried world, a world that still seeks its meaning and moral correctness is associated with business success, even if not a sufficient guarantees it. csr is a rather ambiguous concept of capitalism, which however cannot be completely without the purposes of our report and the ethical dimensions of practice. best be implemented in a mature market and romania is unfortunately far to get there. references 1. aristotel(1998), etica nicomahică , trad. rom. stella petecel, ed. ştiinţifică şi enciclopedică, bucureşti. 2. benedict spinoza(2000), etica, ed. antet, bucureşti. 3. carroll, a. b., buchholtz, a. k.(2000) business and society: ethics and stakeholder management , 4th edition, cincinnati, southwestern college. 4. craciun dan, vasile morar, vasile macoviciuc(2005) etica afacerilor, ed. paideea, bucureşti. 5. drucker, peter(1992), administrando para o futuro são paulo: pioneira. 6. friedman, m.(1970) the social responsibility of business is to increase its profits , new york times 7. hartman, n (1926), ethick, walter de gruyter co., berlin, p. 56 8. immanuel kant,(1972) critica raţiunii practice, ed. ştiinţifică, bucureşti. 9. mill, j. s.(1994) utilitarismul , trad. rom. valentin mureşan, ed. alternative, bucureşti. 10. joao pinto e castro(2002) – comunicação de marketing, silabo gestao, lisabona. 11. m. kaptein,(1998) ethics management. auditing and developing the ethical content of organizations, kluwer academic pub. 12. kotler & dubois(2003) – ”marketing management”, pearson education france, paris. 13. d. menzel(2007), ethics management for public administrators, sharpe, london. 14. popa i, filip r(1999), management internaţional, ed. economică, bucureşti. 15. samuel mercier(1999), l’etique dans les entreprises, editions la decouverte et syros, paris. 16. quinn j. b.(1994) – l’entreprise intelligente. savoir, service et technologies, dunod, paris. studies and scientific researches economic edition, no. 15, 2010 472 microsoft word apostoaie constantin marius_eng.doc multi-dimensional understanding of the “product” in the marketing decision process rodica boier, ph.d, "gh. asachi" iași technical university, romania   abstract the paper starts from the observation that students often experience difficulties in identifying the complete set of aspects involved in making product decisions, but also in understanding the correlations established between these elements. the review of the information required by product management reveals a set of interrelated aspects among which the most important refer to: product category; the needs that the product addresses; usage situations and fields; the product life cycle; seasonality of manufacturing/purchasing/usage; the path from technical features, such as attributes and functions, to the benefits (advantages) for the client; “total product”; the set of related products; the tangible/intangible relationship a.s.o. the paper may be used as a checklist to identify the requisite steps in the multidimensional research, which precedes the decision process of the product marketing. keywords product; marketing; need; product life cycle, total product; service; associated (complementary) product introduction as verified by practice, the marketing decision may experience failure both in the design and the implementation phase, when a certain aspect of the offering is overlooked, be it an unimportant detail. from this perspective, one must note that the teaching process of shaping the students’ marketing skills is frequently deficient due to a sequential approach, lacking the holistic vision, where all parts are interconnected. moreover, beyond the coherent and integrating approach, what is required is a synergetic approach, aimed at ensuring that all parts work together and complete one other. the various marketing subjects convey information, structure knowledge, train abilities, build abilities and in particular attitudes. all of these however are sometimes confined to the subject’s limited, relatively reductionist scope, thus eluding an integrating vision, which would allow the student to make connections and to understand interdependencies and the concrete manner of undergoing the logical and chronological path of the complex, difficult, risky and also challenging process of the marketing decision. the idea for this paper was suggested by the observation that students often experience difficulties in identifying the complete set of aspects involved in making product decisions, but also in understanding the correlations established between these elements. the choice of this particular theme for the article was further motivated by yadav’s recent paper1, which draws attention to the quasi-abandonment of conceptual approaches in research, which now tends to focus exclusively on empirical developments. in terms of its content, the paper will therefore constitute a conceptual approach, intended to fill a void, not so much related to concepts themselves but to the connections among them. moreover, the paper may be used                                                              1 yadav, m.s. (2010), „the decline of conceptual articles and implications for knowledge development”, journal of marketing, 74 (1), p. 1-19. studies and scientific researches economic edition, no. 15, 2010 545 as a checklist to identify the requisite steps in the multidimensional research which precedes the decision process of the product marketing. product category set of needs usage situations and domains tangible / intangible product life cycle seasonality associated products consumer involvement technical features → benefits (advantajes) “total product” rational / emotional customer loyalty consumption visibility p r o d u c t perceived risk direct competition indirect competition product market structure product segmentation ↔ market segmentation buying and consumption/usage behavior customer value strategic positioning figure 1. dimensions of the „product” concept in the marketing decision process the organizations high-performance product marketing are able to leverage with great expertise and talent all the information related to the offering „at three levels2: (1) the product manager as an individual; (2) the marketing processes related to product management; and (3) the organization structure and role definition.” the review of the information required by product management3 reveals a set of interrelated aspects among which the most important refer to: product category; the needs that the product addresses; usage situations and fields; the product life cycle; seasonality of manufacturing/purchasing/usage; the path from technical features, such as attributes and functions, to the benefits (advantages) for the client; “total product”; the set of associated (complementary) products; the tangible/intangible relationship; consumption visibility and/or, as the case may be, the visibility of the consequences of using the product; the relationship reason/emotion in the purchase decision process; customer loyalty; perceived purchase risk; consumer involvement; direct competition; indirect competition by substitutes; product segmentation in agreement with market segmentation; product structure market; the product’s typical buying and consumption behaviors; market gaps and product value for the consumer; strategic positioning (figure 1). it is worth noting that in this complex context, “customer value” and “strategic positioning” are the broadest, all-encompassing concepts, which derive from the previous above. below, we will dwell on the elements which provide a preliminary product description, while those components with a more marked strategic focus will be dealt with in a future article.                                                              2 tyagi, r.k., m.s. sawhney (2010), „high-performance product management: the impact of structure, process, competencies, and role definition”, the journal of product innovation management, 27 (1), p. 83. 3 boier, r., l. țimiraș (2006), cercetarea de marketing, editura performantica, iasi, p. 52. studies and scientific researches economic edition, no. 15, 2010 546 dimensions of the „product” concept in the marketing decision process product category. marketing’s perspective of the concept of “product” is as broad as possible, as it practically encompasses everything that may be offered in order to meet a particular need. the needs and wants of individuals are satisfied through the consumption of goods. the particular need may be a present need, that the consumer recognizes, or a latent one, which the provider must discover, describe, design an adequate product for and subsequently make it known, by explaining it, to the potential consumer. whereas, in marketing’s classical understanding, the “product” offered meant only a tangible good or a service, contemporary developments have required a broadening of the potential materialization of the product in unconventional areas, the product being simultaneously a combination of the most different and subtle tangible and intangible goods, information and software, ideas, attitudes or behaviors, people and places, etc. below, we will use the generic term “product” to designate everything that is offered to one’s attention, analysis and purchase, regardless of the actual form it may take, according to the complex marketing perspective. before focusing on his own offering, the marketer must not overlook the product category it belongs to, simply because, before buying a particular brand, the consumer considers the category it belongs to. as verified in practice, there are situations when the consumer barely accepts an offering, or even rejects it, basically because it stands for a product category of which he has a negative view. conversely, on other occasions, the consumer easily accepts an offering, simply because it is proposed on the marketplace within a product category with a strong positive image. the set of needs the product addresses. behind the decision to buy a product there is always a reason or a combination of reasons. behind the rejection of a product there is every time a reason or combination of various reasons – the consumer’s conclusion that the product, based on its features, will not meet the specific need to the required extent. the process of designing an effective strategy confronts marketers with a long series of decisive questions for the understanding of consumers: the complexity of the need and the set of needs that the consumers attempt to address, the degree of intensity of the needs, the purposes that the consumer seeks to achieve in the process and the associated motivations, the set of actual products and/or services that the consumer wants to buy in order to meet those needs, etc. products motives 1 2 3 4 …. n product a √ √ …. product b √ √ …. product c √ √ …. √ product … …. …. …………. …. …. …. …. …. …. figure 2. the products-motives relationship source: rodica boier (2001), comportamentul consumatorului, editura "gh. zane" iași, p. 68 a reaction to complex changes, both those that affect the self and those related to the influences exerted from outside, the consumer’s motives must be understood through the prism of their considerable dynamics. there are at least three generating causes of the dynamics of motives. firstly, one must recognize that human needs are never completely satisfied; consequently, the gap between the desired state and the actual state in terms of meeting the needs constantly generates motives. secondly, the hierarchy of needs ensures studies and scientific researches economic edition, no. 15, 2010 547 that a need once met will motivate the consumer to seek to satisfy a higher need. finally, once the individual has achieved a particular aspiration level, he will be motivated to aim for a higher level; conversely, the impossibility to achieve a particular aspiration level will determine the individual to scale it back. the relationship between motives and products can be reflected using a matrix, as shown in figure 2. the motives-products correlation matrix differs from a consumer segment to the other depending on their specific combination of features. ensuring the agreement between the needs and motives of a consumer, on the one hand, and the set of products that can satisfy him, on the other, can be a challenging endeavor. this constitutes in fact the core of the marketing effort of companies. product usage situations and domains. the field of use sometimes decisively influences the product configuration, its associated services, its seasonality, etc. it is to be expected that the same product, designed for different fields, will have features customized for the requirements of each particular field. the more the product is customized for the specific field of use, the greater the chances that it will generate consumer satisfaction. usage, on the other hand, refers to the different contexts in which the same product may be used. in the ansoff matrix, the sales growth strategy for an existing product on an existing market is based, among other things, on this solution, i.e. finding alternative uses of the product. most often, they are discovered by “innovative” consumers, who find ways to use the same products for different applications or fields. last, but not last, important among the product usage is the product’s capacity to act as a gift, on specific occasions. generally, the information on this potential product type is obtained through marketing research. if the marketer identifies such a favorable situation, he must subsequently find a solution to suggest to the consumer to buy the product for this specific purpose. product life cycle. the stages that the product goes through from introduction up to the withdrawal from the market, and the varying strategic objectives, sales and profits, consumers, competition and marketing efforts involved, represents a major dimension of the decision process. as part of an effective management of the product range, the organization seeks to maintain an internal balance, with products at different in different life-cycle phases, in order to eliminate the disadvantages of each stage and to compensate potential losses on some products with profits on other products. essentially related to the product’s first life-cycle phase, the new product diffusion process involves the classification chart, which focuses on the relative time required for customers to adopt a new product and on how they use available information sources in the purchasing process. the purchasing moment is measured based on the time between the moment when the consumer becomes aware of the product and the instant when he decides to buy it. the marketer will therefore wish to know the size and characteristics of the various adopter categories, defined in terms of how innovation diffuses in the community as a whole. between absolute openness, on the one hand, and the absolute resistance to innovation, on the other, there is a range of several intermediate attitudes: innovators, early adopters, early majority, late majority and laggards, each with their own profile and consequences.4 over the product life cycle, one can control the extent to which the product delivers satisfaction to consumers. to observe how this objective can achieved, it can be useful to represent the product using levels which reflect the consumer’s different expections: generic product, which simply represents the “good”, with the basic name of the product class, without which the product cannot penetrate the market; expected product, the sum of the customers’ minimum hopes for the product, resulting from experience in consumption; developed product, which exceeds the consumer’s expectations; potential product, which                                                              4 wejnert, b. (2002), "integrating models of diffusion of innovations: a conceptual framework", review of sociology, 28, p. 297-306. studies and scientific researches economic edition, no. 15, 2010 548 includes any virtual element of a future configuration, designed to attract and retain customers. several considerations are of practical relevance for the marketing decision5. firstly, the criterion used for this classification is the product’s degree of specialization, in relationship to consumers’ expectations. secondly, the developed product represents, through its components, more than the customer states as a need/want at a given moment, beyond what he expects or used to expect. as a result of the regular release of upgrades and of the mechanism of experience effect, the consumer learns to hope for reasonable product improvements. customer expectations interact with the manufacturer’s product upgrades, meaning that the product evolves throughout its life cycle. as a matter of fact, the developed product is typical of mature markets, featuring experienced, or even sophisticated customers. thirdly, the potential product reflects the maximum improvements it can receive. the difference between the potential product and the developed product anticipates, at any given moment, what is still possible and simultaneously what remains to be done. however, the border of the potential product is fluid and cannot be accurately traced in advance. finally, the path of an upgrade feature goes in the opposite direction of consumers’ expectations: as a possible upgrade feature becomes a differentiated product, it will end up, sequentially, as a component of the developed product. eventually, customers become accustomed to the feature, which turns into a minimal expectation, incorporated in the expected product field. seasonality in manufacturing/purchasing/usage. product strategy decisions are largely influenced by its potential seasonality. seasonality derives essentially from consumption patterns, yet there are situations where certain aspects of manufacturing or even distribution may cause seasonality6 (for example, the availability of raw materials). generally, the seasonality of consumption, if it exists, will impose specific demands on distribution and thereby on manufacturing. therefore, the typical consumption patterns and, accordingly, the distribution and even manufacturing patterns must be known and understood properly, prior to making any marketing decisions. at the same time, the factors that cause seasonality, no matter its type, are thoroughly examined, in order to identify potential solutions that will lead to its reduction. technical features, functions, features and benefits (advantages) for the customer. marketing theory has provided one further answer to the research undertakings relevant for this article: it is not the article in itself that generates satisfaction, but rather the features (benefits) it consists of or, more precisely, the advantages it brings to the customer. the individual does not research the market to purchase products as mere things, but as combinations of benefits that they provide; he will not buy the product only to possess it, but for the utility it offers in consumption; in other words, consumers will look not for products, but rather for solutions to their problems. “many sellers make the mistake of paying more attention to the specific products they offer than to the benefits and experiences produced by these products.” 7 the “total product”. the product can be represented tridimensionally as follows8: core customer value, the essential level, which reveals, beyond any specific features, the benefits that the customers actually seek; actual product, a particular materialization of the core product, most often under a different name, and features, styling, brand name, packaging and                                                              5 boier, r. (1997), inovare şi succes. strategii de marketing pentru produse noi, editura sedcom libris, iaşi, p. 31-32. 6 favaretto, d., bruno viscolani (2004), “a general model for the marketing of seasonal products”, journal of interdisciplinary mathematics, 7, p. 349-366. 7 kotler, p., g. armstrong (2010), principles of marketing, 13th edition, pearson education, upper saddle river, nj, p. 30. 8 kotler, armstrong (2010), p. 249. studies and scientific researches economic edition, no. 15, 2010 549 quality level; augmented product, incorporating the additional consumer services which complement the actual, tangible product. according to this view, the last two levels of a product include its tangible and intangible basis, which delivers the benefits that the customer expects. the components that shape the levels two and three may also be evaluated in terms of their structural features (physical characteristics), functional features (performance) and aesthetics (style, color). by adopting this structure, the product manager is expected to undertake the following actions in succession: identifying the basic needs that the product will meet; designing of the actual tangible product and its components; devising the set of benefits that will complete the product and enable it to meet customer expectations to the highest degree. associated (complementary) products. there are relatively few situations when a certain need is met through the consumption of a single product. in most cases, ensuring the consumer’s complete satisfaction hinges on the combined consumption of several products, which thereby associate with one another and combine into what marketing designates as set of associated products. the more complex the need, the more likely it is that the set of associated products will be particularly complex in terms of content. in estimating the product value, the consumer seeks to anticipate, in addition to the delivered utility, the costs entailed by the acquisition, ownership, consumption/usage of the product and, where applicable, the disposal costs. all the listed situations involve products and services associated with the actual product. sometimes, there are cases when a consumer’s financial burden, resulting from the associated products (transport, installation and start-up costs, consumables, energy and fuel, repairs, spare parts, etc) exceeds the purchasing cost of the actual product. tangible/intangible relationship. one of the most conspicuous developments in recent years has been the marked growth of the service sector. a service is, in essence, a particular form that the offered product may take. practically, any product nowadays incorporates services. similarly, there are few cases when a service does not include a more or less broad range of several tangible products. one may therefore speak of a product-service continuum9, as a structure where the tangible and intangible mix varies depending on the features of the offering and the profile of the customer segment. within this combination, services add value to the product and similarly support products add value to the provided service. consequently, product marketing will consider these facts and will focus on solutions to enhance the value delivered to the customer, from the earliest product configuration phase, but equally in the subsequent stages, of manufacturing, distribution, communication and after-sale support. furthermore, the marketer’s task will be to find the optimal solutions for managing service-related issues – intangibility, inseparability, variability and perishability – by means both of internal marketing and of external and interactive marketing efforts10.                                                              9 curtis tony (2008), marketing for engineers, scientists and technologists, john wiley & sons, ltd, chichester, p. 85.   10 gary armstrong, philip kotler (2009), marketing. an introduction, 9th edition, pearson education international, inc., upper saddle river, nj, p. 254.  studies and scientific researches economic edition, no. 15, 2010 550 references 1. armstrong, gary, philip kotler (2009), marketing. an introduction, 9th edition, pearson education international, inc., upper saddle river, nj. 2. boier, r., laura ţimiraş (2006), cercetarea de marketing, editura performantica, iaşi. 3. boier, r. (2001), comportamentul consumatorului, editura "gh. zane" iași. 4. boier, r. (1997), inovare şi succes. strategii de marketing pentru produse noi, editura sedcom libris, iaşi. 5. curtis, tony (2008), marketing for engineers, scientists and technologists, john wiley & sons, ltd, chichester. 6. favaretto, d., bruno viscolani (2004), “a general model for the marketing of seasonal products”, journal of interdisciplinary mathematics, 7, p. 349-366. 7. kotler, p., g. armstrong (2010), principles of marketing, 13th edition, pearson education, upper saddle river, nj. 8. tyagi, r.k., m.s. sawhney (2010), „high-performance product management: the impact of structure, process, competencies, and role definition”, the journal of product innovation management, 27 (1), p. 83-96.â 9. wejnert, b. (2002), "integrating models of diffusion of innovations: a conceptual framework", annual review of sociology, 28, p. 297-306. 10. yadav, manjit s. (2010), „the decline of conceptual articles and implications for knowdlege development” journal of marketing, 74 (1), p. 1-19. studies and scientific researches economic edition, no. 15, 2010 551 microsoft word apostoaie constantin marius_eng.doc good manners and etiquettecomponents of businessman’s image ovidiu leonard turcu, ph.d., „vasile alecsandri” university of bacau, romania andreea feraru, „vasile alecsandri” university of bacau, romania abstract modern management takes particular interest in people, in knowing them from a psychosocial perspective, considering their entire personality. it is based on human-centred systems, solving people’s problems, treating humans as subjects not as objects, so that it creates a positive psychosocial environment – the only one which incites, stimulates, mobilizes people for work, inventiveness and creation. there will always be aspects to learn in a business environment which is continuously evolving. success does not only depend on the ability to distinguish chances and opportunities, it also relies on leaving behind a personal card which makes a good impression and which strengthens business relations in the long run. keywords businessman’s image, manners, behaviour, ethics , common sense. jel codes: d 11, d 12, m 19 short history confucius, the famous chinese scholar (551 – 479 b.c.), said that virtue represents nothing if not born from courtesy, namely from the heart. the human being would have a natural and agreeable behaviour, a civilised conduct, only by respecting some rules which have been entailed and codified along the centuries. confucius implemented, by means of his writings, conduct “laws”, with special reference to speaking and eating. in france, king louis xiv established very strict conduct rules although we know that, despite the restrictions imposed by him, he did not use any cutlery but preferred to eat using his hands! the neighbouring italians were no less inferior: bourgeois giovanni della casa is noteworthy for his work “galateo, on conduct”, the term “galateo” being used even nowadays as a synonym of etiquette. later on, in the xvith century, the term “gentleman” appeared, being first used by baldasare castiglione in his book “the gallant”, and it was not essentially modified until wwi. in great britain, the arbiter of etiquette was john debrett who wrote numerous guides concerning manners two centuries ago. there is also a publishing house bearing his name (“debrett's”), which currently publishes the most famous books in this domain. in germany, there is an unofficial code named knigge, based on adolph freiherr knigge’s book “on human relations”. even if the document dates back from the xviiith century, it is respected even nowadays, being used ad literam in the high circles of the society. over the ocean, in the usa, history reminds us of benjamin franklin and george washington who wrote behaviour codes for gentlemen. studies and scientific researches economic edition, no. 15, 2010 520 hence, modern manners were established in the american etiquette system by means of george washington’s (1732-1799) civic rules, but the most successful popularisation of manners was undertaken by emily post, in 1922, in her work “etiquette – in society, business, politics, and at home”. the book became a bestseller and paved the road for its successors trying to promote good manners. the good manners’ code is composed of a multitude of laws, in fact conventions, all having a common denominator: that of not disturbing or importuning your fellow being but, on the contrary, making him/her feel comfortable in your company. paradoxically, this is the fundamental principle on the basis of which the modern and open societies in our days were built: “my freedom ends where the other’s freedom begins”, as the philosopher john stuart mill wrote some 150 years ago. rules and principles regarding business etiquette good manners were not arbitrarily incorporated in some social norms. they have roots in a deep sentiment, in that harmony between behaviour and ethics, between the beauty of human character and its morality. the code of good manners in business includes regulations for every situation and stage in the relationship with a business partner. the world of business is governed by written and unwritten laws. the written laws refer to a series of information, such as: regulations concerning internal policy, information found in books, magazines, on the internet, various studies, etc. the unwritten rules raise certain problems because there are rare cases when academic studies instruct students how to speak in public, how to maintain audience’s interest, what attitude should be shown at business meetings or negotiations, what apparel must be worn in different situations, how to offer a business card, etc. before talking to a person, one sees his/her look, the clothes, the way in which he/she holds hands, or how straight he/she stands. although we do not always admit it, in our relationships we commonly act according to our first impression. a short survey shows that there are always tens of details to be taken into consideration, as well as a bundle of unpredictable situations. according to george grisham and sandra lee1, there are a few principles which can be considered fundamental regarding business etiquette. these are: 1. politeness. according to the authors, this is necessary in every place and at every moment in business contexts. some of the first phrases of the book are: “we like to be treated politely when we are in the position of clients, why shouldn’t we be equally polite when we receive clients?” philosopher bacon believed that “politeness is the garment of the spirit. it should serve us as our daily garments do: they should not be too well-chosen, but they should also nicely hide the imperfections of our body; anyway, it should not hinder our spirit from behaving freely.” 2. discretion. concerning this aspect, the authors state that the “appearance of the e-mail and of the internet has dramatically increased the necessity to respect this principle”. making reference to some rules for using the internet and the e-mail, the authors assert the following: “nobody can guarantee the confidentiality of the message”. among the qualities of a businessman, we observe his discretion and confidentiality regarding a series of information items. confidentiality represents the quality of preserving the secrecy of information, so that it can be only used by authorized persons. 1 “manipularea în afaceri”, george grisham and sandra lee, editura antet, translated by vasile negura, 2003, pag. 86 studies and scientific researches economic edition, no. 15, 2010 521 3. affability in relations with business partners. this aspect results from the following statement: “in general, it costs you nothing if you are friendly with your clients or with your other colleagues”. when we meet an amiable and sociable person we are prone to attribute some other positive features to him/her, such as intelligence, enterprising spirit, or earnestness. 4. punctuality. possibly exaggerating so as to impress their readers, the authors say that punctuality is “even the quintessence of business success”. but there comes up the question: what can be said then of the cultures where time is not that important? punctuality is a part of every person’s card, it is as important as many other things which define and characterise it. to be punctual signifies to start collaboration or partnership successfully, or it can even constitute the success of a negotiation. punctuality means politeness, respect, common sense and maybe even those 7 basic years of education at home. being late at meetings could eventually mean failure in business, failure in avowing yourself, the ruination of relationships with the others, lack of competence and seriousness. in some cases, it can be the first impression a businessman creates about his/her partner. 5. look. one opinion i agree with refers to the fact that “a neat look always helps, together with politeness, affability and language used”. the american specialist in nonverbal communication, professor mehrabian, showed that one’s look (height, weight, colours, clothing, haircut, accessories and, in the case of women, make-up and jewellery) represents 55% of the impression anyone can make regarding a businessman. the next 38% derive from the way in which he presents himself: body language, visual contacts, trust, etc. the rest up to 100%, namely 7%, is represented by what that person knows or says in any given situation. we must mention that those 93 percents will never supplant one’s lack of knowledge, acting unprofessionally, and they will never hide ignorance. they help businessmen in establishing an easier communication mode with their partners. 6. adequate language. george grisham and sandra lee consider that “this is extremely important and helps you make the best possible impression”. the term “adequate” applies to the entire conduct of a person when it comes to meetings. at a business meeting, people communicate all the time. each of them expresses nonverbally what he/she feels during that meeting. by means of nonverbal signs it can be observed whether the subjects discussed are interesting, or if the audience agrees to what the speaker says or not. it is generally considered that those who speak have the leading influence on the course of the meeting or on the decisions to be taken. the way in which one communicates with the others verbally, in writing, or by gestures can strengthen or ruin a personal career, a company, negotiations with partners, relationships with subordinates or leaders, clients or the public. during the discussion, the language is important, and so is what is said the message transmitted. a well-mannered talk always contains politeness markers – “please”, “thank you”. most of the romanian businessmen are acquainted with these simple examples of civilised conduct. still, there are some cultural differences when the business partner is a foreigner. for instance, what is impolite in japan can be accepted as polite in latin america. conduct rules are not widespread at the level of the entire world, but they often find common roots, no matter the nationality. just as it happened with culture, these rules have evolved and diversified, especially in multiethnic societies. therefore, they are not necessarily universal. it is recommended that the businessman should take into account the particularities, rituals and customs of every nation. local habits predominate; they are almost “sacred” and cannot be neglected or broken knowingly if the person wants the guaranteed success of his business. the formula of good manners can be expressed mathematically as follows: good manners = 1/3 rational thinking + 1/3 common sense + 1/3 affability studies and scientific researches economic edition, no. 15, 2010 522 english dictionaries define the term “common sense” as some reasoning acquired by experience rather than by study; american dictionaries define it as solid but unsophisticated reasoning. common sense, though elementary and unrefined, cannot be neutral. it derives from experience, and experience is connected with culture. the most important principle of business conduct refers to the careful analysis of the other business partners’ interests and feelings. in other words, greater concern must be shown to everything that is done or said regarding the business partner. nobody likes flatterers who are always praising their colleagues or business partners. etiquette in business just as commercial products are identified according to a label – especially nowadays when image and brand are so much taken into consideration -, people also advertise themselves. there is the temptation to state that etiquette or good conduct pertains to the high society, but it is not true, as it is not an emblem of royal houses or intellectual elites. sometimes, people connect it with the victorian age when the society paid high respect to behavioural codes. back then, all those who did not respect these codes were excluded from high circles but, in time, such demands went astray. etiquette or the symbol of pleasant conduct can nowadays seem an old-fashioned idea, but it still exists. the etymology of the term “etiquette”, as it is known worldwide, has an interdiction at its roots. according to wikipedia electronic dictionary, the etiquette represents “a code which influences social behaviour, according to conventional norms in a society, social class or group”. regularly, the rules of etiquette are unwritten, and they actually reflect a fundamental ethic code or, on the contrary, it can only be some fashion/trend. in its evolution, etiquette entered various social areas: the military, the priestly areas, the royal one, sports, or entrepreneurship and business management. etiquette in business is a habit which shapes itself in time. contrary to common belief, it is sometimes absent even at the highest levels and in countries with a solid corporatist tradition. etiquette refers to the requirement that the moral standards of a businessman should be in accordance with his behaviour. it regulates external forms of behaviour imposing some model of conduct to the human being. the image of the businessman nowadays is given by his behaviour in society or among his business partners. he must comply with a series of golden rules in the business world, which are enfolded in a significant word: “impact”. each capital letter of the word represents a guideline for a businessman’s conduct2: integrity ….– to act honestly and sincerely. manners …. – he should never be selfish, bad-mannered and disordered. personality ….– he should communicate values, attitudes and options. apparel/ look . – he should always present himself in the best light. consideration ...– he should analyse himself from the other’s perspective. tact … – he should think well before speaking. a businessman’s integrity refers to the fact that he must always be an honest, sincere and trustworthy person. the reputation of being incorruptible is difficult to earn and easy to break. integrity is tested when a person or the company the businessperson represents is provoked or tempted to act less honestly. a precious rule in business conduct says that integrity should be beyond any doubt, for its absence could by no means be hidden. manners represent those patterns of conduct which indicate to a businessperson if he/she can rely on a partner, if he/she will act correctly and objectively in the undertaken business. if one acts or speaks in a racist way, if lack of loyalty towards the company or the colleagues is 2 robinson d. “eticheta în afaceri”, bucureşti, rentrop and straton, 1999, pag. 93 studies and scientific researches economic edition, no. 15, 2010 523 shown, then these manners will be considered unacceptable. good manners also mean acting efficiently so as to make the other feel comfortable in the partnership. the personality of the businessman contributes to the image of the business he represents and it is influenced by: loyalty, effortless speech, persuasion, charm and reputation. at the same time, one’s behaviour offers the best chance to measure his/her qualities. the apparel or the look of the businessperson should not always be seen as a potent quality of that person, but it should not be seen as a weak mark, either. a good impression in front of the business partners is formed and maintained if he/she: is physically neat; wears adequate clothes; adopts a suitable posture in various situations; uses appropriate greeting formulas. consideration towards the other partners is the basic principle which underlines all the good manners in business. the businessperson should be informed about his prospective business partner. similarly, he/she must imagine in advance a possible reaction of the person he is due to meet, whom he/she must write or phone. tact is the last, but not least, golden rule any businessperson must respect, as it helps him/her approach various problems he might confront. to be tactful does not only imply transforming some unpleasant situations into others which could be more acceptable. it implies the careful analysis of the others’ interests and only after that can one choose the most suitable form of expression. what should be understood from this golden rule is that when doubts occur, nothing should be said! the europeans pay attention even nowadays to respecting the right conduct, but in america etiquette is considered by some a barrier, a useless restriction to one’s freedom of speech. others respect it, and the proofs are the posters hung at the entrance in some american restaurants: “no shoes, no shirt, no service”, meaning that access is only granted if you are adequately dressed up. all the cultures on earth guide themselves after some rules, and the one breaking them is admonished and excluded from the polite circles. this circle was defined by emily post, known as the “etiquette diva”, as being the “high society”. “the high society is not limited to a certain space or group, but it defines an unlimited category of people, spread all over the world, whose members possess a high level of culture and civilisation, and not only do they have good manners, but they also display a certain style”, emily post writes in her book simply entitled “etiquette”. manners should be deeply rooted and should take account of who you are, not how you are. once you possess them, they become “a matter of instinct rather than conscious compliance”, emily post adds. etiquette highlights a series of advantages offered to businesspersons: concerning the internal part of the organization: it establishes harmonious relations between people; it boosts staff morale; it contributes to increasing the productivity and efficiency of work groups; regarding its outer facets: it brings a good impression from clients and suppliers; it creates a favourable image for the firm; it leads to enhanced reputation for the firm; it attracts business partners; it facilitates successful new businesses; it facilitates personal success and company success. there is etiquette in everything we perform, whether we walk on the street or we send an email. every day, we only demonstrate who we are in relation with the surrounding world. the respect paid to the others is equivalent to that paid to ourselves. while good manners will never perish, their definition changes from a period to another. studies and scientific researches economic edition, no. 15, 2010 524 conclusions this subject has been of concern for writers and philosophers all over the world since earliest times. the evolved societies of the past millennia had different codes to guide their lives, starting with the egyptians, the greeks and the romans. good manners are essential for one’s conduct and when creating a favourable image of oneself. at the same time, etiquette in business can be one point extra when looking for success. over the last ten years, the business environment in romania has evolved greatly as related to professional image, and this made businesspeople more attentive in public activities or during some business meetings. this owes to the fact that personal image is as important as the image of the business they represent. as a result, they have started thinking of success not only as the outcome of their and their employees’ work, but also focusing on building a personal and institutional image which is as favourable as possible. the success of some business depends, to a great extent, on the good manners and etiquette adopted by the businessperson. lately, we could observe the connection between the businesspersons’ conduct and the company’s productivity, efficiency and profits. inadequate conduct, lacking conscientiousness and attention, no matter if it is caused by negligence, carelessness or ignorance, could cost the manager his promotion or even his job, and it could cost the company its market and its profit. bibliography 1. asfa-wossen asserate, (2007), bunele maniere. mic tratat de supravieţuire în societate, ed. nemira, bucureşti 2. baldrige l. (1997), codul manierelor în afaceri, ed. business tech international, bucureşti 3. bridges john, (2007), cum sa fii un gentleman. mic tratat de eleganţă, ed. nemira, bucureşti 4. candace simpson-gilles, (2007), cum sa fii o lady. mic tratat de eleganţă, ed. nemira, bucureşti 5. cismaru diana-maria, (2009), comunicarea internă în organizaţii, ed. tritonic, bucureşti 6. grisham george şi sandra lee , (2003), manipularea în afaceri, ed. antet, bucureşti 7. mitchell mary , (2007), ghidul manierelor elegante în afaceri, ed. paralela 45, bucureşti 8. paus viorica aura, (2006), comunicare şi resurse umane, ed. polirom, bucureşti 9. robinson d., (1999), eticheta în faceri, ed. rentrop and straton, bucureşti 10. sabath ann marie, (2002), codul bunelor maniere în afaceri, ed. vremea, bucureşti studies and scientific researches economic edition, no. 15, 2010 525 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 28, 2018 http://sceco.ub.ro 31 an analysis of palm oil price fluctuation in the foreign market buyung faculty member of education and teacher training college (stkip) pelita nusa bangsa binjai abstract this research is aimed at investigating the impact of price and non-price on the demand for palm oil, supply and stock of palm oil in a foreign market. the data employed in this research were time series data. the analysis used the model of demand, supply and stock of palm oil. full simultaneity in a dynamic model with inventories was adopted from nerlove (1956). this research has shown that the supply of palm oil in the foreign market had a positive influence on the price, the area and the supply in previous years while the response of the demand was negative. on the other hand, the income and the demand in the previous years had a positive influence. the palm oil stock was influenced by the quantity in the previous years and international price. keywords price; non-price; palm oil foreign market realities jel classification f1; l10 introduction the main goal of long-term development is the realization of a strong foundation for the nation to grow and thrive on its own power to a just and prosperous society. it emphasizes on development with the main goal of achieving a balance between agriculture and industry as well as fulfillment of community needs. development that maintains the linkage between agricultural and industrial sectors is one of the required development strategies, especially by developing countries that have great potential in agricultural sector. kuznets (1964) argued that agricultural sector has the potential to provide four major links to economic growth and development. first, agricultural sector in addition to providing raw materials that non-agricultural sector requires, or product contribution. second, agricultural sector will produce goods for domestic marketing, or market contribution. third, in line with the increase in economic growth and development, agricultural sector can be considered as main source of capital for investment, i.e. a process of transfer of surplus capital from agricultural to non-agricultural sector or factor contribution. fourth, agricultural sector can contribute to the balance of payments through the development of production of import substitution or foreign exchange. plantation is one of the agricultural sub-sectors that play a role in employment, development of production of new remote areas, supporting sector economic activities through the provision of raw materials, giving contribution which means to increase the country's foreign exchange, provision of foodstuffs and being able to improve the welfare of farmers. in agricultural development, the plantation sub-sector is expected to be directed to the achievement of plantation three dharma including (mubyarto, 1983): financing, foreign exchange, creating job opportunities, conservation of natural resources. one of the commodities of the plantation sector contributes to the increase of indonesian non-oil and gas export buyung 32 is a commodity of palm oil. plantation area, volume and value of oil palm oil exports in indonesia are shown in (table 1). in this table represents that the area of oil palm plantation in period of 1984 to 2000 had a tendency to increase, while the volume of exports went through a slight fluctuation, that is the decline in export volume in 1985 amounted to 63.01%, 1988 of 2.78% and in 1993 was reducing by 11.79% and in 1996 there was a decrease of 22.45%. the decline in export volume was likely due to the decline in global palm oil prices in 1985 from us$744.00/ton to us$533.00/ton in the previous year. similarly, there was a decrease from us$348.68/ton in 1989 to us$282.91/ton in 1990 (table 1.2). meanwhile in 1995, there was a change of government policy in terms of palm oil exports, related to the effort in order to ensure the availability of domestic (cpo) cooking oil raw materials. thus, since 1994 the minister of finance enacted the decree no. 439/kmk.017/1994 to impose an export tax on cpo based on the price of domestic cooking oil, i.e when the price was beyond rp.1,250 per kilogram, then the government will apply export tax on cpo. the percentage change in the exports value every year seems immeasurably fluctuating. in 1984, there was a decline in export value by 43.23%, in 1985 there was an increase by 162.56%, and in 1986 declined again by 33.075%, although export volumes increased during the year. palm oil plays an important role in the indonesian economy, especially for raw materials for domestic cooking oil production, which is one of the nine kinds of community basic needs. in the past year, palm oil is the main raw material of cooking oil production, replacing coconut oil that has been declining in its production, and it cannot be relied upon to meet the demand for domestic cooking oil, especially its contribution to the stability of material price which is one of vastly contributing components in triggering inflation. table 1: area, value and volume of indonesian palm oil exports (us$ million) year area (thousand ha) export value of palm oil % export value modifier export volume (thousand ton) cpo price (us$ thousand/ ton 1984 414.6000 111,5 345,8 744.00 1985 549.6000 63,3 -43,23 127,9 533.00 1986 593.8000 166,2 162,56 437,8 257.00 1987 713.3000 112,9 -32,07 566,9 350.46 1988 964.5000 112,9 27,46 551,1 422.72 1989 1072.900 143,6 95,47 741,8 348.68 1990 77599.30 280,7 19,98 781,9 282.91 1991 1163.900 224,6 -9,35 815,4 324.51 1992 1259.300 203,6 64,73 1167,9 395.31 1993 1405.500 335,4 6,32 1030,2 378.90 1994 1437.700 356,6 32,47 1372,0 541.81 1995 1650.900 472,4 51,95 1631,2 649.19 1996 1885.200 717,8 4,11 1265,0 541.96 1997 2552.300 825,5 10,46 1681,9 542.57 1998 2768.600 1446,1 75,18 2891,7 656.53 1999 2785.600 1535,4 6,15 3042,3 664.56 2000 3171.600 1676,9 9,22 3321,5 687.68 source: indonesia economic indicators (bps), indonesia financial statistics (bi) 1984 – 2000 (processed) an analysis of palm oil price fluctuation in the foreign market 33 increasing plantation area and oil palm production is inseparable from the better market of this commodity in foreign market. the price of primary agricultural commodity increased slightly in global market during the first half of 1993. the prominent price increases were seen in rubber, pepper and palm oil. this price increase was mainly due to decreased production in some major income countries (bps, 1993). the increased prices in export commodity can also be triggered by the declining of the rupiah against the us dollar. however, these improvements cannot be optimally employed in a relatively long time. first, it was caused by hard crops commodity such as palm oil. the development of oil palm plantations in addition to those of state-owned enterprises, large foreign private plantations (pbsa) and large national private plantations (pbsn) were also developed by the community (small holder’s estate) both individually and in partnership with large plantations, known as the core estate of the community (pir). development of indonesian palm oil production is shown in table 2. in line with the increase of plantation area, the level of palm oil production is also increasing. the production level of the management pattern indicates varying speed of improvement. production of government plantations had always surpassed the production of smallholder plantations, whereas the area of small holder plantations has increased above the government plantations in 1992. this indicates that productivity of small holders’ estates is very low, possibly due to the lack of integration of the permanent process of small holders’ estate products, with a large plantation-owned processing plant. as we know, in general, the small holders’ estate develops in pir pattern, in which the core estate shall accommodate production from small holders’ estate to be processed into cpo. if the adjusted permanent timing of small holders’ estates along with transport capacity and processing capacity of the plant is underestimated, it will result in excessively extended accumulation of ffb (fresh fruit bunches) resulting in a decrease in oil “rendemen” (ratio of oil quantity produced from the extraction) and increase fatty acid levels. besides, the low productivity of small holders’ estate can also be caused by the length of the ffb distribution line to arrive at the processing plant, for example the small holder’s estate sells their crops to the collecting traders that it may take up two days to process them into cpo. the ffb should be processed into cpo within a maximum of six hours after collecting. private plantation production increased rapidly around 1994 and continued increasing to exceed government production in 1996. this was in line with the expanded area that began to increase beyond government plantations in 1989, thus the increase in production occurred about five or six years later. the average increase in oil palm production according to its management is 106.17 for small holder’s estate and 12.63 percent for government plantations and 16.84 percent for private plantations. table 2: development of indonesian palm oil production production (ton) year small % government private % % holder change plantation % change plantation change total change 1983 539 96338 67539 164416 1984 826 53.25 ml all 84.22 69058 2,25 247361 50.45 1985 8816 967.31 178675 0.68 70966 2.76 258457 4.49 1986 11663 32.29 198865 11.3 73000 2.87 283528 9.7 1987 29933 156.65 213050 6.66 76066 4.2 319049 12.53 1988 31230 4.33 220538 3.51 90899 19.5 342667 7.40 1989 36736 17.63 236745 7.35 119408 31.36 392889 14.66 1990 75390 105.22 249431 5.36 178982 49.89 503803 28.23 buyung 34 1991 85443 13.33 285096 14.3 180806 1.02 551345 9.44 1992 99822 16.83 287896 0.98 171556 -5.12 559274 1.44 1993 104646 4.83 288762 0.30 208821 21.72 602229 7.68 1994 162307 55.1 338741 17.31 295489 41.50 796537 32.26 1995 195533 20.47 384393 13.48 362137 22.56 942063 18.27 1996 233462 19.4 396850 3.24 454364 25.47 1084676 15.14 1997 279604 19.76 423411 6.69 526318 15.84 1229333 13.34 source: ministry of forestry and plantation, directorate general of plantation, 1998 furthermore trading system is very important in agricultural development. nevertheless, in the link of economy and flow of goods in indonesia, trading system is the weakest part, or it has reasonably low efficiency. similarly, in the case of oil palm commodity, small holders’ estate sells ffb (fresh fruit bunches) to collecting traders or large plantations at incredibly low prices. the owners of small estates have no mediums to improve their bargaining position. conversely, large plantations also have less processing process to increase value-added commodities. it can be evident from the export commodity itself in crude palm oil (cpo). senturi (1988) carried out an econometric analysis of the palm oil market in the united states. he used a model for the u.s. palm oil market formed with 3 behavioral equations and 4 identity equations. the behavioral equation includes function of global palm oil prices and function of quantity of the consumed palm oil and function of quantity of palm oil for final stock. he discovered that there was a positive correlation between global palm oil prices and function of quantity with the price of vegetable oil and animal fat. consumption of palm oil in the united states is positively associated with the prices of vegetable oil, animal fats, fat processing and wage rates in food processing products and the lag of palm oil value is negatively related to the predicted global oil price. palm oil stocks in the united states are positively related to the predicted global palm oil price, fat production in the same period, and lag from palm oil stockpiles, and negatively related to changes in global palm oil price and changes in fat production. senturi concluded that palm oil competes with fats and vegetable oils in the u.s. market and palm oil can compete if the price is below the price of fats and vegetable oils. palm oil is more versatile in end use not only for channeling but also for speculation. lubis (1998) developed a marketing model appropriate to the marketing of palm oil and took the case on production and marketing of malaysian palm oil. he discovered that the performance of malaysian palm oil marketing was influenced by marketing variables, especially international market variables such as global palm oil price and some oil substitution prices and policy instruments on the production. the price of malaysian palm oil in the international market is determined by the price of global palm oil consumption. although malaysia is the world's major exporter of palm oil, it only serves as the recipient of the price. bond (1987) estimated export demand and supply with a regional approach for some export commodities based on data from 1963-1982. assuming there was no substitution between the same export commodities in different regions. hence estimates for demand and supply of foodstuffs, beverages and tobacco exports between africa, asia and europe resulted that the price elasticity for demand of foodstuffs by the three regions was negative and significant at a = 1% or a 5%. price elasticity for demand of beverages and tobacco are negatively related, while income elasticity for beverages and tobacco are positively related. research methods this study aims to investigate the main issues which are: an analysis of palm oil price fluctuation in the foreign market 35 (a) response of palm oil supply represented by palm oil production, towards changes in palm oil prices, land area and supply in the previous year; (b) response of palm oil demand as represented by changes in palm oil prices, palm oil revenue and price in the previous year; (c) response of palm oil stocks to price changes, palm oil stocks in the previous year. data that will be processed and analyzed is in the form of secondary data. data has been linked to this research, including: central bureau of statistics (bps), agriculture agency and others and completed with literature study. the model employed in this study is full simultaneity in a dynamic model with inventories, derived from the nerlove model, which are: a. supply function: st*=ao+aipt+a2at+slt (1) b. demand function: dt*=bo+b,pt+b2yt+s2t (2) c. stock function: kt*=co+c,pt+£3t (3) results and discussion estimation result of palm oil demand function equation of palm oil demand function in the foreign market derived from the estimation result is as follows: ln dt = 0,7125 0,22079 ln pt + 0,67549 ln yt + 0,0000016 lndt-i. the results of estimated palm oil demand function in the foreign market using the 2sls method is presented in table 3 below: table 3: estimated results of demand function coefficient variable coefficient t. ratio p-value significant pt -0,22079 -1,973 0,069 s yt 0,67549 18,11 0,197 s dm 0,000015932 1,526 0,001 s source: author’s results remark: s significant, if t.ratio > 1 from table 3, it can be evident that coefficient value of independent variable-variance indicates the appropriate results to the demand theory. variables of palm oil price have a negative correlation with palm oil demand with a coefficient value of -2.2979, meaning that if the price of palm oil rises by 10% then the demand for palm oil will decrease by 2.2079%. this indicates that palm oil price in foreign markets negatively affects the palm oil demand in foreign markets. the income variable is positively related to the demand for palm oil. with coefficient value of income of 0.67549 means that if the consumer income increases by 10% then the demand for palm oil in foreign markets will increase by 6.7549%. this indicates that if the income increases then the demand for palm oil will rise. thereby it is clear that the income positively affects the demand for palm oil in foreign markets as indicated by the t-ratio of 18.11. the lag variable to the demand for palm oil is also positively related to the demand for palm oil with coefficient value of the previous year's demand of 0.000015932 means that if the previous year's demand increased by 10% then the buyung 36 demand for palm oil in foreign markets will rise by 0.00015932%. this indicates that the previous year's demand positively affects to the demand of palm oil in foreign markets as indicated by the t-ratio of 1.526. from the lag coefficient of one year demand (lqt) of 0,000015932 can count up the adjustment coefficient, which is by subtracting one to the coefficient. the obtained coefficient value is 0.999984068 or can be identified close to one. with the adjustment coefficient value approaching one there is precisely a little resistance in realizing the desired demand, thus the desired demand is almost the same as the ongoing demand. from the above explanation it can be concluded that the price of palm oil negatively affects the demand for palm oil in foreign markets. while the previous year's income and demand positively affects the demand for palm oil in foreign markets. estimation of function of palm oil supply equation of palm oil supply function in the foreign market derived from the estimation result is as follows: ln st = -1,4089 + 1,1917 ln pt + 0,26505 ln at + 0,0000073 ln st-i the estimation of the palm oil supply function in foreign market also use 2sls method as presented in table 4. table 4: estimation of coefficient value of supply function variable coefficient t. ratio p-value significant ~ l j 1,1917 3,073 0,008 s la 0,26505 2,768 0,015 s ls, 0,000072943 1,537 0,147 s source: author’s results remark: s = significant, if t. ratio > 1 from table 4, it can be seen that variable of palm oil price in foreign markets are positively associated with the supply of palm oil in foreign markets with a coefficient of 1.1917, meaning that if the price of palm oil rises 10%, then the supply of palm oil palm oil will increase by 11.917%. this indicates that the price of palm oil in foreign markets has significantly positive effect on the supply of palm oil in foreign markets indicated by the t-ratio of 3,073. while the variable of palm oil land area is positively associated with the supply of palm oil in foreign markets with a coefficient value of 0.26505, it means that if the land area of oil palm increases by 10% then the supply of palm oil in foreign markets will increase by 2.6505 %. this indicates that the area of oil palm has a significant positive effect on the supply of palm oil in foreign markets which is indicated by the t-ratio of 2,768. meanwhile, the variable of previous year’s palm oil supply is positively related to the supply of palm oil in the foreign market with a coefficient value of 0.000072943, meaning that if the previous year's palm oil supply increases by 10%, then the supply of palm oil in foreign markets will rise by 0.00072943%. this indicates that the previous year's palm oil supply positively affects the supply of palm oil in foreign markets as indicated by the t-ratio of 1.537. from coefficient value of the ‘lag’ of one year supply (lst) of 0, 000072943 it can be calculated the adjustment coefficient by subtracting one to the coefficient. the obtained an analysis of palm oil price fluctuation in the foreign market 37 coefficient value is 0.999927037 or can be identified close to one. by adjustment coefficient value exactly close to one, there is relatively little resistance in realizing the desired supply, thus the desired supply is almost the same as the ongoing supply. from the above explanation, it can be concluded that the price of palm oil, land area, and the previous year’s supply had positively influenced to the supply of palm oil in foreign markets. estimation of palm oil stock function equation of palm oil stock function derived from the estimation results is as follows: ln kt = -1.0851 + 0.53292 ln pt + 0.45574 ln km the estimated results of palm oil stock function using the 2sls method is presented in table 5 below : table 5: estimated value of stock function coefficients variable coefficient t. ratio p-value significant lp 0,53292 1,442 0,171 s lki 0,45574 1,983 0,067 s source: author’s results remark: s = significant, if t. ratio > 1 from table 5, the estimation of stock function parameters can be explained as follows: the variable of palm oil price was positively related to palm oil stock with coefficient value of 0,53292, meaning that if the price rises 10%, the palm oil stock will rise to 5.3292%. this indicates that the price of palm oil has a significant positive effect on the palm oil stocks as represented by the t-ratio of 1.442. while variables of the previous year's palm oil stocks were positively related to palm oil stocks with coefficient values of 0.45574, meaning that if the previous year stock increased by 10%, then the palm oil stock will rise by 4.5574%. this indicates that the previous year's stocks positively affected the palm oil stocks as shown by the t-ratio of 1,983. from the lag coefficient of one year demand (lqt) of 0,000015932 it can be counted up the adjustment coefficient by subtracting one to the coefficient. the obtained coefficient value was 0.999984068 or can be identified close to one. with the adjustment coefficient value approaching one precisely there was relatively little obstacle in realizing the desired demand, thus the desired demand is equal to the ongoing demand. from the above explanation, it can be concluded that the price of palm oil or palm oil stocks of the previous year had any real effect to the palm oil stock. conclusions based on the results of the discussion and analysis of demand and supply of palm oil in foreign markets as described and stated earlier, it can be drawn some conclusions and suggestions as follows: (a) the price of palm oil negatively affected the demand of palm oil in foreign markets. whereas the income and demand of the previous year had a significant positive effect on the demand for palm oil in foreign markets; (b) the price of palm oil, land area and the previous year's supply positively affects the supply of palm oil in foreign markets; (c) the price of palm oil and palm oil stocks in the previous year have a significant effect on palm oil stocks; (d) the price of palm oil is significantly affected by the cumulative stock of palm oil. buyung 38 references adam, g. f. and j. r. behrman, (1976), economic models of world agricultural commodity market, ballinger publishing company, cambridge. bond, e. m., (1987), an economic study of primary commodity export from developing country regions to the world, international monetary fund staff papers, volume 34 (2). chern, w. s., (1976), acreage response and demand for processing tomatoes in california, american journal agriculture of economic, volume 58 (2). dirjen perkebunan, statistik perkebunan indonesia tahun 1982 1988, komoditi pokok, direktorat jenderal perkebunan, jakarta. houthakker, h. s., and l. d. taylor, (1970), consumer demand in united state analysis and projection, harvard university press, second and enlarged edition, cambridge, massachusetts. kuznet, s, (1964), economic growth and the contribution of agriculture, in eicher, c. k. and witt, l.w. (eds). agriculture in economic development, mc,graw hill. new york. labys, w.c, (1973), dynamic commodity model for forecasting and policy analysis, nichol publishing company, new york. liebhafsky, h. h., (1970), hakekat teori harga, terjemahan paul sikotang, bhratara, jakarta. lubis, a rahman, (1998), production and export marketing model (a case study for malaysian palm oil) kelala no 19/vii/1998 universitas gajah mada. mubyarto, (1977), pengantar ekonomi pertanian, lp3es, jakarta. nerlove, m, (1956), estimates of elasticities of supply of selected agricultural commodities, journal of farm economics, vol. 38,496-509. nerlove, m., (1958), distributed logs and estimation of long run supply and demand elasticities theoritical consideration, journal of farm economics, vol. 40, 301-311. riedel, j., (1988), the demand for ldc exports of manufactures: estimates from hongkong, economic journal, volume 98 (389). soekartawi, (1995), prinsip dasar ekonomi pertanian; teori dan aplikasi, grafindo, jakarta. soekartawi, (1995), pembangunan pertanian, penerbit, pt. raja brafindo persada, jakarta. sumilat, caleine. aji, (1990), tata niaga minyak kelapa sawit, no. 20. departemen perdagangan jakarta. tomek, w. g. and k.l robinson. (1972) agricultural product prices, cordele university --press, ithaca, new york. microsoft word apostoaie constantin marius_eng.doc forest management units through cost cristina otilia ţenovici, „constantin brancoveanu” university of rm. vâlcea, romania mihaela albici, „constantin brancoveanu” university of rm. vâlcea, romania abstract costs minimizing and profit maximizing make the costs adjustment seems to be a vital necessity when the activity developed within the company does not assure the maintenance and stability of the necessary relation between consuming factors and costs. in such circumstances, approaching differing sides of the production cost and improving the methods of calculation has much significance in determining the most appropriate measures necessary for its adjustment and for profit increasing. the whole informational process of costs – formation, control and analysis of costs – involves a careful use the methodological concepts known under the name of classical methods and modern or complementary methods, as well as of other proceedings. such methods and proceedings cannot be applied separately, only conjugated and integrated in a unitary methodological system, each of these methods and proceedings participating at achieving one or more objectives. only by their unitary action they can fulfill all the system objective keywords cost, economic efficiency, decisions substantiation, traditional and modern methods for costs determining. jel codes: m 41, q 00 the future managers will not be able to perform without data provided by management accounting and they have to get used to the proper terminology, its techniques and the way in which the supplied data can be used, as well as the possible limits of this information. the forestry unit has to make up and to use a system of knowing products, working and services costs so that it can be able to set the sales price according to the market demands and the expected margins1. costs determination and their evolution for the products specific to forestry units does not represent a purpose but it is due, on the one hand, to managers orientation changes, who are forced to use a certain tool capable to make possible an intervention for prices adjustment. consequently they ask for competent, relevant and appropriate accounting information on costs. on the other hand, maintaining the forestry unit economic efficiency in the present conditions of technological improvement acceleration and competition intensification which involves competitiveness (private floristries) depends on the manager’s possibility of knowing costs and consequently, performing, through appropriate decisions. the process of decision making involves cost. it influences the decision process in many ways: the relation costs-prices; relation costs-profit; relation costseconomic efficiency. these relations do not represent something new, as they have been present in traditional economic literature. only it is necessary to rearrange them on according to new principles, taking into consideration the market economy demands and fundamentals. thus, in the 1 tenovici c.o. (2007) projecting the informatic system of cost determination and analisys in forestry, universitaria publishing house, craiova, p.12 studies and scientific researches economic edition, no. 15, 2010 501 countries with planned economy they have paid more attention to costs than to prices, considering it to be a direct relation, prices being established according to costs, in the market economy the relation between cost and price becomes a dominant feature. the costs influences directly the price formed on the market, by means of the cost included in the product offer price. in addition, the market price has an indirect role on costs, forcing producers to reduce costs for increasing profit, the producers with reduced costs having more advantage. the changing perspective on the relation between cost and profit had determined important changes in costs determining process, analysis and control, turning it into a permanent activity of operational checking each and every operation that generates expenses included in cost, in order to find out the ways and means of reducing them2. top level management has in view costs minimizing, so profit maximizing, so that costs adjustment seems to be a vital necessity when the activity developed within the company does not assure the maintenance and stability of the necessary relation between consuming factors and costs. costs level and their structure reflects the forestry unit managers’ concern with practicing the new technique, with an efficient using of production factors, their approach on productive activity organizing and managing process, the substantiation level of decisions. in such circumstances, approaching differing sides of the production cost and improving the methods of calculation has much significance in determining the most appropriate measures necessary for its adjustment and for profit increasing. the whole informational process of costs – formation, control and analysis of costs – involves a careful use the methodological concepts known under the name of classical methods and modern or complementary methods, as well as of other proceedings such as: supplement process, simple division process, process of equivalent coefficients, etc. such methods and proceedings cannot be applied separately, only conjugated and integrated in a unitary methodological system, each of these methods and proceedings participating at achieving one or more objectives. only by their unitary action they can fulfil all the system objectives. perfecting the costs informational system by means of automatic data processing should be preceded by the existent costs informational system reorganization. if this aspect is neglected the success and the efficiency of system improvement is harder to be achieved, as the new system will be based on weak system, which still contains many flaws resulted from data manual processing. it is recommended the integrated reorganization by means of models established beforehand that unify in a unitary conception all methods, procedures, the forms of data gathering, processing, valorisation and storing. reconsidering management accountability and costs calculation is one of the main factors of efficient organization of economic activity. it should become able to supply information that meets the requirements of the forestry activity efficient management in the present market economy. the information about production costs occupies a central position, determined by their implications on the actual state and on the future evolution of the unit activity. thus, an efficient leadership on the forestry unit level cannot be undertaken without an informational system able to meet the requirements of a modern production management that allows taking operative decisions and measures, thoroughly founded and on the right time3. the traditional methods of cost determining, including the global method used in forestry for determining and calculating costs, cannot meet the present requirements that aim at performing a modern management which involves adapting and perfecting such methods. a first drawback of these classical (traditional) methods is the great labour volume, as they involve performing two series of calculations on the production cost: provisional calculation 2 baciu t.a. (2001), costs – organization, planning, accounting, calculation, control and analysis, dacia publishing house, clujnapoca, p. 34 3 tenovici c.o. (2007) projecting the informatic system of cost determination and analisys in forestry, universitaria publishing house, craiova, p.20 studies and scientific researches economic edition, no. 15, 2010 502 and historical costing. provisional calculations are done before the productive process beginning through budget processing and the production expenses on the forestry unit level as well as the wood mass cost budget, according to the wood mass spore supposed to be gained according to the regulations in force and the consumption laws established. they also involve the exploitation budget for plots that are to be exploited on the forestry unit level as well as the budget of the unitary cost for each type of wood mass processed. budget processing starts from the integral achievement of works and assignments stipulated in the regulations. historical costing is done after finishing the productive process. in forestry, as we have mentioned before, the productive process takes place over one year and it involves all measures taken for treating the trees necessary for obtaining wood mass spore, according to regulations. such calculations are to be done at the end of each month, called partial historical costing, using the global accumulated calculation. even if the effective cost is more likely to be precise and more detailed, these aspects cannot make for the delay with which it is obtained, since modern leadership asks for proper and pertinent data, instead of the exact ones but obtained too late4. traditional calculation methods, that are the global method used in forestry, allow the regular determination of cost, but only at the end of the production cycle. consequently, the information supplied by means of such classical methods has a historical character and they can be useful at directing the activity in future. although they have in view an operational approach of the main productive consumption through consumption laws, this aspect is limited to the quantitative part and it usually takes place especially for statistical reporting and data gathering for the programming period of the future activity and not for informing the staff involved in taking decisions. this approach is incomplete as, on the one hand, it does not constitute one of the staff’s concern and, on the other hand, the information obtained are not rendered in figures, in terms on money, only from quantitative point of view. thus, another drawback of this classical method, consequently of the global method used for determining cost, consists in the impossibility of assuring an efficient and systematic control on exploiting expenses found in costs. the activity of gathering and processing such expenses represents the base in establishing the effective cost. determining cost at the end of the production cycle does not supply information operationally about deviations from the established level which allow decision makers to make proper decisions for setting aside deficiencies. in order to be able to find deviations from the established level it is necessary to achieve a series of accounting statements, as the accounts system used and the effective way of traditional cost calculation procedure cannot permit finding such deviations. the deviations determined by comparing effective cost with the one that has been established, either economies, or excess levels, are expressed in effective value, without having the possibility to identify the places or the factors that have generated them neither the persons in charge. in order to possibly identify these deviations supplementary calculations have to be done, which involves much work and most times they face the impossibility of providing exact information, even after concluding the productive cycle. the system of expenses monitoring, adequate to these classical methods, is not able to provide simultaneous supervision of expenses and deviations, their analysis is done most of the times later than necessary and the supplied information cannot be used in the decisionmaking process. they cannot be used for balancing the productive activity while it is being developed, only in subsequent calculations. neither do they allow each activity department, as a cost centre, to determine clearly and to appreciate objectively the activity results in order to be able to make correct decisions and take proper measures for work improvement for an 4 calin o., carstea gh. (2002), management accountability and costs calculation, genicod publishing house, bucharest, p.65 studies and scientific researches economic edition, no. 15, 2010 503 optimal fulfilment of the budget objectives, of deviations adjusting and avoiding. it is not about only deviations identified later (that are usually seen too late) but all deviations that can cause a maximum decrease of the information value. another limit of the global cost calculation method identified during a study undertaken within one forestry unit is the distribution of indirect expenses to products costs by using conventional criteria, most of the time inadequate, without taking into consideration the cause relationship between expenses to be distributed and the actual base of distribution. as the method is oriented towards the integral unitary cost calculation, it underline especially the production expenses division in direct and indirect expenses and this division do not allow their analysis in relation to production volume. it is a very well-known aspect, from economic point of view, that costs are appreciated in relation to production volume. this aspect involves costs calculation by dividing production expenses into fixed and variable ones, such division being assured only by modern methods of costs calculation. consequently, in forestry it becomes compulsory to perfect and diversify the methods of management accountability and costs calculation by introducing some new methods and proceedings able to increase from the qualitative point of view costs information, allowing thus management accountability to fulfil successfully its role. the effective development of the activity within the forestry unit, as well as its managing draws more and more often the attention to determine beforehand productive consumption levels, costs evolution and to compare them to the level established by the forestry administration, according to which there are organized wood auctions (for forestry units in the system) as well as to the level reached by private forestry units which have already become a powerful competitor on the market. it also become necessary to supervise efficiently expenses, to know expenses size and their structure, to determine in the shortest possible time the deviations from the established level, the causes that have lead to such deviations and last but not least to identify their exact position. management accountability should assure the quick gathering of exact, clear data, adequate to different aspects of the current management activity. the rational use, as well as the sending in time of such information will entitle the forestry unit management staff to react to problems in the shortest possible time, to name the cause and to elaborate a coherent system of measures which will determine sustainable and efficient forests management. thus, the necessity of permanent costs reduction for assuring economic efficiency within each forestry unit, as well as the requirements imposed by entities’ management in the present market economy, calls for perfect methods of costs calculation. they have in view increasing the role of such methods for founding current and future decisions about the rational using of production factors (the forest seen from economic point of view and its social and ecological functions), perfecting technological processes and adjusting an efficient organizational structure. it becomes necessary to adopt certain methods, systems and techniques of funding, collecting and distributing production expenses and costs calculations, which can assure promptitude, time saving and simplicity, qualities that in the end determine the improvement of results quality for each forestry unit. thus, such new systems, methods and techniques used for costs calculation should result out of the analysis of the real present situation within each forestry unit as well as taking into consideration the future requirements necessary for the aimed objectives, so that to perfect the functional position accounting detains in general and management accounting especially within the leadership activity. according to a critical analysis of the present situation, which still offers positive elements, they should promote new methods, capable to supply useful information to the managerial staff, needed when making decisions, capable to allow an adequate valorisation of information related to the production process. the method that can meet the requirements of scientific management and of the economic activity within the forestry unit is the standard cost one: studies and scientific researches economic edition, no. 15, 2010 504 the advantages that can be obtained after having applied the standard-cost method can be noted as follows5: it assures an operational control on production costs, as the information supplied, concerning the deviations from the standard costs can be registered at short intervals, so they have an operational and favourable character. the method allows thus making decisions during the production process development and not only after it has been performed; it represents an efficient means for performing preventive control on production expenses, by establishing before some standards for the rational use of materials, salaries and other details for each work place; by comparing the effective cost with the established one we can identify not only the size of savings, but we can also know in due time the causes and the responsible staff who has caused such deviations. moreover, the deviations can be analyzed thoroughly, both on cost elements and on price and quantity elements; the standard costs are pre-calculated production costs on scientific, rigorous base, and they are considered real, normal costs, each deviation related to these being considered a deviation from the normal which will affect the financial results of the unit; they cannot offer as an excuse the lack of a pattern that can be used in effective production costs comparison, which can permit us to identify what is normal (by applying the traditional calculation methods the reference elements used for comparing effective expenses could have contained inefficiencies up to an undetermined level), offering the possibility of performing costs control; the standard-cost method includes in its working technique adequate systems of production cost concrete processing and of relating a pre-calculated cost deviations, in comparison with the classical methods used for costs calculation which do not include these systems organically, each enterprise having in view their possible organization; the standard cost is considered a normal production cost; the calculation of the effective cost is no longer necessary. from mathematical point of view, the effective cost is transformed into a derivative quantity and it will be obtained by calculating the plus or minus of the standard cost and the deviations of the present expenses in comparison to the standard ones. it avoids thus two series of operations (provisional calculation and historical costing) as in the case of traditional calculation methods; from economic point of view, costs are judged in relation to production size, some being variable and some others stable. thus, the standard cost method emphasizes costs grouping according to their evolution against the physical volume of production (indirect expenses have a mobile and a stable side), unlike classical methods which are oriented towards grouping production costs in direct and indirect ones; it allows grouping costs into stable and variable according to their evolution in comparison to the evolution of the physical size of production, on the one hand, and costs grouping into direct and indirect ones, according to their proportion in the products costs. deviations are thus determined within the organizational structures, both on calculation item and on other causes, creating analyzing possibilities of the financial results and activity control for each responsibility department; it makes possible future costs estimations, as they reflect future objective-costs based on deficiencies elimination and they are preferred against estimations based on adjusting costs registered in the past which could have contained previous deficiencies; standard costs represent an important information source by means of which planned production can be transformed into physical and monetary necessary resources and they help budget planning; 5 tenovici c.o. (2007) projecting the informatic system of cost determination and analisys in forestry, universitaria publishing house, craiova, p.23 studies and scientific researches economic edition, no. 15, 2010 505 standard costs are set costs, with normative character which allows managerial performances assessment within the company for a given period. encouraging modern management methods should take into account the fact that they rely, from the point of view of their characteristics, their structure and their perfection level, on a series of factors, such as: the social and economic system characteristics, an adequate informational system and the staff’s level of training and knowledge. management techniques and methods, from the point of view of their characteristics, have a collective character and a general structure with possibilities of scientific application on different levels of management. through their content they determine responsibility improvement, allow classifying social and economic phenomena and are based on a scientific language. managing a forestry unit involves, on the one hand, a good knowledge of the present activity in order to be able to interfere with operational decisions in its directing and, on the other hand, prefiguring its future evolution and setting up a predictive research which can underline the development principles in perspective. the information determines the managerial staff involvement through decisions which have the role of setting objectives, of organizing, coordinating and directing collective actions for achieving the purpose. the decision represents the essential moment for every managerial process as it involves all managerial functions. by making decisions, the managerial staff chooses the most appropriate way of acting among many possibilities. the decision, as a behaviour form, based on information has been always a means of directing and coordinating economic activities. using modern methods and techniques of management provides a higher level of accuracy and confidence. thus mathematical approaches on economic processes, operational research development and its application, cybernetics and informatics are the most significant progresses that the science offers to any economic management process. scientific management involves data automatic processing, using a mathematical apparatus adequate to decisions preparation and applying modern methods of activity control. through modelling we have in view the logical arrangement of a set of operations or of a process, by using a formalization methodology. a formal model represents, in fact, a simplified, but suggestive, configuration of the reality it represents. according to some models of operational research we can proceed to a comprehensive analysis of all variables for evaluating the consequences of some different solution given to the problem, offering a simple and real base that helps management in the making decisions process. thus, operational research becomes a priceless tool in forecasting different variants’ consequences, offering the managerial staff the possibility of choosing the most efficient one. decision, as part of the decisional process, does not represent a purpose itself, but it has to be applied correctly through correct actions and deed, its finality depending directly on the staff’s capacity. besides decision, economic information represents the second element of the cybernetic concept used in management and economic activities adjustment activities. therefore, we can speak about the necessity of organizing an informing activity for managerial staff, capable to see promptly what is essential and characteristic in the current activity of the forestry unit. setting up a modern informational system in forestry units have in view offering solutions to problems so that the informational process to be related to the decisional one. in taking decisions we always start from an existent result and we have in view a desirable one. the need of making a decision appears when the system faces a problem which looks forward to a quick solution. the decision involves, besides the human factor, the unit environment, as we have to take into account any social, political, technological and economic changes, etc. both on national level and international, especially now when we face a strong globalization trend. it also involves increasing the complexity of the decisional activity, increasing thus the number of variables and limit conditions where decisions will be adopted. studies and scientific researches economic edition, no. 15, 2010 506 references: 1. baciu t.a. (2001), costurile organizare, planificare, contabilitate, calculatie, control şi analiză, ed. dacia, clujnapoca 2. calin o., carstea gh. (2002), contabilitate de gestiune şi calculaţia costurilor, ed. genicod, bucureşti 3. tenovici c.o. (2007), proiectarea sistemului informatic de calculaţie si analiză a costului in silvicultură, ed. universitaria, craiova studies and scientific researches economic edition, no. 15, 2010 507 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro european urbanization – between strengths and risks marcela-cornelia danu “vasile alecsandri” university of bacău marceladanu@ub.ro abstract on the european continent, urban population, representing a significant segment of the market, with features specific to a particular model of purchase, consumption, lifestyle, etc. , has the potential for growth. the possible effects of this increase (strengths or risks), include: increasing opportunities for employment, increasing level and structure of demand for consumer goods and, in conjunction, of the level and structure of supply, raising of the standard of living, changing requirements and personal taste level population, increased interaction, socializing, psycho-social conversions on the recently urbanised population as well as for the people there, etc. but also the increase in demand for land areas intended for dwellings, commercial premises and hence reducing spaces with vegetation, increasing the degree of concentration of the population in a small grounds, effects on air quality, etc. this study highlights dynamic and interdependent effects of european urbanization on the human population, businesses, and the environment. keywords urban population; human development; strengths; risks; macroeconomic effects; effects on individual; effects on the environment jel classification j11; o15; o18; o44; r11; r12 1.urbanization in actualitydeterminants and prospects. europe is among the most urbanized continents, with approximately 75% of the urban population [expansiunea urbană în europa, agenţia europeană de mediu, copenghaga, raportul nr.10/2006]. over 1/4 of the territory of the eu is at present urban use. the differences are, however, essential, so if in iceland, sweden, netherlands, united kingdom, denmark, belgium, luxembourg, malta, the share of urban population in the total population is very high, however, in others, such as greece, ireland, poland, slovakia, slovenia, croatia, romania, bosnia and herzegovina, albania, moldova, it drops to 60% and 50%. table 1 degree of urbanisation in europe country urban population (%) country urban population (%) 2005 2012 2005 2012 albania 46.8 54.5 macedonia 59.1 59.4 andorra 90.3 86.7 malta 93.6 95 austria 66.5 67.9 moldova 43.2 48.4 belarus 72.4 75.5 monaco 100 100 belgium 97.3 97.5 montenegro 62.2 63.5 bosnia and herzegovina 45.3 48.8 netherlands 80.2 83.6 bulgaria 70.2 73.7 norway 77.5 79.7 croatia 56.4 58.1 poland 61.5 60.8 17 danu cyprus 69.4 70.7 portugal 57.6 61.6 czech republic 73.7 73.4 romania 52.8 52.8 denmark 85.9 87.1 russia 72.9 74 estonia 69.4 69.5 san marino 94 94.1 finland 82.9 83.8 serbia 54.4 56.7 france 81.6 86.4 slovakia 55.6 54.7 germany 73.4 74.1 slovenia 50.5 49.8 greece 60.3 61.7 spain 76.7 77.6 hungary 66.4 69.9 sweden 84.3 85.4 iceland 93 93.8 switzerland 73.5 73.8 irland 60.5 62.5 turkey 66.8 72.5 italy 67.6 68.5 ukraine 67.8 69.1 latvia 68 67.7 uk 79 79.7 liechtenstein 14.7 14.3 europe 71.6 73.1 lithuania 66.6 67.2 ue 27 72.6 74.1 luxemburg 83.9 85.7 source: http://hdr.undp.org in general, urban expansion occurs when the rate of conversion and utilization planning, urban purposes exceeds the population growth rate in a given area in a given period of time. recent studies show that the european cities has increased over the past decade with growth over 5%, equivalent to 3 times the area of luxembourg. the strongest urban expansion has been manifested in countries or regions with high density of population and very large development-belgium, netherlands, germany (south and west), italy (northern), france (paris) as well as in countries with rapid economic growth, ireland, portugal, germany (east), spain (madrid). urban expansion has been determined, on our continent, too by the regional development policies promoted at eu level to the deficient regions were targeted funds from the eu structural and cohesion funds, to develop and modernize infrastructure; with increasing number of urban population in large cities of the continent began to develop too the areas adjacent to the small towns or rural areas, more developed along the corridor and along the coastal areas in connection with river valleys. among the generals determinants of the ever-expanding urban phenomenon is micro and macro socio-economic trends: increase the quality of the transport systems, the rising price of land, raising residential preferences, european and national demographic trends, the traditions, the cultural customs, the attractiveness of urban areas, and last but not least, the increasing mobility of the population in the area. one dimension of urbanization is metropolisation. this is manifested both in the centers of the global economy-(usa, western europe, japan), as well as in less advanced countries, where urbanization demonstrates the weakness of medium or small cities. at the same time, the hierarchical order of the principal agglomerations of the planet is changing. in 1875, london was by far the largest urban unit in the world, other british cities is among the 5 top 20 urban agglomerations of the world [www.ccasp.ase.roe-city, aspecte semnificative ale competitivităţii şi dezvoltării urbane la nivel european]. another trend is the growing, twice the space for a person, compared to 50 years ago. since the 1980s the built-up areas in many countries in western and eastern europe has increased by 20% while the population grew by only 6%. in romania, due to the large socio-economic differences between rural and urban life, continues the phenomenon of migration of the population of the city. in cities, the 18 european urbanization – between strengths and risks high-income class movement to residential suburbs, while crowded areas remain inhabited by people's class. in the suburbs are built villas, swimming pools, tennis courts, etc., while in the big districts appear opportunities for large stores. possible that, in the future, we are witnessing the movement of population from the less developed the historical regions (moldova) to the most powerful developed countriestransylvania, banat. 2.strengths of the urbanization an european perspective it is estimated that by the year 2020. 80% of europeans will live in urban areas, and from the 46 countries of the continent, in 7 of them share of urbanization will be over 90%. the logical consequence is the need for increased demand of land affected housing, commercial spaces, etc. witnessing to the phenomenon of urban sprawl in europe; the phenomenon, however, is different from one country to another, from one region to another; causes changes of substance in lifestyles and consumption patterns at the scale of the continent. although urbanization generally increasing concentration of population and economic life, it brings some complaints, especially from the point of view of the quality of the natural environment, there are a number of advantages and opportunities that this phenomenon creates it; it was found that the use of the territory and the consumption of different energy forms tend to be lower in urban areas than in areas with a dispersed population; waste management and urban water management enjoys the benefits of economy of scale. for example, analyzing consumer spending for food and non-alcoholic beverages for a few european countries [www.eurostat.com] (fig.1) we note that, in most cases, including the eu average, they are higher in areas with a dispersed population compared to areas with dense population. another aspect, which emphasizes, is that of the absolute size of this type of expenditure, which reflects both population inclination to consume more or less of the goods (having the determination the certain consumer traditions, a certain style of life, culture, mentality) and the size of the prices for those products which meet the basic needs of the individual. the situation of ex-communist countries-bulgaria, latvia, poland, slovakia, estonia illustrates both a higher level of expenditure on food and nonalcoholic beverages compared to all the other countries in the eu or outside the eu (at that time) as well as the reality that areas with small population spend more buying the food goods. figure 1 consumption expenditure by degree of urbanisation food and nonalcoholic beverages 19 http://www.eurostat.com/ danu source: www.eurostat.com, 26.06.13 in terms of transport expenses [www.eurostat.com] (fig.2), for the same countries analyzed, we see that, they are too higher in areas with a dispersed population compared to areas with dense population, in most cases. this confirms the eu average but also developed countries luxembourg, united kingdom, denmark etc., or ex-communist countries-estonia, croatia, hungary, etc. the main determinants of this situation are: motivation of transport, frequency of transport movements, distance, travel price, different in the case of developed countries compared with the ex-communist countries. anyway, beyond the expenses that the population makes them with the purchase of these goods and services, related to income levels, resulting from the consumption of such goods and, further, the inputs (human, financial, material, informational), higher in the low population density compared to the concentration of population area. figure 2 consumption expenditure by degree of urbanisation transport source: www.eurostat.com, 26.06.13 a problem that is getting the attention of european decision makers is mobility and accessibility, as essential factors of the territorial cohesion of europe. the number of miles of european land transport will increase during 1995-2030 by 40%. degree of urbanisation of the population new entrants into the eu is not at the level of the other; the degree of congestion of the road grew strong by the year 2010 and the associated costs increased by 1% of eu gdp. development of local, national and european infrastructure will stand in decision-makers attention in the field of regional development, regarded as the basic premise itself local, regional and european economic development. another advantage of urbanization is increased efficiency of activities in urban areas compared with those from areas with a dispersed population [wgbis.ces.iisc.ernet.in/energy/, urbanization – impacts]. the supply of electricity, water, gas etc. services is less expensive than in areas with low population density. therefore, lower cost to creating, to maintain, to supply of those utilities, defrayed by the community, government, population. also, research programs in these fields and recycling are less, or not at all possible in areas with low population density. another coordinated of the efficiency, is the use of space: in cities, dwelling blocks save land that can be end industrial use creative industrial jobs, either commercial covering 20 http://www.eurostat.com/ european urbanization – between strengths and risks consumer needs of the population, be it leisure, relaxation, green spaces, parks, playgrounds for children, etc. covering such needs and preserving the natural environment. access to services for the european population is much higher in urban areas than in rural villages. educational services in all forms, health, social, cultural, transport services are more available to the urban population than rural population. urban life style provides, in most cases, more comfort, convenience and possibilities of direct communication and relationship of much larger, faster, and less time consuming. from the perspective of the services suppliers, as a result of a great request, expressed in a high-density area, the supply continually adjusts, both in terms of quantity and quality, diversification of product range of tangible and intangible, or according to preferences and dynamic requirements of the urban population. the increase in volume of supply involves using the best possible production capacity, requiring additional labour and, on this basis, the reduction of unemployment. as a result, the advantage is so urban consumer and interconditional of the companies, of the community, of the national economy. the social integration of individuals, increase the level of understanding, knowledge, tolerance, acceptance of different cultures and, on this basis, the decrease of psychosocial risks, can be attributed living „arround”, in which individuals can identify and exploit their desired values, intellectual and relational potential etc. great human communities in europe can harness the advantages of economies of scale, can attract national financial resources, european or international and may be used in a more efficient way these resources as compared to the situation in smaller communities where the number of beneficiaries of programmes is small. 3. risks arising from the increase of urbanization although, in most cases, we look at the competitive risk it assumes firms in doing business, one of the risks of the individual supports its existence, is the competitive risk. in this situation, it's about fighting for a better existence of individuals from rural areas eager to start another life in urban area, wanted to be better. [wgbis.ces.iisc.ernet.in/ energy/, urbanization – impacts]. due to lack of education, many of whom, entering the labour market, failing to find jobs, decent housing, and, further, reaching the outskirts of large towns, dwelling in unsanitary, unseemly living conditions, lack of security, severe poverty. the lure of the city turned into a risk they have assumed, and, unfortunately, 'they have incorporated in their lives'. moreover, from here derives its psycho-social problems of individuals and the social risks covered by the community members. another risk, as determined by the increase in the number of urban population, is a major social risk the unemployment. once the number of the population of a community increases, the demand for labor has increased the risk that the newcomer population in that environment, don't find employment, is very high. further, it is influenced the achievement of risk of poverty whose resolution may not be immediate, being determined to the growth and development of urban business environment at a pace higher than the growth rate of the joiner population. pauperization and privations of all kinds creates conditions for the installation of criminal phenomena, many of them associated with the underground economy, macrosocietal risk. one of the risks the urbanization creates and/or develops, is the risk of pollution. most of the european cities solved issues related to utilities, however, risk of pollution manifested in every form, is increased the pollution of air, water, noise 21 danu pollution and, in some cases, visual pollution, are realities of the present. industry and automobiles are 'guilty' of the creation of this risk. for industry, the european decision makers taken legislative, financial measures, to reduce pollution. as regards automobiles, increasing the standard of living of the majority of the european population, multiplying the number of cars, turns into several types of risk, the most serious and most perennials air pollution and the increase in consumption of motor fuels, associated with diminishing oil reserves. the rise in consumption of fuels is attached to an increasing number of motor vehicles. thus, in europe, the number of holders autoturime at 1000 persons increased in 2010 compared to 2003, in austria, from 499 to 529, in bulgaria, from 295 to 345, in finland, from 433 to 538, in luxembourg, from 638 to 665, in romania, from 142 to 201 [http: //data.worldbank.org/indicator/]. the biggest increase have recorded ex-communist states and the smallest increases or even decreases in the number of vehicles have recorded the developed states. at the level of the european continent, consumer spending for housing, water, electricity, gas and other fuels are, in most situations, larger in areas with a high population density compared to areas with low density (fig.3). the explanation is derived from the much larger number of users, in the first case, compared to the second. aside from this situation, notable is that consumer spending with utilities, in absolute numbers, much greater in countries like bulgaria and estonia compared with other developed countries on the continent. this situation may be determinants: high consumption of energy products, non-performing technologies, causing losses of energy, high price of these products/services, lean scrapper saving energy resources, etc. figure 3 consumption expenditure by degree of urbanisation housing, water, electricity, gas and other fuels source: www.eurostat.com, 26.06.13 in addition, propagated risks are medical risk, affecting individuals ' healthrespiratory diseases, allergies, etc., and the natural environment, unable to be returned quickly. temperature rise in urban areas, due to the increase in population, housing, apartments, industries, is another type of anthropic risk with effects of both the population and businesses or the natural environment. the quantity of precipitation increases, amid changes in the water cycle in nature, is a pure risk with anthropogenic determination, specific too areas with concentrations of 22 http://data.worldbank.org/indicator/is.veh.pcar.p3/countries european urbanization – between strengths and risks population. expansion of cities means the transformation of hydrographic networks and as a result, changes in the magnitude and frequency of floods. that risk has made their presence felt on the european continent, causing both loss of life, damage to human health (pandemic) and material losses. another pure risk with anthropogenic determination, favored by urbanization, including the continent of europe, is the destruction of plant and animal habitats. urban growth tends to change, to overcome the original territorial limits: it multiplies and broadcast at the same time, the types of interrelated risks [urcan i., fenomene și procese hidrice de risc în mediul urban]. carrying out a risk multiplier effects induced in urban centre and disruption the overall functioning of a city. a risk highlight the vulnerability of social organisation which includes all forms of urban and territorial organization. cities are places where man has transformed the nature of the surface vegetation, paved and covered, are burying riverbeds, creating climates closed and realizing huge artificial transfers of energy and water. the impossibility of communication network infrastructure, spatial arrangement of urban territory-to sustain a growing population, the need to involve additional costs for reconfiguring the urban space. 4. solutions to mitigate the 'negative urbanization' the vision of urban development at eu level, which brings together environmental and social considerations in the context of territorial planning policies, is considering obtaining positive effects resulting in: policy coherence in all phases of the process; expanding cooperation between agencies at all levels of responsibility; efficient use of structural and cohesion funds at eu level linked with environmental regulations in order to mitigate and limit urban sprawl; minimization of mistakes and failures that result in urban expansion market, in particular towards the escalation of prices of land and housing; collection and dissemination of good practices in relation to the development of compact cities; provision of green spaces in urban areas. to conserve the natural environment are necessary behavioral changes of people and firms, transposed into the individual and organizational decisions. at eu level, these decisions are reflected in the policies, strategies and tactics applied in the framework of national and european environment. european countries have understood that by investing now in energy efficiency can best harness the existing production capacity, it can allocate founds for future investment, it can reduce pollution. efficient use of water can minimize a possible future crisis. also, joint actions and co-ordinated, effective use of resources to promote recycling and reusing, can reduce the quantity of waste. the cities have great opportunities to use organic waste as compost, waste water in agriculture, inorganic wastes into reusable materials. such actions involve the use of eco-efficient manpower so unemployment, improving living conditions. it is also necessary to apply new technologies, what determines the default, raising, scientific research and technological development, geared towards this direction, beneficial in the long-term. the mission of the national entities is to promote recycling and re-use of wastes, both with the support of the industrial business environment and human communities, with 23 danu the support of private initiatives, etc. european governments have a central role in the promotion and implementation of risk minimization programs with anthropogenic effects on the natural environment. to these are added, too the international community to supervise, monitor and promote eco-efficient technologies [www.unu.edu, urban environment consumption]. the proposed objectives are: the setting of consumption standards in the framework of national policies; development and implementation of sustainable environmental technologies for both the poor and the rich; waiving taxes and restructuring subsidies, in order to transfer them from consumption that promotes human development from consumption that affects the quality of the natural environment; increasing the role of information, education, and environmental protection; strengthening international mechanisms to assess the environmental impact of consumption; creating organisations to defend the consumers ' rights, environmental protection, poverty eradication, to equality between the sexes, the rights of children. think globally but act locally and globally should become a reality. 5.conclusions european urbanization is an irreversible process; its dimensions will vary in time and space, as determined by the living conditions promised by urban entities, and, moreover, of the level of development of the country in which the urban area in question. it is desirable to stop the phenomenon? in a situation in which the urban environment made available to individuals and firms strengths and advantages that a concentrated space they can offer lower cost, it would seem that, from this angle, increasing urbanization does not produce than positive externalities. however, the plethora of negative effects, it generates a chaotic, spontaneous urban development, at random, it is not desirable. what needs to be done is a proper urban planning, respecting the natural potential of the area and enhancing the interests of consumers and those of companies. furthermore, the economic development of the rural environment should provide opportunities for a civilized, decent life and the temptation of seeking an unknown environment, in many cases, impossible to surmount risks specific to them. references aspecte semnificative ale competitivităţii şi dezvoltării urbane la nivel european, available on www.ccasp.ase.roe-city. danu, m.c. (2001), riscul în afaceri, editura plumb, bacău. eurostat (2013), available on www.eurostat.com. expansiunea urbană în europa (2006), agenţia europeană de mediu, copenghaga, raportul nr.10/2006, available on www.eea.europa.eu/ro . sasu, c. (1998), marketing internațional, editura polirom, iași. the world bank data (2013), available on http://data.worldbank.org/indicator/ is.veh.pcar.p3/countries. 24 http://www.eurostat.com/ european urbanization – between strengths and risks urban environment consumption, available on http://riscurisicatastrofe.reviste .ubbcluj.ro/ urbanization – impacts, available on wgbis.ces.iisc.ernet.in/energy/. 25 studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro new requirements for statutory auditors in european union botez daniel “vasile alecsandri” university of bacău daniel63331@yahoo.com abstract statutory audit missions are completed through the drawing up of audit reports. the elements of an audit report are standardized by international standard on audit isa 700 “forming an opinion and reporting on financial statements”. in april 2014, directive 2006/43/ec on statutory audits of annual accounts and consolidated financial statements has been amended by directive 2014/56/eu of the european parliament and of the council of april 2014. all in the month of april 2014, the european parliament and the council adopted regulation no 136/66/eec. 537/2014 regarding specific requirements relating to statutory audits of public interest entities. these documents provide for expanded content for the report of the audit board and some additional requirements. in this way the directive 2014/56/ec lays down mandatory items in the report of the audit board additional to those laid down by international reference. regulation lays down the duty of auditor’s entities of public interest to include in the report of the audit board items additional to those laid down by the directive. furthermore, lays down an obligation for them to send, in addition to the report of the audit board, other reports content well specified: a supplementary report addressed to the audit committee of the entity audited; a report to the supervisory authority of the entity of public interest; a report of transparency, which will be published on their web site; and, a report by the authority to the monitoring by reporting list of entities of public interest audited and of revenue. such reports together with some comments, is the subject of article. keywords statutory audit; audit report; public interest entities jel classification m42 introduction statutory audit mission carried out by external auditors shall be completed by the drawing up of the audit report. this is the document by which the auditors shall transmit to financial statements users their opinion with regard to the degree to which they show a true and fair view of financial position and financial performance, together with the other information presented. requirements for the components of the required audit report and the manner of expression of opinion shall be provided by the international standard on audit isa 700 “forming an opinion and reporting on financial statements”. for situations in which shall be issued opinions changed and shall be included and other information in the report the auditor also have to appeal to the international audit standards isa 705 “modifications to the opinion in the independent auditor’s report” and isa 706 “emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”. in accordance with these requirements, the components of the audit report shall be the following: 1. title auditor's report must have a title that clearly indicates that it is a report 37 botez of an independent auditor; 2. the consignee auditor’s report must be sent as circumstances provide for mission; 3. the introductory paragraph the introductory paragraph of auditor’s report must: • identify the entity whose financial statements have been audited; • state that financial statements have been audited; • identify title of each situations which make up their accounts; • make reference to the significant accounting policies and other explanatory information; and • specify the date or the period covered by each financial situation which make up their accounts. 4. management responsibility for financial statements this section of auditor’s report describes responsibilities those persons in the organization who are responsible for the preparation of the financial statements. description must include an explanation for the fact that the management should be responsible for the preparation of the financial statements, in accordance with the general financial reporting applicable, and for that internal control which they calculate necessary to allow drawing up the financial statements free of significant misstatement, caused either by fraud or error. 5. auditor’s responsibility auditor’s report must specify that auditor’s responsibility is to express an opinion on financial statements following the audit, must specify that the audit has been carried out in accordance with international auditing standards and that those standards shall provide that the auditor also to comply with ethical requirements and that the auditor plan and carry out audits in such a way as to obtain a reasonable assurance of the extent to which financial statements are free of significant misstatement . describe a sufficient audit trail specifying aspects: • an audit involves performing procedures to obtain audit evidence relating to the values and presentations of the financial statements; • selected procedures will depend on the auditor’s judgment, including with the assessment of the risk that financial accounts to submit significant distortions caused either by fraud or error. in assessing those assessments to the risk, the auditor shall take into account relevant internal control for the drawing up and presentation of the financial statements accurate for entity, with a view to the preparation of audit procedures appropriate circumstances, but without the purpose of expressing an opinion on internal control effectiveness. • an audit should also include assessment of the degree of appropriateness of accounting policies used and reasonable nature of accounting estimates made by management, as well as and the overall presentation of the financial statements. 6. auditor’s opinion when express an opinion unchanged with respect to the financial statements drawn up in accordance with a general framework of fair presentation, auditor’s opinion should be, except where the laws or regulations provide otherwise, use one of the following phrases, which shall be considered to be equivalent: • statements are true, from all points of view significant, … in accordance with (general framework of financial reporting applicable); or • financial statements gives a correct and accurate … … in accordance with (general framework of financial reporting applicable). 38 new requierments for statutory auditors in european union 7. other responsibilities for reporting these other responsibilities for reporting should be dealt with in a separate section of auditor’s report whose subtitle will be “report on other laws and regulations” or another subtitle content appropriate section. 8. auditor’s signature – auditor’s report must be signed. 9. date of report auditor auditor’s report must be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the accounts, including samples according to which: • have been drawn up all situations included in the financial statements, including the notes relating thereto; and • the persons with the authority recognized have declared that they have assumed responsibility for those financial statements. 10. address auditor auditor’s report must specify the location within the jurisdiction in which the auditor carries out its activities. additional requirements for the audit report in april 2014, directive 2006/43/ec on statutory audits of annual accounts and consolidated financial statements has been amended by directive 2014/56/eu of the european parliament and of the council of april 2014. in the text meet its provisions relating to the audit report. article 28, “establishment of the audit report” are referred to as required to be submitted elements of entity relating to the identification, date and period covered by financial accounts, find the frame of financial reporting, describe the scope of the audit with the indication standards applied and the opinion. in addition, directive makes a few important entries: • inclusion in the audit report an opinion and a statement provided for by the european directive on the annual accounts, which refers to the auditor’s obligation to deliver an opinion on:  report consistency managers to financial accounts for the same financial year; and  preparing the report administrators in accordance with legal requirements applicable and  of a declaration if, based on the knowledge and understanding acquired in the audit with regard to the enterprise and its environment, have identified significant erroneous information presented in manager’s report, indicating nature of these erroneous information; • provides a statement of any uncertainty associated significant events or conditions which may significantly to doubt the ability of the entity to continue to carry on their activities; • make explanations about the situation in which statutory audits has been carried out by several auditors (more firms of auditors). requirements for the audit of entities of public interest at all in the month of april 2014, the european parliament and the council adopted regulation (ec) no 537/2014 concerning specific requirements relating to statutory audits of public interest entities. by entities of public interest shall mean, in national law: “credit institutions; non-bank financial institutions, as defined in accordance with the rules of law, entered in the register general; payment institutions and institutions issuing electronic currency, which are defined according to the law, credit relating to the services of payment and whose activity is limited to the provision of the services of payment, i.e. issue of the currency and to the provision of electronic payment services; insurance companies, 39 botez insurance-reinsurance and reinsurance; entities authorized, covered and monitored by the commission for monitoring of private pension systems; companies financial investment services, management companies investment, collective investment undertakings, central repository, the houses of compensation and operators in the market/ system authorized/ prompted the national securities commission; commercial companies whose securities are admitted to trading on a regulated market; companies/ national companies; companies wholly or major state; autonomous state; legal persons who belong to a group of companies and shall enter into the perimeter of consolidation of a parent undertaking established in romania, which has an obligation to apply international financial reporting standard, in accordance with the legal provisions in force; organizations without purpose bears patrimonial liability receiving financing from public funds”. only for auditing them, the new european regulation lays down some requirements that opposed framework set out by the international standard on auditing audit report. thus, the auditors of entities of public interest must be present in the context of the report following their aspects: • indicates person or body which has appointed statutory auditors or audit firms. usually, statutory auditors shall be appointed by the general meeting of shareholders; • indicate the date of appointment and the period of mission continues, including any renewals of statutory auditors or audit firms. it is a piece of information required in order to ascertain compliance with the requirements concerning the rotation of auditors a mission of auditors to a public entity. regulation lays down that no initial mission to a statutory auditor or firm of auditors and this combined with any further extension may not exceed a maximum period of ten years, but there are also some of the exceptions. • provides, in support of the audit opinion, the following:  a description of the most important risks of declarations, including the risks of significant inaccuracy evaluated assigned to fraud;  a summary of auditor measures in response to these risks; and  where appropriate, critical remarks on the edge those risks; • explains to what extent statutory audits was considered able to detect irregularities, including fraud; • confirms that the opinion is in accordance with the report in addition to the audit committee; • declares that he services which are not prohibited (regulation determines what services are prohibited), and that statutory auditors or audit firms have remained independent from the entity audited during audit; • indicate any services, in addition to statutory audits, which have been provided by statutory auditor or firm of auditors or by any member of the network of which it is part statutory auditor or audit company, for the benefit of entity audited, mother of his undertaking or enterprise controlled by this and which have not been communicated in the report of the administrative, or in financial statements. furthermore, the regulation lays down that member states may lay down additional requirements as regards the content of the audit report. in addition to the audit report referred to above, the auditors of entities of public interest must draw up and submit an additional report to the audit committee of the entity audited not later than the date of submission of the audit report. the report explains the results additional statutory audits carried out and to achieve at least the following: • include a declaration of independence by confirming in writing, on a yearly basis, that statutory auditor, audit company and partners, executives and managers carrying out statutory audits are independent of the audited entity; 40 new requierments for statutory auditors in european union • if the audit has been carried out by a firm of auditors, the report identifies each key audit partner which has been involved in audits; • describe the nature, frequency and extent of such communication with the audit committee or with the body with equivalent function of the audited entity, the body of the management and the administration or supervision of the entity audited, including the data meetings held with these bodies; • includes a description of the scope and timetable audit; • in the case in which they have been appointed several auditors or firms of auditors, distribution of tasks between statutory auditors and/or firms of auditors; • describes the methodology used, including balance sheet liability categories which have been checked directly with the categories whose operational has been based on testing systemic and compliance, including an explanation of substantial fluctuations of weighting is tested by the fund and of conformity as compared with previous year, even if statutory audits of that year has been carried out by auditors other statutory or other firms of auditors; • communicate the level of materiality applied to carrying out the statutory audits of financial statements as a whole and, as the case may be, the materiality for certain categories of transactions, balances accounting or disclosed, and shall inform of the qualitative factors which have been taken into account in determining the materiality; • reports and explains reasoning related to events or conditions identified in the course audit which may create serious doubts regarding the ability of the entity to and continue to carry on their activities and if these events or conditions constitute substantial uncertainty and provides a summary of all the guarantees and letters of comfort, commitments of public intervention and other support measures which were taken into consideration to assess the potential to continue such activities; • report on any significant deficiencies in the financial statements for entity audited or, in the case consolidated financial statements, of the system of internal financial control of parent company and/or the accounting system. for each deficiency significant additional report indicates whether deficiency in question has, or has not been resolved by management; • report on any important problems involving failure to comply with the actual or presumed acts in law and administrative acts or of the statutes which have been identified in the course auditing, to the extent that they are considered to be relevant to enable the audit committee to carry out their tasks; • reports and analyzes the valuation methods applied to the various items in the financial statements or consolidated annual, including any impact of the change of such methods; • in the case of a statutory audit of consolidated financial statements, explain the scope of consolidation and the exclusion criteria applied by the entity audited unconsolidated entities, if any, as well as if the criteria applied are in accordance with the financial reporting framework; • reports:  any considerable difficulties, if any, encountered during audit;  important matters, if any, arising out of statutory audits and which have been discussed or which have been the subject correspondence with the management; and  other aspects, if any, arising out of statutory audits and which, in the opinion of professional auditor, are significant for the supervision of the financial reporting process. member states may lay down additional requirements as regards the content of the report in addition to the audit committee. at the request of a statutory auditor of a firm of auditors, statutory auditors or audit firms main was discussing the problems arising out of statutory audits, referred to in the report in addition to the audit 41 botez committee the audit committee, with the administration or, as the case may be, the supervisory body of the entity audited. additional audit report addressed to the audit committee shall be signed and shall be dated. a significant size has and the report to the auditor also require the supervisory authority of the entity of public interest (at the national level, the financial supervisory authority), as well as in certain cases, the supervisory authority of statutory audit work (at the national level, supervisory board in the public interest of the accounting profession). the report shall be drawn up for the reporting of circumstances about which auditors has knowledge in the course of the mission audit relating to: • a significant violation of the acts in law and administrative acts which provide, as the case may be, conditions for the approval or which specifically govern the conduct of its business activities in the public interest entity; • a threat or a doubt with respect to significant continuity officials said entity of public interest; • impossibility to issue an audit opinion with respect to the financial statements or issue of an opposing opinion or an opinion with reservations. also, statutory auditors or audit firms have a duty to report any information referred to above which has come to their knowledge in the course of carrying out statutory audits of the undertakings in close connection with the entity of public interest in performing, also statutory audits. member states may require from the auditor or firm of auditors additional information, provided that they are necessary for effective supervision of financial market, such as national law. regulation provides for and the establishment of a dialog between the auditors of credit institutions and insurance undertakings and the supervisory authorities. within four months of the end of each financial year, statutory auditor or firm of auditors who carry out statutory audit or audits of entities operating in the public interest shall publish an annual report of transparency. annual report of transparency shall be published on the site dedicated to the statutory auditor or firm of auditors and remains available on site for at least five years from the date of its publication on the site. annual report of transparency shall include at least the following elements: • a description of the structure of legal entities and for the owners of firms of auditors; • if statutory auditor or firm of auditors is part of a network:  description of the network and of the organization of the legal and structural;  name of each statutory auditor serving in independent operation or each firm of auditors which form part of the network; • a description of the structure of a governess of the firm of auditors; • a description of the system of internal control of the required quality of statutory auditor or firm of auditors and a statement of the organism administrative or management about the efficiency of its operation should be established; • that had the most recent operational for quality assurance; • a list with the entities of public interest for which statutory auditor or firm of auditor’s statutory audits to be carried out in the course of a financial year preceding; • a declaration concerning the practices implemented by statutory auditor or firm of auditors in matters of independence, which also confirm that was carried out an assessment of the compliance with internal independence; • a statement concerning statutory auditor policy or firm of auditors as regards training of statutory auditors; • information on basis of remuneration of the partners in firms of auditors; 42 new requierments for statutory auditors in european union • a description of policy statutory auditor or firm of auditors in relation to rotation of partnerskey and staff, and • where are not published in his financial situation, information on the total turnover of statutory auditor or firm of auditors, broken down on the following components:  revenue arising from statutory audits of annual accounts and consolidated accounts of entities operating in the public interest and of entities belonging to a group of undertakings whose undertakingmother is an entity of public interest;  revenue arising from statutory audits of annual accounts and consolidated accounts of other entities;  income deriving from services allowed which are not of the audit board, rendered by entities which are audited by statutory auditor or firm of auditors; and  income arising from services that are not of the audit board, rendered other entities. the report of the transparency shall be signed by statutory auditor or by the firm of auditors. statutory auditor or firm of auditors shall provide annually its competent authority a list of entities operating in the public interest audited, according to the revenue collected from them, present such income as follows: • income from statutory audit; • revenues from services other than those prohibited, provided for by community law and national law; and • revenues from services other than those prohibited, which are not provided for by community law and national law. conclusions new requierments requierd for auditing entities of public interest increase audit companies responsibility toward their clients, entities of public interest, but also toward the supervisory body of the capital market, the supervisory bod of the accounting profession, but also toward their own professional body. this situation will make changes in the policies of management of the audit companies, promoting increased rigor of the method of collection and reporting of data, associated with better positioning of these companies of the market of professional services. references accounting law no 82/1991, with subsequent amendments and additions. directive 2014/56/eu of the european parliament and of the council of 16 april 2014 amending directive 2006/43/ec on statutory audits of annual accounts and consolidated financial statements. isa 700 “forming an opinion and reporting on financial statements”, in iaasb handbook of international regulations for quality control, auditing, review, other assurance services and related services, edition 2012, vol. i, translated and reissued the cafr, bucharest, 2013. regulation (eu) no. 537/2014 of the european parliament and of the council of 16 april 2014 concerning specific requirements relating to statutory audits of public interest entities. 43 in accordance with these requirements, the components of the audit report shall be the following: 1. title auditor's report must have a title that clearly indicates that it is a report of an independent auditor; 2. the consignee auditor’s report must be sent as circumstances provide for mission; 3. the introductory paragraph the introductory paragraph of auditor’s report must: • identify the entity whose financial statements have been audited; • state that financial statements have been audited; • identify title of each situations which make up their accounts; • make reference to the significant accounting policies and other explanatory information; and • specify the date or the period covered by each financial situation which make up their accounts. 6. auditor’s opinion when express an opinion unchanged with respect to the financial statements drawn up in accordance with a general framework of fair presentation, auditor’s opinion should be, except where the laws or regulations provide otherwise...  statements are true, from all points of view significant, … in accordance with (general framework of financial reporting applicable); or  financial statements gives a correct and accurate … … in accordance with (general framework of financial reporting applicable). 7. other responsibilities for reporting these other responsibilities for reporting should be dealt with in a separate section of auditor’s report whose subtitle will be “report on other laws and regulations” or another subtitle content appropriate s... aspecte privind raportarea financiară interimară actuală în românia studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro aspects concerning interim financial reporting in romania: standards and regulations rotilă aristiţa “vasile alecsandri” university of bacău, romania rotila11@yahoo.com abstract the mechanisms employed for the communication of accounting information that is necessary for users in their economic decision-making process consist of the financial statements of an entity. all legal entities, no matter the domain of their activity, have the obligation to draw up annual financial statements for every completed financial year. for certain categories of entities, reporting obligations are also required for periods other than the annual reporting, throughout the financial year. it is the case of interim financial reporting. at the level of the international accounting framework, the aspects related to interim financial reporting are the subject of a separate standard, namely, ias 34 interim financial reporting. in romania, the current system of accounting regulations concerning the annual financial statements comprises accounting regulations that comply with the european directives and which apply to the various categories of entities, on the one hand and, on the other, accounting regulations in line with the ifrs, which are applicable to other classes of entities from certain activity sectors. the accounting regulations that apply to each category refer to, among other things, the contents and the format of financial statements that have to be presented. analysing the system of norms and regulations, this article identifies the requirements concerning interim financial reporting in romania, with reference to the different types of entities. keywords accounting regulations; financial statements; interim financial reporting; financial position; ifrs; european directives jel classification m41 introduction it is well known that the information produced by the accounting activity assists both the internal communication and the external communication of an entity. external communication, which makes the activity of the entity accessible to investors, the state, creditors, suppliers, clients and other legal entities or sole traders that might be interested, is ensured by means of the periodical information provided by financial statements (rotilă, 2011). the international financial reporting standards (ifrs) approach the subject of presenting general purpose financial statements that should be prepared annually by entities, as well as the aspects concerning interim financial reporting, but they do not establish which entities should publish interim financial reports, how frequently they should do it, or how soon after the end of a certain period. the international accounting standards board (iasb) considers that these problems should be decided at the level of each country by governments, organisms for the regulation of securities, stock exchanges and professional accountancy organisms. in romania, all juridical persons, no matter the domain in which they activate or their size, are required to draw up annual financial statements for the completed financial year, an obligation stipulated by accounting law no. 82/1991 (art. 28). for certain 83 rotilă categories of entities, reporting obligations are also required for periods other than the annual reporting, throughout the financial year, in order to provide the information that is necessary for the institutional system of the state, for prudential supervisory purposes or with informative purposes that satisfy the needs of categories of users other than state institutions. given that at the present moment, in romania, certain categories of entities have to apply regulations that comply with the ifrs for the preparation of annual and interim financial statements, we will further present synthetically the characteristic aspects concerning interim financial reporting from the perspective of the international accounting referential and, after classifying the categories of entities depending on the accounting regulations that apply to them, we will try to identify the requirements that are specific to interim financial reporting in romania. interim financial reporting in the international accounting referential at the level of the international accounting referential, the regulations concerning interim financial reporting are included in a separate standard, namely, 34 interim financial reporting. as stated in the objective of this standard, iasb considers that a reliable and timely interim financial reporting improves the ability of investors, creditors and other users to understand the capacity of an entity to generate revenue and cash flows, as well as its financial condition and liquidity. ias 34 interim financial reporting establishes the minimum components of an interim financial report, as well as the principles for the accounting recognition and measurement that should be applied for the preparation of an interim financial report. however, the standard does not establish any rule concerning which entities should publish interim financial reports, how frequently they should do it, or how soon after the end of an interim period, the iasb considers that these problems should be decided at the level of each country by governments, organisms for the regulation of securities, stock exchanges and professional accountancy organisms (iasb, 2011). nevertheless, iasb encourages entities whose debts or shares are traded publicly to publish interim financial reports at least twice a year and to publish them no later than 60 days after the end of the interim period (ias 34, par.1). an interim financial report is defined as a financial report that contains either a complete set of financial statements (as described in ias 1 presentation of financial statements) or a set of condensed financial statements for an interim period (a reporting period shorter than a full financial year). the set of condensed financial statements proposed by ias 34 as an alternative to the complete set presented in ias 1 includes at least the following components: ▪ a condensed statement of financial position; ▪ a condensed statement of comprehensive income; ▪ a condensed statement of changes in equity; ▪ a condensed statement of cash flows; ▪ selected explanatory notes. if an entity chooses to present a condensed set of financial statements, these shall contain at least each of the headings and each of the subtotals that were presented in the most recent annual financial statements together with the selected explanatory notes. ias 34 lists a series of events and transactions for which information shall be included if this is relevant (ias 34, par. 15b). explanatory notes shall contain all the significant information so that the users could understand the changes in the financial position or the performance of the entity since the last annual report. if an entity chooses the complete set of financial statements for its interim financial report, the form and contents of these statements shall comply with the requirements described in ias 1 presentation of financial statements. 84 aspects concerning interim financial reporting in romania: standards and regulations as in the case of annual financial statements, interim financial statements should present comparative information, as follows: ▪ in the statement of financial position: the statement at the end of the interim period and the statement as of the end of the preceding financial year; ▪ in the statement of comprehensive income: the statement for the current interim period and the statement for the cumulative comprehensive income from the beginning of the current year to date; comparative statements for the comparable interim periods of the preceding financial year; ▪ in the statement of changes in equity and the statement of cash flows: the cumulative statement from the beginning of the current financial year to date; the cumulative statement for the comparable interim period of the preceding financial year; for the preparation of interim financial statements, the entity shall apply the same accounting policies as in the case of annual financial statements, with the exception of changes in accounting policies that occur after the date of the most recent annual financial statements (in other words, since the beginning of the current financial year) and which will be reflected in the following annual financial statements. an entity’s reporting frequency (annually, half-yearly or quarterly) should not affect the measurement of the annual results, so the measurement carried out for interim financial reporting should be conducted on a cumulative basis, from the beginning of the financial year to date. we must also mention that, as far as the interim financial statements’ compliance with ifrs is concerned, the same requirements are applied as in the case of annual financial statements, meaning that if the interim financial report of an entity is presented as conforming to the ifrs, then they should fulfil the requirements of all ifrs. the system of accounting regulations in romania and the categories of accounting entities as it is known, the institution that is in charge of regulating accountancy (the issuing of norms and regulations in the accounting domain) in romania is the ministry of public finances. the accounting norms and regulations specific to certain areas of activity are proposed and issued by the institutions that have such attributions, with the approval of the ministry of public finances (mpf), the national bank of romania-nbr (for the banking sector) and the financial supervisory authority-fsa (for the capital markets sector, the insurance sector, the private pensions sector), which form an entire system concerning accounting regulations. in romania, all legal entities, irrespective of the domain of activity, have the obligation to draw up annual financial statements for every completed financial year, in compliance with implemented accounting regulations, an obligation that is stipulated by accounting law no. 82/1991 (art. 28). the current system of accounting regulations in romania, with reference to the annual financial statements, contains both accounting regulations that conform to european directives specific to the various types of entities and accounting regulations that comply with ifrs and which are applicable to other categories of entities. accounting regulations that conform to the ifrs are applied in the present in romania by the following categories of entities:  companies whose securities are admitted for trading on a regulated market, the incident regulations being approved by order of mpf no. 1286/2012;  credit institutions, the incident regulations being approved by the order of nbr no. 27/2010. 85 rotilă mention should be made that, starting with the fiscal year corresponding to 2015, in compliance with the provisions of the fsa instruction no. 2/2014, regulations complaint with the ifrs will also be applied by the entities authorized, regulated and supervised by the fsa the financial instruments and investments sector of (by financial investment firms, investment management firms, collective investment undertaking, central securities depositories, clearing house and market/system operators). as far as the set of annual financial statements, for those entities that apply accounting regulations compliant with european directives, its components are those set out by the applicable accounting regulations, and for entities that apply accounting regulations that conform to the ifrs, the components are those prescribed by the ias 1 presentation of financial statements. annual financial statements presented in compliance with the ifrs represent financial statements with a general scope as they are meant to satisfy the needs of the users who are not entitled to impose on an entity the preparation of reports that are adapted to their specific informative needs. in order to ensure the information system of the state, the ministry of public finances asks entities that apply accounting regulations in compliance with the ifrs to present annual accounting reports at the territorial units of the ministry of public finances. the standard form, contents and submission deadline for these reports are established by regulations issued, depending on the case, by the ministry of public finances for economic agents, or by the nbr for credit institutions. in compliance with the order of nbr no. 1/2013 for the approval of the methodological norms concerning the preparation of annual accounting reports for the informational needs of the ministry of public finances, applicable to credit institutions, with incidental regulations that conform to the ifrs approved by the order of nbr no. 27/2010, credit institutions draw up and present an annual accounting report containing the following forms: a) a statement of assets, liabilities and equity; b) profit and loss account; c) informative data; d) tangible and intangible assets; e) explanations of elements from the profit and loss account; f) other information. the ministry of public finances also prescribes, by means of order, the major aspects regarding the economic operators’ preparation and presentation of annual financial statements and annual accounting reports at the territorial units of the mpf. the categories of legal entities that apply – for the organisation and conducting of the accounting activity and the preparation of their annual financial statements – accounting regulations that comply with the european directives are presented in the figure below. figure 1 accounting regulations in compliance with the european directives source: own compilation 86 aspects concerning interim financial reporting in romania: standards and regulations requirements concerning interim financial reporting in romania besides the requirement of drawing up annual financial statements, for certain categories of entities, reporting obligations are also required for periods other than the annual reporting, throughout the financial year, in order to provide the information that is necessary for the institutional system of the state, for prudential supervisory or informative purposes that satisfy the needs of categories of users other than state institutions. interim accounting reporting intended for the institutional system of the state as stipulated by accounting law no. 82/1991 (art. 28, al. 2), republished, with subsequent amendments and additions, in order to provide the information intended for the institutional system of the state, the ministry of public finances can prescribe that entities have the obligation to prepare and present financial statements or accounting reports at the territorial units of the ministry of public finances in periods other than per annum, throughout the financial year. in the present, in romania, such reporting requirements refer to half-yearly accounting reporting. the obligation of presenting a half-yearly accounting report on the 30th of june applies only to certain categories of entities. for economic operators, the requirements of half-yearly reporting are regulated by annual order of the ministry of public finances. the other categories of entities draw up and present half-yearly accounting reports respecting the format and due dates prescribed in the regulations issued by the nbr for the banking sector and by the fsa for each of the following three domains: insurance, insurance-reinsurance and reinsurance, the private pension system, capital markets domain, with the approval of mpf. as in the case of annual reporting, entities that did not operate from the date of their establishment until the date of the reporting, as well as entities that are undergoing liquidation, are required to present a declaration on oath at the regulatory organism as well as at the territorial units of mpf, without preparing half-yearly accounting reports. an overview of the current regulations that prescribe the requirements for interim (half-yearly) accounting reporting for different types of entities includes: figure 2 regulations concerning the system of half-yearly accounting reporting source: own compilation concerning the forms that constitute the contents of half-yearly accounting reporting, we observe that they are different for the various types of entities. for economic operators (whose turnover in the preceding financial year was higher than 220.000 lei), by order of mpf no. 936/2014, the models of forms used for half87 rotilă yearly accounting reporting were established, for two categories of entities, the set of half-yearly financial statements having the following components: for entities that apply the accounting regulations in compliance with the european directives, approved by order of mpf no. 3055/2009: a) a statement of assets, liabilities and equity; b) profit and loss account; c) informative data. for entities that apply the accounting regulations in compliance with the ifrs, approved by order of mpf no. 1286/2012: a) a statement of assets, liabilities and equity; b) statement of revenue and expenditure; c) informative data. entities from the banking sector prepare half-yearly financial statements composed of a) a statement of assets, liabilities and equity; b) a profit and loss account and c) informative data, the models of reporting forms (approved by order of nbr no. 10/2012, with subsequent amendments and additions) being different for three types of entities: 1) credit institutions, 2) the deposit guarantee fund in the banking sector, 3) the other entities that are regulated by the nbr (non-bank financial institutions, payment institutions, institutions issuing electronic money etc.). these entities transmit their half-yearly financial statements to the territorial units of the mpf and to the nbr. entities from the capital markets sector which are authorized, regulated and supervised by the fsa – the financial instruments and investments sector draw up and present half-yearly financial statements prescribed by instruction no. 5/2006 (approved by order of nsc no. 70/2006, with subsequent amendments and additions) as presented in figure 3. figure 3 half-yearly financial reporting for entities from the capital markets sector source: own compilation entities from the insurance sector that are authorized, regulated and supervised by the fsa – the insurance-reinsurance sector draw up and transmit the set of half88 aspects concerning interim financial reporting in romania: standards and regulations yearly financial statements in compliance with norm fsa no. 18/2014, both to the territorial units of the mpf and to the fsa, with the following components: ▪ for insurers and reinsurers: a) balance sheet; b) profit and loss account, composed of: technical account for non-life insurance; technical account for life insurance; non-technical account. c) informative data. ▪ for insurance and/or reinsurance brokers: a) balance sheet; b) profit and loss account; c) informative data. mention should be made that insurers that administer voluntary pensions funds shall present financial statements for them, as well, and these are: a) a statement of assets, liabilities and equity; b) statement of revenue and expenditure. entities from the private pensions sector that are authorized, regulated and supervised by the fsa – the private pensions system sector draw up and present half-yearly financial statements prescribed by norm no. 9/2011 (approved by decree of scpps no. 12/2011, with subsequent amendments and additions), as presented in figure 4. figure 4 half-yearly accounting reporting in the case of entities from the private pensions sector source: own compilation the system of half-yearly accounting reporting includes the methodological norms regarding the preparation, signing, verification and presentation of accounting reports as well as the informational contents of the forms used for accounting reporting. as 89 rotilă in the case of annual financial statements, half-yearly financial statements provide comparative information concerning the following periods: a) for the statement of assets, liabilities and equity/ balance sheet: ▪ a statement at the end of the reporting period (30 june n); ▪ a statement at the end of the preceding financial year (31.12.n-1). b) for the profit and loss account/ statement of revenue and expenditure: ▪ a statement of revenue, expenditure and of the result of the reporting period (semester 1, financial year n); ▪ a statement of revenue, expenditure and of the result of the comparative period from the preceding financial year(semester 1, financial year n-1). the deadline for the presentation of half-yearly accounting reports is the same for all types of entities, for instance, the accounting reports as of june 30 2014 shall be presented at the territorial units of the mpf until the 18 of august 2014 at the latest. as we can observe, half-yearly accounting reporting provides information related to the financial position, the financial performance as well as data concerning the other indicators contained by the reporting forms. a different category of accounting entities is represented by public institutions, which have the obligation to draw up quarterly financial statements at the end of the ist, iind and iiird quarters, in compliance with the methodological norms approved by order of mpf no. 556/2014 and to present them at the mpf or at the hierarchically superior institutions, depending on the case. a set of quarterly financial statements has the following components: a) balance sheet; b) economic outturn account; c) statement of cash flows; d) budgetary execution accounts 1; e) annexes (including accounting policies and explanatory notes). besides the requirement of publishing quarterly financial statements, public institutions also have to draw up some monthly financial reports. given their specific nature concerning subordination, public institutions should submit or present reports as follows: ▪ at the mpf: the chief authorising officers for the state budget, the social insurance budget and special funds budgets, as well as the public finances county administrations and the public finances general regional directorate of bucharest for local budgets; ▪ at the hierarchically superior institutions: public institutions of central subordination whose leaders are secondary or tertiary authorised officers; ▪ at the public finances county administrations and the public finances general regional directorate of bucharest: public institutions of local subordination whose leaders are chief authorised officers. interim accounting reporting with prudential supervisory or informative purposes for satisfying the needs of users other than state institutions as we have shown above, entities which are authorized, regulated and supervised by the nbr or the fsa, depending on the case, have the obligation to present half-yearly accounting reports not only at the territorial units of the mpf but also at the regulating organism or, even more, on their web page. besides these ones, other requirements are also formulated for interim reporting. 1 budgetary execution accounts differ depending on the category of the public institution, the financing modality and other criteria. 90 aspects concerning interim financial reporting in romania: standards and regulations for prudential supervisory or informative purposes that satisfy the needs of other categories of users, entities that belong to the sectors regulated by the nbr or the fsa are also required additional interim reports. such reporting obligations for similar purposes are also required from companies that are listed on the stock exchange. in accordance with the regulation of nsc (now fsa) no. 1/2006 regarding the issuers and transactions with securities (art. 113), companies whose shares are admitted for trading on a regulated market prepare, transmit and make public a series of quarterly, half-yearly and annual reports, as follows: figure 5 interim accounting reporting – entities listed on the stock exchange source: own compilation companies whose securities are traded on a regulated market shall make public (in written form, on request, as well as in electronic form, on their own website) and shall transmit to the fsa and to the operator of the regulated market the annual financial statements as well as the half-yearly and quarterly accounting reports. in the case of half-yearly reports the following rules shall also be respected: ▪ in case the issuer has to draw up consolidated accounts, the half-yearly accounting reporting shall be prepared in accordance with the international accounting standards that apply to interim financial reporting, adopted in compliance with the procedure prescribed by art. 6. from the european commission regulation no. 1606/2002; ▪ in case the issuer does not have the obligation to draw up consolidated accounts, the half-yearly accounting reporting shall contain the simplified balance sheet and the simplified profit and loss account, as well as the annexed explanatory notes. for the drawing up of the simplified balance sheet and the simplified profit and loss account, the issuer shall respect the same principles as in the case of drawing up annual financial reports. credit institutions shall draw up and transmit to the nbr, for prudential supervisory purposes, periodical financial statements in compliance with the ifrs (referred to as finrep financial statements) at an individual level (order of nbr no. 3/2011) as well as finrep consolidated financial statements (order of nbr no. 1/2011). finrep financial statements at an individual level, required from credit institutions with prudential supervisory purposes comprise two sets of information, namely, basic information (which is transmitted monthly) and information other than the basic type (that is transmitted monthly, quarterly, half-yearly or annually, depending on the case). credit institutions submit/transmit finrep financial 91 rotilă statements at an individual level monthly, quarterly, half-yearly or annually, depending on the case, their structure and reporting frequency being as follows: a) basic information, with these components: fin 1 balance sheet and fin 2 profit and loss account, financial statements which are transmitted monthly; b) information other than the basic type, providing supplementary information and explanations on the indicators included in the basic information and which is transmitted monthly, quarterly, half-yearly or annually, depending on the case. entities from the capital market sector also have the obligation of transmitting halfyearly accounting statements to the regulatory authority (fsa), as shown in figure no. 3. moreover, if their titles are traded on a regulated market, these entities comply with the regulation nsc no. 1/2006 regarding issuing institutions and transactions with securities and are obliged to present the required reports, too. entities from the insurance sector have the obligation of drawing up and submitting to the afs a series of financial and technical reports, as well (annual, half-yearly, quarterly and monthly reports), whose form and contents are established by order of isc no. 2/2009 (in the case of insurance and/or reinsurance companies), and order of isc no. 3/2009 (in the case of insurance and/or reinsurance brokers), respectively. by means of these reports the required information is provided so that it allows the fsa to carry out a well grounded examination of the financial situation they benefit from at a certain moment and to monitor the evolution in time of the major indicators regarding the activity undertaken. conclusions at the international level, the ifrs approach the subject concerning the presentation of financial statements with a general purpose (financial statements that are meant to satisfy the needs of the users that are not entitled to oblige an entity to draw up reports that are adapted to their specific informational needs), prescribe the components that should be included in a complete set of financial statements as well as the minimum components of an interim financial report, together with the principles for accounting recognition and measurement that should be applied for the drawing up of an interim financial report. in the case of interim financial reporting, the ifrs do not establish which entities should publish interim financial reports, how frequently or how soon after the end of an interim period, so the iasb considers that these problems should be decided at the level of each country by governments, organisms for the regulation of securities, stock exchanges and professional accountancy organisms. in romania, in order to provide the information that is necessary for the institutional system of the state, the mfp prescribes the obligation of preparing and presenting, at its territorial units, the financial statements or accounting reports for periods other than the annual reporting, throughout the financial year. currently, the deadline for the obligation of drawing up a half-yearly accounting report is june 30 for certain categories of entities. at the same time, certain categories of entities are required to draw up and present financial statements (annual, half-yearly, quarterly and monthly, depending on the case), either for prudential supervisory purposes or for informative purposes in order to satisfy the needs of users other than state institutions. references ceccar (2004), ghid pentru înţelegerea şi aplicarea standardului internaţional de contabilitate nr. 34 „raportarea financiară interimară”, bucharest, editura ceccar. 92 aspects concerning interim financial reporting in romania: standards and regulations deloitte (2009), interim financial reporting. a guide to ias 34, march 2009, available at http://www.iasplus.com/en/binary/dttpubs/0903ias34guide.pdf. hotărârea csspp nr. 12/2011 pentru aprobarea normei nr. 9/2011 privind sistemul de raportare contabilă semestrială a entităţilor autorizate, reglementate şi supravegheate de comisia de supraveghere a sistemului de pensii private, with subsequent amendments. iasb (2011), standardele internaţionale de raportare financiară (ifrss). norme oficiale emise la 1 ianuarie 2011, partea a, bucharest, editura ceccar. legea contabilităţii nr. 82/1991, republished, with subsequent amendments. norma asf nr. 18/2014 pentru punerea în aplicare a sistemului de raportare contabilă la 30 iunie 2014 a societăţilor din domeniul asigurărilor. ordinul bnr nr. 27/2010 pentru aprobarea reglementărilor contabile conforme cu standardele internaţionale de raportare financiară, aplicabile instituţiilor de credit, with subsequent amendments. ordinul bnr nr. 1/2011 pentru aprobarea normelor metodologice privind întocmirea situaţiilor financiare consolidate conforme cu standardele internaţionale de raportare financiară, solicitate instituţiilor de credit în scopuri de supraveghere prudenţială. ordinul bnr nr. 3/2011 pentru aprobarea normelor metodologice privind întocmirea situaţiilor financiare finrep la nivel individual, conforme cu standardele internaţionale de raportare financiară, aplicabile instituţiilor de credit în scopuri de supraveghere prudenţială. ordinul bnr nr. 10/2012 pentru aprobarea sistemului de raportare contabilă semestrială aplicabil entităţilor ce intră în sfera de reglementare contabilă a bnr, with subsequent amendments. ordinul bnr nr. 1/2013 pentru aprobarea normelor metodologice privind întocmirea raportării contabile anuale pentru necesităţi de informaţii ale ministerului finanţelor publice, aplicabile instituţiilor de credit, cărora le sunt incidente reglementările conforme cu ifrs aprobate prin ordinul bnr nr. 27/2010. ordinul cnvm nr. 23/2006 pentru aprobarea regulamentului cnvm nr. 1/2006 privind emitenţii şi operaţiunile cu valori mobiliare, with subsequent amendments. ordinul cnvm nr. 70/2006 pentru aprobarea instrucţiunii nr. 5/2006 cu privire la sistemul de raportare contabilă semestrială a entităţilor autorizate, reglementate şi supravegheate de cnvm, with subsequent amendments. ordinul mfp nr. 1286/2012 pentru aprobarea reglementărilor contabile conforme cu standardele internaţionale de raportare financiară, aplicabile societăţilor comerciale ale căror valori mobiliare sunt admise la tranzacţionare pe o piaţă reglementată, with subsequent amendments. ordinul mfp nr. 556/2014 pentru aprobarea normelor metodologice privind întocmirea şi depunerea situaţiilor financiare trimestriale ale instituţiilor publice, precum şi a unor raportări financiare lunare în anul 2014. ordinul mfp nr. 936/2014 pentru aprobarea sistemului de raportare contabilă la 30 iunie 2014 a operatorilor economici. rotilă, a. (2011), reglementări şi practici contabile specifice, bacău, editura alma mater. 93 http://www.iasplus.com/en/binary/dttpubs/0903ias34guide.pdf aspects concerning interim financial reporting in romania: standards and regulations microsoft word apostoaie constantin marius_eng.doc tax competition – beneficial or harmful? how various tax measures affect the allocation of resources? adina violeta trandafir, “spiru haret” university, constanta abstract fiscal competition has been in the news ever since the oecd launched a campaign against “harmful tax competition” in 1996. nor is it likely to disappear any time soon. instead, it is likely to intensify, as more and more governments resort to lower taxes to stimulate their economies. is all tax competition harmful, or is it possible to distinguish between harmful and beneficial tax competition? in this paper, in its first part, i try to present the difference between benefit and harmful tax competition. also, the paper try to establish how really is tax competition – “harmful” or “beneficial”. the second parts of this paper analyze the impact and efficiency of different tax measures in allocation of public resources. keywords tax competition, tax measures, allocation of resources, harmful tax competition jel code: h20 tax competition between beneficial and harmful competition is universally hailed as a “good thing”. it is recognized as being socially superior to its opposite, namely a monopoly or a cartel. the reason is very simple: where there is competition, even among the few, the individual customer or small firm is much better treated. the scope for exploitation disappears. the competing firm must innovate, watch its cost structures, seek to please its market, and sell at market prices which it cannot raise without running the risk of seeing its customers shift to its competitors. a monopoly or cartel does none of these things. it exploits its customers and suppliers, does not care about costs, does not innovate, and prices its product to maximize its own utility function. the rents it extracts from its privileged position are usually dissipated in high salaries, long holidays and short working hours for its employees. anyone arguing against competition must bear the burden of proof, for the general presumption is heavily in favor. turning now to fiscal competition in particular, is this not also presumably a “good thing”, for the very same reasons that competition in general is to be preferred to monopoly? fiscal competition is merely a special case of the more general phenomenon of institutional or regulatory competition, which both an austrian like f.a. hayek1 and a neo-classical economist like douglass c. north2 have described as being a process whereby “better” institutions (from a utilitarian standpoint) gradually replace worse ones. thus fiscal competition could be expected to yield both lower taxes and more care in controlling the costs of raising them, greater attention would be paid to the rational management of public expenditure, and possibly even some institutional and regulatory 1 hayek, f.a., the constitution of liberty, the university of chicago press, chicago, 1960, especially chapter 3 “the common sense of progress”, pp.39-53. 2 north, douglass c., structure and change in economic history,, norton & co. new york & london, 1981. studies and scientific researches economic edition, no. 15, 2010 173 innovation might occur. the tax-payer could expect to get better value in terms of public goods, per unit of tax effort, and he would enjoy more freedom to spend his own money as he pleases. a fiscal monopoly, on the other hand, would tend to exploit its tax payers to the hilt, waste their money, and meet every financial shortfall with higher taxes rather than lower expenditure, for this would be the easy way out, and there would be no restraining influence on its actions. to the extent that government is not all-wise and benevolent, but rather subject to capture by and of special interest groups, many of the conventional arguments in favor of optimal public goods provision by the state fall by the wayside, for we learn that the state will tend to maximise, rather than optimise its role if so, the case in favor of fiscal competition is stronger than ever. what, then, might be its drawbacks? in an increasingly open world economy, where investments flow easily from one country to another, one country’s tax system may have a negative impact on another’s, and vice versa. one obvious negative spill-over effect might occur when a tax-induced misallocation of resources spills over onto a neighbouring country through unfair competition in trade and investment. however, tax induced misallocations which have no negative external effects must surely be permitted, since other countries have no right to interfere in another country’s sovereign affairs. a country’s own internal misallocations must be considered to be motivated by a public policy agenda which overrides considerations of efficient allocation of resources, and lie within the normal sovereign sphere of action of a modern state. therefore, a useful guide to distinguishing between beneficial and harmful tax competition would be to distinguish between taxes which cause a clear international misallocation of resources, and which are therefore harmful to others, and those which do not. if fiscal competition were to reinforce harmful tax practices, then it would itself be harmful. various tax measures and its efficiency in allocation of resources discriminatory tax regimes for favored industries when governments offer special tax regimes to the ship-building industry, or for oil exploration, or for informatics research, they are really offering a subsidy3. such tax privileges distort the allocation of resources and are indeed harmful – harmful to the country engaging in them, harmful to the firms receiving the tax breaks (they are shielded from economic reality, and will in due course wither away precisely because once support is withdrawn, they will fail, whereas if they had been forced to face reality from the start, they might have had at least a chance of long term survival) and ruinous for the exchequer if several governments decide to subsidize the same industry at the same time. sectorial tax privileges are clearly “harmful” and competition in granting them simply makes things even worse. it is therefore no surprise that the eu and gatt have strict rules and understandings limiting governments’ freedom to act in this domain. non-discriminatory tax regimes while sector-specific tax breaks, discussed above, distort the allocation of resources between sectors and are clearly harmful and banned in both the wto and the european union, many governments use the tax code to pursue more general policy objectives, such as investment in general, or, more specifically, foreign direct investment. clearly, the more “general” a measure, and the less sector-specific it is, the less it distorts the allocation of resources, and the less “harmful” it is in economic terms. competition between countries on matters of 3 one should not forget that different rates of customs tariffs are also disguised subsidies for particular industries, which in an open world economy could also result in the artificial shifting of investment from one country to another. this form of subsidization and “poaching” other countries’ investments is however absent from the oecd’s definition of harmful tax practices and will not be further alluded to. studies and scientific researches economic edition, no. 15, 2010 174 general taxation cannot be “harmful”, because it does not lead to an inter-sectoral misallocation of resources with negative international effects. it must therefore benefit from the general presumption in favor of competition outlined above, and be deemed beneficial. a generally favorable attitude to business, for instance, achieved by low taxes and light labour laws, might make a country prosperous, and might even attract investment from high-tax countries, but according to the above rule would not constitute “harmful” tax competition, even if it did appear to be “bidding aggressively for the tax base of other countries” 4 (one of the oecd’s definitions of “harmful tax competition”). a moment’s reflection will confirm, however, that this definition of “harmful tax competition” is either wrong and/or inoperative: wrong, because light tax laws are not necessarily harmful, and might be beneficial to some; inoperative, because “bidding aggressively” is in the eye of the beholder and would be stoutly denied, for instance, by a country like estonia5. it is an unscientific and unverifiable criterion. “ring-fenced” tax regimes under the heading of “ring fencing” the oecd/eu identify, and condemn as being “harmful”, intermediate measures which are neither clearly sector-specific, nor absolutely general. here, some distortion of resources occurs, and is indeed intended, in the name of public policy objectives of various kinds. by “ring fencing” the oecd/eu mean tax measures which distinguish between various potential tax payers within the same tax jurisdiction, but which are not sector-specific. for example, governments often offer tax inducements to foreign multinational firms, in the hope of attracting them to their shores. these tax privileges are “ring fenced” in that they are not available to local entrepreneurs, in the belief that foreign investments are somehow superior to local investment, or represent net new investment, and therefore need to be encouraged. sometimes governments further limit such tax privileges to “green-field” foreign direct investment, in the belief that a “new” plant in a greed field is somehow better for the economy than refurbishing an existing plant in an established industrial area (known as a “brown-field” investment). of course it does not matter which form the investment takes, as long as the existing assets (green or brown fields) are put to more productive use by more imaginative entrepreneurs. however, since the foreign entrepreneurs benefit from a tax privilege compared with local firms, we cannot be sure that this is in fact the case. in the meantime, the assets having been bought up by foreigners, the local sellers must then decide what to do with their money: since all countries offer much the same type of inducements, they will probably look abroad for an equivalent tax deal. tax competition of this kind causes an over-stimulation of foreign, as opposed to domestic investment and is clearly “harmful” in an economic sense. but does it distort international competition? the answer is yes, but it is a matter of degree, and only a judicial or diplomatic procedure can identify the cases which deserve redress. for example, when the uk succeeds in attracting a major japanese car manufacturer to scotland with a tempting tax package, firms trying to make money from automobile production without tax breaks are clearly discriminated against, and may well complain. international misallocation spill-overs occur within a single market like the eu or in global markets under the law of wto, and give rise to disputes. this type of competitive behavior is a good example of “bidding aggressively for the tax base of other countries”. it is clear that if all governments compete with each other to attract foreign multinationals, resource misallocation will surely occur and much tax payers’ money will be wasted. it certainly does not increase employment over-all, even for the country which wins the race, since resources spent attracting foreign investment have to be taken 4 oecd, harmful tax competition: an emerging global issue, paris, 1998, p. 16. 5 estonia is attracting much foreign direct investment, possibly as a consequence of a zero corporate tax rate on retained earnings. studies and scientific researches economic edition, no. 15, 2010 175 from somewhere else in the economy. both the oecd and the eu6 have tried their best to outlaw such wasteful measures, which clearly distort markets in their actual application, even if formally they do not favour one sector over another. channelling foreign direct investment into economically backward regions is generally considered to be acceptable, at least in the eu, and will not be condemned as “illicit state aid” as long as the investment takes place within the designated area and is not “excessive”. such policies find their justification in the notion of market failure, and the need for corrective government intervention. however, the aid must not exceed the failure, for that would constitute a subsidy. a considerable part of the eu budget and manpower is devoted to supervising and enacting the eu’s regional policy. while neither the eu nor the oecd classify these policies as “harmful tax competition” they do in fact create a distortion between subsidized and non-subsidized regions of a country, and shift employment and investment from one area to another. however, that is indeed their objective, and as long as the distortion exercises no negative competition externalities on other countries, it may generally be considered as “non-harmful” (but not necessarily beneficial) in terms of our classification system. other forms of “ring-fencing” most countries tax their residents on the basis of the “territorial principle”: they tax income earned within the country, give tax credits on income earned abroad by their residents and already taxed once by a foreign tax authority, and they tax income earned by non-residents if it arises within their jurisdiction. it is generally agreed that income should not be taxed twice, giving rise to a dense network of double tax agreements which regulate the detailed application of these general rules. the united states is exceptional in that it taxes its citizens wherever they reside, on their world-wide income, but gives tax credits for any prior taxes paid to foreign tax authorities. exceptions to these general rules exist, and give rise to the (perfectly legal) tax avoidance industry. among these exceptions is a policy which gives special tax status to firms or individuals who reside in one country, but who earn all their income abroad. this is perfectly consistent with the territorial principle, but the benefit is “ring-fenced” since it is not available to other tax-payers in the domestic market and does not “affect the national tax base”7. the uk, for example, does not tax foreigners residing in the uk as long as all their income arises abroad, and many swiss cantons negotiate the tax rate with wealthy foreign residents on condition that they earn nothing in switzerland. so far, these practices have not caused international disputes, because no distortion of markets can be invoked. on the other hand, the united states for many years offered special tax advantages to domestic firms which earned over 95% of their income from exports (the socalled “designated international sales corporation” or disc). this was later amended to the “foreign sales corporation”, or fsc, as a result of a successful complaint from the eu that the disc regime was in effect an export subsidy, forbidden under gatt rules. in 2000 the wto dispute settlement body judged the fsc regime to be distortionary, also because it offered an effective export subsidy8. from an economic point of view, there is a clear distortion in the allocation of resources between products exported and similar products sold on the domestic market by the same firm. “ring-fenced” holding companies however, the oecd and eu are not after the swiss and british schemes to attract wealthy foreign residents (or not yet), and are happy to leave the disc/fsc problem to wto. what they are really concerned about is ring-fenced international holding companies. these are well-known corporate devices which exist in order to hold shares in other companies, or to 6 see curzon price victoria, “industrial policy” in el-agraa (ed.) the european union, economics and policies, 7th edition, financial times and prentice hall, london etc. 2004, pp. 212237, for an account of forbidden state aids to industry in the european union 7 conclusions of the ecofin council meeting on 1 december 1997 concerning taxation policy (98/c, oj c 2/1 of 6 january 1998), annex 1 “code of conduct for business taxation”. 8 wto appellate body report, united states: tax treatment for “foreign sales corporations”, adopted by disputes settlement body 20 march 2000. studies and scientific researches economic edition, no. 15, 2010 176 own patent or other rights which are then leased to “daughter” companies in return for a fee. firms operating in many countries find it useful to concentrate their “holdings” in a single structure, especially if that structure is exempt from normal corporate tax. as far as the holding company’s dividend income is concerned, this has usually been taxed at the “daughter” company level, so it is normal that dividends paid to “mother” should be tax exempt, or enjoy a lighter tax burden, and when the latter pays out dividends to the ultimate owner, incorporated in a high-tax country, these will be taxed according to the law of that state. however, it is frequently asserted that such holding companies are not transparent and may facilitate tax evasion through international transfer pricing, inflated service charges or exaggerated royalty payments. this may indeed be the case, but it is a long-established principle that one country does not enforce another’s tax laws9, so it is up to each sovereign state to enforce its own laws. in fact, most countries have very strict laws which allow tax authorities to bring declared inter-firm prices into line with market prices. this question is, however, different from whether a “ring-fenced” international holding company, by nature, distorts the international allocation of resources. the answer is not quite the same that as given earlier with regard to encouraging inward foreign direct investment with tax holidays. the international holding company attracts inward capital flows and encourages outward foreign investment. it concentrates capital on the inward flows, and then disperses it again on the outward flows. it provokes, on its own account, no inter-sectoral misallocation of resources, and therefore according to our standard cannot be considered “harmful”. no or low effective tax rates10 the oecd, in its first report on “harmful tax competition”, was unwise enough to claim that general, non-discriminatory, low or zero tax rates could be “harmful”, if used in conjunction with other “harmful practices”, such as ring-fencing, lack of transparency, or lack of information-sharing between tax authorities, if they shifted resources, and hence economic activity, away from high and towards low-tax countries11. this is close enough to saying that low taxes are “harmful” because they attract mobile productive resources from high-tax countries. but are mobile productive resources not fair game? as long as there is no intersectoral misallocation of resources, it cannot be a crime to attract them. resources move to where their general over-all rate of return is the highest, and tax treatment is only part of the long list of variables which will be taken into consideration by investors. to say that low taxes are “harmful” because they shift mobile resources in their direction is much the same as saying that low wages in china are “harmful” because they shift resources, and hence economic activity, away from high-wage europe to low-wage china. for sure, such things constitute competition, but it is not harmful competition, because it does not distort the allocation of resources. thus, as far as wage differentials are concerned, china attracts resources into labour-intensive industries, while europe attracts resources into capitalintensive sectors. far from being inefficient, this shift of resources is generally considered to be positive and in line with comparativve advantage. as for international tax differentials, as long as they are sectorally neutral, any investments which do occur because of them will presumably reflect the host country’s underlying pattern of comparative advantage, and cannot be considered harmful or distortionary in any way. generally low taxes, like market-friendly laws or an incorruptible judiciary, are part of the general factor endowments of a country, and will help to determine the over-all level of economic activity. this is sometimes called “absolute advantage”, in contrast to comparative advantage, and intergovernmental competition in shaping absolute advantage is sometimes 9 richard teather, the benefits of tax competition, iea, london, 2005, p. 83 10 oecd “harmful tax competition: an emerging global issue”, paris, 1998. 11 switzerland and luxembourg refused to endorse the oecd’s report, inter alia, on the grounds that it described their laws allowing for “ring-fenced” low taxes and client confidentiality as being “harmful”. studies and scientific researches economic edition, no. 15, 2010 177 referred to as institutional competition. since it does not distort comparative advantage, nowhere is it condemned in international law. furthermore, unlike the climate, or natural resources, laws, including tax laws, are manmade and can be changed. therefore the high tax country, if it wants to attract economic activity, and even retain such economic activity as it still has, is free to modify its policies, if it so desires. conversely, it is not at all clear why the low tax country should alter its laws to suit the high tax state. each country remains fully sovereign in this regard. the oecd’s definition of harmful tax competition in these terms is also almost naively transparent. if tax competition is deemed “harmful” when it is likely to shift resources, and hence economic activity, away from high and towards low-tax countries, the oecd is making the implicit claim that high-tax, big governments are somehow “better” than low-tax, small ones. another problem, in tax measures and its implication in tax competition and allocation of resources are transparency and exchange of information and how the tax evasion distorts the allocation. many “tax havens”, which make a business of taking in the savings of residents of high tax countries and investing them in tax-free securities, have strict bank-secrecy laws and do not share any information with foreign tax authorities concerning their clients, unless the latter can show that they suspect criminal activity. they do not make easily available the identity of the beneficial owner of this or that account or shareholding (although they “know their customer” because they must be able to respond to a request for information from criminal investigations). according to the oecd, such countries “lack transparency” and are liable to be accused of harmful tax competition. thus the oecd supports the idea of information-sharing between tax authorities, on request, while the eu would like to instigate automatic, permanent and comprehensive information flows between tax authorities. either would put an immediate stop to people accumulating savings in tax havens, and omitting to declare them to their own tax authorities. it is of course illegal not to declare assets and income held abroad, but the fact that some people are driven to this extreme suggests that in some countries taxes have reached unacceptably high levels. in exactly the same fashion, people are also driven to hide some of their economic activity from the tax man, giving rise to the well known phenomenon of the underground economy12. in fact, tax evasion is as old as taxes themselves, and the best way to minimize it is to levy reasonable taxes. international tax evasion and the local underground economy provide the two main escape routes. in modern democratic times, they also set implicit limits to the growth of government. they are both illegal, but the local shadow economy is now so widespread that governments know that they cannot enforce compliance without becoming hugely unpopular (suggesting that high taxes are, in fact, not as widely accepted by the population as some would like to think). limiting international tax competition looks a much easier bet. however, if high-tax countries are successful in stopping the shift of savings to tax havens by enforcing transparency and information exchange, they will displace, but not halt, tax evasion and fiscal competition. the underground economy, both local and international, will grow. in the meantime, wealthy people and their assets will continue to move from high to low tax environments. over time, the economically more attractive places will still enjoy much higher rates of economic growth. so are high-tax countries really better off without fiscal competition? since full information sharing would put a stop to all international tax competition, it has become the main focus of both oecd and eu efforts in this area. the question which interests us, however, is whether tax evasion causes a distortion in the allocation of resources. the answer is surely no, for the same reasons outlined above. there is no inter-sectoral misallocation of resources. savings are channelled to where returns are highest, almost never in the tax haven itself, which is just handling and collecting small streams of savings to form a great river of capital, which goes to whichever 12 council of the european union, joint report on employment 2004-2005, brussels 9 march 2005. studies and scientific researches economic edition, no. 15, 2010 178 industry has successfully competed for it, wherever in the world that might be. in fact, tax havens perform a very useful job in this regard13. conclusions i hope to has established that most international fiscal competition is beneficial rather than harmful, especially that type which is most severely criticized by the oecd and the eu – lower direct taxes. this is because most tax regimes do not distort the international allocation of resources. however, international fiscal competition is still in full swing and we have yet to see its full effects. for the moment, there is no “race to the bottom”14. although direct taxes have fallen dramatically over the past 20 years, they are still well above zero. furthermore, there has been no shift in the tax burden from capital to labour, but rather a shift from direct to indirect taxation. this trend is to be welcomed, because broad-based indirect taxes applying a standard rate to all goods and services are among the least distorting taxes one can devise. total government revenues have increased, not fallen (as expected by the “race to the bottom” school), and in some cases have even increased as a proportion of gdp (though with expected negative effects on the rate of growth). this is a somewhat surprising result, given all the fuss about harmful tax competition. however, it suggests that fiscal competition still has some way to go. references 1. curzon price victoria (2004), the european union, economics and policies, financial times and prentice hall, london, 7th edition 2. feldstein martin, “tax avoidance and the deadwight loss of the income tax”, review of economics and statistics, november, 1999 calculates that for every dollar of extra tax revenue, the us economy loses two dollars of additional output. 3. hayek, f.a. (1960), the constitution of liberty, the university of chicago press, chicago, 4. janeba, eckhard, wolfgang peters, (1999), tax evasion, tax competition and gains from nondiscrimination: the case of interest taxation in europe, economic journal, issue 109, p. 93-109 5. lockwood ben (1993), commodity tax competition under destination and origin principles, journal of public economies, issue 52, p. 141-162 6. north, douglass c. (1981), structure and change in economic history,, norton & co. new york & london. 7. council of the european union report (2005), joint report on employment 2004-2005, brussels. 8. oecd report (1998), harmful tax competition – an emerging global issue, oecd. 13 richard teather, op. cit. chapter 6 14 germany has increased the vat rate from 16 to 19% on 1 january 2007, but is most unwisely also raising taxes on corporations and wealthy individuals. there is no “race to the bottom” here. studies and scientific researches economic edition, no. 15, 2010 179 studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro an overview of fiscal consolidation process in the european union iulia andreea bucur “vasile alecsandri” university of bacău iuliaandreea.bucur@gmail.com mircea muntean “vasile alecsandri” university of bacău mircea.muntean@ub.ro abstract this paper aims to explore, based on theoretical and empirical research in the field and on data available on eurostat and european commission, in the context of financial significant imbalances and thus of the financial stress in the eu countries and especially in the euro area, the main developments in the fiscal consolidation process given the fiscal effort of each country towards fiscal union. since the financial crisis started in 2008, many eu member states demonstrates an obvious macroeconomic imbalance which requires increased responsibility regarding fiscal developments. the impact of the crisis and the causes of sovereign debt high levels trends varied between eu countries as well as the budget deficit levels. thus, the main priority for eu members must be the continuation of differentiated fiscal consolidation, given the specificities of each economy, favoring growth. the medium-term fiscal policy needs to focus on consolidating public finances along with restoring long-term sustainability. keywords eu fiscal consolidation; financial stress; sovereign debt crisis; public deficit; fiscal effort jel classification e62; f36; g01; h62; h63 introduction along with completing the customs union as a first step towards european economic integration, followed by a milestone represented by the creation of the common market, essential for economic growth and convergence, the latest major step of the process of european unification, namely the adoption of the single currency in the european monetary union (emu) in 1999 (sapir, 2011) is unlikely to be the final step (bargain et al, 2012). the economic crisis that started in 2008 and led to the deterioration of worldwide and also european union (eu) public finances represents a huge challenge not only for eu member states, but for the entire european assembly. in this context, the european economic integration takes a number of additional meanings, reason that confirms once again that the importance of the aspects of its manifestation does not diminish over time, but rather increases (bucur, 2013). furthermore, the widespread view of the process and thus of the future of the euro area (ea) consists of two options: either it is complemented by a fiscal union, or it will fall apart. the creation of fiscal union is interpreted, on the one hand, as an introduction of a set of balanced budget rules, and, on the other hand, as a more ambitious project of creating a federal government with significant tax and spending powers comparable to other like us federation (bordo et al, 2011). trying to find the answer to the question whether the euro area needs to move towards a fiscal union or it might work under a different 50 an overview of fiscal consolidation process in the european union institutional arrangement, there have been identified five possible elements of a fiscal union such as: (i) fiscal rules for the member states, policy coordination and supervision, (ii) a crisis resolution mechanism, (iii) a joint guarantee for government debt, (v) a fiscal equalization and other mechanisms for transfers between countries and (iv) a larger eu budget and european taxes (fuest & peichl, 2012). macroeconomic stability and balanced and sustainable economic growth in the eu requires as a prerequisite the existence of solid and sustainable public finances as the single monetary policy can not react to the specific situation for each country and the repercussions due to their unsustainable fiscal policies are more powerful, as clearly the recent financial crisis demonstrated (bucur & dragomirescu, 2013) due to banking crisis, loss of competitiveness in the foreign trade and deficiencies in controlling public expenditures and revenues (viren, 2012). in our study, based on theoretical and empirical research in the field and on data available on eurostat and european commission, we intend to capture, in the context of financial significant imbalances and thus of the financial stress in the eu countries and especially in the euro area, the main developments in the fiscal consolidation process given the fiscal effort of each country in supporting the consolidation towards fiscal union. the impact of the financial crisis and the causes of sovereign debt crisis trends varied between european countries. yet, overall, the continuously increasing of public debt in some eu member states and its heterogeneity reflects the cumulative effect of high primary deficits, of negative or weak economic growth and also of high interest expenditures. the gradual accumulation of substantial budget deficits most of all since the financial crisis started in 2008, which also led to the increased sovereign debt in many eu member states demonstrates an obvious macroeconomic imbalance and also requires increased responsibility regarding fiscal developments. in this context, the main priority for eu members must be the continuation of differentiated fiscal consolidation, given the specificities of each economy, favoring growth. thus medium-term fiscal policy needs to focus on consolidating public finances along with restoring long-term sustainability. the paper is structured as follows. in the second section we briefly pointed out some of the main causes of eu sovereign debt crisis and in some eu states which are also ea members. given the fiscal sustainability of the eu member states and particularly of those of the euro area, an overview of the financial stress in the eu is also presented in this section. the third section contains the main developments in budget deficits and public debt to gdp across eu member states and the impact of austerity fiscal measures in some euro area states, followed in fourth section by the recent adjustments in fiscal consolidation effort of the members, given the role of budgetary institutions in improving fiscal performance at the essential stages of fiscal policy-making process. the last section contains a brief summary of our study and the concluded remarks. sovereign debt crisis and the financial stress in the eu the sustainability of sovereign debt is not a new issue in the euro area, various researches in the field focus on it even before the onset of financial imbalances. once the financial crisis hit, countries such as ireland and portugal have failed to show adequate control of public finances, their level showing an alarming increase reaching up to 123.3% in ireland in 2013 and up to 128.0% in portugal in the same year. under the impact of the financial crisis, government debt to gdp increased in belgium, france, spain, uk and germany, reaching in 2013 values higher than the limit set, of 104.5%, 92.2%, 92.1%, 87.2% and 76.9%. 51 bucur, muntean with of poor management of government debt, greece appears as the state with the highest level, reaching in 2013 the value of 174.9% of gdp. like greece, italy has also a high degree of fiscal indiscipline, even before the financial turmoil period, the public debt value reaching up to 127.9% of gdp in 2013, situation that is in opposition to that of the fiscal balance (-2.8% of gdp in the same year), which can not be said in case of greece. figure 1 public deficit trends in european union, 2000-2013 (% of gdp) source: own processing, based on the data available on eurostat figure 2 government consolidated gross debt trends in european union, 2000-2013 (% of gdp) source: own processing, based on the data available on eurostat the gradual accumulation of substantial budget deficits (figure 1), most of all since the financial crisis started in 2008, which also led to an increased sovereign debt in many eu states (figure 2), especially in greece, ireland, portugal, italy or spain demonstrates an obvious macroeconomic imbalance and also requires increased responsibility regarding fiscal developments in the eu member states. thus mediumterm fiscal policy needs to focus on consolidating public finances along with restoring long-term sustainability (olden et al, 2012). while in spain and ireland the origin of sovereign debt crisis lies mainly in the private sector, in the real estate sector and was passed onto the public sector through 52 an overview of fiscal consolidation process in the european union bank bailouts (semmler & semmler, 2013), in other countries such as greece, portugal or italy is due to the government sector with chronic macroeconomic imbalances (stein, 2011) (table 1). the sovereign debt in the latter mentioned countries was high in earlier times, partly since the '80s and started to rise more and more since the crisis started. table 1 causes of debt crisis trends in greece, portugal, ireland and spain government structural balances (% of gdp) mean, 1998-2007 government net debt (% of gdp) mean, 1998-2007 interest payments (% of gdp) ratio, 2007/1998 capital gains (annual evolution of real estate prices) mean, 1996-2007 greece -4.76 80.25 1.16 10.10 portugal -4.50 50.08 1.42 3.30 ireland -2.24 27.30 0.43 13.30 spain -1.28 42.53 0.53 9.71 source: apud. stein, j. l. (2011), the diversity of debt crisis in europe, cesifo working paper, no. 3348, based on econstats, imf world economic outlook, and bis housing statistics, ifc bulletin, no.31 if until 2007 it has been confirmed that debt in the eu is sustainable (semmler et al, 2005), since the beginning of the crisis, fiscal sustainability in the eu and especially of the euro area is clearly under stress. it is widely accepted that financial stress is a negative state and also a multidimensional problem. however it is the subject of diverse definitions and interpretations (kliesen et al, 2012). a monitor for financial instability that indicates the interaction of financial vulnerabilities and the size of exogenous shocks (grimaldi, 2010; grimaldi, 2011) is the level of financial stability index (fsi). figure 3 fsi and ipi for spain and germany, 1980-2011 source: semmler, w., semmler, a. (2013), the macroeconomics of the fiscal consolidation in the european union, ssrn working paper using the imf (2011) fsi, available for most of the eu states, which indicates the financial stress, in contrast with the oecd (2011) industrial production index (ipi), semmler & semmler (2013) provided some details regarding the relationship between financial stress regimes and economic activity. an analysis for two of eu member states, spain and germany (figure 3), highlighted a significant inverse correlation between indicators, summarized as follows: “stress is low in expansions and high in a regime of contraction” (mittnik & semmler, 2012; semmler & semmler, 2013). 53 bucur, muntean developments in fiscal consolidation process as we mentioned in the previous section, the impact of the financial crisis and the causes of sovereign debt crisis trends varied between european countries. thus, it is obvious that fiscal integration in the eu faces major challenges arising from the need to reduce the level of indebtedness in the context of bleak economic growth prospects, of the pressure on long-term expenditures and of fiscal burden which is quite high (bucur & dragomirescu, 2013) and an effective management of intergovernmental fiscal reforms is essential (kim & vammalle, 2012). despite various determinants of debt crisis, an austerity policy which establishes a permanent constraint on fiscal policy was enacted and imposed. the adoption of the six pack, entered into force in 2011, the monitoring of fiscal policies of the ea states, the implementation in 2012 of specific surveillance procedures for the countries facing financial stability risks and also the introduction of a fiscal discipline represent important steps in reforming the economic and budgetary surveillance in eu. developments in budget deficits in the context of intensifying market tensions and of increasing the budget balance among eu countries from 0.9% of gdp in eu in 2007 up to 6.9% of gdp in eu in 2009 and ea countries from 0.7% of gdp up to 6.4% of gdp during the same period, since 2009 the budget balance recorded a slight improvement which indicates visible efforts in reduction deficits at least at the eu and ea headline level (table 2). table 2 budget deficit in eu-28 and ea-18, 2000-2013 (% of gdp) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 eu-28 0.6 -1.5 -2.6 -3.2 -2.9 -2.5 -1.5 -0.9 -2.4 -6.9 -6.4 -4.5 -4.2 -3.2 ea-18 -0.1 -1.9 -2.7 -3.1 -2.9 -2.5 -1.3 -0.7 -2.1 -6.4 -6.1 -4.1 -3.6 -2.9 source: eurostat further improvement is expected in fiscal consolidation, albeit at a slower pace, although in the next few years some countries will be facing sizeable levels of public deficit (european commission, 2013). an overview on the trends and improvements on the public deficit at the ea countries (figure 4) indicates significant efforts in fiscal consolidation for: latvia, with a reduction in the fiscal deficit of 8% of gdp, slovakia, portugal and spain whose deficit reduction exceeded 4% of gdp, austria, netherlands, france, germany and even greece whose deficit reduction exceeded 3% of gdp. figure 4 trends and improvements in public deficit for ea-18 and non-ea member states, 2013/2009 (% of gdp) source: own processing, based on the data available on eurostat 54 an overview of fiscal consolidation process in the european union noteworthy, the budget balance for ea member slovenia has strongly worsened since 2009, especially during 2012-2013 when the deficit increased with 10.9% of gdp, reaching the highest level of the ea states of -14.6% of gdp. regarding the non-ea member states, we observe (figure 4) significant efforts in fiscal consolidation for: ireland, with a reduction in the fiscal deficit of 8.2% of gdp, even though its level of -5.7% of gdp in 2013 exceeded the imposed limit. lithuania and romania also have reduced their deficit with over 6% of gdp, reaching in 2013 a level below the required. united kingdom recovered since 2009 5% of gdp, although its deficit level in 2013 is of 5.8% of gdp, quite similar situation to that of poland which, despite its efforts, recorded a level of deficit of 4% of gdp in 2013. other countries such as bulgaria and hungary face a better situation, given that their deficit level of 1.2% of gdp and respective of 2.4 % of gdp in 2013 is below the maastricht requirement. only sweden, with a deficit level within the limit of 3% of gdp, recorded a slight increase from 0.7% of gdp in 2009 to 1.3% of gdp in 2013. developments in public debt regarding the government debt among european countries, the upward trend of its average value, especially since 2009, is obvious. in 2013, the eu headline debt came in at 85.4% of gdp from 74.5% of gdp in 2009 while that of the euro area came in at 90.9% of gdp from 74.5% of gdp in 2009 (table 3) and they are projected to rise in the next period (european commission, 2013). table 3 public debt in eu-28 and ea-18, 2000-2013 (% of gdp) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 eu-28 61.8 60.9 60.3 61.9 62.2 62.7 61.5 58.9 62.2 74.5 78.2 80.8 83.5 85.4 ea-18 69.2 68.2 68.0 69.2 69.6 70.3 68.6 66.4 70.2 80.0 83.7 85.8 89.0 90.9 source: eurostat the trends on the public debt of the ea countries (figure 5) indicates that despite the efforts in reducing fiscal deficit, the indebtedness increased significantly for: cyprus (from 53.5% of gdp in 2009 up to 102.2% of gdp in 2013), greece (from 126.8% of gdp in 2009 up to 174.9% of gdp in 2013), portugal (from 83.6% of gdp in 2009 up to 128.0% of gdp in 2013), spain (from 52.7% of gdp in 2009 up to 92.1% of gdp in 2013) and also slovenia (from 34.5% of gdp in 2009 up to 70.4% of gdp in 2013). figure 5 trends and improvements in public debt for ea-18 and non-ea member states, 2013/2009 (% of gdp) source: own processing, based on the data available on eurostat 55 bucur, muntean although the level of indebtedness have not increased as much as the countries mentioned before, in case of italy, given the poor management of debt to gdp even before the financial crisis begin, in 2013 the sovereign debt was 127.9% of gdp. for italy, this situation is in opposition to that of the fiscal balance, with some exceptions, was kept within the convergence criterion limit (bucur & dragomirescu, 2013). in the context of considerable variation across countries, the other ea members also recorded increases in public debt. yet, in contrast we find a rigorous management of public debt in: estonia, denmark, luxembourg and finland, where the emergence of financial turmoil has not affected the debt level so that its level remained below the imposed convergence criterion of 60% of gdp. across the eu states that are not ea members, we can find the same situation of considerable variation in terms of government debt to gdp. while ireland faces a high level of indebtedness (from 62.2% of gdp in 2009 up to 123.3% of gdp in 2013), countries such as croatia, united kingdom and hungary has also debts ratios above the 60% of gdp in 2013, there are countries that demonstrate a more rigorous control of public debt: bulgaria, romania, sweden lithuania, czech republic and poland. the impact of austerity fiscal measures in some eu states in the actual context, the main priority for both national and eu levels, among others, the continuation of differentiated fiscal consolidation, given the specificities of each eu economy, favoring economic growth. if we analyze the adoption, application and enforcement of the fiscal policy rule expressed by the evolution of fiscal rule index (fri), which summarizes information regarding on legal basis of the rule, space for a review, mechanisms for monitoring the compliance and implementation of the rule, and also existence of pre-defined enforcement mechanisms and media visibility rule, we can observe significant variations of the indicator over the last years in the eu and especially in ea states, that should not manifest in a single currency zone (bucur & dragomirescu, 2013). figure 6 average of fiscal rule index in eu, 2000-2012 source: own processing, based on the data available on european commission in the recent years, there is a slight increase growth of the average of fri in the eu, the euro area and also in the non-ea members (figure 6), situation that highlights the importance of fiscal rules especially in the fiscal management of the ea states. however, for some ea states such as greece, spain and italy, the austerity therapy has not brought the quite expected improvement in terms of macroeconomic aggregate like: public deficit and debt and especially unemployment. it can be observed that, despite their efforts in fiscal consolidation, these three countries faced with a huge challenge: the unemployment, whose level increased enormously since 2009, reaching very high levels of 27.5% in greece, 26.1% in spain and a slightly lower one of 12.2% in italy (figure 7). therefore, the fiscal measures not only amplified the economic imbalancies but have also brought the euro area into a deep social crisis and pose a threat to the welfare state (heise & lierse, 2011). other authors share the same opinion, considering that 56 an overview of fiscal consolidation process in the european union fiscal consolidation process was not quite effective as debt stabilization failed in some cases and also that austerity measures were not socially balanced as asymmetric welfare losses and extreme downward real wage adjustments confirmed (busch et al, 2013; semmler & semmler, 2013). figure 7 macroeconomic aggregates for greece, spain and italy, 2010-2013 (%) source: own processing, based on the data available on eurostat in accordance with european commission, the fiscal austerity will not continue once the member states will put their fiscal house in order, and they ensure that their expenditure is financed, which otherwise is a normal practice to ensure sustainability of public finances (european commission, 2013). the fiscal consolidation effort and the role of budgetary institutions in supporting it on the path towards fiscal union in eu, a first step in fulfillment of the commitments of the treaty on stability coordination and governance (tscg) (signed in march 2012) in the emu, the legislative package applied only to the ea member states, the so called two pack, being based on the surveillance mechanisms reformed by the six pack to improve fiscal policy-making in the ea, entered into force on the 30th of 2013. the tscg introduce into national legislation key elements of the strength and growing pact (sgp): (i) the country specific medium-term budgetary objective (mto) for strengthening the public finances when the context is favorable in order to create enough fiscal space for periods of macroeconomic imbalances and (ii) the adjustment path towards mto (european commission, 2013). defined as “cyclically-adjusted general government budget position, net of one-off and other temporary measures”, the mtos should be set in order to: “(i) provide a safety margin with respect to the 3% of gdp deficit limit. for each member state, this safety margin is estimated in the form of the minimum benchmark, which takes into account past output volatility and budgetary sensitivity to output fluctuations. 57 bucur, muntean (ii) ensure sustainability or rapid progress towards sustainability. this is assessed against the need to ensure the convergence of debt ratios towards prudent levels, with due consideration to the economic and budgetary impact of ageing populations. (iii) in compliance with (i) and (ii), allow room for budgetary manoeuvre, in particular taking into account the needs for public investment.” (council regulation 1466/97). according to the recent available data on ameco and european commission, the adjustment in consolidation effort in 2013 is: • mostly expenditure-based in: greece, ireland, lithuania, poland and slovenia; • a mix o revenue-based and expenditure-based in: belgium, italy, romania and spain; • mostly revenue-based in: czech republic, finland, france, luxembourg, netherlands and portugal; • a balanced composition, whereas structural balance evolution shows an expenditure-based consolidation in slovakia; • mostly expenditure-base, whereas the structural balance evolution indicates the opposite in united kingdom. the countries which have not yet reached their specific mto will have to continue improving their budgetary positions in order to correct their excessive deficits and to fulfill their target. it is also necessary that this fiscal consolidation to continue differentiated according to the available fiscal space and also with an increased attention to the growth effects of the implemented measures. the european commission suggests that the consolidation efforts must be mainly expenditure-based because the fiscal burden is at high level in most countries, though the challenges stemming from population ageing creates a higher pressure on public expenditures (european commission, 2013). in fiscal consolidation process is also extremely essential the ensuring of effective budgetary institutions. theoretical and empirical analysis shows that a strong institutional framework can improve fiscal performance (eg. von hagen, 1992; von hagen and harden, 1996; alesina et al., 1999; de haan et al., 1999; gleich, 2003; hallerberg et al, 2009) by highlighting the need for sustainable policies, exposing the full cost of public interventions, emphasizing collective responsibility over sectoral interests, and raising the cost of deviating from stated fiscal objectives (olden et al., 2012). focus on ten southern european countries olden et al. (2012) identify a subset of ten budgetary institutions that have the ability to improve fiscal consolidation at the essential stages of fiscal policy making process: tabel 4 budgetary institutions for supporting fiscal consolidation stages of fiscal policy making process budgetary institutions i. understanding the scale and scope of the fiscal challenge 1. fiscal reporting 2. macroeconomic and fiscal forecasting 3. fiscal risk disclosure and management ii. developing a credible fiscal consolidation strategy 4. medium-term fiscal objectives 5. medium-term budget frameworks 6. independent fiscal agencies 7. performance orientation iii. implementing the consolidation strategy 8. top-down budgeting 9. parliamentary budget approval 10. budget execution source: apud. olden, b et al. (2012), fiscal consolidation in southern european countries: the role of budget institutions, imf working paper wp/12/113, p. 9 58 an overview of fiscal consolidation process in the european union conclusions in the context of the turmoil in financial market caused by the global crisis, many studies focus their attention on the issue of the fiscal consolidation, especially over the last years. based on theoretical and empirical research in the field and on the available data on eurostat and european commission, this paper aims to capture, in the context of financial significant imbalances and thus of the financial stress in the eu countries and especially in the euro area, the main developments in the fiscal consolidation process given the fiscal effort of each country. the gradual accumulation of substantial budget deficits which also led to an increased sovereign debt in many eu member states indicates an obvious macroeconomic imbalance which requires increased responsibility regarding fiscal developments. the continuously increasing of public debt in some eu member states and the heterogeneity across countries reflects the cumulative effect of high primary deficits, of negative or weak economic growth and also of high interest expenditures. in this context, the main priority for eu members must be the continuation of differentiated fiscal consolidation, given the specificities of each economy, favoring growth. thus, medium-term fiscal policy needs to focus on consolidating public finances along with restoring long-term sustainability. we consider that the ambitious objectives regarding structural balancing of public finance and the reduction of public debt ratio will require a longer period of time, especially for those countries heavily indebted and also effective budgetary institutions essential in fiscal consolidation process. references alesina, a., hausmann, r., hommes, r., stein, e. (1999), budget institutions and fiscal performance in latin america, inter-american development bank office of the chief economist, working paper series, 394, available at http://www.iadb.org/res/publications/pubfiles/pubwp-394.pdf. bargain, o., dolls, m., fuest, c., neumann, d., peichl, a., pestel, n., siegloch, s. (2012), fiscal union in europe? redistributive and stabilising effects of an eu tax-benefit system, iza discussion paper, 6585, available at http://ftp.iza.org/dp6585.pdf. bordo, m., markiewicz, a., jonung, l. (2011), a fiscal union for the euro: some lessons from history, nber working paper, 17380, available at http://www.nber.org/papers/w17380.pdf. bucur, i. a., (2013), dimensiuni ale extinderii şi adâncirii integrării economice europene, bacău, editura alma mater. bucur, i. a., dragomirescu, s. e. (2013), an analysis of the fiscal convergence criteria in the european union in terms of the sustainability, studies and scientific researches. economics edition, 18, 137-149, available at http://sceco.ub.ro/database/repec/pdf/2013/20131817.pdf. busch, k., hermann, c., hinrichs, k., schulten, t. (2013), euro crisis, austerity policy and the european social model, friedrich-ebert-stiftung, internationale politikanalyse, berlin, available at http://library.fes.de/pdffiles/id/ipa/09656.pdf. council of european union (1997), council regulation (ec) no 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, available at http://eurlex.europa.eu/legal-content/en/txt/pdf/?uri=celex:31997r1466&from=en. european commission, eurostat, available at http://epp.eurostat.ec.europa.eu. 59 bucur, muntean european commission (2013), report on public finances in emu, european economy 4/2013, brussels, available at http://ec.europa.eu/economy_finance/ publications/european_economy/2013/pdf/ee-2013-4.pdf. fuest, c., peichl, a. (2012), european fiscal union: what is it? does it work? and are there really ’no alternatives’?, iza discussion paper, 39, available at http://ftp.iza.org/pp39.pdf. gleich, h. (2003), budget institutions and fiscal performance in central and eastern european countries, european central bank working paper, 215, available at https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp215.pdf. grimaldi, m. b. (2010), detecting and interpreting financial stress, european central bank working paper series, 1214, available at http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1214.pdf. grimaldi, m. b. (2011), up for count? central bank words and financial stress, sveriges riksbank working paper series, 252, available at http://www.riksbank.se/upload/dokument_riksbank/kat_publicerat/workingp apers/2011/wp252.pdf. de haan, j., moessen, w., volkerink, b. (1999), budgetary procedures – aspects and changes: new evidence for some european countries, in poterba, j., von hagen, j. (eds.) (1999), fiscal institutions and fiscal performance, chicago university press. von hagen, j. (1992), budgeting procedures and fiscal performance in the european communities, european commission economic papers, 96, available at http://aei.pitt.edu/37058/1/a3038.pdf. von hagen, j., harden, i. (1996), budget processes and commitment to fiscal discipline, imf working paper 96/78, available at http://ssrn.com/abstract=882975. hallerberg, m., strauch, r., von hagen, j. (2009), fiscal governance: evidence from europe, cambridge university press. heise, a., lierse, h. (2011), haushaltskonsolidierung und das europäische sozialmodell, friedrich-ebert-stiftung, internationale politikanalyse, berlin, available at http://library.fes.de/pdf-files/id/ipa/07890.pdf. kim, j., vammalle, c. (2012), institutional and financial relations across levels of government, oecd fiscal federalism studies – kipf, oecd publishing. kliesen, k., owyang, m., vermann, k. (2012), disentangling diverse measures: a survey of financial stress indexes, federal reserve bank of st. louis review, 94(5), 369-397, available at http://research.stlouisfed.org/publications/review /12/09/369-398kliesen.pdf. mittnik, w., semmler, s. (2012), estimating a banking-macro model for europe using a multi-regime var, ssrn working paper, available at http://ecomod.net/system/files/bankingfebr13macromodel2012jedc.pdf. olden, b., last, d., ylaoutinen, s., sateriale, c. (2012), fiscal consolidation in southeastern european countries: the role of budget institutions, imf working paper wp/12/113, available at https://www.imf.org/external/pubs/ft/ wp/2012/wp12113.pdf. sapir, a. (2011), european integration at the crossroads: a review essay on the 50th anniversary of bela balassa’s theory of economic integration, journal of economic literature, 49(4), 1200-1229. semmler, w., greiner, a., zhang, w. (2005), monetary and fiscal policies in the euro-area: macro modelling, learning and empirics, emerald group publishing limited. semmler, w., semmler, a. (2013), the macroeconomics of fiscal consolidation in the european union, ssrn working paper, available at http://dx.doi.org/10.2139/ssrn.2320198. 60 an overview of fiscal consolidation process in the european union stein, j. l. (2011), the diversity of debt crisis in europe, cato journal, 31(2), 199215, available at http://object.cato.org/sites/cato.org/files/serials/files/catojournal/2011/5/cj31n2-2.pdf. viren, m. (2012), problems of fiscal consolidation and policy coordination, discussion paper, 82, aboa centre for economics, university of turku, available at http://www.ace-economics.fi/kuvat/dp82.pdf. 61 figure 2 government consolidated gross debt trends in european union, figure 1 public deficit trends in european union, 2000-2013 (% of gdp) 2000-2013 (% of gdp) figure 3 fsi and ipi for spain and germany, 1980-2011 figure 4 trends and improvements in public deficit for ea-18 and non-ea member states, 2013/2009 (% of gdp) figure 5 trends and improvements in public debt for ea-18 and non-ea member states, 2013/2009 (% of gdp) figure 6 average of fiscal rule index in eu, 2000-2012 figure 7 macroeconomic aggregates for greece, spain and italy, 2010-2013 (%) (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the role of accounting procedures in writing /implementing european projects nătăliţa-mihaela lesconi-frumuşanu “eftimie murgu” university of reşiţa mihaelafrumusanu@yahoo.com adela breuer “eftimie murgu” university of reşiţa adela1209@yahoo.com mihaela martin “eftimie murgu” university of reşiţa m.martin@uem.ro abstract this paper focuses on aspects of accounting procedures in general accounting procedures specific to those projects with european funding within public institutions in particular. given the great emphasis placed by the legislator on the development and implementation of accounting procedures, we consider that the theme is a nowadays one that can be used by accounting specialists who work as accountants and financial managers in european projects. we will also focuses on the attributes of the persons responsible for implementing the accounting procedures in a project but also on the importance of their proper professional training in the field. in preparing this paper we started from the legislative provisions in the field, and the results of the study aim to present the work procedures required for accounting organization within a project, and to present the accounting notes used for economic and financial operations specific for european regional development fund funded projects which beneficiary is a public institution. keywords accounting; procedures; policies; notes; implementation; projects; erdf (european regional development fund) jel classification m41 1. introduction this paper approaches the issue of the accounting procedure (fines between 300 and 4000 lei being considered a infringement from the regulations issued by the ministry of finance, on the approval of accounting policies and procedures provided by law according to art. 41 from accounting law no. 82/1991, republished, with subsequent amendments), specifically the importance of the implementation of a project with european funding (in terms of grant projects, the legislator has determined that management authorities should not approve the granting of pre-financing instalments, in other words not to validate reimbursement eligible if the beneficiary does not present the work procedures, including accounting procedures). internal procedures in financial accounting, generally, have the role to determinate the way it progresses in an operation economic-financially, commercially and any other nature (peter et al, 2010). according the legislation that stipulates the obligation to develop such procedures are mentioned: accounting law no. 82/1991, republished (stipulating the obligatorily of issuance procedures, ensuring an internal numbering scheme of the 182 the role of accounting procedures in writing /implementing european projects bill, as well as other financial and accounting forms that underlay records of all the income that is realized through a procedure). the order of the minister of public finance no. 2861/2009 for the approval of the norms concerning organization and effectuation of inventorying the elements of the nature of assets, liabilities and personal capital (inventory proceedings), the order of the minister of public finance no. 2226/2006 on the use of financial and accounting by the persons referred to in art. 1 of accounting law no. 82/1991 (procedures regarding the use of financial accounting forms), order of the minister of economy and finance 3512/2008 on financial and accounting documents (procedures regarding internal numbering system of financial accounting forms). in defining the notion of the accounting procedure we have to start from the definition of accounting policy, which according to current legislation is defined as being the principles, methods and procedures, bases, conventions, rules and specifically practices applied by an entity in preparing and presenting annual financial situations. as it can be seen accounting procedures take part of the accounting policies, which refers to the existing working methods and rules applied within an entity being elaborated either by collecting all internal procedures that have been already defined either their development through the organization of interviews with the people responsible for financial and accounting processes of the entity. in conclusion accounting policies are intended to implement the accounting transactions which are performed by the entities, and the accounting procedures present the methodology for realising this real, complete and consistent transposition. regarding the accounting procedure for the european projects, this is a component part of the ensemble for working procedures that are required to implement an european funded project, assembly comprising at least: the procedure for authorized payments, the procedure of making payments the procedure of drawing repayment request, budgetary debt recovery procedure or the procedure for archiving financial accounting documents and the default functioning of the procedure of the implementation team. 2. research methodology given the fact that in the specialty literature there are few works, specialized studies of romanian accounting literature related to the domain, we decided to call, for the realization of this research, mainly to legislation and publicly available information regarding the accounting projects in the public area, and the experience of the persons occupying positions of responsibility regarding the accounting of projects financed through structural funds. within this part of the work, as noted above, we will focus on accounting procedure, procedure that regulates the way of organization and management of accounting records for a project, implemented by the ministry of forests and climate change as the authority of management, in collaboration with a public institution, as the beneficiary. this procedure, also contains, the monograph of the related accounting registration from specific operations, structured as follows: • registration in the accounts of the operations pre-financing the project; • recording in the accounts the eligible costs throughout the project; • recording in the accounts other expenses than the eligible ones; • registration in the accounts of the related operations that require reimbursement (validation and payment amounts related to eligible expenditure); • registration in the accounts of the main transactions performed after completing the project. 183 lesconi-frumușanu, breuer, martin 3. results of the research results of the research are presenting some aspects related to the duties of the persons responsible for implementing the accounting procedure in a project, and the importance of their proper professional training in the field, presenting the typology of work procedures required for the organization of an accounting project, as well as presenting the accounting notes related to the economic-financially operations specifically for the projects financed by fedr whose beneficiary is a public institution. according to the legislation in force (according to standard no. 17 from the procedures in o.m.f.p. no. 946/2005, republished, modified and completed, and according to ordinance no. 119/1999 on internal control/management and preventive financial control, republished, with subsequent modifications and completions) any public institution is required to elaborate and use operational procedures, including procedures for financial and accounting activity. accounting of the project should not be limited to the accounting records and economically-financial operations in order to ensure accurate and complete reflection, and can be defined as systems and procedures for the financial and monetary transactions that occur in the economic entity regarding a project, therefore the correct elaboration of an accounting procedure together with other working procedures that are required to implement an european-funded project has a key role in its progress. regarding the legislation that must be monitored in order to be elaborated and monitoring of this procedure must be mentionated: accounting law no. 82/1991 with subsequent modifications and completions, order no. 1917/2005 approving the methodological norms regarding the organization and management of public institutions, where regarding the accounting notes regarding accounting, that will be made in accordance with the annex to the minister of public finance no. 2169/2009 according the modification in the order 1917/2005, modifying the methodological norms regarding the organization and management of public institutions accounting changes and additions. accounting operations for such project, is based on accounting commitments according to which the effects of economic transactions and other events are recognized when transactions and events are produced and recorded in a document (not as payments are made) and are recorded in the accounting records, reports and financial statements of the periods to which they relate. in accounting commitments terms we can remind that hepworth (2003) (author that critically analyzes the trend of adopting accounting commitments in the public sector) the transition to accounting commitments in the public sector can be a request of the providers of financial funds or a fashionable trend. regarding national literature, public sector accountant’s specialists consider the accrual accounting only a rule imposed by the normalizations also being revealed to a pronounced need for training them. (tiron, 2008; dumitru et al., 2009) in order to implement this procedure, the staff has a particularly important role, the responsibility for the application and implementation process being distributed between: management staff, persons appointed to the preventive financial control, the head of financial operations banking and recording accounting transactions in a project, the project manager and financial manager 3.1 the role of accounting specialists in this context, we underline the presentation of the attributes of the most important people with responsibilities in the application and implementation of this procedure, 184 the role of accounting procedures in writing /implementing european projects for example the person responsible for the financial and banking transactions and recording accounting transactions relating to the project and financial manager. the person responsible for banking and financial transactions in accounting registration of the project operations performs the following tasks: • must comply with the laws in force in the field of accounting in respect to the project; • to prepare monthly accounting notes and to list account sheets for monthly operations and trial balance; • to keep accounting of the eligible costs and other expenses separate for those eligible for the project; • to make payments and keep track of them separately for eligible costs and separately for others than eligible expenses on contracts and funding sources; • to keep accounts of disbursements from the credit line contracted for payments within the project, recording interest, commissions and rates of refund due and payable by the bank; • to keep analytically accounting for each type of contract (goods, services), to cooperate with financial manager and manager of acquisitions to ensure the acquisition of goods/provision of all services related to contracts in progress; • to keep track of recorded and unpaid expenses analytical on eligible expenses / others than eligible funding sources and contracts; • to record chronologically documents in ledger journal on suppliers; • to keep track of fixed assets, calculate and record monthly, the depreciation and inventory items in the inventory register; • to keep the evidence of grant reimbursement requests received through the sources (erdf, local budget, etc.) as well as payments from these grants; • to ensure conformity of accounting records kept with the original documents, providing the archive of financial-accounting documents related to the project; • to prepare supporting documents for the expenses included in the request for reimbursement (payment orders, proposals, ordering and payment commitments as appropriate); • to prepares the payroll of employees in accordance with the law, highlighting taxes and other benefits offered to the employee. payroll is prepared taking into account the employment contract which is concluded prior to the commencement of employment, time sheets (prepared by the financial manager, project manager and approved by the legal representative of the entity), accounted expenses, the payment of wages for project staff, staff contributions and recipient institution, based on payroll and accounting statement and recording them in the accounting system. financial manager performs the following tasks: • must comply with the laws in force in the field of accounting in respect of the project; • keeps track of suppliers, analytical on each contractor and source of payment; • coordinates economic and financial activity for all operations of the project; • approval of accounting documents, monthly and annual accounts balances related to project activities; • supervising the flow of costs and respecting the financial compliance of implementation of service contracts and procurement; • developing financial section reports submitted to the management authority (ma) and intermediate bodies (oi) (if applicable); • provides financial planning and control of budget execution, financial analysis, project linking the applicant’s accounting system and supervising the flow of payments and documents; 185 lesconi-frumușanu, breuer, martin • checks if the operations of the trial balance are right; • together with the project manager provides accounting data from the accounting evidence and prepares applications for pre-financing and reimbursement requests, checks the supporting documents attached to the latter one; • ensures that there is correspondence between declared expenditure, accounting records and supporting documents for reimbursement claims. • presenting an objective, fair, accurate and without omission point of view linked with financial-accounting documents, of supporting documents, and financial reports of the project; • sends quarterly a copy of these balances “according to the original“ to oi or am (if applicable), quarterly, by the 30th of the month (n + 1) from the end of the quarter; • preparing financial reports and financial accounting documents related to the project (filling the forms annexed to the grant agreement); • ensures that all project-related documents are stamped to avoid double counting and accounting documents on, other ongoing projects, being mentioned reality, regularity and legality certification; • participates in the preparation of documents required for audits and evaluations (interim, final and ex-post); • he/she is responsible for the identification of documents recorded in the accounts, these documents must be backed up by originals in order to support evidence; • after getting reimbursement, submits the required documents for accounting reconciliation to management authorities (quarterly or after each financial transaction, as applicable); • realization of the first checks on the checklist of accounting note and checklist account sheet for various operations. regarding the personal, we encounter in the literature a number of views, especially concerning the staff from public institutions. in this context we mention the opinion of vasile (2012) who summarized the economic crisis for staff in public institutions in romania: the proportion of low-wage increased, during the crisis the poverty has affected more the people less qualified, specialists leave system either in favour of the private sector or to emigrate and there is no stimulus for students to develop a career in the public sector. we consider that the problems faced by beneficiaries of eu funding can be avoided if the accounting specialist knows and obeys the contractual legal rules, and those from the implementation manual, paying particular attention to how the accounting of a project is organized, concerns raised by the financing person/institution being problems that can appear in the accounting of a project, due to distraction to the poor training of the accountant specialist. in order to improve accounting of grant projects, we set out the following proposals/ideas: the managing authorities should do some books on implementing the organization and management of accounting projects and the organization of training sessions for accountants/auditors. an important role in this respect has ceccar which may include in its schedule training programs and courses in this field. this proposal would not be a solution in the public institution because accountants employed in public institutions are not required to be members ceccar, and if an auditor is engaged in a public institution, he/she is declared inactive from ceccar point of view. only the accounting officer or economical manager of a public institution is required to hold a university degree in economics (pitulice, 2013). 186 the role of accounting procedures in writing /implementing european projects 3.2 highlighting accounting activity within a project in order to record financial and economic operations related to projects financed by structural funds we will refer to the provisions of the order of the ministry of public finance no. 2169/2009 for the amendment of the methodological norms regarding the organization and accounting management of public institutions’ with changes and additions. in the framework of the accounting statements it will be presented accounting notes on economic and financial operations with management authorities, the rest of the accounting notes of the project shall be prepared as described above “symbol account. analytical project” (e.g. 401.01.analytic po the abbreviation of operational program through which we have the funding of the project for a supplier from the project). the main accounts record of the project in relation to management authorities, for a public institution financed wholly from own revenues or from own revenues and grants are: 1. recording pre financial value received from the management authority: 5151.361050.analytic po = 4585.analytic po “available in lei of external funds” “advances received from the certification authorities / management authorities / payments agencies structural instruments, funds for agriculture and other funds“ and simultaneously 581 = 5151.361050.analytic po “internal transfers” “available in lei of external funds/grants” 560.361050.analytic po = 581 “available of public institutions fully financed from own revenues” “internal transfers” 2. supplying project account for payments from the account opened in a commercial bank that keeps track of granted credit lines (application for withdrawal): 560.361050.analytic po = 4621.analytic po “available of public institutions fully financed from own revenues” “creditors under 1 year” 3. highlighting the claim to the european commission to the payments made under 56 title “projects funded by external grants (fen) for a specific part of eligible expenses funds (eligible expenses for which has not been made a reimbursement request): 4505.5 = 473.analytic po “amounts that should be received from the european commission representing revenues of the general budget public institutions funded from own / own revenues and grants structural instruments, funds for agriculture and other funds” “amounts being applied to reimbursement “ 4. record of reimbursement demand of expenses submitted for validation to mas (year n): a. reimbursement sum of structural funds: 4583.1.1 = 775.361050.analytic po “amounts that should be received from the certification authority / management authorities post-accession external funds” “post-accession external funds” b. amount refunded from the budget: 4583.2.1 = 7721.361050.analytic po “amounts that should be received from the certification authority/ management authorities funds from the budget” “subsidies from the state budget” 187 lesconi-frumușanu, breuer, martin 5. record of reimbursement demand, representing amounts that should be received due to the payments made in the previous years (year n-1): a. repaid a sum from structural funds: 4583.1.2 = 775.361050.analytic po “amounts that should be received from the certification authority / mas made in previous years external postaccession funds” “post-accession external funds” b. amount refunded from the budget: 4583.2.2 = 7721.361050.analytic po “amounts received from the certification authority / mas made in previous years budget funds” “subsidies from the state budget” and simultaneously: 6. decrease of amounts received from the management authorities with advanced amount received under the pre-financing form: 1. current year n a. sums of the structural funds: 4585 = 4583.1.1 “advance payments received from certification authorities / management authorities / the payment agencies representing pre-financing structural instruments, funds for agriculture and other funds” “amounts received from the certification authority/management authorities external post-accession funds” b. sums from the budget amounts: 4585 = 4583.2.1 “advance payments received from certification authorities / management authorities / the payment agencies representing pre-financing structural instruments, funds for agriculture and other funds” “amounts received from the certification authority / management authorities funds from the budget” 2. previous year n-1 a. sums of the structural funds: 4585 = 4583.1.2 “advance payments received from certification authorities / management authorities / the payment agencies representing pre-financing structural instruments, funds for agriculture and other funds” “amounts that should be received from the certification authority / mas made in previous years external postaccession funds” b. sums from the budget amounts : 4585 = 4583.2.2 “advance payments received from certification authorities / management authorities / the payment agencies representing pre-financing structural instruments, funds for agriculture and other funds” “amounts received from the certification authorities /mas made in previous years – funds from the budget” 7. highlighting settlement claim from the european commission to the payments made under 56 title “projects funded by external grants (fen) for specific eligible expenses from funds (eligible expenses for which has not been made a reimbursement request): 473.analytic po = 4505.5 “amounts being applied to reimbursement” “amounts that should be received from the european commission representing revenues of the general budget public institutions funded from own / own revenues and grants structural instruments, funds for agriculture and other funds” 8. collecting amounts reimbursed by the management authority, registration based on information contained in the statement: • current year n 188 the role of accounting procedures in writing /implementing european projects a. repaid a sum from structural funds: 5151.361050.analytic po = 4583.1.1 “available in lei of external funds” “amounts received from the certification authority/management authorities external postaccession funds” b. amount refunded from the budget: 5151.361050.analytic po = 4583.2.1 “available in lei of external funds” “amounts received from the certification authority / management authorities funds from the budget” • previous year n-1: a. repaid a sum from structural funds: 5151.361050.analytic po = 4583.1.2 “available in lei of external funds” “amounts that should be received from the certification authority / mas made in previous years external post-accession funds” b. amount refunded from the budget: 5151.361050.analytic po = 4583.2.2 “available in lei of external funds” “amounts received from the certification authorities /mas made in previous years – funds from the budget” and simultaneously 581 = 5151.361050.analytic po “internal transfers” “available in lei of external funds” 560.361050.analytic po = 581 “available for public institutions fully financed from own revenues” “internal transfers” 9. refund loan (drawing applications) (in red): 560.361050.analytic po = 4621.analytic po “available for public institutions fully financed from own revenues” “creditors under 1 year” 10. highlighting the interest for the pre-financing received from the management authorities, registration based on information contained in the statement: 5187.analytic po = 4584.1.analytic po “interest receivable” “amounts recoverable by certification authorities /authorities management external post-accession funds” 11. collecting interest on pre-financing received by the management authorities, registration based on information contained in the statement: 560.361050.analytic po = 5187.analytic po “available for public institutions fully financed from own revenues” “interest receivable” 12. registration of fee payment for available management accounts when they are deemed ineligible by the management authorities, registration based on information contained in the statement: 4584.1.analytic po = 560.361050.analytic po “amounts recoverable by certification authorities /management authorities external post-accession funds” “available for public institutions fully financed from own revenues” 13. amounts of money representing the difference between accrued and management fees available accounts dedicated exclusively to receive pre-financing in accounts for deposits of management authorities, at the latest before submitting final claim for reimbursement: 189 lesconi-frumușanu, breuer, martin 4584.1.analytic po = 5151.361050.analytic po “amounts recoverable by certification authorities /management authorities external post-accession funds” “available in lei of external funds” 14. registration of debit notes received from the management authorities, following the notification of the european commission: a. flow of structural funds: 629 = 4584.1 “other expenses authorized by law” “amounts recoverable by certification authorities /management authorities external post-accession funds” b. flow from the state budget: 629 = 4584.2 “other expenses authorized by law” “amounts recoverable by certification authorities / management authorities budget funds” c. flow from pre-financing unjustified within the period specified in the grant agreement: 4585 = 4584.1 “advance payments received from certification authorities / management authorities/ the payment agencies representing pre-financing structural instruments, funds for agriculture and other funds” “amounts recoverable by certification authorities /management authorities external post-accession funds” 15. transferring in the management authorities accounts of the amounts representing debts: a. flow of structural funds: 4584.1 = 5151.361050.analytic po “amounts recoverable by certification authorities /management authorities external post-accession funds” “available in lei of external funds” b. flow from the state budget: 4584.2 = 5151.361050.analytic po “amounts recoverable by certification authorities / management authorities budget funds” “available in lei of external funds” 4. conclusions given the above it can be easily noticed the utility of developing and implementing of accounting procedures together with other working procedures specific to financial and accounting activities of a public institution that implements an european funded project (such as payment authorization procedure, the procedure for making payments, the procedure for making claims for reimbursement, budgetary debt recovery procedure or the procedure for filing financial accounting documents). all these procedures help the accountant specialist to comply with legal and contractual dispositions linked to accounting organization within a project and to conduct from a financial point of view, in good condition a grant project. however the existence of these procedures is beneficial for monitoring and control, of the project both internally (e.g. controls implemented in the accounting-financial department that can be of two types: prevention and detection) and external made by the management authorities as appropriate. the limits of the present research are represented by the existence of few articles, specialized studies from romanian accounting literature related to this topic, which 190 the role of accounting procedures in writing /implementing european projects made us to turn mainly to legislation and public information available on the accounting projects from the public sector, thus underlining that in all domains getting european funds is a priority. references accounting law no. 82/1991, republished, with subsequent amendments (ro). dumitru, m., pitulice i. c., calu d. a., gorgan c. (2009), heredity and tanatogenesis in the public sector accounting in romania. empirical survey regarding the presentation of general purpose financial statements, 32nd annual congress of the european accounting association, 22-24 march 2009, tampere, finland, in pitulice, i. c. (2013), accrual accounting adoption in the romanian public sector, revista română de statistică, 67, available on http://www.revistadestatistica.ro/articole/2013/rrs_01_2013_a4_ro.pdf. hepworth, n. (2003), preconditions for successful implementation of accrual accounting in central government, public money and management, 23(1), 37-44. lesconi frumuşanu, n. m., breuer, a., jurchescu, d. (2011), the role of accounting information writing and project implementation, annals of the university of petrosani – economics, available on http://upet.ro/annals/economics/pdf/2011/ lesconi-breuer-jurchescu.pdf. lesconi frumuşanu, n. m., gabriş, d. (2011), rolul contabilului şi al specialistului contabil în implementarea cu succes a proiectelor finanţate prin fonduri structurale, simpozionul ştiinţific “expertul contabil mediator între principiile contabile şi reglementările fiscale”, ediţia a ix-a, corpul experţilor contabili şi contabililor autorizaţi din românia – filiala arad, moneasa. order of the minister of economy and finance no. 3512/2008 on financial-accounting documents (ro). order of the minister of public finance no. 1917/2005 for approving the methodological norms regarding the organization and accounting management of public institutions (ro). order of the minister of public finance no. 2169/2009 amending the order 1917/2005, for changes the methodological norms regarding the organization and accounting management of public institutions, with further changes and additions (ro). order of the minister of public finance no. 2226/2006 concerning the use of financial-accounting forms by the persons referred to in art. 1 from accounting law no. 82/1991, republished, with subsequent amendments (ro). order of the minister of public finance no. 2861/2009 for the approval of the norms linked with the organization and conducting inventory of assets (ro). order of the minister of public finance no. 946/2005 concerning the code of internal control, including the standards of management / internal control of public entities and for the development of managerial control systems (ro). petre, g., lazăr, a., avram, m., duinea, e. (2010), aspecte practice privind elaborarea şi aplicarea politicilor contabile, revista audit financiar, 4, year viii, available on http://www.cafr.ro/uploads/af4_2010_site-fa25.pdf #page=24. tiron tudor, a. (2008), accrual accounting implementation – local government case study, european accounting association congress. vasile, v. (2012), continuous flow of public sector reforms in romania, conference on “adjustments in the public sector in europe: scope, effects and policy issues”, brussels, 21-22 june 2012, organized by the international 191 lesconi-frumușanu, breuer, martin labour office in cooperation with the european commission, available on http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/ documents/meetingdocument/wcms_184247.pdf. 192 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 79 some elements of specificity of the marketing in the healthcare field laura cătălina ţimiraş university “vasile alecsandri” of bacau, timiras.laura@ub.ro abstract the present paper aims to present some of the specific aspects of marketing in the healthcare field (with strict reference to the products intended for human consumption), in relation to other fields. after a presentation of the fields of marketing applicability in the healthcare, a series of specific elements are presented regarding the nature of the motivations underlying the decision to consume / use a medical product and the elements of appreciation of their value by the final consumers (patients), along with aspects regarding price, distribution and communication. in general, the specificity of the marketing activity is given by the category of products targeted ideas, tangible goods / services intended for the consumer market, products intended for the business markets, which print certain particularities as appropriate: social marketing, marketing of consumer goods, the marketing of services or business-to-business marketing, as well as the specific needs that these products address, the role of the prescribers in manifesting this behavior or the regulations in the field that aim to protect public health. keywords healthcare marketing; medical products; customer value; purchase motivation; price; communication; distribution jel classification m31; i12; i18 introduction the marketing of healthcare products for human consumption (especially those distributed at the level of consumer markets) has multiple particularities compared to other fields of application, a fact determined by the specific needs which they address, by the role of the prescribers, by the regulations in the field that have the purpose of protecting public health etc. referring to the differences between marketing in the healthcare field in relation to other fields of application of marketing crié, d., chebat, j.c. (2013) stated that patient is not a regular consumer, and the rationalities of the actors and the functioning of the markets differ from many points of view. based on information presented in the marketing literature, this paper aims to present some of the specific elements of marketing in the health-related field, referring to medical services and tangible products (prescription drugs, otc medicines can be purchased without a prescription, medical devices, equipment etc.). categories of products in the healthcare field at the market level, medical products can be found in a variety of forms. for example, referring to the product offered by non-governmental organizations whose purpose is to defend and promote the rights of patients with various conditions, this will be represented by all the ideas for which the respective organization militates in the direction of increasing the public's adherence to those ideas; the products offered by a some elements of specificity of the marketing in the healthcare field 80 clinic are materialized in all the consulting services offered, medical investigations, etc. possibly offered by certain doctors / personalities in the medical field, as well as the conditions / environment in which these services are provided, respectively the characteristics of the equipment used etc.; the product offered by a spa complex will consist of all the consultations and recovery services offered, the hotel services and the public catering, including even the natural and anthropic resources of the spa resort where the complex is located and which the clients can benefit from; the product offered by a manufacturer of medicines and medical devices constitutes the totality of the medicines and devices manufactured; the product offered by a company whose activity is the physical distribution of medical equipment is represented by all the transport, storage, handling services, etc. as well as advice, assistance in use, etc. that the respective organization offers. applicability of marketing in the healthcare field due to the diverse nature of the healthcare products and the heterogeneity of the operators in this field, the importance of health for the population, the way of conducting transactions, etc. the applicability of marketing in the field of healthcare knows a multitude of valences. in fact, the use of social marketing to promote socially beneficial behavior change in the public health field has increased. (grier, s., bryant, c.a., 2005). thus, the marketing activities carried out in the healthcare field can be included in the: social marketing, services marketing, consumer goods or business to business to marketing; each of the marketing specializations listed with multiple features that operators in the respective markets must take into account. according to brătucu g. (2003) marketing in the field of healthcare or "healthcare marketing" is a component of social marketing that seeks to raise awareness among the general public about the danger of spreading different diseases, promoting "health" through health education and reducing the number of illnesses. the actions specific to the healthcare marketing target both the healthy and the sick, being differentiated strategies of action for each of the two categories of public. a separate category of strategies are the "demarketing strategies" that are used for products such as alcohol, tobacco, drugs whose consumption can affect the health of the population, in order to counteract the actions of the organizations that promote them and to reduce / eliminate the consumption as appropriate. them. healthcare marketing actions are generally practiced by private organizations for philanthropic, cultural or charitable purposes, as well as public administration bodies, the challenges faced by the initiators of health campaigns being (according to randolph, w., viswanath, k. , 2004) those to attract the attention of the targeted public in the context of the multitude of messages at which they are exposed at all times, as well as to find those motivations able to change behaviors (with an impact on the state of health) often rooted or, as the case may be, to determine new habits, sometimes difficult to adopt. regarding the marketing activities aimed at the medical services (offered in hospitals, clinics, individual medical offices, etc.) they fall within the scope of service marketing, the medical service providers following through the marketing actions undertaken to increase the customer value of the services offered and to satisfy the expectations of the clients. / patients. so, referring to a hospital, kotler (1998) specified that ”a marketingminded person will want to know where the patients come from, why they appeared at this particular hospital, and how they feel about the hospital care and services”. the application of marketing in medical services has intensified with increasing competition between healthcare providers and with the growing awareness regarding the role of patient satisfaction for the development of the organization and, implicitly, in achieving a distinctive competency as wagner et al (1994) suggested: ”building relationship with patients is critical to the success of many health care organizations”. https://search-proquest-com.am.e-nformation.ro/indexinglinkhandler/sng/au/wagner,+henry+c/$n?accountid=136549 laura cătălina ţimiraş 81 also, the marketing activities carried out by the operators in the markets of equipment, devices, medical supplies and pharmaceuticals fall within the sphere of business to business marketing or, as the case may be, the marketing of consumer goods depending on the consumer / end-user organization (hospitals, clinics, medical offices, etc.) or individual (as a patient) to whom they are addressed. as in the case of the medical services market, the increase of the number of operators and the intensification of the competition required the companies to increase the customer value of the offered products in order to increase the level of satisfaction of the consumer / user and thus to maintain / develop at the reference market level. some specific elements about customer value and motivation behind the decision of consumption / use of medical products referring to the medical products and considering that in the concept of marketing a product exists only by reference to a certain market, its specific elements are presented by reference to the final consumer; differences from this point of view, notably existing at the level of the consumer markets and, to a lesser extent, the business ones. in marketing terminology, the customer value of the products refers to the difference between the perceived utility and the perceived cost (boier, 2006), the subjective elements predominating in the appreciation of the value in the case of most products, and the motivation behind the purchase decision is often an emotional one. in this context, at the level of consumer markets, in the design and development of new products an essential role is played by the research of the psychological motivations of consumers. however, referring to the medical products precisely because of the need to which they are addressed (the consumer will consume / use a medical product in general only if the state of health requires it), the motivation underlying the decision of consumption / use is rational and not emotional, and, often, it does not belong to the final consumer (but to the prescriber: doctor, pharmacist). thus, at this market level the process of developing new products is predominantly the result of the research innovation approach in research laboratories and to a lesser extent the research on consumer motivations. on the other hand, the rational motivation underlying the consumption / use of a certain medical product, concerns the category and not the product / service itself (product brand). for example, the decision to go to the doctor is triggered by objective causes, but the doctor / clinic chosen can be based on subjective elements (prestige of the medical staff, the environment etc.). similarly, the administration of a certain drug (referring to its active substance) may have a rational motivation, but the product (brand) may be based on subjective factors (brand awareness, previous favorable experience / brand confidence, appreciation of product presentation etc.); this applies both to otc (when the decision may belong to both the prescriber and the patient) and even to prescription drugs (in which case the decision belongs exclusively to the doctor). therefore, in close relation to the aspects presented, the role that emotional, subjective aspects can play in customer value assessment (perceived utility vs. perceived costs) should not be excluded, though, compared to a wide range of other consumer products, the objective elements are important in the appreciation of value by consumers. for example, referring to the value perceived by the patient of a medical consultation, its usefulness can be appreciated both on the basis of functional benefits (the efficiency of the treatment prescribed for the medical problem in question), but also emotional (confidence given by the prestige of the clinic, the feelings of satisfaction generated by the behavior of the medical staff). on the other hand, the cost charged is given both by the price of the consultation, the expenses related to the transport, other expenses occasioned by the consultation, respectively expenses generated by the return to control etc., as well as by other "expenses" not quantified in money: feelings of frustration , anxiety etc. (generated, for example, by the lack of respecting of the scheduling time or by the inappropriate some elements of specificity of the marketing in the healthcare field 82 behavior of the reception staff, etc.). similarly, taking the case of a drug, its usefulness is given, on the one hand, by the efficiency in treating the diseases to which it is addressed, by the possible minimal adverse effects, etc. (useful in a functional nature), but also the confidence in the manufacturer, appreciation of the way the product is presented, etc. (emotionally useful); and the cost of this will be given both by the price of the product, as well as by other expenses occasioned by the purchase of the product, by the price of any recommended products to be administered together for the reduction of adverse effects etc., but also by feelings of anxiety generated by the administration of the product, for example. in the context presented, and with increasing competition and reaching the maturity by the markets, when the differentiation between products is increasingly difficult to achieve, the different operators at the market level place a greater emphasis on the emotional benefits. for example, taking the case of medical services, differentiating between providers based on the functional characteristics of the services offered (specialties, categories of investigations, technical characteristics / performances of the used equipment, staff training level, tariffs, etc.) is increasingly difficult to achieve, case in which the medical operators place a special emphasis on the emotional benefits: the comfort given by the pleasant environment in which the medical services are provided furniture, arrangement, cleaning etc., appropriate signage (reffering to hospital services), vigolo, v., bonfanti, a.,sallaku, r., douglas, j., 2020, specifing that ”signage has a positive and significant effect on satisfaction”) etc., diminishing anxiety and increasing the confidence in the services offered by the way the staff interact with the patient, his / her level of involvement, discretion, accessible manner in which all the necessary / requested information and explanations are provided; / explanations received during the period of progress etc. thus, referring to the role of communication between the doctor and the patient in the assessment of the medical act, alicja, l.f. (2018) appreciate that the meetings and discussions between the two directly influence the effectiveness of the healthcare received by the patient, generally the patients giving greater importance to the personal characteristics and communication skills of the doctor than the professional competences required. the same author alicja, l.f. (2018), using information from the specialized literature (nowina konopka m., 2016 and wróblewska i., steciwko a., 2013), indicates the factors that she considers essential in the communication of the doctor-patient: focus on the patient and not on the problem; the involvement of the doctor in relation to the patient; the physician's behavior as a humanitarian professional, manifesting empathy; treating the patient with respect; adopting the role of "patient teacher"; maintaining the connection and listening to what the patient says. even at the level of the medical equipment market, a market that presents the characteristics of the business market, the evaluation of the products being carried out mainly according to objective criteria (the technical characteristics of the products), we do not exclude the role of the subjective, emotional elements in the differentiation of the products and, implicitly, in the decision to buy. for example, in the case of two similar medical equipment in terms of the technical characteristics and the price, the confidence given by the manufacturer's prestige, the (perceived) ease of use of the equipment, or, as the case may be, a more efficient communication with the supplier can make the difference. beyond the elements underlying the appreciation of the customer value of different products and, implicitly, the decision to purchase, it should be mentioned that for a significant part of the medical products, the regulations in the field limit the freedom of choice of the consumers (as for example, the medicines delivered on prescription (crié, d., chebat, j.c., 2013), which is a peculiarity of the market for these products. https://www-scopus-com.am.e-nformation.ro/authid/detail.uri?authorid=55975881400&eid=2-s2.0-85076284630 https://www-scopus-com.am.e-nformation.ro/authid/detail.uri?authorid=55789253000&eid=2-s2.0-85076284630 https://www-scopus-com.am.e-nformation.ro/authid/detail.uri?authorid=57204706829&eid=2-s2.0-85076284630 https://www-scopus-com.am.e-nformation.ro/authid/detail.uri?authorid=12446786900&eid=2-s2.0-85076284630 laura cătălina ţimiraş 83 some specific elements about marketing communication regarding medical products in terms of communication, it has many particularities compared to other categories of goods resulting from the legislation in force, as well as the specificity of the purchasing decision process. referring to the legislation, there are multiple provisions that refer to medicines. thus, at community level, directive 2001/83/ec of the european parliament and of the council of 6 november 2001 on the community code relating to medicinal products for human use and the subsequent amendments, regulates the advertising of medicinal products for human use, by advertising understanding “any form of door-to-door information, canvassing activity or inducement designed to promote the prescription, supply, sale or consumption of medicinal products; it shall include in particular: the advertising of medicinal products to the general public, advertising of medicinal products to persons qualified to prescribe or supply them, visits by medical sales representatives to persons qualified to prescribe medicinal products, the supply of samples, the provision of inducements to prescribe or supply medicinal products by the gift, offer or promise of any benefit or bonus, whether in money or in kind, except when their intrinsic value is minimal, sponsorship of promotional meetings attended by persons qualified to prescribe or supply medicinal products, sponsorship of scientific congresses attended by persons qualified to prescribe or supply medicinal products and in particular payment of their travelling and accommodation expenses in connection therewith” according to this document, any advertising for a medicinal product for which a marketing authorization has not been granted is forbidden. advertising should encourage the rational use of the drug, by its objective presentation, without exaggerating its therapeutic qualities and without misleading. advertising for the general public and for the professionals in the field, is subject to different provisions. referring to advertising for the general public, it is forbidden for drugs that are issued on prescription or those containing substances defined as psychotropic or narcotic. the information provided must comply with the information listed in the summary of product characteristics. the direct distribution of drugs to the public by the companies in the field for promotional purposes is also prohibited. advertising intended for the general public must be designed so that the advertising character of the message is clearly visible, and the product clearly identified as a medicine; it must also contain the information necessary for the correct use of the medicine and an explicit and legible invitation to read carefully the instructions in the package leaflet or the outer packaging, as appropriate. advertising for a drug intended for the general public should not contain any material that: gives the impression that a medical consultation or surgery is not required; to suggest that the effects of drug administration are guaranteed and are not accompanied by adverse reactions or are better or equivalent to those of another treatment or drug; to suggest that the health of the user may be improved by the administration of the drug or may be impaired if the drug is not administered (excluding vaccination campaigns); be intended exclusively or mainly for children; to refer to a recommendation of a recognized personality that could encourage drug use; could lead to misdiagnosis; to make claims about healing, in inappropriate terms, alarming or misleading, etc. in the case of advertising for professionals able to prescribe / deliver medicines, the advertising must contain essential information according to the summary of the product characteristics as well as the category in terms of how the product is delivered. the product samples can only be distributed to persons qualified to prescribe them, being accompanied by a copy of the summary of the product characteristics; the directive also specifies the information to be found on the label of medicinal products. https://eur-lex.europa.eu/legal-content/en/auto/?uri=celex:32001l0083 https://eur-lex.europa.eu/legal-content/en/auto/?uri=celex:32001l0083 some elements of specificity of the marketing in the healthcare field 84 according to the same document, the member states must ensure the monitoring of advertising and they may also establish additional regulations in this area. in romania, for example, the advertising of medicines for human use is monitored by the national agency for medicines and medical devices (nammd). according to order no. 194/2015 regarding the approval of the norms for the evaluation and endorsement of advertising for medicinal products for human use, all advertising materials intended for the general public / patients are, prior to being placed on the market, approved by the nammd. the same document specifies that advertising for the general public through social networks or mobile applications, as well as advertising information to the general public containing promotional offers or references to discounts, price reductions, special prices is prohibited. also, outdoor advertising or any form of advertising presented on communication channels, other than pharmacies, medical offices, audiovisual field, print media, internet is prohibited. beyond the conditions that must comply with, the communication for medical products must also take into account the particularities of the purchasing decision-making process. thus, in the market of medical products intended for final consumers, they often do not coincide with the people who make the purchase decision, an essential role in this respect being the prescriber doctor / pharmacist. consequently, frequently on the market of medical products for final consumers, the target of communication is represented by the doctor / pharmacist (as their prescribers) and not the final consumer (the patient), in the context in which patients are not able in most situations to identify the product they need for a particular condition, as well as the fact that most of the products are released only based on the prescription issued by the doctor. the initiators of the communication process must take into account the particularities of the two categories of target audience, for the same product the communication from the perspective of the techniques used, the channels, respectively the messages may differ depending on the category of receivers. for example, taking the case of a new pharmaceutical product for the consumer market that can be purchased without a prescription, the communication may target both the patient and the prescriber. the communication addressed to patients will generally present the specific characteristics of the communication on the consumer market (in compliance with the regulations in force), between the techniques used, the advertising (through various channels: tv, radio, internet, etc.), having a privileged position. in terms of advertising, emotional and factual elements can be combined (considering the nature of the need to which the product is addressed and, implicitly, the fact that the decision to purchase the product category is based mainly on objective elements). the communication addressed to the prescribers will be realized mainly by means of the recommended techniques to be used in the business markets, respectively: sales forces, print advertising (the topic of communication, being a factual nature, indicating the product characteristics), events addressed to professionals in the field. some specific elements about price of medical products referring to the price of medical products, particularities compared to other markets are generated mainly as a result of the policy of clearing medicines and settlement of medical devices and services for patients. thus, patients are rarely aware of the actual price / cost of the services they buy because they bear this cost only partially (crié, d., chebat, j.c., 2013). for example, referring to medicines, there are regulations in the eu regarding prices and reimbursements depending on their role and how they are used in the health system. in romania, the prices of medicines that are issued on the basis of a medical prescription are regulated (their maximum prices are set), and the prices of the drugs that are issued without a medical prescription are freely set and modified (norms regarding the calculation method and the approval procedure of the maximum prices of laura cătălina ţimiraş 85 medicines for human use, 2017). regarding the prices of medicines we mention the price difference between innovative (reference) and generic drugs. thus, according to information provided by the association of manufacturers of generic medicines in romania (2019), the prices of generic drugs are lower with values between 20% and 90% compared to the prices of the reference drugs. innovative or reference medicines are those which enjoy legal protection through the patent. generic drugs represent the therapeutic equivalent of innovative drugs, having the same composition and can be produced after the expiration of their latter patents. the differences between the prices of the two categories of drugs are to some extent justified by the costs of production; the research and development expenses related to the innovative product generating this gap. beyond the differences generated by the production costs (of which consumers are more or less aware), the higher prices of innovative (compared to generic) medicines represent an image of the brand / manufacturer's notoriety, consumer confidence in the respective products for which have a certain experience (generic drugs are produced after 10-15 years from the appearance of the reference medicine), to the entire communication system that accompanies the product on the market. starting from the aspects presented, at the level of the pharmaceutical market the meaning of the term "generic" associated with a drug, should not be confused with the meaning of the notion of generic associated with the brand, according to the marketing concept. according to vrânceanu, d. (2003), a generic brand is a brand that has lost its ability to differentiate the product from its competitors, having a common noun value. for the category of medical products in which prices are freely formed, they have the specific characteristics of the reference market the consumer market or the business market. thus, at the level of the business markets, the price is not, in general, a trigger element of the purchase decision (except in the case of standardized products, with identical terms and conditions of delivery), being practically outdated from the perspective of the importance in making the decision to buy the characteristics technical and functional products (nichifor, 2012). in contrast, at the level of the consumer markets, the price is also an element of differentiation and segmentation of the market according to the criterion of income, higher revenues being generally associated with the orientation towards more expensive products, with a higher customer value from the perspective of the objective elements and, often subjective. on the other hand, the influence that the price level exerts on the purchase decision in the case of consumer markets is only valid for those products in which the consumer / patient does not benefit from compensations / settlements resulting from the available state or private insurance. some specific elements about distribution of the medical products there are also strict rules regarding the distribution of medical products and services. beyond these regulations, from a marketing perspective, the distribution presents the specific characteristics of the product category to which it refers tangible goods / services intended for consumer markets, respectively, products intended for business markets. for example, referring to the medical services market, the distribution channel is generally a direct one, the provider (the doctor / medical staff) providing the patient service directly. it should be mentioned that the depth of the distribution channels may differ, depending on the nature of the medical services, these are generally provided within the medical units (located at a greater or lesser distance from the patient), but can also be provided at the patient's home. (the channel being thus very deep). in the market for goods for final consumers (medicines, medical devices, except for the very expensive ones and whose consumption is rare, as is the case, for example, so-called orphan drugs designed to treat rare diseases), the distribution is usually extensive one (the products are sold through a large number of pharmacies), aiming to be as close as possible to the place of consumption. regarding the distribution of equipment of some elements of specificity of the marketing in the healthcare field 86 consumables etc. distribution to organizations (clinics, hospitals, individual medical offices) the distribution generally presents the characteristics of the distribution on the business market. thus, in general, the products are marketed through short and small indirect channels; and when the product encompasses a high technological level, being therefore more complex, large and / or with a high unit value, it is marketed through direct channels (nichifor, 2012). on the other hand, the standard products of small size and with a low or medium unit value are traded within the indirect distribution channels. conclusions medical products and services are found at the market level in a variety of forms, from communication campaigns aimed at promoting the health of the general public, to medical equipment incorporating a high technological level for organizations specialized in medical services, the product category in which they fall into (ideas, tangible goods / services for the consumer market, products for the business markets), printing the marketing activity with certain particularities as appropriate: social marketing, marketing of consumer goods, marketing of services or business to business marketing. also, specific elements of the marketing activity regarding medical products result from the specific needs that these products address, with an impact on the consumer behavior as a whole, the role of the prescribers in manifesting this behavior, as well as from the regulations in the field that have the role of to protect the health of the population. references alicja, ł.f. 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 1 erasmus+ programme seen from the eyes of potential beneficiaries direct research carried out with students bogdan vasile nichifor, “vasile alecsandri” university of bacau, bogdan.nichifor@ub.ro laura cătălina ţimiraş, “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract the erasmus programme was evaluated from a lot of point of views. depending on the interest of the evaluation, studies were conducted to uncover information related to subjects like: the scope of the programme, the type of participants in the programme, the factors motivating the students to be mobile, the cost and funding of student mobility, the study conditions during the study period, the recognition of achievements during the study period abroad on return, the socio-cultural effect of the mobility (like becoming more “european”), the personal development effects etc. based on the results of a direct research take on the students of the faculty of economic sciences of the "vasile alecsandri" university of bacău, the paper presents a series of results with reference to: the knowledge held by the students with reference to the erasmus + program, how they he perceives it, the reasons underlying the intention to benefit from the program, as well as those underlying the lack of interest in it. the research carried out was performed on a sample of 116 students from bachelor's degree studies years ii and iii of studies selected according to non-probability criteria, so that the obtained results exclusively reveal their point of view. keywords erasmus+ programme; motivations; knowledge; interest jel classification m31 introduction erasmus is the european union programme destinated for education and training and one of the best-known eu-level among higher education students. it was established in 1987 and it has a great impact on the possibility to study for more than 2 million people. the programme is named after erasmus of rotterdam (1465-1536), an important philosopher, theologian and humanist. the acronym erasmus comes from the syntagma european community action scheme for the mobility of university students. the birth of erasmus programme was complicated, even if today it has a lot of supporters in all eu countries. prior to the beginning of the programme, the european commission had been supporting pilot student exchanges for six years before erasmus came into being. it proposed the original erasmus programme in early 1986, but the reaction from eu member states varied: those with substantial exchange programmes of their own rejected the programme while the remaining countries were generally in favour of it. because of the budgetary aspects of the programme, in 1987 erasmus was on the verge of being withdraw from the commission actions, but after a studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 2 compromise between member states, the programme was adopted. in its first year of official functioning, 3 244 students from 11 countries have been its beneficiaries. after its foundation, programme suffered some transformations, being part or combing other similar programmes. in this direction, the erasmus programme, together with several other education and training programmes, was incorporated into the socrates programme which was established in 1995. socrates was replaced with the socrates ii programme in january 2000. that, in turn, was replaced by the lifelong learning programme (2007-2013) from 2007. erasmus + or erasmus plus is the new programme that combines all current eu programmes for education, training, youth and sport, which was launched in january 2014. currently, the programme has a budget of eur 14.7 billion, with the objective to give 4 million europeans the opportunity to study, train and gain experience abroad. the erasmus + programme, which will run until 2020, brings together seven previous programmes and it is set to provide opportunities for various categories of people and organizations. these seven programmes are: • lifelong learning programme • youth in action programme • the erasmus mundus programme • tempus • alpha • edulink • cooperation programmes with the industrialized countries in the field of higher education the scope of erasmus + programme is to contribute to meeting the objectives of the europe 2020 strategy for growth, jobs, equity and social inclusion, as well as the et2020 strategic framework for education and training. according to commission, the programme aims to promote the sustainable development of partners in the field of higher education and to contribute to the achievement of the objectives of the eu youth strategy. it addresses the following topics: • reducing unemployment, especially among young people; • promoting adult education, especially in the area of new skills and the skills required on the labour market; • encourage the participation of young people in the european democratic life; • supporting innovation, cooperation and reform; • reducing the rate of early school leaving; • promoting cooperation and mobility with eu partner countries. since 1997, the romanian institutions of higher education have started to be part of cooperation within erasmus programme. until 2016, more than 75,000 students from higher education, 62,000 young people in youth exchanges, including the european voluntary service, 20,000 young people in initial vocational training and over 30,000 teachers, auxiliary teachers, trainers and youth workers have benefited from the european union programmes (ghitulescu, 2017). studies about erasmus programme the erasmus programme was evaluated from a lot of point of views. depending on the interest of the evaluation, studies were conducted to uncover information related to subjects like: the scope of the programme, the type of participants in the programme, the factors motivating the students to be mobile, the cost and funding of student mobility, the study conditions during the study period, the recognition of achievements studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 3 during the study period abroad on return, the socio-cultural effect of the mobility (like becoming more “european”), the personal development effects etc. from the point of view of categories of students who participate in the erasmus programme, as study by krzaklewska & krupnick, completed in 2007, identified two such categories: • career oriented students they most often come from disadvantaged groups they are students with family incomes low, generally girls, coming from the south, center and eastern europe, they are older and their motivation is related to enrichment of academic knowledge, improvement the prospects for the future job etc. • b. experience-oriented students they are generally men, erasmus students, from western and northern europe countries, younger, and the reasons cited are related of the need to have new experiences, to learn something about different cultures, meeting new people, being independent, living in a foreign country . along with these categories of erasmus students, the same authors, krzaklewska & krupnik, introduce some of the main motives which sit at the base of the mobility. table 1 shows the categories and the main motivations for mobility. table 1. career-oriented and experience-oriented students and their motivations career oriented experience oriented reasons for going abroad indicated as important in survey • to improve academic knowledge • to enhance future employment prospects • to practice foreign language • to have new experiences • to learn about different cultures • to have fun • to meet new people • to be independent • to live in a foreign country student groups who were more likely to belong to specific category • non erasmus exchange students • females with lower family income coming from south (e.g. spain) central and east european countries (e.g. poland) • older • erasmus students • males with higher family income coming from west and north european countries • younger quote with my erasmus program i had the opportunity to start an international work career (bruno fernandes) i always wanted to smell freedom and independence (katerina markova) source: krzaklewska, ewa; krupnik, seweryn (2008), “the role of the erasmus programme in enhancing intercultural dialogue. presentation of the results from the erasmus student network survey 2007”. proceedings of the 4th international barcelona conference on higher education, vol. 6. higher education for intercultural dialogue and multiculturalism. barcelona: guni. available at http://www.guni-rmies.net. in another study regarding the motivations of erasmus student, one of the mentioned authors distinguishes four areas of motivation, which included 11 categories (krzaklewska, 2008): studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 4 1. academic (improving academic knowledge, studying in a different educational system, hoping that it will be useful for future employment/work); 2. linguistic (practicing a foreign language); 3. cultural (learning about different cultures, living in a foreign country); 4. personal (having new experiences, having fun, meeting new people, being independent, developing as a person) other studies use push–pull framework of student mobility in studying the motivations. push factors are elements that operate in the home country of the student whereby they stimulate the individual to study abroad; pull factors are elements of a host country that attract a student to study abroad. a combination of push and pull factors determines a student’s decision to study abroad then his/her destination choice (lesjak et al, 2015). gonzalez et al, 2011 find out that european student mobility is as a dual phenomenon: “ on the one hand, student mobility is influenced by economic variables, such as the price level of host countries or the geographical distance as a proxy for transport costs, and, … on the other hand, the observed tendency to choose countries whose climate is warm, above other considerations, brings into discussion the notion of student mobility as a leisure activity, as if european students collectively were trying to enjoy from the lifelong unique experience of living abroad”. other studies regarding erasmus mobility concentrated on the effect of the mobility on the beneficiaries. again, the effects can be put in different categories (dolga et al, 2015): • effects on the professional and scientific development of exchange students (acquisition of scientific knowledge and skills, acquisition of professional knowledge and skills, acquisition of foreign language knowledge and skills, identification of academic / scientific and professional opportunities); • effects on certain aspects of the students’ personality (development of relational skills, personal system of values, self-confidence, the feeling of independence, the feeling of belonging to a group or a community, attitude towards work and study, attitude towards the chosen profession, attitude towards family); • effects on certain aspects related to the social life and the interpersonal relations of exchange students (interpersonal relations with foreigners, relations with locals – romanians, interpersonal relations with family members and close friends); • effects on other aspects of the students’ life (eating habits, spare time habits, future career plans, future plan regarding family life • effects on level of agreement between the erasmus programme and the needs of students and of the university more pragmatic studies focused on the relation between the mobility and transition to employment and early career. teichler and janson (2007), after participating in the study the professional value of erasmus mobility. final report. presented to the european commission dg education and culture (bracht et al, 2006) conclude in 2007 that “erasmus students view the study period abroad as leading to international mobility, international competences, and visibly international work tasks while hardly promising career enhancement as compared to formerly nonmobile students”. an interesting subject of study, in the context of erasmus programme, was the existence and the formation of “european identity”. mitchell studied, in 2012, erasmus programme in terms of civic experiences. her study identified and widely validated three assumptions: (a) erasmus students engage insignificant contact with other europeans and (b) they become more interested in europe and other europeans and (c) self-identify as european. studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 5 oborune (2013) study, based on van mol (2009) work came to the conclusion that “erasmus programme influences students european identity, but on the other hand, students who take part differ from non-mobile students have more multicultural background, stronger national and european identity. the programme is a catalyst rather than promoter …”. this complex reality of erasmus programme needs additional work, and in this direction our paper focuses on identifying and validating motivations and factors associated with erasmus+ experience, from the point of view of the students of a romanian university. research methodology the research was carried out among the students from the bachelor's studies with frequency years ii and iii, of the faculty of economic sciences of the "vasile alecsandri" university of bacău. the sample surveyed was 116 students, representing about 48% of the total. the sampling method used was an improbable one all students attending the didactic activities were included in the sample in the first week of march 2019 as long as they wished to participate in the study; which is why the research was exploratory, the results representing only the point of view of the investigated students. despite their unrepresentative character, the results provide us with useful information, which are indicative in nature, on the investigated issue and can also be the basis for the formulation of hypotheses for extensive research, representative for the entire community of students as potential beneficiaries of the erasmus + program. research results regarding the degree of knowledge of the erasmus + programme by the investigated students, 100% stated that they had heard about it, but the opportunities offered are known to a small extent by those to whom they are addressed. most of the students know that through the erasmus + programme they can study abroad (over 79% have information about it) and, much less, they know that they can benefit from internships, vocational training, etc. abroad about 40%. however, the other opportunities offered by the erasmus + programme are little known. thus, over 60% of students have not heard that within the erasmus + programme can benefit from the erasmus mundus joint master's program (emjmd) or erasmus + loans for the masters and over 50% of them have not heard that the programme offers financial support for individuals with special needs. also, for the most part, those who have heard about the opportunities mentioned above (the erasmus mundus joint master's program, erasmus + loans for the masters, financial support for people with special needs) offered by the erasmus + programme, are not aware of extensive information. this low level of knowledge can only be partially attributed to the absence of students from erasmus + presentations that are regularly held in the institution, in the context where, according to the data in the table below, there are no major differences between the declared level of knowledge of those who they participated, respectively of those who did not participate in such presentations. the biggest differences from this point of view are recorded in terms of the possibility to benefit from internships, vocational training abroad etc.: 50% of students who participated in erasmus + presentations and only 28.5% of those who did not attend presentations have information about this opportunity. the differences in the level of knowledge of the different opportunities between those who participated and those who did not participate in presentations, appreciated by us as small, prove the existence of factors that affect the efficiency of the communication process, factors that can be held by students as well, in their quality of receivers (such studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 6 as inattention generated by total lack of interest / existence of other priorities, forgetfulness, etc.) but also by those who organize such presentations, in their capacity as broadcasters (such as unattractive presentations, the use of a specialized language not adapted to the audience, etc.). also, it should be kept in mind that information about the erasmus+ programme is also transmitted by other means advertising materials, web pages, etc., showing a low degree of knowledge of the benefits of the program, attesting to a lack of efficiency of the entire communication process, as we have stated previously, the cases can be kept both by the transmitter and / or the receiver of the information. considering that the low level of knowledge refers strictly to the 116 students investigated, it is necessary to verify this phenomenon at the level of numerous students, through representative research. if it is proven that the low level of knowledge of the program characterizes the entire student community, identifying the factors that affect the efficiency of the communication request is a priority in order to take measures to improve it and, implicitly, to increase the student’s interest in the erasmus+ programme. table 2. the structure of the students investigated according to the degree of knowledge of the different opportunities offered by the erasmus+ programme, by total and by categories depending on whether they participated in erasmus + presentations % in total category no. opportunity i d id n 't h e a r a b o u t it i h a v e h e a r d , b u t i k n o w n o th in g a b o u t it i h a v e h e a r d a n d i h a v e a m in im u m o f in fo r m a ti o n a b o u t it i h a v e h e a r d a n d k n o w q u it e a l o t a b o u t it total total investigated students 1 studies abroad 1.7 19.0 62.1 17.2 100.0 2 internships (practice, vocational training, etc.) 22.4 37.9 29.3 10.3 100.0 3 erasmus mundus joint master program (emjmd) 63.8 22.4 8.6 5.2 100.0 4 erasmus + loans for masters 60.3 31.0 6.9 1.7 100.0 5 financial support for people with special needs 53.4 32.8 10.3 3.4 100.0 students who participated in erasmus + presentations 1 studies abroad 3.3 16.7 60.0 20.0 100.0 2 internships (practice, vocational training, etc.) 13.3 36.7 36.7 13.3 100.0 3 erasmus mundus joint master program (emjmd) 50.0 30.0 13.3 6.7 100.0 4 erasmus + loans for masters 46.7 40.0 10.0 3.3 100.0 5 financial support for people with special needs 50.0 30.0 16.7 3.3 100.0 students who do not participated in erasmus + presentations 1 studies abroad 0.0 21.4 64.3 14.3 100.0 2 internships (practice, vocational training, etc.) 32.1 39.3 21.4 7.1 100.0 3 erasmus mundus joint master program (emjmd) 78.6 14.3 3.6 3.6 100.0 4 erasmus + loans for masters 75.0 21.4 3.6 0.0 100.0 5 financial support for people with special needs 57.1 35.7 3.6 3.6 100.0 studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 7 the students' perception of the erasmus+ programme was evaluated by means of statements, indicating to what extent the respective statement describes the evaluated program. thus, according to the results presented in table 3, as well as those of figure 1, for the investigated students, the erasmus+ programme is primarily a means of visiting other countries / places (the corresponding statement recorded the highest average score), but also: a means of knowing new cultures / customs, a means of practicing and improvement of english language proficiency, a starting point for those who wish to continue their studies abroad, a means of knowing education systems in other countries, a starting point for those who want to find a job / to establish abroad, a means of personal development, a means of connecting friends / socializing and, finally, a means of improving professional perspectives. table 3 the structure of the students interviewed according to the extent to which they consider that different statements describe the erasmus + program, evaluated on a scale from 1-not at all, to 5 to a great extent % in total students no. statement n o t a t a ll (1 ) t o a s m a ll e x te n t (2 ) t o s o m e e x te n t (3 ) t o a l a r g e e x te n t (4 ) t o a g r e a t e x te n t (5 ) i d o n o t k n o w total 1 it is a means of learning about education systems in other countries 0.0 1.7 13.8 27.6 56.9 0.0 100.0 2 it is a means of improving professional prospects (cv improvement / employment advantage) 0.0 5.2 19.0 31.0 44.8 0.0 100.0 3 it is a means of practicing and improving english language proficiency 0.0 3.4 10.3 25.9 58.6 1.7 100.0 4 it is a means of personal development (increasing confidence in one's own strengths, ability to adapt to new situations) 0.0 3.4 12.1 37.9 46.6 0.0 100.0 5 it is a means of learning about new cultures / customs 0.0 1.7 8.6 27.6 62.1 0.0 100.0 6 it is a means of connecting friends / socializing 0.0 3.4 15.5 39.7 41.4 0.0 100.0 7 it is a means of visiting other countries / places 0.0 0.0 6.9 27.6 62.1 3.4 100.0 8 it is a starting point for those who want to continue their studies abroad 0.0 0.0 10.3 36.2 50.0 3.4 100.0 9 it is a starting point for those who want to find a job / settle abroad 0.0 0.0 22.4 24.1 50.0 3.4 100.0 studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 8 4.16 4.19 4.28 4.29 4.40 4.41 4.42 4.50 4.57 3.9 4 4.1 4.2 4.3 4.4 4.5 4.6 it is a means of improving professional prospects (cv improvement / employment advantage) it is a means of connecting friends / socializing it is a means of personal development (increasing confidence in one's own strengths, ability to adapt to new situations) it is a starting point for those who want to find a job / settle abroad it is a means of learning about education systems in other countries it is a starting point for those who want to continue their studies abroad it is a means of practicing and improving english language proficiency it is a means of learning about new cultures / customs it is a means of visiting other countries / places figure 1. the average scores attesting the extent to which the interviewed students consider that different statements describe the erasmus+ programme, evaluated on a scale from 1-not at all, to 5 to a great extent referring to the experience and / or the intention to benefit from the erasmus+ programme, out of the total of the investigated students only 3.4% had an erasmus+ experience and all want to relive it. 22.4% of the students, not having an erasmus+ experience, indicated their intention to access the program, but most over 74%, are not interested in the program (they did not benefit and do not wish to benefit from it). (figure 2) figure 2. the structure of the students investigated according to the experience and / or the intention to benefit from the erasmus+ programme (% in total students) referring to the students who benefited from the erasmus+ programme (through mobility of studies and internships), the main reasons underlying the decision to leave in such mobility were: the desire for personal development, bonding with friends / socializing and visiting other countries. all the beneficiary students declared themselves satisfied with the experience, confirmed by the intention to leave again in such mobility. regarding students who have not benefited but intend to benefit from the erasmus+ programme, the main reasons stated as underlying this intention are: improving professional prospects (approximately 70% of those who did not benefit but wish to benefit from the erasmus+ programme indicated this reason among the first 3 most i was and i intend to go further, 3.4% i haven't been, but i intend to go, 22.4%i was, but i don't intend to go anymore, 0.0% i was not and i do not intend to go, 74.1% studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 9 important), the practice and improvement of the linguistic knowledge of english and personal development (both indicated by about 54% of the students) (figure 3). figure 3. the share of students who have indicated a certain reason as being the basis of the intention to go into erasmus+ mobility, in total students who have declared that they have not been, but intend to go in mobility (% in total students) note: each student has indicated maximum 3 reasons, the most important ones being overwhelming (about 3 quarters of the total students interviewed), the students who neither benefited nor intend to benefit from the erasmus+ programme indicated, in particular, the main reasons for the lack of this intention: the linguistic difficulties generated by lack of knowledge / insufficient knowledge of the language of the host country (approximately 53% of those who did not benefit and do not wish to benefit from the erasmus + programme indicated this reason among the first 3 most important ones), fearing the academic demands of the host university (approximately 49%), linguistic difficulties arising from insufficient knowledge of english and the existence of other priorities (approximately 40% each) (figure 4). figure 4. the share of students who have indicated a reason as being based on the lack of intention to go into an erasmus + mobility, in total students who stated that they were not and do not intend to go on a mobility (% in total students) note: each student has indicated maximum 3 reasons, the most important ones conclusions the main results of the research, representing exclusively the point of view of the 116 students from the bachelor's degree studies years ii and iii, of the faculty of economic 7.69 7.69 23.08 30.77 30.77 38.46 53.85 53.85 69.23 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 to learn about new cultures / customs to make friends / socialising to visit other countries / place to identify possibilities for further study… to find a job for me / settle abroad to learn about other education systems to practice and improve english… for personal development to improve professional prospects 11.63 13.95 13.95 18.60 20.93 32.56 39.53 39.53 48.84 53.49 0.0 10.0 20.0 30.0 40.0 50.0 60.0 fear of not being able to adapt to the… i no longer apply for mobility because… longing for family / home no interest to me fear of being alone among strangers lack of financial resources linguistic difficulties caused by… i have other priorities right now fear of not being able to rise to the… language difficulties arising from the… studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 10 sciences of the "vasile alecsandri" university of bacău, who were investigated, with reference to the information held and the way they perceive the erasmus+ programme, the reasons for the manifestation and the lack of intention to benefit from it are presented as follows: there is a relatively low level of knowledge of the opportunities offered by the erasmus+ programme by the investigated students. in general, it is known that through the erasmus+ programme you can benefit from studies abroad (over 79% of the respondents said they have information about it) and, to a lesser extent, the program offers the opportunity to go to internships, vocational training, abroad etc. (approximately 40%). other opportunities offered by the program: the erasmus mundus joint master's program (emjmd), erasmus + loans for the masters and financial support for people with special needs, however, record a very low level of knowledge, most of the respondents declaring that they have not heard of them; referring to how the erasmus+ programme is perceived, for the investigated students this is especially a means of knowing new cultures / habits, a means of practicing and improving the english language skills, a starting point for those who want to learn, a way to continue studies abroad, as well as a means to learn about education systems in other countries; of the total investigated students, a low weight 3.4% benefited from the erasmus+ programme, the satisfaction gained as a result of this experience being confirmed by the unanimous intention to benefit from the program again; 22.4% of the students did not benefit, but wish to benefit from the erasmus+ programme, the main reasons indicated by them as being the basis of this intention being: improving professional perspectives, practicing and improving english language skills, personal development; about 3 quarters of the total students interviewed have not benefited and do not wish to benefit from the erasmus+ programme, the linguistic difficulties generated by the ignorance / insufficient knowledge of the language of the host country, the fear of the academic demands of the host university, the linguistic difficulties generated of the insufficient knowledge of the english language and the existence of other priorities, being the main reasons indicated to a greater extent by them as being the basis of the lack of interest. references bracht oliver, engel constanze, janson kerstin, over albert, schomburg harald, teichler ulrich (2006), the professional value of erasmus mobility. final report. presented to the european commission dg education and culture. dolga l., filipescu h., popescu-mitroia m.m., mazilescu c.a. (2015), erasmus mobility impact on professional training and personal development of students beneficiaries, procedia social and behavioral sciences 191, 1006 – 1013. ghitulescu radu (2017), de 20 de ani în românia, programul erasmus schimbă vieţi, deschide minţi, market watch, no. 195, available at http://www.marketwatch.ro/articol/15655/de_20_de_ani_in_romania_progra mul_erasmus_schimba_vieti_deschide_minti/ krzaklewska, ewa (2008), students, staff and academic mobility in higher education, michael byram & fred dervin (eds.), cambridge scholars press. krzaklewska, ewa; krupnik, seweryn (2008), “the role of the erasmus programme in enhancing intercultural dialogue. presentation of the results from the erasmus student network survey 2007”. proceedings of the 4th international barcelona conference on higher education, vol. 6. higher education for studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 11 intercultural dialogue and multiculturalism. barcelona: guni. available at http://www.guni-rmies.net. kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto. lesjak miha, juvan emil, ineson elizabeth m., yap matthew h. t., podovsovnik axelsson eva (2015), erasmus student motivation: why and where to go?, higher education, 70:845–865, springer. mazilescu crisanta-alina, dolga lia, filipescu hannelore elfride, popescu-mitroi maria monica (2019), erasmus +, o punte de legătură între universități și organizații, eurostampa, timisoara. mitchell kristine (2012) student mobility and european identity: erasmus study as a civic experience?, journal of contemporary european research, vol. 8 issue 4. oborune karina (2013), becoming more european after erasmus? the impact of the erasmus programme on political and cultural identity, epiphany: vol. 6, no. 1. rodrıguez gonzalez carlos, mesanza ricardo bustillo, mariel petr (2011), the determinants of international student mobility flows: an empirical study on the erasmus programme, higher education, 62:413–430, springer. teichler ulrich, janson kerstin (2007), the professional value of temporary study in another european country: employment and work of former erasmus students, journal of studies in international education, 11: 486. van mol, c. 2009. “the influence of european student mobility on european identity and subsequent migration aspirations. a theoretical framework on european student mobility” working paper no. 1 universiteit antwerpen. http://www.guni-rmies.net/ studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 1 furniture accessories market: an exploratory approach at european market level petrache (lang) beatrice georgeta universitatea transilvania din brasov marketing kommunikation manager bei simausrom austria abstract in this article, we aim to identify the views and attitudes of major furniture manufacturers in the european union on the current situation and trends of the european furniture market and furniture accessories. if for the furniture market has been made more studies and research along the way, for the furniture accessories market this is the first qualitative research to be carried out both at national and european level, a initiative caused by the fact that we have not identified other secondary sources with the exception of data taken from a representative producer, which supplies over 80% of furniture accessories to major furniture manufacturers in europe. national and european statistics do not highlight the market for furniture accessories, although in our opinion it is of great importance for the reference industry. in this context, a qualitative research has been carried out whose main objective is to identify the role accessories have in the ergonomics and design of furniture of all categories, regardless of their destination (house, office, hotel, restaurant etc.). the specific objectives of qualitative research are: to identify the opinions and attitudes of the managers of the major furniture manufacturers on the importance of furniture and furniture accessories at the industry level; identifying the views and attitudes of the furniture managers in the furniture industry on the specific market trends in terms of the dynamics of consumer preferences on this market. keywords european furniture market; circular economy; eco-label jel classification m31 introduction the european furniture and accessories industry is of particular importance in international trade, providing over one quarter of the world's need in the field and over one million jobs at the 130,000 profile companies. smes account for about 70% of the total added value, of which a significant share is made up of small and microenterprises. in 2015, the european production of the sector amounted to approximately eur 92 billion, the added value being almost eur 30 billion, and in the context of the growth of the housing parks, for 2018 it was expected that the furniture would hold between 1.5 and 2% of the purchasing power of households. the importance of our research on this market is first demonstrated by the fact that a quarter of the world furniture production comes from the european union, although this industry is quite fragmented in europe. as mentioned above, in 2016, there were almost 130,000 furniture manufacturers on the european market, of which about 70% were smes, and the number of employees in production alone amounted to about one million people (simasrom). production at 2017 was € 86 billion, of which added value amounted to approximately € 31 billion (eurostat). manufacturers of furniture accessories are very small and difficult to identify, and official statistics include these products also in the generic category of "furniture". germany, italy, poland, france and 2 austria are among the top 10 world furniture manufacturers, accounting for over 19% of world production and 60% of european production. in addition, the european furniture market is of great importance from the perspective of the consumption of furniture per capita in europe, reaching about 2% of the purchasing power of households (eurostat). if major world furniture manufacturers are located in several european countries, the main european furniture accessories manufacturer is in romania (simausrom) and supplies more than 80% of the accessories needed by major european manufacturers of furniture. these are the main reasons why i chose the furniture market as the research theme in the european union. the overall objective of the research is to identify the role that accessories have in the ergonomics and design of the furniture of all categories, regardless of their destination. the article has the following parts: summary, introduction, literature review, overview of the market, research methodology, results and discussions, conclusions. finally, the bibliography used in the research documentation is presented. literature review in international literature there is an intense concern for studying markets, for preference analysis, but the role and importance of consumer furniture accessories is not highlighted at all. in this context, we will present some aspects of the furniture market at european level, namely a brief analysis of them, as evidenced by various papers and reports. the nineteenth century brought radical changes throughout europe, as evidenced by the work of some specialists (harrsion, 1971). one of the main aspects of the analysis of the literature that is of interest to our research is that furniture manufacturers need to better adapt to the future demands of customers through functionality, aesthetics, material quality and price, all in the context of sustainability (vink et al, 2012; vos and der voordt, 2002). a concept of relative actuality, the circular economy, also becomes applicable in the furniture industry at european level, with emphasis being placed on the reuse of materials and implicitly on waste minimization, all of which are achievable by designing new products so that a circular pattern can be generated by business in the field (macarthur foundation, 2013). as an argument in favor of the existence of circular economy in the furniture sector at european level is the use of chemicals with harmful effects, which if applicable will lead to clean industrial policies in this area. another aspect that is linked to the circular economy and which is in the view of researchers, but especially regulating bodies, refers to the eco-labeling system. at european union level, this system encourages the production of durable, purposefitting furniture, easy to repair and easy to dismantle in separate material streams at the end of its useful life to maximize recycling potential. according to commission decision (eu) 2016/1332, the european commission has extended the scope of ecolabeling criteria by increasing the number of potential products covered, thus creating greater possibilities for the furniture market, although second-hand furniture products are not covered by that decision (jrc, 2015). regulation (ec) 66/2010 aims to establish an eu-wide voluntary eco-labeling scheme of type iso, based on scientific and technological criteria, with market orientation, taking into account the most important effects and also by creating the premises of good understanding by consumers. studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 3 overview of the furniture market global furniture trade accounts for around 1% of global trade. it grew rapidly by 2008 to us $ 117 billion and declined by 19% in 2009. at present, international trade has returned to pre-recession and is expected to grow by about 5% by 2020. in 2019, asia and south america will be the regions with the highest demand for furniture, north america will experience modest growth, while in europe stagnation will continue, with the exception of eastern europe. currently, a quarter of the furniture production in the world is made in the european union, with the role of germany, italy, poland and france (among the top 10 furniture manufacturers worldwide) being particularly important as they have an aggregate share of 13% of world production and almost 60% of total eu production. according to reports and research in recent years, the european furniture market is recovering slowly and steadily after the crisis triggered in 2008. from the analysis of the statistical data, we find that the share of eu production in the world furniture market is decreasing over the period 2005-2017. a report in 2017 shows that the global furniture industry is worth $ 395 billion, valuation being based on production prices (www.csilmilano.com). the world's largest exporter is china, which has doubled its international sales over the past six years. still, china's exports fell by 6%, to $ 49 billion in 2016 and 36% of all furniture exports. at a distance, china is followed by major european producers: germany (8% of total exports), italy (8%) and poland (7%), these european countries registering increases during the analyzed period. in terms of imports, the largest market is the united states (26% of the total), followed by germany (11%), great britain (6%) and france (6%) (bosch et al, 2017). furniture products record different performances in terms of the competitiveness of eu producers in domestic and foreign markets. some furniture items are less sensitive to international competition than others for various reasons: price dynamics, design and innovative product content, purchasing process, product characteristics, and other factors linked to the production process. the eu production position varies significantly between segments, as illustrated in table 15. germany and italy together account for 40% of total eu furniture production. the rate increases up to 50% for kitchen furniture and up to 45% for office furniture. on the other hand, the share of these countries is reduced to 32% in the upholstered furniture segment (poland first, followed by germany and italy) and 27% for mattresses (eurostat). regarding the dynamics of imports, the main factors that stimulate imports are: frequent practices by manufacturers of delocalization and outsourcing strategies to allow companies to remain competitive. in a study conducted by csil, about 60% of western european companies said that some phases of their production processes are outsourced or prefer to buy components from third parties (www.csilmilano.com); the availability of raw materials in asia (rattan, bamboo, sugar cane, etc. for outdoor furniture) has led to a significant increase in imports of such raw materials; the penetration of furniture in the european market such as office furniture, is still low, although it has doubled in the last 10 years. china is the most important non-eu supplier in every furniture segment, but its relative weight compared to competitors varies, with the largest share in upholstered segment (accounting for more than 70% of eu imports from non-eu countries) and in the offices segment (66%). vietnam, the second supplier in terms of finished furniture items, is the second country at a certain distance, but its relative importance has increased in the office segment (eurostat). 4 as regards the materials used, most furniture products are made of wood or wood-based components (except mattresses). table 1. situation regarding the materials used in the manufacture of furniture in the european union (2017) materials used percentage of total furniture production wood / based on wood furniture 59% metal furniture 14% upholstered furniture (upholstered, mattresses) 15% furniture made of other materials (plastic, bamboo, rattan, glass, etc.) 12% total 100% source: eurostat the main factors affecting the competitiveness of furniture manufacturers at european level are: availability of raw materials and skilled labor, investment in machinery and equipment, investment in innovation and design. research methodology the research conducted and presented in this article is of a qualitative nature and aims at identifying the views and attitudes of major furniture manufacturers in europe on the current situation and trends of the european furniture market, including furniture accessories. the overall objective of the research is to create a clear picture of the profile of the european furniture consumer with the identification of the role of accessories in the ergonomics and design of furniture of all categories. the specific objectives of qualitative research are: identifying the views and attitudes of the furniture managers in the furniture industry in terms of the dynamics of consumer preferences; identifying the views and attitudes of the major furniture manufacturers on the importance of furniture accessories at the industry level. the qualitative research method chosen was the interview, and the qualitative research technique was the in-depth interview (brătucu and brătucu, 2016), thus wishing to know the opinions of the managers of the furniture companies. the process used in the research was semi-structured interviewing, and the interview guide was used as a tool. the sample comprised 25 managers of major furniture companies from representative countries on the specific market, fulfilling the necessary conditions to achieve the research goal and objectives, respectively having decision-making power at the strategic level. participation in the interview was conducted on a voluntary basis, using a selection questionnaire in the beginning of which the purpose and objectives of the research were presented. after receiving the approval from the 25 managers, the guide for the in-depth interview was implemented. the option for the qualitative research method through the interview derives from a series of previous researches carried out on the furniture market and whose results have been validated over time. thus, marcus knauf conducted a market study in which he analyzed the attitudes of german producers and consumers towards lightweight furniture and the use of light wood-based materials in furniture design using a multimodal technique based on the quantitative and qualitative methodologies used in social and economic research (knauf, 2015). the essential aspect of the research, which served as a benchmark in choosing the research method in this article and gave us confidence in the results, was interviewing german furniture sales representatives and studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 5 observing customers in specialized stores. research has proven to be an important aspect of our approach: customers consider quality, price and design as central elements in purchasing decisions, and the furniture's weight is in a secondary place. all these three elements (quality, price, design) are significantly outlined in the furniture products by accessories, namely feet, handles and the like, the perception of quality and design being strongly influenced by them. the production of furniture is also significantly influenced by technologies, and from this point of view there is a strong technological advance, a fact that is also found in the production of furniture accessories. research over the past 20 years shows that some european countries, although resembling in terms of technologies, differ greatly in organizing the market (germany and italy), in particular the size distribution and the organization of retail trade, these differences have an influence on the dynamics of production, prices and exports (florio et al1998), relevant issues, and now, even under the impact of globalization (herrigel, 2015). technological progress is strongly influenced by information and communication technologies, internet of things (iot) technologies being relevant for the furniture and accessories industry. thus, according to research carried out on the italian market, the behavior of manufacturers in the sme category is strongly influenced by the internet (balocco et al, 2008). other significant researches have been made in connection with the ergonomics of the furniture, and the accessories also have a significant, most often defining contribution (ismail et al, 2017). for the purpose of this research, we have in mind representative companies in the european furniture industry, with whom simausrom is doing business, being the supplier of more than 80% of the accessories these major producers use in their production. also, the selected sample includes a number of large distributors of furniture in europe, who buy furniture from major manufacturers as well as from smaller manufacturers. in the research, it was chosen for the guided sampling, using the quota method, which proved to be appropriate in several previous qualitative research (silverman, 2013). the main aspects considered in the sample constitution were, on the one hand, the size and structure of the sample, aspects considered relevant in the literature, even if the opinions of some authors did not excel in preciseness (golafshani, 2003; silverman, 2013) and on the other hand they had in view the complex concept of "power of information" (malterud, 2016), a concept considered by the authors of this research to be the most conducive to reaching the goal and objectives of research, because it covers multiple aspects in interdependence (the type of furniture, the materials from which the accessories are made, etc.). the topic of the interview was as follows: theme 1. the strengths, weaknesses, opportunities and threats existing on the european furniture market; theme 2. producers' views on the place of furniture accessories within the value chain and the extent to which accessories are among the factors affecting the competitiveness of european furniture manufacturing and distribution companies; theme 3. the opinion of managers in the field on the importance of accessories in the purchasing decision; theme 4. the specific importance of the presence of furniture accessories in promotional messages. the obtained answers were recorded and then stored in electronic files. subsequently, these files were transcribed, the information being processed by the technique known as content analysis. 6 results and discussions after the transcription, centralization and processing of the data obtained, the vertical and horizontal analysis was carried out, resulting in the following aspects: theme 1. strengths, weaknesses, opportunities and threats on the european furniture market. the views expressed by the interviewed managers were grouped according to similarity for each highlighted issue in order to finally make a swot analysis on the furniture market in the eu, which would express the views of the major producers and major traders in europe. thus, the interviewed producers consider that the main strengths are: the presence in the european market of all sections of the furniture production value chain. furniture manufacturers in the eu have a wide variety of inputs, from materials to accessories, a wide network of companies and qualified personnel in all fields of specialization, which gives manufacturers a good ability to adapt to requirements, diffusion and personalization of products. high quality raw materials, materials and accessories. the main elements that, in the opinion of interviewed managers, provide additional value in the specific market are wood, leather, metal accessories and finishes. advanced european technology and know-how. the views of all managers converge towards the idea of technology associated with productivity and quality. this observation is valid for materials (leather, wood, fabrics, finishes) and for accessories that are distinctly highlighted and where the requirements are geared to a great variety of materials and shapes / designs. all managers believe that european furniture design is currently unmatched worldwide. existence of other values beyond the price. furniture production has a great tradition in europe. according to managers, furniture production, associated with other european cultural heritage, gives european manufacturers a great capacity to incorporate innovation into manufactured products, constantly seeking different styles and fostering the development of skills in the field of creativity, skills that are recognized worldwide. existence of advanced research centers and design schools. european materials and design research are considered as a global opinion maker. most surveyed producers believe that europe continues to have key competences in product design, research and innovation, aspects that help them grow within the value chain, increasing their contribution to added value. the european market is of considerable size. the furniture market in europe is mature and extremely dynamic. managers appreciate that european furniture production covers between 25 and 28% of world requirements, demonstrating its strength and competitiveness. cooperation and interaction within clusters. furniture manufacturers surveyed believe that the existence of clusters in the field is beneficial as it makes possible cooperation and interaction across the value chain, with synergic effects being visible at the level of innovation, design and diversification. the main weaknesses in the european furniture industry and furniture market highlighted in the interviews are: the high cost of labor. the furniture sector requires intensive and dedicated work throughout the entire production chain, both in the production of the necessary materials and accessories, in which the incidence of these costs in the production of furniture is relatively high. it has thus become european furniture production to compete in those markets where labor is (still) cheaper. labor is aging. manufacturers believe this is a weak point that worries them, all the more so as it is seen in the "upstream" of material and accessories studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 7 manufacturers. the problem becomes even more important than that. in their view, there is a lack of ability to bring young workforce into the field and to create effective training facilities. demand still has weak determinants. the residential real estate sector has not yet recovered after the shock caused by the crisis, and those who are currently building practice low prices. in addition, the population tended to spend less on furniture in the last 10 years. protectionist measures in other markets. while the european furniture market is the most open global market, there are protectionist measures in other markets that generate significant distortions in exports. opportunities identified in interviews with major eu furniture manufacturers and distributors are: new markets. gulf, china and russia have become attractive markets, the number of buyers in the "peak" segment is steadily increasing, and local and foreign competition on these markets is still weak. furniture manufacturers appreciate that potential buyers in those markets will spend more on their furniture than europeans. changing consumption patterns. in the opinion of manufacturing and marketing companies, consumer patterns are changing, with tendency towards functionality and adaptability to space, to the detriment of sustainability. in terms of accessories, managers are announcing the trend towards matt metal or classic "patina" (rust, wrought iron, bent metal, painted, etc.), somewhat decreasing the intersection for glossy stainless steel or plastic. manufacturers believe that changing consumer patterns is an option, given their ability to adapt to new requirements through technology, staff and know-how, and traders through capabilities to interact with customers through their deployed crm programs. exploitation of comparative advantages: competition through quality. the integration of the western european production system with the central and eastern european production system can lead to increasing the competitiveness of products on the domestic and export markets. in the case of furniture accessories, the major manufacturers buy them almost exclusively from firms in central and eastern europe, simausrom finds nominated by all 15 producers surveyed. the threats mentioned in the interviews are: strong competition from asian countries. imports from asian countries are on the rise, with an important share being focused on the segment of average or small buyers. costs and availability of materials and accessories. fluctuations in raw material prices and availability, including accessories, are seen as threats by furniture manufacturers, whose negative impact is felt at their level. insufficient protection of the intellectual property right. the furniture industry proposes products with rising intangible content, which is mainly found in the brand and design. mobile furniture manufacturers and traders consider that these elements ensure their competitiveness as they are well protected, which is not the case at present when the specialized institutions formalized these issues very much. evolution of retail markets. many retailers have invested important amounts for network development, their dominant option being to products that target "medium" and "economic" segments. increased quality of non-european products. this is considered a threat, but it is found that products coming from outside europe have a growing quality, proof of the technological development of the industry in the exporting 8 countries, associated with relatively low prices. this aspect is noticeable both in materials and accessories. as can be seen, the importance and role that manufacturers and traders attach to accessories as parts of furniture is growing, context in which the next topic of the interview continued to discover how competitiveness affects accessories. theme 2. views on the place of furniture accessories within the value chain and the extent to which accessories are among the factors affecting the competitiveness of european furniture manufacturing and distribution companies. producers and traders surveyed consider that furniture accessories are among the essential elements of competitiveness, which results from several aspects. their weight in the total cost of furniture pieces ranges from 7 to 18%, depending on the type of material, design, level or degree of machining and others. the share of furniture making materials, as described by the respondents, is shown in figure 1. figure 1. importance of the elements that make up the pieces of furniture from the perspective of the manufacturers the main factors that manufacturers and traders consider to be interfering with the analysis of competitiveness in furniture production from the perspective of accessories are: the extent to which costs with the necessary accessories affect profitability; the availability of accessories to specialized manufacturers; the cost and availability of "upstream" specialized workforce at the manufacturers of accessories; investments in machinery and equipment at producer level; r & d, innovation and design at producer level; r & d policies, intellectual and industrial property rights, sustainability, etc.); price trends in the market. leather 3% textiles 7% plastic 9% metal accessories 16% marble/stone 1% glass 2% wood, chipboard, mdf 26% lipici/adezivi 2% rubber 2% components (thread, strings, decorations, embroidered patterns, etc.) 17% other unidentified components 15% studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 9 the place of furniture accessories is shown in figure 2 and is the result of the views of manfacturers and retailers. figure 2. place of accessories in the value chain in the furniture industry it turns out that accessories are an important factor for competitiveness, both in terms of costs and the importance of managing the product portfolio. theme 3. the opinion of managers in the field on the importance of accessories in the purchasing decision. furniture manufacturers and retailers believe that most customers choose the furniture according to the quality of the materials they associate or correlate with each other with the quality of the accessories and the mechanisms that give it ergonomics and functionality. as can be seen from the swot analysis above, buyers are increasingly expressing wishes that metallic elements and mechanisms that ensure functionality are from a particular material painted in a certain color, etc. theme 4. the specific importance of the presence of furniture accessories in promotional messages. producer and trader's views converge to the idea that mentioning an enhancement aspect in promotional messages is an important element for good product and brand positioning on the market. ten of the manufacturers and ten traders appreciate that accessories and mechanisms must be components of the psychological axis as they generate the idea of functionality and stability of the furniture, especially when it comes to armchairs, swings, tables, deck chairs and beds. also, in the case of bathroom and hall furniture, the accessories are of particular importance and they also have ornamental features. timber solid wood panels finished wooden panels wood components production of furniture accessories chemical products textile and leather products 10 from the qualitative research carried out through the in-depth interview at the level of some major european furniture manufacturers and traders, we can deduce the quantitative research that will succeed. thus, we conclude that the main assumptions that will be confirmed or denied by the future quantitative research are: h1. consumers differentiate the furniture produced in europe through quality elements of materials, accessories and design; h2. european consumers are increasingly aware of the importance of technology and know-how in furniture manufacturing; h3. european consumers prefer to address specialized retail shops rather than directly to furniture manufacturers; h4. non-european furniture is increasingly preferred by buyers on the eu market due to the progress made in quality and design; h5. european buyers view accessories as essential elements in the decision to choose and buy furniture; h6. european buyers use the brand as a risk mitigation method before buying; h7. european buyers increasingly prefer the metallic accessories that are related to the natural environment (rust-like, metal-like, made of metal or blasted metal) instead of glossy metals; h8. the presence in the promotional messages for furniture of information and images containing accessories is in line with customer expectations these hypotheses resulting from qualitative research will be taken into account in the design of a future quantitative research, to be validated or invalidated. conclusions all aspects presented in the above summary underline the role and importance of accessories in furniture products, product management, on the one hand, and purchasing decisions, on the other hand, according to the views expressed by largescale manufacturers and traders at european level. thus, among the main strengths they have mentioned in relation to the production and sale of furniture, they refer to the high quality and aesthetics of european products due to r & d activities, manufacturing technologies and the professionalism of manufacturers. the weaknesses identified by manufacturers and traders are the high labor cost, which is relatively aging, the weak determinants of demand and the inadequate protection of intellectual and industrial property rights. opportunities identified and presented by the respondents are the existence of new markets, the changing of the consumption patterns and the possibility of adapting the european producers and traders to the new requirements, as well as the real possibility for the producers to exploit the r & d technologies and resources in order to increase their competitiveness by quality. the main threats mentioned are: strong asian competition, the costs and availability of materials and accessories, insufficient protection of intellectual property rights, the evolution of retail markets to weak purchasing power segments and the increase in the quality of non-european products. the interviewed producers and traders consider furniture accessories to be among the key elements of competitiveness. by invoking production management, it is estimated that the share of accessories in the total cost of furniture is in the range of 7-18%, depending on the type of material, design and level or degree of machining. manufacturers and traders believe buyers in the european furniture market are increasingly expressing wishes that metallic elements and mechanisms that ensure functionality are from a certain material, painted in a certain color, etc., unlike previous periods when the problem accessories were at a very low level in the customer's concerns. studies and scientific researches. economics edition, online first, 2019 http://sceco.ub.ro 11 producer and trader's views converge to the idea that the mention of promotional messages on an accessory item is an important element for a good product and brand positioning on the market as it generates the idea of functionality and stability of the furniture and in the case of bathroom furniture and the hallway, the accessories also have an ornamental role associated with the design. considering all the aspects presented above, we believe that the qualitative research achieved has reached its goal and becomes a very good precursor for the quantitative research to be carried out in a specialized market, namely that of furniture accessories at european level. references “the eu furniture market 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(2002). tomorrow’s of fice through today’s eyes: effects of office innovation in the working environment. journal of corporate real estate, 4,pp. 48–65. www.csilmilano.com www.erostat.com www.eurostat.com http://www.mckinsey.com/mgi http://www.csilmilano.com/ http://www.erostat.com/ http://www.eurostat.com/ the risk in management, derivation from interaction between the micro and the macro-economics 17 the risk in management, derivation from interaction betwen the micro and the macro-economics ciocea costel, ec.phd, s. i. f. moldova turcu ovidiu-leonard, professor phd university of bacău abstract : the managerial activity becomes more and more complex, together with the development of the markets on both national and international levels. the manager is subject to information pressure that come from the micro and macro-economics field and the way in which they succeed in being smoothly merged by the managerial team is proof of the activity development of the companies. the present crisis, which has its roots in a financiar crisis, has grown rapidly and transformed into a general economic crisis. the hereby study comprises these aspects and tries in an almost general manner to offer to the managerial activities an adequate support. the thoughts of the neo-classics on the phrase „bussiness risk” has known rapid, consequent and consistent approaches, so that today we cannot regard the risk phenomenon but rationally, systematically inter-dependent, exhaustive and continuous. the rational approach is itself achieved in the context of using new and detailed information that are globally extended and developed, by means of intuition and prediction. in the context of the globalization of economy, the risk at macroeconomics level, with acceleration in types of macro-society risks interacts organically with the micro-economic risks at the level of effects measurement in the triade companyconsumer environment. if at microeconomics level the consumer’s behaviour seems to be the starting point of in identifying the risks, thanks to the marketing research, at macro economics level the decisive aspects seem harder to shape and have a higher reaction type. once started they overlay most often with beginning of the crisis, either economical, or financial, social and the risk factors appear with different intensities in the developments with multiple combinations and final effects, of the most impredictable ones. the world banking system, which ensures the flow and functioning of all other co-existing world sub-systems by means of money represents a marking point in the evaluation of risks at macro-economic level and of the regional crisis. if not before long the banks were accused that they were financing only the ones with financiar power (trans-national companies, investments funds, project between states), in the last decade the northamerican finances considered as opportunity: real estate finances, with stress on the houses for the people less advantged. in 1977 was issue a law entitled ,,comunity reinvestment,, law that practically forced the banks and savings banks loan the disadvantaged communities this law being roughened on time and then let loose. from this moment on the banks that served the poor neighbourhoods had to choose between dropping off on development or giving highly risky loans, loans that could not support installments of the corresponding to the assumed risk. the banks did not escape the trap when the big constructers and financiar handlers have succeeded to announce accesible houses in a large number. these projects had to be financed in large quantities by mortgages of poor quality. (houses that were accesible subprime). by encouragement from the legislative these debentures for mortgage on market were supposed to be covered, by keeping a part and re-selling under another name by the m.b.s. (mortgage baked securities), meaning „packages” that re-organized hundreds of primary claims whose reimbursement was guaranteeed by the state. being geographically variuos, these m.b.s. seemes thus less risky, as they gave the illusion that studies and scientific researches edition: economics, no. 13 (2008) the risk in management, derivation from interaction between the micro and the macro-economics 18 they were 100% secure. the inflation met the requirements of the real estate buyers, but not of the new buyers because the costs with mortgage were causing more and more problems. finally appeared the real estate loans without payment in advance and with very low interest, at first which were to grow eventually. when the monetary policy interest grew, the real estate sector became the main element of triggering a huge financiar crisis. the decline of the real estate funds value also triggered the collapse of the deriving financiar products; the massive issuence of „subprime” mortgage debentures destined to the disadvanteged communities being the essential element of the financiar crisis. in particular, the local financiar area, the state deeds, instruments by which the state was borrowing in behalf of the tax payers, that is in the accounts of the installements flowed in by taxes and assesments; they tend to exceed those of the deposits from the commercial banks. additionally the authorities granted fiscal facilities, of which the banking instruments of saving do not beneficiate. these instruments can be issued on short, medium and long term. state dees on short term are certified by the treasure house with discount, with deadline of up to one year (six months and one year). the discount ceritifcates are state deeds without interest coupon which can be bought by an invester at a lower price than the nominal value and on deadline he will cash in the nominal value. the state deeds on medium and long term, of benchmark type (fiducial) are state bounds with the deadline of over an year (three, five or ten years), sold on nominal value, with discount or bonus for which the issuer pays annualy with interest. in this context the local financiar markets, either primarely or secondary, have the same purpose – diminishing pressure on liquidity. the buy offers on the primary market can be deposited only by means of a bank which stands for the main dealer, the banks which have this quality can participate at state deed auctions, both in their own name, as well as in the name of its clients. the buying at state deeds auctions are competitive, that is the issuer indicates besides the value he/she wishes to knock down also the minimum installement of the interest he/she is willing to accept. in the case of such an offer the investor auctions independently of the main dealer by who he places the offer – can also be performed non-competitive buying offers, by which the invester indicates only the value he/she wishes to knock down. the secondary markets represent multilateral systems that facilitate freely the meeting between demand and offer of sellers and buyers of state deeds. the main secondary market is administrated by the national bank, on which they can deal state deeds on short, medium and long term, by using the services of authorized middlemen: main dealers, credit institutions, companies providing financiar investment services. the need for liquidity is affected also by the psychological impulses of the players (small or big) on the financiar market, of knowing their banking placements quaranteed – problem with which were also confronted the advanced savings g7, at the recent negotiations. in other words the population’s deposits in banks are quaranteed by a quarantee fund. on the inter-banking market does not exist such an entity. in order to form on the banking market also such a form of quarantee should theoretically take place at first moratorium and bankruptcy procedures at all banks – to be hypothetically admit that the entire system is bankrupt. on the european continent the european central bank (e.c.b.) made known the fact that the states are ready to interfere in the shareholding, by making available special credit lines or by buying from them, with the help of the treasure house, packages of „toxic” mortgage bounds. the latter is the solution propsed by the paulson plan, which was initially rejected by the north-american legislative. h. paulson, as the european governments, chose to nationalize the banks, with the faith that this way they could prevent new banking bankruptcy and at the same time to restore the banking and financial sector before that the real sector of world economy to be affected by the diminishing of the credit and that the world economy to confront itself with a long lasting recession. the advantages studies and scientific researches edition: economics, no. 13 (2008) the risk in management, derivation from interaction between the micro and the macro-economics studies and scientific researches edition: economics, no. 13 (2008) 19 of the national economy lay in the fact that our „rudimentary” banking system surprisingly represents a strenght point in these moments because it keeps us away from the crisis because of the ground offer, which lacks in sofistication. in the condition of real estate prices drop and in the situation in which these are quarantees for the approved mortgage credits te romanian banks will face losses. these considerents of inter conditioning of the romanian financial situation and the european and american is underlined also by standard and poor‘s who supported, previously the rise of the world financiar crsis, the revising decision in a negative sens of the rating perspective of the european states with the emerging economies. in the general context enlarging the money quantity without backup holds only one name: inflation and the financing alternative by means of external loans in the case of the romanian economy comes in a difficult context for issuing bounds on the international market of capital. the financiar crisis, which is on a growing trend, creates the premises of a possible economic crisis, if a joint effort of guiding firstly the budgetary sources towards the population and not for consumption is not performed, in parallel with the approach of a carefull policy for granting credits. in the context of liquidity lack economically, we find ourselves in the position of noticing that at the microeconomic level, in some sectors of activity where the competition is very close, there can occur bankruptcy: the construction sector, commerce (supermarket and hypermarket visa-vis the small merchandizers), real estate agents, malls. in these sectors there occurs a supplimentary block: import dependency, which finds itself face off with the depreciation of the leu which will eventually lead to financiar losses. fortunately, because we can use this term at a certain level, int he local economy there was never so much „leverage” (acquisition from more financing sources) and the need for liquidity of the romanian companies is not so big. the comparative analysis of the interaction between micro-macro-economics versus risk (regarded as phenomenon) has shown once again that in the area of micro-economics factors of turbulance are extremly different (from the crisis of the real estate credits to the super-production crisis – previous crises) and their combined development draws in cascade global effects hard to predict and to subject to prediction a priori. administrating the risks in bussiness at a micro-economic level implies an exhaustive analysis in what the information at all micro and macro-economic levels are concerned, analysis which must be continuous, trustworthy, purposeful and segmented in every domain itself. microsoft word apostoaie constantin marius_eng.doc the economic role of tourism and the dimension of the touristic phenomenon on a national and global scale florin lucian isac, ,,aurel vlaicu” university of arad, romania radu cureteanu, ,,aurel vlaicu” university of arad, romania sergiu rusu, ,,aurel vlaicu” university of arad, romania abstract nowadays tourism represents a quite distinct field of human activity, a component of highest importance of the economic and social life for an ever larger number of countries on the globe. tourism evolves constantly due to the changes occurring in contemporary civilization, its dynamics integrating in the general process of development. keywords tourism, tourism industry, tourism destination jel codes: l 83, e 61 tourism plays a very important part in economy by its outstanding contribution to the diminishing of the rate of unemployment. the complexity of the tourist industry, the variety of the preferences and tastes of the touristic consumers, the necessity of personalizing and individualizing vacations, the reduced possibility of automating and mechanizing the operations turns the touristic field into a large labor force consumer. on the other hand, the numberless growth of persons undertaking trips, the extension of the travel distances, of the time afforded to holidays implicitly brings about the enlarging of those implied in the process of carrying out services to tourists. world travel and tourism council counted on 192 million people directly involved in the tourism business, that is 8% of the entire world labor force being employed in tourism on a global scale, that means that 1 of 12 persons is active in tourism. as to 2005, the same bodies estimated the doubling in growth of tourism implied workers, reaching the amount of about 338 million people, thus turning tourism into the most extensive industry in the world. why not to travel? reasons: some people refuse to undertake a trip from various reasons. some of the most common ones are: “i cannot afford” or “i do not have time enough”. however, more often these motifs are but ungrounded excuses uttered with a view of hiding the real questions a traveler might encounter: fear of the unknown, fear for flying by plane, lack of trusting a country whose language is unknown to him [davidoff p.g., davidoff d.s., sales and marketing for travel and tourism, national publishers, 1983, pag.33] i. niţă and c. niţă, undertaking a comparison with other fields of activity reveals the numberless advantages tourism offers: • the vat in tourism is by far higher than in other fields of activity, even because the import of raw materials in this area is insignificant; • this branch is not an intensive energy consumer; studies and scientific researches economic edition, no. 15, 2010 449 • it allows the turning of several materials and human resources into foreign currency that cannot be exploited otherwise; • it uses national raw materials on a large scale; • the return course in tourism is favorable as comparable to other branches, as it is viewed as an invisible export, the price of the touristic products being no longer charged with packing expenses, customs taxes, insurances; • tourism involves directly and indirectly important consumptions of industrial products; • tourism assures the balanced development of all the zones in a country. the main difference between tourism and other forms of recreation [mak j., tourism and the economy, university of hawai’i press, 2004, pag.5] consists of the fact that the consumers need traveling in order to consume tourism. recreation does not always imply traveling. playing tennis or attending a theatre show are recreation activities, however the distance to reach the performance places is minimal. such a person does not leave home for a long period of time. but, traveling implies the way from home to temporarily use another residence in a quite different location. the outstanding importance of tourism within the national economy resides in its nature of being an economic branch of interface and synthesis due to the diversity of the branches incorporated in the content of the tourism industry services. the links between tourism and the other economic branches are complex and extensive, taking different forms, manifesting directly or indirectly, periodically or permanent, on the horizontal or vertical plan. for instance, the unfolding of the tourist activity require inputs from other economic branches: food processing industry, agriculture, constructions industry, energetics, machine building industry. the direct links refer to telecommunications, transportation, art and culture. this is what reveals the important position in the structure of the economic mechanism and its active role in human society’s economic development and modernization. contemporary tourism proves to be a vast industry in full and rapid extension, while the main reasons of this explosion are given by the specific phenomena of the end of the 20-th century: the growth of people’s welfare, the ample demographic changes, the additional time afforded to travels, the rising mobility of the people, the development of the transport means, the up-to-date technology applied on all levels and, last but not least, the maturation of the tourist industry. [bosselman f., peterson c., mccarthy c., managing tourism growth, issues and applications, island press, 1999, pag. 1] there took place great changes of the touristic products and their mass consumption. thus, we may identify four distinct steps [williams a., shaw g., tourism & economic development, european experiences, john wiley & sons ltd., 1998, pag. 3], each of them being characterized by various forms of transport or substance of the social access to tourism: 1. on a first stage, tourism was socially forced ,tourists coming especially from rich zones of northern europe to italy or greece, constituting a period anterior to the development of railroad transport; 2. on a second stage, beginning with the 19-th century, the middle class from rich countries undertook romantic travels to non-industrial europe, so that the area of the mediteranean sea become the most appreciated world vacation area; 3. on a third stage, there emerged the modern mass tourism; 4. on a fourth stage: the green tourism that revitalized the non-industrialized zones from the north and centre of europe organized tourism stretched as soon as tourism manifested as a mass phenomenon. [isac f., rusu s., management în turism, editura mirton, timişoara, 2007, pag. 35] the economic development from the whole world, corresponding to the total or partial elimination of the commercial barriers, the extension and globalization of world economy, contributed to the creation of more favorable conditions to both the international and national tourism, conditions which were influenced even by the approach to the touristic circuit of new zones, as well as by the embettering of life quality. tourism is an important income source for studies and scientific researches economic edition, no. 15, 2010 450 towns, zones or countries. [kaser k., freeman j., hospitality marketing, southwestern/thomson learning, 2002, pag. 42] the touristic system is composed of four integrated parts: [lumdson l., tourism marketing, international thomson business press, 1997, pag. 9.] • the marketreferring to the necessity of making acquaintance with consumer’s behavior manifested under social and cultural restrictions; • the travel – referring especially to travel segments, visitor flux and their features • the destination – based upon touristic attractions, but also upon sales policies applied in the zone • marketing – implying marketing planning and the use of marketing tools the influence upon tourism is manifested from multiple and many-sided directions evolving under the incidence of numberless factors, quite different as to their role and nature. the factors of influence, like the economic growth, free time or geographic mutations affects somehow, in various proportions, the entire branch of tourism, turning the accurate observation of the influence of each individual factor quite difficult. the stages of the development of the touristic destinations: [laws e., tourism marketing, service and quality management perspectives, stanley thornes publishers ltd., 1991, pag. 134] • the pre-tourism : business and personal travels effects: minimal impact upon communities • the proper travelling: the ever rising frequency of independent tourists effects: business opportunities are recognized by undertakers; the local population becomes either hospitable or hostile to visitors • the mass tourism: tourist groups traveling regularly effects: natives’ occupations greatly depend on tourism and investments in it • the tourism management: recognition of tourism as areal industry effects: development of the infrastructure, planned growth, protection measures for the environment. bibliography: 1. bosselman f., peterson c., mccarthy c., managing tourism growth, issues and applications, island press, 1999, 2. davidoff p.g., davidoff d.s., sales and marketing for travel and tourism, national publishers, 1983, 3. isac f., rusu s., management în turism, ed. mirton, timişoara, 2007, 4. kaser k., freeman j., hospitality marketing, south-western/thomson learning, 2002, 5. lumdson l., tourism marketing, international thomson business press, 1997, 6. mak j., tourism and the economy, university of hawai’i press, 2004, 7. rusu s. isac. f., turism rural şi ecoturism, ed. universităţii “aurel vlaicu”, 2009, 8. williams a., shaw g., tourism & economic development, european experiences, john wiley & sons ltd., 1998. studies and scientific researches economic edition, no. 15, 2010 451 microsoft word apostoaie constantin marius_eng.doc how do we know when the change is optimal? lazăr latu, neamt prefecture, romania roxana latu , „al. i. cuza” university iasi, romania abstract the analysis of the external environment must not be limited to the identification of the external factors, but must also take into account their importance. the real management capacity consists of finding out their signification, of identifying exactly those factors which may have a special influence upon the organization. as a consequence of the fact that the external environment is dynamic, it is important to understand correctly the direction of the moment and the location of the change. keywords change, sigmoid curve, paradox, attitude jel codes: o 12 factors requiring the change nowadays, the change represents the core of the management experience and practice. any organization exists and functions within an environment which has an influence on the shape, determines its structure, offers it opportunities and threatens it. among these factors, the most important are the clients and the competence; without effectively knowing it, it is not likely for an organization to survive, or to thrive. with all their importance, clients and competence do not form the entire external environment, as there are many other factors, beyond the organization’s control, which may have significant effects on its performances and perspectives. the analysis of the external environment must not be limited to the identification of the external factors, but must also take into account their importance. the real management capacity consists of finding out their signification, of identifying exactly those factors which may have a special influence upon the organization. as a consequence of the fact that the external environment is dynamic, it is important to understand correctly the direction of the moment and the location of the change. accepting the change, working in an environment which is in a continuous change, analysing the change and actively getting into this change had ceased to be occasional management features, becoming fundamental requirements of the function. paradoxically, but true, the person upon whom you have maximum control is yourself, and the person whom you change very hard is also yourself. the transformation may start only when something ends and something new takes its place. for this thing to happen we must give up the old, even if we do not have any guarantee for what the new will bring. the solution for the transformation of the negative aspects of this change into positive ones, is the capacity of the manager to foresee the resistance and to analyse the reasons for which people and teams oppose to this change. so far we have defined the external factors imposing the change and we have assessed the internal organizational capacity. but even you yourself are one of the most important studies and scientific researches economic edition, no. 15, 2010 384 connections for this change. your attitudes, your enthusiasm, your willingness to allow your employees’ reactions influence the change while this becomes reality, your availability to change yourself. whether we have to deal with a re-organization, an acquisition, a re-technology or a removal of the company, the key factor of a successful transformation will be ourselves and our attitude. to the question whether the change is a good or a bad thing, the answer should be “depends on…”. depends on the reasons of this change, on the fact that the benefits of this change do or do not exceed the costs. so, which are the reasons for which some people talk about a change with enthusiasm, while others see it as a threat. these attitudes seem to depend on the position one has; if you are the one initiating the change or if you are at the other end, of those standing for its consequences. whether we like it or not, the change is part of our life. the organizations are never static, they always suffer one change or another. the common feature is when something changesaccidentally or as a consequence of a plan or of some decisions of the members of an organization-the change always has consequences which may be positively accepted, rejected or ignored by different persons within the organization, and their reactions do have other implications. sigmoid curvethe way through paradoxes if you think you know the way to the future since it is only a continuation of the one reached so far, you might as well get to another place. the sigmoid curve (fig. nr. 1) is an s-type curve, which has been a problem since ancient times. fig nr. 1 the sigmoid curve; source: handy c. –the empty raincoalt, codecs, bucharest, 2007 the sigmoid curve is the story of life itself. we go on life easily, experimenting, making errors, we grow up as we grow up, and then we start from the beginning. it represents the life cycle of each product, of the cycle it grows up in, and where many organizations go down, describing even the evolution of love and relationships. fortunately, life is more than this curve (if life would mean only this, it would be kind of depressing, since every discussion about it would only be the exact place we sit at that moment on the curve, and what measuring unit the time axle has) the secret for a continuous development is to launch on a new sigmoid curve before the first one ends. the best starting point for a new curve is point a (fig. nr. 2), where there is still studies and scientific researches economic edition, no. 15, 2010 385 enough time and enough resources and energy to go to a new curve in the initial phase of exploration and failures, before the first curve starts from the beginning. fig. nr. 2. point a of sigmoid curve. source.. handy c. –the empty raincoalt, codecs., bucharest, 2007 for an obvious thing-this has to be done, just that, at point a, all the messages an individual or an organization receive tell them “everything goes on perfectly” and it would be a stupid thing to change anything, as long as the current prescription has so good results. but what we do know about the change, whether it is personal or organizational, tells us that that the real dynamism for the change starts taking place only when reaching point b (fig. nr. 3) a curve and we look at the disaster. fig. nr. 3. point b of sigmoid curve. source handy c. – the empty raincoalt, codecs ed., bucharest, 2007 but once this point is reached, we need a great effort to extract from that situation and reach the top, where you should be on the second curve. when things go wrong, the leaders of the organization reach to that point being compromised, since they took it down, where the resources and energies decreased. for the individual, an event such as the reserve, usually takes place when this is on point b. it is difficult for it, at that point, to mobilize the resources or to remake the credibility had on top of the curve. therefore, we must not be surprised either that people get to be depressed at this point or that any organization postponing launching of the change process till point b brings new people at the management. only people coming from outside, have, in this case, the credibility and the fresh vision they need for leading the organization back to the top of the second curve. studies and scientific researches economic edition, no. 15, 2010 386 wise are those who start to the second curve from the very point a, as from there begins the way through paradox, the way towards building a new future, without giving up the present. but even so, the problem does not end here. the second curve, either it is for a product, a new method of operation, a new strategy or a new culture, will certainly be very different from the old one. and that’s the way it should be. and people themselves must be different. those drawing the second curve must not be the same to those drawing the first curve. first of all, because the initial leaders must continue having the responsibility for the maintenance of the first curve for a proper time, in order to sustain the first difficult stages of the second curve. second of all, these people would find difficult, in their hearts, to give up an action class while it seems to go that well, even if, theoretically speaking, they admit they need a new curve. therefore, for a while, within an organization, there must coexist new ideas and new people with old ideas and old people, until the second curve is already settled and the first one starts growing dim. the marked area under the maximum of the first curve therefore represents a period of great confusions. there are two or many groups of people and 2 sets of ideas in mutual competition for the future. no matter how wise and well-wisher they are, the leaders of the first curve are restless regarding their future when the curve starts going down. they need a great ability to foresee in order to sustain the others and at the same time to plan their own leaving or their own end. those who can yet do that, finally manage to ensure the rebirth and the continuous growth of their organization. we cannot say it is easy, not even for those extremely cautious, if we read the story below. the president of a great company talked to his “employees/knights”: “i have two messages for you today. first of all, i would like to remind you that we have a big company, very successful, having maybe the greatest success it has ever had. second of all, if we want to continue gaining success, we must radically change this way of working”. he continued explaining people why he considers that the different future he expects will require different answers, but nobody was listening to him anymore. in their opinion, if there was such a success, it was a stupid thing to change anything. but the president was right, they were at point a back then, and looked over the hill, but he did not manage to convince them and implement the required changes. three years later, already at point b, the company understood they need to change, but the first person who was attacked and fired was the president himself. he had lost his credibility, and not even the fact that he had been right from the very beginning made him loved among his colleagues. what is valid for the organization is also valid for the individual and his relationships. a good life is probably a sequence of “the second curve”, each of them started before the first one going down for good. life and priorities change while the individual grows up and becomes old. every relationship needs the second curve sometimes. if within a couple’s relationship, it is the same story. when they realize they need the second curve, they are already at point b. it is too late to do something together, and so, each partner finds a new partner. that is why it is better to say, as a joke, that you are at the second marriage, but with the same partner, because it is cheaper, because we managed to discover the second curve, very different, and applied it together. we cannot say that the drawn period was not difficult, because we fought to keep the old in our past, and, at the same time, experiment new things. the discipline of the second curve the concept of the sigmoid curve helped many people and organizations understand the confusions they are in, at the moment. and still, the question we must all ask ourselves is: studies and scientific researches economic edition, no. 15, 2010 387 „how can we know where we are on the first curve?” a way of answering this question is by making a personal assessment, of the position within the organization, draw the curve as we see it and mark an x on the place we are right now. once the perception about their own curve is discovered, people agree they are way too far along it than they would have admitted previously. they are all much closer to point b than to point a. we will certainly know where we are on the curve only when looking back, as it is much easier to see where the others are, than where we are. we must guess, there is no science for such things. the discipline of the second curve requires us to always suppose that we are around the top of the first one, at point a, and therefore, we must start to prepare for the second curve. the organizations must start from the idea that their current strategies must be replaced within no more than 2 or 3 years and that the life cycle of their products is much shorter than before. the discipline of the second curve will have its favourable effect, will force people question about their own ideas, about those standing at the base of the first curve, and ask themselves some real questions. it keeps us sceptical, inquisitive, inventive-fundamental attitudes during the period of change-and it is the best way of facing the contradictions accompanying these times. the discipline of the second curve follows the traditional cycle in 4 stages of the discovery. the process starts with questions. then the questions lead to ideas, possibilities and assumptions. the best of them are then tested theoretically and in practice. the results of these experiments are reviewed. the first two phases are made up only of time and imagination. the discipline requires us not to recreate the same life, as we would only continue the first curve. the second is always different, though it is based on the first one, and grows up of it. in order to go on, we need the so called “ curvilinear logics”, according to which the entire world and all the things in it are really represented by sigmoid curves, and so every thing has pros and cons, ups and downs, and nothing lasts forever. example: the production principle just –in –time (deliver the goods just in time), has its origin in japan, being then copied all over the world. the idea of a permanent flow of delivery to the factory, when and if you need it, it is so obvious, if you think about it. you do not need warehouses and storage costs. unfortunately, the idea has become too popular. we found out that now the traffic around tokio is almost all the time crowded because of the trucks, and this makes the goods get to the destination “just too late” instead of “just in time”. the costs for being stuck in traffic are way over the old storage costs, not to mention the negative effect of the exhaust gases on the environment. nothing that is “too much” is good, even if we are talking in theory. the curvilinear logic strikes without mercy. in a world in continuous change, there is no perfect answer, we must be in a continuous search. references 1. burdus, e., şi colab.( 2003), managementul schimbării, ed. economică, bucureşti 2. clarke, l. (2002), managementul schimbării, ed. teora, bucureşti 3. handy, c. (2007), pelerina goală, ed. codecs, bucureşti 4. hay, j. (2006),codecs ed., bucureşti, 5. latu, l., botez, d.( 2008), provocarea sau necesitatea de a ne schimba, bucureşti. 6. rusu, c. (2003), mangementul schimbării, ed. economică, bucureşti studies and scientific researches economic edition, no. 15, 2010 388 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro overview about project quality management catalin drob “vasile alecsandri” university of bacau catad@ub abstract the purpose of this study is to emphasize the main aspects regarding project quality management. this study tries to present in the comparative manner, different approaches of the main guidelines, international standards and methodologies regarding project quality management (the pmbok ® guide elaborated by the project management institute, the prince method elaborated by the british office of government commerce etc.). the pmbok® guide describes three elements (processes) of quality management: quality planning (plan quality management), quality assurance (perform quality assurance) and quality control (control quality). the pmbok approach regarding project quality management is that quality management must lead to achieving and validating project requirements. according the prince method the quality is one of the six variables involved in any project. the prince approach regarding project quality management considers that strategy in this field must lead to achieving just the level of quality needed to achieve in the project and not to ensuring the best quality. keywords project management; quality; processes; standards jel classification m10 1. introduction the concept regarding project quality management is relative new. in recent years there have been published various standards and methodologies relating to project management, in general, and relating to project quality management, in particular, such as: the pmbok® guide, the prince methodology, the p2m guidebook, the iso standards and so on. this study tries to present the different approaches of these international standards and methodologies regarding project quality management. 2. defining quality the first thing that must be made when we discus about project quality management is to define the quality. quality is an abstract concept, not very easy to define. in fact, the consumer is the one who defines quality because he is the one who receives it. when all needs are met and when all expectations are met or exceeded, we consider that we received quality. the specialized literature proposes several definitions of the concept of quality, such as the following: quality represents the conformance to requirements, as stated by crosby (1979); quality means fitness for use, as stated by juran and godfrey (1999); good quality means a predictable degree of uniformity and dependability with a quality standard suited to the customer as stated by deming (2000); 231 drob quality represents the degree to which a set of inherent characteristics fulfill requirements as stated by iso 9000 (2005). in the last 30 years, in the field of quality/quality management has been occurred a revolution in the sense that quality no longer refers only to product or service but also to other aspects such as, for example: quality leadership, quality of project management and so on. this new approach has emerged and developed in response to the increasingly high standards imposed by the beneficiaries. 3. project quality management approaches 3.1 the pmbok guide approach regarding project quality management the project management institute has proposed a set of standards and practical guidance for project field, in a document known as the pmbok (project management body of knowledge) guide. the first official edition of this guide was published in 1996 and the last (the fifth) edition of this guide was published in 2012. this guide analyzes specific aspects regarding project quality management in the chapter no. 8. the pmbok® guide defines the quality in the similar way as is presented in the iso 9000 standard. in fact, the entire approach regarding project quality management is compatible with iso quality standards. this approach emphasizes the importance of the following aspects, as stated by pmi in the pmbok® guide (2012): customer satisfaction; prevention over inspection; continuous improvement; management responsibility; cost of quality. the pmbok® guide treated the project management based on project management processes. the project quality management includes, as stated by pmi in the pmbok® guide (2012), three processes: plan quality management, that identifies quality requirements and documents how the project will demonstrate compliance with quality requirements; perform quality assurance, that audits the quality requirements and the results from quality control measurements; control quality, that monitors and records the results of quality activities to assess performance and recommend necessary changes. for all these processes, the pmbok® guide presents the inputs used, the tools and techniques applied to these inputs and the outputs generated. the tools and techniques which can be used in the project quality management processes are diverse (such as: cause and effect diagrams, control charts, cost of quality, inspection etc.) and depend on type of deliverables that will be produced by every project. the pmbok® guide mentions that every project should have a quality management plan. it is very important to have such a plan but equally important is to respect and accomplish it. 232 overview about project quality management figure 1 plan quality management data flow diagram source: adapted by pmi (2012), pmbok® guide, fifth edition, newtown square, pa, usa, p. 229. 3.2 the prince2 approach regarding project quality management the prince method (methodologies) was adopted in the uk, in 1989, when the standard for uk government information systems projects named promptii has transformed in prince after it suffered several changes. later, after 1996 this method was replaced with prince2. this new method was subsequently updated in 2002, 2005 and in 2009. the 2009 edition of prince2 method is more pragmatic and more concise than the other editions. this edition of prince2 method contains two distinct parts: part i: managing successful projects, which is the big one; part ii: directing successful projects. generally, prince2 considers that the project management can be described through the following models: the process model and themes (subject area) model. for prince2 the quality is a very important variable that must be permanently monitored and controlled (stage by stage), as stated by graham (2010): project quality management control quality plan quality management perform quality assurance project documents project management plan validated changes work performance information change request verified deliverables project documents updates organizational process assets updates q ua lit y co nt ro l m ea su re m en ts q ua lit y m et ri cs q ua lit y m an ag em en t p la n quality metrics quality checklists pr oc es s im pr ov em en t p la n o rg an iz at io na l p ro ce ss as se ts work performance data approved change request deliverables stakeholders register risk register requirements documentation project documents updates project management plan updates enterprise environmental factors 233 drob figure 2 the six areas of control in prince2 source: adapted by graham, n. (2010), prince2 for dummies, west sussex, john wiley and sons ltd. publication, p. 24. for prince2 the quality is treated distinctively like a very central theme. the other main themes described in prince2 are: business case, organization, plans, risk, change and progress. the quality theme tries to find answers to following questions: what quality level must be reached? what must to do to reach the required level of quality? after it is defined the level of quality that must be reached is important to draw up a document named “quality management strategy” that defines the way in which will be reached the required level of quality. to be sure that will be reached the required level of quality the quality management strategy must be applied and accomplished. 3.3 the p2m’s approach regarding project quality management a few years ago (starting with the late 1990s), the engineering advancement association of japan has proposed a guide concerning project management, known under the name of p2m (a guidebook for project and program management for enterprise innovation). in present, this guide is managed by the project management association of japan (pmaj). in japan, in the last years, was developed a new approach in project management: kaikaku project management (kpm) which is considered an advanced version of p2m. p2m guide considered that a project is carried out within a framework of a program and not independently. p2m guide is structured in four parts: project management entry, project management, program management and domain/segment management. these parts form the so-called project management tower. in this guide, the aspects regarding quality management are presented in the fourth part called domain management. the domain/segment management contains the followings: the project strategy management, the project finance management, the project system management, the project organization management, the project objectives management and others (11 items in total). the project quality management is included in the project objectives management domain as a work process that forms the core of project management together with the life cycle management, the scope management, the cost management, the time management, the earned value management, the report/change management and the delivery management. the project quality management should be based on the customer's quality requirements. the quality management system should provide a framework of continuous improvement in order to increase or improving the satisfaction of the customers, as stated by pmaj (2005). cost time quality scope risk benefits 234 overview about project quality management figure 3 the project management tower source: adapted by pmaj (2005), a guidebook of project & program management for enterprise innovation, p. 11. 4. comparative analyses between different approaches of the main guidelines, international standards and methodologies regarding project quality management the first thing which is important to be mention is that we are talking about different kind of approach of the main guidelines, international standards and methodologies regarding project management. pmbok and prince2 are regarded as process orientated standards while p2m is regarded as mission orientated standard. while pmbok and prince2 are considered project management approaches of the second generation, p2m is considered project management approach of the last (third) generation. this new project management approach is more adaptable to flexible environmental changes and is more able to solve actual complex problems. p2m tries to create value not only for consumers but for all stakeholders of the project. the second thing: while the pmbok, p2m and iso standards are considered descriptive project management body of knowledge/guides the prince2 is considered a prescriptive project management methodology. the last but not the least thing: in every international standards regarding project management, the project quality management is considered one of the most important concepts/aspects analyzed, that should be applied when carrying out a project. 5. conclusions in the last years, (total) quality management was integrated in the project management, resulting a new concept: project quality management. this new concept is presented in a manner more or less detailed in the main international standards/methodologies regarding project management. in these standards the project quality management is considered one of the most important bodies of knowledge/domains management of project. even if the different approaches included in the main international standards regarding project management (project quality management) are not always very similar, the ultimate goal of applying this new concept is common: to meet or exceed the expectations of the consumers in the best way. entry management project management program management domain/segment management 235 drob references crosby, p.b. (1979), quality is free, new york, mcgraw-hill. deming, w.e. (2000), the new economics for industry, government and education (2th edition), cambridge, the mit press. graham, n. (2010), prince2 for dummies, west sussex, john wiley and sons ltd. publication. international organization for standardization (2003), iso 10006:2003, quality management systems – guidelines for quality management in projects, geneva. international organization for standardization (2005), iso 9000:2005, quality management systems fundamentals and vocabulary, geneva. juran, j.m., godfrey, a.b. (1999), juran’s quality handbook (5th edition), new york, mcgraw-hill. office of government commerce (2009), managing and directing successful projects with prince2 (2009 edition), the stationery office, uk. project management association of japan (2005), a guidebook of project & program management for enterprise innovation, vol i, available on http://www.pmaj.or.jp/eng/p2m_download/p2mguidebook volume1_060112.pdf. project management association of japan (2005), a guidebook of project & program management for enterprise innovation, vol ii, available on http://www.because-i.org/p2mguidebookvolume2_041014.pdf. project management institute (2013), a guide to the project management body of knowledge (pmbok® guide), (5th edition), newtown square, usa. zafarani, e (2011), project quality management approaches: a comparative evaluation of international standards, international conference on construction and project management ipedr, singapore, vol.15, p.37-43. 236 http://www.pmaj.or.jp/eng/p2m_download/p2mguidebook%20volume1_060112.pdf http://www.pmaj.or.jp/eng/p2m_download/p2mguidebook%20volume1_060112.pdf studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro study regarding different types of auditor’s missions daniel botez “vasile alecsandri” university of bacău daniel6331@yahoo.com abstract after the involvement of the audit profession in several financial scandals, the international body of the profession, international federation of accountants – ifac, has developed and published a conceptual framework and reviewed most of the reference standards in auditing to provide references regarding the responsibility of the professionals and the extent of their missions. thus was established the use of a general term for professionals, the “practitioner”, in the context of specific missions using the “auditor”, “practitioner” or “accountant”. on the other hand, have been revised professional standards establish insurance missions and noninsurance operations, with their specific missions that do not provide insurance, including the recoding. the use of these references by audit professionals constitutes one of the “keys” to their success. keywords financial auditor; international standards on auditing-isas; practitioner; accountant jel classification m42 introduction one of the key of success in today’s economy is the use of common language, with a vocabulary recognized by all participants at the show which represent business. an essential part of this language refers to financial information, the area in which domination over a language had the accounting. there are even views on accounting that is world language of business, as meaning language which lays down principles, concept and current co-ordinates of the process of financial reporting, is english. important for our initiative shows the way in which services provided within the scope too wide a financial audit, they are perceived as such by those who apply for them and the extent to which the two parties (supplier and user) use same words. types of missions we use in the current language the term “financial audit”. it can be identified, in most cases, with the services provided by external auditors financial entities, members of essential accounting profession. unfortunately, these professionals were referenced during talks on financial scandals affecting economic environment for several years. in addition to the managements companies, audit professionals were responsible for many bankruptcies products. the famous international company arthur andersen, which has disappeared shortly before the age of 90 years of existence, is representative. these problems and the need for uniform conceptual approach by the building of international federation of accountants-ifac, which has drawn up conceptual framework missions of the audit board and insurance, intend to eliminate confusion, 116 study regarding different types of auditor’s missions together with initiating a process of clarification of existing standards. these actions have led to standardization listed below. in conformity with the conceptual framework, the assignment of insurance means a mission in which a practitioner expresses a conclusion designed to increase the confidence of users concerned, other than the party responsible for, with respect to the result of the assessment or measurement of certain problems in the light of the criteria. in the first place, because of the needs of mission to demarcate strictly financial audit of other professional missions, in terms professional does not discuss financial audit but also of missions to insurance. they, in addition to its mission of financial audit itself, may include the review mission, other missions of insurance and related services. secondly, in general terms, was not brought up for discussion about auditor but about medical practitioner, a term that has a wider connotation than the first and who shall designate a professional accountant in public practice. we are an indication that the term “auditor” can also be used when describing the nature of the services work related or other missions of insurance than auditing financial statements. thirdly, for the identification of the shape finish tasks for the insurance shall be uses the term “conclusion”, the indication that the term of opinion shall be limited to the findings of the insurance missions that have the subject financial statements or when specific standards shall provide for this. as a result, current standards for missions of financial auditor (of practitioner) refer to tasks listed below. the mission of financial audit (we should be able to call mission of the financial audit itself) is a mission of insurance to that purpose of the extent to which financial statements of an entity presents a true and fair view of financial position and financial performance and are drawn up, in significant matters, in accordance with the financial reporting framework applicable. such mission have some characteristic of a few items that a distinguished clearly from other missions of insurance. first of all, the mission of financial audit provides the highest level of insurance formalized in the expression “reasonable assurance”. this level of insurance involves reducing the risk of audit to an acceptable level of low so that it allow auditor to express a conclusion in the form of positive assurance. this form of insurance is another special feature of the mission of financial audit. it is called as positive manner of expression of opinion begins with the statement yes and shall be geared in expression: “yes, financial statements show a true and fair view of financial position, financial performance and cash flow and shall be drawn up in accordance with ... (the financial reporting framework applicable)”. this mission shall be reported directly to international standards on auditisas. the mission of review, it is a mission of insurance which has as its objective to allow the auditor to determine whether a referral to any aspect that you are determined to believe that financial statements are not prepared in their significant aspects in accordance with the financial reporting framework applicable. from the point of view of insurance provided is traded at a lower level than the mission of financial audit, this level is attached to a limited insurance. the auditor also aims to reduce the risk of audit to a level that can be regarded as acceptable low so that it can provide a conclusion in the form of insurance negative. this form of insurance is called negative because it emphasizes the use of negation does not used in the formulation: “i don't have found items that should not be questioned that financial statements show a true and fair view of financial position, financial performance and cash flow ... ”. the review mission is to be reported to international standard on review engagements isre 2400 “engagements to review the financial statements”. tasks of the group are part of the review and the standard isre 2410 “review interim financial statements”. 117 botez similarly these two missions (audit and review), the auditor may have intervention in cases relating to the financial statements. it is a case of special missions which relate to: auditing financial statements drawn up in accordance with a frame of reference for a special purpose (generally other financial reporting framework than usual and officially in the jurisdiction in which the entity audited); carry out audits of individual components of financial statements, specific elements, or aspects of financial statements; and mission of reporting on financial statements made simple. in the case of the contract shall be kept in a professional, use of the term by auditor. also, the assignment is specific and that for the purposes of formulating conclusion is uses the term “opinion”. in addition to these missions that relate directly to the financial statements, audit practitioners can provide customers degrees of insurance (reasonable, or limited) in respect of the information other than financial statements, as well as other financial information and non-financial performance, systems and processes or behavior entity (we notice that in this case it uses the term “practitioner”) . there is a wide array of practitioner action within the framework of these missions, provided that the issue in question to be identifiable and capable of a proper evaluation and to start getting evidence sufficient and appropriate to support a conclusion of insurance (in the case of these missions will be used in the ratio of insurance the term “conclusion”). these tasks shall be normalized, under general appearance, a specific standard: international standard on assurance engagements isae 3000 “assurance engagements other than audit or reviews of historical financial statements”. during these missions, other than audits and revisions, however, and we find the specific missions, the normalized specific standards and whose peculiarity is that it uses the terms “professional auditor” and “opinion”. it’s about international standard on assurance engagement 3400 “the examination of prospective financial information” and international standards on assurance engagement 3402 “assurance reports on control at a service organization”. in addition to these two standards, in the category of those that actually applies, there are international standard on assurance engagement 3410 “assurance engagement on greenhouse gas statements”, which entered into force on september 30, 2013 and a waiting time of entry into force: international standard on assurance engagement 3420 “assurance engagements to report on the compilation of pro forma financial information include in a prospectus”, will enter into force march 31, 2013 and (except that in their case the terms of use and auditor opinion is different). to ensure an appropriate response from the profession to the various requests of professional services, it must include audit practitioners missions and missions that do not offer insurance but highlight their competence. these missions are called related services because the practitioner uses the same procedures as in the investigation of assurance engagements but does not provide any degree of assurance. reference standards for these missions are the international standard on related services isrs 4400 “engagements to perform agreed-upon procedures regarding financial information” and isrs 4410 “engagements to compile financial statements”. in terms of professional vocabulary used in isrs 4400 uses the term “auditor” and the procedure for reporting auditor presents its findings as a result of applying agreed upon procedures and the isrs 4410 uses the term “accountant” and the reporting procedure identifies financial information. these missions do not offer insurance since isrs 4400 investigative procedures are established exclusively by the practitioner but agreed with the client (there are situations in which only sets the recipient) and in the case of isrs 4410 practitioner showcase his skills invoice accounting (such as financial statements based on information provided by the entity). 118 study regarding different types of auditor’s missions table 1 auditor’s engagements mission professions conclusion assurance engagements isas 200 – 810 audit auditor opinion isre 2400 review practitioner expression of negative assurance isre 2410 review interim financial statements auditor conclusion isae 3000 assurance engagements other then audit or reviews of historical financial statements practitioner conclusion: positive assurance; negative assurance isae 3400 the examination of prospective financial information auditor opinion isae 3402 assurance reports on control at a service organization service auditor opinion (positive assurance) isae 3410 assurance engagement on greenhouse gas statements practitioner conclusion: positive assurance; negative assurance isae 3420 assurance engagements to report on the compilation of pro forma financial information include in a prospectus (31/03/2013) practitioner opinion: unqualified; qualified non-assurance engagements isrs 4400 engagements to perform agreedupon procedures regarding financial information auditor statement of factual findings isrs 4410 engagements to compile financial statements accountant from 01/07/2013 practitioner identification of compiled financial information conclusions mastering specific professional vocabulary is a requirement and a necessity for every professional in the field of auditing. its use and accurately identify appropriate professional mission requested service are references to establish the extent of its responsibility and mission. references cafr (2012), manual de reglementări internaţionale de control al calităţii, audit, revizuire, alte servicii de asigurare şi servicii conexe, edition 2012, volume i, bucharest. cafr (2012), manual de reglementări internaţionale de control al calităţii, audit, revizuire, alte servicii de asigurare şi servicii conexe, edition 2012, volume ii, bucharest. iaasb (2012), handbook of international quality control, auditing, review, other assurance, and related services pronouncements, volume i_web.pdf, available on www.ifac.org. iaasb (2012), handbook of international quality control, auditing, review, other assurance, and related services pronouncements, volume ii_web.pdf, available on www.ifac.org. 119 microsoft word apostoaie constantin marius_eng.doc the role and importance of public relations at non-governmental organizations simona duhalm, „vasile alecsandri” university of bacau, romania abstract phenomenon of globalization during the twentieth century, has increased the importance of nongovernmental organizations. their development has gained to the whole world providing an important part of social, educational, cultural and welfare services that the community felt. voluntary and non-profit activity which it carries led, implicitly, to increasing importance in public relations sector, compared with profit business. keywords fundraising activities, communication, non-governmental organizations, persuasion, public relations jel codes: m 31 for nongovernmental organizations it uses specific terminology: non-governmental organizations (ngos), private voluntary organizations, nonprofit organizations, secondary associations (family, ethnic and nationality), voluntary associations, pressure groups. non-governmental organizations are organizations from civil society who are proposing solutions for society’s problems. they provide an important part of social, educational, cultural and welfare services that community felt as necessary in terms of development and its functionality. thus, non-profit sector involved in solving critical problems for society respectively those not receiving sufficient attention from corporate for profit or institutions of government administration. specific features of non-governmental organizations − significant level of structure. ngos are institutionalized entities, have establishment, program work, full-time employees or employees with temporary work, plan their goals, objectives and the measurable goals by various efficiency indicators. − active in the civil society and private sector. from an institutional perspective ngos are separate entities from government, which means that they are not government agencies and not controlled by government, even if they receive government funding. − not generate income through work. unlike other organizations of private sector , ngos do not aim at profit for owners or directors which means that additional revenue will be spent to carry out the organization. if, however, profit is being unavoidable it can not distribute to those who manage or directs the organization, but constitutes an additional source of launching new projects, initiatives, programs or activities that are complementary. − developing activities of self-treatment and economic self. non-profit organizations manage and control their own activities, which means that set their own procedures and independent of external control. − support voluntary volunteering filantropism activities. a feature of the management organization is the voluntary participation of citizens in the declared mission and assumed of studies and scientific researches economic edition, no. 15, 2010 360 status and civic action program. terms like "charity" or "volunteer organizations" derives from the characteristics of non-profit organizations. despite or rather because their action field to sectors, they reflect the variety of issues and concerns of ordinary people more accurately than political parties and market, which not able to reflect reality, s any public authorities could not understand. types of organizations to build a civil society types modern or secular traditional based on religion or ethnicity groups based on affinity (social, recreational) sports clubs hobbies lodge order civic associations self-help groups associates for development of society voluntary organizations citizenship education groups professional organizations unions religious charitable organizations ethnic self-help society political associations pressure groups groups of voters citizen lobbies pressure groups based on religious or secular state religious groups and ethnic minority rights public relations within non-governmental organizations public relations serve to establish and maintain a climate conducive to communication, understanding and cooperation between an organization and its public. can i have different goals from persuading the public for an organization favor, to change organization attitudes towards public, to support the functioning of a society to promote the interests of a company. public relations activities at non-governmental organizations differs from other sectors, in terms of persuasive components of at least five reasons: − to communicate and transmit reliably messages relating to activities, initiatives, projects under the participatory citizenship, solidarity and altruistic; − to create conditions for social adhesion which programs and action oriented to community and people; − to capture attention and interest policy and administrative makers to promote programs to support ideas and projects that advocate; − public relations activities are not subject to the existence of endogenous crisis by nonprofit organization but are caused by external factors objective in case content for the ngo campaigning in public; − primary mission of public relations achieved for the benefit ngo is to encourage social participation around the ideal of sustained public without ignoring the other dimensions of organizational public relations (reputation, credibility, transparency, adherence). studies and scientific researches economic edition, no. 15, 2010 361 as regards credibility and honesty of government organizations, the role of public relations gained importance. regain credibility among the public and maintaining it in a climate of competition and sensitivity are some of the primary reasons that require public relations activities. consequently, public relations can not be excluded from activities involving fund raising from outside the organization. public relations is the need for ngos to maintain a close relationship with the public to achieve its objectives. foundations and charities organizations use the campaign to raise funds and acquire their advanced methods of lobbying in collaboration with government institutions. regardless of the operating field, issue of promoting and maintaining social trust are major targets for non-governmental organizations and to achieve these goals will present various strategies for public relations. the role of public relations is to target well-defined objectives for non-governmental organizations such as: − develop communication channels between the organization and beneficiaries; − to win public acceptance for the organization's mission; − create and maintain a favorable climate for fund raising; − to ensure and maintain public interest in the organization towards the mission; − inform and motivate organizational staff involved (employees, volunteers, board members). even if we talk about non-profit, reputation, credibility and prestige of ngo win whith similar efforts those made an profit sector. keyword this time is "communication", whether they resort to advertising, public relations or other media to communication. public relations tools at a nongovernmental organization may use are varied: − press release. press releases advantage organization that allows them to create positive publicity through the media. the only risk which have this press release is that the company d’ont have certainty that the subject appears in the press. also shall appearing in news media be interpreted freely, which could distort the original meaning. − stories. an organization can not write a story or an article for print media and can not do a story for television, but may invite journalists to carry out an exclusive story about the event that the company considers it extremely important. this tool is advantageous in that it is much easier to control. − interviews and press conferences. press conferences have an air of importance and credibility that used the media means to present information on the organization. − creating events. enables raising funds from various companies by engaging in such actions designed to create a positive image among the public. with the increase in the magnitude of non-profit sector has also increased interest from the media to the activities of nongovernmental organizations. the number of articles in the press has grown considerably, and time for television or radio broadcasts dealing the subjects relating to projects, programs and initiatives by charitable nature. given the process of communication, public relations activities play an important role in the proper management of messages to be transmitted to the target audience. since work by nongovernmental organizations aimed at fundraising, public relations specialist will be to streamline messages transmitted. nongovernmental organizations actions aimed at key issues for the community, such as health, education, environment, culture. how they are managed by public relations professionals must take into account the public's right to information, but also the right to privacy of those concerned with the problem in question. studies and scientific researches economic edition, no. 15, 2010 362 privacy policy and ethical principles in the communication / information public relations specialist must comply with confidentiality rules and principles of morality and for transmitting information in connection with work done by nongovernmental organizations such as: − to support communication networks of nongovernmental organizations and their external environment, emphasizing transparency in the relationship with the media; − to protect privacy of those who benefit from services offered by nongovernmental organizations; provide concrete information from reliable sources and authorized. national legal framework governing public relations: article 30 of the romanian constitution, "freedom of expression", provides: 1. freedom of expression of thoughts, opinions or beliefs and freedom of any creation, by words, writing, pictures, by sounds or other means of communication in public are inviolable. 2. censorship of any kind is prohibited. 3. press freedom and freedom involves setting up of publications. 4. no publication may be suppressed. 5. the law may impose mass media the obligation to make public their financing source. 6. freedom of expression can not harm the dignity, honor, privacy of person and the right to own image. 7. are prohibited defamation of the country and the nation, any instigation to a war of aggression, national hatred, racial, class or religious, incitement to discrimination, territorial separatism or public violence and obscene conduct contrary to morality. 8. civil liability for information or creation made public returns is to the publisher or producer, the artistic performance, the owner of the copying facilities, radio or television, under the law. press offenses are established by law. article 31 of the romanian constitution, “right to information”, provides: 1. person's right to access any public information can not be restricted. 2. public authorities, according to their competence, are obliged to provide correct information to citizens in public affairs and matters of personal interest. 3. right to information should not be prejudicial to the protection of young or national security. 4. mass media, public and private, are obliged to provide correct information to the public. 5. public radio and television are autonomous. they must ensure social and political groups important exercise of the antenna right. organization of these services and parliamentary control over their activities are regulated by organic law. concluzii public relations help create an environment conducive to combining the public interest by volunteering and philanthropic support coming from charitable organizations. for the nonprofit sector, public relations construct, maintain and ensure the functioning of raising resources to meet social objectives of the organization. regardless of how the act and differences between them, all nongovernmental organizations involved in fundraising, mobilizing volunteers and various supporters, organizing special events, have an active role in the media and administers a headquarters. activities begin to differ greatly in terms of actions that ngos operating in different areas are involved. these studies and scientific researches economic edition, no. 15, 2010 363 areas ranging from human rights protection, children, environment, animals to spread the peace in the world. references 1. coman, c. (2006), relaţiile publice. principii şi strategii, ed. polirom, iaşi 2. teodorescu, gh., relaţii publice sectoriale – organizaţii non-profit (suport de curs), iaşi 3. www.cărţiaz.ro 4. www.cdep.ro 5. www.markmedia.ro 6. www.praward.ro 7. www.pr-romania.ro studies and scientific researches economic edition, no. 15, 2010 364 our journal, from debut to modernism our journal, now at its 13th annual edition, appeared out of the need of the group of teachers and economists (which was only at its beginnings during the 90s of the previous century) to make the results of their scientific studies and research well known. the published material was selected only after most of the articles were presented and discussed at scientific conferences organized at the level of the department or of the faculty. in fact, the precursors of the actual journal were the volumes containing the papers presented at the scientific conferences organized by the department specialized in economy in 1991 and 1995. starting with 1996 the actual journal has been issued, with the title “scientific studies and research”, within the economic sciences series, with an editorial board coordinated by phd professor vasile pătruţ and a number of scientific reviewers starting with number 5/2001. among the most constant collaborators we mention associate professor roxana mironescu and associate professor marcela danu, who actually dealt with the editing of the journal, the former being in charge of the first seven issues of the journal, and, the latter, of four volumes of the journal. we mention that, starting with number 3/1999, our journal has been accredited by cncsis and included in category d. the areas of study covered by our collaborators are various and of imperative actuality, referring to the fields of economy and business management, as well as to the ones related to the economic education. having in view the relatively limited experience of our collaborators, the materials presented in the journal were only occasionally the results of advanced research. in many cases, the research was restricted only to bibliographic readings, sometimes followed by a direct research on the real facts, but without accomplishing what we call the “laboratory” research. under the circumstances, by means of the published articles we only rarely promoted solutions, recommendations, and, most important, new interpretations or theories, as well as research instruments and methods. the published articles were most often some means of “popularizing” the well-known truths, and so they were not really “scientific” articles which presented new realities resulting from the undertaken research. after a period of quantitative accumulations (see table no.1), on the basis of the gained experience of our collaborators in the field of research, among whom the majority are doctors and doctoral candidates in economic sciences, we consider that now is the time for a qualitative shift, so as to be able to ensure the necessary conditions for the upgrading of our journal by cncsis to superior categories in the hierarchy of scientific journals. among the objectives we have to set, with this aim, we mention the following: the improvement of the scientific quality of the published articles, thus promoting the articles which are truly valuable, and thus recommended for publication by the editing board, who must accomplish its task with all the requisite responsibility; the presentation and discussion of the materials which are due for publication on the occasion of the faculty’s scientific sessions, hence renewing the practice of organizing annual editions of the conference “contemporary economy and the romanian realities”, or the organizing of scientific symposia on certain themes like the ones organized by the department of accounting and finances, such as “provocations for the accounting profession in the future global informational society” – 2006, “accounting and the information and communication technologies” – january 2007, “accounting within the romanian contemporariness” – november 2007; the reorganization of the editorial board of the journal by attracting some acknowledged personalities in the domain of the economic sciences, academicians, or university professors from romania and especially from foreign countries, etc.; the restructuring of the board of scientific reviewers so as to include renowned personalities within the same area of study; our journal, from debut to modernism 6 ensuring a broader accessibility of our journal within and towards the group of experts at the national and international level, by performing exchanges with publications from other countries, or by promoting the articles of collaborators from other universities in our country or abroad; the publishing of the journal both in romanian and in an international language; the achievement of all these objectives and of others of the same kind should ensure the continuation of the journal’s publishing, as well as the heightening of its prestige, and these are some targets of the future editorial board. references: [1] zaiţ, dumitru, spalanzani alain, research in economy and management, editura economică, bucureşti, 2006 [2] *** ,studies and scientific researches, edition: economics, the collection from 1991 to 2008 [3] *** www.cncsis.ro vasile pătruţ,managing editor professor phd, university of bacău no. year of publication title of article issn editor editorial board scientific reviewers number of pages number of articles occasion of publication precursors of the journal 1. 1991 studies and research i – economylaw – philosophy – history the university of bacau, the faculty of letters and sciences section tourism – services – marketing associate professor i. cioban – scientific secretary of the faculty 153 32 the session of scientific communications of the department of sociohumanistic sciences and philology, i edition 2. 1995 studies and research in economy and law the university of bacau, the faculty of economic and social sciences phd professor c. gh. marinescu phd associate professor vasile pătruţ phd associate professor p. rusu university lecturer, phd candidate l. saradici lecturer, phd candidate r. mironescu 193 27 the session of scientific communications of the department of economic and social sciences, ii edition, 12-13 may 1995 “scientific studies and research” journal, the economic sciences series 3. 1996 no. 1/1996 12249858 the university of bacau, the faculty of sciences, economic sciences series phd professor vasile pătruţ phd associate professor l. saradici phd associate professor r. pintilie lecturer, phd candidate r. mironescu 104 26 the conference organized to celebrate the 35years jubilee of academic education in bacau 4. 1998 no. 2/1998 12249858 the university of bacau, the faculty of letters and sciences department of economic sciences phd professor vasile pătruţ phd professor r. pintilie phd associate professor l. saradici lecturer, phd candidate r. mironescu 78 18 the session of scientific communications of the department of economic sciences 5. 1999 no. 3/1999 12249858 the university of bacau, the faculty of letters and sciences department of phd professor vasile pătruţ – coordinator phd professor r. pintilie phd associate professor l. saradici 141 19 the annual session of scientific communications of the department of economic sciences economic sciences lecturer, phd candidate r. mironescu 6. 2000 no. 4/2000 12249858 the university of bacau, the faculty of letters and sciences department of economic sciences phd professor vasile pătruţ– coordinator phd professor r. pintilie phd associate professor l. saradici lecturer, phd candidate r. mironescu 155 24 the conference organized to celebrate the 10-years jubilee of academic economic education at the university of bacau 7. 2001 no. 5/2001 12249858 the university of bacau, the faculty of letters and sciences department of economic sciences phd professor vasile pătruţ– coordinator phd professor r. pintilie phd associate professor l. saradici lecturer, phd candidate r. mironescu phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor r. petriş univ. “al. i. cuza” iaşi phd associate professor gh. epuran – univ. of bacău 116 19 the annual session of scientific communications of the department of economic sciences 8. 2001 no. 6/2001 12249858 the university of bacau, the faculty of letters and sciences department of economic sciences phd professor vasile pătruţ– coordinator phd professor r. pintilie phd associate professor l. saradici lecturer, phd candidate r. mironescu phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor r. petriş univ. “al. i. cuza” iaşi phd associate professor gh. epuran – univ. of bacău 94 17 the annual session of scientific communications of the department of economic sciences 9. 2002 no. 7/2002 12249858 the university of bacau, the faculty of letters and sciences department of economic sciences phd professor vasile pătruţ– managing editor phd professor p. rusu phd professor l. saradici phd lecturer r. mironescu – chief editor, editor in charge of the issue phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor r. petriş univ. “al. i. cuza” iaşi phd professor gh. epuran – univ. of bacău 132 28 the conference organized to celebrate the 10-years jubilee of academic economic education at the university of bacau 10. 2003 no. 8/2003 12249858 the university of bacau, the faculty of sciences department of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd associate professor r. mironescu phd associate professor m.c. danu – chief editor, phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor r. petriş univ. “al. i. cuza” iaşi phd professor v. răileanu – aes 149 29 the annual session of scientific communications of the department of economic sciences editor in charge of the issue bucureşti phd professor gh. epuran – univ. of bacău 11. 2004 no. 9/2004 12249858 the university of bacau, the faculty of sciences department of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd associate professor m.c. danu phd associate professor r. mironescu – chief editor, editor in charge of the issue phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor v. răileanu – aes bucureşti phd professor gh. epuran – univ. of bacău 165 34 the annual session of scientific communications of the department of economic sciences 12. 2005 no. 10/2005 12249858 the university of bacau, the faculty of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd professor gh. epuran phd associate professor r. mironescu phd associate professor m.c. danu – chief editor, editor in charge of the issue phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor v. răileanu – aes bucureşti phd professor i. florea univ. “al. i. cuza” iaşi 204 30 national conference with international participants “contemporary economy and romanian realities”, 11-12 november 2005, dedicated to the anniversary of 15 years of academic education in bacau 13. 2006 no. 11/2006 12249858 the university of bacau, the faculty of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd professor gh. epuran phd associate professor r. mironescu phd associate professor m.c. danu – chief editor, editor in charge of the issue phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor v. răileanu – aes bucureşti phd professor i. florea univ. “al. i. cuza” iaşi 180 35 national conference with international participants “contemporary economy and romanian realities”, iind edition 14. 2007 no. 12/2007 (in english) 12249858 the university of bacau, the faculty of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd professor gh. epuran phd associate phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor v. răileanu – aes bucureşti 131 25 national scientific symposium “accounting within the romanian contemporariness” – november 2007, dedicated to the anniversary of 10 years our journal, from debut to modernism professor m.c. danu phd associate professor r. mironescu – chief editor, editor in charge of the issue phd professor r. petriş – univ. “ştefan cel mare”, suceava of academic education specialized in accounting in bacău 15. 2008 no. 13/2008 (bilingual edition) 12249858 the university of bacau, the faculty of economic sciences phd professor vasile pătruţ– managing editor phd professor l. saradici phd professor gh. epuran phd associate professor m.c. danu chief editor, editor in charge of the issue phd associate professor r. mironescu phd professor i. cătoiu – aes bucureşti phd professor v. nechita – univ. “al. i. cuza” iaşi phd professor v. răileanu – aes bucureşti phd professor r. petriş – univ. “ştefan cel mare”, suceava 127 22 national conference with international participants “contemporary economy and romanian realities”, iiind edition microsoft word apostoaie constantin marius_eng.doc management and risk in financed projects roxana mironescu, ,,vasile alecsandri” university of bacau, romania nicoleta ciucescu, ,,vasile alecsandri” university of bacau, romania abstract with a caring and professional approach the project management activity may prove to be difficult enough. many specialists in this field indicates that a project plan can be assimilated to a "roadmap", so, for a clear destination, the shortest path is of most pronounced efficacy in order to achieve that purpose, to travel the distance between a current state and desired state and all this is established and configured before we hit the road, all risks included, expected or not. in this paper we present a draft european-style management, which intends to conduct a communion of all the decision makers involved in creating a healthier community. keywords healthy community, project, project management, risk, roadmap. jel codes: m 20, o 12 the project may be viewed as a sequence of activities that produce measurable results. that sequence is created, designed in its final phase, starting from the way the funding source defines the final outcome. a design approach involves taking some risks which will run in its way during this project. traditionally, risk is defined by negative aspects entailed, by its ability to negatively influence the development of an organization, an activity, to achieve goals. risk, perceived as a loss in the funded projects, can take forms such as costs to achieve the goals or to finish the products are higher than those that were originally planned, the results / final products are of inferior quality or lower than originally projected; resources used in the project have been exhausted or even irrationally used; targets or deadlines for delivery of results to beneficiaries have been overcome, and the most serious risk is the total failure of the project. risk can arise either due to the action of intrinsic or extrinsic disturbing factors, in the project, but we must keep in mind that every project includes a degree of risk, because we can not predict the future with utmost certainty. the risk may increase as the project lasts longer, as the time interval between phase of planning and its implementation phase is wider. also, the project manager’s experience, the team working’s experience and, generally speaking, the experience of the organization can negatively influence, if they are limited, the whole quality project results. to these, we can add the project risks generated by the use of methodologies and technologies so new, less verified and hazardous. in a more artistic speech, risk management is a process that proved its similarity to a medical examination, which, after treatment the doctor ordered, after the disease diagnosis, the patient is far away from healing, but he returns to the doctor and he is worse than before treatment. one can appreciate that risk management in projects financed are carried out in three stages: a) setting (description) risk the risk of problems in charge of the project to translate information about the objectives and organizational resources on a so-called "map" of risk permanently updated and adapted to changes in the real environment. answers to questions such as: "what can happen?", "which causes the production of a specific type of event?", studies and scientific researches economic edition, no. 15, 2010 411 "may manifest as a disruptive event?" activities covered by that stage. efforts to identify potential risks involves taking the following steps: study of problems encountered during the course of similar projects, request the opinion of as many professionals concerned by the project more precise formulation of the potential risks and, where possible, eliminating a substantial amount of them; b) measures for combating the risks involved the person who is responsible for such problems in the project need to master the tools by which risk is avoided or transferred to other areas, in order to reduce the impact. when producing negative effects of a particular type of risk can not be avoided, as such should be responsible to control the impact, to develop and implement risk management plan, when it turns from potential effectively; c) control and monitoring results development of risk and potential risk situations is continually monitored, and based on the permanent risk management plan is corrected and updated. project risk management is a circular process which runs continuously. as for business management as a whole, the ability to record your feedback, understand the signals recorded as the initial conceptual plan ensures a flexible approach, marked by dynamism. the project is more likely to achieve success in the real environment, that is, by force of things, unpredictable and uncertain as the project you describe. turin lead an urbact thematic network on the theme "building healthy communities" building healthy communities (bhc) urbs health network for "building healthy communities." the main objective of the project is to create a network of cities of at least 6 different countries to participate in transnational exchange program in which transfer policies, plans, drawings and practices on urban health policy, in order to increase capabilities and knowledge for professional development in urban health. the main problems are emerging on selected the project will focus on the following specific sub-themes: ● health impact assessment and urban health indicators: health impact assessment (health impact assessment hia) is regarded as a major opportunity to integrate health in all policies. hia promises to influence decision-making process, specifying all factors determinative of health, attacking all the injustices and providing an impetus for participation and empowerment in health. thus, the hia provides methodology that makes possible health problems to be included in integrated urban development plans. ● in 2005, the work plan of the eu public health programme has identified the development of an urban health indicator system is essential to the understanding of health information and the system itself. ● active ageing: research shows that if people remain healthy as long as life, hospitalization number of elderly people will be halved. healthy aging can be supported by activities that promote health and prevent disease throughout the life by addressing key issues such as unhealthy nutrition, physical activity, alcohol, drugs and tobacco, risks of environmental, road accidents and the household. ● use of structural development "health revenues. health problem is one of the priorities identified in the "urban dimension" of cohesion policy. several member states have already used the structural and cohesion funds in order to solve some health problems, one for the network being to focus on exchange of experience to use structural instruments for health problems. sound locations and healthy average: analyzing the interaction between environment and health, we study how health is affected not only by pathological factors but also factors in physical and social environment. the project includes 2 two phases: phase 1, which consists in forming a partnership of 10 cities with their appropriate management authorities, undertake a study of problems, needs and actions for health. they also established 10 local support groups (gsl). in phase 2, it is provided an exchange among 100 key players (10 members from each city partner gsl) and the formation of 10 local action plans related to funding sources at european, national studies and scientific researches economic edition, no. 15, 2010 412 and local level and shape some courses of action with instructions to future health interventions. local support groups on the urbact ii (gsl / ulsg) were created to increase the impact of the urbact ii programme. all thematic networks and groups that are part of the urbact ii are required to establish a local support group in the development phase to proceed to implementation phase of the project. however, uslg sites should not be perceived as a simple administrative request to be part of the program. main purpose of local support groups is to disseminate knowledge of transnational exchanges by a wide range of local co-participants and to oversee that this will change locally. in addition, the large number of local coparticipanţilor ulsg involved are able to engage in community urbact, which may take some messages about the central cities to pass. the major objective of all gsl / ulsg is to improve the impact of exchange at the local level. the specific objectives of a specific gsl / ulsg and activities and composition, must be adapted to ensure that the overall goal is achieved. there is no magic formula depends on the nature of the exchange proposed project, nature of local needs and experience in the city / partner. creating gsl depends on what already exists in the city and in the case there are several created possibilities and there depends to the disponibility to go on. after settings, gsl can begin the basic studies in an interactive and dynamic way by using the following: -testing some specific issues with stakeholders; perfecting or reformulating various topics; obtaining references and other co-participants and so on. how far gsl reach the stage of development depends on the point of departure and subject to the deadline of the city. specific objectives to be met from the start: 1. clarification of special needs or concerns of the city, compared with thematic network or working group; identification (mobilization and validation) of what has really given the project the city as best practices, existing instruments, visiting different locations, policies and other experiences; ensuring that this knowledge is reflected in basic research during the development phase (phase 1) and the local action plan will be prepared during implementation phase; dissemination of project results in a much wider local audience; the activity as the main supporters of the project. gsl involvement occurs in two ways: development phase 1 the primary and key stakeholders should provide information on: ■ identify the specific needs of the city of subthemes addressed by the project; ■ experience subthemes addressed by the project; ■ advice on basic research; ■ advice on software developed by the project, especially regarding the operation of the gsl and its relationship to the project concerned; and implementation stage 2 role of local support group gsl in the second phase consists of: ■ participation in the design and monitoring of local action plan; ■ identify and validate inputs, such as case studies; ■ participation in the various exchanges and presentation by co-participants; ■ regular meetings, particularly with regard to training seminars for project partner contribution; ■ comments on final results; ■ testing of certain recommendations; ■ participation in local web platforms; ■ setting the local supporter of the project and conducting lobbying for specific changes; ■ local organizing dissemination events; ■ media awareness campaign to attract local and its project activities. studies and scientific researches economic edition, no. 15, 2010 413 to achieve the overall objective and specific objectives for 2007-2013, envisaged steps and actions are grouped in six national development priorities: • increasing economic competitiveness and development of knowledge-based economy; • developing and upgrading transport infrastructure; • protect and improve environmental quality; • human resource development, promoting employment and social inclusion and strengthening administrative capacity; developing the rural economy and increasing productivity in agriculture; reducing development disparities between regions of the country. environmental objective, accordingly to the ndp: table no 1. the main environmental objectives of the analyzed project shortcomings in environmental services and facilities throughout the country and particularly in rural areas. water and soil air and climate changes ( and natural resources) conserving the biodiversity and the uniques natural areas in romania biodiversitate biodiversity air and climate changes ( and natural resources) growing importance of sustainable development and advancing the list of commercial, political and social priorities. cultural heritage and natural landscapes. quality of life air and climate changes ( and natural resources) (information source: internal project documents) the north eastern regional strategy 2007-2013, bacau being a part, has the priority "infrastructure and environment" measure following: rehabilitation and development of educational, social and health. the objectives of this measure are: -improvement of training; -increasing population health in the region; -supporting the social inclusion of marginalized and socially excluded groups through rehabilitation and upgrading of related infrastructure in such services. in addition to objectives set by the national development plan this project proposes: implement a pilot project in bacau on quality of life assessment based on a set of indicators with a composition similar to that in eu countries (and considering new legislation in romania); monitoring of environmental factors, social, economic and cultural factors that can affect health and quality of life in bacau, by reference to the indicators mentioned above; creating a local action plan which primarily aim to improve quality of life for the people of bacau. it would involve government organizations and local community for development and implementation of local action plan. specialists in risk management support the idea that complete elimination of risk is an utopia or may be an option with low efficiency, in terms of cost. therefore, efforts should be directed to monitor it and if a threshold of risk, both in terms of likelihood and impact. risk management does not remove it entirely, but it is an indispensable process in the project. moreover, risk analysis should precede the onset of the project and if this analysis is drastically negative result, which shows that the risk is unacceptable, the project may be abandoned entirely, since the design phase. contemporary analysis shows that dedicated risk management, unlike traditional approaches that focus primarily on actions to counter, focuses on modern methods for anticipating action, simulation and prediction of risk. current methods conceptual transferred from reaction, counteraction, the action, defense. furthermore, the analysis revealed the beneficial aspect of risk that is not an entirely negative phenomenon, comprising both positive and studies and scientific researches economic edition, no. 15, 2010 414 negative, differentiated proportions. risk is a concept that refers not necessarily, the potential negative impact events as the consequences of uncertainty and change which may arise from the initial planning. roger van scoy, in his work entitled "software development risk: opportunity, not problem", software reviews ingineering institute, usa, 1992, underlined "the risk is not a bad thing in itself, risk plays an essential role for progress, and failure is often part of learning." it is important to maintain a balance between risk and potentially negative consequences of possible benefits that may result in the transformation of risk into opportunities. understanding of project risk as "opportunity" prompt recovery of the unexpected has become a dominant style of management in large companies in the contemporary period. risk management approach is not limited, rigid, guided solely by the objective of containment or control any potentially adverse effects of various events, but it is a method to increase flexibility and adaptability of firms in an more complex environment and hence more uncertain. references 1. van scoy, r. (1992), sofware development risk: opportunity, not problem, software ingineering institute review, usa; 2. luisot, j.p. ( june 2003), what makes an effective risk manager?, risk management magazine, usa; 3. *** www.projectmanagement.ro. studies and scientific researches economic edition, no. 15, 2010 415 studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro risk-assessment procedures and establishing the size of samples for auditing financial statements botez daniel “vasile alecsandri” university of bacău daniel63331@yahoo.com abstract in auditing financial statements, the procedures for the assessment of the risks and the calculation of the materiality differ from an auditor to another, by audit cabinet policy or advice professional bodies. all, however, have the reference international audit standards isa 315 “identifying and assessing the risks of material misstatement through understanding the entity and its environment” and isa 320 “materiality in planning and performing an audit”. on the basis of specific practices auditors in romania, the article shows some laborious and examples of these aspects. such considerations are presented evaluation of the general inherent risk, a specific inherent risk, the risk of control and the calculation of the materiality. keywords audit of financial statements; inherent risk; materiality jel classification m42 introduction professional standards in the field statutory audits provide a series of procedures that auditors they put a few challenges with a professional. one of them, the matter shall be referred to the procedure for determining the size of samples. so, in order to determine sample size, he/she must go through a few steps: 1. assessment of the general inherent risk 2. assessment of the specific inherent risk 3. calculation of materiality 4. assessment of the risk of control 5. analytical review preliminary 6. determining sample size note that these steps follows procedure by which the auditor also obtained information in the understanding entity and the environment or, in accordance with the provisions isa 315 “identifying and assessing the risks of material misstatement through understanding the entity and its environment”. this information serves as the basis of the identification and assessment of risks of significant misstatement (inherent risk and the risk of control). assessment of the general inherent risk inherent risk assessment resulting from general information relating to management and accounting environment, nature of the business entity and significant matters concerning the auditing. on the basis of concrete aspects that form the basis of the 44 risk-assessment procedures and establishing the size of samples for auditing financial statements assessment, inherent risk is assessed on a scale from 1 to 5, from very low to very high. for the study we have done the assessment of the risk inherent in general on the basis of information obtained from two customers of audit, a and b, with a relatively similar situation. thus, for both customers do not there are aspects that will lead to assessment of a very high risk. high risk is given by the situation in which the management contains shareholders. it is a common situation, in which the shareholder/shareholders are at the same time and managers, which is not necessarily indicative of a high risk. other aspects need not entail the assessment of a high risk. financial position and liquidity falling within limits considered normal. the management should be considered integrate and have experience in the field of activity. in the accounts working competent personnel, there are no delays in reporting and the entity does not have a complex structure or a huge size. operating activity has a relatively linear character, which is based on an activity of production with continuous character. previous audits have not revealed significant negative aspects, and their views have been without reservation. in this situation it may be observed that the evaluation lead us to a low level of risk, and by inducing a degree of additional precautions our conclusion is that it is a general risk inherent in medium, for both wireless clients. assessment of the specific inherent risk the assessment of specific inherent risk shall be based on the information collected in phase in the knowledge of the consumer and documented properly in the file task. isa 315 specifies that the identification and assessment of risks of significant misstatement shall be carried out at the level statements for the classes of transactions, balances of the accounts and presentations. understanding customer’s business experience and auditor plays a crucial role. to assess this risk, we suggest that after identifying significant areas, to their attach risk inherent in specific resulted from the existing rules in professional, which involves the answer to six questions: 1. subject system errors/system inadequate/manual system 2. accounting for this area worse professional training 3. complex operations 4. risk of loss/misuse/fraud 5. many professional judgment/calculations 6. unusual operations we can draw up following matrix, according to receive six affirmative answers to these questions, on the basis of which to determine the level of specific inherent risk: 1,2 very low low 3,4 low medium high 5,6 medium high very high the auditors are already familiar with the array of reference for establishing the risk inherent in factor, referred to in section b7 of the guide for an quality audit: 45 botez inherent very low low medium high very high 1 2 3 4 5 specific very low 5 4 3 2 1 low 4 3,25 2,5 1,75 1 medium 3 2,5 1,75 1,5 1 high 2 1,75 1,5 1,25 1 very high 1 1 1 1 1 for our study we have kept customers and suppliers of the customer a and finished products and suppliers of the customer b. for customers of a, we’ve set a specific inherent risk medium, resulting in a risk inherent factor in 1.75 , for suppliers a specific inherent risk low, that is a risk factor of 2.5, and for finished products b and suppliers b, specific inherent risk medium, so inherent risk factor is 1.75. the calculation of the materiality the materiality shall be calculated in the following assessment of the risk inherent in the level of the latter being reference basis for auditor’s reasoning. so, when the general inherent risk is higher, the materiality is lower, and vice versa. note: isa 320 “materiality in planning and performing an audit”, in the form as revised applicable with effect from 15 december 2009, no provision for mandatory preliminary value distribution of the threshold of significance in relation to general balances of the accounts, classes of transactions and presentations of information. it is possible that in some cases the value of the threshold of significance to the financial statements as a whole to be suitable for the purpose of establishing some samples which would lead to the degree of assurance required. but there are also circumstances in which the auditor must use values lower than this. isa 320 introduce the concept of performance materiality, which makes a request for the addition of value to auditor’s reasoning establishing a low level of materiality to reduce to a reasonable level likely uncorrected distortions or not detected to exceed the materiality for financial statements as a whole. on the other hand, isa 320 provides for entity’s specific circumstances in which the auditor also may lay down and use values well below the materiality for certain classes of transactions, balances of accounts or presentations. isa 320 shall submit, as a reference basis, particular cases where the auditor can do, no longer be compulsory for all items for the different levels of materiality for financial statements as a whole. for case study we’ve set the materiality to the financial statements as a whole for the two entities of reference, from the average of between the smallest and the largest value of six reference values calculated on the basis of a model which calls up to three relevant indicators in the financial statements: 1-2% of turnover, 1-2% of assets and 5-10% of the profit. after carrying out these calculations have established the materiality to the following values: materiality company a: 200.000 lei materiality company b: 300.000 lei assessment of the risk of control control risk assessment is based on the information collected in respect of the system of internal control and documented in the appropriate working sheets. under the conditions in which the auditor also considers that the information on the state of the environment of the control and monitoring mode to carry out the inspections are 46 risk-assessment procedures and establishing the size of samples for auditing financial statements appropriate and shall be based on the findings internal control, implement tests to confirm proper operation of the machine. assessment of this risk involves, therefore, in addition to reasonable character organization discovery system of internal control, the existence and application of procedures for testing and effectiveness of controls. as a general rule, these procedures shall be developed by each cabinet of audit. it is a very important aspect because on the basis of the result testing internal controls the auditor also determines in which may be based on the findings internal control on a scale of 1 to 5, and attach the factor 1 a high risk and the factor 5 a low risk. for the purpose of this study, we can establish that he/she has not considered it appropriate to rely on internal control findings and, as a result, assessed control risk at the level of 100%, following the factor of 1. preliminary analytical review analytical procedures claim our understanding of auditor of the entity and the environment or helping him in adequate evaluation of the risk of serious distortions. as a matter of principle, they shall consist of comparisons between the various financial information concerning the entity as well as information for precedent periods such as indicators of liquidity, solvency, performance, or the main categories of expenditure, and the identification of significant variations which require specific attention. from the point of view of the calculation of sample size, pre-analytical revision used in fixing by auditor of a factor of relevance on a scale of 1 to 3, the factor 1 representing the situation that analytical review is not granted no relevance, while the factor 3 assumes that the review did not reveal unusual items. sample size calculation has as reference table for the calculation of the guide on an audit of quality, used in professional practice in romania, to section b7: element population materiality inherent risk factor control risk factor analytical review factor sample minimum level customers a 3.422.000 200.000 1,75 1 2 5 suppliers a 1.201.500 200.000 2,5 1 2 1 finished products b 2.069.063 300.000 1,75 1 3 1 suppliers b 1.849.625 300.000 1,75 1 3 1 by means of the procedure for the establishment of the samples levels have been laid down their minimum. to validate reasoning’s that we made, we will present procedures by which we audited those structures. analysis of structures taken as example emphasizes the following: customers a: the balance of 3.422.000 lei is composed of 90 clients, of which 6 have a value of the balance over the value of the materiality. the sum of them is of 2.316.675 lei, which represents 68% of the total. we can assume the sample results are satisfactory. suppliers a: the balance of 1.201.500 lei is composed of 114 suppliers, of which only one exceeds the value of the materiality, with a balance of 546.484 lei, representing 45%. in this situation, in order to obtain an adequate level of insurance for suppliers, the auditor must extend sample size to 3 components, each with a value over 150.000 lei, which have a value 858.053 lei, representing 71% of the total value of the balance, a comfortable situation. 47 botez isa 320 provides that the performance materiality may be represented by one or more of the values. if the auditor would be determined by planning a threshold of functional significance of 150.000 lei for similar items suppliers, sample size would have been different. finished products b: the balance of 2.069.063 lei is composed of 51 items of which 2 are located above the materiality, with a cumulative value of the balances of 830.820 lei, representing 40% of the total. to obtain the assurance required, the auditor also lays down a sample of 5 items with a value of 1.413.399 lei, representing 68% of the total balance, which would have resulted in the planning stage if he had established a performance materiality of 100.000 lei. suppliers b: the balance of 1.849.625 lei is composed of 208 suppliers, no balance individually does not exceed the value of the materiality. if the auditor would be established a smaller performance materiality, 100.000 lei, then that’s it is located 4 suppliers with a cumulative value of the balances of 599.046 lei, representing only 32%. in this situation, the auditor would have had to establish a performance materiality less than, 50.000 lei, and then in the sample shall enter 10 items with a cumulative value of 946.555 lei, representing 51%, which correlated with the assessed risk can be considered satisfactory. as a result of these successions, the establishment of performance materiality at the planning stage would have resulted in a minimum size of the samples closest to the requirements for obtaining the degree of assurance required, such as: element population materiality inherent risk factor control risk factor analytical review factor sample minimum level customers a 3.422.000 200.000 1,75 1 2 5 suppliers a 1.201.500 150.000 2,5 1 2 2 finished products b 2.069.063 100.000 1,75 1 3 5 suppliers b 1.849.625 50.000 1,75 1 3 7 on the other hand, a rigorous approach to risk assessment and analytical procedures, through the inclusion of some degrees of precaution raised, may change the value factors, with significant impact over the size of samples. conclusions determining sample size represents an adjustment procedure again based on auditor’s reasoning, which brings together all the information and assessments have been observed with respect to entity. in the first place, assessment of the general inherent risk has a significant influence on thoughts on fixing of general materiality, and together with the inherent risk specific, by placing them in the matrix for the identification of the risk inherent in factor, on a scale from 1 to 5 they have a significant impact on sample size calculation. secondly, isa 320 leave the responsibility and at the expense auditor’s reasoning both fixing of global materiality, and use of performance materiality or set materiality for specific classes of transactions, balances of accounts or presentations. this constitutes a margin of action wide enough for auditor and allows the operator to obtain the assurance necessary. thirdly, the establishment of control risk factor attached on a scale of assessment from 1 to 5, has a significant impact on sample size. it is necessary that the auditor, on the basis of tests carried out on the system of internal control and document and establish various factors for the various structures of financial statements. 48 risk-assessment procedures and establishing the size of samples for auditing financial statements last but not least, preliminary analytical review must have regard to the indicators and representative structures for the activity entity, as establishing a relevant factor on a scale of 1 to 3 has a significant impact over the size of samples. references cafr (2014), the guide of an quality audit, bucharest. isa 315 “identifying and assessing the risks of material misstatement through understanding the entity and its environment” and isa 320 “materiality in planning and performing an audit”, in iaasb handbook of international regulations for quality control, auditing, review, other assurance services and related services, edition 2012, vol. i, translated and reissued the cafr, bucharest, 2013. 49 inherent specific information campaigns – means of communication with customers studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro information campaigns – means of communication with customers claudia-nicoleta dobrescu university”eftimie murgu” of resita dobrescu_cld@yahoo.com mirela costencu university”eftimie murgu” of resita costencumirela@yahoo.com abstract within a company’s activities, an important role is granted to the performance and implementation of information campaigns for the final consumers. the paper has the general objective to identify specific issues that constitute the premises for the preparation and conduct of such activities, and especially the expected results. the analysis is performed and based on a direct research among several companies, which operate in various fields, for the identification of a method of performance and implementation of information campaigns that are necessary for ensuring visibility on the reference market. the aim of the study was to identify the importance that the firms from resita give to information campaigns addressed to a target audience. the study was carried from april to may 2013 on a sample of small, medium and large firms, which operate in trade, manufacturing and services. the questions and the discussions addressed to the public were meant to outline the specific aspects of the exact way in which the information campaigns were done for their clients, but also to underline the results obtained with the help of these campaigns. keywords information campaign; efficiency; methods of information; promotion; visibility jel classification m31; m39 1. introduction attracting customers and securing their loyalty is still a problem to solve for many companies. this aspect should represent a priority in the organisations’ endeavour to reach a representative market share, as we are witnessing a multiplication of final customers’ needs. in this respect, economic entities should orient their marketing activities so that the expected results should correspond to the efforts made for reaching their goals. there are numerous tools at the disposal of companies meant to operationalise them on the reference market according to the planning of specific activities, so that the message to be conveyed to the target market might correspond to the set goals. according to the literature, the modalities of presenting a firm’s products or services are varied, depending on the proposed purpose, but especially on the messages transmitted to the target public, which has as final result the consumers’ information. numerous specialists (manole, stoian, accessed, 2013.) consider that promotion and communication represent two closely connected concepts, because in order to implement any form of promotion communication is necessary, and the instruments used in promotional activities are represented by the various 300 mailto:costencumirela@yahoo.com information campaigns – means of communication with customers communication forms. all these aspects shaped in an efficient strategy of communication of the organisation with the customer’s lead to the creation of the clients’ attachment towards the organisation. thus, the customers’ loyalty comprises “the measures a company takes in order to influence the present and future customers‘ behaviour intentions towards a company or its activities in a positive sense, in order to stabilise and develop its relation with them.“ (bruhn, 2003). consequently, the organisation’s communication with the customers represents an intentional process, which means an exchange of messages among them with the purpose to reach both individual (customers‘) objectives, and the objectives of the organisation. the organisation’s success in its relation with the customers and especially its positioning on the reference market depend on the quality of this communication. moreover, the efficient management of the relation with the customers represents ”the systematic analysis, planning, implementation and control of all measures taken by a company oriented towards the customer, with the purpose of persevering the relation with the customers and to maintain this connection as well as possible” (bruhn, 2001). the establishment of the organisation–customs relation is determined by the source’s capacity to satisfy expectations and its ability to be convincing. instability is not brought about by the impossibility to communicate, but by the result of the commitment to communicate or the impossibility to engage a long-term communication. the difficulties occurring in the communication with the customers is caused by the persons involved in this process, as the modalities in which they process information result in the consequences of their action. whenever the target public does not benefit from pertinent information interpretation, we may encounter incompatibilities, gaps or errors among the interpreters involved in communication, errors resulting from the insufficiency of real-time information. time reality means the period when concretely and objectively the communication process can take place. thus, for a correct, clear, actual and real-time information of customers, we consider that the most efficient modality is represented by the information companies, which in our opinion refer to the specific marketing activities with the role to inform the target public about the concrete aspects of the organisation in order to ensure its short-term, medium-term and long-term visibility on the reference market. that is why, for any organisation it is essential to know that the need for communication with its customers becomes a basic need in order to give a public existence to a certain activity, idea or product / service, so that it is not enough for these aspects to exist, but they should also be known. moreover, beyond any organisation’s basic preoccupations, they are permanently confronted with an environment which leaves no moment of respite and consequently its positioning in relation with the customers becomes an efficient modality for creating competitive advantage. in other words no organisation can resist on the market or can have a future if it fails to constructively communicate with its customers. we consider thus that in order to communicate in a constructive manner with customers through information campaigns it is necessary to know and apply several basic rules. these rules refer to the clear, concise and precise formulation of the message in order to be easily and entirely comprehended, to the customers’ motivation raising in order to make them listen to the message transmitted, the use of a common language, the correct transmission of the message, the use of the most adequate communication channels, and, last but not least, the effort to ensure the flexibility and adaptability of the communication system to the requirements or influential factors. 301 dobrescu, costencu 2. research methodology in order to correctly comprehend the aspects of realising and implementing an information campaign, we conducted a direct research among the firms of the town of reşiţa, with the purpose of identifying the importance they grant to the customers information campaigns. the specific objectives of the research refer to: information modalities a firm uses in the relation with its customers; the frequency of using information campaigns; the expected results and the results obtained following the implementation of such campaigns, and the costs afferent to the realisation and implementation of such information campaigns. conducting such a study meant identifying the stages necessary for its realisation. thus, the stages had a logic sequence, from the identification of the general objective and the objectives specific to research, the identification of the target public, the selection of the study representative sample, the actual deployment of the study and the data centralisation, to the analysis and interpretation of the collected data and the study conclusions. (costencu, 2003). in the case of our research, the subjects were the companies registered as operating with their basic economic activity in the town of reşiţa, with the possibility of expanding their activity to other towns. moreover, the respondents are legal persons operating in one of the following domains: commerce, production or services; they are classified into small firms (1-9 employees), medium firms (10-49 employees) and large firms (50-249 employees). thus, the criteria for selecting the firms were based on three variables: positioning of respondent in the town of reşiţa, domain of activity and size of the organisation. the modality of conducting the survey supposed an individual inquiry, structured in accordance with the chosen variables, based on a 15-question questionnaire, 13 of evaluation and two of identification. the questions are conceived and structured in a logical form, which means that for the identification of aspects relevant for the study both closed and open questions were asked, along with mixed, semi-closed or semi-open questions. the data collection was done directly from the representatives of the companies by the distribution of questionnaires and discussions on the basis of question and their answers, the data analysis and interpretation being done for each question and variant of answer. due to the fact that the number of companies operating in the town of reşiţa is not significant, the analysis constitutes a pre-inquiry for the determination of the representative sample for the caras-severin county for a future quantitative study. thus, our analysis is a qualitative one, the respondents being in number of 65, as these companies are active on the reference market and correspond to our analysis criteria. the establishment of this sample paid attention to both internal and external factors as the percentage of small firms in reşiţa is much higher than that of medium and large companies. 3. analysis and interpretation of results the first question refers to the existence or absence of information campaigns among customers. a number of 65 firms answered this question, which represents 100% of the total number of respondents. more than half (62.54%) claim they organise information campaigns for customers, and the most active firms from this point of view are the large firms followed by the medium ones, whereas small firms rank last. furthermore, the firms in the field of commerce are those that conduct more information campaigns, followed by those operating in services and then in production. the second question refers to the modalities firms use in order to conduct information campaigns. taking into account that this is a multiple-choice question, the data analysis points out the possibility of realising information campaigns, in 302 information campaigns – means of communication with customers accordance with the proposed purpose. this question too was answered by a number of 65 respondents, representing 100% of the total. the most frequently used methods of organising information campaigns were implemented on the occasion of the promotion of certain products, services, or promotional manifestations (63.08%), of the realisation of different forms of publicity (47.69%), direct marketing (44.61%) or public relations (16.92%). diverse modalities of customers’ information are adopted in all three sectors of activity with higher weights in commerce and services compared to production. question no.3 ”how efficient do you think your modalities of consumers’ information were ?” was answered by all the interviewed firms (a 100% proportion). most respondents (52.31%) affirmed that these information campaigns were very efficient; 47.69% of them consider they were only efficient and there is no answer recorded for the “inefficient” variant. as for the firm’s size, the higher percentage of the “very efficient” answer is represented by large firms, followed by the medium and small ones. as regards the question ”what were the costs allotted for the information campaigns?”, we should remark that a significant percentage, 49.23% of the interviewed firms, did not wish to answer this question. nevertheless, among the firms that chose to answer, the largest sums were spent by large companies (between 13,000 and 60,000 ron), followed by medium enterprises (between 6,000 and 7,000 ron), whereas other respondents affirm to have spent amounts in accordance with their profit for the information campaigns. when asked about the possibility to allot a larger budget for the consumers’ information campaigns, more than half of the interviewed companies, 70.77%, consider that it is not necessary to allot a larger budget for the information campaigns, and a small percentage of the total respondents, 29.23%, claim that for an efficient confirmation of consumers it is necessary to supplement the budget allotted to information campaigns, probably for the diversification of the information modalities. in relation with the importance of allotting financial resources for the information campaigns, 69.23% of the respondents consider that it is very important to allot financial resources for the realisation and implementation of information campaigns, but without bringing forward arguments in this respect. manufacturing firms, followed by service providers and traders confirm that a well-structured budget can constructively solve the consumers’ information. moreover, large firms stress the allotment of a certain budget for organising information campaigns; at the opposite pole we find small trade firms. nevertheless, the most important actions for the consumers’ information, in the respondents’ opinion, remain the promotion actions, without specifying concrete forms of information. taking into consideration the periodicity of the information campaigns, most respondents, 61.54%, affirm that these campaigns are realised and often implemented by the firm for the information of customers; 26.15% of them claim that these campaigns are implemented very often, while a 12.31% percentage admits to rarely organise information campaigns. we should also remark that small firms rarely organise information campaigns, but the respondents did not specify what “often”, “very often” or “rarely” means in their opinion, when it comes to precise sequences in time. the general purpose of realising and implementing information campaigns refer, for the respondents, to answers as “attracting new customers”, “keeping the existing customers’ loyalty” or other variants indicated by the respondents. when answering this question, more than half of the respondents, 64.61% consider that the general purpose of information campaigns is found in the dimension of attracting and securing customers’ loyalty, an important aspect for large firms, followed by the medium companies and the small enterprises. we remark that there is no other reply variants beside those indicated. 303 dobrescu, costencu when analysing the customers’ opinion about information campaigns from the respondents’ perspective, a 50.77% percentage considers that most customers are content with the message transmitted, without specifying, nevertheless, the reason or reasons making them think than. this answer is chosen by most medium firms, followed by the large ones and then the small ones. however, 49.23% of the respondents affirm that most customers are satisfied that these campaigns bring about price cuts, special offers, promotions etc. we must remark that no interviewed firm considers information campaigns as dissatisfying for customers, which constitutes strength in their relation with their customers. an especially important aspect refers to the identification of human resources conducting these information campaigns. 69.23% of the respondents confirm the fact that these information campaigns are not realised by specialists from the marketing department of the firm, answer given by most small firms; there are also respondents who chose not to specify this aspect. moreover, it is remarked that in small firms customers’ information is frequently done by the firm’s personnel, irrespective of their position. consequently, a 30.77% percentage affirms that the marketing department of the firm conceives and implements information campaigns for customers, answer indicated by large companies. we should also remark that in small enterprises there is no marketing compartment/department, which represents a weakness of theirs as regards the planning and conducting of these information campaigns. we must also underline that, if the interviewed firms operate in other towns too, the information campaigns are done simultaneously in all locations, in different specific periods, either in an identical manner or in different ways. most significant percentages are recorded among large firms in the sector of commerce, services or production. as for the modalities of customers’ information, they may be the same or different depending on other factors specific to the central or secondary locations. after conducting this study, we may draw several conclusions that constitute both advantages and disadvantages in the establishment and/or preservation of the relation with customers by means of information campaigns. thus, most firms organise information campaigns, but there are also firms that do not, especially small enterprises, which constitutes a huge weakness, as the customers’ information should represent the core point of the firm in establishing the relation with the customers. most of the interviewed firms affirmed they used several modalities of customers’ information through publicity, sales promotion, direct marketing or promotional events, public relations being the less used method, also mentioning that these information campaigns were very efficient. furthermore, most respondents affirmed that it was very important to allot financial resources for such activities, in some cases the budget should be increased, but there are also situations when the budgetary share was a constructive one. however, there was a significant percentage of respondents who did not want to specify the budget they allotted for the information campaigns. the goal of conducting such campaigns refers to attracting customers or securing their loyalty, they are frequently organised, most respondents being large companies. we should also remark that most firms do not organise information campaigns within the marketing department of the firm, these activities being performed by other employees (in small firms), and part of the firms carry on their information campaigns in other towns too, where they have secondary activity locations, and most of them organised identical information campaigns. 304 information campaigns – means of communication with customers 4. conclusions from the documentation studied, but also from the survey applied we may remark that the activity of information focused on a firm’ s customers should represent a priority of the organisation’s management, in the complex endeavour of identifying, attracting or securing customers’ loyalty, because no company can developed without informed and satisfied customers. moreover, we consider that irrespective of size, firms must absolutely conduct customers’ information campaigns, and the modalities of implementation should be integrated into a process with positive finality. the costs for each information campaign should be set in accordance with the general and specific objectives of these campaigns, and these costs must be written down in the promotional budget of the company. creating a marketing department or division within the firm or externalising these activities to marketing specialists able to organise such information campaign will definitely result in the implementation of specific activities with positive results. consequently, raising the management’s awareness as regards the necessity and importance of information campaigns, correlated with the selection of the most efficient implementation tools may lead to the attraction of new customers, preservation of the present ones, and ensuring the firm’s visibility on the reference market. references bruhn, m, (2003), relationship marketing. management of customer relationships, england, pearson education limited; costencu, m, (2003), marketing research, resita, efitmie murgu university press; costencu, m, dobrescu, m, dobrescu, c.n, rudolf c, dobrescu d. (2009), evaluating the management of the human resources department in touristic organizations, annals of daaam for 2009 & proceedings of 20th daaam international symposium, volume xx, 1029 1031; manole, v, stoian, m, (2013), ”marketing”, available online at www.ase.ro 305 information campaigns – means of communication with customers claudia-nicoleta dobrescu university”eftimie murgu” of resita dobrescu_cld@yahoo.com mirela costencu university”eftimie murgu” of resita costencumirela@yahoo.com abstract keywords information campaign; efficiency; methods of information; promotion; visibility jel classification m31; m39 importanţa bazei de date în campaniile de marketing direct studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro loyalty – the nucleus of brand capital. case study: rom chocolate bar brîndusa-mariana amalancei “vasile alecsandri” university of bacău brandusa_amalancei@yahoo.com abstract it is considered that loyalty to the brand of some primary customers is the core of the brand capital. a brand, however, may have substantial value, which is given to it by its symbol and slogans, if it is continued with the purchase of a brand after the buyers have made a comparison with the competing products that have superior characteristics. structured on several levels, which are each a different marketing challenge, the loyalty to the brand consists of many factors, among which the most important is the user experience. the paper aims to highlight, starting from a series of articles in online media, the manner in which a traditional romanian brand, rom chocolate bar, continuously repositions itself, attempting to maintain and even increase the loyalty of its consumers, as well as to answer the consumer’s authenticity, accessibility, credibility and modernity needs. even though in specialized literature there are opinions according to which traditional brands are commonly oldfashioned or dull, rom chocolate bar shows the opposite view, being considered a successful brand which is appreciated both at national and international levels. keywords image; personality; identity; brand awareness; brand commitment jel classification m37 1. introduction having become a real social and cultural phenomenon, in our times brands have an almost immeasurable power in business, as well as in politics, arts, sports or charity. brands can be of all forms and sizes – specific or generic, tangible or intangible, global, regional or national, cheap or expensive –, but their force generally results not only from what they are, but also from what they represent (olins, 2006). however, it is quite difficult to find a definition of brands which could comprise all the dimensions of this concept. that is why certain authors choose to define a brand by means of what it is not, thus leaving room for open interpretation: “a brand is not a logo. a brand is not an identity manual. a brand is not a product or a service. a brand is not a label or a package. a brand is not a business plan. a brand is not some kind of fashion or one of its trends. a brand is not a manufacturing process. a brand is not a name or a slogan. but what is a brand? above all, a brand is a promise! a promise made firmly, clearly and for everlasting time. it is a promise that all the expectations of the consumers related to the product, service, or person, will be fulfilled. that is why we can say that a brand is what the others think about it” (caramida, 2009). therefore, being more than a word, a logo or an identification symbol, a brand is a heterogeneous blending of perceptions, emotions, or attitudes regarding a product, making reference to its qualities, or to its tangible and intangible aspects. 274 loyalty – the nucleus of brand capital. case study: rom chocolate bar a series of terms connected to the brand concept also exists, and their definition is important for accurate conceptual distinctions: the name of a brand can consist of a word, letters or numbers used separately or in different combinations; the image of a brand is an essential factor, for the reason that its public representation is directly proportionate to the public trust in that brand; brand personality involves the association of a brand, especially by means of advertising, with certain personality traits, with the purpose of differentiation; the identity of a brand brings together a series of elements, starting from the name of the brand, with the purpose of differentiation; brand awareness involves brand recognition (that is, consumers’ confirmation of previous contact with that brand) and brand recall (the identification of the brand by the consumers when they are offered a product belonging to a certain category or a clue related to the brand product), but it does not necessarily imply the acquisition of the brand or attraction to it; brand commitment refers to the consumer’s connection or the degree of commitment to a brand, which will result in repeated purchase and use of the brand (balaban, 2009). 2. dimensions of brand capital in effect, loyalty to a certain brand shown by devoted consumers represents the nucleus of brand capital. when consumers continue to purchase a brand after comparing it with competing products which possess superior qualities, we can speak about a substantial value of the brand, which probably derives from its symbol and slogans, as well. brand loyalty can be structured on a few levels, each of them representing a different marketing challenge (figure 1): figure 1 – loyalty pyramid source: aaker, d. (2005), managing brand equity. capitalizing on the value of a brand name, brandbuilders grup publishing, bucharest, pp. 65 devoted buyer he likes the brand – considers it a friend satisfied buyer, dissatisfied with the possible implications of brand switching satisfied/ accustomed buyer, who feels there is no reason to change brands buyer who easily switches to another brand/ price-sensitive, indifferent, lacking brand loyalty 275 amalancei the broad-based bottom of the loyalty pyramid corresponds to the changeable/unstable buyer, who is totally indifferent to the brand and for whom any brand is adequate, whereas the name the brand has a very insignificant role for his buying decision. this type of buyer can easily be transferred in the category of buyers who will choose another brand, guiding their decisions on the basis of convenient or low prices. the second level consists of buyers who could be considered accustomed and who are satisfied with a product or, at least, are not dissatisfied with it. in fact, possible dissatisfaction is not sufficient to stimulate the brand switching desire, especially if this change involves effort. at the third level we can identify those consumers whose loyalty is determined by costs (in terms of time, money or performance) brought about by brand switching. this type of consumer can be attracted by the competition by means of reductions or benefits which are significant enough to compensate for switching costs. the fourth level is represented by the socalled ‘brand friends’ who prefer the brand because they associate it with a symbol, previous use experiences of high quality rates. however, the preference for one brand or another cannot commonly be determined precisely. finally, the fifth level includes devoted buyers who take pride in the discovery of the brand and in their condition as first users of the brand. for these buyers, the significance of the brand lies in its functions or in the fact that the brand represents the expression of their identities, while their trust in the brand will make them recommend the brand to others, too. even though these five levels can only exist in a conceptual condition and do not always appear in a pure form, they can nevertheless reflect the existing variety of forms loyalty can take and the manner in which this aspect can affect brand capital. brand loyalty lies at the basis of brand capital and is formed of numerous factors, among which the brand experience is the most important one. still, loyalty is partly determined by major dimensions of brand capital such as, for instance, recognition, associations and perceived quality, but it cannot always be explained by virtue of these factors (aaker, 2005). most brands show the desire to generate more energy and this is explained by the fact that successful brands seem to possess energy. in case of traditional brands, although they are considered trustworthy, honest, accessible and innovative, still, most often, they are regarded to be old-fashioned, obsolete, or boring, which can have an impact on their relevance for certain market segments. it is thus believed that “an element which confers energy to the brand is a product, a promotion, a sponsorship, a symbol, a programme or any other brand element which, by means of association, significantly improves and energizes the target-brand, thus actively managing both the energy source and its associations with the target-brand over a long time span” (aaker, 2006). 3. case study: rom chocolate bar a traditional brand which can be considered successful on the romanian market is rom chocolate bar, produced by kandia, a company whose history dates as far back as 1895 when it had only six employees, in a candy factory in timişoara. in 1920, the number of employees reaches 300, and in 1948 nationalization occurs. in 1964, the first rom chocolate bar appears on the market, whose recipe was modified, as a consequence of the living conditions of those times, first by giving up milk, and then by introducing substitutes in the rum filling (figure 2). 276 loyalty – the nucleus of brand capital. case study: rom chocolate bar figure 2 rom rum and vanilla cream chocolate bar source: http://www.citadinul.ro/2013/07/6-reclame-la-ciocolata-rom-tricolor-comentate/, accessed on 1.10.2013 figure 3 rom authentic rum bar source: http://www.kandia-dulce.ro/brand/rom/, accessed on 1.10.2013 rom chocolate bar was relaunched by kandia in 2005 by means of the campaign rom. strong sensations. romanian sensations. starting from 1964 (dumitru, 2013) – figure 3. on the company’s site, the name of this campaign is clearly explained: “to talk about rom means to talk about romanians and romania. a witness of socio-political events and changes, rom is the chocolate bar many of us were raised with. rom has remained relevant even for the younger ones because it is a part of our history, it is the authentic romanian taste, proud of its identity, which causes strong sensations even now, and which are best understood by the romanians. in its more than 48 years on the market, rom has maintained its identity, as well as its strong taste of rum, and the same package showing the romanian national colours”. therefore, the product has retained its form and its package has long maintained the marks of the romanian colours, thus proving that it does not need continuous reinvention. the only changes brought to the chocolate bar are related to its package quality, now with a more lustrous package surface, and its dimensions (rom “the great” or “the double”), and in this way it has answered the increasing demand of the consumers who are fond of the strong sensations awoken by the taste of rom chocolate bar. however, in 2010, on the package of the chocolate bar, instead of the romanian flag, the american flag appeared, together with the slogan “the taste of coolness” (figure 4). 277 amalancei figure 4 new rom source: http://www.wall-street.ro/articol/marketing-pr/93279/ciocolata-rom-isi-pune-pe-ambalajsteagul-american-ca-sa-porneasca-o-dezbatere-despre-valorile-romanesti.html, accessed on 2.10.2013 the campaign’s main objective, as shown by the press release which announced the change, included the boosting up of sales, especially among the younger generation, as well as the enhancement of brand indicators, the consolidation of its market position and the reinvigoration of its image with the aim of attracting a younger target (mistreanu, 2010). the replacement of the romanian flag with the american one on the bar’s package instantaneously caused the disapproval of the romanians in social media. thus, some facebook users organised a campaign which called for the reintroduction of the original package. blogs also wrote about this change. in fact, rom intended to initiate a debate related to the romanian values which have been forgotten lately. the facebook group “we want authentic rom chocolate back” managed to attract thousands of fans, be they previous chocolate consumers or not. as a result, after only ten days, rom chocolate bar reintroduced the package which showed the romanian flag, together with a quite aggressive campaign which claimed that “rom is back for you. congratulations for the vigour with which you called back 100% authentic romanian rom” (pascu, 2010). mention should be made that, even though over the last twenty years important changes occurred in the factory which produces the chocolate bar, the product has been manufactured without interruption, recording value increases of more than 10% annually (grajdeanu, 2009) and it has thus managed to remain in the top of bestselling chocolate bars. it is considered that rom is a brand which has proved to be successful in romania according to philip kotler’s 4ps (price, product, place, promotion), the strategic secret of this product lying in the wish to attract young people and to bring up to date a brand which was born in communist times (roșca, 2012). the promotional campaigns for rom chocolate are unconventional and always constitute a challenge which aims to stimulate the viewer and, most of all, to create a national image and brand. some of these (2005) were built on the idea of a rebellious attitude against the rigours imposed by the communist doctrine (commercials such as “the work visit”; http://www.youtube.com/watch?v=o5bsn9bkofi, accessed on 3.10.2013 or “the roaker” 1; http://www.youtube.com/watch?v=torzod3uv6m, accessed on 3.10.2013), and replies such as “the party wants you to get a haircut!” have become clichés and are still the subject of substitutions, parody or pastiche in common speech, although the commercial has no not been shown on tv for a long time. others, dating from 2008-2009, were created by associating rom chocolate with 1 “roaker” is a distorted linguistic form of the english word “rocker”. 278 loyalty – the nucleus of brand capital. case study: rom chocolate bar a musical genre called “manele” – a controversial musical genre, which nevertheless managed to impose itself on the romanian musical market and even attracted fans among certain categories of the population, including quite a large number of young people – or with dragobete’s day 2 (http://www.youtube.com/watch?v=olwf7cci0xk, accessed on 3.10.2013), thus taking advantage of the moment when this celebration was reinstituted as a tradition in romania. the slogan “on dragobete’s day, love in the romanian way” had a strong public appeal, being used as the name of numerous events organised for the celebration of this day. however, it seems that the most daring campaign was that from 2010, “the new rom. let’s build america” (http://www.youtube.com/watch?v=ktggv0tpamq, accessed on 3.10.2013), when the romanian flag on the chocolate package was replaced by the american flag. the idea at the basis of this campaign, whose objectives were mentioned above, generated a public debate on the topic of nationalism, romanian values and romanian identity, and it also engendered numerous petitions and demonstrations calling for the reintroduction of the authentic rom. in the same year, this idea also constituted the opportunity to create a new commercial (http://www.youtube.com/watch?v=w8bh43ijhyc, accessed on 3.10.2013), which includes an anthem in praise of rom chocolate, thus confirming the attachment of the romanian people to their colours, tradition, and values. the latest promotional campaign for rom chocolate (2013) is by no means less inspired. starting from the idea that romania occupies the 5th position in the international top of geographical confusions, the commercial explains the difference between bucharest and budapest, the two cities being often confused with one another as a result of the similarity between the names of the two capitals in english. the campaign “bucharest not budapest” managed to attract the attention of many tv stations and was even awarded at the golden drum festival in slovenia (bunea, 2013). the same happened in 2012, at cannes advertising festival, with the campaign entitled “the romanians are smart” (silver lion award for direct lions category – best low budget campaign) – a campaign launched in 2011, due to which romania became the first country in the world which changed its image on the internet (campania “romanii sunt destepti” castiga silver lion la festivalul de la cannes, 2012) – or in 2011, at international festivals in prague and new york, where the campaign “rom. changing the romanian flag” obtained a golden award in the sabre awards competition, consumer marketing – existing product category, and a silver medal and two bronze medals in sections “marketing effectiveness: consumer products and services”, “integrated media: product & service”, “public relation/brand communications: product and services consumer” (campania "noul rom", premiata la sabre si la new york festivals, 2011). as a result of the fact that it has maintained a constant relationship with its own clients, rom won a place in the book worldwidebrands, from which we have extracted a relevant excerpt: “rom has managed to become a brand which is cool enough for the young people, thus succeeding to make the connection between past and present times. rom urges you to say what you think, to be what you are and thus to have the courage to be different. rom pulled through in the hardest of times, spoke openly about what romania means and awoke in the romanians the attachment for their country when everyone wanted to leave abroad. rom makes the best of a bad bargain because it is the sense of humour which characterizes us, the romanians. 2 the equivalent of st valentine’s day. 279 amalancei rom speaks with humour and with a touch of irony about the romanians and romania, revealing strong, authentic sensations” (munteanu, 2011). 4. conclusions we believe that rom brand is characterised by tradition, authenticity, distinction, trust and recognition. according to a study conducted by unlock market research exclusively for biz magazine and published on july 22 2013 at www.revistabiz.ro, it is the second consecutive year when authentic rom occupies a place in top 10 brands considered to be fascinating by the romanians, thus going up with two positions as compared to 2012. it is important to mention that the test group for this top was formed of 600 respondents aged 18 – 55, who were interviewed over the phone using cati questionnaires. the evaluated brands belonged to four product categories, the maximum admissible level being of eight categories, and a series of pragmatic and emotional factors were taken into consideration, attributes which are specific to the concept of fascination. thus, each brand was associated with a coefficient of fascination, and the results obtained formed the top 50 most fascinating brands (barliga, sandulescu, 2013). rom brand has managed, throughout time, to make itself admired/appreciated and respected, to be friendly, to win the trust of the romanian people, building the bridge between the past and the present, laying its foundations on humour, tradition and innovation and thus securing the consumer’s loyalty. references aaker, d. (2005), managing brand equity. capitalizing on the value of a brand name, brandbuilders grup publishing, bucharest. aaker, d. (2006), brand portfolio strategy: creating relevance, differentiation, energy, leverage and clarity, brandbuilders grup publishing, bucharest. balaban, d.c. (2009), advertising. from strategic planning to implementation media, polirom publishing, iaşi. barliga, g., sandulescu, l. (2013), top 50 branduri fascinante in romania, available on http://www.revistabiz.ro/top-50-branduri-fascinante-in-romania-1317.html. bunea, i. (2013), campania gândul „why don`t you come over”, marele premiu la festivalul golden drum, available on http://www.paginademedia.ro/2013/10/campania-gandul-why-dont-you-comeover-marele-premiu-la-festivalul-golden-drum/. campania "noul rom", premiata la sabre si la new york festivals (2011), http://www.wall-street.ro/articol/marketing-pr/104058/campania-noul-rompremiata-la-sabre-si-la-new-york-festivals.html. campania “romanii sunt destepti” castiga silver lion la festivalul de la cannes (2012), available on http://www.kandia-dulce.ro/campania-romanii-suntdestepti-castiga-silver-lion-la-festivalul-de-la-cannes/. caramida, c. (2009), brand&branding. visual identity, i, brandmark publishing, bucharest. dumitru, e. (2013), reinventarea brandurilor româneşti din „epoca de aur“, available on http://www.historia.ro/exclusiv_web/actualitate/articol /reinventarea-brandurilor-romanesti-epoca-aur, grajdeanu, a. (2009), rom autentic, vector de vânzări pentru cadbury, available on http://www.money.ro/rom-autentic-vector-de-vanzari-pentrucadbury_455896.html. 280 http://www.revistabiz.ro/ loyalty – the nucleus of brand capital. case study: rom chocolate bar mistreanu, s. (2010), ciocolata rom isi pune pe ambalaj steagul american ca sa porneasca o dezbatere despre valorile romanesti, available on http://www.wall-street.ro/articol/marketing-pr/93279/ciocolata-rom-isipune-pe-ambalaj-steagul-american-ca-sa-porneasca-o-dezbatere-desprevalorile-romanesti.html. munteanu, a. (2011), o carte despre brandurile îndrăgostite de consumatorii lor, available on http://www.romanialibera.ro/bani-afaceri/angajari/o-carte-desprebrandurile-indragostite-de-consumatorii-lor-243697-pagina1.html. new rom [image], (2013), available on http://www.wallstreet.ro/articol/marketing-pr/93279/ciocolata-rom-isi-pune-pe-ambalajsteagul-american-ca-sa-porneasca-o-dezbatere-despre-valorile-romanesti.html. olins, w. (2006), on brand, comunicare.ro publishing, bucharest. pascu, r. (2010), ciocolata rom – sau ce inseamna sa stii marketing, available on http://razvanpascu.ro/2010/10/10/ciocolata-rom-sau-ce-inseamna-sa-stiimarketing/. rom authentic rum bar [image], (2013), available on http://www.kandiadulce.ro/brand/rom. rom rum and vanilla cream chocolate bar [image], (2013), available on http://www.citadinul.ro/2013/07/6-reclame-la-ciocolata-rom-tricolorcomentate. roșca, c. (2012), brandurile care au trecut testul timpului: câte generaţii au trecut peste ciocolata rom, demachiantul doina sau vinul murfatlar?, available on http://www.zf.ro/companii/brandurile-care-au-trecut-testul-timpului-categeneratii-au-trecut-peste-ciocolata-rom-demachiantul-doina-sau-vinulmurfatlar-10357858. 281 microsoft word apostoaie constantin marius_eng.doc facets of pharmacists recommendation on over-the-counter market in romania monica elena talabă, „al. i. cuza” university of iasi, romania andreia gabriela andrei, „al. i. cuza” university of iasi, romania abstract this study proposes to explore the valued aspects for persons who buy dietary supplemnets and whether pharmacists recommendation influence the buying decision and in what measure. the study is based on a initial qualitative research, followed by a quantitative research, both on pharmacists and consumers from the city of iasi. the results differ to an extent from the findings in west european studies. pharmacists recommendation is of subjective nature, influenced by the relation they have with the over-the-counter (otc) producing company representative and by the trust they place in a brand or anither. from the viw of the customers, pharmacists recommendation has certain power in taking the decision to buy but it is not the most important aspect nor the only one taken into consideration. the reasearch identifies 6 important aspects for the customers when they buy otc products and 4 aspects that the pahramacists take into account when recommending a producer od dietary supplements to the pacients. keywords dietary supplements, over-the-counter market, pharmacist recommendation, customer, focus group, romania jel codes: m 37 introduction as opposed to the medicine market, where the realeasing procedures of a new medicine may take up to a few years, the over-the-counter (otc) market has fewer regulations1, which means that their releaseing is much faster – it may take only one or two months2. this is why it is essential that providers from the health care services shouls help in the choosing process in order to make sure the otc products are taken in safety and are effective. even if all practioners in the health domain may help customers take decisions based on certain information, pharmacists play a key role, due to their accesibility, knowledge on alternative medicine and training in pathophisiology and pharmacology3. as opposed to the medicine romanian market, the otc romania market has not been enough researched from the view point of recommendations. taking this fact into consideration, we want to determine whether the paharmacist recommendation influences the romanian pacient in buying otc products and how 1 www.wall-street.ro, 04 december 2008 (accessed on february 2010) 2 www.wall-street.ro, 06 february 2009 (accessed on february 2010) 3,5 nickerson-troy, j., morse, k., white, r., beals, a., hudson, m. şi kuczmarski, k. (2007), state of the art review: pharmacists' approach to selecting dietary/nutritional supplements for patients, american journal of lifestyle medicine vol. 1: pp. 490 498. studies and scientific researches economic edition, no. 15, 2010 493 important is this influence. also, we explore the criteria used by pharmacists when recommending a certain deitary supplement. literature review the criteria that is used by the pharmacists in recommending over-the-counter supplements is, in the first place and according to medical literature, determination of appropiateness of otc products use for the pacients and determination of safety and effectiveness . besides these, the pharmacists should take into consideration pacient characteristics, the most important one being level of affection, use of other drugs / otc products and the costs4. also, the pharmacist respects a deonthologic code, the most standing being the the international code of farmaceutica deonthology. other results held that pharmacists recommendation take more into consideration their expertise5. one major role of the pharmacist in pharmaceutical care is as a self-care consultant, a term introduced to describe the role of the communitybased pharmacist who interfaces with consumers requesting health information, advice, or counseling6. as self-care consultants, pharmacists should be functioning as consumer advocates in health-related matters. the pharmacist is believed to be uniquely qualified to serve the public’s interest in otc product selection 7. unfortunately, some indicate that the pharmacist’s role in consumer self-care consulting has not lived up to its potential 8. more specifically, the domain of self-care consulting related to otcs product recommendations and sales has often been neglected, undervalued, and/or underappreciated by many pharmacy practitioners 9. a host of barriers and hindrances have been attributed to undoing the profession’s vision of pharmaceutical care, many of which are not new 10. other authors believe pharmacists face two substantial hurdles, cognitive barriers stemming from needing more knowledge and skill, and situational barriers related to economic, time, and physical informational restraints when serving consumer self-care needs. other authors found a significant number of pharmacists were not satisfied with their knowledge of appropriate otc use for various consumer groups, such as instructing consumers on missed doses and overdoses, and counseling patients on the use of self-monitoring devices11. pharmacists are generally not responsible for otc inventory store purchases and store buyers rarely communicate facts concerning new products or devices to the pharmacist. this may place the pharmacist in an inconvenient position of having limited information when trying to explain a range of self-care products to meet consumer demand. pharmacists mostly remain skeptical about recommendations of otc products until they can be shown scientific evidence related to their safety and efficacy. a deepening situational factor influencing pharmacists’ recommendations related to otc products is economics. as third party programs provide coverage for an ever-increasing number of drugs, gross margins 4 kotecki, j., e. (2002), factors related to pharmacists’s over –the-counter recommendations, journal of community health, vol. 27, no. 4 6 srnka, qm. (1998), pharmacists as self-care consultants, american journal pharm association ,38:235. 7 covington, t. (2000), self-care and nonprescription pharmacotherapy, american journal pharm association, pp. 3–14. 8 gebhart, f. (1998). is orba ’90 working?, drug topics, 58–65. 9 trinca, ce. (1995), the pharmacist’s progress toward implementing pharmaceutical care, amer pharm supp, 13:13–18 10 knapp, da. (1979), barriers faced by pharmacists when attempting to maximize their contribution to society, amer j of pharm educ, 43:357–359. 11 archo, r., hillson, em,, jankel, ca. (1994) pharmacists’ satisfaction with their pharmacy education—were they prepared for obra-90? apha ann mt pub,141:25. studies and scientific researches economic edition, no. 15, 2010 494 on prescriptions filled in community pharmacies have been dropping at an ever-increasing rate. thus, to avoid losing money, pharmacists who dispense prescriptions in community pharmacies have been forced to increase their productivity and efficiency12. it has become evident that for pharmacies to survive and prosper today, they must begin to establish new sources of revenue. this is one reason that otc product sales are so important to pharmacies. according to barett13, a noted health care consumer fraud critic, most pharmacists who work in pharmacies face a serious potential conflict of interest in dispensing otc products. barrett’s contention is that on one hand, pharmacists are expected to be knowledgeable about otcs products and to dispense them in a responsible and ethical manner. on the other hand, a pharmacy’s income level may be directly correlated to the sale of otc products. increasing sales and increasing profit margins undoubtedly are goals of every pharmacy. furthermore, pharmacists’ professional journals rarely contain articles criticizing this businesslike approach, while their trade publications carry articles urging pharmacists to compete with other retailers by using similar propaganda techniques14. consequentely, the aims of this study is to establish how important is the pharmacist recommendation for the customer when selling otc products and how pharmacists differentiate among different otc producers. research hypothesis taking into account the finding from the literature review, we frame the following hypothesis: i1. the pharmacist play a central role in helping otc consumer make the most appropiate decision due to their accesibility, knowledge and training in the domain and this is why his/hers recommendation influences the otc buying decision. i2. the customers invest pharmacists with trust and consider them an important provider for taking decisions. i3. due to the fact that pharmacists recommendation does not imply only ethical reasons, they discriminate among different otc producers when they make their recommendation to the customers. methodology collecting data assumed 2 directions – customers and pharmacists. research design meant a qualitative parte done in november 2009 – 2 focus groups with the customers and 5 in-deph inteviews with pharmacists and a quantitative part done in march 2010 – questionnaire survey, both for customers and pharmacists. the first focus group had the following characteristics: otc customers with the age between 20 – 45 years (7 participants), and the second: otc customers with the age between 46 – 65 years (7 participants). to the first focus group 71,5% women; 28,5 % men attended (5 women; 2 men); the second 85,7% women, 14,3% men (6 women; 1 men). other criteria taken into consideration was that the decision to buy otc products to be autonomous, not to be conditioned by the existence of a medical prescription, 50% of the respondents to have a higher income of 1000 lei, 50% of the respondents to have children. the decision made about the focus groups have been taken with a specialist – local producer of otcs and taking into consideration literature reviw findings. pharmacists for in-deph interview where convenience selected. 12 upjohn company. (1995), teaching issues for pharmaceutical management educators, kalamazoo, mi. 13 barrett, s. (2001), unethical behavior of pharmacists, www.quackwatch.com/01quackeryrelated topics/pharm.html 14 eder, r. (1998), caught in the middle. drug st news, 11–14. studies and scientific researches economic edition, no. 15, 2010 495 the questionnaire survey was taken on 90 pharmacies in iasi and 252 customers from iasi. customer application of the questionnaires was held in pharmacies, hazardous, with a numbering pace of 2. results the 2 focus groups done on consumers revealed the fact that the representation held by most female respondents about otcs, resulted from spontaneous associations, was that of help, products that come to aid of body health, vegetables and fruits substitutes. for focus group participants, ‘dietary supplements’ inspire energy, multiple action, an easy product, with a balanced concentration of alimentary supplemnets and minerals. for those undertaking a ‘supplement cure’, the most frequently mentioned symptoms had been: lack of energy, somnolence, sense of weakness, weak sight, lack of appetite, sense of breakdown, nervous consumptions, weak immunitary system. most respondent use to take otcs mostly in two periods of the year: spring and winter, in order to prepare the body for winter or brace it in early spring. there also exists the habit to take dietary supplements before or during stressful periods, with high volumes of work or internse nerveous solicitation or after a strict diet. students used to associate otc consumption with exam periods and most women with children declared taking otcs during and after giving birth. as a mean, a cure of otcs take about 1-2 months, 2 or 3 times a year. we give hearby the factors that influence the consumption of otcs. the physician represents a powerfull influence factor, in most cases he/she being the one recommending respondents to take dietary supplements. in the same time, he/she takes the decision on the brand of otc in order to be bought. the respondents settle in buying the physician recommended otcs, placing great trust upon him/her. many held the opinion that taking otcs must be done after a preliminary visit and at physician recommendation, him/her knowing exactly what quantity of dietary supplements or minerals / vitamines is necessary, in what concentration and what kind of otcs is best fit. experience of friends, relatives has a strong role in choosing vitamines, the power of personal example having a strong persuasive effect. pharmacist recommendation, some of the respondents declaring that it is a short-cut from going to the physician, argument for appealing directly to the counsel and advice of the pharmacist. the general impression is that, taking into consideration the interests and perceptions in certain otcs held by the physician or pharmacist, some of the otcs receive a faster promotion then others and fall into consumption much faster. commercials, especially the ones on television, are high in the influence sources top, being considered a kind of televisioned ‘prospect’ from which information is gathered before going to the pharmacy. presentation catalogues and other written promoting materials, existing in pharmacies, are also a source of information and influence to which many respondents appeal because, on numerous occasions, the pharmacist does not have the time or the patience to offer all the required information about vitamines. regarding the 5 in-deph interviwes with the pharmacists, they revealed the fact that for them, quality of a otc is defned as a combination of number of components, dosage, reputetion of the producer and otc effectiveness. the performance criteria taken into consideration are the correct and standardised concentration / dosage, price, reputation of the producer, quantity on stock unit (which has to check with the consumption periods), stability and resistence of the pill and the variety of presentation forms. some pharmacists associate a high price with a better therapeutical effect of the otc, the reason being that a high price states for high costs which derive from the high trained specialists from behind and from the high technology involved. pharmacists admitted that, as a general rule, if a customer knows exactly what he/she wants, the discussion is reduced to the actual transaction. the quantitative resarch tool – the questionairre – was based on the aspects that were marked as important in the qualitative part. studies and scientific researches economic edition, no. 15, 2010 496 customers also had to complete the consumption frequency, in order to find out whether there is a statistic significant difference regarding the valorised aspects of the ones consumming more frequently otcs from the ones who take otcs only rarely butb this hypothesis was not confirmed. customers were asked wich of the mentioned aspects are taken into account when buying dietay supplements and what is the extent of their influence – product composition, name of producer, physician advice, pharmacist advice, form and taste, package, tv commercial and therapeutic effect on family and friends. each item represented a 5 steps likert scale. the items of the question consists into a scale with internal reability (alpha cronbach = 0,55). the most important aspect is the composition of the product. the qualitative part revealed that dosage /concentration of product is also important, but few declared that they study it when actual buying is in place, possibly because consumers do not trust themselves in evaluateing produst quality. on the second place stands the advice of the physician, followed by the therapeutic effect on family and friends and, on 4th place, the recommendation of the pharmacist. table 1. results in the considered important aspects aspects mean of points product composition 4.48 physician advice 4.15 therapeutic effect on family, friends 3.67 pharmacist advice 3.47 producer 3.42 pill form and taste 2.65 tv commercial 2.45 package 2.12 (source: research report) in order not to become a bias, the price was taken in a separate question, where respondents had to mark on a 5 steps likert scale the importance of price when buying dietary supplements. in this context, the price obtain a mean of 3,70, that is closer to being important than neutral. in other words, price does matter but it is not a decisive aspect when buying otcs. with regard to the previous table, the price is less important than product composition and physician advice, but more important than the effect the otc had on family, friends and pharmacist recommendation. lower the previous table is given, only the price has been included. as a conclusion, pharmacist recommendation is an aspect that strongly influences the buying decision of a dietary supplement but it is not the most important; the product composition – the minerals, vitamins and/or plts extracts included play the most important role, the recommendation of a physician is far more powerfull than the one of a pharmacist and so are the price and the therapeutical effect the dietary supplement had on relatves and friends. we treat with prudence the high marks the price received and put it on the current economic situation. we believe that in the situation of a normaly going economy, the elesticity of the demand of dietary supplements with regard to the price would not be so deep. studies and scientific researches economic edition, no. 15, 2010 497 figure 1. results for valued aspects when buting dietary supplemnets afterwards we found out the opinion of the pharmacists with regard to the recommendation they make. the accent was on the reasons they recommend one brand of dietary supplement against another or one producer in front of another. the technical mean was by marking true or false on phrases that regarded these aspects for a certain producer of dietary supplements. the aspects held into consideration were reffered to a single producer: quality of products, pharmacy discount, the price for the customer, the product variety, special promotions or offers, notoriety of brand, possesion of adequate information about the producer, technique of supplement preparation and therapeutic effect of different brands. most pharmacists discriminate among producers depending on the notoriety of the brand. on the 2nd place sits the criteria of the perceived quality of the products and, on the 3rd place, the price of the products. information about the prepareing ways of the produsct, the variety of products, the promotions and special offers are not considered criteria for choosing among brands or producers. the next figure synthetize the results. figure 2. aspects which stand to the base of discriminatory recommendation of pharmacists among different brands studies and scientific researches economic edition, no. 15, 2010 498 there are certain observations and clarifications we would like to make with regard to these results. this true or false scale is not as powerful as a likert one. with concern to the price of the otcs, during the qualitative research, pharmacists agreed on the point that they use to evaluate on sight the material situation of the consumers and recommend an otc in accordance with these evaluation. in other words, the pharmacist will recommend a cheap otc to a retired person, whereas to a well-dressed lady the pharmacists will recommend an expensive otc. the construct quality of products was also evaluated in dependence with 7 aspects resulted in the qualitative research: dosage, production process, ingredients, stability and resistence of pills, the producer, package, variety of products. in the first place, pharmacists understand by quality in an otc the preparation process, which includes the respecting standards and correctdosage, as pure ingredients as kthey may be, high stable and resistent pills, high technology processes. pharmacists were asked to mark on a scale with constant sum how often they recommend 4 national romania producers of dietary supplemnets. afterwards, a single producer was selected and pharmacists were asked if they recommend him, generally; which are the reasons they recommend him from the aspects above, if they recommend him often then the others and which are the aspects from above they recommend him higher on. the majority of the pharmacists responded that they generally recommend that singular producer but only 25,6% admitted that they recommend him more often than the others. for these last ones, it is statisticaly significant that they marked in higher numbers that the relation with the reprezentative of the producer is friendlier. we conclude that pharmacists usually recommend all producers alike but when they favoure one or another, the causes reside in subjective reasons, one of them being the relation with the producer representative. this result is consistent with a well known rule in sales – ‚relations sell’. conclusions and future directions the hypothesis that pharmacists recommendation is important confirmed but the one that stated that pharmacists discriminate between different producers when they recommend otcs, was not confirmed. otcs consumers from iasi consider pharmacists recommendation of lesser importance that product composition, physician recommendation, therapeutic effect reported by the relatives and friends and the price of the products. taking some nuances, the composition of the product keeps to the rational base of buying and therefore the pharmacist cannot offer a product that the consumer does not one to buy. the recommendation of the physician is law, his authority being much greater than the pharmacists. family, friends and aquaintances represent an important point for giving recommendations, opinion and reports on effects of otc. besides, these represent the principal source of information for dietary supplemnets, accordingly with their answers to another question from the questionnaire. however, the price is more important than the effect reported by family and friends because one has to take into account his own budget. on the other side, the recommendation comming from the pharmacists represents an complex amalgam of evaluation of the producer and the product, of the representative of the producer they get into contact, the discount for the pharmacy and the pacient. we consider important the result that in the majority of cases (75%) the pharmacists do not discriminate among different otc producers but when they do there is a link between the relation the pharmacist has with the representative of the recommended producer. in order to verify this result, a replication of the study is needed, wheather on a higher sample or in a different city. a future direction is also researching the extent to which pharmacists ask pacients about their affections and medicamentation. this study is limited only to find if and how pharmacists discriminate among different producers of otcs. studies and scientific researches economic edition, no. 15, 2010 499 bibliography 1. archo, r., hillson, e.m., jankel, ca. (1994) pharmacists’ satisfaction with their pharmacy education—were they prepared for obra-90? apha ann mt pub, 141:25 2. barrett, s. (2001), unethical behavior of pharmacists, www.quackwatch.com/01quackeryrelated topics/pharm.html 3. covington, t. (2000), self-care and nonprescription pharmacotherapy, american journal pharm association, pp. 3–14 4. eder, r. (1998), caught in the middle. drug st news, 11–14 5. gebhart, f. (1998), is orba ’90 working?, drug topics, 58–65 6. knapp, da. (1979), barriers faced by pharmacists when attempting to maximize their contribution to society, amer j of pharm educ, 43:357–359 7. kotecki, j., e. (2002), factors related to pharmacists’s over –the-counter recommendations, journal of community health, vol. 27, no. 4 8. nickerson-troy, j., morse, k., white, r., beals, a., hudson, m. şi kuczmarski, k. (2007), state of the art review: pharmacists' approach to selecting dietary/nutritional supplements for patients, american journal of lifestyle medicine vol. 1: pp. 490 – 498 9. srnka, qm. (1998), pharmacists as self-care consultants, american journal pharm association ,38:235 10. trinca, ce. (1995), the pharmacist’s progress toward implementing pharmaceutical care, amer pharm supp, 13:13–18 11. upjohn company. (1995), teaching issues for pharmaceutical management educators, kalamazoo, mi 12. www.wall-street.ro, 04 december 2008 (accessed on february 2010) 13. www.wall-street.ro, 06 february 2009 (accessed on february 2010) studies and scientific researches economic edition, no. 15, 2010 500 microsoft word apostoaie constantin marius_eng.doc highlights of marketing research in romania laura catalina ţimiraş, ,,vasile alecsandri” university of bacau, romania bogdan nichifor, ,,vasile alecsandri” university of bacau, romania luminiţa zaiţ, ,,vasile alecsandri” university of bacau, romania abstract being in direct dependence with markets development namely, with economic development level, intensity of competition and consumers demands domestic marketing research market registered up to the year 2008 a sustained increased. more and more players have come at this market, as represented of both world famous organizations, and locally operating companies. revenues from marketing research services showed significant annual increases for most market operators. so as expected, the economic crisis spread at this level too, the year 2009 marking the beginning of earnings decline in marketing research services. on the activity distribution point of view the research marketing market in romania is a concentrated one, mainly dominated by a relatively small number of multinational companies. keywords marketing, marketing research, turnover, market operators jel codes: m 31, d 83 introductory elements marketing research has the purpose of providing information necessary for decision making. virtually, at any time of its existence the organization needs information information about the evolution and impact of macro-environment factors, as well as about the needs, demands, preferences, target consumer expectations, about the evaluation criteria considered by consumers in purchase decision and about what constitutes “value” for them, about the actions of competitors and their offerings, but also those of their suppliers or service providers about brand image and attitude toward their own products etc. whatever marketing activity undertaken a new product launching, or relocation of another, planning and operational program communication, selection of the used marketing channels and of suppliers, or establishing prices for certain products etc. choosing from several action alternatives the one which ensures the best ratio between internal and external organization environmental conditions requires information. not least, marketing research conducted in a continuous manner, that constitutes a feature of market-oriented organizations, allows the identification of various opportunities and avoidance of future hazards. in fact, marketing research provides a whole arsenal of methods and techniques adapted to various situations faced by the organization: from qualitative research, where the obtained data is not a subject to quantification, some aimed at understanding the irrational and / or unconscious aspects of certain behaviours / events / processes, which require deeper investigation on the human psyche to quantitative research that may require use of advanced methods for determining the causality of phenomena and to study the statistical significance of the obtained results. studies and scientific researches economic edition, no. 15, 2010 508 marketing research in romania during 2005 – 2008 marketing research market in romania was formed and developed especially on the account of the request of information shown by multinational companies which take action nationwide. 1 increased competition among different national markets and thus the need to provide to customers real competitive advantages, increasing demands and fast rhythm of change in requirements / consumer preferences have led to awareness in a large extent at the level of all organizations (those native inclusively) of the role and “value” of accurate, current, relevant and sufficient information2 for decision making. this, coupled with the growing number of foreign companies that entered the romanian market, has generated an increasing demand for marketing information and implicitly printing of an uptrend on the reference market (at least up to 2008). table no. 1. turnover (lei)* recorded by some of the most important market operators in marketing research in romania, in 2005 -2008 period nr. crt. organization name ** web page 2005 2006 2007 2008 1 acnielsen romania, bucharest www.acnielsen.com 6991795 m.d. 9087608 11314321 2 ad consulting, bucharest www.adconsulting.ro 2054447 1654875 2202840 2660522 3 alfa cont, bucharest www.alfacont.ro 1282153 1708797 1864602 2899284 4 cegedim românia, bucharest www.cegedim.ro 9600454 11976499 15519410 18121221 5 urban and regional sociology center (ursc), bucharest www.curs.ro 1626688 2119020 2626727 m.d. 6 center for opinion and market research (comr), bucharest www.csop.ro 2577425 m.d. 4062418 6296216 7 d&d research, bucharest www.ddresearch.ro 574489 631436 1162246 849731 8 daedalus consulting, bucharest www.daedalusmb.ro 5606736 7278257 8203971 12396446 9 eurodata management, bucharest www.eurodatamanagement.ro 1665626 3448706 4753141 6972485 10 gfk românia, bucharest www.gfk-ro.com 8638613 12367895 16625213 33127629 11 imas marketing & boring, bucharest www.imas-inc.com 2961118 3848523 5055125 4389588 12 insomar -politic research and marketing, bucharest www.insomar.ro 54476 4000684 13 insomar, bucharest www.insomar.ro 968993 3660751 1453619 1976012 14 romanian institute for socioeconomic research and boring irecson,bucharest www.irecson.ro 4562048 4525715 4983299 5880215 15 irsop market research& consulting, bucureşti www.irsop.ro 3144936 2563070 2780223 3795518 16 isra center marketing research, bucharest www.isracenter.com 1640375 3989389 4327912 5809704 17 marketscope, bucharest www.marketscope.ro 673803 443986 726221 1127876 18 mednet, bucharest www.romednet.com 1117922 m.d. 1412417 2543489 19 memrb romania retail tracking services, bucharest www.memrb.com 7068846 7762983 11478214 11930440 20 mercury research, bucharest www.mercury.ro 5615451 6406870 5296788 7322684 21 metro media transilvania, cluj www.mmt.ro 594188 1458086 2263526 2774395 22 research international market research, bucharest www.research-int.com 887893 2542734 23 synovate, bucharest www.synovate.com 7387393 10727464 17056710 14631127 24 the gallup organization, românia, bucharest www.gallup.ro 2197615 3543344 4290321 6413959 25 tns agb international, bucharest www.agbnielsen.net 4534589 4933077 4977844 60292 26 visionwise consulting, bucharest www.visionwise.ro 421565 1089042 1340305 m.d. – missing data source: *http://www.mfinante.ro; **yearbook media & advertising, mediafax, editions: 2009 and 2010; **http://sociologie.dreamstyler.ro/marketing.htm; **http://mcir.doingbusiness.ro/ro/servicii-profesionale-si-de-afaceri. national marketing research market’s size reached in 2008 the level of 44 million euros3, romania being actually the country with the highest growth rate in 2008 as against 2007 1 http://www.wall-street.ro/articol/marketing-pr/12503/cercetarea-de-marketing-o-piata-de-12milioane-euro.html. 2 these are the 4 criteria for assessing marketing information. 3 source: esomar (european society for opinion and marketing research). studies and scientific researches economic edition, no. 15, 2010 509 worldwide 22.8%. in the same year global market research marketing totalled around 21 billion euros4. table no. 1 presents the turnovers of some of the well known marketing research organizations in romania. among these, the german company gfk, which works in over 90 countries worldwide, is a national market leader in the field, reaching in 2008 a turnover of over 33 million lei and a market share of 19,3%.5 alongside gfk romania, the most powerful marketing research market competitors in romania are: cegedim, synovate, acnielsen, memrb, daedalus, gallup and mercury research6, the only domestic company among those listed being daedalus. figure no. 1 reflects the turnovers realized in 2008 by the main six companies that operate nationally and have exceeded the threshold of 10 million lei. in fact, the six companies, holding the first places in the hierarchy of marketing research organizations in romania have achieved altogether revenues of 101.4 million lei, which represents over 55% of the total market. therefore, we may state that marketing research market in romania is a concentrated one, mainly dominated by multinational companies. 11.3 11.9 12.4 14.6 18.1 33.1 0 5 10 15 20 25 30 35 ac nielsen r om ania m em r b r om ania r etail tr ac king ser vic es daedalus c ons ulting synovate c egedim r om ania gfk r om ania m il. le i figure no. 1. turnover of the first 6 competitors in the market for marketing research in romania, with values exceeding 10 million revenue in 2008 (million lei) source: processing by http://www.mfinante.ro/ real turnover growth is observed for almost all studied organizations during 2005 2008, reaching in some cases over 200% in 2008 compared with 2005 (metro media transilvania, eurodata management, gfk romania). in fact, 2008 represented in romania’s marketing 4 http://www.revista-piata.ro/articole/research/criza-ne-a-invatat-sa-fim-mai-ieftini-oferind-aceeasicalitate.html. 5 http://www.money.ro/cercetare-de-piata/gfk-romania-a-obtinut-in-primele-sase-luni-ale-anuluiafaceri-de-peste-16-5-milioane-lei.html. 6 main players on the national marketing research market were listed by the wall street journal, based on the turnover recorded in 2006. (http://www.wall-street.ro/articol/start-up/40250/a-renuntat-la-unpost-de-manager-de-multinationala-pentru-a-si-infiinta-propria-afacere. html). studies and scientific researches economic edition, no. 15, 2010 510 research a reference year, with the largest revenue made by specialized companies. (table no. 2). table no. 2. change of the turnover recorded by some of the most important market operators in marketing research in romania, during 2005 – 2008 period7 2006 2007 2008 1 ad consulting, bucharest m.d. m.d. 15.4 34.3 2 alfa cont, bucharest -24.4 27.0 12.0 7.5 3 cegedim românia, bucharest 25.1 4.1 44.2 87.7 4 urban and regional sociology center (ursc), bucharest 17.1 23.6 8.3 56.7 5 center for opinion and market research (comr), bucharest 22.3 18.2 m.d. m.d. 6 d&d research, bucharest m.d. m.d. 43.7 102.8 7 daedalus consulting, bucharest 3.2 75.6 -32.2 22.8 8 eurodata management, bucharest 21.8 7.5 40.1 83.5 9 gfk românia, bucharest 94.3 31.5 36.0 247.5 10 imas marketing & boring, bucharest 34.4 28.2 84.8 218.3 11 insomar -politic research and marketing, bucharest 22.0 25.3 -19.5 23.0 12 insomar, bucharest m.d. m.d. 6709.4 m.d. 13 romanian institute for socio economic research and boring irecson,bucharest 254.6 -62.1 26.0 69.3 14 irsop market research& consulting, bucureşti -6.9 5.0 9.4 7.0 15 isra center marketing research, bucharest -23.5 3.5 26.6 0.2 16 marketscope, bucharest 128.2 3.5 24.5 194.0 17 mednet, bucharest -38.2 56.0 44.0 38.9 18 memrb romania retail tracking services, bucharest 67.0 88.8 19 mercury research, bucharest 3.1 41.0 -3.6 40.1 20 metro media transilvania, cluj 7.1 -21.1 28.2 8.2 21 research international market research, bucharest 130.3 48.1 13.6 287.6 22 synovate, bucharest m.d. m.d. 165.5 m.d. 23 the gallup organization, românia, bucharest 36.3 51.7 -20.5 64.4 24 tns agb international, bucharest 51.3 15.5 38.6 142.2 25 visionwise consulting, bucharest 2.1 -3.8 -98.9 -98.9 26 360insights, bucureşti m.d. 146.4 14.1 m.d. + / in percents as against the previous year + / in percents in year 2008 as against the year 2005 nr. crt. organization name m.d. – missing data source: processing after http://www.mfinante.ro marketing research in romania after 2008 starting with 2009, as result of economic crisis, which significantly affected the marketing budgets of agents acting locally, marketing research market entered a downward trend. in fact, the involution was observed worldwide (and not just locally), the marketing research 7 real increases and decreases for turnover are shown. cpi was used for this purpose served by the nis average year (http://www.insse.ro). studies and scientific researches economic edition, no. 15, 2010 511 market following the trend required by the overall economic development. basically, the economic crisis effects have been felt in the global marketing research market prior to 2009, research marketing market in romania knowing the effects with relative delay. 8 not having on disposition information with on a higher presence level concerning the income of organizations acting in the domestic market of marketing research, we reproduce below, with purely indicative purpose, the turnover dynamic derived from activities of advertising and market research, data reported by ins up to january 2010. an upward trend of turnover by late 2008 may be observed (just as shown by the indicators presented earlier on turnover of key market operators in marketing research). the year 2009 marks the decline of the market research marketing and advertising; decline that probably will be attenuated simultaneously with the overall economic recovery. (figure no. 2). 0 50 100 150 200 250 300 350 400 450 2005 = 100% figure no. 2. dynamics of monthly turnover of market research and advertising activities (% vs. 2005) 9 source: http://www.insse.ro/ (tempo-online time series) in conclusion, marketing research market in romania met until 2008 a sustainable development, being in agreement with overall economic development. with the emergence of economic crisis, profile organizations have registered decreases in revenues, a result of reduced marketing budgets of the organizations potential customers acting in the national market. marketing research market in romania can be broadly described as being dominated by foreign companies that operate globally, a phenomenon manifested by the concentration of market activity at a relatively small number of competitors. in addition to foreign companies, romanian companies have managed to prevail in this market, one of them daedalus manages to be at the top five competitors in terms of realized revenue, according to data for 2008. 8 http://www.revista-piata.ro/articole/research/criza-ne-a-invatat-sa-fim-mai-ieftini-oferind-aceeasicalitate.html 9 indicator communicated by ins: turnover indices for market services especially made for enterprises. gross series base year 2005. division “advertising and market research activities”.) studies and scientific researches economic edition, no. 15, 2010 512 bibliography 1. boier, rodica, laura c. ţimiraş. (2006), marketing research, performantica publishing, iaşi 2. media & advertising yearbook, 2009, telegraph 3. media & advertising yearbook, 2010, telegraph 4. wall strett journal 5. market magazine 6. economic tribune magazine 7. http://www.insse.ro 8. http://www.money.ro 9. http://mcir.doingbusiness.ro/ro/servicii-profesionale-si-de-afaceri 10. http://www.mfinante.ro 11. http://sociologie.dreamstyler.ro/marketing.htm studies and scientific researches economic edition, no. 15, 2010 513 marketing communication in the internet 39 marketing communication in the internet duhalm simona, assistant university of bacau abstract: currently, communication becomes more complex, faster and more dynamic every day. in this context, communication switches channels on traditional media to online applications. thus, the electronic communication threatens, if not take the physical communication. we live in the era of information and the information they seek more ways than quick, cheap and accessible spread. among the most common methods of electronic communication including website, electronic newsletter, blog and email custom. online marketing has its roots in traditional marketing, but branch out and in a very obvious due to a unique features: interactivity. on the internet, communication takes place in two directions and not just one, as in traditional marketing. at the same time, sellers and buyers can complete transactions from their homes or offices, at any time of day or night. online marketing offers the advantage of presenting the interactive promotional materials that can meet the expectations of each type of buyer. instead of creating a single message, as happens in the promotion of mass, marketing online allows the creation of "interactive brochure" that allow potential customers to choose the information that they want to see and when they want to see. changing consumer behavior have had thoughts of marketing people who understand that the internet is a very effective tool to attract, retain and loyalty the customer. on the internet, companies can create individualized sales presentations, tailored to each buyer. online marketing allows companies to target their customers in a way that traditional media marketing can not. online advertising is closer to selling personal than anything else. each customer is seen as a single person with its own needs, lifestyle, preferences and purchasing patterns. one of the main objectives in pursuit of marketing on the internet should be developing a comprehensive database that contains detailed information on existing customers and potential. the development of information technologies allow a wide range of facilities for marketers such as a precise targeting both geographical and in terms of age and visitor preferences and consumer web services. another advantage is interactivity that provides internet transforming the advertising into a dialogue (unlike the classic advertising, where it is rather a monologue). in addition, there is a very large variety of forms of advertising, from banner advertising, which can be images, text, animations, sound, image, video spots, etc. these are all interactive. consumers on the internet differs from the way in addressing the procurement and respond to marketing. people who use the internet gives greater importance to information and tend to respond negative to messages aimed only sell products and services. while traditional marketing deals with a somewhat passive audience, online marketing aimed at people who select effective web sites on which they will visit with and banners that will click. thus, online marketing, consumer control a large part of the interaction. advantages and disadvantages of using the internet as a medium of marketing communication advantages of internet are: • targeting very good user segments concerned, now technologies enabling that identify geographic location of the consumer online advertising and targeting a more complex matter of what your visitors, their age, income information, the budget earmarked for a specific category of products (some web pages that can be used as media), etc.; • results that are measurable throughout the program and create a stage studies and scientific researches edition: economics, no. 13 (2008) marketing communication in the internet 40 with a very low error with low cost compared to those of classical marketing research; • rapid visibility and throughout the campaign, which gives a great addition to classical advertising media such as radio or tv, where advertising spots are run at certain times and for a certain duration. internet advertising is constantly circulated by a virtually unlimited number of visitors of the site which runs; • sustainability over time (the articles are usually published in electronic archives) and low cost of maintenance of its existence; • freedom of creativity, leading to innovative concepts (because of technology), appearing different forms, formats, concepts, techniques to promote products or services of a company; • multiple channels show, many "tools” at hand; • increased interactivity, obtaining rapid feedback ,often even instant; • awareness quickly; • low costs. but there are disadvantages such as: • segments are concerned, however, limited in number, still can not speak of a "touch" the mass of the population, although growth rates audience are amazing of explosion due to technological development in recent years; • although there are many results and measurable, times are few people to monitor and act in real time on this campaign because the actions and reactions are different from those of the classic marketing; • lack of a specific method of programming can make the website information will not be found; • lack of qualified personnel in industry, as a result of that is a relatively new field. internet environment is characterized by continuous growth in the number of users and the number of registered domains, improving the quality of content, information and services sites, increasing the amount and degree of sophistication of online advertising with an increased interest of advertisers to the internet . developing access to the internet via cable and mobile phone services with the emergence of additional value added to the main isp links (online services to protect the mail boxes, customer center, voip,)crystallisation of a group of major players, with entrepreneurial activities online, which develops networking sites to attract advertising or to provide applications and online services such as recruitment, virtual markets, etc., drafting and adopting legislation on the itc also led to increasing the number of users. marketing on the internet are very high chances to succeed if they offer free information of value, because customers who are searched on the internet for information and leave convinced of concrete facts and logic. companies that until now had to condense the advertising messages can enjoy a relatively unlimited space, the internet allowing them to place a large quantity of multimedia information, consisting of text, pictures, graphics and sounds. online marketing and provide the advantage that the metering accesses each page, to find out what potential customers are interested. in marketing communication via the internet site is an important strategic tool, as its characteristics: individualization and interactivity, is not only an event on the internet, but also a channel for sale, a promotion and publicity tool, a tool for research, technology necessary to support a development strategy in the virtual market long-term. a website is composed of websites, databases and other applications developed in php, asp, flash, etc.. such applications include: registration forms, banners, logos. the core a web site is web page and a web page consists of text and image. the image can be static or dynamic. dynamic image files can contain video and sound files. the site can sell and bring the consumer closer to the decision to purchase, through the communication of information, customer support, promote technology, is interactive, giving opinions and satisfaction / insatisfaction customers. the success of a site is determined by its quality, easy access to information and quality photos. among the criteria that characterize the quality of the website include: studies and scientific researches edition: economics, no. 13 (2008) marketing communication in the internet 41 • airworthiness (authentication ease, function menu, position within the site); • the design (home page, layot, methods to capture the attention of the visitor); • content information (information structure, the help, contact page); • custom criteria (combining with airworthiness safety, ease of access demo, offered help in case of loss / theft of data authentication). being considered the most important promotional tool online can have a significant influence if it is continually updated and is promoted by registration in search engines and different databases. marketing on the internet, small companies can compete for between equals with big companies. small companies that develop and publish a web site may seem good as professional and reliable companies such as large multinationals. blogs gaining ever more users and readers. a blog is a frequently updated journal published on the internet for the general public, built on a platform of cms (content management system). it is distinguished from other pages by the fact that the data are displayed in reverse order of their introduction. blogs provide information, comments, opinions about a favorite topic (eg political, advertising, local news, personal information), and content can be in text, audio, video. modern blog evolved from online journals, which were started only updated components of the usual sites. with the development of programs that facilitate the introduction and display items in reverse chronological order, the process became accessible to a wider audience. blogs can be made at corporate level. a corporate blog is a blog published and used by an organization with the aim of reaching some targets / parameters, which are either effective or promotion. although in terms of personal blogs quickly expanding market, the corporate level we can not yet speak of a uniform coverage of the market. a little exercise in imagination: when a person calls the call service, prefer to speak with a robot or an employee? the same is true for customers of a company when it opens website would appreciate it if you see something other than a simple catalog presentation. banner is a tool used mostly in communication on the internet. it must look attractive, to be in harmony with the site where it is placed. to build a lasting relationship with the customer, must win the trust and to convey sincerity, and one of the most important ways to build trust is to promptly answer emails. this notify customers that are important for the company. the company could encourage current and potential customers to send questions, suggestions and even complaints via email. representatives are responsible for serving customers can respond quickly to such messages. the company can conceive, also lists the internet-based with electronic addresses of current and prospective customers. these lists provide an excellent opportunity to present the company and its offerings to new customers and build relationships with current customers. thus, market operators online can send to customers newsletters and offers related to certain products depending on the history of customer purchases made. communication via e-mail offers managers marketing communication and numerous priceless benefits from the rapid dissemination of the message to a large mass of receivers and to the minimum cost involved in this process, but use of the internet in a chaotic and lacks efficiency can bring losses that can hardly recover. companies must be careful not to cause dissatisfaction among internet users, due to multiple data. must take into account that can irritate consumers when they sent unsolicited emails. a key element that must be taken in online communication is that much time. thus, for a more efficient use of time, not only that the information is easily and quickly accessible, but it becomes more succinct and to the point. besides marketers are turning to new channels of communication is necessary to change the approach, using the expression studies and scientific researches edition: economics, no. 13 (2008) marketing communication in the internet studies and scientific researches edition: economics, no. 13 (2008) 42 language and brief informal these specific environments. it is now increasingly hard to "aim" consumers through traditional methods, particularly the young. therefore, the budgets allocated to internet marketing in western europe will grow annually by 15% by 2012. europeans of the most developed browsing the internet on average 14.3 hours per week, while the time spent watching tv is 11.3 hours. meanwhile, 36% of "internauţi" mentions that watches television less because it allocates more time browsing the internet. changes in terms of consumer behavior have had thoughts of marketing people who understand that the internet is a very effective tool for attracting, retaining and loialisyng customers. therefore, companies will double the amount allocated to this medium of communication in the next five years. online marketing budgets will increase primarily to better target population increasing number entering the internet and use this to substantiate a more and more decisions. according to forrester forecasts, budgets allocated to online marketing by companies in western europe will grow from 7.5 billion since 2006 to over 16 billion euros in 2012. the increase will not only absolute but in relative terms: if last year in these countries is spent online only 9% of the total marketing firms, in 2012 the share will reach 18%. this trend starts to be felt in romania, where the pace of growth is higher than in western countries, due to start at a low level of development of the market. the amount budget for online marketing in our country is estimated at only nine million euros. in romania, access to the internet population of young urban, age up to 40 years, reached a high level. the audience will grow from year to year, marketing costs are low and benefits are clear. in addition, increases the number of hours spent on the internet and purchasing decisions are based increasingly on research than before, sometimes quite detailed, the internet market. while in romania, most of the online marketing budget is spent on ads in the form of banners, the trend at the european level is different. western european companies will spend this year 4.5 billion euros, or 50% of the budget for marketing actions search engines. the budget allocated to advertising through banners in western europe is three billion, and the marketing via email, of 1.3 billion. conclusions: currently, investment promotion tools that give internet is clearly favorable investment promotion through the classics: written press, television, outdoor. awareness of the importance of communication, reduced costs involved in communicating over the internet led to an explosion of messages sent through the internet, without regard to quality. like any other medium of communication and the internet proved its efficiency through imagebuilding over time. the amount is equivalent to quality, it should be the first concern of those who use this medium of communication. the internet is certainly the newest market for various businesses. provide sufficient space for any entrepreneur, may start a business and investment low, sometimes even without financial resources and eliminates the physical distance, providing access to a much larger number of potential customers. the internet is an extremely dynamic. the competition is becoming greater, and customers are just a few click away from your competitors, making the level of loyalty in the online environment should be reduced. references: [1] balaure v. (coord), adăscăliţei v., bălan c., boboc şt., cătoiu i., olteanu v., pop al. n., teodorescu n. (2002), marketing, editura uranus, bucureşti [2] epuran gh. (1999), cybermarketing. publicitate şi eficienţă pe internet, editura plumb, bacău [3] epuran gh. (2007), marketing pe internet (suport de curs), editura univ. bacău, bacău marketing communication in the internet 43 [4] epuran gh. (1998), tehnici promoţionale. fundamente teoretice, strategii, modele de decizie, editura univ. bacău, bacău [5] kotler ph. (1999), principiile marketingului, editura teora, bucureşti [6] kotler ph. (1997), managementul marketingului, editura teora, bucureşti [7] www.capital.ro [8] www.ebusiness.org [9] www.economist.com [10] www.epayment.ro [11] www.mediainfo.com [12] www.netsun.ro [13] www.news.com [14] www.online.ro [15] www.trafic.ro [16] www.wall-street.ro studies and scientific researches edition: economics, no. 13 (2008) http://www.capital.ro/ http://www.ebusiness.org/ http://www.economist.com/ http://www.epayment.ro/ http://www.mediainfo.com/ http://www.netsun.ro/ http://www.news.com/ http://www.online.ro/ http://www.trafic.ro/ http://www.wall-street.ro/ poziționarea contabilităţii în cadrul știintelor studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro placing accounting among sciences mihai deju “vasile alecsandri” university of bacău dejumihai@yahoo.com petrică stoica romanian court of accounts, bacău county chamber of accounts stc_petrica@yahoo.com abstract framing accounting as a science has been carried out in close connection with the development of knowledge in this field and with the meaning given to this concept of “science”. recognizing accounting as scientific field by specialists is due to the fact that it features a combination of accounting theory and methods for the development and application of these theories. accounting is a scientific discipline in the social sciences because: it is a creation of the human being in response to practical needs; it reflects phenomena, activities and social facts; it addresses various groups of users (managers, bankers, shareholders, employees, tax bodies, etc.) which are an integral part of society; it offers information necessary to decisionmaking, most of the times with impact on the behaviour of individuals; it is influenced by the economic, social, legal and political environment, that is by social phenomena. keywords accounting; scientific; domain; theory; paradigm; evolution jef classification m41 nowadays accounting is regarded as an independent scientific discipline, with its own status in the family of social sciences, the system of economic sciences. the evolution of accounting as a social practice is linked to the development of the human being as an economic being. the oldest known form of accounting was memorial accounting, by which pay commitments and receivables were recorded chronologically, and were considered distinct businesses. later on, the simple-entry bookkeeping appeared, moment recorded by the author of the compendium “the sum of arithmetic, geometry, proportioni et proportionalita”, luca paciolo (rusu, 1991) in 1494. the author did not invent a new accounting method, but presented in detail the way of application and the rules of the double entry bookkeeping. through this work, the author was the first to integrate accounting in the family of sciences using mathematics. framing accounting as a science has been carried out in close connection with the development of knowledge in this field and with the meaning given to this concept of “science”. as the double-entry bookkeeping was applied in the western europe and the accounting literature and teaching were applied, the concerns on the scientific status of accounting increased. recognizing accounting as scientific field by specialists is due to the fact that it features a combination of accounting theory and methods for the development and application of these theories. accounting is a scientific discipline in the social sciences because:  it is a creation of the human being in response to practical needs;  it reflects phenomena, activities and social facts; 150 placing accounting among sciences  it addresses various groups of users (managers, bankers, shareholders, employees, tax bodies, etc. ) which are an integral part of society;  it offers information necessary to decision-making, most of the times with impact on the behaviour of individuals;  it is influenced by the economic, social, legal and political environment, that is by social phenomena. j. b. say considered accounting “the real economic science”, due to the contribution to the emphasis of flows and the circuit of exchanges between economic agents, being concerned at the same time about the measurement, respectively the quantification of their size (klee, 1992). in the economic and judicial sense, professor dumitru rusu has come to the conclusion that the subject of accounting is “the assembly of movements of values that can be expressed in money in a small or great extent as well as the economic and judicial relationships which take birth between the units of the national economy and cause monetary settlements between them; the calculations of accounting reflect a sudden movement and transformation of economic means as well as resources in their order of formation and according to their destination in the process of reproduction” (rusu, 1980). professor bernard colasse argues that between geography and accounting there is a relationship of epistemological affinities, both disciplines affect the information needs of the human being and they face the problem of correspondence between the real space (the entity, i.e. its territory) and the space described (the accounting plan, respectively the map). in the case of accounting, he considered that the subject constitutes at the same time an object of knowledge. as compared with physical or natural phenomena, the phenomena observed by accounting depend on the human behaviour. accounting depends on the socio-economic organisation where it operates, and, in turn, acts on this organisation. the scientific status of accounting is connected to the existence of one or more theories in accounting. according to thomas s. kuhn1, in any scientific discipline which has reached maturity (called “normal science”), the research is based on one or more paradigms. in his opinion, paradigms or theories are those “scientific accomplishments universally recognized that, for a period, offer model problems and solutions to a community of practitioners (of science)” (kuhn, 1976). the members of a disciplinary scientific community have in common one or more paradigms, i.e. a “disciplinary matrix” that provides a relative wholeness of their professional communication (the language of communication) and a relative consensus on their professional judgments. the question is: to what extent do we identify the existence of paradigms in accounting? the recent decades have been marked by the increasing concerns of several authors to develop and validate a theory of accounting, so that, in time, to shape up the existence of several paradigms in accounting. thus, professors b. esnault and ch. hoarau have identified five fundamental paradigms in accounting (ionaşcu, 1997): • the inductive approach: the elaboration of the accounting theory is made by the generalization of the observations provided by accounting practices; • the deductive approach: it assumes prior definition of the objectives of which there are deducted postulates, conventions, methods and rules for accounting; • the predictive approach: it consists in testing accounting methods and rules, depending on their capacity of prediction of events, thus facilitating the decisionmaking; 1he graduaded harvard university where he studied physics. he was professor of the history of science at berkeley university of california, princeton university and at the institute of technology in massachusetts (mit). 151 http://ro.wikipedia.org/w/index.php?title=universitatea_berkeley&action=edit&redlink=1 http://ro.wikipedia.org/wiki/california http://ro.wikipedia.org/wiki/universitatea_princeton http://ro.wikipedia.org/wiki/mit deju, stoica • the behavioural or psychological approach: it studies the individual user’s reactions at the time of publication of accounting information and it focuses on accounting information relevance to decision-making; • the economic approach of information: it sees accounting information as an economic asset. the nature and the quantity of published information are dependant on the offer of accounting information producers and the users’ demand. another author, henning kirkegaard (1988), shows that the evolution of accounting consists in the transition from one paradigm to another (cossu, 1995). he identified three paradigms in accounting that show in fact the evolution of the accounting model: • the first paradigm or the treasurer’s paradigm: according to which the treasurer as unique actor, must answer three questions: where have the money come from? where will the money go? what is the money stock? this model of accounting (cash accounting) corresponds to the economy in which payments are made only in cash. • the second paradigm or the accountant’s paradigm: it appeared together with the development of the accounting language that includes logics, which allows the transfer of a service, as well as the transfer of the appropriate payment to be made in two different moments. in order to be complete, the second paradigm includes the first one. the accounting model requires two actors, the accountant who has to justify the origin and destination of money, and the treasurer that is limited to the context of monetary flows. • the third paradigm or the administrator’s paradigm: in an uncertain environment, administrators put the accounting information on the first place when making decisions. the administrator’s paradigm has three actors (the treasurer, the accountant and the administrator) and has three important moments: when the decision is taken, but not performed; when the decision is made, with the possibility of finding discrepancies at the moment of its performance; when the performed operation is paid, with the possibility of determining deviations from the time of payment. methodologically, it is based on the merger between accrual accounting and traditional double-entry accounting. the acceptance of the new paradigm could generate an information system for the management of organizations, that is, an accounting model oriented to towards the satisfaction of all accounting information users. the presentation of the evolution of accounting as a succession of paradigms shows us that the history of accounting may be regarded as the history of competitions between competing paradigms. by reference to the exact sciences, this diversity of approaches would mean a lack of maturity of accounting as a scientific discipline, so accounting would be in a prescientific stage. t. s. kuhn admits that, in a given field, there can be one or a lot of paradigms: “scientists would say that they share a theory or a lot of theories” (kuhn, 1976). the existence of paradigms in accounting confirms its status as a mature scientific discipline. another aspect related to the scientific status of accounting is the impact of theoretical researches on accounting practices. the role of practitioners and of professional organisations remain important in the development of accounting and its adapting it to the environment in which it operates; in recent decades has increased the importance of research in the field of accounting, research generally led by the academic environment. 152 placing accounting among sciences current accounting research methodology is based on the statistical-mathematical tool and on the methods used by other social sciences, making accounting “an increasingly scientific technique, what in the philosophy of science is called a techno science” (colasse, 1993), which is a technique in symbiosis with science. accounting research is relatively recent and is growing differently from one country to another. in the usa, the first body which has set out to bring together the efforts of teachers and researchers in the field of accounting, considered as global referential, was created in 1916 and named “the american accounting association” (aaa). in romania, the start was in 1994 by creating “the romanian accounting association” (arc). the accounting research carried out in universities and directed by such bodies makes us witness the shaping of scientific communities or disciplinary groups working in the field of accounting. similar to the other scientific disciplines, in the field of accounting as well, we can see a fundamental research, designed to analyze accounting as social, organizational and historical phenomenon, and an applied research that aims at improving the accounting tool depending on the realities of accounting practice. the existence of the two sides of the accounting research was identified by some romanian authors who have named accounting as a “fundamental and applied science” (demetrescu et al, 1979). moreover, professor b. colasse proposed the identification of a normative accounting research, motivated by the fact that accounting practices are based on accounting rules drawn up by the agencies of normalisation. these rules are preceded by studies and work that is by forms of normative or doctrinal research. accounting uses research methodologies that belong to the empirical sciences, as well as the methodologies of theoretical sciences, being a field opened to fundamental and applicative research. as a field of social sciences, accounting is nowadays awarded by two families of sciences: economics and management sciences. currently, in the accounting filed there is a way of organization that highlights two complementary aspects: on the one hand, accounting aims to provide information to external users (domain characteristic of financial accounting), and on the other hand, the information provided by accounting relates to internal users (it is the case of internal management accounting). in perspective, accounting is seen as a true and fair view of the financial position, of performances and changes in the financial position of the company, becoming a useful database in underlying decisions, regardless of their nature. contemporary accounting research does not develop no autarchically in relation to other areas of scientific knowledge or of the socio-economic context. accounting in the scientific knowledge (ionaşcu, 2003) is a form of representation of an organisation, and the “art” of this representation is practiced by empowered persons, accounting professionals who have appropriate academic training. we see accounting as a management technique that allows the collection, processing and analysis of information relating to transactions and events of an entity. in accounting there are recorded by specific techniques only the transactions and events which can be quantified monetarily, thus distinguishing the accounting reality. on the other hand, accounting is an information system that allows the production and dissemination of information for decision making. currently, the scientific status of accounting cannot be certified unitarily, but most authors recognize accounting as a scientific field, because it has a set of accounting theories and methods for developing and applying these theories. since the early part of the 19th century, accounting has been regarded by some authors as an economic science. the close link between economics and accounting is explained by the fact that the latter should reflect, in a conventional manner, all the 153 deju, stoica economic facts that affect the organisation, i.e. the facts relating to the production, distribution and consumption of wealth, being in this sense “the safest method of economic observation”. the status of accounting as a science of human action is given by the fact that management problems originate in human actions, and on the basis of the concept of human action there is the assumption that “human reason plays a role in each action” (kirzner, 1996). scientifically, it should be noted that romania has a small community of researchers in accounting in relation to other countries. accounting research is carried out largely in universities, under the form of doctorate studies. the results of scientific work are the product of personal initiatives because the forms of institutionalised accounting research are missing. although some works of romanian literature accounts may be considered documentary synthesis, by using the domestic and foreign bibliography, the original approaches, with an innovative role in the conceptual and methodological plan, they are still insignificant. written communication in accounting is carried out by specialized newspapers and journals (the journal of public finances and accounting, company’s management and accounting, business accounting and audit, the economist, capital, economic truth), edited by various factors interested in accounting, but which promote, more often than not, a literature of commenting accounting rules. as concerns the view of practitioners on accounting, we consider that it is mainly technical, based on accounting procedures provided by the legal rules, quite perishable (due to the very frequent changes) and dominated by fiscal influences. in higher education we appreciate that there are two guidelines for approaching accounting as a discipline of study, situation resulting also from the way accounting is treated in university courses. a first approach, as a succession of accounting entries, reduces accounting to the primary status of simple technique for recording economic-financial operations, without a guiding doctrine. another approach to accounting is based on the pedagogical presentation of the company’s accounting model, structuring operations in activities generating results in the form of monetary profit and revenue. we consider that this way of presentation better defines accounting as a scientific discipline. epistemologically, for most authors accounting remains a component of the economic science with a theoretical-applicative character and with a role of “recording economic phenomena and processes”. there are different opinions among romanian authors, as well, concerning the scientific positioning of accounting. for a large part, accounting continues to be classically defined as a scientific discipline in the system of economic sciences (călin et al, 1997; petriş, 2000), while for others it is “an information discipline (...), the only discipline that can provide financial information about an organization” (caraiani & olimid, 2001). another segment of authors consider that accounting is a “techno science”, i.e. a technique fuelled by knowledge generated by the accounting practice and by the results of scientific research. accounting should be considered a mature discipline, with many theories, a component of management sciences, an approach resulted from a new replacing of social scientific disciplines. the conceptual framework of accounting is defined by the financial accounting standards board (fasb) as “a coherent system of objectives and fundamental principles, interrelated, likely to lead to the formulation of solid rules and indicate the nature, role and limits of financial accounting and the financial statements.” according to the professors niculae feleagă and ion ionaşcu, the conceptual framework of accounting “is a guide for the development of accounting rules and 154 placing accounting among sciences their interpretation. it is a support for processing the operations relating to transactions and events involved in the company’s activity, which are not resolved by the rules.” (feleagă & ionaşcu, 1998) the local accounting system imposed since 19942, has changed the basic concept with regard to the organisation of accounting, from a monist approach to a dualistic vision, dividing accounts in two sections: the general accounting, called also financial accounting, and management accounting. in its evolution, accounting proved to be traditionally a cash accounting. cash accounting does not make a distinction between the notions of expenses and payments and between the concepts of income and revenue. the accrual accounting records income the moment they are realized and expenses are charged as they are used, regardless of the date on which the effective payment or collection takes place. in professor feleagă’s opinion, “cash accounting advanced accrual accounting. moreover, nowadays, small businesses and most agents use, in one form or another, cash accounting.” (feleagă, 1996) romanian accounting represented a “mixture” of cash accounting and accrual accounting, until early 1994 (being an accrual accounting when recording expenditure and cash accounting when recording revenue), and after this date it became a real accrual accounting. the organisation of accounting in terms of harmonisation implies additional costs that romanian companies will have to bear. to training costs there are added the costs for computerization in accordance with the international standards of accounting, as well as the costs for permanent consultancy and auditing of annual accounts (the consultancy and audit being carried out by different independent professionals). moreover, by the laws and regulations in force, some companies are required to carry out the annual financial audit of financial statements, when auditors express their opinion on the accuracy of financial statements. we wonder to what uses this opinion, whether it is favourable or not, and to whom is it useful? accounting gives a new meaning to the practitioner, as the latter is no longer in a “convenient” position of performer, passing to the position of economic analyst. guessing what accounting will become a quite difficult intellectual exercise. in order to foresee the future accounting systems or techniques, we should anticipate primarily the economy of the future as a very important factor of accounting. as concerns the research on the economy of the future, the results are contradictory. we believe that accounting research should not focus exclusively on improving the existing system, as there is the possibility that, in another country, various companies already experiment new methods of accounting. references călin, o., ristea, m., văduva, i., neamţu, h. (1997), bazele contabilităţii, the didactic and pedagogical publishing house, bucharest. caraiani, c., olimid, l. (coord.) (2001), bazele contabilităţii, second edition, ase publishing house. colasse, b. (1993), comptabilite generale, fourth edition, the economic publishing house, paris. demetrescu, c. g., puchiţă, v., possler, l., voica, v. (1979), contabilitatea, ştiinţa fundamentală şi aplicativă, romanian writing publishing house, craiova. feleagă, n. (1996), controverse contabile, the economic publishing house, bucharest. 2 in accordance with the provisions of the fourth directive of the european economic community and international standards of accounting 155 deju, stoica feleagă, n., ionaşcu, i. (1998), tratat de contabilitate financiară, vol. ii, the economic publishing house, bucharest. ionaşcu, i. (1997), epistemologia contabilităţi, the economic publishing house, bucharest. ionaşcu, i. (2003), dinamica doctrinelor contabilităţii contemporane, studii privind paradigmele şi practicile contabilităţii, the economic publishing house, bucharest, 33-48. kikegaard, h. (1988), the future of management accounting – draft paper, copenagen business university, quoted in cossu, c. (1995), melanges en l’honneur du professeur claude perochon, editions foucher, paris. kirzner, i. (1996), perspectiva economică. un studiu asupra istoriei gândirii economice, all publishing house, bucharest. klee, l. (1992), image fidele et jeux d’image sur l’entreprise – reflection sur les rapports entre principes comptables et realite economique, revue de droit comptable, 92-4. kuhn, t. s. (1976), structura revoluţiilor stiintifice, translation, scientific and encyclopedic publishing house, bucharest. petriş, r. (2000), bazele contabilităţii: breviar, gorun publishing house, iaşi. rusu, d. (1980), bazele contabilităţii, second edition, didactic and pedagogical publishing house, bucharest. rusu, d. (1991), fra luca di borgo şi doctrinele contabilităţii în cultura economică românească, junimea publishing house, iaşi. 156 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 28, 2018 http://sceco.ub.ro 59 some instruments used to achieve environmental performance in tourist accommodation units mirela ștefănică faculty of economics and business administration, al.i. cuza university of iași stefanica_mirela@yahoo.com abstract the paper highlights some instruments that help us to achieve environmental performance in tourist accommodation structures. the most known instruments used to achieve environmental performance are as follows: iso 14001 standards (environmental management standard), emas (european eco-management and audit scheme), and eu ecolabel. with the help of these instruments, we can identify and quantify the material and power resources consumed, the emissions and waste generated, we can evaluate their potential impact over the environment, and we can identify the options to reduce these impacts. the reasons at the basis of the creation of these instruments are extremely complex, going beyond the purely economic frame in order to enter an ethical sphere of debates inciting the spirit of almost all the population on the globe, which is the type of planet that we leave as inheritance to our followers, the future generations. according to the reports of the european commission regarding these instruments we have shown the evolution and the present situation of emas registrations and eu ecolabel for european tourist accommodation services. keywords environmental performance; tourist accommodation; iso 14001; emas; eu ecolabel jel classification q53; l83; m10 introduction generally accepted, performance represents a special achievement in a certain field of activity. performance is defined as: the art of good businesses, the way to use the best possible part of company resources in order to reach the objectives of the organisation (bessire, 1999), a state of competitiveness of the organisation, reached by a degree of efficacy and efficiency which ensure a sustainable presence on the market (niculescu & lavalette, 1999), a special result obtained in the field of management, economy, commerce, etc., imprinting characteristics of competitiveness, efficiency, and efficacy to the organisation and to its process and structural components (verboncu & zalman, 2005, roman et al., 2015). performance means success, competitiveness, accomplishment, action, continuous effort, also optimisation of present and projection of future (harrington & harrington, 2000), and it consists of reaching the purposes in convergence with the orientation of the company (noyé, 2002). according to drucker (2006), performance has two components: efficacy, which represents the ability to establish and to accomplish the adequate objectives, and efficiency, which represents the ability to optimally use the available resources for achieving the objectives. according to the explanatory dictionary of romanian language (1996), performance is a special result, obtained in a certain field of activity. this definition, with no economic or managerial implications, means that performance cannot be associated with any result obtained, only with a special one. what does “special” mean? first, it ștefănică 60 means highly superior to what was previously obtained; second, it means superior to the results obtained by “others” (competitors, etc.), and third, it means different from the objectives favourably assumed. according to oxford english dictionary (2017), performance is given by the quality of performing an action, operation, or process. it also represents the competence or efficiency of a person or thing in performing an activity. from a psychological point of view, according to the same dictionary, performance is given by a person’s noticeable or measurable behaviour in a certain situation, usually an experiment. in business, performance is given by the degree of profitability of an investment (pădurean et al., 2014). performance deals with several concepts as: successful management, successful organisation, successful activity, performance criteria, performance management. the fields where performances could have an impact are as follows: managerial performances, economic performances, financial performances, social performances, technical and technological performances, commercial performances, regional economic performances, environmental performances (porter, 2003). the concept of environmental performance belongs to hobincu (2004), and refers to the measurable results of the environmental management system, related to the control of the organisation over its environmental problems, based on its environmental policy, general objectives, and specific objectives (popescu et al., 2016). according to țigu & călărețu, (2013), there is an evolutional process in the corporations regarding the integration of environmental aspects in complex strategic plans. including the environmental problems and sustainable development among the main concerns of the great general planning needs an increased responsibility, the environmental audit gaining credibility. therefore, we consider that a powerful audit programme for an active environmental management is essential. a concept used, introduced and approached by duțescu et al. (2014) is performance in relation with society and the environment. this is a concept which needs a good management frame, which on one hand associates social management and environment with competitive strategy and business management, and on the other hand integrates environment and social information with business economic information and reporting to sustainability. achieving environmental performance in tourism does not mean only to observe the minimum standards of environmental protection (popescu et al., 2014), it also refers to adopting the best practices, accreditation schemes, ethical codes, environmental certifications (honey&rome, 2001). according to brotherton (2004), environmental performance as a success factor has a competitive lever effect on which the resources of an organisation should focus. in hotel industry, israeli et al. (2006) propose a model for performance evaluation, based on several aspects: financial, specific to the sector, of marketing, regarding customer’s satisfaction, human resources (employees and managers), quality employees (abilities and knowledge), and productivity of their work, quality management and managers’ productivity, hotel efficiency and hotel strategic assets. the studies performed by other specialists in the field of tourism highlighted the following success factors: personal involvement, personnel welfare and training, quality food and services, money as a value, marketing activities and comparative evaluation with the best practices (bergin, 2003); strategy of economic development, of cost management, need to gain new customers and to maintain the existing ones, monitoring competitors’ activity, efficient management of the assets, efficient management of the personnel, encouragement of innovation (flanagan, 2005); profitability, budget control, quality of services, management of the relationship with the customers, customer’s profile, clarity of objectives, investments in personnel, productivity and personnel as drivers of innovation and teamwork (nica, 2010); profitability, maintaining the customers, their satisfaction, evaluation of efficiency and innovation (o’donoghue & luby, 2006); service improvement, focus on customer and some instruments used to achieve environmental performance in tourist accommodation units 61 services, creative use of technologies, development of basic capacities (kandampully, 2006). after analysing the literature, we could see that in the field of tourism the emphasis is on the economic and social performance, and less on the environmental one. in comparison to most studies, we intend to pay more attention to the instruments leading to the environmental performance, because it would be a more original approach, and it would show new aspects. in addition, it would help to the improvement of hotel business quality, to economic and social performance, ensuring a sustainable future. instruments used to achieve environmental performance the most known instruments used to achieve environmental performance are as follows: iso 14001 standards (environmental management standard), emas (european eco-management and audit scheme), and eu ecolabel. the reasons at the basis of the creation of these instruments are extremely complex, going beyond the purely economic frame in order to enter an ethical sphere of debates inciting the spirit of almost all the population on the globe, which is the type of planet that we leave as inheritance to our followers, the future generations. iso 14001 standard of environmental management the creation of an environmental management system in a tourist unit is a complex process involving several stages. first of all, the environmental policy, synthetically presented in figure 1, is a public document, describing the measures to be taken in the tourist unit for environmental protection. figure 1 environmental policy source: hobincu, r.v.,(2004) politica de mediu şi crearea sistemelor de management de mediu, bucharest: perfect this commitment, made by the managers of a tourist unit, must be based on the following: examination and surveillance of the activity developed in tourist units, and analysis of critical points for the environment; taking measures for reducing, preventing, and eliminating environmental pollution; preliminary evaluation of the impact of new activities and products over the environment; prevention or reduction of of continuous improvement of pollution prevention of conformity 1. observing the laws 2. observing regulations 3. observing restrictions 1. objectives 2. means 3. verification 1. technological measures 2. avoiding risks 3. recycling waste environmental policy = commitment ștefănică 62 risks of pollutant substance emissions and of power waste; regularly comparing the programme of environmental action with the environmental policy; systematic performance of environmental objectives; cooperation with authorities for minimisation of the environmental risks, with the help of adequate techniques; sensitisation and eco-awareness of the employees of tourist unit; informing the tourists about the dangers of the products and services towards the environment; obligation of suppliers and subcontractors to observe the environmental norms and regulations applied within the tourist unit; total information of the public, and an open dialogue about the impact of the tourist unit over the environment. environmental management systems according to standard iso 14001 have a systemic, dynamic approach, based on the principle of continuous improvement. they rely on deming cycle (figure 2), and involve mainly the identification of the causes in order to act accordingly for stopping or at least for reducing the negative effects over the environment. figure 2 deming cycle source: author this model of quality management system, also known as pdca (plan – do – check act) has an emphasis on organisational change and innovation, in order to ensure a sustainable business performance. european eco-management and audit scheme (emas) emas has the purpose to promote the continuous improvement of environmental performance by the development and implementation of the environmental management system (ems), evaluation of environmental performances by auditing and offering information related to environmental performances to the interested public. according to the report of the european commission of april 2018 regarding emas registrations, in europe there were 12870 companies, institutions, and public authorities developing their activity under emas coordination, i.e. over 2.6 million people of 3866 organisations. in figure 3 we present the evolution of emas registrations between 2010 and 2018. 2. planning 3. implementation (application and functioning) 1. policy of environment 5. analysis performed by the management continuous improvement 4. evaluation, verification, correction some instruments used to achieve environmental performance in tourist accommodation units 63 figure 3 emas evolution 2010-2018 source: http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm in general, there was a constant evolution of emas registered organisations and units between 2010 and 2013. emas registered units presented an important increase in the last 3 trimesters of the year 2013, followed by a decrease in the first trimester of the year 2014. since then up to may 2016 there was an improvement of the situation. according to the information given by the european commission, we can see that germany and italy are the countries with the highest number of emas registrations. figure 4 top of european countries with the highest number of emas registrations (2018) source:http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm regarding emas distribution in the sector of services, most registrations are in the fields of waste and disposal and public administration, while tourist accommodation services hold the 4rd place, with 185 registrations (figure 5). 4470 4542 4659 4532 4581 4470 4209 3721 4163 4024 3931 3928 4034 3943 3963 3865 3866 7667 7794 7794 8114 8218 8600 8367 10826 6854 7144 8620 8908 9271 9093 9202 9140 9004 0 2000 4000 6000 8000 10000 12000 organisations sites 290 75 1239 27 816 36 983 69 53 1083 751 2232 203 1039 1333 1466 369 91 0 500 1000 1500 2000 2500 austria belgia germania danemarca spania grecia italia polonia portugalia organisations sites ștefănică 64 figure 5 number of emas registered organisations per sectors of activity/services source:http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm consequently, from the 185 emas registrations for accommodation services, germany, spain, and italy are the countries with the highest number of registrations (figure 6). figure 6 emas for accommodation services per countries (2018) source:http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm eu ecolabel the european ecological label, eu ecolabel, is another instrument used to achieve environmental performance. it is granted to the products which are in accordance with certain ecological criteria established at european level. the criteria were identified based on complete scientific studies regarding the aspects related to the entire products/services life cycle, they are available for 3-5 years, and they are reviewed regularly to consider the technical progress. 159 185 193 313 435 0 100 200 300 400 500 membership… accommodation education public administration waste and disposal emas leading service sectors (april 2018) 1 10 73 7 55 4 33 2 0 10 20 30 40 50 60 70 80 austria belgium germany cyprus spain greece italy portugal some instruments used to achieve environmental performance in tourist accommodation units 65 figure 7 eu ecolabel per countries and number of products and services (2018) source:http://ec.europa.eu/environment/ecolabel/facts-and-figures.html with the help of this instrument, we can identify and quantify the material and power resources consumed, the emissions and waste generated, we can evaluate their potential impact over the environment, and we can identify the options to reduce these impacts. the report of the european commission presented in march 2018 shows that 53% of the european ecolabels are owned by france 23%, 15% by italy, and 15% by germany. the situation of european ecolabel per groups of products and services in the present is shown in figure 8. figure 8 eu ecolabel per groups of products and services (2018) source: http://ec.europa.eu/environment/ecolabel/facts-and-figures.html the number of european ecolabels attributed to tourist accommodation services registered an ascending trend from 616 in september 2014 to 704 in march 2018. there are 397 hotels with eu ecolabel, of which 156 are in italy. in figure 9 we presented 484 317 238 315 181 112 88 56 47 37 36 31 20 18 16 14 13 13 55 0 100 200 300 400 500 600 total eu ecolabel licences per country ștefănică 66 the situation of the eco-labelled tourist accommodation services in europe in 2018, for the countries with more than two european ecolabels. figure 9 situation of eco-labelled tourist accommodation services in europe (2018) source: http://ec.europa.eu/ecat/hotels/en/list as we can see, italy is the country with the highest number of eco-labelled accommodation structures. at international level there are several recognised certification and eco-labelling programmes, offering labels or awards conceived to show that environmental, socialcultural, and economic practices of these tourist areas meet higher criteria. conclusions specialty studies highlight the fact that performance is a basic concern of researchers from the economic-social field. on the other hand, there is an increased awareness among the managers concerning the need to optimise the efficiency of operational activities and of business decision making, like those regarding profit, planning, control, and continuous improvement of performance, with the purpose to obtain a competitive advantage. this leads to an increase of solid management practices, with an emphasis on performance management. an economy based on performance and sustainability, obtained individually or by cooperation, leads to favourable results horizontally, vertically, multidimensionally, endogenously, and exogenously. this is the context in which environmental management becomes a component of the managerial function, also in tourism, activated by certifications and registrations reflecting their interest in the operators’ environment. in conclusion, certification, registration, or owing an ecolabel, as well as adopting the best practices by the hotel management represents the best way to show the guests the concern and the efforts of the organisation regarding the achievement of environmental performance, as well as the improvement of quality, because tourists will surely see environmental performance as higher quality. references bergin, b. (2003), restaurant critical success factors and inhibitors. hotel and catering review journal. march. dublin. 156 92 10 36 55 8 5 5 3 3 4 6 0 20 40 60 80 100 120 140 160 180 http://ec.europa.eu/ecat/hotels/en/list some instruments used to achieve environmental performance in tourist accommodation units 67 bessire, d. (1999), définir la performance, contabilité, contrôle, audit, vol.2. brotherton, b. (2004) critical success factors in uk corporate hotels. the service industries journal , vol. 24, no. 3, pp 19-42. dicționarul explicativ al limbii române (1996), bucharest: științifică și enciclopedică, p. 778. drucker, p. (2006), despre profesia de manager, bucharest: meteor press. dutescu, a., popa, a.f., ponorîca, a.g. (2014), sustenabilitatea în industria turismului, bazata pe indicatorii cheie de performanta, amfiteatru economic volum: 16, nr. special 8/2014, pp 830 – 844. flanagan, c. (2005), an investigation into the performance measurement practices of irish hotel groups. dublin institute of technology, dublin. harrington, h.j., harrington, j.s. (2000), management total în firma secolului xxi, bucharest: teora. hobincu, r.v. (2004), politica de mediu şi crearea sistemelor de management de mediu, bucharest: perfect. honey, m., rome, a. (2001), protecting paradise: certification programs for sustainable tourism and ecotourism, washington: institute for policy studies. israeli, a., barkan, r., fleishman, m. (2006), an exloratory approach to evaluating performance measure: the manager`s perspectives, the service industries journal, pp 861-872. kandampully, j., (2006) the new customer-centred business model for the hospitality industry., international journal of contemporary hospitality management. vol. 18 no. 3, pp 173-187. nica, p., (2010), managementul performanţelor resurselor umane, iași: sedcom libris. niculescu, m., lavalette, g. (1999) strategii de creștere, bucharest: economică. noyé, d. (2002), manager les performances, insep consulting editions, paris, p. 6. o’donoghue, d., luby, a., (2006), management accounting for the hospitality, tourism and retail sectors. blackhall publishers: dublin. oxford english dictionary, [online] available at: http://www.oed.com/view/entry/140783#eid0 (accessed 29 september 2017). pădurean, m.a., nica, a.m., nistoreanu, p. (2014), entrepreneurship in tourism and financing through the regional operational programme, amfiteatru economic,17(38), pp. 183-197. popescu, c., bostan, i., robu, i.b., maxim, a., diaconu (maxim), l., (2016), an analysis of the determinants of entrepreneurial intentions among students: a romanian case study, sustainability 8(8), 771; doi:10.3390/su8080771, available online: http://www.mdpi.com/2071-1050/8/8/771/htm (accessed on 15 december 2017). popescu, c.r., popescu, v.a., popescu, g.n., (2014), the entrepreneur’s role in the performance growth of the financial audit activity in romania, amfiteatru economic, 17(38), pp. 232-251. porter, m. (2003), the economic performance of regions, regional studies, vol. 37.6&7, pp. 549–578, august/october 2003, [online] available at: http://dx.doi.org/10.1080/0034340032000108688> (accessed 10 may 2018). roman, t., bostan, i., manolică, a., mitrica, i., (2015), profile of green consumers in romania in light of sustainability challenges and opportunities, sustainability, 7, 6394-6411; doi:10.3390/su7066394, available online: http://www.mdpi.com/2071-1050/7/6/6394/htm (accessed on 15 december 2017). http://www.oed.com/view/entry/140783#eid0 http://dx.doi.org/10.3390/su8080771 http://www.mdpi.com/2071-1050/8/8/771/htm ștefănică 68 țigu, g., călărețu, b., (2013), performanţele supply chain management în turism. studiu de caz la s.c. continental hotels s.a., amfiteatru economic, xv (33), pp. 60-73. verboncu, i., zalman, m. (2005), management și performante, bucharest: universitară. european commission, (2018), eco-management and audit scheme, statistics & graphs, available online: http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en. htm (accessed on 21 september 2018). european commission, (2018), eco-management and audit scheme, reports & statistics, available online: http://ec.europa.eu/environment/emas/register/reports/reports.do (processed data) (accessed on 21 september 2018). emas registered accommodation, (2018), available online: http://ec.europa.eu/environment/emas/pdf/other/emas_accommodation_201 8.pdf (processed data) (accessed on 21 september 2018). european commission, (2018), environment, ecolabel, facts and figures, statistical overview, available online: http://ec.europa.eu/environment/ecolabel/factsand-figures.html (accessed on 21 september 2018). european commission, (2018), the eu ecolabel tourist accommodation catalogue, available online: http://ec.europa.eu/ecat/hotels/en/list processed data, (accessed on 21 september 2018). http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm http://ec.europa.eu/environment/emas/emas_registrations/statistics_graphs_en.htm http://ec.europa.eu/environment/emas/register/reports/reports.do http://ec.europa.eu/index_en.htm http://ec.europa.eu/environment/index_en.htm http://ec.europa.eu/environment/ecolabel/index_en.htm http://ec.europa.eu/environment/ecolabel/facts-and-figures.html http://ec.europa.eu/environment/ecolabel/facts-and-figures.html http://ec.europa.eu/index_en.htm http://ec.europa.eu/ecat/hotels/en/list studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 65 corporate social responsibility (csr) practices of business organizations in south wollo region ethiopia s m uvaneswaran wollo university, dessie, ethiopia. uvaneshsm@wu.edu.et tsega zemen wollo university, dessie, ethiopia tsegazemen@gmail.com seid muhammed ahmed wollo university, dessie, ethiopia. seidmuhammedahmed@gmail.com abstract corporate social responsibility ( csr)is the commitment of business to contribute to sustainable economic development – working with employees, their families, the local community and society at large to improve the quality of life for the business and public. in ethiopia, companies are spending portion of profit for developing the society and corporate under different verticals. this paper highlights the demographic and company characteristics of corporate social activities performed by the organizations in the areas of employee, community, environment, customer and suppliers. to meet these objectives, a stratified-random sampling design was used, followed by proportionate technique. the primary data were collected from the merchandising; manufacturing and service render business organizations. to keep representativeness of the sample units, 142 business organizations were chosen based on the category a tax payers. the data collected are analyzed by using simple percentage and likert scaling techniques to find out the participating companies in csr activities. thus the paper concludes that csr contributions relating to community are more compare to other activities like environmental protection, customer and supplier support, employee motivation and social development. keywords corporate social responsibility; business organizations; employee; community, environment; suppliers and customers jel classification m14; m41; o14 introduction corporate social responsibility (csr) refers to the voluntary integration of social and environmental concerns in the business daily operations and their interaction with business stakeholders. the concept of corporate social responsibility is strongly connected with the ‘triple bottom line’ approach advocated by john elkington in 1997. ‘triple bottom line’ is a frame work for measuring and reporting corporate performance against economic, social and environmental parameters. the idea behind this concept is that for an organization to be sustainable, it must financially secure, it must minimize its negative environmental impact and it must act in conformity with social expectation. corporate social responsibility (csr) practices of business organizations in south wollo region ethiopia 66 the sole aim of establishing an organization is to improve the quality of life in the society. measures need to be put in place that determine and reports the extent to which the organization has impacted on the society from time to time. this has been the basic function of the accounting systems of organizations (francis, 1990). corporate social responsibility (csr), which social accounting and reporting is part of, is one area that organizations can use to gain competitive advantage over firms that do not practice it (price water house coopers, 2002). porter et al (2006) outlined the link between csr and competitive advantage. society is seen to benefit when organizations implement a social approach to accounting and reporting in a number of ways; honoring stakeholder’s right of information, balancing corporate power with corporate responsibility, increasing transparency of corporate activity, identifying social and environmental costs of economic success (gray, 2000). the process of reporting on responsible business performance to stakeholders help in integrating such practices into business practices, as well as identifying future risks and opportunities. critics of this approach point out that the benign nature of companies is assumed and therefore, responsibility and accountability is largely left in the hands of the organization concerned (gray, 2000). ethiopian firms have not been left behind in the practice of corporate social responsibility accounting practices and also observed a spectacular evolution in community and investors stance towards the environment in the past few decades. the firms do disclose their social activities in the annual statements though what they report is limited and often reflect only the positives of these activities (kalunda, 2007; uvaneswaran, 2017). they also use other channels of communicating such as newspapers and the company websites. the study will try to establish the nature and mode of corporate social responsibility practices amongst ethiopian firms located in dessie town as per the list of ethiopian chamber of commerce and sectoral association and the ministry of trade whether by engaging in such practices. research problem according to the concept of corporate social responsibility, business corporations should incorporate social and environmental information in the annual financial reports to users of financial reports. furthermore, with the advent of the era of transparency and accountability the demand for social costs disclosure is increasingly being of concern and desirable by products of economic activities (kalunda, 2007). today, active consumer groups, the public and the government departments demand it and in future, legislations promoted by these groups may make it mandatory. in ethiopia, the business organization are rendering variety of social service to the downtrodden community in the region as free polluted environment, employee motivation, community development and customer support etc. but they did not have practices of showing this information in the media like newspaper, magazines and also the habit of transparency in the financial statements to claim tax reduction. even though some companies are voluntarily engaged in reporting several social responsibility activities in their annual financial reports and it appear that companies have progressed substantially further than literature. apart from these the large and midsized companies located in dessie are more in different sectors and the contributions towards csr is limited or unlimited has to identify and also the application of csr practices. whereas many studies have been done on csr in general and o n social and accounting and reporting, none has been done to ascertain the csr practices followed by the organizations. this paper aims to bridge the uvaneswaran, zemen, ahmed 67 existing gap and will address itself to the following objectives and attribute some knowledge of csr practices in ethiopia. research objective • to understand the demographic factors and also the characteristics of the selected business organizations. • to identify the corporate social activities performed in the areas of employee, community, environment, customer and suppliers. scope of the study although there are different categories of tax payers in ethiopia, this study targeted on category a class tax payers companies found in dessie revenue authority office and also companies located in dessie town. specifically, the research was confined on the organizations involved in manufacturing, merchandising and service business and also to identify the companies rendering csr activities relating to employee, community, environment and customers. literature review freeman (1984) defines a stakeholder as any group or individual who can affect or is affected by the achievement of the firm's objectives. stakeholders of the firm include stockholders, creditors, employees, customers, suppliers, public interest groups and governmental bodies. the major objective of the firm is to attain the ability to balance the conflicting demands of the various stakeholders in the firm. ullmann (1985) presents a three-dimensional model for explaining all correlations among social disclosure and social and economic performance. as indicated above, he presents stakeholder power as the first dimension of the model. he explains this by indicating that the firm will be responsive to the intensity of stakeholder demands. the more critical the stakeholder resources are to the continued viability and success of the corporation, the greater the expectation that the stakeholder demands will be met. a series of studies carried out have shown that corporate social reporting by companies is increasing (deegan et al., 1996). maunders (1982) carried out a survey of published accounts of 300 large companies for the period 1981 to 1982 and concluded that the largest incidence of voluntary disclosure was in the area of human resource. gray et al. (1995) concluded that for the various categories of social disclosures which included environmental, community and safety the average amount of disclosure had steadily increased from the year 1979 to the year 1991. corporate social responsibility reports on a firm’s social and environmental performance from a variety of perspectives; including community involvement, employee relations, product safety, philanthropy and the impacts of the firm on the environment. numerous studies have been conducted based on the belief that a responsible company is rewarded by its good reputation. further, these studies are conducted about the contribution of corporate social responsibility (csr) activities and the social accounting practices in the cooperative societies in ethiopia but none of the them studied as per source of the investigator about the application of this concept to the manufacturing and service companies in ethiopia. from the summary above, it is known that the researchers have not been decisive regarding how ethiopian companies perform their csr activities relating to employees, customers, environment and society. therefore, this study aims to show the gap in contributions and shortage of csr activities in different verticals among the selected business organizations in dessie. corporate social responsibility (csr) practices of business organizations in south wollo region ethiopia 68 methodology the study was carried out using a descriptive survey design, employing primary qualitative data. the target population in this research is limited to business organizations in dessie town, ethiopia. the population of the study is those business enterprises which are found in dessie town. according to the data obtained from dessie town revenue office, of the business organizations available in the town, totally 2129 business organizations have been registered as category a (949) and category b (1180) are tax payers. in terms of firm type these business organizations are categorized under manufacturing, merchandized and service. the researcher conducts study only in the category a tax payers companies by selecting samples which are governed under dessie town revenue office. since these organizations are well organized, the researcher believed that they have proper financial statements and also contribute more to the corporate social responsibility activities. stratified random sampling was used to select sample business organizations from the population. this technique is preferred because it is used to assist in minimizing bias when dealing with the population. with this technique, the sampling frame can be organized into relatively homogeneous groups (strata) before selecting elements for the sample. in addition, purposive sampling was used to get respondents from trade and industry office of dessie town because informants were selected intentionally/purposefully to obtain the required data. in this study for the purpose of sample size determination cochran, (1977) statistical model was used. accordingly, the appropriate sample size used for this study at 93% of level of significance with marginal error 7% was determined using the cochran formula. as a result, 142 samples were taken out of 949 business organizations for this study. the total population was stratified as manufacturing, merchandized and service under category a tax payment. then, from each stratum proportional samples were randomly selected by applying proportional sampling technique. the table below shows the proportion of sample size used from each firm type and category of tax payment. in order to realize the target, owner/ managers/ operators of the enterprises and government officials from trade and industry office of dessie town were the sources of primary data. the study employed quantitative methods as an important means of generating the required primary information from the field. the quantitative method was functional through administrating a householdb a s e d survey using questionnaire. to collect relevant data from the selected samples a questionnaire which consist both closed and openended questions had been applied. the questionnaire was prepared in english language. since the sources of data were business enterprises owners/managers, it is translated into amharic in order to make the questions simple, clear, and understandable to respondents. uvaneswaran, zemen, ahmed 69 in this study, questions related to csr activities were rated on a 5point likert response scale. based on this, an internal consistency reliability test was conducted with a sample of 20 business organizations and the cronbach's alpha coefficient for the instrument was found about 0.809, which is highly reliable. typically, an alpha value of 0.70 or higher is taken as a good indication of reliability, (internet source). since instruments were developed based on research questions and specific objectives; it is possible to collect necessary data from respondents. results and discussion to achieve this objective, data were gathered through questionnaire from 142 business organizations rendering manufacturing, merchandising and service operation in dessie. the data collected about demographic factors like age, gender and educational qualification of the respondents are shown. as indicated in the above table, regarding to the sex of the respondents, from total respondents, 66.9% of the respondents are males. with regard to age of the respondents, 39.4 % of them are found in the age group of below 20 years, 38.1% of them are between the age of 21 and 30 years, and the rest 22.5% of them found between the age group of 31 to 40 years. this implies that the majority of respondents who were running the business firms are relatively young. concerning to the educational qualification, the information in the above table reveals that about 59.2% of the respondents are second grade completed, 39.4% are diploma complete and 1.4% of the respondents are first degree holders. this implies that a majority of the business organizations entrepreneurs are educated up to second grade. from the table 3 reveals that about merchandise firms constitute a sizeable number of business organizations in dessie town when compared to service and manufacturing sectors. 23% of the sample respondents are pursuing family owned business only as per the above table. this shows that the majority (67%) of business organization in dessie town is owned by sole proprietors and at the same time 56 respondents are running merchandise business in this category. with regard to the age (years) of the company that the 50 respondents are merchandising and 39 of them are service sectors having 1-10 years of business experience from the total sample respondents. this means that majority (87%) of the business organization have 11-20 years of experience in merchandising business from the study area. corporate social responsibility (csr) practices of business organizations in south wollo region ethiopia 70 regarding to the csr activities relating to employees from the table 4, from total 142 respondents, about 27% of the employees doesn’t encouraged by the organization to develop real skills and long term careers through performance appraisal and training & development. the majority of the organizations take adequate steps at some extent to solve the problems of the employees. 25% of them say that the organizations consult some extent to take important decisions on issues. this implies that a majority (27 %) of the organizations are committed on employee’s health and safety at very little extent only. about 32% of the respondents replied that the firm ensures the work /life balance to some extent, the majority (35%) of the employees getting average wage rate when compare to the concerned sector’s average wage rate. studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 71 from the table 5, it is clear that more than 50% of the facilities like gender equality/ diversity, representation of women as board of directors and organizing day care centers and pre-schools children are provided to employees by the firm. similarly, less than 60% of the facilities like training, freedom of association, collective bargaining and complaint procedure, medical facilities/health care/ health assistance /maternity leave, promotion policies for women and minorities and prevention child labour, labour discrimination (women) were not provided by the firm. thus, it can be concluded that the majority of facilities like gender equality/ diversity, canteen offering subsidized refreshment / free lunch, representation of women as board of directors and organizing day care centers and pre-schools children are provided at maximum level and at the same time certain facilities like prevention child labour, freedom of association, collective bargaining and complaint procedure, labour discrimination (women), promotion policies for women and minorities, residential complexities and medical facilities/health care/ health assistance /maternity leave are provided to the employees at minimum level. regarding to the csr activities relating to social and community in the table 6, from total 142 respondents, about 25% of the firms donate funds to charity at some extent further, 36% of the organizations make their staff to involve in charity work voluntarily on behalf of the company. about 31 % of the respondents expressed that the organizations will favor at some extent. on the other hand, about 27% of them express as very little extent and 20% of organizations replied that their recruitment polices don’t favor to the local community the 15% of them were not at all involved in supporting of community projects. majority (32%) of the organizations are some extent favor in their purchasing polices to the local community. studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 72 as indicated in table 7, that the organizations contribution to the society. more than 50% of the respondents don’t provide any contributions to the establishment of educational institutions and support for education, recreation and public clubs, road construction, sponsor sports tournament, encourage employees to community development activities and organizing awareness programmes about prevention of uvaneswaran, zemen, ahmed diseases like hiv, aids, cancer . on the other hand, more than 50% of organizations providing funds to rural development, donations to ngo for social activities, religious charities and organizing video/audio programmes short films, poster presentation / distribute pamphlets for understanding the causes of drug addicts like alchool, chat chew, cigrattes. this shows that, the majority of business firms do not provide funds to community developments like establishment of educational institutions and support for education, recreation and public clubs, road construction, sponsor sports tournament, and organizing awareness programmes about prevention of diseases like hiv, aids, and cancer. from the table 8, statements 1, regarding to the extent of csr activities relating to customers, from total 141 respondents, about 28% of the firms don’t provide accurate information’s about products and after sales service, (43%) of the organizations show interest on resolving the customer’s complaints on time. about 38% of the companies provide quality assurance at some extent and shows that the organization provide adherence on production criteria to some extent on quality assurance to the products. further, 35% of the organizations are committed at some extent to provide value to the customers and 33 % of the respondents expressed that the organizations consider little extent on issue of accessibility. on the other hand, about 24% of them express as some extent, 19% of organisations replied that their issue of accessibility as very little extent and 12% of the respondents shows that great extents and not at all accessibility issues. this implies that a majority (33%) of the organisations have little extent on the issue of accessibility (disabled to the customers). studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 74 regarding to the extent of csr activities relating to environment in table 9, from total 4 manufacturing companies, about 28 % of the organizations consider to some extent about environment impact on developing new product such as energy, usage, recyclability and pollution. this indicates that the majority (31%) of the organizations not at all using environmentally friendly packaging and containers for their products. it is clear from the table 10 that the more 75% of the organization did not have any environmental protection in energy conversation, air pollution reduction, purchase of dust absorption machine, packaging reduction and no companies have waste products recycling machine. studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 75 conclusion and suggestions the conclusions were made following the foregoing discussions above, each corresponding to the specific objectives of the study. this study found that the majority of business organization having the ownership of sole proprietors with less than 10 years of experience. with regard to the csr activities relating to employee certain facilities were not provided such as training, medical, bonus, child labor prevention and relating to community few amenities are very less like education support, community development engagement, funding for disabled person and relating to environment protection certain facilities are lacking such as energy conservation, waste products recycling, dust absorption and relating to customers and suppliers needs to concentrate more in about labeling of products and service and maintaining of standard and voluntary code of advertising . in respect to the conclusions made in the study, the companies should concentrate or contribute some percentage of profit to engage in csr activities relating to the areas of employee, community, environment, customers and suppliers. additionally, the mofed and commercial code of ethiopia can formulate stringent norms to the companies for contribution in csr activities based on the scale of operations which will definitely leads the country to the betterment of economic and social conditions and also impart that the csr contribution amount is fully exempted from tax as per ifrs and gri. references aguilera, r. v., d. e. rupp, c. a. williams and j. ganapathi. 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[accessed on 08/5/2016]. https://www.researchgate.net/.../how_to_measure_corporate_social_responsibility_ index [accessed on 15/06/2017]. https://www.mbastudies.com/article/how-corporate-social-responsibility-ischangingin2018 [accessed on 19/03/2018] https://doi.org/10.3390/su10082956 https://doi.org/10.3390/su10082956 http://www.actacommercii.co.za/index.php/acta/article/download/180/255 http://www.actacommercii.co.za/index.php/acta/article/download/180/255 http://www.researchgate.net/ http://www.researchgate.net/ http://www.mbastudies.com/article/how-corporate-social-responsibility-ishttp://www.mbastudies.com/article/how-corporate-social-responsibility-ishttp://www.mbastudies.com/article/how-corporate-social-responsibility-ishttp://www.mbastudies.com/article/how-corporate-social-responsibility-ismicrosoft word apostoaie constantin marius_eng.doc management of the communal local public administration in romania maria vlavian –gurmeza , „al. i. cuza” university of iasi, românia mirela ştefănică, „al. i. cuza” university of iasi, românia abstract the public administration may be defined as the fundamental form of activity of the state, applied by the bodies of the public administration, which consists in exercising the law by establishing some obligatory conducts, as well as by providing services. keywords public administration, rural development, public management. jel codes: h 83 local public administration public administration was thoroughly researched in the technical literature in this field. the opinions coincide over some issues, but they are also different from other points of view. leaving aside the special elements of the various definitions assigned to the public administration, we underline their common elements: public administration – an activity for the execution of juridical acts. the public administration is embodied by the bodies of the public administration „the public administration may be defined as the fundamental form of activity of the state, applied by the bodies of the public administration, which consists in exercising the law by establishing some obligatory conducts, as well as by providing services”. the authorities of the public administration have the social mission to create and apply the state internal and external politics, by applying the law, as given by the parliament, as well as the other acts given for the application of the law. the public administration is a juridical activity, like other state activities. the state has a generally juridical activity, because it organises the social relationships; it should generate juridical rights and liabilities in order to be efficient. beside the juridical facts, this activity includes1 non-juridical facts, to the extent to which they are necessary for the coming out and performance of the juridical facts. the activity run by the authorities of the public administration includes norms and individual regulations, with the purpose to apply the laws and the other juridical regulations. the regulations that the authorities of the public administration must apply are issued to execute the power of the state, therefore they can be applied and if necessary the state power of authority may be used. when those who must perform the juridical regulations do not apply them willingly, the organs of the public administration may proceed with the forced execution and may obligate them by the power of the state to their execution. the authorities of the public administration, through their activity, want to satisfy the social requirements, under the best conditions, and to contribute to the development of the society 1 mircea preda(2007), drept administrativ, lumina lex bucureşti, p.26 studies and scientific researches economic edition, no. 15, 2010 533 as fast as possible and at all levels, to assure the legal order, the democratic rights and liberties. the organs of the public administration must be directly, immediately and efficiently involved in all the problems of the internal and international life, the adoption of operative measures meant to solve them. the purpose of the public administration may be fully accomplished only if the organs of the public administration are operative in concretely solving all the issues of interest of the population, both general and local or special ones. any state, in order to be well managed and administrated, organises its territory in administrative-territorial units with juridical personality, and gives them public law and private law attributions. along time, the administrative organization of the state territory had various forms, trying to answer to the requirements of those times. etymologically speaking, the term “administration” comes from the latin word “ad”, which means “at” and “minister”, translated as servant. in latin there is also the verb “administrare”, which means to serve for something or to serve somebody. having in view this linguistic significant, the issued idea was that administration must act for the benefit of the society, must serve the society, and the administration clerks, and first of all the ministers, should be servants of the society. the notion of “public administration” has several definitions. one of them is the activity, with a functional meaning. in another perspective, the concept of public administration recalls a system of organs, in an organisational sense. in a functional sense, the term of public administration indicates an activity, and in organisational sense it indicates an organ system. in both senses, the public administration is indissolubly related to the state. in the absence of the state, there is no public administration, because it is a state activity, performed by the state bodies. in the third section of the constitution, called public21 authorities, the 5th chapter, with the title public administration, has two sections. the first section is dedicated to the specialized central public administration, ministers, other central bodies, and the second section is dedicated to the local public administration, county councils, local councils, mayors. undoubtedly, both sections refer to state bodies, performing a state activity. both specialized central bodies of the public administration and the local bodies of the public administration are state organs, and the activity run by them is a state activity. therefore the terms “public administration” and “state administration” designate the same concept, but differently formulated. the authors of the specialized literature consider that public administration and state administration are different concepts. the state administration is created and applied by the state authorities (the president of romania, the government, the ministries), and the public administration is created and applied by the local autonomous authorities. such affirmation is found not only in the doctrine but also in the legislation. in art.2, comma (1), letter “b” from the law no. 554/2004 – the law of contentious administrative matters, is provided that it is considered as public3 authority any state organ or any organ of an administrative – territorial unit. in the technical literature it is shown that the functions of the authorities of the public administration may consist in action, consultancy and deliberation. the public administration, starting from this opinion, was classified in active administration, consulting administration and deliberative administration. the administration is active when it executes the law or when it adopts a public utility measure; it is consulting when it gives notices to the active administration; it is deliberating when a body makes decisions which are mandatory for the active administration. 2 constituţia româniei 3 law no. 554/2004, p 1 studies and scientific researches economic edition, no. 15, 2010 534 romania’s evolution in time in fact, the evolution of a country, region or community connected to the time trends represent the essence of modernisation. the history shows that this operation was done each time as a project assumed by the creative segments inside the territorial entities. no cases of miracles are known. everywhere and anywhere the civilization settled and gave its fruit by traditionalizing the innovation on various plans, from the social one to the technological one. the compensatory mechanism between the appeal to the good practice entered into the historical heritage and the inclination towards the progressive change, by testing the new, and the traditional practices, proved to be the most solid realization of the developed societies. invariably, where this mechanism of the performance production failed, the underdevelopment became a way of life, and the fact to escape from the suburbs was a really long and painful adventure. one should notice that the formulas of connection to the tendencies of coming out from the suburbs was each time related to the idea of order, including in relation with the conducts, of disseminated knowledge, of institutionalized innovation, but also to the idea of control of the resources, of concentration of the economic or military power, etc. in fact, rationalization remains the absolute determinant of modernization, as it appeared simultaneously with the illuminist ideology. rationalization constitutes even the purpose of the human action, free from the emotional constraints of the supernatural. in other words, the evolution, as product of a battle for tendency, is not self-generated; it is the consequence of a project, of a wide and long-lasting vision, even if sometimes it failed in the social engineering. the solutions were differently suggested from country to country. where the miracle of the social engineering was taken for granted, the failure was impossible to be avoided, and where the organic vision of the rationalization prevailed, as a reference point and as validation test for the individual initiative, the welfare accumulations imposed the rule. most of the times, the historical context decides. the well-known metaphysical inclination of the romanian people is, for the first time in the history, forced to become derisory in front of the expansion of the european integration model. it claims the compatibility with the efficient performance and seeks the identification with the universe of the good practices. thus, the self concentration on the guiding lines of the specific destiny and with self-sufficient vocation is diluted by the promises of the euroconcentration. it is the beginning of an exercise which exceeds, due to its effects, the cycle opened by the myth of the foundation of our latinity and of our dependence on the way created by the roman empire through the history. conclusions romania is the country with the largest rural administrative-territorial area, representing 87% from the area of the state, with 2858 communes. the communal administrative-territorial units are in a process of change when all the economic, social, politic, civic elements have a new dynamics in trying to adapt themselves to the present conditions. this gives a vital importance to the rural development policy. a communal administrative-territorial unit is functional when the economy is successful and when a democratic spirit develops in the social mentality. during this change we cannot live aside the public administration system, the need to introduce an european dimension in this field, in conformity with the values of this administrative space. the performance of the communal administrative – territorial units depends to a great extent on the competency and the professionalism of the human resources there activating, on the way in which the personnel understands the objectives which stand in front of the public studies and scientific researches economic edition, no. 15, 2010 535 authorities, on the way in which they are solved, on the way of undertaking the responsibility for the consequences of their activities, on the way in which they co-work with the citizens. there is a considerable difference existing between the law and the reality in the field. the reality seems way behind, many times for financial reasons. for example, the taxes are not paid up to the date, there are even remaining from the previous years. the consolidation of the rural development policy became a priority. the inexistence of a real local involved accountability: the annual budgets are indicative and they are adjusted during the year according to the collected incomes and the actual payments. therefore, two of the three communal administrative units are always requesting the state (and the county government) to be allotted additional funds in case of necessity. one aspect which seems fundamental is the need to be more transparent in the management of the public money and more objective in the financial relationships between the state and communities. the new governmental program reuses these ideas, particularly insisting on the need of a public debate regarding the preparation and execution of the local budgets. the rural development is an integrated concept, which uses a multidisciplinary, inter-sectors and territorial (regional) methodological approach. all the directions included in the new reform of the common agricultural policy found their correspondence in the financing mechanism of the rural agricultural and development, included in the new european agricultural pattern defined by the 2000 agenda, according to the agreement of berlin in march 1999; there is a preference for the communities with a population of over 10.000 inhabitants in order to be profitable. the territorial dimension – as a consequence of the restructuration of the industry, the differences between regions appeared very fast, and they continued growing. the disparities between the urban environment and the rural one are also important and in permanent growth. for an efficient democratic control, the preparation of the budgets should be improved (by introducing the differences between the necessary budget and the budget for investments) and by improving the control and audit techniques, inevitable counterparties of the new responsibilities attributed to the elected ones. the reformation of the public administration must approach with priority this essential resource, thus being in front of an important challenge – to establish the modality through which the creativeness of the human resources must be developed. to realize this it is necessary to appropriately approach the elements of the management process of the human resources: recruitment, selection, employment – stimulating the merit and the competences; appropriate salary, combined with other types of incentives; training according to the personal needs and to those of the institution; assessment of the objective performances; proper conduct according to the mission of the public administration; guaranty the stability in the public office; creating a body of professional managers; regarding the recruitment and the selection of the personnel, the administration must establish and identify the ways to attract the possible candidates which prove to have real aptitudes and motivation for a career in a public office. moreover, there is the need to identify the efficient selection ways for the suitable candidates, corresponding best to the requirements of the vacant offices. the economic life of the communes must be re-established and developed in all of the fields: agriculture, livestock, industry, commerce and forestry. the local public authority will have to invest in order to re-establish the economic life of the commune, which must be the number one priority, because it produces the most profitable effects. the infrastructure needs permanent improvement; therefore the investments must be done according to certain economic criteria in order to produce benefit: the safety and the security of the inhabitants of the commune against the calamities; the ratio investment value / number of beneficiaries. studies and scientific researches economic edition, no. 15, 2010 536 another important issue in order to increase the attractiveness of the commune refers to the cultural and leisure facilities in the commune, to increase the social comfort of its inhabitants. the rural development policy is based mainly on three juridical instruments: strategic orientations of the union for the rural development policy, the council regulation regarding the awarded support for rural development and the commission regulation for application. the six strategic directions are: the improvement of the competitiveness of the agriculture and forestry; improvement of the environment and of the rural regions; the growth of the life quality in rural areas and the encouragement of the diversification; the creation of programs for the priorities; the construction of the local employment capacity and diversification; complementarity with other communitarian instruments. this strategy is addressed particularly to the local community, which showed its interest for its objectives, supported by us, as you can see from the results of the questionnaire applied to the inhabitants of the community. the funds management at the local level, their allotment for the realization of the public goods in conformity with the requests of the local community, in an optimum way, it generates a much higher process of development of the administrative-territorial unit, compared to the case of centralization and equal distribution without taking into account the existent local request. it could be seen in most of the developed countries. the management of the funds at local level, their allotment for the realization of the public goods in conformity with the requests of the local community, in an optimum way, generates a higher process of development of the administrative-territorial unit, compared to the case of centralization and equal distribution without taking into account the existent local request. references 1. androniceanu,a.(2005), novelties in public management, universitară publishing house, bucharest 2. androniceanu, a.(2007), management of changes, all publishing house, bucharest 3. bãrbulescu, c., bâgu, c.(201), management of production, vol. ii – production management policies,publishing house, bucharest 4. law no. 188/1999, referring to the status of the civile servants, (r), 5. law no. 215/2001, regarding the local public administration, second edition (2), 6. law no. 161/ 2001, regarding certain measures for the transparency in exercising the public offices and the offices in the business environment, corruptionprevention and sanctioning 7. niculescu, o.,verboncu, i.(2006), managerial methodologies, publishing house, bucharest 8. nicolescu, o.,verboncu i.(2001), bases of the organisational management), publishing house, bucharest 9. verboncu i. michael z.(2005), management and performance, universitară publishing house, bucharest studies and scientific researches economic edition, no. 15, 2010 537 microsoft word apostoaie constantin marius_eng.doc consideration on the price stability – financial stability relationship in the context of financial globalization marius constantin apostoaie, “alexandru ioan cuza” university of iasi, romania abstract this study is focused upon the involvement of the central banks regarding the fulfillment of the two main objectives: price stability and financial stability. these two key concepts are part of an old and ongoing debate that the current turmoil has revived, and that is whether monetary policy should aim, or not, at ensuring financial stability in parallel to its main objective of price stability. on both sides there are solid and well known arguments. in the beginning of the study i have considered a literature review with regard to price and financial stability issues. after that i have tried to shed some light (from a theoretical point of view) on the nature and dynamics of the fundamental interlinkages between the two aspects and there implications on the central banks and the economy. finally i outline some general conclusions that have emerged in the present study. key words price stability, financial stability, central banks, monetary policy, primary objective, financial turmoil, financial system, financial globalisation jel code: e58, g01 introduction the unprecedented structural mutations and disruptions in the financial systems of national economies and also the turmoil specific to financial markets today under the impact of financial innovations, require an urgent restoration of the fundamental objective of the monetary policy promoted by the central banks in the area of systemic stability. this action is necessary because the recent international turmoil show that stabilization of inflation at low levels at the same time with economic growth configures a “new economic environment”, apparently sound, in which financial stability is not gained collaterally. a monetary policy promoted by the central banks with an essential role in ensuring financial stability is justified by the double causality relationship between financial stability and monetary policy: on the one hand, a stable and solid financial system allows an efficient transmission of the monetary policy decisions and, on the other hand, the operational framework of an efficient monetary policy may allow the prevention and removal of financial disturbances. at the same time, the occurrence of the present global crisis allows the empirical testing of the hypothesis according to which the stability of prices, as a fundamental objective of the monetary policy, currently stated in the statute of most of the central bank, is a vital condition, but not sufficient in order to ensure financial stability. stability of the prices and the financial stability – theoretical approach in theory as well as in practice, there is required a delimitation between the two concepts presented in this paper, ”stability of the prices” and ”financial stability”, considering the studies and scientific researches economic edition, no. 15, 2010 6 existence of several definitions of the former and the absence of a unanimously accepted definition for the latter. nowadays, most important central banks in the world, due to their status, have assumed as the main objective of monetary policy ”the ensurance of stability of the prices”. bernanke (2006) considers this objective is a purpose in itself, as well as a tool for the monetary policy, as it has a special contribution to the accomplishment of a sustained economical growth as well as to the macro-economical stability, thus reaching a high degree of social welfare. beyond the multiple theoretical structures and the distinct empirical perspectives, there is a consensus on the stability of the prices regarding the following defining elements: the stability of the prices refers to the aggregate level of the prices estimated by indexes and it is reached when money keeps a constant value in time or the speed of decrease in its power is very slow; at the same time, as the bnr governor mugur isarescu said (2008), the notion of monetary stability overlaps the one of stability of the prices. an operational definition of this concept, the stability of the prices, is given by allan greenspan (1996, p.1), former governor of fed, sua, who says that ”the stability of the prices represents the situation when the estimations regarding the general increase or decrease of the prices during a considerable period of time do not have an important influence on the economical or financial behavior”. according to this approach, the stability of the prices is reached only when the economical agents do not take into account the expected price raises when they make their business decisions. some authors make a correlation between the stability of the prices and the inflationist anticipations, thus offering a quantitative, measurable approach. paul volcker (1983, p. 5), former president of the governors council – federal reserve system, during august 1979 – august 1987, defines the stability of the prices as ”that situation when the anticipations on the general increase or decrease of prices during a considerable period of time do not have a substantial influence on the financial and economical behavior”. alan blinder approaches the financial stability in the same view (blinder, 1994, p.7) and he considers it to be ”that situation when the expected changes in the level of the prices is sufficiently reduced and gradual so that it might not be taken into consideration in the decisions made by companies and households”. mishkin also has a quantitative approach (2000, pp.1-13) when defining the concept of stability of the prices. hence, a corporative engagement from a central bank towards the stability of the prices is not enough to bring the long-desired credibility. the promoted general objective should be translated into a mere quantitative purpose. in 1998, the european monetary institute defined the stability of the prices as ”the annual increase of the consumer price (cpi) for the euro zone under 2%”. in may 2003, the management board of bce (bce, 2001) confirmed the definition of the stability of prices, adding one detail: the board decided that in order to reach this purpose ”it is necessary to maintain the inflation rate close to 2% on medium term”. ottmar issing (issing, 2000), member of the central european bank board considers that the stability of the prices ”refers to a stable level of aggregate prices or to a reduced level of inflation”. another member of the central european bank, luca papademos (papademos, 2006, p.1) thinks that” the stability of the prices is defined by that state in economy when the general level of the prices is stable, on strict terms, or when the inflation rate is sufficiently reduced and stable, so that the considerations on the nominal dimension of the transactions is no longer a relevant factor for the economical decisions”. the universal establishment (of some important banks like: european central bank, federal reserve system, bank of japan or the national bank of romania) of price stability as a fundamental monetary policy objective is self-sustained from the perspective of its advantages regarding: the improvement of the transparency of relative prices, the decrease of the nominal and real interest rates, the protection of the real value of income and fortunes and the prevention of diverting resources from the productive sphere to useless operations of protection against inflation, so that a sustainable economic growth, a better employment and studies and scientific researches economic edition, no. 15, 2010 7 increased welfare on the social level may be reached and stability and social cohesion may be preserved. as a consequence of the intensification in the process of financial globalization and liberalization of the financial and banking markets, and not lastly of the capacity to innovate the financial industry, there has appeared a challenge for the contemporary economy, namely accomplishing the financial stability. in the absence of a viable and stable financial system, the efficiency of monetary policies on reaching the objective of price stability is limited. compared to price stability, a concept considered easy to define and quantify, financial stability is a complex concept (as a result of the complexity and dynamics of the financial system) and does not have, as yet, a generally accepted definition and a synthetic index for evaluation. as jaime caruana (2005) mentions, „in spite of the fact that we benefit from a well-structured frame for the debate over the monetary policiy and its application, our reasoning regarding the financial stability is less advanced”. nevertheless, reaching the financial stability is easier said than done. some authors prefer to approach the financial stability in the view of ”what is not” rather than ”what really is” (poloz, 2006). the economical literature and practice do not provide a unanimously accepted definition of this concept and it is often defined starting from the opposite notion – ”financial instability”. according to j. chant (2003, p.3) financial instability refers to ”the conditions on the financial markets which affect or threaten to affect the economical performances due to their impact on the financial system”. similarly, a. crockett (1997a, p.7) defines „financial stability” as „the absence of instability”, namely, „the situation when the economical performance is not potentially affected by the fluctuation of asset prices or the impossibility of the financial institutions to fulfill their obligations”. it makes the difference between the financial stability regarding the financial-banking institutions and the financial stability of the markets (crockett, 1997b). the american economist frederick mishkin (1999, p.7) is on the opposite side and he considers that ”financial instability appears when the shocks from the financial system interfere with the informational flow in such a way that the financial system is no longer capable of fulfilling its functions and make use of the resources in the most productive activities”. william a. allen and geoffrey wood (2006) assert that for the definition of financial stability there is required a definition of the characteristics presented by a ”period of financial instability”. in order to understand this notion, frederick mishkin (january 2009) refers to two types of risks: the valuation risk and the macroeconomic risk. the first one manifests when the market experiences difficulties in the evaluation process of the complex structured financial products, which lack transparency. the second one appears when an undermining of financing leads to a significant deterioration in the real economy due to the contagion effect (especially at the level of production and of employment). ottmar issing (2003) thinks that it is important to make a distinction between the definition of the financial stability in the view of the system approach and the perspective regarding the volatility of financial variables which are directly noticeable. in this context, the degree of involvement of the central banks could vary according to the need to maintain financial stability. the literature in the field presents an approach in the wide and the narrow meaning of the concept of ”financial stability”. thus, financial stability from a wide perspective refers to the situation when ”the financial system can ensure the efficient use of savings for investment opportunities and can face the shocks without major disturbance”. but a higher use is presented by the narrow approach of the financial stability which could be defined as ”the situation characterized by the absence of banking crises and the presence of a certain level of stability in the asset prices, including the interest rat the european central bank (ecb, 2009) defines financial stability as “a condition in which the financial system – comprising of financial intermediaries, markets and market infrastructures – is capable of withstanding shocks and the unraveling of financial studies and scientific researches economic edition, no. 15, 2010 8 imbalances, thereby mitigating the likelihood of disruptions in the financial intermediation process which are severe enough to significantly impair the allocation of savings to profitable investment opportunities”. one of the ex officials of the federal reserve system, frederick mishkin (1999), considers that financial instability “occurs when shocks to the financial system interfere with information flows so that the financial system can no longer do its job of channeling funds to those with productive investment opportunities”. in the view of the central bank of japan (bis, 2009), the stability of the financial system points to that situation when the financial system and its participants functions adequately, as well as the fact that the population and the companies trust the system. in order to contribute to the stability of the financial system, the central bank makes on-site examinations and offsite monitoring and acts in the quality of lender in order to supply cash when needed. according to the officials of the national bank of rumania (nbr, 2006), financial stability is „that feature of the financial system that deals with systemic shocks on a sustainable basis and without major disruptions, that allocates financial resources efficiently in the economy and that identifies and manages effectively the risks”. although the visions of the monetary authorities in what concerns the concept under examination are slightly different, they have a common feature and namely: the ability of the financial system (from the perspective of its constituent elements: the financial markets, the financial institutions, the financial structures, etc.) to efficiently and sustainably fulfill its defining functions both in normal conditions and in periods with disturbances at the level of the economy (macroeconomic shocks).. in conclusion, the financial stability could be defined as the ability of the financial system to dampen the financial shocks from the inside or outside (at microand macro-economical level), after some extraordinary, significant and unpredicted events, accomplishing the economical performance. stability of prices v. financial stability in relation to the central banks recent events have brought into discussion the dilemma according to which the monetary policy should or should not main objective the insurance of financial stability in parallel to the fundamental objective, namely the insurance of price stability. the arguments brought by both sides, even though contradictory, are strong enough. in the last two decades, the financial crises manifested in the financial globalization process have determined increased debates between the authorities and in the industry literature regarding the link between price stability and financial stability, giving rise to two essential approaches, the conventional approach and the new environment hypothesis. the conventional approach to the link between price stability and financial stability was highlighted by the american monetarist anna schwartz, who advocated that a monetary policy oriented towards ensuring price stability contributes to reducing the frequency and the negative consequences of financial crises. such an approach, known in the industry literature as the schwartz hypothesis claims that price stability is a necessary and sufficient condition for preserving financial stability. (mésonnier, 2004). the conventional vision is analyzed based on statistic data, especially in the works of bordo, dueker and wheelock (1998, 2001), who highlighted that the most serious banking crises occurred during periods with significant price instability. the studies undertaken by bordo and others (2001) show, based on statistics and the example of the usa and uk, that there is a significant positive relationship between inflation and financial instability, for the period 1790-1933 and 1972-1999. the conclusion that can be drawn from the works of the previously mentioned authors is that price stability and financial stability are complementary and coherent. the international financial imbalances occurred starting with 1997 took place in the context of an economic environment characterized by stable prices, which invalidates the studies and scientific researches economic edition, no. 15, 2010 9 conventional approach according to which price stability is a sufficient condition for ensuring financial stability. the study undertaken by goodfriend (2001) shows for the first time the role of a credible monetary policy (that acts against inflation) in the manifestation of financial imbalances. this vision is also supported in the studies made by borio and lowe (2002) and by borio and others (2003), which show that financial imbalances may occur and, moreover, multiply in a new economic environment characterized by stable prices. these authors show the core role played by a credible monetary policy in the worsening of financial imbalances, explicitly introducing the hypothesis of the “credibility paradox” of the monetary policy. the “credibility paradox” of the monetary policy or the “new environment” hypothesis highlights the fact that an economic environment characterized by low and stable inflation may create a climate of exaggerated confidence, that would encourage taking considerable risks and, in this context, an excessive rise of the price of financial assets would occur, leading to an instability of the entire financial system. herrero alicia and pedro del río (2003) study the main factors of influence which have an impact on the financial stability, with an accent on the design of monetary policy. their study, made on a sample of 79 countries during 1970-2000, aims to evaluate the fundamental objective of the central bank and the strategy of monetary police which affects the financial stability (in the appearance of banking crises). thus, we notice the fact that in the case the fundamental objective of monetary policy aims to ensure the stability of the prices, then the possibility to appear a banking crisis is reduced. as regards the strategy of monetary policy, focussing on the currency exchange reduces significantly the probability to appear a banking crises especially in the case of countries under transition. the empirical studies made by q. farooq akram and øyvind eitrheim (2008) demonstrate the fact that the central banks can promote financial stability by stopping inflation and output and that an additional stabilization in asset prices and loan expansion could support the financial stability. the studies are based on the econometric model of the norwegian economy. some authors (dupor, 2002, p.99-106) consider the possibility of reaching a potential compromise between the stability of prices and the financial stability. the stability of prices is presently considered the optimum target to reduce the improper use of resources in the production sector. nevertheless, this aspect applies only in the absence of asset price shocks. in case such a shock appears, the stabilization of prices reduces the distorsions which might affect the investment decisions. the economists dell’ariccia and others (2004), in their works, refer to the influence of the banking crises on the loan market and the level of economic increase with a special impact on the financial stability. thus, they reached the conclusion that adverse shocks lead to weak economic performance as well as tension in the banking environment, while there is a supplementary pressure from the banking sector on the level of economic growth, asthe banks are forced to reduce the level of loans. although the literature in the field presents different studies regarding the influence of the monetary policy on the financial stability, the decision factors cannot elaborate precise regulations in monetary policiy, but rather general considerations and warnings which could be used to influence activity. hence, lorenzo bini smaghi (2008) discusses in one of his papers four general directions the central banks should consider starting from the following issues: the monetary policy in itself could have negative effects on the financial stability; it is very difficult for a central bank to take into consideration the characteristiccs of the financial stability process (especially regarding the waves of the asset prices) in order to accomplish its aims; a monetary policy which neglects the possible problems of financial stability could be inconsistent in time; when financial stability is in danger, the economical and financial indexes could affect the efficiency of the monetary policy. the present international financial crisis which began in august 2007 on the market of mortgage loans in usa highlights the fact that there might be situations in which reaching studies and scientific researches economic edition, no. 15, 2010 10 financial stability is more important than maintaing price stability. in this case, the monetary policy oriented towards price stability could accept, at least on short term, (usually 2 years) the adoption of priority measures so as to ensure the financial stability. in its absence there could not be reached an increase in the efficiency of the monetary policy and consequently the stability of the prices on medium and long term. we must take into consideration the fact that the trend of the monetary policy has influence on the profits on the financial market. therefore, the connection between the monetary policy and the price of the assets is debated in the literature in the field and different empirical studies (sellin, 2001). conclusions analysing the relationship between the monetary stability and the financial stability, we could assert that there is a two-way connection between the two. even though the fundamental objective, on long term of a central bank is generally to ensure the stability of prices, there should be paid particular attention to the financial stability. otherwise, even though there is made progress in the decrease of inflation, their sustainability is not encouraged in the context of an unstable financial system. the impossibility to maintain the financial stability can only lead to a reburst of inflation. according to the analysed materials, under the present day macro-economical context, at the level of the monetary policy objectives, the central banks are naturally in favour of widening the spectrum from the stability of prices to the stability of the whole financial system, beacuse its solidity at least on short term ensures the premises for the objectives expressed on medium and long term, a conclusion which derives from the studies of the above mentioned economists. ensuring the financial stability is a normal preoccupation of the central banks which results from their specific tasks. the bank of england has already included in its legal status the fundamental objective of monetary policy to ”protect and consolidate the stability of the financial system of the united kingdom”. from the point of view of the monetary policy, according to the different views held by the economists we mentioned, the increasing interest of the central banks to ensure the financial stability is explained by the fact that a stable and strong financial system contributes to the increase in efficiency of the monetary policy and consequently to the fundamental objective of ensuring the stability of prices. bibliography 1 bernanke, b. (2006), the benefits of price stability, speech held at „the center for economic policy studies” on the occasion „seventy-fifth anniversary of the woodrow wilson school of public and international affairs”, princeton university, new jersey 2 blinder, a. (1994), „interview with alan blinder”, review of the federal reserve bank of minneapolis, available at http://www.minneapolisfed.org/pubs/region/94-12/int9412.cfm, p. 7 3 bordo, michael d., dueker, michael j., wheelock, david c. (2001), aggregate price shocks and financial instability: a historical analysis, working paper no. 2000-005b, september, federal reserve bank of st. louis, available at http://research.stlouisfed.org/ accessed 2 mar. 2010 4 bordo, michael d., dueker, michael j., wheelock, david c. (2001), aggregate price shocks and financial stability: the united kingdom 1796-1999, working paper 8583, national bureau of economic research, available at http://www.nber.org/ accessed 3 mar. 2010 5 bordo, michael d., wheelock, david c. (1998), price stability and financial stability: the historical record, journal review, federal reserve bank of st. louis, september 1998, pp.41-62, available at http://ideas.repec.org accessed 2 mar. 2010 6 borio, claudio, english, william and filardo, andrew (2003), a tale of two perspectives: old or new challenges for monetary policy?, bis working papers no 127, bank of international settlements, february 2003, http://www.bis.org/ accessed 5.10.2009 studies and scientific researches economic edition, no. 15, 2010 11 7 borio, claudio, lowe, philip (2002), assessing the risk of banking crises, bis quarterly review, bank of international settlements, december 2002, available at http://www.bis.org/ accessed 25 feb. 2010 8 borio, claudio, philip, lowe (2002), asset prices, financial and monetary stability: exploring the nexus, bis working papers no. 114, bank of international settlements, july 2002, available at http://www.bis.org/ accessed 3 mar. 2010 9 caruana, jaime (2005), basel ii – back to the future, speech held on the occasion of „the 7th hkma distinguished lecture”, hong kong, 4th february 2005 10 chant, j. (2003), essay of financial stability, technical report no.95, bank of canada, september 2003, available at http://www.banqueducanada.ca/en/res/tr/2003/tr95.pdf#page=19, accessed 3 mar. 2010, p.3 11 crockett, a. (1997a), the theory and practice of financial stability, gei newsletter, no. 6, p. 7 12 crockett, a. (1997b), why is financial stability a goal of public policy?, „maintaining financial stability in a global economy”, symposium held with the support of the federal reserve system of kansas 13 dell’ariccia, giovanni, detragiache, enrica, rajan and raghuram (2004), the real effect of banking crises, imf working papers, international monetary fund, washington dc, october 2004, available at http://www.imf.org accessed 6.10.2009 14 dupor, w. (2002), comment on monetary policy and asset prices, journal of monetary economics 49, p. 99-106 15 farooq, akram q., eitrheim, øyvind (2008), flexible inflation targeting and financial stability: is it enough to stabilize inflation and output?, journal of banking & finance 32, pp. 1242–1254, available at www.sciencedirect.com accessed 1 mar. 2010 16 goodfriend, marvin (2001), financial stability, deflation and monetary policy, working papers no 01-01, federal reserve bank of richmond, available at http.www.richmondfed.org accessed 15 mar. 2010 17 greenspan, a. (1996), speech held on the symposium achieving price stability, „the federal reserve bank of kansas city symposium proceedings”, kansas city, p.1 18 herrero, alicia garcía, río, pedro del (2003), financial stability and the design of monetary policy, documento de trabajo, no. 0315, banco de españa, madrid, pp. 14-27 19 , disertation held on the occasion of awarding the title of doctor honoris causa from the university of available at http://www.bnr.ro/, accessed 17 mar. 2010 20 probleme ale politicii monetare întrcazul româniei, available at http://www.bnro.ro/ accessed 15 mar. 2010 21 issing, ottmar (2000), why price stability?, european central banking conference, 2 nov. 2000, frankfurt am main, available at www.ecb.int/events/pdf/conferences/wps_issing.pdf 22 issing, ottmar (2003), monetary and financial stability: is there a trade-off?, bis paper no. 18/2003, p.16 23 mésonnier, jean-stéphane (2004), le paradoxe de la crédibilité en question, bulletin de la banque de france nr. 122, february 2004, available at http://www.banque-france.fr accessed 12 mar. 2010 24 mishkin frederic s. (1999), the causes and propagation of financial instability: lessons for policy makers, in global financial instability: framework, events, issues, journal of economic perspectives, no. 13, p.7 25 mishkin, frederic s. (2000), what should central banks do?, federal reserve bank of st louis review, no. 82, pp. 1-13 26 mishkin, frederic s. (2009), is monetary policy effective during financial crises?, nber working paper series, no. 14678, national bureau of economic research, january 2009, available at http://www.nber.org/ accessed 10 mar. 2010 27 mishkin, frederic s. (2009), monetary policy flexibility, risk management, and financial disruptions, journal of asian economics, 29 iulie 2009, (pp. 1–5), available at www.sciencedirect.com accessed 2.10.2009 28 noyer, christian (2008), la conduite de la politique monétaire en période de tensions financières, discours, european banking and financial forum, prague, 1er avril 2008, available at http://www.banque-france.fr accessed 27 feb. 2010 29 papademos, luca (2006), price stability, financial stability and efficiency, and monetary policy, held at the third conference „monetary stability foundation on challenges to the financial system – studies and scientific researches economic edition, no. 15, 2010 12 ageing and low growth”, frankfurt am main, bis review no. 64, available at www.bis.org/review/r060714d.pdf , accessed 12 mar. 2010, p.1 30 poloz, stephen s. (2006), financial stability: a worthy goal, but how feasible?, journal of banking & finance 30, pp. 3423–3427, available at www.sciencedirect.com 31 sellin, p. (2001), monetary policy and the stock market: theory and empirical evidence, journal of economic surveys, vol. 15, 2001, pp. 491–541, available at http://www.sciencedirect.com accessed 16 mar. 2010 32 smaghi, lorenzo bini (2008), financial stability and monetary policy – challenges in the current turmoil, speech on the eu-us financial system, new york, 4 april 2008, available at http://www.sciencedirect.com accessed 17 feb. 2010 33 william, allen, geoffrey, wood (2006), defining and achieving financial stability, journal of financial stability, 2, pp. 152–172, available at http://www.sciencedirect.com accessed 6 mar. 2010 34 financial stability review, june 2009 (2009), european central bank, 2009, p. 9, available at http://www.ecb.org accessed 26 feb. 2010 35 international banking and financial market developments (2009), bank of international settlements, june 2009, available at http://www.bis.org/ accessed 5.10.2009 36 (2006), national bank of romania, pp. 5-17, available at http://www.bnro.ro accessed 26 feb. 2010 37 *** global financial stability report, responding to the financial crisis, and measuring systemic risks (2009), april, international monetary fund, washington dc, available at http://www.imf.org accessed 26 feb. 2010 studies and scientific researches economic edition, no. 15, 2010 13 microsoft word apostoaie constantin marius_eng.doc the correlation between the development of human resource in education and the romanian economy daniela-roxana pintilie, „al. i. cuza” university of iasi, romania ciprian-constantin pintilie, „al. i. cuza” university of iasi, elitec, romania andreea-monica chelu, „al. i. cuza” university of iasi, elitec, romania abstract this article is a thorough reflection on development of human resources and on influence they have programs career development of individual improvement. representative data describe the impact of development programs on educational career. education plays an essential role in the life of the individual both in terms of career, as well as economically. in this sense, the informations and the representative data which characterizes the romanian educational system and ensure quality in education, are in important issue. key words human resources management, sistem of education, management development, professional development, quality development, european trends. jel codes: m 12, i 21 introduction education plays a key role in an individual's life, both in terms of career, and the economic. different business environments in which some people operate, regardless of the type of each environment, describing various events, events that reveal the intellectual training and value system in which each individual is located. education (even at work) emphasize the individual in all circumstances and shall take precedence and ensure its success in any field in which he operates. the more education a person is better, the chances are higher and its prospects. education at work is called 'staff development'. integrated often broad concept of 'training, professional development of human resources requires both training and acquisition of knowledge and skills and improve knowledge and skills already existing training and raising in relation to institutional change and / or existing functional active human resources company. professional development of human resources in education the mission of any organization is to promote innovation and individual creativity to ensure the professional development of staff, whether individual or organizational groups. educational institutions are considered by society models of innovation and change is expected to play key role in promoting economic, social, cultural. achieving excellence in education, training and research is the main factor that can ensure growth potential of the organization's human resources. as a result, human resource development is a necessary process, complex continuing and great responsibility, which involves concrete actions and activities of the new staff selection and training and retraining studies and scientific researches economic edition, no. 15, 2010 429 of the existing. each educational institution in romania is mainly responsible for educational services as training and professional development and quality assurance in education. the term "professional development" can be defined as' a process that develops professional knowledge and skills necessary for effective professional practice. hoyle's definition of this can come off the next issue: a professional must be able, independently one to decide what type of development work required. other authors define specialized 'staff development' in the context of education as "a systematic effort to harmonize their personal interests, desires and needs, carefully evaluated for further career development needs of the organization within which the person practicing . the two definitions lead to one conclusion, namely, that a close interdependence between institutional needs and individual needs. this interdependence leads to the development of educational institution personnel. human resources development of the educational institution entails two aspects: concept, development management, namely training and development of teachers who have or have had responsibilities in the educational institution where they operate (directors, deputy directors, board members, heads of department etc.); should include all school personnel, both academic and non-teaching. staff development is seen not only as a chain of activities leading to performance, but can be regarded as a process. the term "process" includes: planning, training, work itself, training tracking (follow-up) and evaluation. thus, the entire human resources development and training each component of the process must first be planned, implemented and evaluated by completing the following steps: adaptation of human resources development program in the school policy; development programs must be designed in accordance with the requirements of the high; ranking development process; identifying needs; establishing a work program and priorities within it; program implementation; monitoring and assessment program; the program review and identify future needs. identifying professional development needs ministry of education, school inspectorates and schools can design a program to develop human resources according to individual or collective needs. in this respect needs to distinguish four types of underlying composition of a staff development program national level: the strategy of reform of the ministry of education and research in education; local level: implementation priorities for reform and its implementation in the school inspectorates; the schools: priorities and policy development of each school unit which relies on human resources development program; individual level: individual development needs. priorities in education, according to the individual needs of teachers, are clearly stated. education reform in romania to the following principles: decentralization of management, decongestion curricular flexibility and compatibility with european education systems and carried out in these directions: the mentality, structure and educational system. all these directions cause professional development needs. policy, strategies and priorities in education is an important source for generating human resources development needs. each school has its educational policy. at school are allowed rules and principles, priorities and success by implementing a professional development program. it should be noted in this regard that each development program undertaken by the ministry of education is made free of charge for each frame in didactic. regarding studies and scientific researches economic edition, no. 15, 2010 430 professional development programs other than those supported by the ministry of education, they are funded in part by each school. people need to signal that they need development and will succeed only way to fulfill their assignments correctly and effectively, to increase career advancement opportunities or to improve their overall motivation. there must be development opportunities for teachers at every stage of their careers. also, there is a need of implementation of development programs and teacher training, given the work of the school (classes that cover several areas and takes place at that school) or school centers (a work-related courses schools). currently there is no system to detect general needs development / training, but they can be readily identified at each level schools through a questionnaire in which each teacher will complete. more questionnaires will be considered a guide to identify educational needs. human resources development activities and their effectiveness in developing human resources in education may speak of the existence of activities and development programs and training of staff, both internal and external. as regards the internal development of the teaching staff can remember the following activities: mentoring ; activity in which a teacher, during a semester or school year dealing with a less experienced colleague professionally; rotation of duties; responsibilities are exchanged between teachers; additional responsibilities. in respect to activities outside school, teachers are involved in working with colleagues from other schools, which entails the exchange of experience. the main purpose of staff development is to improve the educational process. effectiveness of staff development not only training, but the unit where the development process must be conducted to see an improvement or change in career. effective professional development has the following characteristics: to consider the tasks directly related to the work of each teacher in part; development programs must include: theory, practice, demonstration, feedback and various applications in which the teacher is main participants; the follow-up (phase tracking) applications involving direct undergo teacher training; formal and non formal coordination between the elements; there is some link between training and certain elements of development process are subject to change process. professional development takes place throughout their lives as organized programs, both domestic and external, and ensure improved knowledge / skills that will enable individuals to operate in a most efficient and take pace with changes in institutional / functional appearing throughout your career. professional development of human resources is to develop professional ability of teachers to continue their growth and progress in institution. hrd goal is to increase the capacity of a teacher to successfully perform duties and greater responsibilities, higher. activities that help develop human resources are both internal and external, as mentioned above. they also include the internal and external development programs. of activities within the institution can mention: activities directly related to function / job (eg, meditation, member of the teaching committee, depending on rotation, job assistance, training to carry out the responsibilities incumbent on the position held, etc.). and activities directly related to the function / job (eg, classroom training, psychological testing, training human resources, case studies, role playing, business games, etc.). necessary professional skills can be obtained through methods such as developing formal and nonformal. formal methods most commonly used are: scientific conferences, national and international conferences, international mobility programs such as 'visiting professors' studies and scientific researches economic edition, no. 15, 2010 431 research projects, publishing activities and of non-formal methods can be mentioned: workshops, trainings, schools national and international summer etc. to be highlighted methods involving human resource development in education level, a study research, highlighting the impact, contribution and importance of programs related to these methods, and connection that is established between these programs under development and population profile research process. the instrument, which was used in this research process is questionnaire. it covers: personnel policy pursued by st. sava kindergarten science; researched population profile; the presentation of research needs of the population studied; analysis of professional development programs in human resource education (both formal and informal); the importance and contribution of professional development programs. the subjects of this research study has appealed to teachers of kindergarten st. sava iasi. the instrument of questionnaire used in this case is it being applied to 17 teachers: 3 beginner teachers, 4 teachers completed, 4 with grade 2 and 6 teachers in grade 1. for this research, the community chosen is structured as a single homogeneous subgroups characteristic ie academic degree held by each teacher. the questionnaire was applied directly investigated subjects engaged in actual area. the questionnaire covers aspects of research focusing on: designing a general profile of the population studied, taking into account certain characteristics: age, gender, academic degree, etc. the importance of training programs in human resource development in education (in percent); the importance of training programs on human resources development process through data collected from subjects; sketched profile of the population studied correlation with the resulting analysis on the professional development of teachers of kindergarten st. sava iasi. questionnaires were applied and completed by individual teachers. subjects were anonymous said scientific and research. the research sample is based on the idea that training programs directly influences development of the school teachers investigated. item has been taken into account regarding the influence programs the development of teacher training was, attending courses in the last 2 years. "from the research undertaken was noted that training programs influence subjects to participate in a low or high proportion, development courses, training and even training. kindergarten teachers work of st. sava science covers the following aspects: restructuring and improving staff training; management restructuring; changing organizational culture. undertaken the research to the development of teachers has the following objectives: to highlight the needs professional development of teachers; to explore professional development according to the methods underlying this development (formal and informal methods method); to highlight the importance and contribution development programs; to build a questionnaire based on certain criteria : gender, age, academic degree held by each teacher in the school under review, etc.). through this research aims to highlight the importance of the two methods, formal and nonformal, on professional development of teachers. stages of this research include the following: data collection through questionnaire; data processing analysis of preliminary / final and their generalization. is an interdisciplinary research over the boundary of human resource management with service management and economics. this research is an explanatory in the sense that he studies and scientific researches economic edition, no. 15, 2010 432 proposes to achieve its objectives a priori, but to discover possible causal relationship between the concept of teacher professional development and impact of formal and non formal methods are incuring development on the one hand, and on other hand to highlight the importance of sustainable quality training as investment in the romanian economy. as conclusions from this research, to better illustrate the share of formal methods of professional development would analyze data according to two aspects: number of subjects combined annual participation; the number of annual participation of subjects, depending teaching degree. human resource development in the romanian economy teacher participation in the process of training and specialization is one of the signs indicative of romanian higher education, namely that the teacher education process aimed at speeding emphasis among students and so we can talk about quality in education. bring further education benefit society. assessing this aspect of economic, we can speak of a social return to education exceeds that individual. human resource development is very important for an individual's personal ability to contribute to the economy and to earn more, but do not ignore the social consequences of the existence of a population with higher education levels. teacher education and education of individuals in this case as the main subjects of the educational establishment to society many benefits, many of which have important effects on how the economy operates. higher education may be associated with stability. teacher participation in the process of training and specialization is one of the signs indicative of romanian higher education, namely that the teacher education process aimed at speeding emphasis among students and so we can talk about quality in education. bring further education benefit society. assessing this aspect of economic, we can speak of a social return to education exceeds that individual. human resource development is very important for an individual's personal ability to contribute to the economy and to earn more, but do not ignore the social consequences of the existence of a population with higher education levels. teacher education and education of individuals in this case as the main subjects of the educational establishment to society many benefits, many of which have important effects on how the economy operates. higher education may be associated with stability. conclusions quality of training of human resources takes time, space and staff eager to meet high standards. european educational policy refers only title recommendations, the quality of training of teachers in european schools. not incidentally, the main european processes, on the agenda of ministries of education (some bearing the original name of the cultural area in which they were discussed and approved, lisbon, bologna, bergen) proposed that the priority strategic directions for teacher training and development. system development romanian teachers faced with the absence or decrease the motivation of young graduates from universities for teaching career, with a limitation of perspective and a real feeling of risk. teacher training system in terms of tradition involved a lot of positive aspects, factors of emotional support, of which we can remember what the teacher image and status are valued in the community and gradually diminished by insufficient financing, but the inconsistency of educational policy decisions. although cvt is talking about consistency of processes and activities, however it is noted that professional development means regular training and that training by obtaining teaching degrees should not be ignored. both must be harmoniously intertwine as two processes with different activities, but pursuing the same purpose staff development in education. staff development in education, in this case teachers, is played by those degrees and that each teacher education throughout his career he assumed (he claims) and to ensure the promotion. this is to increase the prestige of studies and scientific researches economic edition, no. 15, 2010 433 the teacher concerned (to be ranked as a good teacher), will increase the prestige of the school in which they operate and so, and parents guide their children to prestigious educational institution in training teachers. hence the education institution that provides trained human capital market as the economy improves and the country. professional development helps teachers to develop their economy or earnings. bibliography 1. antonesei, l., (2005), polis şi paideia, ed. polirom, iaşi. 2. armstrong, m.,(1996), personnel management practice, kogan page, londra. 3. birzea, c., neacsu, i., potolea, d., (2006), educaţia şi formarea profesională a cadrelor didactice din românia, research project improving the professional development of the didactic staff and of the teaching practices learning în south-eastern european contries, open society institute, bucharest. 4. cucoş, c., (2002), pedagogie, ediţia a ii-a, ed. polirom, iaşi. 5. everard, k.b., morris geoffrey,(1996), effective school management, ediţia a treia, pcb, london. 6. gavrilovici, o., iosifescu, s., prodan, a., (2004), management educaţional, vol ii, the romanian institute for education management. 7. ghergut, a., (2007), management general şi strategic în educaţie, polirom publishing house, iaşi. 8. herman, j. susan., (2008), teaching contemporany human resource management, journal of management education, aprilie, vol.32. 9. manolescu, a., (2001), managementul resurselor umane, ed. economică, bucureşti. 10. mathias, l. robert., (1997), managementul resurselor umane, ed. economică, bucureşti. 11. neculau, a.(coord.), (1997), câmpul universitar şi actorii săi, ed. polirom, iaşi. 12. nica, p., iftimescu, a., (2004), management (concepte şi aplicaţii), ed. sedcom libris, iaşi. 13. rotaru, a., prodan, a., (2005), managementul resurselor umane, ed. sedcom libris, iaşi. 14. suciu, m. c., (2005), investiţia în educaţie, ed. economică, bucureşti. 15. warren, d. piper., (1978)," flexibility with control: an example of classroom contact and some other attempts to increase effectiveness", the efficiency and effectiveness of teaching în higher educaţion, ed. în warren piper, university of london teaching methods unit. 16. *** unesco, (1998), "world declaration on higher education for the twenty-first century: vision and action and framewprk for priority action for change and development în higher education", adoptes by the world conference on higher education, october 9. studies and scientific researches economic edition, no. 15, 2010 434 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro ibrd and its involvement in modernising and improving the functionality of pension systems cristina roşu “vasile alecsandri” university of bacău, romania cristinaciuraru@yahoo.com abstract in our research we review the international bank for reconstruction and development’s (ibrd) most important contributions to the functionality of the pension systems around the world. the pension systems design constitutes an important premise for the adequate functioning of these systems. in international practice, there is a wide variety of principles and mechanisms which can constitute the foundation of pension systems, the most common being materialized in the multi-pillar pension system, promoted by the ibrd. its involvement in modernizing and improving the functionality of pension systems has reached also many other aspects such as evaluation of the national pension systems’ performance, financial assistance to governments with the aim of meeting the objectives corresponding to pension systems, scientific, technical and informational support. we conclude that ibrd’s involvement in modernizing and improving the functionality of pension systems has determined a significant transformation of the national pension systems, especially in latin america and eastern and central europe. however, its well-known multi-pillar model is not free of criticism as a result of the various analytical errors. keywords ibrd; pension system; multi-pillar; pension performance indicators; pension system evaluation jel classification h55 introduction the current national context, which is characterized by the ageing of the population and the reduction of the contributors-beneficiaries (dependency) ratio has determined, at the level of international organisms and governments, a growing interest in issues concerning the organization and functioning of pension systems. since the beginning of the 1990s, these issues has been one of the priorities of the international bank for reconstruction and development (ibrd – world bank). studies conducted for this purpose have shown the need for reform in most countries in the world. in ibrd’s view, the reformation of a public pension scheme of the type pay as you go (payg) can be carried out by means of one out of five alternatives, as follows (holzman & hinz, 2005): a) the support of parametric reforms that maintain the structure of the benefits, the public administration and the unfinanced nature of the scheme, which involves only changes in the corresponding parameters (raising the minimum required years of contributions, raising the retirement age and the contribution rates, the shift from benefits indexation depending on the accrual rate of medium wages to the indexation of benefits depending on the inflation rate etc.); the unfinanced scheme is characterised by the fact that the payable pensions are allocated on the basis of 75 roșu collected current contributions, while the existence of a surplus at a certain time represents an exceptional circumstance; b) the implementation of notional accounts, which modify the structure of benefits (they function basically on the principle of defined contributions and depend on the life expectancy at the moment of retirement and on the “notional interest rate” (which is regularly equal to the rate of economic growth) applied to the sums “collected” in individual accounts), but which maintains the type of administration and the nature of the financing. c) the adoption of private management and “fully funded” schemes (based on defined benefits or defined contributions), which limit the involvement of public administration only to the achievement of the objective related to the reduction and elimination of poverty among the elderly; d) the introduction, within the public pension system, of a prefinancing component (which can be partial or total) of benefits, based either on the principle of defined benefits or on that of defined contributions; for the purpose of making the system more efficient, the management of investments can be externalised to the private sector; e) the diversification of the nature of benefits, administration and funding by choosing the multi-pillar model. the choice of one of the alternatives mentioned above depends on the necessities and the specific situation in each country, but also on the inherited system and the existing possibilities for reform. ibrd’s preference for the last alternative was based on the need for diversity and for the sharing of the responsibility concerning the incomes corresponding to the retirement period at the level of more actors. ibrd’s view regarding the organisation and functioning of national pension systems in this context, in one of its early forms, the multi-pillar system proposed by the international forum in an intensely-covered report entitled “averting the old age crisis: policies to protect the old and promote growth” was formed of (ibrd, 1995): the first pillar, organised and administered publicly, which involved mandatory subscription and which was aimed primarily at the reduction and prevention of poverty among pensioners; the second pillar, administered at a private level, is mandatory for the contributors to the first pillar; the third pillar, also administered privately, and which involves voluntary subscription. in ibrd’s view, by means of these three pillars three major functions of a pension system can be fulfilled, as follows: redistribution, saving and insurance. redistribution involves financial transfers from one group of people to another with the aim of preventing poverty, saving leads to lifelong consumption smoothing, whereas insurance protects individuals against negative events such as an economic recession, bad investment, inflation, etc. the first pillar satisfies the need of redistribution, the second and the third cover the savings component and together they manage to protect the beneficiaries against the afore-mentioned risks. under the circumstances of implementing the multi-pillar model, the responsibility of governments regarding pension systems targets three important aspects: imposition, normalization and stimulation. considering that, in general, not all individuals save voluntarily for their retirement, a certain degree of coercion is inevitable. however, it must be correlated with the elaboration of relevant and intelligible norms, which are meant to uphold the 76 ibrd and its involvement in modernising and improving the functionality of pension systems credibility of the pension system (public and private). moreover, the normalization process cannot disregard those aspects which stimulate the call for retirement savings, such as: offering relative or absolute guarantees concerning the amount of the future pension, the deductibility of the pension contributions, the creation of respectable institutions that supervise the administration of the pension schemes in favour of the participants, etc. in ibrd’s vision, the first pillar of the multi-pillar system proposed initially was designed to have a more reduced dimension and, at the same time, to be of a pay-asyou-go type in order to avoid the problems specific to provident funds (financed funds) administered at a public level (unsatisfactory results obtained from investments in government bonds, high contributions or reduced benefits, etc.) and which exist in certain states from the african and asian continents (zambia, malaysia, singapore). the administrative and fiscal capacity of the state, as well as its intention to redistribute through the pension system lay at the basis of selecting one of the modalities for providing benefits in case of pillar i (presented in figure 1). pillar ii was considered to be a solution, on the one hand, for avoiding some of the political and economic difficulties to which the public pension scheme was exposed and, on the other hand, for increasing the accumulation of capital, the development of the financial market, etc. the third pillar was devised in order to satisfy the wishes for a higher income and supplementary protection during the retirement period. in the case of pillars ii and iii, ibrd’s recommendation targeted primarily the individual pension plans, especially due to their advantages, such as: wide coverage at the levels of the individuals, portability1, work mobility, etc. however, their implementation required the existence of well-grounded and rigorously normalised banking and capital markets and of a wide range of financial instruments that could satisfy the pension funds’ investment needs. synoptically, the multi-pillar system (in its initial form) proposed by ibrd is represented in figure 1. figure 1 the multi-pillar system (initial form) promoted by the international bank for reconstruction and development source: world bank (1994), averting the old age crisis: policies to protect the old and promote groth, oxford university press, p. 15 1 the portability of pension rights is equivalent to the possibility of retaining their value as a result of switching workplaces or the country of residence. 77 roșu taking into consideration the modalities for providing benefits in the case of pillar i, we observe the lack of earnings-related benefits. concerning this subject, in ibrd’s standpoint, the obligation to give benefits to those with high incomes in direct proportion to these incomes, on the one hand, and the redistribution to those with low incomes, on the other, can lead to excessive contributory quotas and to substantial transfers to wealthy individuals (the so-called perverse redistribution). when the multi-pillar was launched, its adoption was positively seen by ibrd as a source of economic development and a generator of citizens’ wellbeing (be they young or old), in effect for a long time, as a result of the functions it accomplishes, namely, redistribution, saving and insurance. new perspectives on national pension systems more than ten years after the publication of the report that left an important mark on the evolution of pension systems in more states, the world bank reaffirmed and updated its position, as a result of the accumulated experience and research, in another report entitled “old-age income support in the 21st century: an international perspective on pension systems and reform”. in this study, the need of reforming pension systems is highlighted, as a result of the unfavourable evolution of national pension systems, from the perspective of their sustainability and that of the distortions they provoke at the level of an economy. the updating of the multi-pillar system, supported by ibrd starting with 1994, consisted in its redefinition and expansion to five essential categories, as shown in table 1. table 1 taxonomy of the new multi-pillar pension system supported by the world bank source: holzman, r., hinz, r. (2005), old-age income support in the 21st century: an international perspective on pension systems and reform, the world bank, p. 82 through the promotion of the new multi-pillar model, ibrd addresses more firmly the imperative needs of the states, such as those related to the reduction of poverty and the coverage not only of employees from the formal sector, but also of those from the informal one. with the aim of raising the pension systems’ coverage, certain states like the usa, germany, japan, or new zealand, have implemented, at the level of public or private pension systems, a mechanism by means of which the state or the 78 ibrd and its involvement in modernising and improving the functionality of pension systems employer contributes, on behalf of the employee, to the pension fund, in direct proportion to his contribution (matching defined contribution) (holzman, 2012). according to ibrd, a system that incorporates more pillars than the 5 pillars mentioned in table 1 may provide, through its diversity and flexibility, adequate and affordable pensions, thus being able to fulfil the most important functions of pension systems, as follows: the reduction of poverty levels among the retired citizens, protection in case of economic, political or demographic risks, which are inherent to pension systems, as well as the accumulation of savings for old age. however, for the conception of a pension system every state needs to take into consideration its own economic, social, political, financial, institutional conditions, etc., in order to ensure the viability of the system. thus, the multi-pillar model can take various forms and practical modes of implementation; yet, a few elements are essential to the nature of the implemented model (holzman & hinz, 2005): elements that correspond to the zero pillar, which should cover pensioners whose incomes from the contributory period were too low, or who worked in the formal sector only on a temporary basis; the viability of these elements depends on the existence of other vulnerable groups and on the availability of budgetary resources; elements that allow the prefinancing of future pensions, which can be adopted by any of the pillars and which have certain advantages, both from an economic perspective (they can lead to increasing savings at the national level), as well as from a political one (the presence of resources which are necessary for funding the future pension rights can produce high levels of credibility among the population). besides the requirement that these essential elements should be respected, the reform of the pension system must have as objectives (holzman & hinz, 2005): providing adequate pensions, which should be sufficient for preventing poverty and for ensuring, for the majority of retired persons, a level of consumption that is comparable to the one before the retirement occurred; providing pensions that are possible given the financial power of the contributors and of the society, and which are not detrimental to other economic and social objectives; ensuring the long-term sustainability of the system; implementing a robust system that is capable to resist the major political or demographic shocks or economic volatility, etc. backgrounded on these objectives, ibrd formulated a series of “performance” indicators that can assist the measurement of a pension system’s capacity to deliver, in a safe and efficient manner, the benefits promised to present and future generations, such as (pallares-miralles et al, 2012): the coverage degree of the pension system; the adequacy of the provided benefits; the financial sustainability of the pension system and the degree of providing for pensions from the collected contributions; economic efficiency, namely, the minimization of the distortions that the pension system can cause at the level of the labour market, individual savings, etc.; administrative efficiency, which lies in the minimization of the costs that correspond to the collection of contributions, the payment of benefits and, respectively, the management of investments; the robustness of benefits when they are exposed to certain risks and uncertainties. for the evaluation of national pension systems ibrd employs, besides the indicators mentioned above, a series of indicators that are meant to diagnose the environment in which a certain pension system operates, such as: the fertility rate, the elderly dependency ratio, the workforce participation rate, life expectancy, etc., as well as 79 roșu indicators describing the architecture/design of a pension system, as well as the rules at its foundation (contribution quota, eligibility criteria). the analysis of these indicators facilitates the carrying out of statistical reports and comparisons between states, as well as the identification of good practice in the domain with the purpose of future use in different national contexts. still, as the international organism itself admits, the creation of an informational basis at an international level regarding the policy in the area of pensions is still difficult (pallares-miralles et al, 2012). therefore, besides the manner in which national pension systems are organised, ibrd is also preoccupied with their functionality, giving assistance to governments with the aim of meeting the objectives corresponding to pension systems, precisely in the case of those that target their sustainability, the coverage degree and the adequacy of benefit. to this end, the international body makes use of instruments for microstimulation or actuarial prediction such as axia apex model of pension entitlements (apex) or pension reform options simulation toolkit (prost) (dorfman & palacios, 2012). the numerous conferences organised in the domain of pension systems, the various collaborations with other international institutions (such as the organisation for economic cooperation and development, the inter-american development bank, the international monetary fund, etc.) that tackle problems regarding pension systems in the entire world, as well as the richness of the conducted research, including studies and analyses carried out in each member state, have facilitated the accumulation of a rich and valuable collection of knowledge on the basis of which ibrd can be rightly named “the bank of accumulated and, most of all, valorized knowledge”. besides the technical and informational support provided, ibrd has also backed up financially certain states, with a view to adopting the new proposed system, but taking into account the fact that there is a close link between the implementing capacity of each member state and the degree to which the reformation is possible, namely, the activation of all the pillars or only of some of them. for instance, not every state is ready for the introduction of a private pillar and, as a consequence, it should not even do that unless it fulfils a series of minimal conditions (holzman & hinz, 2005): the existence of a powerful nucleus of banks and other ‘healthy’ financial institutions, which are capable of offering credible services for the management and administration of the funds’ assets; the long-term governmental commitment for the promotion of sound macroeconomic policies, which would contribute to the creation of new jobs and the increase of revenues; the creation of a pertinent, stable and intelligible regulatory environment. conclusions the multi-pillar model should have remained only a reference framework, as ibrd itself admits, thus allowing states to adjust the structure of their pension systems to the specific national context. however, through the years, the multi-pillar system has proved to be a model that is worth following. thus, many states, especially some from latin america and central and eastern europe have reformed their national pension systems taking into account the measures or guidelines proposed by ibrd. nevertheless, this did not lead to the desired outcomes, a fact which favoured the emergence of criticism concerning ibrd, as a result of the various analytical errors identified in the case of the multi-pillar model, such as (barr & diamond, 2009): the lack of vision concerning the effects that all the pillars might have on a certain economy, beyond the effects of one pillar only; 80 ibrd and its involvement in modernising and improving the functionality of pension systems the disregard of certain problems that may occur at an individual level, related to the necessity of pertinent and objective information in order to take the decisions that can influence their standard of living during the retirement period; the laying of emphasis on the manner of financing pensions (payg or accumulation of assets) and not on the source of providing the real consumption, respectively the gnp/gdp (gross national/domestic product) and the manner of distributing it at the levels of the retired generation and the active one; additionally, many of the advantages of the multi-pillar model, especially of the mandatory private pension pillar (lack of political interference, resistance to demographic changes, the development of the financial market, the facilitation of economic growth, increasing the rate of employment, the diversification of risks, etc.) have been demystified throughout the years, as a result of their failure to fulfil expectations or because the same effects (be they positive or negative) can be obtained even in the context of a public pension system alone (thus making the creation of a mandatory private pension pillar ineffectual) (bar, 2001; stiglitz & orszag, 2001; barr & diamond, 2009). in a report that evaluates the assistance offered by ibrd for the implementation of the different multi-pillar pension systems, besides the recognition of certain aspects that have not met their target, such as the persistence of political influence on the private pension schemes, the failure to achieve objectives related to increasing the level of savings, the development of the capital market and the increasing of coverage among the persons from the informal sector, the failure to diversify portfolios (most of the investments taking the form of government bonds), emphasis is laid on the fact that many of the initial conditions (administrative capacity, macroeconomic stability, etc.), which are necessary for the adoption of such a reform, have not been fulfilled satisfactorily, whereas other requirements (the amount of the debt, the corruption level, etc.) have been subsequently neglected (independent evaluation group – world bank, 2006). the fact that the world bank has upheld the implementation of the multi-pillar model even under these circumstances reveals either the distortion of the reality by the factors involved in reforming national pension systems (according to certain interests they may have) or the existence of excessive toleration levels shown by the international organism. references bar, n. (2001), the welfare state as piggy bank. information, risk, uncertainty and the role of the state, oxford university press. barr, n., diamond, p. (2009), reforming pensions: principles, analytical errors and policy directions, international social security review, 62(2), 5-29. dorfman, m., palacios, r. (2012), world bank support for pensions and social security, social protection and labor discussion paper, 1208, the world bank. holzman, r. (2012), global pension systems and their reform. worldwide drivers, trends and challenges, social protection and labor discussion paper, 1213, the world bank. holzman, r., hinz, r. (2005), old-age income support in the 21st century: an international perspective on pension systems and reform, the international bank for reconstruction/the world bank. independent evaluation group – world bank (2006), pension reform and the development of pension systems. an evaluation of world bank assistance, the world bank, washington, d.c. 81 roșu pallares-miralles, m., romero, c., whitehouse, e. (2012), international patterns of pension provision ii. a worldwide overview of facts and figures, social protection and labor discussion paper, 1211, the world bank. stiglitz, e. j., orszag, r. p. (2001), rethinking pension reform: 10 myths about social security systems, in new ideas about old age security: toward sustainable pension systems in the 21st century, edited by holzmann, r. et al, the international bank for reconstruction and development / the world bank, 17-56. the international bank for reconstructions and development/the world bank (1994), averting the old age crisis: policies to protect the old and promote groth, oxford university press. 82 microsoft word apostoaie constantin marius_eng.doc organization of the statutory audit of financial statements in romania gabriela-felicia ungureanu, the bucharest academy of economic studies, romania abstract economic entities around the world, regardless of their membership public or private sector the size, the object of activity, prepare financial statements for presentation of financial information users (investors, creditors, customers, suppliers, public institutions). the financial statements provide information about financial position, performance and changes in financial position of an entity information underlying to base decision process. for romania, the financial audit was not a tradition. recognized as a top area of the accounting profession, financial audit was legislated in 1999. statutory audit, audit of annual financial statements or consolidated annual statements have been established 9 years later (emergency regulation no. 90 june 24, 2008), by transposing directive 2006/43/ec of 17 may 2006 of the european parliament and of council on statutory audit of annual accounts and consolidated accounts, in order to ensure oversight of auditors, in the public interest. cuvinte cheie statutory audit, financial statements, decisions, management, public interest entities, "international standards on auditing. jel code: m42 introduction for romania, the financial audit was not a tradition. statutory audit was governed relatively late, by emergency regulation no. 90 june 24, 2008, in order to transpose directive 2006/43/ec of 17 may 2006 of the european parliament and of the council on statutory audit of annual accounts and consolidated accounts. the audit is the professional examination by an independent and competent persson the fidelity representations and financial accounting in order to express an opinion by reference to a criterion. audit activities include the one hand, examining on a test basis of the evidence about disclosure of financial statements and the second hand evaluating the appropriateness and application of accounting principles used and financial controls arranged and conducted by management to increase the effectiveness of the entity. statutory audit is given to all audit activities on individual or consolidated annual financial statements as required by community legislation transposed into national legislation. individual statutory auditor is approved in accordance with the provisions of emergency regulations no. 90/2008 updated by the competent authority respectively chamber of financial auditors of romania (cfar), to carry out statutory audit. in meaning of the emergency regulations no. 90/2008, approval of a statutory auditor or audit firm means approval statutory audit work is carried out only by statutory auditors or audit firms were subject to authorization, which approval under the terms of order emergency regulations no. 90/2008 updated. the competent authority responsible for approving statutory auditors and audit firms is the chamber of auditors of romania. final responsibility for approving statutory auditors and audit firms is public oversight body. studies and scientific researches economic edition, no. 15, 2010 180 objectives of research • implementation of directive 2006/43/ec of may 17 2006 of the european parliament and the council on statutory audit of annual accounts and consolidated accounts statutory audit to ensure compliance with the requirements of european directives in romania; • development of a harmonized approach to statutory audit at eu level; • achievement of a system of public oversight for statutory auditors and audit firms, based on european principles to ensure monitoring of audit work in romania. research methodology includes following stages • study of legislative rules; • knowledge on statutory audit and analysis of information; • how was the transposition of directive 2006/43/ec on statutory audit; • parallels between national and european requirements; • regulation legal framework for audit activities; • council for the establishment of public oversight in order to ensure the supervision (in public) the auditors; • to update the national legislation as required by eu legislation. expected results • investors regain confidence in individual financial statements and consolidated by strengthening the profession; • ensure sound financial management based on optimal decision, following a statutory audit quality. the level of knowledge in the area of auditing auditing the financial statements required audit obligation defined by national law, thus: • accounting law no. 82/1991, republished specifies that the annual financial statements will be accompanied by audit reports due to financial audit by auditors, individual or legal persons authorized under the law; • minister of public finance order no. 3.055/2009 for approving accounting regulations consistent with european directives, requires that annual financial statements prepared by public interest legal persons subject to statutory audit; • law no. 297/2004 updated, on the capital markets specifies that financial statements and those of transactions set out in the annual report of entities subject to licensing, supervision and control of the national securities commission (nsc) must be audited by financial auditors; • order no. 1 / 2010 of the insurance supervisory commission for approval of the norms about of the end of the 2009 financial year for insurance companies provides that the annual financial statements of insurers and reinsurers will be audited by statutory auditors, legal persons authorized under law. the legal framework: • emergency regulations no. 75/1999 republished and updated on the financial audit activity, with amendments and additions, which are the basis for organizing the financial auditing and regulating the exercise of independent financial auditor profession; • regulation of organization and operation of the chamber of auditors financial in romania, approved by gd no. 983/2004, as amended and supplemented; studies and scientific researches economic edition, no. 15, 2010 181 • emergency regulation no. 90/2008 updated on statutory audit of annual accounts and consolidated annual financial statements, which transposes directive 2006/43/ec of the european parliament and the council on statutory audit of annual accounts and consolidated accounts statutory audit economic entities around the world, regardless of their membership public or private sector the size, the of object of activity prepare financial statements for presentation of financial information users (investors, creditors, customers, suppliers, institutions public). the financial statements provide information about financial position, performance and changes in financial position of an entity information underlying to base of the decision process. it is important that managers know what information is needed, how to obtain such information in regularly and systematically way and how to integrate information in making decisions. for managers it is important to observe the economic environment in which evolves entity, to study the internal organization and how operating its various services, analyzing strengths and weaknesses, opportunities and threats entity. each manager has available a set of methods which will assist in making decisions and financial reports is one of them. to give greater confidence to users of financial reports and greater credibility of the annual accounts, we were asked to audit the financial statements, the person authorized, independent and competent to carry out statutory audits in accordance with international standards on auditing. transposition of directive 2006/43/ec to romania, financial audit was not a tradition. recognized as a top area of the accounting profession, financial audit was legislated in 1999. statutory audit, audit of annual financial statements or consolidated annual statements have been established 9 years later (emergency regulation no. 90 june 24, 2008), by transposing directive 2006/43/ec of 17 may 2006 of the european parliament and of council on statutory audit of annual accounts and consolidated accounts, in order to ensure oversight of auditors, the public interest. "this ordinance establish throught the rules how to avoid any doubts on any interpretation of the authority and responsibilities of the chamber of auditors (cfar), as a professional body invested by the legislature to organize, coordinate and authorization to that end in romania ", said univ. ph. d. ion mihailescu, president cafr for "financiar", on october 29, 2008. since entered into force ordinance 90/2008, all references of "financial audit" of existing in previous legislation will actually make reference to statutory audit. parallels between national and european requirements key provisions covered both of the emergency regulation 90/2008 and directive 2006/43/ec relating to: • designation of competent authorities responsible for regulating and / or public oversight of statutory auditors and audit firms or their specific issues; • key audit partners and statutory auditors appointed by the audit firm to perform the mission or statutory auditors signing the audit report; • set conditions of approval the statutory auditors and audit firms; • statutory audit activity by statutory auditors or audit firms, which have been subject to authorization ; • theoretical knowledge and professional ethics; studies and scientific researches economic edition, no. 15, 2010 182 • the requirements of independence, objectivity and confidentiality relating to statutory auditors; • developing "electronic public register to registration of statutory auditors; • application of the auditing standards and audit reporting; • statutory responsibility of the audit work consolidated annual financial statements (statutory audits of the consolidated accounts); • criteria to be met by quality assurance systems; • setting up of system of investigations and penalties; • establish an audit committee in each public interest entities; • organizing public oversight systems of statutory audit. statutory audit activities basic elements of the concept of statutory audit are: • the professional auditor competence and independence, which is part of / or not from an independent body; • legality statutory audit is governed by the international auditing standards, directive 2006 / 43/ce and national legislation; • the entity's financial statements which are the object of the checks; • expressing an opinion (based on audit evidence) on the fair presentation, clear and complete financial position, results of the entity; • quality criteria by which to make the examination and expressed the view (auditing standards). the objective of statutory audit: auditul statutar este un audit extern având drept obiectiv examinarea profesion a statutory audit is an external audit whose objective is to verify the financial information in order to express a responsible and independent opinion on the financial statements if they are prepared, in all material respects, in accordance with the financial reporting. financial audit has specific characteristics, is an essential element to increase the credibility of financial reporting, which involves a high degree of interest from the public. scope: the auditor makes audit activities in accordance with international standards on auditing ( isa) and have full responsibility for the audit report in connection with the annual consolidated financial statements. where, in conducting the audit, statutory auditors have applied a different standard is appropriate in the audit report to make reference to it. procedures audit, to conduct an audit in accordance with international standards on audit shall be determined by the auditor in compliance with each audit, based on his professional judgement. the statutory auditor or audit firm is appointed by the general meeting of shareholders of audited entity. conditions for implementation audit of statutory audit activities are carried out only by statutory auditors or audit firms were subject to authorization, as that approval under emergency regulation nr.90/2008. authorization assures the compatibility with internal market rules and audit firms already incorporated in the market. the competent authority responsible for approving statutory auditors and audit firms is the chamber of auditors of romania, which, in this sense develop procedures and rules. ultimate responsibility for approving statutory auditors and audit firms is oversight body. to be authorized statutory auditors and audit firms must meet the cumulative number of statutory requirements on the structure and audit process as: studies and scientific researches economic edition, no. 15, 2010 183 • good reputation, in the sense of the provisions of the code of ethics adopted by the ethics committee of the international federation of accountants – compromising its, it is a cause for withdrawal of approval; • higher education in the economic field, completion of specialized training, conducting training courses practice and passed an examination of professional competence; • be concerned with continuous improvement training, to possess knowledge of tax laws, social insurance and in the field of international auditing standards; • to agree on the inclusion in the electronic public register this register allows interested parties to determine whether an audit firm (or auditor) has been approved and provides statutory details of those enrolled. register of statutory auditors shall be published in the official journal of romania and is available in electronic format on the chamber website. responsible for drawing up, updating and publication of public register is the chamber, under monitoring oversight body. • be independent of the audited entity auditors and/or statutory audit firms should not be involved in decision-making and management of the audited entity or accept commitments that would compromise independence. auditors should document any significant threat to their independence; • to be the subject to verification audit quality quality audit system is implemented by the chamber. quality assurance involves evaluating the requirements of independence and integrity of the fees collected the volume of resources expended, compliance with applicable auditing standards and quality control systems of audit firm. quality assurance checks are made at regular intervals, which is not more than 6 years, 3 years respectively, for public interest entities. oversight body, together with the chamber, shall ensure that all statutory auditors and audit firms respect the principles of professional ethics, which deals at least in their operation in the public interest and requirements on independence and objectivity, as defined in the code of ethics. board may prescribe by regulation situations that could jeopardize the independence and objectivity of the statutory auditors or audit firms. • confirm annually in writing, their independence from the audited public interest entity; • notify the audit committee, additional services provided to the auditee; • ensure confidentiality and documents which have had access. a statutory auditor or audit firm that has ended to be employed in an audit mission is still subject to the provisions on confidentiality and professional secrecy. statutory auditor and audit firm, and employees of audit firms must treat as confidential any information about their knowledge during their work, unless the laws or regulations provide otherwise. systems of investigation and sanctioning contraventions the oversight body set up systems of investigations and sanctions to detect correct and prevent improper conduct of statutory audit. apply sanctions to be effective, proportionate and dissuasive about statutory auditors and audit firms, where statutory audits are not conducted in accordance with this emergency regulation. audit firms respond, by law, in their capacity as members of the chamber, where one of the partners, directors or employees, with no quality auditor statutory intervene in the independent profession of statutory auditor in order to prejudice the independence of statutory auditors carrying out this activity on behalf of the audit firm. audit committee every public entity must have an audit committee. membership of audit committees is determined by the regulators of public interest entities in accordance with the laws in force, but at least one member of the audit committee is independent and has expertise in accounting and/or audit. the audit committee is responsible for monitoring the process financial reporting, effectiveness of internal control systems, internal audit and risk management within the entity. it also monitors individual statutory audit of consolidated financial statements, checks and monitors the independence of the statutory auditor or audit firm and, in particular, additional services audited entity. studies and scientific researches economic edition, no. 15, 2010 184 for public interest entities, a proposal from the administrative or supervisory body on the appointment of a statutory auditor or audit firm is based on a recommendation of the audit committee. the statutory auditor or audit firm report on the audit committee key issues arising from statutory audit and in particular on material weaknesses in internal control regarding financial reporting process. public oversight board for auditing statutory emergency regulations no. 90/2008 sets out the objectives of council as: • public oversight of statutory audit work; • drawing up a strategy on public oversight of statutory audit work; • monitoring and coordination of implementation of international standards on auditing and code ethics; • promote increased public confidence in statutory audit work; • development of cooperation and communication with international bodies in the field of isa; • romania’s representation, with professional organizations, international bodies related to isa, the statutory audit and supervision of public participation specialized staff in meetings of these bodies; • developing proposals to the government on amending and supplementing the regulation on organization and operation of the council; • transmission of information and answers to requests from the european commission regarding the statutory audit profession and supervision national public statutory audit activity. the council, through its specialized departments established by internal rules of organization and operation, has the following duties: • monitored in accordance with annual plan established quality control of statutory audit; • monitors the national legal framework corresponding measures taken at the european commission on the independence of statutory auditors; • fullfils agreements with corresponding bodies in the member states of the european union in public oversight of statutory audit work; • provides information on public institutions public oversight of statutory audit work and information on adoption and implementation of isa; • improves the general directions and methods approved by the regular inspections carried out under these schemes and ensure their proper implementation by the chamber of financial auditors of romania, according to the requirements for quality management systems audit work; • take measures for the proper conduct of inspections and their intended results; • monitors the chamber activity on the authorization of statutory auditors and audit firms and on the public register; • endorse the rules and regulations developed by the chamber of statutory audit work; • issue rules and regulations with respect to the public oversight of statutory audit work, as specified in internal rules of organization and functioning of the council; • conduct their own investigations on statutory auditors and audit firms and adopt appropriate measures following findings; • review the annual report prepared and submitted by the chamber, on the work of quality control and where appropriate, impose measures; • it monitors the training of statutory auditors. the council is lead by a board of governors, are appointed representatives of institutions with regulatory responsibilities in accounting, namely the ministry of public finance, national bank of romania, the national securities commission insurance supervisory commission of supervision private pension system, ministry of justice, the professional auditing bodies and representatives of academic profile and the business environment in studies and scientific researches economic edition, no. 15, 2010 185 romania. of note, the public oversight system is governed by non-practitioners who have expertise in areas relevant to statutory audit. conclusions ordinance introduced strict rules, national, on accede to the profession (trainees must have a length of activity accounts for less than 4 years), about the independence and integrity of the statutory auditor and / or audit firm (introducing the requirement that the key partners responsible for audits to be changed at an interval of seven years), on quality assurance (quality assurance should be performed at least once every 3 years), etc... however, emergency regulations no. 90/2008 transposed the provisions of 8 th directive of european union providing the necessary legal basis romanian auditors to contribute to the integrity of financial markets by transparent and quality reporting, which helps investors to know and understand the companies in which they invest. standards, regulations and monitoring activities ensure the public that financial markets can operate in an efficient and ethical. regaining public confidence in the annual accounts and consolidated annual financial statements published by companies on capital markets is important it represents in fact the real challenge of the moment. achieving this goal can be done by ensuring quality statutory audit of financial statements to give the public a sound basis in economic decision making. this is evident at national level, public oversight role of monitoring and coordination of implementation of international standards on auditing (isa) and the code of ethics, by statutory auditors and audit firms, they becoming the supreme guarantor of the application best practices for statutory audit profession. bibliography 1. government emergency regulation no. 90/2008 updated, on the statutory audit of annual accounts and consolidated annual financial statements; 2. directive 2006/43/ec of the european parliament and of the council, on statutory audits of annul accounts and consolidated accounts – official journal of the eu; 3. government emergency regulation no. 75/1999 republished, on financial audit activity; 4. accounting law no. 82/1991 republished; 5. law no. 297/2004 updated on the capital market; 6. omefp no. 3.055/2009 approval accounting regulations in accordance with european directives; 7. law no. 672/2002 updated, on public internal audit; 8. government decision no. 88/2007 for approving internal audit standards; 9. international audit standards– publisher house irecson, 2007: isa 200 – main objectives and general principles to govern audit; isa 240 – the auditor’s responsibility in analyzing frauds as part of financial statements audit; isa 315 – knowing the entity and the environment. the evaluation of significant misstatements; studies and scientific researches economic edition, no. 15, 2010 186 microsoft word apostoaie constantin marius_eng.doc treasury, the resultant flow business luciana spineanu-georgescu, university of constanta, romania abstract treasury expresses the result of all activities of the enterprise and how to comply with the requirements of financial balance. all operations which the undertaking is found out immediately and forward the form of cash flow. the enterprise is a system which, in turn, is characterized by economic, social and financial structure. inside and outside the company are born a lot of flows, a point mentioned in the previous chapter, from which the money have a role and an important place. keywords treasury, flow of receipts, payment flows, treasury management, financial stability, cash expenses. jel code: g30 treasury an enterprise is the flow of receipts and payments take place at the firm within a specified period of time that the flow of differences between receipts and payments by the enterprise. treasury expresses the result of all activities of the enterprise and how to comply with the requirements of financial balance. all operations which the undertaking is found out immediately and forward the form of cash flow. french author b. colas believes that the concept of "cash the company has a clear content, as this concept is used to indicate two different meanings: first sense refers to the designation: earnings, liquidity, the availability of its disposal at one time or it has fodurilor cashier or bank deposits "on demand"; the second sense, most recently occurred after 70 years, is about the name assigned to the result of the difference between working capital and need working capital or from earnings and short-term business loans in a given period. given that concerns the means by which the undertaking shall provide financial balance with the lowest cost, first to understand, given the treasury, is more common. for example professor i. neagoe treasury management characterized as "optimal management of short-term funds to ensure solvency of the company in the best conditions" and the treasury as "all operations, which manages short-term funds. treasury management, according to professor i.a.giurgiu, is "the set of decisions and proper performance of their operations related to procuring the necessary liquidity honor obligations and about the proper recovery of any surpluses. express purpose of treasury management must be given under the financial management of business purpose. therefore, some work shows that the treasury should be managed so as to obtain first the lowest cost of capital used by the enterprise, and on the other hand, placing any surplus to achieve the best returns. in view of the french economists, includes the entire treasury management decisions, rules and procedures to maintain, at lowest cost, the financial balance of the company. studies and scientific researches economic edition, no. 15, 2010 164 treasury management plays in the background, decisions and transactions that involve obtaining and then using the optimal conditions of liquidity in order to ensure permanent financial balance of the company. treasury management is split into two services: one services aimed primarily determining the budget and plan daily cash receipts and payments, and monitoring their implementation; and other services that the surplus liquidity especially administration and conduct financial transactions on the procurement market liquidity for temporary needs. necessary condition for the undertaking to be viable is it to maintain balance cash flow (receipts and payments) and also work to evolve on a permanent basis, cash. second, treasury is a policy instrument available to enterprise managers to achieve strategic objectives of the enterprise. thus, the treasury can be used either to purchase equipment necessary internal growth or to purchase the securities to increase foreign participation. placing efficient global cash surplus in the short term (in terms of cost and maximum liquidity and low risk) before it is committed to undertaking long-term strategic decisions must be permanent care company treasurer. cash flows that may be to increase equity or to raise debt, or to cause their reduction in case of reimbursement are driven by funding decisions. also, making mining operations, the company collected money from sales, has paid salaries and other expenses, which adjusts its suppliers and other external charges. thus, all flows resulting from treasury operations arise from transactions outside the mining and exploitation. as previously stated, any company is in an economic context. its goal is to create a material and intellectual wealth to meet the current and future needs of a market of consumers. however, the enterprise is a system which, in turn, is characterized by economic, social and financial structure. inside and outside the company are born a lot of flows, a point mentioned in the previous chapter, from which the money have a role and an important place. these flows are related to capital formation and its compensation by increasing capital or by increasing the number of shareholders, through external funding, either through exchange quotation. the enterprise needs capital to finance: its investment costs; operating costs, cash, for the duration of his (the operation). treasury services is a distinct service of large companies, the treasury is a component of the financial direction of the company. this service plays an active role on the financial market through an office (desk) specialist. another office dealing with administrative management of the treasury, control compliance procedures, and position confirmation operations. the main activities carried out under the company's cash are: determining cash budget set from compiling all other budgets of the company; forecast receipts and payments daily and highlight differences. operating activities of an enterprise network flows determines remember the actual flows of goods, materials, services, on the one hand, and monetary flows, on the other hand, the level that the link between inputs and outputs is provided by the treasury. treasury is the image availability arising from changes in current monetary receipts and payments, willingness to be to meet continuously maturity. to make a positive contribution to company profitability, the treasury should be well done, to the contrary, may even lead to legal recovery proceedings. at company level, activities which are expected cash flows in accordance with actual flows, is a financial forecasting. as a consequence of financial forecast cash resources are sized and found on that occasion the most effective ways of procuring them to realize in practice the objectives and actions that give the general strategy of company content cost and minimum risk. studies and scientific researches economic edition, no. 15, 2010 165 the forecast cash flow activity is accomplished by "back office" to materialize, mainly through cash budgeting and plan daily receipts and payments for the enterprise. as an expression of financial forecasting, forecasting cash, receipts and payments estimates reflect company and outlining the management of surplus or deficit of cash. forecast inflows refer to the evaluation: flow necessary for operation; flow generated by increased capital of the enterprise; flows from the loan company. the provision is the key revenue forecast analysis because flows are dependent on income business operation. they are a product of business functions and financial behavior. internal analysis is completed by external analysis to develop forecasts of integration of the development level of prices, the market share. these internal and external investigations are crucial in forecasting revenue for the input stream. in conclusion, the input flow projections are based on the distribution or revenue nature, ie their income and income from loans. sources of data on income, which depend on inflows, budgets are provided by financial investment and trade. compared to predict flows of entry, exit flow forecast is the result: operating decisions on regulations, agreements with suppliers, paying for trading expenses, salaries; ong-term decisions: repayments of loans, commitments and regulations on procurement of fixed assets. the flow exits consist of: 1. the operating expenses future development of part of sales are determined for a firm, forecast production. production rate depends on the strategy adopted by the company. production is unstable over time, and surplus production is stored or redistributed if there is a possible further sales, decreasing costs of storage, which tempers, in turn, affect other costs and production efficiency. production scheduling is based on forecast operating costs and investment data: procurement, payroll and similar, liabilities, taxes and other expenses. 2. investment costs, expenses arising from the investment program developed by the company. 3. dividends paid; 4. profit taxes. the confrontation with the inflows of output for some period (month, quarter, semester, year), resulting either surplus or deficit of cash. treasurer may influence some flows to achieve a safe balance in the following directions: expedite the receipt of the claim; mitigation payments from home as possible; use of floating rate, the difference between bank accounts. if the input flow is less than cash flow exits, the treasurer may apply to a bank support, namely: treasury budget allows an upper limit determining whether the company wants to use a credit line; budget to establish the level size, date and duration of the loan required if the company requested a bank loan. in the reverse situation, ie a higher flow input flow output, the treasury operates, with investments over surpluses. the treasurer has the means to optimize cash standing: existing credit arrangements; importance of credit lines used; short-term investment opportunity. studies and scientific researches economic edition, no. 15, 2010 166 budget work is part of the treasury of revenue and expenditure of the company. by processing the accounting information to establish the structure activity cash budget so that they obtain information only to the actual income received and expenditure actually paid. treasury budget activity is in fact a profit and loss anticipated as it allows analysis of economic indicators that provide information on intermediate balances management, specifically on how the financial balance is achieved dynamic enterprise. references 1.bistriceanu, gh., popescu, gh. (2007), romania's state budget, ed. university, bucharest 2. bucataru, d.,(2008), the company’s finances, ed. junimea, iasi ectiv, (2004), budget and public treasury, ed. university, bucharest 4. neagoe, i., (1997), the company finances, ed. ankarom, iasi 5. onofrei, m., (2004), the finances of the company , ed. university.,“a. i. cuza”, iasi 6. roman, c., roman ,a. g. , financial management of local public entities, ed. economic, bucharest public finance, fourth edition, ed. didactic and pedagogic, r.a., bucharest. studies and scientific researches economic edition, no. 15, 2010 167 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the financing of r&d: challenges for romanian firms mihaela diaconu “gheorghe asachi” technical university of iaşi mhl_dcn@yahoo.fr abstract this paper provides a review regarding the financing issues of innovative firms in romania. the financing resources used by innovative firms are closely interdependent with innovation modes adopted by firms (r&d and non-r&d innovations). in the context i highlight the difficulties in attracting external funding resources and the implications for government policy. in this respect, i begin by describing some of the unique features of r&d investments. then i discuss the various theoretical arguments why external finance for r&d might be more expensive than internal finance, going on to review statistical evidence on the support of this hypothesis and the solutions that have to be developed and adopted by the government. the paper concludes with a discussion of policy options. keywords innovation; firm; business angels; venture capital; debt financing jel classification o31; g24; m41 1. introduction innovation is a source of competitiveness and economic development. research and development (r&d) is considered to be an important input of innovation and industrial production. the financing conditions of innovative firms and the issues they face in attracting external financial resources for r&d projects create a framework for government policy intervention. in order to shape the specific framework regarding the financing of innovative firms, i tried to answer two questions: what does reflect the financing resources used by the romanian firms from the perspective of their innovative projects? which are the solutions that can be adopted by the government to spur r&d innovations in romania? our concern for the ways of financing of innovative firms in this country is justified given the very modest size of the input indicators (berd/gdp and gerd/gdp) in the period 2000-2012 that are influenced by the industrial structure (with a prevalence of low-tech industries and non-r&d innovations) and non-innovative small and medium sized enterprises. in the same time, the innovation expenditure structure reflects the lowest implication in internal r&d activity and allocating funding resources mainly to machines, production equipment and software by the innovative firms (diaconu, 2012, 2013). romania is situated far below the eu 27 with respect to r&d expenditure. this gap is due mainly to the r&d expenses made in the enterprises sector that we found being also at a statistically significant unfavorable and persistent difference from the eu 27. the imperative of increasing r&d expenditure can be observed as a result of a poor performance obtained from innovation in romania. from this point of view, the orientation of innovation by stimulating the enterprises to engage themselves more in 157 diaconu research must be able to attenuate the considerable vulnerabilities that hinder the economic development based on knowledge: the concentration of economic and creative capacities in several sectors and the industry dependence on the imports of technologies, on the external resources of knowledge and the insufficient funding from venture capital. in this paper i briefly review in section 2 the characteristics of r&d projects and their impact on funding resources. the financing of innovative firms in romania is discussed in section 3 according with data available and section 4 concludes with a discussion of policy options. 2. r&d projects characteristics and the impact on the funding resources viewed as an investment projects, r&d activities present distinctive characteristics from investments in real assets impacting the use of financing resources. first of all, r&d projects incorporate significant amount of funds for remuneration of researchers and engineers; their efforts to increase knowledge are source of profit for the firm through the development of new products and processes. training expenses and staff salaries are smoothed over time, implying significant adjustment costs for firms (hall, 2009, 2010). secondly, r&d has higher income but more uncertain. investment is made over a long period of time, during which new information reduces uncertainty and it requires an analysis of projects throughout the lifetime. another feature of r&d projects corresponds to the creation of intangible capital partly incorporated in human capital with low salvage value, presenting implications on the project financing. r&d reduces the size of the company’s fixed assets while increasing the level of investment in research which implies sunk costs as r&d commitments grow. in principle, firm can use retained earnings, debt and equity for funding r&d projects. one may admit that firms choose funds such that the financial structure involves minimizing the cost of capital. economic theories (jaffe & russell, 1976; stiglitz & weiss, 1981; myers & majluf, 1984) suggest a higher cost of external financing supported by firms due to the information asymmetry between the innovator and investor and to the tax incidence. the aspects associated to information asymmetry have gained particular attention, being more grounded in practice as the pecking order hypothesis is identified to be at a greater relevance in designing firms’ financial structure. firms adopting r&d project will have far better knowledge of the cost and payoffs than the financier, explaining information asymmetry (or incomplete information) and credit rationing phenomena. even in the absence of credit rationing, asymmetric information issues may determine external debt and equity to be more expensive than internally available funds leading to underinvestment. the sme (small and medium-sized enterprise) sector is the most affected by the credit rationing as it is characterized by a greater variability of profits and growth than large companies. as a result, smes are focused on obtaining funds from informal resources and thus appear to be less linked to the formal market trends related to stable income. the use of internal funds or quasi-equity (loans from family or friends) implies incurring a required rate of return below the market level, while (formal) loans from banks can be contracted at an interest rate above the average rate of the financial market, and possibly higher than that supported by large enterprises. a subset of the smes that require special considerations relate to the innovative ones, that are more important for the national economy and operate, in principle, independently of bank financing. these smes have an innovative behavior in creating competitive advantage and growth. they differ from other smes aiming at progress and growth through innovation. unlike traditional smes that adopt tested 158 the financing of r&d: challenges for romanian firms products or services and rapidly obtain positive cash-flows, a dynamic (innovative) firm will start by incorporating new concepts and marketing methods. in general, innovative smes may be identified as enterprises that operate in high-tech sectors although, in this context can be incorporated other firm as well, with a significant proportion of r&d expenses of the total turnover. after going through characteristic stages, these companies will record growing revenues, absorb labor, export goods and services and register high productivity, but the possibility of funding is a precondition for establishment and development of these firms. in the case of innovative smes, capacity of financing is crucial for entrepreneurial success. the main difficulties supported by innovators in accessing financial resources include the cost of capital which incorporates the risk premium required by capital suppliers, agent and moral hazard costs, lack of collateral associated with intangible assets, lack of track record and limited market potential. traditional sources of financing such as bank loans, including those guaranteed by government or stock issues on the traditional stock exchanges are of the limited relevance for the innovative smes, in their confrontation with initial negative cash flows, untested business models and uncertainty of business success. start-up and small firms face, in principle, with the most severe financial constraints due to the greater intensity of information asymmetry. in principle, after the company exceeded its early stages, it becomes a potential candidate for venture capital investments that link the firm with institutional capital sources. the financing from venture capital minimizes the informational gap as the firm’s access depends on an adequate business plan and demonstrates potential commercial success. a reduced access to the traditional external resources limits funding and threatens innovative companies to grow. venture capitals are, generally, considered to be the most appropriate financial resources for technologically innovative smes. venture capital firms do not only provide resources for the financing of projects, but give also experience in research activities and diffusion of innovations, shaping the company’s business strategy. 3. the financing of innovative firms in romania in order to assess the severity of financial constraint on innovation, most empirical studies aimed at reflecting cost differences between internal and external financing. in this respect, r&d expenditure is used as a proxy for innovation expenditure in different investment equations following the economic theory. it is not surprising that most studies show that innovative smes are the most affected by the phenomenon of financial constraint. an issue unexplained in the literature refers to the nature of the funding gap, especially at the innovative smes level, knowing that they are more affected by financial constraints than large firms. one can admit that a funding gap exists if firms cannot get funds they need because of market imperfections. although identifying funding gap is of interest to government policy in the implementation of appropriate measures to support innovation, the difficulty of distinguishing between the existing and the perceived gap remains unsolved since there is no conclusive evidence determining whether the supply or demand gap prevails in innovative sme (bank of england, 2001). in order to reflect the financing difficulties faced by smes is essential to have statistical data. community innovation survey (cis) centralizes data on factors that hamper innovation, but only up to the cis 2008 (for the interval 2004-2008). in figure 1 we present obstacles perceived by firms in romania to innovate, all nace sectors. the figure 1 shows that innovative firms claim lack of internal funding and this shapes the main obstacle. most affected, in this respect, appear to be the innovative 159 diaconu ones and small firms (< 50 employees) with a proportion of 34.80% who lack their own resources. this obstacle diminishes as enterprise grows; lack of internal funds register medium enterprises with 24.79% of the total (50 – 249 employees) and large firms with 24.19% of the total (> 250 employees). figure 1 obstacles perceived by romanian innovative firms, all sectors source: community innovation survey (cis 2008) – eurostat database the next most important obstacles in innovation are the lack of external financial resources and the cost of innovation. non-innovative firms express similar proportions of those lacking their own funds and confront with obstacles of comparable intensity (cis 2008 – eurostat database). higher financing obstacles faced by small businesses confirm the theory predictions. from this perspective, it is not surprisingly that, using the world bank enterprise survey data, we showed that small firms prefer internal funds that are mostly used for investments, having a lower proportion of bank loans in the financial structure. at the same framework, new equity is another important resource for small enterprises and its use is reduced with increasing the firm’s size (diaconu, 2013). the particular interest in eu to monitor the development of smes in europe determined that the smes finance database (european commission & european central bank) to be improved by increasing the number of questions regarding many aspects that characterize smes funding in the survey. this does not incorporate only innovative firms, and responses refer also to financing innovation by using venture capital and firms’ perceptions regarding their use. we have chosen two questions the most representative for our study for the romanian smes from the year 2012, making possible a comparison with responses in the eu 27 (figures 2 and 3). the firm’s preference for a given external funding resource may reflect its availability and/or an attractive cost. in this respect, figure 2 shows that all firms opt for bank 0 5 10 15 20 25 30 35 lack of funds within enterprise or group lack of finances from sources outside of enterprise or group innovation costs too high lack of qualified personnel lack of information on technology lack of information on markets difficulty in finding cooperation partners markets dominated by established enterprises uncertain demand for innovative goods or services 250 + 50 249 10 49 160 the financing of r&d: challenges for romanian firms loans, loans from other sources, but equity including venture capital and business angels funds have a much smaller representation. although the preference of romanian firms for debt, despite the highest interest rate in europe supported, would seem to be a paradox, this fact may reflect, to a large extent, that there are no other financial resources available for innovation on the financial market. in figure 3 we see that the size of the interest rate is considered to be the biggest obstacle by 33.70% of smes in romania in using debt (against 19.3% of the total smes at the eu average). this perceived obstacle is followed by the insufficient collateral or guarantees. figure 2 external funds preferred by smes source: access to finance for smes in the euro area european commission database figure 3 obstacles faced by smes in attracting preferred external financing source: access to finance for smes in the euro area european commission database the sme sector, as in the eu, most of the economic activity generates a higher level of revenues than large firms (turnover ratio is greater than 60%). despite the satisfactory performance of smes, the economy suffers from lack of dynamic smes, especially in high-tech sectors that could stimulate competitiveness and development by generating of technologies. the low proportion of firms in sectors with low r&dintensity explains their preference for bank loans. firms preference for loans and for a reduced use of equity investment (including venture capital) is, at the same time, a consequence of encouraging debt financing, the dominance of banks in the financial system in romania, an inadequate culture of funding by equity and venture capital. 35.4 21.7 19.5 2.7 6.1 9.9 4.8 19.8 29.3 33.7 1.1 4.4 7.7 4.1 0 10 20 30 there are no obstacles insufficient collateral or guarantee interest rates or price too high reduced control over the firm financing not available at all other dk/na romania eu 27 35.4 21.7 19.5 2.7 6.1 9.9 4.8 19.8 29.3 33.7 1.1 4.4 7.7 4.1 0 10 20 30 there are no obstacles insufficient collateral or guarantee interest rates or price too high reduced control over the firm financing not available at all other dk/na romania eu 27 161 diaconu highlighting the funding gap through the poor demand for funds coming from innovative firms or, the supply gap reflecting non-available funds for innovation allows formulating appropriate policy measures to spur innovation. beyond the obvious usefulness of questionnaires regarding the financing resources used by firms, there are limits to their use in terms of lack of control groups for comparison (noninnovative/innovative firms) and such analysis cannot reflect the failure of different entrepreneurs to innovate or start a business. however, the low proportion of innovative companies focused on r&d activities, significant cost of bank loans and the weak representation of venture capital in the financing innovation denotes both a demand and a low supply of innovation funding, mainly in the early stages. despite the positive incidence in the economy, the size of private equity market, including venture capital, varies considerably over time in the european space. viewed as a whole, the investment activity in the central and east-european countries (cee) showed a similar trend of other eu countries, but the investment size was much smaller, representing less than 3% of the total investments made in the eu. in fact, the venture capital industry in this region is still a young one, with a continuous development since its inception. as in previous years, the investment activity in this region in 2010-2012 was concentrated mainly in poland. the size of venture capital invested in the early stages was the lowest and this characteristic has been maintained in the cee market. the concentration of venture capital invested especially in the expansion stage and buyout also is a characteristic of romanian market in the period 2000-2012 (figure 4). investments in the early stages have been sporadic and maintained at a level between 0 15% of the total venture capital invested (15% being recorded in 2002). even if the share of investments in expansion and buyout is dominant, its irregular and volatile evolution persists. investments targeted mainly to the stages of expansion and buyout demonstrate obtaining of more attractive returns at a lower risk profiles to investors in these stages than in early (seed and start-up) stages of the small enterprises. we can admit that the later ones have been adversely affected by the lack of financing due to the absence of the (visible) market segment of individual investors (business angels) and of venture capital firms. small and new innovative firms experience high costs of capital that are not mitigated by the presence of venture capital. figure 4 private equity investments in romania (mil. of euros) source: eurostat database (2000-2012) in general, investments in romania have been concentrated mainly in the life sciences sectors where 49.8% of the total investment has been carried out (in the year 2010), in 0 10 20 30 40 50 60 70 80 90 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 early stages extention and replacement byouts 162 the financing of r&d: challenges for romanian firms communications – 14.9%, consumer products, services and retail – 13.6%, energy and environment – 9.7% etc. high-tech sectors have been registered sporadic investments, reflecting the effects of the industrial structure (these accounted for 5.6 per cent of the total investment in 2009, 56.60% in 2006 and 0% in the other years). funds raised and divestments showed also large oscillations reflecting the fragility of the private equity market in romania. this feature is even more evident the more funds raised, for example, in 2006-2011, came from european government agencies (external funds counted more than 90% of the total), while investors such as pension funds, funds of funds, insurance companies and banks have been absent from the capital providers spectrum in recent years, being inclusively the consequence of a poor adapted regulatory framework for making high risk investments. in the same time, divestments have been performed mainly through trade sales of the companies to strategic investors and not through initial public offering (ipo) – regarded as the signal of a successful venture capital process in terms of yields achievable by venture capital firms and investors. this has been the dominant divestment mode to unlocking capital, obtaining earnings and their subsequent reinvestments. in the literature, existing studies on the determinants of venture capital investment activity in various countries aimed at identifying the factors with potential impact on the investment level and proceed to constructing of indicators to reflect their incidence, followed by testing them in econometric equations (gompers & lerner, 1998; poterba, 1989; jeng & wells, 2000; romain & van pottelsberghe, 2004; clarysse et al, 2009; cherif & gazdar, 2011; etc.). generally, such factors can be regarded as cyclical, such as gdp growth rate or, structural the entrepreneurial activity and culture formed in the r&d field, the capital market activity, the institutional environment and taxation on corporate income or on capital gains etc. we tested various factors with impact on the equilibrium amount of venture capital invested in romania in the period 2000-2010, including in the equation the annual gdp growth rate, the stock market capitalization, the real long-term interest rate, the gross expenditure on r&d (gerd) to gdp, the effective marginal tax rate on capital income and the unemployment rate (diaconu, 2012b). we could not incorporate the aspects of institutional environment that also would have been of importance for our analysis, due to difficulties to capture and quantify them without having the necessary statistical data. however, the absence of the private pension funds as sources of institutional savings, at least until the year 2007, could shape another explanation of the modest size of venture capital invested in romania. in addition, we have pointed out the restrictions imposed to the pension funds to invest in unlisted companies, the lack of tax incentives to promote innovative young firms, to conduct research activities, technology transfer and cooperation contracts between enterprises and higher education or research institutions. our results indicate that the total r&d intensity is the main determinant of the venture capitals invested in this period in the two phases (for early stages and expansion). a significant incidence, mainly on the supply side, also shows the annual long term real interest rate, while the market capitalization, the effective marginal tax rate on corporate income, the annual inflation or unemployment rate do not impact on the venture capital. in terms of forming and developing of the venture capital market, our recommendation concerns strengthening the demand for funds, respectively encouraging of enterprises to innovate, creating of conditions for the supply to be manifested in the seed and startup stages and the compatibilization of the need for financial resources with prudential rules by adapting regulations for institutional investors. 163 diaconu 4. conclusions and policy implications a number of conclusions have emerged from our theoretical and empirical work. these are consistent across the various samples and methodological approaches. it was important to emphasize the market failures catalogued here due to the separation of financier and entrepreneur. first, debt is not a favored funding source for r&d projects. second, stock market in romania is undeveloped and exhibit weak sensitivity and responsiveness to r&d and firms’ cash flow. third, the weak responsiveness may arise not because firms are not financial constrained, but due to the low cash-flow devoted to r&d projects. finally, there is now considerable evidence that young and/or small firms are more likely to face financial constraints than large established firms and presumably they invest less in r&d. high costs of capital is not mitigated by the presence of business angels or venture capital. in fact, investments made by venture capitalists in romania, in absolute and relative amount (as a proportion of gdp), has been one of the lowest in comparison with the eu average in the period 2000-2012, with a clear investment tendency to the expansion phase of the enterprises. the absence of individual investors (business angels) and almost no supply of venture capital coming from in institutional investors to the early stages have been a major impediment to the development of the r&d intensive industries. abandoning the r&d projects due to the lack of funding cannot be captured by the venture capital variation to the ratio of business expenditure on r&d (berd) to gdp. venture capital investment activity in the two (early stage and expansion) segments is influenced mainly by the total r&d intensity. this result has important implications for the government policy given the role of venture capital in the economy. in this respect, stimulating the supply of venture capital requires, first of all, strengthening the demand of funds by boosting enterprises to innovate and development of attractive projects, through implementing direct and indirect mechanisms to support access to the research results funded from government sources, including the transfer of the research results to business sector to be valued. in the same context, supporting the supply of funds in seed and start-ups stages uncovered by the intermediated market of venture capital becomes essential and it is able to meet the demand for funds of these stages. since the success of each stage of innovative firm depends on the ability perceived to progress to the next stage, appropriate funding mechanisms are needed for each stage. however, increasing the financial resources for innovation cannot be achieved by limiting pension funds to invest. elimination of the restrictive ceiling may be able to provide financial resources for innovative firms and raising the expected returns of funds through harmonizing investment risk with anticipated profitability. references bank of england (2001), financing of technology-based small firms, available on http://www. bankofengland.co.uk. cherif, m., gazdar, k. (2011), what drives venture capital in europe? new results from a panel data analysis, journal of applied business and economics, 12(3), 122-139. clarysse, b., knockaert, m., wright, m. (2009), benchmarking uk venture capital to the us and israel: what lessons can be learned?, report prepared for the british private equity and venture capital association (bvca). diaconu, m. (2013), incidenţa fiscalităţii asupra inovării tehnologice, in păun, i. o., ionescu, c., dinga, e. (ed.), studii post-doctorale în economie. disertații post164 the financing of r&d: challenges for romanian firms doctorale, volume 3, studii și cercetări fiscal-bugetare, bucharest, publishing house of the romanian academy, 270-349. diaconu, m. (2012a), performance paradigms in the innovation activity: the case of romania, actual problems of economics, 9(135), 292-302. diaconu, m. (2012b), characteristics and drivers of venture capital investment activity in romania, theoretical and applied economics, volume xix, 7(572), 111-132. hall, b. (2010), the financing of innovative firms, review of economics and institutions, 1(1), 1-30. hall, b. (2009), the financing of r&d and innovation, nber working paper 15325, cambridge ma: nber. gompers, p., lerner, j. (1998), what drives venture fundraising?, brookings papers on economic activity, microeconomics, 149-192. jaffe, a., russell, t. (1976), imperfect information, uncertainty and credit rationing, quarterly journal of economics, 90, 651-666. jeng, l. a., wells, p. c. (2000), the determinants of venture capital funding: evidence across countries, journal of corporate finance, 6, 241-289. myers, s., majluf, n., (1984), corporate financing and investment decisions when firms have information that investors do not have, journal of financial economics, 13(2), 187–221. poterba, j. (1989), venture capital and capital gains taxation, in summers, l. (ed.) tax policy and the economy, mit press cambridge ma. romain, a., van pottelsberghe, b. (2004), the determinants of venture capital: a panel analysis of 16 oecd countries, discussion paper, 19, universite libre de bruxelles. stiglitz, j., weiss, a. (1981), credit rationing in markets with incomplete information, american economic review, 71, 393-409. 165 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro task for post-crisis in romania: the development of industry marcela-cornelia danu “vasile alecsandri” university of bacău marceladanu@ub.ro abstract the present paper illustrates the role of industry in economic and social development of romania, in the context of the propagated effects of the contemporary economic and financial crisis and mission that is in the recovery of gaps in relation to eu countries. the dynamic of the industrial sector after 1989, highlighting the continuing decline in its contribution to the gdp formation and changing industry structure in favor of industries producing consumer goods. the situation has changed, however, after the crisis, the industry producing capital goods coming back in force, and hosting the entire sector. significant is that the development of the romanian industry must integrate into a viable and sustainable formula, scientific research and technological development with environmental quality. moreover, the qualitative and quantitative dimensions of industrial development in romania should be integrated in the dynamic dimensions of the eu, with all the implications and costs derived from this, in the short term. the plea for industrial development in the post-crisis period is supported by the need to ensure a solid foundation for the development of other economic activities specific to the primary and tertiary sectors. keywords industry development; industry structure; scientific research; industrial policy; integration of industry jel classification l16; l52; l60; o14; o25 1.romanian industry in the context of the contemporary economic crisis the economic and financial crisis has affected entire contemporary economic system in romania from the second semester of 2008. the negative effects of the crisis have been propagated in time and space also of the component of the economic system, for the most part, involvement the mark of the scientific research and technological development: the industry. even if the effects on the romanian industry crisis were visible, a positive dimension of specific period crisis in romania is a good integration of this sector of activity in the single european market. the relatively small differences between the trend in european industry and the romanian have been reported the potential for the restoration of the latter. in 2008 the industrial production in romania has recorded a significant increase of 0.9 % but in the last quarter followed a negative developments continued and in the first months of 2009. according to ins, considering fixed base year 2005 (100), the industrial production indices analysis in gross series submits that, in the period 2000 to 2009, the maximum amount of monthly industrial production was reached in october 2008. after this month followed by installing powerful decline of industrial production in such a way that, in january 2009 it has fallen from october 2008 with 37%. february 2009 marks the reverse evolution and completion of a stage of the restructuring in the industrial sector. [http://www.cnp.ro/studii]. having regard 26 task for post-crisis in romania: the development of industry to the elements of seasonality, for the period under consideration, it can be concluded that the profile of the trend in time of the evolution of industrial production has been: slowing the evolution of industrial production from march 2008; emphasize the steady decline in the last quarter of 2008, with a minimum in december 2008; resumption of growth, from 1 january 2009, from one month to the other, of the volume of industrial production; return industrial production to a level comparable to that reached in 2008 with a dynamic which is slower, compared the speed at which it has produced its reduction at the end of 2008. as regards the structural profile of romanian industry (per division caen rev2), the contraction in demand for various industrial products was followed by policies and strategies related determinands of demand. the results obtained have allowed the industrial activities such as [http://www.cnp.ro/ro/studii]: 1. industrial activities with general difficulties, whose reduction of production are not determined solely by the crisis effects; 2. industrial activities affected by the crisis; 3. activities which have not been affected by the crisis. 1. industrial activities with general difficulties: the light industry, in particular the manufacture of garments, which is located in a longest restructuring process, started with the restriction of activity of inward processing; the extraction of gross petroleum and natural gas, activity which, as a matter of fact, has registered, starting from the 2001, successive reductions of production, annually, an average of 4-5%. 2. industrial activities affected by the crisis – the most of industries, most of them for the export. among the interdependent causes of the effects of contemporary economic and financial crisis on these activities have been: external market reduction, against the background of the economic crisis main partner countries of romania (italy, france, germany, etc. ); reduction of the volume of credits granted to companies by commercial banks, as a result of central bank (bnr) rules; reduction of activity in the construction sector, causing drop in production in the industrial activities related thereto; horizontally spread of the crisis effects, in complementary activities. between the industrial activities, the most affected by the crisis were: the metallurgy recording the greatest reduction of activity in this period, the production being with 49.9 % lower than in the first 5 months of 2008; the industry of building materials their production being with 31.4 % less than during the first 5 months of 2008 ; motor industry road transport, whose production has been with 12.7 % lower than in the first 5 months of 2008 ; rubber products industry and plastics production with 16.6 % less than in the same period. 3. activities which have not been affected by the crisis: industries on which there has been no noticeable negative effects of economic and financial crisis, for example, in electrical equipment industry production reduction has been insignificant (-0.2 %) for the first 5 months; activities where there have been increases of production in the last quarter of 2008. for example, in the food industry, in the fourth quarter of 2008 production 27 danu increased by more than 9% as compared to the same period in 2007. during the first 5 months of the year 2009 food production has reduced by 4.2% as compared to the same period of 2008. this development follows a trend of precluding all types of consumption values of the population, in conditions of crisis; first those covering needs higher order after that, gradually, the other types of inputs; satisfying basic needs, the food products and those associated with them were the last affected by less income, the loss of the job, uncertainty as to future revenues, etc. in the medium term, however, the domestic demand of food products remains relatively constant. in conclusion, the effects of the different economic crisis on industrial activities, the size of the economic entities, their flexibility, the ability to adapt and respond to the risks inherent in crisis and transition through to the new market conditions have created the conditions for structural changes in the industrial sector. 2. the evolution of the industrial sector in romania in post-crisis after analyzing the evolution of industry in the european union in the last 10 years, from the point of view of the weighting of gross value added obtained in industry including energy industry, in total economy [http://epp.eurostat.ec.europa.eu/] (tab.1), we notice that this has decreased from 21.8 % in 2001 to 20.2% in 2007 (with the downward trend of relative stability around this weights since 2005) as well as it had in the economic crisis years to fall to 18.1 %; recovery started in 2010. same trend is specific too the other countries of the eu, the difference between them due to the least, three fundamental coordinates: participation of the industries sector to create gdp, the size of the decline of this sector, the potential for recovery in post-crisis. in the case of romania's situation, the relatively large weighting of industrial sector to gdp creating illustrates, as yet, insufficient exploitation of the potential services sector including the services of scientific research and technological development, which are intended to provide technical support, human and materiel necessary modernization industry. however, recover the affected industry crisis has been, in romania, higher than the european average and many developed countries on the continent. in this sense, gross value added obtained within romanian industry in the year 2010 has increased by 7.4 percent as compared to 2009, while the growth in the eu is of only 3.31 %. table 1 gross value added industry, including energy (% of all branches). geo\time 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 eu (27) 21.8 21.1 20.5 20.4 20.2 20.3 20.2 19.8 18.1 18.7 bulgaria 22.2 22.5 23.3 22.7 23.2 23.9 24.5 22 22.1 23.1 germany 25 24.7 24.7 25.3 25.4 26.1 26.5 25.7 22.4 23.8 france 17.2 16.6 16 15.5 15.1 14.5 14.3 13.7 12.5 : hungary 25.9 24.7 24.9 25.7 25.2 25.5 25.5 25.1 25.5 27.2 poland 22.5 22.3 23.7 25.2 24.7 24.7 24.5 24.3 24.3 24.5 romania 29.4 30 27.8 27.9 28.1 27.8 27.5 25.8 27 29 sweden 23.6 23.3 23 23.2 23.3 23.2 22.9 21.6 19.3 20.9 u.k. 20.5 19.1 17.8 17.1 16.9 16.9 16.3 16 14.7 15.3 source: http://epp.eurostat.ec.europa.eu/ 28 http://epp.eurostat.ec.europa.eu/ http://epp.eurostat.ec.europa.eu/ task for post-crisis in romania: the development of industry regarding the distribution of the turnover on industrial groups, in 2011, in romania, this highlights significant weights intermediate goods industry (27.59 %), energy industry (27.57 %) and the capital goods industry (21 %). the counties involved, for the most part, the turnover of 100037 mil.lei, of intermediate goods industry, are: bucharest (9743 mil.lei), olt (6375 mil.lei), galați, timiș and the slightest: vaslui (71 mil.lei) (fig.1). figure 1 distribution of the turnover of intermediate goods industry in counties, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 the energy industry, with a turnover of 99965 mil.lei, is characterized by a distribution of turnover concentrated in only a few counties: bucharest, prahova, constanța, the vast majority of counties having a very low participation to the energy supply of the country (fig.2). figure 2 distribution of the turnover of energy industry, in counties, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 the capital goods industry, with a turnover of 76124 mil. lei, obtained in 2011, the highest turnover in the counties: argeș (17398 mil.lei) and, from a great distance, timiș (6641 mil.lei), cluj, brașov, arad, bucharest. the lowest participation to the creation of the turnover in this industry held counties: suceava, harghita, giurgiu, botoșani, covasna, vrancea, ialomița, each, with turnover less than 200 mil.lei (fig.3). in the industry of goods in current use (fig.4), the counties who have obtained the highest turnover are: bucharest (9321 mil.lei), ilfov (5345 mil.lei), prahova, timiș and at the opposite pole is located counties: giurgiu (151 mil.lei) and mehedinți (100 mil.lei). analyzing the situation of industrial development in the counties of romania (fig.5), the distribution of major industrial groups shows that in some counties predominate a group of industries capital goods industry being prevalent in the counties argeș, 29 http://www.minind.ro/reindustrializare/documente.html http://www.minind.ro/reindustrializare/documente.html danu arad, cluj, brașov, timiș, while intermediate goods industry holds the biggest turnover of the total industries in counties of olt, neamț, galați, suceava, dâmbovița, bistrița-năsăud, alba, caraș-severin, vâlcea, etc. it is the group of industries with the highest representation in terms of the distribution of turnover in the counties. industry of goods in current use predominates the counties industry of harghita, ialomița, ilfov, vaslui and vrancea, but absolute turnover (total industrial sector, but also for this type of industry) illustrates a relatively weak development of this group of industries. energy industry occupies the most important place in the development of industrial counties of prahova, gorj, constanța, bucharest, mureș. the durable goods industries and the waste collection services does not occupy dominant positions in the industrial sector of any county. figure 3 distribution of the turnover of the capital goods industry, in counties, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 figure 4 distribution of the turnover of the industry of goods in current use, in counties, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 30 http://www.minind.ro/reindustrializare/documente.html http://www.minind.ro/reindustrializare/documente.html task for post-crisis in romania: the development of industry figure 5 distribution of turnover in the industry, industrial groups, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 analyzing the situation of romania's industrial sector in 2011 (fig. 6) noted that the counties of arad and argeș are the only counties where the number of employees in the capital goods industry predominates, as compared to the number of employees in other industries. in intermediate goods industries, well represented at the national level in most counties, the share of employees in comparison to other industries is relatively higher, without exceeding 50% of the total, in neamț and suceava counties. counties where the number of employees in the industry of goods in current use, compared to other industries, are: botoșani (58.48%), vrancea, călărași, vaslui, ialomița, bihor and brăila, in these counties working more than 50% of the total employees in the respective counties. as regards the labour force involved in the energy sector, that predominate in the structure of industrial employment only in the case of gorj county (58.53%). figure 6 distribution of employees in the industry, industrial groups, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 in view of the turnover/employee in the romanian industry, in 2011 (fig.7) the national average was 263.03 th.lei/employee; over the average value were 10 counties of which prahova, constanța and bucharest were detached compared to others. at the negative extreme, with very low turnover/employee, much lower than the national average, have placed the counties of teleorman, covasna, vrancea, (102.49 th.lei/employee) and vaslui (93.03 lei/employee). 31 http://www.minind.ro/reindustrializare/documente.html http://www.minind.ro/reindustrializare/documente.html danu figure 7 turnover/employee industry in romania, in 2011 source: processed http://www.minind.ro/reindustrializare/documente.html, 4.04.2013 in the capital goods industry, the situation is as relatively similar with the total industry average, in the sense that more than the national average is located a small number of counties (9) of which argeș (610.88 lei/employee), bihor, constanța lead detached, and the other 33 counties are below the national average; counties of satu mare, gorj, covasna (59.14 lei/employee) have the poorest results in terms of turnover/employee (less than lei/employee). these latter situations reflect both a human resources policy ineffective, a technical and technological infrastructure deficit as well as a faulty management of the business in the counties concerned. 3. recent evolution of the romanian industry – prerequisite of the future developments in the european context in september 2013 compared with august 2013, the industrial production increased by 19.5 % [http://www.insse.ro/cms/]; at the level of the industrial groups, there have been production increases in: capital goods industry with 39.9%, the durable goods industry with 19.7 %, intermediate goods industry with 13.0%, the industry of goods in current use with 9.3%. only one industry which has registered decrease of production, in this range, it is energy industry (-1,9 %). from the point of view of turnover, the total industry, this has increased by 11.4 %, increase due to the capital goods industry, with 32.7%, durable goods industry, with 12%, intermediate goods industry, with 8.2%, energy industry, by 7.6 %. the industry of goods in current use has recorded a decrease of 2.5%. this reflects a good evolution of the entire industrial sector but, more particularly, the capital goods industry which support and develop the base necessary to ensure the capital goods within the country but also potential for export. between industries in this group, significant increases in production have been manufacture transport motor vehicles, trailers and semi-trailers (61.4%), manufacture computers and electronic products and optical (58.4%), electrical equipment manufacture (33.8 %), manufacture of machines, machinery and equipment n.c.a. (26.0 %). after analyzing the evolution of industry at an interval of one year, september 2013 september 2012 [http://www.insse.ro/cms/], note that the industrial production registered a growth of 10.0%; the industrial groups have registered increases in durable goods industry, with 13.8%, in intermediate goods industry, with 13.0%, in capital goods industries, with 11.4% in industry of current use goods, with 7.9%, and in energy industry, by 1.6%. turnover in industry achieved in september 2013, was 32 http://www.minind.ro/reindustrializare/documente.html task for post-crisis in romania: the development of industry higher by 6.1% compared to september 2012; this increase was mainly due to the increase in the intake of capital goods industries with 10.7%, of the energy industry with 7.5%, durable goods industry with 4.3%, the industry of current use goods industry with 4,1%, in intermediate goods industry by 3.7%. particularly dynamic were, in the meantime, manufacture of electrical equipment (27.3%), manufacture of other transport equipment (23.5%), manufacture of machinery and equipment n.e.c. (by 21.6%), manufacture of motor vehicles, road transport of trailers and semi-trailers (13.8%). it is significant that, in the last year, the whole industrial sector labor productivity increased by 9,8%. raising industrial production and total components has been driven by external demand, raising the total to some industries, of which the capital goods industry. one of industrial groups in an uptrend in romania is capital goods industry [www.minind.ro]. of these, making autos, machinery and equipment, in our country, according to european commission estimates, the greatest growth potential in untapped export, respectively 18.6%. in the eu, this industry generates the highest value added of the manufacturing industries (10.9% of value added of the manufacturing industries, 2.9% of the value added of the non-financial sector). machinery industry, machinery and equipment represents an important sector of the romanian industry, helping to develop, modernize and proper functioning of other industrial sectors, with a share in gdp of 2.5%. machinery industry, machinery and equipment include complex technological lines with long manufacturing cycle, intended for the execution of capital goods, equipment for small and large series, intended for transport, agriculture, consumer goods and components of large mass production or series. industrial production of this industry grew 38.59% in 2011 compared with 2009; exports increased by 56.46% and the average number of employees increased by 2% in the same period. machinery and equipment industry is based on the research, development and innovation. still before the economic and financial crisis, the sector of machinery and equipment began to grow as a result of the investment of 'greenfield', leading to both increased productivity and the number of firms in this sector. enjoy a balanced territorial distribution in terms of production companies. the main target of companies in this sector is working with other companies in the eu in order to facilitate access to modern technologies and licenses and easier to penetrate the european and international market. among the proposals that the decision-makers they have done to support the development of the industry, including: the establishment of a body for market surveillance, the adoption of measures to reduce taxation, increasing the stability of the law relating to investment arrangements, funding programs, etc. set up a territorial network to harness the knowledge and image cross-institutional relations, the establishment and support of industrial parks and business incubators, improve conditions for investment, credit, encouraging and supporting activities related to the capitalization of the companies, reviewing tax policy for the benefit of economic operators whose production is more than 50% for export, the simplification of tax from tax documentation and taxation, investing significant amounts in the fields that encourages industrial innovation, taking active measures to increase the number of specialists and executive staff, etc. positive development and the trend of increasing industrial production, turnover and labour productivity in industry falls within the coordinates of romania's economic development, in the context of the european union's economy [http://europa.eu/]. the europe 2020 strategy, the industry is an essential component of the new model of development. industrial policy will strengthen the competitiveness of the union concerned, will create conditions for positive real economic growth, create jobs and 33 danu will allow the transition to a low carbon economy and effective use of resources. to do this, it is necessary to include policies with an impact on costs, prices and innovation-based competitiveness of the industry and individual sectors, in line with the single market policies, comercial policies, transport, energy, social and environmental policies, consumer protection policies. differentiated approach should be continued for each sector, taking account of the whole value chain and supply chain, including outside the eu, access to energy and raw materials to after-sales service and recycling of materials, as well as periodic reporting by the european commission with regard to competitiveness, industrial policy, the performance of the eu. raising productivity, efficiency of use of energy and material resources, tangible assets and performance of intangible assets-are also possible by ensuring innovation. promoting the introduction and marketing of generic essential technologies are considered necessary for widening the range of products and the development of new industries. support an industry performance is given, inter alia, the upgrading of the skills of the workforce. this requires the formation of networks between specialists, to exchange information and good practice between eu countries, important objective and industrial modernisation. industry in romania, as well as the eu industry from other countries must speed up the transition towards a low-carbon economy, efficient in the use of energy and resources. implantation of human dimension and territorial are key elements in the relaunch of the romanian industry. increasing the role of industry in the economy of romania is motivated and leverage effect on the whole economy, particularly with regard to employment. given the time horizon 2030, the policies in the field of industrial development in romania will follow the strategic directions and objectives of the romanian economy and the fundamentals of developments within the eu, in accordance with the sustainable development coordinates. [www.insse.ro/cms/]. influence factors of the evolution of the different industrial sectors over the medium term are: maintaining and developing a business environment attractive to investment growth, technological modernization and renewal of processes and products; consideration of the environmental impact of products throughout their life cycle (design, manufacture, assembly, marketing, distribution, sale and use to recycling and disposal); compatibility research, development and innovation with the real needs of industry and the market requirements in order to obtain competitive advantages and to reduce the technological gap and productivity compared to the more advanced countries in the eu; promotion of digital technologies in the management of companies, from design to production and marketing, etc.; development and promoting hygiene in the competitive environment in business development in the context of the european competitive environment; improving sectoral assistance and modernization of the role of public authorities in the development and application of industrial policy; supporting direct investment as a source of capital, know-how, technology and management. investment plays a double role in the economy is an important and instable component of costs, their changes can have a big influence on aggregate demand that will affect output and employment, but also positive 34 task for post-crisis in romania: the development of industry determination of capital accumulation, thus helping to increase the production potential of the country and supporting long-term economic growth (samuelson); promoting the development of small and medium enterprises (smes) in the sectors of the processing industry for the production of high-quality products with low cost, adjusted for market requirements; increasing material resources and energy consumed with an average annual rate of 3-4%, by: macroeconomic structural changes increased proportion of services at 48.8% in 2005 to 60% by 2020 and 70% in 2030; structural changes in cross-cutting energy and material sectors share intensive industry; minimum reduction of 1.2-1.5% per year specific consumptions of energy and materials and losses in the manufacturing industry, in sectors of energy and transport, and residential construction as a result of increased investments for technological modernisation of infrastructures, energy management and technological quality; increase 2-3% per year of the share of high value-added products, based on the average and high technologies and services in the export structure; improve technical and economic performance and quality of products and services; optimizing the commercial management, both on the management of the suppliers of raw materials, materials, etc. (especially energy) and on the management of clients. achieving these objectives will ensure that over 60% of economic growth can be achieved without any additional consumption of energy and material resources. also on this basis it will be possible to reduce the pace of depletion of reserves at the main types of raw materials, lower costs, increase competitiveness and thereby ensuring the sustainability of economic growth. 4. conclusions industry development is the foundation for the modern development of the national economy a modern agriculture, efficient and high quality services, and, furthermore, support for the development of other industrial activities. affected by the transition from the command economy to market economy system, romanian industry has been, for a long time, under the specter of massive negative industrial structures and buildings, technical and moral wear of the technologies used, productivity of the production factors, poor investment in scrapper innovation and technology policy, and institutional factors with difficulties of the adaptation to the new requirements of the market for industrial goods, etc. once completed this difficult transition, in which the reform towards another type of industry expected was left, romania had to deal with the transition through the economic and financial crisis, which has affected the sensitive start-up again. however, the decision-makers in the industrial sector have understood that the business environment can restart, as a whole, just by pushing forward, strengthening and modernization of the industry. the desire to initiate or develop business in the field of industry has been transposed in the romanian joined the industrial policy eu policy which, apart from economic and social objectives targeted, focused and longterm relationship with the natural environment. in this sense, romanian industry targeting, at present, by policies developed and implemented of diversification in production, technical and technological innovation, increase quality, increase of 35 danu production obtained, increase in turnover, the export of the products obtained, the productivity of production factors, etc. are not only re-industrialization but sustainable industrialization. references danu, m.c. (2013), mediul de afaceri european, editura alma mater, bacău. gross value added – industry, including energy, available on http://epp.eurostat.ec. europa.eu/. indicatorii dezvoltării durabile în românia, available on http://www.insse.ro/cms/. indicii producției industrial, available on http://www.insse.ro/cms/. industria românească în perioada de criză, comisia națională de prognoză, available on http://www.cnp.ro/ro/studii. reindustrializarea româniei, available on http://www.minind.ro/reindustrializare/ documente.html. samuelson, p. (2000), economie politică, editura teora, bucurești. strategia de dezvoltare durabilă a româniei, available on http://europa.eu/. 36 http://www.insse.ro/cms/ http://www.insse.ro/cms/ http://www.cnp.ro/ro/studii http://europa.eu/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro relational mechanisms in innovation co-creation rodica boier “gheorghe asachi” technical university of iaşi rodica_boier@yahoo.com abstract increasingly, producers and customers establish relationships to mutually undertake the development of an innovative product. consequently, it will be always of interest for an innovative company to know the degree to which different related suppliers are willing to form partnerships by participating in its new product development process. several managerial implications flow from the link between relationship marketing and innovation processes, ranging from tactical product-related decisions to strategic competitor-related decisions, usually made in a relatively short period of time. dedicated customer relationship systems track the interactions with customers and improve the flow of ideas for new products. when trying to develop long-term customer relationships, the ability to provide superior value to stakeholders is a must. through carefully conducted relationships, customers are linked with the innovation company during the entire innovation process, and create a space for mutual understanding, learning and value co-creation. in order to co-create business value through online, also combined with offline innovation-related activities, customer orientation should be implemented throughout the organization – its culture, their systems, including the whole range of interactions. keywords relationship marketing; innovation co-creation; value co-creation; open innovation; virtual customer environments; knowledge exchange platform. jel classification m31 relational mechanisms in innovation at their very basic level, antecedents of the relationship marketing lie in the product aspects, market variables and characteristics of relationship activities. the resulting commitment to stay in the relationship comes from trust, which is in turn positively related to affective commitment, on the one hand, and negatively related to calculative commitment, on the other hand (de ruyter et al., 2001). several managerial implications flow from these findings, ranging from tactical productrelated decisions to strategic competitor-related decisions, usually made in a relatively short period of time. for instance, marketers of high technology products are especially advised to emphasize activities and initiatives that promote positive feelings of affiliation and create a cooperative atmosphere. long-term relationships with customers can provide all kinds of advantages for suppliers. in return, there is a constant pressure for the company on r&d departments to, for example, develop new and innovative products, facilities, or flexible service contracts. increasingly, seller and a buyer establish relationships to mutually undertake the development of an innovative product. the npd relationships generate the „cooperative competency” (sivadas and dwyer, 2000) and involve the product codesign, product co-development, joint problem solving a.s.o. as part of this context, a 162 relational mechanisms in innovation co-creation major part of relationship marketing deals with the interactions between sellers and buyers during the npd process when customizing the products. according to athaide at al. (2003), „… the extent to which sellers undertake np codevelopment relationships is a function of perceived buyer knowledge and the extent of prior interactions with the buyer as well as the degree of product customization involved” (p. 46). in addition, stump at al. (2002) investigated how various relationship activities conducted by the producer during the npd process – education, product knowledge generation, and joint npd – moderate product customization effect on qualitative outcomes. for instance, their findings show that joint npd reduces the negative effect of product customization on seller satisfaction and enhances customization's positive effect on continuity. it will be always of interest for an innovative company to know the degree to which different related suppliers are willing to form partnerships by participating in its npd process. in this respect, labahn and krapfel (2000, p. 181-182) found the customer’s exchange behavior, the structure of dependence in a relationship, and the technology factors as being the three key areas of positive influences on supplier intention for early supplier involvement. value co-creation and relationship marketing when trying to develop long-term customer relationships, the ability to provide superior value to stakeholders, to customers first, is a must. in a comprehensive study, blocker et al. (2011) found that proactive customer orientation not only has a positive effect on loyalty through the value-satisfaction-loyalty chain but it may also reveal a positive effect on loyalty (p. 229). still emerging paradigm, flowing from marketing and innovation areas, the value cocreation is increasingly recognized as an effective opportunity for npd. no more just simple informants, the stakeholders become an integrated part of the npd process. through carefully conducted relationships, they are linked with the innovation company during the entire npd process, and create a space for mutual understanding, learning and value co-creation. there is to be mentioned, the focus of co-creation is on personalization and not on customization (tanev, 2009). a growing body of studies were dedicated to this aspect of the contemporary business in innovation, ranging from a virtual customer environments perspective (füller, 2010; nambisan and baron, 2007, 2009; nambisan and nambisan, 2008), to a npdi approach (franke et al., 2008; prahalad and krishnan, 2008; sawhney et al., 2006 a.o.), the service-dominant logic perspective (brohman et al., 2009; ballantyne and varey, 2006; vargo and lusch, 2004), to a general management view (ramaswamy and goullart, 2010; ramaswamy, 2009; jaworski and kohli, 2006; prahalad and ramaswamy, 2000, 2004; nambisan and nambisan, 2008 a.o.). as opposed to the customer-focused innovation, where innovation is done by the company (closed innovation), or to the customer-centered innovation, where innovation is done with customers (open innovation), in the customer-driven innovation these activities are done by customers (dynamic innovation), as a central entity and key-player, where the innovative company has only a role of coordinator and the innovation process is quite impossible to control. "sticky" and tacit knowledge transfer require high levels of human interaction and the appropriate segmentation for proper analysis represent the critical issues here (desouza et al., 2008). dedicated crm systems track the interactions with customers and improve the flow of ideas for nps. described as an ongoing process of generating, disseminating and using customer knowledge within a company and between the company and its customer, customer knowledge management (ckm) may exists in four forms, each 163 boier of them using knowledge in different ways: knowledge of customers, knowledge for customers, knowledge from customers, and knowledge co-creation. the last one is obtained from a real two-way relationship, conducted to facilitate ongoing interactions between customers and companies to obtain new knowledge, new products and services. this way, the km integration to the crm and marketing reduces the risk of np failing on the market (talet, 2012; sofianti et al., 2010). grönroos and ojasalo (2004) propose a “knowledge exchange platform”, as fertile area for ongoing interactions. relationship continuity is sustained to lead to improved internal efficiency and offers more effectively aligned to the customer needs. in such relationships, there is no dominant researcher. all decisions about the research topic, the research method, and the writing are considered jointly (jaworski and kohli, 2006). the framework described by prahalad and ramaswamy in the co-creating unique value with customers contains four elements as basic building blocks of value cocreation – dialogue, access, risk assessment, and transparency (dart) (2004, p. 6-7) –, all of them containing innovation-specific relationships. in addition, tanev at al. (2011) propose “customer relationships enabled through partnerships and cooperation aiming at cost reduction, design and process flexibility, and leading to better customer and end user experiences based on risk management, transparency and trust” as being one of the three variable describing main value co-creation components, along with “resources, processes, tools and mechanisms …” and “mutual learning mechanisms ….” (p. 5). the very nature of relationships between the innovative company and its co-creators of value, the different stakeholders, changes by adopting these practices. a growing number of studies evoque the new vision of the nature of innovation itself (prahalad şi krishnan, 2008; tanev et al., 2011), built on two key distinctive aspects: the deepest user-driven practice of the value co-creation between companies and customers, on the one hand, and the co-opetitive nature of interactions between different stakeholders during the npd process, on the other hand. marketing relationship in collaborative innovation collaborative innovation is considered as interorganizational relationships (different suppliers, customers, even competitors, for selected projects) focused on the joint development of innovations (stuart, 2000; ahuja, 2000), in which the specific approach involves combining knowledge, technologies, and other resources across organizational boundaries, with specific outcomes like intellectual property, commercial products and platforms, market success and company performance. at least three main mechanisms sustain successful collaborative innovation: the engagement of different participants from the network, having different knowledge and other resource inputs, the combination of complementary capabilities from both partners, the deep and broad trajectory searching for potential innovations, as series of „recombinations” between existing resources (katila and ahuja, 2002). in opposition to dominating and consensus leadership processes, usually associated with less innovation, davis and eisenhardt (2011) propose a rotating leadership process that involve alternating the control of decision making across phases, zigzagging objectives that engender deep and broad technological search for potential innovations, and fluctuating network cascades that mobilize different participants who bring variable inputs to recombination (p. 191). this way, the long lived relationships, often becoming inertial and less beneficial, can be turned to a so-called symbiotic relationships, which continue to be adaptive for long periods of time. in a networking perspective of the collaborative innovation, companies are forced to develop their skills for collaborating with diverse partners, to play a championing 164 relational mechanisms in innovation co-creation role, rather than seeking to control the activities in the collaboration platform. it means to subsume their individual agendas to the larger goals of the platform, to adapt some of their existing practices, to get more specialized and more flexible (more modular), and to measure success in ways that appeal to all partners (nambisan and baron, 2009, p. 48). how to identify, to select and foster such a champion in the collaborative innovation remain the important challenges. over the last years there has been a rapidly growing interest in innovation co-creation (icc), even mentioned in the literature as being a truly „co-creation revolution” (humphreys et al., 2009). relationships developed prior, during and after the icc process have several main benefits, the most important being the capture of new ideas, an important percent of the solution being already built, the instant channel to distribute the novel idea this way, the pull-type of the process instead of push, the icc partners moving together through the innovation process, so they will both support what they created (maddock and viton, 2010), the improvement of costs efficiency (auh et al., 2007), the decrease of cycle time (matthing et al., 2004) and the increase of customer satisfaction. new ict have reduced the perceived distances between the actors of the innovation process while enabling integration of different stakeholders, customers and suppliers first, into the npd process (gassmann, 2006). a growing literature on community based innovation (füller et al., 2004, 2006) and using lead-users from virtual communities was stimulated by companies’ efforts to establish and maintain an innovative relationship and collaboration with customers already in the early phases of the npd process (franz and wolkinger, 2003; nambisan and baron, 2007; nambisan and nambisan, 2008; sawhney et al., 2005; jeppesen and molin, 2003). an integrated model of involving lead users in the early stages of the npd links the “enabling factors” with the “management phase” and the “relational phase” having the project manager at its center, to reach the specific “npd outcomes” (lynch and holden, 2008, p. 5). about enablers, as prerequisites, along with the internal and external ones, the model also contains the relational enablers – compatibility of culture, past experience of collaborating, and ability to handle conflicts. among others, in the relational phase, the roles of project champion are to handle expectations, to ensure appreciation of other’s identity, to establish effective communication patterns, to build inter-organisational trust through inter-personal relationships, to encourage intense levels of interaction, and to audit the relationship. a growing number of innovative companies are hosting virtual customer environments (vces) to allow the involvement of their customers in the npd support activities. classified according to their characteristics of community members and interaction level as virtual customer community, beta testing volunteer corps, user content collaboration innovation community, user development community and user product collaboration innovation community (chan and lee, 2004), the vces can be used in different stage of the npd process, including in the intermediate stages of design and engineering, where these activities are often weaker. in the open source software (oss), where companies explicitly try to utilize the resources within communities in order to create and appropriate value, with just a partial and not direct control, the relationships can be very different. in this context, dahlander and magnusson (2005) describe three different basic approaches used by companies to inter-relate to their communities as a symbiotic (the company tries to codevelop itself and the community), a commensalistic (the company benefits from the co-existence with the community while leaving it without harm) or a parasitic (the company only focuses on its own benefits, without taking into account that its actions might harm the community) approach (p. 487-488). the first approach described offers the most possibilities for the company to influence the community in order to participate in the innovation process. 165 boier conclusions a growing body of studies were dedicated to this emerging aspect of the contemporary business in innovation – the realtionship approach. mechanisms of creating value in co-innovation and marketing relationships in collaborative and/or participative innovation raise more and more interest in the literature and practice of the domain. in order to co-create business value through online, also combined with offline innovation-related activities, customer orientation should be implemented throughout the organization – its culture, their systems, including the whole range of interactions. references ahuja, g. 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(2004), service-dominant logic: continuing the evolution, journal of the academy of marketing science, vol. 36, no. 1, pp. 1-10. 168 studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 77 market reaction on the announcement of sri kehati index in indonesian stock exchange anggita langgeng wijaya universitas pgri madiun, kota madiun, indonesia gonggeng14@gmail.com mia noviyanti universitas pgri madiun, kota madiun, indonesia mianoviyanti18@gmail.com probo mahayu universitas pgri madiun, kota madiun, indonesia pmahayu@gmail.com abstract the purpose of this study was to test the market reaction to the announcement of the sri kehati index on the indonesia stock exchange. the population in this study is all companies included in the sri kehati index from 2013 to 2016. the selection of samples was taken by the population sampling method. hypothesis testing is done by paired t test and wilcoxon signed rank test. the findings of this research are: 1) there is no difference in abnormal returns before and after the announcement of the sri kehati index on the indonesia stock exchange. 2) there is a difference in the activity of stock trading volume before and after the announcement of the sri kehati index in the 5th and 6th periods, but there is no difference in the activity of stock trading volume in other periods. the indonesia stock exchange did not react consistently to the announcement of the sri kehati index. keywords market reaction; sri kehati index; corporate social responsibility; abnormal return; trade volume jel classification m40; m14 introduction this research aims to examine the reaction of the indonesian capital market to the announcement of the sri kehati index in the observation period from 2013 to 2016. the sri kehati index is a kind of stock index on the indonesia stock exchange that provides an assessment to companies that have investments and businesses that are oriented to environmental, social, humanitarian concerns and the utilization and preservation of biodiversity. the sri kehati index was formed by the authorities of the indonesia stock exchange and the indonesian biodiversity foundation on june 8, 2009 (lindananty & soedarman, 2015). the concept of valuation of the company's stock index sri kehati is in line with the concept of corporate social responsibility. wang et al (2016) explained that the concept of corporate social responsibility begins with the idea that businesses have a responsibility to the community and all stakeholders who are directly or indirectly involved in the company. since the 1960s, the concept of corporate social responsibility has attracted so much attention from academics and practitioners. although the idea of csr has received various criticisms, research on csr has been growing very dynamically. reddy and kala (2018) stated that csr shows organizational commitment in balancing efforts to achieve business profits with social interests to employees, local communities market reaction on the announcement of sri kehati index in indonesian stock exchange 78 and society. according to cheng and setiawan (2011), the implementation of csr in the company's strategy and operations will get investors' attention. companies that implement good csr policies show that companies prioritize business sustainability and environmental problems. investors are expected to tend to invest in companies that have good csr. csr can be a strategy to demonstrate the company's competitive advantage. wang et al (2016) states that the implementation of csr is related to value creation activities. the government of the republic of indonesia also pays attention to the implementation of csr. through law no. 40 of 2007 concerning incorporated companies, the government of the republic of indonesia requires companies in the natural resource industry to carry out and report csr activities. the indonesian stock exchange authority then issued a measurement of the level of company concern for csr and the environment in the form of a stock index. the indonesia stock exchange in collaboration with the biodiversity foundation launched a stock index called the sri kehati index. sri kehati index is a stock index which is calculated from companies that are considered to have very good attention to the environment, social and humanity. sri kehati index consists of 25 companies in the indonesia stock exchange. the sri kehati index is announced twice a year in april and october. the composition of companies included in the sri kehati index is possible to differ during each announcement. indahyanti and wijaya (2014) revealed that one of the objectives of financial reporting is to provide information that is useful to users of the report. carnevela et al (2012) states that accounting information is has value relevance if the information can affect the market equity value. previous research shows that accounting information alone cannot explain variations in equity market values. the influence of non-financial information on the value of equity raises a lot of debate among academics. according to carnevela et al (2012), research on the influence of csr information on the capital market becomes interesting to analyze. the existence of the sri kehati stock index on the indonesia stock exchange is expected to provide investors with additional nonfinancial information about the company's social responsibility. market reaction to announcements or information on the market can be evaluated from changes in stock prices and stock trading volume activities (wijaya & sudana, 2017). stock trading volume is able to describe investor expectations on new information, while changes in stock prices indicate the influence of information at the market level (beaver, 1968). stock trading volume is able to reflect investor activity because it considers every action taken by the investor through the sum of all stock trading, while the price reflects an aggregation or average of investor confidence (wijaya & sudana, 2017). according to halkos and sepetis (2007), the stock market evaluates the stock market value of greek companies that implement environmental management systems. company policies that are oriented to environmental concerns require large costs. the capital market should be able to provide a different response between companies that have good environmental performance and poor environmental performance. this study concludes that a better environmental management system results in a reduction in company risk. in the indonesian capital market, one indicator of environmental performance is the sri kehati index. according to zufkafli et al (2017), the sri kehati index is an index that shows that the company has considered social investment and responsible environmental management. previous research on the sri kehati index in the indonesia stock exchange has produced inconsistent results. lindananty and soedarman (2015) state that there is no reaction to the issuance of the sri kehati index when measured by abnormal returns, however, the results are different when measured by trading volume activity. this means that the market reaction is not consistent with the sri kehati index information. wijaya, noviyanti, mahayu 79 asmara (2017) stated that the capital market will react to the disclosure of social responsibility in companies included in the sri kehati index. based on the inconsistencies of several previous studies, the researchers considered that research on the reaction of the indonesian stock exchange to the sri kehati index needed to be re-examined as an effort to complement previous research regarding the capital market reaction to the sri kehati index. the next part of this study will be presented as follows: the second part contains a literature review and development of hypotheses, the third section describes the research method, the fourth section discusses the research analysis, the fifth section presents the research discussion and the last section discusses conclusions, limitations and research suggestions. literature review and hypotheses development corporate social responsibility malik and kanwal (2018) explain that csr is not a new concept. the definition of csr at the beginning was the management of business organizations and social performance that had a positive impact on the community. becchetti et al (2014) explained that csr has shifted the company's efforts to maximize profits on more complex business strategies in order to satisfy various stakeholders. companies in an effort to achieve profits, companies must be able to properly consider the impact of business activities on the interests of each of the stakeholders. cahan et al (2016) explained that csr will have an impact on the company's reputation, a greater goodwill of the company and an increase in the company's performance in the long run. previous research has explained that the company's social performance has an impact on the company's financial performance. ksiezak and fischbach (2017) stated that csr is the way the company is responsible for the company's stakeholders. the importance of csr for corporate strategy is closely related to the company's stakeholders. companies need trust and good relationships with suppliers, business relations, employees and other social organizations. according to ksiezak and fischbach (2017), the basic concept of csr refers to three basic pillars, namely profit, people and planet. the profit aspect will relate to multiplayer effects, taxation and activities that can damage trust in the company. aspects of people include the responsibility of the consumer company, responsibility for employees and responsibility for the community. the planetary aspect includes the company's concern for business activities that affect the natural environment. wang and li (2016) state that increasing global attention and concern for csr has made a significant increase in corporate csr reporting worldwide. astuti and nugrahanti (2005) explained that investors not only analyze earnings information, but also evaluate the disclosure of corporate social and environmental responsibilities. reporting and disclosure of csr activities is one way to send signals to stakeholders (investors) and the market. csr disclosure is expected to provide a signal that can increase the value of the company. stakeholders are expected to have a positive perception of companies that implement csr strategies well and have an interest in investing in the company. wang and li (2016) stated that csr disclosure provides added value for information users to assess the risks and performance of the company in the future. according to lopatta et al (2016), research on csr still causes a lot of debate. academics and practitioners are considered not to agree about the definition and interpretation of csr so that the results of research are still very varied. there is also no consensus of direct csr benefits for companies such as reducing company costs and risks as well as indirect benefits in terms of competitive advantage. the existence of the indonesian market reaction on the announcement of sri kehati index in indonesian stock exchange 80 stock exchange's authority policy regarding the establishment of the sri kehati stock index is an opportunity to develop research on csr. sri kehati index the sri kehati stock index cannot be separated from the csr concept. the sri kehati index is the result of collaboration between the biodiversity foundation (kehati foundation) and the indonesian stock exchange authorities. the word sri stands for “sustainable and responsible investment”. sri kehati index aims to provide additional information for investors about companies that have very good performance in terms of sustainable business, a good corporate governance system, and concern for the environment. this index assesses companies that have implemented csr by considering six fundamental aspects as ranking criteria, including: environment, community development, corporate governance, human rights, business behavior and employment principles (kehati.or.id, 2015). the sri kehati index consists of 25 company shares selected through a selection and ranking process. based on the explanation presented on the indonesia stock exchange website (https://www.idx.co.id/), the criteria used to conduct the assessment include: 1) the company has total assets above rp 1 trillion based on audited financial statements. 2) the company has a positive price earnings ratio (per). 3) public share ownership is greater than 10%. the next step is to choose the 25 best stocks by considering 6 main factors, which include: 1) environment; 2) community; 3) corporate governance; 4) human rights; 5) business conduct; 6) employment practices & decent work. companies registered in the shares of the sri kehati index can change each announcement date. the indonesian capital market reaction to information will be indicated by changes in the company's stock price. changes in stock prices on the stock exchange can be seen from changes in abnormal returns (ar), which is a comparison between actual returns and expected returns (lindananty & soedarman, 2015). market reaction can also be seen from the trading volume activity (tva). tva measures a stock trading activity that occurs in a certain period which is calculated by comparing the volume of shares traded with the volume of previous shares. the capital market reaction to the sri kehati index on this research will be seen from changes in abnormal returns and the company's trading volume activity (tva). hypothesis development du et al (2017) explains that there is an increase in demand from the capital market for sustainability reports. the results of academic research show that sustainability reports affect firm value. companies use various methods in communicating information about sustainability reports, for example through advertising, disclosure of information through annual report or company websites. halkos and sapetis (2007) explain that capital markets react to information about corporate environmental policies in which improving environmental performance will reduce the risk of the company. research on market reactions to social and environmental activities was carried out by ramiah et al (2013). this study investigated the impact of 19 announcements on environmental regulations on entities listed on the australian stock exchange during the period 2005-2011. the results showed that there was an abnormal return of 31% in the alternative energy sector which indicated that the environmental policy had an impact on the long-term energy sector industry. atiqoh (2016) found that csr disclosure affects company stock returns. however, other studies such as astuti and nugrahanti (2015) did not find the effect of corporate social responsibility on abnormal returns. research on sri kehati index has been done by some previous research. the research of lindananty and soedarman (2015) examined the consistency of indonesian stock https://www.idx.co.id/ https://www.idx.co.id/ wijaya, noviyanti, mahayu 81 exchange reaction to the issuance of sri kehati index. the results were shown that for the reaction test of the sri kehati index announcement, it gives consistent result for nine periods the measurement of the abnormal return but does not yield consistent results when the market reaction was measured by trading volume activity. indonesian stock exchange investors do not react consistently to the sri kahati index announcement. kusumaningtyas and andayani (2015) conducted a study on the effect of corporate governance on firm value on the company share that listed on the sri kehati index. the results of this study was indicated that institutional ownership affects the value of the company while managerial ownership, the composition of independent commissioners and audit quality does not affect the value of the company in the company listed in the sri kehati index. laurensia (2015) was conducted a study on the effect of financial performance on stock prices of companies included in sri kehati index by considering aspects of csr disclosure. this study found the influence of financial performance on csr but did not find the effect of financial performance and csr on stock price of company. zulkafli et al (2017) conducted a study on the comparison of stock portfolio performance between companies in sri kehati index and jakarta composite index. the results were shown that the company’s stock performance included in sri kehati index has a better portfolio performance than the company that listed the jakarta composite index. previous research regarding the market reaction to the announcement of the sri kehati index has shown different results. if information about the sri kehati index is assessed by the market as good information, the capital market is expected give a good response. sri kehati is a csr-based and sustainable investment index, so researchers suspect that the indonesian capital market will react to the announcement of the index which can be observed from changes in abnormal returns and trading volume activity. based on the things mentioned above, the hypothesis in this study was expressed as follows. h1 : there are differences in abnormal return before and after announcement of sri kehati index in indonesian stock exchange h2 : there are differences in trading volume activity before and after announcement of sri kehati index in indonesian stock exchange research methods data, population and sample this type of research is an event study, which uses window 10 for the data collection range (5 days before and 5 days after). event studies are a type of study used to assess the impact of an event or certain information on the value of the company. the population in this study was all companies included in the 25 sri kehati index companies in the period 2013 to 2016. the sampling technique used was population samples. data is obtained through the announcement of the indonesia stock exchange data and daily stock price data on the yahoofinance.com. definition and measurement of research variables the capital market reaction in this study is as follows: 1. abnormal return (ar) abnormal return is the difference between the actual return occurs with the return was expected investors. abnormal return measurement was used market adjusted model which is model which assumes that best estimator to estimate return of stock is market market reaction on the announcement of sri kehati index in indonesian stock exchange 82 return index at that time (lindananty and soedarman, 2015). the used of this model will cause a stock return that is estimated to be the same as the market index return. arit = rit e(rmt) where, arit = abnormal stock return of i in period of t rit = return of stock of i in period of t e (rmt) = expected return of stock market index in period of t the calculation of market index return used the following formula: 𝐸(𝑅𝑀𝑡 ) = 𝐼𝐻𝑆𝐺𝑡 − 𝐼𝐻𝑆𝐺𝑡−1 𝐼𝐻𝑆𝐺𝑡 where, e(rmt) = expected return of stock market index in period of t ihsgt = composite stock price index in period of t ihsgt-1 = composite stock price index in period of t-1. 2. trading volume activity (tva) trading volume activity (tva) is a stock trading activity that occurs in a certain period calculated by comparing the volume of stock (number of stock) traded with the volume of stock outstanding. 𝑇𝑉𝐴𝑖𝑡 = ∑ 𝑆𝑡𝑜𝑐𝑘 𝑖 𝑖𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑜𝑓 𝑡 − 𝑆𝑡𝑜𝑐𝑘 𝑖 𝑖𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑜𝑓 𝑡 − 1 ∑ 𝑆𝑡𝑜𝑐𝑘 𝑖 𝑖𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑜𝑓 𝑡 − 1 the sri kehati index is annually announced twice in april and october. announcement of sri kehati index in the period 2013 to 2016 there are eight dates of sri kehati index announcement so that paired sample test was conducted for eight of the date of the announcement. data analysis technique data analysis in this study was carried out using a paired sample t test. if the results of the data normality test show that the data is normally distributed, hypothesis testing will be carried out by paired samples t test. however, if the data does not meet the normality assumption, hypothesis testing will be done with the wilcoxon signed rank test analysis and discussion in this section we will explain the results of the analysis of the indonesian capital market reaction to the announcement of the sri kehati index. to facilitate the readers' understanding of this analysis, we explained that during the 2013-2016 research period there were 8 announcements of the sri kehati index on the indonesia stock exchange. at each announcement of the sri kehati index there are potential changes in company data including the sri kehati index. the indonesian capital market reaction to the announcement of the sri kehati index will be seen from changes in the abnormal return and trading volume activity. if there is a difference of abnormal return and trading volume activity before and after announcement, it was indicated the market reaction, but if there is not difference indicated that capital market does not give response to sri kehati index announcement. analysis of the market reaction is tested for each date index announcement. the table below shows in detail the date of the announcement of the sri kehati index on the indonesia stock exchange. wijaya, noviyanti, mahayu 83 table 1 period of research observation observation period event window t -5 t t + 5 1 april 22 april 26, 2013 april 29, 2013 april 30 may 4, 2013 2 october 23 october 29, 2013 october 30, 2013 october 31 november 6, 2013 3 april 22 april 28, 2014 april 29, 2014 april 30 may 5, 2014 4 october 20 october 24, 2014 october 27, 2014 october 28 november 3, 2014 5 april 20 april 24, 2015 april 27, 2015 april 28 may 4, 2015 6 october 22 october 28, 2015 october 29, 2015 october 31 november 5, 2015 7 april 21 april 27, 2016 april 28, 2016 april 29, 2016 may 5, 2016 8 october 20 october 26, 2016 october 27, 2016 october 28 november 3, 2016 source: indonesia stock exchange, researcher’s data source data analysis was done for each date of sri kehati index announcement. on each announcement date, the researchers were examined the market reaction from the abnormal return (ar) and trading volume activity (tva). test results for each period of observation presented in the following: result of 1st period analysis the first analysis was conducted for the announcement date of the sri kehati index on april 29, 2013. the table below presents the test results for that period as follows: table 2 test of market reaction for 1st periods of research announcement date data in test analysis tool the p value april 29, 2013 ar before and ar after wilcoxon signed rank test 0.824 δtva before and δtva after wilcoxon signed rank test 0.643 source: computed by the author based on table 2, it was known that both of the abnormal return (ar) and trading volume activity (tva) tests were showed insignificant results. testing of abnormal return and trading volume activity (tva) was showed that there was no significant difference of abnormal return and trading volume activity (tva) before and after market reaction on the announcement of sri kehati index in indonesian stock exchange 84 announcement of sri kehati index. in testing the index announcement on april 29th, 2013, the capital market does not react to the announcement of sri kehati index. result of 2nd period analysis the second analysis was conducted for the announcement date of the sri kehati index on october 30, 2013. the table below presents the test results for that period as follows: table 3 test of market reaction for 2nd periods of research announcement date data in test analysis tool the p value october 30, 2013 ar before and ar after wilcoxon signed rank test 0.614 δtva before and δtva after wilcoxon signed rank test 0.499 source: computed by the author table 3 was known that both of the abnormal return and tva tests were showed insignificant results. the results of the analysis show that there was no significant difference of abnormal return and trading volume activity (tva) before and after announcement of sri kehati index. in testing the announcement of sri kehati index on period of october 30, 2013 was shown that the indonesian capital market does not react to the announcement of sri kehati index. result of 3rd period analysis the third analysis was conducted for the announcement date of the sri kehati index on april 29, 2014. the table below presents the test results for that period as follows: table 4 test of market reaction for 3rd periods of research announcement date data in test analysis tool the p value april 29, 2014 ar before and ar after wilcoxon signed rank test 0.396 δtva before and δtva after wilcoxon signed rank test 0.700 source: computed by the author the table 4 was presented the test results for the third observation period of april 29, 2014. based on the table 4, it was known that both the abnormal return and trading volume activity (tva) tests were showed insignificant results. the results of the analysis show that there was no significant difference of abnormal return and tva before and after announcement of sri kehati index. in testing the announcement of the sri kehati index on period of april 29, 2014 was shown that the capital market does not react to the announcement of sri kehati index. result of 4th period analysis the fourth analysis was conducted for the announcement date of the sri kehati index on october 27, 2014. the table below presents the test results for that period as follows: wijaya, noviyanti, mahayu 85 table 5 test of market reaction for 4th periods of research announcement date data in test analysis tool the p value october 27, 2014 ar before and ar after wilcoxon signed rank test 0.060 δtva before and δtva after wilcoxon signed rank test 0.124 source: computed by the author table 5 was presented the test results for the fourth observation period of october 27, 2014. based on table 5, it was known that both of the abnormal return and trading volume activity (tva) tests were showed insignificant results. the results of the analysis show that there was no significant difference of abnormal return and tva before and after announcement of sri kehati index. in testing the announcement of the sri kehati index on period of october 27, 2014 was showed that the capital market does not react to the announcement of sri kehati index. result of 5th period analysis the fifth analysis was conducted for the announcement date of the sri kehati index on april 27, 2015. the table below presents the test results for that period as follows: table 6 test of market reaction for 5th periods of research announcement date data in test analysis tool the p value april 27, 2015 ar before and ar after wilcoxon signed rank test 0.967 δtva before and δtva after wilcoxon signed rank test 0.021 source: computed by the author table 6 was presented the test results for the fifth observation period of april 27, 2015. based on table 6, it was known the abnormal return and trading volume activity (tva) tests were showed different results. testing of abnormal return showed insignificant results with p value of 0.976. the test results were showed no significant differences in abnormal return before and after the announcement of sri kehati index on april 27, 2015. testing on trading volume activity (tva) was showed significant results with p value of 0.021. the test results were shown that there is a significant difference of trading activity volume (tva) before and after the announcement of sri kehati index on april 27, 2015. abnormal return and trading volume activity (tva) test was showed inconsistent result to measure market reaction at the announcement of sri kehati index in this period. result of 6th period analysis the sixth analysis was conducted for the announcement date of the sri kehati index on october 29, 2015. the table below presents the test results for that period as follows: market reaction on the announcement of sri kehati index in indonesian stock exchange 86 table 7 test of market reaction for 6th periods of research announcement date data in test analysis tool the p value october 29, 2015 ar before and ar after wilcoxon signed rank test 0.477 δtva before and δtva after wilcoxon signed rank test 0.008 source: computed by the author table 7 was presented the test results for the sixth observation period of october 29, 2015. based on the table above, it was known that the abnormal return and trading volume activity (tva) tests were showed different results. testing of abnormal return was showed insignificant results with p value of 0.477. the test results were showed that there was no significant difference of abnormal return before and after the announcement of sri kehati index on october 29, 2015, tests on trading volume activity (tva) was showed significant result with p value of 0.008. test results were shown there a significant difference in trading activity volumes (tva) before and after the sri kehati index announcement on october 29, 2015. the abnormal return and trading volume activity (tva) tests were show inconsistent results for measuring market reaction to the announcement of the sri kehati index of this period. abnormal return test was showed no significant results while trading volume activity (tva) test was showed significant results. result of 7th period analysis the seventh analysis was conducted for the announcement date of the sri kehati index on april 27, 2016. the table below presents the test results for that period as follows: table 8 test of market reaction for 7th periods of research announcement date data in test analysis tool the p value april 27, 2016 ar before and ar after wilcoxon signed rank test 0.938 δtva before and δtva after wilcoxon signed rank test 0.452 source: computed by the author table 8 was shown the test results for the seventh observation period of april 27, 2016. based on the table above, it was known that both of the abnormal return and trading volume activity (tva) tests were showed insignificant results. the results of the analysis show that there was no significant difference of abnormal return and trading volume activity (tva) before and after announcement of sri kehati index. in testing the announcement of the sri kehati index on period of april 27, 2016 was showed that the capital market did not react to the announcement of sri kehati index. result of 8th period analysis the eighth analysis was conducted for the announcement date of the sri kehati index on october 27, 2016. the table below presents the test results for that period as follows: wijaya, noviyanti, mahayu 87 table 9 test of market reaction for 8th periods of research announcement date data in test analysis tool the p value october 27, 2016 ar before and ar after wilcoxon signed rank test 0.278 δtva before and δtva after wilcoxon signed rank test 0.812 source: computed by the author table 9 was shown the test results for the seventh observation period of october 27, 2016. based on table 9, it was known that both of the abnormal return and trading volume activity (tva) tests were showed insignificant results. testing of abnormal return and tva were showed that there was no significant difference of abnormal return and tva before and after announcement of sri kehati index. in testing the announcement of the sri kehati index on period of october 27, 2016 was showed that the indonesian capital market did not react to the announcement of sri kehati index. discussion this research did not succeed in finding fully market reaction to the sri kehati index announcement in indonesian stock exchange. test market reaction using abnormal returns before and after the announcement date of the sri kehati index shows that there is no significant difference in abnormal returns. the trading volume activity (tva) test before and after the announcement of the sri kehati index showed there were differences in tva in the 5th observation period (april 27 2015) and the 6th observation period (october 29, 2015). test of trading volume activity (tva) in other observation periods did not show significant results. however, the results of this study support the results of lindananty and soedarman's (2015) study which found that the indonesia stock exchange has not reacted consistently to the announcement of the sri kehati index. the researchers were tried explain why the indonesian stock exchange does not consistently respond to the sri kehati index announcement. the sri kehati index is information related to sustainable investment with consideration of social and environmental aspects of the company assessed by external parties. researchers were argued that the company included in the sri kehati index consists of 25 companies with various types of industries. there are companies with manufacturing, mining, banking and construction companies in the index winners. at the time of this index was announced of course the condition of each type of industry is not the same. the capital market reaction to information from each industry may not be in line, so when the analysis was carried out in one step for the 25 sri kehati index companies, the analysis provided an inconsistent response. the researcher argues that changes in companies that won the sri kehati index in the indonesian capital market did not occur massively. changes in company data only occur in the initial period of the year in the april announcement period. in general, the announcement of the winner of the sri kehati index in the october period was not different from the winner of the sri kehati index in the april period of the same year. if analyzed for four years of observation, the company appointed as the winner of the sri kehati index did not experience many changes. there is only one until three companies that remain and leave the winning data index. this caused the capital market to no longer react to the announcement of the sri kehati index. the announcement of the sri kehati index did not cause a shocking effect on the capital market, so the market reaction on the announcement of sri kehati index in indonesian stock exchange 88 indonesian stock exchange did not react to the announcement of the sri kehati index in this study. conclusions and recommendations this study concluded that the results of the abnormal return test before and after the announcement of the sri kehati index did not provide significantly different results. the results of the trading volume activity test (tva) show that at the eight dates of the announcement of the sri kehati index there were two testing periods which showed differences in tva that occurred in the 5th and 6th period. in the other six periods there was no difference between the volume of stock trading (tva) before and after the announcement of the sri kehati index on the indonesia stock exchange. overall this study concluded that the indonesia stock exchange did not consistently react to the announcement of the sri kehati index. this research cannot be separated from limitations. the limitation of this study is that testing the market reaction to the sri kehati index is carried out for all data without considering the type of industry. companies that are included in the winners of the sri kehati index consist of 25 companies with various types of industries. this condition can cause different reactions by market players depending on the conditions of each type of industry. further research is recommended to distinguish the market reaction test from the announcement of the sri kehati index based on each type of industry. further research is also recommended to test the announcement of other events in the indonesian capital market such as the csr award announcement. references asmara, e.n. (2015), pengaruh karakteristik perusahaan terhadap reaksi pasar modal: studi empiris pada perusahaan yang termasuk dalam indeks sri-kehati tahun 2009-2011, jurnal ebbank, 8 (1), 17-32. astuti, c.w., nugrahati, y.w. (2015), pengaruh pengungkapan corporate social responsibility terhadap reaksi pasar, dinamika akuntansi, keuangan dan perbankan, 4 (2), 90-105. beaver, w.h. (1968), the information content of annual earnings announcements, journal of accounting research supplement, 6 (3), 67-92. becchetti, l., solferino, n., tessitore, m.e. (2014), corporate social responsibility and profit volatility: theory and empirical evidence, industrial and corporate change, 25 (1), 49-89. cahan, s.f., charl, d.v., debra, j.t., vic, n., chris, j.v.s. (2016), are csr disclosures value relevant? cross-country evidence, european accounting review, 25 (3), 579-611. carnevale, c., maria, m., sergio, v. (2012), corporate social reporting in european banks: the effects on a firm’s market value, corporate social responsibility and environmental management, 19 (1), 159-177. cheng, m., christiawan, y.c. (2011), pengaruh pengungkapan corporate social responsibility terhadap abnormal return, jurnal akuntansi dan keuangan, 13 (1), 24-36. du, s., yu, k., bhattacharya, c.b., sen, k. (2017), the business case for sustainability reporting: evidence from stock market reactions, journal of public policy & marketing, 36 (2), 313-330. halkos, g., sapetis, a. (2007), can capital markets respond to environmental policy of firms? evidence from greece, ecological economics, 63 (1), 578-587. wijaya, noviyanti, mahayu 89 indahyati, s.n, wijaya, a.l. (2014), kemampuan komponen laba dalam memprediksi laba masa depan, assets: jurnal akuntansi dan pendidikan, 3 (2), 75-87. kusumaningtyas, t.k, andayani (2015), pengaruh good corporate governance terhadap nilai perusahaan yang terdaftar pada indeks sri-kehati, jurnal ilmu & riset akuntansi, 4 (7), 1-15. kziezak, p., fincbach, b. (2017), triple bottom line: the pillars of csr, journal of corporate social responsibility and leadership, 4 (3), 95-110. laurensia, s. (2015), pengaruh kinerja keuangan terhadap harga saham melalui pengungkapan csr pada perusahaan konstituen indeks sri kehati, agora, 3 (2), 491-497. lopatta, k., frerich, b., thomas, k. (2016), asymmetric information and corporate social responsibility, bussines & society, 55 (3), 458-488. lyndananti, soedarman, m. (2015), konsistensi reaksi pasar modal indonesia terhadap penerbitan indeks sri-kehati, jurnal manajemen dan kewirausahaan, 7 (1), 43-54. malik, m.s., kanwal, l. (2018), impact of corporate social responsibility disclosure on financial performance: case study of listed pharmaceutical firms of pakistan, journal of business ethics, 150 (1), 69-78. ramiah, v., belinda, m., imad, m. (2013), how does the stock market react to the announcement of green policies?, journal of banking & finance, 37 (1), 17471758. reddy, r.r., kalla, k. (2018), corporate social responsibility: conceptual framework, international journal of research in commerce and management, 9 (2), 30-35. wang, h., li, t., riki, t., gerard, g. (2016), corporate social responsibility: an overview and new research directions, academy of management journal, 59 (2), 534-544. wang, k.t., li, d. (2016), market reactions to the first-time disclosure of corporate social responsibility reports: evidence from china, journal of business ethics, 136 (1), 661-682. wijaya, m.s., sudana, i.p. (2017), pengaruh sustainability report pada reaksi pasar dengan kinerja keuangan sebagai variabel kontrol, e-jurnal akuntansi universitas udayana, 21 (1), 616-642. zulkafli, a.b., zamri, a., eky, e.m. (2017), the performance of socially responsible investments in indonesia: a study of the sri kehati index (ski), gadjah mada international journal of business, 19 (1), 59-76. https://www.idx.co.id/ https://kehati.or.id/indeks-sri-kehati/ https://journals.aom.org/journal/amj https://journals.aom.org/journal/amj https://www.idx.co.id/ https://www.idx.co.id/ https://kehati.or.id/indeks-sri-kehati/ https://kehati.or.id/indeks-sri-kehati/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro polish and european economic culture – a comparison izabela ścibiorska-kowalczyk wroclaw university of economics i.scibiorska@onet.eu; izabela.scibiorska@ue.wroc.pl abstract the term "economic culture" describes historically shaped elements in the general culture of population, concerning values recognized and desired by a particular community, relating to the management and to the economic system of the states. the most important economic cultural behaviors include: awareness of economic choices, attitudes and behaviors of economic choices, the rules of the economic game. there is a theory which assumes that the globalization of the economy will lead to the emergence of a single, common to the whole world culture through enculturation, which is defined as a gradual process of growing of the individual (or group) into the culture or cultures through assimilation of cultural heritage of the surrounding community. more inculturation can be understood as a process of movement between different cultures come into contact and the transmission of cultural patterns. the article is an attempt at presenting the polish economic culture against the european background and identifying the differences. it discusses the impact of national history and religion on the present shape of economic life, with particular regard to its negative aspects, i.e. the relatively high level of bribery and unemployment or the negative personal attitudes. keywords economic culture; europe; poland jel classification a1; z13; z12 1. introduction globalisation results in the growing interdependence of countries around the globe. the modern societies differ in their cultural heritage – traditions, customs, values, religion, history and living conditions that have been shaping the national character for centuries. now those different national specifics meet in the international business and affect the economic, political, social and cultural relations. 2. european economic culture the cultural identity of europe is rooted in the greek logos, the roman laws and the judeo-christian tradition. from the biblical conception of man europe drew the best of its humanistic culture, found inspiration for its artistic and intellectual creations, created systems of law and, not least, advanced the dignity of the person as a subject of inalienable rights (john paul ii, 2003). europe, the structure of european community, shall remain a meaningless concept if it does not constitute an embodiment and expression of a civilisation which comprehends our culture and values, a manifestation of who we are and an instrument to reach our goals. whether we like it or not, the present constitutional discourse both reflects and builds the european civilization, id est the european identity. it would be ridiculous for the 83 ścibiorska-kowalczyk discourse not to recognise the key role that christianity plays in this civilization (weiler, 2003). the european economic culture started to take shape as early as in the times of the roman and byzantine empires. the adopted heritage of greek philosophy was all for the autonomy and independence of thought. this resulted in the development of logical deduction, rationalism and empirical approach, which facilitated natural sciences and their practical applications in technology. apart from philosophy, the greek heritage spread the vision of a free citizen and democratic government. since the 16th century, the development of political and legal concepts in europe has been based on the greek and roman achievements in the discourse on political order or public and private law. these were the influences that gave rise to the european concepts of national sovereignty, republican order as opposed to monarchical rule and citizen rights as well as to the spread of fundamental concepts of the roman law regarding contractual relationships (siewierski, 2006). during the 19th century most european countries underwent a deep modernization process, made easier thanks to the policies of national governments whose role was largely enhanced in this period as a result of this process. the political foundations for the transformation were the british and french revolutions. france, germany, northern italy and benelux countries, subsequently followed by britain and other countries of europe, saw a deep transformation of their societies. the british revolution and the french revolution facilitated shifts in the society and the emergence of powerful middle class, which in turn helped the development of market economies and the industrial revolution which brought about the shift of power from the monarch to the parliamentary assembly. nineteenth-century france experienced waves of republicanism and monarchy, but the monarchy had already a limited power. those changes coincided with the development of industry, modernisation of agriculture, growth of cities and deep changes in all the spheres of life (murawski, 1999). those changes were the key factors shaping the economic culture of modern europe. another significant factor was the religions prevailing in individual european societies. christianity, which emerged as a synthesis of jewish beliefs and greek spirit, needed just three centuries to reach dominance in the originally hostile antique world. it brought along some new qualities. the gospel teachings of truth, love and freedom went to meet the dreams and postulates of the giants of classical culture: plato, aristotle, cicero, sophocles and euripides. christianity entered the greek and roman world with no inherent negativity and was well able to incorporate the actual achievements of classical philosophy (mazurkiewicz, 2004). the most important institutional survivor of the roman empire was the christian church (lewandowski, 2004). today, talking about the christian roots of europe may be considered a christian attempt at an appropriation of the european past. while it is true that nobody can deny the historical influences of christianity on european culture (mazurkiewicz, 2004), europe was not the birthplace of christianity – it was born in jerusalem, i.e. outside of europe (john paul ii, 1979). in the european history, christianity constituted a foundation of the community of various european peoples, using different languages and originally having their distinct customs and traditions. christianity’s contribution to emerging europe was a common language, which made communication across the latinised area possible. this common language was used by christian institutions to unify and spread the liturgy, the teachings for believers, the funeral customs, the ways of aiding the poor, the obedience to authorities and the respect for higher social class (siewierski, 2006). the spread of christianity also meant the inculturation of europe. in the early 17th century, after 80 years of civil and 84 polish and european economic culture – a comparison international wars, fought mainly in germany, switzerland, france and the netherlands, europe got divided into four large christian churches: roman catholic in italy and spain, anglican in england, calvinism and lutheranism in denmark, norway, sweden, finland, the baltics and prussia. quite a few countries became multi-confessional: germany, switzerland, france, austria, bohemia and moravia, transylvania, hungary and finally poland, which apart from roman catholics and protestants also had a large eastern orthodox population. eastern europe and the balkans had been predominated by the eastern orthodox church for some time already. europe unified through a common religion was no longer there (pomian, 1992). the original christian critique of striving for wealth, and especially of usury, i.e. a profit-oriented activity, got transformed in time. max weber’s the protestant ethic and the spirit of capitalism presents the essence of the transformations in religious thinking that were decisive in changing the christianity’s stance on economic activity in general and on capitalist economy in particular. for the roman catholic church, a breakthrough in this respect was rerum novarum, a papal encyclical published in 1891. through forming specific social attitudes – a rational approach to economics – christianity affected the european economic culture and business culture to a large extent. the christian religious and moral tradition has indisputably left its clear mark on european history and even now it plays a large role in the life and beliefs of many europeans. in the debates on european integration taking place during the fourth congress of gniezno, the participants emphasized that the concept behind the european union is for the independent countries to form a single organism and not to shun their independence to form a single european state. the eu is not only an economic, political and strategic organisation – it also has a distinct spiritual heritage as well as a religious dimension. therefore its dialogue with various churches and communities is as important as the economic and political matters. brussels combines the representatives of about 170 churches, religions and religious communities (pikus, 2006). the contribution that the christian politicians are able to bring into the process of european integration is the view of the inviolable dignity of every human person, on the basis of which a european culture of life can be built – a culture that recognizes not only the fact that europe fares well economically and financially but also the fact that it is built on values that have made it great (john paul ii, 1997). at the starting point for every european nation there was some different tribe, often hostile to each other, each having its own leader, priests, warriors and mob, its own beliefs, traditions and customs. there were linguistic groups incapable of mutual communication or communicating with great difficulty. there were social classes differing in their legal status, usually hereditary, the largest difference being between the slavery or serfage of ones and the freedom of others. however, at the end point we have quite a numerous community of at least several million people that differs from similar other communities in its own traditions, lifestyle, beliefs, institutions, symbols, area, common history shaping more or less unconscious behaviours, own monuments, familiar landscapes and own language. it is a community whose members are all citizens, equal in the eyes of law and enjoying identical rights to participate in the public life and identical obligations as prescribed by the laws in force. in simple terms, the history of europe can be divided into three phases of unity and subsequent conflict, each lasting for about five centuries. the first period lasted from the fall of the western part of roman empire to the final separation between the eastern christian churches and the western church (476 – 1054). this was a period of expansion for both western and eastern christianity and of a widening gap 85 ścibiorska-kowalczyk between the latin and greek culture. the second period was that of unification of the latin christianity (christianitas) and lasted till the beginning of the reformation movements (1054 – 1517). the third one was an era of conflicts, religion-based at first and then international. this lasted till the treaty of rome which established a stable integration of european states (1517 – 1957). this period saw not only wars, uprisings or revolutions, but also fast development of science, economy, industry and democratic institutions (siewierski, 2006). the basis of western european cooperation started taking shape after the second world war when the countries had to face enormous destruction which made fast and efficient economic development impossible. the concept of joint work on the reconstruction of broken national economies originated in the usa. churchill presented his idea of the ‘united states of europe’ as early as 1946. the idea began to materialise a few years later with the establishment of the council of europe. americans earmarked significant financial resources for the rebuilding of europe within the framework of the marshall plan. the intensive effort taken to reconstruct a relatively strong europe was related on the one hand to the economic need for increasing the trade turnover and building a strong competitive advantage, and on the other to the political plan for blocking soviet expansion. an additional incentive for integration was the economic and political expansion of the united states which since wwii had been working on their position very effectively. thus europe made use of american aid but soon started to consider the us a competitor rather then an ally (tobiszowski, 2006). the adoption of european social charter, first by the eu-15 and then by the eu-25, popularised the belief in social europe and liberal america. however, in reality europe saw five different paths of development. the most significant of these is the model of social market economy (adopted in germany, france, austria and belgium). then there is the scandinavian model of welfare state with its high level of taxation and the welfare offered not only to the employees and their families, but to all the citizens. the third model is a market economy with a well developed system of social benefits (uk, the netherlands and ireland). the fourth model could be nicknamed mediterranean and is characterised by an over-regulated labour market and some economic statism components (italy, greece, spain and portugal). finally, the fifth model is presented by the central european countries under transformation (bossak, 2006). the model for economic cooperation between those different models was established by the treaties of the european union. the treaties incorporated the classical concept of integration that recognized five basic steps leading to full economic integration: free trade zone, customs union, common market, economic and monetary union and finally total integration (balassa, 1961). the implementation of integrative activities within european communities was based on practical premises, with the main incentive being the benefits of trade liberalisation and the positive economic climate favouring such benefits (tobiszowski, 2006). however, debates on the political organization of unified europe have demonstrated that while the principle of ‘unity in diversity’ is generally adopted as the basis of forming european identity, its interpretations vary significantly. some interpretations focus on the community as a whole while others stress the open multicultural europe. the interpretations may be grouped into three basic viewpoints (haller, 1994): 1) europe as a ‘new nation’ in the making, whose unifying aspects are common ethnoreligious identity, christian tradition, rich cultural heritage and shared values, with the collective memory of common roots and historical experience; 2) ‘united states of europe’ as a constitutional federal state, combining european nations within a joint system of political institutions, government and administration; and 3) ‘europe of 86 polish and european economic culture – a comparison fatherlands’, or an association of sovereign national states, abiding by the agreed laws but cooperating on different levels in different spheres and at different levels of integration. nearly all the discussion on the unification of europe focuses on the legal and technical issues. however, a problem far more significant than that is the enormous diversification of national cultures, seen nowhere outside europe. one of the fathers of european communities, jean monet, is often quoted as saying that if he could start the project of european integration again he would start with culture (trompenaars & hampden-turner, 2002). every society is founded on values. they determine its character and the features making it stand out among the other forms of human social life. europe as a society is a mode of turning those values alive. the european values include inviolable dignity of every human person, central role of family, significance of education, freedom of speech and religion, protection of the rights of individuals and groups, solidarity and common good, and the recognition of work dignity (świątkiewicz, 2006). experience proves that there is a distinct cultural difference between the north-western europe (cool analysis, logic, systems and rationality) and the mediterranean countries (interpersonal relations, following own intuition and emotions). significant cultural differences occur even between the neighbouring nations, e.g. the dutch of the netherlands and the flemish and walloons of belgium (trompenaars & hampden-turner, 2002). europe is first of all a definite culture. it is, so to speak, a continent of culture (mazurkiewicz, 2004). it seems to me that there is no better combination than british inventiveness. french wit. slav music. italian cuisine. german perfection. spanish reality, dutch decency. scandinavian fairness… in short, the best combination in the world (hill, 2004). thanks to its preservation of diversity, europe is an area of a wealth of cultures and civilisations whose coexistence is a phenomenon in itself (kadłubiec, 1987). there were quite a few factors which secured europeans the leading role in human development. according to jeremy rifkin, the american dream is being replaced by the emerging european dream that promises to bring humanity to a global consciousness befitting an increasingly interconnected and globalizing society. the european dream emphasizes community relationships over individual autonomy, cultural diversity over assimilation, quality of life over the accumulation of wealth, sustainable development over unlimited material growth, deep play over unrelenting toil, universal human rights and the rights of nature over property rights, and global cooperation over the unilateral exercise of power. in contrast to the american dream, the european dream is based on preserving one’s cultural identity and living in a multicultural world (rifkin, 2005). europe, because of its unique historical experience of the past half-century – culminating in the past decade with the creation of the european union – has developed a set of ideals and principles regarding the utility and morality of power different from the ideals and principles of americans, who have not shared that experience (kagan, 2003). the existing economic culture that accepts the cultural diversity of europe and its diversity of religions may be unable to resist secularization and the neo-liberal tendencies. this is indicated by the ongoing controversy about secularity and separation of the church from the state. this discussion and polemics are culturebased and are of interest to secular and catholic intellectuals alike. catholics see the danger of indifference in liberal democracy, while the laymen claim that ethical relativism is the only guarantee of an effective protection of the rights of individual. laymen claim that a true democracy can not assign a privileged position to any particular ethics, especially the ethics of a particular religion, namely roman catholic, because – according to them – every religious faith entails a potential for 87 ścibiorska-kowalczyk intolerance. catholic intellectuals fear the removal of religious identity from the christian cultural heritage which makes the basis of european culture (mucci, 2005). secularization is a very important phenomenon, associated with actions to eliminate the influence of religion. it manifests through the weakening of religious ties among the believers, a decrease in religious practice participation and the fading of moral and ethical standards developed and promulgated by religions. in europe there is a large diversity of cultures, but in the process of european integration the member countries are beginning to create a uniform economic culture – the process is only in its infancy due to the differences in economic systems as well as to the fact that not all the european countries are european union members. the unification is also attempted in relation to religion which is especially visible in the ongoing debates in france and italy. 3. economic culture in poland the early history of poland is a string of successes in the establishment of polish state, the strengthening and territorial expansion of the kingdom – from the baltic to the black sea and from the oder river to the dnieper river. the outcome of this strive was a multi-cultural country, tolerant to diverse religions, social customs and political opinions – one of the first european countries to have laid the foundations to parliamentary rule and constitutional democracy. despite all these achievements, however, the modern history of poland is mainly a history of foreign rule (orlabukowska, 2004). the economic culture of poland was affected by historical facts. one of the most significant determiners was the slavic ethos. even a cursory glance at the polish past shows that poles used to attach the highest value to fight, play and pray, and not to work or social discipline. the various opinions, both their own and foreign, portray poles as a childish nation of knights-errant that disregard the prose of everyday life and has a habit of building castles in the air, are driven rather by emotions and illusory hopes than reasonable calculations. in contrast to the germanic peoples who soon found themselves at the centre of european civilization, most of the slavs occupied the periphery of europe. this was why poland had no native models of urban areas and had to use e.g. the german experience. from the early days of the polish nobles’ republic, the country’s development took a specific path, other than that followed by the west. the fifteenth century saw the west already divesting themselves of the feudal forms of economy and releasing peasants, while the manorial farms operating on the basis of villains’ work flourished in poland and the ‘later serfdom’ prevailed. the manorial system was the economic basis of the nobles’ republic which lasted for nearly three and a half centuries. this anachronistic economic system petrified the extensive methods of production and gave rise to negative attitudes towards work. the nobility despised the people who made their living from work. this deep contempt persisted even after the fall of the nobles’ republic (lewandowski, 1995). a sociological oddity of the first (nobles’) republic was a record share of nobility in polish society, unheard of elsewhere in europe, and a small number of townspeople. the weakness of native bourgeoisie and the loss of independence meant that poland was spared the european waves of bourgeois revolutions. a far-reaching consequence of the fact was that the noble culture models remained attractive long into the twentieth century (lewandowski, 2004). another significant determiner of the modern economic culture of poland was the post-war period. during the forty-five years of the people's republic of poland, individuals and families benefited from a highly developed form of welfare state. 88 polish and european economic culture – a comparison almost all the employees of state-owned companies and the public sector enjoyed the sense of basic social security. the lack of basic market competition, the full employment and the low wages did not favour any work ethics. there was no system of incentives for individual initiative, entrepreneurship or productive work (lewandowski, 1995). while describing poles, hill notes that undoubtedly, the poles do not like hard work, making up for that with their shrewdness. the opinion seems justified when you hear stories about poles’ black-market operations all over eastern europe: shortly after the fall of the berlin wall at the border crossing across the oder there was a lada bearing polish plates stopped while driving east. there were seventy kilograms of meat found in it, hidden in the seats (hill, 2004). the poles’ black market activities described above were related to the situation caused by the previous regime and any evaluation of this activity requires some knowledge of these issues. the last two decades of the existence of centrally-planned economy formed a strictly economic motivation for work in the collective consciousness of polish society. consumer attitudes were shaped by the collectivist economic system that did not allow independent investments of any entities not constituting a registered company and also took most profits away from the workers into the centrally-planned investments and public consumption. this caused a permanent consumption deficit for households, and the related demand was not coherent with the system of economic institutions. any increase in the monetary income of the population brought with it an increased demand for consumer goods, which together with the lack of motivation for investment and the supremacy of narrowly economic incentives led to a relative over-consumption. this increased tensions in the economy of shortage, as well as exacerbated the main conflict of the system: the competition for consumption. this gave rise to an economic vicious circle, i.e. any income growth brought a crisis of a relative over-consumption, the crisis deepened the market imbalance causing deviant economic phenomena, an the phenomena in their turn hampered the effectiveness of the public sector but in the short term intensified the personal income growth (kozlowski, 2004). in poland, a controversial issue is the suggestion of building a capitalist economy on the grounds other than protestant, e.g. on the catholic tradition. on the one hand, it must be noted that some catholics – at least polish ones – feel a distance and revulsion upon any mention of ‘capitalism’. the notion is repulsive to people morally or religiously sensitive, as it wears a mask of vulgar, aggressive advertising or an unscrupulous, inhuman employer, and brings connotations of a supermarket chain which transforms the concept of a holy sunday into the one of lusty shopping. what's more, polish capitalism still lacks established traditions, positive heroes and mythology. there are no personages or examples that would be inspiring and convincing, also to the deeply religious people. indeed, it should be remembered that the building of a free market in america, in england or in post-war germany was in a sense an end to the previous way of life. the modern polish capitalism, devoid of positive traditions and legends, since the very beginning has been harassed by the black and negative myths. there is the firmly established, self-fulfilling myth of inherent exploitation and embezzlement, originating in part from the propaganda stories of communist poland, and in part from the fears and prejudices of polish opinion elites (sowiński, 2005). seymour martin lipset, the eminent american political scientist, believed that protestantism is most successful in teaching its followers the moral responsibility and uncompromising stance in public affairs and in business, while the catholic, anglican and orthodox churches show more tolerance for human weakness, because clergy to some extent have the power to absolve an individual from a sense of responsibility 89 ścibiorska-kowalczyk (lipset & lenz, 2003). any capitalist economy built in the non-protestant world is bound to face the locally prevalent religion while in search of its moral and aesthetic formation. it is just the quality and spiritual potential of such religious feelings that will determine whether poles, italians or bulgarians learn that getting rich can mean endurance, grace and integrity (sowiński, 2005). lech mażewski suggests that ‘religion is considered an irreplaceable lesson in morality, [...] as it teaches tolerance and living a decent life. through education for respecting the fellow humans and for honesty, catholicism will strengthen the development of liberal virtues far better than the purely secular commitment to freedom’ (mażewski, 1993). in poland, both the institutional church and a very great many of its flock are trying to find their footing in the realities of the capitalist economy and the free market. the attitudes of the catholic world towards the modern economy have changed. this is highly apparent in the very doctrine of the church, as described in detail by a dominican, father maciej zięba in his book popes and capitalism. likewise, in the centesimus annus encyclical, pope john paul ii explicitly recommended an economic system based on the market and on company and private property to catholics, while rejecting the welfare state project or some ‘third way’ between capitalism and socialism. in a manner akin to the weberian spirit, he approvingly emphasized that capitalism can foster the virtues of responsibility and free enterprise. however, in line with the message of protestant ethic and the spirit of capitalism, he is critical of consumerism or any version of capitalism that ignores any private, moral or religious order (sowiński, 2005). the current polish economic and business cultures are affected by the national characteristics of the poles, which were formed in a historical process. andrzej walicki believes that the vices and virtues of the poles acquired their shape mainly in the nineteenth century. ‘during that century, and especially the first half, the poles were still a nation of nobles, having no bourgeois capacity for well-organized, efficient work but cherishing a sense of honour, as manifested by emotional outbursts of patriotism. at that time, poland had no rationally operating civil society of the gesellschaft type; it still remained a confraternity of nobility, albeit spread over a huge territory; as such, it was an archaic community of the gemeinschaft type, a federation of local neighbourhoods linked by direct and personalized relationships. these social conditions gave rise to a great national revival in response to the country’s partition and this found an outlet not in patient work on building civilization and nation, as occurred with the czechs, but in heroic deeds, national uprisings, the fight for the freedom of other nations and public demonstrations of patriotic feelings, as well as in symbolic gestures which forged the national myths (walicki, 2001). perfect examples of what are regarded in polish culture as paradigmatic cases of courageous and honourable behaviour are the three consecutive uprisings of the eighteenth and nineteenth centuries; the last, desperate attack of the napoleonic campaign in russia in 1812 led by prince józef poniatowski; the refusal to surrender to the prevailing german forces in 1939; the warsaw uprising of 1944; and, finally, the post-war workers’ strikes and ‘solidarity’ movement against soviet domination (orla-bukowska, 2004). in a study conducted by the university of economics in katowice, a series of polishgerman-french seminars were held with the aim of identifying cultural differences values and characteristics of the nations involved in the study. the poles taking part in the seminars identified the following national polish values: patriotism, faith and family. they associated patriotism with love of the homeland and the struggle for its freedom and independence. the next value listed was faith, this being not only religious faith, but also faith in the future and in humanity. to the participants, this 90 polish and european economic culture – a comparison was inextricably connected with the said patriotism. in their opinion, family was the ‘little homeland’, within which they feel secure and for which they are able to fight. the respondents also indicated their personal values as being love within the family, towards another person and as an expression of fraternity and tolerance; national and personal security, as associated with the issue of polish independence in the context of the historical and economic situation; and belief in god, as an expression of the strong influence of religion on the poles’ present and future life. national heroes were also selected. they were tadeusz kosciuszko, considered a symbol of honour and the fight for an independent homeland; lech walesa, because of his achievements; and pope john paul ii, whom they considered the greatest pole in the national history, an emblematic figure symbolizing the values with which the poles wish to identify (karcz, 2004). edmund osmańczyk compared poles to eagles and germans to ants. he wrote that the germans are thrifty, provident, diligently following the paths traced out by their employers, economical, frugal, eating rationally even in poverty, meek and humble when in need, brazen and ruthless in prosperity, and always sober. he contrasted this with his perception of the poles, who, in his opinion, are wasteful, reckless, mindful of neither their own time nor anyone else's, going their own ways, living in accordance with their own whim, inclined to rebel against both foreign violence and their own legislation, valuing improvisation higher than organization because the former flatters them individually and unites them in both poverty and prosperity, in the consumption of alcohol and in self-affirmation, while the latter bores them socially (osmańczyk, 1982). the most orderly and thorough concept of the national polish character was given by kazimierz dąbrowski. he distinguished eight positive and twelve negative national characteristics. those he considered positive include the tendency to idealize, romanticism, spirituality, mysticism; courage, brotherhood, chivalry, a quixotic nature; humanity, gentleness, generosity, an absence of cruelty; sincerity, truthfulness, faithfulness, keeping commitments; hospitality, especially to strangers from distant parts; persistence, anxiety, infantilism, susceptibility to development; a sense of freedom, independence, individuality; enormous talent in various fields. he devoted much more space to the negative features of the polish national character. the first one he listed, as giving rise to a number of others, was excessive excitability, emotional lability, volatility and hot temper. to him, poles are likely to go for the extremes; either all or nothing. their weaknesses include recklessness, superficiality, a tendency towards rash synthesis and mistaking their own desires for reality. personalisation is another negative trait. in social relations, the polish people take account of the general impression, of a gesture, a smile, and manners, and attach less weight to objective evidence. what is of primary importance is a simple judgement: i like something or i dislike it. another negative feature is cliquishness, which may be due to a susceptibility to the influence of small, well-organized groups. the fifth negative feature listed is a tendency for selfishness and dissent. the predisposition for selfishness and factiousness results in a tolerance of impunity. in addition, the polish nation is characterized by poor organizational abilities, the reverse side of polish improvisation, a lack of perseverance when it comes to mental effort, the cult of incompetence, the neglect of people of value, self-centeredness, and a lack of keen self-assessment (dąbrowski, 1992). descriptions of the polish national character often emphasize the importance of the councils and parliamentary gatherings in the noble republic, during which the loud, quarrelsome, drunken atmosphere created what has been dubbed ‘the polish hell’, which means ruthless envy, malevolence and the underestimation of outstanding 91 ścibiorska-kowalczyk compatriots (lewandowski, 2004). the period of foreign rule, first prussian, and then that of germany, russia, and the austrian empire, – was a difficult one for poland and the polish people, but inculturation, especially from the germanic culture in the areas of wielkopolska and silesia, forged a work ethic that distinguishes this part of poland from those which had never felt the influence of a culture whose primary feature is respect for work and order. according to teresa bogucka, the latter represent ‘a contempt for work, laziness and a lack of perseverance combined with bungling. during the 1950s and 1960s the polish language developed such descriptive phrases as ‘pre-war work’, and ‘pre-war workman’, which meant that poles were aware of the deterioration of the former quality of work and ethics under post-war conditions. and yet today, there are many places where people work well, which proves that laziness is not a feature inherent to the polish national character but, rather, one acquired in the decades-long process of corruption. polish behaviour still shows traces of some knightly-lordly-factious or villain-serf-mutinous ways of thinking, but these are only traces of the distant past. the fifty years of communism which constitute the more recent past have left far more visible grooves of thought that we keep falling into, but, all in all, the mixture has also produced something new, a quality which has yet to be named ” (bogucka, 1997). 4. conclusions today's economic culture in poland is founded on a new system that has been transformed since 1989, and since 1 may 2004 also on the impact of the european union regulations, whose requirements poland must abide by. still, the historical past has an impact on today's economic and business culture. its negative effects can be seen for instance in the low reputation of poland as a country with a very high level of bribery. as prof. jan miodek writes, ‘i consider any attempts to scare poles away from the united europe to constitute a severe socio-political fault and a case of ingratitude towards the gift of history; the expressed concerns for polish values – a case of pharisaic hypocrisy; and the preaching of endangerment to the very existence of the polish language – a symptom of magical thinking, completely detached from the context of the history of our native language’ (miodek, 2006). polish accession into the eu structures may change both the economic and business culture through inculturation of the positive models from the western european countries with a longer and better experience in business. through social rehabilitation the polish business and intellectual elite may stand a chance of overcoming the lingering attitudes of the communist era and following a path that in a few years will not earn such an acute criticism as the centrally-controlled economy. when comparing the western capitalist democracies to the former socialist economies, it should be noted that the latter face many problems that do not allow for a rate of economic development matching the one enjoyed by the countries with a long tradition of market economy. in the post-communist countries, the public still believes that it is the state who should be responsible for its citizens and organize their life so that they do not have to struggle against any problems. in poland, a large percentage of the population looks forward to benefitting from social aid. these people believe that they deserve aid from the state and are often unwilling to work and become independent. this is especially visible with the shortage of labour supply in the polish labour market, emerging due to large emigration figures and a simultaneous increase in investments co-financed by the eu. polish economic culture gets reformed in a new environment of democracy and market economy, but the 92 polish and european economic culture – a comparison impact of forty-five years of centrally-planned economy still have an impact on the rate of development. references balassa, b, (1961), the theory of economic integration, london, taylor & francis group. bogucka, t, (1997), polak po komunizmie, kraków, znak. bossak, j. w, (2006), amerykański model i inne wzorce rozwojowe, in w. bieńkowski, m. j. radło (eds.), amerykański model rozwoju gospodarczego. istota, efektywność i możliwość zastosowania (237-252), warsaw, sgh. dąbrowski, k, (1992), o charakterze narodowym polaków, polska / regiony, 1, 106129. haller, m, (1994), epilogue: europe as a new nation or a community of nations? international journal of sociology, 24(2-3). hill, r, 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[polish edition of una europa cristiana], poznań, wppd. 94 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 28, 2018 http://sceco.ub.ro 6 internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” amanj mohamed ahmed darbandikhan technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq amanj.mohamed@spu.edu.iq akram ahmed muhammed dukan technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq akram.muhammd@spu.edu.iq abstract the overall objective of this study was to establish the effects of internal controls on the financial performance of asiacell as a telecommunication company in kurdistan region of iraq. this was achieved by looking at the effect of control environment, risk assessment, information and communication, control activities and monitoring on the return on asset of the selected company. the study used both primary and secondary techniques to collect the data. in the model, the dependent variable is financial performance while the independent variables are the components of internal controls. after analyzing the audited financial statements and filling the questioners by the employees of the selected company, the findings of the study showed that there is a significant relationship between internal controls and financial performance. the dependent and the independent variables in the study indicated a relationship with control environment, risk assessment. information and communication and control activities illustrated a positive relationship with the financial performance while monitoring showed a negative relationship with financial performance. the study also found that, asiacell had invested on effective internal control systems, thus, it had a better financial performance as compared to the related firms that had a weak internal control system. the study further recommends that the governing body, possibly supported by the audit committee, should ensure that the internal control system is periodically monitored and evaluated by the respective managers. keywords internal controls; component of control; financial performance and telecommunication company in kurdistan region jel classification m41 introduction internal controls are strategies set by the companies to ensure the integrity of financial and accounting information, meet operational and productivity targets, and transmit administration arrangements all through the association (shokoohi et al, 2015; channar et al, 2015; ngari, 2017; eniola & akinselure, 2016; asiligwa, 2017; hamed, 2009 and bett & memba, 2017). internal controls work best when they are connected to the different divisions and manage the communications between the different business offices (treba, 2003 and bett & memba, 2017). while little frameworks of internal control are indistinguishable, yet many center methods of insight in regards to monetary internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” 7 trustworthiness and bookkeeping rehearses have turned out to be standard administration hones (asiligwa, 2017). it is important that internal controls just give sensible however not outright affirmation to an entity’s management and board of directors that the firm’s goals will be accomplished (hayes et al, 2005). “the likelihood of achievement is affected by limitation inherent in all systems of internal control” (hayes et al, 2005). cunningham (2004) states that the framework of internal control starts as inner procedures with the positive in order to help the company to meet the destinations. administration principally gives oversight actions. it sets the substance of destinations and has generally speaking obligation over the internal control systems (cunningham, 2004). internal controls are an indispensable piece of any organization’s financial and business approaches and systems (nyakundi, 2014 and vadiei & kuchaky, 2008). inside controls comprise of the considerable number of measures taken by the association with the end goal of; securing its assets against waste, extortion and wastefulness; guaranteeing precision and unwavering quality of bookkeeping and working information; guaranteeing consistency with the strategies of the association; assessing the level of execution in every hierarchical unit of the association (enwelum, 2013 and ngwenya, 2013). in addition, a sound of internal control systems can help the organizations to prevent frauds, errors and minimize wastage (uket & joseph 2012 and eniola & akinselure, 2016). custody of assets is strengthened because it provides assurance to the management on the dependability of accounting data that eliminates unnecessary suspicion and helps in maintenance of adequate and reliable accounting records (fernando et al, 2012; kaplan, 2008; coso, 2011 and asiligwa, 2017). regardless of the way that internal control framework is costly to introduce and keep up, it gradually developed throughout the years with the best improvement happening toward the start of 1940’s (cunningham, 2004). not just have the complexities of the business procedures added to this improvement, additionally the expanded size of specialty units, which have energized the selection of techniques is helpful to expand the productivity of business because it goes against errors and frauds (cunningham, 2004; coso 1985; coso 1992 and asiligwa, 2017) . mawanda (2008), states that “there is a general recognition that establishment and requirement of appropriate inside control framework swill dependably prompt enhanced money related execution”. it is likewise a general conviction that appropriately organized frameworks of internal control enhance the revealing procedure and furthermore offer ascent to solid reports which improves the response capacity of administration of a substance. get ready dependable monetary data is a key obligation of the administration of each open organization (cahill, 2006; inusah & abdulai, 2015; kaplan, 2008 and rahmany, 2013). further, positive financial performance in a telecommunication company can be accomplished by annihilating waste in benefits of administration procedures and framework. the “basic achievement factor” for a telecommunication company is how much it satisfies its set goals and mission regarding being productive, successful and sparing (hayes et al, 2005 and shokoohi et al, 2015). the data acquired from a sound inward control framework as reflected from monetary articulations will give a provide details regarding a firm’s money related execution (hayes et al, 2005). in this essence, internal control systems are very instrumental in achieving the firm’s set mission and objectives. the main approach to value for money is the firm’s control over the use of resources in order to achieve its set objectives (hayes et al, 2005). thus, head of ahmed, muhammed 8 departments should establish sound arrangements for planning, appraising, authorizing and controlling operations in order to achieve positive financial performance. dixon et al (1990) also discovered that fitting execution measures are those which empower associations to coordinate their activities towards accomplishing their key objectives. collins (2014) alludes to execution as the capacity to work effectively, productively, survive, develop and respond to the natural open doors and dangers. as of late the part of internal control framework has accomplished awesome significance since it is intended to protect the company’s resources against abuse, guarantee consistency with the company’s laid arrangements, guarantee the company’s workforce are productively used and the organization keeps running in a deliberate and effective way. therefore, the purpose of this study is to investigate and establish the relationship between internal control systems and the financial performance of telecommunication company in kurdistan region of iraq. problem statement despite the fact that internal control systems have been considered by many telecommunication companies, but still they have an issue with poor financial performance, manipulating financial statements and fraudulent in using the company’s assets. thus, this study will investigate to find that is there any relationships between internal control systems and financial performance in telecommunication companies. objectives of the study the main objectives of this paper are to: (i) show how useful is internal controls to organizational performance in telecommunication companies, (ii) explorer the relationship between the components of the internal control and the financial performance of asiacell as a telecommunication company in kurdistan region of iraq. literature review theoretical review various theories have been developed on internal control, internal audit and financial performance. this paper describes some of them as follows: 1. agency theory the agency theory proposes that a firm’s main objective is to amplify the investors’ riches. the theory expresses that the association comprises of principals who are the proprietors of the financial assets and the agents who are the supervisors of the company’s assets (jensen & meckling, 1976; jussi & petri, 2004; tuan 2015; al-matari et al, 2014 and ngari, 2017). the specialists don’t generally partake in the principals destinations and may on occasion act to promote their own particular advantages at the investor’s cost. thus, internal control is one of many mechanisms that used in business to address the agency problem. also include financial reporting, budgeting, audit committees, and external audits. this argument assumed that providing this additional information to the shareholders about the behavior of the management reduce information asymmetry and lowers investors risk and, therefore, the cost of equity capital (jensen & meckling, 1976). internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” 9 2. contingency theory contingency theory is utilized to describe the connections between the context and structure of internal control effectiveness and organizational performance, especially reliability of financial reporting. empirical study proposes that internal auditors who are specialized and higher in internal audit capacity will accomplish viable internal controls that help the firm to earn more profit (cadez & guilding, 2008 and woods, 2009). determinants of financial performance financial performance alludes to how much budgetary targets being or has been proficient. it is the way toward measuring the consequences of a firm’s arrangements and operations in financial terms (whittington & pany, 2001). it is a subjective measure of how well a firm can utilize resources from its essential method of business and generate revenues (ejoh & ejom, 2014). financial performance is utilized as a general measure of a firm’s general money related wellbeing over a given time frame, and can be utilized to look at comparative firms over a similar industry or to compare industries or sectors in aggregation. details, for example, revenue from operations, operating income or cash flow from operations can be utilized, as well as total unit of sales (ejoh & ejom, 2014). further, internal control includes various techniques and measures that are practiced by the management to guarantee smooth and monetary working of a business substance (kumar & sharma, 2005). hence, it is intended to give sensible affirmation that the entity’s general targets are being accomplished (ejoh & ejom, 2014). this is also supported by kumar & sharma (2005), they argued that clear targets are an essential for an effective internal control process. the general targets being achieved include; executing orderly, moral, economical, efficient and effective operations, satisfying responsibility commitments, consenting to appropriate laws and regulations and defending assets against loss, abuse and harm. internal control consists of five interrelated components namely; control environment, risk assessment, control activities, information and communication and monitoring. 1. control environment a study conducted by (ntongo, 2012 and whittington & pany, 2001) the control environment is influenced by the history and the culture of organizations and has an insidious influence on the way organization activities are structured. 2. risk assessment risk assessment refers to the identification and investigation of applicable dangers related with accomplishing the destinations of the association (coso, 2011 and lannoye, 1999). 3. control activities they include a range of detective and preventive activities such as; authorization and approval procedures, segregation of duties (authorizing, processing, recording, reviewing), controls over access to resources and records, verifications, reconciliations, supervision, reviews of operating performance and reviews of operations, processes and activities (aikins, 2011 and coso, 2011). ahmed, muhammed 10 4. information and communication according to asiligwa (2017) information systems produce reports that contain operational, financial and non-financial and compliance-related information and that make it possible to run and control the operation. 5. monitoring ongoing monitoring activities cover each of the internal control components and involve action against irregular, unethical, uneconomical, inefficient and ineffective internal control systems. monitoring can be achieved by regularly supervising and managing activities like monitoring of customer complaints and feedback and audits that conducted periodically by internal auditors (bowrin, 2004 and simmons, 1995). review of empirical studies mawanda (2008) conducted a research on effects of internal control systems on financial performance in institution of higher learning uganda. in his examination, he explored and looked to set up the connection between internal control systems and financial performance in an institution of higher learning in uganda. internal controls were looked at from the perspective of control environment, internal audit and control activities, whereas financial performance focused on liquidity, accountability and reporting as the measures of financial performance. the researcher set out to build up the reasons for steady poor financial performance from the viewpoint of internal controls. the examination set up a critical connection between internal control system and financial performance. it suggests capability profiling in the internal audit division which ought to be founded on what the university anticipates that the internal audit will do and what fitting number staff would be required to carry out this job. the examination accordingly recognized part of internal audit division to set up internal controls which affect the money related execution of organizations. olumbe (2012) conducted a study to establish the relationship between internal controls and corporate governance in commercial banks in kenya. the researcher conducted a survey of all the 45 commercial banks in kenya. it was presumed that the majority of the banks had joined the different parameters which are utilized for gaging internal controls and corporate governance. this was shown by the methods which were acquired the kenya’s procedures. the results demonstrated that banks had established great corporate governance with a strong system of internal controls and that there is a connection between internal control and corporate governance. a study connected by wainaina (2011) examined the internal control function. the researcher established that, other than the prevention and detection of fraud, internal controls should reflect the quality of the general bookkeeping condition in an association and in addition to the precision of its financial and operational records as well. hypothesis of the study the study attempts to test the following hypothesis: 1h1: control environment and financial performance is positively correlated. h0: control environment and financial performance is negatively correlated. 2h1: risk assessment and financial performance is positively correlated. h0: risk assessment and financial performance is negatively correlated. 3h1: control actives and financial performance is positively correlated. h0: control actives and financial performance is negatively correlated. 4h1: information and communication and financial performance are positively correlated. internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” 11 h0: information and communication and financial performance are negatively correlated. 5h1: monitoring and financial performance is positively correlated. h0: monitoring and financial performance is negatively correlated. research methodology research design the research design that was adopted for this study is hypothesis testing research design. the study tested the above hypothesis in detail. this sort of research design that was chosen subsequent to consider the kind of universe and its nature, the targets of the study, the testing outline and the design standard of accuracy. this is because the production of a sound internal control framework in a telecommunication company enormously impacts the area of study. nature of the data ary et al (2006) notes that there are two major sources of data that can be used by the researchers, that is primary and secondary data. this study also relied on both techniques. primary data was collected by using observation and analyzing the results of the questionnaires while the secondary data was gathered from the audited financial statements of “asiacell” based on availability and accessibility of data. data analysis the statistical instrument that was utilized as a part of the study is multiple regression (r2). it was utilized to discover the relationships between internal controls and financial performance. data analysis was finished by utilizing “statistical package for social sciences” (spss version 22.0) program, using one way anova, regression, and correlation. the model communicating and the speculated connection between the independent variables are (control environment, risk assessment, control activities, information and communication and monitoring) and the dependent variable is (financial performance of asicell as a telecommunication company in kurdistan region). particularly the regression model utilized as a part of this study was; fp = b0 + b1c1 + b2c2 + b3c3+ b4c4+ b5c5+e where, fp – financial performance of asiacell. b0 constant c1 – control environment c2 – risk assessment c3 – control activities c4 – information and communication c5 –monitoring b1 b5= measure of sensitivity of variable c to changes in fp e= error term data analysis and interpretation this section presents analysis and findings of the study as set out in the research objective and research methodology. ahmed, muhammed 12 response rate the study targeted 30 respondents from the asiacell employees. out of the 40 questionnaires administered by the researchers, 30 filled questionnaires were collected that translated to 75% as a response rate. according to babbie (2002), any response of 50% and above is adequate for analysis and therefore, the response rate of 75% is satisfactory. correlation analysis table 1 correlation matrix control environment risk assessment info and communications system control activities monitoring financial performance control environment pearson correlation 1 -.303 .565** .625** .499** .887 sig. (2-tailed) .104 .001 .000 .005 .124 n 30 30 30 30 30 30 risk assessment pearson correlation -.303 1 .075 .206 .486** .339** sig. (2-tailed) .104 .694 .276 .006 .000 n 30 30 30 30 30 30 info and communications system pearson correlation .565** .075 1 .381** .523** -.051** sig. (2-tailed) .001 .694 .000 .000 .000 n 30 30 30 30 30 30 control activities pearson correlation .625** .206 .781** 1 .880** .230** sig. (2-tailed) .000 .276 .000 .000 .000 n 30 30 30 30 30 30 monitoring pearson correlation .499** .486** .323** .480** 1 -.323** sig. (2-tailed) .005 .006 .000 .000 .000 n 30 30 30 30 30 30 financial performance pearson correlation .287 .739** .651** .730** .923** 1 sig. (2-tailed) .124 .000 .000 .000 .000 n 30 30 30 30 30 30 **. correlation is significant at the 0.01 level (2-tailed). source: computed by the author the findings from table (1) demonstrated that, there is a positive relationship between the dependent variable “financial performance” and the independent variables “control environment, risk assessment and control activities” and a negative relationship between “financial performance” and the independent variables “information & communication and monitoring”. the pearson’s correlation coefficient between financial performance and control environment is 0.687, this means that the two variables move in the same direction. this implies that an increase in control environment increases the financial performance of telecommunication company. information & communication and monitoring affect financial performance negatively with a pearson’s correlation coefficient of -0.051 and -0.323 respectively. this implies that an increase in information & communication leads to a decrease in financial performance. the same applies to monitoring. regression analysis the examination was directed to build up the connection between internal control and financial performance of asiacell as a telecommunication company in kurdistan internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” 13 region. the analysis applied the statistical package for social sciences (spss) to register the estimations of the multiple regressions for the study. below are the findings; 1. model summary: below table shows the summary of the regression analysis. table 2 model summary model r r square adjusted r square std. error of the estimate 1 .884a .669 .602 .09543 a. predictors: (constant), monitoring, risk assessment, control environment, info and communications system, control activities. source: computed by the author in order to explain the percentage of variation in the dependent variable “financial performance” as explained by the independent variables, the researchers used the regression model for determination (r square) that is obtained from the above. based on the analysis, the findings show that the independent variables contributed to 66.9% of the variation in financial performance as explained by adjusted r2 of 0.660% while 33.1% is explained by other variables outside the model and the error term. 2. analysis of variance the study conducted an analysis of variance, in order to test the impact of the relationship between internal controls and financial performance of telecommunication company in kurdistan region. the findings were as shown below: table 3 analysis of variance anovaa model sum of squares df mean square f sig. 1 regression .980 5 0.197 10.398 .000b residual .440 24 .018 total 1.420 29 a. dependent variable: financial performance b. predictors: (constant), monitoring, risk assessment, control environment, info and communications system, control activities source: computed by the author from table (3), f value of 10.398 is significant at 95% confidence level. this is because the p value is greater than 0.05. the result means that control environment, risk assessment, information & communication, control activities and monitoring have effect on financial performance directly. 3. test for coefficients: this table demonstrates the level of significance on the variables, it also provides the standardized and unstandardized coefficients: table 4 test for coefficients coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta ahmed, muhammed 14 1 (constant) -2.375 .675 -3.519 .002 control environment .515 0.82 0.535 6.276 .000 risk assessment .030 .102 .027 .296 .770 info and communications system .015 .001 .141 1.562 .131 control activities .231 .120 .122 1.931 .065 monitoring -.149 -.235 -.062 -1.356 -.011 a. dependent variable: financial performance source: computed by the author from table (4), the researcher sought to establish the relationships between internal controls and the financial performance in telecommunication companies. the following regression equation was obtained: fp = -2.375+0.515x1+.030x2+0.015x3+0.231x4 from the above findings, holding the various components consistent, financial performance is measured by proficient and powerful usage of internal controls. the consequences of the various regression models show that there is a positive connection between internal control and financial performance. this implies that a single unit increases the results of independent variables (control environment, risk assessment, control activities, information & communication) at 0.515, 0.030, 0.015, and 0.231 respectively. monitoring has a negative beta coefficient of – 0.149, which indicates that one unit increases in monitoring will cause to decrease financial performance by 0.149 and the other indicators remaining constant. the consequence of the examination demonstrates that control environment, risk assessment, control activities, information & communication influence the financial performance positively, with control environment has a higher significant impact. the outcome also shows that monitoring has a negative effect on the financial performance. summary and interpretation of findings according to the respondents, it was revealed that the majority of the hr employees in asiacell were degree holders. on whether the functionality of the internal controls of the organization affects the financial performance of telecommunication company in kurdistan region. the results revealed that most asiacell as a telecommunication company had a control environment as one of the functionality of internal controls that greatly impact on the financial performance in the company. it was also found that asiacell monitored their activities as part of the functionality of internal control systems. however, some of the telecommunication companies failed to provide checks and evaluation of control activities on on-going basis. this showed that, even though monitoring was an important function of internal control in the telecommunication company, but not all telecommunication companies implemented this practice. the statistical results from the regression analysis show that there is a positive relationship between internal control and financial performance of asiacell. this is demonstrated by the level of significance, which attained by each of the independent variables. the result illustrates that control environment has r = 0.887 at p = 0.000. monitoring on the other hand shows that r = 0.323 at p = 0.124, this indicates that monitoring has a weak relationship with the financial performance. the relationship being negative indicates that monitoring and financial performance move in opposite direction. table (2) shows the coefficient of determination and provided that the independent variables contributed to 66.9% of the variation in financial performance as explained by adjusted r2 of 0.669%. this shows that the model was a good predictor. table (3) shows the analysis of variance. from this table, the sum of squares due to regression is internal control systems and its relationships with the financial performance in telecommunication companies “a case study of asiacell” 15 (0.98) as explained by five variables is more than the sum of squares due to residuals (0.44). this implies that the relationship of the variables according to degree of freedom of the variables is accurate. the results in the table means that control environment, risk assessment, information and communication, control activities and monitoring reliably predict financial performance. conclusion the main objective of the research was to determine the relationships between internal controls and the financial performance (return on asset) of asiacell as a telecommunication company in kurdistan region. by fully investing in robust internal control systems, asiacell was able to reduce fraud. according to the findings of this paper, the outcomes determined that some smaller-scale telecommunication companies were in want of evaluations of control activities and independent process checks on a continual basis. in addition to this, financial constraints had rendered periodic reviews of the system more challenging. the study found that a positive relationship had been established between financial performance with independent variables for instance “control environment, risk assessment and information communication technology”. the research also concluded that by investing in robust internal control systems telecommunication companies had significantly enhanced financial performance in contrast to those telecommunication companies that had insignificant internal control system. telecommunication companies employees may not be involved in financial improprieties, they are more subject to accusations when adequate controls do not exist. staff members, management, and other shareholders are actively engaged in assessing internal accounting mechanisms in telecommunication companies, which is an essential area of the firm. to realistically rely on systems of internal control, it must be designed, maintained, and frequently reassessed. unsatisfactory internal controls can complicate the efficacy of the telecommunication companies, as well as situate employs in a position where they may be induced to engage in unethical activities or accounting practices. when adequate controls are lacking, telecommunication companies employees are more likely to be involved in financial improprieties. recommendations our study advises asiacell and other telecommunication companies to provide feedback to all the shareholders with respect to the operation of the system, as well as to strongly encourage and incentivize ethical principles. it is essential that qualified and professional internal and external auditors 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(2009), a contingency theory perspective on the risk management control system within birmingham city council, manage, account. res., 20(1), 69-81. http://saussurea.org/ http://www.facilitatedcotrols.com/internal-%20audit/cosobsic.htm http://www.facilitatedcotrols.com/internal-%20audit/cosobsic.htm https://www.gfoa.org/sites/default/files/eiclgmg.pdf studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the coordinates and typology of relationship between the public system and the different categories of stakeholders florentina neamțu 1 transylvania university of brașov florentinavioletaneamtu@gmail.com luminița zaiț “vasile alecsandri” university of bacău zait.luminita@yahoo.com abstract the development of the new information and communication technologies, which favored the modern societies transformation into knowledge-based society, forced a reconsideration of the governance principles based on what abraham lincoln said “governance of citizens by citizens and for citizens''. the knowledge society coordinates raises new challenges for the public system, offering, at the same time, the opportunity to do activities more efficient and to development those approach that brings the citizen closer to public systems. basically, by reconsidering and by emerging in the public system of concepts such as ethics, social responsibility and sustainable development it has been created the coordinates of oriented citizens implementation framework. governments around the world are making significant efforts towards e-governance assimilation and implementation. these efforts are not focused only on the digitization process itself, but also target a broader reorganization of the public services process and of the participation processes based on the new information technologies. the article presents, based on a detailed analysis of the literature, different models that capture and define the relationships developed by public institutions with various categories of stakeholders. keywords orientation toward citizens; stakeholders; relational models; citizens relationship management; e-government jel classification m39 1. introduction although stakeholder theory has strong roots in the private sector, there is a great interest for its application, at least partially, in public sector decision making process. basically, despite the opposition of the stakeholder theory supporters, it has found its place in academic discussions and public sector practice (tennert & schroeder, 1999). donaldson and preston (1995) were between the first authors who have expressed the opposition to the presence of the concept in the public system, saying that “we have doubts about its value and appropriateness in the public system, since it provides a framework that is specific to the private sector, where regulations, principles and implications are significantly different”. in fact, although most of the tasks related to public sector managers aim to achieve different objectives (public interest) than the private sector (survival/growth of 1 phd student at interdisciplinary doctoral school in marketing, “transilvania” university of braşov 315 mailto:zait.luminita@yahoo.com neamțu, zaiț business and profit), their decisions have the same capacity to affect many categories of stakeholders. moreover, similar to the cases recorded in the private sector, the public sector managers and the government agencies that they represent may be affected by others, as a consequence of their own decisions. in other words, the stakeholder theory proposed by freeman finds its applicability in decision system that is found in a government context. 2. the emergence of stakeholder theory in the public system in the context of the development of e-government platforms as stated by lathan, since the '50s the structure of society is one of the associative type, interest groups being the based to its foundation. obviously, this remark is especially viable in the context of modern society in which there are very few activities, economic, political or cultural, which are not associated with at least one or two categories of stakeholders. in the same direction, baumgartner and leech (1998), taking as a starting point the stakeholder theory from organizational practice, said that “the public system stakeholder are a part of a context that highlights the behavior of government, while the government agencies are part of the same context which shows, on the other hand, the behavior of different categories of stakeholders”. corporate governance is a highly debated topic in academic area, where there are many disputes between different groups of researchers, as follows: • demb and neubauer (1992), sundaramurthy (2000) and westphal (1999) argued the usefulness and the need to integrate stakeholder theory in various public entities and relate it to the opportunities generated for society as a whole. to achieve this goal, however, the mentioned authors do not have a common vision in terms of optimal configuration framework to facilitate this process. • there are researchers in the field of strategic management, as eisenhardt (1989) and hawley and williams (1996), which despite their adherence to the integration of stakeholder theory in the public system, believe that: “because within certain categories of stakeholders it is manifested an opportunism behavior, generated by the desire for self-serving, operationalization of the public system theory must be made while establishing some mechanisms to promote procedural control”. • according to researchers from social sciences field (turnbull, 1997; davis et al, 1997; donaldson & davis, 1994), as strong supporters of the integration of theory in the public system, the various categories of stakeholders should “be cherished as real partners in governance”. moreover, according to sociologists, given “the intrinsic desire for self-actualization'' of different categories of stakeholders, they should be “empowered to exercise independent judgment”. currently, the transition to the electronic corporate governance as a result of assimilation and implementation of new information and communication technologies in the public system generates many disputes in academia field. even though most researchers recognize the importance of stakeholder theory in the public system, in the context of e-government platforms substantial changes occur from the perspective of “decision models, mechanisms for sharing the power and resources coordination” (allen et al, 2001). in this context, e-government is seen as “the embodiment of the challenges faced by corporate governance in the process of obtaining an optimal policy mix based on control and collaboration to maximize the value of different categories of stakeholders” (prahalad and ramaswamy, 2000). other theories which claim the necessity and usefulness of considering stakeholders in electronic governance are: 316 the coordinates and typology of relationship between the public system and the different categories of stakeholders • scholl (2001) has demonstrated, based on a comprehensive literature review, that the integration of stakeholder theory in the context of e-government platforms, although involves limits, generates “undeniable benefits to modern society”; • pardo and scholl (2002) notes that despite the benefits of integrating theory stakeholders in the e-government platforms, there are limits due to shortages in terms of conceptualization from the perspective of “the relationship between new information technologies and communication and stakeholders theory”; • being against the position taken by pardo and scholl, chan et al. (2003) argue that although initiatives to develop e-government platforms are often characterized by a “technical centric approach with minimal impact in terms of public involvement” the interest in developing this relationship is highlighted by the efforts towards implementation of sophisticated systems and the growing number of online services; • in the same direction can be mentioned flak and rose theory (2005) who argue that although the use of stakeholders in the context of e-government platforms may favor a phenomenon of increased critical positions and attitudes, this process of integration has the advantage of “a deeper understanding of the relationship between government and citizens”; • carter and bélanger (2005) and sæbø et al. (2011) consider that, in order to reveal the real usefulness of stakeholder theory in e-government platforms, the starting point must be a coherent process for identifying different categories of potential users of online services. this idea is supported also by gelder et all (2008) and kamal (2011) who states that, unlike the private sector, where theory highlights two major categories of stakeholders primary and secondary in public system practice there is a wider variety of concerned parts. 3. stakeholders typology in the public system in the current analysis context, particular importance should be given to identifying different categories of stakeholders in the context of e-government platforms development. the starting point in this analysis will be the theory proposed by mitchell et al (1997) which had used three attributes for identifying the different categories of stakeholders in the public system: power, legitimacy and urgency. according to these attributes, the different categories of stakeholders can be classified by: (1) the power of influence exerted by stakeholders on the public entity (an idea taken from the theory proposed by salancik and pfeffer (1997) under which power is defined as “the ability of those who possess the power to achieve the desired results”; (2) the legitimacy of different categories of stakeholders in relation to the public entity (an idea taken from the theory offered by suchman (1995) whereby legitimacy is “a generalized perception or assumption according to which the actions of an entity are desirable and appropriate only in the context of building social systems of norms and beliefs”; (3) the urgency of the requirements demanded by different categories of stakeholders, defined as “the degree to which stakeholders require immediate attention”. according to the authors of this theory, temporal sensitivity of stakeholders and the possible delays critics are two of the most important dimensions of this component. in fact, according to this theory, it is promoted the idea that not all categories of stakeholders have the same impact on public entities. later, having as starting point the theory proposed by mitchell et all, scholl (2004) mentions that another element delimiting the different categories of stakeholders is 317 neamțu, zaiț accounted by “their role in relation to the public entity”. in fact the author proposes a segmentation of stakeholders from the reality that, both citizens and organizations may have different roles, either simultaneously or successively. for example, the individual may be simultaneously or successively citizen, online service user or employee of the public entity. in like manner, a private company can be a simple stakeholder with secondary role, or be a primary stakeholder, as a provider of e government platforms. furthermore, the author notes that, particularly in the public system, the position of a stakeholder may change over time. there are times when short-term expectations of different categories of stakeholders in relation to the public entity differ from the ones in long-term. another perspective in stakeholders’ typology in the public field is found in marketing area. based on the relationship paradigm from marketing area, payne, ballantyne and christopher (2005) proposed a model that encourages, in the organizations field, a holistic perspective of the role played by different categories of stakeholders. the model, build by considering six markets consumer market, supply market, labor market, influence market, referral and domestic market (within the organization) suggests, in fact, expanding marketing and communication actions in relation to different categories of stakeholders associated with these markets. it seems that this model has been taken up in the public system and it proved being useful in terms of identifying a general typology of stakeholders. basically, depending on the role of different categories of stakeholders in relation to the public entity, the model has three dimensions: internal market (employees and primary stakeholders), public services market (online service users) and influence markets (politicians, community networks). 4. relational models in e-governance practice taking as its starting point the approach of integrating stakeholders theory in the public system, the literature and organizational practice provides a wide range of relational models that can be implemented within e-government platforms. depending on occurrence time, these models can be classified into two broad categories: • simple models that consider classical relational triangle the government, businesses and citizens; • complex models related to the latest developments in the information society, which extend the relational field by considering a broader range of stakeholder. modelele simple, cu caracter general, au ca premisă fundamentele platformelor de eguvernare, și anume crearea unui teren propice informării și colaborării cu diferitele categorii de părți interesate. conform teoriei propuse de fang (2002), cele trei componente ale modelului sunt: the simple models are built on fundamentals of e-government platforms, which mean to create a foundation for information and collaboration with various categories of stakeholders. according to the theory proposed by fang (2002), the three components of the model are: • e-government, covering the processes and structures that define both the external relations between central and local government entities and between national and international bodies, as well as domestic (public entities – employees, various government departments, representatives legislative executive representatives etc.); • e-business, which captures the government developed partnerships with the business field. here are captured both relations such as government market and the government private sector representatives; 318 the coordinates and typology of relationship between the public system and the different categories of stakeholders • e-citizens who reveal government developed partnerships with citizens, both in their capacity as users of online services as well as representatives of civil society. some of relational models that belong to the first category are presented below: • the model proposed by brown and brudney (2001), built on a 5 coordinates: government – government, government citizens, government business, government civil society and citizens citizens. this model was taken and improved by yildiz in 2007 (figure 1). figure 1. the relation model of e-government platforms proposed by yildiz source: yildiz, m., (2007) e-government research: reviewing the literature, limitations, and ways forward, government information quarterly, vol. 24, pp. 649 according to this theory, the five relational dimensions cover various spheres of the public system and involves special salient features, such as: the government government relationship is associated to e-administration dimension and has the following salient features: communication, coordination and standardization of information and services; the government citizen relationship covers e-government dimension and has as principles the following: communication, transparency, maximization of efficiency and effectiveness indicators, the standardization of information and services; the government business relationship has a wider coverage and can by associated with the e-government, the e-collaboration and e business. dominant features in this context are communication, collaboration and transactions; the government civil society relationship can be associated with e governance dimension (which is different from e-government) and has as dominant characteristics the efforts to ensure proper communication, coordination and transparency; the citizens citizens relationship is also associated to e-governance, but the interest cover communication, coordination and transparency. • similar coordinates are proposed in the same period by carcenac (2001) whose model is built on three relational dimensions: government – government, government business, government citizens. according to this theory, the government – government dimension covers the relationship between central and local government institutions, involving internet applications, procurement platforms, databases and structured and shared knowledge; the government business citizen business civil society citizen citizen government government g2b g2c g2g g2sc c2c 319 neamțu, zaiț dimension reveals the efforts to create an information architecture and online services; the government – citizens dimension covers all forms of direct communication and trade between the two components, namely: information on the actions of the central and local government, participation in public debates, pay taxes etc. • a classic model is also the one provided in 2009 by the keng siau and long yuan. as can be seen in figure 2, the novelty brought by this model, compared to the above ones, is the integration or rather the consideration in an autonomous manner of the government employees component. if the first two models consider this relationship as an implicit component of government – government, in the model proposed by yuan long and keng siau it becomes a self-contained component. unlike the above models, the framework proposed by keng siau and long yuan highlights in a explicit manner the objectives of the government, namely the construction activities involved in making a relationship with each of the 4 categories of stakeholders, such as: government citizens relationship, aiming to provide basic public services fit to drive the growth of this category of stakeholder; government business relationship, based on objectives aimed to improving services to the private sector (eliminating existing redundancy in data collection) and reduce the costs of specific services in the classic system; government government relationship, aiming, like previous models, to improve the collaboration and cooperation between central and local public entity; government staff relationship whose goal is to improve efficiency and effectiveness indicators in government administrations. to achieve this goal there are proposed both structural and methodological changes and improved working conditions (constant access to training, motivation levers etc.). • a similar model as the one provided by carcenac in 2001, is the relationship framework offered by koh and prybutok (2005). the only difference between the two is that the model offered by koh and prybutok operates a clear demarcation between the categories of internal and external stakeholders. . figure 2. the relation model of e-government platforms proposed by keng siau și yuan long source: k. siau, y. long (2009), factors impacting e-government developmnet, the journal of computer information systems, vol. 50, no. 1, p. 98. government – citizen g2c government – business g2b government – employees g2e government – government g2g individual organization in te rn al e xt er na l 320 the coordinates and typology of relationship between the public system and the different categories of stakeholders more complex relational models that reveal the latest stage in the development of egovernment platforms are offered by fang z. (2002), bellanger and hiller (2006), rowley j. (2011), chun-luna-reyes and sndoval almazan (2012). the model proposed by fang z. (2002 ) cover, as shown in figure 3, eight relational dimensions, namely: government citizens, citizen – government, government – business, business – government, government employees, government – government, government – nonprofit, nonprofit government. according to fang theory, each of the 8 relational components offers real opportunities for interaction, such as: g2c information, communication and transactional support designed to meet civil society needs; c2g obtain feed-back support from civil society; g2g information, communication, cooperation and transactions support that facilitates relationship between public entities; g2b information, communication and transactional support (e-auctions , emarketing ) designed for business environment; b2g obtain feed-back support from the private system; g2e information and communications support for employees; g2n informational and transactional communication support for non -profit organizations (political parties , social organizations, etc.); n2g obtain feed-back support from the non – profit organizations. although each of the eight components provides the information, communication and trading support, they are different in terms of provided information, the dialogue nature and the transactions types. another model which is part of the complex frameworks is the one provided by bellanger and hiller (2006). although the model complexity does not reach the above frameworks in terms of the considered components, the relationship proposed by bellanger and hiller is credited simultaneously or consecutively to highlight the state of the various different stakeholders categories. for example this relational framework highlights both individuals and organizations in their dual aspect users of government services or simple representatives of civil society/business. figura numărul 2.6. modelul relațional al platformelor de e-guvernare propus fang figure 3. the relation model of e-government platforms proposed by fang source: fang, z.(2002), e-government in digital era: concept, practice and development, international journal of the computer, the internet and management, vol.10, no.2, p.10. central public entity g2g g2e local public entity g2g nonprofit organizations g2n n2g citizens business g2c c2g b2g g2b 321 neamțu, zaiț as can be seen in figure 4, the model proposed by the two authors is divided into six parts, as follows: g2is (government citizens, users of online); g2ip (government individuals, as part of the political process); g2bc (government – business, as users of online services); g2bmkt (government – business, as suppliers of goods and services); g2e (government employees); g2g (government government). taking as its starting point the various stakeholders categories that were identified in the public system, jennifer rowley (2011) proposes a similar model to that provided by bellanger and hiller. her model is divided into 12 parts, as follows: g2is (government – citizens users of online services); g2ip (government – individuals as part of the political process); g2bc (government – business as users of online services); g2bimm (government – business as users of online services); g2bmkt (government business as suppliers of goods and services); g2g ( government government); g2e (government employees); g2epm (government employees, managers of e-government); g2eitr (government – employees, it specialists); g2n (government nonprofits); g2np (government nonprofit organizations, political parties); g2nrei (government nonprofit, education and research) . figure 4. the relation model of e-government platforms proposed by belanger și hiller source: belanger, f., hiller (2006), a framework for e-government: privacy implications, business process management journal, vol. 12, no. 1, pp. 48–60. 5. conclusions beyond the many views on the construction patterns details of the relational egovernment platforms, there are four classical elements that remain fundamental: government – government, government citizens, government business and government community. central public entities local public entities other public entities business users suppliers civil society users citizens employees g2g g2g g2e g2b g2bc g2bmkt g2c g2is g2ip 322 the coordinates and typology of relationship between the public system and the different categories of stakeholders a summary of the responsibility spheres of each four relational coordinates is shown below. the governance governance relationship aims to: improve service quality and reduce the costs of their provision in the classic system; uniform internal processes; uniform requirements among the various levels of government; facilitating information exchange and team initiatives; changing the culture of civil servants; the transition from reactive to the proactive behavior; increasing administrative efficiency by reducing transaction costs; consideration, in all undertaken actions, of the relation cost effective benefits; improving quality and reducing decision-making time; improving the government transparency etc. the government citizens relationship aims to: providing quick and easy access to information and public services for people; improving the quality of public services; providing services directly to citizens and to a lesser extent through agencies or other servants; ensuring a trust climate and understanding between the government and citizens; citizens' participation in decision-making and governance process; promoting stakeholder involvement and participation in local democracy and urban development. the government business relationship aims to: reduce the difficulties faced by businesses through facilitating access to information; standardization of the requirements regarding information needs; establishing effective ways to ensure interaction between government and business; development of a flexible and competitive urban economy on the regional, national and global level; training citizens in it knowledge and increase flexibility to adapt to the competitive economy demands. the governance community relationship includes: the establishment of the framework for optimal urban strategy in order to achieve community goals; piloting urban governance (create conditions for urban partnerships); promoting good governance (transparency growth, building a climate of trust, promote the sense of accountability, prevent corruption, promote collaboration and cooperation); providing the necessary support for the initiation and implementation of public policies (by engaging citizens in policy and ensuring the process transparency, by urban planning and urban management) etc. whatever the nature of the provided services, it is clear that both individuals and society in general, and organizations, as business representatives, will be found in a symbiosis with public structures throughout life cycle of e-government platforms. references allen, b.a., juillet, l., paquet, g., roy, j. 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(2007), e-government research: reviewing the literature, limitations, and ways forward, government information quarterly, 24, 646–655. 325 rezumat studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro e-business a contemporary realistic form of successful business ovidiu leonard turcu “vasile alecsandri” university of bacău t_ovidiu@softhome.net andreea feraru “vasile alecsandri” university of bacău andreea_feraru26@yahoo.com abstract nowadays, businesses are founded on the law of excluded middle and have to make a choice between two paths: they can either choose to evolve and keep pace with the technological trends, or to stagnate and wither just like a flower without water does, and so they become useless – both ways can be probable in the current economic context. together with the technological evolution of the world, a new type of business has emerged on the business market, namely electronic business. numerous websites and companies which deal with online sales are present on the market. whether they organise online auctions or offer access to information pages or databases in exchange for payment, electronic businesses represent a new manner of doing business, a domain which is currently expanding. keywords business; economy; intangible resources; e-commerce; e-business jel classification f15; o10; m10 the new economy (also called digital economy) is based on the improvements of the digital revolution and the management of information industry, which have a number of specific attributes: they can be differentiated, individualized and personalized incessantly, they can be transmitted to a large number of people who are connected to a network and they can be obtained rapidly. if these items of information become available to the public and are transparent, they can help people know a situation better and thus make better decisions. the organisations of the new economy tend to be flat, decentralized and open to employees’ initiatives. the unprecedented development of information technologies over the last twenty years, which has been determined by the necessity to store and rapidly transmit information at very low prices, has revolutionized global commerce, direct or retail commerce, thus redefining the classical principles of marketing. nowadays, the term “electronic commerce” is synonymous with profit increase. commerce, within the process of managing a business, represents an activity that generates value, using the internet as support or specific software programmes. numerous firms use the internet for advertising purposes and online marketing is an opportunity to create the image of a firm and to attract customers. companies convey technical information and use the web page as a platform for the announcement of news. employing their own website as a store, they can offer products and receive orders. the word internet first appeared in 1965 and was developed by an agency dealing with research projects, namely defense advanced research projects agency (darpa) of the u.s. department of defense. as the word origin shows, the internet 267 mailto:t_ovidiu@softhome.net mailto:andreea_feraru26@yahoo.com turcu, feraru is an interconnected network linking or interconnecting tens of millions of computers around the world. the population of the world in december 2012 exceeded 7 billion people, out of which 2.4 billion people are connected to the internet, as shown in figure 1. 45% 22% 11% 10% 7% 4% 1% asia europe north america lat am/ caribb africa middle east austalia/ oceania figure 1 the world's population is connected to the internet source: internet statistics in the worldwww.internetworldstats.com table 1 population statistics and internet use in the world population statistics and internet use in the world, as of 30 june 2012 world regions population internet users increase 2000 – 2012 africa 1,073,380,925 167,335,676 3 606.7% asia 3,922,066,987 1,076,681,059 841.9% europe 820,918,446 518,512,109 393.4% middle east 223,608,203 90,000,455 2 629.9% north america 348,280,145 273,785,413 153.3% latin america 593,688,638 254,915,745 1 310.8% australia 35,903,569 24,287,919 218.7% total in world 7,017,846,922 2,405,518,376 566.4% source: internet statistics in the world www.internetworldstats.com in romania, out of the total population of 21.848.504 people, 44.1 % of them had internet access in june 2012, which means a total number of 9.642.383 people, according to the data offered by internetworldstats.com. it can be easily observed that the internet’s popularity is continuously and significantly increasing and easy and quick access to information has become a necessity for human life. we cannot deny the fact that this evolution has a major impact on the economy with regard to: the creation of new business models, the diversification of existing ones, or the growth of the labour market’s potential and its occupancy rate in the future. due to this diversity of the market, which undergoes continuous change and comprises a large number of service suppliers, it is necessary to allow enterprises (especially smalland medium-sized companies) to have access to a ‘source’ where they could find the appropriate support for the application of the electronic commerce solutions 268 e-business a contemporary realistic form of successful business to their own activity. a single person now has the capacity to run an entire business and work from home in front of the computer. if in the industrial era people like henry ford or thomas edison represented the group of billionaires, nowadays things have changed. in the information age, people like bill gates, michael dell and the founders of internet companies have become young millionaires or even billionaires. these young people will soon surpass the well-known businessman bill gates in matters of wealth. this fact results from the power of the transition from the industrial to the informational era. this also entails that the online trading of goods and services represents an extension of current commerce. this extension of traditional commerce to include online commerce greatly impacts the economy, in relation to aspects concerning the setting up of new enterprises, the diversification of existing ones, or the labour market potential and its future increase in occupancy rates. online commerce is not restricted by state frontiers; however, it depends on the existence or absence of computer networks. online commerce allows even small suppliers, irrespective of their geographical origin, to be omnipresent and do business all around the world. online commerce positively influences the activity of small and medium enterprises and also supports customers’ choices by offering them a wide range of options. for certain observers of the phenomenon, electronic commerce has the same contents as electronic business or e-business and makes reference to any type of financial transaction which uses information technology. others consider that the notion of “electronic commerce” covers the complete sales circuit, including marketing and the act of selling as such. still, there are analysts who believe that electronic commerce represents any type of commercial transaction which is performed electronically for the purchase of tangible products (such as book, cds, travelling tickets) or intangible ones (like software, tourist services etc.). however, mention should be made that electronic commerce (e-commerce) must not be confused with electronic business (e-business). these two terms must be understood correctly because they represent two different concepts. electronic commerce is the term used when describing the process of transacting goods or services on the internet. on the other hand, electronic business involves the fundamental transformation of classical business mechanisms into a digital network based on the internet. the difference between the two concepts derives from the degree in which an organisation transforms its operations and processes into digital mechanisms via the internet. electronic business can include any process carried out by a firm by means of employing the internet, including internal operation such as staff training. electronic commerce, as compared to electronic businesses, is quite easy to implement because it involves three types of integration: 1. vertical integration of existing web interfaces corresponding to classical transactional processes; 2. integration of companies which possess client or supplier websites or intermediary websites such as virtual markets; 3. integration of technological processes that correspond to managing client orders and client support. a reference model for electronic business, which is shown in figure 2, creates the framework for the quantitative approach of the problem and defines conceptually the e-business activities in order to identify improvement opportunities. the reference model consists of four levels, which are grouped into two main blocs/layers. the superior layer focuses on the nature of the business and processes that provide the services offered by the website. the inferior layer concentrates on the manner in which clients interact with the website and the orders they make by means of the 269 turcu, feraru resources offered by the infrastructure. each level of the reference model is associated with two large classes, namely descriptors and metrics (measure system), which are employed for the quantitative characterisation of the level. figure 2 the reference model for e-business source: own illustration from another viewpoint, e-commerce and e-business have a set of common characteristics: • enhancing processes which deliver value; • lowering costs and increasing companies’ profits; • they use an infrastructure that consists of: databases, applications, servers, security, management instruments and systems; • they involve the creation of new value chains linking the company, clients and suppliers; • they include major organisational changes (potentially destructive ones). the risks of failure or of limited success consequences can be much higher in case of electronic business than for electronic commerce. thus, a wise decision could be the progressive implementation of ecommerce processes, and only after that should the business be transformed into an ebusiness. quick changes can be disastrous for the future. the digital economy or the new economy can be defined as an economy that is based on digital technology, including digital communication networks, software, computers etc. the concept of digital economy also comprises electronic commerce and electronic businesses. table 2 presents the various forms of commerce and its evolution towards electronic commerce. business vision technologi cal vision business model functional model client model resource model business characteristics navigation functions and structures types of client and behaviour website architecture and service demands e xt er na l m et ri cs in te rn al m et ri cs 270 e-business a contemporary realistic form of successful business table 2 forms of electronic commerce brick and mortar business types the classical model of classical businesses in which all the business is conducted exclusively off-line. physical products are sold, products which are manufactured by means of physical processes. click and mortar business the business type where organisations carry out a number of on-line activities, but the primary activity consists in physical production. virtual business the model of organisations in which the economic operations are conducted exclusively in the virtual world – via the internet. electronic market (emarketplace) a virtual market where buyers and sellers meet in order to exchange goods, services, money or information. in reality, the ebusiness concept means much more than electronic commerce. the difference between the two could be that the term ebusiness defines the strategy, whereas ecommerce represents a part of this strategy – ebusiness. the latter aims at strengthening relations with clients and partners, as well as improving efficiency by means of various strategies. figure 3 the succesion of the traditional process source: "marketing management", kevin lane keller, ed. pearson education, 2009 271 turcu, feraru figure 4 the succesion of creating & delivering value source: "marketing management", kevin lane keller, ed. pearson education, 2009 a business model which uses the internet can be defined as a type of architecture for a product, service or information flow, including the description of participants in the business, their roles and income/revenue sources. for instance, among the most popular models which generate revenue for companies we find: a) charging fees for commercials (adwords.google.com); b) selling goods and services (for example www.emag.ro – selling products, www.bt24.ro – banking services); c) selling digital contents (www.apple.com/itunes/ ); d) taxing the processing of transactions which are conducted by two web parties (www.sagepay.com). the choice of the appropriate model can be made after several aspects are clarified, such as: the aim and mission of the business; the business target; measurable objectives; market size; whether the electronic market is open or restricted to certain groups; income/revenue model. electronic commerce is not solely restricted to the internet; it also includes a large number of applications in the system: videotext, teleshopping, off-line environment, sales catalogues on cds, networks owned by corporations etc. conclusions in conclusion, we can point out that ebusiness comprises the electronic means used by a firm in order to manage the business, whereas ecommerce clearly establishes the methods used by the company website in order to facilitate the selling or purchasing of products online. epurchasing involves the acquisition of products, information or 272 http://www.emag.ro/ e-business a contemporary realistic form of successful business services, generally via the internet. this possibility of transferring the buying process to the virtual environment can generate significant profit for the companies that apply the method. some of the advantages created by electronic businesses include: eliminating market access barriers, reducing the possibility of purchasing replaceable products, reducing marketing costs by augmenting the power of sales markets, increasing the informational density among participants in the virtual market, both quantitatively and qualitatively, producing advantages by reducing costs for the collection, storage, processing and transmission of data, which also leads to increased levels of accuracy, promptness and topicality concerning the information. currently, a number of firms have become well known in the romanian business environment, such as emag.ro and okazii.ro. these sites represent two business models that have successfully combined electronic platforms with physical products, so which is the result? a gigantic matchless business! references c.r.c.e. (2000), secretele comerţului electronic. ghid pentru exportatoriîntreprinderi mici şi mijlocii, interational trade center unctad/wto, geneva. curac, daniel, drăgan, florin (2004), sisteme informatice pentru comerţ electronic, timişoara, editura orizonturi universitare. john allen coord. (1997), ghidul întreprinzătorului particular, bucureşti, editura tehnică. kenneth, c. l. (2004), e-commerce – business, technology, society, pearson education. manzoor, amir, (2010), e-commerce: an introduction, editura lap lambert acad. middleton, john (2009), maeştrii afacerilor online, bucureşti, editura meteor press. oecd (2000), e-commerce for development prospects and policy issues, technical paper, no.164. oprean, d., racoviţan, d. m., oprean, v., rusu, l. (2007), managementul afacerilor pe internet, editura risoprint, cluj-napoca. 273 microsoft word apostoaie constantin marius_eng.doc the importance of efficient territory management in distribution planning ioana olariu, “vasile alecsandri” university of bacau, romania abstract the current paper is a theoretical approach to the management of territories according to sales force, which has an important role in the realization of distribution. the central element is the way in which agents split their efforts between the activities and routes they are responsible with. a related issue is that of establishing what comes first – defining the sales territory or performing the selling. the effects of the interaction between the number of distribution representatives and the delimiting of the territory they cover influence the measurement of the individual elements that contribute to achieving commercial performance. keywords workload, market potential, the method of delimiting territories by accumulation, the method of delimiting territories by decomposition, time management. jel codes: m 31 the basic elements of territory delimitation commercial territories are delimited in order to help agents sell more efficiently. delimitation is done by allocating a number of existing and potential clients to each distribution representative (dr) acting in a given area, usually, but not always, established on geographical criteria. the reasons for territory delimitation and the criteria according to which this is done may vary a lot from one case to another. division into commercial territories is not required or useful in all situations. reasons against these delimitations may occur when it comes to selling to friends or social contacts, or selling with the help of references received from other existing clients, as is the case of insurance or financial investment companies. another reason against the existence of territories could also be the small size of the market, the reduced number of clients or dr, which does not justify such a division. where information about potential clients or concerning the way in which a product would be received is not easily available, managers should leave the demarcation of territories for when these aspects will have been clarified. the companies establish commercial territories out of the following reasons: • to cover the whole market. territories allow for the identification of existing or potential clients in a given area, reducing thus the likelihood of omitting some business opportunity or the overlapping of contacts and, therefore, helping to avoid excessive transport costs. • to define the responsibilities of each dr more accurately. this delimitation allows an easier classification of accounts by name, number and frequency of contacts. • to better adjust the selling activity to the clients’ needs. this is possible due to various reasons related to the respective location, such as knowledge of the local conditions and customs. once more, similarity between distribution representatives and their potential clients may prove to be highly significant. studies and scientific researches economic edition, no. 15, 2010 416 • to improve customer relations. the distribution representatives in a given area may find out more about their clients and establish a closer relation with them, visiting them regularly, a thing which represents, by itself, a time-saving source. but excessive contacts and wasting time with too many courtesy visits should be avoided. • to reduce distribution expenses. the number of travels and the related costs are much more reduced if they are situated within the same area. for this reason, most of the companies insist that their distribution representatives should live in the area they cover. • as means of facilitating performance evaluation. commercial situations related to previous periods, to a plan or to some measure of the potential are easier to work out and more accurate when they refer to a well-defined territory. sales managers can also draw comparisons between territories which could help them realize how to improve the activity of the entire sales personnel. • to help the distribution representatives’ work. demarcating territories supports a better coordination among the different departments of a company, between the concrete marketing and advertising activities undertaken by it, at the same time contributing to sustaining and motivating distribution representatives who thus become managers of the areas they cover. the most convincing reason is that territorial delimitation facilitates the implementation of the concept of marketing, contributing to a better identification of the clients’ needs and allowing for more specific actions with a view to satisfying them. in the environment in which selling and distribution take place nowadays, the ability to conduct an efficient management of territories is becoming increasingly important, this being the prerequisite for achieving optimum distribution in terms of costs. the widely accepted procedure for establishing commercial territories covers the following five phases: phase i: choosing the fundamental unit to better define territories, one chooses a starting point that relies on different preexisting divisions, such as economic regions. the differing population density, income differences and industrial particularities make these divisions unequal in terms of their commercial potential. where possible, it is recommended that a smaller starting unit be established, because larger commercial areas may be subsequently created by merging several of these divisions. the market features, the distribution systems and the company reputation are factors of greater influence than the simple geographical borders. phase ii: evaluation of accounts and commercial potential the data systems concerning markets may provide all the information required to make decisions in this respect. in the cases where exact information may be obtained about the market and clients, territory organization can be relatively easy. this involves the classification of all potential clients into different categories, such as yet unverified tracks, existing, past or future clients. the advantages of using computerized systems materialize into the ability of quickly selecting potential accounts according to a series of relevant features. computers can also be used in storing information about the status of the accounts, their real and potential value. the majority of companies divide their accounts according to a classification of the abc type: a = highly important accounts, b = average importance accounts, c = less important accounts. phase iii: the analysis of distribution representatives’ workload the agents’ workload is an estimate of the time and efforts required to cover the assigned geographical territory. this approximation contains the number of accounts of different studies and scientific researches economic edition, no. 15, 2010 417 types, the frequency of contacts, the time allotted to each of them, the time needed to travel among contacts, as well as the time spend with non-commercial activities. the difficulties which may arise when calculating the value of the workload include: • type of product. fast-moving consumer goods require less explanations or demonstrations than technological products. the activity in this field is carried out recurrently, according to some well-established, almost routine patterns. there are, however, certain industrial or other special goods whose benefits require a more detailed presentation, making such visits take longer. • type of sales. distribution representatives may deal with developing and consolidating an account which may take them more time than servicing the existing accounts. they can be faced with having to contact several persons within the same account whereas, in the other cases, they only have to meet with the actual customer. certain types of sales require some missionary or development activity, while others may need a larger-scale promotional activity. • the novelty of the products or of the market. in the case of developing products or markets, it is expected that there should be a need of longer time for each visit and less sales for each account than in the case of existing products or accounts. accounts take time to develop and a large number of accounts means a greater workload in a developing area than is needed for achieving the same volume of sales in a well-established territory. • the market share, the position and the competitive advantage of the company in the respective area. if competitors are already well positioned on the respective market, the work of distribution representatives to maintain each account will be far more difficult and will usually require more time. most companies have a larger market share at home, that is why the task of distribution representatives is substantially more difficult when they have to work in regions away from the company’s headquarters. it may happen that some agents obtain better results even in such circumstances, but this may be given rather by a greater efficiency of the distributors in the respective area than their own dealer qualities. phase iv: delimitation of basic territorial units the objective of this phase is to determine the commercial potential of the distribution representative assigned for a given area. this potential is, in its turn, related to the objectives of the sales staff. as in the case of sales forecasts, there are two distinct methods which may be used: the method of calculation by accumulation and the method of decomposition. the procedure is as follows: 1. the number, size and location of customers are established, also taking into consideration their current, past and potential accounts. these accounts can be classified and grouped properly, for example according to size or other criteria. 2. the number of contacts needed for each account, the time and frequency of visits are determined. 3. a calculation is made concerning how many accounts each dr can serve. it is useful to use an abc classification. specifically, there will be an average of contacts that have to be made daily, the average frequency for each account and the average time for selling in each case. 4. the demarcation lines are drawn, taking into consideration a realistic amount of work which should be commensurate with the basic geographical unit. the method of calculation by accumulation can be applied with the help of a computerized system. information about each buyer resulted from the data collected during contacts may be used to maintain a file with information about clients (vavra, 1992). such hypotheses are more difficult to sustain in practice. or, on the contrary, managers may adopt the method of decomposition in territory planning: starting from a nationwide estimate of the market potential and market share, one may approximate the sales potential; this estimate is then studies and scientific researches economic edition, no. 15, 2010 418 divided by the number of people available (or which can be recruited); finally, realistic geographical boundaries are drawn. the disadvantage of this method is that by trying to equalize the territories’ commercial potential, a difference in workloads occurs which makes geographical borders unrealistic. this issue is further strengthened by the variations in market conditions and the fluctuating efficiency of distributors, so that this quite simplistic method turns out to be, in fact, quite complicated. phase v: assigning distribution representatives to territories after establishing the territories, these must be individually assigned to distribution representatives. these may differ in knowledge level, skill and ability, which makes some be more efficient than others. practice has shown how important it is to find distribution representatives that match the customers but beside this, there are still other factors which allow them to be efficient. the managers’ responsibility is to put these variables in order of priority, trying at least to improve the situation of each of them if not to find the best solution. differences in skill, as well as the agents’ desire or inclination to deal with other areas than the ones they have been assigned to may require the use of compromise which, although not optimal, is still applicable. time management most improvements in this respect may be achieved by agents themselves through more discipline and increased professionalism. among possible improvements, we may mention: the work day should start earlier and end later; less discussions; less breaks; less protocol actions. efficient time management means: better work planning; less visits to undecided or unimportant clients; better use of travel and waiting time; an increased use of the phone, including for establishing the meeting list. factors which distribution representatives should take into consideration when managing their duty hours include: time for elaborating official documents; duration of each visit; travel duration; number of visits; order of visits; time given to developing new relations; time taken by non-commercial activities; time wasted in making conversations with clients. as recommended as it might be to allow each dr to manage time on one’s own, managers have the obligation not only to monitor, but also to stop the incorrect use of time and to promote more efficient practices for making sales. conclusions an optimal territorial demarcation has the following features: • areas are easy to administer; • sales potential is relatively easy to estimate; • time needed to travel and related costs are reduced to the minimum; studies and scientific researches economic edition, no. 15, 2010 419 • there is a homogeneous distribution of opportunities to sell products among existing and potential customers; • workloads are equalized. the most important factors to be taken into consideration when establishing territories are the market potential and the density and dispersion of accounts. references 1. armstrong, g.m. (1976) „the schedule model and the salesman’s effort allocation”, california , management review, 17 (4): 43-51; 2. cravens, d.w., woodruff, r.b., stamper, j.c. (1972) “an analytical approach for evaluating sales territory performance”, journal of marketing, 36 (i): 31-37; 3. donaldson, b. (2001) managementul vânzărilor. teorie şi practică, codecs publishing, bucureşti; 4. johnston, m.w., marshall, g.w. (2006) sales force management, mcgraw-hill irwin publishing, 8th edition, new-york; 5. parasuraman, a., day, r.l. (1977) “a management-oriented model for allocating sales effort”, journal of marketing research, xiv (feb): 22-23; 6. ryans, a.b., weinberg, c.b. (1979) “territory sales response”, journal of marketing research, xvi (nov): 453-465; 7. vavra, t.g. (1992) aftermarketing: how to keep customers for life through relationship marketing, il: irwin, homewood. studies and scientific researches economic edition, no. 15, 2010 420 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 92 access to credit and sustainability of rural households poverty status: a case from côte d'ivoire zrakpa melaine ouoya université félix houphouët boigny abidjan ouoyamelaine@yahoo.fr abstract based on data from the households living standard survey (env2015), we analyze the impact of credit on poverty status stability (ex-post and ex-ante poverty) and then study the regional gaps between poverty and vulnerability to poverty in the rural environment in côte d'ivoire. we slightly modified the model of chaudhuri et al. (2002) to estimate the vulnerability to poverty and consider the poverty index as our measure of poverty. we construct a latent variable that is equal to the square of the gap between poverty and vulnerability to poverty and then use a tobit model to estimate the influence of credit on that variable. our results show that credit makes poverty status unstable by widening the gap between ex-post and ex-ante poverty (poverty and vulnerability to poverty). we also find that the regional distribution of poverty is different from that of vulnerability to poverty in the rural environment in côte d'ivoire. keywords credit; poverty; vulnerability; sustainability; rural households; côte d’ivoire jel classification r20; i32 introduction in the field of development studies, the emergence of the theme of the economic vulnerability of populations dates from the beginning of the 2000s. it followed the analyzes of poverty and joined the analysis of the consequences of natural, political disasters or other which plunges or keeps part of the population in poverty. the economy generally conceptualizes the vulnerability of populations as the result of an insufficient response to a risk which is here that of becoming poor. households face various risks and do not know if a future shock will hit them in the future. the occurrence of such a shock could modify the poverty status of the household by tilting it into poverty (if it was not already there) or simply by keeping it in poverty if it was already poor. thus, the assessment of poverty at a given time is a static approach, not taking into account possible changes in the future. when assessing vulnerability, we refer to the dynamic perspective. vulnerability is explicitly prospective and tries to include the risks likely to push people into poverty in the future. vulnerability research is closely linked to the study of shocks and the risks they generate (wisner et al. 1994). their purpose is to identify the systems, elements of a system or the population groups most exposed to the consequences of a major disturbance. these approaches have led to the identification of "vulnerable systems" or "vulnerable populations", in order, with a view to prevention, to implement actions making it possible to reduce the consequences of shocks on the elements thus targeted. this approach has been qualified as epidemiological management (bidou et al., 2012). in côte d'ivoire, like many developing countries, the measurement of poverty has been the subject of particular attention by decision-makers and researchers. several works access to credit and sustainability of rural households poverty status: a case from côte d'ivoire 93 carried out mainly by state institutions have made it possible to measure poverty with a view to designing a policy to combat poverty. the 2008 household living standards survey conducted by the national statistics institute (ins) found that almost half of the population, or 48.9% of the population, was poor. the daily individual consumption of this segment of the population was less than 661 fcfa (adjusted poverty line). in 2015 (env2015), this same study conducted by the ins found a reduction in poverty to 46.3% with a poverty line established at 737 fcfa per day. ouoya (2019) estimates the vulnerability to poverty of rural households in côte d'ivoire and founds that in the analysis sample 25% of households are poor while 34% are vulnerable to poverty. the work of ouoya (2019) also showed that the sector of activity of the head of household, his level of education and his access to credit are significant determinants of the vulnerability of rural households to poverty. in the wake of these previous works, this study is interested in the analysis of the stability of the poverty status over time in view of a better impact of poverty reduction policies. it’s about explaining the gaps between poverty and vulnerability given access to credit. several specific objectives are thus targeted, namely: measuring poverty and vulnerability to poverty in rural areas in côte d'ivoire; studying the influence of access to credit on the stability over time of the rural households poverty status; analyzing the interregional heterogeneity between poverty and vulnerability to poverty. it is for us to test two research hypotheses namely: h1: access to credit makes poverty status more stable over time; h2: there is a concordance between the regional distributions of poverty and vulnerability to poverty within the rural environment in côte d'ivoire. this research will be conducted according to the plan designated below: the first section will be devoted to methodology, that is to say to the presentation of the analysis model and data. the second section will present the results of our analysis and the resulting discussions when the last section concludes. methodology the data used to carry out our various models and the models themselves will be presented in this section. the first subsection will present these data that comes from the household standard of living survey conducted by the national institute of statistics (ins). the second subsection will be devoted to the presentation of the research methodology. the data the data used for this study come from the 2015 household living standards survey (env2015). this survey was carried out by the national institute of statistics (ins) côte d'ivoire. its main objective was to collect information to improve the planning and evaluation of economic and social policies in côte d’ivoire. the universe of this survey is made up of all african households residing in côte d’ivoire. the sampling frame used was the general census of population and housing (rgph2014). the total sample size is 12,900 households for the 33 strata (31 regions plus the city of abidjan and the yamoussoukro autonomous district). thus, this size makes it possible to guarantee representativeness at the level of each stratum. this study focuses only on households living in rural areas. the database used includes 2,998 observations. descriptive statistics for this study sample are available at the outcome level of our analysis. after presenting our database, we reveal in the following subsection the analysis model. ouoya 94 analysis models two measures are useful for the conduct of this work: on the one hand, the incidence of poverty (number of individuals whose consumption is below the poverty line), on the other hand, the probability of falling into poverty (prediction of poverty status). we predict the status of poverty and therefore vulnerability to poverty from the model presented by chaudhuri et al. (2002) that we modify to take into account our requirements. this model predicts the probability of a household falling into poverty according to its socio-economic characteristics. we are modifying this basic model to take into account household access to credit. here, predictions of vulnerability to poverty will make it possible to classify the population into three groups, namely the very vulnerable (individuals whose probability of falling into poverty is greater than 50%), the vulnerable (those whose probability is between incidence of poverty and 50%) and the non-vulnerable (those whose probability of becoming poor is lower than the incidence of poverty). at the end of this first estimate, two lines of research will be retained for the rest of the work, namely the analysis of regional correspondences between poverty and vulnerability and then, the study of the determinants of the gaps between poverty and vulnerability. vulnerability is a prospective concept, and we retain that vulnerability is the risk or probability that a household will become or remain poor in the near future given its characteristics. such characteristics consider socio-economic indicators and we add household access to credit as an additional variable. a household is poor if its consumption per equivalent adult is below the poverty line. households vulnerable to future poverty are those with low levels of expected consumption and / or are subject to high variability in their well-being. we model the expectation of the mean and the variance of future per capita consumption. the conditional mean of the log of future consumption is assumed to be linear to access to credit and to household characteristics. the regression model is as follows : 𝑙𝑙𝑙𝑙𝑃𝑃𝑃𝑃𝑃𝑃𝑖𝑖𝑖𝑖+1 = 𝛼𝛼 + 𝛽𝛽𝑋𝑋𝑖𝑖𝑖𝑖 + 𝜃𝜃𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 + 𝜀𝜀𝑖𝑖𝑖𝑖 (1) where 𝑃𝑃𝑃𝑃𝑃𝑃𝑖𝑖𝑖𝑖 denotes consumption per adult equivalent of household i at current time t, 𝑋𝑋𝑖𝑖𝑖𝑖 is a vector of socioeconomic characteristics of household i at present t. 𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 is a binary variable taking the value 1 if household i had access to credit during the last twelve months preceding the household standard of living survey and 0 if not. beyond socioeconomic characteristics, we believe that access to credit has an impact on both current consumption and future household consumption (ouoya, 2019). we assume that the mean of the error terms is independent of the 𝑋𝑋𝑖𝑖 and of the variable 𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 that is to say : 𝐸𝐸[𝜀𝜀𝑖𝑖𝑖𝑖+1|𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖, 𝑋𝑋𝑖𝑖𝑖𝑖] = 0. similarly to chaudhuri et al. (2002), we assume that the conditional variance is linearly related to access to credit and to the socioeconomic characteristics of the household. given that 𝐸𝐸[(ln 𝑃𝑃𝑃𝑃𝑃𝑃𝑖𝑖𝑖𝑖+1 − 𝐸𝐸[ln 𝑃𝑃𝑃𝑃𝑃𝑃𝑖𝑖𝑖𝑖+1|𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖, 𝑋𝑋𝑖𝑖𝑖𝑖])2|𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖, 𝑋𝑋𝑖𝑖𝑖𝑖] = 𝐸𝐸[𝜀𝜀𝑖𝑖𝑖𝑖+12 |𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖𝑋𝑋𝑖𝑖𝑖𝑖], the model variance regression model is as follows: (𝜀𝜀𝑖𝑖𝑖𝑖+1)2 = 𝛼𝛼� + �̂�𝛽𝑋𝑋𝑖𝑖𝑖𝑖 + 𝜃𝜃�𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 + 𝑢𝑢𝑖𝑖𝑖𝑖+1 (2) this two-equation model is estimated sequentially using ordinary least squares (ols). we estimate equation (1) and the parameters obtained are used to construct the residuals. the squares of the residual parameters are used in equation (2) to estimate the conditional variance of future consumption by individuals in the household. chaudhuri et al. (2002) use the socioeconomic characteristics of the household to predict the future poverty status of the household. bah (2015) concludes in his work that this procedure proposed by these authors is weak in its ability to accurately predict future poverty status. according to this author, the introduction of current consumption as a predictor of future consumption makes it possible to circumvent this problem. for access to credit and sustainability of rural households poverty status: a case from côte d'ivoire 95 our part, we introduce access to credit as a predictor given the influence it could have on the current level of household consumption. according to the work of chaudhuri et al. (2002), we assume that future consumption is log normally distributed with a conditional mean and variance obtained through the two-step regression presented above. this makes it possible to estimate the vulnerability to household poverty conditional on access to credit and household characteristics through the following model: 𝑉𝑉𝑢𝑢𝑙𝑙𝚤𝚤𝑖𝑖� = 𝑃𝑃𝐶𝐶�(𝑙𝑙𝑙𝑙𝑃𝑃𝑃𝑃𝑃𝑃𝑖𝑖𝑖𝑖+1 < ln 𝑍𝑍|credit, xit) = φ� ln z−e�[ln pccit+1|credit,xit] �v�[ln pccit+1|credit,xit] � (3) where z is the poverty line. another way to estimate (3) is to directly estimate the probability of being poor in t + 1 using a probit model and then hypothesizing that the conditional variance of future per capita consumption is constant across households. bah (2015) finds that such a model is simpler to estimate and makes it possible, for example, to assess the importance to be given to the inter-temporal variance of consumption to depend on access to household characteristics. for the evaluation of poverty, the indicator retained is the incidence of poverty or poverty ratio (p0) which is simply equal to the number of poor individuals compared to the total number of individuals. in 2015, any individual whose daily consumption is less than 737 fcfa or 269,075 fcfa per year is considered poor in côte d'ivoire. following the estimation of poverty and vulnerability to poverty, we design a latent variable equal to the square of the poverty / vulnerability to poverty gap. this latent variable is as follow : 𝐷𝐷𝑃𝑃𝑉𝑉ℎ𝑖𝑖 = (𝑃𝑃0ℎ𝑖𝑖 − 𝑉𝑉𝑢𝑢𝑙𝑙ℎ𝑖𝑖)2 (4) where 𝐷𝐷𝑃𝑃𝑉𝑉ℎ𝑖𝑖 denotes the square of the poverty / vulnerability to poverty gap of household h at current time t. 𝑃𝑃0ℎ𝑖𝑖 is a binary variable relating to the status of poverty; it takes the value 1 if the per capita consumption of household h at current time t is below the poverty line and 0 if not. 𝑉𝑉𝑢𝑢𝑙𝑙ℎ𝑖𝑖 is the probability evaluated at current time t for household h to fall into poverty in the near future (chaudhuri et al. 2002). to estimate the determinants of the square of the poverty / vulnerability to poverty gap, we use a tobit model according to the following specification 𝐷𝐷𝑃𝑃𝑉𝑉ℎ� = 𝛼𝛼0 + 𝛼𝛼1𝑃𝑃𝐶𝐶ℎ𝑖𝑖 + 𝛼𝛼2𝐹𝐹𝐹𝐹ℎ + 𝛼𝛼3𝐸𝐸𝐸𝐸ℎ𝑖𝑖 + 𝛼𝛼4𝑂𝑂𝐷𝐷ℎ + 𝛼𝛼4𝐶𝐶𝐴𝐴ℎ𝑖𝑖 + 𝛼𝛼5𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶ℎ + 𝛼𝛼6𝐻𝐻𝐻𝐻𝐴𝐴ℎ + 𝛼𝛼7𝑀𝑀𝑀𝑀ℎ + 𝜇𝜇ℎ (5) where 𝐷𝐷𝑃𝑃𝑉𝑉�ℎ represents the square of the gap between poverty and vulnerability to poverty at the household level h. 𝑃𝑃𝐶𝐶ℎ𝑖𝑖, 𝐻𝐻𝐻𝐻𝐴𝐴ℎ are binary variables representing respectively the age categories i of the head of household h, (less than 35 years; between 35 and 55 and more than 55) and the sex of the head of household h (0 for women and 1 for men) . the model dependent variable is used to assess the stability of the household's poverty status over time. when its value increases, the difference between poverty and vulnerability becomes greater and the present status of poverty cannot be relied on to conduct poverty reduction policies. 𝐹𝐹𝐹𝐹ℎ is a binary variable taking the value 1 if the head of household h has a full-time job and 0 if not. 𝐸𝐸𝐸𝐸ℎ𝑖𝑖 and 𝐶𝐶𝐴𝐴ℎ𝑖𝑖 are categorical variables indicating on the one hand the level of education i of the head of household h and the sector of activity i of the head of household h. four levels of education are taken into account, namely: no level, primary level, secondary level and university level. regarding the variable 𝐶𝐶𝐴𝐴ℎ𝑖𝑖, it also takes four values, namely 1 for agriculture, 2 for industry, 3 for trade and 4 for services. 𝑂𝑂𝐷𝐷ℎ and 𝑃𝑃𝐶𝐶𝐶𝐶𝐶𝐶ℎ respectively representing the fact that the household lodges in a dwelling of which it is owner then, the fact for the household having received a credit ouoya 96 during the last twelve months preceding the env2015. the variable 𝑀𝑀𝑀𝑀ℎ refers to the number of males in the household h. the dependent variable is as follows: : 𝐷𝐷𝑃𝑃𝑉𝑉�ℎ = 𝐷𝐷𝑃𝑃𝑉𝑉� ℎ ∗ si 𝐷𝐷𝑃𝑃𝑉𝑉�ℎ ∗ > 0 𝐷𝐷𝑃𝑃𝑉𝑉� = 0 when 𝐷𝐷𝑃𝑃𝑉𝑉�ℎ∗ ≤ 0 the coefficients 𝛼𝛼1, … , 𝛼𝛼7 provide an appropriate adjustment to obtain consistent estimators revealing the effects of the changes on the dependent variable. results and discussions this study, as mentioned above, assigns three specific objectives, namely, to measure poverty and vulnerability to poverty, to identify the determinants of the differences and then analyze the possible regional concordances between these two quantities. to do this, the global values obtained between these two variables should be presented in a crosstab. table 1 below presents this information. table 1: poverty crossing/ vulnerability to poverty | poor vulnerable | 0 1 | total 0 | 6,279 584 | 6,863 | 91.49 8.51 | 100.00 | 80.73 21.65 | 65.52 1 | 1,499 2,113 | 3,612 | 41.50 58.50 | 100.00 | 19.27 78.35 | 34.48 total | 7,778 2,697 | 10,475 | 74.25 25.75 | 100.00 | 100.00 100.00 | 100.00 pearson chi2(1) = 3.1e+03 pr = 0.000 likelihood-ratio chi2(1) = 3.1e+03 pr = 0.000 cramér's v = 0.5434 gamma = 0.8762 ase = 0.006 kendall's tau-b = 0.5434 ase = 0.009 fisher's exact = 0.000 1-sided fisher's exact = 0.000 source: our calculations based on env2015 data the usefulness of this table above resides in the fact that it shows us the global values of the variables which were used to evaluate the dependent variable of our final model. apart from this fact, the results presented there have already been mentioned in the work of ouoya (2019) which highlighted, like many works, that the vulnerable population is more important than the population poor in rural areas in côte d’ivoire. in general, there is a significant difference between poverty and vulnerability. a healthy appreciation of the gaps between poverty and vulnerability would be an asset for effective poverty reduction policies. by knowing the factors that can influence the stability of the poverty status over time, decision-makers will be able to conduct policies to fight poverty in an informed manner. and it is for this reason that we are directing this research towards identifying the determinants of the poverty / vulnerability to poverty gaps. the variable of interest is access to credit, but several control variables were introduced into the model. the descriptive statistics of the tobit model enabling this analysis to be made are presented in table 2. access to credit and sustainability of rural households poverty status: a case from côte d'ivoire 97 table 2 descriptives statistics of tobit model estimation sample tobit number of obs = 2998 variable | mean std. dev. min max svp | .1781187 .3826765 0 1 | ca | 55 | .3915944 .4881882 0 1 105 | .1160774 .3203711 0 1 | 1.fw | .5226818 .4995686 0 1 | el | 1 | .2498332 .4329886 0 1 2 | .1517678 .3588556 0 1 3 | .0436958 .2044515 0 1 | 1.od | .5086724 .5000082 0 1 | as | 2 | .0903936 .2867927 0 1 3 | .0880587 .2834275 0 1 4 | .1157438 .3199709 0 1 | 1.cred | .9116077 .2839119 0 1 1.hhs | .8242161 .3806997 0 1 1.fa | .0286858 .1669497 0 1 hi | 872.906 1090.669 4.5 22500 source: our calculations based on env2015 data the breakdown by age group shows that the majority of rural household heads are young. heads of households under the age of 35 occupy 50% of the workforce in the analysis sample. likewise, the heads of households in the rural environment in côte d'ivoire are mostly without education with more than half of the sample size. agriculture is the main source of income for rural households in côte d'ivoire. three quarters of the heads of rural households exercise their main activity there. in addition, it should be noted that rural credit is widely available since almost 90 percent of the workforce had access to credit during the last twelve months preceding env 2015. this is linked to the fact that the informal market is the main source of credit provision in the ivorian rural environment (ouoya, 2019). finally, it should be noted that 82% of heads of rural households are men. following this analysis of the descriptive statistics of the model, we present the results of the tobit regressions in table 3. table 3 results of the tobit regression dvp coef. st.err t-value p-value [95% conf interval] sig 35b.ca 0.000 . . . . . 55.ca -0.775 0.086 -9.02 0.000 -0.944 -0.607 *** 105.ca -0.759 0.130 -5.83 0.000 -1.014 -0.504 *** 0b.fw 0.000 . . . . . 1.fw -0.168 0.071 -2.38 0.017 -0.307 -0.030 ** 0b.el 0.000 . . . . . 1.el -0.073 0.087 -0.84 0.402 -0.244 0.098 2.el -2.298 0.229 -10.02 0.000 -2.748 -1.848 *** 3.el -6.879 . . . . . 0b.od 0.000 . . . . . 1.od 1.153 0.095 12.19 0.000 0.967 1.338 *** 1b.as 0.000 . . . . . 2.as -1.493 0.231 -6.45 0.000 -1.946 -1.039 *** 3.as 0.847 0.105 8.04 0.000 0.641 1.054 *** 4.as 0.778 0.130 5.99 0.000 0.523 1.032 *** ouoya 98 0b.cred 0.000 . . . . . 1.cred 2.402 0.275 8.73 0.000 1.862 2.941 *** 0b.hhs 0.000 . . . . . 1.hhs -1.127 0.101 -11.16 0.000 -1.325 -0.929 *** 0b.sc 0.000 . . . . . 1.sc -0.076 0.094 -0.81 0.421 -0.260 0.108 hi 0.000 0.000 1.29 0.195 0.000 0.000 constant -2.508 0.289 -8.66 0.000 -3.076 -1.941 *** constant 1.136 0.042 .b .b 1.054 1.219 mean dependent var 0.178 sd dependent var 0.383 pseudo r-squared 0.229 number of obs 2998.000 chi-square 853.543 prob > chi2 0.000 akaike crit. (aic) 2902.93 bayesian crit. (bic) 2993.021 *** p<0.01, ** p<0.05, * p<0.1 source: our calculations based on env2015 data the gap between poverty and vulnerability narrows when moving from a young head of household to an older head. thus, heads of household aged between 35 and 55 and those over 55 have greater stability in terms of their poverty status compared to their counterparts under 35. the results of the ca variable statistically significant at 1% reveal this state of affairs. heads of households with full-time employment (variable fw) have relatively stable poverty status compared to heads of households who do not. the negative coefficient of the fw variable is at the origin of this observation (significant at 5%). the level of education has a significant impact on the statibility of the household's poverty status. here, the higher the level of education, the narrower the gap between poverty and vulnerability. thus, households whose head has a higher level of education have a more sustainable and more stable poverty status over time compared to households where the head has no education level. this fact is all the more worrying as more than half of the heads of rural households in côte d'ivoire have no level of education and the lack of stability of the poverty status is all the more a major obstacle to the sustainability of anti-poverty policies. the household head’s business sector also has a significant impact on the sustainability of the household’s poverty status. only the households whose head operates in the industry sector have a relative stability of their poverty status compared to households practicing in agriculture. on the other hand, there is an instability in the poverty status when one passes from a head of household working in agriculture to a head working in services or trade. the variable of interest in our analysis is access to credit (cred). it is significant at the 1 percent level. the result of the tobit regression shows that households with access to credit, compared to those without access to credit, record a larger gap between poverty and vulnerability (ex-ante poverty). thus, the poverty status of these households is greatly modified by their access to credit. these results are in good agreement with the work of ouoya (2019) which showed that access to credit reduces poverty but increases the vulnerability of rural households in côte d'ivoire. for ouoya (2019), it is the nature of the credit, its source, the amount granted and the use of this credit that would explain the unsustainability of its effects on the short and long term poverty status of rural households in côte d'ivoire. thus, it can be said that households that received credit have an unstable poverty status compared to households that did not receive credit in rural areas in côte d'ivoire. households headed by men compared to those headed by women have more stability in their poverty status. this result is significant at the 1 percent level. the availability of social capital by the household increases the stability of its poverty status. however, access to credit and sustainability of rural households poverty status: a case from côte d'ivoire 99 this latter result is not significant. following this first discussion, we now focus on the analysis of regional poverty / vulnerability differences. analysis of regional differences in poverty / vulnerability to poverty the regions with a poverty incidence above the national rate of 46.3% are as follows: autonomous district of abidjan 52%, haut sassandra region 47%, gbèkè region 51%, tonkpi region 55%, kabadougou region 69%, n'zi region 49%, marahoué region 47%, worodougou region 50%, bafing region 49%, bagoué region 69%, folon region 59%, grands ponts region 49%, and the tchologo region with 54%. a total of 13 administrative districts have an incidence of poverty greater than the national level of poverty. table 4 distribution of poverty and vulnerability to poverty in rural areas in côte d'ivoire region mean vul mean p0 vul-p0 (vul-p0)2 (vul-p0)2 (%) evolution rate (%) abidjan district 0,333 0,528 -0,195 0,038 3,803 -36,932 haut-sassandra 0,253 0,475 -0,222 0,049 4,928 -46,737 poro 0,460 0,444 0,016 0,000 0,026 3,604 gbeke 0,488 0,516 -0,028 0,001 0,078 -5,426 indenie-djuablin 0,218 0,413 -0,195 0,038 3,803 -47,215 tonkpi 0,498 0,556 -0,058 0,003 0,336 -10,432 yamoussoukro district 0,336 0,311 0,025 0,001 0,063 8,039 gontougo 0,011 0,407 -0,396 0,157 15,682 -97,297 san-pedro 0,107 0,240 -0,133 0,018 1,769 -55,417 kabadougou 0,602 0,689 -0,087 0,008 0,757 -12,627 n'zi 0,310 0,488 -0,178 0,032 3,168 -36,475 marahoue 0,326 0,467 -0,141 0,020 1,988 -30,193 sud-comoe 0,638 0,349 0,289 0,084 8,352 82,808 worodougou 0,741 0,495 0,246 0,061 6,052 49,697 loh-djiboua 0,494 0,435 0,059 0,003 0,348 13,563 agneby-tiassa 0,403 0,388 0,015 0,000 0,023 3,866 goh 0,401 0,440 -0,039 0,002 0,152 -8,864 cavally 0,244 0,263 -0,019 0,000 0,036 -7,224 bafing 0,229 0,495 -0,266 0,071 7,076 -53,737 bagoue 0,689 0,691 -0,002 0,000 0,000 -0,289 belier 0,085 0,412 -0,327 0,107 10,693 -79,369 bere 0,433 0,433 0,000 0,000 0,000 0,000 bounkani 0,219 0,442 -0,223 0,050 4,973 -50,452 folon 0,643 0,594 0,049 0,002 0,240 8,249 gbokle 0,022 0,328 -0,306 0,094 9,364 -93,293 ouoya 100 grands-ponts 0,237 0,486 -0,249 0,062 6,200 -51,235 guemon 0,288 0,306 -0,018 0,000 0,032 -5,882 hambol 0,148 0,447 -0,299 0,089 8,940 -66,890 iffou 0,348 0,463 -0,115 0,013 1,323 -24,838 la me 0,065 0,333 -0,268 0,072 7,182 -80,480 nawa 0,164 0,220 -0,056 0,003 0,314 -25,455 tchologo 0,438 0,536 -0,098 0,010 0,960 -18,284 moronou 0,151 0,366 -0,215 0,046 4,623 -58,743 source: our calculations based on env2015 data the identification of regions with a ratio of vulnerable people higher than this same poverty index highlights the following regions: gbèkè region 49%, tonkpi region 50%, kabadougou region 60%, south comoé region 64%, worodougou region 74%, lohdjiboua region 49%, bagoué region 69% and folon region 64%. eight administrative districts were retained in this second selection. of these eight administrative districts, six have been previously identified as part of the regions with high poverty rates. these are the regions of gbèkè, tonkpi, kabadougou, worodougou, bagoué and folon. of the 33 constituencies identified, the vast majority, that is to say 25, recorded a decrease between the incidence of poverty and the vulnerability to poverty ratio. this drop is very pronounced in regions such as haut sassandra, indénié-djuablin, gontougo, sanpedro, n'zi, marahoué, bafing, ram, bounkani, gboklè, grands -bridges, the hambol, the iffou, the mé and the moronou which recorded decreases of more than 30%. poverty should decrease in this districts over the next year if we stick to the results of our sample of 10,475 observations. the goh, cavally, bagoué and béré regions also recorded decreases, but these were very slight (less than 10%). other constituencies, on the other hand, recorded an increase between poverty and vulnerability to poverty. these are poro, the yamoussoukro autonomous district, sud comoé, worodougou, loh-djiboua, agnéby-tiassa and folon. the increase is more pronounced in the south comoé, worodougou where the increases between poverty and vulnerability to poverty are respectively 83% and 48%. the rate of increase is between 5 and 20 percent at the level of the other regions having registered an increase between these two ratios. the statistically significant difference recorded in the incidence of poverty and the ratio of vulnerable households to poverty is reflected in the various administrative districts. excluding the poro region and the béré, whose development rates are less than 5 percent, all the districts show differences between poverty and vulnerability with development rates ranging from around 10 for to over 80 percent. in such a context, it cannot be said that there is a correspondence between the spatial distribution of poverty and that of vulnerability to poverty in the rural area of côte d'ivoire. conclusion at the end of our analysis, we found that the incidence of poverty in the analysis sample is 25.8 percent, while the ratio of vulnerable individuals to poverty is 34.5 percent. more than ¾ poor households are vulnerable to poverty, and one in five non poor households is found to be vulnerable to poverty. our work, like chaudhuri et al. (2002), concludes that the ratio of vulnerable to poverty is higher than the incidence of poverty. the risks that these rural households face are the cause of this difference between poverty and vulnerability to poverty. the stability of poverty status is a guarantee of the success of poverty alleviation policies. we have estimated the impact of access to credit on this stability. our results access to credit and sustainability of rural households poverty status: a case from côte d'ivoire 101 show that access to credit increases the gap between poverty and vulnerability to poverty, thus making the poverty status of the household more unstable. thus, we reject the hypothesis that households with access to credit have a more stable poverty status than those without access. in addition, some variables, such as the level of education of the householder, his sector of activity, his age have a significant effect on the stability of the poverty status of rural households in côte d'ivoire. regarding the spatial distribution of poverty in rural areas in côte d'ivoire, we noted that almost all of the administrative districts in our sample (33 in total) recorded a decrease or increase of more than 5 percent between the incidence of poverty and the vulnerability to poverty ratio. only the béré region recorded perfect stability between poverty and vulnerability to poverty. thus, to the question of whether there is a concordance between the spatial distribution of poverty and vulnerability to poverty within rural areas in côte d'ivoire, we answer in the negative. for our part, we cannot speak, in view of our results, of correspondence of the spatial distributions of these two quantities in the rural environment in côte d’ivoire. references bah, a. (2015) estimating vulnerability to poverty using panel data: evidence from indonesia. hal archives-ouvertes, available at : https://halshs.archivesouvertes.fr/halshs-00936199v3 bidou j.e. et droy i. (2012) peut-on mesurer la vulnérabilité sociale et économique des ménages et des individus. 21p. colloque international gemdev – unesco : la mesure du développement : atelier 6 : vulnérabilité et pauvreté, paris (fra), 2012/02/01-03 chaudhuri, s., jalan, j. and suryahadi, a. (2002): “assessing household vulnerability to poverty from cross-sectional data: a methodology and estimates from indonesia”, department of economics columbia university. available at: http://digitalcommons.libraries.columbia.edu/econ dp/117. institut national de la statistique (ins) (2015) «enquête sur les niveaux de vie des ménages en côte d’ivoire, env2015 » ouoya, z. m. (2019), business sector, level of education and access to credit : what influences on vulnerability to rural households poverty in côte d’ivoire. studies and scientific researches. economics edition, no 30, pp 45-64, available at http://sceco.ub.ro/index.php/sceco/article/view/441 wisner b., blaikie p., cannon t., davis i., 1994, 2003, at risk. natural hazards, people’s vulnerability and disasters, routledge, london, 472 p. https://halshs.archives-ouvertes.fr/halshs-00936199v3 https://halshs.archives-ouvertes.fr/halshs-00936199v3 http://digitalcommons.libraries.columbia.edu/econ%20dp/117 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 29, 2019 http://sceco.ub.ro 54 aspects concerning external partnerships of romania after the second world war florina popa academia română, institutul de economie naţională florinapopa289@gmail.com abstract after the ending of the second world war, romania's cooperation relations with other countries were subordinated to the political and economic situations developed among the world states and to the events that followed the completion of the war, the form and content of these relations being different, corresponding to the context. the study presents aspects related to the partnership relations developed through the economic cooperation relations achieved by romania within the commission for reciprocal economic aid – comecon (caer), on the period of its operation (1949-1989). there are presented participants' cooperation modalities, the partnership being of public-public or public-private type. the examples shown include elements regarding the participating parties, the objectives to be achieved, the period, participation share, as the case may be. also, some references are made to the enlargement of romania's economic cooperation relations, internationally, after the 1970 year, expression of the favorable evolution of the geographical space of manifestation of the romanian foreign trade. keywords cooperation; foreign trade; partnership; mixed companies; comecon (caer); international cooperation; socialist countries jel classification f13; f15; h44; l24; l32; m16; o19; p33; p35 1. economic cooperation within the council for mutual economic assistance comecon (caer) (1954 1989) the changes known by the romanian economy and its orientation towards the pronounced development of the industry, especially, the heavy industry, were reflected in the structure of the foreign trade and its evolution (muresan & muresan, 1998). after the year 1949, the foreign trade, over which the state held the total monopoly, was oriented towards relations, in the form of trade exchanges with u.s.s.r. (the union of soviet socialist republics) (u.r.s.s.) and the neighboring states. u.s.s.r. promoted cooperation at regional level, through trade exchange, initiating, in 1949, the formation of the council for mutual economic assistance – comecon (caer) an organization to which, european countries, initially, joined. founding members were bulgarian people`s republic, czechoslovak socialist republic, polish people`s republic, socialist republic of romania, hungarian people`s republic and u.s.s.r.. subsequently, the german democratic republic (1950), the mongolian people's republic (1952), the republic of cuba (1972), the socialist republic of vietnam (1978) joined. also, on the basis of conventions, cooperation relations were concluded with socialist federal republic of yugoslavia, finland, mexico, iraq, and so on. other international institutions and agencies had cooperation relations with comecon (caer), too, namely: the investment bank for economic cooperation, mailto:florinapopa289@gmail.com popa 55 the international investment bank, as well as branch international economic unions of (intermetal 1965, interchim 1970, interelectro 1973, interatomenergo 1973) (costache, 2012). within the organization, the status could be as a full member, associate member, in cooperative relations. the coordination of romania's economic and technical-scientific activity within comecon (caer) was done by a governmental commission. the particularities of leading and coordination of the country's economy were reflected in the relations developed with the comecon (caer) member states, under the conditions of the legislative framework created by the romanian state, in the organization of the economic sector. according to the constitution, the state had the role of planning and coordination of the country's economy (costache, 2012). collaboration within this organization evolved into several goals (costache, 2012): • coordination of national economic plans; • coordination of investment plans; • establishment of enterprises, joint property of several countries; • specialization of industrial production; • establishment of international economic unions. 1.1.types of co-operation within council for mutual economic assistance comecon (caer) as regards the types of co-operation, according to the specialists, it is concretized as follows: one of the forms, most often met, is the mixed type economic units which could have, in a narrow meaning, the significance of mixed production societies "units at which partners from countries with different socio-economic systems participate in", or broader, "economic units at which enterprises, firms from different countries, regardless of their social structure, participate in" (albu, 1985). participation may take place among public-public or public-private type units, as appropriate. their goal was the achievement of some economic objectives, to satisfy some common interests for all partners, in advantageous conditions, the mixed economic units may develop east-east, east-west type partnership relationships and are of bilateral or multilateral character. it holds attention, a number of partnership actions to which romania participated alongside other comecon (caer) member states, through various types of collaboration : a) bilateral cooperation among the socialist countries in the form of mixed-bilateral type units ➢ the agreement between socialist republic of romania (republica socialistă românia) and bulgarian people`republic (republica populară bulgaria) concerning the establishment of the giurgiu-rousse common enterprise, approved on 28 june 1977, through hcm no.144, in the sphere of the construction of heavy machinery and equipment (albu, in albu alexandru d. et al., 1985, p. 66). the objective was the achievement of a microeconomic specialization, the two countries collaborating in the elaboration of projects and construction documentations assembly and operation of production capacities. • the giurgiu unit produced small and medium depth drilling equipment, chemical and petrochemical equipment, industrial fittings, utility vehicles, cast iron and non-ferrous dead-mould castings (albu, in albu alexandru d. et al. 1985, p. 66). • the ruse unit produced technological equipment for mining drilling and for ore processing, metallurgical, chemical and petrochemical equipment, aspects concerning external partnerships of romania after the second world war 56 steel dead-mould castings and forged pieces. (albu, in albu alexandru d. et al., 1985, p. 66). ➢ porţile de fier (i şi ii) hidropower and navigation system, a common romanian-yugoslav enterprise of cooperation, aiming at capitalize the danube resources in the porţile de fier area. the cooperation focused on two objectives (albu alexandru d., in albu alexandru d. et al., 1985, p. 67): • objective 1 – the construction of a power plant of 1050-mw power, for each part it was achieved through an agreement signed on 30 november 1963. • objective 2 the construction of two hydroelectric power plants, whereby, each part to be provided with electricity, at the amount of 1200mw/year; the construction of two spillways and two flood gates for navigation by agreement signed on 19 february 1977. the two parts cooperated to bring together the common capacities of diking and water yaw, technical complementary documentations to jointly develop studies, projects, etc., but also, jointly undertaking of measures designed to increase the energetic capacity of the project (albu alexandru d. in albu alexandru d. et. al., 1985, p. 67). ➢ stînca-costeşti hydroenergetic node on the prut river, s.r.r. – u.s.s.r. (r.s.r. u.r.s.s.) joint enterprise, established by the governmental agreement signed on 16 december 1971. the common goal was the creation of a barrier lake with a volume of 1400 million c.m., which to ensure the following objectives (albu alexandru d., in albu alexandru d. et al., 1985, p. 67): • prevention and control of floods, along the prut river, on both territories, on an area of 100000 ha; • ensuring some water debits towards irrigate an area of 70000 ha, for each territory; • construction of two hydroelectric power stations of 15 mw, for each part, in order to achieve some constant debits of drinkable and industrial water, for each of the parts, of 5-8 c. m. from the total value of the works, of 61867 transferable rubles: the romanian part contributed with 30942 thousand rubles and the soviet part, 30925 thousand rubles. (albu alexandru d., in albu alexandru d. et al., 1985, p. 67). the form of cooperation through the establishment of joint enterprises has had positive results, by: ensuring opportunities to harness the resources of both states, without affecting the sovereignty of the participant states; joint investment efforts for large projects, developed on several plans; the development of products which involve complex technologies. by mixed units made in partnership with socialist countries (enterprises), a wide exchange of managerial experience and professional training of specialists has been achieved. b) cooperation through mixedmultilateral type units there were two types of mixed-multilateral type units, classified under the comprehensive program of deepening and forward improvement of the collaboration and development of the economic socialist integration of the comecon (caer) member countries (programul complex al adâncirii şi perfecţionării în continuare a colaborării şi dezvoltării integrării economice socialiste a ţărilor membre caer)  organizations that had the function of cooperation coordination, in different fields, such as: interchim in the small tonnage chemical industry; intermetal popa 57 in steel production; interelectro in the field of electrotechnical industry; fcc – joint use of containers in international traffic (albu alexandru d., in albu alexandru d. et. al., 1985, p. 53, costache b., 2012).  organizations or economic unions which, beside the coordination function, also, unfolded their own revenue-producing activity, in which enterprises, organizations, research institutes, from different member countries has participated (albu alexandru d. in albu alexandru d. et. al., 1985, p. 54). in the period 1973-1975, multilateral partner organizations of this type were created, reflecting the cooperation in different fields, as exemplified (albu alexandru d., in albu alexandru d. et al., 1985, p. 54): • interchimfibre with a 10-year life span (1974-1984), created on 21 june 1974, by convention signed by the governments of the countries: b.p.r. (r.p.b.), c.s.r. (r.s.c.), g.d.r. (r.d.g.), p.p.r. (r.p.p.), s.r.r. (r.s.r.), h.p.r. (r.p.u.) and u.s.s.r. (u.r.s.s.), with headquarters in bucharest; the objective was to meet the chemical fibres requirements of the participant countries, to the qualitative standards of the best assortments in the world (albu alexandru d., in albu alexandru d. et al., 1985, p.58, costache b., 2012, p. 107); • intertextilimaş with the headquarters in moscow whose activity targeted the production of machinery and technological equipment, needed for the textile industry (albu alexandru d., in albu alexandru d. et al., 1985, p. 54, costache b., 2012, p. 107); • interatomenergo with the headquarters in moscow whose activity focused on the mutual production and delivery of equipment and the provision of technical assistance in the construction of nuclear power plants (albu alexandru d., in albu alexandru d. et al., 1985, p. 54, costache b., 2012, p. 104). • “cooperation with companies from hungary, in the production of wagons, machine-tools, diesel engines, equipment, for the food industry; • cooperation with companies from german democratic republic, in optical industry, manufacture of machine-tools, electrical transformers; • cooperation with yugoslavia in the production of diesel motors and electric motors, auto-trucks, electric household appliances, fabrication of passenger airplanes, with britten norma company in england, etc. .” the cooperation of the socialist member countries, within comecon (caer), through this type of international organizations/unions mixed units made in partnership with socialist countries (enterprises), was advantageous because: they organized economic and technical scientific development directions and plans; sustained the economic growth in the relative countries, over the long term; determined specialization in production; ensured coverage of some scarce production at comecon (caer) level; a large series production was achieved, by mobilizing common financial, technological and human resources; development of research, projection, production and commercialization activities; exchange of experience, possibilities of penetration of technical progress, in different fields. c) jointly participation in the creation of capacities for the capitalization of raw materials aspects concerning external partnerships of romania after the second world war 58 mutually beneficial conventions between the u.s.s.r. (u.r.s.s.) and other socialist countries, concerning co-operation for jointly creation of some production capacities in the raw materials field (albu alexandru d., in albu alexandru d. et al., 1985, p. 61).  multilateral convention for the production of cellulose at ust ilim, signed in june 1973 among b.p.r. (r.p.b.), g.d.r. (r.d.g.), p.p.r. (r.p.p.), s.r.r. (r.s.r.), h.p.r. (r.p.u.) and u.s.s.r. (u.r.s.s.), for creating a capacity of 600 thousand tons, annually, of stationer cellulose, capacity that came into operation in 1978. romania participated, by investments, in the guise of credit deliveries (with an interest of 2% per year), machinery, equipments, consumer goods (furniture, clothing and knitwear) and various materials. the reimbursement consisted of the delivery to romania, of 50 thousand tons of cellulose per year, over 20 years, since objective coming into operation (albu alexandru d., in albu alexandru d. et. al., 1985, p. 61).  convention of co-operation for the extraction and processing of asbestos, in kiembai, signed in september 1973, among b.p.r. (r.p.b.), c.s.r. (r.s.c.), g.d.r. (r.d.g.), p.p.r. (r.p.p.), s.r.r. (r.s.r.), h.p.r. (r.p.u). and u.s.s.r. (u.r.s.s.) participation of s.r.r. (r.s.r.) was carried out by deliveries of credits (with interest of 2%, annually), which was reimbursed after the commune's carring into action 45 thousand tons of asbestos, annually, over 20 years (albu alexandru d., in albu alexandru d et al., 1985, p. 61).  convention of co-operation for the construction of the gas pipeline, with an ammount of 30 billion c.m, annually, to capitalize the crenburg deposit, signed by b.p.r. (r.p.b.), c.s.r. (r.s.c.), g.d.r. (r.d.g.), p.p.r. (r.p.p.), s.r.r. (r.s.r.), h.p.r. (r.p.u.) and u.s.s.r. (u.r.s.s.) in february 1976. romania contributed with 127 billion rubles, of which 95 billion rubles, in freely convertible currency, needed for procurement of some special equipments in west. the contribution of the other socialist countries was, in particular, with equipments and labour (albu alexandru d., in albu alexandru d. et al., 1985, p. 61, 62). as a result of these co-operations, the participant socialist countries were provided with raw materials, for a period of 20 years. (albu alexandru d. et al., 1985). 2. international economic cooperation this form can be considered an element of improving and balancing the world economy, by the simultaneously exchange of material values that it engages, thus, mitigating the effects of the economic crisis. (albu alexandru d. et al., 1985) after the year 1970, romania made efforts towards broadening the economic relations with as many countries as possible, the geographical space of the manifestation of the romanian foreign trade, evolving favorably, from one stage to another, corresponding to the development of the economy. if at the beginning of the 50 years, the main partner, as share in the country's trade relations, was the u.s.s.r. (u.r.s.s.) (60.8% of exports and 43% of imports) and less other countries in the central and eastern europe, in the 60 years, the relations with comecon (caer) member states reached 73% and with developed or developing countries, 27%; after the year 1970, this report changed, the share of trade relations with non-socialist countries increasing to 55.2%. in the year 1989, romania had, globally, trade relations with 59 countries, developing international economic cooperation relations: mixed production companies, mixed popa 59 companies with headquarters in romania, mixed production companies with headquarters abroad, cooperation through sub-production or subcontracting, delivery of equipment and machines on credit repayable in products (the romanian formula of industrial cooperation), international cooperation in the banking and credit field, bilateral co-operation in the field of tourism. romania had relations of cooperation and economic exchanges with european countries (great britain, italy, france, german federal republic, u.s.s.r. (u.r.s.s.), german democratic republic, czechoslovak socialist republic, polish people's republic, hungarian people`s republic; asian countries (saudi arabia, china, iran, japan, kuwait, syria turkey); in the american continent (u.s.a., canada, cuba, brazil); some african countries (egypt, morocco, tunisia). (mureşan m. & mureşan d. 1998, p. 373). the international cooperation relations were found in several areas of activity: production, science and technics, marketing and commercialization, banking and lending activities, services area. the cooperations developed by romania, internationally, in various forms and in various fields, with different states, are shown in the table below (table 1): table 1 actions of international economic cooperation developed in romania 1975 1976 1977 (in the middle of the year) from which: socialist countries developing countries developed capitalist countries mixed production companies in r.s. românia 6 8 9 1 8 mixed production companies abroad 24 27 28 27 1 commercial and banking type companies abroad 31 35 35 6 29 cooperation and specialization in production, with socialist countries 27 44 57 57 achievements of economic objectives in socialist republic of românia (republica 22 11 31 31 aspects concerning external partnerships of romania after the second world war 60 socialistă românia) achievements of economic objectives abroad 127 127 128 32 86 10 cooperations for procurement of raw materials in socialist countries 8 7 25 25 total 245 259 313 114 120 79 sursa: constantin moisuc (1978), ”participarea româniei la colaborarea economică internaţională”, editura politică, bucureşti, p. 130, quotes ”revista economică” nr. 33/1977; revista ”lumea” nr. 34/1977 3. conclusions by participating in cooperation agreements within comecon (caer), romania developed the country's economy, by industrialization, with an emphasis on the heavy industry, achieved the change of structure, by the stronger development of some branches and less, of others, pursued catching-up in the economic development. there were shortcomings caused by the increase in energy consumption, lack of raw materials and minerals, corresponding to the needs of some industries, as well as the development of some industries whose products were not competitive on the external markets of comecon (caer). in the relations with this organization, the governors of the country taked into account, as a priority, the assertion and conservation of the economic independence of romania. within comecon (caer), romania did not get involved in actions, at industrial level, which meant economic integration. at the same time, it targeted towards the cooperation with western capitalist countries, whom share had grown much, up to the end of the eighth decade. the process of international cooperation and its expansion with capitalist countries has brought to romanian economy, a number of advantages (popa i. in albu alexandru d. et. al., 1985, p. 362-363, moisuc c., 1978): advantageous costs, due to the geographic proximity; improvement of relations of external trading; strengthening trade relations among partners; widening romania's relations with the western countries, lessening of some tariff and non-tariff barriers, close relations among partners; enhancing participation in the world economic circuit; promotion of romanian exports; higher capitalization of resources; attracting financial sources and material resources from abroad; the penetration of technical progress through world modern technologies; training of specialists. in the assessment of the efficiency of economic relations, at external level, it is worth mentioning that, although the products that were subject to export, were remarkable through the high quantitative volume, there were situations when they did not meet the qualitative requirements, consequence of the development of an industry, large raw materials and energy consuming, with outdated technologies (mureşan m. & mureşan d., 1998, p. 373). popa 61 references albu, alexandru, d. (coordonator), hamzescu, roşu, i.; popa, i.; ijdelea, r.; olteanu, m.; blidea, v. (1985), cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, catedra de relaţii economice internationale, bucureşti; albu, alexandru, d. ijdelea, r.; blidea, v. (1985), capitolul ii cooperarea internatională în producţie, (pag. 37-135) în albu, alexandru, d. (coordonator) et. al. (1985) cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, bucureşti, catedra de relaţii economice internationale, bucureşti; albu, alexandru, d. (1985), capitlul vi cooperare internatională în sfera serviciilor (pag.228-246) în albu, alexandru, d. (coordonator) et. al. (1985) cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, bucureşti, catedra de relaţii economice internationale, bucureşti; albu, alexandru, blidea, v.; d.; olteanu, m. (1985); capitolul v cooperarea internațională în domeniul bancar şi al creditului (pag.204-227) în albu, alexandru, d. (coordonator) et. al. (1985) cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, bucureşti, catedra de relaţii economice internationale, bucureşti; constantinescu, n. n. (coordonator) et. al. (2000), istoria economică a româniei, vol. ii 1939 -1989, , editura economică, bucureşti; costache b. (2012), activitatea româniei în consiliul de ajutor economic reciproc 1949 1974, academia română, institutul naţional pentru studiul totalitarismului, bucureşti; moisuc, c. (1978), participarea româniei la colaborarea economică internaţională, editura politică, bucureşti; mureşan, m.; mureşan d. (1998), istoria economiei, editura economică, bucureşti; popa i. (1985), capitolul vii contractul de cooperare economică internatională (pag. 247-272), în albu, alexandru, d. (coordonator) et. al. (1985) cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, bucureşti, catedra de relaţii economice internationale, bucureşti; popa i., olteanu m., ijdelea r., capitolul x evoluţii structurale şi direcţii geografice în cooperarea economică internaţională a r.s. românia (pag. 344-367), în albu alexandru d. (coordonator) et. al. (1985) cooperarea economică internaţională a r.s. românia, academia de studii economice, facultatea de comerţ, bucureşti, catedra de relaţii economice internationale, bucureşti; purcărea th. (2000), capitolul 8 comerţul interior în perioada 1948 – 1989, (pag. 253 – 282), în n. n. constantinescu (coordonator) et. al. (2000) istoria economică a româniei, vol. ii 1939 -1989, editura economică, bucureşti; sută n. (2000), capitolul 9 comerţul exterior al româniei în perioada 1949 – 1989, (pag. 283 – 310), în n. n. constantinescu (coordonator) et. al. (2000) istoria economică a româniei, vol. ii 1939 -1989, editura economică, bucureşti; ţăranu liviu (2007), românia în consiliul de ajutor economic reciproc (1949 – 1965), editura enciclopedică, bucureşti (cuvânt înainte de ion agrigoroaiei); revista economică nr. 33/1977; revista ”lumea” nr. 34/1977; constituţia republicii populare române din 1948, în monitorul oficial, nr. 87 bis din 13 aprilie 1948; convenţie din 13 decembrie 1973 privind înfiinţarea uniunii economice internaţionale pentru organizarea cooperării în producţie a livrărilor de utilaje şi acordarea de aspects concerning external partnerships of romania after the second world war 62 asistenţă tehnică în construirea de centrale nuclearoelectrice „interatomenergo”, în buletinul oficial al r.s.r. nr. 63 din 18 aprilie 1974; convenţie din 13 decembrie 1973 privind înfiinţarea uniunii economice internaţionale pentru producerea utilajelor tehnologice pentru industria textilă „intertextilmaş”, în buletinul oficial al r.s.r. nr. 88 din 25 iunie 1974; convenţie din 13 decembrie 1973 privind crearea organizaţiei internaţionale pentru colaborare economică şi tehnico-ştiinţifică în domeniul industriei electrotehnice „interelectro”, în buletinul oficial al r.s.r. nr. din 65 din 20 aprilie 1974; convenţie pentru înfiinţarea uniunii economice internaţionale în domeniul fibrelor chimice „interchimfibre”, în buletinul oficial al r.s.r. nr. 124, din 17 octombrie 1974; decret nr. 508 din 16 decembrie 1970 pentru aderarea republicii socialiste românia la convenţia privind instituirea organizaţiei internaţionale de ramură de colaborare în domeniul producţiei chimice de mic tonaj „interchimfibre”, în buletinul oficial al r.s.r, nr. 145 din 16 decembrie 1970; programul complex al adâncirii şi perfecţionării în continuare a colaborării şi dezvoltării integrării economice socialiste a ţărilor membre caer. acknowledgment the study is a part of the research paper of the institute of national economy, romanian academy (institutul de economie națională, academia română) “rolul statului și parteneriatul public-privat (1918-2018)”achieved in 2018, by a team of researchers – phd. cornel ionescu (coordinator), phd. florina popa. microsoft word apostoaie constantin marius_eng.doc risk management in public procurement process ioana livia manea, „al. i. cuza” university of iasi, romania ioana anda popa, „al. i. cuza” university of iasi, romania abstract public procurement represents an important part of the current economy reality. throughout the procurement process, due to the effect of the interaction among the components of the public procurement system, certain actions with significant negative effects on its optimal operation may occur. risks may turn into certainty either because of a simple error in the development and administration of the procurement process, or because of a deliberate deviation from the existing legal provisions. therefore, there is an imperative for the implementation of certain risk-avoiding measures, as well as of measures aiming to reduce their negative effects in case of their occurrence. keywords public procurement, risk management, tender, contracting authority, ethical behaviour, transparency jel codes: h 44, m10 public procurement in eu the european commission treaty does not include any provisions on public procurement and, for a long time – the member states have not considered this field as representing a problem for the internal market. public procurement contracts1 were administrated within internal market protection, and the main goals were represented by the internal industry support and workforce employment promotion. however, the use of public funds was characterized by inefficiency. although the first public procurement directives came into effect in 70’s, they were either not implemented in the national legislation, or not correctly applied. the document for the establishment of the single european market and the white paper of the “internal market completion” (1985) were recognized as important improvements in this field. these documents were about public procurement, and to the opening and liberalization of public procurement markets. in eu, there is a set of directives regarding to the public procurements according to their object: product supply contracts – these are contracts by onerous title, focused on a contracting authority’s procurement of property, utilization or exploitation rights on mobile goods included in the civil circuit, with or without the purchase obligation. moreover, these contracts will also include installation and bringing into service; 1 contracts that include both the category of sector contracts, by onerous title, which are concluded, in written, between one or several contracting authorities, on the one hand, and one or several business operators, on the other, in view of a public procurement and focused on execution of works, supply of products or of services according to the provisions of public procurement legislation studies and scientific researches economic edition, no. 15, 2010 389 service supply contracts – these are contracts by onerous title, focused on one of the following types of works that are to be ordered and accepted by a contracting authority: execution (including planning) and execution – by any manner or means, of a work according to the requirements submitted by the existing contracting authority; contracts for works – these are contracts by onerous title that are not described by the definition provided for the first two categories of contracts, and which are focused on an activity that has been especially ordered by a contracting authority. most frequently, the procured services belong to the following fields – publicity, management of buildings, cleaning, management consultant, financial services and itc, telephony, satellite communication, etc; in 2004, the european union updates, simplifies and improves the legislation referring to public contract awarding procedures, a legislation that is applicable in the member states. national awarding processes and eu financing awarding processes the national system of public procurement is governed by the same set of rules as the european public procurement system. the contracts financed from the european budget are awarded according to the romanian legislation in force. the european system is governed by the european directives, which are transposed in the internal law. the differences between the two systems are related to the application scope, since the national system establishes similar awarding rules below the european value thresholds. table no. 1. comparison between the national system and the european public procurement system national system european system types of contracts: public procurement contract – for supply, services, and works sector contract2 public works concession agreement3 services concession agreement4 types of contracts: public procurement contract – for supply, services, and works sector contract public works concession agreement services concession agreement public law authorities, public enterprises and business operators developing relevant activities are generally called “contracting authorities” public law authorities are called “contracting authorities” public enterprises and business operators developing relevant activities are generally called “contracting entities” public procurement awarding procedures: open tender, restricted tender, negotiation, public procurement awarding procedures: open tender, restricted tender, negotiation, 2 it refers to that particular public tender contract that is attributed for the development of a relevant activity in sectors of public utility – water, energy, transport, mail. it may be awarded only by a public enterprise developing relevant activities, with any lawful subject, which develop relevant activities based on a special or an exclusive right, or by a public law authority developing a relevant activity 3 this contract has the same characteristics as the contracts for works, except that – the contractor, as grantee, receives from the contracting authority, as grantor, in counter-performance for the works that are to be developed, the works exploitation right or this right is accompanied by payment. 4 this contract has the same characteristics as the contracts for works, except that – the contractor, as licensee, is granted by the contracting authority, as licensor, in counter-performance for the works that are to be developed, the service exploitation right or this right is accompanied by payment. studies and scientific researches economic edition, no. 15, 2010 390 competitive dialog, contest of solutions competitive dialog, contest of solutions simplified awarding procedures for public procurement or direct procurement contracts: call for tender, direct purchase there is no simplified awarding procedure for public procurement contracts. national value thresholds for the application of open tender and restricted tender procedures for the award of public procurement contracts: • 75 000 euro for supply and service agreements • 500 000 euro for contracts for works european value thresholds5 for the application of open tender, restricted tender and negotiation procedures for the award of public contracts: -137 000 euro for supply and service contracts awarded by central contracting authorities 211 000 euro for supply agreements awarded by contracting authorities in the field of defense, as well as for service supply agreements awarded by local contracting authorities -5 278 000 euro for contracts for works national value thresholds for the application of open tender and restricted tender procedures for the award of sector procurement contracts: • 75 000 euro for supply and service agreements • 500 000 euro for work contracts european value thresholds6 for the application of open tender, restricted tender and negotiation procedures for the award of contract by an entity developing relevant activities: • 422 000 euro for supply and service agreements • 5 278 000 euro for work contracts the advertising service agreement is governed by special regulation. there are no special regulations for the advertising service agreement, which is construed as an ordinary service agreement. the service concession contract is awarded following the same rules as the public works concession contract. there are no particular regulations for the service concession contract. the right to appeal is acknowledged for business operators, regardless of the public procurement/sector contract value. no differences are set between the classical system and the utility one. the right to appeal is acknowledged in the case of business operators for public procurement contract values that are bigger than or equal to the european thresholds. only the appeal elaborated against contracts concluded by entities developing relevant activities may be settled by conciliation. (source: www.mie.ro) public procurement principles in practice public procurement principles play an essential part in legislation enforcement, if one also considers the fact that this legislation may not refer to all practical situations. these principles are the following ones: the contracting authority must guarantee the non-discriminating and equal treatment for all business operators, and it must encourage competition among them. the contracting 5 european commission regulation no. 2083/2005, published in the official journal of the european union 333/20.12.2005 6 ibid 5 studies and scientific researches economic edition, no. 15, 2010 391 authority shall not bias any of the involved business operators, and it will not provide any of the involved parties with unjustified advantages throughout the procedures. all business operators will have access to the same information package throughout the public procurement process. mutual acknowledgement is one of the essential principles of eu and of the community legislation. the contracting authority must secure mutual acknowledgement and the same conditions for eu business operators and for the products and services supplied or the works performed by these business operators on the eu market. transparency: public fund use publicity and control must be provided in order to reduce corruption. it is important for the contracting authority to permanently inform business operators on all the activities and all the data referring to the procedure. proportionality – it refers to securing the correlation between: the needs of the contracting authority; the object of the public procurement contract; the requirements that must be met. efficient use of funds – this requires the authority to consider the economic advantages of the submitted offers, in order to obtain the optimal price-quality relation. accountability – the contracting authority has the obligation to choose the most advantageous solution from the professional and economic perspectives that is provided on the market by an appropriate enforcement and observance of the public procurement legislation, as well as the obligation to adapt these solutions to its procurement needs by applying a particular awarding procedure. in order to achieve this, it is necessary for correctly prepared awarding procedure to consider the professional content and the schedule of the awarding procedure. the contract awarding criterion should not be the best price offer, but the offer that is the most advantageous from an economic perspective, taking into account, beside the price, other qualitative, as well as quantifiable criteria. risks in public procurement process the public procurement system represents a significant part of the romanian economic reality, having the same characteristics, both strong points and weaknesses. here are the components of the public procurement system: the regulatory authority; contracting authorities; business operators; system supervisors. various relations occur among these elements in order to achieve the general purpose, as elements interact and condition one another, enhancing or annihilating one another. therefore, throughout the interaction among the components of the system, throughout the procurement process, such actions may occur with negative effects on the entire system. risks – from the ethical perspective during the procurement process, refer to those uncertain, but probable events, whose occurrence may generate damage or negative impacts on certain community specific values. one must underline the fact that risks may become certain either because of a simple error in the development and administration of the procurement process, or because of a deliberate deviation from the existing legal provisions. in the public procurement process, the occurrence probability of a negative element is tightly connected to the value of the budget granted for that particular contract. at the european level, a set of risks have been identified, which are manifested throughout the development of any public procurement process, and which are construed as having general validity and applicability, considering the stage and relation in the public procurement process, according to the table below: table no. 2. risks of public procurement process stage operation risks elaboration of the annual needs idendification high-level official authorities’ involvement in the procurement decision studies and scientific researches economic edition, no. 15, 2010 392 the procurement is not economically justified or it is environmentally harmful lack of communication among compartments in view of an accurate identification of needs identification of needs after budget approval contract value estimation superficial evaluation of the contract value without considering all the costs that may be incurred over-assessment in order to encourage a certain contracting party use of a calculation model leading to a value that may not correspond to the application of a competitive procedure cpv correspondence 7 superficial identification of the appropriate procurement code hierarchies and priorities influence of external actors, such as politicians, consultants, etc. choice of procedure abusive use of uncompetitive procedures invoking the existence of legal exceptions division of contracts with similar objects into small value contracts, invoking different goals abusive use of extreme emergency situations identification of funds unrealistic grant of the budget, which is based merely on cost records, not on covering the existing needs public procurement programme calendar elaboration faulty planning of the procurement process insufficient time allotment for the appropriate development of each stage identification of technical specification specification adjustment in order to correspond to a single business operator specification adjustment to the unjustified request of a decisional factor at the level of the contracting authority identification of unclear specifications or of specifications that do not observe the envisaged performance level frequent and unjustified meetings with the preferred bidder for consultations on technical requirements establishing of contract clauses identification of general clauses that are not specifically related to the contracting authority’s need and to the object of the contract imposing excessive penalties establishing minimum qualification requests requests “customized” for certain business operators, accompanied by superficial justifying documents, with no real support elaboration of the awarding documentation establishing the selection they are not clearly and objectively defined the evaluation factors leave room for speculations 7 public procurement common vocabulary studies and scientific researches economic edition, no. 15, 2010 393 criteria and/or the awarding criterion filling-in the procurement chart, establishing forms and models they are filled-in superficially, with no consideration for procurement specificity, and leaving room for speculations establishing the bid submission deadline establishing an insufficient period of time for bid preparation awarding documentation completion inappropriate verification, which generates contradictory information absence of internal audit procedures participation advertising resistance to the use of other press informing means availability of the awarding documentation resistance to the use of several methods to provide free documentation availability call for competition response to clarification requests providing evasive answers or answers that change the specifications included in the documentation without giving business operators enough time to adapt to the submitted clarifications assignment of the evaluation commission assignment of persons that aim to fulfill certain interests or who have no knowledge of the existing legal provisions candidature acceptance and candidate selection business operators are considered qualified by accepting authorizations or certifications that do not correspond to real facts development of discussions rounds revealing confidential information to the candidates bid acceptance establishing the bid acceptance deadline long before the opening meeting opening of bids bid opening procedure flaws deviations from the correct bid opening procedure examination, offer evaluation and establishment of the winning bid familiarity with bidders in time, manifesting personal interests animosity to certain bidders errors or omissions throughout the evaluation in favour of certain bidders awarding procedure development cancellation of procedure (is necessary) unjustified (easy) identification of cancellation reasons results notification the result notification is lapidary without mentioning the advantages of the winning bid waiting period and settlement of appeals agreements are concluded with claimants in order to withdraw their appeals public procurement contract awarding or framework agreement signing the when the contract is signed, modifications occur studies and scientific researches economic edition, no. 15, 2010 394 contract / framework agreement conclusion compared to the awarding documentation and to the bid, motivating that they have been omitted or that the need has not been well quantified conclusion transmission for the awarding advertisement non-transmission of the awarding advertisement conclusion of the public procurement file finalization of the public procurement file the existence of sporadic records and subsequent to the occurrence of the events random archiving of files development of contract / framework agreement fulfillment of undertaken obligations and partial acceptance absence of a real monitoring system regarding the cost-quality and time perspectives for a contract substantial modifications in the contract conditions in view of longer periods and higher prices for the contracting party frequent and unjustified meetings with the contracting party accepted modifications of the contract specifications below the level of the standards imposed by the documentation delayed payment of bills, postponements of payments in view of price revision, in order to increase contract values temporary advance payments, with no reasons contract completion final acceptance no supervision of contractual obligations, from the cost, quality and time perspectives artificial invoicing for something that has not been yet finalized process analysis conclusions and improvement measures no process analysis to establish whether the expected value has been achieved (source: www.mie.ro) in order to avoid the risks identified above, but also in order to observe the principles that govern the awarding procedures of public procurement contracts, the following activities must be taken into account: establishing a frameworks that is relied on trust, correctness and impartiality; limiting those elements of a subjective nature that influence decisions in the awarding process of public procurement contracts; eliminating the preferential treatment granted to local business operators; securing the “visibility” of rules, opportunities, internal procedures, and of results; eliminating restrictive, abusive requirements; obtaining the best value for public funds, which are always considered as insufficient in relation to the existing needs; monitoring the costs generated by the development of the public procurement process, which includes the costs related to the administration of the process at the contracting authority level, as well as the bid preparation related costs; limiting error occurrence throughout the public procurement process; limiting fraud and corruption phenomena; developing a healthy public procurement market; studies and scientific researches economic edition, no. 15, 2010 395 conclusions the commitment and the attitude of decisional factors within the contracting authorities in relation to public procurement ethical issues are major conditions for the application of certain measures for the implementation of the above-mentioned activities. it is well known that an ethical procurement behaviour which is accepted by all the parties involved in the procurement process may limit or even avoid consequences of the following manifestations: unfair competition, as well as any action or deed that is contrary to fair usages in product purchasing, works performance and service supply activities; active corruption, which refers to someone deliberately promising, offering or giving, directly or indirectly, an undeserved benefit to an office holder, for personal or someone else’s advantage, in order to perform or hinder the performance of an activity implied by their functions; passive corruption, which refers to an office holder deliberately requiring or receiving, directly or indirectly, an undeserved benefit to an office holder, for personal or someone else’s advantage, or accepting an offer or the promise of such benefits, in order to perform or hinder the performance of an activity implied by their functions; conflict of interests, which refers to the situation when an employee of the contracting authority has a personal interest of a patrimonial nature that may influence the objective fulfillment of the tasks implied by their public position. the ethical procurement behaviour is represented by the use of a set of principles and rules, which all lead to the unaltered maintenance of social values. bibliography 1. ghidul pentru atribuirea contractelor de achizitii publice (public procurement contract awarding guidelines), published in official journal no. 894 bis/2.11.2006 2. atribuirea contractelor de achizitie publica si a contractelor de concesiunemanual de traning (awarding public procurement contracts and concession contracts – training manual), ministry of regional development and tourism 3. www.mie.ro 4. cod de conduita etica privind achizitiile publice (ethical code for public procurement), ministry of regional development and tourism 5. propuneri privind completarea si actualizarea ghidului pentru atribuirea contractelor de achizitie publica (suggestions for the completion and update of the public procurement awarding guidelines), ministry of regional development and tourism 6. fighting corruption and promoting integrity in public procurement, oecd 7. www.sourceoecd.org 8. www.sar.org.ro 9. guidelines for awarding public procurement contracts, official gazette, no 894, november 2006 10. performanta de mediu in achizitiile publice – aspecte legate de coerenta politicii (environmental performance in public procurement – policy coherence related aspects), oecd, september 19th 2003 11. recomandarea consiliului privind imbunatatirea performantei de mediu in achizitiile publice (council’s recommendation for improved environmental performance in public procurement), oec, january 23rd 2002 12. ghid pentru achizitiile publice durabile si eficiente din punctul de vedere al costului (guidelines for cost efficient and sustainable public procurements), iclei, second edition, 2007 13. integrity in public procurement good practice from a to z – oecd organisation for economic co-operation and development studies and scientific researches economic edition, no. 15, 2010 396 reverse logistics studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro conceptual issues regarding reverse logistics ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com abstract as the power of consumers is growing, the product return for customer service and customer retention has become a common practice in the competitive market, which propels the recent practice of reverse logistics in companies. many firms attracted by the value available in the flow, have proactively participated in handling returned products at the end of their usefulness or from other parts of the product life cycle. reverse logistics is the flow and management of products, packaging, components and information from the point of consumption to the point of origin. it is a collection of practices similar to those of supply chain management, but in the opposite direction, from downstream to upstream. it involves activities such as reuse, repair, remanufacture, refurbish, reclaim and recycle. for the conventional forward logistics systems, the flow starts upstream as raw materials, later as manufactured parts and components to be assembled and continues downstream to reach customers as final products to be disposed once they reach their economic or useful lives. in reverse logistics, the disposed products are pushed upstream to be repaired, remanufactured, refurbished, and disassembled into components to be reused or as raw material to be recycled for later use. keywords logistics; supply chain; reverse flows; network. jel classification m31 1. introduction because the reverse logistics is driven by two guidelines, of profit and legal regulation, it becomes more complex than the forward distribution system, in terms of managing, controlling and processing. guide et al (2001) studied seven characteristics that distinguish reverse supply systems from the features of forward logistics:  return uncertain timing and quantity of returns, which adds a degree of unrest to demand management and inventory control.  a need to balance returns. too many items returned will cause a firm to penalize unnecessary port inventory cost.  disassembly is a necessary process in remanufacturing, but the rate of recovery is uncertain, which brings difficulty to control sequential operations.  uncertainty in materials recovered from returned items, which raises the question of coordinating inventory.  the requirement for a reverse logistics network. companies should establish collection centers and remanufacturing centers to coordinate the return and remanufacturing process.  complication of material matching restrictions. customers often require some components of the product and will cause a problem that customer satisfaction when a part is not obtained.  stochastic routing problems for materials in the repair and remanufacturing operations. this feature will bring in variability in operation causes coordination and control problem in reverse operation. 326 conceptual issues regarding reverse logistics in addition to these operational differences between forward and reverse supply systems, conceptual system is a system before firing, while the reverse system is both a pull and push (krikke, 1998). in the forward system, the eventual goal is to serve the end customers, while in a reverse system the targets are secondary customer groups, and firms have to implement obligatory returning process from the end-use customers. therefore much coordination and adjustment are necessary in implementing the push and pull systems in reverse logistics. in the literature, there have been several streams of research on issues relating to reverse flows. these include reverse flow network design, inventory control for profits, closed-loop supply chain, green supply chains. 2. components of reverse logistics 2.1. return type products, parts and materials are frequently reverse logistics cycle for different reasons at different points in the life cycle of the product of each element. there are four major returns in practice (krikke et al, 2004):  end of life return (eol): this return takes place when the product life cycle of the item comes to an end.  commercial return: the reasons that these returns are made include wrong orders, customer dissatisfaction, defects, problems with installation etc.  end of use return: this category encompasses returned items after some period of operation due to end of lease, trade-in or product replacement. the products may be refurbished or repaired to be sold in an alternative market or in a geographically different market.  reusable items: products in this classification are separate parts of major products such as reusable containers and pallets, recycled toner bottles, etc. there have also been many studies on inventory control for reverse flows, aiming at integrating the reverse flow into the manufacturers’ materials planning. 2.2. recovery options the first step in reverse logistics with respect to recovery program is to collect the items. firms have different collection systems and strategies contingent on the type of product. with the products collected, firms sort the items based on the condition of the product (jayaraman, 2006). then companies seek to extract value out of the products or components as much as possible by assigning the returned items into an appropriate recovery method. based on the literature, the recovery options are: reuse, remanufacturing and recycling. reverse logistics is concerned with planning decisions and scheduling issues involved in manufacturing, warehousing, shipping, collection and reprocessing of used products, damaged products, unwanted products, outdated products and shipping/packaging materials. there are various reasons why those products are taken back instead of being thrown away: they can be recycled to get reusable raw materials; after refurbishment or repair, they can be resold on the market to gain more profit, they have to be reprocessed to comply with government regulations and environmental law etc. 2.3. secondary market new products are generally transacted in the primary market. the channel process of the primary market, as described by the forward supply chain system, is that flows are 327 olariu from factory to manufacturer’s distribution center, to retailer distribution center, to the store, and then to the end customer. however, some retailers or remanufacturers face how they have to sell remanufactured products since the markets for used products are subdivisions of the primary market and are interwined. a secondary market is defined as a selling channel outside of the primary market, mainly to salvage or overstock brokers (tibben-lembke, 2004). even though, secondary markets are important transaction places, the structure or sales channels in the secondary markets have not been well documented in comparison to the operational aspects of the reverse supply chains system. 2.4. network design for reverse flows even though network formulation in the context of forward flow systems has been widely studied, the system performing forward activities in a traditional supply chain is not directly applicable to the network structure of reverse logistics since the forward flow system is nor originally designed to handle returned products. due to on-equipment of handling return products in the forward system and different cost structures, such as the costs of collecting, classifying, testing and disassembling returned goods that occur only in the reverse channel but not in the forward system (jayataman, 1999). fleischmann et al (1997) also indicated that the reverse channel is not necessarily a symmetric picture of forward distribution. the studies on network design for reverse flows mainly focus on the design of logistics structures for shipping used/returned products back to the facilities. among the more recent results, fleischmann et al (2000, 2001) studied the network design problems and analyzed the impact of reverse flows on network designs and operational performance of a supply chain. the general processes associated with reverse logistics are described as follows (fleischmann et al, 1997):  collection: refers to all activities rendering used products available and physically moving them to some point for further treatment. collection may include purchasing, transportation and storage activities.  inspection/separation: denotes all operations which determine whether a given product is in fact reusable and in which way. thus, inspection and separation result in splitting the flow of used products according o distinct reuse options. inspection and separation may encompass disassembly, shredding, testing, sorting and storage steps.  re-processing: means the actual transformation of a used product into a usable product again. this transformation may take different forms including recycling, repair and remanufacturing. in addition, activities such as cleaning, replacement and reassembly may be involved.  disposal: is required for products that cannot be re-used for technical or cost reasons. this applies to products rejected at the separation level due to excessive repair requirements but also to products without satisfactory market potential, due to obsolescence. disposal may include transportation, landfilling and incineration steps.  re-distribution: refers to directing reusable products to a potential market and to physically moving them to future users. this may include sales, transportation and storage activities. 328 conceptual issues regarding reverse logistics 3. closed-loop supply chains and green supply chains most existing studies on closed-loop supply chains focus on management strategies and policies. the research on green supply chains focuses heavily on environmental issues, the linkages between the operations policies of supply chain partners, and the activities performed by plant managers, suppliers, and customers. reverse logistics is a growing area in logistics management. concern about environmental issues such as pollution, traffic congestion, global warning, disposal and clean-up hazardous materials has led to a number of environmental laws and eu directives that affect logistics systems design and strategies. thus reverse logistics can be defined as: “the process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal”. essentially, reverse logistics is the process of moving goods from their point of consumption to the appropriate link in the supply chain for the purpose of capturing any residual value through remanufacturing or refurbishing, or the proper disposal. thus, reverse logistics management represents a systematic business model, to profitably close the loop on the supply chain. but, reverse logistics is not only about reusing containers, recycling packaging materials, redesigning packaging to use less material, or reducing the energy use and pollution that results from transportation. these activities, while important, are more in the realm of green logistics. if goods or materials are not sent backwards through the supply chain, then an activity is probably not a reverse logistics activity. reverse logistics also includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls and excess inventory. key management elements in reverse logistics include the following:  gatekeeping to screen defective and unwarranted returned merchandise at the entry point into the reverse logistics process.  short disposition cycle times related to return product decisions, movement and processing to avert a lengthy ageing process on returns.  reverse logistics information systems to properly track returns, and measure disposition cycle times and vendor performance.  central return centers or processing facilities dedicated to handling returns quickly and efficiently.  zero returns policies that avoid accepting any physical returns and instead set maximum values of returned products that are payable to customers.  remanufacture and refurbishment of products, which has the following categories: repair, refurbishing and remanufacturing to recondition or upgrade products, and cannibalization and recycling to use or dispose of products.  asset recovery classifies and disposes returned goods, surplus, obsolete, scrap, waste and excess material products, and other assets, to maximize returns to the owner, and minimize the costs and liabilities associated with disposition.  negotiation of the value of returned material without any pricing guidelines. this task is often performed by specialist third parties, who advise the primary participants in the supply chain who are working to transfer ownership of the material back to the original source.  financial management policies to properly handle accounting and reconciliation issues related to returned products.  outsourcing reverse product flow, to reverse logistics outsource suppliers who can be used as a benchmark to help determine what and how reverse activities should be performed and how much those activities should cost. reverse logistics reduces the amount of waste disposed into the environment, thus, reducing the reliance on landfills and energy. saving energy is another valuable 329 olariu environmental motive. many companies today want to appeal to their customers as being “environmentally responsible”, a part of their marketing image. this has become more pressing as customers became selective of green and/or environmentally friendly products. public environmental concern, coupled with sustainable development, has created opportunities for organizations to differentiate their products from their competitors by being “greener” (johnson, 1998). the need to consider reverse and green logistics has also seen the growth of thirdparty reverse logistics providers who assist companies to meet new guidelines and enhance their business opportunities. environmental concerns about packaging, recyclability and reusability are becoming more important, and the implementation and management of reverse logistics will also affect logistics decision-making in the future. 4. in conclusion implementing reverse logistics has numerous benefits. these benefits are economical, environmental, marketing image, market share and exposure, and asset protection. the main motive behind reverse logistics is economical – minimizing cost and increasing profits. reverse logistics is a chance to recapture value from returned products through recovery/reuse/repair options. beside reducing cost, many organizations take back their competitors products in addition to theirs as a strategy to increase their market share. some companies offer to collect all brands of a certain product in exchange for a price discount for the company’s own brand. critical success factors for reverse logistics programmes to capture the key elements above include the following: management and control by mapping or flowcharting the reverse logistics process through the suppliers and other supply chain members, and developing partnerships to achieve reverse logistics goals and economies of scale; measurement by adopting full product life cycle and end of product life costing as they relate to reverse logistics activities and the product supply chain and finance to properly allocate sufficient resources for reverse logistics activities and environmental initiatives. references blumberg, d.f. (2005) introduction to management of rverse logistics and closed loop supply chain processes, crc press. bowersox, d.j., closs, d.j. & cooper, m.b. (2002) supply chain logistics management, new york, ny: mcgraw hill. dale, r.s. tibben-lembke, r.s. (1998) going backwords: reverse logistics trends and practices, university of nevada-reno: reverse logistics executive council. dyckhoff, h., lackes, r. & reese, j. (2004) supply chain management and reverse logistics, berlin heidelber: springer-verlag. fleeischmann, m., (2001) reverse logistics network structure and design, rotterdam, the netherlands: erim report series research in management. grant, d.b.; lambert, d.m.; stock, j.r.; ellram, l.m. (2006) fundamentals of logistics management, mcgraw-hill education; johnson, p.f. (1998) “managing value in reverse logistics systems”, transportation research part e: logistics and transportation review, 34 (3), 217-227. 330 conceptual issues regarding reverse logistics tibben-lembke, r.s.; dale, r.s., (2002), “differences between forward and reverse logistics in a retail environment”, supply chain management: an international journal 7, 5, 271-282. stock, (1998) development and implementation of reverse logistics programs, 9-10, 20. 331 ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com keywords logistics; supply chain; reverse flows; network. jel classification m31 1. introduction 2. components of reverse logistics 2.1. return type 2.2. recovery options 2.3. secondary market 2.4. network design for reverse flows 3. closed-loop supply chains and green supply chains 4. in conclusion implementing reverse logistics has numerous benefits. these benefits are economical, environmental, marketing image, market share and exposure, and asset protection. the main motive behind reverse logistics is economical – minimizing cost and increasi... references (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 23 global islamic finance assets: analysis of the islamic banking in algeria sissani midoun university ibn khaldoun ,tiaret,algeria sissanim@gmail.com tagrerout med university hassiba ben bou ali chelf tagmouh2@yahoo.fr abstract no doubt that islamic banks have proved its efficiency and effectiveness in both :in methods of financial management and also in the mobilization of financial resources for the sake to promote development in various economic sectors not only in islamic countries but even in european as well and of course according to islamic sharia rules. the aim of this paper is to examine the performances and the islamic methods adopted to improve the allocation of financial resources and its specific ways to boost earnings. besides, islamic financial assets were involved in huge financial markets due to its high quality of financial services provided to investors. actually, islamic banking exists in more than 67 countries and by the end of 2019 they may reach about 75 countries in the world. the results show that legislation, shortage of qualified individuals and the lack of using a high technology are the most critical factor of islamic banking in algeria. keywords: islamic banking; islamic assets; usury; islamic sukuk; business ethics jel classification e44; g10; g21 introduction rising trends of islamic finance has increased since its establishment in 1970s and has expanded with its principles in the world wide , especially during and after the global financial crisis 2007-2008 which led to difficulties in many conventional banks however, global islamic realized an asset over 1.3 trillion according to (imf, wp/11/156). and hit 2.4 trillian dollars in 2017.which means about 10℅ percent per year .that leads us to anticipate that the assets of islamic banking will reach over 3.8 trillian dollars by 2023. islam is one of the religions that prohibited the use of usury and so called ‘riba’ in all business practices and dealings since money is an important tool in our hands that we must employ it as a source to develop our economies. the concept of islamic finance that the world knows today is based on an investment motivated by moral and social responsibility. we also noticed that, it is hard to distinguish between islamic banking and conventional banking just by giving and inserting irrational justifications from the islamic sharia to “justify and lend credibility to the islamic brand name (khan, 2010). it is not surprising that the algerian government has launched islamic banking as an experiment to enlarge it year by year and to encourage people and business dealers to deal with islamic financial products ,especially that algerian government entered new reforms in the algerian financial market in the last finance law 2018. global islamic finance assets: analysis of the islamic banking in algeria 24 we, also agree that researchers may have different results on the same topic according to the variables and even the time series or the country profile studied. in our turn, our results differ from former studies(aysan, disli, & ozturk, 2018) (haseeb, 2018) since it determines the merits of the islamic monetary system through attracting attention to the relative stability afforded by the interest-free system and also encourage the continued moderate and modest success of islamic banks in algeria to target primarily business generated from strategic partnership with domestic and regional sovereign and public sector entities. moreover, our results also illustrate the great focus of islamic banking on securing facilities with tangible collaterals in building business relationships. islamic finance is not a religious system, but it’s an ethical system for all people to make money either muslim or non-muslim. literature review various writings on islamic banking and finance dated to the twentieth century. the birth of islamic banking and islamic economics goes to the deem past where most arabic countries were under the dominant western systems of capitalism and communism .this part of the world suffered from colonizers who combated islam religion sharia . at that period famous islam thinkers worked hard to show and found islamic socio-political and economic systems, among these islamic thinkers ,we find,ibn bidis a famous islamic thinker from algeria , mohamed ali in egypt, mohammad baqir al-sadr (1961) in his book entitled our economy, and sayyid abul a'la maududi in economic system of islam, 1970. during this period there were many experiments to establish islamic houses or banks, but they did not see success for political reasons. the first islamic bank was established thanks to a great effort and support from the economist, dr. ahmed al-najjar who founded ‘ bayt guamr bnak ‘ in egypt in 1961(siddiqi, 2006). actually, there are lot of developed and developing countries which suffer from a lack of real harmony and effects between the degree of development and economic growth since poverty rate increased and the number of wealthy people increased and even doubled in many cases. the modern definition of development represents the objectives of islamic finance after the failure of the strategies and theories to achieve development and since 1980, the united nations began to look for a new definitions for development and define it as a sustainable civilization process and a human right to create structural transformations and social and economic changes that allow for a steady escalation of the capacities of the society concerned and continuous improvement of the quality of life in it(iqbal & molyneux, 2005). islamic banking is currently growing fast and contribute in varying proportions in the economic growth either in a low or high degree and this due to the government policy and the extent of the application of islamic banking but in both cases ,islamic banking really represents a significant determinant(hassan & bashir, 2003) . the potential effects of islamic banking on economic growth was involved with individual countries and even studied the macroeconomic stability(el-galfy & khiyar, 2012) and investigated a comparative performance between conventional banking and islamic banking. definitions islamic banking system is the financial institution which operations and activities are based on islamic sharia (mohamad, abdullah, mohamad, & abidin, 2013) however, (abdelrahman, 2015) defines islamic banking as an institution that midoun, med 25 provides financial and investment services that are complaint with sharia and from this definitions we can conduct that ,islamic finance system compared to western conventional system is related to islam religion rules. the principals of islamic finance are based on three main factors which are mentioned in the quran and are an important part of sharia and islamic jurisprudence. they are riba, gharar and maysir, which are explained in detail below. halal and haram concept : the concept of halal means permissible and derived from the by the islamic religion and the same deal for the concept oh haram and haram and both represent the foundation of islamic finance(mukhtar & mohsin butt, 2012).that halal what god and his messenger allowed to muslims .this term also means what is permitted ,pure, permissible and clean .however, haram means what is forbidden by god and his messenger . riba : riba is one of the most dangerous sin ad plagues of societies and all religions agreed on its prohibition. such as giving someone borrow money to someone else and asks him to return it with an increase of 1% as interest. riba is derived from the quran and is unanimously accepted by all islamic thinkers. they also divided riba to two types ,the first is called ‘riba an nasiyah’ and the second is named ‘riba al fadl’(todorof, 2018). gharar : is cheating in business and can be defined as the manner of hide and push push partners into risks (asni & sulong, 2018) and a sort of abuse of trust . we also can distinction between two sorts of gharar: gharar elfahish which is forbidden by islamic sharia while the second is tolerated . table 1: the islamic development bank history chronology of islamic banking country date the mit ghamr savings bank . egypt in 1961 the pilgrims saving corporation of malaysia. malaysia in 1963 the islamic development bank opened. saudi arabia in 1975 the islamic insurance company (based on takaful) company sudan in 1979 the world’s first islamic mutual fund in indianausa usa in 1990 the first tradable sukuk malaysia in 1990 the citi islamic investment bank bahrain. in 1996 the islamic financial services board (ifsb) was established malysia in 2002 the first islamic commercial bank founded outside the muslim world uk in 2004 source: https://www.dummies.com/personal-finance/investing/emerging-markets islamic banking has emerged modestly in the last two decades with the first bank in egypt in 1961 and after 14 years the islamic development bank opened in saudi arabia in 1975 then the first tradable sukuk in malaysia in 1990. actually, the number of islamic banks have registered a great growth and reached 505 islamic banks in the world including 207 islamic windows. https://www.dummies.com/personal-finance/investing/emerging-markets/timeline-the-evolution-of-islamic-finance/ global islamic finance assets: analysis of the islamic banking in algeria 26 methodology this study used qualitative research methods and some financial ratio because of the great inadequate data about islamic banks in algeria in order to analyze the performance of islamic banking in algeria, we have also tried to interview the baraka manager in order to get some descriptive statistics to use them both in analyzing the positive elements and obstacles faced by islamic banks and to prescribe financial reforms for this sector. global islamic finance assets growth from 2012 to 2019. we do agree that, islamic banking is no longer a monopoly of islamic countries or that believe in islam religion since this kind of banks has spread in the word as a real financial industry and globalization has helped in its expansion ,too. we can also notice that islamic banking assets jumped from 1.7 trillian dollars in 2012 to 2.2 trillian dollars by the year 2016 and hit 2.8 trillian dollars in 2018. chart 1: global islamic finance industry assets source: islamic financial services broad during the beginning of the year 2019, the percentage of islamic investments in the infrastructure and sukuk bonds increased significantly, as these investments witnessed a rapid development in the field of financial technology sector (fintech) .the performance of the islamic banking sector grew by a mere 0.9% in 2018, compared to 4.3% in 2017. as many islamic banks began adopting advanced electronic systems to facilitate services and increase the efficiency of islamic banking, these banks also developed methods of innovation in the manufacture of islamic financing tools. from the previous table, we find that the statistics indicate a possible rise to 3.1 trillian dollars by the end of 2019 and probably may reach about 3.7 trillian dollars in 2022. why islamic banking system is growing fast ? from the chart below, we found that islamic banking prohibit speculation and interest according to the islam religion. moreover, islamic banking doesn’t enter in any 0 0.5 1 1.5 2 2.5 3 3.5 4 1.741 1.6981.931 2.063 2.202 2.417 2.6322.873 3.141 3.442 3.782 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 midoun, med 27 prohibited deals or investments like investment in alcohol sector or drugs. they avoid toxic assets, too and prefer to invest in real and durable assets. chart 2: islamic banking source : hassan, k., & lewis, m. (eds.). (2009). handbook of islamic banking. edward elgar publishing more details about islamic banking products. musharaka : this the term refers to an islamic product. it is also a financing participation of the bank in a venture by a company or a customer. the customer and the bank together raise the capital, usually the working capital, for the venture. in the musharaka agreement both, the bank and the customer share the profits and losses as per to mutually agreed proportions(billah, 2019). murabaha (buy and resale) : is one of the most famous sale contract based on negotiation used by the islamic banks(faishal & saleh, 2019) .it is a contract between a customer and the bank. murabaha is not a loan given on interest but in reality it is an arrangement wherein the bank purchases goods upon request of the client, who in his turn makes deferred payments that cover the costs and at an agreed profit margin for the bank. elisstissnar (manifacturing contract): is similar to a regular financing for working capital. all features are similar to a murabaha except that the actual delivery of goods happen at a later date after the receipt of all due payments(chong & liu, 2009). bairo elssalam ( foreword sale) : ii is contract in which the byer and the seller agree to use the term ‘bairo elsslam’ as a main condition in their contract in basic source of islamic banking: it relies on 4 criteria 1inseration from koran and souna ( sharira) 2-el_idjmaa 3el_kiass 4el_idjtihad prohibition / 1interest 2speculation prohibition / 1invest in alcohol & drugs 2toxic assets ismamic contracts are: 1partnership and so called ( musharaka) 2buy and resale and so called ( mourabaha) 3manufacturing contract called ( elisstissnar) 4forward sale and also called (bairo el salam) global islamic finance assets: analysis of the islamic banking in algeria 28 advance where they specify the goods quality , quantity ,price …ects and which may be delivered at a future date in exchange of an advance price fully paid at the time of contract. moreover, the objects of this sale must be goods and cannot be gold, silver, or currencies based on these metals. islam philosophy towards economy islam not only prohibits dealing in interest but also islamic banking is an instrument for the development of an islamic economic order. islam makes a clear distinction between what is halal (lawful) and what is haraam (forbidden) in purs, islam makes it obligatory on the individual to spend his wealth judiciously and not to hoard it, keep it idle, or to squander it. the economic system envisaged by islam aims at social justice. first, islam seeks to prevent the accumulation of wealth in a few hands to the detriment of society as a whole through its laws of inheritance. more than 500 islamic financial institutions operate in the world today.the number of islamic financial institutions grew from around 85 in 1996 to 200 in 2000 and to 300 in 2008.an islamic bank is not permitted to lend to other banks at interest. islamic banking refers to a system of banking or banking activity that is consistent with principles of shariah and guided by islamic economics. since this system of banking is grounded in islamic principles, all the undertakings of the banks follow islamic morals. therefore, it could be said that financial transactions within islamic banking are a culturally distinct form of ethical investing. for example, investments involving alcohol, gambling, pork, etc. are prohibited. islamic banking plays at least four important roles: it encourages lending, stimulates saving, promotes financial stability, and contributes to financing morally acceptable projects (imam & kpodar, 2016) islamic finance is considered a stable financing system that is capable of promoting growth and creating long-term employment. according to the literature concerning the relationship between islamic banks and economic growth, one could safely say that islamic banking is a new financial system that must strictly comply with islamic sharia regulations. what is the difference between islamic banking and conventional banking? we do agree that conventional banks are based on fully man made principles. however, islam banking teaching says that, to make money from money is prohibited and wealth can only be generated through legitimate trade and investment. any gains relating to this trade are shared between the person providing the capital and the person providing the expertise. as matter of fact, money itself has no intrinsic value and therefore islam rules forbids people from profiting by lending it, without accepting a level of risk, i.e., interest (known as riba) cannot be charged. what is riba and why is it prohibited? in arabic, riba literally means “excess”. simply stated, riba is interest. any amount, big or small, over the principal in a contract of loan or debt is riba, prohibited by the quran, regardless of whether the loan is taken for the purpose of consumption or for some production activity. prohibition of interest is ordained in islam in all forms and intent. this prohibition is strict, absolute, and unambiguous. it therefore means that interest is prohibited as it leads to injustices (zulm), and islam is against all forms of injustice and exploitation and seeks an economic system that aims at securing extensive socio-economic justice. the islamic law of prohibition of riba was https://www.sciencedirect.com/science/article/pii/s2214845017300194#bib55 midoun, med 29 originally not based on economic theory, but on divine authority, which considers the charging of interest as an act of injustice. the relation between islamic banks and the central bank. one of the most important role of central banks consists in supervising the activities applied on banks such as checking registers and books for the purpose of validating assets and the different operations. the central banks are involved in developing and boosting rules and setting the range of dealing with specific activities and clients. the relation between islamic banks and central banks is a key driver to increase the growth of islamic banks through assisting them and creating the best environment which helps both the conventional banks and islamic banks to work integration and consistency. therefore, central banks have to facilitate the integration and the work of islamic banks; they have to and support them in order to contribute positively in the sustainable development. islamic banks need special treatment and adopt special rules to encourage them in their performance since they don’t deal with riba. besides, special reserves, limitation on equity, voting rights, and encouraging their wide spread and also in creating new branches. some states have issued special legislation for islamic banks . to prevent the damage to economy that may be cause by the collapse of banks. in some states the central bank provides finance to conventional banks in the form of an interest-based debt and provides liquidity for islamic banks as a form of mourabaha or moucharaka. the central bank can allow limited short-term temporary facilities free of interest of islamic banks on the basis that these banks would place compensatory funds of the same amount for an equivalent duration. islamic banking in algeria one of the available options to mobilize domestic savings for the algerian authorities is to move towards islamic banking which in the last decade and in many economic sectors. the islamic products can be applied in algerian banks as an experience to withdraw investors who prefer islamic methods and rules such as murabaha or the purchase of a product and resale it in the form of murabaha according to the sharia rules far from usury deals. the purpose here is to attract citizens, both local or foreigners, to buy bonds that allow them to participate in investment projects in different sectors and without interest rate in return for an agreed profit margin in the case of profit and accept losses in the case of high risk or loss. success of islamic banks in algeria depend on: ✓ use of the high technologies in islamic banks(al-sartawi, 2017). ✓ the rationalization of the algerians’ point of view towards islamic banks. ✓ provide a legal environment that allows the work in accordance with islamic rules. ✓ opening the capital of this type of banks for public subscription by 50% and 50% of the contributions of the state sectors such as the ministry of religious affairs and the major productive companies of the state. ✓ digitization of islamic banking through using safer and more secure technology in this sector to protect all partnerships. ✓ training of experts in the field of islamic banks. ✓ allowing the islamic banks to invest and share international investments. ✓ benefit from the experiences of leadership islamic banks at international level. global islamic finance assets: analysis of the islamic banking in algeria 30 obstacles faced by islamic banks in algeria before to discuss the problem faced by islamic banks in algeria. let’s give a short idea about one of the famous islamic banks in algeria so called al baraka bank of algeria is the first bank with mixed capital (public and private). it was established on may 20, 1991 with a capital of 500,000,000 daj, and it began practicing its activities physically during the month of september 1991.we can sum up the most important obstacles which islamic banking face and among them al baraka bank in algeria as fellow : hoarding cash at home: experts and economists believe that the circulation of liquidity in algeria outside the official channels is due to the unwillingness of the algerian society to open the door to deal with conventional banks for fear of disobedience to god and the benefits of "usury". the total absence of an islamic financial market :no doubt that the existence of islamic monetary financial market can contribute to the revitalization of islamic transactions .therefore , it became necessary to give the opportunity for islamic banks to operate in accordance with islamic rules and protect them from the unfair deals of the central bank(hesse, jobst, & sole, 2008). the multiplicity and contradiction of judgments: the islamic judgments concerning faith are largely fixed, however concerning transactions are many and multiple. table 2: financial indicators of al baraka group from 2014 to 2018 financial indicators 2014 2015 2016 2017 2018 total operating income 918 1000 1074 999 1021 net income to equity 152 163 152 169 174 financial position total assets 23464 24618 23425 25453 25524 total financing 17624 18358 17465 19123 19207 total customers 19861 20164 19179 20670 20750 profit rates return on average equity %14 %14 %13 %09 %12 operating expenses %57 %54 %53 %57 %56 financial position rates the ratio of total assets %25 %24 %24 %26 %25 the total employees 10853 11458 12644 12795 12865 total number of branches 549 586 697 675 679 source: annual report 2018, from : https://www.albaraka.bh/en-gb/annual-reports/ https://www.albaraka.bh/en-gb/annual-reports/ midoun, med 31 from the table 2 above, it is clear that the profits of al baraka banking group are increasing from 2014 to date 2016, by downloading the total operating income index, which reached us $ 1074 million in2016, down from 2017, amounting to about $ 999 million. however, for the net income to equity, an increase was observed throughout the study period, but it decreased in 2015 5 and has increased again to 174 in 2018. on other hands, the number of total customers moved from 19861 in 2014 to 20670 in 2017 however, we also can notice that the total number of branches is growing fast from 549 to 679 and this islamic bank employs more than 12865 in different countries. table 3: evolution of al baraka bank in algeria (in millions dzd) al baraka bank in algeria 2016 2017 2018 balance sheet 210 344 248 633 270 996 own funds 24 312 24 546 27 429 customer deposits: 170 137 207 944 223 995 financing 110 711 139 677 156 460 off-balance sheet 64 210 72 108 61 124 net banking product 8 539 8 669 11 850 net profit 3 984 3 548 5 167 source :annual report 2018.from : www.albaraka-bank.com/wp-content/uploads/2019/11/rapport2018-fr.pdf from the table 3 above, we can also notice that the balance sheet stands at 270 996 million algerian dinars at the end of 2018, recording an increase of 22 363 million algerian dinars corresponding to + 8.99% compared to 2017. the own funds reached 27,429 million algerian dinars which means + 11.75% compared to 2017 against 24,546 million algerian dinars, in 2017.however, customer deposits reached 223,995 million algerian dinars, registering an increase of 16 billion algerian dinars corresponding to + 7.69% compared to 2017 and + 31.59% compared to 2016.we can see obviously, that al baraka bank financing increased in algeria by 16 783 million algerian dinars corresponding to + 12.02% compared to the previous year, to stand at 156.460 million algerian dinars at the end of 2018.finally, it seems clear that net profit knew a positive jump since it reached more than 5,167 million algerian dinars against 3,548 million algerian dinars at the end of 2017and 3 984 million algerian dinars in 2016, thus means an increase about 1,183 million algerian dinars over the last three years, which means a successful l rate over 29.70% increase. recently algeria knows a serious political reforms especially after the fall down of heads of the political and economic corruption in algeria(midoun, 2016) who squandered colossal sum of public money and took advantage from their political positions as ministers(sissani & belkacem, 2014) and have always worked against the establishing of islamic banks only because public banks were their easy way to finance their suspicious investment which was destructive to the local economy. unfortunately, they have only abused from the use of public money estimated at 200 billion dollars into conventional banks. and due to the suffocating financial crisis in algeria since 2008, the policy makers found that the solution was to open two of the islamic windows as an experiment. today, after the fall down of the heads of corruption, and the issuance of the new finance law, the islamic banks became an alternative solution(platonova, asutay, dixon, & mohammad, 2018) and an imposed reality not only in algeria but in the whole world as well. nowadays, lot of countries are racing to open islamic banks to https://www.albaraka-bank.com/wp-content/uploads/2019/11/rapport-2018-fr.pdf https://www.albaraka-bank.com/wp-content/uploads/2019/11/rapport-2018-fr.pdf global islamic finance assets: analysis of the islamic banking in algeria 32 attract huge capitals, especially from gulf countries and created a hot competition between countries like france, britain and even switzerland to absorb arab capitals. conclusion there is, however, a misconception that islamic finance is for muslims only. this is far from the truth. muslims can safely invest in industries such as telecommunications, technology, the health sector and temp agencies. there is no requirement that firms whose shares are bought are of a special islamic character. it is time that muslims go ahead and invest their stagnant funds into the islamic banks projects, which apply the islamic religion, including moderation and benevolent disputes through islamic ethics. in this research, we tried to talk about islamic banks as a model that permits to gather and accumulate capitals in order to create islamic financial market. in algeria, it seems clear that the government budget suffer from a serious deficit caused by the lower price of the barrel, as matter of fact moving quickly to develop islamic finance with sharia compliant may solve a little bite the critical situation. the government allowed banks to start offering islamic products by december; however the other state banks will receive the greenlight by the end of 2018. this decision is estimated to attract at least 23.97 billion us$. the financial bill 2018 will accommodate sukuk. the algerian public treasury intends to tap the islamic capital market several times until 2022 with the first issuance planned for 2018. unfortunately, islamic finance in algeria has remained relatively undeveloped due to historical and political reasons, and because of political corruption and financial instability as main reason. only two islamic banks, the first is al baraka bank and gulf bank algeria are currently allowed to offer islamic products. finally, the algerian authorities and policy makers can take advantages from the islamic banks as an economic to develop the national economy and diversify its incomes instead of relying on the oil prices. references abdelrahman, a. y. (2015). does islamic banking help in economic development of muslim countries? al-sartawi, a. (2017). the effect of the electronic financial reporting on the market value added of the islamic banks in gulf cooperation council countries. paper presented at the 8th global islamic marketing conference. asni, f., & sulong, j. (2018). hybrid contracts according to islamic perspective. international journal of academic research in business and social sciences, 8(5), 453-458. aysan, a. f., disli, m., & ozturk, h. (2018). bank lending channel in a dual banking system: why are islamic banks so responsive? the world economy, 41(3), 674-698. billah, m. m. s. (2019). musharakah venture capital modern islamic investment management (pp. 83-89): springer. chong, b. s., & liu, m.-h. (2009). islamic banking: interest-free or interest-based? pacific-basin finance journal, 17(1), 125-144. faishal, m., & saleh, c. (2019). development of identical delivery quantity model in inventory management with delayed payments based on bank interest rates and murabaha systems. paper presented at the iop conference series: materials science and engineering. midoun, med 33 haseeb, m. (2018). emerging issues in islamic banking & finance: challenges and solutions. academy of accounting and financial studies journal, 22, 1-5. hesse, h., jobst, a. a., & sole, j. (2008). trends and challenges in islamic finance. world economics, 9(2), 175-193. midoun, s. (2016). the algerian economy governed by black corruption: an empirical study from 2002 to 2015. studies and scientific researches. economics edition(24). mohamad, m. t., abdullah, m. y., mohamad, m. a., & abidin, u. z. a.-a. z. (2013). the historical development of modern islamic banking: a study in south-east asia countries. african journal of business management, 1(1), 114. mukhtar, a., & mohsin butt, m. (2012). intention to choose halal products: the role of religiosity. journal of islamic marketing, 3(2), 108-120. platonova, e., asutay, m., dixon, r., & mohammad, s. (2018). the impact of corporate social responsibility disclosure on financial performance: evidence from the gcc islamic banking sector. journal of business ethics, 151(2), 451-471. sissani, m., & belkacem, z. (2014). the effect of political risk on foreign direct investment: the case of algeria. hyperion economic journal, 2(3), 29-35. todorof, m. (2018). shariah-compliant fintech in the banking industry. paper presented at the era forum. microsoft word apostoaie constantin marius_eng.doc the importance of knowledge on the evaluation criteria in university scientific research projects cristian marius toma1,2 1„al. i. cuza” university of iasi, romania, 2„grigore t. popa” university of medicine and pharmacy iasi, romania abstract scientific research is part of any university mission, at least of big universities, as it represents the complementary element required by the learning process. a learning process based on engendering knowledge is much more valuable and competitive than a learning process which is reduced to a mere transfer of knowledge from the teacher to the students. the important universities consider that “the development of scientific research as a fundamental competence is essential for survival in a more and more competitive environment on global level and that is why, research should be part of the university mission”1. this study aims to highlight how important it is for the university members to be aware of the evaluation criteria for the research projects they undertake. for this purpose, i have interviewed a number of 55 persons, project managers and team members in the projects from the “research for excellency” program and the national plan of research, development and innovation pn ii 2007 – 2013. out of the evaluation criteria for research, the most important ones were considered to be the scientific quality of the project and the quality of the human resources involved in the project. key words evaluation, evaluation criteria, scientific research, research project jel codes: i 21, i 23 introduction the society based on knowledge has the mission to engender knowledge, disseminate it through education and professional training, spread and put it into value in innovations and technological development. even more, investments in research, innovation and technological transfer ensure the economical development of the society. in a certain measure, these desiderata are fulfilled due to the role played by higher education in general and the university research in particular. the development of scientific research increases the chances of receiving funds from government bodies and especially from the industrial field. at the same time, the reputation of the university and its social role is reinforced in the community it belongs to. in the same train of thought, bratianu et al (2007) assert that „in order to change the scientific research in a fundamental competence for the university, a competence which would confer consistency and power in the accomplishment of the competitive advantage, 1 hazelkorn e. (2006), university research management. developing research in new institution, oecd publishing studies and scientific researches economic edition, no. 15, 2010 514 there is needed a strategic decision coming from the management, on one hand, and the elaboration of a specific strategy backed up by an adequate allotment of funds, on the other hand”2. the purpose of the study starting from these considerations, i have made a study which aims to highlight the importance of the evaluation criteria in scientific research undertaken in the research projects. for this purpose,i have interviewed a number of 55 persons, managers and team members in the research projects and the ”research for excellency” program and in the national plan for research, development and innovation pn ii 2007 – 2013. materials and method the first evaluation criterion taken into consideration was the scientific quality of the research project expressed in the following: − adequate knowledge and up-dated presentation of the accomplishments in any field; − originality and innovative character of the research project; − relevance of the purposes of the research project on national and international level; − degree of interdisciplinary character (where it applies); − agreement between the research methodology and objectives of the project. the second criterion under study was the quality of human resources which have to be part of the project. hence, there were analyzed the following issues: − scientific competence of the project manager, estimated mainly in the articles published in isi reviews and other international data bases; − managerial competence of the project manager, his experience and previous results obtained in other research projects; − quality and experience of the research team members, estimated mainly in the articles published in isi reviews and other international data bases; − promotability of young researchers (phd and master students) in the research projects with a clear description of their role in the development of the research projects. another important criterion we have planned to monitor was the project implementation method. regarding this issue, we have analyzed the following: − the quality of the project management – taking into consideration the coherence of the work plan and the associated activities; − the way of disseminating the results of the project − feasibility and credibility of the project, taking into account the human and financial resources of the project; − the approach of the ethical problems of the project. one more important criterion investigated in the study was the usage of resources in the project, respectively : − degree of adequate equipment and experiment devices as well as the presence of adequate equipment and devices in the institution which undertakes the project − optimal dimensions of budget chapters in the research project. these parameters were ranged according to features expressed in percentages: very important, important, less important. 2 bratianu c. et col (2007), managementul cercetării ştiinţifice universitare / the management of university scientific reasearch , ed. economică, bucureşti, p. 24 studies and scientific researches economic edition, no. 15, 2010 515 results and discussions as regards the criterion ” the scientific quality of the research project”, most of the interviewed people (40, respectively 73% ) have shown that this criterion is very important (tabel 1, figure 1). tabel 1. the scientific quality of the research project criterion very important important less important the scientific quality of the research project 40 (73 %) 10 (18 %) 5 (9 %) th e sci e n ti fi c qu al i ty of th e re se arch proje ct 18% 73% 9% very important important less important figure. 1. the scientific quality of the research project tabel 2 and figure 2 present the answers given by the interviewed persons related to the quality of human resources which should be included in the project team. 36 subjects (respectively 68%) considered this criterion to be very important. tabel 2. the quality of human resources criterion very important important less important the quality of human resources 36 (68%) 9 (17%) 8 (15%) studies and scientific researches economic edition, no. 15, 2010 516 th e qu al i ty of h u m an re sou rce s 17% 68% 15% very important important less important figure. 2. the quality of human resources tabel 3 and figure 3 display the answers given by the interviewed persons related to the project implementation method, most of them, namely 34 (respectively 62%) also considered it to be a very important criterion. tabelul 3. the project implementation method criterion very important important less important the project implementation method 34 (62%) 12 (22%) 9 (16%) the project implementation method 22% 62% 16% very important important less important figure. 3. the project implementation method regarding the usage of resources in the project, 26 (47%) subjects considered it to be less important, 10 (18%) important and only 19 of them (35%) ranked it as very important (tabel 4, figure 4). studies and scientific researches economic edition, no. 15, 2010 517 tabelul nr. 4. the usage of resources in the project criterion very important important less important the usage of resources in the project 19 (35%) 10 (18%) 26 (47%) the usage of resources in the project 18% 35%47% very important important less important figure. 4. the usage of resources in the project evaluation criteria used in university scrientific research 40 10 5 36 9 8 34 12 9 19 10 26 0 5 10 15 20 25 30 35 40 45 very important important less important importanta criteriului n um be r of m an ag er s / p ro je ct m em be rs the scientific quality of the project the quality of human resources the project implementation method the usage of project resources figure. 5. evaluation criteria used in university scientific research projects studies and scientific researches economic edition, no. 15, 2010 518 conclusions the study we have undertaken has proved that the most important criterion in the view of the interviewed people is the scientific quality of the research project (40 subjects, representing 73 % from the total of interviewed persons). this criterion is followed, in the order of importance, by the quality of human resources, 36 (68%) of the subjects considered it was very important. the project implementation method is a less important criterion in comparison to the scientific quality of the project and the quality of human resources, but it does not lack importance, as 34 persons (62%) from the subjects ranked it as very important. out of the evaluation parameters used in university scientific research, in the view of the subjects, the usage of project resources was estimated as being less important, as only 19 (35%) of the subjects asserted it was very important. in conclusion, this study shows that the most important evaluation criterion in scientific research undertaken in research projects is the scientific quality of the research project, followed, in the order of importance by the quality of human resources, the project implementation method and finally the usage of project resources. bibliography 1. armstrong m. (2003), managementul resurselor umane: manual de practică / the management of human resources: a practical textbook, editura codecs, bucureşti 2. armstrong m. (2006), performance management, kogan page ltd., london 3. bratianu c., curaj a., vasilache s., baltei c. (2007), managementul cercetării ştiinţifice universitare, ed. economică, bucureşti 4. bendoly e., swink m. (200&), moderating effects of information access on project management behavior, performance and perceptions, journal of operations management, 25, 604-622. 5. hazelkorn e. (2006), university research management. developing research in new institution, oecd publishing 6. isoc d. (2007), managementul proiectelor de cercetare: ghid practice, ed. risoprint, cluj-napoca 7. isoc d. (2007), managementul proiectelor de cercetare: proiecte cu finanţare publică naţională şi internaţionala; capitalizarea şi gestiunea proprietăţii intelectuale: ghid practic, ed. risoprint, cluj-napoca 8. scott-young c., samson d. (2009), team management for fast projects: an empirical study of process industries, international journal of operations & production management, 29(6), 612-635 9. zait d., spalanzani a. (2006), cercetarea in economie si management. repere epistemologice si metodologice, ed. economica, bucuresti 10. winter m., smith c., morris p., ciemil s. (2006), directions for future research in project management: the main findings of a uk government-funded research network, international journal of project management, 24, 638-649 11. www.ancs.ro – the national authority for scientific research. 12. www.cncsis.ro – the national committee of scientific research in high education. studies and scientific researches economic edition, no. 15, 2010 519 microsoft word apostoaie constantin marius_eng.doc business intelligence systems in the business strategy an approach to the romanian reality serghie dan, „al. i. cuza” university of iasi, romania balan ana maria, „al. i. cuza” university of iasi, romania abstract the economics doesn’t mean an accumulation of disparate sciences, is a coherent set of related theories in the support of certain ideas from the schools of thought or arising from different research areas. in the economics, the complementarities between practice and theory are potentiated first by utilitarian reasons and highlighted through the correlation between static systems with dynamic ones. the dynamism of the market today, the volatility given by the competitive environment, the disappearance or weakening of the entry barriers in a sector of activity, make the information to become the most important asset of a company. the access to information, especially analysis, reporting and forecasting in real time (management information) represent the condition and the scaffolding in the competitive environment from our days. key words business intelligence, information, system, data, decision. jel codes: m 15, m 16 the importance and the evolution of business intelligence concept the effectiveness in use of information is determined by an appropriate data structure, by its capacity of processing and synthesis, that provide to the manager from any level the data analysis necessary for operational, tacit and strategic decisions. together with the informational structure, an another tangible necessity in any organization is represented by the tools that are useful for watch and receive in a fast way the changes appeared in the external environment of the company, or in the social, legislative of administrative one. on the segments related to the company’s management spheres, the managers with different responsibilities will have access to information (collected, processed, analyzed and transformed into a form accessible and useful) corresponding to their targets: the sales management must always know which are the most requested products or services on market, which are the most profitable customers, what new products should be designed and offered, for being efficient and to compete; the financial management should always have in view the optimization (on the claim value) of the products or services and to improve the decision process for achieving performance and profitability criteria; we could offer and another suggestive examples about a company’s management structure, but we summarize to point out the most important results of using and processing information in real time, and this result is that with the help on information, is created the source that claim and generate innovation. within a company, the information system can have a rudimentary or a simplistic level (manual systemsinformation written on paper), can be also informal information systems studies and scientific researches economic edition, no. 15, 2010 452 (based on the transmission in the employment relationship, specific especially to the asian companies) and automated information systems (based on hardware, software and human infrastructure). in conclusion, the collection, the processing and the dissemination of information is based on an organization system that includes: people, processes, material and financial resources, all of these beingmore or lessingredients of the system. in 1989, howard dresner, researcher at the gartner group, propose the term business intelligence, defining it as “a set of concepts and methods to improve the decision making, using systemssupport based on evidence”1. the ibm specialists consider business intelligence “using all the data available to a company to improve decision making2. business intelligence requires access to data, their analysis and the discovery of new opportunities in their use”. in an interview accorded in 2004, shaku atre defined business intelligence like “a developmental strategy, vision and architecture that keep a constant alignment between the operations/directions of a company and their strategic objectives”3. according to the definition form baets4, business intelligence represents “a store of knowledge in the business success”. in his opinion, this “store” of knowledge can provide the business success in the adaptation to the environment transformations. the collection and the management of such knowledge is, in fact, the only sustainable competitive advantage. the precursor researchers in business intelligence radically separate the field, to not be confused with a technology or a methodology. business intelligence is included in management and is boosted and made in value by the new knowledge economy. the propose and the result of business intelligence application is found mainly in the efficiency of a performing decision process, through new knowledge. the classical approach or the start of researches was focused on waking information, on acquisition and storage of information, then putting them in a format accessible to managers. salles identifies four major periods concerning the evolution on business intelligence concept: the period of 19801990, when the concept is focused on processes, tools and techniques (wilensky, martre, lesca); the early 90’s, when the concept is defined primarily on he use of business intelligence like waking information and also is defined on its general objectives; since the late 90’s appear the concepts co-management and collective intelligence, organizational learning and working in collaboration; the early 2000’s brought in addition to the earlier concepts, those of cultural identity, regionalism and the concept of “economic defense”5. business intelligence is presenting as specific management information based on processes, tools, methodologies and tested skills. so, like a system, business intelligence use data, processes, tools and technologies to obtain form the competitive, legislative, technological and innovative environment the useful information for decisionmaking. a special feature for efficiency and profitability in organization is given by the global vision obtained form multiple perspectives. 1 power, d. j. (2007), a brief history of decision support systems, available on-line at http://dssresources.com/history/dsshistory.html 2 muntean, m. (2004), iniţiere în tehnologia olap. teorie şi practică, ed. ase, bucharest 3 shaw, t. (2004), shaku atre interview: what is business intelligence?, available on-line at www.dssresources.com 4 baets, w. r. j. (2005), knowledge management and management learning: extending the horizons of knowledgebased management, springer’s integrated series in information systems, vol. 9 5 salles, m. (2003), stratégies des pme et intelligence économique: une method d’analyse du besoin, ed. economica, paris studies and scientific researches economic edition, no. 15, 2010 453 a second key feature is given by the fast response to changes in the external environment of the organization. an approach in terms of information technology the researches that claim this approach have in view the following features of a business intelligence system: the quick access to data (information) stored in organization; procedures for reporting and for effective data analysis; the ability to provide forecasts for future developments. thus, the basic concepts of this approach are transformed into business intelligence systems: the transformation data into information, the information into knowledge and knowledge into profitable business action. in “business intelligence roadmap”6 the concept is presented like an architecture and collection of applications and databases operational integrated, and also like a collection of decision support systems, providing to the business community an easier access to data. business intelligence application to assist the decision facilitates many activities, including multidimensional analyses (eg. olap), data mining, forecasting ability, business analysis, facilities for query, reporting and making graphics, geospatial analysis, knowledge management etc. business intelligence is an iterative process; it starts form the operational environment; the data are extracted form this medium and stored in data warehouses (the data warehouse is in form of a container data center, separate form operational data); the decisionmaker use the decision support system to extract data from data store; holding this information, he can create action plans; this change in the operational information leads to a new iteration of business intelligence cycle7. an analysis of a business intelligence system in terms of romanian realities coordination and dissemination of information romanian executives are ambitious, eager to learn and work more, but we can not speak about them as a separate category, different from the cultural and business models of other countries. one of the most common mistakes that are made by the managers from everywhere is the fact that they don’t communicate enough. “the managers should put to themselves more questions on how they lead the companies and where “is going” the business, and than to communicate these things to the organization”, says bodo schlegelmilch, wu executive academy dean of the university of economics and administration in vienna. it is vital for successful change at corporate level to know how to achieve coordination and information in complex organizations, geographically dispersed. however, the managers are often tempted to not share the information or don’t collaborate with their colleagues for coordinate the activities and achieve the strategic objectives in short-term. why? the answer to this question is vital for successful implementation of the strategy. if every manager would shape the piece of his business and would optimize and automate the processes such as he thinks is better, it is possible that the company as a whole, don’t function better, but worse. 6 moss, l. t., atre, s. (2003), business intelligence roadmap: the complete project lifecycle for decision-support applications, ed. addison wesley 7 giovinazzo, w., a. (2002), internet enabled business intelligence, prentice hall ptr studies and scientific researches economic edition, no. 15, 2010 454 the most effective business modeling, it automates and optimizes, is when it starts from top to bottom, from the entire company’s level and it uses a single system, or, anyway, a few systems, but being integrated as closely8. the automation at the level of departments or activities can become a disability if it can be integrated with the rest of the system, even if, in their piece, they do are very good job. many times it better to give up to some "effect" features, but non-essential, for the sake of integration and for the benefits that it brings to the entire business. in other words, how a system can manage several departments or activities, the greater is the chances that, at the level of the organization, this system to bring more efficiency and the productivity to rise steadily9. data classification most employees have no clue (nor any interest) to classify the information and the documents. how many of those who read these lines doesn’t take all the 2009 emails in their inbox and then use advanced search to search for something among the many thousands of messages? even using the basic tools of taxonomy requires more intellectual resources than what is found normally in a company. one of the best reflexes rooted in employee behavior is to press the print button. if he doesn’t throw the paper as soon as it is read, then sure place it in a location where its presence there has no ninth. in time, the information doubles and triples go to overflowing… one of the major waste of resources of a company is by looking unclassified information (or poorly classified) and redundant information. it is preferable that a business automation system company (management model + it support) to be much smarter than most of its users. first, you must ensure that the system doesn’t records information redundant, or vertically (over time) nor transverse (between departments). the information must be stored only once, in one place and must be retrieved at any time and by all departments that need it, using a uniform system of classification. the classification system must be sufficiently complex, must cover all types of data, completely adaptable to the type of work and the company's business model and sufficiently flexible so that adding new classes or classification criteria doesn’t ruin the whole fabric already operational. as a general rule, the system removes greater the use of paper in the current work, the redundancies can be reduced easily, the classification of information and documents is easier, and, obviously, and their retrieval is faster and more accurately. finally, the risk of losing data is reduced to zero asymptotically10. the access to information resources there are few managers able to optimize their business department and always concerned with productivity. of these, fewer are willing to share the results of efforts, information and contacts with othersbeing from the same department or from different departmentsif they aren’t forced by superior heads to do that. if that happens, obviously they will want and benefit from access to the resources of other departments. the system should allow to those with the right to decide, through a complex of rights and permissions, to decide (and enforce!) that one's information can be used by someone else, under what conditions, if the access to information is or isn’t symmetrical (the ones from the legal department can see what are the information from the procurement department, but not vice versa etc.). basically, it's all for eliminating redundancies. 8 lesca, h., caron, m. l. (1995), veille stratégique: créer une intelligence collective au sein de l’entreprise, revue francaise de gestion, 105, pp. 58-68 9 lesca, h., sadok, m. (2009), a business intelligence model for smes based on tacit knowledge, communications of the ibima, volume 7, issn: 1943-7765 10 velicanu, m., matei, g. (2007), databases versus data warehouses, communication at the 8th edition of the conference of economic informatics, ed. ase bucharest, published in the conference volume studies and scientific researches economic edition, no. 15, 2010 455 indicators of business a key evidenced through practice is that the implementation of business strategy is crucial to success. the failure of a business or if it goes wrong is due not to the lack of the strategy or use to the wrong strategy, but to the work implementation by managers, particularly by the middle managers from the organization. so, if the implementation is not carefully planned, the strategic objectives may not be accomplished. the implementation is a rigorous process involving a series of logically connected activities that allow to an organization to adopt a strategy and to make it work. developing such a logical approach is a challenge for management. an efficient system should cover as many (if not all) activities related to the strategy execution and allow to management the pursuit in real-time (snapshot) all the indicators of business and the "smoke detector parties” that detours and dangers signals since the early stages. basically, a good part of the value of such a system, results from the metrics that it can give, a simple ones (values, graphs, etc.) and complex ones, compound and calculated with specific formulas (business intelligence). the information and asset’s security you know that they stole from you as much as to move you form profit to loss. they blame the customers, the suppliers, the robbers, but some to others not. and you have doubled the guard, you put cameras and ordered financial or technological audit, but for nothing. yes, your employees stealing you and if you don’t want to go bankrupt have to catch them. the solution: the business intelligence application. associated the schedules productivity and the cash flow with each employee. you see what happens when one is on leave, who stay overtime, etc. find the possible causes of each inventory changes and narrows them until you have a name; inquisition. search your own freight market. redeem it systematically and establish a tracking method to discover the pathway; studies and scientific researches economic edition, no. 15, 2010 456 rotation of post. the thieves need to cover their tracks constantly. move them from post and get on someone new, to learn what it is. do not accept excuses like: only i can do that. your interest is that more people to know what suppose a post; audit surprise. make unannounced inspections. in that way, the thieves will not have time to cover with bills or documents the holes that are in stock; track-record. check the history of employees outside the company. call the former employers for references; gratifications. reward the castings and promise them confidentiality. open an anonymously line by that you can receive information; amnesty. give them the chance to bring back what they stole, with the promise that nothing will happen with them, but that for the rest will be severe controls; loan system. if you sell items for personal use or tools, let your employees to take home some models, on signature. that way reduces the temptation to steal objects that are stored only once; screening. check whether the employees meet income with their lifestyle. it may happen that their bmw be taken, however, from your money; menace. no confidentiality. where is found, give to the thief as much negative publicity. a good business intelligence system has to make all the processes through is known that can be stolen as transparent as possible. the information must be maintained throughout the history of the company and it's good to have a strong system of "tracking" by which to trace who and what transaction ever made. the mobile office the mobile office...is talking about it for a while: to be able to work from home, from hotel, so you can move to the client for a week and work as if you were in your office, to sit to any computer and finish what you had to dois not bad, especially when the crisis in the city, when the company reduced its space to save on rent, when bosses are thinking even to introduce shift work, when the distance from home to office or from a customer takes two hours… stringency the more the company is bigger, the more people will hate you, more are frustrated and will consider themselves wronged; it doesn’t matter here, whether is rightly or not. some of them will leave the company at the earliest opportunity, others will be expelled, while others will remain in the company and will try to make themselves "justice". in any case, the manager can understand that he doesn’t know about any project in what stage is, what is done and what to do in future; he will be surprised to find that some data files, contact lists or other such documents, that were there a few days ago, now aren’t ... especially in romania, the systems with "anti-frustration" architecture seem to be the most appropriate at this time. first, it's good to check that the system doesn’t allow to an employee, no matter how angry he is, do irreparable damage, if he puts that in his mind. a software good enables to a new / another employee to sit at computer and, with the username and the password of the person disappeared to take any project exactly from the point that it was left and continue it without the others (especially customers) to realize. the right culture the organizations must develop cultures that support the implementation. for implementation is needed a culture for exploit the achievements, discipline and a sense of ownership. but developing or changing a culture is not an easy task. certain activities with the management team (so-called team-buildings), like climbing mountains, rafting on the water's swirl, paintball battles and others can be fun. it is essential for a successful implementation to studies and scientific researches economic edition, no. 15, 2010 457 know what really produces a cultural change. a business intelligence system is based upon such a structure. from the various business intelligence systems is considered important to note the one of jakobiak, proposing a model for business intelligence based on five main points11: 1. a doctrine that give a definition for business intelligence recognized by the entire group; 2. an approach consist in: a) an overall plan for moving from theory to method (the information flows from who come and for what purposes are proposed, which actors will act, the monitors, the analyzers, the policy makers etc..) in order to develop and implement a coherent strategy. b) an overall plan to develop this method and to introduce structure, control cost and schedule problems. 3. a structure of two networks: poly network information (the selected areas of monitoring) and network analysis (expert groups and the selection of critical success factors). 4. an experiment which defines the rules for operating business intelligence within the organization: degree of freedom for each group, recommendations and guidelines, media and technical support (software, materials, etc.), data storage (types of information taken into account). 5. a quantitative and qualitative control. the cornerstone for jakobiak's model is the network of the experts in analysisthe raw information is sent to the observers, is transformed into developed information usable and interpreted by the decision factors. the limits of the model derive from the separation of phase observation process, including analysis, and isolate the different actors involved, assuming a large number of intermediaries. conclusion finally, the decisions are more effective if the information about business and competitors are analyzed using business intelligence applications, providing opportunities for extrapolation and achieving accurate predictions on future economic trends and conditions. it provides to the companies and to users from all hierarchical levels a strong, complete and powerful technology, to extract from the large amount of existing data the key information relevant and useful for decision making and for the control of business. the knowledge of all business aspects and understanding the factors with positive influence, especially those with a negative impact is a prerequisite for improving the company’s performance and for rising on market. by using these technologies, the companies learn what happened in their business, why it happened and what will happen, all these added to the users experience and intuition, leading to obtaining competitive advantage. meanwhile, business intelligence solutions help to eliminate the communication barriers within the company, help to the information security and enable the decisions based on consistent information and collaborative support. 11 jakobiak, f. (2004), l’intelligence économique: la comprendre, l’implanter, l’utiliser, ed. d’organisation, paris studies and scientific researches economic edition, no. 15, 2010 458 references: 1. baets, w. r. j. (2005), knowledge management and management learning: extending the horizons of knowledgebased management, springer’s integrated series in information systems, vol. 9 2. giovinazzo, w., a. (2002), internet enabled business intelligence, prentice hall ptr 3. jakobiak, f. (2004), l’intelligence économique: la comprendre, l’implanter, l’utiliser, ed. d’organisation, paris 4. lesca, h., caron, m. l. (1995), veille stratégique: créer une intelligence collective au sein de l’entreprise, revue francaise de gestion, 105, pp. 58-68 5. lesca, h., sadok m. (2009), a business intelligence model for smes based on tacit knowledge, communications of the ibima, volume 7, issn: 1943-7765 6. moss, l. t., atre, s. (2003), business intelligence roadmap: the complete project lifecycle for decision-support applications, ed. addison wesley 7. muntean, m. (2004), iniţiere în tehnologia olap. teorie şi practică, ed. ase, bucharest 8. power, d. j. (2007), a brief history of decision support systems, available on-line at http://dssresources.com/history/dsshistory.html 9. salles, m. (2003), stratégies des pme et intelligence économique: une method d’analyse du besoin, ed. economica, paris 10. shaw, t. (2004), shaku atre interview: what is business intelligence?, available on-line at www.dssresources.com 11. velicanu, m., matei, g. (2007), databases versus data warehouses, communication at the 8th edition of the conference of economic informatics, ed. ase bucharest, published in the conference volume studies and scientific researches economic edition, no. 15, 2010 459 the small but significant and nontransitory increase inprice (ssnip)test 66 the small but significant and nontransitory increase in prices (ssnip) test nimineţ liviana, assistant university of bacău abstract: the small but significant nontransitory increase in price test was designed to define the relevant market by concepts of product, geographical area and time. this test, also called the ,,hypothetical monopolistic test” is the subject of many researches both economical and legal as it deals with economic concepts as well as with legally aspects. in competition law cases consisting of abuse of dominance or merging manners allegations the ssnip test is crucial. the ssnip is most used to define a “relevant market”(which is commonly defined as “something worth monopolizing”. this test is designed to avoid ad hoc debates about what products compete with each other, based, for example, on product characteristics. with the help of ssnip test a market can be defined by all its three dimensions: product, geographical area and time. the relevant market is composed of a ‘catalogue’ of goods and/or services which are considered substitutes by the customer. now the question rising is why is such a catalogue worth monopolizing. the answer is that is worth monopolizing because if it is provided by only one supplier, that supplier could profitable increase its price without its customer turning away and choosing other goods and services from other suppliers. economic perspective the ssnip test was first introduced by the us department of justice merger guidelines in 1982. it was then a new method for defining markets and for measuring directly market power .ten years later this test was used for the first time in eu in the nestle vs perrier case and has been officially recognized by the european commission on its “commission’s notice for the definition of relevant market” in 1997. the goal of ssnip test is to identify the smallest relevant market within which hypothetical monopolist or cartel could impose a profitable significant increase in price. the governmental procedure of applying the test involves talking to people who make buying decisions. the question asked is whether such a monopolist or cartel could profit from a price increase of 5% for at least one year with the assumption that the terms of sale of all other products are held constant”. if sufficient numbers of buyers are likely to switch to alternative products and the lost sales would make such price increase unprofitable, then the hypothetical market should not be considered a relevant market for the basis of litigation or regulation. another, larger basket of products is proposed for a hypothetical monopolist to control and the ssnip test is performed on that relevant market. the empirical estimation of the critical elasticity of demand is one of the ways the ssnip test can be applied. if the demand is linear, information on firms’ price cost margins is sufficient for calculation. in the case of a pre-merger elasticity of demand that exceeds the critical elasticity, the decline in sales arising from the price increase will be sufficiently large to render the price increase unprofitable and the products concerned do not constitute the relevant market. an alternative method for applying the ssnip test where demand elasticities cannot be estimated, involves estimating the "critical loss." the critical loss is defined as the maximum sales loss that could be sustained as a result of the price increase without making the price increase unprofitable. where the likely loss of sales to the hypothetical monopolist (cartel) is less than the critical studies and scientific researches edition: economics, no. 13 (2008) the small but significant and nontransitory increase inprice (ssnip)test 67 loss, then a 5% price increase would be profitable and the market is defined. basically, the test consists on observing whether a small increase in price (in the range of 5 to 10 percent) would provoke that a significant number of consumers switch to another product (in fact, substitute product). in other words, it is designed to analyse whether that increase in price would be profitable or if, instead, it would just induce substitution, making it unprofitable. in general, one uses databases from the firms which may include data on variables such as costs prices, or sales and over a sufficiently long period (generally over at least two years). in economic terms, what the ssnip test does is to calculate the residual elasticity of firm’s demand. that is, how does the firm price change by affect its own demand. according to that test, product x is a relevant market if a profit maximizing hypothetical monopolist of product x could impose a small but significant, nontransitory increase in price (ssnip) above the current prices of the brands of product x. for example we consider coca-cola company and pepsico that are substitutes to some degree. cola would be a relevant market if a hypothetical monopolist of cola would raise the prices of coca-cola and pepsi, at least a ssnip. economic theory predicts that any profit-maximizing firm will set its prices at a level where demand for its products is elastic. thus, when a monopolist sets its prices a monopoly level it may happen that two products appear to be close substitutes whereas at competitive prices they are not. this is a problem that many economists have noted as an important pitfall in the use of demand elasticities when inferring in both the market power and the relevant market. plain said, the ssnip test may have the downside that when using it, one cam define the relevant market too broadly, including products that are not substituible. legal perspective the“commission’s notice for the definition of relevant market” has the purpose of providing guidance as to how the commission applies the concept of relevant product and geographic market in its ongoing enforcement of community competition law, especially the application of council regulation no.17 and (eec) no 4064/89, their equivalents in other sectorial applications such as transport, coal and steel, and agriculture, and the relevant provisions of eea agreement and the ecsc treaty. the commission's interpretation of 'relevant market` is without prejudice to the interpretation which may be given by the court of justice or the court of first instance of the european communities. the regulations based on article 85 and 86 of the treaty, in particular in section 6 of form a/b with respect to regulation no 17, as well as in section 6 of form co with respect to regulation (eec) no 4064/89 on the control of concentrations having a community dimension have laid down the following definitions, “relevant product markets” are defined as follows: “a relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products' characteristics, their prices and their intended us”. conceptually, this approach means that, starting from the type of products that the undertakings involved sell and the area in which they sell them, additional products and areas will be included in, or excluded from, the market definition depending on whether competition from these other products and areas affect or restrain sufficiently the pricing of the parties' products in the short term. generally, and in particular for the analysis of merger cases, the price to take into account will be the prevailing market price. this may not be the case where the prevailing price has been determined in the absence of sufficient competition. in particular for the investigation of abuses of dominant positions, the fact that the prevailing price might already have been substantially increased will be taken into account. the assessment of demand substitution entails a determination of the range of products which are viewed as studies and scientific researches edition: economics, no. 13 (2008) the small but significant and nontransitory increase inprice (ssnip)test 68 substitutes by the consumer as it is stated in the paragraph 14 of the european commission's notice on the definition of the relevant market for the purposes of community competition law. the notice then proposes the so-called "ssnip" test, which makes it possible to determine whether particular products are within the same market. the ssnip test, which was first introduced by the us department of justice and the federal trade commission in analyzing horizontal mergers, legally works as follows: suppose that a producer of a hypothetical product (e.g.-only for theoretical purpose-, butter) were to introduce a small but significant non-transitory increase in price. in those circumstances, would customers be inclined to switch their purchases to other producers of butter, or even to producers of another product—margarine, for example— which could serve as a substitute to butter? if the answer is yes, this suggests that the producer of butter operates in a market that is wider than just butter—one that comprises not only butter, but also the substitute product, margarine. a wider market makes it less likely that a merger of butter suppliers would reduce competition and raise prices to the detriment of customers. the presence of margarine suppliers will competitively constrain the price of butter even after such a merger. the same test can be applied to the delineation of the geographic market: if the price of butter in france were raised by a small but significant amount, would customers switch to suppliers in germany? if a firm could raise its price by a significant amount and retain its customers, this would mean that the market would be worth monopolizing: prices could be raised profitably, since there would be no competitive constraint. for this reason, law researchers, refer to the ssnip test as the "hypothetical monopolist test." the hypothetical monopolist test is given formal expression in paragraph 17 of the ec's notice, where it states that: "the question to be asked is whether the parties' customers would switch to readily available substitutes or to suppliers located elsewhere in response to a hypothetical small (in the range 5% to 10%) but permanent relative price increase in the products and areas being considered. if substitution were enough to make the price increase unprofitable because of the resulting loss of sales, additional substitutes and areas are included in the relevant market." this would be done until the set of products and geographical areas is such that small, permanent increases in relative prices would be profitable. the equivalent analysis is applicable in cases concerning the concentration of buying power, where the starting point would then be the supplier and the price test serves to identify the alternative distribution channels or outlets for the supplier's products. in the application of these principles, careful account should be taken of certain particular situations as described within paragraphs 56 and 58 [p.56: there are certain areas where the application of the principles above has to be undertaken with care. this is the case when considering primary and secondary markets, in particular, when the behaviour of undertakings at a point in time has to be analysed pursuant to article 86. the method of defining markets in these cases is the same, i.e. assessing the responses of customers based on their purchasing decisions to relative price changes, but taking into account as well, constraints on substitution imposed by conditions in the connected markets. a narrow definition of market for secondary products, for instance, spare parts, may result when compatibility with the primary product is important. problems of finding compatible secondary products together with the existence of high prices and a long lifetime of the primary products may render relative price increases of secondary products profitable. a different market definition may result if significant substitution between secondary products is possible or if the characteristics of the primary products make quick and direct consumer responses to relative price increases of the secondary products feasible], [p.58 : from a practical perspective, the concept of chains of substitution has to be corroborated by actual evidence, for instance related to price interdependence at the extremes of the chains of substitution, in order to lead to an studies and scientific researches edition: economics, no. 13 (2008) the small but significant and nontransitory increase inprice (ssnip)test studies and scientific researches edition: economics, no. 13 (2008) 69 extension of the relevant market in an individual case. price levels at the extremes of the chains would have to be of the same magnitude as well.] a word of caution on the hypothetical monopolist test: a monopolist may already be charging a monopoly price. if it raises its price further, its customers may switch to alternative products. in this situation, the monopolist's "own-price elasticity"—the extent to which consumers switch from its products in response to a price increase—is high. if a ssnip test is applied between the monopolized product and another product, it might suggest a high degree of substitutability, since consumers are already at the point where they will cease to buy from the monopolist. the test would therefore exaggerate the breadth of the market. this error was committed by the us supreme court in united states vs. ei du pont de nemours and co. (351 us 377 (1956)) in a case concerning packaging materials, including cellophane. it has since been known as the "cellophane fallacy". in this case, du pont (a cellophane producer) argued that cellophane was not a separate relevant market since it competed with flexible packaging materials such as aluminum foil, wax paper and polyethylene. the problem was that du pont, being the sole producer of cellophane, had set prices at the monopoly level, and it was at this level that consumers viewed those other products as substitutes. instead, at the competitive level, consumers viewed cellophane as a unique relevant market (a small but significant increase in prices would not have them switching to goods like wax or the others). in the case, the us supreme court failed to recognise that a high ownprice elasticity may mean that a firm is already exercising monopoly power. this clearly demonstrates the care that must be taken in applying the ssnip test. it may be appropriate in merger cases, where a competition authority is trying to predict what will happen in the future if the hypothetical monopolist were to raise its prices after the transaction; but not in a dominance case, where a crucial issue is whether the defendant is a monopolist in the first place. references: [1] bishop, simon; walker, mike. the economics of ec competition law. london, sweet and maxwell, 1999; [2] motta masimo, competition policy, theory and practice, cambridge university press 2004; [3] serge x. moresi, steven c. salop and john r. woodbury, implementing the hypothetical monopolist ssnip test with multi-product firms, www.antitrustsource, feruary 20008; [4] commission notice on the definition of relevant market for the purposes of community competition law (97/c 372/03) http://www.antitrustsource/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the performance of non-governmental organizations nicoleta ciucescu "vasile alecsandri" university of bacau ciucnico@yahoo.com andreea feraru "vasile alecsandri" university of bacau andreea_feraru26@yahoo.com abstract operation of ngos is dependent on the correct identification of the needs in the community and their ability to attract the necessary funds to cover them. non-profit organizations interest to performance measuring and fulfilling the objectives has increased lately, this it become an essential element for the survival of the organization. the main reasons that underlie the increasing interest are: increasing the number of new organizations; increasing the budgetary reductions; the decrease in the number of donors; increasing the challenges arising from the multiplicity of social cases. in addition, the majority of the stakeholders associated with the ngos want to know if the programs or services they claim have a prominent and positive impact on the community. such organizations felt the need to demonstrate the effectiveness of the programs they provide and the correctness of using the funds are made available. the article intends to present the issues related to the concept of performance for ngos, to clarify the content of each performance categories, namely economic performance, managerial performance and social performance. keywords funds; performance; objectives; efficiency; the beneficiaries jel classification m41 1. the economic performance the main purpose of non-profit organizations, according to the recent researches, consists still in increasing revenue (donations, grants, contracts) and in balancing the expenses so that the organization can support the programs. the financial power of nonprofit organizations is determined by their ability to attract consistently donors, to benefit from sponsorship, support and grants to be used in the services of customers’ groups. this is called the base of variable revenue and changes according to the general level of prosperity of the society in which live donors. the revenues are affected and by changes in the perception of customers’ groups, either positively or negatively. a positive or an improved perception leads to the increasing of the revenues or vice versa. the capacity to generate revenues is, also, affected by the occurrence of urgent concerns. the specific problem of this type of organization is to be strong and stable by the covering of fixed costs, without resorting to shareholders' funds or public finances. 116 the performance of non-guvernmental organizations the measurement of the performance in the non-profit sector is made according to: the size of donors’ groups, the location of donors’ groups, the donation rates and the average donations; the source for all donations, the proportion of each donation; the actual nature of donations (money, time, effort) and the intended nature of the donations; the share of spending on customers’ groups, the desired levels of spending on customers’ groups, the possible levels of spending on customers’ groups; the access to customers’ groups, the access of categories of customers within the organization. 2. the management performance there have been identified three dimensions of performance (medina-borja & triantis, 2007): the effectiveness or results; the quality of services; the efficiency. the nonprofit organizations measure their performance most often traditionally by assessing the managerial activity. the measurement system based on assessing of the performance in a managerial perspective involves the collecting of data on the planning and the use of financial resources, the productivity, the service quality and the customer satisfaction. another approach is to assess the program, namely of the impact of the program, that it had or of the results obtained in the course thereof. the two measuring systems are intertwined, the common point being the measurement of the quality of the offered service. both the overlapping area and the data related to each system are shown in the figure 1. figure 1 overlapping area of the two approaches of measuring the performance source: medina-borja, a., triantis, k. (2007), a conceptual framework to evaluate performance of nonprofit social service organizations, international journal of technology management, vol. 37, no. 1-2 in order to assess how best possible at the managerial level, the non profit organizations must develop a system of continuous internal assessment covering also the efficiency and effectiveness of the programs implemented and the decisionmakers. necessities outputs processes financial issues servicies quality impact results managerial performance measuring system the assessment of the program 117 ciucescu, feraru indices that can shape a clearer picture on managerial performance are: the interdependence; the teamwork; the way to resolve the problems at the level of the task; the productivity; the safety of members; the degree of mutual support. the most important thing in assessing the performance is the continuity in appreciation, measurement and evaluation of it, drawing the conclusions on a regular mood, to maintain a constant vision, so as to detect early the problems. ideally, this is punctuated by regular organizational and team meetings in order to make reports on performances. given that no activity takes place in complete isolation, the performance reporting should consider the effectiveness of working relationships and the coordination of activities and, also, of the legitimate interests both of those inside the organization and of those outside it. the managers should also analyze, regularly, the measures and the indicators currently used, and how they are used to ensure that they are still valid, reliable and able to demonstrate performance. this extends at the level of the accumulated knowledge, to the generalization and the self-perception, both inside and outside the organization. the organization and its managers will be analyzed and assessed in terms of the performance by different categories of people, in different ways. all categories of persons who come into contact with the organization will evaluate it in one way or another. these categories are: the staff: everyone who works for, and in the organization, and therefore, are dependent on it, in terms of revenues and funds raised; the beneficiaries: for the continuity of satisfaction; the communities: where the staff and the customers live and work, and where the organization operates; the supporters: people who make donations constantly. competitors: the other non-profit organizations. the managerial responsibilities: to develop (and to be developed) the capacity and the assessment which is necessary to the organization, imposed by professional management in which is developing and which involves the required services; to take personal commitments to the organizational success and, also, to the department, to the division or to the function for which he is responsible. a high level of personal commitment is required in all occupations, in all spheres of activity and evaluation, this is also applicable to the management and to the managers; to develop a full range of managerial skills and qualities required by the profession of manager. this includes the ability: o to solve problems; o to manage people; o to establish performance standards; o to use the resources efficiently and effectively; o to establish and evaluate the budgets; o to recognize the constraints; o to identify the operations to be performed; o to manage a positive, open and harmonious culture and attitude. the general managerial performances (verboncu, 2006): a. the methodological and general managerial performances refers to the degree of scientific content of the organization management. 118 the performance of non-guvernmental organizations this is expressed quantitatively on the base of the number of systems, methods and management techniques used at one time to exercise the management processes and the involved functions. qualitatively is achieved by making them operational. the measure of the performance is given by the degree of involvement and of participation of the managerial tools in the exercise of managerial processes, given by the number and the proportion of systems, methods and managerial techniques that managers call for exercising of each function. in the same time, it is necessary to add the managerial skills that are given, mainly, by the knowledge in the field of knowledge that managers have managers from the organizational echelons of the organization. b. the general decision-making performance refers to the degree of solving decision problems in the organization. this type of performance is determined as the ratio between the number of decisions taken at the level of the organization and the number of problems it has faced at one time. the application rate of the decisions is another performance which is determined by the initial actions in the field led to the implementation of decisions. this is determined both on the whole management and on the organizational echelons. c. the overall information – managerial management the degree of satisfaction of information needs of managers for the three levels (top, middle and bottom) is determined as the ratio between the amount of information provided and the amount of information required for each level. following the same algorithm it is determined the degree of satisfaction of the informational needs of performers. d. the general organizational performances the degree of achievement of the objectives to be achieved in a while highlights the extent in which the sizing of work processes meet the needs imposed by the five categories of objectives. the degree of structural / organizational coverage of work processes involved in achieving the objectives any procedural component must have a properly delimited organizational-structural support in order to be exercised. if these correspondences are not considered, inevitable will arrive to not reach the objectives. the researches conducted in the field of performance of management committees (brown, 2005): bradshaw (1992) focused on the relationship between the structures and the processes of management committees and their performances, but also between the performance of management and organizational effectiveness; chait (1991) attempted to identify the competences of management committees or the behaviors that were associated with their effectiveness – it were discovered six competences, then a self-assessment questionnaire was developed to assess them; jackson and holland (1998) examined the reliability, the sensitivity and the validity of the instrument and the relation between this and organizational effectiveness; green and griesinger (1996) conducted a study focused only on the analysis of the relationship between performance of management committee and organizational effectiveness; herman and renz (1999) examined the relationship between various factors, including the effectiveness of the management committee and the prestige in one hand and organizational performance in other hand. 3. the social performance social performance is represented by the contribution of the work undertaken by ngos in community development through: encouraging public institutions in making 119 ciucescu, feraru decisions; greater awareness of the legal framework; expressing the point of view of public opinion; aid granted for the preparation of local development strategies; provide opportunities for the participation of citizens, in the largest possible number, to the public's decision. an ngo can play a vital role in society by identifying some strands, overlooked by the public authorities. they can tackle niches identified through the use of organizational capacities and human resources can provide assistance or the authorities. it has been shown that associations which are more involved in socially (through organizing charitable events through the actions of environmental or community development) can benefit from a higher capital in comparison with those that do not are equally involved. social performance can be defined as the ability of ngos to meet the expectation of a diverse group of stakeholders, which will lead to financial performance. the relationship is valid and vice versa. they operate in complex environments with many stakeholders including: the board of directors, volunteers, donors, agencies, government officials, recommending clients or participants. one of the main concerns for these organizations is represented by way of monitoring and management of relations with these stakeholders. they are a source of uncertainty for ngos. from their perspective, the relationship established with ngos is based on the manner in which their expectation are met and how they are treated by members of the organization (ciucescu, 2006). during the past 20 years, the methodology and tools of social performance evaluation have enjoyed a continuous development. different approaches for measuring the social return on investment (sroi) as well as internal rates of return are the most popular methods of analyzing the impact of the investment. social return of investment (sroi) is a framework of understanding, management and measurement of results of activity of the organization. sroi encompasses a wide range of outcomes: social, economic, environmental. this analysis is based on the involvement of stakeholders in the determination of those results that are more relevant. sroi evolved from social accounting and cost benefit analysis and has much in common with other methods of analysis of the results. however sroi differentiates from other methods, because it assigns a monetary value of results, so that they can be collected, and the values obtained are compared with the investments made. sroi values depicting the story of the investment made, including both quantitative findings and qualitative ones. the information provided by these values helps organizations maximize profits. internal rate of return (irr) is a tool used by ngos for the assessment of cash flows. hazen (2003) states that when used properly, can be a valuable tool for acceptance and selection of investment projects. references bradshaw, p., murray, v., wolpin, j. (1992), do nonprofit boards make a difference? an exploration of the relationships among board structure, process, and effectiveness, nonprofit and voluntary sector quarterly. 120 the performance of non-guvernmental organizations brown, a. w. (2005), exploring the association between board and organizational performance in nonprofit organizations, nonprofit management & leadership, vol. 15, no. 3 chait, r. p., holland, t. p., taylor, b. e. (1991), the effective board of trustees new york: macmillan. ciucescu, n. (2014), the social performance of non-governmental, proceedings of the annual session of scientific papers ”ïmt oradea”-2014. green, j. c., griesinger, d. w. (1996), board performance and organizational effectiveness in nonprofit social service organizations, nonprofit management and leaderships. herman, r. d., renz, d. o. (1999), thesis on nonprofit organizational effectiveness, nonprofit and voluntary sector quarterly. jackson, d. k., holland, t. p. (1998), measuring the effectiveness of nonprofit boards, nonprofit and voluntary sector quarterly. medina-borja, a.,triantis, k. (2007), a conceptual framework to evaluate performance of nonprofit social service organizations, international journal of technology management, vol. 37, no. 1-2. smith, d.h., the impact of the nonprofit voluntary sector on society, mcgrow-hill, new york, 1988. străinescu, i., ardelean b. (2007), managementul ong, editura didactică şi pedagogică, bucureşti. verboncu, i. (2006), management, eficiență și eficacitate, management & marketing, the official journal of the society for business excellence. vlăsceanu, m. (2003), organizaţii şi comportament organizaţional, editura polirom, bucureşti. 121 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 6 some recent developments regarding the european union fiscal position iulia andreea bucur “vasile alecsandri” university of bacau andreea.bucur@ub.ro liviana andreea nimineţ “vasile alecsandri” university of bacau liviananiminet@yahoo.com silviu mihai silivestru “vasile alecsandri” university of bacau silivestru.silviumihai@yahoo.com abstract during the last decade, fiscal policies in the euro area and structural reforms in the european union’s countries that experienced different fiscal problems were a priority for the eu decisionmakers. the existence of sound and sustainable public finances in the eu and, in particular, in the euro area is based, on the one hand, on macroeconomic stability, and on the other hand, on balanced and sustainable economic growth. this paper focuses on capturing the recent developments in public finances, more precisely some indicators essential for assessing the health of the eu economy and of its member states. the results of our research show an improvement of them, as a whole, as an effect of structural reforms, investments and also of responsible fiscal-budgetary policies. keywords european union; euro area; public finance; general government deficit/surplus, general government gross debt; gross domestic product (gdp) jel classification e62; f36; h6 introduction in the context of excessive macroeconomic imbalances and financial tensions in the eu, its member states experience various situations regarding general government gross debt and general government deficit/surplus, as a percentage of gross domestic product (gdp). in order to analyze their trends, we used eurostat data, from 2015 to 2018. the obtained results allow us to appreciate that during the analyzed period, the european union has made progress in correcting macroeconomic imbalances, while some aspects of vulnerability still exist. some regulatory aspects the european union public finance, overall, face major challenges arising from the need to reduce the level of indebtedness, of the pressure on long-term expenditures and of fiscal burden which is quite high (bucur, dragomirescu, 2013). according to the treaty on the functioning of the european union, the basic rule of budgetary policy is that “member states shall avoid excessive government deficits” and prove sound public finances by complying with the reference values of 3% and, respectively, of 60% of the gdp for budget deficit and public debt. bucur, nimineț, silivestru 7 in the light of the treaty, “at least once every two years, or at the request of a member state with a derogation, the commission and the european central bank shall report to the council on the progress made by the member states with a derogation in fulfiling their obligations regarding the achievement of economic and monetary union” (article 140(1)). these reports examine, among others, fiscal developments, more precisely the extent to which each member state met the criteria of “the sustainability of the government financial position” as an achievement of “a government budgetary position without a deficit that is excessive as determined in accordance with article 126(6)” (treaty on the functioning of the european union). governed by article 126 of the treaty, the excessive deficits procedure (edp) mentions that if a member state does not fulfil the requirements regarding fiscal discipline, the european commission shall prepare a report when the ratio between the public deficit and the gdp exceeds the reference value, unless the ratio has decreased significantly and steadily and reaches a level close to the reference value, or if its exceedance is exceptional and temporary and the ratio remains close to the reference value, or when the ratio between public debt and gdp exceeds the reference value, unless this ratio is sufficiently diminished and approaches the reference value at a satisfactory rate. data and findings in this context, we analyzed the evolution of the two indicators: general government deficit and gross public debt of the eu member states, from 2015 to 2018. thus, during the considered period, the eu-28’s government deficit-to-gdp decreased from -2.3% in 2015 to -0.6% in 2018, and of ea-19’s decreased from -2% in 2015 to -0.5% in 2018 (table 1). table 1 general government deficit/surplus in the eu, 2015-2018 (% of gdp) 2015 2016 2017 2018 luxembourg 1,4 1,9 1,4 2,4 bulgaria -1,7 0,1 1,2 2 malta -1 0,9 3,4 2 germany 0,8 0,9 1 1,7 netherlands -2 0 1,2 1,5 greece -5,6 0,5 0,7 1,1 czech republic -0,6 0,7 1,6 0,9 sweden 0 1 1,4 0,9 lithuania -0,3 0,2 0,5 0,7 slovenia -2,8 -1,9 0 0,7 denmark -1,3 -0,1 1,4 0,5 croatia -3,2 -1 0,8 0,2 austria -1 -1,6 -0,8 0,1 ireland -1,9 -0,7 -0,3 0 poland -2,7 -2,2 -1,5 -0,4 portugal -4,4 -2 -3 -0,5 ea-19 -2 -1,6 -1 -0,5 estonia 0,1 -0,3 -0,4 -0,6 eu-28 -2,3 -1,7 -1 -0,6 belgium -2,4 -2,4 -0,8 -0,7 slovakia -2,6 -2,2 -0,8 -0,7 finland -2,8 -1,7 -0,8 -0,7 latvia -1,4 0,1 -0,6 -1 united kingdom -4,2 -2,9 -1,9 -1,5 italy -2,6 -2,5 -2,4 -2,1 hungary -1,9 -1,6 -2,2 -2,2 spain -5,3 -4,5 -3,1 -2,5 france -3,6 -3,5 -2,8 -2,5 romania -0,7 -2,7 -2,7 -3 cyprus -1,3 0,3 1,8 -4,8 source: eurostat (online data codes: tec00127) some recent developments regarding the european union fiscal position 8 as for eu-28’s public debt, its level (as a percentage of gdp) decreased from 84.6% in 2015 to 80.0% in 2018 and of ea-19’s decreased from 90.1% to 85.1% during the same years (table 2). table 2 public debt in the european union, 2015-2018 (% of gdp) 2015 2016 2017 2018 estonia 9,9 9,2 9,2 8,4 luxembourg 22,2 20,7 23,0 21,4 bulgaria 26,2 29,6 25,6 22,6 czech republic 40,0 36,8 34,7 32,7 denmark 39,8 37,2 35,5 34,1 lithuania 42,6 40,0 39,4 34,2 romania 37,8 37,3 35,2 35,0 latvia 36,8 40,3 40,0 35,9 sweden 44,2 42,4 40,8 38,8 malta 57,9 55,5 50,2 46,0 poland 51,3 54,2 50,6 48,9 slovakia 52,2 51,8 50,9 48,9 netherlands 64,6 61,9 57,0 52,4 finland 63,4 63,0 61,3 58,9 germany 71,6 68,5 64,5 60,9 irland 76,8 73,5 68,5 64,8 slovenia 82,6 78,7 74,1 70,1 hungary 76,7 76,0 73,4 70,8 austria 84,7 83,0 78,2 73,8 croatia 83,7 80,5 77,8 74,6 eu-28 84,6 83,4 81,7 80,0 ea-19 90,1 89,2 87,1 85,1 united kingdom 87,9 87,9 87,1 86,8 spain 99,3 99,0 98,1 97,1 france 95,6 98,0 98,4 98,4 belgium 106,4 106,1 103,4 102,0 cyprus 108,0 105,5 95,8 102,5 portugal 128,8 129,2 124,8 121,5 italy 131,6 131,4 131,4 132,2 greece 175,9 178,5 176,2 181,1 source: eurostat (online data codes: tsdde410) the situation can also be observed and appreciated through the graphical representations of the two indicators developments (figure 1 and figure 2). figure 1 general government deficit/surplus developments in the european union, 2015-2018 (% of gdp) source: own computation, based on the data available on eurostat bucur, nimineț, silivestru 9 in 2015, the highest level of the government deficit as a percentage of gdp has reached -5.6% in the united kingdom, in 2016 and 2017 spain recorded a government balance of -4.6% and, respectively, -3.1% of gdp, while in 2018 cyprus registered the highest government deficit, of -4.8% of gdp. in spain, the government deficit related to gdp exceeded the reference value of 3.0% for three consecutive years: 2015, 2016, 2017, however, showing a downward trend. also, in 2015 only three eu member states reported government public surpluses – estonia (0.1%), germany (0.8%) and luxembourg (1.4%) – and during the following years the situation has improved. in 2016, 10 states reported government public surpluses and in 2017, 12 countries recorded a positive budget balance. the trends of the last two years, 2017 and 2018, indicate an improvement of the general government balance for more than half of the eu member states, the best results being recorded by portugal (+2.5% of gdp), poland (+1, 2% of gdp) and luxembourg (+ 1.0% of gdp). bulgaria, germany, greece, lithuania, luxembourg and the netherlands registered a higher surplus in 2018 than in 2017. on the other hand, in countries such as: estonia, latvia and romania the general government deficit has increased during the last two years. we can also note that for most member states, the share of public debt in gdp is declining, but the evolution is slow. the decreases are favored, on the one hand, by the improved budgetary positions and, on the other hand, by the resumed gdp growth (european commission, 2019). figure 2 general government gross debt developments in the european union, 2015-2018 (% of gdp) source: own computation, based on the data available on eurostat thus, in 2015, a total of 18 member states reported a debt rate of over 60% of gdp, the highest values being recorded by greece (175.9%), followed by italy (131.6%), portugal (128%), cyprus (108.0%), belgium (106.4%) and spain (99.3%). the lowest general government gross debts as a percentage of gdp were registered in estonia (9.9%), luxembourg (22.0%), bulgaria (26.2%), czech republic (40.0%), romania (37.8%) and denmark (39.8%). compared to 2016, in 2017, the general government gross debt (in relation to gdp) improved for only two of eu member states – luxembourg (of 2.3 percentage points of gdp) and france (of 0.4 percentage points of gdp) –, while for the other 26 countries decreased, especially for: cyprus (-9.7 percentage points of gdp), malta (5.3 percentage points of gdp), austria (-4.8% percentage points of gdp) and netherlands (-4.9 percentage points of gdp). some recent developments regarding the european union fiscal position 10 in 2018, the situation of the general government balance and that of the government debt in the european union are presented in figure 3 and figure 4. figure 3 general government balance in the european union, 2018 (% of gdp) source: own computation, based on the data available on eurostat thus, in 2018, 13 eu-28 member states achieved positive levels of the government balance: austria (+0.1%), croatia (+0.2%), denmark (+0.5%), slovenia and lithuania (+0.7%), sweden and the czech republic (+0.9%), greece (+1.1%), the netherlands (+1.5%), germany (+1.7%), malta and bulgaria (+2%), luxembourg (+2.4%). ireland reported a government balance and 12 eu member states, namely: poland, portugal, estonia, belgium, slovakia, finland, latvia, united kingdom, italy, hungary, spain, france, recorded deficits smaller than 3.0% of gdp. the lowest values were recorded in poland (-0.4%), portugal (-0.5%) and estonia (-0.6%). romania (3.0%) and cyprus (-4.8%) had deficits higher than or equal to 3% of gdp. in case of cyprus the high deficit in 2018 is due, mainly, to the restructuring of cyprus cooperative bank (eurostat). moreover, the support given by the cypriot government in this regard has also affected the state’s general government gross debt, which registered an exceptional increase from 95.8% of gdp in 2017 to 102.5% of gdp in 2018. it is also worth noting that in 2018, both eu-28 and ea-19 registered a general government balance below the reference of -3% of gdp, reaching the level of -0.6% of gdp and respectively -0.5% of gdp. during the period of our analysis, due to favorable cyclical conditions and lower interest rates, the overall government deficit in the eu showed a downward trend, but this “is expected to end in 2019, when the overall deficit is projected to slightly increase for the first time since 2009” (european commission, 2019). at the end of 2018, half of the eu member states reported a government debt above the level of 60% of gdp, the highest of them being recorded in greece (181.1%), followed by italy (132, 2%), portugal (121.5%), belgium (102.0%), france (98.4%) and spain (97.1%). the lowest government debt-to-gdp ratio were registered in estonia (8.4%), followed by luxembourg (21.4%) and bulgaria (22.6%). also, in 2018, the government debt-to-gdp ratio in eu-28 and in ea-19 reached the level of 80.0% and 85.1% respectively. bucur, nimineț, silivestru 11 figure 4 general government gross debt in the european union, 2018 (% of gdp) source: own computation, based on the data available on eurostat the commission estimates that in some eu member states, general government gross debt will remain close to historical peak values, the expected budgetary adjustment being relatively limited or even negative. conclusions in the context of macroeconomic imbalances, financial tensions and long-term challenges on the sustainability of the european union’s public finances, this paper aims to analyze the developments of the main indicators, the general government deficit/surplus and the general government gross debt (in relation to gdp), using the statistical data available on eurostat, from 2015 to 2018. the results allow us to appreciate that during the analyzed period, the european union has made progress in correcting the macroeconomic imbalances, while some aspects of vulnerability still exist, and the evolution of the general government balance and the general government gross debt, as a whole, were favorable both for eu-28 as well as for ea-19. in conclusion, the eu’s public finances have improved, the public debt, although over the reference threshold of 60%, has traveled a downward trend from 2015 until 2018, while the government deficit was below 1% of gdp in 2018. as a result and as recommended by the commission, the implementation of structural reforms in the eu countries, the investment and also the responsible fiscal-budgetary policies, combined with decisive actions at european level, including the investment plan for europe, can further contribute to renewing stability and increasing the prosperity of the european economy. references bucur, i.a., dragomirescu, s.d. (2013), an analysis of the fiscal convergence criteria in the european union in terms of the sustainability, studies and scientific researches. economics edition, no. 18, 137-149, available at http://sceco.ub.ro/index.php/sceco/article/view/223; european commission (2019), communication from the commission to the european parliament, the european council, the council, the european central bank and the eurogroup, 2019 european semester: assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under regulation (eu) no 1176/2011, available http://sceco.ub.ro/index.php/sceco/article/view/223 http://sceco.ub.ro/index.php/sceco/article/view/223 some recent developments regarding the european union fiscal position 12 at https://ec.europa.eu/info/sites/info/files/file_import/2019-europeansemester-communication-country-reports_en_0.pdf; consolidated version of the treaty on the functioning of the european union, available at https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2b506-fd71826e6da6.0023.02/doc_2&format=pdf; excessive deficit procedure (edp), available at https://eurlex.europa.eu/summary/glossary/excessive_deficit_procedure.html?locale=en; https://ec.europa.eu/eurostat/home?, eurostat. https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-communication-country-reports_en_0.pdf https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-communication-country-reports_en_0.pdf https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-communication-country-reports_en_0.pdf https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/doc_2&format=pdf https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/doc_2&format=pdf https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/doc_2&format=pdf https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/doc_2&format=pdf https://eur-lex.europa.eu/summary/glossary/excessive_deficit_procedure.html?locale=en https://eur-lex.europa.eu/summary/glossary/excessive_deficit_procedure.html?locale=en https://eur-lex.europa.eu/summary/glossary/excessive_deficit_procedure.html?locale=en https://eur-lex.europa.eu/summary/glossary/excessive_deficit_procedure.html?locale=en https://ec.europa.eu/eurostat/home https://ec.europa.eu/eurostat/home microsoft word apostoaie constantin marius_eng.doc analysis of the correlations between public capital investments and economic development in romania anca bogdan abstract this article aims to address the correlations between public capital investments and economic development in romania. firstly, it presents a brief literature review on the subject proposed for analysis, under which it can be assumed that public capital investments have a positive impact on production, employment, private sector and thus contribute to economic development. also, we found some heterogeneity of results across country, regions and sectors. secondly, it analysis the evolution of public capital investments and gross domestic product during 2006-2009 and also tests the relationship between this two variables, using a correlation coefficient, based on data from the general consolidated budget provided by the ministry of public finance and also statistical data on gdp from national institute of statistics. keywords public capital investment, economic development, the general consolidated budget jel code: h54, g23, o47 literature review on the correlation between public capital investments and economic development the purpose of this literature review is to present a selection of studies and reports which show the positive and also the negative correlations between public capital investments and economic growth, studies that were based on results obtained in the respective countries. discussions on the effects of infrastructure had increased especially after 1989, with the assumption made by david alan aschauer, that the decline in productivity of public services is crucial to explain the general decline in growth. with his work as a support results in which analyzed the economic situation of the united states, aschauer noted that an increase of 1% of the stock of public capital generates a 0.4% increase in productivity1. as a consequence, sustained participation of state capital is able to contribute to economic growth. various empirical studies show the importance of public capital composition on growth of different regions, as some components have greater direct effects on the production process than others. an example is the study of mastromarco and ulrich (2006), on the case of italy, which shows that capital investment include a basic infrastructure and other non-basic type. the first category included: roads and airports, railways and metros, ports, power lines and water, telecommunications, while the seconds include hospitals, public buildings etc2. 1 aschauer, d.a. (2000), do states optimize? public capital and economic growth, the annals of regional science 34, p.361 2 mastromarco, c. and woitek, u. (2006), public infrastructure investment and efficiency in italian regions, journal of productivity analysis 25, p.2 studies and scientific researches economic edition, no. 15, 2010 149 the study also shows that a 10% increase in infrastructure investment can generate a change in the economic efficiency of different regions, with 4% (for basic infrastructure) and -4% for the non-core, so the effects are symmetrical. on the other hand, shows that increased investment in infrastructure increases non-basic differences between south and north. issues of public capital productivity are of interest for many economists. such a study is the one of mittnik et al. (2001) on a panel of 6 countries (canada, france, britain, japan, netherlands and germany), under which an increase in public investment leads to a higher rate of marginal productivity of private capital and increase long-term private investment3. another economist, yakita (2004), found that public capital accumulation expands the possibility of production in the private sector, while public demand for investment goodsprice elasticity of demand affects total4. some economists have analyzed the economic effect on short and long term of a permanent increase in public capital financed at the expense of establishing the minimum income tax. an increase in public capital investment has a positive effect both on capital stock, but also to employment, in the short term. this multiplier effect is generated by an increase in the marginal productivity of capital and labor, as the wealth reduction due to higher taxes5. another study concerned the causal effect of the public capital stock on production was carried out by kawaguchi et al. (2009), using as natural experiment the electoral reform in japan in 1994, which resulted in changes in public capital between the regions of the country. empirical testing can not reject the null hypothesis that public capital is not productive based on estimates from this experiment. study results indicate that an increase of 10% of public capital is increasing the output per hour of work by 0.4%6. also, some studies look for the side effects of public investment on private capital and employment. such a study is the one conducted by deliktas et al. (2009), on the case of turkey, which emphasizes positive and negative long-term effects of public capital installed outside of regions over others. thus, in the marmara region, which represents 60% of private manufactured in turkey and that attracts most public investment, around 30%, the effects are positive, while in the south-east anatolia, the effects are negative7. these cases are explained by the mobility of production factors, from the less developed to developed ones. moreover, the employment rate is 9.7% to -5.5% in the marmara and south-eastern anatolia. alonso-carrera (2009) identified the positive spillover effects of public capital for almost all regions of spain, with differences in per capita production in various regions8. toshiki tama (2009) showed that public investments enhance economic growth, because it stimulates demand for intermediate goods, and also increasing profits for the sector companies. therefore, this increase raises the interest market rate and thus leads to economic growth9. there are studies showing a negative relationship between public capital expenditure and long-term growth. typical is the study by ghosh and gregoriou (2009) for 15 industrialized 3 mittnik, s. and neumann, t. (2001), dinamic effects of public investment: vector autoregressive evidence from six industrialized countries, empirical economics 26, p.440 4 yakita, a. (2004), elasticity of substitution in public capital formation and economic growth, journal of macroeconomics 26, p.3 5 coto-martinez, j. (2006), public capital and imperfect competition, journal of public economics 90, p.353 6 kawaguchi, d., ohtake, f., tamada, k. (2009), the productivity of public capital: evidence from japan’s 1994 electoral reform, journal of the japanese and international economies 23, p.339 7 deliktas, e. et al. (2009), the spillover effects of public capital on the turkish private manufacturing industries in the geographical regions, annals of regional science, 43, p.376 8 alonso-carrera, j. et al. (2009), macroeconomic effects of the regional allocation of public capital formation, regional science and urban economics 39, p.571 9 toshiki, t. (2009), variety of products, public capital, and endogenous growth, economic modelling 26, p.253 studies and scientific researches economic edition, no. 15, 2010 150 countries. for brazil and thailand, public capital expenditure had a significant negative effect, while current expenditure has a significant positive role on economic growth; on the other hand, for countries like sudan and zimbabwe none of the two types of expenditure has a substantial impact on growth10. the correlation public investment economic development was analyzed for the purposes of the negative impact of inadequate investment on the labor market. everaert and heylin (2004) analyzed the situation of belgium in the period 1965-1966, and their views have shown a clear negative effect between public capital and employment, whereas an increase in public capital stock by 1% reduces the employment in the private sector by around 0.32%, indicating a substitution relationship between two variables11. in recent years, studies focused not so much on public investment to confirm the correlation of public capital investments economic growth, but on measuring the intensity of this correlation. the results of these studies are somewhat different, some identifying a strong correlation, while others advocate a weaker correlation between public investment and capital growth. for example, the study of romp and de haan (2007) supports the idea of an impact on growth capital expenditures substantially lower than the effects mentioned by aschauer (2000) and some heterogeneity, meaning that the effects differ across countries, the level of regions or sectors. also, research conducted by hulten (1996) showed a weak correlation of public capital expenditure on economic development. another study by rioja, also in 1998, using as panel 7 latin american countries, concluded that infrastructure investments have positive effects on gross domestic product and wider on private investment. according to a study by shioji (2001) with the usa situation models (1960-1988) and japan (1955-1993) found that infrastructure was a modest contribution to economic growth of 4% for the u.s. and 19% for japan12. effects identified for the component „education” were positive, as well as for „agriculture and fisheries”, while the „national land conservation” the effects were insignificant. international monetary fund (2004) report shows that empirical research confirms the positive correlation between public expenditure and growth capital. of 102 studies that have led to investment in infrastructure at the impact on productivity and economic growth, 53% showed a positive impact, 42% one limited, and in 5% of these studies the impact was negative. the research includes studies conducted in 30 different countries (including developing countries), 41 studies from the united states, 19 studies in spain and 12 studies in countries like argentina, brazil, colombia, india and the philippines. the individual studies for each country show different results. while in the united states 54% of the studies did not reveal a significant relationship, in developing states the effect was 100% positive, which shows that infrastructure investment plays a key role in promoting growth and productivity and reducing disparities between rich and poor regions. studies conducted in spain confirmed the extent of 74% significant contribution of infrastructure on economic performance. moreover, spain has received from eu cohesion funds to cover the disparities between regions and within them. based on these studies we can say that there are many positive effects of public capital investments on economic development. 10 gregoriou, a. and ghosh, s. (2009), on the heterogeneous impact of public capital and current spending on growth across nations, economics letters 105, p.34 11everaert, g. and heylen, f. (2004), public capital and long-term labour market performance in belgium, journal of policy modeling 26, p.103 12 shioji, e. (2001), public capital and economic growth: a convergence approach, journal of economic growth 6, p.219 studies and scientific researches economic edition, no. 15, 2010 151 testing the correlation between public capital investments and economic development in romania in romania there are no empirical studies to test the correlation between public capital investment and economic growth. based on the data from the general consolidated budget provided by the ministry of public finance and also on data from national institute of statistics, we tested, using the correlation coefficient, the relationship between the public capital investments and gross domestic product in romania, during 2006-2009. the values for public capital expenditure and gross domestic product are presented in table no. 1. table no. 1: evolution of public capital expenditure and gdp in romania during 2006-2009 2006 2007 2008 2009 total public expenditure (million lei) 112,626.3 136,556.5 189,122 193,025.4 gdp (million lei) 344,650.6 412,761.5 503,959 491,273 public capital expenditure (million lei): 12,717 14,410.4 23,203.4 23,175.3 % in total public expenditure 11.29 10.55 12.26 12.00 % in gdp 3.7 3.5 4.6 4.7 (source: developed by authors, based on budget implementation in the years 2006-2009, available on the website of the ministry of public finance and also on data from national institute of statistics) looking at the general consolidated budget in 2006-2009 there were found increased values for public capital expenditure for the period under review, with 0.82% higher in 2009 compared with 2006, their share in gdp and in total public expenditure in 2009 reaching 4.7%, respectively 12%, which reflects an improvement in expenditure policy by channeling public funds to support economic growth. capital expenditures had lower values compared to the original provisions set out in budgets. thus, in 2008, they represented only 4.6% of gdp, from 5.2% originally scheduled in the general consolidated budget. the bulk of investment spending have been made from internal sources (state budget and local budgets), draws support from structural and cohesion funds representing € 178 million (6% of the amount assigned), given that eu allocations were about € 3.1 million, accumulated in the years 2007 and 2008. in 2009, in the consolidated budget we could see that the largest amounts, representing public capital investment, were included in the budget of the central administrative territorial units (11,427.5 million lei) and in the budget of the national company of motorways and national roads (5519.5 million lei). as noted in the table, the state capital participation has a low share in total public expenditure, whereas the mostly took the form of grants, allowances, bonuses, loans with subsidized interest and other reimbursable amounts. taking into account previous values given in table no.1 for public capital expenditure and gdp for the period 2006-2009, it was calculated the correlation coefficient between these two variables. results are shown in table no. 2. table no. 2: calculation of correlation coefficient between public capital investment (x) and gdp (y) for romania during 2006-2008 x (%) 24.74 studies and scientific researches economic edition, no. 15, 2010 152 y (%) 13.11 )(2 x 688.24 )(2 y 123.06 )( x 26.23 )( y 11.09 ),cov( yx 319.23 ),( yx 0.0037 (source: developed by authors) the data show a positive correlation, but poor between the two variables, namely the fact that about 0.37% of gdp growth is associated with or explained by increased public spending capital. table no. 3: evolution of public capital investment reflected in the state budget, in key economic sectors, in romania, during 2006-2009 -thousands lei 2006 2007 2008 2009 mining, manufacturing and construction total public expenditure 621,366 506.311 474950 360007 public capital expenditure 0 0 0 0 agriculture, forestry, fishing and hunting total public expenditure 3,145,768 3,729,783 6,331,897 8,392,664 public capital expenditure 197,269 210,000 263,000 81,266 transports total public expenditure 4,077,567 5,197,122 7,011,205 8,712,444 public capital expenditure 69,644 19,190 13,920 17,532 comunications total public expenditure 12,110 27,980 27,308 310,357 public capital expenditure 1,480 3,370 7,900 38,800 research and development on economic sector total public expenditure 81,093 80,717 117,640 103,974 public capital expenditure 357 415 200 384 fuels and energy total public expenditure 437,098 641,395 806,393 1,057,586 public capital expenditure 0 0 0 0 (source: developed by authors from state budget data for the years 2006-2009) as seen from the table above, in the state budget (data are available for all economic sectors at this level) the increased participation from the state capital has been directed by the transport sector. moreover, its budget was the greatest under the review period. it is noted, however, a decrease of public capital investment from year to year, from 69,644 thousand lei (2006) to 17,532 thousand lei (2009). public capital expenditure is concerned to modernization and revitalization of rail transport activities, upgrading of airports and transportation base. studies and scientific researches economic edition, no. 15, 2010 153 conclusions public capital represents, according to the world bank (1994), the „wheels” if not, „the engine” of the economic activity. public capital expenditure is a key driver of growth contributing to poverty alleviation, improving living standards and business productivity, households and government services. starting from research conducted by aschauer, the role of public capital on growth process began to be a topic of real interest. most empirical studies have shown a positive relationship between public capital investments and economic development and also heterogeneity of public investment effects across countries, sectors or regions. looking at the executions of the general consolidated budget for the years 2006-2009, we have seen that the largest public capital expenditure was targeted to the transport industry. our research found that in romania there are no empirical studies to test the correlation between public spending capital and economic growth, public capital weights in total expenditure incurred by the state is low and down from year to year. after calculating the correlation coefficient between public capital investment and gross domestic product during 2006-2009, there was found a weak correlation, but a positive one, which shows that an increase of state capital participation is likely to contribute to a low proportion to economic development. acknowledgements i am grateful to “alexandru ioan cuza” university of iasi, for financial support of this article, as beneficiary of a grant posdru/88/1.5/s/47646, named “studii doctorale: portal ”, cofinanced from the european social fund, within the sectoral operational programme human resources development 2007-2013, the project implementation period being 36 months, from march 1, 2010, until february 28, 2013. references 1. alonso-carrera, jaime et al. (2009), macroeconomic effects of the regional allocation of public capital formation, regional science and urban economics 39, 563–574 2. aschauer, d.a. (2000), do states optimize? public capital and economic growth, the annals of regional science 34, 343-363 3. coto-martinez, j. (2006), public capital and imperfect competition, journal of public economics 90, 349–378 4. deliktas ertugrul et al. (2009), the spillover effects of public capital on the turkish private manufacturing industries in the geographical regions, annals of regional science 43, 365–378 5. everaert, g. and heylen, f. (2004), public capital and long-term labour market performance in belgium, journal of policy modeling 26, 95–112 6. gregoriou, a. and ghosh, s. (2009), on the heterogeneous impact of public capital and current spending on growth across nations, economics letters 105, 32–35 7. kawaguchi, d., ohtake, f., tamada, k. (2009), the productivity of public capital: evidence from japan’s 1994 electoral reform, journal of the japanese and international economies 23, 332–343 8. mastromarco, c. and woitek, u. (2006), public infrastructure investment and efficiency in italian regions, journal of productivity analysis 25, 57-65 pe anii 2006-2009 bugetul de stat pe anii 2006-2009 11. mittnik, s. and neumann, t. (2001), dinamic effects of public investment: vector autoregressive evidence from six industrialized countries, empirical economics 26, 429-446 studies and scientific researches economic edition, no. 15, 2010 154 12. shioji, e. (2001), public capital and economic growth: a convergence approach, journal of economic growth 6, 205-227 raportul privind ajutoarele acordate de stat în perioada 2004-2006 14. toshiki, t. (2009), variety of products, public capital, and endogenous growth, economic modelling 26, 251–255 15. yakita, a. (2004), elasticity of substitution in public capital formation and economic growth, journal of macroeconomics 26, 391–408 16. www.mfinante.ro 17. www.insse.ro studies and scientific researches economic edition, no. 15, 2010 155 microsoft word apostoaie constantin marius_eng.doc decision and decision makers anuta porutiu, babes-bolyai university, cluj-napoca, romania abstract in the current economic context, decision making requires complex and multiple actions on the part of the policy makers, who are more challenged than in previous situations, due to the crisis that we are facing. decision problems cannot be solved by focusing on manager’s own experience or intuition, but require constant adaptation of the methods used effectively in the past to new challenges. thus, a systemic analysis and modeling of arising issues is required, resulting in the stringent use of decision support systems (dss), as a necessity in a competitive environment. dss optimize the situation by getting a timely decision because the decision making process must acquire, process and interpret an even larger amount of data in the shortest possible time. a solution for this purpose is the artificial intelligence systems, in this case decision support systems (dss), used in a wider area due to expansion of all the new information technologies in decisionmaking processes. these substantial cyber innovations have led to a radical shift in the relationship between enterprise success and quality of decisions made by managers. keywords decision support systems, decision making, decision making process, human resources jel codes: m 10, m 15 the benefits of dss in decision making in practice managerial decision has two forms: decision-making and decision making process. decision-making refers to less complex decision situations which are repetitive or in which variables involved are well known by the governor. decision-making process involves a great consumption of time during which information is collected and analyzed, people are asked to give their opinion in the emerging decision situation. basically the decision making process consists of a series of stages through which the managerial decision is prepared, adopted, implemented and evaluated. to drive the achievement of the objectives, management decisions must meet a number of criteria, of which the most important ones are considered the following: scientific validity of the decision. this leads to avoidance of improvisations and subjectivity in making decisions. legality of the decision. the decision should be made only by the person invested with legal right and empowered to do so. completeness of the decision. the decision must contain all the necessary elements for a correct understanding and implementation. opportunity of the decision. a good decision taken in due time is better than a very good decision taken late. efficiency of the decision. the aim is to achieve a good effect following a specific effort. coordination of the decision. it ensures that decisions on the various departments of the organization are compatible with each other and lead to achievement of the general objective of the whole enterprise. according to peter drucker "decisions should be made at the lowest possible level, in accordance with their nature, and as close as possible to the place that requires action. today there is a tendency to do this, and therefore there are systems that assist managers’ decisions specific to each management level. studies and scientific researches economic edition, no. 15, 2010 435 elements of decision making decision making is defined as a series of steps starting with the analysis of the information, continues with the selection of several alternatives and assessment of the selected alternative on the problem being investigated. in any management decision making these items are found: 1. decision-maker is the person or group of persons to choose the optimal variant out of the possible ones. if the issues are complex the decision is made by a group of people, and in case of current decisions, operational decisions are made by one person. the quality of decisions depends on the qualities, knowledge and skills of the decision-maker. 2. decisional problem. the decision is made to solve a decision problem. in the absence of a problem the decision is irrelevant. 3. the number of decision variants can be finite or infinite. it includes all possibilities of solving the decision problem. in order to define this number, information within and outside the organization, creative management thinking, expertise and research are required. when the decision-making problem has been identified, the decision-maker acknowledges the existence of several possible courses of action. he may have these alternatives by direct involvement or through other persons. choosing the best variant is done according to a series of appropriate methods of mathematical model that characterizes the decisional situation. 4. the number of decision criteria includes a series of features based on which decision variants are evaluated and compared in order to adopt the most rational decision. the number of decision criteria is represented by the points of view of the decision-maker who isolates aspects of economic reality in the decision-making process. criteria decision making is characterized by several levels, according to different variants and / or states of objective conditions. in a decisional situation, when taking into account several criteria there must be taken into consideration the possibility of division and clustering criteria as well as their interdependence. for example, profits can be split by product, subunits etc. also, profits and costs can be grouped into an overall criterion which is profitability. two criteria are independent if the setting of a target in terms of a criterion does not influence the establishment of another goal, in terms of the second criterion. the company's management can use criteria such as: turnover, price, quality, investment recovery period, the cycle of production, utilization of production capacity etc. 5. environment (objective conditions) is represented by the total internal and external conditions that are influenced and influence the decision. for a given decisional situation, several states of objective conditions can occur in the environment. the environment is characterized by great mobility. in the internal conditions one can observe a perfecting of personnel training and improvement of information system, and in terms of external conditions, one can notice changes in legislation of the country and changes in business relationships with various organizations. sometimes the evolution of the environment can be adversarial with regard to its influence on decision making process within the firm. thus, the increasing complexity of business activity adversely affects the substantiation of decision, while raising the level of professional training and management training has favourable effects on decision making. 6. the number of consequences includes all the results that would be obtained according to each decision criteria and each state of objective conditions by applying variants of decision. establishing consequences is an activity that is not always done accurately because the causes that would determine their appearance are not known with certainty. the consequences may affect the quantity or the quality. 7. objectives are levels of decision by the governor proposed to be achieved following the implementation of decision variant chosen. studies and scientific researches economic edition, no. 15, 2010 436 8. the utility of each consequence of the different variants is expressed in the same unit of measure that varies between 0 and 1, the utility representing the governor’s expected benefit from the fact that a certain consequence is achieved. 9. information an essential element in decision-making the importance of information and information systems has been synthesized by j. naisbitt as the result of a calculation which tried to determine the percentage of the u.s. workforce directly involved in the creation, use or distribution of information. considering that the study was conducted in the early 80's the results are impressive, even for the u.s. the percentage of so-called knowledge workers proved to be about 70% of the total. the development of information technology led to the inclusion of information as the sixth organizational resource, along with human resources, machinery, financial resources, materials and management. even in terms of inviolability, the information is a highly efficient and economical way to reunite other business resources. in addition, information is used both to assist the other five organizational resources in coordinating activities and to plan, route and control these activities. in this context, building systems responsible for assisting the decision arises as a priority for the new wave of managers. in a ranking of the importance of resources in terms of management, the second after the human factor is the quality and frequency of business information. now, even if the information is no longer undervalued, underestimated and under-utilized as in previous years, there are a number of issues related to its use in decision-making process. generally, these issues relate to quality and value of information, the volume of information sent to managers and their periodicity. a. the quality and value of information in an ideal situation managers should be able to define the type of information they need, and the management information system should be able to offer it to them. in practice, however, this is not always possible. according to peter drucker, "most decisions should be based on incomplete knowledge either because the information is not available, or because it would cost too much time and money to obtain it”. however, to make the right decision, managers must have the relevant information that will increase knowledge, reduce uncertainty, and is useful for their intended purpose. extremely important for managers is also information value, value derived from changes in decision behaviour caused by data availability. when estimating the information, the cost of producing that particular information should also be taken into account. thus, acquiring, handling, recording and processing data, regardless of the means used for this, do not produce value but only involve cost. value appears only when the data is communicated and understood by the recipient thereby transforming into information. in evaluating the information in terms of value created, its user has the main role and the second factor in this evaluation is how that information is used to improve decision making. quality information is that information which creates value through use and is characterized by the following elements: it is relevant to the purpose or it is sufficiently accurate for its purpose, complete enough for the problem it refers to, it comes from a reliable source, one that the user trusts, it is communicated in time for the purpose, it is properly detailed, it is communicated through an appropriate channel and it is understood by the user. b. the amount and frequency of information another major problem that managers are facing is the large amount of information. a large volume of information can cause not only strangulation and agglomerations in the system but it may also prevent managers from fulfilling their tasks. previous computer systems contained a large number of data, but it was turned into information only when it was involved in assisting the decision process. unfortunately, much too often data is often confused with information which leads to situations in which managers are forced to make important decisions in the absence of relevant information. planning and a good control of operations through effective decision should be based on a constant flow of quality information in real time. data must be processed and sent to the appropriate recipient in due time so that the entire operational environment can be changed or controlled. studies and scientific researches economic edition, no. 15, 2010 437 under these circumstances and given the accelerated pace of business the need to use a computer system to assist managers emerges. the system should not interfere with managers’ rational judgement, but it must increase their abilities and become an extension of managers’ judgement. in conclusion, the information needs to meet the following requirements in order to be used by an organization as a sixth resource: 1. ro respond quickly to changing competitive conditions; in this way new opportunities can be taken more quickly and vulnerable competitive points can be reduced; 2. to increase effectively the organization's internal productivity with a stress on managers’ productivity; this requires better coordination of the functional elements of the organization. 3. to improve creativity, productivity and effectiveness of individual and group decisionmakers within the organization; this means providing appropriate tools to collect real and timely information, improving information analysis and quality decisions, as well as dispatching, assisting and monitoring the implementation of management actions and decisions . these three conditions are required to obtain information that will provide certainty of obtaining competitive advantage for the organization and improvement of management productivity. references 1. avornicului c. avornicului m., (2007), management and systems design, cluj-napoca, romania, risoprint; 2. gherguţ a., (2007), general and strategic management in education, iasi, romania, polirom; 3. mallach, eg, (2000), decision support and data warehouse systems, boston, usa, mcgraw-hill irwin; 4. niculescu o.,(2001), information systems of management organization, economic publishing house; 2001; 5. d. oprea, dumitru f., mesnic g., (2005), systems analysis, ed univ. "al. ioan cuza ", iasi, romania; 6. roger, i ursăcescu, m, vlădean, d. knock, m, burlacu s., (2007), informatics and management, bucharest, romania, university publishing house ; 7. rosca i., (2006), computer-information society. e-services, publishing house, bucharest, romana, publishing house; 8. toca i., (2002), educational management, bucharest, romania, didactic and pedagogical publishing house; 9. zacharias, d., (2001), information systems to assist decision, bucharest, romania, dual tech. studies and scientific researches economic edition, no. 15, 2010 438 regarding the users of financial statements and their information needs 49 regarding the users of financial statements and their information needs luca mihaela, teaching assistant university of bacau abstract: in order to satisfy the information needs of users from inside and outside the organizations, accounting elaborated a proper method of generalization and synthesizing of information it produces, which involved the development of some appropriate tools, known as financial statements. for users outside the company, these are often the only source of information available directly from the organization. the knowledge of the interests of different categories of users has an important role in trying to improve the quality of financial statements, which should allow taking correct decisions based on the financial position, the results of economic and financial activity and the changes in the financial position of the company. producer of specialized information, the accounting present a special offer. logically, we must know “the product” users, the requirements imposed, inclusively the purpose for which each beneficiary will use this specialized information system [horomnea, e., fundamentele ştiinţifice ale contabilităţii. doctrină. concepte. lexicon, ed. tipo moldova, iaşi, 2008, p. 171]. the framework for the preparation and presentation of financial statements presents a classification of different users of financial statements that include seven classes of users (investors, employees and groups that represent them, lenders and suppliers, customers, governments and their agencies and general public), with their information needs. the reason for the absence of the managers in this classification is that, even they are interested in the information contained in the financial statements, they can anytime access additional management and financial information, that helps them carry out their planning, decision-making and control responsibilities. moreover, the management has the ability to determine the form and the content of such additional information in order to meet his own needs. the internal users informing the internal users of financial information are represented by the managers (the leaders) of an organization, which can be grouped, according to general features of the responsibilities to be met, in: senior managers or top-managers (president, general director or board of directors, vice-president, commercial director – if he is directly subordinate to the general director and doesn’t exist the position of vicepresident etc.), whose main skills are the strategic orientation of the organization as a whole, in line with the mission and objectives settled, and the formulation and implementation of efficient and effective strategies, their decisions being mostly strategic and tactical; middle managers (division manager, director of production – when exists the position of vice-president, head of department, head of service if he has office heads like subordinate etc.), whose main skill is to ensuring the effectiveness of activities and the development of harmonious interhuman relations, their decisions being mostly current and tactical; first line managers or supervisors (regional sales manager, assistant of the human resources manager, head of project team, head office, supervisor etc.), whose main skills are using tools and methods, concretely implementation of specific knowledges and management processes, their decisions being integrally current. in conclusion, the managers have the responsibility for enterprise exploitation and the achievement of its objectives. in the small studies and scientific researches edition: economics, no. 13 (2008) regarding the users of financial statements and their information needs 50 enterprises, the manager may coincide with the business owner. as internal users of financial information, the managers won’t expect and they are not limited to information in the financial statements. they have immediate and full access not only to public information of the company, but also to internal information from the organization. their information needs are covered, essentially, through unpublished statements, prepared, not only on the basis of financial accounting, but also of managerial accounting. decision-making roles of managers, according to some opinions presented in the specialty literature, are four: entrepreneurs, disturbance regulators, resource distributors and negotiators. it results that in their activities, managers have usually many and varied targets, often complex. these objectives may refer to best adapt the organization to the conditions it operates by changing the organizational structure or by introduction of some new products or by improving existing ones, finding the right response to an aggressive advertising campaign of a competitor, correct elaboration of budgets, deliver quality goods and services, realized with a minimum cost, maintaining an acceptable level of income, resolving the disputes existing in the company and between the company and its environment, increasing the number of available jobs, protecting the environment etc. to ensure the success and survival in a competitive economic environment, the management needs to focus on two main objectives: profitability and liquidity. these indicators can be found in the explanatory notes to the financial statements. an important role of managers is to make the reality existing in the organization compatible with the needs and expectations of other users. the external users want to have more information about the organization and its activities, information they can trust for taking the best decisions, while managers are interested to public, when they are not forced through the law, only information that allow them to create a favorable image of the organization or information in a form that distort the economic and financial reality of the company (an important role in this latter case have the censors and/or financial auditors). although they benefits from information asymmetry in relation to external users, the managers pay particular attention to how the published information are perceived by them [malciu, l., cererea şi oferta de informaţii contabile, ed. economică, bucureşti, 1998, p. 28]. the reason of this interest is the fact that the financial statements inform the third party over the managerial ability. in other words, the managers use the information from the financial statements, specially, not to make decisions, but to communicate. the external users and their information needs the financial statements are an important means through which accounting information is communicated to decisionmakers. for the users from outside the organization, these are often the only source of information available directly from the company. in the following we present the information requirements of external users, correlated to the information offer by the economic institutions through their financial statements, strarting from the classification of the users in the framework for the preparation and presentation of financial statements which grouped them into seven categories already mentioned in this article: investors, employees and groups that represent them, lenders and suppliers, customers, governments and their agencies and general public. the international accounting standards board (iasb) recognizes that not all user requirements can be satisfied by the financial statements. it follows, however, implicitly, that investors are privileged users. therefore, satisfying their information needs will meet the needs of most other categories of users [gîrbină, m.m., bunea, ş., sinteze, studii de caz şi teste grilă privind aplicarea ias (revizuite) – ifrs, volumul i, ed. ceccar, bucureşti, 2005, p. 22]. studies and scientific researches edition: economics, no. 13 (2008) regarding the users of financial statements and their information needs 51 in what follows, we tried to present more detailed the information needs of external users of financial statements, the manner and the measure these are satisfied by the current content of the financial statements. investors (shareholders, associates), as providers of capital are concerned, primarily, over the risk of investment they have been committed or intends to engage and the profitability which it produces or will produce. according to some authors opinion, the risk relates to uncertainty “that matters", the one who is able to influence the expectations of owners. in financial theory it is considered that the risk is divided into two parts: specific risk, which doesn’t depends on the characteristics of value title, and systematic risk, which measures the sensitivity of the title at the market fluctuations and which, on a equilibrate market, is paid. since the financial statements are not providing a direct assessment for this parameter, investors requires information that help them to measure it. for a more accurate assessment of the risk-return relation, information like: financial profitability of the enterprise (calculated as ratio between the result and the equity), the earning per share (ratio between the net result and the number of shares), dividend per share (ratio between the value of dividends and the number of shares), price earning ratio (calculated as ratio between the exchange rate of share and the net result per share), the capitalization of profits ratio (calculated by reversing the terms of the previously ratio), global investment yield (calculated as ratio between the dividends per share and the exchange rate of share from the beginning of the financial year), have a great relevance for the investors. concretly, the investors are interested in the enterprise ability to achieve future earnings and to increase its wealth, taking into consideration the monetary flows released, which have a tangible representation, and less net benefit, which doesn’t reflects always the real enrichment of the company. in conclusion, the information provided by the statement of cash-flows are more important for the investors than those offered through the income statement. moreover, the preference for the increasing value of the enterprise make the statement of financial position to be privileged to the income statement. a large number of studies on investors needs highlighted the interest of this group for forecasted information, making necessary the publication of some budgetary information in the completion of financial statements. these variant isn’t applied in practice yet, probably at least two reasons: the future is uncertain, the disclosure of certain forecasted information may be contrary to the interests of the company when it acts in a competitive environment. even it is considered that the owners (shareholders/associates) are privileged users, aiming through the actual content of the financial statements, primarily, satisfying their information needs, it can be affirmed that they are not a homogeneous group and therefore will not be met equally their needs. thus, those who hold privileged shares and who hold ordinary shares doesn’t have the same needs nor the same behaviour. since privileged shares entitle to a fixed rate of dividends, their owners are more interested in profits safety (the part they obtain is a fixed rate no matter the profit level) than in the increase of business (by growth will benefit ordinary shareholders only) [malciu, l., cererea şi oferta de informaţii contabile, ed. economică, bucureşti, 1998, p. 19]. in addition, the majority shareholders and minority shareholders do not always have the same power to impose their requirements. also, investors differ in terms of ability to interpret information and therefore the demand of professional investors is different from that of non-professional investors. these are only some examples which show that investors’ heterogeneity will lead, in consequence, to a heterogeneous information request. the employees and the groups that represent them require, in general, relevant information on future prospects of the organization (stability, profitability etc.), on job security and validity of pension plans, on manners and levels of remuneration, on nature and extent of professional opportunities. such studies and scientific researches edition: economics, no. 13 (2008) regarding the users of financial statements and their information needs 52 information can help them to increase the involvement in the company, the interest in work. the profitability, determined on the basis of the information offered by the income statement, reflected also in the balance sheet, is an essential piece of information in their preparation for negotiating the increases of the wages or the improving of working conditions and is also a premise for employment security. for employees and for investors it present interest not only the overall performance of the entity, but the performance of each sector, which help them to verify and understand the managers' decisions on the extension or restriction of particular activities. in the explanatory note to the financial statements nomber 8 information on the employees and members of the board, management and supervision, according to romanian accounting regulations, there must be mentioned some information which present interest for this category of users: the average number of the employees of the organization, detailed for each category, wages paid or payable in the current year, expenses on social security and other expenses for pension contributions. regarding professional opportunities, these information knowledges can stimulate the workers to follow different training programs, other than those offered through the organization, to continue their studies, aspects that will have a beneficial influence over the future business of the entity. sometimes the interest of the employees is oriented on information beyond the field of the financial accounting, such as the incidence over the working conditions of the production programme, the general evolution of the orders, the forcasted measures for improve, transform, replace the equipments or the methods of production and exploitation etc. as a result of pressure coming from the employees and the unions over the businesses, in some countries of the world, became compulsory the preparation of a social balance that includes, in general, information on: the posts (efective posts, foreign workers, employments, departures, promotions, unemployment, absenteeism etc.), the remuneration and other related expenses (the total amount of remuneration, the remuneration hierarchy, the manner of calculation, other related expenses, the financial participation of employees etc.), the conditions of hygiene and safety (accidents at work and on road, the distribution of the accidents on material elements, occupational diseases, expenses for security etc.), other working conditions (the duration and organization of working time, the organization and content of work, the physical working conditions, the work medicine etc.), training, professional relations, other living conditions that depend on enterprise. in the event that the company of our country would be compelled to draw up a social balance, it should contain, therefore, all areas that relate to the living conditions of employees in their work, giving value to positive aspects and shortcomings of social policy. only part of the necessary information to be summarized here can be obtained through the accounting. the lenders, namely banks and other credit institutions, in assuring the financing of the company, are primarily interested in its solvency, which meens its ability to repay the loans and interests on term, and does not grant loan without a rigorous analysis of the organization's financial situation and its performance, more specifically, an analysis of the liquidity and the profitability of the enterprise and the system of guarantees that may benefit. to determ the capacity for repayment the loans it is necessary to valuate the assets and the liabilities of the enterprise, for prudential, to their liquidation value. therefore, some values of the assets are reduced, others are ignored and the values of the liabilities are increased. the estimation of earnings expected by the creditors, in other words the interest, is in line with the risks of lending operations. the determination of these risks can be achieved on the basis of information concerning: the personal, moral and technical value of managers; the general situation of the branch; the general situation of the enterprise (the nature, the quality, the price of the studies and scientific researches edition: economics, no. 13 (2008) regarding the users of financial statements and their information needs 53 products, the key customers and suppliers, etc.) and other information obtained from inside or outside the company. as a rule, there are some preset levels of interest that choose between. a particular attention is given to the liquidity and profitability indicators of the company. in this regard, the creditors assure that the short term loans arn’t used to finance fixed assets, and the company has the ability to create profit, which is a guarantee of the ability of the company to repay on time the loans received and to pay related interests. the guarantees required for giving credits may take various forms: real imobil guarantees (mortgages), real movable guarantees (pledges with or without dispossession), assignment of claims, letters of guarantee, payment instruments in bank circulation and endorsed in favor of suppliers etc. such information and further information can be obtained directly from the financial statements of credited company or may be requested from the company concerned to obtain foreign financing (not all enterprises are willing to provide additional information, giving a particular importance to the nature of these information). the suppliers are primarily interested to check the measure to which the debtor company will be able to carry out its financial obligations, analyzing the solvency of the company and other information which allow the assessment of compliance with payment fixed date. they also want to know what is the probability to continue the business, paying particular attention to development prospects of partners, which could have positive consequences in the future on their activities. in the explanatory notes they find information regarding the compliance with or the breach of the going concern principle, and depending on the other information from the financial statements, from several years, they may appreciate the chances for economic growth of the enterprise. the customers, like other users, need information to assess the continuity of the business and its growth prospects, in order to estimate the risks in their supply. other information which present interest to them are those relating to the prices used by the company, the possibility to get some price reductions, the possibility to get after-sales services (such as maintenance, repairs), the maximum amount of commercial loans received, the time for pay accepted by the company etc. the governments and their agencies have a dual role, on the one hand regulators of the accounting, and on the other hand users of the information contained in the financial statements. as guarantor of the general interest, the state is directly or indirectly involved in the regulation of accounting, to provide users a minimum quality of information published and to attenuate the information asymmetry existing between different categories of users [feleagă, n., ionaşcu, i., tratat de contabilitate financiară, vol. i, ed. economică, bucureşti, 1998, p. 54]. the governments may settle to be presented in the financial statements other information than those existing or additional information for its own purposes, but to influence the financial statements in a manner that meet the needs of others users. as a user, the state needs information, primarily for fiscality reasons, to determine the calculation of the base for taxes and follow the taxpayers pay them on time. fiscal legislation that applies to romania is based on information provided by accounting, because the fiscal result is dependent upon the accounting result. the statement of financial position helps the control of the fiscal authority over the payment of the enterprise obligations on time and prevent fiscal evasion [feleagă, n., ionaşcu, i., tratat de contabilitate financiară, vol. i, ed. economică, bucureşti, 1998, p. 54]. besides the above, the state needs information to assess the various demands regarding the offer of low interest grants or loans, to manage the national accounting, to prepare the statistics on the macroeconomic level, to make economic forecasts etc. the general public is practically represented by any user that has not been mentioned explicitly in the framework and studies and scientific researches edition: economics, no. 13 (2008) regarding the users of financial statements and their information needs studies and scientific researches edition: economics, no. 13 (2008) 54 which is interested in the accounting information produced within an economic organization. for example, in this category of users can enter: polical responsibles of the local community concerned with the contribution of the company to the development of local economy by creating jobs, training employees etc.; the environmental and consumer protection movements attentive to the consequence of the business over the environment and over the quality of life; the researchers interested in the shape, content and quality of financial statements; the competing companies concerned with evaluating the position on the market; the consumers interested in whether exist or not a monopoly and the measure they could be exploited; the courts that give a particular attention to the legal evidence, dedicated to help in establish the truth and correct resolution of cases at the stage of research or judgment. of course, limiting the categories of users is not possible, because demand for information can come from any person who will base his decisions in accordance with the relation he has and the information he know about an economic agent. moreover, in practice, these categories of users may be confused and may have a multiple position to the same company. analyzing the demand for accounting information coming from the different categories of users, it can see, the existence of common information needs (related to the solvency, profitability, liquidity, growth prospects of the company, business continuity etc.) and some distinct needs depending particularly on different vision on certain aspects. taking into account the requirements of different users, which are not satisfied by the current contents of the financial statements, we present some ways to improve the quality of information provided by the financial statements: providing forecasted information, in a normalized form to ensure the comparability over time and space, because the decisions taken on the basis of financial statements refers, in large part, to the future; in the normalization of the structure which provides forecasted information should be taken into consideration many factors, so that this presentation don’t generate additional costs in the form of competitive disadvantages for the organizations, costs with installation of new reporting systems or other disadvantages; the obligation of preparation the statement of cash-flows by every legal persons, taking into account the distortions which affect the information in the income statement (due to the possibility of choosing between different methods of valuating the stock outputs, different periods, methods of amortization the fixed assets, the influence exerted by the fiscality etc.); developing a social balance by all economic companies, including, in a normalized form, the information in the explanatory note to the financial statements number 8, and items that can not be expressed in value, but which presents interest to users, like information referring to the security of employment, the conditions to be met for promotion, the trainings, the professional relations, the conditions of hygiene and safety etc.; adding an additional explanatory note which present the risks over the organization and the estimations of adverse effects, as well as the actions taken to manage them; the specification by the regulators of some additional general information referring to the enterprise which should be presented in the explanatory note number 10, even if these can’t be value expressed. regarding the users of financial statements and their information needs 55 references: [1] cenar, i., deaconu, s.c., viaţa contabilă a întreprinderii de la constituire la faliment, ed. ceccar, bucureşti, 2006 [2] cotleţ, d., megan, o., pelin, a., pistol, i., situaţiile financiare – între informaţie şi decizie, ed. orizonturi universitare, timişoara, 2005 [3] feleagă (malciu), l., feleagă, n., contabilitate financiară – o abordare europeană şi internaţională, volumul i, ed. infomega, bucureşti, 2005 [4] feleagă, n., ionaşcu, i., tratat de contabilitate financiară, vol. i, ed. economică, bucureşti, 1998 [5] gîrbină, m.m., bunea, ş., sinteze, studii de caz şi teste grilă privind aplicarea ias (revizuite) – ifrs, volumul i, ed. ceccar, bucureşti, 2005 [6] horomnea, e., fundamentele ştiinţifice ale contabilităţii. doctrină. concepte. lexicon, ed. tipo moldova, iaşi, 2008 [7] malciu, l., cererea şi oferta de informaţii contabile, ed. economică, bucureşti, 1998 [8] mironiuc, m., analiză economico-financiară, ed. sedcom libris, iaşi, 2006 [9] nica, p., iftimescu, a., management. concepte şi aplicaţii, ed. universităţii “alexandru ioan cuza”, iaşi, 2003 [10] * * * standardele internaţionale de raportare financiară (ifrs) 2007, incluzând standardele internaţionale de contabilitate (ias) şi interpretări la 1 ianuarie 2007, ceccar, bucureşti, 2007 [11] * * * ordinul ministerului economiei şi finanţelor nr. 2374/2007 privind modificarea şi completarea ordinului ministrului finanţelor publice nr. 1.752/2005 pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei nr. 25 din 14 ianuarie 2008 [12] * * * ordinul ministerului finanţelor publice nr. 1752/2005 privind aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei nr. 1080 din 30 noiembrie 2005. studies and scientific researches edition: economics, no. 13 (2008) microsoft word apostoaie constantin marius_eng.doc factors that determine job performance georgeta amalasunta iacob, „al. i. cuza” university of iasi, romania abstract in today's context is seeking various solutions to determine that employees receive performance at work. most of the hand is to motivate people in terms of promoting strategic management objectives. only that the motivation and objectives involved a number of factors that can influence the performance of employees much more than motivation itself. the case study presented in this study will prove this. keywords job performance, types of performance, big five, to influence jel codes: m 12 introduction the aim of the research is human resource management namely the factors who can influence or determinate the performance of the employee at the work place. i’m speaking about the “job performance” concept defined in quality and quantity terms of the employers activity, personality factors, skills and abilities necessary which can predict the employees performance or performance evaluation. the problem with which i started is that one that long time of my short career in human resource i had to face with different materials used for recruitment and selection process in performance for performances evaluation or periodic evaluations who sometimes were incomplete or had to be adapted, but mostly i find difficulties in the way that some selected persons was manifesting performance in terms of technical or operational skills and not in terms of temperament or attitude. they had also a very good capacity for self-monitoring in the way that it influenced in positive mode the evaluation results. also, the employers many times were unsatisfied by the fact that the professiograms, the questionnaires used weren’t satisfied specially when it was talking about employments in keys positions where they wanted to have ideal employees. as well the researches made in this area were axed on socio-professional categories (students, manager, it, employees in industrial, medical or military area) but less on professional levels, number of years experience or longitudinal studies for enhance this type of professiogram or questionnaires to assess performance, in the way to obtain a standard for a certain professional category and in the comparison between the candidate and the standard one to make an assessment of candidate/employee. the main ideas about the theme of research interactionist paradigm in its attempt to conceptualize the work, in terms of psychological theory considers that the operation is the result of ongoing interactions between personal factors, situational, behavioral (bandura, 1977, schneider 1983). according to this interpretation, we can say that (a) the individual shapes the environment to find ways to facilitate certain results, (b) the same environment gives rise to different reactions to studies and scientific researches economic edition, no. 15, 2010 365 different individuals, (c) the same environment has different impact on the same individual, depending the mood of the individual. in other words, personality traits they possess individuals can be triggered by various situational factors, because the latter can diminish or decrease the expression of personality in work behavior and, therefore, is necessary to explain how personality affects performance work. (tett & burnett, 2003). in accord with this perspective, we believe that people who undertake a proactive personality in their environment to facilitate high levels of performance and is a positive predictor for individual performance and behavioral organizational citizenship. [11, pp. 165-212; 14, pp. 258-266] locke's and latham (1990) theory of setting targets which suggests that human exposure is a cause of objective behavioral manifestations and individual performance can be maximized when (a) they establish specific and difficult targets to have high valences and (b) they understand that behavior consistent with the objectives and they feel able to do so. characteristics of targets are used to predict employment outcomes, but no attention is paid to the fact that different content of regulatory objectives and modes of conduct may lead to performance objectives of a qualitatively different (sheldon & elliot, 1999, sheldon, ryan , so, & kasser, 2004). regulation theory of action arose to examine motivation in the workforce, but other things including performance. cyber field is strongly influenced by where he used the concept of goals and highlights mechanisms by which individuals are focused on specific target of action (fresia & sabin, 1991, hacker, 1994). the theory includes the concept of discretion associated with the concept of self-determination theory. fresia (1989) believes that self control combined with optimal complexity of the task without undue complications, lead to optimal performance and well done feeling. job characteristics theory developed by hackman and oldham (1980) argues that the most effective means to motivate individuals is job design. the authors propose ways of improving performance through job design to (1) to provide variety, involving the completion of all tasks and have impact on the lives of all, (2) offer considerable freedom and discretion to employees, (3) to provide full performance feedback . the authors explain that individual differences should be moderate so that job characteristics have a positive impact on performance at work. self-determination theory distinguishes between two concepts: autonomous motivation and controlled motivation, developing in particular the first concept that involves action in the sense of initiative and experience of choosing alternative. autonomy in this context, allows the highest degree of reflection, because they believe that purchasing task is interesting and not because it "must" to do that action. intrinsic motivation is just one example of autonomy. it is opposed or only partially supports the concepts of other theories, restricting individual autonomy to act in their desire to be free to choose activities of the closest individual, not to be influenced by setting objectives, defining characteristics of the job, because it can not have alternative perspectives and thus one becomes controlled, limited and no longer get the best performance. this explains why external rewards do not always produce the desired performance (eden, 1975, deckop and cirka, 2000). theory also found individual differences of people on their guidelines in the process of initiating and regulating their behavior. referring to the guidelines of causality (so & ryan, 1985b), they indicate the degree to which people are self-directed (reflecting the general tendency to experience social contexts as autonomy supportive and be self-determined), control-oriented (reflecting general tendency to experience social contexts controlling and controlled) and impersonally directed (reflecting the general trend to be unmotivated). research has shown that understanding the relationship required to differentiate performance results in terms of "if" task is relatively simple, involving applications tiring on the algorithm, or is more difficult to initiate tasks, flexible, creative, heuristic-do (mcgraw, 1978). laboratory experiments have shown that autonomy is associated with a more efficient performance in terms of complex tasks, while there is no difference in short-term advantage to control performance when well establish tasks are initiated (amabile, 1982; grolnick & studies and scientific researches economic edition, no. 15, 2010 366 ryan, 1987, mcgraw & mccullers, 1979). koestner and losier's research (2002) has made another important difference, namely that intrinsic motivation leads to a better performance on tasks that are interesting, but not autonomous and extrinsic motivation leads to a better performance for tasks which are not very interesting, but are important and require discipline and determination. all these studies suggest that self-motivation, consisting of a mix between intrinsic motivation and internalized extrinsic motivation is higher in situations that include both complex tasks that incites interest and less complex tasks that require discipline. they are paradigms that theoretical research validates them as generally representative for performance at work, among other perspectives and theories, but my research i believe that the above will help me to get my focus and not deviate from the objective, to not ignore that the perspective can change evolving process of deforestation and research. [8, pp.333-350]. the performance: dimensions and his factors many studies have examined the multidimensional and complex construct of "job performance". among the most accepted theories are working performance jp campbell (1990) describes the work as a performance variable individually. performance is what one person can make a distinguished performance and management. campbell, mchenry, and wise (1990) have identified 8 major dimensions of performance: (1) specific tasks the job skills, (2) tasks nonspecifice job skills, (3) tasks of writing and oral communication, (4) demonstrating effort; (5) maintaining personal discipline, (6) facilitation of pair and team performance, (7) supervision and (8) management and administration. in the literature, individual performance dimensions include production facilities, quality of work, ownership, supervision and leadership skills, performance, lost time, turnover, during training, promotion and satisfaction. hunter & hunter (1984) describes the characteristics that may predict future job performance. list includes past performance relative to the position currently held knowledge about the post, psychomotor skills, cognitive, social and attitude on post such as the need for learning, enthusiasm, and control stress. viswesvaran, ones, and schmidt (1996) identified 10 dimensions of work performance: (1) overall performance, (2) work performance or productivity, (3) quality (4) leadership, (5) communication skills (6 ) administrative powers (7) effort (8) interpersonal competence, (9) knowledge of the post (10) compliant or accepting authority. witt, burke, barrick and mount (2002) identified 11 dimensions: quality of work, quantity of work, initiative, communication with customers, planning, commitment to organization, job knowledge, allocation, interpersonal orientation, self-determination and funds management. literature tries to include, besides those mentioned above, organizational citizenship behavior refers to behaviors beyond the skills required by tasks (organ, 1997). [7, pp.593-597, 9, pp 38-61]. others distinguished between task performance and contextual performance. performance that takes the load is defined by those comportamentecare are formally recognized as part of the job and contribute directly or indirectly organizations technical basis. contextual performance is defined by those behaviors that do not directly provide technical support activities, but rather the organizational environment, social and psychological as technical work is conducted (motowidlo & van scotter, 1994, borman & motowidlo, 1997). in the literature studying the quality of life at work, the two forms of performance overlap.[2, pp.31-33] two types of performance tasks are supported by conway (1999): (1) technicaladministrative task performance, (2) performance tasks of leadership. technical-administrative task performance includes all non-leadership tasks such as paperwork, organization, planning, quality, quality performance, financial decisions. however, performance leadership tasks require human relations and people management and motivation, supervision and evaluation of subordinates. performance tasks of leadership is distinguished from contextual performance is that the first one is specific oriented to the studies and scientific researches economic edition, no. 15, 2010 367 objectives and focuses primarily on the guidance and motivation, while contextual performance highlights the moral and promoting the participation of employees in organization's concern (conway, 1999). [4,798-803] employees normally engage in two types of performance: in-role performance and extrarole. the first is defined as those results and conduct the required official, sour serve directly targets organization (motowidlo & van scotter, 1994). in addition, employees have and extra-role activities (morrison, 1994) which is defined by those discretionary behaviors that believes and promotes the effective functioning of the organization, without directly affecting productivity targeted employees (podsakoff & mackenzie, 1994). [1,pp. 78-95] the link between job satisfaction and work performance is an investigation of "saint gral" in terms of organizational behavior (weiss & cropanzano, 1996), because the link between them, according to research, is positive but weak material. often these two concepts overlap, the theory of the employee happy, but is identical in that employee satisfaction causes job performance, but if the employee is satisfied it will motivate them to achieve performance. that you seek to avoid objective and well reasoned as possible, to bring in my research concerns the satisfaction at work. [5, pp 755-760]. but rose (2003; 2000b) also suggests that the significance of the workplace sociopsychological environment is overstated by many of the management theorists. the author conceptualises job satisfaction around the extrinsic aspects of employment with underpinning notion of economic rationality. significant factors in that respect are: terms and conditions of the employment contract; hours of work; money rewards; the work situation and orientation and career aims of the employees (2003:509). consequently, employees viewpoint should be considered with emphasis on these factors: they represent the core of job satisfaction and are therefore conditioning the existence of good jobs. most of studies provide so little details of the variables that it is difficult to gauge the extent to which practices really do match (hutchinson et al. 2003). performance measures also vary. in the majority of the empirical work on the link between hrm and performance, performance is taken as productivity (macduffie 1995; huselid 1995; guest and hoque 1994; ichniowski et al. 1997; wood and de menezes 1998; patterson et al. 1997; wright et al. 2003); this may be self-reported employee productivity (youndt et al. 1996) or labour productivity: the ratio of sales to employees, e.g. input of labour per output of sales (koch and mcgrath 1996:343; patterson et al. 1997; cappelli and neumark 2001; guest et al. 2003); product quality (macduffie 1995; guest and hoque 1994; youndt et al. 1996; ichniowski et al. 1997; wright et al. 2003); financial measures (huselid 1995; delery and doty 1996; wright et al. 2003; patterson et al. 1997; terpstra and rozell 1993; guest et al. 2003; truss 2001; wood and de menezes 1998; storey 2002); pay rates (wright et al. 2003); turnover (huselid 1995); labour efficiency (arthur 1994); machine efficiency (youndt et al. 1996); scrap rates (arthur 1994); labour turnover (arthur 1994; wood and de menezes 1998); job creation (wood and de menezes, 1998); absenteeism (wood and de menezes 1998); perceived organizational performance and perceived market performance (delaney and huselid 1996); tobin’s q (natural log of the ratio of a firm’s market value to the replacement cost of its tangible assets) and gross rate of return on assets (grate) (huselid and becker, 1996). small wonder then that becker and gerhart argue for ‘natural, meaningful metrics’ (1996:791). against this wealth of financial measures, the human side of organisation is less well represented. dyer and reeves (1995:661) group performance measures as: human resource outcomes (absenteeism, turnover, individual/group performance); organisational outcomes (productivity, quality and service); financial/accounting (return on invested capital or on assets); and stock-market performance (stock value or shareholder return). many studies have used organisational and financial outcomes, while very few have used hr outcomes (wright et al., 2003). [10, pp. 5-7] studies and scientific researches economic edition, no. 15, 2010 368 instead, i use emotional intelligence as an interface between individual performance, because its effectiveness in interpersonal communication, coordination ability, organization of individual and group work. [45] by contrast, i will try to confine me to develop the relationship between self-monitoring and performance (snyder, 1983), which is closely related to the self-determination, because the studies are contradictory, and my research undertaken by size of self-monitoring have confirmed only those studies that demonstrate that there is connection between the two concepts, but that just may be a better predictor along with other factors in improving performance and is irrelevant in organizations (day et all, 2002).[13, pp.85-89] regarding psychological factors which i will study the research are the 5 main factors. in relation to these factors, there are 2 major paradigms: the paradigm of "big five" and "five factor model". research factorial of personality psychology and related psycho-lexically converge on the same model causes of personality called "five factor model" (factorial approach / paradigm factorial) or "big five" (lexical approach / paradigm hypothesis lexical) big five model and paradigm. researchers lexical paradigm, those who practice initiated studies in this area, follow the discovery by analyzing the structure of personality and common language have developed their own design called "big five. as we have seen, these authors argue that all the traits that determine individual differences will be represented in language and ordinary language analysis we could achieve a comprehensive taxonomy of personality attributes. [16, pp.5-29] on the other hand, concerns the discovery of structure of personality in terms of information provided by questionnaires led to a paradigm called "five factor model". distinctive for this paradigm is to use data collected through questionnaires and analyze the factors in reducing the use of diversity data. this methodology allowed them to validate the assumption that all traits of personality can be reduced to five independent factors, among which there are no significant correlations. i will follow five factor model paradigm and operationalize the model factors goldberg (1999), a model of personality with an overview of the 5 super factors, each factor having attached 6 facets[11, pp.218-220] there are many meta-analysis demonstrating the validity of personality traits as predictors of performance. the big-five sums up the best predictors of performance in the area of personality traits, conscientiousness is the most effective of the 5 factors for predicting performance. the relationship between conscientiousness and performance is the most stable since it was identified in all fields. conscientiousness exerts its effect on performance through various mechanisms, such as perseverance and commitment to the goals [6, pp 186-208]. barrick, mount and judge (1991) have identified 2 factors of the big-five model as being sufficiently strong correlations to be predictors of performance able-bodied. their research indicates that conscientiousness factor explains 22% of performance variance, and extroversion explained 13%. hurtz and donovan (2000) obtained similar results, conscientiousness having a coefficient of 0.22. they are used in research as contextual performance evaluation and performance in specific tasks (hurtz and donovan cit. in hogan and holland, 2001). tett, jackson and rothstein (1991, apud hogan and holland, 2001) have identified all big-five factors model to have predictive power for performance in extroversion (0.16) to grateful (0.33). dalton and wilson (2000), in a research conducted on the 21 managers working in another country than their own, have identified a correlation of 0.47 between conscientiousness and overall performance. the explanation given by the researchers these results is that conscientiousness factor describes their responsibilities and pleasant, efficient management related behaviors. [2,pp. 11-18;4, pp. 250-258] studies and scientific researches economic edition, no. 15, 2010 369 the case study company rental car problem: finding and shaping factor that determines performance in the workplace because the objectives were not achieved in the last 6 months due to inefficiency and because of this staff are threatened jobs steps: 1.collect information identifying problems through the application of questionnaires regarding: requirements and job demands, the role of each in company, with who interact, problems faced and their opinion about the decision was announced (joint survey between dimensions of organizational climate, the analysis of job, additional questions to capture the dimensions like and family size, internal facilities, the impact on the profile market, valuation of professional colleagues legally). qualitative and quantitative analysis to identify the factors that hinders the achievement of performance: the intra-and inter-relationships, attitudes towards management, undefined clear of responsabilities related, even overlapping positions in the review responsibilities, vertical and horizontal communication, performance evaluation after surrealist criteria, families of origin (professional recognition, number of members), ineffective team work, the manifestation of counterproductive employee behavior, security and social protection offered by the employer, the job requirements, attachment to the company, age, environment of origin. interviews with main individual and group interviews with members of each department and manufactory to confirm or invalidate factors identified, causes inefficiency and how they would like to solve the problems communication official of identified positive and negative factors, methods of improvement and control focus groups on professional development at work and solve problems identified and subsequently approved by company employees psychological evaluation of employees to capture their strengths and weaknesses points and advising them to raise awareness of strengths and weaknesses 2. identification and confirmation of the factors and problems that may affect work performance "nomadic people” staff that had to be liaison between sales and service, was the fact that people who always passed from one camp to another, censored or incomplete information was provided very favorable to squabble when work had to be highest links of communication problem: receptionist, technical advisor, chief of service, head of branch the evaluation: fairness, persistence of decisions reorganization of posts and job descriptions: clarity, the load the approach of staff depending on personality, 100% professional, but unique personality, even difficult how to address a problem that may face departments: nonexistent communication between teams in establishing a common goal the making and transmitting decisions by management: democratic, authoritarian, but not with authority substrate lack of activity carried emotional side high excellence without emotional involvement, emotional attachment towards the company only from first-mover reorganization of predetermined motion time system work in technical department: reorganizing manufactorys, how to work on teams, elimination of some activities that required time receptionist, but ineffective for the service, the introduction of department of sales exceeding service to the customer did not show discrepancies. 3. setting goals and actions for the next 2 months each, with a monthly assessment studies and scientific researches economic edition, no. 15, 2010 370 example: car driver: 1 months primary objective: increasing the number of cars repaired with 2-4cars secondary objectives: to establish and adapt activities according to the type of mechanical repair and availability of aid, improving the relationship with the customer after the reception, any new customer who has purchased a car is presented at technical team, any unsatisfied attitude is required by the customer in the box with the dots and the receptionist and mecanic to resolve problems amicably, people searching for functions and body shop manager and head damage, early activation of customers on special vehicles division, finding the marketing department a way adapted region to promote services service, the assessment of activity by management, improving the transmission of informations, etc evaluation at the end of month by interview and the employee's proposal or concerns about the solutions to problems and events with possible to confront 2 months-primary objective: achieving the target of 6 months ago and to justify the annual wage negotiations secondary objectives: increasing the number of cars entered in service with the number 2 and 2 special vehicles, engaging in the 2 position initially identified and their professional formation, firing an employee, cancellation green phone complaints, increase in labor payment for each car entered into service over accepted target level, achieving a team-building with employees and their family members, obtaining positive descriptions of the national dealer training to the regular assessment evaluation checking compliance target of 9 months ago and exceeding it by 40%. 4. results: increasing the salary after 3 months, increasing the payment from the machines in workmanship and in service, sales growth in division trucks, reorganization items and job descriptions, request after 6 months of the employees of a new assessment to identify potential disturbance due to hiring a significant number of employees conclusions identifying factors affecting performance at work from different categories and combining them may influence positively or negatively. a correct identification and reconfirmation of their factors through qualitative analysis, will allow employees to be given opportunities to develop credible and professional opportunities, but also for obtaining performance to assure workplace satisfaction. disorganization of informations on factors that can be identified from a job as a model, i was determined to achieve a more exploratory study to determine how literature can be found in a small company in romania. it was clear that those factors which are the predominant mode of decision making, behavior and level of communication with colleagues, by way of transmission, but these differences are due to the different personalities that are involved in the performance. for different personalities different methods are needed to address them to achieve performance. these factors that we have offered and purpose by setting improvement objectives and their performances, has led to awareness of the importance of such factors from management but also employees. bibliography 1. bakker, a.b., demeronti, e., verbeke, w. (2004), using the job demands-resources model to predict burnaout and performance, human resouces management, spring 2. barrick r. m., mount k. m. şi judge a. t.(2001), personality and performance at the begining of the new millennium: what do we know and where do we go next, international journal of selection and assessment vol 9, issue 1&2, pag 9-30 studies and scientific researches economic edition, no. 15, 2010 371 3. beh, l., raduan, c.r, (2007), linking qwl and job performance: implication for organization, performance imporvment, vol 46, nr 6, 30-35 4. dalton, m., wilson, m. (2000), the relationship of the five-factor model of personality to job performance for a group of middle eastern expatriate managers, journal of cross-cultural psychology, vol. 31, nr. 2, p. 250-258 5. fisher, c.d. (2003), why do lay people believe that satisfaction and performance are correlated? possible source of commonsense theory, journal of organizational behavior, vol 24, 753-777 6. fong, e. a., tosi, h.b l. jr (2007), effort, performance and conscientiousness: an agency theory perspective , journal of management, vol.33, nr. 161-179 7. forero, c.g., galardo-pujol, d., a longitudinal model for predicting performance on police officers using personality and behavioral data, criminal justice and behavior, 36, 591-606 8. gagné, m., deci, e.l. (2005), self-determination theory and work motivation, journal of organizational behavior, vol 26, 331-362 9. grote, d., (2002), the performance appraisal question answer boock: survival guide for managers, amacom, sua 10. grugulis, i., stoyanova, d., skill and performance, paper presented at the international labour process conference, 21st – 23rd march 2005, university of strathclyde 11. mathews, g., deary, i.j., witeman, m.c. (2005), psihologia personalităţii, ed. polirom, iaşi 12. mohammed, s, mathieu, j.e., bartlett, a.l. (2002), technical-administrative task performance, leadership task performance, and contextual performance: considering the influence of teamand taskrelated composition variables”, journal of organizational behavior, vol 23, 795-814 13. moser, k., galais, n., (2007), self-monitoring and job performance, international journal of selection and assessment, vol 15, nr 1, 83-93 14. riketta, m.(2002), attitudinal organizational commitment and job performance: a meta-analysis, journal of organizational behavior, vol 23, 257-266 15. rode, j. c., mooney, c.h. (2007), emotional intelligence and individual performance: evidence of direct and moderated effects, journal of organizational behavior, vol 28, 399-421 16. rolland, j. p., (2002), cross-cultural generalizability of the five factor model of personality, in the five factor model of personality across culture (coord. robert r mccrae , juri allik), pag 5-29, springer studies and scientific researches economic edition, no. 15, 2010 372 studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro business ethics, between the theoretical concepts and the romanian firms’ practices roxana mironescu “vasile alecsandri” university of bacău roxy_mironescu58@yahoo.com abstract business ethics reflects the philosophy of business, of which one aim is to determine the fundamental purposes of a company. if a company's purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility. ethical issues include the rights and duties between a company and its employees, suppliers, customers and neighbors, its fiduciary responsibility to its shareholders. issues concerning relations between different companies include hostile take-overs and industrial espionage. related issues include corporate governance; corporate social entrepreneurship; political contributions; the marketing of corporations' ethics policies. business ethics issues are complex, due to the extensive consequences, to the many alternatives and to the conflicting results, uncertainties and the personal implications. managers make decisions and develop actions affecting the others; if the effects are adverse, if the others are suffering, then we are dealing with an ethical issue that requires a certain level of an ethical analysis, in addition to the usual economic analysis. but what is more important above all is the recognition that every business decision or action that may affect the others. in the business romanian environment the unethical behavior is not just an exception. keywords managers; business; ethical issues; decisions; morality; social responsibility jel classification m10 theoretical approaches the term 'business ethics' came into common use in the united states in the early 1970s. by the mid-1980s at least 500 courses in business ethics reached 40,000 students, using some twenty textbooks and at least ten casebooks along supported by professional societies, centers and journals of business ethics. the society for business ethics was started in 1980., and the european business schools adopted business ethics after 1987 in 1982, the first single-authored books in the field appeared. (apel, 1987) firms started highlighting their ethical stature in the late 1980s and early 1990s, possibly trying to distance themselves from the business scandals of the day, such as the savings and the loan crisis. the idea of business ethics caught the attention of academics, media and business firms by the end of the cold war. however, the legitimate criticism of business practices was attacked for infringing the "freedom" of the entrepreneurs. (de george, 1990) business ethics reflects the philosophy of business, of which one aim is to determine the fundamental purposes of a company. if a company's purpose is to maximize shareholders’ returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility. corporate entities are considered as legal persons all over the world. the economist milton friedman writes that corporate executives' "responsibility... generally will be to make as much money as possible while 140 business ethics, between the theoretical concepts and the romanian firms’ practices conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom". (friedman, 1970). friedman also said, "the only entities who can have responsibilities are individuals ... a business cannot have responsibilities. so the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? there is a strong temptation to rationalize these actions as an exercise of "social responsibility." in the present climate of opinion, with its wide spread aversion to "capitalism," "profits," the "soulless corporation" and so on, this is one way for a corporation to generate goodwill as a byproduct of expenditures that are entirely justified in its own self-interest”. similarly, another author business consultant, peter drucker observed "there is neither a separate ethics of business nor is one needed" (drucker, 1999) ,, implying that standards of personal ethics cover all business situations. however, peter drucker in another instance observed that the ultimate responsibility of company directors is not to harm the others. another view of business is that it must exhibit corporate social responsibility (csr): an umbrella term indicating that an ethical business must act as a responsible citizen of the communities in which it operates even at the cost of profits or other goals. the ethical issues include the rights and duties between a company and its employees, suppliers, customers and neighbors, its fiduciary responsibility to its shareholders. issues concerning relations between different companies include hostile take-overs and industrial espionage. related issues include corporate governance; corporate social entrepreneurship; political contributions; legal issues such as the ethical debate over introducing a crime of corporate manslaughter; and the marketing of corporations' ethics policies. (beauchamp, bowie, 1997) business ethics is a field of applied study of ethics, on the determination of moral principles and codes of business behaviour, governing relations between people within organizations and govern business decisions and the managers options. (barry, 1998) ethics management is based primarily on the relationship of trust between the two parties that interact; confidence means actually decrease the risk taken and protect the rights and interests of those affected. (ackerman, 1976) the literature has determined that trust is in direct relationship with some modern management techniques, most notably: management by objectives, participatory management, social responsibility and the quality circles. the unethical behavior in business is not just an exception. each of us can give many examples. what are the causes? knowing these causes can help to prevent certain unethical behaviors. numerous case studies, surveys or managerial level simulations in training programs revealed some causes of unethical behavior: the possible gain; the temptation role in the unethical activity is real; especially if a punishment does not exists, anticipating a substantial gain through unethical action is expected to promote unethical decisions; the conflict of roles; many management dilemmas are actually forms of the conflict of roles, putting pressure on the unethical decisions; for example, insurance agents or a banking company can be pressed to promote those products which have wider benefits for their company, not fot the customers; the competition; economic resources is often limited and may determine the existence or the decline of an industry, price fixing between competitors or the violation of monopoly are more common; if there is no competition, there is a greater temptation to make unethical decisions, because the chance of large gains is not offset by the market balances; the personality; some studies have shown that people strongly oriented to the economic values or those with a strong need for personal power are more prone to 141 mironescu unethical behavior than the low-oriented in this direction; in addition, each person addresses a certain extent, his own moral issues, which strongly influence the decisions in morally sensitive situations; the organizational culture; groups, subgroups, leaders of organizations can be models, each of them contributing to the culture of the company; but if they are not based on some strong values or if they have not implemented a code of ethics with a real impact decision making, the organization culture can fall prey to a "success at any cost", attitude, which means that it will be willing to unethical behavior. an analysis of the ethical issues that arise in a business organization is considering five dimensions: personal ethics of managers and employees; the individual ethics, as members of the organization and professional ethics; organizational business ethics (rules, customs, norms); ethics company in its relations with the external environment (suppliers, customers, competitors, media, society as a whole, the natural environment); ethics in the proper field of activity; factors influencing the managerial ethical behavior, taking the manager as a person (family influences, ethical and religious values, needs and personal standards), business organization (organizational culture, policies and codes of conduct, superiors’ and colleagues’ behavior) and external environment (government regulations, norms and values of society, ethical climate of that industry). the most important elements of the ethical climate of an organization include: behavior and support of the top management; realistic objectives of the company; effective vertically and horizontally communication; ethics programs; preparation and training in ethics; processes that lead to ethical decision making; imposing the disciplinary sanctions for violation of ethical standards; using certain mechanisms to denounce the existence of corrupt or illegal practices within the organization; corporate codes of ethical conduct; the ethical imperatives for managers can be grouped into several categories, as they express (le tourneau p, 2000): responsibility face to shareholders (proper management, loyalty, confidentiality, information, transparency); responsibilities face to employees (fair pay, professional development, respect for privacy, respect the right of petition); responsibilities face to customers (original product and service quality, ensuring safety in use, information, correct advertising); responsibilities face to the community (environmental protection, contributions to solving social problems, and respect for cultural diversity). 2. case study the present study considered the ethical analysis of the situation in the romanian companies, ethics and how it is implemented. we also tried to point out the main types of the immoral behavior encountered in the environmental romanian business, given the social responsability cultures. using in our case study a set of statistics and official documents, we tried to see to what extent the ethical management can be a solution for our country. 142 business ethics, between the theoretical concepts and the romanian firms’ practices in conclusion we tried to answer the question: what is the level of institutionalization in ethics for the romanian business? the case study objectives were: 1. delimitating the knowledge levels of the concepts of csr and business ethics by the companies managers from the bacau county; 2. the organization is legally / ethically / or to the social responsibility oriented. what is the orientation of the organization? -to social responsibilities; -to ethics; -to compliance law. 3. the changes in the business environment influences / does not influence business ethics addressed to consumers. considering all these, the most debated moral issues in management are: bribery it is used to manipulate people by "buying" influence. it is defined as "the offering, giving, receiving or soliciting anything of value to influence the action of attempting an official in exchange for the release of its legal duties". the value can be in the form of direct payments of money or property; also can be in the form of reward after the deal was completed. bribery creates a conflict of interest between the person receiving the bribe and his organization. it is used mainly to gain sales (customers) to enter new markets or to change public policy. if giving money (or receiving) is easily defined as bribes, in exchange, the intention of giving gifts is more difficult to assess as bribes. a gift can be given as a sign of courtesy to some occasion, or can influence future business decisions. if a gift is offered with the intent to influence behavior, it is bribery. if that gift does not influence subsequent behavior, then it is not a bribe. but there was absence of this influence is difficult to prove. bribery reduces the freedom of choice, altering the terms of decision making. it is used to make more attractive one alternative compared to the other, for the one who makes the decision; usually, this alternative is the one that produces less satisfaction and fewer company profits because otherwise, why would not need bribes? the constraint it controls the people by force or threats. it is defined as "someone ordered using force or threats of any kind". it is used to determine a person to act against their own beliefs, the personal will, in the interests of another (the one who uses coercion). strength is often used as a threat by the strongest. the constraint may involve the threat of blocking promotion, job loss, removal of the respective etc. for example, trade or tourism, the constraint is found where the buyer is obliged to give the desired products to buy other products. constraints can also mean the use of force to convince the seller to work only with certain clients, the buyer to buy only from certain suppliers or only certain goods and services all free distorting competition. a possible consequence could be higher prices or lower quality compared to the situation where the market would function normally. deception it manipulates people by misleading or organizations by deception; is the act of lying by falsifying the facts, or make false statements knowingly, express or implied, about a fact present or future. dishonest behavior is the most common ethical issue. deception includes distortion or falsification of research or accounting data, creating a false advertising or false products. it also includes reports false, incorrect assessment of the performance 143 mironescu indicators, the financing reports are unreal. deception can reach very high levels, causing huge economic damage or damage the consumer’s health. theft it means taking something that is not your own, without the consent of the owner. theft can cover a wide variety of situations in the business world; stolen property may be physical or intellectual; theft is to use confidential company information for the personal gain; to counterfeit products; to inflate prices unduly deceiving consumers etc. discrimination it is unfair treatment, distinguished persons because of race, sex, nationality, religion etc. discrimination refers to differentiate people in terms of qualification, contribution to business activity, etc., when it comes to remuneration, employment, promotion, evaluation, improvement; discrimination occurs when not identified relevant criteria of differentiation. these are the most common problems that business world include. they are present everywhere, although not with the same intensity. besides them, the marketing practices, including the promotional activities, advertising, often bring into question the need to increase the responsibility and morality of those who support them. a main part of the studied companies managers considered that they have an ethical attitude face to their customers, as follows: question: do you consider the your company proves an ethical attitude face to your customers? table 1 yes no i cannot estimate this 85.22% 5.22% 6.09% figure 1.opinions estimation about the ethics face to customers. a major part of our business agents don’t recognize their unfair attitude face to law, as follows: question: your company is preoccupied to permanently respect law? 6,09% 5,22% 85,22% 0 0, 0, 0, 0, 0, 0, 0, 0, 0, 1 2 3 4 series series 144 business ethics, between the theoretical concepts and the romanian firms’ practices table 2 yes no i don’t know 65.22% 6.96% 27.82% figure 2. expression of the managers’oppinion versus legality. conclusions we concluded noting that applying of the ethical management, the institutionalizing and internalization model is, for now, a wish quite far away from the reality and there are a lot of problems that needs an "exceptional" attention before the desire to make the romanian companies as ethics ones becomes a reality. our contribution is the justification for the adoption and the integration of a new model of business ethics and to create a business environment more responsible by the management of ethics, justification was made through an analysis of the limitations of previous methods (assessed in order of historical succession), presentation exhaustive testing of this solution and adapt it to the private organization in romania, by analyzing and evaluating the ethical status of our country, by using various case studies. in addition we believe that we were able to add to the business ethics field of study a comprehensive and dynamic approach and find a concrete and coherent implementation of the principles and moral values available for the "daily work" of the romanian companies a viable way out for the romanian business. at last, we showed that economic activity can never be separated from the moral evaluation and the moral element of any economic or social treatment. references ackerman r.w., (1976) the social challenge to business, cambridge mass., harvard university press, p.57. apel, karl-otto, (1987), l’ethique a l’âge de la science, presses universitaires de lille p.81. barry, norman, (1998), business ethics, macmillan, uk, p.25. beauchamp, t. l. & bowie, n. e., eds., (1997), ethical theory and business, 5th ed., prentice-hall, upper saddle river, nj, p.76. crăciun, dan; vasile, morar; vasile macoviciuc, (2005), etica afacerilor, editura paideia, bucureşti. de george, r.t., (1990), business ethics, 3rd ed, macmillan, new york, p.117. drucker, p., (1999), realităţile lumii de mâine,editura teora, iaşi, p.117. 65,22% 6,96% 27,82% yes no i don't know 145 mironescu friedman, milton, (1970), the social responsibility of business is to increase its profits, new york times, sept. 13th , p.3. le tourneau, p., (2000), l’ethique des affaires et du management au xxie siècle, paris, dalloz, p.136. 146 aspecte studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro substantiating the development strategies for tourism in protected areas mirela costencu ”eftimie murgu” university of resita costencumirela@yahoo.com claudia–nicoleta dobrescu ”eftimie murgu” university of resita dobrescu_cld@yahoo.com abstract the protected natural areas, irrespective of their classification modality or the motivations they propose, have become more and more attractive for tourists. however, in time, the increasing touristic flows they attract, often developed in an uncontrolled manner, lead to the erosion of the space and the degradation of ecosystems. developing tourism on sustainable principles, with the appropriate balance of the two functions of a protected area – the scientific and the touristic function – should start from the analysis of this form of tourism and of the development opportunities and limits regarded from the perspective of the external environment, and from the particularisation of the concept “site’s tourist reception capacity”. destination areas should meet the economic, social and ecological requirements in competition, so that they observe the integrity of natural resources and of local communities. the upper limit of the number of visits allowed in a protected area is purposefully set at a level below the identified level of accepted use, so that, in the long run, the environment could be able to cover the possible increases occurred in the number of tourists, without subjecting the environment to further harm. keywords protected natural area; touristic flows; swot analysis; site’s tourist reception capacity; development strategies jel classification: q26; m31 1. introduction protected natural areas have become important touristic destinations lately, attracting more and more tourists every year. although the care for nature protection and the declaration of protected areas is centuries old, the scientific grounding of natural areas’ role and the awareness of the need to preserve ecosystems are of a more recent date. the first step in this respect was taken by the founding, more than a century ago, of the yellowstone national park. the next important step was the creation, in 1948, of the international union for conservation of nature (iucn), nongovernmental organism under the unesco aegis, which gave a remarkable impulse to international solidarity in the environment protection. gradually, we have witnessed a worldwide generalisation of the states’ preoccupation to create protected areas, in view of preserving ecosystems and enabling present and future generations to benefit from their advantages. thus, as a result of the remarkable growth of protected areas and of the number of national parks and reservations, there are currently 2978 protected areas on the united nations list, declared within international conventions. (smaranda, 2008) 8 mailto:costencumirela@yahoo.com mailto:dobrescu_cld@yahoo.com substantiating the development strategies for tourism in protected areas in the birth act of the first national park– yellowstone – march 1st 1872 – we read the purpose of creating it: “for the benefit and enjoyment of the people”. this sentence concentrates the entire policy of nature protection: it is not done to save a species of plants or animals from extinction, nor for the study of the relations existing in nature and isolated in a strictly controlled area from the access viewpoint, but the protection is made for the population. at the beginning of the 20th century, protected areas started to attract visitors' attention, rapidly becoming areas of high touristic affluence and at the same time a true source of profitability. however, the high number of visitors and the implications of this phenomenon trigger a serious issue: ensuring the balance between nature’s preservation and deployment of human activities, problem which determines a series of adequate measures in the administration, management and arrangement of national parks, especially the limitation of the number of tourists and the severe directing of touristic circulation. at the beginning of the 20th century another conception, however, started to gain terrain in relation with the purpose of national parks: the necessity to preserve natural groups, “natural sanctuaries”, defined as areas of spontaneous ecological balance, for biologic researches. the notion of “scientific reservation” consequently occurred. this conception lies at the basis of creating the engadine national park (1914). (oarcea, 1990). added to this serious problem represented by the pressure exercised by tourism on national parks, which tends to affect more and more states, a second problem occurs in relation with the purpose of national parks, which can be synthesised as follows: to preserve for the benefit of tourists or to preserve for the benefit of ecologists? 2. protected areas regarded as touristic products protected natural areas, grace to their aesthetic, recreational, educational, scientific valences, constitute remarkably attractive touristic destinations, some of them unique in the world. (ţigu, 2005) of all categories of protected areas, those that allow their integration into the touristic circuit are national parks. this is due to the complex role played by national parks, role supported by the two functions fulfilled by national parks:  a scientific function, of conservation of natural resources;  a touristic function, of satisfying people’s cultural, recreational and resting needs the national park, included into the touristic circuit, can be, at the same time, a component of several types of touristic products: destination of vacations in nature; host of a seminar on ecological themes / of protection of endangered species; onenight stay for a circuit, scene of initiation nature’s secretes. consequently, the national park possesses and may offer diverse touristic products that use simultaneously or alternatively the same technical and material endowment and the same touristic sights. the components of a touristic product are classified into basic elements (accommodation, food supply, transport) and auxiliary elements (balneo-therapy, leisure, sports, educational activities or adventure). as regards the basic elements, with slight exceptions (the regional, national, traditional specificity) they do not entirely justify the tourists’ need for travelling or leaving the residence. the choice of a touristic destination is determined by: • natural factors: geographic location, relief, landscapes, vegetation, fauna, climate • general factors of human existence and activity, past and present: language, mentality, hospitality, traditions, folklore, culture (religion, art, science), politics, economy. 9 costencu, dobrescu • the human element: the local population’s attitude towards tourists, providers, administration and representatives of guarding services and public order • general infrastructure: transports and communications structure and image of settlements, water and energy supply, sewage, telecommunications. • touristic equipment: transport, accommodation, food supply, sports activity, entertainment, information. the motivation underlying the selection of a touristic product is mainly subjective – it depends on the image consumers have created about the product by: publicity, previous uses or previous descriptions of other uses. if we regard tourism in national parks as a particular form of ecotourism, we distinguish the following possible motivations for choosing this touristic product: • return to nature – motivation true for all categories (age, gender, profession, social status). it is the result of the need for relaxation, health, physical and spiritual comfort and proves that modern man cannot disconnect himself from the natural life style, and his contact with the natural environment has positive effects on keeping his equilibrium • knowledge, comprehension and creativity – these are motivations that can be successfully fulfilled in the ambience of national parks, turning vacations into a true process of assimilating new and numerous knowledge and of acquiring skills able to offer tourists personal satisfactions and a sense of utility. • aesthetic motivations – they result from the need for beauty, order, purity, harmony, naturalness, and they urge most tourists to consider themselves lucky for the possibility to visit attractive spots grace to their picturesque aspect and charm. • curiosity – it determines large categories of tourists to get in touch, in situ, with all the specific, sometimes unique qualities of an area and to keep sustainable memories from the novel vacations spend in the natural environment. the “national park” touristic product is not a large-scale touristic product, but bears the mark of originality, novelty, surprise, and constitutes a rich source of satisfaction of needs and thus of motivation. basic services – components of the touristic product – are necessary, but not determining in choosing the touristic destination. consequently, we must take into account the other needs of human beings. thus, the literature considers that we must focus on immaterial qualities (the need for knowledge, initiative, aesthetic needs, creative needs) meant to satisfy secondary needs, much more personalised, of target customers. from this perspective, the “natural park” touristic product can be considered: • a true anti-stress therapy • a place of encounter with wild nature • return to origin  for the segments of tourists from great urban agglomerations in the strongly industrialised countries, who, because of the multitude and density of their preoccupations, live a stressful life and more and more deprived of reverie elements or possibility to travel into nature • a real “laboratory” where we can see life and its action. the “national park” touristic product can satisfy tourists’ needs in two ways:  it contains solutions to diverse problems of consumers (the need for relaxation, isolation from noisy life, documentation, satisfaction of hobbies)  it solves certain states of cognitive dissonance, completing the information (from the press, tv, radio, school) and eliminating the tensions between previous pieces of knowledge , apparently contradictory. 10 substantiating the development strategies for tourism in protected areas as touristic product « the national park » has turned into a new product, and we may say that at present, by analysing its commercial life cycle, it is in the growing phase. it however determines in time a growth of touristic flows towards the parks. the increasing dimension of touristic circulation leads to the erosion of space, to the degradation of ecosystems. thus, the dispute occurs between ecologists and tourism organisers that may be synthesised as follows: « to protect for tourists or to protect against tourists ? ». obviously, it would be ideal to implement a tourism development in protected areas able to balance the two basic functions of national parks: the scientific function and the touristic function. (costencu, 2007) 3. aspects related to the sustainable development of tourism in national parks policy of tourism’s sustainable development in national parks is focused first of all on the set-up of these areas, in zones with different protection degrees, with different degrees of accessibility certain areas being delimited as scientific reservations and being included into touristic circuits. moreover, one of the most radical and efficient measures was to forbid practices considered “noxious”. the list of these types of practice differs however from one country to another. although we may refer to almost 150 years of experience in the arrangement and development of national parks, there are still some problems, which, for different reasons, have not found their solution yet. first, neither theoretically nor practically, no universal consensus has been reached in defining the concept of “site’s tourist reception capacity”; this capacity should be customised in each particular case, and the appreciation of the “optimum” touristic capacity remains extremely subjective. it was found that there may exist negative ecological effects even in the case of a reduced tourists' circulation, and they are more serious by the very fact they do not take a spectacular turn. (wearing, neil, 2000) second, touristic development policies have sometimes taken precedence before the ecological aspect, and numerous compromises have been reached, which, fortunately, have triggered effects only in the peripheral areas. the concept of “reception capacity”, or bearable capacity of a protected area, has at its core the fact that the environment factors set the limits of the population a zone can bear. when these limits are exceeded, the quality of the environment is harmed and consequently its capacity to bear / support a certain population or activity. this goal is reachable, as the biological studies can determine the level of natural resources use in a certain area, setting thus a regularisation of the access to resources. this scientific grounding explains the wide use of this notion as a concept of management in tourism. in this context, the notion contains 3 main elements: • the biophysic or ecological element – referring to the natural environment; • the socio-cultural element – related first of all to the host population and their culture; • the facility element – referring to the visitor’s experience; the reception capacity varies in time and depending on season, and also on a series of factors such as: tourists’ behaviour models; facilities’ management and design; dynamic character of the environment, change (in time) of the attitude of the host community, etc. the international practice shows that the “reception capacity” proved less useful than expected. those involved in the field expected it to reveal exactly “how many are too many?”. there are series of different values and “conceptions” about what defines and involves an “unacceptable impact”. there are no methods of absolute measurement that may define notions such as “agglomeration” or losses of 11 costencu, dobrescu resources”. it is not possible to determine a certain number beyond which unacceptable events (repercussions / consequences) may occur: “in order to prevent the limitation of consumption on very low levels”. people continue to use a certain area for recreational activities, even when they have obvious negative consequences on resources. this is due to the absence of an adequate frame breaking the relation between the wishes and usage / action of the visitor and the management consequences and decisions. (wearing, 2000) consequently, the analysis of the occupation capacity was really ignored due to the complexity of its parameters and, although tourism operators are aware of the fact that too many visitors will degrade the environment and will reduce the quality of customers’ experience, both from the perspective of entertainment (recreation) and of tourism. there are very few examples where this analysis was used by tourism agents in order to efficiently limit tourism. the solutions to the problem of over-straining the environment and area overagglomeration differ according to the management policy of tourism operators, most being preoccupied by the excessive use of parks and profitableness indicators. one of the most notable uses of the notions of “reception capacity” was introduced to the literature by butler (1980) who changed the concept of “product lifecycle”, applying it to the destination life cycle. figure 1 life cycle of the touristic destination source: butler, rw (1990), the concept of tourist area cycle of evolution: implications for management of resources, the canadian geographer, 24 the premise at the basis of butler’s theory consists in the fact that the increase of the number of visitors in an area can be followed by a drop of visitations, as the reception capacity of the respective area is exceeded. it is said that the destination areas go through a relatively uniform transformation in time, from exploitation and launching to consolidation and stagnation, as the material basis of touristic industry changes, in order to receive more tourists and become more competitive. the implications of this theory however makes the managers of destinations to be very careful to any decrease recorded in the ecological destination, and this turns it in the end into the cease of development, as a result of the disappearance of touristic attractions. this is a good example of conceptualisation resorting to the social, ecological and economic implications of tourism in a creating destination frame. recently, researchers focused on the derivation of empirical measurements of this evolution of a destination, especially on the level of the natural environment of an island. the usefulness of the concept of “life cycle” has implications in the setting of the limits of reception capacity and social and environment complication of the rejuvenation decline critical area of reception capacity stagnation consolidation development launching prospecting n um be r o f v is ito rs 12 substantiating the development strategies for tourism in protected areas overuse of a touristic destination. thus, the clear definition of nature and characteristics of a destination’s use become a priority. the general character of the butler model ensures its applicability in almost any situation in tourism. reality, as regards this conceptualisation, consists in the fact that, from many perspectives, the concept of life cycle is regarded today in the same manner as it was considered in 1980, when it was conceived, i.e. the reception capacities are still exceeded, immense hotels still exploit to the maximum the resources of the destination. as regards sustainable tourism, it is worth attempting the re-conceptualisation of the butler model, taking into account the way this cycle would evolve or should evolve, in the ideal hypothetical conditions of sustainable tourism. the literature attempts it, underlining the comparative importance of economic, social and ecological variables in setting a reasonable and long-term level of the reception capacity of an eco-touristic destination. (fennel, 1999) if we analyse romania’s situation, we should point out – first of all – that the state’s initiatives in this field are not absent. for instance, the law of environment protection defines the general frame of nature preservation based on the strategic principles and elements with the purpose of ensuring a sustainable development. these principles can be synthesised as follows: • the principle of caution in decision making; • the principle of preventing ecological risks and damage inflicting; • the principle of conserving biodiversity and ecosystem specific to the natural environment; • the “polluter-pays” principle • priority removal of pollutants directly and seriously endangering people’s health; • creation of the national system of integrated environment monitoring; • sustainable use; • preservation and improvement of environment quality and reconstruction of deteriorated areas; • creation of a participation frame for the ngos and population in the decisions' elaboration and application; • development of international co-operation for environment quality ensuring. the protection of touristic patrimony is largely influenced also by the population’s ecological conscience and their respect for nature, historic sights and art and architecture monuments created along time. tourists’ education is absolutely necessary for nature’s protection. in our country there are 586 protected sights and areas (4.8% of the country’s territory), very many situated in the mountainous area. among them, a particular interest is raised by national parks, which, according to statistics, are 12 in number, completed by two biosphere reservations. although they were declared as such, these protected areas do not operate at presents as biosphere reservations or national parks, the touristic activities do not take place within them according to precise ecological principles. that is why we consider that it is absolutely necessary to approach the tourism activity in these areas from the perspective of sustainable development, more precisely, an approach of the national park touristic product from the marketing perspective. as shown before, most national parks in romania are situated in the mountains, and thus we can consider the tourism generated by the national park touristic product as a form of mountainous tourism. defining the strategies appropriate for this form of tourism in romania, both on the macroeconomic and microeconomic level, should start from a good awareness of the mountainous touristic potential (in general) and of the areas considered (national parks in particular), of the current degree of valuing, as well as of the economic, social and political conjecture influencing the evolution of 13 costencu, dobrescu romanian tourism in general and of mountainous tourism in particular. (costencu, 2008) a useful analysis model, as basis for establishing development strategies, is constituted by the s.w.o.t. matrix. this model reunites a set of information related to the present state of the mountain tourism market, allowing the identification of adequate strategies. the model supposes: • a market analysis highlighting the strengths and weaknesses of this form of tourism; • an analysis of the environment external to the market, from which the opportunities and limitations or threats against its development will result. • if we attempt to synthesise these analysis components, we can present as follows: strengths: • an extremely valuable touristic potential, of great complexity and variety, with numerous endemic species, on a relatively wide territory; a mostly virgin nature; • a fortunate combination, in many areas, of proper mountain touristic resources with natural therapeutic factors (mineral, thermal or saline springs, sedative microclimate), which allows the arrangement or development of complex-profile resorts; • high accessibility, as in most areas there are large and populated valleys, together with an intense communication network – roads and railways – allowing access from all directions towards the destination areas; • the existence of a very valuable cultural-religious patrimony, heritage of the romanian spirituality, which contributes to the originality of the romanian mountainous area in the european space; • still numerous people live in the valleys adjacent to the peripheral zones of national parks, population that is welcoming and interested in the development of touristic activities; • a natural environment generally deprived of major pollution sources; • very important and increasing touristic potential demand (especially the domestic one) motivated by the possibility of practising different forms of tourism in the mountain area; • generally low prices and tariffs compared to the foreign tourists’ purchasing power ; • marketing communication network already operational in romania and abroad, including romanian agencies and offices for tourism promotion. although these advantages are real and obvious, there are, unfortunately, very many weaknesses manifested in this field, among which: • unequal spatial distribution of natural touristic resources, from the viewpoint of structure, volume, value and possibility of valuing; • the lack of a precise evaluation of potential touristic resources; • the network of accommodation and food supply touristic units of medium and reduced comfort in the touristic nuclei in the communities living at the periphery of national parks, as well as in the units of recreation and treatment, which leads, on the whole, to a inadequate quality of services in these areas; • weak technical performances of set-ups for this form of tourism; • unequal repartition of touristic investments, of set-up efforts, most areas with valuable potential remaining unvalued; • poor maintenance of most access roads to the mountain area (where most national parks lie), especially of the secondary roads and mountain tracks; • reduced range of touristic sub-products promoted both on the domestic and the external market; 14 substantiating the development strategies for tourism in protected areas • visible degradation of the natural environment in the domestic circulation areas, due to soil erosion a well as neglect of visitors in the respective areas, lack of education in the spirit of natural protection. there are thus a series of drawbacks of tourism activity in the mountain area, in general, in national parks in particular, and thus there are many things to do in view of a sustainable exploitation of protected areas. some opportunities for the development of this form of tourism may be: • a certain saturation on the market of traditional destinations, which may constitute an advantage if we develop and promote an original and competitive offer; • a relative growth of the interest in this respect, which can determine a more important attraction of investments in the arranging and equipping national parks for touristic purposes. among the threats and limitations hindering the development of tourism in protected areas we can mention: • strong competition on the european market (high number of national parks and natural reservations in europe); • rather low interest manifested by the authorities in the touristic valuing of protected areas; • poor involvement of local communities in the touristic development, due to the lack of experience in this domain; • absence of an adequate general and touristic infrastructure. all these elements should be taken into consideration when establishing the global conception for the higher valuing of these areas. 4. conclusions aligning this particular touristic product to the trends of supply and demand manifested for this form of tourism – or for the mountain tourism in general – on the international plane is a real necessity. consequently, the objectives, strategies and concrete actions taken for the macroeconomic and territorial development of tourism in national parks, as well as in the touristic nuclei situated in the communities living at the periphery of protected areas should permanently aim at supporting these trends. the destination areas should meet the economic, social and ecological requirements in competition, so that they observe the integrity of natural resources and of local communities. the upper limit of the number of allowed visitations is intentionally set at a level below the identified level of accepted use, so that in the long run the environment should be able to cover the possible increases appeared in the number of tourists, without any harm inflicted to the environment. references butler, r.w. (1990), the concept of tourist area cycle of evolution: implications for management of resources, the canadian geographer, 24. costencu, m. (2007), ecotourism. the national park touristic product, timişoara, edition mirton. costencu, m. (2008), ecotourism marketing. strategies of the national park touristic product, timişoara, mirton edition. fennel, d.a. (1999), ecotourism – an introduction, london, routledge. oarcea, z, (1990), studies of systematisation and organisation of the cerna valley domogled national park. 15 costencu, dobrescu smaranda, j.s., (2008), tourism management in protected natural areas, cluj napoca, risoprint edition. ţigu, g, (2005) coord., resources and touristic destinations throughout the world, bucharest, editions uranus. wearing, s., neil, j, (2000), ecotourism – impacts, potentials and possibilities, great britain, reed educational and professional publishing ltd. 16 1. introduction protected natural areas have become important touristic destinations lately, attracting more and more tourists every year. although the care for nature protection and the declaration of protected areas is centuries old, the scientific grounding of na... the motivation underlying the selection of a touristic product is mainly subjective – it depends on the image consumers have created about the product by: publicity, previous uses or previous descriptions of other uses. the link betwen accounting and fiscal evasion 44 the link between accounting and fiscal evasion lăzărescu (marinescu) silvia, economist general manager, human resources organization, anaf abstract: in the literature, controversies have arisen concerning the link between accounting and fiscal evasion, which are the object of debates among specialists from different specialized organizations from many countries. under the term of “creative accounting”, the american and european tax systems have made up an ensemble of accounting mechanisms and also of fiscal manipulation which increased the interest and involvement of the states in the mitigation of such fraud risks and fiscal subterfuges whose percentage in the countries’ gdp varies from 8 to 80%. starting from the swot analysis of tax evasion in the real and underground economy, the specialists of the liberal trades are called to join the fight against fiscal fraud and share their professionalism in creating a real competitive environment characterized by fair play. many accounting specialists define the connection between accounting and evasion as a concept named “creative accounting” that includes the interventions made on financial numbers and on the structure of transactions in order to alter the financial reports. “creative accounting” and “result management” are euphemisms used for accounting practices that deviate from accounting standards. they are characterized by the use of new intelligent means to determine the incomes, debts and receivables leading to results manipulating policies [cernuşcă, l., politici contabile de întreprindere, editura tribuna economică, p.32-36] the term “creative accounting” is found in both british and french literature. in the beginning, around 1980, in england, the increase in corporate revenues was the result of accounting manipulation, as ian griffith pointed out: “each company in the country is fooling around when talking about its profits. each set of financial statements is based on accounts that were cooked and fried over a low fire. that’s the biggest trick ever since the trojan horse.......” [griffith, i., creative accounting, london: sidgwick & jackson] in an academic vision of 1993, nasser defined creative accounting as “the transformation of accounting results from what they are into what they are wished to be, by using rules and/or by ignoring some of such rules to the advantage of accountants” [nasser, k., creative financial accounting: it’s nature and use, hemel hempstead: prentice hall] in france, creative accounting was defined and continues to be perceived as an art. bertolus defined it as “the art of baking accounts”, gounin as “the art of presenting a balance sheet” and gillet stated that it consisted in “the totality of techniques, options and liberties found in accounting texts, which, without getting away from accounting norms and requirements leave company leaders the possibility to fiddle with the result or to modify the aspect of the synthetic accounting documents” [bertolus, j., l’art de truquer un bilan, science & vie economie, no 40, june, 1988] currently, the application of accounting standards has led to the existence of numerous calculation and accounting methods. for instance, in the expansion years of the usa, the american companies “put aside” the capitals received from the federal government for expansion. later on, such funds were counted as profit. we may ask ourselves whether this practice was fraud or just an accounting “game”. situations that lead to the same kind of question are those referring to:  recording the results from the sale of shares or of a part of a subsidiary as revenues; studies and scientific researches edition: economics, no. 13 (2008) the link betwen accounting and fiscal evasion 45  recording barter transactions as revenues;  recording in the books the entire selling price of an asset sold for a commission, instead of recording only the commission;  recording rebates as publicity expenditures (deductible within the limits of the fiscal code);  capitalization of marketing expenditures and so on.  such situations that raise the doubt of fraud or of a mere accounting subterfuge have been the subject of many accounting and tax experts. on the one hand, kpmg launches the idea of introducing new managerial techniques for the consultants focused on the concept of managerial proxy, i.e. the delegation of responsibilities in taking decisions at the lowest level in the managerial chain. on the other hand, some specialists consider that the low number of verifications leave room for, and cover, fraudulent actions, while the lack of managers’ involvement is speculated by both accountants and auditors who become accomplices [dr.sharad kumar, puşcaş c., frauda la nivelul companiilor, contabilitate, expertiza si auditul afacerilor, 2005]. auditors do not have the obligation to identify fraud but it is obvious that their investigations may reveal an accounting recording that has to be reported. romanian literature did not develop the concept of creative accounting, but in feleagă and malciu references are made to the fact that it is “usually used to describe the process whereby accounting experts make use of their knowledge to manipulate the figures in the annual accounts”. as a matter of fact we are interested in the link between creative accounting and fiscal fraud – the eventual differences. there is nothing creative in frauds, they are illegal and there have always existed accounting options no matter if accounting is based on principles, or on rules. moreover, the flexibility of the options related to the application of accounting policies is added to the subjectivism of the evaluation [ristea, m., dumitru, g., gestiunea şi contabilitatea firmei, rev. no. 8/2006]. the following question remains open: is accounting able to produce a truth and an objective message? the idea and the formulation are excessively categorical and unjustly generalizing, even if supported by the scientific experience of the french professor a. cibert who stated: "there are as many truths as there are holders of information and insofar as it excludes quality, the reducing effect of each measure is unavoidable”. to be even more convincing he resorts to p.lasseque, b.colasse and d.boussard who also admit that the "<<truth>> as told by accountancy is only a filter that allows us to understand a certain reality. nevertheless, due to the internal coherence that makes both its strength and its weakness, accountancy allows us to get to a formal truth based on a few postulates: conventions, norms, classification rules.” the question "is there an accounting truth?" can be answered in pirandello’s style: "everyone has one’s own truth". consequently, since there are different social protagonists, the truth about the accurate image of the financial position and performance must be sought depending on the interests of the generators and the users of information. for users, the truth supplied by accountants can only be the result of a compromise between expectations and demanding requirements while for generators, a ratio between sincerity and regularity (observance of the fundamental principles and rules). to sustain the accounting truth, there are a few telling examples of accounting manipulation:  application of the options related to the allowed accounting policies, basic and alternative treatments;  preferential application of evaluations in accountancy:  asset impairment test;  revaluation of fixed assets;  changing the stock evaluation methods;  subjective evaluation of intangible assets and financial securities;  modification of depreciation rate; studies and scientific researches edition: economics, no. 13 (2008) the link betwen accounting and fiscal evasion 46  flexibility of policies regarding the provisions for risks and expenditures;  internal prices for assets assignment and assignment prices among the subsidiaries of the same group;  manipulation of accounts by structuring and delaying real transactions;  increasing the difference between the book value and the acquisition price, through sub evaluation of the purchased asset and passing the difference onto the reserves;  "lease-back" operations, whereby an asset is sold and then rented from the buying company. the effect of such a transaction consists in improving the treasury, reducing the indebtedness rate and increasing the benefit;  attenuation of receivables losses by subscription of an insurance, which improves the result by the difference between the value of the receivable impairment and the paid up insurance premium;  issuance of hybrid securities, whereby companies can turn some debts into own capitals;  assets transfer to another company, along with the debt management, an operation called “accounting disindebtedness”. from an academic perspective, it is to reflect upon the idea according to which the time has come for accounting to take on a really scientific character, i.e. to build a general theory, independent of the application conditions. such theory must be able to determine applications based on a single reasoning. the axiom will be: there is no science other than general, as there is no truth other than particular [hoanţă, n., evaziune fiscala, ed. tribuna economică, bucureşti1997]. swot analysis of fiscal evasion fraud is presently considered to be the highest risk for a company, closely related to market, credit, juridical and reputation risks. fraud risks generate both direct financial losses and collateral losses at very high levels, namely negative publicity, which damages the company reputation, makes investors lose confidence in the company management, affects the business relations and the employees’ morale. a feedback to this situation comes from the investors who call for the development of anti-fraud mechanisms based on preventive measures (internal audit, efficient risk management) as well as on measures meant to identify frauds in time. a survey conducted by global economic crime survey in 2005 [studiu universitatea martin luther, hallewittenberg, germany, 2005,rev.audit financiar, p.3-8] on 3600 international companies shows the following rating of fraud, by categories:  embezzlement 22%  financial statement manipulation 19%  corruption and bribe 19%  false claims 15%  forgery 9%  money laundering 7%  others 9% the reduction of “non-registered” economy is a source for increasing tax revenues to the states and a means to maintain a competition of accepted rules by the dominant entrepreneurs. this is also about imposing a profitability threshold under which companies should not exist, because there is no fiscal profitability [guevorkian, k., l’economie non-enregistre, l’harmattan, logiques economiques, paris,1, p.5-13]. there are many types of nonregistered (underground) businesses that should be identified in order to find their common elements. the question is: “why there exist underground economy in most of the countries, no matter if they are industrialized countries, countries in transition or developing countries?” at an international level, the percentage of fiscal evasion, i.e. underground economy, in the gdp, varied in 1995 between 80% in north korea and 7% in austria, according to some analyses published in different issues of “le monde” [le monde, october, 1996, p.1-7; 1997, p.48, 93; january,1997, p.3; march, 1998, p.4], as follows: the reduction of “non-registered” economy is a source for increasing tax revenues to the states and a means to maintain studies and scientific researches edition: economics, no. 13 (2008) the link betwen accounting and fiscal evasion studies and scientific researches edition: economics, no. 13 (2008) 47 a competition of accepted rules by the dominant entrepreneurs. this is also about imposing a profitability threshold under which companies should not exist, because there is no fiscal profitability [guevorkian, k.,l’economie non-enregistre, l’harmattan, logiques economiques, paris,] there are many types of nonregistered (underground) businesses that should be identified in order to find their common elements. the question is: “why there exist underground economy in most of the countries, no matter if they are industrialized countries, countries in transition or developing countries?” at an international level, the percentage of fiscal evasion, i.e. underground economy, in the gdp, varied in 1995 between 80% in north korea and 7% in austria, according to some analyses published in different issues of “le monde” [le monde, october,1996,p.1-7;1997-pp.48,93; january, 1997, p.3; march, 1998, p.4], as follows: for north korea, it seems that this very high evasion percentage is fed by the “good” in china and the infusion of currency by the japanese workers and the siberian mines’ workers. armenia has the same percentage as zaire, namely 70%, which is due to the lack of interest for a reform of the fiscal system. for ukraine, the percentage of 50% comes from two contradictory sources: the government policy and the pro russian businesses. italy is a specific case characterized by a very dynamic handicraft sector with over 1.32 million enterprises with an average of 23 employees each, which practice fiscal discretion. country percentage country percentage north korea 80% belgium 20% armenia, zair 70% great britain 18% ukraine 50% sweden 17% russia, turkey 40% france, the netherlands 14% serbia 30% germany 13% croatia 25% united states 9% hungary, italy 23% austria 7% the resulting question is “who would profit from the underground economy?” the most interested would be exactly those enterprises that fail to declare, or only partially declare, their business. another category would be the employees who fail to declare or only partially declare their business and the place of such business; such employees benefit from satisfactory salaries, above the country average, without paying the amounts due for pensions, social contributions, unemployment. another satisfied category would be the persons having no working permit and last but not least that category of organizations or persons who would charge a fee not to denounce this type of underground economy. perhaps at this moment is opportune to compare the two swot analyses for the real, registered economy and for the underground non-registered economy. registered economy swot analysis strengths generation of revenues; capacity to contract bank loans; banking payment facilities; concentration of possibilities; export possibilities. weaknesses high control costs; difficult environmental adaptation; mandatory respect for normality; high sensitivity to the environment; social legislation; prohibited activities; difficulties in the desire to observe the intellectual property rights by the non-registered enterprises. opportunities state assistance; development possibilities. threats foreign competition; competition from non-registered enterprises; reduced flexibility; the link betwen accounting and fiscal evasion 48 reduced public investments due to lack of tax collection non-registered economy swot analysis strengths generation of revenues (even if not registered); rapid identification of requirements; no social legislation; no normality observance; lower environmental sensitivity ; no respect to the intellectual property right weaknesses impossibility to contract bank credits; no possibility for growth; difficulties in using banking systems; difficult access to certain activities; impossibility to make publicity; no access to justice; limited training of employees. opportunities environmental adaptability transformation into registered enterprises threats state pressure for registration; increased protection costs; lack of young people training. the state is responsible for transforming the non-registered economy into registered economy, to measure the country’s level of development. the solution is to either ignore it or try an eradication by constraint. it would be also possible that after a minimal identification, such non-registered enterprises should be helped to become profitable through the transparent commissions that provided the tolerance and the constraint to be registered. international recommendations are that all standard methods for control and fight against money laundering should be enforced by the multinational companies as well as by accountants, financial auditors, lawyers and other categories of liberal trades. it is the duty of each of these categories of persons, where a suspicion arises concerning their clients’ illegal activities, to immediately report such activities to the financial regulatory organizations set up for this purpose by the countries’ governments. to satisfy their information needs, decision makers must resort to new information sources. that is why professions such as that of accountant, auditor and tax adviser are called to create new instruments meant to eliminate the information limits of financial statements. references: [1] cernuşcă, l., politici contabile de întreprindere, editura tribuna economică [2] griffith, i., creative accounting, london: sidgwick & jackson [3] nasser, k., creative financial accounting: it’s nature and use, hemel hempstead: prentice hall [4] bertolus, j., l’art de truquer un bilan, science & vie economie, no 40, june, 1988 [5] dr.sharad kumar, puşcaş c., frauda la nivelul companiilor, contabilitate, expertiza si auditul afacerilor, 2005 [6] ristea, m., dumitru, g., gestiunea şi contabilitatea firmei, rev. no. 8/2006 [7] hoanţă, n., evaziune fiscala, ed. tribuna economică, bucureşti, 1997 [8] studiu universitatea martin luther, halle-wittenberg, germany, 2005, rev. audit financiar [9] guevorkian, k., l’economie non-enregistre, l’harmattan, logiques economiques, paris, 1998 [10] le monde, 1996-1998 studies and scientific researches edition: economics, no. 13 (2008) microsoft word apostoaie constantin marius_eng.doc managing global teams anca ştefania stan, ,,vasile alecsandri” university of bacau, romania abstract every global company’s competitive advantage depends on its ability to coordinate critical resources and information that are spread across different geographical locations. as a result of the increasingly global business environment, many companies are building teams that crossnational borders and / or include members from different countries of origin. global teams are formed to enhance the efficiency of an organization by making effective use of the diversity or viewpoints. keywords teams, global teams, cultural diversity, globalization, multicultural teams, jel codes: m 14, m 16 with the inception of globalization transition is witnessed in almost all concerns of businesses. organizations are addressing the challenges of globalization by undertaking a reconsideration of their traditional ways of functioning. as a result of the increasingly global business environment, many companies are building teams that crossnational borders and / or include members from different countries of origin. individuals from different racial and ethnic backgrounds will need to work together in a local workplace, a multinational corporation or an international organization. although many of these teams are designed to pool resources and increase operational efficiencies, the cultural diversity of team members may create a longer learning curve for establishing effective processes than culturally homogeneous group. managers and members of global teams are faced with the challenge of how to access and utilize individual member’s strengths, while at the same time minimizing coordination losses from communication problems, language differences, varying work styles, and misunderstandings. the challenge in managing global teams effectively is to recognize underlying cultural causes of conflict, and to intervene in ways that both get the team back on track and empower its members to deal with future challenges themselves. global teams are formed to enhance the efficiency of an organization by making effective use of the diversity or viewpoints. a global team is a group of employees selected from two or more country (cultures) who are brought together to coordinate, develop, or manage same aspect of a firm’s global operations. cultures exist among people who share the same nationality, the same organizational affiliation, the same function or even the same gender. members of the same culture share common views and they likely to interpret and evaluate situational events and management practices in similar ways. in contrast, members of different cultures are more likely to respond differently to the same event or managerial approach. research on team composition suggests that homogenous teams ( all members from the same culture) are more satisfied and experience more positive reactions, while heterogeneous teams ( with multicultural members ) experience enhanced team creativity and breadth of solutions to a problem. being composed of individuals from different cultures the multicultural teams provide solutions to problems which homogenous teams are unable to device. multicultural teams provide an opportunity to integrate widely different social, studies and scientific researches economic edition, no. 15, 2010 473 cultural and business perspective into key decisions affecting the success of international operations. the benefit of using global teams cultural diversity is a twin sword: if managed properly it can help an organization to enhance its performance, on the contrary if neglected cultural diversity can decrease the performance of the team. the benefit of using global teams are: since due to globalizations are in a continuous quest to tap the opportunities inherent in the different areas of the world, global teams enable organizations to address to the needs and demands of specific markets. global teams can help organizations develop better relationship with the international customer. multinational corporations often create global research and development teams to benefit from sitespecific scientific expertise that is not available in one location, but is spread around the world. still other companies create global teams in specific functional areas, like sales and marketing, and then have representatives of that function from around the world collaborative in teams. this enables the organizations to benefit from a diversity of perspectives and services that can match or fulfill the needs of a global client, wherever that client might be located. global teams provide organizations with a variety and collection of viewpoints. since members of a global team belong to different culture, each member of the multicultural team brings along with him a unique viewpoint and approach to the problem. “diverse group of individuals should be expected to have a broad range of knowledge, expertise, and perspectives than homogenous group of individuals do” (hoffman, 1961). multicultural group ‘s performance is also better than homogenous groups because they have with them at their disposal a collection of different perspectives, as a result groups are exposed to new ways and methods to deal with problems and situations. from manager’s perspective, when people from diverse cultural backgrounds work in teams, they often provide a reasonable understanding about individual cultures and norms. however experience with diversity leads to a better control in managing employees. companies competing in the global markets need to globally introduce innovative products, services and processes rapidly and effectively. as in the emerging knowledge economies many companies are forced to access globally dispersed technological and market knowledge to maintain their competitive advantage by developing an expert team of different cultures. why global teams fail domestic teams and global teams are plagued by many of the same problems – misalignment of individual team members’ goals, a dearth of the necessary knowledge and skills, and lack of clarity regarding team objectives. but global business teams face additional challenges resulting from differences in geography, language and culture. the difference between traditional team work in a single context and global teams work across multiple contexts are presented in table 1. table 1. differences in context between traditional and global teams traditional teams work in a single context global teams work across multiple contexts common physical location and work environment multiple physical locations and work environments common national culture in a single geography multiple national cultures in multiple geographies common economic and political conditions multiple and dissimilar economic and political conditions native language speakers native and non-native language speakers studies and scientific researches economic edition, no. 15, 2010 474 professional expertise and communication skills cross-cultural competence and adaptability in addition to professional expertise, communication skills task is generally contained within organizational and national boundaries task generally involves crossing organizational and national boundaries opportunity for frequent, face-to-face and informal interactions and information sharing opportunities for informal interaction are infrequent and interaction is generally structured and mediated by technology work within a single time zone often work across multiple time zones (source: gluesing j.c., gibson c.b. designing and forming global teams, ceo publication, 2003) teams can fail when they are unable to cultivate trust among their members or when they cannot break down often – formidable communication barriers. the challenge of managing global business teams are: the inability to cultivate trust among team members. trust is critical to the success of global business teams in that it encourages cooperation and minimizes unproductive conflict. each member of a global teams brings a unique cognitive lens to the group. if harnessed effectively, the resulting diversity can yield significant synergies and produce a collective wisdom superior to that of any individual. without mutual trust, however, team members may shy away from revealing their true benefits. the absence of trust is likely to turn a team’s diversity into a liability rather than an asset. global business teams are particularly prone to problems of trust. among the many factors that determine how much trust people feel, three important ones are individual characteristics, quality of communication and the broader institutional context. communication barriers resulting from differences in geography, language and culture also can sabotage global business teams. geographical barriers. with members living in different countries, separated by time zones and conflict schedules, arranging team meeting can pose logistical challenges. undoubtedly, technology (e-mail, teleconferencing, videoconferencing) can enable members to work together despite geographical distance: but technology should be viewed as a complement to, not as a substitute for, team meetings. face – to face meetings foster familiarity and trust – not easily established virtual meetings. when members cannot see one another’s body language and direct experience one another’s reactions, the emotional dimension critical to a team’s success suffers. language barriers. the inability to understand what another person is saying is always a potential barrier to communication in cross – cultural settings. if language barriers are not adequately addressed, the likelihood of creating an atmosphere conducive to candid sharing of different viewpoints / and hence conducive to achieving creative solutions – is greatly diminished. cultural barriers. members of global business teams typically come from diverse cultures and, as a result, may bring different values, norms, assumption and patters of behavior individualistic and collectivistic cultural norm for decision making. national culture has a strong impact on people’s values and hence behavior. gert hofstede’s way to describe national cultures in five dimensions has proved to be useful for researchers. power distance: refers to the beliefs that people have about the appropriateness of either large or small differences in power and authority among the members of a group or society. in low power distance cultures, attempts are made to minimize inequality, people in subordinate positions find it easy to access people in superior positions, and equal rights are emphasized. in high power distance societies, power holders are entitled to privileges and power is considered a basic fact of societies. uncertainty avoidance: focused on the extent to which people are comfortable with uncertainty or ambiguity in the workplace. in low uncertainty avoidance societies, there is less emphasis on rules, the younger generation is considered more trusting, emotions are expressed rarely, and deviation is easily tolerated. in high uncertainty avoidance cultures, experts are valued, hard work is considered important, and a strong need for consensus is felt. studies and scientific researches economic edition, no. 15, 2010 475 individualism / collectivism: this dimension is the extend to which needs and aspirations of individuals get priority and importance compared to needs of others and of collectivities. in the individualistic cultures, personal autonomy, freedom, individual achievement, and right to privacy are valued. on the other hand members belonging to a collectivistic culture emphasize the welfare of their fellows than themselves, according to them decision making should be a collective attempt. masculinity / femininity: this is the extend to which assertiveness, performance, independence, and role differentiation (by gender, or sex) are valued by societies. members of masculine cultures tend to exhibit aggressiveness in pursuing their goals and place a high value on achievement, decisiveness and assertiveness. in feminine cultures, interdependence and relationships are important, roles are not clearly defined according to sex differences, and quality of life is important. long term vs. short term orientation: this dimension is concerned with the extent to which societies include a long – term orientation towards tradition and change. people of a culture with long/term orientation believe that values hard work, personal sacrifice for future benefits, dedication to a cause, and personal thrift. the emphasis is on sacrifice so that future generations can prosper. cultures with short – term orientation give more value to personal steadiness and stability. people with this orientation only live for the present. develop global team there are four key design techniques that help create a supportive environment for global teams: clearly specify the task objective and align it with organizational strategic initiatives; make appropriate resources available; select team members who have the skills, abilities and experience to work in a global team, including the team leader if appropriate; and create a sense of urgency. 1. clearly specify the task objective and align with organizational strategic initiatives. it is important to establish a clear task objective and to align the objective with organizational initiatives, whether those initiatives are tied to global efficiency, local responsiveness or organizational learning or knowledge creation. if team members do not know how their task fits with overall objectives as well as with their own priorities, it will be more difficult for them to commit and hence, to participate fully in the team’s task. the more clearly and specifically managers can define the task, the greater the likelihood that teams with short life cycles and urgent deadlines meet with success. organizational leaders who will have a stake in the outcome of the team’s work should be identified early and should all participate in the task definition to achieve alignment across organizational boundaries. some basic task boundaries and process guidelines can help teams begin their work with reduced complexity. managers should provide the team a basic outline for their scope of work and offer some teaming templates and recommended processes that can team members can start with. particularly if they are new to global teaming, team members need to begin their work with some minimal structure and then adapt it to their needs. offering guidelines that can to help team members understand where decision authority lies and what their reporting relationships are helps to avoid the confusion that ambiguous reporting relationships can create. these boundaries are important even if the team members will be working together on a part-time basis or only for a short while. in fact, more structure may be necessary when teams will be of short duration and with tight deadlines since the team does not have time to create this structure themselves. in sum, as a first step in pre start-up organizational leaders can manage task complexity by taking four key steps: provide the team with a well-defined, strategically aligned objective; actively endorse the team’s objective; offer a minimal structure for the team’s scope of work and some general process guidelines; studies and scientific researches economic edition, no. 15, 2010 476 give the team basic guidance regarding organizational responsibility and decisionauthority related to their objective. 2. make resources available. global teams are embedded not just in one, but in many contexts that may possess quite different systems of organizational support, including budgets, work processes, human resource policies and support people, such as facilitators, administrative support, and information technology tools and facilities. incompatible or insufficient resources are a major source of complexity and frustration for global team collaboration. to manage this complexity before a team is formed, the appropriate stakeholders or managers should conduct a resource assessment to determine the state of available resources, including the degree of overlap in the type and availability of resources across organizational and country boundaries. if there is a great deal of disparity or imbalance, with “rich” and “poor” resources in different contexts, managers may want to invest in resources before the team begins or reallocate resources that are available elsewhere. in a globalized world, however, if the firm wants to remain competitive, investment in global collaboration support systems will eventually be necessary. while it is not always possible to level the playing field entirely, managers should attempt to secure as many resources as possible in advance of the team’s formation, or specify a clear path to accessible resources, so that team members do not have to spend valuable time searching for essential support people, information or technology, or worse yet, become so frustrated they are unable to execute their objective. there is one caveat about resources: while information technology is a critical resource for global teaming, the availability of technology resources is not sufficient for successful performance. members must also be comfortable with the technology, and it should be reliable in each location where it is deployed. simple technologies like email and audioconferencing may suffice, and constitute the best technology choices for teams, especially when time is short. team members do not have time to learn new technology if they are under pressure. at start up, team members should be well acquainted with the technology and have enough “media dexterity” to use the technology effectively to avoid the technology downtime that can distract team members from their task. at the same time, technology use is a process of adaptation. team members must be allowed to negotiate and come to a set of shared norms about how to communicate and which technology to rely on most heavily. in fact, the eventual performance of short-term teams working on high-stakes tasks is strongly influenced by members’ ability to come to early agreement on communication processes. ideally, they need to have a number of readily accessible communication channels that allow them to match their communication needs with the media available. in summary, managers can control resource complexity, especially the complexity that can result from incompatible or imbalanced human resource and information technology systems, if they keep these points in mind: conduct a resource and information technology assessment prior to the start-up of the team; make an investment decision to acquire or reallocate support resources if necessary, or if resources are not available, postpone the team start-up if possible; specify for the team a path to available resources; it is management’s job to make resources available to the team; however, the team should make the decision about the best match of resources and technology to match their needs as circumstances require and as team member skills, abilities and preferences are negotiated. 3. select team members who have the skills, abilities and experience to work in a global team. global team members need to be adept at working with task uncertainty, member diversity, and a variety of team situations. team members too often are selected based only upon professional expertise or job roles alone, or upon their availability to do the technical work. research indicates that employees tend to be more comfortable and effective in a global teaming situation if they are capable of performing the core tasks for their roles, are studies and scientific researches economic edition, no. 15, 2010 477 self-disciplined and goal-directed, are flexible, collaborative and willing to share and exchange information, and remain open to feedback. global team members should be perceptive and receptive to differences in people and culture, ways of thinking, and alternative approaches to processes. they need to be capable of handling the uncertainty. they should also be committed and connected to the business and competent in using technology required for their roles. these skills, while desirable in many work settings in multinational corporations, are particularly crucial to the viability of global teamwork. there are selections tools, such as the global personality inventory (gpi), which is a measurement tool specifically developed for work-related use by psychologists working in or with global organizations. it was designed for applications such as pre-employment selection, developmental assessment, coaching, and succession management. measures such as this one can help managers to select team members who can work well at the global level. the cross-cultural adaptability inventory is a self-assessment tool that can help team members determine the likelihood that they will adjust well to a global teaming situation. team members can assess themselves on four dimensions that research has shown to be important in adapting to cross-cultural situations: flexibility-openness, emotional resilience, personal autonomy, and perceptual acuity. the instrument offers suggestions for what team members can do to increase their abilities on these dimensions as well. it is particularly important to select people to be members of global teams who are capable intercultural communicators, because effective communication is especially critical for integrating diversity in global teams. team members should be motivated to communicate with unalike individuals and be able to take on each other’s perspectives so they can make correct interpretations of behavior, especially when they encounter difficulties. in selecting people for work in global teams it is important to remember that cultural biases, especially those derived from national culture, can have marked effects on team performance. there are taken-for-granted assumptions in every culture about the desirable qualities of the global manager and about how a good team member behaves, with some particularly strong contrasts between eastern and western cultures in the criteria for what constitutes an effective team member. even the most sophisticated global executives are subject to biased assessments of these criteria. it is necessary to get more than just a monocultural perspective on the selection criteria and to use differences of opinion as a way of exposing implicit biases. when managers are designing a team for short-duration or temporary task work, it is especially important to select the right team members. members who already know one another, who may have worked together well on previous projects and are comfortable with one another, are more likely to have some shared understanding of each other as people. a precondition for a fast start is enough of a shared reality among team members to enable effective communication without spending too much time surfacing differences and negotiating a shared resolution, especially when the differences have to do with how people relate to one another. there is also likely to be a foundation of trust and shared knowledge of each other’s work habits if people have worked together previously. they do not have to spend time getting to know one another’s working styles. even if not all of the team members know each other, if a core group has had previous experience working together successfully, they can get off to a speedy start. if the team members do not know one another at all, it is possible for “swift trust” to develop and a “swift start” to occur if channels and norms for communication are pre-specified. the leader plays a pivotal role in global teams. effective leaders must manage the organizational, linguistic, cultural and physical distances that separate members, create severe communication barriers, impede the development of trust and contribute to the misalignment of members’ goals. to maximize their chances of successful teaming outcomes, organizational leaders and managers should remember these key points when they are selecting people to work in global teams: studies and scientific researches economic edition, no. 15, 2010 478 team members should be selected for professional expertise and roles related to the task, but they should also be selected based on their ability to handle task uncertainty, to integrate diverse perspectives and work practices, and to adapt to a variety of team situations: engage the help of human resource professionals who can use selection tools that will provide some measure of an individual’s global competencies and also allow team members to assess their own level of comfort with a global team assignment. be especially mindful to select members who are effective communicators, particularly interculturally. if at all possible, select team members who know one another or who have worked together well on previous assignments, especially if the team will have a short deadline and a high priority task. 4. create a sense of urgency. managers can maintain task focus, and reduce complexity if they structure the team to convey a sense of urgency. there is nothing like a deadline to help focus minds. research indicates that tight deadlines can get a group moving. as with complexity and uncertainty, however, managers must be careful not to assign so much urgency that the members feel anxious about their ability to achieve. pressure can push people to find solutions to differences and to come to agreement for the sake of protecting their mutual self-interest. a sense of urgency can come from environmental factors in the marketplace or in the organization, such as new competitive pressures, new requirements from higher level managers, poor business results, or pressure from a global customer everyone serves. managers can convey a sense of urgency in the way they frame the goals for the team, by obtaining top level endorsement for the goals, by bringing the voice of a credible customer into the task rationale, or by making a good business case for the goals, such as demonstrating a large investment that may be at risk. however, it is important that managers realize that it may take multiple sources of evidence to achieve a shared sense of urgency. understanding what is likely to appeal to team members’ sense of urgency and then exerting positive pressure to engage in collaborative work are key to framing the goals to energize global teamwork. in summary, managers can help team members align with their task objective by taking the following actions: frame the objective as important to the organization by selecting credible sources to endorse the objective; connect the team’s objective to pressure from outside organizational boundaries, from competitors or customers in the marketplace; provide deadlines; connect the objective to people’s careers or to rewards that will motivate participation. global business teams are ubiquitous throughout multinational corporations. but managing them effectively and steering them toward their intended goals is not easy. bibliography 1. gluesing j. c, gibson c. b.(2003), designing and forming global teams, ceo publication, 2. gibson, c. b., building multicultural teams: learning to manage homogeneity and heterogeneity, chapter appear in n.a. boyacigiller, r.a. goodman, and m.e. phillips, crossing cultures: insights from master teachers, blackwell publishing, 2004. 3. govindarajan vijay, gupta anil k, (2001) building an effective global business team, vol.42. no.4 studies and scientific researches economic edition, no. 15, 2010 479 microsoft word apostoaie constantin marius_eng.doc the relevance of notions of risk and uncertainty in investment decision to base at local veronica pasa stignei, university spiru haret constanta, romania abstract investing resources in the local public interest objectives locally involves taking risks caused by system operation and efficiency level established. uncertainty and risk meet anywhere (even local government), combined in different proportions, so that the process has consciously assumed taking place in every field of activity, uncertainty can be eliminated. keywords public investment decision, investment risk, uncertainty jel code: h79 public administration is an operating system1 after its own principles, but is influenced by certain developments in society that is integrated. the quality that defines this particular system is that decisions are produced according to the particular set of public authorities and not by impersonal market forces. however, these priorities can be supported by the monopoly of state action, on the legitimate use of force and coercion. although always rely insufficient allocation of financial resources, there was a wrongful their management, characterized by waste of funds and public consumption unnecessarily. in addition, european officials always raises the need to improve romania's administrative capacity to absorb eu funds, and enhanced budgetary constraints. i think the ultimate solution for achieving these requirements is to import the public sector management methods and techniques of specific resources of the private sector, without losing sight of specific public administration. in european countries, public sector includes organizations that occupy a wide range of activities, the supply of electricity or telecommunications to health services. the specific public policy-making depends on the specific nature of their work, but they are competing with private sector companies. therefore instruments specific strategic and tactical decisions, applies equally both public organizations and private ones, but the difference is that the purpose of public institutions not for profit. the european commission recently adopted the concept that state subsidies are not compatible with the treaty of rome, public organizations are under increasing pressure, to implement competitive economy rules. issues of administrative decentralization and local self-governments have become major concerns of society, especially in solving the problems of ethnic minorities, cultural or linguistic. decentralization is a fundamental process of moving power from center to periphery and generates a multitude of effects such as: grouping peripheral relations in the local environment (by changing the view about the rationality of government), location and intersection of these relations lead to an administrative system the specific it supports local power, local officials are no longer mere performers of directives from the central government, but they acquire the strategic capacity of action, decentralization policy creates 1 mihaela onofrei (2007) "elements of science administration" publisher "alexandru ioan cuza", p. 21 studies and scientific researches economic edition, no. 15, 2010 168 the transfer of jurisdiction, determined to strengthen solidarity and development of local business, creating a new framework in around which the various local actors will have incentives to mobilize. decision is essential act of leadership to solve a given problem, which is accomplished by conscious choice of several versions of possible actions, to that which allows the rational use of human, material, financial and information in order to achieve the intended purpose, with highest economic and social efficiency. administrative decentralization process profoundly changes the reference and the conditions are selected targets based options and decisions . local agent acts as a component of a political environment and administrative decisions are product specific variables of local origin, which central government can not collect them. the administrative decentralization and local self-development to reach a wider political participation and involvement from the public (they are more involved in management of their localities), but not achieve a significant improvement in efficiency of resource allocation. the decentralization scheme, no decision is taken on behalf of and for the state, by one of its officials, but on behalf of local human and corporate, by a body emanating from it. local autonomy is a modern form of expression of the principle of administrative decentralization and means the right to self-administration. it is associated with the establishment of a separate status of local authorities in relation to state government as a way of smooth integration of all local interests to general interests of a material, or territorial basis of our state. the local government has the right within their powers, to cooperate and associate with other similar authorities in the country or abroad, to arrangements between themselves and participate in the development of regional development programs. it is important to note that a genuine local autonomy can exist only in so far as financial autonomy is ensured, a transfer of competences from central to local level, which amounts to a self-government, without the existence of skills in mobilizing resources from local budgets, leading ultimately negatively affect the level of satisfaction of local interests. customizing, administrative decision is the choice of a rational process of decision options, the more possible to achieve the government target. administrative decision can be defined as a manifestation of the will of an organ of government in which he opts for a solution to allow implementation of an object. for administrative decision to ensure the maximum efficiency with the intended purpose, it to meet requirements, the most important being2: 1. to be scientifically, legal and social. (scientific validity of the decision shall remove practice, routine, chance, improvisation, subjectivism); 2. to be the result of the management team and to stimulate citizens' initiative. modern management determines teamwork, in which the leader (mayor) acting as catalyst. in the administration, the team must draw and informing the citizens and decision-making. 3. to be pragmatic and simple. (any administrative decision should have a practical use, so it needed a comprehensive and complete assessment of the economic and social administrative and territorial unit, taking into account the specific problems of local and national). 4. to be appropriate. (administrative decision must be taken of the body right time, knowing the local administration bodies best local social needs. it should be noted that in taking decisions, local bodies take account of normative acts developed by the central government which, in turn, is consult directly with local representatives). 5. to have systemic character. (administrative decision will be integrated into administrative decisions taken previously, thus disappearing overlaps and contradictions between different decisions. nature of the system ensures consistency of administrative decision, administrative decision being determined by the particular content and participants in decision making. administrative decision is output business officials, specialists, citizens, and collaboration between departments administrative structure). 2 vasile munteanu (2008) "comparative public management", ed sedcom libris iasi, p. 330 studies and scientific researches economic edition, no. 15, 2010 169 consultation of citizens in local issues of particular interest is stated by law. citizen participation in decisions and help increase their opportunity to meet a higher standard of local requirements and ensure adherence of citizens in administrative decisions and simplify the process of implementing them. specifically, citizens and ngos can participate in such managerial decisions: the presence in the collective governing bodies of state administration; suggestions / proposals for new decisions and improve the pending. in our country, the principle of consultation with citizens is only said, but not implemented in administrative management. economic development is "the process by which local and / or community based groups, used existing resources and enter into a commitment to partnership with the private sector to create jobs and stimulate economic activities in an area economic well-defined ". the process of economic development, local communities can better manage their own resources and can increase the welfare of its inhabitants. a strength of decentralized economic development, is that people are more related to community life. thus, locally can better quantify community needs, and under a sense of local identity, citizens are directly interested in the town where they live to grow more and more, because they will live better. citizen involvement in strategic planning and economic development of their permanent information about project progress and results achieved, a prerequisite to provide support to citizens in community activities, in addition, citizens feel they are directly interested in community development. investment decision of the local government involves expectations from those that trigger the investment, but these expectations could be affected by events whose sources are multiple, but siu contingencies. financial analysis allows a rapid assessment of risk. authority work is conducted under the influence of a certain degree of uncertainty generated by economic and financial environment, requiring a greater adaptability and flexibility. risk on investment decisions of local government is characterized by not known with certainty the characteristics of future events affecting the project investment, but known number of possible alternatives of those values and the likelihood of each. investing resources involves taking risks caused by system operation and efficiency level established. this raises the risks of economic, political, cultural, social, technical, etc., forming the total investment risk. the projects have a specific life cycle, and therefore the risks should be pursued over the period. uncertainty for investment projects change with his passing from one phase to another life cycle, means overcoming a state of complete uncertainty. the risk is an expected loss associated with the occurrence of future adverse situations. what you need to know local government is the nature of risk, its potential size and the main factors fueling it. in the process of investment analysis and risk assessment, it is necessary to take into account inaccuracies in the figures used in the trial and error in considering whether investment, type of investment made and funding used and duration of the investment objective. investment risk may take the following forms: inflation risk (the risk that the national currency to lose value of money), risk maturity (the non-risk debt outstanding over seven days), political risk (the change of government and denial of continued investment) operational risk (potential losses resulting from a bad management, lack of contracts / delays in their work, fraud). business risk (economic risk) describes the "change to the projections (forecasts) of future income on assets or shares, if not used debt to finance its activities and can be changed over time. appears as a result of inadequate or loss. economic risk shows the administration's capacity to adapt in time with the lowest cost (public money always insufficient) efforts and economic environment in which operates. economic risk depends on the composition of expenditure in the budget, the behavior to the workload, the low activity of investment management and effective administration. the structure of expenditure is reflected best in cost profit volume and the neutral point or "dead". economic risk will be even lower as this stalemate will be lower. replacement investments have a very low risk, because they involve changes in technology. modernization investments are characterized by a low-risk, studies and scientific researches economic edition, no. 15, 2010 170 due to minor corrections in manufacturing technology. expansion and strategic investments entail a considerable risk, led to the need of increasing market supply, labor, capital and outlets. financial risk arises3 whether the local government funding needs of internal and external loans, so the debt. financial risk expresses the inability of local government authority to honor the obligations arising from loans due date (and interest rates costs). if you are in the position of financial risk of becoming so, will have to take decisions amending financing strategy for local investment. borrowing capacity is a key element in attracting financing resources of self-financing. considered insufficient requiring in light of the existence of a coherent strategy to improve local government access to credit market is to set policy guidelines and measures leveraged technical and financial support , made under the risk profile. in romania most local entities and local companies are in level two risk, that have the ability to access market financing, but is indebtedness due to high and low margins, which is incompatible with the financing of infrastructure investments. this group of local authorities could benefit from a support package that includes both technical assistance and also financial support. in understanding the world bank technical assistance package would aim to reinforce the fiscal and financial management and quality management of local entities in the group, the aim being to enable them to reach market access through their own credit. as these entities reinforce their management capacity, the world bank proposes to develop a part of credit guarantee facilities (fgpc) with a model similar facilities that have been implemented successfully in the secondary mortgage market development in several developing economies. for municipalities with increased risk may be allocated from state budget grants conditional capital to finance local investment with a very high priority from an economic perspective, social or environmental, including european funds necessary financing. the risk of short-term financial transactions can be highlighted in the following categories of risks: lack of liquidity risk, the risk of freezing (the administration is unable to repay loans due to the need to draw up risk funds), and the lack of profitability. the risk of long-term financial operations ensure that the operation of investment projects undertaken do not result in degradation of self-financing, and risk must consider conjuncture that could occur (for this administration should be able to attract resources surplus). local government debt must be properly structured in terms of interest rates, maturity and the currency loans. a weak structure of these elements may be contributing factor to the outbreak or spread of economic crisis. recent economic crisis has highlighted the need to limit exposure to liquidity risk and other risks that are as local economies become vulnerable to external shocks. a sound risk management in local public sector is therefore paramount for risk management in other sectors of the economy, as economic entities in the private sector are facing serious problems when poor risk management, which he faces state and local government , opens the possibility of a liquidity crisis. market risk is measured, then, according to increasing debt service generated by changes in interest rate and exchange rate, compared to its predictability. it should also be taken into account real economic losses that may result from the increase or that the state can not refinance debt. management involves managing multiple types of risks. one of the important tasks of the managing local public debt is to identify these risks, their evaluation as far as possible, and develop a strategy for arbitration costs and foreseeable risks. policies debt portfolio management and risk shall be implemented after approval by the government . the experience of other countries shows that the main objective of public debt management is to reduce debt costs and successful management of risks it generates. local government in romania calls on foreign debt is currently at the expense of internal, which increases the financial risk related to capital borrowed. imf recommends developing a debt management structures to identify and manage what can be achieved arbitration between expected costs 3 mihaela onofrei (2008) "financial management", ed chbeck, bucharest, p. 104 studies and scientific researches economic edition, no. 15, 2010 171 and risks inherent in the debt portfolio. the cost of debt is composed of two elements: financial cost (debt service on medium and long) and the potential cost of real economic losses that may result from a financial crisis if the difficulties in refinancing debt or is unable to repay. imf believes that pursuing credible in fiscal, monetary and financial sector will improve the current economic situation, however, risks remain high. resolute implementation of government policies is essential to restoring public confidence and economic growth, continuing cooperation with local authorities. the risks of implementation and application of investment programs will be significant, requiring harsh policies, sustainable related public expenditure. risks specific financing local public investments relate to: • state budget allocations to the reduced amount or at all; • financing costs too high, unjustifiable and unacceptable or difficult to access in terms of political support; • conditioning of favorable credit conditions only ensure the romanian government; • that insufficient credit guarantees achievable only with support from national level; • eu funding available late or unable to access government support results in late to the urgency to achieve the objective; • liquidity problems of local government budgets, foreign exchange risks; • risk of interest changed at short intervals of time (which affects credit costs); risks specific investment projects can be overcome in light of experience gained by the teams responsible for the project. implementation of methods and techniques for analyzing risk in the investment management system involving different types of resources that local government should have and use them for this purpose. the local authority must have primarily financial, material, human and informational, they will analyze the cost-benefit terms, in order to streamline the work of making the correct decision. to reduce risks to adopt models for financing the direct involvement of the romanian government, central government authorities, local as well as the european financial institutions, limited credit risks under the contract, to create reserves of risk / liquidity of own funds local authorities. uncertainty and risk meet anywhere (even local government), combined in different proportions, so that the process has consciously assumed taking place in every field of activity, uncertainty can be eliminated. the uncertainty arises in decision making both by external factors determine the environment, but also by human factors governor. uncertainty is the complement of knowledge, whereas the difference between what is known and what is known to be taken the right decisions, or the disparity between information and environment. references: 1. bebesel mihaela (2008) "financial management of public institutions", ed wallachia, constanta; 2. mihaela onofrei (2007) "elements of science administration" publisher "alexandru ioan cuza"; 3. mihaela onofrei (2008) "financial management", ed chbeck, bucharest; 4. stoina cristian nicolae (2008) "risk and uncertainty in investment", ed teora, bucharest; 5. vasile munteanu (2008) "comparative public management", ed sedcom libris, iasi; studies and scientific researches economic edition, no. 15, 2010 172 civil and criminal rules of the babylonian law studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro civil and criminal rules of the babylonian law ion țuțuianu ”vasile alecsandri” university of bacău tutuianuion@yahoo.com abstract by its age and principles, babylonian law has drawn attention of all epochs, laying at the basis of scientific development of modern law. the regulation, more than 4000 years ago, of property, family, obligations, public administration, succession, probation principle, represents the proof that the institutions which today regulate these aspects, have been a preoccupation for mankind ever since its beginning. even if penalties were distributed depending on social status, a progressive element is represented by the fact that the act could only be punished if it met the condition of intent. the legal monument of this system of law, hammurabi code, has an important signification by the fact that upon that date, the law and the judges aimed at ensuring life to citizens and to guarantee them certain rights, considerably more than other countries in the epoch. it is striking that in antiquity, the right of succession lies all the children regardless of the number of marriages and criminal aspect beyond class character, crimes regulation retained the substance, the changes incurred on penalties take into account the evolution of human rights, as how malpractice mutilation was replaced by pecuniary or administrative penalty. keywords babylonian law; criminal; civil; successions; hammurabi jel classification n3 1. regulation of property it is well-known the fact that the oldest code of law belongs to hamurabi. dug on a diorite stone, in akkadian, its application for approximately 1000 years generated a rich jurisprudence in the ages to come (drimba, 2003). within the 282 articles are regulated: property, public administration, trade and obligations, family law, criminal law, maritime law. like in other countries in the east, the king was considered the rightful owner of the land and depending on the services rendered he would award soldiers and officers a surface which they could not alienate, but which they could lose if the holder refused to fulfil their duty to the king by participating in battles. in case of death in war, the land would be transferred to the eldest son who would also receive the obligations towards the king. now it is also the time when private property is shaped, regarding houses and orchards, which did not depend on the king. another part of the land was the property of village communities, for which they had to give a part of the harvest. both categories of land owners had the duty of executing certain community service activities, such as: maintenance of canals, crossing fords, roads; the king has the right to grant exemptions by written mentions on the milestone. 2. regulation of contracts the matter of obligations enjoyed a careful regulation in the babylonian legislation, by numerous categories of contracts. within the sales-purchase contract, concluded 108 civil and criminal rules of the babylonian law with the agreement of the parties, the procedure consisted of the buyer hitting with a stick the object bought, as sign of purchasing the property. numerous contracts mention the guarantee against eviction, ensuring the buyer of the peaceful use of work against the action of third parties. many formalities of the sales contract were cancelled in time, because they would harden the conclusion of conventions. the forms of practice indicate a series of rules regarding sales, which, however, did not have a general availability. the lease contract had an application, no less important. the rental of buildings was practiced on a very large scale by the rich, who made big profits out of these. besides the rental of buildings, is also known the rental of animals, boats, grain barns etc. an important part is played by the lease contract of orchards and farmland. the richest would often lease land in exchange of a large amount of money or goods, established by law. the rental of personal work also represents the object of many contracts. free workers could lease their labour and were supposed to receive daily an amount of money. in contract are stipulated conditions that bring advantages to the creditor, if the one selling his work does not work during the entire time he was hired for, he is not paid, not even for the work he has done. in certain conditions it is stipulated that the employee receives an advance, and, in this case, if the interrupts work, he is turned into slave (craiovan, 2001). another contract with economic purpose, even more important, is the loan, known in the babylonian law from the ancient times (constantinescu, 2004). the „damcars”, as the usurers were called, would lend money to those in need of it. those who failed to pay the debt became slaves. however, the code of hamurabi brings certain improvement in this regard as well, forbidding transformation of debtors into slaves. thus it was regulated, that, if a debtor fails to pay the debt, he, his wife or his child, could be taken to the creditor's house and work for 3 years, or, if he paid sooner, until the date he paid. the creditor was not allowed to make his own justice, as in this regard, under the law, he loses his debt. in case of natural disasters, which cause serious crop losses, the debtor is exempted from interests for that year and his due date may be delayed. hamurabi also offers other provisions, helping debtors, as in not all people turn into slaves, from free people, as in this way there would be no army left, as slaves were not recruited for military service. this contract was often accompanied by the stipulation of large interests name sibtu. the code of hamurabi sets as object of the loan agreement money and barley. this product was considered, in the most possible general meaning, as food, in general, meaning any kind of grain, fruit etc. the fact that barley is given as example, it is explained by the fact that this cereal played the most important in the feeding of the people and animals of that distant era. also known from a distant era are the company contracts. these contracts have as object different trading or agricultural operations, when more people get together to harvest a land, being necessary a written document, drafted in front of witnesses to prove the contract. at the time of dissolution of the company, common assets would be distributed between the shareholder, according to the agreement made at the time of concluding the contract. another contract discussed is the deposit contract, consisting of the deposit by a certain person of an asset, to be kept by a different person. according to the provisions of hamurabi, the deposit must be made in front of witnesses. if the person receiving the asset to keep it fails to return it, must pay twice its value. there were two kinds of deposits: the deposit itself and crop deposit. in this latter case, the code establishes an exact tariff for the payment of storing the crop in the storage-barns. 109 țuțuianu the amount of the interests was too high, representing an important income for usurers, the percent was of 20% for loans of money and 33% for loans of cereals. in order to guarantee his debt, the creditor may ask the debtor a guarantee, either real, either personal. real guarantee could include either real estate assets, agricultural funds or buildings. in case of agricultural funds, the guarantee is a pledge of use, and in consequence, when the land, due to natural disasters, bears no fruit, the creditor shall not be able to cash the corresponding interests; that is why the law decides that that year is not taken into account for the duration for which the pledge of use was established. in this way, the interest of the creditor is guaranteed. if the land is guaranteed by the debtor provided that it is harvested, the guaranteeing creditor has the right to keep from the crop the value of the capital, of the interests and the investment expenses. the guarantee can also have as object movables: slaves, children and the wife of the debtor, mobile works etc. the asset given in pledge was not always given to the creditor; it would often remain in the possession of his debtor, sometimes, to a third person. the creditor shall not be able to exercise his right over the asset given as pledge by the simple fact of maturity, but it is necessary to ask permission of justice for this. thus, the code provides the obligation to repair the damages caused to irrigation installations due to negligence, responsibility for cutting a tree from a foreign orchard etc. often, for the payment of capital, the pledge was a person (bail); sometimes the bail would guarantee the creditor only under certain conditions (for ex. only in case of disappearance of the debtor etc). babylonian law also knows obligations based on crimes, meaning that if somebody causes damages to another person, for him arouses the obligation to refund the damage caused. 3. family law the foundation of marriage provided a written contract, concluded in front of witnesses, by which the husband establishes unilaterally the rights and obligations of his wife to be. usually, marriage was proceeded by engagement and consisted, besides regular gifts, also in an amount of money, which the fiancée gives to his father-in-law. engagement has legal status: if the fiancée breaks the engagement, he loses the money, and if the girl breaks the engagement, she shall be obliged to refund the double. often the father of the girl, or in his absence, her brothers create a dowry (seriqtum), it usually exceeds by far the terhatum. the dowry remains the property of the woman, the man only having use of it upon the death of the woman, the dowry is transferred to the children, and in their absence, to the family of her father. if the marriage is dissolved by divorce, the woman shall receive the dowry, except for the case the marriage was dissolved due to her fault, when she looses her dowry and is punished. but if the marriage is dissolved not because of her fault, the wife shall receive from the husband a part equal to the one of a child and if from the marriage resulted no children, she shall receive an amount equal to the terhatum (in absence of the terhatum she shall receive the amount of one mina). moreover, the widow has the right to live in the family's house. the spouse, prior to marriage, could have contracted debts. in this case, the wife has to bear the debts of the husband, except for the case when at the time of their marriage the contrary is not specified; however, the husband in not obliged to in the same way for the debts contracted by the wife prior to marriage. in return, for debts contracted during marriage, the spouses are jointly liable. the married woman has a sort of legal capacity. she may be witness, may hold own assets of which she may dispose as she pleases and in absence of the husband she may manage his fortune, if he does not have a major child to take care of this. 110 civil and criminal rules of the babylonian law donations between spouses are allowed. thus, the husband can make a donation to his wife in order to assure her existence after his death. this donation is called nudunnutn, on such property the woman has only the right of usufruct. also, liberals could be made to sons or daughters whom the father wanted to protect. the man has certain rights over the woman. he may sell the unfaithful woman as punishment, and when he is deeply in debt he can give her as slave to the lender (in which quality she cannot stay for more than three years). the woman owes the man conjugal fidelity .the woman surprised in the act of adultery is punished by death, by drowning. in addition to the act, she can be exonerated either by oath or by an ordeal , that of throwing himself into the river, which, if it finds her immoral, will drown her. if the husband was taken prisoner and if his wife does not have the necessary for the daily life, the woman can leave the house or not keep her body "without being considered adulterous. upon the return of the husband the woman may return home; however, the children will stay with their natural father. a husband who left town, and then his wife entered another house, cannot take back his wife because he despised the town with his departure. the man can divorce his woman anytime: in this case, as we have seen, he is obliged to refund the dowry, and a part of his own property, and if the woman was guilty of separation, she looses the right even on her dowry. at first, the woman could not file for divorce, this was allowed in the era of hamurabi only in certain cases, such as abandonment, unworthy behaviour of the husband and refusal of joint cohabitation (hanga, 1977). if the reasons are justified, the woman is allowed to break off, and if no justifiable reason, she tool legal action against her husband, she will be punished by drowning. marriage is generally monogamous; the husband may have only one wife. the husband may repudiate his wife, if after a certain time of joint cohabitation it turns that she can bear no children. the general formula of repudiation is “i repudiate you” or “you are no longer my wife”. the woman repudiated for sterility, shall receive her dowry and the other right she is entitled to under the law. sometimes, the husband keeps the sterile wife and takes another woman, who shall not have the same legal and social status as his wife, but that of an inferior wife. still, in case of repudiation, she will have the rights of a lawful wife, and the children she will born shall have the capacity of lawful children. sometimes the wife, whether she gas children or not, can give her husband a slave concubine who shall be fully emancipated if she gives birth. she can be brought again to slavery if she pretends to be equal to the lawful wife. accepting the situation above, the husband cannot introduce another wife to his home, even if the concubine is sterile. although the husband has discretionary power in repudiating his wife, he cannot repudiate his wife if she is infirm or suffering from a chronic disease; in this case the husband is allowed to have another wife and the first one can either return to her family, either continue to stay with her husband. the discretionary power of the man in matter of repudiation is sort of sweetened by the rights provided to the repudiated wife, without any fault on her side. if the woman was repudiated for immoral behaviour or bad management of the home, often besides the fact that she looses the rights provided by law for the repudiated wife, she is brought back to slavery in the house of her ex-husband. regarding barriers to marriage we reported hindrance for any citizen to marry a woman dedicated to the temple (god's possession has an exclusive character). another impediment is of a somewhat curious characteristic: if the father-in-law does not allow the engagement for a bad reputation of the suitor, his daughter cannot become his wife. finally, another obstacle is similar to modern law: if a widow with children 111 țuțuianu wants to marry, she can do so only after having the inventory of the children's property, and after with the new husband, she will assume the obligation in writing to preserve their goods until they become major (drimba, 1984). the situation of the child born inside marriage is regulated in several articles by the law of hammurabi. the child whose mother is free, has the capacity of free man, the one born from a slave mother and a free father has the capacity of full freed man upon the death of his father and when he is procreated from slave parents he is also slave. finally, the law takes care of children born from parents who work within the area of prostitution; in this case, if children were raised and educated by an honest family, they cannot ask their return to their natural family. previous to the law of hamurabi, the child could be banished without any formality; the code of hamurabi limits this right only to serious cases and only with the consent of the judge. from this point of view, babylonian legislation is more advanced than the israeli one. the banishment of the son brakes any connection between the one banished and his natural family. adoption of a person stranger to the family is also regulated by law and is known even since the sumerian age. in fact, it can be of two types: adoption of the child of a concubine and adoption of a total stranger. the children of the concubine, receive, by adoption the legal status of lawful children; in other words, the adoption plays the role of a legitimation. in all cases, adoption requires a written document, in case of adoption of the children of the concubine, has an unilateral character, in case of adoption of a stranger, the legal document has the value of a document concluded between the adopting father and the parents of the child adopted. adoption of a stranger can be made when the adopter has no family; however, if he wants to form a family, the law gives him the right to alienate the adopted child with the obligation to give his 1/3 of his real estate fortune. if the adopted child denies his adoptive parents, he is turned into slave, chained and sold, and if the adopted is the son of prostitutes, his tongue is cut off. therefore, adoption creates a connection which cannot be broken as the parents want. still, from some documents it results that by contract, certain provisions allowing an easy termination of adoption. thus, a document explained us: “if the adoptive son tells his mother – you are not my mother – he must leave the house, garden and household tools, and if the adoptive mother talks to her son in the same way – you are not my son he must leave the house, garden....”. in other words it is accepted the possibility of a termination on both sides. in other documents, the possibility of termination of the adoption is given only to the adopting father, not also to the adopted child. we said that any stranger may be adopted; from the documents it results that slaves can also be adopted. the adopted child has the same rights on the fortune of the adopting father as a lawful successor. (provided that adoption had lasted until the death of the adopter). private documents, which were kept, prove other aspects of this institution. thus, if the adopter has no children, often the formula of adoption is thus drafted (he is not the eldest of our children), as the possibility to procreate lawful children shall take the adopted child the prerogatives of first born. in case the adopter adopts the children of his concubine, in the same time, he forbids his lawful children to challenge the capacity and the rights acquired by the adopted one. 4. successions inheritance is divided according to the number of children, girls who received a dowry are excluded from the succession. if the daughter did not receive a dowry, she receives some manly part of the estate (movable) of the father, but not with full ownership , but only in use or her brothers undertake to give her a dowry . if a person 112 civil and criminal rules of the babylonian law has been married several times , children of his successive wives will take equal part to inheritance, from this point of view babylonian law is different from other legislation that grant rights to the children coming from different marriages. a change in this respect and in the neo-babylonian law, where the child born of the first marriage receives 2/3 , and the one from the second marriage one third of the estate of his father. where one of the heirs is a minor, will take over from movables, over his part of the succession, certain values as terhatum for the marriage he will subsequently conclude. distribution of assets is made amicably or in front of a judge, according to the principles stipulated by the law. babylonian law does not admit succession by will, in return, the father may, during his life, dispose of his fortune as he wants, provided that a written document is concluded in front of witnesses and, especially, in front of children. at the beginning, the assets of the family formed an inalienable block which the father had to transfer it intact to his successors upon his death. in the era of the code of hamurabi this situation changed. thus, the father may advantage some of the successors during his life, by the so-called donations between the living. these donations were called nudunnum and could be offered to the wife, daughters or sons. the father is allowed to share the rest of the fortune in equal shares to his sons, with their obligation to give him an allowance. the law also takes into account the advantages the father created for the successors. for example, the wife who received a donation, is excluded from the succession by will, as well as the daughter who received a dowry. moreover, it is pretended that is certain cases, a reserve is guaranteed to the successor. before hamurabi, children could be disinherited, without any justification, being enough if the father and mother said – you are not our son – he had to leave the citadel, but subsequently: the exclusion from succession shall be made only with permission from the justice, in cases accepted as serious. finally, the law establishes certain rights (1/3 of the virile share) for each daughter entrusted to the god mardul, as well as the obligation of a dowry for the daughters born from his concubine. sons born from relations with a concubine shall not have rights to succession unless their father gave them during his life, an adoption document. in the absence of any heir, the succession is different from that of brother's f the deceased, and in their absence, the uncles from the part of the groom. as for the succession of woman, this are performed according to the same principles, first in line are the children, and in their absence, her brothers .we must underline the fact that a married woman, but with no children, shall not be able to dispose of her assets, upon death of the woman, they return to the family of origin. if, however she has children from the marriage, and, subsequently, becomes widow, these rerun to her family of origin. if she has children from different marriage and meantime she becomes widow, she keeps her personal fortune (dowry) and what she received a virile share after the death of the husband. she shall not dispose of these assets, which after her death correspond to her children. if between the mother and children occur misunderstandings, the mother may ask the law to allow her to leave the house of her husband, taking with her dowry, that is her wealth from the succession. she has the absolute right to dispose of the dowry; what is left of the dowry shall be distributed to her children. the successors are obliged, as texts show, to maintain the funerary cult of the deceased. this cult does not represent a burden as heavy as in the ancient roman law or egyptian one. the successor was only obliged to make the libations requested by the ritual and spill oil on the grave of the deceased. from the evolution of the babylonian inheritance law we might conclude that in the era of hamurabi the old genteel conception of the family is 113 țuțuianu replaced with an individual conception. indeed, the idea of preservation of the family's asset, to be transferred to the children, make way for a full liberty of the father. moreover, the privileged situation of the eldest son advantages the idea of equality, which is manifested particularly clear in the matter of succession. 5. criminal law criminal law in the era of hamurabi was a slave law; the revenge of the blood, characteristic of primitive societies is replaced, either by a punishment applied by the bodies of the state, either by a compensation which the criminal shall have to pay to the victim. still, the legislation of hamurabi bears of few sequelae from the reports of primitive society. thus, in case of crimes with unknown author, the law establishes a collective responsibility: the territorial jurisdiction where the crime was committed and the leader of the community are obliged to compensate the victim. still as a genteel reminiscent is also the maintenance of the family responsibility. the sons, daughters of the perpetrator are prosecuted instead of him, principle also known by the ancient israeli law in all its rigor. this responsibility applies in the following cases provided by the code: when a person, hitting a pregnant woman causes abortion and her death, he shall be punished with the death of his own daughter: when an architect built a shaky house which fell and killed the son of the owner, as punishment, the son of the architect shall be killed; when the son of an insolvable debtor, given as slave to the creditor, was killed due to the bad treatment he received, the creditor shall be punished with the death of his own son. as a result of the reports of primitive community, we also notice banishment (excommunication) of the perpetrator from that community (such as in case of incest), as well as the application of the law of retaliation (an eye for an eye, a tooth for a tooth, a bone for a bone). retaliation is allowed only between free citizens, the poorest man and the slave cannot use the law of retaliation towards those located above them. babylonian legislation provides several categories of crimes. thus, are the crimes made: a). against people: murder (punished by death even if caused by negligence or accident); false testimony or complaint(punished by death); b). service crimes: (for ex., if a doctor is unskilled and by this he causes damages to others, his hand is cut off); a judge establishes an unfair decision may be punished with a fine 12 times higher than the value of the damage etc; c). crimes against property: stealing is punished with a fine 30 time the value of the asset; is a person steals during a fire, he is burnt; if a person enters through a wall into somebody else's property, he is hanged in that place; if the slave does not recognize his master, he is killed; 4. crimes against family: adultery is punished by death. is somebody accuses a woman o adultery but fails to prove it, the following test is made: the woman in thrown into water and if the water received her, so she drowns, she is guilty; but if she makes it alive, she is innocent and the accuser, as punishment, is shaved on his head. the punishments provided by the code of hamurabi bear a strong character of class. this also result from the inequality regarding punishments applied for the same crime, in report with the social status of the victim and the guilty. thus, if a man from an upper class had hit in the face another man of the same level, he would had been obliged to pay him one silver mina. but, is somebody had hit the face of a person of an upper level than his, the guilty had received 60 lashes. if a slave had hit the cheek of a freed man, he would have had his ear cut off. if somebody had hit the pregnant daughter of an auilium and as a result, she would suffer an abortion, he would pay 10 silver sikli; if the same thing happened with the daughter of a common man (muschenum), the fine would drop to 5 sikli, and with a slave, 2 silver sikli. if the hits 114 civil and criminal rules of the babylonian law had caused the death of a daughter of an auilum, would have been sentenced to death the daughter of the person who hit; if, as a result of the hit, the daughter of a muschenum died, the business would be reduced to a fine of half a mina. finally, if a slave died due to the hit, the fine would be reduced to one third of a silver mina. the same character of class also results from the punishment established by theft. theft would bring along, the fine for the person who could pay it and the punishment by death for the poor who could not pay the fine for the asset stolen, established at a very high amount. also by death is paid the theft of slaves of hiding a fugitive slave; it is also severely punished the littlest disobedience towards the master. if the slave says to his master: you are not my master, his master shall cut off his ear. from those above mentioned, it results that that babylonian system is remote, priority to support slave organization. in the babylonian law, the trial was performed by certain colleges of judges, composed by 4,6,8, …. members and led by the leaders of regions, leaders of cities, village communities. the judges also have administrative positions. ultimately, the role of judge belongs to the king, who can justify any process and settle it in consequence. no procedural distinction is made between the processes cashed by the victim. as a means of probation were: documents, witnesses, oath. sometimes they used ordeals; hammurabi's code states ordeals in case of adultery of the woman and when someone is accused of witchcraft. to strengthen the power of the court ruling, the parties are required duty to not file a lawsuit for a second time. the defendant or plaintiff must undertake in writing, that requirement. in case of violation of these duties, the offender was punished by the judge. references craiovan, i. (2001), tratat elementar de teoria generală a dreptului, editura all beck. dominte, n. r. (2008), organizarea și funcționarea societăților comerciale, bucurești, editura c.h.beck. dravidians-fichte (1912), encyclopedia of religion and ethics, vol.v, edinburg. drimba, o. (2003) istoria culturii și civilizației, bucurești, editura vestala. georgescu, i. l. (2002), drept comercial român, vol.i, editura all beck. 115 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro particularities of consumer behavior in the cosmetics market eugenia harja “vasile alecsandri” university of bacau eugenia.harja@ub.ro laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract based on some results of a research organized in the county of bacau on consumers of cosmetics, using the questionnaire, this article analyses a number of issues with regard to consumer behavior, namely: cosmetics brand most commonly purchased by consumers, cosmetics category to which are allocated the largest sums of money, the amounts of money that consumers are willing to spend per month to purchase these types of products, the importance of some of the main criteria considered when buying cosmetic products and differences manifested in categories of respondents by a number of variables such as age, sex, marital status, income and living environment. the research was conducted using a sample of 500 respondents non-randomly selected, so that the results presented refer only to the studied sample, being a guide to community from which it was extracted. keywords cosmetics; consumer behavior; brand; product selection criteria; expenses for cosmetics jel classification m31 introduction during march-april 2014, in the county of bacau, we organized a direct research, using the questionnaire, in order to know the particularities of consumer behavior for cosmetics. the research was exploratory, the obtained results being a guide for reference in bacău market, given that the determination of the investigated sample (size and selection process) did not respect the principles of the theory of the survey. some of the objectives pursued through this research and to which we referred in the article were: knowledge of the cosmetics brand acquired by most of shoppers, identifying the categories of cosmetics for which the consumers allocate the largest sums of money, knowledge of the amount of money that a consumer is willing to spend per month to purchase these products, determining the importance of some of the main criteria for assessing the products in purchasing decision-making process, and the extent to which variables such as age, sex, marital status, income and environment influence the issues outlined above. the community studied was the population over 15 years. we used the snowball sampling, the questionnaires being administrated by interviewers. investigated sample of 500 people, represented the different categories of persons in terms of age (except those under 15, these are not undertaken under study), gender, living environment, income or marital status. 188 mailto:eugenia.harja@ub.ro particularities of consumer behavior in the cosmetics market research results referring to cosmetics brand most frequently purchased by investigated persons, of the 500 respondents, 28 did not provide information on this topic (indicated response option "do not know / no answer" in the questionnaire). the results presented below refer only to the 472 respondents who said what brand of cosmetics purchase most often. thus, from this point of view, avon ranks first with a share of over 60% of those who said they most often purchase this brand. the second place, but at a considerable distance (15% of total respondents) stands oriflame, a brand comparable to first one in terms of specific distribution system (through direct sales), followed by nivea, l'oreal, adidas and farmec. 3.6% of respondents stated that acquires most common "other brand". for the category "other brand" respondents indicated: puma (0.6% of consumers) and faberlic, yves rocher, dolce & gabana, amway, chanel, christian dior, fa, gerocossen, gucci, no.7., versace, each of these being indicated by less than 0.5% of consumers. for the categories of persons by various socio-economic and demographic criteria, we found a number of differences concerning cosmetic brand most often purchased as follows: • by age groups, avon is preferred to a greater extent by people over 20 years (and especially over 30 years), while nivea and adidas are preferred to a greater extent by the very young (15-20 years) compared with other age groups. l'oreal and oriflame brands were only given by the category over 20 years and farmec by those over 30; • by gender, avon products are preferred to a greater extent by women than men, while a higher proportion of men (compared to women) use most often: oriflame, nivea, l'oreal, adidas; • depending on civil status, people living together prefer in greater extent avon to those who live alone, while nivea is preferred to a greater extent by those who live alone compared to those who live together; • in terms of income, there is not an obvious influence on preferences, i.e. there is no guidance showing greater or lesser extent in buying certain brands with revenue growth; • by residence, consumers show greater orientation towards avon, oriflame and adidas in urban areas, while l'oreal and nivea are preferred by those in rural areas (compared to people in urban areas). oriflame, 15.0% avon, 60.8% nivea, 7.8% l'oreal, 3.2% adidas, 2.8% farmec, 2.1% london, 1.1% maybelline, 1.9% other brand, 3.6% zara, 0.8% metropolitan, 0.8% figure 1 structure of respondents* depending on the brand of cosmetics most frequently purchased * were exempted respondents who did not answer 189 harja, țimiraș table 1 structure of respondents * depending on the brand of cosmetics most frequently purchased by age, sex, marital status, income and living environment (%) brand age gender marital status 15 -2 0 ye ar s ol d 21 -3 0 ye ar s ol d 31 -4 0 ye ar s ol d 41 -5 0 ye ar s ol d o ve r 5 1 ye ar s ol d fe m al es m al es pe rs on s liv in g al on e pe op le liv in g to ge th er avon 27 41 67 63 55 81 46 51 64 oriflame 0 22 17 14 15 6 22 14 15 nivea 36 7 5 8 9 5 10 11 7 l'oreal 0 7 3 2 6 2 4 4 3 adidas 9 4 2 2 3 0 5 4 2 farmec 0 0 2 2 2 2 2 2 2 other brand 27 19 3 8 11 5 11 15 6 total 100 100 100 100 100 100 100 100 100 table 1 (continuation) brand the average monthly income of the household (average per person) residence un de r 5 00 le i be tw ee n 50 0 an d 10 00 le i be tw ee n 10 00 a nd 15 00 le i be tw ee n 15 00 a nd 20 00 le i be tw ee n 20 00 a nd 25 00 le i ov er 2 50 0 le i u rb an r ur al avon 61 56 54 52 54 68 67 59 oriflame 14 21 14 9 15 15 17 13 nivea 11 10 4 4 8 8 6 8 l'oreal 2 4 11 13 6 0 1 3 adidas 2 4 7 0 4 2 3 1 farmec 5 0 0 0 2 2 1 2 other brand 7 4 11 22 11 5 5 14 total 100 100 100 100 100 100 100 100 * were exempted respondents who did not answer cosmetics for which investigated persons have allocated the most money were body care products (soaps, shower gels, deodorants, lotions, etc.), followed by perfumes and makeup. the smallest amount of money was allocated for skin care products (creams, cleansers, masks, shaving products, etc.) and hair care products (shampoo, conditioner, treatment, etc.). information presented refer exclusively to the 434 respondents who provided information on this issue. by socio-economic and demographic criteria, there is real differences between respondents in terms of product categories for which they are allocated the largest amount of money, namely: • by age groups, it is observed that most young allocate large sums of money especially for body or hair care products, while people over 50 years for perfumes. with age there is a shift in needs so that more people allocate the largest sums of money for skin care products and fragrances at the expense of hair and body care. to makeup products are allocated the largest sums of money by people of 31-40 years; 190 particularities of consumer behavior in the cosmetics market • by gender, more women (compared to men) allocate the largest amount of money to perfumes, followed by makeup products, while more men (than women) allocate the largest sums of money for skin, hair and body care; • depending on civil status, most people who live alone allocates the largest amount of money to perfumes, and most of the people living along allocate large sums to body care products; • by income categories, it is noted that for perfume are allocated large sums of money especially by high income categories, while most people with modest incomes allocate the largest amount of money for body care products. there is an orientation following the increasing of incomes, more and more people investing in skin care products and perfumes (the largest sums of money are allocated to these categories), to the detriment of products for hair and body; • most of the people in urban areas allocate money for perfumes, while in rural areas, body care products are preferred. body care products (soaps, shower gels, deodorants, lotions etc.), 33.4% skin-care products (creams, cleansers, masks, shaving products etc.), 10.4% make-up, 15.7% hair care products (shampoo, conditioner, treatment etc.), 11.1% perfumes, 29.5% figure 2 structure of respondents* depending on the products to which are allocated the largest sums of money * were exempted respondents who did not answer table 2 structure of respondents * depending on the products to which are allocated the largest sums of money by age, sex, marital status, income and living environment (%) product category age gender marital status 15 -2 0 ye ar s ol d 21 -3 0 ye ar s ol d 31 -4 0 ye ar s ol d 41 -5 0 ye ar s ol d o ve r 5 1 ye ar s ol d fe m al es m al es pe rs on s liv in g al on e pe op le li vi ng to ge th er skin-care products (creams, cleansers, masks, shaving products etc.) 3 4 13 10 16 5 17 9 11 make-up 3 6 35 11 13 29 0 27 10 perfumes 0 4 31 31 56 32 27 39 25 hair care products (shampoo, conditioner, treatment etc.) 29 40 10 3 6 5 18 9 12 body care products (soaps, shower gels, deodorants, lotions etc.) 65 46 13 46 9 29 38 16 41 total respondents 100 100 100 100 100 100 100 100 100 191 harja, țimiraș table 2 (continuation) product category the average monthly income of the household (average per person) residence un de r 5 00 le i be tw ee n 50 0 an d 10 00 le i be tw ee n 10 00 a nd 15 00 le i be tw ee n 15 00 a nd 20 00 le i be tw ee n 20 00 a nd 25 00 le i ov er 2 50 0 le i u rb an r ur al skin-care products (creams, cleansers, masks, shaving products, etc.) 3 6 17 16 14 15 16 4 make-up 22 6 13 31 5 10 19 12 perfumes 7 34 23 31 74 65 44 15 hair care products (shampoo, conditioner, treatment, etc.) 21 17 8 1 0 0 5 17 body care products (soaps, shower gels, deodorants, lotions, etc.) 48 38 38 19 7 10 15 52 total respondents 100 100 100 100 100 100 100 100 * were exempted respondents who did not answer regarding the amount of money consumers are willing to spend monthly for the purchase of cosmetics, of the 498 respondents who provided information on this subject, most of them 47% indicated a value between 50 and 100 lei. about 28% are willing to spend less than 50 ron and 13% between 100 and 150 lei. the differences are observed by categories of respondents, as follows: • with age consumers are willing to spend more money to cosmetics, most until 40 years (50%) indicating the range of "less than 50 lei", while this range is indicated by under 15 % of those over 40 years; • by gender, we found slight differences, women being decided in a greater extent, to allocate more money to cosmetics; • depending on civil status, most people living together (54%) are willing to spend between 50 and 100 lei per month for the purchase of cosmetics. the category of those living alone show a greater heterogeneity in terms of amounts that they are willing to allocate to cosmetic products during a month; • as expected, higher income consumers are willing to spend more money to cosmetics, compared to those with low incomes; • people in urban areas are also willing to allocate more money to cosmetics compared to those in rural areas. between 100 and 150 lei, 13.2% between 50 and 100 lei, 47.0% less than 50 lei, 27.8% between 150 and 200 lei, 5.0% between 200 and 300 lei, 2.8% over 300 lei, 3.8% figure 3 structure of respondents* according to the amount of money they are willing to spend monthly for the purchase of cosmetics * were exempted respondents who did not answer 192 particularities of consumer behavior in the cosmetics market table 3 structure of respondents* according to the amount of money they are willing to spend per month to purchase cosmetics by age, gender, marital status, income and living environment (%) monthly allowance age gender marital status 15 -2 0 ye ar s ol d 21 -3 0 ye ar s ol d 31 -4 0 ye ar s ol d 41 -5 0 ye ar s ol d o ve r 5 1 ye ar s ol d fe m al es m al es pe rs on s liv in g al on e pe op le li vi ng to ge th er less than 50 lei 51 55 50 11 14 25 31 30 24 between 50 and 100 lei 34 33 37 57 49 47 48 34 54 between 100 and 150 lei 14 8 7 17 17 16 10 17 11 between 150 and 200 lei 0 4 3 7 4 5 5 7 4 between 200 and 300 lei 0 0 1 1 13 2 4 5 2 over 300 lei 0 0 2 6 4 5 2 7 2 total respondents 100 100 100 100 100 100 100 100 100 table 3 (continuation) monthly allowance the average monthly income of the household (average per person) residence un de r 5 00 le i be tw ee n 50 0 an d 10 00 le i be tw ee n 10 00 an d 15 00 le i be tw ee n 15 00 an d 20 00 le i be tw ee n 20 00 an d 25 00 le i ov er 2 50 0 le i u rb an r ur al less than 50 lei 42 33 23 13 16 8 22 35 between 50 and 100 lei 30 36 69 76 33 48 53 42 between 100 and 150 lei 16 10 4 4 36 36 12 14 between 150 and 200 lei 5 7 4 3 2 8 5 5 between 200 and 300 lei 3 7 1 0 2 0 3 3 over 300 lei 4 6 0 3 11 0 6 1 total respondents 100 100 100 100 100 100 100 100 * were exempted respondents who did not answer referring to the importance of some of the main criteria for selecting cosmetics (shown in table 4), we note that, firstly, consumers appreciate the best quality-price options, followed by convenience in purchasing products, the nature of the ingredients (natural) and finally, brand awareness. note that all 500 respondents expressed their views on this issue. significant differences are recorded in the categories of persons by considered socioeconomic and demographic criteria, namely: • by age groups, the importance of all 4 criteria in the purchase of cosmetics is higher for older age categories. the biggest differences between young and old is registered in terms of the importance attributed to convenience in acquiring products; • by gender, differences are found in terms of the importance attributed to the acquisition comfort and used ingredients. thus, if more men appreciate the convenience of buying process, women are more interested in natural ingredients; 193 harja, țimiraș • depending on civil status, the importance attributed to the acquisition comfort is different, being more appreciated by those who live together. a similar situation is seen for the use of natural ingredients criterion, but differences between categories of respondents being smaller; • in relation to household income, the biggest difference in terms of the importance given to the process of buying cosmetic products is registered for the use of natural ingredients and brand awareness, followed by convenience in purchasing, all being considered important by those with higher incomes; • by residence, a greater importance in the purchase decision is given in urban areas compared to rural area to brand awareness and use of natural ingredients. on the other hand, compared to those in urban areas, rural respondents indicated that the most important are best quality-price option and convenience in the purchase. table 4 distribution of respondents according to the importance given to some of the main selection criteria for cosmetic products on a scale from 5 (very important) to 1 (unimportant) and calculated average score for each criterion criteria awarded score average score 5 4 3 2 1 best quality-price option 325 168 7 4.6 brand awareness 114 98 114 105 69 3.2 convenience in the purchase 228 105 66 72 29 3.9 use of natural ingredients 158 159 74 84 25 3.7 table 5 average scores calculated on a scale from 5 (very important) to 1 (unimportant) of some of the main criteria for selecting cosmetics, depending on the focus of consumer in the process of buying cosmetic products by age, sex, marital status, income and living environment criteria age gender marital status 15 -2 0 ye ar s ol d 21 -3 0 ye ar s ol d 31 -4 0 ye ar s ol d 41 -5 0 ye ar s ol d o ve r 5 1 ye ar s ol d fe m al es m al es pe rs on s liv in g al on e pe op le li vi ng to ge th er best quality-price option 3.9 4.5 4.7 4.6 4.8 4.8 4.4 4.6 4.6 brand awareness 2.1 1.9 2.7 3.9 3.5 3.1 3.3 3.1 3.3 convenience in the purchase 2.7 2.9 4.4 4 4.3 3.5 4.3 3.3 4.2 use of natural ingredients 2.8 2.7 3.3 4.2 4.1 4 3.3 3.4 3.9 194 particularities of consumer behavior in the cosmetics market table 5 (continuation) criteria the average monthly income of the household (average per person) residence un de r 5 00 le i be tw ee n 50 0 an d 10 00 le i be tw ee n 10 00 an d 15 00 le i be tw ee n 15 00 an d 20 00 le i be tw ee n 20 00 an d 25 00 le i ov er 2 50 0 le i u rb an r ur al best quality-price option 4.5 4.1 4.9 4.8 4.7 4.5 4.3 4.9 brand awareness 2.7 2.5 3.4 3.9 4.7 4.6 3.6 2.8 convenience in the purchase 3.8 3.4 3.8 4.1 4.5 4.5 3.7 4.1 use of natural ingredients 2.8 3.3 3.8 4.7 4.7 4.8 4.1 3.3 conclusions in conclusion, based on the results of exploratory research undertaken using a sample of 500 individuals, it was revealed that the most commonly purchased brand of cosmetics is avon (over 60% of persons who provided information on this subject), followed by oriflame (15%). cosmetics for which investigated persons allocated the most money are body care products (soaps, shower gels, deodorants, lotions, etc.), followed by perfumes and makeup. nearly half of respondents (47%) are willing to monthly spend for cosmetics an amount between 50 and 100 lei, around 28% under 50 lei and 13% between 100 and 150 lei. the criteria rated as the most important in the process of buying cosmetic products are: best quality-price ratio, followed by convenience in purchasing products. references: aaker, david a., v. kumar, george s. day (1998), marketing research, 6th edition, john wiley & sons, inc., new york, ş.a. cătoiu, iacob, nicolae teodorescu (2003), comportamentul consumatorului, editura uranus, bucureşti. cătoiu, iacob (coordonator) (2002), cercetări de marketing, editura uranus, bucureşti. harja, eugenia, laura c. ţimiraş. (2010), metode statistice utilizate în cercetarea de marketing, editura alma mater, bacău. ţimiraş, c. laura (2007), tendinţe în evoluţia marketingului agroalimentar în contextul extinderii uniunii europene, editura edusoft, bacău. 195 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro project manager skills, risk management tools vlăduț severian iacob ștefan cel mare university severianvladutiacob@yahoo.com abstract although the projects are different from each other there are many common things that contribute to their success. looked overall, the success of a project is the result of a multitude of factors. this person is considered the "engine" of the project. the man who makes the action set for the achievement of project objectives to be brought to an end. the project manager must have the technical knowledge and economic diverse. he should be able to choose a team and lead. you must be tenacious, combative, to know how to communicate both within the team and beyond. in a word, the project manager must have an impressive stock of knowledge, skills and abilities and appreciate as peter drucker, to "exist for the organization. to be its servant. any management who forget this will only cause damage to the organization. "this study will focus on highlighting the skills of the project manager and their role in managing difficult situations or risk. keywords project manager skills; risk management; project; knowledge; abilities; difficult situations jel classification m10 introduction the success of a project manager is mainly related to abilities and skills that he has, whether some are native or otherwise acquired during periods of practical training or personal experience. shaping the personality of such a leader is a process of continuous accumulation, knowing that there is no individual who hold the full set of theoretical and practical information necessary to carry some specific tasks. the presentation of these issues is not mandatory in new things. these findings are the result of multiple proven times and recorded in various studies by many authors as we shall see later in this document. the presentation of these skills, according to various authors leads to the recognition of the link between the project manager skills and successfully resolving situations of risk, and of course, the success of the project. 1. the outline of a successful project human activities and economic entities tend to focus on completing an objective or a group of complementary objectives to cover certain needs of the individuals. whether it's planning an interior or public space or organize a party, or the systematic construction of a house or road in a locality, or any other actions for the realization of an idea, you can refer to the concept project. to achieve any of the stated ideas or any other ideas initiators in their approach, will seek financial, material will consume their own or other people's work completion foreshadowing in some time. as such, a project, the actual meaning of the word is an "action taken to achieve a thing without the guarantee of success" (nodex, 2002). 242 project manager skills, risk management tools in connection with the term "project", but mostly with the project management literature many authors agree (rutman & mowbray, 1983; conrad &hedin, 1987; valadez & bamberger, 1991; măţăuan, 1999). as project management has been thoroughly studied and analyzed in order to improve its continuous the panoply of authors who have shaped the definition of the term has been enriched with other authors (munns & bjeirmi, 1996; ciobanu, 2002; turner, & simister, 2004; bоrgăoanu, 2005; javid, 2009; căprescu, 2010; bulat, 2011; opran, et al., 2012). typically, these definitions are referring to "specific elements: objective data specifically allocated resources, planned activities, and dedicated team period (pascu, 2005). the successful implementation of a project has different meanings from person to person because each developed different expectations. for example, those who are directly involved in the project see the light of its success in framing budgets, quality and performance achieved, whereas for those who look outside the project, meaning success usually comes down to assessing the usefulness and progress. in relation to the success of a project, an interesting statement is made by morris and hugh (1986). according to them, the success of a project depends on realistic objectives aiming customer satisfaction and stakeholders, profitability and value of the project. a reference work presenting the success of projects in a literature review is made by prabhakar (2008). in addition to this work, to highlight the relationship between project success and project leader skills it is susceptible to bring into question the work of kerzner (2003). he identified a number of critical factors for successful projects including those related to the project manager, the criteria that have been selected, organizational adaptability, leadership, commitment to planning and control. based on these assumptions it can shed light on the need to strengthen the relations between the project team, cohesion and collaboration within it, by enhancing management level. leading a welded team, a leader can easily handle the entire project towards employment in the constraints of time, cost and quality. therefore, the presence of the project manager, as an important part in the project (systematic and direct intervention in different phases) entitles him to award the project outcome regardless its success. therefore, a successful project manager must possess the skills and competencies that enable him to manage and complete the project with professionalism and in a successful way. 2. skills and competences of the project manager a person cannot be a project manager if not nominated for this position and if there is a project initiated. in these circumstances the project manager appears to be the major resource inputs category along with the rest of the team and of the other types of material, financial. in the position of leader that person "assume responsibility for the planning, implementation and completion of the project," says meredith & mantel (2009), indicating the six areas of competence that must evolve a project manager "team building, organization, communication, leadership, adaptability and technological skills. " jawid (2009) delimitation of previous records while representing katz (1955, 1993) on effective manager skills or qualifications of the individual (human skills), conceptual (conceptual skills) and technical (technical skills). about this short reference will be made below. human skills of the manager's ability to work "side by side" with other team members to mobilize and commit-instill and support. this ability is related to adaptability and communication skills. also included in the category of human prowess can be will, flexibility, patience, persuasion, delegation, balance, realism, dedication, generosity, 243 iacob stability, speed-thinking discipline. conceptual qualification is related to the systemic perception of manager. it would be about how it detects changes in the effects of processes occurring within projects and interdependence of processes. in the conceptual qualifications are included organizational skills (vision, strategy, planning, guidance, coordination, provision, forecasting, etc.). the technical qualifications make the manager able of using knowledge, tools and specialized techniques. through this type of qualification the manager must demonstrate varied technical knowledge. he also needs to have knowledge about the project in general, to know which are the project phases and the major processes that he leads, to understand the technology. other technical skills may be related to the use of computers and specialized software programming or tracking activities and control. for this scientific endeavor is interesting to note the entries made by anderson (1992) in which it accepts the project manager must be able to identify problems and find a good solution to be able to resolve conflicts. taking into account the views expressed by the authors cited, as well as those of other authors who have addressed this area and which have been studied in the preparation of this material, it is necessary to agree on the existence of a correspondence between a set of skills and a good project manager. the most common opinion (mironescu, 2013), refers to the importance of the accumulation of new skills such as communication and decision, planning, organizing, monitoring, control and evaluation team. a second set of items aimed expertise multidisciplinary, giving the manager a broader view of the whole project and able to react quickly in the event of certain disturbances inside or outside their processes. 3. project risks and their management the existence of individuals and of any activity is accompanied by inherent risks that take particular forms depending on the size, type and conduct. effects of these risks are direct and powerful are reflected upon these activities. although the risk is not perceived to be destructive the events classified as generally risk are adverse. they cannot be totally eliminated, but the establishment and enforcement of measures can reduce more within any organization and / or project it is natural to make substantial efforts to identify sources of risk and to establish procedures to allow keeping risks under control. it is the prerogative of risk management discipline that has developed rapidly in recent years, both at conceptual, theoretical and practical level. failure to give due importance to the effects of risks could lead to material financial loss record and unfortunately human. the evolution of today's society makes possible use of the information technology risk management enabling decision makers to have real-time information and to obtain a minimization of the negative effects of risk. existence of a risk has a positive effect, i.e. to generate progress. thus, by stating that "a higher risk may lead to a higher gain" opran (2012), brings into question the fact that successful organizational structures that structure their work can invest in projects with higher certainty in market conditions unpredictable precisely why they have the ability to assess and minimize risks. in the projects, as in any organization, the risks may be internal or external. generally internal risks are relatively easier to manage. some of these are related to the ambiguity of objectives and priorities, the incoherence of the specifications and documentation, the imprecision of defining specific responsibilities or activities within the project. others refer to the technical and technological risks, i.e. the differences between old technologies and new discoveries that benefit from the lack of training and vision in the uptake and application of information technology innovations. an important place in the category of internal risks is those related to 244 project manager skills, risk management tools human resources. primarily the discussion is about the education of persons involved in project and one can talk about mindset, competence / incompetence, abuse of power, qualification / disqualification. mismanagement of logistics (communication inside and outside), material and financial resources (price risk, currency risk, etc.) can put the organization in the face of other internal risks. compared to internal risks, external ones are not so easy to manage as a result of political actions (changes of regimes / governance, lack of coherent strategy), economic (crisis, embargoes, allocations of gdp) legal (common legislative changes), environmental (climatic conditions: extreme heat, cold, earthquakes, floods), regulatory (authorizations, remittances) community (interruption in the supply of services: water, heat), social (social movements). the success of a project means to overcome any difficult situations or risks during this phase. responsibility of good finalization falls in account of risk management defined by barsan & smith (2003) "the systematic identification, analysis and response to the potential risk of a project." in the agreement with them is stan (2005) as well as opran (2012), which consider risk management as a way "to manage uncertain events success." taking these ideas iacob (2013), presents the risk management as a "structured and formal approach, focused on the necessary steps and actions planned to determine and control the risks, keeping them to an acceptable level." as a continuous process of planning, risk management will help the project manager to overcome the adverse events and maximize those of positive events. it is especially effective as the earlier triggers, as close to the initiation of the project. in risk management, claims opran (2012), four principles must be observed: a) a project cannot accept risks unrelated to the project, b) decisions on the risks must be taken at the appropriate levels, c) accept risks when earnings are higher than costs d) project risk management is integrated into the general project management process. to be effective in risk management proceed primarily to assessment of risk (risk factors are sought) followed by design and planning responses (their priority is building a hierarchy and response strategy). implementation of such a strategy is followed by a systematic monitoring risk within the department. such a component is specific to the general organizational structure of firms being led by a risk manager. 4. risk manager and his attitudes because there is no organization / project that does not face a risk, those who are in a position to coordinate such a project might differ in their opinions of risk depending on education, their culture, personality development. whilst having as support such an argument, opran (2012) argues that attitudes towards risk as well as its perception by individuals, is dependent on variable factors such as emotions, the presentation of reality, humor, etc. it is appropriate that the risk manager has a multidisciplinary training, as well as a varied experience and to be in trend with the developments of the project activity. he must have a strategic vision of how to fight and / or risk mitigation. where there is no specialized department or specialist employee for such activity, the risk management is the responsibility of the general manager of the company / project. studies performed by different authors on managerial behavior, allowed the construction of patterns in the approach to risk. in this context there are leaders who avoid taking responsibility by delegating team members and third parties. there are managers who appreciate the risks as controllable elements, aspect they do not take into account the potential uncertainty and therefore assumes no responsibility. it is interesting to discuss this and other types of managerial attitudes, which, accordingly to some of cited authors, are considered unconventional classical theory of risk: low credibility in probabilistic estimates the importance of managerial 245 iacob preferences differentiated risk taking and risk taking by managers. by assuming the managerial decisions, there are highlighted several aspects to consider in: its own personality, confidence in the importance of probabilistic estimates, assuming responsibility for risk. conclusions completion of this study will familiarize readers with some concepts of project, risk and managerial skills. however, the purpose of the work was to demonstrate that there is an intense connection between skills and competencies of a project manager in risk management. assuming risks and the use of modern theories on the managerial decision-making is basically the key to success of any project, but for this, the most important resource of the project the manager must acquire various skills and competencies and experience. references anderson, s. d. (1992), project quality and project managers, international journal of project management, elsevier. bârsan, n., popescu, i. (2003), managementul riscului. concepte, metode, aplicații, editura universităţii „transilvania” din braşov, available on http://file.ucdc.ro/cursuri/f_2_m41_modelarea_deciziei_economice_barsan_ pipu_nicolae.pdf. bulat, v. (2011), cum scriu un proiect? ghid de reguli de bază de scriere a unui proiect, chișinău, available on www.serviciilocale.md/download.php?file. bоrgăoanu, a. (2005), managementul proiectelor, bucureşti, editura economica. căprescu, m. (2010), teoria curricumului, available on http://www.svedu.ro/curs/tc/c9.html ciobanu, r.m. (2002), managementul proiectelor, iaşi, ed. gh. asachi. conrad, d. hedin, d. (1987), youth service: a guidebook for developing and operating effective programs, washington, dc: independent sector. farcaș, e. (2010), orice firma are nevoie de un manager de proiect, available on http://www.romanialibera.ro/bani-afaceri/angajari/orice-firma-are-nevoie-deun-manager-de-proiect-206780.html. fundația fiman, (1993), managementul proiectelor în ţările în curs de dezvoltare, bucureşti, ed. all. iacob, v.s. (2013), strategii de promovare a proiectelor europene, note de curs usv. available on seap.usv.ro. javid a.s. (2009), project manager skills necessary for project success, available on available on http://faculty.kfupm.edu.sa/cem/soliman/cem520/cem520samplepresentationsofstudentspapers/cem520termpaperpresentattionjavid.p df. katz, l.r. (1955), skills of an effective administrator, harvard business review, available on http://www.studymode.com/essays/robert-katz-skills-of-aneffective-1007858.html katz, l.r. (1993), skills of an effective administrator, harvard business school press. kerzner, h. (2003), project management: a systems approach to planning, scheduling, and controlling, available on http://bookos.org/g/ harold%20kerzner, măţăuan, g. (1999), evaluarea programelor sociale, ed. expert. 246 http://file.ucdc.ro/cursuri/f_2_m41_modelarea_deciziei_economice_barsan_pipu_nicolae.pdf http://file.ucdc.ro/cursuri/f_2_m41_modelarea_deciziei_economice_barsan_pipu_nicolae.pdf http://www.svedu.ro/curs/tc/c9.html project manager skills, risk management tools meredith j.r. & mantel, j.s. (2009), project manager, a managerial approach, john wiley & sons, inc, available on http://allearth.files.wordpress.com /2012/06/mobook9377.pdf mironescu, r. (2013), elemente fundamentale de management, editura alma mater, vasile alecsandri university, bacau. morris, p.w.g., hugh, g.h. (1986), preconditions of success and failure in major projects templeton college, the oxford centre for management studies, kinnington oxford, technical paper no. 3. munns a. k., bjeirmi, b.f. (1996), the role of project management in achieving project success” international journal of project management, elsevier science, 14(2). opran, c., stan, s., spânu, p. (2012), managementul riscului în proiectele europene, bucureşti, available on comunicare.ro/cursuri/u3/managementul proiectelor. pdf. pascu, r.v. (2005), introducere în managentul proiectelor. sibiu, available on ccimn.ulbsibiu.ro/.../carti/introducere_in_managementul_proiectelor.pdf. prabhakar, p. (2008) what is project success: a literature review, international journal of business and management, september, 3(9). rutman, l., mowbray g. (1983), understanding program evaluation, beverly hiss/london/new delhi: sage publications. turner, j.r., simister, s.j. (2004), manual gower de management de proiect, editura codecs. valadez, j.j., bamberger, m. (1994), monitoring and evaluating social programs in developing countries, washington, d.c., edi of the world bank, available on http://www.pol.ulaval.ca/perfeval/upload/publication_192.pdf. 247 microsoft word apostoaie constantin marius_eng.doc clarifications and proposals for improvement in romanian accounting regulations on profit distribution / cover loss and presentation of information appropriate aristiţa rotilă, university “vasile alecsandri” of bacău, românia abstract starting from the analysis of accounting regulations in compliance with european directives applicable to the different categories of entities, as well as from the findings of a study we carried out concerning the financial statements of certain economic agents, in this paper we intend to signal some aspects which, in our opinion, require clarifications, and to launch some proposals leading to the improvement of romanian accounting regulations, even though these will still be applied over a period of time. key-words net profit, loss, profit distribution, loss covering, employees’ profit sharing cod jel: m41 by means of the study we carried out we observed a series of inconsistencies, ambiguities or contradictions in the accounting regulations applicable to the different types of entities, such as, among others, aspects concerning profit distribution/ loss covering and the presentation of corresponding information in the financial statements of economic agents. therefore, in our view, we should clarify, among other things, some aspects concerning: the moment of registration in accounting of net profit distribution; the registration of employees’ profit sharing, and the presentation of corresponding information; the presentation of the proposal for loss covering. concerning the moment of registration of profit distribution in accounting: in financial year n or n+1? both in accounting law no. 82/1991, republished in 2008 (art. 19, par. 3), and in accounting regulations applicable to economic agents approved by ompf no. 3055/20091 (item 248, par. 4), it is stipulated that “the distribution of profit is registered in accounting on destinations after the approval of the annual financial statements”. similarly, accounting regulations approved by ompf no. 3055/2009 (item 248, par. 5) stipulated that, for sums representing legal reserve constituted from the profit of the current financial year on the basis of legal regulations, the registration of profit distribution in accounting is carried out in the current financial year (therefore, not in the next one, after its approval in the general assembly). for a start, we observe that, by this stipulation, the regulations come against the accounting law, which is very clear and leaves no room for exceptions. on the other hand, should we thus understand that, for such destinations of the profit, the approval of the general assembly is no longer needed? the answer cannot be a positive one 1 ompf no. 3055/ 2009 for the approval of accounting regulations in compliance with european directives, published in official monitor no. 766/2009. studies and scientific researches economic edition, no. 15, 2010 187 if we take into consideration that, in the exemplifying model of note 3 profit distribution, the legal reserve (one based on legal regulations) appears as one of the destinations where the profit is due for distribution (distributable net profit) and so, the general assembly’s approval is also necessary for this destination. we might think that, as long as it is a reserve which must necessarily be constituted by any commercial company, the approval of the general assembly would not be necessary. but for what value is its formation compulsory since the law on the basis of which it is constituted2 establishes some minimal limits, such as: “a least 5% from the company’s profit” until it reaches “a minimum of a fifth of the share capital”? the registration of profit distribution for the legal reserve in the financial statements of the current financial year has, in our opinion, no justification except for satisfying fiscal necessities (so that the entity could be able to benefit from this fiscal deduction). it is well-known the fact that the legal reserve represents, to a certain extent, a fiscal deduction: “the legal reserve is limited to a 5% deductible quota, until it reaches a fifth of the share capital subscribed and paid-in (…)”3. therefore, the above-mentioned percentages, minimal limits according to the commercial companies’ law, represent maximal limits from a fiscal point of view. it is expected that, from fiscal reasons, at least until the legal reserve reaches that 20% of the share capital, the entities should not distribute profit for setting up the legal reserve over the limit of fiscal deductibility (5%). once the limit of 20% is reached, it is left at the company’s choice to make up legal reserves of greater dimensions, without benefiting from fiscal deductibility. at the same time, if the legal reserve was used for covering losses, the subsequent reconstitution of the reserve is no longer deductible at the calculation of chargeable profit. so, the fiscal reason would not be available either for the argument supporting the registration of this distribution before the general assembly. as a consequence, in our opinion, from an accounting viewpoint, to this profit distribution we should apply the same treatment as in the case of profit distribution for “other reserves” and, as a result, the registration in accounting should be done in the next financial year, after the general assembly’s approval of the profit distribution. under these circumstances, we question the usefulness of account 129 profit distribution. in our opinion, this could be eliminated from the chart of accounts, according to execution regulations established by omef no. 3005/2009, this account having only the role to show the “reserves constituted, in agreement with the law, from the profit made in the current financial year”4. the fact that for a part of the profit’s destinations the regulator allows the registration in accounting of profit distribution at 31.12.n (and, consequently, the presentation of information in the balance sheet corresponding to financial year n), and for other destinations the presentation in accounting is carried out after the approval of the financial statements related to financial year n, so in financial year n+1, causes confusion for the one preparing the financial statements when presenting the information concerning the profit’s destinations, and he feels puzzled by the term “distributable net profit”, “undistributed profit”, and the exemplifying model of the explanatory note profit distribution (note 3) does not achieve the goal for which it was created. data related to the registration in accounting and the presentation of information on employees’ profit sharing another problem which arises concerning the distribution of profit is related to the part which is due for distribution as incentives representing the employees’ share of the profit. in 2 commercial companies’ law no. 31/1990, art. 183. par. 1. 3 tax code, art. 22, par. (1), item a). 4 besides the legal reserves, above mentioned, it is possible that, in some cases, for some entities, other reserves based on legal regulations might be constituted. studies and scientific researches economic edition, no. 15, 2010 188 the case of autonomous administration, national companies and companies with integral or majority state capital, by means of specific accounting regulations there are indications to elaborate provisions with this aim5. employees’ profit sharing represents one of the destinations at which, referring to the entities above mentioned, the accounting profit is distributed after deducing the charge on profit6 (so, the net profit). where exactly should we present, in the financial statements, such a distribution of profit? as long as the registration in accounting is done by making provisions, such values must be presented in note 2 provisions. on the other hand, as long as it represents a distribution from the net profit, then it should be presented in note 3 profit distribution. these are the reasons why, in practice, the ones preparing financial statements for some entities, being confused, present the distributed sums for employees’ participation both in note 2 and in note 3. but, in order to present this information in note 3, they engage in bringing back together the net profit with the value distributed at this destination. as a consequence, there is a discrepancy between the net profit for which the problem of distribution arises (note 3) and the net profit presented in the balance sheet and in the profit and loss account. taking into consideration the data presented above, our opinion is that employees’ profit sharing, as a destination of net profit, should be reflected in accounting as any other profit distribution, and not by constituting a provision. even if, at first sight, we might consider that all the conditions for recognizing a provision are met, the current obligation (legal or implicit) of the enterprise has a clear covering source, it is aimed at the net profit, and should not affect the enterprise’s expenses. it is as if trying to constitute provisions for dividends. another argument to support our opinion is the necessity of ensuring constancy in presenting the information in different documents which are useful, among other things, for the analysis of economic-financial indicators. in the revenue and expense budgets, documents in which these entities engaged themselves and established their obligation to take part in the profit7, the employees’ profit sharing does not appear as a part of the expenses, but represents one of the profit’s destinations. on the other hand, by the alterations of the accounting regulations applicable to the economic agents starting with 01 january 2010, they were supplemented with aspects concerning the reflection in accounting and the presentation of incentives in financial statements representing the employees’ profit sharing given according to the law. therefore, complying with accounting regulations applicable to economic agents (item 191, par. 2 and 3), in the financial statements of the financial year for which incentives are proposed, as representing the employees’ profit sharing, their counter value is reflected under the form of a provision, the cost resulting from the employee’s service, and the provision is due to be mentioned in revenues in the financial year when such incentives are given. the recognition 5 see the methodology for presenting distributed profit in accounting, on destinations stipulated in art. 1, par. (1) in go no. 64/2001, concerning the distribution of profit in national companies, national corporations and commercial companies with integral or majority state capital, as well as in autonomous administrations, approved with amendments by law no. 76/2001, with subsequent amendments, methodology approved by ompf no. 128/2005 concerning some accounting regulations for economic agents (item ii in the annex). 6 see go no. 64/2001, art. 1, par.1, letter. e. 7 art. 1, par. 1, letter e, in go no. 64/2001, modified by go no. 61/2004 approved by law no. 414/2004, stipluates that „national companies, national corporations and commercial companies with integral or majority state capital, as well as autonomous administrations which engaged themselves and established their obligation to take part in the profit, as a result of their employees’ services for them, can offer these rights within the limit of 10% from the net profit, but not more than the equivalent of a medium monthly salary attained at the level of the economic agent, in the financial period which serves as a reference”. studies and scientific researches economic edition, no. 15, 2010 189 of such a provision takes place only when: a) the entity has a legal or implicit obligation to make such payments as a result of previous events, and b) a clear estimation of the obligation can be made. this provision is taken from ias 19 contents, employee benefits, items 17-22 regarding “profit-sharing and bonus plans”, according to which “the employees receive percents from the profit only if they remain a part of the entity for a specified period”. therefore, it is considered that such an obligation results from the employees’ service and, as a result, profit sharing must be recognized as an expense and not as a profit distribution. the evaluation of such implicit obligations reflects the possibility for some employees to leave the entity without receiving some percentage from the profit, and this justifies the registration of a provision. or, in our case, it is related to the distribution of profit for a completed financial period (concluded financial year closed), and it is known if the employees remained or not in that entity over that period, and the obligations for profit sharing are certain, without the likelihood of a subsequent event to confirm them. under the circumstances, we believe that this expense must be recognized concurrently as a debt towards the employees and not as a provision. and still, where is the contradiction? nowhere else than in the accounting regulations. judging all aspects, it is certain that a value cannot represent, at the same time, both a distribution of the net profit and an expense. although it is considered that such an obligation results from an employee’s service (as stipulated in the regulations), for a unitary regulation of these aspects, it is necessary to modify the guideline concerning the “distribution of profit in national companies, national corporations and commercial companies with integral or majority state capital, as well as in autonomous administrations”, in such a way that employees’ profit sharing would no longer appear among the destinations of “accounting profit after deducing the charge on profit”. inconsistency in accounting regulations concerning the approval of accounting loss covering accounting law no. 82/1991, republished in 2008 (art. 19, par. 4), stipulates that “reported accounting loss is covered from the profit of the financial year and the reported one, from reserves, share premium and share capital, according to the decision of the shareholders’ or associates’ general assembly. the same text, supplemented with the phrase “complying with current regulations”, can also be found in accounting regulations approved by ompf no. 3055/2009, item 249, par. 1. moreover, these accounting regulations stipulate that “in the absence of clear legal provisions, the order of sources for covering the accounting loss is left at the choice of the general assembly of shareholders and associates, respectively, at the management board’s choice”. we understand that, in such a case, the management board is the one to decide the order of sources for covering the accounting loss and that the decision of the general assembly is not necessary, and this contradicts the provisions in the accounting law. such a contradiction could be eliminated by replacing, in the accounting regulations mentioned above, the phrase “respectively, at the management board’s choice”, with the phrase “at the management board’s proposal”. on the necessity of an exemplifying model for explanatory notes to financial statements “loss covering” in conformity with accounting law8, annual financial statements should be accompanied, among other things, by the proposal for profit distribution or accounting loss covering. this way, among the accounting regulations applicable to economic agents, the romanian regulator elaborated a model of explanatory note, note 3 profit distribution, where all the 8 accounting law no. 82/1991, republished in official monitor no. 454/18.06.2008, art.29. studies and scientific researches economic edition, no. 15, 2010 190 possible destinations of the profit are mentioned. so as not to leave out the case in which the result of the financial year is loss, within the same model of explanatory note its is mentioned, in a footnote sending to the title, that “in case of covering reported accounting loss, the sources for its covering shall be mentioned”. we consider that, just as a model for an explanatory note was created, where the profit destinations are presented, in order to assist the ones preparing financial statements, it could be useful to have a model for an explanatory note where the sources for loss covering shall be presented. we mention that, in a study we undertook concerning the financial statements 12 economic agents, analyzing the extent to which the entities present, in explanatory notes, the supplementary information required by accounting regulations, we found out that none of the entities (in which the result of the financial year was loss: 3 out of 12 registered loss) presents the sources for loss covering. the reason for not presenting the information regarding the sources for loss covering could be the fact that, among the models for explanatory notes, there is no such model for this destination. our statement is based on the following aspect: analyzing the extent to which current models for explanatory notes are used, as indicated by the romanian regulator, we observed that all the entities in the study presented information, even though incompletely, in all the 10 explanatory notes to the financial statements. we consider that if the regulator had also elaborated an exemplifying model for an explanatory note named, for instance, loss covering, it is certain that the entities with losses would have also respected the requirement of presenting the information on the sources for loss covering. another argument supporting our statement refers to the attempt made by some of those who prepare financial statements to adapt the model created by the regulator in the following manner, not a very suitable one. figure no. 1. note 3 profit sharing, drawn up by s.c. “y” sa for such an explanatory note, named, for instance, loss covering, we consider the following presentation model to be more appropriate: figure no. 2. note 3 loss covering studies and scientific researches economic edition, no. 15, 2010 191 if it is desired that the loss covering should be made from the profit corresponding to the future financial year (s), then, in the explanatory note, the loss will be considered an “uncovered loss” (the loss is reported for future covering). another clarification seems imperative. the regulator’s use, in the footnote previously mentioned, of the phrase “reported accounting loss”, brings to the surface the following question: does it refer to the covering of the accounting loss of the pervious years, or to the one corresponding to the financial year which has just ended? since it concerns the notes to annual financial statements, these should make reference to the result of the current financial year, which has just ended. we consider the phrase “reported accounting loss” as inappropriate, being used for defining the loss in financial year n. the expression “current accounting loss”, or the phrase in the profit and loss account, “net loss of the financial year”, seems to be more suitable. conclusion for the time being, there are, in the romanian accounting regulations, a series of aspects which need clarifying or require amendments, as well as a series of problems still unresolved by the romanian accounting regulator. obviously, both the romanian regulator and the ones preparing financial statements, the professional accountants, must work hard to ensure the conformity of the information presented in the financial statements with the requirements established by means of accounting regulations concerning annual financial statements, in order to obtain credible and relevant information, comparable at the european and international level. bibliography 1. *** the accounting law no. 82/1991, republished in the official journal of romania no. 454/ 2008 2. *** the commercial companies’ law no. 31/1990, republished, with subsequent amendments 3. *** law no. 571/2003, regarding the tax code, with subsequent amendments 4. *** the order of the public finances minister no. 3055/2009 for the approval of accounting regulations in compliance with european directives, published in the official journal of romania no. 766/2009 5. *** the government ordinance no. 64/2001 on profit distribution of national societies, national companies and companies with integral or majority state capital, and autonomous companies, published in the official journal of romania no. 536/2001, approved with amendments by law no. 769/2001, with subsequent amendments 6. *** *** the government ordinance no. 61/2004, to amend paragraph (1) art. 1 of the government ordinance no. 64/2001 on profit distribution of national societies, national companies and companies with integral or majority state capital, and autonomous companies, approved by law no. 414/2004 7. the order of the public finances minister no. 128/2005, on certain accounting regulations applicable to economic agents, published in the official journal of romania no. 153/2005 8. *** www.bvb.ro. studies and scientific researches economic edition, no. 15, 2010 192 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro gender demographic disparities in bacau county oana ancuta stangaciu vasile alecsandri university of bacau anca_stangaciu@yahoo.com eugenia harja vasile alecsandri university of bacau eugenia.harja@ub.ro abstract gender demographic disparities existing in bacau county were determined by means of some demographic indicators such as: population, natural growth, live births, marriages, divorces, indicators which have been broken down by gender. the assessment of the disparities between men and women from the point of view of the demographic phenomena emphasize the fact that on the level of bacau county there is a surplus of female population, as during the whole period subjected to the analysis, the positive and respectively the negative natural growth for the male population were lower and higher respectively than the one registered in the case of the female population. the birth rate, marriage rate and divorce rate phenomena also changed significantly after 1990 ; thus, the average age of marriage increased, and the gender difference also had a certain growth, which caused a shift in the fertility intensity from the age group 20-24 to the very next one the 25-29 age group. keywords gender disparities; population; birth rate; marriage rate; divorce rate jel classification c19; j16 1. introduction the evolution of population in time, the changes that occur within the age structures and the demographic transition have a series of particular features for the female population and for the male population, thus being confirmed the existence of certain gender disparities in the evolution of the demographic phenomena. 2. methodology the assessment of the demographic phenomena (evolution of the population, of the birth rate, the death rate, the marriage rate, the divorce rate) from the point of view of gender disparities on the level of bacau county required the use of certain data bases for the period of time 1990-2013, taken over from tempo (https://statistici.insse.ro/shop/), on the site of the national institute of statistics. we should mention the fact that the value of the population registered on the 1st july for the period of time 2003-2013 is provisional, as it was calculated through the component method, using administrative data sources for the external migration. these sources do not cover the whole migration phenomenon, especially concerning the emigration. consequently, there is a serious undervaluation of this phenomenon which leads to an overvaluation of the population residing in bacau county; therefore, the data presented is provisional, as the number of the population is going to be recalculated. 30 https://statistici.insse.ro/shop/?page=tempo2&lang=en&context=11 gender demographic disparities in bacau county 3. evolution of the population from the point of view of gender disparities on 1st july 2013, the resident population of bacau county (provisional data) was of 707,045 inhabitants, 349,109 men (49.4%) and 357,936 women (50.6%). the negative values of the natural growth, together with the values of the migration rate, caused the population of the county to diminish year after year starting in 2002, with higher intensity in the case of men. the natural decrease of the population started in 2002, when the negative natural growth in the case of men was higher than the positive natural growth in the case of women and, starting with 2010, when there is also a decrease in the natural growth of the female population, the negative natural growth can be seen in the case of both male and female population. 36 5. 74 9 36 9. 93 0 36 7. 95 5 36 8. 89 3 36 9. 67 9 37 0. 08 2 37 0. 79 0 37 0. 98 1 37 2. 53 2 37 3. 30 0 37 4. 08 9 37 4. 81 7 36 1. 23 8 35 9. 98 1 35 8. 64 9 35 8. 73 5 35 7. 47 3 35 6. 54 7 35 5. 30 3 35 4. 11 5 35 3. 08 9 35 1. 88 4 35 0. 23 6 34 9. 10 9 36 9. 44 8 37 3. 39 3 37 1. 19 1 37 2. 22 6 37 3. 22 2 37 4. 08 5 37 4. 67 3 37 5. 15 0 37 6. 36 2 37 7. 47 7 37 8. 67 2 37 9. 97 1 36 5. 99 2 36 5. 02 4 36 4. 31 2 36 4. 78 3 36 3. 93 8 36 3. 29 7 36 2. 82 2 36 2. 06 1 36 1. 55 2 36 0. 42 0 35 9. 03 6 35 7. 93 6 330.000 335.000 340.000 345.000 350.000 355.000 360.000 365.000 370.000 375.000 380.000 385.000 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 male female figure 1. evolution of the resident population by gender in bacau county for the period of time 1990-2013 (%) source: processing of the data collected from nis for the whole period of time, the positive and the negative natural growth respectively in the case of the male population was lower and respectively higher than the one for the female population, due especially to the male over mortality. 28 40 20 11 15 26 10 54 91 4 60 4 22 3 33 2 5 91 37 7 41 8 -9 3 -4 83 -6 52 40 9 -4 10 -9 6 -3 31 -6 95 -7 06 -1 07 4 -8 55 -9 13 29 98 21 71 18 12 14 19 15 57 10 57 65 5 98 6 11 52 10 73 93 3 67 7 12 3 4 35 5 13 7 3 72 24 4 42 8 -1 2 -2 48 -4 21 -4 15 -4 95 -1 25 3 -1500 -1000 -500 0 500 1000 1500 2000 2500 3000 3500 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 -27000 -17000 -7000 3000 13000 23000 33000 43000 53000 63000 natural increase of the population male natural increase of the population female net settling of the residence figure 2. natural increase by gender and the rate of the migration with residence in bacau county, for the period of time 2000-2011 source: processing of the data collected from nis thus, while in 1990 the positive natural increase of the male population was only 5.3% lower than that of the female population, after 1996 the gap becomes larger, so that in 2013 the natural decrease of the male population was 2.5 times higher than the 31 stângaciu, harja one registered in the case of the female population. the rate of the migration with residence was negative during the whole period subjected to the analysis. 1990 2013 -40000 -30000 -20000 -10000 0 10000 20000 30000 40000 04 ani 10-14 ani 20-24 ani 30-34 ani 40-44 ani 50-54 ani 60-64 ani 70-74 ani 80-84 ani -40000 -30000 -20000 -10000 0 10000 20000 30000 40000 04 ani 10-14 ani 20-24 ani 30-34 ani 40-44 ani 50-54 ani 60-64 ani 70-74 ani 80-84 ani figure 3. age pyramid in bacau county for 1990 and 2013 source: processing of the data collected from nis the age pyramid mirrors in the most accurate way the chronicle of the generations, emphasizing the disparities in the structure of the population, by age and gender. the decrease of the young population narrowed even more the base of the pyramid. compared to 1st july 1990, in 2013 we can notice a decrease in the percentage of the young population (0-14 years old) from 27.0% to 16.1%, and an increase in the elder population (65 and over 65) from 8.6% to 14.1%. on the other hand, the percentage of the adult population (15-64 years old) slightly increases in 2013 compared to 1990 from 64.4% to 69.8%. the population of bacau county continues to be characterized by an excess of female population both on the whole and on the categories of age over 45, and even more obviously for the category of age over 80, when the rate was of 1,538 women for 1,000 men. 4. birth rate from the point of view of gender disparities 6. 35 6 5. 75 9 5. 37 9 4. 91 9 5. 06 1 4. 81 4 4. 67 0 4. 61 6 4. 78 7 4. 58 1 4. 60 6 4. 28 6 4. 21 8 4. 10 6 4. 00 4 4. 12 3 4. 20 2 4. 14 2 3. 96 7 3. 88 5 3. 71 5 3. 54 1 3. 60 9 3. 35 1 6. 11 0 5. 43 4 5. 02 9 4. 72 8 4. 80 8 4. 47 1 4. 39 9 4. 48 9 4. 59 8 4. 65 4 4. 37 5 4. 12 9 3. 77 0 3. 81 2 3. 84 0 3. 80 2 3. 93 9 3. 92 5 3. 91 3 3. 65 7 3. 59 0 3. 31 7 3. 37 2 3. 32 1 2.000 2.500 3.000 3.500 4.000 4.500 5.000 5.500 6.000 6.500 7.000 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 male female figure 4. evolution of the live births on gender in bacau county for the period of time 1990-2013 source: processing of the data collected from nis 32 gender demographic disparities in bacau county the couples’ freedom of deciding on the number of children they want, the requirements of continuous professional training, the social instability and the unemployment are among the main causes which led to the decrease in the number of the live births year after year. during the last years, we can notice that the rhythm in which the birth rate decreases is lower; thus, the number of live births in 2013 was much lower than the one registered in 1990, but compared to the previous year there were only 309 less children born. in 2013, the birth rate was of 9.4 live births per 1000 inhabitants compared to 16.5 ‰ in 1990, and more than half of the number of children born alive were boys, the report being of 107.0 boys per 100 girls registered in 2012 and of 100.9 in 2013. 68 ,9 61 ,5 56 ,6 52 ,0 52 ,4 48 ,7 47 ,1 46 ,8 48 ,0 47 ,3 45 ,9 42 ,8 43 ,2 42 ,7 42 ,1 42 ,5 43 ,9 43 ,9 43 ,1 41 ,6 40 ,5 38 ,3 39 ,2 37 ,6 16 ,5 14 ,8 13 ,9 12 ,9 13 ,1 12 ,3 12 ,1 12 ,1 12 ,4 12 ,2 11 ,9 11 ,1 11 ,0 10 ,9 10 ,8 10 ,9 11 ,2 11 ,2 10 ,9 10 ,5 10 ,2 9, 6 9, 8 9, 4 0 10 20 30 40 50 60 70 80 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 live births per 1000 w omen during her f ertile lif e live births per 1000 inhabitans figure 5. evolution of the birth rate and the fertility rate in bacau county for the period of time 1990-2013 source: processing of the data collected from nis the evolution of fertility was influenced, on one hand, by the demographic behaviour of the couples (which led to smaller families) and, on the other hand, by certain modifications in the number and the structure of the fertile population segment. the level of fertility diminished significantly compared to 1990. thus, compared to 1990, it kept being low (37.6 children per 1,000 women in 2013, compared to 68.9 children in 1990). 28 706 1.670 1.896 1.494 728 147 3 0 0 500 1000 1500 2000 2500 3000 3500 4000 <1 5 15 -1 9 20 -2 4 25 -2 9 30 -3 4 35 -3 9 40 -4 4 45 -4 9 >5 0 1990 2013 figure 5. number of live births by age groups of the mothers in bacau county in 1990-2013 source: processing of the data collected from nis 33 stângaciu, harja most newborns have mothers between 25-29 years old, this age group continuing to have an important contribution to the evolution of fertility (28.4% of the total live births in 2013), while the fertility for the age group 20-24 had the most significant decrease (from 45.1% of the total live births in 1990 to 25.0% in 2013). due to the more and more frequent phenomenon of postponing the pregnancy, we noticed a gradual shift in the fertility intensity for the age group 20-24 to the next one – the 2529 age group. 5. marriage rate from the point of view of gender disparity as direct consequence of the major modifications that occurred in the romanian society, the marriage rate phenomenon suffered great changes. before 1989, there were two characteristics that defined the marriage rate in romania: the average age at first marriage which was quite low and the high percentage of the people who got married at least once during their life. the modification of the living conditions in the context of the new market economy, the higher requirements concerning the level of qualification and education for getting a stable job, the lack of certain advantages that should stimulate starting new families and the disappearance of restrictions imposed on the type of cohabitation, all these influenced the young people to postpone marriage more frequently. however, in the romanian society, the prevalent type of union between men and women is still the legal marriage. in 2013, the number of marriages in bacau county decreased compared to 1990 by 49.9%, the marriage rate reaching in 2013 the value of 4.6 marriages per 1000 inhabitants, compared to 8.7 as it was registered in 1990. 26 ,4 26 ,5 26 ,8 26 ,9 2 7, 5 27 ,9 27 ,8 28 ,0 28 ,0 28 ,3 28 ,6 2 9, 2 29 ,2 29 ,5 30 ,0 30 ,2 30 ,4 30 ,6 30 ,5 30 ,6 30 ,6 31 ,1 31 ,2 31 ,5 23 ,3 23 ,4 23 ,4 23 ,4 23 ,7 24 ,0 24 ,1 24 ,3 24 ,4 24 ,6 24 ,9 25 ,3 25 ,5 25 ,9 26 ,1 26 ,4 26 ,6 26 ,8 26 ,7 26 ,9 27 ,0 27 ,4 27 ,5 27 ,9 20 22 24 26 28 30 32 34 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 mean age at marriage male mean age at marriage f emale mean age at f irst marriage male mean age at f irst marriage f emale figure 6. evolution of the age at marriage by gender in bacau county in the period of time 1990-2013 source: processing of the data collected from nis in 2013, the average age at first marriage increased compared to 1990 by 5.1 years in the case of men and 4.6 years in case of women. this fact made the gender difference even greater, its value reaching 3.6 years in 2013. the increase in the average age at first marriage was caused by the decrease in the marriage rate by age, especially in the case of the early ages, up to 25. 34 gender demographic disparities in bacau county 6. the divorce rate from the point of view of gender disparities the romanian society continues to be a society in which the family based on legal marriage is still promoted and its stability is encouraged. the average length of marriage which ends in divorce increased in 2013 by 3.7 years compared to 1990. after the phenomenon had a boost in intensity in the 90’, the number of divorces reported to the number of marriages remained relatively constant during the last years, with even a descending trend. 37 ,2 36 ,7 36 ,8 35 ,9 36 ,2 35 ,6 36 ,1 36 ,5 36 ,7 36 ,8 37 ,5 38 ,1 38 ,3 38 ,9 38 ,9 39 ,6 40 ,6 41 ,2 40 ,5 41 ,1 41 ,3 41 ,7 33 ,6 32 ,9 33 ,2 32 ,5 33 ,3 32 ,3 32 ,5 32 ,6 33 ,2 33 ,4 34 ,0 34 ,5 34 ,6 35 ,1 35 ,1 35 ,7 36 ,7 37 ,2 36 ,5 37 ,0 37 ,4 37 ,6 0 5 10 15 20 25 30 35 40 45 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 08 20 09 20 10 20 11 20 12 20 13 divorces by age male divorces by age f emale figure 6. evolution of the average age at divorce by gender in bacau county in the period of time 1990-2013 source: processing of the data collected from nis the changes that occurred in the marital behaviour of the population are also reflected in the evolution of divorce. the fact that marriages at an early age and the young families with children were gradually replaced by late, postponed marriages also caused a transition of the average age at divorce. the average age at which men decide to end a marriage through divorce is on average about 4 years higher than in the case of women. the average age at which married people decided to divorce increased by approximately 4 years compared to 1990, in the case of both men and women. 7. conclusion after the assessment of the gender disparities from the point of view of the evolution of demographic phenomena in bacau county, we could notice that the population in our county continues to be characterized by an excess female population due to the negative natural growth of the male population which was greater than the one registered in the case of the female population. this excess in female population also caused an increase in the percentage of women from 1,010 women per 1,000 men in 1990 to 1,025 women per 1,000 men in 2013, although more than half of the number of the live births were boys, the report of live births being of 107 boys per 100 girls in 2012 and 101 boys per 100 girls in 2013. there were also changes in the marital behaviour; thus, the average age at first marriage increased by 5.1 years for men and 4.6 years for women compared to 1990, fact which caused the gender differences to become more accentuated, reaching in 2013 the value of 3.6 years. these 35 stângaciu, harja modifications also reflected in the evolution of divorces. the average age when men and women decide to end a marriage through divorce increased by approximately 4 years compared to 1990, and the difference between the average age for men and the average age for women who decide to end a marriage through divorce is also about 4 years. references caldwell, j. (1982), theory of fertility decline, academic press, new york. kabeer, n. (1996), gender, demographic transition and the economics of family size: population policy for a human-centred development, geneva, united nations research institute for social development. filmer, d. (1999), the structure of social disparities in education: gender and wealth, review policy research report on gender and development working paper series, no. 5, pp. 1-66. harja, e. (2014), analysis of the marriages and divorces seasonality in romania compared to bacau county during 2010-2013, studies and scientific researches. economics edition, no 19, pp. 38-44. stângaciu, o. a. (2013), equality of opportunity between men and women on the labour market – the gender pay gap within the eu member states, studies and scientific researches. economics edition, no 18, pp. 95-100. 36 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro knowledge management in a company petrică stoica court of accounts bacău petricastoica@yahoo.com ovidiu leonard turcu “vasile alecsandri” university of bacău t_ovidiu@softhome.net abstract all organisations are primarily interested in maintaining and increasing intellectual capital assets, and knowledge management represents only a manner of supporting the satisfaction of this interest and of laying stress on this type of assets. a mistaken conception, according to which at the level of a company there is a finite knowledge store that can be “managed”, reflects nothing but the fact that, at the beginning, many companies have overlooked the general aim of their business. the intangible part is immaterial, difficult to describe, quantify and measure. the intangible asset has and creates value and that is why the evaluation of intellectual property does not represent a simple activity. from a modern viewpoint, organisational learning does not consist only in obtaining new knowledge, but also considers its employment in carrying out the activities of the company, and so it contributes to the generation of new knowledge. the success of companies depends on the personnel’s ability to understand, manipulate and develop information. in case of epistemic economy, the improvement of the innovation capacity, the creation of value and wealth are based on the division of knowledge. keywords business; knowledge; companies; management; economy jel classification o10; m10 in specialised literature, knowledge management represents the conceptualization of a company as an integrated system of knowing and leading a company so that knowledge can be used in actual fact. the first romanian study related to knowledge management was published by ştefan iancu, who emphasized the ideas of intellectual capital and economic organisation. in relation to knowledge, management is viewed in two ways: • as management of the company, a case in which it is concerned with the use and integration of various types of knowledge; • the management of knowledge as such. a possible definition of knowledge management could be the similarity with a subject which promotes an integrated approach with the aim of identifying, managing and dividing all the informational assets of a company. (apetroae m., 2004.) informational assets consist in databases, documents, policies and procedures as forms of expertise and experience at the level of individual members of the organisation. in 2001, the audit and consultancy company kpmg defined knowledge management as follows: “knowledge management is a collective designation for a group of 261 mailto:t_ovidiu@softhome.net stoica, turcu processes and practices employed by organisations in order to improve their market value, by augmenting the efficiency of generating and employing intellectual capital”. intellectual capital must not be confused with knowledge management. all organisations are primarily interested in maintaining and increasing intellectual capital assets, and knowledge management represents only a manner of supporting the satisfaction of this interest and of laying stress on this type of assets. knowledge management is a process that takes place within a company, while intellectual capital has implications which cover the entire range of operations undertaken by the company. according to certain opinions, knowledge cannot be administered, whereas the culture that leads to the division of that knowledge can be managed. this statement is partly true in case of tacit knowledge, which is not codified and cannot be stored; due to these reasons, tacit knowledge management represents perhaps the most difficult component of the general management of knowledge. in a company, knowledge can be stored partially by means of a set of managerial and technological procedures and subsequently stored in adequate forms and locations, or promoted by way of internal communication networks. however, another part will maintain its residual, tacit character, continuing to exist only in the conscience of the employees or in the interpersonal relationships they establish. the term “worker in the field of knowledge” (“knowledge worker”) was coined by peter drucker (drucker p., 1999.), a management theoretician, whose prediction consequently proved to be well-grounded, thus anticipating the transformation of knowledge in an essential economic resource. a mistaken conception, according to which at the level of a company there is a finite knowledge store that can be “managed”, reflects nothing but the fact that, at the beginning, many companies have overlooked the general aim of their business. the knowledge society represents a new economy in which the capacity to assimilate and convert new knowledge in order to create new services and products has become predominant. in the knowledge society, innovation seeks to improve productivity, not only the classical one in relation to work and capital, but also new productivity in connection with natural energy and material resources or environment protection. that is why a new economy involves encouraging the creation and development of innovative companies, which have their own knowledge structure. certain authors defined the difference between the old/traditional and the new economy as follows: in the old economy tangible goods count, whereas in the new economy intangible assets matter because they create value. the intangible part is immaterial, difficult to describe, quantify and measure. the intangible asset has and creates value and that is why the evaluation of intellectual property does not represent a simple activity. knowledge society is a fundamental necessity in order to ensure a sustainable society from an ecological viewpoint because in the absence of scientific knowledge and technological knowledge as well as their management it will be impossible to produce goods or the technological organisations and transformations which are necessary for laying the basis of progress in the twenty first century. as a result, the value of knowledge assets can significantly exceed the value of tangible assets. at the global level, the store of knowledge increases much faster than it did in the past. 262 knowledge management in a company a decreased level of dependence on classical resources takes place in conjunction with the amplification of this knowledge store, and knowledge gradually becomes central, as the leading capital of the firm. the knowledge-based economy represents a new economy, which is totally different from the type of industrial economy. the basis for carrying out change processes is represented by the transformation of the company in an organisation that learns. roger e. bohn’s definition of learning is useful from this perspective: “learning is evolution of knowledge over time” (bohn, 1998.). the transformation of a company in an organisation which learns is a process that is not begun or performed spontaneously. it is for the top management of the company to decide whether the status of “learning company” is a strategic target for it or not. from a modern viewpoint, organisational learning does not consist only in obtaining new knowledge, but also considers its employment in carrying out the activities of the company, and so it contributes to the generation of new knowledge. organisational learning must be conceived in all its complexity and a learning company involves, first of all, the existence of employees who learn. consequently, each employee must attempt to possess a type of thinking and behaviour which is centred on learning. the key-elements are intensive communication at the level of employees in the firm and their strong motivation to obtain, protect and integrate knowledge into the organisation. the main objective of knowledge management refers to the fact that it allows organisations to permanently improve their knowledge and become organisations that learn. most economic theories emphasize the identification, formalization, memorization and employment of already existing knowledge, without paying attention to the identification of the manner in which new knowledge is created within companies. the generation of economic knowledge or other types of knowledge must be attributed mainly to individuals because companies cannot create knowledge in the absence of the human factor, and it is their mission to encourage creative individuals, thus producing the proper context for the creation of knowledge. at the level of a company, the creation of knowledge must be seen as a process of amplifying the knowledge created by individuals and of crystallizing that knowledge as a part of the explicit knowledge base of the organisation. a company is an organic unity and plays an important role in a knowledge-based economy because it is the place where information is produced and used. the success of companies depends on the personnel’s ability to understand, manipulate and develop information. the revolution in the field of information technology brought forth various possibilities to codify information, the cost of transmitting it becoming progressively lower (for instance, e-commerce and e-business). due to the information possessed by the personnel in order to make best use of its potential, the importance of teamwork and job sharing will increase. many corporations have implemented programmes for the dissemination of knowledge and information between two subsidiaries, and the stimulation of the innovation process takes place by means of training and lifelong education courses. in case of international knowledge transfer, communication between the subsidiaries of the same firm bears special significance. in the organisational environment, knowledge is the result of transforming information into the ability to perform efficient action, by means of integrative 263 stoica, turcu assimilation and understanding, followed by operationalization in given contexts. knowledge can be recorded in the brains of an individual or stored in organisational processes, products, facilities, systems or documents. drucker (1998) briefly describes the historical and cultural approaches to knowledge, comparing socrates’ “self-knowledge” philosophy with protagoras’ view, according to which knowledge represents “the ability to know what to say and how to say it well”. drucker considers that the latter interpretation has dominated, until recently, the western learning system. it views the current knowledge concept as knowledge “proved in practice” and focused on results. in the traditional economy of an industrial type the roots of productivity boosts and of the creation of surplus value and wealth are found in the division of labour, together with specialized work. in case of epistemic economy, the improvement of the innovation capacity, the creation of value and wealth are based on the division of knowledge. the phrase “division of knowledge” refers to a complex process, which belongs to large interactional social groups by means of which knowledge is generated and employed efficiently. the division of knowledge involves both the specialization and differentiation of knowledge, as well as the process of dividing or integrating knowledge domains, by means of which it is used for solving various problems. the notion of “intellectual capital” is associated with the transformation of knowledge in something that has value – in other words, in intellectual “material”, which is formalized and intensified in order to add value to it. in their activity, companies construct representations about their own knowledge. they deal with the challenge of finding ways to make good use of what they know, although, paradoxically, they are not totally aware of what they know, or of what they do not know. “man can neither seek what he knows, nor what he doesn’t know. he cannot seek what he knows because he knows; he cannot seek what he doesn’t know because he doesn’t know what to look for” (socrates). from this perspective, the statement made by lewis platt, former ceo of hewlettpackard, is also significant: “if hewlett-packard were more aware of what it knows, we could become three times more profitable”. the foundation of the organisations’ activities and those of their actors on knowledge makes the delimitation between the theoretical and applied aspects remain purely conventional in the domains associated with this evolution (knowledge management, organisational learning, and intelligent systems). the american and west-european vision, which takes shape in organisational environments with predominantly individualistic values, places the dissemination and use of knowledge first; on the contrary, the japanese view focuses on the production of knowledge, its dissemination being implicit in a traditional environment that is much centred on group values. the knowledge based economy, which includes today even the smes from romania, alongside with other types of organizations, puts a great emphasis on the exploitation of the intellectual capital. each country, company and individual depends increasingly more on knowledge, which materializes in: patents, skills, technologies, and customer information about suppliers. at the level of smes, the technology and the associated processes act on the individual knowledge, and especially on the side of the intellectual tacit component. the management and the leadership are a powerful integrator in the nonlinear segment. the leadership is important by its power to act on knowledge, on the intelligence and on the individual values. the organizational vision 264 knowledge management in a company and mission are also interesting integrators, which act mainly on the individual emotional intelligence. the organizational culture appears as a powerful integrator, since it acts mainly on the individual intelligence and on the values, creating models of the organizational behavior (mironescu r. at al. 2013) in conclusion a series of companies from different economic and cultural areas have transformed their ordinary activity in a research environment but also in a learning one, as suggested by the new concepts of “knowledge centre” or “corporate university”. significant achievements, especially at the level of new solutions for knowledge management, have been obtained in case of firms that produce both intellectual goods and intellectual-intensive goods. among the most convincing examples we can quote the cases of companies like ernst & young, microsoft or bucknan laboratories, ericsson. we can also add those from the category of public institutions, such as the governmental authorities from scandinavian countries, which have implemented the system of negotiated economy based on the values of social consensus and professionalism. as a general rule, the promotion of these developments adhere to the principles of the knowledge society by applying selectively the system of public intellectual good (with free access), which has become informational content for virtual communities. references apetroae, marin (2004), capitalul intelectual şi economiile epistemice, opinfo, bucureşti. barney, j. b. (1986), strategic factor markets: expectation, luck and business strategy, management science, 32(10) oct., 1231-1241. barney, j. b. (1991), firm resources and sustained competitive advantage, journal of management, 17/1. barney, j.b. (1996), the resource-based theory of the firm, organization science, 7(5) (september-october), 469-476. bohn, roger e. (1998), measuring and managing technological knowledge, in dale neef a. o. , eds., the economic impact of knowledge, butterworth-heinemann, boston, 295314 brătianu, c. (2005b), schimbarea de paradigmă în managementul universitar românesc, revista de management şi inginerie economică, 4(3), 7-23. brătianu, c. (2006), un model de analiză a capitalului intelectual organizaţional, management & marketing, 1(3), 17-32. brătianu, c. (2008), leadership and management in the transition romanian higher education system, management & marketing, 4(2), 21-36. brătianu, c., jianu i. (2007), the vision and mission of the university. case study, management & marketing, 4(2), 37-46. brătianu, c., vasilache s. (2009), evaluating linear-nonlinear thinking style. for knowledge management education, management & marketing, 4(3), 3-18. drucker, p. (1999), knowledge management in california, management review, 41(2). drucker, p. (1999), societatea postcapitalistă, image. drucker, p. (2001), organizaţiile viitorului, teora. feraru a. (2009), the concept of knowledge and knowledge the management in the romanian business field, studies and scientific researches economic edition, 14, 137-141. feraru a. (2011), knowledge management within organisations, annals of the oradea university. fascicle of management and technological engineering, ix (xix), 1, 157160. 265 stoica, turcu fox, t., ward, h., howard, b. (2002), public sector roles in strenghthening corporate social responsibility, a baseline study, world bank, october, p. 1-5. kelleher, d., levene, s. (2001), knowledge management: a guide to good practice, pwc, new york. kim, c., manborgue, r. (2003), fair process: managing in knowledge economy, motivation people, 1. mironescu r., feraru a., drob c. (2013), particular aspects in the intellectual capital management of the romanian smes, proceedings of the 5th european conference on intellectual capital, 1, 593. nonaka, i., takeuchi, h. (1995), the knowledge creating company: how japanese companies create the dynamics of innovation. oxford university press, new york. petrash g. (2002) , knowledge management. classic and contemporary works, masschusetts institute of tehnology. roşca ion gh., păunescu c., pârvan c. (2010), shaping the future of higher education in romania: challenges and driving factors, management & marketing, 5(1), 57-70. scârneci florentina, (2011), who are the romanian managers and how they identify themselves?, management & marketing, 6(1). stolojan, theodor (2002), demitizarea tranziţiei romaneşti, paper presented at simpec conference, braşov, 17-18 may 2002. 266 http://www.managementmarketing.ro/autori.php?var%5b22%5d=en&var%5b0%5d=autori&var%5b1%5d=florentina%20sc%c3%82rneci http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=1&var%5b3%5d=2011&var%5b2%5d=219&var%5b20%5d= http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=1&var%5b3%5d=2011&var%5b2%5d=219&var%5b20%5d= microsoft word harja 2 studies and scientific researches. economics edition, no 18, 2013   http://sceco.ub.ro  45   the main demographics changes in the population of bacău county at the last census eugenia harja “vasile alecsandri” university of bacău eugenia.harja@ub.ro abstract livestock population and its structure is the starting point for all development strategies at both micro and macro level, reason for which accurate knowledge of it is one of the main objectives of official statistics in each state. the analysis aims to highlight the major changes produced after the 90s in terms of population of bacău county and its structure, with time effects on economic and social activity. both the 2002 and 2011 census, bacău was top of the list with an absolute decrease of the population. this was a concern as it has emerged over time as a stable phenomenon. the main reason for the decrease was due to external migration of the population and secondly because of the internal migration flows of population moving towards large economic centers in the country and abroad that attract labor. as most of the migrants are young and active age groups, this phenomena has led to an aging population and to imbalances that can be observed in the age pyramid, with negative effects becoming larger in the future. keywords census; stable population; demographic aging jel classification c10; j10; j11 1. the importance of knowing the population and methodological notes stable population in both actual and structured after various features, underpins all marketing research, development strategies, be it macroeconomic level, or company strategies. the population is the one that provides labor resources but also that consumes work results, therefore it cannot be excluded from any study, and hence the importance of knowing it closely to the reality. census of the population is in this regard the largest statistical research in demography, providing a large number of data on the population that there cannot be found in current statistical surveys. the census surprises aspects of both internal and external migration without documentation, therefore non-existent in the administrative sources. in general , the stable population, according to the methodology, includes all persons living at the time of the census for at least one year, or that came to town with the intention of staying for at least one year, whether or not they had legal documents, whether they were romanian or foreign citizens. 2. stable population dynamics at the latest census the population of bacău county recorded an upward trend reaching its peak at the 1992 census, when it was about 1,8 times higher than in 1948. after this year, the evolution changed in a significant negative trend. privatization of large industrial harja  46   enterprises in the county, which attracted most of the labor force, significant restructures of them that eventually dissolved many, led to a massive internal migration, but especially foreign. bacău was the county facing the largest loss of actual people in the last two censuses. the stable population at the last census was very close to the one in year '66. 414.996 507.937 598.321 667.791 737.512 706.623 616.168 60.480 144.911 201.917 244.263 371.305 326.317 267.141 354.516 363.026 396.404 423.528 380.306 349.027 366.207 0 100000 200000 300000 400000 500000 600000 700000 800000 25 ianuary1948 21 february 1956 15 march 1966 5 ianuary1977 7 ianuary 1992 18 march 2002 20 october 2011 total urban rural figure 1 evolution of the stable population of bacău county in total and average at the last 7 source: own calculations based on data from the statistics institute of bacău county if at country level there were lost 1,56 million people, bacău county has lost 90.455 people, with -12,8 % compared to the 2002 census, being the 9th district in terms of relative decrease. because of this great decrease, the county’s place in the hierarchy of the country was changed from 6 in 1992 and 2011, to number 9, after bucharest and counties like: iaşi, prahova, cluj, constanţa, timiş, dolj and suceava. from the northeast region bacău was surpassed by suceava, which decreased, but to a much lesser extent. this way, the share of total population in the region has changed, from 3,26% to 3,06 % in the last census. if rural stable population fluctuated somewhat around 370 thousand people, urban population has experienced large variations from a minimum of 60,4 thousand in '48 to over 6 times in '92, so that at the last census to decrease to 267,1 thousand people. unfortunately, even the most optimistic scenarios do not lead to positive county population projections. 3. changes in the population structure massive population decreases between the last two censuses not occurred evenly across age, sex and areas; this worsening the imbalance that was already taking shape in the 2002 census. the main demographics changes in the population of bacău county at the last census  47   3.1 changes in age structure, sex and life decrease in the population has been primarily done in the detriment of the ages that are part of the workforce, which correlated with a decrease in birth rates have led to an aging population with long-term effects for the generations who will be retiring. figure 2 the last two census age pyramid, bacău county source: own calculations based on data from the statistics institute of bacău county overlap on the same graph of the age pyramid from the last two censuses in figure 2 is particularly relevant for the statements above. massive loss of effective population aged 0-35 years, and on the other hand, increasing the workforce aged over 53 years, have narrowed the bottom of the pyramid, making it very fragile in terms of population, with social-economic consequences if we think of the few who will soon have to support an inactive population (children and elderly) becoming more numerous. 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 populatia stabila,dupa varste (in mii persoane) ( masculinfeminin masculin 2011 feminin 2011 masculin 2002 feminin 2002 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100+ harja  48   25,0 20,3 18,0 18,2 15,3 12,2 36,7 41,4 40,0 10,8 9,8 13,3 5,9 8,9 9,2 3,4 4,3 7,3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1992 2002 2011 ani under 15 years 15-24 year 25-54 year 55-64 year 65-74 year 75 and over    figure 3 structure of the population by big groups of aging at the last 3 census source: own calculations based on data from the statistics institute of bacău county the effect of changes in age structure as can be seen in figure 3. if at the census of 1992 the group of under 20 years represented 34,3% of the total population, it fell to 24,3% in 2011, while the group of 65 and over increased from 9,3% to 16,5%. demographic aging of the population is observed in the development of specific indicators such as the rate of population aging and demographic dependency ratio for adults. thus, in bacău came back in 1992 a number of 372 elders (65 and over), on average at every 1000 young people (under 15), and in 2011 the index increased 2,5 times, averaging 916 elders at 1000 youngsters. similarly, if in 1992 came back in average 142 elders at 1000 elderly people (15-64 years), the index reached 2011 the level of 252 ‰. the same phenomenon can be seen if we compare the evolution in time of the average age of bacău county population, shown in figure 4. from an average age of 36,5 years in the 1992 census, it reached 40,2 years in 2011, registering in less than 10 years an increase by 3,7 years. contrary to expectations, the population is more elder in urban than in rural areas, the average age being 40,9 years in urban and 39,7 years in rural areas, largely due to a higher birth rate in rural areas. aging phenomena was more pronounced throughout the city, where the average age between the two censuses has increased by 5,1 years, while in rural areas it increased by 2,6 years. compared to the national average, the average age is lower in total in bacău by 0,4 years, but is higher by 0,6 years in urban areas. at the country level, the situation is contrary to bacău county, the population being aged in rural than in urban areas. the main demographics changes in the population of bacău county at the last census  49   36,5 35,8 37,1 35,5 37,5 40,2 40,9 39,7 38,8 41,6 32 34 36 38 40 42 44 total urban rural male female 2002 2011   figure 4 the average age of the stable population in the last two censuses of bacău county, by area and sex source: own calculations based on data from the statistics institute of bacău county aging phenomena has increased even more for women than men. thus, for women, the average age increased in about 10 years by 4,1 years, reaching 41,6 years in 2011 as compared with 38,8 years for men and an addition of only 3,3 years. in both sexes the national average age is higher than the county of bacău. if you could compare the two age pyramids, it will be found that in rural areas there is the greatest imbalance by age and sex. both the rural bottom and top of the pyramid are large compared to the middle, that actually forms the active workforce and financially support both base and top, respectively the children through their allocations and the elderly with the pensions and social benefits they receive. the imbalance in rural areas is grater than in urban areas and in terms of population structure by sex . in rural men outnumber women at most ages groups under 55, the largest discrepancy being groups 19-25 years (by -10% up to -17%) and 37-52 years (with differences ranging between 10% and 30%) groups in the active population, while for the group of more than 56 years, the women surpass men numerically except the age of 99 and 100 years. migration of a massive segment of the working age of female population in the urban areas, it can be seen if we compare the two pyramids. in urban areas, in all age groups between 34 and 97 years , women exceed men numerically . 3.2 changes in ethnic and confessional structure at the census of 2011, due to the absence from home of a large number of people, for those who could not declare the neighbors, the information was retrieved from administrative sources, which made for these people not to be possible to be declared the ethnicity, language tongue and religion. this is also the case of those for whom information was reported by neighbors, relatives, acquaintances and according to the methodology were not allowed to respond to these "sensitive" variables on behalf of those for whom they responded. thus, for bacău data was collected about ethnicity by free statement from a total of 579.580 people out of a total of 616.168, which leaves a percentage of 5,94% of the total for which the ethnicity is unknown. for this reason, harja  50   for better comparability with the 2002 census population structure, it has been calculated only for a total of 579.580 people who answered the question. the majority population at the last census had romanian nationality, numbering 558.507 people, accounting for 96,36 % of the total. there was declared a total of 15.284 roma people (2,64 % of total), a total of 4.208 hungarian people (0,73 % of total). the many roma communities are in: corbasca, valea seacă, buhuşi, bacău, moineşti, dărmăneşti, ştefan cel mare, blăgeşti, buciumi, coţofăneşti, comăneşti, parava, berzunţi, gura văii and livezi, in the other areas being below 200 people. the most numerous communities of hungarians, over 100 people, in descending order are found in the following localities: ghimeş-făget, răcăciuni, agăş, pârjol, cleja and bacău.there were also declared 829 csangos, 99 germans, 91 italians, 51 turks, the other ethnic groups having a small number of people in the county. compared to the previous census, the share of roma increased in total from 1,68% to 2,64%, while the share of romanians decreased from 97,47% to 96,36 %. romanian decrease in weight was certainly influenced by the fact that probably most of the people for whom data were collected from other sources (neighbors, relatives, or administrative) and the ethnicity could not be recorded, were romanian . same issue also with the declared religion. a total of 470.560 people declared their religion as the orthodox (81,22% of the total people declared ), 96.490 people roman catholics (16.65%), 5.492 people with pentecostal religion (0,95%), other denominations with a much smaller share in total. the most numerous communities of the roman catholic religion (between 12,5 thousand people and 2 thousand) are in the following localities: bacău, cleja, nicolae bălcescu, oituz, mărgineni, pârgăreşti, faraoani, oneşti, răcăciuni, gârleni, luizi-călugăra, târgu-trotuş, ghimeş-făget, slănicmoldova and gioseni. 3.3 changes in population structure by marital status at the last census, in bacău there were a number of 237.303 single people, of which 56,3% were male and 43,7% female. legally married were a number of 147.058 men and 148.529 women and 11.713 men and 13.884 women were divorced. a total of 11.655 men were widowed, while widows were almost 4 times as many (45.947 people), the result of a higher average lifespan in women than in men. in consensual union (cohabiting), there were 20.126 people that lived at the time of the census, accounting for 3,3% of the total stable population. compared with the population structure by marital status at the national level, there are not significant diferences at county level. in the county, between the two censuses, major changes occurred in the structure of the segment of the widow population, that share grew from 3,4% in 2002 to 9,35% in 2011, and also a decrease in the share of people divorced, and a slight decline in the married population. changes in structure between the two censuses can be seen easily in figure 5. increase by 75,6% is seen in the number of people who declared they live in a consensual union, from 11.460 people at the 2002 census, reaching 20.126 people in october 2011. this phenomenon is common at country level, the average age at marriage experiencing an increase in recent years, partly because of the increasing cost of living and of unemployment, which makes many young people to postpone marriage until they build a stable situation from a financial point of view. on the other hand due to the emancipation of women, who increasingly prefer to become more financially independent from man and want to make a career first at the expense of family life. the main demographics changes in the population of bacău county at the last census  51   2002 single 40,87% married 48,21% widowead 3,40% divortced 7,52%   2011 single 38,51% married 47,97% widowead 9,35% information not available 0,01% divorced 4,15%   figure 5 stable population structure by marital status of bacău county, in the last two censuses source: own calculations based on data from the statistics institute of bacău county from a total of unmarried people, 60,3% were living in urban areas and from a total of married people, 53,9% were from urban areas. of the total widowed, 61,9% were from urban and from divorced persons in total, most were living in rural (56,9%). 3.4 changes in population structure by education level at the 2011 census, a total of 544.535 people in the county were aged 10 years and over, therefore they should have completed at least primary level education for 4 years. from this group, most had completed secondary school (155.383 people), followed by upper secondary school (208.629 persons, of which 105.090 high school graduate and 103.539 professional school and apprenticeship), primary school (88.953 persons), while higher education had a number of 55.431 people. as can be seen from figure 6, between the two censuses, changes in the stable population by educational level were in favor of a higher level of education, respectively an increase in the share of higher and secondary education level.although the number of those who graduated increased from 31.611 people in 2002 to 55.431 people in 2011, compared with the structure at national level, bacău county still has a smaller percentage: 14,38% at national level and 10,18% in bacău. the same aspect is recorded at high school level, bacău has a share of 19,3% from the total, while the national average is 24,36%. instead, the primary level of education is found in bacău at 16,34% of the people, and at national level at 14,18% of people of 10 years and older. on october 20, 2011 there were in the county a number of 19.306 people who were graduates of any school, although they were at the age at which they were supposed to be primary school graduates, of whom a number of 8.806 being illiterate, mostly women. harja  52   5,22 10,182,87 3,09 34,10 38,31 31,85 28,53 22,58 16,34 3,38 3,55 0% 20% 40% 60% 80% 100% 2002 2011 higher post high school and foremen upper secondary gymnasium primary no schooling   figure 6 structure of stable population of 10 years and over after the last school graduated, the last two censuses source: own calculations based on data from the statistics institute of bacău county the share of those with no school degree was higher in bacău (3,55%) than the national level (3%), as in the case of illiterates (1,36% national level while 1,62% county level). of those described above, it results that although the level of education increased in bacău, we are still below the average of the country. there are also in the case of educational level discrepancies between the two environments for a better education in urban areas and lower in rural. thus, if from the total population of 10 years and over in urban, 19,11% were educated to the last census, in the rural only 3,16% had this level of training. the same happens in the case of upper secondary, the urban share being 27,64% and only 12,75% in rural areas. an opposite situation is observed at the low level of education: the rural 36,2% had secondary education compared to 18,77% in urban, 21,78% from rural population had primary level of education compared to 9,4% in urban areas, 4,76% had no schooling in rural compared to 1,99% in urban or in rural areas the illiterate were 2,26% to 0,8% in urban areas. the highest percentage of population with no schooling are found in older age groups (10,07% at 75 years and over and 4,96% at 70-74 years), but unfortunately there is also a share of 16,94% at the age group of 1014 years, where the conclusion of a high school dropout or repetition of classes in elementary school. 4. conclusions if until in the '90s the trend of population growth was due to a positive natural growth and stability in terms of migration, after this year things got somehow out of control. on one hand, the increasing number of less live births led to a decrease in natural way and, on the other hand illegal migration at the beginning, and after joining the eu somehow becoming legal, made possible to lose significant shares of population. the main demographics changes in the population of bacău county at the last census  53   bacău county experienced the last two censuses the largest absolute reduction in stable population among the country. located in the poorest region in the country, in a county with a strong industry that attracted the majority of the workforce, this started losing each year population as a result of massive layoffs in the industry, the impact on unemployment and poverty. these latter aspects determined much of the population to leave to rural areas on the one hand, where one could live with less cost and therefore this reversed the share of the population for the two areas in favor of the rural areas. on the other hand people preferred to migrate to countries that offered them a job. at the last census, there were declared by the family and neighbors a number of over 57 thousand people as traveling to other countries for a long time (over a year), and have not been included in the population of the county. of these, 73% were at work in italy, 7,62% in the uk and 7,5 % in spain. but, besides these, there was a large enough number for which there was no one to declare to the census, therefore, the number of those who left is much higher, which led to a decrease by more than 18% of the county population. moreover, the migration of the population occurred in a higher proportion at the working age groups, especially between 20-44 years, taking with them over 5.000 children under 15 years who left after parents in other states. this led to greater imbalances by age, which could be observed by comparing the two pyramids of age. urban population decline (-18,1% ) occurred in a higher proportion than in rural areas (-8,2 %) between the last two censuses, compared with the national average where the decrease felt stronger in rural than in urban. this led to the widening of the imbalances by areas, being more highlighted a higher share of the rural in bacău (56,6% compared to the national average of 46%). in fact, if from the total stable population reduction in the country between the last two censuses was due of 37% to urban, in bacău the overall reduction was due to the urban in a share of 65,4%. regarding education, even if it increased in the last census, we have shown that we are still under the national average, primarily due to the higher degree of poverty throughout the area. in conclusion, compared to other areas of the country, much larger investments are needed to reduce the gap in the development of the counties, which would lead to the creation of jobs and attracting people who migrated, or even to preserve those that remain, and economic development would lead to better investment in education, with long-term effects. references barthelemy, p, granier, b, robert, m, (2009), demografie şi societate, bucureşti, institutul european. harja, e, (2004), analiza şi prognoza statistică a numărului şi structurii forţei de muncă, bucureşti, ed. matrixrom. harja, e, (2009), statistică şi econometrie, bacău, ed. almamater. sora, v., mihăescu, c., colibabă, d., grădinaru, g., danciu, a. (2002), analiză statistică demografică. teorie şi aplicaţii, ed. economică. statistical data from statistics institute of bacău county, available on http://www.bacau.insse.ro/main.php, http://www.bacau.insse.ro/phpfiles/ comunicat _rezultate_definitive_rpl_2011_judet%20bacau.pdf. stoica, i, (2011), tentaţia migraţiei. necesitate şi oportunitate într-o lume globalizată, ed. militară. microsoft word muntean mircea engl. concerns of european commission for small and medium size enterprises development mircea muntean, universitatea vasile alecsandri of bacău abstract: european commission initiated development programs for small and medium size enterprises (smes) comprised in sba initiative. the respective programs establish measures in order to facilitate: setting up in a short time span of smes, access to finance, as well as the possibility of introducing it both european single market and global market processed products and performed services. a concern of european commission consisted in recommendation made to member states that, by means of national programs, will support the smes development by offering the possibility of attendance to cross-border transactions with european single market. european commission’s programs were supported by european council and approved by european parliament, following that every member state will establish programs and initiatives on national level. european commission’s strategy concerning smes development is the increase of their number, labour force absorption and a faster economic and financial crisis traversing. key words: european commission, europe’s council, smes, sba initiative smes development and creation play an important role in what the future employment, goods production increase, services performing as well as prosperity of european union is concerned. therefore the commission launched in 2008 an initiative called sba (small business act for europe), to put smes at the forefront of decision-making, to strengthen their potential to create jobs in the eu and to promote their competitiveness both within the single market and in the global markets. as a key element, the sba aims at making the “think small first” principle a reality in policies and decision making at all levels in the eu. the sba initiative has as main aim the adopting of complete and comprehensive policy measures in favour of smes for an easier traversing of economical and financial crisis by european union’s member states. the measures established through this initiative are comprised in an action plan approved in december 2008 by the europe’s council and supported by the european parliament that invited the member states to implement the sba in its entirety. in december 2009, the european commission drew up the report concerning the appliance of initiative sba (com (2009) 680 final), where the practical use of measures contained in sba action plan and in the european economic recovery plan were presented. from the rapport study resulted: • adopting, starting with the 1 of june 2009 of reduced vat rates. therefore, the possibility of boosting economic activity notably in labour-intensive services was offer to the member states. • the proposal on vat invoicing, adopted by the european commission in january 2009, that aims at ensuring equal treatment of paper and electronic 59 studies and scientific researches ‐ economic edition, no. 14, 2009    invoices. the appliance of this proposal is estimated to have a maximum midterm reduction potential of € 18.4 billion if all businesses would send all their invoices electronically. the implementation of the measures program established by sba initiative was realized with vary approaches and results according to specific conditions for every member state. therefore, belgium launched in 2008 its ‘plan pme’, which includes 40 measures covering the main objectives of the sba initiative. in other countries, such italy and ireland, their governments created working groups that take action in the ten areas. in their 2009 national progress reports in the context of the lisbon partnership for growth and jobs, finland, france, the netherlands, romania and the united kingdom have explicitly reported on how they are implementing the sba. the united kingdom has presented in a very detailed annex the measures taken for each of the ten principles of the sba. moreover, some regions, such as catalonia (spain) or north rhine-westphalia (germany), have also adopted the sba. the evaluation of results obtained from sba initiative appliance starts from the “think small first” principle. therefore, starting with february 2009 the european commission proposed to give member states the possibility to exempt microenterprises from accounting rules. starting from this recommendation, member states would be free to devise accounting regimes best suited to their micro-enterprises, aspect that would determine that up to 5.4 million entities will realize expenses savings of € 6.3 billion for the european union economy. a main aim of european commission is reducing the expenses concerning the smes administration with 33%, aspect materialized in saving € 123.8 billion for european union’s budget. this aim is comprised in “action programme for reducing administrative burdens in the eu: sector reduction plan and 2009 actions” – com (2009) 544 approved by europe’s council and parliament. concerns of european commission are met in simplifying the administrative burdens of smes by reducing the average time and cost to start-up a private limited company, to 8 days in 2009 compared to 9 days in 2008. also, the cost for setting up a firm is reduced from € 463 in 2008 to € 417 in 2009. on european commission proposal, eighteen countries have provided an operational one-stop-shop with the purpose of fastening the creation of private limited companies. in order to achieve it, pre-defined procedures were elaborated concerning: company registration, tax registration, etc. such examples are: • bulgaria has consolidated the smes streamlining of start-up procedures in which nine start-up procedures have been merged and simplified into just one; • germany has successfully amended the legislation for private limited companies, by simplifying the procedure and by stimulating the creation of new enterprises; • hungary, malta and slovakia simplified the legislation and contributed to time reduction companies setting up; • slovenia created the electronic “one-stop-shop system” that can register all forms of companies in 3 days or less and has resulted in savings of €10.2 million a year for smes. in what the access to finance is concerned, the commission has simplified state aid rules for smes at the member states level. therefore, the general block exemption regulation (gber) was adopted as part of the sba initiative, which consolidates into one text and harmonises the rules previously set out in five separate regulations, and enlarges the categories of state aid covered by the exemption. the gber introduced new rules on aid intensities for smes. by new rule 20% higher aid proportion 60 studies and scientific researches ‐ economic edition, no. 14, 2009    allowed for small enterprises and 10% higher for medium-sized enterprises as well as on incentives for the creation of start-ups and support for women entrepreneurs. concerning state aid, we mention that in 2008 the approved amount was € 2.8 billion, an increase of €0.3 billion compared to 2007. the commission also adopted a handbook on state aid rules which gives a concise overview of the aid possibilities for smes permitted under community state aid rules. the european commission’s financial support for smes also consisted in adopting a temporary framework on state aid for 2009/2010 providing member states with increased possibilities to tackle the effects of the credit squeeze on the real economy. in particular, member states are able to grant subsidised loans, loan guarantees at a reduced premium, risk capital for smes and direct state aid of up to € 500 000 without notification of individual cases. in 2009 the european commission took action in partnership with the european investment bank (eib) and the european investment fund in order to assure smes’ access to finance. the european investment bank has increased its lending activity dedicated to smes around € 11.5 billion in 2009. for the same period, the european investment fund gave credits of € 1.23 billion. the state aids granting were used in some member states as measure for smes supporting and for bearing with reduced consequences of financial and economic crisis. therefore, most member states (austria, belgium, the czech republic, denmark, estonia, finland, france, germany, greece, italy, lithuania, luxembourg, the united kingdom, spain, the netherlands and hungary) have also adopted policy measures to enhance smes’ access to liquidity, especially to bank lending, through the creation and extension of loan and guarantee schemes for smes. the eib package of € 30 billion for loans to smes also allows some member countries to use a second level guarantee scheme. in addition, belgium and france have set up a “credit mediator” acting as a contact point for smes and entrepreneurs that have problems with their bank. also as propriety, the commission has simplified the cohesion policy management rules to facilitate the implementation of the 455 cohesion policy programmes planned for 2007-2013. these programmes represent a total investment of € 347 billion. hence, the commission supported the smes access towards investment flows directed particularly towards sectors linked to energy efficiency and the use of renewable energies in housing with the purpose to provide growth and jobs. the commission proposed measures for the simplification of the 7th framework programme for research and technological development (fp7) in such way that the smes taking part in an fp7 project to keep the benefit of sme treatment for that project even if it exceeds the sme ceilings during the duration of the project. to encourage and stimulate the smes activity, the commission and the member states jointly decided to further lower the fees for eu-wide trade mark rights by 40% and to simplify the registration procedure from 1 may 2009. these measures are aimed to stimulate smes to realization of cross-border operations and entrance on the single market. in the frame of sba initiative, the commission invited member states to make the most of the “european code of best practices” (called “the sme code”) where smes access to public procurement contracts and public acquisitions manners are foreseen. in presented rapport, the commission has also highlighted the importance of a full and timely transposition of the services directive, which will significantly facilitate the establishment of businesses and the cross-border provision of services. the fast establishment of new enterprises is realized by means of points of single contact with the purpose of offering to interested persons the possibility of filling in all necessary formalities, such as: authorizations, notifications, environmental licenses, by 61 studies and scientific researches ‐ economic edition, no. 14, 2009    electronic means. together with member states, the commission has devoted significant resources to monitor and coordinate the implementation of the directive up to 28 december 2009. this activity will continue in the future, based on a project (spocs) intended to further enhance the points of single contact beyond 2010. the action plan established by sba initiative takes into consideration the creation of smes on global level and constitutes one of european commission’s strategies up to 2020. bibliography 1.muntean, m., păcurari, d., influenţa integrării în uniunea europeană asupra fiscalităţii din românia, revista studii şi cercetări ştiinţifice seria ştiinţe economice a universităţii din bacău, nr.13/2008. 2.muntean, m., păcurari, d., preocupări ale comisiei europene pentru modernizarea fiscalităţii în ţările membre ale uniunii europene privind impozitele indirecte, revista finanţe publice şi contabilitate, nr.10/2009. 3. brezeanu, p., simion, i, celea, s., fiscalitate europeană, ed.economică, bucureşti 2005. 4.http://ec.europa.eu/enterprise/policies/sme/small-businessact/implementation/files/sba_imp_ro.pdf 62 studies and scientific researches. economics edition, no 28, 2018 http://sceco.ub.ro 48 reinsurance utilisation and dependence on the financial performance of non-life insurers: evidence from nigeria francis s. dansu department of insurance, lagos state university, nigeria francisdansu@gmail.com adebayo m. obalola department of actuarial science & insurance, university of lagos, nigeria mobalola@unilag.edu.ng abstract reinsurance is used by primary insurers as a device to cushion the effect of underwriting and solvency risks. however, an overdependence on reinsurance could cause depletion in the income of the primary insurer. the study examined the effect of reinsurance on the financial performance of non-life insurers in nigeria. secondary data used for this research were analysed with descriptive statistics, coefficient of determination (r2), and linear regression. results showed a significant positive relationship between reinsurance utilisation and premium growth rate. similarly, a significant positive relationship was found between reinsurance dependence and profitability (loss ratio). it was recommended that non-life insurers should embrace more of reinsurance facilities particularly for risks of high loss potentials in order to stabilise premium growth rate. in addition, insurance firms in nigeria should harness their claims management activities in order to minimise cost and exposure to underwriting risks. keywords financial performance; loss ratio; premium growth rate; primary insurers; reinsurance jel classification g22 introduction insurance service providers rely on reinsurance business for financial stability. this is confirmed by studies performed previously in america, australia, canada and pakistan (iqbal & rehman, 2014a; chen, hamwi & hudson, 2001; cummins, dionne, gagne & nouira, 2008; carneiro & sherris, 2005; tan & weng, 2012). while the outcomes of some of these studies highlight the significance of reinsurance to the survival of insurance companies, there seems not to be a universal agreement on the direction of reinsurance contribution to financial performance of ceding companies. chen, hamwi, and hudson (2001) observed that though reinsurance can be used as a tool to improve the solvency of insurance companies, it could as well increase their insolvency risks. similarly, iqbal and rehman (2014a) noted that reinsurance can significantly contribute to the performance of insurance firms. they further reported that an over dependence on reinsurance can limits an insurer’s performance and exposes it to counterparty credit risk. that is, the risk that the reinsurer will fail to honour its side of the contract. it therefore becomes critical that reinsurers remain financially adequate in order to perform their key role to primary insurers. reinsurance is defined as the insurance for insurers (swiss re, 2004). it could be considered broadly as the transfer of risks from one insurer (primary insurer or cedant) reinsurance utilisation and dependence on the financial performance of non-life insurers: evidence from nigeria 49 to another insurer (the reinsurer) through an agreement under which the reinsurer agrees, in return for a reinsurance premium to indemnify the cedant for some or all of the financial consequences of certain loss exposures covered by the primary insurer’s policy (iqbal & rehman, 2014a). reinsurance provides quite a number of benefits to the ceding company. according to cummins et al. (2008) insurers are motivated to seek reinsurance by the same factors that inspire other business organisations to buy insurance. specifically, reinsurance reduces volatility of underwriting results of primary insurers, provides them with expertise in key areas of insurance business (product development, pricing, underwriting, and claims management), relieves them of any capital strain, and allows for efficient risk and capital management (swiss re, 2004). in addition to these benefits, reinsurance contributes to the growth of the insurance industry and the general development of the economy. (swiss re, 2004; iqbal & rehman, 2014b). insurance has been found to be highly beneficial to the social, financial, and economic developments of a nation. according to grant (2012) insurance should be perceived not only as a protection mechanism, but more importantly as a partnership that allows individuals and businesses to spread their wings and go where they might otherwise not have dared to go. as a device that enables risk to be transferred from the insured (the supposed risk bearer) to an insurer (the entity that accept to bear the risk) insurance fosters the economy by accumulating funds from premium and transferring same to deficit economic sectors for financing real investments (oke, 2012). the performance of these and other functions of insurance depends highly on the amount of financial security and solvency that accrues to insurance firms through the fundamental roles of reinsurance. reinsurance contributes in no small measure to the stability of insurance business. aside from offering technical assistance to ceding companies, reinsurance protects them from capital depletion, stabilises their earnings, and provides capital for alternative uses (coutts & thomas, 1997; cummins, dionne, gagne, & nouira, 2008). more precisely, reinsurance aids the management of the underwriting and actuarial risks that primary insurers are exposed to (swiss re, 2004; curak, utrobicic, & kovac, 2014). this according to veprauskaite and sherris, (2012) usually reflects in the solvency, earnings and economic value of insurance companies. given the insight from the literature, this study aims to establish the relationship between the reinsurance practice and financial performance of non-life insurance firms currently operating in nigeria. specifically the research aims at observing the effect of the ratio of ceded reinsurance (rcr) and the ratio of reinsurance recoverable to policyholders’ surplus (rrphs) on the premium growth rate (pgr) and the loss ratio (lr) of the selected firms. the indicators used as independent variables for this present study were selected by iqbal and rehman (2014a) and iqbal and rehman (2014b) under the corporate demand theory and used for a related study in pakistan. the study hypothesises that reinsurance utilisation (ratio of ceded reinsurance (rcr)) is not significantly related to profitability (premium growth rate) of nigerian insurers, and that reinsurance dependence (reinsurance recoverable to policyholders’ surplus (rrphs)) is negatively related to premium growth rate (loss ratio) of nigerian insurers. in order to achieve the objective of the study, the rest of this article is organised in this order. the second section contains the review of relevant literatures while the third section discusses the methodology. data analysis and discussion of findings is contained in the fourth section and section five details the conclusion and recommendations. dansu, obalola 50 literature review the usage of reinsurance by primary insurers can significantly improve their performance. this is the outcome of a study conducted by iqbal and rehman (2014a) to investigate the impact of reinsurance utilisation on the performance of non-life insurers in pakistan. with data retrieved from the financial statements of 22 insurance firms in pakistan, the authors find a positive relationship between reinsurance utilisation and the performance of primary insurers. the results specifically show an existence of reduced loss ratio and expense ratio and an expansion in firm size attributed to the usage of reinsurance. in another study by iqbal and rehman (2014b) to examine the relationship between profitability and reinsurance utilisation and dependence by private sector non-life stock insurers of pakistan. the authors utilise secondary data gathered from 22 insurance companies and conclude that reinsurance utilisation has a significant but positive relationship with the profitability of insurance firms. in addition, the results show that reinsurance dependence and exposure has no effect on insurance companies’ profitability. according to curak, utrobicic, and kovac (2014) the factors influencing the decision of primary insurers operating in developed economies to purchase reinsurance include leverage, size, underwriting results, investment returns, and ownership structure. this raises further questions about the motivating factors that promote the demand for reinsurance in underdeveloped insurance markets. the answer to this fundamental question is provided by the authors through the outcome of a study carried out to investigate firm specific factors that influence the demand for reinsurance by insurance companies in croatia. they gathered data from 19 insurance companies between 2006 and 2011. the study reveals that leverage, foreign ownership, investment return, and share of non-life insurance positively affect reinsurance purchase. the study however finds a negative relationship between reinsurance demand and size. in an earlier study carried out by carneiro and sherris (2005), econometric test was used to examine factors that determine the demand for reinsurance by australian insurers; the authors collected a panel data set from the annual reports of 98 australian insurers for the period from 1996 to 2001. the result of the study reveals an existence of a positive relationship between insurance company’s leverage and the demand for reinsurance. the study further finds that the influence of size, taxes, return on investments, and company structure on reinsurance demand are not significant. however, cummins, dionne, gagne, and nouira (2008) in their study carried out to analyse the costs and benefits of reinsurance to primary insurers suggest that the demand for reinsurance by primary insurers is inspired by the same purposes that encourage individuals and businesses to purchase insurance. applying data gathered from the u.s. property and liability insurance firms over a period of nine years (between 1995 and 2003), the authors find that insurers benefits largely from participating in reinsurance activities. they note that reinsurance help limit insurers’ insolvency risk by stabilizing loss experience, protecting against catastrophes, increasing underwriting capacity, reducing liability on specific risks, and minimizing rate of claims dispute. in contrast, the study reveals that it is quite expensive to transfer risks to reinsurers. the cost of reinsurance transaction significantly increases an insurer’s cost of producing insurance service. chen, hamwi, and hudson (2001) use data collected from 980 property and liability firms in the u.s. to investigate the effect of ceded reinsurance on solvency of primary insurers. the results of the analysis indicate that usage of reinsurance by primary insurers could trigger the tendency of insurer’s insolvency. the study further support this assertion by showing that a less solvent insurer is likely to seek more reinsurance protection because of his perceived difficulty to raise capital in the financial market. reinsurance utilisation and dependence on the financial performance of non-life insurers: evidence from nigeria 51 the performance of united states property and liability reinsurers is measured by chen and hamwi (2000). the study focuses on a comparative analysis of the primary insurers and the professional reinsurers using the 1996 data obtained from all the firms operating in the u.s. property and liability sector. furthermore the study adopts the usage of certain financial ratios to measure the operating performance of the companies. the results indicate that both categories of insurers perform well but at varying respects. primary insurers generate higher return from underwriting activities compare to investment. whereas, reinsurers perform better in return on investment than in underwriting profitability. primary insurers are constantly confronted by the risk that reinsurers will default in the bid to fulfill their part of the contract. it is this risk that gatumel and lemoyne de forges (2013) examined in their study – understanding and monitoring reinsurance counterparty risk. the authors conclude that monitoring of reinsurers’ default risk should not be entirely based on market discipline. they also add that insurance companies must expand their expertise in order to understand their level of exposure to reinsurance counterparty risks. tan and weng (2012) conducted a study on enhancing insurer value using reinsurance and value-at-risk criterion. the authors build on the findings of previous researchers to develop a more reliable optimal reinsurance model to be used by primary insurers to achieve better result. the study leads to the development of a model that will assist primary insurers to understand the required measure of risks that should be ceded to reinsurers considering the cost of reinsurance and their motive for profitability. in a related study, veprauskaite and sherris (2012) analyse the reinsurance optimization in life insurance using a modified mean-variance criteria. the purpose of the study is to determine the optimal measure of reinsurance policy including type, mix and retention limit suitable for life insurers given consideration to the cost of reinsurance and the need for profitability. data use for the research includes 425,000 life insurance policies from an unnamed large life insurer in australia. the results of the study shows that optimal reinsurance arrangement for a life insurer depends on some factors which include number of retention limit, claim variance and predetermined risk appetite. meier and outreville (2003) find that reinsurance price is one of the factors responsible for the fluctuations in the prices and profits (underwriting cycle) and hence, loss ratio of primary insurers. this is revealed in their study conducted in the property and liability insurance sector across three developed insurance markets including france, germany and switzerland. the research show that a decrease in the price of reinsurance will result to expansion in the underwriting capacity of primary insurers. yan and hong (2015) use data gathered from the annual statement of the national association of insurance commissioners (naic) for the years 1995-2000 to examine the presence of asymmetric information across three different reinsurance markets in the united states. the outcome of the study shows the existence of asymmetric information in the private passenger auto liability and homeowner’s reinsurance markets but not in the product liability reinsurance market. in addition the study identifies the potency of retention limits as a means of cushioning the effect of asymmetric information challenges. however, long term contractual relationship has not been considered as a tool for dealing with the problem of asymmetric information. financial performance of insurance firms has been immensely assessed by previous researchers. the outcome of most of these studies attests to the relevance of profitability to the survival of business concerns. according to kearney (2010) the global economic crisis has brought the profitability of insurance firms in doubt. nevertheless, nigerian insurers are advised by borokini as cited in anaesoronye (2010) to take underwriting function very seriously in order to remain profitable. dansu, obalola 52 generally, financial performance of business organisations is measured with the use of financial ratios. abate (2012) defines financial ratio as a class of financial metrics that are used to assess a business’ ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. to measure the profitability of business, al-shami (2008) and malik (2011) agree on a number of ratios for the measurement of financial performance. these include return on assets (roa), return on equity (roe) and return on invested capital (roic). roa is an indicator of how profitable a company is relative to its total assets. it shows how efficient the management uses its assets to generate earnings. whereas roe measures how much profit a company generates with shareholders’ investment. roic is a measure used to asses a company’s efficiency in allocating the capital under its control in profitable investments. however, for the specific purpose of insurance business, greene and segal (2004) posit that the performance of insurance companies in financial terms is normally expressed in net premium earned, profit from underwriting activities, annual turnover, return on investment, and return on equity. mehari and aemiro (2013) assess the firm specific factors that determine the performance of insurance companies in ethiopia. they utilised data gathered from nine insurance firms in ethiopia from 2005 – 2010. the study shows that while business size and leverage positively affect the performance of insurance firms, loss ratio has a negative relationship with insurance companies’ performance. the authors therefore conclude that insurers’ size, loss ratio, tangibility and leverage are among the important determinants of insurance companies’ performance in ethiopia. in a related research, lee (2014) uses ordinary least square (ols) regression model, fixed effect model (fem) and random effect model (rem) to examine the effects of firm specific factors and macroeconomic variables on the profitability of property and liability insurance companies in taiwan. the study engages data collected from 15 taiwanese property and liability insurers over a period of eleven years, from 1999 to 2009. the outcome of the study indicates that reinsurance utilisation, underwriting risk (loss ratio), and input cost significantly affect the profitability of insurance firms. the author therefore suggests that a reduction in the value of these three key indicators among others will translate to the profitability of insurance business in taiwan. burca and batrinca (2014) conducted a similar study in romania with the use of econometric model. the aim of the study is to investigate the determinants of financial performance in the romanian insurance market. the secondary data use for the study is obtained from 21 romanian insurers from 2008 – 2012. the results of the data analysis shows that financial performance of romanian insurance firms could be affected among other factors by growth of gross written premiums, underwriting risk (loss ratio), leverage, company size, and solvency margin. a similar study performed in kenya by mwangi and iraya (2014) employed multiple linear regression analysis to assess the determinants of financial performance of general insurance underwriters in kenya. the authors obtained three years data form varying numbers of insurance firms. data were generated from 22 insurers in 2010, 23 insurers in 2011, and 25 insurers in 2012. the result of the analysis shows that while earning asset and investment yield positively affect insurer’s profitability, loss ratio and expense ratio are negatively correlated to financial performance of general insurers. however, growth of premium and size of insurer are not significant in their influence on financial performance of kenyan general insurers. reinsurance utilisation and dependence on the financial performance of non-life insurers: evidence from nigeria 53 materials and methods secondary data is used for this study. the data is obtained from the audited annual financial reports of selected nigerian insurance firms and therefore represent the most pragmatic view of the insurance companies. the data is generated from the financial reports published by the insurance firms, as well as on their respective websites. the population of the study includes insurance companies in nigeria offering non-life policies. there are about 41 of these companies operating in nigeria at present (ciin, 2013). since the population of this study is a finite one, yamane (1964) formula for determining sample size from a finite population was employed in the selection of the study’s sample size at 5% level of significance. the formula states that; 𝑛 = 𝑁 1+𝑁(𝑒)2 n = required sample size n= population e= maximum margin of error at 5% thus, 𝑛 = 41 1 + 41(0.05)2 𝑛 = 41 1 + 0.1025 𝑛 = 37.20508167 𝑛 ≅ 37 although the recommended sample size is 37 companies, only sixteen (16) of these companies were selected as sample because they had complete record of the data needed for the study (2004-2013) and they represent 39% of the total population. a percentage considered appropriate for this study base on the position of amadi (2005). purposive sampling technique was considered in selecting the sample. the data was generated for a ten year period that is, from 2004 to 2013 giving a 160 data set. the data generated for this study include ratio of ceded reinsurance (rcr), ratio of reinsurance recoverable to policyholders’ surplus (rrphs), loss ratio (lr), and premium growth rate (pgr). the lr and the pgr are used as proxies for dependent variables in this study. the lr shows what percentage of claim is being settled with premium received by the insurance company. it is calculated by dividing loss adjustments expenses by premiums earned. higher loss ratios may indicate that an insurance company needs better risk management strategy. a lower rate of this ratio indicates a better financial health for an insurer. malik (2011) used lr to study the determinants of insurers’ profitability in pakistan and found a significant negative correlation between lr and profitability. cummins et al. (2008) and iqbal and rehman (2014) have also used lr as an indicator of profitability. pgr is measured as a year to year change in the new premium of insurance companies. the proxy use for this variable is sales growth (percentage change in premiums) of insurance companies. the insurers with a high premium growth rate will have low profitability due to increased underwriting risk and related provision for solvency margin (lee, 2014; ahmed et al., 2011). the independent variables include the rcr and rrphs. the rcr measures the degree to which an insurance company utilises reinsurance to fulfill its obligation to its policyholders. it is measured as ratio of gross written premiums ceded in reinsurance to total assets. it has been used in previous researches to measure the rate of reinsurance use among ceding companies. (cole & mccullough, 2006; cummins, dionne, & nouira, 2008; iqbal & rehman, 2014b; burca & batrinca, 2014). the rrphs is an dansu, obalola 54 indication of the volume of insurance company’s dependence on its reinsurers to settle claims and it indicates the rate of the insurer’s exposure to the failure of the reinsurer to deliver. its normal range is from 50% to 150% (smith, 2011 cited in iqbal & rehman, 2014a). this ratio is used by iqbal and rehman (2014a) to measure the relationship between reinsurance and performance of primary insurers. the result of the study is significant. the linear regression models developed for this study are as follows: pgr = 𝛼1 + 𝛽1 rcr + 𝜇1 … (1) lr = 𝛼2 + 𝛽2 rrphs + 𝜇2 … (2) results and discussion two hypotheses were tested in this study and results obtained were adequately interpreted, discussed and presented. hypothesis one reinsurance utilisation is not significantly related to premium growth rate of nigerian insurers. • reinsurance utilisation (rcr )was derived by the formula below: 𝑅𝑒𝑖𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 𝑂𝑢𝑡𝑤𝑎𝑟𝑑 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 • premium growth rate was derived by the formula below: 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 𝑜𝑓 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟 − 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 𝑜𝑓 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑌𝑒𝑎𝑟 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 𝑜𝑓 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑌𝑒𝑎𝑟 table 1 model summary for hypothesis one n 16 constant (a) -3.805 rcr(b) 40.439 r2 .277 f-statistics 5.365 p-value .036 source: authors’ computation, 2017 table 1 showed that a significant positive relationship existed between rcr and pgr because the p-value 0.036 was less than the level of significance for the study (0.05). the positive value of the co-efficient of rcr indicated that for every 1% increase in rcr, there will be a corresponding increase of 404.4% in pgr in the nigerian insurance industry. this showed that a direct relationship existed between rcr and pgr. it therefore implied that for the insurance industry to generate profit through premium accumulation there must be constant utilisation of reinsurance. the co-efficient of determination (r2) is 0.277. this showed that only about 27.7% of the variance recorded in the dependent variable (pgr) can be explained by the independent variable (rcr) leaving about 72.3% to be explained by other factors like expense ratio (er), loss ratio (lr), broker and agents’ commission, cost of overheads, and other sundry expenses. the result revealed that reinsurance utilisation is significantly related to premium growth rate of nigerian insurers. reinsurance utilisation and dependence on the financial performance of non-life insurers: evidence from nigeria 55 this result conforms to the findings of iqbal and rehman (2014a) that a positive relationship exists between reinsurance utilisation and the performance of primary insurers. iqbal and rehman (2014b) equally found a similar result when roa and roe are used as proxies for profitability. the result is further justified by the findings of lee (2014) that reinsurance utilisation is among the key determinant of insurers’ profitability. hypothesis two reinsurance dependence is negatively related to profitability (loss ratio) of nigerian insurers • reinsurance dependence (rrphs) was derived by the formula below: 𝑅𝑒𝑖𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 𝐼𝑛𝑤𝑎𝑟𝑑 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 • profitability (loss ratio) was derived by the formula below: 𝐶𝑙𝑎𝑖𝑚𝑠 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 table 2 model summary for hypothesis two n 16 constant (a) 0.278 rrphs (b) 0.150 r2 0.363 f-statistics 7.973 p-value .014 source: authors’ computation, 2017 table 2 showed that a significant positive relationship exists between reinsurance dependence and loss ratio, since the p-value 0.014 is less than the level of significance for the study (0.05). all other variables being kept constant, the positive value of the co-efficient of the ratio of rrphs showed that for every one percent increase in rrphs, the lr increases by 15%. lr being the proportion of actual claim amount paid from the gross premium collected is an indication of the degree of profitability and the lower it is the better for the insurer. these results implied that for the nigerian insurers to lower their cost of claims by 15%, the rate of dependence on reinsurance must be reduced by 1% thereby increasing its profitability. this result contradicts the findings of iqbal and rehman (2014b) which show that reinsurance dependence and exposure has no effect on insurance companies’ profitability (roa and roe). the co-efficient of determination (r2) is 0.363. this indicates that about 36.3% of the variations recorded in lr are explained by rrphs, leaving about 63.7% to be explained by other factors like loss reserving, claim forecasting, loss adjustment, litigation, and recovery opportunities through subrogation. dansu, obalola 56 conclusion and recommendation the objective of this study was to establish the influence of reinsurance usage on the financial performance of nigerian non-life insurers. profitability is an important determinant of organisational performance. it is more important in insurance business because it measures the ability of the firm to perform its basic roles to policyholders, shareholders and other stakeholders. the outcome of the study shows that reinsurance utilisation contributes significantly to the profitability of nonlife insurers in nigeria. the results reveal that profit oriented insurers requires reinsurance to lower the underwriting and solvency risks likely to cause fluctuations in their portfolios. the results further show that for a non-life insurer to lower its loss ratio, thereby creating room for profitability, it must reduce its dependence on reinsurance. however, non-life insurance firms in nigeria should be moderate and strategic in utilising and depending on reinsurance. based on the findings of this study, the researcher hereby makes the following recommendations: i. nigerian non-life insurers should embrace more of reinsurance facilities particularly for risks of high loss potentials. this will enhance the stability of premium growth of the portfolios. ii. however, while 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(2012), an analysis of reinsurance optimization in life insurance. working paper. available at http://www.ideas.repec.org/p/asb/wpaper/201204.html yan, z., hong, l. (2015), testing for asymmetric information in reinsurance markets. the geneva papers, 40, 29-40. available at http://www.genevaassociation.org. http://www.businee.unsw.edu.au/ http://www.huebnergeneva.org/documents/meier3.pdf http://www.nigerianinsurers.org/ https://www.panafricancapitalplc.com/downloadi.php http://www.ideas.repec.org/p/asb/wpaper/201204.html http://www.genevaassociation.org/ studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 99 international economic relations and their influence upon power centers evolution bogdan simion malanciuc bucharest university of economic studies malanciucbs@yahoo.com abstract the relative advantages of the nations at the top of the international hierarchy are never constant, the reasons being in particular related to the uneven rhythm of development of the various societies. this rhythm is correlated with technological and organizational advances, which offers a great advantage to certain societies in relation to others. in this context, international economic relations, any kind of exchanges between countries, have influenced the rise and fall of the world’s states power. history proves that the great powers have managed to maintain their status as long as they have been in the center of the world trade. keywords international relations, power center, international economics, trade jel classification j50 concepts of “power” and “power center” the importance of the power phenomenon in the development of the society is incontestable and certain. yet, this phenomenon is insufficiently studied by economists; the most active researchers of this factor have been and are still the philosophers, the sociologists and the politologists. literally, the power does not make part of the economy mainstream. thus, we notice among researchers an ambiguous interpretation of power, there being different and sometimes contradictory approaches of the issue of power and its role in the economic development. according to robert dahl’s observations in 1957, “this word [power] and its synonyms are incorporated in all civilized languages, more often in meanings that slightly differ: power, influence, control, pouvoir, puissance, macht, herrschaft, gewalt, imperium, potestas, auctoritas, potentia etc” (dahl, 1957). dahl sees power as being a relation between actors a and b; “a has power over b to the extent that he can get b to do something that b would not otherwise do” (dahl, 1957). to do that (changing behavior), state actor a should have some ways to convince state actor b. this are the resources of power: geography, resources, population, economy, military might and so on. power centers are the actors a that have the biggest resources to influence others. throughout history a number of states have managed to be considered great powers: spain, france, austria, prussia (later germany), england, russia (soviet union), united states. international economic relations as a resource of power international economic relations can be and are seen as a resource of power of different states. malanciuc 100 as early as 1817, ricardo's comparative advantage theory demonstrated that free trade is more advantageous for all parties than the autarky. but in all historical periods there were and still are states that believe something else, some of them being great powers. controlling exports and imports is a strategy for different power centers trying to impose their agenda on some international (or even national) issues. looking the other way around, is there a connection between the status of leading state of the international system (biggest power center) and the status of leader of free trade (biggest supporter of trade)? this could be a very actual question taking into account some of the latest statements of trump administration: “we are not in a trade war with china, that war was lost many years ago by the foolish, or incompetent, people who represented the u.s. now we have a trade deficit of $500 billion a year, with intellectual property theft of another $300 billion. we cannot let this continue!” 1 power centers history and international trade classical antiquity the history of rise and fall of great powers can be analyzed since ancient times, since the persian empire, the greek cities and the roman empire. of great importance for international relations is the classical period of greek cities, around 400 bc, which exemplified some of the fundamental principles of interstate power politics (reflected in tucidide's writings on the peloponnesian war between sparta and athens). at that time, the states had sophisticated trade relations and fought each other over a wide area, from the mediterranean to the east of asia. according to tucidide, the main reason for the second peloponnesian war was “athens rise in power and fear that it produces in sparta” (nye, 2005). this rise of power of athens was inflicted by the expansion of greek colonies and trade (controlled by athens’ delos league) in east mediterranean. athens would have become, in the eyes of former ally in war against persian empire – sparta, too powerful because of this expansion. in this case, if sparta did not intervene, international sea trade and colonization would have given birth to the first superpower – athens. the roman empire was powerful due to three reasons: language / culture, military power and commerce. trade was one of the most important activities, roads, markets and ports being build and well maintained during the centuries. after the collapse of the empire’s might, the security of the trade routes cannot be maintained so europe entered in the so-called dark age. early modern period during this time in other parts of the world were different civilizations. after 1400, china under the ming dynasty, was a highly advanced civilization, independent of western influences. in 1420 “chinese fleet had 1.530 war ships, including 400 big floating fortresses and 250 vessels designed for long distance travels” (kennedy, 2011). the most famous official voyages over the sea were the seven voyages of admiral cheng ho, between 1405 and 1433. they succeeded to reach zanzibar and 1https://twitter.com/realdonaldtrump/status/981492087328792577?ref_src=twsrc%5etfw&ref_url=https% 3a%2f%2fwww.cnbc.com%2f2018%2f04%2f04%2fdonald-trump-we-are-not-in-a-trade-war-withchina-we-lost-that-war-many-years-ago.html&tfw_creator=thesheetztweetz&tfw_site=cnbc international economic relations and their influence upon power centers evolution 101 the red sea with their ships (bigger than 60 years later spanish ones). with these vessels the chinese could easily discover portugal some decades before european voyages, but they decided to stop. in 1436 china decided to ban the construction of maritime ships and turn the back to the international sea trade. this was one of the biggest strategic mistakes in human history, leaving an empty place that was soon occupied by the european explorers and merchants. in middle east, northern part of africa and northern india were two muslim empires, the ottoman and the mogul one. their weaknesses after 1550 were strategic overdevelopment, excessive bureaucracy, conservatism, and, most important, the incompetence of leaders. lack of new conquests and huge taxes have stifled the domestic economies, leaving no space for further positive developments in trade. but no matter how imposing and organized these empires from other continents looked compared to the european states, they were all characterized by terrible uniformity in beliefs and practices not only in the official religion of the state but also in areas such as trade relations, education and development of new weapons. no one would have predicted in the first part of that sixteenth century that the europeans would impose upon others. the competition, military rivalry, between european kingdoms and city-states created the framework for military progress, scientific and technological discoveries. turning less obstacles to progress, european societies have entered into a steady upward spiral of economic growth and improved military effectiveness that over time has raised them above all other societies from other continents. european imperialism began in the fifteenth century with the development of vessels capable of crossing the oceans. portugal was the pioneer of the first exploration trips. spain, england, france and netherlands soon followed. through higher military technology, europeans have gained control over coastal cities and supply outposts along major trade routes. gradually, this control expanded deeper into the continent, first in latin america, then in north america, and later in asia and africa. in the sixteenth century, spain and portugal had vast empires in central america and brazil, and the united kingdom and france colonies in north america and the caribbean. the europeans bought slaves in africa and were transporting them to mexico and brazil to work in agriculture and gold and silver mines. the wealth produced was exported to europe, where monarchs used it to maintain armies and build states. although continuous technological progress and ongoing military rivalry has characterized western countries, it has always been possible for one of the competing kingdoms to manage to raise enough resources to overcome the others and thus dominate the continent. in the sixteenth century and the first half of the seventeenth century, catholic states subjected to the habsburg dynasty (spain, austria, etc.) seemed to be able to do so. against them, virtually all other european states (confirming power balance theory) have managed to prevent them from doing so. practically, despite the many economic resources possessed by the habsburg kingdoms (first of all the newly discovered resources in the americas), they did not win the war decisively. the other european states have achieved a better balance between their own material resources and their military power, managing to the limit to stop the domination tendencies of the habsburgs. the treaty of westphalia in 1648 established the basic rules that have since defined the international system the sovereignty and territorial integrity of states as equal and independent members of the international system. since then, the defeated states could be deprived of some territory, but they were generally allowed to continue as independent states instead of being embraced by victorious states. malanciuc 102 this period is characterized by the fierce fight in the oceans between the catholic spain and portugal and protestant england and united provinces, plus france. gains from international trade, resources from colonies, were used to maintain armies in europe and paid for the bloody wars from the time. generally, whoever succeeded to use better the resources win the long wars. late modern period the conflicts between the westphalian peace that ended the 30-year war (1648) and the vienna congress that ended the napoleonic wars (1815) cannot be easily described as a confrontation between a certain bloc of states and its rivals. during this agitated period a few former great powers, primarily spain, but also the netherlands and sweden, fell to the rank of secondary powers; other states england (from 1707 united kingdom), france, prussia, austria and russia dominated the politics and diplomacy of the eighteenth century, engaging in a series of coalition wars that were characterized by rapid alliances. france was the state closest to becoming the hegemon of the continent twice – first under the leadership of louis xiv and second under napoleon. but the efforts of the french have always been under the control of a broad coalition of the other powers. since the end of the eighteenth century, the maintenance of an army and a fleet has become very expensive, which has given great britain a great advantage, being a country that could create a more advanced manufacturing, commercial and banking system. table 1 number of battleships between 1689 and 1815 1689 1739 1756 1779 1790 1815 england (united kingdom) 100 124 105 90 195 214 france 120 50 70 63 81 80 russia 30 40 67 40 spain 34 48 72 25 sweden 40 27 united provinces (netherlands) 66 49 20 44 source: kennedy, p. (2011), ascensiunea și decăderea marilor puteri, polirom publishing house, iaşi, p.110 the number of ships clearly shows the huge advantage that united kingdom had in 1815. as prussian general gneisenau observed in 1815 “great britain is the most indebted to this bastard [napoleon]. because, through events which he gave rise, greatness, prosperity and wealth of england increased. she is the master of the sea, neither here nor in the world trade has no rival to fear.” (kennedy, 2011). britain dominated world trade during this period. as britain's economy was the most advanced in the world from an economic point of view, its products were competitive everywhere. that is why british policy favored free trade. in addition to its central role in world trade, britain served as the financial capital of the world in the 19th century, managing an increasingly complex global market for goods and services. british currency, the pound has become the world standard. international economic relations and their influence upon power centers evolution 103 another british advantage, shared with russia, was the country's “marginal” strategic position, which allowed them to intervene in central european conflicts, yet still protected by the english channel, respectively the huge distances from the russian steppe. the period of the european concert, after the vienna congress, is a period almost without any conflicts, with the maximum increasing of trade. the major conflicts the american civil war, the crimean war and the franco-prussian war clearly showed the military superiority of the societies that had succeeded in modernizing their military forces and benefited from the industry needed to support the large armies equipped with modern weapons. there was a strategic balance, supported by all the great european powers, so that no nation was able to impose its dominance on the others. this stable international situation allowed the british empire to expand its territory outside europe, reaching its peak as a global power in naval, colonial and commercial terms during queen victoria. in the middle of the nineteenth century, industrialization was booming, spreading from the united kingdom to other european countries and even to other continents (british colonies, united states, japan). the international balance of power began to shift to the new states that had the ability to use new technologies and means of production and to extract the necessary resources. it has become very important to have colonial territories mainly for the natural resources, but also for the demographic potential offered. at the beginning of the twentieth century the arms race, both terrestrial and naval, increased. in 1910, germany's share of world industrial output reached 16%, thus exceeding the united kingdom. the economic power indices evolved year after year, showing a major change in the global balance, in the sense that the eurocentric world system was ending. states of the size of some continents, russia and the united states were in the forefront of overcoming the traditional european powers like france and austria. the industrialization of the united states economy was supported by the nineteenth century territorial expansion, which added great natural resources to it. also, the united states economy has attracted huge masses of immigrant labor from europe. the united states led the world in switching from coal to oil and horse-drawn carriage to the motor vehicle. the battles of the first world war, showed in the east a victory of national efficiency and industrial organization of germany over tsarist russia, still quite backward. in the west however, mainly thanks to the economic and military aid of the united states for the countries of the entente, germany was decisively defeated. although victorious, france, italy and even the british empire suffered more losses; russia was embraced by the bolshevik revolution, leaving the united states indisputably the world's greatest power. but the americans returned after the world war i victory to their traditional isolationism, leaving international affairs in the care of great britain and france. their supremacy was questioned two decades later by the axis powers, militarized and revisionist nations germany, japan and italy, dissatisfied with the post-world war i settlements. despite the fast victories of the outbreak of world war ii, germany and its allies were unable to withstand the immense imbalance in natural resources and productive capacities between them and the alliance between the united states and the soviet union. world war ii brought the irremediable weakening of the position of france and great britain, though victorious, as well as of germany defeated and divided into two states. malanciuc 104 british empire, ruler of the sea until now, was replaced in the world scene by former colony united states whose navy will ensure president woodrow wilson’s “freedom of the sea”. contemporary history after the war, in 1945, the military balance again correlated with the global distribution of economic resources, defending a bipolar world from an ideological, economic and military point of view. the position of the united states and the soviet union as super-powers, of a separate class, was also underlined by the development of nuclear weapons, which made the diplomatic and strategic landscape differ a lot from the previous ones. yet the growth and decline of great powers continued through differentiation of rates of economic growth and scientific and technical progress that may cause mutations in the global economy and, obviously, in military capabilities. united states and soviet union have started and maintained an unprecedented race of arms, in which no other power has been able to enroll. this permanent arms race had two negative consequences on capitalist economies. on the one hand, the special importance given to the military factor (large allocations of resources) contributed to a decrease in the productivity of the economy, and on the other hand, these resources required a permanent increase of the money supply in circulation, which generated inflation and the impossibility of maintaining the exchange rate between dollar and gold. from a military point of view, the two great powers have undoubtedly dominated the international landscape since the mid-twentieth century. from an economic point of view, the rapid return of other states, whether victorious or defeated in the last world war, has given rise to a multipolar world. europe has quickly recovered (and with the help of the united states through the marshall plan), becoming the european economic community the world's largest trading entity. japan, hit by two us nuclear bombs at the end of the war, grew from a technological and economic point of view very quickly, surpassing soviet union in the eighties (impressive for a country practically without its own natural resources). china has progressed at a steady pace, placing a strong emphasis on the rapid industrialization of the country. later, india and brazil followed china's example, trying to increase their share of the global economy. there have been three major changes that have led to the creation of a favorable context for the ending of the cold war. these are in the view of odd arne westad (westad & leffler, 2010): the spread of the right to vote, which has led to the expansion of political participation of citizens and the formation of representative democratic institutions; the expansion of the capitalist world, accompanied by the move of major production centers from western europe to north america and then to asia; the end of colonialism that led from 1945 to 1975 to creation of over 75 new independent states, which had a major impact on international relations. there is currently only one integrated world economy and no country can remain isolated. at the same time, the imperfections and problems of the world economy are evident due to the periodic crises and the recessions of recent years. the emergence of a global capitalist economy has deepened the disparities between the richest and the poorest regions. while the united states enjoyed unprecedented prosperity, rising poverty in africa has created a human catastrophe on a continental scale. international economic relations and their influence upon power centers evolution 105 conclusions if we analyze historical evidence of the rise and fall of great powers over the centuries, we will be able to issue some valid conclusions, although there may be some exceptions. for example, the causal relationship between the changes that have occurred over time in the overall economic equilibrium (exploitation of resources, industrialization, technology, productivity) and the place occupied in the hierarchy of national powers in the international system can be observed. the movement of trade flows from the mediterranean sea to the atlantic ocean since the sixteenth century, the redistribution of western european industrial production to the united states at the end of the nineteenth century, has prompted the rise of new great powers. that is why we must seriously treat the shift of global productive balances to the pacific ocean. figure 1 evolution of the earth’s economic center of gravity source: mckinsey institute (2012), urban world: cities and the rise of the consuming class, available at http://www.mckinsey.com/insights/urbanization/urban_world_cities_and_the_rise_of_the_consuming_clas s there is a very strong correlation between the results of the major wars, the coalition (napoleonic, the two world wars) and the amount of productive resources mobilized by the belligerent parties. similarly, history shows us quite clearly that in the long run there is a strong link between the rise / fall of a national economy and the increase / decrease of the military power of that state. this is normal as long as a great cost is required to sustain an impressive military force. also, wealth and power are relative in time; it is true that great britain now has more powerful weapons than at the beginning of the nineteenth century and is much richer in absolute terms but its share of world production has fallen from 25% to just 3%. this does not mean that the economic and military power will increase / decrease at the same speed. all history proves a notable delay between the trajectory of the relative economic power of a state and that of its military influence; the british empire in the mid-nineteenth century, the united states at the beginning of the twentieth century, japan in 1980, the european union after 2000, the current china may prefer to richer (raise living standards) than to spend money on arms. in the case of great britain and the united states priorities have changed half a century later. in the case of japan, european countries, and especially china, we will see ... as the economic expansion of the first two has involved various external obligations market dependencies, dependence on natural resources, alliances it is possible that the development of the latter leads them towards the same results. malanciuc 106 or the “lost decade” of japan and europe's deep economic crisis after 2007 to stop them from following the same path. during all history the great power that dominates the international system is a supporter of trade and open commerce with the others. that is true even in mercantilist era. great britain and united states after world war i are good examples of such a power centers. on the other hand, we can observe that the falling powers are the ones that have the tendency to oppose relations with others, being too conservative. ming’ china, japan before meiji reforms, ottoman empire, spain at the middle of seventeenth century are examples. how will be a world where united states is putting customs and china is supporting free trade? references goldstein, j., pevehouse, j. (2008), relații internaționale, bucurești, polirom publishing house. kennedy, p. (2011), ascensiunea și decăderea marilor puteri, bucurești, polirom publishing house. nye, j. (2005), descifrarea conflictelor internaționale, bucurești, antet publishing house. westad, o.a., leffler, m. (2010), the cambridge history of the cold war, volume iii, cambridge university press. dahl, r. (1957), the concept of power, behavorial sciences, 2:3, pp.201-215. dobbs, r., remes, j., manyika, j., roxburg, c., smit, s., schaer, f. (2012), mckinsey global institute report, urban world: cities and the rise of the consuming class, available at https://www.mckinsey.com/globalthemes/urbanization/urban-world-cities-and-the-rise-of-the-consuming-class aspects in the intellectual capital management of the romanian smes studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro features of the intellectual capital within romanian smes andreea feraru “vasile alecsandri” university of bacău andreea_feraru26@yahoo.com abstract intellectual capital has become a key element of the knowledge economy and the knowledge economy, which includes today even the smes from romania, alongside with other types of organizations, puts a great emphasis on the exploitation of the intellectual capital. the smes employees create a constructive work environment, they manifest a mutual trust and most of them have an appropriate work behavior conforming to the internal standards. the jobs and the teams formed inside the analyzed smes are stimulating the development of the intellectual skills, which reduces the need of involving external experts, appealing those experts would transform tacit knowledge into explicit knowledge. the organizational communication provides the necessary information for the employees and contributes to the establishment of certain fair and effective relationships between managers and employees, between colleagues, but also with the people outside the organization. keywords knowledge; economy; models; organizations; intellectual capital jel classification f15, m1, m10 1. introduction the economic environment where the smes are competing is in a continuous process of changing. switching from a post-industrial based economy to a knowledge based economy has changed the way the small businesses manage their assets. the knowledge based economy, which includes today even the smes from romania, alongside with other types of organizations, puts a great emphasis on the exploitation of the intellectual capital. each country, company and individual depends increasingly more on knowledge, which materializes in: patents, skills, technologies, and customer information about suppliers. at the level of smes, the technology and the associated processes act on the individual knowledge, and especially on the side of the intellectual tacit component. the management and the leadership are a powerful integrator in the nonlinear segment. the leadership is important by its power to act on knowledge, on the intelligence and on the individual values. the organizational vision and mission are also interesting integrators, which act mainly on the individual emotional intelligence. the organizational culture appears as a powerful integrator, since it acts mainly on the individual intelligence and on the values, creating models of the organizational behavior. 2. features of the intellectual capital most authors examine intellectual capital from a static perspective and focus on the development of its various evaluation models. in this chapter we surveyed the classical static models: sveiby, edvisson, balanced scorecard, as well as the canonical model of intellectual capital. 237 feraru among the group of static models for evaluating organisational intellectual capital the canonical model stands out. this model enables the structuring of organisational intellectual capital in: human capital, structural capital and relational capital. although the model is widely spread, it is a static one and can thus create a series of errors in the process of evaluation, because all the three entities mentioned above are not independent from the viewpoint of their contents, as any logic of structuring complex entities requires. as proved by the almost comprehensive analysis carried out by andriessen (2004) and, more recently, by roos and pike (2007), most authors interpret intellectual capital as organisational potential structured in the following manner: human capital, structural capital and relational capital. no matter what designations they might use, static models approach the manifestation of organizational intellectual capital after its foundation (stewart, 1999; roos et al., 1997; sveiby, 1997; andriessen, 2004). that is why all this research has a static character, examining a taxonomy reflecting a type of fixed reality, and not one which is dynamic and changing. in the context of a continuously changing and evolving economy, the most important resource for any enterprise is its human capital. however, the simple existence of a number of employees is not sufficient for making the difference in value between one organisation and another; what represents and constitutes its competitive advantage is the quality of its personnel, their competences, abilities, knowledge and their performanceand success-oriented views. could we say that the implication of performance-oriented employees and the existence of a work environment which stimulates creativity and innovation are enough for long-term business success? certainly, this is not enough because an organisation does not operate by itself, it functions in a certain context and establishes relations with various actors of the organisational environment (stakeholders, clients, suppliers, shareholders, state institutions etc.). that is why the relational component of intellectual capital is as important as its human and structural components. an organisation must concentrate its financial and human efforts on building and maintaining long-term relationships with all its business partners, with the target market and with the society in general. leif edvinsson, in line with the scheme of market value, divides intellectual capital in human capital and structural capital which, in its turn, is formed of client capital and organisational capital, the latter comprising innovation capital and process capital. although this classification seems to be well-structured, it makes use of groups of entities which are not defined rigorously and do not possess unique features. sveiby’s model divides intangible assets in external structure, internal structure and individual competences. as far as the external structure is concerned, we must mention that it refers to clients, suppliers and other stakeholders who are considered relevant for a certain company. depending on the type of organisation, the external structure will differ from one enterprise to another. the internal structure refers to systems, databases and processes which support the organisation, whereas individual competences concern the employees’ individual experience, knowledge, competences, abilities and ideas. the model developed by norton and kaplan does not present intellectual capital from the perspective of its components. the balanced scorecard model analyses an organisation from four perspectives: that of learning and development/growth, internal processes perspective, clients’ perspective and financial perspective, a model which largely resembles some of the classifications of intellectual capital centred on components which were exposed above. in a spectral dynamic analysis, organisational intellectual capital is structured in: organisational knowledge, organisational intelligence, organisational values, and their value is built on certain mechanisms entitled integrators, whose chief 238 features of the intellectual capital within romanian smes constitutive elements are: individual knowledge, individual intelligence and individual cultural values. the following elements can be part of the general designation of organisational knowledge: values, beliefs, rituals within the organisation, organisational culture, knowledge stored in existing software, licenses, patents, or in organisational databases. other elements are added to these, such as the tacit and explicit knowledge of the organisation members, knowledge which is used in daily activities and processes. according to a simple analysis, we could affirm that organisational knowledge includes tacit and explicit knowledge, but this knowledge dyad is replaced with a new perspective: that of cognitive knowledge, emotional knowledge and spiritual knowledge. in order to understand this new manner of approaching knowledge, we will make a brief presentation of this perspective. specialists in eastern europe replaced the cartesian mind-body duality with a unitary conception regarding knowledge; this means that both cognitive and emotional knowledge can change continuously from one form to another by virtue of the thermodynamics metaphor. while western philosophy excluded affectivity from the class of knowledge because of its subjective nature, eastern philosophy extended the scope of knowledge to include affectivity as well, and this is an important element for leadership because employees are motivated especially by means of emotional knowledge. at the same time, innovation is based on intuition, which has both a cognitive and an emotional character. cognitive knowledge is regarded as the direct result of the cognitive process, since they comprise the rational part of the cognitive process. cognitive knowledge contains both rational and non-rational knowledge, so it would be a mistake to consider the spectrum of cognitive knowledge only from the perspective of rational characteristics. emotional knowledge is based on emotions which occur before cognitive processes and they influence the way in which we process information. emotional knowledge shows resemblance both in contents and intensity with the two dimensions of thermodynamic energy. spiritual knowledge contains the most profound significations, values, objectives and the highest motivations, both at individual and organisational levels. spiritual knowledge is held in common by all employees and they generate the necessary motivations for their efforts to accomplish a durable competitive advantage. the vision and mission of an enterprise are strongly supported by corporate values, which are integrated in the field of spiritual knowledge. each employee enters an organisation possessing his/her own collection of cognitive, spiritual and affective knowledge. these types of individual knowledge can be shared, transferred or employed directly in the decision-making process, resulting from the action of organisational integrators. one of the most important problems for each organisation is that of integrating employees’ individual knowledge and intelligence so as to create organisational knowledge and intelligence. in order to achieve this aim, an organisation needs some specific mechanisms for the generation of synergies. this fact is true because in non-linear systems, as in the case of knowledge, the outcome means more than the simple addition of individual achievements. each type of knowledge can be processed by a specific kind of intelligence, so that we obtain a final result for the entire organisation, namely the organisational intellectual capital. organisational intelligence – a component of the intellectual capital possessed by each member of the enterprise – has an important contribution to organisational intellectual capital. the processing of knowledge is performed with the help of intelligence and decisions taken make use of the values of organisational culture as 239 feraru guiding factors. organisational values are composed, in their turn, of cultural values and business values. additionally, while analysing the entropic model, we also investigated the influence of major integrators on intellectual capital, with its three components: cognitive capital, emotional capital, spiritual capital, as well as the field of factors which exerts force on the primary components of intellectual capital – knowledge, intelligence and values – and determines the generation and development of intellectual capital. 3. conclusions in the last decades, the world economy has undergone profound economic changes that were reflected in how economic factors affect productivity. so we exchanged the traditional economy based on resources tangible: land, investment of buildings, capital and labour, into an economy based on intangible assets with financial accounting difficult and high impact on productive performance of organizations. intellectual capital is perceived as an important factor of the success of an organisation. intellectual capital as a dynamic approach focuses on the development of entropic model which captures the dynamic transformation of intellectual capital into usable intellectual capital. also, was analyzed the influence of the main integrators intellectual capital, divided into three components: cognitive capital, emotional capital, spiritual capital, and fields of forces acting on the primary constituent of intellectual capital knowledge, intelligence and values and determines the generation and development of intellectual capital among smes that were analyzed. this study analyses the stage of knowledge of intellectual capital and focuses on the importance and benefits generated by the intellectual capital and knowledge management. references al-ali, n., (2002), all about intellectual capital, comprehensive intellectual capital management. albrecht, k. (2003) the power of minds at work. organizational intelligence in action, american management association: new york. apetroae, m. (2002), către o economie bazată pe cunoaştere, uefiscsu, bucureşti. bârgăoanu, a., negrea, e., călinescu, l. (2007), project-oriented university an emerging concept, management & marketing, 4(4), 55-64. becker, g. (1997), capitalul uman. o analiză teoretică şi empirică cu referire specială la educaţie, bucureşti, editura all. bouchardy i. (2010), quality strategies: what are french universities. looking for?, management & marketing, 5(1), 39-56. brătianu, c. (2005), schimbarea de paradigmă în managementul universitar românesc, revista de management şi inginerie economică, 4 (3), 7-23. brătianu, c. (2006), un model de analiză a capitalului intelectual organizaţional, management & marketing, 1(3), 17-32. brătianu, c. (2008), leadership and management in the transition romanian higher education system, management & marketing, 4(2), 21-36. brătianu, c., jianu i. (2007), the vision and mission of the university. case study, management & marketing, 4(2), 37-46. brătianu, c., lefter, v. (2001), managementul strategic universitar, bucureşti, rao. brătianu, c., vasilache s. (2009), evaluating linear-nonlinear thinking style. for knowledge management education, management & marketing, 4(3), 3-18. 240 features of the intellectual capital within romanian smes brătianu, c., vasilache s. (2009), implementing innovation and knowledge management in the romanian economy, management & marketing, 4(4), 3-14. drucker, p. (1999), knowledge management in california, management review, 41(2). dumitrescu, m. (2001), strategii şi management strategic, ed. economică, bucureşti. feraru a. (2009), the concept of knowledge and knowledge the management in the romanian business field, studies and scientific researches economic edition, 14, 137-141. feraru a. (2010), knowledge management within organisations, annals of the oradea university. fascicle of management and technological engineering, volume ix (xix), 1, 157-160. feraru, a., mironescu r. (2012), intellectual capital as a basic resource for a new organizational behavior and economic development, proceedings of the 4rd european conference on intellectual capital, arcada university of applied sciences, helsinki , finland. feraru, a., mironescu r. (2012), the intellectual capital and the learning organization, journal of international scientific publication, economy & business, bulgaria, issn 1313-2555, 6(3), 30-40. feraru, a., mironescu r., drob c. (2013), particular aspects in intellectual capital management of the romanian smes, proceedings european conference on intellectual capital university of the basque country, bilbao, spain. fox, t., ward, h., howard, b. (2002), public sector roles in strenghthening corporate social responsibility, a baseline study, world bank, october, 1-5. kelleher, d., levene, s. (2001), knowledge management: a guide to good practice, pwc, new york. kim, c., manborgue, r. (2003), fair process: managing in knowledge economy, motivation people, 1. matmati, m. (2004), les effets sociaux des tic et nfo et leurs liens avec la responsabilite sociale de l' entreprise, la revue technologique, iv(1), 97-119. nicolescu, o., nicolescu, l. (2005), economia, firma şi managementul bazate pe cunostinţe, ed. economică, bucureşti. nonaka, i., takeuchi, h. (1995), the knowledge creating company: how japanese companies create the dynamics of innovation. oxford university press, new york. petrash, g. (2002), knowledge management. classic and contemporary works, masschusetts institute of tehnology. roşca, ion gh., păunescu c., pârvan, c. (2010), shaping the future of higher education in romania: challenges and driving factors, management & marketing, 5(1), 57-70. scârneci, f. (2011), who are the romanian managers and how they identify themselves?, management & marketing, 1. vasilache, s. (2008), organizational knowledge dynamics, management & marketing, 2. 241 http://www.managementmarketing.ro/autori.php?var%5b22%5d=en&var%5b0%5d=autori&var%5b1%5d=florentina%20sc%c3%82rneci http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=1&var%5b3%5d=2011&var%5b2%5d=219&var%5b20%5d= http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=1&var%5b3%5d=2011&var%5b2%5d=219&var%5b20%5d= http://www.managementmarketing.ro/autori.php?var%5b22%5d=en&var%5b0%5d=autori&var%5b1%5d=simona%20vasilache http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=2&var%5b3%5d=2008&var%5b2%5d=105&var%5b20%5d= http://www.managementmarketing.ro/arhiva.php?var%5b22%5d=en&var%5b1%5d=2&var%5b3%5d=2008 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the regional assessment of marginal intra-industry specialization oana ancuţa stângaciu “vasile alecsandri” university of bacău anca_stangaciu@yahoo.com abstract the dynamics of intra-industry specialization was shown by means of the regional indices of marginal specialization, indices which break down the changes which appear in the specialization processes into two components: the marginal intra-industry specialization and the inter-industry specialization. the regional assessment of the marginal intra-industry specialization was done on the level of the sections in the combined register, and the results of the analyses confirm the fact that the dynamics of the specialization processes in the romanian regions was greatly influenced by the increase of intra-industry specialization, increase manifested especially in the specialization process pertaining to the manufacturing of products which use intensively the human capital and high technology. keywords marginal specialization; intra-industry specialization; sections in the combined register jel classification c16; f14 1. introduction the intensification of trade with goods which use intensively the human capital and high technology has a beneficial role in the process of economic growth, since this intensification leads to an acceleration of the specialization process on regional level, due to the economies of scale, as well as to achieving comparative advantages in relation to other countries. 2. methodology the regional assessment of the marginal intra-industry specialization implied calculating the marginal intra-industry specialization (miit) index suggested by brülhart (1994), which is in fact a grubel and lloyd type index that measures the dynamics of intra-industry specialization (bastos p, cabral m, 2007). the marginal intra-industry specialization index (miit), as well as the grubel and lloyd index, (grubel h, lloyd p, 1975), was calculated on the level of sections in the combined register (cr), thus quantifying the changes which come up in the intra-industry specialization processes on the level of each section. the index is generally expressed in percentage, and its value is between 0 and 100; it is zero when the changes pertaining to the current year compared to the basic year in the specialization processes on the level of each section are inter-industry, or it has values close to 100 when the increase of specialization in the current year compared to the basic year is due to the expansion of intra-industry specialization. the marginal specialization indices per section were calculated considering as basic years 2000, as well as the previous year since, on one hand, we wanted to see the evolution of changes in the intra-industry specialization processes over a longer period of time (when the basic year is 2000) and, on the other hand, we wanted to explain the yearly evolution by 101 stângaciu means of the changes which come up on the level of each section in the combined register or on regional level (when the basic year is the previous one). 3. regional assessment of the marginal intra-industry specialization on the level of the sections in the combined register on national level [figure1], in the case of the main sections in which the romanian economy has a high degree of intra-industry specialization, the marginal specialization indices calculated for each year in the period of time 2001-2011 compared to 2000 or to the previous year respectively (the basic years) evolve as follows: a) in the case of electrical machines and devices, the contribution of intraindustry specialization in the changes that took place in the specialization processes is slightly oscillatory. thus, during the first two years, the contribution increased up to 93,7% compared to 2000 and then, in 2003, it decreased compared to 2000 as well as compared to the previous year up to the value of about 70,0%. this value stays approximately constant for the next 4 years until 2007, while during the last 4 years the contribution increases, getting once again over the value of 90,0%, as it was during the first years. b) in the case of means of transport, the contribution of intra-industry specialization in the changes that took place in the specialization processes is slightly oscillatory, just as in the case of the section presented above. thus, during the first two years the contribution increased up to 73,1% compared to 2000, and then there was a decrease in 2004 compared to 2000, as well as compared to the previous year, decrease up to the value of 50,0%. this value is the lowest contribution of intra-industry specialization registered during the whole period of time 2001-2011 compared to 2000. after 2004, the contribution of intra-industry specialization increases slightly until 2008, when it reaches once again a percentage over 70,0%, and during the last 3 years, due to the significant increase registered compared to the previous years, the contribution rises to over 75,0%. c) in the case of metal products, the contribution of the intra-industry specialization in the changes that came up in the specialization processes has the highest increase of all sections subjected to the analysis. thus, during the first four years, compared to 2000, the contribution increases dramatically from 0,0% in 2001 (in other words, the modifications that appeared in the specialization processes pertaining to the manufacturing of metal products in 2001 compared to 2000 were 100,0% due to the inter-industry specialization) to 95,4% in 2004. during the next 5 years, until 2009, the contribution of intra-industry specialization decreases slightly until it gets to values around 60,0%, while during the last years the situation improves, reaching once again the percentage of approximately 80,0%. d) in the case of textile products, the contribution of intra-industry specialization in the changes that came up in the specialization processes is oscillatory; however, there is a decreasing trend, especially after 2007. thus, during the first 6 years the contribution oscillated between 80,0% and 90,0% compared to 2000, while in 2007 it increased up to 96,0%. this value is the highest contribution of intra-industry specialization registered during the whole period of time 2001-2011 compared to 2000. during the next 2 years, until 2009, the contribution of intra-industry specialization decreases slightly until it gets around the value of 60,0%, while during the last years the situation improves, reaching once again percentages over 80,0%. 102 the regional assessment of marginal intra-industry specialization basic year = 2000 basic year = the previous year 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 electrical equipment transport equipment base metals textile articles figure 1 indices of the marginal intra-industry specialization (miit) on the main sections in the cr in romania, in the period of time 2000-2011 (%) source: processing of the data collected from nis consequently, in romania, in the period of time 2001-2011 compared to 2000, the intra-industry specialization is the main factor which triggers the changes registered in the specialization processes in manufacturing certain products, since its contribution is over 50,0% in the case of the main sections analyzed. we must notice that, in the case of the sections in which romania has a high degree of intra-industry specialization, the percentage of its contribution is very high, generally over 80,0% in the case of electrical equipment and textile articles, or 60,0% in the case of metal products during the last years. on regional level, the discrepancies concerning the contribution of the intra-industry specialization among the sections in the combined register are great [figures 2, 3], and the main trends of the marginal intra-industry specialization are the following: a) in most regions there are high values of the contribution of intra-industry specialization in the specialization process pertaining to electrical equipment, in 2011 the contribution being of over 90,0% compared to 2000 (except for the regions bucharest-ilfov, south-west oltenia and the southeast region where the contribution of intra-industry specialization is under 60%). the highest values, of over 90,0% during the whole period analyzed, can be found in the north-east and south muntenia regions, and significant increases compared to 2000 are registered in the west region (from 0,0% in 2001 to 87,2% in 2010). in the south-west oltenia region the contribution of the intra-industry specialization is fluctuating, with yearly oscillations (e.g: from 96,0% in 2001 to 0,0% in 2002 and 2003). 103 stângaciu north west region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 central region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 north – east region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south – east region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south muntenia region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 bucharest – ilfov region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south – west oltenia region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 west region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 electrical equipment transport equipment base metals textile articles figure 2 regional indices of the marginal intra-industry specialization on the main sections in the cr, in the period of time 2000-2011 (%) –2000=basic year source: processing of the data collected from nis 104 the regional assessment of marginal intra-industry specialization north west region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 central region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 north – east region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south – east region 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south muntenia region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 bucharest – ilfov region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 south – west oltenia region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 west region 0,0 20,0 40,0 60,0 80,0 100,0 120,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 electrical equipment transport equipment base metals textile articles figure 3. regional indices of the marginal intra-industry specialization on the main sections in the cr in the period of time 2000-2011 (%) – the previous year=basic year source: processing of the data collected from nis 105 stângaciu b) in most regions there are average values of over 40,0% of the contribution of intra-industry specialization to the specialization process pertaining to the manufacturing of means of transport (except for the south-east and bucharest-ilfov regions, where the contribution of intra-industry specialization is lower). constant increases during the whole period analyzed can be found in the north-west region (from 0,0% in 2001 to 68,3% in 2011), and oscillating evolutions are registered in the north-east, south muntenia and south-west oltenia regions. in the west region, the contribution of intra-industry specialization has a negative trend in the period of time 2000-2011. c) in most regions, the contribution of intra-industry specialization in manufacturing textile articles decreases (in the central, north-east, southeast and bucharest-ilfov regions) or has slight oscillations (in south muntenia and the west regions). in the north-west and south-west oltenia regions, the contribution of intra-industry specialization decreases only compared to 2000. we must notice that there are very high discrepancies among the regions concerning the values of the contribution of intra-industry specialization in manufacturing textile articles. d) in most regions, the contribution of intra-industry specialization in manufacturing metal products increases constantly (in the central, southeast, south-west oltenia and the west regions) or has oscillation during the increasing process (in north-west and north-east regions). the intraindustry specialization has no contribution in bucharest-ilfov region, and there are great discrepancies among the regions. 4. conclusion after assessing the marginal intra-industry specialization on sections, we noticed that in most regions the contribution of the intra-industry specialization in the specialization process pertaining to the manufacturing of products using high technologies intensively has increased, registering high values in the case of specialization processes pertaining to the trade with electrical equipment, in 2011 the contribution being of over 90% compared to 2000 (except for bucharest-ilfov, southwest oltenia and the south-east regions). also, there are average values of over 40% of the contribution of intra-industry specialization to the specialization process pertaining to the manufacturing of means of transport (except for the south-east and bucharest-ilfov regions, where the contribution of intra-industry specialization is low), while the contribution of intraindustry specialization in manufacturing textile articles or products that use intensively the work force decreases in the central, north-east, south-east and buchares-ilfov regions or it has slight oscillations in south muntenia and the west regions. ville (2008) got to similar results when she determined the marginal intra-industry specialization index for 23 countries in the european union. the author notices that, in the case of 94 industrial branches in the period of time 1995-2005 the marginal specialization index has high values in the sectors that use intensively high technologies, and low values in the industries which use intensively the workforce. this fact empirically proves that an increase in the degree of inter-industry specialization leads to a lower increase in productivity, while the increase of intraindustry specialization is associated to a faster increase in productivity. consequently, we can say that in romania the dynamics of the regional specialization processes was greatly influenced by the intra-industry specialization, and this influence has positive effects on the economic development, since an increase in the 106 the regional assessment of marginal intra-industry specialization degree of inter-industry specialization leads to a lower increase in productivity, while the increase of intra-industry specialization is associated to a quick increase of productivity. references bastos, p, cabral, m (2007), the dynamics of international trade patterns, review of world economics, 143 (3), 391-415. brülhart, m (1994) marginal intra-industry trade: measurement and relevance of the pattern of industrial adjustment, weltwirtschaftliches archiv/review of world economics, 130 (3), 600-613. grubel, h, lloyd, p (1975), intra-industry trade: the theory and measurement of the international trade in differentiated products, london, macmillan. stângaciu, a (2012), convergenţa comerţului regional intra-industrie în românia o perspectivă empirică asupra modelelor de specializare, bacău, editura alma mater a universităţii „vasile alecsandri” din bacău. tingvall, p (2004), the dynamics of european industrial structure, review of world economics (weltwirtschaftliches archiv), 140(4), 665-687. ville, k (2008), marginal intra-industry trade expansion and productivity growth, etla, the research institute of the finnish economy, helsinki finland, keskusteluaiheita – discussion papers, no. 1164. 107 aspects concerning financial profitableness analysis and its purpose in substantiation of firm’s strategic financing decisions 90 studies and scientific researches edition: economics, no. 13 (2008) aspects concerning financial profitableness analysis and its purpose in substantiation of firm’s strategic financing decisions solomon daniela-cristina, lecturer university of bacău dragomirescu simona-elena, lecturer university of bacău abstract: financial profitableness, relevant indicator in enterprises performance appreciation and of its position on the market, depends on the commercial policy (commercial profitableness), on the engaged capital’s efficiency (economic profitableness), on the policy and financial structure of enterprise (debt degree) offering information both to investors and managers, orienting the enterprise in financing strategic decisions the analysis of enterprise’ performance by means of profitableness rates highlights the efficiency reports between a indicator of results (profit or loss) and an indicator that reflects an activity flux, (business number, consumed resources etc.) or a stock (own capital, total actives). the size of rates is influenced by accountancy policies and practices used by the enterprise that has different informational valences and reflects multiple sizes of economic-financial activity. the financial profitableness rate (rf) expresses the efficiency degree of using the own capitals. in the case where financial profitableness rate is bigger than the borrowed cost capital, then a supplementary value will be created to “payment of the shareholders’ capitals (by the distributed dividends) and firm’s self-financing (by the result in the reserve)”1 . the information given by the firm’s yearly financial situations allow determination of financial profitableness rate. the relation calculation for this rate is the following2: 1 s. petrescu, analysis and financial-accountancy diagnostic. theoretical-practical guide, second revised edition, ceccar’ s publish house, bucharest, 2008, p. 238. 2 gheorghe vâlceanu, vasile robu, nicolae georgescu, economic-financial analysis, economic publish house, bucharest 2004, p.283. rf = 100 capitalown profitnet in anglo-saxon terminology, the financial profitableness rate corresponds to the notion of return on equity (roe) being calculated as below3: roe= equityowneraverage incomenet ' financial profitableness reflects the final purpose of an enterprise’s shareholders, expressed by remuneration rate of capital investment made by them in providing enterprise’s stockings or in reinvesting total/partial profit that reverts4. the financial profitableness rate’s analysis allows the establishing of determining factors and the identifying of some significant aspects for appreciating the enterprise’s performance. in specific literature5 few patterns of factorial analysis are known for financial profitableness rate: 1.rf= 100 capitalown assetstotal assetstotal profitnet 3 marshall d. h., mcmanus w., viele d. f., „accounting: what the numbers means”, seventh edition, ed. mcgraw-hill/irwin, 2007, p. 77. 4 spãtaru, l., economic-financial enterprise’s analysis –instrument of enterprise’s management, economic publish house, bucharest, p. 393. 5 w. păvăloaia, d. păvăloaia, economic-financial analysis concepts. studies, moldavia publish house, bacău, 2003, p. 310-311. aspects concerning financial profitableness analysis and its purpose in substantiation of firm’s strategic financing decisions 91 studies and scientific researches edition: economics, no. 13 (2008) assetstotal profitnet = global capital enterprise’s profitableness invested in fixe and circular assets. capitalown assetstotal = multiplication factor of own average capital or the arm of the financial lever that characterizes indirectly the debt degree of enterprise (gî). because total assets = own capital + debts , the relation becomes: capitalown assetstotal =   capitalown debtscapitalown capitalown assetstotal capitalown debts  1 the financial profitableness rate depend on the permanent capitals structure, meaning on the proportion existent between the borrowed capital, respective debts and own capital . the capitalown debts report is a quotient named “financial lever” that influences the financial profitableness rate and that expresses the enterprise’s debt degree, report that generates the appearance of financial efficiency increase or the financial lever effect. the effect of lever’s increase may be both in favor and unsafe, on this effect the financial risk being connected, the one flowing from capital cost that assures the financing. according to this pattern, the increase of financial profitableness rate can be realized through:  increase of net profit to a leu assets and  growth of debt degree if economical profitableness is higher than interest rate. a growth of multiplication factor can be appreciated as favorable, but it should be reminded that this indicator reflects the debt degree, and therefore is necessary the framing of the size of the multiplication factor under certain preordained optimal values. 2.rf = 100 capitalown assetstotal assetstotal turnover turnover profitnet the financial profitableness rate represents the product between the commercial profitableness rate (profit’s net average), assets rotation and global debt rate. the increase of the financial profitableness rate of own capital is the consequence of the invested capital efficiency increase, as a consequence of the increase of the assets’ speed’s rotation with direct implications on the volume of sells on invested monetary unit but also because of the profit increase to a leu business number that reflects the efficiency of exploitation activity. according to this pattern the increase of financial profitableness may be realized if the following conditions are satisfied: a). inet profit > iturnover the increase of gross profit in an superior rhythm to turnover, possible to be realized through: reduction of exploitation expenses; increase of physical volume of physical production and of the delivered one; manners of amortization calculation; fiscal state’s policy. b). iturnover > itotal assets the increase of turnover will outmatch the total assets growth aspect that means the increase of the enterprise’s speed rotation assets. c). re > d economical profitableness (re) will outmatch the interest rate(d). by its calculation pattern the financial profitableness rate also highlights the following specific conditions:  financial profitableness is influenced by the modality of providing capitals, reason for which is sensitive as against financial structure, meaning the debt degree of the enterprise,  the size of gross profit is influenced by tax evolution, elements undeductive from a fiscal point of view and of the fiscal deductions,  the financial profitableness rate should be higher than the average tax rate in order to make the enterprise’s actions more attractive. under this situation, for the aspects concerning financial profitableness analysis and its purpose in substantiation of firm’s strategic financing decisions studies and scientific researches edition: economics, no. 13 (2008) 92 enterprise, is more advantageous to make appeal to medium and long term loaning for activity financing, this assuring in this way a supplementary profit. the use of the debt should be very carefully made in order not to limit the financial independence of the firm and to reduce the supplementary debt possibilities in crisis periods. the data necessary for analyzing the financial profitableness rate for s.c. alfa s.a. are presented in table nr. 1: table nr. 1 indicators concerning the financial profitableness rate’s analysis for s.c. alfa s.a. indicator’s name mu 31.12.2005 31.12.2006 31.12.2007 net profit lei 125.457 324.568 257.005 own capital lei 508.077 2.059.013 2.049.572 financial profitableness rate (rf) % 24,69 15,76 12,54 the variation of financial profitableness rate % 0 -8,93 -3,22 growth index rf % 100 63,83 79,57 growth index net profit % 100 258,71 79,18 growth index own capital % 100 405,26 99,54 informative value % 25% 25% 25% total assets lei 837.352 2.746.266 3.007.678 global profitableness of invested capitals (net profit/total assets) % 14,98% 11,82% 8,54% debt degree (total assets/own capital) 1,65 1,33 1,47 turnover lei 224.748 234.798 197.000 net profit average (net profit/turnover) 0,56 1,38 1,30 the assets’ speed rotation (turnover/total assets) 0,27 0,09 0,07 the evolution of financial profitableness rate for s.c.alfa s.a is presented in figure nr. 1. 0 5 10 15 20 25 30 2005 2006 2007 rf figure 1 the evolution of financial profitableness rate for s.c.alfa s.a the financial profitableness rate for the analyzed period manifested a decreased tendency that is equivalent to a weak net wining remuneration of own resources, respective the decrease of the own capitals capacity of creating net profit. during 2007 the rate’s level was of 12,54% that means that for 100 lei own capitals revert 12,54 lei net profit. this level does not assure the reconstruction of own capitals only for net profits. the rate’s modification rf= 3,22% was determined by:  aspects concerning financial profitableness analysis and its purpose in substantiation of firm’s strategic financing decisions 93 studies and scientific researches edition: economics, no. 13 (2008)  decrease of global invested capitals profitableness with 3,28% (from 11,82% to 8,54%) that had a negative effect on the indicator;  the increase of firm’s debt degree with 0,14 (from 1,33 to 1,47) with favorable effect upon financial profitableness rate that did not succeed the compensation of unfavorable effect that the decrease of global invested capitals rate in fixe and circular assets. under these circumstances, for society, it is more advantageous to appeal to loaning on medium and long term for activity financing, assuring therefore a supplementary profit. the use of debt should be carefully made in order not to limit the financial firm’s independence and to reduce the supplementary debt possibilities in crisis periods. the financial profitableness rate constitutes a relevant indicator in appreciating the enterprise’s position on the market. an increased remuneration of capitals assures a facile access to financial resources due to the present shareholders’ trust of reinvesting in enterprise and of potential investors – owners of financial resources available for investments as well as the development capacity. references: [1] marshall, d. h., mcmanus, w., viele, d. f., accounting: what the numbers means, seventh edition, ed. mcgraw-hill/irwin, 2007. [2] păvăloaia, w., păvăloaia, d., economic-financial analysis concepts. studies, moldavia publish house, bacău, 2003. [3] petcu m., the enterprise’s economic-financial analysis, economic publish house, bucharest, 2003. [4] petrescu, s., analysis and financial-accountancy diagnostic. theoretical-practical guide, second revised edition, ceccar’ s publish house, bucharest, 2008. [5] spãtaru, l., economic-financial enterprise’s analysis –instrument of enterprise’s management, economic publish house, bucharest, 2004. [6] vâlceanu, gh., robu, v., georgescu, n., economic-financial analysis, economic publish house, bucharest, 2004. [7] *** public finances minister’s command no. 1752/2005 for the approval of accountancy settlements according to european directives, published in official monitor, 1st part, no. 1080 from 30/11/2005. classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy 33 studies and scientific researches edition: economics, no. 13 (2008) classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy dragomirescu simona-elena, lecturer university of bacău solomon daniela-cristina, lecturer university of bacău abstract: classical accountancy shaped and coagulated in an informational system grafted on traditional production systems, characterized by mass productions, planning etc. the powerful concentrations and grouping, economies globalization, both as offer and as demand, the new restrictions and economical opportunities and global environment technologies lead to a redefining of enterprises’ objectives. from the well-known “quantity and productivity”, the enterprise faced a new system of objectives: quality’s increase; terms and costs decrease; productivity; flexibility. in such conditions the need of “defining new methods” appeared, the need of adapting the fundamental calculation methods, their improvement – respective the appearance of modern methods of costs calculation. in any field where production activities are developed, where works are executed or services are performed, there exist costs. the knowing of these costs represents a necessity in any process of substantiation of decisions. the complexity of economical life under the competition conditions imposed on the market economy, leads to the increase of the purpose in information in decision making. of its quality depends the quality of current decisions and of perspective, and implicitly, of the obtained results. the present economical environment made expensive any error in decision caused by reduced quantity of information concerning costs. the modern enterprise management requires the permanent knowing of costs. seen as one of the most significant indicators with the help of which the activity of an industrial firm may be appreciated, the production costs offers a series of information necessary for any leading frame, allowing the forming of a general vision of the organization. it becomes, therefore, an indispensable instrument for diagnostic, for stimulation of probable effects, of one or another from the options, decision making, and the realizations’ efficiency control. combined to other types of instruments (budget, standards etc.), cost information becomes a powerful instrument of management control. otherwise, in present competition economical environment, the purpose of all these instruments is “to orientate the enterprises efficiently” 1. in order to fulfill the support purpose of managers in decision making process, the cost should be submitted to optimization function, meaning the search of “the most advantageous compromise between performances, terms and costs”2. these suppose the identification of all means of costs reduction, especially by improving the projection of products/services/works, the improving of processes and organization. but for the realization of a relevant pattern for costs optimization a correct “measure” of costs is imposed. by control function, the real costs are followed in order not to divert from the standards (norms) preliminary determined by optimization process. the importance of costs control was underlined for the first time by e. smalenbach in 1909, finding the practical appliance in usa in 1920 with the occasion of 1 tabără n. „the modernization of accountancy and management accountancy. present facts and perspectives”, moldova publish house, iaşi, 2006, p. 241. 2 marian l. „project management” from http://www.orizont.net/clubro/crmd/carti/cartemarian. classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy 34 studies and scientific researches edition: economics, no. 13 (2008) investigating the causes of industrial enterprises’ losses. it was appreciated back then that without a permanent cost control a rational householding of the enterprise is not possible3. in traditional practice, cost control supposes the comparison between the real complete cost (effective, post-calculated) and a standard complete cost (estimated, precalculated). costs represent the result of calculations developed by means of specific methods; the succession of effectuated calculations is known in specific literature and practice under the name of costs calculation. the costs calculation methods, also named methods of leading through costs, include the ensemble of processes by which the correlation between expenses and production that brought this occasion are determined. the classical management accountancy shaped and coagulated in an informational system grafted on traditional production systems inspired by „taylorisme”, characterized by mass productions, planning etc. 4 under this situation, the used calculation methods were the classical methods of costs calculation (global method, phases method, commands method), considered as basis methods of organizing the costs measuring activity. the cost calculated through classical methods belongs to the category of integral and absorbing cost (full-costing), the general calculation relation is: c = d + i where: c unitary cost; d the sum of direct expenses afferent to product unit; i the sum of indirect expenses afferent to product unit; this embodies all the production expenses, grouped on direct expenses (expenses that are identified from the beginning on products and expenses places) and indirect expenses (that can only be 3 kilger w. „flexible plankostenrechnung”, köln, 1967, p. 80 quote from epuran m., băbăiţă v., grosu c. „bookkeeping and accountancy control”, economic publish house, 1999, pg. 400. 4 dumbravă p., pop a. „accountancy management in industry”, intelcredo publish house, deva, 1997, p. 28. identified on the expenses places, not on the products too, and will therefore be assigned by procedures on the products). markets globalization, technological progress, new aspirations of employees, new knowledge in accountancy frame, the existence of informatics systems more and more accessible and powerful changed radically the enterprise reality. from a relative stabile environment, simple and less varied, with an homogenous demand, stabile and quantitative, with a low concurrence, a reduced flexibility of technology and a powerful integration specific to the 19 century, it has passed to an environment under the sign of top technologies, much more dynamic, hostile, complex, with a diversified and qualitative demand, powerful competition, short life duration of production. th the powerful concentrations and grouping, economies globalization, both as offer and demand, the new economical restrictions and opportunities and global environment technologies lead to a redefining of enterprises objectives. from the wellknown “quantity and productivity”, the enterprise reached a new system of objectives: quality increase; terms and costs diminishing; productivity; flexibility. in present frame, in order to respond the needs of accountancy of the new production organization, the productive logic involves different products realized in small and flexible shares, increased quality, small stocks, “pulled to downstream” fluxes, polyvalent hand work, automatization. the strategy is orientated towards the fabrication of products that have value for demand, towards the insurance of activity flexibility with the purpose of adapting to environment changes, the permanent following of the costs reduction and quality amelioration. in order to underline the production organization method evolution, from classical organization (taylorian) to an organization specific to present economic environment, and therefore necessary evolution of accountancy control, the below tables are suggestively presented. classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy 35 studies and scientific researches edition: economics, no. 13 (2008) environment  homogenous demand  stable demand  quantitative demand  low competition  low flexibility in technology  integration productive logic  standard product  large rigid series  adjustment by stock  steering through upstream  tasks division  executant operator  subsequent control  centralization  stabile structure accountancy  comparing real cost production/standard  the priority of direct labor work  quantitative control / deviation  verification sanctions  budgetary control objectives  q u a n t it y  p r o d u c t iv it y environment  diverse e on, f demand  qualitativ demand  high etiticomp powerful  short life duration o products  partnership productive logic ible   varied products small shares, flex  process quality  small stocks  fluxes „pulled upstream ”  polyvalent hand labour  externalization automatizat ion accountancy concep n cost sts   tio quality cost  logistic costs  collaboration costs  maintaining co objectives y y t y  q u a l r mit  f l e x ib il c o s t  t e it  p r o d u c t iv i  figure 1. classical organization (taylorian) of production (source: alaza ons”, (source: alazard c., sépari s.„contrôle de gestion. manuel &applications”, under these alculation method of cost be ument of following the expenses of offered by ion allowing only posterior rd c., sépari s.„contrôle de gestion. manuel &applicati dunod publish house, paris, 1996, p. 511) figure 2. the new production organization dunod publish house, paris, 1996, p. 511) conditions, th the information e choice of comes difficult. production, post-calculatc traditional methods become obsolescent. their appliances in present economic frame highlight a series of limits:  it presents the inconvenience that, through their appliance the effective cost of products is obtained, but with a big delay in proportion to the moment of developing of economic processes that have generated it;  the calculation having on its basis these methods does not constitute an operative instr analysis, periodical, by comparison to costs budget;  it does not assure a specific system of costs control and analysis, and, therefore, the necessity of elaboration according to the same methodology of two rows of calculation concerning the production cost appears. a former row of calculation is the one preceding the development of production process, materializing in costs budget (with its different sections), ant the latter is made after the end of the classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy 36 studies and scientific researches edition: economics, no. 13 (2008) production process, to which is referred, on the basis of accountancy management data. the elaboration of the two rows of calculations creates the premises of comparison, periodically, no doubt, of the effective indicators with the ones predicted in the budget.  the practicing of absorbing classical costs produces a phenomenon of “subvention” between the complete costs afferent to different products/services that have a common basis of distribution. this fact maj the favor of the indirect ones. as consequence, the distribution of indirect costs using a hod, abc method ctivity based costing), target-costing method and flexibility, where production is “pulled downstream” by clients’ comma phenomenon makes some products/services to increase or decrease their costs, in the detriment or advantage of other products/services5. the types of “subvention effects” would be, for instance: effects owed to activities variety and costs heterogeneity; effects owed to series size; effects connected to investments for work productivity increase. there should also be underlined the that the costs structure changed in ority, the direct costs weight decreasing in s distribution basis direct costs lost any relevance. also, indirect costs become more technical costs resulted from quality, studies, maintenance, methods etc. in countries with a developed market economy, the classical methods of calculation of costs were replaced by modern methods, such as the just in time met (a etc. ► just in time method departs from the japanese principles of organization and management, founded on concepts of productivity nds, by an effective demand and not “pushed upstream” according to production programs elaborated according to adjusted sells predictions, eventually, by stocks level. fabri ssary to prod sverse organizing, on activiti definition of the process that represe c lculation objects, nterpr 5 ionaşcu i., filip a.t. and stere m. „accountancy control”, ase publish house, bucureşti, 2001, p. 48. also connected to new organization of production system, the integration of all production steps from the three fundamental cycles is appointed: conception → cation → distribution. the possibility of improving any process in what the cost, quality, and term is concerned is befriended especially by this global vision upon all the activities nece uctive process. 6 ► abc method (activity based costing) is founded on a new, more realist, cutting of enterprises, starting from the chain notions of value and tran es. hugues boisvert 7 underlined the passing from tasks efficiency to processes reconception. therefore, the author started from the nts a network of a tivities connected by a commune objective, a chain of activities necessary for delivery of a product or service. on its turn, an activity is considered an ensemble of tasks. the reconception of processes sends to the manner of exerting the activities (adding, modification, suppressing) that compose these processes, to reorganization of connections between these activities and their coordination. thus, it is brought again under discussion the present organization of enterprise and instauration of a new pattern of action. 8 the basis principle of abc method is the distribution less arbitrary of indirect expenses, in concordance to the appeal to effective products, ca e ise’s processes or activities. the cost calculated by this method is more pertinent. an enterprise consumes resources in order to perform tasks, which may be regrouped on activities, and activities form, on their turn, products. therefore, a product is the result of an ensemble of processes, respective of 6 epuran m., băbăiţă v., grosu c. „bookkeeping and accountancy control”, economic publish house,, 1999, p. 385. 7 boisvert h. „de la comptabilité à la gestion par activités”, revues international de gestion, vol. 18, nr. 4, november 1993, p. 7-8. 8 guinea a.f. – „evolutions and involutions in management accountancy”, „bookkeeping and accountancy control” magazine, nr. 8, 2006, p. 43. classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy studies and scientific researches edition: economics, no. 13 (2008) 37 explicative the latter representing shares ts costs correlated with their life cycle, specially with the resources consume pose sequences of complementary activities. 9 in other words, products consume activities, and the activities consume resources. costs are allocated to activities on the basis of variables that express the consumption low, respective factors of costs variation (that starts the activity), also called costs inductors and work units. costs inductors represent the basis of activity’s costs distribution between the products that consumes it, for these a unitary cost being calculated. the calculation of the cost of a product supposes the summing of all direct and indirect expenses, form the activities consumed established with regard to the number of work units consumed (inductors) and their unitary cost. ►target-costing method follows the produc e im d in conception phase. from this phase even, a management’s major concern is constituted by product’s competition in terms of price. target-costs, seen as management step, are based on the rule according to which market dictates selling costs and not the enterprises’ costs do it. 10 it is obvious that the enterprise will want to ensure a certain profit during the life cycle of the specific product. in order to build the profit it should go from price to cost, the target-cost, an estimated cost, being calculated by deduction from the imposed selling price of awaited profit average. analyzing costs on the whole product’s life duration, it is understandable that from the imposed selling price should be covered on long term all enterprise’s costs, both direct and indirect, both fixe or variable, therefore the target cost is a complete one. the selling price, being an imposed one, represents a limit that cannot be surpassed, and if the limit cannot be respected by enterprise it results that the respective product is not viable. ll: ►life cycle costing used especially in plannin n, the loss of pertinence of traditional cost calcu tems is due, mainly, to the between e pre g the fundamental calculation method 9 bouquin h.„management accountancy” (translation and introduction study neculai tabără), tipomoldova, iaşi, 2004, p. 184. 10 ebbeken k., possler l., ristea m. – „calculation and costs management”, teora, bucharest, 2000, p. 379. specific literature11 presents other two methods as we g phase, to estimate the product’s cost on its life period. ►kaizen costing used for identification of cost improvement opportunities during the phase production. * * * in conclusio lation sys existence of a clash th sent pattern of enterprise’s control and the pattern of analysis centers, and to the difference between the composition pattern of real cost and the image given by management accountancy. under these circumstances, the need of “defining new methods” 12, appeared, the need of adaptin s, their improvement – respective the appearance of modern methods of costs calculation. as consequence, some enterprises gave up classical methods, adapting evolved methods, more adapted to economical environment requires. other enterprises adapted a series of indicators in order to measure the performances directly, for instance, by means of dashboards, than indirectly by means of costs. but, no matter the applied methods, the accountancy control should allow the development of activity and decision making in such manner that the enterprises would attain their goals. and cost is an important instrument of accountancy control that, determined as correct as possible in order to reflect reality, sustains managers in the process of piloting the enterprise. 11 albu n., albu c. – „instruments of performance management”, vol. i., management accountancy, economic publish house, bucharest, 2003, p. 240. 12 tabără n. „the modernization of accountancy and management accountancy. present facts and perspectives”, moldova publish house, iaşi, 2006, p. 248. classical calculation methods of costs and their limits in actual frame of romanian economy. present tendencies in costs accountancy 38 references: [1] alazard c., sépari s, contrôle de gestion. manuel &application, editura dunod, paris, 1996; [2] albu n., albu c., instrumente de management al performanţei, vol. i., contabilitate de gestiune, editura economică, bucureşti, 2003; [3] boisvert h., de la comptabilité à la gestion par activités, revues international de gestion, vol. 18, nr. 4, noiembrie 1993; [4] bouquin h., contabilitate de gestiune (traducerea şi studiul introductiv neculai tabără), editura tipomoldova, iaşi, 2004; [5] dumbravă p., pop a., contabilitatea de gestiune în industrie, editura intelcredo, deva, 1997; [6] ebbeken k., possler l., ristea m., calculaţia şi managementul costurilor, editura teora, bucureşti, 2000; [7] epuran m., băbăiţă v., grosu c., contabilitate şi control de gestiune, editura economică, 1999; [8] guinea a.f., evoluţii şi involuţii în contabilitatea de gestiune, revista „contabilitate şi control de gestiune”, nr. 8, 2006; [9] ionaşcu i., filip a.t. şi stere m., control de gestiune, editura ase, bucureşti, 2001; [10] marian l., managementul proiectelor, pe http:// www.orizont.net / clubro/ crmd/ carti/ cartemarian. [11] tabără n., modernizarea contabilităţii şi controlului de gestiune. actualităţi şi perspective, editura tipomoldova, iaşi, 2006. studies and scientific researches edition: economics, no. 13 (2008) http://www.orizont.net/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the evolution of the marketing research market on the level of the european union countries, after 2000 laura cătălina ţimiraş university “vasile alecsandri” of bacau timiras.laura@ub.ro abstract the purpose of this paper is to identify how the marketing research market evolved after 2000 as a whole and by categories of the eu countries (the old and the new states respectively) as well as the impact of the general economic development on this evolution of the market. since 2000 the marketing research market registered a spectacular evolution in the new eu members, which certifies that it is in the growth stage. in the old member states the marketing research market reached maturity, the dynamics being slyghtly positive or even stationary. regardless of the marketing research market trends registered in the old or in the new eu members, the development levels attained in the two categories of states are different. thus, approximately 90% of the marketing research market of the eu belongs to the old states and only about 10% to the new members. similarly to the markets of other products, the market studied here was also affected by the economic crisis, so all the eu countries registered involutions (followed by recoveries) along with the onset of recession. in the countries analyzed, the relationship between the size of the marketing research market and the general economic development expressed by the gdp was a strong and direct one (both in the eu as a whole and by categories of eu countries), higher values of gdp being associated with larger (in terms of value) marketing research markets. keywords marketing research market; economic development; turnover; eu member states jel classification m41; c10 according to american marketing association (2004) “marketing research is the function that links the consumer, customer, and public to the marketer through information information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications”. the marketing research is definetly an indispensable process for any organization, the need for it growing along with the market development, the higher competition, the increased consumer requirements which become more diverse and sophisticated. this paper tries to notice both how the marketing research market developed in the eu countries after 2000 and the impact of the general economic development of the member states on its evolution. the analysis is based on the latest official data from eurostat. 362 the evolution of the marketing research market on the level of the european union countries, after 2000 in order to estimate the size of the marketing research market we have used data regarding the turnover in the field of "market research" and the number of organizations working in this area. the marketing research market on the eu level after 2000 the marketing research market on the eu level is more than 19 billion euros (according to the data for 2011), in terms of turnover. the number of organizations which operate on this market was in 2010 above 37 thousands. the both indicators registered an growth after 2000 – year when the values were under 16 million euros turnover and under 32 thousand organizations respectively. table 1 the turnover and the number of enterprises in the market research activity on level of the eu countries countries turnover in 2011 (millions of euros) number of enterprises in 2010 turnover per enterprise in 2010 (millions of euros per organization) european union (27 countries) 18947.2 37,611 0.48 bulgaria 53.6 409 0.13 romania 225.6 890 0.23 latvia 74.9 397 0.19 lithuania 49 101 0.46 poland 577.5 2,888 0.16 croatia 115.6 779 0.16 hungary 263.1 2,049 0.14 estonia 17.7 57 0.28 slovakia 176.3 779 0.21 czech republic 340.1 880 0.39 malta* 7.8 51 0.15 portugal 89.9 352 0.29 slovenia 55.1 279 0.19 greece** 132.9 767 0.17 cyprus 31 32 0.95 spain 1192 3,871 0.31 italy 1501.5 4,105 0.36 france 2608.1 5,359 0.55 belgium 2061.4 2,718 0.58 germany 2081.4 1,576 1.36 united kingdom 4357.8 3,144 1.18 finland 113 139 0.79 austria 151.4 266 0.54 netherlands 1857 5,568 0.33 sweden 345.6 557 0.56 ireland** 197.7 149 1.33 denmark 369.5 172 2.16 luxembourg 25.4 33 0.92 * data for 2007 ** data for 2009 *** turnover for 2010 (source: personal processing from eurostat, 2013) 363 țimiraș referring to the main features, we can actually consider that the eu marketing research market is divided in two parts the market of the old (richer) countries and the market of the new (poorer) members of the eu. thus, in the old member states (eu-15), the market is characterized by maturity, its dynamics being relatively stationary or, respectively, slightly increasing since 2000. approximately 90% of the market (according to the data for 2011) belongs to the old eu member states (over 17 billion euros). the average turnover per organization involved in marketing research is, in most of the old states, much more above the eu average 48 thousand euros in 2010 respectively. on the other hand, in the new eu member states (poland, slovenia, hungary, malta, cyprus, latvia, estonia, lithuania, czech republic, slovakia, romania, bulgaria, croatia) the marketing research market after 2000 was characterized by an accelerated evolution, in some of these states increasing even 5 times its size. the upward trend emphasizes that the market is in its growth phase, but the average turnover per organization is in all the new members states under the eu average. although the market development after 2000 was very fast in these countries, they have just about 10% in the total of the eu market (according to the data for 2011). as expected, the onset of the economic crisis in europe made its mark on the dynamics of marketing research market in all the countries, so that it registered involutions from this point of view. we can notice that after a fall that began in the period of time 2007-2009 (earlier or later in each country respectively), in the member states the marketing research market regained an upward trend, in some cases even exceeding the level achieved before the onset of the crisis (sweden, belgium, poland, slovenia and romania). on the other hand, in the rest of the eu countries the market research market has not reached the level registered before the economic crisis, some of them being even under half the level achieved prior to the onset of recession (italy, portugal). 20 08 20 08 20 08 20 07 20 09 20 09 20 07 20 07 20 07 20 09 20 07 20 08 20 08 20 08 20 09 20 08 20 08 20 07 20 09 20 07 20 08 20 08 20 08 20 08 20 08 20 11 20 11 20 11 20 11 20 11 20 11 20 11 2 01 1 20 11 20 11 20 11 20 11 20 11 20 11 20 11 20 11 2 01 1 20 11 20 11 20 11 20 11 20 11 20 11 20 10 20 11 0 100 200 300 400 500 600 700 800 900 1000 l ith ua ni a r om an ia h un ga ry sl ov ak ia c ze ch r ep ub lic d en m ar k b ul ga ri a sl ov en ia e st on ia l at vi a po rt ug al c yp ru s g er m an y po la nd n et he rl an ds u ni te d k in gd om b el gi um fi nl an d sp ai n it al y sw ed en a us tr ia fr an ce ir el an d l ux em bo ur g % c om pa re d to 2 00 0 note: the turnover dynamics has been calculated for the last year for which we have data (2011), as well as for year before the fall of marketing research market caused by the onset of the economic crisis. figure 1 the dynamics of turnover in marketing research in some of the eu countries (% compared to 2000) (source: personal processing from eurostat, 2013) 364 the evolution of the marketing research market on the level of the european union countries, after 2000 the relationship between the economic development and the evolution of the marketing research market in the eu countries in 2011 the impact of the economic crisis on the evolution of marketing research markets is justified precisely by the relationship between the economic development and the level achieved by the studied market. thus, studying the relationship between the gross domestic product and the turnover in marketing research registered in the eu countries (except malta), we can notice the existence of a strong and direct connection between the analyzed variables (the correlation coefficient is 0.81). also, applying the statistical significance t-test we have got a calculated t value of 6.983, which for a significance level α of 0.05 and 25 degrees of freedom shows that there is a significant correlation coefficient (the corresponding theoretical t value is of 2.060). y = 0.0012x + 127.43 r² = 0.6611 0 1,000 2,000 3,000 4,000 5,000 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 t ur no ve r ( m ill io ns o f e ur os ) gdp (millions of euros) note: for lack of available official data we have used the turnover in 2010 for ireland and in 2009 for greece figure 2 the relationship between the gross domestic product and the turnover in marketing research registered in the eu countries (except malta) in 2011 (source: personal processing from eurostat, 2013) y = 0.0012x + 232.23 r² = 0.5686 0 1,000 2,000 3,000 4,000 5,000 0 1, 00 0, 00 0 2, 00 0, 00 0 3, 00 0, 00 0 t ur no ve r (m il li on s of e ur os ) gdp (millions of euros) th e eu – 15 (the old states) note: for lack of available official data we have used the turnover in 2010 for ireland and in 2009 for greece y = 0.0016x + 28.142 r² = 0.9382 0 100 200 300 400 500 600 700 0 10 0, 00 0 20 0, 00 0 30 0, 00 0 40 0, 00 0 tu rn ov er (m il li on s of e ur os ) gdp (millions of euro) the new member states of the ue figure 3 the relationship between the gross domestic product and the turnover in marketing research registered in the old members (the eu 15) as well as in the new members (except malta) of the eu in 2011 (source: personal processing from eurostat, 2013) 365 țimiraș studying the relationship between the variables investigated by categories of countries the old (eu-15) and the new eu member states we have noticed a stronger connection between the level of economic development and the level achieved by the markets in the new states. thus, on the level of the 15 old members of the eu, we have obtained a direct correlation, the calculated coefficient being 0.754. in the case of the new eu members, the strength of the studied relationship (the correlation coefficient) is of 0.9686 which attests a deterministic connection between the two variables. in both cases, using the t-test for testing the correlation coefficients we have noticed that these are significant for a significance level α = 0.05. so, we have obtained for the values of the indicators registered in the old eu members a calculated t value of 3.992 (the corresponding number of degrees of freedom being 13) and on the level of the new eu members a calculated t value of 12.321 (for 10 degrees of freedom). conclusions in conclusion, the marketing research market of the eu has developed diferently in the old and in the new member states. thus, in the new eu member states, the evolution has registered an accelerated dynamic, in fact, the market being in the growth period. in the old member states where the marketing research market has got to the maturity stage, the dynamics has been either positive but with low growth rates or stationary. approximately 90% of the marketing research market of the eu belongs to the old states and about only 10% to the new members. the economic crisis has left its mark on the evolution of the marketing researches market, in all countries of the eu, so that there was involution along with the onset of recession. the relationship between the size of the marketing research markets and the general economic development is a strong and direct one, both on the level of the eu market as a whole as well as by types of eu countries, a stronger conection between the turnover in marketing research and the gdp being registered in the new member states. references aaker, d. a., kumar, a.v., day, g.s. (1998), marketing research, 6th edition, new york, john wiley & sons, inc. american marketing association (2013), http://www.marketingpower.com. boier, r, ţimiraş, l.c. (2006), cercetarea de marketing, iaşi editura performantica. eurostat (2013), available on http://epp.eurostat.ec.europa.eu. harja e., ţimiraş l.c. (2009), metode statistice utilizate în cercetarea de marketing, bacau, editura alma mater. lehmann, d.r., gupta, s., steckel j.h. (1998), marketing research, addison – wesley educational publishers inc. malhotra, n.k. (2004), marketing research an applied orientation. fourth edition, upper saddle river, new jersey, pearson education. ţimiraş, l., nichifor, b., zaiţ, l. (2012), highlights of marketing research in romania, studies and scientific researches economic edition, university "vasile alecsandri" of bacau, available http://sceco.ub.ro/index.php/sceco. 366 http://epp.eurostat.ec.europa.eu/ http://ideas.repec.org/s/bac/fsecub.html microsoft word apostoaie constantin marius_eng.doc press manipulation and its negative impact on the youth ioana livia manea, „al. i. cuza” university of iasi, romania ioana anda popa, „al. i. cuza” university of iasi, romania abstract nowadays, manipulation may be regarded as an essential instrument of the “mass industrial society”, aiming at the conclusion of certain agreements that are convenient to the issuing party, turning to deceit with falsified arguments, as well as to appeals to emotional or non-rational components. the particular forms that it takes in various fields of social life may be found anywhere, from the political form to the economic one. press strategies have the capacity of manipulating the young consumer’s behaviour, generating numerous negative effects on their everyday life. keywords manipulation, press, misinformation, advertising message jel codes: m 37 manipulation – conceptual delimitations according to the dictionary of sociology, manipulation represents the action of making a social actor (person, group, collectivity, etc.) think and act in a certain manner that is compatible to the initiator’s interests, and not to their own interests, by using techniques such as persuasion, which deliberately distortions the truth, generating the impression of a freedom to think and decide. unlike the rational conviction influence, manipulation does not aim at the profound understanding of the situation, but at the generation of a convenient understanding, turning to deceit by falsified arguments, as well as to appeals to emotional or non-rational components. in the case of manipulation, the mean intentions of the one who transmits the message cannot be seized by the manipulated person. nowadays, manipulation may be regarded as an essential instrument of the “mass industrial society”. the particular forms that it takes in various fields of social life may be found anywhere, from the political form to the economic one. general forms and methods of manipulation persuasion – it represents the action of convincing someone, one way or another, to do something. this is the action by means of which the author of a message supports an idea, trying to convince the auditory. the person who takes a decision does it several times based on other types of arguments than the logical or logically correct ones, being convinced by the apparent “necessity” or “importance” of that particular action or thing. persuasion does not include negative intentionality (it does not hide facts, but merely underlines the favorable ones); it is related to the force of argumentation, to the speaker’s convincing skills, to the way the speaker is able to place the supported idea in the best of lights. due to its complex structure and its specific language, which combines the force of studies and scientific researches economic edition, no. 15, 2010 397 words and drama tricks (tone, mimics, expressive moves), television provides the most persuasive type of message of all mass communication means. misinformation represents any intervention on the basic elements of a communication process, an intervention that deliberately modifies the issued messages aiming to generate in receptors certain attitudes, reactions, or actions envisaged by a particular social agent1. sometimes, it is considered as an equivalent of black propaganda, since it spreads false information. the misinformation form, the intoxication consists in the over-saturation of sources with false information, in blocking communication channels deceitful, diversionist messages – whether in order to prepare public opinion for a massive hit, or in order to discredit an expected accurate message. its basic instruments are rumors, gossip and tendentious communications. by means of television, intoxication may generate genuine conflicts of images, and the winner of these conflicts is the one who has invested the most in their own image and who has best sabotaged the image of the other. press manipulation: typology and effects the manipulating force of the tv screen becomes stronger as it relies on the image granted credibility (what people see on tv with their own eyes is considered to be genuine). types of tv manipulation : • manipulation by image • manipulation by films • manipulation by montage • manipulation by commentary • manipulation by pagination • manipulation by omission • manipulation by press rumors • manipulation by censorship • manipulation by the “showing hiding” procedure • “showing hiding” procedure charisma • “showing hiding” procedure journalists • “showing hiding” procedure non-verbal communication means when examining the psychology of producing media, one immediately discovers many complexities and dimensions. examples of sub-specialties are: (1) the psychology of persuasion; (2) the psychology of editing; (3) the psychologies of sound, color, attention, cognition; control, games and learning styles2 . it is not possible to examine all of the facets of the psychology of producing media in one brief article. i can, however, provide examples and analysis to help show the nature, scope and technique of production psychology. celebrity endorsements, film sponsorship, and marketing in magazines, text messages, posters and the internet are encouraging children to eat badly, despite knowing they should be choosing fruit and vegetables, the study for the office of the children's commissioner found. children admitted confusing claims on products and mixed messages from the media, schools and parents made it hard to make sensible choices. 1 cf. cătălin zamfir (coord.), dicţionar de sociologie, editura babel, bucharest, 1998, p. 167. 2 barbara j. wilson “designing media message about health and nutrition: what syrayegies are most effective”, jurnal of nutrition, education and behavior, march-april 2007, pag. 513-519 studies and scientific researches economic edition, no. 15, 2010 398 one boy asked researchers: "there are vegetable extracts in cola does that mean its healthy?" 3 youngsters bought into the appeal of brightly-coloured packaging and cartoons on products, as well as free gifts and promotions, finding healthy foods "boring" even though they might like the taste. they were also attracted to products linked to sports events such as the world cup or endorsed by healthy-looking celebrities. one 15-year-old girl told researchers: "when you see a celebrity promoting something, you think 'well they eat that and look great, so i can too'." 4 we all perceive and experience events. when we go from place to place, such as driving to the market, we experience certain perception edits. while driving, we notice scenery and cars as they pass. the car's engine and radio provide context, continuity and language. music may influence mood. when we open the door, we step out into a whole new environment. when we enter a building by passing through doors, or climb a stairway or look up at a light, we change points of view. as a second example, let us examine the psychology of emotions. sensory psychology or synesthetics represents the study of the experiences resulting from a uniting of the senses. adding one sense to another facilitates an experience of higher intensity. this concept is central to stimulation strategy in media. synesthetics is the study of uniting of the senses. it is the response occurring when one sense is added to another. synesthetics is perhaps the line of research most critical to the development of media psychology's emotional dimension. in the new media, our total environment is based on multisensory responses to various audio-visual elements. synesthetics coupled with television or computer interaction creates sensory rivalry and may create positive or negative experiences or reactions to information, ideas or presentations. each stimulus may create positive or negative experiences or reactions. one stimulus may create a positive reaction; others may create conflicts of cues or sensory rivalry. the result, in any case, is emotion from a union of senses stimulated by the multimedia experience. examples of such experiences include seeing a boat rocked by waves. this may activate a sense of imbalance in an observer to the extent that it causes seasickness. viewing a painting of an arctic scene of frost and snow may evoke the sensation of icy cold, producing goose bumps. hearing an explosion or gunshot may give the illusion of being struck. looking at a picture of appetizing food may, in turn, evoke sensations of taste and smell. each of these examples represents a potential behavior or psycho-visual result engendered by a multimedia interaction. to achieve the results we are after, we must use the psychology of editing described earlier, plus the psychologies of color, sound, movement, situational cognition and storytelling, each of which comes into play when creating these scenarios.5 semantics represents the incisive use of language. managing language is fundamental to communication and central to our ability to understand. one simple example may be seen where examining the use of the word "quit." "quit" is a pejorative term of frustration that means "to give up." "quit" also is a software programming term that is used for programmers when writing code. unfortunately, it has found its way to the user. the subliminal response to the word "quit" is negative when it is used in educational or consumer programs. better choices would be "end" or "stop" or "pause" since they convey appropriate meaning without 3 kara chin and james u, mc. neal “chinese children’s understanding of commercial communications: a comparison of cognitive development and social learning models”, jurnal of economic psychology, february 2006, pag. 36-56 4 sarah j. durkon, susan j. paxton, eleonor h. wertheim, “how do adolescent girls evaluate body dissatisfaction prevention messages?”, jurnal of adolescent health, november 2005, pag. 381-390 5 foxall, r.gordon, “behavior analyses and consumer psychology”, jurnal of economic psihology, march 1994, pag.5-91 studies and scientific researches economic edition, no. 15, 2010 399 the implications of failure that the word "quit" conveys. words, their use and articulation, alliteration, intonation and patterns, are central to media communications.6 semiotics is the study of signs and symbols in human communication. semiotics plays an important role in media because visual symbol manipulation facilitates the human. machine interface. symbols facilitate understanding, communication and the creation of relationships. icons enable navigation and control over media pathways. clear, creative and careful use of symbols gives rise to iconography as a highly developed semiotic skill. the graphical interface, through which information is made accessible onscreen, is the principal point of contact between the machine and the person. graphic interface design, iconography and navigation strategies are central to emerging programming architecture and insightful use of symbols. they represent a fundamental skill requirement for those who use media in communication. microsoft, netscape, yahoo and all the other producers search ardently to find symbols and methods that are intuitive, friendly, representational and easy to use. 7 these several examples illustrate the range and scope of production related media psychology. the various aspects of media psychology come together in production and are manifested in techniques, based on principles of psychology that give us practical parameters and techniques for producing better programs. 8 media manipulation and his effects on young people over the last 30 years, the percentage of u.s. children classified as overweight and obese has more than tripled (anderson and butcher, 2006; centers for disease control, 2004). the american academy of pediatrics notes similar increases in medical complications due to childhood obesity, including type 2 diabetes, respiratory illness, hypertension, sleep disorders, and depression (brown, sibille, phelps, and mcfarlane, 2002). anderson and butcher (2006) identified a set of complementary factors contributing to childhood obesity. most factors were individual in nature, including genetics, reduced rates of physical activity, and increased consumption of high-calorie, low-nutrition foods and beverages (particularly soft drinks). further, the review noted that the manufactured food industry has witnessed wholesale change since the 1970s (for example, an increased marketing and consumption of convenience foods such as frozen entrees). 9 this trend spawned a debate about the role that media play in childhood obesity. most of the concern about the tv-obesity link is based on correlational data. the average child spends over 5 hours a day with media (roberts and foehr, 2004), which has caused concern that sedentary media use constitutes a long-term obesity risk (viner and cole, 2005). researchers (taros and gage, 1995) also noted an increase in the number of ads in children's media, particularly television. 10 separate reports (domestic advertising, 2003, 2006; harris, kaufman, martinez, and price, 2002) have noted better than 20% increases in total u.s. food advertising spending from 1995 to 1999 and from 2002 to 2005. over those periods, 65-70% of spending was devoted to television. 6 margaret handerson blair, david h. furse and david w. stewart, “advertising in a new competitive environment: persuading consumer to buy”, business horizons, november-december 1987, pag.20-26 7 w. fred raij, “globalization of marketing communication”, jurnal of economic psichology, april 1997, pag. 255-270 8 laren t., “messages for the masses: food and nutrition issues on television”, jurnal of the american dietetic association, jules 1997, pag. 733-734 9 brown, jane and witherspoon, elizabeth, “the mass media and american adolescents health”, jurnal of adolescent health, december 2002, pag 153-170 10 jennifer l harris, john a. bargh and kelly d. brownell, „priming effects of television food advertising on eating behavior”, health psycology, july 2009, pag.404-413 studies and scientific researches economic edition, no. 15, 2010 400 two reviews (carter, 2006; hastings et al., 2003) concluded that television ads were a probable, albeit small, influence on children's food preferences. recent evidence has suggested direct correlations between food advertising and children's purchase requests (borzekowski and robinson, 2001; o'dougherty, story, and stang, 2006) and overall nutritional intake (vereecken, todd, roberts, mulvihill, & maes, 2006). one study (lobstein & dibb, 2005) found a strong correlation between the amount of advertising (especially for "empty calorie" foods) and the proportion of over-weight children in 10 countries. 11 another study made by kiser family foundation and published in the new york times presents the average number of hours spent by a teenager, using a means of reception. it is presented the average time in 2009 compared with 2004. the results of this study are: graphic. 1. percent of all 8 to 18 years old who own each device 11 zwier, sandra, “medicalisation of food advertising. nutrition and health claims in magazine food advertisements 1990-2008”, appetite, august 2009, pag. 109-113 media device 2004 18 39 12 76 66 29 18 39 12 0 10 20 30 40 50 60 70 80 number of owners 2009 2004 2009 76 66 29 ipod mp 3 player cell phone laptop 2009 4.29 2.31 1.29 1.13 10.45 0 5 10 15 20 25 30 time tv music computer video games movies 2009 2004 1999 1999 3.47 1.48 0.27 0.43 7.29 2004 3.51 1.44 1.02 0.49 8.33 tv music computer video games movies studies and scientific researches economic edition, no. 15, 2010 401 graphic. 2. average hours and minutes spent with each medium in a typical day among 8 to 18 years old the importance of these content analyses emerges when one considers children's interpretive strategies with television content. developmental psychology theories are helpful in identifying the audio/visual cues that heighten children's attention and comprehension of advertising. however, effects research indicates that some of these cues can mislead child viewers. instead of conclusions – examples of press manipulation in modern and contemporary ages an ample international survey made by gallup in 1986 reveals the following facts: only 1 out of 4 subjects believe that the great news institution (such as bbc or nbc) are credible; 79% of the interviewed individuals believe that press is “literally professional” and that their purpose is to do their job as well as they can. a similar survey, made 3 years later (1989), shows certain modifications in the audience’s perception of how television provides information: only 54% of the interviewed people say that reporters present information in an objective manner; 44% think that press is frequently non-objective; more than two thirds of them (68%) declare that journalists always tend to favour one of the parties involved in a conflict; only 33% believe that press is independent, most of them thinking that it is influenced by powerful people or politicial groups; 77% blame press for invading their privacy. bibliography 1. anderson, p. m., & butcher, k. f. (2006). childhood obesity: trends and potential causes. the future of children, 16, 19-45. 2. barbara j. wilson “designing media message about health and nutrition: what syrayegies are most effective”, jurnal of nutrition, education and behavior, march-april 2007, pag. 513-519 3. brown, jane and witherspoon, elizabeth, “the mass media and american adolescents health”, jurnal of adolescent health, december 2002, pag 153-170 4. brown, w., sibille, k., phelps, l., & mcfarlane, k. (2002). obesity in children and adolescents. clinics in family practice, 4, 3. 5. domestic advertising spending by category (2003, june 23). advertising age, 74(25), s-14. 6. domestic advertising spending by category (2006, june 26). advertising age, 77(26), s-8. 7. foxall, r.gordon, “behavior analyses and consumer psychology”, jurnal of economic psihology, march 1994, pag.5-91 8. fred, w von raaij “postmodern consummation”, jurnal of economic psychology, september 1993, pag. 541-563 9. harris, j. m., kaufman, p., martinez, s., & price c. (2002). the u.s. food marketing system, 2002: competition, coordination, and technological innovations into the 21st century. usda agricultural economic report no. 811. washington, dc: usda. 10. hawker, g. (2002) “food the ultimate delivery system?” script magazine, april, 14-17 11. jennifer l harris, john a. bargh and kelly d. brownell, „priming effects of television food advertising on eating behavior”, health psycology, july 2009, pag.404-413 12. kara chin and james u, mc. neal “chinese children’s understanding of commercial communications: a comparison of cognitive development and social learning models”, jurnal of economic psychology, february 2006, pag. 36-56 studies and scientific researches economic edition, no. 15, 2010 402 13. laren t., “messages for the masses: food and nutrition issues on television”, jurnal of the american dietetic association, jules 1997, pag. 733-734 14. margaret handerson blair, david h. furse and david w. stewart, “advertising in a new competitive environment: persuading consumer to buy”, business horizons, november-december 1987, pag.20-26 15. w. fred raij, “globalization of marketing communication”, jurnal of economic psichology, april 1997, pag. 255-270 16. michael, e. oakes “good food gone bad: “infamous” nutrients diminish perceived vitamins and mineral content of foods”, appetite, june 2004, pag. 273-278 17. morasso gabriella, bolognesi claudia, duglio elena, marco musso, „pesticides as food contaminants: a pilot project for correct public information”, trends in food science & technology, 10 september 2000, pag. 379-382 18. ralf greiner and ursula konietzny „presence of genetically modified maize and soy in food products sold commercially in brazil from 2000 to 2005”, food control, may 2008, pag. 499-585 19. renwich, a., barlow, s “risk characterization of chemicals in food and diet, food and chemical toxicology, september 2003, pag 1211-1271 20. roberts, d. f., & foehr, u. g. (2004). kids and the media in america. cambridge, uk: cambridge university press. 21. roe, brian and teisl, maria “genetically modified food labeling: the impacts of message and messenger on consumers perception of labels and products, food policy, february 2007, pag. 49-66 22. sarah j. durkon, susan j. paxton, eleonor h. wertheim, “how do adolescent girls evaluate body dissatisfaction prevention messages?”, jurnal of adolescent health, november 2005, pag. 381-390 23. taras, h. l., & gage, m. (1995). advertised foods on children's television. archives of pediatrics and adolescent medicine, 149, 649-652. 24. vereecken, c. a., todd, j., roberts, c., mulvihill, c., & maes, l. (2006). television viewing behaviour and associations with food habits in different countries. public health and nutrition, 9, 244250. 25. viner, r. m., & cole, t. j. (2005). television viewing in early childhood predicts adult body mass index. journal of pediatrics, 147, 429-435. 26. zwier, sandra, “medicalisation of food advertising. nutrition and health claims in magazine food advertisements 1990-2008”, appetite, august 2009, pag. 109-110 studies and scientific researches economic edition, no. 15, 2010 403 microsoft word apostoaie constantin marius_eng.doc forecast of the economicfinancial performance based on diagnostic analysis daniela cristina solomon, university “vasile alecsandri” of bacau, romania simona elena dragomirescu, university “vasile alecsandri” of bacau, romania abstract to ensure efficient financial management is necessary to achieve the forecast of economic and financial performance on the basis of diagnostic analysis, approach most often developed starting from the prediction of turnover and also necessary for shaping an organization's prospects. in financial management, the turnover’s increasing is considered an objective in itself, being interpreted as generating increased market share, profit. sales condition therefore the entire activity of a company, their variation being considered the main risk factor of enterprise’s economic and financial performance and the staring point in their forecast. keywords performance, economic-financial indicators, diagnostic analysis, forecasting jel code: d81, g17, m49, p47 data analysis of profit and loss account the first step towards financial forecast consists in the analysis of data from profit and loss account, in order to identify the existent correlations between the evolution of the main performance indicators and changes in turnover. financial forecast may be realized on the basis of three methods, namely1: the “percentage of turnover” method, “period rotation” or “rotation speed” method and regression method. to achieve economic-financial forecasting performance of two companies the method “percentage from turnover” will be applied based on the previous data, without taking into account any changes that may occur in the structure of enterprise’s activity. sales condition the entire activity of the enterprise and their variation is considered the main risk factor on the enterprise financial performance. in determining the sales forecast there should be taken into account such factors as2: prices level, competition, suppliers’ conditions, the marketing mix. marketing tools that provide the achieving of the objectives are grouped into 4 categories: product (range, quality, features, packaging, services), price (discounts, pay period), promotion (advertising, sales force, public relations) and placement (channels, stocks, transportation). although only part of the structural elements of the profit and loss are dependent (varies proportionally) as against the sales volume (such as operating income, operating costs), 1 (practical approaches in finance company), irecson publishing house, bucharest, pp 69-89. 2 albu, n., albu, c. (2003), (performance management tools, vol ii, accountancy management), economic publishing house, bucharest, p. 40. studies and scientific researches economic edition, no. 15, 2010 156 others are independent, respectively their values are determined by other factors (for instance: extraordinary income and expenses are not influenced by the workload, but by the occurrence of unforeseen events, the extraordinary ones), the application of the method starts from the principle of linearity of the evolution of all structures in the profit and loss account in relation to turnover. forecasting turnover another step, extremely important, is forecasting turnover and can be realized on one of the following methods: using historical data, or using sustainable growth rate. in specific literature3 we find other methods of sales volume planning, such as: the causal approach; the non-causal approach, the direct method, the indirect method; the court methods, statistical methods (trend analysis, correlation analysis, targeted approach, industry analysis method, production line analysis, final user analysis). all methods have advantages and drawbacks. evidence shows that most large enterprises use the combination of these methods. “using historical data” method method “using historical data” implies the use of turnovers from the two companies registered during 2004-2008 period to determine the expected turnover (for 2009). method of aggregation of data from the past is made by using the average rate of growth. in this case, the expected growth rate in turnover is the average (simple or weighted arithmetic) of the growth rates recorded in the past: simple arithmetic mean is: where: g the average growth rate of turnover; gt = growth rate of turnover in year t, t = 1, 2, 3, 4, or 5; t = number of periods in our case t = 5. weighted arithmetic mean is: depending on the average rate (simple or weighted arithmetic) of growth in turnover, the predicted turnover for next period is determined: forecast function 3 rachlin, r. (2007) (the complete business budgets. practical guide and forms of work), edition ii (trad.: manea fc, trans. and adjust.: paunescu, m., ed. coord. christmas e), bucharest, bmt publishing house, pp 103-106. g t g t t t 1 t ca cacat t t tt 1 1 1 g t t t t t t tg 1 1 t t t t t tt t t ca caca 1 1 1 1 )1()1( gcaca ttprev studies and scientific researches economic edition, no. 15, 2010 157 the predicted turnover value can be obtained through application of forecast function which is available through table calculation program microsoft excel. in calculation of this function the volume of turnover in the period 2004-2008 and development price index (inflation rate) were taken into account. function syntax is as follows: where: x = the expected price index value; x = 5,60%; known_y's = dependent variables matrix, namely the turnover values for 2004-2008 period; known_x's= independent variables matrix, namely price index values for 20042008 period. forecast equation is: y= a+bx, where: xbya ; 2)( xx yyxx b in the case of the two companies, the forecast turnover calculation through the methodology described above is presented in table 1. table 1 estimation of turnover s.c. alfa s.a. s.c. beta s.a. years turnover ca turnover’s growth rate (g) turnover ca turnover’s growth rate (g) price index 2004 10466273 12106476 31.34% 2005 8550487 -18.30% 12726187 5.12% 9.00% 2006 6957491 -18.63% 13753887 8.08% 6.56% 2007 6908835 -0.70% 14206693 3.29% 4.84% 2008 5991906 -13.27% 15487561 9.02% 7.85% simple arithmetic mean 5229346 -12.73% 16474988 6.38% weighted arithmetic mean 5328299 -11.08% 16528483 6.72% p r e d ic t e d v a l u e s forecast 6884964 14.90% 14171687 -8.50% 5.60% forecast of indicators for assessing economic-financial performance. the average percentage held by each indicator in the turnover previously projected is applied (determined by the weighted arithmetic mean) on the expected value of turnover. calculation of expected values is presented in table 2 and graphical representation of projected economic and financial performance is suggestively presented in figure 1 for sc alfa s.a. and figure 2 for s.c. beta s.a. forecast(x,known_y's,known_x's) studies and scientific researches economic edition, no. 15, 2010 158 table 2 predicting economic – financial performance explication ca rexp rfin rcrt rbr rnet average percent from ca alfa 6.94% 1.05% 7.99% 7.99% 6.54% beta 37.99% 4.86% 42.85% 42.85% 35.64% value predicted through extrapolation alfa 5328299 369766 55956 425722 425722 348247 beta 16528483 6279708 802497 7082205 7082205 5890165 value predicted forecast alfa 6884964 477793 72304 550097 550097 449987 beta 14171687 5384285 688069 6072354 6072354 5050287 figure 1 forecast of economic and financial performance of sc alfa s.a. figure 2 forecast of economic and financial performance of sc beta s.a. we can observe that the estimated value of turnover for sc alfa s.a. recorded the value of 5.328.299 lei through extrapolation and respectively 6.884.964 lei using forecast function. between two values, we consider that lower value that obtained by extrapolation, is closer to reality. forecasting through forecast function is too optimistic and has led to increased turnover from the level projected in 2008, given current economic uncertainty, but still fall below the turnover achieved in 2004-2007. in the case of s.c. beta s.a. the value of the projected turnover obtained by extrapolation would register an increase of 6.72%, while using the forecast function it would decrease by 8.50%, and in this situation we choose the extrapolation alternative because the firm proves sustainable economic performance, inflation rate tends to stabilize, and the objective of increasing turnover is realistic for the company. we can observe that turnover forecast in growth determines the estimation of favorable economic and financial performances and vice versa. regarding the application of a sales forecast methods and interpretation of the obtained results, there are some limitations: first, correlation does not mean causation, so the real cause of the link between economic variables may be a variable not taken into account yet; secondly, the identification of the factor determinant in sales estimation is not easily achieved; there must be added that sales are actually under the influence of several factors, and also can lead to errors of interpretation because of the relationship between some variables logically unrelated; some correlations between variables may simply be due to chance and not economic logic; 0 10 00 000 20 00 000 30 00 000 40 00 000 50 00 000 60 00 000 70 00 000 80 00 000 ca re xp rf in rc rt rb r rn et 20 08 ex tra pola re foreca st 0 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 14 000 000 16 000 000 18 000 000 ca re xp rf in rc rt rb r rn et 2 008 extra polare foreca st studies and scientific researches economic edition, no. 15, 2010 159 the use of historical data to estimate future growth in turnover is useful, but is not sufficient information; empirical analysis shows that it is unlikely that firms that have registered faster growth in certain periods to continue the same pace and in subsequent periods. conclusions in conclusion, we consider that a correct forecast of sales is vital to long-term enterprise success. relevance of previously recorded data for forecasting future data depends on the stability of the company’s economic activity and the environment in which it acts, stability which is influenced by the following factors4: volatility of growth rates; company’s size: because growth is measured as a percentage, firm’s size should be taken into account the increased size of the firm makes more difficult to maintain high growth rates; economic cycle: if the company's activity is influenced by economic change is essential when choosing data analysis; estimating the growth rate during several economic cycles is required; structural changes: the growth rates recorded are the result of policy mix adopted by the firm: investment policy, financing policy, dividend policy; given that the company amended one of these policy information to that moment become irrelevant for predicting future developments. bibliography 1. albu, n., albu, c. (2003), instrumente de management al performan (performance management tools, vol ii, accountancy management), economic publishing house, bucharest. 2. management financiar (financial management), economic publishing house, bucharest. 3. (practical approaches in finance company), irecson publishing house, bucharest. 4. obreja, l. (2006), (investment), digital library, academy of economic studies, bucharest. 5. rachlin, r. (2007), (the complete business budgets. practical guide and forms of work), 2nd edition (trans.: manea fc, trans. and adjustment: paunescu, m., ed. coord. christmas e), bmt publishing house, bucharest. 4 management financiar (financial management), economic publishing house, bucharest, p. 81; obreja, l. (2006), (investment), digital library, academy economic studies, bucharest, p. 57. studies and scientific researches economic edition, no. 15, 2010 160 microsoft word apostoaie constantin marius_eng.doc the contribution of human resources management systems in achieving competitive advantage anuta porutiu, babes-bolyai university, cluj-napoca, romania abstract competition has become a current and difficult problem for any organization. this raises the need for the companies to obtain competitive advantages. one way to do this is making use of appropriate information technology, which is the task of information systems for top management. computer technology and data communication technology alter the parameters within which competition unfolds in all fields. whereas in the past information technology was oriented to data storage, in the modern world it must provide a dynamic vision on the organization, facilitating adaptation to changes in business environment and thus ensuring competitiveness. in this way, information technology becomes a competitive weapon which is extremely effective in achieving the objectives of the organization. in addition, it is applicable in any field of activity regardless of the organization’s size. keywords competition, organization, computer technology jel codes: m 12, m 15 improving management productivity real competitive advantage cannot be gained without increasing the productivity of workers. since computer systems assist management, workers are represented by managers. until recently, all discussions relating to productivity ignored the issue of management productivity, focusing on workers’ productivity at lower levels of an organization. viewed from a purely financial perspective, productivity and workers’ productivity are, however, only part of the organization's productivity. for example, if management decides to launch a new product that customers will not buy, it is irrelevant whether the workers who manufacture the product work effectively or not. having a good product at the right time has a greater impact on the organization than improving workers’ productivity. one of the reasons why, until now, no particular importance to management productivity has been given is that managers, through the decisions they make, do not produce a distinct product. it is hard to measure managers’ productivity using conventional methods (quantity of products manufactured / time required, etc..). management productivity should be measured by the quality of decisions and time to make them. they depend largely on the quality and frequency of information, issues that have been treated above. 1. methods and techniques applied in decision-making decision-making techniques have been developed, generally due to the need to get some good decisions. each manager has a set of available tools (techniques / methods) to assist him in making decisions. every organization, be it government or private, non-profit or taxable profit has developed a type of decision making to work with and finally gets to depend on it. therefore the adoption of a new technique / method is often a difficult change for managers who come to resort to this option only in extreme cases in which the use of old methods led to a decision error with serious consequences on the organization. studies and scientific researches economic edition, no. 15, 2010 439 there are two perspectives of decision-making approach, namely the approach in terms of problem solving process on the one hand, and in terms of the process of retrieval problems on the other hand. the first approach is aimed mainly to identify the problem, the solution and its implementation, while in the second approach the quality of the problem posed is essential. problem solving process solving problems is dependent on the type of problem to solve. according to simon's taxonomy the types of problems are classified depending on the type of decision. structural problems (decisions in conditions of certainty) are issues whose elements can be identified and quantified to find the correct answer. mathematical and statistical models used for solving lend themselves to structured programming (eg onicesu method, method of global utility). semi-structured problems (decisions in conditions of risk) are questions that contain structured and unstructured elements. since these issues involve both computer use and human reasoning, it is important to build a proper human – computer interface. addressing these issues is mostly quantitative (eg mathematical hope method, decision simulation). unstructured problems (decision in conditions of uncertainty) are issues whose constituent elements cannot be identified precisely. intuition and human reasoning are required in order to solve them. in these cases it is not possible to use mathematical or statistical models, decision making relying heavily on the decision-maker’s experience. solving these problems requires a qualitative approach and involves the use of heuristic methods (eg degrees of affiliation to the best choice method). a number of techniques have been developed over time to solve decision problems. 1. engineering correct definition of the problems starts from the premise that most errors which occur in solving problems are due to their incorrect definition. to help define the real problems correctly it is advisable to use a chart of the causes and effects and a procedure to present the problem in the form of a diagram. the first step for the proper use of this technique consists in listing all the problems, symptoms and problems related to the matter and the designation of causal links that exist between them. 2. redefinition technique is based on the fact that in many cases the solution to a problem depends on how the question is put. redefining the problem in a broader context may help to deal with them. in most cases the problems do not have distinct solutions and managers must find a solution quickly. it is therefore useful to draw up a table defining the problems before trying to find answers to them. 3. reversal technique involves tackling the problem from tail to head, allowing the manager to look at the problem from a different perspective than the classical one. there is a number of other techniques, such as: verification page aims to separate spheres of influence within a period of time, pareto chart to identify more serious problems, the histogram allows troubleshooting charts, scatter diagrams to identify sites that present defects in the activity, control graphics monitor the production process. two methods to solve problems are used in this approach: quantitatively oriented method this method is derived from the scientific method formulated by bacon and consists of the following steps: 1. observation consists in close observation of the phenomenon that defines the problem: facts, opinions, signs, etc.. this step implies identifying the problem. 2. defining the real problem is achieved through a careful analysis of all factors and all parties involved in the problem. 3. developing alternative solutions – different courses of action or different solutions to the real problem are developed. by using computer quantitative models can be developed. 4. selecting the optimal solution – aims to evaluate different quantitative models / solutions until the optimal one is found. there are standard models which do this. if mathematical relationships are too complex, there can be developed a proper model for choosing the optimal solution or sensitivity analysis can be performed. studies and scientific researches economic edition, no. 15, 2010 440 5. checking optimal solution includes determining a target population and implementing the solution on this population. 6. establishing adequate controls one solution remains optimal as long as the initial relationships between factors are preserved. for an effective control of the solution a monitoring system can be established which will allow feedback to different managers. this method applies to well-structured problems and the linear programming model can be used as a standard model if, for example, a production resource allocation problem arises in a company based on a minimum basic cost, or the transportation model if a vehicle allocation problem arises in a transport company. the disadvantage of this method is that quite often, important information can be missing which affects the decision, and optimization is not possible without it. these limitations restrict the decision making process and lead to finding only a satisfactory solution not the optimal one. 4. decision-oriented method this method leads to satisfactory solutions, not optimal ones, therefore it is usually applied when the first method cannot be used. choosing this method in the decision making assumes that managers do not give up the idea of finding the optimal outcome, but they admit that at one level, this optimization is too expensive, time consuming and it is very difficult to obtain the necessary information to try and analyze the problem in terms of optimal. in these situations it is more practical to find only a minimum acceptable result, rather than to attempt, for example, maximizing profits gained. the method can be applied successfully, eg to analyze unprofitable loans granted by a banking institution. the steps to be taken in problem solving are: 1. intelligence involves looking for the environmental conditions which require decision or, in other words, recognizing the problem. it consists mainly in collecting the data which enables the manager to clearly define the problem and offer a few ideas on possible solutions. 2. design includes invention, development and analysis of various possible courses of action. it involves manipulating the data obtained in order to develop various alternative solutions to the problem. 3. choice involves an evaluation of alternatives and selection of the best ones developed in the design stage. the choice is made in terms of a satisfactory solution versus optimal solution. sensitivity analysis can also be used. 4. implementation – involves putting the solution into practice. 5. control consists in monitoring results and achieving any adjustments necessary. 5. the process of identifying problems this method goes beyond analyzing the current problems of the organization and focuses on identifying future issues and their impact on the organization. thus, top management must identify problems and opportunities ahead. 6. engineering thinking and creative approach which leads the manager to discover new alternatives, with unexpected results in solving decision problems. in this approach the executive must prove not only analytical thinking, but also imaginative and creative one. 7. brainstorming technique is probably the best creative technique used until now. the basic idea is to improve the analysis of problems by finding as many viable solutions as possible and some unusual approaches. 8. summary (syntetics) starts from the fundamental assumption that creative ability can be described and taught. its aim is to increase the quality of the creative results by appointing a synthetic team. this technique uses mechanisms of personal analogy, direct analogy, symbolic analogy and fancy analogy. 9. battele-bildmappen-brainwriting combines elements of the above techniques resulting in a brainwriting approach, meaning each person writes their ideas stimulated by images. there are two essential methods used in this approach: the method focused on issues and the method focused on opportunities. studies and scientific researches economic edition, no. 15, 2010 441 10. problem oriented method this method focuses on examining the environment to explore future issues that will have impact on the organization. stages of method execution are described below. 1. generation requires addressing important issues for the organization. the analysis is forward-looking in the search of future problems, then it is backward-looking as it is necessary to evaluate the cause-effect relationships for each problem. 2. assessment examines the issue in terms of managers’ interest. cost-benefit analysis can be performed to determine the impact of the solution on the financial aspects of the organization. 3. validation at this stage issues that deserve the managers’ attention have already been selected. executives meet to validate them and to determine the order in which these selected issues need to be resolved. 4. setting limits the scope for each problem is set. 5. setting solutions can be achieved in two ways: finding the optimal solution through a quantitative approach or decision-centered approach. the choice is made depending on the type of problem to be solved. 6. implementation putting the solution into practice opportunity oriented method the main emphasis is laid on identifying opportunities for the organization. the steps are: 1. exploration consists in identifying problems and opportunities to improve business operations. 2. selection once opportunities have been identified, it must be determined which of them should be explored by top management. these should constitute critical factors for success in business, and they can be analyzed by using cost-benefit analysis. 3. consideration of borders entails observing the environment to identify opportunities that may emerge and establishing appropriate boundaries for the development and implementation of the solution. 4. solutions management must choose the best opportunity in a set of feasible opportunities. 5. implementation the chosen opportunity must be monitored and implemented making any necessary adjustments. in conclusion, in the process of solving problems, managers must be able to solve any problem, both short and long term (micro or reactive approach). in the process of finding the problem, the manager must solve by perception halfstructured or unstructured problems, in general, long-term (macro or proactive approach). decision making is based on information. information is needed to define and structure the problem, to explore and choose from alternative solutions and to review the effects produced by the implemented choice. references 1. avornicului c. avornicului m., (2007), management and systems design, cluj-napoca, romania, risoprint; 2. mallach, eg, (2000), decision support and data warehouse systems, boston, usa, mcgraw-hill irwin; 3. niculescu o.,(2001), information systems of management organization, economic publishing house; 2001; 4. d. oprea, dumitru f., mesnic g., (2005), systems analysis, ed univ. "al. ioan cuza ", iasi, romania; 5. roger, i ursăcescu, m, vlădean, d. knock, m, burlacu s., (2007), informatics and management, bucharest, romania, university publishing house; 6. rosca i., (2006), computer-information society. e-services, publishing house, bucharest, romania, publishing house; 7. zacharias, d., (2001), information systems to assist decision, bucharest, romania, dual tech 8. . studies and scientific researches economic edition, no. 15, 2010 442 microsoft word apostoaie constantin marius_eng.doc incomplete and imperfect information for sales compensation raluca văleanu, academy of economic studies, bucharest, romania abstract sales force compensation represents the fix and / or variable payment by the company. to compensate agents based on the results, the company set a goal which is brought to their attention through the compensation plan. applying the model of moral hazard, where the agent behavior cannot be verified, it cannot be specified in the contract what is the expected behavior of the agent. in order to make an offer to contract principal should know the effort that the agent will submit it to define the payment and the contract is determined optimally in trade between the two conflicting objectives of the two participants in the contract. although agent behavior cannot be verified, the result of this behavior should be measurable at the end of the contract so that the employer may make the contract contingent on effort commission agent for sale of which is measured by the amount of earnings to the company. keywords incentive compensation, sales agents, incomplete information, contracts theory, moral hazard jel codes: m 15, m 31 sales compensation sales force compensation represents the payment of fix and / or variable salary by the company. the planning for sales force compensation depends on the segmentation of sales agents according to the products and services offered by the company or the account list of each agents, and other criteria. in order to compensate agents based on the results, the employer establishes an annual goal, most often expressed in the form of revenue that the company expects to receive from the contracts that the sales agent closes, objective to be achieved in accordance to eligibility restrictions imposed by the company which result from the segmentation. in order to transmit information to sales agents in a structured and understandable manner, the company presents this information in the form of a compensation plan that includes details about the annual target, eligibility for certain products under this role, sometimes the list of accounts (the territory list) or at least reference about where this information can be found. "the role of agent sales and its compensation plan are most effective when the objective is as clear and singular as possible," says compensation consultant ann barnes1. thus companies must ensure that sales agents have a clear objective about the products they can sell and the list of accounts. the graphic illustration from picture 1 explains easily the product eligibility criteria: sales force structure in oracle based on the products that sales agents can sell on the market in europe, middle east and africa for the most important line of business line called license. oracle license line of business is divided in two major categories of products: technology and applications, which are also divided into several product categories, those shown in the 1 http://compforce.typepad.com/compensation_force/sales_compensation/ studies and scientific researches economic edition, no. 15, 2010 526 picture below on the second line. in this company, the product eligibility represents in fact that a sales agent may sell only products of that product category; they can actually sell any products, but will be compensated only for this product. the company limits the possibility to sell all its products in order to ensure that the agents are focused on their areas of specialization. of course, agents may receive a small bonus if they sell other products and packages from other lines of business, but it depends from company to company. picture 1. the sales force specialization by products in oracle source: intern oracle (2009) another important criterion is the list of customers or accounts to which sales agents can sell. the sales agents are divided are divided depending on the size of the accounts (very large, large, small and very small). in many companies this classification according to the size of the accounts is considered sufficient, but large companies requires delimitation for agents to know exactly which accounts they can address in order not to overlap for the same opportunities. there are several possibilities to detail the accounts for each sales representative. most often the sales agents are divided by industry, like for example sales agents can sell to large accounts in the auto industry. another way of classifying accounts is based on the location, the address of that account, usually for smaller accounts where the list of accounts number is very long. for example, the sun's sales each agent receives a list of accounts (the company’s names), but are listed also some postal codes attached to the list of accounts, therefore sales agents can create sales opportunities both with listed companies and companies with the address to these postal codes. sales representatives are compensated as long as they sign contracts with those customers assigned to them by their employer. if the sales representative sells to an account that does not have designated by the company to him or her, but neither is assigned to another sales agent, he or she may ask to be added to its list of accounts and he or she will be compensated. of course this may mean a whole process that may require several levels of approvals. in large companies such as oracle, there is a studies and scientific researches economic edition, no. 15, 2010 527 software system (a database) where can be found information about accounts and sales agents or teams who sell to those accounts. the products the sales agents sell and list of accounts that are assigned to them represent the two most important criteria for eligibility of sales agents to be compensated, but of course some companies may choose to use other criteria for compensation eligibility such as period activity. compensation plan sales force compensation consultant ann bares2 presented a study about how often companies review their compensation plans and why. the consultant also considers that it is important to analyze whether the recession year of 2009 was unprecedented in terms of revision of sales volume. the study was conducted by world at work, a non-profit association dedicated to knowledge of compensation, benefits and balance work personal life, in november 2009 on a sample of 977 respondents. the main findings of the survey are: most organizations review their compensation plans annually in recent years. annual sales force compensation is not a unique phenomenon of the years 2008 / 2009, but actually is a model dating from 2005. there is a decrease in the proportion of the number of companies which have revised their compensation plans in the past four years, as a result of major changes made in response to strategy changes appeared in the turning of this decade. improvements on the alignment between the incentives paid to sales force and the company strategy is the reason cited for reviewing compensation plans sales force, particularly in the last two years. tabel 1. top reasons for revising sales compensation plans in 2009 top reasons for revising sales compensation plans in 2009 1 improving sales force alignment between pay and company strategy 74% 2 decreased complexity of compensation plans (e.g. reduction parameters, simplifying the formula) 37% 3 changing performance measures to increase the focus on the profitability of sales force 35% 4 changing performance measures so as to increase focus on development, promotion of new opportunities, sale of new products 35% (source: http://compforce.typepad.com/compensation_force/sales_compensation/) as the study shows, most companies prepare an annual compensation in particular to ensure alignment between sales strategy and compensation model. so when the company establishes its business strategy, it sets the target for sales at the company level on each line of business, which then is subdivided by each product until it reaches the goal setting at sales manager’s level and level of each sales representative. this objective is the value of sales contracts which the agent should sign up in order to receive the bonus targeted. every company wants an increase in earnings from year to year, but it is important to estimate future earnings in a a realistic view of all aspects, such as the recent economic crisis. there is no standard method to determine the target company's annual standard or expected period; it depends on decision makers of each company. 2 http://compforce.typepad.com/compensation_force/sales_compensation/ studies and scientific researches economic edition, no. 15, 2010 528 compensation plan is the physical or electronic document through which sales representatives are aware of the sales objective or target it has to be achieved in that period in order to receive the commission or bonus. anna barnes3 explains that the bonus target is the amount of commission that sales agent should receive if he can reach the sales target. the objective of sales volume can be expressed as a value of sales in that country's currency or other currency of reference (if the cost of manufacturing software is very small) or can be expressed as the profit of the company remaining after making the sale (if hardware products, electronic equipment and appliances) or even the number of units sold, according to the matrix that best fits the tasks and responsibilities of sales agents. to determine the compensation rate it is enough to apply a simple division between variable pay target (commission target) and sales target, value which is multiplied by 100 percent. this compensation rate is called flat compensation rate as sales agent is paid with the same rate regardless of the value of sales. many companies apply this method of using this payment rate, uniform. nevertheless there are companies that use progressive rates or accelerated in order to reward more those who manage to sell more than the objective and regressive rates or decelerate to limit gains after a certain point (an alternative for a threshold or cap value). compensation plan depends on format and content from company to company, but overall the plan contains information about the sales target, commissions target and compensation rates and about the eligibility of the sales agent for certain products or accounts or any other criteria eligibility. the way the sales plan is presented to sales agents depends from company to company, but not only, but also from country to country, depending on the laws of each country. in some european countries, under the law, the compensation plan needs to be physically signed by the employees and it is not sufficient that only that the compensation plans are presented to the employees or the acceptance in an electronic form. also in some countries with a strong orientation for protecting employees, such as germany, workers council are very powerful, for example they to do not allowing to change compensation plans from year to year in terms of eligibility criteria. principal and agent in sales compensation model the contracts theory has the objective to analyze the situations when the companies are trying to overcome the barrier of lack of relevant information in making decisions designed to obtain new information or to avoid the costs of their ignorance. contracts theory models use game theory concepts and results in asymmetric information, incomplete and / or imperfect, resulting descriptions called principal-agent negotiation; the parties have a priori beliefs about information they do not hold and their review these beliefs as they run economic relations4. the party who proposes the contract is called the principal and the party who accepts the contract is called the agent. both principal and agent may be individuals, public or private institutions, organizations, etc. therefore, principal proposes the contract to the agent, who examines the contract and decides whether to sign or not. the agent will accept the contract if the utility obtained exceeds the utility that would obtain if it were to do not sign a contract. in many cases, the agent tries to negotiate in his favor. however, the principal controls the definition of contractual terms. the two parties involved in the contract have opposite interests: the cost of one party is actually profit for the other party (the commission paid sales representative is a cost for the principal and sales representative effort is a return to principal). the principal faces a risk because he cannot observe the agent behavior and in order to avoid this risk he could introduce incentives in the contract terms. 3 http://compforce.typepad.com/compensation_force/sales_compensation/ 4 stancu, s. (2002), teoria contractelor. negocierea şi derularea contractelor economice, ase press, bucharest, pg. 22-28 studies and scientific researches economic edition, no. 15, 2010 529 in the case of sales force compensation, the principal is the employer, the company which proposes sales compensation method, and the agent is an employee who may accept the offer in light of the benefits he or she has upon acceptance (compare with the situation when he or she does not accept or compare with other offers). if he or she accepts the offer of compensation, the agent will work to sell the principal products in order to bring revenue for this one. information that principal has is incomplete because of the lack of knowledge level about effort that the agent will make throughout the course of the contract, however it can measure its results at the end of the operation of the contract. the contract that the company proposes to the agent is in fact the compensation plan by setting the contractual terms. it is important to note that although the company proposes compensation plan, considering its overall objective to maximize the profit, it does not know the type of the sales agent whom offers plan (if workers or lazy), it makes the proposal in terms of incomplete and imperfect information. this is why the company should take into account when proposing compensation plan that agents may act differently depending on their type, if they accept the compensation plans. of course the company can analyze the evolution of sales agents in terms of results from year to year that can predict the type, but it can only be an estimate. it is even more difficult when the company needs to generate a compensation plan for the first time to a sales agent that just gets employed. in this case, the company can ask during the hiring process for recommendations from former employers, details of its activities or make assumptions based on the analyze of curriculum vitae (such as higher education in the trade). another indicator that the principal can use when the company proposes compensation plan is the number of opportunities already open by the agents, opportunities meaning those situations when agents have already discussed and negotiated with potential customers and the next year the completion of the contract follows. thus, the employer should investigate certain information to pass the total ignorance barrier about agent’s effort evolution in the period ahead, but will not have complete information, only partial, based more on assumptions. unlike the company that proposes the compensation plan without knowing the results the agents will bring, the agent knows from the beginning all the information needed to measure the benefits he or she receives if accepts the compensation plan. however in order to get great results which means great benefits sales agents depends on many factors, not just their own effort. in general, the mathematical models of the contracts theory assume that agents get the maximum benefit if they make a maximum effort. sales representatives not only know information on benefits that are earned upon acceptance of the individual compensation plans, but they know or at least receive the documents about the entire process of compensation like all the eligibility criteria, terms and conditions of compensation such as: the formula for commission calculation based compensation plan, the frequency of payment, terms relating to the commission beyond a certain limit or implement a management discretion, terms for teaming agreements between two or multiple sales agents by which to share the value of sale etc. sales representatives have all necessary information to decide whether to accept or not the compensation plan. if not accepted, it all ends here, they will not receive any payment from the company, but if accepted, they will receive payment in accordance with its results, according to their achievements compare their targets specified by the company though the compensation plans. moral hazard model for sales compensation model model of moral hazard has the characteristic that the principal, the company, cannot verify the agent behavior, so it can not specify in the contract what is expected behavior of the studies and scientific researches economic edition, no. 15, 2010 530 agent, but it is very important for business to know the effort expected from sales agent in order to make a proposal. sales representative may give indication of his or her behavior by showing good or very weak results in previous contracts; in previous years when the sales agent had compensation plans and achieved its target set by the company, even exceeded in the a large proportion or the opposite side, failed to reach the target or failed to bring any income for the company. if the signal is good company should pay more to influence agent behavior in order to accept the proposed compensation plan. although it does not know what effort will make the agent when an employer or a company proposes a compensation plan to a sales agent he plan in such a way that the payment depends on the effort made by the agent for sales, which is measured by the total of revenue. the employer establishes an annual variable salary, in addition to the fix one which is guaranteed, payment that the agent receives depends on the total value of revenue he or she brings for the company, namely the effort, the actions that the agent carried in principal’s favor. due to the fact that sales representatives are interested in obtaining a high commission, they will make a greater effort which is a benefit also for the company because a higher commission is possible only by closing as much as possible deals, leading to revenue for company which objective is to maximize profit. so both sides, both company and sales force have benefits from this link between the commission and the company revenue, both being able to maximize their benefits. considering the fact that the company proposes compensation plan under incomplete and imperfect information and that the sales agent effort can’t be verified, the company proposes a level of effort, but it should ensure that this level of effort will be made. model of moral hazard actually has to solve the two problems, maximizing the benefits for the company which can be achieved only if the sales representatives accept the contract or compensation plan that the company offer, but they have also their own objective to maximize their benefits, their commissions. sales representatives have the objective to establish the level of effort to be made in order to maximize bonus or payment they may obtain from the company if they accept the compensation plan, which is expressed mathematically in terms of following form: sales representatives know that the employer cannot check their efforts and choose that level of effort that maximizes their objective, the commissions. to accept the conditions proposed by the company in the compensation plan, the sales agents want to meet the condition of rationality: . thus, the mathematical model of moral hazard for sales compensation is expressed mathematically by the following equation: in the model of sales compensation, the effort variable is a continuous, the sales agents can have any value of effort. mathematically is much easier to solve the problem if the agents can have only two types depending on the variable effort (effective or not), but in reality agents can have any value of effort. unfortunately if the variable effort is considered continuously, moral hazard problem becomes very difficult to solve, since one restriction is still a matter of maximizing: . studies and scientific researches economic edition, no. 15, 2010 531 therefore in contracts theory, in order to overcome this obstacle, this restriction of maximizing agent’s benefits was replaced by its first-order conditions, which is expressed by the following restriction of participation: . but this restriction is not always equivalent to the problem of maximizing the agent’s benefits, ensuring only necessary condition. if however it assumes that this reformulation of the condition of rationality is sufficient, the mathematical problem is the following: solving the problem above is done by lagrangean method and obtain the same conclusion as for the discrete model, namely that a good result is a sign that, more likely, the agent make a greater effort. this first order approach is not always accurate, but is the easiest way to solve the problem. another way would be to introduce a type of distribution function depending on effort. regardless of the method, the conclusion is the same, that the payment offered to the sales agents depends on the results obtained by them, namely the value of contracts that they bring the company revenue, the payment being the only way the company can influence their effort. therefore, the company plans compensation for its employees which requires them to receive some results for a particular payment. for example, in oracle each sales representatives has an annual target, most often expressed in value and that purpose will receive some payment. if the sales representative achieves just partially the target, he or she will receive proportionately with their results. bibliography . 1. bădescu a., dobre i., sacal i.b. (2005), metode cantitative de fundamentare ale deciziilor economice în condiţii de risc şi incertitudine, ed. atlas press, bucureşti 2. galupa, a., teoria microeconomica a agentilor economici, biblioteca digitala ase 3. scarlat, e., chiriţă, n. (1999), analiza şi modelarea sistemelor cibernetico economice, ed. etape 4. stancu, s. (2002), teoria contractelor. negocierea şi derularea contractelor economice, ed. ase, bucuresti 5. http://compforce.typepad.com/compensation_force/sales_compensation 6. http://www.jstor.org/pss/1248331 studies and scientific researches economic edition, no. 15, 2010 532 microsoft word apostoaie constantin marius_eng.doc strategies and politics of ocupational stress reduction – case study mihaela-georgia sima, bucharest chamber of commerce and industry, romania simona-clara bârsan, research institute for analytical instrumentation cluj-napoca, romania abstract this work includes 2 parts: main theoretical elements and 1 case study. theoretical elements define and explain concepts such as: stress, stress management, counseling and organizational change. in the case study these elements are applied on a research unit development. the reason for the analysis was the tense situation existing in the company. work methodology included: observation, direct discussions with staff (in small groups) and the application of a questionnaire consisting of 6 modules. on that base, major dominant stressful manifestations were determined. following the obtained results solutions have been proposed to management and employees. in the last part, there are presented the obtained results from the implementation of some of proposed solutions. key words stress, management, counseling, organizational change, results jel codes: m 12 introduction whatever we do in life, we often experience stress. a study conducted by reader's digest in 15 european countries showed that, at present, the romanians have "managed" a spectacular counter performance: we are number 1 in europe at perceived level of stress: 52% believe that stress is the greater health problems, compared to european average of 33%. stress is not necessarily something negative, characterization as negative or positive stress depending on each situation. up to a certain limit, the stress is even necessary to our business. theoretical elements stress positive stress is necessary for our protection, for example in case of an accident by mobilizing all body resources in order to avoid it. in this case, we speak of a positive stress because in a stressful situation, typical stress reactions of the body show heart begins to beat faster, the brain receives more oxygen, the muscles are tense and so on but for a positive resolution of the situation. the negative stress is a reaction to the inherent psychological stressors demands that have the potential to make a person feel tense and anxious, because he or she is not able to face these demands. it is a tension that arises when a person responds to job demands, family and other external sources as if they were generated by its internal needs, obligations and selfcriticism. stress is both additive and cumulative. in time it accumulates up to the state of crisis when symptoms appear. these can manifest physically by: irritability, anxiety, concentration decreased, frustration and hatred. also physical symptoms can occur: muscle studies and scientific researches economic edition, no. 15, 2010 460 tension, headaches, back pain, insomnia and hypertension. untreated, symptoms may lead to illness and even death. stress management refers to: a. identifying causes which produce and adopt measures such as: individual responsibilities change (reduction or increase them); increased autonomy in carrying out tasks; agreeing to employee goals; providing appropriate training (eg in time management techniques); allowing adoption of a flexible schedule; offering professional and personal counseling; improved working conditions; employee relocation; providing access to the sports centers (e.g.: many japanese companies insist their employees workout at the beginning of a working day). helping employees in developing the capacity to cope better with stress by: providing counseling services; organizing working sessions on stress; sports and social activities; training in relaxation techniques; serving meals and providing spaces for adequate rest. counseling is essentially a discussion (a series of talks) between the person who needs help (the client) and another person who masters the techniques of counseling. managers should know such techniques if they wish to solve effectively their subordinates’ problems and obtain maximum results. counseling is a process that helps clients to: 1) identify the problem; 2) to determine which would be ideal or preferred outcomes; 3) to explore ways of achieving results. besides the specialists within the human resources compartment (economists, sociologists and psychologists) an extremely important role falls upon managers at all hierarchical levels, from top managers to team leaders because they are the ones who work directly with people, who create a climate, those who know them best and who can think, with the support of specialists, the best solutions and most important, who can actually implement them. organizational change. in contrast to stress management and assistance programs for employees, some organizations try to reduce stress by using a specialized consultant who is responsible for recommending some ways for improving working conditions. this approach is the most direct way to reduce stress at work. it involves identifying the most stressful aspects of work (e.g. overwork, conflict) and design strategies to reduce or eliminate the identified stressors. the advantage of this approach is that it treats directly the main cause of stress at work. however, sometimes managers do not agree with this approach because it involves changes in work routine, production schedule or in the organizational structure. as a general rule, actions to reduce stress at work should pay particular attention to organizational change in order to improve working conditions. but even the most conscious efforts to improve working conditions are unable to eliminate stress completely for all employees. therefore, a combination of organizational change and stress management is often the most useful approach to prevent stress at work. case study: research and development unit of public utility. methods: in order to identify stressors, the following methods were used: passive observation (a 3 days period), informal discussions and an inventory of stressors. studies and scientific researches economic edition, no. 15, 2010 461 passive observation observation was done over a period of 3 days, was a simple observation, direct, discontinuous. data were recorded following each stage of observation. the purpose was to make an observation of the original image on the environment, activity and behavior caused by this environment. by observation we distinguished characteristic manifestations from the random. informal discussions were held in small groups (2-3 employees) and focused on grievances, problems and difficulties they meet in their work. conversations with employees were the most direct way to find out details of the motivations, aspirations, emotional experiences, interests. following that discussion an inventory of stressors was made. this inventory was then submitted to all employees and constituted the support for differentiation of stress levels present at employees. in order to complete the data a 6 modules questionnaire on stress at work was used: work requests: my work requires me to work very quickly. my job makes me work hard. i am not required to provide a large amount of work. i have enough time to finish my work. my work requires me long periods of intense concentrationmy tasks are interrupted before they are finished and i will have to pay attention to them later. my job is very hectic. pending due to other colleagues or departments slows down my work. decisional authority: my job allows me to take many decisions. at work, i have little freedom to decide how to do my work. i can determine the order in which i finish my tasks. i can determine when i need to fulfill a task i can easily go away from work for a short period. i can set my own working rhythm. i feel that my work gives me a place in the community. iii. abilities: my work requires me to learn new things. my job involves a lot of repetitive work. my work requires me to be creative. my work requires me a high level of skills. i have to do different things in my work. i have the opportunity to develop my specific skills. iv. working contract terms: i can determine when to start and finish work. i can determine when i need a break. i know my work schedule a week before. i can determine when to take my holidays. the health and safety norms are well known and respected. prospects for my career development are good.in five year time, my skills will still be valuable. i have the opportunity to attend training courses, specialization and training. my wages is satisfactory. v. bosses and colleagues’ aid: the atmosphere at work is good. most of the people irritate me. if needed, i can call in for help one or more colleagues. where i work, daily order is good. my work is properly appreciatedi’m informed about the situation of the company. i feel free to discuss problems and complaints with companies’ management. my suggestions regarding changes in working practices in order to streamline work are taken into consideration. magazine company (if any) is useful if there is no magazine, don’t answer. vi. socio-demographic: sex; age; marital status; family component: number of members.... out of which hildren .........; training level; activityfield: public service; other: research projects; personal income; income per family member; city: bucharest stressors inventory. from discussions the following dominant stressors resulted:complaints about career: the impossibility of advancement; conservatism in terms of job design; conflicts with superiors, colleagues, subordinates and customers of the company; contradicted requirements from the institution; unstructured or unclear objectives; inadequate resources; conflicts between the needs and expectations; bad working conditions (noise, faulty lighting, lack of performing equipment); inadequate time management; routines; overload; poor management of potential and skills of employees in the way of not-exploiting resources, capacities, skills; responsibilities on other people; unrealistic deadlines, inadequate schedule; conflict between home demands and those from work; lack of free time; family and housing conditions; financial status; insufficient sleep; legislative changes; the risk of occupational diseases; poor communication. the substantial presence of following stress indicators was noticed: high level of sickness; studies and scientific researches economic edition, no. 15, 2010 462 headaches and stomach aches; mental states such as absenteeism, apathy, embarrassment, boredom, dissatisfaction, fatigue, alienation, anger or irritability, negativism; low productivity and inability to achieve the objectives set forth; increased error rate; increased number of internal conf1icts between employees, excessive rate of staff fluctuation, phenomenon increasing while time passes by. proposed solutions because a fairly large number of employees expressed dissatisfaction about the same issues, we believe that they are active factors of stress. so the stress reduction strategy will focus mainly on reducing them. the solution we proposed is a combination of a stress management with organizational change. it is necessary to be mentioned that the contribution of both parties, especially their readiness to achieve a positive result, respectively a not tensioned and productive working atmosphere, an environment in which the human potential that exists in the organization is able to express and develop. thus, after the analysis, the following recommendations can be made: for management: it is recommended: that specialized programs, involving all employees at a time, are to be developed, in order to enable wider perspective on the possibilities offered by working with companies’ clients. apart from these courses, there may be some changes within the institutional behavior by promoting friendly attitudes between management and employees of the institution. these can start from the management or from the employees. in this way the managements’ image of the employees may improve and the employees can evaluate, diversify and develop professional capabilities. participation in specialized courses enables interaction with other leading business media and professional re perception of the employees’ activities. evaluation of this strategy can be made after at least 6 months, time required in order to assure the participation of at least one set of employees at specialized courses related to the effects of less formal atmosphere due to behavioral changes. a form of assessment could be done through interviews. 2. to improve communication between management and employees, besides the possibility of friendly relations, meetings can be organized involving both management and employees where they can express every opinion. an indicator of good communication is the degree in which the chief and subordinate agree on job issues and each is sensitive to other's point of view. it may be that the parties "agree they disagree" in some respects. these meetings aim to present several points of view and to emphasize that those can lead to expected results. agreement between the parties "implies increased confidence in the professionalism of others. training team work spirit aims to increase the efficiency by improving interpersonal relationships, clarifying goals and roles (what is the team trying to achieve and who is responsible?). it can thus facilitate communication and coordination. training team spirit usually begins with a diagnostic session, "often kept out of work, in which the team examines their current level of functionality"[4]. because our group’ main factor of stress involves extended working hours, the opportunity of doing these sessions away from the workplace is appropriate. 3. defining jobs in a manner that allows a maximum freedom of exercising the skills and discernment of the job’ owner, in order to maintain the interest for the position. design activities so that the employee should have a certain degree of responsibility, sufficient authority and the right to participate in decisions that influence its activity. studies and scientific researches economic edition, no. 15, 2010 463 5. the way employees are treated should give confidence about job security and the position they occupy in the institution. addressing inadequate generally leads to conflicts, and when they cannot show it creates a complex kind of "impotence" which maintained, creates a constant state of stress. providing counseling services for employees, internally, using their own qualified advisors, or resorting to the services of an outside consulting organization. in this way the organization obtains several advantages using minimal resources. for example: a good external image (the company is interested in the welfare of employees), different employees' attitude towards the management of the institution (including reducing of conflicts frequency), compared to the work they perform, high efficiency, intellectual comfort and so on. in terms of resources used, comparing the financial problems that may arise from inefficient work or stuff fluctuation, it can be easily concluded that in fact this will not be considered a substantial effort. 8. create optimal conditions for work – adjusting locations in accordance with occupational health, providing required equipment in order to perform duties. 9. where there is lack of possibilities for material reward, it is recommended to provide other facilities, eg granting time off, merit and performance recognition in public. 10. identifying the right person for a specific job execution, management. this may lead at the same time to: the optimal use of human potential, rewarding the deserving, avoidance of conflicts arising between employees on grounds of incompetence, unnecessary loading of the work of some others, allowing the direct superior to delegate his power because he will do it efficiently. 11. implementing a management system that takes into account the fact that people have also have family problems, such as taking children to kindergarten, and therefore to accept the request of the employee to a flexible or lagged working program. thus we obtain multiple benefits: the employee is satisfied that he/she is understood and helped, personal problems are solved, and the institution benefits from a stable committed and flexible enough employee (considering that they agree to the working conditions and benefits they get from the institution). for employees: learn to manage stress in order to ensure long-term professional success and to maintain physical and mental health: 1. change of perspective. for those employees who think the employer requires too much (quite a big number), it is advisable to check if the problem lies within its personal organization or the way that the department is operating. it is better to turn to a career counselor to make an action plan, which will lead in time to the intellectual and personal comfort. 2. if tension or stress is felt, a five minutes break it is recommended outside the working space, away from work routine. there has been noticed in time that this contributes to a significant stress decrease. 3. respect the time dedicated to family or itself. it is important to leave work at the office, in all the cases. decreasing personal time in favor of the professional one has proven to be a powerful stress factor, regardless of the individual position on the social ladder. 4. organizing the workplace and tasks, keeping a list of priorities and supervising them. feeling overloaded and out of control are situations that cause stress. 5. manifestation of personal feelings towards a close person. the existence of support, of a person who wants to listen, helps relaxation and reduces stress. 6. there certainty that help exists in situations of overload will decrease the tension. but that relationship should be work both ways, from the transmitter to the receiver and back, because in time, roles can reverse and the one who help in a certain situation must be sure that the same support will come back from the one who’s been helped now, when a similar studies and scientific researches economic edition, no. 15, 2010 464 situation should appear. 7. laugh therapyalmost any situation can be relaxed through a joke or a good disposition created by a man with a sense of humor. 8. too high and unrealistic expectations of what can be done in a day, week or month can cause negative feelings. high levels of stress negatively affect motivation and influence professional outcomes. in time, a very capable and performing professional, but unmotivated properly, will come to point of not providing appropriate outcomes. 9. the idea of perfection has to be dropped. no one is omnipotent.failures don’t have to be lived dramatically, but viewed positively and considered ways of learning from their mistakes. 10. a positive attitude is recommended, avoiding negative people with a bad attitude because they can "contaminate" others with their behavior. negativism destroys energy and motivationa positive atmosphere needs to be created around people with which one interacts and within the working environment. achievements should be a cause for joy, even when nobody else feels the same. implemented solutions – obtained results following the analysis and the proposed solutions, management has decided to organize a delegation of three days in mangalia, involving a part of the company’s staff. although the main purpose of the delegation was work, the delegation’s evolution from a psychological and behavioral perspective was a positive one during the three days. starting from a general and permanent state of stress, manifested in various ways, from the high tones of voice to expressed depressions, in the second night a state of relaxation and good communication within the team was reached, which has generated a good mood, maintained after the return to work. as each, at a time, felt able to express itself freely, without regard to function, age and corporate position, the atmosphere was relaxed, accounts adjusted and nerves exhausted. even though organizational problems arose during the delegation, they were treated with more relaxation than normal, and clearly resolved quicker and more efficient. the applied solution was very simple and less expensive for the company, with maximum results. multiple outcomes were registered: delegation target was achieved, cooperation between the analyzed company and hosts was perfected, joint projects have been proposed, convenient for both parties; people to work more relaxed, returned as more than daily colleagues, depending on compatibilities, constructing or deepening a friendship relationship and they became to know each other better than they can do it in the office; in terms of the impression created by the analyzed company’s management, one can argue that using a reduced amount of money, yet something was offered to its employees, which tempered, at least for a while, reluctant and nervous attitude shown before. conclusions in terms of stress there are 2 main ways of approach: total ignorance, with negative results or amplify the importance of the phenomenon and justify the majority of failures on its expense. we believe that no one’s approach is neither normal nor useful for companies or employees. a middle way is always best. far from us the idea of reducing the importance of this element within daily activities, but we do not believe that stress is responsible for all failures, whether personal or professional. thus, from our experience, we recommend to the institutions and employees to consider the evidence presented in this work, both as theory, and practice and studies and scientific researches economic edition, no. 15, 2010 465 seek to apply, according to the specific job, one or more of the solutions we proposed. obviously, depending on stress factors and dominant manifestations that result from an analysis, other solutions might be proposed. therefore we consider it appropriate for everyone, before you diagnose by ear or take a position depending on appearances, to make a brief analysis of the reasons which lead to disruption of the daily activity of everyone. references 1. adirondack, sandy (1999) managementul pur şi simplu?,, ed. f.d.s.c. , bucureşti 2. cosmovici andrei (1996) psihologie generală, ed. polirom, iasi 3. cristea, dumitru (2000) tratat de psihologie socială, ed. pro transilvania, bucureşti 4. johns, garry (1998) comportamentul organizaţional, ed. economică, bucureşti 5. minulescu, mihaela (1996) chestionarele de personalitate în evaluarea psihologică, garell publishing haus, bucureşti 6. nestor, i. m. (1974) psihologia industrială-consideraţii practice de organizare, ed. politică, bucureşti 7. n. i. o. s. h. (national institute for occupational saftey and health), (2002) niosh stress, u.s. departament of health and human services 8. selye, h. (1974) ştiinţă şi viaţă, ed. politică, bucureşti studies and scientific researches economic edition, no. 15, 2010 466 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the determinants of e-government relational models construction: interaction, communication, participation and collaboration florentina neamțu1 transylvania university of brasov florentinavioletaneamtu@gmail.com bogdan nichifor vasile alecsandri university of bacău bnichifor@gmail.com abstract in recent decades the integrating approach of new information and communication technologies in the public sector grew faster. worldwide, most states have made and still make substantiate efforts towards the coherent strategies implementation in order to favor the complex process of integrating the new information and communication technologies. regardless of the objectives maximizing efficiency, increase transparency in the decision process, improve service quality or citizen participation in decision making what we call today e-government has become an essential mechanism in administrative reforms, independent of aggregation level. the article presents an analysis of the factors that define the outline of the e-government relational model. keywords relational models; e-government; interaction; communication; participation; collaboration jel classification m39 1. introduction if at the conceptual level the e-government platforms necessity is universally accepted, problems and malfunctions occur during the implementation and effective use; this reality is common, both externally, being associated to the differences between states of the world in terms of development of e-government platforms, and internally, as evidenced by the gap between the sophistication level of online services provided by the central and local public entities. despite this difference, the common starting point in the relationship model construction and in the e-government platforms development is considered to be the opportunities offered by new information and communication technologies from the perspective of expanding the interaction, participation and collaboration in public entities area 2. theories on the evolution of e-government platforms in the context of the society changes which are associated to the accelerate progress in the xxi century, the opportunity to improve bi-directional information flow and the 1 phd student at interdisciplinary doctoral school in marketing, “transilvania” university of braşov 306 mailto:florentinavioletaneamtu@gmail.com the determinants of e-government relational models construction: interaction, communication, participation and collaboration reconfiguration of framework for collaboration between the public and the various stakeholders categories are real challenges. the high interest for these issues is evidenced by numerous academics searches on identifying methodologies and models that explain the new information exchange coordinates and the locally, nationally and internationally data integration architecture (dawes, 2010; gant, 2003; gelder, maesschalck and colsoul 2010; klievink and janssen, 2010; navarrete, gil-garcia, mellouli, pardo and scholl, 2010; papenfuss and schaefer, 2010; williamset et al., 2009; zheng, yang, pardo and jiang, 2009) . in fact, since 1996, dawes foreshadow the benefits and the challenges associated with information sharing initiatives, considering that “government portals will become a central technical component for interaction, participation and collaboration activities within networks consisting of governmental and nongovernmental actors”. the e-government issue in terms of internet portals functions utility in the public system has been also the subject of numerous investigations. one of the first research steps that have provided an initial perspective on the use of new information and communication technologies in the public sector services was conducted in 2001 in the united states. the study offered by kaylor, deshazo and vaneck (2001) is based on a comprehensive research approach to e-government platforms, in which the sample was composed of 123 municipalities whose population vary between 100,000 to 200,000 inhabitants. looking at the e-government platforms development degree and the online services sophistication level, the three authors have shown that “there is a direct link between the city size and the phenomena of egovernment platforms adoption”. this link has also been identified in 2002 by moon, according to which “the city size and the governance type are key factors on the e-government platforms implementation and development”. the author points out that unlike central government entities in which they observed a proactive attitude in e-government platforms uptake, the local entities are clearly far from the potential results and foreshadowed expectations in the use of new information and communication technologies. later, in 2004, based on a u.s. cities research, reddick suggests a two-stage model that explains the phenomenon of increasing local e-governance. if the first stage suggests the use of data catalog, the second shows a higher level of sophistication, namely the creation of transactional framework. referring to the two dimensions, the author revealed that “in the g2c relations area, the public services are focused on cataloging categories, while in the g2g and g2b partnerships, which are more advanced, that has been reached the transactional level.'' similar studies were conducted by al-nuaimi (2009), attour oueslati, dufresne and longhi (2007), baker, hanson and myhill (2009), hahamis, iles and healy (2005), williams (2008) etc. a special dimension of this research was the studying of various websites of egovernment in terms of functions that facilitate the closeness to the various stakeholders categories. such an analysis was provided by gant and gant (2002), showing that “web portals serve as an integrated gateway into local government websites, offering a single point of contact for the provision of online services at the local government level”. later, in 2008, sandoval almazan and gil -garcia revealed that, by mixing existing applications in e-government portals, has been created the field for “moving from oneway information and data exchange to a more interactive involvement with people”. in fact, as has been shown in the theory and practice, the recent technological 307 neamțu , nichifor innovations are those that have supported this development, examples being web 2.0 and related instruments. 3. interaction, communication, participation and collaboration: construction pylons for relational models in public system practice in the last decade the e-government portals have recorded a constant evolution, this dynamic being in fact a response to the new internet features. we are witnesses to the “radical transformations of portals functions and the principles and interaction framework with citizens and other social actors” (lips, 2010). currently, as revealed by sandoval-almazan and gil-garcia (2010), government websites can be considered such as “communication systems through a computer and the internet”. in the literature and practice area there are listed a multitude of models explaining the government websites development and evolution (gil -garcia and martinezmoyano, 2007; layne and lee, 2001; sandoval almazan and gil -garcia, 2008, 2010). one of the most commonly used approaches is the evolutionary perspective that creates stages and analyzes e-government initiatives upon the characteristics and technical aspects found in every development stage. this approach has proved its usefulness in the government websites principles decoding process, offering both effective levers to quantify the innovation degree and recommendations and directions to follow in improving framework approach. in fact, as has been specified by the advocates of this theory, it appears that each of these steps is already an electronic governance form. although the 5 stages of e-government platforms development approach (information, interaction, transaction, integration and participation) have been proposed as complementary components, and not necessarily mutually exclusive, they can be easily presented as determinants in the construction of relational models. 3.1. the availability of information a core function of e-government portals is that of the public information display (kun chang, melih, sangjae and gyoogun, 2008; susan, 2004). government disclosure format is extremely important, at least in light of the website attractiveness. in the world practice are found numerous presentations: some portals are using traditional structures such as folders or menus, others allow users to search for information using a search engine, and more recently, some of them use multimedia tools (video, audio applications or online presentations). despite the differences in public information structure, all these forms are trying to create the optimum framework to become closer to citizens. regarding the effectiveness of different ways of structuring public information, the practice of developed countries provides numerous studies. for example, a research conducted by buccoliero and bellio in 2010 which aimed to identify web content strategy in italian town of venice, revealed that: “the release of the information should be directly related to back-office structures of the local government”. this idea is supported also by gould, gomez and camacho (2010) who stating that “the provision of timely and accurate information is related to internal efficiency and organizational structure”. 3.2. quality public services the opportunity of improving public services quality through e-government platforms is widely accepted. in the context of the present analysis the interest is granted to the quality as a determinant factor of the relation models construction. 308 the determinants of e-government relational models construction: interaction, communication, participation and collaboration each of the relational models components can be a target for public services and there is a clear evidence of segmentation approaches (g2g, g2b, g2c etc.). however, there are differences between these services categories, both in terms of sophistication level and the integration degree of online conventional benefits. this can affect the relationship with the various stakeholders categories given the trend of “change, of stakeholder expectations regarding online services”. considered to be fundamental in the relational models construction and implementation, this approach that may improve the quality of online public services has been the subject of numerous reform processes (connolly, bannister and kearney, 2010; papenfuss and schaefer, 2010 etc.). moreover, in the literature and practice areas there are provided some alternatives to government web portals, namely the use of mobile phones as information and communication support. 3.3. increasing interaction frequency the world practice has revealed that many government portals, both central and local, currently use web 2.0 tools and applications. however, as academic researchers mentioned there are very few the portals that show a clear operational and assimilation of interaction strategy (sandoval almazan, diazmurillo, gil –garcia, lunareyes 2010). the interaction in terms of e-government platforms must be analyzed in two dimensions, as follows: • an internal dimension (g2g and g2e) which facilitate intra-organizational interaction among central and local public entity and between civil servants and operational staff of central/local government etc. this interaction can be both a restricted or a private one which is developed on the intranet mechanisms applications and an extended or concentrated one, which is group specialized (blogs, social media). in fact, many web 2.0 applications such as blogs and social media (twitter and facebook) can be used both as a support to promote domestic participation in a structured way and as leverage for creating and development of internal relations, favoring the decision making convergence (ballejos and montagna 2010). according to a study provided by noveck, in 2009, other interaction tools beyond e-mail and intranet can be “the wiki collaboration, the mental mapping or using rss and forums”. • an external dimension that fosters both interaction with citizens (g2c) and with different legal entities (g2b, g2n). according to the studies conducted by noveck (2009) and tapscott and williams (2010), the e-government portals that are using wiki applications are real tools for sharing ideas and solutions and to promote the public dialogue. other channels of interaction with civil society or legal entities are: the blog, through which can be promoted initiatives, can be disseminated new ideas or can be developed dialogue with different groups of stakeholders; the new web 2.0 applications such as social networks: twitter and facebook, through which can be disseminated, with a broad coverage, news, messages, warnings or ideas of governance; social tags; rss (syndication content); podcasts etc. obviously, the interaction with the different stakeholders categories can occur also in the absence of web 2.0 applications, such as comments in the specific area in the e-government portals that both aim to encourage the public expression of opinions and the extensive use of chat sessions on specific subjects with various officials. 309 neamțu , nichifor 3.4. multiplication of participation channels civil society, in general, has provided many channels for participation in government. according to academics, these channels may vary from those of the framework facilitating participation in the democratic process (anthopoulos, sio, tsoukalas, 2007), to the one specific to transaction area (boyer-wright, kottemann, 2008). need for a multi-channel strategy, as a mechanism to enhance the participation of citizens in government, has been the subject of numerous studies in the academic area. in 2008, ebbers, pieterson and noordman proposed such a strategy to expand opportunities of citizens towards exchange of information and knowledge. this idea is supported by: • gil-garcia, chun and janssen (2009), according to whom “participation has the ability to create value for citizens and government organizations”; • barnes and vidgen (2007), who states that “the e-government sites are a gateway to electronic channels of participation”; • ong and wang (2009), who consider that the interaction with officials and government agencies, and the stakeholder participation, expanded after use of “online surveys, forum sites , blogs ...”. in the literature there are studies that show the impact of the lack of interaction on the level of participation of stakeholders in the actions of public entities . such studies are provided by fink (2010) and resca (2010), according to whom the low level of interaction and related approaches inconsistency may affect the involvement of stakeholders in participatory approach. the most used channels participation in government portals are the polls and forums. these unidirectional tools facilitate the engagement of citizens in relation to government, allowing the expression of opinions 24 hours from 24, 7 days out of 7 , be it attitude on policies and policy statements, or opinions regarding any malfunction of public services. despite the clear benefits generated (involvement and participation of citizens in government action), these channels are associated with a major disadvantage, namely the lack of direct and rapid feedback from the government. this phenomenon occurs because many government officials were not aware of these forums and polls (matheus, ribeiro, 2009) . although it offers great benefits, email is another tool that can facilitate engagement and customization bond between citizens and civil servants. 3.5. creating new opportunities for collaboration collaboration is the last component, and perhaps most important, of the approach of building a relational model of e-government. usually, people access government portals to obtain information and data, both as inputs to their decision making and as a simple cognitive actions to ensure consistency. moreover, global practice has shown that very little of them want explicitly to work with different entities of the public system. importance of collaboration in e-government platforms comes, as revealed by numerous academic studies (inglehart, 1997; parent, vandebeek and gemino, 2005; tolbert and mossberger, 2006 etc.) from the direct relationship between it and the level of confidence of civil society in government action. according to various surveys, citizens, regardless of geographical location, show consistently low levels of trust in government. against this background, it was observed that the use of applications such as wikis and social networks (facebook, twitter), given their ability to accelerate the phenomenon of interaction and thus 310 the determinants of e-government relational models construction: interaction, communication, participation and collaboration multiplying forms of collaboration, generated an improvement of level of public confidence indicator. in the context of the proposed analysis should be noted that public confidence indicator covers not only the relational dimension specific to g2c, but also includes working with various non-profit organizations (g2n) and even the media (newspapers, television, radio) which, in democratic context, are essential components. based on the reduced frequency of collaboration between different stakeholders and the government, in the literature there are works that indicate that “this type of partnership is characteristic, predominantly, in emergencies, context in which the government portal is perceived as an alternative channel for access to public information that support decision-making” (maldonado, maitland, tapia, 2010). obviously this theory is constantly criticized in academia, most studies noting that the new role of citizens, in an interconnected global environment, is to be a “prosumer: producer and consumer of information at the same time” regardless of the existence of a crisis situations or not. for other academics, research on collaboration and sharing of information revealed the need for reconfiguration of government processes, organizational structures and procedures. in this context, a new organizational paradigm was proposed, namely public sector knowledge networks, considering that the exchange of information and their sharing through the networks improve government processes and facilitate collaboration . to support the previous statement, dawes , cresswell and pardo (2009) explains the difference between the new paradigm and the classical public network: “as opposed to other types of networks, public sector knowledge networks (pskn) deals with information and knowledge sharing beyond traditional boundaries of the organization, trying to meet public needs that one organization canot manage in an independent manner”. this type of network requires the existence of bidirectional relationships between people, processes, software and other information technology. like interaction, collaborative approach can be analyzed in two dimensions: an external dimension that reveals the collaboration between government and stakeholders, and an internal dimension, which emphasizes partnerships between different levels of the public system. collaboration with various categories of stakeholders can involve many instruments. for example, e-government portals may have the warning systems (dawes, prefontaine, 2003), designed to identify any failures or security threats, the context in which stakeholders would use it to alert the authorities. similarly, there are many forms of collaboration within internal relations of the public system. one option is the collaboration between different entities or between local and central level to provide a common framework for the provision of online services. 4. conclusions regardless of the nature and type of relationship, e-government portal is a hub of opportunities for collaboration and exchange of information between government and non-governmental actors. 311 neamțu , nichifor references al-nuaim, h. a. 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(2009), understanding the “boundary” in information sharing and integration, system sciences (hicss), 42rd hawaii international conference on, kauai, 5–8 january, available on http://ieeexplore. ieee.org. 314 http://www.cersi.it/ http://dl.acm.org/ http://ieeexplore/ studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro automotive marketfrom a general to a market segmentation approach liviana andreea nimineț “vasile alecsandri” university of bacău liviana.niminet@ub.ro abstract automotive market and its corresponding industry are undoubtedly of outmost importance and therefore proper market segmentation is crucial for market players, potential competitors and customers as well. time has proved that market economic analysis often shown flaws in determining the relevant market, by using solely or mainly the geographic aspect and disregarding the importance of segments on the automotive market. for these reasons we propose a new approach of the automotive market proving the importance of proper market segmentation and defining the strategic groups within the automotive market. keywords automotive markets; market analysis; market segmentation; strategic groups jel classification l62; l53; l26 1. introduction nowadays automotive market analysis is facing an important short come determined by the fact that all the official statistics on automotive market are based on the same wholesales within a determined market criterion. this means that the criterion is the automotive market of a country, a region or a group of countries (such as the european union). officials consider that the automotive market can be defined solely by country or by region and in their understanding this approach is sufficient for comprehension of market size analysis. however we can easily see that this is a questionable approach as it does not take into account important aspects and leads people reading the statistics believe, for instance, that automotive like dacia logan and volkswagen passat are competing on the same market only because they are sold on the same country, or in the same group of countries. in apia, acea or even european union understanding the relevant market of automotives comes down to the products sold: automotives and the geographical dimensions of the market: country/group of countries. 2. market segmentation as we stated earlier we cannot accept such a general approach because it misses a lot of the outmost important aspects. consider that a collection of markets compose an industry. the automotive industry is composed by the new and used car markets and the aftermarket for spare parts. furthermore, markets can be subdivided by model, year or by makes and each subdivision either by product or by geographic area defines a new market in the automotive industry. the automotive market has changed. the time of “give the customer any color of car they want, so long it is black” (ford) has passed. this perspective worked for the time when customers just wanted a car, any car. more and more the perspective turned into the car that fit different “purpose, purse and personality” (gm). if in the early days of 61 nimineț the automotive market customers main interest was to have a car as time went by their needs began to change, and customers started to focus on a car’s characteristics rather than solely on the functional aspect. there appeared cars for the rich, for the medium class, city cars, off road cars, speed cars, shopping cars and so on. together with the developing of the automotive market and highly differentiated products that meet different forms of needs and expectations it became obvious that market analysis needed change. this was one of the main reasons that brought into attention the concept of market segmentation. but what does a market segment mean? the segment of the market is about products sold on the market or is about the customers from the market? the first impulse would be to say that market segmentation is “definitely about the products”, but on a closer look one can realize that in fact a segment is “a group of people”. philip kotler proved that “market segmentation is subdividing a market into distinct and homogenous subgroups of customers where any group can conceivably be selected as a target market…”. market segmentation is therefore a method of “dividing the market into smaller groups of customers or organizations in which each segment has a common characteristic such as needs or behavior”. following this reasoning we can identify different types of market segmentation. • benefit segmentation mean a group of people who share and seek for similar benefits. this segment is thus about needs and satisfaction of these needs • demographic segmentation means a group of people who share similar gender, age, income, occupation, education, and so on. applying this segmentation one can identify cars for the rich or for the youth, “gents only” and the list can go on. • lifestyle segmentation supposes a group of people who may share the same lifestyle and thus orient to the same type of automotive. fact of the matter is that only market segmentation can help dividing the market actors into strategic groups. as we stated above, segmentation analysis traditionally focuses on products characteristics of product markets as a fundament for dividing industries. furthermore, the strategic group analysis uses firm’s characteristics and the nature of competition intensity varies. 3. strategic groups and “traditional” type of automotive market segmentation so a new question arises: who does industry segmentation help? well, industry segmentation is very useful both for new market entrants as well as for the existing firms helping them to decide resources allocation and also which segments to maintain. strategic groups are clusters of firms that have common characteristics and follow the same or similar strategies in setting key decision variables:  product market scope  distribution channels’ choice  the level of the quality of the product  the degree of the vertical integration  the choice of the technology. putting it simple, the strategic group is the middle ground between industry and firm. there are industries with obvious group structure and with a high degree of homogeneity and there are also industries in which exist differences considering the strategies that firms use. the down side is that strategic groups do not offer any information regarding the profitability of the firm, but offer a complete image of the types of firms in a given industry. 62 automotive marketfrom a general to a market segmentation approach regarding the automotive sector, there are several ways for segmentation this particular market. one of the most used segmentation proposes a combination of price and size of the automotives. it was developed by the united kingdom motor industry trade association (smmt) and is generally accepted by the industry. it proposes 9 segments for the automotive market, depending mainly on vehicle size:  segment amini  segment bsmall  segment clower-medium  segment dupper-medium  segment eexecutive  segment fluxury  segment gsports  segment hdual purpose  segment imulti-purpose vehicle time evolution analysis prove that class b and c (small and lower-medium cars) on most of the markets sum up to 30% wholesales market share. strategic groups are determined on the base of diversification of product lines. from this perspective we can identify: • niche producers • broad line producers diversification criteria suppose the degree of companies’ products dispersion across the segments. however, measuring these criteria is extremely difficult. although the easiest way may seem counting the number of segments, this can be proved quite inadequate because it does not reflect the importance of each segment. for a better understanding, let us take the case of mercedes. mercedes is present on three of the above considered segments and still over 90% of the producers’ sales are on the executive segment e. so, we could use a measure that takes into account the amount of the corresponding sales for each of the segments. propose an index ∑ = = n i is 1 2 where n is the number of segments; and s is the percentage share of the segment. it squares market shares individually while the square root is taken of the total). this mean that a player that operates in only one segment, also called niche player will receive an index that is equal with 100 and the firms that are present in an indefinite number of segments will get an unitary index . on a close look we can see that the summation part of the proposed index is the same that we used to calculate the degree of concentration. in another words, this means that the index is a different use of hirschman-herfindal index. the square root was used as to avoid the hhi exponential character. we can thus identify:  diversified low end producers: nissan, fiat, ford, renault;  diversified high end producers: bmw, mazda, toyota, volkswagen  specialized medium producers: honda  specialized high end producers: mercedes, volvo. companies that are on the same strategic group tend to focus on the same primary segment and cross over the segments. for instance bmw and volkswagen are likely to compete in most of their market segments. we cannot but observe that any analysis regarding strategic groups impose the use of caution. this is because the automotive industry is extremely competitive and evens the firms that seem much distanced from each other are likely to compete in some way. 63 nimineț market segmentation proposes: 1. new automotive 2. used automotive regarding the manufacturer there are: • home automotives • imported automotives depending on the purpose of the automotive there are: • fleet • business • private considering the brand on the automotive market of romania there are: • dacia • fiat, • ford • mercedes • skoda and so on 4. new perspective on automotive market segmentation a study developed in france identified on the automotive market a more customer adjusted segmentation. the segmentation proposed is dependent on the psychological attitudes of the consumer. thus it identifies three types of automotive customer: 1. the functional automotive buyers. this segment considers automotive an instrument that satisfy the need of free movement 2. sportive automotive buyers are the ones that need not only a car but a fast, performing car to feed up their adrenaline need. 3. social automotive buyers. for this segment the social dimension of purchasing a car is the most important. but what makes market segmentation so important? why can’t we consider the whole market as individuality rather than a sum of segments? well, the answer is quite simple and comes from the hear-say wisdom: “it is better to be a big fish in a small pond, than a small fish in a big pond”. this could be translated in the fact that for being a “big fish” a firm should shrink its target market and specialize on a particular sort of customer by narrowing the target, by market segmentation, thus. if now it is clear that market segmentation is vital both for firms and for the consumers, we should consider a method for identifying correctly the market segments. for this it is important to highlight the features that a market segment should have:  different  significant  relevant  accessible  size suitable. let us see each and every aspect above on a closer approach. difference refers to a number of things: the geographic difference, the industry and the consumer interest. if we are dealing with a horizontal market we identify the geographical segment while in the case of a vertical market we have a industry market. so, the ways for defining the segments are: the size of the company and price brackets. relevance and significance refers to something special about the needs of the segment. for instance companies need cheap cars with low consumption and low 64 automotive marketfrom a general to a market segmentation approach maintenance costs; families need comfortable, safe cars; youth needs cars that “make a statement” accessibility refers to the “community” of the segment. the community means the social clubs, on-line forums, magazines and journals. dacia for instance has a club, a forum dedicated and the producer also edits journals regarding the brand. all these are very important because the community, the members of the segments allow the best for of market possible that is the “word of mouth”. last but not least, the size of the segment. the purpose of a segment, any segment is to become a major player on the automotive market, this means to have at least 25% percent of the market. but which is the ideal, best size of the segment for a firm? well, the ideal size of the segment is there up to ten times your target turnover. if it is smaller than that it wouldn’t allow you to growth, and if it is a lot bigger, one would be not the leader but only one of the bit players. conclusions as we proved the official manner used by national and international organisms and automotive associations for segmenting the automotive market are based on wholesales within a geographical market. this approach is quite improper and often determines miss judgment. for these reasons we proposed another type of market segmentation based on the realities of the automotive markets and customers expectations. this type of automotive market segmentation accomplishes the request of taking into account the important differences between market players and allows a correct view on the market structure. references czinkota, m.r., ronkainen, i.a., donath, b (2004), mastering global markets: strategies for today’s trade globalist, south-western, mason, oh, johnson, b. and lilien, g.l. (1994), a framework and procedure for assessin market segment change, penn state isbm working paper, penn state university,university park, pa author kotler, p., keller, k.l. (2005), marketing, management, prentice hall, englewood cliffs, nh nimineţ, l.a. (2013), the automotive market-an ongoing turmoil, procedia economics and finance (elsevier) forthcoming november 2013. reutterer, t., mild, a., natter, m., taudes a. (2006), a dynamic segmentation approach for targeting and customizing direct marketing campaigns, journal of interactive marketing, 20(3/4), 43–52 . yankelovich, d., meer, d. (2006), rediscovering market segmentation, harvard business review , 84(2), 122–132. wind y., bell, d.r. (2007), market segmentation, in marketing book, 230-266, pw. 65 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 28, 2018 http://sceco.ub.ro 19 the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) amanj mohamed ahmed darbandikhan technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq amanj.mohamed@spu.edu.iq abstract the present study entitled “financial statement analysis and assessing the profitability of the kirkuk’s company for producing constructional materials”. the main goal of the accounting department in the firms is to prepare the reliable financial statements in order to make their valid balance sheets, income statements and cash flow statement. this paper determines the confirming effects of the financial statement analysis to assess the profitability of the kirkuk company. the data in this study is based on the secondary data and it collected from the past and present performance of kirkuk’s company for producing constructional materials. to achieve the research goal, four categories of the financial ratios were utilized for testing the study’s hypothesis. this group of ratios was applied to assess the financial situation of the company in the years between “2005 to 2011” by using different techniques of financial statement analysis. the results clearly show that, there are insignificant relationships between profitability with asset regulated and assets utilization. at the same times, there is a weak relationship between profitability and liquidity. keywords financial statements; ratios analysis; profitability jel classification m41; g15 introduction financial analysis can be defined as the process of evaluating the financial condition of a company by analyzing its profitability, viability and stability (sultan, 2014; ravinder and anitha 2013 alani1 et al., 2013 & laitinen, 2006). it is also used to compare the company’s performance with competitors (sultan, 2014). as a result, after the war of iraq of (2003) there is an increasing demand of using the financial analysis through the manufacturing companies in kurdistan region especially and in iraq generally. financial performance and profitability would be defined as measuring the results of the firm’s operations and polices in monetary terms in evaluating the overall financial position of a company (gibson, 2013), which is including balance sheet, income statement, current operation statements and cash flow. this study explains the above statements in details and applies the ratios for them. in this paper, kirkuk company for producing constructional materials is selected. the company was recorded in the listed companies of iraqi stock exchange with a code of (ikfp). this research also describes the profitability of the company. this is because financial statement analysis can be seen as an important tool that used by the various ahmed 20 agents either internally to the company or who is coming as a part of the company as an external operating environment (gibson, 2013). in addition, the ratios and formula can be used to calculate the performances which are derived from the information that is revealed by the periodic financial reports which is the balance sheet, income statements and the statement of cash flow (gibson, 2013). thus, the purpose of this paper is to find any impact on profitability that is caused by financial statement analysis. this paper organized as follows: section one, it is just to give a brief introduction about the topic. section two gives the theoretical background while section three demonstrates some empirical framework. section four shows research methodology and the nature of the data collection. the fifth section gives a summary of the results of financial analysis, the profitability and measuring the company’s performance, and, finally, the conclusion can be drown from the above arguments. theoretical background the concept of financial statements according to (gill, 1999), financial statements are the principal means of reporting financial information for internal and external users. in reality, both public and private traded corporations must comply with strict requirements for preparing financial statements. generally accepted accounting principles (gaap) is the “ground rules” for financial statements and reporting as well. this standard provides a framework to show what information should be included in the financial statements and how should be presented. they are designed so that financial statement information about businesses is reliable and comparable. in order to have a functional understanding of finance, it is essential to thoroughly understand balance sheet, income statement and cash flow (nuhu, 2014; sultan, 2014 & maggina, 2008). financial ratios the concepts of financial ratio and proportion are fundamental to mathematics and important in many other fields of knowledge. many phenomena can be expressed as some proportional relationship between specific variable, often leading to some new unique entity (barnes, 1987). conceptualization and comprehension of these concepts, not to mention skills and competence in using them, facilitate mathematic awareness (barnes, 1987). even, more importantly, these skills foster the ability to use relational reasoning, otherwise known as proportional reasoning, which is crucial to the development of analytical mathematical reasoning (barnes, 1987). 1. profitability ratios profitability ratios is a class of financial metrics that are used to evaluating the corporation’s skill to make receiving likened to its expense and other applicable costs sustained throughout the period of time. it can be used to measure the profitability, which is simply shows the capacity of the firm to make a profit (lasher, 1997; tulsian, 2014; rashid, 2018 & adebisi et al., 2016). a. return on asset (roa) ratio this illustrates how the company generates profit as a result of using assets. (gadoiu, 2018). it can be calculated as follow: return on asset (roa) ratio = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 x 100 (gibson, 2013 & ross et al., 2013) the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) 21 b. return on equity (roe) ratio return on equity ratio (roe) is treated as an important measure of a company’s earnings performance. the roe tells common shareholders how effectively their money is being employed. with it, one can determine whether a firm is a profit-creator or a profit-burner and management’s profit-earnings efficiency (kijewska, 2016). return on equity can be calculated as follow: return on equity (roe) ratio = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑆𝑡𝑜𝑐𝑘 𝐻𝑜𝑙𝑑𝑒𝑟 𝐸𝑞𝑢𝑖𝑡𝑦 x100 (gibson, 2013 & ross et al., 2013) c. operation profit margin (opm) ratio this ratio can be used to measure the ability of a company towards operating and nonoperating expenses (shilpa et al., 2017). it can be calculated as follow: operating profit margin ratio = 𝐼𝑛𝑐𝑜𝑚 𝐹𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑆𝑎𝑙𝑒𝑠 (gibson, 2013 & ross et al., 2013) 2. liquidity ratios the liquidity or solvency ratios are focused on a firm’s ability to meet its short-term debt and obligations. in other words, it can help to know the resources that are available for a company to use in order to pay its current obligation and expenses. (costea & hostiuc, 2009 & tugas, 2012). a. current ratio the current ratio is calculated by dividing current assets on current liabilities. it is also known as a working capital ratio that measures a business's ability to pay short-term libalities (bodie, et al., 2009). current ratio = corrent asset current liability (gibson, 2013 & ross et al., 2013) b. acidtest ratio (quick ratio) acidtest ratio is a one of the liquidity ratio that measures the ability of the firm to use current assets without inventory to cover current liability (rashid, 2018). it means that illustrating the company to meet its immediate financial requirements. hence, this advises that a business is over-leveraged, fraught to keep and raise sales, paying bills too fast, or collecting receivables too slow (brigham & houston, 2014 & bragg, 2012). the acidtest ratio formulated as a follow: acid-testratio (quick ratio) = 𝐶𝑎𝑠ℎ+𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 (gibson, 2013 & ross et al., 2013) 3. asset utilization ratios asset utilization rations include: receivables turnover, days’ sales in receivables, inventory turnover, days’ sales in inventory, cash turnover ratio, total asset turnover ratio. a. account receivable turnover ratio account receivable turnover ratio is amount of money that uncollected in a fiscal year. every company must have a low amount of receivable in a transaction. therefore, the company should collect their money in order to be used and invested in other sectors to make more profit (gautam, 2013). the mathematic formula is: account receivable turnover = 𝑆𝑎𝑙𝑒𝑠 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 (gibson, 2013 & ross et al., 2013) ahmed 22 b. days’ sales in receivables this makes more sense and effect because it converts the above ratio for days (gibson, 2013). this ratio formulated as follow: days’ sales in receivables = 365 𝑑𝑎𝑦𝑠 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜𝑣𝑎𝑏𝑙𝑒 (gibson, 2013 & ross et al., 2013) c. inventory turnover ratio this can be used to measure how the quick your inventory is moving? it means how many times your basic inventory is replaced in a fiscal year (gill, 1999). the mathematical formula is: inventory turnover ratio = 𝐶.𝑂.𝐺.𝑆. 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 (gibson, 2013 & ross et al., 2013) d. days’ sales in inventory this can be applied to find the number of days that we need it to sell inventory, which means showing the efficiency of inventory (dauderis & annand, 2014). this ratio has been formulated as below: day to sell inventory ratio = 365 𝑑𝑎𝑦𝑠 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 (gibson, 2013 & ross et al., 2013) e. cash turnover ratio cash turnover ratio is used to fix the amount of cash that is required to collect as a result of sales (keythman, 2018). the formula is: cash turnover ratio = 𝑆𝑎𝑙𝑒𝑠 𝐶𝑎𝑠ℎ & 𝐶𝑎𝑠ℎ 𝐸𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 (gibson, 2013 & ross et al., 2013) f. total asset turnover ratio total asset turnover ratio is a term that shows the effectiveness of operation of total assets. it specifies how many times that the total assets turned for one year. in general, companies with high ratio tend to have low profit margins, while those with low ratio tend to have higher profit margins (warrad & omari, 2015).the formula consists of: total asset turnover ratio = 𝑆𝑎𝑙𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 (gibson, 2013 & ross et al., 2013) 4. operating properties (regulated utilities) ratios this group also called by “regulated utilities ratios” and is a kind of professional preparation in which a subsidiary company owns all the revenue-generating properties instead of the central company. a. operating ratio it can be defined as a corporation's working outlays and it is commonly used for business, which need a great percentage of revenues to keep operations. the calculated formula is: operating ratio = 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 (gibson, 2013 & ross et al., 2013) b. funded debit to operating property it is a corporation's debt ratio that will settle for more than one year. this form of debt is categorized as funded debt since it is funded by interest payment that is completed by the borrowing firm who terminated the term of the loan. it can be formulated as follow: funded debt to operating property = 𝐹𝑢𝑛𝑑𝑒𝑑 𝐷𝑒𝑏𝑖𝑡 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 (gibson, 2013 & ross et al., 2013) the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) 23 c. percent earned on operating property percent earned on operating property is an income ratio which is coming after operating of properties. it can be formulated as follow: percent earned on operating property = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 (gibson, 2013 & ross et al., 2013) d. operating revenue to operating property this ratio is basically an operating asset turnover ratio. in public utilities, the fixed plant is often much larger than the expected annual revenue, and this ratio will be less. (gibson, 2013). it can be formulated as follow: operating revenue to operating property = 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 (gibson, 2013 & ross et al., 2013) hypothesis of the study h1: the financial statement analysis has a significant impact on the profitability. h0: the financial statement analysis has not an impact on the profitability. objectives of the study the main objective of this paper is to: (i) analyze the financial statement analysis by applying financial ratios for kirkuk company for producing constructional materials. (ii) highlight the difference performances of kirkuk company for producing constructional materials. (iii) suggest some recommendations for the managers of kirkuk company for producing constructional materials. empirical framework this section shows related literature that was conducted by other researchers at the national and international levels. the first study on validity of financial ratio was conducted by (mc donald & morris, 1985). they were focusing on two samples with three models, one of the sample was a single industry the other one linked with a random selected firm. for each industry, the researchers tried to find the application of homogeneity on proportionality. the result was clearly mentioned in their paper, even though financial ratio analysis is a great support for the company but for the comparisons, profitability and proportionality, financial ratios is not helpful. however, (berry & nix, 2012) criticized the work of mc donald and morris over time, over ratios and over industries. a study managed by laitinen (2006) demonstrates a framework for analyzing financial statements of network small and medium-sized firms. the aim was to make a systematic approach for analyzing financial statement. the data was collected from the public financial statements of the related firm. the proportion of each items in income statement and balance sheet were tested and identified for each firm. the paper was focused on eight measurement goals that associated to form profitability, resources, concentration, value, strategic map, productivity, risk and growth. finally, various measures for each goal are suggested. uyar & kılıç (2012) focused on the turkish listed companies by linking firm characteristics with voluntary disclosure of financial ratios in their annual reports. the population included a sample of manufacturing firms that listed in the istanbul stock ahmed 24 exchange. the annual reports of the companies were taken from the corporate websites. the detailed analysis was used to determine the disclosing financial ratio of the firms. the results shown that turkish listed companies demonstrate financial ratios by %5.37 on average in their annual reports. “count data regression models” were utilized to test the hypotheses. the findings of multivariate evaluation show that profitability, firm size, ownership diffusion and auditor size have positive relationship with voluntary disclosure of financial ratios, while the leverage has a weak relationship with it. research methodology and data collection this section explains the research design and shows how to design the approach that is used to achieve the aim of the study. also, it sets the method used in selecting respond. in the next step, the study describes the sample of population, which is collected from the financial statements of kirkuk company for producing constructional materials. finally, the research focuses on the data analysis and shows that how to organized and analyzes the data of this study. 1. research design the design of this study is imaginative research method. both qualitative and quantitative methods were used in data collection and analysis. this paper employed with a case study approach which allows the researcher to conduct an intensive observations and investigation of salient factors in the units of study (kothari, 1990). 2. data collection and analysis this study collected and grouped secondary data. the secondary data were achieved through the iraqi stock exchange website which is published by the kirkuk company for producing constructional materials. the use of the data is a company’s audited financial statements. the data period consisted of (2005-2011). the data were applied on the groups of financial ratios and calculated mathematically. after that, the data was analyzed, applied to the microsoft excel, spss and anova software to achieve the results. respondents were selected randomly in each stratum. hence, the researcher employed probability sampling technique to obtain the desired number of respondents (mugenda & mugenda, 2003). analysis and results discussion the results of the descriptive methods have been displayed through table no. 1 and no. 2 for the statistical analysis of financial statements that had been utilized for the analysis in this study and their correlation matrix as well. while, table no. 3, 4, and 5 reveal the trends of the regression model (model summary), analysis of variance and test for coefficients. the purpose of this study is to confirm the effect of financial statement analysis on profitability in the case of kirkuk company for producing constructional materials. the study utilizes descriptive research design. secondary data is also used in this study. microsoft excel, anova and statistical package for social sciences (ibm spss software, v. 22) used to analyze the data in this study. the statistical techniques have being used such as mean, standard deviation, correlation, regression, model summary, analyzing of variance and coefficient. the data have being applied which consist of the periods of 2005, 2006, 2007, 2008, 2009, 2010 and 2011. the statistical results show that, there is no relationship between profitability, liquidity, asset utilization and regulated utilization. in addition to this, the liquidity ratio, asset utilization ratio and regulated utilization ratio do not have any effect on the profitability the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) 25 for the kirkuk company for producing constructional materials. meanwhile, each one of those variances has effect on the others. for example, the liquidity has an impact on the transactions of the company or any other activities. the liquidity also has an effect on the company’s cash flow. if, the company becomes more and more liquid, they can develop their investment. more investment leads to more activities and then followed by making more profit for the company. finally, the results of this study illustrate that, there is not relationship between the financial statement analysis for assessing the profitability in the kirkuk company for producing constructional materials. however, there is a weak relationship between the profitability and liquidity for the mentioned firm. 1. mean the most commonly used measurement for quantitative variable is the (arithmetic) sample mean. it can be shown as below: table 1 descriptive statistics n minimum maximum mean std. deviation liquidity 7 136.80 414.29 249.9024 99.26461 asset utilization 7 4.09 217.46 76.1830 79.78973 profitability 7 -4.58 .25 -1.1043 1.65548 regulated utilization 7 .14 2.03 .8533 .64446 valid n (list wise) 7 source: computed by the author – using spss version 22 table (1) presents the descriptive statistics for kirkuk company for producing constructional materials during the years (2005, 2006, 2007, 2008, 2009, 2010, 2011), the statistical mean stand on negative (-1.1043) for profitability of the company which highlights the form of loss (net income negatively behaving ), meanwhile, others variables were positively behaving. 2. standard deviation the sample standard deviation is the most frequently used measure of variability, although it is not as easily understood as ranges. it can be considered as a kind of average of the absolute deviations of observed values from the mean of the variable in question. table (1) shows the standard deviation for liquidity is (99.26461), for asset utilization is (79.78973), for profitability is (1.65548) and for regulated utilization is (0.64446). meanwhile, the standard deviation (sd) = ≥ 0. 3. correlation the sample correlation coefficient is also called as a pearson correlation coefficient. as it is clear now that pearson correlation coefficient can be calculated only when both variables are quantitative. table 2 correlations liquidity asset utilization profitability regulated utilization liquidity pearson correlation 1 -.474 -.606 -.657 ahmed 26 sig. (2-tailed) .282 .149 .109 n 7 7 7 7 asset utilization pearson correlation -.474 1 .391 .655 sig. (2-tailed) .282 .386 .110 n 7 7 7 7 profitability pearson correlation -.606 .391 1 .653 sig. (2-tailed) .149 .386 .112 n 7 7 7 7 regulated utilization pearson correlation -.657 .655 .653 1 sig. (2-tailed) .109 .110 .112 n 7 7 7 7 source: computed by the author – using spss version 22 table (2) displays the pearson correlation and it is indicated to achieve the assessment of the ratios. according to this, the liquidity ratios are negatively behaving with asset utilization, profitability and regulated utilization. meanwhile, all other used ratios were positively associated to each other, but not that much. regulated utilization ratios are negatively related to liquidity with (-0.657) which shows the shortage of cash (liquid asset) in the company. therefore, the study may advice the company to keep enough cash for dayto day businesses. profitability ratios have a low percentage of relationship (0.391) with asset utilization, which indicates that the management did not maximize the assets in the company. lastly, the asset utilization has (0.655) of correlation with the regulated asset. 4. regression the examination was directed to build up the relationship between the liquidity, asset utilization, profitability and regulated utilization in the kirkuk company. the analysis applied the statistical package for social sciences (spss) to register the estimations of the multiple regressions for the study. below are the findings; a. model summary this model shows the summary of the regression analysis. table (3) shows insignificant relationship among the variables, where r-square stands on 48.6%, which is moderate and the adjusted r square that is negatively behaving with durbin – watson statistics. this indicates the absent of auto – correlation among the variables. therefore, the table explains the percentage of variation in the dependent variable financial performance as explained by the independent variables. the researcher used coefficient of determination (r square) that is obtained from the model summary above. from the results of the analysis, the findings show that the independent variables contributed to 69.7% of the variation in organizational effectiveness as explained by adjusted r2 of -0.27% while the remain is explained by other variables outside the model and the error term. table 3 model summaryb mo del r r square adjusted r square std. error of the estimate change statistics durbinwatson r square change f cha nge df 1 df 2 sig. f cha nge 1 .69 7a .486 -.027 1.67808 .486 .946 3 3 .517 2.923 the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) 27 source: computed by the author – using spss version 22 b. analysis of variance the study conducted an analysis of variance, in order to test the impact of the relationship between liquidity, asset utilization, profitability and regulated utilization in the kirkuk company. the findings were as shown below: table 4 anovaa model sum of squares df mean square f sig. 1 regression 7.996 3 2.665 .946 .517b residual 8.448 3 2.816 total 16.444 6 a. dependent variable: profitability b. predictors: (constant), regulated utilization, asset_utilization, liquidity source: computed by the author – using spss version 22 table (4) shows the mean-square stands at 2.665 with f value of 94.6% which is insignificant at confidence level. this is because the p value is 51.7% which by far is more than (p-value 0.05). 3. test for coefficients this table shows the level of significance on the variables, it also provides the standardized and unstandardized coefficients as shown below: table 5 coefficientsa model unstandardized coefficients standar dized coeffici ents t sig. correlations b std. error beta zeroorder part ial part 1 (constant) -.741 3.286 .226 .836 liquidity -.005 .009 -.318 .577 .604 -.606 .316 .239 asset utilization -.002 .011 -.090 .163 .881 .391 .094 .067 regulated utilization 1.293 1.648 .503 .784 .490 .653 .413 .325 a. dependent variable: profitability source: computed by the author – using spss version 22 table (5) illustrates the standardized coefficient of liquidity, while representing beta equals (-31.8%) and (-0.9%) for asset utilization. meanwhile, stand on (50.3%) positively. a. predictors: (constant), regulated utilization, asset utilization, liquidity b. dependent variable: profitability ahmed 28 conclusion the main objective of this paper is to determine the impact of analyzing the financial statement analysis on the profitability for the kirkuk company for producing constructional materials. through fully investigating from all departments and checking factors and results, the study has narrowed to a result that using financial statement analysis may not affect the profitability in the company with respect that, the liquidity has a weak relationship with the profitability. hence, there is insignificant relationship between the analyzing the financial statement and profitability in the kirkuk company. at the same times, there is a weak significant relationship from the liquidity to the profitability of the company. at the end, the paper comes to conclude that, the financial statement analysis may not important tools for assessing the profitability in the company. through having an advanced system, the level of efficiency in timely manner, the profit will not increase in the company, there is a gap between the liquidity, asset utilization, regulated utilization and profitability with respect of the weak relationship between the liquidity and profitability. references adebisi, a. e., iyiola, a. a. & olayemi, a. a. (2016), the statistical evaluation of the performance of financial ratio analysis in nigerian manufacturing industry: an empirical study of guinness nigeria plc, the international journal of business & management, vol. 4, no. 1, pp. 295-301. alani, f., yaacob1 h. & hamdan, m. (2013), the comparison of financial analysis tools in conventional and islamic banking: evidence from kuwait, international journal of business and management, vol. 8, no. 4, pp. 85-103. http://dx.doi.org/10.5539/ijbm.v8n4p85. barnes, p. (1987), the analysis and use of financial ratios: a review article, journal of business finance & accounting, vol. 14, no. 4, pp. 449-461. https://doi.org/10.1111/j.1468-5957.1987.tb00106. berry, r. h. & nix, s. (2012), regression analysis v. ratios in the cross-section analysis of financial statements, accounting and business research, vol. 21, no. 82, pp. 107-117. https://doi.org/10.1080/00014788.1991.9729823. bodie, z., robert c. m., & david l. c. (2009), financial economics, 2nd edition, person prentice hall, london. bragg, s. m. (2012), business ratios and formulas: a comprehensive guide, 3rd edition, john wiley & sons, new york, united states. brigham, e., & houston, j. (2015), fundamentals of financial management, 8th edition, south western, cengage learning, united states. costea, c. d. & hostiuc, f. (2009), the liquidity ratios and their significance in the financial, the annals of the "ştefan cel mare" university suceava, fascicle of the faculty of economics and public administration, vol. 9, no.1 (9), pp. 252261. dauderis, h. & annand, d. (2014), introduction to financial accounting, 2nd edition, valley educational services ltd. athabasca. gadoiu, m. (2014), advantages and limitations of the financial ratios used in the financial diagnosis of the enterprise, scientific bulletin economic sciences, university of pitesti, vol. 13 (2), pp. 87-95. gautam, k. r. (2013), structure and utilization of receivable of listed non government manufacturing companies in nepal, janapriya journal of interdisciplinary studies, vol. 2, no.1, pp. 65-72. http://dx.doi.org/10.3126/jjis.v2i1.18068. the impact of financial statement analysis on the profitability assessment (applied study of kirkuk company for producing constructional materials) 29 gibson, c. (2013), financial reporting and analysis using financial accounting information, 13th edition. south western, cengage learning, united states. gill, j. (1999), understanding financial statements a primer of useful information, revised edition, crisp learning publisher, new york. lasher, w. r. (1997), advanced financial accounting, 5th edition, pitman publishing co. london. laitinen, e. k. (2006), financial statement analysis of a network of smes: towards measurement of network performance, international journal of networking and virtual organizations, vol. 3, no.3, pp. 258 – 282. maggina, a. g. (2008), on the distributional properties of financial ratios in annual reports of greek listed companies, international journal of managerial and financial accounting, vol. 1, no.2, pp. 166-183. doi>10.1504/ijnvo.2006.010951. mc donald, b. & morris, m. h. (1985), the functional specification of financial ratios: an empirical examination, accounting and business research, vol. 15, pg. 223228. https://doi.org/10.1080/00014788.1985.9729267. mugenda, o. m. & mugenda, a. g. (2003), research methods: quantitative and qualitative approaches, nairobi: african centre for technology studies, available at https://doi.org/10.12691/education-2-11a-5. nuhu, m. (2014), role of ratio analysis in business decisions: a case study nbc maiduguri plant, journal of educational and social research, vol. 4, no.5, pp. 105-118, available at https://doi.org/10.5901/jesr.2014.v4n5p105. omari, l. & al omari, r. (2015), the impact of activity ratios among industrial sectors’ performance: jordanian case, research journal of finance and accounting, vol.6, no.6, pp. 173-178. kijewska. (2016), determinants of the return on equity ratio (roe) on the example of companies from metallurgy and mining sector in poland, journal metalurgija, vol. 55, no. 2, pp. 285-288. kothari, c. r. (1990), research methodology: methods and techniques, second revised edition, new age international publisher, new delhi. rashid, c.a. (2018), efficiency of financial ratios analysis for evaluating companies’ liquidity, international journal of social sciences & educational studies, vol.4, no.4, pp. 110-123. https://doi.org/10.23918/ijsses.v4i4p110. ravinder, d. & anitha, m. (2013), financial analysis, journal of economics and finance, vol. 2, no. 3, pp 10-22. ross, s. a., westerfield, r. w. & jordan, j. (2013), fundamentals corporate finance, 1st middle east edition, mc grawhill. shilpa, t., aruna, a., & vardhan,v. h. (2017), role of ratio analysis in business decisions, international journal of scientific & engineering research, vol. 8, no. 5, pp. 231-236. sultan, a. s. (2014), financial statements analysis measurement of performance and profitability: applied study of baghdad soft-drink industry, research journal of finance and accounting, vol. 5, no. 4, pp. 49-56. tugas, f.c. (2012), a comparative analysis of the financial ratios of listed firms belonging to the education subsector in the philippines for the years 20092011, international journal of business and social science, vol. 3, no. 21, pp. 173-190. tulsian, m. (2014), profitability analysis (a comparative study of sail & tata), journal of economics and finance, vol. 3, no. 2, pp 19-22. uyar, a. & kılıç, m. (2012), the influence of firm characteristics on disclosure of financial ratios in annual reports of turkish firms listed in the istanbul stock ahmed 30 exchange, international journal of accounting, auditing and performance evaluation, vol. 8, no.2, pp. 137 – 156. https://doi.org/10.1504/ijaape.2012.046603. studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro global advertising market – the dynamics of the last decade bogdan nichifor vasile alecsandri university of bacau bnichifor@gmail.com abstract advertising as a form of impersonal communication aimed at a wide and diffuse audience, is the ideal tool to promote products targeting large markets in which consumers are not strong differentiated in terms motivations, preferences, attitudes, etc. currently, in the global advertising market we can find extremely powerful organizations whose work often exceeds local and even regional economic sphere. from simple expertise in advertising, these organizations have expanded their services to a growing number of communication tools, organizing their activity to better respond to client’s requirements. these kind of advertising organizations alongside global advertisers are the key factors in the dynamics of this market. this article focuses on presenting some data regarding global expenditure in advertising, establishing as reference points the years 2002 and 2012. moreover, we concentrated on expenditures by regions and advertisers, and on revenues obtained by advertising organizations and advertising networks, starting from official data provided by advertising age and euromonitor. keywords advertising; expenditures; markets; agencies; revenues jel classification m37 introduction characterized by the presence of a large number of actors, heterogeneous in terms of size, importance and philosophy of business, advertising market is among those markets that over time were closely related to the progress and welfare of individuals, as the carriers of demand for products and services. the characteristics of this internationally market can be highlighted appealing to an analysis of data regarding some specific aspect of advertising, among them being: investments in advertising, market actors and their activities, advertising agencies, the main media used in advertising and the main categories of products promoted by this communication tool. actual size of the advertising market is expressed in most reports concerning this industry through ad expenditure by the various media. these costs reflect amounts paid by advertisers for ad space and media time and most of the times do not include amounts invested in the planning, creation, implementation and control of advertising. global ad spending based on this methodology for expressing the actual size of the market, will continue to present the most important data concerning the international market. the international market of advertising is conceptually and practically a set of regional, national and even local markets. from this perspective, table 1 and table 2 shows the volume of advertising investments made in the major geographic regions of the world, in periods separated by a decade. 196 global advertising market – the dynamics of the last decade table 1 global ad spending in 2002 by region (millions usd) region 2002 (%) in total 2002 north america 218560.92 56.17 latin america 12066.90 3.10 western europe 77202.71 19.84 eastern europe 9055.25 2.33 middle east and north africa 2090.23 0.54 asia – pacific 65009.80 16.71 australia, new zeeland 5132.91 1.32 total 389118.72 100.00 source: euromonitor data, available at www.euromonitor.com tabelul 2 global ad spending in 2013 by region (millions usd) regiunea 2013 (%) in total 2013 north america 178500 35.3 latin america 38800 7.7 western europe 98100 19.4 eastern europe 26700 5.3 middle east and north africa 4400 0.9 asia – pacific 148600 29.4 rest of the world 10300 2.0 total 505400 100.00 source: advertising age’s marketing fact pack 2014, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf as it was easy to predict, the main areas that emerges through a significant amount of investments are characterized by a high level of economic development. north america, western europe and asia-pacific hold the highest shares in this respect, and absolute amounts invested in this industry reflects the aforementioned economic potential. together, these three areas attracted over 90% of investments made in advertising in 2002, and their gross volume exceeds with much the level in other regions. the same trend prevailed and a decade later, but this time the share is 84%. despite the economic dynamism that produced mutations in terms of economic development worldwide, the three areas still retains their primacy in terms of the advertising activities. north america stands out in this group through leading position in the analyzed decade. but at the same time, there has been a significant decrease in the relative volume of expenses incurred in 2013 compared to 2002, bringing a loss of over 20% share in global advertising spending. we can note the steady level characterizing the expenses of western europe in the analyzed decade and the significant leap recorded by asia-pacific. the latter won in 10 years an additional share of almost 13%, which is most likely explained by investments attracted by most dynamic economy in the world, namely china. the same table also emphasizes the presence in international market of advertising of areas including a large number of countries with a growing economy. eastern europe, 197 nichifor africa, middle east and latin america fall into this category. although the gross volume of the investments is not comparable to the previous group, it is noticeable a growth trend both for the gross invested amounts, as well as for the share in worldwide spending during the 10 years. this is understandable due to the accelerated process of economic growth that characterizes this area in recent years, even though the global economy has faced economic crisis and many countries are still trying to get out. table 3 first 10 largest advertising markets (billions usd) rank market 2013 2012 % chg 1 u.s. 166.90 161.24 3.5 2 japan 52.84 51.74 2.1 3 china 40.95 37.2 10.1 4 germany 23.18 23.43 -1.1 5 united kingdom 20.34 19.38 5 6 brazil 15.86 15.3 3.7 7 australia 13.07 12.81 2 8 france 12.15 12.49 -2.8 9 canada 11.59 11.63 -0.4 10 south korea 10.61 10.74 -1.2 source: source: advertising age’s marketing fact pack 2014, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf assertions formulated above are confirmed by the data presented in table 3. as can be seen, the hierarchy is dominated by traditional developed markets. thus, in the top ten global markets, eight are considered economically strong economy, and other two are part of emerging economies. china and brazil are those kind of markets, markets that are now part of the brics group. it is also noticeable the accelerated growth trend in investments for china. global advertisers it is obvious that the most important role in this evolution is hold by advertisers. from the same international perspective, one can identify a number of organizations whose interests and global vocation led to a detachment in terms of investments made in advertising. highlighting these organizations is further substantiated by the fact that, most often, they are included in charts regarding national markets, irrespective of their geographical location. table 4 shows the top global advertisers and advertising expenses made by them. as expected, their origin is correlated with the economic development of the country or geographical area of origin. usa, western europe and japan, regions which until recently formed the world economic triad, are in the same time areas with high investment in advertising, as well as areas that contribute to the emergence of extremely strong advertisers organizations. of the fifteen companies present in the top, seven are from the us, six from western europe, one from japan and one from 198 global advertising market – the dynamics of the last decade south korea. another aspect revealed by the same table refers to the fact that the industries in which these organizations do business are generally related to consumer markets, which otherwise is logical, given the characteristics of the advertising as a communication tool. table 4 first 15 largest global advertisers (millions usd) advertiser global ad spending rank for 2012 2002 2012 % chg 1 procter &gamble (cincinnati) 4479 10815 241.5 2 unilever (londra/rotterdam ) 3315 7413 223.6 3 l’oreal (paris ) 1683 5643 335.3 4 toyota motor (toyota city) 2405 3310 137.6 5 general motors (detroit) 3218 3206 99.6 6 coca-cola (atlanta) 1199 3029 252.6 7 nes tle (vevey) 1547 2987 193.1 8 volswagen (wolfsburg) 1349 2971 220.2 9 mc’donalds (oak brook) 1183 2693 227.6 10 pepsico 1146 2470 215.5 11 reckitt benckiser group slough, berkshire, u.k. 802 2417 301.4 12 mars inc. mclean, va. 825 2181 264.4 13 fiat (chrysler group) turin, italy/auburn hills, mich. n.d. 2089 14 samsung electronics co. seoul 431 2053 476.3 15 comcast corp. philadelphia n.d. 2003 source: advertising age’s marketing fact pack 2014, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf, advertising age global marketing, november 2003 edition, available at www.adage.com/images/random/globalmarketing03.pdf also, the top presents some homogeneity in terms of membership in one industry or another, one can be able to identify advertisers that activate in the same markets. procter & gamble and unilever are the most relevant examples to those specified above. both come from geographical areas with a high level of economic development and at the same time, it appears that investment in advertising is a measure of competitive struggle that takes place between them. procter & gamble, the most important advertiser during the analyzed decade, managed to keep first place in the hierarchy, with significant internationally investments. the amount of over $ 10 billion far exceeds, for example, the total advertising investments made in 2002, the amount nearly tripled over a decade. notably is also the leap made by samsung during these ten years. samsung is the only company specializing in the manufacture of electronic products in a top dominanted by organizations coming from industries such as: products for home care, automotive, audiovisual, food and pharmaceuticals. moreover, although the amounts spent by samsung have increased almost fivefold, the other companies are not far behind with dynamic of investments in advertising, with the exception of general motors, which is characterized by the same amount investmented in the two reference years. 199 nichifor global advertising networks although advertisers are thought to be the most important formative factors in advertising market, in turn, advertising organizations interfere with their contribution and importance at this market. the specifics of modern marketing communications has now made its mark on how advertising agencies are organized and in terms of services provided by them. initially, the sector specialized in marketing services contained simple agencies specialized in providing services concerning advertising strategy. at present, however, in thes structure of this sector can be found extremely powerful organizations whose work often exceeds local and even regional economic sphere. from simple expertise in advertising, these organizations expanded services to a growing number of communications tools, organizing their activity for better a response to advertisers’ requirements. table 5 shows the top of first ten such organizations, collectively known as advertising organizations. specific for vast majority of them is that they are composed of networks of agencies specialized in offering various marketing services. table 5 first 10 largest advertising organizations by revenues (millions usd) rank for 2012 advertising organizations and their location 2002 2012 % chg 1 wpp london 5781.5 16500.0 285.4 2 omnicom group new york 7536.6 14200.0 188.4 3 publicis group paris 2711.9 8500.0 313.4 4 interpublic group new york 6203.6 7000.0 112.8 5 dentsu tokyo 2060.9 6400.0 310.5 6 havas new york 1841.6 2300.0 124.9 7 hakuhodo tokyo 860.8 2200.0 255.6 8 epsilon irving 1200.00 9 mdc partners new york 1100.00 10 experian marketing services boston 947.00 source: advertising age’s marketing fact pack 2014, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf, advertising age global marketing, november 2003 edition, available at www.adage.com/images/random/globalmarketing03.pdf for example, the first organization in top, wpp, currently consists of 4 major advertising networks: young & rubicam group, ogilvy & mather, jwt and grey group and certain other independent advertising agencies. also, the same group operates the largest digital agency globally, in terms of income, namely wunderman. the situation is similar for other organizations present in the top. analyzing the data we identify again as an interesting fact the origin of these groups. classical economic triad stands out again in the industry. as is easily seen, from the top 10 advertising organizations, six are from the us, two from western europe and two from japan. regarding the results obtained by these organizations in the period under review, we see, at least for the first 7, where data are available, a substantial grow in global revenues. moreover, 2014 could be, even if eventually it wasn`t, a turning point in terms of structuring the relations of power in this market. thus, in 2013, two of the most powerful organizations, omnicom and publicis, announced merger plans. 2014, 200 global advertising market – the dynamics of the last decade however, brought news of quitting the movement, because of formally invoked argument of incompatibility in terms of organizational culture. turning our attention to advertising agencies, we can see that these entities are parts of the advertising organizations. note that all the important advertising organizations are part in the top through their own agency networks (table 6). table 6 first 10 largest advertising networks by revenues (millions usd) rank for 2012 advertising networks (owner) 2002 2012 % chg 1 dentsu (japan) dentsu inc. 1442.60 3577 248.0 2 young & rubicam group wpp 3400 3 mccann-erickson worlwide (interpublic group) 1255.5 2965 236.2 4 ddb worlwide (omnicom group) 815 2655 325.8 5 ogilvy &mather worldwide (wpp group) 589.4 2413 409.4 6 bbdo (omnicom group) 1062.7 2403 226.1 7 tbwa worldwide (omnicomgroup) 665.9 1797 269.9 8 publicis worlwide (publicis group) 909.9 1524 167.5 9 hakuhodo (hakuhodo dy holdings) 860.8 1357 157.6 10 havas worldwide (formerly known as euro rscg, havas) 976 1327 136.0 source: advertising age’s marketing fact pack 2014, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf, advertising age global marketing, november 2003 edition, available at www.adage.com/images/random/globalmarketing03.pdf the top of advertising networks is dominated by a japanese company which, in turn, is placed in the top 10 global advertising organizations. it is dentsu. wpp is currently in the top through two international advertising agencies. among them stands out young & rubicam group with global revenues in 2012 of usd 3.4 billion, a result that ranks it in the top two agencies. mccann erickson worldwide, agency which celebrated 100 years of existence in 2002, is an international network consisting of representatives of agencies located in 130 countries, this ensuring its financial resultsof over 2.965 billion usd, which ranks it in the top three. it is the only representative of intergroup in the top. omnicom group, although placed on 2nd place among organizations of advertising, is present in this list of advertising agencies with three entities ranked 4, 6 and 7. ddb worldwide, the best placed agency of this group, also consists of international networks of agencies with a strong growth in the us market. another organization with a strong presence in this top is publicis group. publicis worldwide, the largest agency focuses its activity on the international space where he earned revenues in 2012 of usd 1.524 billion, nearly double that it had achieved in 2002. hakuhodo is a japanese holding of agencies whose interests have expanded internationally, their branches being present in major countries in terms of the industry such as: germany, uk, china, india, south korea and australia. the most important share of revenue is thus obtained outside the us, reaching in 2012 1357 million usd. finally, havas worldwide, an agency of british origin, close the top 10 agencies with also significant revenue. 201 nichifor conclusions first, it must be said that most analyzes and reports relating to advertising markets, regardless of their location, define dimensions through media spending, not by the amounts asked by advertising agencies. second, the value of media investments are defined at two levels, one representing general list rate charged for a particular media insertion and one that looks to net amount actually paid by advertisers for ad insertion. the net value occurs most often as the difference between gross and custom cuts that the media usually offer to advertisers. third, the data used to describe the same phenomenon can, in some cases, be different because of different data sources and difference in methodology. knowing all this, studying the above data we can see that the global advertising has not stood still in the last decade. investments in this activity increased significantly, which reveals its importance in the overall marketing effort. also, the evolution of the advertising investment is in perfect agreement with the trends of global economic development. new centers of economic development are equally opportunities for investors in advertising and for the service providers in the sector. references advertising age (2003), global marketing, 2003 edition, available at www.adage.com/images/random/globalmarketing03.pdf. advertising age (2013), marketing fact pack, annual guide to marketers, media and agencies, 2014 edition, available at http://gaia.adage.com/images/ bin/pdf/mfpweb_spreadsv2.pdf. euromonitor data (2005), available at www.euromonitor.com. 202 abstract microsoft word iacob vladut engl.     informational system. documents management. vlăduţ-severian iacob alma mater university of sibiu -fssej of bacau, romania   abstract productivity growing, as well as reducing of operational costs in a company can be achieved by adopting a document management solutions. such application will allow management and t structured and efficient transmission of information within the organization. keywords informational system, electronic resources, electronic document, document mangement informational system any type of process of an organization, company or corporation might be affected by top management until elements that furnish a good communication are settled down. this happens by the help of decision-making system, so that the people working in such institutions become part of organizational culture and vision. cost supo rt fiab ilitat vite ză lungi me vol um frec venţ ă cali tate sen s for mă conţi nut cara cteris tici figura. 1. informaţional system, characteristics sursa: camelia basceanu .www.didactic.ro/flux. information flow and definition of information content form an informational system which can be considered as one of the most important components of a corporation’s management. the definition of informational system is closely related to systemic view of organization, this being considered an integrated and complex process in which the data are inputted for collecting information. the inputs are data that are manipulated and transformed to obtain information. the outputs are reports, documents or any other kind of results of informational system necessary to decision-making process. informational system consists of: informational resources, circuits and workflows, procedures and information handling practices. global system of information generated, obtained, available and reusable in one organization represents informational resources. their quality is conditioning its content and also its efficiency. 49 studies and scientific researches ‐ economic edition, no. 14, 2009    the workflow means all transmitted and processed information in a determined period of time from a source sender to a receptor through a channel. its trajectory represents an informational circuit. information adjustment to decision-making management is realized by information handling practices of resource that form a global assembly of collecting, recording, transmitting and processing data. informational system consist of many workflows and a lot of connections between its components. electronic resources taking into account the complex and dynamic background in which an organization or a public institution carries on its activity, it is necessary to specify that having knowhow regarding: • the business market (its dynamics, dimensions and structure), • the competition (quotation, filled market segments, prices, bids, services) • the supplying ( location, delivery terms, prices) • consuming (target segments, specific behavior, purchasing power ) means to create and use an informational system where all electronically processed, stocked and transmitted information are used in decision-making process. in this way electronic resources, firstly, allow the knowledge of past and present situation and, on the other hand, the anticipation of future evolution. they contribute to elaboration and fulfilling the organization goals, providing also the possibility to adopt active strategies that can influence the organization background. the literature states that for a commercial organization informational resources becomes strategic, allowing the rationalization of all processes, taking into account that is easier to move information rather than goods. it must be said that in a commercial organization only stocked information might become informational resources. paper-based document it is an important instrument for communication between departments of public institution or company or between workstations. it is also important in relationships with third parties. paper-based documents are proof, certitude and measure of facts and realize: knowledge of economical, financial, juridical and administrative phenomena and processes; adequate measurement of engagements dimension valued in money; unitary justification of structure features that make sense and signification for time and space comparison when it is required; opportunities background for activity control, risk measurement, implications and decisions regarding resource-planning in efficacious and efficient conditions. existence, movement, conversion and results of adequate resource-planning suppose facts and evidences using documents, explanatory writs or registers. thus the document gain a special importance by its functions: written record, explanation, checking and control, integrity, entirety and systemic processing, evaluation, costcontrol, decisions assistance, politics accomplishment, information certificating and publishing, proof, information transmitting, classification and historical archiving. 50 studies and scientific researches ‐ economic edition, no. 14, 2009    correct accomplishment of document’s functions is conditioned by adequate usedpractices quality of documents, by fulfillment promptness and by speed of information passed between producer and end-user. inner or outer documents get into informational workflow of a public or economic entity and an attentive supervision and an rigorous control are involved. thus documents allow quickly decisions making from staff level to lower levels. decisions are important, no matter how electronic or classic documents are organized, internal monitoring of informational workflow is desired. electronic document as stated in law 455/2001, art. 4 line 2, the electronic document means an electronic form of data collection containing logical and functional relations. electronic documents show letters, numbers or any other intelligible characters to be read by software or a similar process. undoubtedly, electronic document is a social reality, but to become a juridical one it must contain same features like paper-based documents. thus, electronic document must attest in its content relevant acts and facts in juridical sense and an intelligible shape rendering is required. the most important feature of electronic document is its legal aspect as proof in justice, where it is known that the parties show no interest in discussing the content, but the conditions of its validation: authentication, signature, date, the competence of the person that created the document. the electronic document that contains, has attached or has associated an extended electronic signature based on an unsuspended qualified certificate is assimilated to an enrolled under private signature document. document management document management implies the existence of a software that allows circulation (for informing, approvals or modification), storage and retrieval of documents in any electronic format (including classical documents converted to electronic format) with facilities to connect to other computer systems or electronic devices fax, scanner). archiving documents, either classical or electronic, is a requirement for all companies and is guided by specific activity, flow and volume of documents. it becomes a problem when extending business firms, the increasing commercial transactions or after a period of operation. since the filing of documents employs a conventional physical storage space, a subsequent identification of slow and time consumption to retrieve documents it is required a stronger emphasis on electronic applications with which documents can be stored on a dedicated server or by backing up on various electronic media (cd, dvd) from time to time. any application for document management need to consider: registry electronics, household management-indexing documents, versioning, processing the flow, access control, recovery mechanisms, management of archive documents of the organization digitization, indexing, retrieval mechanisms , access control, storage interval. concluzii to meet the challenges of increasingly strong competition from any participant in economic life is looking for new solutions to obtain any kind of information. 51 studies and scientific researches ‐ economic edition, no. 14, 2009    current information is now very easy due to the evolution of information technology. adopting a document management applications from companies involves a considerable effort in the acquisition of computers and programs, but these efforts will be well justified by increased efficiency bibliografie 1. mericiou, v. (1998), management comercial, ed. economică 2. nicolescu, o şi verboncu, i. (1995), management, ed. economics 3. cotoara, d, tîrziman, e.(2004), aspecte ale comunicarii în domeniul socio-uman. ed. universitatii din bucuresti 4. www.marketwatch.ro/articol/565 5. www.info-man.ase.ro 52 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 13 (1 free row, 11 p.) building a discipline. the setup of communication as an academic discipline in romania (1 free row, 11 p.) corina buzoianu national university of political studies and public administration corina.buzoianu@comunicare.ro monica bira national university of political studies and public administration monica.bira@comunicare.ro alina duduciuc national university of political studies and public administration alina.duduciuc@comunicare.ro (2 free rows, 11 p.) abstract this paper aims to shed a light on the importance of looking on the epistemological and methodological grounds of communication as a discipline in romania in order to be able to discuss about the professionalization of the domain. we start from the widely acknowledged idea that communication is a new and emerging field, drawing its concepts, theories, and methods from diverse other fields and domains. in romania, as well as in other former communist countries, after 1990 the changes in the political and economic situation created the premises to establish university programs in communication and to create jobs for people working in communication. all these were possible with the help of “imports” from the western world, imports that transferred not only concepts and theories, but also the epistemological dispute and weakness of the field. this paper explores the development and the current state of communication as an academic discipline in romania. through an analysis of the social documents available on the university program’s website, we seek to understand the theoretical roots of the discipline of communication, as well as its current development. (1 free row11 p.) keywords communication; building a discipline; communication in romania; academic discipline (1 free row, 11 p.) jel classification m41 (3 free rows, 11 p.) communication as a discipline in south eastern europe when compared with other social disciplines, communication is an emerging field facing a rapid development through academic research and publications, academic programs, international academic associations, and professional associations (wang, 2011; taylor & lindlof, 2013). as the literature on the field widely mentions, communication has drawn concepts and knowledge from a great variety of areas (casmir, 2012) and is, thus, uncomfortable in articulating a solid identity (craig, 1999). the interdisciplinary trends have had a great influence on the development of communication thus leading to the current diversity of theories in communication. all these led to the necessity to look at communication and its epistemological roots in order to fully understand its setup as a discipline. some scholars suggest that metatheory should be used in order to reach a critical understanding of the diversity of theories of communication (craig, 2013). building a discipline. the setup of communication as an academic discipline in romania 14 as a consequence of its diversity and interdisciplinary grounds, researchers divide communication in subfields (lindlof & taylor, 2011) to distinguish between the theories and approaches in communication. the multiand interdisciplinary character of communication is seen both as a source of incoherence and as one of its meritorious qualities (craig, 1999; 2013). as in the case of every new field, communication scholars did not reach paradigmatic consensus and common understanding of communication theory as a field (craig, 1999; taylor & lindlof, 2013). some scholars (sfez, 2001), when referring to a nucleus specific to communication, question the possibility for communication to become a science, meanwhile others (craig, 2009, 9) are, on the contrary, arguing that cultivating theoretical cosmopolitanism is a practical suggestion for anyone who would like to contribute to a field of communication theory. there is a large body of literature on the development of communication as a field in the “western” world (mcquail, 2008; simonson & park, 2015), as current literature mainly maps communication studies in north-american and western european countries. although there are several studies dealing with communication and journalism in former communist countries (jirak & kopplova, 2008; klyukanov, 2011; casmir, 2012; ivan, daba-buzoianu & gray, 2014; peruško & vozab, 2015), few studies that we know about approach the development of communication as a field in eastern european countries. thus, we know little about the theories and paradigms that grounded communication in former communist countries. in eastern europe, the development and institutionalization of communication started after the fall of communism and continues today (simonson & park, 2015; casmir, 2012). communication developed in former communist countries with the help of “imports” from the north-american and western european epistemologies, as the mainstream communication theory is still limited to the american and eurocentric cultural assumptions (craig, 2009). after 1990, romania and other countries in eastern europe faced a shift in the social sciences, as many university study programs were established, including communication. when “importing” the field of communication, eastern european scholars acknowledged the dispute regarding the core theories of communication, a fact that continues to have an impact on the development of the field of communication. looking at the current research of the field we identify four gaps that are essential to the setup of communication as a discipline, especially in romania and other south european countries. the first gap is linked to the university programs in communication, as there is no research available on the way communication programs are being structured in romania. one can hardly find details about the specificity of romanian academic programs in the field of communication and the theoretical and methodological similarities between the programs in communication in romania and western european universities. we consider this an important gap especially in the context of the bologna process, where equivalence of diplomas implies equivalence of competences. although there are studies regarding the development of the higher education system in romania and other eastern european countries (sadlak, 1993), these studies do not include the communication domain and the way this filed is constituted as an academic field. the second gap identified in the current literature is the apparent lack of interest for issues related to the academic training of professionals in communication. large scale studies keep a focus on future trends, the use of technologies and innovation and do not gather detailed data to provide an insight on the academic background of communication professionals. for example, the european communicator monitor, the largest transnational study on strategic communication worldwide, conducted annually since 2007, inquires only about the degree level of professionals in communication, but not about their degree specialization (european communicator monitor, 2009-2016). moreover, a study based on a survey of 1401 communication professionals from 30 european countries shows that 27% of the buzoianu, bira, duduciuc 15 participants have a degree in communication (beurer-zuelling, fieseler & meckel, 2009). the third gap identified in the existent literature is the role that professional associations in communication have in eastern europe. as shown in the european communicator monitor (2009-2016), there is an increasing importance of professional associations in communication. the mere fact that a question about being a member of a professional association is included in this large-scale survey offers a valuable insight as to where (symbolic) professional recognition may lay. for the romanian case, we must keep in mind that professional associations in communication (e.g. arrp, ccrp) had to face challenges specific to a post-communist society like trying to develop a proper ngo sector and avoiding to be associated with the “dusty” reputation of unions. the fourth gap refers to a practical question: in romania, tracing the careers of university graduates is left to the appreciation of each university or faculty. therefore, every institution keeps its own records; data are seldom exploitable beyond bureaucratic objectives. universities lack tools for tracking the short and mid-term evolution of any field, communication included, by looking into the career paths and employment patterns of graduates. to this, it is worth mentioning that after the fall of the communism, in romania, some other challenges occurred. for example, in the early ‘90s, few scholars in romania could read in english, as this language was less taught in school during the communist regime. the first scholars teaching communication grounded their teaching in other epistemologies, like philosophy, humanities, and sociology. secondly, when the first job positions in communication became available in romania, people with no previous experience or academic background in communication were hired. these issues are persisting today, as many job adverts in communication require a university degree, but not explicitly a degree in communication, especially for mid-senior and senior level, as might be proved by a quick visit on any popular job finder website in romania. this paper is the result of the first phase study of a research project aiming to analyze the way communication as a field is established in romania, by exploring its epistemological grounds, the research methodologies and the overall development of communication as a discipline in romania. in doing so, we put under scrutiny the professionalization of the field of communication in romania, by considering in craig’s terms (1999) that a clear theoretical ground and a paradigmatic consensus would lead to a deeper understanding of the identity of the communication field. thus, solid communication study programs, together with a profound inquiry of the way communication is being perceived will lead to the further development of the field and to its professionalization. for professionals in social sciences it is useful to scrutinize their own domain, from time to time, and to question their role in society and as far as we know, there is a lack of scientific studies approaching the way in which communication as a field is structured in romania. the originality of our research lies precisely in the effort to assess the perceptions and routes in the communication field, not only from an epistemological point of view, but also from a perspective that will bridge academia with labor market. the main objective taken by this paper is the assessment of the romanian study programs in communication and the content, both in terms of numbers (how many programs are available at a national level; what the existing degree levels are; how many students attend the programs) and content (what disciplines are included in the curricula; what thesis subjects are defended). we aim to inquire the epistemological perspectives of the said institution’s study program in communication through an analysis of their approach of communication-related disciplines. (2 free rows, 11 p.) building a discipline. the setup of communication as an academic discipline in romania 16 method of the study the research project underpinning this paper is based on a qualitative approach, using social documents analysis to explore the development and current state of university programs in communication in romania. the social document analysis provides the foundation for the research project by investigating the undergraduate and graduate programs in communication at the university level. a convenience sample was considered in our case. as the romanian agency for quality assurance in higher education (aracis) regulates, the domain is referred to as communication science and undergraduate study program can be established: journalism, communication and public relations, advertising, information and documentation sciences, digital media and communication and emerging media. the main criteria used for the sample was the existing bachelor program in communication science, as required by aracis. we selected three major university centers from three different sides of romania (bucharest, cluj, iasi) and three smaller university centers (bacau, sibiu, craiova), aiming to cover all parts of the romanian university landscape. we decided not to increase the number of universities for our sample for this stage of the research due to the difficulties in finding data available on the websites and to expand our sample in the next steps, when we intend to contact the administration of the university and ask for the documents. we gathered all the relevant data available on the websites and analyzed the following documents and sections: (1) academic curricula of the study program for students to graduate in 2020 (in the case they were not available we considered the ones from the previous years, but not older than 2015); (2) academic and professional path of the teaching staff with a permanent contract (treatment of data was difficult in this case as information regarding these aspects are hard to find); (3) self-presentation of the program on the website (history, mission, vision and values); (4) syllabus for the courses in the curricula (most the of syllabus were not available and data from the syllabus was archived but considered in this stage of the research); (5) contextual factors shaping the particularities for each selected program (as for example the faculty which hosts the program or the type of accreditation received after formal evaluation). from the above mentioned elements, in this paper we focus mainly on the statements about history, mission, vision and values and on the curricula available for communication programs, mainly courses that are not mandatory and are not due to compulsory regulation of aracis (the romanian agency for quality assurance in higher education). first, we were interested in the statements about the program as the bases of understanding the overall epistemological and methodological grounds and in identifying the linkage with different theories of communication and labor market. second, we looked at the courses that are not listed by aracis as mandatory in order to see how the academic programs offers subjects linked to the labor market or to other related social sciences disciplines. this was looked into by also considering the educational and professional path of the teaching staff. (1 free row, 11 p.) main findings as part of a research project aiming to look at the epistemological grounds of communication in romania and at the setup of the discipline in academia, this paper presents the preliminary findings based on the first phase of the research. we organized our key findings around three focal points, aiming to shed a light on (1) how communication studies are organized from an institutional viewpoint, (2) the discourse they share about values, relevance and institutional achievements and (3) to examine the development of the domain looking into the academic path followed by the university staff. buzoianu, bira, duduciuc 17 communication studies and institutional affiliation it is not a new thing to say that communication, as so many other recent additions to university curricula, has emerged as an academic discipline roughly 30 years ago. without dwelling upon the economic and social changes shaped romanian universities since then, when looking at the timeline of the institutionalization of communication studies one may easily observe that although the first steps took place at the beginning of the 1990’s, it is only ten years later when communication studies became an established field from an administrative viewpoint. drawing from our data we see that many ba programs in communication are missing from the timeline below, especially when it comes to smaller university centers. in a broader perspective this makes sense: as we shall see further down our study. the cultivation of an institutional memory seems to be the hallmark of universities from larger cities. table 1: a timeline of communication study programs year ba phd larger university centers smaller university centers 1990 1993 establishment of the department of communication and pr within the faculty of letters (university of bucharest) university of bucharest 1995 establishment of the faculty of political sciences, administration and communication (fspac) university of cluj university of cluj 1998 establishment of a ba study program on communication and pr, within the national school of political studies and administration in bucharest snspa – bucharest 2001 establishment of a ba study program on communication and pr within the department of communication pr and advertising at fspac ubb cluj university of cluj 2002 establishment of a ba study program within the faculty of social and political sciences (fssp) within the university of iasi university of iasi 2002 establishment of a ba study program within the university of craiova university of craiova 2008 establishment of a phd study program in communication, within snspa snspa – bucharest 2014 establishment of a phd study program in communication, within fspac, university of cluj university of cluj 2019 since communication studies were established within pre-existing academic structures, it follows that, at least in its beginning, the domain was – from an administrative and institutional viewpoint – close to other academic disciplines and molded into institutional forms that could fit the administrative requirement of the day. the current situation of faculties and departments proposing ba study programs in communication sciences is a reflection of those beginning as well as the consequence of institutional development and demographic changes in the area. building a discipline. the setup of communication as an academic discipline in romania 18 figure 1: an overview of academic disciplines related to communication studies from an institutional viewpoint as it shows in the chart above, there are three major academic domains within which communication sciences were adopted as ba discipline: social sciences (usually in close association with political sciences but not exclusively), journalism and philology. usually, large university centers have more than one structure proposing a ba in communication sciences (as it is the case in bucharest and iasi), meanwhile smaller university centers usually have just one such structure. the chart relies on the current institutional situation and on the information provided on their websites by faculties and departments proposing studies in communication in three major university centers (bucharest, cluj, iasi) and in three smaller university centers (bacau, sibiu, craiova). however, although the journalism and media studies seems to have an upper hand on the overall development of the communication in academia, available data points toward a shift within their formal training: the teaching staff that holds a ba in journalism (communication sciences) chose (or was forced to choose, due to the lack of available options) to continue the phd studies in another domain, usually sociology or philology. values and relevance a characteristic shared by all the university structures proposing ba study programs in communication that we explored within this article is the emphasis on the outcomes derived from this choice. usually those outcomes are organized around two main topics: the competences acquired by graduates and their career options presented mainly through the form of enumerating jobs that require (according to the regulation) formal academic training in communication. there is little variation or creativity in this section of the website: the job denominations are those form the list provided by the national occupational qualifications index, although the workforce market, especially within the private sector, provides a larger array of job titles. sometimes the solution of mentioning a larger activity domain is preferred to providing a list of possible future jobs: “our graduates (…) are working nowadays within editorial teams of numerous national and local publications, of various tv and radio broadcast companies, within publishing houses or departments of communication and public relations” (university of sibiu). the second common characteristic is to express the many ways in which the university and the staff is up to date with everything that may be correlated with modernity: a in association with political and administrative studies 4 in association with journalism studies 1 in association with philology 3 7 universities 8 faculties communication studies buzoianu, bira, duduciuc 19 modern teaching approach and the opportunity to be involved in internships (with the most thought after employers) are values communicating by all the departments, in a variety of styles: • the systemic study of communication is an imperative, as the proliferation of communication media has transformed the world where we live in a complex universe, deeply inter-connected (faculty of philosophy and social sciences, university of iasi, 2019). • graduates of this specialization, extremely thought after on the workforce market, will be able to find a job in research institutions within the domain, pr and advertising agencies, departments of public communication within the central and local administration or within the corporate or ngo sector (faculty of letters, university of bucharest, 2019). • our students are encouraged to think freely, to be creative and to present their opinions in an open, argumentative manner. (department of communication, pr and advertising, university of cluj, 2019). as opposed to those two main themes shared across all the structures, when speaking about themselves faculties or departments of communication are also approaching themes that they consider to define their specificity and their unique selling point on the “market” of communication studies: pioneering and tradition. the tradition theme is to be found in the presentation of the communication program at the university of bacau as well as the university of sibiu: each of them are actually underlying the tradition of higher education in their respective cities, thus trying to convey a legitimacy for their more modern study domains, such as communication. on the other hand, the pioneering is a theme disputed by all the 3 structures that are currently proposing a ba in communication in bucharest: faculty of journalism and faculty of letters (the department of communication and pr) and the faculty of communication and pr within snspa. faculty of journalism and the department of communication within the university of bucharest are directly claiming to have been the first in their respective domains (“the first journalism faculty established after 1989” (faculty of journalism and communication, university of bucharest, 2019), “the first academic structure proposing communication studies at the university of bucharest” (faculty of letters, university of bucharest, 2019). the faculty of communication of pr within snspa has a different approach, aiming at the same legitimacy obtained via a pioneering tradition by proposing a timeline of the development of the faculty with references as early as 1991 (faculty of communication and pr, snspa, 2019). humans of … communication studies an academic discipline is obviously built not only around sharing and developing new ideas or testing new theories, but also around the people involved in this process. by looking into the academic path of the staff involved in teaching communication studies within seven university structures across the country, our aim was to bring into attention some characteristics related to age and academic formation of people shaping the actual communication domain within academia, that may contribute to a broader understanding of the current development of this domain. further research will enlarge the database used and will also look into more characteristics than age and academic training (ba and phd). table 2: university staff teaching communication studies grouped by age age number under 30 2 30-39 years old 27 building a discipline. the setup of communication as an academic discipline in romania 20 40-49 years old 37 50-59 years old 12 over 60 years old 12 total number of perused cv and self presentation: 107 total number of persons 90 as shown in the table below, we perused a total number of 107 cvs and self presentations and as far as the age goes, our conclusions are only informed by 90 cases. the results are a mix between the state of communication as a “young” discipline in romania and the current state of economic conditions related to jobs within academia. therefore, the fact that only 2 persons out of 90 are under the age of 30 years old might be a consequence of the requirements that a young researcher must fulfill in order to land a fulltime job in academia (phd degree) rather than anything else. the number of persons aged over 50 years old (24) is lower than any other age group and one may consider a correlation with the relatively “young age” of communication within universities. looking into the academic training of the staff that teaches and (and researches) within the communication domain, several characteristics are recurrent and we will present them without further elaboration, as we need more data in order to investigate eventual correlations or even causation. the teaching staff, both from small universities and from larger ones tends to be the “product” of that same university, even of the same faculty. smaller university centers tend to recruit their staff from their own graduates (ba level) meanwhile for phd studies they are gravitating around a larger university center from the area (this is the case of bacau university and iasi university as well as for sibiu university and the university of cluj). only 3 out of 90 persons included in the current study hold a phd degree emanating from a university outside romania, and none of them are within the field of communication studies, although many of the teaching staff had the opportunity to study abroad more than one month, usually during their phd studies or post-doctoral studies, either in europe or in usa (fullbright). the graphic below depicts the current situation of ba degrees and phd degrees held by the staff employed within the faculties and departments of communication. most of the staff involved in teaching communication disciplines were formally trained in philosophy, philology and sociology (across all the age groups) and communication studies (only for the younger generation). the category labeled as “other” includes study fields such as geography, theology, physics, engineering, economics and law: either for ba degrees or phd degrees in those categories there were only one or two persons holding those specific degrees. philosophy, philology and sociology have shaped the field of communication in its beginnings as an academic domain; nowadays, those three domains alongside communication studies are shaping the field of communication through their researches in terms of topics and methods. buzoianu, bira, duduciuc 21 figure 2: an overview of ba (dark grey) and phd degrees (light grey) held by university staff teaching communication studies conclusions although based on preliminary findings, our study shows some very interesting results regarding the roots and the current development of academic programs in communication. first, data shows that the in romania communication is not only following the multiand interdisciplinary features of the domain, but also has been developed under other major academic domains. thus, from the early beginning, universities in romania put communication in direct linkage with already known academic domains: social sciences (e.g. political sciences), philology and journalism. second, the emergence of communication studies as an academic field is already producing consequences at the very level of the academic institutionalization of this new study domain: the younger generation of communication scholars is overwhelmingly trained within the very field they are shaping. third, the dynamics of small and larger university centers seems to indicate the consolidation of several “centers of influence” in terms of scholarly approaches of communication: however, those centers are not limited to the “traditional” larger universities (in bucharest, cluj, and iasi) as small university centers are developing alternative 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http://comunicare.ro/index.php?page=istoric http://comunicare.ro/index.php?page=istoric microsoft word botez daniel engl. recently aspects regarding international auditing standard 200 „overall objectives of the independent auditor and the conduct of an audit in accordance with international standards on auditing” daniel botez, associated professor phd., university „vasile alecsandri” of bacau abstract: the purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. this is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. the international standard on auditing 200 (isa 200) deals with the independent auditor’s overall responsibilities when conducting an audit of financial statements in accordance with international standards on auditing (isas). keywords: financial statements, financial audit, international standards on auditing the first decade of xxi century aa brought unprecedented challenges to the accounting professionals. financial scandals that have exploded at the beginning of this period have set new coordinates harmonization processes, internationalization of standards and economic globalization in general. europeanization process based on the need for eu enlargement was directly influenced by changes in international references. over all these, the economic crisis has become a global character and influence, in grades and sizes, all stakeholders in the organic processes. one of the key players in these events is accounting profession, which ensures the preparation of financial information underlying economic decisions, and increasing the credibility of this information. as a representative of the international accountancy profession, ifac (international federation of accountants) has been concerned throughout this period of recovering, at certain times, maintain and increase user confidence in the services offered by the accounting profession. a key effort in this direction requires regular review of professional standards. last significant revision of the international auditing standards (isas) was completed in april 2009 with the publication by ifac to form new professional standards for audits and review. a fundamental change them is to set a standard content of each of them. thus, each standard contains the following contents: • introduction it is presented the scope of the standard and revealing at the same time, the need to develop it, and on the standard comes into force; • objective the objective of the auditor general is to obtain sufficient appropriate evidence about the scope of the standard; • definitions they have to assign appropriate meanings of terms used, in application of international standards on auditing; 4 studies and scientific researches ‐ economic edition, no. 14, 2009  • requirements include, as a rule, audit procedures that auditor must apply to achieve the objective standard, and how to issue and reporting their findings; • application and other explanatory material the auditing procedures and the issuance of findings and reporting are detailed to the provision auditor of additional references and the insertion of annexes, where appropriate, containing models of reporting documents or other information. in this case the review was written and international standard on auditing 200 "the general objectives of the independent auditor to conduct an audit of financial statements in accordance with isas. this standard, together with "conceptual framework for mission assurance" is the reference of the auditor general and conceptual issues that need to consider when conducting an audit or review mission. in principle, this standard establishes general objectives of the independent auditor when conducting an audit of financial statements in accordance with isas. in particular, this standard describes the aims of the auditor and explain the nature and purpose of an audit to enable the auditor to achieve these objectives. he also explained, the purpose, authority and structure of isas and includes requirements to establish generally applicable to all audits the auditor's responsibilities, including obligations under isas. compared with the previous version of isa 200 introduction, in its revised form, scope contains several elements that suggests the reasons that gave rise to their introduction. thus, there is a clear reference to the fact that the financial statements that are subject to audit are those of the entity established by management and supervision of those charged with governance. even if it seems a situation for granted, is an important provision that configures a clear delineation of responsibility, focusing on liability management the audited entity. also, an audit is conducted on the premise that management and those charged with governance (where applicable) clearly understand what underlies an audit responsibilities. it takes such a distinction because, in professional practice is found situations where an entity's management believes that the call to audit its financial statements diminish the responsibility on them. the standard explicitly provides that the management and, where appropriate, those charged with governance understand their responsibilities for preparing financial statements in accordance with the applicable financial reporting, including fair presentation, where the reporting is one of accurate picture. another key responsibility of the entity's management refers to the organization and internal control management and, where appropriate, those charged with governance, so as to financial statements free of material misstatement due to fraud or error. it is understandable that the auditor does not involve control function entity, including the scope of internal audit. he shall only evaluate the internal control system on the one hand, and the findings may, in some cases, the internal audit findings. moreover, the management entity is required to allow the auditor (or provide) access to all information management and those charged with governance deems relevant to the financial statements: books, documents and other materials. the auditor may request any additional information the entity's management, for audit purposes. also, the auditor should have unrestricted access to persons within the entity of which he considers necessary to collect evidence. moreover, the financial statements by management, it requires identification of the applicable financial reporting framework in the context of legislation, preparation of financial statements in accordance with it and include an adequate description of the financial statements. meanwhile, the financial statements requires management to exercise judgment in accounting estimate as reasonable in the circumstances fiid and selecting and applying appropriate accounting policies. 5 studies and scientific researches ‐ economic edition, no. 14, 2009  international standards on auditing applicable exclusively auditor. they do not impose responsibility for management or those charged with governance and not supersede the laws and regulations which establish their responsibility. professional standards, to an audit of financial statements is to induce increasing confidence (credibility) of the target users of financial statements. in direct correlation with that purpose, increasing confidence is achieved by the auditor to express an opinion whether financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. this is the objective of the auditor referred to earlier as the standard 200. the isa 200, applicable from december 15, 2009, the auditor's objectives are expressed more nuanced, as it must consider two significant and interrelated issues. first, the auditor should obtain reasonable assurance that financial statements are free of material misstatement due to fraud or error, enabling him to express an opinion whether financial statements are prepared, in all material respects, in accordance with the financial reporting applicable. after the auditor obtain reasonable assurance, can and should report on the financial statements and communicate as required isas, based on its conclusions. standard is a very important statement. for most financial reporting frameworks, drawn up in accordance with the included presentation. thus, the auditor should refer to the financial requirements raporater framework when its opinion. another more nuanced presentation covers audit with an attitude of professional skepticism. professional skepticism is an attitude as a professional auditor. this attitude undoubtedly varies from one auditor to another, is based on some personal characteristics such as professionalism, experience and competence. emphasizing the personal, general auditor should show special attention to circumstances such as: • audit evidence that conflict with other audit evidence obtained; • information confinement fidelity documents and answers questions on the information used as evidence; • circumstances indicating possible fraud; • the circumstances suggest the need for additional procedures to the requirements of isas. attitude of professional skepticism is evident throughout the audit, so that the auditor should not overlook the unusual circumstances, when excessive generalize findings based on the findings or use inappropriate assumptions when determining the nature, timing and extent of audit procedures and evaluate results. professional reasoning is another a specific feature of peofesionist accounting. at the same time, it is one of the elements that distinguished the work of a professional accountant that of other persons employed in the economy. professional reasoning is evident in every step that the auditor is performing financial audit mission. thus, it is necessary when determining materiality, audit risk and, according to them, the nature, timing and extent of audit procedures. also, the judgment auditor assesses whether sufficient evidence has been obtained and appropriate and were met obiectvele isas and objectives of the auditor, and establishing conclusions based on evidence obtained. these are just some of the elements that configure a new attitude on the international accounting standards. its purpose is to support auditors in carrying out training missions at the highest level of quality, on the one hand, and increase public confidence in their services. bibliography 1. ifac (2009), hand-book of international standards on auditing and quality control 2009, editura irecson, bucureşti 2. www.ifac.org 6 microsoft word apostoaie constantin marius_eng.doc ecotourism – model of sustainable tourist development mirela ştefănică, „al. i. cuza” university of iasi, romania maria vlavian-gurmeza, „al. i. cuza” university of iasi, romania abstract in the last years, the tendency in the tourism industry was that of return towards nature and towards the authentic cultural values. among all the forms of tourism, ecotourism distinguishes itself through the strongest connection with the natural and cultural environment, representing the most valuable form of manifestation of sustainable tourism, with the fastest growth rhythm worldwide. integrated in the sustainable development, ecotourism involves activities that directly contribute to the nature protection and to keeping the old human creations unaltered. keywords ecotourism, sustainable development, sustainable tourism, environment, conservation, local population, swot analysis jel codes: q 56 general considerations regarding ecotourism currently, ecotourism is also known under the name of “green tourism”, “kind tourism”, soft tourism” or “ecological tourism”. in reality, under these denominations are hidden nuances of the concept. therefore, some authors consider that ecotourism refers to traveling in the natural, relatively unaltered, even wild areas, to admire the landscape and enjoy the world of plants and animals in their entire freedom, while other authors regard ecotourism as a form of tourism that has as main motivation observing and studying nature and the local traditions within a reservation. 1,2 partially accepting these points of view, according to the author vasile glăvan, we consider that ecotourism does not have a restrictive addressability, for certain areas only, since the entire tourism activity must take place according to ecological principals. currently, the tourists are more and more interested to travel to areas distinguished through the best quality of the environment components. they are preoccupied with the quality of air, water, vegetation, as a tourism resource, with the state of conservation of spiritual goods, the degree of safety offered in all the moments of the travel. for these reasons, the tourism resources from each country and area of the world must be carefully protected, in order to be used in the future with the same profitability as at present.3 1 glăvan, v. (2003), turism rural. agroturism. turism durabil. ecoturism (rural tourism. agrotourism. sustainable tourism. ecotourism) ed. economică, bucharest, p. 169 2 bran, f., simion, t., nistoreanu, p.(2000), ecoturism (ecotourism) ed. economică, bucharest, pp. 15-18 3 niţă, m., niţă, c., niţă, i. (2008), ecoturism în spaţiu rural (ecotourism in the rural space) in talabă i. (coord.), turismul rural românesc:actualitate şi perspective (the romanian rural tourism: actuality and pesrpectives), ed. performantica, iaşi, p. 108 studies and scientific researches economic edition, no. 15, 2010 480 regarding the definition of the notion of ecotourism, according to the opinion of the specialist hector ceballos-lascurain, the one who was credited for introducing the ecotourism term4, the definition is: “a travel in natural and uncontaminated quiet natural areas having as specific object studying, admiring and enjoying watching their landscapes, animals and plants as any cultural manifestation (at the same time old and present) carried out in these areas.” as a result, ecotourism focuses on learning activities and nature discovery. another author, fennell (2001) defines ecotourism as a “form of sustainable tourism, based on natural resources, which is mainly focused on the direct contact with nature and with acquiring knowledge about nature and which must have a low impact on the environment, without consumes, oriented towards the welfare of local communities (control capacity, benefits, dimensions). it covers natural areas and must contribute to conserving or protecting them.” in the majority of definitions given to ecotourism, encountered in the specialty literature, we noticed two main elements: the fact that it is based on nature and at the same time on value (sustainable). elements involved in the development of ecotourism ecotourism supposes carrying out the tourism activities in an environment with landscapes unaltered by pollution and at the same time reassuring. it represents a model of sustainable exploitation of the tourism resource, due to the minimizing of the negative effects on the environment. figure 1. emphasizes the elements involved in developing ecotourism. figure. 1. the elements involved in the ecotourism development source: f. w. theobald (1998), global tourism, butterworth heinemann, greatbritain, pg.201 the first elements involved in the ecotourism development, the respect for the ecosystem integrity, aims at emphasizing the importance of the environment in supporting tourism, maintaining the level of development at a small scale under the control and under the local management, using a specific local development, the compatibility of the development plan 4 băltăreţu, a.,m. (2007), ecoturism şi dezvoltare durabilă (ecotourism and sustainable development) ed. pro universitaria, bucharest, p.104 ecotourism respect for the ecotourism integrity local participation economic opportunities for the local population ecodevelopment studies and scientific researches economic edition, no. 15, 2010 481 with the environment, using materials, know-how and local working force, using facilities and equipments which conserve the energy, practicing the recycling, capitalization and national use of resources, preserving vegetation, reducing the deforestations, using alternative, sustainable technologies5. local participation, the second important element for developing ecotourism, aims at promoting the local participation as much as possible, creating opportunities for the host population, the transfer of property to the local community and its administration, creating opportunities for the group projects and local population as regards the control and administration of natural valuable resources, stipulating some alternative local measures, promoting the socio-cultural “pride” through the organization of programs by the local community, complying with the local ideology and inheritance, stipulating opportunities for the interaction between the local population and visitors. regarding the third element involved in developing ecotourism, respectively economic opportunities for the local community, they refer to coordinating all the elements with the purpose of optimizing the benefits of the local economy, creating jobs for the host population, guaranteeing and protecting the local population, including the communities’ ideas in the political decisions, the equitable distribution of the economic benefits, recognizing the local efforts/services, using the local materials and working force to keep the money into the local economy, keeping a decentralized management 6etc. in all the tourism regions on the globe, the ecotourism development mainly aims at four aspects: economic, ecological, social and cultural, aspects emphasized through table 1. table no. 1. the main aspects of ecotourism economic increasing the degree of capitalization of resources, especially the least known ones in order to achieve a reduction of the pressure exerted on the intensely exploited resources ecological reducing and eliminating waste – if possible recycling them; a more rational use of all the resources social maintaining some occupations, traditional professions of the inhabitants in the areas, which determine the increase of the number of jobs by attracting the population into practicing different forms of tourism the main aspects of ecotourism cultural capitalizing the civilization, art and culture elements that express a certain cultural identity and which develop the spirit of tolerance we can say that ecotourism represents the future of tourism only if combined with a rational, strong planning and management. it helps promoting actions for improving nature, the social, the cultural and the economic, for supporting the conservation efforts. by ecotourism, the tourists are culturalized through their involvement in direct experiences, and the ecological education of all the categories involved in the tourism activities (local community, governmental and non-governmental organizations and economic agencies). regarding ecotourism, omt adopted a strategy that mentions the following 7: 5 theobald f.,w. (1998), global tourism, butterworth heinemann, great britain, p. 200 6 idem 7 www.wto.org studies and scientific researches economic edition, no. 15, 2010 482 the theories that ecotourism is based on must be part of the tourist patrimony of the planet, being considered of world interest; the territories with traditional life styles of the local populations must be respected with a special rigor; by ecotourism we are aiming at minimizing the negative effects on the local and natural environment, and on the local population as well. ecotourism contributes to administering the protected spaces and improving the relationship between the local communities and the persons authorized to administer these protected spaces; ecotourism favors an interaction between the host population and the tourists, determining a real interest for a sustainable development and protection of the natural area, both in the states which provide tourists and in the hosting countries; ecotourism supposes extending the specter of traditional economic activities (agriculture, breeding of animals, fishing), without replacing them however; the local populations and the employees in the tourism industry must use the natural spaces in a sustainable manner and appreciate the natural and cultural valuable objectives. therefore we ascertain that the main objective that ecotourism proposes is supplying a high quality tourism in the conditions of protecting the natural areas, involving the host population and stimulating the local economies. we consider that these desiderates can be achieved by increasing the resources found in conservation, by achieving the environment education and involving the local authorities. the swot analysis of the romanian tourism at the national level, ecotourism is at an incipient stage characterized through the existence of ecotourism “nuclei” in different areas of the country. an important factor for supporting the ecotourism activities is represented by the increased interest for this type of activity. an increasing number of tourists tend to practice ecotourism and want to get involved in this sense, into nature conserving actions, for appreciating and promoting the traditional way of life, the valuable customs and traditions. romania has a huge potential as regards ecotourism, since it has the highest density of large carnivores from europe (half the continental population of bears, a third of the wolves and a third of lynxes), pastoral villages and towns, extended fields, the danube delta (hosting 60% of the total population of dwarf cormorants at the world level). from the beaches of the black sea to the skiing and mountain hikes and tourism based on nature in the danube delta, the natural patrimony of romania offers unlimited opportunities for tourists, in general and ecotourism, especially. we have the seventh part of the world cultural inheritance sites, including the painted monasteries in bucovina, the historical citadel of bucovina, the dacian citadels of orăştie mountains, transylvania, a famous world because of its association with the legend of dracula. the multitude of architectonic styles and the rich literary history are reflected in an ethnic mixture of romanians, hungarians, ukrainians, russians and turkish. a different and unique population like the country landscapes together with a rich history offers the visitors an incursion into the present and past of europe. in table 2, we present the swot analysis for the ecotourism in romania. table no. 2 the swot analysis for the ecotourism in romania strong points weak points the diversity of natural tourism resources (relief and special landscapes), wild areas unaffected the lack of a unitary system for administering the protected areas that allow to practice ecotourism in these studies and scientific researches economic edition, no. 15, 2010 483 by the man’s intervention; the existence of a large number of protected areas (national, natural parks and reservations) included in the european network the nature 2000; the biodiversity present in all the areas – special flora and fauna (the population of large carnivores is recognized at the national and international level), with unique species in europe; the existence of some tourism objectives included on the list of unesco world patrimony (the monasteries with an exterior fresco) situated in the parks; traditional manner of life and agricultural practices; developing the capacity of accommodation in the agrotourism pensions; the existence of important mineral sources both from the quantitative point of view and as regards the facilities offered by the balneo-climatic resorts; the diversity of ecological agroalimentary products; reduced pollution in the majority of rural areas; traditional cuisine and regional specialties; the existence of an ethnographic and folkloric thesaurus of great originality with a rich calendar of traditional fairs and folkloric manifestations for the entire duration of the year; the traditional architecture and the special aspect of the countryside households from different areas of the country. areas; reduced level of education of tourists and the population in the rural environment in view of practicing ecotourism; insufficient exploitation of the natural ad historical monuments; the treatment units afferent to balneary resorts have a high degree of attrition and non-adaptation to the european standards; the lack of an organized system of indicators for the tourism objectives and itineraries; overexploitation of natural resources through inadequate grazing, land clearing, poach, uncontrolled tourism; the public transport to the tourism objectives is insufficiently organized and promoted; the cost of flights to romania is high compared to other countries; the decrease of the number of foreign tourists who visit our country; the reduced use of the accommodation capacity (27.2 %) and the duration of sojourn in the country in relation with the existent tourism potential; the insufficient development/exploitation of the recreation infrastructure; low degree of the population occupied in tourism and the reduced training level of the guides from the ecotourism/specialty personnel who administers the accommodation structures; the absence of a fair in ecotourism; the inefficient ecologization of tourism areas; the lack of strategies that ensure the promotion of ecotourism in the protected areas. opportunities threats high international interest for ecotourism, agrotourism, rural tourism, adventure tourism; very good perspectives for exploiting the mountain areas for the entire duration of the year by hiking, equitation, alpinism, extreme sports, ski; • strong competition at the destination level – external tourism destinations at similar prices and superior conditions; • degradation of the protected areas through the irrational exploitation of the natural resources and the non-ecological and irresponsible tourism; • the infrastructure of utilities (water, studies and scientific researches economic edition, no. 15, 2010 484 the climate, with soft winters and cold summers, favorable for the tourist activity during the year; the increase of the number of tourists who have ecotourism as motivation; implementation of tourism infrastructure projects by the local administration in some regions; the existence of international airports near areas of interest for ecotourism; the existence of a basic research, development and innovation infrastructure; the possibility to attract tourists and foreign investors by improving the cities’ image, exploiting the historical, cultural, spiritual and traditional inheritance; promoting some events based on “nature calendars” (the groan of deer, the blossoming of the mountain peony etc.) the existence of raw materials (construction and wood materials) capable to attract foreign investors; the possibility for the airports to support the business environment and become starting point for the tourism itineraries, through the airports modernization; the forest regime, legally regulated, can have favorable effects on the environment and tourism; the existence of the legislative framework which allows the development of the protected areas and their conservation; the presence of webs in ecotourism within the internet network. sewage, waste management) inexistent or weakly developed in the rural areas; • the transport infrastructure not adapted to the community standards; • the inadequate image of romania can affect its choice as a tourism destination; • the urbanization of rural population involving the lost of authenticity and the local specificity; • the lack of awareness regarding the role of introducing an environmental management system in the tourism sector; • the existence of some areas predisposed to natural disasters (floods, landslides) • the migration of the working force abroad; • the continual growth of the poverty degree in some important regions for ecotourism; • loss of customs and traditions; • extending the built-up areas in the immediate neighboring areas of the protected natural areas; • the instability of the national currency; • precarious emergency medical services; • economic changes on the international plan; • the intensification of the economical financial crisis. as a conclusion, we consider that practicing ecotourism, as an integrant part of the sustainable tourism development, is the most beneficial path to follow, apt to ensure a safe and unaltered environment, especially for the future generations. in this context, it represents a process whose development can be achieved without the degradation or exhausting of resources that make the existence of life on earth possible. studies and scientific researches economic edition, no. 15, 2010 485 bibliography 1. băltăreţu, a.,m. (2007), ecoturism şi dezvoltare durabilă (ecotourism and sustainable development), ed. pro universitaria, bucharest 2. bran ,f., simion, t., nistoreanu, p. (2000), ecoturism (ecotourism), ed. economică, bucharest 3. glăvan, v. (2003), turism rural. agroturism. turism durabil. ecoturism (rural tourism. agrotourism. sustainable tourism. ecotourism), ed. economică, bucharest 4. niţă, m., niţă, c., niţă, i. (2008), ecoturism în spaţiu rural (ecotourism in the rural space) in talabă, i., haller, a.,p., talpaş, j., turismul rural românesc: actualitate şi perspective (the romanian rural tourism : actuality and perspectives), ed. performantica, iaşi 5. theobald, f.,w. (1998), global tourism, butterworth heinemann, greatbritain 6. ***wttc (2006), românia. impactul turismului şi călătoriilor asupra locurilor de muncă şi economiei (romania. the impact of tourism and travels on the jobs and economy). 7. www.wto.org studies and scientific researches economic edition, no. 15, 2010 486 microsoft word apostoaie constantin marius_eng.doc market orientation – a pertinent solution in reevaluating traditional marketing luminita zait, ,,vasile alecsandri” university of bacau, romania laura timiras, ,,vasile alecsandri” university of bacau, romania bogdan nichifor, ,,vasile alecsandri” university of bacau, romania abstract this article focuses on describing the latest trends in the theoretical and practical development of the marketing concept. market orientation is the main item discussed, emphasizing the advantages and pitfalls of applying such a specific concept. keywords marketing, market orientation, evaluating methods jel codes: m 30, m31 traditional marketing – some critics the failure of numerous organizations in the new marketing environment of the 20th and the beginning of the 21th century has generated a number of critics regarding the efficiency and viability of traditional marketing. thus, in theory and practice the questions started to appear, the most common being the one associated with necessity of identifying of some new orientation of marketing function, starting from the grown complexity of the markets and emergence of the new values. the main critics bring to traditional marketing by the academics are related to: • traditional marketing stands on a world which is unrecognizable for many marketing managers which currently have to really manage the marketing process (piercy, 1991); • actual marketing concept is unrealistic and has to be rethink (gummeson, 1987); • traditional marketing methods are no longer as efficient as were in the past (rapp, collins, 1990); • marketing concept, as it was propagated and understand in the past, no longer can assure elements of sustainability in obtaining business success in the context of the end of 20th century (brownlie, saren, 1992); • after studying and disseminating the importance of marketing for a 30 years period, michael thomas concluded the he has serious doubts regarding the efficiency of marketing in current context (thomas, 1993); • marketing process, albeit it have being used in the past by numerous organizations, appears to be now far from being appreciated, especially from the point of view of advantages that it may bring (hooley, saunders, 1993); most of the critics come from where is expected, namely from practice. a series of studies developed in united states of america and europe (narver and slater, 1990; kohli şi jaworschi, 1990; brady and davis, 1993, george, freeling and court, 1994; lambin, 1996; webster, 1997; deshpande, 1998; etc.) revealed a grown lack of satisfaction of different studies and scientific researches economic edition, no. 15, 2010 538 sectors marketing managers regarding marketing process and marketing functional structures. those critics are: • as the confidence in market orientation process and in its functional integration grow, marketing function has no longer the capacity to sustain the process of disseminating market culture at the organization level; • the organizations concentration on “action dimensions” or on operational marketing generated unjustified costs, uncovered by performance; • traditional marketing has promoted tactical means, opening the way for advertising and sales promotion, but ignoring the process of innovation; • in the new marketing environment, marketing process and strategic marketing are much too important to be left just in the responsibility of the marketing function; • aversion on the risk, present in numerous organizations, favored minor innovations, asked by the market, and not breaking innovations based on technology and creativity; • marketing reactions regarding green movements was not the expected one; responding to the pressure of ecological entities by using advertising and not by creating new products concepts, traditional marketing risked to undermine the credibility of green marketing; • by neglecting the segment of simplified products with low prices, traditional marketing favored the entry of big retailers on the market which currently control numerous segments with their own brands; • weak contribution of traditional marketing in developing and maintaining cooperation relationships with big retailers generated loses on important markets, especially in fmcg markets. in the context of this analysis, it has to be mentioned that the critics doesn`t argue against the marketing as it is, but against the marketing function, as it is organized at the level of the organization; both practitioner and academics agree that marketing functions has to be reinvented in a way which to fortify the market orientation of the whole organization. marketing orientation as the new way following the critics bring to marketing, it seems that exist a strong path for sustaining the redefining of this concept and its role in the 21th century. for most of practitioners the need of changing marketing orientation has emerged as a follow up of fundamental changes in world`s markets. these fundamental changes are: the decline of megabrands as a results of price based competitors, the replacement of marketing personnel with the one specialized in undertaking specific tasks, the decline of demand for marketing specialists, the emergence of a new type of consumer which asks for greater value, the presence of a more stratified and aggressive competitors. on the other hand, for academics the necessity of changing marketing view has been revealed by a series of studies which showed a link between market orientation and organizational performances. in this direction, marketing theory sustains the hypothesis of existence of an significant link between the intensity of market orientation and economic performance: “an organization which step toward a superior level of marketing organization improve its economic performance (noble, sinha, kumar, 2002)”. support for this hypothesis come from numerous studies: • after examining the realities of 1504 british companies, hooley and linch concluded that the most efficient organizations are characterized by assuming a coherent orientation toward market, a heedful strategic planning and concentration on products quality (hooley, lynch, 1985). • in 1990, narver and slater realized a study which had the objective of identifying the level of market orientation of a group of 140 strategic units of some american studies and scientific researches economic edition, no. 15, 2010 539 companies; following this study, the authors concluded that exist a strong relationship between market orientation and profitability (narver, slater, 1990); • kohli and jaworchi, which took a series of semi-structured interviews in american organizations, discovered that exist a high level of understanding of the three key components of marketing concept: client orientation, coordination and profitability – and the advantages of marketing philosophy can be translated in superior results in terms of performances, in advantages for employers and in favorable attitudes from the consumers; • following a study using american, japanese and british companies sample, wong and saunders demonstrated that market oriented organizations – classified as innovators, quality marketers and mature marketers – obtain better results in terms of profit, sales and market share than other organizations classifies as price promoters, products manufacturers and aggressive promoters (wong, saunders, 1993); • a market oriented organization has in general a large number of satisfied clients and as a result a higher fidelity rate and lower sales and prospection costs (lash, 1990, dweyr, schurr, sejo, 1987); • a market oriented organization respond better to permanent changing needs by developing new products which renew the portfolio structure and contribute to maintaining an equilibrium between the grow and profitability objectives; • a market oriented organization is better positioned which facilitate the identifying and selection of the competitive advantage as a way to preserve and amplify the market share (porter, 1985); • a market oriented organization develop products which bring to consumers a superior value over the market average, which in turn reduce consumers sensibility to price and grow the level of maximal prices accepted by the market (nagle, holden, 1994); these conditions when reunited directly or indirectly contribute to economic and competitive performance. concluding, we can say that the base hypothesis of this concept is the next one: market oriented organization allocate human and financial resources for: a. bringing together the data about the expectances and behaviors of the main market player, these data being used to b. develop action plans oriented towards market needs, c. plans that are put in practice by all organization functions. on the other hand, a series of authors mention the risk which derives from ignoring this new orientation; the absence of such a culture could generate significant consequences over the organization competiveness and over its capacity to overcome the threats of marketing environment. thus, a number of aspects have to be considered: • interface with environment: knowing that the responsibility of assuring the interface organization – environment is held by marketing function, there is a risk that the changes in macro-environment, such are the socio-demographic ones, to be underestimated by other organizational functions. in this context, the question which appear is related to the credibility, the capacity and the power of marketing structure and especially of product manager to generate changes at the organization level; • the link between r&d and innovation: the conflict between marketing structure and r&d structure, identified even in market oriented organization, ask for a complicated dialog. in this context, the link between inventions and innovations is weak, r&d activity generating a few number of ideas of new products; • the process of developing new products: these kinds of decisions ask for contribution of all organizational structures. at the level of non-market oriented organizations, the process of developing new products is controlled by different structures which impose a target price for marketing structure. in a marketing oriented product developing process, the price accepted by the market is the one which states the standard for innovation and constitute the contract which has to be assumed by all r&d and production structures (cooper, 1993); studies and scientific researches economic edition, no. 15, 2010 540 • competitive advantage and value chain: according to porter theory, competitive advantage has to have as a starting point the value chain activities (porter, 1985). the lack of market oriented culture will generate the risk of funding competitive advantage on minor differentiate elements, with low value for the consumers; • developing of relational sales: commercial structure has for a long time the tendency to favor transactional sale, especially in the processes of identifying and getting new clients. based on the reality that it generates a high level of fidelity, relational sale try to create a durable and mutual profitable relationship with current clients. beyond the previous point, a series of questions are present in marketing literature and practice. to answer to the question “which will prosper in this new context?”, some specialists argue that the new comers have a certain competitive advantage because they don`t have to defend a history of a previous financial status (day, 2000-2001). this affirmation is fortified by the realities of business environment, many organizations obtaining real competitive advantages based on market orientation without special financial resources. moreover, not the size, nor the history are elements which assure success in market, but the superior ability to know, understand and satisfy potential consumers needs. many marketing specialist ask themselves which are the most market oriented organization and what is their key in business success? cannot be said that there are absolute standards, the source of competitive advantage is a better orientation to the market segments in terms of categories identified and their needs as a basis for a rigorous strategic planning. the literature states that there are many theories for a viable business path, the key of that business path being the implementation of a simultaneous orientation towards satisfying the consumers and maximizing the economic efficiency. however, this orientation should not be regarded as automatic success generating because consumer satisfaction is not sufficient to maximize economic efficiency. real profitability is based on continuous attempt to retain valuable customers for the organization by building a strong loyalty, as a result of mutual trust, bilateral obligations and intense communication. supporting modern organizations need to shift towards the market, webster offered in 1999 a set of 11 indicators which can help in identifying the level of market orientation of an organization: focus on satisfying customers throughout the organization, commitment to deliver value, the identification and development of distinctive competencies, forming strategic partnerships, develop sustainable relationships with strategic customers, increasing the importance of segmentation, targeting and positioning approaches, use of consumer information as a strategic tool, focusing on providing additional benefits and services to consumers, improvement and innovation efforts, defining quality in terms of customer expectations consumer, commitment to provide the latest information technologies. the most important models for applying and quantification of the degree of market orientation, however, remain: • mktor scale developed by narver and slater in 1990, built on 15 items divided into 3 subscales: orientation towards consumer, orientation towards competitors and interfunctional coordination (narver, slater, 1990); • markor scale developed by kohli and jaworschi in 1990 and improved in 1993 by jaworschi, kohli and kumar, based on 20 items that link three issues: market intelligence, dissemination of intelligence and the prompt answer to market needs (kohli, jaworschi and kumar, 1993). however, how do market-oriented organizations have a greater ability to understand, attract and retain target audience categories? the answer can be found mixing the following components, in the opinion of day (1990): an outer-oriented culture based on faith, values and behaviors directed towards providing a superior value to consumers and stakeholders, and not least the continued efforts towards discovery of new sources of competitive advantages; distinct skills in market intelligence, networking to target audience and prospective strategic thinking. in other words, market-oriented firms are very familiar with their field of action and are able to establish lasting relationships with customers and other studies and scientific researches economic edition, no. 15, 2010 541 interest groups. the configuration of a strong market-oriented organization is recognized when these feature are present: strategic orientation to the market towards providing higher value, consistency among mentioned features and high flexibility to fold on quickly change business environment. on the other hand, slater and narver argue that market-oriented organizations have the ability to obtain information on the land the action, competitors and consumers, puts this information in a business perspective, decide and take steps to obtain higher value for consumers, and arrange to deliver this value to consumers. according to the theory of the two authors, market orientation calls for: focus on the consumer, intelligence in competitor analysis, inter-functional cooperation and involvement. regarding intelligence in analysis of competitors, this concept implies that a market-oriented organization recognizes the importance of understanding the actions performed by this category of interest: “obtaining a higher value requires that organization identify and understand the main competitors in terms of strenghts and weaknesses, distinctive capabilities and implementation strategies” (narver, slater, 1990). the idea of marketing intelligence is mentioned by jaworschi and kohli (1996), and tadepalli and avila (1999). courses of action similar to those of narver and slater are proposed by wilson and fook, which consider that essential in defining the market orientation are the following requirements: identify consumer needs (responding to questions what goods and services are purchased? who buys them? why do they buy?), define target segments, create differentiated advantages for served target segments and establish distinctive positions in relation to main competitors. some authors, such as craven and shipp (1991), bringing in discussion the concept of capabilities of market-oriented organization, referring to the ability of market knowledge, flexibility, strategic view and develop lasting relationships with all external stakeholders (craven, shipp, 1991). in fact, organizational capabilities refer to: skills, through the interfunctional operational teams, gained knowledge through experience in market orientation, coordination of activities, facilitated by formal and informal communication. more simplified approach to market orientation are given by deshpande, farley, webster, f. (1993) and shapiro (1988): „a set of beliefs that put consumer interests before”; „coordinated implementation of interoperable resources in order to create a superior value to the consumer”. marketing literature describes market-orientation as a process by which organizations obtain, process and disseminate information about consumers and competitors throughout the organization and act on such information. this market orientation is defined broadly in terms of consumer activities (day, 1990, kohli and jaworschi, 1990, deshpande, farley, webster, 1993; jaworschi and kohli, 1993) or synthetic, in terms of a balance between customers and competitors (day, 94, narver and slater, 1990, etc.). what is the importance of market orientation of the organization? specialized research showed that, in general, market-oriented organizations gain better efficiency compared to leading competitors that have not incorporated that vision (ames, hlavacek, 1990). although studies do not specify clear reasons that allow market-oriented organizations to achieve a surplus above the threshold of profitability made by most competitors, there are some elements that are considered important: the efficiency of investment, market-oriented organization has the ability to understand importance of investment in marketing activities; involvement and satisfaction of human resources, factors that are both cause and effect of consumer satisfaction; increased revenue; competitive preemption; superior satisfaction deliver to target segments, organization removing obstacles cannot easily be overcome by competitors. these barriers can be both psychological (the consumer is satisfied with the relationship with the organization and choose to resist to changes) and economic (financial risks generated by changing the brand). studies and scientific researches economic edition, no. 15, 2010 542 instead of conclusions despite these arguments of reinvention of marketing function, there are theories in marketing literature that reveal a degree of skepticism about its value in the future. in this respect, we refer to brown`s theory (1995), which proposes 4 stages of acceptance of the concept and of the marketing approach, as follows (brown, 1995): • first level, that of achieving, is characterized by a general acceptance of the concept of marketing, but that often raises implementation problems; the most common manifestation of this phase is related to acceptance and ownership by the managers of the concept and of the marketing approach. clear effects of this phase, for the many organizations, are the concern to make marketing approach operational in an organizational environment characterized by antagonistic relationships and inter-functional rivalry and centering efforts on identifying internal marketing programs to facilitate necessary organizational change. • the second stage, the intensive development, where marketing concept, already assumed, faces circumstances when it is considered to be rather inadequate or with poor relevance, it is about market sectors and markets where the role and contribution of marketing are low and where there are significant imbalance between supply and demand government, underdeveloped markets, etc. • the third stage, that of rearrangement, requires a fundamental reorganization of marketing concept as a measure to adjust it more quickly and easier to different market realities. in this sense, webster (1988), starting from the necessity of differentiating between the marketing and marketing management, believes that “marketing should return to its basic foundation – orientation toward the consumer ... in the detriment of myopic concerns orientation toward increasing market share”. • the fourth stage, and most radical, is the retaliation one, which according to brown, provides very useful information in estimating the future value of marketing: “... marketing approach has not always had success in order to lose effectiveness today. despite the recent success of marketing approach, the high rate of failure in the process of launching new products recorded the highest threshold of all time”. references 1. ames, ch., hlavacek, j. (1990), market driven management, journal of marketing, vol. 54, issue 2, april. 2. brady, j., davis, i. (1993), marketing in midlife crisis, the mckinsey quarterly, issue 2. 3. brown, s. (1995), post-modern marketing, routledge, london. 4. brownlie, d.t., saren, m.a. (1992), the four ps of the marketing concept, prescriptive, polemical, permanent and problematic, european journal of marketing, vol. 26, issue 4. 5. christopher, m.g., payne, a., ballantyne, d. (1991), relationship marketing: bringing quality customer service and marketing together, butterworth-heinemann. 6. cooper, r.g. (1993), winning at new products, reading, mass, addison wesley publishing company. 7. craven, d.w., shipp, s.h. (1991), market driven strategies for competitive advantage, business horizons, vol. 34, issue 1, january-february. 8. day, g. (2001), market driven winners. symphonya emerging issues in management, ed. dipartimento di scienze economico aziendali, milano, issue 2. 9. day,g.s. (1990), market driven strategy: processes for creating value, free press, new york. 10. deshpande, r., farley, j., webster, f. (1993), corporate culture, customer orientation and innovativeness in japanese frims: a quadrad analysis, journal of marketing, vol. 75, january. 11. deshpande, r., farley, j.u. (1998), measuring market orintation: generalisation and synthesis, journal of market focused management, vol. 2. 12. dwyer, f.r., schurr, p.h., sejo, oh. (1987), developing buyer-seller relationship, journal of marketing, vol. 51, april. studies and scientific researches economic edition, no. 15, 2010 543 13. george, m., freeling, a., court, d. (1994), reinventing the marketing organisation, the mckinsey quarterly, issue 4. 14. gummeson, e. (1987), the new marketing – developing long-term interactive relationships, long range planning, vol. 20, issue 4. 15. hooley, g.j., lynch, j.e. (1985), marketing lessons from the uk’s high-flying companies, journal of marketing management, vol. 1, issue 1. 16. hooley, g.j., saunders, j.a. (1993), competitive position: the key to market strategy, prentice hall internationla, london. 17. kohli, a.k., jaworschi, b.j. (1990), market orientation: the construct, research propositions and managerial implication, journal of marketing, vol. 54, april. 18. kohli, a.k., jaworscki, b.j.,kumar, a. (1993), markor: a measure of market orientation, journal of marketing research, vol. 30, novembre. 19. lambin, j.j. (1996), the misunderstanding about marketing, cems businees review, vol. 1, issue 1. 20. lash, m.l. (1990), the complete guide to customer service, new york, john wiley and sons. 21. nagle, t.t., holden, g. (1994), the strategy and tactics of pricing, englewood cliffs, new jersey, prentice hall. 22. narver, j.c., slater, s.f. (1990), the effect of a market orientation on business profitabi1ity, journal of marketing, vol. 54, october. 23. noble, c.h., sinha, r.k., kumar, a. (2002), market orientation and alternative strategic orientation: a longitudinal assessment of performance implications, journal of marketing, vol. 66, october. 24. piercy, n.f. (1991), market-led strategic change, thorsons, london. 25. porter, m.e. (1985), competitive advantage, new york, the free press. 26. rapp, s., collins, t.l. (1990), the great marketing turnaround: the age of the individual and how to profit from it, prentice hall. 27. shapiro, b.p. (1988), what the hell is ,,market oriented’’, harvard business review, vol. 66, issue 6. 28. tadepalli, r., avila, r.a. (1999), market orientation and the marketing strategy process, journal of marketing theory and practice, spring. 29. thomas, m.j. (1993), marketing – in chaos or trannsition?, in brownlie, d., rethinking marketing, warwick business school research bureau. 30. webster, f.e. (1999), is your company real1y market driven?, financial times mastering global business, pitman publishing, london. 31. webster, f.e. (1988), the rediscovery of the marketing concept, businees horizons, vol. 31, issue 3. 32. wilson, r.m.s, fook, n.y.m. (1990), improving marketing orientation, marketing business, vol. 11. 33. wong, v., saunders, j.a. (1993), business orientation and corporate success, journal of strategic marketing, vol.1, issue 1. studies and scientific researches economic edition, no. 15, 2010 544 consumer products and services value perception 61 consumers products and services value perception nichifor bogdan, lecturer phd university of bacău barin ioana, assistant university of bacău abstract: this article is a theoretical approach on products and services as value satisfiers. consumers have knowledge about the personal, symbolic values that products, services and brands help them satisfy or achieve. values are people’s broad life goals. values often involve the emotional affect associated with such goals and needs (the strong feelings and emotions that accompany success). recognizing when a value has been satisfied or a basic life goal has been achieved is an internal feeling that is somewhat intangible and subjective. in contrast, functional and psychosocial consequences are more tangible and are more obvious when they occur. salespeople add value by identifying customer needs and devising or delivering a solution for those needs. salespeople are able to adapt how products or/and services are presented or even to adapt products/services so that they meet the needs of the buyers. such adaption powers professional selling, because customers often don’t know what they need or how to configure a solution to their needs. satisfying a value usually elicits positive affect (happiness, joy, satisfaction), whereas blocking a value produces negative affect (frustration, anger, disappointment). consumers can have products and services knowledge about products and services attributes, consequences of products or services use and personal values. most marketing research focuses on one type of products and services knowledge – usually attributes or consequences, where the focus typically is on benefits rather than risks. values are examined less frequently and usually in isolation. this paper objective is to show the importance of creating, delivering, and capturing buyer value. a company’s ability to deliver value to its customers is closely tied with its ability to create satisfaction for its employees and other stakeholders. value ultimately depends on the perceiver. smart companies not only offer purchase value but also offer use value as well. 1.introduction value is defined in the pricing literature as the trade-off between customers' perceptions of benefits received and sacrifices incurred (e.g. leszinski and marn, 1997). monroe (1990) and gale (1994) cited quality as customers' primary benefit. monroe (1990) proposed that the sacrifice component exerts the greater influence on buyers' value perceptions. all noted that the role of price is complex and customers do not buy solely on the basis of low price. the context, customers' access to information and past associations also affect price perceptions and consequently customers' value determination (monroe, 1990). other definitions of value have a broader interpretation of sacrifice, in which non-monetary factors such as time and effort are included (e.g. butz and goodstein, 1996; carothers and adams, 1991; groènroos, 1997; kotler, 1996; naumann, 1995; treacy and wiersema, 1995; zeithaml, 1988). sacrifice is again defined from the customer's perspective, as emphasised by doyle's (1989, p. 78) definition of value as ``not what the producer puts in, but what the consumer gets out''. many authors have acknowledged the difficulties involved in defining value (e.g. piercy and morgan, 1997; woodruff, 1997). these stem from the subjectivity of value (hardy, 1987), variations between customers (wikstroèm and normann, 1994), within customers (parasuraman, 1997), between cultures (assael, 1995), in different situations (ravald and groènroos, 1996), preand postpurchase (gardial et al., 1994), and between tangible and intangible offerings (naumann, 1995). studies and scientific researches edition: economics, no. 13 (2008) consumer products and services value perception 62 this is compounded by customer value being a dynamic concept that evolves over time (jaworski and kohli, 1993). indeed it has been claimed that customer value is inherently ambiguous (naumann, 1995) and that value could be considered “one of the most overused and misused terms in marketing and pricing today” (leszinski andmarn, 1997, p. 99). in an attempt to consolidate the diverse definitions, woodruff (1997, p. 142) proposed: ``customer value is a customer's perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer's goals and purposes in use situations''. although the multiple contexts, tasks and criteria in woodruff's definition reflect the richness and complexity of the concept, they impede its translation into a measurable operational definition (parasuraman, 1997). 2. the four consumer buying behaviors most consumers will adopt all of these buying behaviors, but to varying degrees, behaving in different ways according to the type of product they are purchasing and the purchase situation. however each buying behavior group has different triggers in terms of information, support and persuasion. brand-focused marketing communications across the differing buying behavior groups vary enormously. for the brand-focused group, traditional advertising, such as posters, press and tv, will continue to play a part and a key message will be emotional reassurance that they are buying the ‘right’ brand. the brand should be dominant in all communications, but especially when presenting the brand in nontraditional media such as the internet. brand-focused consumers respond to strongly-branded consumer offers and merchandise via the post – good news for the direct marketing industry. but this group requires constant reassurance and the dissemination of information will be particularly vital should the sector undergo rapid change or suffer some crisis. maintaining brand trust is critical to this behavior group. price-sensitive price-sensitive consumers need to experience value for money at every stage of the buying process. marketers should build and maintain everyday low-price brand perceptions, and advertising should play a key part in this. direct communications should be simple, appear inexpensive and emphasise special offers, moneyback deals and price comparisons with competitive brands. and if you want to drive this traditionally less newmedia savvy behavior group on to the internet, demonstrate the low prices they can expect to find there. everybody loves a bargain but none more so than this group. communications must highlight value, and news of special prices or invitations to events such as special sales evenings will work well. feature-savvy feature-savvy consumers are information-hungry and will respond to direct marketing that offers product information such as comparisons with competitors and independent product reviews. internet sites are ideal for presenting this information. independent editorial will carry greater weight than paid-for advertising, so effective public relations will pay dividends. call centre personnel must be highly trained and knowledgeable about the brand they are representing. they should be able to answer complex questions and provide comparative details. brand is least important to these consumers. advice-led personal interaction is key to influencing the buying behavior of advice-led consumers. testimonials, access to online chat rooms and online shopping guides will also play their part. word of mouth will be the best reference, and in this respect, telephone operators will need to be both authoritative and reassuring at the same time. reassurance can also be conveyed through moneyback guarantees and returns policies, and can help to overcome post-purchase dissonance. it is widely anticipated that these buying behaviors can be applied in different markets, although to varying degrees, and the studies and scientific researches edition: economics, no. 13 (2008) consumer products and services value perception studies and scientific researches edition: economics, no. 13 (2008) 63 communications applied ‘tweaked’ accordingly. 3. consumer values higher-level needs approach the status of values, which are critical determinants of behaviour (baier, 1969). rokeach (1968) regarded a value as “an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence’. for schwartz and bilsky (1987) values transcend specific situations and one of the most widely accepted value inventory is the rokeach value survey (rvs). the rvs measures 18 instrumental values and the same number of terminal values. instrumental values are related to preferred modes of conduct such as honesty and friendliness which people know can lead to being accepted by others and to having good relations with others. instrumental values are thus means to reach a goal. terminal values are more related to endstate goals such as wisdom, happiness and freedom. instrumental values are: ambitious, broad-minded, capable, cheerful, clean, courageous, forgiving, helpful, honest, imaginative, independent, intellectual, logical, loving, obedient, polite, responsible, selfcontrolled. terminal values are: a comfortable life, an exciting life, a sense of accomplishment, a world at peace, a world of beauty, equality, family security, freedom, happiness, inner harmony, mature love, national security, pleasure, salvation, selfrespect, social recognition, true friendship, wisdom. vinson and lamont (1977) devised a model of consumer value systems (fig.1) by arranging values at three different levels and giving a hierarchical arrangement to them. fig. 1. consumer value systems people are not born with their values. rather, values are passed from one generation to another; they are learned. engel (1986) point out that some values are relatively constant while others are subject to change. they propose that the triad of families, religious institutions and school plus early lifetime experiences leads to a model of intergenerational value transmission (fig. 2). consumer products and services value perception 64 fig.2. intergenerational value transmission 3.1. products and services quality perceptions products and services quality perceptions represent consumer judgment about the superiority of a product or service, which the user-based approaches think is essential in describing quality. bundles of attributes together represent a certain level of quality, which therefore provide utility to the customer. the benefits are measured through a perceived level of quality (level of working superiority), a bundle of attributes in comparison with the consumer’s expectations. schiffman and kanuk (2004) stated consumers often judge the quality of a product on the basis of a variety of informational cues that they associate with the product. they also stated that the cues can either be intrinsic or extrinsic. intrinsic cues are related to the physical characteristics of the product itself, like size, colour, flavour, aroma etc. the extrinsic cues on the other hand are related to elements that are put together with the actual product like packaging, pricing, advertising etc. the perceived quality of products and services is central to the theory that strong brands add value to consumers' purchase evaluations. 3.2. brand loyalty brand loyalty is the ultimate desired outcome of consumer learning. brand loyalty is the likelihood of positive attitudes and behaviours of consumers towards a particular brand, this could amount to repeat purchase and positive word of mouth. a loyal customer base is an asset for a company and it reduces the need for seeking new customers. it is also a known fact that retaining current customers requires less money and effort than getting new ones. the strongest measure of brand value is the loyalty a company produces among customers. because product quality perceptions influence value, efforts of marketers focus on improving product quality in order to enhance perceptions of value, and consequently purchase intentions leading to loyalty. conclusion the most functional and fundamental means of identifying a market is by its systems of needs. by literally seeing the purchase decision maker’s problem through the decision maker’s eyes, it is quite easy to determine: • what combination of product characteristics represent real value, • how to communicate the product for the maximum perception of value, and, once that’s done, • how likely the respondent will be to buy. studies and scientific researches edition: economics, no. 13 (2008) consumer products and services value perception 65 references: [1] assael, h. (1995), consumer behavior and marketing action, 5th ed., south-western college publishing, cincinnati, oh; [2] band, w.a. (1991), creating value for customers, john wiley & sons, new york, ny; [3] bhat, s. and reddy, s.k. (1998), ``symbolic and functional positioning of brands'', journal of consumer marketing, vol. 15 no. 1, pp. 32-43; [4] brandenburger, a.m. and stuart, h.w. (1996), ``value-based business strategy'', journal of economics and management strategy, vol. 5 no. 1, pp. 5-24; [5] butz, h.e. and goodstein, l.d. (1996), ``measuring customer value: gaining the strategic advantage'', organizational dynamics, vol. 24, winter, pp. 63-77; [6] carothers, g.h. jr and adams, m. (1991), ``competitive advantage through customer value: the role of value-based strategies'', in stahl, m.j. and bounds, g.m. (eds), competing globally through customer value. the management of strategic suprasystems, quorum books, new york, ny; [7] doyle, p. (1989), ``building successful brands: the strategic objectives'', journal of marketing management, vol. 5 no. 1, pp. 77-95; [8] durgee, j.f., o'connor, g.c. and veryzer, r.w. (1996), ``observations: translating values into product wants'', journal of advertising research, november/december, pp. 90-110; [9] engel, j.f., blackwell, r.d. and miniard, p.w. (1995), consumer behavior, 8th ed., the dryden press, fort worth, tx; [10] farquhar, p.h. (1994), ``strategic challenges for branding'', marketing management, vol. 3 no. 2, pp. 8-15; [11] fournier, s. and yao, j.l. (1997), ``reviving brand loyalty: a reconceptualization within the framework of consumer-band relationships'', international journal of research in marketing, vol. 14, pp. 451-72; [12] gale, b.y. (1994), managing customer value. creating quality and service that customers can see, the free press, new york, ny; [13] gardial, s.f., clemons, d.s., woodruff, r.b., schumann, d.w. and burns, m.j. (1994), ``comparing consumers' recall of prepurchase and postpurchase product evaluation experiences'', journal of consumer research, vol. 20, march, pp. 548-60; [14] groènroos, c. (1997), ``value-driven relational marketing: from products to resources and competencies'', journal of marketing management, vol. 13, pp. 407-19; [15] hansen, f. (1972), consumer choice behavior: a cognitive theory, the free press, new york, ny; [16] keller, k.l. (1998), strategic brand management. building, measuring and managing brand equity, prentice-hall, upper saddle river, ny; [17] kotler, p. (1996), marketing management, 9th ed., prentice-hall, upper saddle river, ny; [18] leszinski, r. and marn, m.v. (1997), ``setting value, not price'', the mckinsey quarterly, vol. 1, pp. 99-115; [19] levitt, t. (1980), ``marketing success through differentiation of anything'', harvard business review, january-february, pp. 83-91; [20] mathur, s.s. and kenyon, a. (1997), creating value, butterworth-heinemann, oxford. studies and scientific researches edition: economics, no. 13 (2008) microsoft word apostoaie constantin marius_eng.doc the great depression and the current crisis: brand-related attitudes cosmin ichim, „al. i. cuza” university of iasi, romania abstract history should prevent us from repeating the mistakes of the past. this article focuses on the analysis and interpretation of the branding and promotion events that occurred during the great depression (1929-1933), projected on the decision of the marketing and management specialists of our times. the economic manifestations, such as: the unemployment rate, the decrease of the purchasing power, the crediting related difficulties, etc., specific to both periods of recession, revolve around the consumer and the way he modifies his consumer behavior. this paper tries to find an answer to the following question: given the decisions made by the managers in the 30’s, what brand strategies are recommended for this period? the answers to the question above are the object of the conclusions of this article. the recommendations provided herein invite us to meditate upon the depression from the previous century and to take a critical look at various marketing related attitudes, such as the disregard for rebranding or brand creation and the diminution of the promotion budgets. keywords brand, brand strategies, the great depression, consumer behavior jel codes: m 31, m 37 introduction in 1970, in his book entitled future shock, alvin toffler, in disagreement with the specialists of those times, who believed that science and technology were the main causes of the future product standardization, predicted that, with the passing of time, people would suffer because of a paralyzing excess of options, and not because a lack of products that one could choose from1. there are too many products, too many societies and too much marketing noise2. consumer digest magazine conducted a study which showed that a common family covers between 80 and 85% of its needs with the help of 150 products3. 150 brands – this is the new economy. the brand has gained a crucial place in the history of marketing, for it has enabled us to make a distinction between various products and contributed to the creation of attitudes such as consumer trust and loyalty. larry light, a professional in the field of advertising, was interviewed by one of the editors of the journal of advertising research about his predictions in relation to the development of marketing over the next three decades. light’s analysis proved to be very revealing: “the marketing battle will be a battle of brands, a 1 toffler, alvin (1973), şocul viitorului, political publishing, bucharest, p. 248 2 trout, jack, rivkin, steve (2008), noua poziţionare. cele mai noi informaţii despre strategia de business numărul unu în lume, brandbuilders, bucharest, p. 248 3 trout, jack, rivkin, steve (2009), repositioning: marketing in an era of competition, change and crisis, mcgraw-hill, p.179 studies and scientific researches economic edition, no. 15, 2010 373 competition for brand dominance. businesses and investors will recognize brands as the company’s most valuable assets.” 4 and motivated me in writing this article. this paper presents the brand in two different hypostases (the 1929 and the current crises) and identifies a series of common elements and differences that may help marketers who see the brand as an efficient weapon for communicating with the consumer and adjusting to their new consumer habits to make the best decisions. after the analysis of the brand concept, i will position it in the two time periods discussed herein. this positioning will be strictly correlated with consumer behavior, for which purpose i will resort to case studies. finally, i will try to give shape to a series of recommendations which have as a starting point the analyzed case studies. the brand as a concept the american marketing association defines the brand as a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers 5. according to the macmillan dictionary, the brand has two meanings: a product or group of products that has its own name and is made by one particular company or a mark that is burnt onto the skin of an animal such as a cow, to show who owns it 6. the primary role of the brand is to generate trust, affection and loyalty. as cattle owners used to brand their cattle in order to know which ones are theirs, the companies will try, through the brand, to transfer, apart from the visual identity of the brand, values, attitudes and behaviors to the consumer’s mind. trust, affection and loyalty were measured with the help of the scale developed by chaudhuri and holbrook 7. trust was measured with the help of statements such as: i trust this brand, i rely on this brand, and affection through statements such as this brand makes me happy or this brand gives me pleasure. two aspects of loyalty were taken into consideration: purchased loyalty (i will buy this brand the next time i will purchase this type of product, i intend to continue to by this product) and attitude-loyalty (i am addicted to this product, i am willing to pay more for this product). numerous studies analyzed the relation between customer satisfaction and loyalty, starting from the premise that satisfaction plays a key role in explaining brand loyalty. brand reputation, the influence of the group to which it belongs and recommendations are some other elements that contribute to obtaining loyalty. by winning the consumers’ trust, affection and loyalty, companies can obtain significant advantages, such as: competitive advantage, increased profit margins, increased sales, fast market penetration, inexpensive extension of the product range. the brands of 1929 the period 1922-1928 represented, for the american and european economies, a period of confidence and contentment with the outstanding results obtained, especially in industry. economic development was accompanied by prosperity, salaries became bigger and bigger and unemployment almost disappeared. the crediting system facilitated the development of demand and, implicitly, of production. in his desire to increase productivity, imperatively necessary for augmenting demand, in his work entitled principles of scientific management (1911)8 frederick w. taylor stimulated the trend of scientific management, which advocated 4 aaker, david (2005), managementul capitalului unui brand, brandbuilders, bucharest, p. v 5 kotler, philip (2003), marketing management, pearson education, new jersey, p. 406 6 *** (2006), macmillan english dictionary, macmillan publishing house, oxford, p. 160 7 matzler, kurt, krauter s., bidmon s. (2008), risk aversion and brand loyalty: the mediating role of brand trust and brand affect, journal of product & brand management, vol. 17, nr.3, pp. 154-162 8 nica, panaite (2004), management. concepte şi aplicaţii practice, sedcom libris publishing, iaşi, p.13 studies and scientific researches economic edition, no. 15, 2010 374 for production on assembly lines, with the strict timing of each operation. however, taylorism enhanced fatigue and led to a decrease in the workers’ technical creativity. the “robotizing” taylorism was the source of the non-rationalization of consumer decisions. our consumer was more and more eager to consume, and, because of the normalization, typification and standardization principles applied to products and services, he would become loyal to the products he liked. most marketing specialists argue that it is during this period that the packing and the brand start to act as information and pressure instruments on the buyer. they start to promote real or imaginary features of a given product or manufacturer.9 the exodus of the population to the city, in search for better paid jobs, accelerated urbanization; electrical appliances and the radio become part of the life of ordinary people. mass-media infiltrates in society via the radio, newspapers, the cinema and even television, leading to the diversification of the communication channels and thus laying the foundations for many of the marketing principles and practices. in contradiction with all the above mentioned aspects, on october 29, 1929 (the so-called black thursday) people witnessed the shock of the fall of the share prices at the new york stock exchange. the wall street crash was followed by a wave of bankruptcies, account withdrawals and insolvencies. the purchasing power suddenly dropped, companies significantly reduced their activity, and some of them even closed for good. the unemployment rate reached unimaginable values; where the employers kept their employees, they had to reduce their salaries. the product abundance faced a lack of buyers. the poverty caused by the lack of employment and by the diminution of the salaries led to large scale social movements: strikes and demonstrations of the unemployed, hunger marches, actions of the veterans, farmers, etc10. i will proceed to the analysis of some brand related events, in strict correlation with the economic and social context presented above. rebranding. in 1930, pepsi underwent a rebranding process and invested significant amounts for the promotion of the new image11, also supported by a new shape of the bottle. coke cola, its main competitor, invested primarily in repackaging and brought the six-pack on the market. even if sales dropped, neither of these companies reduced promotion costs. reconstruction of the architecture of the brand portfolio. ivory, the “99.44/100% pure” floating soap and the first successful brand of procter gamble, resists the pressure of reducing promotion expenses and even manages to sponsor some of the first radio “soap operas”, the o’neills. procter gamble launches, also in this period, the camay soup, unfortunately in the shadow of the ivory brand. the company envisages, for the first time in its history, the creation of a brand management team, in charge of a marketing program and of its coordination with sales and production. this was a crucial event in the history of branding12. birth of a brand. in 1931, two years after he had lost his job with steyr, because of the crisis, ferdinand porsche set up his own company, in stuttgart. this would actually be the beginning of porsche13. the first project dealt with the design of an average class car, but they subsequently returned to the idea of a popular car. later, ferdinand would manufacture a high speed vehicle that equaled the “silver arrows” during an age when german cars dominated grand prix races. a while later, ferdinand faced new challenges: his car was supposed to carry two adults and three children at a speed of 100 km/h, to consume little 9 munteanu, corneliu, maxim, emil, et. al. (2008), marketing. principii, practici, orizonturi, sedcom libris publishing, iasi, p. 14 10 *** (sine ano), the great depression and new deal, 1929-1940s, collin county community college district, available at: http://iws.ccccd.edu/kwilkison/online1302home/20th%20century/depressionnewdeal.html 11 aaron, perry (2009), pepsi logo design brief: branding lunacy to the max, available at: http://www.fastcompany.com/blog/aaron-perry-zucker/new-ideas/pepsi-design-process-explained 12 aaker, david (2005), managementul capitalului unui brand, brandbuilders, bucharest, p. 5 13 albulescu, matei (sine ano), povestea unei pasiuni, porsche romania, bucharest, p. 25 studies and scientific researches economic edition, no. 15, 2010 375 fuel, not to have problems during the winter season and not to cost more than 990 reich mark – a little more expensive then a motorcycle. innovation through creativity. walt disney stated: "i hope we never lose sight of one thing – it was all started by a mouse." 14 mickey mouse is the name of the first cartoon to have managed to synchronize sounds and image. when the crisis was the primary concern of the entire population, and all the politicians were preoccupied with their anti-crisis programs, disney launched their first color animated cartoons. nowadays this is one of the most powerful media and entertainment company in the world. non-interruption of the scheduled launches. in 1932, chrysler launched the plymouth model and sent a message that was considered, at that time, unorthodoxly honest. the message incorporated an image of walter p. chrysler, supporting his leg on the new plymouth model, and the slogan: look at all three! 15. chrysler seemed to encourage the public to compare the new model with those of his competitors, ford and general motors, before making a decision. this kind of honesty led to record sales for the new model. chevrolet also scheduled the launch of new models: chevrolet ac (1929), ae independence and ½ ton pickup (1930). in his turn, ford did not stay behind and launched, during the depression, ford model a (1929), ford v-8 model 18 (1932) and 20 other models. 1929. the end of the second wave of company mergers and purchases. after ford had managed to become a vertically integrated company, being, via the purchase of companies, its own producers of tires and car bodies, general motors16 embraced the same type of attitude; colgate and palmolive-peet also decided to merge and to create the colgatepalmolive-peet company brand. table. 1. brands during the great depression brand decisions during the great depression pepsi rebranding; repackaging; investments in advertising coca repackaging, major advertising investments procter & gamble major advertising investments; reconstruction of the product portfolio porsche inspiration, opportunity, technical novelty walt disney birth of a brand by resorting to creativity ford, chrysler, chevrolet product launches, regardless of the economic context, major advertising investments the end of the second wave. mergers or purchases no longer take place recommendations for the current crisis the social and economic context specific to the period of the great depression has many common aspects to the reactions to the current crises. bankruptcies, account withdrawals, insolvencies, high unemployment rate and the decrease of the purchasing power characterize both analyzed periods. however, it is worth stressing the fact that our consumers did not reduce their expenses to zero; many of them started to thoroughly analyze what a product really has to offer. they started to seek those products that bring more value to the earned 14 grover, ronald (2004), walt disney: he built a better mouse, business week magazine online, 17 mai 2004, available at: http://www.businessweek.com/magazine/content/04_20/b3883037_mz072.htm 15 tungate, mark (2007), adland. a global history of advertising, kogan page, london, p.33 16 romanek, broc, et al. (2002), mergers and acquisitions, capstone publishing, oxford, p. 15 studies and scientific researches economic edition, no. 15, 2010 376 money. the brands that succeeded in doing this during the great depression gained loyalty, affection and long term trust. the events which took place in the period 1929-1933, in association to the presented successful recipes, represented the basis for the recommendations below. do not put an end to investments in advertising. as you may notice in table 1, the most frequently met decision of the companies during the great depression was to invest in the promotion of their own brand. we must not lose sight of the fact that, by resorting to a new brand, we strive to gain loyalty, affection and trust. if we reduce the marketing budgets, the consumers will feel abandoned and will reorient towards the products of the competition. if all the players in your field give up promotion, it is wise for you to be the only one that does not take such senseless measures. thus, you will gain the long term loyalty of your customers. resort to advertising agencies or to specialists in the field. as the new consumer seeks to transform all purchases into a good deal, it is crucial for your sale process to achieve an efficient transformation of your message into perceived value. a flawed sale process will lead to wasted resources. promotion campaigns, together with price decisions and promotion channels must be conceived in such a manner as to obtain the best possible results. rebranding. as we are dealing with a new type of consumer, with new consumer habits, we could try to adjust to this new reality by means of a new brand. it is absolutely necessary to question our consumer on the way he perceives our brand at present. many of the current rebranding strategies focus on simplicity and clarity (for example, the rebranding of pepsi, a strategy the company adopted during both period of recession, or kosarom). reconstruction of the product portfolio. say no to price discounts, focus on a new brand, and, implicitly, on a new product, depending on the positioning of the product in relation to its price. the luxury industry (or the industry of premium brands) has numerous rebranding opportunities; this is a strategic course, with beneficial effects as concerns the profit of a business, recommended for lowering a premium brand to an upper-medium or medium price level. it is worth mentioning that it is not advisable to return to high prices for the same brand. consumers will focus on the average price segment and, consequently, this is where the battle between the producers will occur. the low segment does not have rebranding potential, since the consumers and the services in this segment are primarily motivated by the price and not by a potential emotional connection. a new brand, if it relies on innovation and on a potential need. we must keep in mind that recession comes with threats, as well as with opportunities. ferdinand porsche started his own business in 1929, when he became unemployed. cobranding (combination of the name of two or several brands), in case of takeovers or strategic alliances – this is the only solution for the brands subjected to mergers or acquisitions. even if the great depression represented the end of the second wave in the history of mergers and acquisitions, the current crises showed us that some companies resorted to such strategies (see the cases of caroli and campofrio, which would become caroli foods group, the taking over of rompetrol by the kazakhs and their desire to change the name of the fuel stations into litro, powered by rompetrol, the possible takeover of zapp by cosmote for the mobile internet services owned by zapp). their decisions could not be more uninspired. the companies that resort to this type of strategies lose sight of the fact that this crisis will not last forever. for example, i wonder how caroli and campofrio will act when they see that the economic situation is back on the right track and they wish to be independent again. acquisitions are recommended during this period, as they strengthen powerful companies and offer a chance to those that have not come with any solutions to the current crises. anyhow, it is advisable to use cobranding in order to explain your customers what happened with their favorite brand and to aggressively promote the new identity. studies and scientific researches economic edition, no. 15, 2010 377 figure. 1. brand recommendations, suitable for times of recession our recommendations are primarily oriented towards those managers who, so far, have not seen the brand as an efficient weapon for communicating with the consumer. i hope that this article will stir the interest of managers and determine them to thoroughly analyze this phenomenon. conclusions the lessons learned by those who experienced the great depression have already been successfully applied in the current economic and social environment. nevertheless, this research has been limited by the historical positioning of marketing. we started from the premises that history repeats itself and that marketing is, after all, an ahistorical field17. our recommendations are, however, purely subjective and strictly correlated to historical facts. they invite us to meditate upon the recession from the past century and to take a critical look at attitudes such as the disregard for rebranding or brand creation and the diminution of the promotion budgets. references 1. *** (2006), macmillan english dictionary, macmillan publishing house, oxford 2. *** (sine ano), the great depression and new deal, 1929-1940s, collin county community college district, disponibil pe: http://iws.ccccd.edu/kwilkison/online1302home/20th%20century/depressionnewdeal.html 3. aaker, david (2005), managementul capitalului unui brand, brandbuilders, bucureşti 4. aaker, david (2005), managementul capitalului unui brand, brandbuilders, bucureşti 5. aaron, perry (2009), pepsi logo design brief: branding lunacy to the max, disponibil pe http://www.fastcompany.com/blog/aaron-perry-zucker/new-ideas/pepsi-design-process-explained 6. albulescu, matei (sine ano), povestea unei pasiuni, porsche romania, bucureşti 7. grover, ronald (2004), walt disney: he built a better mouse, business week magazine online, 17 mai 2004, disponibil pe http://www.businessweek.com/magazine/content/04_20/b3883037_mz072.htm 8. kotler, philip (2003), marketing management, pearson education, new jersey 9. matzler, kurt, krauter s., bidmon s. (2008), risk aversion and brand loyalty: the mediating role of brand trust and brand affect, journal of product & brand management, vol. 17, nr.3, pp. 154162 17 tadajevski, mark (2009), editing the history of marketing thought, journal of historical research in marketing, vol. 1 no. 2, pp. 318-329 studies and scientific researches economic edition, no. 15, 2010 378 10. munteanu, corneliu, maxim, emil, et. al. (2008), marketing. principii, practici, orizonturi, ed. sedcom libris, iasi 11. nica, panaite (2004), management. concepte şi aplicaţii practice, ed. sedcom libris, iaşi 12. romanek, broc, et al. (2002), mergers and acquisitions, capstone publishing, oxford 13. tadajevski, mark (2009), editing the history of marketing thought, journal of historical research in marketing, vol. 1 no. 2, pp. 318-329 14. toffler, alvin (1973), şocul viitorului, editura politica, bucureşti 15. trout, jack, rivkin, steve (2008), noua poziţionare. cele mai noi informaţii despre strategia de business numărul unu în lume, brandbuilders, bucureşti 16. trout, jack, rivkin, steve (2009), repositioning: marketing in an era of competition, change and crisis, mcgraw-hill 17. tungate, mark (2007), adland. a global history of advertising, kogan page, london studies and scientific researches economic edition, no. 15, 2010 379 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro territorial disparities of the population from bacău county eugenia harja “vasile alecsandri” university of bacau eugenia.harja@ub.ro abstract the last census of 20 october 2011, confirmed the decrease in the stable population in most localities, although this did not occur uniformly across the county. the analysis aims to highlight the stable population evolution in the last two censuses, which mainly led to decreases in existent disparities between localities, to a slight increase of the degree of uniformity in this regard. if in urban areas, all localities have recorded drops, in the rural areas there were 11 localities with population increases, especially large suburban cities. this led to a slight decrease in the degree of variation in the area, from a coefficient of 45,6% at the census of 2002 to 43,4% in 2011 and the reduction in the ratio of the largest and smallest area, from 7,84 times to 6,08 times. if in 2002 there were 21 local rural residents under 3000 inhabitants, in 2011 their number increased to 26, while more than 10 thousand people do not exist in any village in the county, compared to 2 as they were at the previous census. territorial disparities are found also among the population by age, existing only 8 villages where the average age has decreased compared to 2002, these being mainly poor localities from valea siretului, where the birth rate is higher. keywords census; stable population; territorial disparities; average age; coefficient of variation jel classification c10; j10; j11 1. introduction knowing the population and how it varies over time, the causes that led to these changes is particularly important for decision makers from the local government and for companies wishing to do business in the area. at small geographic level, population data are provided when the census is done, when the records are performed even from village level. these data are mostly used by local and central government, whether it is necessary to prepare urban plans, the local budget allocation, or to obtain external funds for various development projects. for this reason i decided to look at how it has evolved since the last census the stable population by localities of bacau county. this will be compared to the 2002 census, and will show where major changes occurred and which have been the main factors that led to it, if regional disparities have widened or conversely, the population data were homogenized. since the structure of the population by age has a great influence on the economic and social life, knowing that across the country we are facing an aging population, i calculated and analyzed also the evolution by localities of the average age of the population in the last two censuses and its degree of variation in territorial profile. 37 harja 2. dynamics of the population by localities at the last censuses if in bacau county, the stable population recorded between the last two censuses a decrease by 12,8% (-90.455 people), this dynamic was much more pronounced in urban areas than in rural areas. the urban areas experiences a reduction by 18,1% (-59.176 people), the relative growth by localities being shown in figure 1. the most significant absolute decrease in population was felt in the county capital, which is the largest (-31.193 people), followed by oneşti (-12.244 people) and buhuşi (-12.244 people). even if in all urban areas the population decreased, due to higher relative decrease of the population from buhuşi and oneşti, the coefficient of variation slightly increases, maintaining the heterogeneity of localities in terms of urban agglomeration. -12,80 -13,72 -15,97 -16,76 -17,36 -17,77 -22,32 -23,81 -10,01 -30,00 -20,00 -10,00 0,00 moinesti bacau county darmanesti slanic moldova targu ocna comanesti bacau buhusi onesti figure 1 relative growth of the stable population at the last two censuses, by urban localities (-%) source: own calculations based on data from the statistics institute of bacău county following a decrease in the population according to the last census, the population of the county capital falls below 150 thousand inhabitants, its place in the hierarchy of the county capitals of the country increased from 12 to 15, after: bucharest, clujnapoca, timişoara, iaşi, constanţa, craiova, braşov, galaţi, ploieşti, oradea, brăila, arad, piteşti and sibiu. basically, the last three cities listed above, surpassed bacau at the last census. the rank of the urban localities in terms of population by the last census can be seen in figure 2. 38 territorial disparities of the population from bacău county 39.172 21.787 19.568 14.562 12.247 11.300 4.198 144.307 0 50.000 100.000 150.000 bacau onesti moinesti comanesti buhusi darmanesti targu ocna slanic moldova figure 2 the stable population at the census from 2011, by cities and source: own calculations based on data from the statistics institute of bacău county rural environment faced with a stable population decline, but it happened in a smaller share than in urban areas, i.e. -8,2% (-31.279 people), dealing with two different trends: one of growth in population in 11 municipalities and one of decrease in the other 74 municipalities. at the country level, the rural population was with -9,59% compared to the previous census, bacau county ranking 5th among the country in terms of rural population, after the following counties: iaşi, prahova , suceava and dâmboviţa. if at country level the share of population in total rural area is 46,03%, in bacau it has a share of 56,64%, ranking 18th among the country from this point of view and 5th in the north east region. in all counties of the region, the majority is the rural population, with an average of 58,37%. the highest relative increases or decreases by localities can be seen in figure 3. besides the localities bordering the county capital (hemeiuş, letea veche, săuceşti, măgura, iteşti) or even oneşti (ştefan cel mare), which more were built in recent years, there are still small increases in population in some poor areas along siret valley. in the latter, the population increases is explained by a slightly higher birth rate. in absolute size, the highest decreases are recorded in rural large towns, making that in 2012 no longer to exist any community of over 10 thousand inhabitants: sascut( 1603 people), dofteana (-1582 people ), oituz (1535 people) , gura văii (-1415 people), faraoani (-1244 people), pârjol (-1238 people), nicolae bălcescu (-1207 people), luizi călugăra (-1021 people), poduri (-1021 people) and others. of these, nicolae bălcescu and luizi călugăra, although they are localities near bacau, have lost population due to massive external migration. major communities of roman catholics, 82,7% in the the case of the first locality and 91,3% for the second, they left one after another to work mainly in italy and spain, often helped by romanian representatives of the roman catholic church in those countries. this phenomenon was observed in the census of 2002, but continued in the future. 39 harja 17,42 16,93 14,72 9,31 8,50 5,70 3,72 3,00 1,27 0,89 -0,03 -0,31 -1,50 -1,69 -14,41 -14,48 -14,87 -15,11 -15,52 -15,77 -15,77 -15,85 -16,77 -16,84 -18,31 -20,98 -22,59 -23,10 -24,03 23,60 -30,00 hemeius letea veche saucesti itesti stefan cel mare valea seaca buciumi magura secuieni odobesti rachitoasa gaiceana sarata cleja gioseni nicolae balcescu dofteana ardeoani manastirea solont sascut scorteni oituz zemes urechesti parjol parava luizi-calugara gura vaii faraoani figure 3 relative growth of the stable population at the last two censuses, by some rural localities (+/-%) source: own calculations based on data from the statistics institute of bacău county 8.564 8.152 7.993 7.252 7.173 7.169 7.080 6.962 6.761 2.106 2.097 2.071 1.983 1.914 1.869 1.715 1.621 1.598 1.537 9.346 0 10.000 dofteana sascut oituz margineni racaciuni balcani nicolae balcescu blagesti poduri cleja colonesti rosiori vultureni beresti-bistrita sarata prajesti damienesti oncesti itesti izvoru berheciului figure 4 stable population at the 2011 census, by extreme rural localities source: own calculations based on data from the statistics institute of bacău county 40 territorial disparities of the population from bacău county 3. disparities of stable population by localities as noted above, the relative growth of the population, although mainly negative, it happened with different intensities by places, resulting in a slight decrease in the degree of variation. this can be quickly seen in figure 5, where the two box-plot diagrams for 2002 and 2011 are provided in parallel by areas. although apparently if in urban areas it is seen a homogenization due to the slight decrease of the ratio between the largest city and the lowest, from 35,1 times to 34,4 times, in reality, the large coefficient of variation, increases slightly in 2011. in the case of rural areas, if in 2002 were discordant in terms of population size a number of three localities, in 2011 remain just two towns, oituz no longer being visible. the average rural population becomes broadly acceptable, the coefficient of variation decreasing from 45,58% in 2002 to 43,41% in 2011, confirming the slight increase in rural homogeneity. figure 5 relative growth of the stable population at the last two censuses, by urban localities (-%) source: own calculations based on data from the statistics institute of bacău county figure 6 relative growth of the stable population at the last two censuses, by rural localities (-%) source: own calculations based on data from the statistics institute of bacău county 41 harja figure 7 relative growth of the stable population at the last two censuses, by rural (-%) source: own calculations based on data from the statistics institute of bacău county 42 territorial disparities of the population from bacău county figure 7 confirms the increasing in the homogeneity of the rural population distribution by localities, comparing the histograms of the last two censuses. it is observed how localities migrate from right to left, to smaller values and how the distribution tends to better normality for 2011. if in 2002 the ratio between the largest rural locality (dofteana, 10.928 inhabitants) and lowest (iteşti, 1.393 inhabitants) was 7,84, in 2011 this becomes 6,08, the highest locality being again dofteana (9.346 inhabitants ), but the lowest being izvoru berheciului (1.537 inhabitants). in figure 7 we can see the best the disparities that exist between rural areas of the county, for each locality is marked both the population size and its absolute decrease between the two censuses. on the chart axis can be seen in every town how many people it had in 2002 and how many were left in 2011, the difference between them is actually coloured in blue, being the absolute increase or decrease in population. to distinguish the 11 localities that experienced a population growth during this period, near them was marked a warning (annotation), all other localities experiencing decreases. it can be observed for example how sascut, the second in size, had in 2002 over 10 thousand inhabitants and in 2011 reached around 8.500, the difference between them is practically the absolute decrease in population with 1.603 people.decrease of population due to migration, especially foreign, but to a lesser extent also domestic, occurred mainly due to active age groups, generally younger, which led to increased aging of the population for both urban and rural areas. a relevant indicator in this regard is the average age. therefore, i calculated the average age of the population for each locality at the last two censuses. overall, the average age in the county increased by 3,7 years, reaching 40,2 years in 2011. only 8 cities recorded decreases in the average age, all rural settlements: valeaseacă (-2,38 years), lipova (-0,54 years), vultureni (-0,38 years), coţofăneşti (-0,31 years), coloneşti (-0,28 years), ştefan cel mare (-0,18 years) and filipeni (-0,06 years). most of the villages are poor, along siret valley with a higher birth rate than the average. in contrast, with a more pronounced aging of the population there were observed towns such as: bârsăneşti (+3,48 years), asău (+3,39 years), ardeoyears (+3,34 years), bogdăneşti (+3,31 years), pârgăreşti (+3,23 years), mărgineni (+3,22 years), sascut (+3,2 years), buhoci (+3,19 years), and the list goes on. in the case of urban area, the average age increased by 5,1 years, reaching 40,9 years in 2011. oneşti recorded the largest increase in average age, by +7,22 years, which makes it in 2011 to be the most aged town, with an average of 42,56 years and followed in order by: buhuşi (42,18 years), târgu ocna (42,16 years), bacău (40,43 years), comăneşti (39,84 years), moineşti (39,82 years), slănic moldova (39,19 years) and dărmăneşti (39,06 years). in the case of rural areas, the average age increased by 2,6 years, reaching 39,7 years in 2011. the youngest locality is horgeşti (33,31 years), followed by gioseni, cleja, corbasca, coloneşti, lipova, valea seacă, răcăciuni, nicolae bălcescu. in contrast, the most aged rural locality is glăvăneşti (45,26 years), followed closely by motoşeni (44,91 years) and dămieneşti (43,92 years). 4. conclusions the 2011 census confirmed a visible aspect, the sharp decrease in population in most localities in the county, as well as emphasized the demographic aging of the population. both phenomena occurred with different intensities from one place to another, existing in rural areas also some cases of positive trends. besides the crowded areas around the county capital, there is also noticed a slight population growth in poor areas, especially due to higher birth rate. the same demographic 43 harja phenomenon mainly influenced also the average age of the population in younger villages, ethnicity and religion being in this respect a key factor. between the youngest and most aged town there is a gap of 11,95 years, which indicates a high degree of variation between the localities of the county. to mitigate the social effects due to demographic aging, there are required political decisions that lead to the development of poor areas, the preservation of the active population, especially the young one, to measures that really stimulate the family and birth. not to be forgotten that the effects of demographic policies are felt over several decades, therefore a political measure taken in this regard will not produce effects immediately, but equally true is the fact that the effect already produced can not be solved. references barthelemy, p, granier, b, robert, m (2009), demografie şi societate, institutul european. harja, e (2004), analiza şi prognoza statistică a numărului şi structurii forţei de muncă, bucureşti, ed. matrixrom. harja, e (2009), statistică şi econometrie, bacău, ed. almamater. sora, v., mihăescu, c., colibabă, d., grădinaru, g., danciu, a. (2002), analiză statistică demografică. teorie şi aplicaţii, ed. economică. statistical data from statistics institute of bacău county, available on http://www.bacau.insse.ro/main.php, http://www.bacau.insse.ro/phpfiles/ comunicat _rezultate_definitive_rpl_2011_judet%20bacau.pdf stoica, i. (2011), tentaţia migraţiei. necesitate şi oportunitate într-o lume globalizată, editura militară. 44 implications of the main mathematical methods on marketing decision making process ioana olariu, assistant professor phd student, university “vasile alecsandri” of bacău, romania abstract decision analysis incorporates both the awareness of decision makers, which is located between total confidence and total ignorance and action values assigned to outcomes variants, meaning decision makers preferences. marketing actions are often insecure. under these conditions, to achieve the desired result, the company management shall have decision analysis models based on mathematical theories developed in recent decades. decision analysis is the procedural and formal logic highlights include decision makers a situation and a number of techniques that determine the selection of a solution which solves the problem. methodological approach of this process serves to form makers options. keywords: decision, decision making process, mathematical methods. jel code: m31 decision and marketing decision making interpreted as systemic models, decisions on well-structured marketing problems are systems that have inputs and outputs. in these models, marketing strategies, expressing controllable by management actions interact with the market environment but in which the company is uncontrollable. although the company influences some extent certain aspects of the market, however this process has limited significance and can be considered only long-term and only to a limited extent. the structure of decision-making situations includes the following components1: a) the use of strategies or actions planned marketing efforts and other resources of the company, or combinations of controllable factors; b) market ambiance uncontrollable variables, called state of nature; c) forecasts as probability of occurrence of each state of nature; d) the consequences or results that occur when there is a certain ambience; d) decision criterion according to which all information held will be used to choose the strategy that will be applied to solve the problem. decision theory is applicable to all types of decision situations. each decision problem is a single system with different content and involving different responsibilities. 1 demetrescu, m.c. (2000), metode de analiză în marketing, teora publishing house, bucharest, p. 179 decision making under certainty decisions under certainty refers to situations where, following marketing actions will produce one result. as such, every action possible to generate a single specific monetary outcome, which is known as there is only one state of nature, whose manifestation in the future is known with certainty by the decision maker. solving decision models under certainty is done by selecting the strategy that produces the best result. thus, the problem of choosing an action is transformed into a problem of selecting between consequences. since the financial results can be measured degree of achievement of the objective which the various actions are to attain the highest monetary outcome is the best criterion for evaluation can be found mainly achieve it. decision rule is therefore to choose those actions that result in the largest monetary consequence. the maximization of cash income, for instance, sales, or market share benefit and so on, but subject to the above restrictions that affect search and information concerning costs, time, cognitive ability and analytical decision maker, market and organizational conditions of the enterprise. these restrictions are very important because the information search process should be included, even if decisions under certainty, the determination of significant variables that come into the decision model and setting specific values of these input variables. since decisions under certainty certainly require knowledge of the state of nature will occur, the only difficulty that presents these decisions is the large number of possible strategies, in this case is the need to use methods of operational research, such as: linear programming, additive method, the method of global utility, the electre method, leader method, onicesco method, the method of the coefficient k, ratio method, decision-making table method, the rompedet method. deployment decision making under certainty requires: maintaining a normal flow of information considered, such as the elements involved are controllable variables and their evolution can be predicted accurately. in this case the decision maker is certain that events will evolve so that once the action started, it will coincide perfectly with some model information that he acquired before the onset of the action. approach decisions under uncertainty uncertainty refers to doubt that creates the appearance of a future event. under uncertainty decision should be based on specific criteria evaluated. it can be used several criteria: conservative or pessimistic wald, laplace criterion, savage criterion, hurwicz criterion2. the main sources that generate uncertainty are: quality of information, incompleteness of information and reliability of inference (it is often impossible to give precise correlation between observed facts and conclusion to be inferred). to solve such undetermined problems, it may apply game theory models, fuzzy logic, probability theory. partial decisions under uncertainty are most often found in marketing. for many times, the decision maker has some information so that it is in an intermediate position between the total lack of information and knowledge of the likelihood of states of nature. decisions under the total lack of information 3 are those in which alternative actions lead to consequences that unknown probabilities. such situation arises when there is a basis of past experience to estimate the likelihood of significant natural state. lack of information on probabilities, can exist in each phase of the decision. 2 rațiu-suciu, c. (2009), modelare & simulare economică – breviar, economic publishing house, bucharest, p. 25 3 demetrescu, m.c. (2000), metode de analiză în marketing, teora publishing house, bucharest, p. 199 approach of decisions under risk attitude can be neutral (linear) risk acceptance (convex curve), or rejection cautious towards risk (concave curve). in practice, the manager has a flexible behavior, the curve representing the attitude towards risk is partially convex, concave part (alternate). the methods of measuring the degree of risk you can use the decision tree theory and processes for complex economic simulation technique4. it is necessary that any decision problem, to analyze the consequences of each alternative with great responsibility, seeking the most rational way of handling. management entities often are in a position to make decisions without reliable information on the occurrence of certain events. consequently, the development of decision-making takes place in the interpretation of economic information in terms of probabilities of the occurrence of natural conditions, resulting, significant deviations from initially expected results. group decisions decision solving situations involves many times work groups within organizations. group decisions have certain advantages: a group comes generally with more and better alternative than one person, group decision making is based on common and diverse experience of its members, while one person is not and may be used only personal experience, stronger group members support the implementation of joint decision, which can be a real advantage for the manager. there are some disadvantages of group decisions: the decision takes time (to listen and analyze point of view of each member) for consumption entails significant costs, not always reach a decision group better than individually. there are times when the need to preserve friendly relations negatively affects group decision. optimal decisions to use group: simple majority method, method utilities, electric methods dimensional algorithm deutch and martin etc. marketing decisions in conflict decisions in conflict5 refer to the decisions made to one or more rational opponents rather than to the state of nature, as if making in situations of risk and uncertainty. before deciding on an issue, opponents carefully consider rational decision maker. under conditions of risk and uncertainty, the states of nature are independent of the selection strategy maker. in conflict, this independence does not exist, because the state of nature instead of opponents appears with an interest contrary to that of the decision maker. game theory classifies decisions in conflict based on the number of opponents and the degree of opposition of interests. conclusions content changes taking place in business entities, require a dynamic decision making, continuous improvement. through rigorous delimitation of authority and responsibility, clear wording chances of problems in each area of activity, significantly reducing the area. an important role in information domain plays has improving indicators and parameters considered in evaluating decision alternatives. each decision version, regardless of its nature, will be assessed through a uniform system of indicators so that it could be known all the implications it will have in their practical realization. the emergence of multi-criteria 4 idem, p. 24 5 ibidem, p. 210 and multi operational models and their application in practice is an important step in improving decision-making of economic units. given the large number of decision problems that are addressed in terms of risk and uncertainty, the use of specific methods of the decision will help to improve decision-making economic units. bibliografie 1. ackoff, r.l.; sasieni, m.w. (1975), bazele cercetării operaţionale, tehnica publishing house, bucharest 2. balaure, v., adăscăliţei, v., bălan, c., boboc, şt., cătoiu, i., olteanu, v., pop, n.a., teodorescu, n. (2002), marketing, uranus publishing house, bucharest 3. demetrescu, m.c. (2000), metode de analiză în marketing, teora publishing house, bucharest 4. dumitrescu, m.a.; niculescu, c. (2001), teoria deciziei şi cercetare operaţională, niculescu publishing house, bucharest 5. feldman, e.f., lehrer, t.l. (1966), warehouse location under continuous economies of scale, în „management science” xii 6. green, e.p., tull, s.d. (1970), research for marketing decision, prentice-hall, inc., englewood cliffs, new jersey 7. kaufmann, a. (1967), metode şi modele ale cercetării operaţionale, vol. i, scientific publishing house, bucharest 8. kuehn, a.a., hamburger, m.j., (1963), a heuristic program for locating warehouses, în “management science”, ix 9. nicolescu, o. (1980), economia şi conducerea întreprinderii industriale, didactic and pedagogical publishing house, bucureşti 10. rațiu-suciu, c. (2009), modelare & simulare economică – breviar, economic publishing house, bucharest. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro influence of national culture on behavior of business: comparative study of slovakia and ukraine nataliia ostapenko taurida national v.i.vernadsky university natayal107@mail.ru abstract this article examines the influence of national culture on the behavior of enterprises by comparing two countries ukraine and slovakia. the data is based on the original author's own research on the enterprises of ukraine and slovakia. the paper is investigated why and how cultural factors (informal institutions) may influence the perception of companies of rules of the game, and the formation of appropriate behavior. on the basis of surveys conducted among enterprises of ukraine and slovakia main conclusions about current formal rules of the game in these countries, perception by entrepreneurs these rules and the formation of certain behavior by them are done. in work on the basis of comparative analysis conclusions about the impact of national culture on the development of entrepreneurship in the national economy are done. the author of the article examines the following indicators: national culture, personal characteristics of respondents, subordination of norms, opportunism, and coherence of formal and informal institutions at the national level. in particular the most important indicators of the perception of norms are: indicators of perception of entrepreneurs of regulation and public policies in the field of entrepreneurship, business productivity, perceptions of bribery and tax evasion, etc. keywords national culture; business; slovakia; ukraine; behavior jel classification z10; d03 1. introduction the main problems of economic policy in the sphere of macroeconomic regulation of development of small business lies in the fact that the development of programs for development and stimulation of small business doesn't consider features of institutional environment of concrete national economy, and is based only on an estimated assessment of efficiency of the concrete "torn-off" actions. at this point, the mechanism of regulation is developed without taking into account existing institutional framework of the national economy, particularly from existing informal institutions rooted in economy. some foreigner authors point out importance of taking into account the existing informal institutions in national economy: north, 1990; von hirschhausen c., 1990; libman a., 2007; domjahn t., 2011. in this case, the traditional and the new institutional theory determines that informal institutions (informal norms of behavior which are forming of habits, customs, mentality and cultural patterns of behavior that shape the behavior of people in society) have a significant impact on economic development. informal institutions are unique to a particular model of the national economy, and the impact of these institutions may negate the effect of any law, which could lead to an institutional trap and reduce the efficiency of development of the national economy. informal institutions shape the 66 influence of national culture on behavior of business: comparative study of slovakia and ukraine interpretation of the entrepreneurs of formal rules of the game, i.e. determine their effectiveness.the sociocultural environment influence entrepreneurial attitudes and motives, the resources that can be mobilized as well as the constraints and opportunities on/for starting and running a business (martinelli, 2004). therefore, to understand the effects of home country institutional constraints on the behavior and performance of business sector, it seems more appropriate to focus on study of affects of culture on this prosses. organizational behavior with respect to institutional pressures is locally specific and differs with respect to experiences and backgrounds of entrepreneurs, nationality, industry and culture (dimaggio, 1988). williamson pointed out, that under incomplete contracting (williamson, 1988) the extent to which agency costs and asymmetric information problems can be mitigated by an appropriate choice of financial contracts depends largely on a country’s contracting environment, which includes both formal institutions, such as legal and economic rules, and informal institutions, such as norms, customs and religions (north, 1990; williamson, 2000). north (1990) observes that the informal constraints that stem from culture have a more pervasive influence than formal laws and property rights in shaping choices in daily interactions. fukuyama (1995) recognizes the trend of similarity in many countries of major institutions of government and economic regulation, accompanied by differences in economic performance, which leads to the assumption that deepseated cultural differences between societies explain the observed difference in performance. aidis r. (2006) identifies the main barriers to the small business sector in various stages of transition, and among the influencing factors on the initial conditions of a country defined geographical factors, cultural and institutional legacy of central planning. according to this in our analysis countries are selected (ukraine and slovakia), which are similar in terms of historical, cultural, institutional development, as well as legal origin (la porta,1999) but at the same time, in these countries at the moment small business sector developing differently. paul g (2001) notes that the institutional environment influences the behavior of enterprises in different ways, and the effects of changes in the behavior of enterprises lead to different economic outcomes. the aim of this research is to investigate the influence of cultural factors (traditions, mentality) on development of small business and productivity of its macroeconomic regulation. 2. literature review. culture culture is a comprehensive system of meanings, symbols, values, and assumptions about what is good or bad, legitimate or illegitimate which underlies the practices and norms in a society (hofstede, 1999). in a very similar way, geertz (1957) noted that culture is a web of meanings, in terms of which human beings interpret their existence and experience, and drive their actions, that is, cultures are models of human behavior and symbolic structures that give meaning to their conducts. culture influences and pervades every aspect of life and, although it is not deterministic, it is subliminal system of thought that reflects the organization of values, norms and symbols of a particular society and influences the interactions and choices of individuals (parsons and shils, 1990). as noted by north (1990) «culture provides a language-based conceptual framework for encoding and interpreting the information that the senses are presenting to the brain» thereby shaping human actors’ perceptions of the external world and influencing their decisions and behaviors. culture also influences how individuals process information and shapes their subjective mental constructs used to 67 ostapenko interpret problems faced in life, which in turn affects their decision-making (north, 1990). in his study of asian societies, weggel (1989) defined culture as the totality of learned behaviors, attitudes, value systems and know-how which is shared and transmitted between members of a larger group. culture is transmitted slowly over time, from one generation to the next, but it also reflects the current environment. in sum, the above discussion suggests that culture influences economic activities through two mechanisms. first, based on the model of williamson (2000), culture conditions formal institutions and hence indirectly affects economic outcomes as suggested by licht et al. (2005). second, culture exerts a direct impact on economic activities through its role as an informal constraint on opportunistic behaviors and through its influence on human actors’ actions and decision-making by shaping their incentives and subjective perceptions of the external world (akerlof and kranton 2000; rabin 1993). direct impact of culture on expectations and preferences was reflected in the works henrich et al., 2001; bornhorst, ichino, schlag and winter, 2005. culture and entrepreneurship culture first of all influences the ways information is processed, thus shaping the patterns of informal institutions (boyd and richerson, 1994). moreover, culture affects patterns of entrepreneurial behavior. cultural norms determine whether a society tolerates profit-making behavior as a prerequisite for entrepreneurial actions. while most studies implicitly understand entrepreneurship and enterprise behavior as a result of person-specific resources and capabilities, empirical evidence indicates that the dominant feature influencing the nature and pace of entrepreneurship is the external environment (peng and heath, 1996; peng, 2000). they define what actors can do, what is expected from them, or they must do, and what is advantageous for them. in this way, they give stability and predictability to economic interaction (dallago, 2000). in institutional terms, enterprise behavior is understood as a reaction to inadequate formal and informal institutions leaving little scope to explain emergent behavior (welter, 2002). another concept draws attention to external political, economic and societal influences on individual behavior, discussing them in terms of formal and informal institutions (hoskisson et al., 2000; peng 2000). one more approach to study development of small business from a position of the institutional theory is based on researches of coherence of formal and informal institutions (welter and smallbone (2005), hernan roxas et al. (2008)). the sociocultural context not only affects the perception of a situation or a rule, but it also affects the evaluation of the alternative behaviors and their consequences (hunt and vitell, 1986). a large number of empirical studies have suggested the influence of national culture on firm performance. national culture has, for example, been shown to have a greater impact on employees than has the organizational culture of the firm (adler, 1986). national culture can influence managerial decision-making, leadership style and human resource management practices (puffer, 1993). all these factors influence a firm's performance in acquiring and deploying resources. giannetti and simonov's (2004) study found evidence that social norms did have some impact on entrepreneurial entry in sweden. the findings from these studies are mixed, but may be analogous to similar research that suggests cultural values and beliefs do have an ability to impact (over and above structural factors) the explanatory power of group guidelines on new firm formation (e.g., davidsson, 1995) some of the existing literature on cultural differences in entrepreneurship suggests that entrepreneurs from different countries are more alike than non-entrepreneurs from the same country (mcgrath and macmillan, 1992). yet, other studies suggest 68 influence of national culture on behavior of business: comparative study of slovakia and ukraine the attributes of entrepreneurs differ drastically across cultures and countries (thomas and mueller, 2000). hofstede (1980) pointed out that greater opportunities for entrepreneurship typically exist in long-term oriented cultures such as korea, taiwan, china and japan. busenitz and lau (1996) also posited cultures that put less value on power distance would favor entrepreneurship. analyzing entrepreneurial behavior from trust-based cultural and sectoral perspectives, welter (2004) conclude that the specific structures of formal and informal institutions, the path dependence of informal rules within cultures and sectors, and incompatible formal and informal institutions assist in explaining certain forms of enterprise behavior in western and eastern europe. culture can also affect behavior and outcomes through its effect on political preferences of individuals about what governments should do: for example, how much government should intrude in economic life, promote competition, regulate the market, redistribute income, run a social security program, or nationalize certain industries and businesses. a number of conceptualizations have been offered in the literature to identify and measure dimensions of national cultures (e.g., hofstede, 1980; schwartz, 1994; schwartz & bilsky, 1987, 1990). the most popular among them are hofstede and world value surveys (tabellini, 2005; inglehart, 2000). 3. methodology in the work we will test such factors as historical heritage, geographical location and cultural heritage (as pointed out aidis r., 2006). from this point of view, i choose ukraine and slovakia for comparative study. these countries are nearby geographical location, they are close by historical development. they long time were under rule of other countries, they are also similar by the communist past, although it should be noted that in ukraine communist regime acted much longer. these countries are similar as well as for cultural development, one nation the slavs, but it should be noted that slovakia is catholic country, and ukraine is orthodox. this work will be carried out on the primary datai.e. own survey data enterprises of ukraine and slovakia. studied indicators are selected on the basis of welter f. individual characteristics, mental and functional at the individual level and the historical, regulatory and structural at level of society. the idea of religion being a determinant of culture draws on max weber’s thesis of a positive relationship between protestantism and capitalism use cultural factors—thrift, hard work, tenacity, honesty, and tolerance—contrast with the xenophobia, religious intolerance, bureaucratic corruption, and state edicts that stifle enterprise. tabellini (2005) measures culture as the “principal component” of four values: trust, beliefs in the importance of individual effort, generalized morality, and obedience (which he considers a negative value), conviction that individual effort is likely to pay off, respect for other people which are inferred from questions on the world values survey. 4. empirical research in table 1 we investigate the quality of the existing rules in the field of entrepreneurship, as well as perception by entrepreneurs of quality of these rules. these figures are quite important, as they define how the enterprise "willing to play" according to the rules (even if they are not effective). table 1 presents percent of 69 ostapenko respondents of enterprises of slovakia and ukraine in terms of agreement with some statements (table 1). table 1 results of survey of enterprises of ukraine and slovak of perception of formal rules of the game t he g ov er nm en t's ac tio ns in th e fi el d of e nt re pr en eu rs hi p is e ff ec tiv e b us in es s ac tiv iti es in m y co un tr y ar e ov er -r eg ul at ed pu bl ic g oo ds in th e st at e ar e al lo ca te d ef fe ct iv el y i a gr ee w ith th e le gi sl at io n in th e fi el d of en tr ep re ne ur sh ip ukr sk ukr sk ukr sk ukr sk completely agree 2,4 0 31,7 26,6 2,4 0 2,4 2,5 rather agree 4,8 7,6 24,4 21,5 7,3 2,6 9,7 7,6 50 on 50 16,7 10,3 31 25,3 12,2 10,4 31,7 10,1 rather disagree 30,9 17,9 4,8 13,9 19,5 18,2 12,2 29,1 do not agree 45,2 64,1 7,1 12,7 58,6 68,9 43,9 50,7 correlation 0,9 0,99 0,998 0,72 source: own authors results of survey as we can see from table 1, between slovaks enterprises there are more opinion that government actions in sphere of entrepreneurship is ineffective (64% not agree), that may consider that slovak enterprises are more involved in the formation of the rules of the game and believe that they can change it. second indicator «business activities in my country are over-regulated» is similar in both countries (correlation 0, 99). so business don’t think that regulation is efficient and optimal, they don’t agree with this. business in both countries also doesn’t think that public goods in the state are allocated effectively. in indicator «i agree with the legislation in the field of entrepreneurship» slovak enterprises is more negative, which can assume, that slovaks may more express their feeling and disagree on certain questions. in table 2 we investigate results of survey of enterprises by parameters of personal characteristics and performance of their business. these indicators reflect the impact of culture on the behavior of entrepreneurs. as we can see (table 2), this indicators is quite different by countries. table 2 results of survey of enterprises of ukraine and slovak of personal characteristics and performance of their business i a m , i n an y ca se , w ill re nd er as si st an ce to a pe rs on u nk no w n to m e i t ru st to un kn ow n pe op le i a m p ro ud o f m y co un tr y i u se d to w or k on ly fo r m ys el f ukr sk ukr sk ukr sk ukr sk completely agree 45,2 60,8 19,1 10,2 40,4 55,7 36,6 43,6 70 influence of national culture on behavior of business: comparative study of slovakia and ukraine rather agree 19 19 26,1 16,4 14,3 20,2 21,9 16,7 50 on 50 19 13,9 28,6 24,1 16,7 16,5 17,1 15,4 rather disagree 14,3 5,1 9,5 31,7 9,5 3,8 12,2 6,4 do not agree 2,4 0 16,6 17,7 19 3,8 12,2 17,9 correlation 0,98 -0,37 0,91 0,92 source: own authors results of survey slovak nation is more likely to assist to unknown persons. but in indicator «i trust to unknown people» slovak nation is more cautious. and we can assume that slovak enterprises is more rely on their own forces, because by indicator «i used to work only for myself» more responders from slovak republic are completely agree, but correlation coefficient compared to ukraine is 0,92. but slovak nation is more proud of their country. in table 3 we present comparative study of enterprises by perception of opportunistic behavior (table 3). table 3 results of survey of enterprises of ukraine and slovak of perception of unscrupulous behavior b ri be is a cc ep ta bl e in s om e ca se s t ax e va si on m ay be a cc ep ta bl e if th e la w is n ot pe rf ec t, it s vi ol at io n is ac ce pt ab le if th e go ve rn m en t is c or ru pt , bu si ne ss is a cc ep ta bl e to le av e in to s ha do w s ukr sk ukr sk ukr sk ukr sk completely agree 28,5 7,6 23,8 5,1 23,7 26,6 52,5 18 rather agree 14,3 7,6 19 1,3 19 17,7 12,5 12,5 50 on 50 23,8 8,9 16,7 8,9 28,6 16,5 15 30,6 rather disagree 9,5 19 9,5 20,3 4,8 16,5 7,5 16,7 do not agree 23,8 57 30,9 64,6 23,8 22,8 12,5 22,1 correlation 0,11 0,58 0,37 -0,07 source: own authors results of survey as we can see from comparative study (table 3), slovak business have more negative attitude to the unscrupulous behavior (opportunistic) – correlation between indicators is small or negative. its means that slovak enterprises are more focused on conscientious behavior within the law, it’s expected that they will rarely break the laws (that is more appropriative to performance of national economy). in table 4 we investigate the level of perception of business development by enterprises (table 4). 71 ostapenko table 4 results of survey of enterprises of ukraine and slovak of perception of business development i a m c om pl et el y sa tis fi ed w ith th e pe rf or m an ce o f m y bu si ne ss b us in es s in s pi te o f ev er yt hi ng m us t a ct ac co rd in g to th e la w c ou ld y ou r co m pa ny d ev el op m or e ef fe ct iv e w ith ch an gi ng le gi sl at io n in th is a re a if i t’ s po ss ib le to ta ke a dv an ta ge o f th e go ve rn m en t f or a br ib e, it is ac ce pt ab le ukr sk ukr sk ukr sk ukr sk completely agree 7,3 23,1 34,2 21,7 61 14,1 28,9 27,8 rather agree 21,9 23,1 19,5 8,2 19,6 14,1 15,8 19 50 on 50 9,8 25,6 19,5 16,2 14,6 17,9 23,7 16,5 rather disagree 22 16,7 12,2 21,7 0 16,6 2,6 12,6 do not agree 39,1 11,5 14,7 32,5 4,8 37,2 29 24,1 correlation -0,89 -0,16 -0,45 0,84 (source: own authors results of survey) as we can see from this study, slovak companies is more satisfied of performance of business (correlation is strongly negative -0,89). so ukrainian enterprises are unsatisfied of business performance, which may assume, that ukrainian enterprises is more paternalistic than slovaks one. but at the same time slovaks don’t believe that business should act according to the law (in spite of its quality). so slovak enterprises is more carry about quality of laws in this sphere, and can act opposite in case the law is ineffective. so statement than ukrainian enterprises is more paternalistic confirms the fact that according to indicator «could your company develop more effective with changing legislation in this area» ukrainian enterprises is more agree with that than slovak ones (correlation is negative -0,45). and last indicator of opportunistic behavior «if it’s possible to take advantage of the government for a bribe, it is acceptable» ukrainian enterprises is more agree with that, that means that enterprises is more subject to opportunistic behavior. 5. conclusions on base of this research following conclusions could be done: 1. national culture may affect the behavior of enterprises in different ways by affecting perception of external world. 2. so slovak and ukrainian enterprises doing business in different ways. both side enterprises mostly disagree with existing rules of the game in sphere of entrepreneurship, but slovak enterprises are more radical in these questions. 3. because of cultural differences enterprises act in different ways in these countries. slovak people are more proud of their country, so they may want to act to give some surplus to country’s budget. this assumption is confirmed by perception by 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regionalism; region; decentralization; administrative-territorial reorganization jel classification o10; r10; r11; r19 1. introduction in the context of globalization process emphasis, some reconsiderations of the role of the state, designed as the main form of government, emerge. on the one hand, the difficulties encountered in economic, monetary matters, and others, lead to over-state organizations creation, such as, the european union, for example, and, on the other, it is feeling the need to increase the efficiency of state policy in finding solutions for solving problems that occur in regional, local plan. in the last decades, the european states have been targeted towards a new model of economic and social development, consisting in the transfer of some prerogatives of the central administrative systems to local communities, to this end, initating regional development policies. the action was determined by the awareness of the important role which regional policies may hold in the balanced development of territories, the goal being the revival of the economic and social development, locally, the economic recovery of more underdeveloped areas, decrease the differences existing among the levels of development of the regions. 2. regionalism, regionalization, conceptual elements the reason for regional policy can be regarded from the perspective of the efficiency which the public authorities (central, local) demonstrate in the use of resources they 76 regionalization, element of economic and social development dispose, namely, the way in which they develop economic and financial policies targeted toward investments encouragement, employment increase, living conditions improvement. among the key factors, determinant for economic, welfare and innovation growth, to be taken into account in regional development balancing, there can be listed: natural and human resources, the development level of technological processes and knowledge, political and institutional framework. the regional process, taking place in europe, is the result of an assembly of phenomena, actions which lead to the formation of a region in a certain territory. in region definition, there are taken into account aspects related to knowledge about territorial issues, appropriate spaces for some activities, allocations of funds, cooperation, partnership. the region, perceived as an homogenous territory by those who inhabit it, is an administrative structure covering a geographic area with cultural, historical, linguistic, economic traditions. according to community charter of regionalisation (art. 1) (gorun, 2009), the region is considered "a territory that, geographically, constitute a net unit or a similar assembly of territories within there is continuity, where population possess certain common elements and wants to keep the specificity and to develop it, in order to stimulate the cultural, social and economic progress." in "statement on regionalism in europe of the assembly of the regions" (gorun, 2009) the region is "the political entity of a level immediately below the state, having certain competences granted by government, its own political powers and responsible before an assembly that had been elected in a democratic manner." referring to the region economic relations it is stated that these are not bounded by borders; there is a freedom in their manifestation, taking into account also the fact that the area of a region may contain a department, a province and an assembly of provinces too. from the perspective of movements that manifest in the regional plan, there are two processes having political and administrative character, that must be addressed: the regionalism and regionalization. regionalism appears as a shift from descendant to ascendant and expresses the desire and the need of communities to get involved and to assume responsibility for the administration of their own problems. shortcomings, regional underdevelopment, community awareness of a better understanding of their own interests in relation to the central structure of the state, constitute elements which give rise to the emergence of regionalism. regionalism is a response of the community towards centralism, the aim being to obtain the right of decision-making at the community level through regional institutions, a more effective formula than that in which the state would be able to establish a unitary framework of regional peculiarities. regionalization is the expression of a "top-down" approach, a consequence of a central political will on issues of local structures, the aim being to reduce regional imbalances. it is a process of administrative-territorial reorganization, initiated by the state, on the basis of a political decision, in which the regions are granted some competences, by the central apparatus, through decentralization or deconcentration formula, so that they should be able to manage their own interests. the perception of region as a homogenous territory and recognition of its identity is made by the state, which, through administrative acts, can act and take action which facilitates its participation in the management of its own affairs. the two concepts, regionalization and regionalism, mutually interact, but they are distinguished by the shape of the movement in regional plan. thus, the regionalization takes into account a development of the whole national territory by reducing economic imbalances, while the regionalism implies the possibility of decisionsmaking at the level of the region, regarding the regional interests and affirmation of identity (culture, traditions), this boundedness being determined by the ascendant path of movement in regionalism. 77 popa regionalization is an administrative action through which the state creates a new level of a country's territorial organisation, a second level of governance, a new below-national entity, but over-local. the process aims at defining new administrative-territorial units, larger areas of cooperation – regions – with the aim to support the actions of balanced development, socio-economic growth of the geographical areas in question. as a process of mobilization, the regionalization is the action by which regions mobilizes themselves "from below", i.e., they become aware of the new opportunities and constraints in the context of international trends and policies (eu legislation) and mobilizes their resources to use the eu financial opportunities and to act strategically alongside the international partners (lähteenmäki-smith, 2004). regionalisation can occur through the process of institutionalization in the relationship with that of mobilization, by which "a region develops itself from a territorial entity to a symbolic space, gradually, taking a more structured form, through the creation of institutions and the establishment of a regional unit, as part of a larger system of regions" (lähteenmäki-smith, 2004; paasi, 1986). from a broader perspective, the phenomenon of regionalization is a process that joins states or regions on the basis of their geographical proximity, from the benefits related to savings in transport and cost information, or from some issues of security or environment. (ciurcanu, 2005; thomson, 1999). the action of regionalisation depend on taking into consideration of some factors referring to eu policies, systems and policies of spatial planning, financing policies, societalgeographical habitats etc. different from the various forms of regionalization definition, it is suggestive the graphical expression of its dimensions (figure 1). figure 1 dimensions of regionalization source: holger 2011, quotes anssi paasi (1996) mentioned by s.tzschaschel&m.michael (2008) in „ist regionale idetität machbar? – zur konstruktion von räumen und identitäten” the two concepts, regionalism, regionalization reflects the shifts that are taking place in the regional plan, interacting each other; their common denominator is decentralization, which involves a multilevel governance. regionalization is in a direct relationship with the territorial decentralization and it is a consequence of these, expressing a process by which the territory of a state is divided into administrativeterritorial units, which have the status of legal persons governed by public law, their own heritage and budgets. conceptually, decentralization refers to the transfer of symbolic dimension production and reproduction territorial dimension building a new territorial form establishment regional unit in spatial structure and social consciousness institutional dimension emergence of institutions and administrative machinery region 78 regionalization, element of economic and social development power, resources or autonomy, from a higher level, the central government, to a lower level, levels which relate to the territorial area, the institutional dimension. in the process of regionalization it interests the relationship that is established among regional structures, their positioning between central and local administration so that these have the necessary authority to balance the actions of central authority. 3. the importance of regionalization for local level economic and social development the creation of the development region in the european union states, requested by the european community, have mainly sought the possibility to develop and implement the strategies, policies and regional programmes of the community, to assort the results expressed in regional statistics, to encourage and concur in attracting the structural funds by the regions of the same state or of different states. within the regional processes, the transformations, the related actions are followed by the stage of regional institutions establishment, namely the regional powers. the change of governance paradigm by shifting to regional governance means reducing hierarchical control and, consequently, increase of self-control, self-determination. decentralization of authority to the regional level has been seen with caution at the eu level, in recent decades, being considered an alternative to traditional relations existing in the structures of governance, the transfer of authority and responsibility to lower levels of government, leading to an increase in the efficiency in setting up opportunities, in administrative problems solving, a better meeting of the regional/local interests and needs, the correct use of the financial resources in relation to established needs. the oecd appreciates the positive role of decentralisation in the strengthening of local and regional governments and of their capacity to formulate and implement policies which lead to competitiveness increase of the regional economy: "local and regional governments, worried that their economies are more and more exposed to world competition, are now expected to influence public policies, so that these can have a real impact on improvement of regional economy competitiveness and of the welfare of the inhabitants" (mihăilescu, 2012). in the context of the current policies of economic and social development of the process of european integration and regionalization, the eu member states have adopted the principle of subsidiarity, introduced by the maastricht treaty, considered a form of social and economic expression of decentralization, local and regional autonomy. this implies the transfer of responsibilities and decision-making competences at regional or local level, but also at national and over-national level. the application of the principle of subsidiarity aims to create abilities for decisionmaking at a level close to the citizen and it reflects that in eu, these decisions respond to community interests and to its need of action, according to the possibilities existing at the national, regional, local level. current relations between the central and local administration are of cooperation, based on the of responsibilities share. the state functions are exercised both horizontally by sharing and carrying out the tasks and responsibilities, among central bodies, and vertically, by share of power among different levels of public administration. the relationship between the central and the local level, concerning sharing tasks, involve changes determined by practical conditions in achieving them. there is the risk of arising significant differentiations among regions, what implies the need to find financial mechanisms able to ensure some offsets, directed to poorer in resources underdeveloped regions, so as to ensure harmonious development conditions, comparable living conditions throughout the country or even within the region. 79 popa taking into account the importance of regional policies in balanced development of territories and the adjustment of imperfect actions of market mechanisms, in european states, there have been institutionalized regional policy instruments towards economic and social development at the local level, economic recovery of the most underdeveloped areas, reducing existent discrepancies. on this way on has been aligned the measures of the european commission, which, paying particular attention to the problem of regional disparities, has initiated a series of actions at european level, referring to regional policies designed for the development of regions. the measures were embodied in the creation of funds designed for the development of regions and institutional mechanisms of their use monitoring, through regional programmes. the incumbency required by the eu commission for the accession candidate countries, to implement the community acquis meant a challenge for the implementation of regionalisation policy, in the countries of central and eastern europe. the rules, procedures and the directions contained in the chapters of the acquis, to which every parliament had to align its legislation, have been the europeanization model, this process reflecting both the impact of these rules on the inland structures, and the variety of in-house actors and of institutions that should uphold the eu rules observance of. the eu has not imposed an exclusive model of regionalization for member states while leaving them the freedom to decide on their own project. in this context, the europeanization and regionalization have meant a "top to bottom" movement, where the states have conducted negotiations with the eu; the adoption of its rules is according to the specific socio-economic structures of the states, the community acquis being a major stake at that stage. the relationship between the eu commission and member states involves rights and obligations, of both parties, in fulfilment of a topics referring to the eu's internal market guaranteeing, its borders securing, compliance with the obligations that come to the member states, the support granted them from the structural funds. the transfer of internal competences of state to below-state levels, in the circumstance of the subsidiarity principle observance of, leads to an increase of the importance of regions and to reducing the state position with reference to its role in solving problems affecting society. central power renounces to its authority exhaustive exercise on different areas, existing cooperative relations between local and state levels. in the meantime, however, regardless of the degree of decentralisation, the state is actual by the control which it exerts in some units of its structures. ensuring the transfer of power towards regions, the process of regionalization, give the possibility to restate policies to meet the local requirements and needs, trend manifested on the entire european area by the variety of regional projects within member states. thus, it can be concluded that one of the aspects of regionalization is its complementary character with globalization. 4. conclusions the concept of regional development is centered on the issues of economic, territorial, areal development, through the use of local and drawn resources, in order to increase the competitiveness of the territory. by stimulating and diversifying economic activities and investments, employment increase, living standards 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the role of creativity in entrepreneurship maria irina dromereschi technical college “anghel saligny” bacau dromereschi_irina@yahoo.com abstract one of the most important factors to explain the sudden relevance of entrepreneurship, was the importance of creativity as a new source of competitiveness. psychologists argue that being creative means to create something new, original and appropriate reality. creative is characterized by originality and expressiveness, is imaginative, generative, pathfinder, invention, innovation etc. increasing effects of globalization leads to the need creative approach in a market with a high level of opportunity and competition. entrepreneurial factors overlap with many creative features such as curiosity, self-confidence, a high level of energy, responsibility and vision. as a highly complex mental formation, creativity is characterized by a multitude of ways such as productivity, usability, efficiency, value, ingenuity, innovation and originality. the impact of entrepreneurial creativity extends to the whole life of an entrepreneur, and not just during business. success is stimulated by the use of juxtaposition and combination of different ideas that often but not related to the impact on decision making. entrepreneurial creativity should be seen as a competitive force and portfolio of skills. adopting a creative entrepreneurial approach protects us from uncertainty and ambiguity in decision making in the external environment. keywords creativity; entrepreneurship; entrepreneurship creativity; entrepreneurial society jel classification l21; l26 introduction force entrepreneurship is vital for economic growth and provides many social opportunities. entrepreneurial capital investments, such as schools, culture and other institutions to develop entrepreneurial creativity are needed not only to form a "stock" of aspiring entrepreneurs but also in the long term, to maintain leadership in the global economy. when organizations exist to serve the people, the business is striving emotional, vital, innovative, creative entrepreneurs who own welfare maximizing its showcase its full potential human selfless service to others. theory of knowledge excess entrepreneurship (audretsch, 2007) suggests that those environments that are rich in knowledge will tend to generate more business opportunities. less entrepreneurial opportunities will generate a context with a smaller amount of investment in new ideas and knowledge. a consequence of globalization, which changed the comparative advantage of developed countries in physical capital in knowledge capital are becoming entrepreneurial opportunities ubiquitous (audretsch, 2007). entrepreneurship and creativity conceptual approach moving from knowledge to activities based on creativity, innovation, entrepreneurship and imagination was perceived as a substantial change in the 128 the role of creativity in entrepreneurship perception of the economy last decade (van oke et al, 2009). increasing effects of globalization and the impact of technology led to the identification of a greater number of business opportunities, while the market was already a crowded place increased competition (mcmullan js et al, 2006). the difference seems to be time specific creativity tool that allows entrepreneurs to access opportunities in ways that can bring competitive advantage of the firm, company or his organization. this may provide the basis for innovation and business development, and a positive impact on society in general (bilton, 2007). entrepreneurship occurs in all types and sizes of organizations, from small business, corporate internal, to global. entrepreneurship can be defined as the process of creating value for the business and social community by making unique combination of public and private resources exploiting economic opportunities, social or cultural in a changing environment. creativity has been regarded as a construction of ideas or products that are new and potentially useful (amabile, 1998), although in a sense of entrepreneurship should be a link-up between innovation and profitability translated into monetary and social. creativity allows the organization to seize the opportunities that arise as a result of changing environmental conditions (shalley ce et al, 2004). entrepreneurship schumpeterian vision has three central dimensions: innovation, risk taking and proactiveness. innovation is the manner in which the contractor seeks new opportunities, and how ideas are brought to a conclusion profitable. test innovation success is measured rather than market ideas in an actual news. risk-taking refers to the way in which innovation is embedded in, and by the organization, company or community. it also refers to people's willingness to allocate significant resources to opportunities, resources calculated to succeed. proactive behavior is concern, the determination to make things happen, adaptability and breaking rules determined to do things. creativity involves a perceptual response to the environment, which in turn can induce a greater or lesser frequency of creative effort. the term "creative intensity" is used by morris and his colleagues (2003) to illustrate the combined effects of the degree and frequency of creative behavior at the individual, organization or company. individual creativity within an organization enhances global competitive advantage and organizational innovation, while creative teams or groups of people make it possible to further increase this advantage (hirst et al, 2009). there is no universally accepted definition of creativity, although there is some overlap in its interpretation. creativity is human specific and can be defined as a predisposition to generate and promote new in all its forms because it is innate but equally to everyone. creativity is the basis of innovation, which in turn, the engine of progress and the most important factor of competitiveness. innovation is also a defining characteristic of entrepreneurship. creativity educates and more, can be stimulated, in particular through group techniques. superior intelligence is useful creativity, but above a certain threshold inhibits creativity. characteristic of creativity is that excels in identifying problems compared with troubleshooting. a preliminary analysis identifies creativity with imagination and originality of thought moving beyond the ordinary. it can be characterized by overcoming conventional or even breaking the rules. young (1985) defines creativity as a natural tendency to actualize our potential, which involves integration with the intuitive logic. this may involve both an advance in thinking, but it can also keep links with the past. ford and harris (1992) believe it to be a deliberate process and are modifiable to some extent throughout the world. hunter (2007) sees creativity as a result of interaction between the individual and the situation after some appropriate environment or climate. creativity occurs best when exploring routes are flexible, non-predetermined and discovery is possible (amabile, 1983). fillis and rentschler (2006) found that creative solutions need not be complex, especially in business relative to the situation where answers are able to bring success to the organization. 129 dromereschi connections between creativity and entrepreneurship connections between creativity and entrepreneurship were made by whiting (1988) and lee (2004). in 1974, stein argued about creative ability and entrepreneurial capacity building that are separate, so challenged in 1984 by gilad. whiting (1988) identified independence, the desire to achieve, curiosity, self-confidence and deep involvement in a task that five main characteristics of creative individuals as selfconfidence, perseverance, a high level of energy, risk-taking calculated and the need to have been regarded as the top five characteristics of individual entrepreneurship. other relevant factors include the use of initiative and flexibility. the existence of differences between being creative and being an entrepreneur does not exclude duplication. in 2007 fillis observed stability factors creative entrepreneurs over time. entrepreneurship is seen as an important contributor to economic growth and job creation while understanding the impact on the process of creativity is crucial (baumol, 2002). entrepreneurial creativity entrepreneurial creativity was defined as the generation and implementation of new (amabile, 1997). entrepreneurial creativity is a continuous process: there before, during and lifetime of a business, it is a result of social context and individual decision (fillis i & rentschler r, 2006). entrepreneurial creativity requires a combination of intrinsic motivation and extrinsic motivation certain a motivational synergy that results when strong levels of personal interest and involvement combined promise of rewards: confirmation of competence, support for skills development and achievement in the future (amabile, 1997). those organizations that are prepared to recognize creative accomplishments are then likely to encourage creative behavior. a model driving style democracy and participation facilitates creativity (nystrom, 1979). and the vision of a leader is an important factor in managing creative people (becherer r.c. et al, 2008). this vision must be communicated through informal and formal channels appropriate and at all levels of management. an organizational culture that facilitates risk-taking is also able to enhance the creative achievements. individual or team creativity is often at the root of innovation. akehurst (2009) believes that, instead of focusing on individual talent, organization leaders should be more concerned with creating and sustaining a domestic environment supportive of collective support for creativity and innovation. entrepreneurship bottom up, where creative thinking and innovative behavior by the employer, was referred to as intrapreneurship (huse m et al, 2005). therefore, an entrepreneurial culture can have a positive effect on the climate of creation. mumford (2002) and amabile (2004) found that leader support was positively related to the level of creativity of employees. therefore, it can be assumed that an entrepreneurial culture is more likely to result in support of leader as an entrepreneur than other forms of management, employee empowerment through decision making. entrepreneurial creativity – european perspective entrepreneurship is manifested in the economy as a multiplicity and variety of forms, with very different results not only reflects the economic welfare and financial. similarly, entrepreneurship is correlated with technological development, job creation and reducing social inequities or issue of environment. the process of globalization and the global crisis of recent years have favored a series of structural changes deeply felt in the business plan. a pressure increased competitiveness enterprise, which resulted in an increase in productivity by using the new technologies and process innovation. in addition, developments in information and communication technology have led to creating new markets, which have revolutionized production processes in 130 the role of creativity in entrepreneurship many economic sectors: industry and, in particular, the service sector. advanced technology and low cost transmission remote data have helped to facilitate entrepreneurs' access to knowledge and networks cooperation, enabling them to operate internationally. new opportunities have stimulated entrepreneurship and creativity, which are considered as engines of economic development 2020. in europe, are created annually 4.1 million jobs only business start-ups. entrepreneurial policies are more closely correlated with innovation, geared at creating new products and services by exploiting both meanings of the knowledge economy. "europe 2020" is the european union's strategy for growth, with the time horizon of 2020. in a rapidly changing world, the eu wants to become a smart, sustainable and inclusive growth. smart growth concerns an economy based on knowledge and innovation. sustainable development requires competitiveness and efficiency in resource use. inclusive growth relates to a higher rate of employment in the economy, generating economic, social and territorial cohesion in the eu. these three priorities are mutually supportive and are able to help the eu and member states to achieve a higher level of employment of labor productivity and territorial cohesion. in fact, five major goals are set on employment, innovation, education, social inclusion and the environment to be achieved by 2020. a number of factors were identified as determinants for the development of entrepreneurship. they were grouped into six categories which contain a number of elements influencing entrepreneurship regulatory framework, market conditions, access to financing, creation and dissemination of knowledge, entrepreneurial skills, culture and innovation, creativity, education and entrepreneurship. entrepreneurial creativity is manifested in five areas: personal development (achievement technology, creativity, entrepreneurial skills, people skills), enterprise (new business models, venture management, innovation management), opportunities (discovering opportunities, pursuing opportunities, moving with speed), customer (creating customer, winning customer, retaining customer) and competition (competitive advantage, competitive strategies, change management).the trends that will provide opportunities include: green trend, cleanenergy trend, organic-orientation trend, economic trend, social trend, health trend, and web trend. the sources of new ideas are: consumers, existing products and services, distribution channels, (federal) government, research and development. given that unemployment is a matter of concern in many world economies, entrepreneurship is seen as a viable solution. to stimulate the development of entrepreneurial activity, the first step to take is to understand the complexity of national ecosystems and their specific characteristics. the private sector can contribute significantly to the development of entrepreneurship by implementing quality programs: training sessions, events and competitions for entrepreneurs just starting out, mentoring programs and support for start-ups or information sessions about existing funding opportunities. facilitating access to accelerators, incubators and co-working spaces is another very important point, along with further promotion of successful models and correct reasons for being an entrepreneur. references akehurst, g., comeche, j.m. and galindo, m-a. (2009), “job satisfaction and commitment in the entrepreneurial sme”, small business economics, vol.32, pp.277-289. amabile, t. (1983), the social psychology of creativity, new york, springer verlag. amabile, t. (1997), “entrepreneurial creativity through motivational synergy”, journal of creative behavior, vol.31, no.1, pp.18-26. amabile, t. (1998), “how to kill creativity”, harvard business review, vol. 76, no. 5, pp.77-88. 131 dromereschi amabile, t.m, schatzell, e.a., moneta, g.b. and kramer, s.j. (2004), “leader behaviours and the work environment for creativity: perceived leader support”, the leadership quarterly, vol.15, pp.5-32. audretsch, david b.(2007), the entrepreneurial society, new york: oxford university press. audretsch, david b., max keilbach and erik lehmann (2006), entrepreneurship and economic growth, new york: oxford university press. baumol, w. (2002), the free market innovation machine: analysing the growth miracle of capitalism, princeton university press, princeton. becherer, r.c., mendenhall, m.e. and eickhoff, k.f. (2008), “separated at birth: an inquiry on the conceptual independence of the entrepreneurship and the leadership constructs”, new england journal of entrepreneurship, vol.11, no.2, pp.1 3-27. bilton, c. (2007), management and creativity: from creative industries to creative management, blackwell publishing, oxford. consultation on an action plan on entrepreneurship, (2012), eu commission, available at http://ec.europa.eu/enterprise/newsroom/cf/ entrepreneurship 2020 action plan, available at http://ec.europa.eu/enterprise/ policies/sme/public-consultation/index_en.htm fillis, i. (2007a), ‘a methodology for researching international entrepreneurship in smes: a challenge to the status quo’, journal of small business and enterprise development, vol.14, no.1, pp.11 8-135. fillis, i. and rentschler, r. (2006), creative marketing: an extended metaphor for marketing in a new age, palgrave macmillan, basingstoke. ford, d.v. and harris, j.j. (1992), “the elusive definition of creativity”, journal of creative behavior, vol. 26, no. 3, pp. 186-198. gilad, b. (1984), “entrepreneurship: the use of creativity in the marketplace”, journal of creative behavior, vol.18, pp.1 51-161. hirst, g., van knippenberg, d. and zhou, j. (2009), “a cross-level perspective on employee creativity: goal orientation, team learning behaviour and individual creativity”, academy of management journal, vol.52, no.2, pp.280-293. hisrich, r.d., peters, m.p, sheperd, d.a.(2006), http://ebook download.cba.pl/ebook/free-entrepreneurship-8th-edition-robert-d-hisrich michael-p-peters-dean-a-shepherd-ppt.html hunter, s.t., bedell, k.e. and mumford, m.d. (2007), “climate for creativity: a quantitative review”, creativity research journal, vol.19, no.1, pp.69-90. huse, m., neubaum, d.o. and gabrielson, j. (2005), “corporate innovation and competitive environment”, international entrepreneurship and management journal, vol.1, pp.313-333. lee, s.y., florida, r. and acs, z.j. (2004), “creativity and entrepreneurship: a regional analysis of new firm formation”, regional studies, vol.3 8, no.8, pp.879-891. mcmullan, j.s. and shepherd, d.a. (2006), “entrepreneurial action and the role of uncertainty in the theory of the entrepreneur”, academy of management review, vol.31, no.1, pp.132-152. morris, m. h., schindehutte, m. and laforge, r. w. (2003), “the emergence of entrepreneurial marketing: nature and meaning” in hills, g. e., hansen, d. j., solomon, g. t. and winslow, e. k. research at the marketing/entrepreneurship interface, university of illinois, chicago. mumford, m.d., scott, g.m, gaddis, b. and strange, j.m. (2002), “leading creative people: orchestrating expertise and relationships”, the leadership quarterly, vol.13, pp.705-750. nystrom, h. (1979), creativity and innovation, john wiley and sons, chichester. 132 http://ec.europa.eu/enterprise/%20policies/sme/publichttp://ec.europa.eu/enterprise/%20policies/sme/publichttp://ebook-/ http://ebook-/ the role of creativity in entrepreneurship shalley, c.e., zhou, j. and oldham, g.r. (2004), “the effects of personal and contextual characteristics on creativity: where should we go from here?”, journal of management, vol.30, pp.933-958. van oke, a., munshi, n. and walumbwa, f.o. (2009), “”the influence of leadership on innovation processes and activities”, organizational dynamics, vol.38, no.1, pp.64-72. whiting, b.g. (1988), “creativity and entrepreneurship: how do they relate?”, journal of creative behavior, vol.22, pp.1 78-183. young, j.g. (1985). “what is creativity?”, journal of creative behavior, vol. 19, no. 2, pp. 77-87. 133 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the eu accession and the impact on romania’s foreign trade and comparative advantage adrian negrea university of oradea ngr_adrian@yahoo.com abstract romania’s accession to the eu was a difficult task, but doable. however, the results of this accession are only now taking shape in the form of export orientation and competitiveness. this paper thoroughly analyses the aspects regarding romania’s foreign trade, based on the classification used by lall (2000), with the data provided by the national institute of statistics on the combined nomenclature xxii sections, covering the 1991 – 2012 period. furthermore, the paper addresses the concept of comparative advantage based on the lafay indicator of romania’s foreign trade during 1991 2012. the indicator is calculated based on the statistical data offered by the national institute of statistics of the combined nomenclature with its xxii sections combined with lall (2000) classification. the conclusions based on prior results try to assess whether the accession to the eu has had a beneficial or harmful effect on romania’s international trade and its comparative advantages. keywords comparative advantage; competitiveness; commercial policy; trade flows; manufacturing jel classification f10; f14 1. the eu accession romania’s accession to the european union involved a series of decisions that had an impact on all international trade flows. the european association agreement stipulated that romania needed to gradually eliminate all the customs duties that it registered with eu countries, and had to align national tariff duties to those applied in the eu. this process involved the implementation in romania of the same trade policy valid for the rest of the european countries. based on berinde (2001, 2009) under the common commercial policy, romania will have to understand and adapt to all three dimensions of the eu, namely: the multilateral, the bilateral and unilateral dimensions. romania has implemented all the aspects of international negotiations, treaties and other agreements concluded by the eu accession. all agreements and treaties signed by romania before joining will become void, romania revoking them unilaterally. the multilateral dimension refers to all the negotiations and agreements conducted under the auspices of the world trade organization (wto), an organization of 157 countries and territories covering over 95% of world trade in goods and services. by the virtue of participating at the activities conducted under the patronage of the wto, the eu is promoting the spirit and own values through international trade flows. at these meetings, a great emphasis is placed on the liberalization of international trade by removing tariff and non-tariff barriers on goods and services, covering also aspects of competition policy in the international market, to avoid distortions arising in the practice of unprincipled policies regarding trade. according to giurgiu (2008) and berinde (2009) the bilateral or regional dimension, adjacent to wto negotiations, 54 the eu accession and the impact on romania’s foreign trade and comparative advantage covers all the bilateral treaties between the eu and various international countries. generally, the treaties are structured according to their purpose: economic partnership agreements (epa), free trade agreements (fta), custom union agreements (cua), and partnership and cooperation agreements. the same authors believe that the unilateral dimension combines all the facilities offered by the eu to developing or least developed countries, in order to encourage the export of goods and services of these countries towards the european internal market. the combination of the above mentioned factors, drove romania to abolish its trade tariffs in a determined period of time, all the local companies suffering a steep production overhaul due to a massive increase of european imports. the impact of this accession on the country’s foreign trade and comparative advantage will be studied in the following chapters. 2. the impact on romania’s foreign trade export trend analysis is based on the classification used by lall (2000), with the data provided by the national institute of statistics regarding the combined nomenclature xxii sections, covering the 1991-2012 period. the following indicators are calculated as the sum of values registered by the specified nomenclature sections. a. resource-based manufacturing (rb): i livestock and animal products; ii vegetable products; iii animal or vegetable fats and oils; iv prepared foodstuffs, beverages and tobacco; v mineral products; ix wood and articles of wood, except furniture; x pulp of wood, paper, paperboard and articles thereof; xiii articles of stone, plaster, cement, ceramic, glass and similar materials. b. low-technology manufacturing (lt): viii raw hides and skins, leather, furskins and articles thereof; xi textiles and textile articles; xii footwear, headgear, umbrellas, and similar articles; xv base metals and articles of base metals; xx miscellaneous manufactured articles. c. medium technology manufacturing (mt): vi chemical products; vii plastic, rubber and articles thereof; xvi but only 84 boilers, turbines, engines, mechanical apparatus and devices, parts thereof; xvii vehicles and associated transport equipment. d. high-technology manufacturing (ht): xvi but only 85 machinery and mechanical appliances and electrical equipment; sound and television image recorders and reproducers; xviii optical, photographic, medical or surgical instruments and equipment and similar; e. other transactions (ot): xxii goods non-included in the other sections of the combined nomenclature the following tables will provide a glimpse on the evolution of trade flows during the analyzed period. the sum of values registered by the specified nomenclature sections mentioned above will be divided by the total amount of exports, so that all the results will be highlighted in percentage. exports run by national producers during 1991 – 2012 can be analyzed based on the data presented in the table below. 55 negrea figure 1 exports run during 1991 – 2012 based on lall (2000) classification, expressed in percentage source: own computations based on the figures published by the national institute of statistics in the monthly trade bulletin according to the table above, one can observe a cyclic evolution of romanian exports to foreign markets. based on the data presented, it can be seen that until 1998, lowtechnology manufacturing held the first position in total exports, but after that, registering a continuous regression in the next period. also, the same table shows how medium technology manufacturing value declines in the period 1992 – 2003, followed by a period of exponential growth, a trend that will continue in the near future. the most significant increase is recorded by high-technology manufacturing. this development can be caused by foreign direct investment in domestic production capacity, increasing its value, especially in the automotive industry. this trend can be seen in the table 1, which analyzes the evolution of romania’s comparative advantages to the rest of the world. this table shows a shift from a resource-based manufacturing and low-technology manufacturing exporting economy, to a medium and high-technology technology manufacturing exporting economy, as in similar cases recorded in the developed western economies. based on future governmental intervention through fiscal subsidies and credit guaranties will encourage future investment in this field, augmenting the sustainable development of national producers and increasing the value of exports of medium and high technology manufacturing products. passing on to the analysis of imports, we see a different picture of what was presented previously. according to the data analyzed in the table below, the highest share in total imports is held by resourcebased manufacturing. this dominant trend in total imports continued until 1997, and may ascribe on the consumer goods shortages and industrial plant closures that the romanian market was facing at the time. however, this trend does not explain how a country endowed with natural resources, holding the fifth largest agricultural area in the eu, registers the highest values of imports in the resource-based manufacturing section. we consider that the lack of national producers and the closures combined with the de-industrialization effect have made romania suffer a decline in this field. 56 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro table 1 evolution of lafay indicator regarding romania’s global trade between 1991 – 2012, based on lall (2000) classification 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 resourcebased manufacturing -0,175 -0,123 -0,107 -0,076 -0,072 -0,057 -0,050 -0,044 -0,020 -0,034 -0,042 -0,028 -0,037 -0,039 -0,035 -0,028 -0,032 -0,030 -0,032 -0,026 -0,025 -0,029 lowtechnology manufacturing 0,129 0,106 0,146 0,140 0,145 0,134 0,144 0,151 0,121 0,120 0,120 0,110 0,118 0,118 0,102 0,090 0,079 0,056 0,035 0,032 0,028 0,028 medium technology manufacturing 0,064 0,042 -0,017 -0,034 -0,041 -0,047 -0,053 -0,065 -0,064 -0,050 -0,059 -0,071 -0,072 -0,072 -0,063 -0,052 -0,050 -0,037 -0,014 -0,013 -0,015 -0,008 hightechnology manufacturing -0,023 -0,021 -0,025 -0,031 -0,030 -0,027 -0,035 -0,038 -0,038 -0,038 -0,019 -0,013 -0,011 -0,008 -0,006 -0,001 0,002 0,012 0,011 0,007 0,011 0,006 other transactions 0,004 -0,004 0,003 0,001 -0,002 -0,004 -0,007 -0,005 0,001 0,001 0,001 0,002 0,002 0,001 0,001 0,001 0,000 0,000 0,000 0,001 0,001 0,003 source: own computations based on the figures published by the national institute of statistics in the monthly trade bulletin 57 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro figure 2 imports run during 1991 – 2012 based on lall (2000) classification, expressed in percentage source: own computations based on the figures published by the national institute of statistics in the monthly trade bulletin further analyzing the value of imports from the low-technology manufacturing perspective, the trend is apparent cyclic, with periods of growth, maturity and decline. the peak of low-technology manufacturing imports is achieved in 1999, and that due only to an increase in textile lohn contracts. the growth of medium technology manufacturing value is recorded in the period 2000 – 2008 and occurs due to extremely high demand from local consumers of goods, especially cars from the european market. if the combined nomenclature is analyzed, it can be seen that the value of auto vehicles imports have tripled from 2004 to 2007. the decline is due to the financial crisis, but as one can see, the trend is towards growth, a sign that once economic growth returns the consumption growth based on imports will soon follow. high-technology manufacturing tend to grow during the years 1991 – 2000, after which a stable period in terms of the percentage held in total imports during the period 2001 – 2008 follows, although in terms of value, it records an annual growth. starting with 2009, their share in total imports is beginning to rise, a sign that this segment can climb on the podium as second place in importance, ahead of resourcebased and low-technology manufacturing. we consider that this would be a positive development, but only if the imported goods are intended for a productive purpose, not only for personal consumption. 3. romania’s comparative advantages the lafay indicator can be used when considering the comparative advantages of the commercial flows, in order to express the competitiveness of a certain field of the economy compared to the rest of the world, according to the formula: 58 the eu accession and the impact on romania’s foreign trade and comparative advantage ∑∑ ∑ == = + + ⋅             + − − + − ⋅= n j i j i j i j i j n j i j i j n j i j i j i j i j i j i ji j mx mx mx mx mx mx lfi 11 1 )()( )( 100 where: xj – represents the exports of the group or product j; mj represents the imports of the group or product j. based on the previous formula and in conjunction with the data provided by the national institute of statistics regarding the combined nomenclature (cn) for all the xxii classes, the data registered in euro during 1991 2012, and combined with lall (2000) classification, the lafay indicator was calculated in table 2 in the annex. the table presents huge discrepancies between the sections. as it can be seen, romania’s comparative disadvantages in the resource-based manufacturing are pictured as chronic, during the entire period analyzed. this represents a big question mark for the decision makers, because romania has the fifth largest agricultural area and is endowed with all the earth’s natural resources. i consider that not all the agricultural land is cultivated, and there is a lack of production companies in this field, able to process the goods and attach a higher economic value. low-technology manufacturing seems to be the sector that registers a comparative advantage during the entire analyzed period. this phenomenon is due to low payments that are received in this sector. because this is a high labor intensive sector, if the salaries went up, romania would lose its competitive edge in favor of other eastern asian countries. the medium technology manufacturing sector seems to register a chronic comparative disadvantage, but this trend is experiencing reparation. due to the increased exports of cars, and a severe contraction regarding imports due to the financial crisis, the figures show a future transformation from comparative disadvantages to comparative advantages in the near future, and only if the exports increase. a point to notice is that the analysis of comparative advantage indicators of romania shows a complete absence regarding the comparative advantages in the medium and high technology intensive manufacturing, but highly competitive in the labor intensive low-technology manufacturing. the question that should be asked is whether it is worth encouraging these sectors in which a comparative advantage is registered, or should the government focus on encouraging and developing the medium and high-technology manufacturing sectors? 4. conclusions the conclusions of this paper state that romania’s economy need a more effective change of the production process. it is inadmissible that a country with the fifth largest agricultural area and endowed with all the natural resources register massive imports of resource – base manufacturing. at the beginning of the 1990s that was due to a lack of consumer products on the romanian market, but nowadays, this is due to a lack of producers in this sector. the value of imported mineral resources, holding the most significant percentage when this indicator is decomposed, highlights the negative effect of the restructuring process. due to lack of interest, many industrial complexes vanished because they were privatized and sold for scrap metal, determining the rest of the economy to import mineral resources from abroad. the 59 negrea second place held by this sector in overall imports with the perspective of holding this place for the next period, it’s a problem that needs to change. in my personal opinion, measures that attract foreign direct investments in this sector combined with governmental credit guarantees and a lax fiscal policy should boost internal production, changing the course from a comparative disadvantage to a comparative advantage. attaining and maintaining a comparative advantage in the low technology manufacturing sector through the hole analyzed period, is possible only because of the low wages in these sectors, especially textiles and footwear. an increase of wages through governmental influence to 1.000 lei, would influence negatively the future maintenance of the comparative advantage. if this will take place, the investors may shift their orders to lower wages asian countries. a remarkable twist from comparative disadvantage to comparative advantage will be recorded in the mediumtechnology manufacturing, due to foreign direct investments realized by renault and ford. this trend will be maintained in the next period, due to a planned increase in the production of auto vehicles suggested by the two renowned producers. in my opinion, this sector should benefit from government intervention through stimulating financial schemes and credit guarantees, in order to increase production of internal suppliers, in order to maintain a high volume of internal intermediate costs, that will help a sustainable development of the national economy. references berinde, m., giurgiu, a. (2005), aderarea româniei la uniunea europeană, oradea, editura universităţii din oradea. berinde, m. (2009), uniunea europeană și integrarea economică regională, bucurești, editura tribuna economică. burnete, s. (1999), comerţ internaţional. teorii, modele, politici, bucurești, editura economică. cerchez, o. (2007), eficiența economică a comerțului exterior, bucurești, editura logos. drăgan, g. (2004), fundamentele comerţului internaţional, bucureşti, editura ase. giurgiu, a. (2008), comerț internațional și politici comerciale, oradea, editura universității din oradea. lall, s. (2000), the technological structure and performance of developing country manufactured exports, 1985-1998, oxford development studies. porter, m. (2004), competitive strategy: techniques for analyzing industries and competitors, gardners books. sută, n. (2000), comerț internațional și politici comerciale contemporane volumul i, bucurești, editura eficient. sută, n. (2000), comerț internațional și politici comerciale contemporane volumul ii, bucurești, editura eficient. this paper is suported by the sectorial operational programme human resources development (sop hrd), financed from the european social fund and by the romanian government under the contract number sop hrd/107/1.5/s/82514. 60 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro considerations on consumer perceived risk laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract in this article we identified a number of factors influencing the consumers’ perceived risk. in the first part we conducted a review of the main issues that define the perceived risk by the consumer at the time of purchase, some of the lines of action of the organizations to diminish this risk perception and a number of influencing factors presented in the literature, with significant impact on the intensity with which risk is perceived by consumers. the second part of the article is based on the statistical information regarding e-commerce market, market in which the perceived risk plays an important role in the purchasing decision. thus, based on available official statistics provided by eurostat we have revealed the existence of certain links between electronic commerce and orientation towards risk and income levels, age and consumer educational level. the review is not intended to be exhaustive, the study taking into consideration only those links that can be identified from using official statistical data. keywords perceived risk; factors influencing perceived risk; online market jel classification m31 introduction to the consumers perceived risk in the process of purchasing consumer perceives a risk, which can be defined as (ashley, 1995) „… that level of risk a consumer believes exists regarding the purchase of a specific product from a specific retailer, whether or not that belief is factually correct”. the author identifies six categories of perceived risk, as follows: • functional – refers to extent to which the product raise up to expectations; • physical – refers to the extent to which the product may bring personal injury; • social – refers to peer opinion on purchased product; • psychological – refers to the extent that the purchase is the right thing; • financial – refers to the affordability of purchase in terms of price; • time refers to the time and effort required by the purchase. the extent to which these risks are perceived varies from one consumer to another, from one product to another and even from one purchase to another for the same consumer or product, depending on the context of acquisition. there are therefore a number of factors acting on the intensity with which the risk is perceived by consumers, some of the influences being generally valid for most consumers and for most purchased products. the perceived risk is directly dependent on the degree of novelty of a product. this is maximum for products that are new and decreases for products for which there is an prior experience. regarding the raised issue, it is estimated that only a small part of the brand new products succeed beyond the launch phase, the associated risk factor representing brakes in purchasing decision. also, in the case of new products is well known that the diffusion rate is relatively slow, risk of first procurement being 203 ţimiraş undertaken initially by a small number of customers (innovators). on the other hand, expenditures associated with r&d of new products are huge, so that the companies introducing new products on the market must have the resources to not be affected financially until the diffusion of new products grows. under the these circumstances, it is obvious that the risk that consumers perceive in relation to new products bring organizations facing a difficult decision, ie either make the decision to launch new products (which may or may not pass the start-up phase and, also involve significant expenditure) or decide to become imitators of existing products launched by competitors (in which case the associated expenditures are lower) and perceived risk by consumers is diminished. however, such a decision may be influenced by the organization's reputation in the market, the perceived risk associated with a new product launched by a prestigious company being much lower than that associated with a similar product in terms of the degree of novelty, but released by little-known organization. the financial risk associated with entry into new markets is significant for many producers, context in which firms use established brands to enter new markets, extending the line (using a known brand for placing a product in the same class of products) or using extension of brand (using a known brand for placing a product in a different class of goods) (aaker and keller, 1990). this decision is based on the fact that consumers perceive notorious brands as less risky, fact that increases the chances for first-time purchases (in srivastava & sharma, 2011 taken by: baker et al., 1986; de chernatony, 2001; dowling & staelin, 1994; de ruyter and wetzels, 2000), so that one of the tools at the disposal of organizations to reduce the perceived risk by the consumer is the brand. it is known that the level of trust between brand, and more brand loyalty, and perceived risk associated with the purchase of a product exists a reverse link. the more the brand enjoy greater trust/loyalty, the less is the perceived risk by the consumer. in fact, the intensity of risk aversion varies from one consumer to another, consumers who show a high level of risk aversion being those who tend to be more loyal (matzler, grabner-kräuter & bidmon, 2008). organizations efforts to obtain consumer loyalty to the brand is focused on positioning strategies that are designed to educate consumers about the cause for which their products are the best choice compared to competing products, the development of successful positioning strategies having a real effect in reducing the risk for purchases that have both low and high levels of involvement (tian-que, 2011). beyond the indisputable role of implementing successful positioning strategies in reducing the perceived risk by consumers and obtaining consumer loyalty, organizations, as owners of premium brands, are significantly affected by the counterfeiting. firms offering counterfeit goods illegally use the notoriety of a certain brand, benefiting from its value. this illegal practice extended worldwide in all market sectors, generating real damage to brand image, leading to falling consumer confidence and thus increasing consumers' perceived risk in relation to the subject of counterfeits brands. in 2000, international trade with counterfeit goods was estimated at $ 100 billion and had between three and six percent of trade in goods (delener, 2000). another element that generates differences on consumers' perceived risk is the value of the product to be purchased. from this point of view there are products that involve a high degree of perceived risk (expensive products, long-use products etc.) and products which do not involves a high degree of risk (consumer goods, involving a reduced effort in acquisition, etc.). finally, two products launched by organizations from different countries will enjoy a different associated perceived risk depending on the consumer experience in relation 204 considerations on consumer perceived risk to the products originally from the respective countries. this difference is generated precisely by what the literature calls "country of origin effect," defined as "the extent to which the place of manufacture influences product evaluations" (gurhan-canlia & maheswaran, 2000). country of origin refers to the place where the product was manufactured or assembled as identified by the "made in" or "manufactured in". the effect of country of origin and brand awareness can generate a synergistic effect on consumer perception. the well-known brands were born in countries rated favorably by consumers at least in terms of covered product category, their very existence contributing to favorable or unfavorable perceptions about the country of origin. in this case, brand image and country of origin effect will contribute together to reduce the risk perceived by the consumer. if the producing country does not enjoy positive acclaim, country of origin effect can affect both strong and weak brands. thus, research has shown that where a product was manufactured in a country unfavorably evaluated, even when it is sold under well-known brand, the latter effect may not be able to destroy entirely the country of origin effect (chu chang, chen & wang 2010). on the other hand, in the context of the increasing number of multinational companies and therefore the manufacture of products / components in a number of countries, the assessment of the effect of country of origin becomes difficult. thus, consumers can identify certain notorious brands with the country of origin of the company, even if those products have been processed in other countries (shirin & kambiz heidarzadeh, 2011), which, in terms of perceived risk will be an advantage. influencing factors on perceived risk by consumers in the online market in europe online shopping, as is well known, is associated with a high level of perceived risk. this is why further on, based on the official eurostat statistics, we sought to identify a number of factors influencing the use of electronic commerce and thus the perceived risk as restrictive factor in buying in this king of market. in eu countries in 2013, 47% of the total population and 61% of internet users have made online purchases. the differences are still great from country to country. thus, in romania, in 2013, only 8% of the population has made online purchases, while in the uk and denmark percentage was 77% (table 1). it is obvious that the standard of living of the population influence the access to the internet and thus manifesting as buyers in the market of electronic commerce. this is why it is relevant the comparison between countries in terms of percentage of those who have made online purchases in total internet users. thus, given this indicator, we found major differences between countries, online purchases being mainly specific to countries with a standard of living above average, while the last position in this regard (percentage of people who purchases online in total people who have used the internet) lies romania and bulgaria. 205 ţimiraş table 1. proportion of people who made online purchases in the total population and in the total number of persons who used the internet, and gdp per capita (data for the year 2013) country % in total population % in total individuals who used internet within the last year gdp / inhabitant european union (28 countries) 47 61 25700 belgium 48 57 34500 bulgaria 12 22 5500 czech republic 36 48 14200 denmark 77 81 44400 germany 69 80 33300 estonia 23 28 13900 ireland 46 57 35600 greece 25 40 17400* spain 32 43 22300 france 59 70 31300 croatia 26 39 10100 italy 20 32 25600 cyprus 25 37 19000 latvia 32 42 11600 lithuania 26 37 11700 luxembourg 70 74 83400 hungary 28 38 9900 malta 46 65 17200 netherlands 69 73 35900 austria 54 66 37000 poland 32 49 10100 portugal 25 38 15800 romania 8 15 7100 slovenia 36 49 17100 slovakia 44 55 13300 finland 65 71 35600 sweden 73 76 43800 united kingdom 77 85 29600 * 2012 data source: eurostat, 2014 it is evident, therefore, that a potential factor braking online purchases is the purchasing power of the population, those with a high standard of living assuming greater risk in online purchases. of course, the large share of those who buy on the internet in the richer countries of europe is justified by custom developed for such purchases, usually formed also in the context of a high standard of living. analyzing the relationship between the percentage of those who used the internet and have made online purchases and gdp / capita in the 28 eu countries, we can confirm the idea that there is some link between the living and the habit of making purchases on the internet. thus, as shown in figure 1, about 50% of the variation in the percentage of those who used the internet and have made online purchases is explained by the variation in gdp / capita (figure 1). 206 considerations on consumer perceived risk r2 = 0.4836 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 0 20 40 60 80 100 internet purchases by individuals percentage of individuals who used internet within the last year g d p / in ha bi ta nt figure 1. the relationship between the percentage of those who used the internet and have made online purchases and standard of living (expressed as gdp / capita) in the 28 eu countries (data for the year 2013) * for greece, not having data for gdp / capita in 2013, was considered the indicator of 2012 source: processing by eurostat, 2014 the relationship between income and inclination to electronic commerce is perhaps the most obvious when making a comparative analysis, at state level, of the share of population who made online purchases in the total population that used the internet for the category of people by income levels (table 2). thus it appears that (except for a few isolated cases) in all eu countries revenue growth was accompanied by a greater inclination to buy on the internet (those on the first groups by income levels have made purchases on the internet in a lesser extent, compared to those enrolled in higher income groups), confirming the idea that implicitly higher revenues generates greater openness to risk taking. table 2 proportion of people who made purchases online in total population who used the internet per category by revenues (data for the year 2013) country individual living in a household with income in first quartile individual living in a household with income in second quartile individual living in a household with income in third quartile individual living in a household with income in first quartile european union (28 countries) 49 50 58 66 belgium 37 47 56 68 bulgaria 8 15 17 31 czech republic 39 41 46 52 denmark 73 69 82 91 germany 72 77 80 85 estonia 22 22 26 36 greece 29 37 54 68 spain 23 35 53 64 france 58 64 68 81 italy 20 25 31 40 cyprus 27 35 44 46 207 ţimiraş latvia 31 30 42 50 lithuania 23 26 33 46 luxembourg 55 70 79 90 hungary 19 27 34 47 malta 38 58 69 77 netherlands 63 64 70 80 austria 62 64 69 67 poland 41 41 48 56 portugal 21 27 33 52 romania 9 11 15 17 slovenia 40 35 40 66 slovakia 37 47 56 63 finland 63 61 66 83 sweden 63 72 74 84 source: eurostat, 2014 online purchases orientation is more pronounced among young people, which highlights their greater openness to risk taking. in table 3 we show the distribution by age group of the share of those who have made online purchases in total population who have used the internet. regardless of the national average, it is found in all countries a decrease in the indicator for the category over 45 years, while people between 25-44 years are the ones that stood out as having the greatest inclination to online purchase. although it may appear some question mark, regarding the differences between the revenue of considered groups as not being able to justify different orientation to online purchases, according to eurostat, population groups 4554 years and 55-64 years showed higher revenues than those of smaller intervals age. in this context, we conclude that age influences the orientation to online purchasing, younger people (25-44 years) assuming a greater risk of these purchases. table 3 proportion of people who made online purchases in total internet users, by age category (data for the year 2013) country age group 16-24 years old 25-34 years old 35-44 years old 45-54 years old 55-64 years old 65-74 years old european union (28 countries) 60 69 64 60 53 51 belgium 55 68 66 56 44 38 bulgaria 25 30 23 14 10 7 czech republic 55 63 51 39 32 23 denmark 89 89 87 83 73 60 germany 78 92 87 79 70 62 estonia 33 42 30 20 13 8 ireland 51 66 62 55 44 36 greece 38 49 41 33 33 25 spain 40 51 48 39 34 23 france 71 80 76 67 60 56 croatia 52 48 39 27 18 13 italy 30 37 36 31 27 20 cyprus 38 46 38 31 18 25 latvia 44 56 48 35 22 15 208 considerations on consumer perceived risk lithuania 42 51 39 25 18 11 luxembourg 77 82 75 74 66 59 hungary 41 46 42 35 24 17 malta 79 76 65 56 42 45 netherlands 80 86 79 76 59 47 austria 69 80 69 65 48 40 poland 50 63 53 36 31 22 portugal 39 52 41 29 20 26 romania 14 21 15 12 10 6 slovenia 65 61 49 38 27 20 slovakia 65 68 58 48 29 23 finland 76 90 85 71 52 35 sweden 82 84 83 81 65 54 united kingdom 86 93 86 83 79 73 source: eurostat, 2014 being directly connected with income, seems to have also an influence on the orientation to online purchases. compared to the differences in income categories, the differences in level of education categories, however, are higher. thus, there is a greater inclination towards electronic purchases and to assuming greater risk in online purchases by people with higher level of education compared to those with medium or low level (table 4). table 4. proportion of people who made online purchases in the total of internet users per category by level of education (data for the year 2013) country individuals with no or low formal education individuals with medium formal education individuals with high formal education european union (28 countries) 43 61 75 belgium 38 55 74 bulgaria 9 18 30 czech republic 37 54 61 denmark 79 78 91 germany 67 81 86 estonia 20 24 37 ireland 33 51 74 greece 18 34 55 spain 23 42 61 france 52 69 86 croatia 32 36 49 italy 21 34 44 cyprus 23 29 50 latvia 26 36 56 lithuania 24 27 52 luxembourg 55 72 82 hungary 17 36 53 209 ţimiraş malta 42 66 84 netherlands 56 73 85 austria 47 66 79 poland 34 42 66 portugal 22 45 60 romania 8 12 29 slovenia 37 45 64 slovakia 42 51 67 finland 61 68 79 sweden 68 75 84 united kingdom 59 83 93 source: eurostat, 2014 conclusions in conclusion, in addition to aspects of the product such as: the novelty of the product, the level of notoriety of the brand, country of origin, value, etc., variables such as income level, age and consumer studies influence the intensity with which consumers perceive risk and it implicitly assumes. of course there are other factors acting on the intensity with which consumers perceive the risk in time of purchase, but in the present study were taken into account variables that we found in official statistics. the study was based on data referring to the e-commerce market in the eu, in which the perceived risk plays an important role in the purchase decision. references aaker, d.a., keller, k.l. 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(2011) perceived risk in marketing strategy, international journal of operational management, marketing and services, volume 1, number 1, december, 2011, pp. 811. 211 microsoft word apostoaie constantin marius_eng.doc deepening integration coordinates of the european assembly iulia andreea bucur, “vasile alecsandri” university of bac u, romania abstract the european economic integration is, by its nature, a very complex and multilateral process, representing a wide area for multidisciplinary studies and research. at the same time, in the current context, the european integration acquires new additional valences, reason for which we can say that the significance of issues related to its manifestation is not diminishing but rather increases. considering the importance and topical of the researched subject, this paper aims to present and highlight the complexity of deepening as a fundamental dimension of european economic integration, and possible consequences resulting from its implementation. keywords deepening, treaties, customs union, internal market, european monetary union, euro jel codes: f02, f15 introduction the complex phenomenon of regional economic integration currently occurs in an impressive and dynamic manner aiming to unify previously distinct economic areas and to intensify economic interdependence between them expressed by increasing flows of goods, services, people, capital and ideas in order to create an open system, which encompasses economic, political, social and other areas. same as enlargement, the deepening is a fundamental dimension of the european assembly. the experience has shown that the enlargement has not excluded the deepening and the european union has succeeded on the two trends proving its capacity to develop both horizontally and vertically. deepening process of the european integration (or vertical integration), started in the ‘50s, involves1 two essential considerations: a gradual increase in common objects, which member states decide to do together by extending common policies and strengthening the supranational character of the community, through extensive use of majority voting system (instead of based on the existing unanimity in the council), which are the national interests of each member state and by strengthening the role of the european parliament (where european citizens are directly represented). over the years, the community requirements and standards have become increasingly rigid with precise rules and criteria for national economic policies of the candidates to align the common european models. 1 uniunea european : istoric, institu ii, procese decizionale, seria micromonografii – politici europene, institutul european din românia, 2003, p.7 studies and scientific researches economic edition, no. 15, 2010 194 customs union first step of deepening european integration from the perspective of deepening process of european economic integration, the ‘50s-‘60s period was marked by economic liberalization (establishment of a customs union as a prerequisite to achieving the common market) and the rules and policies required by unification (common agricultural policy, common commercial policy and common transport policy). establishment by the founding members, in 12 years (possibly 15 years if required) of a large market in order to increase the prosperity of member states of the european economic community (eec) was set as target in the eec treaty article 2 signed at rome on march 25th, 1957 and became operational from january 1st, 1958. thus, the eec began not with a free trade area, but with a customs union achieved in 10 years (2 years before the time fixed by the eec treaty) in july 1, 1968 through the elimination of duties, establishment of common external customs tariff and removal of quantitative restrictions2. in line with the article 9 (1) of the eec treaty, customs union was defined as tariff union representing “all trade in goods and which shall involve the prohibition between the member states of customs duties on imports and exports and of any charge having effect equivalent, and adopt a common customs tariff in their relations with third countries”. tariff unification was achieved first, by eliminating intra-community customs barriers and align them to the common external customs tariff set at the arithmetic average of duties on january 1st, 1957, in the four areas of the community customs (benelux, france, italy and west germany), with some exceptions, particularly for agriculture, and secondly, by lifting other trade barriers and harmonization of national regulations3 to an efficient functioning of the customs union. in accordance with the general agreement on tariffs and trade (gatt), article xxiv, paragraph 8: “the customs union means the replacement of two or more customs territories with a single customs territory in order: (i) customs duties and other restrictive regulations of commerce ... are eliminated for core components of trade union of the territories ... and (ii) ... applied essentially the same duties and other trade regulations by each of the trade union members included in the union territories.”4 eec customs union and the older benelux customs union went far beyond a simple customs union5 by including a common agricultural policy to liberalize agricultural trade within the community, by establishing a common competition policy so that intracommunity trade should not suffer distortions caused by anti-competitive practices, and by the extensive provisions on the harmonization and uniform economic rules and in a somewhat indirect taxation. eec member states have retained many non-tariff trade policy measures, particularly fiscal, technical and physical ones, which are important barriers to mutual trade. fiscal barriers consist of various forms of indirect taxation (vat, excise duties in different rates from country to country within the eec). for example, vat was introduced in the ‘70s, but rates vary from country to country within the eec – from 12% in luxembourg to 22% in denmark – and only in 1991 was fixed minimum rate 15% for of all member states. technical barriers involve different standards of consumption, country of origin marking of products, banning advertising of imported products, exporting firms must have a representative in the country of export eec, restriction loans, and more. physical barriers 2 nechita v. (1997), integrarea european , ed. de teptarea, bac u, p.73 3 ignat i. (2002), uniunea european . de la pia a comun la moneda unic , ed. economic , bucure ti, p.36 4 http://www.wto.org/english/tratop_e/region_e/regatt_e.htm, webpage accessed on march 10th, 2010 5 pelkmans j. (2003), integrare european . metode i analiz economic , edi ia a ii-a, institutul european din românia, bucure ti, p.8 studies and scientific researches economic edition, no. 15, 2010 195 concern internal customs and internal controls eec passport. thus, the 1985 schengen agreement is signed between france, germany and benelux, agreement to no longer provide internal customs checks and enter into force later in 1995. source of attraction for the european countries, common market creates a “centripetal force”6 on their products because of the positive economic and political effects. construction of single internal market ‘70s marked slowdown in european economic integration, oil shock and the international monetary system crisis affecting the development of europe, while u.s.a. and japan react more quickly. amid monetary instability, characterized by large speculative capital movements, in 1978 at copenhagen european heads of state have decided to create a monetary stability zone as a primary objective of achieving european monetary system (ems) established in march 1979 at paris. ems is the prove that european leaders have acknowledged the impossibility of creating a single internal market in the absence of a monetary union without a full financial integration. a new accelerated european integration is achieved by the mid ‘80s. thus, in 1985 the council of europe adopted the decision to convene an intergovernmental conference to amend the treaties of rome. this translates into a single market project, launched by jacques delors as president of the european commission in brussels. white paper, established by the commission, provides the removal, within 7 years, of all obstacles aimed free movement within the eec and outlines the basic principles of the single market project by presenting the measures needed to create it, ultimately leading to the birth of the single european act (sea). sea, signed on february 17th, 1986 and ratified by all member states to july 1st, 1987 is the first significant change to the treaties of rome (1957) which established the objective of the single internal market, until december 21st, 1992, by the four freedoms (free movement of goods, free movement of services, free movement of persons and free movement of capital). in addition to these, there is stipulated new common policies implementation by extending the scope of ec competence to assume new responsibilities in areas that were not mentioned by the eec treaty: environment, science, technology, research and development, regional policy and achieve economic and social cohesion. single internal market becomes reality on january 1st, 1993 and its performance should arise from the implementation of three principles: deregulation, aimed at the complete abolition of customs procedures and national regulations that favor domestic producers; harmonization, representing provisions and regulations reform in each of the member countries in order to make them compatible; mutual recognition, when harmonization is not possible, is that, when a state believes that a product has its own rules, so acceptable for domestic consumers, the other states are not allowed to refuse its entry into their territory. single internal market comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is assured, in other words, a deepening of the common market. it is a market with a mainly social dimension where dynamic competition is stimulated to increase through new means and forms7. (1) free movement of goods is the foundation of european economic integration and also an area where european construction has made the clearest achievements: harmonization of vat and customs duties. significant non-tariff barriers were removed between 1986-1993, characterized by the existence of protectionist practices, supported by some treaty provisions, arising from structural problems especially in traditional industries registered member countries, slowing growth and increased 6 popescu-bârlan, l. (2009), construc ia uniunii europene, ed. c.h. beck, bucure ti, p.62 7 cârti -buzoianu c. (2009), integrarea european : de la aspira ia ader rii la realitatea integr rii comunitare, ed. alma mater, bac u, p.50 studies and scientific researches economic edition, no. 15, 2010 196 international competition. goods manufacturers operating in the context of common standards stipulated under the harmonized regulations, accepted by all member states. mutual acceptance of testing and certification means that products must be certified only once to be available domestically. producers, both those inside and outside the eu, can make and sell products with a single technical specification. shortly, the eu has succeeded in removing barriers to trade in goods that allowed companies in some countries an unfair advantage. for consumers, there are many barriers that may discourage purchases outside their home state, such as inability to use the security or lack of language support. also, the customs duties may discourage or encourage cross-border shopping. redefining markets by increasing electronic commerce, consumers being more advantaged by purchasing the goods from suppliers in any eu member state. improving consumer protection. regarding branded goods, where manufacturers seek to control prices to consumers through retailers, there is growing trade in parallel imports. commercial agents brokers purchase goods to a high standard on low cost markets and then sell them in other member states where prices controlled by the producers are higher. consequently, efforts have focused on establishing a free and effective movement of goods by eliminating obstacles and harmonize national laws. (2) free movement of persons. along with other measures of social harmonization, free movement of persons ensures the social cohesion which is necessary for the existence of a unitary, integrated jointly space. for citizens of eu member states, freedom of movement includes the right to live, work and move freely. article 48 in the treaty of rome provided free movement of labor principle, “subject to limitations justified on grounds of public order, security and public health” not applicable for the occupations in public administration. in 1968 he was already removed all restrictions on workers and their families stay (in most member states, however, stay longer than a vacation requires registration). id cards or passports are required for travel outside a member state, no visa, work permit or other document was not required. sea, the schengen agreement and the maastricht treaty are crucial moments in achieving the “europe of citizens”. but, because of the national disparities still existing, it must continue the harmonization of the laws and strengthening community competences in order to provide an area without internal borders. employers are not allowed to do discriminate on potential employees based on nationality (except some areas such as national security), but there are certain elements that might be considered “barriers” such as recognition, repatriation, and loss of pension rights social security, freedom of movement is not a reality for all member states (under the transitional arrangements detailed restrictions in the accession treaties that apply for a transitional period from 2 to 7 years). meanwhile, progress has been greatest in health and safety at work. (3) free movement of services. established in the treaty of rome, article 52 and article 54 this freedom takes into account two issues: freedom of establishment (the right of an enterprise in a member state to involve a subsidiary or other unit in any partner country) and freedom to provide (the right to provide services anywhere in the community and regardless of nationality). achieving the latter requires compliance to a significant extent, the principle of mutual recognition and minimum harmonization. the difficulties in this area arising from insufficient progress in mutual recognition of diplomas and the absence of eu company law. (4) free movement of capital, the first of the four freedoms, involves the removal of control over capital transactions, while harmonizing national capital charges to ensure fair competition between countries with low tax and high tax ones. logical consequence of the free movement of goods, services and people, requires freedom to supply financial services and free movement of capital and trade integration complements and supports. the benefits8 derived from this process is a decrease in intermediate costs, diversification, a better 8 pascariu g.c. (2006), integrare economic european – curs jean monnet, universitatea „al.i. cuza”, centrul de studii europene, ia�i, p.36 studies and scientific researches economic edition, no. 15, 2010 197 organization and high possibilities to compete on the international market, increased funding opportunities through better mobilization of european economies. consequently, the deepening of european integration has received significant progress in realizing the scope of the idea of achieving the european single market aims to achieve a qualitative leap towards the end of 1992 the eec and also received steps towards a single monetary policy through the creation of the ems in 1979 and plans to achieve economic and monetary union. establish an ems through the european exchange rate mechanism, based on the european currency unit ecu, aimed at solving the internal debt of the eec and preparation of citizens, under psychological aspect, for a single currency. economic and monetary union (emu) and the single european currency in parallel with developing the single market, economic and monetary union (emu) is intended to complete european economic construction. changing european political landscape after the fall of communist regimes in central and eastern europe, led to a structural reform of the eec towards the creation of political union and emu. significant moment in this context is the maastricht treaty (signed on february 9th, 1992 and entered into force on november 1st, 1993) marks a new stage in the process of deepening european integration, with the a special status on the grounds that the treaty is essential to amend and strengthen the eu's founding treaties. there is no generally accepted definition for economic union, even in the maastricht treaty the presentation of a definition for the term of economic and monetary union is proving to be difficult. in accordance with the treaty of rome, economic and monetary union implies coordinating general economic and social policies in member states and unification of their domestic markets, thus ensuring not only the free movement of goods but also services, capital and labor, and especially the total and irreversible convertibility of currencies of the member states and the subsequent release of a single currency. european monetary unification is an unprecedented experience that can not find equivalent and contributed fundamentally to the eu definition of power as a pole of economic and political map of the world. the maastricht treaty states as eu major objective launching and implementation of emu in three stages. the first phase (july 1st, 1990 to december 31st, 1993) has as main objectives: liberalization of capital movements, completing the single market debut amid economic convergence process multilateral surveillance of economic policies of states. the second stage (january 1st, 1994 to december 31st, 1996) covered the following objectives: creating the european monetary institute with the mission to strengthen monetary cooperation between central banks and monetary policy coordination to ensure price stability; outline the convergence criteria. emu was an important step in achieving economic union, and therefore towards deepening european integration. simultaneously with the enlargement to central and eastern europe, started the third stage of monetary union, replacing the national currencies of member states with the euro, the irrevocable fixing of exchange rates and start of operation of the european system of central banks (escb) consists of the european central bank (ecb) and national central banks. although the idea of a single currency has existed since 1968, with the introduction of the customs union and the ems in 1979 and signing up in 1986, the sea, which enshrined the four freedoms of movement are important steps in achieving monetary unification, only in 1994 were initiated preparations towards the euro, first replacing national currencies as the currency of account since 1999 and then enter into circulation in 2002. preparations for eu accession, in accordance with the copenhagen criteria, establish practical rules for monetary unification. transition to emu membership implies two key issues: participation of member states to exchange rate mechanism ii and demonstrate a high level of sustainable convergence performance by them, in order to adopt euro. introduction of the euro has some advantages and disadvantages, reason for which we point some main emu effects on the euro area countries. studies and scientific researches economic edition, no. 15, 2010 198 effects on the competitiveness of member states. completing the single market and the euro participating economies and competitiveness concerns of increased investment in human capital, thus helping to increase production, income, employment and inflation reduction. increased market transparency and price is likely boost their alignment and to boost the competitive environment. as regards european companies exporting single currency leads to increased competition in the single european market and also some operational costs are reduced by the fact that some companies are able to conduct international transactions in euro more than was capable in national currency. effects on eu external relations. a) emu generates an intense development and growth balance between the main actors in the international financial system that euro zone, the u.s.a. and japan, contributing to increased individual responsibility to ensure a stable global environment, japanese and american companies will benefit from removing barriers currency single european market and consolidation monetary stability in the euro area, the world economy will become more symmetric; b) emu, with its economic power, is an anchor of stability for the neighboring countries by linking their national currencies for the euro, these countries can obtain the benefits of price stability and from policies aimed at stability in the euro area; c) emu promotes stability and boost economic growth in the euro area, this having a positive effect on trade and investment relations with other countries; d) emu offers new opportunities for financial investors around the world to diversify investments and to reduce risks. effects on currency stability. the introduction of the euro contributes to creating stable monetary relations and the elimination of currency risk when trading in the euro area, which, especially in export-oriented countries, leading to the possibility of creating new jobs. costs transactions are reduced, because only this includes costs related to currency risk. effects on employment. adopting the single currency is a base for employment, resulting in a reduction in interest rates, leading to encouraging investment and growth – two essential conditions for creating new jobs. effects on consumers. benefits for consumers are: reducing costs for travel in foreign countries, remittances to other countries easier and less costly, greater transparency in costs and increasing competition, both resulting in lower prices, eliminate exchange rate risk countries euro area, reducing interest rates while cutting costs relative to loans, the safety of purchasing power due to inflation reduction, sustainable economic growth leading to job security. effects on transport. euro has generally positive effect on transport between eu member states by reducing intra stimulating conversion costs per transaction, which creates an increased demand for transport services. effects on interest rates. a reduction of inflation through monetary policy pursued by the ecb as well as rising stock market liquidity as space and interest rates tends to decrease. effects on growth. stimulate structural reforms and encourage economic growth stemming from lower transaction costs of foreign exchange reduced or even eliminated the price transparency. effects on the sovereignty of member states. the only aspect of national sovereignty within the meaning of national power of autonomous action in this area directly affected by emu is monetary policy. effects on national economic policy. emu member states remain responsible for national economic policy, although no longer entitled to have an independent monetary policy. also increases near the emu economies in the euro area, this needs a supervision and coordination of their economic policies. effects on taxes. the single currency itself is not responsible for the overall increase in the level of taxation of citizens, but can cause changes in national tax system. while the single market with a single currency require harmonization of tax systems, significant differences between the tax rates may cause economic distortions. studies and scientific researches economic edition, no. 15, 2010 199 the creation of emu has sought to achieve at least two goals. in the first instance, the monetary union wants to provide a catalyst for further political integration of western europe, and in the second, to achieve more dynamic growth and a higher use of labor. conclusions the european union is, at present, the most advanced model of regional integration. continuity is the essence of european construction, the principle set out in the treaty of rome in 1957 by its founders “an ever closer union among the people of europe”. permanent and continuous nature of european construction, throughout its evolution, is offered by the two dimensions: enlargement by the integration of new member states and deepening or qualitative integration, as essential objectives for its continued development and strengthening. deepening integration resulted in generating more interest as the states outside the ec/eu accession to, and hence the security and a greater appetite of the ec/eu enlargement. european experience of economic integration is unprecedented in terms of deepening economic integration through dynamic economic development, achieving the largest single internal market in the world, creating the euro area, achievements of european economic integration process prints a single character. eu’s ability to function effectively in response to citizens concerns can and should be further improved, but this objective can be achieved by stopping the expansion and especially the deepening. therefore, the eu can continue to enlarge and deepen through a process of gradual and carefully managed accession, along with internal reforms of its institutions and policies to avoid the so-called “differentiated integration” or an europe “with more speed”. european assembly is an expression of successful idea – the idea of united europe and of a will – the political will of most western european countries, creating one of the most important trading powers and providing some of the highest civilization and living conditions. bibliography 1. cârti -buzoianu, c. (2009), integrarea european : de la aspira ia ader rii la realitatea integr rii comunitare, ed. alma mater, bac u 2. ignat, i. (2002), uniunea european . de la pia a comun la moneda unic , ed. economic , bucure ti 3. nechita, v. (1997), integrarea european , ed. de teptarea, bac u 4. pascariu, g.c. (2006), integrare economic european – curs jean monnet, universitatea „al.i. cuza”, centrul de studii europene, ia�i 5. pelkmans, j. (2003), integrare european . metode i analiz economic , edi ia a ii-a, institutul european din românia, bucure ti 6. popescu-bârlan, l. (2009), construc ia uniunii europene, ed. c.h. beck, bucure ti 7. uniunea european : istoric, institu ii, procese decizionale, seria micromonografii – politici europene, institutul european din românia, 2003 8. http://eur-lex.europa.eu/ 9. http://www.wto.org/ studies and scientific researches economic edition, no. 15, 2010 200 external audit systems 98 external audit systems stoica petrică, economist abstract: the present article has as objective the presentation of a series of external audit systems, together with some of their characteristics and models found in different countries. the purpose of the external audit performed by the supreme audit institutions (sai) is to assure the proper use of the public funds, a good management and the public and private accountability of the authorities, through the published objective rapports. the public sector audit represents a crucial element within an effective accountability framework met in all demographic governments. the modern audits of the public sector are first of all geared towards the needs of the legislature. however, these add a significant value to public sector management, by providing the objective and professional evaluation of the efficacy of the financial management system and of the economy, and efficiency and effectiveness in the operations performed by the government. in most countries, a supreme audit institution (sai) conducts public sector auditing. the structure, function, and the status of the sai may vary from country to country due to their respective historic development, political systems, culture, language and regional affiliations. in advanced european and american nations it has been introduced a mechanism regarding the approach oriented towards the client performance and market principles which should work effectively. accountability for the use of public funds is a cornerstone of good public financial management. supreme audit institutions (sais) are the national bodies responsible for scrutinizing public expenditure which provide an independent opinion on how the executive has used public resources. the four objectives of public sector auditing are to promote: – the proper and effective use of public funds; – the development of a powerful financial management; – the proper execution of administrative activities; – the communication of information to public authorities and the general public through the publication of objective reports. these fundamental objectives guide the work of all supreme audit institutions but several different public external audit models exist around the world. however, every country is different and even where a supreme audit institution broadly follows one of these audit models, there are likely to be some national variations in its remit and the way it is organized. the three external audit models are the following: studies and scientific researches edition: economics, no. 13 (2008) external audit systems 99 external audit model distribution westminster model, also known as the anglo-saxon or parliamentary model the united kingdom, some european countries as for example ireland and denmark, latin american countries such as peru and chile judicial or napoleonic model the latin countries from europe, turkey, francophone countries from africa and asia, several latin american countries including brazil and colombia board or collegiate model some european countries including germany and the netherlands, argentina, indonesia, japan and the republic of korea table no.1external audit models westminster model the public financial management is currently in the process of developing more detailed guidance to assist country offices in assessing the maturity and performance of individual supreme audit institutions and formulating pragmatic approaches to improve their effectiveness. according to the westminster model, the work of the supreme audit institutions (sais) is intrinsically linked to the system of parliamentary accountability. the basic elements of such a system are: authorization of expenditure by parliament; elaboration of annual accounts by all departments, government and other public bodies; the audit of those accounts by the supreme audit institutions; the submission of audit reports to parliament ; issue of reports and/or recommendations by the public accounts committee (pac); government response to the public accounts committee reports. westminster accountability systems have the following characteristics:  a national audit office (nao) with a single head, often called the auditor general, who may be an officer of parliament  all rights, powers and responsibilities vested in the auditor general personally, rather than in the nao as an institution;  staff who have a professional financial background – accountants and auditors;  a strong focus on financial audit and on the value for money with which audited bodies have used their resources, with less emphasis on compliance with legislative provisions;  a mechanism, whether formal or by convention, whereby the government is required to respond to public accounts committee reports and state the actions it is taking to implement recommendations. according to this system the role of the general auditor may be combined with that of a comptroller. his function is one of control rather than audit and it is performed prior the execution of the expenditure. the comptroller is required to authorize ministry of finance requisitions from central funds. before authorizing such requisitions, the comptroller must obtain assurance that these credits are requested for purposes which have legal authority and are within the financial limits approved by the parliament. checks relating to the comptroller function are normally performed at a high level and do not involve a detailed review of analytical expenditure. studies and scientific researches edition: economics, no. 13 (2008) external audit systems 100 judicial model according to this model, the supreme audit institution is an integral part of the judicial system operating independently of the executive and legislative branches. it is possible for the supreme audit institutions that use this model, to have only a limited relationship with the national parliament. a key aspect of judicial accountability systems is that relevant government officials are usually held personally liable for the sums involved should an unauthorized or illegal payment be made. in addition to the sai’s judicial role, a complementary high level system of parliamentary accountability for public expenditure is normally in place. the key elements of a judicial system are:  at national level, the parliament authorizes public spending in the annual budget;  the officials of the ministry of finance are transferring funds towards other ministries and institutions, and supervise the accounting procedures. they individually prepare the financial situations which are being audited by the supreme audit institution;  the ministry of finance normally plays an active role both in setting rules for public accountants and other officials to follow and in checking that these rules are being compiled with. it may exercise a strong ‘internal audit’ role, in the sense that auditors from the ministry of finance are internal to government as a whole, even though they are external to the body being audited.  the supreme audit institution audits the annual financial statements prepared by the public accountants.  often, sai is empowered to audit several years of accounts simultaneously, rather than auditing every set of financial statements, every year. this is the reason for which it seldom adopts a cyclical approach to their work, particularly for smaller and lower spending entities.  for this purpose sai judges the legality of the public accountant’s actions and can :  “discharge” – the public accountant from further liability if it is considered that the transactions are legal;  impose a penalty where illegal transactions are found. the supreme audit institution normally presents a report on the state account to parliament, insisting upon the most important issues identified in the audit of individual public accountants as well as upon analytical review procedures. the parliament can rely on this report in granting a ‘discharge’ of responsibility to the government for the year, if it is satisfied with the way the government has managed public funds in the year. the main characteristics of a judicial audit model are:  the supreme audit institution is a court and its members are judges who can impose penalties or corrections on audited officials;  there are important safeguards in what concerns the independence of the members of the court who are usually appointed for a non time-limited term until a fixed retirement age;  the court normally selects a member to act as its president. however, all members have independent judicial status and the authority to rule on the cases in front of them;  the main objective of the audit activity is to verify the legality of the transactions which take place;  the professional staff from this kind of sai tend to have legal rather than accounting or auditing backgrounds. there can be variations from one country to another within the judicial model described above. the most important is that in some countries particularly portugal and italy the sais may have an ex ante control function as well as an ex post audit function. this means that the supreme audit institution is responsible for checking and giving prior approval to certain types of public expenditure. the ex ante function is normally performed by a separate court or division within the sai and in contrast to the studies and scientific researches edition: economics, no. 13 (2008) external audit systems studies and scientific researches edition: economics, no. 13 (2008) 101 westminster model, it usually involves a more detailed level of checks. collegiate or board model according to the collegiate or board system, the supreme audit institution has a number of members who form its college or governing board and take decisions jointly. collegiate audit bodies are usually part of a parliamentary system of accountability. reports and opinions agreed by the college are submitted to parliament, where there is usually some form of public accounts committee to act on them. collegiate bodies do not have judicial functions. the basic structure of the accountability model is thus similar to the westminster model, with the key differences being in the internal structure of the audit institution. the main characteristics of this model are:  a governing committee consisting of the members of the college and run by a president;  depending on the size of the office, there may be a series of colleges or subcommittees each having the power to decide on the audit matters within their area of responsibility. there is usually also some sort of appeals committee to review contested decisions of individual colleges;  members normally have considerable freedom in determining their working methodologies and there may be a variety of audit approaches between different colleges within the same institution;  members of the college are normally appointed for a fixed term by a vote of parliament, and have a limited number of mandates, maximum two;  the objective of the sai’s work “financial or legal“ is less influenced by the fact that it is a collegiate institution, than by the general legislative and historical context of the country it operates in. beyond the three main external audit models, it has to be mentioned the fact that, in some countries, an independent external audit institution may not actually exist, while in other countries it may exist an external audit system which, for historic reasons incorporates elements from more than one model of financial accountability. it is possible that a country may not have any external audit function at all, and this can certainly occur in non-democratic regimes where power is centralized within the executive branch. alternatively, an ‘external auditor’ may exist but it will certainly be part of the executive rather than independent of government. before rushing in with a standard model based on one of the existing systems, careful analysis of the current system and traditions of the country needs to be undertaken. consideration needs to be given to what is working within the existing system, what is not working and how an independent sai could best build on what is there already. even if the existing audit body is not fully independent of the government, it may be operating in reasonably autonomous way and there may be elements worth preserving. a country’s supreme audit institution, and all of its financial accountability systems, may incorporate elements of different systems which can be incompatible and ineffective the overlapping of the audit models is potentially one of the most difficult situations to resolve and will probably have ramifications extending well beyond the sai itself. references: [1] cogliandro, g., the audit system, in “international journal of public administration” 2000, volume 23, numbers 2&3; [2] borge, magnus, “the role of supreme audit institutions (sais) in combating corruption” 2005; external audit systems 102 [3] association of chartered certified accountants. “different models of supreme audit institutions”. updated 2005. retrieved 21 april 2005 http://www.accaglobal.com/ transparency/ publicsector/audit/models; [4] borge, magnus. “the role of supreme audit institutions (sais) in combating corruption.” transparency international updated october 1999. retrieved 8 february2005 [5] http://www.transparency.org/iacc/9th_iacc/papers/day4/ws2/d4ws2_mborge.html; [6] international organization of supreme audit institutions. “the lima declaration of guidelines on auditing precepts.” updated 2005. retrieved 8 february 2005 [7] <http://www.intosai.org/level2/2_limade.html>. studies and scientific researches edition: economics, no. 13 (2008) http://www.accaglobal.com/%20transparency/%20publicsector/audit/models http://www.transparency.org/iacc/9th_iacc/papers/day4/ws2/d4ws2_mborge.html (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 7 ukrainian fuel and energy sector: distinctive features olesia azarenkova v.n. karazin kharkiv national university lesyaa91@mail.ru abstract the paper is devoted to the analysis of ukrainian fuel and energy sector (fes). the number of risks that threaten the stable supply of energy sources is growing. a high proportion of the energy intensity of developing economies in conjunction with their growing gdp leads to increased competition on world primary energy markets and causes significant fluctuations in energy prices, which negatively affect the global economy. there is also an important issue for world energy limited use of non-renewable energy resources. considering the prospects of development of ukrainian fes, it is important to pay attention to patterns and trends of the global and national power. we have studied the basic trends of ukrainian fes. it is the most important sector of the economy, and therefore its reform for market economy creation, price liberalization is a very important process. the current task of the energy sector of ukraine is to be able to consistently produce and use energy to promote economic growth and improve quality of life. keywords economy; crisis; energy; fuel and energy sector; ukraine jel classification f43; f50; f62; q43 introduction nowadays global energy market operates and develops in contradictions and transformations. the number of risks that threaten the stable supply of energy sources is growing. in the twentieth century, industrialized countries face stiff competition from developing countries, especially asian countries. a high proportion of the energy intensity of developing economies in conjunction with their growing gdp leads to increased competition on world primary energy markets and causes significant fluctuations in energy prices, which negatively affect the global economy. there is also an important issue for world energy limited use of non-renewable energy resources. energy problems also include the necessity to preserve the environment. increasing the scale of energy consumption of all kinds, strengthening their impact on the environment significantly affect the dynamics of the global energy market and generate contradictions of its functioning. that is why the study of the global energy market, determining the characteristics of its operations and transformations in the conditions of modern economic paradigm, identifying ways of its improvement is timely and relevant. considering the prospects of development of ukrainian fuel and energy sector (fes), it is important to pay attention to patterns and trends of the global and national power. the issues of energy sector in the context of economic attractiveness and opportunities for transition to a new energy level and in the context of energy security need more detailed study of the fuel industry in the country. ukrainian fuel and energy sector: distinctive features 8 brief literature review in recent decades, the problems of the world energy resources market, the formation of energy security, development and implementation of innovative projects in the field of renewable energy were and are the focus of the scientific community. these issues were developed in the works of r. robertson (1987), e. giddens (1990), n. apergis and j. payne (2009), b. levy (1982), j. mitchell (1996), etc. in his work “eu energy policies towards the 21-st century” p. lyon (1990 conducts a comprehensive analysis of the current eu energy strategy and suggests scenarios in the global energy sector at the beginning of the xxi century. much attention in this work is paid to renewable energy sources, which in a few decades will have to completely replace hydrocarbon fuels. the issues of the global and ukrainian energy markets and ukraine are analyzed in the work of v. kostyeyev (2002), which deals with ways to diversify sources of energy supply and factors that determine them. purpose the main objectives of the article is to examine the state of the fuel and energy sector of ukraine in the recent years, the study of energy sector of ukraine economic equilibrium between producers and consumers. results energy sector has a key position in the ukrainian economy and has the necessary potential to meet its own needs for energy transit and export of electricity, coal and oil products to european countries. the basis of the electricity industry is a united power system (ups), which provides electricity to domestic consumers and carries out its exports and imports. ups has eight regional electric power systems connected by backbone power lines, and have interstate power lines. the total installed capacity of power plants at the beginning of 2014 amounted to almost 54.4 million kw; capacity in thermal power plants (tpp) accounted for 27.6 million. kw (or 50.7%), nuclear power plants (npp) 13.8 mil kwh (25.3%), hydropower plants (hpp) about 5 4 mil kw (9.9%), wind power plants (wpp) 9 ths kw (1.65%). figure 1 electricity installed capacity source: information and analytical report "status of oil and gas production activities" (2014), available at http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 (in ukr.) http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 azarenkova 9 as we can see, the trend remains unchanged, i.e. the leading role in the electricity industry play thermal power plants, this is due to relatively free location, half the price of capital cost compared to other power plants. we can note that electricity crisis in ukraine is characterized by negative trend of installed capacity rate ratio (up to 32.5% in 2013), and by lack of energy strategic project (development of more effective methods of power generation based on resource, territorial, environmental and other factors). figure 2 electricity consumption in 2013 source: yaskovets, v. (2010) development of fuel and energy complex of ukraine in the context of globalization, available at http://archive.nbuv.gov.ua/portal/soc_gum/knp/2010_196_1/knp_236-240.pdf (in ukr.) considering the power consumption as a quantitative indicator, we may note that its structure describes ukraine as an industrial country, where the ratio of electricity consumption in industry doubles the consumption needs of the population; that shows the development of the technological side of the economy. however, considering the quality indicators, i.e. the level of electricity consumption per capita, energy intensity of gdp, electricity tariffs, we have a different situation. the level of electricity consumption per capita is an important indicator of living standards of the population. in ukraine this figure decreases year by year: in 1990 it amounted to 5630 kwh and in 2013 to 3195 kwh, a decrease is 1.6 times. ukraine's economy is among the energy intensive in europe. the energy intensity of gdp in 2013 was 0.613 kilograms of fuel per uah of output. the national economy is too overloaded with energy-intensive industrial production. thus, despite the advantage of industry in the structure of energy consumption, inefficient use of resources and low efficiency has a negative impact on the economy and development of the country. since energy is a major component of the national economy, it is necessary to make the valuation of electricity. this figure reflects most clearly tariffs for industry and population. we see that energy tariffs for the population are much higher than rates for the industry in developed countries with the highest levels of energy efficiency and conservation. reducing electricity tariff for industry is gradually in accordance with the technological structure of the economy of the country. this affects the reduction of energy intensity of gdp, causes environmental safety of the region and affects the structure of industry in the region. http://archive.nbuv.gov.ua/portal/soc_gum/knp/2010_196_1/knp_236-240.pdf ukrainian fuel and energy sector: distinctive features 10 at the same time, consumer demand for electric power in the united energy system has been uneven. however, electricity is the most effective and economical only when these fluctuations at full load systems remain as small as possible. thus, in developed countries, we see economic and technological balance, which is the vanguard of the country. ukraine faces such a situation when electricity tariffs for industry are 4 times higher than tariffs for population. however, artificial increase without qualitative changes does not change the situation, but rather will lead to economic crisis, i.e. there is needed an integrated socio-economic strategy of the country where the issue of fuel and energy sector will be a priority. ukraine energy resources make it a relatively resourced countries. however, shortsighted economic and environmental policies led to inefficient use of reserves of gas, oil and other minerals. in the state balance of mineral resources reserves of ukraine and prospective resources of oil, gas condensate, free and dissolved gas are recorded in the amount of over 2.3 billion tons of fuel equivalent, including reserves of industrial categories 1,4 billion tons. stocks of hydrocarbons growth decreases, just over 2013 were opened 4 new deposits. in 2011, there were opened 15 new productive reservoir fields. ukraine has explored more than 314 oil and gas fields, including 57 classified as medium, large and unique in their inventory. most of them are in the final stages of development and are characterized by complicated geological and technological conditions of operation. despite the presence in its territory of oil, gas, coal, shale gas, ukraine is an energy deficit country, satisfying its own needs for energy only by 50%: • produces 10-12% of the total oil consumption; • natural gas 20-25%; • coal 90-92%1. figure 3 gas industry dynamics source: information and analytical report "status of oil and gas production activities" (2014), available at http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 (in ukr.) gas industry is quite young and promising sector. natural gas is the most efficient fuel and chemical raw material. its production was started in ukraine in the 50’s years of the twentieth century. and today is produced 20 billion cubic meters of gas, that 1 muradova, o. (2011) current state of development of fuel and energy complex of ukraine, available at http://archive.nbuv.gov.ua/portal/soc_gum/dtr_ep/2011_6/files/ec611_17.pdf (in ukr.) http://archive.nbuv.gov.ua/portal/soc_gum/dtr_ep/2011_6/files/ec611_17.pdf azarenkova 11 meets ukraine’s needs in it for 20 25%. using gas is two times cheaper compared to oil. despite sufficient deposits of gas for consumption in ukraine, due to lack of exploration work funding the volume of gas production is reducing. ukraine has no plants for natural gas liquefaction. work on the development of shale gas, which, according to experts, can provide ukraine with gas for 30 years, has not yet started. the volume of consumption decreases too slowly (fig. 3), due to negative trends of the industry against the introduction of energy consumption methods. figure 4 oil industry dynamics source: information and analytical report "status of oil and gas production activities" (2014), available at http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 (in ukr.) ukraine is a transit country in the world energy market. the gas transportation system of ukraine implemented the seasonal supplies from russia to europe. in recent years, europe has reduced the dependence of transportation from rf, diversifying gas supplies and energy saving methods. that is what affected the transit capacity of ukraine, with a negative impact on budget revenues. oil industry of ukraine is characterized by low indices, although the potential for mining and processing of oil is much higher. it is represented by oil producing and refining industries. since the beginning of 2013 ukraine produced 1 024 400 tons of oil and gas condensate and 6.9 billion cubic meters of gas. compared with the corresponding period last year oil and gas condensate production decreased by 5.6%, and gas increased by 1.1%. total amount of oil pumping in 2013 amounted to 5 582.0 thousand tons, that is 14.0% (or 907.0 thousand tons) less than in the corresponding period last year. oil transit via ukraine amounted to 4 944.0 thousand tons, that is 3.1% (157.0 thousand tons) less than in the corresponding period last year, while oil pumping volume for ukraine needs was 638.0 thousand tons, that is 54.1% (751 thousand tons) less than in the corresponding period last year2. the coal industry in ukraine is a traditional industry, which occupies a leading position among fuel industries. 75% of coal is used as fuel, 25% as technological raw materials for the steel industry, chemical industry and other fields. in 2013 83.7 million tons of coal were produced, that is 3.0% less than in 20123. 2 information and analytical report "status of oil and gas production activities" (2014), available at http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 (in ukr.) 3 information and analytical report "status of coal industry in ukraine" (2014), available at http://mpe.kmu.gov.ua/fuel/control/uk/ publish/category?cat_id=194359&page ukrainian fuel and energy sector: distinctive features 12 the coal industry needs modernization and restructuring of the sector to improve profitability and competitiveness of ukrainian coal. selling prices for coal do not provide reimbursement for its production. coal industry pollutes the environment with emissions of harmful substances into the atmosphere and water. significant impact on the market transformation of energy resources makes an intensification of the use of alternative energy sources. there are factors of two opposite directions in its development centripetal and centrifugal. the main centripetal forces that seek to enhance the use of alternative energy sources include the desire of countries to preserve ecological balance, reducing the cost of disposal of waste and reduce energy dependency of energy resources suppliers. the main centrifugal forces that prevent the implementation in practice of alternative energy sources is the relatively high cost of equipment for energy generation, need of large areas for its location and relatively large costs of obtained energy. considering that scientific progress steadily drives down the cost of power generation equipment production and reduces material consumption and its dimensions, it can be argued about the future growth of their role and importance. conclusions fuel and energy sector of ukraine is the most important sector of the economy, and therefore its reform for market economy creation, price liberalization is a very important process. the current task of the energy sector of ukraine is to be able to consistently produce and use energy to promote economic growth and improve quality of life. references apergis n., payne j. (2009) energy consumption and economic growth in central america: evidence from a panel cointegration and error correction model, energy economics, 31, pp. 211–216. giddens f. (1990) the consequences of modernity, stanford. information and analytical report "status of coal industry in ukraine" (2014), available at http://mpe.kmu.gov.ua/fuel/control/uk/ publish/category?cat_id=194359&page information and analytical report "status of oil and gas production activities" (2014), available at http://mpe.kmu.gov.ua/fuel/doccatalog/document?id=239090 (in ukr.) kosteyev, v.v. (2002), external economic factors of industrial markets diversification: the example of the energy market of ukraine (phd thesis), rostov-na-donu, russian federation. (in russ.) levy, w. (1982) oil strategy and politics, 1941–1981, colorado, westview press. lyons, p. (1998), eu energy policies towards the 21st century, elstead, surrey, ec inform. mitchell, j. (1996), the new geopolitics of energy, london, the royal institution of international affairs. muradova, o. (2011) current state of development of fuel and energy complex of ukraine, available at http://archive.nbuv.gov.ua/portal/soc_gum/dtr_ep/2011_6/files/ec611_17.pdf (in ukr.) robertson, r. (1987), globalization theory and civilization analysis, comparative civilization review,17, рp. 47–49. azarenkova 13 yaskovets, v. (2010) development of fuel and energy complex of ukraine in the context of globalization, available at http://archive.nbuv.gov.ua/portal/soc_gum/knp/2010_196_1/knp_236-240.pdf (in ukr.) 3 challenges of international standards on auditing in global crisis context 11 challenges of international standards on auditing in global crisis context botez daniel, associate professor, phd university of bacău abstract: the financial crisis that broke out in summer 2007 is striking in its sheer magnitude, the speed of its contagion to the global financial sphere, as well as its persistence. these factors make it on the most impressive and unprecedented events in recent financial history. one of key points concerning the financial crisis looking statutory audit and statutory auditors. the financial crisis in 2001 highlighted weaknesses in the statutory audit process. working with the fsf and market regulators, the statutory audit profession undertook a series of spectacular reforms with four main thrusts :  most countries moved from a system of self-regulation to one of shared regulation or outside regulation, most notably in the usa;  a new system of global governance was introduced with the creation of the public interest oversight board (piob), which oversees the public-interest activities of the international federation of accountants (ifac), particularly in the areas of audit standard-setting (international auditing and assurance standards board – iaasb) and ethics (international ethics standards board for accountants – iesba);  the iaasb adopted an extremely stringent standard for internal control at audit firms. the new standard provides, among other things, for a systematic concurring partner procedure before an opinion is issued. the underlying principle is that the review should make it possible to avoid large-scale audit failures by assigning a non client-facing partner to review audit work (including the identification of macroeconomic and microeconomic risks) as it is being carried out;  independence standards were tightened by placing stricter limits on the work done for audit clients. though auditors have not attracted criticism over the subprime crisis, there are continuing challenges related to the auditing profession. two widely use sets of auditing standards exist side by side, i.e. international standards on auditing (isas) and the us standards adopted by the public company accounting oversight board (pcaob). europe should adopt isas as soon as possible to reduce uncertainty and promote convergence, and should call for convergence between isas and pcaob standards. countries continue to apply different independence rules, particularly those on scope of services restrictions. europe should seek to adopt or converge to the ifac’s independence standards when the current revision is complete. auditors may see their role evolving, as they report more fully on future risks faced by audited companies. however, auditors are reluctant to report publicly more fully on risk identification because of liability issues, which need to be solved. this situation may create a serious gap between the information on past events given in the audit report and expectations by the industry for a forwardlooking opinion on risks facing companies. national supervisors and inspectors, within and outside europe, need to develop mechanisms to cooperate more effectively at operational level in the external control of audit firms. for europe, one of the most important recommendation looking the process of convergence audit standards. all national studies and scientific researches edition: economics, no. 13 (2008) challenges of international standards on auditing in global crisis context 12 auditing standards, including those issued by the public company accounting oversight board (pcaob), and should converge to international standards on auditing (isas). statutory auditors need to report more extensively about risk identification. this will require addressing the question of auditor liability, which in many jurisdictions appears to be a major constraint to expanding the auditor’s risk reporting. convergence should also be a goal for independence standards. among the recommendations of the financial stability forum (fsf) was that “the iaasb, major national audit standard setters and relevant regulators should consider the lessons learned during the market turmoil and, where necessary, enhance the guidance for audits of valuations of complex or illiquid financial products and related disclosures.” the iaasb had already established a task force in february 2008 to consider whether additional guidance on fair values was necessary and that task force was also asked to develop a response to the fsf recommendation. the task force includes representatives of auditors and regulators. a wider group of interested parties, including preparers and investors, has also been consulted to inform the discussions of the task force and provide feedback on activities that the iaasb could pursue in developing possible auditing guidance on fair value accounting estimates. the task force recommended that a reminder of relevant material in isas should be issued. this alert has been prepared in response to that recommendation. one of the important challenges regarding fair value accounting estimates. the following matters are particularly important for preparers and auditors in considering fair value accounting estimates: • the measurement objective, as fair value accounting estimates are expressed in terms of the value of a current transaction or financial statement item based on conditions prevalent at the measurement date; • the need to incorporate judgments concerning significant assumptions that may be made by others such as experts employed or engaged by the entity or the auditor; • the availability (or lack thereof) of information or evidence and its reliability; • the breadth of assets and liabilities to which fair value accounting may be, or is required to be, applied; • the choice and sophistication of acceptable valuation techniques and models; and • the need for appropriate disclosure in the financial statements about measurement methods and uncertainty, especially when relevant markets are illiquid. of the above, in the current environment obtaining reliable information relevant to fair values has been one of the greatest challenges faced by preparers, and consequently by auditors. the nature and reliability of information available to management to support the making of a fair value accounting estimate vary widely, and thereby affect the degree of estimation uncertainty associated with that fair value. if markets become inactive, market price information becomes unavailable and estimates need to be made on the basis of other information, often using models, some of which incorporate inputs that are “unobservable.” the degree of estimation uncertainty therefore increases and affects, in turn, the risks of material misstatement. what may in the past have been a routine valuation problem may become the source of a significant risk. in such circumstances there are limits to the information that management possesses or can obtain and that therefore may be available to the auditor as audit evidence. nevertheless, whether inputs are observable or not, preparers need to have evidence to support them, and auditors need to obtain sufficient appropriate audit evidence recognizing that the evidence may be different from what has previously been available. studies and scientific researches edition: economics, no. 13 (2008) challenges of international standards on auditing in global crisis context 13 experience to date has suggested that, while estimation of fair values has proved to be extremely difficult in light of market uncertainty, it has not proved impossible to obtain sufficient information to record these fair values in financial statements. while fair values are commonly thought to relate primarily to financial assets and financial liabilities, the use of fair value is more widespread. depending on the financial reporting framework, the impact of fair value accounting may be seen with regard to management’s determination of pension liabilities, the value of goodwill and intangibles acquired in a business combination, real estate, endowment funds, share-based payments, non-monetary exchanges and other classes of assets and liabilities. isa 545 is the principal standard that is directly relevant to auditing fair value accounting estimates. it establishes standards and provides guidance on auditing fair value measurements and disclosures contained in financial statements. fair value measurements of assets, liabilities and components of equity may arise from both the initial recording of transactions and later changes in value. further, those financial instruments and other assets recorded at historical cost, but not required to be re-measured at fair value, may nevertheless require fair value consideration, depending on the financial reporting framework, for supplementary disclosure or for estima-tion of provisions or impairment losses. changes in fair value measurements that occur over time may be treated in different ways under different financial reporting frameworks. for example, some financial reporting frameworks may require that such changes be reflected directly in equity, while others may require them to be reflected in income. the isa deals with the overarching requirement for the auditor to obtain sufficient appropriate audit evidence that fair value measurements and disclosures are in accordance with the entity’s applicable financial reporting framework. within the isa, additional requirements tailor the requirements in other isas to the audit of fair value; in particular, those dealing with understanding the entity and its environment and assessing the risks of material misstatement, responding to assessed risks, using the work of an expert, obtaining management representations, and communicating with those charged with governance. isa 300 requires the auditor to establish the overall audit strategy for the audit. part of the establishment of the overall strategy involves determining the characteristics of the engagement that define its scope, such as the financial reporting framework used and industry-specific reporting requirements. in the case of audits of the financial statements of banks or where there are derivative financial instruments, in addition to the isas, the auditor may also look to iaps 1006 or iaps 1012 for further guidance. isa 500 establishes standards and provides guidance on what constitutes audit evidence, the quantity and quality of audit evidence to be obtained, and the audit procedures that the auditor uses for obtaining that audit evidence. unless management is able to support its valuations, it will be difficult for the auditor to obtain sufficient appropriate audit evidence. however, as evidence about assumptions and the validity of models is necessarily less reliable than evidence of a market price taken from an active market, it may be necessary to look at more sources of evidence to accumulate sufficient appropriate evidence, as the quantity of audit evidence needed is affected by the risk of misstatement (the greater the risk, the more audit evidence is likely to be required).26 for example, an auditor, or an auditor’s expert, may use an independent model to compare its results with those of the model used by management in order to evaluate whether the values determined by management’s model is reasonable. in addition, the auditor may consider whether external sources provide audit evidence to which the auditor could benchmark an entity’s practices. for example, sources that track provisioning by institutions may provide the auditor with evidence as to whether the studies and scientific researches edition: economics, no. 13 (2008) challenges of international standards on auditing in global crisis context 14 entity’s valuations are reasonable if it has invested in similar instruments. isa 620 establishes standards and provides guidance on using the work of an expert as audit evidence, whether the expert is used by the entity or used by the auditor. when using the work performed by an expert, the auditor is required to obtain sufficient appropriate audit evidence that such work is adequate for the purposes of the audit. isa 620 explains that when an expert is used, the appropriateness and reasonableness of assumptions and methods used and their application are the responsibility of the expert. however, the auditor will need to obtain an understanding of the assumptions and methods used to consider whether they are appropriate and reasonable, based on the auditor’s knowledge of the business and the results of other audit procedures. this guidance is supplemented by isa 545 which includes guidance on the use of an expert and on the auditor’s testing of management’s significant assumptions. isa 260 requires the auditor to communicate audit matters of governance interest arising from the audit with those charged with governance. isa 545 draws attention to the fact that because of the uncertainties associated with fair value measurements, the potential effect on the financial statements of any significant risks may be of governance interest. for example, the auditor considers communicating the nature of significant assumptions used in fair value measurements, the degree of subjectivity involved in the development of the assumptions, and the relative materiality of the items being measured at fair value to the financial statements as a whole. in addition, the need for appropriate controls over commitments to enter into financial instrument contracts and over the subsequent measurement processes are matters that may give rise to the need for communication with those charged with governance. certain audit matters of governance interest are likely to be of interest to banking supervisors, particularly when those matters may require urgent action by the supervisor. in many countries, requirements concerning the auditor’s communication to banking supervisors are established by law, by supervisory requirement or by formal agreement or protocol. in situations where there are no such requirements, agreements or protocols, the auditor encourages the bank’s management or those charged with governance to communicate on a timely basis matters that, in the auditor’s judgment, may be of urgent interest to the banking supervisor. isa 240 requires the auditor to consider the risks of material misstatements in the financial statements due to fraud. at times of market instability, unexpected losses may arise through failure to protect the entity from extreme fluctuations in commodity prices, from unanticipated weakness in asset prices, through trading misjudgments, or for other reasons. in addition, financing difficulties create pressures on management who are concerned about the solvency of the business. such circumstances may give rise to incentives to engage in fraudulent financial reporting: to protect personal bonuses, to hide management error, to avoid breaching borrowing limits or to avoid reporting catastrophic losses. fraudulent financial reporting often involves manage-ment override of controls that otherwise may appear to be operating effectively. this may include inappropriately adjusting assumptions and changing judgments used to estimate account balances, for example using assumptions for fair value accounting estimates that are inconsistent with observable marketplace assumptions. in illiquid markets, the increased use of models and lack of market comparisons may present opportunities for manipulation or override of amounts calculated by brokers or experts. even without fraudulent intent, there may be a natural temptation to bias judgments towards the most favorable end of what may be a wide spectrum. what is favorableis not always the position leading to the highest profit or lowest loss. studies and scientific researches edition: economics, no. 13 (2008) challenges of international standards on auditing in global crisis context 15 in auditing fair value accounting estimates, therefore, the auditor may need to consider whether the circumstances give rise to increased fraud risks. in reviewing the judgments and decisions made by management in the making of fair value accounting estimates, the auditor may identify indicators of possible management bias; if this is the case, the auditor may need to consider the implications for the rest of the audit. isa 700 requires the auditor to evaluate the conclusions drawn from the audit evidence obtained as the basis for forming an opinion on the financial statements. forming an opinion as to whether the financial statements give a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework also involves evaluating the fair presentation of the financial statements. in doing so, the auditor considers whether the financial statements, including the note disclosures, faithfully represent the underlying transactions and events in the context of the financial reporting framework. in certain circumstances, the auditor may determine that there is a need to draw the reader’s attention to a significant uncertainty by adding an emphasis of matter paragraph to the auditor’s report. isa 701 describes the manner in which this would be done. isa 701 describes an uncertainty as “a matter whose outcome depends on future actions or events not under the direct control of the entity but that may affect the financial statements.” this, strictly, does not describe the type of estimation uncertainty that affects fair value measurements. nevertheless, as indicated above, in times of uncertainty the disclosures about fair values in the financial statements may assume particular importance. however, any such emphasis is not an alternative to modification of the auditor’s opinion if the auditor is not able to obtain sufficient appropriate audit evidence or disagrees with the treatment of fair values in the financial statements. in conjunction with its clarity project, the iaasb revised a number of its standards including isa 540, “audit of accounting estimates” (isa 540). the similarity in the audit approaches to estimates and fair value measurement led to a decision to combine isa 540 with isa 545, “auditing fair value measurements and disclosures” (isa 545), thereby revising both standards. the iaasb believes that the combination enhances the distinction between estimates involving fair value measurement and other types of estimates because it draws upon the similarities between the two while contrasting their subtle differences. the revised isa, isa 540 (revised and redrafted), places more emphasis on areas of higher risk, accounting judgment, and possible bias, thereby assisting the auditor to form appropriate conclusions about the reasonableness of estimates in the context of an entity’s financial reporting framework. these are also areas of particular importance in the context of fair values. the revised isa also includes expanded guidance on auditing fair value accounting estimates as compared with extant isa 545, including audit considerations relating to the proper application of the requirements of the financial reporting framework relevant to such estimates and the use of models in valuations. isa 540 (revised and redrafted) highlights matters such as the auditor’s evaluation of the effect of estimation uncertainty on risk assessments, management’s methods for making estimates, the reasonableness of assumptions used by management, and the adequacy of disclosures. such matters are relevant to estimates in general, but are also particularly important in the context of fair values. isa 540 (revised and redrafted) will be effective for audits of financial periods commencing on or after december 15, 2009, the date when all the standards redrafted under the iaasb’s clarity project become effective. this may particularly be the case, for example, when auditors are faced with circumstances in which the financial instruments the entity has invested in have relatively high estimation uncertainty. these may include fair value accounting estimates studies and scientific researches edition: economics, no. 13 (2008) challenges of international standards on auditing in global crisis context studies and scientific researches edition: economics, no. 13 (2008) 16 for complex financial instruments in general, derivative financial instruments not publicly traded, and fair value accounting estimates for which a highly specialized entity-developed model is used or for which there are assumptions or inputs that cannot be observed in the marketplace. references: [1]. www.ifac.org (2 rânduri libere, 11p) specific elements of communication on agri-food products resulting from eu legislation laura ţimiraş, ph.d, „vasile alecsandri” university of bacau, romania   abstract in the european union a significant number of regulations aimed at agricultural and food sector thus creating the legal framework regarding the mode of production, pricing, distribution and communication in relation to agri-food products. specificity agri-food marketing communication at eu level resulting in most of the measures taken with regard to ensuring consumer protection, food safety and security, some of them, in force in early 2012, referring to the labeling, presentation and advertising of agri-food products, sponsorship and distinctive signs of quality are shown in this paper. keywords: communication, labeling, presentation of agri-food products, advertising, sponsorship, quality marks jel codes: k 32, l 15, m 31 specificity of the agri-food product communication at eu level results in most of the measures taken with regard to ensuring consumer protection, food safety and security. this paper presents some of the elements of primary importance resulting from eu legislation, in force in early 2012, referring to communication of agri-food products without claiming an exhaustive presentation of issues addressed. labeling of agri-food products according to eu regulations1 are considered information about food products all information provided to consumers through labeling, accompanying documents or other means, including modern technology tools or verbal communication with regard to food product. labeling “means any words, particulars, trade marks, brand name, pictorial matter or symbol relating to a food and placed on any packaging, document, notice, label, ring or collar accompanying or referring to such food”.                                                             the label is designed to provide consumers information necessary, sufficient, verifiable, understandable and comparable, so that they can make informed choices. the information shall be located so as to be easily visible and legible. are prohibited any tactics that can mislead the consumer about: identity, property, nature, quantity, mode of production, origin or source of products, date of minimum durability, attributions or properties who are assigned for prevention, treatment or cure of a human illness and which they do not possess them. exceptions to the prohibition on awarding therapeutic properties are natural mineral waters and products with particular nutritional purpose according with the legislation in force. it   1 regulation (eu) no 1169/2011 of the european parliament and of the council on the provision of food information to consumers, amending regulations (ec) no 1924/2006 and (ec) no 1925/2006 and repealing directives: 87/250/eec, 90/496/eec, 1999/10/ec, 2000/13/ec, 2002/67/ec, 2008/5/ec and regulation (ec) no 608/2004. also prohibits the presentation of the product as holding certain features / special ingredients, when in fact they are specific to all similar products. the responsibility in respect of consumer information on agri-food products has the eu operator under whose name or business name the product is marketed or the importer for the products from extra-eu. according to eu regulations, is mandatory that informational message who appears on the label to contain:  the name of the food, who must to be its legal name. failing that, will use a current or descriptive name of the product. also, it’s allowed to use the name under which the food is sold and manufactured in the production country. in the latter case, if the information about the product doesn’t allows the consumer know the real nature of the food and to distinguish from foods which might confuse, the name must be accompanied by other descriptive information of the product to avoid possible confusion. also, the name under which the foodstuff is sold shall include or be accompanied by information on its physical state or specific treatment that has undergone (freezing, refreezing, smoked etc.), if the omission of such information could create consumer confusion. it’s mandatory to mention any ionizing treatments;  the list of ingredients ('ingredient' means any substance or product, including flavorings, food additives and enzymes used in the manufacture or preparation of a foodstuff and who is found in the finished product), preceded by "ingredients" in descending order of their share in the product. it will be specified the amount of the main ingredients. in the additives case will be specified the category they belong to (color, preservative, antioxidant, emulsifier, stabilizer, gelling agent, firming agent etc.), followed by specific name or by case e number. will be also specified the ingredients that can cause allergies. for following products not be required the list of ingredients: fruit and vegetables, carbonated water if is indicated carbonated character, fermentation vinegars derived exclusively from a single basic product without other ingredients, cheese, butter, fermented milk and cream made exclusively of dairy products, products who contain a single ingredient if their name is identical with the name of ingredient or allow clearly their identification;  the net quantity;  the date of minimum durability or the ‘use by’ date. it's not mandatory for fruit and vegetables (which have not undergone any processing operation), wines, liqueur wines, sparkling, flavored and other similar products, beverages with a minimum of 10% alcohol, bakery and pastry normally consumed within 24 hours, vinegar, salt, sugar in solid form, confectionery products consisting almost entirely in sugars flavored and / or colored, chewing gum and similar products;  any special storage conditions and/or conditions of use;  the name or business name and address of the manufacturer, packer or distributor. for imported products are signed the name and address of the eu importer;  the place of origin of the product (if the absence of this information may mislead consumers about the origin or source product and for certain categories of meat specified in legislation in force2);  instructions for use, where their absence could lead to improper use of foods;  alcohol content, if it is greater than 1.2% by volume;  a nutrition declaration (nutrition label). this must include the energy value and the amounts of fat, saturates, carbohydrates, sugars, protein and salt. if case, when sodium is naturally present in the product, shall state that the presence of salt is due to its. nutrition declaration may be completed by indicating the amount of: monounsaturated fatty acids, polyunsaturated fatty acids, polyols, starch, fiber, vitamins and minerals                                                              2 in the combined nomenclature who is the tariff and statistical nomenclature of the customs union reference for current consumption in certain significant quantities in accordance with applicable laws. regarding labeling of organic products, according to eu regulations3, the words "ecological", "organic" or "biological" and their derivatives or diminutives (example: "bio" and "eco") may be used in any community language of the eu to highlight an organic product. will be specified the appropriate code of the control authority for compliance with obligations of operators in terms of organic production and labeling of organic products (each control authority or control body that performs as required by law, tasks related to organic production and labeling of organic products, receives from member states a code number). also, on the packaging will appear the eu organic farming logo and an indication on the place where grown the agricultural raw materials (respectively, inside or outside the eu, or where appropriate, both inside and outside the eu). for products imported from countries outside the european community, the use the eu logo and indication previous mention are not mandatory. indications referring to the organic production method may appear on the labeling, advertising material or commercial documents. figure no. 1. the eu organic farming logo4 source: http://ec.europa.eu/agriculture/organic/eu-policy/logo_en concerning the presentation of food supplements5, these are marketed as "food supplements ". the label shall contain the following information  categories / nature of nutrients or substances of product and quantities thereof;  the recommended daily intake of product and a warning about exceeding this  a warning about that dietary supplements do not replace a varied diet  a statement to the effect that food supplements should not be used as a substitute for a varied diet;  a warning for not to leave the product at hand to small children it is forbidden to assign to food supplements the properties to treat or cure certain diseases. health claims can be shown on the label of food products (including food supplements) on the basis of scientific evaluation carried out by the european food safety authority.6 eu regulations7 who aimed at agri-food products containing genetically modified organisms (gmos) states that they will be labeled with the words: "this product contains                                                              3 council regulation (ec) no 834/2007 on organic production and labelling of organic products. 4 commission regulation (eu) no 271/2010 amending regulation (ec) no 889/2008 laying down detailed rules for the implementation of council regulation (ec) no 834/2007, as regards the organic production logo of the european union 5 directive 2002/46/ec of the european parliament and of the council on the approximation of the laws of the member states relating to food supplements, as amended 6 european regulation (ec) no 1924/2006 of the european parliament and of the council on nutrition and health claims made on foods. 7 directive 2001/18/ec of the european parliament and of the council on the deliberated release into the environment of genetically modified organisms, as amended. http://ec.europa.eu/agriculture/organic/eu-policy/logo_en genetically modified organisms" or as appropriate, will be specified the name of gmo / gmos. information on prices of agri-food products concerning indication of the prices, eu legislation8 refers to the requirement to display the selling price and the unit price (per kg., liter, etc.) of agri-food products, thereby allowing consumers to achieve comparisons and making decisions on informed basis. if the two prices are identical will be displayed selling price. also, for products sold in bulk will only display the unit price. price must be easily identified and read. another eu regulation9 specifies that is significant for decision making purchasing the information about product price inclusive all taxes, or where it can not be calculated in advance will specify how its calculation, respectively, all additional costs if appropriate. it is specified also, where appropriate, any additional costs that may be payable by consumer. aspects of unfair business-to-consumer commercial practices a number of community regulations10 applicable to all categories of products, including agri-food, refer to unfair business-to-consumer commercial practices which are banned in the eu. business-to-consumer commercial practices means “any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers“. are considered unfair trade practices, those that contravene the requirements of professional diligence and may distort the economic behavior of consumers in relation to a product. unfair practices are especially misleading and agressive practices. are considered misleading commercial practices, ones who provide consumers false information, respectively, which may lead consumers in error, even if the information is correct about some of issues, among which:  the existence or nature of the product;  the main characteristics of the product, such as: availability, benefits, risks, composition, complaint handling, method and date of manufacture, delivery, quantity, specification, geographical or commercial origin or the results to be expected from the use or the results of various tests performed on product;  price, how to calculate it or any of its advantages;  the nature, attributes and rights of the trader or his agent;  the consumer's rights, including the right to replacement or reimbursement of the product. are also considered misleading:  comparative advertising which creates confusion with any products, trade marks, trade names or other distinguishing marks of a competitor;  misleading omissions, or not provide or present in a form difficult or impossible to understand the essential information for decision making purchasing. both practices can lead consumers to make a wrong decision. aggressive commercial practices are those using harassment, coercion by any means can affect the consumer buying behavior.                                                              8 directive 98/6/ec of the european parliament and of the council on consumer protection in the indication of the prices of products offered to consumers. 9 directive 2005/29/ec of the european parliament and of the council concerning unfair business-toconsumer commercial practices in the internal market and amending directives 84/450/eec, 97/7/ec, 98/27/ec and 2002/65/ec and regulation no 2006/2004. 10 directive 2005/29/ec. comparative advertising is accepted under the following conditions:  it is not misleading;  it compares products that addresses the same needs;  it compares, objectively, one or more material, relevant, verifiable and representative (including the price);  it does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities or circumstances of competitors;  it compares products with the same designation of origin (for products with designation of origin);  it doesn’t take advantage incorrectly of the reputation of the trade mark, trade name or other distinguishing marks of a competitor;  it doesn't present products as imitations or replicas of others who have protected trade mark or trade names;  it doesn't create confusion among traders, advertisers and competitors, respectively, between the trade marks, trade names or other distinguishing marks, goods or services competing. aspects regarding the audiovisual commercial communication according to eu regulations11 "audiovisual commercial communication means images with or without sound which are designed to promote, directly or indirectly, the goods, services or image of a natural or legal entity pursuing an economic activity. such images accompany or are included in a program in return for payment or for similar consideration or for self-promotional purposes. forms of audiovisual commercial communication include, inter alia, television advertising, sponsorship, teleshopping and product placement”. ”...product placement means any form of audiovisual commercial communication consisting of the inclusion of or reference to a product, a service or the trade mark thereof so that it is featured within a program, in return for payment or for similar consideration”. regarding audiovisual commercial communication (including for agri-food products), it meets the eu following conditions12:  the commercial content of communication is recognizable (it's not masked);  it is not subliminal, respectively does not use too weak stimuli to be perceived consciously, but who can influence economic behavior;  it doesn’t prejudice respect for human dignity;  it doesn’t include or promote discrimination based on race, sex, ethnic or national identity, religion, creed, disability, sexual orientation;  it doesn’t encourage behavior that may affect health and safety;  it doesn't encourage behavior that may affect the environment;  it doesn’t promote tobacco products;  the promotion of alcoholic beverages shall not be aimed specifically at minors and shall not encourage immoderate consumption of such beverages;  it doesn't contain elements that cause physical, moral, intellectual or mental detriment to minor; it doesn't encourage them, directly, to buy a product or to persuade their parents or others to purchase the product; it doesn't exploit the trust of minors in parents, teachers or other persons; or, unreasonably, shows minors who are in dangerous situations.                                                              11 directive 2010/13/eu of the european parliament and of the council on the coordination of certain provisions laid down by law, regulation or administrative action in member states concerning the provision of audiovisual media services (audiovisual media services directive). 12 directive 2010/13/eu. tv advertising and teleshopping for alcoholic beverages must meet the requirements 13:  it doesn't address especially children and doesn't present them consuming alcoholic beverages;  it doesn't associate the alcohol consumption with improved physical performance or with easier driving;  it doesn't associate the alcohol consumption with the favoring of the social or sexual success;  it doesn't present the alcoholic beverages as has therapeutic qualities or that it is a stimulant, a sedative or a means of resolving personal conflicts;  it doesn't create a negative image of moderate consumption or lack of consumption;  it doesn't show high alcoholic content as being a positive feature of beverages. regarding advertising of tobacco products, it is prohibited on radio and television. in press can only be achieved in publications intended exclusively for professionals in the tobacco trade, or in publications that are not addressed to the eu market. regarding sponsorship of tobacco products, the mass-media audiovisual services or programs and the radio broadcast can not be sponsored by market agents who are engaged in the production or sale of tobacco products. sponsorship of events held in several member states is prohibited.14. distinctive signs of quality agri-food products although the results of the quality policy, distinctive signs of quality used in the european union have a undeniable promotional role. inclusion of these signs on the packaging of agrifood products is a guarantee of product quality and prestige of manufacturer. these distinctive signs are: protected geographical indication (pgi), protected designation of origin (pdo) 15, certificate of specific character most frequently designated by „traditional specialty guaranteed” (tsg) 16, organic farming17. geographical indication “means the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product or a foodstuff originating in that region, specific place or country, and which possesses a specific quality, reputation or other characteristics attributable to that geographical origin and the production and/or processing and/or preparation of which take place in the defined geographical area”18. designation of origin “means the name of a region, a specific place or, in exceptional cases, a country used to describe an agricultural product or a foodstuff originating in that region, specific place or country, and the quality or characteristics of which are essentially or exclusively due to a particular geographical environment with its inherent natural and human factors, and the production, processing and preparation of which take place in the defined geographical area”19.                                                              13 directive 2010/13/eu. 14 directive 2003/33/ec of the european parliament and of the council on the approximation of the laws, regulations and administrative provisions of the member states relating to the advertising and sponsorship of tobacco products and directive 2010/13/eu. 15 pgi and pdo are regulated by council regulation (eec) no 2081/92 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs, completed by council regulation (ec) no 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. 16 certificates of specific character, respectively, traditional specialties guaranteed are regulated by council regulation (eec) no 2082/92 on certificates of specific character for agricultural products and foodstuffs, completed by council regulation (ec) no 509/2006 on agricultural products and foodstuffs as traditional specialties guaranteed. 17 council regulation (ec) no 834/2007 18 regulation (eec) no 2081/92. 19 regulation (eec) no 2081/92. certificates of specific character signify recognizing at european level of an element or set of elements through which an agricultural product or a food differs clearly from other similar products or goods. to obtain the certificate of specificity, respectively, the product registration in the register of traditional specialties guaranteed recognized at the eu level „an agricultural product or foodstuff shall either be produced using traditional raw materials or be characterized by a traditional composition or a mode of production and/or processing reflecting a traditional type of production and/or processing”20. pgi, pdo and tsg can be obtained by companies of inside and outside eu, according the legislation in force. bibliography 1) diaconescu, m. (2002), marketing agroalimentar, ed. uranus, bucureşti 2) ţimiraş, c. l. (2007), tendinţe în evoluţia marketingului agroalimentar în contextul extinderii uniunii europene, ed. edusoft, bacău 3) regulation (eu) no 1169/2011 of the european parliament and of the council 4) the combined nomenclature of the european union 5) council regulation (ec) no 834/2007 6) commission regulation (eu) no 271/2010 7) directive 2002/46/ec of the european parliament and of the council, as amended 8) european regulation (ec) no 1924/2006 of the european parliament and of the council 9) directive 2001/18/ec f the european parliament and of the council 10) directive 98/6/ec of the european parliament and of the council 11) directive 2005/29/ec of the european parliament and of the council 12) directive 2010/13/eu of the european parliament and of the council 13) directive 2003/33/ec of the european parliament and of the council 14) council regulation (eec) no 2081/92 15) council regulation (ec) no 510/2006 16) council regulation (eec) no 2082/92 17) council regulation (ec) no 509/2006 18) http://eur-lex.europa.eu 19) http://ec.europa.eu/agriculture/organic/eu-policy/logo_en                                                              20 council regulation (ec) no 509/2006. http://eur-lex.europa.eu/ http://ec.europa.eu/agriculture/organic/eu-policy/logo_en aspects of unfair business-to-consumer commercial practices (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro teenagers and the use of new technologies (ict) for health information alina duduciuc national university of political studies and public administration alina.duduciuc@comunicare.ro abstract the spread of health messages through icts has raised the issues of source reliability more than ever before. there are many channels for adolescents where they can find information about health, and sometimes these messages are contradictory. in this research i employed a qualitative approach to investigate how adolescents seek information about health through icts, what kind of health related topics they search on internet, whether they rely on their peers, teachers or primary group when they are aware of being in risk, and how they assess a source as trustworthy in covering health information. additionally, the current study surveys what it means for teenagers to be in a good physical condition, including their habits regarding self-medication, nutrition, physical activity, weight maintenance, and how they communicate with respect to the above-mentioned health-issues through icts. on this purpose, i conducted two focus group interviewed with 22 romanian adolescents, aged between 12 and 17 years, who have facebook accounts and own smartphones connected to the internet. the main findings suggest that teenagers search the internet to some extent as a response to factors that threaten the health condition, such as the presence of physical symptoms that are overwhelming or stressful. the emotional adjustment is rather targeted to social support offline sources (friends, parents and doctors) than online ones. keywords health; icts; adolescents; risks; internet jel classification i19 introduction in the last decade, different claims have been embedded in both public as well as academic discourses to explain the dramatic changes of the way teenagers communicate using new technologies (ict). as they are prone to embrace the ict rapidly and have highest computer skills, they have been called “digital native” or “early adopters”. as we can see from european polls and studies (eurostat yearbook 2014; eurobarometer 2008; ólafsson, livingstone & haddon, 2013; mascheroni & ólfeson, 2013; livingstone & das, 2010), the period between 2010 and 2014 saw a significant growth of the ict use among children (9-11 years old) and adolescents (12-16 years old). the percentage of adolescents using laptops (49%), smartphones (48%), computers (40%) and tablets (20%) rises significantly. compared with younger children (9-11 years old, 31%), teenagers (12-17 years old) have been using smartphones (32%) more than laptops almost since they turned 10 (mascheroni & ólfeson, 2013). when they turn 8, they already know to browse on internet, and it is prefigured that the age of first internet use will continue to fall in the next years (mascheroni & ólfeson, 2013). 177 duduciuc teenagers and the use of ict for health information: previous studies the use of new technology by teenagers for health and disease prevention has been the subject of many recent researches (jiménez-pernett et al., 2010, bailin, milanaik & adesman, 2014; seçkin, 2014; fergie, hunt and hilton, 2013; hederson et al., 2013, landry et al., 2013; miller & bell, 2011; popa, c., 2013, wright 2011, edward, hart & chester, 2010; kivits, 2009, tu & cohen, 2008, gray et al., 2005). all these studies have assumed that new technologies regardless of their symbolic or utilitarian use are widely present among teenagers. therefore, the scholars have inquired how these technologies are distributed according young people’s health, how and where teenagers are searching for health information, how is health information accessed and used in order to cope with threatening situations and how have the new technologies changed the pattern of communication with doctors and medical staff. both quantitative research (jiménez-pernett et al., 2010; seçkin, 2014; hederson et al., 2013, landry et al., 2013) and qualitative research (bell, 2014; fergie, hunt and hilton, 2013; lindqvist 2012, gray et al., 2005, skinner et al. 2003; borzekowski & rickert 2001) have shown that young people, in a significant manner, consider the internet a major source of information on health and disease prevention, especially because it is fast and preserves the anonymity of users. even if websites and forums are not always assessed by teenagers as reliable sources (gray et al, 2005), teenagers particularly seek on the internet information about sex life (landry et al., 2013; borzekowski & rickert 2001), nutrition, weight maintenance and body image (jiménezpernett et al., 2010, gray et al., 2005, skinner et al. 2003), fitness and sports, tattoos and piercings (jiménez-pernett et al., 2010). recently, a number of studies (nuutinen et al., 2014; sinkkonen, puhakka & meriläinen, 2014; augner & hacker, 2012; punamäki et al., 2007; koivusilta, lintonen, & rimpelä, 2005) have focused on the effects of ict proliferation on teenagers’ life, questioning the credibility of health information available online. i will review similar articles that have approached this subject. about ten years ago, when the mobile phone was still spreading among the population of canadian teenagers, they used the phone to set appointments with friends, rather than to discuss their health problems (skinner et al. 2003). in the study designed at the university of toronto, h. skinner showed that interviewed teenagers (n = 250) believed that the internet and email were the most accessible technology for information and emotional support. even they were aware of the credibility and quality of health information retrieved from the websites, they assessed the internet as the most affordable mean of information because it didn’t disclose their identity when they have a problem that could damage the social self, such as sexual or mental health disease. the internet also helps them to avoid conflicts with parents on issues related to which they have different attitudes. teenagers also used books to verify the online information as “a book is not published until the information is not checked”. the online available information on health is often retrieved from certain websites, and then discussed online or offline with friends. the participants of the research assigned new social roles for healthcare persons as they expected from doctors to recommended, to administrated websites and to go online to ask questions when they doubt about credibility of the websites (skinner et al., 2003). a survey based questionnaire (borzekoweski & rickert, 2001) with sample of 412 teenagers from the suburbs of new york indicated that there are gender differences in the perception of credibility of health information retrieved from the internet. adolescent girls outnumber boys on disclosing and asking social support from their friends in matter of sex life, nutrition and weight maintenance. they also tend to comply with messages from public health campaigns. the study also showed that american teenagers use the internet when they want to update their information on contraception and sex life (42%), fitness (41.6%), nutrition and weight maintenance 178 teenagers and the use of new technologies (ict) for health information (36.5%), alcohol and drugs (24.7 %). they not only use the internet for the problems mentioned, but consider it as the only reliable, important and valuable source of information on health issues. sometimes, the internet as a source for health information is an occasion for teenagers (11-19 years) to avoid going to the doctor and having a health review (gray et al., 2005), as shown in a qualitative study conducted in the usa and uk. the internet is the main source of information for the early teenagers (11-12 years) on topics related to physical and psychological development that occurs during adolescence. most of them go online to search about nutrition, fitness, diet and claimed to have achieved positive outcomes. however, adolescents often complained about the amount of online health information they had encountered, in this manner the many websites with unspecific information and the pop-ups that promote diet pills or medicines. the authors interpreted the results in the theoretical perspective of the detraditionalization concept, advanced by a. giddens (1994), taking into account the increase of online support groups, whose members narrate personal experiences with the disease (user generated content) and treatment alternatives which are not always medical. as far as we have known, no studies have investigated how romanian teenagers use the internet for health information seeking. there are several recent studies (popa, 2014; comănescu, et al., 2013; ardeleanu, et al., 2013) that investigated the relation between the use of icts, unhealthy behaviours and others specific topic that young people show interest on, in this case alcohol and tobacco consumption, sexual life, nutrition, diets, weight maintenance, fitness. as the previous research revealed, there are many online sources for teenagers where they can find information about health, and sometimes these messages are contradictory. therefore, the aim of this study is to answer the following questions: a) how teenagers seek information about health through icts b) how they engaged in health online content c) whether they rely on their peers, teachers or primary group when they become aware of being at risk and d) how they search for support. method participants and sample selection to answer the research questions, in june 2014, we conducted two focus groups interviews with adolescents (n = 22) aged between 11 and 17 years old. the first group was composed of seven girls, and the second of girls (n = 8) and boys (n = 7), all recruited from the suburb area of bucharest. all group members have known each other and had interacted on previous occasions. this research method was chosen due to several reasons. first, i take into account that one of the key psychological changes that take place in adolescence is the desire to gain independence from parents and to be in tune with the peer group (brown, 2004). secondly, i follow up the idea that information retrieved from the internet and social networking sites is often shared and discussed with others. therefore, focus group could be a natural setting of gathering data and also a method that can account for social influence processes within social networks. the selection of subjects was made taking into account several criteria. first of all, whether our subjects own a smartphone connected to the internet. this criterion was applied due to previous research that showed a recent rise of the use of smartphones among the romanian children. here, the number of children who have access to internet on their phones/smartphones is higher than the eu-average (17%) (ólafsson, living-stone & haddon, 2013). secondly, we consider whether our subjects have a facebook account and at least one social network profile on youtube, instagram, twitter, and myspace. and last, whether the overall participants’ health was good upon the interview. they only had experienced acute diseases of minor severity and 179 duduciuc had limited experiences with illness, serious or terminal disease. the interviews lasted about an hour and a half and they were recorded. the audio material was transcribed and group into particular themes. findings icts functions and awareness on health issues subjects were invited to join the discussion by commenting on one of the most widespread beliefs within romanian culture, in this case “health is wealth”. then, the discussion was orientated toward the use of new technologies. therefore, subjects were asked how and whether they wish health on their friends’ birthdays and what social media technologies they used for this purpose (phone, computer, internet, email, facebook). these two “ice breakers” questions have provided some of the research data on subjects’ beliefs about health and allowed data collection on the functions of new technologies in the life of teenagers. most of them expressed that the phone and the sms can be used when we want to send a personal message; otherwise, when they want to be seen by others form the group, they use facebook. being connected to the others through smartphone represents an ongoing experience during the day, as the subjects declared that they access the internet and facebook even when they dine. the sms and internet connection, particularly to access the facebook account, are the most common communication functions and technologies among teens. participants emphasized that they do not think about health because they have only experienced acute pain and have no experience with serious illness. however, during the interview, as they were invited to answer questions, they have thought on health as an important achievement in life, alongside the material and personal ones. health information seeking on the internet and social networking the internet is a “handy” source for teenagers, as it protects them from the costs of not following the social norms, especially when they seek information about their sexual life. considerably, they use the internet to learn more about how they could maintain their weight and what physical exercises to do for this. regarding some minor age-specific issues, such as superficial acne, teenagers interviewed said they sought information on the internet about this, but they were accidently exposed to friends’ posts on facebook about how to get rid of acne. in this matter, they engaged in the recommended behaviour posted on their facebook wall. they perceived the internet as a source that provides wide access to information, but the credibility and usefulness of the information to cope with health problems is being questioned by subjects. as they declared, the internet and the social media are the space where they have been exposed to their friends “courage” to betake risks behaviours in their struggle to gain autonomy toward parents and teachers. it seems stupid to read something on the internet, because you can often get scared. you may not have anything serious, but you read here things and begin to think of something serious. you better go to the doctor than think you’re terminally ill [female, 15 years old]. wikipedia seems to me as the best site [male, 16 years old]. sometimes on facebook and youtube i can find ideas about health. i tried the methods posted by friends to get rid of pimples. i tried almost everything, but had no effect [female, 12 years old] often, on their facebook profile photo, some colleagues show how they exhale smoke.....when they exhale smoke…sometimes in colours…..otherwise in patterns….hearts, dragons, etc. photos are posted after midnight in order for their parents not to see them [male, 15 years old] 180 teenagers and the use of new technologies (ict) for health information i searched on the internet for information about pimples and oily skin reduction. some treatments on the net helped me but the dermatologist knows best [female, 15 years old] sometimes i read on the internet and i got scared. i thought i had a serious problem. i still have to go to the doctor to calm myself when i have a problem. i also searched about a friend’s health problems ....a friend told me her problem and she was afraid to ask her parents ... i’ve been looking on the internet information about her problem....it was actually a sexual problem …and we got very scared when we read what others were saying on the internet .... eventually, she did not avoid the medical investigation, because she was so scared that she had to tell her parents and in the end she went to the doctor... it’s good though that when you are looking on the internet for a shameful word.... nobody on the internet knows who you are.... [female, 16 years old] nutrition and social context some social contexts, such as gathering with friends, are intake food risk occasions. to gather with friends and have fun with them is to drink soft drinks, eat pizza or eat junk food. subjects declared that eating healthy means being able to ignore the rules and sometimes to eat fast foods. even if most of those interviewed said that having a healthy lifestyle consists in eating rationally, having rest, doing regular exercises, avoiding alcohol, tobacco, drugs, some of their nutrition behaviours are however not necessarily related to a good health. there is not fun in going out without cola, sprite, pepsi, pizza, fast food.... i never saw someone of my age that do not drink and eat like this when going out.... [male, 17 years old] body image, diet and media celebrities when i asked what it means for them to have a healthy body, two elements gain more groups approval, in this case doing sports and being thin. girls voiced more concern than boys with respect to have a face without pimples and a slim body. for them, the weight and the appearance are external indicators of people’s health. only two boys from each focus groups mentioned that having a healthy body means not being sick and not having physical pain. being asked to describe a person in their family, groups or public space with a healthy body, teenagers indicated mostly sportsmen (especially boys) and media celebrities (mostly girls) from tv series and shows that they usually watch such as actors from the vampire diaries, game of thrones, how i met your mother. jennifer lopez is 40 years old but looks like 20. she exercises a lot and has a strict diet, so she has a healthy body [female, 15 years old]. a woman with a healthy body has green or blue eyes and is attractive, with build body and muscles. i also like jan from the vampire diaries. he has a healthy body and this is how i would want my husband to look like [female, 15 years old]. antonia [a romanian female music star] has a healthy body because she has undergone plastic surgery and uses all sorts of creams, she always goes to massage sessions and eats what nutritionists tell her [female, 15 years old]. lazar angelor [one of the famous romanian popular personal trainers] generally looks good because he goes to the gym and eats healthy [male, 17 years old]. cristiano ronaldo has a lot of sport activities and is healthy because he eats healthy [male, 17 years old]. a person of my age who has a healthy body is a person who looks almost perfect and is tall [male, 17 years old]. a sociable person who has many friends and goes out often is healthy; she/he does not necessarily have to have brawn [male, 17 years old]. 181 duduciuc a person of my age who has a healthy body is visibly more beautiful than others. she/he has a perfect skin face and she/he is well-proportioned [female, 16 years old]. social support and self-medication subjects were also questioned about the ways in which they get treatment when facing acute headaches. in their answers, no subject indicated the internet as a source of support for physical pain. asking parents support or having a rest rather than going online represents ways whereby teenagers carry off the physical discomfort. some of them mentioned that they take analgesics and anti-inflammatory pills without looking on the leaflet because “this is what my mother gives me and because it makes me feel good.” most of those interviewed know what information a medical prospectus contains, they know that some are contraindicated without medical advice, but this does not have an impact on their behaviour. discussion, limits and conclusions the data of this study indicated that young people use phone-internet for search to some extent in order to prevent somatic symptoms and to cope with health problems. they are more interested in the appearance, in problems related to nutrition and weight maintenance to keep up with the ideas of their peers, rather than in issues regarding prevention or health deterioration. teenagers are exposed to health warning messages accidentally, by change, when accessing certain internet websites or when connecting to social networks. in this respect, the data of present research is similar to recent findings about adolescents health-seeking behaviours, especially in matters related to sexual diseases, physical exercises, nutrition and weight maintenance (jiménez-pernett et al., 2010, gray et al., 2005, skinner et al. 2003). searching on the internet of certain medical terms and of health related topics is rather a response to factors that threaten the health condition, such as the presence of physical symptoms that are overwhelming or stressful. therefore, teenagers develop personal strategies to cope with this threatening situation and use the internet rather to assess the symptoms. the emotional adjustment effort is rather targeted to social support offline sources such as friends, parents and doctors. i can say, based on these findings, that information on health is retrieved from the internet and evaluated together with people who have authority and expertise. the results of the present research are similar to previous ones when the health information seeking behaviour was seen as being directed to a purpose or “to achieve cognitive benefits (increasing knowledge levels on a specific disease, information prior to decision, response strategies), behavioural o (increase the ability to take care of yourself), physical benefits (resistance to disease and improving the quality of life) and emotional benefits (reducing anxiety, fear and pain, expectancy)” (lambert & loisel, 2007). the search for information on health includes a wide range of behaviours, such as direct or indirect questions about the matter in question, clarifying questions, disagreements, discussing and exchanging information with other speakers, reading of texts, observation, consultation with a neutral person, browsing and listening (lambert & loisel, 2007). even if they have wide access to online information due to the spread of technologies, teenagers question the credibility of sources (gray et al., 2005) and are sensitive to the risks to which they expose if they do not go to the doctor. in this matter, the data of this research are contrary that previous studies (nuutinen et al., 2014; sinkkonen, puhakka & meriläinen, 2014; augner & hacker, 2012; punamäki et al., 2007; koivusilta, lintonen, & rimpelä 2005, palmer et al., 2014; alexander & currie, 2004) that have pointed out that teenagers expose to high risks in the online environment and are passive consumers of online technology and information. we 182 teenagers and the use of new technologies (ict) for health information can further take into account in which conditions and relations to what do teenagers rather exhibit passivity and engage in behaviours risky to their health. indeed, the online environment and new communications technologies that they use every day are opportunities to be exposed to risk behaviours considered in tune with the group, as told by the research subjects. moreover, teenagers betake contrary behaviours to parenting education, such as smoking or alcohol consumption, and post themselves in these situations on social media networks to gain popularity. an active teen on social media networks is also exposed to alternative sources of treatment, often non-medical, in issues related to nutrition or physical appearance, such as methods for treating pimples. widespread approval of such user-generated content means that teenagers could engage in that behaviour. teenagers think about health in socio-cultural terms rather than in purely physical ones, as absence of disease or physical symptoms. for them, an adolescent with a good health has a body that approaches images widely accepted in online social networks and promoted in the media (engeln-maddox, 2005). this research was also an occasion of exploring the concept of health information seeking behaviour. widespread in the health communication and human computer behaviour field, the concept of health information seeking behaviour was operationalized differently and sometimes was used as such without receiving a clarification of terminology or a definition. as mentioned by sylvie d. lambert and carmen g. loisel (2007), “health seeking behaviour” is a multidimensional concept, referring to individuals’ response strategies when there is a threat to their health and also to psychological adjustment strategies when a person copes with a disease. the concept appeared in the vocabulary of engineering, social and behavioural sciences due to the interest of certain researchers and policymakers in understanding how individuals retrieve health information, how they assessed a symptoms in respect with the health online information, what type of messages is preferred (prevention, storytelling, medical) and how they use the information they find. following the focus group interviews conducted, i think that health information seeking behaviour is a behavioural response that occurs when the individual realizes he/she has a physical symptom. in some research, the concept was generalized also to situations that allow users access to information on health and prevention, considering that the individual is motivated to avoid risks and maximize benefits. the results of the present research indicated that the internet causes a health information seeking behaviour-response when teenagers are in the stage of assessing the situation and mostly for topics having negative consequences on the self (such as weight, appearance, sexual or mental illnesses). emotional adjustment is instead provided by parental social support networks probably because they have not been yet complete the process of gaining the autonomy toward parents. regarding the teenagers interviewed, i also noted a great awareness of potential risks in relation to self-medication and cases of involuntary or voluntary omission of consulting a medical professional or a leaflet on drugs. however, self-medication is a result of imitating the parental care behaviour. a further study on medication and new technologies could take into account how parents seek information about their children’s health and about drugs on the internet. in generalizing the conclusions, several limits of the research need to be considered. the participants were quite homogeneous with respect to their age, residence and family income. the focus group could trigger conformity to the others’ opinions, as well as reinforcement of stereotypical thinking. furthermore, the limited number of focus groups conducted for this research does not reflect the diversity of health seeking behaviours through icts at adolescence. therefore, in the next step of the research, larger comparison of data and mixt-methods should be taken into account when analysing health by means of icts. 183 duduciuc despite limitations, there is a very little systematic research on how different age groups access online information on health. as shown by this study, teenagers use internet to a certain extent and in a given situation: i.e. when they are in danger and when they become aware of a threat to their health, but also when they want to know more information about diseases that could damage their social self (i.e. sexual). they are not passive consumers of online information, but they select and interpret the contents by calling into question the credibility of sources. parents and health professionals continue to represent for them the persons invested with authority, and this is the reason why they ask their support in the event of physical discomfort. to go out with friends is a social context in which teenagers no longer show sensitivity to risk awareness, by consuming fast food as a symbol of belongingness to a group and by assessing their body in relation to persons considered in vogue and popular by their peers. acknowledgements this paper was possible with the financial support of the sectorial operational programme for human resources development 2007-2013, co-financed by the european social fund, under the project number posdru/159/1.5/s/134650 with the title "doctoral and postdoctoral fellowships for young researchers in the fields of political, administrative and communication sciences and sociology" references alexander, l.m., currie, c. 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(2010). enter health information technology: expanding theories of the doctor-pacient relationship for the twenty-first century health care delivery system. in pescosolido, b.a, martin, j.k., mcleod, j., rogers, a, handbook of the sociologyof health, ilness, and healing. a blueprint for the 21st century (pp.345-359), new york: springer science & bussiness media. 187 (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, september 2018 1 the number of employees, basic statistical indicator of labour market evolution. comparative study based on data from bacau county and the central region of moldova phd. student vasilica-lăcrămioara ciomârtan academy of economic studies of moldova economist at statistical county directorate bacau lacri_vasi@yahoo.com abstract the comparative approach to the evolution of the number of employees at the end of the year is aimed at illustrating the situation of the existing labour market in bacau county of romania and the central region of the republic of moldova over a period of 6 years (2011-2016). the dynamic analysis, with the latest available data of the above mentioned indicator, refers not only to the situation of each territorial unit (bacau county or the central region), but also to a comparative analysis of the situation recorded in each of the two countries, romania and the republic of moldova. in order to identify the existing gaps, data on the number of employees are analysed by gender and forms of ownership. in order to quantify the situation in the two territorial units for statistics regarding the labour market, a rather small number of indicators were taken into account due to lack of their dissemination on the desired administrativeterritorial units. keywords number of employees as at 31st december; dynamics of number of employees; forms of ownership; gender gaps jel classification e24; c19; j16 introduction any economic activity involves the labour factor alongside the other factors of production. labour statistics, as a branch of official statistics, studies the number of employees, the structure, the dynamics and utilization of labour resources of national economy, labour remuneration (forms of salary, average salary and salary funds, salary fund structure) and its productivity . labour statistics are brought to the attention of data users, researchers, all those needing this kind of information, through a variety of statistical publications produced by the institutes of statistics. labour force balance provides information on labour resources, civilian active population, civilian employment, and the number of employees as at the 1st of january. the results of the household labour force survey provide information, by various characteristics, of civilian active population, civilian employment, ilo unemployment, inactive population. also, a series of indicators are disseminated, such as indicators of employment (average number of employees, number of employees as at 31st december), of working conditions (work accidents and injuries, conflicts of interest, strikes triggered in accordance with legal procedures), salary earnings (average monthly gross salary, average monthly net salary, average salaries in october), vacancies, continuing vocational training. studies and scientific researches. economics edition online first, september 2018 2 the reduced number of labour indicators analysed in this paper is mainly due to lack of their availability for the desired territorial level (county for romania and region for the republic of moldova). therefore, data on the number of employees at the end of the year are analysed only by gender and by forms of ownership. short methodological presentation the most recently published indicators related to a 6-year period have been extracted from the databases of the national institute of statistics of romania and the national bureau of statistics of the republic of moldova, so as to be able to follow their dynamic evolution. in order to perform this comparative analysis, a few methodological aspects need to be presented. the year 2011 was the starting year for the analysis, as the data disseminated by the national bureau of statistics of the republic of moldova became comparable starting this year due to scope changes. starting this year, data on the number of employees are obtained from economic and social units with 1 and more employees and from all budgetary institutions. statistical analysis of the number of employees at the end of the year employees are the most important segment of the employed population, and the main source of income for this category is salary or nominal salary income, gross and net. at the end of 2016, the number of employees in bacau county was 11,114, that is 2.1% of the total number of romanian employees, while on 31st december 2016, the central region numbered 124,117 employees, that is 17.3% of the total number of employees of the republic of moldova. figure 1: number of employees as at 31st december, bacau county and the central region (2011-2016) (persons) source: www.insse.ro and www.statistica.md despite the increase in the number of employees in bacau county during the analysed period, romania recorded a slight decrease of the percentage of this indicator of the value registered at national level, from 2.3% in 2011 and 2012 to 2.2% in 2013-2015, reaching only 2.1% in the final year of the analysis. this is not the case with the central region, where the increase in the number of employees coincided with an increase of the percentage at national level (the maximum of 17.5% in the period 2013-2014), and its decrease led to a decrease in value of the structure. 0 40000 80000 120000 160000 2011 2012 2013 2014 2015 2016 1 0 5 6 0 6 1 0 8 6 5 1 1 0 5 2 9 4 1 0 6 6 0 8 1 0 9 6 7 4 1 1 1 1 4 4 1 2 6 4 4 9 1 2 4 2 1 6 1 2 8 0 1 2 1 2 6 4 4 6 1 2 3 9 3 0 1 2 4 1 1 7 p e rs o n s bacau county the central region http://www.insse.ro/ http://www.statistica.md/ studies and scientific researches. economics edition online first, september 2018 3 figure 2: dynamics of the structure of number of employees compared to previous year as at 31st december, bacau county and the central region of the republic of moldova (%) source: processing of the data collected from www.insse.ro and www.statistica.md the dynamics of number of employees as at 31st december for bacau county, compared to the previous year, follows approximately the same trend registered at national level, but with values below those recorded at national level, except for 2012, when the number of employees at county level increased by 2.9%, while at national level there was an increase of 2.5%. it is also worth mentioning the decrease by 3.1% at the end of 2013 for bacau county, the number of romanian employees being 0.5% higher than in the previous year. whereas positive dynamics of this indicator are registered at bacau county and romania levels, these periods are marked by the drop in the number of employees in the central region and the republic of moldova. practically, the periods of increase in the number of employees at bacau county and romania levels are decreasing periods for the central region and the republic of moldova. the end of 2013 registered 3.1% more employees in the center region compared to the same period in the previous year, with an increase of 0.5% in the republic of moldova. the trend in the number of employees registered in the central region is similar to the one registered at national level in the republic of moldova, with the mention that for the years 2013 and 2016 the dynamics of the region is superior to that recorded at national level. figure 3: dynamics of number of employees compared to previous year as at 31st december, bacau county and romania, the central region and the republic of moldova (%) source: processing of the data collected from www.insse.ro and www.statistica.md 100.0 95.7 100.0 100.0 95.5 99.4 102.3 100.0 98.9 100.0 92.0 94.0 96.0 98.0 100.0 102.0 104.0 2012 2013 2014 2015 2016 % bacau county the central region 102.5 100.5 102.1 102.9 103.6 102.9 96.9 101.2 102.9 101.3 98.6 100.5 99.2 99.1 99.8 98.2 103.1 98.8 98.0 100.2 95.0 97.0 99.0 101.0 103.0 105.0 2012 2013 2014 2015 2016 % romania bacau county republic of moldova the central region http://www.statistica.md/ studies and scientific researches. economics edition online first, september 2018 4 the analysis by gender shows that the number of male employees at the end of the year in bacau county is higher than that of female employees, whereas the situation at the central region level is quite opposite, with the number of female employees exceeding the number of male employees. figure 4: number of employees by gender as at 31st december, bacau county and the central region, 2011 – 2016 (persons) source: www.insse.ro and www.statistica.md whereas in bacau county there is an increase in the share of female population from a minimum of 48.0% in 2012 to 51.7% in 2014, the share of women in the central region remained significantly higher than that of men, for the entire analysed period. figure 5: evolution of the structure of number of employees by gender as at 31st december, bacau county and the central region, 2011 – 2016 (%) source: www.insse.ro and www.statistica.md thus, there is a slight decreasing trend for the proportion of male employees per 100 female employees at bacau county level, from 106 persons in 2011 to 103 persons in 2016. the number of male employees per 100 female employees at the central region level indicates slightly oscillating values of the proportion of males, which records the same value of 77 people in the first and last year of the analysed period, and reaches a maximum of 80 persons at the end of 2015. 5 4 4 4 7 5 6 4 6 3 5 3 0 8 6 5 1 5 1 3 5 4 8 8 9 5 6 3 6 0 5 4 9 0 6 5 4 5 6 3 5 4 0 4 2 5 5 6 2 3 5 4 9 3 4 5 4 0 1 7 5 1 1 5 9 5 2 1 8 8 5 2 2 0 8 5 5 0 9 5 5 4 7 8 5 5 4 7 8 4 7 1 5 4 3 6 9 6 5 3 7 3 9 7 0 7 0 8 2 3 6 8 9 9 6 7 0 1 0 0 0 20000 40000 60000 80000 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 bacau county the central region p e rs o n s male female 0% 25% 50% 75% 100% 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 bacau county the central region 51.6 52.0 50.4 48.3 50.0 50.7 43.4 43.9 42.2 44.0 44.3 43.5 48.4 48.0 49.6 51.7 50.0 49.3 56.6 56.1 57.8 56.0 55.7 56.5 female male http://www.insse.ro/ http://www.statistica.md/ http://www.insse.ro/ http://www.statistica.md/ studies and scientific researches. economics edition online first, september 2018 5 figure 6: the proportion of male employees per 100 female employees as at 31st december, bacau county and the central region, 2011-2016 (persons) source: processing of the data collected from www.insse.ro and www.statistica.md at bacau county level, the dynamics of gender, compared to previous year, shows considerable differences, namely while the number of male employees decreases, the number of female employees increases, and vice versa, except for the year 2012, when there is growth in both numbers (+ 3.7% for men and + 2.0% for women) compared to 2011. the same scenario is witnessed in the case of the central region: relatively positive changes in the number of female employees, simultaneously with relatively negative changes in the number of male employees. the exeptions to this trend are at the end of 2012, compared to 2011, when the number of female employees decreased by 2.6% and the male one by 0.6%, and at the end of 2015 when the decrease was of 2.6% in women and 1.2% in men. figure 7: dynamics of number of employees compared to previous year, as at 31st december, by gender, bacau county and the central region (%) source: processing of the data collected from www.insse.ro and www.statistica.md compared to the end of 2011, the number of employees registered at bacau county level as at 31st december 2016, increased by 5.2% as a result of the increase in the number of female employees by 7.1%, and by 3.5% in the number of males, rises which were lower than the ones recorded at national level. compared to the same point in time, the number of employees in the central region at the end of 2016 decreased by 106 108 102 93 100 103 77 78 73 79 80 77 0 20 40 60 80 100 120 2011 2012 2013 2014 2015 2016 bacau county the central region 103.7 94.0 97.0 106.6 102.7 102.0 100.0 105.5 99.4 100.099.4 99.0 102.9 98.8 98.3 97.4 106.2 95.7 97.4 101.6 90.0 92.0 94.0 96.0 98.0 100.0 102.0 104.0 106.0 108.0 2012 2013 2014 2015 2016 % bacau male bacau female the central region male the central region female http://www.statistica.md/ http://www.statistica.md/ studies and scientific researches. economics edition online first, september 2018 6 1.8% (-2.0% for females and -1.6% for males), their negative dynamics being lower than the ones recorded in the republic of moldova. figure 8: dynamics of number of employees compared to 2011 as at 31st december 2016, by total and by gender, bacau county and romania, the central region and the republic of moldova, (%) source: processing of the data collected from www.insse.ro and www.statistica.md analysed by forms of ownership, considerable differences can be observed between the situation in bacau county and that in the central region. whereas at the end of 2016, the public sector in bacau concentrated 27.8% of the number of employees, at the same point in time, the central region held over 52% of the number of employees. in both bacau county and the central region, compared to the end of 2011, there is a slight tendency to change the structure, to decrease the percentages in the public sector (-1.7 pp for bacau county and -1.8 pp for the central region). figure 9: the structure of number of employees as at 31st december, by forms of ownership, bacau county and the central region, 2011 and 2016 (%) source: processing of the data collected from www.insse.ro and www.statistica.md as can be seen in figure 10, the dynamics of the number of employees in the public sector of the central region, compared to the previous year, experiences continuous decrease, whereas in bacau county there is a slight increase in the number of employees during the last 2 years of the analysis (+1.1% at the end of 2015 and + 1.5% at the end of 2016). the number of employees within the other forms of ownership, in both bacau county and the central region, presents year-to-year fluctuations as well as 112.1 105.2 97.1 98.2 112.3 103.5 97.8 98.4 111.9 107.1 96.6 98.0 85.0 90.0 95.0 100.0 105.0 110.0 115.0 romania bacau county republic of moldova the central region % female male total 29.5 27.8 54.1 52.3 70.5 72.2 45.9 47.7 0% 25% 50% 75% 100% 2011 2016 2011 2016 bacau county the central region other public studies and scientific researches. economics edition online first, september 2018 7 diametrically opposed situations: when there is an increase in number of employees in other forms of ownership in bacau county, there is a decrease in number of employees in the central region. for example, the maximum decrease of this indicator in bacau county was recorded at the end of 2013 compared to 2012 (-3.4%), while within the same period, also the maximum increase of this indicator was recorded in the central region (+ 7.4%). the exception to this trend is at the end of 2016, when the dynamics of the number of employees related to other forms of ownership is positive for both bacau county and the central region. figure 10: dynamics of number of employees compared to previous year as at 31st december, by forms of ownership, bacau county and the central region(%) source: processing of the data collected from www.insse.ro and www.statistica.md the number of employees who worked at the end of 2016 in non-public ownership units was higher than at the end of 2011 in both bacau county (+ 7.7%) and the central region (+ 2.0%). the decrease of this indicator in public ownership units may indicate a slight "migration" from the public sector to the other forms of ownership, for both the situations in bacau county and the central region. figure 11: dynamics of number of employees as at 31st december 2016, by forms of ownership, bacau county and the central region (%) source: processing of the data collected from www.insse.ro and www.statistica.md 99.3 97.6 99.8 101.1 101.5 104.4 96.6 101.8 103.6 101.3 98.3 99.4 99.5 99.1 98.498.1 107.4 98.0 96.8 102.1 90.0 95.0 100.0 105.0 110.0 2012 2013 2014 2015 2016 % bacau public bacau other the central region public the central region other 105.2 98.2 99.3 94.9 107.7 102.0 85.0 90.0 95.0 100.0 105.0 110.0 bacau county the central region % other public total studies and scientific researches. economics edition online first, september 2018 8 conclusions the analysis of the indicators that characterize the labour force situation of bacau county in romania as well as that of the central region of the republic of moldova, represented, in fact, the main objective pursued by the present paper. based on the above-mentioned data, we can conclude that in terms of the evolution of the number of employees as at 31st december in bacau county, this was a favourable, positive one, the values of this indicator increasing year by year, similar to the trend at national level, while in the central region this indicator has an oscillating trajectory, decreasing compared to 2011 but still in a slight increase compared to the previous year, actually following the trend of value of this indicator registered in the republic of moldova. the number of female employees in the central region was significantly higher than the number of male employees for the entire 6-year period analysed, which is totally opposed to the case of bacau county, where employees are predominantly male, 2014 being the only year that recorded at its end a number of female employees higher than the number of male employees. the analysis of the number of employees of the two administrative units by forms of ownership indicates a decrease in the ratio of employment in public units, simultaneously with an increase in the ratio of employment in non-public ownership units. it is clear from the above mentioned data that there is an extremely large ratio of employees that activate at the end of 2016 in public sector units (over 50%) in the central region, while in bacau county the ratio of employees is only a few percent greater than 25%. references cole, g.a. (1997), managementul personalului,editura codecs, bucureşti. harja, eugenia (2005), analiza şi prognoza statistică a numărului şi structurii forţei de muncă, editura matrix rom, bucureşti. harja, eugenia (2004), statistica resurselor de muncă, editura matrix rom, bucureşti. perţ, steliana (coordonator) (1993), potenţialul uman al unor ţări din spaţiul est şi sudest european, cide, bucureşti. bns (2008), organizarea muncii şi tipologia programului de muncă, bns, chişinău. bns (2012), piaţa muncii în republica moldova – culegere statistică, bns, chişinău ins, statistics available at www.insse.ro bns, statistic available at www.statistica.md http://www.insse.ro/ http://www.statistica.md/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 96 online media coverage of environmental protest in romania. roşia montană case corina daba-buzoianu national university of political studies and public administration 1 corina.buzoianu@comunicare.ro abstract romania, the place where protests never take place, has been facing significant civil disobedience and street demonstrations in the last years. of them, environmental protests present several particularities and do not convey social problems. the cyanide exploitation in roşia montană in romania has been debated lately due to the fact that the place is part of the romanian historical heritage and due to the negative environment impact. the project has been delayed several times being subject to political and public environment policies. moreover, the cyanide exploitation generated protests and street demonstrations against the project. the present study reveals the media coverage of the protest and analyses the way romanian media referred to the environmental protest related to roşia montană through messages. we investigate the media message and implicitly the representation comprised in it. our analysis includes several predetermined indicators in order to evaluate the media impact regarding the case: environment, economics, and legislative framework, presence of protests, involvement of non-governmental organizations, civil society/community and politicians. keywords environmental protests; roşia montană; civil demonstration; public space; online media message jel classification m31; m37 protest movement in romania after the revolution in 1989, romania has been known as a country where protests never take place, due to the social apathy and weak civil demonstrations (gubernat & rammelt, 2012; stoica 2012; kideckel, 2009). although organized at a national level, unions’ and civil society’s protests did not manage to create a significant impact or to generate a social or political change. the low social cohesion and low solidarity between protesting groups in romania and the formalized union protests (kideckel, 2009) are considered to be features of the protest movement in the country. still, starting with 2012, something seems to have changed, as romania has been facing atypical street demonstrations and civil disobedience. this seemed to a shift in the social movement in romania, scholars discussing about a significant difference between these protests and former street demonstrations in romania (stoica, 2012; gubernat & rammelt, 2012). the many years of passivity in romania seemed to have ended along with the 2012 protests, due to the large array of issues and to the fact that they generated the fall of the government. the 2013 protests against roşia montană cyanide exploitation are not only the most significant environmental street 1 this paper was possible with the financial support of the sectorial operational programme for human resources development 2007-2013, co-financed by the european social fund, under the project number posdru/159/1.5/s/134650 with the title "doctoral and postdoctoral fellowships for young researchers in the fields of political, administrative and communication sciences and sociology". daba-buzoianu 97 demonstrations that romania has faced, but also are considered to be the largest civic movement in romania after the fall of the communist regime (pavelea et al., 2013). for more than 12 weeks protestors in romania and abroad claimed dismiss of the government’s legislative proposal which would have allowed the cyanide exploitation to start. as in most of the protests in romania, participants also asked for the resignation of the prime minister and the ministers and other officials in charge. the 2012 romanian protests and the ones that followed were voluntary civilian resistance movements and have been made visible with the help of offline and online media. looking back, we see that most of them lacked the force and power to shift the political balance and most of the time lead to a quiet end (daba-buzoianu et al., 2013). by examining communication during protests in romania we see the recurrence of the topic political corruption, as, regardless of the initial topic of the protests, this was the most frequently addressed. the protests conveying topics regarding environmental risks were less frequent and have been less dealt with. issues like pollution, contamination and environmental disasters have not been found on the public agenda since the fall of the communist regime, although they have been articulated in several discourses and the public debated among the years. in this respect, the roşia montană cyanide exploitation in romania is a particular case, as it has become both a national and international issue, with significant media coverage and a vivid public debate. from its early beginning in 1997, the project has been criticized by ngos and several media, due to the negative impact on the historical places in the exploitation area and on the environment. roşia montană mine would be the largest mining area in europe in which it would be used 13 times more quantity of sodium cyanide. the project cannot be completed without a displacement or a reallocation of the community. roşia montană is the oldest mining town in romania, the documentary project advocates for the inclusion in unesco heritage list. alburnus maior association established in 2000, is opposed to the mining project appealing to social, environmental, economy arguments and heritage. the association has initiated and coordinated the save roşia montană campaign that has managed to mobilize 100,000 active supporters. during the period 2002-2007, houses were restored and the opportunity to invest in the future some 70 million dollars in cultural heritage became possible. basically an attempt was made in order to establish common denominators: sustainable development, tourism development, the growth of cultural heritage. the involvement of rmgc, the company that intended to own the exploitation, in these directions would be achieved only once the mining would start. the campaign “save roşia montană” started in 2002 and had as a main goal the cancellation of the project. among the years, the campaign has won public sympathy and managed to delay the exploitation, although the legal and administrative processes have continued. the protest against the cyanide exploitation in roşia montană started in august 2013, when the romanian government sent to the parliament the law entitled roşia montană – a public utility. this time, romania has faced a strong public movement and a vivid reaction from the civil society. for about 12 weeks the protestors claimed the parliament to react and vote against the law. the protest ended in november, succeeded in obtaining a negative vote for the law and stopped the exploitation. the discussion about the protest movement in romania should also consider a broader context, mainly europe’s series of protests (della porta & mattoni, 2014). the protests within europe tend to shed a new light on the relation between citizens and political power. still, political and institutional communication during protests remains reactive and less able to promote dialogue. the general european context shows that we are facing an increase of political contestation actions and that we are dealing with both old and new protests (della porta 2007; eising, 2008). although this increase is obvious, we must notice that protests and street demonstrations are strongly rooted in domestic online media coverage of environmental protest in romania. roşia montană case 98 problems and, as a consequence, we are facing a retreat behind the national borders (bârgăoanu, 2011). protests and public space as a visible marker of democracy, the protest is a form of communicating the public disagreement towards the political decisions and is expressing the public’s resentment. by facilitating the interaction between social actors and different opinions and interests, public space is inner linked to democracy (beciu, 2011). as a realm of mediation (dacheaux, 2008) it has become a space for contradictory debates where protestors claim opinions in order to influence the political decision to act accordingly. public space conveys controversy and debate which in contemporary society are strongly connected to the media power of spreading out issues that are at matter (habermas, 1997, 2005). without the role of online and broadcasted media, it is most probably that the public debate would not address certain general interest issues. at the same time, the significant role that media plays in the public debate is responsible for placing topics on the public agenda. accordingly, public space can hardly be put aside from the media (wolton, 2008; beciu, 2011), as media has become an essential condition for public space (habermas, 1997; beciu, 2011). the rise of the online media has significantly changed the role that digital technologies have in public space, due to their role in creating visibility (thompson, 2005). scholars talk about new forms of mediated visibility, as internet has “greatly increased the flow of audio-visual content into the networks of communication and enabled a much wider range of individuals to create and disseminate this content” (ibid., 37-38). all types of protests that we have found and analyzed are general issues that fail to capture common reactions and are being considered relevant only to certain social classes. the lack of social solidarity is associated with the indifference of politicians against the reactions of civil society helped to discourage these forms of civic manifestations. however, the year 2012 was considered atypical compared with the typology of public space after december, when accumulated social tensions have managed to bring together citizens across the country and contributed to the fall of the government. the romanian society has made its presence felt in the public space and captured the media agenda for nearly two months. unfortunately, this phenomenon has been sporadic, and the civil society has continued to adopt particular behaviors specific to transitional democracies. as a consequence of this phenomenon, media played the role of spokesperson for the civil society. for this reason, the themes of public space are the themes that are visible in media, which leads to a reconfiguration of public space into the exposed public space. this paper analyses this particular environmental protest in romania and focuses on the media coverage of the roşia montană case during the protests in two of the most read online news portals: ziare.com and hotnews.ro. the study of the online media coverage of the roşia montană (romania) gold-mining project protests is part of a broader series of research which analyzes communication in the romanian public space. method the current study is based on a quantitative research, in which i have analyzed the content of the online media message regarding the cyanide exploitation in roşia montană during the protests that took place in august-november 2013. the corpus was comprised by the articles submitted by hotnews.ro and ziare.com. these news sites were selected due to the fact that they were two of the most important news sites in daba-buzoianu 99 romania, considering the monthly views. within the framework of the monitoring, i have traced references to five topics: environment, economics, legislative framework, presence of the protests and involvement of ngos, civil society/community and politicians. some of the topics describe are strongly rooted in the protest debate, like environment, economics and legislative framework, while others try to analyze the involvement of different actors, like the case of the involvement of ngo’s, civil society and politicians. the environment topic refers to the presence of positive or negative environmental effects and to the discussion about clear evidence and steps to follow in terms of impact on environment. in respect to the economics, the study took into consideration the positive, negative or neutral impact on economy, both local and national. the presence of the protests noted weather the street demonstrations were announced, even at the level of intention, and the involvements of non-governmental organizations, civil society/community and politicians referred to these categories. moreover, while monitoring i have considered the headings of the articles relevant for the study. the headings that have been encountered during the monitoring were politics, current affairs, environment, economics, opinions, and various. the current paper does not investigate whether the public is aware of the details of the subject, but is interested in finding out the key factors in managing the mining operations and the way they are presented in the media, as well as the attitude of the political and social actors on the generated controversy. the paper has monitored the two on-line news sites hotnews.ro and ziare.com during august-november 2013 in order to observe whether there is a link between the way themes regarding the rosia montană project are discussed, the public reactions and the political decisions taken. the case examines one of the most controversial projects, roşia montană, which sparked numerous polemics, both in terms of economics, environmental and legislative issues, and as well stakeholders, local residents, authorities, politicians, ngos, civil society and local communities directly affected. although the project generated reactions in the media, the public opinion was not aware of the exact consequences or benefits. for this reason, the paper aimed to observe how the preset indicators have had visibility, during august-november 2013 when took place a series of protests against the roşia montană project. discussion it should be noted that in romania’s recent years, protests have focused on domestic issues and have addressed problems like pension and salary cuts and layoffs. not only that environmental protests were uncommon in romania, but environment issues were less addressed in public space and less dealt with in the last years. moreover, unlike other european countries, the ecological parties in romania did not manage to gain significant electoral support. despite all these, the environmental protests referring to the roşia montană project managed to gather a significant number of people. also, these protests have took benefit from online media in order to spread out. the protests referring to the roşia montană project manage to articulate the economic and political topic in order to gain visibility. the current study shows that the environmental topics were addressed mostly in connection with the economic growth of the private company and with the wrong political decision of the decision makers. in a very interesting way, the study underlines a feature of the romanian protests, more precisely the fact that the initial topic is somehow left behind and less visible (dababuzoianu et al., 2013). as other street demonstrations in romania, the environmental protests regarding roşia montană referred to the topics frequently dealt with in the public space, like politics and economy. messages regarding the environmental impact are less visible, instead the legislative framework (16.15%) and the politicians (15.12%) are more frequent, while economy has 12.51%. thus, the visibility of the case online media coverage of environmental protest in romania. roşia montană case 100 comprises topics that were already on the public agenda and less the environmental topic. thus, the protests addressing an environmental topic did not manage to promote it by itself, instead used other topics. moreover, if we were to consider the relation environment-economic-legacy, we see that most of the time the environment impact has been put in relation with the economic outcomes, explaining that the negative impact on the environment is creating a significant economic growth, especially for the company that manages the cyanide exploitation. the legislative dimension is frequently encountered in the media message and is strongly connected with the political dimension, as it seems to be used as an excuse by the politicians. most of the politicians involved in the case have pointed out that the legislation and the legal issues generated by the former ruling party set up a very difficult framework. in addition, it is worth mentioning the fact that the protestors were claiming the parliamentary commission to vote against the project of the cyanide exploitation in roşia montană. the vivid street demonstrations and the significant number of people attending and supporting the cause finally determined the members of the parliament not to vote for the project. in this respect, the indicators referring to protests and legislative framework are strongly linked, because the protests had as a goal a negative vote in parliament. the monitoring shows that the two news sites covered the environmental protests significantly different in terms of visibility, although in terms of content of the coverage there aren’t notable differences. thus, from the total number of 481 references revealed by the four months monitoring, 369 appeared in hotnews.ro and 112 in ziare.com. in terms of visibility, it is obviously that hotnews.ro (76.71%) had a significant interest to cover the event compared with ziare.com, which reaches approximately 23%. still, it is worth mentioning that although the study reveals an importance difference in terms of visibility, the content of the online media coverage shows that there are interesting similarities. the two news sites have written about the roşia montană protests in a similar way, by referring to the same topics and by addressing the same events. moreover, the study shows that the protests regarding roşia montană have been considered to be related to the label public interest, as this has been pointed out by the actors that communicated about the events. not surprisingly, if we look at the visibility within the four months we see that both of the two news sites have referred significantly to the roşia montană case during street demonstrations and have less dealt with it in times with fewer events. the main focus of the articles was to underline the public resentment about the implementation of the roşia montană project throughout the street protests all over the country and abroad, as in the case of the protests organized in london, berlin and brussels. in this respect, as shown in figure 1, september was the month most visible, mainly due to the significant street demonstrations organized in several cities in romania and abroad. figure 1 media coverage of roşia montană protests daba-buzoianu 101 from the point of view of the messages spread out by the protesters, both hotnews.ro and ziare.com write about how the slogans used have linked the case with politics: the green revolution in europe starts with roşia montană; stop the largest cyanide mining project; stop the crimes against romania: the transformation of the apuseni mountains in cyanides; there is something rotten in bucharest. thus, the messages used by the protestors try to exceed the environment topic and mention other elements. a first category of messages is connected with the intention to broader communication on the topic, more precisely to call for europe. the messages the green revolution in europe starts with roşia montană and stop the crimes against romania intend to transform the issue from a domestic to a european one. the second category of messages try to create a certain social solidarity, somehow constructed against the political class: out on the streets like in the 1990s; we are intelligent people, we are not desperate. there aren’t many categories of actors communicating during protests, as the study reveals the involvement of local community’s representatives, ngos and politicians. in addition to these categories, there were some other actors, but their involvement was rather low in terms of visibility. among those, the messages send by the romanian academy were mostly commented. quite interestingly, the messages send by the politicians seem to avoid the topic environment, and rather prefer to address the economic and social impact. the ruling party links the economic messages with the great importance of attracting foreign investors. thus, the negative vote would be considered by the foreign companies willing to invest in romania a negative signal in terms of legislative support for assets. the arguments brought up by the ruling party referring to other countries doing cyanide exploitation are being rejected by the protestors, who exclaim we are defending romania. the messages spread out by the actors can be divided into two categories: one that supports the rule of law and implicitly the implementation of the project, as it is based on a contract between the state and the private company, and one that despite the contract and regulations, argues that environment protection and ecology concerns must be considered priority. quite interestingly, politicians tend to consider roşia montană project as a local issue, something that concerns the local community and the two parties of the contract, while the protestors tend to shape communication in a broader way and to address topics that are frequently on the public agenda like political corruption and government’s impossibility to solve problems properly. also, it is worth mentioning the fact that among politicians, we may find three sub categories according to the way they communicated in respect to the roşia montană project. thus, the data gathered shows that some of them are vividly against the project due to the negative impact on the local community, some are arguing that the project has some benefits worth considering, like the economic and financial ones, and some are in both categories, as they have changed their position throughout time. conclusion the present paper investigated the topics spread in the online media regarding the cyanide exploitation in roşia montană, romania. in relation to this topic, the research emphasized the way in which the main elements defining the problems were visible, as well as the public attitude of the actors implied. starting from these premises the paper underlined that this controversy has been considered a local problem which has become a matter of national and international interest. nevertheless, the ambiguous and conflicting information has been reflected in the lack of firm political decisions. the economic factor has been evoked in the majority of cases through a series of advantages brought to the local community (increase employment rate, the raise of the level of living, attracting investments), as well as disadvantages. online media coverage of environmental protest in romania. roşia montană case 102 at the same time, the paper identified a series of social risks: implementing such a project would have practically led to the disappearance of local community, to the decrease of social cohesion and of social relations at the level of community. the protests have had especially a local character. at the national level, the dissemination of information has been done through authorities and mass media. thus, the paper identified both communicational and image risks. the division into two categories, supporters and opponents of the mining project, has definitely contributed to the delay of the political decisions. the lack of civic culture and the weak public politics have transformed this project into a significant issue. even though the media coverage comprised all the relevant aspects such as economic, social, environmental, and political, at the level of public opinion a lot of ambiguities concerning this project have remained and this fact has also reflected in the social actions visible in media. references bârgăoanu, a. (2011), examenul schengen. în căutarea sferei publice europene, bucureşti, comunicare.ro. beciu, c. (2011), communication sociology and public space, iaşi, polirom. daba-buzoianu, c., erdogan-tosun, g., toker, h. (2013). 'this is not about europe!' the absence of eu-related themes on the agendas of recent romanian and turkish protests, 154-173, in radu, l., bârgăoanu, a., corbu, n. (eds.), the crisis of the european union. identity, citizenship and solidarity reassessed, bucureşti, comunicare.ro. dacheux, e. (2008), public space, paris, cnrs editions. della porta, d. (2007), ‘the europeanization of protest: a typology and empirical evidence’, 189-208, in kohler-koch, b., rittberger, b. (eds). debating the democratic legitimacy of the european union, lanham, rowman & littlefield publishers. della porta, d., mattoni, a. (eds.) (2014), spreading protest: social movements in times of crisis, colchester: ecrp. eising, r. (2008), clientelism, committees, pluralism and protests in the european union: matching patterns?, west european politics, 31(6), 1166-1187. gubernat, r., rammelt, h. (2012), austerity – the trigger for waves of contention in romania, journal of community positive practices, 2, 256-265. habermas, j. (2005), public sphere and structural transformation, bucharest, institutul european. kideckel, d. a., (2009), citizenship discourse, globalization, and protest: a postsocialist-postcolonial comparison, anthropology of east europe review, 27(2), 117-133. pavelea, a., culic, l., topan, f., iancu, i. (2013), media coverage of roşia montană’s protests, studia universitatis babes-bolyai, ephemerides, 58(2), 39-66. stoica, c. a. (2012), faţetele multiple ale nemulţumirii populare: o schiţă sociologică a protestelor din piaţa universităţii din ianuarie 2012, sociologie românească, x(3), 4-33. thompson, j. b. (2005), the new visibility, theory, culture and society, 22(6), 31-51. wolton, d. (2008), communication, paris, cnrs editions. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 49 the financial management and regional development mihaela brînduşa tudose technical university “gh. asachi” of iaşi brindusatudose@gmail.com abstract the main objective of the study is to examine the role that financial management plays in ensuring regional development. this is because the crisis, economic globalisation, the increasing external growth of companies and the institutionalisation of the autonomy of local communities have fuelled the interest in identifying alternatives to local and thereby regional development. the targeted operational objectives were: to define the preliminary coordinates of regional development; to identify the role of private and public financial management in supporting regional development; and to present the financing framework of the siret-prut-nistru euroregion. the main financial levers with a direct impact on regional economic development there are: tax incentives; using eu financing programmes; leverage based on ownership of buildings and land; business incubators, etc. the study suggests that financial management (both public and private) plays an important role in the development of the euroregion, with wideranging present (in the post-crisis) as well as future implications. keywords financial management; public sector; private sector; regional community; regional development; siret-prut-nistru euroregion; crisis jel classification g32; o10 introduction regional development is a primarily economic, applied to a territory, which focuses on the regional community. the policy achieves its objectives by identifying and leveraging resources at the regional level, the ultimate goal being to create and maintain a stable and profitable business climate. in economic and social terms, the results of regional development are assessed by the volume of investments, the increase in productivity and competitiveness, demographic evolution, living standards, the extent to which disparities within the region are reduced, etc. financially, the results of regional development are reflected in the size of public and private resources generated at the regional level. the methodology employed for the purposes of this article relied on hypothesis and deduction. the main objective of the study is to examine the role that financial management plays in ensuring regional development. to achieve this goal, the paper is structured as follows: the first section presents the preliminary coordinates of regional development; section two presents the role of local public financial management in supporting regional development; the third section presents the role of private financial management in the context of regional development concerns; in the fourth section is identified the financing framework of siret-prut-nistru euroregion; the last section summarizes the conclusions and shows future directions of research. the financial management and regional development 50 1. preliminary coordinates of regional development regional development policy targets at a particular area (i.e. territory); this territory along with its population (individuals, groups, professional/employers/trade union associations, educational bodies, ngos) and their particular activities, traditions and interests make up the regional community. in terms of the direct effects it produces, regional development policy serves primarily the interest of the respective community/area, however – at a subjacent level – it also supports national interest (owing to its favourable impact on the economy or society as a whole). the effective delivery of regional development policies involves carrying out activities designed and implemented by local (public and private) stakeholders, through a set of specific programs and projects. the ultimate goal of these policies is to ensure the growth in the welfare of members of communities and of businesses. growth conditions for new businesses and their role in regional development will vary according to the characteristics of the regional environment, and thus different regions may well have quite different types of growth regimes (fritsch, 2011). recent literature concerning regional development has placed significant emphasis on local institutional structures and their capacity to hold down the global. conversely, work on inter-firm networks – such as the global commodity chain approach – has highlighted the significance of the organizational structures of global firms’ production systems and their relation to industrial upgrading (coe et all, 2004) recent studies (vittoria and lavadera, 2014) have revealed that a new definition of regional milieu is emerging from the recent innovation policy framework inspired by the notion of a ‘knowledge economy’. it is grounded in a theoretical context where the emphasis is on the interactive character of innovation, involving the sharing and exchange of different forms of knowledge among the actors. the stakeholders operating in the regional arena may act both as contributors and / or beneficiaries of policies executed at this level. regional economic development is the result of collective actions of: the local public sector, the private sector (local and regional) and local and regional community, respectively. the public sector, represented in particular by local government (but not excluding the involvement of central government), performs the following roles: analyse the local and regional economy; coordinate local and regional economic development; manage local and regional development projects; provide public services; create a favourable climate for various activities, etc. the private sector is composed of businesses that fulfil the following roles: create jobs; contribute to the creation of funds; participate in local and regional strategic planning; jointly participate in providing local public services, etc. the regional community is a joint participant in regional economic development, either directly (by conducting specific activities, including direct investment) or indirectly (through debates, exchanges, guidelines, etc.). the three main stakeholders in regional development (the public sector, the private and sector and the community) operate on two levels: a) the national economic context (shaped by the government's economic policy); b) the international context (determined by a series of policies formulated by various states at international level, as an effect of globalisation). the strategy for the development of a territory involves monitoring a system of zonal indicators (popeangă, 2002). in turn, such indicators are grounded on criteria considered as benchmarks for the overall evolution of the area; these criteria should factor in the existence of comparable data, the possibility to group indicators within representative categories, the relevance for the dynamic analysis of evolution, offsetting any recording errors, etc. the indicators of a region’s evolution can be structured as follows: tudose 51 a) indicators which describe demographic developments (total population; population density; socio-professional groups; age groups; demographic dependency indices; infant mortality rate); b) indicators that define the extent of economic activity and business (industrial and agricultural output per capita; turnover per capita; number of employees per one hundred inhabitants; number of companies per one hundred inhabitants; number of individuals engaged in free enterprise per one hundred inhabitants; taxes collected from one hundred inhabitants; foreign capital invested in the area); c) indicators that reflect infrastructure and public services (number of housing units per one hundred inhabitants; living space per person; number of households per one hundred inhabitants; available drinking water resources per capita; sewage and wastewater network; landscaped areas; total communication routes, including: railways, roads, county roads, village roads; volume of food and non-food retail sales; the number of letters and parcels delivered per one hundred inhabitants); d) indicators of household assets and resources in a particular area (number of private automobiles per one hundred inhabitants; telephones per hundred inhabitants; tv subscriptions per one hundred inhabitants; the number of postal offices in the area; the number of bank branches area); e) socio-cultural, educational and health indicators (active population per one hundred inhabitants; employment rate per one hundred people; unemployment per one hundred inhabitants; social protection expenditure; the number of libraries in an administrative area); f) ecological and environmental protection indicators (number of sources of pollution in the area; forest land affected by pollution; environmental protection spending). both globalisation and regional integration leads to increased competition among local communities for financial assistance, attracting businesses and investment aimed at the local and regional economy. beyond the advantages provided (by providing economic opportunities on new markets for businesses), globalisation also creates threats to local businesses, because most often they cannot compete with major international competitors who sell their products on the local / regional market. 2. the role of local public financial management in supporting regional development supporting regional development is a major responsibility of public authorities (local ones in particular). community progress is dependent upon the capacity of local leaders to link public decisions with new economic and social conditions. for these purposes, local government must have thorough knowledge of the community’s human, intellectual and financial resources. the role of financial management is to create a favourable framework for action, where natural connections are established between financial objectives and the means and instruments used to measure its performance (onofrei et. al, 2011). for that reason, modern public financial management is oriented in such a manner so as to ensure the following: achieving effectiveness; recognising individual responsibilities in carrying out public duties, decentralisation of responsibilities; the introduction and development of strategic management; the outsourcing of certain services to the private sector; the introduction of modern management techniques. the manner in which local public financial management pursues its above-mentioned role depends on how its functions are fulfilled (székely, 2009): a) financial forecasting – a function meant to transpose any strategic objective and tactical decision into income and expenditure, receipts and payments; b) financial organisation – a function that aims to coordinate the activities required to achieve financial objectives; the financial management and regional development 52 c) financial coordination – a function intended to harmonise decisions and actions of the staff of an entity and its sub-systems as part of its strategies, tactical procedures and organisational system; coordination and thereby communication, especially in the financial area, must be controllable and controlled; d) financial training – a function that seeks to predetermine an entity’s staff to achieve its objectives, by observing the established efficiency conditions; e) financial control and assessment – a function designed to quantify the performance of the other attributes of management action (forecasting, organisation, coordination and training), conducted at the closing of management cycle, thus laying the foundation and launching the next cycle. for the purposes of carrying out local public financial management, local authorities have access to a variety of financial instruments to promote regional economic development. considering the current economic situation and limited available resources, the main financial levers with a direct impact on regional economic development may include (ichim, 2009): tax incentives; using eu financing programmes; leverage based on ownership of buildings and land; business incubators etc. tax incentives are tools that can favour/boost/motivate local stakeholders in their capacity as taxpayers (by reducing the tax burden). although in the short term, they may appear to benefit only local taxpayers, in the long term, local authorities can also reap beneficial effects, gaining from an increase in resources from activities bolstered by such tools. the provision of tax incentives is recommended when the overall conditions in a particular local/regional jurisdiction are unfavourable to businesses compared to those in other areas where they might relocate (because they could minimise the risk of the flight of taxpayers to a more favourable tax area). unfortunately, tax incentives can be applied only if local authorities can afford to abandon, over the short term, part of the current guaranteed receipts in exchange for potentially higher future revenue. specifically, tax incentives may focus on: a) the establishment of new businesses and/or support for existing businesses; b) creating new jobs and/or protecting existing ones; c) encouraging companies to start new businesses or undertake investment programs aimed at increasing overall productivity and long-term viability. the decision to offer tax incentives must be judged based on the following two criteria: the expected impact of the decline in current revenue on local public services and the predictability of benefits to be secured by granting tax incentives. given that, as mentioned above, the opportunities to support local economic development through tax incentives are relatively limited, it is necessary to correlate the action of such tools with other specific mechanisms (such as those derived from expenditure policy oriented towards supporting local/regional development). using eu financing programmes represent another alternative in supporting regional development. for example, regional operational programme 2014-2020 has the overall objective of economic competitiveness and improve living conditions of local and regional communities. the involvement of local authorities at this level is intended not only to aid in fund-raising (by means of consulting, facilitating contacts and providing information), but also to establish partnerships that ought to provide effective support for regional development. leverage based on buildings and land ownership. depending on their category, local authorities may use assets in the private domain of state (specifically, buildings and/or land) to facilitate raising funds on their own behalf or on that of local actors (by providing legal guarantees). such leverage can be exercised in the opposite direction too. for instance, when a company needs a specific property guarantee that the local authority is able to provide from its own portfolio, the local authority may provide such tudose 53 property (or more favourable lease terms) in exchange for a share in the company’s capital. business incubators, providing managed business space for new businesses, can also support regional development; in particular, appropriate land may be granted (at reasonable lease rates) for the construction of production facilities allowing small enterprises to develop and expand. in addition, authorities can provide: a) shared services, such as safety, maintenance and repair, cleaning, administrative services; b) common facilities (conference rooms, reception desks, business services, warehousing, payroll and billing services); and c) equipment that can shared (such as computers, faxes and copy machines etc.). in conclusion, we consider that local public financial management plays a major role in supporting the regional development; the separate or joint application of the abovementioned financial levers will allow local authorities to stimulate local and regional economic activity. 3. the role of private financial management in the context of regional development concerns in this section, we will address the role played by firms (through their financing policies) in supporting regional development. specifically, we will present the manner in which firms have adapted their financial management to current changes, due to the transition from the old challenge (role of leverage in maximising firm value) to the new challenge: financial fragility and vulnerability to crises. this is because, against the backdrop of major imbalances, increased debt financing increases risk, causing companies to become more fragile financially; on the other hand, internal financing, being more stable and sustainable, involves lower levels of risk and mitigates financial vulnerability to crises. the vulnerability of the economic environment extends to the other components of global society; the aggregate effect can translate into a slowdown/stagnation/decline in the pace of regional development. we would like to emphasise the fact that not only companies, but also the current economic and financial system need more prudent financing that should support a more stable and sustainable growth rate, and in this context, the earlier focus on profit maximisation must be redefined in favour of securing financial sustainability. only under such conditions can regional development be sustainable. 4. the financing framework of siret-prut-nistru euroregion the implementation of such actions is illustrated by such concrete examples as the establishment siret-prut-nistru euroregion itself, and the projects implemented by district councils of partners in the republic of moldova in cooperation with vaslui and iasi county councils (projects such as: “the demonstrative use of alternative energy resources in moldova by means of the experimental cultivation of alter energy crops; “eco-rural tourism in codrii lăpuşnei”; “enhancing businesswomen’s entrepreneurship – the creation of a cross-border network; “prevention of human trafficking”; “the association of border regions in moldova and the creation of a network of public and private actors involved in socio-economic regional and crossborder initiatives”, “the economic and social development strategy of the siret-prutnistru euroregion”, “the rehabilitation and upgrading of the transport infrastructure in the iasi ungheni border region along road section dj 249 a”). the main source of financing of the euroregion is represented by the financing programmes offered by international bodies (in particular european funds). due to the major share of non-reimbursable funding (granted for specific purposes), most the financial management and regional development 54 associations in the siret-prut-nistru euroregion are active in the social and education sphere or carry out activities that contribute to the economic development of the territories in which they operate. another source of financing for the euroregion (admittedly, with a more modest share) is local government budgets. the financial and budgetary reality of present-day romania is challenging, being marked not only by the extended economic and financial crisis but also by other issues related to the design and implementation of public management. this explains the difficulties faced in co-financing projects implemented using eu financing programmes. the current legal framework (the tax code) expressly provides the possibility for local councils to approve certain tax exemptions for building and land taxes, payable by legal entities, for the purposes of regional development. taking advantage of this legal provision, the local authorities in the two partner counties in the siret-prut-nistru euroregion have adapted their tax policy in such a way as to support the objectives undertaken upon signing the euroregion partnership document. a third source of financing is the funds of businesses that operate in the euroregion area. the unfavourable national context caused by the crisis and the systemic credit crunch have vastly limited the private sector’s financing alternatives and therefore the possibility to co-finance regional development projects. even if private financial management does not have a direct impact on the development capacity of the siret-prut-nistru euroregion, certainly it can influence indirectly the prospects of achieving the objectives undertaken. consequently, in the current financial and economic context, the main objective of financial management in the euroregion should be to secure funding from nonreimbursable grants to offset the loss of public and private resources (as a result of contracting economic activities at national level). conclusions regardless of the level to which it relates (whether national, regional, local or private), the primary responsibility of financial management is to identify and secure resources in order to facilitate the achievement of objectives undertaken (by the state, region, local community, business or individual). regional development is a policy which aims to ensure the establishment /development/modernisation of enterprises, to create and upgrade infrastructure, to facilitate employment, to implement social policies, to modernise cities and villages, etc. the objectives of the policy are achieved by identifying and leveraging resources at regional level, the ultimate goal being to create and maintain a stable and profitable business climate. the examination of the particular aspects of financing regional development, in general, and the siret-prut-nistru euroregion, in particular, was prompted by the present economic and financial context, which has left its mark on regional development opportunities. the research conducted has enabled us to identify the following particular aspects of regional funding: a) it involves actions undertaken in a particular territorial framework (region), yet whose effects become visible at the national level; b) it differs in terms of volume, structure and purpose depending on the needs of each individual region (precisely in order to reduce economic and social development disparities); c) it is based on three main categories of resources: local public resources, local private resources and financing programmes/projects; d) as it involves the use of local public resources, regional financing necessitates local autonomy and financial decentralisation; tudose 55 e) in the case of accessing regional financing schemes, financing is provided after the completing specific phases of project implementation (in the form of repayment of expenses after investments have been made); f) it involves co-financing on the part of the beneficiary (especially for programmes and projects providing non-reimbursable financing). the final conclusion is that financial management (both public and private) plays an important role in regional development, with wide-ranging present (against the backdrop of the global crisis) and future implications. future directions of research. the study constitutes a starting point for further research. specifically, we consider the quantification of the financial management impact on regional development. references coe, m., hess, m., yeung h.w., henderson, j. (2004), globalizing’ regional development: a global production networks perspective, transactions of the institute of british geographers, 29(4), 468-484. fritsch, m. (2011), new business formation and regional development – a survey and assessment of the evidence, discussion papers 1127, berlin. ichim, c. (2009), procesul bugetar local şi dezvoltarea economică locală, economie teoretică şi aplicată, supliment, 1, 134-141. onofrei, m., tudose m. b., oprea, f. (2011), analiza calităţii deciziilor financiare ale colectivităţilor locale în contextul constrângerilor bugetare [analysis of the quality of the financial decisions of local authorities in the context of budgetary constraints], paper presented at the international conference „economie şi cunoaştere” (economy and knowledge) organised by the romanian academy in partnership with al. i. cuza university of iaşi, 20-22 october 2011. popeangă, g. (2002), managementul finanţelor publice locale, bucharest, editura expert. székely, s. z. (2009), management financiar. contabilitatea instituţiilor bugetare, course support material, cluj-napoca, babeş-bolyai university. vittoria, m. p., lavadera, g. l. (2014), knowledge networks and dynamic capabilities as the new regional policy milieu. a social network analysis of the campania biotechnology community in southern italy, entrepreneurship & regional development: an international journal, 26(7), 594-618. recent studies (vittoria and lavadera, 2014) have revealed that a new definition of regional milieu is emerging from the recent innovation policy framework inspired by the notion of a ‘knowledge economy’. it is grounded in a theoretical context where ... (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 75 issues of efficiency for public-private partnerships in the water sector simona frone institute of national economy at the romanian academy frone.simona@gmail.com dumitru florin frone university of agricultural sciences and veterinary medicine bucharest ffrone@hotmail.com abstract the water resources are critical for the economic development in a country or region, since the pollution and depletion of the waters are raising concerns for the environmental and economic efficiency of their management. this outlook calls for analysis on economic and financial issues and risks associated with specific investment projects in water supply and sanitation infrastructure wss. in previous research outcomes we have shown successful models of publicprivate partnerships (ppp) used to manage and mitigate the risks and improve performance in providing the public services of water supply and sanitation (wss). the main objective of this paper is to reiterate the ppp as an efficient business model for the water sector, by employing several methodologies: literature review, case studies, performance indicators, analysis and synthesis. some features and experiences of ppp in the water sector are resumed and analysed, considering recent developments and leading to conclusions and recommendations on their opportunity and efficiency in romania. keywords efficiency; public private partnership (ppp); economic risk; water supply and sanitation (wss); concession jel classification h44; l95 1. introduction as analysed and mentioned in previous research papers in the last about 15 years important trends have occurred within the water sector of the european union, mainly driven by the european water framework directive 2000/60/ec. since having dealt mostly with water demand management and regionalization of water utilities, in order to determine the most efficient path for sustainable development and efficient water management, there is an urge to consider another trend: privatization of the water companies’ management through public-private partnerships (ppp) and creation of a competitive market in the water supply and sanitation (wss) industry. sustainable development depends also on managing the costs of service provision using existing infrastructure along with additional investments in new water infrastructure and rehabilitation, both physical and institutional. therefore, the water/wastewater sector is still undergoing important institutional, economic and technological reforms, aiming at ensuring the financial as well as environmental sustainability of the water and wastewater utilities and services (frone & frone, 2012b). frone, frone 76 the process of regionalisation and aggregation of the romanian water sector was a strategic move, being expected to create, besides economies of scale, also a large enough demand base for the regional wss operators to become attractive for private sector participation (frone, 2012). the paper will highlight some specific features of the water sector and the implications on suitable forms of ppp designed to increase the efficiency of the wss companies and to allow for a more equitable risk sharing between the public and the private sector. 2. background concepts there are quite difficult economic and political choices for the sustainable management of the urban water sector at present. the importance of the water supply and sanitation (wss) networks and services has long been proven as an essential public good for socio-economic development, since: • the provision of water and sanitation services has undoubtedly reduced disease and has yielded health benefits. • the cheap access to water has also encouraged a variety of other uses from agricultural to architectural developments. 2.1. water as a social and economic good however, the water sector is marked by a long history of under-pricing, and opposition to full cost pricing for ethical and social reasons. as analysed in (frone, 2012) water is an economic good, as well as a social good. in view of a sustainable development, it is important to view water allocation as a means of meeting social goals of equity, poverty alleviation and safeguarding health. the social and political factors and the public character of water have contributed in the past to the reluctance of governments to acknowledge water as a finite natural resource and an economic good. water is, however, from the economic analysis viewpoint, a commodity that needs a market price reflecting the cost of provision and its true value to society. besides, as claimed in previous research papers, sustainable water management calls for an integrated approach to the supply and demand of water. therefore, modern water industry and infrastructure deals both with: • the supply side, consisting in the collection, treatment, transport, storage and distribution of fresh water; • the demand side, by collecting, transporting and treating the used (waste) water. still, due to the incapacity or the unwillingness to acknowledge water as a finite natural resource and an economic good – a commodity that needs a market price reflecting the cost of provision and its true value to society (frone, 2012), public water systems are often operated inefficiently and services are unreliable, lacking coverage, regular maintenance and good design. currently more than 1 bn people worldwide still lack access to safe drinking water and up to 2 bn people do not have access to basic sanitation facilities. improving the delivery of urban water and waste water services is still a critical need for many developing countries and economies in transition. our country romania, although a member state of the european union, still faces challenges and issues in increasing the access of the rural population to wss networks and services. currently in romania only about 60% of the total population has access to full public water supply, sewerage and sanitation, due to the issues of efficiency for public-private partnerships in the water sector 77 underdevelopment of water/wastewater infrastructure or to low rates of connection (frone & frone, 2012). therefore, as we shall argue in this paper, in the long run, regional and local governments (public authorities) should consider, for developing and delivering wss infrastructure and utilities the potential involvement of some private sector partners in dedicated partnership projects. the main grounds and reasons for public-private partnerships (ppps) in the water sector are: ▪ improving the delivery and coverage of wss utilities is a critical need for the emerging economies and all the eu member states (including romania), in order to be able to comply with the water directives; ▪ in the european union about usd 75bn per year are currently spent on water and waste water services, and capital investment is predicted to increase by 7% a year for the foreseeable future; ▪ public water systems are often operated inefficiently: lack of coverage, of regular maintenance and of good design; ▪ private wss companies might be able to offer increased access to their private investment funds ▪ the improved and innovative management systems, technologies and techniques. 2.2. forms and features of public-private partnerships in the water sector after having acknowledged some features of the water utilities, and the fact that there is a need to involve the private sector capital and management capacity, the ppp in the water sector, should not be misunderstood as full privatization, with the management and ownership of water infrastructure transferred to the private sector. in a general definition, the public-private partnerships (ppps) refer to any form of agreement (partnership) between public and private parties. hence without passing all the ownership and operations to the private operator, there is still a quite wide range of approaches for involving the private sector in improving the performance of water and sanitation systems. some options keep the operations (and ownership) in public hands, but involve the private sector in the design and construction of the infrastructure. other options involve private actors in the management, operation and/or the financing of assets. accordingly, they involve different degrees of private and public sector responsibilities for service delivery. the main features of the ppps in the water sector are: o cooperation between a public partner and a private partner involving a longterm relationship; o the funding of the projects mostly done by private partners; o the public entity is focused on the objectives to be achieved in the term of public interest and is responsible for monitoring the project, for the quality of the provided services and the pricing policy; o the private partner is usually responsible for the stages in the project like design, completion, implementation and funding; o the risk management is done through risk sharing between partners, so that some of the main risks are being transferred from the public entity to the private partner. there are also several forms of the ppps in the water sector, created and designed to respond to the main problems of water supply and sanitation networks development frone, frone 78 or to improve the operational economic and/or environmental efficiency of the existing water utilities. as may be noticed in table 1, there are some common forms of public-private partnerships in the water sector, more or less specially designed to meet some specific development or efficiency objectives. also analysed in table 1, according to the main objective they are designed for, the authorities would probably choose different options of ppp. there are some forms of ppp mainly used to develop access to wss services and coverage, such as: the mixed-ownership (joint-venture) company in which a private investor takes a minority share in a water company with full management responsibility vested in the private partner; the concession (for 20–30 years), under which the private operator is responsible for running the entire system. investment is mostly or fully financed and carried out by the private operator. table 1 objectives and specific forms of ppps in the water sector forms of ppps in the water sector objectives of the ppps in the water sector specific ppp options developing access to wss coverage and services improving efficiency concessions the mixed-ownership (joint-venture) *** * the concession (for 20-30 years) *** ** contracts the management contract (for 4–7 years) * *** the lease contract (for 10–15 years) ** *** legend: ***=very effective; **=effective; *=less effective source: own qualitative analysis on the other hand, there are other forms of ppp designed and used especially or only to improve economic efficiency, mainly some limited time contracts, such as: the management contract (for 4–7 years), under which the private operator is only responsible for running the system, in exchange for a fee that is to some extent performance-related; the lease contract (for 10–15 years), under which assets are leased to the private operator who receives a share of revenues. nevertheless, due to the water sector being one of natural local monopolies, a strong regulatory role is required to ensure that performance standards are met and the interests of consumers protected. local authorities or governments retain final responsibility for setting and enforcing performance standards. therefore, in all of these options or forms, the public authority remains responsible for overseeing the activity and ultimately ensuring that public needs are met (oecd, 2003). 3. challenges and obstacles of developing efficient public-private partnerships in the water sector in some countries, public-private partnerships in the water sector have existed for more than a century. public-private partnerships (ppp) in the urban water sector mostly take the form of lease or concession contracts, where a public authority retains the ownership of the system and the private sector manages and operates the services. issues of efficiency for public-private partnerships in the water sector 79 in its green paper on ppps, the european commission recognised that the following elements normally characterise a ppp (com (2004)327): •the relatively long duration of the relationship, involving cooperation between the public partner and the private partner on different aspects of a planned project; •the method of funding the project, in part from the private sector, sometimes by means of complex arrangements between the various players; •the important role of the economic operator, who participates at different stages in the project (design, completion, implementation, funding); •the distribution of risks between the public partner and the private partner, to whom the risks generally borne by the public sector are transferred. as may be noticed from a previous study (frone & frone, 2013) all kind of countries (developing, middle income, advanced, even socialist national economies), from all over the world, have involved public private partnerships in providing their water supply and sanitation networks and services. this is a proof that ppps can provide solutions to communities faced with the need to improve critical infrastructure or find cost efficiencies to help fund necessary projects. nevertheless, despite the significant expansion of public-private-partnerships in the urban water sector in recent years, it is estimated that still only 3% of the population in poor or emerging countries is provided with drinking water through private operators. there are some specificities of the wss systems that have a strong impact on the economic and financial features of the ppp in the water sector. due to these features, private operators are particularly sensitive to the quality of the investment climate and the level of risk, which is an important obstacle to public-private partnerships in many regions of the world:  networked water systems have extremely high capital costs;  urban water services are a business with relatively low rates of return on investment, so it is essential that revenue streams are as secure as possible; for instance, as analysed in (platon et al., 2014), the economic and financial risks of the wss activity can be divided into two categories: a) financial risks (investment related), which is the set of risks associated with investment in new infrastructure of water and wastewater: expansion of a distribution network, the creation and development of new sources of drinking water, or the construction of a new water wastewater treatment; b) economic risks of exploitation, which is the set of risks associated with the operation and maintenance of a water supply and sewage-sanitation service. the economic risks of the wss projects are determined by the uncertainty of economic development, namely of the sector market. these most significant economic risks in romania are: the commercial risks of non-payment, related to the consumer demand (i.e. the consumers reaction to increasing wss tariffs), the risk of competition (determined by quasi free access of rural population to water from common wells and own boreholes); the risk of inflation, the contractual risk, the legal and regulatory risk (frone & frone, 2015). 3.1. risk sharing for increased efficiency considering the specific risks of the water sector and the financial challenges brought by the recent global economic crisis, an important issue of efficiency is the selection or development of the right model of ppp arrangement. for instance, as according to (oecd-world bank, 2002), before the global crisis, there was a dominance of concession contracts (more than 82% of cumulated investment 1990-2000), where the objective is (see table 1) to increase the access to wss services, but the private operator is responsible for management of operations, frone, frone 80 maintenance and investment, and hence exposed to a large array of risks, in conjunction with an inappropriate allocation of risks between stakeholders. due to the fact that many public-private partnerships in the water sector were designed in a way that required the private operator to bear the political, regulatory and currency exchange risks in addition to all operational and investment related risks, the global economic crisis (2008-2012) has brought recognition that this might not be the most appropriate way of allocating these risks, since many risks are not under the control of private operators. in figure 1, we represent in a risk matrix, the mechanisms of risk sharing for each of the main 4 types of ppp models for the wss services; as indicated graphically by the arrow, the degree of private responsibility and risk taking increases from left to the right. figure 1 risk matrix (risk sharing mechanisms) of the main ppp models in the wss sector from this viewpoint, the standard models of the public-private partnership in the water supply and sanitation sector are defined by a particular mechanism of the responsibilities and risks allocation (frone & frone, 2013): ppp type i: the management contract under a management contract the operator fills key management positions in the water company with appropriately skilled staff. the publicly owned water company continues to be accountable for other responsibilities, such as undertaking new investment. in this arrangement, the private sector partner will provide o&m and/or capital programme management services and receive an annual fee from the public partner. the revenue collection function is usually retained in the public sector and the scope and mechanism of risks transfer is limited, but performance and efficiency generally improves. ppp type ii: affermage-leases under an affermage-lease, responsibility for operating and maintaining existing assets, plus commercial and management responsibilities, pass to the private operator. the public contracting authority usually retains responsibility for new investment. here, the risk transferred from the contracting authority to the operator is usually quite significant, but the mechanism of risk transfer depends on the details of the contract and, in particular, the way the operator’s remuneration is determined: under an affermage, the tariff adjustment rules that matter most are those applying to the operator’s tariff (or affermage fee); under a lease, the operator gets the customer tariff minus a lease payment, so the tariff adjustment rules that matter most are those that issues of efficiency for public-private partnerships in the water sector 81 apply to the customer tariff. there may be thus a raise in the efficiency of water systems operations. ppp type iii: joint-ventures in this type of ppp, the public-private partnership is more intimate and integrated, since the public and private sector form a joint venture to provide water and wastewater services to the customer. it is a good practice for the public sector to inject the water infrastructure assets and the private sector partner to contribute with the capital, to form a joint venture company. this is potentially the most complicated but is also an increasingly modern and popular model favoured by the different stakeholders. the joint venture model permits the sharing of risks in the form of profit-and-loss sharing. this allows the redistribution of savings and potential benefits in a project between the public and private partner, a provision which is usually conspicuously missing in ppp projects. the public sector will have to retain a certain degree of risks in areas like o&m, revenue collection and financing, compliance (figure 1). ppp type iv: concessions under a concession the operator assumes full responsibility and exclusive right to operate, maintain and carry out investment in a public utility and the risk transferred from the contracting authority to the operator is usually substantial, but depends particularly on the rules for adjusting the customer tariff. 3.2. good practice case-study of ppp in the water sector: apa nova bucharest as a handy example, we are able to cite the water and sewer system of bucharest (capital of romania, population of 2.3 million), privatized in 2000 through a 25-year concession to the french company veolia generating the apa nova ppp for wss. it is analysed and specified in (ifc world bank group, 2013) that before the ppp apa nova, the municipality of bucharest was facing numerous problems in meeting the city’s water and sanitation needs. because of leaks in the distribution network and waste, water losses were nearly 50 percent high, which together with an inadequate metering system resulted in low revenues for the municipality. in addition, some larger investments in sewerage, water storage and quality improvements were also required to meet eu standards. furthermore, the complicated ownership structure of water infrastructure assets resulted in a lack of accountability and of incentives to improve efficiency; the low tariffs meant that insufficient funds were available to invest in the necessary improvements. for choosing the best form of ppp, the main government’s objectives were: • to bring about efficiency gains, so that consumer service levels could improve with minimum tariff increases; • to transfer most of the investment responsibilities to the private sector making it as self-sufficient as possible; • to still avoid the dangers of a private monopoly. based on review, the consultant (ifc) recommended a long-term concession whereby the private operator would be responsible for managing water and sanitation services and for all capital investments. the municipality would, however, retain ownership of the assets. hence, the bucharest municipality assigned the rights and obligations to manage the public wss services and related public assets to the company apa nova bucureşti, on the company's own risk and expense, in exchange for a fee payment (royalty). as stated in a dedicated presentation by the bucharest municipality (2015), the concession contract was awarded in 2000 (for 25 years), following a competitive frone, frone 82 international tendering procedure. the bidding was based on a single criterion: the lowest tariff. apa nova bucharest (veolia water group) won the tender because it offered the lowest combined water and wastewater tariff (calculated as the average of 7 tariffs proposed for specific time periods of the concession). other features of the apa nova concession contract ppp are: • the concession contract is customer-oriented, with clear quantitative and qualitative objectives (levels of services) for the concessionaire, with no imposition of obligatory investments (exception is crivina water production plant – 3 m3/s), monitored by the municipality of bucharest through the municipal authority of public services regulation; • the concessionaire is remunerated with a strictly controlled tariff by the national regulatory authority for public services (anrsc) and the municipal authority of public services regulation (amrsp). • the concessionaire may undergo serious financial consequences if it does not achieve the set of 24 technical and commercial levels of services (los) as provided for in the contract (1,5 m€ contractual penalty per each los not complied with). nevertheless, an issue of economic efficiency is the price (tariff) elasticity of water demand, which is quite high in romania (frone simona, frone dumitru florin, 2012a). other previous analyses have identified from a qualitative risk analysis, the outcome that the most important economic risk of wss projects in romania is the commercial risk, i.e. the risk of falling demand and thus the risk of non-payment of charges for the water and wastewater services, because of the high rates and low affordability of the population, especially in the rural areas (platon et al., 2014) therefore, to reduce the risk of low water demand, the bucharest wss concession contract foresaw the possibility to increase tariffs beyond the contractually foreseen increases, if total water use was more than five per cent below water use in the previous year (apa nova, 2012). figure 2 comparison of the tariffs charged by the wss operators in romania in 2014 (ron/m3) source: report of (bucharest municipality, 2015) however, an interesting conclusion of the report (bucharest municipality, 2015) was that apa nova has managed to improve service more than average while keeping tariffs relatively low, without receiving any public subsidy. as may be noticed in figure 2, the tariffs charged for the water supply and sewerage services in bucharest by the apa nova were not the highest in romania, in 2014 (the 10th position out of the 33 wss companies operating at the time). the solution lies mainly in the ability of the concession to increase efficiency. the efficiency gains “enable apa nova to generate the operational cash-flow needed to cover loans and ensure the return on capital invested.” issues of efficiency for public-private partnerships in the water sector 83 a key accomplishment for economic efficiency was that apa nova bucuresti has reduced non-revenue water (including leakage and commercial losses due to underbilling, theft etc.) from 350 cubic meters per kilometer of network per day in 2002 to 176 cubic meters/kilometer/day in 2007. also, the water quality has improved in bucharest, due to the ppp: in 2000, 69 percent of samples complied with the standard for residual free chlorine; in 2010, 100 percent of water samples met or exceeded romanian and e.u. quality standards. the overall customer satisfaction had increased from 46 percent in 2002 to 75 percent in 2009. the water consumption in bucharest decreased from total consumption of 516 liters per capita per day in 1999 to 225 liters per person per day in 2010, and is decreasing at a compound annual rate of 8 percent due to reduced leakage. therefore, not only in our view but in many reports, the apa nova bucharest ppp for municipal water services is to be praised for being considered very successful since „under the private operator the utility: has raised service quality above romanian standards and toward western european levels; by 2008 efficiency gains had produced cost savings of us$34million. the concessionaire has financed us$259 million in investment, without public subsidy, while keeping tariffs well below the romanian average” (world bank, 2013). 3.3. the scope of efficient ppps in the water sector even when the obstacles for ppp in the water sector are overcome and there are successful stories of good-practice like the one of bucharest apa nova, it must be recognized, however, that public-private partnerships are not always the panacea that some might expect. due to the specificities of the sector, the ppp involving international private sector operators, although potentially efficient and desired, cannot solve all the problems in the water sector, nor can be applied everywhere. it should be first acknowledged that the private sector will only operate where certain profitability requirements can be met, which considerably limits the scope for the water sector public-private partnerships. also, for some reasons mentioned in (platon et al., 2014) regarding the financial risks, major investments in the framework of water public-private partnerships is likely to focus on developed and emerging market economies where the framework conditions for foreign investors are most favourable. in the previous century, close to 100% of the value of public-private partnerships projects has been realized in high and middle income countries, leaving most least developed countries uncovered. although water utilities are now prone to continuous development and innovation, there is a limited number of international water operators, so their human and financial capacities allow for the management of only a small number of projects. the three largest private operators accounted for more than 50% of the global market in the last 15 years. due to the low propensity to pay for wss services and the tariff risk (frone & frone, 2012a) the rural areas as well as small and medium cities in romania and in other developing countries are not or only rarely on the shortlist of international private operators. instead, the ppps in the water sector will focus on urban areas which are likely to yield the most substantial revenue flows and offer the best opportunities to achieve significant economies of scale: usually large cities with a population of 500.000 or more (see above the case of bucharest, as the capital of romania, with more than 2 million inhabitants). frone, frone 84 hence it may be stated that the potential area of operation of international private operators is limited. still opportunities for the involvement of new entrants into the urban wss market exist by a mobilization of new actors from the private sector in developing countries, as well as of some smaller water companies which may help to enlarge the scope for efficient ppp in the future. 4. conclusions and recommendations in romania the most important economic risk of wss projects is a commercial risk, i.e. the risk of falling demand and thus the risk of non-payment of charges for the water and wastewater services, because of the high rates and low affordability of the population, especially in the rural areas. this economic risk is really jeopardizing the efficiency of the water companies and normally does not foster the creation and development of some forms of ppps for the much required and needed development of the water supply and sewerage networks and services in romania. however, in developed and higher-income areas such as the capital city bucharest, the apa nova ppp has worked efficiently as according to an independent evaluation study (done at the request of international finance corporation) showing that: “in bucharest, the ppp concession has clearly improved water and wastewater services. ... the main success drivers were: a committed public authority; a committed and expert advisory team; a well-prepared, high quality, and transparent transaction process; an unusually thoughtful and innovative contract design; welldesigned and implemented contract monitoring and disputing resolution arrangements.” (castalia strategic advisors, cited in the bucharest municipality report, 2015) the investment costs of the apa nova for developing the wss services were also lower, due to the strong features of the private–public partnership ppp (better capital endowment and equity). in conclusion and according to the research, ppp agreements are resourceful and should be used more widely in the financing and development of wss infrastructure and services, in romania and in other eu states. for implementing efficient ppp in the water sector of romania, the outlook is good since there is a proof of success by apa nova in bucharest. besides, as stated already in (frone & frone, 2013) the sustainable development strategy of water supply and sanitation public servicesromania 2025 supports the involvement of private capital in large investments, especially through ppp arrangements required to achieve the major construction and expansion of treatment plants and wastewater. references apa nova (2012), the concession contract, retrieved on may 14, 2013. bucharest municipality (2015), improving the efficiency of the public water service through concession in bucharest, the capital city of romania, capital summit 2015, belgrade, 22-24th april 2015. commission of the european communities (2004), green paper on public private partnerships and community law on public contracts and concessions, com (2004) 327. frone, s., frone, d.f. (2015), emerging markets queries in finance and business. economic risk to a regional water supply and sanitation project in romania. procedia economics and finance, 32, 550–557. frone, s., frone, d.f. (2013), public-private partnerships as mechanisms for risk management in the water sector. scientific papers. series “management, issues of efficiency for public-private partnerships in the water sector 85 economic engineering in agriculture and rural development”, vol. 13 issue 3, 103-110. frone, s., frone, d.f. (2012a), sustainable water pricing and demand management issues in romania, ovidius university annals, economic sciences series, vol. 0(1), 937-942. frone, s., frone, d.f. (2012b), factors and trends of economic efficiency in the water/wastewater sector, procedia economics and finance, vol. 3, elsevier. international financial corporation, world bank group (2013), public-private partnership impact stories. romania: bucharest water and sanitation, ifc wb group 2013. oecd/world bank (2002), private sector participation in municipal water services in central and eastern europe and central asia, conference proceedings, 10-11 april 2002, paris. organisation for economic co-operation and development (2003), public-private partnerships in the urban water sector, oecd observer, april 2003. platon, v. et al (2014), financial and economic risks to public projects, procedia economics and finance, 8, 204-210. world bank (2011), water in bucharest: a utility's efficiency gains under a concession, february 2011, viewpoint note no. 326, by david earhardt, melissa rekas and martina tonizz, retrieved on may 14, 2012. international journal of economic practices and theories, vol. 1, no. 1, 2011 (july) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro a framing of future european parliament elections 2014 in a social media context dorian pocovnicu1 bacau prefecture dorianpocovnicu@yahoo.com mădălina manolache2 europe direct bacau madalina.manolache@unitbv.ro gheorghe epuran “transilvania” university of braşov gheorghe_epuran@yahoo.fr abstract communication in marketing has always been a continuous conceptual hybrid of input from various domains: marketing, p.r., communication, sociology. with the constant transformation of web 2.0. phenomenon the demarcation lines between these domains and their influence has become more blured and difficult to pinpoint. as a result, specific research methods and theories have become adaptable instruments, laying the path for grounded theory approaches or new research methods. framing theory having as basis that the media focuses attention on certain events and then places them within a field of meaning has shifted towards organizations and further on to institutions. framing is a quality of communication that leads others to accept one meaning over another. framing theory suggests that how something is presented (the “frame”) influences the choices people make. in online communicative contexts, their own personal framings allow the communicative actors to make use of language and forethought so that specific embodiments of future evolutions may be depicted. in our case, we shall focus on the topic: european parliament elections, which are to take place in 2014, and on the manner in which it has been framed in two online chat session with three meps. it is our intention to identify the framing techniques used, the framing links and the framing alignments. keywords framing theory; framing techniques; social media; european parliament; consumer citizens jel classification m31; m37; m38 1. introduction the european union institutional system represents an intricate mechanism of polity, policy and lobby, within which there are three major institutional pillars with a profound role in the communication and information policy, inside and outside the eu mechanism. starting with the delors mandate, the communicator of the eu (cini, 1996), namely the european commission, entered scholarly scrutiny regarding the fragmentation of political authority (meyer, 2002) and the lack of coherence within institutional and political communication. furthermore, after the wallström plan d partial progress regarding the communication policy of the eu, the communication deficit of the european commission became the conceptual currency for the entire debate 1 phd student at interdisciplinary doctoral school in marketing, “transilvania” university of braşov 2 phd student at interdisciplinary doctoral school in marketing, “transilvania” university of braşov 337 pocovnicu, manolache, epuran regarding communication and the eu, especially in the context of the elections for the european parliament, the second institutional pillar of the mechanism. with the lisbon treaty entering into force in 2013, the issue of communication and proximity towards the citizen(s) changed its conceptual anchors amid the european discourse, as the institutional frameworks transformed as well. therefore, the intricate mechanism made up of public administration, governance system and private/public lobbying shifted as well on new legal grounds. what also changed were the multiple voices of the eu, namely the people working inside the institutions, rather silent until the emergence of the social media channels, who became present and available for debate and dialogue. schaefer (apud cohen, 2011) considers three indicators of social media: [...] evolution, revolution and contribution. first, it is an evolution of how we communicate, replacing email in many cases. it’s a revolution: for the first time in history we have access to free, instantaneous, global communication. third, social media is distinguished by the ability of everybody to share and contribute as a publisher. placing this trinomial for both the commission and the parliament we observed a constant presence on social media networks, such as facebook, twitter, storify and linkedin. both have evolved, especially the ep, from a rather unconnected position towards the voters to a bridging-up with the media and the electorate, by contributing to the european debate with coherent and live interventions on the social media network, by means of chat applications. the european parliament, as an eu institution, has been named the great noncommunicator (anderson and mcleod, 2004) due to the poor turnout to the elections and the failure of meps to connect with the media and the citizens. in the case of the european parliament, it seems that the online (r)evolution has provided a most convenient channel through which the meps can presents their views to the citizen(s), be they elite or common, and also answer their questions. 1.1 methodology the term frame is borrowed from goffman (goffman, 1974) and it means schemata of interpretation. these schematas allow people to locate, perceive, identify and label repeated occurrences in their lives (snow et al., 1986). framing plays a critical role in the construction of social reality (hallahan, 1999), as it provides the lenses through which people see the reality they live in. framing deals with salience and selection (entman, 1993), where by salience we understand making a piece of information more meaningful or noticeable to certain audiences, in other words, from within the interaction between the text and the receivers the meaningfulness arises. and it is in this interaction that several techniques are used, within seven models (hallahan, 1999) which focus on the object which is framed (what is framed): situations, attributes, choices, actions, issues, responsibility and news. frame alignment is considered an important element for social movement (snow et al., 1986). it was argued that when individual frames become linked in congruency and complementariness, than the alignment of frames occurs producing frame resonance, a key element for the transition of the group from one frame to another. according to snow and bedford, the alignment depends on four elements/tasks: • frame bridging unconnected frames are linked to congruent frames; • frame amplification the beliefs and values of the communicative actors become clear; • frame extension other frames are included; • frame transformation due to changing conditions, frames are altered. 338 a framing of future european parliament elections 2014 in a social media context 1.2 research objectives within administration theory there has been a lasting assumption that sound communication leads to sound performance (pandey and garnett, 2006). in the words of chester barnard, the first executive function is to develop and maintain a system of communication. in the case of the european union, the first sign of the lack of a communication system appeared when the delors commission had to resign because of allegations of influence. during that crisis, the conflict between the parliament and the commission became even more visible, an issue which was remedied with the prodi commission. but even during the first barroso commission, the european parliament remained detached in the relationship with the voters, despite the 2009 election campaigns, which marked a beginning in the ever growing presence of the ep on the european and international stage. as the transition from a noncommunicator to a communicator unfolds for the european parliament, it is interesting to analyze the framing strategies it adopted and the channels it decided to use most often. therefore, our research objectives will focus on the following: • ro1: in the context of social media networks, what are the framing models used by the ep regarding the european elections in 2014; • ro2: has the ep been successful in establishing the foundations for a frame alignment. 2. case study in order to accomplish our objectives we have chosen as a social network facebook and the ep chat application, which became functional on the 24th of march 2011. the first chat available within the app was with simon busuttil, responsible for the frontex mandate. for our study case we have chosen 2 e-conversations with three highly important figures from the european parliament, namely: andrew duff, joseph daul and hannes swoboda. the first is a british liberal who is responsible for steering the recommendations through parliament and the spokesperson on the committee on constitutional affairs which is the committee charged with making the eu more democratic and accountable. the second is the president of the epp’s parliament group and the third is the president of the social-democrats group in the ep. the first e-conversation, which took place on 18th of june 2013, focused on the recommendations of the cca committee on the following topics: candidates for the european commission president being known well in advance, an eu-wide campaign and clear party lines. during this econversation there was a live stream of 142 interventions and 31 answers provided. the second e-conversation, which took place on 26th of march 2031, involved both j.daul dna h. swoboda and presented a more general approach on several topics eu budgets, solutions to end the crisis and european politics. during this e-conversation there was a live stream of 269 interventions and 34 answers (33 in english and 1 in french we analyzed 33 answers). for both of the e-conversations we analyzed the what of the frames, so that we could be able to pinpoint the construction of the social reality for each of the communicative actors, where by construction we understand: the attitudes and the representations. we did not focus on the element of culture, because on facebook it is rather difficult to grasp the whole cultural background of the actors, especially for the senders of questions. in the case of the first e-conversation, we identified two framing models: issue framing, where the issue was the european elections in 2014 and the responsability framing, namely the responsibility for the diminishing voters’ turnout. in the case of 339 pocovnicu, manolache, epuran issue framing, social problems are explained in alternative terms by different parties and it is around these terms that public opinion and audiences are formed. (grunig and hunt, 1984). we have divided the issue framing from the questions and from the answers so that we may pinpoint certain points of congruency and/or of complementariness (see figure 1, figure 2). figure 1 issue framing within the 31 questions figure 2 issue framing within the 31 answers as we can observe from the figures above, the congruency occurs at the first level of framing, meaning that there have been identified four issues framed within the conversation: gender equality, change, identity and voters. it is at the second level of framing that the foundations for frame alignment begins: frame bridging the unconnected frames within the answers are now linked to the unconnected frames within the questions on the basis of the congruency. in the case of the voters issue (see figure 3), the future, the awareness and the protest of young people become complementary to the representation of the youth, within the context of the european elections. 340 a framing of future european parliament elections 2014 in a social media context figure 3 congruency and complementariness for voters issue in the case of the change issue (see figure 4), the procedural, inter-institutional and policy/polity become complementary to the federal europe topic, the agreement vs. non-agreement within the eu institutions and to the awareness on the real choice of the voters. figure 4 congruency and complementariness for the change issue as we can observe, the frame extension has begun at this point, as the connection real choice policy/polity change voters’ awareness of who is in charge was established. in the case of the gender equality issue (see figure 5), the quotas issue becomes complementary to parties’ internal affairs regarding female candidates and the muchdebated persona of angela merkel to the hypothetical positioning as the future president of the european commission. inside this frame, the process of frame amplification has started as the complementarity angela merkel president of the ec is complementary to the federal europe policy/polity change in figure 4; in other words the liberal beliefs and values come forth, revealing the forethought of the one providing the answers the liberals will support a liberal candidate, but when it comes to a female candidate, than merkel is the (free or only) choice, even if she belongs to the epp. figure 5 congruency and complementariness for gender equality issue 341 pocovnicu, manolache, epuran the final congruency is the one regarding identity (see figure 6). at this stage the identity of the voters becomes complementary to the relevance of the eu in the life of the voters and the national vs. european identity of the party becomes complementary to the relation between the identity of the candidate and the identity of the party. another frame extension occurs at this stage, namely the identity of voters relevance of the eu is connected to the awareness of real issues/real choice the future of young people is the eu. figure 6 congruency and complementariness for the identity issue the responsability framing was also analysed from a question/answer approach (see figure 7, figure 8). what we noticed was a much complex interweaving of frames, as indeed the issue itself requires more subtle and intertwined frame extensions. figure 7 responsibility framing out of 31 question 342 a framing of future european parliament elections 2014 in a social media context figure 8 responsibility framing within 31 answers as we may notice, there are two congruent connections which backbone the responsibility frame, namely the impact and the initiative. on account of these two circular linkages, a new frame bridging occurs, with a new framing amplification also: the bridging is represented by the reciprocal impact between economic crisis and voters’ turnout, followed by the amplification the real deficit is the lack of government again the forethought of the one providing the answers comes forth, namely it was never a matter of voters’ disengagement towards the institutions, but it has always been a matter of governance and government, at eu level. it is within this stage that the framing transformation occurs the responsibility framing is endorsed through a binary approach: the impact/initiative translates towards the government level, thus becoming a matter of accountability and credibility on behalf of the eu and the voters’ turnout shifts towards a matter of intercommunication and participation, as the future elections are going to be a twitterati election. for the second e-conversation, we identified three framing models: issue framing, where the issues were: the economic crisis, european elections, youth unemployment, democracy (the hungary situation, the cyprus situation, the uk campaign against romanians and bulgarians), the euro, the single seat; responsability framing, on the topics: connecting with citizens, restoring the trust in eu institutions, voters’ turnout, ; attribute framing, regarding the fear for europs, euroskeptcis, the situation of the net payer countries, trust in the decisional mechanism at a national level, what does it mean to be a european. attribute framing has been one of the domains in which consumer behavior researchers have been more active, using the term in at least four distinct ways. our focus is on the use of problem framing, which refers to the deliberations used by decision makers to structure a preference judgment task (hallahan, 1999); in our case the decision makers are the receivers of answers, as they decide whether their questions have been meet with proper responses in other words, if the future voters have found the right impetus to become even more interested in european issues and, consequently, to go to vote. another use for attribute framing is the agenda-setting in the domain of media in the case of social media the agenda-setters are the meps themselves, due to the evolution-revolution-contribution triad we mentioned earlier. the issue framing was analysed from a question and answers’ perspective (see figure 9, figure 10). in the case of the answers the two meps did not provide answers to all the questions, out of 33 questions 13 received binary answers and 20 received individual answers, either from one speaker or the other. because the description for 343 pocovnicu, manolache, epuran the e-conversation provided a balanced vision of the two leaders, namely both believe that europe must provide the way out of the crisis. but they have a different approach to what it actually means a congruency as to the provider of the solution but a complementarity regarding the specific measures, we decided to present all the answers into one figure, within the principle of congruency, but mentioning the epp and s&d input. comparing the issue framing we notice that the number of congruencies is bigger compared to the first e-conversation and more complex, covering a diverse thematic area. the complementariness at the third level of the frame allows for several patterns of forethought to come forth: • negotiations on the budget, towards a new kind of financial governance; • an alternative to the austerity policy intertwined with a different kind of competitiveness; • european banking union; • policy change, while respecting the eu rules. figure 9 issue framing, out of 33 questions figure 10 issue framing from 33 answers going forth with our study case, the responsibility framing for the questions and answers showed that a frame bridging has occurred between the issue and the responsibility framing through the following complementarities: alternatives to the current austerity policy, eliminate the blame game and the nationalist politicians with populist messages, an alternative economic policy. 344 a framing of future european parliament elections 2014 in a social media context compared to the previous e-conversation, there was only one issue framed, whereas, in this case, there are multiple issues with relevant sub-topics. analyzing the european elections in this second conversation, the relevance of the eu in the daily life of the citizen is stressed and the importance of connecting with and contacting the citizen(s) for the european parliament is dwelled upon. bringing up the two econversations, there are three saliences in the discourses adopted by the three meps, despite their political affiliation: • real issues/real choices awareness of who is in charge connect/contact the citizen relevance of eu in the daily lives eliminate nationalist politicians; • the change processes within the eu institutions the change within the ep alternative to austerity policy and economic policy; • youth unemployment the eu is the future of youth. figure 11 responsibility framing within 33 questions figure 12 responsibility framing within 33 answers in this second e-conversation we identified an attribute framing (see figure 13, figure 14), which divides into four sub-issues: what does it mean to be european, fear for the future of europe, euroskeptics and the net-payer countries. we believe that the agenda setting frame focuses the salience of the change paradigm, as the speakers do not tell to the participants what to think but what to think about, so that they react in the context of voters’ turnout, i.e. change of austerity policy with the alternatives provided change the ideology approach agree/disagree with the change vote for or against but vote. 345 pocovnicu, manolache, epuran figure 13 attribute framing within 33 questions figure 14 attribute framing within 33 answers the problem framing we depicted targets the condition of a european mep and the euroskeptics, as both are built upon preference judgments thus it is a question of deliberation to which the voter might agree or not, according to the perspective in which the problems are presented. since they were identified within the attribute framing, and not among the issues, these insights could provide the voter with other criteria upon which she/he could motivate participation in the democratic mechanism. 3. conclusions since the launch of the european parliament chat application, there have been more than15 e-conversations, with more than 2000 streams and over 1000 answers provided by meps on specific issues. comparing to the 2009 elections, when the social media was used for the first time in most of the member-states, in 2014 the elections will be decided upon starting from social media networks, such as twitter and facebook. as the social media provides a unique chance for the ep and the 750 meps to connect and contact the citizen, there should be more than15 conversations taking place, as the questions of the voters deserve answers from the politicians. as andrew duff mentioned the european parliament is a first experiment of its kind and it would be a shame if it were the last. regarding our research objectives, we were able to identify several framing models and framing processes and we believe that the foundations for a future frame alignment, in the context of future elections, have been set. however, the intricate 346 a framing of future european parliament elections 2014 in a social media context policy/polity mechanism at a eu level needs to become even more present in the offline context as well and needs to provide grounded solutions also. references anderson, p.j., mcleod, a. 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(1994), how to prepare an electronic version of your article. in b. s. jones, & r. z. smith (eds.), introduction to the electronic age (pp. 281–304). new york: e-publishing inc. meyer, c. (2002), political legitimacy and the invisibility of politics: exploring the european union’s communication deficit. journal of common market studies. 37, 617–639. pandey, s.k., garnett, j.l. (2006), exploring public sector communication performance: testing a model and drawing implications. public administration review 66, 37–51. snow, d.a., rochford jr, e.b., worden, s.k., benford, r.d. (1986), frame alignment processes, micromobilization, and movement participation. american sociological review, 464–481. 347 (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 77 the importance of human capital in the strategic development of an organization adriana grigorescu national university of political studies and public administration, bucharest; valahia university from targoviste, romania adriana.grigorescu@administratiepublica.ro anca chiper (neculau) valahia university from targoviste, romania; castilla-la mancha university from spain anca.chiper@yahoo.com abstract in this new world where the level of information has reached overwhelming thanks to new technologies, the human capital embodied in a stock value, skill and knowledge, becomes the main factor of production in the new economy. in this paper i have tried to emphasize that, this relatively new concept such as human capital has become the main motor of organizational development, representing one of the most important advantages of firms to work properly in their environments. the economic growth is conditioned by human capital development; current trends are changing and organizations change their outward form of thought and action and they enhance their human capital (this intangible asset too little highlighted and measured) from the desire of being more flexible and easily assimilated by the market in the future. for modern companies, human capital has become a “golden coin” with 2 sides called: 1) capability (the ability to provide solutions to customers through knowledge, skills, knowhow, and talent); 2) attitude (the ability to profitably use these values of the organization). in conclusion, human capital is measured using iq and the productivity of modern economies depend largely on investment in knowledge and skills, although statistics in romania do not include costs and expenses of human capital. keywords new economy; human capital; solutions; know-how; investment in knowledge and skills; “gold coin” of the organization jel classification m10 human capital world technology should be constantly on the move, improving itself, and it basically stands for an indispensable tool for productivity as well as for the market, yet one should consider the fact that any innovation success depends greatly on the flexibility and vision of the people making part of any relevant organization. nowadays, information and technology run fast and they come “in handy” for any organization, while the main competitive advantage differentiating one given company from another is rendered by the personnel within such organization, as well as by the latter’s ability to achieve fast adjustment to new changes. this may be achieved by one’s ability to constantly learn, to be open to new things, by designing the importance of human capital in the strategic development of an organization 78 one’s own education and experience, all corroborated within one given system of skills and competences. in one such organization, competences arise out of the relevant business strategy and the same should be observed, measured, aligned to company’s strategies and generating constant benefits. all this stands for quite a challenge for both the human resources departments and for the managers in general, since the latter shall be responsible for understanding and meeting customers’ wishes and needs, so as to bring a relevant and truly tangible contribution to the business they run. enhancing and maintaining competitive benefits within one given company may be carried out by human capital management. human capital stands for the knowledge that each and every single individual possesses. human capital is defined as the creative hand within one given organization and it stands for the most significant and most vital resource for one to develop the said business activity, the productivity in terms of goods and services for the purpose of meeting clients’ needs and to sell the same on the relevant market in view of getting profit. material means turn into one finished product following their going through the production process, yet it is human capital that stands for that particular force building this entire system by means of talent and ability. human capital springs out of companies’ need to rely upon one high tech instrument, which shall provide for support in production, since any last generation machine is unable to manage by itself, yet it requires supervisors, as well as workers. any organization is that dynamic and economic entity, where the following factors shall be relevant:  economic capital  human capital  company management. a company object is strictly related to such human capital; the economic capital is related to investors and management relates to managers and administrators. the human capital (humans-talent.blogspot.ro) has the following characteristics:  knowledge  skills  virtues all these variables turn the employee into the main pawn within any given organization, as well as into the main driving element in terms of creativity, production, vision, all of the aforementioned making such employee an indispensable factor at any company level. upon the more and more acute perception of the globalization concept, organizations require the maintenance of one up – to – date trained and qualified personnel, holding decisional power and who shall bring all processes having been started to a good end, within the shortest possible period of time. the staff within one given organization is very important since it adds value to the latter and the creativity around them is part of one company’s long term strategy. managers should invest in the personnel, by protecting, evaluating, constantly developing, awarding and remunerating the latter. competences within one given organization spring out of the relevant strategy; the same should be observable, measureable, aligned to the day – to – day strategy of any given company and generating competitive and sustainable benefits so as not to be able to be “copied” by any competitors (www.geopolis.com). grigorescu, chiper (neculau) 79 human talent in any given organization is genuine, this being far more difficult to be replayed by competitors, and thus investing in human capital stands for one of the most significant pillars of any company. the criterion relating to the hierarchies based upon which success relied in the past, has gradually changed within the recent years, and at present the primary relevance in any company is granted to the competences such individual holds and at the same time to the latter’s attitude towards his ability to acquire new skills that may be of use for the organization. the yield in terms of human capital investments stands for one final indicator in terms of the measuring process, which involves the collection of data for the display of outcomes, as per various levels of interest:  customer satisfaction within the project, as run by the organization at that specific time  learning for the purpose of acquiring new knowledge and skills  applying the aforementioned on the job  the impact of the above described results upon the relevant business. human capital has created a new metaphor at the global level: the employee may act as one new investor in any given organization. people stand for the driving element of change since they hold the know – how resource, thus organizations should bear in mind the constant changes undergone by the business environment and to align their internal productivity towards innovation, analysis and new approaches. the human capital concept has set its mark in the specialized literature as of 1961, the year of the release in the american economic review, of the article written by theodore w. schultz, namely “investment in human capital”. laureate of the noble prize for economy, exponent of the new school in chicago – whose theoretical lead and slogan was:” man – the most precious richness of any country “. knowledge and skills make up the relevant capital and this capital stands for the outcome of one deliberate and willing investment. the concept of such human capital corresponds to any individual’s skills and knowledge enabling the later to achieve change in action and to reach economic growth (coleman j.,1988). human capital may be developed by formal training and education, focusing on updating and renewing any individual’s abilities. one should make a distinction between the various distinct types of human capital, as follows: company specific human capital consists of those particular abilities and knowledge that are relevant within one given company. for instance, some researchers have investigated the impact held by company know – how within the founding team on the increase ratio of the companies that were at the beginning of their business activity. at the company level, human capital is regarded as one component of the intellectual capital (edvinsson, 1997) together with the relevant structural capital. human capital is defined as the value of company employees’ knowledge, skills and experience, and structural capital is defined as the “body and supporting infrastructure of human capital, namely all those things that make up the human capital support in any given company and which are left aside when the employees leave the company at the end of the day” (edvinsson, 1997). mcelroy mark (2001) stretches out and expands the relevant scope of analysis, adding to the human and structural capital, the relevant registered capital within the composition of the intellectual capital. in reference to its structural dimension, he defines the capital as being “the general model of connections between actors”. the industrial branch specific capital consists in that knowledge deriving out of the specific experience in any relevant industry. various researchers have investigated the the importance of human capital in the strategic development of an organization 80 impact held by the experience in a specific industrial branch upon economic growth and economic performance, at both micro and macro – economic level (siegel, macmillan, 1993, kenney, von burg, 1990). individual specific human capital refers to that knowledge applicable to a wide range of companies and industries; it includes managerial and entrepreneurial experience (pennings, lee & van witteloostujin, 1998), the level of academic education and professional training (hinz &junghauer-gans, 1999), such individual’s age and family incomes (kilkenny, nalbarte &besser, 1999). within the relevant most recent economic literature, one speaks of the neoclassical theory of human capital, as well as of such human capital management and strategy. the latter stands for one form of active management – a plan for the insurance, management and motivation of the relevant labor force in view of business performance optimization. human capital, as one central production factor in any given economic theory stands for the stock of knowledge and qualifications that are useful and valuable, as integrated into the relevant labor force, resulting out of one education and professional training process. it relates to any individual’s ability to mobilize other production factors, to specifically combine the same and to predetermine so as to reach the expected and wished for outcome. it is upon this human capital that our richness depends, as well as the richness of our future generations, too. therefore, the establishment of such human capital should enjoy the highest priority, all the more that without the support of an adequate knowledge and human experience, the other production factors shall not be able to produce but very little, if anything at all. the benefit following such human capital investment does not resume itself to the net amount of incomes, as achieved during a life time, out of the sale of qualified labor force unlike the unqualified one, but it also focuses on the subjective feeling of intellectual wellbeing, of trust, as well as of social acknowledgment. according to estimates, between 50 and 90 % of the overall capital stock in the us takes the form of human capital. human capital has various distinct meanings in terms of the various groups of interests:  employers in the business world, human capital stands for the economic value of one set of skills that employees hold; traditionally, it has been perceived as an education and experience function (the last one standing for both the training the employees have received, and the hands – on learning, as gathered by means of experience). within the recent years, one has also added health to the list (physical, cognitive and mental capacity);  society there is also the long term vision of human capital. this includes indicators resulting out of decisional practices and policies which shall have an impact on future generations and which shall shape the form of tomorrow’s labor force. quite often, this long term vision does not fit the political cycles and investment type scopes, yet the lack of such long term vision may trigger the constant loss of one country’s population potential, as well as dropping of productivity level, just as things stand as far as our country is concerned.  individual the individual shows interested in activating on a labor market which should enable him to achieve professional expression, the accurate acknowledgment and rewarding of his own value, which should provide for his mobility, a satisfactory health and wellbeing status, as well as the appurtenance to a good reputation human capital (in terms of education, productivity). romania belongs to the upper-mid income group of grigorescu, chiper (neculau) 81 countries, which means that it pays better here than in albania and serbia, yet the payment is worse than in hungary, bulgaria, macedonia, which countries belong to the same aforementioned group (mocanu, 2014). competitiveness stands for the outcome of talent and the abilities resulting out of such human capital. any organization, regardless of the business activity the latter carries out, if it wishes to maintain one adequate long term competitiveness level, should use formal decisional and analysis procedures that should be embedded within the context of strategic planning. the role played by this process is that of coordinating and systematizing all efforts of the various number of units, as conceived in view of one’s maximizing the overall organization efficiency. internal competitiveness refers to the organization ability to reach maximum performance in terms of available resources, such as personnel, capital, materials, ideas, etc., as well as the relevant transformation processes: the company shall compete against itself, while stating its constant self-overdoing efforts (http://www.mundosigloxxi.ciecas.ipn.mx). external competitiveness is oriented towards the development of organization successes within the context of the current market: industry dynamism and economic stability. once it has reached the relevant external competitiveness level, a company should maintain the same in the future, by generating ideas and products and it should also look for new opportunities on the market. nowadays, in this age of changes, companies wishing to increase their productivity, efficiency ratios, as well as the quality services, tend to use as a central basis for the human element, the development of teams, so as to achieve competitiveness and to adequately reply to the demand for high quality products and services at all levels, as concerned. corporate management quality has just as much relevance for any given organization, as technology and products innovation have. upon consideration of this aforementioned concept, we cannot help wondering if it might be reasonable for one to conduct a comprehensive, fruitful and development related research in terms of companies’ management, for the purpose of creating new instruments for the organization to impose its competitiveness on the market. in the 3rd millennium, companies should turn their attention towards human capital management, by management processes which shall trigger a positive influence on the employees and which shall consolidate the required teams, so as to enhance productivity, in order for one to consider two main factors: the environment stands for a challenge for any given company:  market evolution and expansion  products diversification  new technologies coming up on the market the innovating social–economic management, as elaborated and experienced by savall h. (jean moulin university) stands for one management method closely integrating the human dimension of one given company and the latter’s economic performances. his global level management methods rely on the human development of the company as the main factor for short, average and long term efficiency. companies and enterprises efficiency and efficacy depend a great deal on their own ability to articulate traditional management methods with a human and social vision in terms of the latter’s operation and they closely integrate the human dimension of the company and the latter’s economic performances (savall, 2006). the importance of human capital in the strategic development of an organization 82 human capital may conduct either manual or intellectual works, and the latter may apply to various activity fields, such as industry, agriculture or services. the labor force, or the working ability that such human capital possesses is represented by the set of physical and intellectual abilities that the individual holds and applies within the production for the purpose of meeting the relevant needs. one study conducted in 1999 by pricewaterhousecoopers in terms of the best human management practices, has reached the conclusion that the most significant skills one individual should possess in order to survive and develop and grow within the business world in the following years, are represented by:  leadership,  adjustability to changes,  people management,  teamwork. thus, the role played by human capital within one given organization is vital, and without the latter’s capitalization, the company’s wish to align to market objectives and to enhance competitiveness would lack any meaning whatsoever. references edvinddon l., malone m. (1997), intellectual capital, harper business. feraru, a., (2011), intellectual capital and knowledges-premises of he organizational development proceeding progress, innovation, democracy horizon 2025, tg. jiu, pp. 631-635. feraru, a., ciucescu n. (2011), knowledge and the intellectual capital in modern organizations, annals of the oradea university. fascicle of management and technological engineering, issn 1583-0691, isbn 978-606-10-0128-6 pp. 5106-5111. mendez juan carlos, (2006), la importancia del capital humano en las organizaciones, www.gestiopolis.com, 18.02.2006. mocanu r., http://itol.ro/directory/2014/02/valoarea-capitalului-uman-romanesc, bucuresti, 14 feb 2014. ruiz victor r.l. and domingo n. pena, (2002), el capitalintelectual:valoracion y medicion / pearson education. savall henry, (2006), theorie socio-economique des organisations:impacts sur quelques concepts dominants dans les theories et pratiques manageriales, coloquio y seminario doctoral internacional, lyon, france, 24-25 de avril. valadez guillermo velazquez, las organizaciones y el capital humano, http://www.mundosigloxxi.ciecas.ipn.mx/. w.schultz t. (1961), investment in human capital, american science review. w.mcelroy m., (2001), social inovation capital, www.macroinovation.com. humans-talent.blogspot.ro/ jonathan zegarro, talento humano, la importancia del capital humano en las organizaciones. www.stiucum.com/management, capitalul uman forta fundamental a dezvoltarii, accessed on 03.03.2016. www.geopolis.com/. http://www.mundosigloxxi.ciecas.ipn.mx/. http://www.gestiopolis.com/ http://www.mundosigloxxi.ciecas.ipn.mx/ http://www.macroinovation.com/ http://www.stiucum.com/management http://www.geopolis.com/ http://www.mundosigloxxi.ciecas.ipn.mx/ grigorescu, chiper (neculau) 83 microsoft word ciucescu nicoleta engl. the role and importance of non-profit organizations nicoleta ciucescu,”vasile alecsandri” university of bacau, romania abstract in a complex and challenging background of the whole country, and the ngo sector also, the non-profit organizations are established with the aim of providing public services to communities where they operate, making them as an intermediary between citizens and authorities. in any democratic society these organizations are meant to serve different types of needs and interests of the community, from both a strategic perspective and ethics, that those which are not covered by other categories of institutions and organizations, mean time providing a framework for civic participation, where citizens may participate to the public life. keywords institutions, interests, public life, flexibility, public services introduction in the last years the ngos in romania have regained their identity and had a major impact on the modernization of society. they have created, defined and promoted a self-image, forming a group and also having a place and a role in the romanian civil society. thus, ngos have recently taken over, amid a crisis of state resources, functions and roles which in the past were the exclusive power of government, becoming a very important factor in promoting the values of democracy and the new relationships established between state and society. ngos are characterized by functional dynamics of methods because their running is directly influenced by the community needs and the specific ways of interacting with the civil society. the role of non-profit organizations in today’s society regardless of how ngos are called "non-commercial organizations", "non-profit organizations", "ngos", "associative commercial sector, "civil society", "the third sector", "non-profit association", "organizations without lucrative purpose" etc. all have a single definition. they are willing parties, in their own right, established by the free will of the citizens who are associated on common career interests and/or other interests aiming to achieve shared civil, economic, social and cultural rights and not obtaining profits. the mobility of non-governmental organizations mirrors the community capacity to respond rapidly to its needs. ngos direct to the community the resources that the government does not have or can not collect. also, the lines of actions analysis of nongovernmental organizations may be relevant for the problems solving by the public administration. the ngos play an important role in highlighting issues that might pass unnoticed by the public authorities and in 14 studies and scientific researches ‐ economic edition, no. 14, 2009  helping them to solve problems by using their human resources, local data and their organizational capacity, even monitoring their activities. ngos can offer tangible solutions to the community problems more efficiently and involving less costs than the public administrations in areas such as social work or management of social welfare institutions. the main ways of influencing the ngo sector are: 1. encouraging the officials and the government agencies to accept some variants of solving the problems, which are successfully used in the sector. 2. educating and informing the public of the rights provided by law and the increase of their awareness of these aspects. 3. active participation in adjusting the official programs to the needs of the community, expressing the public opinion and taking into account the specific conditions of the area 4. co-operation with official agencies. 5. influencing the local development policies of national and international institutions. 6. supporting the governments and donors to develop more effective development strategy through strengthening the institutions, increasing the level of professional qualification of their personnel, training their staff in order to acquire a good management capacity. ngos are sometimes perceived as "alternatives" to the solutions proposed by the public administration. the population of a community can not choose the development policy developed by the government or by the ngos because ngos can not launch such an offer. it is unlikely that the ngos can solve the problems of the local communities by their own efforts, the lack of resources being the main cause. the ngos may find optimal ways and solutions for solving social problems but these ones can be completed only if they have an impact on the development of the whole community. the public administrations and ngos can not provide competitive solutions but complementary solutions which can lead to the co-operation between the two bodies. functions, principles and policies non-governmental organizations have often demonstrated their effectiveness in identifying and solving the community social problems, in attracting and enhancing the value of human and financial resources, in estimating the efficiency degree of the public policies: raising the quality standards of the public services more efficient management of the public assets increased profits of the public services; better preservation of the public property optimizing the administrative costs in the context of an increasing demand for public services there is the need of more diversified services than those provided by the government. therefore, the public authorities have to choose between improving and diversifying their offer or contracting these services. if we keep in mind the other countries experience we can say that the contracting of these services is more profitable for economic efficiency reasons. in the context of constraints related to their redistributive function and the politic responsibilities regarding the management of public budget, which is limited, ngos may contract public services. contracting services by ngos would be more beneficial taking into account the nonprofit distribution feature which generates in the case of non-profit contracts, more 15 studies and scientific researches ‐ economic edition, no. 14, 2009  confidence from the beneficiaries and contractors than in the case of profit-oriented contracts. these services contracting can be made by companies, ngos or by both. in this situation the main object of the services contract between the public authorities and the ngos will be an objective set by the authorities and the service provider (ngo) will carry out that goal, considered by the authority being of public interest. the services contract between the public authorities and ngo is the agreement by which the public authority orders the achievement of an objective or service which it will pay for and the ngo binds oneself to perform the object of the contract. the concession contract is the legal framework of public services contracting from romanian public authorities. the government decision 1228/1990 makes no particular references to the concession of services to the nonprofit sector neither for the purposes of its exemption from such activity, nor for the purpose of encouraging the purchase of services by this sector from the public authorities. the nongovernmental organizations also have other roles: counterweight to state power and the private sector, such as the consumer protection associations which educate and protect the citizens (consumers) in their relationship with commercial entities. they offer the framework for citizen participation to the community life despite of two major difficulties faced when trying to increase the involvement of mass authentic government policy, namely: decentralization of decision areas at the state level; the absence of the skills and values needed for the participation. participation in the activities of ngos requires member involvement in decision making processes which develop their appropriate skills and the ability to exercise the role of homo politicus. in the context where the companies, state institutions and the public administration officials fail to identify and meet a whole wide variety of needs and interests in society and provide poor public services, the ngos contribute also to provide public services and goods. they are not restricted to the profitability criterion (as companies) and at the same time show greater responsiveness and creativity in covering social needs. sometimes, even non-governmental organizations may face some obstacles carrying out this work, such as those related to collective action mechanisms. the provision of better goods and services compared to those provided by the public sector, a less bureaucratic administrative structure and the presence of volunteers are prerequisites for lower costs of production of the goods or services delivered by the ngos. it should also be noted that non-governmental organizations are oriented toward the customer satisfaction, and not toward the compliance of formal and bureaucratic procedures. the ngos are also facilitators of social integration and political integration and contribute to groups and individuals integration into society. in societies where there is a high degree of ethnic variety, non-governmental organizations participate in promoting diversity, the decrease of ethnic tensions and interethnic dialogue. they constitute a framework where the interests and the claims of people can be expressed. citizens find in ngos a framework to express their claims. sometimes the pressures from different groups are changed in consistent approaches to influence public policy. ngos promote the diversity of opinion of citizens and their members, aware of the existence of different views and interests in society, do not hesitate to criticize them. ngos provide cheaper and better services because they use volunteers, thereby helping to improve the efficiency and effectiveness of socio-economic activities. in this respect, a comparison can be made: non-governmental organizations place nearly 16 studies and scientific researches ‐ economic edition, no. 14, 2009  free labor in many areas, such as animal welfare, retraining, environmental protection, adult education at distance, information spread, while government officials must pay for these activities. the ngos suppose the team work, the transparency and public participation, without which an administration might not get public support for actions they undertake. ngos have made an important contribution to the reform process, even if the support received from the state was a minimal one and insufficient, compared with its size. there are multiple contributions of nongovernmental organizations, the most important being mentioned below. they have significantly improved public decisions (for example: correcting and improving various bills and other regulations); they have actively participated in the process of education reform; they were the basis for success in international mediation. they contributed to increasing the positive public image of their country, promoting international cooperation. they have effectively managing the transfer of know-how; they have taken over almost entirely the policies of child protection and other concrete activities related to this domain; they represent the indigenous culture and initiate the development of cultural diversity, preparing the ground for an advantageous interethnic dialogue, for tolerance and cooperation with national minorities. the way that organizations act illustrate a model to approach the social issues. it is not necessarily the only one or the best, but certainly it is very efficient in terms of investment – effect report. the activities of ngos do not replace the public administration activities and ngos do not carry out the objectives of public administration. ngos are rather reflecting a way of action which is complementary to the responsibilities of the community administration and are not an appropriate alternative of the public administration. an important function of the nonprofit sector is to support the strengthening of social systems, to give to the citizens the possibility to influence public policies, to criticize and to monitor the government policy. public policies are plans, principles, laws and actions that are developed by decision makers aiming to solve a problem in society, to resist a threat or to achieve an objective. the public policy refer to the government or parliament decisions to address development issues that can have effects on the entire society. they also refer to all measures of a government action program aiming to induce beneficial changes for the society or for a certain part of the society. both ngos and public authorities should provide direct benefits to citizens and promote the development during the developing and the implementing the public policies. if we consider the decision maker and the coverage area classification criteria, the public policies that ngos attempt to influence can be classified as: national, regional or local and belonging to domestic institutions. the public policies can be classified into four categories, keeping in mind the roles outlined above : distributive policies, that authorize something or give an advantage (the ability to build something, etc.); redistributive policies, which specify the criteria of granting or prohibiting rights, benefits, incomes, etc.; policies aiming to establish behavior rules (e.g. rule of the road); constitutive policies, which mention rules to establish other rules (code of criminal procedure). the actors who may be involved in influencing the public policies may be of several kind: 17 studies and scientific researches ‐ economic edition, no. 14, 2009  political actors, internal actors (political parties, pressure groups) and international actors (european council, european union, world bank) apolitical actors, formally constituted organizations (ngos, unions, etc.) and informal networks (groups of influence). we also should also talk about the means used to influence successfully the public policies: 1. providing expert advice on a specific problem that local and central authorities wish to solve, for example, romanian association of humanitarian law and human rights association in romania helsinki committee have contributed to the completion of the law on refugees in romania. 2. information campaigns; this method is based on publication or broadcasting on radio or tv of some messages that aim to make the community aware of an issue which has to be solved. this means of influencing public policy is based on effective cooperation with the media. serious errors, the distorting of the message, the difficulty of communication, the need of an accurate information are just some of the elements of the organizational relationship with the romanian medias. the relation between public authorities, ngos which implement public policies and medias should be governed by professional standards. journalists should always apply the journalism rules in writing a press release, making a database or monitoring. 3. public policy research, the study of public policies by the political research institutes, called also "think thanks", plays an increasing role in influencing public policies. they inform and educate citizens and play an advisory role for parliamentarians, members of the government, local governments. 4. coalition building (temporary or permanently) to develop public campaigns of important cause advocacy (lobby and advocacy campaigns). conclusions ngos play a major role in identifying social problems, in finding solutions, and even in achieving social objectives in a variety of areas that public administrations can not cover efficiently or not at all. these ngos can be partially or fully committed to do some functions of public administration, achieving the objectives imposed by it and without replacing the administration. ngos and public administration are complementary and ngos do not represent an alternative to the public administration. references 1. cole, g.a. (1988), personnel management. theory and practice, d.p. publications ltd, london 2. criuimins, j.c. şi keil, m. (1983), enterprise in the non-profit sector, rockefeller brothers fund, new york 3. drucker, f. p. (1992), managing the non-profit organization. principles and practices, flarper business, new york 4. salamon, l. şi helmut a. (1994), the emerging sector. an overview, the johns hopkins university, institute for policy studies, baltimore 5. schmid, h. şi d. bargal (1988), patterns of management and organizational effectiveness among executives and program directors in community services organizations, hebrew university of ierusalim, paul baerwald school of social work, jerusalim 18 studies and scientific researches ‐ economic edition, no. 14, 2009  6. vlăsceanu, m. (1995), politica socială şi sectorul nonprofit, în : elena zamfir şi cătălin zamfir (coord.), politici sociale. românia în context european, editura alternative, bucureşti 7. *** dimensiuni ale sectorului neguvernamental din românia, (1997) fundaţia pentru dezvoltarea societăţii civile, seria: studii asupra sectorului nonprofit, numărul 3 8. *** modelul românesc de evoluţie al fenomenului asociativ voluntar,( 1997) fdsc, seria: studii şi cercetări asupra sectorului nonprofit, numărul 4 9. *** ghid juridic şi practic pentru organizaţiile neguvernamentale cu scop nelucrativ (1996) sic press group, bucureşti 19 (2 rвnduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 64 current account deficit and economic growth in armenia arus tunian1 v.n. karazin kharkiv national university (ukraine) arusik90@hotmail.com abstract the article is devoted to the study of the problem of economic growth in armenia. it is identified the nature of the balance of payments of the country, indicating a net debtor position, which leads to inherent deterioration of the international investment position. a small open economy of armenia moves to a new phase of development, in the frame of the integration processes within the customs union and the eurasian economic union of russia, belarus and kazakhstan. one of the main characteristics of the armenian economy vulnerability remains a negative balance in foreign trade, which continues to grow, despite the export growth. economic growth is provided, as before, mostly due to the sale of raw materials non-ferrous metals and metal ores, both in the primary as well as in the previous preprocessing. estimating the econometric var models revealed that the negative current account impacts on gdp growth negatively. keywords balance of payments; economic growth; gdp; econometric estimation; integration jel classification e20; f32 introduction a small open economy of armenia moves to a new phase of development, namely to join the integration processes within the customs union and the eurasian economic union of russia, belarus and kazakhstan. one of the main characteristics of the armenian economy vulnerability remains a negative balance in foreign trade, which continues to grow, despite the export growth. economic growth is provided, as before, mostly due to the sale of raw materials non-ferrous metals and metal ores, both in the primary as well as in the previous preprocessing. the modern armenian economy can be also characterized as the one with a high share of shadow economy (35-50% of official gdp), capital outflow, and low attractiveness to foreign direct investment. due to the new geoeconomical challenges it is becoming vitally important to diagnose the quality of economic growth in armenia, partly because the national economy is heavily dependent on diaspora foreign aid and has a total deficit of balance of payments. theoretical and empirical overview in modern economic literature the issue of economic growth is among the priorities. r. solow (1956) proposed that we begin the study of economic growth by assuming a 1 phd student, department of international economic relations tunian 65 standard neoclassical production function with decreasing returns to capital. taking the rates of saving and population growth as exogenous, he showed that these two variables determine the steady-state level of income per capita. according to the analytical report of eurasian bank of development (2013), with the development of the national economy due to the expansion of domestic demand, armenia is extremely interested in agreements that guarantee freedom of movement of labor and capital that provide stable funding the current account of balance of payments. research paper by lanzafame (2013) states, that the balance of payments represents the ultimate constraint on long-run growth and give remarkable support to the keynesian vision of economic growth as being demand-driven. razmi (2010) emphasizes that positive trends in technological progress may hurt or help an economy that faces balance of payments constraints. the impact depends partly on the sector that the progress takes place in and partly on the structure of the economy. in other words, it is not just the direction of shocks to supply (or demand), but also the sectoral composition of these shocks that matters. s. ayvazyan, a. bereznyatskyi and b. brodsky (2014) using econometric models revealed the presence of "dutch disease" in the economy of armenia. deslike from russia, where such an economic behavior is due to the export of oil and gas, in armenia it is happening due to labor migration. nevertheless, the impact of current account deficit on economic growth in armenia still needs more investigation. economic growth and balance of payments in armenia armenia’s economy has undergone a profound transformation since its independence in 1992. sustained growth, ambitious reforms, as well as inflows of capital and remittances have created a market-oriented environment. however, the global financial crisis impacted significantly the market of the country (world bank, armenia overview). according to the world bank review the key challenge for the government is to mitigate the economic and social impacts of the global crisis for the midterm, while continuing policy and institutional reforms essential for recovery and long-term development. increasing the economy’s resilience to external shocks and creating new opportunities for development are important priorities. the structure of armenia's gdp in 2014 is divided as following: the service sector (64.0%), the second position agriculture (19.0%), third place industry (17.0%). in agriculture, the first position is crop (11.1%), followed by livestock (7.0%), the third fishing (0.9%). figure 1 gdp of armenia (mln. u.s. dollars) source: central bank of armenia statistics current account deficit and economic growth in armenia 66 armenian gdp has a positive trend for economic growth during the whole period of observing (2003-2013). double digit growth rates of pre-crisis period were replaced by a 4.0 percent rate after the crisis. following a moderate 3.2 percent growth in 2013, but since 2014 we see the decline of 2.6%, driven mainly by the regression in construction and slowdown in russia. besides low price level on the main ore (metal) raw materials, as well as the expected decline of domestic demand in armenia. such an economic behavior finds its reflection. figure 2 balance of payments of armenia (mln. u.s. dollars) source: central bank of armenia statistics a main feature of the balance of payments of armenia is its overall deficit, indicating that the armenian economy is a net borrower. it should be noted that dislike most of post-transitional economies, balance of payments armenia has a significant deficit both in the current account and the financial account. the only account of the balance of payments of armenia, which is positive the capital account (but this account cannot balance the general equilibrium). as we mentioned before, the basis for economic growth of the republic of armenia of recent decades is the export of goods and growing domestic demand as private consumption, which is supported by migrant remittances from abroad, primarily from russia. starting from 2004 the remittances has been growing steadily (figure 3). figure 3 inflow of remittances by balance of payments (mil. u.s. dollars) source: central bank of armenia statistics no less important in the case of armenia is the state of the labor market. since independence, the labor market in armenia has experienced a profound shift under the influence of a systemic crisis in the early 1990s, economic and social reforms, tunian 67 sustained economic growth for more than 10 years since the mid-1990s to 2008 (before the recent crisis, due to the sustained growth and then decline of the economy). however, the real unemployment rate remained constant at two-digit level: on average, about one in four economically active people was unemployed. this is partly the reason for the high labor migration. methodology and model estimation we run unit root test for the time series. according to the tests for stationarity on a number of variables have yielded conflicting results, so to determine more accurately the order of integration time series we ran phillips-perron test. table 1 unit root test phillips–perron test gdp ca fa remittances c *** * *** *** ct *** ** *** *** c diff *** *** *** *** ct diff *** *** *** *** *p < 0.10; ** p < 0.05; *** p < 0.01; source: eviews we run the following model: gdp =ƒ(ca, fa, remittances), (1) where: ca – current account, mil. usd (quarterly data) fa – financial account, mil. usd (quarterly data) remittances – volume of remittances inflow, mln. usd (quarterly data) regression results from estimating of the equation using ols method is reported in table 2. table 2 regression model results armenia variables regressors (ols) gdp(-1) 1.04*** (15.72) ca(-1) -19.29*** (-7.40) fa(-1) 15.53*** (6.90) remittances 13.779** (14.95) r2 0.85 dw 1.89 note: ***,**,* imply significance at 1%, 5%, 10% levels respectively t-statistic (in brackets) δ – first difference operator the results from the ols estimation show that: current account deficit and economic growth in armenia 68 – the variables ca and fa become significant only with a time lag; – remittances inflow to armenia is one of the most significant factor that explain the structure of economic growth. if remittances increase in 1 unit, the gdp increases in 13,7. it shows that the armenian economy is growing due to the internal demand supported by the money inflows of the working migrants abroad. to check the stability of the models for slovakia and poland (figure 4 and figure 5), we run cusum test. figure 4 cumulative sum test (left) and cusum of squares (right) to test stability of coefficients, cusum and cusumsq tests were performed. figure 4 displays the cusum statistics plotted within 5 % significance confidence bounds. since the graph of this statistic remains within its confidence interval the null hypothesis of parameter constancy is not rejected. the cusum of squares test (figure 4) is a cumulative sum of squared residuals. according to vogelvang (2005) the expectations of the cusum of squares statistic run from zero at the first observation until the value of one at the end of the sample period. the test statistics are plotted with 5 % confidence interval. since the statistic does not hit the critical bound, the coefficients are stable over observed period of time. the p-values of the autocorrelation (bg-test) and heteroscedasticity (bp-test) show that the null hypothesis of non-autocorrelation and homoscedasticity is not rejected. the output in table 4 displays the coefficient of the lagged dependent variable (deposits) negative and significant, variables are cointegrated. the coefficient of adjustment (ect) is negative and significant. it indicates how quickly variables restore equilibrium. table 3 results from residual tests armenia lm-test (breusch-godfrey) prob. chi-square 0.21 0.16 to evaluate the impact of current account deficit on economic growth we implement vector autoregressive modelling (var) that has the following theoretical view (2) (2) impulse response functions are useful for studying the interactions between variables in a vector autoregressive model. they represent the reactions of the variables to shocks hitting the system -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 cusum of squares 5% significance -20 -15 -10 -5 0 5 10 15 20 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 cusum 5% significance tunian 69 figure 5 impulse response function of gdp to current account source: modeling in eviews figure 6 impulse response function of gdp to remittances (left) and financial account (right) source: modeling in eviews thus, after running the impulse response function we can interpret it as following. current account deficit prevent the armenian gdp from positive trend both in shortterm and long-term period. despite the remittances inflow, the current account remain negative and needs crucial steps in the frame of macroeconomic development. incoming remittances play an important role in increasing the country’s gdp. but the response functions shows that in long-term period the remittances may cause a decrease in gdp due to its high volatility. financial account has a negative impact in medium term and long-term periods. international financial institutions have lowered forecasts of gdp growth in armenia in 2015. so, in january, the ibrd (2015) has lowered its forecast for the economy of armenia, expecting stagnation in 2015 instead of 3.5% growth. the world bank also downgraded the forecast, the bank predicts gdp growth in armenia in 2015 at 3.3% instead of the previous forecast of 5%. according to the forecast of the eurasian bank of development, gdp growth in armenia in 2015 may reach 3.8% instead of the previous forecast of 4.2%. the share of construction, trade, transport and services in gdp in 2011 was 60%, while in the industry and agriculture accounts for only 40%, whereas in 1996 the situation was diametrically opposed (40% and 60%, respectively). this structure of the economy is highly dependent on the volume of transfers, which stimulates the final consumption of imported goods on the one hand (direct effect) and on the other and thus is possible to develop service industries, transport, construction and trade. in -2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2,000 1 2 3 4 5 6 7 8 9 10 response of gdp to fa -80 -40 0 40 80 120 1 2 3 4 5 6 7 8 9 10 response of ca to gdp -2,000 -1,000 0 1,000 2,000 3,000 1 2 3 4 5 6 7 8 9 10 response of gdp to ca -1,500 -1,000 -500 0 500 1,000 1,500 2,000 1 2 3 4 5 6 7 8 9 10 response of gdp to remittances current account deficit and economic growth in armenia 70 case of reduction of income transfers problems with the exchange rate, a reduction in imports and the collapse of these sectors, and as a result the financial sector can have very negative consequences for the country's economy. conclusion from the above, the following conclusions. the period from 2013 can be called historical armenia. in 2013, it was political events have shaped economic agenda. the presidential elections and the subsequent decision of armenia's accession to the customs union were factors that determined the long-term political and economic course. this has led to closer armenian economy depends on the macroeconomic situation in russia. to reduce the risks associated with its balance of payments and economic growth, the armenian government would be advisable to absorb external risks. reducing the debt to gdp ratio, easing tensions with azerbaijan and improving relations with other neighboring countries could be the factors of further sustainable economic development in armenia. references ayvazian, s. a., bereznyatsky, a. n., brodsky, b. e. (2014), dutch disease in the economies of russia and armenia, applied econometrics, 4(36). lanzafame, m. (2014), the balance of payments-constrained growth rate and the natural rate of growth: new empirical evidence, camb. j. econ, 38(4), 817838. razmi, r. (2010), exploring the robustness of the balance of payments-constrained growth idea in a multiple good framework, cambridge journal of economics, 1 of 23 doi:10.1093/cje/beq035. sachs, j. d. (1981), the current account in the macroeconomic adjustment process, working papers, 796, national bureau of economic research. solow, r. a. (1956), contribution to the theory of economic growth, the quarterly journal of economics, 70(1), 65-94. vogelvang, b. (2005), econometrics, ft prentice hall. world bank, armenia overview available at http://www.worldbank.org/en/country/armenia/overview. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 23 global competitiveness of the european union member states: evolution and perspectives mihaela brîndușa tudose tehnical university gheorghe asachi brindusatudose@gmail.com valentina diana rusu department of interdisciplinary research human and social, alexandru ioan cuza university valentinadiana.ig@gmail.com abstract our paper is analyzing the theoretical and empirical research in the field of competitiveness and it presents the methodology of determining the global competitiveness index. also, our paper is analyzing the evolution of the global competitiveness index in the member states of the european union, in the last years. the results obtained show that more than half of european union member states recorded an increase in the global competitiveness index on the account of the basic influence factors. with the exception of six countries (bulgaria, cyprus, croatia, france, italy, malta), the european union countries show a favorable influence of the efficiency on the index of global competitiveness. the highest contribution of the efficiency on the increase of global competitiveness is recorded in portugal, romania, latvia, lithuania and bulgaria; on the opposite side is malta, cyprus and germany. regarding the influence of innovation, only three countries have recorded a negative impact of the innovation on the global competitiveness index: finland, spain and austria. on the other hand romania, cyprus and portugal show the highest favorable effect of innovation on the competitiveness. keywords factors of competitiveness; efficiency; innovation; international competitiveness; global competitiveness index jel classification f12; g14 introduction enhancing external economic relations have increased competition and forced the economic agents (respectively the overall economies) to pay more attention to international competitiveness. the competition has exceeded the economic sphere; now, not only firms compete on the goods and services market; the countries compete for the mobile factors of production; people compete for higher incomes and job security (siebert, 2000). neglecting (even partial) of the competitiveness attracts the risk that commercial interdependencies between countries to turn into addictions. therefore, international competitiveness is the essential condition of independent development in an interdependent world. the analysis of global competitiveness allows appreciating the extent to which the various economies of the world countries have managed to face the challenges. regardless of their size, the economies dependent on foreign economic exchanges were confronted with unusual experiences; the economic crisis has generated a crisis of public finances which amid certain political blockages has made it more difficult to recover even for the most advanced economies of the world. in such a global competitiveness of the european union member states: evolution and perspectives 24 scenario has been admitted that the foundation of economic growth and long-term development is the exploitation of the productive potential of each actor of the world market; the economic policies and institutional reforms were accepted as basic tools in redefining the quantitative and qualitative coordinates of the recovery through competitiveness and sustainable performance. based on the analysis of the international competitiveness of the economies of the world, the primary objective of the survey was to identify the specifics of the member states of the european union. to achieve this goal, the paper is structured as follows: the first section presents the state of knowledge in the field; section two presents the methodological coordinates of the research regarding international competitiveness; the third section focuses on the analysis of chromatic of global competitiveness of the eu member states; the last section summarizes the conclusions and shows the limits and future directions of research. the state of knowledge in the field the complexity of contemporary economies, diversification and specialization, technical progress, increased dependency on raw materials, the crises and increasing concerns on risk reduction while maximizing the gains/benefits have redefined the role, dynamics and structure of indicators for assessing global competitiveness. in the late 80s the competitiveness theory has addressed the link between growth and balance of payments of an open economy (fagerberg, 1988). in less than ten years away, the international competitiveness of a country was defined as the ability to sell, the ability to attract foreign direct investment, and the ability to obtain gains (trabold, 1995). then, in the definition of international competitiveness they have opted for association with economic welfare; thus coldwell (2000) takes the view that we can talk about international competitiveness when the economic welfareof a nation is surpassed by increasing trade flows. recent researches have made additional contributions in international competitiveness. competitiveness was defined as: a) the ability to create wealth (kao, 2008; onsel, 2008), being considered a relevant indicator for evaluating countries and regions; b) a high standard of living in a country with the lowest rate of unemployment (european competitiveness report, 2010); c) a set of institutions, policies and factors that determine the level of productivity of a country (sala-imartin et al., 2009). summing up the theoretical and empirical research results, it emerges the idea that the winning more profitable positions depends on variables like performance, welfare, efficiency, innovation and sustainability. competitiveness drives prosperity and a high living standard for the citizens (oprescu, 2012). in order to ensure the progress in research was not carried out a strict limitation on the positive heuristic, but was also made noticeable the negative heuristics. the most "fierce" critical of the concept of international competitiveness was krugman (1996), which said that the definitions are "elusive and meaningless when related to national economies; for the economies with low international trade, the competitiveness is a fun way of saying productivity ". in retrospect, passing through the filter of critical rationalism, we appreciate that solidity of international competitiveness theory has proven its strength and importance. noteworthy is the fact that the path of the research was not unidirectional, but there were also turns in the plan of debates. tudose, rusu 25 methodological coordinates of the international competitiveness research the international competitiveness analysis is carried out after the following points (herciu, 2013): a) the extent that it relates to macroeconomic issues (national welfare, attractiveness for foreign and domestic investments) and not an aggregation of microeconomic issues; b) the extent to which it is made the difference between influence factors and indicators of international competitiveness; c) the amplitude of the technology and innovative gap between countries (in the context of coexistence of the economies based on the efficiency of classical factors and of the innovation based economies). regarded through the recent global transformations, the determinants of competitiveness can be identified as: a) the conditions of the factors of production; on this line, the current prime concern is to reduce resource dependency; b) the conditions of demand/supply; in the absence of other instruments, some states continue to focus on stimulating aggregate demand; however, the trend which is being observed is of revival, in new forms, of the conjunctural policies based on stimulating the supply (supply-side economics); c) the market size; it must not be neglect the experience of the countries which accepting the destruction of their economies have become, fundamentally, outlets market; in this case the fact remains that foreign demand is not based solely on the competitiveness of exported products but also on insufficient domestic production of the partner countries; d) the competitive environment; given that the crisis (economic and financial) has affected most of the economies of the world, it have been severely reduced the prospects of the competitors to resist to the powerful performant companies; e) promotion; to ensure the coordination and division of labor in the value chain in order to promote, large manufacturers have created an extensive network of global promotion; f) government interventions; international competitiveness, where it is visible, has been strongly supported by appropriate public policies; g) unexpected events; some economies have "picked the fruitage" by exploiting favorable opportunities created by the economic crisis, respectively, by speculating the weaknesses of partners. the indicators for assessing the international competitiveness can be analyzed on two levels: microeconomic (focus on products trade, specialization and specialization dynamic, sustainable growth rate of profit/capital of the company) and macroeconomic (trade balance indicators, indicators of international openness, indicators of concentration/geographical dispersion, exchange rate, interest rate, inflation rate, respectively, the human development index. in order to sketch a picture of how eu countries have managed to cope in the face of new challenges we relate to reports by world economic forum (schwab, 2012, 2013, 2014) on global competitiveness. to assess competitiveness were analyzed: the determining factors (called pillars of competitiveness): (1) basic factors (institutions, infrastructure, macroeconomic environment, health and primary education); (2) increase efficiency factors (professional development, efficiency and size of the markets of goods, labor and financial receptiveness to new technologies); (3) innovation factors (quality and complexity of business and innovation); the development stages of each economy: a) stage 1 orientation on the basic factors of competitiveness; b) transition from stage 1 to stage 2; c) stage 2 – global competitiveness of the european union member states: evolution and perspectives 26 competitiveness focused on efficiency; d) transition from stage 2 to stage 3; e) stage 3 based on innovation. the analysis of the international competitiveness of eu member states as regards the annual classification on different predefined stages of growth of all 140 countries, wef reports reveal a shy country migration. taking as reference the beginning (2011/2012) and the end of the period (2014/2015) we observe that has decreased the number of states in the first two groups in the favor of the next three groups, which is a positive aspect (table 1) because it increases the number of efficiency-driven economies and innovation based economies. looking through the prism of the member states of the european union a progress was made in line of classification only by the slovak republic (2012/2013) and estonia (2013/2014), the last one has managed to enter in the third stage of development. the presentation of the positions for the european union member states and the developments registered in the global competitiveness index are shown in table 2. in the period 2012/2013 the eu member states were ranked in the range of 3-96, the best position being hold by finland, and on the last position being greece (column 2, table 2). the first ten positions were occupied by finland, netherlands, germany, united kingdom, denmark, austria, belgium, france, luxembourg and ireland. in contrast, romania, croatia and greece were ranked on the last three positions. between 2013/2014 (column 3, table 2), malta, croatia, bulgaria and greece win many positions in the ranking (6 and 5 positions). the most significant declines in international competitiveness rankings were recorded by slovenia, czech republic, italy and slovak republic (with 6 or 7 positions). table 1 distribution of states on the five stages of development stages of development stage 1: factor driven transition from stage 1 to stage 2 stage 2: efficiency driven transition from stage 2 to stage 3 stage 3: innovation driven the share of orientation towards: basic requirements 60% 40-60% 40% 20%-40% 20% efficiency 35% 35-50% 50% 50% 50% innovation 5% 5-10% 10% 10%-30% 30% gdp/capita (usd) < 2,0 2-2,99 3-8,99 9-17 >17,0 distribution of states: 2011/2012 (no. of states) 37 24 28 18 35 2012/2013 (no. of states) 38 17 33 21 35 2013/2014 (no. of states) 38 20 31 22 37 2014/2015 (no. of states) 37 16 30 24 37 distribution of states from ue: 2011/2012 (no. of states) 2 7 18 2012/2013 (no. of states) 2 6 19 2013/2014 2 5 21 tudose, rusu 27 (no. of states) 2014/2015 (no. of states) 2 5 21 source: data processed after schwab, k. (ed.), the global competitiveness report 2011–2012, report 2012–2013, report 2013–2014, report 2014–2015, world economic forum, geneva also during 2014/2015 the ranking is opened by finland and closed by greece. the most spectacular rises in ranking were register by romania (up 17 positions), portugal (up 15 positions), latvia and greece (each rising by 10 positions). on the opposite side are austria, malta and slovenia who lose 5, 6 or 8 positions in the ranking (column 4, table 2). table 2 the ranking of countries according to the value of the global competitiveness index country rank score (gci) variations of gci 201 2/ 201 3 2013/ 2014 2014/ 2015 2012/ 2013 2013/ 2014 2014/ 2015 r6– r5 r7– r6 r7 – r5 0 1 2 3 4 5 6 7 8 9 10 1 austria 16 16 21 5.22 5.15 5.16 -0.07 0.01 -0.06 2 belgium 17 17 18 5.21 5.13 5.18 -0.08 0.05 -0.03 3 bulgaria 62 57 54 4.27 4.31 4.37 0.04 0.06 0.10 5 croatia 81 75 74 4.04 4.13 4.13 0.09 0 0.09 4 cyprus 58 58 58 4.32 4.30 4.31 -0.02 0.01 -0.01 6 czech republic 39 46 37 4.51 4.43 4.53 -0.08 0.1 0.02 7 denmark 12 15 13 5.29 5.18 5.29 -0.11 0.11 0 8 estonia 34 32 29 4.64 4.65 4.71 0.01 0.06 0.07 9 finland 3 3 4 5.55 5.54 5.50 -0.01 -0.04 -0.05 10 france 21 23 23 5.11 5.05 5.08 -0.06 0.03 -0.03 11 germany 6 4 5 5.48 5.51 5.49 0.03 -0.02 0.01 12 greece 96 91 81 3.86 3.93 4.04 0.07 0.11 0.18 13 hungaria 60 63 60 4.30 4.25 4.28 -0.05 0.03 -0.02 14 ireland 27 28 25 4.91 4.92 4.98 0.01 0.06 0.07 15 italy 42 49 49 4.46 4.41 4.42 -0.05 0.01 -0.04 16 latvia 55 52 42 4.35 4.40 4.50 0.05 0.1 0.15 17 lithuania 45 48 41 4.41 4.41 4.51 0 0.1 0.10 18 luxembo urg 22 22 19 5.09 5.09 5.17 0 0.08 0.08 19 malta 47 41 47 4.41 4.50 4.45 0.09 -0.05 0.04 20 netherlan ds 5 8 8 5.50 5.42 5.45 -0.08 0.03 -0.05 21 poland 41 42 43 4.46 4.46 4.48 0 0.02 0.02 22 portugal 49 51 36 4.40 4.40 4.54 0 0.14 0.14 23 romania 78 76 59 4.07 4.13 4.30 0.06 0.17 0.23 24 slovak republic 71 78 75 4.14 4.10 4.15 -0.04 0.05 0.01 25 slovenia 56 62 70 4.34 4.25 4.22 -0.09 -0.03 -0.12 26 spain 36 35 35 4.60 4.57 4.55 -0.03 -0.02 -0.05 27 sweden 4 6 10 5.53 5.48 5.41 -0.05 -0.07 -0.12 28 united kingdom 8 10 9 5.45 5.37 5.41 -0.08 0.04 -0.04 source: data processed after schwab, k. (ed.), the global competitiveness report 2011–2012, 2012/2013, 2013/2014, 2014/2015, world economic forum, geneva, pp. 13-16 global competitiveness of the european union member states: evolution and perspectives 28 for the entire analyzed period (2012-2015) there are observed mutations wider in the international competitiveness ranking. romania, greece, portugal and latvia are ascending the most positions in the ranking (19, 15 and 13 positions). on the opposite side are france and poland (which lost two positions each), netherlands (which lost three positions) and sweden (which lost six positions). the evolution of global competitiveness index which was the bases for drawing up the ranking reveals increasing and decreasing oscillations (col. 8 and 9, table 2). the overview on these oscillations is shown in figure 1. figure 1 the evolution of global competitiveness index (by country and by reference intervals: 2012/2013, 2013/2014, 2014/2015) the last column of table 2 shows the global competitiveness index variation throughout the entire period (2012-2015); the variation margin is included in the range of 0.12 (slovenia) and 0.23 (romania). table 3 the evolution of the influence from the global competitiveness index influence factors subindexes of gci the direction and amplitude of factors influence country basic factors efficiency innovation 2013/ 2014 2014/ 2015 2013/ 2014 2014/ 2015 2013/ 2014 2014/ 2015 basic factors efficiency innovation 0 1 2 3 4 5 6 7 8 9 10 1 austria 5.63 5.71 4.97 4.96 5.14 5.11 +0.08 -0.01 -0.03 2 belgium 5.51 5.53 5.03 5.07 5.07 5.11 +0.02 +0.04 +0.04 3 bulgaria 4.73 4.71 4.18 4.31 3.28 3.27 -0.02 +0.13 -0.01 4 cyprus 4.84 4.73 4.34 4.28 3.87 4.06 -0.11 -0.06 +0.19 5 croatia 4.69 4.66 4.05 4.11 3.46 3.47 -0.03 +0.06 +0.01 6 czech republic 4.80 5.02 4.51 4.62 4.07 4.07 +0.22 +0.11 0.00 7 denmark 5.55 5.85 5.05 5.11 5.14 5.19 +0.30 +0.06 +0.05 8 estonia 5.43 5.54 4.64 4.73 4.08 4.17 +0.11 +0.09 +0.09 9 finland 5.97 5.97 5.30 5.27 5.65 5.57 0.00 -0.03 -0.08 10 france 5.50 5.42 5.00 5.07 4.84 4.86 -0.08 +0.07 +0.02 tudose, rusu 29 11 germany 5.90 5.91 5.31 5.26 5.59 5.65 +0.01 -0.05 +0.06 12 greece 4.30 4.50 4.06 4.15 3.46 3.55 +0.20 +0.09 +0.09 13 hungary 4.61 4.71 4.28 4.30 3.60 3.62 +0.10 +0.02 +0.02 14 ireland 5.18 5.19 4.89 4.97 4.81 4.85 +0.01 +0.08 +0.04 15 italy 4.85 4.82 4.34 4.36 4.22 4.26 -0.03 +0.02 +0.04 16 latvia 5.00 5.15 4.41 4.60 3.61 3.68 +0.15 +0.19 +0.07 17 lithuania 4.91 5.08 4.35 4.54 3.93 3.97 +0.17 +0.19 +0.04 18 luxembourg 5.87 6.02 4.92 4.97 4.84 4.93 +0.15 +0.05 +0.09 source: data processed afterschwab, k. (ed.), the global competitiveness report 2013/2014, 2014/2015, world economic forum, geneva, pp. 14-16 table 3 the evolution of the influence from the global competitiveness index influence factors (continued) 19 malta 5.17 5.13 4.52 4.43 4.03 4.03 -0.04 -0.09 0.00 20 netherlands 5.89 5.95 5.27 5.28 5.36 5.41 +0.06 +0.01 +0.05 21 poland 4.72 4.80 4.60 4.64 3.65 3.66 +0.08 +0.04 +0.01 22 portugal 4.96 5.00 4.36 4.57 4.06 4.19 +0.04 +0.21 +0.13 23 romania 4.32 4.48 4.13 4.32 3.32 3.53 +0.16 +0.19 +0.21 24 slovak republic 4.60 4.58 4.31 4.31 3.59 3.59 -0.02 0.00 0.00 25 slovenia 5.06 4.86 4.14 4.17 3.88 3.88 -0.20 +0.03 0.00 26 spain 5.05 4.98 4.64 4.67 4.14 4.06 -0.07 +0.03 -0.08 27 sweden 5.95 5.86 5.31 5.25 5.46 5.38 -0.09 -0.06 -0.08 28 united kingdom 5.48 5.49 5.45 5.51 5.15 5.21 +0.01 +0.06 +0.06 source: data processed after schwab, k. (ed.), the global competitiveness report 2013/2014, 2014/2015, world economic forum, geneva, pp. 14-16 more than half of european union member states record an increase in the global competitiveness index on the account of basic factors influence. the most significant negative influences of basic factors on the global competitiveness index is registered by slovenia (-0.22) and cyprus (-0.11). with the exception of six countries (austria, cyprus, finland, germany, malta and sweden), the other eu countries show a favorable effect of the efficiency on the index of global competitiveness. the highest intake of efficiency to the increase of global competitiveness is recorded in portugal, romania, latvia, lithuania and bulgaria. at this chapter lose the most malta, cyprus and germany. regarding the influence of innovation, only five countries are distinguished by a negative impact on the global competitiveness index: finland, spain and sweden (0.08) and austria (-0.01). romania, cyprus and portugal show the highest favorable effect of innovation (+0.21; +0.19 and respectively +0.13). the image of ordering eu member states depending on the size of global competitiveness index is shown in figure 2. global competitiveness of the european union member states: evolution and perspectives 30 figure 2 ranking of the eu countries according to the value of the index of global competitiveness (2014/2015) conclusions the competitiveness has been and remains a priority in the plan of the scientific debate, but also a major concern for all world economies. economic policies and institutional reforms were accepted as basic tools in redefining quantitative and qualitative coordinate of recovery through competitiveness and sustainable performance. the determinant factors of global competitiveness (traditional factors, efficiency and innovation) and country-specific macroeconomic indicators (such as gdp per capita) allow classification of the world economies in different stages of development. according to the latest wef report (2014/2015), at european union level, two of the 27 states (romania and bulgaria) fall into stage two (based on efficiency), five fall in the transition stage from efficiency to innovation (croatia, hungary, latvia, lithuania, poland), the rest of the states (21 in number) fit in the third stage. as regards global competitiveness index at the bottom of the rank is greece, croatia, slovakia and slovenia, where prevails the influence of the first two categories of factors. at the top of the ranking are the uk, netherlands, germany and finland, for which the third category of factors exercises a dominant influence (innovation). limitations and future directions of research. the research relates only on the information provided by reports of the world economic forum. to overcome this limit in future research we consider not only the analysis of the information provided by other papers (sources) but also making projections on the competitive potential of the eu member states. references coldwell, d. (2000), the question of international competitiveness, international advances in economic research, vol. 6(3), 417-426. european union (2010), european competitiveness report 2010, publications office of the european union, luxembourg. fagerberg, j. (1988), international competitiveness, the economic journal, vol. 98, 355-374. herciu, m. (2013), studii post-doctorale în economie, vol. v, studii şi cercetări privind impactul globalizării asupra structurii şi dinamicii economiilor, editura academiei române, bucureşti. tudose, rusu 31 kao, c., wu, w., hsieh, w. j., wang, t. y., lin, c., chen, l. h. (2008), measuring the national competitiveness of southeast asian countries, european journal of operational research, 187, 613-628. krugman, p. (1996), making sense of the competitiveness debate, oxford review of economic policy, vol. 12(3), 17-25. onsel, s., ulengin, f., ulusoy, g., aktas, e., kabak, o. and topcu, y. i. (2008), a new perspective on the competitiveness of nations, socio-economic planning sciences, vol. 42, 221-246. oprescu, r. (2012), bridging intellectual capital and the competitiveness of nations, management & marketing challenges for the knowledge society, vol. 7(1),73-88 sala-i-martin, x., blanke, j., drzeniek hanouz, m.,geiger, t., mia, i. (2009), the global competitiveness index 2009-2010. contributing to long-term prosperity amid the global economic crisis, world economic forum, geneva. siebert, h. (2000), the paradigm of locational competition, working paper no. 367, kiel institute for the world economy. trabold, h. (1995), market spreading versus market concentration: the choice of export marketing strategies reconsidered, vierteljahrshefte zur wirtschaftsforschung, vol. 64 (4), 573–589. schwab, klaus (ed.) (2012), the global competitiveness report 2012–2013, world economic forum, geneva. schwab, klaus (ed.) (2013), the global competitiveness report 2013–2014, world economic forum, geneva. schwab, klaus (ed.) (2014), the global competitiveness report 2014–2015, world economic forum, geneva studies and scientific researches. economics edition online first, september 2016 operational risk management approaches within an investment fund. sif moldova case study costel ceocea “vasile alecsandri” university of bacau costel.ceocea@ub.ro, cceocea@sifm.ro abstract operational risk management consists in the identification and measurement, as complete as possible, of these risks, so that the company to be able to establish appropriate measures to avoid, reduce, transfer or accept, consciously, the risk. the main goal is prevention. operational risk management is a complex process which involves their identification, assessment, monitoring and management. starting from the european legislation, sif moldova has developed and adapted its own operational risk management system, targeting mainly its identification and evaluation, the analysis of activities vulnerable to operational risk, the establishment of the potential risks for each type of activity, the limitation of the operational risk caused by improper data processing, the implementation of internal regulations on the prevention and discovery of facts that can generate losses. to ensure an adequate quality of operational risk management and of the activities related to their control as well as for maintaining an appropriate level of accuracy on information provided to the supervisory authority (asf), it is essential that the investment fund to build a stable and viable database, containing information relating to extended periods, and to ensure continued maintenance of this database. keywords management; operational risk; loss, fraud; error; assessment; adequacy jel classification g32 1. main stages in the operational management risks operational risk management is accomplished through the following four stages: a. identification; b. assessment; c. monitoring; d. management a. identification – it is defined the operational risk in company's vision, it is identified the component elements detached from other risks and it is described the generating events.  identification and ascertainment of real or potential losses;  identification of the event that generated the loss;  determining the type of risk manifested. b. assessment – in this stage there are assessed the risks identified in each structure and the risks are ranked. c. monitoring – as a result of identification and assessment of the risk, the structures must take all the measures to ensure the good functioning of the activity and to prevent the risk. d. management – in this stage it is decided the measures that must be taken for the control of the operational risk  it will be tried to transfer the risk to third parties (through outsourcing or by concluding an insurance) operational risk management approaches within an investment fund. sif moldova case study  it will be tried to diminish the operational risk, in the sense of decreasing the frequency or their magnitude. generally, the frauds are more spontaneous than premeditated. they become more frequent where they are not detected from the beginning and where there are not taken the measures necessary for the prevention. among these measures there are included:  adequate sharing of responsibilities so that each employee to be liable only by one of the following activities: conclusion of a transaction; making a payment; registration of the transaction in the accountancy, etc. this is necessary because the frauds are committed, usually by one person;  existence of an effective control system. those who potentially would like to commit irregularities must be discouraged by the existence of an appropriate control system;  careful review of the norms and security systems and the identification of the weaknesses that could represent a risk of fraud;  communication and clear notification of the procedures that must be applied in certain situations;  the staff must know very precisely the degree of competence and the risk they assume;  company staff should be always aware of its responsibilities in relation to the identification and reporting of the risks, so that the own risk management to be at the basis of each daily activity for everyone  identification at the company level of the key persons – as activity, as experience, as knowledge.  persons who monitor risks must be independent from those who take the risks. an often used solution in the operational risk management is the risk transfer by contracting an insurance policy for certain risk generator events. the company relies on the ability of the insurer to pay a compensation, in accordance with the contractual terms, thus, financing the coverage of some damages. within sif moldova, in accordance with the procedures on the operational risk approved by the management of the company, the structures (departments, services, activity groups): 1. identifies and assess the operational risk, taking into consideriation the following: a. the factors of internal and external environment in which occurs the company's activities; b. the risk tolerance of the company; c. the strategic objectives of the company and the potential changes that will be implemented by the company; d. elements of suspicion (suspect and incident operations of internal or external fraud) that may result from the carrying out of the transcations which are specific to the activities of each structure of the company, other than those contained in the reports made by the company for the prevention and sanction of money laundering, as well as for the establishment of some measures to prevent and combat the financing of the terrorism in transactions; e. the regulatory framework and the internal regulations specific for the company 2. analyzes the company activities identified to be vulnerable to the operational risk (implicitly internal fraud), establishing the potential risks by types of activities at each company's structure, concidering and not limited to: a. applying the principle of separation of powers; b. number, training and qualifications of the staff; c. mode of operation of the internal control; ciocea d. use of information system and degree of availability of the equipment and network; e. volume and value of the amounts carried; f. high fluctuation of staff, its relocation, with or without ensuring in advance of its preparation in order to exercise the new responsabilities; g. frequency of occurrence of events that generate direct or potential losses determined as the ratio between the number of cases in which internal fraud occurred within one year and the total number of cases in which internal fraud might have been occurred; h. the size of the losses generated by each event which is operational risk generator detected by the control bodies; i. inconsistencies in documentation (eg: contracts used in relation with the customers, derogation clauses from internal regulations and standard contracts, providing approval of legality, etc.). 3. acts to limit the operational risk (implicitly internal fraud) caused by faulty processing of data within each compartment, by having an internal control on all documents, following: a. if these are prepared in accordance with internal regulations and if there are all the authorized signatures; b. reality of the data and accuracy of the calculations, legality of the operation, existence of the available funds in account, indicating the correct account for performing the operation, etc. 4. implements, in order to prevent and detect acts that can generate / generated material or monetary damages, internal regulations on the verification and guidance, which follow the application of the legal provisions in force and internal regulations with regards to: a. correct preparation and registration of documents for opening current and deposit accounts; b. mode of exercising the control of operations; c. implements a system of internal control through an appropriate separation of duties by generating dual control, in order to prevent the conflicts of interest and internal fraud. 2. operational risk management the loss due to operational risk events represents the negative change in company's revenues, in the company's asset value or in capital, as a consequence of the events due to operational risk. the defining feature of operational risk events is the requirement to take measures of management of the operational risks occured, regardless of the financial effect of those events. if the occurrence of an event of operational risk generates losses, the risk management is done after the identification of the cause / reason which led to the event of operational risk. operational risk management includes the following elements:  a well defined organizational structure, with tasks and responsibilities of operational risk management, covering all the important organizational structures of the company,  tools of identification and management of the risk,  mechanisms that facilitate the reduction and prevention of the operational risks and of the losses identified,  company's management information reports. the methods and instruments of operational risk management are those processes and systems used by the company for identifying and managing the operational risk, as well operational risk management approaches within an investment fund. sif moldova case study as for the determination of the operational risk level at which the company exposed. these methods and tools of management of operational risk include: a. collection of data on losses due to the occurrence of operational risk events b. self-evaluation of operational risk c. main indicators of operational risk d. reporting system of losses from operational risks (operational risk application) the purpose of applying these methods and tools is to increase the awareness of employees with regards to the existance of the operational risks in the activities carried, the identification, documentation and analysis of the operational risks. 2.1. collection of data on losses due to the occurrence of operational risk events operational risk events can be classified into the following four major categories depending on the cause that led to their appearance:  human error: the errors have their origin in omissions or mistakes due to human factor. examples: exceed the terms, incorrect input data, lack of knowledge / information needed to perform such work, incorrect customer information, etc.  system error: these errors are the result of using inadequate or incorrect information systems. examples: hardware or software failures, computing power interruption, errors display of the information requested by the application used (onlinebanking, reports, scoring, rating, etc.), malfunctioning of atms, etc.  process error: these errors are the results of inadequate or incorrect define of the processes developed. examples: the regulation norms of the activities carried out are deficient or incorrect.  external factors: these errors are the result of external events affecting the company or are due to unauthorized activities performed by third parties. example: natural disasters, vandalism, fraud done by customers (settlement tools, trading with financial instruments, etc.) according to the recommendations of the european directive regarding the determination of the minimum capital requirements for the operational risk of the credit institutions and investment firms, the company must codify every operational risk event identified in one of the seven risk categories: 1. internal fraud, 2. external fraud, 3. employment and safety practices at the workplace, 4. customers, products and commercial practices, 5. damages on tangible assets, 6. activity interruption and inadequate functioning of the systems, 7. execution, delivery and management of the process. collection of data on losses represents the collecting, reporting and management of losses due to the occurrence of operational risk events. according to the law, the minimum data collected should include: a) gross value of loss, b) date on which occurred the event that caused the loss, c) recovery mode of the gross value of loss, d) reasons which have led to the occurrence of the operational risk event. 2.2. operational risk self-assessment this is a survey conducted by the directors of the managing committee, in its own structure, with the aim of identifying the operational risk at which is currently exposed the own organizational structure, highlighting the existing internal control level in its own structure and evaluating the ongoing processes in terms of operational risks that ciocea may arise. during the survey, the main operational risks are identified, documented and analyzed based on the following aspects:  checkpoints within the processes;  it/ technology;  human factors/external factors;  security. the survey will be conducted periodically at the initiative of the risk management. 2.3. key risk indicators – kri they are used to detect the risks that come into the intervals of attention. it is necessary to set target values for the indicators of risk. there are those indicators whose value is reflected in the changes of the relevant factors in terms of the imminent appearance of some risks. determination of the appropriate indicators and the change of their value in time, allow the forecast and prevention / reduction of the operational risks. the main risk indicators indicate that certain processes undertaken within the company are probably more exposed to operational risk than others. the main risk indicators are not representative by their nominal value (an indicator is not too big or too small), but by their tendency that can demonstrate that the operational risk is increasing in certain areas (eg the staff fluctuation in the last period is obviously higher than that which was observed during the previous period, it has increased the number of errors, the surge in sales of a particular product in a branch etc.). the circumstances in which a trend of a main risk indicator has been formed must always be considered. for an easier understanding of the main indicators of risk they can be divided into the following categories:  main indicators of general risk – increase of the operational risk at the company level  main indicators of risk on the product increasing the operational risk on a certain product  main indicators of risk on the process increasing the operational risk on a certain process  main indicators of risk per unit increasing the operational risk on a particular area/division/department of the company 2.4. warning systems the warning systems (green, yellow or red code) are established to monitor the limits of the main risk indicators. in case a main risk indicator is assigned the yellow or red code, then it is necessary to be undertaken certain actions:  the green code means a normal state (without operational risk)  the yellow code means that it has been increased the operational risk and it is required an thorough investigation of the circumstances,  the red code means an emergency situation that requires immediate action. in an ideal situation, the main risk indicators must always be of yellow or green color, because, if it is set correctly, this monitoring system for operational risk must allow early detection of the problems and, consequently, the remediation beforehand of the features of the product / process / it tools, etc. in all cases it is mandatory to check the accuracy of the data and the circumstances in which it was formed the tendency of the main risk indicators. if, after these plausible checks it is proved that the operational risk has increased (eg a particular process generates too many errors due to the human resources involved, because this process was not automated or a product was wrongly developed and caused high rates of default, etc) then it is required a series of actions, such as those listed below, by way of illustration:  contact of the concerned department operational risk management approaches within an investment fund. sif moldova case study  clear identification of cause of the operational risk  identification of all parties involved in the process (inputs – processing outputs)  identification of the compartment / department which is directly responsible  agreeing with the compartment / department which is directly responsible for an action plan (it development, change of regulation, etc.)  implementation of the action plan and the assurance that all the parties involved are informed in advance on the details of this action plan.  continuation of monitoring the main risk indicators in order to measure the impact of implementation the action plan. 3. conclusions operational risk management consists in the identification and measurement, as complete as possible, of these risks, so that the company / investment fund to be able to establish appropriate measures to avoid, reduce, transfer or accept, consciously, the risk. the main goal of the company in the operational risk management is prevention. the requirement is that the cost necessary for the prevention of the operational risk not to exceed the costs or damages that it could generate. to ensure an adequate quality of operational risk management and of the activities related to their control as well as for maintaining an appropriate level of accuracy on information provided to the supervisory authorities, it is essential that the investment fund to build a stable and viable database, containing information relating to extended periods, and to ensure continued maintenance of this database. implementing methods and instruments of the operational risk management instruments mentioned in this paper, the available options are the use of the standard approach or the alternative standard approach. references ceocea costel (2010), the risk in management activity, economica publishing, bucharest. ceocea costel (2014), theory and practice of management decision, economica publishing, bucharest. directive 2006/49/ec of the european parliament and of the council of june 14, 2006 on the capital adequacy of the investment companies and credit institutions. nbr regulation no. 5 of february 18, 2008 on the approval of using the standard approach or the alternative standard approach for the operational risk. studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 174 quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice luminiţa zaiţ universitatea vasile alecsandri din bacău zait.luminita@yahoo.com abstract in the last 10 years the romanian society was in a long process of change, all the economic, social, political factors knowing a new dynamic in trying to adapt to conditions specific to new marketing environment. an important feature of romanian society, which is relevant in the context of the proposed article, is that the economy encourages and facilitates the penetration of transnational organizations in the domestic markets with involved advantages and disadvantages. this article is part of a larger study that targeted the issue of assimilation and operationalization of the marketing concept and market orientation vision of the local organizations in the context of market globalization, to identify, on the one hand, the influence of transnational organizations on the local organizations practices, through the incorporation of marketing vision and culture, and, on the other hand, the extent to which local organizations have specific practices aligned to transnational organizations practices acting on the market in romania. keywords organizational structure; marketing department; traditional department; marketing job; overlapping competences; job description; market orientation jel classification m31 introduction the approach to present research started on the premise of a particular action context in which romania, imposed by globalization of markets, requiring capacity of prospecting, synthesis, adaptation and forecast from local organizations point of view. in this context, the concept of marketing must be understood and applied depending on the particular details of this action environment. often, discussions about management of marketing activities and market orientation generates confusion in the local organizations. specifically, management of marketing activity seems to get a tactic prominence by small local organizations, activities meant to facilitate the access of the products to the market. on the other hand, market orientation is wrongly understood, and it is reduced to the identification of the ways in which the business could extensively grow expressed in terms of generating sales volume, disregarding the influence of a wide range of stakeholders on the activity of the organizations. through the research approach we achieved both organizational behavior description on the issue of marketing and the integration of market orientation, and we identified the transnational companies' influence on local organization regarding the integration of marketing vision and culture (zait, 2013). this article captures a certain section of the above mentioned research, namely the degree of assimilation and zait 175 operationalization of the marketing concept in practices of the local organizations, focusing on identifying the existence of specific organizational structure. research methodology the decision issue that led to research consisted of specific knowledge of the basic elements of marketing activity and the degree of market orientation of the local organizations from different sectors, in the context of market globalization. defined according to the decision problem specified above, the purpose of research was to study the peculiarities of marketing and degree of market orientation, specific to local organizations in the categories of large and medium-size enterprises in several sectors. starting from the defined scope, objectives were developed through which has been identified concrete information for the proposed analysis (ţimiraş, 2007). there were defined both core objectives and a number of secondary objectives, the latter being of lesser importance. some of the most important objectives of the research were: • providing information on the extent to which local indigenous organizations have assimilated and implemented marketing concept (to what extent the investigated organizations: have operationalized, in the structure of the organization, a marketing department; practice marketing activities as supplementary placed in various traditional departments; coordinate their marketing activities under the principles conferred by the new concept of “marketing organization”, by sectors and categories of enterprises; • identifying the number of marketing positions within each organization; • identify areas of marketing related in the job descriptions found for specialized staff; • identify any overlapping of functions and tasks in job descriptions between marketing staff and the related traditional departments (research and development, trade and sales, etc.); in our research, the research unit was the organization itself, all stated objectives, which aimed to identify the main features of the marketing activity and the integration of market orientation, being achieved after analyzing local organizations, large and medium-size, in the following sector, according to caen classification: mining and quarrying, manufacturing, electricity, gas and water, construction, wholesale and retail trade, hotels and restaurants, transport, storage, and communications and financial intermediation (cătoiu et all., 2002). in the selection of investigated units was taken into account their size in terms of turnover and number of staff. there were considered in the analysis those organizations classified as medium and large-size enterprises, as defined under law 133/1999. because it was intended to obtain a representative sample of the studied community, in determining its size it has required the use of statistical methods. statistical data for determining the sample size were: community 269 organizations; standard deviation 33.9 (in determining this value it was considered the number of organizations by sector); probability coefficient corresponding to guarantated results for 269-1 = 268 degrees of freedom and a significance level α = 0.05 from student distribution table 1.96; the maximum admited error of 5%. it was obtained a sample size of 230 organizations. although when developing the research methodology, it was meant to provide a representative sample, in the process of information gathering it has emerged a major drawback a low response rate of 40.43%, due to the refusal of the registered organizations to participate in this research. quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice 176 as the selection process of units in the sample it was chosen proportional stratified sampling (ţimiraş and boier, 2006). this process involved, in a first step, establishing the structure of the researched collectivity by sector and by businesses, in order to identify the weights to be applied to the statistic calculated sample. the number of units placed in the sample, which were extracted from each sector and by organizations category, has been determined so that the extracted sample to be a copy of the general community. subsequently, in order to provide all units of the community the same chance of being selected and included in the sample research, we used random number tables. research results as regards the first objective of the research the extent to which local indigenous organizations have assimilated and implemented marketing concept, it was observed that of total organizations surveyed, 47.13% have a marketing department, while 52.87% do not have that entity in the organizational structure. table 1. distribution of organizations in considered sectors in the survey and the response options on implementing the concept of marketing (whether or not have a marketing department) sector of activity total organizations % of which % have a marketing department do not hold a marketing department mining and quarrying 2.30 4.88 0.00 manufacturing 39.08 36.59 41.30 electricity, gas and water 5.75 9.76 2.17 construction 22.99 17.07 28.26 wholesale and retail trade 17.24 17.07 17.39 hotels and restaurants 2.30 0.00 4.35 transport, storage, and communications 8.05 9.76 6.52 financial intermediation 2.30 4.88 0.00 total 100.00 100.00 100.00 of total organization 100.00 47.13 52.87 of all organizations which have a marketing department, most are located in the manufacturing sector 36.59%, followed by construction and trade with a share of 17.07%, according to table 1. analyzing all organizations that do not have a marketing department in the organizational structure, we can see that the same hierarchy has been preserved: most organizations do not have a marketing department are located in the manufacturing sector (41.30%), followed by construction (28.26 %) and trade (17.39%). by sectors of activity, it has been observed that most marketing departments are found in organizations within extractive industry (100%) and financial intermediation (100%), followed by electricity, gas and water (80%), according to the table 2. zait 177 table 2. distribution of answer options on implementing the concept of marketing (whether or not have a marketing department) in organizations within the researched sectors sector of activity of which % have a marketing department do not hold a marketing department mining and quarrying 100.00 0.00 manufacturing 44.12 55.88 electricity, gas and water 80.00 20.00 construction 35.00 65.00 wholesale and retail trade 46.67 53.33 hotels and restaurants 0.00 100.00 transport, storage, and communications 57.14 42.86 financial intermediation 100.00 0.00 in terms of weight, by sector, of the organizations that do not have a independent marketing department, it has been found that hotels and restaurants hold first place (100%), followed by construction (65%) and manufacturing (55.88 %). of all the organizations surveyed, 79.31% are medium-sized organizations and 20.69% are large organizations. in the category of medium-size, it has been found that 33.33% have a marketing department, while 66.67% do not have this entity in the organizational structure. in the large organizations category, which was the subject of the investigation, 100% of organizations have a marketing department. of all organizations which have a marketing department, 56.1% are medium-sized organizations and 43.9% are large organizations. organizations that do not have a marketing department are just the medium-size organizations category. a structure for organizations in considered sectors, the response options have / do not have a marketing department, is presented in table 3. according to table 3, most midsize organizations which have a marketing department are located in sectors like manufacturing (34.78%) and wholesale and retail trade (21.74%). of all large organizations which have a marketing department, it was found that most are located in manufacturing (38.89%), followed by construction with 22.22%. table 3. distribution of organizations in the considered sectors by the response options on implementing the concept of marketing (whether or not a marketing department) and by businesses sector of activity of which % have a marketing department do not hold a marketing department organization category % medium-size large medium-size large mining and quarrying 4.35 5.56 0.00 0.00 manufacturing 34.78 38.89 41.30 0.00 electricity, gas and water 8.70 11.11 2.17 0.00 construction 13.04 22.22 28.26 0.00 quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice 178 wholesale and retail trade 21.74 11.11 17.39 0.00 hotels and restaurants 0.00 0.00 4.35 0.00 transport, storage, and communications 8.70 11.11 6.52 0.00 financial intermediation 8.70 0.00 0.00 0.00 out of all medium-sized organizations that do not have a marketing department, it was observed that most are found in manufacturing (41.3%), followed by construction (28.26%) and wholesale trade (17.39%). a low presence of marketing departments was found both in the category of medium-sized organizations and in the category of large organizations, in extractive industry sector 4.35% and 5.56%. because the present study aims to identify the existence of marketing activities, including the organizations that do not have marketing department, we wanted to know where are placed such activities in the traditional departments. thus, of all the organizations that do not have a marketing department, 95.65% indicated that marketing activities are located in various traditional departments, and only 4.35% have checked the option that they have no marketing activities. of all organizations that do not have a marketing department, it was found that the largest share regarding traditional structures where marketing activities are located is owned by sales or trading department (53.25%), followed by r & d (18.18%) , manufacturing (10.39%) and public relations (9.09%). as can be seen from table 4, the r & d department was noted in 57.14% of cases (total responses) of respondents from the manufacturing sector, followed by construction (35.71%). production department as an entity that holds marketing activities, was mentioned only in the manufacturing sector, while sales and trading department was mentioned in 43.9% of cases by manufacturing, followed by construction (26.83%) and wholesale and retail trade (17.07%). table 4. distribution of organizations in considered sectors by response options on traditional deparments where are located the marketing activities sector of activity the frequency regarding departments where are localized marketing activities % a b c d e f mining and quarrying 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing 57.14 100.00 43.90 42.86 0.00 50.00 electricity, gas and water 7.14 0.00 2.44 0.00 0.00 0.00 construction 35.71 0.00 26.83 0.00 60.00 0.00 wholesale and retail trade 0.00 0.00 17.07 14.29 20.00 50.00 hotels and restaurants 0.00 0.00 2.44 28.57 0.00 0.00 transport, storage, and communications 0.00 0.00 7.32 14.29 20.00 0.00 financial intermediation 0.00 0.00 0.00 0.00 0.00 0.00 legend: a research and development; b production; c commercial / sales; d public relations; e other departments: financial & accounting; f within our organization we do not conduct marketing activities zait 179 distribution of answer regarding the traditional departments where are located the marketing activities by organizations in considered sectors is shown in table 5. sectors of activity at which marketing activities are developed within traditional departments are: • manufacturing sector 21.05% in production, 21.05% in r & d, 47.37% in commercial or sales, 7.89% in public relations, 2.63% of the organizations indicated that they have no marketing activities. • wholesale and retail trade 70% in sales and trading, 10% in pr and 10% in finance and accounting; 10% of organizations indicated that they are not performing marketing activities. • construction 26.32% in r & d, 57.89% in sales and trading, 15.79% in financial & accounting. as regards the existence of marketing positions within local organizations, we obtained the following structure: 63.22% holding marketing positions allocated to specialists, located in marketing or traditional compartments, 34.48% do not hold marketing positions, but tasks related to this field are found in other jobs with economic studies, while 2.3% indicated that they have no marketing activities. table 5. distribution, within organizations from the considered sectors in the analysis, of the answer options regarding traditional departments where are located the marketing activities sector of activity total answers % the frequency regarding departments where are localized marketing activities % a b c d e f mining and quarrying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing 49.35 21.05 21.05 47.37 7.89 0.00 2.63 electricity, gas and water 2.60 50.00 0.00 50.00 0.00 0.00 0.00 construction 24.68 26.32 0.00 57.89 0.00 15.79 0.00 wholesale and retail trade 12.99 0.00 0.00 70.00 10.00 10.00 10.00 hotels and restaurants 3.90 0.00 0.00 33.33 66.67 0.00 0.00 transport, storage, and communications 6.49 0.00 0.00 60.00 20.00 20.00 0.00 financial intermediation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 legend: a research and development; b production; c commercial / sales; d public relations; e other departments: financial & accounting; f within our organization we do not conduct marketing activities of all organizations which have a marketing department, 97.5% have marketing positions allocated to specialists, while 2.5% do not possess marketing positions, but develop such activities (within the marketing department) by profesionists in economics. of all the organizations that do not have a marketing department, 32.61% hold marketing positions allocated to marketers, 63.04% have no marketing positions, but the tasks are assigned to other posts with or without economic studies, while 4.35% have no marketing activities. distribution of organizations in the considered sectors in the analysis on category units, by the response options on marketing positions is presented in table 6. quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice 180 it can thus be seen that most midsize organizations that have between 1 and 5 marketing positions allocated to specialists, are found in sectors such as wholesale and retail trade (36%), construction (24%) and transport, storage and communications (12%). among midsize organizations that have between 6 and 10 marketing positions allocated to specialists, most are found in sectors such as manufacturing (72.73%), followed by construction (18.18%). between 11 and 15 marketing specialists are found in medium-size organizations, only in the manufacturing sector. table 6. distribution of organizations in the considered sectors by response options on marketing positions sector of activity category of organization % medium-size marketing positions % a b c d e f mining and quarrying 4.00 0.00 0.00 0.00 0.00 0.00 manufacturing 8.00 72.73 100.0 51.72 0.00 50.00 electricity, gas and water 4.00 9.09 0.00 3.45 0.00 0.00 construction 24.00 18.18 0.00 27.59 0.00 0.00 wholesale and retail trade 36.00 0.00 0.00 10.34 0.00 50.00 hotels and restaurants 4.00 0.00 0.00 0.00 100.0 0.00 transport, storage, and communications 12.00 0.00 0.00 6.90 0.00 0.00 financial intermediation 8.00 0.00 0.00 0.00 0.00 0.00 sector of activity category of organization % large-size marketing positions % a b c d e f mining and quarrying 0.00 11.11 0.00 0.00 0.00 0.00 manufacturing 60.00 22.22 50.00 0.00 0.00 0.00 electricity, gas and water 0.00 11.11 25.00 0.00 0.00 0.00 construction 0.00 33.33 25.00 0.00 0.00 0.00 wholesale and retail trade 0.00 22.22 0.00 0.00 0.00 0.00 hotels and restaurants 0.00 0.00 0.00 0.00 0.00 0.00 transport, storage, and communications 40.00 0.00 0.00 0.00 0.00 0.00 financial intermediation 0.00 0.00 0.00 0.00 0.00 0.00 a 1-5 marketing specialists; b 6 to 10 marketing specialists; c 11 to 15 marketing specialists; d marketing tasks are included in the job descriptions of staff with economic studies, but they do not have marketing diploma and are not employed on marketing positions; e marketing tasks are included in the job descriptions of specialists from many professions (from different departments): programmers, engineers, sociologists, etc.; f – don`t have staff employed in marketing activities zait 181 in the medium-sized organizations, marketing tasks localized in the job related to economics, but without marketing specialization can be found in the highest proportion in sectors such as manufacturing (51.72%) and construction (27.59%). only in hotels and restaurants, from medium-sized organizations were identified marketing tasks in the job description of personnel outside the economic domain. in the case of large organizations were mentioned: between 1 and 5 marketing positions in the largest share, in the manufacturing sector (60%); between 6 and 10 marketing specialists in construction (33.33%); from 11 to 15 specialists in marketing for manufacturing (50%). marketing tasks are not assigned to the staff from other fields. the largest number of marketing positions (11 to 15) is found at the level of mediumsize organizations, in sectors such as manufacturing and at large organizations in sectors such as: manufacturing (50%); electricity, gas and water (25%) and construction (25%). as regards the areas of marketing found in the job descriptions of specialist staff, in the sample we found the following frequencies: in 10.84% of cases (total responses) were mentioned activities such as: marketing planning, implementation of plans and marketing programs, control of marketing plans and programs; in 8.74% of cases were specified analysis and marketing research activities; in 7.69% of cases were mentioned forecasting and modeling activities on product and price; in 29.72% of cases were specified activities related to forecasting and modeling the market; in 25.17% of cases were mentioned activities related to the sales force and distribution; in 17.83% of cases were mentioned activities related to communication. information, centralized by answer choice, as in table 7, shows the following structure on areas of interest: • highest frequency of occurrence of marketing planning activities, implementation and control was recorded in the manufacturing industry (45.16%), followed by electricity and energy sectors, construction and transport by the same percentage, 12.9%; • marketing research and analysis activities were mentioned in 52% of cases by organizations in the manufacturing sector, followed by organizations in wholesale and retail trade (28%); • forecasting and modeling activities on product and price were mentioned in 27.27% of cases by organizations in sectors such as manufacturing or transport, storage and trade, followed by electricity, gas and water (18.18%); • forecasting and market modeling related activities were mentioned with the highest frequency in sectors such as manufacturing (38.82%), construction (23.53%) and trade (16.47%); • highest frequency of occurrence of the activities related to the sales force and distribution were recorded in the manufacturing sector (40.28%), followed by construction (23.61%) and trade (19.44%); • promotional activities were mentioned with the highest frequency in the manufacturing industry (41.18%) and trade (27.45%). by categories of enterprises, according to table 8, were found the following: • at medium-sized companies were mentioned, with the highest frequency, forecasting and market modeling related activities (34.54%), followed by sales force and distribution (27.84%) and promotional activities (17.53%); in this category the lowest frequencies were recorded for forecasting and modeling activities on product and price (3.61%); • among larger firms, the higher frequencies were registered for activities related to forecasting and market modeling, sales force and distribution respectively (19.57%), followed by promotional activities (18.48%); the quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice 182 lowest frequencies were recorded in the activities related to marketing research and analysis (11.96%). table 7. distribution of organizations in considered sectors by response options in the areas of marketing found in the job descriptions of specialists sector of activity the frequency of areas of marketing found in job descriptions of marketers % a b c d e f g mining and quarrying 6.45 0 9.09 2.35 1.39 0.00 0 manufacturing 45.16 52 27.27 38.82 40.28 41.18 0 electricity, gas and water 12.90 0 18.18 5.88 0.00 1.96 0 construction 12.90 4 4.55 23.53 23.61 11.76 0 wholesale and retail trade 3.23 28 4.55 16.47 19.44 27.45 0 hotels and restaurants 0.00 0 0.00 2.35 2.78 3.92 0 transport, storage, and communications 12.90 8 27.27 8.24 9.72 9.80 0 financial intermediation 6.45 8 9.09 2.35 2.78 3.92 0 legend: a a. marketing planning, b. implementing marketing plans and programs c. control of marketing plans and programs; b d. marketing research and analysis (market environment, competition); c e. forecasting and modeling (product, price); d f. forecasting and modeling (market); e g. sales force and distribution; f h. promotional activities (advertising, sales promotion, public relations, trade shows and exhibitions); g i. other marketing services table 8. distribution by category of organizations of marketing domains found in the job descriptions of specialists category of organization the frequency of areas of marketing found in job descriptions of marketers % a b c d e f g medium-sized organizations 9.28 7.22 3.61 34.54 27.84 17.53 0.00 large organizations 14.13 11.96 16.30 19.57 19.57 18.48 0.00 legend: a a. marketing planning, b. implementing marketing plans and programs c. control of marketing plans and programs; b d. marketing research and analysis (market environment, competition); c e. forecasting and modeling (product, price); d f. forecasting and modeling (market); e g. sales force and distribution; f h. promotional activities (advertising, sales promotion, public relations, trade shows and exhibitions); g i. other marketing services regarding any possible overlapping of responsibilities and tasks in job descriptions between marketing staff and the staff of traditional departments (research and development, trade and sales etc.), of all organizations that responded to this question, 74.12% said there are such overlaps in their activities, and 25.88% have specified their absence. by categories of organizations, from those that mentioned the existence of overlapping of functions and tasks of the job descriptions between marketing staff and the staff of traditional departments, 84.13% are medium-sized companies and 15.87% are large enterprises. the structure of organizations that have specified no zait 183 overlapping of duties between marketing staff and the staff of traditional divisions is as follows: 63.64% are medium-size organizations and 36.36% are large organizations. distribution of organizations in the studied sectors by the response options offered by the two categories of enterprises is presented in table 9. table 9. distribution of organizations within the researched sectors by the answer on overlapping of tasks and responsibilities between marketing staff and the staff of traditional departments sector of activity the frequency of duplication of tasks% category of organization medium-size large-size a b a b mining and quarrying 1.89 0.00 10.00 0.00 manufacturing 39.62 35.71 30.00 50.00 electricity, gas and water 3.77 7.14 10.00 12.50 construction 24.53 21.43 20.00 25.00 wholesale and retail trade 22.64 0.00 20.00 0.00 hotels and restaurants 1.89 7.14 0.00 0.00 transport, storage, and communications 5.66 14.29 10.00 12.50 financial intermediation 0.00 14.29 0.00 0.00 legend: a – there are overlaps of responsibilities and tasks between marketing staff and the staff of traditional departments b there is no overlap of responsibilities and tasks between marketing staff and the staff of traditional departments overlapping of responsibilities between marketing staff and the staff of traditional departments was mentioned with the highest frequency by category of organizations as follows: • in 39.62% of cases by midsize organizations in the manufacturing sector, followed by those in construction sector (24.53%) and trade (22.64%); • for large organizations, the highest frequencies were recorded in the manufacturing sector (30%), followed by construction sector (20%) and trade (20%). lack of duplication of duties between marketing staff and the staff of traditional departments was recorded with the highest frequencies in sectors such as manufacturing (35.71% and 50%) and construction (21.43% and 25% respectively), both for medium and for larger organizations. the lowest frequencies, regarding the existence of overlapping of functions, were recorded in sectors such as the extractive industry (1.89%) and hotels and restaurants (1.89%) for midsize organizations, and transport, storage, communications, mining and electricity, gas and water (10%) for large organizations. conclusions the research results confirm both above average level of assimilation and operationalization of the marketing concept in the practices of indigenous organizations and partial accuracy of the hypothesis previously released, namely the importance of marketing tends to be underestimated in these organizations. quantitative research on the concept of marketing assimilation and operationalization by local organizations in practice 184 references cătoiu, i., balan, c., popescu, i. c., orzan, ghe., veghes, c., danetiu, t., vranceanu, d. (2002) cercetări de marketing, bucureşti, editura uranus. timiras, l., boier, r. (2006), cercetarea de marketing, iaşi, editura performantica timiras, l. (2007) evoluţia marketingului agroalimentar din românia în contextul extinderii uniunii europene, bacău, editura edusoft. zaiţ, l. (2009), the process of marketing management – between the management marketing activities and the operational marketing, studies and scientific researches, edition economics, issue 14, 129-136. zaiţ, l. (2013), managementul marketingului în contextul globalizării pieţelor, bacău, editura alma mater. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 24, 2016 http://sceco.ub.ro 29 risk management model within an alternative investment fund (aif). sif moldova case study costel ceocea vasile alecsandri university of bacau costel.ceocea@ub.ro; cceocea@sifm.ro abstract risk management has become a primary objective in the management decision. particularly, in case of investment processes, the focus on risk management is becoming more pronounced, as a reaction to the increase in the complexity of financial products and processes of analysis, decision and implementation of investment projects. currently, it is in progress the implementation of the european legislation in the field of investment funds, with a significant orientation towards the regulation of risk management models / processes. in this context, capitalizing the constant concern of the management for effective administration of the risk, sif moldova has structured and implemented a risk management model based on capital adequacy that includes quantifiable prudential indicators as objective support which is essential in optimizing the investment decision. as in the secondary legislation that is specific to aif / aifm it is not proposed and described a standard method of risk management and it is not stipulated a set exposure limits, it was decided to develop a model for risk management in accordance with the requirements of aifm legislation by applying the principles stipulated in the banking norms. keywords management; risk; capital; investment; assets; prudential indicators; eu legislation jel classification f15; f50; o10 reference models in risk management stipulated in eu legislation and taken over into the national legislation in specific terms used in the stock market, we shall refer to the risk management of investment funds called alternative investment funds (aif) or alternative investment funds managers (aifm), a category in which sif moldova will also be included and whose experience may be a case study. basically, an investment fund from aif / aifm category must develop a risk management system that identifies and evaluates each financial risk to which it is exposed in its current activity and which aims in particular that the solvency ratio from its own funds (the permanent resources free of any burden which can, at any time, to absorb any loss caused by the concretization of any financial risk) and the capital requirements (related to the losses that can occur in case such risks are materialized) to be above certain levels considered prudent. it is also requested a prudent level for a number of liquidity indicators. from the complementary perspective of banking legislation, a risk management model has two forms: one standard (as described in legislation) and one advanced built by the financial entity and proposed for approval to the supervisory body. in this framework it can be designed and operated a hybrid risk management system, requesting the compliance with a set exposure limits (as it is mailto:costel.ceocea@ub.ro mailto:cceocea@sifm.ro risk management model within an alternative investment fund (aif). sif moldova case study 30 currently stipulated in the applicable regulations) and the registration of prudent levels of the prudential indicators (solvency ratio, liquidity ratio). premises of developing a risk management model in the case of societatea de investiţii finanaciare moldova sa (framed as aif / aifm) as in the secondary legislation that is specific to aif / aifm it is not proposed and described a standard method of risk management and it is not stipulated a set exposure limits, it was decided to develop a model for risk management in accordance with the requirements of aifm legislation by applying the principles stipulated in the banking norms. on these coordinates and considering that sif moldova is an investment fund that holds stakes in several companies (subsidiaries, associated companies and participations) and whose main objective is the application of some investment strategies through the participations held, it results, naturally, that the company is exposed to a large extent to the solvency risk. on the other hand, given that the most of the holdings are long-term investments and that it is not used the leverage, there were determined internal quantitative limits for the financial risks attached to the assets of the portfolio. by calculating and reporting the capital requirements it is obtained a comprehensive picture of the risk profile of the company's activities and a perspective on the systemic risks that the company is showing for the financial sector or the real economy. risk management model based on capital adequacy to determine the risk profile of sif moldova there are proposed the following indicators and minimum / maximum limits: liquidity risk quantification liquidity coverage ratio (lcr gross) = the value of high liquidity assets that may be valued within 30 days / current liabilities (including the shareholder dividends) with a maximum maturity of 30 days minimum limit proposed: > or = 1,2 liquidity coverage ratio (lcr net) = the value of high liquidity assets that may be valued within 30 days / current liabilities (without shareholder dividends) with a maximum maturity of 30 days minimum limit proposed: > or = 12 lcr has as objective the cover of the liquidity needs on a time horizon of 30 days under a combined crisis scenario (institution and market) in the highly liquid assets there were included two asset classes:  class a – assets that generate immediate liquidity (cash, current accounts, treasury bonds, bank deposits)  class b – assets that generate reserve liquidity (equities and bonds traded on the main markets) ciocea 31 rules for determining the value of listed shares that may be valued at the market in maximum 30 days (20 trading days):  selection of the issuers traded on the main trading markets (which were traded in a number of days representing at least 80% of all trading days of the period taken into consideration);  consideration a volume of maximum 25% of the average daily amount of shares which were traded on the regulated market (in accordance with the limit stipulated in article 5 paragraph (2) of the ec regulation no. 2273 / 2003);  calculation of the market value of the maximum volume that can be traded at the closing price from the date of the calculation and application of a decrease in value of maximum 20%. the resulting value for the indicator “liquidity coverage ratio” will be tested by applying stress variables (e.g. decrease in stock exchange quotations, increase of the debts dividends for shareholders or unanticipated fines, etc.) net stable funding ratio (nsfr) = value of temporary resources (e.g.: unclaimed dividends) / total value of assets (from the balance sheet) maximum threshold proposed: < or = 10% the two ratios (lcr and nsfr) have as objective the increase of the company's resistance to liquidity crisis situations on short-term but also on long-term and are designed to reduce / limit the risk of cash flow of the company. liquid asset ratio (portfolio liquidity) = value of liquid assets / total value of assets (from net asset) minimum threshold proposed: > or = 60% quantifying the market risk (by comparing the potential losses from the market risk with its own funds) risk position = value of capital requirements for assets exposed to the risk position / amount of own funds. minimum threshold proposed: > or = 5% maximum threshold proposed: < or = 25% applicable rule: it was associated the risk position to the exposure in assets of type:  equities listed on a main market, which were traded in a number of days representing at least 50% of the total number of trading days in a year;  fund units at listed open investment funds (oif) and at listed closedend investment funds (cif). foreign exchange risk = value of capital requirements for assets exposed to the foreign exchange risk / amount of own funds. maximum threshold proposed: < or = 5% risk of long-term interest rate = value of capital requirements for assets exposed to the risk of long-term interest rate / amount of own funds risk management model within an alternative investment fund (aif). sif moldova case study 32 maximum threshold proposed: not applicable commodity risk = value of capital requirements for assets exposed to the commodity risk / amount of own funds maximum threshold proposed: not applicable quantifying the credit risk (by comparing the potential losses from the credit risk with its own funds): credit risk (creditworthiness of the issuer / creditworthiness of the debtor) = value of capital requirements for assets exposed to the credit risk / amount of own funds maximum threshold proposed: < or = 50% applicable rule: it was associated the credit risk to the exposure in assets of type:  equity securities (unlisted shares and shares listed on a secondary market);  debt securities (municipal bonds, unlisted or not-traded , corporate bonds);  exposures in fund units at unlisted closed-end investment funds (cif);  trade receivables. there were applied the risk weights provided in regulation 575/2013; at the exposures in venture capital companies (catalyst) and in private equity companies (agribusiness, real estate, opportunity) there were given 150% risk weight on exposures with an extremely high risk. quantifying the concentration risk large exposures to an issuer/debtor = value of the exposure per an issuer/debtor / total value of assets legal limit: 10%; the threshold may be increased up to 40% with the condition that the amount of the exposures that exceed 10% not to exceed together 80% of the total assets (article 118, letter b) of regulation 15/2004) large exposures to a sector = value of exposure to a sector / total value of assets maximum threshold proposed: < or = 60%; counterparty risk counterparty risk = value of capital requirements for assets exposed to the counterparty risk / amount of own funds maximum threshold proposed: not applicable ciocea 33 operational risk operational risk = value of capital requirements related to the operational risks (including the professional liability) / amount of own funds maximum threshold proposed: < or = 5% risk panel as an example, on the basis of the public data available from the financial statements and net asset statement, it has been determined the value of the risk indicators at the date of december 31, 2015. risk type / risk indicator value at dec. 31, 2015 quantitative limits risk exposure proposal minimu m threshol d maximu m threshold liquidity risk highly liquid assets 149.053.707 class a – assets that generate immediate liquidity (current accounts, cash, deposits, government bonds – with maturities up to 30 days) 67.626.058 class b – assets that generate reserve liquidity (listed shares that may be valued in a period of 30 days, with a decrease in stock exchange quotation of maximum 20%) 81.427.649 current liabilities with a maximum maturity of 30 days (gross) 45.672.219 current liabilities with a maximum maturity of 30 days (net) 3.278.058 liquidity coverage ratio (lcr gross) 30 days 3.26 >= 1.2 liquidity coverage ratio (lcr net) 30 days 45.47 >= 12 temporary resources (e.g. unclaimed dividends) 42.379.571 total assets (from balance sheet) 1.095.944.764 net stable funding ratio (nsfr) 3.87% <= 10% liquid assets 1.223.713.152 current accounts 592.961 cash 12.460 deposits with maturity up to 365 days 90.961.057 listed shares, fund units at listed open investment funds and listed closed-end investment funds 1.132.146.674 total assets (from net asset) 1.545.061.332 liquid asset ratio (portfolio liquidity) 79.20% >= 60% market risk capital requirement for market / position risk 182.732.091 own funds 860.609.495 market / position risk indicators 21.23% >= 5% <= 25% risk management model within an alternative investment fund (aif). sif moldova case study 34 capital requirement for market / foreign exchange risk 0 own funds 860.609.495 market / foreign exchange risk indicators 0.00% <= 5% credit risk capital requirement for credit risk 300293..988 own funds 860.609.495 credit risk indicator 34.89% <= 50% concentration risk (large exposures) concentration risk per issuer (e.g. banca transilvania) 39.33% <= 40% concentration risk per sector (e.g. financial) 46.74% <= 60% counterparty risk capital requirement for the counterparty risk 0 own funds 860.609.495 counterparty risk indicator 0.00% operational risk capital requirement for operational risk, including the coverage of professional liability 29.442.445 own funds 860.609.495 operational risk indicator 3.42% <= 5% determination of the solvency ratio of sif moldova the solvency ratio, respectively the own funds ratio represents the own funds expressed as a percentage of the total risk exposure. according to article 92, paragraph (1) of eu regulation no. 575 / 2013, the requirement for the value of total own funds rate in the banking system is 8%. for sif moldova, the calculated solvency ratio (without the deduction from the own funds of the holdings in financial institutions and of the qualified participations) at the date of dec 31, 2015 is of 29.15%, indicating a comfortable capital adequacy. conclusion in general picture of the managerial decision, the focus on risk management is becoming more pronounced, as a reaction to the increase in the complexity of financial products and processes of analysis, decision and implementation of investment projects. on this background, we are witnessing the dynamics of the specific legislation related, which records an up-date of the analysis models nationwide by aligning with the european provisions in the field. particularly, at the moment it is in progress the implementation of the european legislation in the field of investment funds, with a significant orientation towards the regulation of risk management models / processes. this is the framework in which it is enrolled the analysis made by societatea de investitii financiare moldova, which led to a first risk management model based on capital adequacy. imminent entry (may 2016) of sif moldova in the process of approval / authorization by the regulator (fsa) with regards to the status of alternative ciocea 35 investment fund (aif) may lead to the refinement of the model proposed to ensure an effective management of risks associated with the investment processes. references aifm secondary legislation: fsa regulation no. 10/2015 and eu regulation 231/2013. ceocea costel (2010), “the risk in management activity”, economica publishing, bucharest, isbn 978-973-709-503-9. ceocea costel (2014), “theory and practice of management decision”, economica publishing, bucharest, isbn 978-973-709-717-0. eu regulation no. 231/2013; eu regulation ue 575/2013. law no.74/2015 on alternative investment funds. importanţa bazei de date în campaniile de marketing direct importance of database for direct marketing campaigns diana prihoanca, ph.d „vasile alecsandri” university of bacau abstract: direct marketing activities involve interactivity and customization which requires a good knowledge of current and potential customers. information that define consumer profile from geographical, demographic, psychographic and behavioral point of view are contained within a database. keywords: direct marketing, direct marketing campaign, database, customers jel code: m 39 direct marketing is "implementation, registration, analysis and planned tracking of clients behaviors regarding the response directly to a time frame to get future marketing strategies, to develop long-term customer loyalty and to ensure continuity of business development.”1 the essence of direct marketing can be summarized in the following 2: directed. messages are made for each consumer segment in part according to their characteristics to generate a greater rate of response; direct. communication between transmitter and receiver is carried out directly, without intermediaries; marketing. by specific direct marketing techniques, helps to meet the needs of current and prospective customers to maximize profit and to achieve other goals. direct marketing takes three additional important features: relies on direct answers. the client involved in a direct marketing campaign will respond by mail, telephone, internet, fax, sms. it has an important role in the monitoring of feedback; direct marketing campaigns have a measurable character, since responses are measured, evaluated and analysed; requires the construction and maintenance of a database of current and potential clients. justification of direct responses is the consequence of direct communication which aims to stimulate a reaction of some kind from the receiver, to generate a specific consumer behavior, differentiated according to the specific objectives pursued, raising it to react in specific campaigns carried out.3 direct marketing campaigns are conditioned by the establishment and observance of five essential steps 4: establishing the objectives of the campaign; knowledge of the target customer segment;                                                              1 stone,m., bond, a., blake, a. – the complete direct marketing and interactive, bic all publishing, bucharest, 2006, p.18. 2  stone,m., bond, a., blake, a. – the complete direct marketing and interactive, bic all publishing, bucharest, bucureşti, 2006, p.18.  3 vegheş, c. – direct marketing, uranus publishing, bucharest, 2003, p.27. 4 www.marketingdirect.ro  http://www.marketingdirect.ro/ design a promotional message and a relevant offer; the existence of an interface to receive quick and correct answer; analysis of the results of the campaign in close correlation with the objectives set initially. being a marketing feature, but also the source of defining the segment of customers of direct marketing campaigns within the framework of this work i'll give more attention to the database. due to the absence of a database, direct marketing campaigns may not be carried out, direct marketing terms and database were often used as synonyms. a database used within marketing campaigns directly contribute to building relationships with customers through effective management of historical data and behavioral of their marketing activities (figure 1.) contact management with clients clients direct channels indirect channels  internet clients service retail post sales sales intermediari es distributors clients management marketing communications management channels management products management development and strategic planning information and studies on the market client database supplying human resource s operations financing manufacturing distribution figure 1 customer relationships in direct marketing sursa: stone, b., jacobs, r. – successful direct marketing methods, arc publishing, chisinau, 2002, p. 57 starting from the many definitions given in the literature, a database can be defined as „a computerized data management whose components are represented by data contained and structured , management equipment (hardware database) management applications (software component database), users (intermediaries or end-users) and procedures for specific use”.5 in the classification of databases you can use two criteria: their size and nature. depending on the size, the database can be associated with terms such as: database, data center or data warehouse, and depending on their nature, databases can be internal or external. the simplest form of the database is the list of names and addresses of a group of current and/or potential customers who have shared a number of features. in the data list are listed in alphabetical order by last name and are accessed randomly. at the other pole there is a database built on a complex structure that can hold together a virtually unlimited number of variables in a dynamic way. in practice activity of direct marketing campaigns there are used two types of databases: inactive files and relational database.. the inactive file is a list arranged in a sequential order, most often after the serial number of your customers. customer files must have the same form, and have in their content: a number of the customer, the last name, zip code and phone numbers to which they may be contacted. since the signal is acquired sequentially, the use of their inactive files is impractical in the conditions under which it is added customer features regarding the behavior of purchase or consumption, lifestyle, demographic indicators, etc. supplier supplier id name of company. contact person. title of contact. address. city. region. zip/postal code. country. fax pagină web product product id name of the product. provider id. id category. the quantity per unit. unit price. units in stock. units ordered. the control of restocking. surrender . order order id product id unit price. quantity. rebate. order order id client id employee id the date of the order. the date of application. the date of dispatch. shipping way. the recipient's name. the recipient's address. the city. region. zip/postal code. the country order id-ul clientului numele companiei nume de contact titlu de contact adresă oraş regiune cod poştal ţară telefon fax employee employee id name. first name. the title. courtesy title. date of birth. hire date. address. city. region. zip/postal code. the country. home phone. interior number. photography. notes. to report to the ... … transport transporter id company name category id-ul categoriei the name of the class. description. image tel figure 2. the relational database used in the campaigns of direct marketing b-to-b sursa: stone, b., jacobs, r. – successful direct marketing methods, arc publishing, chisinau, 2002, p. 58                                                              5  vegheş, c. – direct marketing, uranus publishing, bucharest, 2003, p.120.  the database of relational type, in which the data are stored in the tables, it allows the reducing the time of processing, by the existence of a single item from a table linked to a single component from another table (figure 2). the information in the tables is done in rows and columns after different criteria of the data or texts collected. by the end of the table, it is established the reference points of the way the ranking of the data in the fields contained in the columns or rows. although in the tables the information is numerous, at the time of processing it is only used only the information that makes "connection". use of the databases in campaigns of direct marketing involves achieving specific objectives: the correct orientation of the campaign by defining more precisely the target group of clients; identification of the firm's strategic customers by building the profile of the "customer" and the identification of all reviews that match this profile; optimisation of direct communication through the use of direct marketing techniques and promotional messages in relation to the profile of clients; the creation of a long-term relationships with our customers through the information necessary to start and maintain held dialogue with them; ensure the necessary support for the activities of marketing, through the data contained can be behavioral profiles as well as modeling and forecasting the behaviour of buying and consumer reviews; design and implement direct marketing campaigns by creating a controlled environment characterized by the use of mechanisms, instruments and procedures of coordonation and evaluation of their efficiency the starting point of the creation of a database is the two sides that characterizes the essential: the marketing (defines the content, structure and use) and the technical side (defines the procedures for the management of the database) and the objectives pursued by building it. the database approach is usually done in conjunction with direct marketing, but in fact it must be regarded as a tool that can be used in different areas of marketing activity in general. the database must be created to allow carrying out a steady stream of activities associated with its use in the direct marketing campaigns (figure 3). the data contained in the customer data (individual and organizational) are generally limited to the name or name and full address. in order to have a clearer picture about the reviews, you can add information about the demographic , geographical, behavioral and psychographic characteristics. in general it can be said that a database built correctly and completely must consist of five categories of data: data for the identification of clients; data for building profile; transactional nature data; data on designing direct marketing campaigns; other information considered to be important in a given context. the data contained in the database come from two types of sources: internal and external. internal data (data of the firm) are customer data from transactions already carried out with them. external data are data obtained from suppliers outside the company with reference to the market and its areas of interest. analysis and research  database general reaction tracking and reporting  management of reaction  planning and budget  contact figura 3 the mechanism for use of the data base in direct marketing sursa: vegheş, c. – direct marketing, uranus publishing, bucharest, 2003, p.124. multiplicity and diversity of external sources of information imposed their classification after several criteria 6: depending on the degree of specialization: sources and specialized sources; depending on the level of specialisation: general sources and specific sources; depending on the costs associated with the provision data: sources free of charge and commercial sources: depending on the regime of property: external sources which are difficult to sell and external sources to be hires; depending on the format and access to data: printed, on magnetic media, in electronic format, or for online access. on the other hand, the data contained in the databases is perishable. information showing fluctuations are linked to: the level of activity (or inactivity) of customers, demographic characteristics, attitudes, preferences, lifestyle, etc. this instability leads to the need for permanent update of the information on the contents of the databases. effective management of data contained in the structure of the databases is done with the help of programs used to create, use and maintenance. in the literature these programs are known under the name of systems in the management of the database (sgbd). directions for use of the database are defined by the customers company, which from the point of view of their status are classified in such commercial: potential customers; new customers (the period of collaboration less than four months); customers in growth (period of collaboration between four and 12 months); mature customers (period of collaboration of at least a year). importance of the data base in campaigns of direct marketing is given by the advantages that it offers, namely:                                                              6  vegheş, c. – direct marketing, uranus publishing, bucharest, 2003, p.127-128.  measurability. firms know, through the specific criteria of the database, the characteristics of the target consumers for each campaign carried out; testability. to optimize direct marketing campaigns that will be carried out, tests may be carried out on the basis of the assessment of fair and accurate of the campaigns already undertaken. selectivity. the criteria that define the structure of the databases allows the selection of the target group of customers that will be the subject of future direct marketing campaigns; customizing. the information provided by the database allow the design of differentiated messages for each segment of customers, and in some cases and for each client; flexibility. based on the existing relationships between the characteristics of customers in the database and the specific direct marketing campaigns is possible to adapt them to the characteristics of the target group of clients. with a database of well designed and managed, direct marketing can be characterized as a continuous process of growth of the portfolio of customers who meet the needs of existing customers by developing their value for the company and turning them into loyal customers. bibliografy: 1. claezssen, y, deydier, a., riquet, y. – multichannel direct marketing, polirom publishing, bucharest, 2009. 2. stone,m., bond, a., blake, a. – the complete direct marketing and interactive, bic all publishing, bucharest, 2006. 3. stone, b., jacobs, r. – successful direct marketing methods, arc publishing, chisinau, 2002. 4. vegheş, c. – direct marketing, uranus publishing, bucharest, 2003. 5. www.marketingdirect.ro (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, august 2016 linking experiential value to loyalty in smartphone industry nuri wulandari indonesia banking school nuri.w.h@ibs.ac.id rina kartika sari indonesia banking school kartikasari.rina@ymail.com abstract the smartphone industry has grown tremendously in the past years across the world, especially in asia. the competition between smartphone brand players has been intense and involving sophisticated marketing techniques. despite of the widespread practice of experiential marketing to market smartphones, little research has been undertaken to investigate whether this practice generate experiential value in the perception of smartphone customers. if the value is evident, the question remains whether it leads to satisfaction and loyalty of smartphone brand. this study tries to investigate whether the practice of experiential marketing drives experiential value, and whether experiential value has a direct effect to loyalty or indirectly through satisfaction. the methodology involved a survey investigating 255 responses from smartphone device user in indonesian market. the result provides useful findings for marketers as well as supporting the direct and indirect relationship between experiential value and loyalty. the suggestion highlight feel experience as one of the driver factors of experience. limitation and future research suggestions are explained. keywords marketing; experiential marketing; experiential value; satisfaction; loyalty; smartphone jel classification m31 introduction the needs for information and communication have grown exponentially along with the vast development of information communication and technology (ict). the means of communication devices have undergone various alterations in terms of models and functions; from a fixed line telephone to mobile phone to a smartphone with many features. smartphone is defined as phone with the function of a mini-computer as it is powerful enough to deliver many functions. the market of smartphone has grown tremendously in the past decade, hence the competition between smartphones producers has intensified and requires sophisticated marketing efforts. the market for smartphone in the world has been forecasted to grow from 1.5 billion in 2014 to 2.5 billion in 2019 (statista, 2016). asia pacific region plays an important role within the traffic of smart-phone worldwide. the data obtained from e-marketer (2014) predicted in 2013 to 2018, the top four countries with the most users of smartphones are china, us, india, and japan. indonesia ranks seventh based on the number of smart-phone users and it becomes one of the drivers of the development of smartphone along with china and india. it is estimated that there are a hundred million active smart-phone users in indonesia alone in 2018 (millward, 2014). the reality makes the market of smart-phone mobile device in indonesia an interesting issue to be reviewed. by the rise of need towards smartphone mobile device, the competition will go more rigorous. as the matter of fact, only certain brands which get to compete. company as linking experiential value to loyalty in smartphone industry the marketer should realize that their duty is not only related to the issue of developing their high-quality products, maintaining their reasonable selling price and potential distribution channels, but also to the issue of marketing and creating experiences for the recent and future customers. this situation has pushed marketers to employ creative marketing effort, which based on the latest thinking of value offering. value is to be regarded as the central process in marketing (ama, 2013). marketing’s central function involve a series of process of creating, communicating, and providing value for the customers by the means which can benefit both the organization and the stakeholders (kotler & keller, 2009). kotler (2002) stated that modern marketing has moved beyond the traditional one by emphasizing the concept of customer experience and experience marketing. experiential marketing is a process of identifying and satisfying customers’ beneficial needs and aspirations by incorporating two-way communication to generate a distinct trait towards the brand in order to be able to survive and become an add value for the targeted customers (smilansky, 2009). the subject of experiential marketing has currently developed attention as one of the latest thinking in the field and encouraged for research. according to market science institute (2013), the first tier (tier 1) of research priorities in 2014-2016 is to prioritize a research related to comprehension of customers and customer experience. although there has been interest in experiential marketing research, a study in the context of of smartphone mobile device is rarely found. most of the research is investigating the service sector. for example, wang & lin (2010) research in tourism industry, while kim & kim (2011) and pham & huang (2015) provided empirical evidence in hotel service. similarly, tuba (2013) investigated festival events. from the limited studies in the context of technology, research by maghnati et al (2012) revealed that experiential marketing affected experiential value of smart-phone. another finding by lin et al (2009) stated that experiential marketing directly affected perceived value but not directly affected loyalty. there was no positive correlation between obtained value and loyalty. hence, the literature review so far still lacking and a comprehensive study experiential marketing is barely found. the scarcity of research in term of marketing smartphone is very contradictive to what is required by the practitioners of this industry. preliminary research via in-depth interview conducted by the researcher with smartphone industry marketers revealed that the experiential marketing is a widespread practice by smartphone dealer and producers. the experiential marketing is included in marketing program mainly in the beginning of consumers’ buying process in order to spark the desire of purchasing smart-phone. the wide practice of experiential marketing, yet lack of solid theoretical background study, calls for further investigation in for the topic in the marketing of smartphone industry. therefore, the main objective of this study is to investigate whether, within smartphone market, experiential marketing can stand as competitive value that leads to customer’s satisfaction and loyalty. literature review experiential marketing is a marketing concept, which attempts to promote its products in order to attract customers as well as to bring about pleasant impression of the products. schmitt (1999) explained that experiential marketing consists of sense experience, feel experience, think experience, act experience, and relate experience. this kind of marketing generates experiential value, which can be a competitive value of the marketers. holbrook & hirschman (1982) clarified that consumer value is an experience obtained from the process of experiencing consumption instead of from the product purchased, the brand chosen, or the product ownership. mathwick, malhotra and rigdon (2001) continue the theory of holbrook using experiential value scale wulandari & kartika sari (evs) which consists of inner/external value as well as active/passive value which are then classified into four categories: consumer return on investment (croi), service excellence, aesthetics, and playfulness. customer value drive satisfaction and loyalty. consumer satisfaction is the consumer’s fulfilment response. it is a judgment that a product/service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfilment, including levels of under or over fulfillment (oliver, 2010). customers are considered satisfied when they have positive impression generated from the process of evaluating what is obtained to what is expected, including the decision of purchase per se as well as the needs and wants related to the purchase (poku et al., 2013). in maintaining the customers, the company should provide optimum satisfaction for the customers. this satisfaction can be met when customers’ expectations are fulfilled. in many cases satisfaction can lead to loyalty. loyalty is defined as a commitment to repurchase consistently in the future (oliver,2010). hypothesis development past studies have found relationships between variables in this research as a base for hypothesis development. mathwick et al (2001) found experiential marketing can affect experiential value positively. this finding is supported by the research of maghnati et al. (2012) in which the conclusion shows that there is a positive effect of experiential marketing variables towards experiential value. the variable consist measurement of sense, feel, act, relate, and think experience. h1: experiential marketing affects experiential value positively wang & lin (2010) stated that there is a positive effect of experiential value on consumer satisfaction. it is also verified by the research of yazici (2013) which statistically and theoretically supports the importance of experiential marketing and value on consumer satisfaction and behavioral intention in the future. h2: experiential value affects satisfaction positively nevertheless, in current competition environment, to make the customers satisfied is not enough. even-though customers satisfaction is essential to generate loyalty, the main goal of the company. according to kotler & keller (2009), when customer satisfaction meets their expectations, the customers will carry on purchasing and this will generate customer loyalty. wang & lin (2010) and wu & tseng (2014) found that there is a positive relationship between customer satisfaction and customer loyalty. experiential marketing aims to increase long-term loyalty of the consumers by providing distinct and unforgettable experience when they use the products. h3: satisfaction affects loyalty positively griffin (2005) exclaimed that customer loyalty is a strong commitment of the customers that they are willing to consistently purchase products or services in a long-term period of time without being influenced by the situation and other products’ marketing. obonyo (2011) stated that there is a significant and positive between experiential marketing and experiential value as well as between experiential value and customer loyalty. brakus et al. (2009) suggested that brand experience affected consumer satisfaction and loyalty. h4: experience value affects loyalty positively the hypotheses developed a model that investigate the relationships between experiential marketing, experiential value, satisfaction and loyalty. methodology the research design used is descriptive research, which aims to describe the nature or characteristics of particular phenomenon. this descriptive research is classified as cross sectional design due to its samples and research period; it means that information was linking experiential value to loyalty in smartphone industry collected from any source of population and managed only once. the data were used using survey quantitative approach. in drawing the samples, the researcher utilized judgment sampling (or widely known as purposive sampling) of non-probability sampling method. the criteria of the respondents are smartphone users in jakarta city, indonesia. the city is selected since it dominates total numbers of mobile phone in indonesia. in 2014, there were 270 million mobile phone users in which the greatest ratio of mobile phone ownership was found in dki jakarta by 1.8 mobile phones per person. the instrument used to collect primary data in this research is questionnaires organized in the form of likert scale covering these following operational variables: the observed variable of experiential marketing includes sense experience, feel experience, think experience, act experience, and relate experience (schmitt, 1999) the observed variable of experiential value includes consumer return on investment (croi), service excellence, aesthetics, and playfulness (mathwick et al., 2011) variable of satisfaction was referred to the concept of oliver (2010) which termed consumption satisfaction scale. lastly, variable of loyalty was based on the concept of oliver (2010). the analysis of result is conducted using sempls with the help of smart-pls software. discussions the research samples consisted of 255 respondents; they are the inhabitants of dki jakarta who use smart-phone. there were 101 male respondents (39.6%) and 154 female respondents (60.4%). the sample was dominated by 112 respondents within the age group of 20-25 years old (43.9%). the level of education varied; the majority of respondents (117 people or 45.9%) hold a bachelor degree, followed by 85 people (33.3%) who are senior high graduates. all of the respondents own smartphone. the brand that dominates smartphone ownership is samsung (45.9%) which makes it the most dominant brand in the sample. the analysis consisted of measurement (outer) and structural (inner) model analysis. outer model analysis was managed to verify that the utilized measurement is valid and reliable. this analysis focuses on the correlation between latent variable and its indicators. the tests which were carried out within outer model analysis are covergent validity (cv), discriminant validity (dv), composite reliability (cr), average variance extracted (ave), and cronbach’s alpha. these tests follow the criteria and the requirements proposed by hair et al. (2014). the criteria are minimum cv of 0.5, minimum cr of 0.7, minimum ave of 0.5, and minimum cronbach alpha of 0.6. among all indicators, 50 indicators met those criteria and qualified the measurement model test. therefore, those indicators are valid and reliable ergo they can measure the data and the questionnaires can serve consistent answers. inner or structural model analysis was administered to assure that the structural model developed is robust and accurate. the evaluation of inner model in this research is conducted by assessing the determinant coefficient (r2) and predictive relevance (q2). the result of r2 analysis shows latent experiential value and customer satisfaction towards latent customer loyalty is 0.448 or 44.8%. the rest (55.2%) is influenced by other unobserved variables beyond the model. while, the effect of latent experiential value towards latent customer satisfaction is 0.576 or 57.6%. the rest (42.4%) is affected by other unobserved variables beyond the model. lastly, the effect of latent experiential marketing towards latent experiential value is 0.585 or 58.5%. the rest (41.5%) is affected by other unobserved variables beyond the model. the value of q2 is used to determine the relative effect of structural model towards the observational measurement of latent, endogenous variable. the value of q2 > 0 provides an evidence that the observed values have been well-reconstructed. the calculation shows result of 0.902 for the model. hence, it can be stated that the model wulandari & kartika sari used in this research is acceptable and that the model has predictive relevance for its value of q2 is 0.902. based on the examination on r2 and q2, it can be inferred that the model developed is robust. therefore, hypothesis investigation was administered. hypothesis testing result the value of t-statistics was obtained from bootstrapping procedure in which the value is used to draw conclusion during hypothesis testing. hypothesis testing is administered by comparing the value of t-statistics of each correlation of each latent variable to ttable with the level of confidence of α = 5%; the result is considered significant when the value of t-statistics of correlation of each latent variable is ≥ 1,96 (hair et al, 2014). hypothesis test result the study found all four hypotheses to be accepted (figure 1). the first hypothesis (h1) test revealed that that the relationship between experiential marketing and experiential value is significant with t-statistics of 28.049 (> 1.96). the value of the path coefficient is 0.765, which implies that experiential marketing has positive effect towards experiential value. this is in line with the research conducted by maghnati et al. (2012) which implies that the better experiential marketing developed by producer of smartphone, the higher experiential value of the users of smartphone. figure 1. research model result (loadings, t-values) the second hypothesis (h2) found that the relationship between experiential value and customer satisfaction is significant with t-statistics of 23.970 (> 1.96) and path coefficient is 0.759. the result proved that experiential value has positive effect towards customer satisfaction. this result supports the work of wang & lin (2010) and yazici (2013). the result implies that if customer’s perception of experiential value is high, the most likely they are satisfied with the smartphone. hypothesis 3 proved that the relationship between customer satisfaction and customer loyalty is significant with t-statistics of 7.687 (> 1.96) and path coefficient is 0.526 which translate to customer satisfaction has positive effect towards customer loyalty. wang & lin (2010) also wu & tseng (2014) provide the same result. the fourth hypothesis (h4) found a positive and significant relationship between experiential value and customer loyalty (t-statistics of 2.536) and path coefficient is 0.176. this is contrary with finding from lin et al (2001), however, in line with brakus et al (2009) and obonyo (2011). the test proved that experiential value has direct relationship to loyalty, thus the higher perception of experiential value translates to higher loyalty from the customers. linking experiential value to loyalty in smartphone industry in addition, a mediation test is conducted to test whether experiential value also have indirect relationship to loyalty thru satisfaction. a mediation effect takes place when the third variable intervenes the other two related constructs (hair et al., 2014). the test of mediation effect can be carried out by using variance accounted for (vaf) developed by preacher and hayes (2008). based on the results of mediation test, the calculation value of vaf is 0.575; it shows that 57.5% correlation of experiential value to customer loyalty is justified by customer satisfaction as the mediator. since vaf is greater than 20% yet smaller than 80%, the customer satisfaction is regarded as partial mediation. implications the study has implications to the practice of marketing in smartphone industry. marketers should design their marketing program to include experiential aspects, which are: sense, feel, think, act and relate. these efforts of experiential marketing will generate the experiential value of customers toward the brand. in more depth, the study infer that the highest experiential marketing is excitement indicator within the dimension of feel experience. this has practical value that the producer of smart-phone must increase and maintain feel experience by creating appealing moods and emotions. the research highlights that feel experience is the main benchmark used to determine whether experience marketing created by the producer is good or bad. this particular experience can be represented through ideas and excitement as well as reputation of customer service. in addition, the marketing program could also align the experience created in order to achieve one of these values: playfulness, aesthetic, service excellence and customers return on investment orientation. third implication is that marketers should realize that to maintain loyalty, the experience marketing program and values should not only create excitement but also satisfaction. this implies that the engagement should occur not only at the time of the buying process but needs to continue throughout the usage of the device. in addition, the study also adds to literature discussion experiential approach, with the replication in the context of smartphone industry. limitations, future studies and conclusion there are limitations and room for improvement for future research regarding topic of this study. there are many factors that might affect the consumer behavior of the current research, but not yet considered in the current study. first, the respondent only evaluates the device experience only. especially in smartphones, applications availability, operation system and telecommunication provider might as well determine experience. secondly, this study has not differentiated between high end and low-end smartphones. in the market, in fact, the price range is quite substantial as the result that technology in present can be cheaply acquired by certain brands. moreover, the study has not taken into account the typologies of consumers. for example, there are consumers that are more experience focused (hedonic) and others are more task focused (utilitarian). future studies can explore how this consumer typology affect the result of consumers in evaluation their experiential value and loyalty. nevertheless, the study adds to the literature on the experiential marketing topic in the context of smartphone industry. it concluded that, the experiential marketing is important to create experiential value and leads to loyalty. however, the products still need to satisfy the customers as satisfying customers have bigger propensity to drive loyalty. the marketing of smartphone is no doubt should be conducted experientially and practice should follow the purchase with engaging services which drives satisfaction to brand loyalty. the experiential marketing practice is considered wulandari & kartika sari important to establish the goals of the company thus it is essential that effective experiential marketing strategy be organized and implemented genuinely in order to create experiential value which will affect the customer’s satisfaction and loyalty. references ama. 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(2009). experiential marketing: a practical guide to interactive brand experiences. london and philadelphia: koogan page. microsoft word bucur andreea engl.     particularities of the european union enlargement process iulia andreea bucur, ph.d. candidate, university “vasile alecsandri” of bacau, romania abstract the european integration model has proven to be so far a successful one, with a high consideration from the other countries of the world and their attempts to replicate its components and to learn from its experience of regional integration is perhaps the most sincere form of appreciation. contemporary global economy knows various other models of economic integration, but none of the existing forms of regional integration was not up to the achievements of the eu which is distinguished primarily by the stage reached and function and its ability to create unity in the context of diversity. irreversible process, and currently ongoing, and designed to produce positive results in perspective, the enlargement is one of the most significant factors of european construction success, always accompanying its history, marking the development, institutional structure, mode of cooperation and its policies. for these reasons, the present paper aims to approach the european integration model by the factors that influenced the enlargement and also by the course of events that are reflected in so-called “waves” of eu enlargement. keywords european integration model, enlargement, determinants introduction the european project is, first of all, a history product, beginning with the moment of end of wwii and created in order to ensure the peaceful settlement of conflicts of interest and to prevent another conflict of the same size. looking over fifty years of european economic integration, we can say that this process was not uniform and is not a linear evolutionary path of europe in the free trade zone in the single market, but it proved to be one characterized by an extremely complex process, with countless difficulties and uncertainties. euro enthusiasm moments alternated with those of euro skepticism and progress in the unification process did not always absolutely satisfy citizens or businesses from different member states. however, on the list of remarkable successes achieved by the european union in the past fifty years we also found the high level of prosperity and economic stability reached by exploring the potential of increasing global interconnections in decades, becoming one of the main engines of global economy and an important model of inspiration for many regions of the world. still present on the agenda of the european union, the objective of fostering prosperity and maintain its economic stability both within and across the world, raises the question of its performance in an enlarged union, since the very beginning european integration was not designed having so many countries and some of the new member states belonging to the category of small, economically less developed, that recently regained their sovereignty. considering absolutely necessary and also undisguised the enlargement issue debut by presenting the main elements of influence that have always accompanied in 7 studies and scientific researches ‐ economic edition, no. 14, 2009    different proportions this process, the next chapter analyzes the factors having a significant influence on the five enlargement stages. the determinants of eu enlargement the phenomenon of european construction enlargement, and implicitly the internal market and economic cooperation, has inspired reforms and has consolidated common principles such as freedom, democracy, human rights and fundamental freedoms and contributes to increased prosperity and competitiveness. this allowed the enlarged union to respond better to the challenges of globalization and simultaneously to become a major and more powerful player on the international scene. until now, the eu enlargement depth analyzes reveal a number of five factors playing a major role on the development and its outcome. a prime determinant of the enlargement process is the eu treaties regulations as provisions which determine how to achieve it. conditions for integration of any state in the european union have been made with ever more precisely over its evolution, to provide clarity both their citizens and guidance to countries wishing to join. the european enlargement subject has been approached and governed since the treaty of rome, in whose preamble is clearly expressed the intention to create the necessary union premises while the rest of europe were invited to join ideas described in the preamble. moreover, article 237 in the treaty of rome governing the procedure for accession of new member states: “any european state may apply to become a member of the community. it shall address its application to the council, which after obtaining the opinion of the commission, shall act by means of a unanimous vote”. the adhesion criteria are covered by an agreement signed between member states and the country wishes to join eu, agreement that must be ratified by all the states under the constitution. the above provisions have been changed since the first revision of the treaty of rome, the single european act in the coming period will be also required the european parliament's agreement. we also found this regulation in the treaty of maastricht and later in the treaty of amsterdam. article 49 of the treaty on european union stipulates that any european country can apply to become a member if it recognizes and respects the values of freedom, democracy and respects human rights, fundamental freedoms and the state law. this does not mean that all european countries have the intention or the eu must accept all applications. in addition, the union reserves the right to decide when it is ready to receive them. treaty of nice brings many new rules and regulations and in particular the so called “protocol on enlargement” which stipulates first how to be composed of the european union authorities, specifying the required majority in a union of 25 and that the 27 member states. in the frame of eu enlargement regulations have been stipulated in the treaties from the beginning, member states have not submitted, to the same extent and with the same consistency, efforts in order to extend the membership base. the main reason is the fear, fully justified, that a greater number of members involves a higher degree of heterogeneity with negative effect on interstate cooperation. increasing heterogeneity as a result of eu enlargement process is often viewed as a risk to the single market and the euro, reason for which the applications for membership were always discussed in terms of possible negative repercussions of enlargement on deepening the integration process. this report tension between enlargement and deepening is a second factor of the process. member states special interests in certain areas, in other words that some branches of the economy could face a number of disadvantages from the emergence of best 8 studies and scientific researches ‐ economic edition, no. 14, 2009    price products in the candidate countries, the "national" interests, meaning that the enlargement could come at the expense of certain member states possibility to influence the decisions and the decision-making capacity of the eu system could suffer negative consequences from the enlargement process and stemming from fears expressed by member states and other european countries, and the european commission and european parliament, are also factors of influence on eu enlargement phenomenon defining the behavior of community actors. besides the above mentioned factors, the eu enlargement process depends on three basic conditions: the internal preparation of candidate states, the eu internal preparation and the negotiations themselves. previous eu enlargements and their main features the european construction initial plan take also into account the integration of new members, the founders of the union having confidence in their idea to leave the door open to other european countries. supporting countries with the vocation to become eu members was the union’s response to the european political changes in the last five decades, promoting economic growth, solidarity and strengthening the democratic forces of the countries emerging from dictatorship. the first step in the enlargement process of european economic integration is the extension to the north that began with the uk application for membership after four years since the treaty of rome entry into force, namely in 1961. after that it took quite a period of time, until 1973 when the united kingdom, denmark and ireland were able to integrate into the european community. the cause of central importance was the french president charles de gaulle opposition, but we can not exclude other factors of economic and especially political reasons deriving from concern about the close interdependence of great britain to the united states that could acquire a nonnegligible influence on the development of european community. this is in total opposition to french president de gaulle's vision about how you have to show: a form of cooperation of sovereign national states, which left the american sphere of influence. meanwhile, the attitude of member states on the accession of great britain was marked by conflicts between the visions of the future development of european community. france, however, could not prevent long-term enlargement. thus, with the occasion of the hague summit in 1969, de gaulle's successor, georges pompidou has agreed to resume negotiations on the extension of the ec, in contrast to other countries france received permission to complete the project and develop the common agricultural policy a so-called “package deal” in which were taken into account the national interests of all member states. furthermore, entered the game special areas interests as possible serious of france (agricultural policy). the accession of united kingdom, denmark and ireland has given quite different meanings to role of the european community. both the uk and denmark, comprising primarily from an economic community which hoped to profit, and the problem of supplementing the measures to limit the sovereignty of both countries was not taken into discussion. while there were still doubts upon the uk integration was not a good choice, extension to the south of the european community held in two phases: 1981 with the inclusion of greece and 1986 the accession year of spain and portugal, was regarded, in unison, as something positive and necessary in terms of political and strategic. the weaknesses deriving practical extension south of the process itself, were the economic consequences, the economic development of the three states being clearly below the average community and institutional heterogeneity due to increased and substantial 9 studies and scientific researches ‐ economic edition, no. 14, 2009    increase in the number of member countries that raised the efficiency of the community institutions and decision-making capacity. analyzing the second wave of enlargement of the european community in terms of determinants, we can say that it was influenced by a particular factors combination. treaties regulations within the meaning of the unanimous approval of member states on accession of new countries, have led to internal problems of the ec in the early '80s, consisting of differences of interests and vision of the future evolution of the integration process, and significantly delayed the negotiations. only after a summit in fontainebleau in 1984, the ec member states were unable to reach a specific date on the accession of spain and portugal (january the 1st, 1986). another significant factor in the process of enlargement to the south is the tension between enlargement and deepening, not possible without first achieving the second by the single european act in 1987 and the domestic market. in this context, some member states and the european commission adopted a series of measures to redress the community. these initiatives have resulted in so-called internal market program, through which, by the end of 1992, were to be removed all trade restrictions which still exist between member states, and in particular all non-tariff trade restrictions, to be that of achieving a true common market, real. the other three drivers of behavior resulting from enlargement of the european community member states have also played an important role in the second stage of the process: area interests, particularly in the common agricultural policy, national interests the future development of the european community as interstate and focusing more on the economic vision of great britain and denmark or towards deepening cooperation including political dimension that looked and vision of germany, skepticism over eu decision-making capacity of the system in parallel with increasing degree of heterogeneity in the aftermath of the second wave of enlargement. the smooth accession was undoubtedly the third one from january the 1st, 1995 which included austria, sweden and finland and the efta enlargement, the main reason consists of very close economic relations between efta and the community that had been governed since 1972 by bilateral trade agreements, replaced later in january 1994 the european economic area (eea). many of community regulations, particularly in the internal market, were applied to the three states, and also having a relatively high economic level, through the eea agreement, before becoming members of the ec. efta countries increased interest for certain topics of reference, and obtain a higher degree of transparency or social policy and environmental policy, the importance of political status in the loss of neutral countries following the cessation of the conflict between east and west on policies that create new impulses . a common element in their first three waves of enlargement of the european community is that all took place in the context of deepening the integration process. if the first three waves of enlargement were considered successful, the following two stages of eu enlargement marked by two times in 2004 and 2007 are seen as unprecedented in terms of scale and diversity that characterizes them and involving high levels of risk in terms economically, socially and politically. a key factor for the initiation of the fourth wave of eu enlargement in 2004 was the berlin wall fell in 1989 and communist regimes in central and eastern european countries (ceec), plus the change processes, the transition to a functioning market economy in those countries faced with economic and social problems rather worrying, problems that resulted in their desire to capture the help and support of western countries. in this regard, a first response from the european community in the early ' 90 was the intensification of diplomatic relations with a considerable number of ceec, concluding association agreements or europe agreements. the essential 10 studies and scientific researches ‐ economic edition, no. 14, 2009    aim expressed by the europe agreements was to facilitate and develop trade and cooperation between the eu and associated countries through a large european market, which was to include all these states. in this they were required to align with the member states by adopting rules for the internal market and restructuring the national economy, receiving at the same time, the union, the financial support under various schemes. by end of 1990 after 10 of the europe agreements with central and eastern european countries in addition to those already existing in turkey (1963), malta (1970) and cyprus (1972) was recognized objective associated countries to become members of european union objectively confirmed by their individual applications. although initially it was a simple association, financial support and the assertion of issues of common interest, they have changed considerably with the council's decision in copenhagen in june 1993 at which point the associated ceec accession could applies only the context in which they were proof that the so-called “copenhagen criteria”: the existence of a stable institutional framework that guarantees democracy, rule of law, human rights and protection of minorities, the existence of a functioning market economy and ability to cope competitive pressures and forces the eu internal market, the ability to assume obligations of membership, including to accept and act in accordance with the aims of political, economic and monetary union. going on the same idea, the european council in madrid in december 1995 underlined the need to adapt the administrative structures of the candidate in order to ensure implementation of eu legislation (acquis communautaire, meaning all the eu rules, practices and presumptions. it basically means what has been achieved so far. this included the single european market and the maastricht provisions on the economic and monetary union) into national legislation and its effective application through the administrative structures and adequate legal. thus, the copenhagen criteria be added a fourth criterion: the administrative capacity for implementing the community's vitae. after the formal request for accession of ceec in the period 1994-1996, the european council called, in light of the treaties, the european commission to draw up reports on the situation of each candidate country in order to see the extent that they meet the accession criteria and capacity to assume their obligations under state obtaining eu membership. these reports were submitted by the european commission in july 1997 as “agenda 2000 for a stronger union and more stable”. agenda 2000 is a reference document for the enlargement process and for the deepening, the emphasis on european integration. milestones in the eu enlargement process are: board of luxembourg in december 1997 and council in helsinki in december 1999. luxembourg european council (december 1997), which said that “enlargement requires strengthening and improving the functioning of institutions previously under the provisions of the treaty of amsterdam”, is when the eu member states decided to start concrete negotiations for accession with the czech republic, estonia, poland, hungary, slovenia and cyprus. negotiations with the "first wave" candidate countries, the so-called “luxembourg group” were opened on march 31, 1998. council in helsinki (december 1999) considers the accession to the union subject to compliance with the copenhagen criteria, candidate had to “share values and goals as they are set out in the treaties” and decided to start accession negotiations with the "second wave", so-called “helsinki group”: bulgaria, romania, latvia, lithuania, slovakia and malta. officially, negotiations with them were opened on february 15, 2000 in brussels. european commission published a policy paper in november 2000, on the enlargement of the union, including the “map” of enlargements from 2002 that was 11 studies and scientific researches ‐ economic edition, no. 14, 2009    an “insurance policy” on the eu's ability to get among them at the end of 2002, new members. this document was approved by the european council of nice, in which was initiated and the treaty of nice (ratified on february 26, 2001) that regulate the organization of the european union to deal with, in terms of institutional future enlargements. at the european council in laeken in december 15, 2001 has made the conclusion that the enlargement process is irrevocable, underlining the clear intention of the european union to end the current accession negotiations by the end of 2002. this was done at the european council in copenhagen in december 2002, at which negotiations were completed only 10 of the 12 states, setting it as the date of accession on may 1, 2004 to also be established and issues the financial period 20042006 (the first difficult years for the eu-25). signing of the accession treaty on april 16, 2003, is the next moment in the evolution process of eu enlargement towards central and eastern europe. the content can be found treaty rules regarding institutional participation of 10 new members in the period between its conclusion and until formal accession on may 1st, 2004. during this period, the candidate countries had observer status in the forums council, with the right to speak but not to vote. so, the first stage of expansion was achieved on may 1, 2004 for the 10 countries: cyprus, czech republic, estonia, hungary, latvia, lithuania, malta, poland, slovakia and slovenia. the fourth wave of eu enlargement in the may 2004 is the most ambitious project of the eu european nations and the elements that you customize are linked on the one hand the large number of countries involved in negotiations with the eu accession conditions, which became members of the most performing groups in the world and integrationist second notable discrepancies in the level of their development from that of other member states but also from that of former candidate countries, current eu. romania and bulgaria have completed negotiations until 2004, the accession treaties to be drawn from the july 2004 deadline for accession by setting january 1, 2007 and the inclusion of three safeguard clause economy, internal market and jha (justice and home affairs). later signing the accession treaty in april 2005, the two countries have entered a system of monitoring and screening in the previous report of september 26, 2006 was advanced on january 1st, 2007 as currently certainly of both countries joined the eu. the fifth wave of enlargement is undoubtedly the most spectacular, the reason being close to europe as the european dream was conceived, but also the most difficult, expensive and full of unexpected compared the first four extensions for the following reasons: lack of a mature market economy for most central and eastern european countries, different stages of consolidation of macroeconomic stability and achieving structural reforms that are found new members, which can be translated by different degrees of preparation for accession, the economic development of new members, except cyprus, malta and slovenia, are well below the eu average, average gdp per inhabitant representing only 40% that of the 15 member states, to be 70% as that of spain and portugal, at their accession in 1986, which creates additional pressure for access to structural funds, the fifth wave of enlargement has place after completing the single market, removing internal border controls, which narrows the single market regulations in order not to affect the integrity, the number of countries that joined the reform requires common institutions and common policies as decision-making process must to remain effective, some common policies, implemented in its current form, would require a much larger eu budget. the current situation of the eu enlargement process involves on the one hand the existence of candidates, being to make the european perspective in eu membership: 12 studies and scientific researches ‐ economic edition, no. 14, 2009    croatia, turkey (eu starting negotiations with both countries on october 3, 2005 for accession) and the former yugoslav republic of macedonia and on the other hand there is the potential candidate countries, other western balkan states albania, bosnia herzegovina, montenegro and serbia (including kosovo under resolution 1244 un security council), countries that undertake efforts to meet the conditions necessary next step in the process of accession. conclusions the context in which the eu enlargement process is marked by three challenges related to economic performance, internal cohesion and external role, so that its success depends on how to respond. if viewed as a new start can be a catalyst for solving some of the most pressing problems of europe. while western european countries stability and democracy are translated into benefits, not only in terms of security, but also in prosperity, economic growth in these countries means opportunities for businesses large, investment, increased trade, increased employment, for the central and eastern europe, the unification symbolizes the values that have aspired for half a century, and while their final option for the values of democracy and market economy. enlargement of european economic integration is, so far, a success story for the european union and the european continent as a whole, contributing to strengthening security in europe and demonstrating their ability to transform into genuine democratic candidate that the rules functioning market economy and which are true partners in facing of common challenges. references 1. cameron, f., (2005), the eu model of integration – relevance elsewhere?, jean monnet/robert schuman paper series, vol.5, no.37 2. dinu, m., socol. c., marinas m., (2007), modelul european de integrare, ediţia a ii-a, ed. economică, bucharest 3. gunor, g., (2007), ever expanding union? a closer look at the european union’s enlargement agenda, euma, vol.4, no.15 4. ignat i., (2002), uniunea europeană. de la piaţa comună la moneda unică, ed. economică, bucureşti 5. kok, w., (2003), enlarging the european union. achievements and challenges, report to the european commission 6. pascariu g.c., (2006) integrare economică europeană – curs jean monnet, universitatea „al.i. cuza”, centrul de studii europene, iași 7. http://www.bis.org 8. http://dadalos-europe.org 9. http://ec.europa.eu 10. http://eur-lex.europa.eu 11. http://www.ier.ro 13 studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 39 the accounting treatment of the value differences resulted from the evaluation of companies involved in the merger process deju mihai “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract the financial accounting aspects concerning the reorganisation of companies by merger operations are of special interest, both for the specialists in the theory field and for those in the accounting practice taking into account the permanent changes and adaptions of the romanian regulations to the european and international accounting framework. this article aims to approach the aspects concerning the accounting treatment of the value differences created as a result of the evaluation of the companies involved in merger operations. keywords merger; reorganisation; evaluation; accounting jel classification m41 the merger is one of that legal means that allow the reorganisation of companies in order to meet the need for their expansion. in addition, from the point of view of economic management, it contributes both to the harmonisation and rationalisation of the production means, and to the improvement of the technology and ability to accomplish certain objectives (the funding of research activities, production specialization etc.). the merger is decided by each company with the observance of the terms in the articles of incorporation. thus, in accordance with the decision of the general meeting of shareholders of each company involved in the operation, their administrators will draw up a merger project that will comprise information on the conditions of the merger1 , namely: data relating to the identification of all the companies involved in the merger; the dates when there were approved the financial statements of participating companies, which have been used for substantiation and conditions of the merger; the date from which the allocated shares give holders the right to share in profits and any special conditions affecting that entitlement; the exchange rate of shares or social parts and the amount of any cash payment; the amount of the premium for merger etc. the managers of the companies participating in the merger should produce a detailed written report explaining the draft terms of merger and clarify its legal and economic foundation, in particular with regard to the exchange rate of shares as well as any special difficulties encountered in carrying out the evaluation of the assets of the 1 law no. 31/1990 on commercial companies, republished in monitorul oficial no. 1066/2004, with further completions and changes, art. 241 the accounting treatment of the value differences resulted from the evaluation of companies involved in the merger process 40 companies subject to reorganization through merger, in order to determine the net merger contribution2, respectively the value with which they participate in the merger. the determination of the net merger contribution of a merger can be done on the basis of the net asset value determined on the basis of accounting value of balance sheet items or based on values established through an assessment report drawn up for this purpose by authorised assessors. the accounting treatment of the differences arising in the evaluation of the patrimony of the companies involved in the reorganisation by merger operations is an issue of interest to specialists in the field of financial accounting and which will be subject to the detailed presentation within this article. the amount of net merger contribution, established by one of the methods mentioned, will form the basis for the determination of the exchange ratio of shares of companies participating in the merger operation. the accounting net asset value equals the net merger contribution from the merger only if at the basis of the accounting of the reorganisation operations through merger is the net asset method, in which case the items of the balance sheet of the companies involved in the merger are taken into account at the value at which they are recorded in the accounting.3 in all other cases, where the two values are not equal, the difference between the amount of the merger contribution and the net accounting value of the company being acquired is recognised as a plus value or minus value from the merger, whose accounting treatment differs from the two companies entered into a merger. thus, in the accounting of the acquiring company/the newly established company, the difference between the amount of net merger contribution for the merger and the net accounting asset value of the company being acquired is recognised according to the corresponding balance sheet items or on the account of “goodwill”in case of the unallocated differences, while at the company being acquired the respective difference represents gain or loss in the merger4. the accounting treatment in the acquiring company, of the differences arising out of the evaluation of the company being acquired as a result of the merger, as mentioned above, is determined by the possibility of identifying differences in evaluation as belonging, or not, to certain items on the balance sheet. thus, in the case when there are used evaluation methods that enable the identification of differences resulting from the evaluation of the net merger contribution of the company being acquired, these differences will be recognised in the accounts of the acquiring company, at the balance sheet items to which they correspond. in cases where, in order to assess the net merger contribution, there are used methods for the overall evaluation (stock market method, a method based on results, etc.), and the resulting difference between the accounting net assets of the company being acquired, cannot be allocated to certain identifiable elements on the balance sheet, it will be recognized in the acquiring company’s accounts as goodwill. at the acquiring company, the differences arising out of the evaluation of its own balance sheet items are not recorded in the accounts; they are used only in the determination of the exchange ratio. to illustrate appropriately the accounting treatment applied to the differences arising out of the evaluation of the companies involved in the reorganisation process, there 2 omfp no. 897/2015 for the approval of methdological norms concerning the reflection in accounting of the main operations of fusion,division and liquidation of companies as well as of withdrawal or exclusion of certain associates within the companies, pct.15 b. 3 idem , pct.15 a. 4 idem , pct.20 a,b. deju 41 will be presented, with reference to the companies involved in the merger, a hypothetical example: 1. assuming that the net merger contribution of the company being acquired, determined both according to the accounting value of balance sheet items and the value resulting from the evaluation occasioned by the merger is presented like this: the balance sheet items afferent to the net merger contribution of the acquired company to accounting value to evaluated value differences a) the case of identifiable differences ⃰ b) the case of unallocated differences ⃰⃰ ⃰ identifiable col.2-col.1 unallocated col.3-col.1 0 1 2 3 4 5 a) the case of positive difference  total assets  unallocated differences 1200 1600 1200 400 +400 400  debts 500 500 500  net merger contribution (equity) 700 1100 1100 +400 +400 b) the case of negative difference  total assets  unallocated differences 1200 950 1200 250 250 250  debts 500 500 500  net merger contribution (equity) 700 450 450 250 250 note: * the differences are identifiable as a result of the individual evaluation of the balance sheet items of the company being acquired. ⃰ ⃰ the differences resulted from the evaluation of the company being acquired cannot be allocated as a result of the global evaluation of the respective patrimony. 2. the accounting treatment at the acquiring company of the differences resulted from the evaluation of the company being acquired with the occasion of the merger: a) the case of positive differences: a) the registration of the capital growth and of the merger premium: 1100 456 clearing with shareholders/associates concerning the capital ⃰ = % 1011 subscribed and unpaid capital ⃰ ⃰ 1042 merger premium⃰ ⃰ ⃰ 1100 800 300 ⃰ with the value of the net merger contribution resulted from the evaluation; ⃰ with the nominal value of the issued shares for the remuneration of the net merger contribution; ⃰ ⃰ ⃰ with the differences between the nominal value and the accounting value of the issued shares. the accounting treatment of the value differences resulted from the evaluation of companies involved in the merger process 42 b) the registration of the transfer of assets and liabilities: b1) the case of positive difference allocated to identifiable asset items: 1600 1600 % balance asset accounts (with evaluated value) = % debts accounts 456 clearing with shareholders/associates concerning the capital (with the value of the merger net contribution) 1600 500 1100 b2) the case of the unallocated positive difference: 1600 1200 400 % accounts of assets items (with accounting value) 207.1 positive commercial fund (with positive difference between the merger contribution value and the net asset accounting value) = % debts accounts (with accounting value) 456 clearing with shareholders/ associates concerning the capital (with the value of the net merger contribution) 1600 1500 100 b) the case of negative difference a) the registration of capital growth and the merger premium: 450 456 clearing with shareholders/associates concerning the capital (with the value of the net merger contribution) = % 1011 subscribed and unpaid capital ⃰ 1042 merger premium⃰ ⃰ 450 400 50 ⃰ with the nominal value of the shares issued for the remuneration of the net merger contribution; ⃰ ⃰ with the difference between the nominal value and the mathematical-accounting value of the issued shares. b) the registration of the assets and debts items taken from the company being acquired: b1) the case of the negative difference allocated to some identifiable assets items: 950 950 % accounts of assets items (with evaluated value) = % debts accounts (with accounting value) 456 clearing with shareholders/ associates concerning the capital (with the value of the 950 500 450 deju 43 merger net contribution) b2) the case of the unallocated negative difference: 1200 1200 % accounts of the balance sheet assets items (with accounting value) = % debts accounts (with accounting value) 456 clearing with shareholders/ associates concerning the capital (with the value of the net merger contribution) 207.5 negative commercial fund (with negative difference between the net merger contribution value and the net asset accounting value) 1200 500 450 250 3. the accounting treatment at the company being acquired of the differences from the evaluation within the merger: the differences resulted from the evaluation of the company being acquired, occasioned by the merger, are recognised in the accounting of the company being acquired as profit – if they are positive or as loss – if they are negative. in accordance with the valid accounting regulations5, at the company being acquired, the differences between the two values are recognised, by means of the accounts 6583 „expenses for the sold assets and other capital operations” and 7583 „income from the selling of assets and other capital operations”, in the account 121 „profit or loss” as a result of the merger, as follows: a) the case of pluses or minuses of value resulting from the evaluation of the company being acquired, afferent to some identifiable items on the balance sheet. the pluses of value resulting from the evaluation in the merger, at the company being acquired, there are recognised as gains from the merger through the accounts 7583 “income from the selling of assets and other capital operations” and 6583 “expenses concerning the deferred assets and other capital operations” , once the registration of the transfer of the assets of the company being acquired to the acquiring company to the appraised value as a result of the merger, as well as the discharge of management with accounting value of the transferred assets. a1) the case of positive differences afferent to some identifiable balance sheet items: 1600 461 debtors = 7583 income from the selling of assets and other capital operations ⃰ 1600 5 omfp nr. 897/2015 for the approval of methdological norms concerning the reflection in accounting of the main operations of fusion,division and liquidation of companies as well as of withdrawal or exclusion of certain associates within the companies. the accounting treatment of the value differences resulted from the evaluation of companies involved in the merger process 44 ⃰ with evaluated value of identifiable elements, of assets, which represent merger contribution 1200 6583 expenses from the selling of assets and other capital operations = % accounts with assets balance items ⃰ 1200 ⃰ with the accounting value of assets items that represent merger contribution 1600 7583 income from the selling of assets and other capital operations = 121 profit or loss 1600 1200 121 profit or loss = 6583 expenses from the selling of assets and other capital operations 1200 following these operations, the balance account 121 „profit or loss” reflects the positive differences resulting from the evaluation of the company being acquired, recognized as gain (profit) from the merger. a2) in the case of negative differences, afferent to some identifiable items on the balance sheet. the minuses in value resulting from the evaluation in the merger of the company being acquired are recorded in the accounts as losses from the merger through the accounts of revenue and expenditure. therefore in the account 7583 account “income from the selling of assets and other capital operations”, there will be reflected the value resulting from the evaluation (lower than the accounting value), and in the account 6583 “expenses from the selling of assets and other capital operations” will be reflected in the accounting values of the transferred assets. 950 461 debtors = 7583 income from the selling of assets and other capital operations ⃰ 950 ⃰ with the evaluated value of the assets items that represents net merger contribution 1200 6583 expenses from the selling of assets and other capital operations = % accounts with assets balance elements ⃰ 1200 ⃰ with the accounting value of identifiable assets items that represent merger contribution 950 7583 income from the selling of assets and other capital operations = 121 profit or loss 950 1200 121 = 6583 1200 deju 45 profit or loss expenses from the selling of assets and other capital operations the account balance “profit or loss” will reflect the negative differences resulting from the evaluation of the company being acquired, recognized as a loss from the merger. b) the case of pluses or minuses of value, resulting from the evaluation of the company being acquired, that cannot be allocated to certain identifiable elements on the balance sheet. in the case of pluses or minuses of value that are not allocated to some identifiable assets arising as global difference between the value of the net merger contribution obtained in the evaluation within the merger and net asset accounting value, they will be reflected through revenue and expenditure accounts, in the account 121 “profit or loss” as a gain or loss from the merger, and also as the difference between the value of the net merger contribution and the net asset accounting value of the company being acquired is positive or negative, thus: b1) the case of the unallocated positive difference 1600 461 debtors = 7583 income from the selling of assets and other capital operations ⃰ 1600 ⃰ with the accounting value of the assets balance elements of the company being acquired, which represents net merger contribution (1200 lei) and with the value of the positive difference between the value of the net merger contribution and the value of the accounting net asset of the company being acquired (1100-700=400 lei) 1200 6583 expenses from the selling of assets and other capital operations ⃰ = % accounts with assets balance elements 1200 ⃰ with the accounting value of assets of the company being acquired that represents net merger contribution 1600 7583 income from the selling of assets and other capital operations = 121 profit or loss 1600 1200 121 profit or loss = 6583 expenses from the selling of assets and other capital operations 1200 the account balance 121 “profit or loss” will reflect the positive difference between the value of the net merger contribution resulted from evaluation within the merger (1100 lei) and the net asset accounting value of the company being acquired (700 lei). b2) the case of the unallocated negative difference: 950 461 = 7583 950 the accounting treatment of the value differences resulted from the evaluation of companies involved in the merger process 46 debtors income from the selling of assets and other capital operations ⃰ ⃰ with the accounting value of the assets of the company being acquired, constituting the net merger contribution (1200 lei) and the value of the negative difference between the value of the net merger contribution and net asset value of the company being acquired (450-700 = -250 lei). 1200 6583 expenses from the selling of assets and other capital operations ⃰ = % accounts with assets balance elements 1200 ⃰ with the accounting value of the assets of the company being acquired, constituting the net merger contribution 950 7583 income from the selling of assets and other capital operations = 121 profit or loss 950 1200 121 profit or loss = 6583 expenses from the selling of assets and other capital operations 1200 the account balance 121 “profit or loss” will reflect the negative difference between the value of the net merger contribution (450 lei) and net asset accounting value (700 lei) recognised as a loss from the merger. conclusions the accounting treatment of the plus values or minus values resulting from the evaluation of the elements on the balance sheet, on the occasion of the merger, raises issues of accounting reasoning. they must be analysed in light of the possibility of their allocation, of certain identifiable balance sheet elements or as representing overall differences resulting from the assessment arising from the merger through the use of some specific methods (stock exchange method, method of profitability, etc.) which cannot be assigned to certain identifiable elements on the balance sheet. the differences from evaluation of the acquiring company shall not be recognised in its accounting as they are used only for the determination of the exchange ratio, while differences related to the evaluation the company being acquired have a different treatment, thus: a) the differences arising out of the evaluation of the company being acquired in connection with the merger, are recognised in the accounts of the acquiring company to the balance sheet elements to which they belong, or as goodwill, in the case of unallocated differences; b) the differences resulting from the evaluation of the balance sheet elements in connection with the merger, at the company being acquired they are recognized as gain or loss through income and expenditure accounts. the specialists in financial accounting, based on this reasoning, will have to apply the appropriate procedures for reflection in accounting of the operations entailed in the merger of the companies. deju 47 references deju, m. (2013), contabilitate aprofundată curs universitar, bacău, editura alma mater. accounting law nr. 82/1991, republished in monitorul oficial nr.454/2008, with further amendments and completions. company law nr. 31/1990, republished in monitorul oficial, partea i, nr. 1066 din 17 november 2004, with further amendments and completions. order nr. 1802 from 29 december 2014, for the approval of accounting regulations on annual individual financial statements and annual consolidated financial statements published in monitorul oficial nr. 963 din 30 december 2014, with further amendments and completions. omfp nr.1286/ from 1st october 2012, for the approval of accounting regulations in accordance with international standards of financial report, for commercial companies whose real-estate value are admitted on a regulated market, published in monitorul oficial nr. 687 din 4 october 2012, with further amendments and completions. omfp nr. 897/2015 for the approval of methodological norms concerning the recording in accounting of the main operations of merger, division, dissolution and close-out of companies, as well as the withdrawal or exclusion of some associates from the companies, with further amendments and completions. the fixed means: an accounting concept or a fiscal one studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the fixed means: an accounting concept or a fiscal one? rotilă aristiţa “vasile alecsandri” university of bacău, romania rotila11@yahoo.com abstract starting from the analysis of the accounting regulations applied to the economic operators, in their evolution after 1989, the specific accounting regulations for certain fields of activity and for certain categories of entities and starting from the fiscal rules and some paper works, we want to clarify in this study some conceptual issues referring to the fixed means, the tangible fixed assets components, of impacting financial information, respectively, on taxation. is the concept of “fixed means” an accounting one or a fiscal one? we try to answer to this question and also to formulate an opinion on whether it is longer justified to use this concept in the accounting vocabulary and hence in the production of information presented in financial statements or in the fiscal vocabulary and implicitly in the work done to produce information provided in the fiscal reports. keywords fixed means; tangible fixed assets; tangible immobilizations; inventory objects; fiscal; accounting regulations jel classification m41 introduction it is known that such material assets held by an entity for using them in the production processes of goods, services, for rental to others or for administrative purposes, longer than one year are encountered in accounting as the tangible fixed assets (tangible immobilizations). in post-revolutionary romania, both in legislation of accounting and taxation, and accounting literature and practice it was maintained and used for a long period of time the term of fixed means, in order to define the tangible fixed assets, other than land and land improvements. so, the tangible assets included: land and fixed means. later on, while the romanian accounting is harmonized with the european accounting directives and respectively to the international standards, this syntagma fixed means is used more and more less explicitly in the accounting regulations and, as a consequence, and in the accounting literature, but it is still used in taxation laws. therefore, a question appears: whether the fixed means still represent an accounting concept or it is just a concept in taxation. in the following lines we try to clarify such issues and clarify if the term fixed means it is still available in the accounting vocabulary or only in taxation language and implicitly in the work done to produce the information provided in the fiscal reports. thus, we proceeded to analyze the accounting regulations applied to the economic operators in their evolution after 1989, the specific accounting regulations applicable to certain categories of economic entities in various fields of activity, as well as the taxation rules and some specific papers works. 94 the fixed means: an accounting concept or a fiscal one? the concept of “fixed means” in the accounting regulations and taxation norms the concept of fixed means, in the romanian accounting in a centralized economy, used to define the economic means of “long life use” is still used after 1989. immediately after 1990, by achieving a “makeover” to the old accounting system, in its adaptation to the urgent requirements arising from the adoption of the first laws of the market economy, the concept of fixed assets (immobilized assets) was introduced, among other concepts, in addition to the classic accounting vocabulary. a legal framework was also developed for organizing and conducting accounting by every patrimonial entity, namely the accounting law no. 82/1991. in the initial version of the accounting law the term of fixed means is used in the context to formulate the following requirement: “accounting fixed means is achieved on categories and individual items” (art. 13, para. 1). later on, it was elaborated the regulation for implementing the accounting law (approved by government decision no. 704/1993), where the fixed means are defined as a component of the tangible fixed assets. in the above regulation, after stating that “within tangible assets are included land and the fixed means” (point 52), the definition for the latter is formulated, as follows: “a fixed mean is considered to be a singular or a complex object which is used as it is and satisfies cumulatively the following conditions: a) its value is higher than the limit established by the law; b) its normal duration of use lasts longer than one year” (point 53). also, there are specified some categories of fixed means that must be taken into account, such as: “buildings; special constructions; machinery and industrial installation; apparatus and installation for measurement, control and regulation; means of transport; working animals; plantations; tools, household inventory and other fixed means (including packaging as fixed means)”. what it happens to those goods that do not meet either the value condition or the lasting condition, to be considered fixed means? in the mentioned regulation that they are considered as inventory objects, a separate category within stocks. according to the regulation (point 63), the inventory objects are “goods with a value below the limit required by the law, as to be considered fixed means, regardless of their length of service or in use for less than one year, no matter their value and the goods assimilated, such as protective equipment, work equipment, special clothing, mechanisms, devices, checkers, sdv, measurement and control devices, molds used to manufacture certain products and similar items”. it should be noted that the charts of accounts, approved at the same time with the regulation implementing the accounting law has different reserved accounts for the two categories of goods, namely 212 “fixed means” with related sub-categories of assets mentioned above, and 321 “inventory objects”. in the same period of time was approved the law no. 15/1994 regarding the depreciation of the immobilized capital in tangible and intangible assets, the methodological rules (order of the ministry of finances (mf) no. 746/1994) and the classification and durations of normal functioning of fixed means (government decision no. 266/1994) were also approved. according to law no. 15/1994, art. 3, “the tangible assets related to immobilized capital are: a) land, including investments in their arrangement; b) fixed means”. for the fixed means there is a similar definition with the regulations for implementing the accounting law. starting from 1999, a new stage in the evolution of romanian accounting began, marked by the development, by the ministry of finance, of the national program of harmonization of accounting legislation with the european directives and assimilation of the international accounting standards. at this stage, it was achieved, on the one hand, the “romanian accounting internationalization” and, on the other hand, the “romanian accounting europeanization”, by developing, by the body of 95 rotilă normalization, also the practical implementation, of two sets of accounting regulations, as follows:  the accounting regulations harmonized with the iv-th directive of eec and the international accounting standards, approved by the order of mf no. 403/1999, subsequently modified and approved by the new version of order of the ministry of public finances (mpf) no. 94/2001);  simplified accounting regulations harmonized with the european directives, approved by order of mpf no. 306/2002. the accounting regulations approved by order no. 94/2001 use the concept of fixed means but do not defined this concept, for example, when it present the rules on the valuation of the elements of balance sheet on the date to entering into patrimony (point 5.13); when it formulates requirements relating to disclosure in the explanatory notes (point 5.62, letter c); or when it presents cash flows from investing activities in the cash flow statement. in the accounting regulations approved by order no. 306/2002 the fixed means does not appear explicitly (only by chance in the rules of operating the accounts), but the definition for the tangible immobilizations is equivalent of that of the fixed means from the previous accounting regulations (point 4.25): “tangible immobilizations are assets that : a) are owned by a legal entity for use in its production of goods or services, for rental to others, or for administrative purposes; b) are used over a period longer than one year; and c) their value is higher than the limit set by the regulations in force.” it may be noted that this definition differs from the one found in the european directives by including a condition in value. the european directives, as international standards, contain the definition of fixed assets include only two conditions, destination and duration, considering the fixed assets “those assets for use on a continuing basis for the purposes of a company activities”. referring to the chart of accounts approved both by order no. 94/2001 and then by order no. 306/2002, one may find that the account entitled “fixed means” has been removed, only specific accounts to different categories of fixed means appear. also, the account 321 entitled “inventory objects” has been removed and replaced with the 303 account “materials in the form of inventory objects”. we must point out that, at this stage, the term fixed means was removed even in the accounting law (through amendments brought by the government ordinance no. 61/2001), which was replaced by the concept immobilized assets, a more comprehensive accounting structure. in preparation for adherence of romania to the eu, new regulations were elaborated, they ensure the full transposition of mandatory provisions of the european directives and some of their optional provisions, whose takeover is left at the discretion of the member states. it is about the accounting regulations compliant with the european directives, approved by order of mpf no. 1752/2005, for the economic operators, subsequently modified / completed and approved by the new version of the order of the mpf no. 3055/2009. since 2012, the companies whose securities are admitted to trade on a regulated market apply the accounting regulations compliant with the international financial reporting standards (ifrs) approved by order of the mpf no. 1286/2012. in the content of all these regulations, the term fixed means is not found, but only the term of tangible immobilizations. the accounting regulations compliant with european directives (point 92), define the tangible immobilizations the same as the international standards such as: “tangible immobilizations are assets that: a) are held by an entity for use in the production of goods or services, for rental to others, or for administrative purposes; and b) they are used over a period of time longer than one year.” 96 the fixed means: an accounting concept or a fiscal one? also, from the accounting regulations compliant with the european directives it gives that a separate component in the structure of inventories it is represented by the “materials in the form of inventory objects” without explaining what they are. we believe that, as long as the expression “materials in the form of inventory objects” is used in the accounting regulations, the “inventory objects” should be defined. the accounting regulations compliant with the ifrs, both in terms of the tangible fixed assets and in terms of stocks, do not define these concepts, but contain only specifications where it must be respected that the mandatory conditions set by ifrs, meaning that “fixed assets [. ..] are recognized under the terms of ifrs” (point 37), “an asset are classified as a current asset under the terms of ifrs” (point 53), “the recognition, measurement and deregistration of stocks is performed according to ifrs requirements” (point 55), “stocks are mentioned in accounting by their nature, in compliance with ifrs” (point 56). in addition, we no longer meet in the stock structure the “materials in the form of inventory objects”, while complying to accounting regulations compliant with the ifrs, in order to transpose the account trial balances in the new chart of accounts, the account balance 303 “material in the form of inventory objects” account being taken by 303 “other materials”. the accounting regulations compliant with the ifrs are also applied by credit institutions (order of nbr no. 27/2010). starting from their analysis, we find that, unlike economic operators, with the adoption of the regulations compliant with the ifrs, a clear distinction by duration was intended, between current assets and non-current assets, without taking into account the value factor valuable, the account balance 363 “materials in the form of inventory objects” being transferred partly in stocks (account 3622 “other supplies”), partly on fixed assets (4424 “furniture, office equipment, protective equipment and human values equipment and other tangible fixed assets”). so, the romanian accounting regulations, as ifrs, require two conditions for a tangible asset to be recognized as an immobilized asset one: the condition of “destination” and the provided “duration” without setting a condition value. therefore, the low-value goods, such as, for example, “trash basket”, could be accounted as a fixed asset, as they have a useful life greater than one year (toma, 2003). we think it would be necessary to limit the value which can define immobilized assets (fixed means) opposite to the goods having an useful life greater than one year, which have to be recognized in inventories (inventory objects). in the absence of such conditions, such as the limit of the value, we believe that we have no a legal basis to reflect as current asset (stock) a good with useful life of more than one year. in practice, as some authors approached the problem, there are two ways to solve it, as follows:  by the accounting policies adopted, the management of a company sets the limit of value at which a good will be accounted for a fixed asset, regardless the taxation in this matter (toma, 2003);  in some cases, for convenience (toma, 2003) and to simplify the work by keeping one row of records (istrate, 2009), the management adopt the threshold set by the tax authority as and accounting threshold. currently, in romania, this threshold is 2.500 lei, an established value by the government decision no. 276/2013 (art. 1, para. 1). related to the fixed means, some entries should be made in relation to the accounting regulations applicable to other categories of entities than the economic operators, namely:  in accounting regulations compliant with the european directives, applicable as appropriate, to private pension sector (norm 14/2007 approved by decision of supervisory commission of private pensions system no. 37/2007), in the capital markets (order of national securities commission 97 rotilă no. 12/2011) or in the banking sector (order of nbr no. 27/2011), as we found also in the case of regulations applicable to the economic operators (order of mfp no. 3055/2009), the concept of fixed means it is no longer used;  the fixed means term appears in the accounting regulations applicable for the insurance sector (order of insurance supervisory commission (isc) no. 3129/2005). even if the actual text of these regulations do not use the term fixed means, however, the chart of accounts for insurance, at group 51 “tangible assets of exploitation” the account 511 “fixed means” appears, with a development of synthetic degree two account based on different categories of insurance, respectively the life insurances (5111 “fixed means for life insurance”) and general insurances (5112 “fixed means for general insurances”), further developed on third degree synthetic accounts based on the categories of known fixed means (technological equipment; machinery and equipment for measurement, control and regulation; means of transport; furniture, office equipment, equipment for the protection of human values and material and other tangible assets), except construction. construction is highlighted together with land as “investments in tangible immobilizations” using the 211 account “land and buildings” with appropriate sub-accounts development.  the accounting regulation applicable for the non-profit legal persons (order of mfp no. 1969/2007) use the syntagma “tangible immobilizations in the form of fixed means”. in chapter ii, on the single-entry accounting organization (b. point 10) it is noted “accounting of the tangible assets in the form of fixed means use the sheet for fixed means [...]”. a separate discussion should appear, related to the applicable accounting standards of the public institutions. the methodological norms regarding the organization and management of the accounting public institutions, approved by order of mfp no. 1917/2005 uses the term tangible fixed assets. for them, we meet the following definition: “the tangible fixed assets are considered complex object or objects used as they are and meet the following conditions: their input value are higher than the limit set by a government decision and their normal use is for a period of time greater than an year” (point 1.2.1). this is actually the definition of the fixed means, made in the law 15/1994 (art. 3). the accounting rules applicable to different categories of entities mentioned above meet in the stocks structure the “materials in the form of inventory objects”, without explaining what they are. only the contents of the methodological norms for organizing and conducting public institutions accounting explain the definition of the inventory objects as they “represent goods with a value below the limit required by the law, to be considered tangible fixed assets, redardless the duration of use, or with a term of less than one year, regardless of their value, the goods similar as well (personal protective equipment, work equipment, special clothing, machinery, tools, devices, controllers, gauges and control etc.)” (point 2.1.2.3). this is actually the definition of inventory assets in the regulation for implementing the accounting law no. 82/1991. it should be noted that we meet further the concept of fixed means in the accounting rules relating to financial and accounting documents (approved by order of the ministry of economy and finance no. 3512/2008). such specific documents, for example:  the receipt for movement of fixed means used as a supporting document that records the movement of fixed means inside the organization; 98 the fixed means: an accounting concept or a fiscal one?  the inventory numbers register used for fixed means records, assigning each means by itself, for identification, inventory number;  the sheet for fixed means assigned to each means, thus resulting the analytical accounting. from a taxation perspective, the concept of fixed means is regulated by the fiscal code. the fiscal code, as reglementing the “fiscal depreciation”, defines the concept of “fixed means” as “any tangible fixed asset, which is held for use in the production or supply of goods or services or to be leased to others, or for administrative purposes, if the normal useful life lasts more than a year and has a value greater than the limit set by a government decision” (art. 7, para. 16). the same definition is encountered in the fiscal code (art. 24, para. 2) for the term “depreciable fixed means”, too. in addition, both the fiscal code (art. 24, para. 3 and para. 4) and the depreciation of the assets law no. 15/1994, shows a list of items that are considered as “depreciable fixed means” as well as a list of items that are not considered “depreciable assets”. the fiscal code also establishes clear rules on fiscal depreciation regimes accepted for each category of depreciable fixed means (art. 24, para. 6), respectively: a) in the case of construction, the method of linear amortization; b) in the case of technological equipment or machines, tools and installations as well as for computers and peripherals, the company can decide the straight-line depreciation method the digressive or accelerated depreciation; c) in the case of any other depreciable fixed means, it can be chosen linear or digressive method of depreciation. for the calculation of fiscal depreciation, the fiscal code calls for the normal duration of use, representing durations of use for recover, from a fiscal standpoint, the input value of the fixed means, on the depreciation method. it is known that, since 2005, according to gd. 2139/2004, approving the classification catalogue and the normal durations of use of the fixed means “for each newly purchased fixed means it can be used variable intervals between a minimum and a maximum period of time”, each economic entity having “the possibility to choice the normal duration of use between these limits”. gd. 2139/2004 (point i.4) states that “thus established, the normal duration of use of the fixed means remains unchanged until full recovery of the input value or its removal from service”. from the two categories of regulations, accounting and fiscal, related to fixed means / tangible assets, a number of differences results between their specific accounting and taxation. particularly, the design and calculation of the depreciation of fixed means/ tangible assets is a problem with accounting and taxation implications. the accounting rules that underlie the financial statements are subject to fair representation and management in terms of efficiency of resources and results of the economic entity and taxation rules are subject to evaluation and calculation, recognition and settlement of taxes owed by the same entity (ristea and dumitru, 2012). the differences find expression in a series of elements considered as a double aspect, accounting and fiscal, as following: accounting depreciation, fiscal depreciation; accounting amortization period of use (useful life), fiscal depreciation period (during normal of use); the depreciable amount, diminished with (accounting) or not (fiscal) the residual value; depreciation methods accepted in accounting or in fiscality. also, there are a number of differences between the accounting and fiscality rules applicable to fixed means/ tangible assets in terms of the possibility of changing the amortization period or the method of amortization. in this article, we not intend, however, to analyze these differences. regarding the accounting literature, the term fixed means is becoming less common, the authors use the terminology of the accounting regulations related to this issue. in some paper works (paraschivescu et al, 2013; horomnea et al, 2008), the authors use the term “tangible immobilizations in the form of fixed means”. in other paper works, 99 rotilă even the authors use not the term fixed means, when defining tangible assets, they include, in addition to the requirements of “destination” and “duration”, the provided “value” also, from the definition of fixed means “the input value is greater as the limit established by laws” (grosu et al, 2013). we also meet the term fixed means used in some representative paper works of literature for the specific economic and financial analysis, being addressed, for example, in the context of the internal potential of the company, to the “managerial analysis of the fixed means” (robu, anghel & şerban, 2014). the law 15/1994 regarding the amortization: between accounting and fiscality as we mentioned, the concept of fixed means is regulated by the law 15/1994 regarding the depreciation of the immobilized capital in tangible and intangible assets. the law 15/1994, as it is amended and supplemented, asserts that the organizations with economic activities, which immobilizes capital in tangible and intangible assets submitted to the depreciation through use or time, “will calculate, will record in the accounts and recover the physical wear and their moral status to restore the assets value” (art. 1) and that they “depreciate the fixed means under this law stipulations, using one of the following depreciation methods [...]” (art. 18). in addition, chapter 4 accounting depreciation of the fixed means and its destination states that “businesses [...] are required to disclose in accounting, in separate accounts, the fixed means and their depreciation” (art. 20). according to the accounting regulations compliant with the european directives for economic operators (point 112), the depreciation of tangible assets is calculated using where one of the following methods: the straight-line depreciation, the digressive depreciation, the accelerated depreciation, the amortization calculated per unit of product or service. to calculate depreciation under digressive method, “which is multiplying the linear amortization rates by a coefficient”, the mentioned regulations refer to the legislation in force “in which case one can be envisage the current legislation”. the legislation setting out the coefficients in question is the law 15/1994, regarding the depreciation of the immobilized capital in tangible and intangible assets. on the other hand, the fiscal code clearly regulate the aspects of “fiscal depreciation” and even contains the stipulation (art. 24, para. 22) that “the law no. 15/1994, regarding the depreciation of the fixed immobilized capital in tangible and intangible assets, republished, with subsequent amendments, does not apply in calculating taxable profit, except to art. 3, para. 2, letter a) and art. 8 of the same law”. art. 3, para. 2, letter a) specify the value condition from the definition of fixed means “a) has an input value greater than the limit established by a government decision. this value can be annually updated based on the inflation index” and art. 8 refers to the way the duration of use is set, namely “normal duration of use and the classification of fixed means shall be approved by a government decision. in their determination, the technical and economic parameters established by the designers and manufacturers, through the books or technical records of the fixed means will be taken into account, concerning the effects of obsolescence. these periods of time will be periodically reviewed, but not later than 5 years.” thus, the law 15/1994 is at a time an accounting or fiscal law? if at the beginning this law was both an accounting and a fiscal one, nowadays, it mainly remains an accounting rule, fiscality is strictly regulated by the fiscal code. likewise, some authors stated in the literature that the accounting depreciation “is regulated by law no. 15/1994 [...]” (pântea and bodea, 2008). as we consider the law 15/1994 (where we find the fixed means properly defined) as an accounting rule, we have the legal 100 the fixed means: an accounting concept or a fiscal one? basis to present, inside the stocks, those items that have a lower value but they have a useful life of more than one year (inventory objects). conclusions in the traditional romanian accounting, the tangible fixed assets immobilizations, except land and land improvements, formed a distinct structure, called “fixed means”. in the context of the development and modernization of the romanian accounting, harmonized with international and european accounting standards, in the romanian accounting regulations on the financial statements the concept of “fixed means” was gradually abandoned (ever more and more), being used instead only the term tangible fixed assets (tangible immobilizations). the concept of “fixed means” is defined explicitly only in fiscal norms and in the legislation about depreciation, not in accounting regulations compliant with european directives or those under ifrs. however, this term is still used, but not defined in the accounting regulations applicable to certain categories of entities (insurers, non-profit legal persons) and in the rules related to the financial and accounting documents. although the content of the accounting regulations compliant with european directives renounced to use the term “fixed means” the chart of accounts, however, a part of the regulations according to european directives, allows a distinction between fixed means and inventory objects, keeping an account entitled “materials in the form of inventory objects”. the invocation, to fit a tangible active in the fixed assets (immobilizations), alongside to the two conditions, the destination and the duration of the of the value condition get from the definition of the fixed means, according to law. 15/1994 (a value greater than the limit set by law) may justify the current asset classification, and present as they are in the financial statements, together with raw materials and consumables, while the inventory objects, participating in several operating cycles and so, their destination and their duration could be taken into account to qualify them as tangible fixed assets. we believe that the term fixed means stated by the law no. 15/1994, can be used both in the accounting vocabulary and in the fiscal vocabulary, even if it is not a distinct structure presented in the financial statements. references iasb (2011), standardele internaţionale de raportare financiară (ifrss). norme oficiale emise la 1 ianuarie 2011, partea a, bucureşti, editura ceccar. horomnea, e., tabără, n., budugan, d., georgescu, i., beţianu, l. 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(2003), ghid pentru înţelegerea şi aplicarea ias 16 „imobilizări corporale”, bucureşti, editura ceccar. 102 http://www.edecon.ro/autor/1116/elena-claudia-serban/ studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 161 modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations luminiţa zaiţ “vasile alecsandri” university of bacău zait.luminita@yahoo.com abstract this paper proposes a model that wants to offer some pertinent answers about the process of assimilation and operationalization of the marketing concept in the practice of local organizations in romania. considering the reality of organizational practice in romania, which revealed a lack of consistency in the approach of assimilation and operationalization of the marketing concept, the model tries to capture a range of factors that determine and explain this phenomenon. reality shows that many romanian organizations either do not perceive the need and importance of marketing in their activity or assimilate and develop a priori, actions carried out by transnational companies that do not meet the particular context of the romanian market and / or of internal environment. the model attempts to capture the peculiarities of the process of assimilation and operationalization of the concept of marketing in local organizations and describe the characteristics of each identified organizational structures. keywords organizational structure; marketing department; interoperable teams; endogenous and exogenous factors jel classification m31 literature review after one comprehensive literature and practice review process were identified 7 levels of the process of assimilation and operationalization of the marketing concept as follows: • level 1: lack of marketing activities in organizations (king, 1965; bartels, 1965; doyle, 1987; mcdonald, 1989; gilbert and balley, 1990; kotler, 1993; hill and o'sullivan, 1997; staton, 1999; lambin, 2000; etc.); • level 2: marketing activities located within the traditional departments (king, 1965; bartels, 1965; keith 1960; doyle, 1987; mcdonald, 1989; gilbert and balley, 1990; kotler, 1993; hill and o'sullivan, 1997; staton, 1999; lambin 2000; balaure et al, 2002; etc.); • level 3: localized marketing activities in one traditional department/marketing department, but subordinate to traditional departments (lewitt, 1960; king, 1965; bartels, 1965; bennett and cooper, 1981; doyle, 1987; mcdonald, 1989; gilbert and balley, 1990; kotler, 1993; littler and wilson, 1995; hill and o'sullivan, 1997; staton, 1999; lambin 2000; balaure et al, 2002; etc.); • level 4: localized marketing activities in the marketing department, on the same level as traditional departments (kotler, 1972; drucker, 1973; kotler, 1980; haas and wotruba, 1983; buell, 1984; scott, and taylor warshaw 1985; ferrel and lucas, 1987; cravens, hill and woodruff, 1987; brown, modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations 162 1987; bernard, 1987; mcgee and spiro, 1988; peter and donnelly, 1988, ramon and barksdale, 1989; baker 1989; kotler, 1993; boyd, walker and larreche, 1998; balaure et al, 2002; etc.); • level 5: localized marketing activities in the marketing department, with the strategic role (doyle, 1987; mcdonald, 1989; rapp and collins, 1990; kohli and jaworschi, 1990; narver and slater, 1990; day, 1990; piercy, 1991; and shipp craven, 1991; brownlie saren, 1992; thomas, 1993; jaworschi and kohli, 1993; deshpande, farley and webster, 1993; wong and saunders, 1993; george, freeling and court, 1994; webster, 1997; tadepalli and avila, 1999; pettigrew and turgeon, 2000; balaure and staff, 2002; lendrevie and lindon, 2003; etc.); • level 6: localized marketing activities in the marketing department, but with the role to implement organization-wide vision and involve all structures of the organization interoperable teams (felton, 1959; gupta et all, 1986; ruekert and walker, 1987; gordon, 1987; workman, homburg and gruner, 1988; masiello, 1988; souder, 1988; page, 1993; webster, 1994; george, freeling and court, 1994; cooper, 1996; griffin and hauser, 1996; kahn, 1996; fisher, maltz and jaworschi, 1997; jassawalla and sashittal, 1997; shaw and shaw, 1998; xie, song and stringfellow, 1998; song, xie and dyer, 2000; maltz, souder and kumar, 2001; webster, 2002; lambin, chumpitaz and moerloose, 2005; dawes and massey, 2005; etc.); • level 7: the disappearance of marketing departments and their replacement by labor groups, interoperable teams centered on groups of customers or product categories (george, freeling and court, 1994; piercy and cravens, 1995; mckinsey, 2005; operationalized by unilever and pillsbury). the parameters of behavioral model of assimilation and operationalization of the concept of marketing in organizational practice taking as starting points the marketing theory and practice, and direct results of a research conducted in the bacau county on local organizations were established the behavior model coordinates, as follows: a. the dependent variable, which reveals the reality of local organizations practices the degree of assimilation and operationalization of the marketing concept in practices of the local organizations. considering the state of knowledge on the process of assimilation and operationalization of the marketing concept in practice of global and national organizations, the proposed model is built according to five levels (figure 1), namely: • level 1: organizational structure in which marketing activities are missing; • level 2: organizational structure in which marketing activities are located within the traditional departments; • level 3: organizational structure in which marketing activities are located in one traditional department / marketing department, but it is subordinate to traditional departments; • level 4: organizational structure in which marketing activities are located in the marketing department, on the same level as traditional departments; • level 5: organizational structure in which marketing activities are located in the marketing department, with a strategic role. although marketing literature and practice mention the existence of 7 levels in the assimilation and operationalization of the concept of marketing in organizational practice, the last two levels are not included in the proposed model – interoperable zait 163 teams and multidisciplinary teams, considering that they are not found the organizational structure of local organizations. these last two levels of the process of assimilation and operationalization of the marketing concept into practice are characteristic of organizations acting in developed economies, with real and long experience in marketing practice. b. the dependent variables, revealing the level declared by organizations the importance given to the concept of marketing. the marketing concept will be present in the model through the appreciation of its importance at the 5 organizational structures. c. the independent variables based on independent variables under investigation in the conducted direct research, within the model were considered a range of factors of influence, endogenous and exogenous, as follows: • exogenous factors: influence of transnational companies, the level of competition in the addressed market / markets and life cycle stage of the target market / markets; • endogenous factors: organizational profile in the industry, organization size, industry expertise and the nature of interdepartmental relations. given the context of action in romania and organizational culture of the local organizations, the study started from the assumption that the considered factors are decisive in the process of assimilation and operationalization of the marketing concept, having the ability to facilitate or hinder this process. figure 1. levels of the process of assimilation and operationalization of the concept of marketing in local organizations to identify the influence of the two categories of factors, both in the process of assimilation and operationalization of the marketing concept in the practices of the organizational structure missing marketing activities organizational structure in which marketing activities are found in traditional departments organizational structure in which marketing activities are included in the marketing department, but subordinate to traditional departments organizational structure in which marketing activities are included in the marketing department, on the same level as traditional ones organizational structure in which marketing activities are included in the marketing department, with a strategic role level 1 level 2 level 3 level 4 level 5 modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations 164 local organizations and the level of the importance given to marketing, we used contingency tables and cramer association coefficient φc. to ensure and facilitate the comparability within the model and to highlight the differences between the actual and declared situation regarding the researched issue, we used a five-level interval scale, strating from the assumption that the distances between the five levels are equal. thus, level 1, for the lack of marketing activities within local organizations, will be placed at the lower end of the scale (-2), while level 5 for the direction of marketing, will be positioned at the upper end of the scale (+2). the importance given to the concept of marketing, marketing management processes and market orientation levels of assimilation and operationalization of the marketing concept figure 2. levels of importance given to the concept of marketing on the five organizational structures regarding the process of operationalzation and assimilation of marketing in practices of local organizations using the same interval scale, we consider, a priori, the following: v .h ig h h ig h a v e r a g e w e a k v .w e a k 2 1.5 1.49 0.5 0.49 -0.5 -0.49 -1.5 -1.49 -2 1 2 3 4 5 level 1 level 2 level 3 level 4 level 5 endogenous and exogenous factors endogenous and exogenous factors zait 165 • organizations placed on level 1 (organizational structure that lacks marketing activities) provides a very low significance level to marketing concept; • organizations placed on level 2 (have an organizational structure in which marketing activities are located within the traditional departments) give a low significance level to marketing concept; • organizations placed on the 3rd level (have an organizational structure in which marketing activities are located in one traditional department / marketing department, but it is subordinated to the traditional departments) provide an average level of importance to the marketing concept; • organizations placed on level 4 (have an organizational structure in which marketing activities are located in the marketing department, on the same level as traditional departments) give a high importance level to marketing concept; • organizations placed on level 5 (have an organizational structure in which marketing activities are located in the marketing department, having a strategic) provide a very high level of importance to the marketing concept. graphically, assessing the levels of importance granted to marketing concept, the five organizational structures that reveal the degree of assimilation and operationalization of marketing in organizational practice is shown in figure 2. checking the viability and relevance of the behavioral model the reality of the practices of local organizations in romania as a result of direct research in organizations in bacau county, it has been observed that 47% of the entities have an independent marketing department, while 53% do not have this structure in their entity. regarding the levels of assimilation and operationalization of the marketing concept into practice in the investigated sample, it was obtained the following distribution: • 10.3% of organizations are placed on level 5, having an organizational structure in which marketing activities are located in the marketing department, with strategic role; • 32.3% of organizations are placed on level 4, having an organizational structure in which marketing activities are located in the marketing department, on the same level as traditional departments; • 4.6% of the organizations are located on level 3, having an organizational structure in which marketing activities are located in one traditional / marketing department, but it is subordinate to traditional departments; • 50.6% of organizations are placed on level 2, having an organizational structure in which marketing activities are located within the traditional departments; • 2.3% of the organizations are placed on level 1, having an organizational structure that lacks marketing activities. to identify particularities of the process of assimilation and operationalization of the marketing concept in the practicese of local organizations, and to facilitate comparative approach between existing reality on the ground and declared vision on the issues investigated, there is a need for a descriptions of the 5 levels considered in the model through the following variables: the number of existing marketing jobs in the marketing department or in the traditional marketing, the degree of involvement in the activities of the organization and the philosophy of marketing integration. modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations 166 organizations placed on level 5: • the number of existing marketing jobs in the marketing department: 56% of organizations have between 11 to 16 marketing jobs, while 22% mentioned the existence of marketing positions around 1 to 5, respectively 6 to 10; • the involvement of marketing in the organization's activities: all organizations mentioned the continued involvement of marketing in the organization's activities; • the philosophy of marketing intgration: most organizations have specified as a philosophy for marketing integration: the competition generated by transnational companies and the desire to improve economic performance; organizations placed on level 4: • the number of existing marketing jobs in the marketing department: 50% of organizations have between 6-10 marketing positions, while 46% mentioned the existence of marketing positions between 1 and 5. 4% of organizations found on this level, mentioned marketing responsabilities in the job descriptions of staff with economic studies, but not specialized in marketing and not employed on marketing positions; • involvement of marketing in the organization's activities: 71% of organizations reported a continued involvement of marketing in the organization's activities, while 25% reported an intermittent involvment; • the philosophy of marketing integration: most organizations have specified as a philosophy for marketing integration: the competition generated by transnational companies and the desire to improve economic performance; organizations placed on level 3: • the number of existing marketing jobs in the marketing department: 50% of organizations hold marketing positions between 1 and 5, while the remaining 50% said that there are vetween 6 and 10 marketing positions; • involvement of marketing in the organization's activities: 50% of the organizations mentioned intermittent marketing involvement in the activities of the organization, while 25% said there is permanently or occasionally; • the philosophy of marketing integration: most organizations have specified as a philosophy for marketing integration: the desire to improve economic performance and the competition generated by transnational companies, namely changes in the business environment; organizations placed on level 2: • the number of marketing positions existing in traditional department: 64% of the organizations mentioned marketing activities in the job descriptions of staff with economic studies, but not specialized in marketing and not employed on marketing positions, while 30 % mentioned the existence of many marketing positions, from 1 to 5. • the involvement of marketing in the organization's activities: 50% of the organizations mentioned marketing intermittent involvement in the activities of the organization, while 30% reported an occasional involvment; • the philosophy of marketing integration: most organizations have specified as a philosophy for marketing integration: the competition generated by transnational companies or local organizations; organizations placed on level 1: • the number of marketing positions existing in traditional departments: lack of marketing activities; • the involvement of marketing in the organization's activities: no marketing activities; • the philosophy of marketing integration: no integrated marketing vision; zait 167 the declared vision of the organization regarding the importance given to marketing concept placing in the proposed theoretical model the average scores obtained in the direct research conducted to assess the importance given to the concept of marketing, we observe that there are differences between the declared vision and model premises on the 5 levels of assimilation and operationalization of marketing in practice. the graphical representation of the differences between the model premises and declared vision regarding the importance given to marketing concept is shown in figure 3. as shown in figure 3, it can be seen that: • the organizations found on level 1 attaches very poor importance to marketing concept, retaining its position as a priori considered in model configuration; • the organizations found on level 2 attaches average importance to the concept of marketing, being similar, according to the configuration considered a priori in the model, to the organizations located on level 3; • the organizations found on level 3 attaches average importance to the concept of marketing, retaining the position a priori considered in the model configuration; • the organizations found on level 4 attaches very high importance to the concept of marketing, being similar, according to the configuration considered a priori in the model, to the organizations placed on level 5; • the organizations found on level 5 attaches very high importance to the marketing concept, retaining the position a priori considered in model configuration. thus, it can be seen that organizations engaged in marketing activities within traditional departments (of level 2), i.e. those that have an independent marketing department, on the same level as traditional ones (level 4), gives, at least declaratively, a more importance to the marketing concept than was considered a priori in the model. in this context, there is a need to identify exogenous and endogenous factors that influenced these repositioning in the proposed model. a. exogenous factors based on the direct research considered variables, there were established as exogenous factors of the model, the following: the influence of transnational companies, the level of competition in the addressed market / markets and life cycle stage of the target market / markets. we launched the null hypothesis that exogenous factors have influenced the declared vision regarding the valuing of marketing concept in the local organizations. testing null hypothesis 1. the influence of the level of competition in the addressed market / markets on the declared vision regarding the valuing of marketing concept in the local organizations. in this case it has been obtained a 0.429 value of cramer's association coefficient φc, evidencing a relatively average association between the level of competition in the addressed market / markets and declared vision on valuing marketing concept within the local organizations. in other words, the influence of the level of competition in the addressed market / markets on the stated vision regarding the importance of marketing concept within local organizations is relatively average. 2. the influence of competition generated by the transnational companies on the stated vision regarding the importance of marketing concept in local organizations in this case, it has been obtained a 0.405 value of cramer's association coefficient φc, evidencing a relatively average association between competition generated by modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations 168 transnational companies and the declared vision on valuing marketing concept within the local organizations. in other words, the influence of competition generated by transnational companies and the stated vision regarding the importance of marketing concept wirhin local organizations is relatively average. the importance given to the concept of marketing levels of assimilation and operationalization of the concept of marketing in practice figure 3. differences between the proposed model premises and declared vision regarding the importance given to the concept of marketing, on operational and assimilation levels of marketing in practice within local organizations 3. the influence of the stage of the target lifecycle / markets market on stated vision regarding the valuing of the marketing concept within the local organizations. in this case, it has been obtained a 0.239 value of cramer's association coefficient φc, evidencing a relatively weak association between the stage of the target market / markets lifecycle and the stated vision regarding the appreciation of the importance of marketing concept within the local organizations. in other words, the influence of the v .h ig h h ig h a v e r a g e w e a k v .w e a k 2 1.5 1.49 0.5 0.49 -0.5 -0.49 -1.5 -1.49 -2 1 2 3 4 5 level 1 level 2 level 3 level 4 level 5 endogenous and exogenous factors endogenous and exogenous factors level 5 in the model level 4 in the model level 3 in the model level 2 in the model level 1 in the model zait 169 stage of the target market / markets lifecycle on the stated vision regarding the importance of the marketing concept within local organizations is relatively weak. after this analysis, we can conclude the the null hypothesis has been confirmed: the exogenous factors have influenced the declared vision on the valuing of the marketing concept within the local organizations. realizing a hierarchy of exogenous factors, we can see that the greatest influence on the stated vision regarding the importance of the marketing concept within local organizations was generated by the level of competition in the addressed market / markets, followed by the competition generate by transnational companies and by life cycle stage of the target market / markets. b. endogenous factors based on direct research considered variables, there were established as endogenous factors of the model, the following: the organizational profile in the sector, organization size, industry expertise, interdepartmental relations nature, the location of respondents in the organizational structure, the training and education level of respondents. we launched the null hypothesis that endogenous factors influenced the declared vision on valuing marketing concept within the local organizations. testing null hypothesis 1. the influence of organizational profile in industry on reported vision regarding the valuing of the marketing concept in this case, it has been obtained a 0.296 value of cramer's association coefficient φc, evidencing a relatively weak association between organizational profile in industry and declared vision regarding the appreciation of the importance of the marketing concept. in other words, the influence of the organizational profile in the sector on declared vision regarding the appreciation of the importance of marketing concept is relatively weak. 2. the influence of organization size on stated vision regarding the valuing of the marketing concept. in this case, it has been obtained a 0.297 value of cramer's association coefficient φc, evidencing a relatively weak association between the size of the organization and declared vision on valuing the marketing concept. in other words, the influence of the size of the organization on stated vision regarding the valuing of the marketing concept is relatively weak. 3. the influence of experience in the field of investigated organizations on stated vision regarding the valuing of the marketing concept. in this case, it has been obtained a 0.319 value of cramer's association coefficient φc, certifying a relatively average association between industry experience of the investigated organizations and declared vision on the valuing of the marketing concept. in other words, the influence of industry expertise of the investigated organizations on stated vision regarding the valuing of the marketing concept is relatively average. 4. the influence of interdepartmental relationships nature within investigated organizations on stated vision regarding the valuing of the the marketing concept. in this case, it has been obtained a 0.325 value of cramer's association coefficient φc, evidencing a relatively average association between the interdepartmental relationships nature within investigated organizations and declared vision on the valuing of the marketing concept. in other words, the influence of interdepartmental relationships nature within investigated organizations on the stated vision regarding the valuing of the marketing concept is relatively average. 5. the influence of the location of the respondents within organizational structure on the stated vision regarding the valuing of the marketing concept. modeling the process of assimilation and operationalization of the concept of marketing by romanian local organizations 170 in this case, it has been obtained a 0.371 value of cramer's association coefficient φc, evidencing a relatively average association between location of the respondents within organizational structure and declared vision on valuing of the marketing concept. in other words, the influence of the location of respondents within organizational structure on the stated vision regarding the valuing of the marketing concept is relatively average. 6. the influence of the training and education level of investigated respondents on declared vision regarding the valuing of the marketing concept. in this case, it has been obtained a 0.275 value of cramer's association coefficient φc, evidencing a relatively weak association between the training and education level of investigated respondents and declared vision on the valuing of the marketing concept. in other words, the influence of the training and education level of investigated respondents on declared vision regarding the valuing of the marketing concept is relatively weak. after this analysis, we can conclude the the null hypothesis has been confirmed: the endogenous factors have influenced the declared vision on the valuing of the marketing concept within the local organizations. realizing a hierarchy of endogenous factors, we can see that the greatest influence on the stated vision regarding the valuing of the marketing concept within the organizations has been generated by the location of respondents within organizational structure, followed by the nature of interdepartmental relations, industry experience, the size of the organization, the training and the education level of respondents. following this analysis, we can appreciate that the declared vision regarding the importance given to the marketing concept was influenced by a number of endogenous and exogenous factors, of which the most important are: the level of competition in the addressed market / markets, competition by the transnational companies, the respondent location within organizational structure, the nature of the interdepartmental relations and the experience of the organizations. these factors explains why, at least declaratively, a greater emphasis is being put on marketing concept than a priori considered. thus, it can be seen that in both cases in which was necessary the repositioning to the higher level of the scale, a greater importance is attached to the marketing concept compared to registered premises within the proposed model and to the organizational practice. conclusions in the light the researched context (bacau county market) and considering the investigated variables in the direct research, conducted in the local organizations, the proposed model has certain limitations as follows: • it is not taking into account all endogenous and exogenous factors that can influence both the assimilation and operationalization of the marketing 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(1998), interfunctional conflict, conflict resolution styles and new product success: a four-culture comparation, management science, vol. 44, december, pp. 192-205. microsoft word apostoaie constantin marius_eng.doc considerations regarding calculation cost in the machine building industry summary the paper structures the advantages and the disadvantages of the determination method of the standard cost. the need of the enterprises to operate with production scientifically established and verifiable costs is a recognized fact by the practice and standard computer technology cost although meets the technology requirements, keeps the deficiencies traditional techniques. keywords diagnosis, standard cost, direct costs, fixed overhead charges, variable overhead charges. jel code: m41 structuring the process of financial analysis the interpretation of the operations of an enterprise is done mainly through the analysis of economic and financial indicators in the financial statements balance and profit and loss account, summary account documents which give a fair, clear and complex image of the patrimony of the financial position and on performance of asset unit. the indicators are best understood when are approached as a system of correlations, sensitive to the management decisions on which occurs the evolution of the specific vectors of value creation. the economic and financial diagnosis involves the research of an economic phenomenon or process which involves correlative the emphasize of both the esigned highlight efforts through the consumption of material, human and financial resources, and of the effects that are circumscribed to the results as social useful values. since socio-human activity has double aspects of consuming resources and effects generating, this makes that the economic analysis to exceed the scope of economic activity, targeting the efficiency of resources consuming in all areas (including social, technical, administrative, etc.). the structure of the financial analysis process into economic and financial indicators will consider the following very important for accuracy results: clear definition of the analysed problem and the adopted perspective: each type of simple or complex analysis must be preceded by a clear definition of the analysed problem and a choice of working perspective, which will naturally lead to a selection of indicators for analysis; using an optimal combination of primary and secondary indicators and of the analytical instruments: is better to establish which are the suitable indicators of a problem and which secondary indicators may provide additional information; identify the key vectors which creates the value that affects business performance: testing the sensitivity of selected key indicators at various developments of the vectors performance and including the critics vectors of value as part of the mix of measures chosen to assess the performance of the analysed business; studies and scientific researches economic edition, no. 15, 2010 93 finding of any comparison standards and of any additional data for analysis: performance analysis is accomplished in the context of comparative data about the industry or key competitors; creating a historical trend and a forecast of economic and financial performance: it must be judjed in a temporal context to the nature of business and industry including the cycle, seasonality, growth and decline. the trend analysis becomes extremely important for predicting the future conditions in the context of predictable events; using historical performance as indicators of future expectations: past performance trends must be tested compared to expectations of future economic conditions, both internal and foreign affairs in the general business, competition and macroeconomic situation; the recognition and the identification of problems and obstacles to the optimal performance: the economic and financial performance analysis in the wide sense should be viewed in the context of the business system; the policies and the strategies of the investment, operation and financing segment must be mutually supportive. the economic and financial indicators are not absolute criterions, they serve only to reflect the financial conditions and the operational performance for certain periods of time compared with similar businesses. to become useful an indicator must be understood both as meaning and as a limitation, each indicator is useful only in connection with a point of view beeing as a hypothesis and with a pursued objectives. most times, the analytical procedures applied by analysts involves the use of financial indicators relevant for understanding of the latest events and of the financial condition of the business and the tackle of financial statements of the user's perspective. the analysts are doing an estimation regarding a financial indicator by analyzing data from past years, of the evolution trends in branch of the budget estimations and non-financial information. the shortcomings of economic and financial analysis are related to limitations of traditional accounting principles, the managers and the analysts will adopt an economic perspective based on cash flows, for substantiation and taking of decisions, which will cause long term performance based on accounting information. cost calculation in the machine building industry a permanent account challenge is related to fair allocation of a part of cost which is accumulated in the management accounting over the sold goods. the need of enterprises to operate with scientific production determined and controled costs is a reality recognized by the practice, and the calculation techniques based on established standards in advance with the view of stocks calculation that comply to the requirements of the technological processes and in the organizational structures in machine building enterprises. the standard cost takes into account the normal levels of materials and supplies, labor, efficiency and established production capacity in scientific manner based both on data from previous periods and on anticipated related elements of business conditions. using the standard cost method in the machine building industry should not be considered independently, since it overlaps to the orders method, so that the organization calculation process to allow the costs estimation and the establishment of the causes of the deviations from pre-scientific standards. the basic concept of the standard technique cost is to establish in advance the cost of conversion of inventories which includes directly costs related to produced units (materials, direct labor) and systematic allocation of fixed and variable production overheads charges. fixed overhead charges are those indirect costs of production that remain relatively constant studies and scientific researches economic edition, no. 15, 2010 94 regardless the volume production. variable overhead charges of production are those indirect costs of production that vary directly or nearly directly with production volume. the allocation of fixed overheads charges on the costs production is based on normal capacity of production and the distribution of the current orders is based on direct labor. normal production capacity is expected to be achieved in average over certain periods or seasons. since the restructuring of the machine building industry have limited the activity in spaces under the design capacity, the current production level is considered that approximates the normal capacity. this technique is limited by the provisional calculated standard costs that are considered the real or normal production costs and it is the base for saling prices. the more or less differences between actual and standard costs are considered deviations from the normal conditions of manufacture and it affects directly the company's financial results. the standard costs technique has the advantage to enable the machine building enterprises that have organized the collection costs by the orders method at the projected costs determination for fast assessment of obtained production forecast, but the disadvantage that preserves the deficiencies of traditional method: the big workload to achieve analytical filing system of changes of regulations and of deviation by making separate papers for all identified quantitative deviations on products and places of expenses. most of the calculating techniques cost allow variations in the extent they are predictable, but the significant changes affect costs periodically allocated in the income distributed periodically. bibliography manolescu, m and collaborators „management accounting”, economic publishing, bucharest 2000 2. erich a. helfert: „financial analysis techniques”, bmt publishing, bucharest 2003 3. iascf 2007 : „international accounting standard 2 inventories” ”economic and financial analysis” ,publishing ase, bucharest 2004 studies and scientific researches economic edition, no. 15, 2010 95 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 29, 2019 http://sceco.ub.ro 17 gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire zrakpa melaine ouoya université félix houphouët boigny abidjan ouoyamelaine@yahoo.fr abstract unlike the other two components of the financial trinity savings and insurance, the demand for credit has been the subject of much work. using data from the household standards of living survey in côte d'ivoire (env2015), we use two logit models to identify the determinants of demand for credit and savings in rural ivorian. our work shows that the social, economic and demographic characteristics of the household and its head are significant determinants of demand for those services. the study revealed that each of these two services is a significant determinant of the other. following this first analysis, we have identified the typical profiles of households with the highest and lowest probabilities of access to savings and credit. finally, the gender approach of this study has shown that unlike the number of men who has no influence on the demand for savings among households without access to credit, the number of women considerably increases the level of access to credit for households with or without access to savings. and that households led by a woman have a better access to credit. keywords credit; saving; rationing; gender; rural households; côte d’ivoire jel classification d14; j16; r22; r51 introduction making sure that farmers have adequate access to financial resources is a key principle of successful rural development strategies. policymakers have long understood that rural producers who can not meet their capital needs must be content with suboptimal production strategies. when they are unable to make the necessary initial investments or bear no additional risk, these producers are forced to give up their productivity, improve their incomes and improve their well-being (besley & coate, 1995). in addition, without adequate access to loans or insurance, producers facing negative shocks such as drought, disease or significant price declines may lose some of the few assets they own (diagne & zeller, 2001). lack of access to finance is often the key mechanism for generating persistent income inequality and slower economic growth. as a result, expanding access remains a major challenge around the world, leaving much to be left to governments (beck et al, 2009). access to the financial market and especially credit remains the basic requirement for the adoption of new technologies in agriculture and the improvement of productivity and incomes for a subsequent reduction of poverty. unfortunately, many obstacles prevent the rural poor from accessing the financial market and receiving credit for financing sustainable agriculture. social and geographical constraints can be the major obstacles. geographical considerations or physical access to a financial institution is one of the barriers that prevents small and gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 18 poor households in many developing countries from using financial services. for example, while spain has 96 branches per 100,000 people and 790 branches per 10,000 square kilometers, ethiopia has less than one branch per 100,000 people and botswana has one branch per 10,000 square kilometers (beck et al, 2007). the poor may not have anyone in their social network who is aware of the various services available to them. lack of education can make it difficult for them to complete loan applications, and the small number of transactions that may be undertaken may allow loan officers to think that it is not worthwhile to help them. in addition, many institutions have minimum requirements or fees for opening accounts: for example, in large areas of africa, it is not unusual for banks to require a minimum deposit of 50 percent of gdp per capita of the population to open a current account (beck et al, 2008). the high cost of maintaining these accounts can thus exclude a large part of the population. the financial market takes into account three types of services that are commonly known as the financial trinity; it's about credit, savings and insurance. given the importance of these services for the development of rural areas, it is necessary to understand the factors likely to have an impact on their access by rural people in order to identify the profiles of households rationed or not in their access to these financial services including credit and savings. subsequently, the gender impact analysis could be an additional asset. this study will be divided into four sections: the first relates to the review of the literature while the second relates to the presentation of the level of access to financial services in côte d'ivoire. the third section deals with the methodology, the fourth section presents both the results and discussions and the last one concludes. literature review it should be noted that credit, savings and insurance markets are generally nonexistent in the rural areas of developing countries, and when they come to exist, many are working imperfectly (morduch, 1995). the exclusion of the financial system means that poor and small businesses depend on their personal wealth or internal resources to invest in education, become entrepreneurs or engage in promising growth opportunities. the question of the analysis of access to the financial sector by the rural poor was mainly oriented around the demand for credit. as such, this review of literature will first discuss the benefits of financial inclusion and then focus on the thorny issue of credit rationing and the policy solutions that flow from it. the last part will give a brief account of the work that has tried to identify the determinants of credit demand. we can note that an inclusive financial system offers a number of benefits to the economy. it provides more resources for investment especially for the promotion of small and medium-sized enterprises (smes). it creates employment opportunities, ensures economic and financial stability by reducing vulnerability and contributes to poverty reduction. access to a well-functioning financial system can economically and socially empower individuals, especially the poor and women, to better integrate into the economy and contribute actively to development. ellis, lemma and rud (2010) empirically shows that access to financial services allows households to invest in education (which contributes to human capital), start or develop a business or invest in agricultural inputs or new equipment (which contribute to physical capital and technological progress). this study thus succeeded in establishing one of the main potential links between access to financial services and growth, with important policy implications. schrieder and heidhues (1995) analyze ouoya 19 the impact of the financial market on the income and food security of rural households in three regions of cameroon. their results show that the provision of sustainable financial services improves incomes, which in turn have a positive effect on the food security of rural households. such a financial market improves the provision of production and consumption credit. production credit improves the productive capacity of households while consumer credit enables these households to smooth their consumption during the lean season. despite its importance for development, many households are rationed in their access to financial services and credit in particular. what is credit rationing? stiglitz and weiss (1981) presented a credit rationing model in which, among the observably identical borrowers, some receive loans and others do not. potential borrowers who are denied loans would not be able to borrow even if they showed a willingness to pay more than the market interest rate, or provide more collateral than what is required of the beneficiaries of the loans. increasing interest rates or increasing collateral requirements could increase the risk of the bank's loan portfolio, either by discouraging safer investors or by encouraging borrowers to invest in riskier projects. therefore, credit restriction, in limiting the number of loan the bank is willing to give, help the market to reach its equilibrium. thus, households emit the desire to obtain credits, if they get the full amount requested, they are not rationed otherwise they are. rationing is more related to the formal credit market than to the informal market. also, the question of credit rationing by rural people can not be analyzed without taking into account the contribution of the information economy. azam, biais, dia, and maurel (2001) analyzes the question of moral hazard in the rationing of access to credit by firms in côte d'ivoire on formal and informal markets. the empirical results of this work highlight serious moral hazard issues for all firms and a reduction in the cost of credit in the informal market. although it is true that information contribute to the effectiveness of the rural financial system and leads to the rationing of these rural poor, the consequences of this rationing on life of these rural households can not be ignored. baland and robinson (2000) show that constraints to access credit can lead to underinvestment in human capital. the critical factor explaining externalities, lack of markets and local monopolies in rural financial markets is the imperfection of information (stiglitz, 1996). the promise feature of financial transactions makes it essential for participants to be well informed about the ability and willingness of other contractors to honor their contractual obligations. in the formal sector, information asymmetry issues can be significant and drives formal lenders to set up pricing and non-tariff mechanisms of selection. in the informal sector, the cost of unobservable effort for the borrower can be relatively low because related people can easily monitor the behavior of the borrower. thus, the absence of such information will constrain the ability of the lender to not only discern the creditworthiness of potential borrowers but also to enforce the contract. governments should provide a sound legal and regulatory legal framework for successful contract enforcement. in recent years, a growing number of observers have criticized the performance of the rural financial market (rfm). to overcome the shortcomings of the rural financial market, a new consensus has been proposed by some authors. a key element of the new consensus is the identification of the expected real interest rate as the main determinant of the behavior of the lender, the borrower, and the saver (gonzalezvega, 1977). real rates should also strongly influence the overall performance of the financial markets. the real interest rate is defined as the nominal interest rate (the contractual rate) adjusted by an overall price index for the economy. proponents of the new consensus argue that low real interest rates seriously disrupt the supply of the gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 20 financial system. because interest on savings deposits is low, savers minimize the amount of financial savings they hold. this forces formal lenders to rely on external funds to finance loans. moreover, since the funds lent under these programs are not mobilized locally, borrowers feel less obliged to repay funds belonging to national or foreign governments. the new consensus suggests that the rural poor can have larger savings, much greater capacity than previously thought, especially when given adequate opportunities and incentives to save (adams, 1978). in such circumstances, what factors have been identified by the literature as influencing access to credit? increasing consumption requires the use of external capital, in this case the credit, to cover the needs of the household. many studies have shown that access to credit has a positive impact on the well-being of the household (wright 2000 ; khandker 2001a ; khandker and faraque, 2001b ; khandker 2003, etc). bendig, giesbert, and steiner (2009), using household survey data from rural ghana show that poor households are less likely to intervene in the formal financial sector than better-off households and that the demand for financial services also depends on various other factors such as household risk assessment and exposure to shocks. mpuga (2008) uses data from uganda's household surveys conducted in 1992/93 and 1999/2000 to shed light on access and the characteristics of the demand for credit among the rural population. using the estimates of the probit, tobit and multinomial logit model, the author finds that the ugandan credit market is highly segmented. rural producers are widely served by relatives / friends and self-help credit associations, and their loan applications are less likely to succeed, and of those that are, only smaller loans are granted. educated people and young people are more likely to apply for credit, whereas women are less likely to do so, and to apply for smaller loans. mohamed and temu (2009) analyze the gender characteristics of the determinants of access to formal credit in zanzibar. using a probit model, they show that the factors influencing credit access constraints differ according to whether the head of the household is a man or a woman. azam, biais, dia, and maurel (2001) find that large firms, with european managers and operators in the formal sector, are more likely to apply for loans from the formal sector, and less likely to be rationed, while informal small businesses run by africans are more likely to obtain financing from the informal sector or to be rationed in their access to formal credit. in comparison with the literature on credit demand, there are significantly fewer contributions on the savings behavior of households in developing countries. access to savings has not been the subject of real interest by researchers contrary to the demand for credit. in addition to this, to the best of the author's knowledge, very little work has been directed to analyzing the case of rural households in côte d'ivoire in order to understand the determinants of these households' access to services such as credit and savings. it is therefore to fill this gap that this study is conducted. this research is focused around the following questions: what are the typical profiles of access to savings and credit in rural côte d'ivoire? do gender variables affect the level of rural households' access to savings or credit? as a result of this review, it is necessary to make a state of the financial market in côte d'ivoire. a brief description of the ivorian financial market according to the world bank group’s systematic country diagnostic (2015), improved access to finance is a critical constraint to the growth of smes and microenterprises in both urban and rural areas, and can have immediate benefits for poverty reduction by helping absorb the growing unemployed and underemployed labor force. ouoya 21 financial sector deepening and inclusion will be critical to achieve growth and poverty reduction in côte d’ivoire. although the ratio of credit to gdp (20 percent) increased rapidly over the last two years, it is still inferior to levels observed in burkina (25 percent), senegal (32 percent) and kenya (40 percent). only 12 percent of the population had access to a bank account in 2013; and possibly 15 percent if accounts at microfinance institutions (mfis) are included. this is significantly below the credit-to-gdp ratios of other african countries. organizational weaknesses in the cocoa, coffee and cotton sectors, etc. have a significant negative impact on the ivorian economy, which is highly dependent on the agricultural sector. traditional cultural practices and poor access to efficient plant material induce low crop yields. also, the financing gap remains one of the major causes of the shortcomings of this agriculture (dsrp, 2009). since the end of 2011, the government has been developing a social and affordable housing program. the strategy comprises supply-side measures to support the construction of social and affordable units (with a target of 60,000 units over 20122015); as well as market measures, including increased budget support for the housing mobilization account to provide low-interest, long-maturity mortgage refinancing for low-income households. increasing access to housing for low-income households will require the government to broaden its social and affordable housing program in a sustainable way. unfortunately, housing finance barely exists and benefits only a few. only 696 mortgage loans were granted in 2013, essentially to bank employees and a few staff from ministries and a few large companies. in a region where housing finance is barely developed, côte d’ivoire fares particularly poorly, representing only 5 percent of all mortgage loans granted in the waemu region by number and 18 percent by value. inclusion is far worse than in regional peers. banks have expressed interest in growing housing finance, especially to support the government’s affordable housing program, but are concerned about the availability of collateral. the banking system showed remarkable resilience during the years of political unrest, due in large part to regional arrangements. the industry capital adequacy ratio (car) improved in 2013 (9.2 percent compared to 8.2 percent in 2012) for the first time since 2010, but remains significantly below the average waemu ratio of 12.9 percent. the profitability of the banking system improved in 2013 after several years of losses (2008, 2010, 2011) but still faces significant headwinds. also, there has been progress in launching the restructuring of state-owned banks. an action plan was adopted on may 5th 2014. its full implementation will help resolve non-viable institutions and strengthen and reorganize others. unfortunately, the capital market does not contribute to financing economic activities, and therefore provides no competition for banks in providing credit. a regional stock exchange, bourse régionale des valeurs mobilières (brvm), was created in 1998 in abidjan and lists 37 companies, of which 31 are ivorian. however, due to political unrest and lower than expected privatizations, the exchange has seen little activity. the regional market capitalization reached only 14 percent of the regional gdp in september 2014. float and turnover are limited. some government bonds are listed, but most are issued by the central bank of west african states (banque centrale des etats de l'afrique de l'ouest, bceao) and held to maturity by commercial banks. contractual savings are also limited, which affects the availability of term financing and capital market development. existing pension schemes are not sustainable and have not accumulated meaningful assets. actuarial studies are being commissioned to design a reform of the pension system. the insurance industry is growing but remains small in terms of turnover and assets. gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 22 the payment infrastructure is modern but under-utilized. cash remains a dominant means of payment for individuals and small businesses. mobile payments have been slow to develop, with some rapid progress observed in 2013. the world bank is supporting the design of a regional retail payment strategy to increase the penetration of retail payments, including mobile payments. in addition, regional authorities are working on the introduction of a modern credit bureau, with ifc support. to address these constraints, the government articulated a comprehensive financial sector development strategy (fsds) in 2013 with the support of the bank. full implementation of the fsds is critical to ensure that the financial sector contributes to sustained growth and poverty reduction. following the presentation of the ivorian financial market situation, we will focus on the methodological approach of this study. methodology database the data in this study come from the household standard of living survey (env) conducted in 2015 by the national institute of statistics (ins). it is the result of similar surveys carried out in 1995, 1998, 2001 and 2008. these surveys made it possible to analyze the evolution of living conditions of households throughout the territory, necessary for the establishment of national policies to fight against poverty and reduce inequalities. the survey provides various types of information on the socio-economic characteristics of households living in côte d'ivoire, including education, health, housing, consumption of food, water, electricity and fuel, the level of employment, income, expenses, etc. the universe of the survey is made up of all african households residing in côte d'ivoire. the general census of population and housing (rgph2014) served as a sampling frame. the sampling follows a two-stage draw: first-stage, proportional allocation of census districts (cd) or enumeration area (ea) in the strata of the study; in the second degree, systematic drawing of 12 households by ea. the sample is stratified into three sets and provides significant results for the region and place of residence; the city of abidjan; and all of côte d'ivoire, urban and rural areas. the rest of the work will be directed towards the presentation of the analysis models. presentation of the models as mpuga (2008), we use a logit model to analyze the determinants of demand for savings and credit services among rural households in côte d'ivoire. both models are as follows: where is the dependent variable of the first model (equation 1). this is a binary variable taking the value 1 if the household has saved during the last 12 months preceding the survey and 0 if no. the dependent variable of the second model is the ouoya 23 credit request of the household identified by (equation 2). it takes the value 1 if the household i solicited and obtained a credit during the last twelve months preceding the survey and 0 if not. the other variables are the independent variables of our two models. is a variable representing the age categories of the head of the household, ie who takes the value 1 if the head of the household is under 35 and 0 if not, who takes the value 1 if the head of the household is between 36 and 55 and 0 if not then, who takes the value 1 if the head of household is over 56 years old and 0 if not. . is a categorical variable representing the education level of the household head. this variable takes into account four categories that take the value 1 if the head of the household has no level of education and 0 if not, which takes the value 1 if the head of the household has the primary level and 0 if not, which takes the value 1 if the head of household has the secondary level and 0 if not, and which takes the value 1 if the head of household has the university level and 0 if not. the variables , respectively, represent whether the head of the household is employed or not and the fact that the household lodges in their own home or not. is a binary variable taking the value 1 if the household has agricultural land and 0 if not; is a variable with four categories representing different sectors of activity. , , and are binary variables representing respectively the fact that the household head operates in the sector of agriculture, industry, trade and services. , , are binary variables representing respectively the fact that the household i received or not assistance during the past 12 months, the fact that the head of household has a full-time job or not, the fact that the household has whether or not a social capital (member of an association or not). , , , , are independent continuous variables representing respectively the size, the main income, the number of agricultural parcels owned, the number of children enrolled and the number of men in the household i. the variable represents the household's i perception of their social capital or level of solidarity in the village where they live. variables and designate respectively the number of people suffering and the number of women in the household i. is a binary variable taking the value 1 if the head of the household is a man and 0 if not and is related to the possession of farmland. is the radom error which is distributed logistically with for a logit model. let’s say the probability that the given household is saving or obtaining credit given the independent variables and , the probability models of and are as follows : (3) (4) where , represent the parameters of the equation and and are respectively continuous and binary variables of our model. this model can be interpreted in several ways. let’s consider the following model: (5) that is the standard deviation of the variables x and d. by dividing each variable by and multiplying the corresponding value of by , we obtain : gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 24 (6) is an x-standardized coefficient. to standardize the dependent variable, is the standard deviation of . we standardize by dividing equation (5) by : (7) so, is a y-standardized coefficient. we can standardize all the coefficients of both x and y : (8) in this work, we want to evaluate the typical profile of households in relationship with their level of access to credit and saving. this can be managed with discret change as mentioned by long and freese (2014). in some other ways, we could predict the probability of achieving each of these events (saving or obtaining credit) when we make discrete changes in the binary or categorical variables of our models. this evaluation is based on these equations : (9) with the categorical variable being changed. we could make joint changes in the categorical variables of our models : we use combinations of changes in categorical or binary variables to identify the typical household profiles with the highest probability of saving or having access to credit, as well as those households with the lowest probability of having access to these financial services (highly constrained or highly rationed households). we can also compute discrete changes when a variable increases by some amount from its observed value. defining as the probability at , noting in particular the value of , the discret change for a change of in equals (11) it is the consideration of these discrete changes that will identify the characteristics of the typical households in our sample. in this case, assumptions must be made about the other variables that are not subject to change. several possibilities exist. the value of these variables could be set to their overall averages within the analysis sample. although using global means for each ideal type is simple, it’s not often realistic. for example, it is reasonable to assume that levels of income and household size would be higher for college-educated respondents than for those who have not attended college and that they would change with age, which is not reflected in the global means. to address this problem, we can use local means that are defined based on the characteristics specified. ouoya 25 results and discussion descriptives statistics the descriptive statistics of the rural household savings analysis model are presented in table 1. the sample studied consists of 2998 observations. 36% of households in our sample were able to save during the last 12 months preceding the survey and the remaining 64% did not. young heads of households (under 35 years) are dominant in the sample with more than half (59%) of the sample while older households represented only 12% of the workforce. this is typical of the life expectancy of individuals in côte d’ivoire which is between 40 and 50 years old. unfortunately, there has been a decreasing trend in numbers as the level of education increases (el variable). households whose head has no level of education represent 56%, 25% for the primary level, 15% for high school and only 4% for the university level. for us, the more the level of education, the less people return to rural areas to live. table 1 descriptive statistiques of savings determinants analysis model estimation sample logit number of obs = 2998 variable | mean std. dev. min max sv | .3555704 .4787656 0 1 ca | 55 | .3915944 .4881882 0 1 105 | .1160774 .3203711 0 1 el | 1 | .2498332 .4329886 0 1 2 | .1517678 .3588556 0 1 3 | .0436958 .2044515 0 1 1.sa | .3842562 .4865001 0 1 1.od | .5086724 .5000082 0 1 as | 2 | .0903936 .2867927 0 1 3 | .0880587 .2834275 0 1 4 | .1157438 .3199709 0 1 1.fa | .0286858 .1669497 0 1 1.sc | .2418279 .428262 0 1 1.cred | .9116077 .2839119 0 1 scp | 1 | .4416278 .4966638 0 1 2 | .2861908 .4520551 0 1 3 | .2118079 .4086576 0 1 hs | 2.70447 1.899033 1 12 hi | 872.906 1090.669 4.5 22500 nal | 1.573716 .9344925 1 6 cs | .2961975 .6110365 0 6 mn | 1.432622 .9367536 0 6 source: our computation with data from env2015 the variable sa reveals that 38% of heads of households are salaried. we note in the same time that 51% of rural households in côte d'ivoire live in their own home. in fact, in rural côte d’ivoire, the price of residential land is relatively accessible and it was quickly made to build a mud house for the needs of the family. the as variable reveals that about 3/4 (72% exactly) of the heads of households operate in the agricultural sector while only 9% are in industry, 8% in commerce and 11% in services. as the dsrp (2009) stated, the ivorian economy has its essence in the agricultural sector, hence the importance of the free trade whose main activity is agriculture. the level of assistance and social protection is unfortunately very low in côte d'ivoire. only 3% of households received assistance during the last 12 months. in general, these helps come from friends and acquaintances and not from state structures. 24% of households are members of an association and have social capital. gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 26 these descriptive statistics show that 91% of households received a credit in the last 12 months preceding the survey. remember that nearly ¾ of the credits granted in ivorian rural areas come from individuals (friends, relatives, acquaintances, pawnbrokers, etc.), therefore from the informal sector, and the banks only give 4% of the credits available in this sector (ouoya, 2018). the variable scp shows that 6% of the individuals surveyed said they could not assess this spirit of solidarity while 44%, 29% and 21% respectively have a low, medium and high opinion of this spirit of solidarity. let’s finally note that the average household size in the sample is 3 individuals while the average annual income per household is around 900 thousands. the number of agricultural land per household is between 1 and 6 and the number of male (male adult) in the household is between 0 and 6 individuals. descriptive statistics for the second model of analysis of the determinants of access to credit for rural households are presented in table 2. the sample size is 5267 individuals. some variables of the first model were not taken into account and other variables were added. household saving status was retained as an independent variable and access to credit, became the model dependent variable. in the second model 85% of households have access to credit while the first model reported that 91% of households had access to credit. the level of access to savings remains approximately the same for both models. the distribution of households by age group, level of education and industry remains virtually the same in both models. there are some slight differences in the variables taken into account in the two models. this difference is relatively pronounced in the proportion of households operating in services (11% in the first model and 22% in the second). several new variables have been incorporated into the household credit analysis model. thus, the hhs variable identifies the sex of the household head. about 84% of rural households in côte d'ivoire are headed by men and only 16% by women. the nal variable has been replaced by a binary variable (al) making reference to whether the household holds agricultural land or not. it has been found that 63% of households hold agricultural land, 57% of households estimate that they have a fulltime job. the gender consideration was slightly modified in this analysis by replacing the hom variable (number of males in the household) with the variable fem (number of females in the household). fem is a numeric variable taking values between 0 and 7 with an average of about one woman per household. the env2015 revealed a variety of pathologies within households and there are 12 to 14 pathologies per household in the sample. the second part of this section is about the results and discussion. table 2 descriptive statistics of credit model estimation sample logit number of obs = 5267 variable | mean std. dev. min max cred | .8555155 .3516137 0 1 ca | 55 | .3778242 .4848894 0 1 105 | .100057 .3001044 0 1 1.sv | .3565597 .4790287 0 1 1.sc | .2077084 .4057054 0 1 1.hhs | .8399468 .3666902 0 1 1.al | .6331878 .4819804 0 1 el | 1 | .2107462 .4078772 0 1 2 | .2139738 .4101475 0 1 3 | .0337953 .1807191 0 1 as | 2 | .0953104 .2936711 0 1 ouoya 27 3 | .0943611 .2923582 0 1 4 | .2272641 .4191044 0 1 1.od | .3704196 .4829629 0 1 1.fw | .5714828 .4949108 0 1 1.fa | .0248718 .1557493 0 1 fem | .9783558 1.335735 0 7 nbmal | 13.83216 .3742651 12 14 hs | 2.290298 1.774676 1 12 hi | 1328.482 4205.864 4.5 34500 cs | .2462502 .5691148 0 6 source: our computation with data from env2015 results and discussion the results of the household savings determinants analysis model show that the explanatory variables have diverging effects on the level of rural households' access to savings. these results are shown in table 3. the first things to note is that all our explanatory variables are significant at 1 percent and only three variables are not. these variables are ., et . concerning the age category of the head of household we see that the fact for the head of household of being in the 35-55 age group increases the odds of saving by 7% compared to heads of households in the under-35 age group. on the other hand, there is a 95% reduction in the odds of saving for households whose head is in the over-55 age group compared to households headed by people under 35 years of age. these differences in the probability of saving according to the age category of the household head could be explained by the fact that heads of households in the 35-55 age group are generally employed and salaried. on the other hand, those in the under-35 age group are generally more in training than in an employee situation. this could explain our results. on the other hand, when one is in the class of more than 55 years, one does not have big project of future and one is rather directed towards the daily management, the problems of health including. it is this fact which, in our opinion, explains this reduction in the probability of saving from this class. the results of our work have shown that the education level of the head of the household (categorical variable el) is a significant determinant of the saving status of household. the analysis was conducted compared to class 0 which corresponds to the fact that the head of household has no level of education. it has been observed that, except for class 1, which corresponds to the fact that the head of the household has the primary level, there is an increase in the probability of saving when the head of the household has secondary level of education or higher compared to heads of households with no level of education. when moving from a household whose head has no level of education to a household whose head has a high school level or higher, there is an increase in the odds of saving respectively from 238 % and 250%. this would be explained by the fact that the higher the level of education is, the more the head of the household has sufficient skills and information to open a bank account by filling all the documentation pertaining to such a company and to subscribe to the saving products plans offered by these financial institutions. in the same vein, the level of education would be an indicator of the standard of living of the household. the third categorical variable of our analysis relates to the sector of activity (variable as) in which the head of household exercises. households headed by person in trade sector are more likely to save money than households headed by farmers. on the other hand, there is a 68% and 89% reduction in the odds of saving at the level of households whose head is respectively in industry or services compared to heads of households engaged in agriculture. gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 28 in terms of the household's perception of the spirit of solidarity within the village or its social capital, compared to the household with no opinion to share on this issue, there has been a substantial decrease in 99% of the odds of saving no matter the level of this spirit perseption by the household. an explanation that might emerge from this result is that households with any estimate of their social capital tend not to save for hedging in the event of shock. this social capital is therefore perceived by these households as a risk hedging instrument. note that this variable is statistically significant at the 1 percent level. households whose head is salaried compared to those whose head is not salaried and those who have their place of residence compared to those who do not see their odds of saving increase by 679% and 60% respectively. households with a salaried head receive some permanent cash flow that could partly be used to feed a savings account. households with their own place of residence can capitalize the cash flows that would in other way be used for house renting. such a monetary surplus could be at the origin of the constitution of savings by the household. among the following variables: hs (household size), hi (household income), nal (number of farmland owned by the household) and mn (number of men in the household), only the increase of household’s size by an individual leads to a reduction in the odds of saving. increasing the remaining variables by one unit increases the odds of saving. all of these variables are significant at the 1 per cent level. this decrease in the odds of saving at the hs variable level is explained by the fact that the increase in household size inexorably leads to an increase in household expenditures. in this case, it is necessary to disburse more resources to meet these burdens and this consequently reduces the savings possibilities of such a household. in another sense, the more are the men in a household, the more human resources are available to carry out activities and generate income that could increase the likelihood of saving money. similarly, the increase in the number of farmland allows the household to have additional space that could be exploited or rented to generate additional income that could improve the ability of the household to save. a similar explanation could be the reason for the increase in the odds of saving when household income increases by one currency unit. table 3 change in odds of saving logit (n=2998): percentage change in odds odds of: 1 vs 0 | b z p>|z| % %stdx sdofx ca | 55 | 0.0658 0.487 0.627 6.8 3.3 0.488 105 | -3.1444 -10.740 0.000 -95.7 -63.5 0.320 el | 1 | -0.1516 -0.946 0.344 -14.1 -6.4 0.433 2 | 1.2206 6.270 0.000 238.9 55.0 0.359 3 | 1.2529 4.711 0.000 250.0 29.2 0.204 | 1.sa | 2.0528 14.109 0.000 679.0 171.5 0.487 1.od | 0.4702 3.624 0.000 60.0 26.5 0.500 as | 2 | -1.1710 -5.445 0.000 -69.0 -28.5 0.287 3 | 0.7693 3.766 0.000 115.8 24.4 0.283 4 | -2.2860 -8.050 0.000 -89.8 -51.9 0.320 1.fa | 5.4407 7.042 0.000 22961.4 148.0 0.167 1.sc | -0.1431 -1.061 0.289 -13.3 -5.9 0.428 1.cred | 12.0454 8.863 0.000 1.7e+07 2956.4 0.284 scp | 1 | -6.5644 -11.757 0.000 -99.9 -96.2 0.497 2 | -5.7911 -10.377 0.000 -99.7 -92.7 0.452 3 | -6.8511 -11.983 0.000 -99.9 -93.9 0.409 ouoya 29 hs | -0.1725 -3.540 0.000 -15.8 -27.9 1.899 hi | 0.0011 14.990 0.000 0.1 214.3 1090.669 nal | 0.5452 7.040 0.000 72.5 66.4 0.934 mn | 1.1178 10.263 0.000 205.8 184.9 0.937 constant | -10.0709 -6.761 0.000 . . . b = raw coefficient / z = z-score for test of b=0 p>|z| = p-value for z-test / % = percent change in odds for unit increase in x %stdx = percent change in odds for sd increase in x sdofx = standard deviation of x source: our computation with env2015 data there is a strong relationship between the fact that the household has been able to benefit from a loan and the likelihood that the household will save. whether the source of the credit is informal or formal, the relationship is very strong and the first explanation would be that households that have benefited from credit have resources that they could keep in the form of savings for risk coverage. for households that have received credit from a credit institution or a bank, they have to create savings account that must be regularly fed to cover the risk of non-repayment at the bank. this compulsory savings is a guarantee recommended by formal credit insitutions when setting up the credit file. also, households receiving credit are uncomplexed and accustomed to receiving financial services. they perceive the opening of a savings account as a necessity. thus, from all points of view, households that have obtained a credit have a higher probability to save. following the results of the analysis of the determinants of household savings, we turned to studying the determinants of credit demand. the null hypothesis of the coefficients of dependnt variables of the credit demand analysis model was tested. except for variables al (ownership of agricultural land), el2 (secondary education level) that are significant at the 5 percent level, the sc variable which is significant at the 10 percent level, and the older age group of more than 55 years which is not significant, the other variables are significant at the 1 percent level as we can see in table 4. like the first model, the analysis of the determinants of credit demand reveals diversified effects of the independent variables on the demand for credit. table 4 factor change in saving model odds logit (n=5267): percentage change in odds odds of: 1 vs 0 | b z p>|z| % %stdx sdofx ca | 55 | 0.7504 6.634 0.000 111.8 43.9 0.485 105 | -0.3101 -1.379 0.168 -26.7 -8.9 0.300 1.sv | 1.6613 13.531 0.000 426.6 121.6 0.479 1.sc | 0.2367 1.890 0.059 26.7 10.1 0.406 1.hhs | -0.7598 -4.219 0.000 -53.2 -24.3 0.367 1.al | -0.2724 -2.286 0.022 -23.8 -12.3 0.482 el | 1 | -0.5409 -3.954 0.000 -41.8 -19.8 0.408 2 | -0.2802 -2.263 0.024 -24.4 -10.9 0.410 3 | 3.1564 3.096 0.002 2248.7 76.9 0.181 as | 2 | 0.7519 3.981 0.000 112.1 24.7 0.294 3 | -1.7466 -11.239 0.000 -82.6 -40.0 0.292 4 | -0.5311 -4.370 0.000 -41.2 -20.0 0.419 1.od | 1.8246 13.229 0.000 520.0 141.4 0.483 1.fw | 1.0628 10.096 0.000 189.4 69.2 0.495 1.fa | -1.2839 -4.765 0.000 -72.3 -18.1 0.156 fem | 1.1188 8.901 0.000 206.1 345.7 1.336 nbmal | 0.3442 2.432 0.015 41.1 13.7 0.374 hs | -0.3821 -4.879 0.000 -31.8 -49.2 1.775 hi | -0.0001 -4.048 0.000 -0.0 -29.4 4205.864 cs | 0.5542 3.078 0.002 74.1 37.1 0.569 constant | -3.3836 -1.714 0.087 . . . gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 30 b = raw coefficient / z = z-score for test of b=0 p>|z| = p-value for z-test / % = percent change in odds for unit increase in x %stdx = percent change in odds for sd increase in x sdofx = standard deviation of x source: our computation with env2015 data taking first into account the categorical variables of our model, namely the age category of the household head (ca variable), the education level (el variable), and the sector of activity of the head of household, we recorde diverging influences of on access to credit. when we move from the category of heads under 35 to those aged between 35 and 55, there is a 111% increase in the odds of accessing to credit. on the other hand, there is a 26% decrease in this probability when we move from household heads under 35-years-old to heads over 55 years old. from our point of view, the 3555 age group is likely to be the period of completion in the life cycle of individuals. household heads in this bracket are generally workers and more reassuring about their creditworthiness than heads under 35. on the other hand, heads of households who are in the over-55 age group have little confidence in their ability to stay in good health and face the deadlines of their debts. life expectancy in côte d'ivoire is in the range 45-50 years, such leaders do not guarantee their longevity and may pass on their loans on their descendants, which could cause conflict situations. such an explanation could be at the origin of the variations of this probability of access to credit. access to credit differs according to the sector of activity of the head of household. using the agricultural sector as the reference, it can be seen that only households operating in industry experience an increase in their odds of having access to credit. households headed by a chief operating in commerce or services record a reduction in their likelihood of having access to credit. for us, the industry sector would refer to a certain degree of formalization of employment, unlike trade and services where everyone could set up their own business. it is probably the precariousness of employment in these two sectors that negatively influences the creditworthiness of these different households. based on the analysis of the head of the household with no level of education, there is a decrease in the odds of access to credit for heads of primary and secondary education level and a substantial increase when head of household has the upper level. from our analysis, heads of households who reached the primary or secondary level were at one time forced to return to rural area without much intellectual baggage. the difficulties of adaptation both in the social environment and in the chosen economic activity create a lack of confidence between these new comers and the others. thus, that could make it difficult for those new comers to access both to informal credit widely available and to formal credit (due to lack of information and credit history with formal intitutions). on the other hand, the achievement of higher education level offers a guarantee of success in several activities and thus put credit actors in confidence concerning these such heads creditworthiness. the transition from the status of non-saver to saver has a strong influence on the odds of access to credit. households that once had access to savings are more likely to build a loan application file with formal institutions. this also improves their solvency so that certain sources of financing are favorable to them. our results are consistent with some empirical evidence that revealed that the usage of savings products, loans and insurances depend on the socio-economic status of households, but also on various other factors, such as households’ risk assessment and the past exposure to shocks (bendig, 2009). there is an increase in the probability of access to credit with the number of pathologies suffered by household members. households must make use of credit to meet the expenses of care for these ouoya 31 pathologies. informal credit being the most available, the spirit of solidarity in rural areas makes these households in crisis use more credit and obtain this credit on the informal market certainly. social capital also has a positive influence on the level of access to credit. by moving from a household with no social capital (ie not a member of a village association) to a household with social capital, there is a 26% increase in the probability of access to credit. social capital creates an environment of trust between individuals. individuals have good knowledge of each other and are more likely to trust each other. thus, they are more willing to enter into credit relationships with each other. this social capital reduces considerably the problem of information asymetry for that it is more easy to monitor related people. in the same way, households with their own homes are more likely to have access to credit, as well as those whose heads have full-time jobs. elis (2010) has shown a correlation between investment so asset disposition and access to credit. assets can serve as collateral for the loan and put the lender in confidence in this credit relationship. as mohamed and temu (2009), we find that access to credit differs according to the gender of the head of household. when moving from a household headed by a woman to a household headed by a man, there is a 53% decrease in the probability of access to credit. in addition, as the number of women in the household increases by one individual, the likelihood of access to credit records a 203% increase. lenders, whether formal or informal, have a long time ago opted for women's credit rather than men's credit. women may be more involved in the repayment of the credits received, but they also use the funds received to actually implement the activity for which the loan application was made. finally, it should be noted that the increase in the number of children to enroll by an individual leads to an increase in the odds of access to credit by 74%. taking care of these children from the beginning of the school year to the school holidays requires the household to make use of additional resources such as credit and whatever the conditions of granting the loan, this could explain this improvement of probability. table 5 result of saving model classification test logistic model for sv -------true ------- classified | d ~d | total + | 655 201 | 856 | 411 1731 | 2142 total | 1066 1932 | 2998 classified + if predicted pr(d) >= .5 true d defined as sv != 0 sensitivity pr( +| d) 61.44% specificity pr( -|~d) 89.60% positive predictive value pr( d| +) 76.52% negative predictive value pr(~d| -) 80.81% false + rate for true ~d pr( +|~d) 10.40% false rate for true d pr( -| d) 38.56% false + rate for classified + pr(~d| +) 23.48% false rate for classified pr( d| -) 19.19% correctly classified 79.59% source: our computation with env2015 data table 6 result of credit model classification test logistic model for cred gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 32 -------true ------- classified | d ~d | total -----------+--------------------------+---------- + | 4325 630 | 4955 | 181 131 | 312 -----------+--------------------------+---------- total | 4506 761 | 5267 classified + if predicted pr(d) >= .5 true d defined as cred != 0 ------------------------------------------------- sensitivity pr( +| d) 95.98% specificity pr( -|~d) 17.21% positive predictive value pr( d| +) 87.29% negative predictive value pr(~d| -) 41.99% ------------------------------------------------- false + rate for true ~d pr( +|~d) 82.79% false rate for true d pr( -| d) 4.02% false + rate for classified + pr(~d| +) 12.71% false rate for classified pr( d| -) 58.01% ------------------------------------------------- correctly classified 84.60% ------------------------------------------------- source: our computation with env2015 data other variables in the model have a negative influence on the probability of access to credit. this is the case for the family assistance (fa) variable, household size (hs) and household main income (hi). we believe that assisted households have fewer arguments to use credit, which would explain this negative relationship. increasing the size of the household improves the human capital required to conduct activities that can increase the household's level of financial independence. likewise, increased income increases the financial independence of the household, which is less and less dependent on external funds, and this may explain our results. barslund and tarp (2008) find countervailing impacts of education, number of dependants, assets, credit history, and secure land rights on the demand for formal and informal loans, but most of the mentioned variables (except for assets) have a statistically significant effect only on either formal or informal credit demand. other variables, such as connections to credit institutions, exhibit a positive significant impact on the demand for both formal and informal loans. the authors’ analysis suggests that the demand for formal loans is largely driven by factors such as land holdings, and hence geared towards production purposes and asset management, while informal credit demand is negatively associated with factors such as age and education and positively associated with a bad credit history and the number of dependants, indicating a household’s tendency to use informal loans for consumption smoothing rather than investment. at the end of the study of the determinants of rural households' access to savings and credit, the level of classification of each of the two models was tested. the results of these two tests are presented in tables 5 and 6 above. the classification level is relatively interesting. the model of the analysis of the determinants of savings has a classification level of 80% while that of the demand for credit reaches a level of 85%. thus, the predicted probability of access to savings and credit for rural households is correct at 80% and 85% respectively. more than ¾ of the predictions of our analysis models are correct. the second stage of our work consists in identifying four typical households in relation to the level of access to credit and savings. these typical profiles are: households with the highest probability of access to savings households with the lowest probability of access to savings households with the highest probability of access to credit ouoya 33 households with the lowest probability of access to credit several tests were carried out by pair of binary variables to identify the different typical household profiles. it is a question of constituting combinations of the modalities of these different variables and of predicting the probability of access to these services. the numerical variables of our model are evaluated at their averages within the groups identified from the modalities of the categorical variables. two subparts will be analyzed. the first relates to the identification of standard profiles relating to access to savings while the second refers to access to credit. the identification of savings access profiles is done through the prediction tables presented in tables 7, 8, 9 and 10. in each of these tables, two categorical variables have been taken into account. these modalities have identified the smallest and the highest probability of access to the service in question. the lowest probabilities of access to savings were described as following: a household whose head is over-55 age category with no education or primary level, non-salaried and with no housing ownership, working in the service sector and who did never receive family assistance nor credit during the last 12 mounth preceding the survey. this household has a social capital (member of village association) and has a strong perception of spirit of solidarity within the village. on the other hand, the highest probabilities of access to savings were obtained according to the following modalities of our categorical variables: a household whose head is in the 35 to 55 age group with the level of high school, salaried and with a home owned and operating in trade. this household has received family assistance and credit and is not a member of an association (does not have social capital). it is also indifferent to the spirit of solidarity within its community. in table 11, we see that the probability of the first profil is very close to 0 the second one is close to 100%. the difference between these two profils is statistically significant at the 1% level as mentioned in table 11. in the second part, we have to identify the typical profiles of access tocredit. tables 12, 13, 14, 15 and 16 present the results of ours tests. the other control variables are maintained at their local means within each group identified by the terms of our predictor variables. according to the level of access to credit, the most rationed households profiel is this: a household whose male head is over 55, trader and parttime worker who was unable to save; this leader does not have social capital, holds agricultural land and has primary education level. table 7 predicting the probability of saving by age and level of education | ca el pr(y) 1 | 35 0 0.207 2 | 35 1 0.183 3 | 35 2 0.470 4 | 35 3 0.478 5 | 55 0 0.218 6 | 55 1 0.194 7 | 55 2 0.486 8 | 55 3 0.494 9 | 105 0 0.011 10 | 105 1 0.010 11 | 105 2 0.037 12 | 105 3 0.038 source: our computation with env2015 data table 8 predicting the probability of saving according to sa and od | sa od pr(y) 1 | 0 0 0.075 2 | 0 1 0.115 gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 34 3 | 1 0 0.388 4 | 1 1 0.504 source: our computation with env2015 data table 9 predicting the probability of saving according to sa and od | as fa pr(y) 1 | 1 0 0.209 2 | 1 1 0.984 3 | 2 0 0.076 4 | 2 1 0.950 5 | 3 0 0.363 6 | 3 1 0.992 7 | 4 0 0.026 8 | 4 1 0.861 source: our computation with env2015 data table 10 predicting probabilities of saving according to sc and scp | sc scp pr(y) 1 | 0 0 0.990 2 | 0 1 0.119 3 | 0 2 0.227 4 | 0 3 0.092 5 | 1 0 0.988 6 | 1 1 0.105 7 | 1 2 0.202 8 | 1 3 0.081 source: our computation with env2015 data this household does not have its home ownership and has received family assistance. on the other hand, it was possible to identify household characteristics with full access to credit. it is a household headed by a high school woman in the 35-55 age group working in the industry, a head who was able to save and then is not a member of an association. this household does not have agricultural land but has its own home and a full-time job and has not received family assistance. the difference between these two profiles is statistically significant as shown in table 17. in the last part of our analysis, we tried to understand the impact of gender on the level of access to savings and credit. figures 1 and 2 allowed us to capture this impact. in the first model of this work, the variables mn (number of males in the household) and cred (access or not to credit) were taken into account. table 11 typical household profiles of access to the savings market and significance of the difference in profiles | ca el sa od as fa cred 1 | 55 2 1 1 3 1 1 2 | 105 0 0 0 4 0 0 | scp pr(y) ----------+------------------ 1 | 0 1.000 2 | 3 0.000 specified values of covariates | sc hs hi nal cs mn current | 0 2.7 873 1.57 .296 1.43 | lincom pvalue ll ul -------------+--------------------------------------- 1 | -1.000 0.000 -1.000 -1.000 source: our computation with env2015 data ouoya 35 table 12 prediction of the probability of access to credit by savings and age | ca sv pr(y) 1 | 35 0 0.862 2 | 35 1 0.971 3 | 55 0 0.930 4 | 55 1 0.986 5 | 105 0 0.821 6 | 105 1 0.960 source: our computation with env2015 data table 13 predicting probabilities of access to credit by sc and al | sc al pr(y) ----------+---------------------------- 1 | 0 0 0.943 2 | 0 1 0.926 3 | 1 0 0.954 4 | 1 1 0.941 source: our computation with env2015 data table 14 predicting probabilities of access to credit by od and fw | od fw pr(y) ----------+---------------------------- 1 | 0 0 0.801 2 | 0 1 0.921 3 | 1 0 0.962 4 | 1 1 0.986 source: our computation with env2015 data recall that there was a statistically significant relationship between these variables and the odds of access to savings (sv). we tried to analyze the behavior of the relationship between the variables mn and sv in case of access or not to credit. figure 1 shows the evolution of the probability of access to savings by households as a function of the evolution of the number of male persons with access to credit or not. when the variable mn equal zero, the probability of access to savings is higher among households with a credit than among those who did not. also, while this probability increases with the increase in the number of men in the case of households receiving credit, it is still close to zero for households with no credit. table 15 predicting probabilities of access to credit by hhs and fa | hhs fa pr(y) ----------+---------------------------- 1 | 0 0 0.966 2 | 0 1 0.887 3 | 1 0 0.930 4 | 1 1 0.786 source: our computation with env2015 data table 16 predicitng probabilities of access to credit by education level and business line | el as pr(y) ----------+---------------------------- 1 | 0 1 0.951 2 | 0 2 0.976 3 | 0 3 0.771 4 | 0 4 0.919 gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 36 5 | 1 1 0.918 6 | 1 2 0.960 7 | 1 3 0.662 8 | 1 4 0.868 9 | 2 1 0.936 10 | 2 2 0.969 11 | 2 3 0.717 12 | 2 4 0.895 13 | 3 1 0.998 14 | 3 2 0.999 15 | 3 3 0.987 16 | 3 4 0.996 source: our computation with env2015 data table 17 summary of typical profiles of access to the savings market and significance of the difference in profiles expression: pr(cred), predict() | ca sv sc hhs al el as 1 | 55 1 1 0 0 3 2 2 | 105 0 0 1 1 1 3 | od fw fa pr(y) 1 | 1 1 0 1.000 2 | 0 0 1 0.033 specified values of covariates | hi fem nbmal hs current | 1328 .978 13.8 2.29 . mlincom 2-1 | lincom pvalue ll ul 1 | -0.967 0.000 -0.997 -0.937 source: our computation with env2015 data thus, while this probability is close to 100% when the number of men is 4 among the households receiving credit, it is still close to 0 for households that have not received credit. we can conclude from this first analysis that access to credit strongly determines access to savings and the presence of more men (male) in the household improves the level of access to savings only in the case where the household has prior access to credit. figure 1 evolution of access to saving by number of men and access to credit source: our calcul from env2015 data 0 .2 .4 .6 .8 1 p r( s v ) 0 1 2 3 4 5 6 nber of men in hshold cred=0 cred=1 adjusted predictions with 95% cis ouoya 37 the second graph analyzes the relationship between the level of access to credit and the change in the number of women (variable fem) in the household according to whether or not the household had access to savings. the red curve shows the evolution of the probability of access to credit by the number of female persons in the households that made savings while the blue shows this same probability for households that did not have access to savings. when the variable fem equal zero, the probability of access to credit is higher among households with a saving than among those who did not. we can see that, unlike figure 1 where the probability remains stationary for households that did not have access to credit, there is an increase in the probability of access to credit when the number of women increases, whether the household has made savings or not. when the number of women reaches 4 to 5 individuals, these probabilities are both close to the unit. it can be concluded here that access to savings determines the level of access to credit, but the presence of more women in the household makes it possible to greatly improve the level of access to credit. figure 2 evolution of access to saving by number of men and access to credit source: our calcul from env2015 data conclusion at the end of our analysis, we were able to understand that many determinants influence access to credit and savings. as stated by bendig, giesbert and steiner (2009), many social factors influence the level of access to savings. these factors could include the characteristics of the household head. as kiiza and pederson (2002), we found that several factors can influence households demand for savings. as them in their works in uganda, we find that the decision to hold a bank savings deposit in is positively related to the level of education and work experience of the household head. age categories of heads of households and the sector of activity have diverging effects on household decision to hold a savings account. this decision is further influenced by the level of permanent income. the analysis of the determinants of credit demand revealed results as divergent as those of the demand for savings. the characteristics of the head of the household have diversified effects on household savings. in addition, households in which many members suffer are making more use of credit to meet the costs of caring for their sick members. also, the spirit of solidarity in rural areas makes these households .7 .8 .9 1 p r( c re d ) 0 1 2 3 4 5 6 7 combien de femmes y a-t-il dans le ménage sv=0 sv=1 adjusted predictions with 95% cis gender impact, typical profiles of access to credit and savings markets: a case of rural households in cote d'ivoire 38 obtain better access to credit. as many studies have noted, it has been found that female-headed households have better access to credit than those headed by men (mohamed and temu, 2009). similarly, households that have assets such as their own place of residence are seeing their level of access to credit improved. finally, the increase in the number of children attending school improves the level of access to credit. on the other hand, there was a negative relationship between the demand for credit on the one hand and obtaining family assistance, the size of the household and its income on the other hand. one of the major facts that emerges from this study is the reciprocal causal relationship between the demand for these two financial services. we found that households with access to credit significantly improve their level of access to savings and the opposite too. following this initial analysis, our work focused on the identification of typical household profiles relative to the level of access to(savings and credit. regarding savings, two typical profiles have been identified: firstly, the household profile having an almost zero probability of access to this service, and secondly, the profile of the household with the highest probability of access to this same service. the lowest probabilities of access to savings were identified in the following categories: a household whose head is over-55 age category with no education or primary level, non-salaried and with no housing ownership, working in the service sector and who did never receive family assistance nor credit during the last 12 mounth preceding the survey. this household has a social capital (member of village association) and has a strong perception of spirit of solidarity within the village. on the other hand, the highest probabilities of access to savings were obtained according to the following modalities of our categorical variables: a household whose head is in the 35 to 55 age group with the level of high school, salaried and with a home owned and operating in trade. this household has received family assistance and credit and is not a member of an association (does not have social capital). it is also indifferent to the spirit of solidarity within its community. the difference between these two profils is statistically significant. subsequently, two standard profiles have also been identified in terms of access to credit: firstly, the household most rationed in their access to credit, and secondly, the household with the highest probability of having access to credit. thus, the analysis of the results of the prediction tables made it possible to identify the following characteristics concerning the most rationed household in their access to credit: according to the level of access to credit, the most rationed households profiel is this: a household whose male head is over 55, trader and part-time worker who was unable to save; this leader does not have social capital, holds agricultural land and has primary education level. this household does not have its own home and has received family assistance. on the other hand, it was possible to identify household characteristics with full access to credit. it is a household headed by a high school woman in the 35-55 age group working in the industry, a head who was able to save and then is not a member of an association. this household does not have agricultural land but has its own home and a full-time job and has not received family assistance. the difference between these two profiles is statistically significant. the last part of our work allowed us to take into account the gender impact on acess to saving and credit. we discovered that the increase in the number of males in the household has a positive influence on the level of access to savings only if the household has previously had access to credit. 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 56 the impact of tax system on global competitiveness. analysis on the level of european union member states mihaela brînduşa tudose “petre andei” university of iaşi brindusatudose@gmail.com constantin străpuc “ştefan cel mare” university of suceava strapuc@gmail.com abstract summarizing the results of theoretical and empirical research, the paper aims to analyze the impact of tax system on global competitiveness through the following three variables: taxation on incentives to invest; total tax rate and taxation on incentives to work. summarizing the analysis to the european union member states, the paper presents rankings and provides interpretations for each case. luxembourg is the country where there is registered: a) the biggest impact on competitiveness of tax policies supporting investment, b) the largest fiscal affordability (measured by gdp/capita and total tax rate) and c) the most generous labor taxation system in the eu. however, in the ranking realized based on the global competitiveness index luxembourg ranks on the 22nd place, on the first place being finland. keywords the global competitiveness index; efficiency; innovation; the total tax rate; fiscal facilities jel classification f02; f14 introduction the analysis of global competitiveness permits the assessment of the extent to which various economies of the world countries have managed to meet the challenges. regardless of their size, the economies dependent on foreign economic exchanges were confronted with unusual experiences; the economic crisis has generated a crisis of public finances which on the background of political deadlock has made it more difficult to recover even for the most advanced economies of the world. in such a scenario has been admitted that the foundation of economic growth and long-term development is the exploitation of the productive potential of each actor on the world market; the economic policies and institutional reforms were accepted as basic tools in redefining the quantitative and qualitative coordinate of recovery through competitiveness and sustainable performance. one of the determinants of competitiveness is the taxation. assessing the impact of taxation on competitiveness must not be achieved only through the prism of the rates afferent to regulated taxes, but also in terms of the ease with which these taxes can be managed by the business environment (in terms of calculation, declaration and payment) and of the degree of collection, number of fiscal and para-fiscal elements etc. the main objective of the research was to identify the extent of the impact of taxation on the global competitiveness of european union member states. to achieve this goal, the paper is structured as follows: the first section presents the state of tudose, străpuc 57 knowledge in the field; section two presents the methodological coordinates of the research on global competitiveness; the third section presents the global competitiveness index for eu member states; in the fourth section is identified the magnitude of the taxation impact on the global competitiveness; the last section summarizes the conclusions and shows the limits and future directions of research. 1. the state of knowledge in the field the complexity of contemporary economies, diversification and specialization, technical progress, increased dependency on raw materials, crises and increasing concerns on risk reduction while maximizing the gains/benefits have redefined the role, dynamics and structure of indicators for assessing global competitiveness. barre (1976) first talked about competitiveness for characterizing the competitive economic policy oriented to the exterior. recent research has brought additional contributions in international competitiveness. the competitiveness was defined as: a) the ability to create wealth (kao, 2008; onsel, 2008), being considered a relevant indicator for assessing countries and regions; b) a high standard of living in a country with the lowest rate of unemployment (european competitiveness report, 2010); c) a set of institutions, policies and factors that determine the level of productivity of a country (sala-i-martin et al., 2009). summing up the theoretical and empirical research results, it emerges the idea that winning more profitable positions depends on variables such as: performance, welfare, efficiency, innovation and sustainability (herciu, 2013). in order to ensure progress in research was not carried out a strict limitation on the positive heuristic, but was noticeable also the negative heuristics. the most “fierce” critical of the concept of competitiveness was krugman (1996), which said that the definitions are “elusive and meaningless when related to national economies; for the economies with low international trade, competitiveness is a fun way of saying productivity”. subsequent work challenged paul krugman's arguments and showed that international competitiveness is a function of savings and investments, respectively a function of fiscal and monetary policy mix (howes & singh, 2000). in retrospect, through the filter critical rationalism, we appreciate that the solidity of international competitiveness theory has proven its strength and importance. noteworthy is the fact that the research path was not unidirectional, but there were turns in plan of the debates. 2. methodological coordinates of the research on global competitiveness to appreciate the impact of taxation on global competitiveness we relate to reports by world economic forum (schwab, 2013, 2014). according to the methodology of these reports, to assess competitiveness were analyzed: the determinant factors (called pillars of competitiveness): (1) basic factors (institutions, infrastructure, macroeconomic environment, health and primary education); (2) increasing efficiency factors (professional improvement, efficiency and size of the markets – of goods, labor and financial receptiveness to new technologies); (3) innovation factors (quality and complexity of business and innovation); the development stages of each economy: a) stage 1 guidance on the basic factors of competitiveness; b) transition from stage 1 to stage 2; c) stage 2 – competitiveness focus on efficiency; d) transition from stage 2 to stage 3; e) stage 3 based on innovation. the impact of tax system on global competitiveness. analysis on the level of european union member states 58 the influence of taxation on global competitiveness index is caught in the second group of factors (related to efficiency). in the category of determinants of efficiency were included: higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; market size. to assess the goods market efficiency were considered the following issues: intensity of local competition; extent of market dominance; effectiveness of anti-monopoly policy; effect of taxation on incentives to invest; total tax rate (percent of profits); number procedures to start a business; number days to start a business; agricultural policy costs; prevalence of trade barriers; trade tariffs (percent of duty); prevalence of foreign ownership; business impact of rules on fdi; burden of customs procedures; imports as a percentage of gdp; degree of customer orientation and buyer sophistication. to assess the labor market efficiency were considered the following issues: cooperation in labor-employer relations; flexibility of wage determination; hiring and firing practices; redundancy costs, weeks of salary; effect of taxation on incentives to work; pay and productivity; reliance on professional management; country capacity to retain talent; country capacity to attract talent; women in labor force, ratio to men. as shown, the impact of the fiscal elements is quantified in order to assess the efficiency of the goods market and labor market, and then to be found in one of the three subindexes that were the basis for determining the global competitiveness index (gci). in brief, the influence of fiscal factors on gci is shown in figure 1. factors pillar subindexes index public institution private institution institutions basic requirements global competitiveness index … … effect of taxation on incentives to invest goods market efficiency efficiency enhancers total tax rate (percent of profits) … effect of taxation on incentives to work labor market efficiency …. …. … business sophistication innovation and sophistication factors … r&d innovation figure 1 the transposition of fiscal factors influences in gci 3. the image of global competitiveness of the eu member states in order to sketch a picture of how eu countries have managed to cope in the face of new challenges we will relate to the results of reports by the world economic forum (schwab, 2013, 2014) on global competitiveness. in terms of annual classification on different predefined stages of development of member states, wef reports reveal a shy country migration. a progress was made on line of classification only by slovak republic (2012/2013) and estonia (2013/2014), the last one managed to fit in the third stage of development. according to the latest wef report (2014/2015), at european union level, out of the 28 states, two (romania and bulgaria) fall into stage two (based on efficiency), five tudose, străpuc 59 fall in the transition stage from efficiency to innovation (croatia, hungary, latvia, lithuania, poland), other states (21 in number) fit in the third stage. the image of ordering the eu member states depending on the size of global competitiveness index is shown in figure 2. figure 2 ranking the eu countries according to the index of global competitiveness (2014/2015) 4. analysis of the impact of taxation on global competitiveness the impact of the fiscal elements is quantified in order to assess the efficiency of the goods market and the labor market; the pursued fiscal issues were: effect of taxation on incentives to invest (etii); total tax rate (percent of profits) (ttr) and effect of taxation on incentives to work (etiw). table 1 gives the evolution of these influences. table 1 quantifying the impact of fiscal factors on global competitiveness country etii ttr etiw dgp per capita (thousand usd) 2013/ 2014 2014/ 2015 2013/ 2014 2014/ 2015 2013/ 2014 2014/ 2015 2013/ 2014 2014/ 2015 1 austria 3.9 3.6 53.1 52.4 3.2 2.9 47.1 48.9 2 belgium 3.3 3.1 57.7 57.5 2.3 2.3 43.6 45.3 3 bulgaria 3.4 3.6 28.7 27.7 3.3 3.4 7.0 7.3 5 croatia 2.3 2.1 32.8 19.8 2.3 2.2 12.9 13.5 4 cyprus 4.2 4.4 23.0 22.5 4.2 4.4 26.3 24.7 6 czech republic 2.7 3.3 49.2 48.1 2.7 3.1 18.5 18.8 7 denmark 3.2 3.2 27.7 27.0 2.8 2.7 56.2 59.1 8 estonia 5.0 4.9 67.3 49.4 4.3 4.3 16.3 19.0 9 finland 4.0 3.9 40.6 38.8 3.8 3.6 46.0 47.1 10 france 2.6 2.8 65.7 54.7 2.8 2.9 41.1 43.0 11 germany 4.1 4.1 46.8 49.4 3.7 3.7 41.5 45.0 12 greece 2.4 2.4 44.6 44.0 2.5 2.5 22.0 21.8 the impact of tax system on global competitiveness. analysis on the level of european union member states 60 13 hungarian 2.7 2.8 50.3 49.7 2.7 2.8 12.7 13.4 14 ireland 4.6 4.5 26.4 25.7 3.5 3.4 45.8 45.6 15 italy 2.1 2.0 68.3 65.8 2.0 1.9 33.1 34.7 16 latvia 3.7 3.8 36.6 35.9 3.1 3.3 13.9 15.2 17 lithuania 3.2 3.1 43.7 43.1 3.0 2.9 14.0 16.0 18 luxembourg 5.3 5.3 21.0 20.7 5.2 5.1 107.2 110.4 19 malta 4.2 4.3 41.6 41.0 4.0 4.2 20.8 22.8 20 netherlands 4.6 4.6 40.1 39.3 3.8 3.7 46.1 47.6 21 poland 3.1 3.3 43.8 41.6 3.3 3.4 12.5 13.3 22 portugal 2.6 2.9 42.6 52.3 2.4 2.8 20.1 20.7 23 romania 2.6 2.9 44.2 42.9 2.1 2.5 7.9 8.9 24 slovak republic 3.1 3.2 47.9 47.2 2.7 2.9 16.9 17.7 25 slovenia 2.9 2.8 34.7 32.5 2.7 2.5 22.2 22.7 26 spain 3.1 2.9 38.7 58.6 3.0 2.8 29.2 29.1 27 sweden 4.5 4.3 53.0 52.0 4.4 4.2 55.1 57.9 28 united kingdom 4.3 4.3 35.5 34.0 4.0 4.1 38.5 39.5 etii – effect of taxation on incentives to invest; ttr – total tax rate, % profits; etiw – effect of taxation on incentives to work source: processed after schwab, k. (ed.), the global competitiveness report 2013–2014, report 2014–2015, world economic forum, geneva. a) as regards effect of taxation on incentives to invest (etii) on goods market efficiency, respectively on global competitiveness index, the reports show modest variation in each member state (2013/2014). positive evident evolutions, with relevant impact on the global competitiveness index, presents france, portugal, romania and the czech republic (figure 3). looking through the prism of all european union member countries are observed major differences. at the bottom of the ranking are italy, croatia and greece, and the top of the ranking is netherlands, estonia and luxembourg. the competitiveness of countries at the bottom of the ranking is affected by the tax burden and restrictive and discriminatory rules on foreign direct investment (fdi). figure 3 effect of taxation on incentives to invest tudose, străpuc 61 b) the analysis of tax burden chromatic on profit configures a wide range, including both somber tones (economies whose tax rate exceed 50%) and lighter tones (economies whose tax rate gets down to 20%) (figure 4). favorable evolutions (towards reducing taxation) were recorded by croatia and estonia. according to a working document of the european commission (ec, 2014) there can be identified the causes of this evolution: estonia had a strong budgetary position; croatia has taken measures so that the structure of taxation should no longer focus on work but on taxes less harmful to economic growth. figure 4 total tax rate for a meaningful interpretation of the total tax rate we followed its correlation with gdp per capita (for 2015); this correlation allows assess the level of supportability of the tax burden. figure no. 5 reveals that countries with a total tax rate higher than 40% and a gdp per capita below usd 20,000 are presenting the lowest level of supportability (romania, poland, hungary, lithuania etc.). at the opposite pole is luxembourg that has the highest gdp/capita and the lowest overall tax rate. figure no. 5. ttr, gpd per capita (2014/2015) the impact of tax system on global competitiveness. analysis on the level of european union member states 62 croatia has a special situation; although it has recorded one of the lowest levels of profit tax, taxation remains burdensome due to the low level of gdp per capita. therefore, this eu member state will have to continue strengthening the institutional framework and promote the efficiency of goods and services market. c) effect of taxation on incentives to work (etiw) put their mark on the efficiency and flexibility of the labor market, which in turn influences global competitiveness. in the bottom of the ranking countries (italy, romania, and belgium) high levels of labor taxation affects economic competitiveness (figure 6). at the opposite pole is luxembourg with one of the most generous labor tax systems in the eu. figure no. 6. effect of taxation on incentives to work (etiw) conclusions the competitiveness has been and remains a priority in terms of scientific debate, but also a major concern for all world economies. national fiscal policies have a major impact on the effective functioning of markets, impact that is transmitted to global competitiveness. for a meaningful interpretation, the tax burden must be correlated with the volume of taxable mass. in the european union, the global competitiveness index varies between 4.04 (greece) and 5.5 (finland); at the bottom of the ranking is greece, croatia, slovakia and slovenia, where prevails the influence of basic factors and of increase efficiency factors. at the top of the ranking is the uk, netherlands, germany and finland, falling in the third stage of development (based on innovation). the analysis of the impact of taxation on global competitiveness for european union member states allows the following conclusions: a) the fiscal policies supporting investment contributes positively to competitiveness in countries such as luxembourg, estonia, netherlands, ireland, uk; the states where the effects of tax incentives on investment bring the smallest contribution to competitiveness are italy, croatia and greece; the dynamic analysis found an increase in concerns on this matter in france, portugal, romania and the czech republic; tudose, străpuc 63 b) knowing of the total tax rate (calculated as a percentage of profit) allows isolated interpretation; the correlation with gdp per capita allowed to observe the supportability of the tax burden; the states with a total tax rate higher than 40% and a gdp per capita below usd 20,000 are presenting the lowest level of supportability (romania, poland, hungary, lithuania etc.); at the opposite pole is luxembourg that has the highest gdp/capita and the lowest overall tax rate; c) the level of labor taxation affects the efficiency and flexibility of the labor market, respectively the global competitiveness; the most generous system of taxation of labor in the eu is found in luxembourg; at the opposite pole is italy, romania and belgium. limitations and future directions of research. the research is only using the information provided by reports of the world economic forum. to overcome this limit in future research we consider to also analyze the information provided by other papers (sources) but also to make projections on the impact of taxation on the global competitiveness of european union member states. references barre, r. (1976), economie politique, vol ii, paris, puf. european union (2010), european competitiveness report 2010, luxembourg, publications office of the european union. herciu, m. (2013), studii post-doctorale în economie, vol. v, studii şi cercetări privind impactul globalizării asupra structurii şi dinamicii economiilor, bucureşti, editura academiei române. howes c., singh, a. (eds.) (2000), competitiveness matters. industry and economic performance in the u.s., university of michigan press. kao, c., wu, w., hsieh, w. j., wang, t. y., lin, c., chen, l. h. (2008), measuring the national competitiveness of southeast asian countries, european journal of operational research, 187, 613-628. krugman, p. (1996), making sense of the competitiveness debate, oxford review of economic policy, 12(3), 17-25. onsel, s., ulengin, f., ulusoy, g., aktas, e., kabak, o. topcu, y. i. (2008). a new perspective on the competitiveness of nations, socio-economic planning sciences, 42, 221-246. sala-i-martin, x., blanke, j., drzeniek hanouz, m.,geiger, t., mia, i. (2009), the global competitiveness index 2009-2010. contributing to long-term prosperity amid the global economic crisis, geneva, world economic forum. schwab, k. (ed.) (2013), the global competitiveness report 2013–2014, geneva, world economic forum. schwab, k. (ed.) (2014), the global competitiveness report 2014–2015, geneva, world economic forum. studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 38 the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient olivia christine chandra atma jaya catholic university of indonesia, jakarta, indonesia oliviachandra06@gmail.com mukhlasin atma jaya catholic university of indonesia, jakarta, indonesia mukhlasin_nur@yahoo.com abstract earnings quality can be determined from the market or investor reaction to information in the published financial statements. but there are some factor, which can be considered to be biased for investors in determining their investment in a company. market reaction can be proxy by earning response coefficient. this study aims to examine the effect of tax avoidance, foreign direct investment and capital intensity on earnings response coefficient. the population in this study is companies from manufacturing sector listed on the indonesia stock exchange (idx) for the period 2017-2019. data obtained from the idx website, yahoo finance and website of certain companies. the population of this study are 135 observation data. the hypothesis in this study were tested by multiple linear regression analysis. the result of this research are: 1) foreign direct investment and capital intensity have a positive effect on earnings response coefficient. 2) tax avoidance has no influence on earnings response coefficient. keywords tax, tax avoidance, foreign direct investment, capital intensity, earning response coefficient. jel classification m41; m48 introduction the structure of the company in this modern era has a separation of authority between management and shareholders. based on agency theory because of the separation of authority can lead to asymmetry information (jensen and meckling, 1976). this happens because management is considered to have more information than shareholders because management directly works in the field. to reduce the asymmetry information, financial statements are made as a form of accountability report from management to shareholders. financial statements can influence decision making to determine which companies have the potential to provide them with capital gains. this can be seen from the quality of earnings reflected in the financial statements. quality earnings must be able to provide adequate and reliable information for users of financial statements such as shareholders, potential investors, creditors, and other parties. based on signaling theory, quality earnings on financial statements can be a signal from management to investors that the company has a good performance (godfrey et al, 2010). therefore ,investors will give a good response and will invest the money they have in the company. informative earnings can be measured by earnings response coefficient (erc). erc can be defined as the level of earnings informativeness for investors. the result of an erc is determined by the investor's response to the announcement of earnings from financial statements. a high erc can the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient 39 indicate the earnings provided are informative, which can increase firm value and stock returns. the amount of earning in a company can be used as a basis for determining taxes. this causes many companies to have a tendency to do tax avoidance, in order to minimize the taxes paid on the company's net income. tax avoidance is indicated to affect earnings response coefficient (erc). chen et al (2013) explained that there is a negative relationship between tax avoidance and firm value. therefore, when companies do tax avoidance, then the firm value tends to decrease. so, fewer investors will invest their funds in the company. this contradicts, with research by mukhlasin and annisa (2018), which states that tax avoidance has a negative influence on earnings response coefficients. according to investors' perceptions, tax avoidance will reduce the quality of revenue information, reflect the lack of good corporate governance, lack of transparency and incur agency and legal costs, the costs incurred are greater than the tax savings made. meanwhile, according to desai and dharmapala (2009), tax avoidance has no significant effect on increasing company value. the result will have a positive effect if the company if it has good governance but does not apply to companies with lack of good corporate governance. besides tax avoidance, several other factors can affect the earnings response coefficient, such as foreign direct investment and capital intensity. first, foreign direct investment is a foreign investment made by the company to other countries for a long period. such investments are loans or purchases in management, joint ventures, expert transfers, and technology transfers. foreign direct investment is generally carried out in countries with low-cost resources than the country of origin, then the expense can be minimized, sales continue to run and company profits will increase, therefore can affect the erc. a company that does foreign direct investment, have foreign ownership in the company, rhee & wang (2009) stated that foreign ownership can reduce stock liquidity, because it increases asymmetric information between foreign and local investors, thereby reducing stock returns. meanwhile, research by sekhri and haque (2015) stated that foreign direct investment can improve the economy and provide opportunities for industries to improve technology, access to global managerial skills, utilize human and natural resources optimally, and global competitive advantages with greater efficiency. hence there is a positive influence between foreign direct investment in the development of the stock market. the second factor is capital intensity, which describes the number of fixed assets owned by a company. elmasr (2007) found there are long-term constraints on the ability of companies with high capital intensity to produce consistent growth in shareholder value. different results found by praet (2010), high capital intensity can be invested when companies experience financial constraints. besides, large investments reflect confidence in the prospects for future growth malik and shaheen (2012) found companies with high capital intensity can improve product quality and reduce production time. saji and harikumar (2014) stated that capital intensity has a positive effect on stock returns. companies with high capital intensity, especially in the industrial sub-sector that requires special equipment or technology such as the pharmaceutical and automotive subsectors, have fewer competitors because new companies will have difficulty committing or buying equipment for production or factory because not able to be used anymore for other uses or will be difficult to sell. based on the explanation above, there is still a research gap found in each research variable. therefore, this study was conducted to re-examine the effect of tax avoidance, foreign direct investment and capital intensity on earnings response coefficient. chandra, mukhlasin 40 literature review and hypotheses development agency theory agency theory explains the relationship between principals (shareholders) and agents (management). jensen and meckling (1976) defines an agency relationship as a contract between the principal and the agent, to provide services on behalf of the principal by giving authority to make decisions to the agent. the separation of authority will cause agency problems such as differences in interests and information asymmetries that lead to agency costs. agency costs are divided into monitoring costs, bonding costs, and residual loss. monitoring costs are the costs incurred by principals to supervise and control agent behavior. bonding costs are the costs borne by the agent to show that the agent has behaved following the interests of the principal. residual loss is the cost of decreasing the welfare of the principal because of the difference in decisions between the agent and the principal. this happens because management gets more information about the company compared to shareholders. accordingly, asymmetry information can be reduced the company makes financial reports then investors acknowledge the performance of management. signalling theory according to godfrey et al (2010), signaling theory is done when managers provide information voluntarily to investors to help in decision making. if the manager has high expectations of the company's growth rate in the future, then the manager will give a signal to investors through company information that is publicly disclosed in this case through financial statements. signaling theory is focused on communication to investors about positive and negative information that occurs in the company. besides, there are 4 elements in signaling theory such as signaling, signal, receiver, and feedback. signaller is management that has information about the company. signal is a form of communication that contains positive or negative information from a signaller. receiver is a signal receiver like an investor. receiver will observe and interpret the signal given. feedback is sent from the receiver to the signaler in response to the signal given (connelly et al, 2010). hypothesis development tax avoidance is an act of utilizing a tax gap (gray area) through transactions that can reduce the tax burden and are legal. however, tax avoidance can reflect the flow of information between management and shareholders is not good and can cause not transparent information in the company. management can act opportunistically and not according to what shareholders want. this represents the existence of poor governance in the company. also, based on the signaling theory with the existence of tax avoidance can be biased towards signals on financial statements, especially reports on company profits and management performance, which can influence investor decisions. investors can assume is the result of taxation and does not reflect the actual profit on the company. the statement above is in line with research by hanlon and slemrod (2009) and mukhlasin and annisa (2018), there is a negative market reaction to companies that avoid tax, then tax avoidance will reduce the quality of income information according to investors' perceptions. according to investors, tax avoidance will reduce the quality of revenue information, reflect poor corporate governance, lack of transparency, and incur agency and legal costs. then the costs incurred are greater than the tax savings made. based on the results of previous studies, the first hypothesis in this study is as follows: hypothesis 1 : tax avoidance has a negative effect on earning response coefficient the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient 41 companies with foreign direct investment are financially established companies because able to invest in foreign countries with large capital costs. in general, foreign direct investment is carried out in countries with a lot of resources but are cheaper than the country of origin so that the burden will be reduced but sales will continue and company profits will increase, so this can affect the erc. this statement is proven by the research of sekhri and haque (2015) found a positive influence between foreign direct investment in the development of the stock market. with foreign direct investment, it is considered to be able to improve the economy, provide opportunities for industries to improve technology, access to global managerial skills, optimal utilization of human resources and natural resources, and global competitive advantage with greater efficiency. therefore, a company with foreign direct investment will improve the quality of the company's profit because it reflects the company's actual profit. then companies with foreign direct investment can be a signal to investors that the company has good performance. based on the description above, the hypothesis proposed is: hypothesis 2 : foreign direct investment has a positive effect on earning response coefficient capital intensity reflects the efficiency of a company using assets to generate sales. with the high level of capital intensity, the costs incurred by the company will be even higher. but on the other hand companies with high capital intensity show an increase in product quality and save production time. then company earnings can increase. praet (2010) found that companies with high capital intensity can divest their assets when experiencing financial constraints and reflect management's confidence in future growth prospects. malik and shaheen (2012) stated that companies with high capital intensity can improve production quality and save production time. saji and harikumar (2014) stated that capital intensity had a positive effect on stock returns. besides, capital intensity can become an obstacle for a new company, especially the industrial subsector that requires special equipment or technology such as pharmaceuticals and automotive. companies will find it difficult to use production equipment for other uses as well as it is difficult to recast, so the company will consider committing or buying the equipment. so that competitors will be less and stock returns will be higher. based on the signaling theory, investors will see companies with a high capital intensity that can increase company profits, so investors will invest in these companies. from the description above, the hypothesis proposed is: hypothesis 3 : capital intensity has a positive effect on earning response coefficient research methods data, population and sample the samples in this study are companies in the manufacturing sector listed on the indonesia stock exchange (idx) in 2017 2019. the exempted samples in this study were companies that lost, use foreign currencies (other than rupiah) in financial statements, and do not report financial statements from 2017 2019. referring to these three criteria then the sample is reduced by outliers, then the final sample obtained is 135 data. the study was conducted with tax avoidance, foreign direct investment, and capital intensity as the independent variable, while earnings response coefficient as the dependent variable. chandra, mukhlasin 42 definition and measurement of research variables erc is used as a proxy for earnings quality in financial statements. scott (2015) stated erc is the influence of unexpected earnings on cumulative abnormal return (car) which is shown through the slope coefficient in the regression of abnormal returns of stocks with unexpected earnings. erc calculates stock prices and accounting profits, which are reflected in cumulative abnormal returns and unexpected earnings. a low erc value reflects information on earnings that is less informative for investors in making decisions, whereas a high erc value shows information on quality earnings reflected in financial statements then can be used for decision making. in this study, erc calculated monthly. based on scott (2015), erc will be calculated in the following steps: i. calculate cumulative abnormal return (car) 𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 = σ𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 where, 𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 : cumulative abnormal return of stock i on period t 𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 : abnormal return of stock i on period t a. calculate abnormal return (ar) 𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 = 𝐶𝐶𝑖𝑖𝑖𝑖 − 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 where, 𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 : abnormal return of stock i on period t 𝐶𝐶𝑖𝑖𝑖𝑖 : actual return of stock i on period t capm : expected return of stock i on period t b. calculating the expected return (capm) 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 = 𝐶𝐶𝑓𝑓 + 𝛽𝛽(𝐶𝐶𝑚𝑚 − 𝐶𝐶𝑓𝑓) where, capm : expected return of stock i on period t 𝐶𝐶𝑓𝑓 : returns obtained from securities with free risk ꞵ : systematic risk of stock i relative to the index 𝐶𝐶𝑚𝑚 : return on the market c. calculate ꞵ (beta) 𝛽𝛽 = 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 ( 𝐶𝐶𝑖𝑖, 𝐶𝐶𝑚𝑚) 𝜎𝜎2(𝐶𝐶𝑚𝑚) where, ꞵ : systematic risk of stock i relative to the index 𝐶𝐶𝑖𝑖 : returns obtained from stock i 𝐶𝐶𝑚𝑚 : returns on the market (associated with cspi) σ2 : variants of returns on the market (cspi) d. calculate actual return (𝐶𝐶𝑖𝑖𝑖𝑖) 𝐶𝐶𝑖𝑖𝑖𝑖 = 𝐶𝐶𝑖𝑖 − 𝐶𝐶𝑖𝑖−1 𝐶𝐶𝑖𝑖−1 where, 𝐶𝐶𝑖𝑖𝑖𝑖 : actual return of stock i on period t 𝐶𝐶𝑖𝑖 : the company's stock price in the period t 𝐶𝐶𝑖𝑖−1 : the company's share price in the period t-1 ii. calculate earning response coefficient from simple linear regression between car and eu 𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 = 𝛼𝛼0 + 𝛼𝛼1𝑈𝑈𝑈𝑈𝑖𝑖𝑖𝑖 + 𝜀𝜀𝑖𝑖𝑖𝑖 where, 𝐶𝐶𝐶𝐶𝐶𝐶𝑖𝑖𝑖𝑖 : cummulative abnormal return of stock i on period t α : a constant 𝑈𝑈𝑈𝑈𝑖𝑖𝑖𝑖 : unexpected earnings of the company i in the period t 𝜀𝜀𝑖𝑖𝑖𝑖 : component error the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient 43 a. calculate unexpected earnings (ue) 𝑈𝑈𝑈𝑈𝑖𝑖𝑖𝑖 = (𝑈𝑈𝑖𝑖𝑖𝑖 − 𝑈𝑈𝑖𝑖,𝑖𝑖−1) 𝑈𝑈𝑖𝑖,𝑖𝑖−1 where, 𝑈𝑈𝑈𝑈𝑖𝑖𝑖𝑖 : unexpected earnings of the company i in the period t 𝑈𝑈𝑖𝑖𝑖𝑖 : earnings of the company i in the period t 𝑈𝑈𝑖𝑖,𝑖𝑖−1 : earnings of the company i in the period t-1 tax avoidance is generally defined as an explicit tax reduction. tax avoidance can be considered as a form of legal tax planning strategy. besides tax avoidance, tax evasion is also another form of tax planning but illegal (hanlon and heitzman, 2010). tax avoidance is accomplished by utilizing the tax gap (gray area) through transactions that can reduce the tax burden. in this study, tax avoidance will be calculated in 2 steps: i. researcher will use an effective tax rate that is with the formula : 𝑈𝑈𝐸𝐸𝐶𝐶 = 𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐼𝐼𝐼𝐼 𝐸𝐸𝐶𝐶𝑇𝑇 𝑈𝑈𝑇𝑇𝐸𝐸𝐼𝐼𝐼𝐼𝐸𝐸𝐼𝐼 𝑁𝑁𝐼𝐼𝑁𝑁 𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐼𝐼𝐼𝐼 𝐵𝐵𝐼𝐼𝐵𝐵𝐶𝐶𝐶𝐶𝐼𝐼 𝐸𝐸𝐶𝐶𝑇𝑇 ii. after getting the effective tax rate, the researcher will do the following calculation : 𝐸𝐸𝐶𝐶𝑇𝑇 𝐶𝐶𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴𝐶𝐶𝐼𝐼𝐼𝐼𝐼𝐼 = 1 𝑈𝑈𝐸𝐸𝐶𝐶 foreign direct investment (fdi) is an investment made by a home country company to a host country with a long-term goal. the existence of fdi provides benefits such as economic growth, expanding employment, and increasing investment. according to park et al (2016), companies with foreign direct investment have overseas subsidiaries. for this research, foreign direct investment is a dummy variable, where if a company has foreign direct investment, it will be given a point of 1 and if otherwise it will be given a point of 0. capital intensity describes the efficiency of a company's performance by looking at the use of assets (in the form of fixed assets and inventories) in generating revenue. noor et al (2010) state that capital intensity is defined as the ratio between fixed assets such as tools, machines, and various properties against total assets. this ratio reflects how the size of the company's assets is invested in fixed assets. according to lanis and richardson (2013), capital intensity can be calculated by : 𝐶𝐶𝐶𝐶𝐶𝐶𝐼𝐼𝑁𝑁𝐸𝐸 = 𝐸𝐸𝐶𝐶𝑁𝑁𝐶𝐶𝑇𝑇 𝐹𝐹𝐴𝐴𝑇𝑇𝐼𝐼𝐴𝐴 𝐶𝐶𝐸𝐸𝐸𝐸𝐼𝐼𝑁𝑁 𝐸𝐸𝐶𝐶𝑁𝑁𝐶𝐶𝑇𝑇 𝐶𝐶𝐸𝐸𝐸𝐸𝐼𝐼𝑁𝑁 this research used 3 control variables so independent variable research on the dependent variable is not affected by other factors outside this research which, total assets, return on assets (roa) and debt to equity (der). total assets are the first control variable used in this study. total assets are proxied as the size of a company. the total assets are obtained from the annual financial statements reported by the company. return on assets (roa) reflects the effectiveness of management in generating profits with existing assets. roa is obtained by the formula: 𝐶𝐶𝑅𝑅𝐶𝐶 = 𝑁𝑁𝐼𝐼𝑁𝑁 𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐼𝐼𝐼𝐼 𝐶𝐶𝐵𝐵𝑁𝑁𝐼𝐼𝐶𝐶 𝐸𝐸𝐶𝐶𝑇𝑇 𝐸𝐸𝐶𝐶𝑁𝑁𝐶𝐶𝑇𝑇 𝐶𝐶𝐸𝐸𝐸𝐸𝐼𝐼𝑁𝑁𝐸𝐸 chandra, mukhlasin 44 debt to equity (der) shows the company's ability to pay long-term debt. der is obtained by the formula: 𝐷𝐷𝑈𝑈𝐶𝐶 = 𝐸𝐸𝐶𝐶𝑁𝑁𝐶𝐶𝑇𝑇 𝐷𝐷𝐼𝐼𝐷𝐷𝑁𝑁 𝐸𝐸𝐶𝐶𝑁𝑁𝐶𝐶𝑇𝑇 𝑈𝑈𝐸𝐸𝐸𝐸𝐴𝐴𝑁𝑁𝐸𝐸 result and disccusion analysis of the data used in this study consisted of descriptive statistical analysis and multiple linear regression analysis and processed with spss 22.0. descriptive statictics analysis descriptive statistical analysis provides an overview of the data in research that can be seen with the average value (mean), standard deviation, maximum value (maximum), minimum value (minimum) and variance. the test results in this study can be seen in table 1 below: tabel 1 descriptive statistical test results erc :earning response coefficient; taxavd : tax avoidance; ci : capital intensity; roa : return on asset; der : debt to equity; ta : total aset source : computed by the author multiple linear analysis tabel 2 analysis results variable b sig. vif tolerance glesjer taxavd 0,00 0,945 1,030 0,970 0,138 fdi 0,009 0,027 1,130 0,885 0,904 ci 0,033 0,002 1,079 0,927 0,862 k-s test 0,200 f value 2,295 sig. (anova) 0,039 adjusted r square 0,055 durbin watson 2,024 n 135 source : computed by the author the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient 45 based on data from table 2, the results of the kolmogorov-smirnov one-sample show a significance value of 0.200. the significance value is greater than the predetermined significance value of α = 0.05 (5%). this shows the research is normally distributed. it can be seen the tolerance value of taxavd, fdi, ci, roa, der and ta is greater than 0.10 and the vif value is smaller than 10. from these results it can be concluded, there are no symptoms of multicollinearity on the independent variables. the durbin-watson value is 2,024, with a sample of 135 (n = 135) and independent and control variables totaling 6 (k = 6). with a significance value set of 0.05. then obtained dl value of 1.6272 and du value of 1.8125. therefore there is no autocorrelation in this study (1, 8125 <2.024 <2.1875). in table 2, the significance value of the glesjer test, namely tax avoidance, foreign direct investment and capital intensity is greater than the significance value set at 0.05. then the independent variable does not experience symptoms of heteroscedasticity. then there is no heteroscedasticity on the independent variables. adjusted r square of 0.055 which means the independent variable can explain or influence 5.5% of the dependent variable. while the remaining 94.5% (100% 5.5%) is explained by other variables outside this research model. in the anova test indicated by an f value of 2.295 with a significant value of 0.039 < predetermined significance value of 0.05. therefore, the independent variables together have an influence on the dependent variable. the effect of tax avoidance on earnings response coefficient can be seen with a significance value of 0.945 and a regression coefficient of 0.000. when compared with the predetermined significance value, the significance value of tax avoidance is greater than 0.05 (α = 0.05). this shows that tax avoidance does not affect earnings response coefficient. therefore, first hypothesis that states tax avoidance has a negative effect on the earnings response coefficient is rejected. the results of this study are not in line with research by hanlon and slemrod (2009) and research by mukhlasin and annisa (2018), which revealed a negative influence between tax avoidance on firm value. this happens because, tax avoidance is considered to reduce the quality of income information, or cause asymmetry information based on investor perceptions. but the results of this study are in line with research by desai and dharmapala (2009), tax avoidance has no effect in increasing company value. this happens because of the tendency of investors to consider investing in companies whose profits are stable or high, and not based on the amount of tax paid by the company. also other factors are more considered such as the size of the company, the level of managerial ownership, and institutional ownership of the company. and the practice of tax avoidance is considered in accordance with tax regulations (legal). therefore, whether or not tax avoidance is carried out by a company does not affect an investor's decision to invest. then, investors will not withdraw their investment or not invest even if the company is avoiding taxes or not. thus, there is no effect between tax avoidance on the earning response coefficient. the significance value of foreign direct investment obtained is 0.027 with a coefficient of 0.009. this significance value significantly influences the level of 0.10 (α = 0.10). then, companies with foreign direct investment give a positive signal to investors, in other words the second hypothesis is accepted. this research is in line with sekhri and haque (2015) which proves that foreign direct investment improves economy, technology, global managerial skills, optimal utilization of human resources and natural resources, and global competitive advantage with greater efficiency. also, companies with foreign direct investment are financially well-established because they are able to invest in foreign countries with high capital costs. foreign direct investment is also usually done in countries that have cheaper chandra, mukhlasin 46 resources. therefore this is expected to increase company profits. then investors can think of this as a signal that the company has a good performance to generate profits in the long run. test on capital intensity shows a significance value of 0.002 smaller than the predetermined significance value of 0.05 (α = 0.05), and has a coefficient of 0.33. then the third hypothesis in this study which states that there is a positive influence between capital intensity on earnings response coefficient is accepted this research is in line with research by praet (2010), companies with high capital intensity can divest their assets when financial constraints occur. also, large investments in capital intensity reflect management's confidence in investment opportunities and growth prospects for the company in the future. malik and shaheen (2012) mention companies with high capital intensity can improve production quality and save production time. saji and harikumar (2014) which stated capital intensity could be an obstacle for new companies for an industrial sector, especially sectors that require special equipment or technology such as pharmaceuticals and automotive. new companies will find it difficult to commit or buy equipment for production or factories because they cannot be used for other uses and are difficult to sell. then, competitors will be less and stock returns will be higher. accordance with previous studies, companies with high capital intensity can be considered as a signal to investors that the company is optimistic about the prospects in the future, in addition to increasing production productivity by saving time and improving product quality. conclusion and recommendations this study aims to determine the effect of tax avoidance, foreign direct investment and capital intensity on earnings response coefficient. based on statistical testing,multiple linear regression analysis and the discussion described above it can be concluded that foreign direct investment and capital intensity have a positive effect on earnings response coefficient. therefore, if a company makes a foreign direct investment and has a high capital intensity, the profit quality of the company is good. this can make investors interested in investing in companies so that the value of shares and stock returns will increase. while tax avoidance has no effect on earnings response coefficient, because investors are more concerned with corporate profits than the amount of tax paid by companies and there are other factors that investors consider more to invest such as company size, managerial and institutional ownership. the recommendation for further research is to add good corporate governance variables. recommendations for further research are adding variables such as good corporate governance and company size. in the study of desai and dharmapala (2009), stated tax avoidance can affect earnings response coefficient if it has good corporate governance. besides, the size of the company can also be added as a research variable because large companies are considered to better maintain the image in the eyes of the public so that they would consider doing tax avoidance more. references chen, x., hu, n., wang, x. (2013), tax avoidance and firm value: evidence from china, nankai business review, 5, 25 – 42. connelly, b. l., certo, s. t., ireland, r. d., reutzel, c. r. (2011). signalling theory: a review and assessment. journal of management, 37(1), 39–67. the influence of tax avoidance, foreign direct investment, and capital intensity towards earning response coefficient 47 desai, m. a., dharmapala, d. (2009), corporate tax avoidance and firm value. the review of economics and statistics, 91(3), 537-546. elmasr, h. (2007), capital intensity and stock returns, journal of investment strategy, 2(1), 61-66. godfrey, j., hodgson, a., tarca, a. (2010), accounting theory (7th edition), australia, john wiley & sons australia. hanlon, m., slemrod, j. (2009), what does tax aggressiveness signal? evidence from stock price reactions to news about tax shelter involvement, journal of public economics, 93, 126–141. jensen, m.c., meckling, w.h. (1976), theory of the firm: managerial behavior, agency costs and ownership structure, journal of financial economics, 3(4), 305-360. malik, q.a., sheheen, s. (2012), the impact of capital intensity, size of firm and profitability on debt financing in textile industry of pakistan, interdisciplinary journal of contemporary research in business, 3(10), 1061-1066. mukhlasin., annisa, m. (2018), investor perception of tax avoidance and quality of earnings information, research journal of finance and accounting, 9(12), 7278. noor, r.m., fadzillah, s.m., mastuki, n.a. (2010), corporate tax planning: a study on corporate effective tax rates of malaysian listed companies, international journal of trade, economics and finance, 1(2), 189 – 193. park, s.j., park, w.j., sun, e.j., woo, s. (2016), is foreign direct investment effective from the perspective of tax avoidance? an analysis of tax avoidance through the international transfer pricing behaviors of korean corporations, the journal of applied business research, 32(3), 917 – 933. praet, a. (2010), voluntary firm restructuring: why do firms sell or liquidate their subsidiaries?, ann finance, 7, 449-476. rhee, s.g., wang, j. (2009), foreign institutional ownership and stock market liquidity: evidence from indonesia, journal of banking & finance, 33, 1312 – 1324. richardson, g., lanis, r. (2013), corporate social responsibility and tax aggressiveness: a test of legitimacy theory, accounting, auditing & accountability journal, 26(1), 75-100. saji, t.g., harikumar, s. (2014), industry dynamics in stock returns: evidence from indian equity market, south asian journal of management, 21, 134 – 151. scott, w.r. (2015), financial accounting theory (7th ed.), ontario, prentice hall canada inc. sekhri, v., haque, m. (2015), impact of foreign investments on indian stock market an empirical study, asian journal of research in banking and finance, 5, 168185. microsoft word apostoaie constantin marius_eng.doc tax evasion causes and prevenience or rebutment way of tax dodger phenomenon corina nichitcin, alecu russo balti state university, republic of moldova abstract tax evasion phenomenon, having negative impact on many levels, must be constantly pursued in order to minimize tax circumvention and control section in the issue of tax fraud. from international theory and experience it is known that normal functioning of market economy is conditioned by promotion of certain efficient policies and adequate legislation implementation. so, as republic of moldova is no exception among countries where tax evasion is, the study of this subject is up-to-date and it is required for presenting these problems at national and international levels. keywords tax evasion, tax elusion, tax fraud, tax facilitations, taxes, assessments, fiscal control, legislation, education tax, liability, revenue authority jel code: h26 tax evasion theoretical concepts tax evasion is a complex phenomenon that manifests as a taxpayer reply at its constraint action imposed by the state and it has economic, social, political, moral, general or specific causes which are rooted in the characteristics of the analyzed period. human nature has always tended to place firstly public interest then the private one. it is rather inclined to consider tax evasion as a prejudice than a legitimate contribution to public expenditure and to envisage worse that who wants to reduce patrimony. collation of these interests increases the appearance of a new reality that of persons’ avoidance from participating in state revenues formation. therefore, tax evasion inheres avoidance phenomenon by all means, integral or partial honouring of taxes, assessments, contributions and other liabilities of natural and legal persons resident and no resident, towards state budget, local budgets. it is true that the term acquired this significance during last decades, but at its entry, particularly in inter-war period, tax evasion was used in a restrict acceptance being identified with tax fraud. in this context, it is remarkable tax evasion type’s determination in relation to laws in force. we distinguish tax evasion or so-called in treatises tax elusion, and illegal tax evasion considered tax fraud. tax evasion phenomenon is presented schematically in the figure below: studies and scientific researches economic edition, no. 15, 2010 108 figure. 1. tax evasion source: g. ulian, o. cuzmina (2007) from those presented in the figure above, it is noticeable that tax elusion represents integral or partial taxes non-payment without qualifying it as a contravention or infraction while tax fraud means taxes non-payment by laws in force contravention. tax evasion causes tax evasion phenomenon has a negative impact from different perspectives. tax nonpayment is a serious state problem in west. firstly, state programs financing is reduced because of insufficient budget resources. secondly, those who do not pay taxes are in a more favourable situation to the honest payers in terms of market competition. it determines tax evasion of the other subject of economical activity. thirdly, in terms of tax contravention spread that causes part of the budget revenue deficit, the state may offset these resources by introducing new assessments and tax raises that condition chain reaction. the main tax evasion causes may be the following: tax payer reaction to fiscal burden; imperfection of fiscal control department; comparison of tax payment and non-payment consequences; unawareness and ignorance of tax law; the erroneous interpretation and application, even abusive of tax laws; inobservance by economic agents of regulations concerning evidence organization of patrimony, incomings, expenditures and financial results. prevailingly, there are situations when accounting is entrusted to lays, to people without necessary training and experience or to those who did not assimilate new regulations; illegal work interpreted as forms of activity on one’s own account, without authorization and so-called hack work which due to its hidden character, balks of fiscal control. these activities occur oftener in trade and agriculture; the imperfection of tax laws; insufficient collaboration of the control apparatus with the other state institutions; tax evasion tax elusion legal tax evasion tax fraud illegal tax evasion circumstances forms peculiarities of determination method of taxable object; tax facilities; imperfection of legislation. illegal development of activities; evidence falsification. studies and scientific researches economic edition, no. 15, 2010 109 the existence of non-advanced control structures deprived of the tax evasion fight ability practiced in different ways; insufficient stimulation of the tax control apparatus, non-correlation of the salary level to social work importance; an inland revenue relatively raised to common taxpayer possibilities; the insufficiency of tax and civil education. in these circumstances it is worth mentioning that the reduced level of tax liability allowance generates a repulsive taxpayer attitude and it tends to avoid, to ignore, to decry tax laws and to practice tax evasion on the various ways and means. the result of fiscal control in the republic of moldova taking into account that “the probability of achieving an event is the ratio between the number of positive cases and the number of possible cases” and analyzing the data of the state tax service, probability calculations of tax evasion detection in 2008 in the republic of moldova is 50.36 %. the detection probability registers different values depending on the type of controls carried out. table 1. analysis of tax controls carried out in 2008 (source: state tax service report, 2008) after tax control accomplished in 2008 sanctions of 94728.3 thousands lei were inflicted. therefore, cases of tax contraventions were registered. the adopted decisions improve continuously and the national public budget revenues increase. measures of tax evasion prevention and rebutment fiscal control (units) excises, taxes (thousand lei) name index t ot al ly ac co ru pl is he d pe na lit ie s (o ut of pr ev io us ) d et ec tio n pr ob ab ili ty , % t ot al ly ad di tio na lly ca lc ul at ed af te r c on tr ol in cl ud in g de la y ta x in cr ea se applied fiscal sanctions (thousand lei) spot fiscal controls verification method inclusively 49023 24689 50,36 106367.3 15043.3 94728.3 total 5323 4099 77,01 55454.3 8271.5 41512.9 economic agents exclusion inclusively 914 362 39,61 244.8 56.2 209.7 thematic 12758 6645 52,1 47516,8 6300,6 25243,9 repeated 38 30 78,95 277,5 49,2 814,7 active 17478 8189 46,85 18,1 1,2 21333,7 by opposition 2505 150 5,99 781,2 129,6 831,8 by chamber checking 9119 4847 53,15 1646,1 209,4 4231,4 other types 1802 729 40,46 673,0 81,5 760,4 studies and scientific researches economic edition, no. 15, 2010 110 authority’s attitude has an important role in the process of taking taxpayer’s decision refusing the submission to the legal norms looking for legal possibilities of paid taxes diminution or choosing the “escape option” in “underlying economy’. the efficiency of rebutment measures of “underlying economy” is determined decisively by the economical situation and its development perspectives. for a certain taxpayer the escape from the abovementioned sector is connected with great expenditure, moreover, once paying the assessments according to legal norms, he “comes to light”, but his business partners are also observed. analyzing this problem, we may state that in countries with transition economy, fiscal systems which function do not always assure the incoming revenues from local budgets of those regions where economical activity actually occurs. that’s why the idea concerning the determination of tax payment arrangement by the enterprises subsidiary and the change of taxpayer address according to the place of production sector and actions. a well-defined notion of benevolence and of a religious activity organization for taxing is necessary to be planned at a legal level. it is required to forbid individual tax facilities for increasing the tax system neutrality. the enlargement of the preventive tax control field constitutes a main condition for reducing the number of tax contravention. the preventive complex of measures offers consulting and methodical help to taxpayers, the publication of tax legislation modifications, the publication of articles referring to tipical and special contraventions of tax legislation, as well as the information about the legal arbitration practice in this field. it is also required to use control by making a poll and transferring the permanent control on the second plan. besides, there are other methods of tax contraventions rebutment which are worth mentioning: the assignation of a proportion that tends to an optimization between salaries and stimulants for fiscal apparatus financial incentive; the development of staff training system referring to the tax evasion prevention, identification and rebutment; the improvement of services for taxpayers by offering tax assistance; the identification of all taxpayers who fall under tax laws incidence; the correct and complete identification of taxable things; the confiscation of the assets or of the undeclared valuable goods etc. the diminution of tax evasion phenomenon to the level that keeps it under control is a complex process which supposes disciplinary approach and the implementation of legislative, organizational, social and psychological measures that may assure the improvement of the business milieu and to contribute to the raising of volunteer conformation level in the process of liabilities payment to the general consolidated budget. in this context, it is important the taxpayers instruction by introducing fiscal training lessons that would give basic knowledge about the tax role and contraventions at which are submitted in case of tax non-payment or abstraction. therefore, the international tax practice concludes that a modern tax system should also inform and teach taxpayers about their liabilities in tax declarations elaboration, keep right note of revenues and expenditure from the activity nature, penalties and sanctions which are implemented to those who break the laws. finally, we may conclude that tax evasion is the logic issue of an imperfect legislation for which rebutment it is not required to establish some drastic sanctions, but it should be effectuated an efficient and strict tax control. a viable legislative system and, first of all, a fiscal education of citizens should be implemented. bibliography 1. (2008) în economiile – studies and scientific researches economic edition, no. 15, 2010 111 2. iachim i., darie, v. (2008) . in: revista econo – 3. craiova 4. 5. 6. raportul privind activitatea serviciului fiscal de stat pentru anul 2008 7. www.fisc.md studies and scientific researches economic edition, no. 15, 2010 112 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 30, 2019 http://sceco.ub.ro 45 business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? zrakpa melaine ouoya université félix houphouët boigny abidjan ouoyamelaine@yahoo.fr abstract many studies have revealed the importance of taking the ex post and former poor into account in designing sustainable poverty reduction policies. with data from the 2015 household standard of living survey (env2015), we use the chaudhuri, jalan and suryahadi model (2002) to measure the vulnerability to poverty of rural households in côte d’ivoire. our work reveals that 34% of households are vulnerable while 25% are poor. the analysis of the influence of certain factors on this vulnerability was based on a tobit model. we come to the conclusion that farm and trade households are more vulnerable than those in industry and services. also, households with a head of at least secondary education are less vulnerable than those whose head is at most at the primary level. finally, contrary to many studies, we find that access to credit has a bad influence on the vulnerability of rural households to poverty. the origin and use of these rural credits would explain this last relationship. keywords vulnerability; rural; credit; business sector; côte d’ivoire jel classification c13; i21; r20 introduction the socio-economic environment of developing countries tends to link the social, economic and demographic characteristics of rural households to the possibility for them to remain or to fall into poverty in the near future. these characteristics tend to influence the ex ante poverty of these households given the shocks and risks they face or will face. it is a dynamic conceptualization of poverty, and hence of vulnerability to poverty, which aims to determine the influence of risk and shocks on the future status of household poverty in order to provide a “critical overview to policymakers” (ajay & rana, 2005). thus, poverty reduction policies must now take into account both ex post poverty reduction measures and also ex ante poverty prevention actions in order to help and assist those who are vulnerable to shocks so that they do not fall into poverty (azam & imai, 2009). novignon (2010) shows that poverty and vulnerability to poverty are independent concepts. thus policies directed towards poverty reduction need to take into account the vulnerability of current non-poor households. the dynamic dimension of poverty that uses risk has attracted interest from the economic literature. thus, pioneering works like those of chaudhuri (2003) and christaensen and subbarao (2005) define vulnerability as the probability of falling into poverty in the near future while ligon and schechter (2003) present it as a low expected utility. tesliuc and lindert (2004), referring to consumption, measure it as an not covered exposure to risk. also, based on these pioneering works, much work has focused on an assessment of vulnerability to poverty and identification of its determinants (azam & imai, 2009, calvo & dercon, 2013). this interest is linked to the fact that traditional measures of poverty do not indicate the degree of risk for business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 46 households to become or remain poor. they can therefore be misleading and misguided in the context of implementing poverty reduction policies (bah, 2013). according to the world bank social risk management framework, these policies are linked to three types of risk management strategies: prevention, mitigation and adaptation (holzmann & jorgensen, 2000). despite the fact that thevulnerability is an emerging concept in the economic literature, there is an insufficient number of case-specific studies of the vulnerability of rural households in developing countries. in addition, the case of the ivorian economy deserves particular the attention within the global model of studying the poverty situation of developing countries. indeed, after independence in 1960, this country has experienced a long period of relative growth and prosperity that many analysts called the ivorian “economic miracle”. this growth was supported by commodity prices (coffee and cocoa in particular) in the international market. unfortunately, in the early 1980s, while some developing economies began a phase of relative growth, the fall in commodity prices led the ivorian economy into a long phase of recession, accentuated by the sociopolitical turmoil of the 1990s. the economic growth after the 1994 devaluation increased from 5.7% in 1997 to -2.7% in 2000, and this downward trend continued in subsequent years despite the lull and the slight recovery in 2001. this economic recession, coupled with a socio-political crisis, had a negative impact on the living conditions of households. indeed, since 1985, côte d’ivoire has carried out several surveys (household living standards survey 1985, 2002, 2008 and 2015) to monitor the evolution of poverty over time. the 1985 survey set the incidence of poverty in côte d’ivoire at 10% and retained 75,000 cfa per individual and per year as the national poverty line. it is this threshold that is updated every year to obtain the 2015 poverty line of 269,000 fcfa. from 1985 to 2008, poverty increased sharply from 10% to 48.9%, despite a decline in the period 1995 to 1998 following the devaluation of the franc cfa. in a recent period, that is, from 2008 to 2015, there is a decline in poverty whose incidence has dropped from 48.9% to 46.3%. according to env2015, rural areas are the main provider of poor people in côte d’ivoire. in fact, the incidence of poverty is 56.8% in rural areas compared to 35.9% in urban areas. however, rural poverty is declining while it is increasing in urban areas. to date, thanks to the normalization of the socio-political situation and the resumption of economic activities, growth has been noted. the completion point of the hipc initiative, largely conditioned by the implementation of several reforms, was achieved in 2012. the country has thus benefited from a significant reduction in its external debt, the amount of which is estimated at around fcfa 6,500 billion. although surveys have been regularly conducted by competent institutions to assess the level of ex post poverty of households in côte d’ivoire, the assessment of ex ante poverty, ie vulnerability to poverty, has not been of real interest, despite the many shocks that households have faced during these recurring crisis. it is therefore necessary to focus on ex ante poverty if it is envisaged to design sustainable poverty reduction strategies in côte d’ivoire, hence the value of conducting this research. the purpose of this work is to contribute to the design of sustainable poverty reduction strategies in côte d’ivoire. this research will be conducted as follows: the first section presents the literature review while the second one presents the current poverty situation of the country. the third section reviews the methodology used in presenting the data and the analysis model. the fourth section presents the results of the econometric analysis and the related discussions. the last section will conclude and make policy recommendations for reducing poverty and vulnerability to poverty among rural households in côte d’ivoire. ouoya 47 review of literature in the existing literature, income or consumption expenditure measured over short periods of time (say one year) have been viewed as proxies for the material welfare of households. however, economists recognize that the feeling of well-being in the household depends not only on average income or expenditure, but also on risks, whether idiosyncratic (relating to an individual) or systemic (relating to to an entire community). it is therefore to take into account the risk inherent in the lives of households that researchers have oriented their work towards the study of vulnerability to poverty (jha et al, 2009). chaudhuri et al (2002) defined vulnerability to poverty as the “ex ante risk that a household will be poor in the future, regardless of its current state of well-being”. an attractive definition of vulnerability to poverty is “the propensity for welfare to suffer a significant shock, bringing the household below a socially defined minimum level” (alwang, siegel & jorgensen, 2001). although this definition reflects the spirit of what we mean by vulnerability to poverty, it needs to be more precise if we want to measure vulnerability. three points require clarification. first, what is meant by “welfare shock”? the measure of well-being most commonly used by economists in this context is consumption per individual (or adult equivalent), although other measures such as income may be used instead. a “shock” of well-being is therefore generally measured as a change in consumption per individual. the shock could be negative or positive, although we are typically affected by shocks in the more traditional sense of harmful events. by focusing on consumption rather than income or assets, we implicitly allow households’ coping mechanisms to work. for example, consider a village hit by drought every few years. households, anticipating periods of drought, store grain in good years for use in bad years. if we use income as a measure of well-being, we will overestimate household welfare in good years and underestimate it during years of drought. by using consumption as an indicator of well-being, we enable households to respond. second, what “socially defined minimum level” of well-being is appropriate? here we generally use a poverty line. studies of vulnerability to poverty generally use an absolute poverty line. third, how can we measure the “propensity to suffer a major shock” from being poor? a good practical way to measure vulnerability is the probability of being poor the following year (chaudhuri, jalan & suryahadi, 2002), or in the next few years (pritchett, shryahadi & sumarto, 2000). but how high must this probability of being poor be to enable us to consider the person (or household) as vulnerable? if i have a 1% probability of being poor next year, am i vulnerable? or 10 percent? or 50 percent? the line between those who are vulnerable to poverty and those who are not is arbitrary, but researchers generally use one of two thresholds: • a probability of being poor by 50%. in this case, a household has at least an equal chance of being poor next year. these households are sometimes called “very vulnerable”. • a probability of being poor from p0 (where p0 is the incidence of poverty). so, if your probability of being poor is higher than p0, you could be considered vulnerable by this measure. indeed, this means that you are more likely than the typical household to be poor in the next period. households whose probability of being poor is greater than p0 but less than 50% are sometimes classified as “low vulnerability”. households that are less likely to be poor than p0 are sometimes referred to as “non-vulnerable”, but this label should not be taken literally because they are likely to be in poverty the following year (or in the next few years). the probability of being poor increases as the time horizon gets longer; a person with a 50% probability of being poor next year may have a 75% probability of being poor in at least one of the next two years and a 87.5% probability of being poor in at least one of the next three years. business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 48 following the presentation of the instruments for measuring vulnerability to poverty, many studies have set themselves the objective of measuring households’ vulnerability to poverty and then identifying its determinants. novignon (2012) after estimating the vulnerability to household poverty in ghana, examined the effect of various socioeconomic characteristics on this vulnerability. his results showed that household health status is a determinant of vulnerability to poverty, and this finding provides empirical evidence for grossman’s “health capital” theory (1972a). according to this theory, health is in itself a resource that helps people improve their well-being, as healthy individuals spend much more time working and less in poor health. similar findings were found by azam and imai (2009) who concluded that in bangladesh, households without education or farming households are probably the most vulnerable to poverty. in the same vein, novignon (2012) showed that households headed by educated chefs are less vulnerable to poverty. these studies are in line with those of ligon and schechter (2003) who found that household health status, household size and educational attainment significantly influence vulnerability to poverty and that households headed by a man are less vulnerable to poverty. the works of jha et al (2009) in fiji have highlighted the fact that the distribution of vulnerability differs significantly from the distribution of poverty and that many non-poor have been found to be vulnerable to poverty. suryahadi and sumarto (2003) analyzed the influence of the indonesian crisis on household vulnerability and poverty. according to these authors, the crisis has led to a significant increase in the number of poor households that are vulnerable to poverty. the increase in the number of poor was mainly due to a large increase in the category of the chronically poor (those who are poor and vulnerable). novignon (2010) showed that about 56% of households in ghana are vulnerable while only about 28% are poor. the implication of this work is that poverty reduction policies must take into account the vulnerability of current non-poor households. milcher (2010) adapted the model of chaudhuri, jalan and suryahadi (2002) to analyze the vulnerability to poverty in nine countries of south-east europe and finds that vulnerability differs considerably from poverty because it affects a larger population facing risks. this work has concluded that policies to reduce or prevent poverty require additional targeting of vulnerable households. swain and floro (2008) studied the effect of shg (self-help group) participation on poverty and vulnerability and found that members of shg had a lower vulnerability than members of a control group. in addition, their study found that poverty contributes about 80 percent of household vulnerability, followed by overall risk. thus, in recent years, the analysis of vulnerability to poverty has been of particular interest to researchers. such comments are supported by the diversity of work whose objective is to assess vulnerability to poverty and / or identify its determinants. the targets of these different works have generally been the populations of developing countries. however, in the west african sub-region, little work has been conducted in this direction, like those of novignon (2010) and novignon (2012) on ghana. from the author’s knowledge, no vulnerability to poverty assessment study has been conducted in côte d’ivoire. it is to fill this gap that we are realising this analysis. the purpose of this work is to contribute to the reduction of poverty in rural côte d’ivoire. it will be for us to answer the following questions all relating to rural households in côte d’ivoire: i) are there more households vulnerable to poverty than poor households? ii) what are the influences of the education level and sector of activity of the head of household on the vulnerability to poverty of households? iii) does access to credit reduce vulnerability to household poverty? from these research questions, we emit the following research hypotheses: h1: households vulnerable to poverty outnumber poor ones; h2: households whose head has a high level of education are less vulnerable; ouoya 49 h3: households engaged in agriculture are more vulnerable than others; h4: households with access to credit are less vulnerable. following the enumeration of our research hypotheses, we present the situation of poverty in côte d’ivoire. state of poverty in côte d’ivoire at the end of independence, côte d’ivoire has experienced two successive decades of unprecedented growth. this growth largely based on the favorable price of cocoa and coffee on the world market, will stop abruptly in the 1980s due to the fall in prices of these products. the country began a long period of unfavorable economic conditions accentuated by successive social and political upheavals. it is at the dawn of this long phase of economic recession that the country will begin in 1985 its first survey on the standard of living of households. these four surveys (1985, 2002, 2008 and 2015) that have been conducted to date have revealed a gradual deterioration in the standard of living of households in côte d’ivoire. thus, the poverty ratio rose from 10% in 1985 to more than 32.6% in 2002 (env2002). moreover, with the scarcity of public resources, investments in basic social services (health, education, infrastructure etc.) have fallen considerably, leading to a decrease in the supply of these services. today, very few ivorian households have access to social services, which is likely to keep them in a sustainable situation of poverty. to this very dark image was added, from september 2002, the political-military crisis that shook the country for more than a decade. this crisis has not only accentuated the deterioration of the living conditions of households, but has also given rise to new phenomena such as the massive displacement of populations, the destruction of goods, tools of production, social infrastructures etc. not to mention the loss of life and the dislocation of family cells etc. the improvement of the macroeconomic framework and the easing of the social climate led to the conclusion of a three-year program supported by the extended credit facility covering the period 2009-2011. the effective resumption of financial cooperation led to a real gdp growth rate of 3.8% in 2009 and 2.4% in 2010. at the same time, gdp per capita has grown very slowly by 0.24% on average per year over the period 2004 to 2010. all these efforts will be once again thwarted by the impact of the post-election crisis of december 2010. in january 2011, the closure of the main bceao agency in abidjan the suspension of banking and export activities of the main agricultural products seriously affected the economic sector. for almost five months (december 2010 to march 2011), the main activities slowed down. the destruction and plundering of many infrastructure hampered production prospects leading to a 5.8% decline in economic growth. thanks to the normalization of the socio-political situation and the resumption of economic activities, economic growth has been revived and the completion point of the hipc initiative, largely conditioned by the implementation of several reforms, was achieved in 2012. the country has thus benefited from a significant reduction in its external debt of about cfaf 6 500 billion. as in previous years, the household standard of living survey (env2015) reveals that poverty is more pronounced in rural than in urban areas. in rural areas, the incidence of poverty is 56.8% compared with 35.9% in urban areas. in addition, the contribution of rural populations to poverty is 61.2% against 38.8% for urban populations. on the other hand, the evolution of poverty is contrasted from one milieu to another. in fact, while poverty is declining sharply in rural areas (from 62.5% in 2008 to 56.8% in 2015), it continues to grow in urban areas (24.5% in 2002, 29.5% in 2008 then 35.9% in 2015). there is therefore a transfer of poverty from rural areas to urban areas. business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 50 figure 1 spatial distribution of poverty in 2015 source: ins, env2015 in 2002, the year in which the socio-political crisis of 2002-2010 began, côte d’ivoire had four out of eleven regions for which more than half of the population was poor with more pronounced situations in rural areas. these were western (64.4% and 67.4% in rural areas), northeast (56.6% and 61% in rural areas), northwest (51.5% and 61% in rural areas) and central west (50.3% and 51.5% in rural areas). in 2008, after six years of crisis, this number rose to 8 out of the 11 strata of which the north (77.3% and 85.1% in rural areas), the west (63.2% and 67.8% in rural areas), the west center (62.9% and 70.7% in rural areas), the northwest (57.9% and 60.4% in rural areas), the north center (57% and 66.3% in rural areas), the center (56% and 65.7% in rural areas), the north east (54.7% and 59.2% in rural areas) and the central east (53.7% and 63.1% in rural areas). the mapping of regional levels of poverty shows that poverty is higher in the north-west border regions in the north-east (from tonkpi to bounkani) and lower in the border regions from east to south-west (going from gontougo to cavally). inland regions (non-frontier) have an intermediate level of poverty between these two extremes. thus, poverty is unequally distributed among the regions of côte d’ivoire. the level of poverty varies from 22.7% in the city of abidjan to 71.7% in the kabadougou region. figure 1 shows the distribution of poverty in the ivorian territory. table 1 presents the distribution of poverty according to the 2015 household living standards survey (env2015). this table shows that besides the city of abidjan, the least poor regions are the region of san-pedro (35.4%), the region of nawa (37.4%), the region of cavally and the autonomous district of yamoussoukro (39.4%). conversely, in addition to kabadougou, the poorest regions are folon (70.1%), bafing (69.2%), bagoué (68.5%) and tchologo (65.6%). in addition, more than half of the population is poor in 22 of the 33 regions of the study. ctr refers to the contribution of the region concerned to national poverty. thus, we see that abidjan, upper sassandra, gbèkè and tonkpi have the highest contributions to poverty. ouoya 51 table 1 poverty indices by region in 2015 strates ratio de pauvreté gap de pauvreté sévérité de pauvreté p0 ctr(%) p1 ctr(%) p2 ctr(%) ville d'abidjan 22,7 9,3 5,7 6,6 2,1 5,1 haut sassandra 54,9 7,5 19,1 7,4 8,8 6,9 poro 54 4 17,6 3,7 7,8 3,3 gbeke 54,9 5,3 18,8 5,2 9,3 5,2 indenie-djuablin 48,7 2,6 17,8 2,7 8,3 2,6 tonkpi 60,6 5,7 24,5 6,6 13,1 7,2 district yakro 39,4 1,4 12 1,2 5,2 1 gontougo 51,2 3,2 17,8 3,2 8 2,9 san-pedro 35,4 2,7 10,7 2,4 4,9 2,2 kabadougou 71,7 1,2 31,9 1,6 17,6 1,8 n'zi 59,1 1,4 19,9 1,3 8,7 1,2 marahoue 53,6 4,4 18,7 4,4 9,2 4,4 sud-comoe 46,8 2,8 14,9 2,6 6,3 2,2 worodougou 54,5 1,4 20,6 1,5 11,3 1,7 lôh-djiboua 49,6 3,4 15,9 3,1 7,5 3 agneby-tiassa 49,5 2,9 18,9 3,1 9,5 3,2 gôh 53,3 4,4 24,3 5,6 14,9 7,1 cavally 41 1,8 16,8 2,1 8,8 2,2 bafing 69,2 1,2 28,1 1,4 14,8 1,5 bagoue 68,5 2,5 34,7 3,6 21,5 4,6 belier 61,8 2 21,1 1,9 9,7 1,8 bere 55,8 2 18 1,9 8,1 1,7 boukani 61,8 1,6 21,8 1,6 10,2 1,5 folon 70,1 0,6 26,3 0,6 12,7 0,6 gbôkle 51 2 20,9 2,3 11 2,5 grands-ponts 48,9 3,5 20,8 4,2 11,1 4,6 guemon 42,9 3,8 13,2 3,3 5,5 2,8 hambol 56,1 2,3 17,5 2 8 1,9 iffou 60,5 1,8 18 1,5 7,4 1,3 la me 52,7 2,6 21,7 3,1 12,6 3,6 nawa 37,4 3,7 10,9 3,1 4,6 2,6 tchologo 65,6 3 29,6 3,8 17,2 4,5 moronou 54,1 1,9 16,4 1,6 6,5 1,3 ensemble 46,3 100 16,3 100 8 100 source: ins, env(2015) methodology data the data in this study come from the 2015 household living standards survey (env2015). the main objective of this survey was to collect information to improve the planning and evaluation of economic and social policies in côte d’ivoire. the universe of this survey is made up of all african households residing in côte d’ivoire. the sampling frame used was the general census of population and housing (rgph2014). as for sampling, it follows a two-stage draw: at the first stage, a proportional allocation drawing of the census districts (cd) was carried out in the study strata; in the second degree, a systematic draw of 12 households per cd was carried out. the sample is stratified into three sets and provides significant results for the region and the place of residence, the city of abidjan and all of côte d’ivoire, urban and rural. the size of the sample per stratum varied between 276 and 1,188 households, to take account of the demographic weight of certain regions. the total sample size is 12,900 households for the 33 strata (31 regions plus the city of abidjan and the yamoussoukro autonomous district). thus, this size makes it possible to guarantee representativeness at the level of each stratum. as part of this search, the database used contains 10475 observations. descriptive statistics for this study sample are available at the outcome level of our analysis. after presenting our database, we reveal in the following subsection the analysis model. business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 52 model of analysis as milcher (2010), we use the model of chaudhuri, jalan and suryahadi (2002) to measure vulnerability to household poverty. this model presents vulnerability as exposure to future poverty risk. thus, vulnerability is the ex-ante risk that a currently non-poor household will fall below the poverty line or a currently poor household will remain poor. the vulnerability level of a household is defined as the probability that the household will find itself consumption-poor in the next time period. this definition includes the difference between the concept of poverty as an ex-post measure and vulnerability as a forward looking ex-ante measure of a household’s wellbeing. vulnerability at the present time depends on the future prospects of household consumption. thus, current vulnerability can only be estimated but never be observed, unlike poverty. in order to make inferences about a household’s future consumption prospects, inter-temporal aspects as well as cross-sectional determinants of the consumption pattern need to be taken into account. in general, a household’s consumption depends on a variety of factors, such as wealth, current income, employment status, educational level and the ability to smooth consumption in the event of income shocks. each of these factors depends on household characteristics. in addition, the general socio-economic and political environment into which a household is situated plays a role. in this paper we start with the assumption that the possibility of future poverty depends, on the one hand, on expected consumption and, on the other hand, on the volatility of its consumption stream. the reason is that the stability of a household’s consumption stream can vary considerably with regard to different household observable characteristics. therefore, vulnerability to poverty is estimated by using estimated consumption and the estimated variance of household consumption. in the absence of longitudinal data that could directly estimate inter-temporal variance of consumption at the household level, fairly stringent assumptions apply when using cross-sectional data. thus, we assume a stochastic process generating the consumption of a household h given by: ln𝑐ℎ = 𝑋ℎ 𝛽 + 𝑒ℎ (1) where ch is per capita consumption expenditure, xh represents a set of observable household characteristics, such as educational achievements and age category of the household head, dwelling characteristics, household size etc., β is a vector of parameters and εh is the error term that captures idiosyncratic factors, which contribute to per capita consumption level differences for households that seem to be observationally equivalent. we assume the idiosyncratic shocks to consumption to be identically and independently distributed over time for each household, thus, uncertainty about future consumptions arrives solely from uncertainty about idiosyncratic shocks for each household. this leads to a third assumption, namely that a household’s future consumption does not depend on the future structure of the economy. given these assumption, we allow the variance of 𝑒ℎto depend on observable household characteristics expressed by: 𝜎𝑒,ℎ 2 = 𝑋ℎ 𝜃 (2) estimating the variance for each household using the observable household characteristics provides a considerable advantage in this model, which is usually left out in standard poverty assessments, which assumes the variance to be equal across households. individual consumption volatilities capture better the fact that poorer households face higher consumption volatility than richer households. the parameters β and 𝜃 are estimated using a three-step feasible generalised least squares (fgls) method. the first step involves estimating equation (1) using the ouoya 53 ordinary least squares (ols) procedure. the estimated residuals are then used to estimate: �̂�𝑂𝐿𝑆,ℎ 2 = 𝑋ℎ 𝜃 + 𝜂ℎ (3) again by means of ols. by regressing the squared residuals on the same observable household characteristics, we estimate the variance of e. in the second step we use the predictions to transform equation (3) as follows: �̂�𝑂𝐿𝑆,ℎ 2 𝑋ℎ �̂�𝑂𝐿𝑆⁄ = (𝑋ℎ 𝑋ℎ�̂�𝑂𝐿𝑆⁄ )𝜃 + 𝜂ℎ 𝑋ℎ �̂�𝑂𝐿𝑆⁄ (4) an asymptotically efficient fgls estimate, �̂�𝐹𝐺𝐿𝑆 can now be estimated by using ols. 𝑋ℎ �̂�𝑂𝐿𝑆 is a consistent estimate of the variance of the idiosyncratic component of household consumption, 𝜎𝑒,ℎ 2 . this estimate is then used in the third step to transform equation (1) as follows: ln𝑐ℎ �̂�𝑒;ℎ⁄ = (𝑋ℎ �̂�𝑒,ℎ⁄ )𝛽 + 𝑒ℎ �̂�𝑒,ℎ⁄ (5) now an asymptotically efficient fgls estimate, �̂�𝐹𝐺𝐿𝑆 can be obtained by using ols. using the fgls estimates �̂�𝐹𝐺𝐿𝑆 and �̂�𝐹𝐺𝐿𝑆, the expected log consumption and the expected variance of log consumption may be calculated for each household h as: �̂�[ln𝑐ℎ |𝑋ℎ ] = 𝑋ℎ �̂� (6) �̂�[ln𝑐ℎ |𝑋ℎ] = �̂�𝑒,ℎ 2 = 𝑋ℎ �̂� (7) finally, the vulnerability level of a household h can be computed using the expected log consumption and the expected variance of log consumption under the assumption that consumption is log-normally distributed. the vulnerability level may be expressed by: �̂�ℎ = 𝑃�̂�(ln𝑐ℎ < 𝑙𝑛z|𝑋ℎ) = 𝛷 [lnz − 𝑋ℎ �̂� √𝑋ℎ �̂�⁄ ] (8) with 𝛷 denoting the cumulative density of the standard normal. the estimated vulnerability level is the probability that the expected future consumption level of a household h is lower than the given consumption poverty line z. as noted above, the merit of this measure of vulnerability is that it can be estimated with cross-sectional data. however, the measure correctly reflects the vulnerability of households if and only if the distribution of consumption across households, given the characteristics of these households over time represents a time series variation of household consumption. as a result, this measure requires a large sample in which households experience good times and others suffer from some negative shocks. to estimate the determinants of the probability of being poor, we make use of the tobit model: �̂�ℎ = 𝛼0 + 𝛼1𝐶𝐴ℎ + 𝛼2𝐹𝑊ℎ + 𝛼3𝐸𝐿ℎ + 𝛼4𝐴𝑆ℎ + 𝛼5𝐹𝐴ℎ + 𝛼5𝐶𝑟𝑒𝑑ℎ + 𝛼6𝐻𝐻𝑆ℎ + 𝛼7𝑀𝑁ℎ + 𝜇ℎ (9) where �̂�ℎrepresents the vulnerability to household h poverty. 𝐶𝐴ℎ, 𝐻𝐻𝑆ℎ are binar variables representing the age group (younger age of 35; age between 35 and 55 and age over 55) and the sex of the head of household (0 for leaders who are women and 1 for men). 𝐹𝑊ℎ is a binary variable with a value of 1 if the head of household has a fulltime job and 0 if no. 𝐸𝐿ℎ and 𝐴𝑆ℎare categorical variables that indicate the level of education and the sector of activity in which the head of household operates. four levels of education are chosen: lack of education level, primary level, secondary level and university level. concerning the variable 𝐴𝑆ℎ, it takes 4 values, namely 1 for agriculture, 2 for industry, 3 for trade and 4 for services. 𝐹𝐴ℎ and 𝐶𝑟𝑒𝑑ℎ are binarious variables representing the fact that the household has received family assistance and has received a credit during the last twelve months. variable 𝑀𝑁ℎ refers to the number of males individual in the household h. the dependent variable is as follows: �̂�ℎ = �̂�ℎ ∗ when �̂�ℎ ∗ > 0 �̂�ℎ = 0 when �̂�ℎ ∗ ≤ 0 the coefficients 𝛼1, … , 𝛼7 provide an appropriate adjustment to obtain consistent estimates of the effects of changes in the explanatory variables on �̂�ℎ (we use vulh business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 54 instead of �̂�ℎ as dependant variable for the rest of the study) for those with a vulnerability to poverty upper than 0 and also indicate the proportion of the total effect due to induced changes in behaviour of those with a probability to be poor in near futur is greater than zero (berndt, 1991). results and discussions we start by giving the descriptive statistics of our analysis sample which contains 10475 observations. table 2 presents these statistics. we can see that the average of the dependent variable (vul) is 24.5%. this value does not describe the percentage of people vulnerable to poverty according to chaudhuri et al (2002). it is table 5 below that gives us this information. the ca variable shows that heads of households are mostly young, with 47% of them under 35 years of age. then come the heads of households between 35 and 55 years old with 40% of the workforce. the level of education is very low in rural côte d’ivoire. in fact, more than three-fifths of rural household heads have no level of education and only 1% have been able to reach university level. the finding is the same at the level of the distribution of the heads of household according to the sector of activity. nearly three quarters are in agriculture, the others being evenly distributed in commerce, services and industry. the crossdivision of households according to the level of education and the sector of activity of the chief is presented in table 3 below. it can be seen that heads of households with no formal education are predominantly present in agriculture with 78% of their total workforce. the same is true for chiefs at primary and secondary level, with 71% and 57% of those in both categories. also, the higher the level of education, the less interest in agriculture. on the other hand, top-level chiefs are more trade-oriented with 63% of the workforce. table 2 descriptive statistics of analysis model variables estimation sample tobit number of obs = 10475 variable | mean std. dev. min max vul | .2454498 .2607339 .001918 1 ca | 55 | .4025776 .4904404 0 1 105 | .1328878 .3394697 0 1 1.fw | .4636754 .4987026 0 1 el | 1 | .2044869 .4033454 0 1 2 | .1759427 .3807896 0 1 3 | .0168019 .1285348 0 1 as | 2 | .0600477 .2375866 0 1 3 | .0462053 .2099394 0 1 4 | .0618616 .2409155 0 1 1.fa | .0296897 .1697381 0 1 1.cred | .9217184 .2686271 0 1 1.hhs | .8421957 .3645748 0 1 mn | 1.543389 1.06038 0 12 source: our calculations based on env2015 data table 3 distribution of the population according to el and as | 1agr 2ind 3cce 4serv educ level | 1 2 3 4 | total 0 | 83,241 6,201 9,728 6,875 | 106,045 | 78.50 5.85 9.17 6.48 | 100.00 | 71.77 56.88 67.32 42.86 | 67.38 1 | 19,802 2,342 2,886 2,797 | 27,827 | 71.16 8.42 10.37 10.05 | 100.00 ouoya 55 | 17.07 21.48 19.97 17.44 | 17.68 2 | 12,274 2,313 1,795 5,063 | 21,445 | 57.23 10.79 8.37 23.61 | 100.00 | 10.58 21.22 12.42 31.57 | 13.63 3 | 671 45 41 1,304 | 2,061 | 32.56 2.18 1.99 63.27 | 100.00 | 0.58 0.41 0.28 8.13 | 1.31 total | 115,988 10,901 14,450 16,039 | 157,378 | 73.70 6.93 9.18 10.19 | 100.00 | 100.00 100.00 100.00 100.00 | 100.00 pearson chi2(9) = 1.4e+04 pr = 0.000 source: our calculations based on env2015 data as we continue our analysis, we can see that credit is available in rural areas since 92% of households received a loan during the twelve months preceding the survey. it should be noted, however, that the main source of credit in rural côte d’ivoire is the informal sector, which accounts for nearly 85 per cent of the total number of loans granted to rural people. the formal and semi-formal sector are at around 15 percent supply as shown in table 4. these results are in line with those of ouoya (2018), which shows that more than three quarters of loans in ivorian rural areas are offered in the informal market, as banks have a small contribution in providing this market with credit. it should also be noted that 84% of heads of households are men and the remaining 15% are women. table 4 distribution of rural credits by origin auprès de quel organisme | freq. percent cum. banque | 746 4.14 4.14 institution de crédit | 401 2.23 6.37 fonds sociaux | 44 0.24 6.61 coopec | 49 0.27 6.88 autre imf | 140 0.78 7.66 tontine | 368 2.04 9.70 particulier | 13,517 75.03 84.73 coopérative/gvc | 1,130 6.27 91.00 autres | 1,621 9.00 100.00 total | 18,016 100.00 source: our calculations based on env2015 data the poverty rate in this sample is 25.78%. in this context, according to chaudhuri et al (2002), all households with a poverty likelihood greater than 25.75% are considered vulnerable to poverty. thus, 34.45% of households have been identified as vulnerable to poverty. the number of households vulnerable to poverty is greater than that of poor households and these results are consistent with many studies on poverty and vulnerability to poverty (chaudhuri et al, 2002, novignon, 2010). table 5 population distribution by poverty and vulnerability | pauvreté vul | 0 1 | total 0 | 6,279 584 | 6,863 | 91.49 8.51 | 100.00 | 80.73 21.65 | 65.52 1 | 1,499 2,113 | 3,612 | 41.50 58.50 | 100.00 | 19.27 78.35 | 34.48 total | 7,778 2,697 | 10,475 | 74.25 25.75 | 100.00 | 100.00 100.00 | 100.00 pearson chi2(1) = 3.1e+03 pr = 0.000 likelihood-ratio chi2(1) = 3.1e+03 pr = 0.000 cramér's v = 0.5434 gamma = 0.8762 ase = 0.006 kendall's tau-b = 0.5434 ase = 0.009 business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 56 fisher's exact = 0.000 1-sided fisher's exact = 0.000 source: our calculations based on env2015 data following the presentation of the descriptive statistics of our variables, some specification tests were performed to select the appropriate model. we have two models at this stage. the first model (saved one) contains a ca variable as presented earlier. the second model, for its part, directly takes into account the age of the head of the household through a variable called “age”. we compared the specification measures of these two models after performing the preliminary regressions. the results are available in table 7. using the aic (akaike’s information criterion, 1973), the model with the smallest value of this indicator has the best specification. in the test, its value is divided by n, the number of observations. as for the bayesian information criterion (bic), it has been proposed by raftery (1995) and others to compare nested and non-nested models. because the bic imposes a larger penalty for the number of parameters in a model, it favors the simpler model compared to the aic measure. the bic statistic is defined in at least three ways and regardless of the version chosen, the result is the same. raftery (1995) suggested these guidelines to strengthen the evidence base for one model over another based on a bic difference: table 6 analysis model selection with raftery (1995) guide absolute difference evidence 0 to 2 weak 2 to 6 positive 6 to 10 strong ˃10 very strong source: long, s.j., freese, j. (2014), regression models for categorical dependent variables in stata, 3rd edition, texas, stata press the bic difference between these two models is 177.6 in favor of the model containing the ca variable. the test gives a very strong preference for this model and is therefore used as our analysis model. so the rest of our analysis was done with this model containing the ca variable. the following table presents our regression first results. table 7 result of specification tests of both models | current saved difference log-likelihood | model | 4313.446 4406.875 -93.429 intercept-only | -781.812 -781.812 0.000 chi-square | d (df=10461/10460/1) | -8626.892 -8813.750 186.858 lr (df=12/13/-1) | 10190.517 10377.375 -186.858 r2 | mcfadden | 6.517 6.637 -0.120 mcfadden (adjusted) | 6.499 6.618 -0.118 cox-snell/ml | 0.622 0.629 -0.007 cragg-uhler/nagelkerke | 4.486 4.534 -0.048 ic | aic | -8598.892 -8783.750 184.858 aic divided by n | -0.821 -0.839 0.018 bic (df=14/15/-1) | -8497.297 -8674.899 177.601 variance of | e | 0.026 0.025 0.000 difference of 177.601 in bic provides very strong support for saved model. source: our calculations based on env2015 data table 8 presents the results of the regression of the selected analysis model. the coefficients of the age group variable for the head of the household show that all other ouoya 57 things being equal and taking as a reference heads under 35 years of age, households headed by a leader whose age is between 35 and 55 years of age have a 1.25% increase in the probability of being poor, while those whose head is over 55 years of age see their probability of being poor decrease by 7.6%. thus, households with an older head are less vulnerable to poverty than households headed by young people or adults. the difference in social and physical capital between old and young could explain this difference in vulnerability status to poverty. indeed, in rural côte d’ivoire, people over 55 years old hold various assets (agricultural land, family courts, livestock etc.) that are used as a means of covering shocks. this theory is consistent with the work of moser (1998) who defines assets as means of resistance against vulnerability. vulnerability is therefore closely linked to ownership of assets. production and exchange activities create assets and, if necessary, can be transformed into production inputs or directly used for consumption. thus, reducing assets increases vulnerability, although this may not be visible. thus, according to moser (1996), “individuals and households ... mobilize their assets to protect their standard of living in the face of the economic crisis”. in addition, people over 55 are very often respected patriarchs with often mature children. these mature children financially support and assist the family. this diversified assistance could contribute to reducing the vulnerability of these households. moreover, the variable fa confirms this theory since households receiving family assistance during the last twelve months preceding this survey have their probability of being poor reduce by 8 percent, all things being equal. the variable fw that identifies the employment status of the head of household (full-time or non-fulltime employment) reveals that households headed by full-time workers are less vulnerable than others on equal terms. indeed, the provision of a full-time job means the regular receipt of a salary that can serve as a buffer in case of shock. the hhs variable, which refers to the sex of the household head, shows that maleheaded households are less vulnerable than those headed by women, all other things being equal. there is a sharp 13 percent drop in the probability of being poor from a woman-headed household to a male-headed household on equal terms. this is consistent with the work of ligon and schechter (2003). the variable mn reveals that increasing the number of men (male) in the household increases vulnerability to poverty. in the ivorian rural area, young men very often live maritally at an early age. these young couples are very fertile and also quickly increase the parental family unit in which they remained residents. the inclusion of all these people makes the household vulnerable to poverty. this could explain the positive relationship between the number of men in the household and the status of vulnerability to poverty. table 8 result of tobit model regression | b t p>|t| bstdx bstdy bstdxy sdofx ca | 55 | 0.0125 3.529 0.000 0.006 0.048 0.023 0.490 105 | -0.0764 -15.417 0.000 -0.026 -0.293 -0.099 0.339 | 1.fw | -0.0163 -5.113 0.000 -0.008 -0.062 -0.031 0.499 | el | 1 | 0.0200 4.882 0.000 0.008 0.077 0.031 0.403 2 | -0.1311 -30.051 0.000 -0.050 -0.503 -0.191 0.381 3 | -0.0493 -3.978 0.000 -0.006 -0.189 -0.024 0.129 | as | 2 | -0.1196 -17.923 0.000 -0.028 -0.459 -0.109 0.238 3 | 0.0217 2.859 0.004 0.005 0.083 0.017 0.210 4 | -0.0340 -5.140 0.000 -0.008 -0.131 -0.031 0.241 | 1.fa | -0.0816 -8.358 0.000 -0.014 -0.313 -0.053 0.170 1.cred | 0.0490 8.270 0.000 0.013 0.188 0.050 0.269 1.hhs | -0.1309 -28.387 0.000 -0.048 -0.502 -0.183 0.365 business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 58 mn | 0.1809 118.062 0.000 0.192 0.694 0.736 1.060 constant | 0.0745 9.764 0.000 . . . . source: our calculations based on env2015 data regarding the level of education of the head of the household, there is a relative equality between the vulnerability status of households headed by a leader with no level and a leader with primary level. on the other hand, households headed by high school or above are less vulnerable than those with no level, on equal terms. this result is similar to the conclusion of the work of azam and imai (2009) who found that households without education are probably the most vulnerable to poverty. the sector of activity of the head of household is taken into account through the categorical variable as as presented above. the vulnerability status of households operating in agriculture is approximately the same as those in trade (a slight increase of 2% from an agricultural household to a shopkeeper household) all things being equal. on the other hand, farm households are more vulnerable to poverty than their peers in industry and services. the work of azam and imai (2009) reaches the same conclusion that farm households are more vulnerable to poverty. we use the prediction tables here to assess the probability of becoming poor according to the educational level (el variable) and the leader’s activity category (as variable). by making these discrete changes on these two variables, the question about the value of the other variables arises. according to long et al (2014), the local mean of these variables is more realistic than the overall mean within the sample. this local average is more appropriate because it takes into account the specific characteristics of the modalities of the predictor variables. the prediction tables are presented in tables 9, 10 and 11 below. table 9 prediction of the probability of becoming poor according to el | el pr_p0 se z p ll ul 1 | 0 0.265 0.002 130.201 0.000 0.261 0.269 2 | 1 0.285 0.004 81.336 0.000 0.278 0.292 3 | 2 0.134 0.004 35.327 0.000 0.127 0.142 4 | 3 0.216 0.012 17.736 0.000 0.192 0.240 specified values of covariates | 55. 105. 1. 2. 3. 4. 1. | ca ca fw as as as fa current | .403 .133 .464 .06 .0462 .0619 .0297 | 1. 1. | cred hhs mn current | .922 .842 1.54 source: our calculations based on env2015 data table 10 vulnerability prediction by business sector | as pr_p0 se z p ll ul 1 | 1 0.254 0.002 148.518 0.000 0.250 0.257 2 | 2 0.134 0.006 20.818 0.000 0.121 0.147 3 | 3 0.275 0.007 37.385 0.000 0.261 0.290 4 | 4 0.220 0.006 34.438 0.000 0.207 0.232 specified values of covariates | 55. 105. 1. 1. 2. 3. 1. | ca ca fw el el el fa current | .403 .133 .464 .204 .176 .0168 .0297 | 1. 1. | cred hhs mn current | .922 .842 1.54 source: our calculations based on env2015 data ouoya 59 table 11 prediction of vulnerability to poverty according to el and as | el as pr_p0 se z p ll ul 1 | 0 1 0.274 0.002 128.309 0.000 0.269 0.278 2 | 0 2 0.154 0.007 23.272 0.000 0.141 0.167 3 | 0 3 0.295 0.007 39.533 0.000 0.281 0.310 4 | 0 4 0.240 0.007 36.236 0.000 0.227 0.252 5 | 1 1 0.294 0.004 81.866 0.000 0.287 0.301 6 | 1 2 0.174 0.007 25.249 0.000 0.160 0.187 7 | 1 3 0.315 0.008 38.902 0.000 0.299 0.331 8 | 1 4 0.260 0.007 35.771 0.000 0.245 0.274 9 | 2 1 0.142 0.004 36.381 0.000 0.135 0.150 10 | 2 2 0.023 0.007 3.043 0.002 0.008 0.037 11 | 2 3 0.164 0.008 20.322 0.000 0.148 0.180 12 | 2 4 0.108 0.007 16.039 0.000 0.095 0.122 13 | 3 1 0.224 0.012 18.426 0.000 0.200 0.248 14 | 3 2 0.105 0.014 7.579 0.000 0.078 0.132 15 | 3 3 0.246 0.014 17.304 0.000 0.218 0.274 16 | 3 4 0.190 0.014 13.773 0.000 0.163 0.217 specified values of covariates | 55. 105. 1. 1. 1. 1. | ca ca fw fa cred hhs mn current | .403 .133 .464 .0297 .922 .842 1.54 source: our calculations based on env2015 data thus, in tables 9, the other variables being maintained at their local average, only households whose head has no education and those whose head is at the primary level are vulnerable to poverty with 26.5% and 28.5% respectively. in the business sector, households operating in agriculture and trade are vulnerable. combining these two variables, we find that among households whose head has no level of education, only those who practice in agriculture and commerce are vulnerable with a respective probability of 27.4% and 29.5%. for primary-level households, those engaged in agriculture, trade and services are vulnerable. on the other hand, when the head of household has reached the secondary and higher level, whatever the business sector in which the household operates, it is not vulnerable to poverty. thus, the higher the education level of the household head, the less vulnerable the household is to poverty. we are now interested in the influence of access to credit (variable cred). contrary to the findings of many works, we find that access to credit increases the vulnerability of rural households to poverty. indeed, according to elis (2010), broader access of individuals and firms to credit will contribute to an increase in return on investment productivity. eswaran and kotwal (1990) argue that having access to credit could reduce households’ vulnerability to negative shocks by increasing their ability to smooth consumption during difficult times. also, this availability of credit allows households to undertake risky investments and helps strengthen the productive assets of households. when producers are unable to make the necessary initial investments or bear the additional risk, they must give up their productivity and no longer be able to improve their income and well-being (besley, 1995, boucher et al. 2008). in addition, without adequate access to loans or insurance, producers facing negative shocks such as drought, disease or significant price declines may lose some of the few assets they own (diagne & zeller, 2001). for example, producers with access to well-designed credit, savings and insurance services may have capital to finance the inputs, labor and equipment they need to generate income; they can afford to invest in riskier but more profitable companies and asset portfolios; and may adopt more effective strategies to stabilize their food intake (zeller et al, 1997). however, the work of beck, et al. (2008) showed that increasing access to household credit does not have a positive impact on growth. overall, greater access to business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 60 financial services offers opportunities to improve agricultural production, food security and the economic vitality of communities and entire nations. how can we explain the positive relationship between access to credit and vulnerability to poverty? to answer this question, identify the main source (s) of rural credit in côte d’ivoire. in the analysis of the rural credit market in côte d’ivoire, it has been found that the formal and semiformal sectors are almost absent as they offer less than 15 percent for rural credit. the informal sector is therefore the main provider of rural credit (env2015). for zeller et al (1997), only quality credit services could enable rural people to make productive investments and stabilize their consumption. unfortunately, despite the fact that informal credit is widely available in rural areas, it should be noted that it has perverse effects of imprisonment of plaintiffs in a sort of vicious circle. indeed, wen tie-yun (2001) argues that a growing number of poor people in rural china have been trapped in the debt cycle and have been forced to provide labor power to lenders in exchange for the repayment of their loans. in a report submitted to the monetary policy committee of the people’s bank of china (pboc) and the central bank of china, it shows that the decline in the formal supply of credit in poor areas has led to a rise in rates of interest in informal credit markets and thus trapped more poor people in the debt cycle. such a conclusion is for us a signal to draw attention to the indebtedness of rural people in côte d’ivoire. thus, in this informal market, interest rates are relatively higher (khalily & khaleque, 2013) and this could lead rural people into a permanent cycle of indebtedness if the funds obtained are not used to purchase production assets (agricultural inputs, equipment etc.). this assertion is in line with the work of besley (1995) who finds that the debt should be used for the realization of initial investments that can increase productivity and thus improve the income and well-being of rural households. so, it emerges the thorny question of the use of resources from credits. to give some answers to our question, let’s look at table 9 below. this table allows us to make an imputation of the use of credits at two levels with, on the one hand, expenditures and, on the other, investments. firstly, it is noted that health, food and other expenses (various ceremonies) account for 36.69%, 22.6% and 22.41% respectively of the number of credits obtained by these rural dwellers. the cumulative total of these three expenditure items amounts to 81.7% of the total number of loans. secondly, three pockets of investment are to be considered in the use of rural credit, namely education (investment in human capital), housing and equipment, which respectively have 10.14%, 1.07% and 2.58% of the total loans obtained. the share of investments in the total number of rural credits is 13.79%, the rest being spent. table 12 distribution of credits by source and use auprès de quel | a quoi ont servi principalement ces dettes organisme | scolarité habitat santé alimentat équipement | total banque | 86 80 139 87 0 | 437 | 19.68 18.31 31.81 19.91 0.00 | 100.00 | 7.04 62.02 3.14 3.19 0.00 | 3.62 institution de crédit | 1 0 0 43 0 | 48 | 2.08 0.00 0.00 89.58 0.00 | 100.00 | 0.08 0.00 0.00 1.58 0.00 | 0.40 fonds sociaux | 0 0 0 0 42 | 42 | 0.00 0.00 0.00 0.00 100.00 | 100.00 | 0.00 0.00 0.00 0.00 13.50 | 0.35 coopec | 1 0 0 0 0 | 4 | 25.00 0.00 0.00 0.00 0.00 | 100.00 | 0.08 0.00 0.00 0.00 0.00 | 0.03 autre imf | 89 0 1 0 0 | 92 | 96.74 0.00 1.09 0.00 0.00 | 100.00 | 7.28 0.00 0.02 0.00 0.00 | 0.76 tontine | 48 0 45 50 0 | 275 ouoya 61 | 17.45 0.00 16.36 18.18 0.00 | 100.00 | 3.93 0.00 1.02 1.83 0.00 | 2.28 particulier | 719 48 3,526 2,226 268 | 9,345 | 7.69 0.51 37.73 23.82 2.87 | 100.00 | 58.84 37.21 79.70 81.69 86.17 | 77.51 coopérative/gvc | 93 1 357 90 1 | 856 | 10.86 0.12 41.71 10.51 0.12 | 100.00 | 7.61 0.78 8.07 3.30 0.32 | 7.10 autres | 185 0 356 229 0 | 958 | 19.31 0.00 37.16 23.90 0.00 | 100.00 | 15.14 0.00 8.05 8.40 0.00 | 7.95 total | 1,222 129 4,424 2,725 311 | 12,057 | 10.14 1.07 36.69 22.60 2.58 | 100.00 | 100.00 100.00 100.00 100.00 100.00 | 100.00 | a quoi ont servi principalement auprès de quel | ces dettes organisme | habilleme transport autre | total banque | 0 0 45 | 437 | 0.00 0.00 10.30 | 100.00 | 0.00 0.00 1.67 | 3.62 institution de crédit | 0 0 4 | 48 | 0.00 0.00 8.33 | 100.00 | 0.00 0.00 0.15 | 0.40 fonds sociaux | 0 0 0 | 42 | 0.00 0.00 0.00 | 100.00 | 0.00 0.00 0.00 | 0.35 coopec | 0 0 3 | 4 | 0.00 0.00 75.00 | 100.00 | 0.00 0.00 0.11 | 0.03 autre imf | 0 0 2 | 92 | 0.00 0.00 2.17 | 100.00 | 0.00 0.00 0.07 | 0.76 tontine | 0 45 87 | 275 | 0.00 16.36 31.64 | 100.00 | 0.00 16.36 3.22 | 2.28 particulier | 222 185 2,151 | 9,345 | 2.38 1.98 23.02 | 100.00 | 82.53 67.27 79.61 | 77.51 coopérative/gvc | 0 45 269 | 856 | 0.00 5.26 31.43 | 100.00 | 0.00 16.36 9.96 | 7.10 autres | 47 0 141 | 958 | 4.91 0.00 14.72 | 100.00 | 17.47 0.00 5.22 | 7.95 total | 269 275 2,702 | 12,057 | 2.23 2.28 22.41 | 100.00 | 100.00 100.00 100.00 | 100.00 pearson chi2(56) = 4.6e+03 pr = 0.000 source: our calculations based on env2015 data we can see that short-term investments in production account for only 3.65% of the total credits granted while investment in human capital (schooling of children) which is a very long-term investment mobilizes 10.14%. thus, even if it is only the quantity of credit and not the value of this credit, one can draw the conclusion that rural credit in côte d’ivoire is primarily informal and that it is mainly used for the realization of expenses and not for investments. these major facts cast doubt on the quality of credit on the one hand, and the use of this credit for productive purposes on the other. for our part, these facts explain the positive relationship between access to credit and the vulnerability of rural households in côte d’ivoire. also, such widely available credits make rural households more vulnerable and could plunge them into a cycle similar to that mentioned by wen tie-yun (2001). business sector, level of education and access to credit: what influences on vulnerability to rural households poverty in côte d’ivoire? 62 conclusion at the end of our work we can mention that the analysis of the vulnerability of rural households to poverty in côte d’ivoire is of real interest because of the specificity of the economic, social and political environment in which this country has been plunged for a few decades. this research was designed to answer three research questions. the first question focuses on the difference between numbers of poor and those who are vulnerable to poverty. it has been concluded that 25.75% of the households in our sample are poor and 34.48% are vulnerable to poverty. households vulnerable to poverty outnumber those who are poor. for chaudhuri et al (2002), it is the presence of risks that explains this state of affairs. thus, we confirm the first hypothesis of our study. in order to split our sample according to the status of poverty and vulnerability, we start by defining the future poor as being non-poor individuals but vulnerable to poverty (poor ex ante). these future poor represent 19.27% of the non-poor. the transient poor are individuals who are poor but not vulnerable to poverty. these represent 21.65% of the poor population. finally, the structural poor are those who are poor and vulnerable to poverty. they represent 78.35% of the workforce of the poor. vulnerability status analysis according to the level of education and business sector will allow us to answer the second research question. it should be noted that households headed by a chef in agriculture or commerce are more vulnerable than those headed by a chef operating in industry and services, all other things being equal. in addition, the achievement of at least secondary education by the head of household reduces the vulnerability of households regardless of the sector of activity in which he operates. the second and third hypotheses of our research are thus confirmed. thus, one of the recommendations of this research would be the continuation of the government program to make the school accessible to all until the minimum age of 16 years. at this stage, all children of school age will have easily reached secondary education. on the third question of whether credit improves the vulnerability of rural households in côte d’ivoire, we answer in the negative. credit unfortunately makes rural households even more vulnerable to poverty. on the one hand, it is the preponderance of the informal market 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 21 labour force specialization in romania regional disparities oana ancuţa stângaciu vasile alecsandri university of bacӑu anca_stangaciu@yahoo.com abstract the specialization of the labour force on regional level was determined by using the onicescu information energy corrected formula. assessing disparities in the regional specialization of the labour force was performed on nace sections, and the results confirm that there are disparities between regions regarding the specialization of the labour force. keywords average number of employees; civil economically active population; onicescu information energy – corrected formula jel classification c10; e24; j21 introduction the objective of this paper is to analyse the labour market from a regional point of view, and to determine the degree of specialization of the labour force in the different regions of romania over the period of time 1992-2014. short methodological presentation for this analysis i started from the regional data base tempo-online in which the labour force index at the nace sections level is represented by the 15 sections (nace rev.1) for the period of time 1992-2008 and by the 19 sections (nace rev.2) for the period of time 2008-2014. labour market analysis is based on two indicators: civil economically active population. this population includes all the people who work for an income and whose work is usually done in one of the activities of the national economy, being defined as an economic or social activity, based on a work contract or a free-lance activity (self-employed) in order to get income such as salary, in kind payment, etc. the following categories of people are included: o employees who work in one of the activities of the national economy in the public (integrally of state and public of national interest), mixed, private, cooperative and collective; o employers managers of private units that employ labour force for the activity of their units; o self-employed; o unpaid family workers. labour force specialization in romania regional disparities 22 the civil employed population does not include the armed forces and similar (the personnel of the ministry of defence, ministry of administration and interior, romanian intelligence office, conscripts), convicts and political and community organizations employees. the average number of employees. this number comprises all the people with individual labour contract/agreement for a definite or indefinite duration (including seasonal workers, the manager or the administrator) whose labour contract/agreement was not suspended during the reference year. the average number of employees represents a simple arithmetic mean resulting from summing up the daily number of employees (suspended labour contract/agreement are excluded) from the reference period including the weekends and legal holidays or other non-working days divided to the total number of calendar days. it also includes the employees whose labour contract was suspended by the employer’s initiative (in case of temporary work interruptions) and receive an allowance from the basic salary in accordance with the position held at the workplace, as required by the law. in the daily number of employees taken into account for the compilation of the average number are not included: the employees in unpaid leaves, on strike or working abroad. for weekends, legal holidays and other non-working days, the daily number of employees is considered to be the one in the previous day, except for those whose labour contract/agreement ceased that very same day. the employees who do not have a full-time employment contract are included proportionally with the number of working hours stipulated in the labour contract. in the daily number of employees taken into account for the compilation of the average number are included only the employees that are paid. the degree of specialisation of labour force on regional level, based on the share of nace sections in the total average number of employees or total civil economically active population, was determined by using the onicescu information energy – corrected formula. the index measures the degree of specialisation of the labour force from the perspective of the structure of nace sections and is calculated by using the following formula: n n s e ij j 1 1 12     where: sij = share of average number of employees/ civil economically active population of nace section i in total average number of employees/ civil economically active population of region j, n = total number of nace sections, i ϵ {1,…, 15}for nace rev.1 (between 1992-2008) and i ϵ {1,…, 19}for nace rev.2 (between 2008-2014) j ϵ {1,…, 8}. the index will oscillate in the interval (0-1), and the concentration of the average number of employees/civil economically active population of a region, a small number of nace sections will result in the value of onicescu information energy tending toward 1 (reflecting a high degree of specialisation), while labour force dispersion on several nace sections will make the value of the index tend towards 0 (reflecting a low degree of specialisation, respectively the diversification). stângaciu 23 the distribution of the labour force per nace sections the distribution of the labour force per nace sections is uneven, with disparities on regional level as well. thus, considered per regions, the distribution of the civil economically active population per nace sections is as follows: bucharest – ilfov regionin the period of time 1992-2004, the civil population working in section d: manufacturing industry represents the highest percentage, as it can be seen in figure 1, meaning 32.9% of the total civil economically active population in 1992 and 21.9% in 2004 respectively, while starting in 2006 the situation changes and most people work in section g: trade, with a percentage of about 19% of the total civil economically active population during the last 8 years. central region in the period of time 1992-2014, most of the civil population works in sections a: agriculture and d (until 2008) and c (after 2008): manufacturing industry, these sections including the greatest percentage of the total civil economically active population, as we can notice in figure 1. thus, 64.1% of the total civil economically active population work in the two sections in 1992, and 47.2% in 2014. starting with 2002, the percentage of people working in section g: trade increases constantly, reaching 15% of the total in 2014. north – east region–throughout the period subjected to this analysis, most of the civil population works in section a: agriculture, this section registering the highest percentage of the total civil economically active population, as it can be noticed in figure 1, meaning 42.2% in 1992 and 39.5% in 2004 respectively. a significant percentage is also represented by the people working in section d (until 2008) and c (after 2008): manufacturing industry; thus, 25.7% worked in this section in 1992, and 14.5% in 2014. starting with 2008, the percentage of people working in section g:trade also increases, reaching up to 12.8% in 2014. north west regionin the period of time 1992-2014, the civil population working in section a: agriculture represents the highest percentage, as it can be seen in figure 1, meaning 37.1% of the total civil economically active population in 1992 and 29.2% in 2014 respectively. likewise, a high percentage of over 20% is represented by the population working in section d (until 2008) and c (after 2008): manufacturing industry. starting with 2003, the percentage of people working in section g: trade increases, reaching a percentage of 13.5% in 2014. south – east regionin the period of time subjected to this analysis, most of the civil population works in section a: agriculture, this section having the highest percentage of the total civil economically active population, meaning 36.7% in 1992 and 31.9% in 2014. a great part of the civil population also works in section d (until 2008) and c (after 2008): manufacturing industry; thus, 28.6% worked in this section in 1992 and 16.0% in 2014. starting with 2008, the number of people working in section g:trade increases, reaching up to 13.6% of the total in 2014. south muntenia region– between 1992 and 2014, the civil population working in section a:agriculture represented the highest percentage, as it can be seen in figure 1, meaning 38.2% of the total civil economically active population in 1992 and 35.3% in 2014. a high percentage, about 20%, is labour force specialization in romania regional disparities 24 also represented by the population working in section d (until 2008) and c (after 2008): manufacturing industry. starting with 2002, the percentage of people working in section g:trade increases, reaching up to 12.4% of the total in 2014. south – west oltenia region – just as in the case of regions north – east, north – west, south – east and south muntenia, most of the civil population works in section a: agriculture (it represents 42.2% in 1992 and 38.4% of the total civil economically active population in 2014), as well as in section d (until 2008) and c (after 2008): manufacturing industry, (19.4% in 1992 and 13.5% in 2014).starting with 2003, the number of people working in section g:trade increases dramatically, reaching up to 12.3% in 2014. bucharest – ilfov region central region north – east region north west region south – east region south muntenia region stângaciu 25 south – west oltenia region west region for the period 1992-2008 (nace rev.1) a:agriculture, hunting and forestry d:manufacturing industry g:trade for the period 2008-2014 (nace rev.2) a:agriculture, forestry and fishing c:manufacturing industry g:wholesale and retail trade figure 1. boxplot for the distribution of the civil economically active population source: processing by the tempo-online west region –until 2005, the civil population working in section a: agriculture represented the highest percentage, as it can be seen in figure 1, meaning 30.3% of the total civil economically active population in 1992 and 26.7% in 2005, while starting with 2006 (except for the period of time 20092012) the situation changes and most people work in section d: (until 2008) and c (after 2008): manufacturing industry, which reached up to 25% of the total population. after 1997, the percentage of people working in section g: trade also increases, reaching up to 14.7% of the total in 2014. as to the distribution of the average number of employees per nace sections, the situation is different compared to the first indicator subjected to this analysis, the civil economically active population. thus, per regions and per nace sections, the distribution is as follows: bucharest – ilfov region–during the period of time 1992-2005, the employees in section d: manufacturing industry represented the highest percentage, as it can be seen in figure 2, meaning 39.5% of the total average number of employees in 1992 and 23.8% in 2004, while starting in 2006 the situation changes and most employees work in section g: trade, with a percentage of about 20% of the total during the last 8 years. central region– in the period of time 1992-2014, most employees worked in section d (until 2008) and c (after 2008): manufacturing industry, this section including the highest percentage of the total number of employees, as it can be seen in figure 2. thus, 50.8% of the employees worked in this section in 1992 and 31.9% in 2014. starting with 2004, the percentage of employees working in section g: trade also increased constantly, reaching up to 15.5% of the total in 2014. north – east region–during the whole period subjected to this analysis, most of the employees work in section d (until 2008) and c (after 2008): manufacturing industry, this section registering the highest percentage of the total average number of employees, as it can be seen in figure 2, representing 43.2% in 1992 and 21.1% in 2014 respectively. starting with 2008, the percentage of employees in section g: trade increases, reaching up to 12.8% in 2014. labour force specialization in romania regional disparities 26 north west region –during the period of time 1992-2014, the employees working in section d (until 2008) and c (after 2008): manufacturing industry represented the highest percentage, as it can be seen in figure 2, meaning 41.9% of the total average number of employees in 1992 and 30.7% in 2014. during the last 10 years, an important percentage of employees over 15% was also represented by the ones working in section g: trade. south – east region –during the period of time subjected to this analysis, most of the employees worked in section d (until 2008) and c (after 2008): manufacturing industry, this section including the highest percentage of the total average number of employees, meaning 34.6% in 1992 and 22.3% in 2014. starting with 2008, the number of employees working in section g: trade also increases, reaching 17.4% of the total in 2014. south muntenia region – between 1992 and 2014, the employees working in section d (until 2008) and c (after 2008): manufacturing industry represented the highest percentage, as it can be seen in figure 2, meaning 44.0% of the total average number of employees in 1992 and 28.5% in 2014.starting with 2008, the percentage of employees working in section g: trade also increases, reaching up to 14.6% in 2014. south – west oltenia region –just as in the other regions, most of the employees here work in section d (until 2008) and c (after 2008): manufacturing industry (which represents 32.6% of the total average number of employees in 1992 and 19.9% in 2014). starting with 2008, the number of employees working in section g: trade increases, reaching up to 16.1% in 2014. bucharest – ilfov region central region north – east region north west region stângaciu 27 south – east region south muntenia region south – west oltenia region west region for the period 1992-2008 (nace rev.1) d:manufacturing industry g:trade for the period 2008-2014 (nace rev.2) c:manufacturing industry g:wholesale and retail trade figure 2. boxplot for the distribution of the average number of employees source: processing by the tempo-online west region – during the period of time subjected to this analysis, the employees working in section d (until 2008) and c (after 2008): manufacturing industry represented the highest percentage, as it can be noticed in figure 2, meaning 36.2% of the total average number of employees in 1992 and 34.0% in 2014. after 2008, the percentage of employees working in section g: trade also increases, reaching up to 15.2% in 2014. in conclusion, the distribution of the civil economically active population per nace sections emphasises the fact that, during the period of time subjected to this analysis, in most of the regions (north – east, north – west, south – west oltenia, south muntenia, south – east) most of the population works in section a: agriculture, while the population working in section d (until 2008) and c (after 2008): manufacturing industry also represents a high percentage of the total civil economically active population. however, in the central and west region, the percentages of the population working in sections a: agriculture and d (until 2008) and c (after 2008): manufacturing industry are about the same, while in bucharest – ilfov region the civil population working in section d (until 2008) and c (after 2008): manufacturing industry represents the highest percentage. it can also be noticed that during the last years the percentage of the people working in section g: trade increased in all the regions. as to the distribution of the average number of employees per nace labour force specialization in romania regional disparities 28 sections, in all the regions most of the employees work in section d (until 2008) and c (after 2008): manufacturing industry, this section representing the highest percentage of the total, except for bucharest – ilfov region where, during the last years, most of the employees work in section g: trade. specialisation of the labour force per nace sections from the point of view of the onicescu information energy – corrected formula, the evolution of the degree of specialization of the labour force per nace sections after 1992, on regional level, is as follows, as it results from figure 3: bucharest – ilfov region in the period of time 1992-2014, the degree of specialization of the civil economically active population constantly decreased (by -59.8% in 2014 compared to 1992) and it was slightly lower compared to the one of the average number of employees. in time, the difference between the two indicators decreased so that, in 1992, the degree of specialization of the civil economically active population was of 0.107 and the one of the average number of employees was of 0.143, while in 2014 the values of these indicators were 0.043 and 0.044 respectively. central regionin the period of time 1992-2014, the degree of specialization of the civil economically active population constantly decreased (by -59.8% in 2014 compared to 1992) and it was slightly lower than the one of the average number of employees. in time, the difference between the two indicators decreased, so that in 1992 the degree of specialization of the civil economically active population was of 0.170 and the one of the average number of employees was of 0.233, while in 2014 these values were 0.101 and 0.104 respectively. north – east region – during the period of time subjected to the analysis, the degree of specialization of the average number of employees decreased (by -59.6% in 2014 compared to 1992) and it was lower than the one of the civil economically active population. in time, the difference between the two indicators increased, so that in 1992 the degree of specialization of the civil economically active population was of 0.203 and the one of the average number of employees was of 0.166, while in 2014 these values were 0.161 and 0.067 respectively. bucharest – ilfov region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 central region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 stângaciu 29 north – east region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 north west region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 south – east region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 south muntenia region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 south – west oltenia region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 west region 0,000 0,050 0,100 0,150 0,200 0,250 0,300 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 r v .2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 average number of employees civil economicaly active population figure 3. evolution of the onicescu index of regional specialization on labour market source: processing by the tempo-online north west region –during the period of time subjected to the analysis, the degree of specialization of the average number of employees decreased (by 34.5% in 2014 compared to 1992, and it was slightly lower than the one of the civil economically active population. the difference between the two indicators increased by 2000 so that, in 1992 the degree of specialization of the civil economically active population was of 0.166 and the one of the average number of employees was of 0.154, while in 2000 these values were labour force specialization in romania regional disparities 30 0.210 and 0.121 respectively. during the last 14 years, this difference between the indicators decreases, so that in 2014 the disparity is of 0.018 compared to 0.089 as registered in 2000. south – east region –during the period of time 1992-2014, the degree of specialization of the average number of employees constantly decreased (by -46.1% in 2014 compared to 1992) and it was lower than the one of the civil economically active population. in time, the difference between the two indicators reached a maximum in the period of time 2000-2001 and a minimum between 2007 and 2009.thus, in 1992 the degree of specialization of the civil economically active population was of 0.153 and the one of the average number of employees was of 0.118, while in 2014 these values were of 0.116 and 0.064 respectively. south muntenia region – during the period of time 1992-2014, the degree of specialization of the average number of employees constantly decreased (by -52.6% in 2014 compared to 1992), and it was lower than the one of the civil economically active population. in time, the difference between the two indicators increased, reaching a maximum in the period of time 2000-2001. thus, in 1992 the degree of specialization of the civil economically active population was of 0.187 and the one of the average number of employees was of 0.175, while in 2014 these values were of 0.144 and 0.083 respectively. south – west oltenia region – during the period of time subjected to the analysis, the degree of specialization of the average number of employees decreased (by -43.5% in 2014 compared to 1992) and it was lower than the one of the civil economically active population. the difference between the two indicators stayed high during the whole period subjected to this analysis, reaching a maximum in 2000. thus, in 1992 the degree of specialization of the civil economically active population was of 0.153 and the one of the average number of employees was of 0.118, while in 2014 these two indicators were 0.116 and 0.064 respectively. west region –during the period of time 1992-2014, the degree of specialization of the civil economically active population and of the average number of employees maintained approximately the same values, with slightly higher variations at the beginning of the analysed period. the difference between the two indicators is small, and the periods when an indicator is higher than the other alternate. in conclusion, the degree of specialization of the civil economically active population is higher than the one of the average number of employees in most of the regions (north – east, north – west, south – west oltenia, south muntenia, south – east), and its evolution during the period of time subjected to the analysis is oscillating having, however, a decreasing trend during the 22 years subjected to this analysis. it can also be noticed in figure 3 that the difference between the 2 indicators is a significant one during the whole period, and the highest disparity between the two indicators is reached between 2000 and 2001.alternatively, in bucharest – ilfov region and in central region the degree of specialization of the civil economically active population is slightly lower than the one of the average number of employees, and the decreasing trend of their evolution leads to a decrease of the difference between the two indicators. in west region, the degree of specialization of the civil economically active population and the one of the average number of employees maintained approximately the same values, and the difference between the two indicators is low. stângaciu 31 conclusion in most of the regions (north – east, north – west, south – west oltenia, south muntenia, south – east), the high degree of specialization of the civil economically active population (higher than the one of the average number of employees) is the result of the uneven distribution of the civil economically active population per nace sections, with a higher percentage of the population working in section a: agriculture. on the other hand, in central region, west region and bucharest – ilfov region the degree of specialization of the civil economically active population is close to the one of the average number of employees, as the percentages of the civil economically active population working in sections a: agriculture and d (until 2008) and c (after 2008): manufacturing industry are approximately the same, and most of the employees work in this section d (until 2008) and c (after 2008): manufacturing industry. the decreasing trend in the evolution of these indicators during the 22 years analysed also emphasises the fact that, on the level of the labour market, there is an un-specialization phenomenon. references jaba, e. (1998), statistică, ed. economică, bucureşti. harja eugenia, stângaciu oana-ancuţa (2009), analiza datelor statistice utilizând spss, bacӑu, editura alma mater a universităţii din bacău. stângaciu oana-ancuţa, harja eugenia (2008), egalitatea de şanse între femei şi bărbaţi în domeniul muncii o analiză a principalelor disparităţi de gen la un an de la integrarea în u.e., priorităţi ale statisticii la un an după aderarea româniei la uniunea europeană, bucureşti, institutul naţional de statistică. stângaciu oana ancuţa (2013), equality of opportunity between men and women on the labour market – the gender pay gap within the eu member states, studies and scientific researches. economic edition, universitatea “vasile alecsandri” din bacău, facultatea de ştiinţe economice, centrul de studii şi cercetări economice, no. 18/2013. ins, statistics available at www.insse.ro http://www.insse.ro/ studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 125 a student dormitory as an educational supporting facility: an enterprise budget analysis dr. etty susilowati, mm budi luhur university ettysslwt@gmail.com dr. sugiharto, m.sc., m.fin budi luhur university ss_aei@yahoo.co.id dr. leonnard, mcomm ipmi international business school leonnard.ong@ipmi.ac.id budi srihartati master student of magister management, budi luhur university abstract the availability of student dormitories has become a major attraction for universities in indonesia since many universities have provided this facility. in this study, we examine the potential of a student dormitory development at the budi luhur university, especially in terms of finance for student interests and education providers. primary data were collected from 185 students and were analyzed by employing feasibility test of net present value (npv), internal rate of return (irr), net benefit cost ratio (net b/c), profitability index (pi) and pay back period (pp). sensitivity analysis was also carried out both in terms of cost and income to anticipate the uncertainty that may occur. the findings indicated that the total investment required in the construction of the student dormitory was rp 155,857,800 with an average revenue per annum of rp 58,314,741,732. the results of the investment valuation analysis of net cash flows for 30 years indicated the npv value of rp 187,355,802,592, irr of 21%, net b/c of 10.57, pi of 2.20, and pbp 6.45 years. this proved that the investment in the student dormitory construction was considered feasible. finally, from the sensitivity analysis of changes in occupancy rate, rental rates and operational costs, it was concluded that the investment in dormitory construction would be unfeasible when occupancy rates and rents were at the level of 80% down. further managerial implications were discussed. keywords student dormitory; investment; investment feasibility test; sensitivity analysis. jel classification i22 1. introduction students are young generation with a lot of potential who are expected to be able to utilize the quality of knowledge they have in society (baharuddin & makin, 2007). to gain the greatest benefit in the learning process, the students are trying to get the best university, according to their interest which is often not provided in their own cities. this resulted in some students must move to other cities to get a higher quality education. in addition to academic quality, immigrant students often also consider the availability of adequate and affordable logistics. demographics of the students origin, distribution which spread throughout indonesia and the concentration of university locations in certain cities in indonesia requires the availability of adequate shelter for mailto:ettysslwt@gmail.com susilowati, sugiharto, leonnard, srihartati 126 students who do not live with their parents. boekaerts (2002) stated that there are several factors that influence the success of students to achieve the optimal achievement, those are intelligence, personality, university environment, and living environment (family, boarding house or boarding house). in addition, the provision of physical facilities significantly affects the level of student satisfaction towards the university (leonnard et al., 2014). therefore, student dormitory is an alternative that can provide a sense of security and comfort for students who are not familiar with the surrounding environment. competition among public and private universities to get the best students nowadays is not only analyzed from academic achievement, but also considering the affordability of education and accommodation costs. in jakarta, several universities have provided student dormitories for students, including university of indonesia, multimedia nusantara university, pelita harapan university, prasetya mulya university, bina nusantara university, bunda mulia university, president univesity etc. student dormitories in addition to helping students in terms of residence can also be the main attraction of a university. in this study, we analyze the potential of student dormitory development at budi luhur university seen from the financial aspect. the results of this study are expected to be beneficial to the interests of students and education providers. budi luhur university is considered very prospective because currently has an active student number of 11.188 people, has 5 faculties consisting of undergraduate and postgraduate programs. of the number of students is estimated about 61.70% comes from outside jakarta and need a place to live during their education. in addition, budi luhur university has more than 3,200 m2 of vacant land that has the potential to be developed as a student dormitory. previous studies have analyzed feasibility analysis (mahyudin et al., 2014; nikki et al., 2014; winantara et al., 2014; dikareva & voytolovsky, 2016) and others have analyzed the feasibility of building public facilities (smith et al., 2014; juwitaningtyas et al., 2015; figueiredo, nunes & brito, 2017) and housing (prastiwi & utomo, 2013; maulina & utomo, 2016; munawaroh & utomo, 2017) but feasibility analysis in the effort of providing educational facilities is still limited. thus, this study contributes to the literature by providing a new perspective on the potential of providing student dormitory, not only from the aspects of educational quality, but also from the university's profitability as a provider of educational services. 2. methodology 2.1 data sources this study employed primary and secondary data. the primary data were collected from 185 students of budi luhur university, while the secondary data were collected from books, journals and papers related to student dormitories, enterprise budget, and investment analysis. data collection was carried out through direct interview by questionnaires with students and others systematically according to the research objectives. 2.2 data analysis data analysis was carried out by evaluating the feasibility of investment through net present value (npv), internal rate of return (irr), net benefit cost ratio (net b/c), profitability index (pi), pay back period (pbp), and sensitivity analysis. npv is the current equivalent value of the expected cash flows taking into account the cost of capital minus the initial cost of the project. an investment will be accepted if the npv from the investment is positive. the formula for calculating npv is as follows (bosma et al., 2017): a student dormitory as an educational supporting facility: an enterprise budget analysis 127 npv = ∑ [(𝐵𝑡 − 𝐶𝑡 𝑛 𝑡=0 )/(1 + 𝑟) 𝑡 ] in which: 𝐵𝑡= benefits/year; 𝐶𝑡= cost/year; r = discount rate; n = project length; t= project year irr is the discount rate that causes the present value of the cash flow to equal the initial cost of the project. an investment is considered feasible if the irr value is greater than the minimum interest rate of attractive rate of return (marr). the formula for calculating irr is as follows (munawaroh & utomo, 2017): irr = 𝑖𝑙 + (𝑖𝑢−𝑖𝑙)(𝑁𝑃𝑉𝑙) (𝑁𝑃𝑉𝑙− 𝑁𝑃𝑉 𝑢) in which: 𝑖𝑙 = discount rate (+); 𝑖𝑢= discount rate (-); 𝑁𝑃𝑉𝑙 = npv (+); 𝑁𝑃𝑉 𝑢= npv (-) net b/c is another type to measure the size of the project, where the present value of the benefit stream is divided by the present value of the cost. an investment is considered feasible if the net value of b/c is positive. pi is the cash flow npv ratio to the investment value of the project. an investment is considered feasible if the value of pi is positive (prastiwi & utomo, 2013). the formula for calculating pi is as follows (prastiwi & utomo, 2013): pi = ∑ 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑛𝑒𝑡 𝑐𝑎𝑠ℎ ∑ 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑎𝑡𝑖𝑜𝑛 pp is a way to calculate the length of time it takes to generate a sufficient net cash flow to pay for the initial expenditure. an investment is considered feasible if the pp give a faster return time (umar, 2001). the formula for calculating pp is as follows (munawaroh & utomo, 2017): pp = 𝐼 𝐴𝑏 in which: i = investation value ; ab = net profit/year all of the analyses were calculated by employing ms. excel. 3. result and discussion 3.1 enterprise budget several assumptions employed in the enterprise budgeting of student dormitory are as follows: 1) the investment is planned for 30 years, according to the highest depreciation in the construction of middle class building, 2) total rooms to be built are 1,493 units, with a foundation of 8,000 m2, total building area of 32,000 m2, the other facilities (aisles, stairs, etc.) of 9,600 m2, and room size of 15 m2 each, 3) inflation rate is determined by average inflation of consumer price index from 2012 to 2016, 4) the discount rate employed is 18 %, and 5) the rental price assumed is able to compete with competitors around the university, especially with competitors who have come first, ie gateway apartment and boarding house. unit price employs the reference of the cost of boarding house rent with monthly payment scheme (table 1). susilowati, sugiharto, leonnard, srihartati 128 table 1 standard for student dormitory rental price type of rooms facility rent single room bathroom inside 1,100,000 sharing kitchen electrity water single room bed 1,350,000 wardrobe air conditioner tv desk and chair bathroom inside double room bed 1,750,000 wardrobe air conditioner tv desk and chair bathroom inside 3.2 investment cost investment costs are costs incurred at the beginning of the project. the initial investment cost for the construction of the student dormitory requires funds of rp 155,857,800.00, where the compliance for funds is assumed to be fulfilled by university. these initial investment costs consist of costs for land, buildings, interiors and furniture (table 2). table 2 projected investment cost of student dormitory no investment types unit price/unit total 1 land 10,000 5,000,000 50,000,000 2 building 32,000 3,000,000 96,000,000 3 building permit 4 floors 4,000,000 4,000,000 4 furniture dan interior number of unit x cost of furniture dan interior for single room 597 6,000,000 3,583,200,000 number of unit x cost of furniture and interior for double room 896 7,000,000 6,270,600,000 total 155,857,800,000 3.3 operational cost operational costs are routine expenses incurred annually at the project age. the operational costs of the student dormitory consist of fixed and variable costs. fixed costs consist of salary of a head of dormitory, an admin staff, securities, and cleaning services (table 3). table 3 projected fix cost of student dormitory no type of costs unit price/unit total 1 salary of head of dormitory 1 3,350,000 3,350,000 2 salary of admin staff 1 2,500,000 2,500,000 3 salary of security 6 2,000,000 12,000,000 a student dormitory as an educational supporting facility: an enterprise budget analysis 129 4 salary of cleaning service 5 1,500,000 7,500,000 total 25,350,000 while variable costs consist of electricity, water, telephone and others (table 4). table 4 projected variabel cost of student dormitory no type of costs allocation price/unit total 1 electricity and water 1493 unit rooms 100.000 149,300,000 service area 2,500,000 2 phone 500.000 500,000 3 others t 10,000,000 total 162,300,000 3.4 cash flow projection the cash flow projection to build the student dormitory includes the flow of benefits or an overview of the incoming money and the flow of costs spent during the investment period after it is accounted for the inflation factor. the projected cash inflows of student dormitory investment are indicated in table 5. table 5 projected cash flow of student dormitory yea r capital fix cost variable cost income cash flow cum. cf 0 155,857,800, 000 (155,857,800, 000) (155,857,800, 000) 1 328,901,04 0 2,105,745,1 20 28,486,440,00 0 26,051,793,84 0 (129,806,006, 160) 2 328,901,04 0 2,105,745,1 20 28,486,440,00 0 26,051,793,84 0 (103,754,212, 320) 3 328,901,04 0 2,105,745,1 20 28,486,440,00 0 26,051,793,84 0 (77,702,418,4 80) 4 328,901,04 0 2,105,745,1 20 34,183,728,00 0 31,749,081,84 0 (45,953,336,6 40) 5 328,901,04 0 2,105,745,1 20 34,183,728,00 0 31,749,081,84 0 (14,204,254,8 00) 6 328,901,04 0 2,105,745,1 20 34,183,728,00 0 31,749,081,84 0 17,544,827,04 0 7 328,901,04 0 2,105,745,1 20 34,183,728,00 0 31,749,081,84 0 49,293,908,88 0 8 328,901,04 0 2,105,745,1 20 41,020,473,60 0 38,585,827,44 0 87,879,736,32 0 9 328,901,04 0 2,105,745,1 20 41,020,473,60 0 38,585,827,44 0 126,465,563,7 60 10 10,445,028,0 00 328,901,04 0 2,105,745,1 20 41,020,473,60 0 28,140,799,44 0 154,606,363,2 00 11 328,901,04 0 2,105,745,1 20 41,020,473,60 0 38,585,827,44 0 193,192,190,6 40 12 328,901,04 0 2,105,745,1 20 49,224,568,32 0 46,789,922,16 0 239,982,112,8 00 13 328,901,04 0 2,105,745,1 20 49,224,568,32 0 46,789,922,16 0 286,772,034,9 60 14 328,901,04 0 2,105,745,1 20 49,224,568,32 0 46,789,922,16 0 333,561,957,1 20 15 328,901,04 0 2,105,745,1 20 49,224,568,32 0 46,789,922,16 0 380,351,879,2 80 16 328,901,04 0 2,105,745,1 20 59,069,481,98 4 56,634,835,82 4 436,986,715,1 04 17 328,901,04 0 2,105,745,1 20 59,069,481,98 4 56,634,835,82 4 493,621,550,9 28 susilowati, sugiharto, leonnard, srihartati 130 18 328,901,04 0 2,105,745,1 20 59,069,481,98 4 56,634,835,82 4 550,256,386,7 52 19 328,901,04 0 2,105,745,1 20 59,069,481,98 4 56,634,835,82 4 606,891,222,5 76 20 10,445,028,0 00 328,901,04 0 2,105,745,1 20 70,883,378,38 1 58,003,704,22 1 664,894,926,7 97 21 328,901,04 0 2,105,745,1 20 70,883,378,38 1 68,448,732,22 1 733,343,659,0 18 22 328,901,04 0 2,105,745,1 20 70,883,378,38 1 68,448,732,22 1 801,792,391,2 38 23 328,901,04 0 2,105,745,1 20 70,883,378,38 1 68,448,732,22 1 870,241,123,4 59 24 328,901,04 0 2,105,745,1 20 85,060,054,05 7 82,625,407,89 7 952,866,531,3 56 25 328,901,04 0 2,105,745,1 20 85,060,054,05 7 82,625,407,89 7 1,035,491,939, 253 26 328,901,04 0 2,105,745,1 20 85,060,054,05 7 82,625,407,89 7 1,118,117,347, 150 27 328,901,04 0 2,105,745,1 20 85,060,054,05 7 82,625,407,89 7 1,200,742,755, 047 28 328,901,04 0 2,105,745,1 20 102,072,064,8 68 99,637,418,70 8 1,300,380,173, 755 29 328,901,04 0 2,105,745,1 20 102,072,064,8 68 99,637,418,70 8 1,400,017,592, 464 30 10,445,028,0 00 328,901,04 0 2,105,745,1 20 102,072,064,8 68 89,192,390,70 8 1,489,209,983, 172 tot al 187,192,884, 000 9,867,031, 200 63,172,353, 600 1,749,442,251, 972 1,489,209,983, 172 net cash flow accumulated during the 30 year is rp 1,490,983,667,972. benefits gained from the construction of student dormitory are inflow obtained for 30 years that amounted to rp 1,749,442,251,720. outflow obtained for 30 years is rp 185,419,200,000 which consists of fixed costs of rp 9,867,031,200 and variable costs of rp 63,172,353,600. 3.5 assessment of investment feasibility the analysis of investment criteria is derived from the the cash flow analysis for 30 years, by looking at the total income, and then deducting it with fixed and variable costs arising from the lease transactions. cash flows are calculated based on 100 % occupancy rate, 100 % operational cost, 6 % inflation, 18 % discount rate, a 20 % increase in rent per four years, a 2 % operational increase per year, with single room rent for rp 1,350,000 and double room for rp 1,750,000. the room size is 15 m2 with 4 floors and a total of 1,493 units as indicated in table 6. table 6 value of investment feasibility no criteria of investment feasibility value 1 net cash flow 1,490,983,667,172 2 total investment 155,857,800,000 3 net present value (npv) 187,355,802,592 4 internal rate of return (irr) 21 % 5 pay back period (pbp) 6.45 6 net benefit cost ratio (net b/c) 10.57 7 profitability index (pi) 2.20 based on the table 6, the value of npv is greater than 1. similarly, the value of net b/c and pi. the irr calculation indicated an irr of 21 %. the findings denote that the internal rate of return generated from boarding investment is greater in value a student dormitory as an educational supporting facility: an enterprise budget analysis 131 than the 18 % discount rate. the value of pbp is 6.45 years. based on the assessment criteria of the payback period, this dormitory investment is acceptable because the amount of investment cost can be returned with a payback period of 6.45 years, with a 100% occupancy rate. from the overall findings, it can be summarized that the construction of student dormitory is feasible to be constructed. 3.6 sensitivity analysis in this study, the sensitivity analysis to be tested is used to find out how sensitivity changes in occupancy rate, rental price, and operational cost. changes are created gradually in percentage form until it is known that the criterion value is not feasible. the results of the sensitivity analysis of the occupancy rate indicate that the project is feasible to be applied at an occupancy rate of 90 % and 100 %, but at the time of occupancy rate down to 80 %, 70 %, 50 %, 25 % and 13 %, the project becomes not feasible anymore, because the investment criterion indicates an improper result, which is pointed from the irr value which is lower than the reference discount rate (table 7). table 7 sensitivity analysis of changes in occupancy rate investment criteria occupancy rate net cash flow total investment npv irr pbp pi net b/c 100 % 1,489,234,224,920 155,857,800,000 187,152,704,159 21 % 6,45 10,56 2,20 90 % 1,314,289,999,723 155,857,800,000 166,842,860,879 19 % 7,05 9,43 2,07 80 % 1,139,345,774,526 155,857,800,000 146,533,017,600 17 % 7,81 8,31 1,94 70 % 958,278,501,447 155,857,800,000 125,512,329,805 15 % 8,70 7,15 1,81 50 % 614,513,098,934 155,857,800,000 85,603,487,761 11 % 11,99 4,94 1,55 25 % 171,029,488,059 155,857,800,000 34,118,035,048 4 % 21,38 2,10 1,22 13 % (39,778,303,303) 155,857,800,000 9,644,673,896 -1 % 31,00 0,74 1,06 while the result of the calculation of sensitivity analysis of the rental price, it is indicated that the higher the presentation of the rental price, the greater the profit and the investment is feasible to be applied. at the present level the rental price of 80 % down the investment is not feasible to be applied because the npv and irr will decrease further. in addition, when the rental price of 13 % net cash flow is negative rp 39,996,983,585, with an irr of -1 % (table 8). table 8 sensitivity analysis of changes in rental rates investment criteria renta l price net cash flow total investment npv ir r pbp pi net b/c 200 % 3,236,927,034,64 0 155,857,800,00 0 390,048,038,52 1 39 % 3,86 21,7 7 3,5 0 150 % 2,363,080,629,78 0 155,857,800,00 0 288,600,371,34 0 30 % 4,72 16,1 6 2,8 5 100 % 1,489,234,224,92 0 155,857,800,00 0 187,152,704,15 9 21 % 6,45 10,5 6 2,2 0 90 % 1,312,717,251,13 155,857,800,00 166,660,275,38 19 7,06 9,42 2,0 susilowati, sugiharto, leonnard, srihartati 132 8 0 8 % 7 80 % 1,139,695,662,97 6 155,857,800,00 0 146,573,637,28 6 17 % 7,81 8,31 1,9 4 50 % 613,640,127,250 155,857,800,00 0 85,502,141,643 11 % 12,0 0 4,94 1,5 5 20 % 90,905,207,863 155,857,800,00 0 24,816,147,135 2 % 24,7 8 1,58 1,1 6 13 % (39,996,983,585) 155,857,800,00 0 9,619,286,592 -1 % 31,0 0 0,74 1,0 6 furthermore, from the calculation of the sensitivity analysis of the change in operational cost, it is indicated that the lower the operational cost of the presentation, the higher the npv value will be, in this case indicates that this investment is feasible to be applied and not affected to operational cost of 13 % (the lowest percentage) and 200 % (the highest percentage) (table 9). table 9 sensitivity analysis of operational costs investment criteria operation al costs net cash flow total investment npv ir r pb p pi net b/ c 200 % 1,416,194,840,1 20 155,857,800,0 00 173,721,233,7 35 20 % 6,9 1 10,0 9 2,1 1 150 % 1,452,721,836,4 59 155,857,800,0 00 180,438,312,0 94 20 % 6,6 7 10,3 2 2,1 6 100 % 1,489,234,224,9 20 155,857,800,0 00 187,152,704,1 59 21 % 6,4 5 10,5 6 2,2 0 90 % 1,496,611,202,7 85 155,857,800,0 00 188,509,282,6 72 21 % 6,4 1 10,6 0 2,2 1 80 % 1,503,842,101,8 80 155,857,800,0 00 189,838,998,2 44 21 % 6,3 7 10,6 5 2,2 2 50 % 1,525,826,956,7 05 155,857,800,0 00 193,881,870,8 41 22 % 6,2 5 10,7 9 2,2 4 20 % 1,547,665,732,7 60, 155,857,800,0 00 197,897,880,4 98 22 % 6,1 4 10,9 3 2,2 7 13 % 1,552,778,489,6 96 155,857,800,0 00 198,838,083,4 28 22 % 6,1 1 10,9 6 2,2 8 then the results of further data processing indicate that the investment will not be feasible at the 50 % occupancy rate for the rental price of 13 %, with a negative npv value of rp -3,213,035,045. the results also indicate that the value of npv negative at occupancy rate of 25 % to the rental price 25 % , occupancy rate of 25 % to rental price 13 %, occupancy rate 13 % to rental price 50 %, occupancy rate 13 % to rental price 25 %, and occupancy rate 13 % to rental price 13 % (table 10). table 10 sensitivity analysis of occupancy rate and rental price to npv occupancy rate ren tal pric e 100 % 90 % 80 % 70 % 50 % 25 % 13 % 100 % 186,811,13 9,238 166,521,60 5,801 146,232,07 2,365 125,232,40 5,259 85,363,47 2,056 33,929,50 4,796 9,480,617, 005 90 166,521,60 148,263,05 130,004,50 111,106,90 75,228,86 28,943,43 6,941,886, a student dormitory as an educational supporting facility: an enterprise budget analysis 133 % 5,801 6,693 7,585 9,258 0,260 8,270 595 80 % 146,232,07 2,365 130,004,50 7,585 113,776,94 2,804 96,981,413 ,257 65,094,24 8,463 23,957,37 1,745 4,403,156, 185 70 % 125,232,40 5,259 111,106,90 9,258 96,981,413 ,257 82,361,524 ,896 54,604,92 5,254 18,796,79 2,892 1,775,570, 211 50 % 85,363,472 ,056 75,228,860 ,260 65,094,248 ,463 54,604,925 ,254 34,690,41 3,074 8,999,172, 170 (3,213,035, 045) 25 % 33,929,504 ,796 28,943,438 ,270 23,957,371 ,745 18,796,792 ,892 8,999,172, 170 (3,640,506 ,471) (9,648,716, 634) 13 % 9,480,617, 005 6,941,886, 595 4,403,156, 185 1,775,570, 211 (3,213,035 ,045) (9,648,716 ,634) (12,707,88 6,778) the calculation of sensitivity analysis of occupancy rate and operational cost to npv also indicates that the investment is feasible to be applied. the npv value is always positive on the change of occupancy rate to operational cost starting from 100 % to 13 % percentage (table 11). table 11 sensitivity analysis of occupancy rate and operational cost to npv occupancy rate operatio nal costs 100 % 90 % 80 % 70 % 50 % 25 % 13 % 100 % 187,027,466 ,042 166,717,622 ,763 146,407,779 ,483 125,387,091 ,689 85,478,249, 645 33,992,796, 931 9,519,435,7 79 90 % 188,370,613 ,085 168,060,769 ,805 147,750,926 ,526 126,730,238 ,731 86,821,396, 687 35,335,943, 974 10,862,582, 822 80 % 189,713,760 ,127 169,403,916 ,848 149,094,073 ,568 128,073,385 ,774 88,164,543, 730 36,679,091, 016 12,205,729, 864 70 % 191,103,917 ,316 170,794,074 ,037 150,484,230 ,757 129,463,542 ,963 89,554,700, 918 38,069,248, 205 13,595,887, 053 50 % 193,743,201 ,254 173,433,357 ,975 153,123,514 ,695 132,102,826 ,901 92,193,984, 857 40,708,532, 143 16,235,170, 991 25 % 197,148,079 ,007 176,838,235 ,727 156,528,392 ,448 135,507,704 ,653 95,598,862, 609 44,113,409, 896 19,640,048, 744 13 % 198,766,571 ,193 178,456,727 ,913 158,146,884 ,634 137,126,196 ,840 97,217,354, 795 45,731,902, 082 21,258,540, 930 finally, the results of the sensitivity analysis of changes in rental rates and operational costs to npv indicate that as the rental prices rise, npv will begin to rise as operational costs fall, conversely as the rental prices fall and the operational costs rise, npv will decline. investment will become unfeasible when the rental prices decrease by 13 % against the operational cost up to 200 % generating npv with negative value rp. -3,925,466,115, (table 12). table 12 sensitivity analysis of rental prices and operational costs to npv operatio nal costs rental prices 200 % 150 % 100 % 90 % 80 % 50 % 20 % 13 % 200 % 376,884,095 ,376 275,334,878 ,979 173,785,662 ,581 153,272,720 ,869 133,165,976 ,002 72,033,347 ,751 11,286,606 ,501 (3,925,466, 115) 150 % 383,599,830 ,588 282,050,614 ,191 180,501,397 ,793 159,988,456 ,081 139,881,711 ,234 78,749,082 ,962 18,002,341 ,713 2,790,269,0 97 100 % 390,315,565 ,800 288,766,349 ,403 187,217,133 ,005 166,704,191 ,293 146,597,446 ,446 85,464,818 ,174 24,718,076 ,925 9,506,004,3 09 90 % 391,672,144 ,313 290,122,927 ,915 188,573,711 ,518 168,060,769 ,805 147,954,024 ,959 86,821,396 ,687 26,074,655 ,438 10,862,582, 822 80 % 393,001,859 ,885 291,452,643 ,487 189,903,427 ,090 169,390,485 ,377 149,283,740 ,531 88,151,112 ,259 27,404,371 ,010 12,192,298, 394 50 % 397,044,732 ,483 295,495,516 ,085 193,946,299 ,687 173,433,357 ,975 153,326,613 ,128 92,193,984 ,857 31,447,243 ,608 16,235,170, 991 20 % 401,062,085 ,286 299,512,868 ,889 197,963,652 ,491 177,450,710 ,779 157,343,965 ,932 96,211,337 ,661 35,464,596 ,411 20,252,523, 795 13 % 402,068,102 ,421 300,518,886 ,023 198,969,669 ,626 178,456,727 ,913 158,349,983 ,067 97,217,354 ,795 36,470,613 ,546 21,258,540, 930 susilowati, sugiharto, leonnard, srihartati 134 4. conclusion and recommendation construction of student dormitory as a supporting educational facility is feasible to be applied in terms of financial, student interests and educational providers. the total investment required is rp. 155,857,800,000. the student dormitory is projected to generate an average income per year of rp 58,314,741,732 and the average cost per year is rp 2,434,646,160. the average net cash flow per year is rp 49,699,455,572 and the net cash flow generated during 30 years is rp.1,490,983,667,172. the result of investment assessment of the student dormitory in the net cash flow for 30 years obtained npv value of rp.187,355,802,592, irr of 21 %, net b/c of 10.57, pi of 2.20, and pbp 6.45 years. this proves that the investment development of the student dormitory is feasible because it will be profitable in the long term for 30 years. from the sensitivity analysis of the change of occupancy rate, the rental price and the operational cost are summarized that the investment of student dormitory will be unfeasible when the occupancy rate and the rental price are at the level of 80 % down, on the contrary with the result of the sensitivity analysis of the change in operational cost it indicate that the nvp will get higher. taken together the occupancy rate and the rental price decreased by 50 %, 25 % and 13 % will cause the investment to be unfeasible in the long run. the operational costs will increase and npv will fall when the rental prices decrease. the investment will also become unfeasible when the rental prices decrease by 13 % against the operational costs increase to 200 % cause nvp is negative of rp. -3,925,466,115. this study is expected to become one of the reference for the further studies, because there are still limited studies about financial feasibility analysis of student dormitory needs. moreover, this study is expected to be able to include the economic aspect of student dormitory potential with bot (build operate transfer) system, operation management (using operator service), and mudharabah. references baharuddin, makin, m. 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(2014), the loyalty model of private university student, international research journal of business studies 7(1), 55-68. mahyuddin, i., mahreda, e.s., mustika, r., & febrianty, i. (2014), analisis kelayakan dan sensitivitas harga input pada usaha budidaya ikan lele dalam kolam terpal di kota banjarbaru provinsi kalimantan selatan, enviroscienteae 10(2014), 9-17. maulina, z. p., & utomo, c. (2015), study kelayakan investasi apartemen gunawangsa merr surabaya, jurnal teknik its, 4(2), d91-d94. a student dormitory as an educational supporting facility: an enterprise budget analysis 135 munawaroh, a., & utomo, c. (2017), analisa investasi the akavia indekost residences ngaliyan-semarang, jurnal teknik its, 6(1), 68-72. poetri, n. a., basith, a., & wijaya, n. h. (2014), analisis kelayakan pengembangan usaha peternakan sapi perah kunak (studi kasus usaha ternak kavling 176, desa pamijahan kab. bogor), jurnal manajemen & organisasi 5(2), 122-138. prastiwi, a., & utomo, c. (2013). analisa investasi perumahan green semanggi mangrove surabaya, jurnal teknik its, 2(2), d191-d196. smith, m. t., goebel, j. s., & blignaut, j. n. (2014), the financial and economic feasibility of rural household biodigesters for poor communities in south africa, waste management 34(2), 352-362. umar, husein. (2001), studi kelayakan bisnis, gramedia pustaka utama. jakarta. winantara, i. m. y., bakar, a., & puspitaningsih, r. (2014), analisis kelayakan usaha kopi luwak di bali, jurnal teknik industri itenas 3(2), 118-129. studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 33 organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis ceocea costel “vasile alecsandri” university of bacău cceocea@sifm.ro ceocea raluca alexandra “gh. asachi” university of iași raluca.ceocea@gmail.com vatamaniuc adrian “gh. asachi” university of iași adrian.vatamaniuc@gmail.com mihălaș vasile “vasile alecsandri” university of bacău mihalas2018@gmail.com abstract the normative framework applicable to public institutions imposes an approach to public procurement management aimed at awarding public procurement contracts in conditions of economic and social efficiency. achieving the objectives set at the level of the organization, in accordance with the principles underlying the award of public procurement contracts is conditioned by the adoption and implementation of specific procedures, mainly oriented towards the organization of decision-making processes. in the context of the crisis triggered by the new coronavirus sars-cov-2, contracting authorities were forced to organize public procurement processes, in a matter of urgency, on a procedural background less oriented towards adopting fast and efficient decisions, with negative effects both on the available financial resources and on the process of ensuring the flow of products, services and works corresponding to the rhythm imposed by the urgent needs of public institutions involved in managing the effects of the health crisis. this paper aims at individualize the decision-making process in the field of public procurement in romania, in order to identify models of good practice, procedures and support working tools for optimizing the public procurement process carried out at the level of contracting authorities in a matter of emergency. keywords romania; procedures; public procurement management; change management; decision-making; urgency; crisis; economic and social efficiency; sars-cov-2 jel classification d73; h12; h57 1. introduction the concept of management, as a general approach, refers to a strategic process of organizing activities in order to achieve certain objectives assumed at the level of the organization. mailto:cceocea@sifm.ro mailto:adrian.vatamaniuc@gmail.com mailto:adrian.vatamaniuc@gmail.com mailto:mihalas2018@gmail.com organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis 34 regarding the private organizations, management objectives are mainly aimed at maximizing profit or achieving other personal goals (e.g. the need to achieve of the leaders, securing a portfolio of clients, increasing knowledge, etc.). in contrast to the management of private organizations, public management mainly aims at achieving a general interest. in the literature, confusions are often identified between the concept of public management and the concept of public administration. thus, the public administration is the expression of the activities undertaken for the fulfillment of the state functions and of the administrative-territorial structures, according to a framework regulated by normative acts. in other words, public administration activities represent activities performed by responsible persons/civil servants, who have drawn competencies to act in order to perform public services, by issuing and/or implementing public laws. even if by the way it manifests itself, mainly due to the political character that determines them, between public administration and public management elements of interdependence are identified, between the two concepts the sign of equality cannot be put. in contrast to the concept of public administration which is strictly legal by the applicable legal framework, the concept of public management has evolved with the development of the functions of public sector organizations, with the development of theories on organization management and the evolution of the organizational and principled framework in which public organizations carries out their activities. thus, public management brings together a set of processes and managerial relationships that occur at the level of the components of the administrative system, which aim to create the appropriate institutional framework to enable the general public interest to be satisfied. even in this framework defined above, the literature tends towards an approximation of these two concepts, a fact also identified at the level of the romanian university environment. thus, public administration tends to be properly defined as “the use of managerial, political and legal theories and processes in order to fulfill the mandates of the legislative, executive and judicial government, in order to ensure the regulations and services for the society as a whole, as well as for its segments” (alexandru, 2003, p.10). moreover, it is found that the link between administration and management is the “decision-making process” process specific to management which, “is the heart of administration, and the vocabulary of administrative theory must derive from the logic and psychology of human choice”. (simon, 1979) 2. public procurement management 2.1. the concept of management at the level of public institutions as in the case of private organizations, the processes carried out at the level of public institutions can be divided into two categories: execution processes and management processes. in detail, the execution processes within the public institutions are usually reduced to bureaucratic processes that have as main result the obtaining of some services or deliverables, which contribute to the achievement of the objectives established at the level of the institution. in contrast to the execution processes, the management processes within the public institutions are manifested by decisional acts. the new public management, one of the strongest international currents in this domain, brings new ways to develop the sphere of public management. costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 35 even if the current of the new public management brings mainly a new attitude regarding the way the public administrative act is carried out, its orientation towards increasing the cost / efficiency ratio in the public sector requires both the import and the adaptation of specific management methods and techniques from private sector toward public organizations as well as the restructuring and optimization of the decision-making process within them. decentralization of public administration, implementation of public policies through projects, increasing the training of officials and clerks, improved organization of public institutions, digitalization of the public administration sector, new attitudes towards the citizen-client impose new guidelines of public administrations, the new role of public management being to ensure the transition from an empirical leadership style to a scientifically based one, based on knowledge and innovation. the managerial decision within public institutions is a manifestation of the will of the administrative bodies, prior to the actions proposed to be undertaken, through which a solution is chosen, in order to achieve the proposed goal or objective or to achieve a desired result. this decision is usually taken when several appropriate possibilities or options are identified, which comply with the applicable legal framework, the selected option being the one that is identified as the most advantageous in relation to the institutional objectives assumed. a definition, with a systemic profile, is given by armenia adroniceanu, presenting the administrative decision as “a complex process of choosing a decision-making variant from several possible ones, in order to achieve a public administration objective and influencing the activity of at least, another person in the system, the system as a whole or society in general” (adroniceanu, 1999). 2.2. the decision-making process analyzing carefully the decision-making process carried out at the level of public institutions, we find that it involves:  collaboration of several people from the organizational structures of the institution  processing a large volume of information  carrying out the process in several stages  endorsement by one or more competent persons  assuming the responsibility of one or more persons holding public positions (dulschi, 2016). in the decision-making process, as a process of analysis and evaluation of several alternatives, the following main elements are identified:  the decision maker – represented by the person or group of persons who are to adopt the optimal variant from those possibly identified.  the problem subject to the decision – represented by the object of the decision  decision variants – represented by the identified options  decision-making criteria – represented by the characteristics on the basis of which the decision-making variants are evaluated and compared for the purpose of ranking and selecting the optimal variant  decision-making environment – represented by the context given by the internal and external conditions that influence the decision  the set of consequences – represented by the results estimated to be obtained by adopting the decisional variants, established in relation to each decisional criterion separately  decision objectives – the results intended to be achieved by the decision maker following the implementation of the selected decision variant. organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis 36 the decision-making process that should underlie the decision-making of the public decision-maker should move away from the administrative model (limited rational model) or the retrospective model (specific to public authorities with low managerial capacity) and move towards a rational model (classic) built on the following steps: i. establishing the institutional objectives pursued ii. collection, verification, processing and analysis of information iii. elaboration of options and quantification of the expected results of each option iv. selecting the most advantageous option v. putting into practice the selected variant, controlling the execution process and evaluating the results obtained. 2.3. public procurement management although an insufficient allocation of financial resources is constantly invoked to the portfolio of needs generated by public institutions in romania, it was found an inadequate management of public procurement processes, characterized by wrong/poor procurement, which generated waste of public funds and consumption of goods, services and unjustified works in relation to the institutional objectives established by the multitude of strategies assumed at their level. in addition, european officials are constantly calling for the need to increase administrative capacity at the level of public institutions in order to increase the absorption of eu funds, based on unfavorable reports on frequent deviations of the public procurement from the legislative framework and related sanctions. we appreciate that the optimal solution to improve the public procurement process carried out at the level of public institutions in romania is one that aims to take over from the private sector some management techniques and methods, by adapting them to the specific constrains of the public administration sector. as indicated in public procurement law1, the managerial decisions that will be adopted regarding the public procurement processes must take into account the principles underlying the award of public procurement contracts, according to figure no. 1 below: figure 1 principles underlying public procurement management source: authors, based on the public procurement law no 98/2016 given that the procurement process is a multidisciplinary one, involving all organizational structures on a variable basis, the managerial decisions that can be taken regarding public procurement must comply with the formalization and approval /approval process required by the regulatory framework applicable to all processes carried out at the level of the public institution and must aim mainly at achieving institutional objectives. 1 article 2 (2) form public procurement law no 98/2016 costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 37 the main objectives that can be set at the level of a public institution with regard to the procurement process carried out at its level are:  ensuring the institution with a flow of products, services and works corresponding to the level and pace required by the objective needs established at the institution level  obtaining the products, services and works required in the context of economic and social efficiency  conduct of contractual relations concluded by procurement processes under optimal conditions, respecting the principle of legality and contractual balance the stages at which the procurement process is carried out, in accordance with the regulatory frame2 are: a. planning/preparation phase, including market consultation b. stage of organization of the procedure and award of the contract/framework agreement c. post-award stage of the contract/framework agreement execution and monitoring of the implementation of the contract/framework agreement in order to advance the above stages, the specific tools for planning and monitoring public procurement processes that may be available to contracting authorities are: a) public procurement strategy b) annual public procurement program c) gantt chart d) risk management plan / risk register e) contracting strategy the characteristics of contracting authorities according to which the structuring of decision-making processes must be adjusted are:  type of contracting authority and its main activity  volume and complexity of the public procurement portfolio  number of people involved in procurement processes  training policy for staff involved in procurement processes. considering the results of the research activity carried out so far, according to the above conclusions, we outlined the following conceptual model that underlies the analysis of the decision-making process in the field of public procurement. figure 2 conceptual model on the decision-making process in public procurement source: authors 2 article 8.(2) of the methodological norms for the application of the public procurement law, published by government decision no. 395/2016 organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis 38 3. public procurement-specific decision-making process in the context of the emergency situation triggered by the covid-19 outbreak 3.1. analysis of the context in which public procurement was carried out during the emergency period the field of public health has caught the full attention of experts and policy makers throughout the first 5 months of 2020. what at first seemed just another flu epidemic, has turned into an event of cataclysmic proportions, both in terms of the number of diseases, as well as the pressure on economic systems and especially public health systems. against this background, the political response mechanisms, decision-making systems and support infrastructure proved to be more or less effective, the moment we present our conclusions in view of being within the limits of an evaluation in medias res, the epidemic not being fully stopped. obviously, this pandemic landscape has changed the paradigm in which decisions have been taken in the public sector, especially within institutions that have played an active role in the action plans applied for combating the spread of covid-19 coronavirus and manage the consequences. thus, as a result of the onset of the state of emergency, by issuing decree no. 195 / 16.03.2020, published in the official journal of romania no. 212 of 16.03.2020, the contracting authorities involved in actions to combat and manage the consequences of the pandemic, from the point of view of public procurement, were transposed into a new framework that required the procurement in a short time of significantly more large amounts of products needed to combat and manage the effects of the epidemic. this new picture of public procurement triggered by the health crisis covid19 was characterized by an inaccurate legislative framework, insufficient administrative capacity and a market dominated by a growing demand. in the process of establishing the state of emergency by decree no. 195 / 16.03.2020, “probably” due to the pressure of the moment, certain terms were used, inappropriately, a phenomenon likely to generate confusion among the contracting authorities. for example in the text of decree no. 195 / 16.03.2020 identifies the inappropriate use of public procurement-specific terminology such as “procurement in direct mode” 3 (and not through “direct procurement”) or “direct procurement procedure” 4 (taking into account that direct procurement5 is not defined as a competitive public procurement procedure). anticipating possible dichotomies, misunderstandings, induced interpretations, national agency for public procurement through a notification published on the institution's website on 16.03.2020, reiterated the incidence of the legislative framework established by public procurement law no 98/2016 in the case of this state of emergency, which promotes the award of public procurement contracts through competitive procedures we intuited that this state of confusion has variably characterized the entire eu space, which is why the european commission issued communication 2020 / c 108 i / 01 of 01.04.2020 on its guidelines for the use of the legal framework for public procurement in the case of the award of public procurement contracts in the event of emergency triggered by the covid-19 crisis, which strengthens the incidence of using the competitive procedures established by directive 2014/24 / eu (and assimilated at the 3 article 10 of decree no. 195 / 16.03.2020 4 article 28 (2) of romania no. 195 / 16.03.20200 5 the direct procurement regulated by art. 43-46 of government decision no 395/2016, is not a public procurement procedure within the meaning of art. 68 of law 98/2016 but only a right offered to the contracting authority to purchase products, services or works with an estimated value below the limit imposed by art. . 7 para. (5) of law 98/2016, without using the competitive method of awarding these contracts. costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 39 level of public procurement law no 98/2016) in the case of awarding public procurement contract of products, services and works needed to deal with this crisis. at the same time, the picture of public procurements in the emergency state was also affected by a low capacity of the teams involved in public procurement processes carried out in this period, both in terms of professional level and availability of their members. among the cases cited in the discussions between experts in various communication channels and specialized forums are:  reduced number of staff  low level of training, inadequate in relation to the particularities of the specific market of sanitary materials, protection materials, medical equipment, medications, etc.  the modification of the work schedule, the transfer of some employees under the telework contract regime, the lack of resources and infrastructure necessary to carry out the activities exclusively online  poor use or non-use of the facilities offered by the digital signature system. following the administration of a questionnaire at the level of several contracting authorities in the north-east region in 20196, conclusions were drawn which, in retrospect, confirm the chronic existence of some of the problems mentioned above, namely:  approx. 7% of the contracting authorities involve in the procurement processes more than 6 persons, and approx. 35% involve a number of 2-5 persons;  over 78% of contracting authorities do not use it applications (other than electronic public procurement system) for planning and managing public procurement processes;  only 50% of the contracting authorities have implemented a continuous professional training program in the field of public procurement (with a participation frequency of max. 2 years);  over 85% of the staff involved in public procurement processes have a total work experience of over 20 years, corroborated by the fact that over 64% of these staff are over the age of 45 (of which 28.6% over 55 for years). and if these factors were not enough to increase the complexity of the decision-making process in the field of public procurement, the market to which emergency public procurement contracts were addressed also put additional pressure on the decisionmaking act, both by the unavailability in the market of the volumes of products requested by the contracting authorities and by the high volatility of the prices related to these products. as elements that directly influenced the specific market of these materials and equipment we highlight:  lack of domestic producers of such products, which would provide a predictability and guarantee of the availability of the requested products in agreed delivery schedules, producers to whom the public authorities could impose, according to law7, the amplification of the production process to cover the additional need generated by such a crisis;  established restrictions on the international transport of goods, especially in trade relations between the european and asian areas that have disrupted supply chains. 6 research report no. 3 advanced at the level of the doctoral school within the university “gh. asachi” iași (vatamaniuc, 2019) 7 eg. article 9 para. (1) of the government emergency ordinance no. 1 of 21.01.1999 on the state of siege and the state of emergency organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis 40  lack of “buffer” stocks at importers and / or distributors with constant activity in this relevant market, ensuring a rapid supply immediately after the award of the public procurement contract;  the small-scale use in this market of the special method of awarding public contracts using “framework agreements”, which provides for the option of purchasing additional quantities (compared to the current need) and which makes it possible to supply initial stocks of products quickly, without other bureaucratic formalities imposed by the applicable legal framework in the field of public procurement. as an example of the above we can present the evolution of the unit price and the contracted volumes related to a product widely used in this health crisis, respectively “surgical mask”, during the first four months of this year, according to the table below: table 1 evolution of public procurement of surgical masks (jan.-apr. 2020) january february march april number of procurement (according to seap catalogue) 17 contracts 78 contracts 251 contracts 263 contracts quantity purchased 60,990 pcs 398,550 pcs. 1,376,280 pcs 1,816,527 pcs average unit price (excluding vat) 0.17 lei/pc 1.83 lei/pc 3.75 lei/pc 2.73 lei/pc source: electronic public procurement system (seap)extracted from direct purchases http://e-licitatie.ro/pub as a specific detail of a market dominated by the crisis, the table above shows a direct correlation between the dynamics of the unit purchase price (+ 2,200.00%) and that of the volume of products purchased (+ 2,256.00%). as a result of this accumulation of factors that have contributed to the accentuation of the uncertainty and to the increase of the risk intensity, we consider as very probable the increase of the incidence of the decisional errors and/or of the deviations from the law. the fact that most contracting authorities (vatamaniuc, 2019) did not implement an internal procedure for decision-making in the field of public procurement (71.4%) also contributed to this situation, even though the leaders of these contracting authorities equally recognize that the implementation of such a procedure would directly contribute to the achievement of the objectives set at the level of the institution (71.5%). in summary, the way in which the public procurements were carried out during the emergency situation can be summarized and explained from the perspective of their specific causal relations, as presented in figure no. 3. http://e-licitatie.ro/pub costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 41 figure 3 causal relationships specific to public procurement processes carried out in the context of covid-19 emergency source: authors 4. conclusions and directions for action on decision-making in the context of emergencies. starting from the idea that the mere finding of a state cannot generate a positive response of the system in the absence of the introduction of improvement measures and without proposing to fully cover this topic, we bring it forward the idea of establishing decision-making procedures and how they can compete to achieve the goals set in the portfolio of public procurement processes carried out in an emergency context. in this new decision-making frame, by applying appropriate change management, the general objectives to be set at the level of the public procurement portfolio of products / services / works required in the context of emergencies must refer at least to:  implementation of specific procedures for decision making in conditions of increasing uncertainty and risk;  professionalization of staff with responsibilities in public procurement management;  promoting integrated risk response systems, at inter-institutional level; the achievement of these objectives must be doubled by the assumption of sets of impact and result indicators, among which we can mention, without limiting ourselves to:  r1. increasing the response speed of contracting authorities in relation to market dynamics  r2. reducing the duration of processes associated with public procurement;  r3. establishing a set of performance indicators at the level of contracts;  r4. reducing errors and reducing the number of cases of procurement failure. organization of the public procurement process at the level of the contracting authorities in romania. particularities and solutions for the management of public procurement procedures organized in the context of emergency of covid-19 crisis 42 and last but not least, it must be emphasized that any process that takes place under conditions of uncertainty and risk can be influenced by factors that are difficult to anticipate which may disrupt both the conduct of public procurement processes carried out at the level of contracting authorities and the functioning of the public procurement system as a whole. references “al. i. cuza” university iași (n.d.), guide to tools and good practices in public decision-making. adroniceanu, a. (1999), public management, bucharest, economic publishing house. alexandru, i. (2003), public administration. csáki, c. (2006), investigating the decision making practice of public procurement, international public procurement conference proceedings. dulschi, i. (2016), the decision-making process in public administration, public administration: theory and practice. european commission (2020), communiqué 2020 / c108 i / 01. european commission guidelines for the use of the public procurement emergency framework related to the covid-19 crisis, official journal of the european union. european parliament and council of the european union (2014), directive 2014/24/eu, official journal of the european union. hințea, c.e., marius, c., țiclău, t.c. (2015), strategic planning and public management reform: the case of romania, transylvanian review of administrative sciences, 30-44. nica, e. (2012), public procurement management, bucharest, economic publishing house. organisation for economic coorperation and development (2018), methodology for assesing procurement systems (maps), oecd. popa, i.g., ispas, r. (2019), study regarding the planning stage of the romanian public procurement process, international conference “knowledge-based organization”. president of romania (2020), decree 195, regarding the establishment of the state of emergency on the romanian territory, official journal. romanian government (1999), emergency ordinance 1, regarding the state of siege and the state of emergency, official journal of romania. romanian government (2016), government decision no. 395, methodological norms for the application of the provisions regarding the award of the public procurement contract, official journal of romania. simon, h.a. (1979), rational decision making in business organizations, the american economic review, vol. 69, 493-51. the romanian parliament (2016), public procurement law no. 98, official journal of romania. vatamaniuc, a. (2019), research report no.3, iași, “gh asachi” university. 1. introduction 2. public procurement management 2.1. the concept of management at the level of public institutions 2.2. the decision-making process 3. public procurement-specific decision-making process in the context of the emergency situation triggered by the covid-19 outbreak 3.1. analysis of the context in which public procurement was carried out during the emergency period 4. conclusions and directions for action on decision-making in the context of emergencies. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 38 total factor productivity influence factor of the economic growth potential. practical application∗ florina popa institute of national economy romanian academy florinapopa2007@gmail.com abstract adequate to the new requirements of economy, the economic research has achieved progresses in addressing the issues regarding the growth and development, the economists drawing a number of theories and models, in order to find resorts that lead to sustainable growth. the paper refers to the means of assessment and forecast of the potential growth of an economy, by using a mathematical model, whose production function takes into consideration the role of three factors, being highlighted the role of the total factor productivity, as an element of influence on growth with the other two factors. the study includes an application of the model use, for the analysis of the growth potential of the economy, at national level. keywords total factor productivity; mathematical model; growth potential jel classification c53; d24 1. introduction the economic literature has given a particular interest to the analysis of growth problems and its determinants, trying to explain the forms of economic phenomena occurrence and provide alternatives concerning the ways to achieve growth. the emphasis was on measures which lead to performance achievement regarding the welfare and sustainable growth: capital investments, stimulate research and development activities and, respectively, technical progress, well-trained workforce etc. the economic research has achieved progresses in addressing problems regarding the development, economic growth, world trade, the economists initially, formulating theories and models based on perfect competition and, subsequently, moving to models of imperfect competition, according to the new requirements of economy, the aim being to find the springs which lead to sustainable growth. 2. total factor productivity the estimation and forecast of the growth of an economy potential, basically, takes into account: the available amount of labour, the amount of capital that can be used and the total factor productivity, the latter being considered a "residual", respectively, that part of the output unexplained by the amount of inputs used in production. ∗this article is part of the scientific research paper for 2014, entitled ”dezvoltarea economică endogenă la nivel regional – aspecte teoretice și practice”, achieved by a team of researchers of the institute of national economy romanian academy (coordinator phd. daniela antonescu). popa 39 assimilated to technical progress, the total factor productivity, more broadly, includes the other sources of growth, different from the factors, labour and capital, its level being determined by the extent of efficiency and intensity of the inputs used in production. the total factor productivity (tfp) is based on the determination of estimated gdp, using the homothetic cobb-douglas production function. y = akαl1-α, where: y – the output – gdp; α the elasticity coefficient; a – the productivity; k – the capital stock; l – the workforce "toupictionnaire"1 defines the concept of "total factor productivity or multifunctional productivity, as a ratio of the production value to the total value of the inputs used (labour and capital)", allowing to measure the effectiveness of productive combination of labour and capital. the tfp is determined, in general, at a scale of a country or economic zone, its evolution, over time, allowing the evaluation of the relative growth, other than the one in relation to the use of production factors, labour and capital. the parties of capital and labour are dissociated by the elasticity coefficient, α. the capital and labour remain the major contributors of production, but the growth vector is considered the total factor productivity (tfp), which can influence the economic growth, its corner stone being the technical progress. the technical progress determine the increase in the factors productivity, leading to their qualitative and not only quantitative growth, what gives growth an intensive nature. the production growth is superior to the growth of each factor, as such, the effectiveness of factors, respectively, the productivity increases due to the process of innovation or improvement of work setup. the difficulty in applying the model results from the assumptions taken into account and the interpretation of results: a number of elements may influence the quality of factors productivity (the technical progress), respectively, change of the production structure (the production of more goods and services, with saving of capital and labour) or of its setup, the education, research and development (r&d), the growth of skilled workforce, what makes it difficult to correctly determine the technical progress; the information required by the calculation of capital stock and labour development, also, of prices development; considering the elasticity rates taken in the series of that two factors. 3. application for romania in the following, it is presented an application regarding the analysis of the potential of economy growth, at national level, using as model, the cobb-douglas production function with tfp. 1toupictionnaire – le dictionnaire de politique – „productivité globale des facteurs (pgf)”, la toupie, http://www.toupie.org; total factor productivity influence factor of the economic growth potential. practical application 40 the used model (ghizdeanu, i.; tudorescu, v.; neagu, m.)2: the cobb-douglas production function 1-y = n k tfpα α⋅ ⋅ , where: y = gdp n = the employed population k = the stock of capital tfp = the total factor productivity for the expression of factors, in a single unit, it is using the linearly-homogeneous function, obtained by logarithm: lny = lnn + (1) lnk+lntfp y = n + (1) k+tfpα α α α⋅ ⋅ → ⋅ ⋅ where: y = lny; n = lnn; tfp = lntfp; α – coefficient of elasticity of the labour factor n 1α – coefficient of elasticity of the capital factor – k, 0< α<1 3.1. the work steps of the application i. the determination of the total factor productivity, as a residual variable in the considered production function, at a given value of the parameter α; the tfp value is determined on each year, based on the values y, n, k of asr ins, for the period 2000-2012; this is the time series of the observed tfp. tfp= y-[ n+(1) k]α α⋅ ⋅ ii. for the time series of tfp (from the step 1) it is applied the trend function and, thus, it is obtained the adjusted series of tfp, for the period taken into account (20002012), as well as the ptf forecast for the years 2013-2015 (noted by tfp*). iii. for the time series corresponding to n labour factor (the employed population) observed, based on the data from asr (time series 2000-2012) it is applied the trend function, achieving thus, the adjusted series of the factor n for the period taken into account (2000 -2012), as well as the forecast for the period 2013-2015 (noted by n*). iv. the determination of the capital stock for each year of the period (2013-2015), considering the forecast of the indicator gross fixed capital formation determined according to the relation: t-1 tkt = (1) k +iδ ⋅ where: kt the capital stock for the year t; δ the rate of capital depreciation; i t – the investment for the year t. •the estimation of the size of current investment is accomplished by applying a constant rate β to the gdp value of the previous year. t-1it = gdpβ ⋅ •the values determined above shall be entered in the logarithmic production function to obtain the y values for the years for which the forecast it shall be accomplished. •it shall be determined the y value, respectively gdp, for the forecast years (by antilogarithm). 2ghizdeanu, i.; tudorescu, v.; neagu m, model de determinare a potenţialului de creştere a economiei româneşti în perioada 2005-2025 – sinteză preliminară, comisia naţională de prognoză, www.presidency.ro/ include/nssd. popa 41 the calculations associated with the national level take place alternatively, every year in part, because the current i investment, is determined based on the previous year gdp. 3.2. calculations and analysis associated with work steps following the previously announced work steps, the analysis highlights the following issues: i.the tfp calculation α = 0.30: tfp = y-[ n+(1) k]α α⋅ ⋅ tfp = y-(0.30 n+ 0.70 k)⋅ ⋅ . the evolution of gdp and the main determinant factors (the employed population, capital, tfp) taken into account for the analysis (time series 2000-2012), is mentioned in the annexes 1 and 2 and shown in the graphics below (figures 1-3): gdp 80984,6 117945,8 152017 197427 247368 288954 344650 416006 514700501139,4 523693,3 557348 586750 0 100000 200000 300000 400000 500000 600000 700000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 y=gdp (ron millions) years figure 1 the evolution of the observed gdp in the period 2000-2012 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro the data in figure 1 reflects an upward evolution throughout the period, interrupted in the year 2009 (peak of the crisis), but resumed in 2010. employed population (n) 10508 10440 9234 9223 9158 9147 9313 9353 9369 9243 9240 9138 9263 8000 8500 9000 9500 10000 10500 11000 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 n= employed population (thoudsands people) years figure 2 the evolution of the employed population in the period 2000-2012 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro http://www.insse.ro/ http://www.insse.ro/ total factor productivity influence factor of the economic growth potential. practical application 42 the employed population had a sharp decrease in the year 2002 beside the year 2000 (1274 thousands people), respectively, 12%, unrecovered until the year 2012, the increases and decreases in the period, being sensitively contiguous. capital (k) 15245 24171 32366 42496 53850 68526 88272 125645 164279 122442 129422 145193 154280 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 k=capital (ron millions) years figure 3 the evolution of the capital in the period 2000-2012 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro the capital had an evolution, similarly to gdp, but the decrease in 2009 had not integrally been recovered, by 2012. ii.the determination of the adjusted tfp (time series 2000-2012) and the forecast tfp* (2013-2015) should be found in the annex 3, represented according to the graphic in the figure 4. tfp yyears figure 4 the evolution of the observed, adjusted and forecast tfp source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro 1.782 1.276 2.801 1.994 2.056 2.043 2.037 1.977 2.001 2.184 2.190 2.175 2.180 1.894 1.921 1.947 1.974 2.000 2.027 2.054 2.080 2.107 2.133 2.160 2.186 2.213 2.239 2.266 2.292 0.0 0.5 1.0 1 .5 2.0 2.5 3.0 2000 2003 2006 2009 2012 2015 observed tfp adjusted tfp 2000-2012 forecast tfp 2013-2015 http://www.insse.ro/ http://www.insse.ro/ popa 43 the evolution of the observed tfp shows a higher level of its, at the end of the period 2012 – beside the start 2000, respectively, 2.18 unto 1.78, the oscillations, increasing or decreasing , in the interval series, being correlated with the changes in other factors and expressing the contribution of tfp to gdp achievement, such as: •the tfp level increase in the years 2002, 2004, 2005, beside the previous years, given the conditions of a sensitive decrease of the employed population, expressing the contribution of tfp to gdp growth (the capital is also increasing). •the tfp level decrease, in the year 2007, compared to the year 2006, the gdp being sustained by the growth both of the capital and of the employed population, compared to the previous year. •the tfp increase in the year 2009 compared to 2008 (from 2.0 to 2.18) sustaining the gdp achievement that decreased, given the fact that both the employed population and the capital had a substantial decrease, as an effect of the crisis. • the adjusted tfp data, determined based on the trend, follow the same evolution, being sensitively contiguous to the observed tfp. iii.the determination of the adjusted n factor (the time series 2000-2012) and of the forecast n* , for the years 2013-2015, should be found in the annex 4, represented according to the graphic in the figure 5. adjusted n and forecast n* 9,195261 9,187866 9,180472 9,173078 9,165684 9,15829 9,150895 9,143501 9,136107 9,128713 9,121319 9,113924 9,10653 9,099136 9,091742 9,084348 9,02 9,04 9,06 9,08 9,1 9,12 9,14 9,16 9,18 9,2 9,22 2000 2002 2004 2006 2008 2010 2012 2014 adjusted n 2000-2012 forecast n*2013-2015 years figure 5 the evolution of the adjusted and forecast n factor source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro the evolution of the employed population, highlights, also, in the data determined based on the trend, the continuous decrease of the indicator, both in the period 20002012 and in forecast, 2013-2015. iv.the determination of the capital factor – k and, respectively, gdp, alternatively, in forecast each year. there are considered constant rates, throughout the forecast period, respectively: • the rate of capital depreciation 0.15 δ = 0.15 • the investment rate 0.048 β = 0.048 • it – the investment in the current year gdp t = α*n t+(1-α)*k t + tfp t k t = (1-δ)*k t-1 + it i t= β*gdpt-1 http://www.insse.ro/ total factor productivity influence factor of the economic growth potential. practical application 44 according to the calculations above, for the period 2013-2015, the forecast values of the model factors, are presented in the table. 1. year 2013 gdp2013= 2013 2013 2013n +(1) k + tfpα α⋅ ⋅ the factors tfp and n should be found in the data from the step 2 and, respectively, 3. k 2013 = 0.85·k 2012 + i 2013; k2012 = 154288 (data base – asr 2013) i2013 = 0.048· gdp2012; gdp2012 = 586750 (data base – asr 2013) i2013 = 0.048·586750 i2013 = 28164 k2013 = 0.85·154288 + 28164 = 131144.8 + 28164= 159308.8 k2013 = 159308.8 k2013 = lnk = ln159308.8 = 11.97859 k2013 = 11.97859 gdp2013 = 0.30·9.099 + 0.70·11.97859+2.24 gdp 2013 = 2.7297 + 8.385013+ 2.24=13.354713 pib2013 = 13.354713 gdp2013 = exp13.354713 = 630780.4 (the natural antilogarithm of the number 13.354713) gdp2013 = 630780.4 year 2014 gdp2014 = α·n 2014 + (1α) · k2014 + tfp2014 k2014 = 0.85· k 2013 + i 2014 i2014 = 0.048· gdp2013 i2014 = 0.048 ·630780.4 i2014 = 30277.46 k 2014 = 0.85·159308.8 + 30277.46= 135412.5 + 30277.46= 165689.9 k2014 = 165689.9 k2014 = ln k 2014 = ln165689.9 = 12.01787 k2014 = 12.01787 gdp2014 = 0.30·9.092 + 0.70·12.01787 + 2.26 gdp2014 = 2.7276 + 8.412509 + 2.26 = 13.400109 gdp2014 = 13.400109 gdp2014 = exp13.4001= 660009 gdp2014 = 660009 year 2015 gdp2015 = α·n 2015 + (1-α) ·k 2015 + tfp2015 k2015 = 0.85·k2014 + i2015 i2015 = 0.048·gdp2014 i2015 = 0.048·660009 i2015 = 31680.4 k2015 = 0.85·165689.9 + 31680.4 = 140836.4 + 31680.4 = 172516.8 k2015 = 172516.8 k2015 = ln k = ln172516.8= 12.05825 k2015 = 12.05825 gdp2015 = 0.30·9.084 + 0.70·12.05825 + 2.29 gdp2015 = 2.7252+8.44077+2.29 gdp2015 = 13.45597 gdp2015 = exp13.45597 =697996.9; gdp2015= 697997 gdp2015 = 697997 popa 45 table 1 the forecast of gdp and of its determinant factors in the period 2013-2015 year y=gdp (ron millions) n (thousands people) k capital (ron millions) tfp 2013 630780 8946 159309 2,24 2014 660009 8884 165690 2,26 2015 697997 8813 172517 2,29 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro the forecast data show that, for national level, there is the possibility of a gdp growth due to the growth of capital and total factor productivity, the employed labor being in decrease. taking into consideration the average annual growth rhythm during the 3 years period, the contribution of factors to potential gdp growth, is presented according to data in table 2. table 2 the factors contribution to potential gdp growth contributions (%) year gdp employed population capital tfp 2013-2015 5,2 -0,9 4 2,4 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro the growth rhythm of gdp of 5.2%, is sustained by the capital, 4% and by the total factor productivity, 2.4%. the negative increase of the labour factor, 0.9%, is the consequence of the significant decrease of population in the series taken into account, respectively, from 10508 thousands people, in the year 2000, to 9263 thousand people, in the year 2012. the calculations based on testing the parameters, respectively, the coefficients of elasticity, for labour and capital, the rate of investment and the rate of capital depreciation, followed to obtain values for the forecast gdp in the period 20132015, as close as to the values announced, in perspective, by comisia națională de prognoză (cnp). thus, the data forecast by calculation, for the years 2013, 2014 and 2015 are close to those forecast by comisia națională de prognoză (cnp)3 (march 5, 2014) (table 3) table 3 the gross domestic product (ron billions) year forecast in the paper forecast by cnp (march 5 2014) 2013 630,8 631,1 2014 660,0 664,4 2015 698,0 698,8 source: own processing. the results reveal the verity of applying the model 3 comisia naţională de prognoză, proiecţia principalilor indicatori macroeconomici pentru perioada 2014-2017, 5 martie 2014, www.cnp.ro/prognoză http://www.insse.ro/ http://www.insse.ro/ total factor productivity influence factor of the economic growth potential. practical application 46 4. conclusions to estimate the forecast gdp and the contribution of factors to its achievement, there were taken into account, in the production function for national level, the following parameters: the coefficients of elasticity for labour and capital factors, α = 0.30, and, respectively, (1-α) = 0.70, the rate of capital depreciation, δ = 15%, the investment rate, β = 4.8%. the analysis showed the contribution of the labour and capital factors to the national gdp achievement, but also, the total factor productivity contribution, in the case of this indicator, the participation degree being different, by years, depending on the level of the other two factors, the labour and capital. the data obtained reflect an increase in production, in the forecast period, higher to the growth of each of the labour and capital factors, the level of total factor productivity expressing the efficaciousness of factors use. the results lead to the conclusion that, the use of the model, although it exposes some difficulties in implementation, as mentioned in the introductive part, may be relevant to such analysis, if should be taken into account a careful testing of the value of the used parameters and a statistical data base, large enough, to be considered methodologically satisfactory. references cabannes, pierre-yves.; montaut, a.; pionnier, pierre-alain (2013), évaluer la productivité globale des facteurs: l'apport d'une mesure de la qualité du capital et du travail, institute national de la statistique et des études économiques, l'économie française insee références édition 2013, http://www.insee.fr/fr/themes. comin, d. (2006), total factor productivity, new york university and nber, http://www.people. hbs.edu/ dcomin/def.pdf. ghizdeanu, i.; tudorescu, v.; neagu, m., model de determinare a potenţialului de creştere a economiei româneşti în perioada 2005-2025 – sinteză preliminară, comisia naţională de prognoză, www.presidency. ro/include/nssd. lipsey, richard g.; carlaw kenneth i. (2004), total factor productivity and the measurement of technological change, canadian journal of economics/revue canadienne d'économique, volume 37, issue 4, pag. 1118-1150, wiley online library, onlinelibrary.wiley.com. quijada, a., (2004), productivitè globale des facteurs et croissance dans un contexte de changement institutionnel: le cas du venezuela (1942-2002), https://www.gate.cnrs.fr/. romer, paul, m. (1994), the origins of endogenous growth, journal of economic perspectives, volume 8, no.1, pag.3-22, www.jstor.org/stable, www.development.wne.uw.edu.pl. comisia naţională de prognoză, proiecţia principalilor indicatori macroeconomici pentru perioada 2014-2017, 5 martie 2014, www.cnp.ro/prognoză. institutul naţional de statistică, anuarul statistic al româniei-asr 2012, 2013, ins bucureşti, 2013, 2014, www.insse.ro. toupictionnaire – le dictionnaire de politique –productivité globale des facteurs (pgf), la toupie, http://www.toupie.org. productivité globale des facteurs, www.fr.wikipedia.org/wiki/productivité_globale_des_facteurs; teorii şi modele referitoare la cresterea economică, http://www.rasfoiesc.com/business/economie/. evoluţia teoriei creşterii economice, https://teoriieconomice.wikispaces.com/. http://www.insee.fr/fr/themes https://www.gate.cnrs.fr/ http://www.jstor.org/stable http://www.development.wne.uw.edu.pl/ http://www.fr.wikipedia.org/wiki/productivit%c3%a9_globale_des_facteurs http://www.rasfoiesc.com/business/economie/ https://teoriieconomice.wikispaces.com/ popa 47 quelles sont les sources de la croissance économique?, http://www.coursseko.fr/resources/economie/croissance/cours-croissance-1.pdf. théorie de la croissance endogène, http://fr.wikipedia.org/wiki/. croissance économique et croissance exogène. modèle du solow, http://fr.wikipedia.org. annex 1 database for the calculation of logarithm values to: gdp, employed population, capital t year y=gdp ron millions y=ln gdp n= employed population thoudsands persons n=lnn k=capital ron millions k= ln k 1 2000 80984,6 11,30201 10508 9,259892151 15245 9,632007 2 2001 117945,8 11,67798 10440 9,253399861 24171 10,89396 3 2002 152017 11,93175 9234 9,130647603 32366 11,13497 4 2003 197427 12,19312 9223 9,129455643 42496 10,65717 5 2004 247368 12,41863 9158 9,122383093 53850 10,89396 6 2005 288954 12,57402 9147 9,121181236 68526 11,13497 7 2006 344650 12,75028 9313 9,1391665 88272 11,38818 8 2007 416006 12,93845 9353 9,143452426 125645 11,74122 9 2008 514700 13,15134 9369 9,145161646 164279 12,00932 10 2009 501139,4 13,12464 9243 9,131621787 122442 11,71539 11 2010 523693,3 13,16866 9240 9,131297165 129422 11,77083 12 2011 557348 13,23095 9138 9,120196822 145193 11,88582 13 2012 586750 13,28235 9263 9,133783249 154280 11,94652 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro annex 2 database for the calculation of observed tpf t year 0.30*n 0.70*k 0.30*n+ 0.70*k observed tfp 2000-2012 1 2000 2,777968 6,742405 9,52037 1,7816 2 2001 2,77602 7,62577 10,4018 1,2761 3 2002 2,739194 6,391453 9,13065 2,8011 4 2003 2,738837 7,460016 10,1989 1,9942 5 2004 2,736715 7,62577 10,3625 2,0561 6 2005 2,736354 7,794478 10,5308 2,0431 7 2006 2,74175 7,971725 10,7135 2,0368 8 2007 2,743036 8,218851 10,9619 1,9765 9 2008 2,743548 8,406525 11,1501 2,0012 10 2009 2,739487 8,200775 10,9403 2,1843 11 2010 2,739389 8,239584 10,979 2,1896 12 2011 2,736059 8,320073 11,0561 2,1748 13 2012 2,740135 8,362567 11,1027 2,1796 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro annex 3 the calculation of adjusted tfp and of forecast tfp* http://www.cours-seko.fr/resources/economie/croissance/cours-croissance-1.pdf http://www.cours-seko.fr/resources/economie/croissance/cours-croissance-1.pdf http://fr.wikipedia.org/wiki/th http://www.insse.ro/ http://www.insse.ro/ total factor productivity influence factor of the economic growth potential. practical application 48 t year observed tfp adjusted tfp 2000-2012 and forecast tfp* 2013-2015 1 2000 1,781642 1,894303 2 2001 1,27619 1,920838 3 2002 2,8011 1,947374 4 2003 1,994272 1,97391 5 2004 2,056147 2,000446 6 2005 2,04319 2,026982 7 2006 2,03681 2,053517 8 2007 1,976568 2,080053 9 2008 2,001266 2,106589 10 2009 2,184378 2,133125 11 2010 2,189689 2,15966 12 2011 2,174813 2,186196 13 2012 2,179652 2,212732 14 2013 2,239268 15 2014 2,265803 16 2015 2,292339 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro annex 4 the calculation of adjusted n and forecast n* t year observed n adjusted n 2000-2012 forecast n*2013-2015 1 2000 9,259892 9,195261 2 2001 9,2534 9,187866 3 2002 9,130648 9,180472 4 2003 9,129456 9,173078 5 2004 9,122383 9,165684 6 2005 9,121181 9,15829 7 2006 9,139167 9,150895 8 2007 9,143452 9,143501 9 2008 9,145162 9,136107 10 2009 9,131622 9,128713 11 2010 9,131297 9,121319 12 2011 9,120197 9,113924 13 2012 9,133783 9,10653 14 2013 9,099136 15 2014 9,091742 16 2015 9,084348 source: data processing based on the data from asr 2012, asr 2013, ins, bucureşti, 2013, 2014, www.insse.ro http://www.insse.ro/ cabannes, pierre-yves.; montaut, a.; pionnier, pierre-alain (2013), évaluer la productivité globale des facteurs: l'apport d'une mesure de la qualité du capital et du travail, institute national de la statistique et des études économiques, l'économie ... (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro brand naming: sound symbolism, brand preference and brand performance alina duduciuc national university of political studies and public administration alina.duduciuc@comunicare.ro loredana ivan national university of political studies and public administration loredana.ivan@comunicare.ro abstract the aim of this study is to highlight the importance of sound symbolism for romanian marketing and advertising applied research. previous research showed that the phonetic structure of brand name communicates its characteristics, i.e. it drives consumers to assess certain features and performance of the product. we assumed that when consumers encounter an unknown brand name, they automatically infer characteristics from the meaning conveyed by the sounds (e.g. phonemes). therefore, we supposed that a brand name for a shampoo (artificially created on experimental purpose) containing back vowels is evaluated better by consumers when they compare it to another brand name with front vowels. furthermore, we tested the influence of the stops and fricatives consonants in inferring certain attributes of product. to this end, fifty nine students (n=59) participated in a research based on questionnaire. the results revealed that subjects evaluated better the brand names containing back vowels than brand names with front vowel. no effect was obtained regarding the presence of stops and fricatives consonants in assessing the brand performance. keywords brand; sound symbolism; advertising; social psychology; brand names jel classification m31 introduction brand naming is considered one of the major determinants in the process of positioning and advertising of different goods and services. releasing new brands on the market means naming them for triggering implicit positive associations in the mind of the customers. therefore, a new product should not only be branded, but it should determine a positive evaluation towards its features in order to overtake competing brands on the market. although marketers and advertisers have been aware of the quality of the product names, it is only recently that they prize the utility of sound symbolism research for fitting the creative concept of the brands. factors affecting perception of brand names: previous studies analyzing what kind of processes and factors could affect brand names evaluation, marketers and social psychologists have been focused, particularly, on five factors as follows: personalizing the brand (wansink, painter, & van ittersum, 2001), fluency of words/brand names (alter & daniel oppenheimer, 2006); name-letter effect (brendl, chattopadhyay, pelham, & carvallo, 2005; nuttin, 1985); alpha-numeric brand names (gunasti and ross, 2010) and sound symbolism (wu, klink & guo, 2013; lowrey & 169 duduciuc, ivan shrum, 2007; yorkston & menon, 2004; klink, 2001). we will review below the studies regarding this topics. fluency one of the main research in brand naming belongs to american psychologists adam alter and daniel oppenheimer (2006), who investigated the impact of the psychological principle of fluency (that people tend to prefer easily processed information) on short-term share price movements. after they did three experiments – one in lab and the other in real-world stock market – they had found that fluently named stocks outperformed stocks with diffluent names in the short term. these results imply that easily processing of a stimulus (conceptual fluency) mediate human behavior and major decisions, in this case where to invest money or who to be trust. an important factor affecting the fluency is familiarity: stimuli that have been previously encountered and stored in memory are processed more easily than their unknown counterparts (fennis & stroebe, 2010). consequently, the ease and effortless a piece of information is processed the better is evaluated by consumers. thus, the more fluently a brand name is perceived, the more familiar is considered. personalization of brands descriptive brand names such as jack daniels, psychedelic sorbet or the booming onion could impact sales or make a customer believe the food tastes better. the straightforward names have a positive impact on sales, attitudes and purchase intentions, but they did not influence how much money customers would pay for the descriptively labelled (wansink, brian, james painter, and koert van ittersum, 2001). in a field experiment at the cafeteria of midwestern university, braian wansink and his collaborators showed that descriptive labels, including geographic labels (cajun and italian), nostalgia labels (homestyle or grandma’s) or sensory labels (tender or satin) trigger more favorable associations for foods as compared to the others names. the authors manipulated few of the menu’s items so as to be as basic label (e.g., grilled chicken) or as descriptive label. based on data collected with a questionnaire, authors revealed an increase of sales for food with descriptive labels, with around 56% of consumers saying that they selected them as compared with 44% of sample who preferred food with regular labels. alpha-numeric brand names alpha-numeric brand names are used mostly for most technical products and cars so as consumer to make easily associations between numbers and different qualities of the brands. after developing a taxonomy of alphanumeric brand names (such as abs type), gunasti and ross (2010) found that higher versus lower numeric portion of brand names (e.g., x-200 versus x-100) is preferred more even when it is objectively inferior to other choice alternatives. consumers with low need for cognition apply “the higher, the better” heuristic to select brands labeled with abs and choose products with higher numeric portions. at the same time, consumers with high need for cognition involved more cognitive process for making inferences based on brand name–attribute correlations (gunasti, 2010). name-letter effect and implicit egoism name letter effect (nle) – that is people like letters contained in their name more than other letters (nuttin, 1985) – has been amply replicated in the field of consumer psychology (see e.g. brendl, chattopadhyay, pelham, & carvallo, 2005) and was largely applied in promoting goods in certain countries (see share a coke in 150 countries including romania). the research of pelham et al. (2002) showed that an 170 brand naming: sound symbolism, brand preference and brand performance important percentage of people choose states, cities and occupations with names resembling their own (e.g., that lauras are lawyers and florences live in florida). this phenomenon is called implicit egotism and has been observed in many cultures around the world. in the field of advertising, brendel et al. (2005) reported that the causal effect of implicit egotism works outside the lab, in a real market situation. not only that people’s names influence their choices, but also they prefer a brand name that resemble (i.e. tonya) with their name rather than a real well-known brand (i.e. twix). sound symbolism sound symbolism – the nonarbitrary relation between a sound of a word and its meaning – has been widely recognized as an important factor in how individuals infer specific meaning from unfamiliar brand names (wu, klink & guo, 2013; lowrey & shrum, 2007; klink, 2001). a brand name is composed of sounds called phonemes. these phonemes have two functions. first, they are the basic components of language and are used to form syllables and words. in fact, a brand name is also a computed series of syllables that turn out in a word with or without meaning. second, phonemes can provide meaning by means of sound. consequently, consumers infer meaning and evaluate the performance of products based on the cues provide by sounds of brand names (yorkston & menon, 2004). in a set of studies conducted by richard klink (2000, 2001, 2003), he showed that the presence of back-low (a, o, u) and high-front vowels (e, i), in brand names could conveys attribute qualities of smallness, lightness, mildness, thinness, fastness, coldness, bitterness, femininity, weakness, lightness, and prettiness. furthermore, klink (2001) brought empirical data about the effects of sound symbolism in affecting consumers’ evaluations of various brands. in addition to vowel sounds, research documents that consonant sounds also convey inherent meaning based on the length of the sound they produce (klink, 2000; lowrey, shrum & dubitsky, 2003). stops and fricatives differ in their manner of articulation. the letters p, t, b, g, d, and k (or hard c) are considered stops. fricatives (s, v, z), on the other hand, have less closure of articulators than stops. approaching the sound symbolism, scholars demonstrated through laboratory experiments that frond vowels and fricatives were more associated with smaller and more angular shapes than were back vowels and stops (klink, 2004). in another allied work, e. a. yorkston and g. menon (2002) found that when consumer chose between two brands of ice cream, frish and frosh, they preferred the latter (frosh) instead of the former (frish) as a result of associating the sound [ä from frosh] with attributes such as bigger, heavier and slower. more recently, t.m. lowery și l.j. shrum (2007) establish evidence that people prefer particular words as brand names when the attributes connoted by the vowel sounds of the word are congruent with the attributes of the products. specifically, when the back vowel sound [ä] was juxtaposed with the front vowel sound [i], the vowel [ä] sound word was preferred only when the attributes implied by the sound (large, slow, dull) had positive implication for the product (i.e. suv, hammer). when brand names is meaningless, sound symbolism – images, qualities and emotions that people unconsciously associate with vowel sounds and consonants – has a certain weight in consumer choices. the phonetic principles have been recently included as one of the main direction in marketing research as well as within branding companies. as the member of the lexicon branding1 declared “in an economy where 1 lexicon branding, inc is an u.s. marketing company specializing in brand naming. they created the famous brands such as toyota, pentium, blackberry and conducted a global research program called sounder to determine whether certain phonemes are more effective than others when communicate attributes of the brand. source: lexiconbranding.com 171 duduciuc, ivan global brands are the norm rather than the exception, a greater understanding of sound symbolism has put lexicon that much closer to our ultimate goal of deciphering and implementing what we call the universal language of branding” (lexicombranding.com). as far as we know, no research has been conducted to test the effect of sound symbolism of the romanian language. therefore, the present study represents an exploratory research on the influence of sound symbolism in communicating brand characteristics. specifically, we assumed that when consumers encounter new and unfamiliar brand names, they often infer brand features from the meaning conveyed by the intensity and frequency of the sounds as they roll on the tongue via the airstream (i.e. the vowels and consonants). methodology based on the previous research, we framed and tested the following four hypotheses: hypothesis 1. consumers evaluate the intrinsic proprieties of a brand name containing fricatives (i.e. simeli), as better than a brand name containing stops (i.e. pimeli). hypothesis 2. consumers evaluate the intrinsic proprieties of a brand name containing front vowels (i.e. simeli), as better than a brand name containing back vowels (i.e. sameli). hypothesis 3. brand names with front vowels (i.e. simeli) are associated more with feminine brand characteristics than brand names containing back vowels (i.e. sameli). hypothesis 4. brand names with stops (i.e. pimeli) are associated more with masculine characteristics than brand names containing fricatives (i.e. simeli). procedure, sample and developing of questionnaire fifty nine (n=59) students enrolled in a social psychology master level course participated in a study for an extra credits in april 2014. participants were aged between 23 (n=26) and 24 (n=23). they had to fill in a questionnaire regarding the evaluation of for fictitious brand names for a shampoo (simeli/sameli; simeli/pimeli). the brand names have been created according to the principles of phonology mentioned earlier. consequently, i manipulated only four phonemes: front vowel (simeli) and back vowel (sameli), stop (pimeli) and fricative (simeli). i asked subjects to choose which of the four names (simeli/sameli/pimeli/simeli) would be appropriated for designating a hair-loss treatment shampoo. secondly, they had to mention which brand name fits the category “products for women” versus “products for men”. the questionnaire also assessed the preferences of the respondents concerning romanian letters, the evaluation of each brand name on a 5-point scale (1 = strongly agree; 5 =strongly disagree) and socio-demographics (gender, age, income, education, residence). results preference for romanian letters. as can be seen from the table no.1, the most attractive letters in the romanian alphabet are a (16,9 %) , l (13,6%), p (11,9) and c (10,2 %) as opposed to the letters m, o, d and y, with around 2% of subjects saying that they prefer it. the research did not reveal any gender effects because in the sample, females (n=46) outnumbered males (n=10). 172 brand naming: sound symbolism, brand preference and brand performance table 1. preference for certain romanian letters romanian letters n % a 10 16,9 d 1 1,7 l 8 13,6 m 1 1,7 o 1 1,7 p 7 11,9 y 1 1,7 total 56 94,9 preference of brands according to the stops and fricatives. the difference between the usage of fricatives and stops in a brand name did not turn out to be statistically significant. for designating a hair-loss treatment shampoo, the respondents preferred the name which began with a stop consonant, pimeli (35,5%) as compared to a fricative consonant (simeli, 30,5%). otherwise, the percentage of the subjects saying they preferred the name pimeli instead of simeli is not statistically significant. this is also showed by the values of anova (f=0.46; p=0.94>0.05) test which is higher than 0.05. tabel 2. preference of stop versus fricative brand name brand name n % simeli 18 30.5 pimeli 21 35.6 i don’t know/don’t respond 17 28.8 missing responses 3 5.1 total 59 100 the preference of brands according to the front and back vowels when the subjects chose between a brand name made up of front vowels (simeli) and one with back vowels (sameli), they preferred the latter, sameli. almost 39% of 173 duduciuc, ivan subjects declared that they preferred the name sameli instead of simeli for designating a hair-loss treatment shampoo. tabel 3. preference of back versus front vowels name brand name n % sameli 23 39.0 simeli 16 27.1 i don’t know/don’t respond 17 28.8 total 56 94.9 missing responses 3 5.1 total 59 100 sound symbolism and brand performance the outcomes of evaluating products according to their characteristics, namely how much the subjects believed that either sameli or simeli designated a hair loss shampoo, were statistically significant (f=134.083; p=0,001<0.05). on average, subjects tend to believe that sameli is more efficient than simeli in preventing hair loss. table 3. anova test sum of squere df mean square f sig between groups 32.862 2 16.431 134.083 .000 within groups 6.495 53 .123 total 39.357 55 in this research, the brand names are equally rated, whether they began with fricatives or stops. the presence of stops or fricatives had no effect in the evaluation of brand characteristics – whether they contained. subjects rated brand name simeli (almost 29%) as efficient as pimeli (almost 30%) for shampoos preventing hair loss (tabel 4). 174 brand naming: sound symbolism, brand preference and brand performance tabel 4. evaluation of pimeli and simeli brand name brand name n % simeli 17 28.8 pimeli 18 30.5 i don’t know/don’t respond 21 35.6 total 56 94.9 missing responses 3 5.1 total 59 100 sound symbolism and brand characteristics when testing the hypothesis – i.e. brand names with front vowels (simeli) are associated more with feminine brand characteristics than brand names containing back vowels (sameli) – subjects rated sameli and simeli as having the same effect. on the other hand, simeli was categorized as a more feminine (62,7%) product than pimeli (16,9%). in other words pimeli is perceived as being (62,7%) more masculine than simeli (15,3%). conclusion in this article, we provided empirical support for three of our four assumptions. on one hand, students evaluate better the performance of brands containing back vowels [a] than front vowels [e]. meanwhile, the presence of stops [p] and fricatives [s] did not turn out to have any effect regardless the preference for brand names. the prevalence of evaluating brand names with sound vowel [a] as better than others, in this case the usage of back vowels (sameli), could be linked to the mere exposure effect (r. zajonic, 1968). in romanian language, girls’ first names and feminine nouns often end in a. consequently, most students from our research assigned feminine attributes to a brand name that contains an emphasis on the vowel a. the subjects might automatically associate the familiarity of the vowel [a] with their attractiveness. on the other hand, we can explain these results taking into account that in the current sample female outnumber male. the larger presence of women (f=49) as compared to men (m=10) could led to the preference for more feminine words (in this case, sameli) and, consequently, to their better evaluation. following the outcomes of present research, no effect of stops and fricatives were obtained, whether the subjects chose the brand name for a shampoo or they assess their performance. but when it comes to convey meanings and communicating characteristics, as the results of the present research revealed, vowels possess an inherent meaning of womanliness while consonants, in this case the stop [p] from pimeli, are perceived as more masculine than word with fricative [s, simeli]. in this respect, our research is consistent with previous ones (klink, 2000; yorkston & menon, 2004; lowrey & shrum, 2007) with respect to the effect of stops on brand characteristics. 175 duduciuc, ivan to conclude, several limits must be taken into account, such as the short number of participants in the study and their similarities in terms of socio-demographics characteristics. further research on phonetic symbolism could investigate how other variables, for instance the type of product (food, electronics, automobiles, body care products) fit with the sounds as well as with the concept of the brand. nevertheless, our study could be considered a starting point in developing the applied advertising research in romania as long as it provides empirical evidence that the sounds generated by vowels and consonants count in the perception of young people as well in defining the brand on the market. references alter, a.l., oppenheimer, d. m. 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(2013). creating gender brand personality with brand names: the effects of phonetic symbolism, journal of marketing theory and practice, 21, (3), 319–329. yorkston, e., and geeta menon (2004). a sound idea: phonetic effects of brand names on consumer judgments, journal of consumer research, 31 (1), 43– 51. 176 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 26, 2017 http://sceco.ub.ro 7 influencing factors of corporate risk disclosure level on banking industry in indonesia harri baskoro adiyanto indonesia banking school hbaskoro@harribaskoro.com abstract this research wants to examine the effects of bank size (csize), profitability (profit), public shares ownership (issue), total number of the board of commissioner (bsize), total meeting of the board of commissioner (rptdekom), and member of commissioner with background from banking supervisory institution (bidekom) to corporate risk disclosure (crd). this research analysis method using multiple linear regression analysis models. the result of this research shows that the data has fulfilled the classical assumption, such as: there is no multicollinearity and heteroscedasticity also data has distributed normally. from the regression analysis, found that partially bank size, profitability and member of commissioner with background from banking supervisory institution variable, are significant to corporate risk disclosure, while public share ownership, total number of the board of commissioner and total meeting of the board of commissioner are not significant to corporate risk disclosure. keywords banking; disclosure; risk; governance; indonesia. jel classification m19 introduction corporate risk disclosure (crd) is an important concern for public, especially investors. it is understandable considering the significance of the information for investors as one of the tools for a careful and precise investment decision. therefore, corporate risk disclosure should be done in a balanced way, meaning that not only the disclosure of positive information but also negative information especially those related to the company's risk aspect. in fact, the practice of information disclosure in banking industry in indonesia is not quite satisfactory. it is evidenced by world bank's research in 2006 entitled "bank disclosure index: global assessment of bank disclosure practices". this study was conducted by computing index composite of banking disclosure in 180 countries since 1994. in this study, measurement was made on disclosure of banking information including assets, liabilities, funding, incomes and risk profiles. based on the research, indonesia's position is ranked 55th out of 177 countries observed by the world bank. this position is far behind the other asian countries such as hong kong which ranked number 1, bahrain in 6th, qatar in 8th, japan in 12th, uae in 18th and india in 32th position. even in southeast asian, indonesia lags behind thailand which is positioned 29th, then malaysia in 44th, followed by singapore in 45th and philippines in 48th. compare to southeast asia countries, indonesia is only better than cambodia, vietnam, brunei darussalam and laos. adiyanto 8 the results of the research encourage the research on risk disclosure of banks in indonesia, besides another fact that bank in carrying out its operational activities is more vulnerable to risk compare to other companies. based on the research background and results of some previous researches, the most appropriate title for this study is: “influencing factors of corporate risk disclosure rate on banking industry in indonesia”. referring to the aforementioned background, the objectives of this research are as the following: 1. analysing the effect of bank size, profitability, number of public shareholding, number of commissioners, number of commissioners board meeting, number of commissioner board members with retiree status of the banking supervisor authority, against the level corporate risk disclosure (crd) in indonesian banking industry. 2. analysing the effect bank size, profitability, number of public shareholding, number of commissioners, number of commissioners board meeting, number of commissioner board members with retiree status of the banking supervisor authority, against the level corporate risk disclosure (crd) in indonesian banking industry simultaneously. this research is expected to be useful for stakeholders to help them obtaining the necessary information to understand risk profile and risk management. it is also attributed for company to be used as bank management reference, in this case the board of directors and senior management, in compiling annual report transparently which include any bank activities to parties related to the company/stakeholders. furthermore, for bank indonesia or the financial services authority (ojk), the results of this study is expected to be used as a consideration in formulating regulations in order to improve the effectiveness of company management in presenting annual report as a form of risk disclosure and ensuring stakeholders being accurately informed by company risk. theoretical analysis 1) good corporate governance theory good corporate governance (gcg) was first introduced in 1992. at that time, cadbury committee in united kingdom published a report entitled "the financial aspects of corporate governance" or better known as cadbury report. since then, cadbury report has become the basis for the implementation of good corporate governance company in united kingdom even to various other countries. corporate governance is defined by sir adrian cadbury (mallin 2004, 3) as: “the whole system of controls, both financial and otherwise, by which a company is directed and controlled.” while the oecd in 1999 defines it as: “a set of relationships between a company’s board, its shareholders and other stakeholders. it also provides the structure through which the objectives of the company are set, and the means of attaining those objectives, and monitoring performance are determined.” daniri (2014, 21) defines gcg as a pattern of relationships (structure), system and processes that direct the company's organs (board of directors, board of commissioners and general meeting of shareholders (gms)) that provide added value to the company on an ongoing basis, with due regard the interests of the stakeholders, based on prevailing laws and regulations. 2) risk disclosure theory disclosure is the dissemination of material information to public in which the contents of an evaluation of the business activities of a company, in this case is bank. influencing factors of corporate risk disclosure level on banking industry in indonesia 9 according to idroes (2011, 234) pillar 3 basel ii sets out the disclosure requirement that enable market participants to assess key information on risk coverage, capital, risk exposure, risk measurement process and bank capital adequacy. risk disclosure is important because it helps stakeholders in getting the information needed to understand the risk profile and risk management. risk disclosure is also useful for risk monitoring and detecting potential problems to encourage early action to prevent it (linsley and shrives 2006, 388). there have been several studies on corporate risk disclosure. “the extend of disclosure in annual reports of banking companies: the case of india” (hossain 2008) shows that bank size, profitability, composition of commissioner board and market discipline significantly influence the level of disclosure. results of this study is in line with research by elzahar and hussainey (2012), “determinants of narrative risk disclosures in uk interim reports”. the results of this study show that firm size and industry type influence the level of disclosure. in accordance with the results of these studies, researches by juhmani (2013), abdallah and hassan (2014), alshammari (2014) and linsley and shrives (2006) show that firm size significantly influences the level of disclosure. the uniqueness of this study compare with previous studies is the addition of variable: commissioner board members with retiree status of the banking supervisor authority to replace leverage variable. variable replacement is conducted because although leverage positively affects corporate risk disclosure, operational definition of leverage variable is less appropriate to be implemented in banking industry. liabilities in bank balance are mostly third-party fund (savings) as bank obligation/ debt. based on the above consideration, this study measures the influences of bank size, profitability, number of public shareholdings, number of commissioner board members, number of commissioner board meeting and commissioner board members with retiree status of banking supervisor authority. the developed hypotheses are the following: h1: bank size significantly and positively influences the level of risk disclosure in indonesian banking industry. h2: company profitability significantly and positively influences the level of risk disclosure in indonesian banking industry. h3: public shareholding significantly and positively influences the level of risk disclosure in indonesian banking industry. h4: number of commissioner board member significantly and positively influence the level of risk disclosure in indonesian banking industry. h5: number of commissioner board meeting significantly and positively influence the level of risk disclosure in indonesian banking industry. h6: commissioner board members with retiree status of banking supervisor authority significantly influence the level of risk disclosure in indonesian banking industry. h7: company size, profitability, public shareholdings, number of commissioner board member, number of commissioner board meeting and commissioner board members with retiree status of banking supervisor authority, simultaneously affects the level of risk disclosure in indonesian banking industry. research method population of the current study includes all conventional commercial banks in indonesia enlisted by bank indonesia and indonesia stock exchange that have go public (open) and have issued annual report in 2012 and 2013. the number of commercial banks in indonesia registered in bank indonesia until december 2014 adiyanto 10 was 120 bank, consisting of 109 conventional commercial banks and 11 sharia banks. among the 109 conventional commercial banks, 39 of them have go public and are listed on indonesia stock exchange table 1 banks enlisted as research object no information research object 1 go public banks in indonesia 39 2 go public sharia banks in indonesia (1) 38 3 conventional ipo bank after 2013 (3) 35 4 banks enlisted in idx but suspended in 2012 and 2013 (1) total 34 source: processed data from various sources (www.idx.co.id) the analysis model used in this research is multiple linear regression analysis model. this model is intended to test the extent and how the direction of independent variables affects the dependent variable. multiple regression equation for testing hypothesis in this research is: rds = α+β1csize+β2profit+β3issue+β4bsize+β5rptdekom+β6bidekom where: rds : risk disclosure score csize : bank size (total asset) profit : profitability issue : number of public share bsize : number of commissioner board member rptdekom : number of commissioner board meeting bidekom : commissioner board members with retiree status of banking supervisor authority α : constanta β1,β2,β3,β4, β5,β6 : regression coefficient influencing factors of corporate risk disclosure level on banking industry in indonesia 11 table 2 banks chosen as research object no. bank name code listing year 1 pan indonesia bank, tbk pnbn 1982 2 bank danamon indonesia,tbk bdmn 1989 3 bank cimb niaga, tbk bnga 1989 4 bank internasional indonesia, tbk bnii 1989 5 bank permata tbk bnli 1990 6 bank artha graha internasional, tbk inpc 1990 7 bank ocbc nisp, tbk nisp 1994 8 bank negara indonesia (persero), tbk bbni 1996 9 bank mayapada internasional, tbk maya 1997 10 bank victoria internasional, tbk bvic 1999 11 bank bumi arta tbk bnba 1999 12 bank central asia , tbk bbca 2000 13 bank mega, tbk mega 2000 14 bank nusantara parahyangan, tbk bbnp 2001 15 bank pundi indonesia, tbk beks 2001 16 bank qnb kesawan, tbk bksw 2002 17 bank icb bumiputera indonesia, tbk babp 2002 18 bank of india indonesia, tbk bswd 2002 19 bank rakyat indonesia (persero), tbk bbri 2003 20 bank mandiri (persero), tbk bmri 2003 21 bank rakyat indonesia agroniaga, tbk agro 2003 22 bank bukopin,tbk bbkp 2006 23 bank himpunan saudara 1906, tbk sdra 2006 24 bank windu kentjana internasional, tbk. mcor 2007 25 bank capital indonesia tbk baca 2007 26 bank tabungan pensiunan nasional, tbk btpn 2008 27 bank ekononomi raharja. tbk baek 2008 28 bank tabungan negara (persero), tbk bbtn 2009 29 bank jabar banten tbk bjbr 2010 30 bank sinarmas, tbk bsim 2010 31 bpd jatim tbk bjtm 2012 32 bank national nobu tbk nobu 2013 33 bank mestika dharma tbk bbmd 2013 34 bank mitraniaga tbk naga 2013 source: http://idx.co.id adiyanto 12 result and analysis table 3 descriptive analysis statistics descriptive n min. max. mean std. deviation asset roa share commissioner meeting bi rds valid n (listwise) 68 68 68 68 67 68 68 67 1048.15 -.01 .00 2.00 4.00 .00 23.53 733099.76 .05 .51 9.00 79.00 1.00 100.00 105400.2 .0219 .2261 4.9853 17.7761 .2353 80.7957 170083.31358 .01340 .16017 1.80788 16.96326 .42734 17.88342 based on the calculation in table 3, the minimum value of size bank variable is 1048.15 and the maximum value is 733099,766 with average value of 105400,2 and standard deviation of 170083,313. minimum value for profitability variable is -0.01 and the maximum value is 0.05 with average value of 0.02 and standard deviation of 0.013. minimum value for public share ownership variable is 0.00 and the maximum value is 0.51 with average value 0.22 and standard deviation of 0.160. minimum value for number of commissioner board member is 2 and the maximum value is 9 with average value of 4.98 with standard deviation of 1.807. minimum value for number of commissioner board meeting variable is 4 and the maximum value is 79 with average value of 17.77 and standard deviation of 16.963. minimum value for commissioner board members with retiree status of banking supervisor authority variable is 0.00 and maximum value of 1 and its average value of 0.23 with a standard deviation of 0.427. the minimum value for risk disclosure score (rds) variable is 23.53 and the maximum value is 100 with average value of 80,79 and standard deviation of 17,883. table 4 research result based on the details in table 4, the following results are obtained: 1. bank size variable (csize) obtained t count value of 2.164. since t count (2,164) > t table (1.99), then ho is rejected. therefore, it can be concluded that size bank (csize) partially has significant influence on level of corporate risk disclosure. 2. profitability variable (profit) obtained t count value of 2.316. since t count (2,316) > t table (1.99) then ho is rejected. therefore, it can be concluded that coefficientsa 72.799 7.002 10.397 .000 3.37e-005 .000 .339 2.164 .034 -384.614 166.087 -.292 -2.316 .024 18.629 13.214 .176 1.410 .164 1.438 1.256 .154 1.145 .257 .241 .135 .241 1.783 .080 -9.989 4.625 -.253 -2.160 .035 (constant) asset roa saham komisaris rapat bi model 1 b std. error unstandardized coefficients beta standardized coefficients t sig. dependent variable: rdsa. influencing factors of corporate risk disclosure level on banking industry in indonesia 13 profitability (profit) partially has a significant influence on level of corporate risk disclosure. 3. number of share ownership variable (issue) obtained t value of 1.410. since t count (1,410) < t table (1,99) then ho is accepted. therefore, it can be concluded that number of share ownership (issue) partially has no significant effect to level of corporate risk disclosure. 4. number of commissioner members variable (bsize) obtained t value of 1.145. since t count (1.145) < t table (1.99) then ho is accepted. therefore, it can be concluded that number of commissioner members (bsize) partially has no significant influence level of corporate risk disclosure. 5. number of commissioner board meeting variable (rptdekom) obtained t value of 1, 783. since t count (1.783) < t table (1.99) then ho is accepted. therefore, it can be concluded that number of commissioner board meeting (rptdekom) partially has no significant effect to level of corporate risk disclosure. 6. commissioner board members with retiree status of banking supervisor authority variable (bidekom) obtained value of t count of 2,159. since t count (2.159) > t table (1.99) then ho is rejected. therefore, it can be concluded that commissioner background (bidekom) partially has a significant influence on level of corporate risk disclosure. table 5 determination coefficient based on the output of spss software above, obtained the value of correlation coefficient (r) of 0,592. the adjusted determination coefficient of 28.5% indicates that contribution of bank size, profitability, number of public shareholdings, number of commissioner board members, number of commissioner board meetings and commissioner member with retiree status of banking supervisor authority against level of corporate risk disclosure is 28.5%, while the rest 71,5% is the contribution of other variable. the discussion of research result is described as follows: 1. influence of bank size to risk disclosure level. the first hypothesis proposed in this study is that bank size has significant and positive influence on the level of risk disclosure in indonesian banking industry. this study obtained regression coefficient value for firm size variable of 3,37x10-05 with significance value of 0,034, where this value is significant at 0.05 significance level because it is smaller than 0.05. thus, the first hypothesis that bank size has significant and positive influence on the level of risk disclosure can be accepted. this result is in accordance with research by linsley and shrives (2006), hossain (2008), elzahar and hussainey (2012), juhmani (2013), abdallah and hasan (2014), and al-shammari (2014) which state that firm size influences risk disclosure level. m o de l summary .592a .350 .285 14.36461 model 1 r r square adjusted r square std. error of the estimate predictors: (constant), bi, roa, saham, komisaris, rapat, asset a. adiyanto 14 2. influence of profitability to risk disclosure level. the second hypothesis proposed in this study is that profitability has significant and positive influence to the of risk disclosure level in indonesian bank industry. this study obtained regression coefficient value for corporate profitability variable of -384.6 with significance value of 0.024, this value is significant at 0.05 significance level because it is smaller than 0.05. based on existing empirical data and from the results obtained, this study shows that the fluctuation of corporate profitability affect the risk disclosure level. this study shows that bank conventional with tbk (go public) status and high profitability have high level of risk disclosure. this result is in accordance with research by hossain (2008) and al-moataz and hussainey (2012) which state that company profitability variable influences risk disclosure level. 3. influence of public shareholding to risk disclosure level. the third hypothesis proposed in this study is that the amount of public share ownership has significant and positive influence to risk disclosure level in indonesian banking industry. this study obtained regression coefficient value for public shareholder variable of 18,629 with significance value of 0.164, where this value is insignificant at 0.05 significance level because it is greater than 0.05. thus the third hypothesis that public shareholding significantly influences risk disclosure level is not acceptable. this finding is not in line with the results of research by horing and grundl (2011) which states that cross-listing and proprietary dissemination are associated with risk disclosure level. 4. influence of number of commissioner board members to risk disclosure level. the fourth hypothesis proposed in this study is that number of commissioner board members has significant and positive influence on risk disclosure level. this study obtained regression coefficient value for number of commissioner board members variable is 1.438 with significance value of 0.257, where this value is insignificant at 0.05 significance level because it is greater than 0.05. thus the fourth hypothesis which states that number of commissioner board members has significant influence on the level of risk disclosure is not acceptable. this finding is not in line with the results of research by suhardjanto et al. (2012), amran et al. (2010), al-janadi (2013), al-shammari (2014) and akhtaruddin et al (2014). however, it is in accordance with the results of elzahar and hussainey (2012) which states that number of commissioner board members has no effect to risk disclosure level. 5. influence of number of commissioner board meeting to risk disclosure level. the fifth hypothesis proposed in this study is that the number of commissioner board meeting has significant and positive influence on disclosure risk level. this study obtained regression coefficient value for number of commissioner board meeting variable of 0.241 with a significance value of 0.080, where this value is insignificant at 0.05 significance level because it is greater than 0.05. therefore, the fifth hypothesis which states that the number of commissioner board meeting variable significantly influence risk disclosure level cannot be accepted. this finding is not in accordance with results of research by suhardjanto and dewi (2011)and suhardjanto et al (2012) which state that the number of commissioner board meeting influences risk disclosure level. influencing factors of corporate risk disclosure level on banking industry in indonesia 15 6. influence of commissioner member with retiree status of banking supervisor authority to risk disclosure level. the sixth hypothesis proposed in this study is that commissioner member with retiree status of banking supervisor authority influences risk disclosure level. this study obtained regression coefficient value for commissioner member with retiree status of banking supervisor authority variable at -9.989 with significance value of 0.035, where this value is significant at 0.05 significance level because it is less than 0.05. thus the sixth hypothesis which states that the existence of commissioner member with retiree status of banking supervisor authority influence risk disclosure level is inferred to have a significant effect. 7. influence of all independent variables on risk disclosure level simultaneously. the seventh hypothesis proposed in this study is that bank size, profitability, number of public shareholdings, number of commissioner board members, number of commissioner board meeting, and commissioner member with retiree status of banking supervisor authority are simultaneously affect the level of corporate risk disclosure (crd) in indonesian banking industry. this study obtained f count value of 5.384. then since f count value (5,384) > f table (2.25) and the significance value is 0.000 < 0.05, it can be concluded there is a significant influence between bank size, profitability, number of public shareholdings, number of commissioner board members, number of commissioner board meeting, and commissioner member with retiree status of banking supervisor authority to corporate risk disclosure level (crd) simultaneously. thus, independent variables in conventional banking with tbk (go public) status in this study mutually influence each other on risk disclosure level. conclusion and implication here are some conclusions that can be drawn from this research: 1. among the six independent variables: between bank size, profitability, number of public shareholdings, number of commissioner board members, number of commissioner board meeting, and commissioner member with retiree status of banking supervisor authority, there are three variables with significant influence on level of corporate risk disclosure (crd) in banking industry. a. bank size, which in this study inferred from conventional banks with tbk (go public) status. greater the total assets owned, the better risk disclosure level score to the public. this is due to the obligation that bank should not only showing its performance to the public but also presenting risk management ability. b. profitability in this study indicates a significant influence on risk disclosure level. based on the existing empirical data and results obtained, the fluctuation of company profitability influence the level of risk disclosure. c. commissioner with retiree status of banking supervisor authority is new independent variable that did not exist in previous studies. the result of this study shows that commissioner with retiree status of banking supervisor authority has a significant influence to risk disclosure level of a bank. 2. from the result of t test by considering the value of significance, it can be concluded that the most significant variable to corporate risk disclosure (crd) level is profitability with t significance value of 0.024. while the independent variable with the least effect on corporate risk disclosure (crd) level is the number of commissioner board member with significance value of 0.257. from the result of f test, it is proved that the significance value of f is 0,000 smaller adiyanto 16 than pre-determined significance value of 0.05. thus all independent variables in this study simultaneously have a significant effect on corporate risk disclosure (crd) level. from the research result, it can be observed that the independent variables that significantly influence risk disclosure level are bank size, profitability and commissioner with retiree status of banking supervisor authority. therefore, it is recommended for supervisor authority of banking and capital market to observe and scrutinize those three factors, considering their significant effects on risk disclosure level. it should be conducted to align that bank supervision and control policy. for banking management, these three factors should be considered regarding the fact that great assets and profitability as well as the existence of commissioner with retiree status of banking supervisor authority have a significant effect on bank risk disclosure. while the variables that do not affect risk disclosure level include share ownership, number of commissioner board members and number of commissioner board meeting. the number of those three variables has no significant effect on risk disclosure 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 144 e-commerce national market study from the perspective of manifested demand laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract e-commerce market in romania recorded the lowest level of development compared to other eu countries, in terms of the intensity of online purchase habit of the population of romania. thus, in 2014, only 16.7% of those who used the computer in the range of 16-74 years and 10% of the total population of the same age had made online purchases, compared with 63.3% and 50% respectively the same indicators at eu level. still, in romania there was a rapid increase in the share of those who make online purchases, so in 8 years (2007-2014) this indicator increased by 3 times. regarding the categories of the population by various characteristics, greater orientation towards online purchases is recorded among individuals with high formal education, youth (under 35), with above-average incomes. in terms of product categories purchased online, the most favorite categories are: clothes, sports goods. this analysis is based mostly on official statistics provided by eurostat. keywords e-commerce market; turnover from e-commerce; orders over internet; structure of demand on internet jel classification m31 e-commerce market in romania has been in recent years in a continue development. according to data from emota european multi-channel and online trade association (data resulting from research conducted by enet internet research and consulting), turnover in 2012 from e-commerce in romania was 647 million euros. compared to 2006, turnover growth of e-commerce was more than 8 times, the level estimated for 2016 amounting to over 1.1 billion euro. viewed from the degree of manifestation of the demand, e-commerce market in romania has registered a dynamic that far exceeded the eu average. however, the degree of "penetration" of this form of commerce is still at a level that places our country in last place among the eu countries. in fact, in romania we can see both a reduced access of the population to technology (it is the eu country that recorded after bulgaria, the lowest share of those who used the computer in 2014) and a low manifestation of this buying habit of those who use the computer (it recorded the lowest percentage of those who made online purchases in all those who use the computer at eu level in 2014), according to data from eurostat. orientation of population towards online purchases at national level during 2007 2014 in romania, in 2014, 10% of the population of 16-74 years made online shopping in the last 12 months of the reporting period. in the period 2007 2014 this indicator has registered a spectacular increase (more than 3 times). relating to the eu average, we timiras 145 find that in romania the share of people who made online purchases in the total population of 16-74 years is still far from that average, but, however, is growing over time, because of the strong growth recorded nationally compared to lower dynamics at ue level (in the european union, the analyzed indicator increased by 67% in the reference period). thus, if in 2007 the share of population in our country who made online purchases in the total population of 16 74 years made up 10% compared to the eu average (90% below average), in 2014 it represented 20% of eu average (80%) below average. (figure 1) figure 1 evolution of the share of people who made online purchases in the total population of 16-74 years in romania and european union source: own processing from eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years the usage of computer in romania between 2007 and 2014 making purchases online is largely influenced by people's access to technology, romania being from this point of view far from the eu average. thus, in 2014, 60% of the population of 16-74 years used the computer, compared to 79% eu average. in time, the mentioned indicator followed an upward trend, exceeding the eu average (in the 2007-2014 period the proportion of people who used the computer in total population of 16-74 years increased by 57.9% nationally and 21.5% at eu level). (figure 2) the link between the use of computer and orientation of the population towards online purchases in romania between 2007 and 2014 in fact, between the development of the two national indicators presented above there is a strong and significant correlation, increased access to technology or computer using generating an increase in orientation of romanian population towards online purchases; on average, in the 8 years analyzed, for each 100 new users of computer there are 29 new online buyers (figure 3 and table 1) 30 32 36 40 42 44 47 50 3 4 2 4 6 5 8 10 0 10 20 30 40 50 60 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 % in to ta l p op ul at io n of 1 674 y ea rs share of population who made online purchases in total population eu 28 romania 106.7 120.0 133.3 140.0 146.7 156.7 166.7100.0 133.3 66.7 133.3 200.0 166.7 266.7 333.3 0 50 100 150 200 250 300 350 400 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 % c om pa re d to 2 00 7 dynamics of the share of the population who made online purchases in total population eu 28 romania e-commerce national market study from the perspective of manifested demand 146 figure 2 the dynamics of the share of population who used the computer in total population of 16-74 years in romania and the european union source: own processing from eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years y i = 0,2869x i 8,4474 r2 = 0,7273 0 2 4 6 8 10 12 30 35 40 45 50 55 60 65 percentage of individuals who used the computer (x i ) pe rc en ta ge o f in di vi du al s w ho o rd er ed o nl in e (y i) figure 3 the link between the share of those who used the computer and the share of those who bought online in romania during 2007-2014 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years table 1 the relationship between the percentage of those who used the computer (x i) and the percentage of those who shop online (y i) in romania during 20072014 regression equation variation (sum of the squares) coefficient of determination correlation coefficient calculated f-value significan ce level theoreti cal fvalue y i = 0,2869 x i 8,4474 total 49,5 72,73% 0,85 16,0 0,05 5,99 factorial 36,0 residual 13,5 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years 65 6 8 71 7 3 75 7 6 78 7 9 38 38 44 4 6 48 53 5 5 6 0 0 20 40 60 80 100 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 % in p op ul at io n of 1 674 y ea rs share of population who used the computer in total population eu 28 romania 104.6 109.2 112.3 115.4 116.9 120.0 121.5 100.0 100.0 115.8 121.1 126.3 139.5 144.7 157.9 80 90 100 110 120 130 140 150 160 170 180 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 % fa ta d e an ul 2 00 7 dynamics of the share of the population who used the computer in total population eu 28 romania timiras 147 increasing the share of those who made online purchases in romania's total population of 16-74 years was not only on account of the increasing of the number of computer users, but also as a result of the habit of buying goods on the internet of the computer users (figure 4). thus, the increase in the period 2007 2014 of 3.33 times of the share of those who made online purchases was generated by the increase of 58% of the share of users of computers, and by the 2.1 times increase in the share of those who did online purchases in total computer users. on yearly average, the increasing by 18.8% in the share of those who bought from the internet in the total population of 16-74 years in romania was generated by a 6.7% increase in the proportion of computer users and by 11.3% increase of the share of users who purchased online. (table 2) table 2 decomposition by the factors which influenced the dynamics of the share of those who made online purchases percentage of individuals who purchased online 333.3 18.8 percentage of individuals who used your computer 157.9 6.7 the share of those who made online purchases in all those who used the computer 211.1 11.3 indicator dynamics in 2014 compared to 2007 (%) the average annual relative change in the period 2007 2014 (+/%) source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years figure 4 evolution of the share of people who made online purchases in total computer users of 16-74 years in romania during 2007-2014 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years economic and demographic characteristics of online consumers on economic and demographic groups in the population there are significant differences in terms of online shopping habit (table 3). thus, considering the age, a much higher percentage of those who buy online are recorded in age groups under 45 years compared to those over 45. the accelerated dynamics of this indicator was recorded in the age groups of 3544, 25-34 respectively. in the categories of population by sex there is not a substantial differences in terms of online shopping habit. considering the education, the largest share of those who make purchases online are individuals with high formal education, followed by individuals with medium formal education. in fact, according to this criterion there are found the greatest differences in population groups. 7.9 10.5 4.5 8.7 12.5 9.4 14.5 16.7 0 5 10 15 20 2007 2008 2009 2010 2011 2012 2013 2014 % e-commerce national market study from the perspective of manifested demand 148 also, a higher percentage of those who buy online are found among people with higher incomes, increased purchasing power being accompanied by greater orientation towards this form of distribution. table 3 evolution of the share of people who made online purchases in the total population into categories by different economic and demographic criteria in the period 2007-2014 (%) year 2007 2008 2009 2010 2011 2012 2013 2014 categories of population by age 16 to 24 years old 5 7 4 6 9 9 12 17 25 to 34 years old 4 7 3 7 11 9 15 18 35 to 44 years old 2 3 3 3 5 5 9 12 45 to 54 years old 2 2 1 2 3 4 6 7 55 to 64 years old 1 1 0 1 1 2 3 3 65 to 74 years old n.d. n.d. 0 n.d. 0 0 1 1 categories population by gender males 3 4 2 4 6 6 9 11 females 2 3 2 3 5 5 8 10 categories of population by level of education * individuals with no or low formal education 1 1 0 1 1 2 2 3 individuals with medium formal education 2 3 2 3 5 4 7 9 individuals with high formal education 12 17 10 15 22 18 28 31 categories of population by income levels individual living in a household with income in first quartile n.d. 1 0 0 1 1 2 3 individual living in a household with income in second quartile n.d. 1 0 1 2 3 4 6 individual living in a household with income in third quartile n.d. 2 1 3 4 5 9 9 individual living in a household with income in fourth quartile n.d. 7 4 7 11 9 13 16 source: own processing from 2015 eurostat data *according to isced 2011 note: are considered people who made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years n.d. – no data categories of goods or services ordered over the internet regarding the categories of goods purchased online, clothes, sports goods are most preferred, in 2014, 58% of 16-74 years making internet purchases of such goods. other categories of goods purchased in internet (but the percentage of those who made such purchases in the total population is well below the level of category of clothes and sports goods) are: books / magazines / e-learning and electronic equipment. over time, in the period 2007-2014, we can see an increase in e-commerce for clothes, sports goods, food / groceries, tickets for events (the share of those who bought such goods on the internet increasing by 3 times) and a diminished orientation of consumers for categories: computer software, films / music, books / magazines / e-learning, shares / financial services / insurance and computer hardware. (table 4) timiras 149 table 4 evolution of the percentage of individuals who ordered goods or services, over the internet, for private use in 2007-2014 period categories of goods or services 2007 2008 2009 2010 2011 2012 2013 2014 food/ groceries 2 4 5 5 7 11 8 6 clothes, sports goods 19 21 38 36 53 53 54 58 electronic equipment 14 12 20 17 22 19 16 21 computer software 32 28 29 32 31 12 15 9 computer hardware 14 11 18 15 17 8 7 11 shares/ financial services/ insurance 4 2 2 6 4 6 3 3 films/ music 46 44 31 35 32 22 20 15 household goods 13 9 9 12 13 12 19 16 tickets for events 6 12 19 24 27 18 19 18 books/ magazines /e-learning material 47 58 47 56 50 40 41 29 food/ groceries 100 200 250 250 350 550 400 300 clothes, sports goods 100 111 200 189 279 279 284 305 electronic equipment 100 86 143 121 157 136 114 150 computer software 100 88 91 100 97 38 47 28 computer hardware 100 79 129 107 121 57 50 79 shares/ financial services/ insurance 100 50 50 150 100 150 75 75 films/ music 100 96 67 76 70 48 43 33 household goods 100 69 69 92 100 92 146 123 tickets for events 100 200 317 400 450 300 317 300 books/ magazines /e-learning material 100 123 100 119 106 85 87 62 percentage of individuals who ordered goods or services, over the internet, for private use (%) dinamics of percentage of individuals who ordered goods or services, over the internet, for private use (2007=100%) source: own processing from 2015 eurostat data note: are considered people who made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years conclusions the national market for e-commerce, although well below the eu average, has shown a strong dynamics, as reflected in rising share of the population who make purchases online. this increase was driven by increasing people's access to technology and as a result of the habit of online buying of an increasing number of eu consumers. thus, in 2014, 10% of the population of 16-74 years have made in the last 12 months of the reporting period online shopping, indicator which in the period 2007-2014 grew by 3.3 times. this growth was driven by the increase with 58% of the share of computers users, but also by the 2.1 times increase in the share of those who made online purchases in total computer users. the categories of the population who registered the largest online purchases orientation are: individuals with high formal education, young people under 35 and those with above-average incomes. the main product categories purchased in the online environment are: clothes and sports goods, and to a lesser extent: books / magazines / e-learning and electronic equipment. references kumar, v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto e-commerce national market study from the perspective of manifested demand 150 zait, l. (2009), les courtiers en information – une nouvelle tendance dans la restructuration des chaines de distribution, the annals of university of oradea. economic sciences, tom xviii, vol. 4, pp. 877 – 881 emota (european multi-channel and online trade association), available at http://www.emota.eu/ eurostat, available at http://ec.europa.eu/eurostat/data/database http://ec.europa.eu/eurostat/data/database e-commerce market in romania has been in recent years in a continue development. according to data from emota european multi-channel and online trade association (data resulting from research conducted by enet internet research and consulting), turn... viewed from the degree of manifestation of the demand, e-commerce market in romania has registered a dynamic that far exceeded the eu average. however, the degree of "penetration" of this form of commerce is still at a level that places our country in... microsoft word ciuraru cristina engl. consolidated techniques for groups of enterprises with complex structure cristina ciuraru-andrica, university “vasile alecsandri” from bacau, romania abstract: the preparation and disclosure of the financial statements of a group of enterprises involves some consolidation techniques. the literature presents many techniques, but in practice are used two of them. they will be described first of all in a particular manner and after that in a comparative one. the group of entities can choose one of these techniques, the final result (the consolidated financial statements) being the same, whatever the option. key words: consolidated financial statements, levels consolidation, direct consolidation 1. introduction the romanian explicative dictionary defines technique as an aggregate of proceedings and skills used in a certain activity. for achieve its goals (the content of consolidated financial statements and also the rules for their preparation, approval, audit and disclosure), the consolidated accounting (a department of financial accounting applied in case of groups of enterprises), uses a so-called consolidation technique. according to above technique’s definition, the consolidation technique regards an aggregate of empirical proceedings and skills used, especially, for preparation of annual consolidated financial statements, legal. the literature 1 refers to four techniques of consolidation: levels consolidation technique, direct consolidation technique, modular consolidation technique and the technique of consolidation using fluctuations method. the modular consolidation technique consists in separating the entities’ financial statements on module. these will be regrouped later, according to the needs of the group regarding the administration, on different activities, geographic area, production’s matters etc. the technique of consolidation using fluctuations method starts with the previous period’s consolidated information and continues with the integration of consolidated flows of the current accounting period, which allows resolving not only the problem of booking them, but also the problem of annual consolidation area. in our country practice, are used the left techniques: levels consolidation technique and direct consolidation technique, probably as a result of stipulate them in the first rule regarding consolidated financial statements (approved by o.m.f. nr. 772/2.000 recalled by o.m.f.p. nr. 1.752/2.005 also recalled by o.m.f.p. 3.055/2.009). it is imperative to say that these techniques are not applied to any case of entities group. for a group of enterprises with a dentritic organigram and one level of boundaries between them (fig. no. 1) these techniques are not applicable. whatever, in 1 feleagă n., ionaşcu i. (1998), tratat de contabilitate financiarǎ, vol. i-ii, ed. economicã, bucurești 20 studies and scientific researches ‐ economic edition, no. 14, 2009  practice, such a simple groups do not often exist. therefore these intervene in case of complex groups (fig. no. 2) made by joining direct and indirect investments with those linear, multiple, circular and mutual. figure no. 1 simple group figure no. 2 complex group these consolidation techniques used in the preparation of consolidated financial statements are applied jointly with the consolidation methods scheduled in regulations2. moreover, they lead, in most cases, to a combination between them (methods) because the group of enterprises may include controlled enterprises, which are integrated using global method, joint-ventures, which are subjects for proportionate consolidation and also associates, integrated by equity method3. therefore, in the case of groups with a complex structure, the methods and the techniques coexist and work simultaneously, under the rules relating them. next, we present some characteristics of two techniques, which came out for practice, levels consolidation technique and direct consolidation technique. 2. levels consolidation levels consolidation is a steps consolidation, each step finalizing with the preparation of subgroup’s consolidated financial statements. a level concentrates all the subgroups from the same consolidation step. initially, the subgroup joins the entities placed farthest from the parent, regarding the control chain, and the entities next to them. thus, the subgroups form successively up to the parent where is ending the consolidations’ suite with the consolidated financial statements of the group as a whole. in every single subgroup exits an entity, at the superior level, that have a parent role for the other (the others) entity (entities) from the inferior level. therefore, figure no. 2, above, first of all will be consolidated the enterprises d and e in their parents a and b, forming the subgroups ad and be, and the next, will be consolidated these subgroups and the entity c in the parent m. for the preparation of the subgroups’ consolidated financial statements, it is used the parent-role entity’s share in every other entity of the subgroup, and for establish the consolidation method it is used the power of the voting rights owned by the group’s parent in each consolidated enterprise. 3. direct consolidation 2 o.m.f.p. nr. 3.055/2009 pentru aprobarea reglementărilor contabile conforme cu directivele europene publicat în monitorul oficial nr. 766 din 10 noiembrie 2009 3 scorțescu f. i. (2005), unele considerente cu privire la tehnica de consolidare pe paliere a societăţilor comerciale cu profil horticol, în „lucrări ştiinţifice”, universitatea de ştiinţe agricole şi medicină veterinară „ion ionescu de la brad” iaşi, vol. 48, seria horticultură dn c e a b a bc m m 21 studies and scientific researches ‐ economic edition, no. 14, 2009  direct consolidation presumes the consolidation of each group’s enterprise directly into parent, in this way preparing only the consolidated financial statements of the group as a whole. thus, it is imperative to share the equity of each consolidated entity between its parent and minority interests according to them portion of investments. also, between them, must be shared the investments that will be eliminated from consolidation. the instrument used in this case is interests’ portion of both, parent and minority interests, but in the enterprise that holds the investments. these two portions are different. in the case of above example (fig. no.2), the entities a, b, c, d and e will be consolidated directly into parent m, apart from the latent subgroups. the share of their equity will be made using the interests’ portion of the parent and minority interests in these entities. for eliminate the investments will be used also their interests’ portion but held in a and b. 4. levels consolidation vs. direct consolidation the both consolidation techniques have special characteristics that will be presented comparatively in below table (table no. 1), emphasizing similarities and differences between them, advantages and disadvantages also. table no. 1 levels consolidation vs. direct consolidation characterization criteria levels consolidation direct consolidation 1. goal preparation of the annual consolidated financial statements of a group as a whole; preparation of the annual consolidated financial statements of a group as a whole; 2. applicability field medium and small groups of enterprises with a complex structure and a limited levels of boundaries; medium and small groups of enterprises with a complex structure and at least two levels of boundaries; 3. procedure on steps, corresponding to the existent levels of boundaries in the group’s organigram, into where it is forming subgroups; directly, whatever the number of the existent levels of boundaries in the group’s organigram, ignoring the consolidation steps; 4. principles the series of consolidations start from the entity placed farthest from the parent, regarding the control chain, and ascend up to it; the order of consolidations is insignificant; 5. accomplish method it is preparing the consolidated financial statements of each subgroup formed, using the adequate consolidation method; it is preparing only the consolidated financial statements of the group of enterprises as a whole, using the adequate consolidation method; 6. used instruments at each step, the interests’ portion of the parent-role entity owned in every other the interests’ portion of the parent, owned directly in each consolidated entity, whatever 22 studies and scientific researches ‐ economic edition, no. 14, 2009  subgroup’s entity, from the inferior level; the level; 7. equity share at each subgroup, between the parent-role entity and the minority interests (including here, also, the interests’ share of other consolidated entities from outside of subgroup); at the group as a whole, between the parent and the minority interests, according to them share of interests owned in consolidated entities; 8. investments share before eliminated them at each subgroup, the sharable investments belong entirely to the parent-role entity, as a result of direct own; at the group as a whole, in case of indirect boundaries, between the parent and the minority interests, according to their share of interests owned in the entities that hold the investments; 9. advantages allows a segmentation of the financial information within the group, by the preparation, first of all, of the consolidated financial statements of the subgroups and only after, the consolidated financial statements of the group as a whole; provides directly, quicker and with less expenses, the state of the assets, liabilities, financial position, income and losses of any group of entities and allows a better portion of the consolidated entities’ equity, between the parent and minority interests; 10. disadvantages requests much more work for accomplish the suite of consolidations, involving more expenses, and also its applicability is limited. it not allows analysis within the group which may satisfying the needs of administration and information, based on a segmentation on different activities, geographical areas etc. whatever the chosen technique, the consolidated financial statements must be the same. references: 1. deju m. (2008), contabilitate aprofundatǎ. concepte, modele, studii de caz, ed. alma mater, bacǎu 2. feleagă n., ionaşcu i. (1998), tratat de contabilitate financiarǎ, vol. i-ii, ed. economicã, bucurești 3. malciu l. feleagǎ n. (2004), reglementare și practici de consolidare a conturilor: din orele astrale ale eurepei contabile, ed. ceccar, bucurești 4. munteanu v., țurcan a. (1998), grupurile de societǎți – consolidarea contabilǎ – ed. economicǎ, bucurești 5. scorțescu f. i. (2005), unele considerente cu privire la tehnica de consolidare pe paliere a societăţilor comerciale cu profil horticol, în „lucrări ştiinţifice”, universitatea de ştiinţe agricole şi medicină veterinară „ion ionescu de la brad” iaşi, vol. 48, seria horticultură 6. ias 27 (2004), ghid pentru ȋnțelegerea și aplicarea standardelor internaționale de contabilitate, ed ceccar, bucurești 23 studies and scientific researches ‐ economic edition, no. 14, 2009  7. ordinul ministerului finanțelor publice nr. 3.055/2009 pentru aprobarea reglementărilor contabile conforme cu directivele europene publicat în monitorul oficial nr. 766 din 10 noiembrie 2009 24 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 55 coping decision, strategies and rural households welfare in cote d'ivoire ouoya zrakpa melaine université félix houphouët boigny abidjan, côte d'ivoire ouoyamelaine@yahoo.fr abstract shocks are ubiquitous in the daily life of rural people in côte d'ivoire, like many other developing countries. these shocked households have to choose between coping or not. with data from the household standard of living survey in côte d'ivoire (env2015), we use a probit model to analyze the factors influencing the decision of rural households to cope or not and then we identify the dominant strategies of these households facing shocks. a logit model allows us to understand the impact of the strategic choices made by these households on their well-being. we find that only health shocks have a positive influence on household’s coping decision. also, for these various shocks (health shocks, natural shocks, economic shocks and shocks related to conflicts / crimes), the dominant strategies are the reduction of consumption, then the receipt of donations and borrowing. however, it is the reduction of food consumption, borrowing and the sale of assets that have a positive impact on these households welfare approximated by their poverty status. keywords rural households; coping decision; welfare; strategies; côte d’ivoire jel classification d10; d60; i30 introduction and literature review in most developing countries, agriculture remains as one of the main sources of income for the majority of rural people. but rural agricultural producers also take part in other activities such as salaried employment in agriculture, trade, and other services as well as self-employment in small industries and commercial activities (micro-enterprises). unfortunately, the income generation opportunities of rural households are usually highly correlated hence, these households are particularly vulnerable to systemic shocks (carlos andres alpizar, 2007). since the majority of rural households are engaged in agricultural production, they are particularly prone to ecological shocks which cause damage on agricultural output and income (tongruksawattana et al., 2008). the adverse effect of shocks is generally more severe for the poor who are less insured ex-ante against shocks and therefore are more likely to reduce consumption than wealthier households (jalan and ravallion, 1999). everyday life in sub-saharan africa carries considerable risk, which often is linked to extreme weather, such as drought. world development report 2014 : risk and opportunity documented that more people have died in sub-saharan africa from drought than any other natural hazard (world bank 2014). but households also face price shocks—increases in food prices or input prices, or falls in output prices. illness or death in the household is also frequently reported by rich and poor households alike. in a study of rural kenya and madagascar, barrett et al. (2006) found for instance that every poor household that was interviewed could ultimately trace its poverty to ill health or an unexpected loss of assets. as rural are facing many shocks that can coping decision, strategies and rural households welfare in cote d'ivoire 56 influence their welfare, understanding shocks and their consequences is essential for developing effective poverty alleviation strategies in developing country like côte d’ivoire. unfortunately a better understanding of this linkage is lacking because comprehensive empirical data are rare (tongruksawattana et al.,2010). differents strategies are used by households to face shocks. the literature on shocks and coping actions has identified these strategies among which we can cite selfinsurance strategies, income diversification, risk-sharing mecanism, etc. risk-coping strategies include self-insurance through precautionary savings and informal group-based risk-sharing. they may also attempt to earn extra income when hardship occurs. kochar (1995) reported increased labor supply as key response in south india icrisat villages. park (2006) using chinese data showed that grain's consumption role makes it an attractive form of precautionary saving even when households have access to credit. empirical work using data from india and africa found that grain buffer stocks are the most important form of saving used to smooth income shocks ex post (lim and townsend, 1998). income smoothing often involves diversifying income sources. across the developing world, farm households receive a substantial share of income from nonfarm activities. reardon et al. (1994) reported an average share of 39 percent of income from nonfarm activities in eight countries in rural west africa. diversification does not always result in income smoothing, for several reasons. first, combining different income sources is not always intended to manage risk. different activities may be conducted at different times of the year, providing income throughout the year by smoothing labor over time. second, during crises farm and off-farm activities move together. in a severe downturn, this would severely limit the usefulness of diversification (czukas et al. 1998). there are also important constraints to entering into profitable and risk-reducing diversification (see reardon 1997). capital and other entry constraints exclude the poor from diversification into activities with a higher return. also, income-based strategies are directly linked to asset-based strategies. as eswaran and kotwal (1989) showed that credit can serve as an insurance substitute, but credit market imperfections usually imply collateralized lending. the consequence is that asset-poor households cannot enter into high-risk activities because downside risks are too high while households with access to (liquid) assets can borrow in times of crisis or sell assets as part of a buffer stock strategy. thus, dercon (2002) found that the poor and asset-poor select a low-risk, low-return portfolio, whereas the rich take on a riskier set of activities. the consequence is further impoverishment, or at least increased inequality. the policy implication is that just promoting diversification is not necessarily a solution. finding ways of reducing entry constraints into profitable low-risk activities is crucial. kochar (1995) argued that labor supply adjustments, rather than asset or other strategies, are the main strategy used by households in india to cope with negative idiosyncratic shocks. moser (1998) reported increased female labor market participation and child labor in ecuador and zambia. during a severe crisis, such as a famine, households undertake additional action such as temporarily migrating to obtain work, working longer hours, and collecting and selling wild foods and forest products all this to prevent destitution (davies 1996). empirical studies have sought to determine whether there is evidence of complete risk sharing in developing countries and other settings, including the united states, and to understand how (partial or complete) risk-sharing is achieved. results from the united states, communities in india, and nuclear households in ethiopia suggest that complete risk sharing is not taking place (dercon and krishnan 2000a; hayashi and others 1996; townsend 1994) but that partial risk sharing may be occurring. theoretical work also reveals the limits of risk-sharing arrangements. hoff (1996) highlights the possible negative consequences of informal risk sharing on poverty. fafchamps (2002) discusses the persistence of inequality and patronage linked to risksharing arrangements. even ouoya zrakpa melaine 57 if imperfect, these risk-sharing networks are crucial in helping many poor households in developing countries cope with misfortune. such groups can insure only idiosyncratic shocks, however, not common shocks. savings or public safety nets could be developed to cope with common risks and to protect against idiosyncratic shocks not covered by communities. informal risk-sharing arrangements can complement public safety schemes (ligon 2002). groups have incentives to self-insure, especially if there are economies of scale in asset holdings (lower transactions costs, for example). some works have attempted to analyze the impact of shocks on household welfare or to study factors that influence the choice of one strategy to another one to cope with idiosyncratic or covariate shocks. here, determining the nature of shocks may help identifying the possibilities to deal with its consequences. dercon et al. (2005) considered a shock as idiosyncratic if it is reported to have affected only that household and covariate if it affects at least some other households. most of the informal riskcoping arrangements and strategies of the poor might work well on idiosyncratic risks (e.g. self-insurance or informal community risk-sharing) but are limited in their effectiveness against covariate risks that create contemporaneous community-wide loses (agenor, 2004 as cited by olalekan et al., 2011). for households facing shocks, rashid et al. (2006) identified factors that influence the choice of coping actions and found that this choice depend on household characteristics, most importantly the diversity and stability of household income sources, household assets and education of the household head. nikoloski et al., (2017) attempted to answer the questions ‘is drought indeed still the dominant risk faced by households, and how do households cope with shocks today ?’. they concluded that risk is higher in rural areas, particularly risks to income. they also found that female-headed households are less susceptible to agricultural price risk, but more susceptible to food price risk. for this particular households, informal assistance is the most prevalent coping mechanism. concerning coping strategies, they found that savings are the most widely used coping mechanism, but have a more limited role for poor and rural households, which as a result rely more on their assets. increasing labor supply (sometimes involving migration) is a common coping strategy in rural areas. olalekan et al., (2011) used a probit model to determine the relationship between personal socio-economic characteristics of the respondents, shocks and choice of coping actions and found that educational status, household size, per capita income, shocks type, coping strategies, among others significantly affect the choice of coping actions and are likely to have implications for households’ future welfare status. christiansen and subbarao (2001) submitted that the need for addressing the issue of shocks becomes paramount because they lead to a wide variability in households incomes. in the absence of sufficient assets or insurance to smoothing consumption, such shocks may lead to irreversible losses such as distress sale of productive assets, reduced nutrient intake or interruption of education that permanently reduces human capital, thereby locking their victims in perpetual poverty. obtaining a deeper understanding of household ability to respond to and to insure against different types of shocks calls for a sound understanding of the factors influencing the decision to cope or not and an analysis of the consequences of strategic choices on household welfare. in côte d'ivoire, shocks are ubiquitous in the daily lives of rural households whose main activity is agriculture. ouoya (2019) reported that nearly three quarters of rural households in côte d'ivoire have agriculture as their main activity. also, in the presence of a given shock, households must make the choice between developing at least one active strategy allowing them to maintain their standard of living or simply remain passive. it is therefore a matter of choosing between two decisions : coping or not coping. in addition to this, one might ask whether the choice of a given strategy by a given household has a positive and significant influence on that household’s welfare. it coping decision, strategies and rural households welfare in cote d'ivoire 58 is according to these lines of research that this study intends to answer the following research questions: what are the shocks that influence household coping decisions? what are the dominant strategies for each type of shock? what is the impact of each of these strategies on the welfare of rural households? this study is conducted according to the following plan: section ii presents the methodology of work with, on the one hand, data, on the other hand, the selected analysis models. section iii discusses the results and the ensuing discussions. the last section is devoted to the conclusion and the limits of this study. methodologie models of analysis we use regressions and descriptive analysis to analyze the links between shocks, coping strategies and the well-being of rural households. we categorize information on the 26 different events (sub-types) into four major shock types, namely, health shocks, natural shocks, economic shocks and crime/conflict related shocks. a household is defined as having experienced a particular shock type if it reports experiencing at least one of the components within a particular shock type. coping is defined as actions undertaken by a household to accommodate the effect of a shock. as debebe et al. (2013) we divided coping actions into six categories plus the option that the household did not adopt any active coping response. these six categories include the use of savings, reducing food consumption, selling assets (including food stocks), borrowing, receiving gifts (in cash or in kind from informal groups, neighbours or the government) and labour supply based strategies. two of these categories, that is, borrowing and receiving gifts may be considered as external coping strategies while the remainder may be considered as internal (to the household) coping approaches. we construct a categorical variable that takes six values from 0 to 5 and each category corresponds to one of the strategies mentioned above (level 0 corresponds to the absence of strategy and savings are excluded because none rural household do use it as a strategy). we use this to tabulate coping strategies employed for the various types of shocks. we then construct a bar graph that will allow us to visualize the dominant strategy employed by households for each type of chock. furthermore, household characteristics such as economic status, human capital, social capital and demographic features may affect the occurrence of a shock and may also be correlated with the coping decision. accordingly, as in (1), we treat the probability of coping as a function of the four shock types and a range of household characteristics. 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝(𝐶𝐶𝐶𝐶𝑖𝑖) = 𝛽𝛽0 + ∑ 𝛿𝛿𝑗𝑗𝐶𝐶ℎ𝑝𝑝𝑜𝑜𝑜𝑜𝑖𝑖𝑗𝑗 + ∑ 𝜑𝜑𝑞𝑞𝑋𝑋𝑖𝑖𝑞𝑞 + 𝜀𝜀𝑖𝑖𝑟𝑟𝑞𝑞=1 4 𝑗𝑗=1 (1) the dependent variable of this probit model (coping strategy – 𝐶𝐶𝐶𝐶𝑖𝑖) is a dummy variable that takes the value 1 if household i decide to cope with shocks and zero otherwise. we regress this on a vector of four shock variables j that household i may have faced in the past one year. the specification controls for a vector of r household and community characteristics (x). this includes measures of i) education level of household head, ii) age category of head iii) sex of head iv) own dweling v) number of men. the last terms 𝜀𝜀𝑖𝑖 is an error term. the use of probit regression is becoming widely accepted in similar literature which explores the correlation between shocks and coping activities (e.g. rashid et al. 2006, tongruksawattana et al.,2010). we use a logit model to analyze the impact of different strategies on rural household’s well-being (poverty). the probit and logit models both assume an average of error terms equal to 0. in the probit model, the error term is normally distributed with a variance ouoya zrakpa melaine 59 𝑉𝑉𝑉𝑉𝑝𝑝(𝜀𝜀) = 1. alternatively, 𝜀𝜀 is assumed to be distributed logistically with 𝑉𝑉𝑉𝑉𝑝𝑝(𝜀𝜀) = 𝜋𝜋2 3⁄ , leading to the binary logit model with the equation pr(𝑌𝑌𝑖𝑖 = 1|𝑋𝑋𝑖𝑖) = exp (𝑋𝑋𝑖𝑖𝛽𝛽) 1+exp (𝑋𝑋𝑖𝑖𝛽𝛽) (2) 𝑌𝑌𝑖𝑖 is a latent variable related to household’s poverty status. it takes the value 1 if the household is poor (individual consumption below the poverty line of 737 fcfa per day or 269075 fcfa per year) and 0 if not. 𝑋𝑋𝑖𝑖 are six variables including hst which is a categorical variable related to the strategies. this variable takes six values namely 0 none strategy, 1-selling assets, 2borrowing, 3receiving donations, 4increasing labor supply and 5reducing of food. the other variables ca, el, hhs, od and mn respectively represent the age category of the head, his education level and his gender (male or female), the ownership of dweling and the number of male persons in the household. database the data used in this research are those from the 2015 household living standards survey produced by the national institute of statistics (côte d’ivoire). the research unit is the household and the people who live there. the universe of the survey is made up of all african households residing in côte d'ivoire. it is a multi-topic national survey, with modules covering many aspects of the standard of living. the general census of population and housing (rgph2014) served as a sampling frame. the sampling follows a two-stage draw with first-stage proportional allocation of census districts or enumeration area in the strata of the study; in the second degree there is a systematic drawing of 12 households by enumeration area. the sample is stratified into three sets and provides significant results for the region and the place of residence, the city of abidjan and all of côte d'ivoire, urban and rural. the size of the sample per stratum varied between 276 and 1188 households, to take account of the demographic weight of certain regions, ie a total sample of 12 900 households for the 33 strata (31 regions plus the city of abidjan and the autonomous district of yamoussoukro). the household survey has 16 sections (household composition, household governance, health and education, employment, income-generating activity, livestock characteristics, agriculture, , ...). as part of our analysis, only rural households (55% of observations) were selected. we use a database of around 35,000 individuals living in rural areas. these individuals reported experiencing a shock in the last 12 months preceding the env2015 survey. following the presentation of our database, it is convenient for us to proceed to the presentation of our results and the resulting discussions. results and discussions table 1 presents the descriptive statistics of the household coping decision analysis model. table 1 descriptive statistics of coping decision probit model estimation sample probit number of obs = 35389 variable | mean std. dev. min max cst | .6535929 .4758315 0 1 1.hes | .5497471 .4975261 0 1 1.nas | .1486903 .3557879 0 1 1.ecs | .1162791 .3205638 0 1 1.ccs | .1026025 .3034433 0 1 | ca | coping decision, strategies and rural households welfare in cote d'ivoire 60 55 | .4393456 .4963144 0 1 105 | .2210856 .4149839 0 1 | el | 1 | .2579898 .4375345 0 1 2 | .0994942 .2993286 0 1 3 | .0114725 .106495 0 1 | 1.od | .3380994 .4730693 0 1 1.hhs | .5582243 .4966054 0 1 mn | 1.989206 1.472861 0 10 source our calculs with env2015 data among these 35389 households who have suffered the effects of a shock during the last 12 months preceding env2015, nearly two-thirds, or 65%, coped to deal with the effects of the shock. the most common shock in rural côte d'ivoire is the health shock with 55 percent of the total number of shocks. after the health shocks, it is the natural shocks that follow with 15 percent of the workforce followed by economic shocks and shocks related to conflicts / crimes. the distribution of households according to the age category of the head of the household shows that the largest workforce is at the 35-55 level with 44%. when it comes to the education level of the household head, the fact is that the heads of households living in rural côte d'ivoire have a low level of education. table 1 tells us that 63% of them have no level of education when 26% only have the primary level. those who have reached high school level represent 10% and only 1% has been able to pursue university studies. 55% of heads of households are men, 34% live in a dwelling of their own and on average there are 2 men per household. these households having experienced one of these four categories of shocks have the choice between developing an active strategy to adapt (coping) or being passive (not coping). what are the factors that influence this coping decision? does the category of shock experienced influence this decision? we use the results of coping decision model presented in table 2 to answer these questions. table 2 probit model unstandadized and standardized estimates b z p>z bstdx bstdy bstdxy sdofx 1.heakth shocks 0.091 3.535 0.000 0.045 0.090 0.045 0.498 1.natural shocks -0.080 -2.679 0.007 -0.028 -0.079 -0.028 0.356 1.econo mic sh -0.205 -6.548 0.000 -0.066 -0.202 -0.065 0.321 1.crime/c onflit sh -0.141 -4.379 0.000 -0.043 -0.139 -0.042 0.303 age categories (ca) 55-55 0.194 11.893 0.000 0.096 0.192 0.095 0.496 55-105 0.196 10.224 0.000 0.082 0.194 0.081 0.415 education level 1 – primary -0.006 -0.338 0.735 -0.002 -0.006 -0.002 0.438 2 – high school 0.070 2.860 0.004 0.021 0.070 0.021 0.299 3 – universit y -0.226 -3.512 0.000 -0.024 -0.224 -0.024 0.106 1.own 0.070 4.265 0.000 0.033 0.069 0.032 0.473 ouoya zrakpa melaine 61 dweling 1.househ older sex -0.054 -3.400 0.001 -0.027 -0.053 -0.026 0.497 number of men -0.019 -3.732 0.000 -0.028 -0.019 -0.028 1.473 constant 0.312 11.340 0.000 . . . . b = raw coefficient z = z-score for test of b=0 mean dependent var 0.654 sd dependent var 0.476 pseudo r-squared 0.012 number of obs 35389.000 chi-square 532.099 prob > chi2 0.000 akaike crit. (aic) 45159.447 bayesian crit. (bic) 45269.611 p> z = p-value for z-test bstdx = x-standardized coefficient bstdy = y-standardized coefficient bstdxy = fully standardized coefficient sdofx = standard deviation of x source our calculs with env2015 data it can be seen that rural households in côte d'ivoire adopt active coping strategies only in the case of health shocks. for a household facing health shock, it propensity to cope is expected to increase by 0.09 standard deviations, holding all other variables constant. for a household facing natural shock /economic shock /shock related to a conflict or crime, it propensity to cope is expected to decrease by 0.028/0.202/0.043 standard deviations, holding all other variables constant (p <0.01). health shocks endanger the vital process of the individual and take into account the death of a family member. in the face of such a shock, coping becomes an absolute necessity and not an option. rural households in côte d'ivoire have thus perceived this state of affairs and this explains the positive relationship between having suffered a health shock and the propensity to cope. when other shocks, these households prefer to let things happen on their own by not making the decision to cope. for a head of household, being between 35-55 years old compared to a leader under 35 increases the propensity to cope by 0.096 standard deviation, all things being equal. similarly, when mooving from a head under 35 to a head over 55 the propensity to cope increases by 0.082 standard deviation, all things being equal (p <0.01). we know that from this age range 35-55, health problems and shocks become more and more common. this is all the more true as life expectancy in cote d'ivoire is in this bracket. above, we have seen that there is a positive relationship between being confronted with a health shock and coping decision and this would probably explain this last result. regarding the level of education, there is a decrease in the propensity to cope when moving from a household whose head has no level to a household whose head has the primary level (or university level) all other variables being held constant (p<0.01). on the other hand, there is an increase in the propensity to cope when moving from a household whose head has no level to a household whose head has a high school education level, all other things being equal (an increase of 0.024 standard deviations p<0.01). for our part, we believe that it is the level of integration of these leaders within their community and their analytical skills that explain the influence of the modalities of this el variable on this coping decision likelihood. a leader with the primary level has a high level of integration given the fact that he has spent virtually all his childhood in the village unfortunately, his analytical skill level is low. the head with a university level has a relatively high analytical skill however his level of integration into the community should be relatively weak. on the other hand, a leader with a secondary level has an appreciable capacity of analysis and he spent part of his childhood in the coping decision, strategies and rural households welfare in cote d'ivoire 62 village hence a good level of community integration. such a leader can expect to optimistically consider the decision to cope and rely on his social capital to accompany him in this initiative. possession of one's own home increases the propensity to cope by 0.033 standard deviations all other things being equal. this is certainly an advantage offering possibilities for defining at least one coping strategy. on the other hand, when moving from a female-headed household to a male-headed household, there is a reduction in the propensity to cope by 0.027 standard deviations, all things being equal (p < 0.01). for our part, it would probably be the compassion that individuals have for femaleheaded households and the fact that they have to consider the male head of household as a sufficiently combative person to find solutions to his own problems which would explain this result. however, for each additional male in the household, there is an increase in the likelihood of coping, the other variables being held constant (p <0.01). at the end of this first analysis, it is concluded that rural households in côte d'ivoire make the decision to cope only if they are confronted with a health shock, given the impact this shock could have on the vital prognosis of family members. they do not cope when facing other types of shock. following this initial analysis which enabled us to determine the influence of the types of shocks on the household's decision to cope, we would like to answer the question of what is the dominant strategy used by these rural households for each type of shock? table 3 and figure 1 in the appendix allow us to answer this question. table 3 distribution of coping strategies by shocks shock households coping strategy 0 1 2 3 4 5 total 10health shock 6880 672 1888 5355 586 6158 21539 31.94 3.12 8.77 24.86 2.72 28.59 100.00 54.25 65.18 65.60 65.75 64.82 59.80 59.94 11natural shock 2122 135 405 1167 0 1798 5627 37.71 2.40 7.20 20.74 0.00 31.95 100.00 16.73 13.09 14.07 14.33 0.00 17.46 15.66 12economic shock 2067 46 360 812 138 1351 4774 43.30 0.96 7.54 17.01 2.89 28.30 100.00 16.30 4.46 12.51 9.97 15.27 13.12 13.29 13conflit/crime 1612 178 225 810 180 990 3995 40.35 4.46 5.63 20.28 4.51 24.78 100.00 12.71 17.26 7.82 9.95 19.91 9.61 11.12 total 12681 1031 2878 8144 904 10297 35935 35.29 2.87 8.01 22.66 2.52 28.65 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 source our calculs with env2015 data first row has frequencies; second row has row percentages and third row has column percentages 0none strategy 1selling assets 2borrowing 3receiving gifts 4labor supply 5reducing food ouoya zrakpa melaine 63 figure 1 distribution of strategies by shocks source our calculs with env2015 data table 3 gives us the distribution of the strategies according to the type of shocks and figure 1 is the graph which results from it. by dominant strategy, we designate the strategy that has the largest workforce. figure 1 reveals that for each of the four types of shocks listed, the most effective choice is recorded at the level of the absence of strategy ie that the households that remain passive and don’t cope are the most numerous if one makes a ranking of strategies by size and that the lack of strategy is considered a strategy. excluding the lack of a strategy (modality 0 on the graph), among the five types of strategies employed in rural côte d'ivoire, the reduction of food consumption is the dominant strategy for each type of shock. the finding is that the order of the first three strategies is the same for each of the four types of shocks. the reduction of food consumption comes first, followed by the receipt of donations and then the loan. the sale of assets comes before the labor supply increase at the level of health shocks and natural shocks. this order of the last two strategies is reversed for economic shocks and shocks related to conflicts / crimes. the most common type of shock in rural areas is the health shock followed by economic shocks. thus, we can conclude that health shocks are most dominant in rural côte d'ivoire. the most commonly used strategy is the reduction of food consumption followed by the receipt of donations. table 4 and figure 2 show the dominant strategies according to the type of shock (covariant or idiosyncratic). as yilma et al. (2013), we classify economic and natural shocks as covariate and health shocks and crime/conflit shocks as idiosyncratic. table 4 distribution of strategies by types of shock shock is covariate households coping strategy 0 1 2 3 4 5 total 990 180 810 225 178 1612 1351 138 812 360 46 2067 1798 1167 405 135 2122 6158 586 5355 1888 672 6880 0 2,000 4,000 6,000 8,000 frequency 13 12 11 10 5 4 3 2 1 0 5 4 3 2 1 0 5 4 3 2 1 0 5 4 3 2 1 0 coping decision, strategies and rural households welfare in cote d'ivoire 64 0idiosyncratic 8492 850 2113 6165 766 7148 25534 33.26 3.33 8.28 24.14 3.00 27.99 100.00 66.97 82.44 73.42 75.70 84.73 69.42 71.06 1covariate 4189 181 765 1979 138 3149 10401 40.27 1.74 7.36 19.03 1.33 30.28 100.00 33.03 17.56 26.58 24.30 15.27 30.58 28.94 total 12681 1031 2878 8144 904 10297 35935 35.29 2.87 8.01 22.66 2.52 28.65 100.00 100.0 100.0 100.0 100.0 100.0 100.0 100.00 first row has frequencies; second row has row percentages and third row has column percentages source: our calculs with env2015 data figure 2 distribution of strategies between covariate and idiosyncratic shocks source: our calculs with env2015 data we find that idiosyncratic shocks represent 71% of the shocks. also, whether the shock is idiosyncratic or covariant, active-strategy households first choose to reduce food consumption and then receive donations. the strategic choices made by these rural households are not in line with the work of morduch (2002) who found that formal or informal transfers (credit and insurance) from outside the community or intertemporal transfers are necessary for the management of covariate shocks. however, our findings are in part concordant with those of debebe et al. (2013) who found that to cope with covariate shocks, ethiopian households dissave and reduce their food consumption. for idiosyncratic shocks, such as health shocks, these households dissave, sell assets and borrow. bonfrer and gustafsson-wright (2015) found that in kenya, households facing health shocks first opt for the use of savings, then the sale of assets finally the receipt of donations and loans. after making these choice, we would like to know the contribution of these different strategies to the welfare of households. table 6 allows us to answer this question. but table 5 gives the descriptive statistics of the variables in the household’s welfare analysis model. we use poverty status as a proxy for welfare. 3149 138 1979 765 181 4189 7148 766 6165 2113 850 8492 0 2,000 4,000 6,000 8,000 frequency 1 0 5 4 3 2 1 0 5 4 3 2 1 0 ouoya zrakpa melaine 65 table 5 descriptive statistics of poverty logit regression model estimation sample logit number of obs = 35389 variable | mean std. dev. min max p0 | .4011133 .4901308 0 1 | hst | 1 | .0269293 .161879 0 1 2 | .0837266 .2769812 0 1 3 | .231004 .4214809 0 1 4 | .0256577 .1581141 0 1 5 | .2862754 .4520261 0 1 | ca | 55 | .4393456 .4963144 0 1 105 | .2210856 .4149839 0 1 | el | 1 | .2579898 .4375345 0 1 2 | .0994942 .2993286 0 1 3 | .0114725 .106495 0 1 | 1.od | .3380994 .4730693 0 1 1.hhs | .5582243 .4966054 0 1 mn | 1.989206 1.472861 0 10 source: our calcul with env2015 data table 5 shows that the sample consists of 35389 observations and 40% of the households in this sample are poor. the descriptive statistics of the other variables in this model are substantially the same as those presented in table 1. the absence of strategy (modality 0 of the variable hst) constitutes the basis of our analysis and interpretations. for the interpretations, we use the results of table 6. table 6 percent change in the odds of welfare analysis model logit (n=35389): percentage change in odds odds of: 1 vs 0 b z p>z % %stdx sdofx hst 1selling assets -0.183 -2.276 0.023 -16.800 -2.900 0.162 2borrowing -0.217 -4.450 0.000 -19.500 -5.800 0.277 3receiving gifts 0.160 4.730 0.000 17.300 7 0.421 4labor supply 0.675 9.040 0.000 96.400 11.300 0.158 5reducing food -0.186 -5.789 0.000 -17.000 -8.100 0.452 age categories 35 55 -0.147 -4.917 0.000 -13.600 -7.000 0.496 55 105 -0.041 -1.199 0.230 -4.100 -1.700 0.415 education level 1 – primary -0.164 -5.512 0.000 -15.100 -6.900 0.438 2 – high school -0.873 -17.003 0.000 -58.200 -23.000 0.299 3 – university -1.476 -8.416 0.000 -77.100 -14.500 0.106 1.own dweling 0.241 8.027 0.000 27.300 12.100 0.473 1.householder sex -0.718 -24.868 0.000 -51.200 -30.000 0.497 number of men 0.893 74.154 0.000 144.300 272.800 1.473 constant -1.647 -45.171 0.000 . . . coping decision, strategies and rural households welfare in cote d'ivoire 66 b = raw coefficient z = z-score for test of b=0 mean dependent var 0.401 sd dependent var 0.490 pseudo r-squared 0.203 number of obs 35389.000 chi-square 9683.315 prob > chi2 0.000 akaike crit. (aic) 38010.872 bayesian crit. (bic) 38129.511 *** p<0.01, ** p<0.05, * p<0.1 p> z = p-value for z-test % = percent change in odds for unit increase in x source: our calcul with env2015 data there is a 16% reduction in the odds of being poor when moving from a household that does not cope to a household that sells assets, all things being equal (p <0.05). there are also reductions of 19.5% and 17% in this odds when moving respectively from a household with no strategy to a household which borrows and from a household without any strategy to a household reducing its consumption, all things being equal (p<0.01). on the other hand, there are increases of 17.3% and 96.3% of this odds of being poor when moving from a household adopting no strategy to a household opting for the receiving donations and from a household with no strategy to a household increasing his labor supply, all things being equal (p <0.01). in the short term, these strategies (asset sales, borrowing and reducing food consumption) improve the household's welfare level by enabling these households to obtain resources to meet short-term needs or to accommodate their needs with available resources. our analysis does not take into account the long-term effects of these choices on the welfare of these households. however, we can conclude as debebe et al. (2013) that reducing food consumption can not be a viable strategy in the event of a health shock because it does not provide resources to meet the costs of care. with respect to the age category (ca variable) of the head of household, when moving from a household under 35 to a household with an older head, there is a decrease in the odds of being poor, the other variables being kept constant. however, this decline is more pronounced when we move from a head of less than 35 years to a leader between 35-55 years (decrease in the odds by 13.6% and p<0.01) all other variables held constant. heads of household in the 35-55 age range are active and have greater potential for improving their well-being than a chef under 35 or a chef over 55 years of age. the level of education has a significant impact on the odds of being poor in rural côte d'ivoire (p <0.01). the odds of being poor decreases with the increase in the education level of the head of household, all things being equal. these results are consistent with the results of many other findings on the effect of educational attainment on poverty. also, male-headed households are less poor than those headed by women, but the increase in the number of males in the household increases the odds of being poor, all other things being equal (p <0.01). conclusion at the end of our analysis we conclude that idiosyncratic shocks and particularly health shocks are very present in the daily lives of rural households in côte d'ivoire. in a shock situation, households can choose between coping and not coping. several factors influence this decision. of the five types of shocks listed, only shocks involving the vital prognosis of family members ie health shocks have a positive influence on coping decision. for each of the categories of shocks, the most used strategy is the reduction of food followed by the receipt of donations and loans. the order is the same whether the shock ouoya zrakpa melaine 67 is idiosyncratic or covariate. however, the viability of reducing food consumption in the event of a health shock is unsustainable as the household can not obtain the financial resources needed to support the care of the sick person. lastly, compared to households that do not cope, it is households that opt for either reducing food consumption, selling assets and borrowing that improve their welfare. on the other hand, those who choose to receive donations or to increase their labor force have a worse welfare situation than those who do not cope with shocks. despite these strategies for managing and coping with risk, vulnerability to consumption shortfalls remains high in developing countries and particularly in rural area. further development of safety nets is therefore necessary. nikoloski et al. (2017) stated that strengthening financial markets to provide financial products as buffers in periods of distress should be part of the development strategy, especially for rural areas. improving and strengthening national social protection systems as well as formalizing social transfers would also help the most vulnerable in smoothing the impact of risk. limitations of the study this study give the implication of the different strategies on the welfare of the households studied. but it does not determine the factors influencing the choice of one strategy over another, and a work that can help us understanding this aspect will be useful. references bonfrer, i., and gustafsson-wright, e. 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(1994), “risk and insurance in village india”, econometrica, 62, 539– 592. world bank, (2014) world development report 2014: risk and opportunity. washington, dc: world bank. groups decision making within the organisation 94 groups decision making within the organization stan ştefania anca, lecturer university of bacau abstract: in a highly global market, organizations that have the ability to analyze and rapidly respond to the constantly changing marketplace will have the greatest chance of remaining competitive and profitable. group decision making is the process of arriving at a judgment based upon the feedback of multiple individuals. due to the importance of the group decision making process, decision making models can be used to establish a systematic means of developing effective group decision making. once a decision has been made, the members of the group should be willing to accept it and support its implementations. in a highly global market, organizations that have the ability to analyze and rapidly respond to the constantly changing marketplace will have the greatest chance of remaining competitive and profitable. this is greatly dependent upon work teams that are cohesive, flexible, and able to rapidly arrive at important decisions. group decision making provides for increased ability to gather pertinent information, to develop creative solutions, and to generate new ideas. the most of the important decisions within organizations are made by groups, or within a group context. group decision making is the process of arriving at a judgment based upon the feedback of multiple individuals. a group brings more resources to a problem than are available to one person. through group discussion, group member pool their knowledge. the interaction of group members leads to new ideas and insights that no single member would have developed. being part of group, encourages members to try to make a good decision and to try to perform better. group decision making has many benefits as well as some disadvantages. advantages of group decisions: – group decisions help to combine individual strengths of the group members and hence has a set of varied skill sets applied in the decision making process. – individual opinions can be biased or affected with pre-conceives notions are restricted perspectives, group decision help to get a broader perspective owing to differences of perception between individual in the group. – a group decision always means enhanced collective understanding of the course of action to be taken after the decision is taken. – a group decision gains greater group commitment since everyone has his/her share in the decision making. – group decisions imbibe a strong sense of team spirit amongst the group members and helps the group to think together in terms of success as well as failure. disadvantages of group decisions: – one of the major disadvantages of group decision making is that it is more time consuming than the process of individual decision making. – group decisions take longer to be finalized since there are many opinions to be considered and valued. – in case of authoritarian or minority group decision making, the people whose opinions are not considered tend to be left out from the decision making process and hence the team spirit ceases to grow. – the responsibility and accountability of the decisions are not equally shared in some cases which leads to a split in the group and hence hamper the overall efficiency of the group. because the performance of a group involves taking into account the needs and opinions of every group member, being able to come to an equitable decision as efficiently as possible is important for the functioning of the group. there are a variety of ways to studies and scientific researches edition: economics, no. 13 (2008) groups decision making within the organisation 95 make decisions as a group; the seven step decision-making model presented below offers an effective structure for choosing an appropriate course of action for a particular task or project. 1. identify the decision to be made. before beginning to gather information and list alternatives, it is important for you as a group to understand clearly what you are trying to decide so you have a goal on which to focus your discussions. 2. analyze the issue under discussion. once you have defined your goal, examine the data and resources that you already have, and identify what additional information you may need. 3. establish criteria. identify the criteria or conditions that would determine whether a chosen solution is successful. ideally, a solution will be feasible, move the group forward, and meet the needs of every group member. 4. brainstorm potential solutions. using the resources and information collected above, brainstorm for potential solutions to the problem or decision identified in step 1. this involves collecting as many ideas as possible. at this stage, ideas should not be criticized or evaluated. 5. evaluate options and select the best one. once you have a list of potential solutions, you are now ready to evaluate them for the best alternative according to the criteria identified in step 3. remember that you may be able to combine ideas to create a solution. ideally, everyone would agree with solution (a consensus), but not everyone may agree. in this case, you will need to use a different decision making methods there are several types of group decisions: 1. unilateral – a decision made by one person, often the nominal leader, without consultation with other group members. at times, it can be appropriate. for example, a minor decision that needs to be made right away. if it is repeated and inappropriate, this type of decision can carry a very low group commitment. 2. handclasp decisions made by two members. one suggests, the other endorses and carries it through without adequate discussion or group consideration. this type has high commitment for the two who made it, but generally not for the others. 3. clique similar to the handclasp but with more people involved. this type usually occurs when a close subgroup decides what is good for the rest of the group. repeated clique decisions cause splintering of the group and low commitment. 4. baiting a technique that reduces discussions around decisions. a person will say, "now we are all agreed, right?" and only the very brave will speak up. this usually suppresses obvious dissention and lowers group commitment. 5. majority rule a popular way of making decisions. however, if the outcome of a secret ballot vote would produce any surprises, it is not a good time to make majority rule decisions. what happens is that a sizeable segment of the group may feel devalued and decrease their commitment to the decisions in which they "lose" to the majority vote. 6. consensus similar to majority rule, but everyone knows that what they think and value is being considered by all, and there will be no surprises if you vote. each person will agree that, under the circumstances, which may not be ideal, the decision made is a fair and workable one that they can live with and support. since the resources involved in the group decision-making process as well as the impact of these decisions affect organizational performance, it is crucial to make the group decision-making process as efficient and effective as possible. due to the importance of the group decision making process, decision making models can be used to establish a systematic means of developing effective group decision making. in general, four group decision making models can be identified each possessing distinct advantages and disadvantages. these four models are the rational, political, process, and garbage can models the rational model the first model is the rational model. this model is based upon an economic view studies and scientific researches edition: economics, no. 13 (2008) groups decision making within the organisation 96 of decision making. it is grounded on goals/objectives, alternatives, consequences and optimality. the model assumes that complete information regarding the decision to be made is available and one correct conception of a problem , or decision to be made can be determined. the model further assumes that the decision-makers consistently assess the advantages and disadvantages of any alternatives with goals and objectives in mind. they then evaluate the consequences of selecting or not selecting each alternative. the alternative that provides the maximum utility (i.e., the optimal choice) will be selected. the political model in contrast to the preceding model, in political model, the individuals involved do not accomplish the decision task through rational choice in regard to objectives. the decision makers are motivated by and act on their own needs and perceptions. this process involves a cycle of bargaining among the decision makers in order for each one to try to get his or her perspective to be the one of choice. more specifically, this process involves each decision-maker trying to sway powerful people within the situation to adopt his or her viewpoint and influence the remaining decision-makers .the political model does not involve making full information available or a focus on the optimal viewpoint like that of the rational model . full information is highly unlikely, since the political model operates based upon negotiation that is often influenced by power and favors. in fact, information is often withheld in order to better maneuver a given perspective. since information is often withheld and subsequently incomplete, the optimal viewpoint is not a key aspect of this model. the advantages of the political model remains that it provides a representation of the subjective manner in which the real world often operates, and it can minimize conflict. individuals will always have their personal biases and agendas that influence their behavior. by identifying or acknowledging this fact in the decision-making process, potential problems and conflict can be foreseen and minimized. conflict is also minimized by the swaying of powerful people to support a particular viewpoint. once the powerful people support this perspective, other group members usually fall in line behind them. the process model in contrast to the political model, the third basic model of decision making is more structured. this model is the process model. with the process model, decisions are made based upon standard operating procedures, or pre-established guidelines within the organization. additionally, the organization of past, present, and future events, as well as conformity, are integral parts to this model . the organization of the past, present and future events are important, because they can be used as a consistent foundation for decision making. considering these time events provides further refinement of the guidelines that help to determine outcomes. conformity is an integral part of the process model since it is the means by which doubt, or incertitude is dealt with during the decision task. if decision makers are uncertain as to the potential effectiveness or the results of a decision, they conform to the pre-established standard. this conformity should not be construed to mean that the decision will not have a solid foundation. in this case, conformity merely relates to the fact that the reasoning for the decision is based upon predetermined guidelines . the garbage can model the fourth model of decision making is the garbage can model. this model is most appropriate for judgment tasks in organizations where the technologies are not clear, the involvement of participants fluctuates in the amount of time and effort given, and choices are inconsistent and not well defined . in such an organization, an opportunity to make a decision is described as a garbage can into which many types of problems and solutions are dropped independently of each other by decisionmakers as these problems and solutions are generated. the problems, solutions and decision makers are not necessarily related to each other. they move from one decision studies and scientific researches edition: economics, no. 13 (2008) groups decision making within the organisation studies and scientific researches edition: economics, no. 13 (2008) 97 opportunity to another in such a manner that the solutions, the time needed and the problems seem to rely on a chance alignment of components to complete the decision. these components are the combination of options available at a given time, the combination of problems, the combination of solutions needing problems, and the external demands on the decision makers. once a decision has been made, the members of the group should be willing to accept it and support its implementations. the primary criteria for evaluating a decision – making approach are quality, speed and acceptance or support. the importance of these three criteria varies depending on the problem or situation. in general, decision – making techniques that include group discussion and participation lead to higher quality decisions. group decision making is slower than individual decision making but the importance of speed as a criterion varies. some decisions are important and need to be made quickly, whereas other decisions should be put off until the group gathers more information. the third factor is acceptance. when acceptance is important, groups should use either consensus decision making or a voting approach that requires more than the majority to adopt the decisions. the eventual success or failure of the group as problem solvers and decision makers depends on the information and knowledge of the participants as well as on their ability to work together effectively during a group decision-making meeting. references: [1] drucker peter, managementul viitorului, ed. asab, bucureşti, 2004 [2] fotache doina, groupware , ed. polirom, iaşi, 2002 [3] neculau adrian, dinamica grupului şi a echipei, ed. polirom, bucureşti, 2007 [4] west a michael, lucrul în echipă, ed. polirom, bucureşti, 2005 studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 30 conventional and unconventional monetary policy. the case of romania pleșcău ioana alexandru ioan cuza university of iași ioana.plescau@yahoo.com abstract the aim of our paper is to analyze the conventional and unconventional monetary policy in romania, in the context of the recent financial crisis. we study the relationship between interest rates and credit risk, but also the non-standard monetary measures that were adopted by the national bank of romania and their impact on the banking system. our results point to a decrease of interest rates in the years after the crisis, which is in line with the majority of central banks that have reduced monetary rates in order to sustain the economy and the credit activity. keywords conventional monetary policy; unconventional monetary policy; financial crisis; bank risk; interest rate jel classification e40; e52; e58; g01 introduction after the outbreak of the recent financial crisis, the major central banks have tried to adopt the best strategies in order to sustain the banking system and avoid a collapse of it. the major central banks have made full use of their standard instrument of monetary policy, the interest rate, and have employed very low levels of it. the purpose was to set such a level for the interest that could encourage de consumption and increase the aggregate output. however, the economy has reached a point where, in spite of the very low level of the interest rate, the economic stability did not improve and the major central banks tried to find new instruments that could improve the health of the economic system. the financial crisis that started in late 2007 has questioned some theories from different areas and it has proven the need to reconsider the economic and monetary theories regarding the financial and economic stability, but also the way in which the financial sector interacts with the monetary one. one of the most debated topics in the recent monetary literature regards the design of the monetary policy after the outbreak of the financial crisis and the effects that the new instruments of monetary policy have on the macro-economy, in general, and on the banking system, in particular. this is the motivation that drives the existence of this study. we aim at making a short review of the traditional monetary policy instrument – the interest ratein order to capture its evolution after the recent financial crisis and to analyze the effects of the interest rate adopted by the national bank of romania in the period 2005-2012. mailto:ioana.plescau@yahoo.com pleșcău 31 literature review in recent years the literature that focuses on monetary policy and its effects makes a distinction, somehow not so clear, between the conventional and unconventional monetary policy. this distinction became more and more used after the outbreak of the financial crisis when central banks reduced the interest rates (conventional instruments) until they hit the zero-lower bound and start to design some new instruments – the so-called unconventional measures of monetary policy. but what are these measures? why are they so unconventional? borio and disyatat (2009) discuss the unconventional monetary measures in the context of implementing the monetary policy and make a classification of these measures and their transmission mechanisms. the authors argues that, in essence, the measures adopted after the 2008 financial crisis are not so unconventional, better said the purpose of each of them is untraditional. comparing the conventional and unconventional monetary measures, borio and disyatat (2009) name the first category as interest-rate policy, while the second category is called balance-sheet policy. this last category comprises four types of interventions: exchange rate policy, loan policy, debt-management policy and the management of central bank reserves. also, borio and disyatat (2009) classifies the unconventional measures in two categories: measures of credit easing and measures of quantitative easing. regarding the theoretical foundations of the unconventional monetary policy, there are studies that highlight the role they had in the period before the financial crisis. bernanke and reinhart (2004) discuss the most important unconventional monetary measures, but also the way a central bank can accommodate both the conventional and unconventional instruments. moreover, bernanke and reinhart (2004) analyze three unconventional policies that a central bank could use when the monetary interest rate reaches the zero-lower bound. this is the situation that come up after the outbreak of the 2008 financial crisis. these three unconventional measures are: the forward guidance regarding the path of the interest rate, the changing composition of the central bank balance sheet and the changing volume of it. we can observe that the measures discussed by bernanke and reinhart in 2004 are exactly the anti-crisis measures that were adopted starting in early 2008. regarding the way a central bank should accommodate the conventional and unconventional measures, bernanke and reinhart (2004) argues that the monetary authority has to be very careful not to send to the public the wrong message that, once the interest rate hit the zero-lower bound, the monetary policy becomes inefficient. this idea is discussed in friedman (2015) also, when he supports the use of some new instruments of monetary policy, together with the interest rates at zero-lower bound, in order to sustain the economy. the most used unconventional monetary measure is the quantitative easing, that was implemented on a large-scale in japan after the crisis in yearly 1990s and in united stated of america and eurozone, after the 2008 financial crisis. basically, the quantitative easing means the purchases of long-term financial assets in exchange of the injections of liquidities that the central banks makes in order to encourage the economic growth. the quantitative easing is a method that was used in the monetary practice even before the 2008 financial crisis, but the implementation of it after 2008 focused not only on government bonds, but also on corporate bonds and other types of privately-held assets. borio and disyatat (2009) argues that the credit easing that was largely used by the european central bank and the forward guidance of the path of interest rates are monetary measures that are strictly unconventional and that were designed to save the banking system from a collapse. the effects of the large-scale asset purchases, as an unconventional monetary policy instrument, need to be studied in terms of the quantity of assets, but also in terms of the structure of central bank balance sheet. conventional and unconventional monetary policy. the case of romania 32 friedman (2015) argues that the effects of the changes in the structure of central bank balance sheet, in terms of assets need to be analyzed by taking into account the quantity of assets, but also the structure of the assets traded on the financial markets. as an example, the federal reserves bank from united states has purchased not only long term financial assets, but also mortgage-backed securities, although the aims of the two are different. in the first case, the central bank wants to influence the longterm interest rate, while in the second case, the central bank wants to influence the interest rate from the mortgage market. regarding the empirical evidence on the effects of unconventional monetary policy, there are some studies that demonstrates the positive effects of these measures in united states of america. for example, baumeister and benati (2010) analyze the impact of unconventional monetary policy in usa, england and japan and their results show that the quantitative easing help to stabilize the economy and to avoid the deflation risks. peersman (2011) studies the unconventional measures adopted by the european central bank and they argue that the credit easing lead to higher levels of bank risk in the eurozone. all in all, when talking about the effects of unconventional monetary measures, there is not a consensus in the literature on whether they had beneficial effects. methodology and data the main paper on which we construct our empirical analysis is andrieș, cocriș and pleșcău (2015) who investigates the risk-taking channel of monetary policy. hence, our paper is a contribution to the existing empirical literature that study the impact of monetary policy in the banking system, in general, and on the bank risks, in particular. we collect data on the commercial banks in romania and make a panel dataset of 68 observations including 11 banks analyzed on a period of 8 years. we use the panel least squares estimation method with cross-section fixed effects and the model that we estimate takes the following form: 𝐵𝐶𝑅𝑖,𝑡 = 𝛼 + 𝛽1 ∗ 𝐼𝑅𝑖,𝑡 + 𝛽2 ∗ 𝐼𝑅𝑖,𝑡 ∗ 𝐶𝑅𝐼𝑆𝐼𝑆 + 𝛽3 ∗ 𝑏𝑐𝑖,𝑡 + +𝜀𝑖𝑗,𝑡 , where bcr is the bank credit risk, ir is the monetary policy rate, bci,t is a vector of bank-level control variables and crisis is a dummy variable that takes the value of 0 in the period 2005 to 2007 and the value of 1 in the period from 2008 to 2012. the role of this dummy variable is to investigate whether the 2008 financial crisis has some impact on the relationship between romania interest rate and the credit risk of commercial banks from the romania banking system. we use the bankscope database to collect data for the commercial banks in romania and the national bank of romania website to collect data on the official monetary policy rate. our dependent variable is the bank credit risk that captures the nonperforming loans that could jeopardize the bank activity. the independent variable is the monetary policy interest rate established by the national bank romania. we include in our model three control variables in order to control for the unobserved heterogeneity of bank-level characteristics. our control variables are capitalization, profitability and bank size (computed as the natural logarithm of total assets). as we can notice in figure 1, the credit risk exhibits a continuous growth in the period after the outbreak of the financial crisis. we believe that this may be motivated by the impossibility of some borrowers to repay the loans they took from the commercial banks. pleșcău 33 0 4 8 12 16 20 24 2005 2006 2007 2008 2009 2010 2011 2012 mean of credit risk figure 1 the evolution of the credit risk in romania source: own computations using the data from bankscope regarding the analyzed period, the figure 2 highlights the decisions of the national bank of romania to reduce the monetary policy rate, decisions that were in line with the one adopted by the major central banks. 5 6 7 8 9 10 11 12 13 2005 2006 2007 2008 2009 2010 2011 2012 mean of interest rate figure 2 the evolution of the monetary policy rate in romania source: own computations using the data from bankscope database results the aim of our empirical estimation is to investigate the relation between the monetary policy rate and the bank credit risk in romania. we use the panel least squares estimation method and the results are reported in table 1. table 1 the impact of monetary policy on credit risk interest rate -2.793* (0.78) capitalization -0.366 (0.75) profitability -0.194 (1.99) size -3.850 (5.16) r-squared 0.726 no. of observation 68 estimation method cross-section fixed effects cluster banks source: own computations conventional and unconventional monetary policy. the case of romania 34 our results point to a negative relation between the interest rate and the credit risk, highly statistically significant. this means that the low levels of key policy rate that were adopted after the 2008 financial crisis have led to a higher level of bank risktaking. our results are in line with the one obtained in the literature regarding the existence of a risk-taking channel of monetary policy. also, our results highlight a negative relation between the credit risk and the three control variables that we used in our analysis. in romania, in the period 2005 to 2012, highly capitalized banks exhibit low credit risk, while large banks with high profitability ratios have lower levels of bank risk-taking. however, we cannot account very much for the results obtained in case of the control variables, because they are not statistically significant. table 2 the impact of the financial crisis on the relation between monetary policy and credit risk interest rate -4.527* (1.48) interest rate * crisis 1.459** (0.64) capitalization -0.825 (0.904) profitability 0.749 (1.99) size -16.36 (8.70) r-squared 0.795 no. of observation 68 estimation method cross-section fixed effects cluster banks source: own computations the second focus of our interest is to see whether the 2008 financial crisis had an impact on the relation between the interest rate and the credit risk. in order to do this, we estimate our baseline regression by including the dummy variable crisis that captures exactly the effects of the financial crisis. the results are shown in table 2. the negative sign of the coefficient for interest rate variable shows that low levels of interest rate lead to higher credit risk. however, if we look at the positive coefficient of the interaction term between interest rate and the variables that captures the effects of the crisis, we can observe that the negative impact of low levels of interest rate on credit risk is reduced in the years after the outbreak of the crisis. this means that the credit risk of commercial banks from the romania banking system is lower after the crisis than before. the role of the dummy variable is to capture this difference. also we can notice that the result for the interaction term is statistically significant, which means that the financial crisis that started in 2008 influenced the relation between interest rate and credit risk in romania. conclusion the financial crisis that started in late 2007 was such a major event that it still produces effects on the whole macro-economy. the aim of our paper is to analyze the effects of the interest rates adopted by national bank of romania in the period 20052012 on the credit risk of commercial banks and to investigate whether the crisis influences this relation. the results point to a negative relation between interest rate and bank risk, statistically significant and, also, to a significant impact of financial crisis on this relation. pleșcău 35 our results are in line with the literature regarding the effects of interest rates on bank risks and especially with the most recent literature that investigates the impact of the very low levels of interest rates. although our analysis brings as novelty the fact that it is focused on the romania’s monetary policy, it has some limitations. the major limit regards the relative small size of our panel dataset that may bias the results. acknowledgement this work was supported by a grant of the romanian national authority for scientific research and innovation, cncs – uefiscdi, project number pn-ii-ru-te-2014-40443. references andries, a., cocris, v., plescau, i. (2015), low interest rates and bank risk-taking: has the crisis changed anything? evidence from eurozone, review of economic and business studies, vol. viii, issue no. 1, 125-148. baumeister, c., benati, l. (2013), unconventional monetary policy and the great recession: estimating the macroeconomic effects of a spread compression at the zero lower bound, international journal of central banking, 9, 165-212. bernanke, b., reinhart, v. (2004), conducting monetary policy at very low shortterm interest rates, the american economic review, 94(2), 85-90. borio, c., disyatat, p. (2009), unconventional monetary policies: and appraisal, bis working papers, no. 292. friedman, b. (2013), the simple analytics of monetary policy: a post-crisis approach, journal of economic education, 44(1), 311-328. peersman, g. (2011), macroeconomic effects of unconventional monetary policy in the euro area, cesifo working papers, no. 3589. (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 14 smart specialization, element of regional development florina popa institutul de economie naţională, academia română (institute of national economy, romanian academy) florinapopa2007@gmail.com abstract research-development and innovation expenditure (conditions of a few high specializations in different fields of science) know an increasing importance, both at countries level and regions, on the background of challenges that occur in economic growth, at european union level, involving investment increase in knowledge, respectively, education, professional training, research and development. the existence of a good model of territorial development means finding a strategy and governance able to create new economic activities that capitalize the competitive and comparative advantages of territorial potential, in global context. the new strategy of economic transformation at local level, the smart specialization, aims to promote efficient and effective use of public investment in research, based on innovation encouragement, at regional level, that should lead to economic growth and prosperity of regions. the implementation of strategy`s instruments involves an integrated approach, by using own forces and potential of each region, that should meet the requirements of european agenda, for growth and competitiveness achievement. by identifying the fields with high potential, at regional level, and their strengthening, the smart specialization can concur to regions access on global markets and international value chain. the study briefly expounds the concept of smart specialization and its constituent sizes, principles of action in the field of research-development and innovation. there are also considered the implementation stages of "strategy", in the interventions at regional level, as well as the advantages and risks that it entails. keywords strategy; development; implementation; regional potential; competitive advantage jel classification o38; r11; r58 1. introduction a successful economic development means a continuous upward process, in which the business environment of a nation evolves in order to support and encourage complex and productive competitive methods. knowledge, the adoption of new organizational solutions and new technologies, continuous innovation are elements which help ensure the economic development, the competitive advantage, the activity of the research-development sector and the capacity of economies to implement its results being determinant for innovation. this article is part of the scientific research paper, for 2015,of the institute of national economy romanian academy”creşterea competitivităţii economice şi specializare inteligentă, la nivel regional în românia”, achieved by phd. daniela antonescu –coordinator, florina popa. popa 15 in the context of the challenges involved in the economic growth at the level of the european union, we distinguish the importance of the expenses incurred for researchdevelopment and innovation (conditions of certain high specializations in different fields of science), both at the level of the countries and at the level of the regions, which involves an increasing investment in knowledge, namely in education, professional improvement, research-development. a sustainable growth, at the level of the member states, is conditioned by improving the single market, by increasing competitiveness, by promoting innovation in industry and services. the existence of a good territorial development model consists of finding a strategy and an administration capable to create new economic activities, which should improve the competitive and comparative advantages of the territorial potential, in global context. 2. conceptual elements the new strategy of economic transformation at local level, namely smart specialization, aims to promote the efficient and effective use of public investments in research, based on stimulating innovation at regional level, which should lead to economic growth and prosperity of the regions. the concept regarding the “smart specialization” appeared in the 2000s, during the european debates, initiated by a group of “european knowledge for growth” experts, regarding the motivation of the gap between the european union competitiveness, which is lower, in relation to that of the united states. the formulated hypothesis was the existence of a weaker economic and technological specialization of the european union, as well as the existence of a lower capacity to prioritize the efforts and resources, in relation to that across the atlantic. the new territorial development model – smart specialization – whose purpose is increasing the effectiveness and the efficiency of economic systems, in order to contribute to a sustainable development, was integrated into the new regional policy of the european commission for 2014-2020, as regional smart specialization strategies (ris3), process which highlights a new administration model developed for certain more effective and more efficient economic systems. the promotion of the concept by the european commission had as purpose a better motivation of the investments in research-development-innovation provided by the eu cohesion policy. for this purpose, the european commission recommended to national and regional authorities of the member states to elaborate research and innovation strategies for smart specialization, which should lead to a more efficient use of the funds, to an intensification of the associations between the community, national and regional policies, between the investments of the public sector with the private one; thus the smart specialization becomes an ex-ante conditionality for the access of the regions to these funds. the implementation of smart specialization strategy tools involves an integrated approach, by using the forces and the potential of each region, which should meet the requirements of the european agenda for achieving growth and competitiveness, the main measures being oriented towards:  reviving the traditional sectors, by developing new activities with higher added value;  finding new market opportunities;  adopting and disseminating new technologies; smart specialization, element of regional development 16  directing the investments with focus on the research-innovation field, by using the regional potential;  exploring new forms of innovation which should lead to technological essential changes. carrying out smart specialization strategies involves management (national/regional) authorities, stakeholders, universities and other higher education institutions, industry, social partners, in an entrepreneurial discovery process. at regional level, smart specialization is considered “the process by which the region can find its competitive advantage and build a particular development strategy, adapted to the advantages and constraints specific to the territory, focusing the resources on technological fields of activity and sectors in which they hold a comparative advantages, proven on one or more chains of international value by targeting excellence”1. 2.1. constitutive dimensions of smart specialization defined by “the establishment of priorities that at a regional-level take place in a series of activities and/or technology domains, and that are potentially competitive and able to generate new business in a global context faced competition from other places” (del castillo, barroeta, paton, 2012), the concept consists of three basic dimensions: 1. global context. specialization means the registration in the global value chain in which the region has to be able to position itself, which implies the definition of the competitive advantages, namely the identification of the elements of differentiation which give it an advantage in the competition with other locations. 2. technological specialization, in regard to the identification of the fields in which the region holds the competitive advantage, which involves the prioritization and the orientation of the efforts and resources towards the innovative technological sectors in which the region holds a competitive advantage and actors able to achieve excellence and added value. 3. a coherent diversification (related variety) implies the orientation of the specialization towards the technological fields or sectors which are in close relation to the purpose of maximizing the positive externalities of knowledge between related technological fields, which should lead to developing certain new technological, innovative fields. the new forms and tools, in the research-development field, proposed by smart specialization, are based on a set of principles, namely: a)the central role of entrepreneurial discovery, a process in which all the actors in the entrepreneurial field interact with each other, having a significant role in choosing the specializations with a strong growth potential. “entrepreneurial discovery” also seeks the aggregation of knowledge elements (technological, economic, social elements) in order to identify the opportunities for developing new innovative fields, which generate growth and jobs. b)taking into consideration, different from the focus on research-innovation, the aptitudes and other advantages of the area: geographic position, population structure, natural resources, aspects of the demand, of the supply – elements which contribute to stimulating innovative activities in the region. c)the possibility to cooperate with potential innovators outside the borders of the region ensures a global perspective on competitive advantages. 1l`europe s`engage en france avec europ`act, guide pour la préparation des stratégies de spécialisation intelligente des régions françaises, 2012, http://www.europe-en-france.gouv.fr; http://www.europe-en-france.gouv.fr/ popa 17 d)the perspective of involving all the regions in the implementation of smart specialization, both of the advanced ones, in the research-development field, and of the less competitive ones, for this purpose, each region taking into consideration: initiating a self-assessment of the advantages, of the knowledge potential they have, of the skills of the actors who promote diffusion of knowledge and innovation; emphasizing the efforts for each sector of innovative technological activity in which they hold the competitive advantage. the regions with lower performance have the possibility to build a strategy corresponding to the potential and evolutions of the market, by taking into consideration their perspectives of economic growth capacities, avoiding the field in which other actors distinguished themselves as leaders. e)the role of public policies. in implementing the conditions for cooperation and interaction between the public and private actors, including the research organizations, universities, the responsibility belongs to the public power which should express itself by: creating incentives for entrepreneurs; estimating the selected specializations; supporting certain complementary investments (education, training); supporting the application of the new strategies; ensuring the fact that the expected measures correspond to the needs of the local population. f)the development of the cooperation between regions which invent technologies and the other regions which apply them, the promotion of the contacts between companies and clusters, improves the access and diffusion of new technologies. the notion of smart specialization can be considered the result of a theoretical consolidation of the works of the economists regarding the competitive advantage of the scale value and productivity chain in a globalized economy. this “involves a process of developing a view, identifying the competitive advantage, establishing the strategic priorities and using smart policies, in order to maximize knowledge based on the potential of developing a, strong or weak, high-tech or low-tech region”2. the interventions at regional level, by implementing the smart specialization strategies, have to be relevant, based on realistic evaluations, by entrepreneurial actors, process which has to be structured in more stages, as follows (table 1): table 1 stages of the smart specialization implementation structure stage 1. identifying and selecting certain technological fields/sectors towards which the region aims to orient, in priority, its efforts and available resources; analyzing the regional potential for innovation. 1. initiating the processes and elaborating an overview regarding the perspectives of the region; identifying the smart specialization model is the result of a “bottom-up” approach, the support coming from the regional government, “top-down”. 2. defining and implementing priorities, 2. designing and implementing the 2what is smart specialisation? smart specialisation platform s3 http://s3platform.jrc.ec.europa.eu/s3pguide smart specialization, element of regional development 18 establishing a complex of coherent policies, based on certain realistic, controllable objectives. smart specialization strategy by objectives and programs which involve all regional stakeholders; it is the basic element of entrepreneurial discovery. 3. the existence of the monitoring system and the assessment which have to ensure the process transparency basic element in increasing the funds of the european regional policies. 3. assessment and monitoring based on which the continuous improvement and the maintenance of efficiency and effectiveness should be ensured. source: jaime del castillo, barroeta, b., paton, j. (2011), “converting smart specialisation into a regional strategy”,working paper series, id infyde working paper series year 1, volume 2 no.1; european commission (2013), “the role of clusters in smart specialisation strategies”, luxembourg: publications office of the european union, https://ec.europa.eu/research/evaluations/pdf/archive/other_reports_studies_and_documents/clusters_smart _spec2013.pdf. following the path of a smart specialization involves the discovery of the fields in which the country/region can be more competitive, in relation to others, which means “an entrepreneurial discovery process”, consisting of searching for new ideas, new partners, developing creative solutions, combining the potential advantages of the area, in order to reach the final purpose, bringing new solutions on the market, promoting growth and jobs. smart specialization can create a competitive advantage for the region, but, at the same time, its opportunities may, also, involve certain risks, like for instance (table 2): table 2 advantages and risks of smart specialization advantages risks establishing priority areas facilitating the orientation of the regional capacities of research, development and innovation, according to the market opportunities. differences between the regions regarding the entrepreneurial capacity may increase the gaps between the regions. specialized diversification it may lead to a variety of the specialization areas of the economy. in the absence of an entrepreneurial critical mass, of the share capital, of the experience in regional administration, the process of regional administration cannot be applied. global context defining the priority areas of specialization in accordance with the global context increases the chances of success. the administration in an open economy is not widespread yet, and success depends on the cooperation potential in the region-country-europe space. popa 19 source: jaime del castillo, paton, j. quote paton and baroetta, (2012), in“what s3 means for european regions, different forms of smart specialization ?”, http://www.know-hub.eu/knowledgebase/encyclopaedia/what-s3-means-for-regions-different-forms-of-smart-specialisation.html smart specialization is a knowledge process whose life span differs, in time, according to regional capacities and evolution tendencies in the environment. entrepreneurial discovery does not follow a unique pattern, any region can act in the direction of creatively combining technologies, of finding business opportunities, of increasing the number of jobs and the wellbeing level. 3. conclusions promoting the concept of smart specialization means an innovation in the european regional policy, oriented towards a strong thematic focus, the purpose being that of defining, at the level of each territory, a strategy for research and innovation, adapted to the advantages and conditions in the area and to the european objectives regarding research-development-innovation. by identifying the fields with high potential, at regional level, and by strengthening them, smart specialization may contribute to the access of the regions on the global markets and in the international value chain. the smart specialization approach is a guarantee of the effective use of the funds and of an efficient coordination between regional, national and european policies, contributing to the increase of the eu competitiveness, by re-enhancing its potential, which will allow it to confront and to resist international competitiveness and defiance at global level. references edmonds, t., jarvis t., mcginness, s. (2000), regional competitiveness & the role of the knowledge economy. house of commons library, research paper 00/73 27 july, available at http://researchbriefings.files.parliament.uk/documents/rp00-73/rp00-73.pdf del castilloj., paton, j., saez a. (2013), smart specialisation and clusters: the basque country case, smart regions for a smarter growth strategies: new challenges of the regional policy and potentials of cities to overcome a worldwide economic crisis, available at www.reuniunesdesestudiesregionales.org/oviedo/2013; del castillo, j.; barroeta, b.; paton, j. (2012), smart specialisation strategies ris3: a quick guide. infyde working paper, year 2, vol.1; del castillo, j., barroeta, b., paton, j. (2011), converting smart specialisation into a regional strategy, id infyde working paper series year 1, volume 2 no.1, available at http://www.infyde.eu/archivos/archivo_68.pdf, http://s3platform.jrc.ec.europa.eu/s3pguide. del castillo j., paton, j., what s3 means for european regions, different forms of smart specialisation? european union, available at http://www.knowhub.eu/knowledge-base/encyclopaedia/what-s3-means-for-regions-differentforms-of-smart-specialisation.html; ketels, christian, h., m., (2013),clusters and cluster initiatives: recent learnings, current challenges, harvard business school, available at http://www.slideshare.net/tcinetwork/clusters-and-cluster-initiativesrecentlearnings-current-challenges; http://www.know-hub.eu/knowledge-base/encyclopaedia/what-s3-means-for-european-regions-different-forms-of-smart-specialisation.html#author1 http://www.know-hub.eu/knowledge-base/encyclopaedia/what-s3-means-for-european-regions-different-forms-of-smart-specialisation.html#author1 http://www.slideshare.net/tcinetwork/clusters-and-cluster-initiativesrecent-learnings-current-challenges http://www.slideshare.net/tcinetwork/clusters-and-cluster-initiativesrecent-learnings-current-challenges smart specialization, element of regional development 20 mempel-śnieżyk, a. (2013),smart specialisation and clusters in economic growth, prace naukowe uniwersytetu ekonomicznego we wrocławiu, research papers of wrocław university of economics nr. 324, 2013,economy and space, pages 92-103,wrocław, poland, www.depot.ceon.pl; paton, j., barroeta, b. (2012),ris3 policy typology: the optimun policy mix for a regional smart specialization; european commissiondirectorate-general for research and innovation (2013),the role of clusters in smart specialisation strategies, luxembourg publications office of the european union, available at https://ec.europa.eu/research/evaluations/pdf/archive/other_reports_studies_an d_documents/clusters_smart_spec2013.pdf; european commission, joint research centre. innovation and growth available at .https://ec.europa.eu/jrc/en/science-area/innovation-and-growth; european commission, research and innovation – regional dimension of innovation – smart specialisation, available at http://ec.europa.eu/research/regions/index_en.cfm?pg=smart_specialisation; european commission (2014), smart specialisation and europe’s growth agenda,luxembourg: publications office of the european union, available at http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/smart_spec_g rowth_agenda.pdf;http://ec.europa.eu/regional_policy/en/information/publicati ons/brochures/2014/smart-specialisation-and-europes-growth-agenda; comisia europeană (2012), specializarea inteligentă. motorul viitoarei creşteri economice în regiunile din europa,panorama, inforegio nr. 44,uniunea europeană, available at http://ec.europa.eu/regional_policy/sources/docgener/panorama/pdf/mag44/ma g44_ro.pdf; http://ec.europa.eu/regional_policy/ro/information/publications/panoramamagazine/2012/panorama-44-smart-specialisation-the-driver-of-futureeconomic-growth-in-europe-s-regions; regiunea centru, agenţia pentru dezvoltare regională centru. informare privind realizarea strategiei de specializare inteligentă a regiunii centru (ris3),strategia de specializare inteligenta a regiunii centru pentru perioada 2014-2020, available at http://www.adrcentru.ro/; www.regio-adrcentru.ro; oecd (2012), cluster policy and smart secialisation. oecd science, technology and industry outlook, oecd, available at https://www.oecd.org/sti/outlook/eoutlook/stipolicyprofiles/interactionsforinnovation/clusterpolicyandsmartspeci alisation.htm l`europe s`engage en france avec europ`act.guide pour la préparation des stratégies de spécialisation intelligente des régions francaises, guide édition novembre2012, available at http://www.europe-en-france.gouv.fr/centre-deressources/etudes-rapports-et-documentation/guide-pour-la-preparation-desstrategies-de-specialisation-intelligente-des-regions-francaises; what is smart specialisation? smart specialisation platforms3, available at http://s3platform.jrc.ec.europa.eu/s3pguide. theoretical outline of supplier relationship management in conditions of economic uncertainty phd.vlăduț severian iacob, alma mater din sibiu, romania summary internet facilities have created new ways to identify, negotiate and engage suppliers and partners worldwide. adding value to organizations, supply chain management aims at streamlining all processes and communication channels between them and their main suppliers, to facilitate effective interactions and flawless. critical conditions generated by the current crisis grew and deepened the importance of supply chain management concept and the leading organizations realized that business partners might be a key element for their success. meanwhile, global exchange of information can improve business processes for better access to resources. key words competitive environment, supply chain management, knowledge management, supply chain, crm, srm, scm value chain. introduction the current economic incertitude does not allow to create a future vision, but emphasizes the differences in global, regional, state level, and mainly at businesses. its effects are destructive and lead to serious and impressive tone. their impact reflects the general economic situation by sharpening the competitive relations or the spectacular bankruptcies and closures of companies and individuals who see themselves faced with job losses or assets and savings. more limited purchasing options make possible permanent changes in the market resulting in a global competition between companies(campelo and stucky, 2007). convulsions in new economic environment reconfigures competitive behavior, causing a revolution in the strategies of organizations. to overcome these challenges, it requires a reconsideration of their way of doing business based solely on internal resources to a dynamic strategy focused on broadening communication with business partners (sethi, 2010). such ongoing exchanges of information are going to get out the isolated firms integrating them into various value chains, especially under the impact of new technologies, especially those from information and communication field. therefore, the acceptance and the introduction of new approaches to relations with stakeholders, use of information technology and electronic networks affiliation tend to be content elements of corporate strategy. increased competition in the economic hub puts additional emphasis on customers, not only to improve cash flow, but also to generate its best satisfaction to deep and strengthen relations within the supply chain (burnet , 2004), making considerable efforts to understand their needs and desires. viewed traditionally, the stated objectives outlined image of what in economic terms represents customer relationship management, but even if the companies emphasize their own customer relationship, it does not mean they do not take into account or that diminish the role of suppliers relationships. creating and maintaining good supplier relations management involves adopting a philosophy to ensure compliance with essential characteristics: respect, partnership, growth and development, proper risk management, developing new capabilities (donoghue, 2011). it should be noted that the option of companies to choose between suppliers and develop skills for identifying opportunities generate some costs related to creating and maintaining relationships. these costs are high regardless of the type of relationship: intermediate or partnership. consistent benefit balance is achieved in the short or long term. choosing a wrong relationship may result in excess costs. on account of obtaining an advantage most companies have a major concern to coordinate activity (ravi and menzigian, 2003), especially taking account of suppliers than customers, collaboration is more advantageous than the loss caused by interruption with supplier. an approach following laws, especially during the crisis, put in a new light supplier relationship management (srm) offering innovative perspectives on supply chain and transparency. customers and suppliers are no longer a priority of maximizing short-term trading results, but follow through cooperation, long term mutual benefit. companies willing to adopt this philosophy will have adequate time reward. they only have to accept to maintain credibility and commitment to start up businesses, especially in the globalized trade and accelerate the dynamic supply chains, focusing primarily on risk management. outlines of the concept of supplier relationship management (srm) defined as new category of solutions that enable manufacturers to optimize their relationships and expenses with suppliers (itil, 2001), supplier relationship management (srm) is a relatively new term business since 1980, although before that time relations suppliers were explained either by 'logistics' and' joint operations or by similar expressions. its adoption and use in businesses started in the 90s as a way to streamline the business wishing to be considered a part of the development and organization of daily buyer-supplier relationship management as part of responsibilities within the flow of information in the supply chain. at first sight it might be interpreted that supplier relationship management is just a subsystem (eulálio, 2009) in the supply chain management (scm), including both business practices and appropriate software (bokhorst and all., 2006). but not only extends the principle of srm supply management, but gives a different nuance of thought on how to work with suppliers, relying on greater transparency and sustained optimism, providing process improvement and increasing performances, which, associated with the purchase of goods and services, may lead to substantial savings through lower production costs, better quality and lower price of the final product. also, srm practices provide a common frame of reference (hald, cordon and vollmann, 2009) enabling effective communication between a company and its suppliers that may use different business practices and terminology content. supplier relationship management goal is to make more flexible and efficient deployment of time events, protocols, actions and transactions between a company and its suppliers, such as customer relationship management (crm) is intended to streamline the process between a company and its customers. srm content and challenges being connected with a high process flexibility, organizational perspective of srm in all companies, particularly those with productive profile where philosophy just the right moment is adopted, has three essential elements: collaboration, integration and reliability (idc, 2006, donoghue, 2011). fig.1 just in time approach to partnership relationship with suppliers source: the partnership model: the type of buyer-supplier relation. http://html.rincondelvago.com policy of just in time (jit) (larson, 2005; guerra and cianchette, 2006) as a means of collaboration in organizations does not mean the relationship between companies is only the art of maintaining a balance between supply and demand, or only a mathematical rigor production process and perfect synchronization of supply in customer-supplier equation, but also the mutual benefit provided by implementing common applications that enable continuous exchange of information and better control over the management of long-term contracts. such agreements may allow to suppliers the possibility of checking the availability of convenient solutions with customers, for example, stating the time limits for best price in the market. such action may generate on the one hand, customer savings, on the other hand, guarantees for suppliers that goods remain in stock. during the historical evolution of relations with suppliers, their integration involved great efforts mainly to achieve b2b (wienclaw, 2008) programs, computer networks, the purchase and installation of software; the xxist century it boom managed to overcome many of the technical barriers of old companies providing real-time access to shared information (sethi, 2010). in this respect, srm deepens ties of dependency and mutual influence between the parties, creating synergy processes in the value chain, synthesizing best practices (barry, senthil and, pradip, 2010) that requires the organization to comply. thus, key business players, using a common portal of trade and marketing (e-marketplaces), enlarge their ebusiness concerns synchronizing processes, directly or indirectly, by connecting the companies. thus, activation of these channels does not mean anything but integrating esourcing and e-procurement activities in b2b electronic market platform that uses internet (gartner, 2004) allowing large, medium and small corporations exchange of goods, services, and information in a more efficient and effective way than was previously possible. from a theoretical perspective supplier relationship management has broad coverage and is not fully installed as a competence (daley, 2009) in business management. srm is more accepted and defined as a formal discipline (evans, 2010). lack of impact in organizations is fueled primarily by an identity crisis as a result of improper definition and poor integration of its functions in the work. normally intended objectives are limited mainly to the cost of operating and risk management (vliet, 2006) which makes the srm may not appear as a source of competitive advantage. this happens frequently in organizations whose managers use a competency-based approach to develop critical skills and capabilities especially in supply problems, emphasizing weaker part relationship to increase management effectiveness. at the same time, managers are always given attention to make strong links with their suppliers recognizing that size relationship is important in creating value for the benefit of both parties. success depends on the seriousness and commitment of each partner in achieving strategies. such requests srm acquisition and implementation skills, values and behaviors aligned not differentiate between providers. frequently, for an organization, the relationship with suppliers is directly related to the development of the product or service (mettler and rohner, 2009) and begins as a strategic sourcing initiative (gecker, 2008) subsequently evolving data and performance indicators (emiliani, 2010). as soon as the adaptation to changing requirements of end users is done, proximity to suppliers advances for the purpose of deepening collaboration and interaction (lintukangas, 2007). increased information exchange, increasing dependency accepting risk and frequency of the transactions are defining elements of collaboration. in this context, management of suppliers and relationships with them is effective if added value is obtained, as competitive advantage. for example, a product similar to the requirements of competition cannot be satisfied, either because of supply problems, either because they do not fit in costs or time resulting in discussion with the supplier of the redesign project. the same trend can register frequently relation to outsourced activities, usually when aiming to increase competitiveness and financial performance. therefore srm can be applied only when the company knows well the needs (poirier, 2003) and has established requirements possibly has standardized nomenclature of products. this way no confusion or misunderstanding may occur regarding delivery of goods or services. influence, behavior, trust, commitment access to resources induce different behaviors of economic agents and consumers. they established many relationships based on challenges faced, trying to have some influence but without having any systematic and successful way (pound, 2008) to do so. each of economic actors are motivated and committed to a relationship as long as it goes well (moldovan, 2006), both labor and effort are appreciated and their wishes and needs are taken into account. as relationships between individuals, in b2b relations, the done efforts create and maintain connections with a certain security. by accomplishing such a condition, it occurs growth and relationship building, contact supplier being considered as a result of how to build trust and loyalty. the supplier will know that encountering an obstacle, it will be supported in solving the problem arose. no less true is that in a srm relationship may occur elements to spoil, to destabilize even to irreparably compromise it. supplier may be overly familiar or suspicious and discussions may contain the same ideas, not inducing different viewpoints. thus, a less good gradually degenerates into bad and the uncertainties that arise will generate motivation and state of recoil that will grind business security. on the same lines, the other partner, desiring change will produce persuasive act without substantive reasons for dissatisfaction surprise, trying to convince either by speech or policy or by various methods of restraint, something that may call into question the continued relationship. occurrence of such situations requires the adoption, at organization and management level, of influencing models that are designed to change behavior and to facilitate overcoming or eliminating persistent and resistant problems. one of the models of the six sources of influence (patterson, 2007), considers the motivations and skills on three levels (personal, social, structural) and involves the implementation of three steps: establishing a measurable result, finding a vital behavior, use the 6 sources of influence matrix (fig.nr.2). fig.nr. 2 the steps of influencing source: influencer the power to change anything, http://sourcesofinsight.com/influencer-the-power-to-changeanything by using this model they will be able to successfully establish the organization's mission and attitude change will be inevitable. establishing more precise boundaries and clear rules on the relationship of srm arrangement will remove any assumptions that the partner knew instinctively to accommodate the situation. knowing the parameters of the relationship, perception of partner changes, even if the external circumstances remain unchanged. even at the individual attitude change leads to a change in the perception of others. accepting a supplier implies to know him. as long as there is a thorough knowledge of the supplier or there is only incomplete information about him, the relationship with him is based on only a dose of confidence and hope to seriously address its obligations. compliance provider fulfilling expectations in terms of understanding the other party. this behavior creates a certain state of safety and increased confidence. a business start with a low confidence level may generate uncertainty in expectations. in this respect, confidence building is a long process. it addresses in particular individuals who engage in such emotional relationship (abosag, tynan, lewis, 2006) which affect the economic ties further. however, curdling trust claims politeness, friendship, empathy, similarity, honestly. studying organizational behavior, especially personal touch-organization in the early 1950s enabled the emergence of the concept of engagement (abrahamsson, 2002). evolution and development of the concept of engagement, as presented today in the literature, is based on several studies, claims and disputes between researchers. numerous definitions of engagement and measurement methods have been integrated in different models, the most commonly used model of organizational commitment are three components affective commitment, normative commitment and engagement as proposed by meyer and allen (meyer and allen, 1991). considering, in particular, connecting individuals to the organization mentioned model may be extended to all stakeholders not only to persons or suppliers. on the one hand, an emotional involvement implicit or explicit promise to continue the relationship (dwyer, schurr and oh, 1987; somogyi and gyau, 2010), requires faith partners for any short-term sacrifices to maintain stability and efficiency (gyau and spiller, 2008), on the other hand, the adoption commitment by the supplier foresees a series of long-term benefits: quality products with lower cost information flow (abosag, tynan, lewis , 2006). therefore, commitment is central to economic relations between partners representing the amount engage different entities to work together for a common goal. thus equated with growth or profitability, commitment is the force that drives the relationship forward (vogele, 2009). however, commitment is hard to maintain because the parties are unable to see the scale start their actions. accordingly, in the event there are all sorts of tensions commitment, resistance, and barriers were identified three major phases involved in change (conner and patterson 1982; corner 1998), each of which is constructed by following some steps. (fig.nr.3) fig. no. 3. development (curve) commitment source: 1. pekka abrahamsson, (2002), the role of commitment in software process improvement types of collaboration and partnership existence of global competition is putting a growing pressure on companies to become more competitive. not being connected to this rate would cause the risk of business exit. therefore, with the aim to obtain more value, higher, some companies may do wrong steps in choosing suppliers without identifying every time the 'key' suppliers. after a series of authors collaborations with suppliers can be segmented in terms of level of cooperation in a mix of four levels (fig.nr.4) from low, combative at a very high supercollaboration (billingt, cordon, volmanit, 2006), while according to others it is part of a process (fig.nr.5) also with four components (lambert, 2008). fig.nr.4 typical mix of relationships with suppliers source: corey billington, carlos cordon, tom vollmann, 2006, super supplier collaboration in fact all refer to how deep is partners in a business relationship. the collaboration defines four components as follows: length of arm, partnership, association, vertical integration. the collaboration fig.nr.5 source: lambert, m.douglas, supply chain management: processes, partnerships, performance, sarasota, florida: supply chain management institute, 2008 usual definition of partnership is that of business relationship based on mutual trust, openness, sharing risks and rewards arising in business (lambert, knemeyer, gardner, 2004). partnership requires high performance companies involved, more than would be achieved if they work separately. creating and implementing a partnership entails use it for resources, both material and financial, as chosen by time, which is why such action is a challenge for managers. so it goes without saying that not all providers should be considered partners. usually limited, resource allocation is made to those firms which will be a true partnership. partnership relations may be varied and may take many forms depending on the organizational environment, all the circumstances affecting the business. implementing, developing and improving relations with suppliers may be based on a partnership model involving assessment, formulation, consultation, implementation, negotiation. any partnership model contains three types of partnership. literature (lambert, 2008) stipulates as follows: • type i with the wider use and recognition as partners. short-term approach. • type ii does not emphasize coordination of activities but more on their integration in a longer time horizon. • type iii which requires a high level of operational integration. the partnership established by lambert consists of three elements: engine (drivers), catalyst (facilitators), and components (components). the three elements lead to an expected result by the parties. fig.nr. 6 model of partnership source: lambert, m.douglas, supply chain management: processes, partnerships, performance, sarasota, florida: supply chain management institute, 2008 driver elements are established after careful examination of potential parties counting on their belief in significant benefits by: (1) cost efficiency, (2) improve customer service, (3) marketing advantage and (4) before stability / growth. facilitator gives the existence of elements to enhance and develop partnership providing a basis for good relations while establishing materiality chance. facilitators include: (1) corporate compatibility, (2) similar managerial philosophy and techniques, (3) reciprocity and (4) symmetry. component elements are mostly similar set of managerial actions and events that determines and dominates the life of the partnership. components are operational relationship through: planning, control, communication, sharing of risks and rewards sharing etc. sharing of above elements leads to a result that implies an assessment, perhaps a readjustment. feedback requires regular updating of state drivers, facilitators and components. own processes and performance measurement provider enables companies to fully inform the partner, not only about the lowest price. conclusions supplier relationship management is a relatively young discipline that has not been widely adopted in business. dealing primarily with segmenting suppliers, establishing performance measurement tools and being currently limited to a series of e-processes, srm is easily assimilated as part of the procurement chain (scm). as such, in the next period srm will remain stuck especially in the area of electronic research, the best prices and markets, as well as e-procurement, due to increasing interest from organizations for the installation of custom electronic systems for tracking processes. it is also the responsibility of managers to reconsider srm and ensure strengthening current practices, especially regarding relations organization change in attitudes, the transfer of information, 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 89 the contribution of gestures to personal branding brînduşa-mariana amălăncei “vasile alecsandri” university of bacău brandusa_amalancei@yahoo.com abstract a form of (self-)promotion but also an authentic strategic choice, the personal brand has become a topical preoccupation of marketing specialists. personal branding or self-marketing represents an innovative concept that associates the efficiency of personal development with the effectiveness of communication and marketing techniques adapted to the individual and that comprises the entire collection of techniques allowing the identification and promotion of the self/individual. the main objective is a clear communication with regard to personal identity, no matter by means of which method, so that it gives uniqueness and offers a competitive advantage. although online promotion is increasingly gaining ground for the creation of a personal brand, an individual’s verbal and nonverbal behaviour represent very important differentiating elements. starting from the premise that gestures often complement, anticipate, substitute or contradict the verbal, we will endeavour to highlight a number of significations that can be attributed to the various body movements and that can successfully contribute to the creation of a powerful personal brand. keywords brand; (self-)promotion; identity; gestures; nonverbal communication jel classification m37 introduction the term personal brand refers to a clear, powerful and persuasive public image with regard to a person (montoya & vandehey, 2009), reflecting the personality, qualities, values and experience that confer uniqueness upon an individual and differentiates him from the others. it is considered that anyone can be a powerful brand, which does not entail the change of one’s personality and does not represent an attempt to be one thing or another. a powerful personal brand uses the intrinsic special qualities of a person in order to make a difference, thus distinguishing itself from a product brand, which is constructed on the basis of the extrinsic characteristics attributed to the product by the others (mcnally & speak, 2002). a personal brand represents a promise made to the ones we interact with, thus creating certain expectations in their minds. by means of a personal brand, which is considered a form of (self-)promotion and even selfishness (montoya & vandehey, 2009), as well as an authentic strategic choice, thus adding extra personal value. the process by means of which persons or entrepreneurs try to differentiate themselves, highlighting their unique value both personally and professionally, bears the name of personal branding (schawbel, 2010). in effect, personal branding does not refer to the creation of an image for the external world, but to the discovery and maximization of one’s strong points and to the understanding of the unique combination between rational and emotional resources and their employment with the purpose of differentiating oneself from the others (nedelea, 2009). it is believed that the contribution of gestures to personal branding 90 branding will become the strongest weapon in the public space, thus being able to influence, positively or negatively, any decision at any level (political, cultural, social, or even military). a suggestive example for that matter is represented by the obama brand – a charismatic brand with high rates of success, as demonstrated both by the number of those who, putting all their hopes in him, voted for him, and by those who have identified themselves with him and the american dream and have been the voice of all afro-americans since the beginnings of the usa until the present (cărămidă, 2009). in the world of fashion, there are numerous brands that bear the name of their founders (armani, christian dior, chanel etc.) and that present certain attributes, offer a series of advantages and transmit clear values, which represent a given conception, just as in the world of business donald trump is associated with the idea of force, power, aggressiveness, but also with that of keeping promises (bădulescu, 2012). although it is believed that social media represents a manner of promotion that is a lot more efficient than offline promotion in the construction of a personal brand, the personalization of the way of talking, making gestures, dressing, adopting an attitude or displaying qualities has a very important contribution. everything that is transmitted verbally is in fact enhanced or deviated by means of gestures, understood as movements of the body or body parts with the clear intention of influencing the receiver. thus, in our paper we intend to highlight the significant contribution of gestures to the image the others create about the speaker. gestures and their communicative action even as far back as the antiquity it was believed that, as it happens in the case of voice, “gestures conform to the intellect” and “express, without words, almost everything” (quintilian, 1974). however, besides the significance they have in discourse, gestures offer supplementary information regarding the personality and feelings of the communicator, constituting, in their own right, a language about the intentions of the person that talks. even more, in each of us there are, unconsciously, rules that create an effective grammar of gestures (chétochine, 2010). gestures are involved in the communicative action, materialized in “language” games, where verbal and extra-verbal means of expression are formed and interconnected by means of completion and substitution rules. the consensus implied in the action that contains the language game refers both to the propositional contents of the expressions/constructions (opinions) and to the expectations of reciprocal behavior (norms), intersubjectively valid, to which we answer together with our expressions (habermas, 1983). therefore, two important roles of gestures result from here, in relation with the verbal – that of complementing and that of substitution –, as well as the intentional character that defines them. the concept of game has a central role in the work of one of the predecessors of the theory of communicative action, namely, george herbert mead. mead talks about a conversation of gestures and considers that the game intervenes in the understanding of the gesture as a significant symbol, in the passage or transfer from the self to the generalized other and in social communication. in other words, along with the gesture a symbol is transmitted, and the person one interacts with could not answer if he/she were not capable of decoding the meaning of the symbol expressed by that gesture. in order that dialogue may become possible, both sender and receiver must attribute the same meaning to the gesture. thus, people signal to themselves the meanings of their own gestures which, on condition that they are the same for all those involved in the interaction, enable gestures/ symbols to be significant: “gestures become significant symbols when the person who is making them expects to elicit amălăncei 91 from the one to whom the gestures are addressed the same kind of response he/she would have given if he/she had been in the interlocutor’s place” (mead, 1934; 2006). therefore, the body parts contribute, along with the mind, to the communication of pure intellectual ideas; more precisely, the somatic actants signal, highlight one thing or another, or model and control the objects that surround us. like words, gestures also produce a certain kind of reverberation in interaction, a resonance that goes beyond the simple correspondence with the indicated entity, thus giving rise to the idea that a halo/an aura accompanies certain gestures and thus the notion of connotation emerged as a series of “insensible emotional and subjective factors that accompany denotation”. consequently, a gesture acquires meaning only in combination with other signs, the gestural syntagms (gestures taken separately) being partial expressions whose weakening of semantic value occurs when they are integrated in larger syntagms. the gestural syntagm arises either as a meaningless syllable or as a word, and the meaning can arise or disappear during the observation, a reason that made the american semioticians deal not with the practical behaviour but with the significant one, which is opposed to the practical one (şoitu, 1997). given that a gesture cannot be divided into syntagms with their own signification and that signification is born in our presence as receiving spectators, we can observe that the problem of meaning/signification becomes even harder to solve. the movements of various body parts can create significant gestures that lie at the basis of the image the others make concerning the feelings, attitudes or experiences of the speaker. however, in case of the many attempts to catalogue these gestures in specialized books on nonverbal communication the signification attached to them often seems purely speculative in nature. nevertheless, an important contribution in this respect can be found in the oratory of the antiquity, and among those who dealt with the role of body parts for the construction of significant gestures in the act of uttering a discourse we can identify marcus fabius quintilian. one of the most expressive body parts is the head. it contributes to the beauty of discourse when its position is upright and natural, whereas a head bent forwards shows humbleness, one moved backwards suggests arrogance, bent sideways it shows idleness, while its stiff and unbending position can show strength of character (quintilian, 1974: 297). seven categories of gestures involving the head have been identified, as follows: 1) the movement of the head forwards (expressing interest in the interlocutor’s speech); 2) an inclined head (shows submission, lack of will and hope; inclining one’s head in greeting shows politeness; keeping one’s head in an inclined position for a longer time may reveal the feeling of shame); 3) nodding (the movement of the head downward repeatedly is perceived as a sign of assent, agreement and understanding related to what the interlocutor says; accompanied by raising one’s eyebrows and half-opening the mouth, nodding signals great interest in what is transmitted); 4) the raising of the head (indicates self-confidence, awareness of one’s value, pride, the ability to act; the stiff raising of the head expresses vanity and arrogance); 5) the movement of the head backwards and upwards (suggests relaxation, daydreaming, the desire to get away from it all); 6) the movement of the head toward one side (toward the right – it indicates affinity, lack of will, resignation; toward the left – it signals skepticism, a critical attitude, or requesting supplementary information); 7) the swaying of the head (expresses both agreement and disagreement, lack of certainty or inclination to compromise; if accompanied by the raising of the shoulders and drooped mouth corners it indicates indecision and disappointment in certain situations; rückle, 1979; 1999). therefore, the head mirrors the spiritual condition in many ways and besides the movements indicating approval, refusal, or confirmation other movements are also known and common, such as those that signal shame, doubt, admiration, or indignation. however, it is erroneous to resort only to the contribution of gestures to personal branding 92 gestures with the head, to frequently move the head, to agitate the head or to turn it in all directions (quintilian, 1974). physiognomy also has an essential role in communication. with the help of our countenance we implore, threaten, flatter, we display signs of joy, pride, or humbleness. at the level of our physiognomy, the greatest impact is that of the eyes, whose movements can express, depending on the situation, determination, indifference, pride, warning, kindness or severity. a speaker that keeps his/her eyes completely or slightly closed denotes lack of experience or intelligence. the eyes transmit these feelings with the help of the eyelids, cheeks and eyebrows. the eyebrows “dominate the forehead; they contract it, broaden it or make it smaller”. it is unadvisable to keep one’s eyebrows completely unmoving, too mobile, unequally moved or in disagreement with the words uttered. by contracting our eyebrows anger is transmitted, whereas by lowering them we suggest sadness; by relaxing them we express joyfulness as well as approval and by raising them we indicate interdiction (quintilian, 1974). an experimental study based on the analysis of the photographs of men belonging to different races revealed that through the different positions of eyebrows (“lowered” or “raised”) information is transmitted regarding the dominating/ dominated status of the interlocutors (keating, mazur & segall, 1977). at the same time, given our habitual observation it seems that the lifting of the eyebrows while listening to the other’s speech is a sign of surprise, whereas their lowering transmits distrust in what is said. as far as the gestures involving the hands are concerned, marcus fabius quintilian argues that they are „the language common to all people”, thus being able to constitute, as in the case of words, a language in itself. with the help of hands, we express a request, a promise, a calling, a threat, or interrogation, negation, dread, fear, joy, sadness, doubt, regret, confession, admiration, shyness, measure, quantity, number, or time. such gestures accompany words naturally, but there are also gestures that are meant to imitate, by means of which we transmit the equivalent idea and which are not recommended to be used during discursive interventions (quintilian, 1974). the author quoted above mentions that a very common gesture results from the placing of the middle finger on the thumb and the stretching out of the other three fingers. it is believed that when the hand is held out and slightly moved towards the right and the left, discreetly accompanied by the head and the shoulders, this gesture shows certainty. the holding out of the index finger is a very useful gesture when we want to criticize or point at something. when the hand is raised and moved towards the shoulder slightly inclining the finger, it is an indication of affirmation, whereas when the finger is directed towards the ground, somewhat reversing it, we signal insistence. the gesture of drawing together the tips of the first four fingers, holding up the hand towards the mouth and turning it downwards while slightly stretching it corresponds to a modest way of being. the words seem to be “drawn” towards the interlocutor when the speaker pulls the hand toward himself with the fingers turned downward, with a somewhat easy gesture, then opens it more widely and stretches it out to the contrary direction. a gesture that is common to informal and somewhat shy communication is that of slowly opening the hand, as if in a promise, and of moving it along short distances, while the shoulders follow it discreetly. in order to express admiration, the hand is slightly turned towards the sky, then the fingers are curled up in turn, starting with the little finger and then, by means of the reverse movement, the hand is opened and turned in the opposite direction. normally, when we ask, we turn our hand towards the one to whom our question is addressed, by means of a smooth hand gesture we promise and express consent, whereas by means of a more vivid gesture we encourage and sometimes praise. by lifting the tip of our fingers drawn together toward our mouth we express weak surprise, sometimes sudden indignation, amălăncei 93 the feeling of fear or a prayer, whereas regret or anger are expressed by clenching our fist and lifting it to the chest. for great orators it is a mistake to raise one’s hand higher than the level of the eyes or above the head, to move it down lower than the chest or to put it on the lower abdomen, as well to gesticulate only with one’s left hand (quintilian, 1974). certain authors who focused on nonverbal communication highlighted the significance of the gestures in which the hands are involved, dividing them into gestures made with the fingers, with the palms, with the fists and with the arms (chelcea, ivan & chelcea, 2005). thus, the use of the index finger when gesticulating has diverse significations. even though the code of good manners interdicts the gesture of pointing with the finger, it seems that for the americans this prohibition is not valid, with many politicians on the stage or on the stairs of the presidential helicopter using this gesture strategically in order to indicate a person from the public whom they notice with surprise and to whom they smile. pointing the index finger at a person has the role of “wand” and indicates the dominating position of the one using it. with the help of the index finger, moving our hand up and down, we scold, whereas extending it accompanied by a closed fist and the swaying of the hand from left to right indicates our refusal or disagreement. together with the thumb as well as with the middle finger, the index forms emblems (for instance, in the former case, it substitutes the term “ok”, and in the latter situation, it takes the form of letter v so as to signify “victory”). it seems that the index finger is the most expressive of our fingers, both in gestures of touching one’s own check or temple and in gestures that synchronize it with the other index finger. in america, finger counting starts with raising the index finger first, then the middle finger, and so on, whereas in europe the thumb is first held up, then the index finger and the middle finger. hand rubbing is a sign of positive evaluation related to what is about to come, but the meaning of this gesture largely depends on the quickness of the movement and the real social situation. putting both palms together with fingers crossed transmits a negative attitude – the higher the hands are raised, the more intense it is. finally, holding hands like an upturned v (resembling the form of a helmet) convey self-confidence, especially in the case of persons with a superior social position. as far as the gestures involving the movement of the trunk are concerned, it is believed that bending the torso forwards signifies closeness, interest, aggression, planning an activity, whereas moving it backwards can indicate retreat, lack of interest (preoccupation for one’s own thoughts), haste, or the lack of planning regarding an activity connected with the partner (rückle, 1979). when trying to decode the nonverbal messages transmitted by means of gestures resulting from trunk movements, the analysis of distances and posture offers useful information. considered a “transfixed/frozen gesture” that differs from the position of the body (chelcea, ivan & chelcea, 2005), posture acquired the following significations in william james’s view (1932), on the basis of experimental results: the attitude of closeness, a situation in which the body is bent forward, as a sign of giving attention; the attitude of rejection, by means of which we avoid the other, signaling refusal or repulsion; the attitude of expansion, a case in which the head, trunk and shoulders are extended, with the suggestion of arrogance, pride, aggressiveness; the attitude of contraction, with an inclined head and drooping shoulders, suggests disappointment and depression (cf. corraze, 1980; 2011). an important element of nonverbal communication is represented by the relation between the posture and the degree of intimacy, any transgression of the intimate space by means of the posture leading to psychic discomfort. the contribution of gestures to personal branding 94 conclusions we can conclude that, together with the markers of position or rank, or those of clothing, age, gender, race, body size and physical appearance, body carriage and speech features, gestures, one’s facial expression and posture represent behavioral elements with expressive and communicational force, being included in what erving goffman calls “face/personal facade” (personal front) – defining one of the elements employed by the individual actor when performing. more precisely, the author claims that, in most routine meetings, individuals tend to present a front/facade. it contributes to defining the situation for those who are watching the “scene”. in its turn, the scene includes, on the one hand, the scenery (settings), which is made up fixed elements – furniture, scenic decoration, background objects etc. – whose variations influence the behavior of all those involved in the situation given and, on the other hand, the personal front. depending on the function performed by the information they convey, the stimuli composing the personal front are divided into “outward aspect/bearing” (appearance) and “attitude” (manner). the “outward aspect/bearing” refers to those stimuli that offer information regarding the social status of the individual and their temporary ritual state (if they are engaged in a formal social activity, in some professional occupation or if they are enjoying a moment of relaxation). the “attitude” involves those stimuli that, at a certain moment, can warn about the interactive role the performer expects to play/act in a situation that is about to take place: “therefore, a proud, aggressive attitude can give the impression that the performer expects to be the initiator of the verbal interaction and the one directing its course. a shy, justificatory attitude can give the impression that the performer expects to follow the ones that take control or that at least he can be determined to do so” (goffman, 1959; 2007). the individual appears to be an „actor in action” that, unlike the social actor, is a real self that is confronted with real and unpredictable situations, which determine him to continuously reinvent his own roles. by means of this interactive show/performance, he induces certain impressions about himself, and these impressions translate his personal demeanour and influence the others in understanding the events they are taking part in. gestures are, therefore, more than complementary elements; they contribute to enhancing messages and impressions. researchers identified “series of frequency” in which gestures amplify the linguistic expression. thus, the smile of a person that is talking is frequently associated with an insistent look, whereas the smile of a person that is listening is often accompanied by a gesture of approval. when the flow of speech is slow, the gestures are quicker than the verbal flow and consist of head movements. if the pitch of the voice is heightened or deepened at the end of a sentence, the corresponding gestures are those of raising or lowering the eyelids, the head and/or the hands. gestural amplitude correlates with the dimension of the uttered linguistic unit, the sentence segments often being accompanied by short and varied gestures made by the most mobile body parts, whereas ample verbal units are associated with large gestures or even with changes in posture. finally, gestures and verbal utterances harmonise at the level of contents (for instance, a pointing gesture is almost always attended by a verbal deictic element). it has also been observed that gestures anticipate verbal expression (for example, by turning towards the interlocutor and by means of specific gestures such as searching for the partner’s look, a smiling or angry facial expression depending on the communicating intention etc., we “prepare” corporally in order to start talking) and supply important information concerning the identity of the social actors (personality, social background, health condition), their emotional state or the relations they have with others. consequently, we can state that the gestural language has a significant role both in the case of personal branding and the facilitation of social interaction and its functioning. amălăncei 95 references bădulescu, t. (2012), introducere în branding-ul personal, available at http://www.traianbadulescu.ro/2012/10/18/introducere-in-branding-ulpersonal/. cărămidă, c. (2009), brand&branding. visual identity, i, bucureşti, brandmark. chelcea, s., ivan, l., chelcea, a. (2005), comunicarea nonverbală: gesturile şi postura, bucureşti, comunicare.ro. chétochine, g. (2008), la vérité sur les gestes, paris, eyrolles. corraze, j. (2011), les communications non-verbales, 6e édition, paris, puf. habermas, j. (1983), cunoaştere şi comunicare, bucureşti, editura politică. goffman, e. (2007), viaţa cotidiană ca spectacol, bucureşti, comunicare.ro. keating, c. f., mayur, a., segall, m. h. (1977), facial gestures which influence the perception of status, sociometry, 40(4), 374-378, available at http://www.jstor.org/discover/10.2307/3033487?sid=21105542171081&uid=7 0&uid=2129&uid=4&uid=3738920&uid=2. mcnally, d., speak d. k. (2002), be your own brand – a breakthrought formula for standing out of the crowd, san francisco, california, berrett-koehler publishers. montoya, p., vandehey, t. (2009), the brand called you, united states of america, the mcgraw-hill companies. mead, g. h. (2006), l’esprit, le soi et la société, paris, puf. nedelea, a. (2009), bazele marketingului, iaşi, sedcom libris. quintilian, m. f. (1974), arta oratorică, iii, bucureşti, minerva. rückle, h. h. (1999), limbajul corpului pentru manageri, bucureşti, editura tehnică. schawbel, d. (2010), 4 steps to building your future, new york, kaplan publishing. şoitu, l. (1997), comunicare şi acţiune, iaşi, institutul european. http://www.jstor.org/discover/10.2307/3033487?sid=21105542171081&uid=70&uid=2129&uid=4&uid=3738920&uid=2 http://www.jstor.org/discover/10.2307/3033487?sid=21105542171081&uid=70&uid=2129&uid=4&uid=3738920&uid=2 microsoft word apostoaie constantin marius_eng.doc the impact of the european financial integration process and other international tendencies on the romanian stock market alina camelia sargu, alexandru ioan cuza university, ia i, romania abstract the study presents in a comprehensive way the effects that deregulation, internationalisation, integration, financial innovation and the development of the institutional investors have had on the romanian stock market. using dates provided by several relevant sources on the field, like the bucharest stock exchange or intercapital, we have established in which extent these tendencies emerged on the romanian stock market and if our stock market has already reached the point where it will be able to fully integrate itself in the european financial system. keywords financial integration, deregulation, internationalisation, financial innovation, institutional investors jel code: g10, f15, f21, f36, n24, o16 introduction in the last decade, the global financial system has considerable evolved and matured. all over the world, markets developed and became more liquid, while in the same time crossborder investment has registered a sharp increase, especially towards the emerging markets of the world. these facts have lead to the increase of the stock markets integration process, which is especially visible in the european union. the integration of the european stock markets has been a very dynamic and complex process, emerging on all markets, including the romanian one. other main european tendencies that have emerged on the romanian stock market are represented by: the process of deregulation, the internationalisation of the national stock markets, the financial innovation, doubled by the development of the institutional investors. thus, even if it is far from being a well developed stock market, the international trends that exist on the mature stock markets, like london or paris, are already emerging on the romanian one. methodological considerations as financial dates are becoming more available, the researchers have the opportunity to examine more in depth aspects of european financial integration, like cross-boarders investments and their impact on financial integration1. after an extended literature review we have concluded that these researches tend to underline the idea that financial integration among euro zone countries is fair higher when compared with the other european union member states. the most recent studies reviewed argue that the difference is anywhere 1 lane, p.r. (2008), emu and financial integration, in: the euro at ten: 5th european central banking conference, lucrezia reichlin, ed. ecb, brussels, pp. 12; 2 e.g. ekinki, kalemli-ozcan, and sorensen 2008; portes and rey 2005; guiso, sapienza, and zingales 2009 studies and scientific researches economic edition, no. 15, 2010 135 between 200-300%, which may seem a little bit unrealistic. this is happening because the time spam that the research covers is to short, and this is forcing a more direct method of research, like a cross-sectional approach, that compare integration on a pair of countries rather than a whole area. using this method we cannot account for time-invariant factors like geographical distances, cultural ties or trust, that are having a determinate effect on the whole integration process2. beside this, the lack of clear dates regarding the before and after period of european ascension, there is hard to separate the integration effect from other factors, like reform or global trends (in this way we might have a reasonable explanation for the inflated figures above). but the bottom line is that even if acknowledged these limitations, because of the confusing nature of these factors, we do not have a clear view over the impact of the european financial integration process. in this regard, our methodological approach was more qualitative, establishing the main trend from the developed stock markets and underling their overall impact on the romanian stock market. we have used in our analyses raw dates provided by the bucharest stock exchange underlying directly the shifts that have occurred in the volume of transaction and capitalisation of the exchange, as a result of romanian integration into the european union. the volatility of the stock markets was calculated as standard deviation of daily returns. the implications of the european financial integration process on the development of the romanian stock market the key for obtaining a sustainable economic growth in the european union, making it more efficient and competitive, is represented by the integration of the financial sector. the single market for european financial products and services will have an important contribution to the increasing of the european union economy as a whole. for example, if the financial integration of the european union will lead to the same level of development in the financial sector as in the united states, the net growth of the real economy of the eu will be stimulate directly with more than one percent every year3. for romania, the integration in the european union from 1st of january 2007 marked the enhancement of the integration process of the financial sector. foreign investors tend now to invest more in romania as a result of better guarantees regarding their property right and also because of the fact that romania, as part of the european union, has implemented also the european financial passport. we must also acknowledge the fact that the romanian stock market has become more exposed to systemic risks, as a result of the european integration process. the domino effect that emerged in all of the european union member countries, as a result of the financial crises started in 2007, had a catastrophically effect on the romanian stock market. 3 liebscher k., christl j., mooslechner p., ritzberger-grünwald d. (2006), financial development, integration and stability evidence from central, eastern and south-eastern europe, cheltenham, united kingdom, pp.21 studies and scientific researches economic edition, no. 15, 2010 136 figure. 1. the evolution of the overall transactions value and capitalisation at the bucharest stock exchange between 1999 and 2009 (eur) source: own simulation based on the dates provided by the bucharest stock exchange it is obvious that after the integration in the european union, on the 1st of january 2007, the bucharest stock exchange registered an important raise both in the overall transactions value (with an increase in value of 48% compared to 2006) and in the value of its capitalisation (with a raise of 14% compared to 2006). even if we cannot attribute the whole raise in value to the integration process, it is more than obvious that this event played a catalytically role. even if the integration of the romanian stock market has been a stimulating factor for its development, its gains must be enhanced by its future evolution. taking this into consideration, the bsx has three options regarding its sustainable development: to continue its activity as an independent marketin this sense the bsx must lunch new financial instruments, as a result of financial innovation, in order to attract new and sophisticated investors and so to raise its assets. in order to survive it must also cut down its cost and increase its revenues. regarding cost cuts, bsx could implement another’s stock exchange software solution, if it will mean a more optimal way of handling business, both from a cost and managerial point of view, rather continuously developing and updating its own software solution. to initiate an alliance or a merger with another similar in size stock exchange from the region – in this regard the bsx is already having collaborations with the stock exchanges from vienna and salonika and also with other stock exchanges from around the globe, meant to increase its liquidity and reduce its costs. unfortunately these collaboration are rather more formal that functional operations. a good example in this case is the collaboration with the salonika stock exchange, which was signed at the end of 2003 and aimed at the development of a dedicated market segment entitled „new market”, which was supposed to handle small and medium size enterprises (smes). unfortunately not even today this segment hasn’t become operational. in the same sense, because of the formal and minimal collaboration that existed so far, the agreement with the vienna stock exchange hasn’t provided the anticipated international exposure and hype, that such an active partnership will had have granted on the more underexposed market. to merge or to forge an alliance with a developed stock market – until now only omx has expressed a direct interest in acquiring bsx, as other major stock market from europe are more interested in partnerships with other major stock market and only have a side interest in acquiring smaller exchanges. the omx offer has come as part of a broader approach that the nordic stock exchange has on eastern europe. its strategy aimed at implementing its own transaction platform, creating in this way the premises of attracting a larger number of investors from this region to its products. in practice the stock exchanges will have had remained separate entities, but for the investor the companies will have had appeared on his transaction screen as if they were listed all on the same market. at this point the bsx is using is very own „in house brewed” transactional software entitled arena. the integration of the companies listed on all the exchanges on the same platform will have had raised the exposure of the companies from the smaller and underexposed markets, making them more visible for the international institutional investors. in this perspective bsx had only to lose from its refusal to join omx in this partnership. taking in to consideration only the opinion of the board of directors of bsx, the refusal had denied the bsx access to the main two trumps of omx – experience and technology. regardless of the path that bsx will choose, in the future, the main characteristic of its development will be cooperation, especially in the context of romania’s ascension to the european union and the deepening of the convergence process, as a result of the preparation for the future transition to the euro. for now, bsx continues to follow closely the trends of studies and scientific researches economic edition, no. 15, 2010 137 the major european stock markets, pursuing its own “organic” development, which will allow it to obtain the maximum benefits from a future possible alliance or merger. deregulation, reregulation and the impact of financial innovation on the romanian stock market at the end of the eight decade of the past century, the stock markets have been hit by a wave of deregulation which included the loosening of the supervision and control regimes. the aim of these changes was to enhance competition and to raise the efficiency of the stock market in general. the big-bag of the london stock exchange in 1986 followed by the big bang of the france stock market in january 1988 and that of the belgium stock market in 1989 have no parallel in the romanian economy since in that period the romanian stock market didn’t even exist. even if it was lunched much later, in 1995, the romanian stock market has been affected by these changes. a good example in this case is the privatisation of the romanian stock market in 2005, which was transformed in an incorporated company (the shares of the new company being equally split between the financial services companies that were active on that date on the market). the only ones who are allowed to own shares at the romanian stock market are the financial services companies. private persons, firms or even institutional investors are forbidden to own a share in the entity. this is the opposite of the situation on other stock markets like deutche borsa were almost 97% of the shares of the stock market are owed by institutional investors, the rest being in the possession of private persons. each stock market has its own policy regarding the management of its shares and the way they are traded. most of the developed stock markets are public companies, often being traded on their own floor. the bucharest stock exchange is also considering such an approach. another tendency present on most of the developed stock markets, which is also a result of the deregulation process, is the constant innovation of financial services. probably the most known financial innovation which is becoming available also on the bucharest stock exchange is represented by derivates as means to diminish the risk allocated to transactions. in the developed countries these products have a long standing tradition, being highly appreciated by investors. chicago is the main market in the world with regard to derivates, a proving fact being the inauguration of the chicago board of trade in 19704. to underline the rapid development of this sector we must also take into consideration the development of such products and the beginning of trade at the bucharest stock exchange starting from 2007. figure. 2 – the development of the future contracts market from the bucharest stock exchange between 2007 and march 2010 (total value of future contracts eur) 4 gaftoniuc, simona (2000), international finances, economic publishing house, bucharest, pp. 380 studies and scientific researches economic edition, no. 15, 2010 138 source: own simulation based on the dates provided by romanian business digest as we can observe, all the values of the indicators of the future contracts market from the bucharest stock exchange are much higher in 2009 when compared to 2008 or 2007, which shows that this sector is developing fast. besides the aspects presented regarding the effects of the deregulation process on the bucharest stock exchange, we must also take into consideration the regulation of the romanian stock market. the romanian stock market is regulated through the 297/2004 law regarding the stock market and its activities, which was developed in concordance with the european directives in the field, taking into account a possible merger or acquisition of the bucharest stock exchange by a larger european counterpart5. in the current economic context, were the systemic risk has emerged especially on the more deregulated stock markets, there is a large debate about re-regulation with regard to the stock market sector and its components. the impact of internationalisation on the romanian stock market maybe the most visible trends on the developed stock market were represented by internationalisation and globalisation. the internationalisation of a stock market refers to its capacity to integrate itself in the global network of financial transactions and stock trades. the internationalisation of a stock market allows the firms that are listed on it to get access to a broader range of financing sources and also to get access to more advance products and services. a good way to measure the internationalisation of a stock market is to account the number of foreign investors that operate on it. for example, on the bucharest stock exchange in 2007 the number of foreign investors represented 40% of the total number of investors on the market. another aspect of internationalisation is represented by the way in which stock markets from around the world interact with each other, the bsx being no exception from this rule. a good example in this case was the current financial crisis which has affected in a direct way the bsx through its relationships with outside markets and investors. as part of their anti risk strategy the foreign investors have sold their participation on the bucharest stock exchange, diminishing through this their exposure on emerging markets. this action has driven the prices down far beyond the reasonable barrier. in the light of this situation the positions of the foreign investors on the bucharest stock exchange has shifted from net buyers, between 2002 and 2007, to net sellers in 2008. this came as a natural consequence to the economic downturn. in 2009 however, the situation has reversed. figure. 3. the evolution of bucharest stock exchange trades by foreign investors between 2005 and 2009 source: intercapital invest sa – 2009 report regarding the evolution of the romanian stock market, at the address www.intercapital.ro 5 anghelache, gabriela (2005), current regulation of the stock market, economic publishing house, bucharest, pp. 137 studies and scientific researches economic edition, no. 15, 2010 139 the downfall of the bucharest stock exchange was amplified by the fact that most of the local investors had speculative interests and at the first signee of trouble sold their portfolio and cashed in their investments. these premises made possible the situation were in the 3rd quarter of 2008 for several days many top companies listed at bucharest stock exchange were forbidden to trade since no offers for buying were made in the ±15% margin. this lead to a historical premier on 8 of october 2008 when trading was stopped for the first time in the bucharest stock exchange history. these events translated themselves in a drop in capitalisation for the bucharest stock exchange from 24 billion eur at the beginning of 2008 to 11 billion at the end of the same year. the bet index has fallen 70% during 2008 and the bet-fi index 85%6, all these negative trends being related directly to the economic and financial distress that characterised the developed stock markets in 2008. the domino effect that characterised the developed stock markets from around the world didn’t mist romania, as we acknowledged earlier, the internationalisation and integration process raising its exposure to systemic risks. as a result of this, the correlation between the bet index and the other regional and international indexes has become the main factor behind the investment decisions on the bucharest stock exchange and not the economic forecast or performances of the firms listed there. it became obvious that the bet index is very well correlated with the other regional indexes like the ones from poland, hungary or the czech republic, this fact being obvious also from the graphic below: figure. 4. the correlation between the romanian stock market and the other stock markets from the region in 2008 (the czech republic, poland, hungary) source: intercapital invest sa – 2009 report regarding the evolution of the romanian stock market, at the address www.intercapital.ro it has also become obvious that the bet index had a higher raise that the other indexes in the region and also a bigger fall. this fact is due to the high volatility that characterises the romanian stock market. in 2009, the correlation between the bet index and the indexes from the czech republic, poland and hungary has been also strong, recording values near the ones from 2008 (0.99 between bet and px, 0.98 with wig and 0.97 with bux). the title of the bet index, as the most volatile index in the region, has been proven once more in 2009. this is evident if we compare the volatility of the bet for 2009, which was 2.58%, with the one of px 1.97%, or the one of wig 1.80% or bux 2.30%. these facts underline the idea that the evolution of the firms listed at the bucharest stock exchange had a marginal impact on the evolution of their stock prices. 6 intercapital invest sa – 2008 report regarding the evolution of the romanian stock market, at the address www.intercapital.ro studies and scientific researches economic edition, no. 15, 2010 140 the conclusion is that, during instable periods, the transactions made by foreign investors and the financial climate are the determinant factors regarding the pricing of shares listed at the bucharest stock exchange. the internationalisation process that has characterised the bucharest stock exchange in the last years was sparked by the fact that romania has become a member of the european union. this event has allowed the romanian stock market to gain momentum in the context of safer investments, better regulations and better integration in the european and global financial system. even if this are positive trends, and the stock market represented 22% of the 2007 gdp, romania has a long way to go, even if it had to top its neighbours, with poland stock market representing 60% of the gdp or even hungary with a stock market that makes up for almost 37% of gdp. as a sign of openness and internationalisation, the bucharest stock exchange has developed several regional partnerships with other stock markets. so, in 2003 the bucharest stock exchange has signed a partnership with the salonika stock exchange in order to develop a segment for sme, like every developed stock market has7, this project being still in the development stage. also, collaboration has been started in 2004 with the vienna stock market, which has launched in 2005 in collaboration with bucharest stock exchange a common index – rotx (romanian trade index). it is estimated that over 250 million eur were invested in romanian firms listed at bucharest stock exchange as a result of the partnership with the vienna stock market. even if this sum may seam large, in reality is well behind the one that a working partnership may have produced over such a period of time. the raise of institutional investors and its impact on the romanian stock market one of the most visible trends on the developed stock markets and which is also becoming more and more familiar to emerging stock market also, like romania, is the raise of the institutional investors. unfortunately due to deficiencies in legislation the raise of the institutional investors didn’t have the hoped effect on the romanian stock market. there are two main categories of institutional investors in romania: the financial services firms and the open investments funds. the financial services firms represent the main institutional investors on the romanian stock market. their evolution has been solid, as a result of the vast privatisation process, started in the mid 90, were 30% of the state firms were privatised through these financial services firms. the investment funds market is still underdeveloped in romania, this fact being evident also from the statistics listed below: table no. 1. the evolution of mutual investment funds between 2003 and 2009 country 2003 2004 2005 2006 2007 2008 2009 usa 8.126 8.041 7.975 8.118 8.029 8.045 8.209 france 7.902 7.908 7.758 8.092 8.243 8.451 8.038 hungary 96 97 91 92 212 258 337 slovakia 37 40 43 43 54 60 70 romania 20 19 23 32 41 53 51 (source: the european funds and esset management association efama, at the address www.efama.org) as we can see from the table the situation regarding the investments funds in romania is more than grim. this is a consequence of the fact that most of the investments are done 7 stoica, ovidiu, the perspectives of the integration of the romanian stock market in a single european stock market, west university publishing house, timisoara, 2005, pp. 295 studies and scientific researches economic edition, no. 15, 2010 141 through deposits. the main factor that could contribute to the development of the investments funds in romania and also to the development of the stock market in general are represented by: a drop in the banking interest rates (which could determine the investors to seek higher revenues in other sectors like the stock market), the raise of the average income, the reform of the pension sector, the raise of the level of financial education that each citizen is receiving and non the least the diversification and sophistication of the products and services that are available in the stock market sector. conclusions in all the trends and characteristics that we have presented here, there is a certain level of interdependence and determination that allows and stimulates the interaction and integration of stock markets all around the world. taking into consideration the fact that, in general, the stock market is a measuring device for all social, economical and political decision and events, the state in which the romanian stock market finds itself proves the fact that there is a long and hard way to go until the full convergence of the economy and the social-political system will be completed. the development of new products, the extension of partnerships with other regional stock markets, doublet by a better regulatory and control system are necessary steps for the development of the romanian stock market. but we must not forget that these are only the first ones in a long road that must be undertaken in order to integrate the romanian stock market in the european financial main stream system. bibliography 1. anghelache, gabriela (2005), current regulation of the stock market, economic publishing house, bucharest 2. charles roxburgh et al. (2009), global capital markets: entering a new era, mckinsey global institute 3. ekinki, m., kalemli-ozcan, f., and sorensen, b. (2007) capital flows within eu countries: the role of institutions, confidence and trust, nber international seminar on macroeconomics, new york; 4. gaftoniuc, simona (2000), international finances, economic publishing house, bucharest 5. guiso, l., sapienza, p. and zingales, l. (2009), cultural biases in economic exchange?, quarterly journal of economics, 124 (3): 1095–1131; 6. juvin herve (2004), les marches financiers, editions d'organisation, paris 7. intercapital invest sa (2008)– report regarding the evolution of the romanian stock market, at the address www.intercapital.ro 8. intercapital invest sa (2009)– report regarding the evolution of the romanian stock market, at the address www.intercapital.ro 9. lane, p.r. (2008), emu and financial integration, in: the euro at ten: 5th european central banking conference, lucrezia reichlin, ed. ecb, brussels; 10. liebscher k., christl j., mooslechner p., ritzberger-grünwald d. (2006), financial development, integration and stability evidence from central, eastern and south-eastern europe, cheltenham, united kingdom. 11. portes, r. and rey, h. (2005), the determinants of cross-border equity flows, journal of international economics, 65 (2): 269-296; 12. stoica, ovidiu (2005), the perspectives of the integration of the romanian stock market in a single european stock market, west university publishing house, timisoara 13. http://www.bvb.ro 14. http://www.finextra.com 15. http://www.efama.org 16. http://rbd.doingbusiness.ro 17. http://www.kmarket.ro studies and scientific researches economic edition, no. 15, 2010 142 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 33, 2021 http://sceco.ub.ro 33 relativity of accounting values: causes, consequences and limitation possibilities mihaela enachi “vasile alecsandri” university of bacău enachi_mihaela@yahoo.com daniel botez “vasile alecsandri” university of bacău daniel63331@yahoo.com abstract accounting is influenced by a variety of historical, economic, cultural, and other nonaccounting factors that led to different judgments in creating a system for representing the reality, the application of regulated requirements and the validation of the fidelity of the information in the annual financial statements, as a final product of accounting. in this article, we focus on the main determinants of the relativity of the values that characterize the events in the life of an organization, which can determine the different reporting of similar realities. thus, we focus on the influence of taxation on accounting, on accounting policies and management decisions and the professional judgment in forming an opinion on the financial statements and we try to identify solutions to limit the relativity of the accounting values. keywords professional judgment; regulatory framework; taxation; accounting policies; management decisions; faithful representation jel classification m41; m42 introduction accounting values are the result of the professional judgments used in preparing and applying regulations, but also in the examination made in order to appreciate the compliance with regulations. so, the quality of the professional judgments exercised in creating and implementing a system for accounting representation of reality, although partially controlled, is essential in increasing the reliability of the information provided by accounting (enachi & andone, 2015). to support the preparers, auditors, regulators and standard setters, the institute of chartered accountants of scotland (2012) elaborated a professional judgement framework for financial reporting. this framework presents the principles of a professional judgement for preparers (knowledge gathering and analysis, assessment of accounting guidance, process for making a judgement, documentation of judgement), auditors (knowledge gathering and analysis, assessment of accounting and auditing guidance, process for assessing and challenging the client’s judgement, documentation of judgement) and regulators (review of financial statements, review of preparer and auditor documentation, decision) and illustrative lists of actions that to undertake in order to apply the principles. in what follows, we present the implications of using human judgment over the information reported by accounting, emphasizing the main aspects, by briefly describing three categories of determinants of relativity and ignoring the anomalies in enachi, botez 34 accounting regulations and the accounting system that could not be discovered and corrected by regulators, entity staff or auditors. at the end of the paper, we present some measures that could be taken in order to limit the distortions of accounting information. the influence of taxation on accounting accounting and taxation exist for different reasons (simon, 2013). they have different objectives, are subject to different rules and serve different purposes (green, 1995, cited by simon, 2013). however, there is an interdependence between accounting and taxation, and in the particular case where the specific regulations of the two branches are developed by the same body, the interdependence is even closer (istrate, 1999). in this paragraph, we focus on the influence of taxation on accounting and try to identify the main tools it uses. for example, according to the fiscal regulations in some countries, the fiscal year is the calendar year, and the taxpayers who have opted, in accordance with the accounting regulations, for a financial year different from the calendar year can choose the fiscal year to correspond to the financial year. such an option will normally lead to different values of the taxable bases and implicitly to different amounts to be paid to the state. even without the existence of such an option, the separation by calendar years of financial years, considered by some authors artificial (pham, 1989, cited by ciumag, 2004), does not, compulsory, have the capacity to ensure the comparability of information in time and space. thus, the balance sheet shows the situation of the assets, liabilities and equity at a given time, and that time may not be representative in the life of the entity. depending on the field that the entity operates (for example, the seasonality of the services provided) we can see completely different values at the end of the financial year compared to those recorded in most other months of the year. pop, fekete and cuzdriorean (2013) found evidence, on behavioral level, that individuals indeed perceive some influence of taxation over accounting, since their choices in practice are fiscal-driven and not accounting driven and this in case of recognition of non-current assets, depreciation, revaluation, provisions. taxation affects accounting because entities, instead of keeping two types of records, one exclusively accounting and one in relation to the state, prefer, for reasons of effort and costs, to keep a single accounting record influenced by taxation (istrate, 2011) in many countries of the world, both in the reflection of different categories of expenses (depreciation, taxes etc.) and in the reflection of the values of some assets, sometimes the latter being the cause of the different reflection of expenses. taxation imposes rules and procedures, sometimes with the possibility of selecting the desired option, but also offers advantages under certain conditions. thus, we find in the fiscal regulations express provisions regarding the depreciation methods that can be applied, by categories of assets, the calculation method of the taxable result, the value added tax rate for different categories of goods or services, the rates related to the state budget contributions, social insurance budget, special funds and the manner of determining the taxable matter in their case etc., the tax rate on the result obtained or income for different categories of entities, tax facilities granted under certain conditions and other similar provisions with influence on the values recorded in accounting. especially since changes in tax regulations occur frequently, we cannot talk about relevant comparisons in time and space, characteristics that must be met in providing information through financial statements. relativity of accounting values: causes, consequences and limitation possibilities 35 accounting practices and their influence on the accounting values in this section of the paper, we bring into discussion the accounting practices, which consist of accounting policies and management decisions with influence on the information provided by accounting. these represent the main way of manipulating accounting information, at the disposal of those who record the events in which the organization is involved. in fact, financial scandals are based on either the discovery of false information or the discovery of the use of techniques to disguise the real situation, known as creative accounting (malciu, 1998). mulford and comiskey (2002) present a classification scheme for the creative accounting practices that includes: recognizing premature or fictitious revenue; aggressive capitalization and extended amortization policies; misreported assets and liabilities; getting creative with the income statements; problems with cash-flow reporting. we can add to this scheme the influence exercised through the explanatory notes to the financial statements. the objectives of creative accounting usually are to meet stakeholder’s expectations, to achieve internal goals, to attract the investors, getting tax incentives, income smoothing and enhancing the market value of shares etc. (khaneja & bhargava, 2017). international accounting standard 8 accounting policies, changes in accounting estimates and errors defines accounting policies as the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. accounting policies include the options of the managers regarding the accounting variables (malciu, 1999). in a broad sense, the accounting policies refer to (casta and ramond, 2009): the choice (or modification) of evaluation methods relating to annual, consolidated or half-yearly financial statements, and more particularly including the choice of modeling the fair value of assets and liabilities; the choice (or the modification) of the methods of presentation of the annual, consolidated or halfyearly financial statements; determining the volume and degree of aggregation of information published in the financial statements and more particularly in the appendix of annual or consolidated accounts; determining the information published in the management report relating to the annual (or consolidated) accounts as well as in the half-yearly report to the charge of listed companies; determining the date of disclosure of financial information; the voluntary publication of optional financial statements or information relating to the running of the business; the choice (or change) of external auditors; early transition to the international accounting standards board (iasb) or alignment with that of the financial accounting standards board (fasb); the choice of reporting format and performance indicators (net income, operating income, comprehensive income); the very exceptional abandonment of certain fundamental accounting principles, such as the principle of business continuity, or clearly identified normative provisions according to the principle of overriding. in the process of applying accounting policies, management makes several professional judgments (apart from those involving estimates) that can significantly affect the values recognized in the financial statements (feleagă et al, 2008). if, through accounting policies, different selections of appropriate accounting practices are captured in a given regulatory framework, management decisions refer to different operations that are actually performed by the entity in order to avoid legal or organizational boundaries. thus, the main purpose of these operations is to give a different image of the company, even if they do not fundamentally change its situation. (dumitrescu, 2014). enachi, botez 36 malciu (1999) presents some example of accounting practices that consist in management decisions with impact on the result recorded by organizations: leaseback operations; artificial assignment of investment securities; circular transactions; stored production etc. an important problem caused by some of the accounting practices is that different presentation in accounting of similar realities leads by default to the distortion of information at macroeconomic level. having no access to information inside the company, except in very special situations, the external users of the information provided by accounting are subject to real risks when their decision is not well documented starting from possible causes generating distorted information. the professional judgment in forming an opinion on the financial statements the performance criterion of accounting is the fair view, the extent to which it renders the objective reality, through a complete and pertinent information on economic facts and processes, expressible in monetary standard (horomnea et al, 2008). the impartial examination of the fidelity of the information contained mainly in the financial statements of the company is performed through financial audit (horomnea, 2010), a complex activity, which cannot be regulated in detail, cannot being established valid universal recipes because the situations faced by the auditor are very different (dănescu, 2007). thus, the activity of the financial auditor revolves around professional judgment that involves complex professional training, ability, sense of responsibility, independence, professionalism etc. (dănescu, 2007). an audit of financial statements provides a reasonable assurance, which means a high, but not absolute, level of assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error (iaasb, 2018). the auditors cannot obtain an absolute assurance, especially because there are inherent limitations of an audit caused by factors such as: the use of sampling; the shortcomings of any accounting and internal control system; the fact that most evidence is persuasive rather than conclusive based on deductions rather than beliefs; the need for the audit to be conducted within a reasonable period of time and at a reasonable cost) and the fact that the opinion is based on professional judgment used in obtaining sufficient appropriate evidence (e.g., decision of nature, timing and extent of the audit procedures) and drawing conclusions based on the evidence obtained (e.g., evaluating the reasonableness of the accounting estimates when preparing the financial statements). thus, the examination made by professional, in order to appreciate the compliance with regulations, can lead to an increased confidence in a more or less faithful image of the financial position, performance and changes in financial position of an organization (enachi & andone, 2015). according to iaasb (2018), the professional judgment represents the application of relevant training, knowledge and experience, within the context provided by auditing, accounting and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement. given the broad intervention of professional judgment, with its subjectivity, the process of auditing financial statements (summary reports, having public character, reflecting the financial position, performance and changes in the financial position of an entity) in order to increase their credibility is affected by a number of factors. relativity of accounting values: causes, consequences and limitation possibilities 37 as grady (1968) sustained, the factors whose combined impact makes it questionable whether the certified public accountant can obtain a fair trial are: 1) it is almost impossible to remove the effect of subsequent events and hindsight and to recreate the environment existing when the examination was made; 2) a lay jury is likely to expect a degree of skill equivalent to infallibility from the cpa; 3) in any suit for damages, where any degree of negligence is found and it is known there is insurance coverage, the jury is likely to be unduly liberal in the measurement of the damages; 4) very few, if any, members of a jury can follow and understand the complex financial transactions and technical testimony presented; 5) where alleged violations of the securities act is involved, burden of proof is shifted to the cpa under the terms of the statute. thus, due to the factors described above, an audit does not constitute a guarantee that the financial reports are free from material misstatement and the entity can continue as a going concern. international standard on auditing 570 going concern presents several events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern and the evaluation of management’s plans for future actions as part of the audit process. the current practice of presenting most of the information over several financial years can facilitate the appreciation of the future, but the direct indication of some prospective information, depending on needs and intentions, supports the process of estimating the future of the financial position, performance and changes in the financial position of the entity, providing to the users, through certification, useful information in making decisions. in this context, the examination of financial reports that contain prospective information involves taking into account additional aspects of those currently addressed. in this regard, isae 3400 the examination of prospective financial information mention that the auditor should obtain sufficient appropriate evidence as to whether: management’s best-estimate assumptions on which the prospective financial information is based are not unreasonable and, in the case of hypothetical assumptions, such assumptions are consistent with the purpose of the information; the prospective financial information is properly prepared on the basis of the assumptions; the prospective financial information is properly presented and all material assumptions are adequately disclosed, including a clear indication as to whether they are best-estimate assumptions or hypothetical assumptions; and the prospective financial information is prepared on a consistent basis with historical financial statements, using appropriate accounting principles. although the opinion of a professional increases the credibility of the financial statements, according to iaasb (2018) the user should not consider this opinion as a guarantee of the future viability of the entity or the efficiency or effectiveness with which management conducted the activities. possible solutions to limit the relativity of accounting values being known the importance of professional judgment in establishing the accounting values, a first solution that should be taken in order to increase the credibility of accounting is to accentuate the importance of principles by adopting an ethical code for the professional accountants and designing a regulatory framework which to be the result of an optimal combination between rules and principles (more difficult to avoid by practitioners even if it involves the widespread use of professional judgment). we must be aware that the use of a more appropriate principle would reduce the need for arbitrary and detailed rules and these do not mean that a enachi, botez 38 principles-based standard is always better than a rules-based standard or that concentration on principles will always lead to less complex rules (nobes, 2005). other solutions aim to reducing the number of alternative accounting processing allowed and reducing the implication of taxation on accounting especially by providing taxable bases and rates applicable to them that are adequate and as stable as possible over time. referring to the work of auditors, we consider very important increasing emphasis on professional skepticism, defined by iaasb (2018) as an attitude that includes the application of a questioning mindset in the context of an appropriate understanding of the entity, its business and the environment in which it operates. in this respect, the auditors should use not only their personal judgments but also some specialized programs in detecting the manipulation of information. other solutions consider rethinking the structure and the content of the financial statements, the only resource available to external users. so, increasing the transparency of the activities unrolled and the results obtained could be made by requesting preparers to include in the financial statements certain non-financial and prospective information, even they cannot be measured in numbers, and formalizing all the components of the financial reports so that to assure that the presentation of relevant information, especially in the explanatory notes, is not avoided. all these measures aim to offer the accounting the possibility of transposing the reality as objective as possible. in order to reduce the risk of being affected in decision-making process, when we base on the information provided by accounting, we need to perform time and space analyzes in order to detect possible deviations from the current trend or unusual values, observe the correlations between information in the financial statements over time (for example, correlations between cash flows and accounting results), additional information provided by entities regarding changes in accounting policies, the intentions and expected evolution of the entity and existing links with other entities (through the participation titles held or family links) that carry out activity in the same field or situated immediately upstream or downstream. conclusions for the unitary judgment of events, at least at local level, although at international level it is much more relevant, and, implicitly, the provision of comparable information in time and space, we must, first of all, appropriately and clearly define the content of accounting regulations and those specific to the audit activity and to reduce, as much as possible, the role of taxation in determining the accounting values. obviously, the quality of professional judgments, determined by a number of internal and external factors, plays a decisive role in ensuring faithful representation of the relevant information in the life of an organization. references casta, j.-f., ramond. o. (2009), politique comptable des entreprises, coordonné par b. colasse. encyclopédie de comptabilité, contrôle de gestion et audit, paris, economica, 1151-1165, available at https://halshs.archives-ouvertes.fr/halshs00679562/document. ciumag, m. 2004, accounting principles and fiscal rules, available at http://mpra.ub.uni-muenchen.de/14963. dănescu, t. (2007), audit financiar: convergenţe între teorie şi practică, bucureşti, relativity of accounting values: causes, consequences and limitation possibilities 39 editura irecson. dumitrescu, a.-s. (2014), contabilitate creative: de la idee la bani: cu exemple practice, bucureşti, editura economică. enachi, m., andone, i. (2015), from instrumentalism to realism in accounting, journal of economic & financial studies, volume 3, number 03, 53-57, usa, lar centre press. feleaga, n., feleagă, l., albu, n., bunea, ş., săcărin, m., coman, n., gîrbină, m.m., gorgan, c., morariu, m.c., diaconu, p. and avram v. (2008), politici şi opţiuni contabile, bucureşti, editura infomega. grady p. (1968, march), realism and professionalism in accounting, new york certified public accountant, volume 38(000003), 179-185, available at http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/ 214527606. horomnea, e. (2010), audit financiar. concepte. standarde. norme (ediţie revizuită şi actualizată), iaşi, editura alfa. horomnea, e. (coord), tabără, n., budugan, d., georgescu, i., beţianu, l. (2008), bazele contabilităţii. concepte. modele. aplicaţii, iaşi, editura sedcom libris. iaasb (2018), handbook of international quality control, auditing, review, other assurance, and related services pronouncements, volume i and volume ii, new york, international auditing and assurance standards board. istrate c. (2011), évolutions recentes de la relation entre la comptabilite et la fiscalite en roumanie, comptabilités, économie et société, montpellier, france, working paper, available at: http://hal.archives-ouvertes.fr/docs/00/65/04/68/ pdf/istrate.pdf, consulted at 10.09.2012. istrate, c. (1999), fiscalitate şi contabilitate în cadrul firmei, iaşi, editura polirom. khaneja, s., bhargava, v. (2017), a comprehensive review of literature on creative accounting. international journal of business insights and transformation, volume 10(1), 46-60, available at https://www-proquest-com.am.enformation.ro/scholarly-journals/comprehensive-review-literature-on-creative/ docview/2092823213/se-2?accountid=136549. malciu, l. (1998), cererea şi oferta de informaţii contabile, bucureşti editura economică. malciu, l. (1999), contabilitate creativă, bucureşti, editura economică. mulford, c.w., comiskey, e.e. (2002), the financial numbers game: detecting creative accounting practices, new jersey, john wiley & sons inc. nobes, c.w. (2005), rules-based standards and the lack of principles in accounting. accounting horizons, volume 19, issue 1, 25-34, sarasota, florida, usa, american accounting association. pop, i., fekete, s., cuzdriorean, d.d. (2013), relationship between accounting and taxation in romania: a behavioral analysis, annales universitatis apulensis series oeconomica, volume 15(1). simon, j. (2013), the relationship between accounting and taxation, united kingdom, university of exeter press. the institute of chartered accountants of scotland (2012), a professional judgement framework for financial reporting: an international guide for preparers, auditors, regulators and standard setters, edinburgh, icas. * * * https://www.ifrs.org/issued-standards/list-of-standards/. (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 65 particular aspects regarding entrepreneur and entrepreneurial culture catalin drob “vasile alecsandri” university of bacau e-mail: catad@ub abstract the goal of this article is to emphasize the main aspects which characterize the notions of entrepreneur, entrepreneurship and entrepreneurial culture. the notion of entrepreneur has been introduced in the economic literature since the late seventeenth century. entrepreneurial culture is a newly concept that has been introduced in the economic literature since the 60s of last century. entrepreneurial culture is a complex notion that refers to values, beliefs and attitudes shared in a society, which characterize entrepreneurial lifestyle. also, this paper contains a study case, which consists in presentation and interpretation of the responses to a questionnaire regarding specific aspects of the entrepreneurship and entrepreneurial culture. the responses to this questionnaire show, among others, the student’s interest for business and the entrepreneurial values which can contribute to business success. keywords entrepreneur; entrepreneurial culture; students; economic development jel classification l26 1. general consideration regarding entrepreneur, entrepreneurship and entrepreneurial culture in the economic theory, were proposed, along time, several definitions regarding the concept of entrepreneur. initially, this notion has been used in the economic theory to describe the founder of a business enterprise. richard cantillon (1680-1734) was considered the first economist who used the term of entrepreneur. in the economic theory, the richard cantillon's contribution regarding this term is that he argues that the entrepreneurial function is manifested in the economic system both at micro and macroeconomic level. jean-baptiste say (1767-1832) was another great economist who contributed to introduce the term of entrepreneur in the economic theory. both r. cantillon and j.b. say considered that entrepreneurs are "risk-takers" because they risk investing their own money. in the early twentieth century, joseph schumpeter was the one who gave a new meaning to the term of entrepreneur. in the schumpeter's view, the entrepreneur is a man of action who has the courage, vision, creative spirit and ability to create something new. also, schumpeter highlighted the importance and the role of entrepreneurs in the economic development of a country. at the end of the twentieth century, peter drucker has proposed a new approach concerning entrepreneurs and entrepreneurship based on the theories of j.b. say and j. schumpeter regarding the entrepreneur. in the drucker's view, the entrepreneur is the person which seeking change, reacts to it and exploits it as an opportunity. entrepreneurs realizes the change through the innovation. particular aspects regarding entrepreneur and entrepreneurial culture 66 list of the economists who have approached the problematic of the entrepreneur and of the entrepreneurship is very long. among the personalities who have made contributions to the development of economic theory in this area we can enumerate on f. h. knight, m. weber, l. walras and i.m. kirzner. but what is the entrepreneurship? entrepreneurship can be defined as a behavioral characteristic of the entrepreneur and, also, as a process. as stated by the commission of the european communities (2003), the entrepreneurship is the mindset and process to create and develop economic activity by blending risk-taking, creativity and/or innovation with sound management, within a new or an existing organization. a relatively new term that relates to entrepreneurs and entrepreneurship is the entrepreneurial culture. entrepreneurial culture can be considered a subtype of culture oriented towards entrepreneurship. as stated by wong (2014), entrepreneurial culture can be defined as a set of values, beliefs and attitudes shared within an organization or a society and which characterizes entrepreneurial lifestyle. the attributes and characteristics entrepreneurial culture arising from the definition of the entrepreneur and of the entrepreneurship. thus, among the entrepreneurial culture characteristics we can include: encouraging risk; tolerating failure; promoting innovation product encourage the improvement and continuous change; vision and passion for business etc. many authors who studied the relation between entrepreneurship and economic development have provided empirical evidences which shows that there is strong and positive relation between entrepreneurship and economic development. also, as stated by beugelsdijk (2007) the entrepreneurial culture is related to economic growth. 2. study about the student’s vision regarding entrepreneurs and entrepreneurial culture the objective of this research was to shows the students' interest regarding development an own business and the to identify the true values who should characterize an entrepreneur and an authentic entrepreneurial culture. the method used in this article is based on a questionnaire applied on 200 students of the “vasile alecsandri” university of bacau, engineering faculty, who are in the last year of study. the questionnaire included the following questions: 1. are you interested in developing your own business? a) yes; b) no; c) i don’t know. 2. when do you think that it's time to open a business? a) during the faculty; b) immediately after the graduation of the faculty; c) after gaining experience in business/work; d) when will appear a business opportunity; e) when i will have enough capital. 3. what would the reasons for which you would open a business? a) financial independence; b) personal fulfillment; c) chance to implement personal ideas; d) the possibility of being own boss. 4. in your opinion, which are the main factors that contribute to business success? a) vision; b) risk-taking; c) identification and exploit of opportunities; d) business ethics; e) motivation; f) passion; g) enthusiasm; h) chance; i) perseverance; j) innovation. 5. in your opinion, which are the main obstacles to opening your own business? a) lack of capital; b) the uncertainty of the economic environment; c) fear of failure; d) excessive bureaucracy; e) fierce competition in the business; f) lack of opportunities/business idea; g) lack of entrepreneurial skills. drob 67 6. which do you think are the main risks arising from opening a business? a) possibility to record a professional failure; b) possibility to record a personal failure; c) the possibility of losing everything (property, family etc.); d) neglecting the family in the detriment of business. 7. in which measure do you thing that your faculty prepares you to become an entrepreneur? a) in a large extent; b) in a medium extent; c) in a lesser extent. 3. data analysis at the first question (are you interested in developing your own business?) 79% of the students questioned have responded that are interested in developing a small business and only 4% have responded that are not interested in developing a business. figure 1. student’s interest in developing a business source: student's questionnaire responses (question no.1) at the second question (when do you think that it's time to open a business?) the students questioned have responded as follows: 3% of the students questioned have chosen the answer option “a” (during the faculty); 12% of the students questioned have chosen the answer option “b” (immediately after the graduation of the faculty; 50% of the students questioned have chosen the answer option “c” (after gaining experience in business/work); 25% of the students questioned have chosen the answer option “d” (when will appear a business opportunity); 10% of the students questioned have chosen the answer option “e” (when i will have enough capital). at the third question the students questioned have responded that financial independence is the main reason for they would open a business (67% of the students questioned) followed by the chance to implement personal ideas (41% of the students questioned) and the personal fulfillment (35% of the students questioned). at the fourth question the students questioned have responded that the main factors that contribute to business success are followings: yes 79% no 4% i already have my own business 6% i don’t know 11% are you interested in developing your own business? particular aspects regarding entrepreneur and entrepreneurial culture 68 motivation (51% of the students questioned); vision (40% of the students questioned); passion (38% of the students questioned); identification and exploit of opportunities (36% of the students questioned); risk-taking (34% of the students questioned); perseverance (26% of the students questioned); chance (19% of the students questioned); innovation (16% of the students questioned) etc. figure 2. main factors that contribute to business success source: student's questionnaire responses (question no.4) at the fifth question the students questioned have responded that the main obstacles to opening their own business are followings: lack of capital (77% of the students questioned); fear of failure (48% of the students questioned); excessive bureaucracy (36% of the students questioned); fierce competition in the business (33% of the students questioned); the uncertainty of the economic environment (31% of the students questioned); lack of entrepreneurial skills (25% of the students questioned); lack of opportunities / business idea (15% of the students questioned). 51% 40% 38% 36% 34% 26% 19% 16% 0% 10% 20% 30% 40% 50% 60% motivation vision passion identification and exploit of opportunities risk-taking perseverance chance innovation which are the main factors that contribute to business success? drob 69 figure 3. main obstacles to opening a business source: student's questionnaire responses (question no.5) at the sixth question the students questioned have responded that the main risks regarding to open a business are followings: possibility to record a professional failure (76% of the students questioned); possibility of losing everything (43% of the students questioned); neglecting the family in the detriment of business (29% of the students questioned); possibility to record a personal failure (22% of the students questioned). at the last question the students have responded that during faculty they were prepared to become entrepreneurs in a large and medium extent (80% of the students questioned) and in a lesser extent (just 20% of the students questioned). 4. conclusions as stated by berger (1991), entrepreneurship and entrepreneurial culture are closely related to the economic development of a country. increasing the numbers of entrepreneurs and the development of the entrepreneurial culture contribute to economic development and to prosperity of the country. also, entrepreneurship contributes to social wealth by creating new markets, new industries, new jobs and so on. the present study highlights the fact that among future graduates of the “vasile alecsandri” university of bacau, engineering faculty there is a great desire to become entrepreneurs and to succeed as entrepreneurs (79% of the students questioned have responded that are interested in developing a small business). in the opinion of 50% of respondents, this intent to initiate and develop a business will be taken into account, mainly, after gaining experience in work. in the view of future 77% 48% 36% 33% 31% 25% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% which are the main obstacles to opening your own business? particular aspects regarding entrepreneur and entrepreneurial culture 70 graduates, to succeed in a business, the entrepreneur must have in among others, motivation, vision and passion (in this order). even though there are many barriers to business success (in particular, lack of capital, fear of failure, excessive bureaucracy etc.) and many risks (especially of professional failure etc.) our students are convinced that knowledge acquired in faculty will help them to become successful entrepreneurs. in this context, the role of the professors in the universities becomes more and more important: to train the specialists of tomorrow and, in the same time, to form the future entrepreneurs. as stated by the development of a true entrepreneurial culture among current students will have beneficial effects in the future in terms of their success in the business field, and also in terms of overall development of the national economy. references berger, b. (1991), the culture of entrepreneurship, institute for contemporary studies, san francisco, california. beugelsdijk, s. (2007), entrepreneurial culture, regional innovativeness and economic growth, journal of evolutionary economics, vol. 17, issue 2, p. 187-210. commission of the european communities (2003), green paper entrepreneurship in europe, enterprise publications, brussels, available at: http://ec.europa.eu/invest-in research/pdf/download_en/ entrepreneurship_ europe.pdf tong, x.f., tong, d.y.k., loy, l.c. (2011), factors influencing entrepreneurial intention among university students, international journal of social sciences and humanity studies, vol 3, no 1, p. 487-496, available at: http://www.sobiad.org/ejournals/journal_ijss/arhieves/2011_1/xue_fa_tong.pdf wong, matthew a. (2014) entrepreneurial culture: developing a theoretical construct and its measurement, university of western ontario electronic thesis and dissertation repository, paper 2138, available at: http://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=3435&context=etd. http://ec.europa.eu/invest-in%20research/pdf/download_en/%20entrepreneurship_%20europe.pdf http://ec.europa.eu/invest-in%20research/pdf/download_en/%20entrepreneurship_%20europe.pdf (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 7 personal bankruptcy and the romanian realities mihaela condrache mihaelacondurache79@yahoo.com liviana andreea nimineţ “vasile alecsandri” university of bacau liviananiminet@yahoo.com abstract bankruptcy is defined as the legal situation in which an individual, a company or an institution cannot meet outstanding liabilities, which are superior in value compared to available assets. personal bankruptcy refers to the situation described above in the case of individuals. this highly important legal and economic institution was long ago settled in the united states of america, united kingdom, france, germany, japan, and recently in former communist countries such as poland, latvia, estonia, and lithuania, existing throughout the eu, except for romania, bulgaria and hungary. in december 2015, in romania, the personal bankruptcy law is to come into force and this article focuses on the main aspects of the three steps procedure comprised in it as well as on the advantages and disadvantages from all involved parts perspective, that is: individual debtors, banks as creditors and state institutions as third parties highlighting the main changes that are to happen both for individuals as well as for the society as a whole. keywords personal bankruptcy; insolvency; legal entities; debtor; creditor jel classification g33; k35 1. introduction bankruptcy (broken bank letter) is the legal situation in which an individual, company or institution (also called legal entities) cannot meet due payments (outstanding liabilities), which are superior in value compared to available resources (assets). in romania the core law for bankruptcy is the insolvency code, in force since the mid of 2014 which contains provisions to ensure a fluent insolvency procedure. this code created the framework for granting financial insolvency for companies and clarifies some aspects of ongoing contracts of an insolvent company. nevertheless the code comprises regulations regarding the reorganization plan. law no. 85/2014 on insolvency proceedings and insolvency prevention is an attempt to unify the regulation of procedures which were before contained in various laws. the code means a compact law, which contains provisions that permit a fluent insolvency procedure and also improve amicable settlement of pre-insolvency proceedings such as the preventive concordat or the ad hoc mandate and arrangement . the new insolvency code specifies the simplified procedure as a procedure whereby the insolvent debtor might go straight into bankruptcy proceedings, either with the insolvency procedure or after an observation period of maximum 20 days. this simplified procedure applies to insolvent debtors who fall into one of these categories: professional individuals subject to registration in the personal bankruptcy and the romanian realities 8 trade register, except those exercising liberal professions; family business, family business members; instruments of incorporation or accounting documents cannot be found; the administrator cannot be found; headquarters / professional does not exist or does not match the address in the trade register; voluntarily dissolved legal persons, judicial or law before drawing application, even if the liquidator has not been appointed or, even called the mention regarding the appointment has not been entered in the trade register; borrowers who have declared their intention by application of bankruptcy; any specific person which had not obtained the law required authorization to operate an enterprise. 2. personal bankruptcy general overlook like the companies, people can also give themselves bankrupt. in the civilized world this is a settled law provision. personal bankruptcy has a long history in the us, uk, france, germany, japan, and, a more recent one in former communist countries such as poland, latvia, estonia, lithuania (2013). in fact it exists throughout the eu, except for romania, bulgaria and hungary where it may, however, soon come to live. a person may enter bankruptcy / insolvency of its income can no longer satisfy creditors. the debtor may ask for the court protection and the court would consider whether the bankruptcy is excusable or not. the debtor shall be presented before the court to be declared insolvent, at his request or at the request of creditors. after being declared insolvent the debtor can propose a plan to creditor and the debt will be paid under the supervision of a trustee and a periodic control of the court, or is declared bankrupt. there are three steps involved in this procedure: a 90 days observation period, personal insolvency and finally bankruptcy. 3. romanian perspective on personal bankruptcy law no. 151/2015 on insolvency individuals was published in the official monitor on 26 june 2015 and will come into force in six months, december 26. the normative act was promulgated by president klaus johannis in june 18, after being adopted by deputies. the final vote was in 20 may with 309 votes "for", 0 "against" and 3 "abstentions". in december 2014, the bill passed tacit the senate. the new law provides new balanced arrangements so that not to favor any debtor nor creditor, but to offer a real support of all romanians of good faith who were indebted not by their fault but because they got into financial trouble. the main advantages of this law are: • any foreclosure started is suspended once the insolvency proceedings for individuals begin • the accumulation of interest and penalties for overdue payment are inhibited • all receivables become liquid and due • all unilateral acts of the debtor have no longer effects • ensures a balance between the interests of individual debtors and those of creditors the key provision of the law is that it establishes legal procedures designed to rectify the financial situation of the individual debtor in good faith, covering a larger measure of its liabilities and "discharge of debts" of the concerned individuals. essentially, an individual debtor is considered insolvent when its assets are characterized by insufficient cash funds available to pay outstanding (overdue) debts. insolvency of an condrache, nimineț 9 individual debtor is presumed by law to exist if after passing a period of 90 days from the due date of the obligations it has not paid its debts to one or more creditors. the new regulation procedures will apply to individuals, except those that manage a company, independent activities or freelancers. law no. 151/2015 covered three insolvency levels: • insolvency proceedings on a debt repayment plan; • insolvency proceedings based on the liquidation of assets; • simplified insolvency procedure. these procedures apply depending on reliability and depending on the results obtained by previous procedure. at this point a question arises: what conditions must be met to apply for personal bankruptcy? law no. 151/2015 establishes that the insolvency of the debtor's assets is that state which is characterized by insufficient cash funds available to pay debts as they become due. the insolvency is assumed after passing a 90 days period since the due date in which the debtor has not paid the debt to one or more creditors. 4. law addressability and procedure romanian personal insolvency law aim individuals of good faith, whose debt resulting from an activity that aims to meet a personal need, such as from utility providers, delays in the payment of bank loan contracted to purchase a service or product staff and not a business that aims to generate profit. however, the law does not clearly define what a borrower in good faith is, but make a list of debtors who can not benefit from this procedure. among the reasons that may prevent an individual to enter insolvency are the existence of convictions for various offenses, preparation of fraudulent or overly generous acts that have diminished its wealth, failure to submit the efforts to find a job a.s.o. the new provisions will apply to individual debtor who: • domicile, residence or habitual residence for at least six months prior to application in romania; • is insolvent and there is a reasonable likelihood regain, over a period of 12 months, able to perform its obligations as contracted, while maintaining a standard of living reasonably for himself and for the people it has dependents; 1 • the total amount of its obligations due is at least equal to the threshold value (threshold value represents the minimum amount of outstanding debts of the debtor required to be filed for the opening of insolvency proceedings on the basis of the plan of debt repayment or procedure by judicial insolvency liquidation of assets; this is 15 minimum wages). individuals insolvency can be solved in three ways: on the basis of debt repayment plan, the liquidation of assets or the simplified procedure. 4.1. insolvency based on recovery plan liabilities in case of a debtor believed to be insolvent (because it lacks cash to pay due debts state insolvency can be taken into account if payment term debt was exceeded by more than 90 days), but its financial situation is not irreparably compromised, the commission may request the opening of insolvency based on debt repayment plan, which is an administrative and not a judicial procedura. in this case, the minimum 1 reasonable probability is estimated by considering the total amount of obligations related to revenues or forecasted to be realized given the level of training and expertise of the debtor and also the traceable assets in his possession personal bankruptcy and the romanian realities 10 debt must total 15 minimum wages (the law does not specify net average salaries). the application for opening insolvency procedure is public and includes the reasons that caused the situation, the debts, the prior initiated procedures to negotiate rescheduling debt, the marital and profesional status, the amount of revenues collected on the past three years as well as the expected revenues for the next three years, debtors assets, bank accounts, amounts recovered from debtors, litigations in progress or completed, the existence of convictions for tax evasions or false. the application will have attached the evidence of occupational status employed / unemployed, evidence that was not fired for reasons that may be charged and that he made every effort to obtain a job, the documents proving income and tax returns for the past three years, an extract from the judicial record and tax record to date, a report to the credit bureau and a proposed repayment plan. after analyzing the request, the insolvency application may either be accepted in order to open the insolvency proceedings based on a plan, or may be rejected and noted that the financial situation of the debtor is irremediably compromised, in which case, the court may grant insolvency proceedings through liquidation of assets, or in simplified form, as appropriate. effects of opening insolvency proceedings based on repayment plan: • provisionally suspend foreclosures started, for not more than three months, unless the court decides to extend this period if such debtor's financial situation would become hopelessly compromised; • an administrator will be appointed for the procedure. based on data provided by informing creditors and debtors, debts table will be drawn; • the debtor, with the insolvency administrator will develop a debt repayment plan, which proposes acquittal. share coverage of debts by repayment plan must be higher than the share of coverage could be achieved by liquidating the assets of the debtor. a series of rescheduled debts cannot be reduced or removed in insolvency proceedings, such as legal or conventional maintenance obligations or liabilities resulting from criminal liability and the contravention; • the duration of the plan is five years, extendable by another year; insolvency commission will assess the feasibility of the plan. the plan is approved if creditors representing 50% of the total value of receivables and 30% of the debts that benefit causes preference voted in favor; • in case the repayment plan is not approved by creditors, the debtor may request the competent court to acknowledge it. thus, the court has the right to override the vote of creditors in case assessed that these were against unreasonably share of debt coverage superior to that proposed in the plan that would be achieved through liquidation; • upon approval of the repayment plan all enforcement measures for the realization of receivables, runny interest, penalties, delay penalties etc., except receivables benefiting causes of preference are suspended; • institutions or companies with insolvent person has signed contracts will not be entitled to terminate ongoing contracts by the opening of insolvency proceedings; • the debtor is obliged to cooperate with the commission and with the insolvency receiver and communicate any information on its financial condition; must be subject to surveillance receiver in relation to all activities; it is required to prepare quarterly progress reports to the plan; is obliged to conduct a legal activity producing income; • in the case of not respecting the plan, or that the debtor does not pay its current debts based on closing procedure can be initiated a liquidation of assets plan condrache, nimineț 11 4.2. insolvency through asset liquidation proceeding insolvency through asset liquidation procedure can be requested by the debtor, directly, where "financial situation is irremediably compromised". the situation is considered irreversible compromised after being passed through two filters: subjective, and that of the debtor's bankruptcy judge. a clearer definition of the terms could avoid an uneven court practice. creditors may request the opening of the liquidation of assets when the procedure based on a plan cannot be carried out. once the insolvency court upheld the liquidation of assets, suspended foreclosures and individual debtor is prohibited from using the assets and the income that can be liquidated. carrying the insolvency proceedings through liquidation of assets involves: • preparing the final table. the liquidator will ask creditors to submit, within 30 days of the initiation, information on the amount of the debt and the market value of the asset which is guaranteed. the liquidator is obliged to prepare the preliminary table of receivables within 15 days of receipt of the notice. • inventory of assets of the debtor. within 30 days of the opening of proceedings, the liquidator will make the inventory of assets of the debtor. • liquidation of the assets. the deal liquidator sells the assets, which will conclude on behalf of the debtor, to sales. the goods are sold free of encumbrances. if, although they have made every effort the liquidator failed to capitalize on the good in two years, lenders may become its owners for liabilities. • termination and release of liability. after the goods have been recovered and the proceeds were distributed to creditors, the liquidator shall prepare a final report. within 30 days of when it becomes final, the court pronounces the closing of procedure and determines how debtor revenues may be used to cover liabilities, after closing procedure. • issuance of debt remaining waste is covered by debt cancellation during post-closing procedure. according to article 72, the debtor will be released from liability if after three years from the closing date of the procedure at least 50% of the total receivables is covered, or after 5 years 40%, and so on. 4.3. the simplified procedure insolvency insolvency simplified procedure can be accessed by an individual if the total amount of its debt is not more than 10 minimum wages, has no assets or income tracking and has over the standard retirement age or has lost total or at least half of the working capacity. insolvency commission will review its application and if it satisfies the conditions will be submitted to the court. from the date of the final judgment shall suspend all enforcement measures, the flow of interest, calculating penalties and so on. the debtor must, since the opening of proceedings to pay their current debts on time, not more loans, report annually to the board of insolvency on the situation of its property or if extra income over ½ of the minimum wage economy front said at the time the application for insolvency, insolvency should notify the commission if inherits her donates or receives goods or services worth more than minimum wage. 5. law limits not all borrowers can benefit from the application of the new law. law. 151/2015 establishes that it regulates procedures will not apply to the debtor: • in the case which has been closed for reasons that are imputable to an insolvency procedure based on debt repayment plan, a legal procedure of insolvency by personal bankruptcy and the romanian realities 12 liquidation of assets or a simplified insolvency procedure more than 5 years prior to the formulation of a new application to open insolvency proceedings; • who has been sentenced for an offense of tax evasion, forgery of a crime or an intentional crime against property by disregarding confidence; • who was fired in the last 2 years for reasons attributable to him; • that, although fit to work without a job or other source of income and not filed reasonable diligence needed to find a job or refused unreasonably, a job proposed by either a other income generating activities; • new debt that has accumulated through voluptuary expenses while he knew or should have known that it is insolvent; • that caused or facilitated reaching insolvent, with intent or gross negligence. shall be presumed to have had this effect: contracting in the last six months before the application to open insolvency proceedings, the debts that represent at least 25% of the total liabilities, excluding liabilities excluded; • take over the last three years before the application, the undue burden in relation to its state patrimony, the benefits they get from the contract or to all the circumstances that have contributed significantly to the failure of the debtor to pay its debts, other than those caused by people who contracted it so; • performance in the last three years before the application of certain preferential payments, which have contributed significantly to reducing the amount available to pay other debts; • transfer in the last three years before the application, goods or assets or heritage values of another natural or legal person while he knew or should have known that through these transfers will reach insolvent; • termination of an employment contract by mutual consent or by resignation last six months before the application initiating proceedings; • another insolvency procedure opened before the application for opening insolvency procedure under law 151/2015 6. conclusions experts believe that the insolvency law violates the right of individuals’ free access to court. insolvency law has also some gaps that will aggravate its application. one is the establishment of committees of insolvency, with complex components, but without any official of the creditor, the insolvency commission is also invested with powers of decision, control and surveillance of the individual's or administrator's insolvency proceedings, which will bear real difficulty in practice. another problem posed by the law in its current form is violation of the right of free access to court. in some cases, the commission acts as a court of insolvency itself without giving the person the opportunity to challenge the measure in court. also, the insolvency administrator is appointed by the board of insolvency random from among the insolvency practitioners, bailiffs, lawyers or notaries public, listed as the administrators and liquidators for insolvency proceedings of individuals. enrollment in this special list will be made only after an examination organized by each professional body, but are automatically included bailiffs and insolvency practitioners with a length of over five years expertise. this will create a discretionary treatment between lawyers and notaries that must express willingness to be included on the special list of insolvency administrators and insolvency practitioners or bailiffs with an expertise bigger than five years, which will be automatically included. the law imposes a number of duties for liquidators without them to be detailed in any way. for example, the liquidator may request denunciation condrache, nimineț 13 of contracts concluded by the debtor. this law complements law no 85/2014 on insolvency proceedings, which regulates a special procedure allowing the receiver to terminate the contract within 3 months from the initiation to maximize debtor's property. instead, the new rules are completed only with the civil code, which does not allow denunciation unless a clause inserted in the contract prior to termination, and the civil procedure code, which governs this institution at all. in this situation, the liquidators would be unable to fulfill their obligations without clarifying the duties limitations. plain said, personal bankruptcy reffers to a debtor who has to pay the bank a rate that can no longer afford (low income, unemployment, disease, growth rate) may enter into a plan of reorganization to pay a certain amount monthly for three. nevertheless, call for bankruptcy is a very serious thing for the borrower and should be avoided. in case of bankruptcy, the customer loses his house and other properties dispensable. that happens now only in the case of enforcement, except that now, if the collateral / assets made not cover the debt, the debtor will still have to pay the bank the difference, that will remain embarrassed for many years, perhaps decades, no chance resorting to a loan, credit card etc. let us think of the sale value of a home now compared to the glory years of the real estate market, when houses were not only expensive but also overvalued by real estate appraisers. on average, prices have fallen by 50% from the peak, and if the guarantee is auction sold, the debtor is good by paying for the difference, plus interest and fees. that means that for many years the debtor is under debt and all the declared income are tracked and the bank has the right of them. this is why some choose to hide their income and go to gray economy affecting not only the economic side of life but also the social one. with the bankruptcy of individuals approved, the debtor has a new start. he'll lose his home but will not be prosecuted for credit difference if it's in danger, can stay in his house for a while. for banks, the advantages are that, beyond the fact that they may require insolvency of the debtor, they can unleash their provisions made for bad loans as a result of the bankruptcy debtor. thus, the pressure on bank balance sheets, because the money trapped provisions are very expensive. however, banks worry that romanians will rush to declare bankruptcy in order not to pay rates on credit and that the law means nothing but a new method by which debtor could and would understand to escape obligations. romanian bankers have expressed opposition to this law project ever since the beginnings. last update: given that none of the previous conditions needed for the law implementation weren’t met, the personal bankruptcy law is to come into force since the end of 2016, which is a year later then originally planned. references government resolution regarding the methodology for applying the law no. 151/2015 law no 151/2015 regarding the personal insolvency procedure nimineţ, liviana, (2007), the preventive concordata time adjusted institution, the 2nd economy transdisciplinarity cognition bulletin nimineţ, liviana, (2015), a humanizing economic approach on competition policy or how the behavioral economics blends with “traditional economics”, studies and scientific researches. economic edition, issue 21, pp 32-37 r.m., rosu, c.m., mihailescu, g.d., petcu (2015), falimentul si lichidarea, bucuresti, universul juridic, studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 7 the "e triangle": employment, employee and employer in the european union liviana andreea nimineţ “vasile alecsandri” university of bacau liviananiminet@yahoo.com abstract one of the biggest forces of the european union is its people, people living and working within this union. this stands not only for the european union but for every state, as it is well known that people are the ones that can make a state great or poor. for this reason, the matters regarding labor are a continuous concern both for european union common institutions as well as for every individual state of the european union. the main interest, on both sides, is to ensure the best for every part involved in labor process because this means, in the end, added value for everyone. the article focuses on the realities as well as on the expectations regarding the labor field highlighting the most preeminent aspects of the so called "e triangle": employment, employee and employer starting with the most needed definition for each and every one of the above going towards even to proposing remedies for the "spots" needing improvement. keywords employment; employee; employer; labor; european union jel classification j08; k31 introduction employee is generally defined as “an individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties. also called worker.” while the employer is a “legal entity that controls and directs a servant or worker under an express or implied contract of employment and pays (or is obligated to pay) him or her salary or wages in compensation”. employment, on the other hand, has more meanings: “1 an act or instance of employing someone or something; 2 the state of being employed; 3 an occupation by which a person earns a living; work; business. 4 the total number of people gainfully employed or working. 5 an activity or the like that occupies a person's time”. although all of the above definitions are linguistically correct none of them comprises the true dimensions and importance of these three words. no matter where we stand everything revolves around the “e triangle” because, virtually it all comes done to work. employment, employee and employer matter importance was recognized by most of the states. european union has developed, back in 1997, a strategy called the european employment strategy (ees). it establishes a set of common objectives and targets for employment policy and mainly aims to create more and better jobs throughout the eu. the "e triangle": employment, employee and employer in the european union 8 employment matters – european union vision employment issues are a continuous concern for the european union, as we stated. now it is visible in the europe 2020 growth strategy whilst being implemented through the european semester, the process promoting close policy coordination of eu member states and eu institutions. on a closer look, the implementation of the ees (supported by the work of the employment committee) mainly supposes four steps of the european semester:  employment guidelines are priorities and targets for employment policies that are first proposed by the commission, then agreed by national governments and finally, adopted by the eu council.  the joint employment report (jer) is based on three important milestones: the assessment of the employment situation in europe; the implementation of the employment guidelines and an assessment of the scoreboard of key employment and social indicators. jer is published by commission and then adopted by the eu council.  national reform programmers (nrps) are submitted by national governments and afterwards analyzed by the commission for compliance with europe 2020.  based on the assessment of the nrps the commission publishes a series of country reports, both for analyzing member states' economic policies and also for issuing specific recommendations for each member state. the employment package this package was launched in april 2012 as a set of policy documents looking into how eu employment policies interact with a number of other policy areas all with the aim of smart, sustainable and inclusive growth. it identifies the eu's biggest job potential areas and the most effective ways for eu countries to create more jobs by proposing measures that target three directions: supporting job creation; restoring the dynamics of labor markets and improving eu government. job creation is supported by: stepping up job creation across the economy; reducing the tax on labor while ensuring fiscal sustainability; promoting and supporting self employment, social enterprises and business start-ups; transforming informal or undeclared work into regular employment; boosting 'take home' pay; modernizing wage-setting systems to align wages with productivity developments; harnessing the potential of job-rich sectors: ict, green economy, healthcare; mobilizing eu funds for job creation by european social fund. restoring the dynamics of labor markets is ensured mainly by reforming labor markets. this means encouraging companies' internal flexibility to protect jobs in crisis times; encouraging decent and sustainable wages; making job transitions pay; reducing the labor market segmentation between those in precarious employment and those on more stable employment; anticipating economic restructuring; developing lifelong learning and active labor market policies; delivering youth opportunities and the youth employment package (see also youth unemployment analysis and youth niminet 9 action teams); reinforcing social dialogue and public employment services; investing in skills and in the synergy between the worlds of education and work. improving eu governance mostly means: reinforcing coordination and multilateral surveillance in employment policy and strengthening the link between employment policies and relevant financial instruments. long term unemploymentthree key steps one of the key employment challenges is addressing long-term. the european commission is stepping up supporting member states by giving them more specific policy guidelines. the commission has identified three key steps for dealing with long term unemployment: 1. encouraging the registration of long-term unemployed with an employment service; 2. providing each registered long-term unemployed with an individual in-depth assessment to identify their needs and potential at the very latest at 18 months of unemployment; 3. offering a job integration agreement to all registered long-term unemployed at the very latest at 18 months. simplified access to support will lead to simplified and better access to support for those that are out of work for long periods of time. the job integration agreement means a tailor-made plan that is meant to bring the long-term unemployed back to work. it can include, given the existing services in each member state one or many from the following: mentoring, help with the job search, further education and training, support for housing, transport, child and care services or rehabilitation. every long-term unemployed will have a single point of contact for accessing this support. member states are involved in an active commitment and partnership with employers, who should be more dedicated to finding a pathway back to work for the long-term unemployed. labor lawthe big picture labor law defines one’s rights and obligations as workers and employers. eu labor law addresses two main areas:  working conditions such as working hours, part-time and fixed-term work, posting of workers, and so on;  informing and consulting workers about collective redundancies, transfers of companies, and so on. the main objectives of eu policies and law on labor are to:  achieve high employment as well as strong social protection,  improve the living and working conditions,  protect social cohesion. from the very preamble of the treaty on the functioning of the eu is settled the eu aim: to promote social progress and improve the living and working conditions of the peoples of europe. on what labor law is concerned, the eu encourages policy initiatives of individual eu countries by setting minimum standards. in accordance with the article 153 of the the "e triangle": employment, employee and employer in the european union 10 treaty eu adopts laws (directives) that establish minimum requirements for working and employment conditions, informing and consulting workers. besides the directives, individual eu countries are free to provide higher levels of protection if they wish to. let us take an example: european working time directive entitles workers to 20 days' annual paid leave but many countries (romania not included) have opted for a more generous right to the benefit of workers. the eu adopts directives which member countries incorporate in national law and implement. this means that the national authorities (labor inspectorates and courts, for example) that enforce the rules. when facing a dispute before a national court that raises a question of how to interpret an eu directive, the court can refer the issue to the court of justice of the eu. the european court gives afterwards the national court the answers it needs to resolve the dispute. the commission makes sure that eu directives are incorporated into national law and ensures the correct implementation of the rules by a through systematic monitoring. the infringement procedure is used by the eu commission whenever the commission considers that an eu country has not incorporated a directive into national law correctly. this way, commission ensures that all the rights set out in the directives are available in national law. still, the commission can’t procure redeeming for individual citizens (i.e. compensate damages or set a situation right) this can be done only by the competent national authorities. with over 240 million workers in the european union, eu labor law rights benefit directly a large numbers of citizens and have a tremendous positive impact on one of the most important and tangible areas of their daily lives. eu labor law also benefits employers and society as a whole by: providing a clear framework of rights and obligations in the workplace; protecting the health of the workforce; promoting sustainable economic growth. furthermore, eu labor law goes hand in hand with the single market. the free flow of goods, services, capital and, not at least, workers needs to be accompanied by labor law rules, that ensures fair competition between countries and businesses based on the strength of their products and not on lowering labor law standards. eu labor law principles fair treatment means equal opportunities and is a basic right in the european union. this mean that is illegal to discriminate because of a person's sex, age, disability, ethnic or racial origin, religion, belief or sexual orientation. laws for equal rights between women and men have existed since the very early days of the european community and since 1970s a total of 13 pieces of legislation have been adopted with the aim of ensuring women and men fair and equal treatment at work. these laws cover a range of areas including equal treatment when apply for a job, equal treatment at work, protection of pregnant workers and breastfeeding mothers, and rights to maternity leave and parental leave. sex discrimination is not the only discrimination form and in 2000 the new eu legislation prohibits to discriminate against someone because of their:  racial and ethnic origin  religion and belief  disability  sexual orientation  age niminet 11 these five areas of discrimination, together with gender discrimination, are included in the amsterdam treaty of the european union as areas where the eu can act to prevent discrimination. of course discrimination can occur for other reasons, such as because a person marital statute ( is married or not), because of their income level, because of where they live. discrimination can also happen because of a mix of different reasons, such as someone's age and their sex (for instance an older woman might be particularly vulnerable to unfair treatment in the jobs market). the laws to protect people against discrimination because of their racial and ethnic origin (for example their black skin color or their roma origin) cover not only employment but other areas of daily life where unfair treatment can occur, such as in schools, housing, health care or access to good and services, such unfair treatment in shops, restaurants, hotels etc. all countries in the eu are obliged to take these equality rules on board. countries joining the eu also have to comply with these rules. eu equal treatment legislation sets out minimum levels of protection that apply to everyone living and working in the european union. countries can go further and adopt even stronger legal measures. flexicurity in eu legislation is vital in the fight for equality but nowadays eu needs to do more. this is why the european union is supporting a range of measures to combat discrimination, from funding projects, to carrying out research to supporting awareness-raising and information campaigns. flexicurity is an integrated strategy for enhancing, simultaneously, flexibility and security in the labor market. it attempts to reconcile employers' need for a flexible workforce with workers' need for security – confidence that they will not face long periods of unemployment. common principles of flexicurity mean working with national governments, social partners in order to determine how countries can implement them through four components:1. flexible and reliable contractual arrangements, 2. comprehensive lifelong learning strategies, 3. effective active labor market policies, 4. modern social security systems flexicurity is a main component for the employment guidelines and also the european employment strategy as a whole. integrated flexicurity policies play a major role in modernizing labor markets and contributing to the achievement of the 75% employment rate targeted by the europe 2020 strategy. measures initiated regarding this issue include:  agenda for new jobs skills: for reducing segmentation and supporting transitions by strengthening the flexicurity components and implementation; equipping people with the right skills for employment, improving job quality and the working conditions, and supporting job creation  new skills for new jobs: for upgrading, anticipating and better matching skills and jobs  youth on the move: to help young people acquire skills, qualifications and experience  anticipating, preparing and managing company restructuring  strengthening public employment services (for example job search support, career analyses, validation of experience, and so on). the "e triangle": employment, employee and employer in the european union 12 policymakers continue to face the challenge of fighting europe's high unemployment levels and devising policies that will help on building a dynamic and resilient labor market. conclusions employment levels in the eu have begun to rise again, and the economies worst affected by the crisis: greece, ireland, portugal and spain have shown employment growth in the last 12 months. however, wide divergence in labor market performance is still obvious across member states, with unemployment rates ranging from below 5% (in austria) to nearly 26% (in greece). eurofound's european monitoring centre on change (emcc) tracks change in labor markets. the emcc operates the european restructuring monitor (erm) to track major restructuring events and enable analysis of trends across member states and sectors. this shows that while employment in some sectors, especially manufacturing and construction, has been very strongly hit, others, as ict and professional services, have continued to create jobs. the annual report from the erm describes the latest trends in restructuring, and major restructuring news is reported regularly in the erm quarterly. restructuring not only affects the company and its employees but can have a major impact on the region where the company is based. competitive growth in europe is based on finding the right balance of economic activities. it is important to distinguish between cyclical job loss and the structural loss of jobs (in some manufacturing sectors, for instance), which will not be recovered when europe pulls out of crisis. employment has shown a pattern of polarization over the past years, having greatest growth in top-paying and low-paying jobs and muted growth in the middle of the pay spectrum jobs. this polarization was more intense during the crisis, with the large job losses in manufacturing and construction. the resilient jobs have tended to be in knowledge-intensive services in both the public sector (such as health and education sectors) as well as in the private sector. jobs in europe are growing in quality, but the greatest challenge remains to have enough jobs. to ensure that social support systems remain viable as europe’s population ages, it is crucial that more people are employed and that employees stay employed for longer over their lifetimes. these goals can be achieved only if workers are healthy, qualified and motivated to stay employed for longer and if the wider societal supports are in place to enable people to stay employed. sustainable employment covers the many areas of ensuring that people are able and available to work; quality of work is a central theme, as are policies supporting work and employment. references decision (eu) 2016/344 of the european parliament and of the council of 9 march 2016 on establishing a european platform to enhance cooperation in tackling undeclared work available at eur-lex.europa.eu/legal content/en/txt/?uri=celex:32016d0344 council recommendation of 15 february 2016 on the integration of the long-term unemployed into the labour market document 32016h0220(01) available at eur-lex.europa.eu › ... › eu law and publications › eur-lex opinion of the european economic and social committee on the annual growth survey 2016 (com(2015) 690 final) and the ‘draft joint employment report accompanying the communication from the commission on the niminet 13 annual growth survey 2016’ (com(2015) 700 final available at ec.europa.eu/europe2020/.../2016/ags2016_annual_growth_. european parliament resolution of 4 july 2013 on the european parliament’s priorities for the commission work programmer 2014 (2013/2679(rsp)) european employment strategy of european commission com/2012/0173 final */ available at eurofound.europa.eu/news/spotlight-on/employment/overview employment-jobs-in-europe nimineţ, liviana, (2015), a humanizing economic approach on competition policy or how the behavioral economics blends with “traditional economics”, studies and scientific researches. economic edition, issue 21, pp 32-37 managing the process of european integration of small and average-sized companies in today’s economy managing the process of european integration of small and averagesized companies in today’s economy ion sîrbu, dr.hab., prof.univ., asem chişinău sergiu duţă, drd. asem chişinău, vaslui abstract: the increasing complexity of economic activities, the fast-paced, never-ending change in requirements and objectives, as well as the lack of stability in time of the processes determined by the globalization, have led to the necessity to set new ways of approaching the development of small and average-sized companies. therefore the innovations, the knowledge, the information and other results of intellectual activity have become not just fundamental, but also dominant factors in the economic development of the modern society, as putting them to good use has become the main function of management. keywords: management, economy, team jel codes: k0, k10 introduction: economic integration nowadays requires profound scientific and practical research in order to approach the systems of effectively using the potential of development of small and average-sized companies in vaslui county. this tendency brings forth supplementary points to sustain the elaboration of a new management paradigm as the knowledge-based economy is turning into a fundamental economic factor. it is interesting to examine the process of innovation as part of the new theories of economic integration, as an endogenous, dominant economic factor, as it concerns the development of small and average-sized companies up to the present day’s stage. a feature of the progress recorded in the management of companies on an international level is the mutation caused by the globalization of economic activities, upgrades in production technologies, the outburst of knowledge and the high competition. basic contents: the new outline of economic relations, i.e. of interests, implicitly leads to competition and it is relies on it. there are, obviously, more and more plans on which economic agents in various fields are competing, hence concerning a large scale of domains and specialized tools. the competition spans over all the phases of the re-production process, over all the stages undergone by the product on its way from the maker to the customer, from concept and design up to its creation, sale and follow-up in consume. thus the competition is concerned both with cuts in research-design-production expenses per item, and with the variations of sale prices according to the demand-supply ratio. modern market economy requires the economic agents to promote – alongside their competition – a strategy of production with a great capacity of adapting itself to the demands of the market, as well as a certain elasticity of the prices, which should enable a clear ranking, so that the producers could make more profit. beforehand one must take into account the need to provide enough resources and the concrete capacity of offering technical/material supplies to all the companies, no matter what type of property they may fall into. if they do not meet these requirements and there is a hold on production capacity, then the competition, the modernization and the quality are out of question. in such conditions, the beneficiary will have to buy whatever they find available, will have no choice and will come by no alternatives to cover their needs. when one is desperately seeking resources, with no certainties for the future, the effect will be de-motivating as to any initiative of enterprise. it so stands out that market economy assumes a generalized competition in all fields and branches, in all processes of social re-production (research, production, distribution, exchange and consume), not only the kind of competition that is limited to the payment and is undergone with the specific means of the market, because modern market economy has got a strong integrating role, visible both in the re-production processes forcing their way through, and in the meeting of its multiple means and tools, used in the progress of the competition. the factors presented above are the ones that help create the environment for an enterprise. at the same time, small and average-sized companies encounter many problems, as in making the final products, in advertising – due to high costs -, and in training or specializing personnel. as it is the case with solving other situations: the high tax-level, which may bring the development of small and average-sized companies down to a halt, and the worst scenario is financing these companies’ business by loan. the businessman must be aware of the fact that the size of the company and the market strength are not essential conditions for an effective program of promotion. thus it is fundamental to establish a set of measures so as to encourage and maintain the success of small and average-sized companies. from the government it is expected to make a quick decision to support the business, because the limiting and deterring of small and average-sized companies from their development parameters may lead to their turning into an obsolete, secondary element, in the context of the big picture of national re-production. cutting off the role and functions of the market within the general mechanism of national economy, especially by extra-economic means and tools, has brought along serious malfunctions and distortions between branches, sub-branches, and economic companies. table 1. classification of companies according to their personnel (number) (based on the experience of developed countries) no. country small companies average-sized companies 1 canada 5-49 50-199 2 denmark max. 50 max. 500 3 france max. 50 max. 500 4 germany max. 50 max. 500 5 greece max. 50 max. 500 6 ireland max. 50 max. 500 7 italy 20-49 50-99 8 japan 5-20 max. 300 9 norway 1-20 21-100 10 u.s.a. 1-100 100-500 11 romania 1-49 50-199 drawn from the data found in the bibliographical sources in any economy, the market has a great role and important regulating functions, as a result of internal laws determined by variable factors and conditions of great complexity and strictly objective nature. any artificial, forced intervention, which intends to change the course of development of the internal processes of the market, against their normal direction, is rejected by the real economic practice, proving to be in-operative or, if dealt with under great pressure, it may render that objective phenomenon artificial. analyzing previous experiences and the present-day concepts concerning the adaptation of production units to modern economy, it cannot be stated with certainty that large markets favour big companies. one cannot infer anything concrete as to the role of small or new companies in developing the economy, either. so far the analyses show that large markets in full development provide great opportunities for new and small companies, and they are also a vital component for a better quality of life. such concerns have led to a great variety of programs developed by the european union. this large, standardized market, is going to offer a substantial advantage to the big companies, seriously endangering the small ones. there are some advantages in the functioning of small and average-sized companies:  the management team is smaller, which makes it more operative;  they contribute to the technical and scientific progress in implementing advanced innovations and technologies in the process of production;  they help form new professional, team relationships, which make an intermediate group of managers;  the important investments are more efficiently put to use by small and average-sized business enterprising companies. all along the evolution of romanian enterprises, small and average-sized companies have undergone various stages of development, with different economic and financial results, taking national economy to another level of quality and quantity. the swot analysis of the business environment of small and averagesized companies in vaslui county strong points the average work productivity per annum in 2011 was of 114.1 thousand lei/employee (close to the regional average of 118.4 thousand lei/employee); the existence of active traditional local units ( e g vascar, rulmenţi s a, ulerom, safir, mopan, confecţii /tailoring/ bârlad etc); 35.2% of the modulus of active local business units in vaslui county is owned by industrial units; the existence of examples of good practice of integrated economy, from agriculture to production and trade; modern production facilities in food industry and ball bearing production; the existence of traditional products, certified by the ministry of agriculture and rural development. weak points the local business environment cannot provide as many jobs as the current demand in the county; only 0.3% of the active local units in vaslui county are big companies (with over 250 employees), and the regional percentage is of 1.4%; insufficient personnel trained/qualified in constructions, because of migrations to other areas for better wages; a low level of development of economic activities – as compared to the level of the region ( 1.17 small and average-sized companies/100 inhabitants in vaslui county; 1.53 small and average-sized companies/100 inhabitants in the north-east region); an uneven distribution of local units throughout the county – business companies seem to prefer urban areas (especially in the towns of vaslui, bârlad and huşi); a low capacity of the local business environment to sustain investments for development; a low development of entrepreneurial spirit, especially in rural areas; a small number of units that have implemented a system of management of quality; a very low level of foreign investment in the county; a very low development of it, research-innovation; a low development of services; the questionable ownership of the industrial sites in a state of decay, whose potential cannot be valued; a lack of associative culture, not so much co-operation between companies. opportunities european funds that support the development of enterprises; the development of means of supporting and sustaining the local economy in vaslui; cheap, qualified work force can bring forth the foundation of new enterprises; the development of the tutova business center and of the vaslui business resource center, structures which support the business environment and facilitate the access of foreign investors to the vaslui area; encouraging and developing public-private partnerships; in the territory there are domains and buildings available for investments; increasing the number of societies with foreign funds; developing the range of activities managed by the tutova business center and of the vaslui business resource center; governmental programs that will support the small and average-sized companies; the european union’s policy concerning the research and innovation activities in microcompanies; the geographic location of the county on the eastern border of the european union; the opportunity to develop economic projects in the siret-prut-nistru euroregion; the national policies regulating exports. threats the tailoring sector’s dependence on the lohn, which tends to get directed towards countries outside the european union, where work force comes cheap: the republic of moldova, ukraine etc. high taxes and excessive bureaucracy; -a lack of cash may lead to bankruptcy in local active units such as micro-companies or even average-sized companies; blocking loans because of the economic crisis and financial blockages; an increase in competition due to the free markets arising as a result of becoming members of the european union; -not informing the people about the procedures of initiating a business enterprise; an increasing inflation rate and unemployment will implicitly lead to a decrease in the population’s capacity of buying goods and/or services; insufficient financial resources for funding and co-funding european projects; a lack of stability of the laws; the migration of qualified work force outside the county and abroad; a discrepancy between work demand and offer. conclusions as the dynamics and complexity of private economy – as far as the evolution of management is concerned – are influenced by the processes of globalization and economic, spiritual and innovative integration, they induce the need to form a managerial way of thinking, based on the market conditions, and to thoroughly study today’s management. time and space (place) currently play a certain role in educating and establishing an economic, managerial mentality, adequate in the context of the competition in economy. we should pay attention to creating – in the future – a way of thinking of the managers, but also of the economic agents – focused on the results of the functioning of local companies and on the continuous planning of the leaders – in the process of integration into the european union. it is clear that market relations require new conditions for uplifting the capacity of creativity of the personality, for teaching and training the new generation about the demands of market economy, for leading and developing innovations through work and business initiative. another tendency in the evolution of the systems of management is the fact that the economic conscience not only reflects the production process, but it also changes it actively according to the demands of economic competition. thus it is in the reciprocal relations between the object and the subject of economic thinking that the creative force is released – and so is the force of managing personnel in the public or private production process. let us emphasize upon the fact that thinking, as an innovative process, appears and develops as long as people are practically active, and human conscience both reflects and creates the objective world. as a synthesis of the above, one can observe how the evolution of managerial thinking has been strongly influenced by the principles and techniques of the classic concept of management, by putting to practice the fundamental knowledge in order to ensure its viability worldwide. the modern concept of managerial thinking is based on scientific management and it implies a management based on the objectives of innovations in the process of globalization. references 1. bertalanffy l., (1993), theorie de systems, paris; 2. drucker p., (2004), inovaţia şi sistemul antreprenorial, bucureşti; 3. feuraş e., (2008), metodologia cercetărilor economice, asem, chişinău; 4. radu i. ş.a. ,(2001), informatica pentru managementul firmei, ed. tribuna economică, bucureşti; 5. rusu c-tin.,(2005), managementul schimbării,cetex, iaşi; 6. sârbu i., georgescu n. ,(2003), managementul întreprinderii, editura alma-mater, sibiu, p. 74; 7. sârbu i.m.,(2008), sistemy planirovaniya v biznese, maa, chişinău; 8. sârbu i.m. ,(2009), teoria i practica proizvodstvennogo menedzhmenta, maa, chişinău; 9. taylor f.,(1994), principii de conducere ştiinţifică, bucureşti; 10. *** , monitorul oficial vaslui , nr.1 supliment 1/2007; 11. ***, strategia de dezvoltare a judetului vaslui in anul 2011, http://cjvs.ro. studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 32 accounting methods of the operations performed for the reorganisation of companies deju mihai “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract the process of company reorganisation by merger or division operations, which is the object of recent accounting regulations, are of a real interest for the accounting specialists, taking into consideration the elements of newness and the complexity of financial-accounting operations. in this article, we aim to present the particularities of the specific accounting methods of the operations performed for the reorganisation of companies. keywords: merger; reorganisation; methods; accounting jel classification m41 merger operations involve the transfer of assets, debts and equity items from one or more companies to another company, which will issue and allocate the shares to the shareholders/associates of the companies that dissolve on the basis of the exchange ratio agreed by the companies involved in the merger. the exchange ratio, which is at the basis of the pay of the merger contribution of the company being acquired, can be determined on the basis of net accounting asset, based on the accounting balance sheets prepared on the occasion of a merger or on the basis of the non-accounting balance sheets, which there can be found the adjustments arising from the evaluation of the balance sheet by the evaluators. at the recording in accounting of the reorganisation operations through merger, there will be taken into account a series of rules of a general nature: the participating companies to the merger operation will be drawn up in accordance with the legislation in force 1, financial statements with a special purpose (merger) for the set date in accordance with the commercial companies law2 and which will be submitted to the territorial units of the mfp within 30 days of their approval by the general meetings of the respective companies; the recording in accounting of the main operations on the reorganisation through merger of companies, will be performed in compliance with accounting rules and the specific accounting regulations3, with european directives or to international financial reporting standards (ifrs), as appropriate. where the companies involved in the same operation apply different accounting regulations compliant with european directives or regulations, which comply with 1 accounting law nr.82/91 republished in monitorul oficial of romania, nr.454/2008, with further amendments and completions, art.28, alin 1^1. 2 companu law, nr.31/90 with further amendments and completions, art.244 3 omfp nr. 897/2015 for the approval of methodological norms concerning the recording in accounting of the main operations of merger, division, dissolution and close-out of companies, as well as the withdrawal or exclusion of some associates from the companies, with further amendments and completions. deju 33 ifrs, the accounting treatment of the merger operations is that foreseen by the accounting regulations applicable to each entity; in the financial statements afferent to the merger, the companies involved will also take over the results of the inventory and the evaluation occasioned by the operation of reorganisation through merger, according to the applicable legal regulations. thus, according to pt. 101 of the accounting regulations concerning annual financial statements and consolidated annual financial statements, approved by omfp no. 1802/2014 “the assessments made in connection with the reorganisation of companies (mergers, divisions) do not constitute a reassessment in the meaning of these regulations, such assessments are being carried out in order to determine the exchange ratio for all items of the balance sheet. there make exception the cases when the date of financial statements that are at the basis of the reorganisation coincides with the date of the annual financial statements”; from a fiscal point of view, companies that are reorganised, including by merger operations, must comply with the provisions of law 227/2015 regarding the fiscal code, with subsequent amendments and additions, the law governing matters relating to the procedure for carrying out such operations, as well as any other regulations governing aspects of a fiscal nature, in effect on the date of reorganisation; the shares held by companies that are being reorganised, one in the capital of the other (mutual holding), will cancel, at book value, on account of the elements of equity laid down by the general meeting of shareholders/associates. where there is sufficient equity to cover the value of the cancelled shares, the difference will be supported from the results of the merger account 149.5 “losses arising from the reorganisation, which are determined by the cancelling of titles held”. these losses will be covered from profit or other equity items, as decided by shareholders/associates in the general meeting; the transfer from the company being acquired/companies that end their activity to the acquiring/newly founded company, of assets, debts and equity shall be effected on the basis of delivery-receipt protocols concluded between the receiving company and the company/companies that deliver the merger contribution; in the delivery-receipt protocol there will be indicated, for each company being acquired/companies that end their activity, the balance accounts according to the checking balances that were at the basis of the financial statements drawn up for the merger operation, as well as other information necessary for the entry into the accounts of acquired elements. in the accounting of the acquiring company/newly founded company, there will be taken account balances of the company being acquired/companies that end their activity, to the values specified in the deliveryreceipt protocol. simultaneously with the transfer of goods and the values from the company being acquired to the acquiring company there will also be delivered the documents confirming the ownership right on the intake transferred; in the delivery-receipt protocol concluded between the companies participating in the merger there will also be written the result recorded in the “profit or loss account”, by the company being acquired/companies that end their activity, during the period between the date when the financial statements were drawn up related to the merger and the date of delivery-receipt protocol. the result of this period will be taken by the acquiring company/newly founded company through account 117 “result brought forward”-analytically distinct; in the delivery-receipt protocol of patrimonial items transferred in connection with the merger there will be written clear data relating to assets, liabilities, equity with the specification of their tax value; the determination of the exchange ratio and the merger premium will be in accordance with general assembly decision of shareholders/members of the accounting methods of the operations performed for the reorganisation of companies 34 companies involved in the merger, based on accounting balance sheets incurred in the operation of merger – in the case of using the net asset accounting method or on the basis of the non-accounting balance sheets when using the global assessment method, which will also include adjustments (differences) resulting from the assessment made by the evaluators. depending on how is determined the value of net merger contribution of companies involved in the reorganisation operation through merger, from an accounting point of view, there can be used two methods for recording the merger transactions, i.e. the net asset method, or the global assessment method, respectively. as follows, there will be presented particularities concerning the accounting recording of the reorganisation operation through merger of companies, in the case of using the net accounting asset for the determination of the net merger contribution. the net asset accounting method assumes that the values used in the reorganisation operations through merger are based on the use of net accounting asset, determined as difference between total assets and total liabilities reflected in balance sheets related to the merger. the accounting net assets established this way corresponds to equity. in the case of using the net asset accounting method, for the recording in accounting of the reorganisation operations through merger, there will be taken into account the following rules:  the assets, liabilities, and equity of the company being acquired/companies that end their activity, are removed from their records at the existing value in accounting;  the recognition in the accounts the acquiring company/newly founded company of assets transferred from the company being acquired/companies that end their activity is accomplished at the net accounting value or the gross accounting value, case when there are taken distinctly their afferent adjustments, as they are emphasised in the accounting of the company being acquired/companies that end their activity as a result of the merger;  the recording in the accounts of the acquiring company/newly founded company of balance sheet items constituting the merger contribution is based on the balances of the synthetic checking accounts, analytical checking balances and other accounting documents (journals, books, etc.) that were at the basis of the financial statements related to the merger and recorded in the delivery-receipt protocol between companies involved in the operation;  the recording of the net merger contribution, on the equity items by the acquiring company is made in accordance with the merger project approved by the general assemblies of the companies involved in the operation;  from an accounting point of view, the merger transactions are treated distinctly depending on the specifics of the merger operation, namely the merger by absorption or merger by reunion. a. the merger by absorption i. entries in the accounts of the acquiring company: 1. the entry of the registered capital increase and the merger premium: 456 clearings with the shareholders/associates concerning the capital” = % 1011 “subscribed and unpaid capital” 1042 “merger premium” -value of the merger net contribution -capital increase -merger global premium note: the value of the net merger contribution of the acquired company will be equal to the net accounting asset established within the merger. deju 35 2. the entry of the take-over by transfer, in accordance with the delivery-receipt protocol of assets elements: % “accounts of assets elements”⃰ = 891 “opening balance sheet” note: there will be taken at the net or gross value as they were written in the delivery-receipt protocol. if they are taken at the gross value, then there will also be taken the appropriate adjustments and depreciations. 3. the entry of the take-over by transfer, in accordance with the delivery-receipt protocol of the liabilities, amortization and adjustments afferent to the balance sheet items transferred at gross value: 891 “opening balance sheet” = % • 456 “clearings with the shareholders/associates concerning the capital” • “debts accounts” • “adjustments accounts” • “amortization accounts” ii. entries in the accounts of the company being acquired: 1. the taking from the accounting records of the equity elements and the recording of shareholders/associates’ rights concerning the remuneration of the merger contribution: % “equity accounts” = 456 “clearings with the shareholders/ associates concerning the capital” 2. the taking from the records of transferred assets elements: 892 “closing balance sheet” = % “accounts of assets elements”⃰ ⃰ note: with the balances with which the assets elements accounts were recorded in the delivery-receipt protocol, at net or gross value, case in which the afferent amortizations and adjustments will be transferred. 3. the taking from the records of the transferred elements, as liabilities, amortizations and adjustments of the transferred assets. % “liabilities accounts” “clearings accounts” “adjustments accounts” ⃰ = 892 “closing balance sheet” ⃰ note: with the balances that were recorded in the delivery-receipt protocol. accounting methods of the operations performed for the reorganisation of companies 36 4. the regularisation of accounts 456 “clearings with the shareholders/associates concerning the capital” and 892 “closing balance sheet”, respectively the discharge of obligations concerning the remuneration of shareholders/associates for the merger contribution: 456 “clearings with the shareholders/ associates concerning the capital” = 892 “closing balance sheet” instead of the entries at p.4, there could be reflected the receivable rights of shareholders/associates concerning the merger contribution transferred through the accounting article: 461 “different debtors” = 892 “closing balance sheet” and the discharge of receivables by receiving shares from the acquiring company and their repartition to the shareholders/associates of the acquired company: 456 “clearings with the shareholders/ associates concerning the capital” = 461 “different debtors” b. the merger by reunion i. entries in the accounts of the newly set company: 1. the entry of the constitution of the registered capital, by the contribution of companies that are being dissolved (a and b): 456 “clearings with the shareholders/ associates concerning the capital” = 1012* “subscribed and paid capital” analytically: company a company b note: i mention the fact that in the case of the merger by reunion there are no merger premiums, as the beneficiary society is newly set up and the nominal value of the issued shares is that set by the merger project. 2. the take-over from the companies that are being dissolved of assets elements: % “accounts of assets elements“ analytically distinct for the contributing companies a and b ⃰ = 891 “closing balance sheet” ⃰ note: with the balances that were recorded in the delivery-receipt protocol. 3. the take-over from the dissolving companies of liabilities, amortizations, adjustments afferent to the transferred balance sheet elements: deju 37 891 “opening balance sheet” = % “debts accounts” “amortization accounts” “adjustments accounts” ⃰ note: with the balances that were recorded in the delivery-receipt protocol. ii. entries in the accounts of the dissolving companies: the entries are similar to the ones made by the company being acquired in the case of the merger by absorption, thus: 1. the taking from the records of equity elements and the recording of the shareholders/associates rights concerning the remuneration of the merger contribution: % “equity accounts” = 456 “clearings with the shareholders/ associates concerning the capital” 2. the cut from the records of transferred asset elements: 892 “closing balance sheet” = % “accounts of assets elements” ⃰ ⃰ note: with the balances with which the assets elements accounts were recorded in the delivery-receipt protocol. 3. the taking from the records of the transferred elements, as liabilities, clearings and adjustments afferent to the transferred assets.: % “debts accounts” “amortization accounts” “adjustments accounts” ⃰ = 892 “closing balance sheet” ⃰ note: with the balances that were recorded in the delivery-receipt protocol. 4. the regularisation of accounts 456 “clearings with the shareholders/associates concerning the capital” and 892”closing balance”, respectively the discharge of obligations concerning the remuneration of shareholders/associates for the merger contribution: 456 “clearings with the shareholders/ associates concerning the capital” = 892 “closing balance sheet” instead of the entries at p.4, there could be reflected the receivable rights of shareholders/associates concerning the merger contribution transferred through the accounting article: accounting methods of the operations performed for the reorganisation of companies 38 461 “different debtors” = 892 “closing balance sheet” and the discharge of receivables by receiving shares from the acquiring company and their repartition to the shareholders/associates of the acquiring company: 456 “clearings with the shareholders/ associates concerning the capital” = 461 “different debtors” conclusions the companies involved in the reorganisation operations through merger establish, by decisions of the general meetings of each of the companies involved, the conditions of the merger, the way of establishing the net intake of merger and exchange ratio underlying the remuneration of shareholders/members of the disbanded companies/the companies being acquired. if the exchange ratio will be determined based on the value of net merger contribution, established on the basis of the net assets of each company involved in the merger, for the recording of merger operations, from accounting point of view, there will be used the net asset accounting method as described throughout this paper. in other cases, where the value of merger contribution differs from the net asset value, there will be used for the accounting recording of merger operations, the method of global evaluation, which will be the subject of other research topics concerning its use in the accounting practice. references deju, m. (2013), contabilitate aprofundată curs universitar, bacău, editura alma mater. accounting law nr. 82/1991, republished in monitorul oficial nr.454/2008, with further amendments and completions. company law nr. 31/1990, republished in monitorul oficial, partea i, nr. 1066 din 17 november 2004, with further amendments and completions. order nr. 1802 from 29 december 2014, for the approval of accounting regulations on annual individual financial statements and annual consolidated financial statements published in monitorul oficial nr. 963 din 30 december 2014, with further amendments and completions. omfp nr.1286/ from 1st october 2012, for the approval of accounting regulations in accordance with international standards of financial report, for commercial companies whose real-estate value are admitted on a regulated market, published in monitorul oficial nr. 687 din 4 october 2012, with further amendments and completions. omfp nr. 897/2015 for the approval of methodological norms concerning the recording in accounting of the main operations of merger, division, dissolution and close-out of companies, as well as the withdrawal or exclusion of some associates from the companies, with further amendments and completions. microsoft word nichifor bogdan engl.     strategic marketing – some conceptual and operational reviews from structured marketing works bogdan nichifor, „vasile alecsandri” university, bacău abstract: strategic marketing has been for a long time widely recognized as an important aspect of activity of modern organizations. knowing it characteristics and its role in organizational management is extremely important in developing a long-time efficient business. this article focuses on presenting some synthetic conclusions extracted from the structured strategic marketing works of well-known marketing authors. key words: strategic marketing, marketing strategy, processes. the role of strategic marketing – a synthetic view strategic marketing represents the process of strategy development, based on marketoriented view, which consider both the changes which are taken place in business environment and the necessity to offer superior value to consumer. the scope of such a process is the one which favor organizational performances and not sales growths. from this point of view, we can see that marketing strategy has the role to deliver superior value to the consumer by combining consumer influence strategies in a coordinated set of actions based on market orientation. strategic marketing is responsible in assuring the link between the organization and environment, establishing the process of marketing as a responsibility of the whole business and not as the one specific only to a specialized function. because of the traditional association among marketing process and set of identifiable entities such as: organization, consumers, marketing channels, competitors, marketing has an enormous significance for the whole strategic planning process at the business level. strategic marketing gives an important expertise in: environment monitoring, market segments to be targeted, defining strategic guidelines for product development, selecting competitors to fight to. the successful integration of the interfunctional strategies of the business increases the chances to deliver the superior value wanted by the consumer. back to marketing strategy strategy can be defined as the knowledge regarding the position in which the organization wishes to be and the path followed to be in this position. from this point of view, strategic marketing can be easily associated to the manager decision regarding the markets in which to compete and the way followed to penetrate these markets. an efficient marketing strategy is based on four behavioral aspects: market receptiveness, developing valid forecasts regarding the environment dynamic and the 63 studies and scientific researches ‐ economic edition, no. 14, 2009    behavior of the markets, exploitation of organizational competences and developing an realistic base for obtaining and maintaining competitive advantage. marketing strategy is not developed in isolation; it presumes a correlation with the corporate plan. at the corporate level, marketing inputs (competition screening, the dynamic of the market, and the changes in the environment) are essential in formulating strategic corporate plan. the marketing process represents the interface between the organization and the market and the knowledge about the current conditions in the market are extremely important for all the strategic planning exercises. in a certain conditions, marketing strategy operates with three essential elements, known as 3 c: consumer, completion and corporation. marketing strategies are focusing on the way in which corporation can effectively differentiate from the competitors, capitalizing its own strengths in offering superior value to the consumer. an efficient marketing strategy should be characterized by a number of premises: a clear definition of market, a solid correspondence between strengths of the organization and the market needs, superior competitive performance in the key aspects of the business. together, all three aspects define the triangle of marketing strategy. formulating marketing strategies on the base of the three aspects make necessarily the next actions: • where to compete, this decision makes necessarily defining the market; • how to compete, this decision asks for identifying the instruments to be used; • when to compete, this decision asks for temporal planning of market entry. knowing all that, we can define marketing strategy as the process of creating a unique and valuable position, which imply a set of different activities. developing marketing strategy asks for selections of those activities which are different from those of the competitors. essentials of strategic marketing the core specific aspects of strategic marketing are: 1. focusing on long term implications. the decisions specific to strategic marketing have implications on long term. in other words, strategic marketing means engagement and not action. efficient monitoring of environment asks for strategic inputs. these inputs are different from one specific to marketing research because they ask for more detailed analysis. 2. corporate inputs. strategic marketing decisions need the existence of the inputs from three sources: corporate culture, corporate public and corporate resources. corporate culture engages: style, characteristics, taboos, rituals of the superior management, which over the time are recognized as being organizational intrinsic. corporate public includes different categories of public with an concern regarding the existence of the organization. these categories are: consumers, employs, trade partners, government and community. corporate resources include financial, human, physical and technologic resources specific to the organization. corporate inputs establish the degree of freedom of the manager regarding the market to penetrate the business to invest or to abandon. 3. different role for strategic unit. traditionally, it has been considered that all the products ask for efforts to maximize the profit. strategic marketing adopt the premise that the products have different roles for the organization. the practices specific to strategic marketing try to identify the characteristics of 64 studies and scientific researches ‐ economic edition, no. 14, 2009    every strategic unit before establishing its role. moreover, different strategic units are synergic associated to maximize the marketing effort. finally, each strategic unit is delegated to a manager, which has the necessary experience and skills to manage it properly. 4. organizational levels. strategic marketing is primary developed at strategic unit level. 5. relation with the financial dimension. the decisions specific to strategic marketing are closely related to financial dimension of organizational activity. the importance of maintaining a close relationship between marketing and finance is not a new organizational aspect. strategic marketing doesn`t have a linear evolution. in the 1970, turbulent environment forced the managers to develop strategic plans for a better efficient and centralized management of the resources. all these plans had an important financial dimension. it has been widely recognized that the marketing inputs are necessary, but are they obtained when it is needed or are they considered as already given. for example, the majority of strategic planning actions focus on cash-flow and investments return, both associated to market share. the market share can be in the same way approached in two terms: it is considered as constant or it is considered to be ad-hoc obtained. as a conclusion, marketing inputs, such as market share, have to be seen as results and not causes. important in the past, as well as in the future a number of factors point to the important role of which strategic marketing is playing. first, the battle for market share is intense both in mature and new markets. strategic marketing is an indispensable instrument in such conditions. second, the turbulent market conditions ask again for strategic marketing. third, the battle between producers and distributors market share engages strategic marketing on both sides. tradition marketing channels have become relative, many producers being in the same time wholesalers, retailers, buying groups etc. in specific situations, distributors and producers representatives play an important role, in other buying groups and cooperatives play a more important role. fourth, international competition has become more intense. more and more countries develop new capacities which let them to be more competitive in international markets. these countries are ready to learn, to adapt and to innovate, being interested in improving economical conditions and life standards. fifths, market fragmentation lead to growing strategic marketing importance. competitive realities of the markets make necessary the existence of strategic marketing instruments to be used in identifying market segments and launching new products. sixth, facile access to technology and short-term product life-cycle favor the rapid moving marketers. rapid moving marketers have to have an important expertise in strategic marketing. seventh, the new millennium asks for identifying new competitive spaces, in which the organization is the only leader. corporate imagination and strategic based policies are essential in developing new markets. knowing all this facts, modern organization has to implement strategic marketing within its core culture and business practices as a premise of successful long-term existence. the next figure shows how strategic marketing process can be developed in order to ensure a systematical approach of all marketing decisions. 65 studies and scientific researches ‐ economic edition, no. 14, 2009    figure 1. the process of strategic marketing sursa: jain, s.c., marketing, planning and strategy, south western college publishing, cincinatti, 2000, p. 35. bibliography 1. cravens, d., piercy, n. (2008), strategic marketing, mcgraw hill/irwin 2. gilligan, c., wilson, r. (2003), strategic marketing planning, butterworth-heinemann 3. jain, s.c. (2000), marketing, planning and strategy, south western college publishing, cincinatti 66 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 24, 2016 http://sceco.ub.ro 15 specific mechanisms and methods for estimating tax fraud brindusa tudose gh. asachi university of iasi brindusatudose@gmail.com constantin strapuc stefan cel mare university, suceava strapuc@gmail.com abstract in the last decades, tax fraud has grown, being catalogued as a serious impediment in the way of economic development. the paper aims to make contributions on two levels: a) theoretical level by synthesis methodologies for estimating tax fraud and b) empirical level by analyzing fraud mechanisms and dynamics of this phenomenon, properly established methodologies. to achieve the objective, we have appealed to the qualitative and quantitative analysis. whatever the context that generates tax fraud mechanisms, the ultimate goal of fraudsters is the same: total or partial avoidance of taxation, respectively obtaining public funds unduly. the increasing complexity of business (regarded as a tax base) and failure to adapt prompt of legal regulations to new contexts have allowed diversification and “improving” the mechanisms of fraud, creating additional risks for accuracy estimates of tax fraud. keywords fiscal fraud; tax fraud; vat; corporation tax; corporation and personal income tax; fraud mechanism; method jel classification f02; f14 introduction the complexity and diversity of imposable processes, free movement of capital, goods and people inside the eu, technological progress, fiscality, financial and economic crisis, risk reduction goals and the need to maximize gains and amenities, have redefined the behavior of fiscal actors (especially taxpayers). in the last decades, due to insufficient public funds, reducing tax fraud (as part of matrix underground economy) has become a major preoccupation of world states. tax administrations around the world are facing two major challenges: a) economic globalization and increasing velocity of information flows and b) increasing social needs, growth materialized in increasing public spending which imposed taxes on the measure. in this context, more and more taxpayers (economic operators and individuals from different countries) are moving towards areas off shore, or choose to act, in whole or in part, in the underground economy, avoiding payment of taxes, or to take the risk of fraud. the main objective of the research was to analyze the mechanisms of tax fraud and to present theoretical and empirical methods for estimating tax fraud. to achieve this goal, the paper is structured as follows: the first section presents different taxonomies of tax fraud mechanisms; the second part shows the main methods used to estimate fiscal specific mechanisms and methods for estimating tax fraud 16 fraud, the applicability and the limits; the last section contains a conclusion summary and offers limits and future research directions. fiscal fraud. the taxonomy of fiscal fraud mechanisms the convention on the protection of the european communities’ financial interests (ojc, 1995), defines fraud as any intentional act or omission relating to: a) the use or presentation of statements or documents false, inaccurate or incomplete, which has the effect diversion or incorrect retention of funds from the general budget of the european communities or budgets managed by them or their behalf; b) hiding information and violation of a specific obligation, with the same effect; c) misuse of such funds for purposes other than those for which they were originally granted. we can accept, by extension, that the definition of fraud might be adopted regarding tax fraud, with the specification that, in this case, socially dangerous deeds take place in the process of forming budget resources needed for eu function and community development as well as member states’ budgets. although it was and is the subject of many studies and works of theoreticians and practitioners of tax law, tax evasion remains a difficult concept to define and there is no universally accepted legal definition. the doctrine distinguishes between: tax fraud, regarded as a form of tax evasion committed intentionally, which generally it is subject to criminal penalties. the term includes situations that are intentionally presented false declarations or counterfeit documents. tax evasion, that designates the illicit methods through which fiscal obligation is hidden or ignored, and the contributor pays lower taxes than it should have, by hiding information or income as against fiscal authority. we subscribe to the opinion, that tax evasion and tax fraud are “the result of logical flaws and inconsistencies of imperfect legislation and wrong treated, of faulty methods and modalities of application, of lack of regulation and the legislator incompetence whose excessive taxation is as guilty as those they provoke to evasion” (şaguna & şova, 2011). based on the purpose, three evasion methods can be identified: full abstraction from payment, partial abstraction and illegal reimbursement from the consolidate state budget. fraud mechanisms can be more largely detailed starting from the nature of the imposable operations that generate fraud: circulation of goods, entity income (profit and dividends received), individual income. 1. mechanisms of fraud based on value added tax are specific of sectors where the rotational speed of amounts is greater and cashing the value of goods is carried out at a time close or identical to the time of delivery (fruits / vegetables, cereals / crop agricultural products, construction materials, energy products, meat / meat products). the main mechanisms identified are: a) the setting up in the short term (45 days within 3 months) of phantom companies which “disappear” after intra-community purchase products; b) registration on the documents accompanying the transport of fictitious beneficiaries, who cannot be identified and verified in real time during transit through border points; c) tax code theft (on intra-community acquisition documents appear real businesses but they have no connection with the transaction, and therefore do not recognize it. specialty literature is detailing four methods to defraud the state budget by the carousel method (pătroi et al, 2013): a) the classic method (using phantom companies); b) the improved carousel method (the cheapening of the products covered by the successive transactions are compensated with “gain of vat”); c) the simulated delivery method (in which the documents are drawn up community delivery, but the goods are actually sold domestically [without invoice], and the tudose and strapuc 17 operation is performed without the knowledge or with complicity of the foreign partner); d) the parallel sale method (a fictive sale with minimum addition to not increase profits -, doubled by a sale on a “parallel market” at prices much higher than those recorded in the accounting records 2. mechanisms of fraud in field of excise. the object of this fraud consists of tobacco products (especially cigarettes), alcoholic beverages, but especially fuels. from a fiscal point of view, the excisable products involve the payment of sums representing obligations to the state budget. these tax obligations are reflected in a percentage (sometimes significant) in the market price of the product. therefore, tax evasion in this area materializes to circumvent payment of such tax obligations (excise). the major fraud context is the storage of excise goods under excise duty suspension, which allows postponing payment of excise duty to the state budget. other mechanisms can be added, such as: a) mixing alcohol with still fermented beverages or wine, yielding products within the intermediate product group, which are difficult to verify if the manufacturing recipe is identical with the proportion declared when was obtained the authorization; b) counterfeiting or substituting other nonexcisable goods (non-excisable mineral oils sold illegal as a fuel); c) illegal removal of goods under the supervision of tax (tax warehouse); d) to not declare to customs the total quantity of excise goods, respectively smuggling; e) creating certain “favorable conditions” that permit excise recovery on fuel. 3. mechanisms of fraud by corporation tax and tax on dividends. corporate taxation is relatively simple in a closed economy, but it becomes more complicated when companies operate in different countries (noor et al, 2015). managers can handle the revenues for their own personal benefits. the most common way of evading paying corporate tax consists in the artificial increase of expenses and the decrease in the tax base, by using invoices issued by phantom companies. the tax base decrease can also be achieved by not recording in full the revenues achieved, by transferring the taxable incomes to the newly established entities within the same group, or by incorrect classification during the exemption period. another mechanism of defrauding is generated by the intent of tax optimization, by setting up companies in offshore jurisdictions with a “favorable tax climate”. the main elements of the attraction of tax havens are the “tax lightness”, the banking secrecy, a good communications network and the political stability. seen as refuges for natural or legal persons with high incomes, who aim to avoid taxation in their native country, tax havens and offshore centers are characterized as sophisticated tools of international tax evasion (haita et al, 2015), existing as it is shown in literature (trandafir, 2012), a very fine and sensitive line between “tax evasion” and “tax avoidance right”. the recent discoveries undertaken by “panama papers” have reestablished the boundaries between tax optimization and tax evasion. 4. fraud mechanisms aiming at personal incomes are based on moonlighting and transfer / hide of incomes. as regards moonlighting, the main methods of defrauding are (naf a, 2015): a) activity which is not outlined and taxed carried out without individual labor agreement, without legal tender drawn up and payment of obligations to the state budget without timesheet for highlighting norm of time, without documents for highlighting norm of production and the type of work and not appointing in any way the person who carries out the work; b) work partly highlighted and taxed carried out by double recording of the working time and hence of the salary paid and, respectively, a dissimulation of full-time work, through part-time contracts, the salary payment being made partly under the contract and partly “in hand”; specific mechanisms and methods for estimating tax fraud 18 c) work during the so-called “trial periods”, not outlined within documents, or the permanent activity which is dissimulated into “day laborers”. in a report published by special eurobarometer (2015), there are presented the evasion mechanisms by black labor both from the perspective of the carrier of the labor demand (who purchases goods / services conducted through unstated work), and from the perspective of the workforce bidders (providing goods / services performed by unstated work). the key motivation for the purchase of these unstated resources is the price. the final conclusion that emerges from the research of tax fraud mechanisms is that, in temporal perspective, we are witnessing an increase in their complexity, passing from the hidden transactions, ponzi schemes and falsification to the more serious issues such as international fraud, identity theft, phantom companies etc. on the line of recommendations, we consider it is very important to clearly delineate two aspects: fiscal optimization and tax fraud. because the concerns of tax optimization can be used as a front for tax fraud. methods of estimating tax fraud according to the researches of profile, identification of tax fraud is difficult. however, using modern statistical means can achieve estimate the size of this phenomenon, having a reasonable degree of trust. the dynamics of tax evasion can be analyzed retroactive, insofar this is identified and sanctioned on its specific manifestations. we adhere to what is stipulated by the literature according to which, about tax fraud, can be admitted only estimates and not accurate assessments. the literature reveals the following methods in estimating tax fraud (filipescu, 2011): approximate methods, methods based on social surveys and methods based on fiscal control. the approximate methods evaluate tax fraud based on logical suppositions and methodical estimates. the logical suppositions use speculative deductions in a certain context with the main objective influence on public opinion and politico-economic environment, in particular about the existence of the phenomenon and, as finality, the awareness of danger and reduce its (figure 1). figure 1 estimated tax evasion based on logical assumptions source: amariei, r. (2015), offensive nafa raise prices, capital, no. 56/14.04.2015 available at http://www.capital.ro/ofensiva-anaf-creste-preturile.html the methodical estimates use specific statistical methods, respectively, economic and sociological tools; central elements of this method are: the projected state budget and tudose and strapuc 19 the budget incomes, in close correlation with national accounting; the most commonly used method is the method of representative sample. in that case, an eloquent example are the analyses made by the fiscal council, which, using statistical methods and economic tools, estimates tax evasion in absolute amount for each tax item, and also, in percentage of gdp (table 1). table 1 dynamics of the evolution of tax evasion in romania tax evasion from: (milions lei) 2010 2011 2012 2013 income tax 5093 4968 4852 4749 social security contributions 16393 15989 15617 15285 the value added tax (vat) 50347 57476 72399 76747 profit tax 3512 3126 2624 2795 excise duties and vice tax 3663 2616 2323 2438 % from gdp 2010 2011 2012 2013 evasion from black labor 3,18% 3,14% 2,89% 2,61% tax evasion in the informal sector (population) 0,92% 0,62% 0,60% 0,58% source: own processing after the fiscal council, annual report 2014 the social survey method enables understanding the phenomenon and its causes (using surveys, questionnaires, interviews). the method presents both advantages (information from source) and disadvantages (dishonesty those surveyed). the specialists say such a method is more eloquent when it is applied to limited areas and specific activity (not at the macroeconomic level but rather on the branches and domains); the areas concerned are (condrea, 2013): customs system, excise goods, trade with vegetables and fruits etc. indicators targeted are: the number of institutions with powers of control; frequency and density of checks performed by state bodies; number of applied sanctions; frequency and number of legislative changes. simultaneously with the concerns estimate of tax fraud and other fiscal issues can be targeted: assess of general attitude towards evasion, correlated with study of the tolerance degree for it; analyzing the impact of tax evasion at micro and macroeconomic; the escapist type behavior study and people’s willingness to resort to tax evasion and fraud; identifying typologies inclined to evasion and the most corrupt sectors of activities; identifying measures to combat tax evasion (condrea, 2013). surveys of national agency for fiscal administration (nafa, 2015) on a representative sample of 13,500 taxpayers and 1,500 officials reveal that only one third of contributors pay their taxes willingly and the share of illegal evasion increases with the size of the taxpayer (table 2). table 2 estimated tax evasion based on sample survey category neutral / undecided voluntary compliance forced compliance licit evasion illicit evasion individuals 9 26 32 17 15 small enterprises 9 28 31 19 14 medium taxpayers 9 29 26 25 10 large taxpayers 11 32 19 31 7 source: nafa (2015) specific mechanisms and methods for estimating tax fraud 20 the control method enables estimation of the size and dynamics tax fraud, making deductions and generalizations. fiscal control is not only to documents and statements of taxpayers (control summary) but also covers the verification of facts and script, direct and cross (depth control). the method allows: predicting overall (national) and partial fraud (by sectors of the national economy). at the same time and other aspects are identified and useful for improving fiscal behavior, such as: types of sanctioned taxpayers; acts committed and the sanctions imposed; types of taxes which are commonly involved in tax evasion. the reports drawn up by nafa structures shows that in the period 2014-2015, though was reduced the number of fiscal inspections, increased volume of additional obligations set, decreased number of fines, but increased their value, also increased the number of criminal complaints and calculated value of related damages (table 3). table 3 nafa the tax audit activity indicators 2015 fourth quarter 2014 fourth quarter 2015 number of inspections carried out 81053 16869 15313 additional obligations established (millions lei) 18841,4 4152,3 4438,4 number of fines applied 11117 3029 2780 value of fines applied (millions lei) 24,9 6,6 7,1 confiscation of goods and cash (millions lei) 22,1 2,3 2,4 number of criminal complaints 3384 768 804 the damage calculated (millions lei) 11253,3 2335,4 2527,0 value of precautionary measures (millions lei) 4966,0 948,6 920,3 source: own processing after nafa – official statistical bulletin no.4 / 2015 on the other hand, the control activity about tax fraud, conducted by specialized structure of national agency fiscal administration (fiscal antifraud general directorate) reveals an increase in the number of checks and the number of fines, ascertaining the same time, an increase their value and value of the damage calculated by criminal complaints made (table 4). table 4 nafa – the fiscal control activity indicators 2015 fourth quarter 2014 fourth quarter 2015 number of checks carried out 42936 6294 11335 number of fines applied 30835 2646 8114 value of fines applied (millions lei) 145,7 13,3 42,2 confiscation of goods and cash (millions lei) 228,9 58,9 136,8 number of suspended activity 849 282 87 number of criminal complaints 810 235 167 the damage calculated (millions lei) 4700,3 1740,2 1892,5 value of precautionary measures (millions lei) 2590,2 783,6 692,9 source: own processing after nafa – official statistical bulletin no.4 / 2015 tudose and strapuc 21 each of the methods discussed have advantages and disadvantages, conditionings and limits. therefore, when analyzing the dynamics of tax fraud is advised caution when interpreting the data. conclusions and recommendations it is widely recognized that tax evasion and fraud are the main obstructs the mobilization of tax revenue, tax revenue losses caused by them having various etiologies. in terms of time, between the occurrence of fraud mechanism, detecting fraud (analyzing and processing information to estimate its size and structure) and adopting measures to combat this phenomenon, are interposed time periods larger or smaller. reducing these periods is related to the capacity and efficiency of tax administration to prevent and to correct fiscal behavior toward desirable models. regardless of the context (causes) that generate tax fraud mechanisms, the ultimate goal of fraudsters is the same: total or partial avoidance of taxation, respectively obtaining public funds unduly. analysis of operations generating fraud allowed the identification some more prolific areas of fraud mechanisms (movement of goods, formation and distribution of businesses income and labor taxation) or some more arid areas (taxation for buildings, lands and means of transport). because of the broad scope of applicability of taxes (general and special) on the movement of goods, the complexity and extent of transactions, permissiveness and interpretability of the regulatory framework, the fraud mechanisms were “perfected” and diversified. according to estimates by the fiscal council, performed on the data provided by ins, mostly tax evasion is attributable to value added tax. mechanisms of fraud uncovered in economic practice (internal and external) were based on acquisitions undervalued, evasion of tax, illegal deduction of vat, illegal vat reimbursements etc. in terms of excise duty, the fraud mechanisms are based on failure to register or partial registration of sources of income in the accounting records, decreasing the tax base, using lower odds than real ones or misstating the real operations with excise goods under cross-border traffic. in the taxation field of profit, the most frequent means of evading tax obligations is the artificial increase of expenses and the decrease of tax base (by failure to integral register of income obtained or by transferring taxable income to the newly established entities within the same group, or by framing incorrect in the period of exemption). in regard to labor taxation, the fraud mechanisms are pursued on two levels: black labor and transferring or hide the incomes. the research of fraud mechanisms must not omit the tax optimization mechanisms. that is because the declared intentions of tax optimization may serve as fronts for tax fraud. in matter of tax fraud, can be admitted only estimates, but not accurate assessments. this aspect obliges for caution in interpreting the data. the estimation of tax evasion is based on retroactive quantitative and qualitative analysis. the most relevant methods for estimating tax fraud is based on fiscal control and statistical analysis, economic and sociological. at the opposite pole are positioned methods based on logical assumptions. due to the complexity and diversity of taxable transactions, are frequently used surveys, respectively, questionnaires. due to its negative consequences, the tax fraud has been and will remain one of the most discussed economic and social phenomena in doctrine and practice fiscal and its eradication is practically impossible. limitations and future directions of research. the study is a synthesis of recent research results in the field. to overcome this limit, in future research, we consider the specific mechanisms and methods for estimating tax fraud 22 realization of own estimates, relevant, about dynamics and structure of tax fraud in periods of growth, stagnation and economic decrease respectively pre and post crisis. references amariei, r. (2015), nafa offensive raise prices, capital magazine no. 56//14.04. 2015, available at http://www.capital.ro/ofensiva-anaf-creste-preturile.html. condrea, e. (2013), shadow economy in romania, vol. 3, “post-doctoral studies in economics”, bucharest, romanian academy publishing house. filipescu, r. (2011), theoretical and practical dimensions of the economy. case study for romania, phd thesis at the university “alexandru ioan cuza”. fiscal council (2014), annual rapport 2014, available at http://www.consiliulfiscal.ro. haita, g., héguin de guerle, o. (2015), controlled offshore structure. tax fraud and tax optimization in an international context, public finance and accounting magazine, no. 7-8, pp.15-23. nafa (2015), methodology the tax inspection on salary income tax and compulsory social contributions, official statistical bulletin no. 4/2015, available at http://www.anaf.ro. noor, n. f., sanusia, z., m., heang, l. t., iskandar, t. m., mat isa, m. (2015), fraud motives and opportunities factors on earnings manipulations, procedia economics and finance, issue 28, pp.126-135. official journal of the european communities council act of 26 july 1995 drawing up the convention on the protection of the european communities’ financial interests, accessed 25.04.2016, available at http://eur-lex.europa.eu/legalcontent. pătroi, d., cuciureanu, f., benţa, a. (2013), national vat vs. intra-community, bucharest, ch beck publishing house. special eurobarometer 402 (2015), undeclared work in the european union, available at http://ec.europa.eu/public_opinion/archives/ebs/ebs_402_en.pdf. şaguna d.d., şova d. (2011), tax law (the 4th edition), bucharest, ch beck publishing house. trandafir, c. (2012), offshore companies between lawful and unlawful regulation, bucharest, juridical universe publishing house. http://www.capital.ro/ofensiva-anaf-creste-preturile.html http://www.consiliulfiscal.ro/ http://eur-lex.europa.eu/legal-content http://eur-lex.europa.eu/legal-content http://ec.europa.eu/public_opinion/archives/ebs/ebs_402_en.pdf studies and scientific researches. economics edition online first, april 2018 25 trade liberalisation in sadc and the economic benefits of belonging to an rta: the case of tanzania nzeyimana dyegula planning and investment manager, rail asset holding company, tanzania djesca@yahoo.com francis lwesya department of business administration, school of business studies and economics, university of dodoma, tanzania flwesya@yahoo.com. abstract this paper examines the dynamics of trade liberalization in the southern africa development community (sadc) region and the economic benefits that tanzania derives from sadc membership. we use qualitative analysis and trade indices. the findings show that sadc is far behind its agreed schedule of transforming the region into a customs union and sadc intraregional trade is very low, only south africa and mozambique show the potentials to increase intra-regional trade and benefit more from sadc in the short run. on the other hand, tanzania’s economic benefits from sadc membership have remained trivial, though her exports and market share have been steadily increasing since the mid-1990s. however, tanzania does not suffer adversely from the dual memberships of eac and sadc regions, despite its membership in the two overlapping rtas making its trade regime complex because tariff reductions under eac customs union are not compatible with sadc’s, hence resulting in problems in implementing the sadc trade protocol. nonetheless, the country may not need to withdraw its membership from either eac or sadc due to signs of good prospects in the long run under the proposed harmonization of the eac and sadc trade regime through the tripartite free trade area arrangement (comesa−eac−sadc). keywords trade liberalization; trade integration; trade intensity index; revealed comparative advantage index (rca); regional trade area (rta) jel classification f13; f1 1. introduction regional integration in africa particularly in sub-saharan africa (ssa) has a long history since the formation of the southern african customs union (sacu) in 1910. currently, ssa contains 12 of the at least 14 regional trade agreements (rtas) existing in africa (see figure 1 for some of the rtas in ssa). of the 14 rtas eight of these are officially recognised by the african union (au) and they include: the arab maghreb union (uma), common market for eastern and southern africa (comesa), community of sahel-saharan states (cen sad), east african community (eac), economic community of central african states (eccas), economic community of west african states (ecowas), inter-governmental authority on development (igad), and the southern africa development community (sadc). while the remaining six rtas are considered as inter-governmental agencies and these are: central african economic community (cemac), economic 26 community of great lakes countries (cepgl), indian ocean commission (ioc), mano river union (mru), sacu and west africa economic and monetary union (waemu). figure 1 selected rtas in sub-saharan africa regional integration has been going on along with the development of intra trade agreements with the implementation of sadc being the most recent (meyer et al. 2010). with at least 12 rtas, most countries in ssa belong to at least two of them, thus regional integration in the sub-region is very complex and confusing affair, what alves et al. (2007) describe as “a spaghetti bowl that hinders regional integration by creating a complex entanglement of political commitments and institutional requirements.” with tanzania being a member of eac and sadc, this is similar to many ssa countries that have multiple memberships in various rtas. as a result, some regional trade groupings such as sadc have had to refocus their agendas and strategies (e.g. sadc’s original commitment to the introduction of a customs union in 2010) while others such as comesa are deepening their trade integration (e.g. comesa fta implementing its customs union in 2010). rtas have different objectives and these range from purely market or economic integration to socio-political cooperation agreements. the motives for tanzania to become a member of sadc (sadcc then), however, were for socio-political cooperation such as the fight against apartheid policies in south africa amongst others. in all cases tanzania has been a committed member in advocating the fraternity objective of sadc states. tanzania withdrew its membership from comesa in 2000 because the government perceived less beneficial compared with eac and sadc, and believed that the agendas of these organizations were incompatible with comesa. the fact that tanzania’s leading trade partners are members of eac (kenya) and sadc (especially south africa) makes it likely that tanzania may benefit significantly from the two rtas. the desire to further promote an economic relationship with south africa was another deciding factor. however, some of the private sector organisations in tanzania still believe that comesa was beneficial to tanzania and tried to reopen the debate as to whether the country could reinstate her membership. the scope and stage of implementation of trade agreements among the aforementioned rtas varies. however, trade barriers still remain high in these rtas and thus it has been observed that intra-regional trade has been minimal and regional member states of these rtas have not meaningfully benefited economically. this paper therefore n o . o f m e m b e r c o u n tr ie s rtas in ssa waemu ecowas cemac comesa eac sacu sadc studies and scientific researches. economics edition online first, april 2018 27 explores the extent of trade liberalisation in sadc and assesses the economic benefits of tanzania’s membership of sadc. the rest of the paper is organised as follows. section 2 discusses the overlapping membership of trade agreements. section 3 discusses the progress made in liberalising trade within the sadc region. section 4 discusses the benefits and costs of tanzania’s membership in sadc and section 5 sets out the conclusions of the paper. 2. overlapping membership of trade agreements many countries in eastern and southern africa belong to more than one rta as shown in figure 2. some of these rtas have overlapping membership, conflicting objectives and obligations in some cases. this is a case particularly with comesa/eac/sadc member states whose integration processes and agenda until recently are inconsistent (meyer et al. 2010). however, the existing complex and confusing structure of eastern and southern african regionalism is far from an ideal starting point from which to build a regional framework for the 21st century (gibb, 2006). the issue of overlapping membership among member states is becoming a burning debate in countries that are members of comesa/eac/sadc. thus, some member states will eventually withdraw from one or more rtas due to the increasing problems of membership overlaps. needless to note, deepening of regional integration has also taken place within existing rtas and includes other areas of integration such as monetary and fiscal integration and other forms of policy cooperation and/or harmonization. this deepening of integration has often been accompanied by a widening of regional agreements (meyer et al. 2010). it is a policy choice for a country to join a particular rta. tanzania is party to several trade agreements both at the regional and multilateral level. for a poor country such as tanzania with inadequate resources and human capacity and inefficient institutions, this is considered a daunting challenge, which limits the effectiveness and implementation of agreed protocols (musonda, 2004). however, it is important to note that rtas are different in focus, thus tanzania has different reasons for joining or leaving different regional trade arrangements and hence may decide to speed up the integration process with one while slowing on another. tanzania is a member of both the eac and sadc. under the sadc protocol on trade, tanzania was obliged to dismantle all tariff barriers to all her fellow sadc member states by at least 2012. figure 2 the extent of overlapping membership among eac, comesa and sadc 28 conversely, tanzania is also obliged as a result of its eac membership to create a eac common external tariff (cet) that excludes and discriminates against noneac−sadc member states. thus, tanzania has agreed indirectly and simultaneously to promote free trade with all sadc member countries and to maintain tariff barriers against them at the same time. other countries in eastern and southern africa are in exactly similar position and raises similar complexity issues and so are the rtas with overlapping membership. however, the focus of this paper is on the extent of trade liberalisation in sadc and tanzania’s benefits from being its member discussed in what follows. 3. extent of trade liberalisation in sadc region sadc, established in 1980 as sadcc, is currently made up of fifteen member states as shown in table a.1 in appendix a. the region has a combined population of 223 944 179, a combined gdp at market prices of us$360 billion and gdp per capita of us$3152. for the period 2000−09, intra−sadc exports grew by 9.7% averaging us$8112.8 million while imports grew by 10% averaging us$8293.0 million. the ultimate goal of sadc regional economic cooperation is to transform the organisation into an economic union by 2016. the path to the creation of the economic union started with the coming into force of a trade protocol in 2000 and this led to the creation of a free trade area (fta) in 2010. this achievement started with the implementation of a series of tariff phase down schedules that was designed to result in 85% of all trade within sadc being zero duty by 2008 and eventually transform the region into a customs union by 2010. however, this was not achieved as there were problems which affected the transition. in fact the roadmap towards the achievement of the customs union has not been clearly defined. in assessing the extent of trade liberalisation in sadc and the economic benefits of belonging to the regional trade body, this section uses the two trade indices that are used to evaluate the potential economic effects of a free trade agreement following the suggestions in plummer et al. (2010). these indicators include: the intraregional trade intensity index to assess the biasness of sadc towards trading among them and the revealed comparative advantage index developed by balassa (1965) and the results are reported in tables 1 and 2. table 1 shows sadc regional trade intensity indices for the 15 member states and a value that is greater (less) than one indicates trade flow that is larger (smaller) than expected with other sadc member states. the indices seem to suggest that the sadc region is more important as a destination for its members’ exports than as a source of their imports. for example, tanzania’s indices although increased to 0.50 for the period 2000−9 are still below one suggesting low dependence of the country on the region for its exports. however, landlocked countries such as malawi, zambia and zimbabwe have a high degree of dependence on regional partners for both exports and imports while non-landlocked countries such as tanzania have very low dependence on the region. table 1 sadc regional trade intensity indices country export intensity import intensity 1980 1985 1990 1995 2000 2005 2009 1980 1985 1990 1995 2000 2005 2009 angola -1.00 0.00 0.00 0.00 0.03 0.03 0.02 0.00 0.00 0.00 0.00 0.00 0.10 botswana drc 0.00 0.00 0.00 0.00 0.10 0.40 1.20 0.00 0.00 0.10 0.00 0.00 0.10 0.10 lesotho madagascar 0.00 0.00 0.00 0.10 0.20 0.30 0.20 0.00 0.00 0.20 0.00 0.10 0.00 0.00 studies and scientific researches. economics edition online first, april 2018 29 malawi 0.00 0.10 0.20 0.20 1.50 2.20 2.10 0.10 0.10 0.00 0.10 0.10 0.30 0.10 mauritius 0.00 0.00 0.00 0.00 0.30 0.20 0.30 0.00 0.00 0.00 0.00 0.00 0.00 0.10 mozambique -1.00 0.20 0.20 0.50 -1.90 1.60 1.60 -1.00 0.00 0.00 0.10 0.10 0.10 0.20 namibia seychelles 0.20 0.00 0.40 0.20 0.50 0.40 0.30 0.00 0.00 0.00 0.00 0.00 0.00 0.10 swaziland south africa 0.00 0.00 0.00 0.02 0.02 0.03 0.04 0.00 0.00 0.10 0.10 0.10 0.10 0.10 tanzania 0.00 0.00 0.00 0.10 0.50 0.50 0.50 0.00 0.00 0.00 0.00 0.10 0.10 0.00 zambia 0.00 0.10 0.20 0.10 1.50 1.20 1.40 0.00 0.10 0.00 0.10 0.10 1.00 0.30 zimbabwe -1.00 0.00 0.10 0.00 0.30 3.50 3.00 0.10 0.10 0.10 0.20 0.30 0.20 source: imf direction of trade statistics; keane et al. (2010) note: bold = member of comesa; italic = member of sacu; underlined = member of eac; (a) 2008 data; (b) 2001 data table 2, presents the top ten products in which the sadc region has a revealed comparative advantage (rca). a region or country reveals its comparative advantage in specific products when the rca indicator scores higher than one, and this shows that its exports of a specific product are more than expected on the basis of comparison to the reference area (keane et al., 2010). table 2 seem to suggest that the region has an rca primarily in agriculture, intermediate goods and ores and minerals and some of these product groups are live trees and other plants, edible fruit and nuts, tobacco, ores, slag and ash, precious metals and base metals. table 2 revealed comparative advantage (rca) indicators for sadc and rest of the world hs description 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 6 live tree and other plants; bulb, root 1.9 1.3 2.2 1 1.2 1.4 7.8 2.4 3.3 6.9 0 8 edible fruit and nuts 4.5 3.5 3.9 4.2 4.7 4.4 3.7 3.9 3.9 5.3 2 4 tobacco/manuf. tobacco substitutes 8.4 7.9 5 3.2 5.9 5.4 6.4 5 5.9 4.8 2 6 ores, slag and ash 8.2 7.5 9.2 7 6.2 6 6.4 7 9.6 10.7 3 6 explosive; pyrotechnic prod; matches 7.7 3.3 4.2 4.2 5.2 3.8 3.3 4 5.2 4.6 7 1 precious/semi precious stones/metals 8.6 12.1 7.8 10.9 10.7 11.9 10.6 10 8.4 5.8 7 4 copper and articles thereof 3.7 3.5 3.7 4 3.1 3.7 4.3 4.2 4 6.9 7 5 nickel and articles thereof 3.5 3.8 4.5 1.5 7.6 2.5 2.9 5.3 5.5 4 8 6 railways locomotives/rolling stock, parts 10.7 9.4 10.3 8.2 7.6 6.6 8.6 8 7.4 8.8 8 8 aircraft, spacecraft and parts thereof 2.8 2.8 3.5 4.2 4.1 4.6 3.9 4.1 5.6 5.6 source: derived from data obtained from uncomtrade database; keane et al. (2010) nevertheless, quantitative analyses undertaken such as keane et al. (2010) suggest that non-tariff barriers (ntbs) reported to unctad-trains disproportionately impact on intra-regional trade in sadc and that these ntbs tend to divert imports away from regional towards non-regional partners. furthermore, keane et al. (2010) reveals that most recent trade policy reviews available for sadc members show that most of the ntbs are reported as problematic by traders and these include: competition policy and 30 infant industry protection1, sanitary and phytosanitary (sps) standards /technical barriers to trade, rules of origin and customs procedures. table 3 present reports by exporters/importers and trading partners to sadc secretariat of ntbs imposed by sadc member states for the period 2009 to 2010. the table summarises ntbs registered by or reported against sadc members and shows that sadc member states imposed 305 ntbs against other sadc member states for the period. the table also shows that the greatest number of complaints has been reported by namibian importers and exporters against namibia’s trading partners (complicated customs procedures and import and export quotas). table 3 types of ntb by sadc members between 21st january, 2009 to 8th june, 2010 a n g o la b o ts w a n a d r c l e so th o m a d a g a sc a r m a la w i m a u r it iu s m o z a m b iq u e n a m ib ia s e y c h e ll e s s o u th a fr ic a s w a z il a n d t a n z a n ia z a m b ia z im b a b w e t o ta l grand total 9 28 13 14 5 32 3 20 36 16 40 13 19 33 24 305 6. trade related administrative ntbs 3 9 2 3 6 2 1 6 7 14 4 4 2 5 68 3.1 export/import licence 2 3 2 2 6 6 5 1 6 4 37 5.5 transit issues 1 7 2 2 5 1 2 5 7 1 33 2 technical barriers to trade (tbt) 1 4 1 4 1 2 4 6 1 2 1 27 1. sps measures 1 3 4 1 2 5 4 4 2 26 5.3 clearance procedures 1 2 1 1 4 1 4 1 5 1 3 24 7 payments 1 1 1 2 1 1 2 1 3 1 3 1 2 20 3.2 quotas 3 1 3 7 2 3 19 5.6 rules of origin 2 2 1 2 4 1 6 1 19 5.2 customs documentation 1 1 1 7 2 1 3 16 5.4 pre-shipment inspection 1 3 1 1 1 7 5.1 customs valuation 1 1 1 2 5 4. immigration/ consular requirements crossborder traders 1 1 1 3 5.7 safeguards 1 1 source: http://ntb.africonnet.com/startreport.php; keane et al. (2010) however, the main source of ntbs within sadc relate to trade administration imposed by south africa against other sadc members. thus the establishment of ntbs seem to stifle intra-regional trade in the sadc region and it has been identified as particularly binding constraint for the economically smaller sadc member states such as tanzania. on the other hand, exporters and importers trading with tanzania for the same period reported only 19 ntbs as shown in table 3. the table shows that most of these ntbs imposed by tanzania are trade related administrative measures, transit issues and sps measures. it’s worth noting that tanzania has a dual membership to eac and sadc. however, the country’s membership in the two overlapping preferential arrangements (eac customs union and sadc fta) makes the country’s 1 these include price controls, quantitative restrictions and other charges intended to protect local industry and /or encourage local processing http://ntb.africonnet.com/startreport.php studies and scientific researches. economics edition online first, april 2018 31 trade regime complex as tariff reduction under eac is not compatible with the sadc requirements and hence tanzania has had problems implementing the sadc trade protocol. 4. costs and benefits of tanzania’s participation in sadc trade arrangement 4.1. benefits that tanzania derives by participating in sadc it is generally argued in international trade theory that countries such as tanzania and others can benefit from free trade through increased exports and investments. to empirically evaluate the costs and benefits arising out of tanzania’s membership to sadc, the literature on the theory of international trade on the effects of regional economic integration is followed. according to theory, entry into a regional integration scheme can have static effects, which is a result of resource allocation in response to changing relative prices, welfare effects, and dynamic effects, which come from changes in efficiency, ability to exploit economies of scale, and in level of investment and growth (negasi, 2009). in assessing the benefits and costs, this section rely on trade indices following plummer et al. (2010) and these are: the trade complimentary index which is a measure of potential trade between two partners (shirotori & molina, 2009), and the revealed comparative advantage indices and the results are reported in tables 4 and 5. additionally, the section compares trade flows between tanzania and her major trading partners before and after joining the sadc free trade area in order to assess any signs of trade creation, trade diversion and welfare effects. the trade complementarities index compares the export basket of one country to the import basket of another country with positive values up to 100 indicating the extent to which the exports of one country matches the imports of another. on the other hand, values of less than zero and negative show that the export and import shares differ greatly suggesting limited potential for intra-regional trade. table 4 presents trade complementarities indices constructed for 13 member countries of sadc for which data were available. the table suggests that only south africa and mozambique appear to have the composition of exports similar to other sadc members’ imports thus suggesting that only these two countries have the potential for high intra-regional trade growth. however, for other members and tanzania in particular, the table seems to suggest that the compositions of their exports are not conducive to increased intra-regional trade because their export and import baskets differ greatly from each other. for example, a comparison of the relative importance of few export destinations such as mauritius, mozambique and south africa to tanzania reveal that tanzania’s exports match with the imports of mauritius and mozambique only to a small extent as shown in table 4 with positive indices of 14 and 2 respectively. on the other hand, with a negative index (-14), the results reveal that the country’s exports do not match with the imports of south africa suggesting limited potential for trade between the two countries. this therefore shows that there is limited potential for tanzania to increase her participation in sadc intra-regional trade. to further understand what may be the reason behind the similarities in the export and import baskets, rca indices for tanzania‘s top 10 exports have been computed and the results are presented in table 5. the table reveals that tanzania has high rcas in coffee, tea and spices, vegetable textile fibres, yarn, and woven fabrics, ores, slag and ash, pearls, precious stones, metals and coins, and cotton product groups. however, when compared with the rest of the sadc member states and the rca indices for sadc (see table 2), tanzania has similar comparative advantages to the region 32 particularly in the top five exports with the exception of meat and edible meat offal (h0−07) and oil seed, fruits, grain, seed etc (h0−12) products. table 4 trade complementarities indices in sadc b o ts w a n a l e so th o m a d a g a sc a r m a la w i m a u r it iu s m o z a m b iq u e n a m ib ia s e y c h e ll e s s w a z il a n d s o u th a fr ic a t a n z a n ia z a m b ia z im b a b w e botswana -56 -35 -61 -46 -53 -43 -52 -50 -59 -55 -53 -50 lesotho -50 19 -36 -5 15 -18 -66 -34 12 6 -36 1 madagascar -35 -60 -59 -41 -18 -21 -78 -43 -78 -17 -3 -7 malawi -61 -74 -41 -56 -9 -21 -79 -2 22 -2 -37 -16 mauritius -46 -59 -4 -48 16 9 -55 -36 32 14 32 -4 mozambique -53 -74 -30 -57 -54 -8 -76 -49 43 2 -32 2 namibia -43 -64 -28 -59 -36 6 -70 -31 40 -4 -25 -6 seychelles -52 -76 -19 -66 -45 16 11 -48 37 -5 -24 -17 swaziland -50 -61 -9 -37 -32 22 -8 -69 29 13 -30 -25 south africa -59 -70 -45 -72 -52 6 -16 -81 -44 -14 -35 -31 tanzania -55 -77 -48 -71 -59 7 -13 -82 -52 46 -31 -24 zambia -53 -79 -54 -78 -62 3 -8 -83 -35 39 -23 -26 zimbabwe -50 -77 -25 -51 -51 11 -12 -70 -39 36 -6 -23 source: derived from data obtained from uncomtrade database; keane et al. (2010) note: data for lesotho are 2004; swaziland, 2006; malawi, namibia and seychelles, 2008, all others are 2009 furthermore, some of the product groups with high rca such as coffee, tea and spices, vegetable textile fibres, yarn, and woven fabrics, and cotton also differ from the country’s top 5 exports. table 5 rca for tanzania to the rest of the world for the country’s top 10 exports hs product description export value rca indices h0-71 pearls, precious stones, metals, coins, etc 418085782 12.00 h0-26 ores, slag and ash 131170956 17.50 h0-07 meat and edible meat offal 80199996 6.05 h0-08 edible fruit, nuts, peel of citrus fruit, melons 69766251 6.40 h0-12 oil seed, oleagic fruits, grain, seed, fruit, etc, ne 43173779 5.02 h0-52 cotton 38368590 11.61 h0-27 edible vegetables and certain roots and tubers 22856766 0.07 h0-44 wood and articles of wood, wood charcoal 13860690 1.29 h0-09 coffee, tea, mate and spices 12431043 30.18 h0-53 vegetable textile fibresnes, paper yarn, woven fabric 7200757 27.93 source: derived from data obtained from uncomtrade database; keane et al. (2010) it has been argued by authors such as castro et al. (2004) that implementation of planned fta has implication on import and export flows and customs revenue. therefore, tanzania like many other countries that belong to regional trade organizations has to analyse the effects of implementation of trade protocols on the country’s trade policies and the benefits of belonging to such organizations. as discussed earlier countries join rtas either for political and social reasons or for economic benefits from the bigger markets that rtas provide. the possible benefits that may accrue to tanzania for being a member of a rta include: possible gain in foreign direct investment (fdi), possible gain of export market share in regional markets due to reciprocity and possible gains due to new market location. studies and scientific researches. economics edition online first, april 2018 33 to assess whether the above possible gains have actually accrued to tanzania, this subsection uses statistical evidence where available. empirical evidence, however, seems to suggest that in the sadc region, the main driver of trade within the region in terms of exports is south africa followed by zambia and zimbabwe respectively as shown in table 6. tanzania’s exports to the region have largely remained very low although have increased from 2.60% in 1980−84 to 5.10% in 2005-09. keane et al. (2010) argue that south africa’s regional importance is much more pronounced as a source of other sadc members’ imports than as a destination for their exports. despite the low levels of market share for tanzania’s exports to the sadc region, the country’s nominal exports have steadily increased over the period 1995−2010 reaching us$6 billion in 2010 as shown in figure 3. the figure also shows that inflows of fdi into tanzania has been increasing since 1998 and reached the peak of about us$ 1.2 billion in 2008 although this cannot be directly attributed to sadc membership. table 6 sadc intra-regional exports (% share) country 1980-84 1985-89 1990-94 1995-99 2000-04 2005-09 angola 0.90 1.10 1.10 3.60 7.00 6.60 botswana 8.40 15.00 12.40 2.80 1.00 1.60 drc 6.40 5.90 3.60 4.20 4.40 9.10 lesotho 0.20 0.30 0.20 0.00 0.00 0.00 madagascar 0.10 0.70 1.90 3.20 3.20 2.20 malawi 5.90 6.80 9.50 8.60 6.80 4.40 mauritius 0.80 1.50 2.00 6.00 6.10 3.40 mozambique 5.30 9.90 7.60 13.00 14.80 12.10 namibia 0.40 0.20 1.10 0.80 0.40 0.40 seychelles 0.40 0.40 0.80 0.80 0.90 0.80 swaziland 1.50 2.70 6.00 2.10 1.10 0.80 south africa 48.30 37.90 39.60 23.40 18.30 25.20 tanzania 2.60 2.80 2.50 4.60 6.10 5.10 zambia 9.60 12.50 9.30 11.10 13.80 14.40 zimbabwe 10.80 5.00 8.30 18.00 17.20 14.70 source: imf direction of trade statistics; keane et al. (2010) figure 3 tanzania’s exports and imports and inflows of fdis for the period 1995-2010 source: authors’ compilation based on data derived from un comtrade database and unctadstat data base for fdi data f d i in m il li o n s u s $ tanzania's exports and imports and inflows of fdis for the period 1995-2010 exports of goods and services 34 4.1. costs associated with tanzania’s membership to sadc the fiscal effect of trade liberalization of economies essentially involves a loss of government import tariff revenue, particularly where governments have not put in place appropriate measures to expand alternative sources of revenues (matambalya, 2001). this is a critical problem that has been left unaddressed in small open economies such as tanzania. the problem with such rapid revenue losses and general costs is that they undermine the member states’ ability to fund the day-to-day operations of its own country, especially given the fact that tanzania is very much reliant on donor funding to support its national budget. in other words, small open economies require increased direct donor funding of national budgets, or significant speedy support for tax diversification to replace lost revenue and to avoid undermining state functioning and national development programmes. in summary tanzania has suffered losses as a result of her membership to the economic groupings and has faced ntbs in accessing the sadc market and these include: possible loss of protection for infant domestic industry and loss of tariff revenue as tariffs on imports go down or are eliminated among others. specifically the removal of tariffs in intra-sadc trade may result in tanzania losing tariff revenue as has happened when eac became a customs union. it has been argued that tariff duties and vat on imports are the most important sources of customs revenue in tanzania. castro et al. (2004) estimated that in 2001-02 customs revenue accounted for 8.5% of tanzania’s total revenue. off the total customs revenue collected in 2002, tariff duties and vat on imports accounted for 45.3% and 42.3% respectively thus suggesting that customs revenue is mainly consisted of revenue from tariff duties and vat on imports in tanzania. to illustrate further the impact of tariff reduction or tariff removal on tanzania’s revenue as a result of joining an rta, when tanzania joined the eac customs union in 2004, the country lost an estimated revenue amounting to us$19 million (4.2% of customs revenue) (us$40 million with the suspended duties) without the duties which were suspended but phased out over a period as shown in figure a.2 in appendix a. on the other hand, withdrawing from an rta can result in a country’s exporters losing the market for their exports as happened when tanzania withdrew from comesa in 2000. ng’andu (2008) estimates that the country lost on average per year for the period 2000−2005, exports amounting to us$73.3 million totalling us$366.5 million in value terms for the five year period as shown in table a.3 in appendix a. table a.4 in appendix a shows a sample of tanzanian companies that had lost the comesa market after the country withdrew from the rta in 2000. this can equally happen if tanzania was to withdrawal its membership from sadc. 5. conclusion the paper has explored the extent of trade liberalisation in sadc and has also assessed the economic benefits of tanzania’s membership to the rta. the paper’s findings seem to suggest that sadc is far behind the schedule of transforming the region in a customs union. the region still maintains a lot of ntbs and is at the fta level. the study has revealed that sadc intra-regional trade is very low and that only south africa and mozambique seem to have the potential to increase intra-regional trade and benefits from sadc. the study has found that tanzania’s economic benefits from sadc membership have been minimal. however, its nominal exports and exports market share have steadily been increasing since the mid-1990s and so have the inflows of fdis. at the moment tanzania does not suffer adversely from its dual membership of eac and sadc regional integration initiatives. however, tanzania’s membership in overlapping rtas studies and scientific researches. economics edition online first, april 2018 35 has made its trade regime complex while tariff reductions under eac is not compatible with sadc requirements hence the country has had problems implementing the sadc trade protocol. the country therefore may not need to withdraw its membership from either eac or sadc. in the long-term the country will do well to advocate for a harmonisation of the eac and sadc trade regimes, possibly through the mechanism of the proposed comesa−eac−sadc tripartite fta. references african union (2010), trade liberalisation, investment and economic integration in african regional economic communities towards the african common market and economic community, report presented at the au conference of ministers of trade, 6th ordinary session, 29th october-november 2010, kigali, rwanda. alves, p., draper, p., halleson, d. 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(2004), regional integration and poverty: the case of tanzania. meyer, n. et al. (2010), bilateral and regional trade agreements and technical barriers to trade: an african perspective, oecd trade policy working papers, 96. negasi, m. y. (2009), trade effects of regional economic integration in africa. the case of sadc. paper drafted for the services sector development and impact on poverty thematic working group working paper, available at http://www.tips.org.za/files/13.trade_effects_of_regional_economic_integrat ion_-_ssd.pdf ng’andu, b. k. e. (2008), zambia’s dual membership of comesa and sadc. a study commissioned by zambia business forum with support from market access trade and enabling policies and zambia threshold project. http://www.tips.org.za/files/13.trade_effects_of_regional_economic_integration_-_ssd.pdf http://www.tips.org.za/files/13.trade_effects_of_regional_economic_integration_-_ssd.pdf 36 plummer, m. g., cheong, d., hamanaka, s. (2010), methodology for impact assessment of free trade agreement, mandaluyong city, asian development bank. shirotori, m., molina, a. (2009), south-south trade: the reality check, issues in new economic geography of trade, united nations conference on trade and development: geneva, available at http://www.unctad.org/ditc/tab/publications/ditc-tab-2008-1-final17march2009.pdf uneca (2011), establishment of inter-rec’s free trade areas in africa drawing on lessons from the comesa−sadc−eac fta experience, addis ababa, uneca. wanga, g., matambalya, f.t. (2001), southern african development community and poverty alleviation: an overview, presented at the southern african regional integration conference, st. george’s hotel, johannesburg, 19th and 20th july 2001. http://www.unctad.org/ditc/tab/publications/ditc-tab-2008-1-final-17march2009.pdf http://www.unctad.org/ditc/tab/publications/ditc-tab-2008-1-final-17march2009.pdf studies and scientific researches. economics edition online first, april 2018 37 appendices appendix a table a.1 summary of international trade agreements for tanzania agreement member countries membership for tanzania (year) nature of the agreement current status gdp per capita (us$) total population comesa burundi, comoros, dr congo, djibouti, egypt, eritrea, ethiopia, kenya, libya, madagascar, malawi, mauritius, rwanda, seychelles, sudan, swaziland, uganda, zambia, zimbabwe 1995 endorsed 2000 withdrew started with free trade area (fta) and now in progress to establish custom union customs union (cu) launched 2010 1,811 406,102,471 sadc angola, botswana, dr congo, lesotho, malawi, mauritius, madagascar, mozambique, namibia, seychelles, south africa, swaziland, tanzania, zambia, zimbabwe 1992 signed the declaration and treaty 1996 adopt sadc protocol in trade establish a fta in sadc region by 2008 and cu by 2010 and common market by 2015 fta launched 2010. cu postponed (indefinitely) 3,152 233,944,179 eac burundi, kenya, rwanda, tanzania, uganda 1999 signed the treaty 2000 ratified by parliament regional trade integration with custom union as the entry point custom union signed in march, 2004, eala unanimously approved the custom management bill in december 2004 685 133,100,000 source: eac, 2011 38 table a.2 tanzania: customs revenue change by sector in eac customs union sector share of total imports (%) change in tariff protection* change in customs revenue revenue loss from elimination of suspended duties (%) in us$ million % of customs revenue food and live animals 12.2 1 -9.0 -2.02 23 beverages and tobacco 0.8 -29 -0.4 -0.09 0.2 crude materials, inedible, except fuels 3.1 6 -7.9 -1.79 0.0 mineral fuels, lubricants and related materials 0.5 n.a. 0.1 0.02 0.0 animal and vegetable oils, fats and waxes 4.2 -25 -0.8 -0.18 35.2 chemicals and related products 14.1 -36 -3.7 -0.83 1.3 manufactured goods classified chiefly by material 18.5 -16 18.2 4.12 30.4 machinery and transport equipment 40.0 -39 -17.1 -3.85 5.0 miscellaneous manufactured articles 6.7 -10 1.7 0.39 4.7 commodities and transactions not classified elsewhere 0.0 -6 0.0 0 0.0 total 100 -48 -18.78 -4.24 100 source: castro et al. (2004) studies and scientific researches. economics edition online first, april 2018 39 table a.3 determination of loss and potential of comesa market company average export value (million) per year 1997 2000 average export value (million) per year 2000 2005 estimated export potential in future (million) comments or observations 1 soap and allied industries ltd <us$ 0.5 <us$ 1.5 <us$ 1.8 increased production will allow the company to export much more 2 aluminium africa ltd us$ 1.2 us $ 1.10 <us$ 1.5 company estimated potential us$ 26 million 3 sumaria group (i) simba plastic ltd nil us $ 0.55 us$ 1.2 exports value of shelly’s pharmaceutical co. ltd not included as medicines enjoy duty free status in most comesa states (ii) sdl ltd us $ 0.15 us $ 0.35 us$ 1.0 (iii) nyanza bottling nil nil us$ 0.42 4 panasonic battery co.ltd us$ 0.90 us $ 0.22 us$ 2.0 company’s product quality much better than most imported dry cell batteries 5 kibomatch group ltd us $ 3.6 us$ 2.1 us$ 3.0 company looks forward for export expansion. 6 metal products nil us $ 1.3 us$ 3.2 looks forward for export expansion 7 mbeya cement na us $ 4.0 us$ 6.0 company exports and believes it can increase 8 panafora (pan african enterprises subsidiary) company not established us $ 0.2 us$ 0.6 has started in 2005 to export to malawi & mozambique and is moving to congo (dr), zambia, rwanda & burundi 9 abb tannlec ltd na na na export to many comesa countries 10 ok plast ltd 1997 – 0.75 1998 – 0.762 1999 – 0.816 2000 – 0.647 2001 – 0.36375 2002 – 0.34125 2003 0.2891 2004 – 0.25215 2005 – 0.267,25 us$ 0.85 company produces sandals & slippers and competes with a lot of imports in comesa countries. 11 tea industries (tea board oftanzania) us$9.4 us$10.0 us$ 16.0 tea is sold via auction in mombasa and can export to comesa market 12 tanzania tobacco board nil na us$ 2-3 states that they can export this figure to egypt alone per year and this would boost farmer’s morale &production in ruvuma. 13 unilever (tz) ltd not applicable 0.7 exported by end of 2006 us$ 1.5 company can export to zambia and malawi but 30% duty is the problem. uniliver kenya exports via tunduma in spite of heavy transport costs. 40 14 mukwano industries soap not applicable 0.4 us $ 1.2 exports to malawi and pays duty now. in february 2006 it exported soap noodles of us$ 33,000 15 2000 industries soap noodles not applicable 0.1 us$ 0.5 exports to malawi and may be to other countries too. 16 murzah oil not applicable 0.5 us$ 1.5 exports to zambia & malawi now. 17 kioo ltd 1998 – us$ 3.4 1999 – us$ 2.0 2002 – us$ 2.0 2001 – 3.1 2002 – 5.2 2003 – 5.0 2004 – 0.5 average us$ 5.3 us$ 12-15 export figures exclude exports to kenya and uganda kioo ltd exported a lot also to madagascar, angola, djibouti the so-called distant markets. kioo ltd lost export orders to zimbabwe and malawi in 2003 due to lack of preferential tariffs (us$ 2 million) 18 tanzania breweries ltd na 2001 – us$0.104 2002 – us$0.312 2003 – us$0.286 2003 – us$0.167 average us$0.250 tbl lost an export order of millions of dollars to mauritius in 2002 – 2003 due to lack of comesa preferential tariffs. the company has capacity to export when playing field levelled. 19 tanzania china friendship textiles co. ltd us $ 0.18566 us $ 0.87152 us$ 3.0 the company exports mainly via small scale cross border traders, but when they can export without paying duty the opportunity will be open, as tax on textile imports are very high. 20 raffia bags ltd na 2002 us $ 0.2 average us $ 1.5 na by 2003/4 raffia bags negotiated and is exporting cement bags duty free to zambia. when duty free is extended on all its products the exports can be boosted. 21 a to z ltd na na na the company is exporting mosquito net duty free to comesa countries and tshirts to malawi & south africa. t-shirts will enjoy duty free status in comesa 22 sunflag (t) ltd na na <us$ 1.2 the company is exporting mosquito net duty free to comesa countries and tshirts to malawi & south africa. t-shirts will enjoy duty free status in comesa total estimate 18.45 28.70 us $ 73.3 source: ng’andu, 2008 studies and scientific researches. economics edition online first, april 2018 41 table a.4 a sample of companies which had lost comesa export market after tanzania’s withdrawal company date of statement made on loss of market potential importing country observing 1 karibu textiles mills ltd 2000 2001 malawi, zambia u s e d t o e x p o r t t o m a la w i & zambia but has stooped. 2 mac group ltd 20th may, 2003 rwanda, burundi states it can export even more to other comesa countries. 3 tanzania breweries ltd 23rd may, 2003 & 2005 mauritius, malawi, congo (dr) and zambia still exporting a little to malawi, drc, zambia and kenya. 4 tanga cement co. ltd on 13th may, 2003 letter to cti rwanda, burundi stopped exports in 2001 but states it longer needs export markets and wants protection. 5 sabuni industries ltd 2000 2001 rwanda, burundi reduced exports but can export more to malawi, zambia and drc. 6 tanzania cigarette co. ltd 2005 malawi, zambia, congo (dr), rwanda and burundi exports a little to malawi, mozambique. zambia bat cigarette factory is closed and will depend on imported cigarettes. 7 aluminium africa ltd 2003 &2005 malawi, zambia, rwanda and burundi still exports smaller amounts due to tariffs. but company capacity requires a lager comesa market. 8 tanzania portland cement co. ltd (twiga) 26th june, 2003 used to export to rwanda, burundi, malawi, mozambique stopped exports but can export also to drc, comoros and seychelles. it is now concentrating on the local market. 9 raffia bags ltd 10th may, 2003 & 2005 malawi, zambia still exporting some and can export also to drc, rwanda, burundi, comoros & zimbabwe. raffia bags, cement bags are exported to zambia chilanga cement free of duty following raffia bags negotiations. 10 sita steel rolling mills ltd 9th july 2003 malawi, congo (dr), and rwanda can export also to zambia and burundi. it is an engineering company which requires a bigger market. 11 kioo ltd 2nd february 2004 zambia, zimbabwe, malawi, madagascar, angola, congo (dr), burundi, ethiopia, djibouti, mauritius, seychelles. still exporting some but has capacity to double exports. has modern state of the art machinery which depends on a large comesa market for its viability. 12 tanzania china friendship textiles 2005 malawi, zambia, congo (dr), comoros. currently exports are through small scale cross border traders but with free duty in comesa, it can export various fabrics. 13 sunflag (t) ltd 2005 export to south africa, kenya & uganda export expansion & production need the comesa market. 14 abb tanelec (t) ltd 2005 exports to malawi, zambia, congo (dr), rwanda, still exports some and has potential to compete with south africa in 42 burundi, angola, kenya, uganda & zimbabwe comesa countries as its market share is the east & central africa region. 15 general tyre east african ltd 2005 now exports tokenya anduganda only undertaking production expansion and will need the comesa market. 16 mbeya cement ltd 2005 malawi, burundi and rwanda exports to malawi & burundi around us $ 3.5 million a year. but has high export potential if duty free as it is now operating at very small profit margin. even northern province of zambia may get cement form mbeya factory. 17 trishala steel rolling mills ltd 2005 exports only to kenya and uganda under eca preferential tariffs undertaking expansion plans to export to rwanda, burundi, drc, malawi and zambia. 18 said salimbakhressa co. exports to congo (dr), zambia, rwanda and malawi still exporting some but has potential to increase exports to all these countries. 19 soap & allied industries ltd 2005 exporting to zambia, malawi, congo (dr) etc have high potential to increase exports but there are many other soap manufacturing companies which can export to comesa. 20 ok plast ltd 2005 exports to malawi, rwanda, zimbabwe, zambia, congo (dr), uganda, mozambique can export more to all these countries and others. 21 cmj karambaya 2005 june 2006 malawi, burundi, rwanda, comoros, congo (dr), zambia states that it can export if there is external tariff harmonisation and free trade. 22 jiemel industries ltd 2006 kenya, uganda, burundi, malawi, zambia, congo (dr), zimbabwe, southern sudan. exports some but has potential for more exports if its products enjoy duty free. 23 matsushita electric (panasonic) co ltd rwanda, burundi, congo (dr), malawi, comoros, madagascar used to export in the past and is exporting a little now. it has potential to export again. 24 sumaria group of tanzania ltd malawi, zimbabwe, zambia, rwanda, burundi, comoros, congo(dr), madagascar, southern sudan some sumaria group companies such as simba plastics, shelly’s pharmaceuticals, sdl ltd are exporting and can increase exports if comesa market is opened. 25 metal products co. ltd malawi, zambia, rwanda, burundi, congo(dr) etc. used to export and is still exporting some and has potential to export more when free trade is made available. 26 k-b nair, the jubilee insurance of tanzania exporting the comesa yellow card services to transit states that the sale of the yellow card can increase greatly when tanzania is a member of comesa. studies and scientific researches. economics edition online first, april 2018 43 trucks from comesa countries e.g. malawi and zambia. 27 a to z textiles mills ltd exports t. shirts and mosquito nets to comesa countries exports t. shirts to south africa. but exports mosquito nets to all comesa countries duty y free under who campaign against malaria. it can export t-shirts to comesa countries if duty free. 28 tanzania pharmaceutical industries ltd congo (dr), malawi, rwanda, burundi, zambia, kenya uganda, southern sudan, madagascar, comoros, seychelles company is undertaking state of the art machinery installation and production will need the comesa market. 29 kibo match group ltd rwanda, burundi, malawi, congo(dr), southern sudan, eritrea, comoros, madagascar exports to kenya and uganda under eac, and is capable of exporting to comesa to comesa countries. 30 various cooking oil companies e.g. murzah oil malawi, zambia, mozambique, rwanda, congo (dr), burundi, comoros, madagascar & southern sudan. cooking oils is being exported to many comesa countries by various small & medium scale exporters even with duty paid but kenya exports more to zambia, congo (dr) & rwanda, burundi due to duty free. source: ng’andu, 2008 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro recent evolution of the capital markets in romania catalin drob “vasile alecsandri” university of bacau catad@ub.ro abstract the purpose of this study is to emphasize the main aspects regarding the establishment, development and evolution of the capital market in romania. this study tries to present the main milestones which marked the evolution of the national capital market from the beginning until now. even if the first romanian stock exchange was established in 1881, the modern capital market in romania is a relatively young, which began to function with the reestablishment of bucharest stock exchange in 1995. the capital market in romania has a great potential of development. statistical data presented in this paper, regarding the evolution and the development of the capital market in romania, emphasizes that this market was and is strongly linked to developments in the real economy. keywords economy; realities; crisis; capital market; growth; romania jel classification d53; e44 1. introduction the capital market is a specialized market where meets the supply and the demand for financial assets on medium and long term. on this market are freely traded securities such as shares, bonds and derivatives. this market has the leading role in raising capital; these funds are attracted by the issuers of shares / bonds who are seeking capital to finance investment projects. the capital market has two components:  primary market is the market where new issues of securities are negotiated for the first time. it is about the process by which financial intermediaries place newly issued securities in exchange for a fee;  secondary market: once securities are put in circulation in the primary market, they are subject to secondary market transactions. the effective functioning of the secondary market is realized through negotiations markets or through organized markets such as the stock exchange and the otc (over the counter) markets. between the two forms of capital market (stock exchange and otc) there are several differences such as: the stock exchange is very centralized while the otc market is less centralized; the stock exchange is very regulated while the otc market is less regulated; the stock exchange ensures transaction security, while the otc markets provides a lower level of transaction security. the stock exchange is an auction market while otc is a negotiation market etc. 122 recent evolution of the capital markets in romania 2. the evolution of the capital market in romania as stated by dragotă, v et al (2009), historically and economically, romania evolved inconstantly over time. in romania, the capital market formation was related to the appearance in bucharest in 1881, of the first stock exchange and of the adoption of the first laws that regulate the functioning of this capital market. further development of the romanian capital market was favored by improving the legislative framework in 1904 and 1929 and by the development of the capitalism system. the evolution of the capital market in romania by the end of the world war ii was heavily influenced by major events that occurred during that period (romania's participation at the two world wars, the economic crisis of 1929-1933, etc.). during this period, the best results of the bucharest stock exchange were recorded in 1939. the change of political regime in romania after the conclusion of world war ii meant the end of the capital market and stock market amid the start of the process of nationalization of the national economy and instauration of state property. after 1989, with the restoration of market economy in romania it was also necessary the reestablishment the capital market and its specific institutions. thus, in 1995 occurs the reestablishment of bse (bucharest stock exchange). the first trading session at the bse had took place on 20 november 1995. the stock market in romania was structured, since the beginning, on two distinct components: bucharest stock exchange (bse) and romanian association of securities dealers automated quotation (rasdaq), which subsequently merged into a single market, by absorbing rasdaq by bse. bucharest stock exchange started work in 1995 while rasdaq began operating in 1996. the two markets have had a similar evolution, influenced by economic and political developments in romania. in regards to the bucharest stock exchange, the listing of a derivative to this stock exchange can be done on two sections: national or international. the national section of bse is divided into three categories: i, ii and iii. inclusion in a given category is made according to the degree of compliance with the economic performance criteria, inclusion in first category requiring the fulfillment of additional criteria such as a profitable activity in the past two years. rasdaq market consists of three categories of issuers, divided in three categories, depending on certain criteria of performance and liquidity: the first category of excellence; category ii of excellence; category iii (basic). the functioning of the capital market and of the stock exchange in our country was regulated primarily by the law 52/1994 regarding securities and stock exchanges and by the law 297/2004 which aimed at strengthening the existing legislation at that time in the field of capital market and adapt it to the provisions of community legislation. in present, the administration, implementation, and monitoring and compliance with the provisions of these laws is carried out by the financial supervisory authority. with regard to the performance of the bucharest stock exchange, we can say that after a very good start, with a maximum of traded securities and of stock values recorded in 1997, followed a major decline, until the end of the year 2000. starting with 2001, the evolution of the stock market was a positive one until the commencement of economic and financial crisis in 2008. the year 2008 was a very difficult year for the stock market in romania. this year, the index of the bucharest stock exchange lost 70,5% of its value recorded in 2007. the stock market recorded a comeback in 2009, a decline in 2011, a stagnation in 2012 and a slight increase in 2013. with regard of shares traded on the bse, after strong rebound recorded on the market in 2008 and 2009, the value of transactions 123 drob with shares had a positive trend starting with 2010 (a value of transactions with shares of 2.5 billion euros in 2013, compared to only 1.3 billion in 2010). in 2013, the stock capitalization of bse recorded a value of around 30 billion euros, of which 11.3 billion euros represents only the capitalization of erste bank group, which is the largest company listed on the bse. the evolution of the value of transactions and of stock market capitalization at bse from 2001 to 2013 is presented in the following table and figure: table1 the evolution of the value of transactions and of stock market capitalization at bse year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 transactions value (billion euros) 0,1 0,2 0,3 0,6 2,2 2,8 4,2 1,9 1,2 1,3 2,3 1,7 2,5 stock market capitalization (billion euros) 1,4 2,6 3,0 8,8 15,3 21,4 24,6 11,6 19,1 23,9 16,4 22,1 30 figure 1 the evolution of the value of transactions and of stock market capitalization at bse regarding the number of companies traded on the bse in 2013 situation is as follows: the international section: 1 company (erste bank group); the national section: • category i: 28 companies; • category ii: 52 companies; • category iii: 1 company. on rasdaq market, the value of transactions with shares is much smaller than the amount of transactions with shares at bse. starting with 2008, the market value of transactions with shares had a negative evolution, recording only in 2013 a slight increase in relation to the year 2012. the evolution of the value of transactions on rasdaq market from 2001 to 2013 is presented in the following table and figure: 124 recent evolution of the capital markets in romania table 2 the evolution of the value of transactions on rasdaq market year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 transactions value (billion euros) 0,1 0,13 0,11 0,15 0,3 0,24 1,3 0,43 0,14 0,14 0,14 0,05 0,07 figure 2 the evolution of the value of transactions on rasdaq market in terms of the number of companies traded on the rasdaq market in 2013, the situation is presented as follows: category i: 4 companies; category ii: 5 companies; category iii: 973 company. currently, on the bond market of the bse are traded 3 categories of bonds: corporate bonds, government bonds and municipal bonds. at the end of 2013, on this market were carried out 3 issues of corporate bonds and were traded 28 issues of government bonds and 37 issues of municipal bonds. the evolution of the value of transactions with bonds performed on the bse in the period 2003 to 2013 is shown below: table 3 the evolution of the value of transactions with bonds on bse year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 transactions value (billion euros) 5 71 35 282 233 62 303 620 128 321 314 125 drob figure 3 the evolution of the value of transactions with bonds on bse in romania, the first derivatives stock exchange started operating in 2004 under the tutelage of the monetary financial and commodities exchange (from sibiu). currently, this stock exchange is called sibex (sibiu stock exchange). derivatives stock exchange from bse is a younger market being founded in 2009. this market is structured on several segments: futures market, options market and structured products market. derivatives market in romania is still at beginning and has a great potential for development. if in 2010, on the structured products market of bucharest stock exchange were recorded transactions in the value of 45,8 million ron, in 2013 the amount of such transactions has reached 531,6 million ron. as regards capital market perspective in romania we can say that the uncertainty about the evolution of the world economy and national economy, do not favor a significant increase in the short term of the stock market in romania, but rather a stagnation. as stated by badea, l. (2012), the main objectives of the bucharest stock exchange for the next period of time call into question the increase of liquidity in the market by attracting new investors, however, in the longer term, with overcoming this crisis, it is estimated that the capital market in romania will develop further and become increasingly more attractive for romanian and foreign investors. 3. conclusions even though the first stock exchange was established in 1881, the modern capital market in romania is a relatively young market, which began to work with the reestablishment of bucharest stock exchange in 1995. the romanian capital market has considerably grown in the last years. if the start was quite difficult, since 2001, the capital market has had an upward trend until the onset of economic and financial crisis in 2008. in 2008, the stock market in romania has experienced a strong rebound, the volume and number of transactions recorded in that year was well below the levels recorded 126 recent evolution of the capital markets in romania in the years preceding the crisis. the return of capital market from the shock generated by the financial and economic crisis was slow and modest. thus, if in 2007 the volume of shares transactions at bse reached a record level of 4.2 billion euros, in 2010, this volume decreased to the level of 1.2 billion euros and by 2013 this volume had increased only up to the level of 2.5 billion euros. statistical data presented in this paper, regarding the evolution of the capital market in romania, put out the fact that this market was and is strongly linked to developments in the real economy, political and social events and military ones, that have produced both nationally and internationally. as stated by barna, f., and mura, p. o. (2010), the financial development follows economic growth and the financial development is a cause of economic growth. as regards capital market perspective in romania we can say that in the short term we don't expect a major increase on that market. in the longer term it forecast a new increase of the capital market due to the increase of the foreign investor confidence in the romanian economy. references badea, l. (2012), impact of the financial crisis on the romanian capital market in the european context, theoretical and applied economics, volume xix, no. 3(568), pp. 27-40. bailey, r. (2005), the economics of financial markets, cambridge university press. barna, f., mura, p. o. (2010), capital market development and economic growth: the case of romania, annals of the university of petroşani, economics, volume 10(2), pp. 31-42. datasets available at www.bvb.ro. datasets available at www.kmarket.ro. dragotă, v., stoian, a., pele, d.t., mitrică, e., bensafta, m. (2009), the development of the romanian capital market: evidences on information efficiency, romanian journal of economic forecasting, volume 2, pp. 147 160. drob, c. (2009) investiții directe de capital, editura alma mater, bacău. turcu, o., mironescu, r., drob, c., feraru, a., et al (2008), management, editura alma mater, bacău. 127 methodologic elements necessary in making forecasts for regional 103 methodologic elements necessary in making forecasts for regional ţimerman dumitru, ec. north-west tv satu mare deju mihai, professor, phd university of bacău abstract regional picture appear two romanians: a richer, which includes the bucharest-ilfov, west and center and a poor, other regions. among the most competitive districts are ilfov (8. 553 euro per capita), timiş (7. 931 euro per capita), braşov (7. 108 euro per capita), arad (6. 675 euro per capita), cluj (6. 561 euro per capita), constanta (6. 368 euro per capita), and among the poorest botosani (2. 745 euro per capita) and vaslui (2. 930 euro per capita). according to a report by the national prognosis commission (cnp), while bucharest-ilfov region will have a gdp per capita of 11. 694 euros next year, the northeast will remain poverty pole, 3. 826 euro per capita. economists argue that, if not reduce disparities, mainly through public investment, we could assist in disruption of important social and economic environment. lowering differences would include the maintenance of close growth rates of gdp / capita, and these important gaps. economic analysts draw attention to the dangers which may arise due to different levels of development. develop forecasts in territorial at regional or county-is a necessary and useful approach in the perspective of romania in the european union. from this point of the assessment of regional economic disparities and the potential development of each area provides an important support kinesiology orientation and use with maximum efficiency of the structural funds and cohesion funds that romania will benefit by integrating. regional forecasts provide information on possible future development, with employment in the global data of the national economy as a whole. 1. methods of regional forecasting because each zone is treated separately in the context of development throughout the country, regional forecast is more than a breakdown by region of some macroeconomic indicators. analyzed to predict the level of each region, can highlight their contribution to the overall development of the romanian economy, and how the programs of regional development are reflected in the future development of the regional economy, this ensuring a better economic foundation of prognoses nationally. how important is that the regional forecasts are ascending method (in which it is based on information relative units in a region and to obtain the sum total regional); descending method (which distributes a number of different national regions with the help of key distribution) and mixed methods (combining methods upward and downward, depending on the data available and reliable in the region). each of the methods summarized above have advantages and disadvantages of its. benefits could be a direct call to the relevant data sources at regional level for ascending method, numerical or guarantee coherence between national and regional for the second, which would have the disadvantage of not providing estimates are calculated starting of direct data, but through a key distribution to be correlated with the phenomenon analyzed. basically, the regional development prognoses were combined methods mentioned, especially that from the database statistics, there are two major impediments, namely: lack of data on the evolution of territorial price, making the assessment and forecast growth regions have a greater degree of relativity, and that the regional statistics studies and scientific researches edition: economics, no. 13 (2008) methodologic elements necessary in making forecasts for regional 104 studies and scientific researches edition: economics, no. 13 (2008) has a delay of 1-2 years from the national, which includes the estimates for past periods. in conclusion, forecast at the regional level reveals differences between regions in the context of development throughout the country, differences that tend, since 2005, to be diminishing, achieving a balance in the evolution trends of the indicators analyzed in the regions. it may emphasize, first, the need for a reduction of differences in the evolution of the industrial sector, by broadening the mixed or private capital in areas with predominantly state capital, thus avoiding liquidation or restructuring of enterprises, which would lead to lower economic activity in those areas. also be exploited tourism potential of each region in order to balance the other shortcomings of the economic zone. attracting foreign investment is another important factor in reducing disparities, including unemployment in certain areas of the country with a poor development or may with a predominance of rural activities (such as the north east or the south ). 2. existing disparities between the years 2005-2008 the statistics show that romania has entered the transition with a relatively low level of regional disparities, compared with other member states or candidate countries. they have grown rapidly and in particular between bucharest and the rest of the country. in the year 2005, there were gaps in the regions where most agricultural counties coexist with the most developed. this phenomenon has been widespread due to the impact of economic restructuring in particular areas monoindustriale, whose population has been affected by unemployment due to closure of unprofitable state enterprises.so, we can mention the border with moldova and ukraine and less-developed over the danube. evolution industrial1 production indices at counties and regions in 2005 1 indices of industrial production (ipi) characterize the evolution of total industrial production at the county level, ipi while calculated to characterize the evolution of national gross value added at factor cost, carried out in industrial activity. they were calculated in each county based on data from the "statistical research on compared to 2004, leads to the following conclusions: • the industrial production indices counties recorded in 2005, contradictory values, from -20.2% in suceava ( north east) to 37.5% in teleorman county (south region) • industrial developments were diametrically opposed and regions: in region north east, was the largest gap between the maximum and minimum of industrial production, about 35 percent. thus, bacau which has the greatest contribution to the regional industrial production achieved in 2005, the biggest jump of 15.3%, mainly on account of manufacturing industry, with an increase of 19.4%. on the opposite side was suceava to 20.2%; and in the south region east have been discrepancies between counties, but the spread was less, about 15 percent. buzău county was one that experienced the greatest increase, 4.3% and the lowest level was in the county of tulcea, -12.2%, one of the lowest in the country; in the south region, was the biggest leap of industrial teleorman county 37.5%, but it has a relatively small contribution in the regional industrial output compared with prahova county giving over 30% of it, and whose industry has exceeded in 2005 to 9.9% in 2004. calarasi county was made at the lowest level (-3.9%) in the region; as regards the south region west differences were about 10 percent, from 13.7% in olt county, at -6.1% in mehedinti county the western region, except in carasseverin county ( -1.1%), three counties have achieved growth, the highest level recorded in arad (16.8%) in the north region west emerges bistrita-nasaud county with 15.3% at the stand opposed to -8.7% in cluj, who gives more than 30% of industrial production in the region the center has achieved the highest in the county of alba (14.2%) and lowest in covasna (-4.8%) physical industrial production (ind) in 2004 and the" short-term indicators in industry (indts) in 2005. methodologic elements necessary in making forecasts for regional 105 in region bucharest developments were close, 3.4% in ilfov county and 3.2% in bucharest; • developments in industrial districts and with different weights that each county contribute to industrial production in the region which forms part, as did industrial production to be above the national average, which was 2% in the following regions: east, west , bucharest and south west. center region was at the national level. under achieved on the total economy were the north west, north east and south eastern europe, whose industrial production fell. besides bucharest, which is specific growth followed a west-east direction, proximity to western markets, acting as a distribution of growth. although statistical data shows some variation over time due to local factors, it can be seen as economic growth had a significant geographical component, underdeveloped areas are concentrated in the north eastern border with moldova and the south, along the danube. under-appears to be strictly correlated with unemployment and the prevalence of rural activities, and inability to attract foreign direct investment. western areas and the center of the country were advantaged by their position closer to western markets and lower their dependence of the primary sector. until now, they have received more foreign direct investment. different causes of disparities in economic and social development at the intraregional as future developments are to be quite unpredictable. in terms of economic growth in the year 2005, the total economy, it has been a slow (4.1%) compared to previous years, the decline in agricultural production due to rain and floods that have affected romania more times in spring and summer of last year and a slower increase (2%) of industrial production. level region, the increases were different from 2.2% in northern region east to 7.3% in bucharest region. regional developments in 2005 were marked by flagging agricultural production, especially in areas with a strong profile of agriculture, but also supported the pace of construction works, as the areas affected by weather vagaries were needed extensive work reconstruction of infrastructure (roads, bridges, railway embankments, etc.. ) and the restoration of housing space, in areas damaged by rain and flooding. at the national level, economic growth has been supported in principle the construction (9.9%) and services (8.1%), industries with a more modest contribution (2.5%), while the agricultural sector recorded a decrease of 13.9 percent. a detailed analysis based on figures from each region and nationally, show that for 2005, an average growth over the economy (4.1% compared to 2004) have achieved only regions bucharest (7 3%) and west (5.6%), increase of the latter being supported by industry, with a gross value added of 6.5% and services 10%. other regions were below the national average, being the closest center (3.8%) and south (3,7%). the south has made in 2005, the biggest jump of the gross industrial value added (8%), but increased intake of it was largely wiped out by the reduction in agricultural production following the devastating effects they have had floods last summer on crops, this area is an agricultural area with extensive. the south east south west and north west achieved an increase of 2.6%. the lowest level was recorded in the north east, 2.2%, mainly due to a reduction of gross value added in industry (-1.4%) and agriculture (-15%). in industry there have been various developments in one region to another, where the average national gross value added of this industry was 2.5%, have been spectacular developments in the region (south of 8%, with 6.5 western %), with some modest developments (bucharest by 3.5%, south west to 2.3% and center 2%), while others showed a decline (north east with -1.4% and north west 1.8%). in all regions, agriculture has been strongly affected by weather conditions, the gross added value is reduced by more than 10 percent. in construction, developments were between 8.8% in the center and 10.6% in the bucharest. within the services of noted west region with 10% followed by north east studies and scientific researches edition: economics, no. 13 (2008) methodologic elements necessary in making forecasts for regional 106 with 9.5% and north east 9%. the lowest was in south region (6.5%). analysis of the evolution of foreign trade in each region show, also significant differences. it is noteworthy that most of the romanian foreign trade is done through the bucharest region, which in 2005 represented about 21% of total exports of goods and about 40% of total imports, the trade deficit represents about 78% of total country. other regions share in total country between 6.3% (south region west) and 15.7% (western region) for the export of goods. imports of goods, contributions ranged from 2.6% (south region west) and 11.5% (the center). as regards developments in the dynamics of foreign trade in 2005, the total country exports increased by 17.5% while imports were 23.9% compared to 2004. region at the most significant growth in both imports (67.9%) and export (58.4%) was achieved in the south region. increases above the national average exports have made the north east (19.5%) and south west (23.9%), while imports only center region with 24.1%. as a result, there were trade deficits in almost all regions, region bucharest, being in first place in this regard. i noted areas where there has been a surplus of trade balance, and south east and west. although reducing economic disparities is a long term process, whether it is about differences between countries or regions of the same countries, however, prospects for real reduction can be identified in the evolution of the medium-term phenomenon. under these conditions, the evolution in recent years and prospects through 2008 shows that at this time we talk about maintaining an economic gap between regions. the ratio of maximum (west region) and minimum (north east) of the gross domestic product per capita in the euro remains constant at about 1.7 (compared to the excluded region that bucharest has a gdp per capita very high). that gap is not deep, especially in view of attracting the positive effects of structural funds, creates preconditions for reducing the gap after 2008. 3 share of sectors in total employment region bucharest is the only region of the country in which services, which nationally have 38% of total employment, generating the most important jobs, reaching 63.4% of total employment in the region. construction industry and hold 30% of total employment, regions beyond this level were center (35%), west (34.7%), bucharest (31.9%) and north west (30.3%). average national level has been exceeded and the west and center with a share of the population in the occupied area of 41.8% respectively 38.6%. region bucharest is the only region of the country in which services, which nationally have 38% of total employment, generating the most important jobs, reaching 63.4% of total employment in the region. in 2005 only 2 areas had earnings above the national average (bucharest: with 23.4% and south west: 0.3%). average national level has been exceeded and the west and center with a share of the population in the occupied area of 41.8% respectively 38.6%. in respect of the south west is notable that the gorj county raises wages above average and this area due to mining on its territory. in 2005 only 2 areas had earnings above the national average (bucharest: with 23.4% and south west: 0.3%). earnings significantly below the national average were recorded in the north east (with 10.3% being the lowest earnings), center (with 8.2%) and north west (to 6.5%). in respect of the south west is notable that the gorj county raises wages above average and this area due to mining on its territory. earnings significantly below the national average were recorded in the north east (with 10.3% being the lowest earnings), center (with 8.2%) and north west (to 6.5%). disparities between regions were reduced from 42.1% in 2000 to 33.7% in 2005. the gap is still significant due to higher earnings achieved in the bucharest. regional disparities of income is supplemented by maintenance discrepancies in terms of unemployment, even if it has known in recent years a significant reduction. the highest level of unemployment in 2005 was recorded in the north east south east, south, south west and center with studies and scientific researches edition: economics, no. 13 (2008) methodologic elements necessary in making forecasts for regional 107 unemployment rates above the national average (5.9%) and lowest level was registered in the bucharest (2.8%). if at the national level for civilian employed population at the end of growth was 0.1%, at the regions, except bucharest (3.3%) and west region (0.7%), this area is the favoured position closer to western markets for the other regions the values are slightly decreased compared to the previous year, some of these regions is dependent on agriculture and affected by proximity to the border with moldova and ukraine (in the case of the north east) or reducing cross-border trade due danube (in the case of the south). average number of employees registered increases above the national average (2.9%) in bucharest (7.0%) and west (3.0%) and increases under the national average in all other regions. evolution of earnings in 2005 indicates an increase from the previous year with 22.1% nationally, stand is on a downward trend, even in conditions arising from the introduction of flat income tax wage. real wage growth (calculated as the ratio between the index of average net earnings and the consumer price index) was 12.1% nationally, with considerable increases over the national average in four regions (west, north west, center and bucharest ) and the national average in the other four regions (north east south east, south and south west). what is noteworthy is that these increases are generally less than + / 1 percentage point compared to the national average. romania is the only country in the area that had increases in average gross salary of two digits 20% in first five months of 2008 compared to same period of 2007 which, in a pessimistic scenario, inflation could fathom, said, for newsin, chief economist of the national bank of romania, valentin lazea. "we have a pharmaceutical influence the gross average wage growth on inflation, but it is evident that the countries in transition, in the area, but wages in romania rose by over 20% from last year. in central european countries, hungary, poland, slovakia, about eight years wage growth is a single figure and this is reflected in the inflation rate. november sowing, from this point of view, the baltic countries, where you remember how much inflation has increased after the boom ended. or ukraine, where last year there was a wage increase of 40% and inflation 30%. not to say that we could arrive at such rates of inflation, but it is clear that you can have an increase of 25% of wages and inflation of 5%, "said chief economist of the national bank of romania, valentin lazea. in the first half of 2008, average inflation was 0.6%, twice that of the first six months of 2007, according to statistical data, while wages have climbed to five months, almost one quarter (24 98%) being under analysts, an important factor of deepening inflation. in the first five months of 2008, romanians have won, on average, 1. 651.6 lei, 33 lei more than the average interval from 1321.6 lei similar in 2007. wage increases have put pressure on inflation trends, the average is practically doubling in the first six months of 2008 from january to june 2007, from 0.3% to 0.6%. establish a regional development and reduce economic and social disparities between different regions involving all areas, from the purely economic (creation of smes, infrastructure, environment, development of agriculture) to the socio-cultural (unemployment, human resources, education). regions of romania are below the average level of economic development of regions in member countries of the union, but have internal differences and. this situation makes it necessary to adopt a series of measures, supporting growth and improving living conditions by exploiting the potential of effective regional and local initiatives to stimulate, foster domestic interregional cooperation, aimed at reducing regional imbalances and prevent other international imbalances, in order finally to increase the living standards of citizens. however, the policy of regional development in romania has a tradition formal and documented. in 1990, romania was a country relatively evenly developed, which were added precipitation budgetary resources of the entire period, as romania did not feel the need for a formal policy on regional development. forced industrialization policy carried by the socialist regime had the effect of levelling the studies and scientific researches edition: economics, no. 13 (2008) methodologic elements necessary in making forecasts for regional studies and scientific researches edition: economics, no. 13 (2008) 108 degree of development of the whole country, although this was achieved by building of industrial facilities that did not have any competitive advantage which in the process of transition the economy have come largely disabled. regional policy has been incurred solely in response to availability of financial assistance from the european union. given the controversy that the idea of regionalization has generated public authorities preferred institutional framework and the establishment of eight development regions, not offering an argument visible in their construction and obvious attempt to avoid historical criterion. basically, the law does not provide regional development such a criterion, stating only that the development is born by a voluntary association of local authorities. in chapter ii of the law are given the development in accordance with the objectives of economic and social cohesion, for which the european institute of romania has conducted impact studies. in regional development work for regional development agencies that are non-governmental bodies, nonprofits, public utility, but with legal. although romania has entered the transition with a relatively low level of regional disparities, compared with other member states or candidate countries, disparities have grown rapidly both at interregional and sub regional. according to statistics, among the least developed regions are north-east and south america, and the most developed bucharest and ilfov county and west. within regions, disparities remain, and predominantly agricultural country, those marked by unemployment due to restructuring, with little investment and rudimentary infrastructure, those with environmental or urban areas in decline coexist with others that are less affected by these problems. this is the case of the west, where a timiş county with a gdp more than hunedoara. in addition, within the counties were declared disadvantaged areas with declining industries (eg mining regions in the county of gorj, hunedoara and suceava). geographical level, there are increasing because economic development tends to concentrate in the area of bucharest, and inequalities in urban areas are growing. thus the state must intervene with significant financial resources to combat poverty and reduce inequalities, with concrete measures against unjustified and polarization between rich and poor which has widened in romania. reducing disparities, the harmonious development involving, primarily, new programs, additional financial resources and new people to implement regional development programs. regional policy can be judged from the perspective used by the central authorities and local resources available, combinations of tools for economic and financial policy in order to stimulate investment, create jobs and improve living conditions in a region / territory specific. such instruments of economic policy covers a wide range, from the general nature such as, the legal framework intended to support development of economic regulations specific measures such as state aid granted to firms in order to stimulate investment or projects to support the restructuring. references [1] report of the national forecast [2] research statistics on industrial production of natural-ind 2004 [3] short-term indicators in industry – 2005 [4] the regional national commission of prognosis [5] law 315/2004 [6] national commission of prognosis, institute national statistics [7] national strategic reference framework 2007-2012-summary [8] no info economic.14, 11-17 july 2007 [9] issues of regional development in romania, narcisa mosteanu roxana, ed. sylvia, bucharest 2001, p.85-94. [10] currier national no. 5219 25 july 2008. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 49 ways of achieving religious and moral education through combined actions of family and school actors: a marketing research in the north-eastern region of romania ghinea adrian ciprian trannsilvanya university of brașov ghinea.adrian.ciprian.@unitbv.ro abstract this research is based on the pace recommendation and in this paper we will showcase some of the results. our main purpose was to describe and analyse possibilities to achieve a moral and religious education by both family and school actors, as well as to come up with an inventory of suggestions for the improvement of this two-fold type of education. for this article we will only focus on a supportive objective, namely identifying the state-of-fact of religious and moral education in the north-eastern region of romania, more specifically the item concerning the effectiveness of religion and the belief that it provides answers to some problematical issues in the lives of the subjects selected for the study. keywords religious education, christian religion, moral beliefs, etics, religious pluralism, marketing research jel classification m39, z12, i21 introduction in the pedagogy textbooks edited after 1989, religious education has regained its rights in a gradual manner (leach & moon, 1972). in exchange, the aspect of moral education has remained a constant presence in textbooks, and the approach has been rather similar from one author to another. should we remain faithfull to the christian epitome, we know why and how to deal with teaching religion, but we don’t know for sure wirh what effects. for many people, it is necessary to be a religious person in order to be a moral person. religion is regarded as a mediator of their morality, so, losing one of these aspects entails the loss, partially or entirely or temporarily or definetely, of the other. some people, who have attended religion classes before 1989 will forever have this memory imprinted in their daily existence; others will have rather vague notions which will not badger them, whereas others will reject the religious outlook on the world, becoming self-sworn atheists. of course, there will be those who will question, at some point, their religious beliefs or, out of pure social conformism, will formally uphold the rules of the confession they belong to, leaving the undecided, who, with no systematic religious education, will seek their own path towards the ultimate values, out of accomplished aspirations or confirmed deceptions. nonetheless, the spiritual guidelines of education reflected in the pedagogical process are clearly demarcated, of course in a relative manner. in a careful planning of didactic principles suitable for christian religion, magdalena dumitrana identifies six such spiritual principles (dumitrana, 2007). three of them are ways of achieving religious and moral education through combined actions of family and school actors: a marketing research in the north-eastern region of romania 50 principles of christian education (opoku et al., 2006; wilhoit & ryken, 1988): 1) ecclesiastical centricity principle; 2) the christian conception of the child principle and 3) all religious education is to be done within a centripet orientation towards jesus christ, as divine and human alike. other three principles (alexander, 2003) are directly connected to religious education and teaching, namely 4) the constitution of the christian character, 5) the specific purpose and means of religion: it addresses predominantly to the affect, as it is a teaching which is not taught, but rather shared, or imparted, since the teacher plays the role of a spiritual mentor and the classroom becomes a small ecclesia; 6) the ethical-moral character of education, according to which christian religion undertakes from moral education the method to mould moral beliefs and behaviors and, in return, it bestows moral education the ideological content of the ethics necessary to be nurtured in school, that is christian morals. it is believed that there are at least four reasons for strengthening the knowledge of religious facts in the public education system across europe: 1) fighting religious illiteracy; 2) seeking answers to the challenges brought by democratic and religious pluralism; 3) counteracting the drift caused by the relativism sourced in the collapse of all major ideologies; 4) educating with the purpose of better living in the polis and of respect owed to the other (mathieu & willaime, 2005). the recommendation to strengthen religious education in public school (powers, 2008) sums up a series of contradictions and unravels the reasons for which religious education system, although margianl in the curriculum, holds a symbolic stake for both state and society. on the one hand, there is ample recognition for the part played by moral beliefs and convictions in identity formation and social action drive. on the other hand, the tendency in european education is to undermine religious education on account of school education purposes, such as deconfessionalization, noncatechistic schooling and opening-up to a pluralism of interpretations (cogill, 2008). acknowledging the public mission of religions within the learning planning (in the sense of a bildungsroman) is not equivalent to a homo religiosus plea. because, beyond helping the child develop and justify his/her own options and cultivate an autonomous vision about the world and the way things exist, in general, the focus is not solely on a spirituality infusion in school, in other words the consciousness of faith (scrima, 2011), but also on stregthening the modern and postmodern values’ system. no matter how slender is the standpoint of authorities towards modern pedagogy, which guides but does not constrain (similar to the lectio divina of origen of alexandria (keator, 2017)), it does not provide any account on the contradictions and ambivalence between the socio-cultural, political and educational options which exist when dealing with moralreligious education. therefore, “religion and democracy” recommendation of the european council emphasises “teaching about religions as sets of values towards which young people must develop a discerning approach, within the framework of education on ethics and democratic citizenship”(european council parliamentary assembly, 1999:2). a critical review of a religious fact entails either to accept or to reject, in an informed manner (hull, 2004), religious values, but can also lead to an emptiness of meaning or a backwards attestation of the matter of the divine. the reccomendation also makes refference to the problematic status of religion, as a study discipline in public schooling (watkins & mortimer, 1999), given the fact that human rights and children rights represent the educational ethics of modern contemporary times. methodological framing our sample of social actors consisted of high-school pupils, parents and teachers from 24 high-schools in the north-eastern region of romania, out of which we were able to apply a questionnaire to 120 high-school pupils, 120 parents and 120 teachers, during ghinea adrian ciprian 51 january – february 2017. unfortunately, the sample may not be considered representative for the targeted population, since the subjects were selected based on their accept and availability to respond to th questionnaire. the questionnaire applied contained items concerning the stated and the actual importance of religious faith, the trust in religious teachings and praxis, how various religious educational activities are implemented in schools and how different actors contribute or not to the religious education of pupils. furthermore, there were included some items concerning the presence of religious symbols in schools, the place and role of religion in school and whether evaluation is done in religious classes in schools. out of the total of four statistical hypothesis defined for this research, we have chosen to present the results obtained for the second, which is h0 over 50% of the respondents believe that religion offers adequate answers to the moral issues of society at large. results and discutions trust in religion is not limited to a mere doctrinal adherence; the depth of religious feelings is highly conditioned by its capacity to operate both in the interpersonal and social relations, as well as in the spiritual experiences realm and by the possibility to suggest solutions to the difficulties and problems of the individual and of society. when asked the question how much do you trust the religious teachings of your confession? 61% of the students questioned indicated a high level of trust, whereas one third indicated a moderate level of trust (see table 1). table 1. distribution of answers for the question how much do you trust the religious teachings of your confession? trust high medium low non existant no answer scores 3 2 1 0 living environment rural 65,8% 27,7% 4,1% 1,3% 1,1% urban 56,6% 35,9% 4,9% 2,1% 0,5% age under 15 74,4% 9,3% 2,3% 7,0% 7,0% 15 – 16 61,1% 32,9% 4,1% 1,3% 0,7% 16 18 60,9% 32,1% 4,7% 1,5% 0,7% gender male 52,9% 37,0% 6,8% 2,7% 0,6% female 66,7% 28,6% 2,9% 0,8% 1,0% total 61,0% 32,1% 4,4% 1,6% 1,0% those with the highest level of trust are the young people aged under 15 years (74,4%), followed by the 17-18 age sector (60,1%). male respondents (52,9%) and students of both genders from both living environments (56,6%) are situated in the lowest rank. when corroborating these observations with the data obtained regarding the importance given to religious beliefs, we observed that even though most of the high-school students (85,7%) value religious belief in a highest manner, less then two thirds state a level of trust equal in force, whereas one third declare a moderate trust level, a fact which may indicate a misalignment with their own system of convictions. therefore, we may assert that for an important segment of young population, the importance bestowed to religion is much higher than the trust in the doctrine itself, these young people distancing themselves in a critical manner from the traditional teachings. lacking such an important characteristic, namely a total adherence to dogmatic teachings, we may consider that their devoutness may relate more to insufficiently defined interests towards the religious phenomenon and to a diffused aspiration towards the sacred. we may also presume that these tendencies will compel ways of achieving religious and moral education through combined actions of family and school actors: a marketing research in the north-eastern region of romania 52 them to extend their search towards other religions or spiritual manifestations, from which they will extract eclectic ideas, but much more resonant to their own aspirations and beliefs. the total value of 61% from table 1 is evidence to the fact that only this percentage is fully convinced of the doctrinal truths, therefore we included an item in the questionnaire targeted towards the four functions fulfilled by religion (see table 2): a function of purpose (religion offers answers regarding the meaning of life); a function of ethics (religion makes the faithfull to become more ethical); a function of affect, which induces a soothing reaction or a reduction of anxiety (religion brings confort and hope to the faithfull) and a function of social cohesion (religion brings people together, making them more sympathetic). table 2 distribution of answers to the question how much would you agree with the following statements? total high medium low not at all i don’t know nr weig hted avera ge rank scores 3 2 1 0 1) religion offers answers regarding the meaning of life 46,8% 30,5% 10,2% 3,5 % 3,2% 5,7% 2,246 ii. 2) religion makes the faithfull to become more ethical 42,9% 29,5% 10,3% 2,8 % 6,0% 8,5% 2,162 iv. 3) religion brings confort and hope to the faithfull 65,3% 17,0% 6,0% 1,3 % 3,4% 6,9% 2,535 i. 4) religion brings people together, making them more sympathetic 47,5% 24,2% 13,0% 3,0 % 4,3% 7,9% 2,216 iii the answers, based on the weighted average, reveal the fact that 65.3% place the function of affect on first place (religion brings confort and hope to the faithfull) whereas all the remaining functions present similar values (46.8%, 42.9% and 47.5%), therefore prooving a certain inhibition towards the possibility that religion may offer answers regarding the meaning of life or that it may bring people together. for the function of ethics, we may posit that, even though religion prescribes the rules of conduct for interpersonal reltions, this does not imply that they are necessarily followed in day-to-day living. or, regulating the moral conduct on a behavioral level is projected, in the external manifestation of interpersonal rapport, through a demeanour constantly guided by the prescriptions derived from religion itself. even so, for the question is religious belief a benchmark for your decision making or choice of behavior? only 23.7% of high-school respondents stated that they always regulate their ghinea adrian ciprian 53 conduct based on religious canons. it may be assumed that, when dealing with daily living challenges, young people do not always find in their confession an effective way to act, in accordance also with the behavioral norms as well. conclusions and further research our purpose in this article we have described and analyzed the possibilities of achieving a moral and religious education by both family and school actors and we have made an inventory of suggestions for improving this type of education twice. during the research we identified the current situation of religious and moral education in the northeastern region of romania, focusing on the effectiveness of religion and faith. from the results presented in a limited manner in this paper, we may pinpoint three future research directions: since affect was indicated as the highest function of religion, it may be of interest to analyse the connection between internalized affect and the inhibition manifested externally, namely why is there a disconnect between a confort and hope brought within the faithfull and the external manifestation of this confort, which is clearly not perceived as being linked to purpose, ethics or social cohesion; should we define the lack of an effective way to act as a lost in translation locus of the younger generation, it may useful to dwelve on various, and probably more effective ways to depict the all-encompasing truths embedded in religious teachings, such as social media or even digital discourse manifestations; creating more windows of opportunity and of dialogue with the younger generations to better equip the church (malory & smith, 2001) in responding to the younger generations’ aspirations and beliefs. this may offer rich conversations with the younger generations, in the sense of aligning their perception with what is already encoded in the christian texts. references alexander, r., (2003). still no pedagogy? principle, pragmatism and compliance in primary education, cambridge: university of cambridge. cogill, j. (2008). primary teachers’ interactive whiteboard practice across one year: changes in pedagogy and influencing factors. king’s college university of london. dumitrana, m. (2007), didactica crestina. bucuresti: v&i integral. european council parliamentary assembly (1999). pace recommendation 1396 (1999) religion and democracy. hull, j. m., (2004). ‘practical theology and religious education in a pluralist europe’, london, british journal of religious education vol. 26, no. 1. keator, m. (2017), lectio divina as contemplative pedagogy: re-appropriating monastic practice for the humanities. boca rato, usa, routledge. leach, j. and moon, b. (1999). learners and pedagogy, london: p.c.p. mallory, sue and smith, brad, (2001). the equipping church. grand rapids, mi. zondervan. mathieu, s., & willaime, j.-p. (2005). des maîtres et des dieux: écoles et religions en europe. paris, ed. belin. opoku, john & addai-mensah, peter & manu, eric. (2014). realization of the nature and role of christian education in modern pedagogy. british journal of education. 2. powers, bruce p., ed./comp. (2008). christian education handbook. nashville. broadman press. scrima, a. (2011). functia critica a credintei. bucurești, ed. humanitas. ways of achieving religious and moral education through combined actions of family and school actors: a marketing research in the north-eastern region of romania 54 watkins, c. and mortimer, p. (1999). ‘pedagogy: what do we know?’ in: mortimer, p. (ed), understanding pedagogy and its impact on teaching, london: chapman. wilhoit, jim and ryken, leland. (1988). effective bible teaching. grand rapids, mi. baker book house. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the evolution of european business environment in the last four years marcela-cornelia danu “vasile alecsandri” university of bacău marceladanu@ub.ro abstract in the present work i described the evolution of the main coordinates of the business environment in the countries of europe. i examined the dynamics of economic growth, inflation, budget balance, current account balance, public debt for 41 european countries, taking into account their delimitation of regional groups. analysis of the business environment in the countries of europe using the indicators "assessment of the business climate" and "country risk" is aimed at identifying signals which are transmitted by the national economies, to the system of european economy, to the system of global economy but, in particular, the application optimal policies for improving the quality of the societal environment on the continent. i analyzed the impact of economic growth and inflation on business development, establishing relations between the rate of economic growth the dynamics of the number of enterprises, the rate of inflation the dynamics of the number of enterprises from 19 countries in europe. keywords economic growth; inflation; budget balance; current account balance; public debt; country risk; business climate jel classification o10; o11; o52; e01; e66 coordinates of the business environment in eastern europe after the economic and financial contemporary crisis, evolution of the european economy as a whole, has been breeding in the sinewave 2010 and 2011, decrease in 2012, with the relative stabilization in 2013 (http://epp.eurostat.ec.europa.eu/ statistics_explained). socio-political context and economic situation of each country on the european continent, the magnitude of the economic downturn and its effects on regional institutional framework to which they relate, etc., european economies have led to different situations in life, economic dynamics specific to each state entity. in terms of growth of gross domestic product in the period 2011-2014* (estimate 2014) at the level of 10 eastern european countries (www.un.org/) (fig.1), if in the year 2011 the largest gdp increases were registered in the republic of moldova (www.coface.com/) (6.8%), belarus (5.5%) and ukraine (5.2%), in 2012, the recession year at the level of the whole continent, the russian federation has registered the highest economic growth in the region (3.5%); the republic of moldova, the czech republic and hungary have had negative economic growth; in 2013 was a revival for the republic of moldova, poland, romania, hungary and a decrease, compared to the previous year, the economic growth in bulgaria, russia, slovakia, ukraine; 2014 bring the resumption of economic growth in most of the countries of eastern europe. the evolution of inflation in the region under analysis (fig.2) shows large discrepancies, from levels of more than 50% in 2011 and 2012 in belarus and to less 7 danu than 5%, during the time, in bulgaria, poland, the czech republic, slovakia; on the same background of the discrepancies is the belarusian situation which, from a level of 59.2% in 2012 has descended to a level of 17.5% in 2013, reaching 14.8% in 2014 (estimate). -2 -1 0 1 2 3 4 5 6 7 8 be la ru s bu lg ar ia m ol do va , r ep ub lic o f po la nd c ze ch r ep ub lic r om an ia r us si an fe de ra tio n sl ov ak ia u kr ai ne h un ga ry 2011 2012 2013 2014* fig.1.gdp growth (%) in east europe source: processed by www.coface.com none of the countries of this region has not recorded a continuous decreasing trend of the rate of inflation but also favourable macro-economic situations have been bulgaria, poland and the czech republic, slovakia, romania, hungary. having determination the region's geopolitical situation, ukraine has evolved positively in the period 2012-2013, the rate of inflation dropping from 8% in 2011 to 0.6% in 2012 and even the deflation (-0.3%) in the year 2013, reaching once again into the 2014 level in 2011 (8%) estimate. belarus, russia, ukraine and the republic of moldova shall be maintained with high levels of inflation in 2014. -5 0 5 10 15 20 25 30 35 40 45 50 55 60 b el ar us b ul ga ria m ol do va , r ep ub lic o f p ol an d c ze ch r ep ub lic r om an ia r us si an f ed er at io n s lo va ki a u kr ai ne h un ga ry 2011 2012 2013 2014* fig.2. inflation (yearly average) (%) in east europe source: processed by www.coface.com another dimension of evaluation of the quality of the business environment is the budget balance (fig. 3). in all the analysed the situation in this region reflects the high levels of budget deficit to gdp. the most difficult cases are in ukraine, where the budget deficit of -2.8% of gdp in 2011, it was stressed at -4.3% in 2012, -4.8% in 2012 and -5.2% in 2014 (estimate). a descending trend of hungary which had, from a budget surplus of 4.2% in 2011 fell continuously, reaching -2.9% of gdp budget deficit, estimated for the year 2014. excessive deficit situations with high levels were recorded in this period, in slovakia too (-5.1% in 2011, -4.3% in 2012, -3% in 2013, 4% in 2014). significant is the dynamic of budget balance in belarus which, starting from a budget surplus of 2.8% in 2011 fell to 0.7% in 2012 and 0.2% in 2013, for 8 http://www.coface.com/ http://www.coface.com/ the evolution of european business environment in the last four years 2014 is estimating a budget deficit of -0.7% of gdp. the current account balance illustrates, for the countries of eastern europe, difficult situations and negative developments for moldavia, ukraine and belarus in the last 4 years. in the republic of moldova the deficit of the current account was -11.3% of the gdp in 2011, -9.4 % in 2012, -10% in 2013, expected a level of -9.7% in 2014. -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 2011 2012 2013 2014* belarus bulgaria moldova, republic of poland czech republic romania russian federation slovakia ukraine hungary fig.3. budget balance (% gdp) in east europe source: processed by www.coface.com bulgaria, slovakia and hungary have registered a good evolution of balance of current account but czech republic, poland and romania (from -4.5% of gdp in 2011, to -4.4% in 2012 and -1.1 % 2013, estimating a growth to -1.3% in 2014. the countries in the region with a surplus current account during the last 4 years are russian federation and hungary. in the case of public debt, in most of the countries of region, the level has decreased in 2014 as compared with the previous years. however, in hungary the public debt, as a percentage of gdp, has remained high in all these years (80 %, 79 %, 79 %, 81 %). at the opposite pole is placed russian federation with the lowest levels of public debt (9.8 %, 11.8 %, 10.8 %, 11.6 %) and bulgaria too. dimensions of the business environment in northern europe in northern european countries in 2011, economic growth (fig.4) recorded the highest levels in the baltic states (estonia 9.6%); in 2012, with the exception of norway and latvia which have recorded a positive dynamic of economic growth, all other countries have regressed and finland, denmark and ireland have had negative economic growth; in 2013, as compared to the previous year, increased denmark, iceland, united kingdom, ireland and sweden, and finland was left alone in the region with negative economic growth; in 2014 the most of the northern european countries had higher levels of economic growth compared to the previous year. -2 0 2 4 6 8 10 de nm ar k es to nia fi nla nd ic ela nd la tv ia lit hu an ia no rw ay un ite d ki ng do m ire lan d sw ed en 2011 2012 2013 2014* fig.4.gdp growth (%) in north europe source: processed by www.coface.com 9 http://www.coface.com/ http://www.coface.com/ danu in northern europe, inflation (fig.5) has not represented a special problem during the last four years, although in that region are developed countries, members of the european union, developed countries not members of eu and ex-communist countries, membres of the eu, each of them bearing the imprint of the history and development of the economic policies implemented over time. the majority of the countries in this region have seen favorable developments of the level of inflation, so, for 2014 are estimated inflation rates of less than 4%; the dynamics of inflation has followed a decreasing trend in the majority of cases, in all four years of study. -1 0 1 2 3 4 5 6 d en m ar k es to ni a fi nl an d ic el an d la tv ia li th ua ni a n or w ay u ni te d ki ng do m ire la nd sw ed en 2011 2012 2013 2014* fig.5. inflation (yearly average) (%) in north europe source: processed by www.coface.com as regards the situation budget balance (fig.6), in the region, in the year 2011, ireland and the united kingdom were faced with the highest levels of budget deficit (ireland recording the largest budget deficit at the level of europe), is maintained in the last four years but the trend of revival in the case of ireland (-13.1% ; -8.2 %; -7.2 %; -4.8 %). norway is the only country in the region with a surplus budget and sweden, starting from a situation of budget balance in the year 2011, the regressed gradually, reaching the budget deficit of -1.4% of the gdp in the year 2014 (estimate). on the whole, in the year 2014, the budget deficit, as well as weighted in the gdp, has been kept relatively in the same intervals of variation as well as in the year 2013, dynamic being positive as compared with the year 2011. -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 2011 2012 2013 2014* denmark estonia finland iceland latvia lithuania norw ay united kingdom ireland sw eden fig.6. budget balance (% gdp) in north europe source: processed by www.coface.com in northern europe, the current account balance in 2011, was in surplus in the case of norway (12.8% of gdp), sweden, denmark, estonia, and ireland and in deficit in case of the other five countries in the region (iceland,-6.3% of gdp). it is significant positive developments in iceland which decreased the current account deficit up to 2.9% of gdp in 2014 (estimate), latvia (from -2.1% of gdp in 2011, to -1.3% of 10 http://www.coface.com/ http://www.coface.com/ the evolution of european business environment in the last four years gdp in 2014) and lithuania (from -3.7% in 2011, to -1.2% in 2014). also, is notable the increase in the current account surplus of ireland (from 1.2% in 2011 to 6.9% in 2014). as regards public debt, some of the northern european countries are faced with high levels of it. the situation has, however, different, from one country to another, thus, if in the year 2011, estonia had a debt of 6.1% of gdp, ireland had a debt of 104.1% of gdp, iceland had a debt of 102.3 % of gdp and uk 84.3 % of the gdp. in the 2014, only iceland, latvia and norway were weightings of public debt in gdp smaller than in the 2011; all other 7 countries of the region have emphasized dependence on public sector by the private sector national or international. worrying has become increase of the share of public debt in the gdp in the case of ireland to 120.7 % but also in the case of the united kingdom to 92.5 %. evolution of the business environment in south-eastern europe and transcontinental in the south-eastern and transcontinental (turkey) changes in economic growth (fig.7) reflects the difficulties that have faced or are facing, yet, the countries of the region. if, in year 2011 the turkey has recorded an increase in gdp of 8.8% and albania, macedonia and montenegro have recorded gdp increases of over 2%, in the year 2012 all the countries of southern europe and turkey also had decreases in the levels of economic growth from 2011; with the exception of albania, malta and turkey, all others have had negative economic growth. the situation has not improved than in bosnia and herzegovina, macedonia, malta, montenegro, serbia and turkey, continuing in the year 2014 too, only in macedonia, malta and montenegro. it is significant that some countries have been in economic recession in 2012 and 2013, were revived in the year 2014; the case of greece, italy, portugal, slovenia and spain. other cyprus and croatia, in the same way as those referred to above states of eu, have not been able to get out of the cone of negative economic growth nor in the year 2014. -8 -6 -4 -2 0 2 4 6 8 10 al ba ni a bo sn ia a nd h er ze go vi na c yp ru s c ro at ia g re ec e ita ly fo rm er yu go sl av m al ta m on te ne gr o po rtu ga l se rb ia sl ov en ia sp ai n tu rk ey 2011 2012 2013 2014* fig.7.gdp growth (%) in south europe and transcontinental source: processed by www.coface.com in the period under consideration, in south-eastern europe and transcontinental, inflation was, in majority, moderate (fig.8), except for serbia and turkey which have exceeded the threshold inflation rate of 5%. 11 http://www.coface.com/ danu -1 1 3 5 7 9 11 al ba nia bo sn ia an d he rz eg ov ina cy pr us cr oa tia g re ec e ita ly fo rm er yu go sla v m alt a m on te ne gr o po rtu ga l se rb ia sl ov en ia sp ain tu rk ey 2011 2012 2013 2014* fig.8. inflation (yearly average) (%) in south europe and transcontinental source: processed by www.coface.com it is significant that serbia has evolved positive, thereby reducing the level of inflation from 11.1% in 2011, to 5% in 2014 but turkey has evolved negative, increasing the level of inflation at 6.5% in 2011 to 8.7% in 2014 (estimate). it is notable that, in the majority, the level of inflation in 2011 was diminished until 2014. greece, bosnia and herzegovina and portugal have recorded cases of deflation (greece in the years 2013 and 2014, respectively -0.9% and -0.4%, portugal, in 2014, -0.1%, bosnia and herzegovina, in 2013, -0.1%). budget balance situation shows that all the countries of the region have the budget deficit for the past 4 years (fig.9). if in 2011, greece and spain had the highest levels of the budget deficit (both, -9.6% of gdp) in 2014 greece reached a budgetary deficit of -2.7% of gdp and spain at -5.6% of gdp. in the opposite direction have evolved albania, which on a budget deficit of -3.5% in the year 2011, reached a deficit of 6,5% in the year 2014, serbia, from -4,3% of the gdp, to -8.5% of the gdp. -15 -13 -11 -9 -7 -5 -3 -1 1 3 5 2011 2012 2013 2014* albania bosnia and herzegovina cyprus croatia greece italy former yugoslav republic of macedonia malta montenegro portugal serbia slovenia spain fig.9. budget balance (% gdp) in south europe and transcontinental europe source: processed by www.coface.com as regards current account balance, in the year 2011, the current account deficit of more than -9 % shall be recorded in montenegro (-17.7 %), albania (-12 %), bosnia and herzegovina, greece, turkey, serbia. with the exception of montenegro that has diminished slightly the deficit in the four years, reaching, according to estimates at 16.2% in 2014, in all other countries the situation had improved, reaching greece, in 2014, to a surplus of 0.9% of gdp. in 2014, the balance of the current account surplus was in slovenia, italy, croatia, cyprus, greece, spain, portugal. in 2011, the public debt do not raise special problems in non eu countries. has reached high levels in greece (170.3% of gdp), italy (120.7% of gdp), portugal (108.2 percent), cyprus, spain, malta. excepting of turkey, in all 14 countries of the 12 http://www.coface.com/ http://www.coface.com/ the evolution of european business environment in the last four years southern europe and transcontinental, public debt has risen over the last 4 years; in cyprus increased by 70.88% (2014 from 2011), in slovenia increased by 69.85% in croatia, spain, serbia has increased by over 40%. short radiography of the business environment in western europe in the same way as in the case of northern europe, in this region, all countries, member or non-member states of eu., are developed countries and, more than that, none of these is not part of the group of ex-communist countries. amid economic development and especially, as a result of smart economic policies recovery, the economic crisis has not left deep and lasting footprints in societal life. if in 2011, all the countries in the region recorded positive economic growth (fig.10) germany and austria, with the highest values (3.3% and 2.8%) in the year 2012 the decrease was generalized, and in the case of the netherlands, luxembourg and belgium, the economic growth became negative (-1.6% in netherlands). in the year 2013, luxembourg has exited the recession increasing, from -0.2% in 2012 to 1.9%, while maintaining in 2014 too; switzerland has been on a rising trend that has maintained in 2014. compared with 2013, in 2014, excepting of luxembourg, all other countries in western europe have registered an increase in economic growth. -2 0 2 4 au str ia be lgi um sw itz er lan d fr an ce ge rm an y lu xe mb ou rg ne the rla nd s 2011 2012 2013 2014* fig.10. gdp growth (%) in west europe source: processed by www.coface.com in the period 2011-2014, the rate of inflation in western europe (fig.11) was less than 5%. in 2011, luxembourg had a rate of inflation of 3.7%, while switzerland by 0.2%. in 2012, all the countries of western europe have diminished the level of inflation, excepting of the netherlands, which registered an increase from 2.5% in 2011, to 2.8% in 2012. in this year, switzerland registered deflation, a situation that has kept it in 2013. in 2013, the rate of inflation fell again, in 7 countries of the region, 6 of them with a "quiet" inflation and only moderate inflation netherlands (2.6%). although in the year 2014 it is estimated slight increases in levels of inflation in the countries of western europe (germany, from 0.4% in 2013, to 1.8% in 2014), none of the countries does not exceed the level of the "quiet" inflation, creating favourable conditions for societal development. -1 -0.5 0 0.5 1 1.5 2 2.5 3 3.5 4 au str ia be lgi um sw itz er lan d fr an ce ge rm an y lu xe mb ou rg ne the rla nd s 2011 2012 2013 2014* fig.11. inflation (yearly average) (%) in west europe source: processed by www.coface.com 13 http://www.coface.com/ http://www.coface.com/ danu either as regards budget balance (fig.12), have not been particular problems, in the last four years, in this region. in 2011, france (-5.1% of gdp) and the netherlands (4.3% of gdp) have recorded the highest levels of budget deficit, while, switzerland and luxembourg have had budget surpluses. in 2012, in belgium increased budget deficit and luxembourg has passed, from the surplus to the budget deficit, maintaining the situation up to the year 2014. year 2014 has meant a deterioration in the budget balance for austria; switzerland has had budget deficit, in the netherlands and luxembourg has increased the deficit. this year, germany exceeds the budget deficit situation, passing the budget surplus. the current account balance shows, in 2011, the deficit in the case of france and belgium, the situation that these countries it perpetuates in all these last years, but the proportion in the gdp deficit decreases only in the case of france (from -1.8% of gdp in 2011, to -1.1% of gdp in 2014). other countries have current account surpluses, most of switzerland (which increases the operating surplus at 8.9% of gdp in 2011, to 13.9% of gdp in 2014), the netherlands (8.7% of gdp in 2014), germany (7.2% of gdp in 2014). -6 -5 -4 -3 -2 -1 0 1 2011 2012 2013 2014* austria belgium sw itzerland france germany luxembourg netherlands fig.12. budget balance (% gdp) in west europe source: processed by www.coface.com the level of public debt, it is, on the whole, maintained, during the 2011-2014. austria, belgium, france, luxembourg and the netherlands have increased the share of public debt to gdp while germany and austria have lessened it (most of germany, from 80% gdp, to 75.7% of gdp). so in 2011 and 2014, the lowest levels of public debt to gdp were in luxembourg. evaluation of the european business environment, 2011-2014 assessment of business environment according to coface is done with the help of two cumulative where appropriate indicators: business climate and country risk. the analyses use a seven-level ranking: in ascending order of risk, these are: a1, a2, a3, a4, b, c and d. regarding to an assessment of the business climate and the country risk in the eastern europe, in the year 2014, we notice that none of countries has not reached the level of a1; czech republic, slovakia and hungary are valued with the index a2 and belarus, the republic of moldova and ukraine are rated the most weak. the situation is as significantly different as regards country risk assessment, in this case, only poland reaching a2; the highest level of country risk is in belarus and the ukraine; generally, in the region of eastern europe both the quality of the business climate and the country risk indicates a situation with a high potential for improvement, however, highlighting a modest credibility of the business environment. 14 http://www.coface.com/ the evolution of european business environment in the last four years table 1. assessment of the business climate and country risk in europe, 2014 eastern europe/ indicators by bg md pl cz ro ru sk ua hu business climate d b d a3 a2 a4 b a2 d a2 country risk d a4 c a2 a4 b c a3 d b north europe/ indicators dk ee fi is lv lt no uk ie se business climate a1 a2 a1 a1 a3 a2 a1 a1 a1 a1 country risk a3 a3 a2 a3 b a4 a1 a2 a3 a1 south europe and turkey/ indicators al ba cy hr el it mk mt me pt rs si es tr business climate c c a3 a3 a3 a2 b a2 c a2 c a2 a1 a4 country risk c d c c c b c a2 c b c a4 a4 b west europe/ indicators at be ch fr de lu nl business climate a1 a1 a1 a1 a1 a2 a1 country risk a1 a3 a1 a3 a1 a1 a3 (source: www.coface.com) regarding the performances as well as some problems facing the northern europe, business climate is appreciated, in the year 2014, as favorable business development, all the 10 countries of the region satisfying standards of group a; only latvia is evaluated with the index a3, lithuania and estonia a2 and other countries a1. it is very important proper application and continues to specific mechanisms of the market economy, macroeconomic policies consistent for the improvement of the business environment. on the other hand, country risk perception reflects more rigor quality economic environment and political environment in the countries analyzed, highlighting indices may weaken than those relating to the assessment of the business climate in 8 of the 10 countries of the region; only norway and sweden are valued with a1 on both the indicators. by analysing quality of the business environment and the country risk of the countries of south-eastern europe and transcontinental, at the level of 2014, the situation is as follows: of the 14 countries in the region, only spain has earned a1 for business climate, the other member countries of eu receiving evaluation a2 or a3; between non-member countries eu, turkey has an a4 and the other countries do not meet the conditions to be rewarded with group a. regarding to the country risk, the assessment is more rigorous, so only malta, slovenia and spain benefit from evaluation in group a, the other 11 countries in the region showing a level of country risk, so the economic, social and political components considered risky enough or even very risky (the case of bosnia and herzegovina, group d) to conduct international business, with performance. expression of economic, social, political factors of national environments, in correlation with environment variables european and international business, the indicators relating to the assessment of the business climate and the country risk, highlights, for the countries of western europe, the most favorable conditions for the conduct of business, sustainable human development. both the indicators reflect optimal situations from the point of view of the business climate as well as the lowest levels of the country risk in austria, switzerland, germany. to highlight the impact of the business environment variables on its development, we have calculated the correlations (for year 2012) between: the rate of increase number of enterprises and rate of economic growth; the rate of increase number of enterprises 15 http://www.coface.com/ danu and the annual rate of inflation. i have used statistical correlation coefficient, respectively: ( )[ ] ( )[ ]∑ ∑∑∑ ∑ ∑ ∑ −− − 2222 yynxxn yxxyn table 2. some characteristic of business climate in europe, 2011, 2012 country 2011 2012 number of enterprises gdp growth (%) inflation (%) number of enterprises gdp growth (%) inflation (%) belgium 550.777 1,8 3,4 566.006 -0,1 2,6 bulgaria 309.953 1,8 3,4 312.608 0,8 2,4 estonia 54.933 9,6 5,1 58.408 3,9 4,2 spain 2.087.372 0,1 3,1 2.385.077 -1,6 2,4 croatia 153.687 -0,2 2,3 148.573 -1,9 3,4 latvia 79.234 5,5 4,2 91.939 5,6 2,3 lithuania 127.517 5,9 4,1 141.893 3,6 3,2 luxembourg 29.165 1,9 3,7 29.265 -0,2 2,9 hungary 550.259 1,6 3,9 528.519 -1,7 5,7 malta 27.664 1,8 2,5 26.796 1 3,2 austria 304.242 2,8 3,6 308.411 0,9 2,6 poland 1.523.418 1,9 3,7 1.519.904 1,6 0,9 portugal 831.655 -1,3 3,6 793.235 -3,2 2,8 romania 408.951 2,2 5,8 425.731 0,7 3,4 slovenia 117.481 1 2,1 119.644 -2,5 2,8 slovakia 414.905 3,2 4,1 398.392 2 3,7 sweden 651.418 2,9 3 661.822 1,3 1 united kingdom 1.696.589 1,1 4,5 1.703.562 0,3 2,8 norway 272.264 1,3 1,3 278.899 3 0,7 (source: http://ec.europa.eu/eurostat/statistics; www.coface.com) statistical correlation coefficient between the rate of increase in the number of enterprises and the economic growth rate, r 1 = 0,511664 so, between those two indicators there is a direct connection, of medium intensity, which confirms the interrelationship among the national economic system and the role of positive economic growth in economic development in the future; moreover, the relationship between the economic growth and dynamics of enterprises is two-way. statistical correlation coefficient between the rate of increase in the number of enterprises and the rate of inflation, r 2 = -0,35693 so, between the two indicators there is a reverse link, of low intensity, reflecting the favourable situation of the economy of european countries considered that moderate inflation rates, stimulating business environment and entrepreneurship development. conclusions analyzing the evolution of the gdp growth in the continent as a whole, we note that, after the years 2012, 2013, years of economic recession, 2014 marks the invigoration of economic development. inflation is generally „quiet” or moderate but, in countries such as belarus, turkey, ukraine, russian federation, republic of moldova, high levels of inflation rate, in the year 2014, may discourage business initiatives. high budget deficit in 2012 and 2013, in several european countries, has the tendency to decline in 2014, with the exception of: albania, cyprus, serbia. in the statement of deficit of the current account shall be placed, in 2014, the non-member countries of the eu (montenegro, moldova, belarus, albania, bosnia and herzegovina, ukraine, 16 http://ec.europa.eu/eurostat/statistics http://www.coface.com/ the evolution of european business environment in the last four years turkey) in which, as in the case of the budget deficit, the motives are not, mainly of an economic nature but correlated, political, social, economic. in the situation of high public debt, in the year 2014, was developed countries, in the eu or outside reflecting its perpetuation of effects from contemporary economic and financial crisis (greece, portugal, spain, cyprus, etc.). knowledge of the business climate, the country risk is important because achieving enterprise on the external markets is also determined by the conditions of access and their development in various countries (prunea, p.). recent developments on the european continent shows beyond the credible, reasoned image of developed countries, propagated in business environment, attention must be directed toward the whole societal system in europe, both from the economic point of view as well as socio-political. references danu, m.c. (2013), mediul de afaceri european, editura alma mater, bacău. datasets available at http://epp.eurostat.ec.europa.eu/. datasets available at www.coface.com/. datasets available at www.un.org/. prunea, p. (2003), riscul în activitatea economică, editura economică, bucurești. 17 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 24, 2016 http://sceco.ub.ro 36 creativity and entrepreneurship. methods of stimulating creativity maria irina trofin (dromereschi) colegiul tehnic „anghel saligny” bacău, românia dromereschi_irina@yahoo.com abstract creativity as producing new information system, you can put in what seems unconnected connection, after so many forms of the unfold plan and in content. an entrepreneur will think and do new things or old things in a new form trying to transform ideas into tangible things, products and services. entrepreneurship is the process through which all functions, activities and actions are shared to identify business opportunities and creating organizations through which they will be used in order to obtain profit and meeting social interests. boosting creativity is justified in that creative activity is educated, even if some native elements have their own importance in the creative process. if we start from the idea that most barriers to creative thinking are all human creations, tributaries of the left hemisphere, will have to find alternative responses to stimulation, shaping and maintaining the creative process and even create organizational culture conducive to the creative process. ideas are our tenement dwellers and often are near us in the simplest and quickest form. just educate us the activation process and instituting the ideas process which involves methods fall under three broad categories: imaginative, heuristics and logical approach. subject to the risk taken, the combination of these methods can provide as many alternatives to a reality whose details they ultimately determines who assumes the risk of their own decisions. keywords creativity; entrepreneurship; stimulating creativity methods jel classification l26; m14 boundaries on addressing concepts psychologists argue that being creative means to create something new, original and appropriate reality. due to the complexity of the phenomenon of creation, it is highly unlikely to reach a definition that a universally accepted definition because each author emphasizes different sizes. if for some authors ,,creativity is the ability or capacity to produce something new and valuable” according to others it is a process through which the new product (rosca, 1981). being creative means seeing the same thing but to think of something different. as a particularly complex mental formation, creativity is characterized by a multitude of ways: productivity, energy-efficient on, value, ingenuity, novelty, originality. although there were trends to limit creation and productivity, utility, value, defining creative novelty and originality are. productivity refers to the large number of ideas, solutions, papers, products or services. the usefulness of the results of the action, which must have at least one use and contribute effectively to meeting the need. measurability performance capture efficiency refers to the efficiency of the action, the performance that can be obtained by the use of the creative work. the value of products of creative activity must be both theoretical and practical, and be recognized and respected socially. ingenuity involves special elegance and effectiveness of methods of solving problems. novelty refers to the distance in time mailto:dromereschi_irina@yahoo.com trofin 37 of things, ideas and originality of the scarcity of ideas, solutions or products. to delineate the creative activity of reproductive health since 1959 i.a. taylor stated that creative performance must show a certain meaning economic, social, cultural, scientific, technical, etc., value that is recognized and the results of creative activity must be made consistent intelligible. creativity is presented at several levels: expressive behavior, process, productive, innovative, resourceful and emerging (at the legalities, principles, theories that are revolutionizing the field). neuro-bio-psychological theory of creativity merges into a single model and integrative creativity as many of the components that are placed in different areas of operation of the brain (cortex and subcortex). after representatives of this theory in the creative process involved both analysis and synthesis, as both image and word, both conscious and subconscious as both cognition and affection, both on the concrete and the abstract. these dimensions correspond to various ways of creation of knowledge, experience and behavior. creativity requires collaboration, cooperation between the two hemispheres, each capturing reality in its own way. in terms of psychological and physiological balance people differ in the two hemispheres. each hemisphere controls half of her body reversed, with the same functions and the same roles with the exception of language and thought. defined characteristics modal (edwards, 1999) of the two hemispheres, the left hemisphere is recognized by: verbal, analytical, symbolic, abstract, temporal, rational, numerical, logical, linear while the right hemisphere is recognized by: nonverbal, synthetic concrete, analog, timeless, non-rational, space, intiutiv, globally. highly creative persons, regardless of profession, are available all four sectors brain (cortical left as cortical, limbic left limbic law), which are activated depending on the specific problem solving times (herrmann, 1982). traditionally it is considered that the left hemisphere controls language fully but the latest research concluded that most of the language components include complementary processes of left and right hemispheres. while the right hemisphere processes information related to the language by extracting paralinguistic information such as melody and intonation of speech and speaker identification, the left hemisphere is more adept at using the structure of sentences to reach this level interpretation of the message. both hemispheres process but realizes the meanings of words in different ways. although they accces dictionaries mental similar, they differ in the way knowledge semantic activated by words heard or read: the right hemisphere allows activation of semantic relations removed the multiple meanings and interpretations metaphorical, while the left hemisphere select meanings closely related and a unique interpretation of each word. both hemispheres have their contributions in decoding written texts and speech processing but left hemisphere specializes in connective deductions and inferences looking to the right. while the left hemisphere is typical rational approach (vertical), logical sequence, because a guarantee of the validity of the approach (chalvin, 1992), the right hemisphere approach is dependent on the historical, geographical, economic, sociological etc. (horizontal). knowledge of nature creative approach to entrepreneurship is therefore complementary and permanent one. entrepreneurship is defined as a state sufficiently durable to generate business ideas put into action. defining starts from the individual but from a cultural approach can be extended to communities and populations. the essence of entrepreneurship is to be different (casson, 2003). gabriele euchner believes that entrepreneurs have values stronger than managers such as: responsibility (total commitment to the company and its products, people trust in employees and partners), will create originality, with performance, customer orientation and flexibility (agility to seize opportunities, greater response and mobility to put into action). the entrepreneur takes the uncertainty in each of the roles speculator (risk of loss or gain), owner (possession) and decision maker (power). rewards can take different forms from their own work to the satisfaction of material, psychological, moral or social. starting from the theory of sigmund freud, personality is a result of individual action and creativity and entrepreneurship. methods of stimulating creativity 38 reaction to conflicting forces: aggressive impulses, desires biological and social constraints internalized. the exterior acts as the pleasure principle and provides tools for survival, reproduction and aggression. ego acts as the reality principle: conscious perception, thinking, memory, decisions. superego acts principle and will focus on how to exert effort, generating feelings of pride or shame (guilt). while personal characteristics of nature are relatively rigid social and professional characteristics can be modeled by type pedagogical interventions. in other words entrepreneurship educators has dimensions tailored to the main types of motivation: the desire for independence (self-determination), the desire to create something useful (creativity and innovation) and risk preparedness (assuming a moderate risk). in light of the technical realities, economic, social and political, each historical period has highlighted the different entrepreneurial concept. from land owners (capitalists) enterprises of cantillon (sec. xvii), suppliers of goods, innovation and progress entrepreneurs marshall and schumpeter (sec. xix), the person that maximizes opportunities and builds an organization the entrepreneur's druker (sec. xx), in the xxi century, the entrepreneur can be played by william bygrave in the "ten factors d”: vision, the ability to make decisions, way, determination, dedication, devotion, attention to detail, self-determination, financial rewards and delegation of responsibilities and rights. without going into a report annoyance with economic equilibrium neoclassical theory determines the business opportunities currently idea that credit is given the opportunity arising from economic imbalances. shane and venkataraman identifies and explains briefly the process of capitalizing on business opportunities in four phases: the emergence of opportunity (the existence of opportunities of economic imbalances and asymmetric information), eplorarea environment (recognition opportunity due to cognitive characteristics and based on knowledge), assessment ( analysis of key factors influencing characteristics like timeliness and individual differences) and operation (commissioning equation of factors that could multiply operation result: solution market and the institutional solution). the difference in approach is given by the unequal access to the information or by generating either by distribution, or by usage. identifying business opportunities has evolved from passive to active model creation and even "implementation" opportunities (alvarez, 2005). barriers to creative thinking if the success of a business is determined by the quality of ideas that develops when they need to be creative. creative effort is constantly recalibrating the relationship between needs, resources and values. people need to analyze needs, to weigh the resources and adapt their behaviors. c. rogers believes that creativity is the main reason the human tendency to actualize itself, becoming what is potential. integrative approach-synthetic, dynamic and unified creativity identify contributory factors and its inhibitors. barriers to creative thinking of e. languages were grouped into four categories: barriers related to socio-cultural context, barriers of fear endemic barriers due individualistic attitudes and barriers related to individual-group relations. sociocultural context related barriers are felt by the individual who lives in an unsatisfactory environment or type of company for him. he can not admit nor can join the stairs of values, ideologies society he lives for that is not on itself. this leads to a conflict of values and the absence of reference frameworks. volatility of societies, aging, scientific discoveries or philosophical supersaturation individual with individual reporting the information may disrupt a scale of values considered a benchmark and reference may fade within it. to the three traditional environments: family/community, profession/ education and leisure/entertainment appeared informal, unstructured and diffuse a fourth medium: media or information environment. conditioning and manipulation by the media in the absence of lucidity and critical thinking is secure and trofin 39 lasting effect in the collective memory deformed reality and events. creativity is not missing but built on false premises. the quality of the creative act is conditioned by the quality of information used. prejudices are related to traditions, habits born or adopted as satisfactory or as part of the identity of those who practice them. they often become obstacles in the effort facelift, change, and one that takes this action is perceived as having a deviant behavior. cultural differences can be explained by compliance through education to values and ideologies specific to a culture. they offer a different perspective on the world and life and expanded information flow on a global scale is a positive factor in the popularization of its main creative features of different cultural types. invoking these differences when they are not subject to competitive advantage can be attributed to the individual feeling of security provided by belonging to a culture or another. frustration has its origins in the belief of being the victim of injustice, suffering, hate caused by others. frustrations trigger reactions and behaviors retardants for creativity. fuga (withdrawal), aggressiveness, transfer, compensation, resignation and frustration are integrating stages, segments and manifestations of their frustrations. integrating the inevitable frustrations of any activity and ages, calls the individual's ability to adapt to a reality very dynamic and positive and creative manifestation of personality during this process. barriers due to endemic fear refers to the fear that trying those persons exposed to vulnerable situations or who have personal sensibilities. the expressions are facing aggression, the principle of competition, resistance to change and lack of self-confidence. facing with people known or unknown causes some reactions of fear, often unpredictable. for various reasons shyness, exposure to prolonged stress, poor education the person perceives the other as a judge, a person of authority tend to withdraw, to defend, to be suspicious collaborate, hostile attitudes creativity. aggression is straining the state of conflict that marks certain people. manifested verbally or in writing in public is harmful contagion creativity and creating a tense climate. competition principle is not a principle in itself harmful than the excess. although competition oppose rather than to bring together people in conditions of fair competition based on authentic values, says the best and stimulated the creative act. resistance to change is one of the strongest barriers to the expression of creativity. the change involves breaking routine, the unknown, taking risks, loss of control inhibiting creativity. lack of self-confidence makes every man to do much less than the opportunities it has. self-confidence, motivation and conviction to achieve individual and collective progress claim and inspire creativity. individualistic attitudes are specific barriers due to their focus on their person in this category comprising entrepreneurs, managers and executives. among the forms of this type of obstacle remember egocentric behavior, lack of self, feelings of incompetence or inefficiency, lack of objectivity and realism and excessive passivity. egocentric behavior indicates an excessive concern for oneself at the expense of activities, relationships or people. creativity requires dedication, commitment, generosity and altruism. not knowing oneself self makes it difficult reactions and behaviors in professional, social, cultural and where our roles are different interchangeable. everyone perceives multiple levels of meaning in relation to the different social roles that we have with the processing of information rational, socio-emotional and rational. the possibility of moving from one level to another significance occurs depending on the degree of emotional involvement, circumstances, alertness and mental tone. for personality development is necessary to know the unseen part ,, "johari window (meissner, 2000). knowledge is easier to obtain feedback with regard to their conduct and their actions. feelings of incompetence or inefficiency are at the origin of depressive states clearly unfavorable creativity through persistence inferiority. supposed inferiority design in social and reporting to others in terms of intellectual, aesthetic, economic. the deficiency is one of the self, the individual expects to be appreciated and considered by others, not having enough self-confidence. lack of objectivity and realism is a source perception of reality creativity and entrepreneurship. methods of stimulating creativity 40 through the prism of personal feelings, external forms of manifestation is the dramatization, simplification, trivializing, personal interpretation, indifference and generalization. from this perspective, creative attitude requires a truthful and authentic perception of reality. excessive passivity induced inertia, indolence, lack of involvement and lack of interest. the causes of this behavior quite common in organizations can be: the discrepancy between the draft prepared by others and project personnel required to carry out activities that do not like, you do not approve, or whose purpose you do not understand, pressure or coercion, lack of interest in the proposed task or required, convenience (awaiting instructions from others), fear of making mistakes and responsibility implicit or fatigue and poor health. unlike these unproductive behaviors, creativity assumes full employment, dedication, personal consumption and group resources. barriers related to individual-group relations are positioned in proximity personal or organizational sphere and manifest lack of real communication, marginalization, lack of authenticity, isolation and addiction. lack of effective communication can occur in three areas: poor communication due to language or vocabulary, incomplete communication (handling) and communication distorted, falsified or willfully distorted. creativity requires open communication, empathy, assertive and constructive. marginalization occurs when people do not respect my word, bypass or do not comply with the norms, rules, laws including bureaucratic societies perceived as inhibiting of creativity. creative behavior is usually deviant from the norm, the average, but in a constructive manner, rewarding. lack of authenticity feeds constant fear, censorship people expressing themselves according to what they feel and want actually. between what they feel and what they would like to be and outwardly, there is a difference it produces discomfort relationships without substance and durability. figuration roles poorly rewarded produce frustration and lack of cooeziune at group level. the isolation and self-isolation can be directly correlated inversely with creative abilities but also depending on the purpose and subject initiator of this phenomenon. if the group is one that excludes one of its members, or if mutually exclusive, it is likely that the excluded feel inhibited expression of creative potential. dependence does not stimulate creativity regardless of the currency: money, information, power control, rewards, punishments, physical or mental force of seduction, a person's status in the group. creative people are independent, appreciate and cultivate the spirit of initiative and freedom of expression. communities with a greater degree of conservatism and mass education systems tend to cultivate dependence on the individual but the group as proof of belonging to this group is the one who can provide extra security. methods to stimulate creative thinking when we put the question of educating creative thinking that we know about creativity is not only important but also justified. no matter which profession you: trader, mechanic, responsible for customer relations at a hotel, teacher, doctor, courier or designer but personality type and context matters. propose creative problem solving paradoxically unlearning, without which learning act, be it personal or organizational level is not sustainable. educating creative thinking lies not in finding solutions, but to create new options. it is understandable why the manager is unhappy with a solution that does not come with "how to use" and why new methods of marketing research focus on ethnographic studies and observation. the future will be like never past. as such solutions in the past are no longer present or future solutions. what is learned in business schools is what was and could resemble what might be. on the other hand, transfer theories in the exact sciences to human resources employees, customers, managers, associates becomes problematic and unrealistic because it applies adaptive complex systems subjected to nonlinear dynamics (ramachander, 2010). a new idea is trofin 41 usually rejected for reasons immediately so-called pragmatic and realistic. the fact is most common confusion between a new idea a perfect idea. in order to eliminate this roadblock creativity, osborn has developed the principle of separation timing of completion or occurrence of an idea of the valuation of its (basic principle of brainstorming). according to the theory of hubert jaoui, a creative approach completely comprises five stages, each entailing a beam divergence (opening) and a convergent (closing), gathered under the banner papsa: perception, analysis, production, selection, application (jaoui, 1990). in each of the five stages were developed creative techniques which respect the alternation of divergenceconvergence. to be creative you have to separate the two essential stages of the creative process: phase of opening and closure. since their function is a complementary, during the opening stage will be used those techniques that allow for the creation of a field as broad ideas obscene language, while in the closure phase of the extracted ingredients and filtered energy released during diverging to reach the original settlement a few options, effective, feasible problem. in general, the methods of stimulating creativity can be grouped into three categories: imaginative approaches (brainstorming, synectic method book collectively method philips 66), heuristics (method morphological matrix discoveries, concasaj) and methods of logical approach (functional analysis , value analysis and graphical analysis). brainstorming old indian origins (prai-barshana, now nearly 400 years old) and it was proposed by alex. f. osborn early 30s. it aims to create the necessary environment to enable the organized expression of ideas and fostering the best of them. the problem may be an object, a method, an advertisement etc. and deliver results when the goal is capturing a greater number of ideas within a maximum of 3045 minutes. the principles of the method are: the quantity generates quality (30 to 200 ideas), adjournment (criticism and evaluation not ste admitted during the meeting) and effect chain reaction (an idea can be born a new idea to the same participant or to others ). based on the rules that apply to a hearing they were developed three variations on the method: little technique, technique "fresh eye" and organized technical research the problem. little technique involves several consecutive sessions and is characterized by the fact that only the presiding know the exact nature of the problem by approaching gradually through stimulating questions. justification small steps and make the issue into obscurity assumes that those involved will not apply to existing solutions and provide ideas totally new perspective to the problem stated. technique "fresh eye" assumes that group meetings can be more effective if participants are not specialists or have a prolonged know-how in the field. organized research technique involves breaking the problem into sub-problems and seeking solutions for each of them. it believes that alternatives to solve subprobelmelor will offer original ideas and problem overall. synectic, a method developed by william gordon, based on the following operational mechanisms: turning the unknown into familiar (analogy personal the identification of the problem to be solved), transforming the familiar into something unusual (direct analogy comparing elements belonging to different domains), ignoring any laws by assigning different meanings to those known or regular (fanciful analogy the creation of a new world, imaginary, different from the real one). although requires collective participation and duration of sessions not exceeding one hour rules sinecticii have features: participants from all sectors / departments, people who do not enjoy overly reward and not remain demobilized phase failure and should show strong interest affairs specialist; participants aged between 25 and 40 years, the group should consist of 5-7 people and the discussions should be held contradictory, each proposal is scientifically justified. the two mediators, one specialist questioned the other outside it, they will pursue discussions to be recorded. method book assumes that collective creative process needs a longer period of reflection to each participant and competent actions combine creative individual with the collective. it involves setting up a group of creativity where each receives a notebook in which you write the problem studied, creativity and entrepreneurship. methods of stimulating creativity 42 personal ideas for solving the problem for a month and summarize them. coordinator of the group will take the books, will synthesize the ideas participants will distribute books with summaries made by him and will hold group discussions that will choose the best ideas. phillips 66 technique brings together 30 participants in a creative activity has lasting two hours. participants are divided into five groups diverse as professional precupări and ages, and each microclustered shall appoint a person with representative role. business leader presents the problem to be solved and every microgup will retire for 6 minutes to discuss the problem and note the ideas. then micro-groups are brought together in a joint session in which each representative micro group will present its ideas. among them will be selected the most interesting ideas and will choose the most advantageous solution for the intended purpose. as a heuristic method is suitable morphological those types of problems for which solutions involving the cumulative satisfaction of a number of limitations that may be of technological, financial, commercial, infrastructure or cultural. or morphological matrix method was developed by astronomer fritz zwicky and is basically an individual technique but at certain stages, can be applied as a technical group. the strength of the method is analytical and systematic description of the solutions we choose the best one. the method steps are to establish requirements (parameters, functions, attributes) that must fulfill solution of the problem, the inventory of possible options to achieve each requirement are described combinatorial all possible, be placed in a table morphological describe clearly all variants obtained by combination removes solutions mundane and familiar (common), make another sorting by removing incompatible solutions, disadvantageous or absurd, and finally the remaining solutions is selected either randomly or taking into account other elements, the solution final. matrix discoveries is also a technical matrix that uses a table that intoduce, both horizontally and vertically, variables that can associate and combine giving a particular response of each combination on a product, process or needs and how where can it be satisfied. matrix allows the combination of technical factors (horizontal and vertical) current and future, and the combination of technical factors (vertical) and economic (horizontal) in an organization. for example, some variants satisfy current situation of the organization with technical resources and economic conditions while others may be applicable in future versions either with superior technology with either additional training or additional financial resources. concasaj is a technique that aims revaluing creative products, processes, phenomena relatively familiar pecum and relationships between them through ,, breaking "problem in its component elements and their inclusion in a matrix analysis. fritz zwicky has created a three-dimensional matrix with which, for example, for a product, are the relationships between product parameters (size, weight, color, composition etc.), grid research (alteration, enlargement, reduction, etc.) and questions of control ( who ?, where ?, when ?, what ?, how?). each of answers constitute as a solution to solve the problem. methods of tackling them specific analytic logic. functional analysis is a research method and involves a product functions: identification, determination, characterization, sorting, ranking and evaluation functions. it can be used as a method to solve logic problems independently or as a method associated value analysis in the design of a product. functional analysis can be external and internal. the external analysis is the expression of functional necessity and is completed by the specification functional. from this perspective, the product is a set of functions and represent the views of the client user. the internal analysis of the product design stage belongs, expresses the views of the manufacturer. it highlights the technical functions, design and must respond optimally need at minimum cost. essentially the method allows splitting of a product in its main functions, the ranking of these functions, costing functions and seeking solutions to fulfill them in terms of improvement and reduced costs. the method of value analysis is defined as a functional approach (by functions/objectives and not just through solutions) with economic (the costs related trofin 43 functions) and multidisciplinary (requires a working multidisciplinary in an organization with an arbitration managers) . the method differs from other methods of cost reduction by reducing the cost not only of components and functions of the product. last of the methods listed logical approach is graphical analysis method. graphical analysis method is common and immediate impact by accessibility. it expresses succinctly analyze product or service, technology or process using graphical representation. this category includes road criticized technique, decision tree, mental maps etc. critical path method is a heuristic based on graph theory. the method allows the timing of the activities of a complex process (is a repetitive, with a well-defined objective whose achievement is developing a variety of activities that consume resources, time and gategorii more portions that are made by staff). it is modeled by a graph and enables follow up of the final term planning process and the interim periods. managers controls the process so that it can be done in an optimal duration with an optimal consumption of resources and ensure the compliance process with other objectives beyond. decision tree method is a method of project management and specific assistance projects with external funding is even mandatory. all decisions are made in a sequence of alternatives (decisional situations) taking into account the likelihood of future events. the decision tree allows segmentation of a complex managerial problems in a logical and orderly series of math problems easier and evaluating concrete gains or losses at each level decision making. the decision tree is used in solving complex managerial issues with major financial implications: the introduction of new products into production, positioning the productive units choice, choice of equipment, increase production capacity, planning maintenance and repair machinery. to build decision tree the following steps: problem identification, goal setting and determine possible alternatives, determining the level of consequences for each alternative, determining probabilities of events, calculation hope mathematical each alternative decision, the stage at which it is estimated the expected values for each possible combination of the alternatives and choosing the decision based on the maximum value obtained, reported value for money (emv the expected monetary value). mental maps is the visible expression of how we think and helps to practice differential thinking long term. it's about thinking in colors, symbols and images plus associative thinking. configuring mental maps it is based on scientific fact that most natural form structure is circular or spiral around a center or nucleus from which initiates a process of creative thinking. each keyword can be connected by lines to other keywords. it can be represented simply and easily structure a personal business ideas, a new strategy, a new approach to a project or solve a problematic situation in an organization. bionics is a technique for generating ideas using analogies. "inventions" of nature are sources of inspiration for anthropogenic environmental problems. bionic steps are: defining the problem, the search for analogies in nature, analyze examples from nature and identifying solutions to the problem. technical scamper proposed by alex osborn is based on a series of questions that generates ideas, solutions to problems to be solved: the substitution (which can be substituted?) combination (which can be combined?), adaptation (which can be adapted?) modification (which can be changed?), increase/addition (which can be added?), challenge other uses (what other uses can be found for the product or service?), elimination (which can be removed?), overturning (which is the opposite of this?), rearrangement (rearrangement product which is better?) conclusion creativity does not comply patterns. it involves breaking routine especially in those issues where we do not have a clear answer. the traditional model predictive (forecasting, planning, control) domeni rarely works related to human behavior, creativity and entrepreneurship. methods of stimulating creativity 44 society, culture, organization. working life through excellence is conducted by probabilistic rules. conventional methods certainly have their value in solving specific problems and punctual, but when the time comes to seeking new ideas or inspiration for a product, process or new, creative methods can support our hope. suitable means entrepreneur and manager, should be based on systems thinking, dialogue, paradox and nonlinear models. generating business ideas is not a random process, especially as people seek reasoned ideas, solutions for businesses, their problems or just curiosity. conscious or subconscious level, problem situations always seem to have solutions for people who search using techniques more or less structured but is a beginnings. references alvarez, s. (2005), “two theories of entrepreneurship: alternative assumptions and the study of entrepreneurial action” in paper of economics & evolution, mpi, jena. braudel, f. (1996), ,histoire et sciences socials.la longue duree", in f.braudel, ecrits sur l'histoire, flammarion, paris,1958/pp.41-48. bygrave, w., zacharakis, a. (2010), the portable mba in entrepreneurship, 4 ed., john willey sons new jersey,. cantillon, r. (1931), essai sur la nature du commerce en general, edited by higgs h., london. casson, m. (2003), entrepreneurship, the concise encyclopedia of economics, mpg books ltd, bodmin, cornwall. chalvin, d, (1992), utiliser tout son cerveau, esf, paris, p.39. edwards, b. (1999), drawing on the right side of brain, penguin putnam inc., new york, p. 44. euchner, g. (2000), erfolg als entrepreneur, financial times, munchen. fueglistaler, u., muller, c., volerz, t. (2004), entrepreneurship, gabler, wiesbaden. herrmann, n. (1982), the creative brain, in nassp bulletin, p.36. jaoui, h. (1990), la cretivite.mode d’emploi. aplications pratiques, esf, paris. limbos e. (1994), les barrages personnels dans les rapports humains, esf, paris. marshall, a. (1930), principles of economics, macmilllan and co, london. meissner, a. (2000), selbstmanagement, gwi, munchen. mironescu roxana, feraru, andreea (2012), intellectual capital as a basic resource for a new organizational behavior and economic development, 4rd european conference on intellectual capital, arcada university of applied sciences, helsinki, finland, proceedings cd version, isbn 978-1-90-8272-32-issn 2049-09-5x, book version isbn 978-1-908272-31-7, issn 2049-0933, 2012, pg.540, isi proceedings. mironescu, roxana, feraru, andreea (2012), a critical success factor of the knowledge management in the educational organizations, university of oradea, the faculty of management and technological engineering, annals of the the oradea university, fascicle of management and technological engineering, issn 1583-0691, isbn 978606-10-0128-67,vol 11, pg. 564, ulrichs, web global series, icaap, intute, index copernicus international. ramachander, s. (2010), creativitatea la lucru, ed. rosetti educational, , p.20-24. rogers, c. (1967), le development de la personne, ed. dunod, paris. roşca, al, (1981), creativitatea generală şi specifică, editura academiei, bucureşti, p. 16. shane, s., venkataraman, s. (2000), the promise of entrpreneurship as a field of research, academy of management review, vol.25, p. 217-226. microsoft word apostoaie constantin marius_eng.doc the discriminant analysis: an exploratory study concerning the degree of financial autonomy of companies in the context of the romanian business environment marilena mironiuc, mihaela-alina robu, ioan-bogdan robu, abstract this study aims at analyzing the evolution of financial autonomy on a sample of 80 companies quoted in the bucharest stock exchange, between 2006-2008. classically, financial autonomy is measured using the global and day-to-day rates of financial autonomy. however, this study has tested the dependency between the global rate of financial autonomy (own capital/ total debts) and a series of economic and financial indicators, with the purpose of obtaining both a score function that would help making a classification of the companies subject to our analysis, in performance groups (companies with a high financial autonomy, companies with a medium financial autonomy, companies with a low financial autonomy, and companies with no financial autonomy), and quantifying the influence of the relative variations of these economic and financial indicators on the relative variation of financial autonomy. in order to calculate the results, the statistic instrument spss 15.0 was used, and the work method was the discriminant analysis and the regression and multiple correlation analysis. keywords cluster analysis, financial autonomy, internal financing, crisis, discriminant analysis. jel code: g32, m41, c51, c53, g17 introduction the globalization phenomenon forces the countries of the world to live under the conditions of the recent international economic crisis. the malfunctionalities of the financial market, the collapse of crediting caused by a significant increase in the cost of debt and by more difficult access conditions to credits, the uncertainty related to regulations and the fiscal pressures in crisis situations, the worsening of the depression, all these are threats that endanger companies sustainability, which negatively influence value creation for the shareholders, and which determine financial autonomy to acquire higher valences for companies. in this period of crisis, the guilty for excessive debts from previous years are searched, among the debtors who have resorted to loans without ensuring the fact that they would be able to pay back their credits, and among the credit institutions that have encouraged their clients, thus contributing to the creation of a climate of “ignored risks” or risk transfer mainly on the debtors. the analysts tend to bias the balance towards the creditors, who have infringed the principles of business ethics out of the desire to increase their profits in an opportunistic manner. the depression determines an “economic darwinism”, that is, the position of certain companies is consolidated based on the bankruptcy of others. in this context, solutions are searched and suggested for reanimating the capital market, for activating the inter-banking studies and scientific researches economic edition, no. 15, 2010 96 market, and for compensating the losses recorded on the financial market1. therefore, the promotion of strategies that generate liquidity, through the design and implementation of fiscal measures that stimulate work, savings, and investments, the reduction of the real interest rate, and crediting upturn are essential for ensuring business continuity2. conceptual approaches on financial autonomy at the origin of the selection of a company’s financing sources there always is a required amount for financing, which may cause financial imbalances and tensions within the firm. it is important for the internal resources to have a relevant weight in the financial structure of any company, which means a high degree of financial autonomy. financial autonomy is a premise for access to credits, which proves that the company is not subject to the risk of insolvency as a result of a too high dependency on creditors who, under these circumstances, will not intervene in the company’s decision-making process. therefore, internal resources represent a guarantee of the company’s solvency. if this guarantee is insufficient, the sponsors will require additional guarantees in order to allow access to their capital. the degree of financial autonomy is directly conditioned upon the size of the internal contributions of any company (internal financing), represented by resources such as: net profit or profit remained after paying the dividends; the amortization of locked up assets, and the amounts resulted from disinvestments (usage of the locked up assets that are out of function or of selling the surplus assets); other funds assimilated to the internal capital, as well as natural or financial contributions of the future owners. each of the two modalities of building the company’s capital presupposes costs and implies certain obligations for the sponsors. internal financing implies obtaining a significant profit, of which a part is reinvested for increasing the locked assets and for funding the exploitation cycle. the accumulation of capital by reserving undistributed profit creates a double advantage for the company: it strengthens the company’s financial autonomy and its ability to make debts. amortization is also used for internal financing, which is the expression of the depreciation of the fixed means, in which part of the company’s social capital is locked and that has the role to preserve its productive potential, by renewing the locked up assets and covering the exploitation risks. in the conditions of a significant development of the company, internal financing is not enough, but it ensures: the fact that the company is in its turn interested in obtaining higher economical and financial results, mobilizing internal reserves and using them efficiently, which encourages the capital contributions of new shareholders3; increasing the company’s interest for self-development, independence, and financial autonomy; building a safe method for covering the required amount to be financed, considering that in certain conjectural situations the company may encounter difficulties in obtaining capital from the financial market; financing for risky investments and intact preservation of the company’s ability to acquire debts. 1 naifar, n. (2008), la récente crise financière internationale cause t-elle la crise des marchés des swaps sur défaut de crédit ?, mpra paper no. 11909, p.1, http://mpra.ub.unimuenchen.de, 2 mironiuc, m. (2009), risk management in the new european context: methodological approaches, scientific works. horticulture series, year i.ii. vol. 52, “ion ionescu de la 263 3 vasile, i. (2005), , meteor press publishing house, bucharest, p. 204 studies and scientific researches economic edition, no. 15, 2010 97 according to certain opinions, internal financing tends to diminish capital mobility at a high extent4. although internal financing is the expression of a healthy financial policy, exaggerations in this direction are not recommended, since the company needs to preserve its relationship with the financial market. certain companies that integrally cover their costs for economic development from internal financing are tempted to neglect the cost of the own capital, considering it as free of charge. but the economic and financial reality proves that, irrespective of its provenience, capital has a cost and sometimes the cost of the own capital is higher than the cost of the borrowed capital. any policy for internal financing needs to be analyzed according to the profitability of the reinvested profit. if the profitability of the new investment projects covered by internal financing is equal to the profitability rate requested by the shareholders who have invested their capital in the company, then the internal financing policy is neutral. only when the profitability of the investments covered by internal financing is higher than the rate of profitability that pays back to the shareholders, the internal financing policy has a positive effect on the company, expressed in an increase of its value. as a consequence, internal financing contributes to the increase of the company’s capital, but does not allow any profit increase unless the profitability rate of the investment projects surpasses the profitability requested by the shareholders5. the capital contribution adds to the financial autonomy of the company, but also implies a diminution of power and a division of the company’s net result between the capital “contributors”. the decision to pay the shareholders through dividends influences the company’s policies related to capital accumulation, internal financing, and investment. the dividend policy has, at the first sight, opposed effects on the company and its shareholders. on the one hand, distributing dividends deprives the firm from a fraction of its internal financing, which means a loss of liquidity, for which advantageous placements could have been found. on the other hand, the dividend policy ensures that the shareholders who have made financial placements are paid back. therefore, there can be noticed an opposition between the company’s interests, as an economic entity and as a decision center oriented towards accumulating capital and power, and the shareholders, as third parties whose interest is represented by a remuneration for their risk capital placed within the company. this opposition tends to diminish as capital accumulation transforms, on the long term, in additional value for the shareholders. internal financing is an indicator with a rich informational value for the company, its creditors, and its investors. it is carefully monitored by the company, for which it represents the safest financing resource, ensuring its financial independence. creditors analyze internal financing because it is a clue regarding the company’s access to credits and its ability to pay them back. internal financing convinces potential investors that the company is able to efficiently use and manage the given capital and that they are guaranteed an attractive payback for the risks taken through investments. research methodology considering the determinant factors of financial autonomy, in this article we aim at testing two working hypotheses: a) the existence of interdependencies between a series of rates (which we will name, from now on, independent variables), and the rate of global financial autonomy, which will be expressed in the description of a score function, which can be used as an instrument for classifying the companies from the analyzed sample. the score function will have the form: y = a1 × x1 + a2 × x2 + ... + a8 × x8, where y is the dependent variable of the suggested model, taking the following values: 1 – high autonomy, 2 – medium autonomy, 3 – low 4 conso, p., hemici, f. (2005), gestion financière de l’entreprise, 11th edition, dunod, paris, p. 207 5 mironiuc, m. (2009), -contabile, the studies and scientific researches economic edition, no. 15, 2010 98 autonomy, 4 – no financial autonomy. in order to include the companies in our sample in one of these four classes suggested, the debt degree was taken into account (total debts/own capital). therefore, four intervals were formed: for (dtot/oc) [0;0,7] we will associate a high degree of autonomy (1), for (dtot/oc) (0,7;1] we will associate a medium degree of autonomy (2), for (dtot/oc) (1;2] we will associate a low degree of autonomy (3), and for (dtot/oc) (2;+ 4). the independent variables xi (with i = 1:8) represent a series of rates which we have analyzed in this model: x1 = the rate of total debt (dtot/ptot), x2 = the rate of immediate liquidity (at/dc), x3 = the rate of general solvency (atot/dtot), x4 = the rate of general liquidity (ac/dc), x5 = the rate of financial profitability (rnet/oc), x6 = the rate of commercial profitability (rgross/ca), x7 = the rate of internal financing (oc/ptot), x8 = the degree of debt (dtot/oc). the coefficients a1...8 are the unknown factors of the suggested mathematical model, which will be calculated by solving the system of 80 equations (the size of the suggested sample of companies quoted in the bucharest stock exchange-bse) with 8 unknown factors (coefficients associated to each rate). the information collected and processed is from the period 2006-2008. b) based on the collected information, we aim to test the existence of connections between the relative variations of the independent variables in the model above and the relative variation of financial autonomy, variations that we will name elasticities. two functions will be obtained (for the periods 2008-2007 and 2007-2006), under the following form6: eatf = b1×eli + b2×esg + b3×elg + b4×erf + b5×erc + b6×eaf + const, where: b1...6 = the coefficients of the model (unknown factors), const – constant, eatf – the elasticity of financial autonomy 0 0)], eli – 0 0)], esg – 0 0)], elg – 0 0)], erf – the elasticity of financial 0 0)], erc – 0 0)], eaf – 0 0)]. starting from the sample of the 80 romanian companies quoted in the bucharest stock exchange, discriminant function coefficients have been obtained for the years 2008, 2007, and 2006, using the direct method7 (all variables were simultaneously taken into account). using the statistic program spss15.0, a prognosis was also made concerning the inclusion of a company in one of the categories mentioned above, even if the respective company does not belong to the analyzed sample. discussions on the results after processing the database using spss 15.0, results for valid interpretations have been obtained, which will be later used in making decisions. the most important results are those that lead to calculating the coefficients of discriminant functions. therefore, the standardized coefficients with higher values determine the importance and degree of contribution of the associated variable to the discriminant ability of the function. table no. 1. points out the impact of each independent variable on the three suggested mathematical models, the influence power being given by the module value of the coefficients, while the meaning is given by the sign of each coefficient. according to the obtained data, for the function corresponding to 2006, there can be noticed a significantly positive influence of the rate of 6 jaba, e., jemna, d., vioric lan, c. (2007), discriminant analysis in the study of romanian regional economic development, the scientific annals of “alexandru ioan cuza” 7 jaba, e., robu, i-b. (2009), audit, revista audit financiar, no. 11, bucharest, p. 24 studies and scientific researches economic edition, no. 15, 2010 99 global internal financing (oc/ptot) – having a coefficient of 0.47 (maximum values of the ratio will determine the inclusion of the company within a group with high autonomy), but, negatively, a significant influence is shown by the rate of global debt (dtot/ptot), with a coefficient of –0.47 (maximum values of the ratio will indicate a low financial autonomy). for the year 2007, the rate of financial profitability (rnet/oc) and the degree of debt (dtot/oc) largely determine the classification of the companies in the three established categories (the coefficient of 2.56, associated to maximum values of the rnet/oc ratio, contributes to including the companies in categories with high financial autonomy, while the coefficient of 2.43, associated to dtot/oc, determines the inclusion in a group with low financial autonomy). table no. 1. coefficients, the structure matrix, and global means coefficients structure matrix sample means variables 2006 2007 2008 2006 2007 2008 2006 2007 2008 (dtot/ptot) -0.47 0.65 2.24 -0.97 0.89 0.94 0.46 0.47 0.50 (at/dc) 0.06 -0.17 0.18 0.96 -0.87 -0.92 0.71 1.40 1.21 (atot/dtot) 0.05 -0.14 0.02 0.38 -0.41 0.25 7.50 10.46 14.90 (ac/dc) 0.09 -0.10 0.06 0.30 -0.37 0.25 2.28 3.34 3.24 (rnet/oc) 0.04 2.56 0.26 0.29 -0.25 -0.17 0.12 0.59 0.19 (rgross/ca) -0.01 -0.09 -0.09 -0.20 -0.44 0.31 0.10 -0.09 -0.28 (oc/ptot) 0.47 -0.19 3.14 0.17 -0.14 0.24 0.54 0.52 0.49 (dtot/oc) -0.16 2.43 0.37 -0.07 0.17 -0.03 2.73 -1.17 -0.61 at the level of the fiscal year 2008, the highest influence is given by the rate of global debt (dtot/ptot) equal to 2.24, as well as by the rate of internal financing (oc/ptot) equal to 3.14. using canonic coefficients, it is possible to obtain the mathematical model of the score function. based on the data provided by this table (the coefficients section), score functions will be built for every year: score2008 = 2.24 x (dtot/ptot) + 0.18 x (at/dc) + 0.02 x (atot/dtot) + 0.06 x (ac/dc) + 0.26 x (rnet/oc) – 0.09 x (rgross/ca) + 3.14 x (oc/ptot) + 0.37 x (dtot/oc). the structure matrix section points out the significant correlations, as well as their meaning, from the established variables and the score function. there is a correlation between each independent variable and the discriminant function. these connections are presented in absolute value, and the values that tend towards +/–1 indicate strong correlations between the variable and the score function, which will significantly influence the score of each company. as can be noted, for 2006, the dtot/ptot ratio will determine the inclusion of the companies in categories with an inferior financial autonomy, while the at/dc ratio will determine the inclusion of the companies in categories with a high financial autonomy. table no. 2. group statistics presents, in detail for each fiscal year and for each independent variable analyzed, the average value for the group to which the company belongs. analyzing these values, there can be noticed the existence of important differences both between the average levels per group and from one year to another. the table also points out the number of cases validated for each individual class. therefore, for the fiscal year 2008, the number of quoted companies that belong to the class of high autonomy is 40, for those in the class with medium autonomy is 6, the class with low autonomy includes 17 companies, and the class with no financial autonomy, 17 entities. comparing with the other years, 2007 and 2006, there can be noticed a slight drop in the number of companies with high and medium autonomy and a significant increase in the number of companies with a low financial autonomy. in order to be able to classify, at need, companies that do not belong to the analyzed sample but that are characterized by the same economic, financial, time and space criteria, the statistic instrument also allows prediction functions. studies and scientific researches economic edition, no. 15, 2010 100 table no. 2. group statistics (1rând liber, 11 p.) these discriminant functions can be written as linear equations, whose coefficients can be found in the columns of table no. 3. table no. 3. coefficients of the classification functions high autonomy medium autonomy indicators 2006 2007 2008 2006 2007 2008 (dtot/ptot) 194.86 104.26 1257.49 199.60 103.40 1247.89 (at/dc) 0.41 0.16 9.64 0.38 -0.14 9.47 (atot/dtot) 0.06 0.03 -0.16 0.05 0.01 -0.17 (ac/dc) -0.58 0.26 -1.96 -0.75 0.28 -2.00 (rnet/cpr) 1.07 -1.12 22.72 0.92 -0.82 22.63 (rgross/ca) 1.78 4.76 -8.43 1.95 5.01 -8.24 (oc/ptot) 203.82 106.63 1263.03 206.26 104.45 1251.80 (dtot/oc) -0.23 -0.40 2.35 -0.24 -0.30 2.36 (constant) -100.45 -54.40 -627.81 -103.02 -52.20 -616.81 low autonomy no autonomy indicators 2006 2007 2008 2006 2007 2008 (dtot/ptot) 198.08 107.29 1274.5 198.92 107.80 1239.87 (at/dc) 0.46 -0.09 9.78 0.30 0.02 9.45 (atot/dtot) 0.06 0.01 -0.17 0.05 0.01 -0.16 (ac/dc) -0.91 0.22 -2.09 -0.65 0.20 -1.99 (rnet/oc) 0.79 -0.14 23.16 0.88 -0.01 22.32 (rgross/ca) 1.94 5.13 -8.65 1.79 4.21 -8.26 (cpr/ptot) 203.27 107.56 1277.71 199.52 105.39 1238.57 (dtot/oc) -0.23 -0.08 2.43 -0.21 -0.07 2.21 (constant) -100.59 -55.85 -642.98 -100.59 -56.12 -608.34 average high autonomy average medium autonomy indicators 2006 2007 2008 2006 2007 2008 (dtot/ptot) 0.20 0.18 0.18 0.44 0.44 0.46 (at/dc) 1.24 2.40 2.10 0.39 0.29 0.36 (atot/dtot) 13.64 17.77 28.30 2.30 2.29 2.18 (ac/dc) 3.35 5.07 5.20 1.63 1.99 1.54 (rnet/oc) 0.089 0.04 0.01 0.11 -0.04 0.01 (rgross/ca) 0.15 -0.02 -0.32 0.11 0.02 0.06 (oc/ptot) 0.79 0.80 0.80 0.57 0.53 0.53 (dtot/oc) 0.29 0.25 0.27 0.77 0.83 0.87 cases 39 44 40 11 8 6 average low autonomy average no autonomy indicators 2006 2007 2008 2006 2007 2008 (dtot/ptot) 0.55 0.58 0.58 0.91 1.08 1.18 (at/dc) 0.14 0.16 0.44 0.15 0.17 0.20 (atot/dtot) 1.82 1.76 1.73 1.25 1.13 1.05 (ac/dc) 0.97 1.20 1.67 1.18 0.93 0.82 (rnet/oc) 0.10 0.04 -0.06 0.19 2.29 0.93 (rgross/ca) 0.03 0.01 -0.40 -0.07 -0.31 -0.19 (cpr/ptot) 0.44 0.43 0.42 0.10 -0.06 -0.21 (dtot/oc) 1.26 1.38 1.40 8.93 -6.11 -5.19 cases 9 8 17 21 20 17 studies and scientific researches economic edition, no. 15, 2010 101 therefore, for 2008, the discriminant function for the class with high autonomy is of the type: high autonomy score = 1257.49 x (dtot/ptot) + 9.64 (at/dc) – 0.16 x (atot/dtot) – 1.96 x (ac/dc) + 22.72 x (rnet/oc) – 8.43 x (rgross/ca) + 1263.03 x (oc/ptot) + 2.35 x (dtot/oc) – 627.81. a similar method will be used for building the prognosis function for the other autonomy classes. after obtaining the 4 functions, in order to classify a company that does not belong to the analyzed sample into one of the 4 categories mentioned above, the score corresponding to each function will be computed, and its maximum value (compared to the other calculated scores) will indicate the inclusion of the company in one of these 4 classes. the same process will be used for the years 2007 and 2006. after testing the interdependence relationships between the variations of the rates analyzed in this model, for the period 2006-2008, we will look at the results given in the tables below. table no. 4 presents the average elasticity corresponding to each economic rate, as well as the dispersion of the values from the average. if for the fiscal years 2006-2007 the average elasticity of financial autonomy was 5.48 (for an increase of 1% of ptot, there is an increase by 5.48% units of oc), for the following period it increased up to 14.58 (an increase of 1% of ptot will determine an increase of the level of oc of up to 14.58 %). table nr. 4. descriptive statistics 2006-2007 2008-2007 average std. deviation average std. deviation the elasticity of financial autonomy 5.48 36.74 14.58 100.87 the elasticity of immediate liquidity 0.02 57.53 -0.06 50.40 the elasticity of general solvency 0.19 5.19 10.96 86.78 the elasticity of general liquidity 2.06 12.65 0.61 4.84 the elasticity of financial profitability 40.00 242.99 -159.44 1570.26 the elasticity of commercial profitability -608.17 5224.08 -42.32 241.54 the elasticity of internal financing 4.96 28.28 -1.40 80.48 such significant variations can also be observed at the level of the elasticity of general solvency (a multiplication by 57.68), the elasticity of financial profitability (a significant decrease of 298.6%, attaining a negative elasticity), as well as at the level of the elasticity of commercial profitability (a significant invigoration tendency). table no. 5. correlations between elasticities efa eil egs egl efp ecp eif 1.000 -0.094 0.973 -0.589 0.013 0.042 -0.155 -0.094 1.000 -0.095 -0.325 -0.002 0.025 0.006 0.973 -0.095 1.000 -0.600 0.011 0.025 0.004 -0.589 -0.325 -0.600 1.000 -0.022 0.079 0.023 0.013 -0.002 0.011 -0.022 1.000 -0.079 -0.002 0.042 0.025 0.025 0.079 -0.079 1.000 0.005 pearson correlation 2007-2008 efa eil egs egl efp ecp eif -0.155 0.006 0.004 0.023 -0.002 0.005 1.000 1.000 -0.047 0.299 -0.105 -0.030 0.049 0.529 -0.047 1.000 0.053 0.758 0.016 0.029 -0.027 0.299 0.053 1.000 0.094 -0.002 0.095 0.031 -0.105 0.758 0.094 1.000 0.007 0.012 -0.062 -0.030 0.016 -0.002 0.007 1.000 -0.098 -0.029 0.049 0.029 0.095 0.012 -0.098 1.000 -0.013 pearson correlation 2006-2007 efa eil egs egl efp ecp eif 0.529 -0.027 0.031 -0.062 -0.029 -0.013 1.000 studies and scientific researches economic edition, no. 15, 2010 102 as table no. 5 shows, between 2007-2008, the elasticity of financial autonomy is positively influenced by the elasticity of general solvency (a positive modification of the general solvency will trigger an increase of the financial autonomy), while the elasticity of general liquidity will influence it in the opposite direction (a positive modification of the general liquidity will trigger a decrease in the financial autonomy). the synthesis of the influences of elasticities (the main variables in the model) on the elasticity of financial autonomy can be reflected in equations that transpose these connections, according to table no. 6. table no. 6. coefficients un-standardized coefficients model dependent variable: the elasticity of financial autonomy 2006-2007 2007-2008 (constant) 2.859 2.399 the elasticity of immediate liquidity 0.041 -0.007 the elasticity of general solvency 2.060 1.127 the elasticity of general liquidity -0.436 -0.124 the elasticity of financial profitability -0.002 0.000 the elasticity of commercial profitability 0.000 0.008 the elasticity of internal financing 0.666 -0.200 therefore, for the periods 2006-2007 and 2007-2008, the regression equations have the form: efa06-07 = 0.041×eil +2.06×egs –0.436×egl –0.002×efp +0.666×efc + 2.859. efa07-08 = -0.007×eil +1.127×egs –0.124×egl +0.008×ecp –0.200×eif + 2.399. conclusions previous analyses allow us to notice that the companies characterized by the best degree of financial autonomy are those with the highest levels of the indicators for solvency, immediate liquidity, general liquidity, and profitability. the companies with no financial autonomy are oversaturated from the point of view of their debts, which has determined, in some cases, an erosion of the own capital by a carry-forward of the losses from the previous years (an effect of the absorption of the exploitation result by the financial expenses). our study points out a reverse correlation between the degree of financial autonomy and the rate of financial profitability. as a paradox, the companies in the group with no financial autonomy are characterized by higher levels of the rates of financial profitability than the rates of the financial profitability of the companies included in the group with a high financial autonomy. this cannot be explained by the positive leverage effect determined by debt in case of companies with no financial autonomy, as it is a false profitability, determined for certain subjects by the reduced amount of their own capital (which mathematically intervenes in the denominator of the profitability ratio) or, for others, through a significant negative net result (loss) for a negative own capital (eroded by debt). from the analysis of the elasticity of financial autonomy in relation with the elasticity of the economic and financial indicators included in the built score functions, there can be noticed a direct and intense interdependence between the company’s financial autonomy and their solvency, which confirms the assertion that the internal resources represent a guarantee of the company’s solvency. also, the correlations between elasticities stress the diminution of the financial autonomy as an effect of the increase in the general liquidity. in order to explain this correlation, we take into account the fact that an increase in the rate of general liquidity may mean an increase, at a higher rate, of the floating assets in relation with the increase rate of the current liabilities. however, in fact, floating assets are not represented solely by investments in titles that can easily become liquid (treasury equivalents), but also by studies and scientific researches economic edition, no. 15, 2010 103 commercial stocks and receivables that absorb significant financial resources. in this case, an increase in the rate of general liquidity is a signal for increasing the temporary necessary amount to be funded and for the diminution of the financial autonomy. bibliography 1. conso, p., hemici, f. (2005), gestion financière de l’entreprise, 11e édition, dunod, paris 2. dallocchio, m., salvi a. (2004), finanza d’azienda, egea, milano 3. jaba, e., robu, i-b. (2009), utilizarea analizei discriminant pentru ob inerea probelor de audit, revista audit financiar, nr. 11, bucure ti 4. jaba, e., jemna, d., vioric discriminant analysis in the study of romanian regional economic development tomu 5. mironiuc, m. (2009), -pozi -risc, editura 6. mironiuc, m. (2009), fundamentele tiin ifice ale gestiunii financiar-contabile a întreprinderii, editura ii „alexandru 7. analisi finanziaria. valore, solvibilità, rapporti con i finanziatori, the mcgraw-hill companies, publishing group italia, milano 8. , 9. vasile, i. (2005), i studies and scientific researches economic edition, no. 15, 2010 104 microsoft word apostoaie constantin marius_eng.doc some remarks concerning the indicators for appreciation the performance and the value created by the enterprise doina pacurari, universitatea vasile alecsandri din bacau mircea muntean, universitatea vasile alecsandri din bacau abstract the appreciation of the performances of the enterprise are made, as a rule, by ways of indicators which are of accounting type, the result of financial exercise, profit or loss, being mostly used. this result can be determined differently, according to approaches of patrimonial, economic or financial nature. due to the handling potential of this indicator, the attention of the analysts focused in time also on other computing patterns, uninfluenced by the accounting methods and techniques used by the enterprise. the investors’ need of information determined the conception of some performance computing models based on the concept of creating value for the shareholders. among these, those which express the ability of the enterprise to create value on long term, based on discounted cash flow, are the most appreciated. nevertheless, within the romanian economic context, the most used performance indicators are still of accounting nature for being accessible and understandable. key-words performance, classical indicators, result, creating value, modern indicators jel code: g32, l25, o12 introduction in business, the concept of performance can be translated by success obtained either generally or in the specific field of activity of the enterprise. the quantification of this succes cab be made through a series of qualitative and quantitative indicators such as: turnover, market quota, operating cash flows, added value, personnel qualification, reputation of the managers’ team, social climate, etc. however, the main indicator, unanimously accepted, for assessing the performances of the enterprise remains its accounting result (we consider that the term result has a wider meaning than income, the last one suggesting more a favorable result). if, by the middle of the 80s, the main performance indicator followed by the users of financial statements was the net result, the suspicions concerning its manipulation through various techniques of accounting nature, have determined, in the first stage, an interest increase in other result indicators as the operating result or the gross operating surplus (equivalent to the term anglo-saxon earnings before interest taxes depreciation and amortization). the last ones allow a better comparison of performances of various enterprises by means of elimination of fiscal incidence (if the tax is calculated for global business), of financial and extraordinary elements, of provisions, etc. among the factors that can influence the performance of an enterprise we can rank: the activity structure, the technological process, the materials used, the access to resources, the capacity of using the fixed assets, the quality of the employees, etc. the information about the performance of an enterprise, mostly its profitability, is necessary for: studies and scientific researches economic edition, no. 15, 2010 113 the evaluation of potential changes of economic resources which the enterprise can controll in future; the anticipation of enterprise’s ability to generate cash flows by using the available resources; the formulation of reasonings regarding the efficency of the enterprise to use new resources. however, from the investors’ point of view, as the main category of users according to anglo-saxon approaches, the performance aims the earnings per share and more, the dividend per share. gradually the notion of shareholder value has been imposed. nowadays, there are numerous models of creating value and of appreciation of the enterprise' profitability. among the modern indicators used in appreciation of performances there are: economic value added, market value added, total shareholder return, cash flow return on investement, and so on. due to the fact that the classical performance indicators offer limited information, the concept of value creating had become an integral part of managerial culture, and we can speak of „value based management”, with the following advantages: ability to maximise the creation of value; improvement of decision making; encouragement of profitable investments leading to increase of value; improvement of resources allocation; setting clear objectives focused on the increase of the entity value; improvement communication with the investors and analysts. the methods of performance analysis based on the concept of shareholder value became a necessity during the 90s, because of numerous critics with regards to the limits and subjectivity of the classical indicators. even though there are important differences between the methods and that it can be difficult to put them in practice, the main objective remains the measurement of the shareholder value and its maximization. classical indicators of the enterprise' performance the main indicator of the performance of the enterprise is the result (profit or loss). it is an accounting model. its value and formation are presented in the financial statements of the enterprise. the main advantage of the classical indicators relies on the fact that, due to its prolonged use, the majority of the people concerned is familiar with their computing method and can interpret their value. the classical approach of performance, mainly of the result, aims at three aspects: a) patrimonial – by means of the same evaluation method, the value of the enterprise is compared at two different moments. the result of the exercise n is determined as a difference between the equity (eq) registered at the end of exercises n and n-1, more precisely the result shows the increase or decrease of value of the equity between the beginning and the end of the exercise n: result of exercise n = eqn – eqn-1 considering that the value of the equity can be influenced during the course of the year by contributions from the owners (capital increases by: contributions in cash and/or in kind, conversion of debt) or in favour of the owners (quota distributions, capital decreases), changes that do not relate to the result of the exercise, the equation becomes: result of the exercise n = – owners’ contributions+ distributions in owners’ favour this approach can lead to different values of the result during inflationary periods because the adjustments brought to different patrimonial elements, following the variations in prices, can be done by various methods, in such cases, supplimentary information regarding the studies and scientific researches economic edition, no. 15, 2010 114 methods of evaluation used, offered through explanatory notes, can reduce to some extent the degree of incertainty of the users. b) economic – the result is determined as the difference between revenues and expenses: result of exercisen = revenues of exercise n – expenses of exercise n the economic approach can be controversed following the way of recognition of the revenues and expenses but also of the way of connecting expenses to revenues. c) financial – the result is the expression of variation of the treasury of the enterprise during the reporting period, computed by the comparison of cashing and cash payment flows. the result, expressed by the variation of the treasury (cash), is determined as a difference between the self-financing capacity, as security collected during the financial exercise and the computed expenses, that do not result in cash flows but correspond to real depreciation or probable risks: result of exercise = self-financing capacity – computed expenses the concept of result is accompanied, however, by a touch of subjectivity in relation to the interest of each category of users. for instance, with regards to the users’ view about the result measured through traditional methods, the investors are interested, as shown before, by the net profit and its distribution as dividends, while the creditors are more interested by the gross result before the interest’ payment. regarding the policies and accounting options adopted by the enterprise (stock evaluation, depreciation methods, etc.), the result can be different, and the enterprise, the management respectively, will follow its own interests (maximization of profit with the aim of presenting a better „image” or, on the contary, the reduction of profit with the purpose of tax relief, etc ) the resilient character of the result limits the informational value of the profit and loss account. in order to avoid drawing erroneous conclusions based on this summary document, the user must analyse the methods and the accounting policies adopted by the enterprise and their impact on the reported result. other accounting indicators used in appreciation of performance of the enterprise are the operating result and the gross operating surplus (corresponding to ebitda, earnings before interest taxes depreciation and amortization, used in anglo-saxon models). their advantage relies on the fact that they cannot be handled by various accounting techniques of registering the provisions and of the adjustments of assets’ value. moreover, they are not influenced by the level of fiscality (insomuch as the tax is computed globally for the entire activity of the enterprise). the only element by which one can intercede over the value of these indicators is represented by the cost of sold goods, influenced by the method of valuation of stocks. a better appreciation of the performance of the enterprise can be achieved by means of return ratio. it is common knowledge that these ratio allow comparisons in time and space, due to their way of computating namely by the effects obtained related to the efforts corresponding these effects. the main return ratio are: economic return (determined as ratio between the operating result and the value of enterprise assets and known as return on assets, roa) and financial return (determined as ratio between the net result and the value of own capital and known as return on equity, roe). obviously, the investors are interested in the financial return of the enterprise, as expressing the theoretical ability to distribute dividends. modern indicators of appreciation of created value by the enterprise it is a known fact that the basic obligation of the management of any enterprise is to make operational, investment and financial decisions that will ensure the long-term growth of the shareholders’ wealth. the modification of the value of the own capital, together with the result by share, indicates the evolution of which this shareholders’ wealth has registered during a period of time. studies and scientific researches economic edition, no. 15, 2010 115 if we refer to the accounting value of shares, based on the own capital presented in the financial statements, this is a measure subject to distortion. since it represents a residual value, the net assets is affected by all past and future accounting adjustments, as well as by the more and more complex way to recognise changes of value for assets and liabilities. in conclusion, in the majority of cases in which the issue of economic analysis occurs the relevance of this indicator is doubtfull. a series of indicators imposed over the last years as forms of expressing the new value created by the enterprise for its shareholders. we can rank, among these, the discounted cash flow, the economic profit, economic value added, market value added, the total shareholders return. the novelty of the computing models of the created value in relation to the traditional methods of establishing performance is the fact that they lay emphasis on the cost of capital entirely. the discounted cash flow (dcf) (a concept developped by alfred rappaport in his work „creating shareholder value: the new standard for business performance”, known also under the term of „shareholder value”) allows appreciation of the value of the shareholders’ participation to the enterprise’s activity and offers thus information regarding the substantiation of strategic decision making. the indicator is obtained following the discount of the future forecast cash flows in correspondence with the cost of capital (of the investments made). the cash flows considered are whose related to operating activities in a certain period of time, without being influenced by the cash flows related to financing (interests, dividends, etc.). it is considered the best financial indicator for the appreciation of the enterprise’s ability to create value for its owners. however, due to the fact that the forecast of the future cash flows is difficult to achieve by external analysts, dcf remains a less used indicator. the measurement of the economic profit (ep) represents another method for determination the value created, having its roots in the „residual income” mentioned by the economist alfred marshall at the end of the 19th century and seen as the pay of some enterprises owner for the invested capital and the planning work, control and supervision. the economic profit indicates the result obtained throughout the period, after covering all expense, including the expenses regarding the capital used. by comparison, the net profit doesn’t take into account the cost of using the investors’ capital, offering information that can mislead the users. thus, some enterprises which are profitable from the point of view of the accounting result can be unprofitable from an economical point of view. the economic profit is computed following: ep = (capital return – wacc) x invested capital where, wacc is weighted average cost of capital (the average ratio of total capital remuneration). difference between the capital return and his wieghted average cost is named "performance spread". the economic profit value may be appreciated depending on certain key-factors that can be a basis for various objectives formulation regarding the performances: the capital return, in his turn influenced by the profit margin (profit/turnover) and the efficiency of developed activity (reflected by invested capital turnover); the ability of enterprise to generate turnover of capital use. in 1991, the economic profit was redefined by the members of stern steward & co and thas a new concept has been developed: economic value added (eva). by definition, eva is the difference between the net operating profit (after tax) and the opportunity cost of capital used: eva= net operating profit invested capital x capital cost ratio eva, a financial accounting type indicator, is a measure of the financial performance by reflecting the economic profit of the enterprise and being direct related to the wealth creation for shareholders of time. that is to say that eva reflects the measure in which the obtained studies and scientific researches economic edition, no. 15, 2010 116 result exceeds or is lower than the minimum rate of payment required by the creditors and investors for investment projects with similar risk. by way of defining, eva give a lot of attention to the cost of capital. the business enterprise must generate a rate of return at least equal with the market one, obtained in similar risk conditions. otherwise, the accounting profit is unreal and irrelevant forasmuch the enterprise concerned does not create wealth for its owners but rather it acts in loss. the relationship between eva and dcf is simple. dcf is actually the sum of the future economic profits, discounted at weighted average cost of capital: dcf = i i eva (1 +wacc)i=1 the economic value added allows the individual performance measuring, subject to the application of a required return ratio. eva, like all yearly indicators with integral or partial accounting character, may be subject to distortion. thus, it can try the maximization of eva for a given year in detriment of the coming years. a high value of the indicator at one time does not indicate the long-term wealth creation. therefore, only the discounted future cash flows may reflect the enterprise's ability to create sustainable value. the other indicator introduced by stern steward & co is market value added (mva), especially applicable for listed companies. mva indicates the surplus of the total market value over the invested capital value and reflects the appreciation of the enterprise on the capital market. mva = market value of the company – total invested capital the market value of the company (market capitalisation) is calculated by multiplying the quotation with the number of shares that are in circulation (for the unlisted companies the market value is estimated on the basis of the present value of future cash flows generated for investors). a positive mva indicates a investment return higher than capital cost and also that the shares are trading at a higher price than initial capital. the relationship between the last two indicators is the following: mva = discounted value of the future evas the increase of eva will be followed by an increase of the market value added. based on the above relationship, the market value of the own capital can be considered to be the present value of all future cash flows belonging to owners. mva (or rather change in mva) represents a better criterion than quotation evolution because it connects the increasing of value with the capital invested to obtain it. another indicator, this time of stock type, to measure performance is total shareholder return (tsr) (proposed by boston consulting group). tsr allows appreciation of the value obtained by the investors of share ownership and reinvestment of dividends in a certain period of time (at least one year). indicator is the percentage and allow comparisons between companies or over the industry or market average. tsr is computed following: tsr = 1 0 0 (q -q )+div q x 100 where: q1 quotation at the end of the period q0 quotation at the beginning of period div amount of dividends (includes not only the distributed dividends but also the cash payments to shareholders and the repurchases of shares) tsr is thus a actuarial rate of return to shareholders who bought shares at the beginning of period, determined by evaluating the own portofolio at the quotation valid to end of the period. to be relevant, the calculation must be done for a long time (5-10 years) so as to eliminate the effect of non-systematic variations of quotation. studies and scientific researches economic edition, no. 15, 2010 117 for listed companies is also calculated and the price earnings ratio (per), by dividing the share price to earnings per share. the profit taken into account is the last year profit of the common shares. per allows comparisons with the average rate of a certain industry or market wide. a synthesis of the main advantages and disadvantages of the above indicators is presented in the table below: type of indicator advantages disadvantages accounting net result profit per share gross operating surplus operating result economic return financial return -quick computing; -extensive utilisation, for all-types enterprises; -accesible to all categories of users. -have not respect to: required equity return, cost of the own equity, risks; -except for rates of return does not allow relevant comparisons in space (between two or more enterprises); -handling potential through accounting engineering. financial discounted cash flow -the best criterion for apreciation the enterprise’s ability to create value. -difficult computation, especially for external users. financialaccounting economic profit (economic value added) -quite simple computation; -pay respect to weighted average cost of capital. -limited to one financial exercise, his trend being difficult to measure. capital market total shareholder return market value added price earnings ratio -if tsr is computed for a longer period of time may be indicate the real obtained shareholder return; -mva is quite simple to calculate and reflect the total created value, not only the annual one. -per allows comparative analyses of domain or wide stock market. -difficult to apply for unlisted companies; -in the short term may be affected by capital market volatility. conclusions the constant concerns of theorists and practitioners for as accurate an assessment of the enterprises’ performances lead to the definition of several indicators, some of accounting nature, others of financial and capital market nature. over time, the analysts focused gradually from the intrinsic performance of the enterprise to the performance in benefit of the shareholders, by creating long term value. studies and scientific researches economic edition, no. 15, 2010 118 the best appreciation criterion of the ability of the enterprise to create value for its owners is based on updating the future cash flows generated by its economic activity. the computing model of the discounted cash flow is, however, difficult for external analysts, which significantly restricts the area of application of this indicator. the indicators of type of capital market are adequate when analyzing the performances of the listed companies but still in a small number in the current economic context in romania. for the time being, the most used performance indicators are those of accounting nature due to their accesibility and intelligibility. their use, when having sufficient information concerning the accounting principles and methods applied by the enterprise, allows the valuation of past performances and the estimate of future performances. these performances represent the expression of the enterprise’s ability to create value for its owners. we feel that the analysts in our country could pay a greater attention to some indicators such as economic profit or economic added value, as these models take into account the total cost of the invested capital. bibliography [1] helfert, e., [2] jianu, i., analiz studii de caz, [5] petrescu, s., -contabil: ghid teoretico-aplicativ, ed.a ii-a rev., ed. [6] quiry, p., le fur, y., pierre vernimmen finance d'entreprise, 7e édition, ed. dalloz, paris 2008 [7] tracy, j.a., how to read a financial report, 6th edition, john wiley&sons, 2004 [8] williams, j.r., haka, s.f., bettner, m.s., carcello, j.v., financial accounting, 13th edition, mcgrow-hill, n.y. 2003 studies and scientific researches economic edition, no. 15, 2010 119 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 29, 2019 http://sceco.ub.ro 6 statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova vasilica-lăcrămioara ciomârtan academy of economic studies of moldova economist at statistical county directorate bacau lacri_vasi@yahoo.com abstract an important factor in promoting economic development is the educational capital that should be seen as an investment in those who will generate economic growth. the present paper aims to carry out a statistical analysis of indicators in the field of education: early education, presentation based on statistical indicators disseminated by the two main official institutions: the national institute of statistics of romania and the national bureau of statistics of the republic of moldova. in order to quantify the educational phenomenon in the two territorial units for statistics regarding the education market, a rather small number of indicators were taken into account due to lack of their dissemination on the desired administrative-territorial units. keywords education; school unit; school population; teaching staff jel classification i20; i21; c 200 introduction in addition to other information, the foundation of social and economic policies also requires the knowledge of some essential aspects of the educational system and its segments, as this field has obvious and defining implications on the evolution of a society. in a normal society, educational capital should underpin all social, political and economic decisions. the main statistical indicators in educational system refer to institutions, school population (the total number of preschoolers, pupils, and students involved in the educational process regardless of the form of ownership and the levels of education), teaching staff and logistics. educational indicators are the basis for analyses that allow the foundation and adoption of decisions related to the conduct of economic activities, the results of policies adopted over a certain period of time and their effects. according to the international standard classification of education isced 2001, early childhood and preprimary education are included in early education category level 0, as the first stage in the educational system. the units operating at level 0 both in romania and the republic of moldova are nurseries (for the institutionalization of children under the age of 3) and kindergartens (for children aged 3-5 years for romania and 3-6 years for the republic of moldova). the reduced number of indicators analysed in the present paper is mainly due to their lack of availability for the desired territorial level (county for romania and region for the republic of moldova). ciomârtan 7 short methodological presentation the intend was to provide a comparison between the two administrative territorial units in romania and the republic of moldova concerning grouping disseminated statistical indicators according to the specific methodology. in conducting this analysis, international comparability in the field of education was taken into account, based on the international standard classification of education isced 2011. thus, according to the international standard classification of education 2011, the educational system of the two states is as follows: table 1 comparisons of the educational system according to isced between romania and the republic of moldova level by international standard classification of education isced 2011 educational system in romania educational system in republic of moldova level 0 early education early childhood education preprimary (preschool) education early education level 1 primary education primary education level 2 lower secondary education: gymnasium lower secondary educationgymnasium: (grades v to ix) level 3 upper secondary education: high school and vocational (lower cycle and upper cycle) upper secondary education : lyceum education (grades xxii) secondary vocational education (for graduates of gymnasium) postsecundary vocational education (the first 2 years for graduates of gymnasium) level 4 non-university tertiary education: post high school and foremen education secondary vocational education (for graduates of general secondary schools and lyceums) level 5 postsecundary vocational education (exclusive the first 2 years for graduates of gymnasium) level 6 higher education bachelor studies licence’s higher education (cycle i) level 7 higher education master's degree or equivalent (postgraduate studies and courses) master’s higher education (cycle ii) long first degree programme equivalent at level 7 (integrated higher education, inclusive medicine and pharmacy) level 8 doctoral and post-doctoral studies doctorate (cycle iii) postdoctorate source: ins (national institute of statistics): educational system in romania and bns (national bureau of statistics): education in the republic of moldova statistical publication statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova 8 in order to carry out the study, the most recently published indicators related to a 5-year period have been extracted from the databases of the national institute of statistics of romania and the national bureau of statistics of the republic of moldova, so as to be able to follow their dynamic evolution. the types of units functioning in romania are nurseries and kindergartens, the latter being independent or subordinated to other educational institutions, and the units functioning in the republic of moldova are nurseries, kindergartens, nurserykindergartens, school-kindergartens, and community centres. these units can provide regular care program, as well as extended program, and weekly or special program, in both private and public systems. teaching staff are natural persons employed in the educational system that perform teaching activities within the educational and training process (full-time and part-time). according to the methodology, they have to register only once at the unit where they are employed (where the employment record book is issued). as for the number of children enrolled in nurseries and kindergartens, there are differences between the two countries. in romania early childhood education corresponds to level 01, according to international education regulations (the new international standard classification of education isced 2011) and includes children aged 0-2 years, whilst preprimary education level 02 includes children aged 3-5 years and over. in the republic of moldova, the age groups corresponding to early education are: 0-2 years for early childhood education (level 01) and 3-6 years for preprimary education (level 02). statistical analysis of indicators in early education (early childhood education and preprimary education) early education includes early childhood education and preprimary education. the disseminated statistical indicators are: school units (nurseries and kindergartens), enrolled children, teaching staff and infrastructure related to early education. with regard to the availability of these indicators for comparative analysis, it differs from one indicator to another. for instance, the infrastructure of the number of nurseries and kindergartens is disseminated only by the national institute of statistics at county level, whereas we do not have this information regarding the central region. another example is the dissemination of the indicators related to capacity of institutions (number of places, groups) by the national bureau of statistics of the republic of moldova, whereas we don’t have such information at the level of the national institute of statistics in romania. at the beginning of 2017/2018, the number of units in early education in bacau county was 435, while at the same time, the central region numbered 485 units. the only year of analysis when the number of nurseries and kindergartens in bacau county outstripped the central region was the beginning of 2013 (+one unit), while the highest gap between the two territorial units was recorded in 2017: (+50 units). the dynamics of the number of nurseries and kindergartens in bacau county follows a downward trend, inasmuch as in the last year of the analysis the number decreased by 3.1% compared to previous year, and by 9.4% compared to 2013. the number of units registered in the central region follows an oscillating trend, the highest increase compared to previous year being recorded in 2014 (+ 1.5%), while in 2017 there were 0.4% fewer nurseries and kindergartens than in 2016, but 1.3% more than in 2013 (+5 units). ciomârtan 9 figure1: number of units in early education, bacau county and the central region (2013-2017) source: database of county statistical direction bacau and www.statistica.md figure 2: dynamics of the number of units compared to previous year, bacau county and the central region of the republic of moldova (%) source: processed data from county statistical direction bacau database and www.statistica.md taking into account age discrepancy in early education between the two educational systems: 0-5 years of age for romania and 0-6 years of age for the republic of moldova, the number of children enrolled in nurseries and kindergartens can not be compared as numbers, but only as dynamics of this indicator. while there is a decrease in the number of children attending these units from year to year in bacau county, the situation is completely opposite for the central region of the republic of moldova where their number increases (except for the last year of the analysis). in 2017 in bacau county they were 1.7% fewer children institutionalized in early education system than in the previous year, while compared to 2013 their number decreased by 9.3%. although in 2017 the number of children attending nurseries and kindergartens in the central region decreased by 1.0% compared to 2016, when compared to 2013, their number increased by 2.5%. 480 463 456 449 435 479 486 484 487 485 0 100 200 300 400 500 2013 2014 2015 2016 2017 u n it s bacau county the central region 96.5 98.5 98.5 96.9 101.5 99.6 100.6 99.6 80.0 90.0 100.0 110.0 120.0 2014 2015 2016 2017 % bacau county the central region http://www.statistica.md/ http://www.statistica.md/ statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova 10 figure 3: dynamics of children enrolled in early education institutions compared to previous year, bacau county and the central region of the republic of moldova, 2013-2017 (%) source: processed data from www.insse.ro and www.statistica.md the gross enrollment rate in early childhood education and preprimary education is an indicator used to highlight the level of participation in education during a given year. the proportion of enrollment in the educational process reflects the capacity of the educational system to allow children from early childhood and preprimary age groups to early education system. the calculation formula for gross enrollment rate is: 100* tv tt p e rbc = where: rbct = gross enrollment rate in educational system, during school year t; et = total number of children enrolled in early education system, regardless of age, during school year t; ptv = total population of age group v, the official age group corresponding to early education level. in order to calculate the gross enrollment rate in early education, the official age group for bacau county is 0-5 years of age, and the one for the central region of the republic of moldova is 0-6 years of age. as a percentage ratio of the population of official age group as at january 1st, the gross enrollment rates in early education system in bacau county do not exceed 40% throughout the 2013-2017 period, with the highest rate registered in 2014 (40.1% ). unlike the situation in bacau county, the gross enrollment rates in early education institutions in the central region are increasing from one year to another, from 48.1% in 2013 to 49.3% in 2016 and 2017. the dynamics of children enrolled in bacau county, compared to previous year, follows the same downward trend as that of the population of official corresponding age group in early education. the decreases of the number of enrolled children in bacau county are higher than the decreases of the population of official age group (0-5 years), except for 2017, when the decrease in population compared to previous year is lower than that of the number of enrolled children (-1.7% versus -2.4%) and also 2014 (0.4 pp between the two dynamic values). in case of the central region, the situation is the opposite: the positive relative changes compared to previous year for children enrolled in nurseries and kindergartens are superior to the positive relative changes for population aged 0-6 years. an exception to this trend is observed in year 2017 compared to 2016, when the dynamics were negative, the decrease of the population 96.7 97.1 98.2 98.3 101.4 101.2 100.8 99.0 95.0 105.0 2014 2015 2016 2017 % bacau county the central region , http://www.insse.ro/ http://www.statistica.md/ ciomârtan 11 aged 0-6 years being lower than the decrease of children enrolled in institutions (-0.9% versus -1.0 %). figure 4: gross enrollment rates in early education system, bacau county and the central region of the republic of moldova, 2013-2017 (%) source: processed data from www.insse.ro and www.statistica.md figure 5: dynamics of number of children enrolled in early education institutions and dynamics of population of official age group, compared to previous year, bacau county and the central region of the republic of moldova (%) source: processed data from www.insse.ro and www.statistica.md when analysed on the two age groups: up to 3 years and 3 years and over, differences can be observed between the situation in bacau county and that in the central region. while in 2017 early education institutions in bacau county gathered 91.9% of enrolled children aged over 3 years, at the same moment the central region gathered 89.9%. for both bacau county and the central region, compared to 2013, there is a tendency to change in the structure of number of enrolled children, that is increasing shares of the number of enrolled children aged up to 3 years (+ 5.9 pp for bacau county and +1. 6 pp for the central region). 39.9 40.1 39.2 39.0 39.3 48.1 48.7 49.2 49.3 49.3 0.0 10.0 20.0 30.0 40.0 50.0 2013 2014 2015 2016 2017 % bacau county the central region 96.7 97.1 98.2 98.3 101.4 101.2 100.8 99.0 96.3 99.3 98.6 97.6 100.2 100.3 100.5 99.1 95.0 105.0 2014 2015 2016 2017 % bacau county enrolled children the central region enrolled children bacau county population of official age group (0-5 years) the central region population of official age group (0-6 years) http://www.insse.ro/ http://www.statistica.md/ http://www.insse.ro/ http://www.statistica.md/ statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova 12 figure 6: evolution of the structure of number of children enrolled in early education institutions by age groups 0-3 years and 3 years and over, bacau county and the central region of the republic of moldova (%) source : processed data from county statistical direction bacau database and www.statistica.md the average unit size in early education is the ratio between the number of children and the number of units they are enrolled in. thus, taking into account the number of operating nurseries and kindergartens, it has been noted that the average number of children per early education institution in bacau county is 39, whereas in the central region of the republic of moldova the average number of enrolled children per unit is 90. unlike the national institute of statistics, the national bureau of statistics of the republic of moldova also disseminates the number of existing places in such institutions, therefore there were 82 children per 100 places in the 2013-2014 period and 83 children per 100 places in the years 2015 and 2017, the maximum number of 84 children per 100 places being registered in 2016. figure 7: average number of enrolled children per early education institution, bacau county and the central region, 2013-2017 (persons) source : processed data from www.insse.ro and www.statistica.md in order to have a complete and clear picture of the educational system, it is necessary for the statistical analysis to be extended also to the teaching staff, the very people directly involved in the realization and positive development of the educational process. the number of teaching stuff in early education units in bacau county in 2017 was lower than in the central region, situation which remained unchanged throughout the entire analysed period. as with other indicators presented, while early education 2.6 6.2 7.3 8.1 8.1 8.5 9.2 9.7 10.0 10.1 97.4 93.8 92.7 91.9 91.9 91.5 90.8 90.3 90.0 89.9 0% 25% 50% 75% 100% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 bacau county the central region 3 years old and more up to 3 years old 39 39 38 38 39 89 89 90 90 90 0 25 50 75 100 2013 2014 2015 2016 2017 childrens the central region bacau county http://www.statistica.md/ http://www.insse.ro/ http://www.statistica.md/ ciomârtan 13 phenomenon in bacau county follows a descending trend, the central region registers an increase over the analysed period. the continuous decrease in the number of enrolled children and in the population of official age group corresponding to early education level in bacau county has also determined a decrease in teaching staff from year to year. thus, in 2017, the number of teaching staff in early education system decreases by 1.6% compared to previous year and by 7.3% when compared to 2013. teaching staff number in the central region increases by 3.1% in 2017 compared to 2013 and it registers a slight decrease of 0.3% compared to previous year. figure 8: teaching staff in early education institutions, bacau county and the central region of the republic of moldova (persons) source: www.insse.ro and www.statistica.md taking into account the number of operating nurseries and kindergartens, it has been noted that the average number of teaching staff members per early education institution throughout the 2013-2017 period in bacau county is 2, whereas in the central region of the republic of moldova the average number of teaching staff members per institution is 7. figure 9: average number of teaching staff per early education institution, bacau county and the republic of moldova (persons) source: processed data from www.insse.ro and www.statistica.md a relevant average indicator in educational statistics is the average number of children per teaching staff member. taking into account the number of teaching staff, it has been noted that the average number of children per teaching staff member in nurseries and 1143 1107 1073 1077 1060 3395 3428 3470 3508 3499 0 2000 4000 2013 2014 2015 2016 2017 p e r so n s bacau county the central region 2 2 2 2 2 7 7 7 7 7 0 2 4 6 8 2013 2014 2015 2016 2017 persons the central region bacau county http://www.insse.ro/ http://www.statistica.md/ http://www.insse.ro/ http://www.statistica.md/ statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova 14 kindergartens in bacau county throughout the 2013-2016 period is 13, while in 2017 the number is reduced to 12. in the central region of the republic of moldova there is an average number of 16 children per teaching staff member throughout the entire analysed period. figure 10: average number of children per teaching staff member in early education institutions, bacau county and the central region of the republic of moldova, 2013-2017 (persons) source: processed data from county statistical direction bacau database and www.statistica.md the existence of a link between the number of children enrolled in the early education institutions and the teaching staff in this education system can be determined by one of the parametric methods for determining the link, namely the regression equation. according to the available data, both for bacau county and for the central region, there is a direct link between the two indicators, ie the increase of 100 children enrolled in the early education institutions in bacau county, the number of the related teaching staff would increase average of 6 teachers, while for the central region of the republic of moldova, with the increase of 100 children, the teaching staff would increase by an average of about 8 people. figure 11: the existing link between the number of children enrolled in the early education institutions and the teaching staff of these institutions in bacau county and the central region of the republic of moldova source: processed data from county statistical direction bacau database and www.statistica.md 16 16 16 16 16 13 13 13 13 12 0 10 20 2013 2014 2015 2016 2017 c h il d r e n s bacau county the central region y bacau county= 0.0622x r² = 0.8513 1040 1080 1120 1160 16500 17000 17500 18000 18500 19000 enrolled children t e a ch in g s ta ff ythe central region= 0.0785x + 53.462 r² = 0.9093 3360 3400 3440 3480 3520 42000 42500 43000 43500 44000 44500 enrolled children t e a ch in g s ta ff http://www.statistica.md/ http://www.statistica.md/ ciomârtan 15 y the central region = 1,2554x 67953 r 2 = 0,596 42000 42600 43200 43800 44400 88200 88400 88600 88800 89000 89200 89400 population of official age group (0-6 years) e n ro ll e d c h il d re n y bacau county = 0.3948x r² = 0.9059 16200 16800 17400 18000 18600 19200 42000 43000 44000 45000 46000 47000 population of official age group (0-5 years) e n ro ll e d c h il d re n the calculation of the correlation coefficient, in both cases shows a close connection between the two variables, the calculated determinant coefficient indicates a weight of 85.1% of the influence of the number of enrolled children on the teaching staff existing in the early education institutions in bacau county, in time for the situation in the central region, the influence is over 90% (90.9%). similarly, it can be determined what type of link exists between the population of the official age group (for bacau county it is 0-5 years and for the central region of the republic of moldova for 0-6 years) and the number of children enrolled in institutions. applying the same parametric method of link determination, it is also found in the case of the two variables that there is a direct link for both spatial areas taken in the analysis. the increase by 10 persons of the population has an average increase in the number of children enrolled in 4 persons in bacau county, while at the level of the central region of the republic of moldova the increase with a child from the official age group would lead to an increase on average with a child enrolled in early education institutions. as can be seen from figure no. 12, the determinant coefficient calculated for bacau county data shows an influence of 90.6% of the population of the official age group on the number of children enrolled in the early education system, while for the situation of the central region of the republic of moldova the influence is only 59.6%. figure 12: the existing link between the population of the official age group and the number of children enrolled in the early education institutions in bacau county and the central region of the republic of moldova source: processed data from county statistical direction bacau database and www.statistica.md conclusion the analysis of indicators characterizing the situation recorded in early education system of bacau county in romania, as well as that of the central region of the republic of moldova, represented the main objective of this research. based on the data above, we can conclude that the evolution of number of nurseries and kindergartens in bacau county was not a favourable one, as the value of this indicator decreases from year to year, whereas in the central region it registers an ascending trajectory, being on a rising trend in the 2013-2016 period, but with a slight decrease in 2017 compared to previous year. the year over year decrease in the population aged 0-5 years in bacau county in the 2013-2017 period also triggered a decrease in the number of enrolled children in nurseries and kindergartens in the county, whereas the growth of population aged 0-6 years in the central region of the republic of moldova triggered an increase in the number of enrolled children in early education units in this region. the gross enrollment rate in early childhood education and preprimary education in bacau county is lower than that of the central region of the republic of moldova, fluctuating from year to year, but without exceeding 40%, while in the central region http://www.statistica.md/ statistical analysis of the main indicators in early educational system in bacau county compared to the central region of the republic of moldova 16 the gross enrollment rate is on a rising trend from year to year, reaching a peak of 49.3% in 2016 and 2017. the average unit size in early education in the central region is higher than in bacau county, with an average of 90 children per nursery/kindergarten compared to an average of only 39 children per unit in bacau county. the number of teaching staff in the central region was significantly higher than in bacau county, the dynamics of this indicator following an upward trend throughout the analysed period, while the continuous decrease in the number of enrolled children and the population of official age group corresponding to early education level in bacau county also determined a decrease in the number of teaching staff from year to year. the average number of teaching staff members per unit is only 2 for the situation registered in bacau county, with 5 persons below the average number of teaching staff members per nursery/kindergarten in the central region. the average number of children per teaching staff member in nurseries and kindergartens in bacau county is 12, whereas the average number of children per teaching staff member in the central region of the republic of moldova throughout the entire analysed period is 16. the determination of the linear regression parameters for determining the existence of a link between the number of children enrolled in the early education institutions and the teaching staff in this educational system indicates both in bacau county and the central region a direct link, with influences of 85% in the case of bacau county and over 90% in the case of the central region. practically, with the increase of 100 children enrolled in the early education institutions in bacau county, the number of teaching staff involved would increase on average by 6 teachers, while for the central region of the republic of moldova, with the increase of 100 children, the staff didactic would increase on average by about 8 people. also, when applying the regression model for the variables: the population of official age group and the enrolled children, there is a direct link between them, but with a lower intensity, the coefficient of determination in the bacau county being slightly higher than that in the center region. references ins, statistics available at www.insse.ro tempo-online database bns, statistic available at www.statistica.md baza de date a direcției județene de statistică bacău ins, “sistemul educational în românia – date sintetice”, ediția 2018, bucurești, pag.16 bns, “educația în republica moldova – publicație statistică”, ediția 2018, chișinău, pag.5 andrei, tudorel (2003), statistică şi econometrie, ed. economică, bucureşti jaba, elisabeta (2003), statistica, ed. economică, bucureşti http://www.insse.ro/ http://www.statistica.md/ e.u.’s strategy of building a knowledge economy roxana mironescu, ph.d., senior lecturer, ,,vasile alecsandri” university of bacau, romania andreea feraru, ph.d student, assist. ,,vasile alecsandri” university of bacau, romania abstract the european union strategy for building knowledge-based economy includes a set of objectives, priority action areas, targets and measures to guide european policy for growth and employment. the european union strategic objective is to become the most competitive and dynamic knowledge-based economy. in many fields of activity, economic too, knowledge is an important source of power, or, in other words, one of the main instruments of economic and social success. knowledge must always be associated with mastering and anticipating changing phenomena and to the everywhere challenges. keywords economy, knowledge, growth, stability, cohesion jel codes: f15, f50, o10 introduction due to the massive development registered in the informatic services sector the global economic landscape is fundamentally changing. there were made some major changes because of the introduction of worldwide pc, of the software technology and of the rapid development of data networks and internet-based services. at the present it looks increasingly obvious that the world passes through a continuos rapid transition from an economy based on industry to a knowledge-based one. it can be argued that the resulting knowledge and more knowledge. knowledge is a public property. once being discovered, it becomes virtually free of charge for all (excepting the knowledge protected by law). the benefits of the new discoveries will be for the benefit of everyone, sooner or later. it should be noted some important aspects of the new economy as being fundamentally different from those of the old economy, meaning that the economic laws were not changed, but the economy has changed in a radical way. in the industrial economy the capital is more important than the land. in the new economy, innovation through knowledge is the most important, it underlies many aspects of the economy. in the global knowledge economy, which is promoted, supported advantage of nations will not come from natural resources owned or on cheap labor forces, but in their ability to harness the intellectual capital. today and tomorrow, the "mind" and not "muscle" will be important for the economic growth. the development of civilization, the knowledge-based economy can be regarded as a further step, which presents favourable prospects of a new better way of life. this economy has an economic and also a social important impact, it is based on the use of information in all the spheres of the human existence and activity . defining the knowledge economy the time evolution for the concept of the knowledge-based economy has led to certain investigations which have established some fundamentals, as follows: industry of knowledge, which will note that the future will support those industries based on knowledge, innovation, on the development of the design activities; a second approach which processed the knowledge economy was the knowledge management approach. the first specific international conference and exhibition was held in brussels on 2022 december 2000. the emblem of the conference was "europe's future is the knowledge economy" and was highlighted by robert taylor and unisys. knowledge economy has to satisfy a maximum of determined needs with limited resources, therefore we can say this is an efficient economy. knowledge economy is a new concept, a new kind of economy. this new economy is a gate that professor joseph e. stiglitz, nobel prize in economics in 2001, considers as having a "greater chance for democracy and sustained economic growth which will bring, in the near future, prosperity and social justice." defining the knowledge economy may be a difficult goal. first, we must consider the wide variety of successful implementation of the concept, and secondly, the specific of the various worldwide countries which registered and recognized significant progresses such as usa, britain, france, germany, finland, austria, singapore or south korea. during the preparations for a knowledge-based economy, an important factor may be the recommendations elaborated by the world bank institute and oecd in a country study published in 2000. it was entitled "korea and the knowledge-based economy: making the transition" where there are presented some lines of action for the transition towards a knowledge-based economy. for example we can remember:  strengthening intellectual property rights, promoting exploitation of intangible assets;  take the necessary political measures to encourage competition (competitive firms are more oriented to innovation);  managerial and curricular reform in higher education;  encourage greater interrelationships between firms, universities and government research programs;  the proper allocation of the resources to the universities. the european’s union efforts should be drived up to build the knowledge society, and to the continuous improvement of the administrative capacity. they are absolutely necessary priorities to support and diversify the labor market. only a better exploitation of the local and regional potential by strengthening local and regional powers can lead to both a sustainable development of communities, as well as by a coherent sectorial policy and change, they look feasible because of strengthening the trade relationships and the interand regional changes. e.u.’s strategy european union strategy for building the knowledge-based economy was adopted while the lisbon summit in 2000.lisbon is known as the lisbon agenda or lisbon process,and it was adopted by all the caountries participating to the lisbon meeting , at the european council in march 2000, for a period of 10 years. its fundamental aim is to make europe the "most dynamic and competitive world economy." the strategy addresses to all eu member states and has the following main objective: to offset low productivity; to contribute to economic growth in the european union. the main covered fields of activity there are: to support and to restore the economic life, the social life and the environmental protection.the lisbon strategy reforms enriche the five areas as shown in figure no 1. knowledge society internal market knowledge based economy environmental protection labour market business environment fig. no.1. the components of a knowledge based economy. these industries, regarding the european union strategy for building knowledge-based economy there are:  the knowledge society. regarding knowledge in education, research, development and innovation, the document recommends measures leading to the "fifth freedom", namely the free movement of knowledge. therefore, it would create a genuine european research area and an integrated patent jurisdiction, with a single affordable patent. the member countries are required to develop national strategies on implementing and internet usage in all the schools by 2010.  the internal market. since the internal european market still has not quite managed to encourage growth, innovation and competitiveness, then, this strategy aims to action in the following areas: public aquirements, especially in the border areas ; commercial transactions involving excessive costs, especially those connected to the intellectual property protection ; border barriers for services within eu; energy and aviation markets, which are not completed at european level.  the business environment. regarding business, the report calls for an integrated policy approach as an european law on the establishment and development of a large number of smes because they create nine out of ten new jobs.  the labour market. on this topic, the report aims to develop action plans that include a number of goals such as: to reduce school drop in primary and secondary forms of education; to invest in professional development of human resources; to encourage the free movement of labor; to modernize the labor market in the eu area.  regarding the environment protection, the report states: to provide and maintain life in all its diversity, protecting the earth capacity; to appreciate the limited resources of the planet's natural; ensure a high level of protection and improvement of environmental quality; to prevent and reduce environmental pollution; to eliminate all factors leading to environmental degradation. the implementation of the lisbon strategy has updated three cycles: march 2000 march 2005; march 2005 march 2008; march 2008 march 2011. during the special meeting on 23-24 march 2000 in lisbon, the extraordinary european council of the european commission received the polical initiative entitled "e-europe – an informatic society for all". this is a guarantee for the eu to fully benefit, for future generations, of the developments related to informatic society. it was adopted as an action plan (feira, 2000), and then was updated in 2002 in seville by the strategic document "e europe 2005 an information society for all. the european commission has taken this initiative to speed up implementation of digital technologies in europe, and to provide the necessary skills for widespread use, too. the implementation of the lisbon strategy requires governmental measures in order to use the following tools: the integrated guidelines for growth and jobs; the community lisbon programme; the commission's annual reports on its implementation; the national reform programmes and the annual national reports on implementation of national reform programmes. the member states contribute to the lisbon national reform programmes and the commission through the community lisbon programme. the importance of the european union strategy for building the knowledgebased economy in romania once the eu’s access, romania has become a part of the integration process, strengthening the european cohesion and an important player in achieving the common objectives of the lisbon strategy and sustainable development. lisbon strategy is an opportunity for each member state, romania and hence, to overcome the economic difficulties of the moment, implementing structural reform measures in the economy. with the strategy review, in 2005, it was agreed that each member state to develop a national plan of reforms, so that romania fulfilled in 2007, resulting in the national reform plan 2007-2010 which aimed at achieving economic performance and featured employment of lisbon, in conjunction with a fair social system elements to ensure sustainable development of our country. concerned about the achievement the objectives of the initiative "e-europe, the eu seeks new associated countries of central and eastern europe, including romania, to achieve the objectives set by the strategic document" e-europe 2005 an information society for all. in full compliance with the lines of the commission's proposals for competitiveness and innovation framework 2007-2013, the priorities of romania's competitiveness strategy are: 1. improving access from this site to market, capital, technology enterprises, especially for the small and medium sized enterprises; 2. develop knowledge based economy: including promoting innovation and development of a competitive business background; 3. improve the power system’s efficiency and encourage the renewable energy exploitation. these priorities take into account the guidelines proposed by the commission for cohesion policy 2007-2013. thus, romania's priorities were confirmed by the commission which expressed its intention to support the following processes: improving the access to financing for all the firms; increase and improve investment in research and development; facilitating innovation; promoting the informatic society; problem solving for the intensive traditional sources of energy in europe. if we take into account all the measures that romania must implement under the lisbon strategy it is necessary just to note that those measures needed to be taken in the current economic crisis. they must be an essential component of the crisis response mechanism. it requires improving the efficiency of the central and of the local government, the fiscal policy change especially limiting excessive costs and expenses and implementing a medium term financial framework (multi-annual budgetary programming). the budgetary resources must be directed to those areas that provide growth. the crisis programmes are particularly important, there are those which measure and aim to ensure the quality of education and training system's correlation. they, in turn, must be related to the labour market needs. conclusions knowledge-based economy offers a new vision. this involves the intertwining of all the aspects of information, economic, managerial, social and technological approaches. implementing the new vision at local levelmujst be of a strong originality, the interdisciplinary approach is evident. the success of knowledge-based economy requires innovation and creativity, qualities that are especially promoted by the higher education system. entrepreneuship and leadership development is to include, according to various studies, in the academic training. it is considered that the knowledge economy will provide a huge advantage for the emergent markets, for the isolated parts of the world economies, or for the countries like romania. the strategy adopted in this paper contains the role of knowledge, believed to be of the most importance in creating added value in the knowledge based economy and it is explained by highlighting a range of practices and recognized as defining elements. among these elements, the most important changes are the following:  the orientation of the intellectual capital from business as the main source of competitive advantage, that capital often exceeding the value of the classical assets;  the increasing share of „information” and „knowledge”among the employees, information becoming more and more a public asset, in all the social fields.  the increasing role of information and communication technology (ict) as a catalyzing factor for knowledge-based economy through its ability to facilitate the active dissemination of knowledge and for the accumulation of knowledge in the products and services marketing. bibliography 1. apetroae, m. (2002), către o economie bazată pe cunoaştere, uefiscsu, bucureşti, p. 1-5; 2. drucker, p.,(1999) knowledge management in california, management review, vol. 41, nr. 2/1999; 3. dumitrescu, m. (2001), strategii şi management strategic, ed. economică, bucureşti; 4. fox, t., ward, h., howard, b. (2002), public sector roles in strenghthening corporate social responsibility, a baseline study, world bank, october, p. 1-5; 5. kelleher, d., levene, s. (2001), knowledge management: a guide to good practice, pwc, newyork; 6. kim, c., manborgue, r.,(2003), fair process: managing in knowledge economy, rev. motivation people, nr. 1/2003; 7. matmati, m.,(2004), les effets sociaux des tic et nfo et leurs liens avec la responsabilite sociale de l' entreprise, la revue technologique, vol. iv, nr. 1/2004, p. 97119; 8. nicolescu, o., nicolescu, l.(2005), economia, firma şi managementul bazate pe cunostinţe”, ed. economică, bucureşti; 9. russu, c., dumitrescu, m., pleşoianu, g. (2008), calitatea managementului firmei. evaluare şi interpretare., ed. economică, bucureşti; 10. http://www.inforegio.ro/index.php?page=jargon; 11. http://strategia.ncsd.ro/dbimg/27_fisiere_fisier.pdf; 12.http://www.europeana.ro/stiri/. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 7 the european company (societas europaea) on rind sight liviana andreea nimineţ vasile alecsandri university of bacӑu liviananiminet@yahoo.com abstract the article deals with the rind aspects of european company (also known by its latin name societas europaea or se), a “type of public limited-liability company regulated under european union law”. although this form of company was proposed more than 40 years ago, it was only in 2001 when the council issued regulation (ec) no 2157/2001 of 8 october 2001 on the statute for a european company defining the european company (se) as “a legal structure that permits a company to operate in different european union (eu) countries under a single statute”, as determined by the law of the union and common to all eu countries. being a new legal form, the se coexists with the corporate forms that already were in each member statebeing governed by both european regulation and national law. as it follows we address the rules, classification, conditions for settling an se, organization structures, tax harmonization, employee involvement in the se, advantages and disadvantages of ses, as well as the opportunity of spes. keywords european company (se); european union; law; creditors; employees; shareholders. jel classification k22; o52. introduction the european company (also known by its latin name societas europaea or se) is defined as a species of public limited-liability company regulated under european union law. council regulation (ec) no 2157/2001 of 8 october 2001 on the statute for a european company (se) defines the european company (se) as a “legal structure that permits a company to operate in different european union (eu) countries under a single statute, as determined by the law of the union and common to all eu countries”. these provisions are completed by council directive 2001/86/ec of 8 october 2001 regarding the involvement of employees. although it was proposed almost 30 years before it came into force, it was only in 2004 when eu facilitated the existence of se that gives companies the possibility to operate in more than one member state the option of being established with a european corporate identity and operate with a single set of rules and a unified management system or even as a single merged company. since its introduction back in 2004, the european company statute was chosen by more than 1800 businesses, from which approximately 600 ses have been established in 22 of the member states with a very broad spectrum of business areas in which the ses are commercially active. first, companies used the se to create a european identity, to set the ground for cross-border restructuring within the group and to determine employee participation. the european company (societas europaea) on rind sight 8 societas europaea (se) european regulation versus national law the main particularity of a se having domicile in an eu country is that it has dual governance:  the eu specific regulation; and  for the aspects not covered by the regulation, by national laws applying european measures for the se specifically and those applicable to public limited liability companies. matters such as liquidation, winding-up, insolvency and suspension of payments are mostly governed by the applicable national law. rules for establishing an se being a new legal form, the se coexists with the corporate forms that already are in each member state. the se is a separate legal entity with a minimum registered share capital of eur 120,000 divided into shares eligible for listing on a stock exchange. the name of an se must include the letters “se”. an se has headquarters in the member state where its head office is located and thus registered in the appropriate commercial register. in addition to these regulations, the se is subject to and governed by the national laws of its headquarters member state, thus the basic requirements for an se are the same in each member state. still most of the details are determined by national law. we can say that se is more national rather than european common legal entity. in order to create a european company, it is necessary to be an existing base represented by at least two corporate firms with domicile in different eu countries. the company can be created in one of the following ways. table 1 rules for establishing an se type of constitution type of company criteria to be met merger (to establish a european company) public limited liability companies at least two of the companies must originate in different eu countries establishment of a european holding company public limited liability company or a limited liability company at least two of the companies must originate in different eu countries or they must have had a subsidiary or branch in another eu country for at least 2 years establishment of a european subsidiary companies, enterprises or other legal entities at least two of the companies must originate in different eu countries or they must have had a subsidiary or branch in another eu country for at least 2 years conversion public limited liability company the company must have had a subsidiary in another eu country for at least 2 years source: ec.europa.eu/internal_market/company/societas-europaea there are five exclusive ways (if we take subsidiaries into account) for creating an se. each of these ways reflects the basic requirement, called in international law extraneity element, that is a cross-border or international element that must exist. first of all, existing public limited-liability companies can merge in order to form a european company, if and only if at least two of the companies involved come from different member states. niminet 9 secondly, companies, such as public or private limited-liability companies, can form a holding se if more than 50% of the capital of each of the promoting companies is contributed and at least two of the promoting companies are from different member states or have had a subsidiary or branch in another member state for at least two years. the third way to create an se is as a joint venture company. in this case the same condition for cross-border activity apply. fourthly, there is a converting way that means that the existing public limitedliability company can be converted into an se if it has a subsidiary in another member state for at least two years. last but not least, an se itself can establish subsidiary european companies. even though the se regulation restricts the ways in which an se can be formed to five alternatives, any kind of corporate structure – depending on the individual needs of the “mother” companies – can be achieved by using se regulation and the existing legal options. for corporate company to establish a european company it has to:  “be created under the law of one of the european union countries  have both registered and head offices in the eu, and  have a presence in other eu countries (subsidiaries or branches) or be governed by the laws of at least two different eu countries.  minimum subscribed capital of €120,000” (se regulation) as stated before, a european company can create one or more subsidiaries. its subsidiaries are also european companies. the registered office of the se is where it has its central administration, or its true centre of operations. still, the se may transfer its registered office within the eu without having to undertake the dissolution procedure of the original company in order to form a new company. both registration and completion of liquidation of a european company is published for information in the official journal of the european union. organization structures, tax harmonization and employee involvement in the se the statutes of the european company can relate to two different possible organization systems:  the two-tier system providing for a management board and a supervisory board in addition to the general meeting of shareholders; and  the single-tier system providing simply for the general meeting and an administrative board. the name of any new european company should be preceded or followed by the abbreviation “se” and only companies created under the european company statute are allowed to use this designation. se regulation does not provide for the tax treatment of the se. however, according to article 10 of the se regulation, fiscal treatment of an se is the same as for a national stock corporation in the member state in which the se has it administrative centre. thus, taxation of the se follows the applicable national tax system for stock corporations. given that there is an harmonization of all member states national regulation with primary european law, the secondary european law (especially the european company (societas europaea) on rind sight 10 merger directive) that must be complied to, it is safely to say that member states have enacted their own national regulations regarding the fiscal treatment of se matters. in what working relations are concerned (that is management-employee relations) it is compulsory that an agreement containing information and consultation procedures and, where appropriate, employee involvement in the management bodies of the se, exists for every se established. the employee involvement supposes any means by which employees can influence decisions there are to be taken within a se. such means are:  information and consultation  participation in managing the se by having:  “the right to elect or appoint a number of members of the se supervisory or administrative body, or  the right to recommend and/or oppose the appointment of some or all of the members of the company’s supervisory or administrative body.” (see council directive 2001/86/ec of 8 october 2001 supplementing the statute for a european company with regard to the involvement of employees) summarizing what we stated before, se can be settled in one of the following ways: table 2 condition for settling an se how who requirements merger (to form a european company) public limited liability companies at least 2 of those companies need to be from different eu countries formation of a european holding company public or private limited liability companies at least 2 of these companies need to be from different eu countries or they need to have had, for at least 2 years, a subsidiary or a branch in another eu country formation of a european company subsidiary companies, firms or other legal bodies at least 2 of those need to be from different eu countries or they need to have had, for at least 2 years, a subsidiary or a branch in another eu country conversion a public limited liability company this company needs to have had, for at least 2 years, a subsidiary in another eu country source: ec.europa.eu/internal_market/company/societas-europaea european private limited-liability company (societas privata europaea). a step forward? as can be easily seen from the things presented before, the se addresses mainly the “big” business, leaving aside, somehow the small and medium size companies. in order to “fill” this gap the idea of a european private limited-liability company – societas privata europaea was born the 1990s. niminet 11 commission presented a “proposal for a council regulation on the statute for a european private company” on 25 june 2008 (com(2008) 396 – commission’s draft of the spe regulation). the council of the european union also presented its proposal on 27 april 2009 (9065/09 – council’s draft of the spe regulation). although the main features of the so called “small sister of se” were drafted, 8 years after the commission draft regulation, spe is still only a proposal. spes are supposed to exist in addition to the corresponding national legal forms and are meant to be governed by the expected spe regulation, which does not contain any regulations on labor law, tax law, accounting or the insolvency of an spe. these aspects will be governed by national law and existing community law. as a private limited-liability company, the spe would have: own legal personality, a minimum registered share capital of 1.00 eur and cannot be publicly traded. it may be formed by one or more natural persons and/or legal entities by: conversion of an existing company; merger of existing companies or division of an existing company. the main difference between se and spe is that spe does not require a cross-border element. this difference was, in fact, the main reason the proposal of spe was criticized, as absence of a cross-border requirement will make the spe highly accessible, but also means that eu legislation is actually interfering with internal matter, given that it was mainly the extraneity element that legitimate eu regulation. on more general perspective, the idea itself on the spe is under question and on continuous debate as it is meant to be “a uniform vehicle throughout the european union”. well, it is an illusion to think that the spe could be perfectly uniform throughout the european union since there is no european corporate law that provides guidance for national court of law, that is the court entitled to interpretation of the regulation for every individual case brought to justice. conclusions most of the prosperity and success of european companies is related to the single market and its common set of rules. the four freedoms and the single market made more trade possible between european nation. being a win-win situation, societas europaea, at first, came as a natural, yet long waited, step forward towards the more connected eu. the dual law system, combining both common, european rules as well as national law system makes se a little bit harder to deal with then it as intended back 40 years ago. although the common set of rules aim to make it all simple the fact that european countries had the possibility to adopt or decline one or more of the privileges, determined a heterogeneous system. in time, member states proved to be but frightened to lose their autonomy, and thus started to refer to national laws more often and ended by, somehow, giving up the original, very articulated, common plan. the ‘european label’ of an se was intended to remove barriers, even psychological barriers, between member states and to create a european ‘dimension’ of business. also, the creation of n se, can be seen as very strict as regulation requires a high degree of a cross-border activity and a minimum capital requirement of 120.000 eur. these two aspects together with the expensiveness of creating an se make things really difficult and used mainly by big companies which can afford the costs and, in the end, ses didn’t prove to be as attractive as first intended. references council regulation (ec) no 2157/2001 of 8 october 2001 on the statute for a european company (se) available at http://eur-lex.europa.eu/legalcontent/en/all/?uri=uriserv:l26016 the european company (societas europaea) on rind sight 12 council directive 2001/86/ec of 8 october 2001 supplementing the statute for a european company with regard to the involvement of employees available at http://eur-lex.europa.eu/legal-content/en/all council regulation (ec) no 885/2004 of 26 april 2004 adapting regulation (ec) no 2003/2003 of the european parliament and of the council, council regulations (ec) no 1334/2000, (ec) no 2157/2001, (ec) no 152/2002, (ec) no 1499/2002, (ec) no 1500/2003 and (ec) no 1798/2003, decisions no 1719/1999/ec, no 1720/1999/ec, no 253/2000/ec, no 508/2000/ec, no 1031/2000/ec, no 163/2001/ec, no 2235/2002/ec and no 291/2003/ec of the european parliament and of the council, and council decisions 1999/382/ec, 2000/821/ec, 2003/17/ec and 2003/893/ec in the fields of free movement of goods, company law, agriculture, taxation, education and training, culture and audiovisual policy and external relations, by reason of the accession of the czech republic, estonia, cyprus, latvia, lithuania, hungary, malta, poland, slovenia and slovakia available at http://eurlex.europa.eu/legal-content/en/txt/?uri=celex:32004r0885 council regulation (ec) no 1791/2006 of 20 november 2006 adapting certain regulations and decisions in the fields of free movement of goods, freedom of movement of persons, company law, competition policy, agriculture (including veterinary and phytosanitary legislation), transport policy, taxation, statistics, energy, environment, cooperation in the fields of justice and home affairs, customs union, external relations, common foreign and security policy and institutions, by reason of the accession of bulgaria and romania available at http://eur-lex.europa.eu/legal-content/en/txt/?uri=celex:32006r1791 council regulation (eu) no 517/2013 of 13 may 2013 adapting certain regulations and decisions in the fields of free movement of goods, freedom of movement for persons, company law, competition policy, agriculture, food safety, veterinary and phytosanitary policy, transport policy, energy, taxation, statistics, trans-european networks, judiciary and fundamental rights, justice, freedom and security, environment, customs union, external relations, foreign, security and defence policy and institutions, by reason of the accession of the republic of croatia available at http://eur-lex.europa.eu/legalcontent/en/txt/?uri=celex:32013r0517 report of the commission to the european parliament and to the council application of council regulation (ec) no 2157/2001 of 8 october 2001 on the statute for a european company (se) (com(2010) 676 final not published in the official journal microsoft word enachi mihaela engl. the knowledge – as production factor enachi mihaela, teaching assistant, university of bacau abstract: in the current economic context, knowledge becomes the new nucleus of progress. if in the traditional economy the production factors were land, labor and capital, in the new economy knowledge is the major component of the productive system. through the present study we try to clarify the position of knowledge in the production system and its role as a production factor, by explaining how it effective acts and contributes to the increase of welfare at the organizational and national levels. keywords: knowledge, residual production factor, individual production factor, economic growth. we will try, first, to clarify the position of knowledge in the production process, assessing the role played by it, namely, the quality of residual production factor or individual production factor. the knowledge has been part of the production process since the beginning of human species. thus, obtaining food in primitive era couldn’t be made without knowing if fruits, vegetables etc. are edible and not toxic, then for hunting our ancestors had to know what weapons to use, how many people must action for success, what is easier to catch etc. the knowledge was needed after both the evolution of agrarian civilization and industrialism and the more in the third wave, that of knowledge. without learning and knowledge the human species would not survive, would not have occurred achievement or expand of production, and thus economic growth. paying today again attention to the knowledge, recognizing its contribution to the production process, we only relocated it where always begin. key role of the knowledge is shown also through the fact that, while under the traditional theory of economic growth, each marginal unit of resource (labor, land, capital), added over a certain level, produces increasingly less effects, in the case of knowledge these marginal rate is not decreasing but increasing. first, we detail some of the issues leading to the idea that knowledge could be considered a residual production factor, being found in some of the traditional production factors, in different weights. economists who considered that when we speak about knowledge we are dealing with a residual production factor, very important in the productive system, presented some opinions according to which knowledge is reflected by the quality of work and the design of capital goods. they therefore argue that we find knowledge as part of two of the traditional factors, labor and capital. in this regard, alfred marshall sees knowledge as a part of the capital, adam smith considers the division of labor as the fundamental cause of the knowledge accumulation (we inferred from these the inclusion of knowledge in labor), and fritz machlup considers the technology as a form of knowledge and white-collar workers the only knowledge producers, and he treats the knowledge as a factor whose value is 39 studies and scientific researches ‐ economic edition, no. 14, 2009  almost impossible to determine separately, as it present a variety of structural elements, coming from multiple areas. thus, machlup identifies five types of knowledge (practical, intellectual, from smalltalk and pastime, spiritual, „unwanted” or accidentally acquired), both scientific and common, which can be obtained by formal or informal way (as sources of learning he identifies: family, school, trainings on the job, church, armed forces, television, selfeducation, experience), through various means. as justification for considering knowledge as a residual factor, we can mention the impossibility of creating capital without the support of knowledge and the impossibility of adequately conducting the business by the human factor in the absence of absolute needed knowledge in various stages of production. it is therefore very difficult to separate the two traditional production factors from knowledge factor, the more there are involved here a variety of tacit knowledge and knowledge acquired and used as the production process is carried out. moreover, should not overlook the fact that, perhaps more quickly than other inputs, as time passes and changes in the economy accelerate, knowledge becomes obsolete and practically devoid of utility and hence value. although some knowledge of the past come sometimes back to life proving useful due to changes in the context they are assigned, receiving such a new meaning, often the opposite is true. we will continue by presenting some of the reasons for which knowledge is considered an individual production factor. in this respect, we will use a definition that present knowledge as the sum of our perceptions and understandings about nature and society (which may not be correct), while learning is the process by which individuals or organizations acquire new knowledge (here knowledge novelty is rather relative than absolute). thus, an economic theory of knowledge at the state level could be called „national learning capability”, considered the capability to assimilate new knowledge and to use it to improve the welfare. this is a system determined by three dimensions: infrastructure for learning (existing knowledge base and resources for formal and informal learning), institution (foundation of a society’s formal environmental in which individuals make calculations about their possibilities of action and make decisions on the type of initiative that should be taken for their material or nonmaterial gains within their own capacities and social limits) and culture (social context that shapes individuals preferences over institutions and efforts to explore opportunities under a given social environment). national learning capability is a subsystem within the production system, the three factors of its, above-mentioned, two-way interacting with the three traditional production factors (labor, land and capital). some of those interactions, listed for exemplification, are referring to the following issues: the population size determines the possible resource learning oriented, and the learning contributes to population growth by reducing mortality rate, which is possible by increasing the supply channels, providing healthier nutritional options, more effective fight the diseases etc.; the small in size and population or underdeveloped territories tend to feel more vulnerable, which could increase the attractiveness for learning, and the learning can lead to an increased power in master nature, people being able to find solutions for replacing scarce natural resources through more efficient use of them, finding alternative, and sometimes discovering new resources; the capital influences learning capacity by providing necessary resources for this process take place, being known that the rate of technological progress depends of capital used in research and development, while the learning affects capital accumulation through its contribution to the production process, since capital is the result of production. 40 studies and scientific researches ‐ economic edition, no. 14, 2009  the knowledge presents many features of other production factors, but also many differences. for example, it may in certain circumstances (with the support of label), replace the land by providing solutions for the creation of artificial resources, can, like capital, be acquired, replace labor, but unlike capital which can be completely separated from work, some of it (especially the tacit one) can not work alone because it can not easily be converted into tangible forms. peter drucker points out that absolutely decisive production factor is neither capital, nor labor, nor land, basic economic resource is and will continue to be the knowledge. in fact, knowledge is the only significant resource today, but the traditional production factors didn’t disappear, but became secondary. alvin toffler believes that while the labor, land and capital were the main factors of production of the second wave, the knowledge is the basic resource for the economy of the third wave. this intangible asset have become a key resource, which gradually replace the traditional ones, offering the possibility of reducing other inputs used in increasing wealth. considering knowledge a distinct resource, the production function elaborated on the basis of four variables can be presented as: x = f (q, n, k, l). in this function q is due to the sum of scientific, technological and social knowledge, n is the land or nature, k is capital and l refers to labor. robert solow, like other economists, present the residual factor or total factor productivity (tfp), respectively the quantity of output unexplained by the inputs used in production, like a result generated primarily by scientific and technological progress. of course it is accepted that single, scientific and technological knowledge, are not sufficient to lead to economic growth, the social ones being also essential. by integrating both scientific and technological knowledge and social ones in the production function we can better explain the causes of economic growth, leaving less room to accidental events. although the share of knowledge, regardless of how it is integrated into the production function, is very low, around 1%, its contribution to economic growth is estimated to rise to 90%. we can speak of four types of knowledge important in the new economy: know-what (to know what): refers to knowledge of different facts, phenomena, processes; this is the most widespread and less usable as such in the production process, but represent the basis for other kinds of knowledge; know-why (to know why): refers to knowledge about the causation of different facts, processes, phenomena, respectively the scientific knowledge on the principles and laws of nature, on it relying technological development and renewal of products and services; often it is the result of basic scientific research; know-how (to know how): refers to the skills and abilities to do something, the knowledge relating to practical experience, contributing substantially to the production and commercialization of products and services; the basis for this, most often, is represented by research type application; know-who (to know who): refers to those who know what and those who know how to do that something, involving the formation of special social relationships that provide access to experts and on the efficient use of their knowledge. if „to know what” and „to know why” may be found by consulting various materials, „to know how” and „to know who” are rooted primarily in practical experience. more important for the growth of welfare are often the last two types of knowledge mentioned. for taking notice of several differences between traditional production factors and knowledge factor, i presented in what follows the general characteristics of the knowledge which, in summary, are considering the following aspects of that: 41 studies and scientific researches ‐ economic edition, no. 14, 2009  is non-rival: the same knowledge can be used by any number of people without reducing the existing amount (in addition, the more it is used by more many people, the more possibility there is to generate more knowledge from existing one; knowledge is by its nature inexhaustible); is non-exclusive: it is not possible to exclude someone who wishes to use it, respectively the amount of knowledge used by one person does not diminish the amount that other people can use; is relational: any individual piece of that makes sense only when juxtaposed with other pieces which provide the context (sometimes this context can be communicated nonverbal or paraverbal); is collegial: the more numerous is, the more complex, numerous and varied possible useful combinations are; is easier to carry than any of the resources: it can be transmitted instantly to one or more persons, wherever they are located, at the same infinitesimal price; can be stored in pieces increasingly smaller and using a variety of means (memory of individuals, different material or electronic means); can be compressed in symbols and abstractions; is intangible: we can not touch it, but we can manipulate it; is non-linear: small ideas can bring amazing results; is heterogeneous: not have a homogeneous content, and the places where it is produced are varied; is difficult to isolate, it is spreading; may be explicit or implicit, expressed or not, shared or tacit. these characteristics being known is very difficult to achieve the measurement of knowledge contribution to economic growth, it affecting not only the resulted quantity, but also the way in which the products and services are obtained. however, some specialists have proposed some series of indicators that could be used to measure knowledge, few such views being given in what follows. if robert solow presented the utility of the production function in determining the contribution of knowledge to economic growth through the link established between the quantity of inputs and outputs of the production process, fritz machlup believes that knowledge can not be measured starting from the production function because these is only an abstract construction involved in the characterization of some quantitative relations considered relevant in terms of empirical, without allowing the information about the causality of those relations. thus, to measure knowledge machlup use national accounts, although knowledge was not represented and isn’t representing a category of national system of accounts. he uses, in this regard, two indicators: „knowledge industries” and „knowledge workers”. the first of those refers to organizations, departments or teams within them and, sometimes, individuals and families who produce knowledge for their own use or for the use of others. the second indicator takes into account workers who have functions in production and dissemination of knowledge. according to the oecd report the knowledge-based economy, from 1996, also in measuring knowledge can be used indicators such as: the research and development expenditure, the engineers and technical personnel employment degree, the patents, the licenses, the know-how, the international balance of payments for technology etc. other indicators that can be used to measure knowledge, beginning from the learning behind its accumulation, are: the rate of literacy, the number of high-school or college graduates, the number of people involved in research and development, the freedom of action, the degree of social responsibility etc. despite of all attempts to propose different ways to measure the contribution of knowledge to economic growth, it remains a part of it, although very important in the 42 studies and scientific researches ‐ economic edition, no. 14, 2009  production process, impossible to evaluate because of its tacit existence and from that of the impossibility of being codified in any conditions of manifestation. although the evaluation of knowledge remains not fully solved because of the characteristics it has, however, paying particular attention to it by treating as a critical input to the growth of welfare is important. it is expected that in the future the productivity of knowledge will make the difference between the rich and less rich countries, running accessing, using and producing knowledge activities being crucial to organizational and national economic success. references: [1] machlup. f., the production and distribution of knowledge in the united states, princeton university press, usa, 1973 [2] năstase, c., economia cunoaşterii. note de curs, universitatea „ştefan cel mare” suceava, facultatea de ştiinţe economice şi administraţie publică, suceava, 2009 [3] popescu, r., tehnologie şi inovare în economia cunoaşterii, editura chiminform data, bucureşti, 2007 [4] suciu, m.c., economia cunoaşterii şi civilizaţia globală: investiţia şi speranţa în om, editura ase, bucureşti, 2002 [5] toffler, a., heidi, a., revolutionary wealth, knopf, usa, 2006, tradusă în limba română de către năstase, a., năstase, n., sub titlul avuţia în mişcare, editura antet xx press, prahova, 2006 [6] oecd, the knowledge-based economy, paris, 1996, disponibil la adresa http://www.oecd.org/dataoecd/51/8/1913021.pdf [7] andone, i., valoarea cunoaşterii în societatea bazată pe competiţie, în revista informatica economică, nr. 1(25), pp.7-13, inforec association, bucureşti, 2003 [8] dinu, m., socol, c., from solow model to endogenous economic growth – romania’s reinsertion into civilization?, în revista informatica economică, nr. 1 (37), pp. 122-127, inforec association, bucureşti, 2006 [9] godin, b., the knowledge economy: fritz’s machlup’s construction of a synthetic concept, project on the history and sociology of s&t statistics, working paper nr. 37, 2008, disponibil la adresa www.csiic.ca/pdf/godin_37.pdf [10] luban, f., breazu, g., managementul cunoştinţelor, în revista economia, nr. 1-2, pp. 5356, editura ase, bucureşti, 2000 [11] machlup. f., the supply of inventors and invention, in the national bureau of economic research, volume the rate and direction of inventive activity: economic and social factors, pp. 143-169, umi, 1962, disponibil la adresa http://www.nber.org/chapters/c2116.pdf?new_window=1 [12] solow, r.m., technical change and the aggregate production function, in the review of economics and statistics, vol. 39, no. 3, pp. 312-320, mass inst of technology press, usa, 1957 [13] tang, sh., knowledge as production factor: toward a unified theory of economics growth, 2005, disponibil la adresa http://iaps.cass.cn/english/articles/showcontent.asp?id=406 [14] witt, u, brokel, t, brenner, th., knowledge and its economic characteristics – a conceptual clarification, in the jena economic research papers 2007-013, friedrichschiller-university jena, germany, 2007 [15] * * * http://www.scribd.com/doc/6719626/intrarea-in-era-economiei-bazata-pecunoastere. 43 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 69 preferences of youth in relation to the origin of brands romanian and foreign and its main motivation laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract this paper is based on some results of a direct research conducted among youth 18-30, students of the faculty of economic sciences of the vasile alecsandri university of bacau. the research was conducted in the month of april 2016 on a sample of 100 students selected by group sampling scheme and has an exploratory character offering a guideline on youth preference for romanian or foreign brands for product categories: food products, alcohol beverages, personal hygiene products, cosmetics, cleaning products, clothing, footwear, consumer electronics and cars. they are also shown and the main reasons underlying preferences in terms of brand origin. the results of study highlights that the youth prefer in a greater extent romanian food products compared to foreign ones, but, for products encompassing high technology (cars, appliances and electronics) and for fashion products (clothing and footwear) over 50% of respondents prefer foreign brands. keywords direct research; preferences; reasons; domestic brand; foreign brand jel classification m31 introduction the multitude of brands on the market domestic or foreign – put the consumers in a process of evaluation, according to objective or subjective criteria, acknowledged or not. in the context of the abundance of products, the marketers are working to make their products known, to bring their products closer to consumers, to convince them to buy, to satisfy their tastes in order to generate recurrence acquisition and develop their loyalty over time. basically, preference for certain product categories is generated by a number of factors related to product (tangible, acorporal and communication components) and to a number of elements related to consumer: his needs, expectations, his tastes, etc. preference of romanian consumer for romanian or import products was studied by nielsen in 2008, the results stating that romanian products are preferred only in foods (53% of investigated romanian saying this), but in terms of products for personal care and cleaning, are preferred imported goods (romanian products are preferred by 22% and 26% respectively). (market magazine, november 2008) another study by memrb and published the same year, reveals that only 30% of the dominant brands in the retail market in romania (measured by market share) are indigenous. (market magazine, june 2008) consumer preferences for specific product categories, however, are significantly influenced by age, being well known that young people can have different criteria for choice of different brands. in this context, we aimed to evaluate the extent to which preferences of youth in relation to the origin of brands romanian and foreign and its main motivation 70 the romanian or foreign brands, by their characteristics, fall in youth preferences for different product categories. methodology and limitations of research in april of 2016, we conducted a direct research among young people aged 18-30 years, selected from undergraduate students of the faculty of economic sciences of the vasile alecsandri university of bacau. the research was conducted using survey and questionnaire data were completed through self-registration. we used group sampling scheme, the investigated sample of 100 respondents, being representative exclusively for the population of which it has been extracted. the research is exploratory, the results some presented in this paper may constitute hypotheses for other representative surveys for other collectivities. some of the objectives of research was to identify preferences of youth regarding the brand origin domestic or foreign for product categories and to identify the main motivations underlying these preferences. the motivations presented as underpinning the preferences for one or another category of brands, it is based solely on the statements of the respondents, being therefore those which respondents are aware of and those they wanted to declare. but bear in mind that, at the base of individual behavior stay other factors which consumer is not aware of or that he wishes not to declare, context in which in order to identify them one can be use qualitative research methods. (popescu, 2002) youth brand preference in terms of origin referring to food products, we can see that youth generally prefer local brands (20% of them prefer romanian products, compared with only 10% who prefer foreign brands) although most (55%) prefer equally romanian and foreign brands. in fact, this product category is only one of those subject to assessment for which there is a greater orientation towards local brands compared to foreign ones. a relatively high proportion (15%) of respondents said they did not know whether romanian or foreign brands are preferred or could not provide an answer to the question. in case of alcoholic beverages, 44% of young people prefer equally the two categories of brands and nearly a quarter prefer foreign brands (basically, the percentage of those who prefer foreign brands is over 3 times higher than the percentage of those who prefer romanian products). 26% do not know the origin of their favorite brands or, where appropriate, have not been able to answer / do not have preferences, this percentage having practically the highest values compared to similar products from other categories. the preference for foreign products for personal hygiene is manifested for a rate of respondents over 5 times higher than those who prefer romanian products. (41% versus 8%); still, largest category of respondents 44% is represented by those who said they prefer both categories of brands. foreign brands of cosmetics are appreciated by most young people, with 44% share, which surpasses 11 times that of those who said they prefer romanian brands. more than half of the people surveyed said they either prefer both categories of brands (38%), either do not know the origin of brands or cannot provide an answer on the issue investigated / have no preference. in the case cleaning products, most young people (53%) equally prefer investigated brand categories. similarly, as the case of "alcoholic beverages" category, a significant proportion do not know the origin of the brands or cannot answer / have no preference (19%). the gap between those who have expressed a preference for țimiraș 71 foreign brands and those who have expressed a preference for domestic brands is in this case a high one (6 times). regarding the clothing and footwear products, there is a relatively identical situation. most young people prefer foreign brands (53%) and a low share (1% and 6%, respectively) prefers romanian brands. compared to other analyzed categories, clothing and footwear products are the category for what most young people were able to express their preference for the origin of the brand, which indicates a higher degree of knowledge of brands. thus, could not show their preference in terms of brand origin only 5% of respondents for clothing and 4% for footwear. foreign brands of products which integrate high-technology (electronics and appliances, cars) are also preferred by young people. with 56% for electronics and appliances, and 62% for cars, the two product categories recorded the highest percentage of young people who have shown their preference for foreign brands. regarding the preference for romanian brands, if for electronics and appliances we found 9% of respondents who stated that, no respondent prefers romanian cars. less than 30% said that they prefer both brands for these product categories. overall, the romanian food products are those that enjoy the greatest manifestation of preference compared to other categories analyzed, although most young people prefer romanian and foreign brands alike. in contrast, preference for foreign brands is manifested most intensively (over 50% of respondents) for passenger cars, electronics and appliances, as well as clothing and footwear. products categories that most respondents said they preferred both brands are: food products, cleaning products, alcoholic beverages and personal hygiene products. most of those respondents who were unable to indicate the category of favorite brands, either due to ignorance of their origin or the fact that they were not able to answer / they have no preference, are: alcoholic beverages, cleaning products, food products and cosmetics, attesting the lowest level of knowledge of the brands for these categories (compared to the other products analyzed). table 1. distribution of respondents according to the preference for origin of the brand domestic or foreign by product category (% of total investigated sample) product category i prefer especially romanian brands i prefer especially foreign brands i prefer equally romanian and foreign brands i do not know if favorite brand / brands is/are romanian or foreign do not know / no preference food products (excluding alcoholic beverages) 20 10 55 9 6 alcoholic beverages 7 23 44 8 18 personal hygiene products 8 41 44 6 1 cosmetics 4 44 38 7 7 cleaning products 4 24 53 13 6 clothing 1 53 41 4 1 footwear 6 53 37 4 electronics and home appliances 9 56 28 7 cars 0 62 26 3 9 source: own research preferences of youth in relation to the origin of brands romanian and foreign and its main motivation 72 figure 1. respondents' preference for local brands and foreign by product category* (% of total investigated sample) * it has been excluded those who said they prefer equally romanian and foreign brands, those who do not know the origin of the favorite brands or, where appropriate, have not been able to answer / no preference source: own research the main reasons given by respondents in case of preference for romanian brands for certain categories of products although, overall, lagging behind foreign brands in terms of youth preference, for a low number of respondents, romanian brands are preferred to foreign ones (except cars, in which case no respondent said he prefers romanian products). so, those who prefer romanian brands for different product categories are primarily motivated by: lower price than the foreign products (of the 100 young people investigated, 67 said that among the top three causes why they prefer certain romanian brands is the lower price of products); desire to support the romanian economy and favorable previous experience with romanian products (indicated by most respondents). more than a quarter of the respondents also indicated as the main reasons: superior product quality and confidence in local producers. note that 15% of respondents indicated previous unfavorable experience with foreign products, which reflects a shift towards romanian products after experiencing dissatisfaction generated by foreign products. table 2. distribution of respondents by main reasons given for preferring romanian brands for certain product categories reason number of respondents who indicated that reason* high product quality 28 a lower price of products 67 increased confidence in local producers 30 desire to support the romanian economy 53 previous favorable experience with romanian products 50 previous unfavorable experience with foreign products 15 țimiraș 73 romanian products are less harmful to health 1 * each respondent indicated maximum 3 reasons, the most important source: own research the main reasons given by respondents in case of preference for romanian brands for certain categories of products regarding foreign brands, preferred to romanian brands (except brands of food products), they are first in the options of youth mainly due to: high product quality (of the 100 young people investigated, 83 showed among the top three reasons for the preference for foreign brands the fact that foreign products are superior in terms of quality), better value for money, favorable previous experience with foreign products (over 60% of youth indicated these reasons). comparing the share of those who prefer romanian products because of the unfavorable experience with foreign products, the percentage of those who prefer foreign products as a result of dissatisfaction generated by the romanian products is lower (10%), reflecting basically that a greater number of youngsters were dissatisfied after consumption of foreign brands than the romanian ones. table 3. distribution of the main reasons given by the respondents who prefer foreign brands for specific product categories reason number of respondents who indicated that reason* high product quality 83 a better value for money compared to romanian products 62 distrust in domestic producers / products 14 previous favorable experience with foreign products 62 previous unfavorable experience with romanian products 10 the products are not manufactured in romania 1 the reputation of the producers 1 * each respondent indicated within 3 reasons, the most important source: own research conclusions following the research, conducted on a sample of 100 students, aged 18-30, we found that they prefer in a greater extent romanian food products compared to foreign ones (over 50% stated, however, that he prefers equally two categories of brands). on the other hand, for products encompassing high technology (cars, appliances and electronics) and for fashion products (clothing and footwear), over 50% of respondents prefer foreign brands. the least known brands by the respondents proved to be brands from the following categories of products: alcoholic beverages, cleaning products, foods and cosmetics, these recording the highest percentages of respondents who have not known the origin of favorite brand or not able to answer / do not have preferences. the main reasons given by respondents underlying preference for certain categories of romanian products are lower price compared to the foreign products; desire to support the romanian economy and favorable previous experience with romanian products. in the case of foreign brands, the preference for certain product categories was justified in the light of particular reasons: high product quality, better value for money, favorable previous experience with foreign products. starting from the results of research, these can constitute hypotheses for future researches, the issue being possible to be investigated by conducting thorough representative studies at national / regional level etc. on other age segments and / or preferences of youth in relation to the origin of brands romanian and foreign and its main motivation 74 groups. also starting from the main reasons given by respondents as underpinning the preference for local or foreign brands, one can consider in a future research their identification for each product category, and even for different product. not at least, investigating the reasons underlying consumer preferences can be achieved through qualitative research in order to identify of those that consumers are unaware or unwilling to declare. references dătculescu, p. (2012), cercetarea practică de marketing, editura brandbuilders grup, bucureşti. dătculescu, p. (2006), cercetarea de marketing, editura brandbuilders grup, bucureşti. kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto. popescu, i.c. (2002), cercetări calitative de marketing chapter, în the cătoiu, i. (coord.), cercetări de marketing, (pp. 191-226), uranus publisher, bucureşti. săndulescu l. (2015, september, 18), top 100 cele mai puternice branduri romanesti, revista biz available at: http://www.revistabiz.ro/top-100-cele-mai-puternicebranduri-romanesti/; ţimiraş, l. (2016), young people's preferences for romanian agro alimentary goods, studies and scientific researches. economics edition, special issue, available at: http://sceco.ub.ro/index.php/sceco/article/view/353. revista piaţa (2008, iunie, 21), brandul romanesc fata cu globalizarea, available at: http://www.revista-piata.ro/marci_romanesti-id168.html. revista piaţa (2008, november, 20), local vs strain: alimente romanesti, cosmetice din import, available at: http://www.revistapiata.ro/local_vs_strain__alimente_romanesti__cosmetice_din_import id4290.html. http://www.revistabiz.ro/top-100-cele-mai-puternice-branduri-romanesti/ http://www.revistabiz.ro/top-100-cele-mai-puternice-branduri-romanesti/ studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 70 some aspects regarding the impact of foreign direct investment in economic development florina popa academia română, institutul de economie națională, bucurești, florinapopa289@gmail.com abstract foreign direct investment are among the mobilizing factors of the economic development of a country, alongside the domestic investments, being a basic support in the achievement of the development and modernization strategies. the study presents, briefly, the effects of intervening foreign direct investment flows on the economy of a country, able, by the advanced experience brought, to generate a better capitalization of resources, a contribution to growth. the directions of manifesting the mechanisms of influence of foreign direct investment, as well as the role that they hold for their impact, the economic environment of the host country and the policies practiced in relation to foreign direct investment are taken into account. the purpose of the paper was to point out some aspects regarding the favourable impact that foreign investments could have on an economy, by the contribution to new technologies and the contribution to the productivity increase. the conclusions point to the potential of the impact of foreign direct investment on development and the need for the host countries, to support some properly oriented policies, by maintaining a correlation between the volume of foreign investment flows and the development potential of a country. the research method used to carry out the study was the documentation from the foreign and domestic specialized literature, the synthesis and processing of the relevant ideas, by capturing the impact of foreign direct investment in economic development. keywords: impact, policies, development, foreign investments, effects jel classification: o10; f21; f23; f63 1. introduction the beneficial contribution expected to be obtained on the basis of foreign direct investments motivates the interest of host countries' governments in attracting them, the stake being the advantages of the investment flow for the economic growth. initially, considered as an important source of capital growth, especially, in the case of countries whose savings rates are modest, compared to the development needs of the economy, the prospects for appreciation of the role of foreign direct investments have changed over time. in considering the positive effects of these, which place them among the important actions with role in the economic growth, the directions in which they are manifested were taken into account (te velde d. w, 2006): it ensures the capital needed to supplement the public financing resources; it favours the increase of employment, by the new jobs created or by stimulating the activity of other firms in the local market; mailto:florinapopa289@gmail.com florina popa 71 alongside the capital flow, the contribution of foreign direct investments is embodied in advanced technologies, modern management practices used in the company in which they invest, which is also disseminated, in other firms with similar production, forced to adapt themselves under the pressure of competition; it bears the mark of stability on the long-term, the investor being interested in protecting and developing the investment. opinions regarding the appreciation of foreign direct investment, as an important factor of economic and social development have led to the worldwide competition increase, for foreign direct investment, their practice being considered a success. the new approach of foreign direct investment relates to growth, development and prosperity and, also, to the manifestation of economic freedom supported by appropriate mechanisms and institutions. at the same time, also, there is the opinion that the excessive intervention of the multinationals may lead to the economic dependence of the host country, on the foreign capital and, also, to the danger of unbalancing the activity of the local companies, due to the competitive pressure exerted by the multinational companies (horobeţ & popovici o., şerbu, 2007). 2. the role of foreign direct investment in economic development in assessing the effects of foreign direct investments on the economy of a country, a number of elements that can influence them must be taken into consideration (horobeţ a. & popovici): the particularities of the sector in which the foreign investor acts; the time interval considered for the analysis of the impact; the type of investment implanted by the foreign company: greenfield, the merger with a local firm, acquisition etc. ; the strategy practiced by the investor; the attitude of the governments of the recipient countries towards foreign direct investment. foreign direct investment flows are profitable for the host countries for the contribution made for the use of resources (based on cost and efficiency criteria), the contribution to economic growth, the influence mechanisms manifesting in several directions (trufin, 2016; șerbu, 2007; te velde d. w., 2006; horobeţ & popovici, 2017): resources capital; technological transfer; increasing the quality of human capital, acquiring new managerial skills; foreign trade (or access to the world market); competition; human resources development. the accumulation of capital, by the contribution of foreign direct investments (alongside the own resources of the host country) is achieved to the extent in which the foreign direct investment flows are intended for the investments financing and, implicitly, if the investors who have become owners, support the technological transfer (șerbu s.-g., 2007). technological transfer the need to increase the economies of the host countries implies the sustained implementation of the new technologies, giving the measure of the influence of foreign direct investments. in the mechanism of technological transfer, the findlay's (1978) theory concerning "the investment psychic distance" with reference to the distance between the higher level of development, in the country of some aspects regarding the impact of foreign direct investment in economic development 72 origin of foreign direct investments and the lower level of the recipient country in fact, technological distance must be taken into account. the possibility of access to the new technologies is conditioned by the level of the other factors which get involved in supporting the investments of the foreign actor (human capital, infrastructure, distribution networks etc.), which can influence the type of technology that could be implemented. the development potential is in inverse relation to the size of the technological distance between the investor and the local firms. the smaller this is, the more know-how information is more accessible to companies that use more advanced technologies, than to those that practice outdated production technologies and the qualification of the workforce is lower (trufin o. s., 2016). as regarding the transfer of technology from the investing companies to the local companies, the way is the imitation of the production process, a procedure frequently used in the transfer of the novelties from the fields of knowledge and technologies, with a beneficial influence on the productivity of the local companies. this acquisition technique is an adaptation of the new technology, conditioned by the complexity of the production process owned by the investor and by the real possibilities of implementation, of the host country (trufin o. s., 2016). thus, the technological transfer induced by foreign direct investment contributes to the increase of industrial specialization, especially, in the advanced sectors of the receiving country. the increase of the quality of human capital is ensured on the basis of the qualification of the personnel trained at the investor who, as a result of the transfer to the companies from the local market, bring their input of information in the field of management and of new technologies (horobeţ & popovici, 2017; trufin, 2016, șerbu, 2007). foreign trade, access of the products sell-out on the foreign market as a result of the transnational activity of foreign direct investment, the host country has the advantage of increasing the export of goods based on the relations and investor access to international networks; thus, a transfer of production on the international market is carried out, which implies an increase of competitiveness, too. therewith, the local companies have the opportunity to take over from transnational companies, the strategies for establishing the networks of distribution and international transport (trufin, 2016, șerbu, 2007). it should be mentioned that the type of trade practiced by the receiving country influences the impact exerted by foreign direct investment on the development (trufin o. s., 2016): • if the foreign direct investment are planted in a country whose trade regime substitutes the import, the foreign companies will face the competition of the local companies, so they will have to reconsider their own technological advantages; for local firms, the chances of development are conditioned by classification in the rank of those with a less "technological distance" and have the possibility of technological transfer. • in the event that the foreign direct investment are located in a country that promotes the export, in order to increase the competitive advantages, the investors will have to focus, especially, on strengthening their own capacities of using the international markets and the distribution networks that they have and less, on obtaining the advantages at the expense of the production technologies. competition between the investing firms and local firms is a phenomenon of foreign direct investment impact on the economies of the host countries. the competitive pressure exerted by the multinational companies entered on the local market, which have a competitive advantage, can cause the local companies to accelerate the implementation of the new technologies, such as to make their production more florina popa 73 efficient, to increase the productivity and the chances of sustaining the competition (trufin, 2016). the development of human resources is manifested through (șerbu, 2007): increasing employment due to the establishment of new companies that provide new jobs; employment, training and professional development in new fields, new qualifications and specializations. as a rule, the impact of foreign direct investments on the economies in which they are planted is felt in two forms: direct and indirect (horobeţ & popovici, 2017). • the direct impact is the consequence of the investments of the multinationals in new companies created in the host country or in companies that have been taken over from it and it manifests: at microeconomic level, through capital contribution, transfer of technologies and modern management skills, human resources development; by sectors of activity, contributing to change of the market structure and directing businesses towards meeting the demands of consumers and suppliers; at the macroeconomic level, the influence being felt on the increase of the budgetary revenues and in the export structure. • the indirect impact is felt in the local companies, others than those that are the object of certain direct investments, but, involved under the pressure of the multinational companies competition, in taking over their advanced techniques, the consequence being an increase of their performance and competitiveness. schematically, the effects of foreign direct investments on the economies of the recipient countries and their forms of occurrence are presented in the figure below (figure 1): the effects of foreign direct investment, both the direct and the indirect ones, are manifested in increasing companies performance, competitiveness and business efficiency. the economic growth, as a result of the intervention of foreign direct investment can be manifested (figure 2) (te velde d. w., 2006): for a short term, as a result of: • increasing the volume of production or of accumulation of factors (growth, capital, employment etc.); • the efficiency of using factors, by using higher technologies or localization in activity segments with higher added value; on a long term if they are associated with productivity spillover effects. some aspects regarding the impact of foreign direct investment in economic development 74 figure 1 the impact of foreign direct investments on the economies of the recipient countries and forms of occurrence source: author`s processing based on information from bibliographic sources figure 2 periods of manifestation of investment flows source: author`s processing based on information from dirk willem te velde (2006), „foreign direct investment and development an historical perspective”, background paper for ‘world economic and social survey for 2006`, overseas development institute, commissioned by unctad, 30 january 2006, https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/850.pdf foreign direct investment impact direct indirect levels microeconomic macroeconomic local firms that are not the subject of investments but have been stimulated towards increasing performance and competitiveness, under the pressure of competition capital contribution ; transfer of advanced technologies; increasing the quality of human capital, acquiring new competences and managerial techniques ; foreign trade increasing export volume; competition attracts the implementation of new technologies human resources development increasing business performance, competitiveness and efficiency; businesses movement towards meeting the needs of consumers and suppliers. budget revenues growth ; balancing the national budget and the balance of payments ; change of export structure. economic growth , consequence of f oreign direct investment intervention s hort term l ong term by inducing the accumulation of factors; increasing the efficiency of using factors b y productivity spillover effe c ts https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/850.pdf florina popa 75 3. the relation economic environment impact of foreign direct investment the contribution of foreign direct investment to growth depends on the existence of a more developed economic environment and on the attitude of the host country, respectively, on the policies practiced by them, in relation to foreign direct investment: trade policies the extent to which they are favorable to export or, are oriented towards the internal market (te velde d. w., 2006). according to analysts, the foreign direct investment penetration is stronger in open economies towards this process than in the countries wherein the protectionist measures practiced are not favourable to foreign shares; the level of qualification of the human capital, the extent to which it is able to ensure the capitalization of the transfer of technology covered from the foreign subsidiaries to local companies (șerbu s.-g., 2007); the governmental policies to support foreign direct investment through taxation practiced or other forms of facilities (trufin o. s., 2016, p. 71); macroeconomic policies of the host state, in fields such as infrastructure, monetary policy (trufin o. s., 2016); the level of development of the financial markets, on the functioning of which, the creation of relations between the national investor and the foreign one depends on (şerbu, 2007); the type of investment flow, the characteristic of the intervention may influence, differently, the effects of foreign direct investment on the development of a country's economy. for example, the “greenfield” foreign direct investment impact on the economy is beneficial, as it develops new capacities, favouring the employment and consumption. differently, the acquisitions may have some adverse effects, among consequences, being possible the withdrawal of some activities and jobs respectively (șerbu, 2007). by the impact produced, the foreign direct investment signifies a real potential for the economic development, the increase of the competitiveness and the performances of the host country companies. at the macroeconomic level, the impact of the foreign investments flow can be positive but also, negative, depending on the type of foreign direct investment implanted, the economic policies and the conditions offered by the receiving country. there are some critical opinions referring to the impact of foreign direct investment and the risks that their intervention it supposes, such as (șerbu, 2007, trufin, 2016, horobeţ & popovici, 2017): the interest of the multinationals to invest in high productivity fields, without favouring the increase of the productivity of the national companies; the effect of foreign competition leads to a diminution of the market segment of the national investors and, respectively, of their profitability, with effects in the decrease of the productivity; on the local market, it occurs a transfer of the demand from the local companies to the multinational companies, whose marginal costs are lower, due to the use of advanced technologies,; in the short term, local firms are disadvantaged because, in order to resist competition, they must adopt new technologies and increase productivity but, in the long term, they have the prospect of development; "technological distance" can produce favourable effects in localization of foreign direct investments on the market of the host country, materialized in the increase of the productivity, of the commercial flows, but at the same time, it can lead to the decrease of the number of jobs, as an effect of the productivity increase; some aspects regarding the impact of foreign direct investment in economic development 76 the activity of local companies can be unbalanced due to the competitive pressure exerted by the multinational companies; there is the risk of losing the position held on the market by the local companies, sometimes, even the elimination of the local producers, situation generated by the advanced technology and the resources owned by the foreign investor. in this context, the host country can orient itself towards the practice of a strategy whereby the flows of foreign direct investments should be directed towards areas and sectors of activity in which there are the premises of optimizing the positive effects, with the least possible manifestation of the negative ones (horobeţ & popovici, 2017). the policies initiated by this can be of sustaining the foreign direct investment, but also, of discouraging, the orientation being, depending on their influence on the local companies (trufin, 2016). in the context of the beneficial role of the intervention of foreign direct investments in an economy, it is worth mentioning, also, the fact that the excessive intervention of the multinationals, in the economic activity of a country, can determine the economic dependence of the receiving country, on the foreign capital (horobeț & popovici, 2017). conclusions the approach of foreign direct investments relates to economic growth and development, to prosperity. the impact of foreign direct investments on growth and development is determined by the type of foreign direct investment, the particularities of the company, the economic conditions in the area whereat the investments and commercial policies are implemented (trufin, 2016, negrițoiu 1996). of particular importance is training of human resources, as well as the construction of technological capabilities, that should favour the processing of spillover effects of productivity (te velde, 2006). by the interaction with foreign direct investment, the host country's companies have the possibility of knowledge of new techniques of production and management, of increasing the productivity, entering and expanding the business on the international market (trufin o. s., 2016). foreign direct investment is constituted as an important element for the economic development and the increase of the competitiveness of the beneficiary countries; at the same time, some aspects of risk, such as: changes in the structure of the business environment, loss of market position of local firms, or removal of local producers, generated by foreign competition, must also be taken into account (horobeț & popovici, 2017). the policies supported by the governments of the host countries can be oriented according to the interests of the national economies, respectively: supporting the attraction of foreign direct investment or discouragement, depending on the influences they can induce on local companies (trufin, 2016); orienting, as far as possible, of the external investment flow, towards sectors or areas of activity that have the perspective of manifesting the positive consequences of the impact and, respectively, as low as possible, of the negative ones (horobeț & popovici, 2017; șerbu, 2007); attracting those types of investments that favour economic growth, ”efficiency-seeking” şi and ”greenfields” and to a lesser extent, of those of mergers and acquisitions type (șerbu, 2007). it should not be neglected the fact that, for the positive effects of foreign direct investments on growth, the host country must be at an appropriate level of economic florina popa 77 development, able of taking over the transfer of technology, information, qualification, with effects on productivity growth (horobeţ & popovici, 2017; șerbu, 2007, trufin, 2016). acknowledgment: the study is a part of the research paper of the institute of national economy, romanian academy,”investiţiile străine directe şi impactul schemelor de parteneriat public-privat. studiu de caz românia”, achieved in 2019, by phd. florina popa (coordinator). references aitken, b.; gordon h. hanson; harrison, ann, e., (1997), ”spillovers, foreign investment and export behavior”, journal of international economics, 43: 103132, issue 1-2; balasubramanyam, v. n.; salisu, m.; sapsford d. (1996), “foreign direct investment and growth in ep and is countries”, the economic journal, vol. 106, no. 434 (jan., 1996), pp. 92-105, published by: oxford university press on behalf of the royal economic society, doi: 10.2307/2234933, https://www.jstor.org/stable/2234933; findlay, r. (1978), „relative backwardness, direct foreign investment and the transfer of technology: a simple dynamic model”, the quarterly journal of economics, vol. 92, no. 1 (feb., 1978), pp. 1-16, published by: oxford university press, doi: 10.2307/1885996, https://www.jstor.org/stable/1885996; görg, h.; greenaway, d. (2003) „much ado about nothing ? do domestic firms really benefit from foreign direct investment ?”, discution paper, 944, november, 2003, http://ftp.iza.org/dp944.pdf; haaparanta (1996), “competition of fdi”, journal of public economics, 71: 121-139; horobeţ, a.; popovici, o. (2017), investiţiile străine directe: evoluţia şi importanţa lor în românia, mai 2017, studiu realizat în parteneriat de academia de studii economice bucureşti şi consiliul investitorilor străini, https://fic.ro/documents/view/studiu-investitiile-straine-directe-evolutia-siimportanta-lor-in-romania; mirza, h. and giroud a. (2004), ‘regionalization, foreign direct investment and poverty reduction. lessons from vietnam in asean’, journal of the asia pacific economy 9 (2), pp. 223-248, https://doi.org/10.1080/1354786042000207353; negriţoiu. m. (1996), salt înainte. dezvoltarea şi investiţiile străine directe. (jumping ahead. foreign direct investments and the economic development), ediţie îngrijită de valeriu ioan-franc, editura pro & editura expert, bucureşti; şerbu simona-g. (2007), investiţiile străine directe. determinanţi, efecte şi politici de promovare, casa cărţii de ştiinţă, cluj-napoca; te velde, dirk, willem (2006), „foreign direct investment and development an historical perspective”, background paper for ‘world economic and social survey for 2006`, overseas development institute, commissioned by unctad, 30 january 2006, https://www.odi.org/sites/odi.org.uk/files/odiassets/publications-opinion-files/850.pdf; trufin ovidiu s. (2016) investiţiile străine directe. procesul de dezvoltare investiţională (pdi) în românia, editura tehnopress, iaşi; voinea l. (2007), corporațiile transnaționale și capitalismul global, editura polirom, iași; https://www.jstor.org/publisher/oup https://www.jstor.org/publisher/res https://www.jstor.org/stable/2234933 https://www.jstor.org/publisher/oup https://www.jstor.org/publisher/oup https://www.jstor.org/stable/1885996 http://ftp.iza.org/dp944.pdf https://fic.ro/documents/view/studiu-investitiile-straine-directe-evolutia-si-importanta-lor-in-romania https://fic.ro/documents/view/studiu-investitiile-straine-directe-evolutia-si-importanta-lor-in-romania https://doi.org/10.1080/1354786042000207353 https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/850.pdf https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/850.pdf some aspects regarding the impact of foreign direct investment in economic development 78 unctad (1999), world investment report, unctad, geneva. studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 112 advertising brands by means of sounds symbolism: the influence of vowels on perceived brand characteristics alina duduciuc national university of political studies and public administration alina.duduciuc@comunicare.ro abstract the aim of this study is to test the influence of sound symbolism on perceived characteristics of a brand as well as to highlight the importance of applied social psychology to current practice of advertising. previous research showed that the phonetic structure of brand name communicates its characteristics, i.e. it drives consumers to assess certain features and performance of the product. i assumed that when consumers encounter an unknown brand name, they automatically infer characteristics from the meaning conveyed by the sounds (e.g. phonemes). therefore, i supposed that a brand name for a shampoo (artificially created on experimental purpose) containing back vowel is evaluated better by consumers when they compare it to another brand name with front vowels. furthermore, for the accuracy of responses, i used the semantic differential scale to measure the differences between two brands in terms of certain attributes of product. to this end, fifty students (n=50) participated in a research based on questionnaire. as the results of the current research showed, the brand name with back vowel outnumbered the brand name with front vowel on two dimension, i.e. on brand activity and brand efficiency. the brand name containing front vowel was rated better when subjects evaluated the product in generally. last, but not least, when it comes to convey meanings, the sound of back vowels [a] could be used more when marketers promote products that communicate its characteristics such as efficiency, velocity and health. the back vowel could be also assessed to products with larger packing or special sailing such as extra quantity. meanwhile, the brand names with front vowels [ie] could be created for more expensive products with good quality, mainly addressed to men. keywords brand name; sound symbolism; advertising; social psychology; semantic differential jel classification m31 introduction the term “sound symbolism” has been recently employed by scholars from different areas of study (marketing, advertising, social psychology and communication studies) in order to acknowledge the importance of phonemes – either vowels or consonants – in the process of advertising different goods and services. it is commonly accepted that any spoken language has its own rules of combining sounds so as to turn them into words. furthermore, the physiologic condition of streaming the sounds (encode) – either with or without stressing – elicits different decoding processes of the receptors. based on these assumptions derived mainly form linguistics, scholars have already began to test the effectiveness of sounds (i.e. vocals or consonants – phonemes) on consumer’s preferences and purchasing decisions. for example, yorkston and menon (2004) created two fictitious brand names for ice cream, frish and frosh, by manipulating only the vowel sound, such as: the [i] sound in frish is more of a front duduciuc 113 vowel sound than the [a¨] sound in frosh. the participants tended to associate the [a¨] with attributes such as bigger, heavier, duller and slower as compared to sound [i]. consequently, the frosh brand was perceived as smoother, richer, and creamier than the frish brand name and it was preferred among the potential consumers (yorkston and menon, 2004). brand specialists and scholars voiced concern over the effect of brand names on consumer perception, for instance the ford edsel has been attributed to a poor brand name (klink, 2001); mazda (chile division) rename its laputa minivan because “puta” means “prostitute” in spanish; clairol introduced the mist stick curling iron in germany without observing that “mist” is slang for “manure” (fetscherin, alon, littrell & chan, 2012). all these examples refer to the automatic inference that consumers could make as a result of pairing the phonemes (i.e., how words sound) with cultural aspects of a semantic unit (i.e. how sounds/words connote meaning). sound symbolism and perceived characteristics of brands there is little doubt that branding represents a crucial stage in positioning the products and services (keller, 2003; lindsdrom, 2005) as studies related to this topic have been flourished worldwide. nevertheless, it was only recently that the marketers have paid attention to the research regarding sound symbolism. fifty years ago, the restrained interest on the effects of sounds symbolism on marketing could be counted on poor disseminations of research outside the academic laboratory as well as on the limited connection between marketing and linguistics. in a pioneering study (sapir, 1929) conducted mostly on cross-cultural samples, sapir (1929) asked englishspeaking subjects to associate two apparently meaningless words, mil and mal, with a small and a large table. a large percentage of english speaking subjects – that is 80% of them – assessed mal to a large table and mil to a small one. following sapir, other scholars asserted that certain sounds do have effects in real language. for instance, jespersen (1922) emphasized that back vowels such as the [u] sound in dull or ugh are often found in english words expressing disgust or dislike (e.g., blunder, bung, bungle, clumsy, muck), and words beginning with sl also tend to have a negative connotation (slouch, slut, slime, sloven). words beginning with fl often express movement (flutter, flap, flicker) (apud lowrey and shrum, 2007). similarly, smith (1998) proved that brand names or people’s names that contain either back vowel sounds or begin with sl are perceived as less positive than others names. on this purpose, he analyzed u.s. presidential election outcomes, from 1824 to 1992, and found out that the more a family name of the candidates was related to a negative sound (such as sl , fl or u), the fewer his chances to win the election were. research regarding sound symbolism have been conducted on languages around the world, highlighting similarities and contrasts in conveying word meaning. brown (1958) suggested that words connoting “little” in non-english languages – such as kleine (german), petite (french), piccola (italian), and mikros (greek) – have front vowel sounds as the initial syllable. the same is true for suffixes: diminutives in english are made by adding ie, in spanish ico and ito, and in italian ino (apud lowrey and shrum, 2007). since the beginning of the 2000s, richard klink’s (2000, 2001, 2003, 2009) influential works had been successfully applied the principles of phonology into the marking research. after a systematic review of sound symbolism studies, klink (2000) empirically reviled that products with brand names containing front vowels, as opposed to back vowels, are perceived as smaller, lighter (relative to darker), milder, thinner, softer, faster, colder, more bitter, more feminine, friendlier, weaker, lighter (relative to heavier), and prettier. in his experiment, subjects perceived the brand names containing fricatives, as opposed to stops, as smaller, faster, lighter (as advertising brands by means of sounds symbolism: the influence of vowels on perceived brand characteristics 114 opposed to heavier), and more feminine. with respect to conveying sharpness or softness, he did not obtained significant outcomes either the names containing stops or fricatives. furthermore, products with brand names containing voiceless stops, as opposed to voiced stops, were perceived as smaller, faster, lighter (relative to heavier) sharper, and more feminine. similarly, brands containing voiceless fricatives, as opposed to voiced fricatives, were perceived as faster, softer, and more feminine. the outcomes of klink’s studies were further replicated. in this respect, yorkston and menon (2004) stated that the processing of brand names and their sound symbolism effects imply automatic cognition processes such as the effortless strategy of the mind. based on above mentioned research (i.e. yorkson & menon, 2004), lowrey and shrum (2007) were interested to observe how much an individual links a vowel or consonant sounds with a certain characteristics of a product. specifically, they juxtaposed two-seater convertible (smaller, faster, lighter) with sport utility vehicle (suv; larger, slower, heavier), and knife (sharper) with hammer (duller). they assumed that subjects “would prefer words with front vowel sounds as brand names over words with back vowel sounds when the product categories were two-seater convertible and knife, but would prefer those very same back vowel sound words as brand names over the same front vowel sound words when the product categories were suv and hammer” (lowery & shrum, 2007, 409). the results showed that: “sounds of words appear to convey meaning apart from the denotative meaning of the words, and people spontaneously apply these meanings when fitting brand names with products. when the sounds of the words are associated with certain attributes (small, sharp), the words are preferred as brand names for products in which those attributes are favorable (convertible, knife). conversely, when the sounds of the words are associated with an opposite meaning (large, dull), they are preferred for product categories for which those attributes are considered appropriate (suv, hammer)” (lowery & shrum, 2007, 411) klink (2009) argued that certain sounds of the brand names can better target the products on the market, meaning that front vowels were received more favorably by females as compere with brand-back vowels which are better evaluated by males, particularly in product categories where masculinity–femininity is a more salient product attribute (e.g., deodorants vs. paper clips). recently, wu, klink and guo (2013) tested the relation between the meaning of a sound and brand personalities (masculine either feminine) in three artificial brand name pairs such as following: mig/mog for spring water, riv/rov for deodorant, frish/frosh for vitamin c, and zid/zod for body wash. half of the participants (the “gender targeting group,” n=48) were informed that “the brand is specially design for women/men” (i.e., spring water and deodorant for women; vitamin c and body wash for men), while the other half did not receive this information (the “non-gender targeting group,” 49 respondents). the “non-gender targeting group” represented the control group. the results of the experiment support the effect of phonetic symbolism on consumers’ perception of gender brand personality. specifically, back vowel sounds were associated with the masculine personalities (adventurous, aggressive, brave, daring, dominant, and sturdy), whereas front vowel sounds were related to the feminine brand personalities (expressing tender feelings, fragile, graceful, sensitive, sweet, and tender). moreover, when respondents were instructed that a brand is designed for a particular gender, they demonstrated differential preferences according to the two vowel types, namely, brand names with front (back) vowels were chosen for brands targeting women (men). when no gender related instructions were provided, the respondents indicated little to no preferences for brand names with front or back vowels. duduciuc 115 methodology as previous research showed, the phonetic structure of brand name communicates its characteristics, i.e. it drives consumers to assess certain features and performance of the product. i assumed that when consumers encounter an unknown brand name, they automatically infer characteristics from the meaning conveyed by the sounds (e.g. phonemes). therefore, i supposed that a brand name for a shampoo (artificially created on experimental purpose) containing back vowels (gameli) is evaluated better by consumers when they compare it to another brand name with front vowels (giameli). hypothesis based on the previous research, i framed and tested the following four hypotheses: hypothesis 1. the subjects will probably evaluate the proprieties of a brand name containing back vowel (i.e. gameli) better than a brand name containing front vowel (i.e. giameli). hypothesis 2. the subjects will probably evaluate the performance of a brand name containing back vowel (i.e. gameli) better than a brand name containing front vowel (i.e. giameli). hypothesis 3. the subjects will probably evaluate a brand name containing back vowel (i.e. gameli) as more efficient (i.e. in this case, the efficiency in hair-loss treatment shampoo) than a brand name containing front vowel (i.e. giameli). hypothesis 4. the subjects will probably perceive the name with back vowels (gameli) as more feminine than a brand with front vowel (i.e. giameli). procedure, sample and developing of questionnaire fifty (n=50) students enrolled in a social psychology master level course participated in a study for an extra credits in december 2014. participants were aged between 23 (n=36) and 24 (n=14). as regarding to gender, thirty of them were female (f=30), and the rest of them male (m=20). they had to fill in a questionnaire regarding the evaluation of two fictitious brand names for a shampoo that prevent hair-loss (gameli/gimeli). the brand names have been created according to the romanian principles of phonology (slama-cazacu, 1999; avram, 1961). consequently, i manipulated only two phonemes: front vowel (giameli) and back vowel (gameli). i asked subjects to choose from a bipolar list of attributes certain characteristics that could be assessed for the two shampoo brand names (giameli/gameli). for measuring the perceived characteristics of a brand as well as for its evaluation and performance, i used the semantic differential rating scale (osgood, 1964) with 9-bipolar adjectives such as: good quality-bad quality; expensive-cheap; healthy-unhealthy; slow-fast; weak-strong; inefficient-efficient; feminine-masculine; insufficient-abundant; large-scale-small-scale. the subjects were asked to choose where his/her position lies on a scale (with 8 points) between two bipolar adjectives. then the responds were grouped according to three factors (epa – evaluation, power and activity): brand evaluation (good quality-bad quality; expensive-cheap; insufficient-abundant), brand activity (inefficientefficient; slowfast; healthy-unhealthy) and power/brand efficiency (weak-strong; large-scale-smallscale; masculine-feminine). the date was computed using spss version 20. secondly, the questionnaire also assessed the preferences of the respondents concerning romanian letters and its orthography, the frequency of using hair loss shampoo and socio-demographics (gender, age, income, education, residence). advertising brands by means of sounds symbolism: the influence of vowels on perceived brand characteristics 116 results perceived attributes of the brands. as we can see from the table 1, the brand name containing front vowel (giameli) was perceived as more positive than the brand with back vowel (gameli) on all nine attributes. on average, giameli is evaluated by subjects as better (m=4,43), cheaper (m=4,71), healthier (m=4,74), faster (m=4,46), stronger (m=4,68) and more efficient (m=4,86) than gameli. the brand with front vowels (giameli) it was also assessed as being masculine (m=4,44) and small scale dimension (m=4,64) compared with gameli which was perceived as feminine (m=3,27) and large-scale dimension (m=4,55). table 1. attributes assigned to each brad on average gameli giameli bad quality 3,51 4,43 good quality expensive 3,57 4,71 cheap unhealthy 3,89 4,76 healthy slow 3,47 4,46 fast weak 3,91 4,68 strong inefficient 4,00 4,86 efficient feminine 3,27 4,44 masculine insufficient 4,00 4,34 abundant large scale 4,55 4,64 small scale the profile of the brands. as a result of using a semantic differential scale when measured the perceived of characteristics of the two brand (giameli and gameli) i illustrate (figure 1) the profile of the two studied brands. the figure no. 1 highlights the differences between the two brands in terms of attributes, i.e. how much a brand is closer or farther from a positive pole than the other. figure 1. the bipolar profiles of the brand names duduciuc 117 brand evaluation, activity and power. the outcomes of ranking products according to their characteristics, namely how much the subjects believed that the two brands (giameli and gameli) are better in terms of their activity, efficiency and cognitive evaluation are presented in the table no.2. as we can observe, the brand name with back vowel (gameli) outnumbers giameli (brand with back vowel) on two factors related to brand activity (inefficientefficient; slow-fast; healthy-unhealthy) and brand efficiency (weak-strong; large-scale-small-scale; masculine-feminine). the brand name containing front vowel (giameli) scores better (m=16,67) only when it comes with cognitive evaluation of a product (good quality-bad quality; expensivecheap; insufficient-abundant) as compared with gameli (m=16,62), but the differences between them (on average) are not statistical significant. table 2. epa scores for each brad, on average brand name evaluation positive giameli power positive giameli activity positive giameli evaluation negative giameli power negative giameli activity negative giameli g ia m e l i mean 16,67 15,50 15,60 8,60 8,56 7,50 n 9 6 10 5 9 8 std. deviation 1,732 ,837 3,062 3,362 3,046 2,976 g a m e l i mean 16,62 18,00 18,30 5,57 4,50 5,57 n 13 7 10 4 4 7 std. deviation 2,959 1,528 27,510 1,258 2,380 2,878 conclusion in this article, i provided empirical support for three of the four assumptions. generally, subjects evaluate better the brands containing front vowels [ie] than back vowels [a], in this case the brand giameli as better (m=4,43), cheaper, healthier, faster, stronger and more efficient than gameli. although, when measuring the brand rating according with three factors such as brand performance, brand efficiency and brand evaluation (cognitive) using the semantic differential scale, the results are more specific. as the outcomes of the research showed, the brand name with back vowel (gameli) outnumbers giameli (brand with back vowel) on two factors relating to brand activity (inefficientefficient; slow-fast; healthy-unhealthy) and brand efficiency (weak-strong; large-scale-small-scale; masculine-feminine). the brand name containing front vowel (giameli) was rated better (m=16,67) only when it comes with cognitive evaluation of a product (good quality-bad quality; expensivecheap; insufficient-abundant) as compared with gameli, but the differences on averages are not statistical significant. as a result of questioning the influence of front and back vowels within the brand name, i can say that a product containing back vowels [a] could be created when advertisers want to promote a brand that could be automatic assessed to characteristics such as efficient, faster, healthier, stronger, with larger packing. meanwhile, the brand names with front vowels [ie] could be linked to more expensive products with good quality, mainly addressed to men targets. when it comes to convey meanings and communicating characteristics, as the results of the present research revealed, romanian back vowels [a] possess an inherent meaning of womanliness while front vowels [ie], in this case the [ie] from giameli, are perceived as more masculine than word with [a], gameli. in this respect, our advertising brands by means of sounds symbolism: the influence of vowels on perceived brand characteristics 118 research is similar with previous ones (klink, 2000; yorkston & menon, 2004; lowrey & shrum, 2007; klink, 2009) regarding the effect of back vowels on brand characteristics. in romanian language, girls’ first names and feminine nouns often end in a. consequently, most subjects from our research assigned feminine characteristics to a brand name that contains an emphasis on the vowel [a]. on the other hand, we can explain these results taking into account that in the current sample females outnumber males. the larger presence of women (f=30) as compared to men (m=20) could led to the preference for more feminine words (in this case, gameli) and, consequently, to their meaning of womanliness. following the outcomes of present research, i obtained an effect of front and back vowels when the subjects assess the performance of shampoo that prevent hair loss. as i mentioned above, when it comes to convey meanings, the sound of back vowels [a] could be used more when marketers promote products that communicate characteristics such as efficiency, velocity, health. the back vowel could be also assessed with products with larger packing or special sailing such as extra quantity. meanwhile, the brand names with front vowels [ie] could be created for more expensive products with good quality, mainly addressed to men. to conclude, several limits must be taken into account, such as the short number of participants in the study and their similarities in terms of socio-demographics characteristics. further research on phonetic symbolism could investigate how other variables, for instance the type of product (food, electronics, automobiles, body care products) and the other socio-demographics (income, education) fit with the sounds as well as with the concept of the brand. nevertheless, the current study could be considered the second stage in researching the brand names effects on young consumers (duduciuc & ivan, 2014) and could be link to the similar attempts (chelcea, 2012) to develop the applied advertising research in romania. acknowledgements this paper was possible with the financial support of the sectorial operational programme for human resources development 2007-2013, co-financed by the european social fund, under the project number posdru/159/1.5/s/134650 with the title "doctoral and postdoctoral fellowships for young researchers in the fields of political, administrative and communication sciences and sociology". references avram, a. (1961), cercetări asupra sonorității în limba română, bucurești: editura academică. chelcea, s. (2012), psihosociologia publicității: despre reclame vizuale, iași, editura polirom. duduciuc, a., ivan, l., (2014). brand naming: sound symbolism, brand preference and brand performance, studies and scientific research. economics edition, 20, 79-85. fetscherin, m., alon, i., littrell, r., chan, a. (2012), in china? pick your brand name carefully, harvard business review, available at https://hbr.org/2012/09/in-china-pick-your-brand-name-carefully klink, r.r. (2000), creating brand names with meaning: the use of sound symbolism, marketing letters, 11 (1), 5–20. klink, r.r. (2001), creating meaningful new brand names: a study of semantics and sound symbolism, journal of marketing theory and practice, 9 (2), 27–34. https://hbr.org/search?term=marc+fetscherin https://hbr.org/search?term=ilan+alon https://hbr.org/search?term=romie+littrell https://hbr.org/search?term=allan+chan duduciuc 119 klink, r.r. (2003), creating meaningful brands: the relationship between brand name and brand mark, marketing letters, 14 (3), 143–157. klink, richard r. (2009), gender differences in new brand name response, marketing letters, 20 (3), 313-326. lindsdrom, m. (2005), build powerful brands through touch, taste, smell, sight, and sound, new york, free press. lowrey, t.m., shrum, l.j. (2007), phonetic symbolism and brand name preference, journal of consumer research, 34 (3), 406–414. osgood, c.e. (1964), semantic differential technique in the comparative study of cultures. american anthropologist, 66(3), 171-200. sapir, edward (1929), a study in phonetic symbolism, journal of experimental psychology, 12 (3), 225–239. slama-cazacu, t. ( 1999), psiholingvistica – o știință a comunicării, bucurești: editura all. smith, grant w. (1998), the political impact of name sounds, communication monographs, 65 (june), 154–72. wu, l., klink, r. r., guo, j. (2013). creating gender brand personality with brand names: the effects of phonetic symbolism, journal of marketing theory and practice, 21, (3), 319–329. yorkston, e., menon, g. (2004). a sound idea: phonetic effects of brand names on consumer judgments, journal of consumer research, 31 (1), 43–51. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 32 a humanising economic approach on competition policy or how the behavioral economics blends with “traditional economics” liviana andreea nimineţ “vasile alecsandri” university of bacau liviananiminet@yahoo.com abstract behavioral are crucial for understanding both the consumer’s attitude and firms’ attitude as well as for understanding the market outcomes. the past ten years brought a lot of attention from researchers and policy-makers on the behavioral economics issue. classical, traditional economic models rely on the assumptions of rationality and ordered preferences. behavioral economics explores interactions between demand and supply including information framing, the use of heuristics in decision-making and time-inconsistent preferences. the research on behavioral economics has led to an extensive debate about the relative merits of both traditional and behavioral economics. first of all we propose to highlight the advantages and disadvantages of behavioral economics versus traditional economics on a very sensitive issue: the competition policy. then we address market issues that can be solved by means of behavioral economics afterwards turning out attention to the remedies of behavioral economics and ,last but not least, the united kingdom successful model on the matter of competition policy. keywords behavioral economics; competition policy; consumers jel classification e03; k20; l1 introduction behavioral economics uses psychological perspectives in order to explain the importance of the behavioral and cognitive processes both on consumer behavior as well as in market outcomes. in the last ten years it received a lot of attention both from researcher s as well as from policy-makers. latu sensu, traditional economic models rely on the assumptions of rationality and ordered preferences. behavioral economics explores interactions between demand and supply given that “certain human cognitive and behavioral characteristics result in constrained (bounded) rationality and potential “biases in decision-making and outcomes”. these characteristics include information framing, the use of heuristics in decision-making, and time-inconsistent preferences. the research on behavioral economics has led to an extensive debate about the relative merits of both traditional and behavioral economics. a first question is whether behavioral economics is more accurate than traditional economics to predict certain market outcomes. it is not the case that behavioral economics has overthrown the existing paradigms in economics. this led to a continuous debate on the (relative) merits of traditional economics and determined vivid policy debates all over the world, in all economics related fields, including the competition policy one. nimineț 33 behavioral economics vs. “traditional” economics there are several ways to look at the question regarding behavioral economics versus classical, traditional economics. first of all are the “traditional” researchers that consider that the traditional economic model also explains the behavioral phenomena, so it brings nothing new. they argue that there already are traditional economic models that explain how: a) a market may fail to function where the buyers have less information about the product than the sellers do (asymmetric information); b) a buyer‘s demand for a good may depend not only on price but also on the demand of other buyers (network effects); and c) competition is less effective in markets where consumers face high search or switching costs. likewise, a consumer‘s irrational high willingness to pay for a branded good can be captured using traditional demand curves. second are the researchers that consider that behavioral economics is mainly relevant in respect to the individual consumers rather than to the companies. a part of the researchers argue that the consumer biases determine adverse outcomes and these could be better dealt with the “consumer protection policy” and not with competition policy. behavioral economics and competition policy given the above, a question remains: how much does behavioral competition affect competition policy given that in most of the cases we deal with business to business disputes. what is the importance of consumer biases in these cases? can the “traditional” competition tools cope with that or another perspective is needed? let us think of costs for instance. “traditional” economics explained all of it. or hadn’t it?!? well, behavioral economics surely can put what drives search costs on a different light and can explain, for instance, how product differentiation affects the behavior of a consumer. furthermore can explain how firms might be able to exploit consumer biases. this means added value and this is all research is about: bringing added value. make no mistake, in competition cases one cannot simply dived them into: traditional and behavioral ones. they all exist, both of them. the difference is determined solely by the way the investigations are conducted meaning that sometimes consumer biases and bounded rationality can be a major factor in the investigation and other times could be just one aspect among others to take into consideration. let us see what can affect the consumer behavior? surely product differentiation can do that in all the stages that form the demand-supply circle: access, asses and act. given that, firms can exploit this by pricing framework. depending on the pricing policy of the firm it may be beneficial or harmful for the consumers. consumers profile is also crucial: a sophisticated group of consumers are harder to please than the naïve ones. all these influence market power, market shares and even can change a little bit the definition of “classical” market. market issues and behavioral economics next we propose to see how behavioral economics changes the perspective of some “traditional” market definitions tools, such as the ssnip test. the ssnip test is mainly about how consumers respond to price variations rather than why do they respond to it. however, behavioral economics searches the reasons behind the consumers reaction so that to frame market definition analysis. given the known fact that the choice of the price base to which a price increase is applied as part of the ssnip test is crucial in obtaining a meaningful market definition the a humanising economic approach on competition policy or how the behavioral economics blends with “traditional economics” 34 behavioral economics brings a new element: is this question relevant where more than one price is involved (e.g.: bundled products, add-ons and drip pricing). in addition may it be relevant to consider price discrimination markets based on customer groupings into sophisticated and naive customers? the ssnip test applied to markets with drip pricing or secondary products can find “pockets of market power-narrow markets”, with market power/dominance for the provider. this means that the abuse of dominance rules could be a potentially relevant instrument to intervene in such markets in such a manner that it does not become over-intervention. abuse cases involving the direct exploitation of customers are extremely rare, and usually it all comes down to excessive pricing cases (opposed to other exploitative practices, for example reducing service quality). behavioral economics proves that companies may have a greater ability to exploit their customers (or, more specifically, exploit consumer biases) than traditional models let us believe. but what does it mean for competition authorities? should they look more closely at cases concerning exploitative abuse? or this is an issue of consumer protection and financial regulation policies? regarding bundling and tying, behavioral economics argues that consumer biases may reduce competition within a particular market or between markets. can this situation be seen as following the rules on abuse of dominance? first, a dominant position must be established and this depends on market definition and assessment of market power. secondly there are extremely rare this type of cases concerning the abuse of dominance regulation. all the restrictive agreement and mergers can be easily addressed using traditional approaches. still, the behavioral economics literature brings a new perspective both on consumer and on firm biases that can be used to add additional value to the traditional approaches. added value of behavioral economics first of all it is important to say that behavioral economics puts a new perspective on the matter of how surveys for both market definition and merger analysis should be conducted so that to obtain reliable information. psychology and behavioral economics literature have already brought their input in guiding and developing best practice in the use of surveys. secondly, there is great potential to use experiments in competition investigations. experiments are an important tool for behavioral economics literature and can be added to results obtained from econometric and survey analysis. this is still an unexplored area. behavioral economics can be used in cases dealing directly with market outcomes and competition concerns resulting from consumer biases. however important behavioral insight can be used in cases dealing with competition problems that aren’t mainly related to consumer biases. we all know that policy-makers need to better understand demand side of markets that is how consumers really behave. the key steps for that are: collecting empirical evidence and testing the remedies. below is a figure representing the interactions between demand and supply highlighting the weak points, or where the cycle may break down. nimineț 35 figure 1. demand –supply interactions source: office fair trading 2010 behavioral economics remedies behavioral economics seeks to correct these or to find ways of working with consumers` biases so that to determine a better course of action (which is more productive than trying to solve the biases). these remedies (liberal paternalist) do not deprive consumers of choice, and result in a better deal for a certain group of customers without making matters worse for other consumers. this type of policies should include: – simplifying information disclosure to the key points so that to overcome framing, inertia and information overload; – determining consumers to make a choice (forced choice) rather than let them remain inert or simply opt for the default; – using “default opt-ins or opt-outs”—whenever there is a superior outcome for consumers, the policy should propose to set that outcome as the default, without restricting consumers ability to choose an alternative. the main advantage of these interventions comes out of the cost: a much lower cost compared with heavy interventions (education programmer is one good example). another important advantage is that they maintain the consumers’ freedom of choose altering solely the access information frame. even if these interventions do not get through, no harm is done. these interventions aim to preserve consumers’ sovereignty. case studymarket investigation in uk an extremely useful instrument that combines features of competition policy and consumer protection and which may be better suited for these cases rather than the abuse of dominance regulation, for instance—is the market investigation instrument in the uk. these investigations are used in markets where competition seems to be ineffective, but still without obvious abuse of dominance or restrictive agreement.” remedies can be imposed on a forward-looking basis to address undesired competition outcomes, including those determined by consumer biases. other policies may wish to consider adopting such a regime, or seek other policy options so that to combine features of competition policy and consumer protection.” intervention can be by means of competition policy or consumer protection policy a humanising economic approach on competition policy or how the behavioral economics blends with “traditional economics” 36 the conceptual approaches, importance and techniques to asses market outcomes gathering empirical evidence on consumer preferences and behavior apply to consumer protection and financial regulation policies as much as they do to competition policy. for any policy instrument, we must keep in mind that not all adverse market outcomes of bounded rationality and consumer biases can be remedied by governments, partly because governments are subject to biases too. behavioral economics can surely enable better, smarter intervention and most of the times this does not mean more intervention, quite contrary. an analogy is needed: the same way a consumer can be affected by biases in his product purchasing process, state institution can be also affected in their decision making process. conclusions most of the behavioral economics literature deals with consumer biases as a natural extension of the analysis of humans’ cognitive and behavioral characteristics nevertheless, companies (or the people who work for them), be they suppliers or buyers in a market, may also be characterized by bounded rationality and biases, and this can also be relevant for competition policy. there is also another, to some extend less developed, strand of the literature that deals with firms’ biases. in addition, there is a strand of literature dealing with behavioral economics impact on competition policy mostly relevant for capital and securities markets. last but not least governments (or the people who work for them) are also characterized by bounded rationality and biases. this is a very important aspect to bear in mind when discussing remedy design and policy implications of behavioral economics in general. a valuable lesson from other economic policy areas can also be applied here: market failures, even if fully identified and understood, cannot always be effectively remedied given that there can be government failures also. by the same token, not all adverse market outcomes resulting from bounded rationality and consumer biases can be remedied by governments, in part because governments are also subject to biases. references armstrong, m., huck, s. 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(2010), economic literacy: basic economics with an attitude, rowman&littlefield publishers. studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 60 loneliness, social interactions and sense of humor. a quantitative study comparing romanian students and older adults ioana schiau national university of political studies and public administration, bucharest, romania ioana.schiau@comunicare.ro abstract the current study explores social and emotional loneliness, social interactions and humor in a sample of romanian students, departing from the schiau 2016 study that found the production and social use of humor to be correlated to a reduced social loneliness in a sample of romanian older adults. studies indicate that loneliness can be experienced at any age, and that humor can act as a coping mechanism with life’s difficulties, triggering positive emotions. the current study replicates findings in the literature, indicating that younger adults experience less loneliness than older adults, and use more humor than older adults. young women in the sample had a significantly more positive attitude towards humor than the men. this study has useful implications for a number of fields, including the economic and marketing sectors. the current student population represents a growing market, and studies indicate that the use of humor by service providers may intervene with any negative feelings that could cause clients to withdraw their engagement and cooperation in the service endeavor (locke, 1996). therefore, we argue that, for the retail and service sector, it is important to understand the different approach towards humor by the different age and gender groups discussed in this study. keywords social and emotional loneliness; humor; young adults; older adults; romania jel classification i31 introduction the current study departs from the study by schiau (2016) that found the use of humor in interpersonal communication to be correlated with a reduced sense of social loneliness in a sample of romanian older adults. humor can function as a coping mechanism, helping individuals adapt to various situations and difficulties, across the age groups, and there are indicators in the literature that humor is experienced and valued differently at different ages. despite the vast research literature that presents loneliness as one of the principal predicaments of ageing, there is strong evidence that loneliness also affects younger adults. therefore, replicating the study on a sample of romanian younger adults will help highlight age differences in terms of loneliness and social network correlates, and can offer new information regarding the impact of humor on perceived sense of loneliness for younger adults. will we find that young adults who use more humor in their social interactions also report feeling less lonely? how will the levels of loneliness reported by students compare to those reported by older adults? literature review loneliness and age a look into the classical literature on loneliness cannot overlook the 1973 contribution by robert weiss, who distinguished between “the loneliness of social isolation” and schiau 61 “the loneliness of emotional isolation”, two distinct feelings, brought about by two distinct situations: either the lack of a significant and supportive social network, or the lack of close, intimate relationships. in their seminal 1982 work, peplau and perlman theorize that loneliness is due to a discrepancy between the individual’s desired relationships and the relationships available to them. research has revealed that loneliness it can be culture-specific, can depend on socio-economic factors, age and gender. although loneliness is experienced among individuals of all ages, certain studies suggest older adults are particularly vulnerable to social loneliness (donaldson & watson, 1996). however, there are studies that point out loneliness is also experienced by other age groups (victor et al. 2002). a 2001 u.s. study found that young adult and older adult participants did not differ in terms of emotional or social loneliness (green et al., 2001); a 2004 u.k. study by berguno, leroux, mcainsh, and shaikh found that 80% of children aged 8-10 reported feeling lonely and isolated at school (2004); in a meta-analysis, pinquart and sorensen quote studies that find only 5% 15% of older adult study participants to declare ever feeling lonely (pinquart & sorensen, 2001; see also prince et al., 1997). loneliness can also be strongly felt by a student population that has moved away to university and living away from family members (wilcox et al. , 2005), throughout the process of adjusting to major life changes (rokach & brock, 1997) and dealing with a lack of financial capital (halleröd & larsson, 2008) – all situations characteristic to a young university student population. clearly, there is evidence in the research literature that the issue of loneliness across the lifespan requires further investigation. one explanation for these differences is that older adults face an array of difficulties brought on by the ageing process, which are correlated with a sense of loneliness: reduced social activity (aartsen & jylhä, 2011), an absence of friends and family (savikko, 2008; drennan et al., 2008), living alone, bereavement and widowhood, and lower education (tilvis et al. 2011, aartsen & jylhä, 2011). one other perspective is the socioemotional selectivity theory by carstensen (1995), who argues that older adults focus on the most important of their social interactions and are selectively limiting social interaction to close others. there are reasons to investigate the presence of loneliness in a romanian student sample, when taking into consideration the cultural and socio-economic climate of the current sample. a 2011 study found that the reported level of loneliness is consistently higher in eastern europe than for western european and northern european countries, across all age groups, with the former communist countries having the highest level of loneliness (yang & victor, 2011). this could be explained by the shift in society following the fall of communism. migration is also a phenomenon that could influence feelings of loneliness across all age groups. according to the official 2011 population census by the romanian national statistical institute, 3.6% of the total population was living abroad, especially adults of working age, which means that many younger adults may have limited direct contact with their parents who have moved abroad to work. humor and its relationship to age and loneliness humor has been regarded as a source of positive emotions, which can distract the individual from negative emotions and thus reduce said negative feelings (samson & gross, 2012). apter and smith (1977) theorize that humor can help individuals see a situation as less severe, and distance themselves from negative emotions. according to caron (2002), humor produces the positive emotion of mirth, which helps individuals cope with negative situations. there are several theoretical explanations regarding the way humor can function to reduce negative emotions. one theory is the cognitive distraction hypothesis, which proposes that humorous stimuli reduce the resources that loneliness, social interactions and sense of humor. a quantitative study comparing romanian students and older adults 62 individuals allocated towards processing negative emotions (strick et al., 2009). there is evidence in the research literature that humor is correlated with psychological health and resistance to stress, by enhancing perceived social support, according to the study by martin, puhlik-doris, larsen, gray, and weir (2003). individuals with a greater sense of humor also seem to be more socially competent, as studies by bell, mcghee, and duffey (1986), kuiper, grimshaw, leite, and kirsh (2004) and yip and martin (2006) indicate. the research literature also found age-specific differences in the use and appreciation of humor, which account for the relevance of investigating an age divide in terms of humor in romania. thorson, powell, sarmany-schuller, and hampes, for example found that younger subjects generally score higher than older individuals on humor scales (1997). ruch and colleagues, found that younger adults laugh more often and more easily than older adults (2010), appreciate verbal humor more and show more appreciation for everyday humor, as indicated in the study by proyer, ruch, and müller (2010). the current study aims to identify age-related differences in the use of humor, by comparing the findings to those obtained in a methodologically-identical study, carried out using romanian older adult participants (schiau, 2016). since this previous study found that humor can function as a mechanism to reduce social loneliness, the current study proposes to investigate the relationship between humor and loneliness in the same cultural space, but for younger adults. ruch, proyer and weber propose that findings on the use of humor for older adults could enable practitioners and professionals working with this age group to enrich daily communication (ruch et al., 2010). moreover, loneliness has been shown to be correlated with a lower income and weaker purchasing power for goods and services (halleröd & larsson, 2008). therefore, we argue that a good awareness of patterns of interpersonal communication and socio-emotional indicators for age and gender groups could positively impact the retail and service sectors. methodology participants and procedure selfadministered questionnaires were used on a sample of students aged 18 to 30 (n = 197). a sample of 25 men (mean age= 21, sd =2.53) and 170 women (mean age= 21, sd= 1.87) filled in the survey; two respondents did not indicate gender. the survey contained the multidimensional sense of humor scale (thorson & powell, 1993), the social and emotional loneliness scale for adults (ditomaso, brannen & best, 2004). participants also reported the frequency of interactions with family and friends and filled in socio-demographic data. for the purpose of comparison, the study used of the database for the schiau (2016) study, which used the same methodology on a sample of romanian older adults (n = 83; 25 older men, mean age= 67, sd = 6,13; 58 older women, mean age 68, sd = 6,78). measures and validation use of humor in interpersonal relationships. the multidimensional sense of humor scale (mshs thorson & powell, 1993) was used to assess participants’ self-evaluation on the use of humor in interpersonal relationships. sample items are “other people tell me that i say funny things”; “humor helps me cope”; “i like a good joke”; i can say things in such a way as to make people laugh”, and participants indicated on a 5-point likert scale how well each of the statements described them; from 1 (not at all) to 5 (very much). we used a back translated romanian version of the mshs, previously translated and validated on a population of romanian older adults in a study by schiau schiau 63 (2016). a principal components factor analysis was conducted, and produced four dimensions. however, items loaded differently on the four factors than they did in the original english language instrument (thorson & powell, 1993), and also differently from the sample of romanian older adults (schiau, 2016), suggesting an age-specific difference in the way humor is used and assessed. the four resulting factors were labeled production and social use of humor (cronbach’s alpha = .92); adaptive humor (cronbach’s alpha= .81), positive attitude towards humor (cronbach’s alpha= .61) and negative attitude towards humor (cronbach’s alpha= .63). the overall reliability for the mshs total scale was cronbach’s alpha = .87 sense of loneliness. this was measured by using the social and emotional loneliness scale – short version (selsa-s, ditomaso, brannen & best, 2004), an instrument that originally contains three subscales, the social loneliness subscale, emotional loneliness family subscale and emotional loneliness romantic; the last subscale was not used in the current study. sample items are “i feel part of a group of friends”; “my friends understand my motives and reasoning”; “my family really cares about me"; "i feel close to my family" and items were rated on a 7-point likert scale that ranged from 1 (strongly disagree) to 7 (strongly agree). the scale was validated for the romanian student population by using a back translated version. the items loaded on the two factors exactly as in the original english language scale, and the translated instrument showed very good reliability, the social loneliness subscale having cronbach’s alpha= .81 and the emotional loneliness scale having cronbach’s alpha=.89. frequency of social interactions. this was assessed by asking participants to rate their frequency of interactions separately for family and friends (i.e.: “how often do you see your family members?”), using a 5-point likert-type scale: from 1(every day) to 5 (once every few months or more rarely than this). participants also rated the quality/meaningfulness of the time spent with family and respectively friends (i.e. “how often do you have positive meaningful interactions with your family – for example, enjoyable conversations, common activities, sharing feelings?”), on a similar answer scale. results and discussion the experience of loneliness students in our sample reported rather low levels of loneliness, but experienced more social loneliness (mean score= 2.05, sd= 1.13), than emotional loneliness (mean score= 1.72, sd= 1.26). this could be interpreted as a sign that the adjustment to university life, to a completely new social network of friends and colleagues, perhaps to a new city, poses difficulties to students and results in higher levels of social loneliness; we could speculate that, in this situation, students come to rely more on their family ties, resulting in lower levels of emotional (family) loneliness. when investigating gender differences in terms of loneliness, the results show that women in the sample feel both less social and less emotional loneliness than the men; however, the difference is not statistically significant. individuals in the sample who felt less social loneliness were those who had more frequent interactions with friends (r(194)= .18, p= .008) and more frequent meaningful interactions with friends (r(194)= .34, p= .00). this is according to the theory of loneliness (weiss, 1973), and also shows that the research instruments employed by the study correctly measure the concept of loneliness. when comparing the results to those obtained on a sample of older adults, the romanian students reported significantly less social loneliness (mean score for students= 2.05, sd=1.13; mean score for older adults= 2.63, sd= 1.09; t=-4.05, df=160, p=.00) and significantly less emotional loneliness (mean score for students= 1.72, sd= 1.26; mean score for older adults= 2.05, sd =1.50; t=-1.90, df=274, p=.05) than the romanian older adults. compared to older adults, younger adults also reported loneliness, social interactions and sense of humor. a quantitative study comparing romanian students and older adults 64 significantly more frequent social interactions with friends, and more frequent meaningful interactions with friends. these finding are in line with other research studies that found older adults to report significantly higher levels of loneliness. it could be speculated that, in romania, this is an effect partly due to the societal shift following the fall of communism, such as schwartz, bardi, and bianchi indicate (2000). this will have left individuals in a state of mistrust towards others and having to adapt to new relationship patterns, suggest studies such as that of schwarzer, hahn, and schröder (1994). these changes may have primarily affected current older adults, who were in their prime in 1989, rather than younger adults such as those in the current sample, who were born after 1989. the use of humor in interpersonal communication analyzing the results obtained on the multidimensional sense of humor scale, the four dimensions of the humor scale correlate in an intuitive manner, suggesting that the instruments measure the concepts correctly. the production and social use of humor scale correlated with a positive attitude towards humor (r=.35, n=193, p= .00) and with adaptive humor (r(193)=.79, p= .00), the latter two dimensions also correlating positively amongst themselves (r(193)= .39, p= .00). intuitively, a negative attitude towards humor is correlated negatively with a positive attitude towards humor (r(193)= -.23, p= .001). we analyzed the gender differences for the student sample and found no statistically significant difference in the scores men and women obtained on the production and social use of humor and adaptive humor dimensions, the mean scores being almost identical. however, one interesting result was that men had a significantly lower mean score on the positive attitude towards humor scale (t=-3.6, df=191, p=.03), and a significantly higher mean score on the negative attitude towards humor scale (t=-2.6, df= 33.19, p=.01). young women in our sample generally view humor more positively than young men. when comparing the results to those obtained on a sample of older adults, for the dimensions labeled production and social use of humor and adaptive humor, the romanian students obtained a significantly higher score on the former subscale, indicating that they use more humor in their interpersonal communication (mean score for students= 3.54, sd= .78; mean score for older adults= 3.12, sd= .99; t= -3.74, df= 274, p= .00). this is in line with other studies, including by thorson, powell, sarmanyschuller and hampes that found older adults to score lower on the mshs. this is a difficult result to interpret, being that humor has also been revealed to be able to help older adults cope with the difficulties of the ageing process (dziegielewski et al. 2004) and that older adults are found to generally be more inclined towards positive affect (ready et al., 2011). because we lack comparative trans-national studies regarding humor use and appreciation scores, it is difficult to attribute this finding to a cultural or psycho-social context. however, this result is relevant for the retail and service sectors, which could keep this finding in mind when elaborating protocols for communication with younger or older consumers. previous studies found that the use of humor by service providers may foster client engagement and cooperation in the service endeavor (locke, 1996), and the findings of the current study indicate that younger adults are more prone to making use of humor in their interpersonal communication. this could be argued to be true for their transactions and purchase activities as well. we therefore recommend the use of humorous communication as a strategy more likely to succeed with younger adults. the relation between humor and loneliness schiau 65 when seeking to investigate the connection between humor and a sense of loneliness, we discovered that only a positive attitude towards humor correlated negatively with the sense of social loneliness, (r(192)= -.15, p= .03); no correlation was found between humor and emotional loneliness. however, when controlling for gender, we found that this correlation was strongest for the women in our sample, and was much weaker and not significant for the men. this is an interesting finding, suggesting that women who have a positive attitude towards humor and appreciate its positive effects in social interactions can also experience a reduced sense of loneliness. the findings were compared with those obtained on the sample of romanian older adults. for romanian older adults, a significant correlation was only for older women, and not for older men: the production and social use of humor was correlated to a reduced sense of social loneliness. however, for a younger category of adults, it seems that it is not the actual use of humor in interpersonal communication that can help ease a sense of loneliness. the less lonely individuals in the sample were those who had a generally positive attitude towards humorous interactions, jokes and humorous people. it could be speculated that women who appreciate humor are prone to have a positive outlook on life, and could therefore feel more optimistic about their social network and less lonely. the connection between humor and frequency of interactions with friends and family was also investigated. there were significant correlations between the production and social use of humor and the frequency of interactions with friends (r(192)= .24, p= .001), and the frequency of meaningful interactions with friends (r(192)= .27, p= .00). adaptive humor was significantly correlated in a similar manner, to the same two factors: frequency of interactions with friends (r(192)= .25, p= .001), and the frequency of meaningful interactions with friends (r(192)= .17, p= .01). this suggests that people in the sample who use more humor in their interactions and who can use humor as a mechanism to cope with different situations are also the individuals who can maintain a strong social network, providing them with support and companionship. conclusions the current study, despite the specific limitations of a quantitative approach based on self-report, has managed to bring a small, but interesting contribution to the literature on loneliness and humor in older age. firstly, the study replicated the findings of previous research, indicating that younger adults report experiencing less loneliness than older adults do, and report using more humor than older adults do. young adults also indicated that they meet their friends more often, and have more frequent meaningful interactions with them. further research on this topic could explore the main factors that trigger feelings of social loneliness, and should consider the possibility of a socioemotional regulation process, where older adults willingly decide to narrow down their social network and focus on their most important and close relationships. interestingly, for a romanian student population, the use of humor in interpersonal communication did not correlate with a reduced sense of social loneliness, as in the model found for romanian older women. rather, for students in our sample, it was the positive attitude towards humor that was connected to a reduced sense of social loneliness (the correlation being much stronger for women); participants with a more positive attitude towards humor were also those who had more frequent meetings and more frequent meaningful interactions with friends. there are grounds to speculate here that humor is experienced and appreciated differently by romanian young men and women, with young women having a significantly more positive attitude towards humor. this issue requires further investigation. loneliness, social interactions and sense of humor. a quantitative study comparing romanian students and older adults 66 consequently, a number of recommendations can result from the present study, to aid professionals in economic, retail and service sectors, as well as those working in marketing and advertising, when it comes to the communication strategies and protocols to be observed for specific age and gender groups. firstly, there are indications in the study that romanian young women have a more positive attitude towards humor than young men do – this could be an interesting insight for the advertising industry, where advertisements targeted at women rarely make use of humor. unique selling propositions directed at women consumers should take into account their willingness to engage with humorous messages. moreover, it seems that younger adults make more use of humor in their interpersonal communication than older adults do, according to the own reports of the participants in this study. this would lead to the assumption that humorous communication is a strategy that better fits young customers and consumers. this is a matter that should be researched further in subsequent studies, targeted specifically at investigation the reception and appreciation of humorous communication in purchasing contexts, client service protocols, or in advertising. as expected and suggested by previous research studies, the level of loneliness reported by older adults was higher than indicated by younger adults. this could also be due to cohort effects, where the current cohort of older adults have experienced life during the communist system. this has led to a mistrust in social relations (schwarzer et al., 1994) and, subsequently, increased levels of loneliness. and, most significantly for the economic sector, this age cohort was socialized with a particular set of social and communication protocols, and was deeply reliant on alternative economic systems (e.g. the black market or unofficial trades with other individuals). the design of a communication protocol for this age cohort should take these factors into account. references apter, m. j., & smith, k. c. p. 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(2006), sense of humor, emotional intelligence, and social competence. journal of research in personality 40 1202–1208, http://dx.doi.org/10.1016/j.jrp.2005.08.005 studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 6 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (ii) mihai deju the “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract the existence of groups of companies is a relatively new issue for professional accountants, the academic environment, as well as for regulatory bodies in the field of accounting in romania. in this context, the theoretical and practical aspects of the preparation of the consolidated annual financial statements generate extensive debates among accounting specialists, in order to find practical solutions to support the understanding and correct application of accounting regulations in the field of the consolidation of accounts. in two articles, we will present the accounting treatment of the disposal of securities held, within subsidiaries, associates, as well as in jointly controlled companies, by companies that prepare consolidated annual financial statements. the issue of disposal of securities held with entities whose individual financial statements are subject to consolidation will be presented in the form of case studies, structured as follows: elimination of securities held with affiliated entities (object of previous article); elimination of securities held in associates and jointly controlled entities (joint ventures) object of this article. key words: consolidation of accounts; removal of titles; affiliated entities; associated entities; joint venture. jel classification m41 the elimination of securities held in associated and jointly controlled entities the consolidation of jointly controlled entities as well as associated entities is done through the equity method, so that the interest of the securities holding company in such entities is presented in the consolidated balance sheet separately under the item “equity securities”. in the case of using the equity method, for the preparation of the consolidated annual financial statements, participation interests are initially recognized at acquisition cost and, depending on post-acquisition changes in the investor's share of the net assets in which he invested, their value will be adjusted. the share of the profit or loss of associates and jointly controlled entities, attributed to the interest in participating in these entities, is presented separately in the consolidated profit and loss account, under the item “profit or loss for the financial year related to associates and controlled entities in common”. if the equity method is applied for the first time to an associate or jointly controlled entity, that entity is presented in the consolidated balance sheet at the value of the proportion of equity of the associate or jointly controlled entity represented by that interest. the difference between the carrying amount of the securities (participation interest) held by the investor and his proportion of the consolidated entity’s equity deju 7 (associated or jointly controlled) is presented separately in the consolidated balance sheet or in its explanatory notes, to the equity elements that make up this difference. that difference shall be calculated on the date on which the equity method is first applied, and where that difference cannot be identified as belonging to assets or liabilities, it shall be treated in accordance with the rules applicable to goodwill. the case of participation interests acquired at the date of incorporation of the issuing company company m holds 20% of the shares of company c, securities that were acquired at the time of the establishment of company c, at the acquisition cost of 20,000 lei. company m exercises a significant influence over company c. on 31.12.n, company m prepares consolidated accounts and company c is retained in the consolidation perimeter. . at 31.12.n, the equity of company c recorded the following values: subscribed and paid-in share capital: 100,000 lei; statutory reserves: 50,000 lei; the result of the financial year: 10,000 lei. the determination of the share of company m in the net assets of company c: equity (net assets) company „c” total part that belongs to company m (20%) subscribed and paid-in share capital 100,000 20,000 statutory reserves 50,000 10,000 the result of the current financial year 10,000 2,000 total 160,000 32,000 by equivalence, at the end of year n, the securities held by the investor (company m) in the issuing entity (company c) will be valued in the consolidated balance sheet at a value equal to the share of company m in the equity of company c (32,000 lei). a) the equivalence of the issuing company, the disposal of the securities held and registration of the takeover of the share held by the investing company (recorded at the balance sheet level): 264 „equivalent c titles” = % 263 „shares held in jointly controlled entities” 106 „consolidated reserves” 121 „consolidated result” 32,000 20,000 10,000 2,000 c) reflection of the share of the result of company c that belongs to company m (corrections at the level of “profit and loss account”): 121 = 768/analytic 2,000 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (ii) 8 „consolidated result” „profit for the financial year related to associated entities and jointly controlled entities” note: if the investing company has acquired interest in the issue at the date of incorporation of the issuing company, their acquisition cost is also fair value, and we no longer need to use “goodwill” to reflect any differences between the acquisition cost and the fair value of the investment of the respective interests of participation. the case when the participation interests are acquired, at a date subsequent to the establishment of the issuing company, at a cost higher than the fair value of the respective securities (positive goodwill). on 31.12 (n-1), company m acquired 20% of the shares of company y, which it jointly controls with company z. at this date, the carrying amounts and fair values of the identifiable assets and liabilities of company y are equal, and the equity of company y has the following values: equity y at (n-1) values subscribed and paid-in share capital 100,000 reserves from re-evaluation 50,000 statutory reserves 30,000 total equity 180,000 the acquisition cost of the y participation interests is 40,000 lei. on 31.12.n, the result of company x is 15,000 lei, and the revaluation reserves of this company increase by 10,000 lei following a revaluation operation. on 31.12.n, company m prepares consolidated annual financial statements, and company y, over which company m exercises a significant influence, is included in the scope of consolidation. if the participation interests are acquired at a date subsequent to the formation of the issuing company, the difference in value between the acquisition cost and the fair value, at the date of acquisition of those participation interests, will be recorded as “goodwill positive / negative”, according to the case. in our example, we will consider that the positive goodwill, resulting from the equivalence of company y by company m, is amortized over a period of 4 years. a) the determination of goodwill as the difference between the acquisition cost of the participating interests held and the value of the net assets at the acquisition date (n-1): i) the acquisition cost of securities y (n-1) 40,000 subscribed and paid-in share capital y 100,000 reserves from re-evaluation y 50,000 statutory reserves y 30,000 net assets of company y evaluated at fair value (on 31.12.n-1) 180,000 ii) share of net assets evaluated at fair value on the date of the acquisition of securities (180,000 x 20%) 36,000 36,000 iii) goodwill (i-ii) 4,000 deju 9 b) the determination of the share of company m in the net assets of company y at the date of consolidation (31.12.n): equity (net assets) total part that belongs to company m (20%) subscribed and paid-in share capital 100,000 20,000 reserves from re-evaluation (50.000+10.000) 60,000 12,000 statutory reserves 30,000 6,000 the result of the current financial year (n) 15,000 3,000 total 205,000 41,000 c) the equivalence of the associated entity, with the reflection of positive goodwill and equity elements, related to the values recognized after the acquisition of the securities, taken over to consolidated equity (recorded at the balance sheet level): 45.000 41.000 4.000 % 264 “equivalent y titles” 2071 “positive goodwill” % 263 “shares held in jointly controlled entities” 105 “re-evaluation reserves ⃰ ” 121 “consolidated result” 45,000 40,000 2,000 3,000 * the part that belongs to company m from the reserves of company y, recognized after the date of acquisition of the securities ((60,000 lei-50,000 lei) x 20%). it can be seen that in the case of the consolidation of an associate or jointly controlled entity, only the part of the equity elements obtained after the acquisition of the securities will be taken over. in our case, 20% of the revaluation differences of 10,000 lei and 20% of the profit for the current year. d) the reflection of the share held by company m from the result of company y (corrections at the level of the “profit and loss account”): 121 “consolidated result” = 768/analytic “profit for the financial year related to associated entities and jointly controlled entities” 3,000 e) depreciation of goodwill on account of current result (4,000 lei x 1/4): balance sheet recording: 121 “parent company profit or loss” = 2807 “depreciation of goodwill” 1,000 “profit and loss account” correction: 6811 “operating expenses on depreciation of fixed assets” = 121 “parent company profit or loss” 1,000 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (ii) 10 note: the corrections at the level of the “profit and loss account” component of the financial statements, presented figuratively as equities, will influence the respective component according to the established model of the “profit and loss account”: the elements on the right side of equality will be added to the “revenue” part; the elements on the left side of equality will influence the “expenditure and profit” part. the case when the participation interests are acquired at a date subsequent to the establishment of the issuing company, and their cost is lower than the fair value at the date of acquisition of those participation interests (negative goodwill). on december 31, 2007 (n-1) company m acquires 30% of the securities issued by company c. the cost of the purchased participation interests is 30,000 lei. on 31.12.n company m prepares consolidated annual financial statements, including in the consolidation perimeter company c. the equity of company c, at the date of acquisition of the participation interests (n-1), respectively the date of inclusion in the consolidation perimeter by company m, recorded the following values: equity of company c on 31.12.n-1 on 31.12.n subscribed and paid-in share capital 100,000 100,000 reserves from re-evaluation 50,000 60,000 statutory reserves 20,000 45,000 the result of the current financial year 10,000 30,000 reported result 0 10,000 the value of net assets 180,000 245,000 a) the determination of goodwill as the difference between the acquisition cost of participation interests c and the share of the value of the net assets of company c, at the date of acquisition (n-1) of the respective participation interests by company m: i) the acquisition cost of securities c (n-1) 30,000 subscribed and paid-in share capital 100,000 reserves from re-evaluation c 50,000 statutory reserves c 20,000 the result of the current financial year (n-1) 10,000 net assets of company c evaluated at fair value (on .12.n-1) 180,000 ii) share of net assets evaluated at fair value on the date f the acquisition of securities (180.000 x 30%) 54,000 54,000 iii) negative goodwill (i-ii) -24,000 b) the determination of the share of company m in the net assets of company c at the date of consolidation (31.12.n): deju 11 equity (net assets) total part that belongs to company m (30%) subscribed and paid-in share capital 100,000 30,000 reserves from re-evaluation 60,000 18,000 statutory reserves 45,000 13,500 the result of the current financial year (n) 30,000 9,000 reported result 10,000 3,000 total of net assets on 31.12.n 245,000 73,500 c) the equivalence of the associated entity, reflecting the negative goodwill and equity elements of company c, related to the values recognized after the acquisition of the securities, taken over at consolidated equity (recorded at the balance sheet level): 73,500 264 “equivalent c titles” % 262 “shares held in jointly controlled entities” 105* “consolidated re-evaluation results” 106* “consolidated statutory reserves” 121* “consolidated result” 207.5 “negative goodwill” 73,500 30,000 3,000 7,500 9,000 24,000 * note: the shares of the differences realized in the respective elements after the date of acquisition of the participation interests were taken over at consolidated equity: for re-evaluation reserves: (60,000-50,000) x30%); for statutory reserves: (45,000-20,000) x30%); to the current result: 30,000 x 30%. d) reflection of the share held by company m from the result of company c (corrections at the level of the “profit and loss account”): 121 “consolidated result” = 768/analytic “profit for the financial year related to associated entities and jointly controlled entities” 3,000 e) transfer of “goodwill negative” to consolidated results according to the accounting regulations in force (point 551.1). 207.5 “negative goodwill” = 121 “consolidated profit or loss” 24,000 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (ii) 12 conclusions approaching some practical aspects regarding the preparation of the consolidated annual financial statements by the groups of companies in romania, through case studies, given that accounting theory and practice do not abound in effective solutions for applying accounting regulations in the field, we consider that it can represent an indicative guide for the application and understanding of those regulations by professional accountants, academic researchers and economics students. with the confidence that both accounting theory and practice can be permanently updated and improved, i am waiting for proposals or suggestions on the issues discussed in this article. references bogdan v., fărcane n., popa d.n., boloş m.i. (2011), raportarea financiară la nivelul grupurilor de societăți – repere contemporane, bucurești, editura economică. deju m.. note de curs “ contabilitate consolidată – bacău 2020 feleagă n., feleagă l. (2007), contabilitate consolidată. o abordare europeană și internațională, bucurești, editura economică. order of the minister of public finance no. 1802/2014 for the approval of the accounting regulations regarding the individual annual financial statements and the consolidated annual financial statements, with subsequent amendments and completions. studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 76 the operational risk management in the romanian smes roxana mironescu “vasile alecsandri” university of bacau roxy_mironescu58@yahoo.com ovidiu leonard turcu “vasile alecsandri” university of bacau ovidiuturcu@ymail.com costel ceocea “vasile alecsandri” university of bacau costelceocea@yahoo.comt abstract the prerequisite for the smooth functioning of the business risk management is the correct identification. basically, identifying business risks is fundamental to determine the optimal level of protection for a given activity. if the risk is underestimated, the protection will be insufficient to cover losses and, if overstated, the cost of protection will reduce the excess proceeds of the activity. the objective of this research was to identify the internal and external major factors which influence the present activities and the future of the smes from the north east region the method used in this paper work is based on a questionnaire applied to a sample of 120 top managers coming from various fields of activity, operating on the market for more than two years. the management of information and the data collection was conducted in the late 2013. in the first stage, a total of 35 risks was identified. the further evaluation of the results used the probability and the impact of the identified risks, based on questionnaires and by processing information from the documentation provided by the managers of smes taken under the analysis. keywords corporate governance; financing risks; financial predictions market risks; operational risks jel classification m10 1. introduction the study of risks is born, as a science, in the sixteenth century a period of time of renaissance for challenges and discoveries. today, risk management has penetrated the entire spectrum of activities, as a discipline that measures the degree to which the consequences of failures, the irregularities or mistakes lead to huge depreciation and disaster, damaging the rights and objectives of certain relevant stakeholders. as part of the investment risk control, specialists have discovered the full range of risks grouped in three main areas, these are the risks: credit, market and operational. the operational risk refers to the exposure of the financial losses due to downtime or lack of the correlation of the internal activities of an entity, due to events, trends or external changes that could not be known and preventable or to the internal organization and control system and ethical standards set excluding those events that are specific to market risk, credit risk and the strategic. elements of operational risk are determined by the existence of risks of personnel, procedural risks, technological and transaction control. the participants in investment and in operational processes are all agreed that operational risk cannot be completely eliminated and the work must be conducted such mironescu, turcu, ceocea 77 that its results be as small negative as possible. starting from the fact that any economic entity is created in order to profit from the production and sale of goods or services, the results are based on the organization and management of the entire process of capitalizing the available assets, borrowed or attracted. the operating with business assets, reflected by the indicator net income will fluctuate, depending on the entity's ability to market the produced goods and services. in the development of business, the company assumes the execution of multiple processes that have their own risks and during these operations they are subject to operational risk, caused by defects, errors, operating or technical operations. the definition of the operational risks has preoccupied, in that recent years, financial specialists who, meeting in the basel committee in 1998, have defined and framed at last the operational risk investment purposes named the protection against this risk: • avoiding the unpredictable huge losses; • avoiding the multitude of small and dangerous losses; • improving the operational efficiency; • improving the profit on the invested capital unit; • reduction of earnings volatility; • a more efficient allocation of the capital; • improving the customer satisfaction; • improving the managers’ preoccupation about the operational risks; • a better usage of the intellectual capital of the firm; • ensuring the company manager and shareholders that these risks are properly assumed. in a business environment, the action of conducting risk management contains the entire combination of strategies, processes, infrastructure and institutions able to furnish appropriate models that help control as strict as possible, so the risk may depend on its purpose, so that: • to correctly identify all the potential risks, the company may encounter; • to elaborate and develop adequate measurement and control procedures, establishing also the upper limit of the risk bearable by the company (risk appetite); • to use in the internal processes those methods and techniques the most advanced , used by the modern economic entities in the same field of activity; • to continuously adapt the operational system to the market conditions, in a transparent manner; • to pay attention to the existence of favorable clauses or to propose such favorable specific clauses for the titles transactions; • to apply and propose particular models conforming to those of the economic entity. table 1. the managing process of the operational risk environment strategy processes infrastructure models culture the activity purpose risk awareness the firm and its people the particular social and cultural training risk evaluation and action politics and procedures the lowest training level communications proposed values operating modus methodologies organization evaluation the acceptable measurement and control control and limits transparency and impartiality the operational risk management in the romanian smes 78 limit of the risk wages measuring the value system optimal compensation from the analysis of the risk management process, it seems that three fundamental components are required: • identification and risk assessment; • develop a strategy for responding to risk factors and; • the risk control. the work to identify business risk involves the identification of the risks that may arise during the conduct of an activity (still to be covered) and to determine their characteristics. the risks identification aims both the exposure of the property, of the rights and human resources and the potential hazards that may cause these exposures. the risks identification is accomplished in two stages: the risk perception, namely the awareness that a risk threatens the business project and the identification of the risk itself. the risk categories the most commonly used are: • technical risks: quality or performance, dependence on homologated technology, the requirement to obtain a certain performance; • project risk management: misallocation of time and resources, inadequate quality of the project plan, unrealistic or incomplete estimations, supply problems, poor communication techniques; • internal risks: the costs, time and goals are inconsistent, a lack of prioritization between the organizational projects, an inadequate or discontinuous funding, conflicts in funding or wrong resources allocation to different projects of the organization; • external risks: changes in legislation, market trends, labor disputes, country risks. 2. study on the main environmental risk factors which influence the smes from the north east region, romania. case study on the industrial smes the business risks assessment can be done by estimating two dimensions: (böcker, k., 2008). impact: it measures the impact of each risk and refers to the importance of the probable loss. values are given on a scale from 1 (negligible impact) to 4 (very high impact). probability: this establishes the possibility of occurrence of the event on a scale of 0 to 1. in the evaluation process, there are four categories of business risks: • strategic risks: these are risks that affect the company values and it can lead to bankruptcy, stagnation or fall in activity as a result of the inability of the organization to adapt itself to a specific competitive, constantly changing environment; these are specific risks including changes in customer priorities, threats from the traditional competitors and emerging changes in the brand perception, changes in the access to financial capital, to the human capital, new developments in technology, the global movement of the economic and geo -political factors, legal changes and regulation, quite numerous in the current economy; • economic risks: these risks include changes in the interest rates, in the exchange rates, commodities, shares and other property, in credit and other liquidity risks; mironescu, turcu, ceocea 79 • operational risks: there are risks related to key people and their career planning, the composition and the orientation of the board of directors, the orientation of the human resources and employment, information technology systems, accounting, auditing and control systems, regulatory compliance, design errors, productivity and disruptions in operations and supply chain; • hazard risks: the risk that determines the decrease of the non-financial assets because of the natural phenomena, physical damage of the real assets, the employees' actions, events that affect the liability, the product revocation and integrity, as well as the business interruption. in order to assess and accomplish an efficient risk management, both the small and medium organization and its managers must learn to approach the risks in terms of a holistic view and subsequently, to reduce the internal and/or external financing risks. (terry et al., 2001). the methods were based on the interpretation of the opinions and attitudes as results of a questionnaire survey, a systematic observation of the concrete phenomena and synthesis of some previous studies in this area. the analysis of the level of preparedness of small and medium companies for the risk management was performed using as the basis a questionnaire for gathering information with a number of 110 questions, the bimodal format (yes/no) addressed to key people (manager / responsible). by using of special computer applications afforded we obtained compliance rates for each category of risk and a risk general rate. the performances evaluation in the obtained results aimed to identify the following risks: financing risks, branding and good reputation risks, corporate governance behavioral risks and safety, ergonomy and accidents management/ losses/ employer responsibility, absences management, environmental management, producer’s responsibility, property conservation, business continuity, computer dependence, erisks and internet, human resources, key employees, political and credit risks. finally, we calculated an overall score (average weighted by the importance given to each category of risk) to see how the companies are able to manage the risks they face. to calculate the risk score of each topic, there were used different weights, given to each question in the survey, according to the extent considered appropriate to each question for the study in question. the method used in this paper work is based on a questionnaire to a sample of 120 top managers of the smes in the ne region, coming from the industrial activity, operating on the market for more than two years. the management of information and the data collection was conducted in the early 2013. the main objectives of the present study were: • what are the operational risks the managers coming from the analyzed smes recognize; • which is the evolution of the turnover of these companies, influenced by the identified risks; • what are the strategies for the future in these smes; the major objective of this research was to identify the internal and external major factors which influence the present activities and the future of the smes from the north east region in romania. both in romania and the eu’s countries, the smes are defined to be those companies that have up to 250 employees and generate a net turnover of 50 million euros. at the eu level, there are over 23 million smes (a figure recorded in 2011), which represents over 98% of all the european enterprises (http://ec.europa.eu/enterprise/policies/ sme/facts-figuresanalysis/performance-review/files/countries-sheets/2010 2011/romania_en.pdf.). in terms of their contribution to employment, the smes bring 67.4% of the existing jobs in the non-financial economy, inside the european union, in 2012, virtually maintaining the same level as in 2011 (67.4% ), but greater than 2010 the operational risk management in the romanian smes 80 (66.9%). the share of gross value added of the smes suffered a slight decline in the last two years, falling to an average of 58.1% of the aggregate e.u.’s economy. romania is well below the european average, concerning the development of the smes sector. if the european average amounts to 42 smes/1000 inhabitants, in romania there are around 24 smes/1000 inhabitants. according to a recent report made up by the world bank (doing business report, 2013), romania is positioned on the 68th place in the world range of countries, in terms of the facilities for setting up a company (a business start-up). even in such difficult conditions, between 2003 and 2008, there was a significant increase of the number of the romanian smes. then, a period of decline followed, between 2008 and 2012 and the number of such enterprises began to decrease. the economic crisis overlapped with an unstable economic framework and generated a cessation of activity, in less than two years, for about 250,000 smes in our country. looking at the data from the graphic 1, it can be concluded that a substantial fraction of smes in romania (52.30%) have faced some difficult problems in 20082012, because of the national and european economic decline. these firms are more vulnerable to contextual challenges than the large firms and only a percentage of 34.51% reported a substantial increase in their activity. graphic 1. dynamics of the surveyed smes between 2008 and 2012. source: adapted to the data from the smes white book, 2012, sigma house of publishing, bucharest in 2010, 13,846 small and medium enterprises offered jobs for 53,120 employees. in 2008-2010, suffering from the impact of the global economic and financial negative trends, the smes in this region experienced a downward trend. the largest decline was registered in the field of the construction industry and in trade. in 2010, the turnover of these companies decreased, compared to 2008, by approximately 30%. the unemployment rate, in 2009, stood at around 9%, almost double compared with the rate registered in 2007. 3. results and discussions the economic and the financial performances of these smes, in the present and for the future, must be analyzed taking into account some uncertainties and business risks and by the means of the activities that these companies intend to put into practice to fight them. according to a survey conducted in 2012 by the national council of the smes in romania, about 54% of respondents, as romanian small entrepreneurs, considered the current business environment as to be not favorable to the business development. this mironescu, turcu, ceocea 81 study revealed that the main difficulties faced by the romanian smes, in 2011, as they were the following: the decreased domestic demand, the excessive taxation, excessive bureaucracy, the inflation, corruption etc. it should be noted that the embarrassing conditions that affects the activity and economic performance of these companies are, as follows: • decline in the domestic demand; • excessive taxation; • bureaucracy; • excessive controls; • high borrowing costs; • delays in cashing invoices from the private companies; • corruption; • inflation; • difficult access to credit; • recruiting, training and motivating staff; • relative instability of the national currency; • non-payed invoices by the state institutions; • increasing wage costs; • poor quality of the infrastructure ; • competition made by the imported products; • decline in the export demand; • obtaining necessary consultancy and training company; • knowledge and adoption of the communautaire acquis. another survey, conducted by the national council of the smes, among the romanian small entrepreneurs, underlines that about half of them does not predict any activity, rather do not elaborate short, medium or long term business strategies. however, the small and medium firms in romania are ranked as to be the second in the central and eastern region of europe, in terms of optimism, linked to the effects of the financial crisis, after the austrian ones. thus, most of the small entrepreneurs from romania intend to expand its business, in a moderate manner, in the near future (c.n.i.p.m.m.r., (2012), 2012, cartea albă a imm-urilor din românia, the smes’ white book). in the first stage of our inquiry, a total of 35 risks was identified. the evaluation results using the probability and the impact of the identified risks, based on questionnaires and by processing information from the documentation provided by the managers of sme taken under the analysis, are shown in table risk assessment. (see table 1). table 1. table risk assessment risk description risk type impact factor [1-4] probability [0-1] risk factor priority strategic risk the occurrence of some unforeseen risks in the general strategy of the company, because of a lack of a risk strategy strategic 2 0,80 1,60 the operational risk management in the romanian smes 82 the risk of major fluctuations in prices the impact on the company's significant variations in prices and quantities of the raw materials economic 1 0,50 0,50 the risk of disputes suing the company for various reasons strategic 2 0,50 1,00 economic environment risk risks due to changes in the local, national and european economic environment economic 2 0,60 1,20 credit risk major financial risks because of macroeconomics changes economic 2 0,35 0,70 funding risk risks from the lack of a longterm strategy on financing risk strategic 2 0,50 1 the property risk risk due to possible disputes regarding the property operational 2 0,05 0,10 risk contestation procedures risks due to the failure in the organization and analysis of the employees’ and / or customers ‘complaints operational 2 0,40 0,80 competition risk risk due to the increased competition and because of the lack of a competition continuous monitoring strategic 1 0,50 0,50 minor risk medium risk critical risk risks in the red zone should be resolved first because they are the ones that can create great difficulties and are critical for the small firm, while the green zone have the lowest priority, as they are minor risks. the interviewed managers have appreciated that the occurrence of some unforeseen risks in the general strategy of the company, because of a lack of a risk strategy may be a critical risk, with a probability of 0.80 and an impact factor 2, while some significant risks, such as environmental economic risk, prices risk, funding risk, credit risk, competition risk, coming from the changing environment, have mironescu, turcu, ceocea 83 a low risk for our managers, with probabilities between 0.8-1.2, and impact factor 2. there are some comments to make about the managers’ economic education and their capacity to understand and face the business risks. the compliance rate for each chapter of the identified risk by the questionnaire is shown in table 2. chapters such as "environmental management" and "producer’s responsibility" had the highest rate (100%), while chapters "key employees" and "human resources" know the lowest rates (30% and 33%). table 2. the calculated scores by the questionnaire, for each chapter of risk chapter (type) of risks score the highest score % the financing risks 400 1100 36% branding and good reputation risks 800 1200 67% corporate governance 300 700 43% behavioral risks and protection safety 1650 2000 83% ergonomy and accidents management/losses/employer responsibility 550 600 92% absences management 650 700 93% environmental management 900 900 100% producer’s responsibility 400 400 100% property protection 950 1100 86% business continuity 400 500 80% computer dependence. e-risks and internet 750 1100 68% human resources 200 600 33% key employees 300 1000 30% political and credit risks 200 400 50% the overall score calculated as a weighted average based on the importance given by the evaluator to each chapter in question is set to 67.7%, and is considered a good value which denotes the capacity above average of the smes for risk management faced by the analized companies. the score of each risks chapter is colored according to the system for comparison of the scores method. it must be remembered that this rate is based only on a percentage score, so the criticality of each category should be evaluated based on the financial impact on business operations. however, it is recommended that all the questions in each category, regardless their importance, should be considered as potential mitigation recommendations for the future. the operational risk management in the romanian smes 84 fig. 1. the calculated scores for the topics in the questionnaire. colors for each chapter (type) of risks the financing risks branding and good reputation risks corporate governance behavioural risks and safety ergonomy and accidents management/losses/employer responsibility absences management environmental management producer’s responsibility property protection business continuity computer dependence. e-risks and internet human resources key employees political and credit risks legend 50.00% 30,00% 33,33% 68,18% 80,00% 86,36% 100,00% 100,00% 92,86% 91,67% 82,50% 42,86% 66,67% 33,36% 0,00% 20,00% 40,00% 60,00% 80,00% 100,00% 1 financing risks branding and good reputation risks corporate governance ergonomy and accidents management/employer responsibility absences management environmental management producer's responsibility property conservation business continuity e-business and internet human resources key employees political and credit risks behavioral risks and safety 0% 25% 26% 50% 51% 75% 76% 100% mironescu, turcu, ceocea 85 financing risk the score for this risk chapter is 37%. this score represents a fairly low rate, as a warning, indicating that financing risk is a subject that requires more attention paid by the managers of the smes. the main advantage in terms of risk financing that results from the questionnaire is that the company has a proactive policy in insurances strategy, which is reviewed at relatively short intervals, allowing for some rapid reaction to changes coming from the internal and external environment of the firm. however, this strategy lacks a longer time horizon, which gives it a weakness against future risks distant in time. fluctuations in the prices and quantities of commodities and currency have a significant, but not very big on the business activity, which increases the need for risk financing. the adoption of financial procedures to minimize exposure to such fluctuations would significantly reduce the size of these types of risks. at the same time, non-adopting a system of total cost of risk leads to over / under-sizing costs allocated to long-term financial risk. most of these weaknesses have as the primary source the lack of a budget allocated to risk management. branding and reputation risk the achieved score in this risk chapter is 67%. the reputational risks are very important to a company which, while working in the private sector, is listed on the stock market or has penetrated a new market if the company's reputation is in danger, the consequences can cause a disaster through loss of the customers’ confidence and the protection by the means of insurances is difficult for this type of risk. the business operations require close attention and a factual analysis in order to estimate the potential consequences. this risk chapter has a relatively high score due the attention to own image, which is reflected in the activities of the marketing department and its financial support, including copyright and media monitoring of a direct relevance for the company. making a financial assessment of the main official brand company product, alongside with the adoption of different ways of measuring the brand performances would increase the score of this risk chapter and would reduce the risk of reputation. corporate governance the score in this section is 42.86%, primarily due to the lack of training programs for stakeholders regarding the risk management and the poor developed information system to identify the key risks and their causes. the companies maintain a relative control of the risk at the level of senior managers, although there is a full and comprehensive implementation of the risk management process. as the implementation an integrated risk management will start and continue the effects will be beneficial in the long term. this enhances communication within the company on key risks and possible losses, with financial consequences and facilitate the alignment with the company goals and the overall vision, an aspect appreciated by us as being deficient. within the organization, the managers wants to maximize and ensure long-term profit, by taking account of risk. this objective is the major responsibility of the general manager of the organization. because the risk plays an important role in achieving this objective, the general manager or the executive director may be labeled as “final” risk managers and therefore, it is not unusual that the risk responsible inside the organization respond directly to the director general. behavioral risks and safety the score for this risk chapter is 82.50%. even if the score is high there are some important risks in this regard. the behavioral risk analysis is very important because in the recent years the companies has been involved in a reorganization without taking into account explicitly the impact on employees’ behavior. the factors that lead to behavioral risks that may affect the companies performances were only partially identified. there are a few methods of evaluating the effectiveness of operational procedures. the operational risk management in the romanian smes 86 certain elements of awareness for the workplace risks and the risk reduction program are: • the review and the analysis fo the accidents causes; • the review of the potential risks at work; • identify and eliminate risk; • an analysis for the probability and severity of risks; • advising. • ergonomics and accidents management / losses/ employer’s responsibility. • the score for this chapter is 91.67%, which is among the largest registered by the company. an effective ergonomic program should be able to demonstrate improvements in manual handling (or ergonomic improvements documented in other fields of activity) and reduces accidents caused by physical demands. this can be demonstrated by changing instruments, tools, changing workplaces, etc. leading to a reduction of the accidents before the implementation. one field where progress is needed is the correct management of the employees’ complaints. the importance of this chapter is justified given the serious challenges facing the northeastern region in finding and retaining the qualified staff cause of the massive migration of labor in the more developed countries of the european union. absences management the score is 92.86%, its high rate appeared under the existence of developed programs for the evidence of absences inside the companies. the lack of any strategy in absences management caused by health reasons however leads to the existence of a factor risk in this area that the companies would have to eliminate. environmental management the score of 100% in this chapter, which demonstrates that environmental issues are considered to be an important priority in the company’s vision, so they seek for sustainable development. the existence of an official policy on the environment, managed by responsible managers leads to a high degree of uncertainty and risk fighting, in case of the environmental accidents that might occur during the current activities. in the context of high environmental concerns arising from the romania’s integration in the european union this topic can be an advantage, when the smes will try to access the structural and cohesion funds for business development and economic competitiveness. producer’s responsibility the score for this risk chapter is 100%. most of the points of this chapter are mandatory responsibilities, assumed by the companies, to comply with the european rules, introduced when romania has been accepted as a member of to the european union. the continuation of the present way of doing things will maintain a low risk in the field. companies’ management should pay a continuous attention but, still, this risk chapter stands frequent changes in the regulations. risk of property protection the score for this risk sector is set at 86.36% as a result of the nine responses for questions in this section. the available property protection measures are vital to support the activity. considering this aspect, the properties are considered critical to company, that is why it has a complex system of the property protection, periodically evaluated, and modeled on the new risks arising in this critical area. risks that the company may encounter in this area are listed below: • fire and natural hazards such as earthquakes, floods, storm, lightning, etc.; • theft and intentional acts, such as fire, terrorism, bomb threats, etc.; • failure of machinery and electronic equipment; mironescu, turcu, ceocea 87 • employees’ and third parties’ accidents, either as visitors or contractors. business discontinuity and counteracting the risk of discontinuity considering the current approach of the business in the analyzed companies, the existence of a business continuity plan becomes essential. the score this risk chapter is 80%, which is above the average and it requires a special attention. a business continuity plan should include emergency responses, crisis management procedures, and communication and recovery strategies. preparing a business continuity plan is mainly aimed to reduce the impact of service interruption, regardless of the source generating the interruption and the resumption of the main functions of the organization, which is planned by identifying the necessary period to recover for the critical functions. computer dependence risk, e-risks and internet the outcome score is 68.18% under this risk chapter. the improvement of this score is considered to be necessary, due to the rapid expansion of the field of virtual trading of various goods and services at the national and european level. a special attention should be paid to such risk assessment, to the it training for the personnel, regarding emergency situations in the field, using the internet as a way of selling their products and implement safety procedures, by exploiting these opportunities human resources the score is set at 33.33% for this risk chapter. this value is below the average so it requires a special attention for the management of human resources. there are many risks in this section, where the most important are generated by the events of the last period in the activity of smes, including a large number of layoffs and reduced periods of activity the need to counter these types of risks should be analyzed as soon as possible as the involved human resources continue their work of in optimal conditions. key employees the rate for this risk section is 30%. according to human resources department, the key people are identified, but the strategy to cope with a loss of key employees is nonexistent. another important issue in order to solve the problems related to the financing of key employees is the recruiting for a substitute. the funds for the headhunting a successor must be in managers’ attention. in addition, managers have to pay higher wages if it will be necessary to recruit a new employee in the case of loss in key personnel political and credit risk the score is set at 50% for this risk chapter, which is mainly due to one of the critical risks of the companies, namely counterparty risk, where the companies have a revenue collection problem. the credit insurance is insufficient to fight against the very high degree of risk in this area, so that more radical and complex measures are necessary for a risk minimization. in recent years, the problems with the exportation have contributed to reduce this score. one of the most important challenges for the establishment, the growth and the survival of smes' remains their access to funding. though they provide 50 % of the jobs in most developed countries, the smes attract only a very small percentage of the total investments. the investments in the smes for the g20 are 574 billion, representing 6% of the total 9.250 billion in all the forms of investment and the vast majority of the funds are coming from the bank lending. only 17.5 % of the romanian think to initiate a business perspective on their own within 6 months. this percentage puts our country on the 56th position of 59 evaluated countries and ranked it on the last position among the countries with efficiency oriented economy. a percentage of almost a half (45.99 %) of the adult population of romania avoids to start up a new company for fear of a possible financial failure. according to certain analysis and reports, the smes sector in the bacau county recorded a slight recovery in 2011 and 2012. thus, although in 2011 the number of the the operational risk management in the romanian smes 88 smes has declined by over 4% compared to 2010, the turnover of these smes increased by 17% compared to 2010, while their gross profit grew by over 40 % compared to 2010. the number of employees working in the smes sector, in this department of the country, increased also, by almost 6 % compared to same period of 2010. so, the vulnerabilities of the smes are mainly linked to the limitation of the necessary resources, to the entrepreneurs’ financial decisions, to the changing business environment and to the fragile training for facing the various business risks. productivity and profitability of smes reveals the precarious situation of the smes in romania, in terms of efficiency and competitiveness. 4. conclusions. as a final conclusion, the sme sector in romania is far to be a solid and competitive segment of the national economy. in order to embed the smes sector in romania there is a need for a more rigorous approach, based on the implementation of business and risks management strategies. risk management is not an exact science, it is an art of approximation, whose quality increases with time and the spent capital. the small and medium companies do not have their history of risk management, so it is recommended to introduce integrated future investment in information systems for risk management and train the employees in the integration of risk management to enhance their work efficiency. references böcker, k. (2008), modelling and measuring business risk, pillar ii in the new basel accord – the challenge of economic capital. c.n.i.p.m.m.r., (2012), the smes’ white book, editura sigma, bucureşti, http://www.cnipmmr.ro/. comisia naţională de prognoză, (2012), the smes contribution to the economic growth present and future, http://www.cnp.ro/inovatie/docs/seminar-studii-24-022012/prezentare_studiu _3.pdf; http://www.insse.ro. european commission (2011), small business act fact sheet 2010/2011 romania, http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performancereview/files/countries-sheets/2010 2011/romania_en.pdf. european commission (2012), small business act fact sheet 2012 romania, http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performancereview/files/countries-sheets/2012/romania_en.pdf. international bank for reconstruction and development/the world bank (2012), doing business report 2013 – smarter regulations for small and medium – size enterprises, http://www.bnr.ro/, http://www.doingbusiness.org/reports/globalreports/doing-business-2013. terry, c.; webb, m.; griffith, m. (2001), the risk factor. how to make risk management work for you in strategic planning and enterprise, england, harrogate. online health information seeking during adolescence: a quantitative study regarding romanian teenagers studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 89 online health information seeking during adolescence: a quantitative study regarding romanian teenagers alina duduciuc national university of political studies and public administration alina.duduciuc@comunicare.ro abstract how internet is used by individuals from different age groups to keep their health in check has become one of the major issue of both academic researchers and policy makers. the topic derives mainly from 2000-2014 data which converge towards an internet accessing pattern as source of information regarding health. previous studies showed that teenagers are the main consumers of the internet and they often start surfing for online health concerns on social media (facebook, twitter) and popular engines (google, yahoo). the current paper describes how romanian teenagers (n=161, aged 14-19) browse for online topics to keep their health in check. based on a questionnaire, the data revealed that the internet is used to a certain extent by more than a third of the respondents for health topics and over half of them consider that the health related information helped them to achieve a good trim. overall, the research outcomes showed that the adolescents seem less interested in using internet for health information and sometimes challenge the credibility of online health content. keywords internet; icts; health; teenagers jel classification i19 objective of the study and premises the social-demographic group researched in this questionnaire-based study, whose results i will present hereinafter, is represented by romanian adolescents, aged between 14 and 19, most of them high school students who live and study in urban areas, who have a smartphone and a facebook account. this survey is the second stage of this research, after the qualitative one (duduciuc, 2014), and has as purpose to describe the way in which teenagers use new technology to access information related to health. the main focus of the research is to explore the impact online information on this topic (health and a healthy lifestyle) has on teenagers’ health and on the decisions they make, such as, for example, treating minor symptoms they could have at a certain point (headaches, for example). the study also explore the socio-demographic data regarding on: technology consumption (the number of devices used), the frequency with which the internet is accessed from the mobile phone, their residence, gender, participation to sport activities, the presence/absence of chronical diseases. at the same time, the survey took into consideration how the teenagers self-assessed their health, the type of health information searched online (treatments, disease symptomatology, the experiences of sick people, alternative treatment measures, news about epidemics) and their perception of the usefulness of the information found. online health information seeking during adolescence: a quantitative study regarding romanian teenagers 90 internet as health information source the data from 2000-2014 (flash eurobarometer 404, 2014; ólafsson, livingstone & haddon, 2013; mascheroni & ólafsson, 2013;, 2013; kummervold & wynn, 2012; pletneva, vargas & boyer, 2011; livingstone & das, 2010; edelman trust barometer, 2009 eurobarometer 2008; eurobarometer 58.0, 2003; kummervold et al., 2008; fox, 2006) converge towards an internet accessing pattern as source of information regarding health. the percentage of the population using the internet for health related topics grew from 42.3% in 2005 to 52.2% in 2007 (kummervold et al., 2008), whereas in 2014 it reached 90% of the eu population (flash eurobarometer, 404, 2014). with respect to the socio-demographical differences, young women are among the most active internet users using the internet as health source. in 2007, the internet was perceived as an important information source on health by 46,8% of the population, with a significant growth by 6.5% with respect to 2005. since 2007 and until 2014, the increased usage of the internet as online information source was overwhelming, growing by 44% with respect to 2007 (graph 1). figure 1. frequency of use of the internet to search for health-related information source: flash eurobarometer 404, 18-20 september 2014 it is interesting to notice, at the same time, how using the internet changed people’s traditional relationship with healthcare personnel and changed the interaction with doctors, on the whole. according to the health engagement barometer (edelman, 2009), doctors remain the most significant and valuable information source for patients. in france, a study dating from 2010 revealed that patients preferred to ask the doctor (89%) than to search the internet (64%) for a possible diagnostic (edelman, 2009, p. 8). on the other hand, an international study from 2006 showed that 88% of the users go back to doctors to validate the online information. however, the same percentage (88%) turns towards other sources in order to validate the information duduciuc 91 about doctors (edelman, 2009). other studies (eysenbach & köhler, 2002; fox, 2006) have shown that looking for health sources usually starts on search engines like google, yahoo, etc. nevertheless, the credibility of the search results is often questioned. it has also been shown that the search engine especially created for medical information and healthcare gives more credible results. using the internet as information source about health in the european union member states the eurobarometer (flash eurobarometer 40) made in the autumn of 2014 for the eu members states – european citizens’ digital health literacy: europeans becoming enthusiastic users of online health information – places the internet in a top of the population’s trust (n=26566) regarding the information sources on health topics. at least 90% of the subjects from 16 eu member states say that they are satisfied with the information they find on the internet on health. overall, the satisfaction is higher in sweden (97%), ireland (96%) and the uk (96%). moreover, at least three out of ten people declare themselves highly satisfied in cyprus, ireland and great britain (31%) and malta (30%). overall, one can notice dissatisfaction in latvia (19%), greece (16%), spain (13%), and germany (12%). thus, six out of ten europeans (60%) go to online sources when they look for health related information: eight out of ten europeans aged 15-39 and less than a third of those over 55 years old (http://ec.europa.eu/public_opinion/flash/fl_404_en.pdf). the credibility of online information about health. the respondents aged 40 or older (61-62%) tend to give more credibility to the information on the internet when they have to make decisions about their health, compared to those aged 39 or younger (55-57%). two thirds (62%) of those who know the subject (health) well trust the online health sources when they make decisions, compared with 43% who consider that they have little knowledge about health. the respondents with secondary education and with higher education are more prone to understanding the terminology used in online articles on health (86% versus 78%) and to distinguish between relevant and irrelevant online information (84% versus 75%) compared to those who dropped out of school at the age of 15 (http://ec.europa.eu/public_opinion/flash/fl_404_en.pdf). the frequency of internet surfing in romania (n=1006), as source of health related information for the question whether in the past 12 months they have accessed the internet to search for health related information, within the sample for romania the following distribution of the respondents’ opinions was registered: more than half of the romanians (53%) declared that they had never used the internet search functions for this type of specialized information, meaning over a tenth (12%) more than the european non-users (41% in eu). over a tenth of the romanian users accessed the internet to search for this type of information less than once a month while almost a tenth (9%) approximately once a month. the rate of regular users of health related information, if we can call them that, is of approximately 26% in romania which means that more than a quarter of those surveyed surfed the internet several times a month (13%) and several times a week (13%) in the past year for health related information (http://ec.europa.eu/public_opinion/flash/fl_404_fact_ro_en.pdf). general information about health or methods to improve health. those who use the internet for health related issues were asked about the type of information they are looking for. according to the structure of the flash http://ec.europa.eu/public_opinion/flash/fl_404_fact_ro_en.pdf online health information seeking during adolescence: a quantitative study regarding romanian teenagers 92 eurobarometer 404 questionnaire, there was a question (within the last 12 months, what type of health-related information have you look for on the internet?) for which the subjects could tick, at choice, two answers out of four. almost half of the respondents (49%) declared that they searched for general information or ways to improve their health. two fifths of those questioned (40%) searched for specific information about wounds, diseases, epidemics, illnesses or sickness, looked for information about the symptoms of a specific disease or illness, while approximately a third of the ones questioned (29%) looked for details about treatments or medical procedures. more than a tenth of the subjects (12%) used the internet to find a second opinion after seeing a doctor. with regard to the type of searched information, the percentages do not differ very much between romanian users and european users of medical information. teenagers’ use of internet for health topics the european and american teenagers generally search for health information either starting from search engines (fox, 2008), or from their friends’ posts on facebook (kummervold et al., 2008, p. 8). in the united states of america, youngsters aged between 18 and 24 represent the age category that most probably starts searching online for health information using a search engine. three quarters of the american youth (74 %) aged 18-29 started from a search engine, compared to 65% from the age group 30-49 (fox, 2008, 6). in eu member states, youngsters tend to use social networks to inform themselves about health. using the “like” button can influence the youngsters’ decisions regarding health if the online material containing medical information ends up being discussed with the “friends” on the social network (in the case of facebook). as i have seen from the results of the survey, “only a few participants mentioned that they use forums and social networks to search for information about health” (kummervold et al., 2008, p. 29). methodology the survey participants in order to answer the research questions, i have chosen the questionnaire-based survey. thus,184 students participated in the survey from two academic high schools in bucharest and ilfov county, namely radu popescu academic high school (ilfov county) and “n. kretzulescu” economic high school (bucharest). the questionnaire was filled online during it classes, in the interval november-december 2014. the average age of the respondents was 16. the investigated poll was not representative in relation to the total number of the population from the same age group in romania, but allowed us to prove the patterns of searching for online health information during adolescence. the frequency of online search for health information over a third of the respondents have searched for health information on the internet (often – 24%, always – 11%). at the other extreme there are around 11% of these who have never searched for online information about health. more than half of those surveyed (53%) have surfed the internet for health related topics (table 1). table 1. how often have you searched for health related information on the internet? (n=161) n % (5) never 17 10.6 duduciuc 93 (4) rarely 31 19.3 (3) sometimes 55 34.2 (2) often 39 24.2 (1) always 17 10.6 (99) i don’t know/i won’t answer 2 1.2 total 161 100.0 health related topics searched on the internet and their frequency further on, our survey measured what health related topics adolescents are searching for on the internet, and how frequently they access them. the adolescents included in the survey rarely or sometimes search online for information about healthy food (57%), how to remove pimples (37%), how to have a beautiful complexion (43%), about menstrual cramps (32%), about diets (39%), about sexually transmitted diseases (52%), about contraception (45%) and about how to tone up their body (43%). the frequency of the type of health related information accessed. overall, teenagers seem to be less interested in accessing some health related information on the internet, as shown in the distribution of the answers for question 12 in the questionnaire. they rarely read on the internet about how certain diseases are treated (67%), about how a certain disease manifests itself (60%), about stories of people who dealt with the same health issues (57%), natural methods to treat diseases (48%) and news about infectious diseases widely spread around the globe (54%). the highest interest was for information about how a specific disease manifests itself, information which is often accessed on the internet by teenagers (27%). the perception on the usefulness of health related information accessed online over half of the surveyed subjects consider that the health related information they accessed and read online helped them to a small extent with a health problem they were having at a certain point in time. conversely, 33% appreciate that the online information on health was useful to a great extent for a health problem, while 13% do not know what to answer to this question (table 2). table 2. the distribution of the answers to the question “in your opinion, to what extent did the information you read on the internet help you with your health problem?” (n=159) in your opinion, to what extent did the information you read on the internet help you with your health problem? n % to a very small extent 20 12.6 to a small extent 61 38.4 to a great extent 52 32.7 to a greater extent 6 3.8 i don’t know/i won’t answer 20 12.6 total 159 100 conclusions the questionnaire-based survey, whose results were previously mentioned, allows us to summarize some facts. online health information seeking during adolescence: a quantitative study regarding romanian teenagers 94 firstly, the internet is used to a certain extent by adolescents in order to inform themselves about health and a balanced lifestyle. more than a third of the respondents have looked for information about health on the internet (36%, out of which: often – 24%, always – 11%). at the other extreme there are 11% of them who have never searched online for health related information. more than half of those surveyed (53%) have surfed the internet for health related topics. secondly, the perception on the credibility and usefulness of online health related information is often debatable. the teenagers surveyed both in the first stage (n=22) (duduciuc, 2014), and in the questionnaire-based stage (n=161), challenge the credibility of the online information on health. more than half of the surveyed subjects consider that the health information they accessed and read online helped them to a small extent with a health problem they had at a certain point in time. conversely, 36% appreciate that the online health information was useful to a great extent for a health problem, whilst 13% do not know what to answer to this question. overall, the adolescents seem less interested in accessing some health information on the internet. these seldom read on the internet about how to treat certain diseases (67%), about how a certain disease manifests itself (60%), about stories of people who dealt with health issues (57%), natural methods to treat diseases (48%) and news about infectious diseases widely spread around the globe (54%). the highest interest was for information about how a specific disease manifests itself, information which is often accessed on the internet by teenagers (27%). references duduciuc, a. (2014), teenagers and the use of new technologies (icts) for health information, studies and scientific research. economics edition, 20, 67-78. edelman. (2009), health engagement barometer. health influence in the era of public engagement (2009), available at http://www.edelman.com/assets/uploads/2014/01/2009-trust-barometerglobal-deck.pdf eurobarometer (2008), towards a safer use of the internet for children in the eu: a parents’ perspective, luxembourg, european commission, available at http://ec.europa.eu/public_opinion/flash/fl_248_en.pdf eurobarometer 58.0 (2003), european union citizens and sources of information about health, available at http://ec.europa.eu/health/ph_information/documents/eb_58_en.pdf europe in figures – eurostat yearbook 2014. (2014), information society statistics households and individuals, last update june 2014. available at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/eurostat_yearbo ok. eysenbach, g., köhler, c. (2002). how do consumers search for and appraise health information on the world wide web? qualitative study using focus groups, usability tests, and in-depth interviews, bmj, 324, 573-576. available at: http://www.bmj.com/content/324/7337/573.long. flash eurobarometer 404. (2014), european citizens’ digital health literacy, available at: https://ec.europa.eu/digital-agenda/en/news/europeans-becomingenthusiastic-users-online-health-information. fox, s. (2006), online health search, available at: http://www.pewinternet.org/files/oldmedia/files/reports/2006/pip_online_he alth_2006.pdf.pdf kummervold, p.e., wynn, r. 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(2013), mobile internet access and use among european children, initial findings of the net children go mobile project, milano: educatt. http://www.netchildrengomobile.eu/reports/ ólafsson, k., livingstone, s., haddon, l. (2013), children’s use of online technologies in europe. a review of the european evidence base. lse, london, eu kids online. pletneva, n., vargas, a., boyer, c. (2011), d8.1.1. requirements for the general public health search, available at www.khresmoi.eu spadaro, r. (2003), eurobarometer 58.0 (2003). european union citizens and sources of information about health, available at http://ec.europa.eu/health/ph_information/documents/eb_58_en.pdf who report. (2014), health for the world’s adolescents is a world health organization. a second chance in the second decade. available at http://www.who.int/adolescent/second-decade. secondly, the perception on the credibility and usefulness of online health related information is often debatable. the teenagers surveyed both in the first stage (n=22) (duduciuc, 2014), and in the questionnaire-based stage (n=161), challenge the c... (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 24, 2016 http://sceco.ub.ro 6 the algerian economy governed by black corruption: an empirical study from 2002 to 2015 midoun sissani faculty of economic, management and commercial sciences, university ibnkhaldoun, tiaret (14000), algeria sissanim@gmail.com abstract the main objective of this paper is to highlight the concept of corruption and analyses our cumulative knowledge about corruption’s effects on the economic growth in algeria during the period 2002–2015. this article emphasizes the major source of corruption and how the quality of institutions and government policies could mitigate the risk of corruption or increase it. the findings also show the great role of free media in most developing countries which created a new tendency to talk about the effects of corruption especially in recent years. using a multiple regression model, we find that a 1% decrease in the corruption index cpi level increases the gdp growth rate by approximately 2,005%. the analysis also revealed that there is a negative relationship between the country rank and the economic growth. finally, the results suggest that more economic freedom, social and political stability lead to less corruption. keywords corruption; political economy; government policy jel classification d73; g28; p48 1. introduction no doubt that algeria and a lot of countries around the world are still suffering from corruption which is rampant in the poorest countries and represents a great danger on the cultural and moral values. besides, it slows down the economic growth and has a big influence on the continuity of all reforms suggested or planned by some developing countries. algeria is among the countries sunken in corruption, especially with the slump of oil costs which recently plunged back below 40 dollars in 2016. the algerian economy trends towards a harsh financial crisis which may not only consume all the foreign currency reserves during the three coming years at most and may push the weak government to go back to borrowing as well. unfortunately, corruption is always there where there is an absence of public ethics and the absence of governance. since the oldest history, corruption has existed under different names such as frauds, bribes, robberies, the squandering of public money besides the influence peddling which is based on illegal practice or political influence to get advantages and preferential treatment in exchange for money. this phenomenon has led algeria’s government to the dustbin of history and most parliaments are conspirators and corruption has extended over a lot of public sectors. policy makers in algeria are also sinking increasingly in corruption. in contrast, this situation may have a negative effect on the distribution of the algerian incomes. without transparency and accountability, corruption is growing up and viewed as a modern ethic in the psychological and mental characteristics of any algerian. many studies have shown the importance of studying corruption and have tried to find the most important factors which push people to enter in corrupt activities. in our study, we try to focus on sissani 7 corruption which runs rampant in algeria. this cancer is slowly killing social ethics and the economic growth. 2. literature review definitely, globalization has contributed to the wide spreading of corruption especially because it was founded on the removal of borders and the protectionist laws. both cross-border business and multinational companies have increased corruption opportunities in the world under a suspicious policy umbrella. eventually, a lot of states in the world and among them, algeria, have encouraged implicitly corrupt politicians and the owners of wealth in smashing the society ethics and this phenomenon has led to public disgust. the literature has pointed out the negative impact of corruption on economic growth, stability, social morality, and especially concerning the legitimacy of the state and the way political power is exercised. a. (jain, arvind k, 2001) according to this researcher, corruption represents a major threat to economic development and using a survey he tried to identify the different factors that deter or facilitate and favour corruption and he made some suggestions to reduce corruption. b. (warren, mark e, 2004). the author provided a moderate concept of corruption in his paper and he demonstrated that corruption is the inappropriate use of power over collective decisions and here democracy depends on the voters and political opposition in the case that they can replace corrupt leaders or not .so, the degree of awareness among voters, associations and political parties and they represent the seed which leads to the failure or the success of democracy itself. on other hand, corruption creates inefficiencies in deliveries of public services and the shifting of these services to other sectors to benefit from bribes. c. (ghulam shabbir and mumtaz anwar, 2007). in their article entitled the “determinants of corruption in developing countries”, they noticed that corruption is one of the most dangerous phenomena that destroy the institutional foundation and the government social policy and it may lead to the public and private misallocation of resources. they also mentioned that corruption represents a real challenge for policy makers and they divided the corruption determinants into two parts: economic and non-economic ones and they found out that the most important determinants that matter more are the economic determinants such as economic freedom, education and globalization. d. (alt, james e., and david dreyer lassen, 2003). they focused on the relationship between corruption and institutions in the united states. using a regression model in their article “the political economy of institutions and corruption in american states” they tried to make the point theoretically and empirically and they concluded that political institutions have a great role in explaining the prevalence of corruption. e. (drury, krieckhaus and lusztig, 2006). he analyzed the impact of corruption in democracies and non-democracies in the period between 1982 and 1997. he concluded that corruption can freeze the economic growth in authoritarian regimes. f. (axel dreher friedrich schneider, 2010). this article is among the best articles focuses and emphasizes on the need of the state’s intervention in the economy to combat the shade economy. it also analyzes the relationship between the shade economy and corruption. in this article, the researchers find a strong significant impact of the shadow economy on corruption especially in low income countries. however, there is no robust relation in high income countries. the algerian economy governed by black corruption: an empirical study from 2002 to 2015 8 3. corruption definition there is no precise or universally accepted definition of corruption but there is a sort of consensus that corruption has a detrimental effect on the social welfare and the economic development. various definitions are found according to different approaches and schools. world bank defines corruption as: “the abuse of public office for private profits when an official accepts solicits or extorts bribes” (1997: 8).” this means that corruption is the misuse of entrusted power for private gain. in the same context, the united nations development programs (undp) defined corruption as accepting money "… for doing something that one is under the duty to do or that one is under the duty not to do " (2000: 167). on the other hand, corruption is a sort of deviation from the formal duties of the public role and it refers to the acts in which power and influence of the public office is used for personal gain. 3.1 corruption typology and measurement 3.1.1. corruption typology corruption can be classified into numerous main forms: grand, petty and political corruption. researchers have provided many classifications but these classifications remain subjective and they depend on their impact on the economic or social field (okew, 2015). 1) grand corruption: it is a crime at a high level of government that distort policies or the central functioning of the state. this kind of corruption increases the poverty of thousands or millions of people in any country where corruptors, especially the country leaders, benefit at the expense of the public good. 2) petty corruption: it refers to the engagement in some activities that are far from the social norms and the abuse of entrusted power by lowand mid-level public officials in their interactions with ordinary citizens, who often try to access basic goods or services. 3) political corruption: is exploitation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse to increase their position and sustain their power, status and wealth. 4) systemic corruption: very widespread in algeria and encouraged by the system itself and this sort of corruption dominates the major processes and institutions of the state. corruption becomes an essential and integrated aspect of the society. 5) administrative corruption: includes bribery and favoritism and the civil servants try to live beyond their legal income. this kind of corruption emerges when the society loses its behavior and cultural values and the civil servants became a tool that businesses can buy to pay lower taxes or to gain access to low-level procurement contracts. however, there are some searchers who divided corruption into bribery, embezzlement, fraud and extortion. table 1 forms of corruption bribery bribery is the act of promising, giving, receiving, or agreeing to receive money in return for preferential treatment or government services. embezzlement embezzlement is to steal money despite being entrusted to take care of it. it occurs when someone who was entrusted to manage or monitor someone else’s money or property steals all or part of that money or property for the taker's personal gain. sissani 9 fraud economic crime and deception practice that involves some kind of trickery, swindle and deceit in order to gain unlawful or unfair advantage. it is the process of cheating to obtain financial gains. extortion extortion occurs when one person forces another person to do something against his will, generally to give up money or other property, by threat of violence. nepotism and cronyism nepotism is favoritism in the public administration, appointments and secure contacts or securing contracts to relatives, family ties and close relationship regardless of whether it is deserved or not. however, cronyism is an unfair practice through offering jobs and other advantages to friends or trusted colleagues by powerful politicians. source: prepared by the author from different sources 3.1.2. measurement of corruption corruption is a very sensitive topic and it is very hard to measure it. thus, we have to look for a range of control mechanisms in order to reduce corruption. these measures are as follows: a. corruption perception index: the corruption perceptions index (cpi) is among the best tools in measuring corruption. it was launched in 1995. in 2011 cpi measures the perceived levels of public sector corruption in 183 countries and territories around the world and actually the (cpi)ranks 200 countries on a scale of zero to 10, with zero indicating high levels of corruption and 10 indicating low levels. this definition encompasses corrupt practices in both the public and private sectors (seligson, 2002). b. global corruption barometer: the global corruption barometer is a public opinion survey. the barometer deals with citizens, who faced, were exposed or suffered from petty bribery and their experience with institutions and public services most affected by bribery. it also deals with individual and peoples experiences with corruption in their countries. this index was created in 2003 and it measures corruption in more than 100 countries in the world. it became one of the largest cross-country surveys which collected the general public’s views on corruption, especially people’s experiences with corruption. in 2010 and 2011 the barometer succeeded to interview more than 100,000 people. c. political risk index: the country risk guide comprises 22 variables in three subcategories of risk: the economic risk, financial risk and the political risk. the last one assesses corruption and other components such as the government stability and ethnic tensions etc. the factors that facilitate corruption are:  politic instability;  weak governance;  educational weakness and the non-respect of ethics;  the justice system;  weak institutions;  absence of accountability. 4. algeria’s efforts to combat corruption understanding corruption in its proper context is not easy because its determinants and its intensity differ from a state to another and from a geographical place to another. concerned about the threat posed by corruption, algeria introduced some laws and legislation to reduce the impact of corruption and prevent the theft of the public money. algeria took part in and signed the united nation convention against corruption in 2004 issued the 2006 law to fight against it through specialized services. unfortunately, http://cpi.transparency.org/ the algerian economy governed by black corruption: an empirical study from 2002 to 2015 10 corruption is widespread in most government institutions and the media have published recent reports about politicians and governmental leaders’ scandals after using their political power abusively to gather private enrichments. nevertheless, the long civil war between 1992 and 2000, military influence, corruption, and cronyism have remained prevalent up to this day (sissani and belkacem, 2014). although the legal framework criminalizes a large range of corruption offenses, the algerian economy is still suffering from this danger called corruption and if we have a look at the chart (1) we can see obviously that algeria was in the 84th rank according to the corrupt national transparency out of 175 countries in 2006 and scored 3.1 in the corruption perceptions index. however, after making some important economic and legislative reforms, the corruption did not decrease but it intensified and algeria’s rank became 105 out of 175 countries in 2010. in 2011, its rank worsened and occupied the 112th rank out of 175 countries in the world. once again, in 2014 algeria received a score of 3.6 out of 10, which places it on the 100th place. fortunately, it has improved its ranking in 2015 and occupied the 88th place by obtaining a 3.6 out of 10 in the international corruption index. chart 1 algeria corruption index from 2006 to 2015 source: trading economic, from: tradingeconomics.com/algeria/corruption-rank no doubt that international companies which are operating or intend to invest in algeria face the problem of bribes and nepotism and they often find a great political and economic risk (sissani and belkacem, 2014) while dealing with the public services. the corruption file emerged with the embezzlements and bribes linked to the state company called “sonatrach” in 2015 and which revealed the implication of officials and ministers in the corruption scandal and some economists estimate that corruption has harvested more than $ 30 billion dollars during the past ten years. 5. data and methodology the dependent variable in this study is the gdp per capita. the independent variables are: corruption perception index (cpi), the inflation rate, international corruption rank, unemployment (percent) and the poverty rate. the period from 2002 to 2015 is sissani 11 chosen to study the relationship and the impact of corruption and other economic variables on the growth rate in algeria. both the corruption index and rank are obtained from transparency international web site. we use 14 observations in our regression and this may pose some problems with the observation size but we can avoid them with other tests. in our study, we will use the ordinary least squares method (ols). the study model is formulated as follows. the dependent variable is ‘gdp per capita’ and the data were extracted from the african statistical year book issues (2013, 2014, 2016). however, the independent variables are obtained from (cpi) and the algerian governmental agencies sites (cnes and ones) and they are explained below: gdp rate = β0 + β1. x1 + β2 . x2 + β3 . x3 + β4 x4 + β5 . x5+𝜺𝒊 where:  β0= the intercept.  β1 to β5 = the partial slope coefficients.  rank (x1): international corruption rank.  cpi (x2): international corruption index.  inf (x3): inflation rate (percent).  unemployment (x4) : unemployment (percent).  poverty rate (x5): poverty rate. we focus our investigation model on corruption (cpi) and the international corruption rank and their impact on gdp in algeria. εi is an error term that captures measurement errors and unobserved determinants of output. table 2 data inserted in multiple linear regression (mlr) modal source: transparency international reports (2002 to 2015) african statistical year book, afdb, 2016, p. 56, from: http://www.afdb.org/ * we removed (x4) which represents the unemployment variable and (x5) which represents poverty rate because when we run the regression with these two independent variables, an insignificant model results. see table (3). years x1 rank x2 cpi x3 inf x4 unemp x5 poverty rate y gdp growth rate 2015 88 3.6 4.8 11,20 11,2 3,9 2014 100 3.6 2.9 10,60 7 3,3 2013 94 3.6 3.3 9,8 5,03 3,8 2012 105 3.4 8.9 11 5,20 2,6 2011 112 2.9 4.5 9,80 5 4,0 2010 105 2.9 3.9 10,00 6,2 2,4 2009 111 2.8 5.7 10,20 5,1 3,5 2008 92 3.2 4.9 11,30 5,2 3,2 2007 99 3.0 3.7 13,88 5,7 4,6 2006 84 3.1 2.3 12,30 23 5,4 2005 97 2.8 1.4 15,75 5,7 5,1 2004 97 2.7 4.0 17,70 6,4 5,2 2003 88 2.6 4.3 23,71 8 6,8 2002 96 2.7 1.4 25,66 8,5 4,1 http://www.afdb.org/ the algerian economy governed by black corruption: an empirical study from 2002 to 2015 12 table 3 the coefficients of the estimated model coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 6,557 5,653 1,160 0,280 rank -0,039 ,048 -,274 -,810 0,442 cpi -0,014 ,023 -,162 -,603 0,563 inf -0,024 ,179 -,038 -,136 0,895 unemp 0,102 ,067 ,454 1,518 0,168 pov rate 0,028 ,081 ,113 ,347 0,737 a. dependent variable: gdp rate source: author compilation 6. results in this empirical analysis, we have tried to find the impact of some selected macroeconomic variables such as inflation rate, the corruption index, rank, and their impact on the gdp rate based on a 5.0 percent. in the first table (4) entitled the model summary, the value of the correlation coefficient is r value = 0.79; however, the r square value r2 = 0.62 means that this model expresses about 62% of the data and 38% can be related to other independent variables. table 4 the model summary model summaryb model r r square adjusted r square std. error of the estimate sig. f change durbinwatson 1 0,792a 0,627 0,516 .8387 0,016 2,537 a. predictors: (constant), infl, cpi, rank b. dependent variable: gdp rate source: author compilation the next table is the anova table, which shows us how well the regression equation fits our inserted data. according to the analysis of variance table which is summarized in the output of anova table (5), the significance value is (0.016), which is below (0.05) and less than the critical value of alpha. so, the null hypothesis is rejected and the alternative hypothesis which assumes that there is a significant difference between the groups is taken. besides, the sig value shows us that the whole model has a great statistical significance. table 5 anova and the significance of the model anovab model sum of squares df mean square f sig. 1 regression 11,849 3 3,950 5,614 0,016a residual 7,035 10 ,703 total 18,884 13 a. predictors: (constant), infl, cpi, rank b. dependent variable: gdp rate source: author’s compilation sissani 13 table (6) presents the coefficients and it determines how much the independent variables (the inflation, corruption and the corruption rank) contribute statistically and significantly. from the output, it has been removed the inflation rate where the sig value was = 0.839, which means that this variable is not statistically significant. however, all other variables are statistically significant. the intercept (constant) sig value is 0.001. finally, the rank sig value is 0.021 and the cpi sig value is 0.017 and both of them are below the alpha value. table 6 the coefficients of the estimated model coefficientsa model unstandardized coefficients standardized coefficients b std. error beta t sig. 1 (constant) 18,65 3,944 4,730 0,001 rank -0,085 ,031 -,591 -2,722 0,021 cpi 2,005 ,697 -,597 -2,875 0 ,0 17 infl -,029 ,140 -,046 -,208 0,839 a. dependent variable: gdp rate source: author’s compilation 7. conclusion and discussion in this study, we try to investigate various economic and non-economic independent variables as determinants which have a great influence on the dependent variable (dgp rate). our main purpose was to see if corruption has a significant linkage with the dgp growth rate. it was confirmed that the impact of corruption is quite a serious problem, which has a great effect on the economic performance especially in developing countries such as algeria. what distinguishes this study is that there is a negative causal relationship between corruption and the gdp growth rate. when corruption cpi (which is a sort of scale from 10 highly clean to 0 highly corrupt) decreases with one degree, the gdp rate increases with 2,005 percent. this paper has attempted to assess the impact of corruption in algeria which is a wealthy country due to its resources but its people live in poverty. from the argument given above, we can also observe that when the country rank increases with one position, the gdp rate increases with 0.085. to reduce the level of corruption, the government has to create an anti-corruption committee or cell in all the public sectors and to train employees to face corruptors and any corruption situation. it is also important to train the workers and officers to write reports to the responsible ones if they detect any suspicious activities. previous studies have demonstrated the impact of corruption and its linkage with the income, the government budgets or its impact on poverty (mauro, 1998). certainly, the reasons for the wide spreading of the phenomenon of corruption is linked first to the absence of the strong legislative anti-corruption framework besides the low freedom given to the judiciary system and the lack of liberty in the media which is still under the political umbrella. combating corruption is a real challenge in algeria. for example, in recent surveys made by the global corruption barometer, they found that 50 million adults in algeria and north african countries pay bribes to access basic services. the algerian economy governed by black corruption: an empirical study from 2002 to 2015 14 references alt, j. e., & lassen, d. d. (2003), the political economy of institutions and corruption in american states, journal of theoretical politics, 15(3), pp.346-360. dreher, a., & schneider, f. (2010), corruption and the shadow economy: an empirical analysis, public choice, 144(1-2), pp.215-238. drury, a. c., krieckhaus, j., & lusztig, m. (2006), corruption, democracy, and economic growth, international political science review, 27(2), pp. 121-136. jain, a. k. (2001), corruption: a review, journal of economic surveys, 15(1), p.73. mauro, p. (1998), corruption and the composition of government expenditure, journal of public economics, 69(2), pp. 263-279. okewu, e., & okewu, j. (2015), e-government, e-governance and e-administration: a typology of corruption management using icts, in proceedings of the 15th european conference on egovernment . academic conferences limited. seligson, m. a. (2002), the impact of corruption on regime legitimacy: a comparative study of four latin american countries, journal of politics, 64(2), p 421. shabbir, g., & anwar, m. (2007), determinants of corruption in developing countries, the pakistan development review, pp.751-764. sissani, m., & belkacem, z. (2014), the effect of political risk on foreign direct investment: the case of algeria, hyperion economic journal, 2(3), p.30. sissani, m., & belkacem, z. (2014), the impact of country risk components on algeria attractiveness for foreign direct investments (1990-2012), applied econometrics and international development, 14(1), pp. 133-146. trancparency international, ti report (2006). available at url www.transparency.org warren, m. e. (2004), what does corruption mean in a democracy? american journal of political science, pp.328-343. http://www.transparency.org/ microsoft word apostoaie constantin marius_eng.doc challenges for the romanian public pensions system in the current economic and financial crisis ancauniversity of iasi, romania abstract this paper aims to address the challenges for the romanian public pensions system in the current economic and financial crisis. firstly, are presented the defining indicators of the romanian public pension system, such as number of pensioners, the number of taxpayers, the dependency ratio pensioners/contributors, public pension expenditure as a percentage of gdp, etc. the article illustrates the challenges regarding the sustainability of the pension system to the aging population and the main predictions of specialized financial institutions on public pension expenditure for the next period. it also presents the current abuses of public pension system and the measures taken by the romanian authorities to reform it. keywords romanian public pension system, public pension expenditure, economic and financial crisis jel code: h55, g23, o47 introduction the financial crisis has rapidly turned into an economic crisis with major implications for all public programs, including pension systems. rising unemployment and difficulties in collecting revenues for the state budget, due to financial and economic crisis, has affected the social security schemes, pension funds and other sources of income of older people across the globe. given this context, governments must deal with budget deficits that will result from maintaining or increasing the benefits of social programs. according to hinz et al. (2009), combined fiscal deficit of the pension systems could range from less than 1% of gdp, if the crisis proves to be moderate, and recovery is rapid, up to 13% of gdp otherwise. current deficits involve expansion of public debt, which can spur the economic recovery, but at the same time, transfer some of the burden of adjustment to future generations. also, according to a recent review of world bank estimates (2009), after consulting measures to reform the pension law in romania, in 2050, the deficit created by spending on pensions in gdp, by keeping the current system, will reach 12%. hit by the global crisis, many states have made changes in public pension schemes and adjusted the operating parameters. such measures are aimed at: increasing the statutory retirement age (the case of germany, australia, austria, belgium, denmark, czech republic etc.), increased mandatory minimum period of contribution (france), changing how pensions are indexed to future reduced increases (the case of hungary), reducing pensions in payment (latvia, hungary). studies and scientific researches economic edition, no. 15, 2010 143 according to some studies1, state pensions are much less sustainable than systems based on capitalization and private management. this we can find also for romania and the new draft law on pesions envisages reforming public pension system. analysis indicators of the romanian public pension system a factor that carries impact on the public pension system is the aging population, further increasing the living standards of the last century, the professional development of individuals, but also the development and progress of medicine. the population of romania is in a process of reduction and accelerated aging: from 23.2 million inhabitants (1990) to 21.3 million inhabitants (2010). under scenarios of the international monetary fund, united nations, european union, world bank, 2050 will be reached on 16-17 million people or 13.3 million people (most pessimistic scenario, ebrd, 2008). the current situation of the pension budget was generated by a number of decisions taken by those in government after 1989. at that time, romania had 8 million employees and 2.6 million of pensioners, with an additional one million of retired farmers. the dependency ratio, calculated as the ratio between the number of employees contributing to social security state and the number of beneficiaries, was at the time, comfortable, of 3.4 employees to one retired and the pension fund had a surplus of 500 million usd. in the next two years, the number of pensioners increased to 3.2 million people because of the decree-law no. 60, given in march 1990, which sent the pension in a few months, over 500,000 employees, as permitted early retirement with four years for sickness and with two years earlier for the normal early retirement. thus, the dependency ratio became 2.1 employees / 1 retired due to being represented by the decision to reduce the retirement age in 1990, for women at 53 years and for men at 58 years. during 1992-1996, under the government vacaroiu, 500,000 other employees have become pensioners, many of them being unemployed after the first privatizations. also in 1993, were taken to the public fund other 120,000 retirees, resulting from the bankruptcy of cooperatives, as also the pensioners from the creation funds, artists etc. at that time, 1.6 employees sustained one pensioner. in 1996, the pension fund recorded a deficit of 0.23% of gdp and needed small loans from the state treasury to cover losses. moreover, the massive retirement between 1990 and 1998 have served to mask unemployment privatization. these realities have led to the preparation of a draft pension law in 1998 which came into force in 2001 after 2 years of debate in parliament. law has been distorted by the 57 subsequent regulations introduced by the privileged classes. special pensions, for example, establishing a preferential retirement judiciary, parliamentarians, ambassadors and civil pilots, were introduced one by one, by parliamentarians, from 2003 to 2008. the number of people with special retirement came in 2009 to about 200,000. the critical point was the year 2001, when the number of pensioners from state insurance budget (4.5 million, without former farmers) exceeded the number of employees in the economy (4.4 million), the dependency ratio being 0.9 to 1 retired employees. further, in the period 2004-2008, pension expenditure reached 13 billion usd (€ 9.2 billion) because the pension point value increased from 265.2 lei, as it was in january 2004, to 697.5 lei, in october 2008. according to labor ministry statistics, the total number of pensioners of the state social security system, including paying farmers in 2009 were 5.54 million people, while the total number of contributors to public pension system did not exceed, at that time 5.65 million people, leading to a dependency ratio for the public pension system of 0.98 for retired to 1 1 federacion internacional de administradoras de fondos de pensiones (2009), the impact on workers of the parametric changes in the paygo programs, pp.5-6 studies and scientific researches economic edition, no. 15, 2010 144 taxpayer. in 2009, total annual pension expenditure in romania were about 39 billion lei, the largest budget expenditure category, its share in gross domestic product being 8%. thus, the pension fund budget deficit was about 1.5 billion euros (about 2 billion dollars), while that for 2010 is estimated at 1.7 billion euros. one of social measures adopted by the romanian government in 2009 was indexing pensions by 3% on april 1 and 2% from october 1 this year. the value of the pension point has become currently 732.8 lei. the public pension system in romania, as also from other countries, have felt the impact of these demographic changes. according to european commission estimates, the number of pensioners in the public pension system will rise to 6,736,000 in the year 2050, respectively 6,445,000 pensioners in the year 2060, the growth rate from 2009 to 2060 being 16.85%. concerning taxpayers, the number is estimated to decline from a level of 6,348,000 contributors to the year 2010, to 5,689,000 contributors in 2050 and respectively, in 2060 to 5,297,000 contributors, the rate of decrease in the period 2010-2060 being 16.56%. according to un statistics, the evolution of old age dependency ratio by the year 2050, will increase by more than 2 times: from 21% in 2005 to 49% in 2050, when old age dependency ratio of 65 years and over, compared to 15-64 years; from 23.6% in 2005 to 56.6% in 2050, for old age dependency ratio of 65 years and over compared to the population of 20 to 64 years2. an increase in the dependency rate indicates a situation where an increasing number of potential beneficiaries of health and pension system (especially those aged 65 or over) are supported by a relatively small number of potential contributors. the process of population aging is doubled by another, the net migration. according to population division of the department of economic and social policy of the united nations secretariat statistics, in the period 2010-2015, net migration per year will be -20, and in 2015 will be 1. also, the long-term sustainability report of the european commission, reports that agerelated expenditure will increase in the eu, according to forecasts, by about 4 ¾ percentage points of gdp on average until 2060 and by over 5 percentage points in the euro area in particular because expenditure on pensions, health costs and those for long-term care3. for romania, as also to luxembourg, greece, slovenia, cyprus, malta, netherlands, spain and ireland, according to european commission forecasts, growth of age-related public spending will be fairly significant, with 7 percentage points or even more. however, pension reforms adopted in many member states produce positive results in terms of sustainability of public finances. almost all member states have tightened the conditions for eligibility for public pensions, mainly by increasing the retirement age and restricting access to early retirement schemes. european commission report shows that romania has a sustainability deficit of 9.1% of gdp and must adjust, long-term budgetary executions this percentage to reach a situation in which public finances are sustainable and healthy. most of this deficit sustainability (7.4 percent from 9.1 percent of gdp) comes from the increasing costs of state pensions. in the background event demographic phenomena, that of aging, reduce fertility and population reduction, with negative effects on public budgets, european commission estimates that the level of public spending on pensions will increase the eu average of 10.2% of gdp in the 2010, to 12.5% in 2060. in 2009 the romanian state has spent about 48 billion lei, representing 9.5% of gdp and 31% of the revenues of the country, which is justified as follows: 40.4 billion lei for public system pensions, 3, 2 billion lei for pensions to farmers, over 3.7 billion lei for special military pensions for police and special services and over 608 million lei for airmen pension, magistrates, parliamentarians, diplomats etc. 2 fi , s. (2009), perspectivele sistemului românesc de pensii p.159-166 3 (2009), , bruxelles, p.4 studies and scientific researches economic edition, no. 15, 2010 145 state social security budget deficit total was about € 1.74 billion (7.36 billion lei) in 2009. revenues from pay state social insurance contributions were nearly 33 billion lei in 2009, 2.36% higher than in 2008, while expenditure on contributory pension scheme, without farmers’ pensions and special pensions were 40.4 billion lei in 2009, up 19.9% from 2008. according to the romanian government, in 2009, state budget lent pension budget of € 1.5 billion. funds for pensions for 2010 are on the sum of 39.6 billion lei, of which € 1.7 billion euros is the money contributors pay as taxes to the state budget. pension costs for 2010 will be 7.36% of gdp (538 billion lei). our country is among the states with the unsustainable public pension budgets of the eu, the estimated share of gdp spent on pensions of state will have an upward trend from 8.4% for 2010, to 15.4% in 2060. it is estimated that after more than 50 years, romania will be the 5th place at european level after greece, luxembourg, slovenia and cyprus, for the largest share of gdp spent on pensions. policies to reform the public pension system in romania according to demographic forecasts, the true crisis is on the starting point. it is very important that measures taken now to cover long-term objectives. some recommendations from international financial institutions are: indexing pensions to inflation, increasing the retirement age and equality for men and women, and reduce early retirement. the decision to index pensions to inflation during the crisis is to better protect pensioners in the short term by maintaining purchasing power, but at the same time, contribute to longterm fiscal sustainability of the pension system. as regards the second objective, the retirement age, it is known that most oecd countries amounted already the retirement age for men and women up to 65 or beyond, while most eca countries continue to enable men to retire earlier than 65 years and continue to allow women to retire at ages even lower than men’s . average age is even lower than the statutory retirement age, with half or more of retirees younger than november withdraw legal retirement age because of early retirement privileges for many pre-transitional occupations. while life expectancy for male is significantly lower than in western europe, the expected duration of benefits is longer for men and women even more than in western europe. the current romanian public pension system faces many abuses, which the new pensions law attempts to eliminate, such as: -massive increase disability retirement, as evidenced by the increase of 50% from 600,000 persons in 2001 to 900,000 in 2009, because of fraudulently receiving an invalidity pension to other persons not meeting the necessary health conditions. -tripling the number of annual early retirement, in 2009 leading to the 115,000 early retirement in part. of course, there is a risk that we will have fewer taxpayers to fund pensions and will no longer be paid pensions in the future. the new law proposes to introduce a mechanism to discipline this practice of early retirement and not to encourage this mechanism. each person is entitled to take an early retirement, only that there is a small penalty. it is currently 30% of retirement, but the new law provides for an increase to 45%. for example, if a woman retirement age is today 58 years and 9 months, she can retire early at 53, but in the period from 53 to 58 years, the pension will be less with 30%. in other countries, such as germany, the penalty is maintained throughout the pension, just to dampen this mechanism. -a disagreement between the smallest and largest public pension in romania the existence of special systems of public pensions which introduced a number of privileges and unequal treatment for some occupational categories has created a huge difference between the lowest pensions (350 lei) and the largest public pension (37,000 lei), more than 100 times, a ratio of 1 to 100. this suggests an unfair system that can not continue, as are necessary money from the state budget to other areas, such as health, education, infrastructure, and at the same time, it is necessary to have a budget of pensions on a selfsustaining based, according to the contributivity principle. studies and scientific researches economic edition, no. 15, 2010 146 the new law brings into question the contributivity principle, which is considered by some as a correct principle, a healthy, equitable one, ensuring sustainability of the pension system in romania and according to this principle, if you make a greater contribution during the course of employment to pension budget, you will receive a larger pension, and on the opposite, if you have a lower contribution, the pension will be smaller. implementing this principle means eliminating the privileges and discrimination which currently exists in the actual pensions system. of 5,800,000 pensioners, about 180,000 receive special pensions and only for 15%, which are not based on the contributivity pension principle, the pension will decrease, while those with a military pension up to 30 million lei will not be affected. special pension declines to those where pension was determined to be 80% of revenues a person had in the last month of activity at work. for example, if a person has contributed to a pension of 25 million lei, but last month the revenue was 100 million lei, they received a pension of 80 million lei (80% of 100 million lei). -actual average retirement age by law, the retirement age should be today 58 years and 9 months for women and 63 years and 9 months for men. the actual age that we have in fact is 54 years and 7 months. according to the new law, the retirement age for both women and men will be 65 years. according to pensions at a glance report (2009), for countries like czech republic, greece, hungary and turkey, eligible retirement age would increase during the next period to 65 years. from 1995 to 2005, in 15 countries increased the retirement age, is the case of austria (60 years and for the future, 65 years, between 2024 and 2033), belgium (from 64 to 65 years in 2009), republic czech (increased with 2, respectively with 4 months in each year since 1996 in order to increase the retirement age in 2030 to 65 years for men and for single women and for those with a child between 62 and 64 years for those with more of a child), italy (61 to 63 years between 2010 and 2013), etc. also, in the last 5 years, some states have planned to increase the retirement age over 65 years, such as australia and germany to 67 years and britain in 68 years. over the years, according to an analysis of the oecd in 1958 and until the year 1999, retirement ages have fallen, and later to boost. for men, the retirement age fell by 2.5 years between 1958 and 1999 to below 62 years, the oecd average, while women decreased by just 1.5 years, averaging 60.5 in 1999. since 1999 and until now, the retirement age for both sexes showed increases of about 2 years. the financial impact for the consolidated budget of implementing the law on pensions, on both short and long term (year 2020) will consist of4: reducing pension costs by cca.784 million lei in 2010 and about 1.459 million lei in 2020, reducing the consolidated public budget expenditures with cca.2761 million lei in 2010 and about 24.119 million lei in 2020, increasing public budget income with cca.152 million lei in 2010 and about 2.626 million lei in 2020. conclusions the financial crisis has significantly affected the pension systems around the world, signaling the governments to respond as promptly to the increase pension deficits, which are facing today. while some public european pension programs date back in the late 19th century, current schemes are the result of changes imposed largely after world war ii. based on various studies conducted by international financial institutions, aging and also net migration, are factors causing concerns to governments based on the „pay as you go” system, as a consequence of the increase budget expenditures by public pensions. to get an insight into the public pension system in romania was made an analysis of key figures (the number of pensioners, the number of taxpayers, the dependency ratio of this 4expunerea de motive privind legea privind sistemul unitar de pensii publice, februarie 2010, p.7 studies and scientific researches economic edition, no. 15, 2010 147 indicators, public pension expenditure in gdp, etc.) since 1989 till now. there have seen some cases the sustainability of current difficulties: decrees that allowed too low retirement age (in 1990, women retired at 53 years and men at 58 years), decisions that facilitated the massive retirement in 1990 and 1998, the goal being to disguise unemployment privatization, loans from the pension fund to cover budget holes, increasing funded retirees to the state with those resulting from failing industries (1993), the pension emergences for special categories (mps , magistrates, officers). on the other hand, were presented the abuses faced by the romanian public pension system:, such as: the massive increase for cases of disability retirement, triple of the annual number of early retirement, disagreement between the lowest and most large pension public pension system and the actual average retirement age under the legal. the new pension law aims to introduce a mechanism to discipline early retirement system, retirement check sickness, to increase the average age retirement at 65 years for women and men, to eliminate all discrimination in the system, to reduce pensions set at a high level, and also to contribute to the unification of public pension system. i think that for the future, a prudent way of ensuring those who currently contribute to the state social insurance budget that will benefit from a pension when they reach the retirement age, it to combine the public financing system „pay as you go” with the private funds, being known the fact that diversity of funding pension sources provides security in old age. acknowledgements i am grateful to “alexandru ioan cuza” university of iasi, for financial support of this article, as beneficiary of a grant posdru/88/1.5/s/47646, named “studii doctorale: portal ”, cofinanced from the european social fund, within the sectoral operational programme human resources development 2007-2013, the project implementation period being 36 months, from march 1, 2010, until february 28, 2013. references 1. european commission and economic policy committee (2009), the 2009 ageing report: economic and budgetary projections for the eu-27 member states (2008-2060), brussels, no 1 2. divizia popula ie a departamentului de politici economice i sociale a secretariatului na iunilor unite (2009), perspective privind popula ia lumii: versiunea 2008, http://esa.un.org/unpp 3. expunerea de motive privind legea privind sistemul unitar de pensii publice, februarie 2010 4. federacion internacional de administradoras de fondos de pensiones (2009), the impact on workers of the parametric changes in the paygo programs 5. fi , simona (2009), perspectivele sistemului românesc de pensii, editura mirton, timisoara 6. holzmann, robert. (2009), aging population, pension funds, and financial markets: regional perspectives and global challenges for central, eastern and southern europe, washington, dc 7. oecd (2009), pensions at a glance 2009: retirement-income systems in oecd countries, paris 8. http://www.mmuncii.ro/ 9. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ studies and scientific researches economic edition, no. 15, 2010 148 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 151 landmarks on the evolution of e-commerce in the european union laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro bogdan nichifor “vasile alecsandri” university of bacau bnichifor@gmail.com abstract in this paper are presented and analyzed a number of statistical indicators to highlight the size and the trends in the european e-commerce market in recent years, namely the turnover of ecommerce, the share of turnover from e-commerce in total turnover of the organizations, the share of enterprises conducting online sales in total enterprises, the population share which shop online in total population. information is presented both aggregated and individualized, allowing highlighting disparities between european states. the paper also captures a number of correlations between the orientation to online purchasing and level of development of european countries, on the one hand and access to technology on the other. the survey is based on official statistics provided by eurostat (data from european union countries) and information provided by emota european multi-channel and online trade association (data pooled across all european countries). keywords e-commerce market; turnover from e-commerce; orders over internet; eu market jel classification m31 the evolution of e-commerce market was marked by remarkable growth in recent years in the european market. this is not surprising in the context of increasing access of the population to technology (an increasing proportion of the population had access to the computer and used it), on the one hand, and as a result of changes made to purchase behavior and consumption, on the other hand. thus, e-commerce is keeping up with the convenience buying process, allowing procurement in a very short time and from a large area (national or international), giving the possibility for comparing a large number of offers in terms of product characteristics and price, offering the ability to purchase products at lower prices than those of traditional distribution networks etc. europe's place in the e-commerce world market thus, in europe in 2013 according to data from emota (european multi-channel and online trade association) turnover from e-commerce reached 352 billion euros, representing an increase of approximately 17% over the previous year and almost 2 times bigger than the turnover of 2009. (figure 1). landmarks on the evolution of e-commerce in the european union 152 35 2 30 1 24 9 21 5 18 5 190,3 162,7 134,6 116,2 100,0 0 100 200 300 400 2009 2010 2011 2013 2013 e ur os b ill io n 0 50 100 150 200 % c om pa re d to 2 00 9 figure 1 evolution of e-commerce turnover in europa, in 2009 – 2013 period (billion euros) source: taken and worked up from e-commerce and distance selling in europe report, emota (european multi-channel and online trade association) europe is, in fact, the largest e-commerce market relative to other major regions of the world (asia pacific and north america). thus, in 2013, according to the same data sources indicated above, in europe held in global online trade a share of 33%, followed by asia pacific with 32% and north america with 30%. (figure 2). north america: 30% rest of the world: 5% europe: 33% asia pacific: 32% figure 2 share of turnover of e-commerce in the regions of the world in the total turnover of e-commerce worldwide in 2013 source: taken and worked up from e-commerce and distance selling in europe report, emota (european multi-channel and online trade association) population access to technology in the european union as we said before, a contributing factor in the development of electronic commerce is increased people's access to technology in recent years. in the european union (eu28 countries), according to data for 2014, 79% of the total population of 16-74 years have used the computer in the last 12 months, which represents an increase of over 11% compared to 2009, respectively over 21% compared to 2007. regarding the data for individual countries, there were major differences, the most spectacular growth was recorded in general in the former communist countries and in some of the less developed countries in the older eu members (greece, portugal). timiras, nichifor 153 62 .2 57 .9 51 .2 50 .0 44 .9 43 .8 40 .8 39 .7 37 .7 35 .6 30 .0 28 .8 26 .9 26 .2 25 .0 22 .7 22 .1 21 .7 21 .5 20 .8 19 .4 17 .3 13 .6 12 .0 11 .5 11 .3 10 .7 6. 8 5. 6 0 10 20 30 40 50 60 70 b ul ga ri a r om an ia g re ec e m al ta c yp ru s po rt ug al c ro at ia c ze ch r ep ub lic l ith ua ni a it al y h un ga ry sp ai n e st on ia l at vi a po la nd ir el an d sl ov ak ia fr an ce e u -2 8 b el gi um sl ov en ia l ux em bo ur g u ni te d k in gd om fi nl an d d en m ar k g er m an y a us tr ia n et he rl an ds sw ed en g ro w th in % in 2 01 4 co m pa re d to 2 00 figure 3 evolution of the proportion of people who used the computer in total population, for the eu countries in 2014 compared to 2007 note: are considered persons who have used the internet in the last 12 months of the reporting period. the data refer to the population of 16-74 years source: own processing from eurostat despite the spectacular increase of people's access to technology in recent years in new eu member states, these states have continued to record values below the eu average in terms of computer usage by the population (figure 4). this constitutes a limiting factor in the development of electronic commerce, which, however, while maintaining the growth rate of the population access to technology in these countries in recent years, will be lowered in time. 60 60 61 65 69 69 70 71 73 74 75 76 77 78 79 81 81 83 83 84 85 87 89 92 93 94 94 95 97 0 20 40 60 80 100 120 r om an ia b ul ga ri a it al y g re ec e po rt ug al c ro at ia po la nd c yp ru s l ith ua ni a sl ov en ia m al ta sp ai n l at vi a h un ga ry e u 2 8 ir el an d c ze ch r ep ub lic sl ov ak ia a us tr ia fr an ce e st on ia b el gi um g er m an y u k fi nl an d sw ed en n et he rl an ds l ux em bo ur g d en m ar k % o f t he to ta l p op ul at io n of 1 674 y ea r figure 4 the share of people who used the computer in total population, in the countries of the european union in 2014 note: are considered people who used the computer in the last 12 months of the reporting period. the data refer to the population of 16-74 years source: own processing from eurostat landmarks on the evolution of e-commerce in the european union 154 the orientation of the eu population to online purchases in connection with the evolution of the population access to technology, the share of people who shop online in total population of 16-74 years also recorded an upward trend, from 30% in 2007 to 50% in 2014. (table 1) table 1 evolution of the share of people who used the computer and the share of people who made online purchases in the total population and the share of those who made online purchases in all those who used the computer 2007 2008 2009 2010 2011 2012 2013 2014 percentage of individuals who used the internet 65 68 71 73 75 76 78 79 percentage of individuals who ordered over the internet 30 32 36 40 42 44 47 50 the share of those who made online purchases in all those who used the computer 46.2 47.1 50.7 54.8 56.0 57.9 60.3 63.3 year indicator source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years considering the data for the 2007 2014 period, we found that the correlation between the percentage of those who used the computer and the share of those who made online purchases in the last 12 months in the eu-28 is a deterministic one, correlation ratio being closer to the value 1. y i = 1,4315x i 64,5506 r2 = 0,9801 25 30 35 40 45 50 55 60 65 70 75 80 percentage of individuals who used the computer (x i ) pe rc en ta ge o f i nd iv id ua ls w ho o rd er ed o nl in e (y i ) figure 5 the relationship between the percentage of those who used the computer and the share of those who bought online in the eu 28 in the 20072014 period source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years timiras, nichifor 155 table 2 the relationship between the share of those who used the computer (x i) and the share of those who shop online (y i) in the eu 28 in the 2007-2014 period regression equation source of variation sum of the squares coefficient of determination correlation coefficient f-value significance level critical value for the f statistic y i = 1,4315 x i 64,5506 total 348,9 98,01% 0,99 295,86 0,05 5,99 model 342,0 error 6,9 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years comparing the dynamics registered in the share of those who used the computer to the dynamics of the share of those who made online purchases we observe a much faster trend regarding the later indicator (21.5% versus 66.7% in the 2007 2014 period). this demonstrates that increasing the share of those who made online purchases was generated both by increased access to computer and by change over time of buying habits (people who although had the technology but not using to buy online, have acquired this behavior). this fact is emphasized by the increased share of those who made online purchases in all those who use computers (table 1). in eu countries it was found that online purchases are specific mainly to old eu countries, while in the new states, the share of those who make online purchases in all those who use the computer lies also below average. 16 .7 28 .3 35 .6 36 .1 37 .7 38 .0 40 .0 40 .6 41 .0 44 .2 48 .6 48 .7 50 .0 53 .1 57 .6 57 .8 61 .7 62 .1 62 .7 63 .3 63 .9 73 .1 73 .8 75 .5 77 .9 78 .7 79 .8 80 .4 8 5.9 0 10 20 30 40 50 60 70 80 90 100 ro ma nia bu lga ria li thu an ia ita ly po rtu ga l cy pr us gr ee ce cr oa tia hu ng ary la tvi a po lan d sp ain sl ov en ia cz ec h r ep ub lic es ton ia sl ov ak ia ire lan d be lgi um m alt a eu -2 8 au str ia fi nla nd fr an ce ne the rla nd s lu xe mb ou rg ge rm an y sw ed en de nm ark un ite d k ing do m % in tot al po pu lat ion w ho ha ve us ed co mp ute figure 6 the share of those who made online purchases in total of those who used the computer, the eu countries in 2014 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. the data refer to the population of 16-74 years the eu countries which recorded the lowest values of the share of people shopping online in the total population of 16-74 years and the biggest increases in this indicator in recent years are generally old communist states and some of the less developed old states. age groups who experience the greatest propensity to online purchase are 2534 years, followed by 16-24 years group and that of 35-44 years. (table 3) landmarks on the evolution of e-commerce in the european union 156 table 3 share of population who made online purchases in the total population by age, and dynamics in 2014 compared to 2009 16-24 25-34 35-44 45-54 55-64 65-74 belgium 54 62 71 69 55 36 22 257.1 bulgaria 17 33 30 22 12 4 0 566.7 czech republic 43 62 63 53 40 22 11 252.9 denmark 78 89 89 85 81 67 53 139.3 germany 70 77 92 87 74 56 33 134.6 estonia 49 67 77 58 44 25 11 544.4 ireland 50 61 66 62 48 28 15 151.5 greece 26 39 39 33 24 12 4 325.0 spain 37 45 54 49 37 20 7 205.6 france 62 71 83 74 61 47 32 182.4 croatia 28 46 47 36 23 10 2 400.0 italy 22 29 34 30 22 13 5 220.0 cyprus 27 36 44 34 20 7 4 270.0 latvia 34 52 60 43 28 14 5 309.1 lithuania 26 39 49 34 19 9 2 433.3 luxembourg 74 71 85 80 73 68 55 157.4 hungary 32 47 47 44 29 17 6 290.9 malta 47 80 69 55 40 22 14 235.0 netherlands 71 83 87 79 72 61 38 129.1 austria 53 77 73 67 48 32 17 147.2 poland 34 52 60 48 26 13 6 212.5 portugal 26 41 49 38 21 7 4 288.9 romania 10 17 18 12 7 3 1 333.3 slovenia 37 65 60 50 25 14 7 231.3 slovakia 48 65 68 59 45 25 10 300.0 finland 68 81 89 87 73 50 29 141.7 sweden 75 80 85 84 79 68 50 141.5 united kingdom 79 83 90 88 81 70 53 149.1 european union (28 countries) 50 61 68 60 50 35 23 166.7 share of population who made online purchases in the total population, in 2014 the dynamics of population share of 16-74 years who made online purchases in the total population, in 2014 compared to 2007 (%) countries out of which, by agetotal population (16-74 ani) source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period there is in fact a strong link between the degree of development and therefore the purchasing power of the population and the extent of internet use to purchase goods and services in the eu countries. thus, taking into study the levels of gdp / capita at purchasing power parity (gross domestic product at market prices in current prices, pps per capita) and the share of individuals who in the last 12 months of the reporting period have shopped online, in 2013 for which we have data for both indicators, it appears that at the level of the 28 eu members, higher levels of purchasing power are associated with greater tendency of people towards online purchases. (figure 7) timiras, nichifor 157 y i = 0,0014x i + 6,9409 r2 = 0,5027 0 10 20 30 40 50 60 70 80 90 100 0 10 00 0 20 00 0 30 00 0 40 00 0 50 00 0 60 00 0 70 00 0 gross domestic product at market prices pps per capita (x i ) sh ar e of p op ul at io n w ho m ad e on lin e pu rc ha se s in th e to ta l po pu la tio n (y i) figure 7 the link between gross domestic product / capita and the share of the population who made online purchases in the total population in eu countries in 2013 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. from regression and correlation analysis there is a significant link between gross domestic product / capita and percentage of individuals who ordered over the internet in all eu countries, the correlation coefficient having the value of 0.709. (table 4). table 4 the link between gross domestic product / capita and the share of the population who made online purchases in total population in the eu-28, in 2013 regression equation source of variation sum of the squares coefficient of determination correlation coefficient fvalue significance level critical value for the f statistic y i =0,0014 x i + 6,9409 total 11533,3 50,27% 0,709 26,28 0,05 4,22 model 5797,3 error 5736,0 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. we studied the value of gross domestic product at market prices in current prices, pps per capita in fact, if we remove from the analysis luxembourg, which in terms of the analyzed indicators is found to deviate from the general trend recorded in the other eu countries (see figure 7), the link between the two analyzed indicators is one more stronger (correlation coefficient is 0.829). table 5 the link between gross domestic product in current prices, pps per capita and percentage of individuals who have bought online in all eu countries (excluding luxembourg), 2013 regression equation source of variation sum of the squares coefficient of determination correlation coefficient fvalue significance level critical value for the f statistic y i = 0,0024 x i +18,0033 total 10734,7 68,69% 0,829 54,86 0,05 4,24 model 7374,1 error 3360,6 source: own processing from 2015 eurostat data note: are considered people who have used computer / made online purchases for private use in the last 12 months of the reporting period. we studied the value of gross domestic product at market prices in current prices, pps per capita landmarks on the evolution of e-commerce in the european union 158 percentage of turnover from e-commerce on enterprises' total turnover the development of this form of trade is reflected in the evolution of the turnover from e-commerce of eu organizations. thus, in 2010, 14% of the turnover of companies with over 10 employees (excluding the financial sector) was obtained from electronic trade, a share that reached 15% in 2014. there is big difference, however, between eu members in this regard. thus, from table 6 is seen that this is not a generalized phenomenon (countries like lithuania, germany, netherlands, and denmark recording declines in terms of the analyzed indicator). a dramatic increase in this indicator was recorded by cyprus where turnover from e-commerce on enterprises' total turnover was raised by 8 times. it is found that in almost all eu countries there is a certain relationship between firm size and the percentage of turnover from e-commerce on enterprises' total turnover. thus, except for estonia, cyprus, latvia and lithuania, in all other eu countries for which data are available, the lowest share of turnover from e-commerce were recorded in the category of small enterprises and higher levels in the category of large enterprises. table 6 percentage of turnover from e-commerce on enterprises' total turnover, on some of the eu countries in 2014, and dynamics compared to 2010 all enterprises with 10 persons employed or more small enterprises (10-49 persons employed) medium enterprises (50249 persons employed) large enterprises (250 persons employed or more) bulgaria 3 1 2 6 150,0 czech republic 29 15 21 37 152,6 denmark 16 11 18 19 94,1 germany 13 7 11 15 72,2 estonia 18 16 12 25 163,6 ireland 52 28 45 63 216,7 greece 2 n.d. 3 3 n.d. spain 15 5 11 21 136,4 france 15 6 14 20 115,4 croatia 13 10 12 14 144,4 italy 7 2 8 11 140,0 cyprus 8 13 6 3 800,0 latvia 8 3 13 10 114,3 lithuania 7 4 11 8 50,0 hungary 20 4 9 32 125,0 malta 9 2 5 22 n.d. netherlands 12 5 8 17 85,7 austria 13 4 9 22 100,0 poland 12 n.d. n.d. 18 150,0 romania 6 4 5 8 150,0 slovakia 13 4 8 19 118,2 finland 19 n.d. n.d. n.d. 105,6 sweden 18 9 18 22 100,0 united kingdom 20 6 10 26 125,0 european union (28 countries) 15 6 11 20 107,1 percentage of turnover from e-commerce on enterprises' total turnover (*without financial sector) dinamics of percentage of turnover from e-commerce on enterprises' total turnover (all enterprises with 10 persons employed or more) in 2014 compared to 2010 (%) countries source: own processing from 2015 eurostat data percentage of enterprises selling online on total enterprises closely related to the shown indicator (percentage of turnover from e-commerce on enterprises' total turnover), the proportion of businesses selling online in all eu-28 enterprises has been growing in recent years. thus, referring to firms with over 10 employees (excluding the financial sector), 15% of these sales were made online in 2014 (minimum 1% of turnover), compared to 13% in 2010. percentage of enterprises selling online on total enterprises by size confirms that greater orientation towards timiras, nichifor 159 electronic commerce is at the level of large enterprises, followed by the medium ones. (table 7) table 7 percentage of enterprises selling online (at least 1% of turnover) on total enterprises with 10 persons employed or more (without financial sector), in 20102014 period 2010 2011 2012 2013 2014 small enterprises (10-49 persons employed) 12 11 12 13 13 medium enterprises (50-249 persons employed) 20 20 22 22 22 large enterprises (250 persons employed or more) 31 32 35 35 35 all enterprises, (10 persons employed or more) 13 13 14 14 15 years categories of enterprises (without financial sector) source: own processing from 2015 eurostat data categories of goods or services ordered over the internet as regards goods purchased online there is a greater propensity to purchase clothes and sporting goods at eu-28, 59% of 16-74 years population making internet purchases of such goods (at least one purchase in the last year of the reporting period). also, household goods, tickets for events, books / magazines / e-learning are among the categories of products purchased by a larger proportion of the eu population. (table 8) table 8 percentage of individuals who ordered goods or services, over the internet, for private use in 2014, in the last year food/ groceries clothes, sports goods electronic equipment computer software computer hardware shares/ financial services/ insurance films/ music household goods tickets for events books/ magazines /e-learning material belgium 9 47 17 18 11 6 21 26 39 27 bulgaria 20 73 19 7 9 2 8 31 15 13 czech republic 6 52 27 6 4 4 5 12 35 16 denmark 15 58 29 21 28 17 38 40 66 31 germany 15 67 37 30 31 10 38 52 44 52 estonia 13 53 20 11 13 21 12 30 50 20 ireland 10 55 29 15 8 16 32 26 59 38 greece 6 51 31 4 18 2 6 18 17 13 spain 14 43 22 17 22 8 14 26 42 29 france 18 57 13 20 22 5 20 37 29 34 croatia 5 48 22 9 24 4 7 24 18 23 italy 6 35 21 15 9 6 13 26 21 31 cyprus 11 61 24 10 23 2 4 11 13 14 latvia 4 48 30 4 18 28 7 29 32 10 lithuania 13 59 17 8 13 14 11 33 42 15 luxembourg 15 50 28 33 20 8 37 32 52 62 hungary 11 49 29 8 11 3 11 29 27 29 malta 4 66 30 25 29 7 22 24 29 36 netherlands 21 63 32 32 15 10 28 37 55 50 austria 13 62 33 25 21 4 28 31 38 49 poland 24 61 19 14 14 4 12 42 16 26 portugal 16 42 18 30 7 11 21 21 23 32 romania 6 58 21 9 11 3 15 16 18 29 slovenia 24 53 22 11 28 5 10 37 34 27 slovakia 10 61 18 8 6 3 10 40 16 30 finland 5 65 27 27 23 27 31 29 56 36 sweden 12 60 23 : 26 26 34 30 66 45 united kingdom 32 67 34 32 19 29 43 57 48 46 european union (28 countries) 18 59 27 24 21 13 28 41 40 39 countries categories of goods or services source: own processing from 2015 eurostat data landmarks on the evolution of e-commerce in the european union 160 conclusions the european market for e-commerce has shown a strong dynamics, as reflected in both turnover in this category of commercial activity, as well as in the growing number of consumers that purchases online. market expansion was generated as a result of increased access of the population to technology, and by acquiring the habit of online buying by a increasing number of eu consumers. thus, according emota, turnover of e-commerce at european level increased from 185 billion euros in 2009 to 352 billion euros in 2013. also at eu level, the share of those who made online purchases increased by 38.9% during 2009-2014 and by 66.7% in the period 20072014, and the share of turnover from electronic commerce of businesses with over 10 employees (excluding the financial sector) increased from 14 % in 2010 to 15% in 2014. the main categories of products purchased online are: clothes and sports goods, household goods, tickets for events, books / magazines / e-learning. references kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto.; zaiţ, l. (2013), managementul marketingului în contextul globalizării piețelor, editura alma mater, bacău emota (european multi-channel and online trade association), e-commerce and distance selling in europe report, available at http://www.emota.eu/ eurostat, available at http://ec.europa.eu/eurostat/data/database http://ec.europa.eu/eurostat/data/database in this paper are presented and analyzed a number of statistical indicators to highlight the size and the trends in the european e-commerce market in recent years, namely the turnover of e-commerce, the share of turnover from e-commerce in total tur... the evolution of e-commerce market was marked by remarkable growth in recent years in the european market. this is not surprising in the context of increasing access of the population to technology (an increasing proportion of the population had acces... a study case on csr and managerial culture in the eastern romanian private business studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 83 a study case on csr and managerial culture in the eastern romanian private business roxana mironescu “vasile alecsandri” university of bacau roxy_mironescu58@yahoo.com abstract the corporate social responsibility (csr) is a prerequisite for business growth, through innovation and business opportunities providing, in order to make the difference between companies, in the high competitive environment. in our view, the csr must be integrated and developed inside the company strategy, as its basic set of moral values and principles that reflect the company goals. in this scientific approach, we have explained the concept of social responsibility both in terms of theory and as an analysis support for practical issues, in some eastern romanian companies. the paper is oriented for achieving two main goals: to determine the main social responsibility actions made by the companies and to demonstrate the importance of their implementation; to explore the impact of the csr activities on an expected advantageous position of these companies on their markets. considered as a direct beneficiary of the community where it belongs, the company returns a part of its success to the community through its active participation in the critical general problems. a company that does not respect the environment, the community, its employees or the ethical principles, will lose credibility and will move away customers and suppliers. keywords corporate social responsibility; competitive advantage; managerial culture; economic and social efficiency; ethical principles jel classification m10 1.introduction. starting with the ‘80s to the present, the issue of the ethical behavior in the business world was significantly intensified under the pressure of certain laws, national regulations, european regulations, international regulations and under the powerful influence of the public opinion and the media. although there are no studies to refute/confirm this aspect, the ethical/unethical business conduct are determined by the manager and his management team. creating this manifestation of business ethics, which aimed to improve the climate of business ethics has been implemented in organizations through various instruments such as codes of ethics, ethics committees and trainings in ethical topics and the establishment of associations operating in this area. bad practices of business can produce enormous harm to individuals, communities and the environment. helping us to better understand the causes and consequences of these harmful practices, business ethics seeks to improve the human condition. the shareholders’ demands businesses to be ethical, to become more complex. business ethics provides means to better appreciate and understand these challenges, so the companies can respond more effectively to the ethical expectations. few european or from the other parts of the world people have received a formal education in terms of the business ethics. business ethics helps to the ethical decision making, providing executives with the necessary knowledge and tools enabling them a study case on csr and managerial culture in the eastern romanian private business 84 to correctly identify, diagnose, analyze and provide solutions to the problems and the ethical dilemmas they face. ethical offenses continue to occur in business. for example, ferrel et al. cites a study (ferrel et al, 2000) which shows that 48% of employees in the united states admit to an unethical or an illegal guilty. business ethics provides a new way to look at the reasons behind these actions, as well as the ways these problems could be solved by managers, people of the law or others, interested in improving business ethics. business ethics provides the capabilities and skills to assess the benefits and problems associated with different ways to lead business ethics inside an organization. business ethics gives us knowledge that go beyond certain traditional schemes of business study, business have to face with some of the most important questions raised by the society. it also gives us the knowledge and skills not only help in the field of business, but also helps us to understand modern societies in a systematic way, it gives us the opportunity to approach some life situations beyond the classroom or the office. promoting the appropriate ethical behavior, both from managers and the subordinates, it has a great importance for the final results that impact the entire organization. 2. the corporate social responsibility, a conceptual approach, as a component of business ethics. the responsibility is defined in the dictionary of the romanian language (dex) as a conscious attitude, a sense of responsibility towards the social obligations or a task, a liability someone assumes. howard r. bowen, considered by archie b. carroll as the father of the corporate social responsibility is the first reference to the term csr (corporate social responsibility) [bowen, h. r. 1953]. he argues that a company is obliged to take those decisions or to follow those lines of action which are desirable in terms of goals and values of the society. bowen argues that the acceptance of the concept of social responsibility has a double motivation. businessmen must behave like responsible moral agents towards the society. [frunză, s., 2011]. the european commission (http://www.ces.ro/newlib/studii-ces/studiulresponsabilitate-sociala-companii.pdf accessed at: 02/24/2016) by a press communicate 347/2002 defines the corporate social responsibility as a contribution to the sustainable development of the enterprise: “the sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to accomplish those of the future” (world business council for sustainable development www.wbcds.org). the european commission also published in a press communicate 366/2011, the csr green paper, which encourages and stimulates companies to adopt the social responsibility as part of their organizational culture. for a deeper understanding of the concept of csr, we must take into consideration the term of “corporation”, which is by far the dominant form of the economic entity in the modern market economy. csr must be an attitude, a sense of responsibility of each of us from the small and insignificant gestures, to even reaching the long-term development strategies. the social responsibility is also the fundamental ethical principle, expressing to who and for what is a manager responsible, through his own ethical principles and aiming to meet the various social problems facing the company in the communities where it operates (poţincu & poţincu, 2013). csr brings not only benefits for the community but is a mutually beneficial strategy according to the position adopted by the social and business partners. conceived as the “win – win” principle, csr is the most valuable typology strategy that can be mironescu 85 adopted by companies which are supporting the community in solving problems but they create also a favorable image influencing the profit. in the early 30s when a new reform was set up because of the monopolistic actions of the companies (gains and wages freeze), andrew carnegie, one of the most powerful businessmen, was involved in solving various social problems. since 1950, the theory that a favorable image of a business is closely related to social responsibilities was developed and applied. the 60’s have brought to the first line a factor of powerful influence upon the companies, namely the civil rights concerning the ecological issues etc. between 1970-1980, the social issues have become increasingly important, strengthening the link between them and the business. during the 1990, the csr it is generally accepted and in 2000 it becomes a very important part of the strategic management. “the biggest challenge for a company is to identify to whom it is responsible and which are the boundaries of this responsibility" (borţun, et al, 2011). a company survival depends on those persons under direct or indirect effects generated by the business. the stakeholders are a key element while analyzing the external environment of an organization that can positively or negatively influence it. csr is a term that cannot be studied without an early deep bond analysis upon the main category of professionals, namely traders, focusing our attention especially on their behavior. among these professionals and their stakeholders, a complex relationship is creating, based on trust and mutual respect. această inițiativă fiind prima într-adevăr eficientă pentru mediul de afaceri românesc. corporate social responsibility in romania was incurred by the multinationals, which are currently the main drivers of csr even now (eg coca cola, known for the initiated social projects). like any important concept, needed with a rapid assimilation, the romanian csr was originally imposed more like a fashion than as a result of the awareness of the all the stakeholders’ needs. at the first time, the domestic companies have turned to the socially responsible practices aiming to be in line with the business standards already consolidated at the european and international level. and then, after the romanian market has become increasingly competitive, the domestic companies have begun to realize the potential socio economic approach for the construction of an image-building, as a prerequisite for commercial success in the medium and long terms. so, much of multinational or national companies operating in romania made known their socially responsible practices and participate in an active exchange of experiences through a specialized site on internet (crăciun, 2005). this initiative is the first one really effective for the romanian business environment. it is necessary to define the social responsibility and the responsibilities components. carroll and buchholtz offers the following definition: “the corporate social responsibility contains what the society expects from an organization in terms of economic, legal, ethical and philanthropic terms, in a particular time.” (carroll & buchholtz, 2000). all these responsibilities must be simultaneously met and analyzed to provide a clear and real organizational view. the economic responsibility is the most important, finding itself at the base of carrol and buchholtz’s pyramid responsibilities. it is the guide for the all other responsibilities, keeping the economic operator on the market, the life of several categories of people such as shareholders, employees and customers depending on. the legal responsibility supposes the compliance with the legislation in force. businesses must operate in accordance with legal regulations. the ethical responsibilities represent the business and organizations moral behavior face to the stakeholders, all these rules being not included in the common law. a study case on csr and managerial culture in the eastern romanian private business 86 the philanthropic responsibility is voluntary, without any external constraint and looks upon the involvement in actions meaning to improve the employees’, the local communities and the community as a whole life quality. philanthropic activities are not involving legal obligations, but it is required even a legal sanction of the economic operator, in case of failure to comply the consumer’s protection legislation the difference between a philanthropic action coming from a firm and the one coming from an individual is quite visible. a philanthropic action coming from a firm is made in order to promote the main image, an individual, instead, when he making such a gesture, he has no hidden interest, without expecting anything in return. love of the human kind, which underlies philanthropy, is replaced by a reciprocal relationship where everyone involved have something to gain. all these types of responsibilities can be found in the business european context, but in a different approach. in the u.s., the economic responsibility is focused on achieving profit and manifests as certain strict obligations to the shareholders. this time, it is the legal responsibility that lies at the bottom of the responsibilities and the state plays a strong role in regulating the corporate activities. from the european perspective, even if the economic and the legal responsibility are remarkable, there are doubts about the ethical issues. even for the large companies, the morality is always a controversial subject. the philanthropic responsibility was implemented due to legal regulations, taxes paid were large and the issues relating to education and those concerning the community needs remained for the government service. the corporate social responsibility is the contribution that companies must have to support the development of the society. between a company profitability and the social responsibility there is a mutual relationship, they are strongly influencing each other. a company that engages social works for the society is better perceived, its revenues record a increasing trend; meanwhile a company that has unlimited income can afford to promote a responsible behavior, strengthening its positive image. the social responsibility is a mutually beneficial relationship between companies and communities. on the one hand, it generates a profit growth for companies, on the other hand, csr is considered as a support for vulnerable communities or social groups. the company investments in community, as involvement activities, suppose an inputs and outputs analyze thereof. the inputs may be: the time (number of paid hours of the employees involved in csr programs), the financial situation (the invested money), revenues in kind (benefits in kind: products, equipment, services, facilities offered by the company for the involvement in community activities), time management (how much worth the management time invested in community projects). outputs concern: company benefits (such as reduced absenteeism, fluctuations staff, improved reputation), community benefits (how many children or how many families have daily access to a cleansing center or the cleaning up the river sides etc.), additional support or additional support value, generated by the company’s initiative (the value of the city hall involvement or the involvement of other partners, the additional funding raised by a ngo partner etc.). the desire of companies to modernize the communities infrastructures through social, cultural or educational activities directly contribute to the increasing living standards. thus, a greater number of people will be able to buy products or services these companies offer. new customers will be attracted by those companies contributing to the prosperity in the society they live. by interacting and long-term relationship establishing with the local authorities, a company and facilitates the understanding and a good relationship with the community residents. mironescu 87 3. empirical observations and discusssions. if built correctly, the social responsibility may bring many advantages for a company: increase market share; enhances reputation; increase brand loyalty; attract and retain valuable employees. however, the csr is mutually beneficial, based on the principle of “win-win”. thus, companies create a better image by influencing the profit and the involved community groups have some support in solving social problems. all the romanian companies agree that csr must be assumed by businesses, but it is not right to interprete it just only like philanthropy the social responsibility is, broadly, a set of actions that companies do beyond their financial obligations. currently, the social responsibility actions became parts of the strategic priorities of each company. a generic approach to csr include the following areas: human rights; working conditions in the chain of suppliers, but also within the company; the environmental impact of processes, operations, products and services; responsible investments; the impact on the local community processes, operations, products and services. the social responsibility practiced by the romanian companies have two dimensions, such as: internal and external dimensions. regarding the internal side, the social responsibility was focused on two main issues: adopting responsible procedures for the employees problems, problems derived referring to human capital investments, change management, safety and security at work. the adoption of the best environmental practice, the main question arising is provided by the environmental resources management and their use in the operating system. human resources management. the major challenge for many companies is attracting and keeping highly qualified employees. thus, csr can include various measures such as providing employees decision-making power, stimulation of the lifelong learning, equal payment and career opportunities for minorities and women, better information throughout the company. safety in the workplace. this is the subject of numerous legal regulations, but governments and businesses seek additional ways to promote it, using these aspects as criteria for procurement of goods and services. voluntarily applied, these arrangements may be seen as a complement to the legislative and control activities. environmental impact management. this size is based on the idea that the environmental impact can be reduced by reducing resource consumption, reduce waste and emissions. therefore, we conclude that less or more efficient use of resources leads to both increased profitability and competitiveness. adapting to change. the contemporary european economy faced important structural changes which have affected not only employees, but also other interested stakeholders, mainly due to the closure of certain production facilities. these changes were associated with a employment decreasing trend in europe, which involved the economic, political or social crisis, from the national to the local communities. romanian companies must assume their part of responsibility for ensuring a certain degree of employment. they must be involved in the local development strategies and on the active labor markets, so they can reduce the impact of large-scale restructuring. the external dimensions. csr must be extended outside the company, involving other interested social and economic groups, such as business partners suppliers, creditors and consumers, local or central authorities, the local community or the ngos. a study case on csr and managerial culture in the eastern romanian private business 88 the main issues on the external dimensions of the csr are: partnerships with business components of the markets; partnerships with the local community; the human rights protection; a greater attention for the global environment. 4. conclusions. in conclusion, we can say that the csr takes into consideration the overall impact a company produces upon a society and the need to responsibly and specifically manage this impact on each stakeholder. when a company has a high economic performance, it can afford to devote a significant amount of its resources for social performance. also, a large financial performance leads to a greater social performance the aim of this paperwork is linked to the romanian people’s and businessmen need of morality, aspect becoming increasingly visible in the last decades. they are not only concerned about their own business and prosperity, but also about the welfare of the community where they are located. with their provided products and services, more and more companies gradually need to implement a policy of social responsibility. the company involvement, as a common citizen, has become indispensable for any economic entity wishing to obtain both the financial success and the respect of the society. the attitude of the local or regional organization referring to those activities and responsibilities aiming the groups of interest, includes also the investments inside the community, some good customer relationships, the children’s welfare and education, a support for the disadvantaged groups, a proper treatment of the environmental problems, various arts and sports funding. finally, the innovation is the primary factor the csr is based on. references borțun, d., crișan, c., dehelean, d., ducu, c., grigore, g., horia, c., oprea, l., stancu, a., (2011) parteneriate sustenabile și bune practici în responsabilitatea socială, bucurești, pag. 49. bowen, h.r., (1953), social responsibilities of the businessman, harper & row, new york, ny. caroll, a., b., buchholtz, a., k., (2000), business & society, ethics and stakeholder management, south-western publishing, cinn., ohio. crăciun, d., (2005), etică în afaceri, editura ase, bucurești. ferrel et al, (2000), business ethics: ethical decision making and cases, 4th edn. boston: houghton mifflin, pag.13. frunză,s., (2011), comunicare, etică și responsabilitate socială, editura tritonic, bucurești, pag. 128. poţincu, l., poțincu c.r., (2013), etică în afaceri și responsabilitate socială corporatistă, editura c.h. beck, bucurești, pag. 18. http://www.wbcds.org-world business council for sustainable development. (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 48 applicability of consolidated techniques in the view of romanian accounting regulations roşu cristina “vasile alecsandri” university of bacău cristinaciuraru@yahoo.com abstract the accounting regulations are more and more interested in groups of companies. in some cases, these regulations require for preparing the consolidated financial statements. this is the task of the parent company who keeps the consolidated accounts. to accomplish its goals, the consolidated accounting uses a couple of, so-called, consolidation techniques. these are applied in the case of groups of companies with a complex structure. their goal is to elaborate the consolidated financial statements using a set of methods and empirical skills. in this article we synthesize and apply the consolidation techniques in the view of romanian accounting regulations. the romanian practice has revealed, especially, two techniques: one based on direct consolidation and another one based on multiple levels (phased consolidation). therefore, this work regards only the technical side of consolidated accounting, accounting records being evaded. furthermore, we focus only on the preparation of the consolidated balance sheet in the case of some hypothetical groups of companies. keywords group of companies; consolidation techniques; consolidated financial statements; consolidated balance sheet. jel classification m41 introduction the romanian dictionary defines the concept of “technique” as a set of procedures and skills specific to a certain field (www.dexonline.ro). consolidated accounting, as a branch of financial accounting applied to group of companies, uses, as an instrument to accomplish its goal (preparation and presentation of consolidated financial statements), a so-called consolidation technique. therefore, consolidation technique refers to a set of procedures and skills used, especially, to prepare and present consolidated financial statements. the first romanian regulations related to consolidated accounting, approved by o.m.f. no. 772/2.000, stipulate two consolidation techniques, namely phased consolidation and direct consolidation (o.m.f. no. 772/2.000, art. 60). some authors mention two others consolidation techniques: one based on modular consolidation and another one based on fluctuations methods (feleagă and ionaşcu, 1998, pp. 686-687). modular consolidation technique consists in modular division of subsidiaries’ financial statements, after which, these are regrouped, according to group’s management strategy, by activity type, geographical area, production sector etc. the technique based on fluctuations methods consists in the integration of previous consolidation data with current consolidation data, which allows solving two problems at once: evaluation of consolidation area year by year and accountancy of consolidation operations specific to current year. roșu 49 consolidation techniques are applicable to complex groups (figure 1) which are characterized also by indirect affinities between parent company and its subsidiaries. figure 1 group of companies with a complex structure source: own processing consolidation techniques are applied together with consolidation methods, both pursuing the same objective: preparation and presentation of consolidated financial statements. the following, we present the main characteristics of both consolidation techniques stipulated by the romanian regulations. phased consolidation technique according to phased consolidation’s rules, consolidated financial statements are prepared for each subgroup of the group of entities applying, at each level, the appropriate consolidation method (according to control percent). the first subgroup includes the entity (ies) that is (are) placed at the end of the affiliations chain (according to affiliations’ flow chart) and its (their) parent entity. the subgroup’s parent entity, in this case, is the very next entity (according to affiliations’ flow chart) towards the parent entity of the entire group. the consolidated financial statements of the next subgroup are prepared based on last subgroup’s consolidated financial statements and the individual financial statements of the next parent entity and so on towards parent entity of the entire group. at this final level the consolidated financial statements of the entire group are prepared. thus, in figure 1, at the first consolidation level, the d and e entities are consolidated within their parent entity namely a for d and b for e. next level is consolidation of these two subgroups together with c entity within the m entity. in preparation of consolidated financial statements of each subgroup they are used the participation (interest) percent owned by the parent company of that subgroup in the consolidated entity (ies), while the consolidation method depends on the control percent owned by the parent company of the entire group in the consolidated entity (ies). direct consolidation technique direct consolidation consists in consolidation of each subsidiary directly within the parent company of the group. thus, a single set of consolidated financial statements is prepared. for that purpose, the shareholders’ equities of each subsidiary are divided between the parent company and minority shareholders (non-controlling interest) based on their participation percent in each subsidiary. however, when eliminate the carrying amount of investment in each subsidiary they are used the participation percent of applicability of consolidated techniques in the view of romanian accounting regulations 50 both, the parent company of group and the minority shareholders, in the entity that owns the investment that are eliminated. therefore, when the parent company owns indirectly the investment, the participation percents, used in either case, are different. in figure 1, the a, b, c, d and e entities are directly consolidated within the parent company. when divide the shareholders’ equity of d and e entities they are used the participation percent owned in these entities by both, m company and minority shareholders. instead, when eliminate the carrying amount of a’s and b’s investments in d and e, they are used the participation percent of both, m company and minority shareholders, owned in a and b entities. phased consolidation versus direct consolidation in this section, we present, comparatively, some characteristics of both consolidation techniques together with their main advantages and disadvantages (table 1). table 1 phased consolidation versus direct consolidation characterization criteria phased consolidation direct consolidation 1. goal preparation and presentation of the annual consolidated financial statements. preparation and presentation of the annual consolidated financial statements. 2. applicability area small and medium groups of companies; the groups flow charts are simple and contain at least two dependency levels. small, medium and large groups of companies; the groups flow charts are complex and very complex and contain at least two dependency levels. 3. procedure consolidation based on multiple levels in accord with group’s flow chart; at each level one or more subgroups are constituted and for each subgroup the consolidated financial statements are prepared. direct consolidation of each subsidiary within the parent company, whatever the number of dependency levels; a single set of consolidated financial statements is prepared. 4. principles consolidations start with the entity placed at the end of the affiliations chain (according with affiliations’ flow chart) and continue, consecutively, until the parent entity of the entire group is one of the consolidated entities. the order of consolidations is not essential. 5. instruments at each consolidation level, the participation (interest) percent owned by the parent company of each subgroup in the consolidated entity (ies). the participation (interest) percent owned by the parent company of the entire group in each consolidated entity, regardless of dependency level. 6. distribution of shareholders’ equities at the level of each subgroup, according to participation percent in consolidated entity, between subgroup’s parent entity and minority shareholders (and others entities within the consolidation area, but out of subgroup). between the parent company of the entire group and minority shareholders, according to their participation percents in consolidated entity. roșu 51 7. distribution of carrying amount of the investment (together with their elimination) at the level of each subgroup, its entire value is attributed to parent entity of subgroup, as a consequence of direct affiliation. at the level of group, between the parent company of group and the minority shareholders, according to their participation percent in the entity that owns the investment that is eliminated. 8. advantages allow to divide the financial information within the group as a result of preparation the consolidated financial statements at the level of each subgroup. provide, directly, promptly and low-priced information about the financial position, performance and changes in financial position of group of companies; allow to better control the distribution of shareholders’ equities between the parent company of the group and minority shareholders. 9. disadvantages imply: high volume of work for preparation the consolidated financial statements of each subgroup; high cost; non-applicability for all types of groups of entities. it does not allow: analysis within the group which can satisfy the objectives of internal management (provide information to make good decisions); group segmentation by activity type, geographical area etc. source: own processing based on literature (pitulice, 2007, pp. 116-130; bogdan et. al., 2011, pp. 89-98; feleagă and ionaşcu, 1998, pp. 686-687; popa et al., 2007, pp. 367-386; deju, 2013, pp. 91-105; săcărin, 2001, pp. 38-48) whatever the selected technique, the consolidated financial statements are the same (as we show in the following). studies regarding the applicability of consolidation techniques in this section, we present the applicability of consolidation techniques preparing the consolidated balance sheet of some hypothetical groups of companies (the same rules are applied also when prepare income statement). considering this work regards only the technical part of consolidated accounting, we ignore the accounting records. as a consequence, to simplify the following examples, we assume that the parent company has owned subsidiaries’ shares since their incorporation. therefore full subsidiaries’ retained earnings are post-acquisition, and between entities of the group there are no transactions. note 1: we use the report form of the balance sheet but in a very simplified version, considering that, regardless of the items number of balance sheet, the rules of consolidation techniques and of consolidation methods remain the same. example 1 the “m” company has owned 80% shares of “a” company and the “a” company has owned 40% of “b” company. below there are the separate financial statements, as at 31 december n, of these three entities that compose the group. applicability of consolidated techniques in the view of romanian accounting regulations 52 table 2 separate financial statements of “m”, “a” and “b” entities balance sheet items m a b shares in affiliated entities investments in associates diverse assets 160 440 40 410 200 total assets 600 450 200 share capital reserves profit (loss) for the period 200 100 50 200 100 100 100 20 70 shareholders’ equity liabilities 350 250 400 50 190 10 total equity and liabilities 600 450 200 the chart of group “m” is as below: 80% 40% the first step in preparation the consolidated balance sheet is to establish how the m company controls (mostly through voting power) the others two companies. for that purpose they are calculated the voting power or the, so-called, control percent owned in each subsidiary (cp) on the basis of is established the consolidation method. thus: cpm→a = 80% → requires global integration method cpm→b = 40% → requires equity method a. preparation of balance sheet using phased consolidation technique 1st consolidation level: consolidation of “b” entity within the “a” entity the participation (interest) percent (pp) used for this consolidation level is: ppa→b = 40% table 3 consolidated balance sheet of subgroup “a” balance sheet items amount investments accounted for using the equity method (40% x 190) diverse assets 76 410 total assets 486 share capital consolidated reserves (100 + 40% x 20) consolidated profit (loss) for the period (100 + 40% x 70) 200 108 128 shareholders’ equity liabilities 436 50 total equity and liabilities 486 2nd consolidation level: consolidation of subgroup “a” within the parent entity “m”. the participation (interest) percent (pp) used for this consolidation level is: ppm→a = 80% m a b roșu 53 table 4 consolidated balance sheet of group “m” balance sheet items amount investments accounted for using the equity method diverse assets (410 + 440) 76 850 total assets 926 share capital consolidated reserves (100 + 80% x 108) consolidated profit (loss) for the period (50 + 80% x 128) non-controlling interests, of which: non-controlling interests – profit (loss) of the period (20% x 128) non-controlling interests – other own capital (20% x 308) 200 186.4 152.4 87.2 25.6 61.6 shareholders’ equity liabilities (250 + 50) 626 300 total equity and liabilities 926 b. preparation of balance sheet using direct consolidation technique in order to prepare the consolidated balance sheet using direct consolidation technique, we use two intermediate tables by means of which we divide the shareholders’ equities of each subsidiary between the parent company and minority shareholders (non-controlling interest) based on their participation percent in each subsidiary. also, when eliminate the carrying amount of investment in each subsidiary, we divide it between the parent company and minority shareholders, according to their participation percent in entity who owns the investment that is eliminated, together with the elimination of parent’s portion of share capital of each subsidiary. the participation (interest) percents (pp) used for each consolidation are: 1st consolidation: ppm→a = 80%; 2nd consolidation: ppm→b = 32% table 5 distribution of shareholders’ equity of “a” entity no. shareholders’ equity total m’s interest (80%) non-controlling interests (20%) 1 share capital 200 160 40 2 reserves 100 80 20 3 profit (loss) for the period 100 80 20 4 total equity (1 + 2 + 3) 400 320 80 5 elimination of investment in a entity 160 160 6 distribution (4 5) 240 160 80 table 6 distribution of shareholders’ equity of “b” entity no. shareholders’ equity total a’s interest (40%) m’s interest in b through a (80%) non-controlling interests in b through a (20%) 1 share capital 100 40 32 8 2 reserves 20 8 6.4 1.6 3 profit (loss) for the period 70 28 22.4 5.6 4 total equity (1 + 2 + 3) 190 76 60.8 15.2 5 elimination of investment in b entity 40 40 32 8 6 distribution (4 5) 150 36 28.8 7.2 applicability of consolidated techniques in the view of romanian accounting regulations 54 note 2: the parent entity (“m”) does not control its investee in “b” entity. therefore, she is entitled (according with her participation percent in “a”) only to “a”’s portion of “b”’s equities. table 7 consolidated balance sheet of group “m” balance sheet items amount investments accounted for using the equity method (40% x 190) diverse assets (410 + 440) 76 850 total assets 926 share capital consolidated reserves (100 + 80 + 6.4) consolidated profit (loss) for the period (50 + 80 + 22.4) non-controlling interests, of which: non-controlling interests – profit (loss) of the period (20 + 5.6) non-controlling interests – other own capital (40 + 20 + 1.6) 200 186.4 152.4 87.2 25.6 61.6 shareholders’ equities liabilities (250 + 50) 626 300 total equity and liabilities 926 example 2 the “m” company has owned 25% shares of “a” company and 60% shares of “b” company. “a” company has owned 30% of “b” company. below there are the separate financial statements, as at 31 december n, of these three entities that compose the group. table 8 separate financial statements of “m”, “a” and “b” entities balance sheet items m a b shares in affiliated entities (m in b) investments in associates m in a a in b diverse assets 60 50 490 30 420 200 total assets 600 450 200 share capital reserves profit (loss) for the period 200 100 50 200 100 100 100 20 70 shareholders’ equity liabilities 350 250 400 50 190 10 total equity and liabilities 600 450 200 the chart of group “m” is as below: 25% 30% 60% thus: cpm→a = 25% → requires equity method cpm→b = 60% → requires global integration method m a b roșu 55 a. preparation of balance sheet using phased consolidation technique 1st consolidation level: consolidation of “b” entity within the “a” entity the participation (interest) percent (pp) used for this consolidation level is: ppa→b = 30% table 9 consolidated balance sheet of subgroup “a” balance sheet items amount diverse assets (420 + 200) 620 total assets 620 share capital consolidated reserves (100 + 30% x 20) consolidated profit (loss) for the period (100 + 30% x 70) non-controlling interests, of which: non-controlling interests – profit (loss) of the period (10% x 70) non-controlling interests – other own capital (10% x 120) m’s direct interests in b, of which: m’s interests – profit (loss) of the period (60% x 70) m’s interests – other own capital (60% x 120) 200 106 121 19 7 12 114 42 72 shareholders’ equities liabilities (50 + 10) 560 60 total equity and liabilities 620 note 3: the “m” interest in “b” is separately mentioned, as it can not be considered a non-controlling interest. 2nd consolidation level: consolidation of subgroup “a” within the parent entity “m”. the participation (interest) percent (pp) used for this consolidation level is: ppm→a = 25% table 10 consolidated balance sheet of group “m” balance sheet items amount investments accounted for using the equity method (25% x 427)1 diverse assets (490 + 60% x 200) 106.75 610 total assets 716.75 share capital consolidated reserves (100 + 25% x 106 + 60% x 20) consolidated profit (loss) for the period (50 + 25% x 121 + 60% x 70) 200 138.5 122.25 shareholders’ equities liabilities (250 + 60% x 10) 460.75 256 total equity and liabilities 716.75 note 4: “m” directly owns an interest in “b” which affects the assets, the equity and the liabilities of group. 1 427 represents the total equity of subgroup “a”, disregarding non-controlling interests and “m”’s interests. applicability of consolidated techniques in the view of romanian accounting regulations 56 b. preparation of balance sheet using direct consolidation technique the participation (interest) percents (pp) used for each consolidation are: 1st consolidation: ppm→a = 25%; 2nd consolidation: ppm→b = 67.5% table 11 distribution of shareholders’ equity of “a” entity no. shareholders’ equity total m’s interest (25%) 1 share capital 200 50 2 reserves 100 25 3 profit (loss) for the period 100 25 4 total equity (1 + 2 + 3) 400 100 5 elimination of investment in a entity 50 50 6 distribution (4 5) 350 50 table 12 distribution of shareholders’ equity of “b” entity no. shareholders’ equity total m’s interest (60%) a’s interest (30%) m’s interest in b through a (25%) 1 share capital 100 60 30 7.5 2 reserves 20 12 6 1.5 3 profit (loss) for the period 70 42 21 5.25 4 total equity (1 + 2 + 3) 190 114 57 14.25 5 elimination of investment in b entity a in b m in b 90 60 30 7.5 30 60 60 30 7.5 6 distribution (4 5) 100 54 27 6.75 table 13 consolidated balance sheet of group “m” balance sheet items amount investments accounted for using the equity method (25% x 400 + 7.5% x 190 – 7.5) diverse assets (490 + 60% x 200) 106.75 610 total assets 716.75 share capital consolidated reserves (100 + 25 + 12 + 1.5) consolidated profit (loss) for the period (50 + 25 + 42 + 5.25) 200 138,5 122.25 shareholders’ equities liabilities (250 + 60% x 10) 460.75 256 total equity and liabilities 716.75 conclusions preparation of the consolidated financial statements, in the case of complex groups of societies, is a technical issue of the parent entity of the entire group, as we show in this article. however, preparation of the consolidated financial statements is based on accounting records. in this article we ignore them and we focuses on the technical side of the roșu 57 consolidated accounting. in a following work, we will approach also the accountant side of consolidated accounting. consolidation techniques are applicable in the case of complex group of societies. in this article we have applied two consolidation techniques that are recognized in romanian regulations, namely phased consolidation and direct consolidation. the direct consolidation technique is mostly used in the case of group of companies with a complex and very complex flow chart because it promptly allows preparing the consolidated financial statements only at the level of parent company of the group. the phased consolidation technique is applied, especially, in the case of group of companies with a simple flow chart, this technique requiring the preparation of consolidated financial statements at each dependency level. in a particular case of group of entities, whatever the consolidation technique that they are applied, the consolidated financial statements of the group are exactly the same. references bogdan, v. et al. (2011), raportarea financiară la nivelul grupurilor de societăţi – repere contemporane, bucureşti, editura economică. deju, m. (2013), contabilitatea consolidată curs universitar, bacău, editura alma mater. feleagă, n., ionaşcu, i. (1998), tratat de contabilitate, vol. i-ii, bucureşti, editura economică. pitulice, c. (2007), teorie şi practică privind grupurile de societăţi şi situaţiile financiare consolidate, ploieşti, editura contaplus. popa, a.f. et al. (2007), studii practice privind aplicarea standardelor internaţionale de raportare financiară, ploieşti, editura contaplus. săcărin, m. (2001), contabilitatea grupurilor multinaţionale, bucureşti, editura economică. o.m.f. nr. 772/2000 de aprobare a normelor privind consolidarea conturilor, published in m. of. partea i nr. 374 din 11 august 2000, repealed. www.dexonline.ro. studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 44 the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables ristina tri rahmawati universitas pembangunan nasional veteran jakarta ristina.tri@upnvj.ac.id muhammad anwar fathoni universitas pembangunan nasional veteran jakarta mfathoni@upnvj.ac.id abstract indonesia is ranked second the largest halal cosmetic consumer country in the world with a total consumption of us$ 4 billion. in fact, indonesia hasn’t been first rank of the 10 indicator countries for halal pharmaceutical and cosmetic producers. halal cosmetic manufacturers in indonesia still ranked sixth, this condition is inversely to the total consumption of the indonesian residential to halal cosmetics. this study aims to determine the effect of advertising and product quality on halal cosmetic purchasing decisions with online consumer reviews as a mediating variable. research method is descriptive quantitative. research test is the inner model, outer model, hypothesis testing and mediation testing with warppls 7.0. population is men and women who have bought and used halal cosmetics and domiciled in jabodetabek. samples are 210 people using purposive sampling. the results of a study found advertising, product quality, and online consumer review significant and positive on the purchasing decisions, and online consumer review was able to mediate advertising and product quality on purchasing decisions. the research is to increase indonesian halal cosmetic manufacturers to become the world’s main producer of halal cosmetics and innovate in the growth of halal cosmetics industry. keywords advertising; halal cosmetics; product quality; purchasing decisions; online reviews jel classification l6; m3 introduction the halal industry is the most developed and growing sector from year to year. indonesia is a country that has great power to develop the halal industrial sector, because it has the largest muslim population in the world. the halal industry in indonesia continues to develop and receives support from various parties, ranging from government policies, regulations, halal certificates, and technological developments in an effort to develop the halal industry (fathoni & syahputri, 2020). the halal industry is predicted to experience an increase in revenue in 2024 for the halal product and lifestyle sector (standard, 2020). indonesia as a producer of the halal industry among the 10 indicator countries of the islamic economy 2020/21 is still not able to rank in the top five producers in various halal industries, namely islamic finance, halal travel, halal pharmaceuticals and cosmetics (standard, 2020). halal cosmetics are the answer for muslim women who want to treat their faces to their feet without violating the teachings of islam (maria, 2020). changes in needs make cosmetics a primary need for every women, so it is rahmawati, fathoni 45 important to pay attention to safe cosmetics when using cosmetics (zukhrufani & zakiy, 2019). indonesia as the country's halal cosmetic producer is still in the sixth rank. table 1. top ten pharmaceutical & cosmetic producer countries 2020/21 rank country total muslim 1 malaysia 16,318,355 2 united arab emirates 4,615,081 3 singapore 781,558 4 iran 82,500,000 5 egypt 87,500,000 6 indonesia 229,000,000 7 french 5,720,000 8 south africa 1,050,000 9 turkey 79,850,000 10 tunisia 11,190,000 source: state of the global islamic economy 2020/21 (processed) singapore is a country that is included in the top five halal cosmetic producers and the only country that does not have a muslim majority population, but indonesia is still unable to compete with singaporean products. indonesia is a country with the highest muslim population in the world, but it has not been optimized in utilizing the halal economy so that indonesia has not been able to become the main producer of halal needs for the world (fathoni & syahputri, 2020). table 2. five countries with the highest consumers of halal cosmetics rank country total consumption total muslim 1 india $6 billion 195 billion 2 indonesia $4 billion 229 billion 3 russia $4 billion 20 billion 4 malaysia $4 billion 16, 31 billion 5 turkey $4 billion 79,85 billion source: state of the global islamic economy 2020/21 (processed) according to a report from the state of the global islamic economy 2020/21 data, as a consumer of halal cosmetics, indonesia ranks second with consumption of us$4 billion (standard, 2020). this condition is inversely proportional to the total consumption of the indonesian population for halal cosmetics. the fact is that indonesia has not been able to become the first rank of the 10 indicator countries for halal pharmaceutical and cosmetic producers. the majority of indonesian people buy halal cosmetics online, where the highest sales from an e-commerce shopee, bukalapak and tokopedia are wardah brands originating from indonesia. cosmetics purchases in indonesia are still dominated by brands from south korea, namely nature republic and innisfree, which are ranked second and third (digimind.id, 2020). local halal cosmetics have not developed optimally because they compete with imported halal cosmetic products from non-muslim countries such as singapore, thailand, and south korea which flood the cosmetic market in indonesia. indonesia is required to participate fairly and contribute to developing halal cosmetics both nationally and internationally, not only as users of cosmetics but also as producers the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables 46 of halal cosmetics (nursyamsiah, 2018). cosmetics are not only used by women but also by men. men are starting to realize the importance of taking care of hair to feet. products used by men are different from products used by women. men's halal cosmetic products are dominated by facial care because men's cosmetic products are not much found (basyarahil, 2017). men who use cosmetics are considered unnatural because cosmetics are considered not too important (juliarty, 2019). according to the fatwa mui no. 26 of 2013, that every muslim may use cosmetics, as long as it is halal, pure and doesn’t contain forbidden ingredients. consumers when purchasing products don’t only focus on halal but also be careful in choosing products to suit their needs. consumers will consider several factors when deciding to buy cosmetics (yanti & darwanto, 2021). based on the problem from the background, it is deemed necessary to conduct further research related to the decision to purchase halal cosmetics. the novelty of the research is that there has not been a research title that discusses the three variables simultaneously, namely advertising, product quality and online consumer reviews, and also not found online consumer reviews as a mediating variable. therefore, researchers will discuss advertising and product quality on purchasing decisions with online consumer reviews as a mediating variable. literature review purchase decision purchasing decisions in islam have limitations that are born from islam. the limitations of purchasing decisions in a muslim's review are using halal products, prioritizing primary or basic needs, frugal, and aiming for the pleasure of allah swt (muflih, 2006). according to mankiw (2008) consumer purchasing decisions are influenced by price, quality and income. consumers before purchase will consider the price of the two products and buy the product that has a relatively cheaper price. purchase decision is the attitude of a person in making a purchase after comparing one type of product with another type of product as an alternative choice (setiadi, 2017). purchasing decision indicators according to (mongi et al., 2014) as follows: 1. the need to use a product 2. desire to try a product 3. stability of the quality of a product 4. product repurchase decisions advertisement advertising is a very important promotional tool for companies whose products are aimed at the wider community (morissan, 2010). according to lupiyoadi (2013) advertising is useful for building attention to the existence of the product being offered, expanding information about a product, convincing potential buyers to buy or use the product, and recognizing products from other products. ads must have 5 elements (kotler & keller, 2016) among others : 1. mission is the purpose of an advertisement. the purpose of advertising is to inform or introduce a product to consumers so that they are influenced to buy the product. 2. message (message). the message displayed by an advertisement must be able to explain the added value of the product through sentences and images. advertising is called a storytelling medium that informs the buyer about the clarity of the product. 3. media. media is used to reach the target market effectively and cost-effectively. media is also the best tool for advertising dissemination. rahmawati, fathoni 47 4. money (funding). advertising budgets are determined by pricing decisions on each feature, marketing reach, frequency and impact. 5. measurement. measurements are references obtained after an advertising campaign, to determine whether an ad is successful or makes a brand's reputation worse. a good advertisement will give a good and pleasant impression so that it will be easily remembered by consumers. product quality quality is the ability of a product to meet its specifications (lupiyoadi, 2013). companies need to improve the quality of their products to win the competition, the more satisfied a consumer is with a product, the longer the consumer will stay with the product.islam teaches companies to make quality products and be transparent in the information on product packaging (zuardi & sari, 2019). measurement of product quality is divided into eight measurements according to sviokla in (lupiyoadi, 2013, hlm. 214), among others : 1. performance relates to the use of the basic benefits of a purchased product. 2. the specialty of the product is secondary benefits or accessories. 3. reliability is the usefulness of a product which consists of two results, namely satisfactory or not within a certain period of time. products that have greater benefits then the product can be relied on. 4. conformity, is the usability of the product in accordance with the basic function and serves to meet certain specifications or not and then found deficiencies in the product. 5. durability, which means how long the product lasts before the product is used up. the frequency of consumer consumption is faster, the greater the durability of the product. 6. service expertise, including speed, convenience, follow-up on complaints that are deemed unsatisfactory. 7. beauty, relates to the appearance of the product packaging as seen from the appearance, taste, smell, and appearance of the product. product packaging is good then the quality of the product is maintained. 8. perceived quality, is the result of after using a product. consumers who are dissatisfied with the product because of the possibility that consumers do not understand the use of the product purchased. online consumer reviews online consumer reviews are a type of electronic word of mouth that share product information from the consumer's perspective (lee & watkins, 2016). online consumer reviews is defined as a place to get product information that is not available elsewhere in the hope that reading reviews can reduce risk in purchasing decisions and also to reduce search time for products that consumers want to buy (khammash, 2008). six conditions for an online review to be effective (zhao et al., 2015) as follows : 1) review benefits. the benefit of the review is the information of a product online so as to facilitate the process of making consumer purchasing decisions. 2) review skills. the expertise of someone who understands more about the product will have a greater influence on consumer purchasing decisions, through online consumers reviews can find someone who understands about the product. 3) review time. the process of searching for data by consumers is faced with large amounts of information based on different times. online review must always provide up-to-date information that will attract the attention of potential consumers. 4) number of reviews. number is a meaningful attribute of word of mouth communication and plays a role in measuring the number of interactive messages. the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables 48 the number of reviews is a number of opinions or testimonials from a consumer. online reviews that agree, consumers increasingly believe in these reviews and products. 5) review rating. there are two types of online review values, namely positive and negative reviews. negative reviews are caused by dissatisfaction with the use of a product, consumers who have a disappointing experience will be more active in disseminating information. 6) complete review. completeness aims to measure how detailed and complete a review is. consumers need a complete online review, the completeness of the review is the key to making decisions when faced with the uncertainty of available information. halal cosmetics cosmetics are an important requirement in the field of beauty (sukristiani et al., 2014). cosmetics according to bpom ri number 19 of 2021 concerning guidelines for follow-up on supervision results of traditional medicines, quasi medicines, health supplements, and cosmetics, explains that cosmetics are beauty care products used for external parts of the human body such as epidermis, hair, nails, lips, teeth and others and functions to clean, scent, change appearance, and maintain healthy skin and body (peraturan.go.id, 2021). halal cosmetics in appearance are almost the same as ordinary cosmetics, the difference is that halal cosmetics do not contain haram ingredients which are prohibited by islam. the guidelines used in choosing halal cosmetic products are similar to choosing halal food, namely in qs al baqarah verse 168. methodology this research uses a quantitative descriptive method. variables will be measured based on indicators of each exogenous and endogenous variable using a likert scale of 1-4, for the doubtful choice is removed to avoid ambiguous answers and are deemed less valid. sampling is non-probability sampling using purposive sampling technique (sugiyono, 2013). the sample of this study uses the criteria that men and women who live in jabodetabek, have bought and used halal cosmetics. determination of the number of samples using the formula according to (hair et al., 2010). researchers may choose in determining the number of samples between 5 to 10, if the sample obtained is less than 10 times, it must be at least 5 times. this research has 23 questions, so counting samples is 23 times 9 is 207, to minimize the contents of the wrong questionnaire then the samples becomes 210 respondents. this study uses primary and secondary sources. the primary sources were obtained by the authors from men and women who had purchased and used halal cosmetic products domiciled in jabodetabek. the secondary sources used are books, government publications, news, journals and other sources related to research. researchers collect data by distributing questionnaires to a predetermined population through google froms or an application similar. the data analysis technique of this research uses the inner model test, outer model test, hypothesis test and mediation test using warppls 7.0 software. results and discussion deskriptive respondent data this research obtained 210 respondents of women and men who have bought and use the product halal cosmetics in jabodetabek. respondent data will be described based on the characteristics of the questionnaire that has been researched, as follows: rahmawati, fathoni 49 table 3. respondent data by gender gender respondent percentage (%) men 44 21 % women 166 79 % total 210 100 % source: data processed, 2021 based on the table, it can be concluded that the majority of consumers of halal cosmetic products in this study were women amounting to 166 respondents with a percentage of 79%, and men amounting to 44 respondents with a percentage of 21%. table 4. respondent data by age age respondent percentage (%) 12 23 years (generation z) 134 63,8 % 24 39 years (millennial generation) 60 28,6 % 40 55 years (generation x) 15 7,1 % 54 74 years (baby boomer generation) 0 0 % > 75 years (pre-boomer generation) 1 0,5 % total 210 100 % source: data processed, 2021 based on the table, it is concluded that consumers of halal cosmetic products in this study are the majority aged 12-23 years who are included in the category z generation aged 12-23 years as many as 142 respondents by 63.8%. table 5. respondent data based on domicile domicile respondent percentage (%) jakarta 116 55,2 % bogor 15 7,1 % depok 20 9,5 % tangerang 47 22,4 % bekasi 12 5,7 % total 210 100 % source: data processed, 2021 based on the table, it is concluded that the majority of consumers of halal cosmetic products are domiciled in jakarta as many as 116 people with a percentage of 55.2%. table 6. respondent data based on work work respondent percentage (%) student 58 27,6 % civil servant 8 3,8 % private employees 100 47,6 % entrepreneur 12 5,7 % housewife 16 7,6 % other 16 7,6 % total 210 100 % source: data processed, 2021 based on the table, it is concluded that the majority of consumers of halal cosmetic the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables 50 products in this study work as private employees as many as 100 people by 47.6%. measurement model (outer model) convergent validity test convergent validity aims to prove that each question from the research variable indicators can be understood by respondents who respond to statements. the loading factor size is generally accepted as 0.708 or higher and the loading factor value < 0.5 must be removed from the model, however from the loading factor value exceeding 0.5 to 0.6 it is still considered to meet the value requirements and it is said that the indicator is valid. from the results, it was found that there were still questions that had scores below 0.50, although the majority of the questions had scores above 0.50. therefore, questions that have a value below 0.50 must be deleted, this is because a value below 0.50 is considered invalid or does not meet the requirements for convergent validity. then the researcher will delete the loading factor value below 0.50, namely kp4 of 0.422. discriminant validity test discriminant validity aims to prove that each question from the research variable indicators is not messed up by respondents who respond to questions. the measurement indicator through the aves value of the extracted average variance must be higher than the correlation involving exogenous and endogenous variables, besides the aves value must be above 0.50. the results of discriminant validity: table 7. results average variance extracted (aves) variable average variance extracted (aves) purchase decision 0.721 advertisement 0.795 product quality 0.760 online consumer reviews 0.717 source: data processed, 2021 based on the table, it shows that the aves value of each variable has a value above 0.50 and is higher than the correlation involving exogenous and endogenous variables, meaning that all variable data are valid and meet the requirements of discriminant validity. internal consistency reliability test this test aims to measure how capable indicators can measure variables. in testing the reliability of internal consistency there are 2 ways, namely the value of composite reliability and cronbach alpha. the requirements for the value of composite reliability and cronbach alpha must be above 0.70, and the composite value must be higher than the cronbach alpha. the results of internal consistency reliability: table 8. composite reliability test variable composite reliability cronbach alpha purchase decision 0.841 0.762 advertisement 0.872 0.804 product quality 0.905 0.878 online consumer reviews 0.861 0.805 source: data processed, 2021 rahmawati, fathoni 51 based on the table, it is concluded that the composite reliability and cronbach alpha values are reliable and meet the internal consistency reliability requirements structural model (inner model) test to find out the model has a match with the data, it can be seen from the average path coefficient (apc), the average r-squared (ars) and average variance factor (avif). the model fit is accepted if the apc and ars p value < 0.05 while the avif must be smaller than 5. the results of the test model fit: table 9. model fit and quality indices after removal model fit and quality indices indeks p value criteria description average path coefficient (apc) 0,288 p<0,001 p<0,05 received average r-squared (ars) 0,388 p<0,001 p<0,05 received average block variance inflation factor (avif) 1.488 ≤ 5 and ideally ≤ 3,3 received source: data processed, 2021 after the model fit test is met, then the next step is to look at the value of the coefficient of determination (r2). the test of the r-square coefficient of determination is needed to find out how much influence the x variable has on the y variable. the category of the r-square coefficient of determination is divided into three, namely substantial at 0.75; moderate by 0.50; and weak by 0.25. table 10. result effect sizes for path coefficients variable r-square description advertisement → online consumer reviews → keputusan pembelian 0,438 weak product quality → online consumer reviews → purchase decision source: data processed, 2021 based on the table, it is found that the value of the coefficient of determination of purchasing decisions is 43.8%, the remaining 56.2% is explained by other variables not examined. the r-square value for the purchase decision variable of 43.8% is a weak category. hypothesis test hypothesis testing was conducted to determine the effect of each variable through path analysis with the help of warppls 7.0 software. the effect of advertising on the purchase decision to halal cosmetics the results of advertising testing on purchasing decisions for the path coefficient value are positive at 0.172 with a pvalue 0.005 where the value <0.05 means significant. the results of the study found that h1 was accepted because the advertising variable had a significant and positive effect on purchasing decisions for halal cosmetics in jabodetabek. more and more advertising information will increase consumer purchasing decisions, otherwise if the level of advertising decreases it can reduce purchasing decisions. research results in line with previous research that advertising has an effect on purchasing decisions (astuti, 2019; binti rahim et al., 2015; gustini & istiqomah, 2021; widyaningrum, 2018). although these studies were conducted in different cities, the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables 52 they used the same research theme, namely halal cosmetics and still showed the same results. the research results are different from the research ayuniah (2018) that advertising has no effect on wardah cosmetic purchasing decisions on active students of the 2011-2014 class majoring in management, faculty of economics, gunadarma university in depok, and research septiyani & rakhmawati (2020) stated that advertising has a negative influence on wardah's cosmetic purchasing decisions. figure 1. test results research source: data processed, 2021 the effect of product quality on the purchase decision to halal cosmetics the results of product quality testing on purchasing decisions for the path coefficient value is positive at 0.400 with p value < 0.001 where the value < 0.05 means significant. the results of the study found that h2 was accepted, because the product quality variable had a significant and positive effect on purchasing decisions for halal cosmetics in jabodetabek. good product quality will affect purchasing decisions, if halal cosmetic products have the quality that consumers expect, then consumers will be gradual with these products and make repeated purchases. poor product quality can reduce the level of purchasing decisions. research results in line with previous research by eka sri handayani (2020) and ayuniah (2018) concluded that product quality has a positive effect on purchasing decisions. although these studies were conducted in different cities and subjects, they used the same research theme, namely halal cosmetics and still showed the same results. the results of the study are different from the research conducted anggadwita et al. (2019) and rosida (2018) that quality doesn’t affect the decision to purchase halal cosmetics, namely in public who live in several villages in indonesia and muslim women in west java. more research from septiyani & rakhmawati (2020) shows that quality has a negative influence on wardah cosmetic purchasing decisions. the effect of online consumer reviews on halal cosmetics purchase decisions test result online consumer reviews on purchasing decisions for the path coefficient value are positive in 0.222 with a p value < 0.001 where the value < 0.05 means significant. the results of the study found that h3 was accepted because the variable of online consumer reviews had a significant and positive effect on purchasing decisions for halal cosmetics in jabodetabek. good online reviews will encourage consumers to make purchases, on the contrary if the level of online consumer reviews decreases or is rahmawati, fathoni 53 bad, it can affect the level of purchasing decisions. research results in line with previous research astuti (2019) and lestari & lutfitah (2020) concluded that online consumer reviews have an effect on purchasing decisions, namely on female students who use wardah in kebumen regency and consumers who buy wardah products online in surabaya. although these studies were conducted in different cities and indicators, they used the same research theme, namely halal cosmetics and still showed the same results. the results of the study are different from the research conducted amin & rachmawati (2020) explained that online consumer reviews have a negative effect on purchasing decisions on muslim women who use wardah in the city of surabaya. mediation test the mediation test was analyzed from the value of the indirect effect and the value of the direct effect. the mediation test was assessed by its level of significance (p value). 1. the study conducted a direct effect test between exogenous and endogenous. figure 2. test results direct effect source: data processed, 2021 2. the study conducted a indirect effect by adding a mediating variable among the research variables. table 11. results indirect and total effects with 2 segments no variable indirect effects p value description 1 advertisement → online consumer reviews → purchase decision 0,048 0,161 not significant 2 product quality → online consumer reviews → purchase decision 0,096 0,023 significant source: data processed, 2021 the effect online consumers reviews in mediating advertising and product quality on halal cosmetics purchase decisions the results of advertising testing on halal cosmetic purchasing decisions through online consumer reviews found that the indirect effect value decreased from the direct effect of 0.048 from 0.223 with a p-value of 0.161 > 0.05, so it was not significant. the results of the mediation are called full mediation, which means that advertisements are not able the effect of advertising and product quality on the purchase decision of halal cosmetics with online consumer reviews as mediation variables 54 to directly influence purchasing decisions without going through online reviews, it can be seen from the direct effect value of advertising 0.223 which is smaller than product quality of 0.487. the results of testing product quality on the purchasing decisions for halal cosmetics through online consumer reviews showed that the indirect effect value decreased from the direct effect by 0.096 from 0.487 with p value of both paths <0.05, so it was significant. the result of the mediation is called partial mediation, meaning that product quality is able to directly influence purchasing decisions without going through online reviews. the results of the study found that h6 was accepted because the online consumer review variable was able to indirectly influence the relationship between advertising and product quality on purchasing decisions for halal cosmetics in jabodetabek. the results of this study are strengthened by research pertiwi & pradhanawati (2020) stated that advertising and product quality affect the purchasing decisions of wardah cosmetics for female students at the faculty of social and political sciences, diponegoro university, and advertising and product quality have an indirect effect on purchasing decisions when mediated by brand image. the results of the study support the research opinion of chua & banerjee (2015) where experience on products in the form of reviews on the internet is one source of valuable data for consumers in helping make purchasing decisions. conclusion based on the results of the discussion on advertising and product quality on the decision to purchase halal cosmetics with online consumer reviews as a mediating variable, it is concluded that all variables have a positive and significant on the halal cosmetics purchasing decisions at male and female respondents who live in jabodetabek. so it is concluded that in order to increase halal cosmetic manufacturers, companies need to pay attention to and maintain advertisements, and the quality of a product so that local products can be glimpsed by consumers. in addition, companies need to pay attention to online reviews from consumers both positive and negative, in order to make products better. researchers found limitations in this study, there are other variables that affect purchasing decisions because the value coefficient determinant is low. based on the results obtained, the researchers provide some input and considerations based on the research that has been done. for researchers who want to do research on halal cosmetics to add other variables, add a larger number of samples and a wider research location. for regulators, both the government and related institutions, to maximize the opportunities that exist in developing halal cosmetic manufacturers in indonesia and make invitations to use local products. for business people must always maintain the quality of local products so that they are not less 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(2019). the effect of beauty influencer, lifestyle, brand image and halal labelization towards halal cosmetical purchasing decisions. jebis (jurnal ekonomi dan bisnis islam)| journal of islamic economics and business, 5(2), 168–180. abstract introduction literature review purchase decision advertisement product quality online consumer reviews halal cosmetics methodology results and discussion deskriptive respondent data measurement model (outer model) convergent validity test discriminant validity test internal consistency reliability test structural model (inner model) test hypothesis test the effect of advertising on the purchase decision to halal cosmetics the effect of product quality on the purchase decision to halal cosmetics the effect of online consumer reviews on halal cosmetics purchase decisions mediation test the effect online consumers reviews in mediating advertising and product quality on halal cosmetics purchase decisions conclusion references (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 43 contribution of jewish minority to the economic development of bacau filipoaia cristina-iolanda university of bucharest, simion mehedinti doctoral school, nature and sustainable development filipoaiacristinaiolanda@yahoo.com deju mihai “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract during more than six centuries of existence, bacău benefited both from the favourable socioeconomic and political context, and from the interrelationships with the other communities, from the harmonious combination of these two elements resulting both the growth and development of the locality and the position in the local and regional hierarchy. the main beneficiaries of the progress made were of course the inhabitants, the city representing a living environment for them, as well as the essential factor in the functional dynamics and in the urban landscape. giving meaning to the past, we must recognize that each community that contributed to the development of bacău has its own history, bacău becoming the trustee of the communities ‘history entirety, which in perfect communion with romanians defined the complex identity of the locality. the jewish community is no exception, whose collaboration with romanians for over two centuries has contributed to increasing the economic level of development of the locality since the second half of the 18thcentury. keywords community; jews; economic development; industry; bacău jel classification o10; o18; n93; n94 introduction basic component of the national urban system, bacău municipality has grown and developed permanently during more than six centuries of existence, evolution determined on the one hand by the favourable socio-economic and political context and, on the other hand, by all interrelationships with the other settlements, their intensity and frequency determining its position in the urban hierarchy at local and regional level. except for external influences, the city was primarily a living environment for its inhabitants, the main beneficiaries of progress made, but also an essential factor in the functional dynamics and urban landscape. knowing the history of a place means not only “giving meaning to the past but also mapping the identities of the people” who populated that place over time to trace their spatial-temporal becoming and symbolically engrave them on the map of universal culture (șerban, 2013). each community that contributed to the existence of bacău has its own history, bacău being in fact the communities’ history entirety that in a process of perfect symbiosis with the romanians defined the complex identity of the locality. each community, with its own religion and way of being, with its own traditions, holidays contribution of jewish minority to the economic development of bacau 44 and symbols, has expressed its vision of the world, of man and of relationships with peers in a specific language, which distinguishes it from the majority population, as well as from other communities (cmeciu, 2015). jewish minority’s contribution an essential element of the urban space, the population was probably its most dynamic component, any qualitative and quantitative changes recorded at its level, reflecting directly on the urban landscape. the jewish population also played an important role in the dynamics of bacău population. if at the beginning of the 16th century poland was the safest country for jews, the precipitating events of the late 16th and early 17th centuries and the increase of anti-semitic manifestations made it possible for jews from all over europe to move to the northern carpathians, including to the romanian territory, respectively to the current area of bacău municipality, where they settled. the relationships “with the local population determined a peaceful coexistence” (boldur, 2016). the documentary sources attesting to the settlement of the jews in these lands go back into the mists of time until the beginning of the 18th century. documents have been preserved showing that in 1742 the ruler of moldavia, constantin mavrocordat, granted the jewish merchants avram and boroh of hotin fortress the right to settle in bacău. in 1763, bacău name is associated with that of rabbi ischer dov, the son of the late rabbi iehuda leib, and a few years later, in january 1766, mozes, the jew from bacău, is mentioned in documents. in the 18th century, the rulers of moldavia and many boyars facilitated the establishment of craftsmen and merchants in the places they owned on the one hand to populate the fairs ravaged by battles, on the other hand for the important source of income they represented for the royal and manorial treasury. the golden bull of the ruler ioniță-sandu sturdza of july 23, 1829, strengthened the privileges of the burghers and aimed to “attract merchants and craftsmen of any kind”, a fiscal document from 1803 stating that there were 58 jews, heads of households, who paid taxes. the inventories made after the censuses were not only fiscal, but also allowed a relative assessment of the demographic change. the inventory of 1831, redone in 1832, shows that out of the almost 3000 inhabitants of bacău at that time, 519 were jews, respectively 13,5% of the population. 68 families lived on crafts and trade. at the end of the 19th century, most of the jews of bacău were merchants and craftsmen or had occupations in the oil, forestry or textile industry. marius mircu describes in novels published in tel aviv, the life of the jewish community of bacău at the beginning of the 19th century. “the jews were renowned merchants and craftsmen: braziers, silversmiths, barbers, tailors, brick makers, boiler makers, shoemakers, fur hat makers, a butcher, a torchbearer, a hatter, a baker, a glassblower, a saddler, a dyer, a coppersmith, a stonemason, a carpenter, a weigher and several tailors (mircu, 1988). this demonstrates the skill of the jews, their mastery and mercantile spirit, as well as their involvement in the economic life of bacău and in the economic progress of society. the proof is the fact that in 1815 the jewish tailors founded a synagogue, “on tavernelor street, on the initiative of moise leib, iancu’s son” (zaharia, chiriacescu). the tailors’ guild was one of the important guilds, as it appears from “yivo-bleter”, the work of i. kara, vol. 45, 1975, p.96. from the “ledger” of this guild, it results its special status. it dealt with professional activity, the coexistence of craftsmen, the observance of religious precepts, as well as the ethical norms within the profession. “it was forbidden to practice the trade by tailors who were not part of the guild, or who came from other filipoaia cristina-iolanda, deju mihai 45 localities” (kara, 1995). gradually other guilds appeared, the most numerous being those of shoemakers, also with their own synagogue, of woodworkers, scribes, glassmakers, locksmiths, barrel makers and tinsmiths. in many cases, the profession has turned into a name, many being called argintaru, croitoru, căciularu, cojocaru, etc. various statistics, including that of craftsmen made by n. colescu in the last years of the 19th century highlight the obvious role of jews in commercial activity in the city and in its development. the 569 “merchants” carried out various and varied activities, among them the members of the brill family standing out in the field of grain trade. some had become owners of large barns (mordehai ber, berl malai, pinhas edelstein, șaie cofler, and later the jacobsohn, isaac avram brothers, and others). the remarkable figure of moișe klein, the merchant who came from poland and became in a very short time the largest grain trader on bacău piatra street, stands out in this field. buium, his son, was the owner of the large grain barns on the mill canal and of the water mill, which later became filderman mill. another important barn owner was aron schuler, also known for his philanthropic activity, for example, the establishment of the hospital that was named “mina and aron schuler”. some grain merchants even had “business cards”, respectively postcards printed with their name and quality (for example iacob bercovici). in a.c.m.e.o.r. archives of israel there is evidence of business correspondence between david raisel of bacău and the grain exporter chrisoveloni of brăila, from 1899. the ironware trade contributed to the strong development of bacău and the whole of moldovia. in the work “bacăul din trecut și de azi (bacău from the past and today)” published in 1933, grigore grigorovici mentions the largest “ironware wholesaler in moldovia” (grigorovici, 1933), faiviș klein, whose company provided rails for railway construction.the jews were also present in the trade in timber and construction materials, obviously extremely necessary for urban development. many jews had eau de cologne shops both in bacău and in the county. to that end, for example, the hirschenbein brothers supplied all the fairs of bacău county and many cities of moldovia. the first bookshop in bacău was founded in 1860 by herman margulies. the leather trade and the establishment of the first leather factories are directly related to the names of the leibu and iosif brill brothers. many of the jewish merchants traded in haberdashery, others owned inns, pubs or other food units or with articles necessary for peasant households (harnesses, bricks, etc.). the shops were lined up in strada mare, leca street, the streets leading to focșani, piatra and roman. at the end of the 19th century, over 20% of the jewish population of bacău worked in handmade workshops in the most various fields: silversmiths, dyers, furriers, nougat sellers, bakers, jewellers, butchers, modistes, hatters, masons, tinsmiths, painters, locksmiths, shoemakers, etc.a proof that the jewish craftsmen were trying to keep up with the requirements of the time and diversify their profiles to meet the new needs is the emergence of new trades, which had not been mentioned in previous documents: watchmakers, umbrellas, confectioners. it is interesting that in the statistics of the time some professions do not appear, such as coachmen, stove makers, carmen, sieve makers. the latter carried out the selection operation of cereals and oilseeds and fully contributed to increasing the number of cereal growers and their level of wellbeing.the magazine “egalitatea” showed in december 1915 issue that the large number of craftsmen and the need to defend their interests led to the establishment of the various craftsmen union on april 24, 1881, an organization that had such a high level that in 1915 was recognized as a legal and juridical person.in 1885, craftsmen working in the field of construction set up a mutual aid association, “aghidas haboinim”, which operated until the outbreak of world war ii. contribution of jewish minority to the economic development of bacau 46 jewish craftsmen sought to introduce increasingly new and modern methods of production. for example, the typographer margulies brought to bacău in 1882 the first flatbed printing machine, which also used hebrew letters. the typographer m. habor did the same in 1883, then d. rosenberg, i. copel, a. goldșmit and others. the concern for modernization also existed in the photographic workshops, which had been taking colour photographs since 1877–1878 in segal and max agatstein workshops. having at their disposal the raw materials existing in the area (cereals, cattle, wood, crude oil, etc.), from small craft workshops they have evolved through the perseverance of entrepreneurs to top units in those fields. the most representative development was registered in the industrial branch of tannery, leather and footwear. the first tanneries were founded by brothers leibu and iosif brill, on florilor street on the bank of bistrița. they brought the hungarian ioșca and the german carol lahman as foremen. the tannery was destroyed by floods, after which another was created on lecca street, then it was moved to tăbăcarilor street, on the right bank of bistrița and operated until its nationalization in 1948. “noticing the lack of a yuft type leather factory, leibu and iosif brill brothers brought david iuftaru to bacău, who, in 1850, founded a leather factory in the northern part of the city”. the subsequent reforms favoured the evolution and development of this industrial branch. thus, samuel filderman, who was originally a seller of peasant sandals, also set up a tannery in the north of the city, from which gradually developed the important modern industrial complex known as s. filderman enterprises. it was entered in the register of industrial companies in 1890. filderman then bought a leather factory from paul kisten. in 1908, dr. h. perlbergher also set up a leather factory in bacău that produced black and coloured leather using chrome tanning for the first time in the country. the competition determined the immediate modernization of filderman’s factory, by bringing from abroad the specialists and the machines that were needed. in 1908 the two manufacturers joined forces and “founded the first chrome system fine leather factory in romania and bacău systematic tannery” (zaharia, chiriacescu). during world war i, filderman factories were the only companies in the country that supplied the army with leather and sole, introducing boots, harness and fur items into the manufacture (zaharia, chiriacescu). on fabricilor street, together with the tanneries owned by herman abramovici, zelțer, grinberg, weiss, the leather factories of l. klein (of 1880) and h. pfeferman (of 1885) developed. the jews of bacău were also very active in the field of milling. using cereals from the eastern part of the county, in the second half of the 19thcentury, brill nemțeanu founded the first systematic mill. in 1904 herman brociner founded the mill which was later taken over and modernized by calmovici and sons. the development of the textile industry in buhuși was competed against by the appearance of this industrial branch in bacău as well. the oldest textile enterprise in bacău was singher cloth factory, founded in 1908, which from the peasant cloth it initially produced came to produce high quality fabrics. gloria leon grad scarf and ribbon factory, founded in 1913, is part of the same field. it has become the most important factory in the country in this field. in 1907, s. oringher founded a quilt and mattress factory. leon and moritz cloth factory was then established, in 1913 h. schulemsohn factory, and in 1915 s. marcusohn quilt factory. the wood industry, also favoured by the existence of the vast forest area in the county and by the rafting that was practiced on bistrița and which was advantageous from this point of view in bacău, benefited from the involvement of jewish entrepreneurs, who set up plank factories (ștrul kendler) or sawmills (i. fedler, respectively dz goldenberg and sons) (zaharia, chiriacescu). filipoaia cristina-iolanda, deju mihai 47 the roots of the food industry were represented by brandy distillers. zisu focșaner and dumitrache florea set up a brandy factory in 1834, with foreign craftsmen brought from galiția. in 1892, ellenberger alcohol factory was recorded in mărgineni bacău, later taken over by blum făinaru. the first brewery in bacău, established in 1867, was taken over in 1919 by ozias herșcovici. from 1884, the gaseous water factory of j. ellenbogen also operated, and from 1900 that of tecuceanu. the metallurgical industry is represented by companies that operated both before and after world war i. among them were herșcu șvarț foundry, moise șvarț iron construction enterprise and a. davidovici and sons foundry, an enterprise founded in 1918, which developed a lot after world war i. also set up by the jews were the candle factories established between 1892 1895 by a. herșcovici, i. heclinger, respectively m. faclior, blum făinaru oil refinery from mărgineni, which started operating in 1877, the brick factory of a. moscovici, the soap factories founded by daniil i. daniil and bercu gros in 1892, respectively ellenberger in 1919, respectively the chemical laundry of iulius ilovici established in 1910. the number of jewish workers in the textile industry, tanneries, mills, leather, and print houses gradually increased. jews also actively contributed to credit and banking field. in 1912, “speranța” bank was established in bacău the first jewish financial institution. according to issue 20 of the newspaper egalitatea of july 1912, it started its operations with a capital of 20 thousand lei. the banking institution was intended mainly for jewish craftsmen, as a credit and economy company. the difficult period that followed the world war ii and the establishment of communism in romania made many of more than 18000 jews existing in bacău around 1950 choose to emigrate, and the jewish community to decline sharply, reaching in 2011, according to the census, to only 40 people. conclusions in conclusion, in the second half of the 19th century “the first industrial enterprises appeared in bacău and it is not an exaggeration to say that the jews were pioneers in this field”. whether they were modest industrial units or top enterprises, they all contributed to an active economic life in bacău, came to the aid of the population with the most diverse goods and created jobs. “jewish traders brought very useful behavioural traits to the economic sector: innovative spirit, concern not to lock themselves in a narrow sector, but to trade as many categories of goods as possible and use procedures that accelerate the rotation of their capital. many of them would focus on import-export activity. and some, …, have been able to invest their wealth in more evolved forms of industrial and banking capital” (zaharia, chiriacescu). references boldur dimitrie-ovidiu (2016), monumente istorice băcăuane (băcău historical monuments), bacău, iulian antonescu museum complex cmeciu doina (coord), (2015), povești europene retrăite (relived european stories), (2015), bacău, europe direct information center grigorovici, gr.,. (1933), bacăul din trecut și de azi (bacău from the past and today) kara i. (1995), title: obștea evreiască din … bacău (jewish community from … bacău), bucharest, hasefer publishing house contribution of jewish minority to the economic development of bacau 48 mircu m. (1988), croitorul din back (the tailor from back), tel aviv șerban, l. (2013), bacău. palimpseste urbane (urban palimpsest), bacău, rovimed publishers publishing house zaharia, d., chiriacescu emilia, industria lemnului(wood industry), file 189 zaharia, d., chiriacescu emilia, industria pielăriei (leather industry), file 93 bacău state archives, file 19/1866 encyclopedic dictionary of judaica (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 95 personal selling in marketing ioana olariu „vasile alecsandri” university of bacău, faculty of economic sciences ioana_barin_olariu@yahoo.com abstract personal selling is a major element in the marketing communication program of a business firm. this article describes in a theoretical way the scope and significance of personal selling in marketing, it outlines the stages of the selling process. personal selling is the most effective marketing communication tool because it allows salespeople to adapt their presentation to each potential or current client. they use their knowledge of the customer’s buying process to choose effective sales strategies. an effective sales presentation is usually the most important element of a sales job. most well-managed companies want their salespeople to go through the following sequence in making a presentation: locating and qualifying prospects, a preapproach, the presentation itself, closing the sale and follow-up. finding the best prospects may be the key step in this sequence, but the close may be the hardest part. keywords selling; presentation; follow-up; communication; evaluation jel classification m41 introduction personal selling is direct person-to-person communication (either face to face or by phone) from a seller to a buyer, for the purpose of making a sale. there can be one or more sellers or buyers in a personal selling process. the heart of the personal selling program is the sales presentation. in one sense, there are many different ways to go about making a sale, since every salesperson will approach this objective in his or her own unique manner. on the other hand, after many decades of experience with sales force management, modern corporations have found that sales presentations are usually most effective when salespeople go through a procedure or process consisting of several steps (prospecting, pre-approach, presentation, the close, and follow-up). there are many different kinds of selling jobs. not all personal selling will go through all these steps in making a sale. the major advantage of the sales process is to focus attention on the fact that it is not enough to simply locate some prospect and deliver an enthusiastic sales pitch. this is the old-fashioned approach to selling. sales managers in today’s modern corporations know the importance of locating the very best prospects and of preparing carefully in advance before delivering a sales pitch. this is particularly true for the creative and persuasive types of selling usually required for the more expensive products and services. personal selling is the tool of interpersonal relationships within the promotional mix. this implies a two-way communication between sales personal and individual customers. personal selling may be more effective than advertising in more complex situations. sales employees can ask their customers more detail to learn more about their problems, and then adjust marketing offer and its presentation to match the specific needs of each client. the role of personal selling varies from one firm to another. personal selling in marketing 96 sales process consists of several stages that the employees have to master perfectly. these action steps focus on a specific objective: to attract new customers and solicit orders from them. however, most sales employees spend most of their working time striving to retain existing customers and build long-term relationships with customers. finding the best prospects it may be the case that the most important part of the entire selling process is simply locating the most promising prospects. even an excellent sales presentation will fail when it is delivered to a person or a company that has no real need for the product or service, cannot afford to buy it, or is very satisfied with its present long-term supplier. a successful sales presentation always starts with locating prospects who have a clear need for the product or service, have adequate financial resources to pay, would buy a large enough quantity to result in a profitable sale and have the authority to make a decision or a strong recommendation. the process of reviewing all these criteria for each prospect is known as qualifying the prospect. if any one of these elements is missing, it is normally not worth the salesperson’s time to get an appointment and deliver a sales pitch. there are many sources for locating good prospects. referrals are often among the best sources for qualified leads. these referrals can come from present satisfied customers, from other business contacts, or from social friends. most of these people are willing to give good referrals, because they know the salesperson personally. also, they usually know some useful information about the prospect. other sources for good referrals include dealers and suppliers. sometimes a great deal of help can be secured from within the company. sales managers have usually a great deal of experience with the marketplace, and they can often suggest where good leads can be found. also, company files can sometimes give data about previous customers that might be useful for another sales call. the first step in completing the sales process is prospection identifying potential qualified customers, namely those potential buyers that are compatible with the company's offer. the approach of potential clients is crucial to the success of sales. prospecting is the stage of the sales process, where the sales employee identifies qualified potential customers. often, sales employee must address many potential buyers, just to get a few transactions. even if the company provides them tracks prospecting, sales employees must know how to find them alone. sales employees must also know how to preselect or to qualify the potential buyers. they may be qualified by studying several types of information: financial capacity, volume of business, special needs, location and possibilities of increasing turnover. the pre-approach once a good prospect is identified, inexperienced salespeople are usually very anxious to set up an early appointment and deliver their best sales pitch. but experienced salespeople know how important it is to set the stage by learning as much as possible about the prospective customer first. this is called pre-approach. it is based on the principle of the marketing concept that stresses customer orientation. in general, the more a salesperson knows about the prospect, the better are the chances of making a sale. the salesperson should attempt to get advance information about such points as how big is the company, what is its financial position and credit rating, what special needs or problems does it have, how might the company’s products or services satisfy these special needs, who will get involved in making the buying decision, what type of olariu 97 motivation or appeal is most likely to be effective, and what are the buyers personal characteristics and outside interests? some of this information is available from published secondary sources; other parts might be obtained by telephone calls to business acquaintances or other suppliers to the company. before proceeding to approach a potential customer, sales employee must find out as much information about the organization and on those in charge of procurement within the organization (characteristics of their styles and buying). sales employee can obtain this information from several sources: standard reports, published or online, about the organization's work, discussions with friends and acquaintances and others. further, sales employee must set the objectives of the visit, which can be qualification of potential client, obtain information or even place a sale. another task is to choose the best method of approach, which can be personal visit, a telephone conversation or a letter. optimal scheduling approach should be carefully considered, because many potential customers are busy during certain periods of time. sales representative must prepare well an overall sales strategy for the potential client. therefore, preparation approach is the stage in the sales process where the sales employee gathers information about a potential customer prior to the sale visit. the approach establish a meeting with the potential client can be difficult, even harrowing for inexperienced salesperson. although the sale should not rely solely on the application of processes, this requires certain ability for the agent to reach the most appropriate people to receive and understand the message conveyed. what matters to creating a long term relationship with the customer relies on how an agent acts. the request for a meeting is the most important process to establish a working relationship, but letters of presentation and references data by third parties may also have a crucial role. for the transaction to take place, the agent must know how to create a relationship of communion with the client, using what it has in common with him and his own experience. if sales are higher or products are new, so the risk is higher for the customer, it is vital for staff to appear credible. companies known to have a certain advantage in this phase, so that agencies related to lesser-known companies must do twice as much effort to overcome fears buyer. in approach step, sales employee should know how to present themselves before the prospective buyer and proceeds under auspicious relationship with it. at this stage the utmost importance in terms of sales outside the employee's phrases with this open discussion and comments on the words of the interlocutor. opening the discussion must be done with positive phrases, such as to gain customer goodwill from the outset. then they can follow some well-chosen questions to learn more about customer needs, material or displaying a sample presentation times, to attract the attention and curiosity of the buyer. as in all other phases of the sale, it is crucial that the sales employee listen carefully to what the customer says. the approach is the stage of the sales process where sales employee gets acquainted with the customer first. the presentation on the basis of all the above information, the salesperson can develop a sales presentation that shows a good understanding of the prospect’s needs. it can also show how the company’s products can answer those needs better than competitors’ products. when the salesperson arrives to deliver the pitch, it is important to be well dressed and to start off right. the early moments of a presentation are extremely personal selling in marketing 98 important. the salesperson must have an interesting opening statement and should move quickly to the main points of the presentation. it is important to remember that most buyers are very busy people, and they do not want to wait while the salesperson gets his or her act together. often, a lengthy written proposal is required also, which can be studied by the prospect after the presentation. many sales presentations follow the aida approach: attention, interest, desire and action. the opening statement should contain a grabber to get the attention of the buyer. this is followed by a discussion of the product or service characteristics, to provide the information needed by the buyer to develop interest in the product. desire can be generated by showing exactly how the product can solve problems, reduce costs, reduce maintenance needs, or provide other benefits. action is generated by getting the buyer’s signature on a contract or by getting a clear understanding that a sale has taken place. what distinguishes good salespeople is the skill to ask questions. however, agencies often attach much importance to neglect oral presentations and business proposals are made in writing, all prices or tracing letters, which technically can be considered also as part of the presentation. it is essential that agencies to ensure that they have correctly identified all the buyer needs, the solution offered and that, where possible, even surpassed these expectations, rather than be limited to meet them. moreover, when there are the right conditions for use visual aids, it can make the buyer to give more credit to the salesperson, product or his company. agencies with more experience deemed prefabricated presentations, templates are much less important than the carefully structured and tailored to each client. so far, the seller has listened, understood customer needs, trying to figure out what kind of personality is, what is more sensitive, how it can be tackled. hence, he chose a strategy, the ones prepared before, or has built on the spot, new one. now is the time to implement it, to prove that the product meets the requirements of its client and convince him to buy. in the introductory phase of the sales process, sales employee tells the buyer "the story of" the product, showing them what benefits it can bring and how it can solve their problems. the current understanding regarding the practice of marketing is to a much greater extent compatible with the view that the main quality of sales employee is to solve the client's problems, and less talent of delight buyer with nice words or persuade through a pushy sales effort. buyers today want solutions to their problems, not friendly smiles; wants results, not extravagant praise. they want employees to listen to their sales requirements, to understand their needs and respond to them with appropriate products and services. this approach focuses on meeting the needs of sales requires the employee to have good listening skills and problem solving. therefore, the presentation stage of the sales process is when the employee tells the buyer "the story of the product", highlighting its advantages for the customer. countering objections the buyer will try to shirk or to raise objections to the commercial presentation and must understand that this is the human nature. again, experienced salespeople will say that the objections should be regarded as being welcomed, because they confirm the interest of the buyer on the product or service, providing questions which are expressed such as a disclose of the real customer needs. top agents know how to distinguish between different types of objections. some are nothing but questions the client asks for clarification and they are always welcome. there are also expressing concerns and real objections. agencies must listen carefully to questions, to ensure that both parties understand better what the real problems are and agree with clients a olariu 99 way to solve them. attention to these questions increases confidence in agent and lays the foundation for future interactions with him. objections are a natural customer defense reflex. most times, the act of selling is perceived by the customer as a confrontation of conflicting interests, and the objections are its most powerful weapons. beginners sellers are afraid of objections, while experienced consider them true incentives, data sources, signals from customers that allow them to focus their arguments in the right direction; on the contrary they fear most of silent clients, impenetrable ones. customers will almost always have objections during the presentation, when they are asked to launch a command. the problem may have been real or just psychological and, in many cases, objections will not be formulated as such, but will remain unspoken. at the stage of overcoming objections, sales employee should apply a positive approach to bring out unspoken objections, to ask the buyer to clarify any objections, to see these objections as best deals to provide more information and transform them into buying reasons. all sales professionals need specialized training to acquire good skills for resolving objections. overcoming objections is the stage in the sales process where the sales employee detects, clarifies and resolves the objections raised by the customer in respect of purchases. closing the sale for most salespeople, the most difficult aida stage is “action”, usually referred to as the close. all the effort and preparation come down to this one moment. if the salesperson asks for the signature or agreement and the buyer does not respond, there is a terrible sense of failure or defeat. in order to avoid the risk of asking for the order and getting a refusal, some salespeople will continue talking about the product’s merits or about the customer’s needs. this is often referred to as talking the sale to death. one strategy that has helped many salespeople is called the assumptive close. by assuming the sale is already made, the salesperson can more easily avoid a direct refusal that might come from asking for the order. this approach also helps to close the presentation on a very positive note. the salesperson has to face a goal and achieve it because it is absolutely necessary for the continuation and development of economic relations. in some cases, agencies offer customers additional features and benefits which do not need, losing business because of this, because they didn’t ask them to take a concrete decision. the effective dosage of efforts means jointly agreeing the objectives pursued either side that can carry on that relationship to new activities. after successfully overcome the objections raised by the potential customer, sales employee will now try to conclude the sale. sales professionals must know how to recognize the signs gestures, comments and questions which signals show that the potential customer is ready to make an order. salesperson has several techniques on closing the sale: may request an order, may summarize the main points of the agreement, may offer to help the buyer in writing the order, and may ask him if what model does he want or can determine that if he doesn’t order at the time, the customer will lose out. sales representative can offer the buyer specific reasons for closing the sale, such as lower prices or additional products delivered for free. therefore, the conclusion is the stage of the sales process where the sales employee asks the customer to make an order. personal selling in marketing 100 follow-up after a successful close, there is sometimes still a great deal of work to be done. delivery dates and locations must be decided upon. sometimes the customer will ask for minor modifications in the product or service, to suit his or her own company’s particular needs. these modifications must be worked out with the designers or production people of the salesperson’s company. if a new piece of equipment is being delivered, the customer’s own employees must be trained to operate it properly and safely. the salesperson is responsible for seeing that all of these and other details are worked out smoothly and quickly. even after delivery has been accomplished, the salesperson will stay in close touch with the new customer. for a customer-oriented activity, it is very important to know what happens after the sale. most buyers are unhappy when promises are not fulfilled and the sales agent is not acting as he told would do. in the current environment, such an omission is fatal for how the agency intends to develop relationships and ability to comply with everything promised, even to make an extra effort to delight the customer; this is the essence of what it means to do business. the last stage of the sales process returning later or post-sales is necessary if the employee wants to ensure customer satisfaction and repeat orders in the future. immediately after closing, sales employee must complete the information given to the customer with details about the delivery time, conditions of purchase and other issues. then he must plan customer return visit after receiving the initial order, to ensure that they fulfill all the promises in terms of installation, training and service. that visit will reveal any problems in the meantime, will convince the sincere interest of the buyer and salesperson will diminish any concern arising after completion of the sale. therefore, the return post-sale is the last stage of the sales process, the sales employee visits the customer again, to ensure that he is satisfied and will continue to buy in the future. conclusions by its nature, any sale is a single act. however, synthesizing the experience clearly shows that major vendors all have a common structure and sales that travel a rational scheme, the same irrespective of who, what and who sells. this consistency comes from the fact that a sale is first an interpersonal act, between the selling and the buying and, only then, a relationship between two companies; or, from this point of view, people are the same. general scheme of selling is: researching the market; prospecting (defining and locating potential customers), identification (finding names and addresses) and contacting them, usually by telephone to obtain an appointment; meeting preparation: gathering information about the interlocutor, choose overall strategy, preparation of documentation; meeting customer at his premises or at the vendor; evaluation part, verification of information: decision-making power, financial resources; discovering customer needs: to study its problems, their reformulation favorable terms for the seller; presentation and demonstration; answering objections; summaries of the agreements reached and trying to get a commitment from the client; price discussion; customer purchase decision; negotiation terms of the sale; completion (signing the contract); monitoring and evaluation results, conclusions; resolve customer complaints. this order of the phases of the sale is almost always respected, even if it skips one or more phases. vendors are beginning to intervene somewhere between prospecting and meeting preparation, time depending on type of company or the size of its strategies olariu 101 etc. in general, the company is larger and more rigorously organized, the less they participate in exploration itself. references alessandra, t., wexler, p., barrera, r. (1997), nonmanipulative selling, englewood cliffs, n.j.: prentice hall; blythe, j. (2005), managementul vânzărilor şi al clienţilor cheie, editura codecs, bucureşti; butunoiu, g. (1998), tehnici de vânzare – curs pentru agenţii de vânzări, editura all, bucureşti; cole, g.h., miner, m. (2002), handling sales objections, national public accountant, vol. 47, no. 5, pp. 24-26; donaldson, b. (2001), managementul vânzărilor teorie şi practică, editura codecs, bucureşti; doney, p.m., cannon, j.p. (april 1997), an examination of the nature of trust in buyer-seller relationships, journal of marketing, pp. 35-51; futrell, c.m. (2005), abc’s of relationship selling through service, burr ridge, il: irwin, pp. 418; holmlund, m. (2004), analayzing business relationships and distinguishing different interaction levels, industrial marketing management, vol. 33, pp. 279-87; hopkins, t., (1994), how to master the art of selling, new york: warner books, pp. 191; leek, s., naude, p., turnbull, w. (2003), interactions, relationships, and networks in a changing world, industrial marketing management, vol. 32, pp. 87-90; natenberg, t. (2004), referrals: your key to sales success, selling, pp. 9; pierce, h. (2004), persuasive proposals and presentations: 24 lessons for writing winners, mcgraw-hill, new york; proctors, ph. (septembrie 2000), a well-bread sale, selling power, pp. 20; radick, m. (august 1993), training salespeople to get success on their side, sales & marketing management; robertson, k. (october 2004), creating a powerful sales presentation, selling, pp. 12; schrage, m. (february 2004), are customers selling for you?, sales and marketing management, pp. 22; sparks, j.r., areni, c.s., (2002), the effects of sales presentation quality and initial perceptions on persuasion: a multiple role perspective, journal of business research, vol. 55, no. 6, pp. 517-28; stevens, ch.; macintosh, (2002-2003), personality and attractiveness of activities within sales jobs, journal of personal selling and sales management, no. 23; wagner, j.a., klein, n.m., keith, j.e., (2001), selling strategies: the effects of suggesting a decision structure to novice and expert buyers, journal of the academy of marketing science, vol. 29, no. 3, pp. 289-306; weitz, b.; catleberry, s.; tanner, j., (2007), selling – building partnerships, mcgraw-hill irwin, new york. studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 43 interest rate regime and the performance of the nigerian capital market jeroh edirin delta state university, abraka, nigeria jeroh4laff@yahoo.com c. m. ekwueme nnamdi azikiwe university, awka,anambra state, nigeria cm.ekwueme@unizik.edu.ng ekwuemecm@gmail.com abstract this study x-ray’s the interest rates regime in nigeria as it affects the performance of the nigerian capital market. in order to achieve this objective, relevant data for a period of 33 years spanning from 1981 – 2013 were obtained from the factbook of the nigerian stock exchange, cbn statistical bulletin as well as the annual accounts of quoted firms for the relevant years. the data obtained were analysed with the ordinary least square (ols) technique. the result from our analysis reveal among others that changes in interest rate regimes have majorly influenced the level of the performance of the nigerian capital market. based on the above, we recommend that capital market regulators and other regulatory agencies should keep an eye on movements in interest rates and the minimum rediscount rate (mrr) (now mpr) and watch their trend. we also recommend that efforts must be put in place to establish a policy review and reassessment mechanism that would help in assessing the impact of selected policy measures on the economy so that policy makers would know the effectiveness and efficiency of designed policies and be guided in the policy review and development process in the country. keywords lending rate; sap; capital market; equity rate; mrr; financial sector reforms; nigeria jel classification e4; e44; n2 1. introduction the federal government of nigeria in 1986, introduced a comprehensive economic restructuring programme (the structural adjustment programme [sap]) which emphasized the need for increased reliance on market forces. in order to pursue the objectives of introducing the sap, financial sector reforms were initiated by the federal government. the reforms, which focused on interest rate administration, structural changes, reduction of credit control, free entry into the banking sector, liberalization of capital flows, etc (obamuyi & olorunfemi, 2011), encompasses both financial market liberalization and institutional building in the financial sector. the broad objectives of financial sector reform amongst others included: i. improving efficiency by increasing the level of savings through the removal of controls on rate of interest. ii. elimination of non-price rationing of credit to reduce misdirected credit and increase competition. iii. enhancing of institutional structure and supervision. interest rate regime and the performance of the nigerian capital market 44 between 1970 – 1986 a period described as the pre-reform period (obamuyi & olorunfemi, 2011), the monetary policy environment in nigeria was highly regulated (ogede, 2013). in fact it has been argued in the literature (soyibo & olayiwola, 2000; obamuyi & olorunfemi, 2011; ojima & emerenini, 2015) that during the pre-reform period, policies of directed credits as well as that of interest rate ceiling and restrictive monetary expansion were the rule rather than the exception. this according to obamuyi & olorunfemi (2011) resulted to a situation where interest rates policy instruments became fixed with marginal increases. by august 1987, the central bank of nigeria (cbn) liberalized the interest rate regime (ikhide & alawode, 2001) and adopted the policy of fixing only its minimum rediscount rate (mrr). this policy as noted by scholars (obamuyi, 2009; obamuyi & olorunfemi, 2011; udoka & anyingang, 2012; ogede, 2013) was actually put in place to achieve efficiency in the financial sector, thus engendering financial deepening. it is noteworthy however that the minimum rediscount rate (mrr) according to cbn (2006) is the official interest rate of the cbn, which is the major determinant of prevailing interest rates in the economy. thus, decisions taken by the cbn on the mrr definitely affect the level of economic activities as well as the prices of goods and services in the country. this policy was however modified in 1989, when according to siyanbola, sobande & adedeji (2012) and onwumere, okore & ibe (2012), the cbn issued further directives on the required spreads between deposit and lending rates in the country. in addition to the above development, one should note that by 1991, a maximum margin was prescribed between the average cost of capital of each bank and its maximum lending rates in the country; but by 1992, financial institutions were however required to maintain only a specified spread which was between their average cost of capital and their maximum lending rates (cbn, 2006; imoisi et al, 2010; siyanbola et.al., 2012; ogunbiyi & ihejirika, 2014). with this, partial deregulation was however, restored. furthermore, cbn (2006) maintained that by 1993, the maximum lending rate ceiling was removed. this, according to akingunola et al (2012), made interest rates in the country to increase to an unprecedented level, vis a vis the trend of inflation rates that was prevailing in the country as at then. thus interest rates in 1993 were volatile and rose to unprecedented levels, thereby exerting negative impact on investments in the productive sectors of the economy, while volatile inter-bank rates undermined the efficacy of open market operations and general stability in the financial system. on the basis of the foregoing developments, some measures of regulation were introduced in the management of interest rates, resulting to what udoka & anyingang (2012) described as policy reversal in 1994. this time, there was the claim that a wide variation and unnecessarily high rate of interest exist under the complete deregulation of interest rate (udoka & anyingang, 2012). thus, deposit rates were set at 12 per cent per annum, while a ceiling of 21 per cent per annum was fixed for lending. this measure of regulating interest rate as noted by udoka & anyingang (2012) was however retained in 1995, though with little modification for flexibility. by october, 1996 total deregulation of interest rates was again adopted due to the fact that the controls introduced in 1994 and 1995 had negative economic effects (imoisi, uzomba & olatunji, 2010; siyanbola, sobande & adedeji, 2012; akingunola et al, 2012). as a result of the total deregulation of interest rates in 1996, udoka & anyingang (2012) opine that banks were given freedom to determine the structure of interest rates in consultation with their customers. the cbn, however, retained the discretionary power to intervene in the money market to ensure orderly developments in interest rates (akingunola et al, 2012; udoka & anyingang, 2012). the edirin, ekwueme 45 deregulation of interest rates brought in liquidity glut, high interest rates and volatile inter-bank interest rates which became a permanent feature in the nigerian economy. however, the deregulation policy on interest rate was retained in 1997 (akingunola et al, 2012) though by october 22, 2002 as noted by ayodele, obafemi & akongwale (2013), the cbn reached a tripartite agreement on interest rate moderation with the banks operating in the country. in that agreement, a decision was reached to lower interest rate to a point where lending rates would not exceed 4% above the mrr. that notwithstanding, we must note however that lending rate between 1997 – 2006 according to ogede (2013), did not show a significant trend in reduction with an average of 22%, despite the declining deposit rate that was averaging 15%. by december 8, 2006, a policy referred to as the monetary policy rate (mpr) replaced the minimum rediscount rate (mrr) as a cornerstone of monetary policy implementation (ayodele et al., 2013; doguwa & essien, 2013). the mpr as noted by (akingunola et al, 2012) was introduced as an instrument targeted at correcting the excessive short-term interest rate volatility; especially with the setting of the seven (7) to 13 (thirteen) percents corridor. they further pointed that this measure allowed the central bank of nigeria (cbn) to actively intervene in the money market to achieve the interest rate target. in september 2013, the cbn monetary policy committee (mpc) met with a view to assessing the challenges facing the nigerian economy, as well as reviewing economic developments in the country (cbn, 2013). the fallout of the meeting was the fixing of the benchmark rate (mpr) at 12 percent with an asymmetric corridor of +/200bps. cash reserve ratio (crr) on private sector deposits stood at 12 percent, while that of public sector deposit was 50 percent. liquidity ratio was fixed at 30 percent of total assets, while net open position of 1.0 percent of shareholders’ funds was maintained (cbn, 2013). cbn (2013) maintained that interest rate in nigeria averaged 9.55 percent from 2007 until 2013, reaching an all time high of 12 percent in october, 2011 and a record low of 6 percent in july of 2009. it may be disheartening to know that this resulting low interest rate according to obamuyi & olorunfemi (2011), discouraged saving mobilization and the channeling of the mobilized savings through the system. this trend as they noted, may have a negative impact on stock market activities as well as economic growth. on the basis of the aforementioned, this study is designed to see how the policies on interest rates over the years have affected selected performance indices in the nigerian stock market by looking at the period 1981-2013. 2. theoretical framework and review of related literature 2.1. theoretical framework notable theories on finance and development (mckinnon, 1973 and shaw, 1973) criticized the dominant neo-classical monetary theories and the keynesian counter arguments (odili & ede, 2015). odili & ede (2015) further opine that the neoclassical monetary growth models postulate that high-positive interest rate have a direct impact on savings and investment. within this school of thought, odili & ede (2015) were of the view that money is regarded as a substitute for physical assets and productive investments. keynesian economists on the other hand, argue that lowinterest rate increases investment, income and eventually savings. mckinnon (1973) and shaw (1973) advanced arguments in favour of a complementary relationship between financial and physical assets as opposed to the substitutability theory by the neoclassical theory of interest rate. interest rate regime and the performance of the nigerian capital market 46 on a general note, the barometers for measuring the performance of the economy include among others real gdp growth rate, interest rate, rate of inflation, the exchange rate, fiscal position and the debt position. of these, interest rates is believed to have a strong effect on stock market activity as they impinge directly on the state of corporate activity in any country. this is because interest rate is the financial prices for credit thereby affecting the allocation of resources, prices as well as profitability. ultimately, fluctuations in interest rates are believed to be reflected in the prices of shares – an indicator of market performance. for instance, lowering of interest rate on demand and savings deposits will improve returns to investment holding factors such as risk, transaction costs, etc. constant. this of course, has a multiplier effect on the demand and share price of affected listed equities. on the basis of the above, this study is hinged on the assumptions of the mckinnonshaw theory (1973). 2.2. factors affecting interest rates in nigeria the behavior of interest rates in nigeria over the years can be traceable to a number of factors. in the views of akingunola et al (2012) and udoka & anyingang (2012), such factors include, but not limited to: i. the high rate of domestic inflation arising from the huge fiscal deficit of federal government which was financed mainly by central bank; ii. the undue discretion which the deregulation of interest rates conferred on key market players in pricing their funds as well as the arbitraging activities of market speculators; iii. technical insolvency and serious cash flow problems on the part of some weak banks resulting in distress borrowing; iv. the investment demand: the higher the level of investment demand, the higher the level of interest rates. similarly, the lower the level of investment demand, the lower the level of interest rates; v. the use of stabilization securities and the system of allocation of foreign exchange both of which induced the sterilization of large funds at the cbn; and vi. the demand for money or liquidity preference in addition to the quantity of money or money supply in the economy vii. the level of savings (or conversely, the level of consumption). 2.3. overview and evolution of the nigerian capital market capital markets consists of financial institutions that are harnessed together for the purpose of fund mobilization for use by both the public and private sectors of an economy. akingbohungbe (1996) defined the capital market as the market where both long-term and medium-term finance is raised. it is what ekezie (2002) described as a market for dealings (i.e. lending and borrowing) in longer-term loanable funds. in the views of atoyebi, ishola, kadiri, adekunjo & ogundeji (2013), a capital market is a network of specialized financial institutions, series of mechanism, process and infrastructure that are engaged in the facilitation of the needed contacts between the suppliers of fund and the ultimate users of such funds for investment or other purposes in the economy. this clearly shows that capital markets are markets for trading long term financial securities which includes ordinary shares, long term debt securities such as debentures, unsecured loan stock and convertible bonds. owolabi & adegbite (2014) also added that other public sector securities like gilt-edged stocks, treasury bills and government bonds are traded on the floor of capital markets. several studies have drawn a link between capital markets and the socio-economic growth and development of most economies (shaw, 1973; levine & zervos, 1996; edirin, ekwueme 47 osaze, 2000; donwa & odia, 2010; ogege & ezike, 2012; atoyebi et al, 2013). this is because efficient financial intermediation is very crucial to economic development (mishra, mishra, mishra, & mishra, 2010) thereby influencing growth positively. in the views of osaze (2000), an efficient capital market is essential for long term growth in capital formation. by implication, it becomes obvious that capital markets helps in the mobilization and efficient allocation of capital for investment purposes. the capital market is made up of the primary and secondary markets (inaya & proso, 2013). while the primary market is concerned with the raising of new capital (new issues) the secondary market on the other hand is the market for the sale and purchase of existing securities. before 1959, almost all formal savings and deposits in nigeria as noted by sec (2009), were in the banking system. according to donwa & odia (2011), the period from 1960 – 1986 was marked with the enactment of various acts as well as the emergence of the securities markets and instruments in addition to the development of several policies relating to financial and non financial sector. accordingly, resulting from some of the acts enacted, capital market in nigeria started far back in 1961 following the establishment of the lagos stock exchange on september 15, 1960 which began trading on june, 5, 1961 (sec, 2009; donwa & odia, 2011; ogege & ezike, 2012). the lagos stock exchange as donwa & odia (2011) pointed, was actually established as a result of the recommendation of the barback committee of 1957. on inception, the lagos stock exchange was a self regulatory institution which was incorporated under the company’s ordinance as an association limited by guarantee (ogege & ezike, 2012), with about 19 listed securities as at june, 1961. by 1977, there was a reorganization of the stock exchange by the indigenization decree of 1977 which changed the name from the lagos stock exchange to the nigerian stock exchange following recommendations of the industrial enterprise panel (adeosun panel) of 1975 (donwa & odia, 2011) and the financial system review committee (pius okigbo committee) of 1976 (sec, 2009; donwa & odia, 2011; ogege & ezike, 2012; atoyebi et al, 2013). between 1977 and 1980, additional trading floors were opened in port-harcourt and kaduna. as at 2008, nse has opened trading floors in kano, yola, calabar, illorin, uyo and abeokuta. before then, there was the establishment of the capital issues committee (cic) by the central bank of nigeria (cbn) sometime in 1962. resulting from an increase on the level of economic activities in the capital market the capital issues commission (cic) was established in march 1973, to take over the activities of the capital issues committee since the need to provide a stronger institutional support to the securities issuance process as well as the regulation of the pricing and timing of securities that would be offered to the public could not be overemphasized. it must be noted however, that sec (2009) maintained that neither the committee nor the commission was conceived as the apex regulatory agency for the capital market as at that time. between 1978 1979, efforts were made to replace the capital issues commission with the securities and exchange commission (sec) act 1979 (re-enacted as decree no.29 1988) (sec, 2009) which made sec the apex monitoring institution of the nigerian capital market (sec, 2009; donwa & odia, 2011; ogege & ezike, 2012; atoyebi et al, 2013). while the nigerian stock exchange (nse) remains the central point of the nigerian capital market, the regulation of the activities in the nigerian capital market rests on the hands of the securities and exchange commission (sec), though it is supervised by the federal ministry of finance. in 1996, a 7-man panel headed by one chief dennis odife as noted by sec (2009), conducted a review of the capital market and sec’s role and effectiveness and gave recommendations which led to the enactment of the investment and securities act no.45 of 1999 (isa). the act was promulgated in may 26, 1999 (sec, 2009) and interest rate regime and the performance of the nigerian capital market 48 repealed the sec act of 1988. accordingly, by 2007, the isa 1999 was re-enacted. below is figure that clearly summarizes the evolution of the capital market in nigeria. 1961 1973 1979 1988 1999 2007 capital issues commission set up sec act reviewed, decree no. 29 passed isa amended sec act enacted, sec established isa passed cbn establishes capital issues committee figure 1 evolution of the nigerian capital market source: sec (2009) 3. methodology this research work was done by the use of the quasi experimental design. data on companies quoted on the floor of the nigerian stock exchange for the period 1981 – 2013 was used in this study, and the ordinary least square regression analysis was specifically adopted to see how changes in interest rate regime had influenced the performance of the nigerian capital market. this technique is desirable because it is a consistent and unbiased estimator. the linear relationship between the dependent variable and the independent variable is determined. 3.1. model specification for the purpose of this study, the following model was developed in its log form and adopted as follows: b1 < 0 where: mperf = stock market performance (proxied by stock market capitalization) ir = interest rate mrr = minimum rediscount rate ut = random variable l = natural logarithm b 0 = constant b 1, b 2 = parameter decision rule: where the calculated f-ratio is greater than the table value, we reject the null hypothesis and accept the alternative hypothesis. similarly, where the calculated f-ratio is less than the table value, we accept the null hypothesis and reject the alternative hypothesis. edirin, ekwueme 49 4. results and discussion in this section, we start by presenting the trend of interest rate movement following the changes in interest rate regime over the years. we also analyzed the trend of market capitalization for the period under study. in figure 2, we present the trend of interest rate movement while figure 3 shows the movement of the components of market capitalization for the period under study (1981 – 2013). figure 2 trend of interest rate and mpr/mrr in nigeria (1981-2013) from fig. 2, it is obvious that interest rates for the various years were mostly higher than the minimum rediscount rate (mrr) except for 1985 (pre-reform period) and 1993. the reason for the trend of interest rate exhibited in 1993 could be traceable to the removal of the maximum lending rate ceiling in 1993 by the central bank of nigeria (cbn) which saw interest rates rising to unprecedented levels. on the basis of this development, measures of regulation were introduced in the management of interest rates, resulting to what udoka & anyingang (2012) described as policy reversal in 1994. notice also that after the policy reversal in 1994, interest rates were placed on points above the mrr, now replaced by mpr. we also analyzed the trend of market capitalization for the period and observed that market capitalization had exhibited an upward movement all through the period, except for the sharp downward trend indicated between 2008. this downward movement could be attributed to the impact of the global financial crisis on activities of the stock market (jeroh, 2013). however, beginning from 2009 and 2010, we observe also that market capitalization is exhibiting upward movement. this upward movement after 2009 could be as a result of policy measures taken by the regulatory bodies in nigeria. interest rate regime and the performance of the nigerian capital market 50 figure 3 movement of componenents of market capitalization in nigeria (1981-2013) 4.1. correlation analysis this section presents the correlation results obtained from the spss output. the primary objective of this analysis is to measure the strength or degree of linear association between the variables of interest rates, minimum rediscount rates and market capitalization. this was done through the pearson correlation coefficient (pcc), variance inflator factor (vif) and tolerance level (tl). nachmias & nachmias (2009) opined that there could be strong positive relationship, a weak positive relationship and no relationship. thus, pearson’s r ranges from -1.0 to 1.0, where a negative coefficient indicates inverse relations between the variables. the vif and tl were used to establish whether there is multi co-linearity between the variables of the study. hence, when vif and tl are closer to 1, it indicates the existence of multi co-linearity between the variables. table 1 correlation for lmcap, lir and mrr pearson correlation variance inflator factor (vif) tolerance level (tl) variable zero partial part lirr -.079 .246 .229 1.000 1.000 lmrr -.368 -.427 -.426 1.000 1.000 source: spss output table 1 indicates a perfect co-linearity between market capitalization, interest rates and minimum rediscount rates. this was supported by the results obtained from the vif value (1.000) and tl value (1.000). with the pearson correlation using zero, partial and part correlation, the degree of association is negative and weak. however, using the zero correlation alone, the degree of association for interest rates is negative and strong but it is not sufficient to say that the degree of association when using the aggregates of zero, partial and part correlations. trend of market capitalization (1981 2013) edirin, ekwueme 51 4.2. regression analysis this section involved the presentation and analysis of the regression results as well as the test of the research hypotheses. table 2 regression result for the variables variables coefficients t-statistic prob. constant(model) 6054.517 2.002 .054 lirr1 mrr1 303.444 -659.054 1.393 -2.588 .174 .015 source: spss regression output as shown in table 2, the model for this study designed to capture the relationship of movements in interest rate and the minimum rediscount rates with the level of he performance of the nigerian capital market (p-value = .054) was statistically significant at 5 percent or lower. table 3 goodness of fit through r square (model) model1 r r square adjusted r square std. error of the estimate 1 0.933a 0.877 0.834 4516.61245 source: spss output a. predictors: (constant), lir, lmrr b. dependent: lmcap as shown in table 3, both r2 and adjusted r2 measure the fitness of the model i.e. they measure the proportion of the variation in dependent variable explained by the model. but since adjusted r2 is the modification for the limitation of r2 the value of the adjusted r2 is considered to measure the fitness of the model. thus, as it is shown above, the value of adjusted r2 is 0.834, suggesting that interest rates and minimum rediscount rates in the model is explaining 83% variation on market capitalization. thus, we can understand that the model of the study is providing a good fit to the data since the unexplained variation is just 17%. 4.3. test of hypothesis the test of hypothesis was based on the f-ratio. the results was obtained from the analysis of variance (anova). the hypotheses for the study to be tested is hereby stated below: h o1: there is no significant relationship between changes in interest rate regime and the performance of the nigeria capital market. ha1: there is a significant relationship between changes in interest rate regime and the performance of the nigerian capital market. table 4 anova result model1 sum of squares df mean square f-ratio sig. 1 regression residual 141388494.249 611993640.886 2 30 70694247.125 20399788.030 33.465 .044b interest rate regime and the performance of the nigerian capital market 52 total 753382135.135 32 source: spss output a. predictors: (constant), lir, lmrr b. dependent variable: lmcap from table 4, it can be observed that the independent variable give a significant effect on the dependent variable, where f-ratio is 33.465 with a p-value of less than 0.05 (i.e. p<0.44) indicating that, overall, the model used for the study is significantly good enough in explaining the variation on the dependent variable. decision: based on the f-ratio as shown in table 4, we reject the null hypothesis which states that there is no significant relationship between changes in interest rate regime and the performance of the nigerian capital market. our conclusion is that there is a significant relationship between changes in interest rate regime and the performance of the nigerian capital market. 5. conclusion this study was designed to look at changes in interest rates regimes in nigeria in order to establish its impact on the performance of the nigerian capital market for the period 1981 – 2013. it was observed that following the introduction of interest rate reform in nigeria, interest rates for the various years were higher than the minimum rediscount rate (mrr) now replaced by mpr except for 1993. the reason for the trend of interest rate exhibited in 1993 could be traceable to the removal of the maximum lending rate ceiling in 1993 by the central bank of nigeria (cbn) which saw interest rates rising to unprecedented levels in line with rising inflation rates which rendered banks' high lending rates to become negative in real terms. this is as expected in the literature (akingunola et al, 2012). on the basis of the this development, measures of regulation were introduced by government in order to manage interest rates, resulting to what udoka & anyingang (2012) described as policy reversal in 1994. from the analysis and test of the hypothesis, it was observed that changes in interest rate regimes have majorly influenced the level of the performance of the nigerian capital market (proxied by market capitalization) during the period under study compared to the minimum rediscount rates, although minimum rediscount rates to some extent was found to have influenced the performance of the nigerian capital market, but not as in the case of interest rates. thus, the performance of the nigerian capital market (proxied by market capitalization) is said to follow a random walk. in addition, there was a perfect co-linearity between market capitalization, interest rates and minimum rediscount rates. from the aforementioned, we therefore conclude that there is a significant relationship between changes in interest rate regime and the performance of the nigerian capital market. 6. recommendations based on the outcome of our analysis and test of hypothesis, we recommend that capital market regulators and other regulatory agencies should keep an eye on movements in interest rates and the mrr (now mpr) and watch their trend. in light of the above, efforts must be put in place to establish a policy review and reassessment mechanism that would help in assessing the impact of selected policy measures on the economy. at least, this would enable policy makers to know the effectiveness and edirin, ekwueme 53 efficiency of designed policies which will to a large extent, guide in the policy review and development process in the country. references akingbohungbe, s. s. 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro towards a definition of controlling mihaela mocanu bucharest university of economic studies, romania mihaela.mocanu@cig.ase.ro abstract controlling is a concept that is still subject of many controversies. nowadays, it is used both in theory and in practice to designate a variety of activities. the paper aims at shedding light on this enigmatic concept. first of all, the author offers an overview of the historical roots of “controlling”. secondly, different definitions of the concept of “controlling” are contrasted. the author comments upon two types of definitions: concepts oriented towards the goal to obtain results (profit, turnover, low costs) and concepts oriented towards the universal goals of the company (e.g. product-related, environmental, social goals). last but not least, the paper identifies the different perspectives used when defining the concept, in order to provide the proper background for understanding “controlling”: the information-oriented perspective, the coordination-oriented perspective and the reflection-oriented perspective, and the rationalityoriented perspective. keywords controlling; management; definition; corporate governance; controversies jel classification m14; m49 introduction controlling is an enigmatic concept, which is used both in theory and in practice for a variety of activities. at present, there is no generally accepted definition of this concept, and the vagueness of the term is underlined by anthony (1965) as follows: “in practice, people with the title of controller have functions that are at one extreme, little more than bookkeeping and, at the other extreme, de facto general management”. behringer (2011) observes that the diversity of ways of understanding controlling becomes obvious if screening the publicly available job announcements. under the name of “controlling”, employers search for very different tasks, ranging from an accounting-oriented controller to a controller with numerous responsibilities in projects and investments. preißler argues that each researcher that deals with this topic has his own perceptions on what the meaning of controlling is or should be – however, these perceptions differ. the paper has the objective to perform an in-depth analysis of the concept of controlling. the paper is structured as follows. the first section offers an overview of the historical roots of the analyzed concept. secondly, the author contrasts different definitions of the concept of “controlling”, whereas the next section identifies the different perspectives used when defining the concept. brief history of the concept “controlling” the tasks of controlling are not fully new. this section presents a concise history of controlling, in accordance with schultz (2010). the roots of the word “controlling” are latin. the word appeared in the middle ages, from the two latin words: “contra” (against) and “rotulus” (roll). in the 13th century, these two words merged into 62 towards a definition of controlling “contrarotulus” (counter-accounting). “counter-accounting” meant checking of the real stocks of goods and money against the written records. this is a control activity that would nowadays belong to the tasks of auditing. in the european royal courts and also in monasteries, this “counter-accounting” was performed by a “contrarotularius”. in the 15th century, this word turned into the official title of “controller” at the english royal court. over the anglo-saxon language area, both the function and the title of “controller” arrived in america. in just two years after the establishment of the united states of america, in the year 1778, the us congress created the job of “comptroller”, who was supposed to supervise the budget management of the american government and to insure its conformity. about 100 years later appeared the first position of controller in the private field: in the year 1880, the company “atchison, topeka & santa fe railway system” created the position of controller, whereas the respective person had mostly financial responsibilities. however, it was only after the economic crisis in the 1920s that controlling established as an important functional area in companies. following the dramatic company crashes, most big companies in the us set a controller job. middle and small companies followed. controlling gained quickly a great significance, so that already in 1931 appeared the first advocacy group called “controller’s institute of america”. in 1962 this body was renamed as “financial executive institute” (fei). in usa, controller tasks were proposed by the financial executive institute, as follows: • planning: development of profit plans, distribution plans and investment plans for the company, as well as budgeting systems and planning procedures, • reporting and interpretation of data: control through the comparison between plan and reality, analysis and interpretation of deviations, reporting to management and owners, data processing system development, coordination of reporting systems and procedures, • assessment and advice: assessment of results, advice to management regarding goals; • tax calculation and optimization, including the development of procedures for dealing with fiscal issues; • external reporting: supervision and coordination of the preparation of compulsory reports to the national authorities, • protection of company assets by enforcing proper internal control, • continuous research and analysis of economic or political environment. definitions of “controlling” rambusch (2012) identifies two types of “controlling” concepts: concepts oriented towards the goal to obtain results and concepts oriented towards the universal goals of the company. first of all, in the definitions oriented towards results, the main task of controlling is to coordinate all sub-plans of the company and, in this context, to support the goals related to turnover, costs or profit. representatives of this approach are coenenberg and baum (1992), hahn (1996), horvath (2006), lachint (1992), reichmann (2006), and serfling (1992). coenenberg and baum (1992) define controlling through the following tasks: coordination and control of the target goals; supervising the internal and external company processes; keeping the flexibility of the company; dealing with complexity. according to hahn (1996), controlling has the informational function to support 63 mocanu result-oriented management. horvath (2006) gives a similar definition of controlling and describes controlling as a subsystem which supports company management and coordinates the planning, control and supply of information. on the other hand, lachint (1992) defines “controlling” as a systematic approach to improve the impact of the company’s management and considers controlling a service function for management. this service function uses a modern information and communication technology and comprises concepts, instruments as well as information to support company’s management to achieve its financial targets. reichmann (2006) describes the main goals of controlling as: support for planning, coordination of subsystems, as well as control of the economic results. thus, controlling has the role of a management information system. serfling (1992) defines controlling as a system of information supply to the management through planning, control, analysis and development of action alternatives to run company operations. this system serves the efficient and effective achievement of profitability goals. moreover, serfling (1992) considers that controlling is a management philosophy as well as a communication approach and an instrument of company management. second of all, the definitions of “controlling” oriented towards the universal goals of the company are definitely wider. the main task controlling consists in the coordination of the entire sub-plans and managerial subsystems, such as human resources management and company organization. representatives of this approach in defining controlling are küpper, weber and wöhe. in brief, küpper (2008) defines “controlling” as the “coordination of the management system”, whereas the coordination refers to the subsystems: planning, control, information system, organization and human resources management. küpper (2008) acknowledges that controlling should go beyond profit targeting and should comprise goals related to products, potential, environmental or social aspects. in a similar mind frame, weber (2004) defines controlling as a special management function and describes a variety of tasks that serve to an efficient and effective management. on the other hand, wöhe (2005) considers that controlling is the sum of all measures that support the coordination of the areas management, planning, control, organization, human resources and information, so that the company’s goals are achieved in the best way possible. perspectives in defining the concept “controlling” besides a variety of definition, there are also a variety of perspectives in defining “controlling”, which are presented in this section. in accordance to the research of ossadnik et al (2010), there is the information-oriented perspective, the coordinationoriented perspective and the reflection-oriented perspective. the information-oriented perspective: the main task of controlling is to supply to the company’s management information that is relevant for the managerial process. from this perspective, müller defines controlling as a "central institution of the business infonomics”. following this definition, controlling has the task to determine the informational needs of the company and to prepare and provide the required information, as a solution oriented towards both the problem and the receiver. the information source of controlling is the accounting system, which depending on its design, may be supplemented by other information systems. the coordination-oriented perspective: on the other hand, the purpose of controlling is to coordinate intraand inter-systemically the various management subsystems of a company. this perspective is based on the theoretical separation of the company in a performance system, an execution system and a management system, the last being divided into subsystems. splitting the company into different 64 towards a definition of controlling subsystems generates the need for coordination. all execution actions need to be coordinated towards achieving the company goals, whereas the task to formulate company goals and direct the execution system towards these goals belongs to management (the so-called primary coordination). in order for this primary coordination to be possible, it is necessary to connect together the subsystems that build up the management system. this coordination task (the so-called secondary coordination) belongs to controlling. the reflection-oriented perspective: the view on “controlling” presented by pietsch and sherm aims at defining more precisely “controlling” as a management and leadership support function. in this view, controlling as managerial function has the task to serve the "reflection of decisions that were taken in the context of other management functions, and ... [the] reflection of the coordination between these decisions." this managerial function derives the managerial support function of controlling. this function consists in adequately making available to the management an informational overall view. last but not least, the rationality-oriented perspective: according to the opinion of weber and schäffer (1999), controlling has the task of insuring the rationality of the management. generally, management has to make a variety of decisions, whereas this decision-making process must take place on the background of bounded rationality (simon, 1961). the manager is willing to make a rational decision, but due to the limitations of human perception and information processing, he/her is not able to actually make a rational decision. sanders and kianty (2006) mention the following human limitations: (1) knowledge limitation: there is no complete information on all situations in the company and on the market; (2) anticipation limitation: managers may not fully anticipate the possible consequences of actions; (3) limitation of opportunities for actions: the management cannot fully comprehend which are the available opportunities for actions. even under these limitations, the tendency is to make decisions rationally as possible. therefore, controlling is the function that was created within the company exactly to perform this task – namely to ensure the rationality of the management as far as possible (although the identified limitations also apply for controlling). discussions and conclusions nowadays, management deals more and more with complexity, caused by several factors: economic crises, increased scope and diversity of the own company’s activity, dynamics and complexity of the corporate environment, as well as high competitiveness on the market. on this background, there is a stringent need for a superior management support system which can provide the required information and which can reconcile the planning, the control and the information supply for the company’s welfare. such tasks are carried out by controlling. however, although controlling is needed and already widespread, especially in german-speaking countries, there is no generally accepted definition of controlling. in our opinion, one of the reasons may be the fact that it is an english term, an anglicism for which no proper word has been found in the local language(s). this leaves room for manoeuvre and keeps the discussions open. the academic literature comprises a diversity of controlling definitions: there are definitions oriented towards results, as well as definitions focused on the universal goals of the company. additionally, the variety of perspectives (such as the information-oriented perspective, the coordination-oriented perspective, the reflection-oriented perspective, and the rationality-oriented perspective) makes the definition of controlling even more difficult. 65 mocanu the present paper’s contribution consists in the systematization of the most important understandings of the concept of “controlling” in the academic literature. moreover, by also taking into consideration the history of the concept, the existing definitions and the potential perspectives, the author extracts from the literature a definition of controlling that corresponds to her view and shall be used in future research, namely: “controlling is a system that provides the necessary instruments and pieces of information, so that the management can supervise and coordinate the current business, compare alternative actions and take well-substantiated decisions.“ acknowledgements this work was cofinanced from the european social fund through sectoral operational programme human resources development 2007-2013, project number posdru/159/1.5/s/142115 „performance and excellence in doctoral and postdoctoral research in romanian economics science domain”. references anthony, r.n. (1965), planning and control systems: a framework for analysis, harvard university press, boston. behringer, s. (2011), konzerncontrolling, springer-verlag berlin heidelberg coenenberg, a. g., baum, h. g. (1992), unternehmenspolitik und umweltschutz, universität augsburg (germany). schwerpunkt wirtschaftspruefung und controlling. horvath, p. (2006), controlling, 10th edition, vahlen, münchen. müller, w. (1974), “die koordination von informationsbedarf und informationsbeschaffung als zentrale aufgabe des controlling”, zeitschrift für betriebswirtschaftliche forschung (zfbf), no. 26, p. 683–693. ossadnik, w., van lengerich e.,·barklage d. (2010), controlling mittelständischer unternehmen. empirischer status quo und handlungsempfehlungen, springer-verlag berlin heidelberg. pietsch, g., scherm, e. (2001), “die reflexionsaufgabe im zentrum des controlling”, controlling and management review, no. 45, p. 307–313. preißner, a. (2002), profit center managen, hanser, münchen. rambusch r. (2012), interne kundenzufriedenheit mit dem controllerbereich, gabler verlag | springer fachmedien, wiesbaden. sanders k., kianty a. (2006), organisationstheorien. eine einführung, vs, wiesbaden. schultz v. (2010), basiswissen controlling. instrumente für die praxis, deutscher taschenbuch verlag, münchen. simon h.a. (1961), administrative behavior, 2nd edition, macmillan, new york. weber j., schäffer u. (1999), “sicherstellung der rationalität von führung als aufgabe des controlling?”, betriebswirtschaft 59(6), p. 731–747. wöhe g. (2005), einführung in die allgemeine betriebswirtschaftslehre, vahlen, münchen. 66 the present paper’s contribution consists in the systematization of the most important understandings of the concept of “controlling” in the academic literature. moreover, by also taking into consideration the history of the concept, the existing defi... this work was cofinanced from the european social fund through sectoral operational programme human resources development 2007-2013, project number posdru/159/1.5/s/142115 „performance and excellence in doctoral and postdoctoral research in romanian e... anthony, r.n. (1965), planning and control systems: a framework for analysis, harvard university press, boston. behringer, s. (2011), konzerncontrolling, springer-verlag berlin heidelberg coenenberg, a. g., baum, h. g. (1992), unternehmenspolitik und umweltschutz, universität augsburg (germany). schwerpunkt wirtschaftspruefung und controlling. horvath, p. (2006), controlling, 10th edition, vahlen, münchen. müller, w. (1974), “die koordination von informationsbedarf und informationsbeschaffung als zentrale aufgabe des controlling”, zeitschrift für betriebswirtschaftliche forschung (zfbf), no. 26, p. 683–693. ossadnik, w., van lengerich e., barklage d. (2010), controlling mittelständischer unternehmen. empirischer status quo und handlungsempfehlungen, springer-verlag berlin heidelberg. pietsch, g., scherm, e. (2001), “die reflexionsaufgabe im zentrum des controlling”, controlling and management review, no. 45, p. 307–313. preißner, a. (2002), profit center managen, hanser, münchen. rambusch r. (2012), interne kundenzufriedenheit mit dem controllerbereich, gabler verlag | springer fachmedien, wiesbaden. sanders k., kianty a. (2006), organisationstheorien. eine einführung, vs, wiesbaden. schultz v. (2010), basiswissen controlling. instrumente für die praxis, deutscher taschenbuch verlag, münchen. simon h.a. (1961), administrative behavior, 2nd edition, macmillan, new york. weber j., schäffer u. (1999), “sicherstellung der rationalität von führung als aufgabe des controlling?”, betriebswirtschaft 59(6), p. 731–747. wöhe g. (2005), einführung in die allgemeine betriebswirtschaftslehre, vahlen, münchen. (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, august 2016 romanian brands awareness among young people. the case of common food products laura cătălina ţimiraş, “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract awareness is a prerequisite in the development of successful brands; in this paper are highlighted, for certain categories of common food products, brands enjoying the highest spontaneous awareness among young people. on the basis of this work are some of the results of a direct research conducted on a sample of 100 students, aged between 18 and 30 years. common foods are intended for current consumption, serving to meet the dietary needs of consumers. thus, we studied certain categories of food products with characteristics which make them fall within the common products category: milk and dairy products, meat and cooked meat (except fish), fish and eggs, canned meat (including pate), canned vegetables, bakery, milling products, pasta, breakfast cereals, sugar, eggs, nuts and seeds, oil, margarine. the conducted research has an exploratory character. keywords brand, unassisted awareness, top of mind awareness, usual food products, romanian market jel classification m31 introduction according to the dictionary of american marketing association (2016), “brand awareness is a marketing concept that enables marketers to quantify levels and trends in consumer knowledge and awareness of a brand's existence. at the aggregate (brand) level, it refers to the proportion of consumers who know the brand”. (source: the masb common language project. http://www.themasb.org/common-languageproject/ http://en.wikipedia.org/wiki/brand_awareness”). awareness refers both to the consumer's ability to recall and recognizes a brand; recall being achieved in the absence of the brand, and recognition in its presence (datculescu, 2006). the importance of awareness is arising from the fact that to be purchased by consumers, a brand must first be known (macdonald & sharp, 2003). according to the dictionary of agromarketing, common foods are those products intended for current consumption and must have the following characteristics: have the best value for money; to be easily handled, stored and prepared, enabling time savings; to be nutritionally balanced so not to affect the health of consumers (marian, 2016). basically, in this paper we have considered assessment of consumers' ability to recall (spontaneous awareness) different brands of food products just for that category of foods whose consumption is current. we therefore studied the following categories of food products that generally include foods that are categorized as common: milk and dairy products, meat and cooked meat (except fish), fish and eggs, canned meat (including pate), canned vegetables, bakery, milling products, pasta, breakfast cereals, sugar, eggs, nuts and seeds, oil and margarine. respondents were asked to indicate the top brands (max three) that come to mind when thinking about different groups of food products. tables 1-15 show for each product http://en.wikipedia.org/wiki/brand_awareness romanian brands awareness among young people. the case of common food products category under investigation the brands mentioned by a minimum of five respondents (5%) among first three known brands. the research was exploratory one. the studied sample was made of 100 respondents, selected from the students of the faculty of economic sciences, vasile alecsandri university of bacau. the study was conducted in april 2016. research results for a clearer picture of the place held by each brand in the minds of consumer, we have determined the number of respondents who indicated it in first place (top of mind), then the number of those who nominated it second place, respectively on the third place. to assess the place of common products compared to the festive ones (consumer goods, occasionally consumed, with outstanding sensory properties, but containing substances whose regular consumption can be harmful), in terms of brand awareness, the first investigated aspect was to identify the most popular brands for the whole class of food products and alcoholic beverages (according to the methodology specified above). thus, in table 1, that the most popular five brands, indicated by most of the respondents among the top three known are: pambac, coca cola, milka, agricola, fanta. considering the first nominated brand, the brands situated in the top are: pambac, coca cola, milka, fanta and danone. note that pambac stand out much from other brands both in terms of nominations among the top three popular brands and in terms of first nomination made by respondents. thus, compared to the next ranked brands, over two times as many respondents indicated it both first and among the top three known brands. of the eleven brands indicated in table 1, most of them are from soft drinks category (coke, fanta, pepsi), chocolate category (milka, poiana) and dairy products category (danone and napolact). also, one brand refers mainly to bakery, milling and pasta, one to meat and meat products, one to alcoholic beverages and one to fast food products. we therefore found that the awareness of the brand for the common products is much lower compared to the festive ones; only four (pambac, agricola, danone and napolact) of the eleven shown in table. 1 referring in particular to the common food products. note that two of the brands presented in table. 1, pambac and agricola, represent companies from bacau county, where the study was conducted. table no. 1. the most popular* brands of food products and alcoholic beverages on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option pambac 20 14 2 36 coca cola 9 4 4 17 milka 9 5 2 16 agricola 4 8 1 13 fanta 6 5 1 12 danone 6 1 4 11 napolact 5 3 1 9 pepsi 1 2 6 9 poiana 2 1 3 6 cotnari 1 4 5 kfc 1 2 2 5 timiraș other answers 33 48 58 x total 96 94 88 x * brands indicated by a minimum 5 respondents. source: own computation following are the results referring to unassisted brand awareness for different categories of food products. as regards milk and milk products, the first five places depending on the number of respondents who indicated them among the top three are: zuzu, napolact, la dorna, danone, fulga; except danone brand, all other brands are local. considering the top of mind awareness, first five places are occupied by: zuzu, la dorna, napolact, fulga and covalact, all romanian. over half of respondents indicated three brands of dairy products, 18% two brands, 25% one brand and 5% were not able to nominate any brand. note that when studying the awareness of food products and alcoholic beverages brands, danone was nominated by a greater number of respondents compared to napolact (see table no. 1). but in the category of milk and milk products, napolact outpaced by far danone, especially in top of mind awareness. this shows a stronger association of the napolact with the its product category compared to danone, stronger mentally processed when the consumer thinks to food in general. table no. 2. the most popular* brands of milk and milk products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option zuzu 21 10 7 38 napolact 13 9 4 26 la dorna 15 4 4 23 danone 3 10 6 19 fulga 12 3 2 17 covalact 6 4 3 13 activia 2 5 5 12 panda 4 3 4 11 albalact 3 4 2 9 pilos 3 3 6 casa buna 3 3 6 other answers 13 12 12 x total 95 70 52 x * brands indicated by a minimum 5 respondents. source: own computation the best known brand of meat and meat products is agricola, with a percentage of 35% from the perspective of top of mind awareness and with 42% of respondents who nominated it among the top three brands that they recall. basically the number of respondents who indicated agricola as the first brand of meat and meat products is almost 6 times higher than the next nominated brand (fox). there is a relatively high share of those who could not nominate any brand in this category of products 34%, 31% indicating one brand, 22% two brands and only 13% mentioning three brands. all the six brands indicated by a minimum of 5 respondents are indigenous. romanian brands awareness among young people. the case of common food products table no. 3. the most popular* brands of meat and meat products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option agricola 35 5 2 42 fox 6 5 1 12 caroli 3 5 1 9 cristim 4 3 2 9 ana si cormel 3 3 6 kosarom 2 3 5 other answers 13 11 7 x total 66 35 13 x brands indicated by a minimum 5 respondents. source: own computation the only fish and fish products brands that have minimum five nominations are bonito and salmaris (domestic brands). this category is characterized by a very low level of knowledge of brands; 72% of respondents indicating no brand. table no. 4. the most popular* brands of fish and fish products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option bonito 11 2 13 salamaris 4 1 5 other answers 15 3 1 x total 28 5 2 x * brands indicated by a minimum 5 respondents. source: own computation in the category of canned meat and pate, bucegi brand is first, with a share of 45% in top of mind and with 58% of those who indicated among first three brands. at a considerable distance are brands like: mandy, ardealul, antefrig, hame. except hame brand, all other brands are indigenous. the share of respondents who indicated one or more brands of canned meat and pate is relatively close compared to meat and meat products category. thus, 33% could not even name one brand in this product category, 34% indicated one brand, 15% two brands and only 18% mentioned three brands. table no. 5. the most popular* brands of canned meat and pate on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option bucegi 45 9 4 58 mandy 5 6 3 14 timiraș ardealul 4 4 4 12 antefrig 2 2 1 5 hame 3 2 5 other answers 11 9 4 x total 67 33 18 x * brands indicated by a minimum 5 respondents. source: own computation similar to the category of fish and fish products, for canned vegetables category there have been nominated by at least five respondents only two brands bonduelle and cora; almost 70% of respondents were not able to identify any brand for this product group. table no. 6. the most popular* brands of canned vegetables on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option bonduelle 15 2 17 cora 5 2 7 other answers 11 8 5 x total 31 12 5 x * brands indicated by a minimum 5 respondents. source: own computation regarding bakery products, pambac stand out much from other brands, being the first choice for 68% of respondents and ranking in the top three mentioned brands in the case of 79% of respondents. ranked second both in top of mind and in terms of the first three nominations is inan, brand belonging also to a producer from bacau. other brands mentioned by at least 5% of the respondents were: franzeluţa, boromir and luca (the last two being also domestic brands). only 23% of all respondents indicated three brands in this product category, and 32% indicated two and one brand. a share of 13% did not indicate any brand in this product category. table no. 7. the most popular* brands of bakery products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option pambac 68 9 2 79 inan 8 16 4 28 franzeluţa 2 6 8 boromir 1 4 1 6 luca 3 2 5 other answers 5 18 16 x total 87 55 23 x * brands indicated by a minimum 5 respondents. source: own computation romanian brands awareness among young people. the case of common food products and in terms of milling products, pambac was nominated by most respondents, both in terms of first nominated brand (16%) and in terms of the first three nominated brands (19%). other brands indicated by a minimum of five respondents, but located at a considerable "distance" from the first are: dobrogea, cora and grania, the latter also belonging to the company pambac. a small number of respondents were able to nominate brands in this product category, 64% of them not doing any nomination. table no. 8. the most popular* brands of milling products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option pambac 16 3 19 dobrogea 2 5 7 cora 5 5 grania 5 5 other answers 8 10 3 x total 36 18 3 x * brands indicated by a minimum 5 respondents. source: own computation brand pambac is in top for pasta, but was followed closely by barilla, italian brand. of the respondents, only 8% indicated three possible answers, 18% two brands, and 34% one brand. 40% of them indicated no brand in this category. table no. 9. the most popular* brands of pasta products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option pambac 24 6 1 31 barilla 21 9 30 băneasa 3 2 1 6 other answers 12 9 6 x total 60 26 8 x * brands indicated by a minimum 5 respondents. source: own computation regarding breakfast cereals, the brands of the swiss group nestlé enjoys most awareness, respondents indicating either umbrella brand "nestlé", either one of the product brands (nesquik, nestlé fitness, lion presented in table no. 13 and cheerios and cini minis, indicated by fewer than five respondents). thus, 47% of respondents indicated that first brand nestlé or one of nestlé group brands. except nestlé group, only brand that accounted at least five nominations is viva. only 11% of all respondents indicated three brands of breakfast cereals, 21% indicated two brands and 35% one brand. 33% of respondents indicated no brand. timiraș table no. 10. the most popular* brands of breakfast cereal products on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option nestlé 24 10 3 37 nesquik 16 6 22 viva 6 3 9 nestlé fitness 3 4 7 lion 3 2 5 other answers 15 7 8 x total 67 32 11 x * brands indicated by a minimum 5 respondents. source: own computation known sugar brands to respondents are mărgăritar and coroniţa, both domestic. if mărgăritar brand was nominated among the top three by a greater number of respondents, coroniţa detaches far as first nominations (46% of respondents). a relatively high number of respondents (14 people) nominated product by type ("granulated sugar"), not by brand, being registered in "other answers". table no. 11. the most popular* brands of sugar on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option mărgăritar 28 30 4 62 coroniţa 46 11 1 58 other answers 10 8 6 x total 84 49 11 x * brands indicated by a minimum 5 respondents. source: own computation a lesser degree of knowledge was recorded for eggs, where only two brands agricola and cora accounted minimum five nominations (the first outpacing by far the second). it is found that 73% of respondents have not mentioned any brand in this category being practically the highest recorded percentage in this respect compared to the other categories of analyzed products. table no. 12. the most popular* brands of eggs on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option agricola 17 17 cora 4 1 5 other answers 6 2 2 x total 27 3 2 x * brands indicated by a minimum 5 respondents. source: own computation romanian brands awareness among young people. the case of common food products seeds and nuts category is dominated in terms of brand awareness by nutline, a domestic brand, registering a 37% in the case of top of mind awareness. the share of those who have made three nominations in this category of products was 9%; 27% had two nominations and 32% 3 nominations. 32% of respondents could not recall any brand in the analyzed category. table no. 13. the most popular* brands of seeds and nuts on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option nutline 37 10 1 48 grivas 8 8 1 17 star 2 3 1 6 other answers 21 15 6 x total 68 36 9 x * brands indicated by a minimum 5 respondents. source: own computation in the category of oil, the best known brands, as indicated by most respondents among the top three nominees, are: untdelemn de la bunica and unisol, both domestic; the first of them holding a 30% share in the case of top of mind. out of 100 respondents, 11 indicated three oil brands, 27 two brands and 36 one brand. 26 respondents could not recall any brand of oil. table no. 14. the most popular* oil brands on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option untdelemn de la bunica 30 6 1 37 unisol 20 15 2 37 aro 4 1 1 6 floriol 3 2 5 other answers 17 16 5 x total 74 38 11 x * brands indicated by a minimum 5 respondents. source: own computation the best known brand of margarine is delma, being the first nominated by 60% of respondents. at considerable "distance" have been nominated rama, unirea and becel. 11% of all respondents indicated three brands of margarine, 27% two brands and 44% one brand. table no. 15. the most popular* brands of margarine on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total as first option as second option as third option timiraș number of respondents delma 60 12 3 75 rama 9 10 4 23 unirea 5 5 1 11 becel 2 4 6 other answers 6 7 3 x total 82 38 11 x * brands indicated by a minimum 5 respondents. source: own computation conclusions the results of research conducted among students of the faculty of economic sciences of the vasile alecsandri university of bacau regarding the awareness of common food products shows a relatively low degree of their knowledge. for certain categories of products eggs, fish and fish products, canned vegetables, grain mill the share of those who remembered no brands was between 64% and 73%; and for categories: pasta, meat and meat products, breakfast cereals, canned meat and pate, nuts and seeds, oil, over 25% of respondents could not indicate any brand, even if some of these groups occupy a significant share in alimentation, according to the food pyramid (graur, 2006). referring to the brands of food products and alcoholic beverages which enjoys the highest awareness among young people, the results of the study highlight the greater degree of knowledge of brands for festive goods (whose consumption is occasional) compared to the common food products. determined based on the number of respondents who have nominated them between the first three recalled brands, pambac, coca-cola, milka, agricola, fanta enjoy the highest value of awareness, and for the top of mind the first brands are: pambac (20%), coca cola and milka (both 9%), fanta and danone (both 6%). by product category, brands with the highest share in terms of top of mind awareness in the examined sample are: zuzu (21%) for milk and dairy products, agricola for meat and cooked meat, except fish (35%) and eggs (17%), bonito (11%) for fish and fish products, bucegi (45%) for canned meat products, including pate, bonduelle (15%) for canned vegetable, pambac for: bakery products (68% ), milling products (16%), pasta (24%), nestlé (47%, including both umbrella brand nestlé and brands of product: nestlé nesquik, nestlé fitness nestlé lion, nestlé cheerios and nestlé cini minis) for cereal for breakfast, coroniţa (46%) for sugar, nutline (37%) for nuts and seeds, and untdelemn de la bunica (30%) for oil and delma (60%) for margarine. low level of knowledge of the brands for the various categories of food products from those studied should be a warning to operators in the respective markets; as mentioned at the start of the paper, the awareness of the product / brand is a basic condition for its acquisition. in this context, the study results can form hypotheses for research on nationally representative samples, through which could be obtained necessary information on which can be adopted decisions to improve communication to increase awareness of the brands portfolio. references dătculescu, p. (2012), cercetarea practică de marketing, editura brandbuilders grup, bucureşti. dătculescu, p. (2006), cercetarea de marketing, editura brandbuilders grup, bucureşti. fifield, p (2008), marketing strategy masterclass. implementing marketing strategy, elsevier. graur m. (coord.), (2006), ghid pentru alimentaţia sănătoasă, editura performatica, iaşi, available at http://www.fao.org/3/a-as693o.pdf. http://www.fao.org/3/a-as693o.pdf romanian brands awareness among young people. the case of common food products macdonald e, sharp b. (2003), management perceptions of the importance of brand awareness as an indication of advertising effectiveness, marketing bulletin, no. 14, article 2, available at http://marketingbulletin.massey.ac.nz/v14/mb_v14_a2_macdonald.pdf. manole, v., stoian m., ion, r.a. (2003), agromarketing, ediţia a ii-a, editura ase, bucureşti. marian, c., (2016), dicţionar de agromarketing, editura tribuna economică, bucureşti. săndulescu l. (2015, september, 18), top 100 cele mai puternice branduri romanesti, revista biz available at http://www.revistabiz.ro/top-100-cele-mai-puternicebranduri-romanesti/. ţimiraş, l. (2016), young people's preferences for romanian agro alimentary goods, studies and scientific researches. economics edition, special issue, available at: http://sceco.ub.ro/index.php/sceco/article/view/353. american marketing association (2016), dictionary, available at https://www.ama.org/resources/pages/dictionary.aspx?dletter=b. revista piaţa (2008, iunie, 21), brandul romanesc fata cu globalizarea, available at: http://www.revista-piata.ro/marci_romanesti-id168.html. http://marketing-bulletin.massey.ac.nz/v14/mb_v14_a2_macdonald.pdf http://marketing-bulletin.massey.ac.nz/v14/mb_v14_a2_macdonald.pdf http://sceco.ub.ro/index.php/sceco/article/view/353 https://www.ama.org/resources/pages/dictionary.aspx?dletter=b microsoft word olariu ioana 1 engl. implementation of rcm (retail classification methodology) concept in the distribution system teaching assistant ioana barin – olariu, university “vasile alecsandri” of bacau abstract rcm is a methodology through which are described the details of identification and clustering (classification) the outlets, and the customers who visit them. classification is based on various criteria, which concern both the seller and the buyer. the information resulted from classification makes possible the clustering of different locations which help improve planning and resource allocation, organize the activities and evaluation decisions. this article’s purpose is to provide clear information as regards: outletsr classification methodology, the importance of implementation, basic information vs. value-added information, data accuracy and maintainance of information the role of this methodology is to provide clear methods for classification and grouping the locations, based on the identification of clients and retailers.values/ similar needs. keywords retailers classification, basic information, value-added information, implementation system. 1. what is the retailers classification methodology (rcm) 1.1. the present situation romania currently uses a classification system (rcs) on which were added elements of methodology (rcm). rcs (retail classification system) only describes how to collect information, while rcm (retail classification methodology) also describe how the collected information can be used to improve business performance. in the past, rcs was regarded as a data collection activity and possibly as an implementation system. rcm focuses on using information and ensuring alignment with strategy and plans, making possible these two things. the focus is on optimizing the data to maximize performance at the situation in which the information was collected just in case that will ever be used. 1.2. the advantages of using the classification once complete the classification of outlets, the benefits are: consumer needs are better identified and satisfied; activities which are to implement could be better planned and designed; efficient allocation of resources and investments; people trained for each type of channel (petrol stations, hypermarkets, wholesale, etc.) that would offer to the tradesman competent advice; the representative becomes specialized on channel that operates. 1.3. the importance of implementing rcm the classification becomes possible with collecting a minimal amount of information about outlets, and makes it possible to prioritize and ensure that: resources are allocated to outlets that efficiently count; the activities are aligned and integrated between brand team and sales force. 72 studies and scientific researches ‐ economic edition, no. 14, 2009  an essential aspect of rcm is that it makes possible the alignment within the organization, by providing a common basis of locations wich both marketing team and sales force work with. additionally, it ensures a common understanding of some key elements (authority, volume, quality, channel / segment). it is needed to decide whether held information is out of date, containing relevant details and whether the approach to classification is still in line with strategic and operational plans. even though different methodologies and new processes were introduced, the need of suitable information on retail to support core business processes (trade coverage planning, territory management, activities prioritizing, etc.) always existed. however, rcm is focused on optimizing the available information and is useful regardless of what data or systems exist. a key difference is that the rcm was designed to provide a high degree of flexibility. this has great importance in adapting to local needs, but at the same time it offers a level of global consistency in terms of certain key issues such as channels definition, volume classification, etc. flexibility also refers to the option to collect over time additional information from the outlets, and then be added into the database without creating disturbances. 2. basic information rcm offers two levels of data collection. the first step involves providing information that is considered essential / basic and to be collected from as many locations: customer data (static); required basic classifications data. basic information is used for: outlets classification; fundamental processes of marketing. the real value of rcm comes from the efficient interpretation of collected data but also of how other processes influence. the rcm implementation planning must take into account the existing needs and how information in addressing these needs will be used. basic information is used in making key decisions on resource allocation: what locations will be covered? who will cover these outlets? what activities will be implemented and in what locations? what are the main locations for investment? what brand is present and in what location? what brand activities will be implemented and in what locations? the answers to these questions underpin the elaboration of strategic and operational plan. there are several options to collect information: tmr (trade marketing representative); dr (distribution representative); mr (merchandising representative); external staff: research agencies. considering the simplistic nature of basic information, they can be collected from any of the above staff. however, information with higher value added must be collected by the companies staff, preferably tmr. much of the basic data (at least those on the dealer) may already be available in the system or may be obtained from: public institutions: chamber of commerce, etc.; other companies: purchase database; 73 studies and scientific researches ‐ economic edition, no. 14, 2009  research agencies: nielsen may have a list of outlets. basic information are: 2.1. information about the customer it refers to basic information about the outlet (eg name, address, phone, etc.). this information is used to establish the territories to be visited addition who visit them. 2.2. information for basic classification it refers to data required for outlets classification. it includes 2 sets of data: elementary classification (minimal information); additional information. the information required to be collected is related to volume, channel, type of outlet, authority, consumers age, etc. it is possible to collect additional information to facilitate the planning, classification process. 2.3. channel and subchannel defining different types of channels is based on consumer behavior and on the methods by which it can interact with them. in current terms of market dynamics, categories profile constantly change, the boundary between different types of channels becoming thinner. ex: convenience gas stations which have inside cafe + a small outlet also. under this interpenetration circumstances, each place with separate management is separately classified 2.4. authority another important information refers to the power of decision of the location person of contact on distribution, merchandising, price and order. authority intervenes in the establishment of: who will visit the outlet? eg if decisions are taken in the outlet, it can be send a tmr to positively influence the decisions, over an account where decisions are taken centrally what will the frequency of visiting? eg: how often to visit an outlet on which decisions can’t be influenced. what types of activities need to be made? eg: if the person can decide on the order, a visit of a dr is required to take it. information about the authority is included in: objectives planning; developing marketing activities that are appropriate for each type of authority; appropriate reports. 2.5. information about outlets location location: this information provides clues about area’s features where the location is situated. proximity: represents those locations that are situated in residential areas, whose clients are mostly the same. the business potential comes from the fact that the seller knows the majority of customers, knows their preferences and his recommendation may influence a lot the buying decision. 2.6. additional information that are necessary to the classification depending on the features of a market, it can collect other information, if they help in classification process. all such information, in each market, will provide additional data that will result in advanced planning, implementation and evaluation. examples include: contracts; supply sources; it is recommended that this type of information to be collected, because it will facilitate the analysis of product flow in the secondary distribution chain; the economic environment in which the outlet is located. 74 studies and scientific researches ‐ economic edition, no. 14, 2009  3. value-added information after the basic information is collected, a basic classification is done, which indicates the priority locations in which it is useful to collect value-added information. types of value-added information: data about the consumer; data about segments of consumers; data about consumer behavior; criteria on merchant; data about communication; data about employees; other criteria. 3.1. data about the consumer it is information about the consumers, which helps planning / prioritization, it may include: share of women/men; income and / or education. 3.2. data about segments of consumers it is information about the segments of consumers who visit a location; can help identify and prioritize: products like: clothes, drinks, accessories, etc..; social group who visit the location. 3.3. data about consumer behavior the decision on which such information will be collected are taken centrally, based on consumers research. if locally there is some information about consumer behavior that bring aid in planning, implementing and evaluation, they will be mentioned. 3.4. merchant criteria it is possible that additional information about the merchant to prove useful, especially for horeca, where staff can be used as a "brand ambassador". information can include: age; domain experience; the ability to influence the.consumers 3.5. data about the communication a key example of this category is the percentage of shelves exposure "facing share", which offers the possibility of measure the exposure rate of outlet. improving of this indicator may be a key aspect of operational plans. 3.6. data about employees this data may be collected, especially if there are plans to use the employees as "brand ambassadors" or in other programs in which they are involved. it may collect information about: number of employees and the staff turnover; motivation and ability to influence; attitude towards the fmcg field. 3.7. other criteria in large part, it refers to horeca, because of its different specificity from retail, so is required typical data collection of this channel, taking into account the recommendations of the research team: existing contracts; the kind of music; the prices; various restrictions. 75 studies and scientific researches ‐ economic edition, no. 14, 2009  3.8. additional information to those used in the classification as part of the collection of data, it may be decided raising additional information which will not be used for classification: dealer contact – eg: email, name, favourite visit day.; merchandising data pop / pos materials existing in outlets; contract data details of existing contracts; financial data – eg: credit period, credit limit, etc.; competition data. collecting such data is a component of the implementation process, especially if this information was not available previously. rcm should be treated as a method to obtain an approximation of outlets. although the accuracy of collected data is a priority, should not be lost of sight the cost and complexity resulting from the effort of errors minimizing. 4. data maintenance once collected the information, it should be updated continuously. it is necessary to set the person responsible for this activity (in principle, the person who visits the outlets). for the outlets viewed more than one representative, it is necessary to set each area of responsibility. the recommendation is that dr (distribution representative) should handle basic and financial information, while tmr (trade marketing representative) should handle the value-added and ratings. bibliography 1. dwyer, f.r.; tanner, j.f., (2006), business marketing, mcgrew-hill, new-york, 3rd edition 2. gattorna, j.l., (1999), managementul logisticii si distributiei, publishing house teora, bucuresti 3. peter, j.p.; olson, j.c., (2008), consumer behavior and marketing strategy, mcgrewhill, new-york, 8th edition 4. weitz, b.a.; castleberry, s.b., (2007), selling – building partnerships, mcgrew-hill, new-york, 6th edition 5. www.magazinulprogresiv.ro 76 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro specific models of representing the intellectual capital andreea feraru “vasile alecsandri” university of bacau andreea_feraru26@yahool.com nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahool.com abstract various scientists in the modern age of management have launched different models for evaluating intellectual capital, and some of these models are analysed critically in this study, too. most authors examine intellectual capital from a static perspective and focus on the development of its various evaluation models. in this chapter we surveyed the classical static models: sveiby, edvisson, balanced scorecard, as well as the canonical model of intellectual capital. in a spectral dynamic analysis, organisational intellectual capital is structured in: organisational knowledge, organisational intelligence, organisational values, and their value is built on certain mechanisms entitled integrators, whose chief constitutive elements are: individual knowledge, individual intelligence and individual cultural values. the organizations, as employers, must especially reconsider those employees’ work who value knowledge because they are free to choose how, and especially where they are inclined to invest their own energy, skills and time, and they can be treated as freelancers or as some little entrepreneurs . keywords cognitive knowledge; emotional knowledge; spiritual knowledge; human capital; structural capital and relational capital jel classification f15; f50; o10 statistical models of representing intellectual capital the chapter entitled statistical models of representing intellectual capital approaches and analyses the concept of intellectual capital, as well as the main models which can support enterprisers/managers in evaluating and quantifying the advantages of intellectual capital. most authors examine intellectual capital from a static perspective and focus on the development of its various evaluation models. in this chapter we surveyed the classical static models: sveiby, edvisson, balanced scorecard, as well as the canonical model of intellectual capital. among the group of static models for evaluating organisational intellectual capital the canonical model stands out. this model enables the structuring of organisational intellectual capital in: human capital, structural capital and relational capital. although the model is widely spread, it is a static one and can thus create a series of errors in the process of evaluation, because all the three entities mentioned above are not independent from the viewpoint of their contents, as any logic of structuring complex entities requires. the human capital is the component that integrates the intellectual capital resources associated to the intangible human resources inside an organization. the formal definition of the human capital can be found in the dictionary of economics, rendered 134 specific models of representing the intellectual capital as, "the stock of professional knowledge, skills, abilities and health that can determine a person to enhance its creative capabilities, and, thus, the expected future revenues; it means, also, the ability to get people to the effective production of the goods and services ". as proved by the almost comprehensive analysis carried out by andriessen (2004) and, more recently, by roos and pike (2007), most authors interpret intellectual capital as organisational potential structured in the following manner: human capital, structural capital and relational capital. no matter what designations they might use, static models approach the manifestation of organizational intellectual capital after its foundation (stewart, 1999; roos et al., 1997; sveiby, 1997; andriessen, 2004). in turn, the human capital can be divided into individual capital, which includes knowledge, skills, personal skills and the social capital, aiming the human relationships at the workplaces. several studies show that in the u.s. companies, the value of human capital exceeds the capital structure and the value of the relational capital. that is why all this research has a static character, examining a taxonomy reflecting a type of fixed reality, and not one which is dynamic and changing. in the context of a continuously changing and evolving economy, the most important resource for any enterprise is its human capital. however, the simple existence of a number of employees is not sufficient for making the difference in value between one organisation and another; what represents and constitutes its competitive advantage is the quality of its personnel, their competences, abilities, knowledge and their performanceand success-oriented views. could we say that the implication of performance-oriented employees and the existence of a work environment which stimulates creativity and innovation are enough for long-term business success? certainly, this is not enough because an organisation does not operate by itself, it functions in a certain context and establishes relations with various actors of the organisational environment (stakeholders, clients, suppliers, shareholders, state institutions etc.). that is why the relational component of intellectual capital is as important as its human and structural components. an organisation must concentrate its financial and human efforts on building and maintaining long-term relationships with all its business partners, with the target market and with the society in general. leif edvinsson, in line with the scheme of market value, divides intellectual capital in human capital and structural capital which, in its turn, is formed of client capital and organisational capital, the latter comprising innovation capital and process capital. although this classification seems to be well-structured, it makes use of groups of entities which are not defined rigorously and do not possess unique features. sveiby’s model divides intangible assets in external structure, internal structure and individual competences. as far as the external structure is concerned, we must mention that it refers to clients, suppliers and other stakeholders who are considered relevant for a certain company. depending on the type of organisation, the external structure will differ from one enterprise to another. the internal structure refers to systems, databases and processes which support the organisation, whereas individual competences concern the employees’ individual experience, knowledge, competences, abilities and ideas. the model developed by norton and kaplan does not present intellectual capital from the perspective of its components. the balanced scorecard model analyses an organisation from four perspectives: that of learning and development/growth, internal processes perspective, clients’ perspective and financial perspective, a model which largely resembles some of the classifications of intellectual capital centred on components which were exposed above. 135 feraru, ciucescu after carefully investigating the bibliographical support, we selected and analysed critically all these models. proper knowledge of these models for evaluating intellectual capital is useful because in the second part of the research we tested a new model for evaluating intellectual capital. dynamic models for representing intellectual capital the chapter entitled dynamic models for representing intellectual capital presents the main models regarding the dynamics of knowledge developed through time. in concrete terms, it contains the approach of intellectual capital from the perspective of organisational integrators, the clarification of concepts like linearity and non-linearity for analysing organisational knowledge fields, or knowledge processing, as well as the presentation of the entropic model of intellectual capital (brătianu et al, 2009). given the importance and dynamics integrators within an organization, has been prepared and developed a model of intellectual capital as follows: figure 1 the integrated perspective on intellectual capital source: brătianu c., 2009, p. 235 in a spectral dynamic analysis, organisational intellectual capital is structured in: organisational knowledge, organisational intelligence, organisational values, and their value is built on certain mechanisms entitled integrators, whose chief constitutive elements are: individual knowledge, individual intelligence and individual cultural values. the following elements can be part of the general designation of organisational knowledge: values, beliefs, rituals within the organisation, organisational culture, individual knowledge individual intelligence individual values integrators intellectual capital organisational values organisational intelligence organisational knowledge tacite explicite emotionale cognitive business social 136 specific models of representing the intellectual capital knowledge stored in existing software, licenses, patents, or in organisational databases. other elements are added to these, such as the tacit and explicit knowledge of the organisation members, knowledge which is used in daily activities and processes. according to a simple analysis, we could affirm that organisational knowledge includes tacit and explicit knowledge, but this knowledge dyad is replaced with a new perspective: that of cognitive knowledge, emotional knowledge and spiritual knowledge. in order to understand this new manner of approaching knowledge, we will make a brief presentation of this perspective. specialists in eastern europe replaced the cartesian mind-body duality with a unitary conception regarding knowledge; this means that both cognitive and emotional knowledge can change continuously from one form to another by virtue of the thermodynamics metaphor. while western philosophy excluded affectivity from the class of knowledge because of its subjective nature, eastern philosophy extended the scope of knowledge to include affectivity as well, and this is an important element for leadership because employees are motivated especially by means of emotional knowledge. at the same time, innovation is based on intuition, which has both a cognitive and an emotional character. cognitive knowledge is regarded as the direct result of the cognitive process, since they comprise the rational part of the cognitive process. cognitive knowledge contains both rational and non-rational knowledge, so it would be a mistake to consider the spectrum of cognitive knowledge only from the perspective of rational characteristics. emotional knowledge is based on emotions which occur before cognitive processes and they influence the way in which we process information. emotional knowledge shows resemblance both in contents and intensity with the two dimensions of thermodynamic energy. spiritual knowledge contains the most profound significations, values, objectives and the highest motivations, both at individual and organisational levels. spiritual knowledge is held in common by all employees and they generate the necessary motivations for their efforts to accomplish a durable competitive advantage. the vision and mission of an enterprise are strongly supported by corporate values, which are integrated in the field of spiritual knowledge. each employee enters an organisation possessing his/her own collection of cognitive, spiritual and affective knowledge. these types of individual knowledge can be shared, transferred or employed directly in the decision-making process, resulting from the action of organisational integrators. one of the most important problems for each organisation is that of integrating employees’ individual knowledge and intelligence so as to create organisational knowledge and intelligence. in order to achieve this aim, an organisation needs some specific mechanisms for the generation of synergies. this fact is true because in non-linear systems, as in the case of knowledge, the outcome means more than the simple addition of individual achievements. each type of knowledge can be processed by a specific kind of intelligence, so that we obtain a final result for the entire organisation, namely the organisational intellectual capital. organisational intelligence – a component of the intellectual capital possessed by each member of the enterprise – has an important contribution to organisational intellectual capital. the processing of knowledge is performed with the help of intelligence and decisions taken make use of the values of organisational culture as guiding factors. organisational values are composed, in their turn, of cultural values and business values. unlike previously mentioned models, the entropic model reveals the dynamic transformation of potential intellectual capital in usable intellectual capital, just like 137 feraru, ciucescu energetic models in physics reflect the transformation of the potential energy of a body or a mechanical system into kinetic exploitable energy. first, the individual contribution of each employee, existing under the form of knowledge, ways of thinking, emotions, behaviour patterns and values, is transformed into organisational capital with the support of integrators. this chapter aims to demonstrate the fact that we can change the viewpoint of perceiving and approaching intellectual capital, so that its generation could be analysed and improved. in fact, by positioning the intellectual capital in the centre, we can observe the roots rather than look up and examine the branches. thus, we can argue that the value of intellectual capital depends on certain organisational mechanisms, hereafter named integrators. by introducing the concept of integrator (brătianu, 2008), new options were revealed for researching the dynamics of intellectual capital in an organisation, as well as the practical methods for its development as a potentiating factor or, respectively, for its transfer in managerial action. an integrator represents a tangible or intangible system for aggregating individual contributions on the basis of a non-linear regulation. hence, it does not refer to the summing up of individual contributions, but to their integration. the ultimate outcome does not reflect a value resulting from the multiplication of the number of employees, but signifies a value which is greater or smaller than the multiplication of individual intellectual capital. in a subsequent stage, the differentiation of organisational intellectual capital occurs, in order to meet the clients’ demands and requirements to the best possible degree. these integrators are detailed and analysed from the perspective of developing the intellectual capital. they are capable of bringing together primary constituents and of integrating them in the intellectual capital of the entire organisation, with the aid of synergy, similar to the process of projecting a system. conclusion additionally, while analysing the entropic model, we also investigated the influence of major integrators on intellectual capital, with its three components: cognitive capital, emotional capital, spiritual capital, as well as the field of factors which exerts force on the primary components of intellectual capital – knowledge, intelligence and values – and determines the generation and development of intellectual capital. the management and the leadership are a powerful integrator in the nonlinear segment. the leadership is important by its power to act on knowledge, on the intelligence and on the individual values. the organizational vision and mission are also interesting integrators, which act mainly on the individual emotional intelligence. the organizational culture appears as a powerful integrator, since it acts mainly on the individual intelligence and on the values, creating models of the organizational behavior. intellectual capital as a dynamic approach focuses on the development of entropic model which captures the dynamic transformation of intellectual capital into usable intellectual capital. also, was analyzed the influence of the main integrators intellectual capital, divided into three components: cognitive capital, emotional capital, spiritual capital, and fields of forces acting on the primary constituent of intellectual capital knowledge, intelligence and values and determines the generation and development of intellectual capital. 138 specific models of representing the intellectual capital references andriessen, d. (2004), making sense of intellectual capital – designing a method for the valuation of intangibles, butterworth-heineman, burlington (ma) and oxford (uk). brătianu, c., (2008a), knowledge dynamics, review of management and economic engineering, vol.7, special issue, no.5, pp.103-107. brătianu, c., (2008b), a dynamic structure of the organizational intellectual capital, in: naaranoja, m. (ed.) knowledge management in organizations, pp.233-243. vaasa: vaasan yliopisto. brătianu, c. (2009) the frontier of linearity in the intellectual capital metaphor, electronic journal of knowledge management, vol. 7, issue 4. brătianu, c., vasilache, s., mandruleanu, a., dumitru, i., prejmerean, m., amza, d. (2009), capitalul intelectual organizațional. bucurești : editura ase bucurești. brătianu, c., dima, a.m., vasilache, s., orzea, i. (2012) nonlinear integrators and intellectual capital dynamics. bucurești : editura curtea veche. brătianu, c. (2013) nonlinear integrators of the organizational intellectual capital. in m. fathi (ed.) integration of practice oriented knowledge technology: trends and perspectives, pp.3-16, springer, new york. brătianu, c., orzea, i. (2013) the entropic intellectual capital mode, knowledge management research & practice, 11(2), pp.133-141. gardner, h. (2006) multiple intelligences, new horizons, new york. davenport, t.h. si prusak, l. (2000), working knowledge, harvard business school press, boston. gardner, h. (2006), multiple intelligences, new horizons, new york. feraru, a., mironescu r. (2012), the intellectual capital and the learning organization, journal of international scientific publication, economy & business, bulgaria, issn 1313-2555, vol. 6., partea a 3-a, pp. 30-40. feraru, a., mironescu r. (2012), e.u.’s strategy of building a knowledge economy, studies and scientific researches edition economics, issn 2066-561x, nr.1617, pp. 147-152 feraru, a., mironescu r.și drob c. (2013), particular aspects in intellectual capital management of the romanian smes, proceedings european conference on intellectual capital university of the basque country, bilbao, spain, e-book isbn: 978-1-909507-15-9, e-book issn: 2049-0941, book version isbn: 978-1-909507-13-5, book version issn: 2049-0933. stewart, t. (1998), intellectual capitalthe new wealth of organizations, london, nicholas brealey publishing house. sveiby, k.e. (1997), the intangible assets monitor, journal of human resource costing and accounting, volume 2, issue 1, pp. 73–97. 139 studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 84 environmental impact of transportation in the tourism industry – dimensions and actions mirela ștefănică al. i. cuza univ of iași, faculty of economics and business administration stefanicamirela@yahoo.com abstract the development of tourism and the increase in the number of travellers at the level of certain areas of touristic interest brings socio-economic benefits and also leads to the damaging of the quality of the environment. transportation, as component of the tourism industry, has many side effects on the environment due to carbon dioxide emissions, pollution, etc. the work mainly emphasizes the way in which air, road, rail and water transportation influences the quality of the environment, contributing to global warming at the same time. climate change, a consequence of global warming, is perhaps the biggest problem of the beginning of the millennium, representing one of the most prodigious forces that will affect the progress of humanity in the 21st century and later. in this sense, our paper tries to draw attention to the adaptation measures meant to diminish the vulnerability of climate change at the level of tourism, in general and transportation, in particular. keywords tourism; impact; environment; transportation in tourism; global warming; climate change jel classification l83; r49; z32 introduction the first attempts to define tourism, as economic and social phenomenon go as back as the half of the 19th century. meanwhile, tourism-related activities developed rather slowly; however there was a boost in the 1960s when tourism turned in a true “phenomenon specific to the modern world” that became the first world “industry” due to the great impact of the activities in the 1960s, the creation of the raw product worldwide and of jobs (jugănaru, 2007). thus, referring to tourism as industry, we mention that it is the part of the economy made up of a series of activities from various branches whose common function is to satisfy tourists’ needs. the tourism industry contains the following: ▪ accommodation sector: hotels, motels, guest houses, farms, cruise ships, villas, castles, camping, time-share properties, secondary residences; ▪ food sector: restaurants (classic, traditional, fast-food), bars, cafés; ▪ transportation sector: commercial sector represented by airlines, travel by ship, railway, road (coaches) and non-commercial sector consisting of private cars, planes and yachts; ▪ travels sector: travel agencies and tour operators; ▪ entertaining sector: gambling, clubs and discos, theme parks; ▪ information sector: tourist information network; ▪ additional services, facilities and infrastructure services. therefore, tourism has a complex content, it comprises not only the resources meant to ensure touristic circulation, but also the economic sectors that directly compete to satisfy touristic demand and needs. environmental impact of transportation in the tourism industry – dimensions and actions 85 but on the other hand, tourism is mainly based on the valuing of touristic resources, and the level and intensity of this valuing lead to a series of side effects on the environment, in space and time. these effects are expressed by means of the notion of impact (cândea et al, 2003). according to europe’s environment: the third assessment (eea 2003), the direct impact of touristic activities on people and the environment at local level is strongly influenced by the intensity in time (periodicity) and space. such impact is caused by: ▪ the intensive use of water and lands by leisure and touristic activities; ▪ the provision and use of energy resources; ▪ the changes of the natural framework occurred further to the construction of infrastructure, buildings and various facilities; ▪ air pollution and waste; ▪ soil compaction and impermeabilization; ▪ the disturbance of fauna and local inhabitants (e.g. due to noise pollution) the direct impact on natural resources, either renewable or not, owing to touristic facilities, roads and airports, may be caused by the use of lands for accommodation facilities, other infrastructure plans and to extract construction materials (such as sand extraction). the impact of transportation in tourism on the environment transportation is essential for the tourism industry, and for the daily life of population; it represents the first manifestation of touristic consumption and is the only component of tourism industry that the tourist cannot do without. it ensures the travel between one’s home and the touristic destination or other facilities specific to the tourism activity. thus, transportation services in the tourism industry, apart from the overall operations, aim at the conditions and facilities related to the organisation ofthe transportation of tourists and their luggage (minciu, 2000), a series of activities meant to facilitate the achievement of the other touristic services (technological transportation necessary for accommodation, meals and leisure).at the same time, the technical success recorded in transportation afforded unprecedented growth of the touristic flow and considerably increased the power to access isolated destinations (matei, 2004). recently, there is mainly air and road transportation in tourism (over 40% of the total amount for each), railway and water transportation being lower in percentage (around 7-8%), according to tourism market trends: europe – 2000. in what follows, we present the main side effects on the environment of the various means of transportation used in tourism. the impact of railway transportation in tourism on the environment in the late 20th century and early 21st century, the railway transport of passengers and travellers fell in demand because of the competition with other modes of transport. furthermore, the lack of standardisation between states makes impossible a direct relation between them (gaps, electrification), not to mention the restrictions on network development due to the configuration of landforms, water-dry land division, the high price for their maintenance, financial inefficiency on some lines, the need for subsidies, especially governmental ones. despite all these, in some areas on the planet, the railway network modernised: ever since 1965 japan has introduced high-speed trains in big cities – shinkasen, ground effect trains – maglev and europe has almost 200 cities related by eurocity, tgv, intercity, railbus, eurotunnel – 1994, to which we can add the facilities for international tourists via eurailpass. ștefănică 86 for the environment, this mode of transport has a relatively low impact shown in vibrations, the rise of anthropic landforms (e.g. embankments and excavations) and the likely electrostatic or electrical pollution of electrified tracks. the impact of road transportation in tourism on the environment the tourism industry is favoured by the development of road transportation due to the different modes of transport: buses, coaches, maxi-taxi and especially cars. cars are the most employed mode of transport and they continually gain in popularity for the following reasons (ferenț, 2007): ▪ greater flexibility in choosing transportation routes; ▪ the tourists’ desire to know more in a shorter time, which is essential for the comfort of travelling and sometimes as far as distance is concerned; ▪ allow an increased accessibility of isolated sightseeing spots and greater ease in luggage transportation; ▪ increase the tourist’s feeling of independence; ▪ a diminution of the cost per tourist against the background of the increase in the occupancy degree of the mode of transport. regarding the relation between these modes of transport and the environment, it is important to mention the great and multiple impact they exert: co, sox, nox, lead, hpa emissions, other volatile compounds, sound and soil pollution, land consumption for infrastructure, as well as accident risks. the impact of water transportation on the environment tourism employs water transportation especially via cruise ships that ensure both the transport and accommodation or destination in the same place. the touristic attraction is the mode of transport itself as it benefits from the services mentioned above and other facilities: meals, shopping, sports games, pools, dance, theatre, films, conference rooms, library, thus becoming a genuine floating resort. approximately 20 million passengers embarked on a cruise ship in 2016 worldwide, as compared to only 0.5 million in 1970. moreover, on the tourism market, there is an increase in the use of ferryboats, yachts, motor scooters, hovercrafts (great britain, alaska), kayak-canoe, boats that are both touristic attractions or entertainment. for the environment, the impact of these modes of transport is related to accident risks, the behaviour of tourists or personnel in tourism with respect to the management of materials used on the mode of transport and the eco-technical equipment of the boat or the diving schedules in the sea that may endanger the marine life. bluewater network association claims that a voyage that lasts for a week on a regular ship is responsible for the generation of 4.5 trillion litres of “grey waters”, 50 tons measured in garbage metres, over 200000 tons of waste and 160000 litres of oil contaminated water. wherever they get (and unfortunately most of them reach the sea), pollution problems occur. the effect of cruise ships on communities visited seems to be ambivalent as there are few important tangible benefits for the locals. the impact of air transportation on the environment air transportation is one of the most popular modes of transport due to low travelling time, high comfort, online reservation system; however, there are some disadvantages given the perceived risk of accidents (although world statistics shows that is the safest mode of transport equipped with devices for detecting dangerous objects on boarding, highly qualified personnel, aeronautical technology), because of terrorism acts, fixed timetables, expensive tickets, etc. for the environment, air transportation is identified as one of the cause of global warming, the depletion of the ozone layer, and via airports, it becomes a major chemical environmental impact of transportation in the tourism industry – dimensions and actions 87 pollution source for the air in the tangent residential areas, and is responsible for sound pollution, as well. according to the aviation environment federation (aef), short economic flights incur 300-460g of co2 per kilometre, whereas long distance flights, 210-330 g. at present, international flights increased by more than 5% per year (short distance flights in the asia-pacific region by 8%, the european ones by 5% and the usa ones by 3%) (adam, 2007). the contribution of tourism and its transportation to global warming global warming is the phenomenon responsible for the increase of average temperatures in the atmosphere nearby the soil, as well as in oceans. it started to worry us after the 60s further to massive industrial development and the increase of the concentration in greenhouse effects held responsible for this phenomenon (stănciulescu & micu, 2012). in 2004, david king, the british government’s chief scientific advisor of the time as reputed scientist, underlined that climate change, a consequence of global warming, was the most serious problem of the entire humanity, much more serious than terrorist threats. before often exacerbated nationalisms, religious and cultural gaps, ethnic identity and welfare levels between people, global warming often reminds us more than anything else of the only thing we have in common – the earth. by its impact on the planet’s ecology, rain falls, temperature and weather patterns, global warming will affect the life of every one of us in part. before our very eyes, earth temperature is growing, the quantity and distribution of rain falls changes, ecological areas migrate, seas and oceans get warmer, ice caps and glaciers are melting and millions of people are worried about the future (watkins, 2008). the continuous rise of international travels amounting to hundreds of millions and the billions of internal travels in the recent years according to statistics largely contribute to the increase of greenhouse effects; at the same time, the tourism sector is vulnerable in front of climate change. a unwto report establishes a link between tourism and climate change. the main conclusions of the study are the following: ▪ carbon emissions from transport, accommodation and other touristic activities are estimated at 4-6% from the total amount of carbon dioxide emissions; ▪ because of the lack of measures against them, carbon dioxide emissions from this sector could rise by 150% in the following 30 years; ▪ the impact of climate change on tourism will increase along with greenhouse effects. climate change can affect important touristic areas in which climate is of utmost importance such as northern europe, the mediterranean or the caribbean; ▪ coastal, mountain areas and the wild regions in the less developed countries and small islands will be particularly affected; ▪ the tourism sector will need to be able to cope with the changes mainly in the endangered areas by the substantial diminution of emissions via new technologies and financial mechanisms. consequently, the tourism industry contributes to global warming especially by means of carbon dioxide emissions of planes and cars (that ensure both the transportation of tourists and of the products necessary to satisfy their needs once arrived at their destination), as well as the use of energy (which is vital for any accommodation unit or one that provides meals, for technological processes and for the customers’ personal use) and the fuel necessary for various installations (liquid and gas fuels being used for the preparation of domestic hot water, central heating, technological steam for professional washing/ cleaning services, etc.). ștefănică 88 in addition, the change of the destination in certain lands, i.e. the excessive urbanisation of some touristic interest areas or the deforestation carried out for building infrastructure specific to tourism development contribute to the volume increaseof greenhouse effects. measures for the diminution of climate change to diminish the vulnerability of climate change, specialists proposed a series of adaptation measures corresponding to every sector, as can be seen from table 1 below. table 1measures for the diminution of climate change sector adaptation strategy action framework positive and negative factors tourism diversification of touristic attractions transport to ski slopes at high altitudes and glacial lakes production of artificial snow integrated planning (the capacity of touristic accommodation links to other sectors) financial measures (subsidies, credits) demand for new touristic attractions financial and logistic problems side effects on other sectors (e.g. increased consumption of energy for the production of artificial snow) transportation norms for route design and planning railways and other infrastructure elements national transportation policies considering the effects of climate change financial and technological obstacles amelioration technologies and integration in essential sectors (e.g. energy) energy consolidation of air transportation networks energy efficiency promoting the use of energy from renewable sources national energy policies fiscal and financial regulations norms to prevent the effects of climate change financial and technological obstacles stimulation of new technologies use of local resources source: stănciulescu, g., micu c., (2012), managementul operațiunilor în hotelărie și restaurație, bucurești, ed. c.h. beck, p.390 according to the table above, the tourism sector contributes to global warming by carbon dioxide emissions of planes and cars, as well as by the use of energy for installations. for this reason, all the people involved in the tourism industry are responsible and need to find solutions so as to adjust to climate change and limit its effects. conclusions as previously mentioned, air and road transport are gaining in popularity, alongside with the increase in the number of tourists and their mobility. at present, tourism represents more than 60% of all air travels, so it is responsible for a more important environmental impact of transportation in the tourism industry – dimensions and actions 89 quota with respect to dangerous gas emissions such as carbon dioxide. emissions from modes of transport, electric energy-related ones are strongly connected with acid rains, global warming and serious phenomena of local pollution. sound pollution from air transportation, cars, motorcycles, buses and leisure vehicles such as snowmobiles, ski jets, atvs are an increasing problem of tourism that causes irritation, stress or even hearing loss. in conclusion, transportation in tourism has a significant impact on the environment, either direct or indirect by energy consumption, fossil fuels, the materials used to obtain modes or means of transport, terminals, space consumption, pollution with effect on global warming, acid rains, depletion of the ozone layer, disturbance of ecosystems by traffic jams or sound pollution. references adam d., (2007), flights reach record levels despite warnings over climate change, the guardian, 9 mai 2007, p.3 cândea m., erdeli g., simon t., peptenatu d., (2003), potenţialul turistic al româniei şi amenajarea turistică a spaţiului, bucurești, ed. universitară, p.318 ferenţ e., (2007), economia şi managementul turismului, iaşi, ed. politehnium, p.149 jugănaru d.i., (2007), politici şi strategii în turismul mondial, bucurești, ed. expert, p.17 matei e., (2004), mediul şi turismul, bucurești, ed. credis, pp.30-33 minciu r., (2000), economia turismului, bucurești, ed. uranus, p.233 stănciulescu g., micu c., (2012), managementul operațiunilor în hotelărie și restaurație, bucurești, ed. c.h. beck, p.390 watkins k., (2008), în raportul undp (programul naţiunilor unite pentru dezvoltare) pentru 2007/2008 witt st., brooke m., buckley p., (1995), the management of international tourism, new york, routledge, p. 24 ***tourism market trends: europe – 2000, (2000), world tourism organization, madrid, p. 15 ***united nations world tourism organization – climate change and tourism: responding to global challenges microsoft word niminet liviana engl. european competition policy in time of crisis. to be or not to be liviana andreea nimineţ, universitatea vasile alecsandri din bacău abstract: it is a known fact that competition and all the policies implied by it have a positive impact on economy. but what happens when financial crisis strike? has competition policy an autoregulating power or it must be helped by international institution? what is the road to be followed in time of recession? key words: competition policy, crisis, competition law 1. crisis background when talking about crisis the first thing that comes in mind is the question “what went wrong?”. the current crisis has its roots in a series of enormous strategic errors made by the banks and other financial institutions. in “technical” words the main reason was the balance sheets (assets and liabilities) of banks relative to their own capital that expended, not over the last year, but over the past decade. as a result of this expansion some huge global imbalances appeared (asian saving and western borrowing to spent)1 combining with the steady growth, low interest rates, low inflations. plain said, these institutions borrowed far too much given their low capital base, and, when the asset price bubble began to burst, they were caught out. the peak of this was reached by the selling and purchasing of opaque credit default derivatives between financial institutions. what happened then is very plastic expressed by bruce lyons2 : the rapid demand growth suppressed the power of competition to select only the fittest to survive in the same way the unlimited food in the animal kingdom does. the financial crisis originating in the usa quickly spread to the rest of the world with confidence receding inter-bank lending rarefied and a serious credit crunch. financial institutions throughout the world got into trouble, and over time the crisis in the financial markets has caused wide-spread financial difficulties across the world. 2. competiton policy and the financial and economic crisis all the economic theories support the fact that competition is desirable because it increases the welfare of consumers and contributes to efficiency in economic activity. competition is defined as the rivalry between individual firms. rivalry ensures that only the most efficient and innovative firms are in the market and thus competition is an ongoing process that works through using the company resources, entry and exit in the market and innovation. it is difficult to quantify how much does an efficient competition affect the productivity and the economy in general, but a number of 1 john vickers, the financial crisis and competition policy: some economics ,the global competition policy magazine, december 2008 (1) 2 in the paper: competition policy, bailouts and economic crisis 67 studies and scientific researches ‐ economic edition, no. 14, 2009  extensive studies have found that stronger competition is associated with higher productivity and efficiency. in the same way that it is clear that competition in business has a positive impact, it has also been established that competition restrictions may cause great damage to the public and the economy. there are several reasons for which one can say that a recession has a big harmful potential for competition and all the policies supported by it. a. in order for competition policy to work the markets need time to evolve and became efficient. in other words the entry of new and efficient ones as well as the exit of the inefficient is only a part of competition policy’s goal. b. the competitive markets generally produce better value for consumers, but during a recession the short run survival actions take over and usually the exit of the un-fitted firms may be more expensive for the society. this also comes from the fact that the competition’s benefits do not appear immediate and are less visible while the costs of the existence of business, employees and consumers are more up-front. c. the recession determines a public pressure exercised over the political power in order to intervene and rescue the failing firms, counteract the unemployment and consumer vulnerability. if in times of a benign macroeconomic environment in the principal market places the laissez faire stance prevails, in times of recession state’s intervention is expected. neelie kroes, the europeam commissioner for competition stated that laissez faire is not a good solution for a society: “it was john ralston saul who said that <<unregulated competition is just a naïve metaphor for anarchy>>we don’t need that. what we need are regulated markets. the challenge is to maximize our prosperity by finding the most efficient ways to regulate them”3 in times of crises competition law becomes particularly important. in earlier crises, proposals have come forward calling for weaker competition laws. in order to be able to assess the rationale of such a standpoint, it is helpful to look at experiences and evidence from earlier economic setbacks, recessions or depressions. lessons can be learned from the great depression and how it was dealt within united states. research has shown that weakening competition laws as a tool to combat economic difficulties may have the opposite effect and works to prolong the crisis. it is important to keep this in mind when governments take actions in order to limit the negative effects of the current crisis. the current global crisis has profoundly affected the availability and cost of credit to the world’s households and businesses. being basically a crisis in trust this credit crunch impacted almost all european countries by a quick and deep contraction of the economies. stock prices are down between 50 per cent and 90 per cent since the peak in early 2007. unemployment rates have risen and will first start to level in 2010. inflation remains low, however, but a real fear of deflation still exists. initiatives to remedy the effects of the crisis include expansive fiscal policy measures and tax cuts, credit packages for households and industries as well as bank rescue packages. in these circumstances, crises is likely to determine companies to have anticompetitive conducts. a distressed economic environment is a situation that monopolies and cartels may take advantage of. it may also be in the advantage of no market power suppliers that in time of market crisis may achieve substantial market power and thus increase prices for a long time while their rivals being in the incapacity of reaction. the crisis may pose pressure for the legalization of export cartels or even recession cartels (for saving the distressed domestic firms and provide them with an export market advantage) as well as to the allowance the mergers (by definition, anticompetitive) for saving the failing companies. 3 the economic club toronto, competition, the crisis and the road to recovery, march ,2009 68 studies and scientific researches ‐ economic edition, no. 14, 2009  3. the policy and measures of the eu commission in respect to the financial crisis a wide spread reaction was determined as the financial crisis hit europe, and this reaction involved not only ecb, but national governments and the european commission as well. much of the initiative to deal with the crisis in a concerted way has come from the eu member states. at later stages the ecofin has actively developed common principles to guide member states in their reactions to the crisis, resulting in a concerted action plan, which was subsequently endorsed by the european council of mid october 2008. the european commission has played an active role in the design and implementation of the financial recovery plan. the commission had the explicit support of the european council which confirmed that the ec competition rules, also referring to the principles of single market and state aid rules, should be applied despite the exceptional circumstances. as noted by gerard (2008), the commission’s role was extremely important in: a) providing legal certainty to economic operators b) acting as stabilizing force through the crisis, and in c) preventing negative spillover effects from individual member states actions in relation to the crisis. the legal certainty is built on two principles and two phases of the crisis. the principles are “clarity in the applicable legal framework” and “the rapidity of action”. the stabilizing role was emphasized in the flexibility of approved measures, while strictly adhering to the legislation, and the negative spillovers were targeted with prevention of a widespread systemic crisis. the first temporal phase of the crisis, between september 2007 and september 2008, derived from the supreme crisis reaching europe, which was unable however to induce widespread fears of a systemic crisis. during this first phase of the crisis, the commission tackled the individual cases according to article 87 (3) (c) of the ec treaty and the “community guidelines on state aid for rescuing and restructuring firms in difficulty.” the second phase of the crisis revealed the potential severity of the crisis at hand. it started as fears of a systemic crisis arose, partly due to the "reorganization" bankruptcy filing of lehman brothers. the eroding confidence in the banking sector from october 2008 resulted in a severely restricted access to liquidity. there were doubts whether the “guidelines” would still provide an appropriate framework to tackle the crisis, as the systemic nature of the crisis was now realized to threaten sound financial institutions as well. in this phase the importance of “rapidity of action” was further emphasized. in early november 2008, the european union's heads of state and government agreed on the need for a coordinated response to the crisis. the commission’s european economic recovery plan, was a response to the member states coordinated effort to deal with the crisis.4 the plan intends, among other things, to stimulate demand and confidence, and to boost long-term competitiveness. it proposes a countercyclical macroeconomic response to the crisis in the form of a set of actions to support the real economy. some of the proposed measures include state aid. the commission, and the state aid control as an integral part of the eu’s competition policy, plays key roles in this countercyclical macroeconomic response. the latest overviews of actions taken confirm that eu state aid policy has indeed provided a framework for coordinated and rapid implementation of national measures. the role of the commission as a stabilizing force is highlighted in that, while showing some reluctance to compromise the interpretation of ec competition law principles, it has 4 communication from the commission to the european council, a european economic recovery plan; com(2008) 800 of 26 november 2008 69 studies and scientific researches ‐ economic edition, no. 14, 2009  shown that the current legal framework is rather flexible in the face of exceptional circumstances. during the second phase of the crisis, the commission approached the resolution of the financial crisis in three steps: 1. the banking communication adopted on 13 october 20085 2. recapitalization communication of 5 december 20086 3. impaired assets communication of 25 february 20097 the banking communication allowed rescue operations in order to stop or prevent runs on financial institutions. in this context, art 87 (3) (b) of the ec treaty was considered to be an appropriate legal basis for state intervention. the recapitalization communication identified a set of standards and safeguards allowing member states to recapitalize banks to ensure adequate future levels of lending. concerns about adequate lending volumes were raised in view of the reluctance shown by fundamentally sound banks to continue lending at usual volumes and conditions. the impaired assets communication provides the framework for a so called “cleanup phase” of financial institutions' balance sheets by removing toxic assets and underperforming loans. this phase is assumed to require restructuring in the market, but is considered being an essential step in order to restore confidence in the financial sector and the economy. in december 2008 the commission adopted a “temporary framework”, with measures available to the end of 2010, to allow member states to mitigate or remedy the effect of the credit crunch on the real economy in minimally distortive way. the two main objectives pursued by the temporary measures are8: 1. to unblock bank lending to companies and thereby guarantee continuity in their access to finance 2. to encourage companies to continue investing in the future, in particular in a sustainable growth economy including the development of green products. according to this temporary framework, member states may grant, under certain conditions: a. a lump sum of aid up to €500,000 per company for the next two years, to relieve them from current difficulties b. state guarantees for loans at a reduced premium c. subsidized loans, in particular for the production of green products (meeting environmental protection standards early or going beyond such standards) d. risk capital aid up to € 2.5 million per sme per year (instead of the current €1.5 million)in cases where at least 30 per cent (instead of the current 50 per cent) of the investment cost comes from private investors. the need for and implementation of financial aid has been large and widespread. by april 2009 , the european commission approved 49 separate financial aid schemes and was investigating 11 more. these schemes concerned 19 of 5 oj c 270, 5.10.2008 communication from the commission – the application of the state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis, p. 8–14. 6 oj c 10, 15.1.2009, communication from the commission– the recapitalization of financial institutions in the current financial crisis: limitation of the aid to the minimum necessary and safeguards against undue distortions of competition, p.2-10 7 oj c 72, 26.3.2009, communication from the commission on the treatment of impaired assets in the community banking sector, of 25 february 2009, p.1 8oj c 16, 22.1.2009 , the consolidated version, integrating the amendments adopted by the commission on 25 february 2009, p. 1-9 ( published in oj c 83, 7.4.2009, p. 1-15). 70 studies and scientific researches ‐ economic edition, no. 14, 2009  the member states (among which were all 15 pre-2004 member states). according to the commission the temporary framework was respected, and by may, the commission authorized a total of 37 measures in 16member states under the framework. references: e. carletti, background note on competition anf financial markets prepared for oecd global competition forum, february 2009daf(comp)/2009(2) d. gerard, managing the financial crisis in europe: why competition law is a part of the solution not the problem, global competition magazine, december 2008 b. lyons, competition policy, bailouts and the economic crisis, centre for competition policy, university of east anglia, february 2009 (1st draft) m. motta, competition policy: theory and practice, cambridge publishing house, 2004 j. vickers, the financial crisis and the competition policy: some economics, global competition policy magazine, december 2008 communication from the commission to the european council, a european economic recovery plan; com(2008) 800 of 26 november 2008 oficial journal c 270, 5.10.2008 communication from the commission – the application of the state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis oficial journal c 10, 15.1.2009, communication from the commission– the recapitalization of financial institutions in the current financial crisis: limitation of the aid to the minimum necessary and safeguards against undue distortions of competition oficial journal c 72, 26.3.2009, communication from the commission on the treatment of impaired assets in the community banking sector, of 25 february 2009 oficial journal c 16, 22.1.2009 , the consolidated version, integrating the amendments adopted by the commission on 25 february 2009 71 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 71 overview about the management of the human resource in projects catalin drob “vasile alecsandri” university of bacau catad@ub.ro abstract the purpose of this study is to emphasize the main aspects regarding the management of the human resource in projects. this study tries to present in the comparative manner, different approaches of several guidelines, international standards and methodologies regarding the management of the human resource in projects (the pmbok ® guide elaborated by the project management institute and the prince method elaborated by the british office of government commerce). the pmbok® guide describes four elements (processes) of human resource management: human resource planning, acquire project team, develop project team and manage project team. the pmbok approach regarding human resource management is focused on utilizing the people involved in the project in the best way. according the prince method the management of the human resource is focused on the roles and responsibilities of the human resource within the project. in this standard, the responsibilities are viewed like a roles. everybody involved in the project can have one or more roles and a role can be fulfilled by several persons. keywords human resource; project; project team; project manager; board manager jel classification m54 1. introduction within a project are used several types of resources: material, human, financial and informational. the most important resource used within a project is the human resource, more precisely, the project team. the project team is leading the project to success or to failure. but what are the factors (related to the project team) that can contribute to the success of the project? there are many factors but perhaps the most important factor is to know how to select the best people able to achieve the project goals and to make them to work as a really team. achieving this desideratum represents a real challenge because the project team can be made up of people coming from different organizations. the project team may be established based on (but not compulsory) three components: core team, client team and contract team. thereby, the project manager has very important role to harmonize these heterogeneous components and to manage them appropriately. in the last years, have been developed several guides, standards and methods concerning the project management, such as: the pmbok®guide, the prince method, the p2m guidebook etc. as appropriate, these guides, standards and methods analyze, among other things, the issue of human resources within projects in more detail (within the pmbok®guide and the prince method) or more succinctly (within the p2m guidebook). overview about the management of the human resource in projects 72 2. human resource management according the pmbok®guide this guide provides guidelines, general and specific rules for project management. in 1996 the project management institute (pmi) published the first edition of this guide. the last edition (the fifth edition) of this guide was published in 2012. the pmbok® guide considers that project human resource management is one of the most important knowledge areas of the project management. in the view of the pmbok® guide, other important knowledge areas are: time, cost, quality, communication, risk etc. the pmbok® guide treat a project like a sum of processes. thus, the last edition of this guide considers that project human resource management includes the following processes: human resource planning; acquire project team; develop project team; manage project team. every process is defined by three elements: inputs, tools and techniques and outputs. the relationship between human resource management processes are showed in the following picture: figure 1. the relationship between human resource management processes source: adapted by pmi, pmbok®guide (2012), 5th edition, usa, pp. 257 2.1. human resource planning as stated by pmi (2012) in the last edition of the pmbok® guide, “human resource planning is the process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan”. the main result (output) of this process is the human resource management plan. this plan is an important part of the project management plan. in order to elaborate the human resource management plan can be used several tools and techniques such as: organizational chart and position description, organizational theory, expert judgment etc. in practice, we can use several formats to document team member roles and responsibilities: hierarchical, matrix and text-oriented. an example of responsibility assignment matrix is the raci (responsible, accountable, consult, and inform) chart: human resource planning aquire project team develop project team manage project team drob 73 table 1. raci matrix person activity popescu ionescu vasilescu mihaescu liescu activity no. 1 a i r i c activity no. 2 i a c r c ……………….. . . . . . activity no…. a i r i i source: adapted by pmi, pmbok®guide (2012), 5th edition, usa, pp. 262 this chart presents all activities, all people associated with a certain activity and their responsibilities. for every activity must be designate only one accountable person. 2.2. acquire project team as stated by pmi (2012) in the last edition of the pmbok® guide, “acquire project team is the process of confirming human resource availability and obtaining the team necessary to complete project activities”. the project team can come from inside the organization and/or from outside the organization. in any case, the project manager must pay attention to several criteria, in order to acquire the best project team: the availability, the cost, the experience, the attitude, the ability, the knowledge and the skills of the human resource. 2.3. develop project team as stated by pmi (2012) in the last edition of the pmbok® guide, “develop project team is the process of improving competencies, team member interaction, and overall team environment to enhance project performance”. the main tools and techniques used for developing project team are: interpersonal skills, such as communication skills, emotional intelligence, conflict resolution, negotiation, influence, team building etc. training activities, that are used to develop the competencies of the project team members; team-building activities, that are used to develop the interpersonal relationships; ground rules, that are used to impose a good behavior within the project team; recognition and rewards an appropriate behavior. co-location etc. the development of the project team can contribute decisively to project success. the project success is recorded when all the objectives are reached and all the planned activities of the project are completed. 2.4. manage project team as stated by pmi (2012) in the last edition of the pmbok® guide, “manage project team is the process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance”. the main tools and techniques used for manage project team are: observation and conversation, that are used when the project manager wants and can to be in direct contact with the project team members; project performance appraisals, that can be made by project manager having as starting point the appraisals realized by the project members, by the project supervisors or by the project stakeholders; overview about the management of the human resource in projects 74 conflict management, that is a technique used in order to solve the conflict which may occur during the project; interpersonal skill such as leadership, influencing and effective decision making; issue log etc. 3. aspects regarding human resource in the prince2 standard the name of this standard is an acronym for projects in controlled environments. the prince method was elaborated in the uk, in 1989. in 1996 this method was replaced with prince2. the last update of this standard was made in 2009. the approach of this standard is based on seven main processes and on seven themes (such as: plans, quality, organization etc.). the prince2 method don’t analyze the human resources like a distinct theme but in every process and theme is about the human resources. the prince2 theme regarding organization try to explain very clearly the responsibilities of the human resources within the project. this theme don’t takes into account only the accountability and responsibility of the project team and of the project manager. also, in this part of the standard is presented the responsibilities of the main stakeholders (business, user and supplier). in this standard, the responsibilities are viewed like a roles. everybody involved in the project can have one or more roles and a role can be fulfilled by several persons. prince2 proposed four level of authority for an organization: one outside the project (corporate or program management) and three inside the project (project board, project manager and team manager). as stated by office of government commerce (2009), the project board play an important role. this board is composed of senior managers who owns the project and who are responsible for the project direction/managing. the manner in which the project board direct the project can make the difference between success and failure of the project. the project board has three main roles. every role represents the main interests of business (executive role), user (senior user role) and supplier (senior supplier role). another important concept concerning human resources used in prince2 is project management team. this concept emphasis that all managers must working together as a real team in order to ensure the success of the project. also, this concept presents all the management roles in the prince2 standard. if project board must ensure the project direction, the project manager has the responsibility for the daily management of the project. the project team must undertake all activities involved in the project. this team has a “chief” named team manager. the team manager must perform the daily management of the project, must monitor the manner in which are undertaken the project activities and report this to the project manager. in order to ensure the success of the project, prince2 propose two distinct structures: the project assurance and the project support. the project assurance (business, user and supplier assurance) is very similar like an audit while the project support provides administrative services for managers as stated by graham (2010): drob 75 figure 2. the project management team in the prince2 standard source: adapted by graham, n., prince2 for dummies (2010), 2th edition, john wiley & sons ltd., england, pp. 193 4. conclusions in practice, are used several standards concerning project management. these standards propose many recommendations regarding the best use of the human resource within the project. in the pmbok® guide the human resource is considered one of the most important knowledge areas of the project management and is analyzed within a distinctly chapter named project human resource management. the pmbok® guide presents in detail the main tools and technics which can be used in order to make the human resource more efficient. the prince2 method don’t analyze the human resources within a distinct chapter. the approach of this standard is focused on the roles and responsibilities of the human resource within the project. even if between guidelines, standards and methodologies (methods) of project management there are many differences, their main goal is common: to provide the best recommendations and practice to manage project to success. the human resource is very important for the success of the project. therefore, this should be used both effective and especially efficient. references drob, c., zichil, v. (2013), overview regarding the main guidelines, standards and methodologies used in project management, journal of engineering studies & research, vol. 19 issue 3, pp.26-31. graham, n. (2010), prince2 for dummies (2th edition), john wiley & sons ltd., england. office of government commerce (2009), managing and directing successful projects with prince2 (2009 edition), the stationery office, uk. project management association of japan (2005), a guidebook of project & program management for enterprise innovation, vol i, available on http://www.pmaj.or.jp/eng/p2m_download/p2mguidebookvolume1_06011 2.pdf, and vol ii, available on http://www.becausei.org/p2mguidebookvolume2_041014.pdf. project management institute (2012), pmbok®guide (5th edition), usa. corporate/programme management project board project manager team manager team members project assurance change authority project suport http://www.pmaj.or.jp/eng/p2m_download/p2mguidebookvolume1_060112.pdf http://www.pmaj.or.jp/eng/p2m_download/p2mguidebookvolume1_060112.pdf microsoft word apostoaie constantin marius_eng.doc business intelligence systems accounting integration in romania. a comparative analysis. , romania abstract business intelligence (bi) systems have penetrated the romanian market, providing a real decision support by integrating and synthesizing a large variety of information available in real time, anywhere in the world, including through mobile terminals. this study examines the bi solutions promoted in romania through internet sites written in romanian, in terms of how the accounting information integration is done. our paper highlights the most used economic and financial indicators and most often selected tools by bi systems developers to assist decisions. the writing bring forward the lack of transparency of the analyzed sites towards of configuration details of economic instruments, which we consider likely to delay the managers from romania in order to become familiar with bi solutions, and it represent a weakness of this products promotion. keywords managerial accounting, knowledge-based systems, accounting systems, decision support systems, business intelligence jel code: m41, m15, d81 introduction using intelligent systems confer the ability to gain competitive advantages by wisely exploiting the information.1 from the cgi experience, who was quoted in 2008 as the largest canadian information technology services company in the field, founded in 1976, the following issues are noteworthy: one of the biggest problems of the organizations in order to ensure that operational performance and strategic vision have a common denominator is the need for the performance quantification, efficient and high accuracy analysis, both at strategic and tactical level; can even speak of a struggle to provide, based on daily operations, the tools that can confer predictive capacity to the management team; efforts to identify the necessary information to effectively lead the organization, to efficiency, can be minimized by using methods and systems capable to reduce time for this process and provide specialized support.2 1 velicanu, m., matei, g., (2008), “a few implementation solutions for business intelligence ”, economic informatics review, 3 (47), bucharest, pp.139-146. 2 *** cgi group inc., “business intelligence – enabling transparency across the enterprise”, microsoft download center page, created 2004, <http://download.microsoft.com> . accesed 2 dec. 2009. studies and scientific researches economic edition, no. 15, 2010 120 in the beginning of the twenty-first century, there are major changes in terms of how managers can use computer systems that support decision making; more and more computers are linked in a network, so that decision support systems can quickly become shared goods for the entire organization, organizations can now easily use the intranet and internet networks offering high-performance applications for the decision makers in any point on the globe, many organizations develop distributed systems, intranets and extranets, enabling the easy access to data stored in multiple locations and enabling the collaboration and the cooperation with the whole world; integrating systems performed even beyond within an organization. managers can make better decisions because they have more precise information. 3 integrating applications in information systems, interlinking systems, with the development of networks, internet, storage and data processing technologies has even created strategic advantages for some countries. (s.u.a., japan). using portals we can achieve integration of existing information systems to provide public services. for some users, these systems provide summary information and decision support4 business intelligence systems (bi) can be defined as using data and information technologies in order to facilitate the cognition of the organization background and the knowing of its operations, aimed to improving decision making5, and mission of this powerful sequence of analytical tools is to generate valuable knowledge to improve decision at all levels, leading to better products, services, logistics, or communications.6 bi solutions components assigned by the commonwealth scientific and industrial research organisation from australia, csiro, are: extracting electronic information from text documents, databases, images, media files and web pages; synthesising useful knowledge from collected data using data mining, text understanding and image analysis techniques; linking the useful facts and inferences and filtering out irrelevant information; identifying reasonable decisions or courses of action based on the expectation of risk and reward; employing semi-interactive software to identify good decisions and strategies. 7 the idea that economic modeling is a continuous process, because to reduce its costs, organizations are looking modeling techniques aimed at adapting the knowledge to specific problems, was developed by bitkowska. 8 in what stage are you? where you going? we can not make these remarks without appropriate information required by managers. we can not direct without information, 3 economy, management series, 1-2, bucharest, pp.27-32. 4 lungu, i., velicanu, m., bara, a., diaconita, v., botha, i., “portal based system integration – foundation for decision support”, journal of economic computation and economic cybernetics studies and research, 1, (2009), academy of economic studies, bucharest, accessed 24 oct. 2009, <http://www.ecocyb.ase.ro/revista/ion%20lungu.pdf>. 5 curtis, g., cobham, d., (2008), business information systems. analysis, design and practice, pearson education limited, prentice hall, essex, england, pp.227-258. 6 arinze, b., amobi, o., (2004), “a methodology for developing business intelligence systems”, business intelligence techniques. a perspective from accounting and finance, edited by anandarajan, m. et al., springer, new york, pp.181-196. 7 *** commonwealth scientific and industrial research organisation australia (csiro), “business intelligence what is it?”, mathematics, informatics and statistics page, created 28 may 2003, <http://www.cmis.csiro.au/> . accesed 6 mar. 2010. 8 bitkowska, a., (2008), “identification and modeling of business processes at the enterprise”, economic amphitheater review, special 2, academy of economic studies, bucharest, pp.168-176. studies and scientific researches economic edition, no. 15, 2010 121 mostly from the accounts. managerial accounting is a provider of information for the managers, general and detailed information. general side is assured of financial accounting, while the details are from administration accounting, where the preponderance of information is ensured by the costs. that is why managerial accounting is "created" by selection, based on objectives. 9 those it (information technology) systems with web services based architecture, on the vision of researchers hagel and brown10, will overturn the existing opinions on it management and will emphasize new strategy trajectory of information technology. it is noted in their study that in the past, companies have looked at systems in terms of the owner. they bought the equipment and licensing applications, and also employed big teams for their use. after years in which different parts of technology were purchased, companies end up with a "mishmash" of disparate systems spread in many units. research of both authors showed that large companies tendency effort is for invest large sums to interconnect applications owned, and put it in the unified database. it is noted that web architecture is structured on internet services and is open, and is not with property right. rather than build and maintain unique internal systems, companies can "rent" functionality needed (data storage, processing engines, specific applications) from service providers. the foundation will be offered, according to the authors, by software and standard communication protocols such as xml and soap, which allow information to easily flow between different applications. bi solutions in romania and their integration of accounting to shape the flow of information and accounting data used by intelligent systems in romania to support decision makers, but also to determine how the existing bi solutions on the romanian market capture that flow, our research examined 12 such solutions. we assume that systems that are sold in romania are in line with current global standards involving information integration and use of portals and was considered that the main channel of promotion adopted by it companies is the internet. selection of bi systems in our research was conducted by yahoo search engine, using keywords "business intelligence", for written in romanian sites. search resulted in a number of 358,000 answers, 10 solutions per page, and from the first 25 shown pages, we extract only the sites of bi solutions developer companies that had either the economic indicators used, or only the embedded decision support tools that rely, as is customary, on economic and financial indicators or on accounting information. comparative analysis of the 12 intelligence system for economic transactions promoted in romania, in terms of how its achieved the integration of the accounting information, was our research method. collection and collation of information provided on sites are presentated in table no 1. of the 12 companies, only 4 have chosen to detail the economic and financial indicators that have selected to give managers a detailed picture of economic performance, and other 3 have said only that the systems use key performance indicators (kpi), without nomination. we believe that is due for trying to protect systems against piracy or because of products made at the request of customers, according to the specificities of each area of activity. 9 annals of craiova university, ii, craiova, pp.724-726. 10 hagel iii, j., brown j.s., “your next it strategy”, harvard business review, (2001), harvard business publishing, accessed 21 oct. 2009, <http://hbr.harvardbusiness.org/2001/10>. studies and scientific researches economic edition, no. 15, 2010 122 all 4 detailed solutions use the development of turnover indicator or the sales trend. stock rotation or evolution is an indicator used by 3 of companies who have chosen to submit details on sites. the same number of proposals have met with regard to claims disclosure. two nominations have been for the analysis of budgets and analysis according to different criteria. table no 1. features of the main bi solutions romania publicized company bi solution decision support tools economic indicators acumen integrat acumen integrat (source: www.acumeni ntegrat.com/ro /section/servic ii ) balanced scorecard; dashboard. key performance indicators (kpi), no nomination ebs romania clarvision erp (source: www.ebsroma nia.ro/produse /clarvision5.ht m ) tables customizable by the user; reports developed with crystal reports and reports editor; export of data to other reporting tools; management of tasks that allow to users execution of tasks assignment and tracking; instant messaging application (integrated). -changes in stocks quantity / value on groups of items; changes in stocks; evolution of the turnover; -development expenditure / income; development of debt; due changes; development on the groups of the balances accounts; -development on the accounts groups of the turnover; analysis of budgets: the deviations analysis. evo xperience software evo manager (source: www.arsson.r o/produs_evo xp_man.php ) tree structure of cost centers and revenue; budget of departments and subdivisions manager dashboard; cash flow analysis on the european model by days, weeks or months; cash flow forecast for over due analysis to partners; managerial analysis of balance sheet or profit and loss report; top customers, top agents, top products; complete graphics analysis of sales. sales trend; gross margin; days sales uncollected; stock rotation; fast-rate liquidity; productivity; working capital; -indicator of debts and penalties; -age of stock and partners debt. company bi solution decision support tools economic indicators studies and scientific researches economic edition, no. 15, 2010 123 microsoft microsoft business intelligence (source: http://office.mi crosoft.com/ro -ro/products ) evaluation and dashboard; analysis; planning; budgets. key performance indicators (kpi), no nomination oracle oracle business intelligence (source: www.oracle.co m/technology/ products/bi/pd f/oraclebi%20 se1%20busin ess%20wp.pd f ) interactive web dashboard. no nomination romsym data business objects (source: www.business objects.ro/prod use.php) dashboard; intuitive scorecard; predictive analysis; rules-based alerts; performance / target analysis. no nomination sap sap business objects edge bi (source: www.sap.com/ romania/soluti ons/pdf/sap_ bobj.pdf) -dashboards; hypothetical analysis; custom reports; planning; budget. no nomination sistec cogito bi (source: www.sistecsbsol.ro/solutii _servicii.php?f id=85&sbsol= 5bvuc1lcvd1oa vvlpmkp7546i 4) reports; analysis. no nomination siveco siveco business analyzer (source: www.siveco.ro /web/content.js analysis using graphs and tables; database analysis. key performance indicators (kpi), no nomination studies and scientific researches economic edition, no. 15, 2010 124 p?page=72&la nguage=1) company bi solution decision support tools economic indicators soft consult qlikview 9 (source: www.tlgsoft.r o/index.html) complete visual control panels; update data in real time; pdf reports; -detailed graphics features and spark lines, whiskers, trellis graphics and customizable backgrounds in real time; visual highlighting exceptions. analysis of cash flow; analysis of cost, price; analysis of sales trends; identify problem areas and their cause; focusing on customers, suppliers and important articles (pareto); analysis of new customers vs. lost; sales map; vendors price analysis; comparison of global conditions (cost, delivery, payment terms, discounts, ...) departments necessary estimate; analysis of stock rotation; optimizing stock deposits ( freight relocation suggestions) ; intelligent stock alerts; what-if analysis; highlight claims using dynamic period; analysis of income, payment habits, payment delays (share, trends, ...); building and tracking budgets. soft net consulting asis (source: www.softnet consulting.ro/ asis_descrier e.html) -dashboard; -resource management; -economic and financial analysis. economic and financial indicators without nomination total soft charisma analyzer (source: http://www.c harisma.ro/pa gina-produse16.html) dashboard; -analysis, tables, graphs. -performance indicators defined by the company, various defined criteria analysis (growth – decreasing trends, position / target, etc.); detailed analysis: monthly studies and scientific researches economic edition, no. 15, 2010 125 sales trends, ranking first 10 sales people in the company, analyze the areas of sales, etc.. analysis (drill down) to lower level, even to the level of item. among the tools used to give managers an overview information, including accounting information, we observe detachment of dashboard, used by 9 of the 12 systems. more often, various financial and economic analysis (7 cases), reports, tables, graphs (5 cases), budgets (4 cases), balanced scorecard and predictive analysis (3 cases), are used. conclusions in contemporary society, knowledge optimize timely access to information, it open the way to the right decision, or, in many cases, to the successfull decision. most researchers believe that modern information technology integrates more and more applications, trying to gather information, communications, rules, habits, and even proposals for decisions. although we can not certainty determine the general features of how accounting information is integrated in bi systems on the market in romania, because there is a lack of transparency regarding decision-support configuration, our study has the merit to point most used indicators or financial and economic tools general represented in these solutions. we wish also to emphasize the idea that promoting bi products in more detailed way would be, in our opinion, likely to familiarize managers in romania with bi specific, which would lead to increased demand in this area, especially considering the fact that portals of companies with a long tradition of these solutions, such as oracle, sap or microsoft does not provide evidence to guide the potential buyer from romania to a clear answer regarding the approach to the economical-financial indicators or to the accounting information. this study is, once again, confirming the view of herbert a. simon, winner of 1978 nobel prize in economics for pioneering research into economic decision making in organizations: “computers today can share the work of thinking with us, and there is plenty of work and will continue to be for both of us.” (1997).11 bibliography 1. andone, i., dologite, d., mockler, r., dezvoltarea sistemelor inteligente în economie, economic publishing house, bucharest 2. , tehnopress publishing house, iasi 3. arinze, b., amobi, o., (2004), “a methodology for developing business intelligence systems”, business intelligence techniques. a perspective from accounting and finance, edited by anandarajan, m. et al., springer, new york 11 simon, a.h., (1997), models of bounded rationality. empirically grounded economic reason. vol.3, massachusetts institute of technology, pp.145-148, 159-162, 173-182. studies and scientific researches economic edition, no. 15, 2010 126 4. bitkowska, a., (2008), “identification and modeling of business processes at the enterprise”, economic amphitheater review, special 2, academy of economic studies, bucharest 5. curtis, g., cobham, d., (2008), business information systems. analysis, design and practice, pearson education limited, prentice hall, essex, england 6. hagel iii, j., brown j.s., (2001), “your next it strategy”, harvard business review, harvard business publishing 7. economy, management series, 1-2, bucharest 8. lungu, i., velicanu, m., bara, a., diaconita, v., botha, i., (2009), “portal based system integration – foundation for decision support”, journal of economic computation and economic cybernetics studies and research, 1, academy of economic studies, bucharest 9. lyytinen, k., newman, m., (2008), “explaining information systems change: a punctuated sociotechnical change model”, european journal of information systems, operational research society ltd. 10. simon, a.h., (1997), models of bounded rationality. empirically grounded economic reason. vol.3, massachusetts institute of technology 11. annals of craiova university, ii, craiova 12. velicanu, m., matei, g., (2008), “a few implementation solutions for business intelligence ”, economic informatics review, 3 (47), bucharest 13. *** cgi group inc., (2004), “business intelligence – enabling transparency across the enterprise”, microsoft download center page, <http://download.microsoft.com> 14. *** commonwealth scientific and industrial research organisation australia (csiro), (2003), “business intelligence what is it?”, mathematics, informatics and statistics page, <http://www.cmis.csiro.au/> 15. www.acumenintegrat.com 16. www.ebsromania.ro 17. www.arsson.ro 18. http://office.microsoft.com/ro-ro/products 19. www.oracle.com 20. www.businessobjects.ro 21. www.sap.com/romania 22. www.sistec-sbsol.ro 23. www.siveco.ro 24. www.tlgsoft.ro 25. www.softnetconsulting.ro 26. www.charisma.ro studies and scientific researches economic edition, no. 15, 2010 127 (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, april 2018 44 the effect of the financial ratios on the share price of insurance companies listed in the iraqi stock exchange market using multiple regression analysis applied research in the iraqi stock exchange market othman abdul qadir hama amin sulaimani polytechnic university kurdistan region, iraq othman.amin@spu.edu.iq abstract this research aims to identify the most important financial ratios affecting the share price of insurance companies listed in the iraqi stock exchange market (isem) during the period 20062015, and to indicate which ratios are more influential than others on share prices. the research population which consisted of (4 companies) is taken from insurance companies listed in the iraqi stock exchange market. the research sample consisted of one of these companies, its” iraqi international insurance company representing 25% of the research population. in the statistical analysis a multiple regression model was used to determine the relationship between the independent and the dependent variables and the results of this study showed that there is a statistically significant relationship and effect between some financial ratios and the share price. the study gave a general background on the financial markets and the iraqi stock exchange market in particular. what characterizes this study from previous ones is demonstrating the effect of the financial ratios on the share price in the iraqi setting for insurance companies listed in the iraqi stock exchange using the multiple regression method. keywords financial ratios; share price; financial markets; iraqi stock market; multiple regression jel classification c22; g15 introduction the financial ratios are considered to be one of the most useful financial indicators in the field of financial analysis and the overall performance of the company, which investors seek to know. financial markets play a role in the economic activity in terms of their functions both in the developed and the developing countries. investors always try to avoid risk in their investments, especially investing in insurance companies, so that they can also transfer part of these investments into existing funds while at the same time ensuring the greatest possible return. financial ratios are seen to be of significance to shareholders, potential investors in equities, stock exchange analysts and investment banks. shareholders and investors are interested in knowing the impact of the company's performance on the income generated from their investments in the shares of insurance companies. therefore, the financial ratios are very important to the management of the company in term of share prices in financial markets, especially as studies and scientific researches. economics edition online first, april 2018 45 the primary objective of financial management is to maximize the wealth of shareholders by maximizing the market value of the share. the study is consisted of the following parts: the first part: methodology of research and some previous studies research methodology the research methodology is as follows: research problem the problem of the research is represented in the following questions: 1. do the financial ratios of insurance companies work in measuring the overall performance of the company which the investors seek to know? 2. what is the effect of the financial ratios published in the financial statements on the share price of insurance companies in the iraqi stock exchange market? 3. what is the effect of these ratios on the shares' prices of insurance companies in the iraqi stock exchange market? research hypotheses the research hypotheses are as follows: 1. there is no significant correlation between the financial ratios and the share price of iraqi international insurance company listed in the iraqi stock exchange market. 2. there is no statistically significant effect between the financial ratios on the share price of iraqi international insurance company listed in the iraqi stock exchange marketز research objectives the objectives of the research are to: 1. identify the dimensions of the financial ratios' analysis, advantages and how to utilize it in determining the share price of insurance companies. 2. identify the implications of the financial ratios' analysis on the quality of information published in the financial statements of insurance companies whose shares are traded in the iraqi stock exchange market. 3. develop a quantitative model using multiple regression analysis in determining share price based on financial ratios. research significance the importance of the research is that it discusses the dimensions of the financial ratios' analysis of the insurance companies whose shares are traded in the iraqi stock exchange market as well as their effect on the share price using regression analysis method because the financial market's activity in iraq reflects the economic activity of companies, especially insurance companies, so we find that there are factors impacting the share prices including the financial ratios which this study explores its effect on the share price using a quantitative statistical method which is the multiple regression analysis. research population and sample the research population consists of the insurance companies listed in the iraqi stock exchange market, totaling (4) companies and the sample of the research is one 46 company of these companies, it`s iraqi international insurance company which represent 25% of the research population. time period and location of the research time period: the time range of the research is determined by reference to a time series of financial ratios and the company's share price for the research sample from 2006 to 2015. locational boundaries: iraqi stock exchange market some previous studies first: arabic studies 1. the study of yunus 1995 (the effect of issuing shares on the returns of shares in the amman financial market). the study aimed at verifying the effect of issuing shares on their returns by calculating the extraordinary return resulting from announcing the issuance. the researcher studied (5) banks, (3) service companies and (13) industrial companies. the study included a cross sectional analysis for testing without the independent factors. the test results showed that they were not significant determinants. the test also included the absence of unusual behavior during the underwriting period, in addition to giving a background to the financial markets, the system and growth of the volume of equity issues in jordan. 2. the study of badri and al-khoury, 1997 (study of stock movements in the amman financial market using the econometric models). the study aimed at identifying the movements of shares in the amman financial market using standard models based on the analysis of quarterly information between 1978-1994. the standard estimates of the models presented in this study showed that there is a statistically significant relationship between movements in share prices and some macroeconomic variables, without the possibility of relying on this information in making investment decisions. 3. the hussein study titled (securities and their markets with reference to the iraqi stock exchange markettheoretical framing) aimed at explaining the role of the stock market as the main driving force for economic growth as economic progress is closely linked to the existence of a thriving and developed stock exchange market. in addition to increasing securities and their diversity leads to increased public interest, from many categories such as owners of surplus funds from savers who wish to invest their money in the market for a long term in various possible ways of issuance and exchange. second: foreign studies 1. the study of filion & boyer 2004 (common and fundamental factors in stock returns of canadian oil and gas companies). the study aimed at identifying how the share in the industrial sector was affected by a number of factors for the sector and the market returns for this sector. the study concluded that the returns of this sector are corresponding positively with the market returns and oil prices and that it is inversely correlated with interest rates as well as canadian exchange rates against the us dollar. 2. the study of shin, chin, 1997 " open-market stock repurchase announcements and revaluation of prior accounting information". it aimed at showing the extent of open market interaction with the published accounting information and its impact on share repurchase. a sample of 323 markets was used during the period from 1978 to 1992. the study concluded that the market is affected by the published accounting information. also there is a relationship between repurchasing the shares and the market's response to the accounting information. studies and scientific researches. economics edition online first, april 2018 47 the theoretical framework concept of shares (equities) the underwritten shares (and the added ones) are formed by investors, which include their financial contributions and determine their ownership of the company. consequently, both the declared capital and the actual capital as well as the equity capital are all terms reflecting the total value of the shares acquired by the investors. the share gives its holder a right or a share in the ownership of the company and this share is determined by the number of shares he owns to the number of the issued shares. the share is defined as a " financial document issued by a shareholding company with a nominal fixed value, which is the (par value) ensuring equal rights and obligations for its owners and is offered to the public through underwriting in the essential market (primary market) and it is allowed to be traded in secondary markets (al-jarjawi, 2008). securities' markets these are financial institutions dealing with investing in securities in terms of issuance and exchange in which the buying and selling of financial securities such as shares and bonds are conducted. the operations of these markets entail returns and risks. hence the financial market is the mechanism through which purchasing, sharing and exchange of financial assets which include (shares, bonds and currencies) are carried out (alamiri, 574: 2013). (al-rubaie, 2009:7) points out to the market as being the place where investors meet and transactions of securities in terms of selling and purchasing are done. these transactions form one of the channels through which money flows into between individuals, institutions and different sectors which helps in mobilizing, developing, and preparing them for investment fields. iraqi stock exchange market iraqi stock exchange market or the so-called baghdad stock exchange (bursa in arabic), was established in 1991 to meet the foreign requirements or conditions during the period when the international sanctions were imposed and as one of the structural transformation measures in the iraqi economy towards the private sector. as a government market run by the iraqi ministry of finance, it absorbed during the period of 1992 and 2003 about 113 iraqi companies of private and mixed companies with an annual circulation of more than 17 million dollars. in line with the new situation in iraq, which emerged after 2003 with focus on the role of the private sector, removing economic restrictions and opening to the outside world , the baghdad stock exchange market has been canceled and the iraqi stock exchange market was established under the name the iraqi securities commission, similar to the american securities commission under the law 74 for the year 2004. in accordance with this trend two institutions have been established which are the iraqi stock exchange market and the iraqi securities commission, which since 2005 became an independent body and became the only exchange market in iraq (al-hamdani, 2013: 1) objectives of the iraqi stock exchange the iraqi stock market aims to achieve the following objectives (al-rubaie, previous source: 7): 1. organizing its members and preserving the recognized criteria of companies in a way that suits investors and enhance investors' confidence in the market. 2. organizing transactions for members in the services related to the bonds as well as the operational procedures and determining the rights and obligations of the relevant parties and means to protect their legal interests. 3. enhancing investors' interests in efficient, reliable, competitive, transparent and truthful markets. 4. collecting, analyzing and publishing necessary statistics as well as information to achieve the objectives stipulated in the law of securities market. 48 5. establishing and supporting contacts with arabian and international financial markets which can constructively contribute in the development of the stock markets and other licensed markets. the concept of financial ratios the financial ratios are logical relationships between certain elements in the financial statements. many of them can be calculated by linking a given element to another one, taking into account a logical relationship between the two elements which the ratio is intended to be calculate for both of them. these two elements may appear in the same list or may appear between two different lists (albadawi and shahatah, 2003:202). the financial ratios are viewed to be better than the comparison method between the elements of the financial statements due to the existence of defect in the comparison of the aggregates and the details of the financial statements' elements where growth or decrease in the business activity of the company is not taken into account. hence with calculating the financial ratios of the financial statements' elements and comparing them with their counterparts of the previous years for the same company or others, this defect can be overcome. thus, the financial analyst can produce more accurate results when making comparisons in the analytical procedures' methods (naim, 2008: 63). objectives of financial ratios the most important financial ratios' objectives can be explained as follows: 1. understanding given data in the financial statements in order to assist the management in making various decisions as the financial indicators resulting from financial analysis reveal the strengths and shortcomings in the financial position of the firm. in addition to that using these indicators enable the company of examining its previous achievements. accordingly demonstrating their commitment to the financial policies. 2. reducing the large volume of the financial statements to a small and useful number of clearly defined financial indicators (al-jerjawi : 2008, 58). types of financial ratios first: liquidity ratios these ratios can help in identifying the ability of the economic unit to meet its shortterm financial obligations (polis, 2009: 45), including: 1. current ratio = current assets / current liabilities 2. rapid liquidity ratio = (current assets inventory) / current liabilities second: profitability ratios the profitability ratios reflect the overall performance of the company as the profitability ratios unify the impact of most management decisions. it examines the company's ability to generate profits from sales, assets and property rights, which is the measure of the effectiveness of management policies for the investment, financing and operating companies. (al-amry, 2013: 88) 1. net profit margin = net profit of the current operations / net sales 2. return on total assets = net profit after taxes / total assets 3. return on equity (property right) = net profit after taxes / total equity rights. third: the ratio of indebtedness in general, indebtedness ratios focus on measuring the ability of a company to service long-term debts and repay them when it is due. beside that when the date of those debts is due, the firm must be able to repay those debts from its own funds (equity) or borrow again. certainly the ability of the firm to get or repay long-term debts often depends on or is related to the ability of the crediting corporations to be clarified (lotfi , 2008: 348) and it includes: 1. ratio of current liabilities to the equity = current liabilities / equity 2. ratio of debt to equity = total liabilities / total equity studies and scientific researches. economics edition online first, april 2018 49 fourth: operating and activity ratios based on these ratios, efficiency or activity indicators are obtained which are considered a measure of the efficiency and effectiveness of the economic unit in exploiting and managing its assets. these ratios include (polis, 2009: 47): the rate of total assets' trading = net sales / total assets the rate of current assets' trading = net sales / current assets the rate of net capital trading = net sales / net working capital fifth: market ratio (shares) it is a set of financial ratios showing the relationship of the share's price to the profits, cash flows and the book value of the share, as well as giving investors an image of the company's past and expected positions. these ratios (relevant to the market) are viewed as the most important ratios for investors, creditors, investment banks and financial analysts as they use them to achieve their aims and objectives (brigham & ehrhardt, 2005: p 454). these ratios are represented as follows: 1. profit ratio per ordinary share = net profit after interests and taxes / number of ordinary shares 2. market value to the book value = ordinary share's price in the market / book value of the ordinary share 3. ratio of the share's price to the share's profit = ordinary share's price in the market / the share's profit 4. book value of ordinary share = total value of ordinary shares / number of ordinary shares the applied side of the research al-ameen insurance company was incorporated in baghdad under the incorporation certificate no. 7606 on 31/7/2000 with a capital of 150 million iraqi dinars (id). its capital in 2015 was 3,410,100,000 id. the company aims to provide the best security coverage, most suitable and beneficiary to protect the national economy and community members as well as invest the funds accumulated for the best available investment opportunity .the company achieved a net profit in 2015 of 326,040,231 ids. table (1) shows the company's share price and financial ratios for the years 2006-2015. from the table, data were analyzed to extract the following: first: finding the multiple correlation between the dependent variable (y) represented by the share price and the independent variables represented in the financial ratios. in order to establish correlation between variables, the statistical analysis program (spss-20) was used, and the outputs shown in table (2) were obtained. table 1 the share price and financial ratios of the company ratio of book value to ordinary share (x7) ratio of market value to book value (x6) profit ratio per ordinary share (x5) ratio of current liabilities to equity (x4) return on equity (x3) ratio of return on assets (x2) current ratio (x1) share price (dinar) (y) years 1.220 1.200 0.189 0.650 0.121 0.073 2.501 1.500 2006 50 0.670 0.910 0.151 0.475 0.123 0.084 3.086 0.950 2007 1.220 1.027 0.182 0.342 0.178 0.133 2.108 1.050 2008 1.720 1.011 0.191 0.302 0.083 0.064 2.065 1.100 2009 1.690 1.188 0.198 0.218 0.022 0.018 5.257 1.350 2010 1.010 1.019 0.165 0.114 0.059 0.053 9.170 1.220 2011 1.006 1.002 0.121 0.090 0.100 0.092 11.269 1.050 2012 1.760 1.805 0.263 0.071 0.185 0.173 10.352 2.000 2013 1.140 1.031 0.143 0.096 0.109 0.099 9.971 1.420 2014 0.748 0.560 0.140 0.120 0.082 0.074 8.209 0.770 2015 source: these data have been extracted from the company's financial statements and annual studies published on the website of the stock market "http://www.isc.gov.iq" as well as field visits to the iraqi stock exchange market and the research sample's considering that the dependent variable represented in the share price symbol is (y), so he independent variables are: (x1) current ratio (x2) rate of return on assets (x3) return on equity (property rights) (x4) ratio of current liabilities to equity (x5) profit ratio per ordinary share (x6) ratio of market value to book value (x7) ratio of book value to ordinary share table 2. coefficients of correlation between dependent and independent variables x7 x6 x5 x4 x3 x2 x1 y 655. .940 .774 .48.341 .429 .2600 1.000 pearson correlation 0.020 0.00 0.04 0.016 0.039 0.026 0.023 sig.(1-tailed) 10 10 10 10 10 10 10 10 n ** the correlation is statistically significant at a level of 0.05. source: outputs of the statistical analysis program (spss-20) from table 2 above we conclude that: 1. the correlation between the variable (y) represented by the share's price and the trading ratio (x1) is a weak positive relationship (0.260) and the value of sig = 0.023, which is less than the level significance of 0.05. this is because of the insurance sector aiming at having large liquidity for the companies to pay their dues during the process of compensation. studies and scientific researches. economics edition online first, april 2018 51 2. the correlation between the share's price (y) and the return on assets (x2) is positive (0.42) and sig = (0.010), which is below the level of significance at 0.05. 3. the correlation between the share's price (y) and the return on equity (x3) was positive reaching to (0.34) and sig = (0.039), which is below the significance level of 0.05. 4. the correlation between the share's price (y) and the ratio of current liabilities to equity (x4) has a negative inverse relationship of (-0.48) and the value of sig = 0.016 which is less than the significance level (0.05). 5. the correlation between the share's price (y) and the profit per share ratio (x5) was positive (0.774) and the value of sig = 0.04 was below the significance level of 0.05. 6. the correlation between the share's price (y) and the ratio of market value to book value (x6) was positive (0.94) and sig = 0.00, which is below the significance level of 0.05. 7. the correlation between the share price (y) and the ratio of book value to the ordinary share was positive (0.65) and sig = 0.020, which is below the significance level of 0.05. from what has been presented it is clear that there is a significant correlation between the share's price and the financial ratios and we can reject the null hypothesis h0: "there is no significant correlation between the financial ratios and share's price of insurance companies listed in the iraqi stock exchange market". we accept the alternative hypothesis h1. second: estimation of the multiple regression model: the multiple regression model was estimated using the statistical method shown in the following table: table 3: summary of the relationship model example of figure model summary b model r r square adjusted r square std. error of the estimate change statistics durbinwatson r square change f change df1 df2 sig. f change 1 .970a .941 .736 .178587 .941 4.583 7 2 .191 2.170 a. predictors: (constant), x7, x3, x1, x5, x4, x6, x2 b. dependent variable: y source: outputs of the statistical analysis program (spss-20) table 3 shows that the coefficient of determination (r2) demonstrated the high explanatory power of the independent variables of the financial ratios on the dependent variable (the share's price) as it pointed out that 94% of the changes in the dependent variable are explained by the independent variables, with the remaining (6%) belongs to other explanatory variables not included in the model, while value of (f) = 4.538. as for the durbin-watson test, its value of (2.170) indicated that there was no problem of self-correlation between residues in the model. the result of regression analysis is illustrated in the following table: 52 table 4: analysis of regression variance anovaa model sum of squares df mean square f sig. 1 regression 1.023 7 .146 4.583 .000b residual .064 2 .032 total 1.087 9 a. dependent variable: y b. predictors: (constant), x7, x3, x1, x5, x4, x6, x2 source: outputs of the (spss-20) table 4 shows that the calculated value of (f) which is (4.583) with a degree of numerator freedom (7) and a denominator degree of 2 and at a significance level (0.000). thus, we obtained the coefficients of the regression equation line and standard deviations which can be shown in the table below: table 5: coefficients of the regression equation and its standard deviations for the effect relationship between the financial ratios on the share's price (y) coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -.893.910 -.981.025 x1 .90 .078 .981 1.153 .016 x2 3.507 .306 -1.294-.358.014 x3 8.975 .784 1.287 .362 .152 x4 -.60.596 .338 .378 .0242 x5 3.341 .650 .387 .719 .0547 x6 .342 .768 .306 .445 .700 x7 .335 .449 .378 .745 .0534 a. dependent variable: y source: outputs of the program spss-20 table 5 shows that the values of: (a) = (0.893) (b1) = (0.90) (b2) = 3.507 (b3) = 8.975 (b4) = (-0.60) (b5) = 3.341 (b6) = 0.342 (b6) = 0.335 and the regression equation is: studies and scientific researches. economics edition online first, april 2018 53 ŷ= (-0.893) (t= 0.981) + (0.90) x1 (t=1.153) + 3.507x2 (t=0.362) + 8.975x3 (t=0.362) + (0.60)x4(t=0.378) + 3.341 x5 (t=0.719) + 0.342 x6(t=0.445) + 0.335 x7(t=0.745) r2=%94�̅�2 =73% f=4.583 dw=2.170 from the above equation we conclude the following: 1. the equation indicates that there is a positive effect correlation between the variable (x1) represented by the trading rate on the share's price of the insurance company with the value of (0.90), which means increasing this percentage leads to the increase in the share's price in the stock market because the success of the insurance companies is with having a high liquidity ratio for the purpose of compensation and payment of dues. 2. there is a positive effect correlation between the variable (x2) represented by the rate of return on assets on the share's price amounting to (+3507), i.e. the increase of this ratio leads to an increase in the share's price in the stock market. 3. there is a positive effect correlation between the variable (x3) represented by the ratio of return on equity to the share's price of 8.975, which means that the increase in this percentage leads to an increase in the share's price in the stock market. 4. there is an inverse effect relationship between the variable (x4) represented by the ratio of current liabilities to equity on the share's price with the value of (-0.60), i.e. an increase in this ratio leads to a decrease in the share's price in the stock market. 5. there is a positive effect correlation between the variable (x5) represented by the percentage of profit per every ordinary share on the share's price by 3.341, i.e. increasing this percentage leads to an increase in the share price in the stock market. 6. there is a positive effect correlation between (x6) represented in the ratio of the market value to the book value of the share price by the amount of 0.342, i.e. an increase in this percentage leads to an increase in the share price in the stock market. 7. there is a positive effect correlation between (x7), which is the ratio of the book value of the ordinary share to the share price of 0.335, i.e. an increase in this percentage leads to an increase in the share price on the stock market. based on what have been stated above we can reject the second null hypothesis : (h0), which states that "there is no statistically significant effect between the financial ratios on the share's price of insurance companies listed in the iraqi stock exchange market" and accept the alternative hypothesis (h1). conclusions and recommendations conclusions 1. the ratio of current liabilities to equity (property rights) is inversely affecting the share's price of insurance companies in the stock market i.e. increasing this ratio leads to a decrease in the share's price. 2. the ratios (trading and return on assets, return on equity, profit per ordinary share, market value to book value, book value per ordinary share) positively affect the share's price of the insurance companies, i.e. their increase results in increasing the share's price in the stock market. 3. when analyzing the financial statements of the insurance companies listed in the iraqi stock exchange market, a large number of financial ratios can be used which can 54 be divided into groups and each group we will examine a study a specific phenomenon. this will depend on the purpose of the process of the financial analysis. 4 knowing the financial ratios by investors leads to knowing the movement of the share price’s trend during a given period. recommendations 1. paying attention to the process of financial analysis because of its active role in stating the financial position of enterprises, as well as its role in the rationalization of investment decisions. 2. the iraqi stock exchange market should necessarily require the listed companies to prepare their financial statements in accordance with international accounting standards with a view to standardizing the procedures and rules adopted in the preparation of these lists in order to help investors to make comparisons between the performance of companies in the insurance sector and other sectors when making the investment decision. 3. the importance of paying attention to the accuracy of the data contained in the financial statements and ensuring transparency in disclosing its contents. 4. the need for the iraqi stock exchange market to require the listed companies to prepare the list of the cash flows in addition to both balance sheet as well as the profits and losses due to their importance at the time of taking investment decisions, as this list was not available in a number of companies. references aljerjawi, halima khalil, (2008), the role of financial analysis for financial information published in financial statements for forecasting shares' prices, master thesis in accounting and finance, gaza, islamic university. alamiri, muhammad ali ibrahim, (2013), the modern financial administration, first edition, amman, alwael house for publishing. al-badawi, mansour ahmad and shahatah , al-said shahatah, (2003), modern trends in auditing, alexandria, al-dar al-jamaa'ia, (univesity house). brigham, eugene f. & ehrhardt, michael c., (2005), financial management, 11 edition, usa filion, boyer, m, (2004), common and fundamental factors in refures of canadian oil and gas companies naim, lewis, (2013), the importance of using analytical procedures in auditing phases, applied study in the public economic corporation – jijle for phlin , master thesis in commercial sciences, department of financial accounting, branch of auditing, algeria, university of muhammad khudaira biskra, faculty of economics, business and information sciences. polis, hind yusif, (2009), the use of financial ratios as a benchmark for accessing an acceptable tax base, high diploma dissertation equivalent to master's degree, higher institute of accounting and financial studies, university of baghdad. lutfi, amin alsaid ahmed, (2007), modern developments in auditing, alexandria, dar al-jamaa'ia. al-rubaie, falah khalaf, (2009, june 26) ways to upgrade the iraqi stock exchange market, al sabah newspaper. al-hamdani, awda naji, (2013, march 11), the securities market and challenges in meeting the growing financing needs, al-mada newspaper, issue 2747. badri, sabah, khoury, ratab, (1997), studying stocks' movements in the amman financial market using standard models, journal of dirasat,vol 24, no.1, amman, jordan. studies and scientific researches. economics edition online first, april 2018 55 al-hussein, mayson ali, (2013), securities and their markets with reference to the iraqi stock exchange market, theoretical framing, journal of babel university for humanities, volume 21, no. 1, iraq. shin, liu, chin, jennifer, open-market stock repurchase announcements and revaluation of prior accounting information, the accounting review, vol.25, no.99 yunus, bahjat, (1995), the effect of shares' issuance’s on shares' returns in the amman financial market, unpublished master thesis, university of jordan, amman, jordan. http://www.isc.gov.iq studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 21 the accounting reflection of merger operations – the global evaluation method mihai deju “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract depending on the manner in which the evaluation of companies involved in merger operations is carried out, two methods are employed for the accounting reflection of merger operations: the net asset method and the global evaluation method. this article presents the characteristics of using the global evaluation method for the accounting reflection of merger operations. keywords merger; global evaluation; reorganisation; accounting methods jel classification m41 in the case of employing the global evaluation method for establishing the value of the companies involved in reorganisation activities through merger, the values corresponding to the balance sheet items are determined by authorised assessors by means of an assessment (evaluation) report drawn up for this particular purpose. the balance sheet items of the absorbed company/companies that cease to exist are taken over by the absorbing company/the company that benefits from merger contribution at a value that results from the evaluation, as it is recorded in the books of account of the absorbed company and as specified in the delivery-receipt protocol. the values of the companies involved in the merger will lie at the basis for determining the exchange ratio, such values being determined by the evaluation called for by this operation. as far as the accounting aspects are concerned, the following rules shall be observed: the differences arising from the evaluation required by the merger operation in the case of the absorbed/acquired company are recognized in the books of account of the absorbing/ acquiring company/the newly created company on the basis of the items/elements to which they correspond, and the possible unchargeable (unallocated) difference of certain balance sheet items represents goodwill. the differences arising from the evaluation of the absorbed/acquired company shall be recorded in the balance sheet drawn up by the acquiring company after the recording of the merger operations; the differences arising from the evaluation required by the merger operation in the case of the acquiring company are not recorded in its books of account. the values resulting from the evaluation of the acquiring company on the occasion of the merger are used only for determining the exchange ratio 1 ; 1 ompf no. 1802, 29 december 2014, for the approval of accounting regulations concerning annual individual financial statements and annual consolidated financial statements, published in the official gazette of romania, no. 963/ 30 december 2014, pos. 101 and ompf no. 897/2015 for the approval of methodological norms concerning the reflection in accounting of the main operations of merger, partition the accounting reflection of merger operations – the global evaluation method 22 in the case of the acquired company/companies that cease to exist (the case of merger through consolidation), the differences arising from the evaluation on the occasion of the merger are recognized in accounting records as elements of gain or loss 2 , as follows: o if the value of the net contribution is higher than the accounting net asset, the positive difference represents the profit/gain; o b) if the value of the net contribution is lower than the value of the accounting net asset, the negative difference is known as loss. the recognition in the books of account of the acquired company/companies that cease to exist of the (negative or positive) difference arising from the global evaluation on the occasion of the merger is performed by means of the following accounts: 7583, “revenue from the sale of assets and other capital operations” and 6583 “expenditure concerning the disposal of assets and other capital operations”, at the date when the merger operation generates effects. from a practical viewpoint, in the case of employing the global evaluation method, each company involved in the merger draws up a balance sheet off the ledger which also includes the adjustments resulting from the evaluation carried out by authorised evaluators. the purpose of these off-ledger balance sheets is that of presenting the situation of items such as assets, liabilities, and equities of the merging companies, with the aim of determining the exchange ratio, which is necessary for establishing the number of shares issued by the acquiring company in order to remunerate the shareholders/associates of the acquiring company for the merger contribution. for the drawing up of off-ledger balance sheets (statements) that are necessary for determining the exchange ratio, the following rules shall be observed*: in the case of acquiring companies, the value differences emerging from the evaluation of the balance sheet items are recorded in the category of/next to the elements to which they belong, while the value differences that do not correspond to certain identifiable elements/items are recorded as “goodwill” in correspondence, in both cases, by means of account no. 1068 as “other reserves”. if the evaluation of the companies reveals a decrease that cannot be covered by means of “other reserves”, this decrease will be covered by the result of the financial period. in the case of acquired companies, the differences arising from the evaluation are included next to the balance sheet items to which they belong, and the amounts that do not correspond to some identifiable items are mentioned in account no. 207 “goodwill”, in both cases, by means of the “profit and loss” account. the accounting reflection of merger operations in the case of the global evaluation method involves aspects that are specific to the two types of mergers, through absorption and through consolidation, as presented further below. a. the accounting reflection of merger through absorption operations according to pos. 101 in the accounting regulations concerning annual individual financial statements and annual consolidated financial statements approved by and liquidation of companies as well as of withdrawal or exclusion of certain associates from companies, published in the official gazette of romania, no.711 bis as of 22.09.2015, pos.20 a. 2 ompf no. 897/2015 for the approval of methodological norms concerning the reflection in accounting of the main operations of merger, partition and liquidation of companies as well as of withdrawal or exclusion of certain associates from companies, published in the official gazette of romania, no.711 bis as of 22.09.2015, pos.20 b. ⃰ note: these accounting norms (rules) are available only for statements (balance sheets) off the ledger/off-balance necessary for determining the exchange ratio. deju 23 ompf 1802/2014, the differences arising from the evaluation on the occasion of companies’ reorganisation through merger are not recorded in their books of account. these differences are used only for the determination of the exchange ratio. for this purpose, the balance sheets that lie at the basis of determining the exchange ratio are drawn up off-ledger, as we have shown above. in compliance with ompf no. 897/2015 for the approval of the methodological norms concerning the reflection in accounting of the main operations of merger, partition and liquidation of companies as well as of withdrawal or exclusion of certain associates from companies, the accounting treatment of differences arising from the evaluation called for by the merger is the following: the differences arising from the evaluation of the acquiring/absorbing firm are not recorded in the company’s accounting; the differences arising from the evaluation of the acquired/absorbed company shall be treated differently in accounting, as follows: a) in the books of account of the acquiring company, the differences shall be recognized as added values or minus values arising from the merger, on the basis of the balance sheet items to which that correspond or by means of the “goodwill” in the case of unallocated differences; b) in the books of account of the acquired company, the differences shall be recognized as profits or losses resulting from the merger, by means of the revenue and expenditure accounts. in the following section, we will present the accounting entries and the necessary explanations for a proper understanding of the accounting treatment of the merger operations in the case of employing the global evaluation method. i. accounting recordings in the case of the absorbed company: 1. the recording of the accounts receivable regarding the value of items such as the assets transferred on the occasion of the merger: 1400 461 “various debtors” = 7583 “revenue from the sale of assets and other capital operations” 1400 explanations: the sum corresponding to the amount/account receivable, i.e. to the revenue regarding the transferred assets, will include both the accounting value of the assets of the absorbed company and the differences resulting from the evaluation on the occasion of the merger, recorded in the category of asset items to which they correspond or globally by means of account 207 “goodwill” – in the case of unallocated positive or negative differences. mention should be made that these differences are recorded only off the ledger/off-balance, in the balance sheet drawn up after the evaluation of the material items, which is necessary for establishing the value of the merger contribution and of the exchange ratio. 2. the recording of the removal from accounts of balance items such as transferred assets: “allowance for depreciation” = “depreciable assets accounts” with the value of the depreciation recorded by the the accounting reflection of merger operations – the global evaluation method 24 time of the merger 6583 “expenses concerning the disposal of assets and other capital operations” = % “balance asset accounts” (with net or gross accounting value) explanations: account 6583 “expenses concerning the disposal of assets and other capital operations” shall record the net or gross accounting value that corresponds to items such as the transferred assets, as they were recorded in the books of account of the absorbed company and as it was agreed upon by means of the merger project. if the assets are disposed of at their gross value, then the corresponding adjustments will also be transferred. 3. closing revenue and expenditure accounts: 121 “profit or loss account” = 6583 “expenses concerning the disposal of assets and other capital operations” 7583 “revenue from the sale of assets and other capital operations” = 121 “profit or loss account” explanations: the balance of account 121 “profit or loss” will record the profit or loss corresponding to the merger, and it represents the difference between the revenues corresponding to the transferred assets (at their evaluated value) and the expenses related to the disposed assets (recorded as their accounting value), and which corresponds to the difference between the value of the net merger contribution and the value of the net accounting asset (of the re-evaluated net asset), or the difference arising from the evaluation of the absorbed company, respectively. 4. the recording of the removal from accounts of items such as debts and adjustments corresponding to transferred asset items when assets were disposed of at their gross value: % “debt accounts” “adjustment accounts” = 461 “various debtors” 5. the recording of cancellation of equity items, which correspond to the net merger contribution and the recording of the financial obligation regarding the payment of shareholders/associates: % “equity items”, including account 121 – which records the loss or gain arising from the merger or the difference = 456 “settlements with shareholders/associates concerning the capital” deju 25 resulting from the evaluation of the absorbed company, respectively 6. regulation of accounts 456 “settlements with shareholders/associates concerning the capital” and 461 “various debtors”, a recording that corresponds to the redemption of financial obligations to the shareholders/associates of the absorbed company as a result of distributing shares/ social stakes by the absorbing company: 456 “settlements with shareholders/ associates concerning the capital” = 461 “various debtors” alternative option if we were to choose not to comply with the provisions of pos. 101 from the accounting regulations concerning annual individual financial statements and annual consolidated financial statements – approved by ompf no.1802/2014 and, instead, we would record in accounting the differences arising from the evaluation of the absorbed company, the accounting procedure in the case of the absorbed company, with respect to the recording of the merger operations through absorption, in relation to using the global evaluation method, would be as follows: in the books of account of the absorbed company 1. recording the value differences (be they positive or negative) arising from the evaluation of the balance sheet items: a) in the case of differences attributable to the evaluated balance sheet items (usually the tangible assets) % “accounts with balance items such as assets”/ asset accounts = 7583 “revenue from the sale of assets and other capital operations” for positive differences 6583 “expenses concerning the disposal of assets and other capital operations” = % “balance asset items” for negative differences b) the case of unallocated differences ⃰: ⃰ these differences occur when we employ global evaluation methods for the evaluation of the absorbed company (the stock market method, methods based on results etc.), a situation in which the difference between the value of the merger contribution and the value of the net accounting asset (positive or negative) cannot be attributed to certain balance items. 207.1 “positive goodwill” = 7583 “revenue from the sale of assets and other capital for positive differences the accounting reflection of merger operations – the global evaluation method 26 operations” 6583 “expenses concerning the disposal of assets and other capital operations” = 207.5 “negative goodwill” for negative differences c) the closing of revenue and expenditure accounts and the recognition of the gain or loss arising from the merger: 7583 “revenue from the sale of assets and other capital operations” = 121 “profit or loss” (distinct analytic account) the gain/profit arising from the evaluation brought about by the merger 121 “profit or loss” (distinct analytic account) = 6583 “expenses concerning the disposal of assets and other capital operations” the loss arising from the evaluation called for by the merger 2. recording the account/amount receivable representing the value of balance items such as transferred assets 461 “various debtors" = 7583 “revenue from the sale of assets and other capital operations” (with the net/gross evaluated value of transferred assets) ⃰ ⃰ we have shown above that in the merger project the companies can make provisions for the taking over of items such as assets, liabilities and equity at a net or gross value, a situation in which the corresponding adjustments and depreciations will be taken over. 3. the recording of the removal from accounts of items such as transferred assets: 6583 “expenses concerning the disposal of assets and other capital operations” ⃰ = % “balance asset accounts” – including account 207 “goodwill” (at gross/net evaluated value) deju 27 the sums recorded in accounts 7583 and 6583 (pos. 2 and 3 above) also contain the positive or negative results of the evaluation (operation 1a and 1b), which cancel or invalidate each other, without recognizing the difference arising from the evaluation demanded by the merger. 4. closing the revenue and expenditure accounts corresponding to the merger operation: 7583 revenue from the sale of assets and other capital operations” = 121 ⃰ “profit or loss” 121 ⃰ “profit or loss” = 6583 “expenses concerning the disposal of assets and other capital operations” ⃰ note: following these recordings, the balance of account 121 “profit or loss” no longer reflects the difference arising from the evaluation called for by the merger, a difference which is recorded in pos. 1. 5. the recording of the removal from accounts of items such as liabilities, adjustments and depreciation corresponding to transferred assets: % “debt accounts” “adjustment accounts” “depreciation accounts” = 461 “various debtors" 6. the recording of the transfer of equity elements and (financial) obligations to the shareholders/associates of the absorbed company regarding the remuneration of the merger contribution: % “equity accounts” ⃰ = 456 “settlements with shareholders/associates concerning the capital” ⃰ equities also comprise the profits or losses arising from the merger, which are reflected in the balance of the “profit or loss” account, as mentioned in the operation from pos. 1. 7. reception of securities for the remuneration of the merger contribution: 109 “company’s own shares” (261 “shares owned in affiliated companies”) = 461 “various debtors” 8. distributing securities to the shareholders/associates of the absorbed company: the accounting reflection of merger operations – the global evaluation method 28 456 “settlements with shareholders/associates concerning the capital” = 109 " company’s own shares" (261 " shares owned in affiliated companies") ii. accounting recordings in the case of the absorbing company: 1. recording the capital increase and the merger premium: 456 “settlements with shareholders/associates concerning the capital” = % 1012 “post-issue paid up share capital” 1042 “merger premium” 2. recording the taking over of asset items from the absorbed company at the value arising from the evaluation, with differences recognized directly in the category of items to which they correspond or in account 207 “goodwill”, in the case of unallocated differences: % “balance asset accounts” (including account 207 “goodwill”) = 456 “settlements with shareholders/associ ates concerning the capital” at the evaluated value recorded in the books of account of the absorbed company note: with balances specified in the delivery-receipt protocol. 3. recording the taking over of balance items such as liabilities, adjustments and depreciations from the absorbed company: 456 “settlements with shareholders/associates concerning the capital” = % “debt accounts” “adjustment accounts” “depreciation accounts” conclusions in all the situations in which the value of the net merger contribution differs from the value of the net accounting asset, the method of global evaluation shall be employed as a method for the accounting reflection of merger operations, a method which involves the following accounting guidelines to be complied with by the companies participating in the merger, as follows:  in the case of the absorbing/acquiring company: the difference between the value of the net merger contribution and the net accounting asset is not recorded in the books of account; the difference between the contribution value and the value of the net accounting asset that corresponds to the absorbed company is recognized in the category of balance sheet items to which they belong or in the “goodwill” account in the case of unidentifiable differences; deju 29  in the case of the absorbed/acquired company: the difference between the merger contribution value and the value of the net accounting asset is recorded as profit or loss arising from the merger, depending on the positive or negative quality of the difference. for the purpose of recording merger operations in their books of account, accountants shall have to work with the accounting principles that correspond to the accounting regulations applicable in the time frame associated with the operation regarding a company’s reorganisation through merger. references deju, m. (2013), contabilitate aprofundată curs universitar, bacău, editura alma mater. accounting law nr. 82/1991, republished in monitorul oficial nr.454/2008, with further amendments and completions. company law nr. 31/1990, republished in monitorul oficial, partea i, nr. 1066 din 17 november 2004, with further amendments and completions. omfp no. 1802 from 29 december 2014, for the approval of accounting regulations concerning annual individual financial statements and annual consolidated financial statements, published in official gazette of romania, no. 963 from 30 december 2014, with subsequent amendments and additions. omfp nr. 897/2015 for the approval of methodological norms concerning the reflection in accounting of the main operations of merger, partition, dissolution and liquidation of companies, with subsequent amendments and additions. studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 102 transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange anny widiasmara universitas pgri madiun, kota madiun, indonesia anny.asmara@gmail.com ika purwaningsih universitas pgri madiun, kota madiun, indonesia ikapurwaningsih800@gmail.com abstract the purpose of this study is to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions. the data used is secondary data in the form of annual financial statements downloaded from the official website of idx www.idx.co.id. the population of this study is a manufacturing company registered in idx for the period 2016-2018. sample selection technique using purposive sampling method so that 33 companies are obtained according to the criteria. the analysis technique uses multiple linear regressions tested with spss version 20 applications. the results showed that taxes, tunneling incentives for income shifting, and financial reporting had no effect on transfer pricing decisions. meanwhile, intangible assets have a significant positive effect on transfer pricing decisions. keywords tax; tunneling incentive for income shifting; financial reporting; intangible assets; transfer pricing jel classification m41; g12 introduction this research aims to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions using a sample of manufacturing companies registered in idx for the period 2016-2018. transfer pricing is basically a neutral concept, i.e. the price charged between divisions or intersegments in the same organization for the exchange of products and services. however, if an exchange involves a multinational, interdivision, or intersegment company that crosses the tax jurisdiction of a different country, then the multinational company is motivated to act non-neutral to the exchange price. this motivation arises because there are economic benefits, namely overall tax cost savings (tampubolon & al farizi, 2018). the definition of transfer pricing in terms of taxation is pricing for intra-corporate purposes that occurs in affiliated companies. differences in tax rates between countries present an opportunity for business entities to take advantage of the difference in rates by shifting income or fees from business entities in high-tax countries to other business entities in a group in a tax haven country in order to save tax costs (tampubolon & al farizi, 2018). (jacob, 1996) found a link between the amount of tax paid and the reported profit and the volume of interstate transactions in multinational corporations. if companies use transfer pricing to minimize their global taxes, then the companies transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 103 that have the greatest chance of manipulating profits are companies with large amounts of international inter-company sales and large differences in interstate tax rates as well. transfer pricing can also be applied to companies in one group . transfer pricing can lead to a decrease in state income from the tax revenue sector, whereas tax is the highest source of income of the country (refrizal, 2019). the issuance of se-04/pj.07/1993 and kmk-650/kmk.04/1994 regarding the list of tax haven countries is the beginning of the indonesian government's attention to transfer pricing practices. the increasing seriousness of the indonesian government in paying attention to transfer pricing is evidenced through the issuance of law no. 36 of 2008 on income tax. the rules on transfer pricing are further detailed in regulation of the director general of taxation no. 32 of 2011 which is an update to regulation of the director general of taxation no. 43 of 2010 (setiawan, 2014). g-20 countries have agreed to work together to fix loopholes that can be exploited by transfer pricing actors through the creation of a transparent international taxation system, namely with the publication of base erosion and profit shifting (beps) action by the organization . noviastika research (2016) shows the influence of taxes on transfer pricing decisions. the chances of running transfer pricing will increase if the tax rate imposed by a country is so high that a company that makes a large profit is motivated to transfer its profits to its affiliated entities located in a low-tax country. in contrast to the above research, melmusi's research (2016) shows no tax influence on transfer pricing decisions. companies can take ways other than transfer pricing, among others by implementing tax planning to reduce the tax burden. tunneling is the transfer of resources out of the company for the personal benefit of controlling shareholders (johnson et al., 2000). (gilson & gordon, 2003) disclosed that controlling shareholders may take several steps to fulfill their personal interests through controlling the company's operational policies such as dividends, salaries, bonuses, and the company's transfer pricing decisions were also influenced by financial reporting which in this study was projected with a bonus plan. bonus plan is one of the accounting strategies aimed at the projectation of directors' compensation through efforts to increase the company's overall profits. bonuses are awarded on the basis of the profits achieved, so it is logical that directors attempt to manipulate the company's profits in order to maximize their remuneration receipts and bonuses. transfer pricing may result in one subunit or division experiencing losses (hartati et al., 2014). marisa (2017) did not find any effect of bonus plan on transfer pricing decisions. the awarding of bonuses based on profit does not motivate the company's board of directors to maximize the company's profit with the transfer pricing mechanism. meanwhile, melmusi (2016) found the effect of bonus plan on transfer pricing decisions. the definition of intangible assets according to psak 19 is a nonmonary asset identified without physical existence. intangible assets are difficult to assess, so royalty transfers are also difficult to assess based on arm's length. intangible assets have certain characteristics such as lack of established markets and subjective valuations thus increasing the opportunity of intangible assets transfer between companies in tax jurisdictions in contrast to transfer pricing mechanisms (richardson et al., 2013). jafri and mustikasari (2018) found there was no intangible assets influence on transfer pricing decisions. the intangible value of large assets does not encourage managers to take transfer pricing decisions. intangible assets are functioned as additional information to minimize the information gap between controlling shareholders and noncontrolling shareholders. in contrast to the results of the above study, fadhilah (2018) found that there is a significant influence on intangible assets on transfer pricing decisions. the intangible assets value is directly proportional to the transfer pricing decision. widismara, purwaningsih 104 literature and development overview transfer pricing hypothesis transfer pricing is pricing in inter-party transactions that have a special relationship (regulation of the director general of taxation, 2011). (kurniawan, 2015) defines transfer pricing as the company's policy in setting the price of an inter-party transaction that has a special relationship. (tampubolon & al farizi, 2018) defines transfer pricing as a product or service exchange transaction that occurs between two different entities within a group of companies. (suandy, 2016) distinguishes the definition of transfer pricing into two, namely neutral and pejorative definitions. in a neutral definition, transfer pricing is assumed to be a purely business tactic and strategy by not aiming to reduce the tax burden. in the pejorative definition, transfer pricing is assumed to be an attempt to save tax burdens using tactics, one of which is to shift profits to low-tax countries. in general, the term transfer pricing tends to lead to manipulation of transfer pricing, which is the practice of determining transfer value not based on market forces which has an impact on saving the total tax burden of a group of companies as a whole through the transfer of accounting profits or tax revenue from higher tax jurisdictions to tax jurisdictions. lower (suwanto, 2012). (circular letter of the director general of taxation, 1993) states that the reasonableness of transfer pricing practices can be made on the sale price, purchase price, administrative and general fee quota or on overhead costs, interest charged on loans to the owner, payment of commissions, licenses, franchises, leases, royalties, rewards for management services, engineering, and other services, purchase of company assets by the owner at prices below normal prices, exports with third party intermediaries that lack/have no business substance. the central issue of transfer pricing is the issue of pricing or pricing. fiskus and other tax authorities want to ensure that between companies that have a special relationship or who do not have a special relationship will use a fair price in every trade transaction. if the company does not apply a reasonable price, a country's fiss will potentially lose revenue from the tax withdrawal sector. fair pricing is a reference to the most valid exchange pricing for inter-party transactions that have a special relationship (tampubolon & al farizi, 2018). (regulation of the director general of taxation, 2011) defines fair price or fair profit as price or profit in inter-party transactions that do not have a special relationship in comparable circumstances, or price or profit in accordance with the principle of fairness and custom of business (arm's length principle/alp), which is the principle that requires the similarity of price or profit in transactions between parties that have or do not have a special relationship if there is a similarity or commencment of the situation. the establishment of a special relationship is when one party is in control or has significant influence over the other party in financial and operational decision making (ikatan akuntan indonesia, 2014d). (suandy, 2016) declares a special relationship established between the parent company and a subsidiary company or branch office or representative office either located domestically or abroad. the regulation on special relationships is found in (law of the republic of indonesia, 2008) article 18 paragraphs (3), (3a), and (4). the utilization of transfer pricing by taxpayers is feared to reduce the potential for state tax receipts. therefore, it is necessary to make a transfer price agreement for reasonable market pricing. advance pricing agreement (apa) is an agreement made by the directorate general of taxation together with the taxpayer or tax authorities of other countries in determining the parameters of fair price or fair profit in front of the parties who have a special relationship (pohan, 2013). tax tax is a mandatory contribution to a country owed by a private person or entity that is coercive on the basis of the law, without obtaining direct benefits and utilized in transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 105 fulfilling the state's budget for the large amount of people's welfare (law of the republic of indonesia, 2009). prof. dr. rochmat soemitro, s.h. defines taxes as people's dues to state coffers under the law (which can be imposed) by not obtaining direct lead services (counterpresentations) that can be shown and which are utilized for the payment of public expenditures (mardiasmo, 2016). tax is defined as dues without obtaining lead services (counterpresentations) that can be directly demonstrated and utilized for the payment of public expenditures (supramono & damayanti, 2010). prof. dr. p.j.a andriani defines taxes as dues to the state (which can be imposed) owed by those who are obliged to pay them according to the regulations, by not regaining achievement, can be directly appointed, and useful to pay various public expenses related to the obligation of the state to run the government. according to prof. dr. mjh. tax smeets are an achievement to governments that are owed through common norms, can be imposed, without any contrarepancies that can be shown individually, which is intended to finance government spending (agoes & trisnawati, 2013). tunneling incentive for income shifting (rahmawati, 2016) defines tunneling as a term used to describe the actions of controlling shareholders who are looking for ways to take "profits" without the knowledge of non-controlling shareholders (adverse selection). controlling shareholders are legal entities and/or individuals and/or business groups with a percentage of shareholdings more than equal to 25% of the total outstanding shares and have voting rights or shareholdings smaller than 25% but are shown to have exercised control both directly and indirectly (bank indonesia regulation, 2012). the term tunneling was originally used to describe the conditions of the takeover of non-controlling shareholder rights in the czech republic. tunneling is the transfer of assets and profits outside the company for the benefit of controlling shareholders. tunneling can be categorized into two forms. first, controlling shareholders can transfer business entity resources into theirs through transactions between entities and owners through fraud, asset sales, transfer price contracts that bring benefits to controlling shareholders, overly large executive salaries, loan guarantees, takeover of corporate opportunities, etc. second, controlling shareholders can multiply their shares even if they do not supply assets at all by issuing dilutive shares, minority freeze-outs, insider trading, and creeping acquisitions thus making noncontrolling shareholders loss (johnson et al., 2000). corporate loans are the main form of tunneling in chinese listed companies. the chinese-listed holding company encouraged its subsidiaries to become registered companies by using the sale of related party goods and services to raise revenue in the pre-ipo period. this is motivated by tunneling opportunities in the post-ipo period, namely exploiting the economic resources of noncontrolling shareholders for the benefit of controlling shareholders. tunneling is done by often not paying down debts to their listed subsidiaries thus making this the main reason for the early death of many new listed companies (aharony et al., 2010). (la porta et al., 2000) mentions tunneling incentive for income shifting can occur in some form. for example, "inside" (a term for managers and controlling shareholders) sells additional outputs, assets, or securities in companies under their control to their other companies below normal prices. tunneling incentives for income shifting can also include transfer of corporate opportunities, placing family members who may not qualify in managerial positions, or overpaying executives. widismara, purwaningsih 106 financial reporting (bonus plan) bonuses include one type of short-term employee benefit, namely employee benefits (except severance) that are expected to be completed entirely in less than a year after the annual reporting period during which the related services provided by employees expire (ikatan akuntan indonesia, 2014c). bonuses are additional income aimed at improving employee morale in improving work performance and loyalty to companies that are generally only awarded once a year. bonuses are only awarded if the company makes a profit during the fiscal year that has passed and is not given evenly, but rather depends on the achievement of the individual's work (mulyapradana & hatta, 2016). business unit manager bonuses can be based on the company's total profit or on the profit of the business unit or the combined two. this is based on the argument that the manager's decisions and actions have more of a direct impact on his own business unit, rather than on other business units. however, this approach can hinder cooperation between units (anthony & govindarajan, 2011). bonuses can be based on the performance of a particular person or group that has many members, such as a working group, profit center, or even a company as a unit. the most commonly used possibility is the performance metrics in the annual bonus plan (merchant & van der stede, 2018). income-based bonus schemes are a common method used to reward company executives. the bonus scheme allows management to decide on accounting and accrual policies that can maximize their bonus receipts (healy, 1985). intangible assets intangible assets are nonmonary assets identified without physical form. intangible assets have the main characteristic of objects that cannot be seen and held. intangible assets can be recognized by the entity if the entity has the possibility to benefit financially in the future from that asset as well as the value of the asset or the amount of expenditure that must be spent in order to obtain it can be credible. the intangible assets include patents, copyrights, brands (trade marks), goodwill, franchises, and so on (agoes & trisnawati, 2013). (indonesian institute of accountants, 2014b) defines intangible assets as assets that usually have a long economic lifespan, have no form, are beneficial in the company's operations and their use is not for trading. intangible property consists of patents, trademarks, trade names, designs, and models. in addition, intangible property also includes literature or literature and rights to artistic ownership and intellectual property rights (oecd, 2010). multinational corporations think strategically to relocate their intangible assets to affiliated business entities based in low-tax countries as recipients of royalty transfers from business entities in high-tax countries (dudar et al., 2015). intangible assets have two main characteristics, namely excluding assets that have a physical form also excluding financial assets and can be owned or can be controlled in commercial activities. intangible assets can also be distinguished in two categories namely trade intangible and marketing intangible (oecd, 2010). the development hypothesis (bernard et al., 2006) found that u.s. exporters set different prices for reasonable (un related) customers and customers of related parties. pricing for unblated parties tends to be greater than related parties. this pricing is influenced by the type of goods, the size of the company and the export share of the company, the tax rate of the destination country, as well as changes in the exchange rate against the us dollar. this is contrary to the wishes of fiskus and other tax authorities to ensure that between companies that have a special relationship or who do not have a special relationship will use a reasonable price in every trading transaction so that the fiskus of a country can prevent the potential loss of income from the tax withdrawal sector (tampubolon & al farizi , 2018). parent companies and subsidiaries are separate legal entities from a tax point of view. the two companies arrange transactions in such a way that the company's domestic transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 107 subsidiaries lose out, but the parent company overseas profit (rahayu, 2010). (saraswati & sujana, 2017) revealed that the tax has a positive effect on transfer pricing. in order to minimize the total corporate group tax burden, a company transfers resources to related entities domiciled overseas in order to reduce profits. the high tax rate of a country is directly proportional to the company's opportunity to implement a transfer pricing mechanism. companies with concentrated ownership structures tend to tunnel. this can happen because controlling shareholders have the capacity and incentive to conduct transactions at a special price, protection against the rights of noncontrolling shareholders is still weak, and the strong influence of controlling shareholders on agents in decision-making that maximizes the profit of controlling shareholders and harms noncontrolling shareholders. the majority of shares in public companies in indonesia are controlled by only a few parties, so controlling shareholders tend to tunnel (marfuah & azizah, 2014). there are two things that encourage companies to tunnel, namely ownership structures and financial resources. controlling shareholders can leverage their power and influence to pressure agents to make decisions that side with them. abundant resources are a stimulus for controlling shareholders in taking tunneling steps for its own sake (marfuah & azizah, 2014). transfer pricing is done in order to tunneling to noncontrolling shareholders so that they lose. the negative impact of tunneling for the company is the decline in financial performance (wafiroh & hapsari, 2016). transfer pricing transactions can be done through the sale of inter-affiliated companies (noviastika f. et al., 2016). bonus plan hypothesis explains that if the awarding of bonuses is based on achieving profit, the company's management is more inclined to adopt accounting policies that can maximize the profit of the current period in order to pursue bonuses (sulistyanto, 2018). bonus plan is an accounting strategy that aims to appreciate the board of directors for achieving the company's consolidated profit (mispiyanti, 2015). the distribution of bonuses from the owner is not only aimed at directors who make profit for their divisions or subunits, but also for directors who want to work together to increase the company's consolidated profits (mispiyanti, 2015). if a bonus is handed on the basis of the company's reported profit, the company tends to manipulate profits through transfer pricing (lo et al., 2010). intangible assets are nonmonary assets that can be identified and have no physical form (agoes & trisnawati, 2013). bonus plan hypothesis on positive accounting theory suspects that companies that use bonus plan policies are more inclined to choose accounting procedures that will raise profit in the current year (sulistyanto, 2018). regarding intangible assets, companies that use bonus plans are more inclined to choose amortization methods that can raise the company's annual profit (fadhilah, 2018). intangible assets are difficult to assess, so the transfer value of payments (royalties) is also difficult to assess based on fair price (richardson et al., 2013). this loophole can be exploited by companies that use bonus plans to maximize the company's profit achievement by utilizing transfer pricing mechanisms. multinational corporations strategically relocate their assets to entities located in countries that apply low tax rates to receive royalty transfers from related entities located in countries that apply high tax rates (dudar et al., 2015). (fadhilah, 2018) found empirical evidence that intangible assets have a significant positive effect on transfer pricing. the higher the value of intangible assets, the higher the motivation of business entities to implement transfer pricing mechanisms. based on the above, the hypothesis in this study is stated as follows. h1: taxes affect transfer pricing decisions widismara, purwaningsih 108 h2: tunneling incentive for income shifting affects transfer pricing decisions h3: financial reporting affects transfer pricing decisions h4: intangible assets affect transfer pricing decisions research methods data, population and sample this type of research is quantitative research using secondary data in the form of annual financial statements downloaded from the official website of the indonesia stock exchange (idx) namely www.idx.co.id. the population of this study is a manufacturing company registered in idx for the period 2016-2018. samples are selected by nonprobability sampling method with purposive sampling technique. definition and measurement of research variables 1. transfer pricing decision is pricing in inter-party transactions that have a special relationship. transfer pricing decisions are measured using related party transaction /rpt, which is one of the company's strategies in carrying out transfer pricing. the transaction of the sale of products from a subsidiary company to the parent company is done by not taking profit so that the subsidiary company loses and does not have to pay tax charges (marisa, 2017). rpt (related party transaction)= (total special party receivables) (total receivables) 2. tax is a mandatory contribution to a country owed by a private person or entity that is coercive on the basis of the act, without obtaining direct benefits and utilized in fulfilling the state's budget for the large welfare of the people the measurement of tax variables using the effective tax rate (etr) indicator. policymakers and interest groups often use etr as a means to make conclusions about the corporate tax system because etr provides a statistical summary of the cumulative effects of various tax incentives and tax rate changes (richardson & lanis, 2007). etr=(tax expense-deffered tax expense)/(pretax income) 3. tunneling incentive for income shifting tunneling is the transfer of assets and profits outside the company for the benefit of controlling shareholders. tunneling incentive for income shifting is measured by the ratio of the largest number of shareholdings to the number of shares outstanding. entities are considered to have a significant influence on other entities if they have a minimum investment capital of 20%, either directly or indirectly (indonesian institute of accountants, 2014a). tun=(largest number of shareholdings)/(number of shares outstanding) 4. financial reporting bonus is an additional income aimed at improving employee morale in improving work performance and loyalty to companies that are generally only awarded once a year. the financial reporting (bonus plan) in this study was measured using the itrendlb formula, which is a comparison between the amount of net profit in the year t to the net profit of the year t-1 (saraswati and sujana, 2017). itrendlb=(net profit for the year t)/(net profit for the year t-1) 5. intangible assets are nonmonary assets identified without physical form (agoes & trisnawati, 2013). intangible assets are difficult to assess, so the transfer value of payments (royalties) is also difficult to assess based on fair price (richardson et al., 2013). intangible assets are measured by log formula (fadhilah, 2018). ia = log (𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖𝑎𝑎𝑎𝑎𝑖𝑖𝑖𝑖𝑎𝑎) transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 109 data analysis techniques data analysis techniques in this study are conducted in several stages namely: descriptive statistical test, classic assumption test consisting of normality test, multicolinerity test, autocor correlation test, and heteroskedastity test, multiple linear regression test, hypothesis test consisting of t test and coefficient determination test (r2) analysis and discussion. in this section we will explain the results of tax influence analysis, tunneling incentive for income shifting, financial reporting, and intangible assets against transfer pricing decisions.uji statistik deskriptif table 1 descriptive statistics test results descriptive statistics n minimum maximum mean std. deviation pj 62 ,11 ,40 ,2537 ,06361 tun 62 ,21 ,93 ,6198 ,19675 itrendlb 62 ,36 1,87 1,0658 ,34905 ia 62 7,08 13,32 10,4184 1,46725 rpt 62 ,00 ,27 ,0661 ,06492 valid n (listwise) 62 sources: prepared and computed by the authors based on the table of descriptive statistical test results above, it is known that the value of n (amount of data) in each variable etr, tun, itrendlb, ia, and rpt is 62. a) the tax variable (etr) has the smallest value of 0.11, the largest value of 0.40, an average value of 0.2537, and a standard deviation of 0.06361. b) the tunneling incentive for income shifting (tun) variable has the smallest value of 0.21, the largest value of 0.93, an average value of 0.6198, and a standard deviation of 0.19675. c) the financial reporting variable (itrendlb) has the smallest value of 0.36, the largest value of 1.87, an average value of 1.0658, and a standard deviation of 0.34905. d) the intangible assets (ia) variable has the smallest value of 7.08, the largest value of 13.32, an average value of 10.4184, and a standard deviation of 1.46725. e) the transfer pricing decision variable (etr) has the smallest value of 0.00, the largest value of 0.27, an average value of 0.0661 and a standard deviation of 0.06492. classic assumption test normality test table 2 normality test results one-sample kolmogorov-smirnov test unstandardized residual n 62 normal parametersa,b mean 0,000000 std. deviation ,05676106 most extreme differences absolute ,091 positive ,091 negative -,050 kolmogorov-smirnov z ,715 asymp. sig. (2-tailed) ,686 a. test distribution is normal. b. calculated from data. sources: prepared and computed by the authors widismara, purwaningsih 110 based on table 2, it is known that the asymp value. sig (2-tailed) is 0.686. this value shows that the probability of acceptance of 0.686 is greater than the significance level (0.686> 0.05), so it can be concluded that the data is normally distributed.uji multikolinieritas table 3 multicollinearity test results coefficientsa model collinearity statistics tolerance vif 1 (constant) etr ,967 1,034 tun ,932 1,073 itrendlb ,986 1,015 ia ,947 1,056 a. dependent variable: rpt sources: prepared and computed by the authors based on table 3, it is known that the tolerance value> 0.10 and vif <10 for all variables, so it can be concluded that there is no multicollinearity symptom.uji autokorelasi table 4 autocorrelation test results model summaryb model durbin-watson 1 2,086 a. predictors: (constant), lag_x4, lag_x1, lag_x2, lag_x3 b. dependent variabel: lag_y sources: prepared and computed by the authors based on table 4, it is known that the calculated d value (durbin-watson) is 2.086. the dl and du values according to the dw table are 1.4554 and 1.7288, respectively. the conclusion that can be drawn from the results above is that there is no autocorrelation in this study.uji heterokedastisitas du < d < 4-du  1,7288 < 2,086 < 2,2712 transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 111 figure 1 heteroscedacity test results based on figure 1, it is known that there is no clear pattern and the distribution of dots is evenly distributed above and below the number 0 on the y axis, so it can be concluded that in this study there is no heteroscedasticity. multiple linear regression analysis table 5 multiple linear regression analysis test results coefficientsa model unstandardized coefficients standardized coefficients b std. error beta 1 (constant) -,117 ,079 etr -,042 ,120 -,041 tun -,027 ,040 -,081 itrendlb ,000 ,022 -,002 ia ,020 ,005 ,458 a. dependent variable: rpt sources: prepared and computed by the authors based on the results of the statistical hypothesis test in table 5, the results of the multiple linear regression equation are as follows: the regression equation above can be described as follows: a) the constant of the regression equation is -0.117, which means that if the four independent variables, namely tax (etr), tuneling incentive for income shifting (tun), financial reporting (itrenlb), and intangible assets (ia) the changes are equal to zero, then the decision transfer pricing (rpt) decreased by 0.117. b) the regression coefficient of the tax variable (etr) is -0.042. this means that every one-unit increase in the tax variable, a decrease in the transfer pricing decision will be followed by 0.042. conversely, for every one-unit decrease in the tax variable, an increase in transfer pricing decision will be followed by 0.042. c) the regression coefficient of the tunneling incentive for income shifting (tun) variable is -0,, 027. this means that every one unit increase in the tunneling incentive for income shifting variable, a decrease in transfer pricing decision will be followed by 0.027. conversely, for every one-unit decrease in the tunneling incentive for income rpt = -0,117-(0.042)etr-(0.027)tun+(0.000)itrendlb+(0.020)ia+e widismara, purwaningsih 112 shifting variable, an increase in transfer pricing decision will be followed by 0.027. d) the regression coefficient of the financial reporting variable (itrenlb) is 0,000. this means that every one-unit increase in the financial reporting variable, an increase in the transfer pricing decision will be followed by 0,000. conversely, for every oneunit decrease in the financial reporting variable, a decrease in the transfer pricing decision will be followed by 0,000. e) the regression coefficient of the intangible assets (ia) variable is 0.020. this means that every one-unit increase in the intangible assets variable, an increase in transfer pricing decision will be followed by 0.020. conversely, for every one-unit decrease in the intangible assets variable, a decrease in transfer pricing decision will be followed by 0.020. hypothesis testing statistical test t table 6 statistical test results t coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -,117 ,079 -1,480 ,144 etr -,042 ,120 -,041 -,352 ,726 tun -,027 ,040 -,081 -,675 ,502 itrendlb ,000 ,022 -,002 -,020 ,984 ia ,020 ,005 ,458 3,849 ,000 a. dependent variable: rpt sources: prepared and computed by the authors based on the results of the t statistical hypothesis test in table 6, it can be concluded that the effect of each independent variable on the dependent variable is as follows: 1) the tax variable (etr) has tcount <ttable which is -0.352 <2.00247 and has a significance value greater than the α value, namely 0.726> 0.05. thus, ha1 is rejected. 2) the tunneling incentive for income shifting (tun) variable has tcount <ttable, which is -0.675 <2.00247 and has a significance value greater than the α value, namely 0.502> 0.05. thus, ha2 is rejected. 3) the financial reporting variable (itrendlb) has tcount <ttable, which is -0.020 <2.00247 and has a significant value greater than the α value, namely 0.984> 0.05. thus, ha3 is rejected. 4) the intangible assets (ia) variable has tcount> ttable that is 3,849> 2,00247 and has a smaller significance value than the α value, which is 0,000 <0.05. thus, ha4 is accepted. test the coefficient of determination (r2) table 7 the result of determination coefficient test model summaryb model r r square adjusted r square std. error of the estimate 1 ,485a ,235 ,182 ,05872 a. predictors: (constant), ia, itrendlb, etr, tun b. dependent variable: rpt sources: prepared and computed by the authors transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 113 based on table 7, it can be seen that the value of adjusted r2 is 0.182, which means that the variation in the dependent variable that can be explained by the independent variable is 18.2%. this means that the independent variables which include taxes, tunneling incentives for income shifting, financial reporting, and intangible assets affect transfer pricing decisions by 18.2%, while the remaining 81.8% are influenced by other variables not examined in this study. discussion 1. the effect of taxes on transfer pricing decisions based on the results of the t statistical test, it can be concluded that taxes have no effect on transfer pricing decisions. indonesia applies a corporate income tax rate of 25% for the 2016-2018 period. however, the sample companies did not choose transfer pricing as a tax saving mechanism. these results support melmusi (2016), who suspects that the sample companies have implemented a tax saving mechanism through tax planning activities, which is to make the tax burden as low as possible in the existing tax regulations. this result is contrary to kusumasari et al. (2018), klassen et al. (2013) and richardson et al. (2013) who found that the high corporate tax rate imposed by a country is directly proportional to the company's decision to transfer corporate profits to a tax heaven country through the transfer pricing mechanism. 2. effect of tunneling incentive for income shifting on transfer pricing decisions based on the results of the t statistical test, it can be concluded that tunneling incentive for income shifting has no effect on transfer pricing decisions. the results of this study support ayshinta's (2019) research which states that the absence of the effect of tunneling incentive for income shifting on transfer pricing decisions indicates that controlling shareholders do not take advantage of their control rights to give orders to management to carry out transfer pricing. wiratno (2017) states that this indicates that a large percentage of share ownership is not a benchmark in a company's decision to carry out transfer pricing. thus, the interest of the controlling shareholder to increase personal gain is no longer relevant because the special relationship is not formed as a result of a blood relationship, so that expropriation is difficult to realize because the approval of the board of directors is required in making managerial decisions. the absence of the effect of tunneling incentives for income shifting on transfer pricing decisions can also be used as a reference for the effectiveness of the supervisory mechanism implemented by the company. brundy (2014) divides the supervisory mechanism into two categories, namely internal and external. the internal control mechanism is through the board of commissioners, especially those dominated by the independent board of commissioners. tunneling can be suppressed by the board of commissioners by authorizing transactions deemed material and improper. the external supervisory mechanism is through creditors and independent auditors. creditors have a risk of uncollectible debt so they are authorized to supervise the company's performance and can ask for debt repayment at any time if the company violates the debt agreement. meanwhile, independent auditors are responsible to the general public to provide professional opinions on financial reports published by the company. this study contradicts lo, et al. (2010) who found that tunneling incentives for income shifting have an effect on transfer pricing decisions. the profit shift increases in proportion to the percentage of ownership of the controlling shareholder. 3. the effect of financial reporting on picing transfer decisions based on the results of the t statistical test, it can be concluded that financial reporting has no effect on transfer pricing decisions. this research supports wiratno (2017), which indicates that the high itrendlb value means that the current year's profit is greater than the previous period's profit. the average value of intrendlb in this widismara, purwaningsih 114 study is 106.58%, so it can be categorized as tending to be stable. the stability of the itrendlb value indicates the company's lack of interest in manipulating profits through transfer pricing to increase bonuses. a good stakeholder supervision mechanism also suppresses the unexpected spike in profit due to transfer pricing. the competence of the audit committee in the areas of accounting and finance will affect the effectiveness of supervision of management so that manipulative managerial actions can be quickly identified and addressed (saraswati & sujana, 2017). this result contradicts lo et al. (2010) who found empirical evidence that company managers tend to use transfer pricing to increase profits if companies implement a profit-based bonus mechanism. hartati et al. (2014) also found the tendency of directors to do their best to increase overall company profits, one of which is through the transfer pricing mechanism, in connection with the company owner's policy to provide bonuses based on overall profit achievement.. 4. the effect of intangible assets on transfer pricing decisions based on the results of the t statistical test, it can be concluded that the effect of intangible assets is directly proportional to the transfer pricing decision. the greater the intangible asset value of a company, the greater the company's decision to carry out transfer pricing. these results support anggraini's (2018) research which states that the high transfer pricing transactions are due to the inequality in interpreting the value of transfer prices and the difficulty in determining the right definition for intangible asset transactions. the level of difficulty in measuring an intangible asset is directly proportional to the company's tendency to apply the transfer pricing mechanism. the difficulty in measuring intangible assets creates opportunities for le companies to transfer profits to a tax heaven country through transfer payments (royalties) which are difficult to measure using the arm's length principle (dudar, 2015). companies in indonesia tend to ignore research and development, even though r&d is closely related to intangible assets. moreover, the database of the transfer pricing mechanism, especially on intangible assets, is still lacking (fadhilah, 2018). the results of this test contradict the research of deanti (2017) and jafri and mustikasari (2018) where both studies suggest that there is no influence of intangible assets on transfer pricing decisions. the amount of intangible assets of a company does not motivate management to take the transfer pricing mechanism. the valuation of the company by investors solely takes into account the high intensity of r&d and the value of intangible assets and ignores the increase in the company's financial performance due to the utilization of the company's intangible assets. conclusions and recommendations based on the results of hypothesis testing, the following conclusions can be drawn: 1. taxes have no effect on transfer pricing decisions. these results provide evidence that tax is not the main reason companies apply transfer pricing. 2. tunneling incentive for income shifting has no effect on transfer pricing decisions. these results prove that the percentage of share ownership is not a benchmark in the decision to carry out transfer pricing. 3. financial reporting has no effect on transfer pricing decisions. the stability of the itrendlb value of the sample companies shows that the company is less interested in manipulating earnings (earning management) through transfer pricing as an effort to maximize bonus. 4. intangible assets have a significant positive effect on transfer pricing decisions. this result means that the greater the intangible assets, the company's transfer pricing decision will also increase. some limitations are still found in this study, including the following: transfer pricing decision: manufacturing companies with special transaction on the indonesian stock exchange 115 1. the observation period is relatively short, namely three years, so that the results obtained do not provide a complete picture of the effect of the independent variable on the dependent variable. 2. the parameters used are still limited to the information provided by the company in the annual report. however, not all companies include the required information, especially information regarding intangible assets, so that many companies do not pass the sample selection criteria. further research is recommended for 1. adding independent variables that have a big influence on transfer pricing decisions, for example good corporate governance (gcg) and debt covenants. 2. extending the research period, in order to get a better picture of the effect of independent variables on transfer pricing decisions. 3. expanding the population so that research results can reach more corporate sectors. references agoes, s., & trisnawati, e. 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(2016), pajak, tunneling incentive dan mekanisme bonus pada keputusan transfer pricing. el muhasaba: jurnal akuntansi. https://doi.org/10.18860/em.v6i2.3899 abstract the purpose of this study is to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions. the data used is secondary data in the form of ann... keywords tax; tunneling incentive for income shifting; financial reporting; intangible assets; transfer pricing jel classification m41; g12 literature and development overview transfer pricing hypothesis tax încrederea organizaţională sau dincolo de aparenţe entrepreneur: between the old and the new. portrait of romanian entrepreneur maria irina trofin (căs. dromereschi), technical college „anghel saligny” bacău, românia abstract difficult to capture in precise strokes of a definition of entrepreneur is not only linguistic but also chronological connotations. entrepreneur or business leader or intraprenor, designer or manager, are all "hats" of entrepreneurship or a mood that is creating new business at risk pressure to obtain the expected profit. this explains the need to recognize such a character profile, characteristics and mode of action creates situations that they face. amplification of entrepreneurship and thus increase the number of people who create their own business, own business have as motivators: independent lifestyle, consider entrepreneurs as heroes, demographics, increasing share of services, new technologies, cultivating entrepreneurship, development of the internet and globalization. the transformation of a person into an entrepreneur is influenced by four variables: the situation, psychological, sociological and economic. these are all plans that are designed impregnated cultural entrepreneur personality in which it evolves and you need entrepreneur must assume. in romania, entrepreneurship even encouraged, financed and newer educated, is just beginning. who is romanian entrepreneurs who are its features and are accomplishments are some of his recent studies and research findings at the last minute. to what extent can help individual entrepreneur and social welfare are some of the questions answered theoretically predictable. practically answer is incomplete. keywords entrepreneur, entrepreneurship, entrepreneur romanian. cod jel: l26, m14. chronology concepts of entrepreneur and entrepreneurship in economic literature it is argued in the literature that the entrepreneur is a key factor in making the pace and direction of change, as few other businesses can do. the term was originally used by the contractor cantillon in the first half of the nineteenth century. it provides the first attempt to explore the entrepreneurial function in the economy. entrepreneur's success lies in the ability to perceive and predict actions and reactions peers better than they can provide for his. the unique feature of cantillon's entrepreneur is foresight and confidence to act under uncertainty (casson, 1982). cantillon's major contribution lies in the fact that he emphasized the existence of a third category of individuals than owners and workers. he gave a name to these people who are not involved in the production process and their contribution in terms of creating wealth is unobservable and intangible: entrepreneurs. he went on to give a systematic exposition of what distinguishes function entrepreneurial behavior, showing that the contractor is initiating a project or activity is significant. jean baptiste say the entrepreneur as a rare phenomenon that is able to coordinate and combine factors of production. say's contribution in the wider area of business studies derive from associating entrepreneurship with the function of combining inputs in a production process. thus, the main function of the entrepreneur is the central processing unit which receives information from a variety of sources and the production decisions. say argues that "the contractor shall not be rich because they can work with borrowed capital, but must be at least creditworthy and have a reputation for intelligence, prudence, regularity and probity ... (must have) a combination of moral qualities not often found together: judgment, perseverance and knowledge of the world. "(say, 1964 (1803), p.285). being a long period in the shadows, the entrepreneur has returned to the main character of economic inquiry during the twentieth century. frederick barnard hawley tried to integrate contractor (identified by the developer) in the classical theory. hawley's choice regarding terminology, calling its construction theoretical "risk theory of profit" and instead use the term entrepreneur entrepreneur, could explain the tendency to ignore the post-knight by economists. hawley motivatorul and conceptualize the entrepreneur as the bearer of uncertainty that will decide what will happen, how much and by what method to achieve their goals (hawley, 1907). schumpeter risktaking entrepreneur emerges: the latter is a function of the banking sector which capitalist or entrepreneur borrows money. instead, the entrepreneur is defined as innovative individuals who introduce new combinations of factors of production. he argues that the essence of the entrepreneur lies in the perception and exploitation of new business opportunities ... always has to do with the approach of other uses of natural resources in that they are stolen from their traditional use and subject to new combinations (schumpeter, 1928). schumpeter goes on to identify five types of innovation: the introduction of a new good, the introduction of new production methods, opening a new market, the conquest of a new source of raw materials, creating a new type of industrial organization. therefore anyone performing any of these functions either independent businessman or manager of a larger organization, is an entrepreneur. 1949 schumpeter goes on to differentiate between entrepreneurship and entrepreneurial function. distancing himself from labour's tripartite division of say, schumpeter identifies a class division between invention and entrepreneurship: the latter being characteristic of businesses that make things work (say's application) while first being of those employed in production of new ideas (scientific) (say's abstract work). ideas generated by the inventors themselves are not of any importance for economic activity (schumpeter uses the example of the ancient greeks who produced all that is needed to create a steam engine but built itself one), as not all innovations should incorporate something that is new in scientifically (schumpeter, 1947). even though in some cases the invention and entrepreneurship are combined by the same trader, however, they remain distinct analytical categories. similarly, schumpeter provides a clear distinction between management and entrepreneurship. the first is perceived to be a simple matter essentially a management problem if combinations that took place in the past should simply be subject to customary adjustments that generates business experience before conditions change under the influence of external factors [...] but if we believe in say's definition where combinations that are not inherited from the past must be set again, then the situation is different and we really have before us a distinct function (schumpeter, 1949). distinguishing feature of the invention, entrepreneurship and management schumpeter emphasizes the importance of the former. he argues that the entrepreneur changes the rules of the game, combining resources in new ways and thus establishes a new production function (martinelli, 1994). he explores the revolutionary character of the entrepreneur with the same admiration you show proletariat marx. in fact, schumpeter is responsible for the design entrepreneur as a heroic figure of capitalist development. so, talented entrepreneurs are rare. it's not a surprise that they are now in the generalized and chronic economic crisis the solution considered as critical points of the economic cycle and the medium and long term. max weber's work on entrepreneurship is part of wider research that explores the origins of economic knowledge and specific content of religious belief. weber (1922) distinguishes between capitalist and entrepreneur historical predecessors. capitalist entrepreneur is involved in a rational and systematic process of economic gain, his calculations are measured in relation to the economic criteria, earn their trust through honesty and subordinated to the interests of capital accumulation consumption. rationalize every aspect of the entrepreneurial process (defined as instrumental rationality) is what characterizes the capitalist entrepreneur. to answer the question: what motivates the capitalist entrepreneur, weber indicates the importance of religious creditors. it identifies the protestant ethic as a key factor in motivating the capitalist entrepreneur: it emphasizes the intrinsic value of labor. in this context, the work of an individual is regarded as a calling in assigning literal concept of vocation. moreover, the protestant ethic financial reward for their work as an expression of divine blessing. at the same time, however, demanded austerity protestant values and accumulation of productive assets (weber, 1922). momentum transformation protestant ethic motivated by true entrepreneurial action is due to the development of experimental science, rational authority from roman law and government administrations rational (kilby, 1971). austrian school offers one of the most consistent and suggestive theoretical construction entrepreneurial studies. radical subjectivism, methodological individualism and motivation of human action were used persuasively to strengthen our understanding of the function of entrepreneurs in market processes. continuity (mises-hayek-illustrated by kirzner) and the development of ideas through generations of austrian school led to the growing importance of this topic. a defining attribute of entrepreneurial action is that it has a purpose, that action is put into operation and transformed into useful results, aiming to achieve certain goals and objectives is the ego meaningful response to the stimulus and its environmental conditions. (mises, 1966). mises's entrepreneur is a complex creature undoubtedly an individual both in terms of goals behind, but also in terms of the structure of the mind and its experiences. led by an inherent dissatisfaction about its ability to meet its goals, the contractor has the ability to imagine new combinations of meaning in the face of uncertainty. thus, the actions of entrepreneurs are full of purpose and rational. actions may be wrong but are derived rationally. in fact, erroneous actions of an entrepreneur are market opportunities for another. this conceptualization is profoundly different, less heroic but more inclusive than that offered by schumpeter making us look beyond innovation entrepreneurship. at the same time, however, requires a set of alternative restrictions, excluding any investigation of change instigated by the contractor. indeed mises's entrepreneur is responsive to the challenges offered by specific situations. moreover, the impact of the external environment in particular institutional setting has on entrepreneurial activities, recognized, remains unexplored way since knowledge of a collective structures by analyzing individual actions (mises, 1966). hayek focuses on the concepts of information and knowledge, rather than on entrepreneurial decision making problem. he starts to identify ways in which individuals involved in complex and expanding division of labor, successfully coordinate their actions when each individual has only local knowledge and idiocratică (foss, 1994). thus, a key element in hayek's discussion about the process of learning was what he saw as a problem of the division of knowledge (hayek, 1937), meaning that different economic agents know different things. availability information is only the first of constraints on individual decisions. ability to process information (what hayek called mental processing) offers another set of constraints. this puts considerable pressure of time, physical endurance, consciousness, mind and senses capaciăţii entrepreneurs (tansey, 2002). hayek sees the world in which there is a continuous process of discovery. entrepreneurial discovery process description shows that individuals and companies are surrounded by pre-existing theories which are interpreted in the light of events. experineţei perceptions species accumulated (knowledge) are modeled universal influence an individual's own experience. this, combined with the fact that access to information is partially located are arguments supporting the idea that entrepreneurs are key operators in acquiring information and knowledge and the search for equilibrium prices. entrepreneurs generate hypotheses tested is then confirmed or rejected. kirzner's theory is explicitly founded on the ideas developed by mises (human action) and hayek (information and knowledge). naturally alert to the potential profit oporunităţi is the defining attribute of entrepreneurs practitioners. entrepreneurial opportunities are created for earlier errors that resulted in deficits, surpluses, mis-allocated resources. entrepreneur alert, bold discovered these errors and when they were made, buying where prices are low and selling where prices are high (kirzner, 1997). earlier entrepreneurial errors combined with continuous change in taste, handy resources and technological developments mean that opportunities for entrepreneurial profit are present in each market. in this context, the process by which opportunities are observed and collected in an inherently unsafe environment is the essence of the market economy. consequently, kirzner advancing the notion of entrepreneurial discovery. the starting point of his approach is the conceptualization of hayek on the market as a process of mutual discovery continues. discovery differs from neo-classical building by bending the notification and opportunity plus the realization that something was overlooked fact already available (kirzner, 1997). thus, the entrepreneur is always engaged in a systematic scanning the market for opportunities, without knowing exactly what you are looking for. alert entrepreneurship refers to an attitude of receptivity to opportunities available but so far neglected. each finding is accompanied by a sense of surprise of what the contractor neglected aterial. mark casson develops an economic theory of the entrepreneur who is inspired by neo-classical theoretical constructions. by doing so he admits emotional significance rewards and costs of accessing information, while remaining detached from the idiosyncratic nature of early scientists (schumpeter and kirzner) on motivation contractor that are incompatible with rational action (casson 1998). novelty compared to the neo-classical assumptions begins with the recognition that individuals differ not only in taste but also in their access to information (casson 1982). minded individuals acting in similar circumstances, but with different information at their disposal, can make different decisions. this is due to the fact that information is costly, so individuals can choose to make decisions based on very limited information and partly because interpretation of the information may be different since you individuals use their own cognitive frames. (casson, 1998). it is important to emphasize that the data processing casson differ significantly different from that offered by kirzner and mises. while the latter refers to information that individuals do not know that there (hence the element of surprise), the first refers to information available known as a cost to be produced (stiglity 1994). summarizing, entrepreneurship has a different perception of the situation due to different access to information. the decision to act is up optimism and confidence that drives entrepreneurial behavior. thus, the demand for entrepreneurship (ie number and nature of entrepreneurial roles, opportunities that must be seized and exploited) is very subjective. (casson, 1993). providing entrepreneurs is governed by occupational choice. based on neo-classical models developed by lukas (1978) and kihlstrom and laffont (1979), casson suggests that the decision to become an entrepreneur is influenced, at least partially, the rewards of entrepreneurship possible about salary levels. this could be graphically represented by a neoclassical supply curve. however, casson thesis expands its position by arguing that the supply curve depends on the number of entrepreneurs capable, which in turn is determined by the distribution of wealth, education organization, social structure, degree of social mobility and the institutionalist (casson, 1982). d.h.'s approach harper, a student of mark casson, is a significant departure for radical subjectivity that extends beyond the austrian tradition and is influenced by popper's idea of increasing the level of knowledge. its starting point is the recognition that learning processes are crucial to all phenomena that economists try to explain. thus, he begins to establish a dynamic theory of entrepreneurial learning. harper entrepreneurship is defined as a profitseeking activity in order to identify and solve specific problems in complex and uncertain situations. it involves discovering and creating new frames containing goals rather than allocating certain meanings given search targets (harper, 1996, p 3). entrepreneur is an agent seeking to break the routines established and the existing range of ideas. increasing knowledge is oragnizată around a core group proposals. unit of analysis is the individual, because only individual businesses have goals, circumstances and preferences and make decisions. however individuals when faced with a problem, do not necessarily know the parameters. instead, individuals should try to gain understanding is constructed subjectively despite the fact that objective reality exists. more importantly, however, there is no test method even if someone has found the truth. thus, businesses are fallible simply by their inability to test assumptions underlying their actions. in response, individuals make tempting solutions to problems in a world of structural uncertainty, complexity and real time and learn from the feedback provided by successive decisions. however, feedback is rarely optimal or perfect. thus, while not possessing true knowledge antreprenoriii demonstrated, however, they can make rational decisions. rational decision making in this context means the assessment schemes in the light of logic and experience. in the last 25 years, research driven entrepreneurial business schools has become increasingly dominated by evolutionary approach. erik stam (2002) aimed to explore the issue of the context in which the entrepreneur operates. stam's work focuses more on individuals rather than groups. furthermore, analysis of institutional evolution and geography combined with time derived from economic geography. while recognizing the merits of entrepreneurial personality and training organization, he examines entrepreneurship as a contextual phenomenon. this allows him to perceive entrepreneurs as individuals who act within certain social and physical contexts and living in specific times and locations. the institutional analysis of his work is perceived largely in terms of theoretical lines of the new institutionalist economics of williamson and north. formal and informal insituţiile gives intsrumentele we need to unravel the maze of social relations. he emphasizes institutionalization, seen as a process that imposes constraints on entrepreneurial businesses which, in turn, have the ability to implement change in the institutional plan. analysis provides tools to explore evolutionary change within the system. it makes it possible explanation on how the forms of organization and behavior emerge and evolve in socio-economic conditions. stam adopts an essentially darwinian relating to human reflexivity and appropriate action. also, time geography is an approach in which time and space are not seen as a combination of two dimensions but as a framework for analysis. the main starting point in time geography (or "geo-historical analysis" as it is sometimes called) is that "the time, place and something happens that affects the way that happens" (stam, 2002, p 8). the approach developed by stam trying to bring unity of space, time and process. although superficially described in a short paper, it gives a suggestive research on the study of entrepreneurship. one of those issues that raise concern about the explanatory power of the argument developed by thornton and by stam is the action. more specifically, to what extent and how businesses can act independently of the context in which they operate. what are the factors and processes that facilitate timely action despite social determinism? under what circumstances is prescribed behavior or contextual entity free will? portrait of romanian entrepreneurs   gallup organization study in romania, in january 2005 made with interactive training company in bucharest (using hofstede's methodology) made up portrait of the entrepreneur, employee, manager and romanian leader in an organization. power distance index of authors called power complex says that people obey authority and not a contest, it is related emotional devotion and dependence either be negative as by hatred and counter-dependency. the other facet of this dimension is complex authority may explain the refusal by most romanians obstinenţă and unreported to respect the laws and authority, and at the same time express request of laws and rules. individualism level shows that the groups to promote their members' interests at the expense of other groups, "us" against "your" and excluded by each individual multiplication of resources. the trend observed is that the degree of individualism is increasing due to population identified by hofstede correlation between individualism and funding received by the country (increase confidence in the ability of individuals to create added value to begin to learn self-sustaining economic). romanian femininity shows that members of society seeking a collaborative environment and require support of all members of society, regardless of their contribution. the downside of this indicator shows that feminine values of society determines a lower level of competitiveness of local organizations to those in foreign markets, valuing leisure female personal values and cooperation at the expense of performance objectives. the authors identify as a possible source of the high index, orthodox religion (dominant) that gender complementarity is more inclined than women's subordination to men. hofstede notes that while the services that have high added value that can not be mechanized and requires the presence of human factor will require learning of feminine values. uncertainty avoidance index shows that the population has a high degree of anxiety about the future and safety of today prefer the uncertainty of tomorrow. anxiety level and pressure creates favorable impulse, haste and negative emotion expression without control. the authors identify historical argument and repeated foreign rule in combination with the high level of collectivism as necessary to explain the high degree of anxiety romanians. short-term orientation in romania shows an inclination to present and past (original orthodoxy in christianity and confucianism unlike practicing virtue and making efforts today to obtain results tomorrow) at the expense of investment in the uncertain future, and low saving for the future. short-term oriented societies live mainly in debt instruments. romanians will be very difficult to plan long term and will prefer the innovative trodden paths. short-term orientation is at the root of the low level of capital invested and partly explains the need for rich quick. the authors warn anachronism model "family" that entrepreneurs seem to prefer because they have not enough knowledge to create a clear structure in the long term. moreover, this model oriental favor nepotism and corruption organization to employees due to centralization of authority. persists in these patterns, entrepreneurs risk losing potentially valuable employees (autorealizării dissatisfaction expected), keep employees were "adapted" by psychological corruption (avoiding responsibilities and risky actions and praising effort contractor) or to create mechanisms internal corruption (favoritism and hiding actual performance). in the process of eu accession, the difference that worries most is complex and authority tend duplicity and dissociation between statements and actions. standardization imposed by the eu will be a good win and subsequently appreciated. certification, quality standards, rules and procedures will be refused although initially will be further treated with devotion. there are sufficient reasons why many people choose to engage in business on his own instead of employee status. most often, entrepreneurship is seen as an opportunity or as a means of subsistence in the absence of an alternative or fear of becoming unemployed in a future perspective. as opportunities are declared desire for independence and financial gain higher than for an employee. a separate category is motivated by necessity entrepreneurs who say they have found another way to earn a living. opportunity oriented improvement refers to those entrepreneurs who appreciate independence and seek to continuously improve standards. this type of motivation is most common in innovation oriented economies. entrepreneurial motivation analysis report submitted by gem 2011 shows that the share of early stage entrepreneurs are motivated by opportunities of 67.3% and twice the value recorded for early stage entrepreneurs motivated by necessity. it can be concluded that more than two-thirds of early stage entrepreneurs are motivated by opportunities. the analysis summarized in romania show changes in entrepreneurial aspirations, as follows: decreased level of expectation on the rapid growth of early stage entrepreneurial activity from 0.07% in 2007 to 0.27% in 2009 among the population aged 18-64 years back growth expectations slightly to 0.48% in 2010, a slight increase in the market for new products by 22.4% and an orientation towards internationalization level increase to 28.5% in 2010. from 1995 to present, romanian entrepreneur profile improved in terms of the ratio between men and women entrepreneurs, education, technical skill and entrepreneurial experience. from a gender perspective, almost two thirds (63.4%) of entrepreneurs who have set up a business on his own in 2008 were men. although the percentage of romanian entrepreneurs remained positive men, the difference between the number of female entrepreneurs and male entrepreneurs number in romania decreased gradually until 2008. regarding educational level, 53.9% of romanian entrepreneurs are high school and university graduates, while 1.7% of them completed only primary education level. percentage romanian entrepreneurs, graduates of secondary schools and universities experienced a rising trend since 1995. hence, the content of school curricula result of focusing on developing a culture and entrepreneurial skills to be improved in higher education, regardless of area of specialization. improving education entrepreneurs create a favorable to develop dynamic companies. romanian entrepreneurs skill level has improved in recent years, the proportion of unskilled workers who set up their own businesses decreased to one third in 2008 to two-thirds what it was in 1995. however, the level of managerial experience of the founders / managers of enterprises is still very low, only 2.4% of start-ups (startup) in 2008 were started by entrepreneurs with previous experience in managerial positions. this lack of managerial experience must be complemented by vocational training (cvt) or oriented disciplines including management / entrepreneurship education into the curriculum of technical and scientific universities, given the research conducted by ins data, which show that more than half of romanian entrepreneurs have completed higher education level. impact of financial crisis on the problems faced by entrepreneurs was passed in difficulties with access to finance. in 2008, the share of new firms without resources amounted to 77.1%, the percentage of those with problems caused by delays in payments by customers reached 49.7%, and those with limited access to bank loans reached 47.2%. however, the difference between financial difficulties and other problems become more pronounced offer: more than 20% of entrepreneurs faced difficulties related to the lack of technology, lack of access to skilled employees or raw materials. survival is the most important issue for start-ups and entrepreneurship development in romania. however, most of the new firms that survive or remain in the category of micro, or in the best case evolves as the class size small. very few of them are able to develop a medium enterprise level in a short period of time. this latter group of companies called dynamic entrepreneurial projects or, less formally, "gas", are responsible for creating the largest number of jobs, innovation and added value to the socioeconomic environment. therefore, public policies to support entrepreneurship should distinguish between traditional businesses and the potential for rapid growth and provide mechanisms for the creation and development of "gazelles", especially in less developed areas of the country. the study reveals that the entire population of firms, a relatively small segment fast growing companies provides a major part of newly created jobs along with a considerable amount of turnover. analysis results lead to the conclusion that to accelerate entrepreneurial growth, a policy should be directed at increasing productivity through entrepreneurship education and key skills qualifications which replace facilitating access to finance. based on the number of companies active in romania, as the main indicator of entrepreneurship, we can see the impact on employment and contribution to value added as comparative data with average values recorded in the european union. smes are numerical majority holding a 99.7% share of the total number of active enterprises in the economy in romania, similar proportion of eu-27. they have a significant contribution of 65.9% in total number of employees and is located very close to the average of smes in the european union (66.9%). smes in romania participates at a rate of 50.2% in gross value added in the economy, a lower percentage compared to the eu average 58.4%. according to the analysis contained in a recent european commission study, entrepreneurship education has a positive impact on entrepreneurship of the young generation, the attitude and willingness to private initiative and ultimately its role in society and the economy. entrepreneurial skills that can turn ideas into actions include: creativity, innovation, risk taking and project management ability and success. furthermore, it helps to understand a given context and assessment opportunities so determines entrepreneurship and starting a business. according to the same study, the objectives of entrepreneurship education are related to improving young people's entrepreneurial skills, creativity and self-confidence, encourage innovative startups, increasing the role of entrepreneurs in society and the economy. although entrepreneurial knowledge necessary for learning is growing, there are still a number of obstacles in the development of entrepreneurship education, especially in terms of finance and human resources. entrepreneurship education is one of the main determinants for entrepreneurship. it plays a major role in key business skills, having a positive impact on entrepreneurship of the young generation, the attitude and willingness to private initiative. romania is among the few european countries that do not yet have a national strategy for entrepreneurship education. although the past 10 years have been implemented initiatives to promote entrepreneurship education, both in the national education system as well as various training programs, actions in this direction are scattered, with no coordination and coherence between them. conclusions the contribution of entrepreneurship to increase economic performance and well-being and social cohesion can be easily evidenced by the relationship between the values of the indicators for entrepreneurship and macroeconomic outcomes. the reality of the impact of entrepreneurship on the economy and society globally recognized through studies and reports from international bodies are confirmed in romania with regional analysis. internationally, entrepreneurship is widely recognized as a generator of wealth in society and crucial factor for economic growth and job creation. supporting entrepreneurship has become a priority in recent years and is considered a solution to the crisis and stop worrying unemployment rate. in the european union, entrepreneurship is included in national programs for vocational education in most member states, but entrepreneurship is not related to certain subjects or certain professions and, therefore, should be viewed in a general approach to the strategic level of any countries. although entrepreneurial knowledge necessary for learning is growing, there are still a number of obstacles in the development of entrepreneurship education, especially in terms of finance and human resources. despite some encouraging elements, it appears that the uptake and effectiveness of entrepreneurship education in schools is still far from being fully satisfactory. bibliography 1. baumol, w.j., “entrepreneurship: productive, unproductive and destructive”,journal of political economy, volume 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(1966) human action, 3rd rev. ed., henry regnery, chicago. 36. weber, m.(1976) the protestant ethic and the spirit of capitalism. allen and urwin. london. 37. correlation analysis on entrepreneurial culture and region economy development, the sixth wuhan international conference on e-business, innovation management track, pp.2393-2398. 38. http://www.postprivatizare.ro/romana 39. comisia europeană, strategia europa 2020. 40. comisia europeană, consultation on an entrepreneurship 2020 action plan, 2012. 41. comisia europeană, study on the smes' impact on the eu labour market, com 16/01/2012 42. institutul naţional de statistică, anuarul statistic al româniei, 2011. http://ideas.repec.org/a/kap/revaec/v11y1999i1-2p5-17.html http://mises.org/th.asp%20accesat%20pe%2010/09/2011 http://mises.org/th.asp%20accesat%20pe%2010/09/2011 http://mises.org/etexts/histsetting.pdf%20accesat%20pe%206/09/2011 http://mises.org/etexts/histsetting.pdf%20accesat%20pe%206/09/2011 http://www.asiaing.com/15-great-austrian-economists.html%20accesat%20pe%2013/08/2011 http://www.asiaing.com/15-great-austrian-economists.html%20accesat%20pe%2013/08/2011 http://www.postprivatizare.ro/romana integration of mathematical models in marketing theory and practice ioana olariu,assistantprofessor phd student, university“vasile alecsandri” of bacău, romania abstract this article is a theoretical approach on the main mathematical models used in marketing practice. application of general systems theory in marketing involves setting behavior assumptions as models of various processes.these models have, on the one hand, to describe the interactions between ambiance and system factors, and, secondly, to identify causal dependencies existing in these interactions.since the models are the means by which possible solutions can be drawn consequences, they occupy a central role in the design of a system to solve a marketing problem.the model is a simplified representation which is described and conceptualized phenomena and real life situations.the purpose of a model is to facilitate understanding of the real system. models are widely used in marketing, it takes different forms that facilitate understanding the realities of marketing. keywords: mathematical model, decision, marketing system. jel code: m31 reality and abstraction in modelingprocess application of general systems theory in marketing involves setting behavior assumptions as models of various processes. these models have, on the one hand, to describe the interactions between ambiance and system factors, and, secondly, to identify causal dependencies existing in these interactions. since the models are the means by which possible solutions can be drawn consequences, they occupy a central role in the design of a system designed to solve a marketing problem. the purpose of a model is to facilitate understanding of the real system. if it is too complex, it will be difficult to understand and will facilitate the understanding of reality. on the other hand, if the model is too simple, it will be too general and will remove too much from reality. good modeling to combine the characteristics of two extremes to complete the models that synthesize and reproduce the essence of real structures and processes with acceptable precision and accuracy and at the same time, can be treated with relative ease. logic models and accurate construction are useful for organizing information on events that are related to marketing activities, allowing indicate pathways and determining strategies. models are widely used in marketing, it takes different forms that facilitate understanding of the realities of marketing. conceptualization modeling includes1: (1) the perception and definition of marketing real situation, (2) identify the factors and relationships that occur in reality studied field, (3) formulate mathematical relations system, (4) solve the model by using mathematical techniques; (5) validation and model testing (6) the application of the model. building models is a scientific process consists of a logical sequence of phases. these phases are:                                                              1 demetrescu, m.c. (2000), metode de analiză în marketing, teora publishinghouse, bucharest, p. 28  observation, formulation of a theory or hypothesis, conducting a controlled experiment, measurement and analysis of the results by comparing identical parallel processes but over which operated the experimental treatment. towards scientific research, aimed mainly investigate causality, building marketing models have an additional intrinsic orientation action, pursuing the knowledge acquired in solving specific problems. modelling is based on real world situations and to recognize significant relationships between variables to get the path abstraction to representation theory.for example, a model designer can see the relationship between transport costs, the degree of satisfaction of shoppers and shopping center location, or find link between sellers and sales efforts and resulting benefits or costs of allocating funds to boost sales and achieve favorable consumer reactions. based on the identification of such links, designer model will become aware of logical conceptual relations that will enunciate clearly and succinctly. these relationships can then be quantified using data and information available, experiments or simulations. in this way we obtain a mathematical model to determine the background. after building a mathematical model, it can be applied to real data. resulting feedback provides the basis for improved modeling conceptual relations perceived by quantifying changes leading to improvement and refinement of the model. categories of models in marketing characteristics on which the models can be classified are numerous. a great first classification is dividing the tangible and abstract models. models are representations of tangible materials, models, prototypes, as in exhibitions, fairs etc. symbolic or abstractmodels areintangible. they use ideas, concepts and abstract symbols to represent objects or quantities. other classifications are based on the degree of formalization (verbal models, logical flow charts or mathematical models), the size of the degree of certainty (deterministic or probabilistic) or refer to time (static or dynamic models), or the scope of coverage (specific or general models) etc. models can be built for a variety of purposes. thus, some models are designed primarily to increase scientific knowledge. other models aimed primarily solve specific decision problems. the most important models are those aimed primarily decision-making. but the distinction between the two categories is not absolute because the decision models inevitably contribute to widening theoretical knowledge of marketing. models that provide guidance in the decision-making process, helping in solving marketing problems can be examined in the following order2: 1) taxonomicalmodels, 2) descriptive models, 3) predictive models, 4) normative models. 1.taxonomic models in their simplest form, taxonomic models classify objects, events, entities or different information according to their specific characteristics that distinguish them. taxonomic models help to simplify and improve the process of research, modeling or decision making and provide either comparing categories analyzed in order to explain the differences, nondisclosure or identification of categories in the past. such models are those that define processes using mathematical or statistical significant market segments. among the methods associated with the classification of the models, is listed the factor analysis, group analysis (sometimes called numerical taxonomy), multidimensional scaling, as well as joint analysis of the relationship of compensation relations for quantifying attitudes towards alternative products with more attributes and other techniques and processes3.also from the classification models category are marketing information systems. as marketing data are                                                              2idem, p. 36   3myers, j. g., greyesr, s.a., massy, w.f. (1979), the effectiveness of marketing’s r and d for marketing management: an assessment, journal of marketing, vol. 43, p. 17-29  collected and stored for subsequent use by enterprise management, archives organizational problems andprompt retrieval help people find the information become increasingly important. in this regard, an important concept is the information structure that is hierarchical classification, detailed information. this classification is the expression of a model that specifiesimportant attributes of each set of data, determining the relationship between attributes of several ensembles, comprising an optimal information structure and data attributes. the problem is similar to that of group buyers in significant market segments. it is a problem of modeling the data classification. the complexity of these tasks but that the assessment information is difficult to address the current processes optimization. simulations are used to assess the evaluation the characteristics of specific representations of information structures. in this respect has been proposed using the method of groupsanalysis from the multifactorialstatistics. 2. descriptive models descriptive models aim at understanding and explaining marketing phenomena, which can be theoretical or empirical, depending on the degree to which incorporates empirical data to estimate and test parameters. thus, marketing literature, theoretical models are found on consumer attitudes and market events, which details a number of assumptions regarding the ways in which consumers process information and make decisions to buy. some of these models have been made in the estimates and empirical verification. other consumption models used to explain differences in the structure of consumption expenditure and by comparing different groups of families from a sample.many of these models are mathematical in nature, their parameters are estimated and tested methods of correlation and regression, analysis of variance and analysis of multiple discriminant. descriptive models provide detailed and accurate representation of larger systems. the model can indicate areas where it is necessary to get some data and this information can guide the search towards experimental research or statistical studies. explicit nature of a descriptive model provides a basis for coexistence of divergent views on the nature of the wider system. all these uses of descriptive model are related to improving problem solving because they lead to a better definition, specification and understanding of a problem. 3. predictive models predictive models aim at predicting the future behavior of the system in future events. in marketing they are intended for operational purposes, namely to provide direct input into the decision making process. thus predictive models differ from them descriptive, aiming to enhance knowledge and develop scientific research. a descriptive model can simply be predictive forecasting model parameters and inputs and subsequent use of the model to obtain an estimate of the system. predictive models generate predictions that are necessary for planning and controlling marketing efforts of the company. prediction models can be classified into pure prediction or extrapolation and structural.extrapolationmodels. purely predictive models or extrapolation are based on timebehavior marketing processes and disregard the controllable variables. one such commonly used model is that of forecasting sales.these consist forecasts of weighting different data sets on deviations between planned and actual sales. long-term forecasts for the trend in the use forms or take into account a number of independent variables such as population, household income, etc., which in turn can be predicted using time series methods. multiple regression is often used to estimate parameters of these models. most stochastic models of time when choosing a brand and purchase shall be made also in this class of models. such models for predicting change market structures are applying markov chains and learning curves. systemic models of structures. structural models explicitly introduce marketing factors and assess their effect. the structural model is designed to answer the question: what would happen if, for example, would have changed the price or any other marketing variable? the interaction between the model should be examined carefully and is necessary to test alternative forms of modeling4. forecasting structural models is conditional in nature, because it depends on marketing variables. these applications of predictive models provides information and raises very significant for identifying, exploring and understanding the issues of leadership and management of marketingsystem. 4. normative models in contrast to descriptive and predictive models that show how a system operates and that, as it will operate in the future, normative models serve to determine system problems that must be solved. normative mathematical models can be classified into patterns using algorithmic and enumerative optimization methods and models using heuristic methods. another criterion for the classification of normative mathematical models namely uncertainty refers to the uncertainty of forecast reveal explicit or ignoring its results. optimization models.the objective of an optimization model is to maximize or minimize a result based on decision variables or controllable and uncontrollable market variables, under certain restrictions. in practice it is usually necessary to introduce intermediate stage on the significance of each result. this operation is essential when to consider preferences among different types of results.optimization models use computer routines from which to obtain the best solution to solve the problem. and algorithmic methods are enumerated, as all acceptable alternatives are evaluated, and strictly applying the rules of a suitable algorithm leads to identifying the best alternative for crossing the decision of a finite number of steps. linear programming techniques, quadratic and integer are algorithms. linear programming determines maximizing a linear function of several variables decision in terms of restrictions on the values of variables. quadratic programming or the whole number is applied in cases where the objective function involves squares and products of decision variable values or decision variables must be integervalues.dynamic programming is an algorithm for maximizing a series of decisions over time in situations where the choice of influence strategies in a period options available or likely results in another period5. because it provides the easiest way to minimize or maximize an amount to restrictions specified linear programming is widespread, especially in areas where you want to cut spending. with this method may be calculated best plan for achieving stated objectives, in situations where flights are limited. in the areas of designing a system or organization for solving marketing problems, these assumptions relate to forecasting system states and situations with which the system will face. linear programming is a process linking the two sets of projections. optimization and achieving the best response to a problem is a familiar concept for those who do mathematical calculations or who apply differential calculations to determine the rate of change of a factor depending on the modification of another factor. heuristic models. heuristic models are used when the range of admissible decision alternatives is too large, so optimization by enumeration is not possible. whereas it has to be used an organized method to search for an alternative to solve the problem, it has to resource to the use of principles that provides guidance on how to act. these principles are not conceptions of situations that a system will face, but they are straightening, guides to action, even in situations that are not anticipated in cases for which there is a formal model and analytical solution. computer programming techniques, called heuristics, using principles of action made operational, providing search directions for future computer unnoticed or unforeseen circumstances.compared with algorithms, heuristic procedures are more flexible and requires far fewer computations, but offers no guarantee of optimal decision alternative setting, but only that of determining good and satisfactory solution.                                                              4norberg, l., arthur, g., johnson, p., (1979), structureandunderstanding: someobservations on currentactivities in thefild of structural modeling, tehnologicalforecastingand social change, vol. 14, p. 278-289  5kotler, ph., (1970), operationsresearchand model building in marketing, handbook of modern marketing, mcgraw hill, ch. 3, p. 43-61  conclusions logic models and accurate construction are useful for organizing information on events that are related to marketing activities, allowing indicate pathways and determining strategies. construction of a model is subordinated to a practical purpose6. this may require the development of forecasts of future events. sometimes these predictions are repeated, each time with other inputs to the model. in principle, a total system designed to recurring problems will include several models of operational research: selecting the type of problem and, as such, the type of model to be chosen will be determined partly by the nature of the system, depth of the problem of leaving research system, the mathematical and methodological knowledge and experience, training and guidance to the team of analysts. bibliography 1. ackoff, r.l.; sasieni, m.w. (1975), bazele cercetării operaţionale, tehnicapublishinghouse, bucharest 2. bălan, c. (2004), marketing – aspecte conceptuale şi operaţionale, ase publishinghouse, bucharest 3. cătoiu, i. (2004), știința și arta modelării în marketing – dimensiuni semnificative, in marketing, aspecte conceptuale și operaționale, ase publishinghouse, bucharest 4. demetrescu, m.c., (1971), metode cantitative în marketing, scientificpublishinghouse, bucharest 5. demetrescu, m.c. (2000), metode de analiză în marketing, teorapublishinghouse, bucharest 6. dumitrescu, m.a.; niculescu, c. (2001), teoria deciziei şi cercetare operaţională, niculescupublishinghouse, bucharest 7. kotler, ph. (1988), marketing management, prenticehall inc. 8. kotler, ph., (1970), operationsresearchand model building in marketing, handbook of modern marketing, mcgraw hill 9. langhoff, p. (1965), the setting: some nonmetric observations, in “models, measurementand marketing”, prenticehall inc. 10. myers, j. g., greyesr, s.a., massy, w.f. (1979), the effectiveness of marketing’s r and d for marketing management: an assessment, journal of marketing, vol. 43                                                              6 demetrescu, m.c. (2000), metode de analiză în marketing, teorapublishinghouse, bucharest, p. 36  microsoft word olariu ioana 2 engl. fmcg companies specific distribution channels teaching assistant ioana barin olariu, university “vasile alecsandri” of bacau abstract distribution includes all activities undertaken by the producer, alone or in cooperation, since the end of the final finished products or services until they are in possession of consumers. the distribution consists of the following major components: distribution channels or marketing channels, which together form a distribution network; logistics o rphysical distribution. in order to effective achieve, distribution of goods requires an amount of activities and operational processes related to transit of goods from producer to consumer, the best conditions, using existing distribution channels and logistics system. one of the essential functions of a distribution is performing acts of sale, through which, with the actual movement of goods, their change of ownership takes place, that the successive transfer of ownership from producer to consumer. this is an itinerary in the economic cycle of goods, called the distribution channel. keywords distribution channel, direct distribution, indirect distribution, outlets classification. intoduction distribution in its general meaning is the physical movement of stock from the place of manufacture to retailer and then in consumer possession. distribution is divided in two phases: distribution on the client store; distribution as trade marketing element. distribution is vital to the success of fmcg companies. ensuring that they deliver to customers their brands in the correct amount, the place and right time, in good condition and at a competitive price, is still a challenge for the trade marketing and distribution companies department. also, the distribution is important for business partners, including independent distributors, the relationship with them based on the principle of mutual profit. fmcg companies have three objectives in terms of distribution: brands’ availability – final consumers can buy the products only if those are on the shelves. the right brands should be in the right outlet at the right time. brands’ disponibility should reflect the customers profile from each area. product’s quality – companies must ensure that the consumers have the best products in terms of freshness, appearance package and quality. effective distribution of price viewpoint making the availability and quality of products in the most effective, has an important role in efficient distribution. a better distribution helps reduce costs, bad investments in too much stocks of products, increases profits and improves communication for each person involved in the distribution. 77 studies and scientific researches ‐ economic edition, no. 14, 2009  1. direct distribution or direct delivery to outlets – in this case, the companies control goods distribution directly to retailers or through exclusive distributors. fig.1. direct distribution direct distribution offers the following mutual benefits: a simple and direct distribution line; a constant bilateral communication to and from retailers. being simple, it reduces the amount of goods that passes through several links and maintains product appearance. making direct distribution to retailers allow to all those in the supply chain to interact directly. 2. indirect distribution – it involves an intermediary which delivers the products to retailer. fmcg companies don’t control all aspects of brands distribution. indirect distribution occurs when it exists the control of the entire supply chain; the control passes to cash & carry wholesaler or retailer so that products are available at the retailer. fig.2. indirect distribution fmcg company exclusive distributor retailers distributors fmcg company retailers wholesaler cash & carry 78 studies and scientific researches ‐ economic edition, no. 14, 2009  in certain markets, these intermediaries are more specialized. they are focusing their efforts on one particular type of trade channel. a trade channel groups its clients that have similar characteristics, such as: the outlet type; the range of products; the pricing policy; the consumers type; the objectives and strategies. 3. types of distribution channels similar clients must be grouped into trade channels to allow the specialization of the companies’ resources and to better understand clients’ business who fit a certain type of trade channel: grocery outlets; convenience outlets; horeca outlets. 3.1. grocery classification: there are diverse range of goods. in general, buyers come with a list of products, that they buy or search for another person. 3.1.1. discounter: the main category of products is represented by “dry” products (canned, sugar, flour, etc.); self-service; reduced range of products: 1-2 brands/ products area; functional sets, non-aesthetic; located in urban areas/residential; trade surface ranged from 300 to 2.500 m² 3.1.2. hypermarket: self-service, with at least 10 pay-desks; key categories are fast moving consumer goods; an agressive pricing strategy; located in the coterminous area of cities; trade surface is larger than 2.500 m². 3.1.3. general store counter servicing, with self-service possibility; less than 5 pay-desks; the main categories are fast moving consumer goods; usually located in residential areas; trade surface less than 1.500 m²; the space is reduced, and the shelves are less organized. 3.1.4. supermarket self-service, with at least 5 pay-desks; the basic categories are composed of fresh and dry products; wide range of products; located in urban areas, usually in residential areas; trade surface ranged from 300 to 2.500 m²; well organized by groups of goods arranged on shelves. 79 studies and scientific researches ‐ economic edition, no. 14, 2009  3.2. convenience classification: it offers specific advantages, such as easily accessible location or an extensive working time table. it sells various product categories, but relatively few types. 3.2.1. c-store key categories are the products fated to immediate consumption/needs chips, soft drinks, newspapers, tobacco, sweets; products are available at a cash-register or on self-service; often with a long working time table; the prices alters, but tend to be above average level; located near homes, in residential areas; reduced trade surface, in general – 300 m². 3.2.2. kiosk key categories are sweets, chips, soft drinks, tobacco, newspapers, gifts; variable surface, generally smaller than 50 m²; they can work as franchise in the hotels, which can affect the merchandising; the lack of space may restrict the merchandising opportunities; the key outlets are located in the pedestrian areas, stations and other high traffic areas. 3.2.3 gas stations • the main purpose is selling fuels, the majority sells even food, sweets, tobacco, newspapers, etc.; • it often works in a system similar to c-store; • food products are generally sold at high prices; • key locations are on the main roads, in both areas, urban and rural; • mostly self-service to the cash register. 3.2.4. street vendor: • it doesn’t have a permanent location; • it sales products for immediate consumption. 3.3. horeca classification: are places where the consumer pays for the drink, food, accomodation or entertainment, being liable to an impulse consumption. 3.3.1. bar the main categories consist in alcoholic and non-alcoholic immediate consumption; the sale is performing either the counter or by a waiter, on which are often adding tobacco products; located in trade or residential areas, both urban and rural; a reduced trade surface. 3.3.2. recreational provides recreation and entertainments services; the consumer visits these places for relaxation and recreation; located in urban and trade areas. resorts may be outside the cities, in rural area or near beaches. 3.3.3. disco these places begin their activity at dusk, with longer working time table; 80 studies and scientific researches ‐ economic edition, no. 14, 2009  the main attraction is the music and dance; are marketed alcoholic beverages and tobacco products; merchandising achievements are usually personalized. 3.3.4. restaurant provides a wide range of products that are cooked for immediate consumption; the consumer spends a long time in this location; it is located in the trade areas/residential (urban/rural); it sells a limited range of products, mostly premium brands. conclusion fmcg companies activate in an environment of increasing complexity of products, rapid technological development and increasing economic, social and political pressures. strategically oriented companies realize that the key element of long-term success is increasing interdependence. these proactive companies understand that strong long-term profitability can be achieved by creating and promoting positive relationships, mutual benefit between members of distribution channel. bibliography 1. balaure, virgil ( coordinator ); adăscăliţei, virgil; bălan, carmen; boboc, ştefan; cătoiu, iacob; olteanu, valerică; pop, nicolae alexandru; teodorescu, nicolae (2000 şi 2002), marketing , publishing house uranus, bucureşti 2. blythe, jim (2005), managementul vânzărilor şi al clienţilor cheie, publishing house codecs, bucureşti 3. dwyer, f.r.; tanner, j.f., (2006), business marketing, mcgrew-hill, new-york, 3rd edition 4. gattorna, j.l., (1999), managementul logisticii si distributiei, publishing house teora, bucuresti 5. kotler, philip (1997), managementul marketingului , publishing house, bucureşti 6. www.magazinulprogresiv.ro 81 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 54 the influence of retail store image and individual factors on consumer buying decisions ioana olariu „vasile alecsandri” university of bacău, faculty of economic sciences ioana_barin_olariu@yahoo.com abstract in this article is examined the relationship between store image, individual factors and consumer purchase behavior. first link is made between consumer attitudes and his buying decisions. second, the relationship between store image and consumer purchase behavior is mediated by attributes of retailer that include merchandising, store atmosphere, in-store service, accessibility, reputation, promotion, facilities and post-transaction service. this article is a theoretical approach on what is known about how people decide whether or not to buy something and then how they decide which item or items to buy and what retailer is the best choice. in the process of doing this, we will discover that the process of making a buying decision is not nearly as simply as it may seem. a good understanding about how consumers make buying decisions is very important in developing effective marketing plans. marketers can change the design of the store interior, aisle layout, carpet and wall textures, scents, colors, shapes, and sounds experienced by the customers. thus store image is a result of many variables which can be manipulated by the retailer to influence consumer mood and, subsequently, the buyer's behavior. keywords retailer; store image; attitudes; attributes; consumer; purchase behavior jel classification m41 introduction a great many purchases are not based as much on what people are like as they are on simply what people want. in other words, people with different characteristics often like the exact same things. many kind of people want some things for a variety of reasons that are not directly related to their own personal characteristics. good marketing planners do not take anything for granted when it comes to understanding their customers’ motives, and product preferences, buying decision making. they want to know as much as possible, since any small insight can sometimes mean the difference between success and failure. this means that market planners need to understand the basic principles of consumer behavior in order to get an in-depth understanding of how people go about making a purchase. making a purchase people make buying decisions in many different ways. one reason is because they buy many different types of products and services, ranging from very cheap and simple to very expensive and complex. another reason is that there are sometimes a the influence of retail store image and individual factors on consumer buying decisions 55 great many factors which might affect any particular purchase. still another reason is that different people make their buying decisions in different ways, according to their own personalities and past experiences. on the other hand, some observers feel that most people make hardly any buying decisions at all. they argue that most purchases are so simple that they do not involve much careful thought – they take place almost automatically (olshavsky and granbois, 1979). this is especially true for lower-priced items that most people buy frequently with hardly any thought, but it could also be true for many higher-priced items that do not require much effort or evaluation. at the other extreme are products or services that are very important to people, usually because they cost a great deal of money or have strong social implications. a purchase involves a complex buying decision when it includes a systematic search for information, and a careful evaluation of several factors. motivational forces affecting purchase behavior every buying decision starts with a motive. the consumer may have become aware of this motive at any time before actual purchase. motives are ”all those inner striving conditions variously described as wishes, desires, needs, drives and the like. formally, then, a motive is an inner state that energizes, activates or moves, and that directs or channels behavior toward goals” (berelson and steiner, 1964). the marketing planner needs to know what the basic forces are that motivate consumers and which motives are most important for each of the company’s products or services. consumer attitudes personal motives lead to a need recognition. in turn, this need starts a person through a buying decision process. the outcome of this process is a set of attitudes toward each product or brand that is evaluated. attitudes are defined as ”a person’s enduring evaluations, feelings, or action tendencies toward some object or idea” (krech, crutchfield and ballachey, 1962). this definition shows that attitudes encompass all three major components of the human mind: evaluations (cognitive: thought processes), feelings (affective: liking or disliking) and action tendencies (conative: motivations). they reflect a person’s overall inclinations toward a product or service offering. once attitudes are formed, they tend to remain relatively stable over time for most types of products. this makes it important for a product to make a favorable impression on the buyer. these topics are particularly important to marketing planners, who need to develop and maintain favorable attitudes among consumers toward the company’s products or services. how are attitudes formed? it is now generally agreed that people’s attitudes toward a product or brand are based on their evaluations of the attributes of that product, for example, quality, durability, styling, sweetness, and thickness. in this view, attitudes are formed by evaluating products or brands on the basis of their attributes. the important questions are:  how do people decide which attributes of a product should be considered?  how do they decide how important each attribute is to them?  how do they evaluate each brand on each attribute?  how do they combine these attribute evaluations into an overall evaluation of each product, so they can choose the one that is best for them? olariu 56 for the more complicated decisions many people consider the importance of all attributes, together with the amount of each attribute each product possesses, and then combine these evaluations to arrive at an overall evaluation of each product. and for very complex buying decisions, they sometimes use a combination of these approaches (punk and staelin, 1983, lutz, 1981). types of attributes there are several ways in which products can be described in terms of their attributes. it is useful to think of three major types of product or service attributes (myers and shocker, 1981): benefits represent what the product will do for the user, what needs or objectives it helps meet. product characteristics are the physical properties of the product. imagery refers to how the product represents the user to other people and tells what type of person the user is. all these types of attributes are important to at least some extent in nearly every consumer product or service. attitudes and behavior behind all this interest in attitudes lies one very important assumption – that attitudes lead directly to behavior. the market planner feels that if the company can create favorable attitudes toward its product or service, these attitudes will sooner or later be reflected in purchase of its brand. each market planner needs to determine to what extent favorable attitudes lead directly to purchase for each company’s product and to what extent other factors are also important. strategic marketing plans designed to improve people’s attitudes toward a product will emphasize different things than those designed to accomplish other objectives, such as simply making people aware that the product exists, telling them how and where to get it, or opening up many new distribution outlets so they can more easily obtain the item. consumer behavior and store image the store image many specialists have focused their attention and efforts to operationalize a fundamental concept that characterizes consumer behavior store image. this can be defined as a set of attitudes formed through evaluation by the consumer, of the most important attributes which characterize the store. jay d. lindquist, summarizing the views of 26 researchers in literature, managed to set up a profile of store image, given by the following new attributes rated as important: store offer. for its characterization are considered five attributes: quality, diversity of product range, fashion, guarantees, and price. services (before, during and after sales) to characterize them, are taken into account: diversity of services in general, services provided by the sales staff, the presence of self-service, the easiness of returning bought goods, the quality of service delivery, credit policies. customer characterized by the following attributes: social class to which he belongs, matching self-image and store staff. physical features, including: the existence of elevators, lighting, air conditioning, toilets existence, interior architecture, carpets, equipment for products display. the level of access that is characterized by three factors: the degree of access, location and parking possibilities. the influence of retail store image and individual factors on consumer buying decisions 57 ambiance inside the store, namely the extent which meets the visitors’ expectations. post transaction satisfaction generated by buying the product. promotion, which groups: sales promotion, advertising, products display, promotional stamps, symbols, colors etc. institutional factors, including store design, store reputation and confidence they enjoy among consumers. shoppers and store image g.p. stone proposed a classification of retail buyers according to their attitude towards stores. following research undertaken, this author has identified four types of buyers: economic buyer, characterized in that it has formed his strong attitudes on prices, quality and supply sorts, being oriented towards efficient buying; custom buyer who feels the need to develop strong personal relationships with shop workers to gain special recognition on their part; ethical buyer who has formed strong attitudes towards small independent traders and unfavorable attitudes regarding retail chains; listless buyer who considers shopping boring and a waste of time. the decision making process of choosing a store as is well known in the theory of consumer behavior, a central place in most of the models created by specialists is occupied by explaining the buying decision process of a product or service. in retail marketing, the product, in its broadest sense, it is a store, restaurant or other retail unit. kent b. monroe and joseph b. guiltinam developed a model for choosing a store that is based on directional flows of influence over the buyer in the situation of taking a decision. the backbone of the model consists of four sections of baseline variables: reviews and general prospecting activities and information; strategies for substantiating the budget and planning the shopping; the importance of store attributes in process of informing the purchaser and perception of store attributes that influence its choice. the two specialists have designed a preliminary model, suggesting the direction and meaning of each influence for all considered variables. essentially, the model is dependent by the fundamental variable that is the buyer attitude towards the store in question. in its turn, it is considered to be dependent by the importance of store attributes and how they are perceived by the buyer, which is the global image. information and prospecting activities are estimated to have a direct influence on the importance of store attributes and on how they are perceived by the buyer. when the product of the last two is the largest of all considered variants, the retailer will be selected. the starting point of the model is to consider the characteristics of the buyer (economic, demographic, personality, lifestyle, etc.) and describe how they influence his general views and activities related to the purchase. in their turn, these views and activities lead to the formation of evaluation criteria used by the buyer in selecting the stores where they will go shopping. this evaluation is based on the retailer's most important attributes, such as location, assortment structure, level of prices, promotional means and provided services. retailers can influence the evaluation of their stores, developing appropriate strategies in the field of advertising, aesthetics and overall appearance, etc. buyer’s characteristics will certainly affect how it sorts the store attributes and will therefore be influenced the perception on store image (perception on the attributes and olariu 58 the set of attitudes towards the shop). the perceived images on the store will influence what store will be chosen and what types of products will be bought. if the buyer is satisfied with that retailer which through its offer and services, amounted to his expectations, the perceived positive image will be reinforced by a feedback from purchase to opinions and attitudes. it will maintain or even increase the likelihood that in the future the buyer will choose the same store. when the buyer has had several positive experiences in relation to a particular store, he will gradually adopt a routine behavior, eliminating or simplifying some phases usually present in a buying decision process. in other words, if the buyer is satisfied with the chosen store, he will not go through all stages of the purchase decision unless it changes some important factors. favorite stores stores are chosen for their image that is the general impression on product range, quality, value and services provided by the retailer. selection and store design have become key elements of successful marketing. highlights the availability of data regarding products can influence consumer preferences; if the information is available and easy to understand, consumers will be more willing to attend the store. information should be available in the appropriate form. music has a considerable contribution to the atmosphere of the store. slow music determines spending more time shopping and an increase of the amount spent by the client, compared with fast music. music at a strong volume reduces time dedicated to purchases, but doesn’t reduces the spent amount. the choice of music must be adapted to the store type. music can be used to manipulate the perception on store image. store configuration can be changed so customers can move easily through the store and come into contact with certain products; for example placing districts bakery near the store entrances to produce pleasant odors and boosting the purchasing of the products near the cash registers. articles placed at eye level are sold two times better than those at lower levels. although the effects varies, the colors of the interior and exterior must be chosen carefully. overall color scheme contributes to the store image. other important factors that influence the preferences on retailers are cleanliness, loaded shelves, product range, number of cash registers, sellers’ kindness, sharing disabled, aisle layout, parking, emergency exits, free bags and organic products. conclusions to buy is to express oneself under the eyes of others, and thus expose oneself to being judged. people’s buying decisions are often more difficult to understand than they appear to be. the various types of products and services can be classified as to whether they are high or low in involvement or importance for most people and whether they require a complex buying decision or are bought mostly by habit. complex buying decisions require a search for information and the processing of this information to arrive at evaluations for each alternative product or brand that might be bought. every purchase starts with a motive of some kind. however, the same motive can usually be satisfied by several different types of products, and conversely each product can often satisfy several different motives. buyers are motivated by the pleasure felt at buying and by the practicality of products; stores must approach both aspects of the customer purchase experience. the influence of retail store image and individual factors on consumer buying decisions 59 buyers prefer stores that have a certain image and are influenced by the physical aspects of the environment such configuration, interior design, music, smells and the form in which the information is presented. encouraging loyalty to a store greatly boosts the sales. references arms, b. (2008), marketingul local, editura all, bucurești. berelson, b., steiner, g.a. (1964), human behavior: an inventory of scientific findings, harcourt, brace and world, new york. blythe, j. (2005), managementul vânzărilor şi al clienţilor cheie, editura codecs, bucureşti. cave, s. (2005), comportamentul consumatorului, grupul editorial cosmos viking pinguin, bucurești. cătoiu, i., teodorescu, n. (2004), comportamentul consumatorului, editura uranus, bucurești. datculescu, p. (2006), cercetarea de marketing – cum pătrunzi în mintea consumatorului, cum măsori și cum analizezi informația, editura brandbuilders grup, bucurești. hammond, r. (2007), smart retail: magazinul tău – un fenomen al vânzărilor, editura all educational, bucurești. krech, d., crutchfield, r.s., ballachey, e.l., (1962), individual in society, mcgrawhill, new york. myers, j.h., (1986), marketing, mcgraw-hill, inc.. myers, j.h., shocker, a.d. 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 24 circular economy in romania within european context marcela-cornelia danu ”vasile alecsandri” university of bacău marceladanu@ub.ro valentin nedeff ”vasile alecsandri” university of bacău vnedeff@ub.ro abstract in the present paper we have approached some conceptual and coordinated marks of the societal reality connected to the circular economy. generated by „the limits of certainty” regarding the future of the world business, the operationalization of the circular economy has become a part of the eu strategies and started the various stages of implementation as an active process in all countries. we have highlighted the opportunities and the risks related to the circular economy, the european dimension and, in particular, the romanian one of this process, the role of the triad: consumer-company-natural environment, while implementing the circular economy. circular economy is both a new approach of the societal life, based on changing the mentalities of the individuals having the role of decision makers at the company level and public administration and the decision makers – consumers, as well as a policy meant to be made operational across all entities: governmental, entrepreneurial, individually – human. keywords circular economy; resources; waste; protection of the environment; sustainable development jel classification o13; o18; o29; q01; q50; q56 introduction the circular economy is a system of production and consumption which produces minimal losses. if until now, the economy has been operating in accordance with the pattern “purchasing-production-disposal” (ec, 2015); the transition to the circular economy reshapes the pattern into „purchasing – production – reuse – repair – reconditioning recycling.” according to this meaning, „wastes can turn into resources.” this idea started to take shape when the industrial revolution „gave a new theme to solve” to the society: management of waste (giarini, stahel, 1996). the level of concentration and accumulation of wastes has increased as the tendency of concentration and specialization of production has increased, too. similarly, the process of the transformation of these reusable by-products or even totally new products has started to develop, too. in addition to the industrial wastes, the wastes produced by the consumer, as a result of increasing consumption, have gradually become evidence of the developed countries and, at the same time, risks which these could not avoid, mitigate or treat immediately. risks and opportunities in the implementation of circular economy in europe at present, at the eu level, each citizen uses, on average, 15 tons of materials, every year, generating more than 4.5 tons of wastes. in this context the role of the relational danu, nedeff 25 system „consumer-company” becomes all the more important; the consumer behavior and their attitude towards the environment should be amended; the companies will have to change their policies in general and their marketing policy in particular, having in view the attracted resources throughout the entire circuit (andersen, 2007). with the support of the modified consumer behavior, new consumption patterns, implicitly, and correlated; the companies will be able to create new markets or new market segments. more than that, it is also possible to create new opportunities and/or new jobs 13 (ec, 2010), (prothero, dobscha, 2011). the europe 2020 „a strategy for smart, sustainable and inclusive growth” aims a „the sustainable growth and job creation through a better use of the resources.” having in view the system of relations in the world, there should be a global approach of circular economy. in this respect, eu leaders have established a plan of measures which includes ideas such as (ec, 2015): ranking of waste and prioritizing of their reduction and recycling gradual elimination of toxic substances with very high risk projects supporting related to the circular economy by using european funds stimulation of products and services demand that are most eco-friendly as a result of the initiatives of public authorities to purchase eco goods and services encouraging the companies to choose the ecological products eu directive on eco-design of products which are related to energy, encouraging thus the companies to launch products with a low environment impact. the european resource efficiency platform (erep) has requested the eu to establish a target meant to ensure the increasing of the resource productivity by more than 30% by 2030. the implementation of the circular economy is an objective requested by the stage of the economic and social development and by the potential of the resources our planet holds as always. in the process of the circular economy implementation, both opportunities and potential risks have been identified (ec, 2015). the main risks faced by business decision makers within the application procedure of the circular economy are: lack of interest of companies in undertaking the promotion of circular economy lack of interest of consumers to accept the change of this type lack of knowledge required in order to apply the components specific to circular economy production infrastructure that is inadequate to new requirements business models and production systems that are both unsuitable inappropriate technology small investment in the field low demand for sustainable goods and services. the opportunities in the implementation of the circular economy are: net savings obtained by companies, at the eu level, meaning 604 billion euros or 8% of their annual turnover reduction in the total annual emission of greenhouse gases by 2-4% gdp growth with 1% up to 2030 an increase in the number of jobs of about 2 million at the eu level favorable perception of the population regarding the valences of the circular economy (euro barometer surveys on trends), such as: 86%: positive impact on the quality of life 80%: favorable effects on economic growth 78%: opportunities for employment 51%: recycling at home has a positive effect on efficiency in the use of resources 50%: recycling of waste in industry and construction has a positive effect on efficiency in the use of resources. circular economy in romania within european context 26 starting from the words of the authors giarini and stahel (giarini, stahel, 1996), that is, „each product ends up becoming waste in the long term” decision makers will have to take into account the life cycle of the products which are reused, repaired, refurbished, recycled, their lifetime and possible barriers to these activities: economic entropy, that is, very high full recycling costs, or absolute physical entropy, respectively physical impossibility of full recycling. however, in the last few years developments in technical progress and scientific research have changed many of the physical and technical-functional coordinates of the products, as well as the possibility of their reintegration into the economic circuit. considerations relating to the protection of the environment in europe and romania the national decision makers’ concern for the improvement of the relation with the natural environment and, on this basis, the efficiency of the economic activities by entering the circular economy within the production systems, is expressed by the economic and environmental indicators such as: environmental protection expenditure per capita and environmental protection expenditure (% of gdp), generated waste (kg), treatment of waste (kg), etc. at the european union level, the evolution of the environmental protection expenditure (fig. 1) reveals a european average of 167.79 euros per capita in the year 2008, and a slight increase, that is, 172.65 euros per capita in the year 2012. the luxembourg (736.28 euros per capita in 2012), the united kingdom, denmark, malta, belgium and the non-eu countries (i.e. norway, with very high levels and growing along the 5 years, reaching thus to 552.15 euros per capita in the year 2012) exceed the eu average registered in the period 2008-2012. in the same way as the other ex-communist countries that were analysed, romania allotted amounts of money much smaller than the european average (respectively 39.01 euros per capita in 2008; 39.2 euros per capita in 2011, with a peak of 62.13 euros per capita in the year 2011) to the environment protection. figure 1. environmental protection expenditure in europe eur per capita source: processed from http://ec.europa.eu/eurostat/ with respect to the environmental protection expenditure, as a percentage of the gdp (fig. 2), the situation is different in the sense that, if the european average was 0.67% of the gdp in the year 2012, sweden and denmark were below this level (0.53% and 0.34%), malta outran, obviously, all eu countries or non-eu ones even if, in the period 0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 2008 2009 2010 2011 2012 http://ec.europa.eu/eurostat/ danu, nedeff 27 2008-2010, malta recorded an increase from 1.54% to 1.92% after which, in 2011, a decrease to 1.2% followed by an increase to 1.39%. it is to be noticed that, if in the case of the environmental protection expenditure (euro per capita), romania ranked below the eu average, in the case of weighting of these expenditure of the gdp, starting from the year 2010, the situation has been changing, which means that our decision makers are interested in the relationship with the natural environment. more than that, the reduction of activities in the underground economy, many of which directly affect the quality and the perennial potential of the natural environment, led to an increased involvement in the environment protection. figure 2. environmental protection expenditure in europe % of gdp source: processed from http://ec.europa.eu/eurostat/ as regards the treated waste (kg per capita) (fig. 3), the european average of the year 2012 was of 4,539 kg per capita and 13,653 kg per capita aggregated in the years 2008, 2010 and 2012; with levels well above the eu average that were registered by bulgaria (21,729 kg in 2012 respectively 64,866 kg per capita, aggregated in the 3 years) and luxembourg, finland, estonia, and sweden, too. figure 3. treatment of waste in europe kilograms per capita source: processed from http://ec.europa.eu/eurostat/ romania exceeded, when it comes to this chapter, the european average, recording a volume of waste to be treated that reached to 7,718 kg per capita in 2008 and 10,612 kg per capita in 2012. in romania the quantity of waste to be treated, combined on the 3 years, has reached 28,843 kg per capita, that is, 2.11 times more than the eu average. 0.00 0.50 1.00 1.50 2.00 2.50 2008 2009 2010 2011 2012 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2012 2010 2008 http://ec.europa.eu/eurostat/ http://ec.europa.eu/eurostat/ circular economy in romania within european context 28 the treatment of waste is a major coordinate on the sustainable development of the country and obviously, the appropriate implementation of the concept of the circular economy. the treatment of waste shall be carried out by means of the following options: deposit onto or into land, land treatment and release into water bodies, incineration/disposal, incineration/energy recovery, and recovery other than energy recovery – backfilling, recovery other than energy recovery – except backfilling. if the average of the european union in the treatment of waste (fig. 4) is predominated by the depositing of the waste in or on land meant to this destination (1,835 kg per capita in 2012, representing 40.42% of the total number of 4,539 kg per capita), in romania the situation is pushed to this extreme less agreed in the context of the sustainable development and of the circular economy: in 2012 the weighting of the waste treatment by storage was of 90.52% (9,607 kg per capita out of 10,612 kg per capita). the energy recovery treatment or the treatment that does not involve the energy recovery occupies very small weights in iceland, bulgaria, and romania (under 10%) and very large weights in slovenia, italy, the czech republic, belgium, poland, germany, luxembourg, france, estonia, denmark, austria, the united kingdom, spain, the netherlands, latvia (all holding weights higher than the eu average at this indicator, that is, 46.96%). an environmental policy oriented toward recovery, reuse, and recycling signals the efficient management of the resources and their reintroduction in the production processes. in these countries the circular economy is not just a concept to be implemented but an advanced stage in this approach. figure 4. treatment of waste, romania and eu kilograms per capita, 2012 source: processed from http://ec.europa.eu/eurostat/ having in view the criterion of the environmental protection expenditure, in romania, depending on the category of producers concerned: specialized producers, nonspecialized producers, and public administration in the period 2005-2013 (see fig. 5), we remember that time between the years of the economic crisis 2008 and 2009, with a consequent increase supported by the year 2011, that was faster in the case of the specialized producers and slower in the case of the non-specialized producers; after the year 2011 a regress of the environmental protection expenditure has followed in the case of the specialized producers and public administration, counterweighted by the increase of the expenditure supposed to be made by the non-specialized producers. in absolute sizes, the specialized producers register the biggest expenditure with the environment protection. the policy of the non-specialized producers is significant thus starting from 915.87 thousand lei spent for the environment protection in 2005 they allotted 7,875.17 thousand lei in 2013 (increase of 411.04%) coming closer to the level 0 2,000 4,000 6,000 8,000 10,000 12,000 european union (28 countries) romania recovery other than energy recovery except backfilling recovery other than energy recovery backfilling incineration / energy recovery (r1) incineration / disposal (d10) land treatment and release into water bodies deposit onto or into land http://ec.europa.eu/eurostat/ danu, nedeff 29 of the expenditure the specialized producers allotted for the environment protection in the year 2013, that is, 8,731.38 thousand lei. the attitude of the public administration toward this major topic, namely, the low level of the expenditure for the environment protection was alarming in all these years and the decreasing trend recorded after the year 2011 (maximum level reached in the year 2011 was of 5,367.40 thousand lei followed by decrease to 3,571.21 thousand lei in the year 2012 and 2,905.37 thousand lei in the year 2013). figure 5. environmental protection expenditures in romania, by producer categories, 2005-2013 (thousand lei) source: processed from www.insse.ro the position of the company and the consumer in the circular economy both the producer and the consumer are important in the greening economy (eaa, 2015). the companies will have to change their strategic options in the politics of the products, that is, from the rise in rate new products launch to the prolongation of the lifecycle of the existing products and the creation of new products that are durable over time. the increase of the cooperation at the level of the supply chains and between them will create the possibility to reduce the costs and minimize the negative externalities. the development of the eco-innovation will be the framework of the appearance of new products, new processes, new technologies, and new organizational structures. it is also possible to re-orient the companies from the production and sale of products to the production and sale of production services. the business development is estimated in general, and mainly the small and medium-sized companies based on leasing, sharing, repair, modernization or recycling. the european resource efficiency platform (erep) identified, among other things, some significant areas for the companies: information on resources a product contains information on the way in which the products can be repaired, recycled new business models principles connected to the standards of durable supply. the efficient use of the resources and the circularity will require the reconfiguring of the financial and accounting framework of the organizations, market analysis of bonds, including for small projects and small and medium-sized firms. a strategic alternative agreed by firms, in the last time, is that of „consumption in collaboration”, offering the consumers the possibility to resort, in the first place, to the services the products are offering and meet their needs by renting , agreements for the common use of the products, and less by purchase. 0 2000 4000 6000 8000 10000 12000 14000 2005 2006 2007 2008 2009 2010 2011 2012 2013 unspecialized producers specialized producers http://www.insse.ro/ circular economy in romania within european context 30 the product policy is redesigned and the focus moves away from the product salepurchase process to the sale-purchase right to use the product. the sale-purchase action begins to lose ground in the tangible area, in favor to the advantage of the intangible one. in this context, we consider that the development of the circular economy has the economy of the intangible as the development axis. on the other hand, the products manufacturing whose lifecycle is desired to be as long as possible moves the conduct of the competition from the innovation area, of the launching of new products in the area of sustainable innovation, of existing products modernization and, not ultimately, in the in the services area offered by existing products. in some european countries „the libraries” of garments operate, where users can borrow clothes. it is considered that any reduction measure of the rate of extraction of the raw materials, the reduction in the quantity of waste, the increase in the resource productivity, the recycling and re-use of products, reduces the pressures on the environment by increasing the ability of ecosystems to cover one’s needs (preston, 2012). the human health and the activities people are carrying out depend on the health the environment, both on shortand longterm. the consumer is a major pawn of the successful implementation of the circular economy (rambo, 1983). he must be in a position to know and understand the viable and perennial benefits that the business environment offers to the consumer by improving the circular economy. furthermore, the consumer must become an integrated part of the triad „consumer-company-natural environment” to respond in a favorable and active way to the policies the firms apply in the direction of the growth of the level of recycling, re-use, reintegration of the outputs in the production process and in the level of supply of rental services, sharing, exchange, repair, and product manufacturing. the relational system „consumer-firm” will inherently and implicitly lead to mentality changes – from the consumer to the user, from the owner to the coowner. the benefits of the consumer will be of a financial nature, too: affordable prices for products, lower costs and higher benefits. in this way, the economic utility will increase, the level of satisfaction of consumers being determined by the size of the prices of the tangible and intangible products they have purchased. conclusion the physical limits of the planet conditions and determines the limiting of the consumption of resources. the problem does not belong to the present but is the direct reflection of the historical actions of individuals. however the solving of the problem is in the present and the future as well. from a technical point of view the use of the externalities of production and consumption, as raw material reincorporated in the production processes, involves changes in the technological environment – upgraded technologies but also new technologies, methods of organization of production and labour adapted to this type of politics (casagrandi, guariso, 2009). from a financial point of view the application of circular economy involves some strategic alternatives that are meant not to envisage the objective of profit maximization for the previous activity (production and/or sale of the products and/or services) joined with the objective of profit maximization for new activities (waste attracting and use, their processing, etc.) but a new strategic approach based on business relation extending upstream: suppliers of raw materials, wastes resulting within production processes, suppliers of modernized and/or new technology, suppliers of specialized labor in this direction. more than that, the development of the relational system of a company shall be carried out horizontally, too, through inter-firm cooperation having the same vision in view. danu, nedeff 31 references andersen, m.s. (2007), an introductory note on the environmental economics of the circular economy, integrated research system for sustainability science, 2:133–140, available at http://www.environmental-expert.com/ . casagrandi, r., guariso, g. (2009), impact of ict in environmental sciences: a citation analysis 1990–2007, environmental modelling & software 24(7), pp 865–871. european commission (2008), eurostat, data set, available at http://ec.europa.eu/environment/, accesed on 11 march 2015. (the circular economy – connecting, creating and conserving the values). european commission (2014), on the review of the sustainable development strategy. a platform for action, data set, available at http://eur-lex.europa.eu/. giarini, o., stahel, w.r. (1996), the limits of certainty – facing risks in the new economy of services, bucharest, edimpress-camro. national environmental protection agency (2014), national environmental protection agency, bacău branch, available at website, http://apmbc.anpm.ro/. national institute of statistics (2014). national institute of statistics, bacău branch, available at http://www.bacau.insse.ro/. preston, f. (2012), a global redesign? shaping the circular economy, energy, environment and resource governance, available at http://www.chathamhouse.org/sites/files/ chathamhouse/ public/research/ energy, (accesed on 1 february 2015). prothero, a., dobscha, s., freund, j., kilbourne, w.e., luchs, m.g., ozanne, l.k., thøgersen, j. (2011), sustainable consumption: opportunities for consumer research and public policy, journal of public policy & marketing, vol. 30, no. 1, pp. 31-38, available at http://journals.ama.org/doi/abs/ 10.1509/ jppm.30.1.31. rambo, a.t. (1983), conceptual approaches to human ecology. research report no. 14, honolulu: east-west center. schlüter, m., mcallister, r.r.j., arlinghaus, r., bunnefeld, n., eisenack, k., hölker, f., milner-gulland, e.j., müller, b., nicholson, e., quaas, m. & stöven, m. (2012), new horizons for managing the environment: a review of coupled social-ecological systems modeling, natural resource modeling, 25(1), pp 219-292. http://ec.europa.eu/environment/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 116 about the advantages of public-private partnerships and its organizational forms popa florina institutul de economie naţională, academia română (institute of national economy, romanian academy) florinapopa2007@gmail.com abstract the advantages and disadvantages provided by joining in public-private partnership reveal the challenges the economies are constrained to, pursuant to the impact of ppp on certain economic processes. there are identified forms of public-private partnership, which, in their development, are based on a number of factors: the actors involved, the origin of the financial resources, the duration of the contract, the existing traditions, types of agreement in relation to the way of sharing responsibilities and risks between public and private actors. the paper reveals studies achieved on the elements of public-private partnership, advantages, disadvantages they highlight, the forms of partnership grouped in relation to different factors, the stages pursued in the initiation of public-private partnership projects. keywords financial resources; agreements; projects; forms; partnership jel classification h41; h42; h44 1. introduction studies and opinions concerning public-private partnership are often met in proffesional economic, financial, judicial publications, used in marketing, in product and service supply, collaboration between the two sectors (public and, respectively, private,) being a contemporary chapter of interest of administrative actuality. the problems faced by governments in their actions aimed at achieving a high efficiency in public works development such as insufficiency of governmental financial resources, have led to the initiation of new forms of institutional cooperation, generic called public-private partnership (wettenhall, 2003; boase, 2000; osborne, 2000). although the notion of public-private partnership emerged in the 70s of the last century, on the background of the new public management procedures getting into public administration, the collaboration between the public and private sector dates back to the ancient times, in the course of history, undergoing transformations and evolving until the modern age. the cooperation with the private sector, by the privatization or outsourcing of public service delivery has led, over time, to a acknowledgement:the study is a part of the research paper of the institute of national economy, romanian academy “rolul statului și parteneriatul public-privat (1918-2018)”achieved in 2017, by a team of researchers dr. cornel ionescu (coordinator), florina popa; mailto:florinapopa2007@gmail.com about the advantages of public-private partnerships and its organizational forms 117 diminution in the role of the state and an increase in the performance of the public sector in public activities development (savas, 1982). 2. advantages, disadvantages of public-private partnership in this form of cooperation, the partners voluntarily commit themselves to a common goal achievement and, to this end, mobilize the necessary resources, the costs, risks, responsibility and profit allocating proportional to the contributions of the parties. thus, the partnership is an expression of the participants' awareness of the advantages that the endeavour of such cooperation represent them, comparatively to the individual option. the impact of ppp on some economic processes can lead to varied effects, both in terms of the advantages and disadvantages they develop. 2.1. advantages among the advantages of partnerships practice, can be considered: • can help to improvement of the operation form of state-owned enterprises, by giving the service delivery, implicitly carrying out some investments, to private entrepreneurs; without being the only provider, the public sector retains the role of decisions making on the chosen objectives and overseeing compliance with standards in the public interest; • supporting public investments, the partnership mechanism allows the possibility for the development of infrastructure programs and, at the same time, for governmental resources orientation to support other economic and social sectors, avoiding taking or increasing public loans; • there is a transfer of the project operational and execution risk from the public sector to the private sector, the latter having an advanced experience and technology of performance, which favours the increase in the pace of project implementation. • it is created the possibility of introducing competitive principles into traditional activities of the public sector, which leads to an increase in service quality, encouragement of innovation, reduction of costs. thus, the elements of ppp policy favour the private sector managerial principles getting in the economic concepts of the public sector, respectively, the implementation of the new public management; • there are created the possibilities for the supplier, to ensure the performances, according to the contract's standards, these being a condition to accomplish payment of the services; • there is a prospect of cost savings achievement in the implementation of a project through ppp, of a quality comparable to that of the traditional executions, or of a higher quality project, under the same level of expenditure; • the mobilization and sharing of participants' resources, exchange of experience and the mutual support through implementation of the knowledge they hold is the stake in achieving the objectives pursued by the participants, their optimum being conditioned by the contribution of each of the associated partners. 2.2. disadvantages performing some works in ppp can also lead to disadvantages such as: popa 118 • engaging in some long-term contracts under a technology of execution, at that time, removes the supplier's constraint to adapt to new technologies (which involve additional costs associated with), to increase competitiveness; • the ppp transaction costs (related to contract bidding, negotiation and administration) may be higher than those associated with traditional government purchases; • the possibility of certain difficulties occurrence in the administration of the contracts, caused by a parties' faulty cooperation, the elements of difficulty may also be determined by the involvement of several actors, in the contract; the situation involves the need to manage possible conflicts of interest among the participants, through dialogue and negotiations which lead to their overcoming; • obtaining the estimated profit, from the achievement of the project varies in relation to the volume of the assumed risks, the complexity of the project, the competitiveness of the developers; • the government may encounter difficulties in assessing proposed costs for the cases where the private entity has a share of knowledge and experience in project implementation. reducing the probable disadvantages encountered in ppp works achievement can be favored by taking into account actions such as: • the transfer of risk to the most qualified part in the achievement of the project, in order to optimize the results of the cooperation; • close monitoring of the performance of the contract, of the quality and estimated performance; • ensuring a satisfactory number of bidders, which will facilitate the introduction of competition, but will ensure the possibility of control on the quality of the offers. 3. forms of public-private partnership ppp is based on a contract between the public and private sector through which the private sector contributes with financial resources and projects, and the public sector is responsible for delivering services to the population, respecting the needs of individuals and contributing to the standard of living raise. (unece, 2008) ❖ among the first forms of public-private partnership are the mixed ones, which have varied over time, in relation to the actors involved, the origin of the financial resources, the duration of the contract, existing traditions in different countries, from which can be mentioned (wettenhal, 2003):  mixed enterprises, existent in many countries where the structure and form of activities development were considered mixed, by the scientific literature. for example, the state-owned company, singapore airlines, which, although sold shares for capital growth, has maintained its status of state-owned company (thynne and ariff, 1987); singapore telecommunications ltd (singtel), where the government owns the majority of the shares, bought, entirely, the enterprise australian telecom optus. (mcdoanld, 2001).  outsourcing agreements by which the public authority requests, by contract, to a private company, to carry out some activities, which remain the property of the public sector, pursuing to merge the public interests with the private ones. (callender and johnston, 1998). about the advantages of public-private partnerships and its organizational forms 119  the subsidy, controlled competition, regulation etc. a related form that reveals aspects of the public-private partnership; is manifested by granting subsidies from government to private companies in order to achieve objectives difficult to be met by the state. ❖ although there are a variety of forms of public-private partnership agreed between the government and various entities that cover different market areas, the scientific literature groups them into two broad categories:  institutionalized ppps refer to a joint entity setting up joint ventures which belong to public partner and to the private one, against providing a work or service for the benefit of the public. the ways in which an institutionalized ppp can come into existence could be: • creation of a new entity by the public and private actor; • the private actor buys and holds shares in a public company, exploiting the service, and the public sector keeps the control of the company, through shares.  contractual ppps are different forms of agreements that express contractual relationships between the public and private partner and the delegation of tasks to the private partner. the two categories depend on country-specific implementation modalities and are regulated at european level. ❖ in relation to the forms of sharing responsibilities and risks between public and private actors, the models of contracts and, adequate, of public-private partnerships, are presented as follows:  buy-build-operate (bbo) contract through which the transfer of a public utility to a private or public entity is achieved through the sale, for the modernization and operation of the infrastructure over a specific period of time, on advantageous terms (the national council for public-private partnership; unece, 2008).  build-own-operate (boo) financing, construction, property and the operation of a utility come to the private sector, forever, without the public authority having to buy the public utility (the national council for public-private partnership; unece, 2008).  build-own-operate-transfer (boot) financing, designing, construction and operation a utility come to the private partner who will charge taxes for them, for a specified period. at the end of the period the property is transferred to the public sector (unece, 2008).  build-operate-transfer (bot) under a long-term concession contract, designing, financing, construction of a new utility come to the private partner who exploits it during the concession period (unece, 2008).  build-lease-operate-transfer (blot) financing, designing, construction and operation of a rented equipment and charging taxes of user during the lease contract period come to a private partner, through franchise (unece, 2008).  design-build-finance-operate (dbfo) through a long-term lease contract, designing, financing, construction of a new building and its exploitation during the lease period come to the private sector (unece, 2008).  operation license it comes to a private partner, usually, for a specified period (unece, 2008). popa 120 ❖ different from these classifications, also it can be mentioned other categories of ppp, in relation to some criteria (mcquaid, 2000): a) in relation to the pursued objective exogenous or endogenous, strategic or program or project-oriented partnerships. • exogenous when it pursues to attract additional external resources or endogenous when it aims to maximize the efficiency of internal resources use. • strategic or program or project-oriented: they pursue major goals of the organization by developing of a spread strategy for a particular area, or are geared towards specific long-term projects/programs. from the perspective of the area of activities pursued, the strategic partnerships can target a narrow or a wider area of activities. b) in relation to the geographical area, it can identify: • ppp targeted at certain categories of customers, from small disadvantaged urban areas or from larger areas; • ppp oriented towards policies at national, regional or local level, such as those related to social exclusion, discrimination or urban regeneration. c) in relation to the mobilization relationships between actors, within partnerships it can identify: • top-down, the initiative is taken by a high-level authority such as the central government; • bottom-up, the initiative is taken by local communities through strategies that rely on the local level existing resources. (bailey, 1994; friedmann and weaver 1979). 4. conclusions over time, there has been an increase in interest in partnerships as well as in the experience gained in their development, against a background of the emphasis of the privatization process, which has become almost dominant. maintaining, in partnership, both parties, keeping the values of partnership and risk-taking can ensure a sustainable character for partnership. the reason for partnership setting up, by appealing to the private sector, is largely due to the insufficiency of budgetary resources and technologies needed at the public sector level, in the achievement of public works and delivery of public services. through ppp, the public sector aims to attract additional financial resources needed to finance large infrastructure projects for which the funds collected from taxes and tax rates are not enough. the resources come from both the state budget and the private sector but also from the service users (partially or entirely), thus, increasing the safety of finalizing the projects at the scheduled time, avoiding the situation of spending overcome by the public sector, by setting up a payment scheme before the begining of construction. by way of action, ppps can determine advantages or disadvantages that generate a series of challenges, through the impact they have on the economic processes. the forms of partnership have evolved over time, bearing changes in relation to the degree of involvement of the public and private sector, responsibilities and risks sharing between the two parties, the financial resources allocated, the objectives pursued, the historical period in which they have developed and the existing traditions. about the advantages of public-private partnerships and its organizational forms 121 references bailey, n. 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core banking services on profitability. case study: all branches of a private bank in mashhad mansour dehghan islamic azad university, neyshabur mansour.dehghan@gmail.com mahdi ghafoorifard payame noor university mahdi.fard@gmail.com babak shamsi islamic azad university, neyshabur hamidshams87@gmail.com seyed hamid seyed heydari islamic azad university, torbate jam h.triboon@gmail.com abstract recently, the growth of information technology and increasing competition among banks has considerably affected attracting customers. banking industry has made great changes to transform into the core banking. the present study aims to assess the effect of the implementation of core banking services on profitability. these services, as different branches of electronic banking, are consisting of internet banking, mobile banking, telephone banking, point of sale (pos), atm, and electronic money which are all tested in the current study. in order to test research hypotheses and the existing relationship between variables, needed data has been collected and analyzed through the application of stepwise regression model. the achieved findings indicate a significant relationship between the application of internet banking and atm and the variable of profitability, while there is no significant relationship between the application of telephone banking, mobile banking, pos, and electronic money and profitability. keywords core banking; electronic banking; profitability jel classification m10; m41; g21 introduction getting access to the internet network and electronic relations among different people and organizations in the virtual world has provided economic and commercial exchanges. electronic banking is one of the essentials of electronic commerce which can facilitate global financial systems to a certain extent (bikzad & molavi, 2009). with the rise of electronic banking and advanced information and communication technology systems in banking industry, traditional banking activities looks dated. thus, banking is considered as a subfield of information processing industry which is formed on the basis of novel concepts such as electronic money, atm, pos, and so on. due to the economical advantages of electronic banking systems such as reducing costs, increasing profits and quality of services offered to the customers, removing temporal mailto:mahdi.fard@gmail.com the effect of implementing core banking services on profitability. case study: all branches of a private bank in mashhad 104 and spatial constraints, broadening the domain of banking and marketing activities, not only do new banks apply electronic banking, but also old ones attempt to offer electronic services besides traditional ones (goudarzi & zobeidi, 2008). various researches demonstrate the growth of online banking all over the world, in a way that the rate of electronic banking relations has exceeded %50 in the leading countries (pikkarainen et al., 2004). in iran, conducting banking affairs without loss of time is regarded as a key to success which is crucial in all banking competitions (maleki & akbari, 2010). the current study aims to investigate the effect of core banking services on profitability. core banking core banking is a general term used to describe the services provided by a group of network bank branches, bank customers may occurs their funds and other simple transaction from any of the member. thus core banking solution is a stride-headed towards enhancing the customer services through any-where and any-time banking (manjushree, 2014). simply put, core banking helps customers to remove temporal and spatial constraints, and utilize networks and telecommunications technology to transfer resources (money) in banking system (heidarpour & tahmasbi, 2009). khrawish and al-sadi (2012) define electronic banking as the adoption of electronic means in the delivery of banking products and services. such products and services include deposit taking, lending and payment products and provision of other electronic payment product and services such as electronic money during 24 hours a day as well as 7 days a week. therefore, core banking includes all electronic channels which are used by customers in order to deposit accounts, pay bills and purchase what they need (dandapani, 2008). various core banking services internet banking internet has greatly affected electronic banking. there is no temporal and geographical constraint through the application of internet banking. internet banking is an electronic payment system which enables customers to conduct financial transactions without referring to the bank, just through their pcs or communications networks (taghavi fard et al., 2012). atm automated teller machine (atm) is an electronic telecommunications device that enables the customers of a financial institution to perform financial transactions. atms are often located inside a specific place which may be accessible 24 hours a day. they are also considered as a branch of the bank, since they provide different services offered in the bank (maleki & akbari, 2010). pos point of sale (pos) is the place where a retail transaction is completed. it is the point at which a customer makes a payment to the merchant in exchange for goods. at the point of sale the retailer would calculate the amount owed by the customer and provide options for the customer to make payment. telephones or network communications may be utilized to conduct transactions through pos (habib zadeh & mirmajidi hashjin, 2011). dehghan, ghafoorifard, shamsi, seyed heydari 105 mobile banking multidimensional services such as gprs which are accessible through mobiles enable customers to conduct financial transactions like getting account balance and financial statement, requesting check, and transferring from one account into other accounts (farnoud, soltani & zarabiye, 2008, p. 356). telephone banking conducting small transactions between a customer and its bank can be possible through telephone banking which can be through three different methods: audio transaction, voice recognition, and pre-planned telephones (habib zadeh & mirmajidi hashjin, 2011). electronic money electronic money involves the use of internet or other networks to store or transmit money. this type of money can be stored on smart cards or computer’s hardware. electronic money falls into different types as follows: electronic card, electronic wallet, electronic check, digital money, and virtual card (maleki & akbari, 2010). profitability profit is an important term in business decision makings. a large volume of accomplished researches and studies in the field of accounting are with regard to profit. profit, as a guide of the dividend, can be applied by managers, investors and financial analysts as an index for evaluating management effectiveness and predict decision makings. as a matter of fact, all financial and manufacturing programs, activities and decisions are reflected in the firm’s profitability (ghafoorifard, 2011). net income margin (nim) is utilized in the current study to calculate profitability. due to the fact that riba and bahre must not be involved in iranian banks, interest is calculated and substituted with riba and bahre (pazhouyan & shafiei, 2008). review of literature conducted researches in foreign countries indicate that various indexes such as productivity, efficiency and profitability have been applied to evaluate the implementation of information technology systems in the banks’ economic performances. a sum of their findings can be explained in the following manner. khrawish and al-sadi (2011) investigated the impact of e-banking on bank profitability in jordan and found that due to the costs of applying e-banking services, they do not significantly affect profitability based on roe and roa, while e-banking services significantly affect the index of gross profit. similar research was carried out in pakistan by sumra et al. (2011). they indicated that electronic banking can increase bank profitability. coppin et al. (2003) did a research with regard to all banks in barbados and found that atms were not profitable at first, since training personnel and customers how to use them was expensive. but when it was educated, efficiency increased from %3 to %17. eyadat and kozak (2005) examined the role of information technology in the profit and cost efficiency improvements of banking sector, and found that investing in information technology systems can increase bank profitability while decrease cost efficiency in proportion to profit efficiency. siam (2006) assessed the role of the electronic banking services on the profits of jordanian banks, and concluded that electronic banking services negatively affect bank the effect of implementing core banking services on profitability. case study: all branches of a private bank in mashhad 106 profitability in the short term, while they have a positive influence in the long term, since bank investments are all with regard to infrastructures and staff’s training. reviewing different databases, scientific documents and articles, this conclusion can be drawn that few researches were conducted in iran in the field of electronic banking some of which are as follows. goudarzi and zobeidi (2008) applied combined data of six commercial banks in iran (tejarat, refah kargaran, sepah, saderat, mellat, and melli) over a period from 2000 to 2005. they utilized fixed effect model and generalized least squares method to conclude that the number of each bank’s atms positively affects its profitability. shetab (interbank information transfer network) system has also accelerated and increased this effect. thus, it can be alleged that improving electronic banking has significantly affected iranian banks’ profitability. abdi et al. (2010) investigated the effect of new banking technologies on the organizations’ agility. they did their research with the help of academics and banking experts. findings of this study indicate that the staffs’ knowledge and skills in the application of new banking technologies have the most correlation with seven dimensions of flexibility, accountability, speed, integration and low complexity, core competencies, high quality, product improvement, and culture of change. furthermore, the staffs’ knowledge and skills are significantly associated with electronic banking indexes, widespread networks of information exchange between customers and bank, and aforementioned dimensions. baradaran et al. (2009) assessed the effect of using bank cards among the customers of bank melli in east azerbaijan, and found that this usage can increase the customers’ satisfaction and feeling of security. research questions, hypotheses and variables this study intends to find whether there is a significant relationship between the application of core banking services and profitability in different branches of a bank in mashhad. to find the answer, six following hypotheses have been designed. 1. there is a significant relationship between the application of internet banking and profitability. 2. there is a significant relationship between the application of mobile banking and profitability. 3. there is a significant relationship between the application of telephone banking and profitability. 4. there is a significant relationship between the application of atms and profitability. 5. there is a significant relationship between the application of poss and profitability. 6. there is a significant relationship between the application of electronic money and profitability. profitability has been considered in this study as the dependent variable, while other variables of the application of internet banking, mobile banking, telephone banking, atms, poss and electronic money have been regarded as independent variables. research methodology cause and effect relationships between dependent and independent variables have been investigated in the current study in order to test statistical hypotheses and confirm or reject them (vazifeh doust & nik nezhad tehrani, 2007). dehghan, ghafoorifard, shamsi, seyed heydari 107 target population and samples target population of the research is consisting of 59 branches grades 1, 2 and 3 in mashhad over a period from march 21, 2010 to march 18, 2012. sampling has been conducted on the basis of customers’ academic degree and interviewing with the branches’ head. owing to the fact that the customers in branches grade 3 were mostly illiterate, these branches have been omitted from sampling, thus 24 branches have remained as the research sample. data collection preliminary needed data has been collected through financial reporting programs and analytical software utilized in the banks. in this regard, the application of core banking services in 2010 and 2011 has been considered as independent variables of the research, while profitability (net income margin) has been regarded as dependent variable. secondary information has been assembled through desk research such as documents, articles, theses, libraries and internet. spss software has been applied to conduct statistical tests. data analysis and hypothesis testing multiple regression models have been utilized in this study in order to test six research hypotheses. profitability has been considered in this study as the dependent variable, while other variables of the application of internet banking, mobile banking, telephone banking, atms, poss and electronic money have been regarded as independent variables. the regression model can be written as follows: (1) where: x i refers to independent variables, α stands for the fixed value of intercept, βi is the impact factor of independent variables, ε is residual, n refers to the number of independent variables, and profitability stands for net income margin (nim). stepwise regression model has been used for data analysis. therefore, the data whose correlation with other dependent or independent variables are acceptable enters the model. other variables whose correlations are not acceptable (e.g., those variables which have no significant effect on the dependent variable) cannot enter the model. the obtained results of stepwise regression model for the dependent variable of profitability are shown in table 1. table 1 variables which could enter the stepwise regression model model entered variables exited variables 1 the application of atms --------------- 2 the application of internet banking --------------- on the basis of the table 1, only two variables (the application of atms and internet banking) were acceptable to enter the model. other variables of core banking services did not have the acceptable condition to enter the stepwise model. model 1 is consisting of the variable of the application of atms, and model 2 is consisting of the variable of the application of internet banking. due to the fact that the effect of implementing core banking services on profitability. case study: all branches of a private bank in mashhad 108 other core banking services variables did not have a significant effect on profitability, they cannot enter the stepwise model. table 2 coefficient of determination, adjusted coefficient of determination, and durbin watson statistic in the model model correlation coefficient coefficient of determination (r) adjusted coefficient of determination durbin-watson statistic 1 0.719 0.499 0.488 ---------- 2 0.808 0.644 0.611 2.035 autocorrelation of residuals in regression model was calculated based on durbinwatson statistic. non-existence of autocorrelation among residuals is essential. the values near 2 for this statistic show non-existence of autocorrelation among residuals. durbin-watson statistic for the above model is 2.035 which is acceptable (table 2). in table 2 coefficient of determination for model 1 is about 0.499 which is associated with the independent variable of the application of atms. in model 2, coefficient of determination is bigger (about 0.644) for the independent variable of the application of internet banking. it means that %64.4 of profitability changes are rooted in changes in two variables of the application of atms and internet banking. table 3 variance analysis for the model with the dependent variable of profitability model source of changes sum of the squares degree of freedom mean of squares fisher statistic (f) significance level 1 regression 138.789 1 149.89 17.121 0.001 residuals 129.47 16 9.11 total 278.46 17 2 regression 198.03 2 91.50 14.12 0.000 residuals 99.47 15 5.39 total 278.46 17 in table 3 for model 1, which has only one independent variable (the application of atms), significance level equals 0.001 (less than 0.05). thus, with the confidence level of %95 it can be concluded that the application of atms significantly affects profitability. for model 2, which has two independent variables (the application of atms and internet banking), significant level equals 0.000 (less than 0.05). thus, with the confidence level of %95 it can be concluded that the application of atms and internet banking can significantly affects profitability. table 4 regression coefficients with the dependent variable of profitability model variables standard coefficient nonstandard coefficients t statistic significance level standard error coefficient 1 fixed value -----1.370 2.887 2.077 0.051 the application of atms 0.695 0.001 0.004 4.210 0.001 2 fixed value -----1.395 0.69 0.464 0.623 dehghan, ghafoorifard, shamsi, seyed heydari 109 the application of atms 0.523 0.001 0.003 2.879 0.007 the application of internet banking 0.41 0.021 0.044 2.321 0.019 in table 4 for the final model (model 2), significance levels for two independent variables equal 0.007 and 0.019 (less than 0.05), while significance levels of fixed values are 0.623 and 0.05. therefore, the following manner can be written: profitability= 0.523 (the application of atms) + 0.41 (the application of internet banking) discussion in this study, the designed hypotheses are regarded as h 1, while null hypotheses are h 0. first hypothesis testing according to table 4, since the variable of the application of internet banking exists in the final model and the significance level equals 0.019 (less than 0.05), h0 is rejected with the confidence level of %95. thus, it can be concluded that the application of internet banking significantly affects profitability. on the other hand, regression coefficient equals +0.41, it means that the application of internet banking and profitability are directly and significantly associated with each other. second hypothesis testing according to table 4, the application of mobile banking does not exist in the final model. thus, h0 is not rejected with the confidence level of %95, and the variables of the application of mobile banking and profitability are not significantly associated with each other. third hypothesis testing according to table 4, the application of telephone banking does not exist in the final model. thus, h0 is not rejected with the confidence level of %95, and the variables of the application of telephone banking and profitability are not significantly associated with each other. fourth hypothesis testing according to table 4, since the variable of the application of atms exists in the final model and the significance level equals 0.007 (less than 0.05), h0 is rejected with the confidence level of %95. thus, it can be concluded that the application of atms significantly affects profitability. on the other hand, regression coefficient equals +0.523, it means that the application of atms and profitability are directly and significantly associated with each other. fifth hypothesis testing according to table 4, the application of pos does not exist in the final model. thus, h0 is not rejected with the confidence level of %95, and the variables of the application of pos and profitability are not significantly associated with each other. the effect of implementing core banking services on profitability. case study: all branches of a private bank in mashhad 110 sixth hypothesis testing according to table 4, the application of electronic money does not exist in the final model. thus, h0 is not rejected with the confidence level of %95, and the variables of the application of electronic money and profitability are not significantly associated with each other. conclusion the achieved results of testing research hypotheses indicate that the application of internet banking and atms significantly and directly affects profitability, thus improving these two variables and encouraging customers to apply them are suggested to be taken into consideration. in this regard, all banks are recommended to enable customers to use electronic tools. on the other hand, the achieved findings of this study demonstrate that the application of other core banking services such as mobile banking, telephone banking, pos, and electronic money does not significantly affect profitability. due to the fact that these services have been recently offered in iran, they are not welcomed as much as other banking services, as a result, they cannot be so profitable, and more or less application of these services cannot change the final profitability. banks are recommended to encourage customers and change their viewpoints about new core banking services and electronic tools. references baradaran, r. & naserpour, s. & shakouri maleki, l. (2009). electronic banking and the application of bank cards in improving bank performances, journal of beyond management, 2nd year, issue 8, pp. 189-215. bikzad, j. & molavi, z. (2009). the quality of electronic services and customers’ satisfaction, journal of bank & economics, issue 104, pp. 39-44. pazhouyan, j. & shafiei, a. (2008). structural analysis of iran’s banking industry: empirical application of davis u, journal of quantitative economics (quarterly journal of economics review), volume 5, issue 4, pp. 81-105. taghavi fard, m.t. & zahedi adib, m. & torabi, m. (2012). effective elements in the application of internet banking services by customers (case study: bank mellat), iranian journal of information processing and management, volume 27, issue 3, pp. 539-560. habib zadeh, m.j. & mirmajidi hashjin, s.s. (2011). the role of electronic banking in money laundering and different ways of coping with it, journal of comparative law researches, volume 15, issue 1, pp. 23-42. farnoud, h.a. & soltani, s. & zarabiye, f. (2008). electronic banking management, tehran: sabzan publication. heidarpour, f. & tahmasbi, a. (2009). the effect of costs in educating and advertising electronic banking on attracting bank deposits (case study: bank saderat in mazandaran), journal of the financial accounting and auditing researches, volume 1, issue 1, pp. 81-98. abdi, n. & salavati, a. & ghasemi, sh. (2010). assessing the effect of new banking technologies on the organizations’ agility (case study: bank melli iran in sanandaj), fourth national conference of technology management in iran, tehran. dehghan, ghafoorifard, shamsi, seyed heydari 111 ghafoorifard, m. (2011). the relationship between internal elements of an organization and economic value added, m.s. thesis of management, islamic azad university of neyshabour. goudarzi, a. & zobeidi, h. (2008). assessing the effect of improving electronic banking on profitability in iranian commercial banks, iranian journal of economic research, 10th year, issue 35, pp. 111-140. maleki, m. & akbari, p. (2010). investigating the role of electronic banking in iran, journal of bank and economics, issue 112, pp. 14-20. vazifeh doust, h. & nik nezhad tehrani, r. (2007). evaluating the effect of internet banking on commitment, trust and attractiveness of electronic banking services (case study: en bank), journal of new economy and commerce, issues 10 & 11, pp. 112-130. coppin k., craig well r. and moore w., (2003), "atm usage and productivity in the barbadian banking industry", central bank of barbados’ economic review, vol. 30, no. 3, pp. 117-122 dandapani k., (2008), "internet banking services and credit union performance", managerial finance, vol. 34, no. 6, pp. 437-446. eyadat m., kozak s. j., (2005), "the role of information technology in the profit and cost efficiency improvements of banking sector", journal of academy of business and economics, vol. 5, issue. 2, pp. 70-76 manjushree, s., (2014), "an implementation of core banking solution with special reference sbi shivamogga", sai om journal of commerce & management, volume 1, issue 2, pp. 25-34. khrawish h. a., al-sadi n. m., (2011), "the impact of e-banking on bank profitability: evidence from jordan", middle eastern finance and economics, issue 13, pp. 142-158 pikkarainen t., pikkarainen k., karjaluoto h. and pahnila s., (2004), "consumer acceptance of online banking: an extension of the technology acceptance model", internet research journal, volume 14, number 3, pp. 224–235 siam a. z., (2006), "role of the electronic banking services on the profits of jordanian banks", american journal of applied sciences, vol. 3, no. 9, pp. 1999-2004 sumra s. h., manzoor m. k., sumra h. h., abbas m., (2011), "the impact of ebanking on the profitability of banks: a study of pakistani banks", journal of public administration and governance, vol. 1, no. 1., pp. 31-38 (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 71 statistical models of representing intellectual capital andreea feraru “vasile alecsandri” university of bacau andreea_feraru26@yahool.com abstract this article entitled statistical models of representing intellectual capital approaches and analyses the concept of intellectual capital, as well as the main models which can support enterprisers/managers in evaluating and quantifying the advantages of intellectual capital. most authors examine intellectual capital from a static perspective and focus on the development of its various evaluation models. in this chapter we surveyed the classical static models: sveiby, edvisson, balanced scorecard, as well as the canonical model of intellectual capital. among the group of static models for evaluating organisational intellectual capital the canonical model stands out. this model enables the structuring of organisational intellectual capital in: human capital, structural capital and relational capital. although the model is widely spread, it is a static one and can thus create a series of errors in the process of evaluation, because all the three entities mentioned above are not independent from the viewpoint of their contents, as any logic of structuring complex entities requires. keywords organisational intellectual capital; human capital; structural capital and relational capital; internal structure and external structure jel classification f15; f50; o10 concepts and models of intellectual capital attention to the concept of intellectual capital (ic) has appeared with the notification of the significant differences between the market value of a company and the net book value. it seems that this phrase is attributed to the american economist john kenneth galbraith, about 30 years ago. galbraith suggests that this concept means more than knowledge or pure intellect, it means action. thus, intellectual capital is a way of creating value and a resource in the traditional sense (roos et al., 1997). it is not enough to have an organization people with high intellectual capacity, if these resources are not adequately used in the creation of value. much of the increased interest in this area is probably due to thomas stewart, who first used the term of intellectual capital in the press (in the article “article brainpower”, 1991, published in fortune magazine). that year, skandia him leif edvinsson appointed as the first director of intellectual capital in the world (director of intellectual capital), and only four years later skandia already publishes his first public report on intellectual capital (andriessen, 2004). in classical economic theory, capital is one of the three factors of production, in addition to land, and labor. it refers in particularly to buildings, equipment, machinery etc., which are used to produce other goods (in literature it is also used the phrase statistical models of representing intellectual capital 72 physical capital). thus, intellectual capital is a term that is used to signal the presence of otherwise capital, different physical and financial capital (peltoniemi, 2006). brătianu (2006) considers that extending the semantics of a fundamental concept, such as the capital, may be more difficult than defining a new concept. therefore, specialists in various fields (economic, management, accounting) tried to define more precisely the concept of intellectual capital. there are several approaches to this concept, showing on the one hand the difficulty of defining something as "untouchable" and, on the other hand, its importance in the society and economy of knowledge. the conceptual framework of intellectual capital includes three directions, leading to a complex picture of the concept, and therefore to a better understanding of it. a first direction comes from the field of accounting. the term most commonly used by the accounting community is that of intangible assets. van den berg (2003) believes that traditional financial accounting systems have lost the ability to provide information regarding the value of an organization, value that is being increasingly given by intangible assets. lev (2002) estimated that 60-70% of the value of a company is given by intangible assets (van den berg, 2003). moreover, investments in intangible assets considerably exceed those in tangible assets, further increasing the difficulty in estimating the fair value as a company. leonard nakamura has calculated that in 2000, private us companies have invested in intangible assets 1,000 billion, on par with gross private investment in tangible assets; in the same year, the stock of intangible assets in the us economy reached 5.000 billion, accounting for half the market value of all existing corporations (dragomirescu, 2004). however, even people who support the adequacy of traditional accounting systems are concerned about the possible introduction of elements that may be regarded as subjective non-financial elements in annual reports. if it would be a mistake to combine financial indicators with non-financial indicators, a much bigger mistake would be to ignore the latter (stewart, 1999). in most accounting manuals and articles occur various situations (eg resignation of a manager) that, while recognized as important, are not shown in traditional financial accounting documents. such situations can seriously affect a company but are overlooked in terms of accounting reporting. moreover, the accounting community faces in relating to intangible assets as they complicate things regarding an accounting fundamental concept, namely the independence of the exercise, which involves a strict delineation in time of the revenue and expenditure for the financial year for which the reporting is made, regardless of date of receipt or payment amounts, basic requirement of accrual (andriessen, 2003). a second way is to find a suitable matrix for the intellectual capital. in this regard we have been developed various models of assessment of the intellectual capital. many authors have tried to capture in a few words the essence of the concept of intellectual capital. according to stewart (1999), intellectual capital is "intellectual material knowledge, information, intellectual property, experience that can be used to create wealth" (p. xi). in the same direction also fit the definitions given by hugh macdonald "knowledge that exists in an organization and can be used to create competitive advantage" (stewart, 1999, p. 67) and by leif edvinsson (skandia) and pat sullivan "knowledge that can be converted to value" (sveiby, 2001). it is an intellectual potential, consisting of knowledge in various forms, that has the ability to transform itself into technological processes and management in a number feraru 73 of operational elements, assets, creating value, to be integrated into end products such materials and a company's intangible (brătianu, 2006). but these definitions are too vague to be helpful managers. david klein and laurence prusak try to capture a more pragmatic intellectual capital. they consider intellectual capital as "intellectual material that has been formalized, captured and used to produce an asset of greater value" (stewart, 1999, p. 67). therefore, an engineer with great intellectual potential, but who is isolated in an office, doing routine things, report lost on the head office, are intellectual material, but they are not and intellectual capital, as they were not used. however, it is quite complicated to determine exactly which resources and how they contributed to an asset of greater value. for this reason, the operational performance of such an approach is also quite low. from the definitions given so far by different authors can deduce some characteristics of intellectual capital: 1. it is intangible, although some elements may be associated intellectual capital and material form (ie patents, trademarks); 2. there is a close connection between intellectual capital and knowledge in various forms; 3. provide opportunities to achieve higher performance in the future. due to the strategic importance of intellectual capital, the prevalence of establishment of responsibility for their management (eg chief knowledge officer, director of intellectual capital etc) and employment status with loads of conception (knowledge worker) has become a common presence in contemporary organizations, going beyond the borders of the research sector (dragomirescu, 2004). moreover, the creation of such management functions as a totally new show in terms of intellectual capital, the business world is far ahead of theorists and researchers from academia (brătianu, 2006). as it can be seen from the above definitions, it is quite complicated for a definition of a few lines to capture the essence of the concept of intellectual capital and to provide a complete picture both conceptually and practically. therefore, both practitioners and researchers in the field ic prefer to use as a starting point in their approaches different classifications of intellectual capital components. for example are quite a few models measuring / evaluating the intellectual capital that do not use such a classification (this is especially models that have been developed specifically to assess intellectual capital. but with intensified concerns for ic field, they have been employed for this purpose). the most commonly used classification is the one that divides intellectual capital into three components: human capital, relational capital (customers) and structural capital. stewart (1999) attributes this taxonomy leif edvinsson of skandia's and hubert saint onge. however, it should be noted that leif edvinsson, according to market value scheme divides intellectual capital into human capital and structural capital, which in turn consists of the share customer and organizational capital, the latter being constituted in turn in innovational capital and capital processes. although it seems well structured, the classification uses groups of entities that are neither well defined, nor unique. for example, structural capital comprises organizational capital, although the structure is part of an organization and not vice versa (brătianu, 2006). thus, increasingly more authors use them in their empirical classification of intellectual capital in human capital, structural capital (organizational) and relational capital (customers). statistical models of representing intellectual capital 74 a similar classification is sveiby's model, which classifies intangible assets in the external structure, internal structure and individual skills. the external structure refers to customers, suppliers and other stakeholders that are considered relevant to a particular company. depending on the type of organization, the external structure will differ from one company to another. the internal structure refers to systems, databases, processes that support the organization. individual competence refers to individual experience, knowledge, skills, abilities and ideas of employees. by contrasting different models we see that there are different terms for the same item (ex: human capital skills = internal, structural capital = internal structure). bontis (2001) is unsatisfied with the situation illustrated above, considering that the main reason is the still embryonic phase of the field. moreover, nobody wants to give up on their models and to build on already existing models and concepts (andriessen, 2004). a brief overview of the existing classifications for intellectual capital is illustrated in table 1 table no 1. components of intellectual capital models components of intellectual capital indicator of market value net book value (market-tobook value) intellectual capital is not presented components. according to this model, intellectual capital is the difference between the market value and net book value indicator tobin’s q ratio) intellectual capital is not presented according to components. balanced scorecard (norton şi kaplan) intellectual capital is not presented according to components. this model suggests us to take a look at the organization from four perspectives: learning and growth, internal process perspective, customer perspective, financial perspective, which largely resembles some of the components of intellectual capital classifications developed later. sveiby model (sveiby’s intangible assets monitor)  the external structure  internal structure  individual skills modelul skandia  human capital  capital structure, which in turn is divided into customer capital and organizational capital, which is innovational capital plus capital processes. roos et al model (intellectual capital index)  human capital (skills, attitude, intellectual ability)  capital structure (relational and organizational innovation / development capital) the technology broker’ ic audit  active market  human capital  intellectual property  capital infrastructural ic community has evolved a lot in recent years and the focus shifted to evaluation / measurement ic, developing assessment statements ic, ic strategic management. however, as more rigorous definition of the basic concepts is necessary for empirical approaches of the researchers in the field, but it is also used to increase the capacity for the implementation of research results into practice. in this regard, we agree with the vision of bontis illustrated above. there are too many names for the same elements, and this does nothing to hinder further research. some researchers were concerned, particularly, by the form, and less by the background aspects. feraru 75 the appearance of a considerable number of models to assess the intellectual capital stresses that experts have not yet reached a consensus, but that there is a model supported by most businesses, because there are some difficulties in applying them. static models of representation of intellectual capital are based upon the analysis of tacit knowledge and explicit knowledge because they underlie the intellectual capital (brătianu, 2011c). regarding the static knowledge, the models are seen as stock, which by their nature are static. moreover, we can say that these models do not show us how we can increase the amount of capital coverage, moreover they lack the ability to show us how we can turn some of it into action and value. although human capital is the most important component of intellectual capital, it can only be realized if there is a structural capital capable of transforming potential of human capital into capital. thinking patterns are virtual systems processing information and knowledge at the individual level. they are formed through education in the family, in school, in the community or by the individual himself. from the point of view of time, thought patterns can be static, dynamic and entropic (bratiano and murakawa, 2004 brătianu, 2007). in short if static models, knowledge (intangible resources) are based on the metaphor of "knowledge regarded as stocks and flows" in dynamic models, which are based on the metaphor of "field". references andriessen, d. (2004), making sense of intellectual capital – designing a method for the valuation of intangibles, amsterdam: elsevier. bontis, n., (1998), intellectual capital: an exploratory study that develops measures and model, management decision. brătianu, c. (2006), un model de analiză a capitalului intelectual organizațional, management & marketing, vol. 1, nr. 3, pp. 17-33. brătianu, c. (2007), thinking patterns and knowledge dynamics. proceedings of the 8th european conference on knowledge management, 6-7 september 2007, barcelona, pp. 152-157, vol. 1, published by academic conferences limited, reading.brătianu, c. (2008) a dynamic structure of the organizational intellectual capital, in: naaranoja, m. (ed.) knowledge management in organizations, pp. 233-243. vaasa: vaasan yliopisto. brătianu, c., (2009), dinamica cunoştinţelor. brătianu, c. (2011 a), changing paradigm for knowledge metaphors from dynamics to thermodynamics, systems research and behavioral science, 28, pp. 160169. brătianu, c. (2011 b), a new perspective of the intellectual capital dynamics in organizations, in: belen vallejo-alonso, arturo rodriguez-castellanos, gerardo arregui-ayastuy (eds.), identifying, measuring, and vahing knowledge-based intangible assets: new perspectives, pp.1-21. new york: business science reference. brătianu, c. (2011 c), knowledge and intellectual capital. bucurești : editura business excellence. brătianu, c., murakawa, h. (2004) strategic thinking, transactions of jwri, vol. 33, no.1, pp. 79-89. statistical models of representing intellectual capital 76 feraru, a. (2009), the concept of knowledge and knowledge management in the romanian business field, studies and scientific researches economic edition, issue 14. feraru, a., (2011), intellectual capital and knowledges premises of he organizational development proceeding progress, innovation, democracy horizon 2025, tg. jiu, issn* issn 2247-465x issn-l 2247 465x , pp. 631-635. feraru, a., ciucescu n. (2011), knowledge and the intellectual capital in modern organizations, annals of the oradea university. fascicle of management and technological engineering, issn 1583-0691, isbn 978-606-10-0128-6 pp. 5106-5111. roos, g., roos, j. (1997), measuring your company’s intellectual performance. long range planning, special issue on intellectual capital, vol. 30, no.3. studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the economic risk in trading companies’ valuation mircea muntean “vasile alecsandri” university of bacău, romania mircea.muntean@ub.ro iulia andreea bucur “vasile alecsandri” university of bacău, romania iuliaandreea.bucur@gmail.com andrei muntean mediterranean agronomic institute of chania, greece andreimuntean1987@gmail.com abstract the negative influence of internal and external factors on the enterprise’s operating activity may lead to the realization of losses and economic-financial imbalance of the enterprise. such situation leads to the economic risk, which can be avoided by diagnosis analysis. the manifestation of the economic risk has repercussions in: obtaining profit from operating activities, the maximization of the enterprise’s value and the increase of the market share. the operational risk can be detected by the method of forecast analysis “cost-volume-profit” or via coefficient of lever exploitation. this paper aims, on the basis of the information of a commerce company, to reveal the influence of risk in assessing the enterprise, as well as the possibilities to maximize its value and the increase in economic and financial performance in a competitive environment. the results of the research demonstrate the impact of the circulating expenditure structure on the enterprise’s financial results, as well as on equity. keywords valuation; economic risk; maximization; economic value jel classification g32; m41 introduction the economic risk, also called operational firms expresses the enterprises’ capacity to adapt operatively and with the lowest consumption of financial resources to the change of the economic and social environment. the presence of the economic risk leads to the reduction of the result and, implicitly, of the enterprise patrimony, with an effect on the enterprise market value. the consequences of the economic risk are “reflected in the reduction of the operating activity result, as a result of increasing the cost of acquisition of the raw materials, goods and tariffs for the provision of services, the payment of wages to staff in no connection with the turnover and labor productivity, the unjustified increase of fixed costs etc” (muntean, 2006). for the enterprise, the economic risk has significance in the elaboration of forecasts regarding the future of the operating activity, the determination of cost-effectiveness and, implicitly, the increase of the patrimony value. an estimation of the economic risk in business practice is carried out by the method of forecast analysis “costvolume-profit”. the application of this method constitutes an instrument of management very useful in business performance analysis by fixing of profitability, the enterprise vulnerability analysis at risk factors that surrounds it and sensitivity analysis useful in the decision making process” (jianu, 2007). according to this 67 muntean, bucur, muntean method, there must be carried out the separation of business expenditure in variable costs and fixed costs, to determine the influence of these categories on profits and, implicitly, the value of the enterprise’s patrimony. the use of this method of forecast analysis allows the setting of the conditions necessary for the realization the microeconomic balance which consists covering costs with income (balance point), the opportunity of making a profit and the maintenance or increase in patrimony value. the increase in the enterprise value supposes the overcoming of the break-even point by covering expenses and achieving a profit in the highest amount possible which would lead to an increase in equity and the net assets of the enterprise. the correlation volume-cost-profit is, for the economic environment, a component that is part of the processes and techniques used for the purpose of drafting a financial-accounting diagnosis performance-oriented and the risks to which economic activities are subject to” (petrescu, 2012) within the enterprise. risk is closely linked to the enterprise performance, correlation expressed by getting as high a profit volume or loss. the determining of enterprise risk or performance is an operation which contributes to the assessment of patrimony and, implicitly, of the capital invested by the owners, taking as a starting point the correlation between revenue and expenditure and the result of the financial year. the setting of the enterprise situation may be determined by economic and financial diagnosis, thus carrying out an assessment of risk performance, and from here the findings concerning the past activity of the enterprise. on the basis of the information and assessment of the real situation, there will be determined the strategic decisions relating to the future of the enterprise. the drawing up of the financial and economic diagnosis requires the assessor’s focus on some specific issues, such as: the study of net assets, the operating result, the economic balance, the financial equilibrium, as well as profitability of the enterprise activity etc” (muntean & bucur, 2014). the analysis, the determination and the assessment of the real situation of an enterprise contributes to the establishment of causes which have an effect on its performance, the risk occurrence, as well as the maximization of the enterprise value. the maximization of the enterprise value established by assessment is the best market value at a given time and the possibility of increasing the wealth in the forthcoming period. it follows from the above that “the enterprise assessment is more than just establishing some property or goods from its assets, but also determining the enterprise capacity to generate flows (profit, cash-flow etc.)” (anghel, 2010). always, the enterprise is considered to be the entity that has the ability to produce goods, and the role of assessment is: risk prevention, increase of economic, financial performances and maximization of patrimonial value. the performance and maximization of the enterprise value is rendered by the size of the net profit and the value equity. in our study we want, on the basis of the enterprise information, to show the influence of risk in the assessment of the commerce enterprise, possibilities to maximize its value and increasing the economic and financial performance in the competitive environment. the results of our research demonstrate the impact of the circulating expenditure structure on the financial results of the enterprise, as well as on equity. the work is structured as follows. the methodology of research is presented in the second section, followed in third section by the diagnosis analysis and the interpretation of the results obtained. the final section of the paper contains a synopsis of our research and the main conclusions made on the basis of the results obtained and their interpretation. 68 the economic risk in trading companies’ valuation the methodology of research specific to the commerce enterprises, the “break-even point is the volume of activity expressed by the critical turnover (cacritical), starting at which there are covered the expenditure on goods (ch m), fixed costs (chf) and the variable expenses (ch v) reported to this volume” (muntean, 2006). the break-even point resulting from the confrontation between total expenses with the turnover and will be attained when the critical turnover balances expenses in the neutral point where the outcome of work is equal to zero (b=0). the determination of the break-even point taking into consideration that commerce enterprises have a diverse range of products and services, is made on the basis of the following relations: at the neutral point (b=0), the commercial margin is: by reporting the equality members to the turnover, we obtain: where: ca critical – critical turnover; ch m – expenses on merchandise; ct – total expenses; b – profit; mc – commercial margin; ch v – variable expenses; ch f – fixed expenses; ca – quota of trade mark-up 100 lei turnover; vn – medium level of variable expenses at 100 lei turnover. the break-even point is used in the evaluation of the enterprise for several purposes: (1) laying down the conditions necessary for the recovery of expenditure of income without profit, in neutral point (b=0): (2) the determination of the safety margin (m s) representing the difference between the turnover (ca) and the break-even point (cacritical), expressing the enterprise capacity to adapt the economic activity to the requirements of the market. the higher the value of this indicator is, the higher the possibility of the enterprise to eliminate the operational risk and to ensure the development of the work in a safe manner. the safety margin is determined on the basis of the calculation relation: (3) the calculation of safety period (is) by reporting the safety margin (ms) to the break-even point (cacritical), on the basis of the relation: the operational risk is removed if the safety margin has higher values than the break-even point. the safety period reflects the position of turnover and expresses the enterprise capacity to adapt to market requirements and competitive environment. (4) the calculation of the efficiency surplus (se) that expresses the share of the safety margin in the turnover. the reduction in the value of this indicator leads to a fall in the turnover to the level of the break-even point and the loss of profitability of operating activity. the 69 muntean, bucur, muntean entry in the enterprise in losses area leads to the reduction in the amount of market value and financial position. (5) the determination of the sampling index (i p) contributes to the setting of fixed expenses (chf) in the total trade margin (m c), being calculated according to the relation: the low level of this indicator contributes to the easier achievement of break-even point, the increase of profitability, the financial position and the market value of the enterprise. the diagnosis analysis and the interpretation of the results the obtained results as a result of the diagnosis analysis for the trading enterprise “alfa” case study, are presented in table 1. table 1 the calculation of the breakeven point of “alfa” ron no. indicators period n n+1 n+2 n+3 0 1 2 3 4 5 1. turnover (ca) 2.790.815,7 3.033.606,9 2.358.296,3 1.782.112,2 2. expenses concerning goods (ch m ) 2.094.943,0 2.266.481,1 1.754.125,9 1.311.418,7 3. commercial margin (m c ) 695.872,7 767.125,8 604.170,4 470.693,5 4. circulating expenses (ch c ) (l.5 + l.6) 909.981,0 980.471,7 1.029.496,1 631.575,5 5. variable expenses (ch v ) 491.283,7 559.027,5 501.715,3 337.577,0 6. fixed expenses (ch f ) 418.697,3 421.444,2 527.780,8 293.998,5 7. profit afferent to turnover (p ca ) -214.108,3 -213.345,9 -425.325,7 -160.882,0 8. medium quota of trade mark-up ( ca ) (%) (l.2/l.1*100) 24,934 25,288 25,619 26,412 9. medium level of variable expenses ( vn ) (%) (l.5/l.1*100) 17,604 18,428 21,274 18,943 10. critical turnover (ca critical ) 5.711.485,0 6.143.712,0 12.148.380,2 3.935.938,2 11. safety margin (m s ) (l.10 – l.1) -2.920.669,3 -3.110.105,1 -9.790.083,9 -2.153.826,0 12. safety period (i s ) (%) (l.11/l.10*100) -51,14 -50,62 -80,59 -54,72 13. efficiency increase (s e ) (%) (l.11/l.1*100) -104,65 -102,52 -415,13 -120,86 14. sampling index (i p ) (%) (l.6/l.3*100) 60,17 54,94 87,36 62,46 15. other operating income 259.934,2 311.841,8 663.637,5 381.818,5 16. total operating income (l.1 + l.15) 3.050.749,9 3.345.448,7 3.021.933,8 2.163.930,7 17. total operating expenses (l.2 + l.4) 3.004.924,0 3.246.952,8 2.783.622,0 1.942.994,2 18. operating result (l.16 – l.17) 45.825,9 98.495,9 238.311,8 220.936,5 19. financial income 6.832,7 15.268,9 15.033,8 3.216,6 70 the economic risk in trading companies’ valuation 20. financial expenses 863,8 13.060,4 2.500,2 0,0 21. financial result (l.19 – l.20) 5.968,9 2.208,5 12.533,6 3.216,6 22. extraordinary income 0,0 0,0 0,0 0,0 23. extraordinary expenses 0,0 0,0 0,0 0,0 24. extraordinary result (l.22 – l.23) 0,0 0,0 0,0 0,0 25. total income (l.16 + l.19 + l.22) 3.057.582,6 3.360.717,6 3.036.967,6 2.167.147,3 26. total expenses (l.17 + l.20 + l.23) 3.005.787,8 3.260.013,2 2.786.122,2 1.942.994,2 27. gross result of the financial year (l.25 – l.26) 51.794,8 100.704,4 250.845,4 224.153,1 28. profit tax (16% *l.27) 8.287,2 16.112,7 40.135,3 35.864,5 29. net result of the financial year (l.27 – l.28) 43.507,6 84.591,7 210.710,1 188.288,6 source: own calculations from the analysis of the submitted data there results: • profit afferent to turnover registered negative values, contributing thus to the reduction of patrimony value and the financial position of the enterprise in the competitive environment; • evolution of the turnover registered values that contributed to the diminishing of the market position and the reduction of equity; • safety margin has negative values, generated by the increase in fixed expenses in relation to the evolution of the turnover, at the expense of variable expenses and lack of consistency in the evolution of the three indicators; • the safety period shows negative values as a result of reduced share in critical turnover and the loss recorded in the carrying out of the turnover; • the index of profitability has recorded negative values due to the high break-even point; • the sampling index has high level as a result of the large share of fixed costs in the circulating expenses; • the operating activity recorded profit by disinvestment of fixed assets. the operating risk influence on the assessment of the enterprise may be determined on the basis of the operating lever coefficient also called the degree of balancing the enterprise operation, where it “expresses sensitivity of the operating result to variations in sales. being the elasticity which measures the percentage increases of this result in response to an increase in the percentage of sales” (petrescu, 2004). this coefficient (cel) is “the indicator by which the economic risk is assessed, i.e. the enterprise inability to adapt in time and with a minimum of effort to the variations in conditions of the economic and social environment” (epuran, băbăiţă & grosu, 1999). the calculation of operating levier coefficient for commerce has in view the relative change of the operating result afferent to turnover (re) in relation to relative change of commercial margin (mc). the coefficient of the operating levier (cle) is determined according to the calculation relation: where: mcv – margin of variable expenses. the risk of exploitation is the larger and can influence the value of the enterprise, as the amount of circulating expenses is close to the value of trade margin and the difference contributes to the reduction or cancellation of the operating activity profit. 71 muntean, bucur, muntean this risk: • is at its maximum, when the circulating expenses cancels the trade margin and reduces the enterprise value; • does not exist, when the result of the turnover is at a maximum and increase the value of the enterprise. • decreases with the increase of the trade margin and reduces the circulating expenses, in particular of fixed expenses, a fact that generates the increase of the enterprise value. the economic risk is determined by the trading margin, the share of fixed expenses and the occurrence of the turnover as opposed to the critical point. the dependency of the operating levier coefficient towards the critical point is emphasised according to the calculation relation of turnover and of the result generated by additional turnover above the balance point, as follows: where: ms – safety margin. table 2 the calculation of the operating levier coefficient of “alfa” ron no. indicators period n n+1 n+2 n+3 0 1 2 3 4 5 1. commercial margin (m c ) 695.872,7 767.125,8 604.170,4 470.693,5 2. variable expenses (ch v ) 491.283,7 559.027,5 501.715,3 337.577,0 3. margin of variable expenses (mc v ) (l.1 – l.2) 204.589,0 208.098,3 102.455,1 133.116,5 4. operating result afferent to turnover (re) -214.108,3 -213.345,9 -425.325,7 -160.882,0 5. coefficient of operating levier (cle) (l.3 / l.4) -0,95 -0,97 -0.24 -0.82 6. turnover (ca) 2.790.815,7 3.033.606,9 2.358.296,3 1.782.112,2 7. safety margin (ms) -2.920.510,1 -3.118.631,1 -9.802.551,6 -2.153.610,7 8. coefficient of operating levier (cle) (l.6 / l.7) -0,95 -0,97 -0.24 -0.82 source: own calculations from the data presented (table 2) there results that the operating activity is subject to operational risk as a result of the variable expenses uncorrelated bias with trade margin. in these circumstances, the enterprise value decreases with the increase of the operating risk. the avoidance of the operating risk may be carried out by an increase in turnover and trade margin to a percentage higher than variable expenses, and fixed expenses to be kept fairly constant. by avoiding the operating risk of exploitation there is ensured the increase in the value of the enterprise, the consolidation of its position on the market and the financial position in the competitive environment. the increase in the result of the financial year from the operating activity contributes to the increase in equity and implicitly, of the enterprise value under the conditions of financing the activity of their own financial sources. thus, the operating activity is not subject to financial risk. the determination of the net result of the financial year and its contribution to the change of equity and implicitly of the net assets is realised by the calculation model (oprean, 1997): net result = total income – total expenses = [(turnover + fixed production + variation of stocks + other operating income) + financial income + extraordinary income] – [(variable expenses + fixed expenses) + financial expenses + 72 the economic risk in trading companies’ valuation extraordinary expenses] – tax profit = [(safety margin + critical turnover + fixed production + variation of stocks + other operating income) + financial income + extraordinary income] – [(variable expenses + fixed expenses) + financial expenses + extraordinary expenses] – tax profit = equity at the end of the financial year – equity at the beginning of the financial year – capital infusion during the financial year. through this model of calculation there is emphasised a correspondence of certain indicators presented in the profit and loss accounts, reflecting the contribution of economic flows generating income and expenditure on the financial structure and the value of the enterprise. table 3 the determination of the result of the financial year of “alfa” ron period total income total expenses equity at the end of financial year equity at the beginning of financial year capital infusion during the financial year the result of the financial year (col.1-col.2 or col.3-col.4-col.5) 0 1 2 3 4 5 6 n 3.057.582,6 3.014.074,9 512.395,5 885.475,1 -416.587,3 43.507,7 n+1 3.360.717,6 3.276.125,9 489.349,5 512.395,5 -61.545,7 84.591,7 n+2 303.697,6 92.987,4 271.983,3 489.349,5 -73.869,2 210.710,2 n+3 216.714,3 1.978.858,6 349.471,1 271.986,3 -110.803,9 188.288,7 source: own calculations conclusions the avoidance of the economic risk economic is possible by changing the profitability in relation to turnover and removing the negative influence of the factors with action directly or indirectly on the enterprise activities. the removal of the economic risk has a positive consequence on: the profitability of operating activities, the increase in the enterprise patrimony and the financial position on the market. the relationship risk – profitability should emphasize the enterprise opportunities in economic growth and hence of operational profit from operating activities. the achievement of these goals will contribute to the evaluation of the enterprise and its consolidation in the competitive environment. from the data presented (tables 1-3), the financial result afferent to turnover recorded over the whole period negative values having influence on the reduction of the enterprise value: the positive values of the financial year result from operation activities are carried out due to the income resulted from the disinvestment of fixed assets with negative influence in the evaluation of the enterprise. as a result of reducing the value of the fixed assets, the equity and the enterprise value decreased. the increase in the enterprise value is carried out by avoiding the operating risk, the increase in turnover by increasing the revenues and reducing the afferent expenditure on financial results of the financial year in question. specific to the commerce enterprises is the increase of trade margin in conjunction with decreasing fixed expenses and increasing profit from operating activity. this is possible by the achievement of the turnover with stocks of goods with trade margin to cover circulating expenses achieving a higher profit to contribute to the increase in equity. 73 muntean, bucur, muntean references anghel, i. et al (2010), evaluarea întreprinderii, bucureşti, editura economică. epuran, m., băbăiţă, v., grosu, c. (1999), contabilitate şi control de gestiune, bucureşti, editura economică. jianu, i. (2007), evaluarea, prezentarea şi analiza performanţei întreprinderii, bucureşti, editura ceccar. muntean, m. (2006), analiza echilibrului economico-financiar al întreprinderilor comerciale, bacău, editura edusoft. muntean, m., bucur, i. a. (2014), evaluarea întreprinderii, bacău, editura alma mater. oprean, i. (1997), întocmirea şi auditarea bilanţului contabil, deva, editura intelcredo. petrescu, s. (2004), diagnostic economico-financiar, iaşi, editura sedcom libris. petrescu, s. (2012), performanţă şi risc în afaceri, iaşi, editura universităţii “alexandru ioan cuza”. 74 table 1 the calculation of the breakeven point of “alfa” table 2 the calculation of the operating levier coefficient of “alfa” table 3 the determination of the result of the financial year of “alfa” studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 136 the pervasiveness of metaphor in the language of economics gabriela telibașa “vasile alecsandri” university of bacău, gabriela_andrioai@yahoo.com abstract nowadays, metaphors can be seen in a totally new light, exceeding their primary function of being used only as ornamental tropes and becoming powerful instruments of expressiveness. they are active in the development of a conceptual framework for representing new ideas, as well as in providing new meaning. with their help, readers gain a more precise understanding of the terminology and scientific concepts and therefore, contribute to a greater accuracy in the use of language. given their pervasiveness, language becomes less abstract and more manageable in concretising, objectivising or even humanising concepts. economy related topics are part of our everyday’s language. having a close relationship with human beings and human society, the field of economics becomes a rich linguistic domain which, if explored, proves to be very productive in offering semantic extension. applying conceptual terminology to corpus material we shall try to identify, classify and gather information with specific interest in metaphors that belong to the field of economics. keywords economy; conceptual metaphors; structural metaphors; orientational metaphors; ontological metaphors; source domain; target domain jel classification z 19 introduction different definitions have been given to metaphors along time but, what is important to notice is that theoreticians have come to the conclusion that metaphors can be seen in a totally new light, exceeding their primary function of being used only as ornamental tropes and becoming powerful instruments of expressiveness. the contemporary theories have criticized the traditional conception about metaphor and took into consideration the trope’s ornamental function, as well as the relationship between the metaphor and the concept. nowadays, we can talk about the pervasiveness of metaphor in everyday life, not only in language (as classical theories demonstrate) but also in thought and action. this new perspective, developed by george lakoff and mark johnson in their book metaphors we live by, had a tremendously positive impact on the study of metaphor. according to their cognitive view of metaphor, language is filled with a large number of metaphorical expressions that are not frozen, but which reflect large-scale metaphorical systems. thus, in order to understand the nature of language we have to look at our conceptual world and see how it has shaped signs because language covers only a part of the world of concepts which humans have or may have. in conceptual theories, metaphor is defined as understanding one conceptual domain in terms of another conceptual domain, a domain that can be any coherent organization of experience. the conceptual domain from which we draw metaphorical expressions telibasa 137 corresponds to the source domain; and the conceptual domain that we try to understand corresponds to the target domain. metaphorical connections arise from the perception of correlations between different domains such as life, living organisms (plants, tress, flowers, etc.), food (solid or liquid substances), economics, information technology, engineering, sports, etc., but they can also make us see new associations or they can make us attribute new structures or properties to objects, concepts and situations. this is done by means of the mapping of a source domain onto a target domain. with the cognitive view, metaphor becomes a matter of conceptual mapping from a source domain (the domain that is mapped) to a target domain (the domain onto which it is mapped), the metaphorical expressions being the primary exemplars of such conceptual mappings. thus, through mapping we understand a systematic set of correspondences that exist between the constituent elements of the source and the target domain. to know a conceptual metaphor is to know the set of mappings that applies to a given source-target pairing. case study our case study aims at applying conceptual terminology to corpus material trying to identify, classify and gather information with specific interest in metaphors that belong to the field of economics. nowadays, economics plays a very important role in our life because we are interested in how we get our living. prices are continually increasing, industry is also changing, the government makes efforts to stabilize economies and prevent inflation. economics is about the everyday things of life thus, it is normal that terms such as budget, labour, market, stock exchange, bills, insurance, management, financial deficit, capital, money, payment, banks, etc., to be familiar to people. having such a close relationship with the human society, the field of economics becomes a rich linguistic domain which can be explored. metaphor, at its turn, is a concept with multidisciplinary implications and can be found in every aspect of human thought. it becomes obvious that in trying to perceive the world of economics, metaphor is indispensable in defining economic problems and principles. it sometimes happens that, given their daily usage, people are no longer conscious of the metaphorical structure on which their sentences base. in such cases, they lose their metaphorical value and become dead metaphors. this is the case of the following example: economy is a car, not a body. (bnc) the interpretation of this metaphor leads to a new meaning but it is not that rich as other examples we are going to explain. a car is a more familiar concrete concept than the concept of economy. when comparing economy with an object such as a car, we understand that economy, as a whole, can work as smoothly as a car. this meaning may give us the impression that economy is as predictable as a machine or that it may be kept under control exactly the way people control the machines they are working with. since a metaphor relies on the literal use of a word just to indicate that the speaker wants to communicate something other than the literal meaning, we believe that the negation has been used here, only to create a contrast between two conceptual metaphors. in fact, the negation is trying to hide the features the metaphor is trying to highlight. in the case of “economy is not a body”, the meaning implied is that, in opposition to cars, human bodies are fragile. applying the cognitive theory, this metaphor is of the type a is b and belongs to the conceptual metaphor: economy is a machine/mechanism. according to lakoff and johnson there are three categories of conceptual metaphors: structural, orientational and ontological. such metaphors activate at least two domains of knowledge by replacing the employed domain onto the source domain. while interpreting conceptual metaphors, it is important to have in mind the possibility for the three categories to overlap. our example belongs to structural metaphors. within this the pervasiveness of metaphor in the language of economics 138 type, conceptual metaphors refer to abstract metaphorical systems in which an entire (abstract) complex mental “concept is metaphorically structured in terms of another” (usually more concrete) concept. structural metaphors “allow us to use one highly structured and clearly delineated concept to structure another.” such metaphors activate at least two domains of knowledge by replacing the employed domain onto the source domain. (george lakoff and mark johnson, 1980) in our case economy is the abstract concept which is explained in terms of the more concrete concept of machines. usually more than one abstract knowledge domain is structured in terms of the same basic source domain (the abstract domains being partially structured in terms of more concrete domains). the machine as a source domain is metaphorically applied to understand the abstract concepts of economy. in expressing the metaphor in written terms, the more abstract domain (economy) comes first; a form of the verb to be immediately follows it, while the concrete domain (body, food, plant, liquid, etc.) is placed at the end. all the constituting parts of the metaphor are written in uppercase letters. other examples illustrating the conceptual metaphor economy is a machine are represented by the following examples: the funds received are the fuel needed to make this business work. (bnc) a car won’t start without fuel. here, funds are considered very important for the future of the business. another similar example of this type is: an aid programme was established to oil the wheels of economic reform in the region. (http://dictionary.cambridge.org/dictionary/british/oil-the-wheels accessed on 20 march 2015.) by “oiling the wheels” the reform will work smoothly. wise market transactions can contribute to the well functioning of our company. (bnc) without good transactions a company won’t resist on the market. your plan is the engine needed to make our business work. (bnc) the engine is the most important part of a car without it, a car wouldn’t start. a good plan can make a business work. this is the capital needed to fix your business. (bnc) machines break, businesses lose capital, in order to fix these problems we need solutions. these examples are illustrative as they use some of the terms belonging to the domain of machines which facilitate the understanding of economic phenomena. going back to our former example, “economy is a car not a body”, we may interpret it differently if we take into consideration that both cars and human bodies are part of the source domain which may also be seen as containers. an abstract complex system such as economy may be metaphorically conceptualized in terms of a body, the body of a person. this is possible because the human body is a powerful centre of metaphorical expansion. the body serves here as a container and may also function as a donor domain. the idea of a human body seen as a container with a bounding surface and an in-out orientation belongs to lakoff who states that not only objects but substances as well can be viewed as containers. firms, trade unions, or even the economic system itself may be seen as economic body. (george lakoff and mark johnson, 1980) in the conceptual metaphor economy is a body/ a human being, the individuals anthropomorphize economic activities. in other words, through anthropomorphic metaphors, the transfers of meaning take place from the human body and its parts, and from human senses and human passions to inanimate objects. but, anthropomorphic metaphors may also draw comparisons to the psychology of the human mind. in this case, economy can disappoint societies, may suffer exactly like individuals, or may recover from crisis. in anthropomorphic metaphors, the parts of the body are metaphorically used to describe different aspects of economy. we consider that the following examples speak for themselves: http://dictionary.cambridge.org/dictionary/british/oil-the-wheels telibasa 139 economic depressions: cause and cures. (bnc) (it is possible for economy to collapse due to external causes. the same way people feel depressed and cannot recover without help.) these are the permanent scars of recession. (bnc) (recessions generally occur when there is a widespread drop in spending. this process usually leaves signs.) the heart of dynamic economy beats strong. (bnc) (the heart is considered the most important part of a body; economy is associated with living organisms.) in capitalism, money is the life blood of society but charity is the soul. (the streams of money flow in and out exactly like blood passes through our vessels.) this is also an example of a liquid metaphor that we will also discuss later, in this paper. economic performance in 1989 showed a great improvement as a result of recoveries in the sugar and tourism industries, the backbone of the economy. (bnc) (the backbone supports the body.) the us economy is back on its feet again. (bnc) (economy has recovered.) persons like caliban have no head for money. (bnc) (without a brain we cannot reason.) we didn’t have any supplies on hand and were unable to finish the job. (on hand, meaning in one’s possession). the new manager has his finger in the pie of many small businesses. (to be involved in something, to receive money for something). the small computer company went belly up several months ago. (to go out of business because of financial problems.) according to the cognitive perspective, some types of metaphors allow us to orient concepts, refer to them, and quantify, etc., them, as we do with some orientational and ontological metaphors. in the example above, the metaphoric expression went belly up also functions as an orientational metaphor. orientational metaphors, as their name states, give concepts a spatial orientation. they are metaphors in which concepts are spatially related to each other, as in the following ways: up and down, in and out, front and back, on and off, deep or shallow, central or peripheral. in each case, the target concepts are paired the way the source concepts are: antonymous or counterparts. in our investigation we have encountered metaphoric expressions belonging to the conceptual metaphor economy is plant. words from the source domain of plant are used metaphorically to describe aspects of economy. the most commonly used items are flourish, weed out, spread, growth, to put down to roots, to soar, to blossom, etc. knowledge about plants trees, flowers, fruit and vegetables are very accessible to people and contribute to the understanding of economy. the examples selected from the british national corpus are illustrative for this type and speak for themselves. the new business has started to put down roots. grow your money tree by planting money seeds. the best way to allow an economy to flourish is to stand back and give room for choice, competition, incentive and the will to succeed. it is spreading to other firms too, as banks weed out their client lists in order to raise profits and cut asset growth. profit is soaring. the entire company grew from one simple idea. healthy diet, healthy environment with a fruitful economy! the firm blossomed into a major real estate player. up to know, we have seen that economy can be a machine/ a mechanism/ an object, a body, a plant. we have also found evidence of the conceptual metaphor economy is a substance/ a solid or a liquid. money is food is another illustrative example of conceptual metaphor of the type a is b. every person is said to lead a the pervasiveness of metaphor in the language of economics 140 hand-to-mouth existence, although this expression is more often used for the person in the first situation, the one who must put whatever food comes into his/her hand into his/her mouth immediately in order to survive. people in this condition are living from meal to meal by necessity, not by choice. some linguistic instantiations of the conceptual metaphor can be expressed as: money is food. when people cook the books it is said that they keep false accounts to make money illegally or avoid paying taxes. all the tea in china may be used to refer to honest people that wouldn’t do anything not even for a large sum of money. dough is used to refer to cash and other financial assets. the connection between dough and money may not be apparent taking into consideration that in baking, dough is too rigid to leak but flexible enough to knead. another possibility is to take into consideration the metaphor to be rolling in dough which suggests the existence of a large sum of money, more than needed. when somebody skims the profits, it means that one hides earnings or profits in order to avoid paying taxes on them. passing from dough to cakes, the expression to have a cake and eat it refers to a person who wants a well-paid secure job, without working evenings or weekends. be your bread and butter refers to an activity or job that somebody does in order to get the money he needs. the metaphor a person selects to frame a concept focuses attention on some aspects but ignores others. for example, in considering food “a commodity” people’s attention draws on commerce, on anything that can be marketed: bought or sold. expressions such as he won’t buy that or the idea won’t sell emphasize how ideas, viewed as food products can be intellectually marketed. through such familiar examples, abstract or complex concepts can be easily understood. not only food may be seen as a commodity but ideas also, the way we package our ideas or ideas that won’t sell. there are always marketing ideas to boost our business. that’s a worthless idea. these are only some examples of metaphorical expressions offering guidance into a metaphorical world. when metaphoric expressions have associated conventional images, it is common for an independently motivated conceptual metaphor to map that knowledge from the source to the target domain. when talking about leadership and budget, the following examples speak for themselves: he is the big cheese, where the big cheese is “the boss;” he/she is the breadwinner in the family used “to portray the person who earns the most money,” here food is about gender. bean counter stands for the job of accountant in the example “he had been working as a bean counter for 20 years before he resigned.”(bnc) money is food is a familiar example of a structural metaphor, as it provides understanding of one concept in terms of another. money is referred to as dough, bread and bacon. in the example he brings home the bacon, bacon is used to refer to the amount of money that family lives on. we conceptualize a lot of abstract and less delineated domains in terms of domains that are relatively better understood and more delineated in our physical and cultural environments. a metaphor involves cross-domain mappings: the source (more delineated) domain is mapped onto the target (less delineated) domain, and these metaphorical mappings are experientially grounded. with the conceptual metaphor money is liquid, we talk about liquid assets, liquidity, liquidation, cash flow, outflow, currency. economists use the term liquidity for money because banks act like tanks of water; thus, banks become a kind of reservoirs with streams of money flowing in and out. many examples of metaphoric expressions belonging to the conceptual metaphor money is liquid may also be classified as orientational, because money flows in and out. another illustrative example: funds rush to pour money into online lending. (bnc) the expression cash flow also shares similar characteristics to water flow. there are plenty of metaphorical examples which highlight the similarity between cash and liquid. liquidity equates convertibility. cash is highly liquid because one can convert it to almost anything (from cars to household appliances, houses and real estates, land, firms, etc.) in a very short period of time. telibasa 141 alternatively, non-liquid assets can't be converted from one form to another. the fact that banks hold a number of fairly liquid assets, such as money at call, bills of exchange and short-dated bonds, makes it difficult to identify a simple liquidity ratio. liquid asset refers to the money that a company or a person has, and the property they can easily exchange for money. as a metaphor, money acquires the attributes of a liquid, a wet substance which flows, has no fix shape and can be easily exchanged or sold to pay debts. with liquidity risk, it should be recognised that diversification into new areas of business may reduce the ability of institutions to obtain liquid funds. there are plenty of metaphorical examples in the field of economics which highlight the similarity between cash and liquid. (bnc) we find the following examples illustrative for our investigation. the problem with a high-tech start-up is that you have a net cash outflow. (bnc) ‘a number of victims have already gone into liquidation,’ he added. (bnc) one member asked for details of how my father had gone into voluntary liquidation. (bnc) mundie, one of the three founders of alliant in 1982, will remain on the board to advice in final sale of the service business and ultimate liquidation of the company. (bnc) the fact that banks hold a number of fairly liquid assets, such as money at call, bills of exchange and short-dated bonds, makes it difficult to identify a simple liquidity ratio. many of these terms have been accepted by the english speakers and are known as lexical metaphors. somebody who is without debt is called solvent. a solvent business is a company that lacks liquidity. a rich person is called affluent. in affluent suburbs wealthy people have large houses and tree-lined streets. affluent workers remain, in spite of their affluence, men who live by selling their labour power to their employers in return for wages. in an affluent society the material benefits of prosperity are widely available. spending money is also like moving a liquid. when somebody invests money in something, they prim/pour the pump, sink, inject money into it, or drain. “if several big bills fall due when you first start you may have to ‘prime the pump’ with savings”. in the late 1800s this expression originally was used for pouring liquid into a pump to expel the air and make it work. in the 1930s it was applied to government efforts to stimulate the economy and thereafter was applied to other undertakings. (dictionary http://idioms.thefreedictionary.com/prime+the+pu mp, accessed on 20 march 2015) arriving as ostentatiously as you'd expect from the seriously wealthy, business angels pump money into private companies in return for shares. (bnc) our investigation continues with other examples of liquid metaphors which refer to causing (a resource or supply of something) to be used up gradually and often completely, the same as we draw off (a liquid) by a gradual process. as an election approaches, the government of the day will pump money into the economy. (bnc) the mining industry has predicted that the ban will have dire economic consequences, forcing the loss of hundreds of jobs and forcing investors to sink funds into overseas mining ventures. (bnc) why does guinness sink money into an elephant reserve in kenya and j. sainsbury splash out on a dolphin patrol in the far east? (bnc) http://idioms.thefreedictionary.com/prime+the+pump http://idioms.thefreedictionary.com/prime+the+pump the pervasiveness of metaphor in the language of economics 142 if it is likely that the purchaser has to inject money into the business it could end up losing more than it paid if there is a total disaster and the vendor's liability is limited in this way. we pull the plug on it when we stop supporting something financially. (bnc) the government pulled the plug on spending (bnc) (to prevent from happening or continuing, to stop spending money on something.) mr o'hare suspects that ‘not that many [profit sharing schemes] have been put in place over the last couple of years’ because of the cash flow drain represented by the company's contributions to the fund. (bnc) just less than half the money created went down that drain. in the immediate post-war period germany constituted the single most important drain on the dollar. (bnc) if there's a lot of money floating about in this area then i think that, some committee or other should be looking at the refurbishment of the courts which are a disgrace. (bnc) in this category of conceptual metaphors proved to be the most flourishing. here, we have also identified examples of hyperboles, figures of speech based on the exaggeration used for the sake of emphasis: money poured into the market after the thin pre-election trading. (bnc) the high interest rates offered made funds flood into our bank. (bnc) an extra £2 billion flooded into the market as the top 100 share index rose by over 13 points. (bnc) america's banking troubles have also brought in business: swiss banks have been flooded both with deposits and loan requests from blue-chip american firms. (bnc) as we have observed, metaphor is perceived as involving processes of conceptual blending in which the target is understood in terms of the source. liquid, as the source domain constitutes the framework for the target domain determining the ways in which the target domains refer, and the ways we act, as in the case of money. only some of the particular features of the literal meaning of the source domain (vehicle) are being transferred to the target domain (topic). the relationship between the literal and metaphorical meanings or the grounds is responsible for the way metaphor works. for example, a typical feature in the target domain liquid, a substance which exhibits a characteristic readiness to flow and little or no tendency to disperse, and is amorphous but has a fixed volume and is difficult to compress. at the same time, exactly as water, it is a nutrient that sustains life/ a liquid necessary for the life of most animals and plants. money is liquid is an ontological metaphor which gives shape to abstract concepts and helps us, conceptualise them as objects. money is what we earn by working and what we spend in order to buy things. money is the most liquid asset of all because it is the most common medium of exchange; it does not have to be converted into anything else in order to make purchases. money is liquid is an ontological metaphor which gives shape to abstract concepts and helps us, conceptualise them as objects. money is what we earn by working and what we spend in order to buy things. money is the most liquid asset of all because it is the most common medium of exchange; it does not have to be converted into anything else in order to make purchases. as our investigation shows, the field of economics can play the role of the source domain which can be used for the concept area from which metaphor is drawn. it is interesting to note that not all the aspects of the source necessarily map onto the target but only the prototypical features. telibasa 143 nevertheless, similarities derive from correlations and the grounds bases on them. unfortunately, some of the metaphors are so often used that one is unaware of their metaphoric meanings and they stop being perceived as metaphors and become conventionalised expressions. conclusions this paper demonstrates the pervasiveness of metaphors in everyday language and its capability of creating new realities. metaphorical expressions can offer people guidance into a metaphorical world in which concepts lead them on an organised path of daily activities. when metaphoric expressions have associated conventional images, it is common for an independently motivated conceptual metaphor to map that knowledge from the source to the target domain. the economic domain is available for anyone who wishes to take a well-understood aspect from a familiar domain and use it in such a way as to stand for a thing as a whole or just for a part of it. the cognitive approach proved to be relevant for the research; metaphors offer a variety of the interpretative use of language and give rise to semantic extension. references andrioai, g. (2009), conceptual metaphors based on food idioms, proceedings of the 2nd roass conference, transmodernity. managing global communication, alma mater publishing house, bacău, pp. 505 – 517. andrioai, g. (2009), a cognitive approach to metonyms based on food, interstudia. semestrial review of the interdisciplinary centre for studies of contemporary discursive forms, volume language, discourse, society, nr. 3, ed. alma mater, bacău, pp. 109-118. andrioai, g. (2009), metaphors and metonyms are not mere words. a food-based analysis on conceptual metaphors and metonyms, style in language, discourses and literature, v, horia hulban (editor), lumen, iaşi, pp. 91-103. avãdanei, ş. (1994), la început a fost metafora..., editura virginia, iaşi. hulban, h.(editor) (2005) metaphorical models, style in language, discourses and literature i, lumen, iaşi. hulban, h. (2001), syntheses in english lexicology and semantics, ed. spanda, iaşi. lakoff, g., johnson, m., (1980) metaphors we live by, university of chicago press. neagu, m., (2005), cognitive linguistics. an introduction, editura didactica şi pedagogică r.a., bucureşti. ricoeur, p., (1977), the rule of metaphor. multi-disciplinary studies of the creation of meaning in language, translated by robert czerny with kathleen mclaughlin and john costello, sj, routledge & kegan paul, english translation, university of toronto press. ullmann, s., (1967), the principles of semantics, basil blackwell, oxford. the heart of dynamic economy beats strong. (bnc) (the heart is considered the most important part of a body; economy is associated with living organisms.) economic performance in 1989 showed a great improvement as a result of recoveries in the sugar and tourism industries, the backbone of the economy. (bnc) (the backbone supports the body.) microsoft word pacurari, muntean engl. enterprise’s performance evaluation on the basis of value added doina păcurari, vasile alecsandri university of bacău mircea muntean, vasile alecsandri university of bacău abstract: important indicator, used in performance analysis, value added expresses enterprise’s contribution to national gross domestic product. the value added through economic activity developed by enterprise should assure the remuneration of all its life participants: employees, investors, state and enterprise itself. information referring to enterprise capacity of generating value added should be based on decisions concerning future enterprise decisions. the present article presents, by means of a case study, value added calculation (by subtractive and additive method) and their analysis. key words: added value, performance, subtractive method, additive method, production factors, remuneration one of the main indicators used in european countries for enterprise’s performance appreciation is value added. this offers a wide perspective on the enterprise’s capacity of value creation, taking into consideration not only the investors interests but the ones of the other direct or indirect participants to economic activity as well. the value added expresses the increase on value obtained in the frame of current activity, resulted from use of resources that enterprise may dispose, over the value of goods and services emanated from third parties. the production of the exercise constitutes the indicator that is placed at the basis of value added determination. this aspect is due to the fact that the production is the measure of activity developed by enterprise during the financial exercise, activity for which external supplies, under the form of intermediary consumption, were consumed. the difference remaining after these consumption deductions represents the value added produced through own production factors contribution. the value added is found between purchasers (upstream market) and sales (downstream market), being a measure for action means suitable to enterprise and characterising therefore its performance. the relevance of value added surpasses the one of turnover, the latter being incapable of measuring the economic enterprise’s power. there may be enterprises that register the same turnover but have different activity objectives and the value added that it realised is also a different one. unlike the turnover, that also includes the value of purchases of raw materials, materials, goods and services (that are found in the turnover of providing firms), the value added comprises only the equivalent of the considered enterprise’s activity. by its content, the value added is the microeconomic equivalent of gross domestic product. also, gross domestic product represents the sum of enterprise’s values added registered on national level. the indicator expresses the enterprise’s contribution to total goods and services production, on branch or national level, allowing the appreciation of methods used in productive process as well as in production’s structure and integration degree. 82 studies and scientific researches ‐ economic edition, no. 14, 2009  information given by analysis and diagnostic of value added has to stay, among others, on the basis of the managerial decisions concerning enterprise’s future development. the future performance planning cannot be realised without taking into consideration the enterprise’s capacity of generating added value. the value added may be determined through two methods: subtractive method (synthetic), according to which goods and services consumption coming from third parties are subtracted from the realised production; additive method (analytical), which supposes a reversed process, pointing out the repartition elements of value added, where actually the production costs that has to be remunerated are involved. the analysis of value added calculated by subtractive method (synthetic) according to subtractive method, value added (va) is calculated as difference between the exercise production (pe), to which commercial margin (mc) is added (whether the enterprise also has commercial activity) and intermediate consumption of goods and services (ci) coming from the third parties: va = pe + mc – cit commercial margin, as difference between sales of goods and their purchase cost represents the supplement value brought by commercial activity, as sold value added. by reporting the value added to turnover the degree of economic integration of production can be determined, on vertical. the higher is the enterprise economic integration, the lower are the external contribution dependence and afferent risk degree. in order to illustrate, we present in follow up the value added calculation through subtractive method. example used is that of a retail company, from construction materials domain. the analysis was realised for 2004-2008 period, on the basis of data published in yearly financial statements. table no.1. value added calculated by subtractive method -thousands lei no specification year 2004 2005 2006 2007 2008 1 commercial margin (mc) 16.892 25.197 36.315 58.310 93.058 2 exercise production (pe) 520 561 1.614 4.991 5.412 3 commercial margin + exercise production (rd.1+2) 17.412 25.758 37.929 63.301 98.470 4 total material expenses * 1.712 2.953 5.725 9.993 12.021 5 goods and services from the third parties 2.681 3.700 7.706 14.044 12.385 6 intermediate consumption (ci) (rd.4+5) 4.393 6.653 13.431 24.037 24.406 7 value added (va) (rd.3-6) 13.019 19.105 24.498 39.264 74.064 8 index increase of mc (%) 100 149 215 345 551 9 index increase of pe (%) 100 108 310 960 1040 10 index increase of mc+pe (%) 100 148 218 364 566 11 index increase of ci (%) 100 151 306 547 556 12 index increase of va (%) 100 147 188 302 569 13 turnover (t) 80.132 121.012 174.780 254.087 395.491 14 rate of value added(va/t) (%) 16 16 14 15 19 83 studies and scientific researches ‐ economic edition, no. 14, 2009  * includes row materials and consumables, other material expenses and external charges (on energy and water) according to above presented data, the value added registered an increasing tendency, more emphasized in the latter part of the period. except the year 2008, the growth rate of value added was inferior to the growth of intermediate consumption. the value added rate maintained in 2004-2007 period around 15%, in 2008 registered an increase of 4%, reaching therefore a level of 19%. this evolution indicates a conservation of the vertical integration degree, respectively of enterprise’s dependence on external material resources acquisitions. the analysis of value added calculated by additive method (analytic) the additive method is a repartition method that supposes the summing of structural elements of new-created value, namely: staff expenses (wages and social protection expenses), taxes due the state (excepting the value added tax), financial expenses, depreciation of fixed assets and respectively the net value added after depreciation deduction. according to this method, value added may be calculated starting either from the net result of financial exercise or from the operating result, as following: a) on the basis of net result: va = rn iex + eex if + ef other io + other eo ios + aj + tax + es where: va value added rn net result iex / eex – extraordinary revenues / extraordinary expenses if / ef financial revenues / financial expenses io / eo operating revenues / operating expenses ios revenues from operating subsidies aj – adjustments concerning provisions and value adjustments on assets tax –other taxes, duties and similar expenses es – staff expenses b) on the basis of operating result: va = ro – other io + other eo ios + aj + tax + es this calculation pattern highlight the investment consumptions role (represented by expenses with depreciation and adjustments for impairment of assets), next to other production factors, on the gross value added creation. by excluding the depreciation and adjustments concerning the fixed assets (ajai) the net value added is obtained: net value added = gross value added – ajai in interpreting the net value added there should be taken into consideration the methods used by enterprise in what the fixed assets evaluation and depreciation is concerned. the determination of the value added through additive method allows analysis such as growth factors, value added structure according to the contributors to capital as well as value added distribution to the remuneration the production factors – labor and capital, the only ones who contribute to realisation of new created value. for the analysed firm, the value added calculated starting from the operating result is presented as follows: table no.2. value added calculated by additive method 84 studies and scientific researches ‐ economic edition, no. 14, 2009  -thousands lei no specification year 2004 2005 2006 2007 2008 1 operating result 10.757 13.476 13.930 27.638 52.222 2 other operating revenues 0 803 1.039 3.313 15.129 3 other operating expenses * 0 -613 -808 3.063 16.007 4 revenues from operating subsidies 0 0 0 0 0 5 adjustments on provision 0 0 0 0 0 6 adjustments for impairment of assets 669 3.669 6.561 4.417 7.057 7 value adjustments on assets 0 21 168 21 67 8 other taxes, duties and similar expenses 345 356 573 617 975 9 staff expenses 1.248 2.999 5.113 6.821 12.864 10 gross value added (rd.1-2+34+5+6+7+8+9) 13.019 19.105 24.498 39.264 74.063 11 net value added (rd.10-6) 12.350 15.436 17.937 34.847 67.006 * only expenses with compensations, donations and disposal of assets are retained from heading “other operating expenses” in the income statement. structural analysis of the value added points out the participation of the repartition elements on the creation of value added and reflects the production factors remuneration according to each contribution: a) labor remuneration = staff expenses value added b) state remuneration = taxes and charges value added c) creditors remuneration = financial expenses value added d) investments remuneration = amortizations and depreciation adjustments value added e) enterprise remuneration = net profit value added the remuneration of the production factors on the account of value added highlights the fact that every factor incorporates two different parts: one corresponds to an added cost for enterprise and other corresponds to a sampling of result. the added cost is the cost of enterprise activity, added to goods and services purchased from outside, while the sampling of result are components of net result that are distributed to production factors under the form of dividends, profit tax, selffinancing. analysed as a sum of added costs and shares of results, the value added offers an image on the evolution of these costs, from where useful information for accounting result. schematically, this summing can be represented as follows: added value = added costs + shares from result i. labor = staff expenses + employee participation in profits 85 studies and scientific researches ‐ economic edition, no. 14, 2009  ii. capitals iii. state iv. enterprise = = = financial expenses taxes and charges amortisements + + + shareholders dividends profit tax self financing the value added structuring according to remuneration of participants in the enterprise activity supposes the knowing of the profit distribution modality, aspect found in explanatory notes of annual financial statements. table no. 3. structure of value added on participants in the business of the company -thousands lei no specification year 2004 2005 2006 2007 2008 1 labor remuneration (rd.1a+1b) 924 2.222 7.859 12.123 25.865 1a -staff expenses 924 2.222 3.859 5.123 9.865 1b -employee participation in profits 0 0 4.000 7.000 16.000 2 taxes and charges due the state (rd.2a+ 2b+ 2c) 2.945 3.896 4.923 6.246 11.589 2a -social insurance and protection 324 776 1.254 1.697 2.998 2b -other taxes, duties and similar expenses 345 357 573 617 975 2c -profit tax 2.276 2.763 3.095 3.932 7.615 3 creditors (rd.3a) 111 241 602 1.422 2.296 3a -interest expenses 111 241 602 1.422 2.296 4 shareholders (rd.4a) 0 8.283 5.955 10.906 15.819 4a -dividends 0 8.283 5.955 10.906 15.819 5 self-financing enterprise (rd.5a+5b) 8.749 4.271 8.128 12.510 27.600 5a -adjustments for impairment of assets and provisions 669 3.690 6.729 4.439 7.125 5b -profit carried forward 8.081 581 1.400 8.071 20.476 6 correction elements* 290 190 -2.970 -3.945 -9.106 7 value added (rd.1+2+3+4+5+6) 13.019 19.105 24.498 39.264 74.063 8 labor remuneration (%) (rd.1/rd.7) 7 12 32 31 35 9 state remuneration (%) (rd.2/rd.7) 23 20 20 16 16 10 creditors remuneration (%) (rd.3/rd.7) 1 1 2 4 3 11 shareholders remuneration (%) (rd.4/rd.7) 0 43 24 28 21 12 enterprise remuneration (%) (rd.5+6/rd.7) 69 24 22 21 25 * the influence of other elements besides those contained in previous sections according to data from table no. 3, there is a reduction in the proportion (from 23% in 2004 to 16% for 2007 and 2008) that taxes and charges due the state has in value added, because reducing taxation. in the same time, the proportion held by staff 86 studies and scientific researches ‐ economic edition, no. 14, 2009  remuneration increased from 7% in 2004 to 35% in 2008. the financial creditors’ remuneration was pretty low during the entire period, having a proportion between 1% and 4%. if in 2004 the entire net profit was retained as financing source for the enterprise, starting with 2005 the net profit was distributed both for enterprise and shareholders remuneration (dividends) and starting with 2006 also for employees remuneration (employee participation in profits). the enterprise remuneration maintained in 2005-2008 period between 21%-25% which assured a gradual increase of the self-financing capacity and the own equity. a better assessment of value added evolution can be made if the inflation effect is also taken into consideration. for this purpose, the values of analyzed indicator are recalculated, corrected with the index increase of prices, according to the following table: table no.4. value added expressed in comparable prices -thousands lei no specification year 2004 2005 2006 2007 2008 1 value added (va) 13.019 19.105 24.498 39.264 74.063 2 index increase of prices (%) (ip) 100 111,9 122,0 129,9 136,2 3 va in comparable prices (vacp = va/ip) 13.019 17.074 20.081 30.226 54.378 4 index increase of vacp (%) 100 131 154 232 418 5 variation of vacp (%) 0 31 54 132 318 the value added trend between 2004 and 2008 is presented graphically as: 0 10000 20000 30000 40000 50000 60000 70000 80000 2004 2005 2006 2007 2008 value added in current prices value added in comparable prices as a general assessment, we may state that during the period under review added value, both the one expressed in current prices and the one expressed in comparable prices, followed a growth tendency, more emphasized towards the end of the period. this evolution expresses the development of the creative purpose of enterprise, more precisely the increasing of value it adds to goods purchased from the third parties and commercialized. 87 studies and scientific researches ‐ economic edition, no. 14, 2009  bibliography 1. muntean, m.(2006), analiza echilibrului economico-financiar al întreprinderilor comerciale, ed.edusoft, bacău 2. păcurari, d. (2009), diagnostic şi strategie în societăţile comerciale pe baza informaţiilor de sinteză ale contabilităţii, ed. tehnopress, iaşi 3. păvăloaia, w., paraschivescu, m.d., olaru, g.d., radu, f. (2006), analiza financiară: studii de caz, ed.tehnopress, iaşi 4. petrescu, s. (2008), analiză şi diagnostic financiar-contabil: ghid teoretico-aplicativ, ed.a iia rev., ed. ceccar, bucureşti 88 (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 102 young people's preferences for romanian agro alimentary goods laura cătălina ţimiraş “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract based on the results of a research undertaken among young people (18-30 years), students of the faculty of economic sciences of the vasile alecsandri university of bacau, this paper reveals their preference for local or foreign brands (on the romanian market) for various categories of food products. it is also highlighted their views on certain essential evaluation criteria for food products (sanogenetic potential, value for money, appearance, taste, availability within commercial network, promotions, image), comparing romanian and foreign products. the survey shows that the preference for romanian brands applies particularly to: eggs, bakery products, grain mill, milk and dairy products, fruits and vegetables, meat and meat products (over 50% of the investigated people). a large proportion of young people believes that romanian products are tastier and healthier than foreign ones, the better image enjoyed by foreign brands being a result of the promotion and packaging of products and not the quality of product; they also believe that romanian brands are insufficiently promoted nationally, perceiving offer of imported products as being broader than the local one. the research was conducted on a sample of 100 students selected by the group sampling scheme and has an exploratory role for the community of 18-30 years people in romania, offering, for it, only an indicative perspective on the raised issues. keywords agro alimentary goods; preferences; romanian brand; foreign brand jel classification m31 food purchase and consumption behavior of the population is largely determined by cultural baggage acquired in the family. besides transmitting eating habits from generation to generation, within the behavior is manifested their transformation over time resulting from: cultural transfers from different groups / communities (groups of affiliation other than family), including other cultures; marketing activities of agents operating in the market's etc. the specific cultural transfers regarding dietary habits of other cultures is manifested more visible in the romanian market, young people being generally more receptive to the acquisition and therefore, to modification / waiver of some habits belonging to indigenous culture. the absence or low expression of traditionalism can manifest itself not only by borrowing dietary habits which are not specific to romanian culture but can also contribute to preference for foreign food products to the detriment of indigenous ones. of course, the orientation to other than domestic products cannot be attributed solely to the lack of traditionalism, being necessary to considering other triggers (the unfavorable experiment with certain domestic products, the increased confidence in the products produced in other countries, etc.). ţimiraş 103 this paper presents results of a research directly carried out among the segment of young people (considered to be the less traditionalist) with reference to their preference to local brands versus foreign ones in the romanian market, by categories of food products, and also highlights their opinion regarding romanian food products compared to foreign ones in terms of certain essential evaluation criteria. research methodology the research was conducted among students of undergraduate studies with frequency of the faculty of economic sciences of the vasile alecsandri university of bacau, results being practically representative exclusively for this collectivity, for a guaranteed probability of 95% and an error of 2,17% the research method was survey using self-registration process of completing the questionnaires. the research was conducted in the month of april 2016. the studied sample was 100 respondents aged 18-30. group sampling has been used, with randomly selection of four teams of students from a number nine who were subject to evaluation. research limits as stated previously, results of research are only representative for the collectivity formed by students of the faculty of economic sciences of the vasile alecsandri university of bacau. although the statistical information cannot expand to the community made up of young people 18-30 years of bacau and romania, they have provided a guideline on youth preference for local brands for different categories of studied food products. the research results regarding the young romanian preference for food products young people preference for origin of the brand domestic or foreign has been studied for a total of 22 product categories. young subjects were asked to indicate whether they prefer romanian brands, foreign brands, or both two categories and if they know if favorite brands are romanian or foreign, or have preferences in this regard, for each of the 22 categories of food products. the results shown in the table 1 confirm that the products for which young people prefer romanian brands are mainly the usual ones, intended for current consumption which have a high degree of perishability and / or requiring further processing to be consumed: eggs and bakery products, milling, dairy, vegetables and fruits, meat and processed meat and ready meals (excluding fish); 50% of young people preferring romanian brands for these product categories. a significant proportion of the respondents (40%) said they would rather equally prefer romanian and foreign brands, especially in the case of: confectionery, nuts and seeds, soft drinks, chocolate, chips and snacks, alcoholic beverages, cereals (ready-toserve), margarine. comparing the number of those who indicated that they prefer romanian brands with those who prefer foreign brands we found that is especially the case of festive products and / or products that do not need / require minimal processing (coffee, chocolate, crisps and snacks, tea, confectionery, alcoholic beverages and soft drinks, nuts and seeds, cereals (ready-to-serve) are preferred in greater extent foreign brands, although in no case, the share of those who said they prefer that category of brands has not exceeded 50%. basically, except coffee, for all other product categories the young people's preferences for romanian agro alimentary goods 104 percentage of those who said they prefer equally romanian and foreign brands exceeded the percentage of those who said they prefer foreign brands. however, overall, we can say that romanian brands of food products are preferred to a greater extent than foreign brands, for a total of 13 product categories, young people saying they prefer romanian brands, and for a number of 9 categories foreign ones. moreover, the gap between the percentage of those who prefer romanian brands and of those who prefer foreign brands is much higher in case of products for which local brands are favorite. we identifies for certain categories of products (canned meat and vegetables, coffee, alcoholic beverages, fish) a relatively high share (over 20%) of those who have not expressed a preference or didn`t know if favorite brands are romanian or foreign. table no. 1. distribution of respondents according to the preference for the origin of the brand of food products domestic or foreign by product category (% of total investigated sample) product category i prefer especially romanian brands i prefer especially foreign brands i prefer equally romanian and foreign brands i do not know if favorite brand / brands are romanian or foreign do not know / no preference eggs 77 2 14 2 5 bakery products 67 5 22 1 5 milling products 65 4 19 2 10 milk and dairy products 55 5 30 2 8 vegetables and fruits 53 6 37 2 2 meat and precooked meat (except fish) 52 5 32 2 9 oil 49 4 33 5 9 sugar 44 6 37 3 10 canned meat (including pate) 39 13 22 3 23 margarine 39 3 42 3 13 fish and eggs 37 12 30 6 15 canned vegetables 36 8 30 3 23 pasta 33 22 34 11 tea 21 27 35 4 13 cereals (ready-toserve) 20 22 43 2 13 nuts and seeds 16 22 50 6 6 sugar confectionery (excluding chocolate) 13 26 56 3 2 alcoholic beverages 13 24 43 2 18 soft drinks 12 27 47 2 12 chocolate 10 40 46 3 1 chips and snacks 8 30 46 5 11 coffee 5 49 24 2 20 source: own research ţimiraş 105 conducted research aimed to evaluate the opinions of young people on the romanian food products compared to foreign ones, in terms of the essential criteria for the evaluation of these products: the sanogenetic potential, value for money, appearance, taste, availability in commercial network promotions, the image. thus, young people were given a series of statements, they expressing their consent using a scale with 3 levels, the distribution from this point of view being presented in table. 2. based on the presented distribution and mean scores value (to determine the average score of each level on the scale of assessments, it was awarded scores, respectively: 1 agreement 0 partial agreement, -1 disagreement), we can say the following: romanian food products are generally considered healthier than those imported, 39% of respondents agreeing with the statement "in general, romanian food products are healthier than those imported.", while only 2% showed their disagreement. referring to the value for money characteristic, it is not a major differences between those who agree and those who disagree with the statement "in general, romanian food products are better in terms of value for money compared to the imported ones."; similarly, in case of attractiveness, there is a relatively similar percentage between those believing that romanian products are more attractive and those believing imported ones are more attractive; romanian food products are considered tastier than imported ones, over 50% of the investigated persons agreeing with the statement "romanian food products are often tastier than imported ones", while only 9% showed their disagreement; the biggest differences between those who agree and those who disagree are recorded for the statements: "romanian food products are not sufficiently promoted nationwide" and "in the commercial network, the supply of imported products is often broader than romanian one ", 69% and 62% of respondents indicating their agreement in relation to them, compared to 3% and 7% disapproval. “better image enjoyed by foreign brands is generated from the promotion and packaging of products and not the quality of the basic product." was also a statement with a large number of supporters (42 %), while 13% did not agree with statement. the points made above are confirmed by the mean scores, their values stating that in average romanian products compared to imported ones are healthier, tastier, insufficiently promoted, and less abundant, the better image of foreign products being generated by the promotion and packaging and not by the quality of the basic product. table no. 2. distribution of respondents according to opinion regarding a series of statements with respect to domestic and foreign food products and mean score for each statement statement agree (1) partial agree (0) disagree (-1) do not know / cannot say mean score* in general, romanian food products are healthier than those imported. 39 49 2 10 0.41 in general, romanian food products are better value for money compared to the imported ones. 24 40 18 18 0.07 young people's preferences for romanian agro alimentary goods 106 often, the romanian food products are not as attractive (aspect) than the imported ones. 33 35 28 4 0.05 often, the romanian food products are tastier than imported ones. 53 36 9 2 0.45 romanian food products are not sufficiently promoted nationally. 69 25 3 3 0.68 in commercial network, the supply of imported products is often broader than the specific romanian food products. 62 23 7 8 0.60 better image enjoyed by foreign brands is generated from the promotion and packaging of products, not by basic product quality. 42 39 13 6 0.31 * scores determined on a scale from 1 to -1. in determining the average score was not taken into account the number of those who did not indicate one of the three levels listed. source: own research between shown preference of young toward romanian brands and appreciation of some of the aspects evaluated by the statements presented in table. 2 are certain associations. thus, we studied the existence of differences in the categories of respondents according to various statements agreement and the categories of food products where romanian brands are preferred, using contingency tables and 2 test. significant differences for a probability of results guarantee of 90% and respectively 95% were found between preference for romanian brands of food products and agreement to the following statements: "in general, romanian food products are healthier than imported ones"; "romanian food products are often tastier than imported ones." thus, as was natural it was found that the one who believes romanian food products healthier and tastier prefer romanian brands to a larger number of product categories. distributions of respondent preference for romanian brands and agrees with the above statements and the corresponding 2 values are calculated and tabulated in tables no. 2, 3, 4 and 5. table no. 3. distribution of respondents by agreeing to the statement "in general, romanian food products are healthier than imported ones" and the product categories where they prefer local brands number of product categories where they prefer local brands number of respondents % in total subgroup agreement partial agreement disagreement agreement partial agreement disagreement 0 5 12 14 2 30.8 28.6 100.0 6 11 15 28 38.5 57.1 0.0 12 17 9 7 23.1 14.3 0.0 18 22 3 7.7 0.0 0.0 total 39 49 2 100 100 100 source: own research ţimiraş 107 table no. 4. distribution of respondents by agreeing to the statement "romanian food products are often tastier than imported ones" and the product categories where they prefer local brands number of product categories where they prefer local brands number of respondents % in total subgroup agreement partial agreement disagreement agreement partial agreement disagreement 0 5 13 19 2 24.5 52.8 22.2 6 11 24 14 6 45.3 38.9 66.7 12 17 13 3 1 24.5 8.3 11.1 18 22 3 5.7 0.0 0.0 total 53 36 9 100.0 100.0 100.0 source: own research table no. 5. the calculated and tabulated values for 2 needed to study differences in preference for local brands and agreement to the two statements association calculated value 2 degree of freedom level of significance (%) tabulated value 2 number of product categories where they prefer local brands agrees with the statement "in general, romanian food products are healthier than imported ones' 10,95 6 10 10,64 agrees with the statement “romanian food products are often tastier than imported ones” 12,63 6 5 12,59 note: table results attest that the differences between the two pairs of correlated variables are significant only for the students collectivity from which the sample was extracted source: own research conclusions main results of research undertaken with reference to young preference to local or foreign brands (on the romanian market) testifies that overall local brands of food products are preferred by young people in greater extent compared to foreign brands. products that young people prefer in a greater extent romanian brands are especially: eggs, bread and milling, milk and dairy products, fruits and vegetables, meat and meat products, over 50% of respondents preferring indigenous brands from these categories. a higher preference for foreign brands applies particularly to: coffee, chocolate, crisps and snacks, tea, confectionery, alcoholic and soft drinks, nuts and seeds, cereals (ready-to-serve), the share of those who said they prefer this category of brands not being over 50%. youth consider that romanian products are tastier and healthier than foreign ones, better image enjoyed by foreign brands being generated from the promotion and packaging of products and not by their quality and romanian products are insufficiently promoted at national level and the supply for sale is lower than the one for imported products. these findings could form the basis of decisions of the romanian producers of agricultural products to further promote their products and also increasing the attractiveness of packaging, particularly for the categories of products: coffee, chocolate, crisps and snacks, tea, confectionery, alcoholic beverages and soft drinks, nuts and seeds, cereals (ready-to-serve). young people's preferences for romanian agro alimentary goods 108 i remind that the research was conducted on a sample of 100 students, selected using group sampling scheme from bachelor students of the faculty of economic sciences of the vasile alecsandri university of bacau. the results are representative only for this collectivity, offering an indicative about the phenomenon investigated among young people of 18-30 years and forming hypotheses for further research, representative for larger collectivities. references boier, r, ţimiraş, l.c. (2006), cercetarea de marketing, iaşi, editura performantica; cătoiu, i. (coord.) (2002), cercetări de marketing, editura uranus, bucureşti; datculescu, p. (2006), cercetarea de marketing, editura brandbuilders; kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto; malhotra, n.k. (2004), marketing research an applied orientation.fourth edition, upper saddle river, new jersey, pearson education. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 127 candidates in the presidential elections in romania (2014): the use of social media in political marketing monica pătruţ “vasile alecsandri” university of bacău monicapatrut@yahoo.com abstract the phenomenon of social media has drawn the attention of the specialists from the political marketing because it contributes quickly and efficiently to the increase of the political product’s visibility and appeals to its supporters for content creation and viral promotion of the political messages. in addition, the candidate can communicate directly with the citizens and may involve them in creating virtual communities. in our study we briefly present the way in which social media was used, timidly at first, during the campaign for the 2008 parliamentary elections, for the 2009 presidential elections and for the 2012 local and parliamentary elections. the importance of social media increased during the 2012 romanian presidential impeachment referendum and contributed decisively to rallying voters to go to the polls and, implicitly, to the klaus iohannis’s victory in the 2014 presidential elections. we have focused especially on facebook, as social network, because it has managed to attract the largest number of users in romania. the success of the 2.0 political actors does not imply (only) to use the network as an alternative news channel, but especially to establish the bidirectional connection and constant interaction with virtual friends. keywords presidential elections; political marketing; social media; facebook; romania; 2014 jel classification m31 1. new times, new campaigns! progress in the field of technology and communications has brought about a considerable increase of the importance of the online environment in political marketing, while maintaining the traditional campaign tools which continue to play a significant role. in literature, there is shift from the 20th century campaign pattern to the 21st century typical campaign (johnson, 2011). even if between the two patterns there are still continuity elements and an evolutionary process, the change of paradigm is considered to have been carried out in the usa by the republican bob dole who, during the 1996 presidential debate urged voters to visit his campaign website. “the 20th century pattern” focused more on the political consultants in shaping the strategy and messages, emphasized the top-bottom communication and did not involve too many activists and voters in the carrying out the election campaign, allocating television the dominant position in the election campaign communication area. although there were surveys and public debates, the election strategy was built on the consultants’ intuition, instinct and experience. campaign financing was ensured by the major donors and voters were mere spectators having as single task to be present to vote. “the online revolution” supported by the new and social media has marked the shift to “the 21st century pattern” and showed its effectiveness starting from the us candidates in the presidential elections in romania (2014): the use of social media in political marketing 128 presidential elections in 2008 (mihalache, 2012). this pattern is much more fluid and allows the citizens’ involvement. although it keeps television as a means of communication, it places the online component in the centre of the campaign. johnson (2011) insists that “as the online component of the campaign has started to consolidate, campaigns have realized the importance to have a network administrator, a blog specialist, a social network manager, a group of online publicity, a staff for the online campaign of strategic importance equivalent to any other components of the campaign”. these campaigns are carried out continuously and at fast pace, also joining small donors that can contribute online or by sms, involving and rallying voters/volunteers who can share their time, ideas, money and energy in the campaign. this new pattern offers the best prerequisites for a greater public participation in the political life (lees-marshment, 2009). 2. social media and 2.0 political actor 2.1 social media – a brief introduction social media refers to those environments we use for social interaction, which use as platforms the internet and mobile technologies and enable communication according to many-to-many (ulmanu, 2011). following another definition, social media is built on three key-elements: the content created by the user, the communities and the web 2.0 technologies (ahlqvist,bäck, halonen & heinonen, 2008). content creation and participation become interesting when there are other people who do this. people have the ability to communicate directly, to interact and to create real virtual communities. digital technologies specific to the web 2.0 era facilitate users to participate in these activities. in the same theoretical direction, heinonen & halonen (2007) define social media as tools, spaces and operation modes for people who interact with one another, create, share, change and comment on contents in the virtual communities and social networking. social media may take several forms, including forums on the internet, weblogs, blogs, wikis and podcasts, video, photos, social-bookmarking. according to andreas m. kaplan & michael haenlein (2010) there are six different types of social media: collaborative projects (wikipedia), (micro)blogs, content communities (bookcrossing, flickr, youtube, slideshare), social networking sites (facebook, linkedin, and myspace), virtual worlds games (world of warcraft) and virtual communities (second life). the explosive and attractive phenomenon called social media is explained by the heinonen & halonen (2007) using a metaphor. starting from the idea of the representation of the digital society as a human hand, authors consider that each of the five fingers represents a topic (identity, recognition, confidence, belonging and creativity) and the palm (empowerment) is the ability resulting from the contribution of the five fingers. for each individual, social media is a tool to help themselves to express their identity, to receive recognition from the other members of virtual community, and this fact stimulating them to participate more in the community life and create content, to become more confident and to remain faithful to social networks or to discover new ones. belonging to these communities cannot be achieved without the individuals’ motivation and skills to connect, to communicate, to make a choice between the various existing networks and communities and to demonstrate their creativity by posting new contents. together, the five fingers empower the hand to participate successfully in the digital life. pătruţ 129 2.2 social media – a hybrid element of the promotion mix entirely agreeing with mangold & faulds (2009), we believe that social media has produced changes in the classical marketing paradigm and has become a hybrid element of the promotion mix because it enables businesses/ organizations to speak with customers/targets and, at the same time, customers/ targets to communicate between theman extension of traditional word-of-mouth communication. in the old paradigm, the integrated marketing communication (imc) aimed at transmitting a coherent message to customers by coordinating all the elements of the promotion mix – advertising , personal sale, public relations, direct marketing and sales promotion. in the new paradigm (see fig. 1), social media have improved their tools and strategies to communicate with customers/targets (castronovo & huang, 2012), giving them the status of credible source of information on products, services, companies as well as pressure factor on businesses/ organizations for improving the offered services. figure 1. social media and the new paradigm for marketing communication source: mangold & faulds (2009, p. 360) after social media was successfully integrated by the commercial marketing in the new communication paradigm, it is the turn for political marketing to offer it the same importance. candidates in many countries have integrated social media into their communication strategies and this has also contributed to their success in the campaign. research in the past few years has shown that politicians have appealed especially to social networking sites, the most popular being facebook, twitter, myspace. using social networking sites (sns) candidates have sent citizens political messages and tried to involve them in a two-way communication with the political elites (cogburn & espinoza-vasquez, 2011). citizens are encouraged on social network sites to “create their own political content, distribute it online, and comment on the content created by others” (hanson et al, 2010). they also have generated online involvement and offline activism by facilitating face-to-face meetings with supporters and connections between supporters, and managed in some cases to create virtual volunteering communities (vitak et al, 2011), attracted funds and donations (hanson et al, 2010). sns represented an opportunity for candidates to reach people less interested in politics (utz, 2009) and to control the message transmitted by posting, deleting or editing some campaign messages or by providing further candidates in the presidential elections in romania (2014): the use of social media in political marketing 130 clarification if a message was misunderstood by journalists or citizens (bor, 2014). sns have helped to humanize candidates, to turn them into genuine and accessible people (slotnick, 2009), to understand the electorate’s needs and views (larsson, 2015, p.2). taking advantage of this technology, the candidates’ campaign staff have collected a lot of personal data and, after their analysis, they could not send personalized messages, changed the calendar, content, or channel through which these messages reached safely and quickly to recipients (cogburn & espinoza-vasquez, 2011). in addition, by interesting, simple or amusing/tormenting messages sent to the candidates and redistributed by the citizens in their own social networks we have come to the “viral distribution” (klinger & svensson, 2014) and to globalization topics or campaign issues by means of this technology era specific to the web 2.0 era. 3. social media a political marketing tool (also) in romania 3.1 social media – a concise story of their faint early beginning..... its first timid uses took place during the electoral campaign for the 2008 parliamentary elections ((pătruţ, 2011; pătruţ, 2012) and in the 2009 presidential elections (aparaschivei, 2011; bosoteanu, 2012; momoc, 2011; holotescu et al., 2011). at that time, social media helped to promote the image of the political actor to rally supporters to vote (momoc, 2011). even if some romanian politicians entered into the virtual game, they interacted less with their online friends. romanian mps chose to post on facebook impersonal official messages, information and images related to their activities in the parliament or party, family photos and of trips, and they very seldom interacted directly with their friends from the list, possible supporters and voters. in 2012, local and parliamentary elections took place in romania. in both campaign, candidates used social media to launch self-promoting messages and attacking topics, to rally supporters to vote and to avoid uncomfortable debates in the election campaign. (pătruţ & pătruţ, 2013; pătruţ, 2013a). the blogosphere and facebook network fragmented the virtual space, the candidates isolating themselves according to ideology, thus the online channel operated less as a platform for debate, but more as a political pr tool (momoc, 2013). social media became more dynamic, more interactive in 2012 also on the occasion of the second romanian presidential impeachment referendum when facebook turned into an arena to fight for the opponents and supporters of the president in office. using photos, posters and posts, through praises and attacks, the two opposite parties were able to involve all the virtual friends in assessing, commenting and distributing the political information, especially during and at the end of electoral period (pătruţ, 2014). in order to show the dynamic feature of social media during the referendum, we have included in our analysis not only facebook, the social network which has held the monopoly in the online environment, but also other platforms created during the election campaign, the best-known being: http://www.legea-junglei.ro, www.demitel.ro, www.davotez.ro, www.totuldesprebasescu.com. we used as a model for the analysis the honeycomb pattern taken from kietzmann, hermkens, mccarthy & silvestre (2011) and adapted it to the available information. this pattern emphasizes the fact that the central block of digital interaction is constituted by six peripheral blocks: presence, sharing, relationships, reputation, groups and conversation. on facebook, the virtual groups / communities were formed according to a single criterion: to be (by the side of our president, you are you angry with basescu? why?, the torch of democracy.) or not to be with the president traian basescu (the torch of democracy 2, fed up with traian basescu, the country is burning. give a like if pătruţ 131 you were disappointed with traian basescu, yes, for the dismissal of basescu!). being mainly open, these groups managed to attract many members and they were able to operate as a true aggregator of political opinions on the space axis and during the entire election campaign and as an ‘opinion barometer’ valid for the virtual environment (pătruţ, 2013b). sharing is seen as a way to interact in the virtual environment and refers to the exchange process between users, exchange consisting in receiving and delivering content. by analyzing the number of these shares, as it can be seen in table 1, the pro president group was more active than the one against president, the former sharing materials in the network 38,403 times, and the latter only 33,817 times. table 1. groups set up on facebook during the 2012 referendum nume of the group type likes comments shares by the side of our president open 339, 866 60, 342 34, 231 you are you angry with basescu? why? open 17, 994 12, 255 4,171 the torch of democracy closed 1900 80 10 the torch of democracy 2 open 267 75 162 tired of traian basescu, open 1109 982 2238 27 055 the country is burning. give a like if you were disappointed with traian basescu open 5945 2198 4352 yes, for the dismissal of basescu! open 4500 1022 2248 source: pătruţ m. (2013b, p.847) conversations between facebook users, members in the analyzed groups, have been an indicator of the fact that this campaign managed to capture and rally the active electorate on the network. the number of comments generated is high: 72,605 generated by the pro-president group and 5,533 belonging to the opponent group. the analysis of these comments shows us that in the social media there was a real preoccupation to talk more than the opponent. relationships define the manner in which users refer to one another in the virtual environment, exchanging information, joining each other or chatting, meeting or just appearing on the friends’ list. the facebook pages analyzed show that the relationships between users worked to a limited extent and only if the users shared the same political beliefs. for example, the group entitled fed up with basescu still referred to groups which militated for president dismissal: dismiss him.ro, are we cleaning up the politics?, basescu down!, bye, bye basescu!, pdl mafia!. social media was an effective tool used in the election campaign for the presidential dismissal referendum in 2012. both sides involved in the election competition invested in online platforms to increase the campaign’ efficiency and reach the young audience. the posted campaign materials managed to rally and involve internauts in carrying out the election campaign or citizen responsibility awareness campaigns advertised in order to be able to exercise the vote. based on the materials posted, on the analyzed groups arguments were supplied by the campaign staff, arguments that met only with others provided by the users sharing the same political beliefs. unfortunately, the two political sides and their corresponding groups represent within the virtual environment isolated islands candidates in the presidential elections in romania (2014): the use of social media in political marketing 132 which do not communicate with each other, without allowing opponents the dialogue, exchange of arguments or counter-arguments. 3.2 .... to the important role in the election of the “facebook president” the presidential elections held in 2014 began with 14 candidates, but the two finalists were victor ponta from the psd+unpr+pc alliance (3,836,093 votes validly cast, i.e. 40.44%) and klaus iohannis supported by the christian liberal alliance (2,881,406 votes validly cast, i.e. 30.37 %). if in the first round the situation was rather clear, in the second round things took an unexpected turn, iohannis, the candidate, managing to win the elections (6,288,789 votes validly cast, i.e. 54.43 %) with an advance of 1,024,406 votes in front of his opponent, the prime minister victor ponta. from the inside of the campaign staff, we found out that the whole campaign for klaus iohannis was designed to focus on the concept of authenticity, the latter being understood as a campaign devoid of rhetorical embellishments, of rejection of the negative messages and attacks from the opponents, with an emphasis on a positive campaign prevailing in the online environment and specifically aimed at young people in the urban areas who could be reached by social media (mihalache & huiu, 2015). social media became a channel that could no longer be ignored, according to the existing data (www.facebrands.ro) 7 million citizens had a facebook account in 2014. the images with the citizens from abroad sitting at endless queues to vote in the first ballot, the doors of the embassies shut in front of the citizens who had not voted created excitement in online environment, were commented upon and distributed by members of the facebook network. judging by the number of fans for the two candidates, the number of posts or likes received, it might be asserted that facebook was a faithful barometer for the current situation in the field. in the last week of the campaign for the second round, ponta had 715,332 fans and iohannis 874,844, in the case of both opponents, all fans were from romania and from the countries in which there are romanian communities (see table 2). during this period, klaus iohannis posted 110 messages which were rewarded with 3.746.977 likes, 180,914 comments and 462,234 shares. victor ponta posted 116 messages and received from fans only 1,200,445 likes, 159,439 comments and 105,913 shares. (covaci, 2015). table 2. fans’ distribution on the two candidates according to the geographical criterion victor ponta klaus iohannis country no. of fans % from the total no. of fans country no. of fans % from total no. of fans romania 644,418 90.1% romania 681,280 80.3% italy 15,734 2.2% italy 44,117 5.2% spain 6,437 0.9% spain 22,907 2.7% germany 4,291 0.6% germany 21,210 2.5% u.k. 5,006 0.7% u.k. 16,119 1.9% moldova 2,145 0.3% moldova 7,635 0.9% u.s.a. 2,145 0.3% u.s.a. 6,787 0.8% france 2,145 0.3% france 6,787 0.8% source: tănase, 2015, p.101 pătruţ 133 before the second round of elections, there had created the event pages on facebook by which the romanians in the country and those in the diaspora were invited to get out in the street to support the constitutional right to vote. the various reported irregularities or personal impressions about the way in which elections ensued in the polling stations in the country or abroad were shared on facebook. there were rallying and ideological motivation campaigns coordinated by means of facebook, the best-known being the vote-rallying campaign: let’s make ourselves heard! on the election day, klaus iohannis had 35 posts and victor ponta 18 posts. regarding engagements, klaus iohannis had the fans’ engagement three times higher than his opponent’s, which proved to be decisive in winning the competition both in the online environment, and at the polls. the lucky turnover in this case was that of the engaged users, of the unique people who interacted uniquely with klaus iohannis’s facebook page. on the night after winning the elections, iohannis posted the following message on facebook: “together, we have won the battle here on facebook! thank you very much for this victory! you are now the largest community formed around a politician in the online environment! together, so many and so strong, we're unbeatable! today we have won! .... you have written history! for the first time, the online has made a difference”. the study conducted by the romanian institute for assessment and strategy (romanian abbreviation ires) shows that 32% of the interviewees went to vote after incidents at the voting boxes in the diaspora, and 42% said that they had a family member or a friend abroad and their advice in connection with their vote was decisive. 54% of interviewees said that they used the internet, and most of them (93 %) are present on facebook. 70% of those who use the internet consider that the internet and social networks influenced the participation to vote, 13% sent or redirected the election messages or election campaign and on the internet, 24% gave “like” to some pages or messages of the candidates in the presidential elections. in conclusion, the study underlines that “the convergence between facebook, television and mobile telephony was the recipe which led to the great rallying to vote in the second round” and thus, ensuring klaus iohannis’s victory in the presidential elections. 4. conclusions social media has offered unexpected opportunities to the political candidates: helping them to communicate with the voters, organize face-to-face meetings with supporters and create connections between supporters, attract funds and donations, send messages in real time and at very low costs, involve citizens in the message creation and their viral sharing, introduce themselves to virtual friends as cautious, careful people sensitive to the needs of their fellows. the 2.0 political marketing pattern implemented by b. obama’s political campaign team in 2008 started, steadily but firmly, to grow in romania as well. the 2014 presidential campaign showed how important it is for a successful candidate to hold the central position in a social network, to communicate mutually with the citizens and have a constant interaction with them. the political actor either communicates in the social media or disappears. references ahlqvist, t., bäck, a., halonen, m., heinonen, s (2008). social media road maps exploring the futures triggered by social media. vtt tiedotteita valtion candidates in the presidential elections in romania (2014): the use of social media in political marketing 134 teknillinen tutkimuskeskus (2454), available at http://www.vtt.fi/inf/pdf/tiedotteet/2008/t2454.pdf. aparaschivei, p. 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(2011). it’s complicated: facebook users’ political participation in the 2008 election. cyberpsychology, behavior,and social networking, 14(3), 107–114. http://www.sferapoliticii.ro/sfera/162/art05-momoc.php http://www.sferapoliticii.ro/sfera/159/art07-patrut.php http://www.sferapoliticii.ro/sfera/169/art14-patrut.php http://www.upm.ro/facultati_departamente/stiinte_litere/conferinte%20/situl_integrare_europeana/lucrari5/ietm5_part100.pdf http://www.upm.ro/facultati_departamente/stiinte_litere/conferinte%20/situl_integrare_europeana/lucrari5/ietm5_part100.pdf a conceptual approach on the stages of a press conference studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 120 a conceptual approach on press conference ioana olariu “vasile alecsandri” university of bacău ioana_barin_olariu@yahoo.com bogdan nichifor “vasile alecsandri” university of bacău bnichifor@gmail.com abstract a press conference is an important tool of public relations. the primary role of public relations is to manage a company’s reputation and help build public consent for its enterprises. the goal of pr is to develop and maintain goodwill with most, if not all, of its publics. failure to do so may mean loss of customers and revenues, time lost dealing with complaints or lawsuits, and loss of esteem. a company’s publics change constantly. well-executed public relations is an ongoing process that molds good long-term relationships and plays an important role in relationship marketing and integrated communications. companies often call press conference when they have significant news to announce, such as the introduction of a new product or advertising campaign. although used less often by organizations and corporations, this form of delivery can be very effective. the topic must be of major interest to a specific group before it is likely to gain coverage. keywords article; corporate advertising; press; press release; public relations jel classification m31 introduction the term public relations is widely misunderstood and misused. part of the confusion is due to the fact that public relations cover a very broad area. depending on the context and one’s point of view, it can be a concept, a profession, a management function, or a practice. every company, organization, or government body has relationships with groups of people who are affected by what it does or says. they may be employees, customers, stockholders, competitors, suppliers, legislators, or the community in which the organization resides. marketing professionals refer to these people as stakeholders because they all have some vested interest in the company’s actions. in pr terminology, each of these groups is considered one of the organization’s publics. because of the powerful effect of public opinion, companies and organizations must consider the breadth of impact of their actions. this is especially true in times of crisis, emergency, or disaster. but it also holds true for major policy decisions: changes in management or pricing, labor negotiations, introduction of new products, or changes in distribution methods. each decision affects different groups in different ways. effective public relations can channel groups’ opinions toward mutual understanding and positive outcomes. in short, the goals of public relations are to improve public opinion, build goodwill, and establish and maintain a satisfactory reputation for the organization. pr efforts may rally public support, obtain public understanding or neutrality, or simply respond to inquiries. olariu, nichifor 121 1. public relations tools the communications tools at the pr person’s disposal vary widely, from news releases and photos to audiovisual materials and even advertising. 1.1. news releases and press kits a news release (or press release), the most widely used pr tool, consists of one or more typed sheets of information issued to generate publicity or shed light on a subject of interest. news releases cover time-sensitive hard news. topics may include the announcement of a new product, promotion of an executive, an unusual contest, landing of a major contract, or establishment of a scholarship fund. a press kit (or media kit) supports the publicity gained at staged events such as press conferences or open houses. it includes a basic fact sheet of information about the event, a program or schedule of activities, and a list of the participants and their biographical data. the kit also contains a news story about the event for the broadcast media, news and feature stories for the print media, and any pertinent photos and brochures. 1.2. photos of events, products in use, new equipment, or newly promoted executives can lend credence or interest to a dull news story. in fact, a photo tells the story faster. photos should be high quality and need little or no explanation. typed captions should describe the photo and accurately identify the people shown. 1.3. feature articles many publications, especially trade journals, run feature articles (soft news) about companies, products, or services. they may be written by a pr person, the publication’s staff, or a third party. as an mpr tool, feature articles can give the company or product great credibility. editors like them because they have no immediate deadline and can be published at the editor’s convenience. features may be case histories, how-to’s, problem-solving scenarios, or state-of-the-art technology updates. other formats include roundups of what’s happening in a specific industry and editorials. 1.4. printed materials these are the most popular tools used by public relations professionals. they may be brochures or pamphlets about the company or its products, letters to customers, inserts or enclosures that accompany monthly statements, the annual report to stockholders, other reports, or house organs. a house organ is a publication about happenings and policies at the company. an internal house organ is for employees only. external house publications go to company-connected people (customers, stockholders, suppliers, dealers) or to the public. they may take the form of a newsletter, tabloid-size newspaper, magazine, or even a periodic size. their purpose is to promote goodwill, increase sales, or mold public opinion. a well-produced house organ can do a great deal to motivate employees and appeal to customers. however, writing, printing and distributing can be expensive and very time-consuming. 1.5. posters, exhibits and bulletin boards posters can be used internally to stress safety, security, reduction of waste, and courtesy. externally, they can impart product information, corporate philosophy, or other news of interest to customers. a conceptual approach on press conference 122 companies use exhibits to describe the organization’s history, present new products, show how products are made, or explain future plans. exhibits are often prepared for local fairs, colleges and universities, and trade shows. internally, the public relations staff often uses bulletin boards to announce new equipment, new products, meetings, promotions, construction plans, and recreation news to employees. many companies now maintain an intranet site where they can post their internal messages. 1.6. audiovisual materials slides, films, filmstrips, cds are all forms of audiovisual materials and may be used for training, sales, or public relations. considered a form of corporate advertising, nontheatrical or sponsored films are often furnished without charge to movie theatres, organizations, and special groups, particularly schools and colleges. many pr departments provide video news release (vnrs) – news or feature stories prepared by a company and offered free to tv stations, which may use the whole video or just segments. video news release are somewhat controversial. critics see them as subtle commercials or even propaganda and object when stations run the stories without disclosing that they came from a public relations firm, not the station’s news staff. 2. press conference this tool is rarely used in business situations, except in cases of major breakthroughs or emergencies. it is used in cases when a press release cannot cover all issues or when it is necessary to counter the possibility of negative impressions being formed. it also announces that the story is felt to be important, and this may lead to broader, more thoughtful coverage. the timing of the press conference should be such that it coincides with vehicle deadlines. mornings are best for evening papers and television news; mid to late week is best for the weekly trade publications; afternoons work best for morning papers. press kits should be available and should contain relevant photographs, the complete text of any prepared statement that will be read, biographies of any key individuals, and background fact sheets. usually major accomplishments, major breakthroughs, emergencies, or catastrophes warrant a national press conference. on a local level, community events, local developments, and the like may receive coverage. sports teams use this tool to attract fan attention and interest when a new star is signed. managing a press conference involves the following steps: 2.1. preparing the conference: choosing the right tasks that will be approached; timing (date, day, time) and optimal venue; drafting and sending invitations to the press; developing teaching aids related to the exposed subject (such as media files, statistics and graphs). the subject must be prepared by public relations specialists with the leaders of the institution. thus, public relations specialists will research the subject and will achieve a score with relevant information for the press, that public institution leaders must take into account in their speech, which will help them in writing the message, will identify possible questions and appropriate answers, will establish with the institution leaders who will present its views. if timing of organizing press conference compete with other events, journalists will be attracted by what they consider to be more important and the conference might to be doomed to failure. the range of midweek (tuesday, wednesday, and thursday) is best placed to organize the press conference olariu, nichifor 123 by public institution. recommended deployment time is between 10.00 and 12.00 hours. the venue shall be identified easily and quickly found by journalists (are preferred areas or rooms that are already known). the meeting room is required to have good acoustics, to be well insulated from outside noises, bright, airy, with possibility of ventilation in summer and warm in winter; be also enough large to comfortably accommodate all conference participants. the ideal situation is provided for those rooms with sliding walls, the space can be increased or decreased rapidly, depending on the number of participants. preparation and invitations launching. is answered by decisions and concrete measures to essential questions: • who is invited?; it is important to be in the meeting room specialized journalists directly interested in the topic of the conference; • when? (usually, the invitations are sent 3 weeks before, but it is estimated that for the romanian market, the term is too distant, being preferable an invitation to 12-14 days in advance, at most). • how? preferably on letterhead (public institution name, address, phone, fax). it contains: a. date of issue; b. title: "invitation" + explanatory title, which contains the name of the institution and the reason for organizing the conference; c. the person or organization which is inviting (usually invitation is made by the mayor or chief prefect institution; their name is written in full, and the function is presented in detail); d. conference theme (importance, interest, novelty of themes on the agenda); e. leading representatives of public institutions that will participate in the press conference; f. date, time, place (possibly a map or a plan of the city and of the venue); g. the schedule (detailed in hours); h. who will participate; i. response coupon (response indicating the deadline); j. name, position and signature of the person which made the invitation; k. address, phone, fax press office and name of the person who can be contacted for further information or to confirm participation: l. existence (if any) of a lunch or cocktail after the conference. to attract leading journalists are recommended: adding a personalized letters; providing transportation / accommodation; arranging the schedule (the possibility to come later); promise of favors: some news exclusive, interview with the mayor, the prefect or president of the county council. media representatives are invited to a press conference public institution, not summoned. as a result, the tone should be warm, friendly, polite, but without excess of politeness formulas. it will be used short and concise sentences, the invitation should be clear, complete and motivated, able to arouse the interest of journalists and the willingness to participate in the press conference. preparations of the interventions and documents: public institution brochure, press file, mayor/prefect speech, photographs, slides, brochures, posters (for the presentation); administrative organization logo custom objects (most used are pens and notebooks, as can be directly and immediately used by journalists, also effective are more special items that can be stored long-term journalists clocks or wall port documents, pens, possibly with screen printed name / logo of the public institution. in order to carry out systematic interventions, it will have to be established in advance the following: a conceptual approach on press conference 124 who speaks (the order of the interventions will be given by the importance of the personalities); what they say (anticipating questions, especially for sensitive subjects, possibly suggesting sending questions in advance delicate and often no chance of success); as they say (observations are logically structured, not exceeding 20/30 minute speeches, direct, informative, persuasive): usual vocabulary, short term; normal flow (140-170 words/minute); using anecdotes; simplification; alternating personal pronouns (i/we + your avoid impersonal). institution leaders speech must be prepared by public relations specialists especially for the press conference. it's good to be short, clear, fluent, and easy to read, with a concrete language without generalities; to express a definite point of view, a clear position on the topic addressed. it is also advisable to have no more than 3 pages, so they can be read or spoken within 10 minutes. when exceeding this length, there is a risk that journalists get bored and leave during the conference, and the message will not reaching the public. organizing the venue. under normal circumstances, it is desirable to have enough space for all guests, to ensure an efficient layout tables and chairs so that journalists not to bother each other and have easy access, to exist and to be functional microphones overhead projectors etc. the conference room will be ready from a technical standpoint, the best sound system and light; will eventually be equipped with video if it shows graphs, maps, surveys etc. 2.2. conference proceedings checking on the press conference will consider: to be a reception desk journalists and guests throughout the performance of the conference; to have a person responsible for the activity display and enrichment media file; it provides identification badges; need for organization and management of waiting in the hall of the delay; it will offer small gifts, samples, objects logo etc.; media files are distributed. from press conferences organized by public institutions, journalists expect: interesting news for the public; timely, real, sincere information; clear, concise, direct information (should work kissprinciple "keep it short and simple"); timely information released until the closure editions or until the installation space schedule. journalists hope also that they will be able to learn unusual or contacting officials in the public and expect some form of written messages. in general, the press conference starts with addressing by the spokesman of a message of welcome for journalists and a very brief presentation of the topic and participants at the conference. next will be one of the leading public institution speech on the theme of the conference. the speech can be read or spoken from memory, italic, aloud, but without irritating the audience, in a tone that emphasize ideas that wants to be underlined. it is recommended that the speech will be distributed to journalists in writing after completing the press conference. it will take into account that during the conference, gestures will be carefully controlled, avoiding wide gestures, tics etc. to efficient disseminate the message to public institution is recommended that, representatives, leaders and specialists in communication: to be relaxed; olariu, nichifor 125 to be honest; to adopt a direct addressing to the journalists; do not use jargon or technical terms elements; do not qualify journalists' questions ("yes, your question is interesting ..." or "this question is not appropriate ..."); do not use the words "no comment"; do not be defensive and to adopt a positive style; have no ironic or violent replicas with the journalists; do not disseminate information "off the record", because there is no certainty that journalists will take into account this recommendation, just because the information is communicated to the public; to keep their calm, smile, be communicative, not suspicious. when the conference will be finished (the journalists are informed about duration at the beginning of the meeting), it can be considered complete. at this stage, a spokesman makes a brief summary of the topic, pointing out the most relevant issues and thanking journalists for participating. if the discussion is still in progress and the issues are interesting for the journalists, the conference may be extended by no more than 15-20 minutes. at the end of the conference may be held informal discussions between journalists and public institution leaders, may be granted audiovisual media interviews. the optimal duration for a press conference should not exceed one hour. 2.3. the evaluation of the press conference. this is done by the specialists in communication has primarily designed to assess its impact. communication specialists can assess whether the organization of the press conference was effective by analyzing its reflection by the media. in case the press will not give attention to the event (or it will be very low), the public institution marketers must determine the reasons why the message was not perceived as desirable and operate its communication strategy changes in public sector organizations. conclusion an increasing number of marketing-oriented companies have established new responsibilities for public relations. pr takes on a much broader perspective, designed to promote the organization as well as its products and/or services. the way that companies and organizations use public relations might best be viewed as a continuum. on one end of the continuum is the use of pr from a traditional perspective. in this perspective, public relations is viewed as a nonmarketing function whose primary responsibility is to maintain mutually beneficial relationships between the organization and its publics. in this case, customers or potential customers are only part of numerous publics. marketing and public relations are separate departments; if external agencies are used, they are separate agencies. at the other end of the continuum, public relations is considered primarily a marketing communications function. all noncustomer relationships are perceived as necessary only in a marketing context. in these organizations, public relations reports to marketing. at the same time, for many companies the pr function is moving more and more toward a new role, which is much closer to a marketing function than a traditional one. in the new role of public relations, managers envision both strong marketing and strong pr departments. rather than each department operating independently, the two work closely together, blending their talents to provide the best overall image of the firm and its product or service offerings. a conceptual approach on press conference 126 references amalancei, b. m., manole, v., epuran, gh. 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(1995), public relations. strategies and tactics, new york, harper collins college publishers. ioana olariu “vasile alecsandri” university of bacău ioana_barin_olariu@yahoo.com bogdan nichifor “vasile alecsandri” university of bacău bnichifor@gmail.com keywords jel classification m31 introduction 1. public relations tools 2.2. conference proceedings references (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 6 the impact of taxation as an aid to economic development (applied study in kurdistan regional government) amanj mohamed ahmed darbandikhan technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq amanj.mohamed@spu.edu.iq muhammad nawzad ali darbandikhan technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq muhammad.nawzad@spu.edu.iq othman mohammed mahmood halabja technical institute, sulaimani polytechnic university / sulaimani, kurdistan region, iraq othman.mohamed@spu.edu.iq abstract this research was carried out to determine the weight of taxation in economic development, the main purpose is to discover the level of impact of taxation on economic development or if it has any impact. another key objective is to improve the level of understandability and find probable solutions toward issues in taxation within the kurdistan region, as well as unveiling the kurdistan regional government’s taxation system in compliance with the up to date old iraqi tax laws. krg is barely surviving this crisis, with the increase of unemployment and poverty could taxation work as an aid to support the piles of the region. the current corruption in the government that does not use tax money efficiently and lack of transparency has been evaluated. primary and secondary research methods were used to be able to gather information in order to reach an understanding. the primary source of data includes personal interviews and questionnaires, meanwhile, the secondary source of data includes the use of textbooks, social media, internet, and newspapers. non-probability method of sampling was used in selecting the respondents. the study used the standard deviation, chi-square formula, and tables for the method of the examination. the results clearly illustrates that the government should commence the critical pursuit of broadening regional economy in order to improve economic growth and expansion and to become meticulous to fight with real corruption. the limitation and resources should be expanded by the government and bring taxation back to life through educational systems and social awareness. keywords taxation; aid; economic development; kurdistan regional government jel classification m41; o17 introduction background of the study ‘‘tax is a payment which the government forces the individuals, corporations, and fiduciary to pay unrelated to the goods value and provided services. raising revenue, amanj mohamed ahmed, muhammad nawzad ali, othman mohammed mahmood 7 redistributing wealth, stabilizing prices and foster economic growth are the main goals of tax’’ (jones et al., 2013 and bauer et al., 2015). in general, tax victims are individuals, corporations, and fiduciary (estate). taxation aims to enhance the governments’ revenue, stabilizing economic growth through the two concepts of horizontal equity and vertical equity (jones et al., 2013). horizontal equity means similar circumstances should have similar tax burdens and vertical equity means circumstances of higher income should be taxed higher percentage in comparison with lower income circumstances (armstrong et al., 2015). the most important functions of any government especially developing countries such as krg is the provision of public and self-raised services such as electricity, water, hospital, schools, roads as well as rising the individual income of everyone within the borders, poverty alleviation to mention a few (aikins, 2011 and armstrong et al., 2015). for their services to be adequately provided, the government should have enough revenue to finance them. the mission of financing and controlling these huge responsibilities is one of the critical problems facing the government. depending on the scarce resources of the government, there is an urgent demand to lift the citizens along because the imposition of tax on all taxable individuals and companies to strengthen government financial position (aikins, 2011 and aldy and stavins, 2012). to this end, the government has always enacted various tax laws and reformed existing ones to stand the taste of time. they include income tax management act, companies income tax decree. all these are targeting at making sure sticking to tax payment and stop supporting tax evasion and avoidance (bauer et al., 2015 and brand et al., 2013). for the purpose of this study, the researcher would be concerned with the impact of taxation as an aid to the economic development of the kurdistan regional government. krg is in compliance with the iraqi 1982 income tax law. however, the general directorate of tax authority in krg in 2017 announced that every company and individual is required to provide quarterly filings. making decisions such require immediate practice and well defined set of guideline (deloitte touche tohmatsu limited, 2018). due to, lack of information in taxation by the krg citizens. however, tax authority requires audited financial information in order to tax the individuals or the corporations accordingly and accurately. in kurdistan regional government, it is easy for the taxpayers to avoid tax because of the current economic crises that are facing the region. taxation allows avoidance but tax evasion will be counted as a crime and the victim will be charged with a penalty or imprisonment (aikins, 2011). computing tax when it comes to computing tax we have few well established concepts. mainly for computing tax, the gross income is required in the first step (hoffman et al., 2016). the tax models for both individual and corporation starts with gross income, sometimes for individuals we call it adjusted gross income which basically is not so different from the main concept. for the tax formula, income is needed. also, the exclusions should be there in order to get a gross income (larkey, 2015 and bilau et al., 2018). starting with gross income the tax formula changes and varies from individual to corporation. in individual tax, exemptions and includable income items are there (bilau et al., 2018 and tufetulov et al., 2018). but, for the corporation we have deductions and additions to income. in these two different scenarios, tax accountant and also the tax authority must focus on assessing and finding the true value (bilau et al., 2018 and brand et al., 2013). also, the firms and the individuals need to have at least a brief background on tax in order not to feel cheated and to be familiar with the tax rates and the tax due amount. sometimes, with a good tax consultant or a good tax officer inside the firm the the impact of taxation as an aid to economic development (applied study in kurdistan regional government) 8 amount of $1-$10 could mean nothing to the tax payer and would not even notice the impacts that this small amount of money has on the company (zucman, 2014 and bilau et al., 2018). in other words, let us assume that the 15% tax rates apply to the income of $100-$250, and the tax rate of 20% is applied on the income of $250-$400, if the income of an individual is $255 they are obligated and 20% tax rates would be imposed on them. in these cases, a good tax officer would help out the individual and deduct the income by the use of the items that can be deducted from the income, by reducing $5 the tax rates for the individual decreases by 5% from 20% down to 15% (tufetulov et al., 2018). imagine if these numbers where in billions, the international companies and the huge industries might suffer from this (larkey, 2015 and tufetulov et al., 2018). statement of the problems the first need of any modern government is to generate enough revenue which is indeed the breath of its nostrils. thus, taxation is by far the most significant source of revenue for the government krg regard payment of tax as a means whereby the government raises revenue in here at the expense of their sweat. it is good to note that no tax succeeds without the taxpayer’s co-operation. here we can ask some thoughtprovoking questions such as: what makes taxation such a difficult issue? why do people feel cheated when it comes to tax? is the government making judicious use of taxpayer’s money? in view of these questions above, this study is going to be carried out to offer a solution to them. it may not sound right to the economists and the citizens raising the suggestion of a good tax in krg. because, krg is an oil country and usually the oil countries with small populations exempt the individuals and take easier roads toward taxation. most countries with oil pay minimum amount of tax instead the people receive money annually from the government. if we account for kuwait, individuals tax rate is zero, people do not pay taxes and also in many gdp which stands for gross domestic product in the income method approach. people in kuwait keep the annual return for them self by 100%. then, the question of why should krg citizens pay tax then? most simple answer to be given is that krg is a very corrupted country therefore, nowadays they are suffering from an economic crises that caused by inflation and misuse of the countries resources and bad administration. in this paper, the writers oversee and focus on the tax income of the government and the economic crises impact on them. objectives of the study the general objective of the study is to assess the contribution of taxes towards the growth of the kurdistan regional government economy. however, the specific objective of this study is: 1. to study and show, the current taxation legislation in the region and the goal of the government. 2. to investigate and suggest, the needful actions from the tax authority and possible actions to take toward economic development. 3. to determine, why people feel cheated when it comes to tax. 4. to determine, the extent government has been using revenue generated from tax. amanj mohamed ahmed, muhammad nawzad ali, othman mohammed mahmood 9 value of the study the difference, between this research and other related research is that krg is facing financial crises which have negatively impacted the whole region. also, krg as a part of iraq which they are huge distributors of oil and listed with opec finding themselves stuck in an economic and political situations for many years and the struggle still continue to this day. the role of tax within every country and region if not used appropriately and well administered it will be useless. in kurdistan, tax laws and the administrations of tax, both need to be updated and the laws need to be updated. krg under the old laws and this current corrupted system with the help of good tax it can easily strike back up in the economy, even if it turns out hard with the accurate judgment and action the government can use the huge amount of taxes that so far has not been collected and distribute it into serving the public such as: roads, hospitals, schools, electricity, etc. literature review various theories have been conducted on tax as an aid toward economic development. they include the theories of money cycle and collection of taxes, government services, economic causes, the indian government, tax definitions, tax collection and regulations, and kurdistan real-estate tax. money circulation theory for business to flourish in the country there has to be good infrastructure such as roads, telephones, electricity, etc. this infrastructure is developed by governments or through close involvement of the government (grown and valodia, 2010). when governments collect money from taxes it ploughs this money into development of this infrastructure and in turn promotes economic activity throughout the country (paler, 2013). the concept of taxation is also important to businesses because governments can fund this money back into the economy in the form of loans or other funding forms (salami, 2011 and paler, 2013). government services theory the goal of producers is to make profits by satisfying consumer demand. open competition among producers usually results in their providing the best quality of goods or services at the lowest possible prices. the free enterprise system does not produce all the services needed by society (salami, 2011). some services are more efficiently provided when government agencies plan and administer them. two good examples are national defense and state or local police protection (salami, 2011 and stiglitz and rosengard, 2015). everyone benefits from these services and the most practical way to pay for them is through taxes instead of a system of service fees. other examples are the management of our natural resources, such as our water supply or publicly owned land, and the construction of hospitals or highways. taxes are collected to pay for planning these services and to finance construction or maintenance (scheve and stasavage, 2012 and sumner, et al., 2013). revenue is also collected through user fees, such as at the entrances to national parks or at toll booths on highways and bridges (u.s department of treasury, 2010). economic effects theory there is simply no empirical evidence or plausible economic mechanism to support the claim that cutting top tax rates spurs economic growth. (kee, 2013 and stiglitz and the impact of taxation as an aid to economic development (applied study in kurdistan regional government) 10 rosengard, 2015) when president bill clinton hiked taxes, the economy boomed. when president george w. bush slashed taxes the economy ultimately collapsed (mills et al., 2012). it wasn’t until after most of the bush tax cuts expired during the obama administration that the post–great recession recovery started to pick up steam—an ongoing recovery that, as uneven as it has been, has grown into one of the longest economic expansions in u.s. history (kee, 2013 and parry and williams, 2012). indian tax reform theory gst the biggest tax reform in india founded on the notion of “one nation, one market, one tax” is finally here. the moment that the indian government was waiting for a decade has finally arrived. the single biggest indirect tax regime has kicked into force, dismantling all the inner-state barriers with respect to trade (sumner et al., 2011 and beach, 2018). the gst rollout, with a single stroke, has converted india into a unified market of 1.3 billion citizens. fundamentally, the $2.4-trillion economy is attempting to transform itself by doing away with the internal tariff barriers and subsuming central, state and local taxes into a unified gst. the rollout has renewed the hope of india’s fiscal reform program regaining momentum and widening the economy. then again, there are fears of disruption, embedded in what’s perceived as a rushed transition which may not assist the interests of the country (rodden and wibbels, 2010 and sumner et al., 2011). tax defining theory tax is a fee charged (“levied”) by a government on a product, income, or activity. according to twomey et. al. (2011) defined tax as a compulsory payment made by individuals and firms to the government. ola defines taxation as a compulsory financial contribution to government by individuals and corporate bodies. government financial operations are impossible without taxation. apart from this, taxation can be a powerful means in order to achieve the goals of social progress and the objectives of economic development (tang et al., 2011 and albouy, 2012). it serves as a device encourages the growth certain activities by way of giving exemptions, discourage use of certain products by way of imposing heavier charges like those sin taxes which are imposed upon tobacco products, or strengthen anemic enterprises, also by way of tax exemptions. local industries may be protected through taxation by imposing high customs duties to foreign goods. moreover, taxation can also be used to reduce inequities or inequalities in wealth and income by progressively higher taxes as in the case of estate and income tax. (twomey et. al., 2011 and tufetulov et al., 2018). krg real-estate theory parliament of kurdistan in 2011 reissued and modified 2007 tax legislation for transformation of ownership of properties and started implementing in 2017, between the families if no more than 2,800 meter square taxes would not be imposed on them. also, when it comes to transfer of ownership between seller and buyer taxes would be imposed only if the area of the property exceeds the 2,800 meter square (kurdistan parliament new rules and regulations, 2015). amanj mohamed ahmed, muhammad nawzad ali, othman mohammed mahmood 11 research methodology research design in this part, account on how this research project is being carried out is explicitly dealt with. here, the area of study, the population, the sampling method, research instrument questionnaire, and oral interview used. the interview will consist of a number of questions designed to answer my research question. qualitative data will be gathered from the questions where participants’ responses are undefined; individuals can give their own opinions. ethical guidelines will be used for the purpose of avoiding any ethical issues, respondents’ are free to choose what to keep anonymous. an interview is used as this costeffective and takes much less time than questionnaire the whole such number of participants, this also as mentioned will avoid ethical problems as respondents are not diverting to an uncomforted zone (barideum, 1988; churchill, 1976; humphries, 2017 and howard and sharp, 1983). nature of data the data in this study comes from both primary and secondary source. the primary source of data deals with those data originated by the researcher as a result of studying a particular issue. the primary data for this study is made up of information generated specifically for this study. in order to have an insight into the research topic and argue as accurate as possible to the assignment. in addition, the secondary data are those existing before the need for this study was conceived but which are related to the research topic. they constitute a stepping in most research assignments for the researcher because the knowledge gained in reading and collecting materials from work done by others will fortify the researcher in this effort to generate primary data. this method of data collection was adopted because it suits the research study and equally aids to reveals the impact of taxation as an aid to economic development. data analysis in this section, the researcher intends to analyze the data collected in previous part. it should be necessary to point out that the researcher used oral interview and questionnaire types of collecting data because of the advantages associated with these methods. the presentation of data as expressed below is based on the design of the questionnaire. the presentation and analysis of data which is based on the whole questionnaires are being distributed. the questionnaire indicates the effectiveness or ineffectiveness of the kurdistan tax system based on the answer provided by the respondents. test of hypothesis we shall at this point test the hypothesis to either accept or reject them and as well determine the extent of their reliability. the acceptable of the hypothesis used in this study does not imply that the data collected was 100% reliable and error free but will only enable us know that it will not lead to disbelieve (flick, 2015 and mccusker and gunaydin, 2015). the probability of being in error is called the significant level of the type 1 error made and it is taken at 50% level. then we obtain x2 (0.001) or column is the number of independent calculations required for that row or column before the remaining unknown in that row or column can be obtained. h1: revenue generated from tax has a positive impact on the economic development of kurdistan regional government. the impact of taxation as an aid to economic development (applied study in kurdistan regional government) 12 h0: revenue generated from tax does not make any positive impact on the economic development of kurdistan regional government. hence v (r – 1) (c – 1) where r = row c = column the formula of chi-square is denoted thus: x =γ(oi–ei) where oi = ei = x = γ the observed frequency value the expected frequency value of chi-square at alpha summation. in this test, the null hypothesis (h0) shall be accepted if x2 oi is less than x2 ei but shall be rejected then, otherwise hence x2 oi = observed hypothesis x2 ei = expected hypothesis literature review data analysis and results and discussion from the data collection, analysis, and the test of the hypothesis, as it can be observed from the first question asked, most of the respondent replied with a negative response toward paying tax, along with the high rate of evasion and avoidance of tax. the high levels of tax avoidance and negative reactions are due to the low background in taxation in the region, people of kurdistan pay taxes when the government forces them or when they have other legal works which cannot be done without the tax authority clearance. one of the major issues in the region that triggers the complexity among the people is having no information on tax, people’s awareness for tax is really low and it causes continuous conflict between the taxpayers and the tax authority. also, slows down the whole process in the daily work of the authority (directorate of sulaymaniyah tax authority 1, 2019). the analysis of the questionnaires showed us that the people have been unsatisfied with the government’s functions. from the respondents’ opinion, the researchers derived the causes of this dissatisfaction and linked it to a few reasons of corrupt officials, inefficient tax legislation, tax money not used judiciously, and bad administration of tax. from the researcher’s perspective, the tax rules of 1982 are simple to implement and it is being accurately processed daily. presence of corrupt officials, have made an effect on the relationship between the citizens and the tax authority and growing the uncertainty. the opinion of tax money not used judiciously rises due to the government’s policies that have no transparency, people pay taxes in the names of services and no services have been provided to them, that is why even the tax authority does not trust the tax filings of the taxpayers. table 1 probability level (alpha) degree 0.5 0.10 0.05 0.02 0.01 0.001 1 0.455 2.706 3.841 5.412 6.635 10.827 2 1.386 4.605 5.991 7.824 9.210 13.815 3 2.366 6.251 7.815 9.837 11.345 16.268 4 3.357 7.779 9.488 11.668 13.277 18.465 5 4.351 9.236 11.070 13.388 15.086 20.517 sources: chi-square, math beans project. amanj mohamed ahmed, muhammad nawzad ali, othman mohammed mahmood 13 table 1 demonstrates that the hypothesis which has been tested by the chi-square formula, the rejection of the hypothesis explain it self. the iraqi and the kurdish government does not depend on tax, which having that huge amount of money circulating within the region and yet still not improving the taxing source. according to the directorate of sulaymaniyah tax authority, the government’s budget is consist of 4% of taxes, with having oil at least the government should raise the taxes up to 30%. therefore, taxes would impact the economy positively in order to obtain consistency in the economic development. according to (directorate of sulaymaniyah tax authority 1, 2019), poor people pay taxes with low rates and the rich do not pay taxes at all. however, even those companies that want to pay tax, their provided financial statements will be rejected immediately by the tax authority. because there is no trust between the government and the citizens, although, the government requires all the company’s to have an internal auditor along with the external auditor to audit their financial statements to get rejected by the authority. a question may arise: then what should the companies and individuals do? simply, the government has tax officers to reevaluate the estimated income of the companies and the individuals. as if this is not complicated enough for a society with a poor background in taxation, taxpayers are responsible to file their taxation reports in the beginning of the year. if not, the tax evaders would be fined through doubling their taxes policy and depending on the situation and the jury sometimes the cases may lead to one to five years of imprisonment. table 2 chi-square formula oi ei oi-ei 2 oi-ei 2 oi-ei /ei 15 11.5 3.5 12.25 1.065 8 20 -12 144 7.2 27 18.5 8.5 72.25 3.91 50 50 0 12.171 sources: prepared and computed by the authors cell 1: (15+8)/100 * (50/1) = 11.5 cell 2: (8+32)/100 * (50/1) = 20 cell 3: (27+10)/100 * (50/1) = 18.5 hence u =(r-1) (c-1) where r = 3 c = 2 i.e u = (3-1)(2-1) = 2 x2 = (0.001,2) 13.815 from the chi-square distribution table table 2 show that x2 is greater than x2 (0.001, 2). hence we reject h0 (the null hypothesis) and accept the alternative hypothesis thereby concluding that revenue generated from the taxation has a positive impact on the economic development kurdistan regional government, iraq. the impact of taxation as an aid to economic development (applied study in kurdistan regional government) 14 conclusion and recommendation conclusion kurdistan, tax laws and also the administrations of tax, should to be updated and also the laws should be up to date. various theories are conducted on tax as associate a help toward an economic development. the purpose of producers is to create profits in order to satisfy the shopper’s demands. open competition below producers typically leads to providing the most effective quality of products or services at the most efficient costs. aside from this, there is a tool that encourages the expansion bound activities by the approach of giving exemptions, discourage the use of a bound product by the approach of imposing heavier charges like those sin taxes that square measure obligatory upon tobacco product, or strengthen anemic enterprises, additionally by the approach of tax exemptions. in our research design regard on however this research is being applied is expressly addressed. here, the world of study, the population, the sampling methodology, analysis instrument form, and oral interviews used. on the tabular analysis, conception took to type in tabulation and therefore the analysis taken from the finished questionnaires. whereas assembling the questionnaires one in all the advantages that gave the investigator the advantage of asking the respondents direct queries so as to grasp the explanations behind their response. of course, the identities area unit unbroken hidden for moral concerns. the tabular analysis could be elaborated thanks to justifying and interpret every question of the survey richly. all of this through, making a table for every question and analyze the response and therefore the reasons if doable. from the information assortment, analysis, and therefore they take a look at of the hypothesis, because it is often determined from the primary question asked, most of the respondent replied with a negative response toward paying tax, at the side of the high rate of evasion and avoiding of tax. the high levels of minimization and negative reactions square measure thanks to the low consequence in taxation within the region, people of kurdistan pay taxes once the government forces them or once they produce other legal works that cannot be completed the tax authority clearance. recommendation based on these results and the proven factors that taxation affects the growth and has a positive impact on economic growth in kurdistan, this research proposes the following recommendations to help raise awareness and overcome these obstacles: 1. the education system mainly need to be revised and improved, the children of today are the faces of tomorrow. with having no taxation background and lack in legal information, taxation needs to be included in the education system. 2. taxation legislation needs to be updated. the legislation for taxation in krg is very old and it is up to date, the last legislation was issued back in 1982. 3. audit firms and the citizens trust. fixing the two points stated in the above, the government or the tax authority specifically needs to work on this point toward improving the connection between them. the least they can do is to rely on the auditors when they authorize them and officially certifies them. because, there is no one in the world that would like to pay tax, therefore, the neutrality of the auditors is needed. amanj mohamed ahmed, muhammad nawzad ali, othman mohammed mahmood 15 references aikins (2011), an examination of government internal audits’ role in improving financial performance, public finance and management, 11(4), 306-337. albouy, d. 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(2014), taxing across borders: tracking personal wealth and corporate profits, journal of economic perspectives, 28(4), 121-48. http://www.treasury.gov/resource-center/faqs/taxes/pages/economics.aspx http://www.treasury.gov/resource-center/faqs/taxes/pages/economics.aspx (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro elements of the neoclassical growth theory∗ florina popa academia romana– institutul de economie naţională florinapopa2007@gmail.com abstract one of the relevant components of the contemporary economic science is the economic growth theory, the economic background of the time leading to new guidelines of the research. the neoclassical growth theory the core of modern analysis explains how the capital accumulation and technological changes affect the economy, significant for the analysis of the economic growth process being the solow’s neoclassical growth model. the paper brief describes the elements of the economic growth model developed by solow, both for the situation when it allows the explanation of extensive growth and that wherein the growth is of intensive nature, as a result of the intervention of exogenous technical progress – a determinant of factors productivity growth. it is highlighted the importance of the exogenous neoclassical model, proposed by solow, who showed the determinant role of the technical progress in the economic growth phenomenon. keywords neoclassical theory; growth; solow’s model; technical progress jel classification e10; e13; o11; o47 1. introduction in the evolution of an economy, the main objective of development is the economic growth achievement, a basic factor in providing the long-term economic success of a nation and a premise of the efforts to eradicate poverty. in this sense, the economic literature has shown a continuous concern on the questions of growth and its determinants, the developed theories and models aiming the research of possibilities for steady growth, finding the ways in which the future work can be predicted based on the current experience data, identifing the ways that can lead to a continuous growth. the growth theories and models have evolved over time, correlated with the dynamics of economic reality, the used factors and instruments of economic analysis, being appropriate for the stages of development (the classical theory, the keynesian and neo-keynesian theory, the neoclassical theory, the new theory of growth – the endogenous growth theory). 2. the neoclassical growth theory – the solow’s model in the second half of the last century, the theory of economic growth has become a component of the contemporary economic science, the new orientation of researchers being generated by the economic context of the era. ∗the study is part of the research paper, in 2014, of the institute of national economy, entitled „dezvoltarea economică endogenă la nivel regional – aspecte teoretice şi practice”, (coordonator dr. daniela antonescu). 25 popa the neoclassical growth theory the core of modern analysis explains how the capital accumulation and technological changes affect the economy. it is noted a number of characteristic features of the theory: • perfect competition on the market of goods and production factors; • taking into consideration of two factors, the labor force and capital; • the yields are constant throughout the factors; • decreasing marginal yields on each of the two factors; • the growth of economic rate correlated with the population growth rate. meaningful for the analysis of economic growth process is the neoclassical model of solow (1956). for solow, the production level depends both on the quantity and on the factors productivity – the labor and the capital – alongside which, in the production function, he incorporated a third factor – the technical progress, whose role was considered exogenous. the model shows how in the absence of tehnological progress, there is the risk of economic growth cease, as a result of incomes decrease. 2.1.basic elements of the model: the agregate production function of the neoclassical model is of the form (aghion, p.; howitt, p.,1998): y = f(k,l) where: y – the production; k – the amount of capital; l – the amount of labour force the function allows explaining the extensive growth depending on: the capital increase by investments in capacity; the workforce growth by demographic effect. starting from the function: y = f(k,l), it is considered: » on a constant offer of workforce, the production function shall be expressed as a function of capital y = f(k) and shows: what is the volume of output y produced with a given stock of aggregate capital, k, at a given level of knowledge (aghion, p.; howitt, p.,1998); characteristic for the accumulation of capital: the revenues are decreasing the marginal product of capital is decreasing (in the capital stock): the growth can be generated only by the capital increase. the equation of neoclassical theory of growth highlights how the rate of the capital stock change at any time is determined by the volume of the existing capital at that time. k = sf(k) – δk, where: s – the constant saving of population; δk the rate of capital diminishing in the absence of population growth and of technological changes, the economic growth is limited due to capital decrease. when the capital stock reach the stationary level y* = f(k*) the rate of the output growth ceases; the economic growth is of temporary nature. the saving rate growth, s , temporarily increases the rate of capital accumulation, but has no long-term effect on the growth rate which falls back toward 0; it is the consequence of the capital depreciation rate increase (δ) which reduces its level and of the output on long-term, accelerating the depreciation swift. »when the aggregate output stream depends on the capital and labor force, in the scale production function y = f (k, l): the output per person is y = y/l and depends on the stock of capital per person k = k/l (aghion, p.; howitt, p.,1998). 26 elements of the neoclassical growth theory using the cobb-douglas function y = l1-α kα and 0 <α <1, the production function per capita could be written y=f(k)=kα. considering: the population growth l with a constant exponential rate per year n the capital increase k – determined by the saving rate per person sy and the capital decrease due to: the depreciation per person with the depreciation rate δk and the population growth which causes a decrease with the rate nk, the net rate of capital increase results from the equation: k = skα – (n+δ)k, wherein: s the savings rate n – the rate of population growth δ – the rate of capital depreciation for a more speedy growth of population, the trend is of reducing the amount of capital per person similar to depreciation because of the increase of the number of people which attend the income achievement. as such, the rate of capital depreciation has to be compensated with a rate of population growth. but also it is needed an upper limit of capital per person. when the population savings compensate the decrease of capital (generated by depreciation and population growth) it is reached the stationary value k∗ expressed by skα = (n+δ)k. on the long run, the capital stock converges to the stationary value k∗ and the output per capita will converge to the corresponding stationary value, y* = f(k∗). the output and the capital grow dependent on the rate of population growth, but on the long-term, the growth (expressed in the output per person) will stop. the economic growth is of extensive nature, the share of growth being given by the quantitative extent of production factors (the labor and respectively, the capital). 2.2. the exogenous technological element the solow's neoclassical model showed the difficulty that it provided a perspective of gradually diminishing of per capita economic growth and progress cease, in the absence of innovation in technology; having reached the stationary steady state, the economy ceases growth. solow has exceeded this limit, by introducing, along with labor and capital, a third factor technical progress. considered an exogenous factor, the technical progress increases the productive efficacy of the other two factors, offsetting the revenues diminishing and explaining the growth of the output per capita over time (diemer, a.). the model assumes the existence of a parameter of productivity – a in the aggregate production function, which increases with a constant exponential rate g, its exogenous value reflecting the progress in science. for the aggregate production function in the form y = (al)1-α, kα (aghion, p.; howitt, p.,1998) wherein: a the productivity l the labor force k the capital α the constant 0 <α <1 » the technological progress equivalent with the increase of labour force supply al, increases with the rate of population growth n, plus the rate of productivity g, so the growth rate is n + g; » the capital stock growth rate is given by the saving minus the depreciation sy-δk, wherein: s the savings rate; y – the output/capita; δ – the rate of capital depreciation. 27 popa the distinction from the previous situation (a) occurs at the rate of population growth from n to n + g; the capital per capita k (as shown above) moves toward the stationary state. the output and capital per person grow dependent on the exogenous rate of technical progress g. along with the accumulation of capital, the downward trend of the ratio output/capital is attenuated by the technical progress. the revenues diminishing and the technical progress mutually attenuate, and the ratio output/capital is constant, so that the economy reaches the stationary state moment. the reached stationary state maxim point of increase is determined by the rate of savings s, the rate of depreciation δ, the rate of population growth n, but the parameter that affects the rate of growth is the exogenous rate of technological progress g. the long-term growth is achieved through the intervention of the exogenous technical progress which influences the effect of the "work" factor , this increasing at a constant rate. so, the stationary state moves over time, under the influence of exogenous technical progress, different from the past situation, wherein the growth tended to convergence, to stationary state (amable, b., 2002). the technical progress determines the growth of the total factor productivity, leading to their qualitative and not only quantitative growth, which confers growth an intensive character. the elements that distinguish the two forms of growth (extensive and intensive) of the neoclassical model should be noted in the figure below (figure 1): figure 1 elements that distinguish the two forms of growth source: adaptation from quelles sont les sources de la croissance économique?, http://www.coursseko.fr/resources/economie/croissance/cours-croissance-1.pdf intensive growth given by the technical progress that determines factors productivity growth leading to their qualitative increase extensive growth factors intensive growth factors extensive growth achieved by the quantitative extent of factors the amount of labour force the amount of capital a good organization of the workforce, its efficacity increase based on productivity growth the capital improvement based on technical progress 28 elements of the neoclassical growth theory 3. conclusions the solow's model does not explain the long-term growth, but only the possibility to avoid the stagnation of production per capita, as a result of a technical progress generated by positive external effects. the increase due to exogenous technical progress can not be considered a selfsustained and cumulative phenomenon, due to the exogenous nature of the progress, considered to be achieved outside the economic sphere and due to a deacreaseing marginal productivity of each factor. noting the role of technical progress, as a factor of economic growth, the neoclassical exogenous model, proposed by solow, represents a critical moment in the economic growth theory, the knowledge of which is necessary to understand the further contribution of the endogenous growth in the economic growth theory. the works that followed solow's theory focused on answering the long-term growth question, complementing and enriching the model. in the '80s '90s period, the romer's works outlined the new theory of growth the endogenous growth theory – at the origin of which, there is the emergence of theories of research and development, the technological innovations diffusion. references aghion, p.; howitt, p. (1998), endogenous growth theory; problems and solutions by cecilia garcía-peñalosacoordinated by maxine brant-collett massachusetts institute of technology, united states of america, the mit press cambridge, massachusetts london, england, available at http://www.fordham.edu/economics/mcleod/aghionhowittchapter1.pdf. amable, b. (2002), un survol des théories de la croissance endogène, available at www.paris.schoolofeconomics.eu/docs/darcillon-thibault. diemer, a., théories de la croissance endogène et principe de convergence. croissance endogene et convergence, available at http://www.oeconomia. net/private/cours/croissanceendogene.pdf. dinu, m.; socol, c. (2006), from solow model to endogenous growth. romania’s reinsertion into civilization ? revista informatica economică, volumul x, nr. 1(37)/2006, pp. 122-127, available at www.revistaie.ase.ro/ content/37/dinusocol.pdf, http://econpapers.repec.org/article/aesinfoec/. evoluţia teoriei creşterii economice, available at https://teoriieconomice. wikispaces.com/. mecu, dragoş, g.(2013), modelling economic growth, revista română de statistică – supliment trim ii/2013, pp. 239-242; available at www.revistadestatistica.ro/suplimente/2013/2_2013/srrs2_2013a36.pdf. quelles sont les sources de la croissance économique?, available at http://www.cours-seko.fr/resources/economie/croissance/courscroissance-1.pdf. théorie de la croissance endogène, available at http://fr.wikipedia.org/wiki/. 29 microsoft word apostoaie constantin marius_eng.doc initiatives of european union’s council on the value added tax mircea muntean, vasile alecsandri university of bacau abstract value added tax is an indirect tax, which constitutes an important source of income for the european community budget and for each state separately. therefore, european union grants a special role to avoid fiscal evasion and collect the amounts from taxable transactions under the value added tax for assuring the increase of budgetary incomes. for this purpose, european commission through its professional bodies has permanent concerns regarding goods importation from states outside european union and goods and services transfer between communitarian states. key words value added tax, communitarian states, goods transfers, goods delivery. jel code: m41 the working group for fiscal issues, on the basis of european commission’s proposal and european parliament’s notification examined the necessity of amending the directive 2006/112/cee of european council from the 28th of november 2006 regarding the common system of value added tax for diminishing the fiscal evasion on goods import from european union area. with this purpose, the taxing for certain categories of products is exempted of value added tax payment, if followed by delivery or transfer of the respective products towards a taxable person from another member state. the respective exemption granting is approved for every member state, with regard to specific conditions and also with regard to the traders’ intentions for avoidance of value added tax payment. in order to prevent fiscal evasion, the europe’s council received from european commission proposals for defining the applicability area for value added tax exemption for imports as well as proposals for establishing detailed regulations for their implementation, setting out the nature of transactions and minimal conditions that applies to this measure. the importer has the obligation to communicate clearly to the importer member state competent authorities its registration code as value added tax payer or the identification code as value added tax payer of its fiscal representative, given to the member state where the importation takes place. therefore, the value added tax should be paid by the person that has this payment obligation to the fiscal authorities, and every state will foresee under certain circumstances, a person other than the one required to pay that tax, to pay jointly and severally liable with the taxpayer. also, the supplier may jointly pay the value added tax for exempted products or may guarantee the payment of this tax if the products are purchased by another person. the delivery person is jointly responsible to value added tax payment for intra-communitarian acquisition of the respective products if not complied with the obligation to prepare a recapitulative statement containing information relating to respective delivery or the statement that does not contain information on goods delivery importation. recapitulative statement is not required when the recipient has filed for the period when he realized the import and value added tax becomes chargeable for the transaction, a statement which shows all the information on this category of taxes on imports respectively. also the studies and scientific researches economic edition, no. 15, 2010 105 person who delivers the goods must be duly justified to the competent authorities deficiencies related to that transaction. these rules application must be made by all member states in terms of transparency by the end of 2009. the need to amend regulations implementing directive 2006/112/ec on the common system of value added tax was foreseen in notice nr. 2009/c306/17 of the european economic and social committee. according to the presented document the aim is simplifying and reducing administrative burdens on operators and especially on small and medium enterprises on the value added tax payment, as well as effective measures to combat tax fraud. in these measures implementing an important role is played by electronic and on paper invoicing of the operations realised by the economic operators, subject to value added. in this sense the european economic and social committee express some reservations concerning the excessive freedom allowed member states in adapting these rules. therefore the council of europe through the rules issued by tax authorities follows to assign the same evidentiary value to electronic invoices as invoices on paper, but it is an instrument of harmonized rules designed to limit the options left to member states. for enhancing the activity of small and medium enterprises, through proposed rules, the council of europe considers extending the use of simplified invoices that emphasizes the value added tax, as well as storing of electronic invoices data for streamline and control of commercial transactions, costs reduction and increase labour productivity, diversion of resources consumed, etc. the implementation of the proposed rules should help to combat fraud to avoid paying value added tax, if using electronic invoicing and making cross-border operations between the fiscal changes of information about intra-communitarian deliveries. through implementation of the proposed rules the invoicing, deduction and payment of the value added tax in the case of successive deliveries of goods to the same customer is followed to be done monthly or on other conventional deadlines. in this sense the term conventional may be the calendar year, but the european economic and social committee expresses some reservations about the possibility for member states to introduce the conventional term of one year in cases that do not fall under the directive that bids the harmonization of value added tax. based on the proposed rules, under implementation by the economic operators of cash accountancy, value added tax shall become payable when cashing, and the right to deduct shall arise on delivery of goods and services made or when issuing invoices. this option is valid for economic operators taxable persons, if besides the principle of cash accountancy have an annual turnover that does not exceed two million euro. introducing simplified invoicing is allowed for shipments whose tax base is less than 200 euro, and the delivery of goods or services is exempt from value added tax deduction. this possibility is an obligation for traders in the member states, when for supplies of goods or services the operations place is on the territory where traders have their respective headquarters. the difference between the „complete” and simplified invoice consists in the manner in which it can be used: the first serves to the right to deduct, and the second does not have this role, with the exception of the cases allowed within that state. the proposed rules recommend to member states to require economic operators an official translation in the respective language of those countries of such invoices, obligations that are already applied in some states and that are not mildly bearable for enterprise. also, through new rules there is the possibility of state tax administrations to carry out the invoices electronically to a trader in another member state in order to detect whether to comply with legislation on value added tax. certain rules of directive 2006/112/ec on the common system of value added tax were amended by directive 2009/162/ue of the council of europe, in terms of rules on the place studies and scientific researches economic edition, no. 15, 2010 106 of delivery of gas and electricity through the existing systems centralized on the european union’s territory. for „deliveries of gas through a natural gas system located within the community or any commercial network in such a system, the delivery of electricity, or the delivery of energy for heating or cooling through heating or cooling networks to a taxable dealer, where delivery place is considered to be the place where that taxable dealer has established his business or has a fixed establishment for which the goods are delivered or, in the absence of such a place, a place where he has its common domicile or residence” [directive 2009/162/ue, art.38]. taxable dealer is considered any taxable person that has as main activity object buying gas, electricity and energy for heating or cooling and then reselling these products, and their own consumption of these products is negligible. the exception is gas consumption and energy delivered through a system on the community’s territory or a network connected to such scheme, where the buyer does not have a permanent place, the delivery place is considered the place where the buyer actually uses and consumes goods. in terms of the rate of value added tax, each member state may apply a reduced rate for the supply of natural gas, electricity or energy for district heating. bibliography: 1. brezeanu petre and others, 2. iordache elena (coordinator), manualul specialistului în fiscalitate 2005 3. ***, directive council of europe 2009/162/ue. brussels, 22.12.2009 4. ***, regulation (ec) 117/200 european commission, brussels, 30.11.2009 5. ***, european economic and social committee notice on the proposal for a council directive amending directive 2006/112/ec on the common system of value added tax in terms of rules on invoicing. (com/2009/c 306/17) studies and scientific researches economic edition, no. 15, 2010 107 microsoft word duhalm simona engl. advertising or public relations – which is the organizations choice in the current period? simona duhalm, asis.univ.drd., university „vasile alecsandri” of bacau, romania   abstract in the current period, when the issue of efficient use of financial resources is a central, organizations seeking the best ways to both promote their self-image, and products or services they produce and sell. between the promotional techniques by the mass communication in which organizations can appeal,  the makers have to choose between advertising and public relations activities. keywords communication, efficiency, media, persuasion, advertising, public relations communication process modern marketing is more than just make a good product, establish an attractive price for it and make it accessible to target consumers. firms must communicate, both with their current customers and with the potential. to communicate effectively, they sign contracts with advertising agencies, employs specialists in direct advertising, in sales promotion and sign contracts with firms specializing in public relations, which follows to advertise the product and to impose on the market the company's image1. in choosing the appropriate choice of communication policy, decision makers within companies should be able to formulate answers to these problems-questions such as: who communicate?, what communicate?, how to communicate?, what result communicate? considering the components of the communication system, communication scheme is as follows: transmitter = customer (announced) + advertising agency message = advertising receiver = target group channel = tv, newspapers, radio, internet, out-door (the outdoor), in the door, unconventional media code = adapted to the specific language of the target group, speaks on the meaning of the target group                                                              1 kotler, ph. (1997), managementul marketingului, ed. teora, bucuresti, p. 755  35 studies and scientific researches ‐ economic edition, no. 14, 2009  context = medium of communication, social, economic and cultural figure. 1. scheme to communication process given the importance of using financial resources as effectively, a firm-level decision makers have to choose between advertising and public relations which is considered the most effective promotional tools that can call. advertising – generalizations and features advertising is any paid form of impersonal presentation and promotion of ideas, goods or services to someone who can be identified2. advertising objectives can be classified according to what is intended to be achieved: to inform, persuade or remind. advertising can be used both to create an image for a product and to boost sales. in terms of its quality, may be mentioned the following: is a means of communication to the general public, is persuasive, presents an expressive strength and non-personal character, is a highly partisan character, answering motto: "to communicate to sell", is the great subject and messages sent are almost perfectly controlled by the promoter3. in terms of budgets, through television advertising requires a huge budget, while other forms of advertising such as that carried in newspapers, can be achieved with relatively low budgets. when an organization chooses advertising as a means of communication, it can use the following tools: advertisements printed or broadcast on radio or television; outside / inside the packaging; films; brochures, leaflets, posters; billboards, display of logos; posters displayed at point of sale; audio-visual materials. public relations generalizations and features public relations can be defined by the fact that follow build good relations with its public by obtaining favorable publicity, by imposing a favorable image and by managing and defusing rumors, news and bad events.  public relations appear as a means of communication between an organization and its publics, it helps the managers to know the attitudes of public and can make decisions and help the public understand the specific organization and trust it4. the impact of public relations we have within the organization is primarily due to its three distinct features: high degree of credibility news and reports seem more credible than advertising specific ads, lack of public reticence message reaches the target audience for a news, not strictly interested in a communication to achieve the act of sale, presentation they can, like advertising, to make a company or product presentation . currently, public relations is found in all activities and important social and political moments, in almost all institutions, in preparing and carrying out major sports and cultural events, in crisis situations and those of normality. public relations is a                                                              2 kotler, ph. (2004), principiile marketingului, ed. teora, bucuresti, p. 708  3 epuran, gh. (2002), comunicarea in afaceri. strategii, tehnici, modele de decizie, ed. alma mater, bacau, p. 54  4 coman, c. (2006), relatiile publice. principii si strategii, ed. polirom, iasi, p. 20  36 studies and scientific researches ‐ economic edition, no. 14, 2009  complex area that specialists should respond to public desires, maintaining favorable relationships with publics such an organization. major tasks of a public relations department is communicating with external and internal communications. external communication includes all varieties of public events of the organization: the relationships with the media, exhibitions, audio-visual in all its forms, photos, videos, dvds, films, direct communication, promotion, public opinion campaigns, organizing events: launches, cocktail parties, openings, crisis management, fundraising, public affairs and lobby, service information and complaints or press reviews and occur at audiences outside the organization. differently, internal communication is addressed to the internal audience: employees, shareholders, other members of the organization using the enterprise means that publication, closed network news, welcome program or meetings with some of the leadership5. difference between advertising and public relations given the strictly interested in publicity, namely, the selling, public relations are meant to describe events, share beliefs and vision of the organization, to convey the truth and the facts objectively. to persuade, advertising can call to the elements of nature emotional, subjective, as opposed to public relations using factors credible, impartial. currently, public relations does not refer only to relations with the press, but were extended to all commercial and noncommercial structures, political organizations, organizations ongovernments, state structures by the institution comes in contact. public relations are meant to analyze trends, to clarify their implications and to offer solutions aimed at the interests of the organization, as well as those or target audience. advertising is one component of marketing activity and a source of information about products, services, individuals and organizations. table. 1. the differences between advertising and public relations criteria for differentiation advertising public relations purpose selling and increasing market share winning the goodwill and building a favorable image for an organization or a brand objective misleading consumers into action towards the purchase of a product or service to create and maintain mutual understanding between an organization / product / service and consumer target clearly identified a market segment in terms of sociodemographic characteristics and psihografice addresses a large group, which form the public opinion: the community, employees, members, stakeholders / employees, financial partners, distributors and consumers for companies, opinion makers / leaders media communication press, radio, television, internet, cinema, advertising by mail, printed advertising, publications, news letter sites, fairs, exhibitions, videos and audio                                                              5 dagenais, b. (2002), profesia de relationist, ed. polirom, iasi, pp. 167-168 37 studies and scientific researches ‐ economic edition, no. 14, 2009  special events creative process require the use of elements which seduce the consumer, persuasive elements, emotional, dramatic videos and audio materials and formulating texts were informative and must provide only reliable information both publicity and public relations are quality variable acting a long-term and psychological level. efficient use their in the current period is quantify by the financial resources used and achieving the proposed objectives. advertising is a field where risk and uncertainty is high, planning activities play an essential role. conclusions currently the number of those who use the services of public relations is growing, which is applied both in the marketing mix to promote brands as well for corporate communication6. public relations have acquired a great importance for the management of a company, that help the company to communicate better what is its i: objects, values that characterize one, relationships with the community in which they operate, internal changes or any other information of interest to the public. in the top public relations services that appeals to most find relationships with media companies, followed by organizing events and environmental monitoring7. the advantage of using public relations activity is not only much lower in cost compared to advertising, but that i can attract a number of increasingly large consumer of those who reject advertisements, considering them too interested . since both publicity and public relations help to promote a product or organization, they can be used in conjunction. when i want to market launch of a product / organization is more efficient if the target audience is informed in a first stage through a public relations campaign. the score is to create an attitude of acceptance from public, advertising actions becoming more efficient both in terms of achieving objectives and in financial terms. references 1. coman, c. (2006), relatiile publice. principii si strategii, editura polirom, iasi 2. dagenais, b. (2002), profesia de relaţionist, trad. anca-magdalena frumuşani, ed. polirom, iaşi 3. epuran, gh. (2002), comunicarea în afaceri. strategii, tehnici, modele de decizie, editura alma mater, bacău 4. kotler, ph. (1997), managementul marketingului, editura teora, bucureşti 5. kotler, ph. (2004), principiile marketingului, editura teora, bucureşti 6. www.markmedia.ro 7. www.pr-romania.ro                                                              6 www.pr-romania.ro  7 www.pr-romania.ro   38 (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 89 building an effective sales force ioana olariu „vasile alecsandri” university of bacău, faculty of economic sciences ioana_barin_olariu@yahoo.com abstract building an effective sales force starts with selecting good salespeople, but good salespeople are very difficult to find. the reason for this is that most sales jobs are very demanding and require a great deal from the salesperson. there are many different types of sales jobs. before it can hire salespeople, each company must do a careful job analysis to see what particular types of selling and other skills are necessary for each sales job. one task of the market planner is to establish clear objectives each year for the entire sales force, for each region, each sales office, and each salesperson. sales jobs are different from in-house jobs in some significant ways. nevertheless, each company must continually work on building and maintaining an effective sales force using the following steps: recruitment, selection, training, compensation and evaluation of each salesperson. keywords salespeople; recruitment; selection; training; evaluation jel classification m41 introduction one of the reasons personal selling is difficult is that the salesperson is caught in a squeeze between the company and the customer or potential customer. on the one hand, the salesperson is paid by the business firm to represent its own interests when dealing with customers. in this role, the salesperson must represent the customer’s interests in attempting to get from the company such things as quick deliveries, good credit terms, immediate repairs if equipment breaks down, and extra allocations of products or supplies in times of shortages. in this role, the salesperson must fight for the customer’s interests. representing both the company and the customer is often a rough situation to be in, and the salesperson must use tact, good judgment, and emotional maturity in keeping both sides as satisfied as possible. this also requires the ability to think clearly and with imagination, often under extreme pressure. the salesperson must also be a self-starter, since there is a steady flow of work that presents itself to be solved or accomplished. the salesperson must schedule sales calls on present customers, and must also call on potential new customers frequently. this requires a great deal of initiative and internal motivation. the most difficult problem of all may be the constant discouragement that every salesperson faces. it takes a great deal of “ego strength” to accept defeats gracefully and to resolve to try even harder the next time. studies have shown that in many industries only a third to a half of new salespeople survive more than a single year. for those who do survive, the financial rewards can be very substantial. there is usually no faster way for new college graduates to make a good income than by getting a sales job that requires creative and persuasive selling. building an effective sales force 90 several steps or phases are involved in building and maintaining an effective sales force in a business firm: recruitment, selection, training, compensation, evaluation. these steps are not actually sequential for established companies, since they continually engage in all steps in order to maintain a productive sales force. selecting the right salespeople an early and often the most important step in building an effective sales force is to select good salespeople. the selection of salespeople is usually done by professional personnel managers and consultants, especially in large business firms. these people know how to do the job analysis that is necessary to find out exactly what is required for each type of sales position. screening tools and techniques a wide variety of tools and techniques are available to help both the sales manager and the company personnel department in selecting the best salespeople from all applicants, for example: company application form, mental ability tests, personality and interest tests, interviews with company management, interviews with outside personnel evaluation specialists. the particular tool or tools that are the best predictors of sales success will vary from one selling job to another and from one evaluator to another. some personnel specialists will tend to stress the interview; others will put primary emphasis on mental ability or personality tests; and others feel the application form is the best indicator, because it shows what a person has already done in his or her life to develop good selling skills. the most reasonable conclusion is that all the various tools are potentially valuable for screening applicants. most selling jobs require a great deal of customer contact, and it helps greatly if the applicant is the type of person who likes to be with people. the personal history on the application form shows what the previous sales or customer contact jobs a person has had, what social clubs they belong to, what leisure time activities they engage in. an applicant’s personal history can also show the degree of commitment he or she is likely to bring to a sales job. recruiting an applicant pool in many cases, the key requirement for a good selection process is having a good pool of applicants to choose from. this means that recruitment procedures must be effective. a good recruiting system in large companies must operate continually, even when there are no immediate job openings. training salespeople new sales employees almost always require a training period before being sent out into the field. for some sales jobs this training can be done in only a few days or weeks; in others it takes much longer. among the many points that need to be covered in sales training are such topics as:  what the company stands for, including its mission and objectives  what its products or services will do  how the company’s products compare to those of the competition  the different needs and characteristics of various customers  specific selling and prospecting techniques  company office reporting procedures olariu 91  how the salesperson is expected to dress and act  how to interface with the different portions of the company on behalf of the customer the list could go on and on. it is clear that creative and persuasive types of selling require a great deal of training for new sales employees. part of this training must be done in-house. another large part must be done in the field, under real-world conditions. most well-run large business firms now have regular training sessions for all their salespeople, to keep them informed and up to date. compensating salespeople because sales jobs are different in some important ways from internal jobs, they need a different kind of compensation arrangement – one that provides a more direct incentive for a job well done. it is possible to provide this direct incentive because salespeople usually have a very tangible record of achievement – the volume of sales or profits generated. this is usually the primary basis for rewarding the sales force in most companies. there are two major types of compensation for salespeople: financial and nonfinancial. financial incentives there are three principal approaches to compensating sales force financially: straight salary, straight commission and combination of salary plus commission. the straight-salary approach has some advantages, particularly for new salespeople. some companies use straight-salary compensation for experienced salespeople and for new ones. straight-commission compensation often provides the greatest incentive for sales employees. here the employee receives a percentage of the total sales volume he or she generates. because both straight salary and straight commission have serious weaknesses, most companies pay on the basis of salary plus commission. this provides a balance of the best features of both types of compensation. nonfinancial incentives there are many different types of nonfinancial sales incentives. these include trophies and plaques, free trips to conferences in resort areas, extra amounts of secretarial and other internal support, and advancement up the ladder into sales management. nonfinancial incentives are an important part of the job of building and maintaining an effective sales force. evaluating the sales force in most large companies, each salesperson develops an individual plan of action for the next month, quarter, or year, in writing. this plan will include a variety of specific objectives, both quantitative and qualitative. quantitative objectives usually include:  sales volume  average order size  gross margins, selling expenses, costs per sales call  number of sales calls to make on existing customers  number of new accounts to open up  number of meetings with dealers or distributors qualitative objectives do not require as much planning time, but they may be equally important. these objectives include:  improving one’s knowledge of products (both company’s and competitors’)  more information about customer needs and current buying practices  improving personal selling techniques building an effective sales force 92  better prospecting approaches  developing better personal relationships with people within the company that provide selling and service support the new sales force today’s sales job is very different in some significant ways from what it was years ago. market intelligence most salespeople now carry a much greater responsibility for keeping company management informed about what is going on in the marketplace, accurately, currently and in detail. a part of this information come from the sales call reports they submit regularly. other parts are developed in the process of making a proposal to win a particular order. competitive information in particular has become especially important in recent years. company salespeople can provide a great deal of useful competitive information from their discussions with customers and prospects. this information becomes a part of the marketing intelligence system of the company. telemarketing phone calls to present customers can often accomplish the following: obtain reorders of suppliers or equipment the customer has bought before, inform customers of new products or services that are now available, find out there are any changes in the customer’s business that would offer opportunities for additional sales, ask if deliveries are on time and if the supplies or equipment are working properly, ask customers to estimate future needs, for sales forecasting purposes. telemarketing can also be used very effectively in identifying and qualifying prospects and in soliciting new business. today’s salesperson works from referrals or prospect lists. each prospect can be called on the telephone to see whether there is enough real interest to justify a sales call. in a growing number of cases, the sale itself can be made over the telephone. team selling in today’s business world, most companies selling very complex equipment to other business firms no longer expect a single salesperson to make all the contacts and presentations necessary to win a large order or contract. they form selling teams, which consist of representatives from each part of the company involved in a sale. this team is coordinated by a salesperson, who calls specialists in whenever needed and who often includes them in major sales presentations. call routing by computer a few large companies with “management sciences” departments or capabilities have developed computer models that plan the proper number of sales calls each salesperson should make on each customer or within each sales territory. the computer is given all this information for each customer and each salesperson, and it calculates the number of times each customer should be contacted each year or quarter by a salesperson. they also provide an estimate of the sales or profits that should be generated by each salesperson or in each sales territory, and this is useful in evaluating the performance of the sales force. salespeople have to fulfill one or more of the following tasks:  exploration: salespeople find new customers and cultivate relationships with them;  targeting: salespeople decide how to divide their limited time resources between actual customers and potential customers;  communication: salespeople communicate professionally, information about products and services offered by the company; olariu 93  sale: salespeople mastered the "art of selling", which is to address, presentation, finding answers to objections and preparing sales;  offering: salespeople offer customers various services consultations concerning their problems, technical assistance, financing and delivery of goods without delay;  gather information: salespeople performs both market research and gather information on this and completes reports on sales visits they have carried out;  allocation: salespeople decide which customers to be allocated with priority certain products, in cases the company has insufficient quantities of them. conclusions there are many different types of sales jobs. before it can hire salespeople, each company must do a careful job analysis to see what particular types of selling and other skills are necessary for each sales job. one task of the market planner is to establish clear objectives each year for the entire sales force, for each region, each sales office, and each salesperson. quantitative objectives can be specified for sales volume, number of units, and gross profit margins; qualitative objectives include signing up new dealers, conducting training sessions, setting up displays, and improving selling skills. as companies increasingly show a strong market orientation, their sales forces should focus increasingly on market and customer needs. classical vision is based on the idea that salespeople should be concerned only with sales, marketing department assuming the task to deal with profitability and marketing strategy. according to the new vision, however, salespeople must know how to produce both customer satisfaction and profit to the company. the attributes that salespeople must have, are: energy and personal initiative; organizational and planning capacity; a satisfactory level of schooling and culture; ability to adapt to a variety of personalities and behaviors; concern for personal and professional development; desire and need for professional recognition. sales jobs are different from in-house jobs in some significant ways. nevertheless, each company must continually work on building and maintaining an effective sales force. references blythe, j. (2005), managementul vânzărilor şi al clienţilor cheie, editura codecs, bucureşti; butunoiu, g. (1998), tehnici de vânzare – curs pentru agenţii de vânzări, editura all, bucureşti; buchwald, art. (november 2001), selecting the correct sales tool, customer relationship management, pp. 27-28; cravens, d.w. (fall 1995), the changing role of the sales force, marketing management, pp. 49-57; delvecchio, s.k., zemanek, j.e., mclntyre, r.p., claxton r.p. (winter 2002-03), buyers' perceptions of salesperson tactical approaches, journal of personal selling & sales management, vol. 23, pp. 39-49; delvecchio, s., zemanek, j., mcintyre, r., claxton, r., (2004), updating the adaptive selling behaviours: tactics to keep and tactics to discard, journal of marketing management, vol. 20; donaldson, b. (2001), managementul vânzărilor teorie şi practică, editura codecs, bucureşti; building an effective sales force 94 grapentine, t., (2005), segmenting the sales force, marketing management, vol. 14; hawes, j.m., rich, a.k., widmeir, s.m. (2004), assessing the development of the sales profession, journal of personal selling and sales management, vol. 24, pp. 27-38; holmlund, m., (2004), analyzing business relationships and distinguishing different interaction levels, industrial marketing management, vol. 33; ingram, t.n., laforge, r.w., leigh, t.w., (2002), selling in the new millennium: a joint agenda, industrial marketing management, vol. 31, pp. 559-67; jantan, m.a., earl, d.h.jr., shawn, t.h., ashraf, m.a., (2004), managerial perceptions of sales training and performance, industrial marketing management, vol. 33; johnston, m.w., marshall, g.w. (2005), relationship selling and sales management, burr ridge, il: mcgraw-hill/irwin; kerin, r.a., hartley, s.w., berkowitz, e.n., rudelius, w., (2006), marketing, mcgraw-hill/irwin, ny; leach, m.p., liu, a.h., (2003), investigating interrelationships among sales training evaluation methods, journal of personal selling & sales management, vol. 23; manasco, b. (may-june 2004), future force: the next era of sales effectiveness, 1to1 magazine, pp. 31-34; manna, d.r., smith, a.d., (2004), exploring the need for emotional intelligence and awareness among sales representatives, marketing intelligence & planning, vol. 22; myers, j.h., (1986), marketing, mcgraw-hill, inc.; pitt, l.f., ewing, m.t., berthon, p.r. (2002), proactive behavior and industrial salesforce performance, industrial marketing management, vol. 31, pp. 63944; randall, j., randall, c., (2001), a current review of hiring techniques for sales personnel: the first step in the sales management process, journal of marketing theory and practice, vol. 9; robinson, l.jr., marshall, g.w., moncrief, w.c., lassk, f.g. (spring 2002), toward a shortened measure of adaptive selling, journal of personal selling & sales management, vol. 22, pp. 111-19. schwepeker, c.h.jr., good, d.j. (2004), marketing control and sales force customer orientation, journal of personal selling and sales management, vol. 24, no. 3, pp. 167-79; spiro, r.l., stanton, w.j., rich, g. (2003), management of the sales force, burr ridge, il: mcgraw-hill/irwin, chap. 9; weitz, b.a., castleberry, s.b., tanner, j.f.jr., (2007), selling: building relationships, mcgraw-hill/irwin, ny; (2 rânduri libere, 11p) studies and scientific researches. economics edition, special issue, june 2016 http://sceco.ub.ro 58 business plan management tool of the entrepreneur nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahoo.com abstract this paper proposes to highlight the importance of developing of a business plan, which is an indispensable tool for any entrepreneur, aims to reduce the degree of uncertainty in entrepreneurial activity, to reduce the company's environmental vulnerability. thus the objectives of the paper consist on presentation of the concept define, the role, the functions of the business plan, also the typology, the stages concerning the preparation and the content. of it. the research method was to use a comparative study of the specialty literature. the business plan represents a logical flowchart of action, which involves perspective on thinking on a business, starting from certain objectives, helping to create an overall picture of the whole business. basically it covers all stages and resources which will be necessary to an entrepreneur to achieve the proposed objectives in a predetermined time period. the business plan offers the possibility to assess the chances of success of businesses, representing a means to control for the entrepreneur on profitability and business viability through a systemic analysis of a comprehensive set of rigorously structured information, providing thereby the knowing of all aspects involved in business and the effective and in depth preparing. keywords entrepreneur; businesses; goals; profitable; success jel classification m13; m21 introduction we live in a society where there is an increasingly hard competition, in which any company, to be considered performant, must meet a number of conditions, and have a certain model of organization and economic activity. the development of contemporary society is characterized by a highly dynamic evolution, causing changes not only in terms of the size of the enterprises, the degree of concentration and complexity of economic activities, but also in relation of the companies with their economic and social environment, with the market. launching in business is a very important step for an entrepreneur, because the risk of failure is high in the early years. involvement in an established business and its development enjoys a greater chance of success due to the decrease of the degree of uncertainty. all these suggest that entrepreneurs need to create a business plan. in this context the existence of a competitive business plan, anchored in the current economic reality, might make the difference between success and failure. 1. what is the business plan the transition to a market economy has imposed reconsideration of economic activity in terms of profitability and competitiveness. the development of business activity after the fulfillment of these two concepts involves also the use of tools to foreshadow ciucescu 59 the results of the initiated actions. the business plan is a symbol of a new vision and approach specific to the market economy, based on identifying and harnessing of economic opportunities. the business plan is one of the most used tools to harness economic opportunity in the current period, there are many theoretical and practical approaches on this. the business plan is approached in several ways, the most widespread being practical definitions, from the position of a manager or of an entrepreneur. in the specialty literature, the business plan has been defined by various authors. west (2000) considers the business plan as “a tool of the present, developed through successive approximations, using the experience and the achievements of the past to design a realistic way forward. it has as aim the most advantageous and workable compromise between what is desired and what the company can do.” the team coordinated by turcu (2008) believes that “the business plan is a method of designing and promoting of a new business or of a significant development of an existing business, starting from the identification of an economic opportunity, through which are determined the objectives to be fulfilled, are dimensioned and structured the main necessary resources and activities, demonstrating that it is profitable and that it deserves to be supported by potential investors.” according to săndulescu (2006) the business plan is “a document which makes known the existing resources and developing prospects of a company and invites in this way, the support and the cooperation of potential supporters (entrepreneurs, lenders and investors).” other approaches treat the business plan in terms of management science. from a management segment view, nicolescu (2000) consider the business plan as a “dynamic decision tool, designed, on the one hand, to managers within the company in order to increase the efficiency of their work and, on the other hand, to investors, bankers and, generally, to any possible industrial, commercial, social partner, to whom it enable them to be informed of the perspectives of this business.” so as longenecker, moore and petty has shown (2003), in the paper small business management an entrepreneurial emphasis, business plan is defined as “a written document reflecting the development prospects of a newly created business.” so as zimmerer and scarborough, (2005) in the paper essentials of entrepreneurship and small business management, a business plan is seen as “a summary of a business idea, which includes operational and financial details, opportunities and marketing strategies and, also, skills and managerial capacities of the entrepreneur. the business plan also describes the direction the company is heading, which are its objectives, where you want to reach and, especially, the methods of achieving the objectives.” in my vision, the business plan is a document that includes the objectives and how to achieve them, and the resources necessary to achieve the set objectives, developed with the aim of directing business activity, to a position in the market and profit. 2. the role and the functions of the business plan 2.1. the role of the business plan the role of a business plan is complex and consists in demonstrating viability of the business that are expected, but also to guide the entrepreneur in running the necessary activities to achieve the set objectives. therefore, the business plan should be considered not as a form or document to be completed at the request of potential donors, but as a complex system based on the interdependence of resources, activities and operations, and which reflects in an accessible manner to the reader the business what it is intended to be conducted and the positive (profitable) development of it in time. business plan management tool of the entrepreneur 60 the role of a business plan is to guide the entrepreneur since the first year of running the business and to demonstrate that the business deserves to be funded. its implementation means control and adjustment in function of actual development. this control exercised over the business development will cover all critical elements of the economic entity (stocks, costs of production, sales, payments). it is not however a passport for financing, but a way of highlighting the entrepreneurship flair and spirit, the promoted business idea. as stated by badea (2005) the business plan is a written document that describes the nature of the business, the target-market, the advantages that business will have on the competitors and the resources and skills available to business owners. for its preparation is necessary to carefully consider the offered products / services, the competition, the necessary financial resources and other operational details. however, the business plan is a working tool used to start and run a business that requires material, financial and human resources. this means that the business plan is used as an effective planning tool and as a mean of allocation and control of resources. through it is harnessed the experience and achievements from the past in order to build the future by the most appropriate methods of estimation and approximation. the business plan is a management tool designed to reduce the degree of uncertainty in the day to day activity of small and medium companies, thereby reducing their vulnerability to the environment. according to the authors barsky and catanach (2005) “business plan performs several roles, including: determine the field in which the company operates or will to carry out its various activities; determine the objectives that company proposes in every field of activity; formulate some hypotheses about market conditions, sales, finance, human resources in which the company will act; determine and implement of company’s strategies; estimate some obstacles and risks that may arise during the course of activities.” according to kotler (2001) “a business plan pursues 3 objectives. firstly, it serves to formulate strategies and to transmit them to higher levels of management. secondly, it is a supporting element of the application for financing the activity and, thirdly, it is a tool for tracking the evolution of the company and making the necessary corrections during its implementation.” ionescu (2004) believes that essentially “a business plan can serve as: 1. an action plan; 2. a route map for the company; 3. a selling tool.” according to porojan (2007) “a business plan can serve as an action plan to help setting in motion" a business that the entrepreneur was considering for a long time. once the business was launched, a business plan is a valuable tool to keep the business on track in the desired direction, so it can be considered a route map for the company. considered as one of the most important roles, the business plan can serve as a selling tool that is the tool that is needed to convince financiers (creditors or investors) to provide the necessary support.” 2.2. the functions of the business plan the speciality literature has identified several functions that performs business plan. in this regard, the team led by bişa (2005) believes that “business plan has as basic functions: 1. function of effective communication tool, of transfer of ideas, of proposal of plans, especially to financial institutions. ciucescu 61 2. function of management tool, reference framework in exercising managerial functions, by coordinating business activities, the development of coherent predictions. 3. function of measure and control. the business plan allows evaluation, permanent comparison of the obtained results with the proposed objectives and, on this base, taking the right decisions. 4. function of establishing the financing needs, the fundraising and repayment of borrowed amounts.” 3. typology of business plan the typology of the business plan is based on a number of criteria identified by experts in the field, such as: the form of the business plan, the goal of preparation, according to direct interested persons, the size and the degree of detailing. in terms of the form, business plans may be established either in a form of a document produced professionally, to be used, for example, for obtaining the financing, either in the form of a manuscript that serves as documentation for goals, objectives and company’s strategies. as a document for internal use, it is no need to have a special graphic form, nor to be bound, being sufficient the filing. the team coordinated by radu (2004), believes that “in terms of the purpose for which is drawn up, the business plan can be: a management tool for analysis, implementation, supervision and control of the business; a means of communication with the economic environment to attract funds.” according to nicolescu (2001) “as a communication tool with the economic environment, the business plan is drawn up for: starting a new business; making an investment; obtaining a loan; conclusion of strategic alliances; achieving a merger; obtaining selling contracts.” the business plans are developed for a specific public, interested in how is running the activity of a company. in this regard, ursachi (2005) notes that “given the fact that the interests of those directly involved differ, and the results can not satisfy everyone equally, we can distinguish different types of business plans based on the directly interested persons: confidential business plan for a restrained audience (for example, senior management, major shareholder or, with some amendments, a potential buyer of the company); partly business plan for either investors or financiers, who want to know the business prospects, focusing on cash flow and capital structure, or for some specific reader (managers of regional or national branches) who want detailed and realistic indications for decision making; business plan without confidential informations, for a general information, destined, for example, to shareholders, financial analysts, customers, suppliers, researchers.” according to săndulescu (2006), in terms of size and degree of detailing, you can create several types of business plans, depending on the development stage of the company and the set objectives, as follows: a summary business plan fits best to the companies which do not have a long standing, being in an early stage of development. business plan management tool of the entrepreneur 62 -a business plan more widespread and became traditional is the business fully plan, developed in 10 to 20 pages, which presents with more details the operations and future projects of the company in question. in the case of well-established companies, a business plan can be an important guide to management by ensuring all managers to understand the directions of action of the company and their role in achieving goals. in this case, it is appropriate to draw up an operational business plan, detailed, developed in over 20 pages. more the level of detailing is great, more sure is the fact that the managers understand their role and how to bring out all actions, pending final goals. 4. the stages of preparation of the business plan 4.1. the stages of preparation of the content of the business plan a business plan can be compared to a road map, because it shows where the company is and where it wants to go. the business plan includes milestones and other props for guiding in the environment in which the company activates, also preparing the trader for less predictable changes of the “route”. in preparing a business plan there are not patterns to suit all companies, although some goals or functions are common. the business plans must describe the products / services to be sold, the available market for this or the market that will be created for these, must show how services will be provided etc., all in a compelling, clear and concise form. preparing a business plan is a dynamic phenomenon, which is in a permanent improvement, because the potential funding sources may like to see improvements of the plan, new ideas and the latest figures. however, the business plan must be reviewed and updated at least annually. regarding the process of preparing a business plan is obvious that it requires a specific sequence of operations. thus, bessis et alli (1997) believes that “for preparing a business plan it is necessary to follow the following three steps: collection of information (prices, competitors, suppliers, technical data of achievement / performance of services, juridical data etc.); actual planning of the activity, choosing the right strategy and finding ways to achieve the set goals. business plan design requires to contractors to agree on the degree of detailing in which the preparing of the final plan. this level of detailing will result otherwise, partly, from the size and maturity of the company, and from the given goal of the business plan; drafting the plan (stage of choosing of the optimal form to presentation of the result of the previous stage). if it does not pay enough attention to these stages of preparing a business plan then more than likely that recipients of the business plan will treat in a similar manner what is presented to them as a business plan.” 4.2. the content of the business plan what must include a business plan and how to prepare a business plan are important issues that must adapt to the goal for which it was developed. the main areas that need to cover a business plan are in short: business, market, management and finance. according to burduş (2005), “the content of the business plan consists of information on: a) the business (the company, the field of activity, the objectives); b) the market (the customer, the product, the market segmement, the competition); c) the management (the organization, the management, the staff); ciucescu 63 d) the finance (the income, the expenditure, the sources and the use of funds, the financial previsions).” the team coordinated by turcu (2008) believes that “a business plan should highlight the strengths of the companies against the competitors and, at the same time, to assess realistically the difficulties they might face. the investors must be persuaded that many inherent business risks were identified and can be controlled. the plan structure includes: a) the synthesis of the business plan; b) the presentation of the company; c) the products and the services of the company; d) the marketing program and the sales plan; e) the development plan of the products and the services; f) the program of operational activities; g) the management of the activities; h) the financial plan; i) the final offer or entrepreneurial business plan; j) the annexes.” regarding the drafting of the business plan should take into account certain requirements, such as: the written pages not to be in great numbers; the presentation to be done clearly and with references to sources used in an objective manner; the style to be fair, simple, clear, precise, and the phrase to have a single meaning; the presentation of the facts from the past and the future evolution of business to be done chronologically; to be well organized, logical, precise, shapely and to highlight the essentials; to have a nice aspect; to be printed in a sufficient number of copies. conclusions from the study of the specialty literature we can draw some conclusions on the preparation and the importance of a business plan. the business plan is a means of self-edification for those who order and carry out the business plan on the profitability and viability of the entrepreneurial approach regarding the harness of an economic opportunity. through a systematic analysis of a broad set of informations, that are rigorously structured, using certain methods and techniques, it ensures a deeper knowledge of the issues involved by the harness of the economic opportunities. the business plan is a tool for prevision of the business in that business, in the sense that in the business plan are established the objectives to be achieved, the duration and the sequence of the necessary activities, the size of the allocated resources and the marketing, financial, technical, personnel and management main parameters to be considered. the business plan represents a basis for organizing, coordinating and controlling the processes involved in the entrepreneurial approach to harness the economic opportunity. thus, starting from previsioned objectives and from the activities outlined, it is established organizational system configuration. later, simultaneously and after the putting into operation of the organizational system, it begins to be used the elements incorporated in the business plan and for the goal to coordinate the decisions and the actions of the staff implicitly. it is essential that all modes of organization, coordination and control, with important role in ensuring the business plan management tool of the entrepreneur 64 functionality of organization, to be organically subordinated to the achievement of the previsions included in the business plan. the business plan is the most complete and effective tool for entrepreneurs. in order that the business plan to be operational there must be a coherence between the decisions taken at different levels by finding a balance between the current management of the company and its strategic options. this fact does not mean that the business plan cannot be changed due to real opportunities, but only after a reassessment of the new situations and after a detailed assessment of the new directions the company could turn thanks to the harness of these opportunities. references badea, f. (2005), managementul producţiei, editura ase, bucureşti. barsky, n. p., catanach, a. h. jr. (2005), management accounting: a business planning aproach, editura houghton mifflin, boston. bessis, j., galați, d., hiller, l., kienast, p. (1997), planul de afaceri. cum să concepi şi să redactezi un plan de afaceri, editura ştiinţă şi tehnică, bucureşti. bişa, c. (coord.), (2005), elaborarea studiilor de fezabilitate şi a planurilor de afaceri, editura bmt, bucureşti. burduș, e. (2005), tratat de management, editura economică, bucureşti. ionescu, v. c. (2004), managementul firmelor mici și mijlocii, editura economică, bucureşti. kotler, ph. (2001), managementul marketingului, editura teora, bucureşti. longenecker, g. j., moore, c. j., petty, w. (2003), small business management – an entreprenorial emphasis, editura south western, usa, ohio. nicolescu, o. (2000), sisteme, metode şi tehnici manageriale ale organizaţiei, editura economică, bucureşti. nicolescu, o. (2001), managementul întreprinderilor mici şi mijlocii, editura economică, bucureşti. porojan, d. (2007), planul de afaceri: concepte, metode, tehnici, proceduri, editura irecson, bucureşti. radu, v. (coord.), (2004), planul de afaceri, editura mărgăritar, bucureşti. săndulescu, i. (2006), planul de afaceri. ghid practic (modele de referinţă), ediţia a iii-a, editura c.h. beck, bucureşti. turcu, o., et alli (2008), management, editura alma mater, bacău. ursachi, i.(2005), management, editura ase, bucureşti. west, a.( 2000) planul de afaceri, editura teora, bucureşti. zimmerer, t. w., scarborough, n. m. (2005), essentials of entrepreneurship and small business management, editura englewood cliffs, prentice hall. (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, august 2016 festive food brands awareness among young people on romanian market laura cătălina ţimiraş, “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract in this paper are presented some of the results obtained through an exploratory research carried out in the month of april 2016 on a sample of 100 students from the vasile alecsandri university of bacau, referring to awareness of festive food brands on the romanian market. festive products bave special sensory properties designed to especially satisfy gastronomic indulgence and not nutritional needs of individuals. thus, we studied a number of categories covering mainly food products for the pleasure of eating, namely: confectionery, coffee, tea, chips and snacks, soft drinks and alcoholic beverages. thus there are shown brands that enjoy the highest spontaneous awareness in the investigated sample, young people undergoing investigation being asked to indicate the top 3 brands that come to mind for various product categories investigated. the study shows both the brands which enjoy the highest top of mind awareness and those brands which were nominated by most respondents among the top three of which they remember. keywords brand, unassisted awareness, top of mind awareness, festive foods, romanian market jel classification m31 introduction nowadays consumers have more options in terms of product choice, but much less time making decisions than they ever had, so a brand that helps simplify decisions, reduce risk purchase, create and provide expectations is invaluable ( pike, 2008). regarding the choice of a product, lehman et. al (1998) indicated a number of factors that may cause or precede the choice process, product / brand awareness being one of them (along with: awareness and liking of advertising, knowledge / understanding of the brand, perception / rating on specific attributes, importance of product attributes, satisfaction with present product, perceived risk in using the product, approach used to make a choise). most studies on brand aimed to evaluate brand equity, a concept that covers all positive and negative attributes from a consumer or organization point of view (datculescu, 2012). awareness is one of the attributes that underpin "brand equity", along with: brand loyalty, perceived quality, brand associations in addition to perceived quality, other proprietary brand assets: patents, trademarks, channel relationships etc. ” (kumar et. al, 1999). the concept of "brand equity" is not universally accepted, but regardless of the opinions of experts on this subject, marketing research is frecvently focused on studying the performance of the brand and levers of action on it. in the evaluation of the performance of the brand, usually, awareness is one of the aspects covered by the studies, along with: knowledge of brand, the general opinion about it, functional efficiency of the product, image, feelings and emotional states evoked, the extent to which influences behavior. (datculescu, 2012). festive food brands awareness among young people on romanian market awareness is a quantitative component of the image and refers to the specified share of members from a population who have heard of brand, organization, product or person (zaharia, 2003). by developing brand awareness, marketers pursue that at any time the need arises for a particular product / product category, brand will be activated from memory and will be taken into account in the choice of decision alternatives (peter and olson, 2008). the awareness should not be confused with the favorable attitude towards the brand, in practice being situations where a brand is very well known because of some negative attributes. a study conducted in romania, among students, with reference also to food products, showed that overall awareness of the products is associated with a higher quality (voinea, 2013). according to dictionary of agromarketing, festive or elite foods are intended for consumption with special occasions (religious holidays, birthdays, etc.) or, in many cases, they are purchased as gifts. the main features that these products have to submit refers to the outstanding sensory properties and very good image among potential buyers, due, on the one hand, to the properties of the product, on the other hand, to pricing strategy practiced by the producing company (usually high), messages and systems of communication associated with the product on the market, distribution systems practiced (often selective) (marian, 2016). festive products contain substances which consumed in large quantities can be harmful (fats, sugars, alcohol, caffeine etc.). through research was assessed spontaneous awareness of different brands on the romanian market. we asked respondents to indicate the top 3 brands for each category of food products which were the subject of the study, products with specific characteristics (distinctive organoleptic characteristics, containing substances that can be harmful in frequently consumption) which falls into the category of festive: confectionery (excluding chocolate), chocolate, coffee, tea, chips and snacks, soft drinks and alcoholic beverages. research methodology the survey was conducted in april 2016 on a sample of 100 young people, aged 1830, students of the faculty of economic sciences of the vasile alecsandri university of bacau. data collection was conducted through self-registration. research has an exploratory nature. each brand was evaluated for top of mind awareness (the percentage of respondents who indicated that brand the first among those remembered) and in terms of the percentage of respondents who indicated that brand between the (maximum) three nominees. results show awareness for the brands which have been nominated by at least five respondents of the one hundred investigated. research results in the category confectioneries (except chocolate), ranked first, both in terms of the number of people who indicated first and in terms of position among the top known brands, is milka. there is an appreciable "distance" between this brand and the following brands in the hierarchy; thus, more than 50% of respondents indicated in the top three known brands milka compared with oreo, located in the second place from this point of view. also, as the first nomination, milka exceeded over two times the brands ranked second (oreo, joy and nestlé). among the ten brands nominated by a minimum of 5 respondents, we can find local brands such as poiana and rom. only 46% of all respondents indicated three brands in this product category, 9% only two brands and 24% one brand. a relatively large number of respondents (21%) indicated no brand on this product category. țimiraș table no. 1 the most popular* brands of confectionery (excluding chocolate) on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option milka 14 5 19 oreo 6 3 3 12 bucuria 6 3 1 10 raffaello 1 5 4 10 poiana 1 6 2 9 rom 5 1 3 9 kinder 5 3 8 7 days 4 4 8 nestlé 6 1 7 snickers 2 3 1 6 other answers 33 22 27 x total 79 55 46 x * brands indicated by a minimum 5 respondents. source: own computation the highest degree of knowledge of brands (compared to other product categories analyzed) enjoy chocolate. thus, only one respondent indicated no brand, while 72% indicated three brands, 22% two brands and 5% one brand. the first in the top of mind and in terms of the first three nominated are milka and poiana. thus, in regard to the first nominee, 48% of respondents indicated milka and 23% poiana. over 70% of respondents indicated milka and 57% poiana among the top three brands that come to mind. of the ten brands presented in table. 2, which were nominated by at least 5 respondents, over 50% are represented by domestic brands (poiana, africana, primola, laura, kandia, rom). table no. 2 the most popular* brands of chocolate on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option milka 48 19 4 71 poiana 23 22 12 57 africana 2 10 10 22 primola 3 9 7 19 laura 3 8 7 18 kandia 5 1 6 12 bucuria 6 4 10 heidi 1 6 3 10 rom 2 5 2 9 kinder 1 2 3 6 other answers 5 8 18 x total 99 94 72 x * brands indicated by a minimum 5 respondents. source: own computation festive food brands awareness among young people on romanian market regarding coffee, jacobs brand stand out much from other brands, with 38% value for top of mind and 68% of respondents indicating it among the top 3 known brands. other brands that stood out in terms of awareness are: nescafé, lavazza, doncafe, tchibo. 45% of all respondents indicated three brands of coffee, 32% two brands and 19% one brand. 4% of respondents indicated no brand. table no. 3 the most popular* brands of coffee on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option jacobs 38 20 10 68 nescafé 15 19 9 43 lavazza 17 12 5 34 doncafé 12 2 5 19 tchibo 4 7 4 15 fort 5 2 1 8 other answers 5 15 11 x total 96 77 45 x * brands indicated by a minimum 5 respondents. source: own computation for tea category, respondents indicated both tea brands that are made in their own household (including herbal) and soft drink brands that contain tea plant. 71% of respondents indicated a minimum of 1 brand for this category of products and 15% three brands. only four brands were indicated by at least five respondents among the top three known brands. in the first places in terms of top of mind awareness lies lipton (soft drink brand) and fares (indigenous herbal tea brand). depending on the number of respondents who have indicated the top three brands that come to mind, fares brand was surpassed by lipton. table no. 4 the most popular* brands of tea on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option lipton 21 14 35 fares 21 3 1 25 nestea 16 3 19 greenfield 2 7 3 12 other answers 11 9 11 x total 71 36 15 x * brands indicated by a minimum 5 respondents. source: own computation foreign brands chio and lay's are detaching for chips and snacks category. on top of mind, they register 52% (lay's) and 23% (chio), both being nominated by over 60% of respondents among the top three brands that come to mind. of all respondents, 36% indicated a brand, 38% two brands and 18% three brands of chips. a share of 8% didn`t remembered any brand in this product category. țimiraș table no. 5 the most popular* brands of chips and snacks on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option lay's 52 24 5 81 chio 23 30 8 61 star 3 5 6 14 lotto 2 3 4 9 viva 3 1 4 8 krax 3 3 6 other answers 6 8 9 x total 92 74 36 x * brands indicated by a minimum 5 respondents. source: own computation regarding soft drinks, first in the top of mind is occupied by coca cola (28%), followed by: fanta, pepsi, prigat and domestic brand dorna, with percentages below half of the level recorded by the first brand. from the perspective of the first three brands remembered by the respondents, first in the top are: coca cola, fanta, pepsi, sprite, dorna. a significant share of all respondents 75%, nominated three brands, 15% indicated two brands, and 5% one brand. 5% of respondents could not indicate any brand of soft drinks. table no. 6 the most popular* brands of soft drinks on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option coca cola 28 19 5 52 fanta 13 20 10 43 pepsi 12 13 8 33 sprite 3 4 13 20 dorna 8 4 3 15 prigat 9 3 2 14 cappy 3 6 3 12 borsec 2 5 7 adria 4 1 5 other answers 15 19 25 x total 95 90 75 x * brands indicated by a minimum 5 respondents. source: own computation in the category of alcoholic beverages, local brands cotnari and ciuc hold the top two spots depending on the number of respondents who have nominated among the top three known brands, followed by j & b, jack daniel's, timişoreana and ursus (the last two, also local). regarding the first nomination, we found that in first position lies jack daniel's, followed by ciuc, cotnari, j & b and timişoreana (the last two with the same number of nominations). this product stands out in terms of share, biggest, of those festive food brands awareness among young people on romanian market who indicated three brands (79%). also, 12% had two nominations, and 5% just one. 4% of respondents have not nominated any brand. table no. 7 the most popular* brands of alcoholic beverages on the romanian market brand share of respondents who indicated a particular brand among the top three that come to mind % persons who indicated brand among the top 3 known brands in total number of respondents as first option as second option as third option cotnari 11 7 8 26 ciuc 12 10 3 25 j&b 7 8 4 19 jack daniel's 13 3 3 19 timişoreana 7 10 2 19 ursus 6 9 4 19 cricova 4 2 7 13 bucegi 6 2 4 12 noroc 3 4 5 12 bergenbier 1 4 2 7 ciucaş 3 2 2 7 heineken 4 1 2 7 tuborg 2 1 3 6 absolut vodka 4 2 6 angelli 3 3 6 alexandrion 1 4 5 other answers 16 21 21 x total 96 91 79 x * brands indicated by a minimum 5 respondents. source: own computation conclusions the results of research conducted among students of the faculty of economic sciences of the vasile alecsandri university of bacau on the awareness of the brands of festive food products, show that the brands with the largest shares in terms of the indicator top of mind in the examined sample are: milka, both in the case of chocolate (48%) and other sweets (14%), jacobs (38%) for coffee, lipton and fares (both 21%) for tea, lay's for chips and snacks, coca cola (28%) for soft drink and jack daniel's (13%) for alcoholic beverages. considering the first three nominations made by the respondents for each category of products, same brands are prevailing, except fares brand that, from this viewpoint, was surpassed by lipton. the issues addressed by this study may be broadened, conclusions drawn could be checked at the level of representative samples of the different collectivities. also, starting from the brands which enjoy the highest awareness, one can continue to evaluate and study the other attributes that measure their performance. references dătculescu, p. (2012), cercetarea practică de marketing, editura brandbuilders grup, bucureşti. kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto. țimiraș lehmann, donald r., sunil gupta, joel h. steckel (1998), marketing research, addison – wesley educational publishers inc. manole, v., stoian m., ion, r.a. (2003), agromarketing, ediţia a ii-a, editura ase, bucureşti. marian, c., (2016), dicţionar de agromarketing, editura tribuna economică, bucureşti. peter, j.p. & olson, j.c. (2008), consumer behavior& marketing strategy, international edition, mcgraw-hill/irwin. pike, s. (2008), destination marketing: an integrated marketing communication approach, elsevier. săndulescu l. (2015, september, 18), top 100 cele mai puternice branduri romanesti, revista biz available at http://www.revistabiz.ro/top-100-cele-mai-puternicebranduri-romanesti/. ţimiraş, l. (2016), young people's preferences for romanian agro alimentary goods, studies and scientific researches. economics edition, special issue, available at: http://sceco.ub.ro/index.php/sceco/article/view/353. voinea, l (2013), calitate şi securitate alimentară. reorientări în comportamentul alimentar al consumatorului modern, editura ase. zaharia r.m. (2003), notorietate, in florescu, c., mâlcomete p., & pop, n.al. pop (coord.), marketing. dicţionar explicativ, editura economică, bucureşti. revista piaţa (2008, iunie, 21), brandul romanesc fata cu globalizarea, available at: http://www.revista-piata.ro/marci_romanesti-id168.html. http://sceco.ub.ro/index.php/sceco/article/view/353 studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 13 the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic lidija madzar faculty of finance, banking and auditing, alfa bk university, belgrade, serbia lidi.madzar@gmail.com dusica karic belgrade business and arts academy of applied studies, belgrade, serbia prof.dusica@gmail.com dusanka paspalj auto-moto association of serbia and phd student of faculty of applied management, economics and finance mef, belgrade, serbia duskapaspalj@gmail.com abstract the covid-19 coronavirus pandemic of 2020 brought huge changes, leaving unforeseeable consequences for the global economy, the business community and people's lives. it has led many companies to resort to working from home. the pandemic also forced many educational institutions around the world and from the republic of serbia to adapt to the new reality by actively implementing electronic teaching. the aim of this paper is to determine whether this new teaching method could have affected the quality of teaching outcomes and educational processes in the country. in the article, wilcoxon signed rank test was conducted on the grades of a selected sample of 100 students from a higher public school of economics from serbia in order to determine the size and statistical significance of the difference between median samples, before and after the transition to electronic learning. the results of the analysis showed that the transition to electronic teaching most likely improved the quality of educational processes and results in serbia, indicating a statistically significant difference between the sample medians. despite the described limitations of the study, it is possible that this type of teaching has improved the quality, inclusiveness and resilience of educational processes in the country. keywords republic of serbia; e-learning; e-teaching; quality of educational outcomes; wilcoxon signed rank test jel classification i21; i23; c14 1. introduction at the end of the december 2019, an epidemic of the hitherto completely unknown strain of coronavirus appeared in the chinese city of wuhan, which spread rapidly to other chinese cities, as well as to the entire asian region. by february 2020, at least 25 countries were affected by a new virus strain that was spreading to the rest of the world very quickly. wu, chen and chan (2020) state that this severe pneumonia, i.e. a serious acute respiratory syndrome caused by new and insufficiently researched pathogens, got its official name coronavirus disease-2019, while in february 2020 the world health organization (wto) renamed it to covid-19. the virus caused by the pathogen covid19 is a potential zoonotic disease and it is highly contagious. the number of people suffering from this disease has risen sharply around the world, and on march 11, 2020, the who declared it a global pandemic. johns hopkins medicine`s website (2021) the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic 14 stands out that the severity of this atypical disease varies from person to person, as it carries symptoms such as cough, fever, shortness of breath and breathing difficulties, muscle aches, sore throat, headache, chronic fatigue, nausea, attention deficit disorder, loss of hair, dyspnea, etc. research by lopez leon, wegman-ostrosky, perelman, sepulveda, rebolledo, cuapio and villapol (2021) indicates that there are more than 50 long-term effects of this illness, among which are chronic fatigue, headache, insomnia, joint pain, blood pressure problems, anosmia, stroke, heart attack, diabetes mellitus, a depression, anxiety, etc. wu et al. (2020) estimated that the mortality rate due to this illness is moderate and ranges from 2% to 5%. in december 2020, the first vaccines against this disease appeared which calmed the world to some extent, while their effectiveness at this moment remains insufficiently clear and blurred. the covid-19 health crisis has certainly left its unforeseeable consequences on the business world and the global economy. the pandemic has triggered one of the deepest economic recessions in the last 100 years, directly threatening human health, global economic activities, social welfare, living standards and employment. the dramatic decline of the world economy since the outbreak of this health crisis has been accompanied by a sharp slowdown in international trade flows, global financial flows and world production activities. in addition, borio (2020) highlights that global financial market has experienced major turmoil and disruptions, moving from a phase of liquidity crisis to a phase of their insolvency, all in the context of limited and dwindling space for economic policy management. although there is no precise way to predict the economic damage from this pandemic, for 2020 szmigiera (2021) estimated the global gross domestic product (gdp) to decline by 4.5%. according to other assessments by statista (2021), in 2020 alone, global gdp amounted to about $84.54 trillion, which was almost $3 trillion (by 3.21%) less than in 2019. many contemporary countries have been forced to lunch their fiscal, monetary, macro prudential and other anti-crises measures, as well as various aid packages to mitigate the unfavorable economic consequences of the covid-19 pandemic. the recent appearance of the delta strain of this virus suggests that this global pandemic could continue at least until 2023, leading to concerns that the risks of recovery will remain high over the next year. although vaccination campaigns are underway in most countries of the contemporary world, the conference board (2021) emphasizes that the high rate of transmission of the covid-19 virus delta strain has led governments to re-establish strict restrictions on mobility, voluntary consumers` lock-in and on working from home. such circumstances have led necessarily and inevitably to the new reality that the global business community is facing today. many companies have quickly adapted to the new circumstances, switching to work from home (wfh) in order to continue their business activities and protect the health of their employees. telecommuting or distance working is an alternative work arrangement in which company staff performs their tasks from another place, most often from home. in this model, employees use the internet and other modern technological tools to collaborate with various stakeholders, hold meetings and perform their regular working tasks. this issue has been studied by (turin rahman & uddin arif, 2020, pp. 291-292) who found that most employees were reasonably satisfied with working from home, while facing anxiety, social isolation, and general concerns about the course of the pandemic. this study also found that the perceived level of employee productivity was higher in their wfh activities than in the office space. until the appearance of the global pandemic, telecommuting was only an additional opportunity and convenience, while since its outbreak, 66% of the surveyed employees have become forced to work from their homes full-time. nielsen (2020, p. 3) states that these respondents generally enjoyed the benefits of wfh, trying to achieve a balance between business and private life. this new type of performing duties implied a massive madzar, kalic, paspalj 15 change in lifestyle, as well as an increase in the level of employee engagement depending on their gender, race, ethnicity, educational level, working position, size and activity of the company. finally, teodorovicz, sadun, kun and shaer (2021) have shown that the forced transition to work from home was associated with a dramatic reduction of commuting time, as well as an increase in time spent at work, in meetings and/or in performing personal activities. they also state that it seems that the transition to the wfh model did not significantly affected the perceived well-being of employees, while many of them caught the fancy of this new way of doing business. the pandemic has also led most education institutions to switch to new ways of doing business, with special emphasis on the implementation of electronic teaching (e-teaching). this was also the case with higher educational institutions from the republic of serbia (rs), which were forced to adopt innovative business solutions and teaching and learning methods in order to retain, serve and meet the educational needs of their students in the best possible way. during the spring of 2020 and restrictions of movement caused by curfew, serbian schoolchildren attended classes from their homes, mostly watching special tv programs with educational content. at the same time, students of higher education institutions from serbia mostly attended classes in closed electronic sessions held by their professors, learning from materials attached to their schools’ and faculties` electronic classrooms. this practice continues today with the introduction of the socalled combined model of teaching, i.e. a combination of attending the classes phisicaly and following classes from home, depending on the situation with the pandemic. the republic of serbia is a developing country that belongs to the regions of southeast europe and western balkans. it is a high-middle income economy with about 6.9 million inhabitants, a gdp of $52.96 billion (world development indicators database, 2021), while the rs official bureau of statistics reports (2021) the unemployment rate of 11.1%. on march 1, 2012, serbia became an official candidate for membership in the european union (eu). since then, after changing the methodology of the eu accession, the county has opened only negotiating cluster 1. european western balkans portal suggests (2021) that this happened only because this cluster contains those negotiating chapters that were already opened in the previous accession phase (financial supervision; judiciary and fundamental rights; justice, freedom and security; public procurement and statistics). the world bank report on serbia (2021) emphasizes that due to generous anti-crisis fiscal support measures intended for enterprises and citizens, the country has experienced a significant increase in its fiscal deficit. this increase in budget deficit was estimated at around 8% of gdp in 2020, while the share of its public debt in gdp was in the same year estimated to reach a level of 58.2%. serbia is currently burdened by numerous economic, social and political problems. among its most significant economic problems stand out the insufficiently functioning market economy, necessary public administration reforms, structural weaknesses of its economy, bottlenecks in private sector growth, dominance of public enterprises in some industries, unfinished energy transition and green growth processes, population decline, labor shortages, vulnerability to climate change, etc. in financing its economic development, the country currently relies heavily on foreign direct investments (fdi) and foreign loans. the aim of this article is to investigate the impact of the transition from classical ex cathedra to electronic teaching on the quality of education and learning achievements in the case of one public owned high school from serbia. in other words, the intention of the authors of this article is to determine whether the change in the way of teaching and learning due to the covid-19 coronavirus pandemic could have affected the quality of the educational processes in the country. for the purpose of this research, a study group sample of 100 students of budget accounting study course was selected, where a total number of 100 undergraduates studied in accordance with the educational quotas obtained from the rs ministry of education, science and technological development. the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic 16 the next section provides an overview of the literature on the goals, methodology and effects of electronic learning (e-learning). the third section contains a detailed description of the sample and the methodology used, while the fourth section provides results and discussions. finally, the last section draws a conclusion about the possible impacts of the results of this research on the quality of educational outcomes in the country. 2. literature review e-learning is a system of formalized learning that bases on the use of electronic resources, primarily computers, tablets, smartphones and the internet. in a somewhat broader sense, we can also describe e-learning as a network that enables the transfer of knowledge, skills and experiences to a large number of users, at the same or different times (the economic times, 2021). formalized e-learning is mainly delivered through electronic classroom systems (e-classrooms), while in the physical sense teaching can take place inside and outside the conventional classroom. while this learning system gained its popularity thanks to the rapid technological advances, today many of us consider that schools that do not have distance-learning technologies and that apply traditional ex cathedra teaching methods lag far behind those that rely on these modern systems. kumar basak, wotto and bélanger (2018) assert that e-learning presents an alternative form to traditional teaching, while it can also figure as its complementary form. some researchers (chitra & raj, 2018, pp. 11-12) state a number of benefits of e-learning systems for students such as capability for research, critical thinking, independence, high motivation and commitment to learning, self-responsibility, dissemination of knowledge via the internet, growth in self-confidence, improved communication among students, independence in work, ease of use and learning, etc. they also cite some of its shortcomings and pitfalls, such as insufficient interaction with professors, reduced social interaction, higher dropout rates, incomplete grades, lack of self-discipline, health problems and inability to access contemporary information and communication technologies (icts). al-atabi and al-noori (2020, p. 10) further emphasize that today`s society is witnessing a revolution in education that bases on the influence of electronically interconnected world on individual and group learning outcomes. in the globalized world of new icts, media and cultural patterns, the education system itself is facing a challenge to its basic tenets and rules. when it comes to the achievements of e-learning, some researchers (zare, sarikhani, salari & mansouri, 2016, pp. 31-32) suggest that this type of teaching encourages knowledge, creativity, fluency, originality, flexibility, independence, judgment and self-confidence of students in relation to the traditional ex cathedra approach to lectures. finally, zaraiizavaraki and rezaei (2011, p. 1) also confirmed these findings, determining that this type of teaching significantly and positively affects the attitudes, motivation and academic results of students. on the other hand, the professional literature points out some disadvantages of this form of teaching. of all its perceived technical shortcomings, gary james (2021) emphasizes in particular limited formatting capacity of teaching content in current browsers, the restriction of instructional methodologies, slower performance of sound, video and graphic presentations, the need for control of and technical support to this process, long and slow time of downloading applications, limited student assessment and feedback, the absence of interactivity, weak multimedia courses, alienation from human contacts, etc. in this context, some other research (zounek & sudický, 2013, pp. 59-60) highlights the probability of lacking sufficient skills and knowledge on use of contemporary icts; problems with presentation, word-processing, collaboration and other kinds of personal learning purposes tools; a priori negative attitudes towards icts which can prevent students from achieving the expected learning results, negative madzar, kalic, paspalj 17 resentments for students who lack sufficient motivation and the ability to manage workload; treats to learning independence; decreased productivity and worse study results of the students with poor learning habits; a feeling of isolation and abandonment in virtual environment; difficult communication and information overload, etc. as the main problems that this type of teaching is facing with. nevertheless, o`donoghue, singh and green (2004, p. 63) show that online teaching attracts students and encourages them to learn, increasing their flexibility in terms of study time and location, rising the accessibility of higher education, and thus bringing potential benefits to the workforce and society. 3. research methodology sampling the aim of this article is to determine the impact of electronic teaching on the quality of the teaching process, i.e. on the educational outcomes on the example of one state owned high school of vocational studies from belgrade, the capital of serbia. this school has about 8,000 students and 20 study programs in undergraduate, specialist and master vocational studies. after the outbreak of the covid-19 coronavirus pandemic, the school reacted very quickly and from the summer semester of the 2019/2020 school year, it switched from traditional to electronic teaching. from that moment, all school`s e-classrooms became equipped with the necessary teaching materials, presentations, exam questions and tests for knowledge self-assessment. unlike the former conventional type of teaching, from the moment the electronic teaching started, lectures were not obligatory. professors also did not keep records of attending classes, while students mostly attended them from their homes. despite that, the students continued to take the exams in the classic way, by coming to the school and physically staying in its premises, either electronically or by solving tests. in addition, the school provided its students with a chatbot, i.e. a virtual digital assistant with the aim of providing them with better communication, enabling them time savings, as well as faster and more efficient delivery of teaching services. the statistical samples of this research consisted of a group of 100 students` grades from the budget accounting undergraduate vocational studies, as many as there were a total number of enrolled students in that course. the observed student group had 51% male and 49% female members. in this research, we monitored and compared their grades before and after the transition to e-teaching process. more precisely, for the purpose of this analysis, we collected the grades of these students from the first year of study one-semester course in accounting, which students took before the outbreak of the covid-19 crisis, and from the third year of study one-semester course in management accounting, which the same group of students took after the coronavirus disease outbreak and the transition to e-learning. given the fact that these courses belong to the group of methodologically, substantively and didactically related and similar subjects, as well as that they were taught by the same male/female professor, we started from the assumption that the grades from them are most likely mutually compatible and comparable. in order to ensure the anonymity of students, data on their gender and grades based on their index numbers were extracted from the school`s electronic database. in this research, the wilcoxon signed rank test was used to determine the size and statistical significance of the difference between the group medians, before and after the transition to e-learning. applied methodology wilcoxon signed rank test for paired samples was used in this article to test the hypothesis of the two populations` medians equality, from which the samples were selected. this test is a non-parametric alternative to the paired samples t-test, which is way it does not require a normal probability distribution as a prerequisite for its the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic 18 application. in this statistical test, the ranking of absolute differences between data pairs obtained from two samples is first performed, and after that a sign is assigned them based on the higher value from a given data pair. this test essentially calculates the differences between sets of data pairs and analyses these differences in order to determine whether they differ statistically significantly from each other or not. after that, the wilcoxon signed rank test compares the sums of positive and negative ranks (with + and – signs). in the case of larger samples, i.e. when the number of sample elements is n > 15, a normal distribution can be used to perform this test (mann, 2009, pp. 714-715). in the wilcoxon signed rank test for paired samples and in the case of large samples with their elements n > 15, the realized value of the z-test statistic is obtained based on the t-test statistic, using the following formula (mann, 2009, p. 719): 𝑧𝑧 = 𝑇𝑇−𝜇𝜇𝑇𝑇 𝜎𝜎𝑇𝑇 (1) where 𝜇𝜇𝑇𝑇 is the mean of the t statistic`s sample distribution, while 𝜎𝜎𝑇𝑇 is the standard deviation of the t statistic`s sample distribution. these two indicators are further calculated based on the following formulas: 𝜇𝜇𝑇𝑇 = 𝑛𝑛(𝑛𝑛+1) 4 (2) 𝜎𝜎𝑇𝑇 = � 𝑛𝑛(𝑛𝑛+1)(2𝑛𝑛+1) 24 (3) in this analysis, the matched pairs` differences are calculated as follows: matched pairs` differences = students` grade after the transition to e-teaching – students` grade before the transition to e-teaching (4) in this research, the wilcoxon signed rank test for paired samples was used because the results of the students` grades before and after the transition to e-learning did not show a normal distribution. while before switching to e-learning, the value of skewness was 0.89, and kurtosis was 0.48, after switching to e-learning, skewness amounted to -0.70, while the value of kurtosis was -0.83. in addition, this is an intuitive statistical method, which is adequate for the cases of repeated measurements, while also being simple to apply and interpret. this article starts from the null hypothesis h0 that the transition to e-learning did not improve the grades of students, i.e. that the medians of the samples before and after this intervention were equal (ma = mb). alternative hypothesis h1 states that the transition to e-learning affected the growth of students` grades, i.e. that the sample median after this intervention was higher compared to the period before (ma < mb). now, the initial and alternative hypotheses can be presented as follows: h0: ma = mb and h1: ma < mb. madzar, kalic, paspalj 19 4. results and discussions the results of preliminary analysis that included the values of mean, median and mode, as well as of skewness and kurtosis before and after the transition to e-learning are presented in table 1. table 1 statistical indicators of samples grade before transition to elearning grade after transition to elearning mean 7.21 8.74 median 7.00 9.00 mode 7 10 skewness 0.89 -0.70 kurtosis 0.48 -0.83 source: authors` celaculation the table 1 clearly indicates that the mean of the sample grades in the meantime increased from μa = 7.21 to μb = 8.74, while the mode after this intervention was mode = 10, indicating that most students from the group received the highest grades after switching to e-learning. the applied wilcoxon signed rank test revealed a statistically significant increase in students` grades after the transition to online learning, z = -7.24, p = sig < 0.001, with a large difference in grades, i.e. with a large effect size (r = 0.51). the median scores of the observed students` grades increased from md=7.00 before to md=9.00 after the transition to online learning. based on all the above, it can be concluded that the null hypothesis h0 can be rejected, while the alternative hypothesis h1 that the transition to e-learning affected the growth of students` grades, and thus the growth of the sample median after this intervention cannot be rejected. observed by genders, the values of the mean, median and mode of male students` grades also showed their increase due to this intervention (table 2), while the application of wilcoxon signed rank test revealed a statistically significant increase in their grades after the transition to e-learning, z = -5.24, p = sig .< 0.001, with a large difference in grades, i.e. with a large effect size (rm = 0.52). the median of grades of the observed male students increased considerably from mdm = 7.00 to mdm = 9.00 after switching to e-learning, while it is noticed that most male students received the highest grade of 10 (modem = 10) after this intervention. on the other hand, the indicators of the mean, median and mode of female students` grades also experienced their growth (table 2), while the use of the same test also showed a statistically significant increase in their grades after this intervention, z = -5.05, p = sig. < 0.001, also with a large effect size (rf = 0.51) (pallant, 2010, p. 232). the median of grades of the observed female students also increased considerably from mdf = 7.00 to mdf = 10.00, while most female students also received the highest grade of 10 (modef = 10). at the very end, it seems that female students achieved slightly better educational outcomes than the male ones, because the mean of their grades after the transition to elearning was higher (meanf = 8.82 in relation to meanm = 8.67). at the same time, the median of their grades mdf = 10.00 was also higher than the corresponding median of male students` grades mdm = 9.00. the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic 20 table 2 male and female students` grades statistical indicators grade before transition to elearning grade after transition to elearning mean of male students` grades 7.20 8.67 median of male students` grades 7.00 9.00 mode of male students` grades 7 10 mean of female students` grades 7.22 8.82 median of female students` grades 7.00 10.00 mode of female students` grades 7 10 source: authors` calculation potential limitations of this research relate to the fact that it is very possible that, under the initial shock, impressions and influence of the coronavirus covid-19 pandemic, the professor was subjective, biased and lenient towards her/his students in their evaluation and after switching to electronic teaching. there is also a possibility that the professor restored to reducing the volume of teaching material in accordance with the recommendation of rs ministry of education, science and technological development on reducing the teaching materials. the ministry also provided informal guidance to education staff on not lowering the examination criteria. it is also possible that the students really liked this form of teaching, and learning, as well as they dedicated more time to their obligations and learning activities because they were not obliged to attend classes physically. one of the surveys conducted in serbia, organized by the serbian centre for international public policy, indicates that, after the initial shock, 65% of surveyed students stated that they maintained continuity of lectures, exercises and learning during this health crisis. on the other hand, serbian news agency fonet (2021) states that when asked whether professors changed their criteria during the pandemic, 52.2% of surveyed students gave a negative answer. in any case, we should be very careful in interpreting the results of this analysis given the fact that the evaluation of these students was conducted in completely unusual circumstances, caused by initial shock and fear of a coronavirus covid-19 pandemic. thousands of conducted studies deal with this issue today, pointing out contradictory results, facing various biases and not giving strong conclusions about the real results of e-learning activities. in addition to the already mentioned studies (chitra & raj, 2018, zare, sarikhani, salari & mansouri, 2016 and zaraii-zavaraki & rezaei, 2011) which indicate the positive impact of e-learning on many abilities, activities, achievements and educational outcomes of students, there are quite opposite conclusions. the results of this research do not fit in well with the findings of coman, ţîru, meseşan-schmitz, stanciu and bularca (2020, p. 14) who point at the fact that some higher education institutions from romania were not well prepared exclusively for this type of teaching, thus making the benefits of online learning identified in other research diminishing. in this study, the main problems and obstacles of e-teaching highlighted issues such as teachers' lack of technical skills, inadequate style of teaching in online environment, difficult assimilation and processing of information by students, lower value of eteaching, lack of students` self-confidence and courage in expressing their views, etc. madzar, kalic, paspalj 21 all these factors could have an unfavorable impact on their educational outcomes. another similar study (mohammad, 2012, p. 229) also points to the possible obstacles that online teaching brings to educational outcomes. this research specifically states the insufficient focus of teachers on technical capacities and online materials and activities, insufficient understanding of the way students perceive their e-learning environment, insufficient online tools to achieve effective learning outcomes, etc. in the form of the main problems in implementing electronic teaching. however, there are quite the opposite views (o`donoghue, singh & green, 2004, p. 72) that indicate some social advantages of online learning, such as increased flexibility and accessibility of knowledge, the growth of shy and anxious students` self-confidence, increased independence in learning, the permanent availability of technology and multimedia, development of new skills, etc. previous experiences in conducting online teaching in serbia also unequivocally indicate a number of advantages of this type of teaching activities. matijasevic, caric and skoric (2021, pp. 166-168) highlight that they include participation in e-teaching and e-learning activities in a high-quality way, 24-hour access to teaching content, synchronized communication, intensive interaction between teachers and students, didactic value of online tools, internet as an additional base of knowledge sources and development of digital skills. therefore, the positive impact of contemporary information and communication technologies on the educational system, as well as on educational methods, approaches and outcomes comes to the fore. in principle, the penetration of icts in the field of education has had a positive impact not only on the technical aspects of teaching, but also on the ways of teaching and acquiring knowledge by students. all this unequivocally indicates the need to conduct further studies that would more specifically address the impact of online teaching on the quality of learning processes in higher education institutions in order to help decision makers in creating and implementing future directions of education policy. 5. concluding remarks the covid-19 coronavirus pandemic outbreak has undoubtedly brought new challenges to serbian economic and educational system. the current health crisis has greatly changed the context of education, work, entrepreneurship, gatherings, behavior and overall life, posing new challenges to the whole world. the aim of this paper was to determine whether the transition to electronic teaching had a statistically significant impact on the quality of teaching processes and students` educational outcomes in the case of one economic profile higher school from belgrade. in this analysis, it was concluded that e-learning has most likely notably and statistically significantly improved the quality of learning, grades and educational achievements of the observed students. this type of teaching most likely motivated them to better and more productive learning, increasing their flexibility, creativity, openness to change, adaptability, critical thinking, independence, responsibility, and self-confidence. in the absence of direct communication and direct contact with students, on-line teaching and distance learning have most likely changed the role of teachers and professors themselves, who have also experienced increased flexibility, self-direction and control over the teaching process, challenges of conceptualization and adequate delivery of knowledge and teaching content, as well as improved communication and collaboration with their students. they also realized the importance of positive feedback, as well as better interaction results in their lines of communication with students. in any case, the world bank group (2020, p. 1) asserts that the current pandemic has led many contemporary counties to make their education systems more effective, inclusive and resilient, as well as to improve their digital skills and probably educational outcomes of participants in online teaching and learning activities. the possible impact of the online learning on the quality of education in serbia during the covid-19 pandemic 22 references al-atabi, a. j., al-noori, b. s. m. 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(2013), heads in the cloud: pros and cons of online learning, international conference disco 2013: new technologies and media literacy education, june 2013, center for higher education studies and west bohemia university, prague, 58-63. studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 65 european requirements regarding the audit reporting daniel botez vasile alecsandri university of bacău daniel63331@yahoo.com abstract in recent years, reporting requirements on the statutory audit have been revised and amended to increase the audit report’s communication value. in addition to the stipulations of the international auditing standards package on reporting, revised and enforceable on 15 december 2016, the european union issued the directive 2014/56 / eu amending directive 2006/43 / ec on statutory audits of annual financial statements and consolidated financial statements and eu regulation no. 537/2014 on specific requirements for the statutory audit of public interest entities, both of which were published on the same date, june 17, 2014 and with the same application deadline, june 17, 2016. these normative acts foresee increased requirements for the reporting procedure in the statutory audit. thus, the directive provides for additional content requirements for the audit report, and the regulation requires additional information in the report but also the issuance and provision of other reports by the auditor: report to the audit committee of the public interest entity; in some cases, a report to the publicinterest entity's supervisory authority or to the auditor's supervisory authority, and a transparency report published annually on the auditor's website. our article details this information with direct reference to the content of these european official documents. keywords european directive regarding statutory audit; public interest entities; audit report jel classification m42 introduction for more than ten years, ifac has begun a process of reviewing the international auditing standards (isas) applicable in the field of audit reporting. this process was completed in 2016 by publishing a set of revised standards and a new audit reporting standard that came into force on 15 december 2016. at the same time, there were european concerns about amending the statutory audit directive. thus, on 17 june 2014, the directive 2014/56 / eu amending the directive 2006/43 / ec on statutory audits of annual financial statements and consolidated financial statements was published in the official journal of the european union. on the same date, eu regulation no. 537/2014 on specific requirements regarding the statutory audit of public interest entities. both documents were due to be implemented and enforced in the legislation of the member states on 17 june 2016. a series of circumstances have caused many member states to be unable to meet this deadline. this is also the case of romania, who at the time of writing this article (may 2017) is close enough to finalizing the implementation process. these legal acts introduce additional requirements on the reporting procedure in statutory audit, which complements and continues the series of important changes introduced by international standards. mailto:daniel63331@yahoo.com botez 66 requirements of the directive 2014/56 / eu and eu regulation no. 537/2014, on statutory audit report in art. 28 of the directive, entitled "preparation of the audit report", it is set out as mandatory to present the elements regarding the identification of the entity, the date and the period covered by the financial statements, the identification of the financial reporting framework, the description of the scope of the audit, mentioning the standards applied and the audit opinion. these requirements are similar to those of the international standards on auditing isas. in particular, the directive requires the inclusion in the audit report of an opinion and of a statement on the annual financial statements, which refers to the auditor's obligation to issue an opinion on: ✓ the consistency of the management’s report with the financial statements for the same financial year; and ✓ preparing the management’s report in accordance with the applicable legal requirements. also, a statement should be included in the audit report if, based on the knowledge and understanding gained during the audit regarding the enterprise and its environment, the auditor identified significant misstatements in the management report, indicating the nature of such erroneous information. in the auditor’s report there must be a statement regarding any material uncertainty associated with events or conditions that may considerably cast doubt on the entity's ability to continue to operate. the reader must find in the report clarifications regarding the situation in which the statutory audit was performed by several auditors (several audit firms). regulation no. 537/2014 on the audit of public interest entities introduces additional requirements to those laid down in the directive applicable to this category of entities. thus, in these reports there should be a statement about the person or the body that appointed statutory auditors or audit firms. typically, statutory auditors are appointed by the general meeting of shareholders. the report must also state the appointment date and the continuous mission period, including previous renewals and revalidations of statutory auditors or audit firms. it is necessary to establish compliance with the requirements on the rotation of auditors of an audit engagement to a public entity. the regulation establishes that neither the initial assignment of a particular statutory auditor or audit firm nor any subsequent extensions may exceed a maximum of ten years, but there are some exceptions. in support of its opinion, the auditor should disclose: ✓ a description of the most significant disclosure risks, including the evaluated significant inaccuracy risks attributed to fraud; ✓ a summary of the auditor's measures in response to these risks; and ✓ where relevant, key observations on the risks involved; regarding the finding of irregularities, the report explains to what extent the statutory audit was considered capable of detecting them, including fraud. also in the auditor's report on public interest entities, the auditor confirms that the audit opinion is consistent with the additional report addressed to the audit committee. for the purposes of the regulations specifying which services are prohibited, the auditor states that he has not provided non-audit services and that the statutory auditors or audit firms remain independent of the audited entity during the audit. also referring to the services provided, the auditor shall indicate the possible services in addition to the statutory audit that were provided by the statutory auditor or audit firm or any member of the network of the statutory auditor or audit firm for the benefit of the audited entity ,its parent undertaking or the undertaking controlled by it and not communicated in the management report or in the statements. european requirements regarding the audit reporting 67 the audit of public interest entities regulation introduces an obligation that auditors provide, in addition to the statutory audit report, three other types of reports. additional report addressed to the audit committee in line with european requirements and romanian legislation, public interest entities are required to have an audit committee. this constitutes an interface between the statutory auditor and the entity's management body. the auditor should provide the audit committee with a report no later than the date of the statutory audit report, comprising the following: • a declaration of independence confirming in writing, annually, to the audit committee that the statutory auditor, audit firm and partners, executives and directors conducting the statutory audit are independent of the audited entity; • if the audit was conducted by an audit firm, the report identifies each key audit partner who was involved in the audit; • if the statutory auditor or audit firm has taken steps to carry out its activities by another statutory auditor or another audit firm that is not a member of the same network or has made use of the work of some external experts , the report indicates this and confirms that the statutory auditor or audit firm received confirmation from the other statutory auditor or other audit firm and / or the external expert of its independence; • a description of the nature, frequency and extent of communication with the audit committee or equivalent body of the audited entity, the management body and the administrative or supervisory body of the audited entity, including the dates of the meetings held with the bodies concerned; • a description of the scope and timing of the audit; • if more auditors or audit firms have been appointed, describes the distribution of attributions between statutory auditors and / or audit firms; • describe the methodology used, including the balance sheet items that were directly verified and whose verification was based on a systemic and conformity testing, including an explanation for any substantial variations in the differences between background and compliance testing compared with the previous exercise, even if the statutory audit of that exercise was performed by other statutory auditors or other audit firms; • communicate the materiality threshold applied to the statutory audit for the overall financial statements and, where appropriate, the threshold or materiality thresholds for certain categories of transactions, balances or disclosures, and inform about the qualitative factors that were considered when determining the materiality threshold; • report and explain judgments about events or conditions identified during the audit that can create serious doubts about the entity's ability to continue operations, and whether these events or conditions are a substantial uncertainty and provide a summary of all warranties, letters, public intervention commitments and other support measures taken into account in the assessment of business continuity; • report on any significant deficiencies in the financial statements of the audited entity or, in the case of consolidated financial statements, in the parent undertaking internal financial control system and / or in the accounting system. for each significant deficiency, the additional report shall indicate whether the deficiency in question has been or has not been resolved by the management; • report any significant issues involving the actual or supposed non-compliance with the laws, regulations and administrative statutes or statutes that have been identified during the audit, in so far as they are considered relevant to enable the audit committee to carry out its tasks; botez 68 • report and analyze the valuation methods applied to the different items in the annual or consolidated financial statements, including any impact of changing such methods; • in the case of a statutory audit of consolidated financial statements, the auditor explains the scope of the consolidation and the exclusion criteria applied by the audited entity to non-consolidated entities, if any, and whether the criteria applied are consistent with the financial reporting framework; • identifies, as appropriate, any audit work performed by a third country auditor or auditors, by the statutory auditor or statutory auditors, by the entity or entities of a third country or the audit firm(s) with regard to a statutory audit of the consolidated financial statements, other than the one performed by the members of the same network to which belongs the auditor of the consolidated financial statements; • specifies whether the audited entity provided all explanations and documents requested; • reports: ✓ any major difficulties, if any, encountered during the audit; ✓ important matters, if any, that arise from the statutory audit and that have been discussed or have been the subject of correspondence with management; and ✓ other aspects, if any, arising from the statutory audit and which, in the auditor's professional opinion, are significant for the supervision of the financial reporting process. report addressed to the supervisory authority of public interest entities report to the statutory audit’s activity supervisory authority in certain situations specifically provided for by the regulation, the auditor is required to prepare and report to the supervisory authority of public interest entities. member states may require that this report be transmitted to the statutory auditing activity supervisory authority. in romania, the supervisory authority of public interest entities is the financial supervisory authority, and the statutory audit activity supervisory authority is the public interest supervisory board of the accounting profession. this will be transformed, according to the project of implementation of the directive, into the statutory audit activity supervisory authority. the auditor of the public interest entity shall report to one of the two authorities in the following cases: • when refusing to issue an audit opinion on the financial statements or when it intends to issue a contrary opinion or a qualified opinion. statutory auditors or audit firms also have a duty to report any of the above-mentioned information they have become aware of during the statutory audit of an enterprise in close contact with the public interest entity in which it also carries out the statutory audit; • when they have found a significant breach of the laws, regulations and administrative provisions which provide, as the case may be, for the conditions of authorization or which specifically regulate the conduct of activities of the public interest entity; • when, in their view, there is a significant threat or doubt as to the continuity of the operation of that entity of interest, there is a significant threat to the continuity of the operation of that public interest entity. european requirements regarding the audit reporting 69 annual transparency report the auditor of the public interest entity has the obligation to publish a transparency report on its own website on a yearly basis. this must be published within four months of the end of the financial year and must remain on the site for at least five years. the transparency report is updated periodically, but the original version must remain available. this report shall include at least the following information: • a description of the legal structure and the owners of the audit firm; • if the statutory auditor or audit firm is part of a network: ✓ a description of the network and its legal and structural organization; ✓ the name of each statutory auditor operating independently or of each audit firm that is part of the network; ✓ the countries where each independent statutory auditor or audit firm that is part of the network is authorized as statutory auditor or has its registered office, central administration or principal activity; ✓ the total turnover achieved by the statutory auditors operating as sole practitioners and audit firms that are members of the network, resulting from the statutory audit of annual and consolidated financial statements; • a description of the governance structure of the audit firm; • a description of the internal quality control system of the statutory auditor or of the audit firm and a statement by the administrative or management body on the effectiveness of its functioning • the date when the last quality assurance review was carried out; • a list of the public interest entities for which the statutory auditor or the audit firm performed statutory audits during the preceding business year; • a statement of practices implemented by the statutory auditor or independent audit firm, which also confirms that an internal assessment of independence has been carried out; • a statement on the policy of statutory auditor or audit firm regarding the continuous training of the statutory auditors • information regarding the partners' remuneration basis in audit firms; • a description of the statutory auditor or audit firm's policy regarding the rotation of key audit partners and staff; • if not published in its financial statements, information about the total turnover of the statutory auditor or audit firm, broken down into the following: ✓ income from the statutory audit of the annual and consolidated financial statements of public interest entities and entities belonging to a group whose parent undertaking is a public-interest entity; ✓ revenues from the statutory audit of the annual and consolidated financial statements of other entities; ✓ income from non-audited permitted services provided to entities that are audited by the statutory auditor or audit firm; and ✓ income from non-audit services rendered to other entities. the statutory auditor or audit firm shall provide annually to its competent authority a list of audited public interest entities, based on the revenue received from them, by dividing the respective revenues as follows: • statutory audit revenue; • income from services other than those prohibited by the union and national law; and • income from services other than prohibited services not provided for by union and national law. botez 70 conclusion the additional reporting requirements of the new statutory audit directive, and in particular those set out in the regulation applicable to audits of public interest entities, aim to increase the level of information for users of statutory audit reports and their confidence in financial information published. for auditors, changes are a challenge in terms of increasing the professionalism they are showing. references directive 2014/56/eu of the european parliament and of the council of 16 april 2014 amending directive 2006/43/ec on statutory audits of annual accounts and consolidated accounts. regulation (eu) no 537/2014 of the european parliament and of the council of 16 april 2014 on specific requirements regarding statutory audit of public-interest entities and repealing commission decision 2005/909/ec. studies and scientific researches. economics edition, no 33, 2021 http://sceco.ub.ro 26 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (i) mihai deju “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract the existence of groups of companies is a relatively new issue for professional accountants, the academic environment, as well as for regulatory bodies in the field of accounting in romania. in this context, the theoretical and practical aspects of the preparation of the consolidated annual financial statements generate extensive debates among accounting specialists, in order to find practical solutions to support the understanding and correct application of accounting regulations in the field of the consolidation of accounts. in two articles, we will present the accounting treatment of the disposal of securities held, within subsidiaries, associates, as well as in jointly controlled companies, by companies that prepare consolidated annual financial statements. the issue of disposal of securities held with entities whose individual financial statements are subject to consolidation will be presented in the form of case studies, structured as follows: elimination of securities held with affiliated entities (object of this article); elimination of securities held in associates and jointly controlled entities (joint ventures) object of the next article. keywords consolidation of accounts; removal of titles; affiliated entities; associated entities; joint venture jel classification m41 elimination of securities held with affiliated entities the preparation of the consolidated annual financial statements by the parent company involves the elimination of the carrying amount of the investment made by it in each subsidiary, while eliminating its share of the equity of those subsidiaries. this is, in fact, a compensation of the carrying amount of the shares held in the entities included in the consolidation with the part of their equity, related to those securities (shares). “the offsetting of disposed securities held in subsidiaries is based on the fair values of the identifiable assets and liabilities at the acquisition of the shares or, if the acquisition takes place in several stages, on the date on which the entity became a branch”1. the difference resulting from the offsetting between the book value and the fair value of the securities is presented as a separate element of the consolidated balance sheet, respectively “positive or negative goodwill”, as the case may be. the positive goodwill is an asset that represents future economic benefits that are generated by other assets acquired within a business grouping (acquisitions), but which cannot be individually identified and valued separately. this, as a rule, is recognized 1 accounting regulations for individual annual financial statements and consoliated annual financial statements approved by omfp no.1802/2014, point 508(1). the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (i) 27 on consolidation and represents the difference between the acquisition cost and the fair value at the acquisition date of the part of the net assets related to the acquired securities. positive goodwill recognized in the consolidation of accounts is included in the category of intangible assets and is usually amortized over a maximum period of 5 years. (...) however, in exceptional cases where the useful life of the goodwill cannot be reliably estimated, entities may amortize goodwill systematically over a period of more than 5 years, provided that this period does not exceed 10 years”2. the negative goodwill is the result of anticipating future losses (such as expenses with the restructuring of the acquired company) or the consequence of a good deal (the acquisition of the company’s shares at a low rate due to the passing difficulties it is going through). the value of the negative goodwill can be transferred to the consolidated profit and loss account, according to the legal regulations in force, only: a) “if this difference corresponds to the forecast, at the acquisition date, of unfavourable future results of the entity concerned or to the forecast of costs that the entity will incur, to the extent that such forecast materializes; or b) to the extent that the difference corresponds to a gain realized ”3 in the context of the disposal of the securities held by the parent company in subsidiaries, “non-controlling interests” must also be recognized, when part of the shares of the subsidiaries included in the consolidation are also held by persons other than those subsidiaries and the parent company. “non-controlling interests” are presented in the consolidated balance sheet in equity, separately from the equity of the parent company. we specify that the accounting regulations in our country do not make any reference to the way of evaluating the “non-controlling interests”, but they can be valued either in proportion to their share of the net assets of the subsidiary measured at fair value, or their fair value4. in the examples we present, “non-controlling interests” will be valued in proportion to their share of the net assets of the subsidiary measured at fair value. the case when the participation titles are acquired on the date of the establishment of the subsidiary. the parent company (sm) holds 60% of the shares of company f (subsidiary), securities that it acquired on the date of its incorporation, on 01.05.n-1. the acquisition cost of the securities is 1,200 lei. at 31.12.n, the equity of subsidiary f recorded the following values: capital: 2,000 lei ; reserves: 1,000 lei the result of the financial year : 500 lei. at 31.12.n, the parent company prepares for the first time consolidated annual financial statements. in order to reflect the accounting of the elimination of the securities held by the parent company at subsidiary f, the net assets of subsidiary f will be divided, in the part belonging to the parent company and the part belonging to minorities, as follows: 2 idem point 183 (1) 3 idem point 551 (1) 4 these two ways of assessing non-controlling interests are provided by ifrs “business combinations” (ifrs 3.18) deju 28 equity(net accounting assets) total the part that belongs to the parent company (60%) the part that belongs to the noncontrolling interests (40%) capital 2,000 1,200 800 reserves 1,000 600 400 result of the financial year 500 300 200 total 3,500 2,100 1,400 a) the accounting reflection of the elimination of f-titles, of the taking over of the shares of equity capital belonging to the parent company and of the noncontrolling interests (recording at the balance sheet level): 3,500 2,000 1,000 500 % 101 “capital f” 106 „reserves f” 121 „profit or loss f” = % 261 “shares held by affiliated entities” 106 „consolidated reserves” 121 „consolidated result” 108 „non-controlling interests” 5 3,500 1,200 600 300 1,400 when consolidating the subsidiaries whose securities are held by the parent company from the date of establishment of that subsidiary, the fair value of the assets and liabilities coincides with their carrying amount, so that the elimination of the value of the equity securities on consolidation does not generate goodwill. b) recording the share of the result of subsidiary f (corrections at the level of the profit and loss account): % 121 „result that belongs to the shareholders of the parent company(consolidated result) 1081 „resultnon-controlling interests ” (with the part of the result that belongs to the minorities) = 121 „profit or loss f” 500 300 200 the case of the acquisition of securities by the parent company at a date subsequent to the establishment of the issuing company (subsidiary) on 31.12.n-3, the parent company acquired 80% of the shares of company f, which was incorporated at an earlier date. the acquisition cost of the shares is 300,000 lei. the parent company consolidates subsidiary f for the first time on 31.12.n. in order to consolidate subsidiary f, the following clarifications will be taken into account: 5 non-controlling interests represent a balance sheet item that appears in the consolidated balance sheet only in the case of global integration. the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (i) 29 1. we assume that the evolution of the capital of subsidiary f was as follows: lei equity on the acquisition day (n-3) values on the consolidation day (31.12.n) subscribed and paid-in capital 200,000 200,000 reserves 70,000 210,000 result of the financial year 0 40,000 total equity 270,000 450,000 2. the equity of company f, on 31.12.n-3, had the following values: subscribed and paid-in capital 200,000 lei, reserves 70,000 lei. also, at the date of acquisition of the securities, the fair values of the identifiable assets and liabilities were identical to the accounting ones, except for a building whose fair value was higher than the book value by 80,000 lei. the remaining amortization period of the building, from the moment of acquiring the titles, is 20 years. 3. goodwill is amortized over a period of 5 years. the difference between the acquisition cost and the fair value of the units, determined at the date of acquisition of those securities, represents a positive / negative “goodwill”, as the case may be. a) the determination of good will6: i) the cost of acquiring the securities 300,000 capital f reserves f building value added (valuation reserves) net assets of company f measured at fair value (on 31.12.n-3) 200,000 70,000 80,000 350,000 ii) share of net assets evaluated at fair acquisition day (350.000 x 80%) 280,000 280,000 iii) goodwill (i-ii) 20,000 b) share of equity of subsidiary f at the date of consolidation (31.12.n): equity total the part that belongs to the parent company sm (80%) the part that belongs to the “non-controlling interests” (20%) capital 200,000 160,000 40,000 reserves 210,000 168,000 42,000 result of the financial year 40,000 32,000 8,000 total 450,000 360,000 90,000 6 we specify that in the presented examples the part of good will that belongs to the parent company is determined. deju 30 c) elimination of f securities, reflection of goodwill, takeover of the shares in the respective equity elements of the subsidiary, according to the percentage of interest held by the parent company and non-controlling interests (balance sheet entry): 550,000 200,000 210,000 40,000 20,000 80,000 % 101 „capital f ” 106 „reserves f ” 121 „profit or loss f” 2071 „goodwill” 212 „constructions ” = % 261 „shares held at affiliated entities” 106* „consolidated reserves ” 121* „consolidated result ” 108** „non-controlling interests ” 550,000 300,000 112,000 32,000 106,000 * represents the share part of the sm company from the reserve of subsidiary f obtained after the date of acquisition of the securities: (210,000 lei 70,000 lei) x80% = 112,000 and the share of the current result. ** represents the share that belongs to the minorities from the own capitals of the f branch from 31.12.n (90,000 lei) + the share part of the value added afferent to the construction (80,000 lei x 20%). note: it can be seen that only the shares that were formed after the acquisition of the securities are taken over from the consolidated equity, and the non-controlling interests are taken over, in addition to the share of the equity belonging to the minorities, and the share of the surplus value related to assets expressed at fair value. d) share of the result of company f (recording at the level of “profit and loss account” component of the financial statements): % 121 „result that belongs to the shareholders of the parent company” 1081 „result– part that belongs to noncontrolling interests” = 121 „profit or loss f” 40.000 32.000 8.000 e) recording the depreciation of the difference (plus) of value related to the construction (annual depreciation 80,000 / 20 = 4,000 lei): lei construction depreciation previous financial years (n-2 and n-1) current financial year (n) part that belongs to sm 4,000 x 2 x 80% = 6,400 4,000 x 80% =3.200 part that belongs to noncontrolling interests 4,000 x 2 x 20% =1,600 4,000 x20% =800 total 8,000 4,000 -recording at the balance sheet level: % 106 „consolidated reserves” = 2812 „construction depreciation” 12,000 6,400 the elimination of securities held in the entities within the group. accounting approach in the context of the consolidation of accounts (i) 31 121 „consolidated result” 108 „non-controlling interests” 3,200 2,400 -corrections at the level of the „profit and loss account”: 6811 „operating expenses on depreciation of fixed assets” = % 121 „result that belongs to the shareholders of the parent company” 1081 „result– part that belongs to non-controlling interests” 4,000 3,200 800 f) amortization of goodwill amortization of goodwill 20,000 / 5 x 2 =8,000 20,000/5 = 4,000 balance sheet entry % 106 „consolidated reserves” 121 „consolidated result” = 2807 „amortization of goodwill” 12,000 8,000 4,000 -corrections at the level of the „profit and loss account”: 6811 „operating expenses on depreciation of fixed assets” = 121 „result that belongs to the shareholders of the parent company” 4,000 conclusions approaching some practical aspects regarding the preparation of the consolidated annual financial statements by the groups of companies in romania, through case studies, given that accounting theory and practice do not abound in effective solutions for applying accounting regulations in the field, we consider that it can represent an indicative guide for the application and understanding of those regulations by professional accountants, academic researchers and economics students. with the confidence that both accounting theory and practice can be permanently updated and improved, i am waiting for proposals or suggestions on the issues discussed in this article. references bogdan v., fărcane n., popa d.n., boloş m.i. (2011), raportarea financiară la nivelul grupurilor de societăți – repere contemporane, bucurești, editura economică. deju m.. note de curs “ contabilitate consolidată – bacău 2020 feleagă n., feleagă l. (2007), contabilitate consolidată. o abordare europeană și internațională, bucurești, editura economică. deju 32 order of the minister of public finance no. 1802/2014 for the approval of the accounting regulations regarding the individual annual financial statements and the consolidated annual financial statements, with subsequent amendments and completions. studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 32 cash vs. synthetic cdos silviu eduard dinca university of craiova silviu@dinca.biz abstract during the past few years, in the recent post-crisis aftermath, global asset managers are constantly searching new ways to optimize their investment portfolios while financial and banking institutions around the world are exploring new alternatives to better secure their financing and refinancing demands altogether with the enhancement of their risk management capabilities. we will exhibit herewith a comparison between the true-sale and synthetic cdo securitizations as financial markets-based funding, investment and risks mitigation techniques, highlighting certain key structuring and implementation specifics on each of them. keywords true-sale cdo securitization; synthetic cdo securitization; credit derivatives; cash assetbacked cdo securities; synthetic asset-backed cdo securities jel classification e44; f30; g15 1. cdo securitizations collateralized debt obligations (cdos) are asset-backed securities whose underlying collateral is formed of a diversified pool of cash-flow generating obligations. cdos are part of an ongoing structured finance’ evolutionary trend that is providing advanced methods of converting financial risks into freely marketable and tradeable commodities. this revolutionary process started with the short-term abcp and longer-term abs securitizations and it found support and further catalysts with the development of financial engineering and financial derivatives along with the expansion of the overall global securitization markets. a) cdos family tree there are multiple types of cdo classes and structures in the marketplace today, which can be differentiated based on the various classification criterions one might use to sort them out. the main forms of cdos can be broken down by: a) aim of transaction (initiator’s motivation)  balance sheet management (balance-sheet cdos): they are implemented to optimize initiators’ balance sheet management. they are both true-sale (cash-flow) based cdos, credit-derivatives based (synthetic) cdos and hybrid cdos (combination of cash and synthetic);  arbitrage opportunities (arbitrage cdos): they are employed to capture the various arbitrage opportunities existing in the global financial markets. they are cash-flow cdos and market-value cdos based on both true-sale and synthetic structures. b) securitization technique  true-sale cdos: the transaction follows the true-sale implementation principles. they consist of both balance-sheet cdos and arbitrage cdos;  synthetic cdos: the transaction follows the credit derivatives implementation principles. they contain balance-sheet cdos as well as arbitrage cdos. cash vs. synthetic cdos 33 c) source of funds for principal and interest payments  cash-flow cdos: the repayments are based on the ability of the cash-flows generated by the underlying assets to fully service the principal and interest payments of the newly issued cdos. they comprise balance-sheet cdos as well as arbitrage cdos on both true-sale and synthetic forms;  market-value cdos: the repayments are based on the ability of the marked-tomarket value of the underlying assets to fully service the principal and interest payments of the newly issued cdos. they include mostly arbitrage cdos on both true-sale and synthetic forms;  hybrid cdos: they are a combination of cash-flow and market-value cdo structures. they cover balance-sheet cdos and arbitrage cdos on both true-sale and synthetic forms. d) funding technology (liabilities distribution)  cash-based (true sale) cdos: the transaction is based on the true-sale securitization principles of risk transfers and funding. they contain both balancesheet cdos and arbitrage cdos;  synthetic (credit derivatives based) cdos: the transaction is based on the credit derivatives (synthetic) securitization principles of risk transfers and funding and can be further divided into fully-funded synthetic cdos, partially-funded synthetic cdos and fully-unfunded synthetic cdos. they contain balance-sheet cdos as well as arbitrage cdos;  hybrid cdos: the transaction is a mixture of cash and synthetic securitization. they cover balance-sheet cdos and arbitrage cdos. e) collaterals management style  actively managed (dynamic) cdos: they are actively traded by the collateral managers. they include mostly arbitrage cdos on both true-sale and synthetic forms;  passively managed (static) cdos: they are traded under very limited conditions by the collateral managers. they include mostly balance-sheet cdos on both true-sale and synthetic forms. f) composition of the underlying assets (the reference portfolio) they can differ widely, but the majority of cdos consist of one or a combination of the following: (a) loans (commercial, middle-market, corporate/sme, secured/unsecured junior/senior, distressed and nonperforming, emerging markets, leveraged and high-yield, leases, piks, trade receivables factoring and forfeiting based, revolving credit lines, mezzanine, municipals, project finance, syndicated, bilateral); (b) bonds (corporate investment grade & high yield, sovereign investment grade & high yield, convertible, emerging markets, distressed and nonperforming, mezzanine, secured/unsecured junior/senior, municipals, project finance); (c) collateralized debt obligations (loans & bonds); (d) mortgage-backed securities (commercial & residential); (e) financial derivatives; (f) hedge funds, private equity, reits; (g) private placements, equity, trust preferred securities; (h) asset-backed securities (various collaterals); (i) structured finance securities. they cover balancesheet cdos and arbitrage cdos on both true-sale and synthetic forms. g) product (deal) types depending on the combination of the underlying assets and collateral types, one can find different types of cdo transaction structures, such as: collateralized debt obligations (cdos); collateralized loan obligations (clos); collateralized bond obligations (cbos); collateralized synthetic obligations (cso), or synthetic cdos; collateralized fund obligations (cfos); collateralized insurance obligations (cios); commercial real estate cdos (cre cdos); collateralized equity obligations (coes); structured finance cdos (sfcdos), which includes cdos of abss, mbss, reits, cdos; etc. they include balance-sheet cdos as well as arbitrage cdos on both truesale and synthetic forms. dinca 34 b) cdos structuring specifics any cdo securitization is carried out by means of a bankruptcy-remote special purpose vehicle (spv), called the cdo vehicle, which issues asset-backed securities (the cdos) to the institutional investors. the eligible collaterals mixture backs these cdos, which are issued in several classes, each class being formed of several tranches, whereas each tranche is featuring different risk/reward profiles associated with the underlying assets pool. hence, the cdo vehicle is able to shape its liabilities to comply with a broader range of risk/return investors’ profiles. by implementing the tranching process a cdo securitization undertakes the redistribution and reallocation of the underlying portfolio’s credit risks and returns to the cdo investors. thus, cdo vehicle’s liabilities are segregated and dispersed into various tranches, each tranche having a different credit quality and a distinct return level, realizing in this way a structural subordination within the cdo transaction. consequently, cdos’ debt servicing relies not only on the underlying collaterals’ diversification and credit quality, but additionally and foremost it entrusts on the transaction’s inbuilt seniority/subordination, overcollateralization and structural protection mechanisms of credit enhancement and liquidity support (either cash-flow or market-value protection and support schemes). following the source of funds for principal and interest repayments principles, one can divide the credit and liquidity quality of cdos based on either cash-flow structure or market-value structure. thus, in case of a market-value cdo structure, the protection mechanisms’ quality derives from transaction’s ability to liquidate its assets and repay fully and timely entire debt tranches; while in case of a cash-flow cdo structure, the quality of protection mechanisms relies on the size of subordination and the degree of overcollateralization, which must be larger enough so that the after-default cash-flows of the underlying assets to fully cover all debt tranches. therefore, the most important structural features of a cdo securitization could be summarized as: (a) securitization technique (true-sale or synthetic); (b) source of funds for principal and interest repayments (cash-flow or market-value); (c) funding technology (cash based or credit derivatives based); (d) collaterals management style (actively managed or passively managed); (e) transaction’s cash-flow and loss allocation system (cdo securitization waterfall); (f) transaction’s credit and liquidity enhancements; (g) transaction’s degree of seniority/subordination, overcollateralization, reserve accounts, excess spreads; (h) transaction’s hedging mechanisms (credit, currency, interest-rate hedging). figure 1 simplified generic cdo securitization transaction structure source: author’s representation cash vs. synthetic cdos 35 the cdo structuring process generates a multiple set of asset-backed securities, called tranches, each of them having different exposures to underlying assets’ risks, different credit ratings, different payment seniorities and different rates of return. generally, a cdo structure comprises of (super) senior tranches, mezzanine tranches, subordinated tranches and equity tranches. the waterfall structure rules that the equity tranche (usually unrated) represents the first-loss position and it is the first to absorb losses in the cdo structure. if losses exceed the value of the equity tranche, they are absorbed by the subordinated (non-investment-grade credit rating) and mezzanine tranches (investment-grade credit rating). finally, the (super) senior tranches (highest credit rating) are the last to be affected by any losses and only in the case that such losses have not been absorbed entirely by the other lower-level tranches. nevertheless, the waterfall structure stipulates as well the rates of return for each of these tranches, which is opposed to their credit standing: equity tranches carry the highest returns, subordinated tranches and mezzanine tranches lower yields than equity tranche and the (super) senior tranches are compensated with the lowest returns in the cdo structure. the cash-flows/losses allocation of a cdo securitization is based on a sequential distribution scheme (the waterfall principle) depending on the seniority of tranches within the capital structure of the cdo structure. the payments (both repayment of the principal and payment of the interest) are prioritized firstly to the highest tranches (highest credit rating and lowest returns), with the remaining to be paid out to tranches located progressively lower in the cdo transaction hierarchy (lower credit rating but higher returns). hence, this subordination of the cdo structure allows, on the one hand, the investors to select the level of exposure that fits better to their risk/reward profiles/appetites and, on the other hand, the issuance of asset-backed securities with different coupons reflecting the various levels of seniorities, risks and returns according to the underlying assets (reference portfolio) structuring particulars. c) motivations of cdo securitization transactions originators and sponsors involved in the broader cdo securitization transactions benefit of multiple key motivations, including: (a) to secure alternative cheaper sources of funding, risks transfer and refinancing; (b) to improve the overall balance sheet management; (c) to employ an effective tool for regulatory and economic capital management; (d) to enhance further the regulatory capital relief; (e) to generate additional fee income; (f) to improve the risk management by reducing the overall credit exposures or adjusting certain risk stratification particulars; (g) to free up lending capacity with respect to certain categories of borrowers or economic sectors and industries; (h) to benefit from additional capital arbitrage returns; (i) to enhance the liquidity management; (j) to access additional means to enhance the overall capital structure arbitrage; (k) to enhance the minimum regulatory capital arbitrage; (l) to make use of an efficient tool for capital ratio management; (m) to improve return on equity and return on assets ratios; (n) to attain portfolios’ risk adjusted performance; (o) to augment credit limit management; (p) to monetize illiquid on-balance sheet assets and to improve their market value; (q) to expand the volume of assets under management; (r) to raise the total valuation of a cdo issuer; (s) to increase the equity capital by means of issuing trust preferred securities; etc. broader cdo securitization is providing institutional investors with abundant motivations, including: (a) it provides portfolio diversification by means of multiple industries, sectors and borrowers of interest; (b) it facilitates access to different and better-quality risks adjusted returns profiles; (c) it allows the ability to tailor risk/return profiles by providing better risk/reward performances; (d) it diversifies the overall portfolio risk exposures; (e) it provides a highly versatile and comprehensive tool for portfolio investment management; (f) it upgrades the portfolio risk dinca 36 management; (g) it supplies investment portfolio diversification into new asset classes; (h) it delivers portfolio diversification by investing along a wider credit spectrum; (i) it supplies considerable volume and liquidity of highly rated securities that may not be available in the markets otherwise; (j) it supplies higher yields and risk-adjusted returns relative to other instruments of comparable credit quality; (k) it is offering better perspectives to achieve portfolios’ alpha returns; (l) it facilitates portfolio’s arbitrage opportunities among various asset classes; (m) it provides enhanced portfolio’s leverage; etc. we will emphasize hereafter some cdo essentials from the securitization technique perspective providing a brief comparative analysis between true-sale and synthetic cdos. 2. true-sale cdo securitizations in a true-sale (or cash-funded, or traditional, or conventional) cdo securitization the ownership of the underlying assets being securitized, along with their related financial risks, is legally transferred, by means of a true-sale operation, from the transaction sponsor to the bankruptcy-remote spv, whereas the spv issues cdo securities backed by these (transferred) assets which are distributed to institutional investors. hence, the acquisition of the underlying assets involved in a true-sale cdo securitization is fully cash-funded by the proceeds generated by the issuance of cdo vehicle’s asset-backed securities and, conversely, the repayment of cdo securities is straightly linked to the cash-flows generated by the underlying assets. since the underlying assets are sold, in exchange for cash, to the cdo vehicle, they are actually completely removed from the sponsor’s balance sheet, altogether with their associated financial risks, hence cash-based cdo securitizations represent both a funding tool as well as an on-balance sheet’ risks transfer operation. figure 2 simplified generic true-sale cdo securitization transaction structure source: author’s representation from sponsors’ motivation perspective, cash cdo securitizations are implemented both as balance-sheet management transactions (cash-flow balance-sheet cdos) and as arbitrage opportunities transactions (cash-flow arbitrage cdos). from repayments’ source of funds standpoint, cash cdo securitizations are mostly cash-flow transactions whereas the assets are not usually marked-to-market, however marketcash vs. synthetic cdos 37 value cash cdos are quite common transactions especially in the case of true-sale arbitrage cdos. while the funding technology is exclusively cash-based (true-sale), the cash cdos are featuring mostly a passively managed (static or limited-trading) collaterals management style, whereas the composition of the underlying assets consist of any assets types common in cdo transactions combined in a large variety of cdo transaction structures. originators and sponsors involved in true-sale cdo securitizations benefit of multiple key motivations additional to those specific to generic cdos, including: (a) to achieve off-balance sheet treatment; (b) to enhance the liquidity management and assets valuation; (c) to improve return on equity, return on assets, return on economic/regulatory capital, risk-adjusted return on capital ratios; (d) to augment credit limit management, capital capacity and financial flexibility; (e) to allow access to new investors base; (f) to improve asset-liability management by means of a new alternative for asset/liability divestitures; (g) to improve the balance-sheet management in terms of exposures, concentration, diversification, credit spread, capital cost, balance-sheet reduction; (h) to provide access to trade the arbitrage spread opportunities; (i) to earn the spread between return on the invested assets and the costs of the cdo transaction; (j) to exploit yield mismatches and differences in funding costs between assets and liabilities; (k) to achieve funding through the issuance of debt securities and equity; (l) to capitalize on perceived discrepancies between the market-value and the theoretical-value of the risky assets; (m) to improve return on assets ratio; etc. true-sale cdo securitizations are providing institutional investors with plentiful motivations additional to those specific to generic cdos, including: (a) it delivers portfolio diversification through investments on a broader credit spectrum and long terms to maturity; (b) it provides exposures to the high-yield market via credit rated instruments; (c) it achieves a leveraged return between yield on assets and the financing cost of transaction; (d) it provides investment strategies in opportunistic arbitrage-based products; (e) it monetizes the diversification benefits of uncorrelated assets classes; (f) it monetizes the relative value opportunities for less liquid assets; (g) it achieves higher returns for investments in the same level of credit rated securities; etc. 3. synthetic cdo securitizations a synthetic (or credit derivatives based) cdo securitization represents a financial engineered structure where the credit risks associated with an on-balance sheet assets pool (reference portfolio) are transferred by transaction’s sponsor from itself, either directly or via an spv, to the institutional investors by means of the credit derivative instruments. consequently, the originator is considered as credit protection buyer while the investors are deemed as credit protection sellers. given that a synthetic cdo securitization facilitates originators to separate credit risks trading from balance sheet funding, the transfer of credit risks is achieved synthetically, by means of credit derivatives, rather than by a true-sale operation as in the case of cash cdos. since the synthetic cdo securitizations enable the removal of associated credit risks without any assets transfer, the underlying assets (reference assets) are not actually removed off the sponsor’s balance sheet and thus synthetic cdos are mainly employed as financial risks transferring tools rather than balancesheet funding operations. hence, by means of financial derivatives replication, a synthetic cdo carries collateral’s risks/returns characteristics (transferring the credit risks of a pool of reference assets, or transferring the total return profile of the reference assets) to the cdo vehicle without conveying also the actual assets to the spv as well, the dinca 38 originator remaining thus their legal and beneficial owner. nevertheless, in a synthetic cdo the cash-flows on the reference assets are transferred to the cdo vehicle by means of credit derivatives as an alternative way of on-balance sheet asset divestiture. in turn, the spv issues the asset-backed securities that are placed with the cdo investors. according to the funding scenario selected by the originator and to the deal structuring particulars, synthetic cdos can be issued by means of a fully-funded, partially-funded or fully-unfunded securitization structure, whereas different types of credit derivatives (funded clns, unfunded cdss/trss) are used to implement each type of synthetic cdos transaction. figure 3 simplified generic fully-funded cdo synthetic securitization transaction structure source: author’s representation figure 4 simplified generic partially-funded cdo synthetic securitization transaction structure source: author’s representation cash vs. synthetic cdos 39 figure 5 simplified generic fully-unfunded cdo synthetic securitization transaction structure source: author’s representation from sponsors’ motivation perspective, synthetic cdo securitizations are implemented both as balance-sheet management transactions (synthetic balance-sheet cdos) and as arbitrage opportunities transactions (synthetic arbitrage cdos). from repayments’ source of funds standpoint, synthetic cdo securitizations are both cashflow transactions as well as market-value cdos. while the funding technology is exclusively synthetic (credit derivatives based), from collaterals management style approach, synthetic cdos are both actively managed (dynamic) and passively managed (static) cdos, whereas the composition of the underlying assets consist of any assets types common in cdo transactions combined in a large variety of cdo transaction structures. originators and sponsors involved in synthetic cdo securitizations benefit of multiple key motivations additional to those specific to generic cdos, including: (a) to allow the securitization of credit products (unfunded assets, guarantees, undrawn exposures, credit lines, derivative positions, loans with restrictions on assignment and transferability) that may otherwise be unsuitable for true-sale securitization or for offbalance sheet funding; (b) to allow asset managers to take both long and short views on asset classes, economic sectors/industries without removing the respective assets from the balance sheet; (c) to allow the trading of pure credit-driven views; (d) to allow the transfer of credit risks related to partial claims on a specific reference asset; (e) to exploit arbitrage opportunities between cash and synthetic products; (f) to accomplish a greater flexibility to accommodate tailor-made solutions for credit risk requirements through the use of credit derivatives; (g) to achieve lower closing costs than cash cdo securitizations; (h) to facilitate the avoidance of true sale treatments; etc. synthetic cdo securitizations are providing institutional investors with further motivations in addition to those specific to generic cdos, including: (a) it allows investors to take synthetically long and short positions over the market; (b) it allows investors to gain exposure to otherwise inaccessible assets classes; etc. 4. true-sale vs. synthetic cdo securitizations the interplay between true-sale and synthetic cdo securitizations is inspiring for the particular opportunities that each type of transactions provides to both sponsors dinca 40 and investors alike. as per above details, one can note that equally cash and synthetic cdos are featuring meaningful funding, refinancing, investing and risks management advantages to all transactions’ participants, however each category of cdos is providing some particularities which can be optimally engaged following specific originators’ motivations and objectives. we will sketch herewith further distinctive features of cash vs. synthetic cdos from the practical transaction’s perspective: table 1 comparison synopsis between true-sale and synthetic cdo securitizations outlining the main attributes of cash vs. synthetic cdos features true-sale cdo securitization synthetic cdo securitization transaction objectives funding and transfer of the financial risks (in all cases). both true-sale and synthetic securitizations enable the same volume of credit risks to be transferred to the cdo investors transfer of the financial risks (in all cases) and funding (just in case of funded and partially funded transactions). both true-sale and synthetic securitizations enable the same volume of credit risks to be transferred to the cdo investors underlying assets and related risks treatment assets are sold to the spv and all related risks are hence transferred to the spv. the spv becomes assets’ owner only financial risks are transferred via credit derivatives to the spv, or directly to the investors (in case of non-spv transactions). originator remains assets’ owner underlying assets regime become off-balance sheet assets related to the originator. transaction reduces the originator’s balance-sheet size (i.e. the volume of total on-balance sheet assets) remain on-balance sheet assets related to the originator. transaction does not reduce the originator’s balance-sheet size (i.e. the volume of total on-balance sheet assets) carrying out transaction objectives originator acts as seller of the on-balance sheet assets originator acts as protection buyer for the on-balance sheet assets ramp-up period 1-6 months 1-2 months aim of transaction balance sheet management; arbitrage opportunities balance sheet management; arbitrage opportunities securitization technique true-sale synthetic source of funds for principal and interest payments cash-flow structures; market-value structures cash-flow structures; market-value structures funding technology (liabilities distribution) cash-based (true sale) synthetic (credit derivatives based): fully-funded, partially-funded, fullyunfunded collaterals management style actively managed (dynamic); passively managed (static) actively managed (dynamic); passively managed (static) source: author’s representation cash vs. synthetic cdos 41 5. conclusions both true-sale and synthetic cdo securitizations constitute the most efficient secured funding and investment alternatives available to asset managers, banking and financial institutions in the global capital markets. the ability to raise more stable medium and long-term funding at very competitive terms, to access a broader pool of global investors, to increase the supply of liquidity to financial institutions, to diversify anyone investment portfolios and to enhance the risk-adjusted returns of assets portfolios are the main advantages to sponsors, originators and investors involved in asset-backed securities programs. in order to capture all the benefits emerging from true-sale and synthetic cdo securitizations, financial institutions should run in parallel, simultaneously both truesale and synthetic securitization programs since they are complementing all together, allowing originators and investors to effectively manage the investments, fundraising and risks management aspects by optimally interconnecting local asset markets with global financial and capital markets. references bank of america securities (1999), collateralized bond obligations: abs research. bank of america securities (2007), introduction to structured finance. barclays capital (2009), introduction to cdo securitisation. citi global markets (2009), new trends in structured finance. commerzbank capital markets (2009), introduction to cdo securitisation. credit suisse securities (2007), introduction to cdo securitisation. de vries robbe, j., paul, a. u. (2005), securitisation of derivatives and alternative asset classes, kluwer law international. de vries robbe, j., paul, a. u. (2006), innovations in securitisation, kluwer law international. de vries robbe, j., paul, a. u. (2007), expansion and diversification of securitization, kluwer law international. dinca, s. e. (2015), balance-sheet vs arbitrage cdos. dinca, s. e. (2015), cash vs synthetic abcps. dinca, s. e. (2015), cash vs synthetic abss. dinca, s. e. (2015), cash-flow vs. market-value cdos. dinca, s. e. (2015), structured finance & assets securitisation: participants’ motivations and competitive advantages, annals ucv economic sciences series, 43(2). ernst & young (2007), cdo securitisation: a valuation guide. european central bank (2008), the incentive structure of the originate and distribute model. european central bank (2011), recent developments in securitization. goldman sachs securitisation group (2009), insights on asset securitisation deals. hsbc securities (2008), cdo securitisation guidelines. j. p. morgan securities (1999), guide to credit derivatives. j. p. morgan securities (2003), credit derivatives research. kpmg (2009), new trends in cdo securitisation. lloyds banking & markets (2007), cdo securitisations. merrill lynch structured finance (2005), cash and synthetic clos. rbs capital markets (2008), new developments in cdo securitisation. standard & poor’s structured finance (1999), global cbo/clo rating criteria. standard & poor’s structured finance (2001), cash flow cdos: continued growth. ubs securities (2008), asset securitisation techniques. wachovia capital markets (2009), introduction to asset securitisation. dinca 42 watson, r., carter, j. (2006), asset securitisation and synthetic structures: innovations in the european credit markets, euromoney books. microsoft word apostoaie constantin marius_eng.doc 1 taxation in romania during transition irina bosie, “alexandru ioan cuza”university of iasi, românia abstract taxation, as fundamental element of budgetary revenue, represents the subject of newest utilization. budget revenues through importance they hold, exercises a direct influence on the behavior of people being used by natural and legal persons as modeling tools in the economic and social life. using the generic concept of taxation we can obtain a plurality of components, it’s defining elements, such as expression level of tax levies by various reports, the legal framework on tax revenue, financial institutions with responsibility for budgetary and fiscal powers, mandatory sampling methods, techniques and procedures used in the settlement and settlement revenue collection and budget. performance of the economy at a time, effective use of public spending financed by taxes, public needs set by government policy and approved by parliament, taxpayers, understanding of the budgetary needs, state of democracy in that country reached the level of taxation this one being determined by mentioned factors. keywords: fiscality, transition, fiscal policy, reform jel code: h25 fiscal policies promoted in romania during transition period. legal framework for starting and creating tax reform in romania was created with the adoption of legislation on the reorganization of state institutions as autonomous economic and commercial society. this was possible since 1990. shortly thereafter, he was drafted and executed budget, stopped to centralize the state budget by payments of profits under a planned economy following de-budgeting economy. in turn, direct taxes were introduced as specific income tax, capital tax incomes, salary tax has been assigned the task owners income and business tax remains payroll, tax that exceeds the ceiling established by the government. a modern form of indirect tax called value added tax (vat), appeared in 1993, the overall tax structure, replacing the tax on the movement of goods. this form of taxation was present in all other eu countries, and by adoption, romania has made an important step in economic and financial restructuring. duty taxes were used to adjust market supply and demand in times of economic life. also occurred, resulting in extra funds de-budgeting public spending. they were designed to cover certain obligations of the state. taxation in romaniaeuropean union, the comparative analysis to refer to the tax systems of eu countries must present clear positioning romania in the light of community landmarks, from requirements imposed by european countries for upgrading access to the single market, which has tough competition and operators characteristics of the member countries. studies and scientific researches economic edition, no. 15, 2010 14 2 redistribution of gross domestic product and public financial resources coming from taxes and levies differ from each member country to another, depending on the degree of development of its economically. these operations aim to satisfy the general public interest. under revenue statistics, countries in transition, aimed at eu accession have lower gdp than the eu countries with the most modest economic performance. they showed gross domestic product share of redistribution through taxes and contributions, close to the unweighted average of the eu. eu countries have manifested a tendency to increase the redistribution of gdp through taxes and contributions. shorter periods of time, comparable to those that are related to romania in transition, retrospective analysis shows developments not only different from one country to another, but often contradictory. thus, during 1985-1997, the share of tax revenue to gross domestic product, the total european union increased by 1.7 percent. of the 15 countries in 9 of them have been growing, and 6 reductions. in romania, between 1990-2001, was a loss of tax revenue to gross domestic product by 4.5 percentage points. it is important to indicate that the level of tax reduction has occurred as a result of reconsideration of tax policies promoted by the government and not as a result of declining production and gross domestic product collapse, as happened in romania. taxation in romania has made various developments, ¬ socio-economic conditions different from those of the european union. in total tax revenue made throughout the european union, participated in direct taxes accounted for over 50% and an indirect ratio below 50%. among the largest share of direct taxes their income taxes and income taxes. indirect taxes have the largest share a tax on goods and services in all eu countries, direct taxes dominant feature. for the rapid increase in indirect taxes has been made that argument would be that developed countries adopted a policy called the emphasis on financial resources. but social and economic progress and prosperity in all european union countries, has created functional common market, which favors the development of trade relations and determine need for common rules at community level to promote free competition. countries have different economic development levels favored by geographic location, with different fiscal policies, resulting in different financial features. by assuming community acquis, romania as member state is obliged to acquire, mandatory community regulations. at the same time has a duty to develop and promote appropriate fiscal policy and conditions current stage of development interests. single currency and creation of the euro area determined to strengthen competitive capacity of the eu countries taken individually and taken together the community. euro currency movements ¬ advantage is that direct investment capital not to be influenced by monetary factors. tax reform is an integral part of economic reform in each state, with complex issues influenced by the political character of economic and social life, the process of training conducted over a long period of time and medium term fiscal reform for generating and maintaining money balanced development of economic structure in a uniform direction, measures for eliminating internal and external imbalances to achieve tax and social fairness and long-term tax revenue to the sizing and spending structure. the goals of tax reform is tax reform measures to meet eu requirements: reducing the complexity of the tax system for taxpayers and tax administration device, attracting foreign investment, reducing the migration of capital and labor to countries with more taxes low economic imbalances caused by the removal of taxes on investment and business environment, improved balance of the tax system, by stimulating investment and employment (reducing unemployment). tax reform effects studies and scientific researches economic edition, no. 15, 2010 15 3 tax legislation must be clear and precise in interpretation and it is to determine the financial resources, encourage saving and long-term investment, increase transparency in fiscal policy, also increasing the progressivity of tax rates with favorable characteristics for low-income social levels, increase taxpayer confidence in the tax system, reducing the size of state sector institutions. in the completion of tax reform measures are now willing to go to discourage tax evasion, remove tax exemptions from taxation, maintaining a low level of company profit tax rate and the maximum marginal rate of tax provided for staff so as to limit measures of income transfer between companies and personal income in two-way. minimum conditions for the proper administration of economic policy are tax reform and the need for a stable fiscal system professional tax preparation tax code according to the european union, creating a modern information system and data sampling of tax, taxes and duties (e-tax e-administration, e-government). taxes are an economic policy instrument revealed by studying the effectiveness and efficiency of their taxes is the ability to provide the resources for major state objectives using both lower management costs. taxes contribute to correcting the negative effects of the economy, and may be an intervention at both macro and micro level. tax structure must adhere to the goals of fiscal policy and economic policy. economic, political and social influence and tax structure must meet the requirements of fiscal policy related to economic, budgetary, the phenomenon of inflation, social policy and that of investment. instead of conclusions among the solutions to resolve tax problems are situations that reflect an increase in taxes, and cases in which economic issues were resolved through tax cuts and tax rate development analysis shows a winding road. it is generally considered that any increase in the tax rate must be accompanied by important provisions for improving the equity of the tax system. fairness it seeks to incorporate concepts that determine the balance and according to this principle are essentially equal in terms of revenue should pay equal taxes. through fiscal policy, monetary and exchange with financial and economic instruments such as taxes, transfers and subsidies, credit, interest, prices, exchange rates, economic activity is influenced by public authority. starting from a fair opportunity to avoid payment of taxes should be reduced as more and different sources of income need to be taxed. tax reform is required as a prerequisite for ensuring economic recovery of our country, aimed at aligning tax practices of developed countries and create a modern tax system. the tax system must meet the requirements of market economy by improving the taxation of personal income, re taxes, excise duty and local taxes. romanian tax system puts undue pressure on social groups and stimulate investment in this area that do not require special skills, entrepreneurs uninvested in activities that require work to be remunerated properly qualified. thus fiscal policy requires a rapid restructuring in view of measures to increase transparency, provide a stable tax base, extensive tax reductions related to investment income, improved tax collection system, measures to reduce and prevent tax evasion and fraud and finally introducing the flat tax represents a plausible option for enhancement of european fiscal balance. taxes, assessment and tax contributions must act to support economic and population based on a real partnership between the state and taxpayers. government fiscal policy is designed to support the objectives of convergence with the budget deficit in the normal rate. the goal established by the government is to deliver improved public services, including a system of quality education and training, a modern and reliable transport network and responsive health services. it ensures that these services be provided through increased public sector investment. studies and scientific researches economic edition, no. 15, 2010 16 4 in conclusion, we can say that the issue of taxes in the european economic area is not yet complete, due to differences in taxation both direct and indirect. romania, as eu member, must meet regulations imposed by the stability and growth in multilateral coordination of economic and fiscal policies to develop programs as sustainable convergence. bibliography 1. ed. polirom, ia procesul bugetar public al. i. cuza 4. ed. 5.***** program de guvernare pe perioada 2005 6. ***** 7. www.ccir.ro/ader sistemul fiscal în românia; studies and scientific researches economic edition, no. 15, 2010 17 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 142 evolution of the eu organic food market after 2010 laura cătălina ţimiraş “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract this paper presents the evolution of the organic food market at eu level, as well as its place in the world. market size was highlighted based on the retail sales of organic food indicator, and the consumer penetration rate of this product category was assessed by retail sales of organic food per capita. europe is the second largest market in the world for organic food, out of the total, 91% being related to eu member states (in 2015). in the last few years, the analyzed market has seen increases in eu countries, with differences between them, both in terms of dynamics and consumption intensity (old eu members far outstripping the new ones on this indicator). despite the positive evolution, the analyzed market remains a market with a huge potential for development, still untapped, the penetration of organic food consumption still being at a low level. keywords organic food, market, european union, retail sales, evolution jel classification m31, m39, c10 the emergence and development of organic agro-food products is a consequence of public awareness of the role that food has on the health of the population and, implicitly, of raising consumer concerns for their own health, corroborated with the government’s policy of sustainable development, amid the exacerbation in the last decades of nutrition illnesses caused by inadequate nutrition. according to eu legislation, organic (ecologic or bio) food can be labeled as organic only when at least 95% of ingredients are organic. thus, according to council regulation ec no. 834/2007 on organic production and labelling of organic products, organic production is an overall system of farm management and food production that combines best environmental practices, a high level of biodiversity, the preservation of natural resources, the application of high animal welfare standards and a production method in line with the preference of certain consumers for products produced using natural substances and processes. certification of organic products has many advantages for both producers and consumers. lohr, l. (1998) identifies three functions: guarantees to consumers that the certified product, which has no observable differences compared to non-organic products, has been grown, processed and packaged in compliance with the rules limiting or prohibiting the use of synthetic raw materials and protecting the environment; ensures producers that illegal use of the organic term (by competitors) does not deprive them of the use of premium prices and of obtaining market shares that can be generated through certified products; evolution of the eu organic food market after 2010 143 increases market efficiency by reducing contradictory information along the marketing channel from manufacturer to consumer. the evolution of the global organic food market the global organic food market in 2015 reached more than 75.7 billion euros, representing average purchases per person of 10.3 euros. north america is the region with the highest average spending per person, followed by europe, but at a considerable distance (on average 100 euros spent in north america for organic food, 33.8 euros are allocated in europe with the same destination). (table 1) table 1. the global organic food market, in 2015, on world regions region retail sales (million euro) retail sales per capita (euro / person) africa 17 n.d asia 6255 1,5 europe 29781 36,4 latin america 31 n.d. northern america 38539 107,7 ocenia 1085 27,6 world 75709 10,3 n.d. – no data source: fibl -ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture. statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 41). according to data for 2015, the largest organic food markets in the world are: usa (holding 47.3% of the world market), followed by germany with 11.4%, france and china (under 10%). (figure 1) over time, between 2010 and 2015, the largest expansion of the organic agri-food market was recorded in china (an increase of approximately 6 times), which in fact led to its entry in 2015 among the top 5 countries in terms of analyzed market size. in the other countries at the top of the list (except for sweden, where over 5 years the organic food market has increased more than 2 times), the increases were below 100%. table 2. the ten countries with the largest organic food markets, in 2015 and compared to 2010 country retail sales (million euro) / + in % in 2015 compared to 2010 2015 2010 usa 35782 20155 77,5 germany 8620 6020 43,2 france 5534 3385 63,5 china 4712 791* 495,7** canada 2757 1904 44,8 united kingdom 2604 2000 30,2 italy 2317 1550 49,5 switzerland 2175 1180 84,3 sweden 1726 804 114,7 spain 1498 905* 65,5** *data for 2009; ** / + in 2015 compared to 2009 source: taking over and processing after:fibl-ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture, statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 41); fibl survey 2012, in willer, helga and lukas kilcher (eds.) (2012): the world of organic agriculture, statistics and emerging trends, 2012. fibl-ifoam report. research institute of organic agriculture (fibl), frick and ifoam, (table 12). țimiraș 144 figure 1. total share of the ten countries with the largest organic food markets in 2015, in the global organic food market source: adapted after: fibl-ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture, statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 41); referring to average spending per capita, a more relevant indicator for assessing the level of development of organic food markets, switzerland is the country with the highest global value (more than 25 times higher compared to the global average and over 7 times higher than the european average, according to data for 2015). table 3. the ten countries with the highest per capita retail sales of organic food product in 2015 and compared to 2010 country retail sales per capita (euro / person) / + in % in 2015 compared to 2010 2015 2010 switzerland 262 153 71,2 denmark 191 142 34,5 sweden 177 86 105,8 luxembourg 170 127 33,9 liechtenstein 142 100* 42,0** austria 127 118 7,6 usa 111 65 70,8 germany 106 73,6 44,0 france 83 52 59,6 canada 77 57 35,1 *data for 2009 ** / + in 2015 compared to 2009 source: taking over and processing after: fibl-ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture, statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 41); fibl survey 2012, in willer, helga and lukas kilcher (eds.) (2012): the world of organic agriculture, statistics and emerging trends, 2012. fibl-ifoam report. research institute of organic agriculture (fibl), frick and ifoam, (table 12). the evolution of the eu organic food market by subscribing to the global trend, the size of organic food markets and average per capita spending on such products have grown in recent years in eu countries. the eu 47.3 11.4 7.3 6.2 3.6 3.4 3.1 2.9 2.3 2.0 0 10 20 30 40 50 u s a g e rm a n y f ra n c e c h in a c a n a d a u n it e d k in g d o m it a ly s w it z e rl a n d s w e d e n s p a in % evolution of the eu organic food market after 2010 145 organic food market amounted to more than 27 billion euros (91% of the total european market) in 2015, of which 98% belong to the old member states. average spending per person has surpassed more than 5 times the world average, but this outpouring is specific only to the old members, with the countries in the old communist bloc far below average (around half of the world average). compared to northern america, the region where organic food has the largest penetration in consumption, the average eu consumption is only around 50%. table 4. the eu organic food market in 2015 region retail sales (million euro) retail sales per capita (euro / person) european union, din care: 27107 53,7 eu 15 26586 65,9 the new member states 521 5 source: fibl -ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture. statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 59). confirming the above-mentioned idea, it is noted that in the old eu member states, average spending per capita ranged between € 30 and € 191 (except for portugal), while in the new member states they were below € 30 (table 5). this can be explained both by economic and cultural differences between the two categories of countries, such as: the purchasing power of the population, the knowledge of consumers about the impact of diet on the state of health and the importance given to them, exigence regarding the products on the market etc. table 5. the organic food markets of eu countries, in 2015 and 2010 country retail sales / + in % in 2015 compared to 2010 2015 2010 retail sales retail sales per capita million euro euro / person million euro euro / person austria 1065 b) 127 b) 986 117,8 belgium 514 45,7 421 38,8 22,1 17,8 bulgaria n.d. n.d. 7 0,9 croatia 99 d) 23,4 d) 69,2 15,6 43,1 e) 50,0 e) czech republic 74 d) 7 d) 59 7,4 25,4 e) -5,4 e) denmark 1079 190,7 791 142,2 36,4 34,1 estonia n.d. n.d. 11,8a) 8,8 a) finland 240 43,9 80 14,9 200,0 194,6 france 5534 83,3 3385 52,3 63,5 59,3 germany 8620 105,9 6020 73,1 43,2 44,9 greece n.d. n.d. 60 5,3 hungary 30 3 25 a) 2,5 a) 20,0 f) 20,0 f) ireland 142 30,7 103,2 23,1 37,6 32,9 italy 2317 38,1 1550 29,8 49,5 27,9 latvia 4 b) 2 b) n.d. n.d. lithuania 6 b) 2 b) n.d. n.d. luxembourg 94 170 65 127,5 44,6 33,3 netherlands 1072 63,4 656,5 39,6 63,3 60,1 poland 167 4,4 58,9 1,5 183,5 193,3 portugal 21 b) 2 b) 21 2,1 romania 80 b) 3,7 b) 45 2,1 țimiraș 146 slovakia n.d. n.d. 4 0,7 slovenia 49 c) 26,6 c) 38 18,6 spain 1498 32,3 905 a) 19,5 a) 65,5 f) 65,6 f) sweden 1726 177,1 803,8 86,1 114,7 105,7 united kingdom 2604 40,2 2000 32,2 30,2 24,8 european union (28 countries) 27107 53,7 n.d. n.d. europe 29781 36,4 n.d. n.d. n.d. – no data dynamics was calculated for periods of at least 4 years a)data for 2009; b) data for 2011; c) data for 2013; d) data for 2014; e) / + in % in 2014 compared to 2010 f) / + in % in 2015 compared to 2009; source: taking over and processing after fibl-ami survey 2017, in willer, helga and julia lernoud (eds.) (2017): the world of organic agriculture, statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017 (table 66); fibl survey 2012, in willer, helga and lukas kilcher (eds.) (2012): the world of organic agriculture, statistics and emerging trends, 2012. fibl-ifoam report. research institute of organic agriculture (fibl), frick and ifoam, (table 58). analyzing the dependence between average spending per capita and gross domestic product at market prices in some of the eu countries for which we have data, we see a direct link; of the average expenditure variation in the 16 countries surveyed, almost 50% being determined by the gross domestic product variation. note that by checking the statistical significance of the relationship between the two variables with the fisher test, it was found that this is significant for a significance level of 5%. (table 6 and figure 2). y = 231,9x + 19961 r² = 0,4946 r = 0,703 0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000 0 50 100 150 200 g ro s s d o m e s ti c p ro d u c t (e u ro / p e rs .) retail sales of organic food (euro / pers) figure 2. relationship between retail sales of organic food (euro/pers) si gross domestic product at market prices (euro/pers) in some ue countries* in 2015 *belgium, croatia, czech republic, denmark, finland, france, germany, hungary, ireland, italy, luxembourg, netherlands, poland, spain, sweden, united kingdom, for which we have data. for croatia and czech republic, data is for 2014. source: adapted after fibl-ami survey 2017 (for data regarding retail sales of organic food) and eurostat, 2018 for gross domestic product at market prices evolution of the eu organic food market after 2010 147 table 6. relationship between retail sales of organic food (euro/pers) si gross domestic product at market prices (euro/pers) in some eu countries* in 2015 countries regression equation coefficient of determination (r2) correlation coefficient (r) calcula ted fvalue signific ance level theoretic al fvalue european union (eu – 28) y = 231.9x + 19961 49.46 0.703 13.7 0.01 8.86 *belgium, croatia, czech republic, denmark, finland, france, germany, hungary, ireland, italy, luxembourg, netherlands, poland, spain, sweden, united kingdom, for which we have data. for croatia and czech republic, data is for 2014. source: adapted after fibl-ami survey 2017 (pentru datele privind retail sales of organic food) and eurostat, 2018 for gross domestic product at market prices although characterized by a rapid growing, population consumption of organic food remains at a low level. for example, in denmark, the country with the highest level of organic spending at eu level, in 2015, the share of organic food in total food sales in retail stores was estimated (ekoweb estimates) at just 8.3%. however, it is worth noting that this share is increasing, in 2010 the indicator was 5.7%. (statista, 2018). also, in the same year, in germany (another country for which we have data) organic share of the total food market was 4.78% (http://orgprints.org, 2018). there are many reasons behind the limitations in the growth of the organic product market. thus, according to the study published in denmark, italy and the united kingdom by jensen, k., denver, s., zanoli, r. (2011), with data for 2006 and 2007, some of the reasons behind the slow increase in demand for organic products are: (higher) prices for some of these products, but also the poor or even the nonexistence of organic products for certain categories of food; (barriers for those who regularly consume organic products); lack of confidence in organic farmers, low importance for healthy eating and / or lack of knowledge of organic food (barriers to the occasional or nonconsumers of organic products). strengthening the last idea presented, the study carried out in 6 european countries by zander, k., padel s., zanoli r. (2015) shows a low level of knowledge of the european ecological logo (introduced in 2010); of the total of 3,000 respondents, only 15% of them knowing the significance of that logo. it is obvious that in the absence of knowledge of the benefits of organic products consumption and / or their recognition (via the logo), the possibilities for extensive market growth are practically limited. conclusions responding to the orientation of more and more consumers to a healthy diet, the eu organic food market has seen a positive development in recent years. however, the statistical data shows that the average consumption per capita for this product category is kept at a low level, with a huge potential for development now. starting from the results of an eu study (presented above) that identified many factors justifying the relatively low consumption of organic food, we can appreciate that the diversification of the range, the intensification of the media coverage of the characteristics of these products and their impact on health and finding solutions for price hikes are lines of action with potential effect in the expansion of this market. țimiraș 148 references harja e., ţimiraş l.c. (2009), metode statistice utilizate în cercetarea de marketing, bacau, editura alma mater helga, w., lernoud, j., (eds.) (2017): the world of organic agriculture, statistics and emerging trends 2017. research institute of organic agriculture (fibl), frick and ifoam – organics international, bonn. version 1.3 of february 20, 2017, available at: https://shop.fibl.org/chen/mwdownloads/download/link/id/785/?ref=1 helga, w. and kilcher, l. (eds.) (2012): the world of organic agriculture, statistics and emerging trends, 2012. fibl-ifoam report. research institute of organic agriculture (fibl), frick and ifoam, available at: https://shop.fibl.org/chde/mwdownloads/download/link/id/785/?ref=1 lohr, l. (1998), implications of organic certification for market structure and trade, american journal of agricultural economics, 80 (number 5, 1998), pp 11251129, available at: http://www.jstor.org/stable/1244216 jensen, k., denver, s., zanoli, r. (2011), actual and potential development of consumer demand on the organic food market in europe, njas wageningen journal of life sciences, volume 58, issues 3–4, december 2011, pages 79-84, available at: https://www.sciencedirect.com/science/article/pii/s1573521411000066 zander, k., padel s., zanoli, r. (2015), eu organic logo and its perception by consumers, british food journal, volume: 117, issue: 5, 2015, available at: https://www.emeraldinsight.com/doi/full/10.1108/bfj-08-2014-0298 agricultural market information company (ami) (2017), the organic market in germany-highlights 2016, diana schaack,, biofach, nürnberg (available at: http://orgprints.org/31200/7/schaack-2017-organic-market-germanybiofach2017.pdf) council regulation ec no. 834/2007 on organic production and labelling of organic products, available at: https://eur-lex.europa.eu/legalcontent/en/txt/?uri=celex%3a32007r0834 eurostat, 2018, available at: http://ec.europa.eu/eurostat statista inc. 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romania ready for adopting euro? mihai rebiga university “ , romania abstract the common monetary policy is applyed in all member states of the economic and monetary union (emu), having a common institutional system, common european currency and system of regulations that helps them coordinate the banking activities in all emu. the application of this policy has brought remarkable results so far, settling the monetary market in the euro zone. but, the new european union member states have to apply these common rules and regulations in order for them to accede to emu, which could produce both positive and negative effects, especially given that most of their economies are not yet ready for this king of changes. it is romania’s situation as well, having had the target set on acceding this by 2014. but is the romanian economy ready for such a change? and how close is romania to achieving the convergence criteria? key words economic and monetary union, euro adoption, monetary market, financial crisis, convergence criteria, monetary policy jel code: e58 introduction at the time of inclusion in the community, the medium and long term target of the new eu member states is to achieve a level of integration as close to maximum as possible, political integration being the main expected purpose of all european countries. but this latter stage has not yet been reached, so monetary integration becomes the intermediate target in order to find a solution for the political integration. throughout the paper we shall analyze the opinions of several experts on the introduction of euro in countries that currently enjoy the common monetary policy, effects that were expected before joining the euro zone and later effects. we shall also analyze the context of the present romanian economy, the current financial crisis’ effects on the monetary and currency market, inflation and achieving the convergence criteria at this level. the ultimate goal is to determine whether romania is ready to introduce the single european currency and thus the common monetary policy implementation and establishment of possible effects that may arise from this, if the national bank of romania is ready to go under the tutelage of central bank europe as part and to subordinate its monetary policy and the effects that this might cause the subordination of the fragile romanian economy. for this, the paper is structured as follows: section 2 presents the current context of the romanian economy. section 3 examines how the common monetary policy was implemented in the newest economic and monetary union member states. section 4 combines the current romanian economy context with the present emu member states opportunities. section 5 presents a view of how the convergence criteria are being met or have any chance of being reached by the romanian economy and what the measures needed to be taken by the authorities. section 6 concludes the analysis by fixing the results of the possible adoption of euro by romania. studies and scientific researches economic edition, no. 15, 2010 128 the present economic context in romania since the exchange rate liberalization in 1997, the monetary market in romania was passed to free floating exchange. moreover, in 2001, the currency market in romania was changed by introducing the margins creeping courses, with a band width of ± 5%1. since 2005 the foreign exchange market in romania has suffered a major reform, changing the strategy of exchange rate stability targeting with the inflation targeting objective. thus, the central bank of romania is currently addressing the price stability by intervening on the market through measures to limit the amount of currency in circulation while trying to encourage investment on the romanian capital market. however, the privatization of the banking system was attempted in order to encourage the market competition, which would lead to a more attractive interest rate for investors. the monetary authority's policy worked very well until recently. unfortunately for the romanian economy, the upward trend that was induced by the encouraging policies practiced by the central bank was interrupted by the confrontation with the new economic context, the financial crisis that emerged in the world in 2007, with severe adverse effects on the romanian economy. in this context the pressure felt by the central bank led to the reduction of minimum reserve ratio due to the lack of liquidity on the market. if reducing the minimum reserve amounts in lei had no negative effects, but rather to help market operators, for foreign currency amounts the impact has almost been catastrophic. in these new circumstances, the commercial banks withdrew large sums from the market, returning them to the parent banks above, that had brought large amounts of currency in the national economy after buying the old romanian banks. moreover, the political class carries a strong negative influence on the economic environment. in october 2009 the dismissal of the romanian government caused a strong shock on the market, leading to currency depreciation by about 5% within only 3 days. new member states of emu evolution greece, slovakia, slovenia and portugal use euro in circulation, being among the euro area countries, but in the years preceding their accession to the area, the unemployment rate in these countries was very high. thus, by 20042, the unemployment rate reached the threshold of 8% in portugal, exceeded this threshold in greece and 12% in slovakia and slovenia. under these circumstances the unemployment rate in romania, which in 2009 was forecasted by the nbr to be 8%3 and in reality it reached the level of 7.8%4 no longer seems as alarming. also, during the same period, the rate of inflation in the listed countries hover around 10%. if these values relate to the current situation in romania we can conclude that, even during the current economic crisis, it no longer seems quite as serious. we can then determine the entry of the single currency target in the close future periods. the states that have already adopted the single european currency are divided into two categories in terms of exchange rate arrangements. thus, france, belgium, netherlands, luxembourg, austria and denmark have succeeded in the period before the introduction of euro a relatively fixed maintain course towards the german currency. however, there is also the second camp, which includes countries like italy, britain, ireland, portugal and spain that 1 cuaresma, c. j., fidrmuc, j., silgoner, m.a. (2008), maria antoinette silgoner fundamentals, the exchange rate and prospects for the current and future eu enlargements: evidence from bulgaria, croatia, romania and turkey, empirica, 35, p. 198 2 babecký, j. (2008), aggregate wage flexibility in new eu member states, auco czech economic review, 2, p. 130 3 2009, national bank of romania, p. 64 4 buletin lunar studies and scientific researches economic edition, no. 15, 2010 129 opted for a devaluation of currency that can help maintaining exchange ratio within ± 15%, so a relatively high margin of fluctuation. furthermore, italy and britain have come at certain times of erm leaving loose speculation on the currency market5. in this situation, the inflation ratio in romania in the recent years is not very alarming, even though some of the most developed countries in eu have announced that they have exceeded the global financial crisis, romania remained behind at this point. during the 90s, the greek monetary policy was focused on achieving the level of inflation set by the maastricht treaty. thus, the central bank based its intervention policy on the interest rates and its binding to the other member states registered rates, for a more simple coordination of price stability. in these circumstances, the national bank of greece, managed to bring the economy on a positive trend and the results were favorable, exceeding many economists’ hopes. the inflation rate suffered an interesting development during the year pre-accession the emu inclusion. thus, it decreased in the years before it: 4.5% (1998), 2.1% (1999), 2.9% (2000) and in the year of inclusion, in 2001 it rose to 3.6%.6 there is however an interesting trend in the inflation rates in states which joined the euro zone, meaning that they have dropped in pre-inclusion years, following a slight increase of this indicator in the first year of single currency. we speak here of portugal which experienced an evolution as follows: 1.9% (1996), 2.2% (1998), 2.1% (1999), 2.8% (2000)7, the last one being the year of adoption of the single currency, or slovakia, where the inflation level reached 4.4% (2007), 2.8% (2008), 4.6% (2009)8. in romania, the monetary policy practiced by nbr produced the expected results, and even more, in the years before the world financial crisis started manifesting went down even more than most optimistic economists expected, reaching below 5%, specifically at 4.8%, bringing us even closer than the achievements of the greek economy. however, the inflation rate for 2009 increased up to 7.8% and unfortunately continues suffering frequent changes. the 2001-2007 range produced a positive turn for the rapidly developing european countries, and the convergence rates achieved by these countries were generally higher than in previous periods. it the situation of czech republic, followed by slovakia and slovenia, while poland has a much lower level. romania and emu in the new economic climate economic and monetary union should learn from the past and try to pass over the obstacles that were faced by the old monetary unions, which reached the end of their existence. however, compared to them, emu has several advantages which hopefully are to be exploited in a favorable way. for example, it is neither a purely international monetary union, nor a national one since the transfer of sovereignty is incomplete9. a critical in the single monetary policy is played by the convergence criteria, required to be met by the states that want to incorporate in the euro area. thus, price stability, convergence interest rate, exchange rate stability and budgetary discipline are of main importance and priority for any such state. joining the emu has several inconveniences of which the most important ones are losing the autonomy of the monetary and fiscal policy. for a state in development as is the case of romania, it may have beneficial effects on one side and adverse effects on the other. perhaps the negative side predominates, both in the conditions in which the romanian economy has 5 antal, j., holub t. (2007), exchange rate arrangements prior to euro adoptio, auco czech economic review, 3, p. 314 6 http://www.indexmundi.com/greece/inflation_rate_(consumer_prices).html 7 http://www.indexmundi.com/portugal/inflation_rate_(consumer_prices).html 8 http://www.indexmundi.com/slovakia/inflation_rate_(consumer_prices).html 9 bordo, m., james, h. (2008), a long term perspective on the euro, economic papers, 307, p. 27 studies and scientific researches economic edition, no. 15, 2010 130 recorded upward trend based on state intervention on fiscal policy and especially the central bank’s interventions in the monetary policy. thus, “triangle of inconsistencies” as i called sahoko kaji in 2004 in his the euro, the enlarged eu and asia is being shaped, triangle composed of three goals: monetary policy autonomy, exchange rate stability and free movement of capital. these three objectives of the emu can not be achieved simultaneously. this could cause instability, imbalance, with negative effects on an economy like that of romania, knowing that the whole movement of capital was coordinated by the monetary policy pursued by the nbr. most capital inflows in the 2005-2007 period, so before the beginning of the financial crisis, was based on amounts sent by the romanian workers working abroad and on speculative capital inflows into the country due to attractive interest rates. moreover, following the privatization of banks, capital inflows was relieved, even those entering large amounts in the romanian economy, attracted the highest degree of fructification and therefore better recovery of resources. however, after 2007, they began to withdraw the amounts invested on the romanian market, being forced by the liquidity crisis that the parent banks were facing. moreover, the nbr minimum reserve rate reduction policy, for the foreign currency amounts particularly, have helped to increase the amounts withdrawn from the romanian money market, thus leading to an overheating of the lack of liquidity. in romania’s case, the main problem is that of meeting the conditions of budgetary discipline. unfortunately, the policies promoted by the government for ending the financial crisis need to be explored more extensively before implementation, which did not happen with the romanian government. even more, conflicts have arisen in recent times and winding up in recent days led to a worsening economic situation. also, contracting the credit from the international monetary fund has brought new conditions and new needs in order for them to be fulfilled. the new targets, imposed by this institution, made it necessary for some changes to be made to the budget. nevertheless, increasing taxes, mass redundancies and reduced public spending by reducing the amount for productive activities encouraging are not the appropriate measures for stopping an economic crisis. in these new circumstances, the national bank is seen even more compelled to intervene in the market to counter the imbalances caused by panic induced by the events produced. the effects of eu enlargement on banking systems, of both the new and old member states should be favorable. thus, traditional banks in developed countries of the union may choose to develop their business by expanding into new member states10. the level at which domestic banks are taken over by powerful international banks is widely regarded as a favorable factor for healthy development of the banking system in any state. accordingly, after 1991 romania has targeted the banking system privatization reform for the state banks, which led to the current situation in which most banks operating in the market are either indigenous banks that were taken by international giants or branches of some such banks. so while in some countries such as bulgaria, croatia, latvia a large part of the national banks in the system have domestic capital (about 50% in the last two), in other states the level is much lower. it is poland, hungary, czech and even romania situation, where this indicator stands at around 20%, while the remaining 80% are foreign-owned banks. favorable effects were felt during the previous periods in the context of flooding local markets with capital for investment coming from outside the economy, leading to an acceleration of growth, but during the current crisis the effects were completely negative. we can talk about romania here, where significant amounts of increased liquidity have been withdrawn due to the great needs of money faced by the parent banks. the differences between the newly entered states of the union and the much older traditional states are unfortunately very high, which leads to a discrepancy in understanding the 10 passera, c. (2004), the enlarged eu: economic integration, financial development, and business opportunities for foreign banks, transition studies review, 11(3), p. 27 studies and scientific researches economic edition, no. 15, 2010 131 monetary policy needed to be implemented in both cases11, perfectly true and producing greater damage to the new states and less to the old developed ones. therefore, the standards imposed by germany and france have had negative effects on less economically developed countries. it is here where portugal has been affected by the new rules for growth and stability formulated by the two pillar states of the european union. convergence criteria indicator levels for romania as i mentioned during the previous section, the convergence criteria are: price stability, convergence rate, budgetary discipline and exchange rate stability. in the following paragraphs we will review how the levels of the specific indicators for each criterion are met. price stability as a criterion implies that the inflation rate should not exceed by more then 1.5% the average rate of the 3 member states of eu that had the best performance in this area. table nr. 1 inflation rate criterion in 2009 member state inflation rate (2009) netherlands 2.50% portugal 2.60% germany 2.70% average first 3 2.60% average eu 5.36% romania 7.80% (source: www.indexmundi.com) as can be seen from the table above the inflation rate in romania is 5.2% higher than the average inflation rate registered in netherlands, portugal and germany, which are states recording the lowest level of the indicator across the eu. moreover, the inflation registered in romania in 2009 exceeded by 2.44% the average inflation rate for all eu countries. under these circumstances we can conclude that this criterion is far from being achieved. the interest rate convergence criterion requires that long-term interest rate can not exceed the average of the recorded results within the 3 states that achieved the best performance by more than 2% in the previous year. table nr. 2 long term interest rate in the european union countries feb mar apr may jun jul aug sep oct nov dec germany 3.13 3.02 3.13 3.37 3.47 3.34 3.31 3.26 3.21 3.22 3.14 sweden 2.93 2.94 3.18 3.57 3.62 3.37 3.45 3.38 3.25 3.27 3.24 uk 3.23 3.00 3.16 3.41 3.52 3.55 3.45 3.42 3.34 3.46 3.60 average first 3 3.10 2.99 3.16 3.45 3.54 3.42 3.40 3.35 3.27 3.32 3.33 average eu 5.50 5.59 5.54 5.49 5.79 5.60 5.44 5.38 5.22 5.16 4.99 romania 8.42 9.38 9.77 8.32 11.30 11.46 11.46 11.00 9.13 8.24 8.66 (sources: ecb and european commission) 11 poghosyan, t. (2009), are “new” and “old” eu members becoming more financially integrated? a threshold cointegration analysis, international economics and economic policy, 6, pages: 279 studies and scientific researches economic edition, no. 15, 2010 132 as can be seen from the table, this criterion can not be considered done as well. the difference between the romanian long-term interest rates and the average result in 3 the european countries considered the best in this domain in the analyzed year is 5-6% instead of 2% that is the maximum admitted. a significant difference can be found from the average long-term interest in the whole union as well. in this situation the difference is smaller (2.95.6%) but still very far from the value we need. the budgetary discipline criterion involves two lines of analysis. on the one hand the budget deficit should be taken into consideration. at the end of the previous year should not exceed more than 3% of gdp and on the other hand the government debt should not exceed 60% of gdp. these values are considered good even if the results have not been the ones asked for, but they are very close to the target. the following table contains data about these indicators. table nr. 3 bugetary discipline indicators 2009 gdp government deficit public debt quantum (mil. ron) 505503.0 36400.6 148055.1 percent in gdp 100% 7.2% 29.29% (source:nbr and mfp) as we can see in the table, we are at two sides of the same rock. the public debt is lower then 60% of the gdp so this condition is met. but the criterion is far from being achieved since the buget deficit is more then 2 times bigger than it should be. the exchange rate stability criterion requires that the state willing to join emu to have been a member of the exchange rate mechanism (erm ii) for at least two consecutive years without a record of currency depreciation in this period. romania does not meet these conditions, since it is not a member of erm ii, but the authorities are expressing the desire of being included in the 2010-2012 range. conclusions throughout the paper we have analyzed the current economic context in romania, how the monetary policy were implemented before integration of new member states in emu and a comparison between the situation in these countries at these times and the current situation in romania. we can say here that the romanian economy is not currently ready for such a high step, especially when thinking about the necessity of interventions on the national money market. from the perspective of membership criteria we can be say that while before the global financial crisis started its bad influence we were located on a comfortable position, at present this can no longer be said. price stability is not met, accounting to the inflation rate increasing sharply from month to month. the interest rate convergence can not be mentioned because of the large discrepancies in the exchange rates evolution and high inflation. all these lead us to conclude that the interest rate is necessary to be raised to cover all the risks the banking sector is facing. the stability of exchange rates is affected by an accumulation of factors coming from both the political medium and the necessity of other measures needed to be imposed in order to influence the monetary policy for touching this criterion. budgetary discipline forces the state to take measures with negative effects over the national economic environment. the conclusions are simple and as clear as possible. the national bank of romania interventions by monetary policy, were in the past and are currently of a high performance, even when the facing financial crisis has aggravated the economic situation in general. moreover, the political side has negative influences on the economy, mostly through shocks produced in recent months. in these circumstances, the national bank is forced to studies and scientific researches economic edition, no. 15, 2010 133 make further efforts to stabilize the national currency due to devaluation forced population caused by panic induced by the political chaos. however, a possible implementation of the single monetary policy could have negative effects on the romanian economy at present, especially because the national bank will not have the authority to intervene on the market to defend the national currency, inflation targeting and indirectly boost economy practiced by the credit policy. the most pessimistic version of the story is that of a national collapse following the shutdown of the nbr beneficial interventions. bibliography 1. antal, j., holub t. (2007), exchange rate arrangements prior to euro adoptio, auco czech economic review, 3, pages: 312-323 2. arghyrou, m. g. (2009), monetary policy before and after the euro: evidence from greece, empirical economist, 36, pages: 621–643 3. aron, o. (2008), the impact of europeanization upon party systems in slovakia and romania, transition studies review, 15, pages: 273-280 4. babecký, j. (2008), aggregate wage flexibility in new eu member states, auco czech economic review, 2, pages: 123-145 5. belke, a., spies, j.(2008), enlarging the emu to the east: what effects on trade?, empirica, 35, pages: 369–389 6. bordo, m., james, h. (2008), a long term perspective on the euro, economic papers, 307, pages: 130 7. cuaresma, c. j., fidrmuc, j., silgoner, m.a. (2008), maria antoinette silgoner fundamentals, the exchange rate and prospects for the current and future eu enlargements: evidence from bulgaria, croatia, romania and turkey, empirica, 35, pages: 195-211 8. gärling, t., thøgersen, j. (2007), effects of the euro changeover on consumer behaviour: introduction to the special issue, journal of consumer policy, 30, pages: 303-311 9. katainen, j. (2009), bringing economic growth back to the european union, european view, 8, pages: 47–52 10. passera, c. (2004), the enlarged eu: economic integration, financial development, and business opportunities for foreign banks, transition studies review, 11(3), pages: 17-27 11. poghosyan, t. (2009), are “new” and “old” eu members becoming more financially integrated? a threshold cointegration analysis, international economics and economic policy, 6, pages: 259-281 12. ryan, c., horsewood, n. (2009), the role of banks in financial integration: evidence from new eu members, international economics and economic policy, 6, pages: 235-258 13. sahoko, k. (2004), the euro, the enlarged eu and asia, asia europe journal, 2, pages: 399-414 14. , challenges for the new eu member states on the road to the eurozone, international economics and economic policy, 6, pages: 157–177 15. buletin lunar 16. 2009, national bank of romania 17. www.indexmundi.com 18. www.mfinante.ro studies and scientific researches economic edition, no. 15, 2010 134 studies and scientific researches. economics edition, no 24, 2016 http://sceco.ub.ro 45 creating value within consumption culture daniel adrian gârdan spiru haret university, bucharest danielgardan@yahoo.com gheorghe epuran transilvania university of brașov gheorghe_epuran@yahoo.fr iuliana petronela gârdan spiru haret university, bucharest gardanpetronela@yahoo.com abstract the issue of culture consumption is a particular concern within the modern marketing theory. culture can be seen as representing a body of knowledge, beliefs, values, attitudes, symbols etc, developed in a certain period of time by a group of individuals, items transmitted with the help of a social learning process to other generations within the group. thus, the consumption of culture will identify itself with the consumption of any product, service or a combination of them, directly resulted as manifestation of culture, expressions of artistic creativity specific for a certain cultural space. the present paper proposes the analysis of the phenomenon referring to the culture consumption in terms of specific characteristics. the paper reviews the features specific to the modern consumer of culture, the relationship that exists between the individuals’ level of education and the culture consumption and value creation process or augmentation of the intrinsic value of an artistic product as a result of the contribution that the culture consumer can bring himself. the authors highlight the fact that within extremely complex processes which are defining the culture consumption, consumers can assume an active role, becoming on their turn co-participants in the cultural goods and services value creation and transmission. the modern consumer benefits more than ever from the advantages offered by the information technology, being called to respond to major challenges of the postmodernism paradigm in terms of culture consumption. globalization and other social economic and politic phenomena have profoundly changed the reports between individual and culture, between self and other members of the society, causing synthesis and essential transformations of culture consumption, of culture consumers typologies, and not least of the very forms of artistic expression related to cultural goods and services. keywords consumption culture; cultural marketing; value co-creation jel classification m31; z10 nowadays culture consumer, defining elements and specific features each consumption process bears the imprint of characteristics determined by the specific features of different types of consumers and in the same time because particular elements of the consumption object – products and services concerned. consumption of culture will also be strongly influenced by a complexity of factors, among the most important ones being the characteristics demand agents consumers. culture consumers represents a particular type of consumer who developed throughout civilization history a peculiar relationship with factors of social, economic or political nature. thus, both its features and its involvement in consumption have experienced a strong dynamic transformation caused by the last century changes. creating value within consumption culture 46 examination of some de-monopolization processes and ranking of some predefined legitim cultural enclaves, that have reached a level of declassification within the west civilization is necessary (dimaggio, 1987). thus, the society in which the consumers are expressing themselves has become essentially a cultural one, since the social life has become less regulated and the social relations have become more variable and less structured on the basis of stable norms. overproduction of signs and reproduction of images and simulations has led to a loss of the stable sense and to a aesthetization of reality. high level of cultural goods consumption (like art, novels, opera, philosophy), must be correlated with the ways in which other mundane cultural goods (clothing, food, drinks, cultural destinations) are handled and consumed, as high culture has to be marked in the same space as the quotidian cultural space. figure 1. components of culture source: khan martin (2006), consumer behavior and advertising management, new delhi: new age international limited publishers, p. 35 consumption preferences and lifestyle are involving discriminatory judgments that are simultaneously are identifying and are permitting classifications for their own judgements or tastes over others. particular constellation of tastes, consumption preferences and practiced lifestyles are associated with specific occupations and segments of social classes, making possible to investigate the universe of tastes and lifestyles with all its structural oppositions and fine distinctions that are operating within a society in a particular time in history. knowledge becomes important, namely knowledge of some new products, of their social and cultural value and how to use them properly. this situation is encountering especially in case of aspirational social groups which are adopting a way of learning regarding consumption and respectively cultivation of a certain lifestyle. for groups like the one that has as name – the new middle class, new working class or the new wealthy class or upper one, magazines, newspapers, books, radio and television programs which are focusing on self-development, personal development, capacity of self – managing, networking, building a fulfilled lifestyle are the most relevant. also in the case of these social groups we can met most frequently self-consciences of the autodidact which is preoccupied to send the proper and legitimate signals through its consumer activities. culture internal level of culture – on mental level (ideas, knowledge, concepts) material external culture (objects that can be seen, touched, used in day by day life, examples: art, music, theatre, clothing, living places, books, etc.) cognitive component elements, the belief in afterlife, ideas, knowledge, the belief in supernatural powers normative components, values, customs, norms that are regulating behaviors gârdan, epuran, gârdan 47 this could be the case especially with the group which bourdieu and passeron referred in 1984 as being” new cultural intermediaries”, those persons that are working in the field of media, design, fashion, advertising and other ”para” intellectual jobs, whose occupations involve performing certain services and production, marketing and dissemination of symbolic goods. under the given circumstances, of a growing symbolic goods offer (touraine, 1985), the demand for cultural specialists and intermediaries who have the ability to poke various traditions and cultures in order to produce symbolic new goods and to offer also the needed interpretations for their use, has also increased. the process of life aesthetization in parallel with the celebration of the artist as a hero and the stylization of life under the form of an artwork – these brining expressiveness to the project initiated by artist and respectively to that lifestyle has found echoes within a wider audience, beyond the artistic and intellectual circles through the expansion of occupational groups specialized in symbolic goods that act simultaneously as producers/ disseminators and concerned consumers/audience for cultural goods. the expansion of “new cultural intermediaries”, as bourdieu and passeron calls them, involved a broadening of the range of legitimate cultural goods and felling some of the oldest symbolic hierarchies. new tastes creators are constantly looking for new cultural goods and experiences and are also involved in the creation of popular pedagogies and guides related to lifestyles. they encourage a constantly inflation of cultural goods, drawing on the basis of trends having an artistic intellectual inspiration and it contribute to creating new artistic and intellectual production conditions working alongside them. the new intermediaries can be found in jobs oriented towards the cultural consumption market – mass-media, advertising, design, fashion etc., and in other government or private financed jobs referring to professional, educational counselling and therapy. they are fascinated by identity, aspect, presentation, life-style and endless search for new experiences. also, they are actively promoting and transmit the life-style of intellectuals towards a larger public and they are conspiring with intellectuals in order to legitimize new fields, such as sport, fashion, traditional music and culture as valid intellectual analysis fields. their habits, moods and preferences related to lifestyle are such in a way designed that they are identifying with artists and intellectuals, however, with the condition of demonopolization of their artistic and intellectual goods enclaves, while having in the same time interests apparently contradictory to support prestige and cultural capital of these enclaves and to popularize and make them more accessible to a wider audience. this part of the new middle class (cultural specialists and intermediaries to which we have already referred), which also include those from the counterculture that have survived from the 60” s and those who have taken elements of their cultural images in different contexts, represents a disturbing group for old petty-bourgeois virtues and cultural mission of "thatcher-ism". thus, it becomes more difficult to capitalize productive efforts of this group of specialists in expansion in terms of the message about these petty-bourgeois virtues and the cultural order associated to them. the expansion of the art market and the increasing volume of artists and those with auxiliary occupations, especially in metropolitan centers, plus the use of art as a vehicle for public relations by large corporations and the state alike, have resulted in significant changes of the role that the artists have. (zukini 1982). many artists have given up their commitment to high culture and avant-gardism and adopted a more open attitude toward mass consumption culture, manifesting now a desire to collaborate with other culture intermediaries, image creators, audiences and creating value within consumption culture 48 publics, taking place a blurring of genres and trends related to the deconstruction of symbolic hierarchies. therefore, advertising and design have not only come to confuse with art but they are even celebrated and exposed in museums as art. as stephen bayley noted (1979, p. 10): industrial design is the art of the 20th century – also quoted by forty in 1986. at present, the current consumer of culture presents an interesting picture, characterized by a strong dynamism and substantial changes in terms of consumer behavior, content of preferred cultural products and services and relationships they develop within the processes of consumption. current consumer of culture is extremely complex being a person completely free of old class cultures, unpredictable in terms of tastes, in continuous search of emotional and hedonic experiences, concerned about the quality of life, about authenticity. (lipovetsky, 2006). in this way, cultural institutions face a consumer that is more affective, which adopts a powerful decision-making process, shaped by circumstances, distancing themselves from individualism and seeking to strengthen social ties within groups or communities. (bourgeon-renault, 2009). the audience lives increasingly more different cultural experiences under the sway of cultural consuming logic that appeals to educational, aesthetic or playful character, using a mixture of cultural genres. (lahiri, 2004). people seek fulfillment forms through art, corresponding to their own level of understanding. the need of fulfillment starts from the alienation process the contemporary individual have lived and that is representing also a very important factor that influences consumption of culture. the alienation started from the estranging of the individual final toward the result of his work. thus, the lack of respect that is induced by such a state, stereotypy and conformism manifested in the lives of many, are going hand in hand towards the emergence of a growing needs related to the consumption of art, culture. daily poor emotional experience results in the manifestation of the need to involve. art, through its various forms of expression can flourish indefinitely by the emergence of new and new ways of artistic expression (music and theater, dance and circus performances etc.), making it possible to satisfy the most varied needs of aesthetic and emotional nature. the way people are consuming culture, is representative for individuality expressing of each person. social groups that have higher levels of education and better material endowment consciously reject mass conformism. thus, generally, in terms of consumption are easily assimilated with innovative exotic products and services, and in terms of culture consumption is noted an increase interest in vanguard literature, music and fine arts. as individuals accumulate more material prosperity, this trend is increasing and although in the case of unusual, exotic, "break the rule” goods and services the number of options is generally limited, for cultural products or services the situation is different. art, thanks to the extremely diversified variants of expression, we can say practically inexhaustible, offers opportunities for every individual to express his uniqueness. from a psychological point of view, motivations that are behind the consumption of art can be assimilated to profound reasons related to the discovery and affirmation of their identity, the personality of each. engaging not only from the perspective of art product or service consumer, but also of the participant, amateur art creator, offers the opportunity to explore their means of artistic expression and finding their identity. from another perspective, the consumption of art can provide stability for the people that are feeling that everything happens with an accelerated dynamic around them. this culture consumption is an act which identifies the individual with a millenary tradition of excellence. another view presupposes the ability of art to satisfy the need gârdan, epuran, gârdan 49 for intellectual and emotional stimulation of individuals. symbols can engage the human psyche on multiple levels simultaneously. (a. toffler, 1997) broadly, the need to express social status or success based solely on material accumulation, of possessions, is exceeded currently by the trend to reject this materialism and to replace it with individual self-realization. achieving social prestige through consumption became too easy and pointless for many representatives of modern social classes. thus, are becoming interesting intellectual activities, refining aesthetic sense, involvement in voluntary activities etc. free time dedicated to achieving individual goals, personal development and involvement in intellectual experiences becomes a common thing. influences exerted at the level of culture consumption from the perspective of education level alvin toffler noticed in his book” the culture consumers” the special bond between the level of education and the degree of culture or the appetite of individuals to become culture consumers. thus, everything starts from the idea that the ability to appreciate qualitatively art is closely linked to the existence and manifestation of abstract thinking of individuals. this capability is based on the ability to abstract, skill developed in the modern educational systems. (toffler, a., 1997) the adult’s ability to abstract is learned and developed with each new effort. it produces a state of auto stimulation; education level becomes relevant to the ability of individuals to appreciate more possibilities for expression in a particular field. thus, people without high levels of education, with a more modest intellectual endowment are largely preoccupied with practical aspects of everyday existence, and tend to appreciate forms of artistic creation having a questionable quality sub-art. these forms involve a very simple artistic language, language that the individual concerned fails to decode and can it be identified with, more easily. people that are evolving psychologically and have a greater capacity to abstract things, even in direct relation to their own lives, will become high quality genuine art consumers, with forms of artistic expression capable of abstraction at the same level. developing aesthetic taste is directly related to the educational process and to the high level of income. at eu level, the involvement of consumers in the consumption of culture presents an eloquent situation in terms of these correlations, according to the statistics in figure 2. the most widespread activity watching or listening to a cultural program tv or radio, is most prevalent among those aged 40 years and above, with 42% percent of those aged 55 years and older who had a frequency of 5 times per year in the past year compared with 35% of those in the 15-24 range. in terms of education level, those who studied beyond the age of 19 or who were still studying at the time of the research, are also more likely to watch or listen to cultural programs. 54% of those who graduated over the age of 19 accomplishes this by more than 5 times in the last year. also, respondents from the socio-professional category of managers were most likely to watch or listen to cultural programs, 53% of them stating that they have done this for more than 5 times in the last year, compared with only 28% of housekeepers. at the level of the barometer, the same can be said about reading books education being the strongest predictor for reading books, with 51% of people who studied after 19 years and 48% of those who were studying at the moment of research having read more than 5 books per year. predictably, in terms of occupation, managers and students were the categories that have the highest frequency of reading books 59% of managers and 48% of students read more than 5 books in one year. creating value within consumption culture 50 figure 2. distribution of cultural activities in which eu citizens are implying, comparison 2007-2013 source: european commission, (2013), special eurobarometer 399 – cultural access and participation, european, http://ec.europa.eu/public_opinion/archives/ebs/ebs_399_en.pdf as for other cultural activities considered by the research team which conducted the poll visit a public library, going to the cinema, the percentages of those with higher education levels were significantly higher than the other categories. also for visiting historical monuments or locations of that kind it was revealed a much greater participation of people with a higher education level 20% and 17% for people who have studied the secondary or tertiary level compared to 4 or 8% of the ones from the categories with primary study levels. museums received the same results with percentages of 12% for people who are still studying and 9% for those with secondary level compared to 2% or 4% for those with primary level. ballet, opera and dance performances were preferred by people with higher and average education and in the proportions of 26% and 29% compared to 7% of the category with lower levels of education. the correlations made between reasons for not participating in activities related to cultural consumption and variables related to age, level of education and income have revealed that young people have claimed that lack of interest is the main reason for not going to the opera or ballet 60% of those aged between 15 and 24 years, compared with 48% of those in other age groups. the level of education is again highlighted in terms of the reasons for non-use. those who left school before 16 years of age are predisposed to cite lack of interest as the main reason for non-consumption for most of the important cultural activities visiting public libraries, going to the theater, opera or ballet, museums etc. the study also has revealed that, for most cultural activities planned, people with higher levels of education tended to cite lack of time as the main reason for non-use. lower level of education showed a cultural consumption behavior different from cultural events in other european countries visits to historical sites, cultural, reading a book by foreign authors, going to theater or ballet groups, respondents with higher educational level being more highly sensitive involved in these cultural experiences abroad. one of the most important aspects related to the consumption of culture and creating added value for the consumer is represented, as highlighted earlier, by the degree of involvement of the people in cultural artistic activities. gârdan, epuran, gârdan 51 from this perspective, the study cited eurobarometer 399, revealed that a small minority is directly involved in cultural activities art, at the first place being dance with 13%, followed by photos or shooting 12%, interpretation songs 11%, various activities sculpture, painting, drawing or handcrafting 10%, playing a musical instrument 8%, making websites or artistic blogs 8%, composing poetry, writing novels, etc. 5% and acting in amateur theater teams 3% (eurobarometer 399, 2013, p. 49). education is a discriminatory factor in relation to involvement in artistic activities, people that are still studying having a rate of 61% of engagement in these activities compared to 48% of those with secondary education or 20% of those with primary level education. people with lower levels of education are less involved in activities like playing a musical instrument (2%), singing (6%) dancing (8%) or writing (1%). as a general conclusion, people with a high cultural index are people with a stronger engagement in activities of artistic creation. respondents who studied more are much likely to say that lack of time is the reason for not participating more in arts activities, while those who leave education earlier are more likely to say they are not interested in these activities. promoting interest for culture within an organized framework offered by the school is the condition for subsequent increased participation of adults to the consumption of cultural goods and services. using the same special eurobarometer 399 was shown that using the internet can be an element that will change the way in which the consumption of culture will evolve in the future. 56% of europeans use the internet for purposes related to culture, 30% of them doing that once a week. among the activities connected with culture, 53% relate to reading newspapers, 44% search for cultural information and 42% listening to online radio stations or music. eurobarometer was conducted on a representative sample of 15 european union member states between april 26 and may 14, 2013. culture consumption will be influenced to a greater extent by the social status than the class to which the individual belongs. the status is expressed through a certain lifestyle, a great amount of flexibility being available for individuals currently in relation to the options that they have in terms of the consumer habits manifestation, including the consumption of culture. this one is an integral part of the lifestyle. many individuals within certain advantaged social strata are not actually frequent consumption of high culture and furthermore, people showing marked tendency to reject most popular forms of culture. well defined cultural consumption patterns persist over time and can be identified a limited number of culture consumer that prove to be systematically differentiated from a social point of view. there will be culture consumers as” omnivorous”, paucivorous and univorous (chan wing tak, goldthorpe john h., 2007). omnivorous consumers will have pretty high levels of consumption in the forms of culture both higher and from the popular ones having the tendency to be more socially advantaged than univorous consumers. college graduates and other people with completed higher education are significantly more likely to be part of an omnivores culture consumer type than paucivorous culture consumers type. when more variables that can influence the consumption of culture, are taken into consideration, such as social status, class and income, education level will reflect rather some aspects of social stratification, psychological effects the ability of individuals to process information element seen by empirical aesthetic supporters as having a major influence on the level of cultural consumption. creating value within consumption culture 52 for university graduates the status effect is less pronounced than for those with qualifications at a lower level. specialists consider as a result of the research undertaken, that the effects which education can have on the consumption of culture are nuanced and diversified, depending on the type of cultural products or services envisaged. for example, in the case of theater, dance and cinema, the effects of social status and education on consumption patterns are roughly similar in the case of music, the education effect being a little bigger, in case of visual arts the educational level is by far the most important factor (chan, w. t., & goldthorpe, j.h., 2007, p. 184). value creation within contemporary culture consumption value creation is a very important aspect in modern marketing literature. specialists talk about creating value not only as an effect of actual production processes or benefits, but especially about co-creation of value by consumers together with goods manufacturers or service providers. the scientific literature highlights the numerous lines of research and theoretical valuable contributions that subscribe to the concerns related with the issue of cocreation of value or consumers' involvement in consumption, outside of a simple consumption process of goods or services. thus, it can be remembered only a few of the renowned authors who have proposed various approaches and interpretations useful for explaining the analytical framework of the creation or co-creation of value. starting with the concept of co-production (wikstrom, 1996, bendapudi, leone, 2003, gronroos, 2006, woodruff & flint, 2006, kozinets, 2007, etgar, 2008) and continuing with the one of consumers involvement kalaignanam, varadarajan, 2006, anderson et all, 2008) or prosumers (toffler, 1980, bagozzi & warshaw, 1990, xie et al, 2008) and ”working” consumers (gabriel & lang, 2006, zwick et al, 2008, arvidsson, 2008, cova & dalli, 2009), specialist have pointed out the different angles of this complex process of value co-creation. in order to explain the mechanism that is underlying to the value co-creation process within the equation producer (provider) – consumer is necessary to emphasize the importance that is owned by the cultural context in which consumption takes place and value creation of course. value is not given only by functional utility of goods or services consumed, but also by consumers' interpretation of issues that are covering the object of consumption, including here products, brands and services. thus, the concept of value involves more than functional utility report to the purchasing power of consumers, being evoked the concept of symbolic meaning of consumption. individuals will give a different value for different ways of expressing the options related to lifestyle, so consumption of certain goods or services acquires superior valences in the cultural context determined by values associated to a particular lifestyle. it can be said that, currently, the main concern of companies no longer lies in creating value for customers, but create value with consumers. the set of values important for both companies and consumers, will balance themselves through various interactions through dialogue, through involvement. during the history of customer orientation, it can be distinguished the perspective offered by vargo and lusch which have launched in 2004 the concept of ”dominant logic of services”. the two specialists have proposed at that time a conceptual framework that prioritizes the idea that customer orientation of companies is a process of collaboration and learning between companies and customers, an adaptation to the dynamic and individual needs of the latter. the value is defined by the client and cocreated with its help, rather than incorporated into production. the results are not something to be maximized, but something from which it can be learned as firms try to serve customers better and to improve performance. (vargo, s & lusch, r., 2004) gârdan, epuran, gârdan 53 under the business model based on services, human actors are vital to the exchange process. what happens before and after the actual transaction (the performance itself) becomes more important than the very transaction itself it creates a dynamic continuum in which both customers and organization that is performing the service will help maximize satisfaction and optimize networking through a learning process (vargo, s & lusch, r., 2004). in the common process of creating value, both the client and the provider will perform different roles, depending on the stage and the perspective of conducted performance. thus, in the service production/performance sphere, the provider is a facilitator of value, as the customer engages itself into the performance in the area of joint activities, the provider can integrate into the process of creating value with the role of co-creator. the customer will be a creator of value when it comes to the direct interaction being able in the same time to be co-creator along with the provider. in the sphere of the client, he will take much of the performance, engaging heavily in consumption, becoming a value independent creator, the provider keeping only his role of facilitator. the process by which customers and providers assumes value creation is shown in the figure below, being visible its importance in the field of services, where the three dimensions the supplier’s one, the common one and, respectively, the customer’s one are having a strong interrelation. figure 3. the process of value co-creation within performances source: grönroos, c., & voima, p. (2011), making sense of value and value co-creation in service logic, hanken school of economics working papers, helsinki, p. 31 promoting a services-based approach across the entire marketing activity wishes to give credit to the idea that the real delivering of value sought by the customer can be made easier from the perspective of analyzing interaction types between providers and customers. thus, it can be distinguished direct or indirect interactions, the indirect ones being possible to take place before the direct ones. creating value within consumption culture 54 direct interaction refers to the process in which the and customer’s and organization's resources (personnel, system, service environments) interacts through a process which involves a form of "coordinated dialogue". this direct interaction occurs in areas where production processes and delivery are performed simultaneously with the use of services by customers. however, direct interaction can take place wherever the customer interacts with the company in a manner similar to the dialogue (such as in the case of product design). figure 4. direct and indirect interactions the role of the client and of the service provider source: grönroos, c., & voima, p. (2011), making sense of value and value co-creation in service logic, hanken school of economics working papers, helsinki, p. 32 indirect interaction refers to situations when customers use or consume resources representing outputs of firm processes, such as when the customer is using a product offered by the company and thus interacts with this resource. resources can take many forms and can be: physical, virtual or mental. in the context of services, it usually means that when direct interactions are completed, the customer interacts with the resource or the outcome of the service process. consumers will build, develop and maintain self-identity by means of consumption (firat, & venkatesh, 1995), given that complex portrait of modern consumer denotes expertise, capacity of discernment and knowledge (alba, & hutchinson, 1987), and also the ability to give birth to social networks (holt, 1995). in terms of culture consumption, scientists have identified four major research directions that relate to: the concrete cultural practices, material and symbolic resources involved, rules or social nature resources, meaningful ways of life. so, the complex gârdan, epuran, gârdan 55 ensemble of elements that characterize the creation of value in relation to this type of consumption takes the form of practices, resources, norms and meanings. it becomes obvious the connection that occurs between the cultural context in which consumers have developed and their own culture consumption itself. the cultural context can be conceptualized as a collection of practices, resources, rules and meanings that create the background for co-creating value and evaluating experiences (edvardsson et all, 2011). co-creation of value will also be influenced by various social constructs specific to different forms of sub-culture. specific relationships for social groups or geographical areas, shared norms at this level by members of their communities, will determine different socio-cultural contexts for the co-creation of value by consumers. in the case of cultural goods and services consumption, the process of creation and cocreation of value acquires new meanings, much more complex than most other categories of goods or services designed for current consumption. the value attached to cultural goods and services is most often the result of an artistic creation process, with a strong symbolic and immaterial dimension. from this point of view the involvement of culture consumer in the act of creation of these goods and services becomes essential. unlike other categories of goods, the cultural ones addresses a category of higher needs, which is why quantifying their value is a complex process that must take into account a number of variables relating not only to consumer motivations of individuals, but also to their ability to recognize and appreciate distinctive elements for the culture to which they belong, the possibility of conferring symbolic value to those artistic products which best expresses their personality traits, characteristics of lifestyle etc. therefore, value creation represents for creators of cultural goods an ongoing challenge, tailored to the requests and subjective interpretations, social and cultural dynamics of individuals at a time. the process of co-creating value both for cultural goods and cultural services is highly qualified for two major categories goods and services respectively. also, nuances and differences are expressed strongly and when analyzing the different classes of cultural goods or services in terms of their content visual arts, performing arts, music creation, literary, sculpture, textiles, architecture etc. all these artistic manifestations take an almost infinite variety of concrete expression, both in the form of physical goods and immaterial services. each of them requires a different symbolic value for culture consumer and a unique creative process, both in terms of methods, technologies used, and the outcome thereof. thus, the participation of consumers in value creation is also very nuanced and tailored to the specific situation. in addition, the item really particular for co-creating value in the cultural field is represented by the contribution that culture consumers, the public that is encouraging consumption of culture and relating artistic creations, have from the perspective of artistic inspiration phenomena which underpins these creations. thus, very often, ideas or items that inspires art creators are mostly developed based on feedback from the culture amateur public or its reactions to previous creations. in this way, a complex creative process is born, through which cultural creators and consumers alike contribute to the development and creation of new cultural goods. from the point of view of cultural services consumption things are also tinted, depending on the type of cultural service to which reference is made. in case of a concert or a theater, opera, operetta, etc., co-creation of value takes shape similar to the situation encountered when the provision of other services is done, meaning that consumers will actively contribute to the specific environment running event (will sing the song along with the singer, will attend as amateur actors in directed plays order to include viewers within them, etc.). creating value within consumption culture 56 an interesting issue is the one about passive or active consumption phenomenon, specific for various cultural goods. if, in the case of a playing film in the cinema, cinema-goers are having a film production adaptation of a famous novel, generally being passive consumers of the intrigue within the literary opera adaptation under the play of the actors, consumption as a literary work of the same novel, reading it, involves active participation of the consumer of literature, the capacity of visualizing things and characters in the opera, the ability to view the evolution of the action etc. behold, that often the consumption of a cultural good presupposes the co-creation of value associated with it through the effective involvement of consumer, emotions experienced and effective consumption of it being directly related to the individual's capacity to transpose himself in relation to the artistic product concerned. finally, a previously stressed element is represented by the active effort of co-creation of value associated to the cultural goods or services through effective involvement of culture consumers in creative cultural activities. thus, creative work of professionals can be enhanced and put into better use through the contribution made by culture enthusiasts within various manifestations (circles of painting, sculpture, amateur theater etc.). the appetite manifestation for different forms of artistic creation, not only educates and stimulates consumption culture of participants, as well as other categories of potential consumers in the community, but also contribute to the financing of official various cultural initiatives or the activity of institutions regulating the field. one of the most important factors for co-creating value is represented by the ability to access, adapt and integrate available resources (akaka m., vargo s., & lusch r., 2012). from this point of view, in case of cultural goods and services, the active involvement of culture consumer in delivering value enhances this ability, their own level of appreciation of the arts and other manifestations of culture being higher among the selfcultural current. conclusions and future directions of research culture consumption represents a special type of consumption. in this case, the consumer does not liquidate what he consumes. consumers can become true partners with manufacturers. the culture consumer can be considered an active consumer. consumers can create artwork in their turn, can engage in commenting the existing ones, through active consumption they may potentiate the intrinsic value of artistic goods. many consumers are in fact active culture amateurs as regarding different various forms of artistic expression. culture consumers are making a massive investment of time, energy, money as consumers and active participants within various organizations and institutions that are governing the artistic field. consumers will not only search for aesthetic satisfaction, but quickly they make an effort aimed to the creation and development of institutions that distribute or produce culture. a special role it may have the integration within modern educational programs of various art forms taught on a regular basis, such as fine arts or music. the individuals level of education is one of the most important factors which potentiate the consumption of culture both in terms of quantity and structural quality. the same relation exists between the level of education and degree of involvement in activities which are creating cultural goods, so in relation to value co-create in this area. in 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 49 public sector conceptual elements, implications in economic and social life florina popa institute of national economy, romanian academy florinapopa@gmail.com abstract the public economy, branch of economic science analyses the state, as economic actor; its field of research interacts with investigations of other areas of economic science (monetary, international trade, market organization etc.). the state has experienced various stages of manifestation of its role in the economy, against the changes in society, which led to either an increase in its intervention, to regulate market phenomena, the recovery of economic activity in times of crisis, or to its decline against the modernization of the economies of industrialized countries, the increase of the role of entrepreneurs, technological progress. thus, the development of economic science, changes in economic area, the emergence of capitalism, of industrialization in the nineteenth century, especially the second half, outlined a new role towards state intervention in economic life; in the context of new economic developments of the last decades of the twentieth century, the interventionist role of the state has diminished, the state giving up certain activities, in return for initiating other actions (privatization, reducing state monopoly, deregulation).the paper presents conceptual elements referring to public sector, peculiarities that distinguish it from the private sector, as well as issues about the state implication in the economic life, in different periods of evolution of society. keywords public economy; institutions; private sector; state implication jel classification h11; p43 1. introduction the entire human existence is inseparably linked to the presence of the state, to the activities that it develops manifested in many fields of the economic and social life. state’s interventions, as an economic actor, take the form of services provided to the community (in areas that cannot be covered by the private sector), of the economic, legal regulations, in order to correct the deficiencies of the market economy, or destined for stimulating the economic activity. state’s political decisions determine the system of rules based on which the society operates, namely, political, economic, legal institutions, essential for the life and actions of individuals. government’s action provide to the community’s individuals several advantages in matters which mark their material and spiritual existence: ensuring ownership (individual and joint), reducing transaction costs, etc. 2. the public sector theoretical elements the scope of the concept of economy includes a series of categories in various areas: public, services, political, social, investment, other branches.  acknowledgment. the study is a part of the research paper of the institute of national economy, romanian academy „criterii de eficienţă economică şi socială a administraţiei publice din românia” achieved in 2016, by a team of researchers – dr. daniela antonescu (coordinator), florina popa. popa 50 references on the concept of economy have been made since ancient times, starting from xenophon and aristotle in ancient greece, or seneca, pliny the younger and elder in ancient rome, as they developed conceptions about how to make wealth from agriculture, from livestock. for classical economists (adam smith, david ricardo), economics is a science of wealth, which is based on production, its growth being conditional on productive level; in case of neoclassic writers (hayek), the exchange process, by the price level (as the supply-demand ratio) is decisive for achieving wealth. in the modern era, economics is a science of allocating the goods, the resources which are limited, given an unlimited demand. as a branch of economics, public economics is to study the action of the state, its role in the economy of a nation. the main function of public sector economy is to capture the significance of the public sector concept in the development of economic phenomena, to motivate the need for the presence of this sector in the economy, through the institutional system created, following the allocation of resources at the state level, its degree of involvement in economy. public economics, a branch of economic science analyses the state as economic actor, its scope of research interacting with the investigations of other areas of economics, such as the monetary, international trade, market organization field, etc.. among the definitions given by specialists in this field of economics, public economics, we can mention: "it is a branch of economics that focuses on analysing the role and behaviour of the state [...] and on its impact on the national economy and even on the international one, and consequently, on the welfare of citizens" (profiroiu et al, 2011). the "expression public sector – means the set of economic or social activities carried out under the total or partial control of the state and local communities. it is opposite to that of the private sector " (“toupictionnaire”: le dictionnaire de politique. secteur public, http://www.toupie.org/dictionnaire/secteur_public.htm). "represents a component of economics which specializes in the study of the separation of the public sector activities, the understanding of the consequences of this activity, as well as of possible alternatives, tools and methodology specific to the economy, namely focusing on analyzing the effectiveness of public resource allocation, the cost –benefit analysis of state activity" (ailenei, 2005). as a branch of economics, the public sector economics studies the area of action of the government, analyzing the government functions in the society, focusing on how it allocates resources, as well as on its composition (education, health etc.) (marinescu). from all these definitions, emerges the basic idea that this branch of economics is to study public sector policies (of the state) oriented towards development and welfare. in the area of the public sector economics analysis there is a number of categories of activities regarding: services provided to community, state regulations destined to increase welfare policies, policies to encourage economic growth, funding, resources, their distribution. a distinctive feature of the public sector in relation to the private one is the authority of decision making, which determines the characteristics and mode of operation of the two systems: the public sector and market economy. • the market economy systemthe decision making has a decentralized character, which assumes:  the object of exchange – the property rights of the owner of the goods and services provided;  the exchange voluntary, mutually beneficial for the parties under market relations;  economic operators decide what they use, generate or consume, as appropriate, wanting to obtain the satisfaction at the expected level; public sector conceptual elements, implications in economic and social life 51  the demand-supply balance is determined by pricing the goods / services on the corresponding market. • the public system – the decision making is centralized the decision is political, the principle on which the system is based is the existence of a coordination authority that orders economic agents the way in which they participate in economic life:  the limits allowed to consumers to purchase goods and services;  the categories of goods that can be delivered by producers;  the resources established;  the authority of decision is the holder of resources, establishing their destination. even with the restrictions that the system imposes, public policies are, also, the object of demand (citizens) and of supply (central, local government) (profiroiu, a., profiroiu, m., 2007)1. 2.1. the state, a presence in economic life the state is a political category closely linked to the economy. there are several reasons that outline the concept of state: "... the state includes the territory, population and organized state power. in this case, it is considered that the state is a human group set within a given territory over which a sovereign public authority is exercised" (năstase, mihăilescu, 2008). from a sociological perspective, the state is "a specific and essential dimension of political society, a society that resulted from the settling on a particular territory, of a human collectivity, relatively homogeneous, embodying the nation and which is governed by an institutionalized power, with the ability and means to express and to carry out the will of a part of the community, as general will. this will can belong, in concrete historical conditions, to a small group or to a majority group" (manescu, 2014). from the organizational perspective, the state is "a set of regulatory and governance institutions, which are designed to produce rules, to control, to direct, or regulate" (profiroiu et al, 2011). related to the functional aspect, on the one hand, the state refers to the set of institutions the objectives of which correspond to state’s functions and on the other hand to the effects that institutions and its functions produce, regarding the social order, the economic and social stability, the insurance of welfare, etc.. in this sense, the state shall establish and implement policies depending on the effects pursued. thus, some categories of state intervention can be exemplified, the expression of its involvement in the economy: creating an economic, social legal framework, protecting and defending the moral, cultural traditions of the national territory; getting involved in the mechanisms of life by regulatory measures in order to increase economic performance. in relation to the dimensions of state involvement, the economic and social organizational arrangements meet the type of state (liberal, neoliberal, bureaucratic). from an economic perspective, the public sector (the state) is considered "the production system of public goods and services" which includes the process of formation of demand and supply for this product category and the related institutional system (public decision, public property). in the representation of economic actor, the 1in contemporary economy, it cannot make strict delimitations on how resource are allocated, respectively, between the public and private sector, the elements and mechanisms of the two systems based on the principle of decentralization, respectively of centralism, interacting and acting as a mixed economic system (free market system combined with state intervention). real economic system – mixed modern market economy system is characterized by the existence, in varying degrees, of the elements which manifest itself in two forms, with a preponderance, however, of the market ones. popa 52 public sector (state) is defined as "the set of all activities developed by the state", which includes the following bodies (profiroiu et al, 2011): • public institutions the resources of which come from the public budget: central and local governments producing public goods and services aimed for the society. powers of decision in achieving public interests, on administrative levels central, local, regional are granted in relation to the existing decentralization degree, to the political decision; social protection bodies answerable to the public power and its decisions; • public enterprises obtaining income (resources) from the sale of own production, namely: autonomous administrations, national companies (without the competition of private companies); joint ventures with state-owned and private capital (belong to the public sector but the operation manner is similar to the private sector). they compete with the private sector; banks and insurance companies with public capital. there is no clear demarcation between the public and private sector, as they are related and competing, the line separating them continuously moves, according to political orientation. both the public and private sectors are distinguished by features in opposition (table 1). table 1 features that distinguish the public sector from the private sector public sector • regulated; • public goods and services; •production is carried on public decisions taken under democratic conditions; •allocation of goods is carried out according to the needs of consumers (public interest). private sector • regulating free enterprise; • private goods and services; •production is based on the manufacturer's decision according to the market demand and supply, respectively, the consumer payment; •allocation of goods is dependent on the achievement and level of profit, on the consumer demands. source: profiroiu, a.; hogye, m.; moldovan, bogdan, a.. economie şi finanţe publice. management financiar suport de curs, http://www.apubb.ro/wpcontent/uploads/2011/03/economie_si_finante_publice_management-financiar.pdf; thus, for the optimal allocation of resources, the public sector plays a major role, through the influence that governmental activities exert on it, respectively, the level of public expenditure reflected on the society. 2.2. the evolution, in time, of the state in the economy the manifestation of the position and of the activities of the state in the economy has been a topic of different views of economists favourable, as necessary, to a neutral state or to an interventionist state, significantly involved in the society’s life. http://www.apubb.ro/wp-content/uploads/2011/03/economie_si_finante_publice_management-financiar.pdf http://www.apubb.ro/wp-content/uploads/2011/03/economie_si_finante_publice_management-financiar.pdf public sector conceptual elements, implications in economic and social life 53 in early nineteenth century the classical liberal doctrine, launched by a. smith, limited government interference, the government assuming the exercise of responsibilities on limited, traditional areas (national security, justice, education). the market served as self-regulator under free trade and competition and also as distributor of resources. the development of economics, changes in economic field, through the emergence of capitalism, of industrialization in the nineteenth century, especially in the second half, had given a new role to the state in economic life. the need to promote a fair competition, to balance economic activities, protection of consumers, motivated state’s intervention in the promotion of fair competition based on free enterprise, on free movement of capital, of labour, on the manifestation of demand and supply on the market which would ensure pricing. the events of early last century, the development of microeconomics, the first world war, the economic crisis in the twenties had brought about change in the traditional approach and increasing the government's role in solving national economy problems. the state had to intervene through taxes, subsidies to finance goods and services which were not provided through the market. according to keynes, the phenomenon of self-regulation of the market does not ensure the optimum allocation and in case of unstable economies, the system favours the increase in unemployment, which implies for the state, the task of becoming a more active factor in economic life, serving to correct market errors, which assumes, also, increasing expenditure volume. performance of the state in the economic range rose in the period between the two world wars, emphasizing interventionism after the second world war when the scope of the public power increased. through public enterprises, the state became a producer, consumer, employer, exercising the main functions of allocation, stabilization, redistribution. the manifestation of the "welfare state" aimed at social solidarity represented a development of economy capable of ensuring social protection, including public actions for the benefit of citizens, accompanied by corresponding increased public expenditure, and effects in tax increases. in the last decades of the twentieth century, in the context of imperatives emerging in industrialized countries, of modernizing economies (increased role of entrepreneurs, of technological progress) the significance of the interventionist state decreased, which gave up certain activities in exchange for initiating other actions; they proceeded to the privatization of the public sector in various fields, they gave up the state monopoly, the deregulation process took place. the increasing role of the state in the economic and social field was manifested after the financial crisis peak in 2008-2010, the state organizing interventions to redress through actions destined to support economic activity (injections of liquidity and saving banks or companies from bankruptcy). given the rapid changes occurring in the environment where traders move, it is expected for the state to develop a strategy of perspective and supervision of the future, which involves financing the expenditure that is usually borne by the public sector, and also support for private initiatives. at the same time, there are uncertainties about the effectiveness of public actions, the probability of the risk of occurrence of state failure being linked to the inefficient side of public sector bureaucracy and to the costs that it engages, to the difficulty and complexity of solving tasks that belong to the public sector. the aspect involves the need for clear delimitation of government actions that would ensure the most advantageous alternative to the degree of state intervention in the market economy. popa 54 3. conclusions the main function of the public sector economy is to capture the significance of the public sector concept in the development of economic phenomena, to motivate the need for the presence of this sector in the economy, by means of the institutional system created, following the allocation of resources at state level, the degree of its involvement in the economy. public economics, a branch of economic science analyzes the state as an economic actor, its implications being manifested in the economic life through a series of actions that include the legal regulations for carrying out the social and economic life, the interventions in the market mechanism through reforms designed to increase economic performance, however, in the context of the links that the public sector provides between the sphere of production and consumption and the carrying out of economic flows between economic operators. given the rapid changes occurring in the environment where economic agents are moving, it is expected for the state to develop strategies of perspective and supervision of the future, which assumes financing the expenditure which is usually borne by the public sector, and also support granted for private initiatives. references ailenei, d. 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(1937), economics and knowledge, economica, new series, vol. 4, no. 13 (feb.1937), pp. 33-54, http://www.jstor.org/stable/i343614; zai, p., lazăr, d., inceu, a. (2012), economie şi finanţe publice universitatea babeşbolyai, cluj napoca, facultatea de ştiinţe politice, administrative şi ale comunicării, cluj-napoca, www.fspac.ubbcluj.ro/moodle/pluginfile.../curs%20ec%20si%20finante%20pu blice.pdf; “toupictionnaire”: le dictionnaire de politique, secteur public, http://www.toupie.org/dictionnaire/secteur_public.htm; vie publique. au coeur du débat public publié le 5 février 2015 par erasme, http://www.vie-publique.fr/spip.php?page=reperes; vie publique. au coeur du débat public découverts des institutions. le role economique de l'etat, approfondissements, 30.05.2006, http://www.viepublique.fr/decouverte-institutions/financespubliques/approfondissements/role-economique-etat.html http://www.jstor.org/stable/i343614 http://www.fspac.ubbcluj.ro/moodle/pluginfile.../curs%20ec%20si%20finante%20publice.pdf http://www.fspac.ubbcluj.ro/moodle/pluginfile.../curs%20ec%20si%20finante%20publice.pdf http://www.toupie.org/dictionnaire/secteur_public.htm http://www.vie-publique.fr/spip.php?page=reperes http://www.vie-publique.fr/decouverte-institutions/finances-publiques/approfondissements/role-economique-etat.html http://www.vie-publique.fr/decouverte-institutions/finances-publiques/approfondissements/role-economique-etat.html http://www.vie-publique.fr/decouverte-institutions/finances-publiques/approfondissements/role-economique-etat.html microsoft word apostoaie constantin marius_eng.doc interdependencies between the capital market and the monetary policy decisions claudia guni abstract the declared scope of this work is to highlight the main correlations between the monetary and the capital market, including identifying the adequate objective of monetary policy which might positively influence over the offer on the capital market. the main target of the monetary market consists in the stability of the prices. the link between monetary policy and stock market is extremely important. the stock prices are sensible to economical conditions. moreover, these prices rapidly change, thus there is a chance for a deviation from the fundamental value, with side-effects for economy. key words capital market, monetary policy, stocks, bonds, interest rates jel code: e50, o16 monetary policy influences the function of the capital markets. within the monetary transmission mechanism, changing the interbancary interest rates, active prices and ongoing changes. the variation of the monetary policy interest rate thus influences the market value of the mobiliary values, such as bonds and stocks. bonds price is reverse to the long term interest rate, thus an increase of the long term interest rates generates a fall of the bonds price. if the other factors stay the same, the increased interest rates also lead to a drop of the price of other mobiliary values, such as bonds. this happens because the following expected rentabilities are discounted at a higher rate, thus the present value of future incomes will drop. if the other influence factors do not stay the same, changes in the monetary policy may have indirect effects on the expectations regarding the future economic activity. the question we need to ask is: how much is the stock price influenced by the variations in the monetary policy? it is very important to focus on the variations that the market participants could not predict regarding the monetary policy, because the predictable variations are known by the investors, thus there is little possibility that the stock prices might be affected upon the announce. when announcing a variation of the interest rate by the central bank, the stock indexes immediately change values, the market thus incorporating the fluctuations of the interest rate in the aggregated values of the actions. an estimation of the size and duration of these effects is not an easy thing to do. because capital market brokers are generally well informed, any monetary policy decision which was predicted is already incorporated in the stock price, generating a weak reaction when announced. capital markets are useful sources for information regarding monetary policy expectations. the monetary policy decisions are implemented by modifying the target regarding the short term interest rate, respectively the monetary policy interest rate (the interest rate for the attracted deposits). a decrease of this interest rate generates an increase of the stock value. contrary, the restrictive monetary policy (increase of the interest rates) presents effects on the capital market, reducing the action value. studies and scientific researches economic edition, no. 15, 2010 60 why does the monetary policy influence the stock price? unpredicted variations in the monetary policy influence the stock prices, not so much by influencing the dividents or the real risk-free interest rate, but by influencing the risk factor of the stocks. a restrictive monetary policy makes investers see the stocks as a risky investment and thus ask for a higher lucrativeness rate. at a given level of the predicted dividends, the higher lucrativeness rate required by the stockholders can be reached by lowering the current stock price only. this has various implications, including as far as the influence of the stock price in transmitting the effects that the monetary policy decisions have on economy is concerned. let us suppose that investors do not take into account the risk. at this moment, there are two factors influencing the current stock values: the pieces of information influencing the investor’s predictions regarding the current and future dividends or the information influencing the investor’s predictions regarding the short term interest rates, whether current or future. the pieces of information regarding whether the current or future dividends, measured in real terms, are higher than previously expected should diminish the stock price. there are two possible explanations for the reason why the expectations for the real short term interest rates diminish the stock price. firstly, in order to evaluate future dividents, an investor must update them; since the high interest rates make the future divident be lower in the present, similarly, high interest rates diminish the stock value. secondly, the high interest rates make investments, other than stocks, be more attractive, increasing the required lucrativeness of the stocks and diminishing what the investors are willing to pay for it. in an environment where the investors do not take risks into account, the stock prices should only be modified bsed on the information regarding current or future dividents or based on real current or future interest rates. however, investors do take risks into account. considering this and the fact that stocks are seen as risky investments, investors generally require a higher average lucrativeness, as opposed to other assets considered less risky. this supplementary lucrativeness, known as stock risk bonus, reflects an additional compensation required by the investors in exchange for having risky assets. as well as the information and real interest rates, the information influencing the risk bonus of the actions present side ffects over the stock price. we have identified three factors influencing the stock price: • information regarding whether current or future dividends will be raised, thus increasing stock prices; • information according to which the real short term current or future interest rates will be higher contribute to the diminishing of the stock prices; • information which determine the investors to ask for a higher risk bonus for stocks will diminish their price. the central bank’s decisions influence the stock prices as far as these influence the investors' expectations regarding dividends, real short term interest rates or the stock risk level. it is important to determine quantitatively which of the investors’ expectations are most affected by the unpredicted variation of the central bank interest rate. predicting these key variables, the investors may estimate how much they are willing to pay for said stocks. if an unpredicted increase of the oficial rate semnificatively modifies the predictions regarding future dividents, but do not greatly influence the predictions regarding interest rates or risk bonuses, then we can assume that the monetary policy influences stock prices mainly by modifying the investors’ expectations regarding future dividends. if, however, the variation of the monetary policy influences predictions regarding real interest rates and not the rates for the other two variables, then the unpredicted monetary policy decisions influence stock prices mainly by means of lucrativeness rates expected by the investors. as a consequence, an unpredicted restrictivity of the monetary policy contributes to an unsignificant variation of the predictions regarding future dividends and real future interest rates. the most important effect of the monetary policy restrictivity is accomplished by means of increasing the risk bonus of the stocks. this may only occur if the current stock price falls. studies and scientific researches economic edition, no. 15, 2010 61 the restrictive monetary policy may increase the risk level of the stocks, by increasing interest costs and by damaging the companies’ balance sheets. conversely, an expansionist monetary policy increases stock prices and diminishes risk bonuses, thus reflecting a diminishing of the economical and financial volatility. in this latter case, the economic and financial risks are diminished. the transmission of the monetary market over the economy is made by means of capital markets. in this context there are a number of approaches, such as: • monetary policy and short term interest rates: liquidity effect, referring only to the shocks on the money supply; • monetary policy and long term interest rates: the expectation theory regarding the term structure of the interest rates; • monetary policy and stock prices: the updated dividend model; • monetary policy and currency rate: the overshooting model. a restrictive monetary policy leads to a short term appreciation of the national currency, after which it tends to lead to a depreciation. the stock prices reflect predicted dividends, profits or updated cash-flows of the companies. the effects of the monetary policy on the stock prices are as follows: • monetary policy, by varying the official interest rate, influences the discount rate; • monetary policy, by varying the official interest rate, influences predicted cash flows, updatd to a modified interest rate; • a problem of the identification of the monetary policy effects on the stock prices consists of the correlation between interest rates and the inflation rate. shall the interest rates rise as a consequence of inflation, future cash-flows also will. • due to the rigidity of the inflation, monetary policy influences the real interest rates. a higher interest rate leads to a decrease of the stock prices, as the discount rate has increased and the profits/dividends are low. the stock prices decrease when the monetary policy is restrictive (the interest rate increases). the effect on stock prices is statistically significant, but the explanatory power of the monetary policy is highly limited. a hypotesis of effective markets suggests that only the unpredicted variations in the interest rates shall influence stock prices. predicted variations of the interest rate are already incorporated in the stock price at a prior moment. it is important to analyse which is the macroenconomic impact of inflation and of the interest rates on the functioning of the capital market. we must also take into account the important role that predicted inflation and nominal interest rates play in determening the requested lucrativeness rate, used in the evaluation of the investments. it is foreseeable that these variables be highly important in the microeconomic evaluation. the effect that the monetary policy provisions have on the investing decisions is generally regarded as a key element in the monetary transmission mechanism. the monetary policy influences investing decisions by means of capital cost, a mechanism called interest rate channel. imperfections on the capital market are included in another monetary policy channel, the credit channel, implying the existence of a number of amplifying factors which disseminate the effects of the interest rate, consisting of the balance position channel and the credit channel. should the capital markets be less than perfect, the variation of the financial condition of a company may affect its needs for capital stock, thus involving the balance position condition. the degree to which the central bank reaches its main objectives of maintaining the price stability and the credibility of its efforts also has long term implications for the real economy. in this context, an individual decision concerning the monetary policy may be less important in a general framework, the latter being the decisive factor. should the monetary policy objectives and strategy not be clear, inflationist pressures will occur, as well as risks studies and scientific researches economic edition, no. 15, 2010 62 leading to increased real interest rates and which will determine turnover curves, which affects economic rise. on a short and medium term, the monetary policy measures present real additional effects. these represent links within the transmission mechanisms between using monetary policy instruments, on the one hand, and modifying stock prices, on the other. analitically, there are two distinct stages within the monetary policy transmission mechanism. in the first stage, the monetary policy measures the impact on various segments of the capital market, which is reflected in adjustments of the market interest rates and of the active prices, currency rates and other financiary conditions. in the second stage, these variations affect the individual inclination towards consumerism. am important factor is the way the monetary policy measures influence the investing behaviour. corporative investments are an extremely evanescent component of the aggregated demand, representing an important factor of both the economic growth, as well as of the full employment of the labor force. capital cost represents the most important variable by means of which the monetary policy may influence the investing activity, respectivelly the investing decisions. depending on the investment request, this is known as the interest rate channel. however, the influence of the central bank on the real financing costs is highly limited. on the long run, the attempt to push the real rates of the capital market under their stability level y means of an expansionist monetary policy leads to an increase of the inflation. when the investors anticipate an increase of the inflation, the requested lucrativeness rates similarly increase, so as to reach constant lucrativeness real rates. there is an imperfect relationship between interst rates and inflation. should the relationship been perfect and should the investors correctly predict the following inflation, the spread between the interest rate and the inflation rate would be constant, reflecting the real lucrativeness of corporative bonds. investors do not correctly predict the evolution of the inflation rate. the theoretical relationship is that between the predicted inflation and the interest rates, which differs fron the information regarding the current inflation. the currency demand is supposed to be a negative function of interest rates. this affirmation is supported by the is-lm model, which considers that the existence of a high money supply will lead to high costs / high inflation after a while. the money supply and the interest rates are dependent upon the supply and demand shocks. thus, the monetary policy influences real long term interest rates and are much more important for invesments, consummism etc. the central bank does not have direct influence on long term interest rates. market interest rates are determined by the inter-temporal shunting between real active interest rates (for credits) and passive interest rates (for deposits), and by the predictions regarding inflation. variations in the money supply may influence the predicted inflation. bibliography 1. abel, a.b. (2007), macroeconomics,addison-wesley publishing company, 3rd edition 2. anghelache, g. (2004), , ed. 3. chen, n.f. (1986), economic forces and the stock market, journal of business 59, no. 3 4. devereux, m. (2003), exchange rates and monetary policy in emerging market economies, university of british columbia 5. jonas, j. (2003), inflation targeting in transition countries: experience and prospects, nber, wp no. 9667 6. pocan, i.m. (2005), politicile monetare si piata de capital din românia, ed. studies and scientific researches economic edition, no. 15, 2010 63 studies and scientific researches. economics edition, no 31, 2020 http://sceco.ub.ro 17 risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid19 crisis costel ceocea „vasile alecsandri” university of bacău, romania cceocea@sifm.ro raluca alexandra ceocea „gh. asachi” university of iași, romania raluca.ceocea@gmail.com adrian vatamaniuc „gh. asachi” university of iași, romania adrian.vatamaniuc@gmail.com vasile mihălaș „vasile alecsandri” university of bacău, romania mihalas2018@gmail.com abstract public procurement involves adequate risk management, specific to the procurement portfolio established at the level of the organization. in order to achieve the proposed objectives, in accordance with the regulated framework established at the level of public institutions from romania, decisions made at the level of contracting authorities must be based on risk management tools and mechanisms. these tools and mechanisms are defined on the basis of analyses of public procurement processes, carried out in compliance with the legal framework applicable at both european and national level. the new context created at the level of the contracting authorities in romania, with the onset of the covid-19 crisis, forced the management factors to adopt emergency decisions, to manage new risks and to implement rapid changes in public procurement processes, in the context of high uncertainty. this paper aims at analyzing the way decisions are made at the level of contracting authorities in romania, in order to identify specific risk management mechanisms, based on the assessment and anticipation of risks related to public procurement organized in an matter of emergency. keywords romania; public procurement management; risk management; risk factors; change management; decision-making; anticipation; emergency; covid 19 jel classification d81; d73; h57 1. introduction the purpose of public procurement is to award contracts for supply, service or works under conditions of economic and social efficiency1, in accordance with the principles and procedures set by the applicable legal framework of these activities, to economic operators qualified for the optimal execution of such contracts. 1 article 2 (2) from law no 98/2016 on public procurement risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 18 the award of these public procurement contracts shall ensure the necessary resources to carry out the activities and achieve the objectives set at the level of public institutions, which aim to achieve/satisfy a general interest. from the perspective of analyzing the field of action, but also the scope, some experts like (becq, 2006) points to the trend towards unifying the legislative framework, while others (harink, 1999) points out that the field of public procurement comprises a set of strategies and procedures whose purpose is to transfer goods to achieve the ultimate objectives. the current public management that has been influenced by the current new public management since the `80 enforces public factors to abandon outdated methods, specific to a traditional bureaucracy based mainly on administrative decisions and to adopts and adopt complex managerial positions built on rational, scientifically grounded decisions based on knowledge and innovation. accepting the functional definition2 of public management proposed by imbrescu (2010), we see the need for decisions taken in the public sector to be rationally substantiated so that the actions taken to ensure optimal results in ensuring the provision of public services by the organization. modern, goal-based management draw attention to the idea of streamlining the use of organizational resources, (noordegraaf, 2015) in the context of coordinating social efforts so that objectives can be achieved and public needs met. in other words, the concept of public governance, oriented towards the management, coordination and use of institutional commitments (grossi & steccolini, 2014) requires the adoption of rational decisions, based on the development of processes with a high level of complexity (adroniceanu, 1999) which aims at selecting a decision from the set of identified alternatives which exerts influences at individual, systemic or societal level. public procurement management manages the processes specific to the first stage of the process of ensuring and managing the resources necessary to carry out public administration activities. in this context, public procurement management, a component of public management, is responsible for carrying out the processes of quantifying the „objective need”, transforming it into an „objective necessity” and then satisfying the latter optimally, through the contract of public procurement, reason for which the decisions adopted within the public procurement management processes have a major impact on the future decisions that can be adopted, respectively on the results of the administrative activity related to the public organizations. although risk and risk management are generally seen as a function assigned to certain categories of specialists, achieving the objectives set at the level of public institutions requires the adoption of a strategy based on risk management measures and mechanisms, by involving all officials responsible for both management processes as well as the execution processes within the public organization, oriented towards the adoption of decisions that have the capacity to diminish the effects of some events that can negatively affect the degree of achievement of these objectives and implicitly the beneficiaries of these decisions: citizens. therefore, in order to ensure the achievement of the institutional objectives set at the level of contracting authorities, it is necessary to adopt an adequate risk management, which should be the basis for decisions related to public procurement processes to ensure the optimal allocation of the portfolio of public procurement contracts. through which the products, services or works are provided, at the qualitative, quantitative level 2 „the set of management processes (relationships) existing between the components of the administrative system, through which, in public power, laws are enforced (by organization or direct execution) and / or are planned, organized, led coordinates, manages and controls the activities involved performing services that satisfy the general public interest” (imbrescu, 2010) costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 19 and at the time imposed by the objective needs and necessities established at the level of the public organization. 2. the risk and public procurement processes 2.1. the context of management risk specific to contracting authorities the definition of risk is the subject of numerous studies, each specialist seeking to capture only one side or all of its sides and dimensions. as far as we are concerned, in relation to the purpose of this paper, we consider that the approach to risk in relation to the uncertainty and the effects on the proposed objectives (vișoiu & rusu, 2010, p. 23), allows the establishment of a coherent analysis framework. risk in public procurement cannot be avoided, as it exists at any time or stage of the public procurement process, that is why public procurement management must carry out concrete, operational activities at all levels of the contracting authority in order to optimally understand and manage these risks. a risk approach in public procurement processes must be based on an adaptation of the concepts and techniques of risk developed and applied at the level of all organizations in the light of the regulatory framework applicable to public organizations and the specific limitations imposed on contracting authorities. within the process applied at the level of the contracting authority, for the implementation of risk management in public procurement, it will be considered both the establishment of the context of the public procurement process carried out at the organization level and the assessment and treatment of risks specific to public procurement processes. establishing the organizational context applicable to risk management in public procurement is done taking into account: a) internal and external parameters to be taken into account for the management of risks specific to public procurement processes (both at the level of the contracting authority and at the level of potential bidders) b) the objectives set at the level of the planned public procurement portfolio c) the architecture of the organizational chart of the personnel involved in the public procurement processes at the level of the organization d) identifying and analyzing the direct beneficiaries within the organization who will be responsible for receiving and / or using the products, services or works to be purchased, including their expectations regarding the object and manner of future public procurement contracts. e) the legal and normative framework applicable in the area of public procurement and, as the case may be, the subject of future contracts for public procurement. the process of assessing the risks specific to public procurement takes place in the following stages: risk identification – as a process aimed at identifying, recognizing and estimating all potential events or situations that, if they occur, will affect the fulfillment of the objectives set at the level of the public procurement portfolio of the organization. the elements to be addressed at each defined risk level are:  source / cause of risk – as a situation that causes the identified event  the event – as an action that can occur and that will be related to the source of the risk.  the impact – as a result of the event, a natural consequence of the occurrence of the risk  time and place – as positioning in time and space of the identified event risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 20 risk identification „is the first and most important phase of the risk management process, which consists in identifying the potential hazards that exist within the entity” (florea-ianc, 2010) following the analysis of the public procurement process indicated by public procurement law no 98/2016 respectively by the norms of application of this law3 2 the risk portfolio identifiable at the level of most contracting authorities can be grouped as follows: table 1 risk category risk group types of risks context risks economic risks risks associated with working conditions risks related to inflation and / or price stability risks related to the activity of the competitors in the market to which the public procurement contract is addressed risks related to the financial market, the fiscal environment and the ability to finance the activities of market operators currency risk risks associated with the financing capacity of contractors sociocultural risks the risk of fraud, corruption, theft, professional negligence risks associated with media campaigns changing the behavior of end users of the object of acquisition power positions of entities acting on producers / importers deficiencies in the expertise in the relevant sector of activity in relation to the object of the pa contract lack of capacity of teams involved in pa processes lack of leadership skills of decision makers involved in the pa process political and legal risks political and administrative risks risks associated with states of local / regional / national political instability risks associated with trade sanctions / restrictions risks associated with gaps or legislative ambiguities environment al risks risks associated with climatic factors: storms, floods, landslides, extreme weather events risks associated with events / accidents with local / regional impact: triggering of major fires, major alterations of soil characteristics, etc. 3 the methodological norms for applying the provisions regarding the award of the public procurement contract / framework agreement from law no. 98/2016 on public procurement published by government decision no. 395/2016 costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 21 risks associated with the onset of diseases (epidemics / pandemics) affecting human, animal or plant health, with major economic and social impact portfolio risks risks regarding the structuring of the procurement portfolio risks associated with the process of quantifying the need / necessity risks associated with the process of establishing the estimated value and allocating the financial resources related to public procurement contracts risks associated with the capacity of the contracting authority risks associated with the training of human resources involved in public procurement processes risks associated with the lack of skills needed to plan and manage the public procurement portfolio risks associated with the ability to plan and allocate time resources related to public procurement processes risks of using uncompetitiv e purchasing methods risks regarding the division / structuring of public procurement contracts in order to avoid awarding contracts through competitive procedures risks regarding the violation of the principles / legislation applicable to public procurement / object of the contract in the process of planning / structuring the public procurement portfolio risk of misuse of exceptions or emergencies for public procurement portfolio planning process risks internal risks contractual risks financial risks personnel risks (availability, level of education, competence of staff involved in public procurement processes, conflicts, etc.) risks regarding the organizational system risks regarding data and information resources risks related to the selected award procedure risks regarding tender documents (definition of technical specifications, contractual clauses, conditions of participation) risks in ensuring transparency and equal treatment in the award procedure risk associated with bid evaluation risks associated with the award and conclusion of the public procurement contract risks associated with the execution of public procurement contracts technical risks risks associated with the development and technological advancement and innovation in the field of the object of the contract risks associated with design / design errors risks associated with technical failures / unavailability / incompatibilities commercial risks risks associated with the performance (technical / logistical / organizational) of the contractor internal commercial risks (working capital insurance) risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 22 risks associated with the context in which the contractor operates (collaborators, subcontractors, third parties, etc.) source: authors, based on their own analyzes and anap recommendations (public procurement guide available at https://achizitiipublice.gov.ro/home) risk analysis – as a process oriented towards understanding the risk, its assessment, providing input data for structuring the identified risk assessment processes. in this process, attention will be paid to detecting the public procurement process directly affected by the identified event the real limits of the elements of each identified event and the possible relationships of this event with other probable events, following the consequences on one or more objectives related to the public procurement portfolio. both negative and positive consequences will be analyzed, according to the precautionary principle (by maximizing negative effects and minimizing positive effects). according ayyub, bilal m., risk analysis „is the technical and scientific process for understanding the nature of the risk and determining the level of risk by examining the basic risk components or elements”. (ayyub, 2014) risk assessment – as a management process based on comparing the level of risk identified with the tolerance criteria of the organization in order to establish initial priorities and adopt the best strategy to address these risks. this process is based on specific risk assessment methods and techniques, adopted at the level of each contracting authority, such as the probability assessment scale, the impact assessment scale or the risk exposure assessment scale. by reference to the content of the standard iso 31010, risk assessment „involves comparing the estimated risk levels with the criteria defined in the context in which it was established, to determine the importance of the level and type of risk” (international organization for standardization, 2009). from the point of view of the tools used to manage the risk management processes:: a) for the process of identification and analysis of risks in the field of public procurement, we consider it useful the use of risk assessment sheets (risk scenarios) that deal in detail, for each event identified at least:  description of its sources/causes, supporting elements and triggering elements.  description of the spatial dimension of the event,  temporary positioning and its duration  the potential evolution of the event over time,  its ability to trigger other subsequent / collateral events that have the potential to influence the effects of the initially identified event or to generate new effects;  the public procurement process/processes affected and the impact of the event on it  estimating the probability of occurrence of the event as well as other subsequent/collateral events  uncertainties associated with the event analysis process b) for the risk assessment process specific to public procurement, we consider it useful the use, as a quantitative method, a risk matrix, prepared separately for each identified risk category, which will highlight the factors which influences the occurrence of the event, analysis of consequences, estimation of the probability of occurrence of the event, the uncertainties associated with the risk analysis process. https://achizitiipublice.gov.ro/home costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 23 as tools for formalizing this stage of the risk management process, we consider as appropriate those recommended by the general secretariat of the government through the package of documents specific to the internal management control system4. we are of the opinion that the tools used in risk management processes as well as the degree of standardization and clarity of information highlighted in these tools can influence the level of quality of the decision-making process adopted at the organization level, with a negative impact on risk treatment. ensuring in this way a unitary concept of risk management, at the level of certain categories of contracting authorities, will allow the trans-organizational consolidation of the results of risk assessments and their quantification at sectoral level (eg hospitals, local public authorities, etc. ) for the purpose of identifying and adopting measures at national/regional level (legislative/administrative) with a favorable impact on reducing the probability/intensity of certain risk categories, common to certain categories of contracting authorities. all these tools for identification and analysis as well as risk assessment methods in the field of public procurement provide input for the risk treatment stage. risk treatment – as a process aimed at identifying the range of options and making the best decisions to address the identified risks. the decisions taken can be oriented towards:  risk avoidance through decisions not to initiate or continue the public procurement process  removal /isolation of the risk (or its source)  changing the nature or degree of probablity of the risk  mitigation of the consequences of risk  transfer or risk sharing to the contractor (or other entity involved in the public procurement process)  the retention / acceptance of the risk in the identified form the selection of the best option is made on the basis of an analysis based on the balance between the effort required by the application of proposed decision (material, human, temporary, financial, etc.) and the institutional benefits, obtained in this way, by the contracting authority, subject to compliance with the applicable legal framework in the field of public procurement. we consider that an option that presents several alleged advantages, with a favorable impact on the management of the contracting authority, but which violates the legal framework applicable to public procurement or the principles underlying the award of public procurement contracts, does not contribute to the purpose of this legal framework defined by article 2 (1) of law no. 98/20165 and is likely to seriously affect the trust, fairness and impartiality in the public procurement system, respectively the health of the competitive framework that ensures the best results on the market for allocated public funds, which is why we consider that this option cannot be part of the risk management process. also during this stage, attention will be paid to the identification of the parameters of residual risks, considered as risks that persist even after the risk treatment stage, on which occasion the opportunity to initiate additional processes to treat these residual risks can be analyzed. methods that can be used in public procurement-specific risk management activities should primarily be those based on risk scenarios and those based on event-ordering and to use input data both from similar procurement processes carried out at the level 4 „methodology of risk management” published by the general secretariat of the government on https://sgg.gov.ro/new/metodologie-scim/ 5 article 2 (1) from public procurement law no 98/2016: „the purpose of this law is to ensure the necessary legal framework to achieve the purchase of goods, services and works in conditions of economic and social efficiency” https://sgg.gov.ro/new/metodologie-scim/ risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 24 of other contracting authorities and from similar processes carried out at the level of the contracting authority (generated by „ex-post” analyzes of the procurement processes carried out). based on the risk sheets, the risk matrix and the risk management plan, a risk register will be drawn up at the level of the contracting authority, as a risk management tool, provided by the law framework6, in which, for each identified risk, at least the following information will be highlighted:  date of risk identification  source of risk  risk description  consequence/ consequences  inherent risk by indicating the probability, impact and exposure to risk  strategy adopted at organizational level  residual risk by indicating the probability, impact and exposure to the residual risk  estimated time for impact  current status of the highlighted risk as highlighted by the general theory of management, the ability to manage risk management processes is directly influenced by the professional experience of people involved in the activities of identification, analysis, assessment and treatment of risks, which is why we consider that the teams selected by the heads of the contracting authorities must be made up of specialists from all sectors of activity within the institution, who have sufficient experience in this field. 3. management of public procurement risks in the context of the emergency triggered by the covid-19 crisis 3.1. decision-making context at the level of contracting authorities with an active role in combating the spread of covid-19 coronavirus and managing its effects after identification in wuhan (china) the outbreak of the novel coronavirus covid19 (december 2019), on january 30, 2020 the world health organization (who) stated that this event is likely to pose a risk to public health in the other states, having the potential to spread globally. in february 2020, both the european center for disease prevention and control (cepcb) and other relevant organizations in the member states sent messages about the need to closely monitor the spread of the new coronavirus covid-19 in order to provide risk assessments involved of this crisis as well as to initiate plans of measures to respond to these risks. subsequently, on march 11, 2020, the world health organization officially declared a state of pandemic and on march 13, 2020, declared europe as an active center of this pandemic. until these moments, data circulating in the public space confirmed that the international epidemiological situation caused by the spread of novel coronavirus covid-19 affected more then 150 countries, infecting over 160,000 people and causing over 5,500 deaths. 6 article 5 (4) of the order of the general secretariat of the government no. 600/2016 on the approval of the „code of internal managerial control of public entities” costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 25 in romania, by the decree no. 195 of 16 march 2020, the state of emergency was established by which special emergency measures were adopted in the field of public order, the economic field, the health field, the field of work and social protection, the field of justice and the field of foreign affairs. therefore, we find that data on the announcement of the covid 19 epidemic event have been transmitted in the public space since january 2020, when the relevant public institutions were responsible for preparing the risk scenarios triggered by the epidemic and initiating action plans that should be undertaken in order to control the spread of this virus in order to reduce its impact on the population. at that time, according to the function of periodic revisions of risk plans, it was necessary to initiate the process of identification-analysis-assessment-treatment of risks caused by the spread of the new coronavirus covid19 in romania, on which occasion the organizational context applicable to this process had to be taken into account, in relation to the type of public institution at which this process should have been initiated as well as the role it would have played in the actions to prevent the spread of the virus and managing its consequences. thus, analyzing from the perspective of the organizational context of some hospital units or institutions actively involved in the implementation of the action plans imposed by triggering the state of emergency, we can appreciate that it was necessary to initiate review processes at the level of public procurement management/updating the risk registers and implicitly the action plans adopted as a consequence 3.2. risk management in the field of public procurement of personal protective equipment, in the context of covid-19. existing protocols in the health environment as well as operational procedures implemented at the level of institutions responsible for emergency management (e.g. romanian general inspectorate for emergency situations), applicable in case of epidemic situations, indicated that in case of a pandemic situation, the need for personal protective equipment and disinfectants is considerably higher than in normal working situations, which is why the attention of public decision-makers should be given priority to the provision of stocks of such products an affordable price. in the following, for simplification, we will approach a risk analysis only from the perspective of the process of purchasing surgical masks, a product that was in great demand during the state of emergency and was used in varying amounts by all public institutions, which played an active role in measures taken to control the spread of covid19 coronavirus and to manage the consequences. in relation to the purchase of this product, the objectives that could be influenced by the risks generated by the covid crisis are: o1. identifying / contracting suppliers who have the capacity to fulfill the public procurement contract o2. delivery of products on time o3 purchasing products at an affordable price following the analysis and assessment of the risks specific to public procurement (table 1), using the tools recommended by the general secretariat of the government7, for public procurement processes for the provision of personal protective equipment in the context of the covid crisis, the following risks have been shown to have a high probability and impact on the achievement of one or more of the above objectives: 7 „risk management methodology” published by the general secretariat of the government at https://sgg.gov.ro/new/metodologie-scim/ https://sgg.gov.ro/new/metodologie-scim/ risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 26 table 2 risk category risk group identified risks influenced target context risks r.1.economi c risks r.1.1. risks related to inflation and / or price stability o3 r.1.2.risks related to the activity of the competitors in the market to which the public procurement contract is addressed o1 +o2 portfolio risks r.2.risks regarding the structuring of the procurement portfolio r.2.1.risks associated with the process of establishing the estimated value and allocating financial resources related to public procurement contracts o3 process risks r.3. internal risks r.3.1. -contractual risks o2 r.3.2.financial risks o3 r.4. commercial risks r.4.1.risks associated with the context in which the contractor operates (suppliers, collaborators, subcontractors, third parties, etc.) o2 r.4.2.risks associated with the timely execution of public procurement contracts o2 source: authors. before presenting an approach on the treatment of these specific risks, as a reference element, we consider relevant the presentation of the table of procurement processes for surgical masks carried out through the seap catalog, between january and april 2020, compared to those carried out in the same period last year. table 3 january february march april 2019 2020 2019 2020 2019 2020 2019 2020 acquisitions 44 17 32 78 11 251 9 263 quantity (pcs) 230.750 60.990 138.350 398.550 51.400 1.376.280 25.450 1.816.527 average unit price (ron /pc) 0,09 0,17 0,08 1,83 0,08 3,75 0,08 2,73 source: seapdirect acquisitions extract http://e-licitatie.ro/pub the following information provided by the romanian public procurement system should also be noted as a reference:  the number of purchases of surgical masks initiated by contracting authorities from using seap and rejected by bidders, in january-april 2020, was approx. 450 acquisitions, representing approx. 74% of total purchases of these products completed in the same period (609 transactions);  between january-february 2020, within the seap, no competitive procedure was initiated (open or simplified tender) for the purchase of surgical masks http://e-licitatie.ro/pub costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 27 and which could have been awarded until the end of april 2020.  the first competitive procedures initiated by seap and aimed at the acquisition of surgical masks were launched in the second half of march 2020, with a schedule of completion, award and contracting beginning may 2020. in detail, it is found that the number of contracts for the supply of surgical masks has increased, compared to the previous year, by approx. 2.5 times in february, 22 times in march 2020 and 30 times in april, which is mainly influenced by the measures adopted by public authorities in the context of the crisis of covid-19. it should be noted that january 2020 does not provide a picture of these purchases that would betray the adoption of early measures to ensure preventive stocks of these products. chart 1 2019/2020 comparative analysis of the number of public procurement contracts concluded for the purchase of surgical masks source: romania's electronic public procurement system (seap) in the same trend, the number of surgical masks purchased increased compared to the previous year, 2.9 times in february 2020, 26 times in march 2020 and 71 times in april 2020. in the same note, it is noted that the number of surgical masks purchased in january 2020 does not seem to be influenced by the messages launched in the public space by the world health organization or european centre for disease prevention and control. 44 32 11 917 78 251 263 0 50 100 150 200 250 300 january february march april surgical masks number of purchases 2019/2020 2019 2020 risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 28 chart 2 comparative analysis 2019/2020 of the number of surgical masks purchased source: romania's electronic public procurement system (seap) as a phenomenon specific to a demand market, generated a growing global need for such types of products, in the context in which the capacity to insure these products in the romanian market was limited (not being domestic producers in this market) the average purchase price had an upward trend, registering in february 2020 a spectacular growth rate (1,076% compared to january 2020), in march a doubling of the price (205% compared to february) and in april marking the first sign of stabilization in the market by returning to the average price recorded in the first 4 months of the year (2.12 lei / piece). again, it should be noted that the average unit price for transactions in january 2020, even if it was significantly higher than the average unit price recorded in the previous year (1.8 times), was not yet influenced by the crisis announced in this market. this table of public procurement of surgical masks shows us a side of the impact that the covid-19 crisis had on the public procurement processes carried out by the contracting authorities in romania, which is characterized by a lack of prevention in terms of ensuring stocks of protection as well as poor risk management in terms of public procurement. these data generated by the public procurement processes carried out through romania's electronic public procurement system (seap) by the contracting authorities involved in the actions to combat and manage the consequences of the pandemic, were constituted as input data that were used in the process of analyzing the range of options and adopting optimal decisions to treat the selected risks. considering the need to equip with personal protective equipment the persons involved in actions to combat the spread of coronavirus covid19 and to manage its effects, possible risk avoidance or risk acceptance options may lead to consequences such as unavailability of products in the required quantity or at the appropriate time, respectively, for the inefficient use of the funds allocated to these acquisitions, with 230,750 138,350 51,400 24,45060,990 398,550 1,376,280 1,816,527 0 500,000 1,000,000 1,500,000 2,000,000 january february march april surgical masks quantities purchased 2019/2020 2019 2020 costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 29 negative consequences on the health of its own staff or citizens, respectively on the financial capacity of the institution. chart 3 comparative analysis 2019/2020 of the average unit prices for surgical mask purchases source: romania's electronic public procurement system (seap) therefore, a risk treatment plan highlighted in table no. 3, appropriate for this context will be based mainly on options aimed at controlling and transferring risks and less at avoiding or accepting risks. 3.3. options for treating with the risks specific to the processes of public procurement of protective materials in the context of an emergency situation. as a first package of risk management measures is the one related to mitigating the consequences of the risks identified by:  dividing the stock of products required to be purchased into batches and sequencing them through public procurement contracts with different delivery terms for each batch, leading to lower prices for the products to be delivered in the second part of contractual interval, with impact mitigation of economic risks (r.1.1) and commercial risks (r.4.1.)  the granting the paying in advance, under conditions provided by the law, to the selected provider, as will lead to improving the bargaining power of the provider in relation to its competitors, followed by decreasing the internal risk of the supplier (r.3.1, r.3.2.) and commercial risks (r.4.1 and r.4.2.)  using of framework agreements, with additions to the quantities of products subject to the contracting authority's plans in case of emergency, leading to a reduction in procedural times related to procurement processes and the maintenance of an adequate price of contracted products, with the impact of mitigating economic risks (r.1.1.) risks regarding the public procurement portfolio (r.2.1), internal risks of the supplier (r.3.1. and r.3.2.) as well as commercial risks (r.4.1, r.4.2) .  using at the level of the contracting authority of a list of pre-selected suppliers 0.09 0.08 0.08 0.08 0.17 1.83 3.75 2.73 0 0.5 1 1.5 2 2.5 3 3.5 4 january february march april surgical masks average unit prices (lei / piece) 2019/2020 2019 2020 risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 30 (like „qualified vendor list”), for those products that are identified in the response plans of the contracting authority in emergency situations. the criteria on the basis of which these suppliers can be pre-selected, will be selected according to the specifics of each product. (e.g. the length of the distribution chain between the manufacturer and the contracting authority, the existence of domestic producers, the responsiveness, the product's own storage capacity, quality and safety standards, price stability, etc.). this treatment will lead to a better assessment of the contracting authority's financial effort, to reducing the administrative time required by the contracting authority's operational procedures, to conduct public procurement processes and to select the supplier, in accordance with the law, while maintaining a high level of supplier response, and as appropriate, the quality of the product supplied. this measure will have a mitigating impact on economic risks (r.1.2), portfolio risks (r.2.1.) and trade risks (r.4.1 and r.4.2.)  the use in the procurement process of a requirement regarding the presentation by the bidder of the proof of availability and possibility to reserve the stock of products subject to the future contract (at the manufacturer, logistics operator, own warehouse, etc.), measure that will have a diminishing impact of the internal (r.3.1 and r.3.2) and commercial (r.4.1. and r.4.2) risks of the future supplier. another package of risk management measures may be the one related to the transfer of risks through:  segmentation of the quantity of products needed in distinct lots, which will be assigned to distinct economic operators, which will lead to a transfer of internal (r.3.1., r.3.2.) and commercial risks (r.4.1., r.4.2), between competing economic operators operating in this market segment.  award of contracts through centralized procurement units (e.g. onac8) for part of the required quantity of products, which will lead to a transfer to this centralized procurement unit of economic risks (r.1.1, r.1.2) and of the risks regarding the public procurement portfolio (r.2.1.0). these examples of risk treatment measures can be the starting point for improving risk management plans specific to contracting authorities involved in emergency management actions and combating their effects, such as county/municipal emergency hospitals, county emergency inspectorates, county police inspectorates, etc. 4. directions for action on dealing risk treating related to public procurement processes carried out in the context of emergencies as highlighted in countless works and published articles, the covid-19 crisis has contrasted the reduced ability of public authorities to change in the short term and to take decisions in a context of uncertainty. according to the documents published by the contracting authorities in romania, we find that, for the most part, they were limited to a formalized risk management, without generating risk plans that refer to concrete measures, specific to public procurement, by which to highlight the actions to be taken in case of emergencies. 8 onac:the national office for centralized procurement, whose role is to organize centralized procurement for and on behalf of the contracting authorities in romania, for products with a significant share in the national public procurement portfolio. costel ceocea, raluca alexandra ceocea, adrian vatamaniuc, vasile mihălaș 31 therefore, the experience gained after the events that took place in romania during january-may 2020, caused by this health crisis, shows us that on the line of change management, the contracting authority must adopt a change management appropriate and to change its attitude also in terms of the risks specific to public procurement. the crisis triggered by the covid-19 pandemic provided the necessary opportunity for new concrete measures, aimed at increasing the capacity for change and administrative capacity at the level of contracting authorities, in terms of managing procurement portfolios in an emergency context. thus, as directions of action at regional/local level we highlight at least the following: a) developing working procedures in the field of risk management, with mandatory highlighting of risks specific to public procurement and focusing less on formal aspects of processes and more on identifying risk management measures, in the context of the legal framework on public procurement; b) development of human resources trainings programs, carried out sectorally, focused on the initiation and management of risk management plans specific to certain categories of contracting authorities, based on workshops and case studies aimed mainly at developing identification skills, analysis, assessment and treatment of sector-specific risks related to the contracting authority; c) updating the system and operational procedures, existing at the level of the contracting authorities involved, the actions of managing emergency situations and combating their effects, by increasing the frequency with which the risk plans (monthly / quarterly) related to public procurement of products/ services /works identified to be necessary in such situations: d) operationalization of ex-post analyzes related to the previous public procurement processes, at the level of the contracting authority, which should provide detailed information that can be used as input data in the processes of elaboration and management of risk management plans. as complementary measures to the above, we also propose a package of action directions at national level such as: i) establishment and/or operationalization of central procurement units at the level of ministries that are involved in the management of emergency situations (eg ministry of health, ministry of interior, ministry of national defense, ministry of environment, etc.), at the level of which to manage specific risk management plans in the field of public procurement. ii) implementation (procedurally) of a unitary risk management concept at the level of certain categories of contracting authorities (eg hospitals), based on eu9 and romanian10 guidelines as well as through guides and methodologies published in this regard; iii) operationalization of a tertiary legislative package by national agency for public procurement and /or general secretariat of the government, for the implementation at the level of the contracting authorities involved the actions of management of emergency situations and combating their effects (mandatory regime) of risk management plans, specific to public procurement. in this regard, it is necessary for national agency for public procurement, in collaboration with the relevant institutions, to generate guidelines on the initiation and operationalization of these risk management plans, by highlighting standard risk management measures identified to be common to a certain category of contracting authorities. 9 e.g.: „risk assessment and mapping guidelines for disaster management” 10 e.g.: „guide to the implementation of internal control standards in public procurement management by the contracting authorities standard 8risk management” as a supporting document for the osgg 600/2016 risk management in public procurement process. particularities and solutions for optimizing public procurement in romania in the context of emergency caused by the covid-19 crisis 32 also, as a specific tool for risk management, we propose that at the level of certain contracting authorities, which are expected to be involved in actions to manage emergencies and combat their effects, to periodically conduct stress tests to analyze after the implementation of the above measures, the potential effects that may generate certain risks in the category of the above identified on the objectives set at the level of public procurement portfolio and on the performance indicators set at the level of the contracting authority. references adroniceanu, a. (1999), public management, bucharest: economic publishing house. ayyub, b. m. (2014), risk analysis in engineering and economics, maryland, usa: chapman and hall/crc. becq, b. (2006), procurement reform and capacity building: shortcuts and tools to facilitate the implementation (a 2-a ed.). florea-ianc, m. m. (2010), identifying and assessing the categories of risks associated with audited organizations, annals of the “constantin brâncuşi” university of târgu jiu, economy series, nr. 1/2010. grossi, g., & steccolini, i. (2014), accounting for public governance, emerald insight, vol 11, no.2, 86-91. harink, j. (1999), excelling with e-procurement: the electronic highway to competitive advantage, alphen aan den rijn, holland: samson. imbrescu, i. (2010), elements of public management, bucharest: lumina lex. international organization for standardization (2009), iso 31010 risk management — risk assessment. national audit office (2000), supporting innovation: managing risk in government departments, london. national audit office (2004), managing risks to improve public services, london. noordegraaf, m. (2015), public management: performance, professionalism and politics, palgrave. the government of romania, (2018), order of the general secretariat of the government no. 600/2018, the government of romania. vișoiu, i., & rusu, c. (2010), implementation of risk management at organizational level (application guide), bucharest: economic publishing house. 1. introduction 2. the risk and public procurement processes 2.1. the context of management risk specific to contracting authorities 4. directions for action on dealing risk treating related to public procurement processes carried out in the context of emergencies references (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 75 romanian brand notoriety among young people laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract based on the results of a direct research conducted in april 2016 among students of the faculty of economic sciences of the vasile alecsandri university of bacau, this paper highlights the notoriety of romanian brands in general, as well as for product categories: food products and alcoholic beverages, cosmetics and personal hygiene products, cleaning products, clothing, footwear, consumer electronics and cars. the research was conducted on a sample of 100 respondents aged between 18-30, having an exploratory character. we studied unaided brand awareness, respondents being asked to indicate the top three brands that come to their mind for each evaluated product. the results of the study revealed the most recognized romanian brands on the investigated sample, both in terms of known brand enunciation among the top three, and as first nominations made (top-of-mind awareness). keywords direct research; brand; unaided brand awareness; top-of-mind awareness jel classification m31 introduction in april 2016 we organized a survey among students of undergraduate studies of the faculty of economic sciences of the vasile alecsandri university of bacau, one of the objectives being to identify the romanian brand awareness among youth in general and for product categories: food products and alcoholic beverages, cosmetics and personal hygiene products, cleaning products, clothing, footwear, electronics and appliances, cars. the research among the segment of young people is based on the fact that they usually have different preferences compared to older people in terms of brands / products, given the fact that in the process of self-knowledge, they are very open to new things, even looking for it actively (pringle & field, 2008). on the other hand, according to the same authors, older people are less receptive to novelty (giving as example, music), their tastes acquired during youth may remain unchanged. in this context, this paper aims to identify how common are romanian brands to young population, which is in the process of formation, starting from the idea that, as the brand is known and appreciated in this period of life, it has a greater chance to be preferred and later, as the individual ages, in the context of decreasing interest in novelty. studying brand involves evaluating several aspects. thus, datculescu (2012) states that matters usually covered are: brand awareness, brand knowledge, the general opinion about it, functional performance of the product, image, feelings and emotional states evoked, the extent to which they influence behavior. romanian brand notoriety among young people 76 marketers are very interested regarding consumers' knowledge about brands. most strategies aim to make consumers aware of a brand, teach them about it, and influence them to buy it (peter & olson, 2008). note that from all listed matters, which can be investigated, the paper presents only the information referring to brand awareness. in the business dictionary, brand awareness is defined as “extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. expressed usually as a percentage of target market, brand awareness is the primary goal of advertising in the early months or years of a product's introduction” webfinance, inc. (2016). to make buyers aware of a brand is a prerequisite (but not sufficient) to convince buyers to purchase it (kotler & pfoertsch, 2006). methodological issues the research was conducted on a sample of 100 young people aged between 18 and 30, and data collection was performed using questionnaire by self-registration. sampling method used was sampling group, from a total number of 9 study groups were selected 4 groups and put under investigation. we opted for the assessment of brand awareness, asking respondents to indicate the top three domestic brands that come to mind in general, and by product category (unaided awareness). limits and value of research results the conducted research is exclusively representative for collectivity made up of 1830young students of the faculty of economic sciences of the vasile alecsandri university of bacau (for a probability of 95% results guarantee and an error of 2.17%). the importance of research results comes from the fact that we give a guideline on the awareness of romanian brands for investigated product categories, the study results could constitute hypotheses for research on representative samples of different communities of young people (from the county, region, country, etc.). in interpreting the results one should, however, realize that the awareness is only a necessary, but not sufficient, condition for a successful brand, so to have a whole image about the popularity of romanian brands it`s needed to extend research and evaluation on other issues which highlight the performance of a brand. the research results referring to romanian brands awareness among youth the first aspect considered in the undertaken research was the knowledge of unaided awareness of romanian brands in general (without taking into account the category of product/service to which it relates). thus, when asked to indicate the top three domestic brands that come to mind, 86 respondents indicated 3 brands, 9 respondents 2 brands, and 5 of them one brand. given the number of respondents who indicated a particular brand among the top three that come to mind, according to table. 1, the best known romanian brands are: dacia first place, pambac second place (both indicated by over 30 respondents), followed by: agricola third place, cotnari fourth place, timişoreana fifth place (indicated by over 10 respondents), bucegi sixth place, napolact and ursus both ranked seventh, ciuc, farmec, dedeman all three ranked eighth, luca, glade, covalact ranked ninth. but if we take into account only the first response indicated by respondents, knowing that the best known brand is first mentioned (top of mind awareness), the position http://www.businessdictionary.com/definition/brand.html http://www.businessdictionary.com/definition/customer.html http://www.businessdictionary.com/definition/associated.html http://www.businessdictionary.com/definition/target-market.html http://www.businessdictionary.com/definition/primary.html http://www.businessdictionary.com/definition/goal.html http://www.businessdictionary.com/definition/advertiser.html http://www.businessdictionary.com/definition/month.html http://www.businessdictionary.com/definition/product.html țimiraș 77 held by some brands may register differences. thus, it appears that there are brands which are indicated by a smaller number of respondents among the top three known, but most of them have nominated them "at the forefront" of the list. for example, farmec, nominated by 6 respondents among the top three known brands, was given the first place by 5 of them, so outpaced brands such timişoreana, bucegi, ursus, cotnari and napolact, listed above in higher positions. similarly, cotnari brand, located on the fourth position in terms of nominating, is out of the top 10 brands in the country based on the top of mind awareness. table 1 shows local brands which were given a position on top by a minimum of 5 respondents. note that some of the listed brands are not indigenous, but none of them have exceeded a total of five nominations. table 1. the most famous romanian brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents dacia 20 7 10 37 pambac 13 11 10 34 agricola 6 9 4 19 cotnari 1 8 4 13 timişoreana 4 6 1 11 bucegi 3 2 4 9 napolact 1 5 1 7 ursus 2 1 4 7 ciuc 1 3 2 6 farmec 5 1 6 dedeman 2 1 3 6 luca 3 2 5 poiana 3 2 5 covalact 1 4 5 other answers** 35 38 38 x total answers 100 95 86 x * brands indicated by a minimum 5 respondents. **including non-indigenues brands. in the following lines are presented the results of research about the unaided awareness of the brands for some product categories, results obtained following the same procedure. thus, regarding the food products (excluding alcoholic beverages), 44 respondents indicated 3 brands, 18 respondents 2 brands and 16respondents one brand. note that 22% respondents could not indicate any domestic brand of food. the reasons for which about ¼ of the respondents could not indicate at least one romanian food brand products may pose a problem to be studied in future research, given the nature of current consumption and thus permanent contact with this product category. the data presented in the table. 2 attests that the best known brand of food products is pambac. it stands out over other brands being in the forefront both in terms of brand nominations as the first option (top of mind) and in terms of the number of nominations among the top three known. romanian brand notoriety among young people 78 second after pambac, in terms of number of respondents who indicated it among the top three known brand stands agricola, but is surpassed by napolact in termsof the indicator top of mind awareness. other brands of domestic food products, which enjoy a greater awareness among young people are: poiana, borsec, dorna, rom, zuzu, covalact, luca, albalact. table 2. the most famous romanian food brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents pambac 24 12 4 40 agricola 4 12 4 20 napolact 6 4 10 poiana 5 2 1 8 borsec 2 3 2 7 dorna 2 2 3 7 rom 1 3 3 7 zuzu 2 2 3 7 covalact 2 2 2 6 luca 2 2 2 6 albalact 2 2 1 5 other answers** 26 16 19 x total answers 78 62 44 x * brands indicated by a minimum 5 respondents. ** including some non-indigenues brands. in the category of alcoholic beverages, it appears, from the number of respondents who indicated among the top three known brands,that the most popular brands are: timişoreana ciuc, bucegi, cotnari, ursus, noroc, ciucaş. considering the first nominated brand, the results show that the cotnari ranks first, followed by timişoreana ciuc, ursus, noroc. of all the respondents. 49 indicated 3brands, 24 indicated 2 brands and 15 indicate 1 brand of alcohol product, 12 of them failing to indicate any brand. there is a higher proportion of those who could indicate atleastone brand of alcoholic beverages, compared to the food productssituation, which reflects a high degree of knowledge of local brands of alcoholic beverages compared to those specific to food products. table 3. the most famous romanian alcoholic beverages brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents timişoreana 15 15 7 37 ciuc 13 9 6 28 bucegi 8 10 8 26 cotnari 16 6 3 25 ursus 10 12 1 23 noroc 5 5 2 12 țimiraș 79 ciucaş 3 3 4 10 other answers** 18 13 18 x total answers 88 73 49 x * brands indicated by a minimum 5 respondents. ** including some non-indigenues brands. for the category of cosmetics and personal hygiene, the best known brands (indicated by a minimum of 5 respondents) are: farmec and gerovital. it appears that under 50% of respondents were able to identify at least one brand of romanian cosmetic products and personal hygiene and only 5 people idicated three brands. it should also be noted that except for the two brands (farmecand gerovital), a significant share in total of other mentioned brands was held by foreign brands (over 75%) which reflects a low level of knowledge of the romanian brands in this category. table 4. the most famous romanian cosmetics and personal hygiene brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents farmec 8 3 1 12 gerovital 6 1 1 8 other answers** 33 15 3 x total answers 47 19 5 x * brands indicated by a minimum 5 respondents. ** over 75% of them fall into the category of foreignbrands. for cleaning products category, the most famous romanian brands are dero and triumph. over 40% of respondents were not able to identify at least one domestic brand of cleaning products. in other category nominations (except dero and triumph), 95% have targeted foreign brands, certifying thus very low level of knowledge of local brands for this product category. table 5. the most famous romanian cleaning productsbrands * (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents dero 12 3 2 17 triumf 2 3 5 other answers** 45 23 11 x total answers 59 29 13 x * brands indicated by a minimum 5 respondents. ** 95% of them fall into the category of foreignbrands. for clothing and footwear categories, awareness of romanian brands is relatively identical. only one brand for each category exceeded 5 nominations mizar for clothing and marelbo for footwear. over 60% of respondents were not able to identify romanian brand notoriety among young people 80 any romanian brand for the two categories and the category "other answers" (see tables 6 and 7) hold a significant share of foreign brands. so, in this case too, awareness is extremely low for romanian brands, respondents indicating eithernolocal brand or confusing them with foreign brands. table 6. the most famous romanian clothing brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents mizar 14 14 other answers** 25 17 5 x total answers 39 17 5 x * brands indicated by a minimum 5 respondents. ** 70% of them fall into the category of foreignbrands. table 7. the most famous romanian footwear brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents marelbo 14 14 other answers** 19 13 5 x total answers 33 13 5 x * brands indicated by a minimum 5 respondents. ** over 75% of them fall into the category of foreignbrands. allview and arctic brands are the only romanian electronics and home appliances brands known by the respondents. more than half of the respondents were not able to identify at least one brand for this product category. other mentioned brands are foreign or, where appropriate, brands of local distributors of electronic products and home appliances. table 8. the most famous romanian electronics and home appliances brands* (number of respondents who indicated a particular brand among the top three that come to mind) brand as first option as second option as third option % persons who indicated brand among the top 3 known brands in total number of respondents allview 15 1 16 arctic 7 1 8 other answers** 22 18 9 x total answers 44 19 10 x * brands indicated by a minimum 5 respondents. **brands of the local distributors of electronic products and home appliances and brands that do not fall into the category of domestic (about 70%). țimiraș 81 for car category, 83% indicated romanian brand dacia, the remaining respondents indicating foreign brands (6%) or, where applicable, not indicating any brand. conclusions results of research referring to awareness of romanian brands in general and by product category certifies a lesser degree of knowledge at least for certain product categories. the best known romanian brands, whatever category of products / services to which they relate, ranked according to the number of respondents that indicated in the top three known brands, are: dacia, pambac, agricola, cotnari, timişoreana, bucegi napolact, ursus, ciuc, farmec, dedeman, luca, poiana, covalact. in some product categories, given the same indicator, the best known brands are: pambac, agricola, napolact, poiana, borsec, dorna, rom, zuzu, covalact, luca and albalact for food products; timişoreana, ciuc, bucegi, cotnari, ursus, noroc and ciucaş for alcoholic beverages; farmec and gerovital for cosmetics and personal hygiene; dero and triumph for cleaning products; mizar for clothing; marelbo for footwear; allview and arctic for electronics and home appliances; dacia for cars. for the studiedproduct categories, the greatest degree of knowledge of local brands are found in alcoholic beverages and cars (in the latter case, given the share respondents who know only romanian brand dacia, compared with the share of those who indicated minimum a local brand for this product categories), followed by food products. on the other product categories there is a low degree of knowledge of local brands, respondents either could not show any brand or confusing the romanian with foreign brands. given the exploratory dimension of conductedresearch, the results can form hypotheses for future research on representative samples of regional, national, etc., in which case, if they are confirmed, may underlie decisions to improve the communication process of local companies managingthe awareness of their brands. references dătculescu, p. (2012), cercetarea practică de marketing, editura brandbuilders grup, bucureşti. kotler p., pfoertsch w. (2011), b2b brand management, editura brandbuilders grup, bucureşti, after kotler p., pfoertsch w. (2006), b2b brand management, spinger-verlag, berlin. kumar v., aaker, d.a., day g.s. (1999), essentials of marketing research, john wiley & sons, inc., new york chichester weinheim brisbane singapore toronto. pringle h., field, p. (2011), strategii pentru brandingul de success. notorietatea şi longevitatea unei mărci, editura polirom iaşi, after prongle h., field, p (2008) brand immortality. how brands can live long and prosper, kogan page limited, london. peter, j.p. & olson, j.c. (2008), consumer behavior& marketing strategy, international edition, mcgraw-hill/irwin. săndulescu l. (2015, september, 18), top 100 cele mai puternice branduri romanesti, revista biz available at http://www.revistabiz.ro/top-100-cele-mai-puternicebranduri-romanesti/. webfinance, inc. (2016), business dictionary (2016), available at http://www.businessdictionary.com. http://www.revistabiz.ro/top-100-cele-mai-puternice-branduri-romanesti/ http://www.revistabiz.ro/top-100-cele-mai-puternice-branduri-romanesti/ microsoft word rotila aristita engl. financial statements – basis for assessing the financial performance from the investors’ perspective, by means of prospectively oriented indicators aristiţa rotilă, lecturer phd, university of bacau, romania abstract the items of information within the financial statements are presented with a general purpose, in order to satisfy the needs of all categories of users but, in this paper, we decided that, starting from the financial statements, we could approach the issue of assessing the financial performance only from the single perspective of the investors, also taking into account the market value of the company. the market value of a company represents the sum of the market values of the two components in the capital’s structure: shareholders’ equity and liabilities. it is considered that it is only in the case of shareholders’ equity that the market value differs from the accounting value, but this is not the case with liabilities, so the “market value added” will be researched only by taking account of shareholders’ equity. keywords financial performance, book value, market price, earnings, dividend, market capitalization, shareholders’ equity, share as it is mentioned in the romanian accounting norms, accounting must produce, publish and keep the information about the financial position, the financial performance and the cash flows, both for the internal requirements of the entities, and regarding the relationships with the present and potential investors, the financial and commercial creditors, the customers, the public institutions and other users1. equally interested in the proficient functioning of an entity and in the performance of that business, together with the investors and financial creditors, are the managers, but it is not our intention here to study performance from their viewpoint2 as well. at any rate, the managers’ activities must be convergent with the interests of the investors; they must be receptive to the viewpoint and expectations of the investors regarding the “time, the attainment and evaluation of results”, the main task of the management being to “bring stability, development and credible financial performance for the investment entrusted by the shareholders”3 because, when the shareholders buy 1 accounting law no. 82/1991, republished in the official monitor no. 454 / 2008, art. 2, allign. (1). 2 an analysis of financial performance from a managerial perspective would focus on the evaluation of returns in case of a company’s activities, by means of investigating the profit and loss account (using absolute values and rates), and of the efficiency of using the company’s resources, by means of a combined investigation of the balance sheet and of the profit and loss account (using different rates). 3 helfert a.e., tehnici de analiză financiară, ghid pentru crearea valorii, 11th edition, bmt publishing house, 2006, pag. 131 and 162. 100 studies and scientific researches ‐ economic edition, no. 14, 2009  shares, in fact they employ the firm to create value for them4. in order to assess the financial performance from the perspective of the investors we must take into account a series of indicators measuring the profitability of their investment and the means of distributing the profits they have (the distribution rate or the ratio between the reinvested part and the one distributed as dividend), based on the current profits generated for them by the firm’s activity, but we must also take into account a range of indicators measuring the expectations related to the future performances. the investors are obviously waiting for the gradual increase of the market value of their shares. therefore, what is of main concern for the investors in the shares of a firm is a combination between the remuneration under the form of received dividends and the increase/ decrease of share-prices, an indicator which is also named total shareholder return. benefiting from the information regarding the past performance, with the purpose of determining the prospective dimension of a company’s financial performance, the investors will appeal to a correlated analysis of the information deriving from the financial statements with information regarding the market price (the share list) of the shares. in that sense, together with the indicators earnings per share, dividend per share, book value of a share and return rate on shareholders’ equity, resulting from the financial statements, there can be calculated a series of indicators characterizing the expectations or hopes of the investors regarding the achievement of future earnings. such indicators which “prospectively consider a company’s financial performance” are: price/earnings ratio – per; dividend yield – divy; price/ book value ratio. by means of these indicators the position occupied on the market by a certain company can also be caracterized, these indicators being also known as market indicators or indicators of the market position. we could also include in the category of indicators which take account of the prospective financial performance of a company the earning per share if, when calculating it, we could take into account not the net earning but the comprehensive income of the accounting period5, which is oriented towards the future because it takes into consideration not only the profits and losses achieved, recognised in the profit and loss account, but also the ones which have not been achieved yet but will be confirmed in the future and which, on a regular basis, are recognised in the shareholders’ equity. for our study we examined the information presented in the financial statements of a commercial company in romania which operates in the field of “building and repairing spatial aircrafts and crafts”, which we conventionally call here s.c. alfa s.a. the company in view has been listed on the bucharest stock exchange (bvb) since 1998. at the same time, we have also acquired some information from the site of the market where the alfa shares are traded. the indicators afferent to the company for the period 2003-2007, representing the data necessary for the calculation, as well as the values resulting from the calculation, are presented by us in the table below. table no. 1: indicators of s.c. “alfa” sa 4 tabără n., horomnea e., dicu r., performanţa firmei în contextul reglementărilor internaţionale, part 2, in the journal contabilitatea, expertiza şi auditul afacerilor, no. 6/2008, pag. 20. 5 see jianu i., evaluarea, prezentarea şi analiza performanţei întreprinderii: o abordare prin prisma standardelor internaţionale de raportare financiară, ceccar publishing house, bucureşti, 2007, pag. 457. 101 studies and scientific researches ‐ economic edition, no. 14, 2009  year indicator 2002 2003 2004 2005 2006 2007 nominal value of share (nv) lei/share 2,50 2,50 2,50 2,50 2,50 2,50 book value of share (bv) – lei/share 3,16 3,32 3,43 3,59 5,70 5,68 average value of share on market (p6) – lei/share 3,14 3,23 3,91 4,73 5,70 16,89 net earnings per share (eps) – lei/share 0,52 0,55 0,52 0,58 1,15 0,87 dividend per share (dps) – lei/share 0,35 0,36 0,35 0,44 0,87 0,65 distribution rate (dps/eps) 67% 65% 67% 76% 76% 75% price/earnings ratio (per) 6,04 5,87 7,52 8,16 4,96 19,41 dividend yield (divy) 11,15% 11,15% 8,95% 9,30% 15,26% 3,85% price/ book value ratio (p/bv) 0,99 0,97 1,14 1,32 1,00 2,97 but before interpreting the performance indicators oriented towards the future, we can firstly observe the attitude of the company’s management regarding its dividend policy. the ratio between the reinvestment and the distribution of the profit is clearly in favour of distribution under the form of dividends, the distribution rate having values between 65% and 76% in all the period surveyed. the evolution of the two indicators, the earning per share7 and the dividend per share, as well as the evolution of the absolute value of the net earning and of the dividends, indicators which influence the investors’ future decisions, can be represented as follows: 0 0,2 0,4 0,6 0,8 1 1,2 1,4 2.002 2.003 2.004 2.005 2.006 2.007 dividend per share earning per share figure no. 1. indicators earning per share and dividend per share 6 we use this term since we have not taken into account a market price at a certain moment but an average price calculated for all the transactions that took place each year at a time. 7 we must mention the fact that all the shares of the company are ordinary ones and there are no potential ordinary shares which would induce the issue of dilution of earnings for ordinary shares and of determining the earning per share in two ways, the basic one and the diluted one. 102 studies and scientific researches ‐ economic edition, no. 14, 2009  0 2.000.000 4.000.000 6.000.000 8.000.000 10.000.000 12.000.000 14.000.000 16.000.000 2.002 2.003 2.004 2.005 2.006 2.007 net earning dividends figure no. 2. indicators net earning and dividends at the same time, two other values appear in the calculation of the indicators suggested for analysis, namely, the market price (in our study, the average value of a share on the market) and the book value of a share. the difference between these two indicators (price per share – book value of share) explains the “market created value” for a share which, at the level of the company, is equal to the difference between market capitalization8 and the shareholders’ equity. according to the theory of the efficient markets, the share list “reflects, as a tendency, the future performance” of the issuing entity, and constitutes “one of the clearest signals connected to the performance of a listed company”, and an increase in the share list is interpreted as “the investors’ anticipation of a performance in continuous improvement and the vice versa”9. a minority investor, deprived of the possibility to take decisions at the management level of the entity in which he invested, could use as a means of influencing the decisions related to the entity only the “share list” and, if the entity offers any reasons of unease, he could take the decision of selling the shares. similarly, the strategic investor could take a series of major decisions for the entity’s life, such as the substantial alteration of the policy concerning investments, the choice of clients or suppliers, financing, payment etc., or, in other words, “he could create a greater value for the company” and will “generally be interested in paying a higher price than the share list”. a comparative evolution of the two values per share, the market price and the book value, will be presented in the following figures. 0 2 4 6 8 10 12 14 16 18 2002 2003 2004 2005 2006 2007 average value of share on market book value of share figure no. 3. value per alfa share from the diagram presented in figure no. 3. we can observe that both the book value 8 the value according to which the shareholders’ equity of a firm is assessed by the market, also named “market capitalization”, is determined by the product between the number of shares issued and the market price of a share. 9 dragotă v., ciobanu a., obreja l., dragotă m., management financiar, vol. 1: analiză financiară şi gestiune financiară operaţională, the economic publishing house, bucureşti, 2003, pag. 94-95. 103 studies and scientific researches ‐ economic edition, no. 14, 2009  and the market value of a share underwent an ascending evolution between 20022007, excepting the last year, when the book value went through a slight descent at the level of a share (5,68 lei compared with 5,70 lei, the permanent capitals dropping with 0,44%). the two values had close amounts in 2002 and 2003, the differences between them, very small ones (0,02 lei and 0,09 lei), being favourable to the book value, which means that the value created by the market was a negative one. between 2004 and 2005 the market value increased, exceeding the book value with 0,48 lei/ share (13,99%) in 2004, respectively with 1,14 lei/ share (31,74%) in 2005, which means that the market added value for the company. on 31.12.2006, as a result of the reassessment of the constructions (16.522.383 lei revaluation differences) and of going through a significant increase of the financial result of the financial year as compared to the previous financial year (almost its double – 197,80%, from 6.800.130 lei to 13.450.668 lei), the book value which, previously, as we have shown, was below the market value with 1,14 lei/ share, reached the level of the one last mentioned, namely, 5,70 lei/ share. it is evident that there are many factors influencing the market price of an entity’s shares, but we consider that the reporting of such a net profit in the financial statements, which meant almost a doubling of the earning per share (a growth from 0,58 lei to 1,15 lei), had positive effects concerning the market price in the period following the general assembly (12 april 2007) which endorsed the financial statements, including the distribution of the net profit for dividends in a proportion of 75,76% (10.190.878 lei). as a consequence, in 2007, the book value (5,68 lei/ share) is significantly exceeded by the market price (16,89 lei/ share – the annual average, respectively 16,25 lei/ share – the average in december). the evolution of the average trading price in 2007 is presented in the following diagram. 18,90 21,22 18,1718,39 19,1419,23 14,86 12,03 9,21 16,09 16,25 19,22 0 5 10 15 20 25 january february march april may june july august sept ember oct ober november december figure no. 4. the monthly evolution of the average trading price of alfa shares in 200710 on the basis of these two values, the market price and the book value, we determine the value of the prospectively oriented indicator concerning performance, the price/ book value ratio. the price/ book value ratio (p/bv) characterizes the investor’s policy from the perspective of supplementary gains (lower or higher) expected for the future. the indicator establishes the ratio of the value “attributed by the investors” to the entity and its book value resulting from the balance sheet. in the case of s.c. alfa sa, the extent of the p/bv indicator evolved during those 10 source: annual report, 2007, s.c. „alfa” sa. 104 studies and scientific researches ‐ economic edition, no. 14, 2009  six years as shown in the following diagram: 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 2002 2003 2004 2005 2006 2007 figure no. 5. the evolution of the indicator price/ book value it can be observed that, if between 2002-2006 the investors, in general, appreciated the value of the entity at a value which was close to the book one (with small differences in 2004 and 2005), those who purchased shares in 2007 had a much more optimistic outlook, foreseeing that they would carry out supplementary gains in the future and, as a consequence, they attributed an almost threefold value to the company, the dimension of the ratio price/ book value being of 2,97. regarding the indicator price/ earnings ratio (per), also known as earnings multiplier or capitalization coefficient, it is used as a general estimator of the manner in which the market judges the financial performance of the company and its prospects11. it is one of the most frequently used analysis indicators in case of entities listed on the stock exchange, indicating how much an investor is ready to pay for a unit (one leu) from the profit per share achieved by the entity. this indicates, at the same time, the time unit (measured in years) in which an investor who purchases certain shares at the current market price can retrieve his investment on the basis of the annual net profits of that particular entity. from the diagrams below we can observe that the investors who purchased alfa shares paid a different price from a year to another for a leu from the profit per share, which means that even their range of expectations for the recovery of the investment is different, this commonly being between about 5 years (4,96 years in 2006) and 8 years (8,16 years in 2005), with the exception of the investors in 2007 who, we might say, bought the profit per share for a period of 19-20 years, under the conditions that this might remain constant. 0,00 5,00 10,00 15,00 20,00 25,00 2002 2003 2004 2005 2006 2007 11 see tehnici de analiză financiară, ghid pentru crearea valorii, 11th edition, bmt publishing house, 2006, pag. 138. 105 studies and scientific researches ‐ economic edition, no. 14, 2009  figure no. 6. price/earnings ratio (per) 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 16,00 18,00 2002 2003 2004 2005 2006 2007 average value of share on market earnings per share figure no. 7. indicators price per share and earnings per share for an already made investment, if the earning per share increases or diminishes, and it was observed to happen from a year to another in the case of the company in our example, then the investor will have to wait for a shorter or longer period of time so as to recover his investment from the profit. but the greater the rate of benefit growth per share is, the more attractive the share is, and the investors are more prepared to buy the earning per share for a longer period of time, which actually means a greater per indicator, and the smaller it is then the more reduced per is. another performance indicator from the investors’ perspective, as we have mentioned above, is represented by the dividend yield. the dividend yield (divy), also named the dividend rate or share profitability, represents the ratio between the annual dividend of a ordinary share and the market price of the share. it expresses, for the shareholders, the current profitability of a ordinary share obtained only on the basis of dividends received/ to be received, without taking into consideration the potential gains or losses of capital. contrary to the earning per share which conveys the theoretical enrichment of the shareholder during a year as related to a share, the dividend per share represents a cash flow. the distributed dividend per share also partially influences the market price of a share, but the frequency of its influence is lower in the case of romanian companies which report their dividends only annually as compared to companies in foreign countries where the dividends are reported each quarter. it is definite that certain influence with quarterly frequency can be observed in case of the dividends awaited by the shareholders, taking into account the dividend policy practised by the company by considering the quarterly net financial results. it is well-known the fact that there are requirements of quarterly reporting for the companies whose shares are admitted for trade on a regulated market, the reports being open to the public12. in the case of the entity under study here, the dividend yield did not have a constant evolution during those 6 years, but a fluctuating one (see figure no. 8), obviously depending on the extent of the two factors: the dividend per share and the market price of the share, whose evolution was presented above. 12 see regulation no. 1/2006 regarding the issuers and operations with securities approved by order no. 23/2006 (art. 113) of cnvm. 106 studies and scientific researches ‐ economic edition, no. 14, 2009  0,00% 2,00% 4,00% 6,00% 8,00% 10,00% 12,00% 14,00% 16,00% 18,00% 2002 2003 2004 2005 2006 2007 figure no. 8. the dividend yield (divy) the annual values of the indicator were of 11,15% between 2002-2003, it undergoes a descent of 8,95% in 2004, then it goes through ascent in the following two years, reaching the level of 15,26% in 2006. in 2007, the dividend yield declines almost four times as compared to the previous year, and this was caused particularly by the extremely strong increase of the market price (as we have shown, there was almost three times the value, from 5,70 lei/ share to 16,89 lei), and, at the same time, this was caused by a decline of the dividend per share. the evolution which was last mentioned must not necessarily be appreciated as negative as far as what matters is, as we have shown above, the total profitability for shareholder, namely the dividends per share accumulated with the increase of share prices. by means of the increase of share prices traded in 2007, the market truly created an additional value for the existing shareholders. clearly, in order to appreciate if, on a short term, the investment in alfa shares was the best choice for the investors in each period taken separately, it would be useful to compare this with the exchange rates on the financial market. depending on the evolution of these indicators from a period to another, in relation to the moment when the shares were purchased, the performance hoped for by some investors was confirmed and, as a result, they decide to maintain or increase their investment in the company, whereas for others the awaited performance was overestimated, so it was not achieved or it had no chances of achievement, and for this reason they decide to give up their investment or to diminish it. of course, the same reasoning is available for the following period, too, for those who have just invested in such shares in the last period of the interval we have investigated. in order to assess the market position of a certain company, these indicators regarding the expected performance are compared with the averages of the market and sector where the company operates13. in the case of s.c. alfa sa, on the basis of the data in table no. 2, we can observe that the values of the market indicators are superior both to the average of the activity sector14 and to the average of the market where the entity’s shares are traded (bucharest stock exchange). this means that the expectations concerning the company’s capacity to obtain higher returns and to ensure the growth of the shareholders’ wealth are higher compared to the average expectations for the companies in the sector or for the entire group of listed companies. 13 we can also calculate the market risk, an indicator which expresses the volatility of a share price as compared to the volatility of other share prices (the ratio between the alteration of the share price of an entity and the average alteration of the price of all shares). 14 at the level of the bucharest stock exchange market, the entities whose shares are traded are grouped in eight sectors, the entity selected by us in this study being part of the “products of the manufacturing industry” sector. 107 studies and scientific researches ‐ economic edition, no. 14, 2009  table no. 2 indicators of the market position15 data nivelul 31.03.2008 30.06.2008 30.09.2008 p/bv per divy p/bv per divy p/bv per divy entitate: s.c. „alfa” sa 2,31 16,76 6,59 2,20 14,43 5,50 1,28 9,73 9,29 sector: products of the manufacturing industry 1,69 11,87 2,64 1,23 10,44 4,40 1,00 7,09 5,40 piaţă: bvb 2,30 14,62 2,92 1,88 11,76 3,56 1,27 7,48 5,13 in conclusion, even if the items of information presented in the financial statements are produced on the basis of past events and transactions, their elaboration and presentation concern the future. the users must have the possibility to perform evaluations so as to take the correct decisions. the information regarding the financial performance of the company deriving from the financial statements also lies at the basis of the indicators which characterize the expectations concerning future performance. bibliography 1. dragotă v., ciobanu a., obreja l., dragotă m., management financiar, vol. 1: analiză financiară şi gestiune financiară operaţională, the economic publishing house, bucureşti, 2003 2. helfert a.e., tehnici de analiză financiară, ghid pentru crearea valorii, 11th edition, bmt publishing house, 2006 3. jianu i., evaluarea, prezentarea şi analiza performanţei întreprinderii: o abordare prin prisma standardelor internaţionale de raportare financiară, ceccar publishing house, bucureşti, 2007 4. tabără n., horomnea e., dicu r., performanţa firmei în contextul reglementărilor internaţionale, part 2, in the journal contabilitatea, expertiza şi auditul afacerilor, no. 6/2008 5. accounting law no. 82/1991, republished in the official monitor no. 454 /2008 6. regulation no. 1/2006 on issuers and operations with securities approved by order no. 23/2006 (art. 113) of romanian national securities commission (cnvm), published in the official monitor no. 312 / 2006 7. www.bvb.ro 15 because we did not have access to the data regarding the sector and the market for the entire interval under study (2003 – 2007), we agreed to take into consideration the indicators established for 2008, considering at least three periods, namely the end of the first three quarters of 2008. 108 studies and scientific researches. economics edition, no 33, 2021 http://sceco.ub.ro 6 modeling the impact of corruption, degree of freedom to invest and democracy on domestic investment: evidence from mena countries sayef bakari faculty of economics sciences and management of tunis, tunisia bakari.sayef@yahoo.fr lamia benzid university of sousse, sousse, tunisia lamia.bbenzid@gmail.com abstract this study examines the impact of corruption, investment freedom, and democracy on domestic investment in countries in the middle east and north africa. in order to achieve this, the gmm model was used to test the annual data from 2011 to 2017. the empirical results show that corruption has a negative impact on domestic investment, but the degree of investment freedom and democracy have a positive impact on domestic investment. one of the major contributions of this work is to assert the requirement to wheel more awareness to the direct link between corruption, governance, investment freedom, and domestic investment. keywords corruption; investments; governance; investment freedom jel classification d02 introduction today's investment is one of the most important financial resources on which the different countries of the developed and underdeveloped world rely, because the most attractive countries for investment are those that are most successful in their growth. investment has become the economic phenomenon that characterizes the end of the 20th century and the beginning of the 21st century. it is one of the main pillars of economic development. the success of investment law is also linked to its adequacy to international law and the caution of investment principles, i.e. granting investors the freedom to transfer their money, the inadmissibility of their nationalization and the recourse to international arbitration for the settlement of investment disputes. as a macroeconomic variable, it plays an important role in the economic system because it is directly related to other variables such as savings, income, employment, and growth rates. this is the theoretical aspect of the issue that is of concern to all countries, as evidenced by the growing awareness of the need to strengthen their capacity to attract foreign direct investment through financial, technical, administrative and human resource development mechanisms. thus, the increase in the volume of investments requires the creation of adequate economic conditions. domestic investment is defined as gross fixed capital formation in a country. it is therefore the sum of local investment and foreign investment. domestic investment in mena countries is divided mostly between the extractive and public sectors (services), followed by the agricultural and manufacturing sectors. bakari, benzid 7 studies on the effects of democracy, corruption and degree of freedom to invest on domestic investment in mena countries are extremely rare. however, mena countries have particular characteristics both in terms of their business climates (informal sector, institutional weaknesses, embryonic industry...) and in terms of political changes. these characteristics make the analysis of the relationship between the above-mentioned variables and domestic investment in this region a major theoretical and empirical challenge. this work differs from other studies in two respects: (i) its focus on mena countries; (ii) the study of the role of democracy, corruption and the degree of freedom to invest in changing the sector distribution of domestic value added. in order to respond to this double problematic, this work is composed of five sections. section 2 develops a review of the literature. it is followed by the presentation of the data from our study and the empirical model in section 3. section 4 is empirical. it consists of the interpretation of the estimation results of the econometric model in the context of a dynamic panel. finally, the conclusion and the policy implications will be the subject of the fifth section. review of the literature in what follows, we cite some empirical works that have focused on studying the impact of political variables (democracy, corruption and economic freedom) on domestic investment. democracy and domestic investment democracy is a political system characterized by political and civil liberty (gastil, 1989). according to proponents of democracy, citizens' incentives to work, invest and allocate resources efficiently can all be maintained in a climate characterized by political and economic freedom, free flow of information and protection of property (north, 1990). democracy can have negative effects on the economy if political and social demands turn into strikes and demonstrations that disrupt business activity and force entrepreneurs to stop their activities and leave the country. continued protests and strikes can even discourage foreign direct investment inflows. therefore, the impact of democracy on growth can only be negative or negligible. the type of the connection between political regime and growth can also be affected by political instability. the results of the theoretical work suggest that the link between democracy and growth can be influenced by political instability. alesina and tabellini (1989), özler and tabellini (1991), cukierman et al. (1992) argue that political instability considerably reduces the time horizon, not only of the investor, but also of the political decision-maker. in a democratic regime, the latter is then satisfied with a wait-and-see management of power, particularly in the economic field. the big changes needed are then dodged. this type of effect is particularly noticeable in weak democracies, where the partisan system is very fragmented. a government with a short time horizon may also choose to run away from power and pursue a worst-case economic policy that it hopes to reap the benefits in the medium term (failure of its successor). similarly, a government with a short time horizon has no incentive to respect either its commitments or the rules and principles that should, in principle, regulate economic activity (property law, contract law, taxation, etc.), clague et al. (1996). furthermore, fosu (1992) points out that the probability of capital loss rises in the presence of political uncertainty, which decreases the amount of investment actually undertaken. the unstable country then sees national and foreign investors turning away from the opportunities offered by the national economy. the consequences for growth can be serious: a decline in investment, deterioration in export performance, and modeling the impact of corruption, degree of freedom to invest and democracy on domestic investment: evidence from mena countries 8 difficulties in financing private and public projects. moreover, alesina and perotti (1996) found that the connection among political instability and economic growth tend to a rise at risk and a decline in investment due to the volatility of the political climate. the experiences of several countries, especially the arab spring countries (tunisia, libya and egypt), which have undergone a change of political regime reveal that the transition to a more democratic political regime can be followed by political instability affecting development. evidence from these three countries indicates that a phase of transition to democracy can be accompanied by political instability that may adversely affect growth. this implies that the impact of democracy on investment depends on political stability. for example kurzman et al. (2002) argue that democracy reduces investment because the unpopular policies that allow investment are not enforced by democratic regimes. acemoglu et al. (2008) claim that, due to their redistributive tendencies, political institutions generate distortions. in the period 1960-2004, aisen and veiga (2013) studied a sample of 169 countries and found that authoritarian regimes limit development by reducing the accumulation of physical and human resources. however, the empirical results of zouheir and karim (2012) analysis, using a dynamic panel data model, to define the connection between democracy, investment and economic growth for a sample of 11 countries from the mena region during the period 2000-2009, show that there is a significant correlation between democracy and investment on the one side and on the other side between civil liberties and economic growth. the findings also highlight a positive connection between investment and political rights. also, for a sample of 79 countries over the period 1984-2008, makrem and faycel (2018) tried to test this relationship and to incorporate the notion of political stability as a complementary variable for democracy. the key findings indicate that democracy impacted significantly growth in a politically stable climate. the findings of the work are heterogeneous, implying that the influence of democracy on domestic investment is far from obvious. corruption and domestic investment corruption is an international scourge. while its existence, degree and scale vary from a country to another, it is a phenomenon that affects all nations: it affects the most advanced, the least developed, the wealthiest and the poorest nations. corruption has several forms, such as bribery, embezzlement, influence peddling, abuse of office, illicit enrichment, fencing, money laundering, tax evasion, nepotism, revolving doors between the government and the private sector, conflict of interest, and so on. numerous studies have established that corruption disheartens investment and is an additional cost to businesses, reducing the profitability of investment projects. first, empirical evidence proposes that corruption reduces the investment/gdp ratio, lowers the level of investment and significantly retards economic growth (mauro, 1995). corruption also distorts the dynamic cycle related with public investment and influences the distribution of public spending. corruption can induce public officials to distribute public funds, but in compliance with the corrupt opportunities they provide, such as major infrastructure or defense projects. mauro (1998) argues that public spending on education as a proportion of gdp is negatively correlated with the level of corruption in most countries. same, four mechanisms by which corruption impacts economic development have been established by tanzi and davoodi (1997): 1. higher public expenses; 2. lower public bakari, benzid 9 funds; 3. decreased public spending on some turfs, such as health or education; and 4. poorer quality public infrastructures. in addition, some researchers have empirically shown that corruption decreases the output of capital and constitutes an important factor in the decision-making of investors. according to the findings of lambsdorff (2003), an increase in corruption by one point on a scale of 0 (highly corrupt) to 10 (highly clean) decreases an output by 4 percent of gdp and 0.5 percent of gdp by net capital inflows. campos et al. (1999) suggest that investment is not only influenced by the degree of corruption, but also by the essence of corruption. corruption systems that are more stable than those that demand government favors have less harmful investment consequences than those that are less predictable. asiedu and freeman (2009) examine the effect of corruption on investment by using aggregate (country-level) investment data, country-level measurement of corruption, and pooling data for countries from multiple regions. they employ firm-level investment data and corporate and country-level corruption measures, and permit the impact of corruption to vary by region. their endogen variable is the growth of investment by firms and they use six corruption measures from four different sources: two corporate and four country-level measures. they notice that the corruption impacts investment differently across regions. everhat et al. (2009) employ an international finance corporation data set of 50 developing and transitional countries covering the period 1984-1999 that bypasses these issues. they notice that the effect of corruption appears to be more ambiguous on the level of public investment than has been found in previous literature. they do, nevertheless, notice that the impact of corruption on private capital accumulation is significantly more detrimental than what was previously discovered. they also notice that corruption's impact on governance is unambiguously negative, further deterring economic growth. for the period 2004 to 2013, zakharov (2019) studied the causal correlation between corruption and fixed capital investments in the russian regions. by adding novel instrumental variables for corruption, they fix the issue of endogeneity: the existence of the free press and abuses of the freedom of journalists. the key finding is that corruption affects significantly and negatively aggregate investment in fixed capital. he found that, by disaggregating investment by ownership, corruption reduces private investment, and not the investment that is made by state-owned firms. for businesses with international investment, the influence is greater. a strong negative association between regional imports of capital goods and corruption has also been observed. to conclude, the domestic investment effect of corruption is negative. degree of freedom to invest and domestic investment the principle of the freedom to invest, seen from the point of view of the right of establishment, is recognized in post-19451 commercial treaties, but is not nowadays the subject of a precise definition. this seems normal so far as the notion of investment itself is not defined. several projects have been launched on the subject of freedom of investment2. these projects have opened a debate on the subject. they have confirmed the need to recognize certain fundamental principles in favor of foreign investors, namely transparency, liberalization and non-discrimination. nevertheless, they did not succeed in finding a common definition of the term. consequently, it is up to each state 1jean-pierre laviec, protection et promotion des investissements, paris, presses universitaires de france, 1985 aux pp 53-77 [laviec]. 2see in particular oecd, investment committee, « la liberté d’investissement, la sécurité nationale et les secteurs stratégiques », on line : ocde <www.oecd.org/fr/investissement/politiques-investissement/40473834.pdf>. modeling the impact of corruption, degree of freedom to invest and democracy on domestic investment: evidence from mena countries 10 to set its own conditions governing the admission and treatment of investment on its territory. despite the scarcity of a dense literature on studies of the effect of economic freedom on domestic investment, studies on the effect of economic freedom on fdi are extremely frequent. in a sample that includes 18 latin american countries, bengoa and sanchez-robles (2003) analyzed the link between economic freedom, fdi and economic growth using panel data. their findings suggest that economic freedom leads to fdi inflows in a favorable way. in his research, quazi (2007) explored the correlation between economic freedom and fdi in seven countries in east asia (china, indonesia, korea, malaysia, philippines, singapore and thailand). the results showed that a significant determinant of fdi investments is economic freedom. the link between economic freedom and fdi has been explored by heriot and theis (2008). the outcome found that in drawing fdi, nations with more economic independence were more competitive. in a report for middle east countries and european countries in africa, caetano and calerio (2009) studied the association between economic freedom and fdi. as a result of the research, it was determined that the association between economic freedom and fdi was favorable. in a panel of 85 countries, azman-saini et al. (2010) explored the relation between economic freedom, foreign direct investment and economic growth. the outcomes reveal that the influence of fdi in the host country is contingent on the degree of economic freedom. pourshahabi et al. (2011) analyzed the oecd countries' relationship between fdi, economic freedom and growth. the first model indicated that fdi was positively influenced by human resources, business size, political stability and inflation and had an important influence on fdi in countries. it was inferred, however, that while the association between economic freedom and fdi in oecd countries was favorable, it was of no major significance. the second model indicated that growth was driven by fdi, economic freedom, spending on public consumption, public investment and human resources. in a us report, pearson et al. (2012) explored the relation between economic freedom, economic growth and fdi. the research covering the time between 1984 and 2007 indicated that both economic freedom and the rate of growth in each state were major variables that had a positive effect on fdi flows. using panel data analysis for a survey of 79 developed countries from 1998 to 2014, hossain (2016) examined the interplay between economic freedom, foreign direct investment and economic development by considering the degree of economic freedom as given by the "heritage foundation". the outcome reveals that economic freedom in the developed country is a strong determinant of fdi inflows. in a panel of four north african countries (tunisia, morocco, algeria and egypt), zghidi et al. (2016) explored the causal interactions between foreign direct investment (fdi), economic freedom and economic growth over a five-year period from 1980 to 2013.they discovered clear evidence of a positive correlation between fdi and economic growth using the framework generalized process of moments (gmm) in a panel data study. they also observed that economic freedom tends to act as a supplement to fdi and that in the presence of the economic freedom component, the influence of fdi is more pronounced. this suggests that multinational corporations (mncs) benefit most from the involvement of countries that encourage greater freedom of commercial activity. bakari, benzid 11 imtiaz and bashir (2017) examined, by employing panel data approach, the role of the domestic investment environment (measured by the heritage foundation economic freedom index) along with other macroeconomic variables in attracting fdi in south asia for 20 years from 1995 to 2014. results have shown that economic freedom as a whole is a significant determinant of fdi. disaggregated economic freedom research shows that fdi is statistically strongly affected only by fiscal and trade freedom. as a result, the report urges south asian countries to boost their domestic investment climate in order to draw more foreign capital. the role of economic freedom of the host country in bilateral direct investment was examined by xu (2019). with a selection of 155 countries, he has researched this topic in a gravity model. he has also used some efficient gravity model estimation techniques to combine the zero observations and the quantile regression approach adopted. the results show that both home-country and host-country economic freedom are positively associated with bilateral direct investment and that home-country economic freedom has much greater explanatory capacity for foreign direct investment. therefore, the promotion of economic freedom could attract more foreign direct investment from outside than direct investment from within. motivated by this background, we note that fdi is positively affected by the degree of freedom to invest. in our study, we try to understand the nature of the relationship between the degree of freedom to invest and domestic investment in a better way. data, methodology and model specification data description the selected countries respect the ranking and analysis of the world bank. the sample includes the mena countries depending on the availability of data. in total, our sample comprises 9 countries (algeria, egypt, iran, lebanon, morocco, oman, saudi arab, tunisia and yemen), and the estimation period is from 2011 to 2017. variables and sources of data to study the impact of democracy, degree of freedom to invest and corruption on domestic investment, we will apply a linear estimation of panel data that has 8 variables whose reason to clarify this effect. the following table defines the variables and the data source of each variable. table 1. descriptions of variables n o varia ble description source 1 di gross fixed capital formation (% of gdp) perspective monde/world bank 2 corr corruption perceptions index transparency international 3 demo democracy index economist intelligence 4 dfi degree of freedom to invest perspective monde 5 idh human development index perspective monde 6 fdi foreign direct investment, net inflows (% of gdp) perspective monde/world bank 7 fc final consumption expenditure (% of gdp) perspective monde/world bank modeling the impact of corruption, degree of freedom to invest and democracy on domestic investment: evidence from mena countries 12 8 y gdp growth (annual %) perspective monde/world bank source: collected and calculated by authors from perspective monde and world bank definitions of variables our empirical methodology is based around the estimation of 8 variables. in this paragraph, we will present the definitions and tools for the use of its variables. ✓ gross fixed capital formation (% of gdp): gross fixed capital formation (formerly gross domestic fixed investment) includes land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings. according to the 1993 sna, net acquisitions of valuables are also considered capital formation. ✓ corruption perceptions index: the corruption perceptions index (cpi) scores countries on how corrupt their governments are believed to be. it is published by transparency international, an organization that seeks to stop bribery and other forms of public corruption. a country's score can range from zero to 100, with zero indicating high levels of corruption and 100 indicating low levels. transparency international launched the index in 1995, and today it scores 180 countries and territories. ✓ democracy index: synthetic index of democracy, according to the analyses made by the economist. this measure takes into account the democratic culture, the government's ability to implement its program, respect for civil liberties, citizen participation and the quality of the electoral process. ✓ degree of freedom to invest: degree of freedom to invest. a degree close to 100 means that investments can be made with few limits. some countries have great freedom in this respect: luxembourg, denmark and the united kingdom. conversely, north korea, but also zimbabwe, iran, and cuba have virtually nonexistent freedom. the constraints are then multiple: they can hit the foreign or domestic investments. limitations can be financial, bureaucratic or propertyrelated. to determine this degree, several sources are used, including economist intelligence unit. this indicator was developed by the heritage foundation, in partnership with the wall street journal. the heritage foundation is a research and educational institute founded in 1973 whose mission is to formulate and promote conservative policies based on the principles of free enterprise. ✓ human development index: human development index (hdi). it is a composite index that measures the average quality of life of a country's population. theoretically, the index ranges from 0 to 1. it takes into account three dimensions of human development. first, the possibility of having a long and healthy life based on life expectancy at birth. then, the level of schooling, estimated from the rate of illiteracy and attendance at different levels of the school system. finally, the standard of living, calculated from gross domestic product (gdp) per capita, taking into account purchasing power parity (ppp). ✓ foreign direct investment, net inflows (% of gdp): foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. it is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. this series shows net inflows (new investment inflows less bakari, benzid 13 disinvestment) in the reporting economy from foreign investors, and is divided by gdp. ✓ final consumption expenditure (% of gdp): final consumption expenditure (formerly total consumption) is the sum of household final consumption expenditure (private consumption) and general government final consumption expenditure (general government consumption). this estimate includes any statistical discrepancy in the use of resources relative to the supply of resources. ✓ gdp growth (annual %): annual percentage growth rate of gdp at market prices based on constant local currency. aggregates are based on constant 2010 u.s. dollars. gdp is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. it is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. model specification and empirical methodology in this paper, we create a model dealing with domestic investment as a dependent variable. in this model we apply as independent variables: corruption perceptions index, democracy index, degree of freedom to invest, human development index, foreign direct investment net inflows (% of gdp), final consumption expenditure (% of gdp) and gdp growth (annual %). the basic model is written as follows: 𝐃𝐈 = 𝐅 (𝐂𝐎𝐑𝐑, 𝐃𝐄𝐌𝐎, 𝐃𝐅𝐈, 𝐈𝐃𝐇, 𝐅𝐃𝐈, 𝐅𝐂, 𝐘) (𝟏) the empirical format of this model is written as follows: 𝐃𝐈 = 𝐂(𝟏) + 𝐂(𝟐) ∗ 𝐂𝐎𝐑𝐑𝐢𝐭 + 𝐂(𝟑) ∗ 𝐃𝐄𝐌𝐎𝐢𝐭 + 𝐂(𝟒) ∗ 𝐋𝐈𝐁 𝐢𝐭 + 𝐂(𝟓) ∗ 𝐈𝐃𝐇 𝐢𝐭 + 𝐂(𝟔) ∗ 𝐂𝐅 𝐢𝐭 + 𝐂(𝟕) ∗ 𝐅𝐃𝐈 𝐢𝐭 + 𝐂(𝟖) ∗ 𝐘𝐢𝐭 + 𝛆𝐢𝐭 (𝟐) to determinate the direct effect of democracy, degree of freedom to invest and corruption on domestic investment, we will apply an empirical analysis based on estimation of panel generalized method of moments (gmm). empirical analysis the estimation of the equation (2) gives the substituted coefficients which are written as follow in the equation (3): di = 14.1875002171 − 0.175426593265 ∗ corr + 1.95562727381 ∗ demo + 0.0972111079188 ∗ lib + 27.8249459548 ∗ idh − 0.289140869408 ∗ cf + 0.562416798505 ∗ fdi + 0.0816927210284 ∗ y (3) according to the equation (3), we can note that corruption perceptions index and final consumption expenditure have negative effect on domestic investment. however, democracy index, degree of freedom to invest, human development index, foreign direct investment (net inflows) and gdp growth have a positive effect on domestic investment. the objective of the following table is to specify the significance of each variable to determine the robustness of the impact of the independent variables on the domestic investment. table 2: estimation of panel generalized method of moments (gmm) dependent variable: di method: panel generalized method of moments variable coefficient std. error t-statistic prob. c 14.18750 12.51381 1.133747 0.2618 corr -0.175427 0.095520 -1.836540 0.0717 modeling the impact of corruption, degree of freedom to invest and democracy on domestic investment: evidence from mena countries 14 demo 1.955627 0.789288 2.477711 0.0163 lib 0.097211 0.042691 2.277079 0.0267 idh 27.82495 12.48273 2.229075 0.0299 cf -0.289141 0.078928 -3.663341 0.0006 fdi 0.562417 0.555862 1.011793 0.3161 y 0.081693 0.125800 0.649387 0.5188 source: calculations done by the authors based on the eviews 10 software. the econometric rule states that the relationship between the x and y variables in a regression model is statistically significant when the probability of the coefficient (prob) is less than 10%. with: ✓ prob < 1% means a strong significance. ✓ prob < 5% means a normal significance. ✓ prob < 10% means a low significance. according to the estimation of panel gmm, that corruption perceptions index, final consumption expenditure, democracy index, degree of freedom to invest and human development index are significances. these mean that corruption perceptions index and final consumption expenditure have negative effect on domestic investment. however, only democracy index, degree of freedom to invest and human development index have a positive effect on domestic investment. table 3 includes a set of diagnostic tests to verify the quality of our model and the robustness of our estimate. table 3: diagnostic tests diagnostic tests r² 0.663558 adjusted r² 0.620738 jarque-bera 4,370767 probablity of jarque-bera 0,112435 source: calculations done by the authors based on the eviews 10 software. all residual diagnostic tests are satisfactory and assert that our model is acceptable and well treated (r² is greater than 60% and the probability of jarque-bera is greater than 5%). conclusion this research examines the impact of corruption, degree of freedom to invest and democracy on domestic investment in mena countries. in order to achieve this purpose, annual data for the periods between 2011 and 2017 were tested using gmm model. empirical results show that corruption has a negative effect on domestic investment, however, the degree of freedom to invest and democracy have a positive effect on domestic investment. indeed, corruption is a global scourge. although its nature, degree and extent differ from one country to another, it is a phenomenon of concern to all countries: it affects the most developed countries, the least developed, the richest and the poorest. likewise, corruption erodes community and investor confidence in the country. in general, corruption discourages investment, which hinders economic growth. in fact, empirical evidence indicates that corruption reduces investment. one of the main reasons corruption discourages investment is that it increases the cost of doing business, which bakari, benzid 15 reduces the profitability of the investments. in this context, and according to the oecd (2016), bribes and difficult and drawn-out negotiations increase transaction costs, thus increasing the costs of economic activity in general. bribes and other illegal fees act as a "hidden tax", which increases the cost of the investment. likewise, corruption often involves heavy bureaucracy with many steps, including unnecessary delays and procedures that increase the chances of collecting bribes. corruption affects all countries and undermines sustainable development. as indicated in the report, corruption can negatively affect the productivity of the private sector because it discourages investment. it also harms competition and entrepreneurship. then, corruption can have negative effects on states' public revenues. indeed, corruption undermines the ability of states to collect taxes. finally, corruption can disrupt the decision-making process leading to public investment and thus can have negative effects on the state's public spending, particularly by limiting its efficiency. it should be borne in mind that corruption also affects other determinants of economic and social well-being, such as sustainable development, health, education and access to water. the overall policy message in this article is very straightforward: reducing the level of corruption in a country will help domestic investment and ultimately help increase economic growth. there is still much work to be done in terms of the interaction between corruption and the accumulation of domestic investment and its impact on economic growth. one of the main contributions of this article is to emphasize the importance of paying more careful attention to the direct link between corruptions rather than the direct link between corruption, governance, investment freedom and domestic investment. references acemoglu, d., johnson, s., robinson, j.a. and yared, p. 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(2012). democracy, investment and economic growth. international journal of economics and financial issues, 2(3), pp. 233-240. chambers of worksteps in the development of labor law chambers of worksteps in the development of labor law ion țuțuianu phd, “vasile alecsandri” university of bacău, romania abstract social changes that followed the war and perfection state unit generated new and complex problems in all areas. we try to present problems directly aimed at the working class, that is formalized and institutionalized labor, social and economic context of the time. as regards labor law of 1927 rooms and discussions around it, brought the authors to the conclusion that trying to regulate relations between labor and capital and precise directives followed, social reconciliation, abolition of trade union activity, labor movement split and its supervision. concessions workers were considered only illusory and employers with state dominance. however during 1933/1934, chambers work activity had a positive role in the field of enforcement of labor law, serving an important role in other institutions and labor organizations, representing a significant step in the development of labor law. keyword: labor law, rooms, development after completion state1 drive new socio-economic framework of the romanian legal system to require a more developed labor. industrial progress and the emergence of the international labour organisation2, acquires new meanings in the political and socio-economic. postwar period, characterized by revolutionary effervescence, with extensive evidence of labor actions, proved political maturity and the need for new approaches to labor issues and modernizing state the result of this turmoil we find expression in legal formulas governing relations between labor and capital, without harming the essence of the state, bringing the two inputs vigorous intervention by administrative bodies both in production and in the political-social working class. in this context, a new romanian legislation appear: board rooms employment and labor. this responds to the need to resolve legal developed two aspects: on the one hand put on new principles relations between employees and employers, on the other hand was a feature of european rules, since enactment of room to work in france, england italy takes place at the end of sec. xix and early xxth century austria and yugoslavia in order to accomplish this goal legislative occurred several political forces of the time. the first proposal for the founding of labor rooms in romania, a find made in the socialist party's electoral program, presented at conference 23 to 26 may 1919, who see their role in resolving disagreements between labor and capital3. advantage of taking power in 1922, the national liberal party, seeking to streamline presence on the political scene, by drawing up a comprehensive labor legislation into a single 1 ștefan pascu, făurirea statului național român, 1918,editura academiei, bucurești, 1983, vol.,p. 131 2 prin tratatul de la versailesîn 1919. vezi și nicolae voiculescu , drept cumunitar al muncii, editura rosetti, bucurești, 2005, p. 12. 3 vezi documente din istoria mișcării muncitorești din românia, 1916-1921. editura politică, bucurești, 1966, p. 371. system by designing and creating work based on the principle rooms equal representation of workers and employers4 but have not had the support of workers or employers to legislate.5 in june 1925, there is a new attempt of the ministry of labour, providing the project besides setting unit labor room (only employees) and regulation at rest sunday, major project due to opposition industrialists, disappeared on his way to the senate in room6. after these unsuccessful attempts, we find a change of strategy adopted by the new labour minister gregory trancu iasi, projects or organizations that send professional workers and employers, labor inspectorates, corporations, civil societies and associations, chambers of commerce and industry for review and observations to establish a common vision the draft labor rooms were representative body care and labor in industry and commerce, with legal personality and their territorial distribution would be made according to the economic importance of each region but with all successful adoption or not this project legislatv enjoyed a very smooth way, for while the state had given to reducing the conflict between labor and capital, labor organizations is seen as an attempt to liquidate trade unions7. this is all the more as work rooms had always checked by the ministry of labour. all he could dissolve ministry when offenders situation against public order or national security. (article 42). in addition to close cooperation with the ministry of labour, rooms employment must maintain good relations between inputs contribute to a solid organization and training of employees to meet labor market, help organize placement offices, signaling authorities as necessary measures to remove or reduce unemployment crisis. contributes to the establishment of cultural institutions for employees in commerce and industry ministry requested priectele opinion on labor issues, carry out investigations in enterprises, to defend and uphold justice, the rights of employees in the event of unpaid wages, unfair dismissal or breach of employment contracts., collaborate with county or municipal authorities and other professional cameras8. side effects of working class occurred within the people's assembly held in anina, timisoara, brasov and ploiesti, who considered setting up cameras work as a burden placed on their shoulders and the principle of parity as a subordinate to the employers. labour inspectorate of arad and general confederation of labor, speaks only for workers' representation on these organizations9 and factory decides by magazine "ugir" just cameras workers if the government does not give up on this project10 political opposition rallying to speculate when workers attitudes and hub, peasants by the voice of rh, ioanitescu, and liberals by i.inculeţ the view that achieving social harmony can not be achieved in the same organization encompassing the employer and the salary element only separating them. but, despite the opposition of manifest different categories and classes, rooms employment bill and higher labor council passed through two rooms and was voted in april 1927. however budgetary reasons , the law could not be applied. law analysis leads to the conclusion that trying to regulate relations between labor and capital and give a legal basis, followed a few specific objectives: social harmony, the 4 inițiativa a aparținut lui gh.mârzescu, care propune redactarea unui cod al muncii cu toată legislația aferentă relațiilor de muncă. 5 vezi universul din 19 martie 1923. 6 această încercare a aparținut ministrului muncii n.d.chirculescu.; vezi n.d.chirculescu, p.n.l., și politica socială , în revista de studii sociologice și muncitorești, i, 2, sept. – oct.1933, p.3 7 vezi d. galașescu -pyk, munca și democrația în democrația, xi 3, martie 1923, p. 25 8 . em.bold , gh.iacob, contribuții privind studierea și cunoașterea legislației muncii din romania, în cercetări istorice, iași, 1975, p. 223. 9 i.bogoly, manualul camerii de muncă brașov, edit.gologov, brașov, 1936, p. 5 10 socialismul, 20 martie 1927 abolition of trade union activity, blurring the labor movement and its strict supervision. law displeased both the workers and the employers and the failure was inevitable. with a budget from employee contributions, without any material aid from the state or employers, lack of autonomy, work rooms became institutions that was hard to find some organs hybrid character, socially useless, unsustainable.11 the idea was not abandoned and in 1932, dr ioanitescu, as labor minister, drafted a new project, eliminating the parity principle is adopted became law on 11 october 1932 and in 1933 work rooms were set up12 as a first prerogative prescribed by law for labor rooms, consist of notification higher authorities about the situation of workersand to the officials private and craftsmen. in this context, rooms employment is concerned with improving labor legislation, had the task of making laws and approve such proposals.13 persistent concern in such matters, has often spoken against abusive employers who considered this action to be informed on the situation of workers, considering it biased14 all the power of these institutions of social policy was: labour compliance control, whose prerogative field event was different from one period to another. thus, in the period 1933 1936, presidents and secretaries involved in monitoring cameras work on the implementation of all labor laws with labor inspectors and singular controls how law enforcement at rest sunday., highlighting the positive role of labor room within the scope of labor law.15 in the second phase from 1936-1944, the law restricted the power of working room compared to the previous period, meaning that in addition to law enforcement controls at rest sunday, were only able to request inspectors, organizing controls regarding other labor laws without the participation of any member of the house can work. 16 in such conditions one of important functions of the boards of work that should complement the others could be exercised only partially, as a result minimal effects. activity report of the working chamber arad 1936, refer the matter, that the new procedure was cumbersome pit, rooms employment because they could not intervene promptly when abuse occurs.17 following these institutions have expressed on various occasions desire to change restrictive provisions contained in the 1936 act, to expand their opportunities to exercise control over labor laws. report of the union of chambers of labour for the year 1938/1939 reaffirmed the need to reorganize labor inspection in the sense of close collaboration with chambers of labor, since the application of labor laws leaves much to be desired and generate more conflicts and discontent muncitoreşti.ideea is included among the masses and work materials prepared rooms in iasi, ploiesti, bucharest, craiova, timisoara. in general we can say that the performance of inspection of the implementation of labor laws by working rooms was reduced in scope, because forms of execution and therefore effectively limited. one of the most important powers of the new institutions was the training, area which had a range of powers provided by law or pine organizing training and exercise rules on craftsmanship. giving these tasks was the natural consequence of the abolition of guilds corporate reorganization trades, responsibilities incumbent by law chambers work to protect and encourage their members work 11 gh.neculcea, camerele de muncă și consiliul superior, în societatea de mîine, iv, 12-13, aprilie 1927, p. 179 12 vezi legea pentru înființarea camerelor de muncă și regulamentul lor electoral, edit.librăriei universala, bucurești, 1934. 13 buletinul camerei de muncă oradea, i, 1 , 1934,p.4. 14 buletinul ugir xiii,nr.4/ 1934, p.5 și nr. 10-12/1936, p.11. 15 buletinul camerei de muncă bucurești, iv, 1-6, 1937,p.13. 16 legea pentru înființarea consiliului superior economic și organizarea camerelor profesionale , din 29 aprilie 1936. 17 buletinul uniunii camerelor de muncă,iii, 18-24, 1939,p.26. giving these tasks was the natural consequence of the abolition of guilds, corporations, trades reorganization, responsibilities incumbent by law chambers work to protect and encourage their members work. therefore, these tasks should be understood in terms of their double character, namely: a) administrative, expressed by organizing professional training and development committees or to exchange cards craftsman, worker, laborer, certificates of apprenticeship, b) the social educational establishment translated into professional training and financial support of workers, artisans, clerks individuals to complete their studies. delimitation entail logically and nuanced appreciation of the manner in which labor rooms have fulfilled these duties they have contributed to unify titles capacity to boost, by combating illegal exercise of professions18 at the same time by organizing professional training courses in almost every work meeting rooms, they provided apprentices, workers, craftsmen and even an organized private officials to restore and supplement specific knowledge of their activities.19 this activity, although limited in scope, mainly due to financial shortfalls and reduced inspection powers law enforcement work is a real contribution to vocational training and retraining of the categories listed. new institutions exercising a series of tasks aimed at the prevention and settlement of labor conflicts expressed through: registration of contracts of employment and apprenticeship, organizing a conciliation commission, the organization disputed claims service, maintenance spending part of the work of judges.20 the effects of this activity has been limited, both because of limited financial resources, but especially because of contradictory and confusing provisions of various labor laws regarding labor disputes and their resolution achievements of the labor room should be mentioned: the allocation of funds to encourage and assist deserving disciples, disciples maintenance homes, supporting employment offices, and helping the unemployed, organizing medical offices, canteens, hostels, libraries, organizing exhibitions handicraft products in the country and support the participation of romanian craftsmen at international exhibitions in paris ( 1937), berlin (1938) și new york ( 1939). to determine as accurately place of work room in labor law in the interwar period, the efficiency of their work to be understood in a nuanced depending on a number of factors: business lines, dividing into three distinct sections of new institutions (workers, craftsmen, private officials); attitude of political parties, employers and the working class. so the new social and political institutions have fulfilled especially those advisory and administrative functions such as expressed by the gathering of information on the employment situation, recording contracts, issuing qualification card. they failed to realize, however, fully designed in the application of labor laws, the application of labor disputes, professional development, social. is found while carrying out the powers conferred by laws that favored differential and unequal members of the boards of work sometimes. thus the exercise of powers of some with the information, and control used mainly conciliation employees and the professional qualification, almost exclusively, craftsmen. taking into account that the last phase of the work-room work after 1938 were particularly concerned qualification, we can conclude that in the years they served mainly the interests of craftsmen. among the factors that have diminished the role of labor rooms in socioeconomic life, have prevented their mission, first mention limited autonomy and use nejudicioasă low budget so by law21. in this context one transcript is enlightening ministry: "lords of the boards of work looks to be an institution placed under the control of the ministry. strict enforcement will follow the law and whenever cameras work will try to 18 buletinul muncii, xvi, vol.i-ii, 1936, p. 67. 19 buletinul ucm,iii, 18-24, 1939, p. 54, 223. 20 contracte de ucenicie înregistrate la camerele de muncă în 1936-1938, imprimeriile statului , buc. 1939,p. 202. 21 monitorul oficial, nr. 44/3sept. 1936, d.s. șed. 27 martie , p. 1935. overcome the powers will be brought to reality ". this is compounded by the attitude of employers who, regardless of their form of expression, had a substantial influence on the work of the boards of work, managed to reduce the opportunities for low and so original and amended by law. but what has most diminished activity room was politicizing their work, which is the introduction to the governing bodies of these institutions ruling political party agents. method was the appointment of interim committees elected boards instead. in this way, the ruling circles could handle labor rooms, quashing the bud actions had endangered the interests of the bourgeoisie. however, rooms employment during 1933-1934, had a positive role in law enforcement labor law through their holding an important role in other institutions and organizations working in romania. bibliography 1. sanda ghimpu, al.țiclea, dreptul muncii, bucurești, 1994 2. nicolae voiculescu, drept comunitar al muncii, bucurești, 2005 3. andrei popescu, dreptul internațional al muncii, bucurești, 1998 4. gh.filip, albert lozeanu, ștefan coste, roxana lazăr, dreptul muncii, junimea,iași, 2008. 5. i.traian ștefănescu, tratat de dreptul muncii, vol, i, lumina lex, bucurești, 2003. 6. d.firoiu, dreptul muncii, vol.ii. cluj, 1980. 7. s.beligrădeanu, legislația muncii comentată, vol.iv, lumina lex, bucurești, 1993. 8. s.ghimpu, i.tr.ștefănescu, dreptul muncii, vol.ii, bucurești, 1974. 9. g.tașcă, politica sociașă a româniei, bucurești, 1940. 10. al țiclea, codul muncii comentat, universul juridic, bucurești, 2011. microsoft word apostoaie constantin marius_eng.doc „the control” in view of international accounting regulation and romanian accounting regulation cristina ciuraru-andrica, „vasile alecsandri” university of bac ania elena opri an, „vasile alecsandri” university of bac summary in romania, financial reporting accountant is governed by accounting low number 82/1991, republished, and o.m.f.p. 3.055/2009 approving the accounting regulation in accordance with european directives. to these are added the international financial reporting standards (ifrs, ias and ifric) of which must take into account certain romanian legal persons in accordance with applicable regulations. therefore this paper presents the main points of the control from the two types of accounting regulations perspective (national and international) applied in our country. keywords control, exclusive control, parent, subsidiary, acquirer, acquiree jel code: m41 introduction the control exercised by an entity over another entity has special implications in accounting plan, but not only. in first place, the entities form a group or a business combination. the group, in accounting terms, includes besides the controlled entities, also the entities on which parent exercises a common control or a significant influence. however, in this few lines we will stop only on control, conditions of its existing and the consequences arising from its manifestation. in second place, we have to delimit the consolidation perimeter to establish those entities which are capable of being consolidated, in the sense that its separate financial statements will be the bases for preparing consolidated financial statements. so the group (precisely the parent) must prepare a distinct set of financial statements (with some exceptions) whose objective is to satisfy the user needs. accounting regulations applicable to solve the two issues, mentioned above, differ depending on the area where the group is manifesting and on the legal obligation to which it must submit to. so, in our country, according to accounting regulations of the o.m.f.p. 3.055/2.0091, the entities that are part of the category of legal persons of public interest2 (with 1 o.m.f.p. nr. 3.055/2009 for approval of accounting regulations with european directives published in the m.o. nb. 766 from 10 november 2009, art. 14 2 according to art. 33 alin. (2) from accountant law nr. 82/1991, republished, legal persons of public interest are: credit institutions; non-bank financial institution, defined according to legal regulations, written in general register; insurance, insurance-reinsurance and reinsurance companies; authorized entities regulated and supervised by the studies and scientific researches economic edition, no. 15, 2010 38 exception the entities of which securities are traded on a regulated market, credit institutions and non-bank financial institution, defined according to legal regulations, written in general register, insurance, insurance-reinsurance and reinsurance companies, association of pension, the financial investment services companies, management of investment companies and collective investment undertakings) and other legal persons which must prepare consolidated annual financial statements, can prepare the statements either based on directive vii of the european economic community, either based on the international financial reporting standards. this option suits especially multinational groups which do not have to prepare two sets of financial statements (national and international). however, they do not escape the fact that the separate financial statements of the entities which form the group, must be prepared both in accordance with national and international accounting regulations. therefore, the present paper, shows the control key points from the perspective of the two regulatory and standardization bodies (the ministry of public finance – in the case of national accounting rules and international accounting standards board, in the case of the international ones). „the control” in view of international accounting regulation according to international accounting standards (principal: ifrs 3 „business combination”, ias 24 „related party disclosure”, ias 27 „consolidated and separate financial statements”, ias 28 „investments in associates” and ias 31 „interest in joint ventures”) control represents the power to govern the financial and operating policies of an entity, named subsidiary, to obtain benefits from its activities. a subsidiary is an entity, including an unincorporated unit as a partnership, which is controlled by another entity (named parent – defined as an entity that has one or more subsidiaries). the term control, used by the international accounting rules, in fact is availed to denote the excusive control. this consists in the capacity of the parent to rule directly or indirectly an subsidiary, being able to fully decide other its activity. in literature, exclusive control knows several forms of exercise: exclusive right control and exclusive fact control. to these two, some authors add a third form of exclusive control manifestation named exclusive contractual or statutory control. basically: exclusive right control occurs when the parent holds, directly or indirectly, over 50% from voting rights of the subsidiary; exclusive fact control occurs when the parent has the power to appoint or remove a majority of the subsidiary governing bodies; exclusive contractual or statutory control results when the power of the parent to establish the financial and operating policies of an subsidiary derivers from a contractual or statutory clause or from an agreement. international rules stipulate that a parent must consolidate its investments into a subsidiary, to prepare its consolidate financial statements. therefore, ias 27 shall be applied in the preparation and presentation of consolidated financial statements for a group of entities under the control of a parent. supervisory committee of the private pension system; the financial investment services companies, management of investment companies and collective investment undertakings, authorized and approved by the national security committee; the entities of which securities are traded on a regulated market; national companies; legal persons which belong to a group of companies and enters the consolidation perimeter by a parent who applies the international financial reporting standards studies and scientific researches economic edition, no. 15, 2010 39 according to the standard, it is assumed there is control when the parent holds, directly or indirectly, in subsidiaries, more than half the number of votes (exclusive control), except exceptional cases in which can be proved that this kind of propriety is not control. control also exists when the parent holds half or less of the voting power of an subsidiary when there is: a) power over more than half of the voting rights by virtue of an agreement with other investors (exclusive contractual or statutory control); b power to govern the financial and operating policies of the entity under a statute or an agreement (exclusive contractual or statutory control); c) power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body (exclusive fact control); or d) power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body (exclusive fact control). to establish control are taken into consideration also the potential voting rights related to share warrants, share call options, debt or equity instruments that are convertible into ordinary shares, or other similar instruments that have the potential, if exercised or converted, to give the entity voting power or reduce another party’s voting power over the financial and operating policies of another entity. potential voting rights are not currently exercisable or convertible when, for example, they cannot be exercised or converted until a future date or until the occurrence of a future event. in assessing whether potential voting rights contribute to control, the entity examines all facts and circumstances (including the terms of exercise of the potential voting rights and any other contractual arrangements whether considered individually or in combination) that affect potential voting rights, except the intention of management and the financial ability to exercise or convert such rights. so basically, the exercise of exclusive control requires the possession of the majority of voting rights, but due to absenteeism of small shareholders in general assemblies and the existence of shares with different voting rights (double or deprived voting shares) exists the possibility that a stake below 50% to be enough to acquire control. example: the parent owns 35% of the stoke in a subsidiary double voting right shares. 15% of the subsidiary stoke represents deprived voting shares (potential voting rights).even if the parent percentage of ownership is only 35% (named interest rate), it exercises control (expressed through voting rights in general assemblies) in percentage of 58,33%3 (named control rate), so an exclusive control. therefore, control can or can not be the consequence of property relationship. in perspective of ifrs 3 “business combination” control can occur also in these situations: a) by transferring cash, cash equivalents or other assets (including net assets that constitute a business); b) by incurring liabilities; c) by issuing equity interests; d) by providing more than one type of consideration; or e) without transferring consideration, including by contract alone (example: the acquire repurchases a sufficient number of its own shares for an existing investor (the acquirer) to obtain control ; minority veto rights lapse that previously kept the acquirer from controlling an acquire in which the acquirer held the majority voting rights) also control may exist under the influence of pertinent factors and circumstances as 3 percentage is obtained after calculation: (35 * 2) / (35 * 2 + 50) studies and scientific researches economic edition, no. 15, 2010 40 a) the relative voting rights in the combined entity after the business combination (the control belongs to the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity; in determining which group of owners retains or receives the largest portion of the voting rights, an entity shall consider the existence of any unusual or special voting arrangements and options, warrants or convertible securities. exclusive right control); b) the existence of a large minority voting interest in the combined entity if no other owner or organised group of owners has a significant voting interest (the control is hold by the combining entity whose single owner or organised group of owners holds the largest minority voting interest in the combined entity exclusive right control); c) the composition of the governing body of the combined entity (the control is exercised by the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity exclusive fact control). the parent defined by the ias 27, according to ifrs 3 is named acquirer. it is the entity that obtains control of another entity named the acquiree (according to ias 27 – subsidiary). the mentioned ifrs defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses. the control exercised over another entity can be achieved in stages. example: on 31 december n, s.c. „alfa” owns 25% of s.c. „beta” shares. on that date, s.c. „alfa” buys another 35% of s.c. „beta” shares, that gives it the right to control aver sc „beta”. according to ifrs 3 this transaction is named a business combination achieved in stages. sometimes the existence of control according to one of the ways listed above is temporary. so the parent can lose control over a subsidiary with or without a change in absolute or relative ownership levels. this could occur, for example, when a subsidiary becomes subject to the control of a government, court, administrator or regulator. it also could occur as a result of a contractual agreement. (or of time of expiration being previously concluded) or from the sale of an interest in equity or when the subsidiary issue new interests in equity to third parties. more as in some cases control can be achieved in stages, as its loss, sometimes, it can be the result of several transaction (arrangements). in all this cases the parent lose the capacity to govern the financial and operating policies of the entity, and all benefits that would have resulted from these. also the existing of control implies the determination of the application area of consolidated financial statements (according to ias 27) or of the consolidation perimeter, as it is named in literature (composed exclusively of consolidated companies or included in consolidation). if recently, according to ias 27, the subsidiaries over which a temporary control is exercised (as a result of ownership of their shares for sale only) and those severely restricted which affect the ability to transfer funds to parent , were excluded from the perimeter, in present this exemptions are eliminated. so, the rule is that all subsidiaries must be consolidated. justification for this rule stands in: subsidiary problem acquired with the intention of sale within twelve months and for which the management actively search a buyer, must be treated according to ifrs 5 “non-current assets held for sale and discontinued operations” the subsidiary which operate under severe restriction are also consolidated on the grounds that these circumstances do not exclude control. “the control” in view of romanian accounting regulation studies and scientific researches economic edition, no. 15, 2010 41 romanian accounting regulations requires the parent company conditions that must be accomplished to exercise exclusive control over an entity (subsidiary): a) to own the majority of the voting rights (exclusive right control); b) to be a shareholder or a member of the entity and that the majority of members of the administration, management and supervision that have accomplished these functions during the financial year, during the previous financial year and until the annual consolidated financial statements, to be appointed only as a result of exercising its voting rights (exclusive fact control); c) to be a shareholder or a associates of the entity and to be the only one that holds control over the majority of the voting rights or because of an agreement with over shareholders or associates (exclusive contractual or statutory control); d) to be a shareholder or an associate of the subsidiary and to have the right to exercise a notable influence over it, under a contract signed with the concerned entity or a clause in the memorandum or subsidiary status if applicable law permits such contracts or clauses (exclusive contractual or statutory control); e) to have the power to exercise or to effectively exercise a notable influence or control over a subsidiary (exclusive right control); f) to be a shareholder or an associate of the subsidiary and to have the power to appoint or remove the majority of the subsidiaries administration, management and supervision members (exclusive fact control); g) to rule on an unified basis the parent company and its subsidiary (any of the three types of exclusive control). as in international regulations, to evaluate if an entity hold control are taken into consideration also the potential voting rights but not the intention of management and its financial capacity to exercise or convert such rights. example: entities a and b holds 45%, respective 30% of the ordinary shares, with voting rights, over entity c. the others shares have been dealt to a large number of shareholders who do not participate into decision. entity b also owns options which are exercisable at any time and if it would be exercised would give it the right of exclusive control over entity c. however, the entity b does not intend to exercise them. this situation does not change the fact that the parent of entity c is entity b and not a, as we are tempted to think. we observe that in romanian accounting regulations the term of exclusive control is found also under the name of dominant/notable influence as under the simple term of control. even if this regulations does not present any definition of control, from the conditions that must be accomplished to exist control, we deduce that in principle represents the power of the parent over the subsidiary reflected by the voting rights and manifested by unilateral and firm decisions on its activity. as specified above the existing of control implies the dimensioning of the consolidated perimeter. o.m.f.p. 3.055/2.009 stipulates that the parent and all its subsidiaries must be consolidated, that is to be included into the consolidated perimeter. to this rule there are exceptions. so, an entity can be excluded from consolidation and implicit from the perimeter in these situations: inclusion is not significant for the purpose of giving a faire picture of assets, debts, of the financial position and profit or loss of entities included into the consolidated financial statements (however if two or more of the entities satisfy this requirement it must be included into annual consolidated financial statements, if considered as a whole it is significant for the purpose of providing a faire image); severe restrictions on long term stops the parent to exercise its rights over the assets or the entity management; the needed information for preparing the annual consolidated financial statements can be obtained only with undue costs or delays; studies and scientific researches economic edition, no. 15, 2010 42 the entities shares are held exclusively for subsequent sale. conclusions the existing of control represents a significant economic event that warrants a change from the investments accounting to the consolidation, from individual financial statement to the consolidated financial statements. in view of the two accounting regulations, national and international, the control has in principle as object the share that carries the voting right. control its the symbol of power exercised by the parent/acquirer over the activity of the subsidiary/acquiree and manifested through supervision and guidance. exercising control implies the establishing of the consolidation perimeter. in its delimitation the regulatory bodies have different opinions. while the international standards do not provide any exceptions from the subsidiary consolidation including them all, in the consolidation perimeter, the romanian regulations shows several instances of exclusion of subsidiaries from consolidation. these differences may have special implications on the consolidated financial statements (and implicit on users) related to comparability and pertinent financial and economic analysis. likely that harmonization will lead the ongoing attempts to alleviate these discrepancies and to unique the accountant language “spoken” by the financial statements. control gives rise to power relation on which always participates the parent (acquirer, dominant, consolidated) company on the one hand, and one or more subsidiaries (acquiree, consolidate, daughter) company on the over hand, whose “product” is the consolidated financial statements. bibliografie 1. deju m. (2008), contabilitate aprofundat , ed. alma mater, bac 2. funda ia comitetului pentru standarde interna ionale de contabilitate (2009), standardele interna ionale de raportare financiar ianuarie 2009, edi ia a 4-a, revizuit , ed. ceccar, bucure ti 3. gîrbin sinteze, studii de caz i teste gril ias (revizuite) – ifrs, ed. ceccar, bucure ti 4. malciu l. feleag reglementare i practici de consolidare a conturilor: din orele astrale ale eurepei contabile, ed. ceccar, bucure ti 5. pitulice c. (2007), teorie i practic i i situa iile financiare consolidate, ed. contaplus, ploie ti 6. popa a., pitulice c., jianu i., nichita m. (2007), studii practice privind aplicarea standardelor interna ionale de raportare financiar în românia, ed. contaplus, ploie ti 7. s contabilitatea grupurilor multina ionale, ed. economic bucure ti 8. ordinul ministerului finan elor publice nr. 3.055/2009 pentru aprobarea oficial nr. 766 din 10 noiembrie 2009 9. http://www.iasb.org studies and scientific researches economic edition, no. 15, 2010 43 studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 24 the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania costel ceocea “vasile alecsandri” university of bacău cceocea@sifm.ro raluca alexandra ceocea “gh. asachi” university of iași raluca.ceocea@gmail.com aurora cosma academy of economic sciences, bucharest preda_auro@yahoo.com marius savin academy of economic sciences, bucharest ionmariussavin@yahoo.ro abstract to achieve quality involves the use of standards in all medical and non-medical processes carried out in the medical system. standards translate quality into operational terms. they set minimum levels of excellence or performance compatibility intervals. in the paper below i presented a brief history of quality management in the world, then a brief history of quality management in health to demonstrate the importance and relevance of implementing quality management in the current health system. the case study presents the interpretation of the data obtained after the evaluation of the medical unit by anmcs, accreditation system of health units. in this content i presented the number of indicators implemented related to the applied standards and implicitly the number of non-compliant indicators. the results obtained lead to the presentation of the "strengths" of the health unit, also the recommendations are related to the processes that can be improved. the presentation of the results obtained from the application of satisfaction survey to inpatients during 2017 strengthens the belief that the implementation of quality management in a medical unit is not unnecessary work, on the contrary it is appreciated by patients and its continuation is an imperative action to have medical units at standards of excellence. keywords quality management in health: quality management; quality standard; accreditation jel classification i18; m20; o33 introduction the appreciation of quality has changed a lot over the years. traditionally, quality concerns were only the analysis of products removed from the conveyor belt. nowadays, following the systematic development of processes, the cause of quality serves more for prevention than for subsequent analysis. in top companies, the quality system is applied in all departments, including marketing and sales. in all countries, in all sectors, and in education, and at the level of public administration, the quality management system is successfully applied. quality measurement is an essential cornerstone of the national movement to achieve a high value of healthcare that ensures significant results for patients and reduces costs, this being done by national and international accreditation bodies. the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 25 the role of legislation and development agencies is to encourage healthcare organizations to pay more attention to developing capacity-building activities. literature review the beginnings of quality are found in the medieval europe of the end of the 13th century. in those times, craftsmen were organized into guilds that were responsible for elaborating strict rules for the quality of the products and services. in those times also, inspection committees were set up, that marked the seamless goods with a special symbol. however, the artisans also put their mark on products, thus having two marks: the inspection mark and the mark of the craftsmen, both serving as proof of quality, this system existing until the beginning of the 19th century. the quality system from factory production began in the mid-1750s in the united kingdom, this turning into the industrial revolution of the 1800s due to changes in the prevailing production methods. in the united states, at the end of the nineteenth century, frederick w. taylor implemented a new management approach which goal was to increase productivity without increasing the number of qualified craftsmen, this being done by employing specialized engineers and using the craftsmen as inspectors whose duties were to execute the engineers' plans. this approach has led to increases in productivity but also to an increase in the number of rejects, leading to the establishment of inspection units in order to remove non-compliant products. a new phase in the history of quality is the one when the united states, during the second world war, introduced the sampling tables and published them into a military standard entitled mil-std-105, these were annexed to military contracts, suppliers knowing what they expected to produce. at the same time, the armed forces sponsored the manufacturers to improve their quality through training courses in the statistical quality control techniques (sqc) of walter shewhart. walter shewhart began controlling the processes in the 1920s, showing that the quality of the final product is influenced by the quality of the processes that created it, and shewhart also laid the foundation for control charts as a quality tool. w. edwards deming, is known for his activity in japan after world war ii, for his collaboration with the japanese managers. deming is known as "the post-war japanese economic miracle." from 1950 to 1960, japan had the largest economic growth, becoming the second largest economy in the world due to the processes partially implemented by deming. he is the creator of the plan-do-check-act model joseph m. juran, who predicted the quality of japanese goods, will exceed the quality of goods produced in the united states in the mid-1970s due to the revolutionary pace of quality improvement in japan. working independently from w. edwards deming, juran focused on the quality management, went to japan, started courses in quality management, the first beneficiaries being the top and middle managers, thus ensuring that in the 1970s japanese products were seen as quality leaders. kaoru ishikawa changed the way people think about work. he wanted to concentrate the activity for the customer’s satisfaction, the customer following to receive services even after receiving the product. according to ishikawa, quality improvement is a continuous process and can always be done one step further. he also drafted the causeand-effect diagram, also called "ishikawa" or "fish scheme", with the help of this diagram, the user can see all the possible causes of an outcome and can find the causes of imperfections, this being one of the first quality management tools. japan has revolutionized the quality approach from product inspection to improving all the organizational processes, the result being higher quality exports for lower prices. thus, the "total quality" is born in the united states of america, which is a consequence of the evolution of quality in japan, after the second world war. initially, us ceocea, ceocea, cosma. savin 26 manufacturers considered that the japanese success was due to prices, but as time passed, quality competition continued to grow. the united states response was total quality management (tqm). thus is born iso 9000 quality management standards, 1987, the national baldrige quality program and the malcom baldrige national quality award established by the american congress in 1987. the quality management evolution continued with: • since 1995, the malcolm baldrige national quality award has added a criterion of business results to the successful measures of the applicant. • in 2000, the iso 9000 series of quality management standard has been reviewed in order to improve the customer satisfaction, • in 2015 was implemented the iso 9001 standard for the risk management, • six sigma method, developed by the american engineer bill smith, while working for motorola in 1980, in order to improve processes by minimizing defects. • dr. yoji akao centered the quality development by focusing on the wishes or needs of the customers in designing or redesigning a product or a service. • there appear specific versions of iso 9000 standards for quality management standards for the automotive industry (qs-9000 and iso / ts 16949), aerospace (as9000) and telecommunications (tl 9000) and for environmental management (iso 14000). • the services sector, healthcare, education and government implement the quality management. • the education and healthcare sector was added to the malcolm baldrige national quality award. quality in health is the result of patients’ expectations. one of the basic definitions of quality in health is given by donabediant who describes the quality of healthcare as „those care that is expected to maximize the size of patients’ well-being, taking into account the balance of expected gains and losses, occur at all stages of the health care process”. key points of the quality management evolution in the health sector: • 1854 , florence nightingale in england, quality improvement documentation • 1861, barton , sua, sanitary commissions, • 1862,1918, pasteur, blue, france, sua, improvisations and innovation • 1879, chamberland, france, sterilization • 1895,1056,1960, rontger, safar, laerdal, germany, sua, france, norway, tehnology • 1910, flexter, sua, education • 1881–1955, pasteur, von behring, kitasato, descombey, salk, kendrick, eldering, pittman, fleming, france, germany, japan, usa, england, • pharmaceuticals • 1883–1945, bismark, beveridge, kaiser, germany, england, usa, healthcare financing • 1908, ford, usa the role of industry and mass production one can say that the concern for providing quality health services began in 1854 during the crimea war. with the outbreak of cholera among british soldiers, the british government sent a group of nurses to accompany florence nightingale to care for the sick people, their actions decreasing mortality from 42.7% to 2.2%. the first improvements in the provision of healthcare, implemented by florence nightingale, consisted in: • decreasing overcrowding, • providing ventilation • removal of the cavalry horses that were sheltered in the basement of hospitals, the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 27 • disinfection of sewers and latrines with peat coal (nightingale, 1863) florence nightingale has made meticulous records that led to the statistical measurement of quality from nowadays and has performed the collection, tabulation, interpretation and graphic display of descriptive statistics, for this she became the first woman elected in the statistical society (1860), in 1883, the queen victoria awarded her the royal red cross, in 1907 being the first woman to receive the british order of merit. in 1861, during the civil war from america, the sanitary commission was established, which, based on the lessons learned from crimea, promoted clean and healthy conditions in the camps and hospitals of the armed union. as a volunteer, clara barton has supervised the healthcare of soldiers in the state of virginia in order to help meeting the goals of the sanitary commission. dr. elizabeth blackwell helped clara barton, she worked with florence nightingale in england and was the first woman to graduate from the us medical school. louise pasteur is identified as one of the "greatest benefactors of humanity of all times." he found that the disease is caused by microorganisms or microbes, which later became known as the germs theory. the discovery of the existence of germs and microbes led to the implementation of antiseptic practices by all physicians and hospitals in europe and then in the usa. the entire research of louis pasteur led to "pasteurization", using heat to destroy microbes in food products. the surgeon dr. rupert blue, has contributed to the improvement of the health quality in america. during 1918 the flu pandemic has killed 50 million people, namely 1/5 of the earth population. dr. rupert blue instituted quarantine (for ships entering the country), compulsory medical examinations for all emigrants, newsletters that communicated weekly the status of the latest outbreaks. also, dr. rupert blue had to solve the problems that occurred during outbreaks of polio, smallpox, typhoid fever and bubonic plague. the surgeon took measures in order to eradicate rats and control mosquitoes during the opening of the panama canal. dr. charles chamberland, french physician and biologist, in 1879, invented the early prototype of the modern autoclave, based on the researches of the british physicist dr. denis papin and the researches carried out by louise pasteur, with whom he frequently collaborated. he also led to the development of the chamberland filter and then designed the chamberland autoclaves. another significant moment in the history of health quality is represented by the discovery of x-rays, in 1895, by wilhelm conrant rontgen, they revolutionized the ability to diagnose and eventually treat cancerous tumors and won the nobel prize for physics in 1901. the development of intensive care therapy was done by dr. peter safar in 1956, his discoveries led to the development of the resuscitation technique, crp, which was accepted worldwide, and asmund laerdal developed the first realistic dummy for crp training. in 1950, dr. safar convinced the baltimore fire department to use fully-equipped ambulances with emergency medical staff. dr. safar also set up the first intensive care unit, being considered the largest specialist in the field of resuscitation research. medical education began in 1765 at the college of philadelphia (now known as the university of pennsylvania), which was co-founded by benjamin franklin. abraham flexner has made the reform of medical education following the research on the state of medical education from us. the improvements proposed by him were followed by standardized tests for admission to medical schools (mcat developed in 1028). but some of the biggest discoveries that led to the increase in the healthcare quality have been the discovery of vaccines between 1881 and 1955: ceocea, ceocea, cosma. savin 28 • antrax vaccine discovered in 1881 by louis pasteur; • antirabic vaccine discovered in 1885 by louis pasteur; • diphtheria vaccine discovered by emil von behring and shibasaburo kitasato in 1891; • tetanus vaccine discovered by pierre descombey in 1924; • polio vaccine discovered by jonas salk in 1955; • pertussis vaccine discovered by peart kendrick, grace eldering and margaret pittman in 1949. the penicillin "miracle drug" discovered in 1928 by sir alexander fleming in england has saved many human lives. but the improvement in quality of the medical services was also made by the fact that health insurances appeared, during the nineteenth and twentieth centuries, in different countries. in germany, chancellor otto von bismarck devised a state health insurance program in 1883, otto von bismarck being known as the father of healthcare in germany. in england, william beveridge, responsible for the "beveridge report" from 1942, gave options for the reconstruction of the british healthcare system which led to the establishment of the national health service in 1948. the us participated to voluntary, religious and charitable initiatives for the elderly and the poor people. the population who had money had easy access to quality healthcare. the american industrialist henry kaiser devised a health plan for his workers with a prepayment program. these prepaid programs evolved into kaiser permanente in 1945 in oakland, california. the us health insurance system has developed unevenly, in a decentralized manner and has gaps even today. currently, germany is on the 25th place in the who chart, england is on 18th and the usa on 37th. case study implementing the quality management system of medical services in medical center srl tulcea the hospital medical center srl was opened in 2014, starting from january 2015 has started the implementation of the quality management system inside the medical unit. in 2015, in march, the application for registration to the accreditation process was submitted to the national authority for quality management in health sector. the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 29 table 1 situation of meeting the standards grouped by reference categories is the following reference chapter according to omh 446/2017 no. of indicators subject to analysis applicable indicators compliant indicators noncompliant indicators nonapplicable indicators score achieved maximum score percentage % 01. strategic and organizational management 533 4888 415 73 45 1,148.25 1366 84.06% 02. clinical management 386 260 218 42 126 800.00 995 84.06% 03. medical ethics and patient’s rights 62 58 56 2 4 181.50 189 96.03% total 981 806 689 117 175 sourse: anmcs -accreditation report reference 01 – strategic and organizational management the purpose of the reference is to stimulate the hospital to conceive and substantiate its activities, based on the strategies and policies elaborated by the management structures, with determining on medium and long term the purposes and goals of the organization, with adapting the courses of action and the optimal allocation of resources for the accomplishment. of these goals, according to the mission of the organization. it aims to determine the increase in the efficacy and efficiency of the hospital and its optimal interface with the healthcare system, maintaining and amplifying the market segment occupied. the main goals of the reference are:  identifying the place that the hospital occupies and which it intends to occupy on medium term, in the health system;  the correlative approach of the hospital with the environment where it operates;  synchronizing the activities of the organization with the potential of the resources;  establishing a pre-planned course of action destined to meet the goals proposed;  establishing a structure of consistent actions in behavioral plan, considering and favoring the development of an intense process of organizational learning, with the implementation of quality management and the development of the organizational culture. score achieved by reference 01 84.06% table 2 within reference 01, 533 indicators have been subject to analysis, being identified: applicable indicators number compliant indicators 415 non-compliant indicators 73 non-applicable indicators 45 source: personal contribution achieving 1,148.25 points of 1366 maximum possible points, representing a percentage of 84.06% ceocea, ceocea, cosma. savin 30 figure 1 structure of qualitative indicators used in the analysis of strategic and organizational management source: personal contribution reference 02 – clinical management the purpose of the reference is focusing the healthcare services on knowing and meeting the needs of the patient generated by the disease condition and the socialbehavioral particularities or the one's own or spiritual beliefs, expressed by him, under clinical safety conditions. the hospital must apply best practices (efficient, effective and safe for the patient), in accordance with his health needs, ensuring his access to medical services and their continuity in a way that allows the traceability of processes, through proper, nonbureaucratic and real-time documentation. the main goals of this reference are:  defining the mission of the hospital according to the level of available resources, by establishing the level of competence, expressed according to the types and complexity of the available services determined by the technical-material and professional capacity;  establishing the concordance between the patient's health needs and the mission and resources of the hospital;  limitation of the medical services provided within the hospital's competences;  ensuring the quality of the medical services provided and the patient's safety through monitoring continuously the healthcare results, its effectiveness and efficiency. clinical governance follows the steps of the patient's route from taking over to solving the case, its goals being reflected by the standards presented. score achieved by reference 02 80.40% table 3 within reference 02 386 indicators have been subject to analysis, being identified: applicable indicatores number compliant indicators 218 non-compliant indicators 42 non-applicable indicators 126 sourse: personal contribution compliant indicators non-compliant indicators non-applicable indicators the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 31 achieving 800.00 points of 995 maximum possible points, representing a percentage of 80.40% figure 2 structure of qualitative indicators used in the analysis of clinical management source: personal contribution reference 03 – medical ethics and patient’s rights the purpose of this reference is to support the hospital in establishing the conditions for conducting its activity so as to allow the qualitative goals imposed to the medical act to be achieved, with the respect of patients' rights, their protection against professional errors, but also the protection of the medical body and the health unit against the risk of entailing the civil liability. the main goals of this reference are:  adapting the qualitative requirements of the medical service to the current context of knowledge and compliance with the medical legislation  managing the risk of civil exposure of the professionals and of the hospital within the interaction with the prejudiced patients or who consider to be prejudiced as a result of rendering the medical assistance. score achieved by reference 03 96.03% table 3 within reference 0362 indicators have been subject to analysis, being identified: applicable indicators number compliant indicators 56 non-compliant indicators 2 non-applicable indicators 4 sourse: personal contributions compliant indicators non-compliant indicators non-applicabil incicators ceocea, ceocea, cosma. savin 32 figure 3. structure of qualitative indicators used in the analysis of medical ethics and patient’s rights source: personal contribution presentation of the results achieved and the health unit classification into the accreditation category following the analysis of the documentation resulting from the assessment process for accreditation, the hospital assessment and accreditation unit identified a number of 806 applicable indicators, of which 689 compliant and 117 non-compliant indicators, resulting into:  total score achieved * 85.90%  number of standards with a score lower than 51% ** 0  percentage of indicators with score (-10) *** 1.45% certain indicators are specific to certain activities depending on the specialty of hospitals, medical center srl being a monodisciplinary recovery hospital, specialized in treating chronic diseases, does not have authorized some activities such as surgery, operating room, neonatology, thus explaining the existence of a number of indicators that cannot be applied. based on the order of the anmcs president no. 10/2018 regarding the approval of accreditation categories of the sanitary units with beds related to the second cycle of accreditation, as amended and completed, published in the official gazette of romania, part i, no. 95 from january 31, 2018, medical center srl, tulcea county, falls into the second category, accredited with recommendations. the implementation of the quality management system inside the hospital unit was a challenge for the management and the medical staff. the deficiencies of the employees from the health sector in terms of their vision on quality must be highlighted. patients' fate is often determined based on the individual decisions of the employees in the health sector. even today, in case of these decisions, only the limited medical knowledge play a decisive role and the related sciences, such as the economic aspects of the medical system, the health management or the results and the criteria of the quality management, are rarely applied. accreditation of health units:  represents the process of validating the compliance of the features of the health services performed by the health units, with the accreditation standards enforced by anmcs and approved under the law, following which health units are classified compliant indicators non-compliant indicators non-applicable indicators the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 33 by accreditation categories in order to give confidence in their technicalprofessional and organizational competence;  is an external and, mainly, independent assessment process, carried out by persons specially trained for it – assessors;  focuses on three dimensions: implementation of the quality management system, organization of processes for accreditation of health services and improvement in professional practices;  regards the hospital as a set of processes carried out by an organization, resulting into patient-centered health services. accreditation purpose:  health services to provide safety conditions for the patients, staff and environment;  the health services provided to meet the needs of the communities served;  the patients’ taking over by the health units to be done within the limits of competences and some categories of accreditation of sanitary units with beds the general minimum mandatory conditions for the classification of the sanitary unit with beds into the accreditation categories are:  each accreditation standard must be met at least 51%;  the critical indicators regarding the patient safety to be met 100%. the criteria according to which the classification into accreditation categories of the sanitary units with beds related to the second cycle of accreditation are the following:  the total score achieved following the assessment of compliance with the requirements of the standards of the national health quality management authority;  the share of indicators with value (-10) applicable to the sanitary unit;  the level of fulfilling the requirements regarding the achieving of the sanitary permit, expressed by the existence or non-existence of a compliance plan. results the score achieved following the analysis of the documentation resulting from the assessment process in view of the accreditation confirms the effort that has been made in order to ensure that the health services we provide meet the needs of the community served and to ensure the safety conditions for the patient, staff and the environment. strenghts 1. ensuring the optimal performance of all processes of providing medical and health care as a result of the correct definition of the organizational structure and organizational management; 2. ensuring the staff needs by the human resources management, according to the mission undertaken by the hospital; 3. the financial and administrative management that responds to the strategic and operational goals of the hospital; 4. the organization, respectively the functioning of the service quality management system, which ensures the performance of all processes related to quality monitoring and improvement inside the hospital; 5. customized organization of the discharge or transfer of the patient under safe conditions; 6. promoting respect for the patient’s autonomy; 7. observing the principle of equity and social justice, respectively the patients' rights; 8. observing the principles of well-being and non-harm. ceocea, ceocea, cosma. savin 34 improvement potential 1. the existence of the consistency between the strategy and strategic management of the organization with the need for health care and the dynamics of the health services market; 2. the information system that responds to information needs and determines their effective use inside the hospital; 3. developing a communication system at the hospital level that meets the needs of the organization and beneficiaries; 4. preventing the occurrence of damages through the management of the non-clinical risks underlying the decision-making process; 5. the need for the care environment to provide the conditions necessary for the delivery of medical assistance; 6. taking care of patients, which is done according to their needs, mission and resources available from the hospital; 7. the initial assessment by identifying the needs of the patients within the context of knowing their exposure to risk factors (environmental, social, economic, behavioral and biological) for the establishment of the need for their assistance and medical care; 8. addressing the patient in an integrated and specific way, with applying the best medical practices, in order to ensure continuity of care and nursing; 9. the ability to provide paraclinical services according to the examination needs established by clinicians; 10. ensuring continuity of medicine treatment and patient safety through a high performance pharmaceutical management; 11. the concern for increasing the capacity to prevent and control the infections related to the assistance by implementing and observing good practices in the field; 12. development, respectively the implementation of the policy of insurance and improvement in the patient’s safety; 13. the implementation of the clinical audit for the purpose of improving healthcare and decreasing variability in practice. conclusion the implementation of quality management in medical center hospital, led to the improvement of the conditions granted to patients during hospitalization, the reduction of risks, the treatment of patients according to procedures developed according to national and international guidelines. a future research in 5 years when the next accreditation cycle will be showed you the value of implementing the quality management standards in the hospital medical center hospital. another tool for measuring the implementation of quality in hospitals is done by applying questionnaires to patients to measure satisfaction, this method led to the following results: analysis report of patient satisfaction surveys year 2017 during 2017, 595 surveys were distributed to hospitalized patients, of which 595 patients were respondents, so 100% of patients answered out of 595 responding patients, 77.64% were retired, 12.60% were employees, 9.7% were other categories 56.47% were urban patients 65.56% of rural patients 6. how many times have you benefited from the medical services offered by the hospital? 51.03% first time the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 35 36.13% benefited several times 0.75% loyal patients 7. what is the general impression about the hospital visit? 98.99% very good impression. 0.09% good impression 8. how did you find out about the services offered by the hospital? 0.16% brought by ambulance 45.71% from friends 0.16% of tv 19.15% of the family 1.1% via the internet 0.16% of the written press 0.5% through street advertising 33.10% from the family doctor 9. how do you appreciate the hospital environment? 84.70% excellent 8.9% very good 0.16% good 10. how do you appreciate the behavior of the medical staff? 92.43% excellent 7.5% very good 11. how do you appreciate the behavior of the non-medical staff employed by the unit? 91.42% excellent 8.06% very good 0.33% satisfactory 0.16% unsatisfactory 12. how do you appreciate the way you were treated during the visit? 93.35% excellent 7.5% perfect 13. upon admission you were accompanied to the reserve by? 99.66% health personnel 0.33% of the family 14. please provide ratings for the following services 14.1 accommodation 100% perfect 14.2 nutrition 97.47% perfect, 2.5% good 14.3 time allowed by the salon doctor for your consultation 98.65% perfect, 1.16% good, 0.16% unsatisfactory 14.4 quality of medical care provided by: 14.4.1 the salon doctor 99.83% perfect, 0.16% good 14.4.2 nurses 99.66% perfect, 0.42% good 14.4.3 nursemaid 99.49% perfect, 0.5% good 15. at the functional explorations/laboratory analyzes you were accompanied by: 100% medical staff 16. have you been instructed on how to take your medicines? 93.78% yes, always 0.16, yes, sometimes 17. regarding the administration of drugs: 10.1 has it done under the supervision of the nurse? 88.57% yes, always 0.5% yes, sometimes 10.2 have you received medication for one day of treatment? ceocea, ceocea, cosma. savin 36 4.7% yes, all at once 75.46% divided partially 3.3% never 18. were medicines administered in hospital? 75.63% were administered only from the hospital 3.19% do not know 19. if the drugs were bought by the family, what was the procedure: 0.5% based on a simple prescription issued by the hospital doctor; 23.86% based on a prescription issued by the family doctor/specialist on the recommendation of the hospital doctor; 12.10% do not know. 20. you were satisfied with the care provided: 13.1 during the day 100% yes 13.2 during the night 100% yes 13.3 in weekend 100% yes 21. general impression about the hospital 97.98% very satisfied 1.5% satisfied 0.5% dissatisfied 22. what would you like to improve in the hospital? 0.67% personal behavior 9.7% accommodation conditions 89.4% do not know 23. if you need to be readmitted, you will opt for the same hospital? 100% yes 24. will you recommend the medical services offered by the hospital and to your family or friends? 100% yes analyzing the data collected through these surveys we can say that there would be aspects to improve such as: the environment and accommodation conditions, but like any activity of providing health services, this is a perfectible and dynamic activity. references cavaillon, j.m., legout, s. (2019), duclaux, chamberland, roux, grancher, and merchnikoff: the five misketeers of louis pasteur. gene& immunity, volume 20, 344-356. assmus, a., line, b. (1995), slac.stanford.edu. [online] available at: https://www.slac.stanford.edu/pubs/beamline/25/2/25-2-assmus.pdf [accessed 14 01 2020]. bordenave, g. (2003), louis pasteur (1822-1895). microbe and infection, 5(6). conti, r.f., warner, m. (1994), taylorism, teams and technology in ‘reengineering’ work‐organization, new tehnology, work and employment, september. delooz, p. h. (2003), internațional emergency medicine: the vision of a pioneer, prof. dr. peter safar, on emergency medical care, european journal of emergency medicine, 10(3), p. 163. donabedian, a. (1978), the quality of medical care, science, 26 may, 856-864. dr. blue, r. (1948), dr. rupert blue, us health leader; former surgeon general dies i noted for work in bubonic i plague and with leprosy, the new york times, p. 27. h., e., 2010. elisabeth blackwell: a pioneer female medical graduate, british journal of hospital medicine, volume 71. the impact of government accreditation in the field of the quality of medical services on the satisfaction of patients in romania 37 huston, r.p. (1972), abraham flexter in perspective: american medical education 1865-1910, bulletin of the history, 46(6). juran, j. m. (2002), a call to actions: the summit: carlson school of management, university of minnesota-minneapolis, measuring business excellence, 1 september. mauleon, c., bergman, b. (2009), exploring the epistemological origins of shewhart”s and deming”s theory of quality: influences from c.i.lewis”conceptualistic pragmatism, international journal of quality and service sciences, 1(2), p. 160. meyer b. c., bishop d. s. (2007), www.emeralddinsight.com/1751-1348.htm. [online] [accessed 14 01 2020]. nightingale, f. (1979), looking back. taken from "notes on hospitals" by florence nightingale, 1863. 01 septembrie, pp. 39-43. peterson, p. (1999), total quality management and the deming approach to quality management, journal of management history, 5(8). rotaru, d. m. (2013), tendințe actuale a sistemelor de asigurari de sanatate in diferite tari. [online] available at: https://ibn.idsi.md/sites/default/files/imag_file/66.tendinte%20actuale%20a% 20sistemelor%20de%20asigurari%20medicale%20in%20diferite%20tari.pdf [accessed 14 01 2020]. suarez-barraza, m. f., rodriguez-gonzalez, f. g. (2019), cornerstone root causes through the analysis of the ishikawa diagram, is it possible to find them? a first research approach, international journal of quality and service science, 12 june. tjomsland, n., peter baskett, p. (2002), the resuscitation greats asmund s. laerdal, resuscitation, 53(2), 115-119. yung, w. (1997), the values of tqm in the revised iso 9000 quality system, international journal of operations & production management, 1 february. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 70 analysis by cohort of the baccalaureate graduates and higher studies graduates – territorial disparities in romania oana-ancuța stângaciu “vasile alecsandri” university of bacău stangaciu@ub.ro eugenia harja “vasile alecsandri” university of bacău eugenia.harja@ub.ro daniela măgirescu bacău county statistics office daniela.magirescu@bacau.insse.ro abstract the present work aims to analyze the dynamics of the higher education graduates by cohort according to the evolution of the number of baccalaureate graduates by region and county. there are gaps between the different areas, in favor of the more developed ones. apart from the city of bucharest, counties such as cluj, timiș, brașov, sibiu, arad, which attract young people from other areas of the country and because of the better offer of employment upon completion of studies, stand out. the conclusions of this analysis based on the data of the official statistics confirm the existence of disparities in the territorial profile, between the poorer areas of the country and the most developed, being appropriate a coherent policy to favor these areas in granting funds for a higher education accessible to the population. keywords higher education; licensed; baccalaureate graduates; discrepancies in education jel classification m41 the evolution of baccalaureate graduates from the period 2011-2021, by cohorts assuming that the vast majority of baccalaureate graduates come from the same generation of live births, we further looked at what happened to each cohort separately, leaving aside the influences of mortality and migration. thus, from the cohorts of live births from the years 1993-2003, the baccalaureate graduates from the years 2011-2021 resulted, considering that every year, most graduates with a baccalaureate come from the cohort to which they should belong as a year of birth. in the whole country, out of a number of 212,459 children born alive in 2003, a number of 97,121 children (45.7%) completed the baccalaureate in 2021. bacău county, out of a number of 7,918 children representing the cohort of 2003, a number of 3,149 children (39.8%) complete the baccalaureate in 2021. if in 2003 bacău county was in 4th place in the country after the city of bucharest and the counties of iași and suceava in terms of the number of live births, in 2021 it was in 5th place in terms of the number of baccalaureate graduates, being surpassed by the counties of prahova and suceava. (figure 1) stângaciu, harja, măgirescu 71 figure 1. the cohort of live births from 2003 by county and the corresponding baccalaureate graduates from 2021 source: personal processing of the ins – tempo online available data in a number of 11 counties, the share of baccalaureate graduates in the country as a whole was higher than the share of live births from the cohort of origin, in descending order according to the municipality of bucharest, these being: cluj (+38.2%), argeș (+26.3%) , gorj (+16.6%), prahova (+16.5%), alba (+15.9%), vâlcea (+15.7%), timiș (+7.4%), constanța (+6 .1%), arad (+3.7%) and suceava (+0.3%). from this point of view, bacău county is in 25th place, the share of baccalaureate graduates in the country as a whole (3.24%) being -13% lower than the share of live births cohort of 2003 (3.73%) . figure 2. share of baccalaureate graduates in total live births-cohorts in the period 2011-2021, by region source: personal processing of the ins – tempo online available data in figure 2, a maximum can be observed in 2015 of the share of baccalaureate graduates in total live births from the cohort to which they belong, this being the highest level in the analyzed period both for the country (49.9%) and for each region in part. the northeast region ranks last in the country with a share of 40.9%, after the regions: bucharestilfov (78.9%), north-west (52.6%), west (49.7%), south-west oltenia (48.3%), south-muntenia (47.9%), center and south-east, each with 47.8%. 36 ,3 32 ,8 39 ,6 39 ,4 4 3, 1 34 ,3 36 ,5 35 ,3 3 8, 8 42 ,3 40 ,9 72 ,1 63 ,2 66 ,5 64 ,6 78 ,9 63 ,5 6 7, 2 63 ,7 69 ,6 76 ,8 69 ,0 44,2 41,2 47,4 44,4 49,9 40,4 43,0 40,8 44,8 49,3 45,7 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 north-east center southmuntenia south-east west south-west oltenia north-west bucurestiilfov total analysis by cohort of the baccalaureate graduates and higher studies graduates – territorial disparities in romania 72 in 2021, romania's average was 45.7%, the last place being also held by the north-east region, with 40.9%. in the period 2011-2021, the average rate of promotion in the north-east region was 38.1%, below the national average (44.6%). practically, the degree of poverty of the region shows once again its effects on the resources allocated by the population for learning and respectively on the level of education of the population. the northeast region was consistently in last place, even though the share of graduates in the total live births by cohort increased slightly compared to the first years. out of the last 11 years, in a number of 8 years the share was below 40% and only in 2015, 2020 and 2021 did it slightly exceed this percentage. the situation by counties can be seen in figure 3, both in the column diagram and in the two comparative maps for the extreme years of the period. 2011* 2021* * values truncated to one decimal place figure 3 share of baccalaureate graduates in total live births-cohorts in 2011 and 2021, by county (%) source: personal processing of the ins – tempo online available data bacău county, from a 33.3% share in 2011 of graduates with a baccalaureate in total born of that generation (35th place in the country), reaches a 39.8% share in 2021, occupying the 25th place in the country's county hierarchy. lower shares in the region in 2021 can be found only in botoșani and vaslui counties, the poorest from an economic point of view. in the period 2011-2021, the average weight is 36% for bacău county, occupying the 4th place in the region after the counties: suceava (44.9%), neamț (41.3%), and iași (38.2%). even after this aspect, the influence of the level of economic development is known, with bacăul losing a lot in recent years. 20 ,5 2 5, 8 27 ,0 32 ,7 34 ,0 34 ,2 35 ,1 36 ,3 36 ,5 36 ,9 37 ,9 38 ,2 38 ,6 39 ,3 39 ,3 39 ,5 39 ,7 39 ,8 42 ,0 42 ,3 42 ,7 42 ,9 43 ,2 43 ,8 44 ,2 44 ,3 44 ,3 44 ,6 44 ,7 44 ,8 45 ,7 45 ,8 47 ,4 48 ,5 49 ,1 52 ,9 53 ,0 53 ,2 53 ,3 5 7, 7 6 3, 2 77 ,4 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 ilf ov g iu rg iu ca la ra si co va sn a ia lo m ita va slu i bo to sa ni tu lc ea sa tu m ar e ca ra sse ve rin bi st rit an as au d te le or m an m ur es vr an ce a ha rg hi ta br ai la o lt ba ca u da m bo vi ta g al at i ia si si bi u bu za u do lj hu ne do ar a sa la j bi ho r m eh ed in ti n ea m t br as ov m ar am ur es su ce av a ar ad co ns ta nt a ti m is va lce a al ba pr ah ov a g or j ar ge s cl uj m un ic ip iu l b uc ur es ti 2011 2021 stângaciu, harja, măgirescu 73 from the comparison of the two cartograms, we can see on the one hand the decrease in the number of counties with weights below 38%, from 15 counties in 2011 to 4 in 2021, but also the decrease in the number of counties with weights above 46%, from a number of 15 to a number of 6 (including the municipality of bucharest). the number of counties with weights between 43%-46% increases from 3 in 2011 to 10 in 2021, and the group of those with weights between 38%-43% increases from 10 to 11 counties, in this situation also finding bacău county. figure 4 boxplot of the distribution of counties according to the share of baccalaureate graduates in total live births-cohorts in the period 2011-2021 source: personal processing of the ins – tempo online available data similar aspects can also be observed in the boxplot in figure 4, where the distributions of counties are presented according to the share of baccalaureate graduates in total live births of the respective generation, for the period 2011-2021. the highest median is found in 2015, the best year for this indicator, the values being obviously decreased in the following years. in 2021, the interquartile range decreases slightly compared to the previous two years, with the first 25% of the smallest counties finding them up to 37%, and the first 25% of the largest counties above 46%, with the decrease of both the minimum level as well as the maximum. the outliers can also be observed, i.e. the counties that make a discordant note compared to the rest, in the last year they were the municipality of bucharest, and the counties of cluj and argeș with high extreme values, and at the opposite pole the counties of ilfov and giurgiu. evolution of bachelor's graduates in total baccalaureate graduates from 2015-2021, by cohorts in general, we would expect the evolution of graduates with a bachelor's degree to be in direct relation with the evolution of baccalaureate graduates, but in reality, this only manifests itself in the bucharest-ilfov region. although the northeast region has a dynamic of baccalaureate graduates of +7.4% in the period 2011-2018, the graduates with bachelor's degrees corresponding to these generations, respectively those from the period 2014-2021, register a decrease of -5.1 %. this, given that the national average of the dynamics of baccalaureate graduates was -2.9% and that of bachelor's graduates was +0.7%. in the case of bacău county, an increase of baccalaureate graduates was observed by +8.4% for this period, but materialized in a -4.1% reduction in the number of graduates, as if we were dealing with an inverse relationship between the two indicators (figures 5). analysis by cohort of the baccalaureate graduates and higher studies graduates – territorial disparities in romania 74 indirectly, it results that large university centers, and especially those located in the most developed areas of romania, attracted a large part of the baccalaureate graduates of the north-east region. for example, in the north-west region, although the number of baccalaureate graduates decreases by -9.4%, the number of bachelor's graduates from these cohorts increases by +10.2%. in this case, the counties of cluj followed by bihor had a great influence, counties that have flourished economically but also socially in recent years, attracting more and more students in search of better future jobs paid, but also more numerous and diverse possibilities for spending free time. it can also be observed from here that the "richer", more developed counties attract more and more intelligence, perpetuating and deepening the gaps between the development of different areas of the country. for these reasons, the state should intervene and invest more in education in the case of less developed areas, thus having a greater chance for graduates to stay there after completing their studies and contribute to their development. figure 5 share of bachelor graduates in total baccalaureate graduates-cohorts in the period 2015-2021, by development regions (%) source: ins own data processing – tempo online the evolution of the share of bachelor's graduates in total baccalaureate graduates from the cohort to which they belong can be seen in figure 5, with the bucharest-ilfov region being in first place every year. thus, in 2021, the number of bachelor's graduates from this region was almost 2.4 times higher than the number of baccalaureate graduates for that generation. the bucharest-ilfov region was followed by the north-west region (+17.8% bachelor's graduates compared to bachelor's graduates of the same cohort), the west region (+11%), all other regions coming with a relative reduction of bachelor's graduates versus those with a baccalaureate for the same cohort, while the national average was -10.5%. in terms of dynamics, it can be observed that the north-west region is ahead of the west region, these changing their place in the hierarchy, cluj counties making a significant contribution, followed by bihor. thus, in the north-west region the share of bachelor's graduates in the baccalaureate graduates of the cohort to which they belong was +27.6% in 2021 compared to 2015, followed by the south-east region with +12.96%, the region south-west oltenia with +10.38% and bucharest-ilfov region with +4.95%. all the other four development regions experienced reductions in the indicator: by -15.87% in the south-muntenia region, by -8.75% in the north-east region, by -3.43% in the western region and by -1 .2% in the center region. 29 ,2 22 ,9 25 ,1 22 ,7 26 ,4 23 ,9 24 ,6 22 8, 2 21 2, 2 22 7, 1 19 5, 3 24 0, 2 23 2, 2 23 9, 4 83,6 72,0 77,9 70,0 86,7 85,1 89,5 0,0 50,0 100,0 150,0 200,0 250,0 300,0 2015 2016 2017 2018 2019 2020 2021 southmuntenia south-east south-west oltenia north-east center west north-west bucurestiilfov total stângaciu, harja, măgirescu 75 2015* 2021* * values truncated to one decimal place figure 6. share of bachelor's graduates in total baccalaureate graduates-cohorts in 2015 and 2021, by county (%) source: personal processing of the ins – tempo online available data the distribution of the country's counties for this indicator is presented comparatively in the two extreme years of the period, both in the diagram and in the cartograms in figure 6. although according to the number of those who passed the baccalaureate exam in 2018, bacăul is in 8th place after bucharest, iași, suceava, prahova, cluj, argeș and constanța, with 3,080 graduates, in terms of the number of 2021 graduates we are in 15th place, with 989 graduates. thus, the share of bachelor's degree graduates in total baccalaureate graduates of the cohort is only 32.1% for bacău county, almost half of the average of the north-east region (60.1%). in first place is the county of cluj, with a number of bachelor's degree graduates 3 times higher than the baccalaureate graduates of that generation, which means that over two thirds come from high school students from other counties of the country. in the same good situation are the capital (2.48 times), timiș county (over 2.2 times), iași county (with +97% more graduates than those who took the baccalaureate), brașov county (with + 44.4%), dolj county (with +34.8%), sibiu county (with +33.9%) and constanța county (with +11.4%). comparing the two maps, there is a change for the better in favor of the counties in the north-west and west regions. 0, 8 3, 7 5, 0 6, 4 7, 5 8, 1 8, 9 10 ,4 10 ,8 11 ,3 12 ,0 13 ,5 14 ,2 15 ,1 15 ,2 23 ,7 31 ,5 31 ,5 32 ,1 32 ,4 34 ,1 34 ,4 36 ,3 42 ,9 47 ,1 78 ,0 80 ,2 85 ,2 92 ,6 1 11 ,4 13 3, 9 13 4, 8 14 4, 4 19 6, 9 22 1, 6 24 8, 2 31 5, 1 0,0 50,0 100,0 150,0 200,0 250,0 300,0 350,0 bo to sa ni ia lo m ita n ea m t vr an ce a bu za u o lt ca la ra si sa la j br ai la va lce a ilf ov co va sn a sa tu m ar e te le or m an ca ra sse ve rin bi st rit an as au d ha rg hi ta pr ah ov a g or j m ar am ur es ba ca u da m bo vi ta hu ne do ar a m eh ed in ti su ce av a ar ge s al ba ar ad m ur es g al at i bi ho r co ns ta nt a si bi u do lj br as ov ia si ti m is m un ic ip iu l b uc ur es ti cl uj 2015 2021 analysis by cohort of the baccalaureate graduates and higher studies graduates – territorial disparities in romania 76 the number of baccalaureate graduates cohort the number of bachelor's graduates figure 7. the number of bachelor's graduates in 2021 and the number of baccalaureate graduates cohort, by county source: personal processing of the ins – tempo online available data in figure 7, the county structures of the number of baccalaureate graduates in the 2018 cohort and the corresponding bachelor's graduates in 2021 can be seen, the counties being in order of the weights held in the total country. thus, if in 2018 a number of 95,692 high school students passed the baccalaureate, 11.6% of them came from the capital (11,115 students), followed by iași county with 4,162 students (4.3%), suceava county with 3,822 students (4%), prahova county with 3,766 students (3.9%), bacău county being in 8th place with 3,080 students (3.2%). regarding the number of graduates in 2021, corresponding to the 2018 cohort of baccalaureate graduates, they totaled 85,665 across the country, most of them being concentrated in the city of bucharest, representing approximately one third of the total (27,584 graduates, respectively 32, 2% of the total). the counties follow: cluj with 11,155 people (13%), iasi with 8,194 people (9.6%), timiș with 6,280 people (7.3%), dolj with 4,012 people (4.7%), constanța with 3,718 people (4.3%), brașov with 3,344 people (3.9%), bihor with 2,551 people (3%), sibiu with 2,521 people (2.9%). bacăul ranks 15th with 989 licensed persons, representing 1.2% of the country's total. from figure 8 you can see the boxplot of the distribution of counties according to the share of bachelor's graduates in total baccalaureate graduates by cohort, the smallest difference between the minimum and maximum being in 2017, with a maximum deviation of 241.4% , while the gaps have increased over time, reaching 314.3% in 2021 (a minimum of 0.8% and a maximum of 315.1%). the counties that stand out as outliers, being with values outside the box-plot, are always the same four (cluj, bucharest, timiș and iași). if in the last three years the median is around 25% and the interquartile range is somewhat the same in size, the county of cluj stands out more and more strongly as an outlier, distancing itself more and more from all the counties of the country, but also from the other three outlier. stângaciu, harja, măgirescu 77 figure 8 boxplot of the distribution of counties according to the share of bachelor's graduates in total baccalaureate graduates-cohorts in the period 2015-2021 source: personal processing of the ins – tempo online available data trying to identify a link between the number of baccalaureate graduates and the number of graduates in the same cohort, we drew up the correlogram in figure 9. r2=80,5% (all counties) liniar (p=0,00) r2=36,7% liniar (p=0,00) figure 9. scatterplot between the number of baccalaureate-cohort graduates and the number of bachelor graduates in total, by county in 2021 source: personal processing of the ins – tempo online available data if we include all counties, it would result that the number of baccalaureate graduates determines the number of bachelor's graduates in the respective cohort by 80.5%, being a rather intense link between the two categories. thus, we would estimate that for an increase of 10 baccalaureate graduates, the number of bachelor's graduates would increase by 25 people on average. again, the correlogram shows the disadvantage of bacău county, which is far below the regression line, compared to advantageous counties such as the four outliers, but also compared to counties such as brașov and sibiu, for example. if we exclude the outliers, the connection becomes of medium intensity, the degree of determination being reduced to 36.7%, therefore the number of baccalaureate graduates determines to a lesser extent the number of graduates per cohort. number of baccalaureate graduates number of baccalaureate graduates num be r of b ac he lo r g ra du at es analysis by cohort of the baccalaureate graduates and higher studies graduates – territorial disparities in romania 78 conclusions we believe that a balanced development policy of all areas of the country and the eu, respectively, should take into account a priority allocation of funds for education to these areas, the allocation of a greater number of budgeted places in higher education compared to the established indicators, which to make access to a "european education" more attractive and easier for young people. the allocation of funds must encourage more participation of young people in higher education within existing university centers in less developed areas. in these areas, the population even in the cities, not to mention the rural population, has low incomes and can hardly afford access to a higher education. this is also the reason for a very high school dropout even among those who enrolled in higher education courses in these university centers, young people not being able to support their studies and offering their workforce to activities that require a high lower preparation. in this way, young people from disadvantaged backgrounds, such as those from rural areas, would be attracted even more, young people who, although they may have an above-average level of intelligence, do not have access to higher education from a financial point of view. if they are given more facilities to be able to financially support their studies, these areas would have a much greater chance to develop in the future, by the return of young people with a higher education to the areas where they belong. but unfortunately, as all the presented statistical data have shown, the most developed areas continue to attract even more students and, indirectly, the future highly specialized workforce, most of whom remain after completing their studies in the locality where they perfected their education by crowding these already crowded areas. at the same time, in order to put into practice the desire of a higher education accessible to the whole country, favorable to social inclusion, it is necessary to grant higher funds as a priority to university centers in disadvantaged areas, in order to reduce the existing inequities and develop a process of convergence regionally at the level of the entire country. references harja, e., stângaciu, o.a., (2009) "analiza datelor statistice utilizând spss" editura alma mater. stângaciu, o.a., harja, e., (2014), "gender demographic disparities in bacau county " studies and scientific researches. economic edition, the university “vasile alecsandri” of bacău, nr. 20/2014, available at url: (http://sceco.ub.ro/index.php/sceco/article/view/269 ) consiliul național de statistică și prognoză a învățământului superior, (2022), propunerea cnspis privind metodologia de alocare a cifrei de școlarizare pe domenii universitare pentru studii universitare de licență, master și doctorat în anul 2018/2019, available at url: (https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocarecifrei-de-%c8%99colarizare-pe-domenii-universitare ) ministerul educației, (2022), notă de fundamentare privind aprobarea cifrelor de școlarizare pentru învățământul preuniversitar de stat și pentru învățământul superior de stat în anul școlar/universitar 2022-2023, available at url: (https://www.edu.ro/sites/default/files/nota_fundamentare_proiect_hg.pdf ) ins tempo online (2023), data set, available at url. (http://statistici.insse.ro:8077/tempo-online/ ) http://sceco.ub.ro/index.php/sceco/article/view/269 https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocare-cifrei-de-%c8%99colarizare-pe-domenii-universitare https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocare-cifrei-de-%c8%99colarizare-pe-domenii-universitare https://www.edu.ro/sites/default/files/nota_fundamentare_proiect_hg.pdf http://statistici.insse.ro:8077/tempo-online/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 27, 2018 http://sceco.ub.ro 107 romania’s tax system: going backwards or moving forward? liviana andreea nimineţ “vasile alecsandri” university of bacau liviananiminet@yahoo.com iulia andreea bucur “vasile alecsandri” university of bacau iuliaandreea.bucur@gmail.com abstract having a tremendous importance for the modern state, tax system objectives, regulations and collection is a precise barometer for state’s economic development and for its trajectory, as well as for more subtle aspects such as political efficiency and common weal. as we can easily understand it is essential that we know and comprehend the means and the endings of tax system in a dynamical sequence that means always looking at where it came from and , in the same time, where it is going to. it is for these reasons that we proposed a time evolution analyze for the romanian tax system, highlighting its main components such as: personal income tax, corporate income tax, value added tax, social contributions, excise duty and the changes they have been through in the past years focusing on the current “fiscal revolution” and the alterations produced of romania’s tax system seen as a part of the european tax system. keywords tax system; european union; romania; contributions; regulation. jel classification h20; h30 introduction the importance of fiscal systems is unanimous recognized as a key factor that influence the entire economy. “the trend for saving, investment and working, influencing the increase of production and the decrease of unemployment, which represents an essential element of the economic strategy, making the fiscal reform an important component of the economic reform” (postole, ciobănaşu, 2013) is mainly if not solely determined by the fiscal system. the state development determines a different tax and contribution level from one state to another. inceu and lazăr (2003) consider that the more economic developed countries by means of state budget and tax system reassign a more important part of gross domestic product (gdp) than the less developed countries. furthermore the structure and dimensions of the tax systems is so different from one country to another essentially because the needs of each country are unique. actual state and data of taxing system in eu high levels of taxation in the eu, point out that this is an area with significant taxation and in the recent years is especially increasing. furthermore, the fees’ level in the european union is not a novelty as it goes back since the latter part of the twentieth century. nimineț, bucur 108 taking into account that european countries have different levels of economic development, the major tax systems differences between countries can be easily explained. it is important to note that we are still rather far from a unified approach to fiscal policy at european level, given that as long as there are both developed and developing countries, they have different economic levels, and thus, different economic needs. some countries aimed at encouraging the private system and attracting new investments, either foreign or domestic, (emerging countries) and others aimed at “avoidance or reduction of tax evasion, maintaining existing market investors'” (ciobănaşu, priescu, postole, iliescu, 2009). furthermore, taxes in the european union increased significantly compared to other advanced economies, including major countries outside the eu, like members of the oecd. table 1 current taxes on income, wealth, etc., % of gdp. general government time / geo 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 eu (28 countries) 12.9 13.2 12.9 12.1 12.1 12.3 12.6 12.9 12.9 12.9 13 (p) 13.2 (p) eu (27 countries) 13 13.2 12.9 12.2 12.1 12.3 12.7 12.9 12.9 12.9 13 (p) 13.2 (p) euro area (19 countries) 12 12.4 12.3 11.4 11.4 11.7 12.2 12.6 12.5 12.6 12.6 (p) 12.9 (p) euro area (18 countries) 12 12.4 12.3 11.5 11.4 11.7 12.3 12.6 12.6 12.6 12.6 (p) 12.9 (p) belgium 16.1 15.9 16.1 14.9 15.3 15.8 16.1 16.7 16.8 16.6 16.3 16.8 bulgaria 4.6 7.2 5.8 5.3 4.8 4.6 4.7 5.1 5.4 5.4 5.6 5.9 czech republic 8.6 8.8 7.8 7.1 6.8 7 6.9 7.2 7.3 7.2 7.6 7.7 denmark 28.8 28.6 27.9 28.3 28.5 28.4 29.2 30.2 33.2 30.6 30 30.1 germany 11.3 11.7 12 11.2 10.6 11.1 11.6 12 12.1 12.2 12.6 12.9 estonia 7 7.4 7.7 7.4 6.6 6.3 6.6 7.2 7.5 7.9 7.7 7.4 ireland 13.6 13.2 12.2 11.8 11.7 12.1 12.7 12.7 12.8 10.6 10.5 10.4 greece 8.3 8.3 8.1 8.5 8.3 9.2 10.8 10.5 9.7 9.7 10.4 10.2 spain 11.6 12.8 10.5 9.4 9.3 9.5 10.2 10.3 10.2 10.1 9.9 10.2 france 11.8 11.7 11.9 10.7 11.2 11.7 12.4 12.9 12.7 12.7 12.6 12.9 croatia 6.8 7.3 7.1 7.1 6.6 6.4 6.3 6.5 6.3 6.1 6.6 6.3 italy 13.8 14.5 14.7 14.1 14.1 13.9 14.9 15 14.7 14.7 14.8 14.6 cyprus 9.2 11.9 11.1 9.6 9.4 10.1 9.9 10.3 10.3 9.9 9.6 9.6 latvia 7.9 8.3 9.1 7 7.4 7.3 7.7 7.7 7.8 7.9 8.4 8.6 lithuania 9.5 9.1 9.2 5.9 4.6 4.3 4.8 5 5 5.4 5.7 5.4 luxembourg 13 13.1 13.8 14.2 14.3 13.9 14.2 14.2 13.6 14.3 15.1 15.4 hungary 9.1 10 10.3 9.6 7.8 6.3 6.8 6.6 6.8 7 7.4 7.4 malta 11.3 12.6 12.1 13 12.2 12.4 13 13.7 13.7 13 13.6 14.1 netherlands 10.8 11.1 10.8 11 11.1 10.7 10.2 10.1 10.7 11.5 11.7 (p) 12.8 (p) austria 12.8 13.2 13.8 12.6 12.7 12.8 13.1 13.4 13.7 14.2 13 13 poland 7.3 8.3 8.4 7.2 6.7 6.7 7 6.7 6.8 6.9 7.1 7.4 portugal 8.3 9.2 9.3 8.6 8.5 9.5 9 11.4 11 10.9 10.3 10.2 romania’s tax system: going backwards or moving forward? 109 romania 6 6.5 6.4 6 5.8 6.1 5.8 5.9 6.2 6.6 6.5 6.1 slovenia 9 9 8.7 8.1 8 7.8 7.5 7 7.2 7.2 7.5 7.4 slovakia 6.4 6.4 6.7 5.8 5.6 5.7 5.8 6.4 6.8 7.3 7.3 7.1 finland 16.8 17 16.8 15.5 15.4 15.9 15.6 16.2 16.4 16.6 16.5 16.6 sweden 21.1 20.1 18.7 18.5 18.2 17.6 17.4 17.8 17.8 18.4 18.7 18.6 united kingdom 15.4 15.6 15.3 14.8 14.8 14.9 14.1 13.9 13.6 13.8 14.1 14.3 iceland 18.3 18.1 17.4 15.6 15.7 16.7 17 17.7 19 17.6 18 19.2 liechtenstein : : : : : : : : : : : : norway 22.2 21 21.7 19.7 20.6 21.3 20.8 19 17.3 16 15.5 15.6 switzerland 13.9 13.9 14.3 14.4 14 14.1 14.1 14.2 14.1 14.8 15 : source of data: eurostat, www.ec.europa.eu. the table above highlights the dynamics of taxes in the past twelve years (from 2006) both in eu and eu member states, but also for some european, non eu states. romanian fiscal code principles and realities principles guiding the romanian fiscal code are essential for the sanity of economic life and for this reason it is important that they are not only established, or written down, but also that they are the main reason behind any legislative action. taxes covered by the fiscal code are based on the following principles: a) neutrality of tax measures in relation to the various categories of investors and capital, thereby ensuring a fair taxation level to the investors, both romanian and foreigners; b) certainty of taxation by establishing clear legal provisions that do not lead to arbitrary interpretations, and the precise set of time, manner and amount of payment for each payer; c) justice and tax equity ensures that the tax burden of each taxpayer is determined on the basis of the contribution, depending on the amount of revenue or one’s properties; d) tax efficiency provides similar levels of budget revenue from one year to another year by maintaining the efficiency of taxes and contributions in all phases of the economic cycle, both in times of economic boom and in the crisis; e)predictability refers to the stability taxations offers for periods of at least a year in which no changes could intervene regarding increasing or introduction of new forms of taxes and contributions. figure 1 tax revenues by main taxes, romania compared to eu-28 source: taxation trends report, dg taxation and customs union, 2017 nimineț, bucur 110 although predictability is essential for the taxing system, ordinance no 97/2017 deeply affects the provisions of the fiscal code as it entered into force on january 1st, 2018. the most important changes regard the following types of taxes: •social security contributions; • personal income tax; • microenterprises income tax; • corporate income tax; • vat; • local taxes; • excise duty. as it follows we will take a closer look on the changes made to these types of taxes. main categories of contributions the past few years amended the contribution framework. a synthetic overview of the main changes is presented below. table 2 changes regarding social contributions source: taxation trends report, dg taxation and customs union, 2017 year 2018 brought important changes for cas, cass and cam that cover the main categories of contributions, as follows: social security contribution (cas) was established at the rate of 25% and is payable by individuals who have, as employees or other individuals, taxable incomes as defined by the fiscal code.. health insurance contribution (cass) at the rate of 10% is owed by the contributors from wages or other forms of income for which this contribution is due. this category is composed by a multitude of income sources such as dividend income, interest income, income from other sources, income from independent activities. the first important change is that these revenues, excepted from the compulsory contributions to social health insurance before 2018, are now part of tax regulations, although the calculation method is slightly different as it is based on the minimum wage. given these, a punctual analyze for each type of income is essential. insurers' contribution to employment (cam) at the rate of 2.25% is payable by employers from the gross wage fund. this contribution covers the risk and accident fund, unemployment fund, the fund for sick leave, wage claims guarantee fund. for arduous working conditions, employers pay a 4 % from the gross wage fund contribution to social insurance and an 8% contribution for special working conditions. shares of social security contributions of 25% and 10% for social health insurance are, starting romania’s tax system: going backwards or moving forward? 111 from 2018, paid by employees but still retained by the employer from the gross wage, and also, the employer has the obligation of payment to the budget and submitting within the legal deadline (25th of the following month or 25th of the month following the quarter for the fiscal quarter period). in 2018 the wage calculation method is maintained meaning that from the gross income are withheld the social security contributions that are deductible for income tax and the tax base income is gross income reduced by social security and personal deductions. a special feature for the social security contribution is the introduction of specific procedures for self-employment income from rental and leasing and dividends from other sources for which specific tax regimes are applied. for example, if an individual is employed and also have income from dividends, they have to pay health insurance contribution both as an employee and on income from dividends. the monthly basis for calculating the contribution to health for the dividends income is the gross national minimum wage for the month in which the dividend is paid. personal income tax between 1990 and 2004 the personal income tax was based on progressive rates and from 2004 the flat rate tax scheme was adopted. starting january 1, 2018, income tax was reduced from 16% to 10% for all categories of taxable income, excluding income from dividends that maintains rate of 5%. table 3 tax reforms before 2017. personal income tax source: taxation trends report, dg taxation and customs union, 2017 an increase of personal deductions, was also established as follows: for individuals who have a gross monthly income of up to 1,950 lei, deductions are granted as follows: • for taxpayers who have no dependents = 510 lei; • taxpayers who have one dependent = 670 lei; • taxpayers that have two dependents = 830 lei; • taxpayers which have three dependents = 990 lei; • taxpayers with four or more dependents = 1,310 lei. for persons with a gross monthly wage between 1,951 lei and 3,600 lei the deductions are digressive to the above and for a gross monthly wage above 3,600 lei there are no personal deductions. the wage income tax is withheld by the employer, who is required to submit the declaration and the payment to the state budget. nimineț, bucur 112 corporate tax and microenterprise (smes) income tax starting 1990, the new framework regarding free initiative activities in industry, trade and services determined a progressive profit tax with rates from 1% up to 50%. from 1991 until 1994 the law established 2 profit ratio: below 1,000,000 lei, a 30% rate and above 1,000,000, a 45% rate cumulated with temporary exonerations. from 1995 the tax rate was 38% and the temporary exonerations were eliminated. starting 1997 the corporate tax system simplified gradually but it is still seen as one of the most inefficient forms of tax with very shallow collection rates (around 22%). to further simplify the tax system, in 2003 was introduced the microenterprise (smes) income tax. starting january 1st, 2018, a microenterprise income cap is 1,000,000 euros, calculated in lei at the rate of 31 december of the previous year. the tax rates of 1% for microenterprises that have at least a full-time employee and 3% for microenterprises without employees are maintained. the conditioning to a field of activity is repealed meaning that companies which derive income from consulting and management in a percentage higher than 20% of total revenues, in the area of gambling, insurance, a.s.o. can also be microenterprises. the possibility to choose to pay corporate income tax by increasing the share capital to the amount of 45,000 lei is repealed. the following romanian legal entities cannot be microenterprises: • deposit guarantee fund in the banking system; • investor compensation fund; • guarantee fund and private pension funds; • guarantee private pension fund; • tax transparent entity with legal personality. if during the fiscal year a micro entity income exceeds one million euros, it will owe tax since the second quarter in which it exceeded the limit, and the calculation and payment of profit tax is made taking into account the revenues and expenditures from that quarter onward. the following table contains the main changes on corporate income tax before 2018. table 4 corporate income tax. reforms prior to 2018 source: taxation trends report, dg taxation and customs union, 2017 in 2018 is repealed the procedure on limited deductibility of interest expense on loans to other entities and to transpose the provisions of the directive to limit the limited deductibility of interest expenses and other costs of debt to associated companies. essentially, the interest charges on loans to associated companies are deductible in an amount of up to eur 200,000. if the cost of borrowing exceeds € 200,000, then they are deductible in the 10% of the difference between revenues and expenses according to the accounting regulations, minus the non-taxable income and romania’s tax system: going backwards or moving forward? 113 plus the profit tax expenses, the excess costs of debts and deductible amounts representing tax depreciation. another structural change in the income tax regulation is a more precise regulation of international transfer of assets from romania to other states. value added tax in europe, the history of value added tax starts in france, back in 1954. by 1967 the member states of european economic community agreed to replace their own turnover tax with a common vat. in romania a 18% vat was first introduce in 1993 in order to replace the circulation of goods tax (which was into force from 1989 until 1992. before 1989 romania had a unique tax). vat introduction meant inflation raise, but also stimulated investments and export. in 1998 vat rate increased to 22% and from 2000 vat rate decreased again to 19%. starting 2010 and until the end of 2015 the standard rate increased to 24%. from january 1st 2016, vat standard rate decreased again to 20% and from january 1st 2017 the standard rate was settled to 19% along with two reduced vat rates of 9% and 5%. a 18% rate as in 1993 was expected for 2018, but the “fiscal revolution” did not contained this vat rate decrease after all. the most important changes on vat in the past three years are presented in table 5. table 5 vat reforms before 2017 source: taxation trends report, dg taxation and customs union, 2017 with the “fiscal revolution” of 2018, an anti-abuse rule was introduced on vat deductibility. this is applicable when a taxable person procures goods or services from suppliers, which subsequently found to be involved in tax evasion. the tax authorities have the right to cancel the deduction of vat on the company making the purchase, if they have evidence "beyond doubt" that the company knew or should have known that the supplier is involved in a case of vat fraud. this new provision is transposing several european court of justice decisions, which established that the tax authorities may cancel the right to deduct vat on purchases from suppliers with inappropriate fiscal behavior, unless proves undoubtedly that the taxable person is guilty of vat fraud and the company that has deducted vat from purchases knew or should have known that his supplier is involved in a case of vat fraud. nimineț, bucur 114 excise duties the main changes regarding excise duties as environmentally-related taxes concern: table 6 excise duties changes source: taxation trends report, dg taxation and customs union, 2017 in the field of excise duties, in 2018 a new offense is introduced. all the equipment, tanks and containers in which are found products subject to excise duty (cigarettes and some alcoholic drinks) without being labeled or marked inadequately or by false marks will be seized. in addition to this seizure, a sanction consisting of a fine from 20,000 lei to 100,000 lei will also be applied. the predictable change although at the very beginning or this article, when we presented the tax system principles we stated predictability, the “fiscal revolution” seemed to be not very well thought through, thus, on march 30, 2018, the romanian government adopted a new emergency ordinance changing the fiscal code. ordinance 25/2018 changed the income tax for microenterprises, changes expected by an important part of this business field. it introduced the possibility of companies that now apply microenterprise income tax to opt only one time to switch from tax on microenterprises to corporate income tax only if those companies have a share capital of at least 45,000 lei and at least two full-time employees (can be employees with parttime work, but the duration of work cumulated must be equivalent to those of two full-time employees) employees with an employment contract for an indefinite period or at least two persons paid under contracts management or mandate an indemnity bigger than minimum wage. switching to another tax system will be realized in the third quarter after the company satisfies the two conditions simultaneously, while calculating the tax will be made taking into account the revenues and expenses recorded on 1 of the first month of that quarter. if after switching to a fiscal system, one or both conditions that allowed this switch is/are no longer met, then, to remain on the current system, the entity must meet the condition provided within 60 days. otherwise it will switch over and will not be able to return to corporate tax unless it meets other criteria than those of equity or number of employees. in 2018 the opportunity to switch to microenterprise is viable only from the april 1, 2018 onward. therefore all companies that meet the condition can switch the fiscal regime only from the second quarter. romania’s tax system: going backwards or moving forward? 115 conclusions romanian tax system has tried, in the past almost 30 years to find its path both within states borders as well as in the european union, especially after 2007, when harmonization and adapting to european realities became a must. nevertheless sometimes the regulations, rules and changes made to the tax system and fiscal code seemed chaotic and no coherent, being subject to politically determinants rather than economic ones. 2018 came with a “fiscal revolution” that decreased income tax rate and moved social contributions solely on employee, following flat wage level law in public sector but bringing confusion and inequities both in the public as well as in the private sector, leaving the economic analysts with the question to what good was this “revolution” driven. the need to alter the new fiscal code with emergency ordinances that counteract some of the flaws and inequities is, without a doubt, proof that either it was made for the wrong reasons or it was hustled and not well thought through without proper simulations and crossed analyzes that permit the foreseen effects within all components of romanian economic system. references ciobanasu, m., priescu i., postole, a., iliescu, e. (2009), tax avoidance for resident business by establishing offshore companies , proceedings of the fifth "administration and public management" international conference: "public institutions' capacity to implement the administrative reform process", no. 23, bucharest, june 23-24, 2009, research centre in public administration and public services, bucharest, romania inceu, a.m., lazăr, d.t. (2003), impozitul ca principal element al politicii fiscale, revista transilvană de științe administrative, http://rtsa.ro/rtsa/index.php/rtsa/article/view/302/297 mcgee, r. w. (2008) taxation and public finance in transition and developing economies, springer publishing house pătroi, d.p., biriş, g. (2011) controverse actuale în fiscalitate: comentarii şi soluţii, bucharest, ch beck postole, m. a., ciobanasu, m. (2013), role of custom duties in the formation of budget revenues, journal of knowledge management, economics and information technology, issue 1/2013, p.203-2110 emergency ordinance of romanian government no 97/2017 emergency ordinance of romanian government no 25/2018 taxation trends report (2017) , dg taxation and customs union, www.ec.europa.eu (2 rânduri libere, 11p) preliminary aspects of a qualitative research projection simona haidău, university assistant phd student, university vasile alecsandri of bacău   abstract in this paper are presented preliminary aspects on the design of of qualitative research achieved by nongovernmental organizations in the north-east of romȃnia. the research aims to identify attitudes, opinions and behaviors to nongovernmental organizations to implement public relations programs and campaigns. keywords private administration, nongovernmental organizations, associations, foundations, public relations, campanign jel codes: l31, m31 1. introduction in the current period, when competition is increasingly fiercer, and communication budgets are downward trend, underline the fact that advertising can not be the only answer to the la the increasingly complex marketing problems. modern marketing increasingly impose combining specific activities of advertising, sales promotion, direct marketing and public relations. the role and importance of public relations activity increased in importance during the economic and social development, gradually becoming the significant and distinct activity of contemporary society. as a distinct field of economic agents activity, the public relations will be between the most effective tools of communication policy in contemporary society comprising promotional obvious valences. public relations applications are found in almost every human activity. public relations are used in organizations, regardless of where they operate, such as economics, finance, politics, government, education, healthcare, nonprofit organizations, arts, sports, tourism, etc. diversity range of organizations leads to a understanding and hence the practice field. the present study is projected to assess the extent to which nongovernmental organizations apply the public relations system in the current socio-economic context and it is based a series of assumptions and hypotheses meant to give more value through the prospect of results and the possibilities for their operationalization. 2. marketing qualitative research methodology at nongovernmental organizations from north-east region 2.1. decision problem definition, purpose, hypothesis and research objectives decisional problem that will be the realization of this research is the knowing the extent to which nongovernmental organizations apply public relation system, namely various specific programs and campaigns. purpose of research defined as an extension of decision problem will guide the whole research to identify attitudes, opinions and behavior nongovernmental organizations on the implementation of public relation programs and campaigns. key assumptions of qualitative research are: h1: nongovernmental organizations attaches great importance to the process of communication with target audience; h2: more than half of nongovernmental organizations apply pr system by implementing various programs and campaigns; h3: over half of the nongovernmental organizations prefer public relations activity to attract funds / volunteers, compared with publicity actions; h4: over half of the nongovernmental organizations prefer public relations activity to making known the services offered; h5: variables that influence decisions to initiate programs and public relations campaigns by private government organizations studied are mainly discrete variables. research objectives that will lead to achieving the proposed goal are:  knowledge of nongovernmental organizations views on the importance of the communication process with target audience;  identify the knowledge and opinions nongovernmental organizations towards public relations programs and campaigns;  knowledge of nongovernmental organizations views on public relations techniques at witch can call;  knowledge of the decisional variables nongovernmental organizations in selecting programs and public relations campaigns. 2.2. choosing data sources and methods of gathering information based on the benchmarks for their achievement will be used primary data sources, namely, information will be provided by persons authorized by the nongovernmental organizations. qualitative research method chosen will be interviewed in depth semiconducting. this type of interview is a variant of in depth interview undirected, since:  remain valid principles of non-directivity;  attitude of investigator should be neutral, it must having to respect the same rules as for in-depth interview undirected;  sample construction is done in the same way;  interview is recorded on magnetic tape and then will be subject to a content analysis. unlike in-depth interview unmanaged, semiconducting interview is performed using an interview guide (also called conversation guide), devised in advance. the interview guide contains topics that should be addressed during the discussion (about 56 themes set according to the research objectives). the topics will be introduced by the investigator only if the respondent did not addressing the spontaneous. is not necessary to respect a certain order: will be discussed according to the closeness of in relation to the topics addressed by the interviewee. a view to developing the interview guide, should be noted that this is not a questionnaire with open questions and fall time between 30 minutes and an hour. 2.3. defining community and identifying units under investigation in-depth interview sample means addressing subjects in terms of relevance and intrinsic value of information which they hold. it requires a rigorous selection for not being compromised research process is well known that from other research nature of the information obtained has the highest degree of privacy in relation to opinions subjects interviewed. regarding the recruitment to the participants in-depth interview semiconducting will use a filter questionnaire to be disposed unwanted attributes of subjects. recruitment questionnaire 1. have you participated in in-depth interviews semiconducting similar last 6 months?  yes1  no 2. please type nongovernmental organization in which you are: ………………………… 3. please indicate the main field of activity of the nongovernmental organization you represent:  culture, art, sport, recreation  education, research  health  social services  protection of the environment  economic and social development  protection of rights and promote the interests of citizens  women's rights and gender equality  philanthropy and volunteering  international cooperation  business and professional interests representation  religion considering the purpose and objectives of qualitative research, community from the level to be selected the units subject to interview will be composed of all nongovernmental organizations which they operate in the northeast region. units investigated are the nongovernmental organizations which they operate in various fields such as:  bethany association field: social services;  youth association onesti – field: culture, art, sport, recreation;  we love nature association field: environmental protection;  agnesiana association – field: culture, art, sport, recreation;  association for promoting diversity in education field: education and research;  community support foundation field: social services;  association oblio – field: culture, art, sport, recreation;  caritas association field: social services;  john bosco foundation – field: culture, art, sport, recreation. 2.4. prepare the material conditions for data collection and developing research tools conducting the interview will involve using as data collection tool guide the interview or conversation. the objectives set the previously be addressed under the guide in four subjects: topics included in the conversation guide:  nongovernmental organizations views about the importance communications process with target audience;  knowledge and opinions of nongovernmental organizations by public relations programs and campaigns;  nongovernmental organizations views with regard to public relations techniques available to them;                                                              1 if the answer is affirmative selection process is stopped at the interview organizations  the decisional variables nongovernmental organizations in selecting programs and public relations campaigns. for the smooth conduct of interview, by the idea of eliminating weight approach to the topics under discussion (offering insufficient information for purpose of research), will proceed to address issues with a greater degree of detail. thus, for each theme will determine topics as:  known vectors of communication; advertising or public relations; differences existing between the two techniques of communication: advertising, public relations; motivation by election advertising as communication techniques; motivating choosing public relations as a means of communication;  concept of public relations; strengths and weaknesses of public relations activity; frequency of calls to the public relations activity; public relations activity with its own forces or by resorting to specialized people outside the organization; favorable conditions by implementation of the public relations system (to gain confidence; to communicate and transmit messages reliably with regard to activities, initiatives, projects under the participatory citizenship, solidarity and altruistically; to maintain a close relationship with the public to achieve the objectives ==> donor-recipient relationship; in order to raise funds and volunteers; for promotion public opinion aware about the importance of nongovernmental organizations activities; for creating, maintaining and improving the image of nongovernmental organizations); advantages and disadvantages of implementing public relations fields nongovernmental organizations;  public relations techniques known; views on a variety of public relations techniques available to them; the order preference regarding public relations techniques used; nongovernmental organizations preferences for certain public relations techniques based on goals formulated;  internal variables: people age from the level of nongovernmental organizations management; efficiency of financial, material and time consumption; possibility of using various media channels; external variables: sociodemographic (age, sex, marital status, occupation, residence, education level, social class and income groups of population, lifestyle) natural; cultural; technology; political and legislative. for conducting the interview will be using a video camera that allows full recording of the interview, giving a much richer material for analyzed in comparison with data recorded using a tape recorder. support video recording of the interview was accepted by subjects with conditions guaranteeing their anonymity and destruction of material recorded information held immediately after completion of the analysis. another tool for collecting the information is card will be used to annotate operator of words or themes that can be deepened further. 2.5. collecting information collection of data will be done after conducting in-depth interviews that will be subject nongovernmental organizations from northeast region. the interview will involve open discussion between "researcher" and the subject interviewed. shall be observed the principles of non-directivity, such as: avoidance orientation discussion by imposing a certain structure, inducing responses, interpretation, approval or disapproval, making observations or interruptions of the person interviewed. also the interviewer will be able to intervene in the discussion following: ease of discourse, to deepen themes approached, listen carefully interviewed subject, indicating that it is understood, as well as an overview of the interviewees with respect logic statements it. during the interview will address the issues set out in the interview guide, by making a detailed these form a more complex by the interviewees. the themes will not have a preset order and operator interview intervention in the discussion will be necessary only in cases of recovery of the discussion. people from non-governmental organizations which will be qualitative research and were subjected to interview representing people in management organizations or within the public relations department. bibliography 1. balaure, v. (2002), marketing ediţia a ii-a revăzută şi adăugită, ed. uranus, bucureşti 2. cătoiu, i. (coordonator), bălan, c., popescu, i.c., orzan, gh., vegheş, c., dănețiu, t., vrȃnceanu, d. (2002), cercetări de marketing, ed. uranus, bucureşti 3. cătoiu, i. (coordonator) (1999), metode şi tehnici utilizate în cercetările de marketing. aplcații. ed. uranus, bucureşti 4. florescu (coord.), c., balaure, v., boboc, st., cătoiu, i., olteanu, v., pop, n.al. (1992), marketing, ed. marketer, bucureşti 5. kotler, ph. (2000), managementul marketingului, ediţia a ii-a, ed. teora, bucureşti 6. kotler, ph. (2000), principiile marketingului, ediţia a ii-a, ed. teora, bucureşti 7. lefter, c. (1996), cercetarea de marketing. teorie şi practică, ed. lux libris, braşov 8. popescu, i. c. (2000), metode calitative utilizate în cercetările de marketing, ed. ase, bucureşti 9. www.cdep.ro contributions of bacău to the economic literature and culture – the life and work of professor vasile pătruţ mihai deju, ph.d, “vasile alecsandri” university of bacău, romania abstract the economic culture and accounting theory in bacău area has its beginnings in the setting up of the first practical school of agriculture, by ion ionescu de la brad, who included in the curriculum an accounting course, as well. over the years, the economic education of bacău area education has evolved from “the school of accounting and co-operative education” (1919) to the modern economic higher education, in our days. during an important period of the evolution of education and culture in bacău area, professor vasile pătruţ is present, having a significant contribution to the accounting theory, teaching and practice in bacău. key-words contributions of bacău, economic literature and culture. jel code: a11 the evolution of economic literature and culture in bacău area can be approached only in strong connection with the emergence and development of education, in this area. if we speak of tradition in bacău, in terms of economic culture and accounting theory, we must mention that it finds its beginnings towards the end of the 19th century, more precisely in 1870, when ion ionescu de la brad, the founder of the romanian modern agriculture, set up, on his own land, a model farm and a practical agriculture school, which included in the curriculum a course of “phytology, zootechny, rural economics and accounting”. later, at the beginning of the 20th century, more precisely in 1919, when the position of economic and commercial centre of bacău allowed the development of popular banks, the school of accounting and co-operative education was set up in bacău – together with the group of popular banks in bacău. the same year, the elementary school of commerce in bacău was also founded with the help of the chamber of commerce and industry, and especially of its chairman, george florescu, an exponent of bacău business environment, who has strived to meet the requirements of merchants and industry employers in the area. this school was recognized by the ministry of public instruction in 1921. shortly after, in 1925, the superior school of commerce was set up, a school that, only three years after, together with the elementary school of commerce, will turn into the commercial high school of bacău. it will operate uninterruptedly until the education reform in 1948 when it changes in the technical school of economic administration and will operate until 1955, when the professional and economic education will be abolished in bacău. after a break of five years, in 1960, the commercial and accounting education in bacău reappears under the dome of a commercial school group, which had in its structure the professional commercial school and the post-secondary school of commercial technique, preparing particularly accountants for commerce. the large number of enterprises in bacău economy and the increased demand of staff with average economic training, in the post-collectivization period, caused the setting up, in 1966, of the economic high school in bacău, whose purpose was the training of accountants, planners, statisticians and merceologists. the commercial school group and the economic high school merged in 1972, in one school institution that will bear in time, more names, now being called “ion ghica” national college, though it would have been more appropriate to call it “ion ionescu de la brad”, according to the tradition. as we speak of bacău traditions concerning the accounting theory, we must mention that in the curricula of all the above school units, accounting and economic disciplines have always appeared as subjects of study of the first rank. among the mentors who honoured with competence and professionalism the economic disciplines, we mention here only a few: prof. gh. manolescu, between the years 1924-1952, prof. nicolae vânătorul 1949-1955, and 1962-1972, prof. vasile pătruţ during the period 1966-1991, prof. vasile gavriliu 1966-1991, prof. elena mocanu 1968-1994 and others to whom i ask forgiveness for missing to mention their names. a qualitative leap, in the field of bacău economic education, occurred in the postrevolutionary period, and since 1990 we can speak of the existence of higher economic education in the public university of bacău, by means of the section tourism-services and since 1991, marketing section. in the autumn of 1992, in reply, the first year courses were opened at “george bacovia” private university, founded by the foundation with the same name, having an economic section in its structure. since 1997, at the public university of bacău, the economic education has diversified, and a new specialization, “accounting and managerial informatics”, was set up by the initiative of professor vasile pătruţ. i have made this retrospective of economic education in bacău, since professor vasile pătruţ has been present, by his contributions, to the accounting theory, teaching and practice in bacău, for more than forty-four years. as a creator of economic culture and, especially, of accounting theory, his work needs be known, because, essentially, culture is based, at each stage of its existence, on the creation of predecessors, and ignoring the past inevitably leads to the weakening of the present creative forces. furthermore, we will proceed to the presentation of the human and the mentor vasile pătruţ, because, if you really want to know someone’s personality, you should go back to the origins. thus, by analysing the past, we consolidate the present and discover the future. the presentation of professor vasile pătruţ’s life has as bibliographic basis the work entitled “professor vasile patrut. a life devoted to economic education and scientific research”, developed by a collective of authors, members of the department of accounting and finance from the faculty of economic sciences of the “vasile alecsandri “university of bacău (the work represents mainly an autobiography, being coordinated by its main character himself). vasile pătruţ was born on 18th of december 1940, in boteşti village of the commune with the same name, in the former roman county, today called neamţ county, and coming from a family of farmers to whom god gave two children. the father, neculai pătruţ, dies on the front in april 1944, so only the mother, widow catrina will take care of the growth and education of the two children. the student vasile pătruţ followed the four compulsory primary grades at the school in his native village, being one of the best students. following the advice of the teacher neculai bernevic, the mother registered her son to attend the 5th -7th grades, at the only school in the commune where the second education cycle functioned. in this cycle of education, the student vasile patrut is has very good results. his love, at first for “the art of accounting”, and later for “the science of accounting” appeared in this period, when, in the summer holidays, between the 6th and the 7th grades, and after graduation, as well, the teenager vasile n. pătruţ works as junior accountant at the consumption cooperative in the commune, with his uncle, vasile iordache pătruţ, president of the cooperative. in the autumn of 1956, the teenager vasile pătruţ is sent, with a scholarship of the district union of consumption cooperatives, to be trained for four years, in the field of accounting, at the technical school of cooperation in buzău. in 1960, the young vasile pătruţ, graduate of the technical school of cooperation, was assigned chief accountant at the consumption cooperative, pildeşti, in roman district, where, as a young professional and intellectual, he had the mission to help increase the level of civilization in his native rural area, as a contractual obligation towards the unity funding of studies. after two months of work, july and august 1960, at his first official job, the consumption cooperative pildesti, with the money earned (650 lei per month), the young vasile patrut travels to bucharest, to be present, in september 1960, at the entrance examination, to the unique economic institution of higher education in the country, the “v.i. lenin” institute of economic sciences in bucharest, the current academy of economic studies. following the contest (two written examinations: mathematics and geography, three oral examinations: geography, history, constitution), vasile pătruţ is declared admitted as a fellow student, with a high average, since at the beginning of the courses, he was named, by the dean of the faculty, professional responsible of the group. this is how his life as a student in bucharest began, the most beautiful period of the professor’s life, as he himself said in various circumstances. in this period, the young vasile pătruţ showed an attraction for study and scientific research, acting as a member or a leader in students’ scientific circles, such as the accounting circle and the analysis of the enterprise economic activity one, the latter under the guidance of professor alexandru gheorghiu who was also the coordinator of his graduation paper. we can conclude that for the student vasile pătrut, the studentship is the period when the passion for the “science of accounting” was born, culminating, afterwards, with the award of the title of doctor in the field of accounting. upon graduation, in 1965, as vasile patrut was among the best students, he would have wished to remain in higher education, in bucharest, where his wife still had two years of study. however, there was no such possibility in that academic year, and he had the take the position of teacher at the school in buzău, where he had been student five years before. here, he worked only for one school year, because, starting with september 1966 he transferred closely to his native place, as teacher of accounting and finance at the commercial technical school in bacău. after obtaining the first degree in education, in 1968, professor vasile pătruţ transferred to the economic high school in bacău, where his wife, the teacher frăsina patrut, came, as well, at the economic high school in bacău, later the economic college, professor vasile patrut worked for 21 years, until 1991, when he was called upon to contribute to the creation the economic higher education in bacău. in those years, which coincided with a large part of his life, professor pătruţ contributed to the formation of many generations of accountants with secondary education and he himself made achievements in his professional, social and family life. professor vasile pătruţ taught during these years, particularly accounting, and other economic disciplines, as well: finance, business analysis, foreign trade, the mechanization and automation of the work, and economic informatics. permanently concerned about the development of the accounting theory and practice and also about his own scientific and academic training, professor vasile pătruţ participated in various training programmes organized in the country, he obtained the second teaching degree in 1973 and the first teaching degree in 1979, and in 1988 he was conferred the academic title of doctor in economics, accounting section, at the academy of economic studies in bucharest, under the guidance of his well known professor victor puchiţă. as we mentioned above, in 1991, professor vasile pătruţ answered the solicitation of the public university, and, following a contest, he occupied the position of associate professor for the accounting discipline. as the only professor with superior didactic degree, among the economists from the university of bacău, he is named head of the department of economics and social sciences, in 1995, and in 1996 he obtains the title of professor from this position, professor vasile pătruţ, assumes the difficult and noble task of setting up a team of teachers, by attracting specialists from production with vocation for higher education, by determining graduates, of the most valuable economic students of higher education in bacău to choose the career in higher education, as well as by working with a number of specialists, recognized practitioners, whose expertise and scientific attire have put their long-term mark on the economic education at the “vasile alecsandri” university of bacău. thus, there began the process of consolidation and development of the economic higher education which was born in bacovia’s native town, expanding the range of specializations of the public university in bacău. in the autumn of 2008, professor vasile pătruţ retired, but still worked as an associate professor in the academic year 2008-2009, particularly at the master programme in business accounting and audit, that he himself set up and organised. although he had some offers from other educational institutions, he preferred to retire, considering that the time had come to write more for posterity, sharing his knowledge and experience as an accounting teacher, of nearly half a century, dedicating himself to the establishment and publication of scientific papers and memoirs. thus, professor vasile pătruţ proves that, from a prodigious activity, one can retire only formally, when the meaning of life was the passion for permanent study and research. over the years, the scientific research activity of professor vasile pătruţ has resulted in the development of many works and studies published in publishing houses or journals, textbooks, for economic high schools or for economic higher education. synthesizing, professor vasile pătrut has developed as a single author, or co-author, along with his colleagues from the department: 14 books – most of the books published in publishing houses recognized by cncsis, over 70 studies and articles published in journals recognized nationally and internationally; 5 works of applied research; 33 books, courses and other works with didactic character. to these there are added two books of memoirs and two documentaries in the form of brochures, carried out as the only author or in collaboration. among the scientific books in the field of accounting, we mention: „contabilitatea financiară a întreprinderii” (“the financial accounting of the enterprise”) published in two editions 1994 and 2003; „manualul expertului contabil şi a contabilului autorizat” (“the certified public accountant manual” ) published in six editions between 1995 and 2002; „contabilitatea întreprinderii” (“enterprise accounting”) 2002; „contabilitate şi diagnostic financiar” (“accounting and financial diagnosis”) two editions: 2005 and 2010; “gestiunea şi contabilitatea unor activităţi economice cu caracter deosebit”(“the management and accounting of special economic activities”) 2005; “didactica disciplinelor economice”(“didactics of economic disciplines”) -2008; etc. the above mentioned works, as well as the other ones, represent a great contribution to the development of accounting theory and practice, being meant for students of economics and the interested parties to take full advantage of accounting knowledge in view of managing units in which they are involved as managers, investors or business partners. some of the works were the bibliographical source for exams organized by ceccar for improving the quality of chartered accountant or certified public accountant, while others can be the basis for research in the field of accounting. in his capacity of teacher of accounting, for 44 years, including 26 years in high-school education and 18 years in higher education, professor vasile pătruţ contributed along with his collaborators to the formation of over 25 generations of accountants with secondary education and over 15 generations of economists with higher education. at the same time, he contributed to the formation of four promotions of graduates with a master degree in business accounting and audit and 4 master promotions in marketing strategies and communication in public administration. he participated in his capacity as scientific reviewer, as a member of the board of advisers, at the evaluation of several theses in the field of accounting. as a didactician of accounting, as well as head of professional departments, at college and high school, he also contributed to the formation of a significant number of teachers in the field of accounting and other economic disciplines. professor vasile pătruţ himself, as head of the chair, in his report on the work made during his mandate between 2004 and 2008, asserts that ... “after a lifetime dedicated to the economic education (43 years), of which 18 years of higher education in the university of bacău, i.e. 13 years as head of the chair, i can say that i am satisfied with what i have done and what i leave behind. it remains that you, my younger colleagues, most of which were my students, to make further progress, at an even higher level of accounting education, in the service of which i have dedicated almost all my life. i wish you good luck in your future work, may you be united and not forget your forefathers.” in sign of respect for the entire activity, we can conclude that professor vasile pătruţ, throughout his career, has been identified with the school, remaining in the memory of his students as the model of high school teacher and the embodiment of the professor. his dedication to the school and pupils or students remains exemplary and admirable. many of his collaborators over the years can be proud to have met him and are thankful for the altruism of the professor who has proved, most of the time, both mentor and colleague, supporter in training, in research, professional development and career. if the large number of accountants and economists trained at bacău became known in various areas of activity, this is greatly due to the economic school of bacău and to its teachers. professor vasile pătruţ has a special contribution to the development of the romanian economic education, a decisive contribution to the creation and consolidation of the economic higher education in bacău, especially of the accounting one, which, in fact, he sets up and develops, together with other collaborators. the “vasile alecsandri” university of bacău, through the faculty of economics, has professor vasile pătruţ who laid the cornerstone and built in bacău the school of economists and accountants, leaving to his followers the moral duty to continue and develop the economic education in bacău at european and international standards. when we make statements or think about the contribution of professor vasile pătruţ to the economic culture and especially to that of “the science of order”, one of the most beautiful creations of the mind – according to a great philosopher, we cannot but include him in the science area of bacău, along with other valuable creators of economic culture and literature. we refer here to the remarkable group of collaborators of professor vasile pătruţ within the department of accounting finance of the “vasile alecsandri” university of bacău – authors of innumerable works, to the prestigious specialists in the field of accounting from the “george bacovia” university of bacău, as well as other personalities of accounting theory and practice, which bacău has offered. in this context of cultural-scientific space of bacău, we discover professor vasile pătruţ and consider him a true master of accounting in bacău, who will be a reference model for future generations of students, economists, practitioners, researchers, creators of accounting literature. bibliografie 1. pătruţ, v. (coord.), deju, m., pătruţ, b., rotilă a., ţuţuianu, i. (2010), profesorul vasile pătruţ. o viaţă dedicată învăţământului economic şi cercetării ştiinţifice – autobiografie şi biografie, alma mater publishing house, bacău 2. rusu, d., petriş, r., horomnea, e. et.al. (1991), fra luca di borgo şi doctinele contabilităţii în cultura economică romanească, junimea publishing house, iaşi (2 rânduri libere, 11p) taxation of income from tourists’ accommodation: case of romanian boarding houses doina păcurari, ph.d, „vasile alecsandri” university of bacau, romania   abstract this paper presents the main aspects regarding taxation of income which the boarding houses’ owners get from tourists’ accommodation services. whether they unfold the activity as legal person or obtain receipts as natural person, the boarding houses’ owners must pay tax to the budget. the tax calculation, term of payment, submission of tax declaration, these are some issues approached in this paper. the level of taxation affects accommodation tariffs and so their competitiveness. the fiscal optimization represents a very important aspect for business administration, irrespective of size of the economic entity. keywords accommodation services, tourist boarding houses, agro-tourist boarding houses, tax, regulations jel codes: k34, m21 introduction although the economic crisis affected world-wide tourism, it still remains a service sector with a high potential for rally and growing. the special attention which the states pay to the tourism is reasoned by its influence to the economy, but also by its social and environment effects. the tourism contribution to the eu gdp is estimated by the directorate general for enterprise and industry to be more than 5%1. considering also the related sectors, the tourism generates more than 10% of the eu gdp. the tourism also gives rise to employment, the number of employees in eu tourism industry being estimated between 12 and 14 million of persons, with a number of 2.3 million employees only in tourist accommodation sector2. taxes and fees from tourism represent an important budgetary resource. besides profit tax and income tax, like direct taxes, the value added tax and the local taxes and fees, such as accommodation fee, are added. by taxation of income from this important activity sector, the citizens could benefit by better public services, the taxes and fees collected from service providers being used for the financing of public expenses3. even if in this approach an augmentation of taxation is justified, it was proven that this solution is not beneficial for tourism anywhere in the world4. first of all, a higher taxation discourages this activity                                                              1 european commission, dg enterprise and industry, http://ec.europa.eu/enterprise/sectors/tourism/ 2 eurostat (2011), europe in figures eurostat yearbook 2011, p.342 3 gooroochurn, n., & sinclair, m. t. (2005), economics of tourism taxation: evidence from mauritius, annals of tourism research, vol.32 (2), p.483 4 durbarry, r. & sinclair, m. t. (2000), tourism taxation in the uk, portal: articulos de revistas universidad de sevilla, p.10 sector5. second of all, a larger taxation than in other countries determines the decrease of respective country amenity as a destination for foreign tourists. the majority of the tourist accommodation providers are small-sized. the big companies are not very numerous. therefore, the taxation of small entities is important also for the state and for the contributors. recent trends in tourist accommodation services in romania the establishments for tourist accommodation are grouped in several categories such as: hotels, motels, inns, tourist boarding houses, agro-tourist boarding houses, hostels, tourist villas, chalets, camping sites, houselet-type units, and so on. the boarding houses are most numerous from the total of functional tourist accommodation establishments (45.2%)6. on this account we consider that the boarding houses typify the small entities’ category wherefore we want to present the taxation rules. according to the national institute of statistics (nis)7, the tourist boarding houses are establishments of tourist reception having a capacity of up to 20 rooms, in rural area, with a maximum of 60 places, which offer special designed spaces for the tourists’ accommodation. according to the same reference, the agro-tourist boarding houses are establishments of tourist reception having an accommodation capacity of up to 8 rooms. both types of establishments can operate in the owner’s house or in independent establishment and must provide, besides the accommodation facilities, conditions for meals’ preparing and serving for tourists in spaces properly designed. the evolution of the accommodation capacity of romanian boarding houses, of number of tourists’ arrivals and of the overnight stays, during 2007-2011, is presented in figure 1. 7,778,009 8,429,606 11,377,906 10,382,704 9,638,545 740,148 835,675 737,848 696,555 840,286 1,669,8851,406,8281,486,4691,702,8351,519,931 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 2007 2008 2009 2010 2011 accommodation capacity tourists' arrivals overnight stays   figure 1. the evolution of the main indicators regarding tourist accommodation in boarding houses during 2007-2011 source: nis, www.insse.ro                                                              5 dwyer, l., forsyth, p., & papatheodorou, a. (2011), economics of tourism, contemporary tourism reviews, p.11 6 nis (2012), romanian tourism statistical abstract 2012, p.20 7 nis (2010), statistical yearbook 2010, chap. tourism, p.2 as the figures in figure 1 show, the accommodation capacity has grown significantly during the analysed period, from 7.778 thousands to 11.378 thousands of places. but the tourists’ arrivals and the overnight stays have registered small variations, remaining around 750 thousands of tourists, and 1.550 thousands of overnight stays respectively. consequently, the net use indices of the tourist accommodation capacity have registered small values. for instance, in 2011, the net use index of tourist accommodation capacity in tourist boarding houses was 15.5% and 13.8% in case of agro-tourist boarding houses8. the services offered by the hotels and others tourist accommodation establishments, in 2008, represented 21.2% of the services mainly rendered to the population (as incomes, including vat). in 2009 and 2010, this percentage decreased to 20.4%. comparatively, the weight of restaurants’ service increased from 32.3% in 2008 to 36.4% in 2009, and then slowly decreased to 35.3% in 20109. the tourist accommodation services legal forms of developing the economic activity the boarding houses’ owners can develop their economic activity as natural persons (if tourist accommodation spaces are in their personal houses) or as legal persons. if they operate as natural persons, the incomes from tourist accommodation services are considered, from a fiscal point of view, as incomes from independent activities or as incomes from the grant of the use of goods, depending of accommodation capacity of the boarding house. if they operate as legal persons, there are two possibilities of registration: as a commercial company, required to pay the profit tax, or as a micro-enterprise, required to pay the tax on incomes of micro-enterprises. consequently, tourist or agro-tourist boarding house, as economic entity, is subject of taxation depending on its status. for certain categories the tax is influenced by the expenses made during the fiscal period, and for others it is not. the expenses with energy and water, staff costs, the expenses with capital or inventory depreciation, these are some of the most important expenses corresponding to the provision of accommodation services. hereinafter, we present the main regulations regarding taxation, applicable for the economic entities belonging to the above mentioned categories. taxation of income from tourist accommodation services in compliance with romanian fiscal regulations the romanian fiscal code10 regulates, at national level, the main taxes and fees, including the profit tax and the income tax. this regulatory document establishes the rules for computing, payment and declaring these taxes due to the state budget. for the presentation of these main regulations regarding taxation, we consider an agro-tourist boarding house whose incomes in n fiscal year were 50,000 m.u.. we point out that in romania the fiscal year coincides with the calendar year. all the mentioned incomes are considered to be achieved from the tourist accommodation services. the expenses corresponding to these incomes were 30,000 m.u.. we presume that all these expenses obey the regulations in order to be deducted in taxable profit computation. we consider the following possible situations:                                                              8 nis (2012), romanian tourism statistical abstract 2012, p.38 9 nis (2010), statistical yearbook 2010, chap. domestic trade and market services, p.4 10 romanian fiscal code (2003), adopted by low no.571/2003, published in official gazette, part i, no.927/23.12.2003 a) the boarding house is registered as legal person (commercial company) required to pay the profit tax; b) the boarding house is registered as micro-enterprise; c) the boarding house’s owner develops its economic activity as authorized natural person. case a: the boarding house is registered as legal person required paying the profit tax as a romanian legal person, other than micro-enterprise, the entity due the profit tax irrespective of the effective turnover, number of employees or other indices. the foreign legal persons also due the profit tax if they carry out activity through a permanent office in romania, or in an association with or without legal personality, or if they achieve incomes from/or in connection with immovable property located in romania. the profit tax rate is 16% and the computation basis is the taxable profit, calculated as difference between taxable incomes and deductible expenses during the fiscal period. the profit tax is computed quarterly, based on incomes and expenses cumulated from the beginning of the year. the tax declaration and payment are settled also on a quarterly basis, on or before the 25th of the month that follows the quarter for which the tax is computed. after the fiscal year is closed, the annual profit tax must be computed and the eventual differences must be regulated. the anticipatory payments system is also applied in romania but only by the banking companies. this system demands the calculation of anticipatory payments as a fourth of the profit tax of the previous year, multiplied with the consumer price index. anticipatory payments for the first three quarters of the year must be made. after the annual profit is settled, the eventual difference to the tax due must be calculated and paid on or before march 25th of the next year. if the contributors register losses, their recovering can be realise in the next 7 years by deducting the fiscal losses from the taxable profits. for the above example, the profit tax (tp) due by the boarding house is: tp = 16% x (50.000 30.000) = 3.200 m.u. case b) the boarding house is registered as a micro-enterprise the micro-enterprises do not pay the profit tax but the so-called tax on the incomes of microenterprises. the conditions that must be fulfilled by an enterprise to be registered as a micro-enterprise are the following: a) to obtain incomes that have not exceeded 100,000 euro; b) the incomes must not to be obtained from the activities in fields like banking, insurance and re-insurance, gambling, consulting or management; c) to have from 1 up to 9 employees including. d) its capital shares to be owned by persons other than the state, local authorities, public institutions or entities with more than 250 employees. the above conditions must be fulfilled on december 31st of the previous fiscal year than that for which the taxpayer wants to apply this taxation system. the tax on incomes of micro-enterprises is computed by applying a rate of 3% on registered incomes, except incomes from the production of assets for own necessities, subsidies, incomes from provisions, incomes from adjustments for depreciation or impairment losses and incomes from indemnifications granted by the insurance companies. the tax is computed quarterly on the incomes registered in respective quarter. for this reason, the tax regulation after the closing of the fiscal year is not necessary. the tax declaration and payment are settled on a quarterly basis on or before the 25th of the month that follows the quarter for which the tax is computed. this is a simple system for taxation, facile and beneficial for taxpayer if the weight of expenses is reduced. the tax on incomes of micro-enterprise in our example (tim) is: tim = 3% x 50.000 = 1.500 m.u. the fiscal code sets regulations regarding alternation of the taxation system, more precisely the passing to the profit taxation if one or more of the above conditions are no longer fulfilled. case c) the boarding house’s owner develops its economic activity as authorized natural person as natural person, the owner on the boarding house is due tax on receipts from rental with touristic purpose of the rooms placed in its personal house. the tax regulations in this case depend on the number of the rooms intended for rental. if the boarding house has less of 5 rooms for tourist accommodation, the incomes are taxable as incomes from the grant of the use of goods. otherwise, the incomes are taxable as incomes from independent activities. in both situations the tax is calculated by applying the rate of 16% on annual net income. during the year the taxpayer is required to make anticipatory payments and after the determination of the taxable annual net income, the differences must be paid, if need be. the annual net income may be determined on the basis of income norms or based on the simple entry accounting system (determination so-called “in real system”). determination of net income on the basis of income norms for certain economic activities developed by the natural persons, the general directorates of public finance set the annual income norms for each administrative territorial unit. these differ from county to county, or from town to town. in rural areas the income norms are usually lower. the annual tax is determined by the competent fiscal body by applying the tax rate of 16% to the income norm. the tax must be paid during the year in two equal rates, on or before july 25th, and november 25th respectively. supposing that the boarding house in our example has an annual income norm of 12,000 m.u., the tax due by the natural person will be: ti = 16% x 12.000 = 1.920 m.u. the natural person must submit only one tax declaration regarding the income norm, at the beginning of the year, on or before january 31st. as a rule, if the natural person rents to the tourists less than 5 rooms, the annual net income is determined on the basis of income norms. if the natural person still wishes the determination of the net income based on the simple entry accounting system, he must submit a request with their option to the fiscal body. determination of annual net income based on the simple entry accounting system the simple entry accounting is actually the cash accounting. the net income in this case is calculated as difference between the receipts and the paid deductible expenses during the fiscal year. the fiscal code establishes the conditions that the expenses must fulfil to be deductible for computation of the tax basis. in case of application of the real system, the natural person is bound to submit a declaration at the beginning of the year, this time for estimated incomes and expenses, and to make anticipatory payments in two equal instalments (by july 25th and november 25th respectively). the value of the anticipatory payments is established by the competent fiscal body. after the fiscal year is closed, the natural person must declare the actual annual net income and, based on this statement, the fiscal body establishes the annual income tax and the differences to be paid or recovered. the rules presented for the determination of tax on natural person incomes are applicable in case of rental of villas too. the table 1 presents synthetically the rules for the taxation of boarding house incomes: table no.1. rules for taxation of income from accommodation services legal person natural person profit tax payer microenterprise accommodation capacity income category rate cb* income category rate cb* rate cb* 1-5 rooms income form the grant of the use of goods 16% net income (income norms; real system, optional) over 5 rooms income from independent activities 16% net income (income norms or real system) income from provision of services 16% taxable profit 3% actual income *cb computation basis conclusions considering the above, the boarding house’ owner can optimize its fiscal duty if he estimates correctly the expenses necessary for business. consequently, he can opt even for a taxation system influenced by the expenses, or for another one influenced only by the income. also, he must consider the income norms established for the fiscal unit where his boarding house is registered. a proper financial management allows the accommodation establishments’ owners to apply lower tariffs for the services offered to the tourists. this is a very important aspect in gaining customers, especially foreign ones, in these current conditions of very high competitiveness. references 1. romanian fiscal code (2003), adopted by law no. 571/2003, published in official gazette, part i, no.927/23.12.2003, with subsequent amendments. 2. durbarry, r., sinclair, m.t. (2000), tourism taxation in the uk, available online at http://fama2.us.es:8080/turismo/turismonet1/ 3. dwyer, l., forsyth, p., papatheodorou, a. (2011), economics of tourism, contemporary tourism reviews, april 1, available at http://www.goodfellowpublishers.com/free_files/fileeconomics.pdf 4. eurostat (2011), europe in figures eurostat yearbook 2011, available online at http://epp.eurostat.ec.europa.eu/cache/ity_offpub/ks-cd-11-001/en/ks-cd-11-001-en.pdf 5. national institute of statistics (2010), statistical yearbook 2010, available online at http://www.insse.ro/cms/files/anuar%20statistic/20/20%20turism_ro.pdf 6. national institute of statistics (2012), romanian tourism statistical abstract 2012, available online at www.insse.ro microsoft word apostoaie constantin marius_eng.doc the role of government policies in the proliferation of multinational business valentina golea, university politehnica of bucharest nicoleta niculescu*, university politehnica of bucharest drago filip niculescu , economist abstract the different components of the governmental policy have a significant influence over the foreign companies` activity. the economic policies include the fiscal policy, monetary policy, commercial policy and sector policy. for transnational society, the most influential governmental actions are those regarding economic restriction like: exchange control, import restrictions, taxes control, price control, the local matters restrictions, foreign investments` restrictions. knowing the host country’s global political climate (anticipating changes that might appear in time) and its involvement in a larger frame of the world’s political context will offer to the company the possibility of a correct underlying and adaption of its own international strategy according to the concret conditions of the political space where it will operate. keywords government policies, multinational business, political risk, multinational companies, political instability, host country jel codes: f23, f29, f42 introduction some countries’ attitude towards foreign companies is more open than others. some countries are open to external collaboration, while others are very conservative, accepting foreign products slower, and sometimes promote an exaggerated protectionism and nationalism. the host country’s national security policies limit or even prohibit the foreign companies` access into key sectors . at the same times, in accordance with foreigh policies, the host governments can favor the access to strategic sectors by companies that originate from certain countries. that is why, for a realistic substantiation of its expansion strategy, the company must analyze the host country’s foreign policy, especially the diplomatic relations between the host country and its country of origin. if there are certai conflicts (economical, political or military) or tense relations between the two countries, deterioration of relations is anticipated, the companies will look at other foreign markets where adequate or even preferential treatment will be give to them. an isolation policy promoted by the host country is not preferred by the foreign company because this isolation reflects indirectly on its activities, restricting it to the local market and creating difficulties with market penetration and external supply lines. all these economic or studies and scientific researches economic edition, no. 15, 2010 227 noneconomic policy elements promoted by the host country’s government will have different consequences for the transnational company’s future activity. the importance of stability policies government all countries, no matter if developed or developing, seek macroeconomic stability through monetary, fiscal and predictable earning politics, fighting against negative phenomena that the economy is dealing with (inflation, unemployment etc). the general economic policy depends on the host country’s government form, specifically the states’ involvement in the economy (as an example, a government with radical political orientation will insist on the government strong presence in the economical environment). the stability or instability of the host countey’s government is of maximum importance to international companies. political risk in international affairs increases when difficulties within the business environment are hard to anticipate as a result of political change. radical changes that appear after periods of relative stability pose the highest risk. such changes mark a country’s government policy as instable, capable of diminishing the investment process. instabilty can result from a change of the type of government or the political parties that are governing ; another possible situation consists of the form of government staying the same, but a dramatic change of foreigh policy being passed by law. the most drastic changes in government business relations appear the form of government is changed. the new government may promote a new politicy of aggressively exploiting foreign companies . in this case, some markets` potential may be diminished ; even so, certain foreign companies may register profitable investments in this country, but only in certain fields. the governments’ high instability and the difficulty of anticipating change in the government’s polities deteriorate investment opportunities. the political risk refers to the possibility of political decisions, events and conditions from one country affecting the business climate in such a manner that the investors lose money or do not reach the profit margin expected . for a company with overseas activity, the risk generated by political implications vary, the most noticeable being: seizure, expropriation and nationalization, special operating rules for foreighn investors, embargo, boycott etc. to be considered a risk, political change have to be capable of negatively influencing the company’s profits or objectives. political specialists have created stability indices, in order to better anticipate the risk that countries pose. such an index has been created by political risk services , offering the possibility of political risk evaluation with regard to a classification system that reflects (bradley, f., 2001: pp 181): 1. restrictions regarding profit, capital repatriation or currency control ; 2. delayed payments to exporters ; 3. the policy referring to monetary and fiscal expansion ; 4. foreign loans made by the government. the countries are graded for each risk category, and then classified in four categories, from a (countries with the lowest risk) to d (countries with the highest risk). some public sources publish periodic lists regarding countries hierarchy on the political risk scale (sasu, c, 1998: pp 91) : for example, the british magazine the economist publishes on every trimester a hierarchy of countries that considers 27 influence factors, the highest risk being attributed 100 points ; the american publication international country risk guide is assesses these risk monthly. the factors that are taken into account are: government corruption, birocracy, legislation tradition, the risk of external conflicts, political terrorism, political leadership, economical planning failures and the rate of fulfillment of economical predictions. in order to diminish political risk, some measures can be taken, such as finding some means of cooperation with local companies. studies and scientific researches economic edition, no. 15, 2010 228 various types of government attitude towards multinational companies when speaking of democratic governments (parliamentary) the public opinion has relatively an important role in fundament the government’s policy, it has to fin dit self, with the political parties’ help, in the process of adopting legislative and administrative measures. it is generally known that political parties influence the government’s activities regarding the policy towards foreign companies. the political parties system can be classified in: two-party system, multi-party, single-party and the system dominated by one party. when speaking of the two-party system it is important to study the impact made by the sucession of different parties at governing on the foreign companies` actinvity and their relation witn the government in charge. in a multi-party system, no party is strong enough to dominate and control the formed government which as a consequence is a majority coalition incorporating an amalgam of parties. regarding the multi-party system this suffers frequent modifications caused by changes in the structure of the governmental coalition, the longevity of such a coalition being dependent on the collaboration and cooperation which exist between each of the partners. such a system is best represented in italy, but it can also be seen in germany, france, belgium, holland and even romania. a single-party system where is no opposition and the government party inhibits other parties’ genesis and development, and also their activity. this can have a negative effect over foreign companies’ activity, and in this case political competition is excluded, the system can very easily transform itself in a dictatorial system. a system dominated by only one party is the system where no other party is strong engough to win control of the government. this is a situation encountered especially in the countries when the parliamentary system is found in the formation phase, but as the system matures yhe transformation to a multi-party system takes place. for the company decided to globalize its affairs it is important to know the government’s attitude towards foreign companies’ activity on its national territory. the political parties’ position is as important as the government’s attitude in this matter, because any of them can succeed to govern or the philosophy of an opposing party or parties. conclusion in order to fully and completely understand the host country’s political situation and its stability it is necessary for the guest country`s manager to evaluate the political stability. political instability can also be generated by the loss of the government’s political support of certain formation (specifically to the coalition governments).the involvement of the population on a large scale in electing managerial political structures can diminish or on the contrary, magnify legislative and executive fragmentation of the political body and political instability related to political preferances’ homogeneity/heterogeneity expressed by the electorate. in order to evaluate present instability, the foreign company wishing to expand its activities on a new market will look at, alongside with earlier mentioned elements, onther factors like: frequency of strikes and street demonstrations, and the frequency of antigovernment and political manifestations, terrorism acts’ frequency, governmental crisis frequency, irregularity of political changes and coups. making this analysis, the company will try to predict the future evolution of these factors, and related to them the future political instability. so, the native country’s political instability studies and scientific researches economic edition, no. 15, 2010 229 determines the company to turn its activity overseas, to other markets, and the host country’s high political instability discourages foreign companies’ investments and activities on the country’s territory, politically speaking, a stable host country is preferred. a company, in order to be aware of its vulnerability towards the host country’s political climate, has to always have in mind that the company is a guest and has to act according to this statute. the company’s profits are not owned exclusively by it, the local work force and the host country’s economy have to have some advantages for allowing the company to invest. at the same time the foreign company has to be part of the host country’s economy through public interest projects, the foreign personnel have to adapt to the new environment conditions they will work in. also, it is recommended not to administer the investment from the main centre , but through the local managerial competencies’ involvement, only procedures supervision should be made from the centre. in order to get the side of the host countries’ governments, foreign companies can take part in economical and cultural project of public interest. references 1. bradley, f., 2001, marketing international, ed. teora, bucure ti 2. fatehi, kamal, 1996, international management, prentice hall 3. golea,valentina, 2008, managementul afacerilor multina ionale, ed. bren 4. mockler, r., 2001, management strategic multina ional, ed. economic 5. niculescu, m., lavalette, g, 2003 ., strategii de cre tere, ed. economicã, bucure ti 6. sasu, c., 1998, marketing interna ional, ed. polirom , ia i studies and scientific researches economic edition, no. 15, 2010 230 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 21, 2015 http://sceco.ub.ro 14 the role of the urban environment in implementing the circular economy in romania marcela-cornelia danu ”vasile alecsandri” university of bacău marceladanu@ub.ro elena nechita ”vasile alecsandri” university of bacău enechita@ub.ro liliana rozemarie manea “gheorghe asachi” technical university iasi manearozemarie@yahoo.com abstract in the present paper we analyzed the position of the romanian urban environment in the process of implementing the circular economy, with the correlations and interdependences between the phenomena and demo-economic processes and the forms for the application of the circular economy. the poor implementation of the circular economy in the urban areas in romania is conditioned by the low level of income, the expenditure, the consumption expenditure and the degree of low urbanization, the low level of labour productivity, etc., and by the psychology of the decision makers that is still not adjusted to the requirement to make the best choices for sustainable development of the economic system. we have highlighted the correlations between: the municipal waste recycling rate and the resource productivity in romania; the total income of the population in the urban areas of residence in romania and the waste recycling rate; the total average expenditure per person in urban areas and the municipal waste recycling rate; the monthly average consumption expenditure per person, in urban areas and municipal waste recycling rate; the employed population rate in urban areas and the municipal waste recycling rate; the urban population living in the 41 counties of romania and bucharest and the municipal waste recycling rate. keywords circular economy; urban areas; income; expenditure; labour productivity; municipal waste; sustainable development of cities jel classification o13; o18; q01; q56; r11 strategic coordinates of the sustainable development of the cities in romania in the context in which, over ¾ of the europeans live in urban areas, the vision of the circular economy in urban areas become imperative. the productions, purchase, consumption of the inhabitants living in cities, their lifestyle have an impact on the quality of the environment (van kamp, 2003). more than that, the urban design and planning, the management of the territory and the urban landscape planning determine the way of living of people, their social and economic life, and, of course, the quality of the environment. in order for a city to be durable, the decision makers must have a systemic approach, taking into account the local history context, its development over time, the current potential, and the dynamic external environment of the city, too. the targets that are set should exceed the short term border, thus they are supposed to be long-term objectives, mailto:enechita@ub.ro mailto:manearozemarie@yahoo.com danu, nechita, manea 15 with gradual stages of application in the short term: the use of renewable energy, the reduction in energy consumption per capita, the reducing of the volume of waste resulting per capita, the reduction in emissions of greenhouse gases, the sustainable use of resources, including water, land, insurance of the biodiversity space, etc. (hoornweg, perinaz, 2012). among the specific arrangements for action we can include: the production of biogas, using the organic waste as a raw material, the improving of the collection and sorting of waste, the launching of intensive information campaigns, including the educational establishments of all levels, the investment in infrastructure (i.e. specialized equipment), the energy plants, and the development of the system of relations with the civil society, public institutions, and the private sector. having in view the fact that the measures to be taken are supposed to meet the consumers’ needs and requirements, the provision of alternative solutions and facilities, related to the choices they will make, we can conclude they are of prime importance (blythe, 1998), (chen, chai, 2010). the urban inhabitants must be well informed in order to make their smart choices. the premises of face-to-face meeting and the social networking sites must be multiplied in order to develop the system of relations, interaction, social component of the respective urban area, etc. the cultural component of the city also contributes to the achievement of this objective – the intensification of the cultural activities involving the urban inhabitants not only as consumers of cultural activities but also in their position of participants; the producers of culture having thus an important role in the valorization of the cultural-artistic potential of the citizens and, further, the diversification of their lifestyle and the improvement of the quality of the environment where the urban inhabitants live. more than that, such an attitude that is favorable to the human development determines the improvement of the city image with beneficial effects on the economic component of the latter; a city with a positive image attracts investors, new business and it strengthens the existing ones. as a result of the poor experience, yet, in the implementation of the objectives of the sustainable human development, the decision makers of the cities in romania will have to learn the best practices of the european cities. the key to the problem is the change of the people’s mentality, both as consumers and producers, on the attitude toward the environmental issues (stern, 1985). the role of the public authorities is threefold: to provide information, to create the necessary infrastructure, to give their personal example. the sustainable urban development of the cities in romania (ginavar, 2008) is imperative under the conditions in which cities are considered to be main pawns in the competitive environment, having in view the knowledge-based on economic growth and the creation of prosperity. bearing in mind the lisbon strategy, the cities in romania must be able to answer the following questions: „how can we transpose, best of all, the european objectives, in local measures, in order that the towns to become truly competitive?”, „how can the objectives of competitiveness be achieved, providing, at the same time, the economic social territorial cohesion?”, „how can the life quality in the romanian cities be improved?”. in the last few years, in romania, most urban areas have been passing through the extension process, and the large urban areas have continually been subject to change. these two processes shall be conducted on the following phenomena: resettlement of the population in the territory, temporary emigration with the purpose to work abroad functional alterations inside the urban areas, determined by commercial buildings, headquarters of the company, collective dwellings, conversion of industrial areas or isolated industrial establishments, conversion of military the role of the urban environment in implementing the circular economy in romania 16 units, building of large shops in the territory, storage facilities, private small and medium-sized firms a vast range of litigations that were unfortunately solved by the occupation and the dismantlement of parks and nurseries development of the system of connections in the territory and in the localities which require the construction and/or the upgrading of the motorways, fast roads, highways, railways and their corresponding stations, ports of agreement, airports; the organization of the circulation in the urban areas, the reconfiguration of the sidewalks areas, etc. at present, the cities in romania fulfil the following roles: provides the potential for a way of life of high quality represents the focal point for the rising within the regions that have a large impact in the balanced regional development direct and major contribution to the increasing of the competitiveness of romania and the european union. the romanian cities must comply with the leipzig charta on the sustainable european cities which has proposed: the strengthening of the competitiveness and of the identity of the european cities and regions, the promotion of the heritage conservation, the creation of the support eu strategy for sustainable development. the following goals are required in order to achieve the proposed objectives: understanding of the importance of the sustainable urban development in the regional/national/european context integrated urban planning application of the urban policies, including those to thwart the climate change and to reduce risks education and involvement of all relevant urban planning actors development of partnerships an increase in the level of communication, of openness, of the dialog between the actors involved in urban development improvement of the quality of public services improvement of the accessibility and mobility by creating and/or upgrading of infrastructure, parking areas, public spaces regeneration of the local identity, changing of mentalities new practices in the public administration. aspects of implementing the circular economy an important aspect which the concept of circular economy highlights (eaa, 2015) is the non-inclusion within the production costs of the pollution costs generated by production and consumption; that is to say, the negative externalities. the negative externalities of the firms can be found only in the calculation of their social costs and not in their private costs that is in fact the basis for the calculation of the firm profits. therefore, none of the products available on the market do not reflect the real costs of that product. the services that nature provides to us are not reflected in the economic situation of the firms. one reason is the difficulty of assessing the accuracy of all adverse effects and of their size both in the short term and in the medium and long term. it is also difficult to identify all the involved entities, all the more so, the risks rage to which we are exposed is highly diversified and for accurate capturing of these it is necessary the collaboration of several centers for analysis and evaluation. so, to approach the issue of negative externalities only through the inclusion in the firm costs of some estimated expenses it is at least incorrectly both for the environment coordinates as well as for the individuals (de oliveira, puppim et al, 2013). more than danu, nechita, manea 17 that, an important element of the triad the „consumer-firm-environment”, (danu, 2001), that is, the firm will be affected; in the case in which the identification and the correct assessment of all the adverse effects that are caused to the consumer and to the environment will be successful, the firm will not be able to cope with the very huge costs but only by including them into their costs and, further, in the production price of their outputs. if this is the case, in the end, on the one hand, the consumer will have to pay by the price at which they will purchase the product and, on the other hand, the firm that will add these costs, too, will lose some of the volume of its sales in favour of those firms that will focus on the basis of the demand and not on a cost-oriented basis. it is a vicious circle in which, for the time being, there is no way out. one solution would probably be the reconsideration of all the types of expenses, of their level, including the relations between their levels, as well. from the point of view of the consumer, the issue that is involved refers to the level of acceptability of a price higher than the consumer would have to pay for the goods which include the negative externalities of the firm in relation with the environment (kirchoff et al, 2011). in addition, urban areas with a high density of population and with a high degree of concentration of economic activities (more or less polluting) are, on the one hand, put to advantage by the potential of a high quality of life, and, on the other hand, are inherently exposed, not only to natural risks (mainly pollution) but also taking responsibility for higher levels of the prices of tangible and intangible goods. the costs involving the exposure of the population to natural hazards – diseases that may occur, their effects in time, etc., are difficult to estimate with accuracy, in order to be included in their calculation of the costs by the accountants of the firms. an approximate solution is already used in some countries of the world: the establishment of some environmental taxes. the optimum choice seems to be the subsidizing by the government of these costs in order not to damage the standard of living of the population who buy products at a price which includes these charges. on the other hand, the government subsidizing of such charges without the permanent government monitor and without the government penalization when the firms and the population fail to follow the natural environment would cause financial losses to the government budget and, possibly, the increase in the government public debt. in the event that the government subsidizing for the environment taxes shall be applied (the sales prices of the products are smaller) the population would have to choose those products that are less harmful to the environment but, the condition is that, in the perception of the consumer the lower price of the product might not be associated with other reasons such as: promotional techniques, poor quality of the product, hidden vices, etc. to prevent such consumer behaviours, a permanent and sustained communication with consumers is necessary; the government and economic agents that are producers or traders need to inform, to persuade and remind the consumers the price facility they are offered and the need of buying sustainable products and services. even so, there is a financial risk the government entity may incur. on the other hand, in case of lack of communication or poor communication with consumers, the manufacturing firm undertakes a risk of image and the consumers, in their turn, incur the psycho-social risks, as determined by the purchasing which cannot meet their expectations (peptenatu et al, 2011); the need to change their lifestyle, usage patterns, etc., are also supposed. correlations and interdependences within the circular economy an essential objective of the economic development of a country is the increase of the productivity of all production factors; the circular economy is ensured but by increasing the productivity of the production factors attached to the environment – the raw materials, fuels, and energy (barbier, 2011). in table 1 we have highlighted the municipal waste recycling rate and the resource productivity in romania in the period the role of the urban environment in implementing the circular economy in romania 18 2003-2011. we notice that, up to the year 2005, the municipal waste recycling rate increased from 0.29% to 2.22%, followed by a regression in 2006 after which, even in conditions of economic crisis, it increased at a high pace reaching to 7% in the year 2011. the resource productivity had, however, an inverse evolution, starting from 0.90 thousand lei/ton in the year 2003, 0.91 thousand lei/ton in the year 2004 after which, a sinusoidal evolution but without any return to the level reached in 2004. what can be said under these conditions? the evolution of the romanian economy, mainly of the industry, was marked by a negative dynamic in terms of productivity of the production factors that are detached from the environment. the confirmation of this situation is given by the pearson correlation coefficient (drugan, 2005), (cătoiu, 1999), with the help of which we have tried to observe if there is any correlation and intensity level between the municipal waste recycling rate (x) and the resource productivity (y) (see table 1), in romania, in the period 2003-2011. table 1 municipal waste recycling rate and resource productivity, in romania years municipal waste recycling rate (%) resource productivity (thousands lei/tonne) 2003 0,29 0,90 2004 1,39 0,91 2005 2,22 0,87 2006 0,65 0,87 2007 1,06 0,78 2008 1,10 0,66 2009 2,00 0,78 2010 6,00 0,84 2011 7,00 0,75 source: www.insse.ro by applying the formula the pearson correlation coefficient (n = 9) we get the r = -0.2084 so, between the two indicators there is an inverse relationship of low intensity. of course, a resource productivity as high as possible can result in the saving of resources, and in a lower level of collected waste; and thus the waste recycling rate in the urban areas will be less. it is somewhat paradoxical the intensity of correlation between the two variables because, within an efficient economy, with high levels of productivity of the production factors, the positive propagation on the economy of waste is obvious. the explanation lies in the large difference between romania and the eu developed countries, as regards the levels of productivity of all production factors and the decrease of the resource productivity after the year 2003. having in view the fact that the obtaining of waste has as a premise the individual decisions of the exponents of the demand and supply in question, as well as the consumers and the producers we have first analyzed the impact of the consumer behavior involving their decision-making; the decision of consumption and, in the end, the accumulation of waste, have as a prerequisite the people’s income. it is to be noted that, although the crisis had negative effects on the economic development in romania, ( )[ ] ( )[ ]∑ ∑∑∑ ∑ ∑ ∑ −− − 2222 yynxxn yxxyn http://www.insse.ro/ danu, nechita, manea 19 the level of the monthly average income of the urban population has increased. having a sinusoidal evolution of the municipal waste recycling rate, though very low at the beginning of the period, began to strongly grow after 2009, showing a new and intelligent attitude of the urban decision makers in relation with the environment. in table 2 we have shown the evolution of the total income of the urban population in romania average of total income per person, in urban area (x) and the municipal waste recycling rate (y) in the period 2003-2011. we have calculated the correlation between the two indicators, the coefficient of correlation (r = 0.6508), expressing that between the two indicators there is a direct correlation, of medium intensity, justified by the direct link between the income and the consumption, and its finality respectively, the externalization of the consumption. table 2 economic and environmental indicators, in romania, 2003-2011 year monthly averages of total income per person, in urban area (lei) monthly averages of total expenditure per person, in urban area (lei) average consumption expenditure per capita, in urban area (lei) employment rate in urban area (%) municipal waste recycling rate (%) 2003 317,23 310,07 212,42 47,5 0,29 2004 403,53 386,17 263,46 48,9 1,39 2005 472,67 441,80 310.38 47,9 2,22 2006 552,97 511,99 357.78 49,8 0,65 2007 669,17 606,28 413.48 49,5 1,06 2008 855,34 756,09 514.40 49,9 1,10 2009 928,80 806,33 549.90 49,4 2,00 2010 925,92 811,85 552.56 49,5 6,00 2011 946,98 835,43 566,25 50,2 7,00 source: www.insse.ro in the case of the total average expenditures per person in urban areas average of total expenditure per person, in urban area, in the period under consideration (see table 2), we notice that the effects of the economic and financial crisis did not reflect in their dynamic only by the temporization of the increase of expenditures; the correlation between the total average expenses per person in urban areas average of total expenditure per person, in urban area (x) and the municipal waste recycling rate (y), in the period 2003-2011; r = 0.6556 shows the direct link, of medium intensity, between these indicators. as we mentioned earlier, the size and the intensity of the correlation between the variables that shape the economic situation of the societal entities (firms, consumers, government and buying decisions, consumption, post-consumption) shall designate the level of relations with the environment. being an important component of the average of total expenditure, the average consumption expenditure per person in urban areas (see table 2) have recorded an increasing evolution, even if the impact of the crisis diminished their increase rate in the period in some respects 2003-2011. the correlation between the average consumption expenditure per person in urban areas (x) and the municipal waste recycling rate (y), that is, r = 0.6525, confirm the direct correlation of medium intensity between the two variables but also the development in the direct proportion of indicators: the average of total income per person, in urban area/ the average of total expenditure per person, in urban area/ the average consumption per person, in urban area and municipal waste recycling rate. we consider that an increase of the intensity http://www.insse.ro/ the role of the urban environment in implementing the circular economy in romania 20 of these correlations highlights a high potential for the valorizing of the consumption externalities that is still unexploited. therefore the development of the circular economy at the level of urban entities has strong conditions to be used. if in the period 2003 2011 romania’s population evolved in a negative direction dropping from 21,627,509 inhabitants to 20,199,059 inhabitants (decrease by 6.6%) while the urban population dropped from 11,434,118 inhabitants to 10,902,302 inhabitants (drop of 4.65%). the weighting of residential population in urban areas increased up to the year 2007 (from 52.86% in 2003 to 55.44% in 2007) and then it dropped to 53.97% in 2011 and 53.89% in 2014. the employment rate in urban area followed a relatively good evolution, increasing from 47.5% in 2003 to 50.25% in 2011 and 50.4% in the second semester of the year 2014. the increase is mostly determined by the decrease in share of urban population within the total population and, further, within romania’s population in the last few years. under these circumstances, while correlating the employment rate in urban area (x) with the municipal waste recycling rate (y) in the period 2003 – 2011 (see table 2) a direct correlation (r = 0.4168) with an acceptable degree of association may result. from the point of view correlation direction, there is a noticeable direct link between the population providing different types of economic activities, being involved in carrying out the outputs (positive or negative for the societal life) and implicitly of the waste but the rate of reuse, recovery, reintegration of waste in the production cycle is also determined by the weighting and actions of the unemployed population within the total urban population (barbier, 2010). with regard to the correlation between the urban population for the 41 counties and bucharest, too (the urban population of the county related to the urban population of romania) and the municipal waste recycling rate in the 41 counties (calculated as the ratio in percentage terms between the recycled waste and collected waste, at county level) in 2011 (the last year with available information on www.insse.ro) we have presented (see table 3) the two analyzed indicators; we have used the method of the spearman rank correlation to highlight the correlation between the two variables (the demographic one and economic one) that has an impact on the natural environment in the long term. table 3 correlation between urban population and municipal waste recycling rate in romania, 2011 county county urban population/ romania’s urban population (%) rank municipal waste recycling rate * (%) rank alba 1,82 21 1,11 29 arad 2,15 18 0,46 38 argeș 2,55 13 2,36 25 bacău 2,81 11 5,84 14 bihor 2,55 14 15,39 5 bistrița-năsăud 1,00 38 1,4 28 botoșani 1,59 24 9,98 9 brăila 1,92 19 0,14 40 brașov 3,67 4 1,96 26 buzău 1,66 22 0,09 42 călărași 1,03 37 15,84 4 caraș-severin 1,58 25 0,97 32 http://www.insse.ro/ danu, nechita, manea 21 cluj 3,78 3 3,03 22 constanța 4,27 2 0,92 33 covasna 0,93 40 5,63 15 dâmbovița 1,38 30 0,92 34 dolj 3,11 8 0,11 41 galați 2,88 10 1,81 27 giurgiu 0,73 42 7,89 10 gorj 1,44 29 0,81 35 harghita 1,18 32 2,76 23 hunedoara 3,00 9 14,23 6 ialomița 1,12 36 5,48 16 iași 3,28 7 1,04 30 ilfov 1,12 35 0,47 37 maramureș 2,53 15 3,22 20 mehedinți 1,19 31 0,36 39 mureș 2,52 16 14,19 7 neamț 1,84 20 6,47 12 olt 1,60 23 3,73 18 prahova 3,35 6 1,02 31 sălaj 0,85 41 11,42 8 satu mare 1,52 28 3,13 21 sibiu 2,47 17 3,34 19 suceava 2,55 12 6,02 13 teleorman 1,17 34 0,6 36 timiș 3,59 5 81,12 1 tulcea 0,98 39 34,38 2 vâlcea 1,55 27 23,51 3 vaslui 1,57 26 7,56 11 vrancea 1,18 33 2,64 24 bucurești 16,98 1 5,01 17 source: processed from www.insse.ro having in view the fact that the sample size is > 10, the spearman statistical test is where and it can be compared with the critical value of the normal distribution table. the obtained value for z is 0.5826 so between the two indicators there is a direct connection of medium intensity. we test the significance of the correlation coefficient of the ranks by comparing its value with the reference value for the level of significance of 0.05 (from the table). we observe that the value of z is 0.5828 > 0.313 so we reject the zero hypothesis according to which there is no correlation between the two variables. given the fact that the dimension of the sample is high we can use the test t 1n1)n(n 1)n(n-6r z 2 −+ − = ∑ = = n 1i 2 idr http://www.insse.ro/ the role of the urban environment in implementing the circular economy in romania 22 by applying the formula to test the significance of the correlation coefficient. in accordance with the table t, the reference value for the level of significance is 0.05 = 0.684, having in view the bi-directional assumption. the obtained value for the t (in our case) is 2.994 so > 0.684. it is accepted the alternative hypothesis according to which there is a direct correlation between the two variables. in conclusion, by analyzing the connections between several variables that are specific to the economic environment and the demographic environment, on the one hand, and the municipal waste recycling rate, as a significant indicator for the implementation of the circular economy, on the other hand, we notice the existence of the correlations where the medium or acceptable intensity of these highlights the potential of the romanian economy in the field of waste reintroduction in the economic circuit. conclusion the circular economy focuses on the consumer thus understanding that „there is no business without customers” and that „the goal of business means the customer base development as well as the customer fidelity” and it surpasses this vision by integrating the management of the relation with the natural environment within the equation of company success (peattie, belz, 2010). the multiplication, diversification and strengthening of the relationships downstream a company (with the customers of products that are modernized, adapted or new because of the circular economy implementation but with other entities, too) are based on a new philosophy and action concerning information and communication meant to be permanent and effective (eiu, 2005). in the eu circular economy is a policy procedure in advanced application and the differences between the levels of development of the european actors reveal different stages of this process. in romania even though the environment protection, in a general sense, and the environment protection in urban areas, as a specific purpose, have started to be a constant preoccupation for the decision makers in the firms and public administration, the context: that is, the demographic one, the economic one, the technological one and last but not least, the cultural one that is insufficiently trained (the low income level, expenditures, consumption expenditure in urban areas, average rate of low urbanization and large discrepancies between the 41 counties, inappropriate mentality to the new trends, etc.) determines small rates of waste collection, small rates of waste recycling, options that are still limited toward implementing the circular economy. references barbier, e.b. 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(1985), support for environmental protection: the role of moral norms, population and environment, volume 8, issue 3-4, pp 204222. the economist intelligence unit, the economist intelligence unit’s quality-of-life index (2005), available at http://www.economist.com/media/ pdf/ quality_of_life. van kamp, i., leidelmeijer, k., marsman, g. & de hollander, a. (2003), urban environmental quality and human well-being. towards a conceptual framework and demarcation of concepts; a literature study, landscape and urban planning, 65, pp 5–18. http://www.sciencedirect.com/ studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 71 updates regarding audit reporting daniel botez vasile alecsandri university of bacău daniel63331@yahoo.com abstract in 2009, the international federation of professional accountants ifac initiated a process of reviewing reporting standards. the purpose of this process is to improve the auditor's way of communicating and to increase the relevance of the audit globally, meaning that the auditor's report is more informative by presenting more information about the entity and about the audit of the financial statements. thus, reporting standards have been amended, a new standard has been published, and the impact of these changes on other standards used by the auditor has been reported. the most relevant aspects concern the introduction of new paragraphs in the auditor's report regarding key aspects of the audit and the assumption of business continuity. also, the structure of the report has been modified. keywords international standards on auditing; auditing reporting; key audit matters jel classification m42 introduction for a long time, there have been concerns related to the way the auditor's report can increase the value of communication in the public interest of the auditor. they can be summarized in three periods. the first period of research and consultation was completed in may 2011 when ifac published a public consultation document on increasing the relevance of audit reporting. it was based on academic research on the subject, which ran from 2006-2009, and on the synthesis and review of national initiatives or practices between 2009 and 2010. the second period of standard development began in december 2011 with the presentation of the project proposal and was finalized through the intervention of the working group and the project completion teams on the subject in january 2012. the final period, the public consultation, implied the invitation to discussions in july 2012 and the publication of the project in june 2013. finally, in january 2015, ifac has published the set of amended auditing standards with effective date of coming into force before or starting december 15, 2016. the revised isa standards package on reporting includes: ✓ isa 700 "forming an opinion and reporting on financial statements" ✓ isa 701 "communication of audit key issues in the independent auditor's report" ✓ isa 705 "changes in opinion in the independent auditor's report" ✓ isa 706 "paragraphs to highlight issues and paragraphs on other matters in the auditor's report" ✓ isa 720 "auditor's responsibilities regarding other information" ✓ isa 570 "business continuity" ✓ isa 260 "communication with those responsible for governance" mailto:daniel63331@yahoo.com botez 72 reporting news to summarize, the main changes foreseen in the revised form of isa 700 "forming an opinion and reporting on financial statements" (iaasb, 2017, pp. 718-773) are as follows: • the auditor's opinion will be presented as the first section of the report and all sections will have a subtitle that will increase accessibility and lead to the best structure of the report; • improving reporting to increase transparency and clarifying responsibilities, such as an auditor's statement regarding the compliance with independence requirements and other ethical responsibilities, the name of the engagement partner (for listed entities only), expanding the description of the auditor's responsibility and key audit features, as well as the description of management and auditor's responsibilities for the continuity of business; • a new section in the auditor's report regarding other information when such information is presented together with the audited financial statements; • where applicable, information on the presumption of business continuity; • to form an opinion on the financial statements based on the evaluation of the conclusions drawn resulted from the evidence collection; • clearly expressing this opinion in a written report. these requirements supplement those which remain in force and which constitute the core of this standard. the auditor should obtain reasonable assurance that the financial statements as a whole are free from significant misstatement due to fraud or error. for this he has to consider some essential aspects. first of all, the auditor shall form his opinion only after obtaining sufficient and adequate audit evidence. for this, he has to assess the extent to which uncorrected misstatements are significant, individually or cumulatively. it also assesses the extent to which the financial statements adequately represent the selected accounting policies and that the selected accounting policies are consistent with the applicable and appropriate financial reporting framework. in the same sense, the auditor convinces himself that the management's estimates are reasonable, that the information presented is relevant, credible, comparable and comprehensible, and that it is presented appropriately for users to understand the effect of significant events and transactions. last but not least, it is determined whether the terminology used is appropriate and the extent to which the financial statements achieve a fair presentation. when the financial statements are prepared, in significant ways, in accordance with the general financial reporting framework, the auditor expresses a unanimous opinion. if the auditor concludes that the financial statements are materially misstated or that he cannot obtain sufficient and appropriate audit evidence, he will change his opinion in accordance with the requirements of isa 705 "changes to the opinion of the independent auditor's report". structure of the audit report according to the new requirements the auditor's report presents a different structure by including some additional paragraphs, completing the information provided by the existing ones and changing their location. thus, the structure of the report is as follows: • title the report must have a title that clearly shows that it is the report of an independent auditor. we suggest using the "statutory auditor's report" title. • the recipient updates regarding audit reporting 73 the requirements stipulate that the report should be addressed according to the circumstances of the engagement, but it may be that the law, regulations or terms of the engagement may provide for the addressee of the auditor's report under the specific legal conditions. typically, the report is addressed to those for whom it is drawn up, i.e. to shareholders or to those responsible for governance. • opinion this section includes the auditor's opinion and some elements considered absolutely necessary: ✓ the identification of the entity whose financial statements have been audited ✓ the statement that the financial statements have been audited ✓ identifying the title of each component ✓ a reference to notes, including a summary of significant accounting policies ✓ the specification of the date or period covered by each of the components of the financial statements ✓ the use of the expressions "present fairly in all significant aspects" or "present a true and fair view". • basics of opinion (bases for opinion) in this paragraph, the auditor presents some of the elements underlying his opinion. firstly, he makes a statement that the audit was conducted in accordance with isas standards and makes a reference to the section of the report describing the auditor's responsibility for complying with isas. also, this paragraph contains a statement by the auditor that he is independent of the entity in accordance with relevant ethical requirements for auditing, compliance by the auditor with any other ethical responsibilities, indicating jurisdiction over ethical requirements, or reference to the code of ethics. also in this paragraph, the auditor declares that the evidence obtained is sufficient and appropriate to support the opinion. • going concern, in accordance with the provisions of isa 570 "going concern" (iaasb, 2017, pp. 575-604) when the auditor considers that the going concern assumption is inappropriate as the basis for the preparation of the financial statements, he will provide a contrary view. if the auditor considers the appropriate continuity assumption but there are significant uncertainties, he proceeds differently depending on the circumstances. if there is adequate disclosure in the financial statements, the auditor provides an unchanged opinion but includes a separate section under the heading "significant business continuity uncertainties" in the report, in which he draws attention to the notes in the financial statements in which these matters are presented and states these issues. there is also the possibility of doubting the continuity of the entity's activity in the future and that its opinion is not changed from this point of view. if significant uncertainties are not adequately disclosed in the financial statements, the auditor expresses a supportive opinion or an opinion, and in the paragraph on the bases of opinion he states that the uncertainties exist and that they are not adequately disclosed in the financial statements. if management has not evaluated or extended the continuity assessment, including the auditor's request, the implications for the report should be studied. • key audit matters the presentation of the key aspects that the auditor identified during the audit is mandatory for audited entities when the auditor is bound by law or regulation, or when the information regarding this aspect is required in compliance with isa 701 standard "communication key audit matters in the independent auditor's report." (iaasb, 2017, pp. 774-797) botez 74 the purpose of communicating key audit aspects is to increase the auditor's report communication value through the transparency of the audit. the communication of key aspects provides users with additional information on those issues considered significant by the auditor. the auditor's objectives are to determine the key audit aspects and, once he has formed an opinion on the financial statements, to communicate these issues by describing them in the auditor's report. communicating these issues is not a substitute for: ✓ the presentation of the applicable financial reporting framework used by management for accurate presentation; ✓ the auditor’ s ability to express a modified opinion when he considers it necessary; ✓ to report significant uncertainty about business continuity; ✓ it is not a separate opinion on a particular aspect. the auditor determines or identifies key issues with respect to the areas assessed as being of high risk of material misstatement or significant risks, significant professional judgment on the elements which supposed the management's judgment ,including the accounting estimates for which uncertainties were identified or the effect of the audit on events and on significant transactions of the period. in this paragraph, the auditor presents key issues that are significant according to the auditor's reasoning, and points out that these issues are presented in relation to the financial statements as a whole and during the process of forming an opinion, and he doesn’t provide a separate opinion regarding them. examples of the fields from which the auditor may determine key issues are: goodwill; the evaluation of the financial instruments; the effects of the new ifrs standards; the assessment of assets and liabilities for the calculation of the pension fund; the recognition of revenue; the assessment of the business continuity hypothesis (iaasb, 2015b). • responsibility of management (identification) management is responsible for the preparation of the financial statements in accordance with the applicable financial reporting framework, the implementation of the internal control necessary for the preparation of the free financial statements of misstatements due to fraud or error. management also assesses the entity's ability to continue its business and whether the use of operating continuity as the basis for preparing the financial statements is appropriate. • auditor's responsibility the new requirements provide for a wider presentation of the auditor's responsibilities. first, as before, it sets out the audit objectives. it also states that reasonable assurance is a high level of assurance but does not guarantee that an audit performed in accordance with isas always detects significant distortions, if any. it states that distortions may be due to fraud and error and describes that what is considered significant, individual or cumulative is reasonably expected to influence the decisions of the users based on the financial statements or to define or describe what is significant in accordance with the financial reporting framework. it also states that the auditor uses professional judgment and maintains skepticism during the audit and describes an audit specifying the auditor's responsibilities: ✓ identify and assess the risk of material misstatement of financial statements as a result of fraud or error; plan and perform the audit in response to these risks; to obtain sufficient and adequate evidence to support the opinion. the risk of not detecting significant misstatements due to fraud is higher than that resulting from errors, as fraud may involve forgery, intentional omissions, lack of presentation or cancellation of internal control; updates regarding audit reporting 75 ✓ to gain an understanding of the relevant internal control in order to properly plan the procedures but not to express an opinion on its effectiveness; ✓ evaluate the adequacy of the accounting policies used, the reasonableness of the estimates and the transparency of the presentations; ✓ conclude on the suitability of management's use of the presumption of continuity of business and whether it has found evidence to cast doubt on this assumption. if there are uncertainties, they should be presented in the report and if the items are not adequately presented in the notes take into account the change of opinion; ✓ evaluate the overall presentation, structure and content of financial statements, including presentations, and find that events and transactions are presented in such a way as to ensure a true and fair view; ✓ specify that the auditor communicates to those entrusted with governance, among other things, the scope, audit period and significant findings, including those concerning internal control deficiencies. in the particular audit situation of rated entities, the auditor specifies that he provides the entity's management with a statement of compliance with relevant ethical independence requirements, threats, and measures, and communicates to management all significant aspects of the audit and key audit issues. the description of the auditor's responsibility for the financial statements may be included in the audit report as an attachment to the auditor's report or by reference to the website of a competent authority. • other reporting responsibilities this paragraph is introduced when the auditor has other reporting responsibilities additional to those required by the international standards on auditing. • name of the mission officer (listed entities) given the importance of listed entities, the presentation of the name of the mission officer is an additional element of transparency. specific legal acts may provide, in certain jurisdictions, for the submission of additional information. • signature of the auditor generally, the signature of the auditor is the signature of the person authorized to represent the audit firm. • auditor's address • report date the date of the report delimits the auditor's responsibility for events and transactions occurring before and after that date. the auditor's behavior is set out in isa 560 "subsequent events". conclusion starting with the audit report for the financial year 2016, the auditors apply the revised reporting standards. this is a challenge for both auditors and users of the report. by providing a report with more information, in an extended form, it increases its informative value, providing a better understanding of the auditor's position and its importance in the business environment. references iaasb (2017), handbook of international quality control, auditing, review, other assurance, and related services pronouncements, 2016-2017 edition, volume i, available at https://www.ifac.org/system/files/publications/files/2016-2017iaasb-handbook-volume-1.pdf https://www.ifac.org/system/files/publications/files/2016-2017-iaasb-handbook-volume-1.pdf https://www.ifac.org/system/files/publications/files/2016-2017-iaasb-handbook-volume-1.pdf botez 76 iaasb (2015a), the new auditor’s report: greater transparency into the financial statement audit, available at https://www.ifac.org/system/files/publications/files/reporting-on-afs-new%26-revised-stds-combined_1.pdf iaasb (2015b), auditor reporting – key audit matters, available at https://www.ifac.org/system/files/publications/files/auditor-reportingtoolkit-kam-overview.pdf iaasb (2015c), auditor reporting on going concern, available at https://www.ifac.org/system/files/publications/files/auditor-reportingtoolkit-going-concern.pdf iaasb (2016), the new auditor’s report: questions and answers, available at https://www.ifac.org/system/files/publications/files/the-new-auditorsreport-questions-and-answers_0.pdf https://www.ifac.org/system/files/publications/files/reporting-on-afs-new-%26-revised-stds-combined_1.pdf https://www.ifac.org/system/files/publications/files/reporting-on-afs-new-%26-revised-stds-combined_1.pdf https://www.ifac.org/system/files/publications/files/auditor-reporting-toolkit-kam-overview.pdf https://www.ifac.org/system/files/publications/files/auditor-reporting-toolkit-kam-overview.pdf https://www.ifac.org/system/files/publications/files/auditor-reporting-toolkit-going-concern.pdf https://www.ifac.org/system/files/publications/files/auditor-reporting-toolkit-going-concern.pdf https://www.ifac.org/system/files/publications/files/the-new-auditors-report-questions-and-answers_0.pdf https://www.ifac.org/system/files/publications/files/the-new-auditors-report-questions-and-answers_0.pdf (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 111 some evolutions of the romanian it market laura cătălina ţimiraş “vasile alecsandri” university of bacau timiras.laura@ub.ro abstract it market in romania registered a positive trend, estimations regarding the evolution for the next period indicating the same trend. this development was implicit in conjunction with the growing interest of population and organizations for getting the economic and social benefits offered by information technology, the expansion of the market and the increasing in the use it by organizations and population empowering reciprocally. in this context, the contribution of the industry of "information and communications" has increased in overall macroeconomic indicators and in the total employed population at the national level. keywords it market; internet; population jel classification m31 introduction "information and communication technology" (ict) is one of those sectors with huge development potential, this being evidenced by the statistics indicators, and in the same time constituting both development objective of national and european strategies and programs. thus, the "promotion of the 10 sectors of the future", identified as the economic sectors with the potential of smart development, is one of the priorities set out in national competitiveness strategy 2014 2020. among the 10 identified sectors is included the "information and communication technology ". as we stated earlier, ict support is a priority at european level. thus, under the eu cohesion policy for the period 2014 2020, drafted by the european commission, represents a necessity directing the investments towards four key areas for economic growth and jobs creation, here including the ict; achieving the strategic objectives assumes among other things: "continuing the transition to innovative uses of ict by businesses, citizens and public administrations, such as the provision of electronic services in health (ehealth), in the public sector (e-government), in smes (e-learning, e-business), coordination of resource efficiency in urban areas (smart cities) and preservation of cultural heritage through digitization, enhancing digital literacy, elearning, e-inclusion and related entrepreneurial e-skills ". contribution of "information and communications" branch in achieving macroeconomic indicators according to data for the period 2010-2014, in romania, the contribution of ict to macroeconomic indicators (gross added value to the national economy) grew from 4.9% to 6.6%. this increase occurred on a background of positive developments in some evolutions of the romanian it market 112 the total gross added value of all industries, the dynamics registered by "information and telecommunications" (+ 58.4% in 2014 compared to 2010), outpacing the average in the national economy (+ 17% in 2014 compared to 2010). (table 1 and fig. 1) table 1. gross added value in the total national economy and in the “information and communications” branch in the period 2010-2014 indicator 2010 2011 2012 2013 2014 gross value added total activities (mil. euro) 113249.3 116966.4 117125.1 127043.1 132553.8 gross value added “information and communication” activities (mil. euro) 5551.5 5573.4 5326.9 7126.0 8793.3 % gross value added from information and communication in total gross value added 4.9 4.8 4.5 5.6 6.6 source: taken and processed from eurostat figure 1. dynamics of total gross added value in the national economy and in the branch of "information and telecommunications" in the period 2010-2014 (% compared to 2010) source: taken and processed from eurostat evolution of employment in the sector "information and communications" similar to results indicators, the employment in the industry of "information and communication" has raised during 2010 2014 by over 20%, which contributed to the growth of this sector in total employment in romania (from 2% in 2010, to 2.3% in 2014). (table 2 and fig. 2) țimiraș 113 table 2. employees in total national economy and in the branch of "information and communications" in the period 2010-2014 indicator 2010 2011 2012 2013 2014 employees total activities (thousand) 5,643.8 5,690.6 5,726.3 5,737.2 5,841.3 employees "information and communication" activities (thousand) 111.1 115.7 131.2 132.0 135.0 % employees from information and communication in total employees 2.0 2.0 2.3 2.3 2.3 source: taken and processed from eurostat 101.5100.0 104.1 118.1 118.8 105 110 115 120 125 % c om pa re d to 2 01 0 figure 2. employees in total national economy and in the branch of "information and communications" in the period 2010-2014 source: taken and processed from eurostat sales development in the national it market based on information derived from a study conducted by gfk, sales of it equipment in recent years (2010 2014) had an upward trend, in annual average increase being about 8% (table 3) table 3. evolution of it equipment sales in the period 2008 -2014 year 2010 2011 2012 2013 2014 it equipment sales (mil. euro) 338 427 432 455 455 source: gfk some evolutions of the romanian it market 114 126.3 127.8 105 110 115 120 125 130 135 140 % fa co m pa re d to 2 01 0 figure 3. dynamics of it equipment sales in the period 2010-2014 (% compared to 2010) source: own computation from gfk production of it equipment fall within nace division "manufacture of computer, electronic and optical products". according to table 4 there is a decrease in recent years (for which we have official data) of the specific results of this division, which, in the context of increasing sales of it equipment, highlights the lack of local attractiveness and appropriateness of the activity (production of hardware) compared to other activities related (operating in the same nace division). table 4. evolution of turnover in the sector "manufacture of computer, electronic and optical products" in the period 2010 -2013 year 2010 2011 2012 2013 turnover (thousands lei) 12056543 11332789 7314076 6993454 source: results and performance of enterprises in industry and construction, in 2011, 2012, 2013, 2014, 2015, national statistics institute. figure 4. dynamics of turnover of the sector "manufacture of computer, electronic and optical products" in the period 2010-2014 (% compared to previous year) source: own processing after results and performance of enterprises in industry and construction, 2012, 2013, 2014, 2015, national institute of statistics regarding the software and it services market, its dynamic outpaced the growth recorded by sales of it equipment. thus, between 2011 2014, according to a study by pierre audoin consultants commissioned by the employers' association of the țimiraș 115 software and services industry, sales of software and it services grew by almost 50%. (table no. 5) estimates for the coming years, according to the same sources, indicate market growth up to 3782 mil. euro in 2018, which basically means an average annual increase of about 12%. table 5. sales development of software and it services in the period 2011 -2014 year 2011 2012 2013 2014 software and it services sales (mil. euro) 1644 1877 2152 2421 source: pierre audoin consultants figure 5. dynamics of sales of software and it services in the period 2011 -2014 (% compared to 2011) source: own computation after pierre audoin consultants the expansion of the it market can be highlighted based on both economic indicators presented above (gross added value and employment in the branch "information and communications", sales), and based on indicators confirming the access people and organizations to technology, implicitly reflecting the social dimension of the analyzed sector, highlighting the orientation of the entire society toward computerization. referring to the population's access to technology, according to data from eurostat, in 2014, 60% of the population of 16-74 years used the computer. although we are far below the european average (79% in eu), it is established that the indicator followed an upward trajectory, so that during the period from 2010 to 2014 there was an increase of over 30%. subscribing to the same trend, internet access of households in romania also increased, from 42% in 2010 to 61% in 2014. some evolutions of the romanian it market 116 figure 6. share of people who used the computer in the total population of 16-74 years in romania and the share of households with internet access in romania during 2010-2014 source: eurostat also, public expenditures for the purchase of equipment to process information and accessories rose by almost 70% over the past 4 years. figure 7. evolution of public expenditure for the purchase of computing equipment and accessories during 2011-2014 source: coordinates of living in romania. income and consumption, 2011-2014, ins * own processing based on average annual cpi from ins țimiraș 117 referring to organizations' access to technology, according to available data provided by eurostat, the proportion of organizations in romania (organizations with over 10 employees, excluding the financial sector) that have computer was in 2014 87% (in recent years the progress of the indicator being positive). in connection with the above indicator and recording the same trajectory, the share of enterprises (organizations with over 10 employees, excluding the financial sector) who had internet access in 2014 amounted 85%. relating to the eu average (97% of businesses had computers and as many had internet access in 2014) we see that romania is below the eu average in terms of the use of computer and internet access of the organizations. figure 8. share of enterprises in romania in all enterprises (with over 10 employees, excluding the financial sector) that have a computer and had access to the internet during 2010-2014 source: eurostat in conclusion, indicators that show it market developments in romania registered an upward trend, highlighting thus the expanding sectors of hardware, software and it services. market dynamics has been highlighted by sales trends, by the increased use of information technology by organizations and population, and by the increasing contribution of the branch of “information and communication" in achieving national macroeconomic indicators. references coordonate ale nivelului de trai în românia. veniturile şi consumul populaţiei, 2011, 2012, 2013, 2014, institutul naţional de statistică. rezultate şi performanţe ale întreprinderilor din industrie şi construcţii, 2011, 2012, 2013, 2014, 2015, institutul naţional de statistică. programului de guvernare 2013 – 2016. educaţie (http://www.edu.ro/index.php/articles/18774). http://www.edu.ro/index.php/articles/18774 some evolutions of the romanian it market 118 politica de coeziune a ue în perioada 2014 – 2020, comisia europeană (http://ec.europa.eu/regional_policy/sources/docgener/informat/2014/fiche_ict _ro.pdf). recomandarea 2006/962/ce a parlamentului european şi a consiliului din 18 decembrie 2006 (http://ecalificat.ro/uploads/files/productsitems/0/recomandare_a_par lamentului_european_si_a_consiliului_europei_privind_co mpetentele_cheie.pdf). românia strategia naţională pentru competitivitate 2014-2020, ministerul economiei (http://www.minind.ro). industria românească de software şi servicii it: 2.5 mld euro in 2014, 3.7 mld euro in 2018, blogul industriei software din românia (https://programatinromania.wordpress.com). studiu: industria de software şi servicii it a crescut cu 13% în 2014, ajungând la venituri de 2,42-mld. euro, asociaţia patronală a industriei de software şi servicii – anis (http://www.anis.ro). top 15 cele mai mari firme de soft, servicii şi soluţii de it după afacerile din 2014, ziarul financiar (www.zf.ro). vânzările de echipamente electro-it au trecut de 2 mld. euro pentru prima oară după 2008, ziarul financiar (www.zf.ro). eurostat, available at http://ec.europa.eu/eurostat/data/database. institutul naţional de statistică tempo-online, indicele preţurilor de consum (www.insse.ro). http://ec.europa.eu/regional_policy/sources/docgener/informat/2014/fiche_ict_ro.pdf http://ec.europa.eu/regional_policy/sources/docgener/informat/2014/fiche_ict_ro.pdf http://ecalificat.ro/uploads/files/productsitems/0/recomandare_a_parlamentului_european_si_a_consiliului_europei_privind_competentele_cheie.pdf http://ecalificat.ro/uploads/files/productsitems/0/recomandare_a_parlamentului_european_si_a_consiliului_europei_privind_competentele_cheie.pdf http://ecalificat.ro/uploads/files/productsitems/0/recomandare_a_parlamentului_european_si_a_consiliului_europei_privind_competentele_cheie.pdf http://www.minind.ro/ https://programatinromania.wordpress.com/2015/06/11/industria-romaneasca-de-software-si-servicii-it-2-5-mld-euro-in-2014-3-7-mld-euro-in-2018/ https://programatinromania.wordpress.com/2015/06/11/industria-romaneasca-de-software-si-servicii-it-2-5-mld-euro-in-2014-3-7-mld-euro-in-2018/ https://programatinromania.wordpress.com)/ http://www.anis.ro/ http://www.zf.ro/ http://www.zf.ro/ http://ec.europa.eu/eurostat/data/database http://www.insse.ro/ studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 54 towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe bronson mutanda manicaland state university of applied sciences, mutare, zimbabwe valemutanda@gmail.com maireva chrispen manicaland state university of applied sciences, mutare, zimbabwe chrispen.maireva@msuas.ac.zw abstract the advent of digital financial technology left the business community and its clients celebrating convenient ways of online shopping, paying bills and money transfers. however, digital banking technology came with its share of challenges, due to highly digitalised economies in the context of the fourth industrial revolution, cyber fraudsters are increasingly targeting and leveraging on financial market infrastructures. cyber security of banking institutions and the financial systems across the globe remains a major concern of central banks, investors, internal auditors and financial risk managers. the purpose of this research paper was to examine the efficacy of cyber fraud prevention measures used by commercial banks in zimbabwe. the study also looked into the difficulties encountered in managing cyber-fraud. results indicate that cyber fraud risk management strategies adopted by commercial banks are partly effective which indicates existence of opportunities for cyber fraudsters to attacks and get away with it at the expense of clients, banks and the financial system as a whole. results also indicate that commercial banks are facing quite a number of challenges which include the following: lack of sophisticated systems, cyber attackers are always ahead, some of the clients do not take awareness messages send to them seriously, some clients share passwords and credit cards and lack of enough education and knowhow of employees. the study therefore concludes that, cyber fraud risk management strategies adopted by commercial banks are partly effective. monetary and fiscal authorities need to continue monitoring commercial banks with regard to implementation of cyber security risk based supervision framework. keywords cyber fraud; commercial banks; management strategies; resilience; risk jel classification g2 1. introduction cyber fraud has emerged as a major issue in developing countries' financial systems and poses a danger to the global movement toward more inclusive financial sectors (usman and shah 2013; baur-yazbeck et al 2019). zimbabwe, a member of the global village, has over time adapted and moderately converted to a largely digital economy, primarily in the financial and retail sectors (reserve bank of zimbabwe 2021). this is unquestionably backed by the reserve bank's policy on employing digital financial services, and its success is attributable to teamwork, commitment, prudent risk management, and market innovation that continue to fuel the transformation in the digital financial system (reserve bank of zimbabwe 2021). zimbabwe's 2020 national risk assessment (nra) report, among other risks, notes the risk of cyber fraud, particularly through digital financial channels, contributes about us$900 million annually in illicit proceeds of crime. zakrzewski et al (2019) find that mutanda, chrispen 55 financial services companies are 300 times more likely to be targeted than others. this shows that successful criminal cyber fraud against financial sector firms can be particularly beneficial for cyber fraudsters. accounts, customer information, related transactions, and backup systems are digitized, and by doing so, cyber fraudsters take advantage (brenner, 2017). cyber fraudsters using sophisticated systems employ more aggressive pressure tactics and target more vulnerable targets, affecting utilities, financial services firms, retail stores, health care systems and data-rich companies (department of general australian government attorney general's office, 2013; broadhurst, 2006; clough, 2015; webster & drew, 2017; the global risks report 2022). according to shinder (2002), e-commerce, internet banking and related technologies have network connections and as banks expand the range of online services for customers, the risk of internet computer fraud (icf) increases. highprofile financially motivated frauds have been observed around the world with the growing patronage of digital banking services and their expected dominance in the near future (dzomira 2014; baur-yazbeck 2020). commercial banks in zimbabwe are adjusting to technological advancements around the world, but cyber fraudsters are also on the lookout (reserve bank of zimbabwe 2021, mugari, gono, maunga and chiyambira 2016). thus, the financial services ecosystem's requirement for cyber resilience and endpoint security cannot be overstated (reserve bank of zimbabwe 2021; carstens 2019; coeure 2019). due to zimbabwe's current liquidity crisis, more people are utilizing services like payment cards and the real time gross settlement system (rtgs) (mugari, 2016). due to these new payment methods, financial institutions are now more vulnerable to dangers like e-card fraud and fraudulent rtgs transfers (mugari, 2016). significantly, authorities and other stakeholders are becoming increasingly concerned about the sophistication, cyber fraud frequency and cyber fraud as they pose a threat to undo the progress made thus far (reserve bank of zimbabwe 2021). following these developments, the reserve bank of zimbabwe encouraged the adoption of cyber risk management methods in the banking industry. to lessen the danger of cyber fraud and all types of cyber-attacks, the reserve bank of zimbabwe has suggested a variety of procedures under risk-based cyber risk management (reserve bank of zimbabwe 2021). this study sought to determine the efficacy of commercial banks' strategies for reducing their exposure to cyber fraud risk as well as the difficulties they encounter in doing so. 2. literature review 2.1. types of cyber fraud 2.1.1. phishing roger (2008) defines phishing as attacks on the accounts of individuals or organizations in order to obtain private information to be used for fraudulent purposes. europol (2014) described it as fraud against businesses and financial institutions by stealing customer identification data. phishing is also called identity fraud (united nations office on drugs and crime, 2010). sarannia & padma (2014) defined identity theft as the theft of private and confidential information for fraudulent use without acknowledgment of the owner. they went further and identified three types of phishing, namely spear, cloning and whaling (saranni and padma, 2014; dubey and manna, 2014, chandhary, 2014). in line with the above, kpmg (2012) highlighted that phishing is the most common type of identity theft. boateng and amanor (2014) identified vishing and smishing as types of phishing. towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 56 2.1.2. hacking padgett (2007) cited in hedayati (2012) defined hacking as the illegal access to systems or databases to obtain personal or organizational private and confidential information. the availability of personal information online has made it easier for criminals to steal from businesses and individuals (magutu et al, 2011). bawane and stelke (2014) listed hacking techniques such as denial of service, spoofing, sniffing, viruses and worms, key-loggers, social engineering, and fake messages. 2.1.3. card fraud identity theft and credit/debit card fraud are two types of cyber fraud that are frequently used interchangeably. this entails pretending to be someone else and stealing their identity, their name, social security number (sin), credit card number, or other identifying details, in order to engage in criminal activity. it involves the unauthorized collection of credit and debit card magnetic stripes and pins (dubey et al 2015). card fraud can happen at any bank atm or via a compromised eftpos device (dubey et al 2015). the card information and pin will be encoded into a phony card by online scammers, who then use the card to make fraudulent withdrawals and purchases. 2.1.4. advance fee scams these cyber scams are usually done through a letter, email or phone call offering a large sum of money if you can help someone transfer millions of dollars or other currency out of their country. to initiate the transaction, you are asked to send your bank account details and an administration fee. these bank details are then used fraudulently by cyber fraudsters. 2.1.5. salami attacks: the key is to keep the alterations subtle enough that they are overlooked in some cases (kante 2017). for instance, a bank employee could install a program on the bank's servers that automatically deducts a tiny sum of money from each customer's account (let's say us$0.5 every month) (kante 2017). this illicit debit will likely go unnoticed by the account user, but the bank employee will be paid significantly more each month as a result (kante 2017). 2.2. cyber fraud risk management cyber fraud risk identification, cyber fraud risk assessment, cyber fraud risk measurement, cyber fraud risk mitigation/risk management, and cyber fraud risk understanding are all essential components of managing cyber fraud risk, just like managing any other financial risk. the risk management approach for cyber fraud is depicted in figure 1 below. by removing threats, managing effects and lowering vulnerabilities, effective cyber fraud risk management lowers the likelihood of severe negative effects on a company (reserve bank of zimbabwe 2021). risk management for cyber fraud must be continual and proactive, requiring control over both the technology itself and the people and systems that use and support it (reserve bank of zimbabwe 2021). due to the constantly shifting risk environment, the procedure must be dynamic (reserve bank of zimbabwe, 2021). mutanda, chrispen 57 fig 1. financial risk management process source: oesterreichische national bank (oenb) in cooperation with the financial market authority (fma) (december 2004) 2.2.1. cyber fraud risk identification the proper assessment of cyber fraud risk centres on identifying and comprehending current hazards as well as potential new business venture threats (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). cyber fraud risk assessment should be ongoing and take place at both the micro (transaction) and macro (whole portfolio) levels (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). 2.2.2. cyber fraud risk assessment to thoroughly assess the efficacy of cyber fraud risk management measures, it may be helpful to walk through the relevant procedure or activity and assess how well the controls are currently performing. the organization must evaluate itself while assessing the risk of cybercrime (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). self-evaluation can take the form of a qualitative risk assessment utilizing internal data and expert judgment, and, to a lesser extent, quantitative models (european insurance and occupational pensions authority 2019). 2.2.3. cyber fraud risk measurement the capacity to measure cyber fraud threats is necessary for effective risk management. a banking organization must accurately and promptly measure its risks in relation to the possibility of negative consequences on its earnings, capital, and corporate goals (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). the institution's and the level of risk's complexity should be reflected in the complexity of the risk measuring tools (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 58 2.2.4. cyber fraud risk treatment the risk management procedure for cyber fraud starts when the risk assessment is finished. using policies, standards, and processes that outline roles and authorities, a banking organization must set and convey control limitations (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). whether residual risk is at an acceptable level or whether treatment is necessary depends on an organization's risk assessment and risk appetite (reserve bank of zimbabwe 2006, reserve bank of zimbabwe 2021). treatment options for the risk may include enhancing current controls, putting in place new controls, or stopping the activity, program, or service altogether. 2.3. the fraud triangle theory in 1953, cressey decided to pursue a doctorate in criminology and focused his thesis on organizational funds embezzlement. cressey interviewed 200 people to understand more about embezzlement, which sparked the creation of this concept. "trusted people become trust breakers when they believe they have a financial issue that cannot be resolved openly, realize that this issue can be secretly resolved by breaching a position of financial trust, and can apply to their behavior in this situation a verbalization that allows them to adjust their representations of themselves as trustees with their representations of themselves as users of trust funds or property," was the formulation of the theory (cressey, 1973). the hypothesis he created throughout his study was more widely known as the fraud triangle. one leg of the triangle represents motivation, the second leg represents opportunity, and the last leg represents rationalization (mohottige, sujeewa, shukri, yajid, khatibi, azam and dharmaratne 2018). fig 2. fraud triangle model source: oag adapted from other people’s money (2009) the most commonly used model to understand the causes of fraud is through the application of the fraud triangle. the fraud triangle explains that fraud is driven by three forces: motivation, rationalization, and opportunity. mutanda, chrispen 59 2.3.1. motivation in simple terms, motivation is usually based on greed or need. many people face the opportunity to commit fraud, and only a minority of the greedy and needy do (mohottige et al 2018). personality and temperament, including how fearful people are of the consequences of risk, play a role (abdullahi, mansor and nuhu 2015). some people with good objective principles may fall into bad company and develop a taste for the fast life, which tempts them to commit fraud (abdullahi, mansor and nuhu 2015). 2.3.2. opportunity in terms of opportunities, fraud is most prevalent in companies with weak internal control systems, poor security of company assets, little fear of exposure and likelihood of detection, or unclear policies regarding acceptable behavior (mohottige et al 2018). research has shown that some employees are completely honest, some are completely dishonest, but many are driven by opportunity (dharmaratne et al 2018). 2.3.3. rationalisation the third and final factor in the fraud triangle is rationalization. cressey noted that rationalization is not an ex post facto means of justifying a theft that has already occurred. it should be noted that rationalization is a necessary component of a crime prior to its commission; in fact, it is part of the motivation for the crime (dharmaratne et al 2018; mohottige et al 2018). since the treasure thief does not consider himself a criminal, he must justify his wrongdoings before committing them. rationalization is necessary so that the offender can make sense of his wrongful behavior and maintain his self-image as a trustworthy person (mohottige et al 2018). 2.4. empirical review of literature aldasoro et al(2020b)'s study uses advisen's unique dataset of more than 100,000 cyber incidents to explore the drivers of cyber costs across sectors. the cost of cyber incidents is generally greater for larger firms, but this effect is smaller for the financial sector (the first two columns in the fourth panel show the relationship between cyber cost and firm size) (aldasoro et al. 2020b). cyber incidents can be interconnected, that is, one incident can affect several organizations at the same time (aldasoro et 2020b). the higher this connection, the higher the cost, especially for financial firms (third and fourth columns in the fourth panel (aldasoro et al. 2020b). according to some estimates by bouveret (2018), based on data collected from media and newspaper articles in the period 2009 -17 years in singapore, the cost of risk for the entire banking sector, including the contagion effect, could be 14-19% of the banks' total net profit. in a study conducted by raghavan & parthiban (2014) to examine how cyber fraud affects an organization's finances, they discovered that there are many different types of electronic fraud in the banking industry, including atm fraud, cyber money laundering, credit card fraud and that the main objective of all scams is to gain access to a user's bank account. according to dzomira (2014), there are two types of e-fraud: direct fraud (such as money laundering, salami technology, and employee embezzlement) and indirect fraud (eg malware, phishing, identity theft, etc.). in a study on the development of credit card fraud defenses in the usa, uk, australia, and indonesia, prabowo (2011) discovered that a frequent method to credit card fraud prevention reduces the opportunities for offenders to commit their crimes, which are often resource-intensive and thus therefore, a smart strategy must be properly formulated and executed. previous studies have failed to investigate the effectiveness of cyber fraud risk management strategies, something this study sets out to address. towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 60 3. methodology 3.1. sample a random sample of 50 officers and managers from the it department, operations department, risk management department and senior managers were chosen for responding to questionnaires while 5 officers from across the departments were considered for interviews. 3.2. instruments the tools for collecting data from the respondents were questionnaires and interviews. the questionnaire was developed on the basis of data from bank managers and tested before being used for the survey. the questionnaire was divided into two subsections to make it easier for participants to answer. the first section focused on the demographic information of the respondents, including; age, gender, years of experience in banking and the position they held in their organizations. the second section aimed to obtain information on the effectiveness of cyber fraud risk management strategies in a banking organization as well as the challenges faced. to verify the reliability of the questionnaires, a pilot study was conducted. 3.3. data collection and analysis this study used a combination of qualitative and quantitative research design. data collection was done through a survey during which the researcher distributed questionnaires to the bank reception for further submission to the relevant departments. the researcher also selected 5 employees from it department, risk management department, operations department and audit department of 5 commercial banks for interview. data analysis was performed using spss version 23, descriptive and inferential statistics were used. 4. results from table 4.1 below, 33 respondents were males while 15 were females. although 50 questionnaires were given out, only 48 bank employees responded which implies a 96% response rate. table 4.1. cross tabulation of gender and experience experience total 0-5 years 6-10 years 11-15 years 16-20 years more than 20 years gender male 6 7 9 6 5 33 female 1 7 4 3 0 15 total 7 14 13 9 5 48 mutanda, chrispen 61 table 4.1 above shows that 6 male respondents had 0-5 years of work experience, 7 men had 6-10 years of work experience, 9 men had 11-15 years of work experience, 6 men had 16 to 20 years of work experience and 5 men with more than 20 years of experience. in addition, table 4.1 shows that one female respondent had experience of 0-5 years, 7 6-10 years, 4 women 11-15 years, and 3 16-20 years. years. more men (33) were interviewed than women (15). 4.1. frequently reported cyber frauds fig. 3: types of cyber fraud risks reported in commercial banks in zimbabwe from the bar graph above, 72.9% (35) of the respondents indicated that card cloning/ card fraud is the most frequently reported cyber fraud risk in commercial banks of zimbabwe, 10.4% (5) of the respondents cited phishing as the most frequently experienced cyber fraud, 6.3% (3) cited salami attack as the most frequently reported cyber fraud risk while 4.2% (2) and 6.3% (3) cited hacking and advance fee scams as most frequently reported cyber fraud risks respectively. from the interviews carried out, respondent 2 said: “despite several attempts by the bank to warn customers, card cloning cases are on the rise, and victims are being unknowingly plundered of their hard-earned money. several victims of these online fraudsters misplaced their credit cards or gave up their card information in retail establishments. it is unfortunate to learn that some online scammers record video of transactions made by customers at pos terminals. cybercriminals will later utilize these films to conduct unauthorized transactions.”. the above response unveils tricks and strategies being employed by cyber fraudsters to steal from commercial bank clients. having identified these strategies, commercial banks need to continue encouraging their clients never to expose card numbers and secret codes even during the process of transacting in retail shops. 4.2. cyber fraud prevention strategies all respondents indicated that commercial banks have crafted cyber fraud prevention strategies which include inter-alia the following: intrusion detection and prevention systems, thorough vetting of new employees, keeping software and devices up to date, antivirus and antimalware protection software, use of different and unique passwords for all accounts, setting up of a whistle-blower hotline, training and education of employees on preventing and controlling risk, use of multi-factor authentication technology, alerting clients about cyber fraud through sms, firewalls and role-based 35 5 3 2 3 0 5 10 15 20 25 30 35 40 card cloning/ card fraud phishing salami attacks hacking advance fee scams frequencyt yp e o f cy be r fr a u d towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 62 access of bank systems. all respondents cited that these are some of the strategies put in place by commercial banks to prevent cyber fraud within commercial banks. 4.3. management of cyber fraud risk in the organisation fig 4 below indicate perception of respondents concerning management of cyber fraud risks in the organisation. these responses come after a question was included in the questionnaire in-order to investigate perception of the workforce concerning cyber fraud risk management. the way risks are managed within an organisation determines whether an organisation will win or not. cyber resilience requires all hands on the deck, it demands a holistic approach to risk management. fig. 4: perception of respondents concerning management of cyber fraud risk the chart above represents perception of respondents concerning cyber fraud risk management in the bank. 35.4% of the respondents indicated that they disagree to the holistic approach of cyber fraud risk management, 29.2% of the respondents indicated that they strongly agree to the holistic approach of cyber risk management, 12.5% of the respondent strongly agree that cyber fraud risk management is the duty of everyone within the organisation, 10.4% are not sure and 12.4% agree that cyber risk management is the duty of everyone in the organisation. from the interviews carried out, respondent 5 said: “the risk management division and the it division are solely responsible for controlling cyber fraud threats, rather than assigning this obligation to every employee in the bank. they must implement procedures robust enough to safeguard customers and the bank as a whole.”. this perception by some respondents is a clear testimony that in some organisations, cyber fraud risk management is being left out to the it and risk management department. there is need for such organisations to adopt a holistic approach whereby everyone in the bank is involved in the fight against cyber fraud risks. table 4.2 responses showing the effectiveness of cyber fraud prevention strategies frequency percent valid percent cumulative percent 12,5% 12,5% 10,4% 35,4% 29,2% strongly agree agree not sure disagree strongly disagree mutanda, chrispen 63 valid very effective 6 12.5 12.5 12.5 partly effective 40 83.3 83.3 95.8 neutral 2 4.2 4.2 100.0 ineffective 0 0 0 very ineffective 0 0 0 total 48 100.0 100.0 the effectiveness of commercial banks' cyber fraud prevention techniques was investigated using a 5-point likert scale. according to table 4.2, 12.5% of respondents said the adopted cyber fraud prevention techniques are effective, 83.3% said the strategies are only somewhat effective, and 4.2% said they had no opinion on the topic. respondent 1 stated: “because of the complexity of the systems utilized by fraudsters, it is very difficult to be certain of the efficiency of cyber fraud control techniques. they constantly innovate new ways to hack our systems and are one step ahead of us. what we can only conclude is that our strategies are only partially successful.”. information from respondents reveal that strategies adopted by commercial banks in order to mitigate against cyber fraud incidences are not hundred percent effective. cyber fraudsters always invent ways of attacking and getting away with it. table 4.3 influence of gender, experience and level of education on rating of cyber fraud risk management strategies a test was carried out in order to determine if education level, gender and level of education have an effect on the way employees rate cyber fraud risk management strategies. findings in table 4.3 show that employees' opinions of cyber fraud management strategies are not significantly influenced by their gender. gender beta was discovered to be ß = -0.379, t (48) = -2.826, and p=0.125> 0.05. in this regard, it is evident that gender has no bearing on how risk management solutions for cyber fraud are rated. further analysis reveals that education ß=-0.134, t (48) = -1.899, p=0.0040.05, experience ß=-0.155, t (48) = -1.193, and experience ß=-0.134, respectively. this suggests that the workforce's perceptions of the efficacy of cyber fraud risk management techniques are highly influenced by their level of education and work experience. in order to check the significance of the model, anova parameters were used and the information is shown in the table 4.4 below. model unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) 2.722 .222 12.283 .000 experience -.052 .043 -.155 -1.193 .002 gender -.327 .116 -.379 -2.826 .125 highest level of education -.134 .070 -.253 -1.899 .004 towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 64 table 4.4 anova table showing the significance of the regression model anovaa model sum of squares df mean square f sig. regression 2.048 3 .683 5.346 .003b residual 5.619 44 .128 total 7.667 47 a. dependent variable: how do you rate cyber fraud risk mitigation strategies in your organisation? b. predictors: (constant), highest level of education, experience, gender f (3; 48) = 5.346, p=0.003–0.05, which shows that the regression model is significant. to put it another way, the regression model effectively explains how the workforce perceives the usefulness of cyber fraud risk management measures. findings reveal that evaluation of the efficacy of cyber fraud risk management is influenced by the worker's level of education and experience. these findings show that one's degree of education and experience have a significant impact on how people perceive the value and capability of cyber fraud risk management measures. table 4.5 responses showing the effectiveness of cyber fraud detection systems frequency percent valid percent cumulative percent valid very effective 3 6.1 6.3 6.3 partly effective 37 75.5 77.1 83.3 neutral 7 14.3 14.6 97.9 ineffective 1 2.0 2.1 100.0 total 48 98.0 100.0 total 49 100.0 answers to the questions of whether commercial banks have cyber fraud detection systems and how successful these systems are shown in table 4.5. above. according to 6.1% of respondents cyber fraud detection systems are effective, 75.5% of respondents said they are partially effective, 14.3% of respondents said they were neutral, and 2% said they are ineffective. based on the interviews, respondent 3 stated: “of course we have systems in place to deal with cyber fraud but systems meant to detect cyber frauds are limited. investments are being made towards installation of more advanced computer systems meant to ring fence our servers. however, cyber fraudsters are not novice in as far as computer systems is concerned, they will always find ways of circumventing our detection systems”. it is clear from the above statement that commercial banks still struggle with cyber fraud despite having detection systems. cybercriminals spend more money on highly mutanda, chrispen 65 developed and advanced systems that can get beyond software that can detect them. additionally, data show that commercial banks' detection systems are constrained and unable to catch every effort made by cybercriminals. table 4.6 challenges faced by commercial banks in fighting cyber fraud challenges frequency percent valid percent cumulative percent valid lack of sophisticated systems 7 14.6 14.6 14.6 cyber fraudsters are always ahead 21 43.8 43.8 58.3 some clients do not take sms send to them seriously 7 14.6 14.6 72.9 clients are always sharing passwords and cards 6 12.5 12.5 85.4 some cyber fraudsters are former employees 3 6.3 6.3 91.7 lack of enough education and knowhow of employees 4 8.3 8.3 100.0 total 48 100.0 100.0 table 4.6 above represents challenges faced by commercial banks in their quest to manage and mitigate cyber fraud risks. from the information on the table, 43.8% of the respondents indicated that the greatest challenge is the level of swiftness with which cyber fraudsters are advancing in technology. other challenges include, lack of sophisticated systems and software to ring fence commercial bank systems, 14.6% of the respondents cited that they lack sophisticated systems to deal with cyber fraudsters, on the same note, respondents cited that clients are not taking warning messages sent to them seriously and by so doing, they expose themselves to cyber fraudsters. the other challenge cited by 6.3% of respondents is that clients share passwords and by so doing give room to cyber-attacks. 8.3% of the respondents indicated that there is information deficiency on its manpower which can only be closed by training and development. 6.3% of the respondents cited that, cyber fraudsters are former employees who take advantage of their knowledge of bank systems to attack and get away with organisational money. 5. discussion of research findings the study carried out revealed almost three important themes which are: cyber fraud risk management strategies adopted by commercial banks are partly effective, the towards a cyber resilient banking system: effectiveness of cyber fraud risk management strategies adopted by commercial banks in zimbabwe 66 greatest challenge faced by commercial banks in their quest to manage cyber fraud is the pace at which cyber fraudsters are moving. the last observation from the study is that card cloning is the greatest form of cyber fraud experienced by commercial banks in zimbabwe. 5.1. commonly reported cyber fraud although commercial banks are subject to other types of cyber fraud, statistics indicate that card cloning/card fraud is the most frequently reported. commercial banks must create measures to improve the security of credit/debit cards in light of this knowledge. without investment in credit/debit card securitization, cyber resilience will only ever be a pipe dream. if businesses want to safeguard their customers from online fraud, they must make significant investments in credit card security. also, banks must constantly inform their customers on the tactics employed by cyber fraudsters. commercial banks should use walk-in customers as an opportunity to inform them about cyberattacks and how to defend against them. some customers unknowingly reveal their card details and secret codes to cyber fraudsters increasing chances of attacks. 5.2. effectiveness of cyber fraud risk management strategies the study's findings show that cyber fraud risk management strategies adopted by commercial banks are effective in part because of how sophisticated fraudsters are. given this information, commercial banks need to create a research and development department dedicated to obtaining the latest developments in the protection of banking systems. this opinion is in line with the recommendations of duby and manna (2014) who state that all banks should have a dedicated anti-fraud department, its role is to monitor, investigate, report and raise awareness. research and development should invest in obtaining the latest information on how cybercriminals attack systems so that mitigation strategies can be developed. commercial banks are also encouraged to invest in the latest technologies and systems in tandem with the development of the world and which are also ready to repel the attacks of cyber-attacks. findings also point to the need for banks to invest more in training and developing workforce so that everyone in the organization is aware of the need to combat cyber fraud. this is in line with dubi and manna (2014) who state that banks should inform and train employees about different types of fraud and how to detect them. mwabu's (2013) research in kenya revealed that another factor that affects e-fraud in the banking sector is the customer's level of e-fraud awareness. research findings show that cyber fraud in the banking industry thrives on customer ignorance, so fraudsters steal using card cloning, phishing (fake emails and/or fake websites), identity theft, password or pin disclosure, trojan horses (embedded computer virus). in line with this, adeyemi (2010) observed that criminals obtain customer account credentials, that is login name and password, using various schemes. a "look over the shoulder" scheme occurs when a customer carries out financial transactions while under the supervision of a criminal (mwabu 2013). a large number of cases have been reported where criminals obtained access data to customer accounts simply by observing customers at a public internet access point (mwabu 2013). cyber fraud risk management cannot be left to the risk management department. if commercial banks are to be resilient to cyber challenges, a holistic approach is needed. 5.3. challenges faced in the fight against cyber fraud risks the development and complexity of cybercriminals was named as the biggest difficulty in the fight against cybercriminals by a lot of respondents. to increase their effectiveness and reach, cybercriminals work together in organized or loosely connected cybercrime syndicates, using sophisticated software tools, social mutanda, chrispen 67 engineering, and psychological approaches (broadhurst, 2006; ionescu et al., 2011). commercial banks should increase their investments in modernizing and updating their systems in light of this. systems that are not modernized and upgraded will develop flaws that cybercriminals can exploit. to protect depositors' money from online scammers, highly advanced technology must be purchased. if banks are to be cyberresilient, they must invest in multi-factor authentication technologies, intrusion detection and prevention systems, antivirus, and antimalware security software. according to dubey and manna (2014), banks should work to increase customer and staff knowledge of fraud. the foundation of fraud management is having an understanding of how to avoid and detect scams. banks must implement a variety of strategies to raise customer and employee knowledge (dubey and manna 2014). also, it is crucial for commercial banks to think about educating their customers so that they won't be caught off guard. to prevent customers from disclosing their card information and secret codes to others, commercial banks may want to consider handing out booklets to all walk-in customers. dzomira (2015) also mentioned the necessity of awareness campaigns in order to build cyber resilience. the most effective strategy for preventing electronic or cyber fraud is customer awareness and education (dzomira 2015). various parties involved in the financial services sector, including the government, corporations, consumer advocacy groups, and financial guardians, must improve their commitment to working together to provide client education and awareness (dzomira 2015). education is needed to inform clients of these advances because card cloning has been identified as the most often reported cyber fraud risk. the bank systems must be set up to automatically log out any employees who leave the company, and role-based log in procedures must be implemented. to improve cyber resilience, the banking sector must make significant investments. conclusion findings of the study reveal the following three things: cyber fraud risk management strategies by commercial banks are not very effective but partly effective. the research also concludes that the greatest challenge faced by commercial banks in their endeavour to fight against cyber fraud is the rate at which cyber fraudsters are innovating strategies and tactics to attack. lastly, the study concludes that card cloning is the most frequently reported cyber fraud risk. given these conclusions, the researcher encourages commercial bank managers and the regulatory authorities to invest more in sophisticated and modern systems and technology so as to enhance cyber resilience. the researcher encourages bank managers to consider cyber fraud risk management as the responsibility of everyone in the organisation rather than leaving it to the it and risk management department. training and development of the workforce need to be prioritised, commercial banks need to allow their workforce to go for forensic 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(2019). “global wealth 2019: reigniting radical growth”, boston consulting group, 20 june. microsoft word apostoaie constantin marius_eng.doc reading the new standard isa700 daniel botez, university “vasile alecsandri "bacau, romania abstract : review of permanent professional standards is a requirement for professional bodies of professional accountants, resulting in broader processes of globalization and harmonization. a set of revised standards on financial audit engagement was published by ifac in april 2009. international standard on auditing (isa) 700 "forming an opinion and reporting on financial statements” is one of them. this standard deals with the auditor's responsibility to form an opinion on the financial statements and determine the form and content of the auditor's report issued following an audit of financial statements. even if you do not have major changes, the revised standard contains several provisions that emphasize the important role of the auditor's report and more specifically defines its responsibility. keywords: international auditing standards, audit report isa700 jel code : m42 introduction in april 2009, ifac (international federation of professional accountants) published a set of international standards on auditing (isas) revised. it's about standards relating to financial statement audit engagement. one of the main points of the revision process is the formulation of these standards by reference to a standard structure which includes the following: • introduction it is presented the scope of standard and revealing at the same time, the need for it, and on the standard takes effect; • objective auditor general objective is to obtain sufficient appropriate evidence about the scope of the standard; • definitions they have to assign appropriate meanings of terms used, in application of international standards • audit requirements include rule, audit procedures the auditor should apply to achieve the objective standard, and how to issue and reporting their findings; • application and other explanatory material the auditing procedures and to issue findings and are detailed for the purposes of reporting to the auditor of additional references and the insertion of annexes, where appropriate, containing reporting templates and other information. one of the key standards, which sets the reference coordinates reporting of audit opinion mission is international standard on auditing 700. called up in 2009 "independent auditor's report on a full set of general purpose financial statements, the revised standard is called "forming an opinion and reporting on financial statements”. having knowledge of its provisions, the auditor found some new elements which establish a more rigorous delineation of its area. the purpose of this study is to highlight these new elements contained in the revised standard. studies and scientific researches economic edition, no. 15, 2010 18 why a new standard 700? first, there is talk of forming an opinion on the auditor's responsibility. the auditor's report is the interface through which the conclusions of its work are made available to users. opinions stated in the report summarizes, on a qualitative level, all personal valences from the auditor's professionalism, experience, ability to collect and interpret evidence. furthermore, the report needs to show consistency, qualitative aspect with reference to auditing standards global markets induces credibility, and helps users understand the report and identify unusual circumstances. new standard form of auditor’s objectives emphasizes the audit report. they are: a) to form an opinion on the financial statements based on an assessment of the conclusions drawn from audit evidence obtained, and b) clearly express an opinion by the inclusion in the report to describe the basis of this opinion. one of the new issues presented relate to the identification of the financial reporting framework. the previous version of the standard reference was "applicable financial framework" or "acceptable financial framework, both leading to the requirement of fair presentation. the revised version, the appearance varies in terms of conceptual definitions are included to guide the identification of this framework. thus, the applicable financial reporting is defined as the financial reporting framework adopted by management and where appropriate, by those charged with governance in the financial statements, which is acceptable in terms of the nature and objectives of the entity financial statements, or required by law or regulation. further defined two references to financial reporting framework. the term "fair presentation framework is used to refer to a financial reporting framework that requires compliance with the framework and: (1) explicitly or implicitly recognizes that to achieve a fair presentation of financial statements would might be necessary leadership to provide presentations which exceed those required specifically by the reporting, or (2) explicitly acknowledged that it might be necessary for management to deviate from a provision of the framework general to obtain a fair presentation of financial statements. such deviations are expected to be needed only in extremely rare situations. the term "compliance framework" is used to refer to a financial reporting framework that requires compliance with the compliance framework, but no recognition of (1) and (2) above. the formation of opinions on financial statements, the auditor should determine whether obtaining a reasonable assurance whether the financial statements of material misstatement due to fraud or error. to obtain reasonable assurance, whether the auditor has obtained sufficient evidence and relevant. this relates to the requirements of isa 330 "auditor response to assessed risks”. a new aspect concerns the auditor's conclusions about the significance of identified misstatements. these conclusions relate to the requirements of isa 450 "misstatements identified during the audit assessment”. is a new standard dealing with the auditor's responsibility to evaluate the effect of identified misstatements on the audit and of uncorrected misstatements on the financial statements. the auditor also should assess whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting. same evaluation includes consideration of qualitative aspects of the entity's accounting practices, including evidence of a preconceived attitudes in management's reasoning. furthermore, the auditor should evaluate whether, in view of the applicable financial reporting framework: ; studies and scientific researches economic edition, no. 15, 2010 19 accounting policies selected and applied are consistent with the applicable financial reporting and appropriate; accounting estimates issued management are reasonable formation presented in financial statements is relevant, reliable, comparable and understandable; significant transactions and events on the information provided in the financial statements and terminology used financial statements, including the title of each component is appropriate. text in bold above represent assessment requirements introduced by the revised standard. in principle, financial reporting frameworks that present financial statements are prepared and presented in public are fair presentation frameworks. in these circumstances, the auditor requested evaluations should include assessing whether the financial statements contain a fair review, evaluation includes consideration of: manner that ensures fair presentation. as a direct consequence of applying international standards on auditing, the auditor should express an opinion unconditional (unchanged, without reservation) when it concluded that financial statements are prepared, in material respects, in accordance with the applicable financial reporting. on the other hand, if the auditor concludes that based on evidence gathered, the financial statements present misstatement or is unable to obtain sufficient appropriate evidence, it changes the view in accordance with isa 705 "modifications of the independent auditor's opinion report. if a financial statement prepared in accordance with a fair presentation framework does not achieve a fair presentation, the auditor should discuss with the management entity and, according to the requirements of the applicable and how the issue is resolved, whether it is necessary to change the view. if financial statements prepared in accordance with a fair presentation framework does not achieve a fair presentation, the auditor should discuss with the management entity and, according to the requirements of the applicable and how the issue is resolved, whether it is necessary to change the view. regarding components auditor's report, there is no new aspects. it must contain at least the following: auditor's report should have a title which clearly indicates that an independent auditor's report destination the report be addressed in accordance with the circumstances of the engagement introductory paragraph which include: identification entity whose financial statements are audited statement that audited financial statements are the identification of each component of the reference set of financial statements in summary significant accounting policies and other explanatory information the date and period of each component of the financial statements responsible for preparing financial statements. the auditor's report must cover not management, but must use the most appropriate term. the report must describe the management responsibility for financial statements, including responsibility for drawing them in accordance with the applicable financial reporting and internal control organization necessary to ensure that financial statements are free of material misstatement due to fraud or error. studies and scientific researches economic edition, no. 15, 2010 20 the report should state that the auditor's responsibility is to issue an opinion on the financial statements based on audit, it was carried out in accordance with isas and explain that these standards require the auditor comply with ethical requirements, and and plan and perform the audit to obtain reasonable assurance that financial statements are free of material misstatement. the report should indicate whether the auditor believes that the evidence obtained is sufficient and adequate to provide a basis for opinion. an opinion you express unconditional (unchanged, no reservations) on the financial statements prepared in accordance with a framework for fair presentation, the view should use one of the forms: financial statements present fairly (fairly) in all material respects ........, under ...........( framework) financial statements give (have) a fairly ............. ............... .. under (the) when expressing an unmodified opinion on financial statements prepared by reference to a framework of compliance, the auditor should express the view that financial statements were prepared in all material respects, in accordance with ....( the). if this framework is ifrs or ipsas, the auditor's opinion should identify the jurisdiction of origin of that frame. whether auditor reporting responsibilities include other, additional responsibilities under the isas, it will include a separate section entitled "report on other legal or regulatory requirements. if the report contains such a section, then report title will be "report on financial statements. report must be signed report not be dated before the date on which the auditor has obtained sufficient appropriate audit evidence to underpin the view, and all components of the financial statements have been prepared and those with recognized authority and assumed responsibility for those statements. the report must show the name of the location of the jurisdiction where the auditor practices. it introduces provisions on auditor behavior then you must use a specific type of report. if the auditor is required by law or regulatory requirements specific to certain jurisdictions, to use a specific format of the report, the report may refer to isas only if it includes at least the elements described above. if the auditor should apply the specific auditing standards other than isas, it may refer to isas in addition to national standards only if there is any conflict between the requirements of national standards and isas, which lead to the auditor to form a different opinion or not to include an emphasis paragraph if required by isas, and the auditor's report includes the minimum set of isa elements 700. if additional information not required for financial reporting framework, are presented together with the audited financial statements, the auditor should identify where such information is clearly differentiated from the audited financial statements. if they are not clearly differentiated, the auditor should request a change in how the additional information are unaudited. if management refuses, the auditor should explain in the report that the information is not audited. conclusion the set of standards issued by ifac in april 2009 set a reference date for financial statement audit engagement. in this reference, how the auditor shall provide reasonable information published stakeholder’s entity is essential for understanding of these financial statements. isa 700 contains references absolutely necessary for the auditor to successfully complete his professional approach. studies and scientific researches economic edition, no. 15, 2010 21 bibliography 1. ifac cafr, handbook of international auditing standards and quality control, financial audit 2009 irecson publishing, bucharest, 2009 2. www.ifac.org / isa 700 studies and scientific researches economic edition, no. 15, 2010 22 similarities and disparities between romanian individual and consolidated financial group statements florentin emil tanasă phd student, doctoral school of economics, ”alexandru ioan cuza” university of iași e-mail: tanasa.floretinemil@yahoo.com doina prodan (căs. palade) phd student, doctoral school of economics, ”alexandru ioan cuza” university of iași e-mail: doina_palade@yahoo.com abstract: the purpose of this study is to identify, analyse and assess the main connections and implications of consolidated accounts on enterprise economy. appearance of consolidated financial statements is intrinsically linked to certain concepts, such as group, control, the perimeter of consolidation, percentages of interests, methods of consolidation, or restatements. for a more complete view regarding consolidated annual accounts, it is necessary to delimit and define these particular elements. this approach targets the presentation of our vision over positioning, place and function of financial consolidated statements in the process of the financial report. the study envisages a summary and comparison of ideas found on this subject in thespecialty literature, the regulations developed by various international bodies. thus, we think it will facilitate the correct positioning of the consolidated financial statements and the consolidated accounts’ concepts. to achieve the proposed desiderates, we have used a constructive methodology for identifying disagreements, approvals and development of a speech to more efficient and effective management of the mentioned concepts. keywords consolidated financial statements, accounting standards, consolidation perimeter, percentages of interest. jel classification: m40, m41. introduction worldwide, group as a form of organization is a topical issue considered by many accounting referential. in recent decades, this event has had a fulminant evolution, with implications in several areas of the economy and covers a wide range of sectors. recently, in the last 10-15 years, group companies have been created in romania, but we expect the intensification of this phenomenon,on the basis of globalization and taking into account the current european and international context. in some countries1, such as germany, france, italy and japan, somegroup companies have to prepare two distinct sets of financial statements: both individual and consolidated, first based on existing national regulations and the consolidated based on international financial reporting standards.                                                              1 i., goncharov, j., werner, j., yimmermann, (2009) legislative demands and economic realities: company and group accounts compared, pg. 3, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=880128 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=880128 the two categories of financial statements are prepared for different reasons the consolidated statements are made in order to provide a true and fair view of the financial position and performance of an economic entity and individual accounts are prepared for state institutions, mainly for information and taxation.from this point of view, each state legislator requires the companies to prepare individual reporting based on national standards. 1. preparation and presentation of individual and consolidated financial statements individual accounts of groupc ompanies are independent and individual components of the consolidated accounts and support a series of transformations in order to bring to a common denominator elimination of disparities and transactions that occurred between group components.the consolidated accounts are prepared based on these financial statements.finally, the consolidated financial statements aim to present an overview at group level as fair, transparent and close to economic reality, as possible.both in terms of structure and in terms of content can be observed similarities and differences between the two sets of annual accounts. the annual accounts main objective2 of is to provide a true and fair view of the financial position, assets and results of a particular entity to interested users. annual financial statements for entities applying accounting regulations harmonized with eu directives and international standards, approved by order of the ministry of finance, are composed of the following synthetic documents3: for companies that exceed 2 of the size criteria at the balance sheet’s date and for listed companies financial statements with 5 components: balance sheet, income statement, statement of changes in equity, cash flow statement, notes to the financial statements (according to 3055/2009); if 2 of the size criteria are not exceeded financial statements with 3 components: abridged balance sheets, profit and loss account and notes to the abridged annual financial statements simplified (as 3055/2009); peoplewho recorded low assets and turnover values in the previous financial year abridged financial statements with 2 components: abridged balance sheets and abridged profit and loss account (under ompf 2239/2011). annual and simplified financial statements are deposed to territorial units of the ministry of finance, along with two other forms: other data and non-current assets.when groups of companies, listed companies and other entities are subject to consolidation, they may prepare financial statements based on accounting regulations with european directives or international standards ias / ifrs. the international accounting standard ias 1 presentation of financial statements applies to all entities that report to the international standards for the preparation of the annual accounts,being available for both individual preparation and presentation of financial statements and the consolidated accounts4. the presentation of financial statements can be done either separately or within the same document, called the annual report, which is usually audited and the board or other governing body has the responsibility to prepare and present of the annual accounts.                                                              2c., istrate, introducere în contabilitate, editura polirom, iași, 2002, pg. 163 3ordinul 3055 din 29.10.2009 pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei, partea i, nr. 766 din 10.11.2009, actualizat la 01.01.2011, http://www.dgnconsulting.ro/ordinul-3055-2009.html 4m. gârbină, ș., bunea, sinteze, studii de caz și testegrilă privind aplicarea ias (revizuite)-ifrs, vol. iii, editura ceccar, bucurești, 2008, pg. 173 http://www.dgnconsulting.ro/ordinul-3055-2009.html according to ias 1, the annual accounts consist of following synthetic documents5: balance sheet, comprehensive income statement, or profit and loss account, changes in equity or changes in equity other than those relating to contributions and shareholders equity withdrawals, flow statement treasury, annexes (i.e. accounting methods and explanatory notes). other items included in the annual report entities can be synthesized by a management report containing an analysis of the factors influencing the performance of the company, sources of financing, investment policy, risk management policy, company resources and benefits that are not presented in the balance sheet. 1.1 balance sheet internationally, the accepted formats for presenting the results are6: account (tracks the relationship assets = equity + payables or assets = liabilities) and list (on the basis of equality assets liabilities = total equity). the balance sheet consolidated by the global integration financial method reflects the broadest economic and financial view over the control the dominant society exertsover the subsidiaries. when applying the method of global integration, consolidated balance sheet will contain new items, in liabilities7: consolidated reserves that include reserves of the dominant company and those of the controlled entity, belonging to the group, beginning with the date of the its consolidation; consolidated result includes both outcome of the dominant entity and the corresponding share of the controlled company results; minority interests refers to the share of the subsidiary's equity held by shareholders outside the consolidation perimeter of the group. consolidated debts consisting of debts and liabilities of the entity that controls the controlled company. specific elements of the consolidated balance sheet as ompf 3055/2009 are: presentation of amounts attributable to shares in subsidiary undertakings included in the consolidation, held by persons other than companies included in the consolidation, separately, under "non-controlling (minority) interests". minority interests must be presented separately from the equity of the parent-company. 1.2 profit and loss statement the emergence of income statement is confirmed in the second half of the fourteenth century, being, to some degree dependent on the balance sheet developments.income statement is, to some extent, as an extension of the balance that brings clarification of changes in equity other than those resulting from contributions or redistributed. regarding the consolidated profit and loss statement, after consolidation by global integration method will include a new item "minority interests", which reflects the share of the result of the controlled company, which returns to shareholders outside the group.this post does not appear in the case of proportional integration method.                                                              5m., ionașcu, i., ionașcu, raportarea financiară conform normelor contabile internaționale (iasifrs),editura tribuna economică, bucurești, 2007, pg. 16 6n., tabără, e., horomnea, c., toma, conturile anuale în procesul decizional – elemente de contabilitate, analiză financiară și evaluarea performanțelor întreprinderii, editura tipo moldova, iași, 2001 7a., tiron, tudor, consolidarea conturilor, editura tribuna economică, bucurești, 2000, pg. 59 according to ias 1 presentation of financial statements, posts which must appear in the consolidated income statement can be summarized as follows: the current activity income, finance costs, share of results of associates, or companies put into equivalence gross result after out of assets or liabilities of discontinued operations, income tax expense, net profit or loss of the year, net income distribution between groups and minorities. ias 1 standard allows classification of expenses in case the results are by nature (raw materials costs, depreciation costs, salary costs) or by destination / their function selling cost method (cost of sales, administrative expenses, selling expenses). the first way of classifying costs is easier for small and medium companies, but the second provides information most relevant to users of financial accounting information. however, regardless the method of presentation of expenses in the income statement chosen by a company, ias 1 standard states that it is also necessary the presentation of expenses on the basis of the other method, in annexes. according to national regulations (omfp 3055/2009), in the consolidated profit and loss account there is presented separately the value of any profit or loss attributable to shares in subsidiary undertaken included in the consolidation held by persons other than the entities included in consolidation, at the post "profit or loss of the financial year of the noncontrolling interests "8. 1.3 cash flows cash flows9 reflect all incoming and outgoing cash and cash equivalents.available funds comprise cash and demand deposits, and short-term investments aimed equivalents, easily convertible. as concern the evolution of the financial situation,there is alack of a management company in the difference between an increase in turnover and production and a reduction in treasury. in this respect, it should also be considered aspects of investment activity conducted by the company, or the means used by the entity. the panel of the cash flowsdesignates the liquidity and flexibility of an enterprise. liquidity refers to the time required to convert an asset to cash, or for payment of current liabilities, an increased liquidity indicating a lower risk of bankruptcy. regarding the company's ability to pay its due debts nor balance sheet nor profit and loss account does not provide enough information, for whichthe cash flow statement is an important tool for assessing the liquidity and solvency of the company. funding panel includes cash outflows (payments) and inflows (receipts) incurred duringan accounting period, thus giving origin cash, but its causes and how to change them. international standard ias 7 statement of cash flows applies to all companies required to prepare financial statements with five elements, regardless of the type of activity carried out. depending on the type of activity that generates cash flows are classified into operating activities, investing activities or financing activities.the size of the three categories of cash flows are indicators of availability in relation to variations in operating activities, investing or financing. according to ias 7 statement of cash flows, cash flows from operating activities are determined using either: the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or                                                              8***, ordinul 3055 din 29.10.2009 pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei, partea i, nr. 766 din 10.11.2009, actualizat la 01.01.2011, http://www.dgnconsulting.ro/ordinul-3055-2009.html, accesat la data de 20.05.2012, ora 22.49 9a., tiron, tudor, consolidarea conturilor, edituratribuna economică, bucurești, 2000, pg. 183 http://www.dgnconsulting.ro/ordinul-3055-2009.html the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. under the indirect method, the net cash flow from operating activities is determined by adjusting profit or loss for the effects of: changesduring the period in inventories and operating receivables and payables; non-cash items (provisions, depreciation, deferred taxes, non-controlling interests); adjustments for cash outflows or inflows, relating to future or past financial exercises. ias 7 encourages reporting cash flows from operating activities using the direct method, which provide more information to users. 1.4 change in equity the most relevant form of reflectingthe financial development entity is statement of changes in shareholders’ equity, in fact, reflecting changes in net asset value over a period. statement of changes in equity may be prepared in two ways: either exhaustive presentation of information on changes in equity elements in this case, or disclosure of some further information, in the explanatory notes to the financial statements. the main elements contained in this synthetic document under accounting standard ias 1 presentation of financial statements, are the following: net profit or loss for the period; items of income and expense recognized directly in equity (as a result of compliance with the international standards or interpretations) and the total of these items; total comprehensive income for the period, showing separately amounts attributable to owners of the parent and to non-controlling interests; effects of changes in accounting policies and correction of errors in accordance with ias 8 accounting policies, changes in accounting estimates and errors. among the events that generate income and expenses recorded in equity category, we can mention: changing accounting methods, revaluations, correction of errors, the occurrence of conversion differences consolidation, recognizing changes in the fair value of certain financial instruments10. the entity’s total change in equity as determined after excluding changes resulting from transactions conducted in relation to shareholders/associates is a measure of profit or lossfor the company's activity during a reporting period. 2. particulars of consolidated financial statements in accordance with international standards international financial reporting standards comprise a number of issues specific to large companies that prepare consolidated financial statements. of such information, we can mention: changes in currency exchange rates, tax, reporting in hyperinflationary economies, interim financial statements, segment reporting activity, changes in accounting policies and corrections of errors, earnings per share and events after the reporting period.                                                              10 c., istrate, contabilitatea nu-i doar pentru contabili, editura universul juridic, bucurești, 2009, pg. 300 2.1 income taxes according to accrual accounting principle,the result and the related income tax must be recorded in the appropriate accounting financial year transactions they generated, regardless of the time of actual payment (early or later). income tax is determined using the taxable profit of the entity and not the carrying amount11. if the accounting result is calculated by subtracting total expenses from total income amount, taxable result is based on the result sheet, plus taxable expenses, related to this period and deducted taxable income and tax loss carry forwarded by the company. therefore, tax law is the origin of differences between taxable and accounting profit. as required by the international standard ias 12 income taxes, when the taxation of income and deductibility of expenses is made in another financial year, deferred tax is taken into account. in countries where accounting is connected with taxation, such as germany or japan, deferred tax sources are not numerous and its values are not significant, even at the consolidated level. on the contrary, anglo-saxon countries are characterized by a clear separation of the accounting and fiscal rules, having as a result, considerably higher amounts of deferred taxes12. the differences arising between the taxesand accounting result fall into two categories13: permanent differences, comprising expenses accounted for, but not deductible and income counted but excluded from the tax base; temporary differences arising from the accounting for revenues and expenses to be included or deducted from the following year's fiscal results and the integration or deduction of income or expenses that have not yet been accounted for. the international standard ias 12 establishes categories of temporary differences that may occur: taxable temporary differences, which involves increasing tax income in a future period, when crossing the costs of that asset or extinguishment of the debt that has caused these temporary differences; deductible temporary differences, which are reflected in reduced tax income in future periods will be recovered when the asset value or amount of the debt will be extinguished on which they occurred. taxable temporary differences deferred tax liabilities, intervene in situations where: the tax value of an asset is less than its carrying amount, or if the tax liability is greater than its carrying amount. reverse situations will result in deductible temporary differences deferred tax claims or tax loss carried forward. there are no temporary differences relating to the initial recognition of assets or liabilities of, or goodwill. a noteworthy aspect is that a deferred tax claim is not accounted for if it is not likely that the company will have sufficient taxable favourable results in the following financial. if you make a credible justification that there will be future taxable profits sufficient to cover the loss carried forward, shall disclose the deferred tax claim in annexes annual accounts of the entity.                                                              11f., scorțescu, consolidarea conturilor grupurilor financiare, editura ion ionescu de la brad, iași, 2008, pg. 143 12n., tabără, e., horomnea, c., toma, conturile anuale în procesul decizional – elemente de contabilitate, analiză financiară și evaluarea performanțelor întreprinderii, editura tipo moldova, iași, 2001, pg. 238 13m. gârbină, ș., bunea, sinteze, studii de caz și testegrilă privind aplicarea ias (revizuite)-ifrs, vol. ii, editura ceccar, bucurești, 2007, pg. 178 otherwise, no such claim is accepted registration, and every subsequent closure, have one further reassessments of deferred tax claim and can account for the asset entity that future taxable profits is probable. 2.2. subsequent events there are certain events occurring after the date for submission of annual accounts thathave significant effects on presence information for the period ended.ias 10 events after the reporting period provides information that must be presented in relation with events after the balance sheet date and the moment that requiresadjustment of the financial statements for adjusting events events after the balance sheet date that provide further evidence of conditions that existed at the end of the reporting period14. subsequent events are considered those events that occur between the end of the reporting period and the date that the board of directors authorizes the issue of financial statements. some provide evidence of conditions that existed at the balance sheet date (adjusting events after the balance sheet date) and others are indicative of conditions that arose after the balance sheet date (non-adjusting events after the balance sheet date)15. ias 10 states events thatinvolve adjustments of the annual accounts: settlement of litigation against the entity after the reporting date may provide evidence of the existence of liability at the reporting date; information after the balance sheet date, indicating impairment of asset items that confirm the existence of an obligation; detection the existence of errors or fraud financial statements are incorrect; determinationthe cost of assets for which the acquisition cost cannot be calculated accurately by the balance sheet. non-adjusting events that occur after the end of reporting period are: natural disaster occurring after the end of reporting period, with significant impacts on the activity; changes in tax laws or tax rates enacted or announced after the reporting period that have a significant effect on current and deferred tax; initiation of litigation arising out of events that occurred after the reporting period; abnormally large changes after the reporting period in foreign exchange rates; disposal of securities held in the capital of an important subsidiary; majorshare transactions, association or involvement in a combination of companies. ias 10 provides that the entity shall notprepare financial statements on the going concern basis if events after the reporting period indicate that the entity shall not be able to continue as a going concern. conclusions groupstructureshave appeared as a result of the development strategies adopted by the companies.among them, note the following two possibilities: either maintaining the legal unit of the entity and it creates new departments or branches, or creating new companies (or buying existing companies), with separate legal personality under the control of the dominant society.foreign development underlies the emergence of groups of companies.                                                              14***,ias10 – events after the reporting period, http://www.iasplus.com/en/standards/standards/standard9, 15h., greuning, d., scott, s., terblanche, traducere: t., cabsan, standarde internaționale de raportare financiară – ghid practic,ediția a vi-a, editura irecson, bucurești, 2011, pg. 626 http://www.iasplus.com/en/standards/standards/standard9 in order to eliminate the difficulties of assessing the financial position and profitability third component companies of a group should be established to consolidated financial statements (accounts group). separate financial statementsdo not provideenough information to form a fair and global image of the group.in order to build consolidated information is made restatements and aggregations of data on parent society, and the entities under its control. consolidated financial statements reflect a situation actually complementary to individual accounts, ties given by capital between companies within the group, and presenting an overview of the group's financial structure and profitability. given the economic reality, with a strong competitive and that the main objective of the group companies is to create value for shareholders, we can say that the consolidated financial statements are a relevant tool information for interested users. bibliography 1. n., feleagă, l., feleagă, contabilitate consolidată – o abordare europeană și internațională, editura economică, bucurești, 2007 2. m. gârbină, ș., bunea, sinteze, studii de caz și teste grilă privind aplicarea ias (revizuite)-ifrs, vol. i, editura ceccar, bucurești, 2007 3. e., horomnea, dimensiuni științifice, sociale și spirituale în contabilitate, ed. tipo moldova, iași, 2012; 4. e., horomnea, tabara n., budugan d., georgescu i., beţianu l., dicu r. m. – introducere în contabilitate. concepte şi aplicaţii, ed. tipo moldova, iaşi, 2011; 5. c., istrate, contabilitatea nu-i doar pentru contabili, editura universul juridic, bucurești, 2009 6. c., istrate, issues related to the impact of the ias/ifrs implementation in europe, quality management of accounting information, editura universității “alexandru ioan cuza”, iași, 2008 7. n., tabără, e., horomnea, c., toma, conturile anuale în procesul decizional – elemente de contabilitate, analiză financiară și evaluarea performanțelor întreprinderii, editura tipo moldova, iași, 2001 8. f., scorțescu, consolidarea conturilor grupurilor financiare, editura ion ionescu de la brad, iași, 2008 9. a., seetharaman, m. krishna moorthy, a. s. saravanan, a new approach to the preparation of consolidated financial statements of group companies, the review of financial and accounting studies, euro journals publishing, 2011 10. ***convergence with the international accounting standards board, http://www.fasb.org/intl/convergence_iasb.shtml, 11. ***gaap vs. ifrs, http://www.termpaperwarehouse.com/essay-on/gaap-vs-ifrs/58929. 12. ***ordinul 3055 din 29.10.2009 pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei, partea i, nr. 766 din 10.11.2009, actualizat la 01.01.2011, http://www.dgnconsulting.ro/ordinul-3055-2009.html, http://www.fasb.org/intl/convergence_iasb.shtml http://www.termpaperwarehouse.com/essay-on/gaap-vs-ifrs/58929 http://www.dgnconsulting.ro/ordinul-3055-2009.html microsoft word apostoaie constantin marius_eng.doc accounting practices regarding the non-current assets held for sale marilena manea, valahia university of targoviste veronica stefan, valahia university of targoviste summary generally the non-current assets, and especially the tangible assets, are held by the entity (as it results from their very definition) in order to be used in the production of goods or for services, to be rented to the thirds or to be used for administrative purposes during several periods. for the time interval that a non-current asset is not classified as being held for sale, its recognition and implicitly its assessment will be done in accordance with the provisions of the applicable international financial reporting standards; after the classification of the respective asset as being held with the intention of subsequent sale there will be applicable the provisions of the contemporary ifrs norm 5 “non-current assets held for sale and discontinued activities”. key words assets available for sale, fair value, afferent costs to the sale, loss from depreciation jel code: m41 introduction from the need of convergence between the us gaap provisions which classify the longterm assets either as held and used, either as held for sale and applicable according to the ifrss, the international accounting standards board has analyzed the implications regarding the distinction between the non-current assets held and used in the productive process, respectively those held for sale. the board has posed the problem if a separate classification for the non-current assets held for sale would create an exaggerate complexity in the ifrss and would introduce an element of intention of the leadership in accountancy. there was suggested that a classification as assets held for sale would not be necessary and renaming them as assets withdrawn from the active service would eliminate the complexity, because the latter one would be based on actuality and not on what could be perceived as managerial intention. still, although the classification of the ownership for sale beings with the intention to sell the asset, the other criteria of this classification are tightly connected with it and are more objective than the simple intention or commitment to sell. it was concluded that a classification as withdrawn from the active service would not necessarily need less criteria to support it. for example, there would be necessary a distinction between the assets withdrawn from the active service and those kept in the reserve or temporarily inactive. from the concern not to generate abuses and beginning from the reality according to which if the classification and assessment of the assets held for sale from the ifrss are identical to those from the us gaap, there will be obtained a convergence in an area important for the users of the financial situations, was concluded that the delimitation and presentation of the information on the assets and groups of assets and debts in course of assignation is of real use to the users. studies and scientific researches economic edition, no. 15, 2010 84 the principle sitting at the base of the delimitation of the assets as being destined either to the continuous use, either to the sale stipulates that the book value of those withdrawn from the active service is recovered, primarily by sale. hereby, on paragraph 6 of ifrs 5 “non-current assets held for sale and discontinued activities” is considered that an entity can catalogue a non-current asset (disposal group) as held for sale if its book value can be recovered primarily by a sales transaction than by continuous use. it is deemed necessary the presentation of a non-current asset classified as held for sale, as well as of the assets belonging to a group classified as held for sale separately from the other assets within the accounting balance. by applying the principle of delimitation of the assets, the board has decided that the assets withdrawn from the active service which do not comply with the criteria of classification as assets held for sale, must not be presented separately as there is a possibility for the book value of the asset to not be recovered primarily by sale. implicitly, the board has decided that the assets which comply with the criteria of classification as held for sale and are in use should not be omitted from a separate classification. this because if a fixed asset is available for immediate sale, then the remaining utility of the asset is connected to the recovery by sale and the book value will be recovered primarily by sale. in accordance with the same principle of delimitation, an enterprise will not catalogue as held for sale a non-current asset (or disposal group) which is up for cassation. this results from the fact that its book value will be recovered primarily by continuous use. classification of the non-current assets held for sale in order for the entity1 to classify a non-current asset as being held for sale the following criteria must be fulfilled: action, must be committed to a sales plan; condition subject only to terms that are usual and customary for sales of such assets; necessary for the completion of the sales plan to be initiated; s a completed sale within one year from the date of classification of the asset as being held for sale (with limited exceptions, presented in annex b of the standard); reasonable in relation to its current fair value; and significant changes to the plan will be made or that the plan will be withdrawn. 1st example : we hereby propose the exemplification of the intention and availability for immediate sale of the non-current assets by taking into consideration an entity wanting to sell a production space and which began a search process for potential buyers. from the available information it is considered the sale of the productive space with the unfinished orders on the sale date. as the entity is selling the productive space together with the unfolded activities, the transfer of the unfinished orders on the sale date will not affect the duration of realization of the sale process, the criteria of paragraph 7 being thus observed on the date of commitment of the sale plan. 1 2005 studies and scientific researches economic edition, no. 15, 2010 85 if the space would be sold without transferring the unfolded activities, the potential delays caused by the buyer prove the unavailability for immediate sale. when an entity acquires a non-current asset (or disposal group) solely for the purpose of his subsequent sale, the respective asset/group will be classified as held for sale on the date of acquisition, only subject to the condition of one year of paragraph 8 and if is highly unlikely that any other requirement of those contained in paragraphs 7 and 8, are not met this deadline will be completed within a short period after the acquisition (usually within three months). also, the operations of non-current assets exchange covering the commercial form can be catalogued as sale operations, and the assets classified as held for sale. according to sfas 144, the assets with long usage which are not exchanged for similar productive assets cannot be classified as held for sale. they are treated as ceased only in the moment of the exchange. the basis for conclusions at sfas 144 mentions that this is due to the fact that the exchange of these assets is registered in accordance with the book value of the asset, and not at the fair value, and that the use of the book value is a lot more in accordance with the accountancy of the long term assets held and used than with the value of the assets which are to be sold. still, according to ias 16 “tangible assets”, revised in 2003, an assets exchange is usually evaluated at its fair value. the need of convergence with the ias norms has induced fasb towards the publication of an exposure project in which the assets exchange would be realized at fair value. there is also proposed a modification of sfas 144 so that, in the case of assets exchange with commercial substance, these assets would be eligible for the classification as held for sale. there can be situations when the assets held for sale do not fulfill the criteria described at paragraphs 7 and 8 of ifrs 5 – especially the period required for the sale – as result of some circumstances outside the control of the enterprise. for these non-current assets the classification as held for sale will continue by the extension of the period required for the sale process, if: -current asset (or disposal group), it expects certain third parties, but not the buyer, to impose certain conditions on the transfer of the asset (or disposal group) which will lead to the extension of the sale period, and: the actions necessary for the observance of these conditions cannot be initiated until a firm purchase commitment is not obtained, and the firm purchase commitment presents a high probability during one year. an enterprise obtains a firm purchase commitment, and the buyer or the third parties will impose unexpected conditions on the transfer of the non-current asset (or disposal group) previously classified as held for sale, conditions which will extend the period required for the sale process, and: actions were effectuated in due time in order to respond to the new conditions; a favorable resolution is expected on the factors delaying the process. ly considered improbable appeared and, as result, a non-current asset (or disposal group) previously classified as held for sale is not sold until the end of the period, and: within the initial one year period the enterprise has taken the necessary measures to respond to the modifications intervened in the circumstances; the non-current asset (or disposal group) is actively promoted on the market, at a reasonable price, in accordance with the modifications of the circumstance; the criteria mentioned at paragraphs 7 and 8 are fulfilled. 2nd example: a chemical products manufacturer intends to sell a production space represented by an auxiliary section, implicitly the afferent terrain of 4.500 m². after obtaining a firm purchase studies and scientific researches economic edition, no. 15, 2010 86 commitment, the buyer effectuates an inspection on the space and identifies the previously unknown damages brought to the environment. the company is imposed by the buyer to eliminate these damages, fact which leads to the extension of the maximum one year period necessary to the development of the sale process. the company initiates actions of elimination of the damages, the remediation of the situation is very probable; hereby there are fulfilled the conditions provided at the exception from the requirement of the one year period, point b). within the one year period, although the reparations imposed by the buyer were effectuated, the property was not sold yet. the market conditions have deteriorated, but as the company still believes in the future the situation could remediate it continues not to reduce the sale price. although the property is still registered as owned for sale, its sale price exceeds the current fair value registered on the market. within these conditions it proves that the property is not available for immediate sales, as the criteria of paragraph 7 of ifrs 5 are not fulfilled. evaluation of the assets held for sale a non-current asset held for sale will be evaluated in accordance with the provisions of this ifrs. the ifrs 5 norm specifies that a non-current asset is evaluated in accordance with the applicable ias norm (as reevaluations according to ias 16, value depreciations according to ias 36, etc.) for as long as it is not classified as being held for sale. if the asset enters the perimeter of ifrs 5 norm and is rated as being held for sale it must be evaluated at the smallest value between: which was the reason of the international regulator when choosing such an option of the evaluation of the non-current assets destined for sale? for a non-current asset destined for sale, the recovery of its book value is realized primarily by sale; the evaluation of the assets available for sale – as effect, in accordance with the ifrs 5 provisions should not be different from the one resulted from the application of other ifrss. thereby, according to other ifrss (was noted the provision according to which an entity keeps the lifetime and residual values of the non-current assets at updated values, respectively the depreciation is recognized in the variant of the maximum between the use value and the fair value less selling costs), if the fair value less selling costs is bigger than the book value, there will be no depreciation (because the residual value has been updated). if the fair value less selling costs is lower than the book value, there will be a loss from the depreciation which will reduce the book value to the level of the fair value less selling costs which will not be amortized (because the residual value was updated), except the case where the use value is bigger than the fair value less selling costs. if the use value is bigger than the fair value less selling costs, it is likely to appear small differences between the treatment according to other ifrss and the treatment according to ifrs 5. according to other ifrss there will be a loss from the depreciation insofar as the book value exceeds the use value, and not insofar as the book value exceeds fair value less selling costs. according to other ifrss there would also be an exceeding depreciation of the use value (new book value of the asset) compared to the fair value less selling costs (its residual value). still, for the assets classified as held for sale, the use value differs from the fair value less selling costs only in the measure of the net treasury fluxes waited before the sale moment. if the period up to the sale is short, this value can be relatively small. the difference between the loss from the recognized depreciation and the subsequent depreciation which would result according to other ifrss, compared to the loss from the depreciation and no other subsequent depreciation according to ifrs 5 would still be small. the board has concluded that the requirements of the evaluation imposed by ifrs 5 for individual assets most of the times will not involve significant differences towards the studies and scientific researches economic edition, no. 15, 2010 87 provisions of other ifrss. moreover, the board agreed with fasb on the fact that the treasury fluxes obtained from the remaining use of the asset were connected with the recovery of the asset’s value through sale and, so, it has concluded that the individual assets classified as held for sale should be evaluated at the minimum between the book value and the fair value less selling costs, and they should not be subject to the amortization. where the assets will be disposed together in a unique transaction, they will be treated as disposal group, the evaluation basis for non-current assets classified as held for sale must be applied to the group as an ensemble. for the recently acquired assets which meet the requirements for classification as held for sale the assessment on the recognition date is realized at the lowest value between its book value if they had not been graded as held for sale (for example, the purchase cost) and its fair value less selling costs; for a recently acquired asset considered to be ceased immediately (for example, it was acquired as part of a bigger transaction, but it is not necessary), its assessment can be realized at the fair value less selling costs at its purchase. corroborated with this case, if the asset is acquired as part of a business combination, its evaluation at the recognition will be done at fair value less selling costs, because its book value (its cost) is not relevant at the purchase date (within the combination). if the sale is expected to occur beyond the period of one year, the entity will assess the costs by regarding the sale at their current value, any increase in the current value of those sales will be presented in the income statement as a financial cost. also, the addition to the updated value of the selling costs and of other expenses elements which can subsequently intervene is recognized as financial expense, in accordance with the provisions of paragraph 17. 3rd example: the x entity holds a non-current asset registered in accountancy with the value of 85.000 u.m., classified at the end of the n exercise as held for sale. it is considered at 31.12.n for asset a fair value of 87.000 u.m., afferent selling costs of 3.500 u.m. at the end of the following exercise the sale operation had not been realized, not because of the entity, so the maintenance of the asset classified as being available for sale is still allowed. the update of the costs afferent to the sale takes place using an update rate of 12%. in march, exercise n+2, the sale takes place, the costs afferent to the sale being now estimated at a value of 3.900 u.m. before the classification of the asset as held for sale, its evaluation was realized at amortized cost; at the end of the n exercise, as the fair value less selling costs is exceeded by the book value (83.500<85.000) there is recognized a depreciation of 1.500 u.m. for the asset. at the end of the following exercise, after the update of the selling costs (3.500/1,12 = 3.125 u.m.) considering the unmodified fair value of87.000 u.m., the sum of 375 u.m. is written at the revenues, as effect of the increase of the fair value less selling costs to 83.875 u.m. (83.875>83.500 new fair value > the book value of the asset after the recognition of the loss value). in march, exercise n+2, the new book value of 83.875 u.m. exceeds the fair value less selling costs with 775 u.m. it will be proceeded at the recognition by financial expenses of the period of increase of the costs afferent to the sale. recognition of losses from depreciation for the assets destined for sale the discussions at the level of the international accounting standard board were concentrated in the differences between the reevaluated non-current assets and the other as it follows: studies and scientific researches economic edition, no. 15, 2010 88 accordance with ias 16), any decrease registered in the fair value would represent a loss from the depreciation recognized as expense in the income statement; eevaluated assets destined for sale: the income statement, but the decreases in the estimated fair value should be compensated from the surplus from the reevaluation created based on ias 16; 16 to be accounted as expense in the income statement; and the income statement, but an ulterior increase in the fair value should be totally recognized as increase from the reevaluation in accordance with ias 16, exactly as it happened before the reclassification of the assets as being held for sale; also, the costs regarding the sale should be always recognized in profit or loss. it was concluded as being much too complex such a distinction between the reevaluated assets and those which were not yet submitted to this process, so a unitary approach was admitted: will recognize a loss from the depreciation in the income statement regardless if the noncurrent assets were reevaluated or not before their entry in the perimeter of application of ifrs5; a gain in the income statement, without exceeding the loss cumulated from the depreciation which was recognized in accordance with this ifrs or previously in accordance with ias 36. 4nd example: it is considered asset y registered in accountancy at the value of 250.000 u.m., classified at the end of the n exercise as held for sale. it is considered that the exceptions provided at paragraph 9 of ifrs 5 are fulfilled so that the asset is maintained in the initial classification, there are given the following fair values, diminished by the costs of the sale afferent to the end of the exercises n, n+1 and n+2: 230.000 u.m.; 200.000 u.m.; 270.000 u.m. as the fair value less selling costs is lower than the book value, it is recognized for asset y at the end of the n exercise a loss from the depreciation of 20.000 u.m. in the income statement. at the end of the n+1 exercise the new book value of 230.000 u.m. exceeds the fair value with 30.000 u.m.; it is recognized a loss from the depreciation for the asset of another 30.000 u.m. in the n+2 exercise the fair value of 270.000 u.m. exceeds the book value with 70.000 u.m. there will be recognized as gain from the increase in time of the fair value being accounted for revenues only the sum recognized previously as loss from the depreciation for the respective asset, either in accordance with ifrs 5, (either with ias 36 “depreciation of the assets”, according to the case). although the potential gain is of 70.000 u.m., there will be recognized a revenue of 50.000 u.m. at the end of the n+2 exercise, sum which compensates the loss of value registered previously in accordance with ifrs 5. in the context of recognition of the losses from depreciation, if up to the date of sale of the asset there was not recognized a loss from the depreciation or any gain, now, on the date of sale they can be recognized in accordance with the requirements of ias 16 “tangible assets”, respectively ias 38 “intangible assets”. the requirements connected to the recognition are established: -72 of ias 16, revised in 2003 for tangible non-current assets; -117 of ias 38, revised in 2004 for intangible non-current assets. studies and scientific researches economic edition, no. 15, 2010 89 the losses from the depreciation, for a group of assets destined for disposal, there will be recognized in the income statement through the adjustment of the book value of the component assets at the level of the fair value, except the assets which although a component part of the group are not the object of the evaluation requirements of ifrs 5; they are evaluated in accordance with the applicable ifrss, as specified in paragraph 19 of ifrs 5: “within the ulterior reevaluations of the disposal group the book value of any assets and debts which are not the object of the evaluation requirements of this ifrs, but which are included in a disposal group catalogued as held for sale will be reevaluated in accordance with the applicable ifrss before the fair value less selling costs of the disposal group to be reevaluated”. there are observed differences between the provisions of ifrs 5 and ias 36 regarding the allotment of a loss from depreciation; thus, ias 36 imposes as a loss from the depreciation of a cash-generator unit to be allotted first with the purpose of reducing the book value of the commercial fund and afterwards with the purpose of the pro rata reduction of the book value of the other assets within the unit, unlike ifrs 5 which imposes the direct adjustment of the book value of the composing assets of the group. 5th example: an entity is committed to a sale plan and intends to assign a production space representing an important quota of its activities. in the disposal group there are tangible non-current assets of 16.700 u.m. divided as it follows: asset x – 4.600 u.m., asset y – 8.400 u.m., asset z – 3.700 u.m. the group classified as available for sale has a fair value less selling costs of 12.500. u.m. as the evaluation of the group classified as held for sale is realized at the minimum between the book value and the fair value less selling costs, the entity will recognize a loss from the depreciation of 4.200 u.m. distributed to the assets composing the group based on their book value, as it follows: table no. 1 distribution of the loss from depreciation on the assets of the group specification book value before allotment of the loss value loss book value after allotment asset x 4.600 (1.157) 3.443 asset y 8.400 (2.113) 6.287 asset z 3.700 (930) 2.770 total 16.700 (4.200) 12.500 if in this example there is also an m asset component of the disposal group but which is not the object of the evaluation requirements of ifrs 5, being evaluated in accordance with ias 16 “tangible assets” model of reevaluation, it is first evaluated in accordance with the applicable norm, and afterwards it is evaluated the fair value less selling costs of the group. given the m asset accounted at a value of 15.000 u.m., for which the fair value is estimated at 17.500 u.m., with a depreciation loss recognized for expenses of 1.000 u.m. as for the asset there was previously recognized a loss from depreciation, the sum of 1.000 u.m. is written at incomes, the difference of 15.000 u.m. being registered as an increase from reevaluation. the resumption of losses from depreciation for the assets group destined for sale involves the recognition of a gain through the increase of the book value of the composing assets, but not more than the loss cumulated from the previously recognized depreciation either in accordance with ifrs 5, either previously in accordance with ias 36. amortization of the assets classified as being held for sale studies and scientific researches economic edition, no. 15, 2010 90 a non-current asset classified as being held for sale or which is included in a group of assets available for sale will not be amortized. this thing is logical since the concept at the basis of the amortization is the allotment of the asset’s cost on its useful lifetime, and once the asset is deemed as being held for sale, this purpose no longer has a sense. if the asset (assets group) held for sale no longer fulfills the criteria for assignment provided at paragraphs 7-9 from ifrs 5, the element can no longer be kept in this category and its reclassification is imposed in the category of exploitation assets to which it belongs. also, the value at which it is recognized in the financial situations will be changed. its assessment will be done through reporting to the date on which it no longer fulfills the conditions to be classified as being held for sale. thereby, a non-current asset which ceases to be classified as being available for sale must be assessed at the lowest value between: adjusted with any depreciation or amortization which could be recognized if the asset was not classified as being available for sale, and the replacement value on the date of the subsequent decision of not selling. there will also be considered any modifications (increases or decreases) in the book value of the asset afferent to the period in which it did not fulfill the classification criteria as asset held for sale and until the elaboration of the financial situations. for the non-current assets composing the cash-generator unit the replacement value is that accountant value which would have been recognized after the allotment of any loss from depreciation supported by ugn, respectively the recoverable value. if an asset or an individual debt is eliminated from a disposal group classified as being held for sale, the remaining assets or debts from the disposal group which are to be sold will continue to be assessed as a group only if the group fulfills the criteria for classification as held for sale. in other circumstances, the non-current assets remained from the group which fulfill the criteria for classification as held for sale individually must be assessed individually at the lowest value between their book values and the fair values less selling costs on that date. for the non-current assets available for sale, the financial situations must present, in accordance with ifrs 5, the following information: in the balance of the total assets available for sale; -current assets classified as being held for sale (separately or within an assets group destined for sale; situations, of the information presented previously regarding the main categories of assets destined for sale; capitals, regarding the non-current assets classified as being destined for sale; or loss resulted from the reclassification or after a subsequent reevaluation of a non-current assets destined for sale; -current assets classified as being destined for sale as well as the reasons for their reclassification. it can also be indicated the sector of activity to which the non-current asset destined for sale belongs to; or which led to the planned assignment, as well as the manner and moment of the assignment. conclusion in romania, according to the current regulations, ifrs 5 does not have yet a specific approach, a proper treatment, but it is assumed that the adoption of the provisions in studies and scientific researches economic edition, no. 15, 2010 91 accordance with the european directives will lead towards a process of convergence which is otherwise desirable. references 1. 2. manea m., stefan v. (2007), “fundamentals and practices for the initial recognition of the fixed assets” international conference „challenges of contemporary knowledge-based economy”, alba iulia university, annales universitatis apulensis, oeconomica series, volume i pp. 226-235, issn 1454-9409 3. popa a., pitulice c., nichita m., jianu i. (2007), „studii practice privind aplicarea standardelor 4. ristea m.coordonator (2004), „ghid pentru în contabilitate – ias 36”, editura ceccar 5. ristea m.coordonator (2007), imobilizate”, 6. van greuning h. (2005), standarde – ghid practic, editura irecson 7. *** iasb (2009), „ifrs pentru imm-uri”, editura ceccar 8. *** 9. *** ifrs 5 “active imobi 10. http://www.iasb.org/home.htm 11. https://buy.iasb.org/timssecommerce/timssnet/common/tnt_frontpage.cfm studies and scientific researches economic edition, no. 15, 2010 92 importanţa bazei de date în campaniile de marketing direct studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 81 political communication during the 2014 presidential campaign: online media coverage cristina cîrtiţă-buzoianu “vasile alecsandri” university of bacău cristina_buzoianu@yahoo.com abstract the election campaign has lately become a real challenge where all the political actors display their skills, the communication ones, but also those related to the electoral marketing and public relations which play a vital role in creating the image of a particular candidate. the interest that the public manifest towards the presidential debates, as well as towards all the means of political communication used by the actors involved represents a reference point in the construction of an election campaign. our paper aims to achieve a quantitative analysis of the communicational messages sent during the 2014 presidential campaign in the online media. in this respect, we are going to conduct a media monitoring on two central newspapers, namely “evenimentul zilei” (“daily event”) and “jurnalul național” (“national journal”), to track the online media visibility of the political communication starting from several indicators predefined in order to measure the efficiency of the political communication. thus, our approach considers the influence of political communication in the election campaign as it appears in the online press in romania. keywords electoral marketing; election campaign; political image, communicational strategies; media monitoring jel classification m31; m37 context of the 2014 presidential campaign nowadays, the electoral communication is influenced by the principles that underlie marketing and advertising, evolving during all these years, from a spontaneous form of the speeches which a candidate produced, up to the online election communication integrated into a campaign plan well-defined before the official start of the election run. thus, the political communication is a complex phenomenon that must be distinguished from the elements of political marketing. electoral communication and electoral marketing communication become synonymous when the approach to be adopted by a political candidate is evoked: market analysis, elaboration of the election strategy, choice of the means of communication, building a communication plan and application of the evaluation measures. “nothing is more doubtful than this limited approach by which it is presented as a new instrument what a man has long considered as a form and a condition of participation in the society’s life. the development of commercial advertising, the marketing and public relations, the use of the survey techniques and quantitative analysis, the massive dissemination of the political messages by mass media have competed in the emergence of a political industry with which we easily associate the political communication” (gerstlé, 2004). political communication is a tool which allows voters to participate in making political decisions and it can help to assess as political communication during the 2014 presidential campaign: online media coverage 82 well as to sanction the politicians’ activities by voting. the effects of the political communication are not usually entirely determined by the sent message, but also by the historical context in which they are produced, in other words, by the political climate at a certain moment. “the political activity is not reduced to a strategy of conquest. a political campaign is nothing but a moment of crystallization and acceleration of conflicts and decisions made and matured before and which will subsequently be managed” (gourévitch, 1998). any of the politicians should improve their media presence, which is a guarantee of their reputation and prestige among the public. in this context, the political marketing is considered one of the new ways which power makes use of in order to control communication and implicitely, the media. marketing techniques allow politicians to react to media constraints (săftoiu, 2003), but the main objective of the political marketing is to enhance the informational role of the media, but also their persuasive potential. therefore, the media do not present only political reports, but they also constitute an essential part of the framework where politics takes place, often playing the role of real political actors. our paper aims to analyze the 2014 presidential campaign in romania in relation to the found online media messages related to the main two frontrunners in the election race. the 2014 presidential elections developed the online campaigns for the first time in the romanian politics. this was achieved by iohannis’s marketing team, who managed to bring him to cotroceni, and also to turn him into the most popular politician in the online environment in europe. thus, it was the most spectacular online political campaign ever made in romania. political analysts have confirmed the fact that it is the first time when a candidate successfully uses the internet, without promoting the populist messages or having a negative campaign, managing to impose by its simplicity and authenticity. victor ponta’s campaign relied more on accusations, supported by his strong communication abilities, but also by the political experience derived from his position, as prime minister. one of the messages around which he built his presidential campaign was a change all the way, alluding to the idea that traian basescu is the embodiment of absolute evil in the romanian politics. the other candidate, klaus iohannis, adopted a peaceful strategy, did not try to attack victor ponta, although he had several vulnerabilities that could have been speculated. he created the image of a serious man who does not just talk, his campaign slogan being the romania of the things well done. following the 2014 presidential election, klaus iohannis was declared a winner undoubtedly, after having obtained 54.43% of the votes, while his opponent, victor ponta received 45.56% of the votes. the total number of voters who came to vote was 11,719,344 people, representing 64.10% of those registered on the permanent electoral lists (www.bec2014.ro). klaus iohannis’s presidential campaign – the romania of the things well done the candidate of the liberal christian alliance (lca) promoted the idea that the romania of the things well done is a romania where the president fulfills all his duties and promises to voters that aims at an effective achievement of changes, a president who is truly concerned about the developments in his country and not about talk shows or political conflicts. the romania of the things well done means for iohannis, economic and social development for all the romanian citizens, a governance that does not operate only on television, but one which will implement all http://www.bec2014.ro/ cîrtiţă-buzoianu 83 the projects and promises made and the results will be visible in the citizens’ living standard. therefore, iohannis promoted a romania to be proud of and the dignity to be romanian not just as a slogan, but to become a state of mind. opinions on this slogan were split, the political analysts stating that iohannis tried to refer to the ethnic group which he comes from, managing to win confidence based on stereotypes made about the german people. in addition, specialists also believe that the chosen slogan managed to create a connection between the electorate and iohannis, starting from the stereotypes about germans, on the one hand, and a segmentation of the two mental plans which could be interpreted as an inadequacy between the typologies of both societies. the most important strategy of the campaign for the candidate klaus iohannis was the presence in the social media, especially on the facebook social network. some experts in communication and online state that social media did not work in favour of iohannis or of another candidate, social media simply functioned as it usually works. the electorate which is active in the online environment had, this time, one candidate who gained in popularity quite rapidly, thanks to the strategies applied. iohannis’s team created on the official facebook page a section entitled powerful together where his supporters could find materials text, video, powerpoint presentations, speeches, any information about lca candidate activity. these messages easily captured the attention of his electorate due to their quality and simplicity. iohannis, unlike his opponent, used more video materials, while victor ponta relied too much on image processing and common messages. another strong point of this campaign was the connection between the candidate’s image and message, between the online and the offline, as well as between all the materials and the messages promoted. the benefits of such consistency were that the public would see and hear the same message continuously and voluntarily or involuntarily. once perceived, the message would become easier to reproduce. the compatibility between the candidate’s personality and the online campaign managed to create the impression of honesty among the electorate, and this was a key point in the election race. therefore, iohannis’s stake was to create, on the one hand, consistency between the politician brand and the image he promotes in a certain campaign, and, on the other hand, between the messages communicated and the needs of the target audience. on the facebook page of the candidate iohannis, a feedback would appear immediately after each event from the campaign. videos or text messages were published, sometimes before they were taken over by the news agencies. an immediate feedback creates a good image both in the press and among voters, demonstrating that the presidential candidate is spontaneous and up-to-date, emphasizing the voters’ need to be informed about the activities he performs. klaus iohannis’s online campaign was rated as a successful campaign. he managed to identify his target audience, objectives and action plan and also managed to win the first place online, with over 1,000,000 likes and a search of over 5,000,000. the established plan aimed at conducting a campaign with a clear message, consistent with the candidate’s image. the campaign focused on a strategy of avoiding clichés and focused more on the elements that define and differentiate iohannis, as a political actor, from the other candidates, namely: a simple and understandable language, decency and coherence in discourse and behaviour, and, not in the least, the guarantee of a job well done. political communication during the 2014 presidential campaign: online media coverage 84 victor ponta’s presidential campaign – ‘a unifying president’ victor ponta entered the presidential race from the position of the candidate in office, being labelled as the youngest prime minister. throughout the entire election race the social democratic party (sdp) candidate had several slogans, but the most memorable was a unifying president, this slogan promoting the idea of unifying all the romanians everywhere. victor ponta argued that currently, romanians are more divided than ever, adding that the great union means erasing the borders between the left and the right, and this would contribute significantly to the development of romania. this message is well built because it addresses all the romanians promoting the territorial unification with moldova and bringing together a country torn apart as population. therefore, the slogan has a double meaning being considered a good choice and specific for the party supporting him. another message of this slogan suggests that despite all the daily political scandals, ponta is a man who can unite and change the way in which politics is conducted in romania. one of the main objectives of victor ponta’s campaign was to promote the profile of the country and that romania is a beautiful country, which we should be proud of. the sdp presidential candidate’s campaign started with the presentation of ponta’s political achievements over the two and a half years as the romanian prime minister, promising romanians further on a presidential vision focused on continuity and stability. initially, ponta’s campaign messages had promoted anti-basescu messages, stating that he would try to rebuild the post-basescu romania. building an election campaign based on negative arguments against the opponents does not represent something new for the romanian electorate. ponta resorted to systematic attacks against his opponent and also allowed himself to emphasize the differences between the various regions of the country, as well as between the different categories of citizens. most offenses made against the presidential candidate klaus iohannis were related to the differences between him and the majority group, including personal attacks, being accused that he was not a good family man, because he had no children. victor ponta argued that his presidential project is one for the entire romania, for its citizens and, unlike his opponent who addressed things, he addressed the people. during the same period, other sdp members of the parliament said they would never vote for an alien from nation and law adding that iohannis would become president of romania when victor ponta became president of germany. the candidate victor ponta focused on a predominantly negative campaign, in which his speech was virulent and violent, using communication strategies to attack and intimidate the political opponents. thus, there was a discrepancy among voters between the idea promoted by the second slogan, a unifying president and the urge to conciliation after basescu’s government and the ways to promote the candidate. methodology our case study is based on a quantitative analysis of the communication messages sent by the two presidential candidates in the online media in romania from october 3rd to november 15th, 2014. our analysis corpus was represented by the articles in two central national newspapers online, such as evenimentul zilei and jurnalul național. during the media monitoring, we watched two actors (the two candidates: victor ponta and klaus iohannis) according to 6 preset indicators:  political project;  slogan;  values; cîrtiţă-buzoianu 85  speech efficiency;  communication with the public;  communication with the opponent. following the monitoring, we identified 252 references out of which 144 in evenimentul zilei and 108 in jurnalul național. the visibility share of the two candidates was quite close, with no major representation discrepancies, which reveals that the two newspapers were trying to maintain their objectivity. main findings the quantitative analysis of the themes communicated in the two national newspapers highlighted numerical values fairly close between the two candidates, showing differences on certain indicators. out of the 252 references inventoried, iohannis cumulated 131, while victor ponta 121. this hierarchy is maintained at the level of each newspaper: in evenimentul zilei, the difference between the total of themes communicated by klaus iohannis and victor ponta is represented by 8 references, while in jurnalul naţional is represented only by 2 references. figure 1. communication messages of the two candidates reflected in the online press at the level of indicators accumulating articles from the two papers for the two political actors we can say that, on the first place, political projects stand out with 56 references, communication with the public – 44, values – 43, speech efficiency 41 and on the last two positions, slogan 35 and communication with the opponent 33 references. in evenimentul zilei, the candidate iohannis had a high percentage at 4 out of the 6 indicators, namely for political projects 27.63%, for slogan 18.42%, for communication with the public 14.47% and for communication with the opponent 7.89%. the lowest data were recorded at the level of the values indicator with only 11.84% compared with only 29.41% recorded by his opponent. for the political political communication during the 2014 presidential campaign: online media coverage 86 project indicator, we can find in the article entitled klaus iohannis has launched his presidential project an example: “i want the citizens of romania in 2018-2019 to feel that they live in a country of the things well done, to feel that romania is on a way with precise objectives and a stable future for the next generation.” victor ponta’s percentage distribution brings forward two indicators, namely the discourse efficiency and values, and on the third place, the communication with the opponent recorded almost equal percentages for both candidates, around 7%. “ponta has attributed to himself all the political issues that iohannis could have used in his campaign, so to speak and not stolen”. some topics, such as church, family and ethnicity, were not among the strengths of the left parties and this would have favoured ponta quite a lot. figure 2. indicator distribution in ‘evenimentul zilei’ “victor ponta might have some reasons to panic, among them the diaspora vote and unexpectedly weak results in several counties that were considered under the influence of the social democratic party”. this statement was made by a member of the liberal party. regarding the speech efficiency indicator which reached a total of 22.05% for the sdp candidate, it is said that: “victor ponta has the great advantage of being prime minister for two and a half years, being accustomed to tv shows and appearances before the audience, and his speeches are fluent and authoritative”. for the indicator related to the communication with the opponent, in an article entitled iohannis flees from confrontation, we can find the following reference: “victor ponta scored at courage for confrontation just before the end of the second round, and iohannis did not profit from this, instead he chose to flee”. another indicator is the slogan where we find quite a few references in the article entitled ponta criticizes iohannis’s slogan: “the prime minister victor ponta expressed his opinion on the klaus iohannis campaign’s slogans saying that they are very poorly designed and that iohannis refers to things and not to people”. in jurnalul național, victor ponta stands out in particular for indicators, such as the slogan with 14.54% and the communication with the opponent with 27.27%. regarding the indicator related to values, there are similar percentages for the two cîrtiţă-buzoianu 87 actors, whereas the candidate iohannis has higher percentages for political projects, namely 26.10%, for communication with the public 26.41%, for discourse efficiency 11.32%. in an article entitled klaus iohannis, the election campaign final for the first round we can find the following statements: “when we look around and especially on television we can see only the negative side of the romanian politics in the last 25 years, basically a romania which victor ponta wants”. in this speech, presented in sibiu, klaus iohannis promises not to forget about the citizens and that together with his team he will do everything possible for romania to become a country of the things well done. his opponent, victor ponta appeared in front of the voters with more political projects. thus, in an article entitled ponta raises pensions, we identify the following example: “i want to announce publicly that it has already been adopted the fiscal-budgetary strategy and measure on increasing pensions to all the elderly in romania”. figure 3. indicator distribution in ‘jurnalul naţional’ for the indicator regarding the slogan, we find both appreciative and critical references: “klaus iohannis urging voters to go to vote to get rid of victor ponta’s romania and to win our romania, a romania of the things well done”, and in another article called ponta’s slogans, we find the following statement: “the sdp party’s slogan: a change all the way is plagiarised”, some political analysts claiming that it was not the only plagiarism that the sdp appealed to in the election race. for the indicator related to values, we notice topics, such as religion, ethnicity and family. “when i was little, i went to church very often because my grandfather was a priest and he would take me with him”, said ponta in an interview. for the speech efficiency indicator, we find posts related to the lca candidate: “in his tv appearances to date, iohannis has shown that he is a very good speaker, although protected and helped by the moderators”. for the communication with the opponent, we identified the following statements: “mr. ponta has deliberately hampered the diaspora vote” and ponta did not delay to answer these charges: “mr. iohannis even when he speaks still fails to say something real and interesting”. political communication during the 2014 presidential campaign: online media coverage 88 conclusions the indicator distribution in the two newspapers shows that the highest percentage was recorded for the indicator related to political projects with 22.22%, followed by two indicators with close values, namely the communication with the public with 17.46% and values with 17.06%, speech efficiency with 16.26%, and on the last two places, there are the slogan with 13.88% and communication with the opponent 13.09%. by making a comparative analysis between how visible these communication issues are, we can note both similarities and some differences between the two candidates by comparing the two newspapers monitored. in evenimentul zilei, the candidate klaus iohannis was distinguished by the indicators related to political projects, slogan and communication with the public, while victor ponta, especially to values and speech efficiency. the indicator regarding the communication with the opponent recorded similar values of 7% in this newspaper for both the political actors. in jurnalul național the candidate victor ponta is much better represented, being a winner at 4 of the 6 indicators: political projects, values, speech efficiency and communication with the public, while iohannis obtained higher percentages for the slogan and communication with the opponent. we can notice that 3 of the 6 indicators follow the hierarchy in the two newspapers. in both publications, iohannis obtained the best percentages for slogan whereas victor ponta for values and speech efficiency. our analysis shows that in the newspapers monitored iohannis is successful for more than half of the indicators proposed, although in the television confrontations victor ponta was designated a winner. this indicates, on the one hand, the gap between the written and audio-visual media as well as the role which the political communication plays among the electorate when voting preferences are defined. references beciu, c. (2002), political communication (in romanian comunicarea politică), bucharest, comunicare.ro. gerstlé, j. (2004), political communication (in french la communication politique), paris, armand colin. gourévitch, j.p. (1998), the image in politics. from luther to the internet and from posters to videos (in french: l’image en politique. de luther à internet et de l’affiche au clip), paris, hachette littérature. marcu, l. (2010), mass-media and the election communication (in romanian massmedia şi comunicarea electorală), târgovişte, bibliotheca. mcnair, b. (2007), introduction in political communication (in romanian introducere în comunicarea politică), iaşi, polirom. rus, f.c. (2006), political pr (in romanian pr politic), iaşi, institutul european. săftoiu, c. (2003), political journalism. politicians’ manipulation by mass-media. mass-media manipulation by the politicians (in romanian: jurnalismul politic. manipularea politicienilor prin mass-media, manipularea mass-media de către politicieni), bucureşti, trei. microsoft word apostoaie constantin marius_eng.doc workforce quality culture in contemporary economy considerations regarding romania petronela mateescu – “al. i. cuza” university of iasi, romania abstract quality culture development relies on the understanding of the laws of change in force in an institution or organization, and it requires knowledge of the culture evolution in that organization. the employees of an organization feel whenever certain changes occur and they should therefore be aware that all the organization decision makers must get involved in planning and implementing the changes, so as to assure the former that everything goes according to the plan. keywords workforce, quality culture, workforce quality jel codes: j24, j54, j80 workforce quality culture in contemporary economy there are numerous quality culture development strategies, depending on the place and workforce employed by the organization. they have been thoroughly studied and debated upon, which finally resulted in awareness raising on the concept of quality culture among all the people involved. this is meant to create a new concept within the organization able to overcome all the discrepancies and disagreements that may have a negative influence on the organization operation. the following principles have to be complied with in order to achieve high quality: quality does not happen by chance, but it is the outcome of a lengthy process; quality should be the preoccupation of each employee; all the activities should be accurately performed from the very beginning; quality is the result of a continuous learning process improvement; quality is achieved as a result of a communication and cooperation process. employees should be given the opportunity to express their opinions, concerns and fears openly, so as to be able to better understand the need of change and to act according to the expectations of the management. for an adequate quality culture development process, each employee of an organization should comply with certain compulsory characteristics, which are: acceptance of a quality culture philosophy at all the organization levels, efficient communication among departments, between departments and management, between employees and management, rewarding and recognition of highly deserving employees. several qualitative research personalities have talked about the need to implement in any organization, regardless of its size, an adequate quality culture, according to the place, time and types of employees. one of the most fervent supporters of this concept was j. m. juran, qualitative research specialist and theoretician, who proposed and implemented the concept of “conflict between studies and scientific researches economic edition, no. 15, 2010 250 cultures”, that is between those who want change and those who reject it or are opposed to the idea. the management should take the necessary actions to identify each side or the opposing structures, and then to discuss and explain the reasons accounting for the need of change, which will finally lead to success within the organization. the organization management should identify, either from the very beginning, or throughout the process, the need of change of the mentality of the workforce related to the most sensitive aspect, which is quality. senior management should consider this aspect, as the whole organization staff is involved in the provision of services or goods, which will be used or distributed within or outside the organization. as any other entity, an organization operates according to well-established rules and is composed of staff that sometimes varies, which also impedes upon the quality of the services or goods. there are however people within the organization, both at the management and at the production levels, who behave according to the ”it might work” rule or, even more frequently, according to the “to err is human“ principle. conducting the organization business according to these principles may seriously harm both the company image, and profit and turnover. this type of workforce is in a permanent need of control and inspection designed to ascertain the deviations or differences that they should have been able to identify and analyze themselves, and then make the adequate decision related to the solving of the deficiencies found. nonobservance of these rules leads to the creation of noncompliant goods, whose sometimes major deficiencies require recovery costs that result into an artificial product or service cost increase, which has a boomerang effect on the organization. if such products or services are launched on the market, they will most certainly trigger a loss of company reputation before its regular or prospective customers. the organization management should perform an extremely thorough analysis of the main quality policy objectives and they should also develop a simple and useful method to increase the employees’ interest in organizational quality and culture. experts call this quality culture shaping and development method group culture analysis. by means of this analysis method, senior management should identify the groups inside the organization that have the highest involvement in producing and promoting the product or service quality levels. the analysis should also determine the responsibilities of the departments both directly and indirectly connected to the level of quality of the goods and services provided by the organization. the analysis carried out by the management should establish to what extent there are major differences between the current values and the culture of the inner groups, where they should start from when implementing these measures, which will finally lead to objective fulfillment, that is higher quality levels. laying the foundation of these transformations of the organization cultural environment should start from the senior management and work its way down to the last performer in the organization. organizational quality culture is therefore the day-to-day manifestation of the workforce within the organization, underlying the employees’ values, traditions, behavior and attitude at the workplace. quality has ceased to be the sole preoccupation of the organization, as it has become a concern for each individual, thus turning into an education and culture component, which allows a better understanding of its necessity, as well as the discovery of what is best in the world. quality is also a behavior component, involving persistence, resumption, review and tenacity in one’s work. although the notion of quality, as a fundamental component of the human behavior, exists from the beginning of its history, the concept of quality has been tackled by the management science for about two decades, when research was initiated in europe, and the quality actions materialized within each organization in organizational objectives and structures. studies and scientific researches economic edition, no. 15, 2010 251 organizational management has therefore enriched itself with a new field – that of quality management. the development of all the workforce management processes, for a coherent personnel administration, requires the following: modernization of the initial and continuous workforce training system, for the purpose of providing the required professional skills. motivation, psychological assurance and work relations improvement, designed to attain higher staff satisfaction related to their professional expectations and social status requirements, and at the same time meant to achieve a balance between the institution and employee interests. workforce management should consider the following priorities: international cooperation development and implementation of the european workforce management good practices; extended partnerships with the civil society and inner cooperation within the field of practice; law observance monitoring in workforce management; development of coherent, unified, transparent and non-discriminatory personnel policies and procedures; professionalization of the workforce management practices; improvement of the workforce career management system; correlation between the employees professional careers and their initial and continuous training programs; modernization of the institutional structure of staff initial and continuous professional training; assurance of a tighter connection between the operative work needs, theoretical professional training and internships in the company initial and continuous training institutions; work environment improvement, work safety and security assurance, staff cohesion, motivation and disciplinary practices provision; better organizational culture management and implementation of a modern, effective and efficient behavior of the institution workers; development of computer-based personnel data management solutions. workforce quality is closely connected to and dependent upon both the level of general education and professional training, and the country’s economic development. throughout the millenniums, man has evolved from plant cultivator and animal breeder, to producer and even creative worker nowadays. this process also involved the progressive evolution from a mostly physical work to an increasingly intellectual effort. due to production automation, robotization and computerization, the place and role of the human being in economy has changed, turning creative work into the decisive factor of economic life. a superior professional training level acquires an overwhelming importance in work potential formation and its putting to good use, which means that school, due to its various levels, fields and specialties, plays a decisive role. at the same time, the scientific and technical developments, the increasingly complex production processes, the rapid depreciation of the amount of knowledge acquired during initial training, point out the imperative needs of professional training improvement in employees. the actual forms of manifestation of this process are numerous and they differ according to profession and specialty, to company needs, to the requirements of the position held, to the employees’ interest and promotion possibilities, etc. the improvement of the qualitative content of the work itself and its fruits brings about objectively longer spare time opportunities throughout a man’s life, which is the expression and premise of an increase of the role of the human factor and of the degree of civilization in general. studies and scientific researches economic edition, no. 15, 2010 252 considerations regarding romania in romania, the offer of training programs designed to increase workforce flexibility is limited: only 40% of the companies provide multi-training programs, and less then 23% retraining programs. the most frequently evoked reason was the fact that the current knowledge level of the employees meets the organization requirements, and therefore companies preferred to recruit already trained personnel instead of consuming their financial resources for personnel training. a significant percentage of 52.0% of the companies did not provide professional training because of the high costs of employee training. the initial employee professional training process requires certain financial efforts from the companies, materialized in workforce cost expenses regarding the trainees, the trainers and mentors, the location (rent, electricity and water), equipment and charges1. there are still few companies promoting a systematic human resource development approach. thus, only 44% of the companies providing professional training actually have a training strategy and only 33% included this strategy in the overall company development plan. most of them enjoy limited resources (40% of the companies allocated a special training budget and 20% of them have employees that are actually involved in organizing professional training activities). an efficient method used to assess the improvement of the knowledge acquired during the training courses by the trainees is the assessment of the course effect by various means. training course providing companies assessed the effect of the courses provided using one or several of the following methods: assessment of the level of satisfaction of the trainees at the end of the professional training, testing the acquired knowledge, assessment by the superior or by means of a questionnaire, use of the production improvement measuring indices. further to the analysis of the assessment methods, we noticed that the most frequently used methods were those determining the level of satisfaction of the trainees attending the fpc at the end of the training and those in which the assessment was made by the superior or by means of questionnaires. 91.7% of all the assessing companies preferred these methods. 86.3% of the companies that assessed the effect of the courses used tests, while only about 76.6% of the assessing companies chose the assessment method based on production improvement measuring indices. the purchase and commissioning of new equipment, machinery, facilities, as well as the reengineering of the processing processes require a particular level of knowledge of the workers, their training and retraining. conclusions here are some of the factors generating competitiveness in our globalized world: knowledge, innovation and training. highly trained workforce considerably contributes to the reduction of the costs incurred for the implementation of new technologies and, at the same time, supports the employees with a poorer training level to be able to use the new technology. continuous education thus becomes the main component of the work quality increase strategy. good knowledge and insight are essential for the stimulation of the use of new technologies, of the prevention of work market segmentation generated by the various levels of employee training. 1 caracteristici ale form rii profesionale în întreprinderile din românia (characteristics of professional training in romanian companies) bucharest 2007, p.43 studies and scientific researches economic edition, no. 15, 2010 253 references: 1. s.becker capitalul uman-o analiz teoretic i empiric cu referire special la educa ie (human capital a theoretical and empirical analysis, with special reference to education), romanian edition published by all publishing house, bucharest, 1997 2. ricardo, d. despre principiile economiei politice i impunerii (on the principles of political economy and taxation), vol. i, ii, romanian edition published by the academic publishing house, bucharest, 1962 3. sehnbruch, k., from the quantity of employment to the quality of employment: an application of amartya sen’s capability approach to the chilean labor market, phd thesis, cambridge university, 2003 4. caracteristici ale form rii profesionale în intreprinderile din românia (characteristics of professional training in romanian companies), forproi.n.s.-bucharest, 2007 5. anuarul statistic al româniei (statistical yearbook of romania), 1990 – 2008 6. http://europa.eu.int/comm/eurostat/public/datashop/printproduct/ studies and scientific researches economic edition, no. 15, 2010 254 studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 36 key drivers of brand loyalty among homogenous firms: the case of the nigerian telecommunication industry obukohwo oba efayena foundation for economic research and training (fert) lagos, nigeria. economix4life@gmail.com enoh hilda olele department of economics delta state university, nigeria. oleleehilda@gmail.com ngozi patricia buzugbe department of arts & humanities delta state polytechnic, ogwashi-uku, delta state, nigeria buzugbengozi@gmail.com abstract no firm operate in a vacuum without interacting within the immediate environment as well as reacting and counteracting with internal and external forces. each firm operating in an industry strive to expand its operations gaining more market shares, while warding off rival firms from gaining competitive grounds comparatively. the nigerian telecommunication industry possesses the characteristics of an oligopolistic industry which is predominantly a competitive industry with rival firms vying to retain customers’ loyalty and expand market share. the study thus investigates the impact of key drivers on brand loyalty among the firms. the pls-sem analysis employed in the study showed that while communication, cooperation and trust positively impact brand loyalty, product quality, value-for-money and service quality had no significant impact on brand loyalty. the study thus recommend that individual firms take conscientious efforts to develop and implement policies to stimulate brand loyalty as well as expand market share. the policy implications of this study can be applied to other competitive industries in nigeria. keywords brand loyalty; firms; telecommunication; product quality; competitive jel classification l80; m21 1. introduction with advancing technologies, the global telecommunication industry is becoming more digitalized and competitive. this industry has created a solid framework for a global digitalized economy, and has connected all echelons of social and economic activities. the importance of the telecommunication industry cannot be overemphasized. even in period of the global health crisis such as the ravaging covid-19 pandemic, the industry powered economic activities the world over, averting a potential “total lockdown” crisis. apps such as zoom, cisco webex, whatsapp, skype, viber, wechat, line, you tube and others were all powered by data from the telecommunication industry. the narrative is not different in nigeria as the industry has evolved through the years and have been striving to meet the demand of the teeming populace. with general inefficiency in the country’s indigenous communication firm, nigeria telecommunication limited (nitel) which necessitated full and partial liberalization efayena, olele, buzugbe 37 of the industry in 1992 and 1999 respectively, more homogenous firms have evolved to meet up with the challenges of telecommunication in nigeria. specifically, there are about eight licensed telecommunication firms in nigeria which include mtn, airtel nigeria, globacom, 9mobile, smile, ntel, swift network, spectranet and mainone with the first four having a larger share of the market. the metamorphosis in the nigerian telecommunications industry has resulted in the migration from traditional landlines to various brands of handheld phones. the teledensity, landline telephones per 100 individuals domiciled in a given area, has generally been on a downward trajectory in recent years. clearly, this trend showed that users are gradually moving from the use of landline telephones to more sophisticated phones. this also implies that service providers such as 9mobile, airtel, glo and mtn have taken over a large share of the previously monopolistic telecommunication industry and has more or less formed an oligopolistic market structure following government’s full and partial liberalization of the industry in 1992 and 1999 respectively. this trend has resulted in greater competition since customers have a basket of alternatives from which choices can be made hence network upgrade and expansion of service portfolios is the focus of network providers in order to retain customers, while trying to attract new ones to their organizations. the automate goal of rival firms in the nigerian telecommunication industry is to become a customer-centric firm. competition among rival firms is a pervasive phenomenon. in general, as competition between firms intensifies, the need to retain customers comes to the fore. this is important since brand loyalty will impact the profitability of firm (climes, 2016; faroog, 2018). such loyalty on the part of the customers has to do with the attitude and behaviour of the customers, with customers willing to persist to the product(s) irrespective of choice alternatives (cossio-silva, et al., 2016; lian & yoong, 2017). this has resulted in cost reduction and market attraction (dean, 2007; yang, et al., 2019; somasundaram, et al., 2018; ali, et al., 2019; budianto, 2019). there are several studies on the positive effect of brand loyalty on organizational performance. such studies range from the banking sector (bogati & vongurai, 2016; tweneboah & farley, 2015); the airline industry (azad & sadeghifar, 2019; lin, et al., 2018); the hospitality industry (cheng, et al., 2019; aldaihani & ali, 2018; chang, 2013; chien-hsiung, 2011; habib, et al., 2011); the telecommunication industry (husain, 2015); the textile industry (yeap, et al., 2018); the electrical industry (leong & rahman, 2019); to the automobile industry (loureim, et al., 2017); among others. in nigeria, brand loyalty persists in several industries. for instance, it can be seen in the nigerian carbonated soft drinks market, which is predominantly dominated by coca-cola and pepsi for many decades. although, coca-cola has been operating in nigeria since, 1951, it can clearly be observed that brand loyalty exists when the volume of consumption of pepsi drinks which only came into operation in nigeria during the early 1990s is considered. individuals exhibit long-standing loyalties to these brands as the coca-cola and pepsico adapt several aggressive strategies to retain customers as well as expand market share. further, brand loyalty can also been seen among mobile phones brands. this market is predominantly occupied with brands such as nokia, techno, itel, blackberry, among others. as competitive as it is, the issue of brand loyalty in the nigerian telecommunication industry is oblivious to many. drawing from the fierce competition among rival firms and the volatile demand of their products, the nigerian telecommunication industry requires an in-depth study as to brand loyalty since this holds the key to firms’ profitability and sustainability in the industry. explicitly, there is urgent need to appraise the impact of variables such as product quality, trust, cooperation, communication and commitment on brand loyalty. this is essential since the general performance and sustainability of the firms depend on retain customers’ loyalty and key drivers of brand loyalty among homogenous firms: the case of the nigerian telecommunication industry 38 market expansion. this study is thus geared at evaluating the impact of brand loyalty in the nigerian telecommunication industry. following this brief introduction, section 2 presents the methods employed in the study, sections 3 and 4 discusses the results of the study and concludes the study, respectively. 2. methods 2.1. sampling technique the study adopted a cross-sectional approach in collecting data from customers of the four (4) giant telecommunication firms in nigeria, namely, 9mobile, airtel, glo and mtn. obtaining the entire population of customers of these firms is impossible given space and time. the population of telecommunication services exceeds 1,000,000 individuals. according to gill, et al. (2010), within a 95 percent confidence level, a minimum of 384 individuals are adequate for such a study. this study distributed a total number of 500 questionnaires which far exceeds the given threshold. therefore, a simple random sampling technique was adopted in which every individual in the population has equal rate of being included in the sample, thus avoiding sampling bias. visits were made to the service centres of the various telecommunication operators to elicit the needed information. due to restrictions brought about by the covid-19 pandemic, visitations were made within three months after the removal of vehicular and human movements to ensure that a relatively large proportion of end-users were captured in the study. this time period is deemed appropriate since it will adequately reflect customers’ loyalty to the brands after the complete lockdown of economic activities. collection of questions spanned over three (3) months with a total of 467 questionnaires returned. after appropriate consideration, only 431 questionnaires were suitable for analysis. 2.2. data a self-administered questionnaire was employed for the study. the questionnaire consists of two sections. section a elicits respondents’ bio and socioeconomic information, while section b covers the relational variables related to brand loyalty. the choice of variables employed in the study followed previous studies (leong & rahman, 2019; yeap, et al., 2018). the variables include brand loyalty, product quality, cooperation, communication, trust, value-for-money and service quality. these variables all have three (3) measurement items. while the brand loyalty was measured using a 5-point likert scale (1 = definitely disagree, 2 = disagree, 3= neutral, 4 = agree, 5 = definitely agree) the other variables was measured with a 7-point likert scale, ranging from 1 (strongly disagree) to 7 (strongly agree). the internal reliability was obtained from a pilot run and the cronbach alpha coefficients for brand loyalty, product quality, cooperation, communication, trust, value-for-money and service quality were estimated at 0.69, 0.81, 0.78, 0.84, 0.83, 0.67 and 0.71, respectively. these estimates were above the 0.60 minimum alpha (nunnally, 1978). 2.3. method of data analysis the study adopted the partial least squares structural modelling (pl-sem) technique. the convergent validity and the discriminant validity was carried out to ensure the reliability of the empirical results. the findings of this study can therefore be applied to other industries in nigeria. efayena, olele, buzugbe 39 3. results 3.1. descriptive statistics an x-ray of the collected results showed that a large proportion of the respondents (69.8 percent) were females. most of the respondents were within the 30-45 age bracket (59.3 percent), while the least was within the 60+ age bracket (2.1 percent). education-wise, most of the respondents had university first degrees (47.3 percent). 8.2 percent of the respondents had no formal education, while the educational class with the least respondents was postgraduate degree (2.9 percent). 3.2. empirical findings 3.2.1. principle factor test in order to avoid the common method bias in which the measurement method rather than the constructs determines the variance in the variables employed, the study employed the harman’s single factor test. the principle factor obtained was 29.13 percent. this was below the proposed threshold (podsakoff & organ, 1986). this indicated that the model was devoid of common method bias. 3.2.2. measurement model the pls-sem analysis results were presented in table 1. it presented the composite reliability scores and average variance extracted (ave) for all the constructs in the model. table 1. convergent validity construct measurement item indicator reliability average variance extracted (ave) composite reliability brand loyalty (bl) bl1 0.811 0.763 0.921 bl2 0.937 bl3 0.803 product quality (pq) pq1 0.822 0.831 0.909 pq2 0.907 pq3 0.926 cooperation (cn) cn1 0.930 0.806 0.938 cn2 0.863 cn3 0.871 communication (cm) cm1 0.842 0.716 0.873 cm2 0.819 cm3 0.837 trust (tt) tt1 0.843 0.762 0.916 tt2 0.804 tt3 0.897 value-for-money (vm) vm1 0.853 0.765 0.911 vm2 0.910 vm3 0.887 service quality (sq) sq1 0.941 0.827 0.951 sq2 0.916 sq3 0.902 source: authors’ compilation key drivers of brand loyalty among homogenous firms: the case of the nigerian telecommunication industry 40 a cursory observation of table 1 shows that the coefficients of the indicator reliability of all the constructs were above 0.80, with a lower bound of 0.803 and an upper bound of 0.941. the lower bound of the composite reliability was 0.873, while the upper bound was 0.951. these values exceeded the 0.70 threshold value (hair, et al., 2017). the same was true of the average variance extracted (ave) values obtained. each of these values exceeded the 0.50 threshold value (fornell & larcker, 1981). the results of the convergent validity showed that the variance in the variables was largely explained by their constructs. there was also a need to establish that a given construct was truly distinct from other constructs in the model. the study employed the heterotrait-monotrait ratio of correlation (htmt) test. table 2 presents the results of the discriminant validity test. table 2. discriminant validity construct bl pq cn cm tt vm sq bl 0.734 pq 0.411 0.717 cn 0.420 0.379 0.749 cm 0.327 0.368 0.417 0.715 tt 0.501 0.429 0.476 0.413 0.759 vm 0.336 0.437 0.346 0.532 0.551 0.723 sq 0.419 0.528 0.438 0.391 0.332 0.468 0.724 source: authors’ compilation the values in table 2 showed the correlations between the constructs in the model. henseler, et al. (2019) proposed an htmt criterion of 0.85. the correlation values showed that the constructs are distinctly different and unique since the values were below the proposed threshold of 0.85. that implied that each construct can be judged on its own merit. 3.2.3. structural model the structural econometric model results in more than the conventional causal relationships in their reduced form. a well specified structural model is capable of identifying the mechanisms which determine outcomes, as well as quantify impacts on specific outcomes (hamish & meghir, 2017). thus, the structural model was highly recommended for the study since the structural model has the capacity of determining the impact of each of the key drivers of brand loyalty. by applying a bootstrapping procedure with 4,999 resampling following leong and rahman (2019), the study obtained the following results as presented in table 3. table 3. empirical results relationship beta t-statistics p-value decision h1: pq bl 0.263 0.199 0.438 not supported h2: cn bl 0.158** 4.211 0.000 supported h3: cm bl 0.259** 3.966 0.000 supported h4: tt bl 0.183** 4.602 0.000 supported h5: vm bl 0.326 0.187 0.513 not supported h6: sq bl 0.116 0.355 0.214 not supported note: * and ** signify p < 0.05 and p < 0.01 significance level, respectively. source: authors’ compilation efayena, olele, buzugbe 41 of the explanatory variables, cooperation (β = 0.158, p < 0.01), communication (β = 0.0.259, p < 0.01) and trust (β = 0.183, p < 0.01) have a significant and positive impact on the dependent variable (brand loyalty). thus, only h2, h3 and h4 were supported. however, product quality, value-for-money and service quality did not exert any significant impact on brand loyalty. hence, h1, h5 and h6 were not supported. these findings contrasted previous studies (grace & o’cass, 2005; krystallis & chrysochuo, 2014). the predictive accuracy of the model captured by the coefficient of determination (r2) was high. an estimated r2 of 0.632 shows that the model adequately explained variance in brand quality. 4. concluding remarks the study analyzed the impact of selected relational variables on brand loyalty among homogenous firms in the nigerian telecommunication industry. basically, cooperation, communication and trust exerted a significant and positive impact on brand loyalty, while impact of product quality, value-for-money and service quality on brand loyalty was insignificant. the study found that in order to achieve individual firm’s objectives of loyalty, retention and market expansion, as well as careful consideration should be given to policies that enhance the quality of the firm’s products and services. this will ensure that customers maximize their value-for-money. the firms should continue to strengthen and improve on cooperation, communication and trust with customers to maintain their loyalty towards the brand. specifically, telecommunication firms should create a platform in which customers can personalize their experience with the firm. this can be achieved through bigdata technology. in addition, customers should be sensitized on new products on arrival. such policy-mix will ultimately enhance firm performance in the long run. references aldaihani, f.m.f., ali, n.a. 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(2018), key drivers of brand loyalty among malaysian shoppers: evidence from a japanese fashion retailer, asian academy of management journal, 23(2), 1-24. microsoft word apostoaie constantin marius_eng.doc the sustainability of public debt in romania in economic and financial crisis marian dobranschi, “al.i.cuza” university of iasi, romania abstract public finances are key driver in the eu for economic recovery as the debth of the recession and credit constraints require fiscal policy action. this paper emphasis the needed review of public debt and its role in economic development as a particular challenge for emerging economies such as romania. we explore the most important effects of public debt on economic growth like crowding-out effect, the realtionship between private and public financial transfers, the effect of public debt over gdp growth, inflation and on the sustainability of fiscal policy on the long run. finnaly we estimate that the composition of public debt can suport debt stabilization and how debt management can stabilize the debt to gdp ratio in face to real returns and outputs growth and thus supports fiscal restraint in ensuring sustainability. keywords external public debt, debt sustainability, economic growth, debt management, crowding out effect, budget deficit. jel codes: h62, h63, h68 introduction governments have to often borrow in order to finance expenditures on public goods and services that promote growth and increase nation’s welfare. the decision of how much to borrow is that of fiscal policy which determines the targeted level of debt based on a sustainability analysis of government debt. one concept of sustainability relates to solvency, the ability of the government to service its debt obligations in perpetuity without explicit default, [6, p. 95]. another concept put forth [6, p. 108] renders fiscal sustainability a broader scope by relating it to the government’s ability to maintain its current policies while remaining solvent. the growth of public debt has important implications for the economy. the growth of domestic debt leads to an increase in debt servicing costs, leaving less for investments in economic infrastructure and expenditures on such vital items as health, education and social security. the expansion of public borrowing can lead to the crowding out of private investments, especially when government borrows to cover current consumption spending and interest payments. of course, it may not affect overall economic growth if government expenditure is mostly incurred on capital formation, such as the creation of infrastructure. since the build-up of internal debt generally creates pressure on future inflation and an interest hike, in addition to the crowding-out effects, it may have an undesirable impact on the economy and society. an increase in fiscal deficits and public debt places negative pressure on financial systems and growth prospects, eroding a country’s creditworthiness. during the last 20 years, rising public debt has become a key issue in economic policy debates in many european countries, including romania. the stability and growth pact (sgp) and the maastricht fiscal criteria for entry into the european economic and monetary studies and scientific researches economic edition, no. 15, 2010 206 union (emu) aimed at securing sustainable fiscal policies. more recently, however, it has turned out that the rules of the sgp could not be enforced, and that fiscal deficits have surpassed the 3% of gdp limit in several emu countries. amendments to the sgp rules are being widely discussed and many observers question policy maker’s determination to stick to sustainable fiscal policies. apart from the political debate about the sgp, the questions as to which fiscal policy is sustainable in the long run and whether policy makers are ready to succumb to sustainable fiscal policies are of interest. there is wide-spread agreement among economists about sustainability of public finances meaning that budgetary policy observes the long-term government budget constraint. according to this prescription, the sum of discounted future government budgetary surpluses must not be smaller than discounted future government debt including the initial stock of debt. the actual behavior of fiscal policy makers, on the other hand, is much less clear. in particular, to judge whether fiscal policies in a particular country were sustainable over a certain period of time, much information about past, present and future government budgetary policies is required, and assumptions about several parameters are necessary for most tests of this question. a major reason why emerging economies are more prone to financial crises than mature economies is the atypical composition of their debt. thus far, the literature has largely focused on external debt, notably on the inability of emerging economies to borrow in international capital markets in their domestic currency, which is sometimes coined the external dimension of ‘‘original sin’’. evolution of public debt in post-socialist romania at the beginning of the transition period in 1990, the public debt in romania was insignificant. during the following years, the accumulation process accelerated. by 1998, the domestic public debt, together with the country’s external debt, already increased to nearly 40% of gross domestic product. although the indebtedness degree of the country continues to be smaller than levels registered in other european countries, more dangerous is its accelerating trend in conditions of some not so very high-performing macroeconomic policy management. in order to adhere to nato and european union actions and agreements with international financing institutions, such as the international monetary fund and the world bank, the problem of public debt and budgetary deficits has become more and more sharp. the major difficulties proceed from weak performance of the romanian economy doubled by the complex problems of economic reform and restructuring, but also by more restricted access to external financing on international markets. during the period after 1989, romania faced more public debt accumulation as a new matter of macroeconomic policy, in contrast to other central and east european countries such as bulgaria, the czech republic, hungary, or poland. while the external debt of romania was insignificant in 1990 (us$230 million), the other central and east european countries were already confronted with debt amounts of many billions of us dollars (hungary – us$21.3 billion, bulgaria – us$10.9 billion, czech republic – us$4.4 billion). in the case of poland, the figure was close to us$50 billion. eight years later, in 1998, the external debt of romania already increased to more than 9 billion usd, while the other countries (with the exception of the czech republic, where external debt was five times larger than in 1990) registered either a modest growth (e.g. the case of hungary with growth of us$5.5 billion) or even a diminution (poland with more than us$6 billion, partially caused by cancellation of a proportion of its external debt, and in bulgaria with us$1 billion). one of the weakest performances of the romanian economy after 1989 was the poor experience regarding the management of public debt and budget deficits. in romania, contrary to advanced countries, the external debt is the main component of total debt. however, in later years one can see that the accumulation of domestic public debt became a more important source to cover deficits. for instance, in 1998 it represented close studies and scientific researches economic edition, no. 15, 2010 207 to 8% of gdp. this evolution is in direct connection with efforts to improve the management of domestic debt, especially by enacting a new rule in april 1997 regarding the development of a secondary market for state obligations, restricting access to external sources of financing and taking over in public debt an important volume of non-efficient credits. for instance, the share of state loans approved by special normative documents evolved as follows: in 1992 – 8.1%; in the 1993-1996 period– an average level of 5.7% (with a maximum share of 11.7% in 1995); and in 1998-1999 – more than 30% during an accelerating restructuring process of the banking system. it is remarkable to see that romania has also begun to demonstrate the correlation between election cycles and accumulation of public debt. according to this, when the leading political coalition has a large number of parties with various political orientations, as is the actual situation in romania, then the budget policy loses its coherence and deficits will increase. on the contrary, in countries where the political power is in the hands of only one strong party, the chance to apply an efficient management of public debt is greater. debt management role in ensuring its sustainability external debt management involves balancing resource mobilization and deployment as well as orderly repayment of future obligations. for sustainable debt management, policy makers need to project accurate debt dynamics that are sensitive to the way the current account deficits are being financed. if borrowed resources are not used productively, external borrowing can result in severe debt servicing difficulties. debt management authorities therefore need to focus on efficient allocations of capital in sectors generating proper returns, and should effect monitoring to determine whether the borrowed resources are being used to improve the country’s production capacity so that future obligations are serviced [15, p. 112]. there is no rule of thumb for determining whether a country’s debt level is sustainable. for an accurate projection on debt sustainability, several indicators should be assessed simultaneously in a forward-looking way. it should be noted, also, that debt sustainability analysis has to be country-specific, with consideration of the country’s debt history, the level of sovereign ratings and the degree of development in the financial sector and capital markets. a country is said to have unsustainable debt if its level of debt has made its servicing projection (amortization as well as interest payments) incompatible with the projection of net capital inflows. temporary liquidity problems can also make debt servicing difficult when they are triggered by a sharp drop in export earnings, an increase in interest rates, appreciation of the contracted currency, or increases in the price of imports, such as oil. the currency and interest rate composition of debt, its maturity structure and the availability of resources for debt repayments are all important factors that affect the vulnerability of the economy to external liquidity crises. debt sustainability analysis considers the indicators of “solvency” as well as “liquidity” together. this way of analysing debt sustainability resolves the issue whether a country needs to reduce its debt, as in the case of solvency, or to reschedule and restructure debt to make it sustainable. the common set of solvency indicators has been the ratio of external debt to exports, external debt to national income, debt service ratio and interest service ratio. the level of short-term debt has also been considered an important liquidity risk factor that can precipitate a foreign exchange crisis, especially when coupled with high or unsustainable current account deficits. recent debt sustainability analysis takes into account the ratio of short-term debt to total outstanding debt and the ratio of international reserves to shortterm debt as common indicators of liquidity. the trade deficit also reflects a macroeconomic disequilibrium. on the demand side of gdp growth, due to the higher rate of import volume increase than the export volume one, the negative contribution of net exports in 2006, for instance, cut almost half of the domestic demand, resulting a real gdp growth rate of 7.7 percent (see table 1). from this point of studies and scientific researches economic edition, no. 15, 2010 208 view, the international trade is slowing the economic growth of romania and if the domestic demand hadn’t been driven by the final consumption (fuelled by the credit expansion) a much lower gdp growth rate could have been registered. table 1 evolution of gdp years 2003 2004 2005 2006 2007 real gdp growth 5.2 8.5 4.1 7.7 6.5 contribution of: domestic demand 8.8 12.9 8.7 14.1 12.3 net exports -3.6 -4.5 -4.5 -6.4 -5.4 source: romanian national commission for prognosis the macroeconomic costs of the persistent trade deficits are severely penalising romania. the reversal of a high gdp growth rate of romania, which is trying to match the development gap with eu during the process of economic and monetary convergence, is the worsening of its external balance. in our view, the trade and current account deficits are also revealing the romania’s lack of competitiveness, the limited resilience capability to the market forces pressure and the integration difficulties, not only in europe but also at the global level. the energy intensity stands for the competitiveness factor with the most significant gap compared to other european countries. moreover, the energy inputs, more and more expensive, spread through inefficient channels in the entire economy are seriously damaging the product competitiveness both on internal and external markets. the huge energy bill (including from imports, which amounted to eur 5 billion in 2006, under the circumstances of higher world prices) is also a major contributor to trade deficit widening. the vicious circle of romania’s economic growth (see figure 1), whose primary causes have been shown, is made up by a chain of vulnerabilities, starting from the obsolete economic structures (energy-intensive and material-intensive) which are creating an intrinsic dependency on imports, contributing to the rise of trade deficits and implicitly of current account deficits, whose coverage through progressive compensatory flows is going to increase the external debt. as a consequence, higher risks for the external balance sustainability occur, including for a financial turmoil, which could damage romania’s international position and its economic development. [8, p.94] figure 1: the vicious circle of economic growth in romania studies and scientific researches economic edition, no. 15, 2010 209 the impact of public debt on economic development the conventional approach postulates a positive relationship between both the deficit and the inflation rate and the deficit and a negative current account, and no perceptible impact of the deficit on economic activity. indeed, according to this theory, a rise in the deficit results in an additional supply of government bonds, which can only be sold by offering a more attractive yield, is creating upward pressure on interest rates. consequently, the initial boost to the economy created by the deficit’s impact on global demand ends up being partially diluted by the falloff in investment attributable to higher interest rates. this is called the “crowding out” effect. also, the resurgence of demand draws in its wake an overheating of the economy, resulting in price increases. in the event that the deficit is monetized (printing money), the resulting fall in interest rates and increase in production will be very short lived, since the acceleration of inflation will drive these variables to their previous levels. in terms of foreign trade, the conventional theory postulates that a rise in the deficit, with its associated interest rate increases, stimulates an influx of foreign capital that must be compensated by a current account deficit owing to balance of payments identity. consequently, all the elements are in place for the deficit to be an indicator of a macroeconomic management that is on the skids. also, since the deficit drives inflation, it can only result in a depreciation of the national currency, according to the monetarist approach and the ppp model. it should also be noted here that the impact of inflation expectations on the exchange rate dominates that of the upward pressure on interest rates. indeed, the deficit can result in negative real interest rates. the classic theories of budget deficit demonstrates its negative impact on economy (by reducing the national revenue) and living standard of the next generations that have to stand a higher fiscal pressure to pay the public debt. engaging to budget expenditures higher than the current revenues is an imprudent policy with multiple effects. the increase of internal public debt as the effect of budget deficit financing from public loans may cause the bank interest increase with negative effects on investment credit demands and inflation [10, p.445]. financial turmoil risk external financing external debt trade deficit trade balance obsolete economic structure dependancy on imports current account deficit studies and scientific researches economic edition, no. 15, 2010 210 traditionalists argue that a reduction in the budget deficit will significantly help the economy in the long run. this theory is based on the following logic. when the government runs a budget deficit, it is spending more than it is taking in. in this way, national savings decreases. when national savings decreases, investment-the primary store of national savings-also decreases. lower investment leads to lower longterm economic growth. similarly, lower investment is accompanied by higher domestic interest rates, which decreases net exports. based on this logic, a budget deficit is a drain on the long-term economy. traditionalists argue that a reduction in the budget deficit will significantly help the economy in the long run. this theory is based on the following logic. when the government runs a budget deficit, it is spending more than it is taking in. in this way, national savings decreases. when national savings decreases, investment-the primary store of national savings-also decreases. lower investment leads to lower longterm economic growth. similarly, lower investment is accompanied by higher domestic interest rates, which decreases net exports. based on this logic, a budget deficit is a drain on the long-term economy. the present economic theory suggests that the reasonable public loans in a developing country do not alter the economic growth. if the lent resources are used in productive purposes, the repayment of the accumulated debts should be painless. in case of some high public debts there is risk regarding the country’s repayment incapacity that might discourage investments and trouble the economic growth. the theory of excessive indebt was defined by jeffrey sachs who suggested that the payment owned to the creditors acts like a discouraging tax for production and that there is an indebt threshold beyond which any debt marginal increase generates a significant reduction of investments, a fact that reduces the future repayment capacity. the mere existence of a budget deficit, meaning a higher amount of monetary resources in economy, generates inflation. if the budget deficit is covered by monetary issue, the impact on inflation will be even stronger. as the main objective of any central bank is to limit inflation, the monetary authorities will take measures to increase the reference interest that may attract speculative capitals, contributing to the national currency strengthen and consequently discouraging exports. therefore another consequence of the budget deficit is the occurrence of current account deficit. the modern theories of budget deficit consider that this unbalance does not have only inevitable negative effects. according to the “ponzi gamble” theory, a less prosperous future is only a possible consequence of a period with high budget deficits. if the economic growth rate is higher that the debt rate, the budget deficits will be covered by the future economic growth from the general resources. this approach of the budget deficit means to study the average interest rate for the public debt and to compare it with the average economic growth rate. the rational game ponzi in which repayments and debts are always replaced by a new debt was presented in the studies of minsky (1982) and kindleberger (1978). applying the ponzi game, the government may increase the living standard because each generation benefits by transfers and no generation pays additional taxes for them. but this point of view cannot be accepted because the budget deficit, even if it does not always lead to fiscal pressure increase, will determine lower investments as the savings will be mainly placed in governmental titles. despite romania's classification by the world bank in international statistics as a “less indebted” country, together with poland, croatia, the slovak republic, czech republic, estonia, etc. (while hungary is classified as “moderately indebted” and bulgaria as “severely indebted”), some alarming signals were emitted by certain external financing institutions last year. with a background of continuing economic recession for the consecutive third year and a rapid external debt-service burden, certain international agencies specialised in evaluating country risk declassified romania’s score. one of the most important arguments was the worsening of sustainability indicators in correlation with other negative occurrences, such as diminishing accumulation resources, decreasing domestic savings and investment rates, and increasing risk for foreign investments. the fact that more than 90% of the gross country’s studies and scientific researches economic edition, no. 15, 2010 211 debt is externally financed demonstrates the fragility of the national economy and the high degree to which it depends on external financing conditions for collecting new resources. in such conditions, the sustainability problem, already intensely preoccupying external financing institutions of romania, should have to give serious incentives to those having an impact on macroeconomic policy decisions, especially to government. conclusions the external vulnerability became an important issue as a result of recent financial crises. the debates focused on the external and public debt sustainability in order to identify the relationship between these two variables in order to investigate the degree of vulnerability of a country from the point of view of its international financial position and internal stability. so, the recent increase of external debt in romania conduct to the necessity to investigate the debt sustainability for the external position and for the domestic debt. in theoretical and empirical studies on this issue are developed many techniques in order to analyze the debt sustainability regarding the existence and the type of sustainability, and the incidence of economic variables on debt sustainability. these variables can be used to influence the dynamics of public and external debt in order to ensure the intertemporal budget constraint. starting with these methods we find that romanian debt sustainability is weak and there are evidences for long term equilibrium between debt and current account. fiscal policy and government debt matter. first, looser budgetary policies crowd out private investment and lead to more foreign debt, a higher domestic interest rate and lower economic growth. also, taxes on economic activity have adverse supply-side effects. second, even if debt equivalence holds, higher public debt due to an intertemporal shift in taxation causes intragenerational inequity. in practice, heterogeneity among households (due to differences in age or number of children), liquidity constraints, uncertainty, precautionary saving, and distortionary taxes ensure that government debt affects real macroeconomic outcomes. third, even if government debt and public consumption do not affect employment, output and growth, government debt smoothes intertemporal tax distortions and finances temporary rises in public spending or public investment projects with a market return. fourth, unsustainable budget deficits matter because they may necessitate a switch from bond to money finance, leading to unpleasant monetarist and fiscal arithmetic. alternatively, unsustainable budget deficits may cause explicit default. fifth, without reputation or explicit binding contracts for the monetary authorities, the presence of long nominal government debt induces a higher equilibrium rate of inflation due to the danger of repudiation through unanticipated inflation. these time inconsistency problems can be partially overcome by appointing a conservative central banker, indexing public debt or issuing long debt in foreign currency. it is desirable that governments impose a financial straitjacket. most cabinets have many spending ministers and only one finance minister. to give more power to the minister of finance, norms are imposed on budgetary policies. unfortunately most, including the maastricht norms, are procyclical and give debt little role in smoothing intertemporal tax distortions and financing temporary increases in public spending. furthermore, most norms apply to government debt rather than to net government liabilities. governments should borrow for temporary increases in government spending and for net investment in projects with a market return, but the government should levy taxes for permanent increases in government spending and for losses on public investment projects, privatisation issues and operating foreign exchange reserves. in addition, governments may borrow for projects which yield a stream of services over a number of years. a high ratio of government debt to national income matters, since high taxation is needed to service debt. however, it is inadvisable to have a severe fiscal contraction (e.g. a temporary tax hike) to cut the ratio of government debt to national income. romania’s financial stability and its country rating are also facing growing risks arising from the international environment: an abrupt correction of the current account global imbalance studies and scientific researches economic edition, no. 15, 2010 212 and the uncertainties related to the unpredictable monetary flows movements coming from the huge international reserves concentrated in asia, mainly in china and japan. in our opinion, romania is constrained to take steps for preventing a fatal slipping from the sustainable development path and to reformulate its economic and monetary policies, aimed to maintain the external balance, giving priority to exports recovery and to attract foreign direct investments in area with clear comparative advantages. references 1. afonso oscar, alves hernrique rui, vasconcelos b. paulo, “public deficits and economic growth”, economic modelling, april 2009, pp. 1102 – 1112; 2. albu lucian liviu, pelinescu elena, “sustainability of public debt and budget deficit”, economic policy, october 2000, pp. 3-22; 3. becchiochi, emmanuelle and missali, alessandro. „managing debt stability”, universita degli studi di milano, dipartamiento di economia politice e aziendale, www.economie.unimi.it, december 2004; 4. bobeica gabriel, necula ciprian, “modeling the economic griwth in romania.the influence of fiscal regimes”, institute of economic forecasting, june 2008; 5. campeanu emilia, miricescu emilian, “analyzing the relationship between public and external debt sustainability: case study romania”, empirica, june 2008, pp. 148 – 154; 6. claeys peter,“policy mix and debt sustainability: evidence from fiscal policy rules”, empirica, 2008, pp. 89-112; 7. georges patrick.“borrowing short – or long term – does the government really face a trade-off”, public fianance management, vol. 6, nr. 2,2005, pp. 206-243; 8. georgescu george, “current account deficit and implications on country risk of romania”, institute of economic forecasting, october 2007, pp. 88 -97; 9. kraay aart and nehru vikram, “when is external debt sustainable”, the world bank, february 2004; 10. parvu daniela, clipici emilia, “budget deficit perspective in romania”, empirica, april 2009, pp. 444 – 449; 11. melecky, martin. “a cross-country analysis of public debt management strategies”, the world bank, banking and debt management department, policy research working paper, jyly 2007, pp. 30-37. 12. mcfarlane, lavern and robinson, wayne. “public debt, money supply and inflation: a crosscountry study”, imf staff papers, september 2009; 13. panizz ugo, “domestic and external public debt in developing countries”, united nations conference on trade and development, march 2008, pp. 1-26; 14. panizz ugo, “domestic and external public debt in developing countries”, united nations conference on trade and development, march 2008, pp. 1-26; 15. staffs of the international monetary fund and the world bank, “amendments to the guidelines for public debt management”, imf, november 2003; 16. the world bank staff, “external debt and sustainable debt management”, the world bank, washington 2004, pp. 108-121; studies and scientific researches economic edition, no. 15, 2010 213 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 24 considerations on the impact of higher education from an economic and non-economic perspective bogdan vasile nichifor ”vasile alecsandri” university of bacau , bogdan.nichifor@ub.ro laura cătălina ţimiraş ”vasile alecsandri” university of bacau , timiras.laura@ub.ro lumita zaiț ”vasile alecsandri” university of bacau , luminita.zait@ub.ro abstract the impact of higher education is reflected in both individual and collective benefits, economic and non-economic. for example, if pursuing higher education means an increased chance of employment at the individual level and of being better paid, at the macroeconomic level, a higher share of the population with higher education is associated with lower unemployment rates, with an increase in productivity and, consequently, with an acceleration of economic growth. the economic advantages of higher education are complemented by non-economic advantages such as: increased manifestation of civic spirit, increased care and better health, a decrease in crime etc. among the population with higher education. this article aims to highlight some of the economic and non-economic benefits, individual or collective, of higher education, starting on the one hand from information in the literature and on the other hand from official statistical information, using eu statistical information. keywords tertiary education; economic benefits; non-economic benefits jel classification i25, i29 introduction the aim of this paper is to highlight some of the economic and non-economic benefits that higher education has for both society and the individual. information on these benefits was collected on the one hand from the literature and, on the other hand, resulted from the analysis of relevant statistical data, using data at eu level. economic and non-economic benefits of higher education at individual and collective level, as they result from the literature the literature abounds in theories and research approaches that highlight the favorable impact of higher education on economic development, at an aggregate level, on the one hand, and on individuals, on the other. higher education is conventionally associated with three social key functions, namely: significant contribution in the field of education, high impact in the field of research and support in knowledge transfer. nichifor, țimiraș, zaiț 25 the most important dimension of this impact, implicit and visible, is manifested in the area of economic benefits, being known the contribution of higher education in the economic growth of a state, respectively, at individual level, the intrinsic link between the degree of education and income. particular attention should be paid to non-economic benefits, as it is known that the results of education translate, at the individual level, into knowledge, skills, attitudes, and values. in other words, as noted by bynner, schuller, and feinstein (2003), noneconomic benefits capture effects that cannot be directly measured in terms of income and productivity, their contribution being related to increasing quality of life. in this context, it is obvious that higher education also has an important cultural dimension (barr, 2012), contributing, in addition to obtaining a high level of performance at the macroeconomic level, to promoting an extensive set of values. one of the non-economic benefits of higher education is the promotion of civic spirit. the specialized literature that highlighted the impact of higher education on the dissemination of civic spirit refers mainly to the attitude towards the exercise of the right to vote. research in europe and the united states has shown a direct link between education and voting (milligana , 2004; borgonovi and miyamoto , 2010; dee , 2004; teen , 2007), the gap between individuals with higher education and those with a low level of education varying strongly, in the analyzed areas, from the perspective of voting participation. moreover, we appreciate that this discussion can be extended to the area of influence exerted by the representatives of the political environment on the political choices of individuals, the practice proving that individuals with a low level of education are more easily oriented towards supporting a certain political current. on the other hand, individuals with higher education, beyond being more interested in the political life, have their own beliefs, being difficult to urge in the absence of strong rational arguments. correlated with the benefit of manifesting the civic spirit, also in the non-economic area of the advantages provided by higher education is also found the one of increasing the civic commitment. in the field of civic engagement, the literature (calhoun , 2006; borgonovi and miyamoto , 2010; borgonovi , 2012; ogg , 2006) includes values such as involvement in volunteering, participation in public debates, mutual trust and tolerance towards others. if calhoun is the one who supports the theory that higher education institutions are accelerators in the development and increase of civic engagement, especially due to involvement in the public and professional areas, the rest of the mentioned works are focused on analyzing the relationship between education and tolerance to those around, namely trust in society. the liberalization of the labor market and the phenomenon of immigration from the european space were only 2 of the reasons that led to the conduct of research to highlight the link between the level of education and tolerance towards others. thus, bogronovi and miyamoto (2010), studying the phenomenon in 21 european states, showed that highly educated individuals are much more tolerant with immigration than those with a low level of education. practically, in the case of this dimension of civic engagement, it was observed that the marginal rate in the case of individuals with higher education is clearly higher than that of individuals with poor education (41%, compared to 18%). a possible interpretation of this phenomenon is that attitudes and beliefs about society as a whole end in the age range of 18-25 years, which is also the interval for pursuing higher education, when the ground is created for experiencing interaction with foreign students. there are a number of authors in the literature who have highlighted a direct link between the high level of education and the crime rate. for example, machin (2010) and feinstein (2008), respectively zaback , carlson and crellin (2012) are the ones who mention that individuals with higher education are the least likely to commit considerations on the impact of higher education from an economic and non-economic perspective 26 crimes. obviously, the direct link between education level and crime rate cannot be eloquent in the absence of a broader context, which includes both objective indicators (standard of living, job security, etc.) and subjective ones (personality, individual value system). etc.). the impact of the elevated level of studies on health is the area that has been much addressed in the literature. thus, according to studies conducted over time, the following areas of favorable influence of the level of higher education: • individuals with higher education, due to their lifestyle, are likely to fit into the segment of the population with a longer lifespan (chevalier, 2010; hout , 2012); • the educated population, with higher education, is less prone to the assimilation of behaviors harmful to health ( tobacco consumption, alcohol consumption, inadequate quantitative and qualitative food consumption, which generates obesity cutler et all , 2010; kuntsche , 2004), the effects are also felt in the mortality rate (reduction of the mortality rate due to cardiovascular diseases mackenback , 2006; reduction of the incidence of premature births and infant mortality rate, in the case of smoking mothers currie and moretti , 2003); • the high level of preparation of the partners favors the manifestation of a balanced family climate (feinstein and sabates , 2006); • the high level of training is also correlated with the manifestation of an obvious behavior of prevention in the field of health (fletcher and frisvold , 2009; feinstein and sabates , 2004; baum et all , 2010). the literature (brennan et all , 2010; pascarella and terenzini , 2005) goes in depth and even mentions the impact of higher education in terms of individual changes. in other words, it has been observed that for individuals who have completed higher education, this experience is associated with changes in both cognitive and attitudinal, as well as in areas that contribute to increasing the quality of life. a summary of the influences attributed to higher education on individual changes is provided by brennan , durazzi , and tanguy (2013), as follows: • cognitive changes associated with academic development (improvement of communication skills and development of specialized vocabulary; assimilation of skills and abilities in the field of analysis; assimilation of information in various fields; capacity for synthesis and critical thinking, improvement of skills to adapt to innovative technologies etc.) • attitudinal changes (development of civic spirit; high tolerance in relation to others and in relation to society; openness to diversity, etc.); • psychological changes (increased self-confidence; higher control over one's own existence and increased independence; assimilation of interpersonal communication skills, etc.); • changes in the economic and career plan (clearly higher employment opportunities; adequate employment status and high earnings; job satisfaction according to the preparation, respectively according to one's own projections and expectations; job stability; socio economic positioning favorable, high rate of return on investment in education, etc.); • change in the quality of life (improving health and prevention in this area; increasing life expectancy; a substantial improvement in the ability to educate one's children; improving decision-making capacity in the field of private consumption; demonstrating buying behavior predominantly rational, with a tendency to save and invest in income-generating activities; openness to the lifelong learning / improvement process, etc.). nichifor, țimiraș, zaiț 27 according to the theory launched by lagemann and lewis (2010), focused on highlighting the non-economic benefits of higher education, at the individual level, graduates must achieve the following results: skills in interpersonal relationships, multicultural understanding , skills in identifying and solving labor issues, consistency in setting and achieving their own goals and confidence to act in the direction and with the intention of making a difference . the impact of higher education on individual development in areas such as emotional skills, interpersonal skills, ethical behavior, and intellectual abilities has been highlighted by other authors (maxwell, 2007; mchenry, 2007; palmer, zajonic , scribner , & nepo , 2010). individual changes, because of higher education, have also been the subject of modeling processes, with bynner, schuller and feinstein (2003) proposing the conceptualization of social benefits in three dimensions identity capital, human capital and social capital. according to this triangular pattern, human capital captures the knowledge, skills and skill level assimilated by individuals in the formal learning process (changes in cognitive, economic and career development); the share capital overlaps with the changes in attitudes mentioned above; identity capital can be assimilated to psychological changes. starting from the aspects mentioned above, which try to outline a framework of the economic and non-economic benefits of higher education at the individual level, we can identify the specific influences exerted at the macroeconomic level as well. if the effects of higher education on macroeconomic development are known in terms of economic benefits (accelerating economic growth, lowering the unemployment rate and increasing the employment rate, greater flexibility for the labor market, increasing labor productivity, reducing public spending, etc.), non-economic benefits issues are less visible (increased social cohesion, increased tolerance of society, political stability, better social mobility, reduced crime, etc.). hout (2012), starting from the individual economic benefits, namely high incomes for people with higher education, points to the contribution of education in macroeconomic terms, emphasizing the impact on economic growth and the well-being of society. beneficial results on the labor market, seen at the macroeconomic level, from the perspective of flexibility and high employment rate, have been mentioned in numerous studies (hackman, stixrud and urzuna, 2006; brennan, kogan and teichler, 1995; stokes, 2015). economic and non-economic benefits of higher education resulting from the analysis of eu-27 statistics at the level of the european union, there is an increase in the population's interest in pursuing higher education, constantly increasing, in recent years, the share of those pursuing higher education in the total population of 18-39 years, as shown in table no. 1. table 1. students in tertiary education by age groups as% of corresponding age population, at eu level 27 age 2015 2016 2017 2018 2019 18 years 16.0 17.2 19.1 19.9 20.7 20 years 37.1 37.8 40.7 41.3 41.9 22 years 34.2 33.6 36.0 36.4 35.0 24 years 23.0 22.7 24.5 24.7 23.6 26 years 13.2 13.0 14.0 14.2 13.8 28 years 8.3 8.1 8.7 8.9 8.8 considerations on the impact of higher education from an economic and non-economic perspective 28 from 30 to 34 years 3.9 3.8 4.2 4.2 4.2 from 35 to 39 years 2.0 1.9 2.1 2.2 2.2 source: eurostat ( https://ec.europa.eu/eurostat/web/main/data/database ) the interest of the population in the direction of graduating from higher education is obviously related to the potential benefits that they can generate. thus, the statistical information for the period 2015-2020 on the labor market in the european union shows that graduation is associated with a much lower unemployment rate, which shows increased employment opportunities for those who complete the level tertiary education. for example, in 2020, the unemployment rate in the tertiary education population was 4.7%, compared to 6.6% of the upper secondary and post secondary non-tertiary education population and, respectively, 13.7% at the level of the one with less than primary, primary and lower secondary education. (table 2) table 2. unemployment by educational attainment in the eu-27, at the level of the population aged 15 to 74, between 2015 and 2020 (percentage of population in the labor force) level of education 2015 2016 2017 2018 2019 2020 less than primary, primary, and lower secondary education (levels 0-2) 18.7 17.4 16.0 14.5 13.5 13.7 upper secondary and post secondary nontertiary education (levels 3 and 4) 9.2 8.3 7.4 6.6 6.1 6.6 tertiary education (levels 5-8) 6.1 5.4 4.8 4.4 4.2 4.7 source: eurostat ( https://ec.europa.eu/eurostat/web/main/data/database ) figure 1. unemployment by educational attainment in the eu-27, at the level of the population aged 15 to 74, in 2020 (percentage of population in the labor force) source: eurostat ( https: // ec .europa.eu / eurostat / web / main / data / database) practically confirming the information presented above, the indicators that show the evolution of the employment level of the eu population, show that the population with higher education has a much higher level of employment compared to the categories of 13,7 6,6 4,7 0 4 8 12 16 less than primary, primary and lower secondary education (levels 0-2) upper secondary and postsecondary non-tertiary education (levels 3 and 4) tertiary education (levels 5-8) https://ec.europa.eu/eurostat/web/main/data/database https://ec.europa.eu/eurostat/web/main/data/database https://ec/ nichifor, țimiraș, zaiț 29 people with a lower level of education. for example, according to the data presented in table 3, in 2020, 83.9% of the total population aged 15-64 with tertiary education they were employed, compared to 69.9% for those with upper secondary and postsecondary nontertiary education and, respectively, 43.3% those with less than primary, primary and lower secondary education . table 3. employment by educational attainment level, in the eu-27, at the level of the population aged 15-64, between 2015 and 2020 (percentage of total population) level of education 2015 2016 2017 2018 2019 2020 less than primary, primary and lower secondary education (levels 0-2) 41.6 42.4 43.3 44.1 44.6 43.3 upper secondary and post secondary nontertiary education (levels 3 and 4) 68.1 69.1 70.1 71.0 71.4 69.9 tertiary education (levels 5-8) 82.3 83.1 83.9 84.4 84.9 83.9 source: eurostat ( https://ec.europa.eu/eurostat/web/main/data/database ) figure 2. employment by educational attainment level, in the eu-27, at the level of the population aged 15-64, in 2020 (percentage of total population) source: eurostat (https://ec.europa.eu/eurostat/web/main/data/database) from the point of view of income, the population with higher education enjoys a higher standard of living. thus, the information regarding the mean nominal monthly level earnings of employees by employment at the level of some european union countries, correlated with the distribution of the employed population by categories of studies according to occupation, highlights the increased degree of employment of the population with higher education (compared to other categories of population), at the level of those major occupational groups where higher incomes are recorded. thus, according to the data for 2018 for which we have data for several eu countries, the groups of occupations at which the highest incomes are recorded are: ”managers”, ”professionals” and ”technicians and associated professionals” (valid for all countries for which we have data). 43.3 69.9 83.9 0 20 40 60 80 100 less than primary, primary and lower secondary education (levels 0-2) upper secondary and postsecondary non-tertiary education (levels 3 and 4) tertiary education (levels 5-8) % https://ec.europa.eu/eurostat/web/main/data/database considerations on the impact of higher education from an economic and non-economic perspective 30 table 4. mean nominal monthly earnings of employees by occupation, in 2018, at the level of some eu countries (us dollars) the country t ot al m an ag er s pr of es si on al s t ec hn ic ia ns a nd a ss oc ia te d pr of es si on al s c le ri ca l s up po rt w or ke rs se rv ic e an d sa le s w or ke rs sk ill ed a gr ic ul tu ra l, fo re st ry an d fi sh er y w or ke rs k ra ft a nd re la te d tr ad es w or ke rs pl an t a nd m ac hi ne o pe ra to rs , an d as se m bl er s e le m en ta ry o cc up at io ns austria 3348 7773 4562 4105 2974 1964 1723 3455 3127 1736 belgium 3793 8045 5464 4299 3346 2375 nd . 3311 3347 2326 bulgaria 698 1970 1037 826 543 402 465 554 511 378 cyprus 2090 6709 2936 2324 1559 1377 1386 1719 1757 1299 czech 1550 3177 2181 1700 1279 1062 1064 1323 1290 913 estonia 1541 2290 2054 1653 1360 1035 977 1416 1346 1001 finland 3647 7429 4874 3785 3008 2558 2556 3277 3329 2244 germany 3780 9074 5744 4199 3489 2617 2898 3494 3207 2262 greece 1047 1845 1303 1206 1030 860 784 931 991 754 hungary 1151 2231 1636 1206 1069 800 744 1001 959 672 ireland 4270 6822 5982 4437 3481 2753 2852 3493 3439 2767 latvia 1347 1972 1780 1422 1181 888 932 1201 1155 844 lithuania 1122 1873 1402 1061 931 750 695 917 925 647 luxembourg 4247 8520 5617 4177 3400 2729 2716 3178 3271 2002 netherlands 2968 6317 4279 3310 2577 1717 2306 3066 2937 1239 poland 1295 2497 1586 1315 1050 817 805 1080 1070 793 portugal 1049 1920 1567 1151 886 798 713 877 866 633 slovakia 1388 2922 1718 1515 1153 1020 986 1297 1216 782 slovenia 2100 3398 2883 2260 1825 1518 1450 1675 1624 1319 spain 2363 5347 3395 2879 2139 1678 1938 2226 2282 1493 sweden 3980 6741 4694 4268 3336 3141 2980 3589 3440 2796 nd . no date source: ilostat, international labor organization (https://ilostat.ilo.org/) on the other hand, at eu level, according to 2020, 76.7% of the tertiary education population falls into the groups ”managers” (8.7%), ”professionals” (48.8%) and ”technicians and associated professionals” (19.2%); categories that at the level of the population with a lower level of education, are represented to a small extent (26, 3% at the level of the upper secondary and post-secondary non-tertiary education population and 10.2% in the lesser than primary, primary and lower secondary education population). nichifor, țimiraș, zaiț 31 table 5. distribution of employment, 15 years and over, by categories by educational attainment level by occupation, in the eu-27, in 2020 (% in total category after education) occupation total population tertiary education (levels 58) upper secondary and post secondary nontertiary education (levels 3 and 4) less than primary, primary and lower secondary education (levels 0-2) managers 5.0 8.7 3.3 2.3 professionals 20.4 48.8 5.7 1.5 technicians and associate professionals 16.2 19.2 17.3 6.4 clerical support workers 9.7 8.0 12.3 5.7 service and sales workers 15.8 6.8 21.0 20.6 skilled agricultural, forestry and fishery workers 3.5 1.0 3.9 7.9 craft and related trades workers 11.5 2.7 16.0 17.5 plant and machine operators and assemblers 7.5 1.4 10.2 13.0 elementary occupations 8.5 1.5 8.2 24.1 other categories 1.9 1.9 2.0 1.2 total 100 100 100 100 eurostat own processing (https://ec.europa.eu/eurostat/web/main/data/database) a number of non-economic benefits are also associated with a higher level of training. thus, comparing life expectancy to tertiary population categories education with those with a lower level of education finds a life expectancy associated with higher education. thus, considering the information for the period 2015-2017 (the last years for which we have data for a large part of the eu countries) we find that at the level of the countries considered, the highest life expectancy is recorded in the tertiary education population, followed by the upper secondary and postsecondary nontertiary education population, and the smallest life expectancy is registered by the less than primary, primary and lower secondary education population. table 6. life expectancy at less than 1 year, in some eu countries, between 2015 and 2017, by total population and by educational attainment level the country total population tertiary education (levels 5-8) upper secondary and postsecondary non tertiary education (levels 3 and 4) less than primary, primary and lower secondary education (levels 0-2) 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 bulgaria 74.7 74.9 74.8 76.2 75.9 76.8 74.6 75.1 74.8 72.2 72.4 72.4 denmark 80.8 80.9 nd . 82.9 83.0 nd . 81.1 81.2 nd . 77.8 77.7 nd . estonia 78.0 78.0 nd . 80.9 80.9 nd . 77.3 77.4 nd . 72.5 72.6 nd . greece 81.1 81.5 81.4 81.9 81.9 82.5 80.9 81.7 81.2 80.4 80.3 80.2 croatia 77.5 78.2 78.0 78.1 79.2 80.1 75.6 76.7 76.1 76.9 78.2 77.5 italy 82.7 83.4 83.1 82.6 83.6 84.6 83.5 84.6 84.3 81.4 82.0 81.5 hungary 75.7 76.2 76.0 78.0 78.3 79.1 75.6 76.8 76.3 72.6 72.6 72.0 poland 77.5 78.0 77.8 80.9 81.1 81.7 76.5 77.2 77.0 74.2 74.1 72.8 considerations on the impact of higher education from an economic and non-economic perspective 32 portugal 81.3 81.3 81.6 82.8 83.2 84.2 80.2 81.3 81.1 80.9 80.7 81.0 romania 74.9 75.2 75.3 74.8 74.9 76.2 73.8 75.1 74.9 73.4 72.9 72.6 slovenia 80.9 81.2 81.2 83.2 83.7 83.5 80.9 81.1 81.1 78.6 79.0 79.0 slovakia 76.7 77.3 77.3 80.1 80.8 80.6 77.0 77.5 77.6 69.7 69.9 69.2 finland 81.6 81.5 81.7 83.9 83.8 83.8 81.4 81.4 81.6 78.4 78.1 78.4 sweden 82.2 82.4 82.5 84.0 84.2 84.3 82.2 82.3 82.3 80.0 80.1 80.2 norway 82.4 82.5 82.7 84.1 84.1 84.3 82.5 82.8 82.8 79.7 79.5 80.0 turkey 78.2 78.1 78.5 80.0 79.8 80.3 78.7 78.5 78.9 77.8 77.7 78.0 nd . no date source: eurostat ( https://ec.europa.eu/eurostat/web/main/data/database ) figure 3. life expectancy at less gap than 1 year by population categories by educational attainment level, compared to the national average, at the level of some eu member states (+/years compared to the average), in 2017 eurostat own processing (https://ec.europa.eu/eurostat/web/main/data/database) another indicator of the quality of life and which differs by population categories depending on the level of education is the number of births of minor mothers. thus, based on data from 2019 in some eu countries, it is found that (except for cases for which the mother's studies are not known), mothers aged 10-14 were registered exclusively among the population with less than primary, primary and lower secondary education, and mothers aged 15-19 registered to the most extent in the same category by level of education. on the other hand, in the tertiary education category of population the phenomenon of birth at the age of 19 is extremely rare (in some eu countries there are 1 child with mothers aged 15-19). 2, 0 1, 1 2 ,1 1, 5 3, 1 3 ,9 2, 6 0, 9 2, 3 3 ,3 2, 1 1, 8 1, 6 1, 8 0, 0 -0 ,2 -1 ,9 1, 2 0, 3 -0 ,8 -0 ,5 -0 ,4 -0 ,1 0, 3 -0 ,1 -0 ,2 0, 1 0, 4 -2 ,4 -1 ,2 0, 5 -1 ,6 -4 ,0 -5 ,0 -0 ,6 -2 ,7 -2 ,2 -8 ,1 -3 ,3 2, 3 -2 ,7 -0 ,5 -10 -8 -6 -4 -2 0 2 4 6 b ul ga ri a g re ec e c ro at ia it al y h un ga ry po la nd po rt ug al r om an ia sl ov en ia sl ov ak ia fi nl an d sw ed en n or w ay t ur ke yy ea rs tertiary education (levels 5-8) upper secondary and post-secondary non-tertiary education (levels 3 and 4) less than primary, primary and lower secondary education (levels 0-2) https://ec.europa.eu/eurostat/web/main/data/database nichifor, țimiraș, zaiț 33 table 7. number of births with the mother's age of 10-14 years and 15-19 years respectively (live births by mother's age) in some eu countries in total and by educational category attainment level, in 2019 the country nr. born with the mother's age of 1014 years nr. born with the mother's age of 1519 years t ot al t er tia ry e du ca tio n (l ev el s 58) u pp er s ec on da ry a nd p os t s ec on da ry no n te rt ia ry e du ca tio n (l ev el s 3 an d 4) l es s th an p ri m ar y , p ri m ar y an d lo w er se co nd ar y ed uc at io n (l ev el s 02) u nk no w n t ot al t er tia ry e du ca tio n (l ev el s 58) u pp er s ec on da ry a nd p os t s ec on da ry no n te rt ia ry e du ca tio n (l ev el s 3 an d 4) l es s th an p ri m ar y, p ri m ar y an d lo w er se co nd ar y ed uc at io n (l ev el s 02) u nk no w n czech 22 0 0 22 0 2261 0 324 1697 240 denmark 1 0 0 1 0 339 0 35 295 9 estonia 2 0 0 2 0 258 0 45 213 0 greece 97 0 0 77 20 2209 1 260 1478 470 croatia 3 0 0 3 0 862 1 370 406 85 latvia 2 0 0 2 0 546 0 101 444 1 hungary 58 0 0 54 4 4991 0 694 4151 146 poland 35 0 0 32 3 8242 0 2218 5861 163 portugal 29 0 0 26 3 2048 0 425 1490 133 romania 749 0 0 733 16 17933 0 3935 13410 588 slovenia 3 0 0 3 0 206 0 50 156 0 slovakia 38 0 0 38 0 3452 0 442 3010 0 finland 1 0 0 1 0 592 0 129 463 0 sweden 4 0 0 0 4 911 1 143 530 237 norway nd. nd. nd. nd. nd. 350 1 30 275 44 turkey 142 0 0 137 5 53189 13 5442 46505 1229 nd. no data source: eurostat ( https://ec.europa.eu/eurostat/web/main/data/database ) conclusions an entire range of benefits are associated with tertiary education of the population. these benefits are manifested in various areas of economic and social life, having an impact both individually and collectively. thus, higher education is associated, among other things, with a higher employment rate and implicitly with a lower unemployment, higher salary income, higher life expectancy, better health, etc., aspects that also result from the information presented in the literature as well as from official statistics, in which case information on the european union was used. https://ec.europa.eu/eurostat/web/main/data/database considerations on the impact of higher education from an economic and non-economic perspective 34 references barr, n. (2012), the economics of the welfare state, 5th edition, oxford, university press. baum, s., ma, j., payea, k. (2010), education pays 2010. the benefits of higher education for individuals and society, the college board advocacy and policy center. brennan, j., durazzi, n., tanguy, s (2013), things we know and don’t know about the wider benefits of higher education: a review of the recent literature, bis research paper, number 133, october 2013, departament for business, innovation and skills, london, pp. 4-72. brennan, j., edmunds, r., houston, m., jary, d., lebeau, y., osborne, m., rischardson, j.t.e. (2010), improvind what is learned at university: an exploration of tne social and organisational diversity of university education, london: routledge. brennan, j., kogan, m., teichler u. (1995), higher education and work, london, uk, jessica kingsley. borgonovi, f. 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(2003), mother’s education and the intergenerational transmission off huma capital: evidence from college openings, the quarterly journal of economics, 11/2003, volume 118, issue 4, pp. 1495-1532. cutler, d., lleras-muney, a. (2010), understanding differences in health behaviours by education, journal of health economics, 01/2020, volume 29, issue 1, pp. 128. dee, t. (2004), are there civic returns to education?, journal of public economics, volume 88, issue 9, pp. 1697-1720. feinstein, l., sabates, r. (2004), education, training and take-up of preventative health care, centre for research on the wider benefits of learning, wider benefits of learning research report no. 12. feinstein, l., sabates, r. (2005), education and youth crime: effects of introducing the education maintenance allowance programme, centre for research on the wider benefits of learning, wider benefits of learning research report no. 14. feinstein, l., sabates, r. (2006), does education have an impact on mothers educational attitudes and behaviours? centre for research on the wider benefits of learning, wider benefits of learning research report no. 16. feinstein, l., budge, d., vorhaus, j., duckworth, k. (2008), the social and personal benefits of learning: a summary of key research findings, centre for research on the wider benefits of learning. nichifor, țimiraș, zaiț 35 fletcher, j., frisvold, d. (2009), higher education and health investements: does more schooling affect preventive health care use?, journal of human capital, 2009, volume 3, no.2, pp. 144-176. hackman, j.j., stixrud, j., urzuna, s. (2006), the effects of cognitive and noncognitive abilities on labour market outcomes and social behavior, journal of labor economics, 24 (3), 411-482. hout, m. (2012), social and economic returns to college education in the united states, annual review of sociology, 38(1), 379-400. kuntsche, e., rehm, j., gmel, g. (2004), characteristics of binge drinkers in europe, social science and medicine, 07/2004, volume 59, issue 1, pp.113-127. lagemann, e. c., lewis, h. (2012), renewing the civic mission of american higher education in e. c. lagemann & h. lewis, what is college for? the public purpose of higher education, pp. 9-45, new york, ny: teachers college press. machin, s., marie, o., vujic, s. (2010), the crime reducing effect of education, centre of economic performance, 05/2010, paper no. 979, london school of economics and political science. mackenbach, j. (2006), health inequalities: europe in profile, dg health and consumers, european commission. maxwell, n. (2007), from knowledge to wisdom, london review of education, volume 5, pp. 97-115. mchenry, l. b. (2007), commercial influences on the pursuit of wisdom, london review of education, volume 5, pp. 131-142. milligana, k., morettib, e., oreopoulosc, p. (2004), does education improve citizenship? evidence from the united states and the united kingdom, journal of public economic, 2004, volume 88, issue 9, pp.1667-1695. ogg, j. (2006), a brief profile of the new british establishment, the political quarterly, 06/2006, volume 77, issue 1, pp.81-89. palmer, p. j., zajonc, a., scribner, m., nepo, m. (2010), the heart of higher education: a call to renewal. san francisco, ca: jossey-bass publications. pascarella, e.t., terenzini, p.t. (2005), how college affects students: a third decade of research, san francisco: john wiley. stokes, p.j. (2015), higher education and employability: new models for integrating study and work, cambridge, ma, harvard university press. teen, s. (2007), the effect of education on voter turnout, political analysis, 10/2007, volume 15, issue 4, pp. 446-464. zaback, k., carlson, a., crellin, m. (2012), the economic benefit of postsecondary degrees: a state and national level analysis, boulder, co: state higher education executive officers. studies and scientific researches. economics edition online first, april 2018 56 relationship between capped lending rate and non-performing loans of listed commercial banks in kenya wanjiku g. thuita riara university thuitagladys@gmail.com abstract the study sought to establish the relationship between capped lending rate and non-performing loans among the listed commercial banks in kenya. the secondary data for the study was collected from 2013-2017. the research tested the null hypotheses that capped lending rate has no significant relationship on non-performing loans of the listed commercial banks in kenya. the study adopted descriptive research design to test the null hypotheses. the study found out that the capped lending rate has positively influenced the non-performing loans of the listed commercial banks in kenya. the study therefore concludes that capped lending rate has helped in improving non-performing loans of the listed commercial banks in kenya. the study recommends that listed commercial banks in kenya should make efforts to improve capped lending rate because it has been found to have a positive effect on non-performing loans of the listed commercial banks in kenya. the study will be of help to the banking sector, central bank of kenya and other policy makers aligned to the financial institutions. keywords non-performing loans; capped lending rate, banking sector; correlations; central bank of kenya jel classification e13 introduction according to economist the rate of interest (lending rate) is determined through demand for money (deposits) and money supply (loans and advances). with increase in lending rate, the borrowers are expected to pay high interest amount which sometimes end becomes a burden. before the capping of the lending rate, borrowers from the commercial banks in kenya paid back the borrowed amount at an average rate of 17% from 2013 until third quarter of 2016 when the banks reverted to exorbitant rates and the government through parliament passed a law to cap the lending rate at 4% above the central bank of kenya base rate. according to boudriga, boulila and jellouli (2009), a loan qualifies to be in state of non-performing when the principal and the interest payments are past 90 days or more. non-performing loans is an expense to the banks translating to reduced profit margins. balgova, nies & plekhanov (2017), argues that the non performing loans can be a result of the customer inability or unwillingness to service their loans. the nonperforming becomes a burden to both the lenders and the borrowers and for the borrowers the colleratel is trapped by the lender until the loan is fully recovered or dispossed off to recover the outstanding loan. according to chege (2014), high lending rate increases the nonperfoming loans and inability to pay the principal and the interest. non-performing loans affects the gross domestic product and investment 57 growth of an economy. countries that manage to address the high non-performing loans achieve long run economic growth. the lending rate and the non-performing loans can either be negatively or a positively correlated. other factors such as the size of the bank and risk profile tend to influence the relationship between the lending rate and the npls (chege, 2014). it is important for individual banks to control the npls to achieve desirable performance and the financial environment with minimum provisions for bad and doubtful debts to cushion the banks on the risk that results to reduced profit margin and eventually the collapse of the banking sector and the economy at large (waweru and kalani, 2009). the financial crisis in asia and sub-saharan africa was a result of the npls (karim, et al., 2010). to manage default risk, the government of kenya introduced credit reference bureau (crb). the financial institutions are expected to share credit information as a ration to ensure that once the customer borrows from one financial institution and fail to pay the principal plus the interest, then listing is done and it become difficult to access finances elsewhere. despite the existence of crb the banks still contiunes to record high nonperforming loans (npls)with statistics showing that in the year 2016, 316,455 individuals out of a group of 600,000 had been listed in the crb increasing the credit risk and the lending power (central bank of kenya, 2017). despite the drastic measure to cap the lending rate one year down, the banks continue to incur massive losses from the non-performing loans. the banking sector plays a vital role towards the economic growth of a country with a positive contribution to gross domestic product in 2016 at5.8% compared to 5.7% in 2015 (kenya national bureau of statistics, 2017). the sector has faced a number of challenges and the latest being in the year 2016 when chase bank of kenya was placed under receivership for reporting of insider loans and failure to meet statutory banking ratios (central bank of kenya, 2016). statement of the problem empirical evidence shows that countries that previously caped the lending rate uncapped within a span of less than one year after capping citing issues of nonperformance of the economy thus creating empirical gap (miller 2013; makinde, 2016). past studies show that there exist a positive relationship between the lending rate and non-performing loans (ng’etich, 2011; otieno, 2013; munialo, 2014). the above studies have been conducted before the capping of the lending rate thus the need to add knowledge on the association between the capped lending rate and the non-performing loans. this study sought to address both the methodological and knowledge gap through conducting a rigorous study on the relationship between the capped lending rate and the non-performing loans among the listed commercial banks in kenya. specific objective the specific objective of this study is to establish the relationship between the capped lending rate and the non-performing loans of the listed commercial banks in kenya. research hypothesis ho1: capping the lending rate has no significant relationship on the non-performing loans of the listed commercial banks in kenya. 58 independent variables dependent variable figure 1: conceptual framework methodology a research design is a plan, structure and strategy of investigation so conceived to obtain answers to the questions or problems. the study used descriptive research design and secondary data was sourced data from the banks financial statements. the independent variables in this study was capped lending rate and customers loans and advances while the dependent variable is the non-performing loans of the listed commercial banks in kenya. to analyze the data, the secondary data was correlated using pearson correlation using statistical package for the social sciences. regression analysis was also used so as to establish the relationship between capped lending rate and the non-performing loans. the study sampled 5 out of 11 commercial banks listed in the nairobi securities exchange. the five banks which were sampled include kenya commercial banks, barclays bank of kenya, nic, equity bank and co-operative bank of kenya. correlations for capped lending rate and non-performing loans in order to determine the relationship between capped lending rate and the nonperforming loans, the study conducted a correlation analysis between capped lending rate and the non-performing loans and results offered in table 4.1. table 4.1 correlations for capped lending rate and non-performing loans no n -p e rfo rm in g l o a n s c u sto m e r l o a n s a n d a d v a n c e s c a p p e d le n d in g ra te non-performing loans 1 customer loans and advances .690* 1 capped lending rate .752** .340* 1 ** p< .01 level (2-tailed), * p< .05 level (2-tailed). the study correlation analysis results showed that association between capped lending rate and the non-performing loans was statistically significant and positive (r = 0.752, p < 0.01). the association between capped lending rate and the customer loans and advances was also positive and statistically significant (r = 0 .340, p < 0.05), customer capped lending rate non-performing loans customer loans and advances 59 loans and advances and non-performing loans were correlated positively (r = .690, p < .05). regression analysis between capped lending rate and non-performing loans the object was to establish the relationship between the capped lending rate and the non-performing loans of the listed commercial banks in kenya. in an effort to establish the relationship between the capped lending rate and the non-performing loans of listed commercial banks in kenya, the study had set the following research hypothesis; h01: capped lending rate has no significant relationship on the non-performing loans of the listed commercial banks in kenya. in testing the hypothesis, the study used regression coefficient (beta β). the mean score of non-performing loans of the listed commercial banks in kenya measures were regressed against the mean score of measures of capped lending rate and results presented in the table below. table 4.2 (a) regression results for capped lending rate and non-performing loans model summary model r r square adjusted r square std. error of the estimate 1 .752a .565 .420 34.67774 a. predictors: (constant), capped lending rate the study regression finding shows that 56.5 percent of non-performing loans of the listed commercial banks in kenya can be explained by capped lending rate (r squared = 0.56.5) table 4.2 (a). the study findings found out that there was an influence of capped lending rate on non-performing loans of the listed commercial banks in kenya. this concurs with nasieku (2014) who found out that the price of the loan does affect the npls at 43.8% and the remedial for npls is for the banks to conduct effective risk assessment. table 4.2 (b) regression results for capped lending rate and non-performing loans anovaa model sum of squares df mean square f sig. 1 regression 4683.183 1 4683.183 3.894 .043b residual 3607.637 4 1202.546 total 8290.819 5 a. dependent variable: capped lending rate b. predictors: (constant), non-performing loans the relationship between the capped lending rate and the non-performing loans of the listed commercial banks in kenya was positive and significant in that its r was .752 (table 4.2a). from the regression analysis, the study found out that there is a relationship between the capped lending rate and the non-performing loans on the listed commercial banks in kenya although it was statistically significant (p-value = .043). 60 the study therefore rejected the null hypothesis since the p-value was less than .05 (.043). table 4.2 (c) regression results for capped lending rate and non-performing loans coefficients model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 22.226 143.190 2.949 .060 capped lending rate .798 8.765 .752 1.973 .043 a. dependent variable: non-performing loans the regression results shows that relationship between the capped lending rate and the non-performing loans of the listed commercial banks in kenya was positive and significant at individual level (β = .752, p-value .043) but it was statistically significant in that the p-value was than 0.05). the resultant model from the relationship between the capped lending rate and the non-performing loans of the listed commercial banks in kenya and which may be used to estimate non-performing loans given the level of capped lending rate is as follows; npl = 22.226 + .752clr + ε where: npl is non-performing loans 22.226 is the yintercept constant .752 is the beta (β = .752) or the slope coefficient. clr is capped lending rate ε is the error term discussions the regression results show that 56.5 percent of non-performing loans of the listed commercial banks in kenya (r squared = 0.565) was accounted for by capped lending rate. the study therefore found out that there was a relationship between the capped lending rate and the non-performing loans of listed commercial banks in kenya were positive. this shows that capped lending rate employed by listed commercial banks in kenya has helped improve on non-performing loans. the study results concur with the results of a study done by chege (2014) which showed that most of the banks npls went up with only listed commercial banks in kenya dropping with less than 2.0 billion from 2016 to 2017. the banks liabilities (customer deposits) are the determinants of the loans the bank is expected to give out to its customers. conclusions and recommendations the study found out that 56.5 percent of non-performing loans of the listed commercial banks in kenya can be explained by the capped lending rate. therefore, the study found out that there was a relationship between the capped lending rate and the nonperforming loans of the listed commercial banks in kenya. based on the study findings the study concludes that capped lending rate has helped to improve the non-performing loans of the listed commercial banks in kenya. 61 the study recommends that listed commercial banks in kenya should make efforts to improve on capped lending rate because it has been found by this study to have a positive effect on non-performing loans of the listed commercial banks in kenya references balgova, m., nies, m., & plekhanov, a. (2017).the economic impact of reducing non performing loans, (193). boudriga, a., boulila, n., & jellouli, s. (2009). does bank supervision impact nonperforming loans: cross-country determinants using aggregate data?. university of tunis: essec, defi. central bank of kenya (2015; 2016; 2017). published articles. chege, m.(2014). effect of interest rates on non-performing loans in commercial banks in kenya. http://www.znfu.org.zm/article/bank-zambia-removes-caps-interest-rates institute of certified public accountants of kenya (2016). banking sector reforms vital for growth. nairobi. karim, a., chan, g. & hassan, s. (2010). bank efficiency and non-performing loans: evidence from malaysia and singapore. kenya bureau of statistics (2017). economic survey launch, nairobi. kenya economic outlook (2016). the story behind the numbers,nairobi. mbua, s. (2017). effects of interest rate capping by the central bank of kenya on the banks listed on the nairobi securities exchange. united states international university. makinde, o. (2016). effect of interest rate on commercial bank deposits in nigeria. miller, h. (2013). interest rate caps and their impact on financial inclusion. munialo, j. (2014). the relationship between lending rate and non performing loans in commercial banks in kenya, university of nairobi. mwakolobo, b. (2013). the impact of financial sector in the economic growth in nigeria. nasieku, n. (2014). factor affecting non-performing loans: a case of commercial bank of africa, kenya. united states international university-africa. ng’etich, j. (2011). the effects of interest rates spread on the level of nonperforming assets. a case of commercial banks in kenya. international journal of business and public management.1, (1), 58-65 otieno, m. (2013). non-performing loans of commercial banks in kenya. university of nairobi. republic of kenya (2007). kenya vision 2030popular version.pdf waweru, n. & kalani, m. (2009). commercial banking crises in kenya: causes and remedies, african journal of accounting. vol. 4, no. 4, pp. 12-32. world bank group (2014). interest rate caps around the world still popular , but a blunt instrument. http://www.znfu.org.zm/article/bank-zambia-removes-caps-interest-rates (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 77 financing policy of firms in the context of crisis-induced vulnerabilities mihaela brîndușa tudose gheorghe asachi technical university of iași brindusatudose@gmail.com valentina diana rusu department for interdisciplinary research in social sciences and humanities, alexandru ioan cuza university of iasii valentinadiana.ig@gmail.com abstract our study analyses the changes in the financial structure of the firms in the context of the vulnerabilities induced by the financial crisis. the study shows that there have been registered a reconfiguration of firms’ financial structure which has triggered an increase in their financial fragility and vulnerability to crises. the results obtained confirm that the effects of financing differ depending on the economic conditions in particular period (normal periods and crisis periods). in tranquil times solvency is more important for the firms than liquidity. after crisis, the firms became more cautious regarding liquidity, solvency and the prospect of securing longterm financial balance. these firms have abandoned the objective of maximizing the positive effects of debt financing adopting a more prudent financing. keywords financial crisis; financial fragility; financing policies; liquidity; solvency; vulnerability jel classification g32; g01 introduction unlike the earlier challenges that prompted research in the field (e.g. the capital structure irrelevance or relevance), the present-day challenge consists in the manner in which firms must finance so as to cope with the imbalances (such as crises) that affect the economy. to understand how firms secure the financing of their operations, it is necessary to examine the determining factors of the financing decision. specialist literature includes a vast body of research on this issue; encapsulating the wide-ranging debates, the determining factors of financial structure have been grouped as follows: a) firm-specific determining factors; b) industry-specific determining factor); c) countryspecific determining. studies that explore the role of variables specific to firms, industries and countries in defining firms’ financing policies suggest that the three factor categories influence differently the corporate capital structure. under normal circumstances, firm-specific factors wield the greatest influence over capital structure. however, in cases when the society is affected by major imbalances (such as crises), the dominance of the influence of specific factors over capital structure changes. as a result, in the context of crises associated with a systemic credit crunch, the impact of macroeconomic factors becomes more extensive, causing an increase in firms’ vulnerability and fragility. research has shown that the effects of financing and risk management differ depending on the economic conditions in particular period (normal periods and crisis periods). moreover, the empirical studies conducted have attempted to measure the impact of mailto:brindusatudose@gmail.com mailto:valentinadiana.ig@gmail.com tudose, rusu 78 funding shocks on corporate investment by examining the last financial crisis, viewing this as a natural research subject (campello et al., 2010a; campello et al., 2010b, duchin et al., 2010; almeida et al., 2012). these studies have focused on determining the degree to which firms anticipated the financial crisis, showing that, to the extent that firms can forecast an impending crisis, the real effects of financing can be offset before the shock. comparing the two scenarios (anticipating the crisis or not), it has been shown that risk management mitigates funding shocks in two ways (andersen, 2008): a) first, greater concern about the imminent onset of a financial crisis compels firms to invest more conservatively; b) second, by anticipating a higher likelihood of a crisis, firms set up monetary reserves that reduce the impact of financial shocks on investment. the main objective of this article is to examine the dynamics of firms’ financing in a crisis context in order to highlight the link between the various financial structures adopted by firms and their financial vulnerabilities. the methodology underlying the development of this article was hypothetical-deductive. by analysing and summarising the most relevant works in the field, we observed that the corporate financing focus is shifting from optimality to sustainability; under the banner of these transformations, the optimisation of firms’ financial structure must no longer target only the maximisation of shareholder earnings, but should also ensure financial sustainability while minimising risks. our study is structured as follows: section 2 presents the coordinates of financial fragility; section 3 presents the methodology of the research; section 4 presents the analysis of the effects of financing on financial vulnerability; the last section advances some conclusions. financial fragility amid major imbalances, the increase of debt financing amplifies risks, causing firms to become more fragile from the financial perspective; conversely, internal financing (using retained earnings), being more stable and durable, entails minimal risk levels and improves financial vulnerability to crises. the formulation of the hypothesis of financial instability as a theoretical argument of crises was prompted by the following important observations (iancu, 2010): a) the foundations of the modern capitalist economy there are, on the one hand, the investments in financial (capital) assets and, on the other, a sophisticated and complex financial system interconnected with the investment and the real economy processes; b) financial assets, which have the capacity to generate revenue/profit, determine firms to earmark increasing funds (including borrowed ones) for investments as they anticipate future earnings; c) as a result of the above, there is a general tendency of the financial system to become increasingly leveraged, especially during times of prosperity, which leads to a rise in the degree of vulnerability in the context of potential crises (including in the case of potential systemic credit squeeze). in an environment that favoured indebtedness, almost all firms end up being overindebted and face similar financing problems. amid a systemic credit crunch, it is rarely possible to finance the firm by contracting new loans. in such a situation, solvent yet illiquid firms may be forced into bankruptcy to the extent that they are temporarily unable to meet their debt commitments (sen, 2010). on the other hand, during periods of systemic constraints on liquidity, the odds of financing the cash flow deficit by selling the firm’s assets is also limited, because other firms behave in the same way to finance their own needs. even with a very low level of debt, firms cannot avoid the crisis, because converting assets into liquidity would not be possible. in relatively calm periods, liquidity is less important than solvency, because a solvent firm will be able to financing policy of firms in the context of crisis-induced vulnerabilities 79 find financing to cover potential liquidity problems. in a crisis atmosphere, liquidity can become more important (bernanke et al., 1988). by correlating the grouping of units based on the minskyan model (hedge units; speculative units; ponzi units) with the systemic credit squeeze, recent research (sen, 2010) has highlighted that, although a firm may be viewed as a hedge unit, a systemic credit crunch can induce financial structure fragility (which runs counter to the initial minskyan claims). this is due to the fact that the crisis can be so severe, systemic and devastating on a global scale, that the firms’ prospects of achieving target earnings would suddenly dry up. the conclusion that emerges is that although they offer a range of advantages, debts trigger serious problems related to financial fragility compared to financing using retained earnings and own capital. in an environment of uncertainty over projected income, even though firms may have the lowest debt ratio, making debt payments at scheduled maturity can pose serious problems. any economy that relies on uncontrolled leverage is doomed to collapse eventually. under such circumstances, john k. galbraith’s postulate, proclaimed as early as 1958, still proves its veracity: creditdriven growth is not sustainable. methodology of the research the examined sample consists of 90 companies listed on the bucharest stock exchange. as for the delimitation of the period under review, we looked at the 20062011 period in order to capture the peculiarities of developments prior to and during the crisis. information was collected from the annual financial statements (available both on the website of ministry of finance, in the companies information section and on the website of each company). the current ratio reflects the potential for certain assets to be turned, over the short term, into liquidity to meet current payment obligations. one of the fundamental principles of the financial equilibrium of a company states the current assets value must be always higher than the accounts payable or current liabilities. reference values of this indicator are: the minimum accepted value is 1, below this level the company being at risk of default; the maximum acceptable value is 2, above this level use of current assets being considered improper. the accounting regulations harmonised states that the recommended accepted value – of the current ratio – is around 2. to determine solvency, we considered two categories of information: equity and total financial liabilities. solvency restores a debtor’s opportunity to have sufficient assets to be able to meet payment obligations. in assessing the headline threshold for this indicator, we considered two further indicators: debt/equity ratio – based on how it was calculated (as the ratio of medium and longterm debt and total liabilities, plus equity), it can be interpreted as the share of medium and long-term debt in the permanent capital; the minimum threshold for the solvency indicator must be 1 (equity must cover at least the financial liabilities while the other side of permanent capital should cover non-financial debt and possibly part of current assets); the mean share of medium and long-term debt (out of total liabilities) provides information on the structure of working capital; when the indicator value is low, ensuring the financial stability depends primarily on the size of equity; this predetermines us to recognise same minimum threshold for solvency. to examine the evolution of the cash-flow we relied on the french model, which accounts for the variation of net cash flow based on the interaction between long-term and short-term equilibrium, respectively, on the variation of the working capital and the working capital requirement (δcf = δwc – δwcr). tudose, rusu 80 to assess changes in net cash flow (at the end of the year compared to the beginning of the year), we collected information on the working capital and the working capital requirement. the increase in working capital is evidence of improvement in the company’s financial structure, namely the increased share of stable to permanent needs. the same growth demonstrates the company’s capacity to generate cash both at the top and the bottom section of the balance sheet and to improve its cash position considerably. conversely, the decrease in working capital is evidence of a financial imbalance: permanent needs are covered with short-term resources. this situation, coupled with the increased working capital requirement, leads to chronic cash flow imbalance, respectively, to a greater risk of bankruptcy for the company. a positive change in net cash flow is interpreted as an increase in the real capacity to finance investment. a negative variation suggests a decline in real financing investment capacity (i.e., a reduction in asset value). given the dependence of cash flow to the change in the working capital requirement, it is assumed that a profitable company does not necessarily have a positive cash flow, as the latter is dependent on variations in financing requirements and, furthermore, on fluctuations in making or receiving payments. analysis of the effects of financing on financial vulnerability of romanian companies starting from the observation that in relatively quiet times, liquidity is less important than solvency (because a solvent company will be able to secure funding to cover any liquidity problems) (sen, 2010) whereas in a crisis environment, liquidity may become more important (bernanke et al. 1988), we aim to analyse how the two indicators (liquidity and solvency) evolved over the period 2006-2011, using as benchmark the romanian companies listed on bucharest stock exchange. to highlight the element of originality that we aim to deliver, we should point out the following: a) we will consider both a firm-level and an aggregate-level analysis; b) for a representative sample of firms (non-financial firms listed on the bucharest stock exchange) we will examine the current ratio in terms of the relation of current assets and short-term debt; c) as the analysis is performed retroactively (for the 2006-2011 period), we do not use estimated values for the solvency ratio, but rather the actual recorded ratio; solvency will be measured based on the relationship between equity and total financial liabilities; d) in addition to the liquidity and solvency ratio, we will analyse the cash flow for the period to assess the financial behaviour of firms both during the pre-crisis period and during the crisis. study results by processing the data we obtained a set of results, summarised in table 1 below. the table provides the mean values of indicators, representative of the entire sample (values were obtained by determining the simple arithmetic mean of the individual values of the 90 firms in the sample). financing policy of firms in the context of crisis-induced vulnerabilities 81 table 1 evolution of indicators in the period 2006-2011 indicators 2006 2007 2008 2009 2010 2011 period average 90 firms current ratio 1.88 2.01 2.41 2.53 2.63 2.49 2,32 solvency 9.49 9.09 14.7 15.02 13.71 14.28 12,71 net cash flow change[δtn] (% of firms with + or – change) positive 53.33% 51.11% 42.22% 56.67% 55.56% 51,78% negative 46.67% 48.89% 57.78% 43.33% 44.44% 48,22% figure 1 evolution of liquidity and solvency in 2006-2011 by processing globally the data in the sample, we observed that the average current ratio, representative for the whole period, is 2.35. the fact that the indicator stayed around the maximum permitted value reflects a somewhat prudent current asset management policy. the mean solvency rate over the entire period we looked at is 12.69. in terms of annual averages, one can notice an upward trend (from 9.49 and 9.06 respectively early in the period to 14.28 in the last year of the review). indicator values reflect a good, rising level of solvency. this may be explained by the decreased share of debt financing (especially medium and long-term financing). as regards changes in net cash flow (calculated in relation to values recorded at the beginning and end of each year), we noticed that, in the first part of the period under review, the share of companies that recorded a negative change in net cash flow increased (from 46.66% to 48.88% and 57.77%; in the second half of the period, the share of firms with negative net cash flow decreased to 44.44%). interpretation of results as far as liquidity is concerned, evolutions cannot be viewed as positive because: the number of companies falling within the optimal range decreased (minimum 1, maximum 2); the number of firms that do not use assets efficiently increased; there was an insignificant reduction in the number firms at risk of default. the evolution of solvency itself was not favourable either: there was a doubling of the number of companies recording solvency ratios less than one unit, translating into less equity to financial liabilities and consequently into an impairment of working capital and net cash flow, respectively. the number of firms in the other benchmark intervals varied only slightly. 1.88 2.01 2.41 2.53 2.63 2.49 9.49 9.09 14.7 15.02 13.71 14.28 0 5 10 15 20 2006 2007 2008 2009 2010 2011 current ratio solvency tudose, rusu 82 the analysis focusing on net cash flow change reveals an increase in the share of firms recording negative variation (for the first three years of the period examined), followed by a reduction (in the second part of the period). in light of these considerations, the period under review is defined by: a decline of the examined indicators in the 2006-2009 interval; an improvement of indicators in the 2010-2011 period. conclusions amid the transformations that have marked the economic and social life, we are witnessing a reorientation of the research on corporate financing towards the study of the impact of debt financing on financial vulnerability. the old challenge (the ratio of debt in the firm’s overall financing) has been abandoned in favour of a new challenge: financial fragility and vulnerability to crises. the problems related to the way in which firms must finance their operations remain current and acute. this is due to the fact that indebtedness generates financial fragility, while the latter amplifies firms’ vulnerability during crisis periods; if a fundamental change does not occur in financing behaviours (in terms of a reduction of debt dependence), the vulnerability of the financial system to crises will be heightened. the basic solution to stabilise the economy is to change firms’ financing method (by reconsidering risks). in the case of romanian companies, the evolution of current ratio levels validates the following hypothesis: during relatively tranquil times, liquidity is less important than solvency, while in a crisis environment, liquidity may become more important (reached similar conclusions; bernanke et al., 1988; sen, 2010; danso and adomako, 2014). the slight increase of the current liquidity over the maximum level can be interpreted as the result of the firms’ concerns to provide liquidity (during crisis periods). the upward evolution of the solvency indicators indicates that firms have redefined their financial policies amid concerns to reduce financial vulnerability (by decreasing their medium and long-term debt). the information obtained on the variation of net cash flow reveals a deterioration in long-term financial balance in the first three years of the examined period, followed by a slower recovery to the original condition (over the next three years). this movement confirms the hypothesis that during the pre-crisis period there was a general tendency towards increased leverage in the whole system (iancu, 2010), leading to increased vulnerability. during the crisis, changes in the financing habits (in the sense of a decreasing reliance on debt) reduced the vulnerability of the system. the change in the firms’ financing approach (owing to a reconsideration of risk) enabled the improvement in the situation of the companies under review (which returned to pre-crisis levels). considering that research in the field has expanded considerably over the years, we would like to note that, for the purposes of this study, we aimed to provide a selection of the most relevant research; hence, we acknowledge that the study does not claim to be exhaustive. beyond these limitations, we consider that the stated opinions remain relevant. the paper serves as a starting point for conducting future, more extensive research. references almeida, h., campello, m., laranjeira, b. a., weisbenner, s. j. (2011), corporate debt maturity and the real effects of the 2007 credit crisis, available at ssrn: http://ssrn.com/abstract=1405505 or http://dx.doi.org/10.2139/ssrn.1405505, accessed 11.03.2017. http://dx.doi.org/10.2139/ssrn.1405505 financing policy of firms in the context of crisis-induced vulnerabilities 83 bernanke, b., campbell, j., friedman, b. and summers, l. (1988), is there a corporate debt crisis?, brookings papers on economic activity, vol. 19, no. 1, pp. 83– 134. campello, m., graham, j., harvey, c. (2010b), the real effects of financial constraints: evidence from a financial crisis, journal of financial economics, vol. 97, issue 3, pp. 470-487. campello, m., giambona, e., graham, j. r, harvey, c. r. (2010a), liquidity management and corporate investment during a financial crisis, review of financial studies, society for financial studies, vol. 24, no. 6, pp. 1944-1979. danso, a., adomako, s. (2014), the financing behaviour of firms and financial crisis, managerial finance, vol. 40, no. 12, pp. 1159-1174. duchin, r., ozbas, o., sensoy, b. a. (2010), costly external finance, corporate investment, and the subprime mortgage credit crisis, journal of financial economics, vol. 97, issue 3, pp. 418-435. iancu, a. (2010), sinteză privind modelarea fragilităţii sistemului financiar [overview of modelling financial system fragility], romanian society for economic science, review oeconomica, vol. 3, pp. 161-168. sen, a. (2010), a without debt and strong financial structure, international research journal of finance and economics, issue 59, pp. 77-85. microsoft word apostoaie constantin marius_eng.doc the impact of the european integration process on the banking system – an overview bogdan ilu , alexandru ioan cuza university of iasi, romania abstract in the last decade the european integration process was the main focuses of the european union, as its completion could bring a huge step toward a fully integrated european union. as the banking sector is the main channel for funding of the european economy, it has become now more clearly than ever that is integration is of the up more essence. the aim of this paper is to quantify the progresses registered by the main european union’s economies in the process of banking integration, as their example is generally followed by the other member states. first we underline the necessity of the european integration and the progress made using an extended literature review doublet by an analysis of the main indicators for the banking systems of these countries. we also present, in a non-exhaustive way, the main trends that have characterised the banking sectors of these countries in the last decade: diversification, vertical product differential and consolidation underlying their impact on the sectors architecture. keywords banking integration, european financial integration, diversification, consolidation jel code: g21 introduction the euro has been one of the major factors for development in the last decade in the european union. it has been also one of the most important social experiments carried out in the international arena. even since the early stages of the economic and monetary union there has been a fearful debate regarding its role in the european economic environment. one the one side there is a belief that the euro can enhance and bee the necessary ingredient in the process of the single market completion1. on the other hand many studies and economist have argued that the european union as a whole lack the necessary premises for the developing and becoming an optimal currency area2. an extensive research has been carried out in order to establish the impact of the euro on the different sectors of the european economy like: trade, industry or financial markets. even if the researches carried out mostly find positive impact and transformations as a result of the euro adaptation. unfortunately most of the studies are unable to identify clearly the exact impact, especially in the case of financial integration, as there are many transformations and structural reform that are having a direct impact on the economical environment of a country that wants to adopt the euro. one of the main sectors that were affected by this was the banking sector. over the last decade banking markets across the european union have become increasingly integrated. even in the light of these trends there are still barriers to full integration, these being more 1 see dolores report – * (1989) report on economic and monetary union in the european community, luxemburg. 2 see mundell, r., (1961) a theory of optimum currency areas, american economic review, 51 (4): 509-517. studies and scientific researches economic edition, no. 15, 2010 64 obvious on the retail banking segment. european integration and directly banking integration pose implications for systemic risks while raising even more challenges for the currency supervision framework. as a result of these changes, banks in the european union have responded by adopting and implementing strategies of diversification, vertical product differentiation or consolidation approaches. integration of the european banking industry our analysis is focused on the big five economies of the european union. these belong to germany, united kingdom, france, italy and spain (“big five”). these countries also have the largest populations on the european union which combined with their economic development provides the best ground for underlying the evolution and mutations in the banking sector as a result of european financial integration. figure. 1. characteristics of the “big five” economies of the european union in 2009 source: own simulation based on eurostat data between 1997 and 2009 the total number of bank in the european union has dropped from 9624 to 8348, in the context of eu extension from 15 countries to 25 in 2004 and then to 27 in 2007. in the “big five” economies this trend has manifested also, with the total number of banks dropping from 6540 to 4402. eu ro a d op tio n studies and scientific researches economic edition, no. 15, 2010 65 figure. 2. evolution of the number of banks in the “big five” economies of the european union between 1997 and 2009 source: own simulation based on eurostat and european banking federation data on the other hand there was a raise on the total assets of bank in the same period, both at european level and also in the case of the big five economies. this growth reflects the effectiveness of deregulation and the single market program in bringing about the end of “repressed” banking systems.3 figure. 3. evolution of the assets held by the banks in the “big five” economies of the european union between 1997 and 2009 source: own simulation based on eurostat and european banking federation data mean while the employment of the banking system has been somehow stable, decreasing with only about 5% in the european union between 1997 and 2009. the evolution in the “big five” economies has been very different, with a relative increase in italy and spain and a diminishing in employment in germany, france and the united kingdom. figure. 4. evolution of the employment by the banking sector in the “big five” economies of the european union between 1997 and 2009 source: own simulation based on eurostat and european banking federation data the data on the concentration of the banking sector (the share of the first five banks assets in total banking sector assets – cr5 indicator) presents a rather interesting situation. there is a relative stability regarding this indicator. this is possible because on the one hand the deconcentration that comes natural as a side effect of increase competition on open market in 3 dermine, j., (2006) european banking integration: don’t put the cart before the horse, in: financial institutions, markets and money 15, 57–106. eu ro a d op tio n eu ro a d op tio n studies and scientific researches economic edition, no. 15, 2010 66 the traditional loan business and on the other hand is offset by the tendency of concentration that characterises non-traditional banking activities4. figure. 5. evolution of the cr5 indicator in the “big five” economies of the european union between 1997 and 2009 source: own simulation based on eurostat and european banking federation data it is evident that the complexity of the european financial integration in general and that of the banking sector in particular runs more deeply than the raw dates presented here can summarise5. an argument in this favour is represented by the liberalisation of and the integration of the european financial markets and payment systems, which have put an enormous pressure on the banking system. as a response to the ever growing competition that they must face, banks have opted to diversify their activities outside their traditional line of business and entered non-interest earning segments like: insurance and mutual fund sales, private banking and asset management. at the same time banks have saw fit to re-engineer their value chain by increasing the rate of their loans portfolio securitization. overall, financial innovation has lead european banks to offer a wider range of products and services that ever before, conducting an ever greater part of their businesses off balance-sheet. as a result of this transformation the differences between banks and non-bank financial intermediaries has become blurrier than ever6. these transformations have been reflected also in the traditional way of banking business, mainly in the loan sector. here, after an enhancement of the loaning as a result of euro adaptation, the banking sector of the “big five” has registered a rather slow pace in increasing the volume of loans (both to business and retail). 4 carbo , s., fernandez, j., (2005) the determinants of bank margins: the effects of diversification, funcas working paper. 5 barros, p.p., berglof, e., fulghierri, j., gual, j., mayer, c., vives, x., (2005) integration of european banks: the way forward, centre for economic policy research, london. 6 rajan, r.g., zingales, l., (2003) banks and markets: the changing character of european finance, in: gaspar, v., hartmann, p., sleijpen, o. (eds.), proceedings of the 2nd ecb central banking conference on the transformation of the european financial system, european central bank, frankfurt. eu ro a d op tio n eu ro a d op tio n studies and scientific researches economic edition, no. 15, 2010 67 figure. 6. evolution of the loans granted by the banks in the “big five” economies of the european union between 1990 and 2009 source: own simulation based on eurostat and european banking federation data the integration of the european financial markets and the banking system in particular has been sustained by a series of legislative act aimed at preparing, allowing and enhancing the integration of these sectors. table no. 1. european legislation that had an impact on the integration of the eu banking and financial sectors year legislative piece 1977 first banking directive 1988 basle capital adequacy regulation (basle i) 1988 directive on liberalization of capital flows 1989 second banking directive 1992 large exposures directive 1993 investment services directive 1994 directive on deposit guarantee schemes 1999 financial services action plan (fsap) 2000 consolidated banking directive 2000 directive on e-money 2001 directive on the reorganisation and winding-up of credit institutions 2001 regulation on the european company statute 2002 financial conglomerates directive 2004 new eu takeover directive 2005–2010 white paper on financial services policy 2006–2008 capital requirements directive (basle ii) (source: european central bank, (2009) eu banking sector stability, european central bank, frankfurt, and own updates) despite this sustained legislative drive at european level, regarding the harmonization and integration of banking sector in particular, there are still barriers in the way of a fully integrated system, as stock markets have achieved a higher degree of integration than the banking sector as many researches show7. the barriers that are arising come from different areas like: national economic conditions and characteristics, culture, language barriers and none the least from fiscal and legal system8. taking into consideration these barrier there are several way in which a bank can expand its operations abroad, in other european union member states9: one approach is to open a branch or a subsidiary in the countries in which it wishes to expend; another is to offer cross-border services and products directly through the european financial passport; or it could enter a strategic partnership with another bank that already operates in that particular country, taking in to consideration the option of locating different functions of 7 cappiello, l., ho¨rdahl, p., kadareja, a., manganelli, s., (2006) the impact of the euro on financial markets, european central bank working paper no. 598. 8 berger, a.n., dai, q., ongena, s., smith, d., (2003) to what extent will the banking system become globalized? a study of bank nationality and reach in 20 european countries, journal of banking and finance, 27, 383–415. 9 hm treasury, (2005) supervising financial services in an integrated european single market: a discussion paper, hmso, london. studies and scientific researches economic edition, no. 15, 2010 68 its business in different states – the ones that are offering the best environment for that particular function. even if the integration of the european banking system is far for its completion, it is obvious that the european bank have a wide range of strategies available to them in order to extend their business at a european level. in this regard, the integration of the banking system as a whole has a direct effect on its stability and exposure to systemic risks. before integration, the evolution of the national banking system of a particular country is positively correlated with is macroeconomic performances. as the system becomes more integrated, banks tend to geographically diversify their business and the correlation with a specific country where it operates tends to diminish. so the exposure of a specific bank or a national banking system to country-specific macroeconomic shocks is reduced. on the other hand, deepening the integration process is leading to a shift in correlation from country specific to european specific shock, exposing a wider segment of bank to shocks10, a good example of the in this case being the 2007-2010 financial crises, which spread all across europe through the integrated financial and banking system. there is no doubt that the european integration process in general and the construction of an integrated banking system have help in the achievement of the facts presented above. nevertheless, the degree to which the ideal of an integrated european banking market has yet been realized remains open to debate. the main trends of the european banking system as a response to the structural changes in the european banking market architecture the main european banks have responded through an aggressive expansion strategy that aimed their development either thru internal development or through merger and acquisition. this strategy has enabled banks to grow in a relative short period of time, taking full advantage of the new integrated european banking environment, which in turned allowed them to obtain large economies of scale. these economies were obtained through a better management of variable costs like labour and a diminishing in the percentage of operational inefficiencies, based on a diversification of the revenue sources. a very important role in the growth strategies and the diversification of revenues played the ability of bank to expend their cross-border activities. the tendency for much cross-border european banking activity to take place through the creation of subsidiaries rather than branches points to the continued existence of significant barriers to full market integration11. in general, the impact of an increase in market size on the growth of individual firms depends on industry product and technological characteristics. accordingly, the potential for management strategy to influence performance may be high if there is scope for vertical product differentiation and the posibility for further consolidation. consolidation has contributed significantly to the reduction in the number of banks operating in the eu-27 countries, as we have showened earlier. empirical evidence on the impact of bank mergers in europe is mixed. there is some event study evidence that stock markets prefer focused mergers to those that involve diversification12. the empirical literature on mergers and acquisitions has used either a event study methodology and stock price data in oreder to underline the investor expectetion in regard to the merger or has done a before and after nanlysis of the performance that the banks has registred usig accounting data or performance ratio indicators. until now unfortunetly no reserch was undertaken usign an integrted approche of the two methods. it is more than 10 gropp, r., moermann, g.a., (2004) measurement of contagion in banks equity prices, journal of international money and finance, 23, 405–419. 11 barros, p.p., berglof, e., fulghierri, j., gual, j., mayer, c., vives, x., (2005) integration of european banks: the way forward, centre for economic policy research, london. 12 beitel, p., schiereck, d., wahrenburg, m., (2004) explaining m&a success in european banks, european financial management 10, 109–140. studies and scientific researches economic edition, no. 15, 2010 69 obvous that further investigation must be done in order to establish the full impact of consolidation and vertical differentiation on the integrated european banking sector. conclusions even if there has a great deal of progress registered in the process of european banking integration there is still a long road ahead. there still exist multiple barriers that are preventing free access to the market, partisan behaviour from both regulator and authorities deprives participants of equal treatment and never the least, and systemic events like the current financial crisis tend to bring back nationalist behaviours. the process toward a fully integrated banking sector is multi-faceted and ongoing challenge. but more importantly researches must come with a clear answer regarding maximal degree of integration that can be reached on such a dynamic and complex sector, like the banking one. we believe that future studies regarding these matters will provide the necessary blue print for the deepening of the integration in the european banking sector and the ultimate goal, that of a fully working european financial system that will ensure the european economy the necessary resources for a sustainable development. biography 1. * (1989) report on economic and monetary union in the european community, luxemburg. 2. barros, p.p., berglof, e., fulghierri, j., gual, j., mayer, c., vives, x., (2005) integration of european banks: the way forward, centre for economic policy research, london. 3. beitel, p., schiereck, d., wahrenburg, m., (2004) explaining m&a success in european banks, european financial management 10, 109–140. 4. berger, a.n., dai, q., ongena, s., smith, d., (2003) to what extent will the banking system become globalized? a study of bank nationality and reach in 20 european countries, journal of banking and finance, 27, 383–415. 5. cappiello, l., ho¨rdahl, p., kadareja, a., manganelli, s., (2006) the impact of the euro on financial markets, european central bank working paper no. 598. 6. carbo , s., fernandez, j., (2005) the determinants of bank margins: the effects of diversification, funcas working paper. 7. dermine, j., (2006) european banking integration: don’t put the cart before the horse, in: financial institutions, markets and money 15, 57–106. 8. european central bank, (2008) eu banking structures, ecb, frankfurt am main. 9. european central bank, (2009) eu banking sector stability, ecb, frankfurt am main. 10. european central bank, (2009) financial integration in europe, ecb, frankfurt am main. 11. european central bank, (2009) financial stability review, ecb, frankfurt am main. 12. gropp, r., moermann, g.a., (2004) measurement of contagion in banks equity prices, journal of international money and finance, 23, 405–419. 13. hm treasury, (2005) supervising financial services in an integrated european single market: a discussion paper, hmso, london. 14. mundell, r., (1961) a theory of optimum currency areas, american economic review, 51 (4): 509-517. 15. rajan, r.g., zingales, l., (2003) banks and markets: the changing character of european finance, in: gaspar, v., hartmann, p., sleijpen, o. (eds.), proceedings of the 2nd ecb central banking conference on the transformation of the european financial system, european central bank, frankfurt. 16. http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/themes 17. http://www.ebf-fbe.eu/index.php?page=statistics studies and scientific researches economic edition, no. 15, 2010 70 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 6 exploring the association between r&d expenditure and the job quality in the european union fernando almeida university of porto & inesc tec almd@fe.up.pt nelson amoedo polytechnic higher institute of gaya (ispgaya) nma@ispgaya.pt abstract investment in research and development is a key factor in increasing countries' competitiveness. however, its impact can potentially be broader and include other socially relevant elements like job quality. in effect, the quantity of generated jobs is an incomplete indicator since it does not allow to conclude on the quality of the job generated. in this sense, this paper intends to explore the relevance of r&d investments for the job quality in the european union between 2009 and 2018. for this purpose, we investigate the effects of r&d expenditures made by the business sector, government, and higher education sector on three dimensions of job quality. three research methods are employed, i.e. univariate linear analysis, multiple linear analysis, and cluster analysis. the findings only confirm the association between r&d expenditure and the number of hours worked, such that the european union countries with the highest r&d expenses are those with the lowest average weekly working hours. keywords research and development; innovation; job quality; european union; temporary work; precarious work jel classification j81; o32 introduction in a knowledge-based economic context, the value of organizations does not only lie in their tangible assets (e.g. land, buildings, machinery), but also in immaterial or intangible aspects. these intangible elements include the ability to innovate, the ability to produce new products, the ability to establish partnerships, distribution channels, human capital, corporate culture, among other things (niculita et al., 2012). according to the oecd (2012), research and development (r&d) activities include systematic creative work to increase knowledge and use it in new applications. these activities can be subdivided into basic research, applied research, and experimental development. basic research is defined as experimental or theoretical work undertaken with the primary aim of acquiring new knowledge about the foundations of phenomena or observable facts without any specific application in mind (oecd, 2012). in this sense, applied research differs from fundamental research in that it has a specific practical objective in mind. on the other hand, oecd (2012) characterizes experimental development as systematic work based on existing knowledge obtained through research or practical experience, to produce new or improved products, materials, or processes. due to the distinctive characteristics of these three concepts, there are differences in how the results of the r&d process are disseminated. according almeida, amoedo 7 to cash and culley (2015), the results of fundamental research are generally rapidly and widely disseminated, while the results of applied research and experimental development are disseminated under patent protection or licensing agreements. investments in r&d have been evidenced in the literature, over time, as one of the factors of technical progress and, therefore, contributing to the innovation and the increased productivity of countries (blanco et al., 2013; hornung, 2001). furthermore, the r&d investment of one country also influences the productivity of other countries through spill-over effects and diffusion processes (xing, 2018). in this sense, countries with strategies consolidated in policies that promote technological and nontechnological development, stimulate innovation, education and advanced training are those that achieve higher levels of gdp per capita (barkhordari et al., 2019; diebolt and hippe, 2019). the european union (eu) considers that investing in r&d is crucial for the future of europe and enables the european social model to function (kacprzyk and doryn, 2017; pece et al., 2015). the eu's support for r&d activities generates added value by encouraging collaboration between research teams from various countries and disciplines, which is central to the global scientific progress. in this sense, r&d activities in the eu increase the competitiveness of its member states, companies, and universities (etzkowitz and chou, 2017). additionally, investments in r&d also contribute to improving the daily lives of millions of people in europe and around the world (crespi and quatraro, 2015). simultaneously, one of the objectives of the europe 2020 strategy is to create more and better jobs. among the important principles, objectives and activities referred to in the europe 2020 strategy is the promotion of a high level of employment through the development of a coordinated strategy, in particular with a view to the creation of a skilled, qualified and adaptable workforce and labor markets capable of responding to economic change (ec, 2019). this vision is also shared by piasna et al. (2019) who advocate the need to obtain indicators of job quality to be included in the eu's employment strategy. it is unequivocal that the quantified assessment of the volume of employment of nations needs to be supplemented by an analysis focusing on the quality of employment in all its dimensions. in this sense, this article aims to assess the relevance of r&d investments made by several entities (i.e., government, enterprises, and higher education institutions) for job quality in the eu, using data for the period 2009-2018. this article is innovative in exploring the issue of job quality as part of the europe 2020 strategy and analyzing the relevance of its development from r&d investments. the aim is to find out whether these r&d investments have also helped to improve the living and working conditions of workers in the eu. our main argument is that investment in r&d must be accompanied by the development of job quality, allowing simultaneously a european growth based on the simultaneous development of technological and social dimensions. this paper is organized as follows: initially, a literature review of the role of r&d investment and the dimensions of job quality is carried out. the research questions are also defined in this section. next, the methods used in this paper are presented. subsequently, the results of the article are analyzed and discussed. finally, the conclusions are discussed, and some indications of future work are given. literature review benefits and ways to stimulate r&d investments in r&d are a priority in several companies, and it is frequently observed that several companies leverage their competitive advantages through this type of exploring the association between r&d expenditure and the job quality in the european union 8 investment. in fact, in the global and knowledge economy, the creation of innovation factors that allow companies to increase their level of competitiveness in the market is, in many cases, directly related to the availability that they have for the allocation of resources to r&d (schmidt et al., 2016). according to goffin and mitchell (2016), companies invest in r&d for different reasons, such as the markets in which they operate, the size, the maturity of the business, the type of activity developed, the behavior of competition, or the market strategies outlined. the benefits of r&d activity can be felt more directly, through the products and processes resulting from innovation, or less immediately and more immaterial, through the development of skills and the ability to improve their performance (dziallas and blind, 2019). the analysis of the benefits of r&d activity is explored by various actors. lawson and samson (2001) state the r&d strategy allows companies to create new innovative products or add ways to differentiate existing products from those offered by competitors. by adding new functionalities, due to a greater scientific and technological incorporation, it is expected that products and services can generate greater economic value. furthermore, investment in r&d will also allow the development of new, more efficient production methods that reduce the cost of production or provision of services (özer, 2012). in this sense, investment in r&d may result in more efficient production processes, which reduce marginal production costs or allow the creation of more efficient products with higher marginal productivity. anadon et al. (2016) advocate this greater efficiency globally promotes the decoupling of economic growth from the increase in resource consumption, promoting sustainability. it is also important to note that investment in r&d may not have an immediate practical effect. r&d effort is necessarily an activity with a high level of uncertainty, in which the return on investment is assumed to be difficult to predict (spacek and vacik, 2016). however, the accumulated knowledge is an asset of the company which, if well managed, can become a competitive advantage. podmetina et al. (2018) refer that the scientific and technological knowledge generated by r&d activities allow companies to develop new skills and increase their agility to anticipate trends and be able to change their strategy. additionally, several companies are operating in the industrial property market that allows them to trade patents and royalties through the developed r&d activities (attorney, 2017). the european union and each member state are interested in and committed to fostering investment in business r&d through the definition of concrete objectives and policies, on the understanding that this will eventually translate into tangible gains in competitiveness. there are multiple forms of public support for corporate r&d and all eu countries have public policies to stimulate companies to invest in r&d, although with relevant differences considering the specificities of each country and the mix of instruments that materialize such support. in the european context, two major groups of public support instruments stand out: direct funding and indirect funding (van pottelsberghe et al., 2003). direct funding of r&d projects is provided through grants, loans, or other financial instruments. on another perspective, indirect financing is carried out through tax incentives that reduce the amount of tax to be paid by companies. according to westmore (2014), direct financing and tax incentives are instruments with different characteristics and are only partially substitutable with each other. traditionally, public policies have favored direct financing over corporate r&e. however, recent data provided by the oecd (2018) point to a growing increase in the number of countries with tax incentive systems for r&d, with a progressive replacement of direct funding by tax incentives. another way to encourage r&d activities is through public/private higher education institutions. universities are reference points in building the design of science and are also promoters of innovation that contribute to the economic development of countries. the triple helix model proposed by etzkowitz and leydesdorff (2000) argues that almeida, amoedo 9 universities can play an increasingly relevant role in innovation in the context of knowledge-based societies. briefly, the triple helix model expresses a new configuration of emerging institutional forces in support systems for r&d activities. hunady et al. (2019) state that in a knowledge-based economy, the university becomes central in the process of providing human capital and in the process of launching new enterprises sustained in the growth generated within universities and research centers. in this sense, several countries have adopted measures to strengthen the relationship between the university and industry, to channel the contributions of academic research to innovation and fostering the economy. these measures focus on the strategic actors associated with the process of knowledge transfer and on the permissiveness that universities can support innovation in the industry through the production of products and/or processes that can be marketed (philippi et al., 2018). perspectives about the job quality the new information economy has created paradoxical challenges for the european union countries. from one perspective, some european citizens are unemployed and cannot find a job, and on the other hand, some citizens need to work more than 60 hours a week through various work activities. according to gautier and moraga-gonzález (2018), the number of hours of work and the intensity of workload is currently higher than in the past. this vision is complemented by imran et al. (2015) when highlighting that job security, loyalty and commitment of employees is no longer an acquired factor, as it was in organizations of the past. therefore, companies must empower and motivate their employees to increase their competitiveness. another facet of the literature has emerged that aims to complement the traditional view of the number of new jobs created. this perspective seeks to assess the level of job quality, thus complementing the analysis of the volume of employment with another that focuses on the quality of these jobs. job quality emerges as a necessarily multidisciplinary concept in which various perspectives on citizens' employment should be analyzed together. in the literature, it is possible to find several proposals for job quality indices that contemplate objective and subjective dimensions, in which the physical conditions of work, the health of employees, learning, the quality of the employer-employee relationship, etc. are found. (amossé and kalugina, 2010; tangian, 2005). additionally, leontaridi and sloane (2001) propose the existence of subjective indicators obtained from the use of job satisfaction surveys. one of the essential aspects of job quality is the length of working hours. traditionally, the number of working hours is associated with the success, commitment, and productivity of a job. however, this view is contradicted by carmichael (2015) who compiled several studies in the area and concluded that spending more hours at work can be harmful to both the worker and the company. additionally, this study states that managers could not distinguish the most productive workers from the least productive by looking exclusively at working hours. statistics released by the oecd indicate that countries with longer working hours do not necessarily have higher productivity (oecd, 2019). on the contrary, studies conducted by lepinteur (2016) and glaveski (2018) indicate that shorter working hours favor productivity and contribute to reconciling employment and family. in this sense, it is important to explore whether the investment in r&d has led to a reduction in the number of working time hours, promoting a work-life balance. therefore, the following hypothesis was formulated: h0: in eu countries, higher levels of r&d expenses are negatively associated with the average weekly working hours the labor market in recent years has undergone various transformations, from the process of technological innovation, changes in production processes, changes in organizational structures, as well as in human resources management. fudge and strauss (2013) argue that in a global economy, with the predominance of financial logic exploring the association between r&d expenditure and the job quality in the european union 10 and short-term profitability, there is continuous pressure for labor factor flexibility. in response to these challenges and the seasonality of demand in certain sectors of activity (e.g., tourism), companies have been changing their operations, namely using new forms of hiring workers, increasingly resorting to temporary work. temporary work is a job with a defined temporary limitation, with some asymmetries in the eu countries, although the average reference value is up to a maximum of two years (eichhorst et al., 2017). however, the definition of temporary work is more complex and is based on a tripartite or triangular relationship between the worker, the temporary employment agency, and the company where the worker is currently going to work during the period of this relationship (schoukens and barrio, 2017). in this sense, and given the increasing importance of temporary work in recent years in the eu, it is important to explore whether the investment in r&d has contributed to increasing employment stability. therefore, the following research question was established: h1: in eu countries, higher levels of r&d expenses are negatively associated with the percentage of temporary work another factor impacting the quality of work is the precariousness of labor relationships. hipp (2016) includes in this component a set of different labor configurations, such as service contracts, seasonal work without contracts, and occasional work. campbell and price (2016) state that considering the historical dimension of this problem, job insecurity has particularly affected the working classes. however, the profile of the precarious worker has been broadened to include young people under 25, women, and less qualified professional groups (pembroke, 2018). furthermore, job insecurity is more prevalent in seasonal economic sectors and small businesses (ilo, 2015). in fact, we are facing a situation where more and more individuals are at risk of social and economic precariousness. the study carried out by oliveira and carvalho (2008) allows us to conclude that precarious work affects eu countries differently and has been a structural feature in the reconfiguration of labor markets. in this sense, and given the importance that job insecurity has on the quality of life of citizens in the eu, it is important to explore whether the investment in r&d has contributed to reducing the rate of job insecurity. therefore, the following research question was established: h2: in eu countries, higher levels of r&d expenses are negatively associated with the percentage of precarious work with the enlargement of europe to 27 member states in january 2007, the eu increased its geographical coverage and population, but inevitably the asymmetries between its member states emerged. the economic, social, demographic, and territorial disparities in the eu-27 are widening, and the gap between the center and the periphery, between the richest and poorest regions, has increased (götz; 2016; scharpf, 2009). furthermore, the global financial crisis of 2007-2012, which affected the eu mainly in the period 2009-2013, was one of the factors that increased the asymmetries, especially between the countries of southern and northern europe. in this sense, it is pertinent to explore the asymmetries of each of the eu-27 countries, considering the three indicators of job quality previously considered. therefore, the following research question was established: h3: in eu countries, higher levels of r&d expenses are associated positively with the levels of job quality almeida, amoedo 11 methodology data the data for this study come from eurostat, which is the official us statistical office. the data available at eurostat come from the various member states through the european statistical system (ess) and allow comparison of statistical data from different eu countries. croatia was not included in this study because joined the european union on 1st july 2013. firstly, the research and development expenditure database was accessed. according to eurostat (2019), r&d expenditure is defined as: “research and experimental development (r&d) comprise creative work undertaken on a systematic basis to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications. r&d expenditures include all expenditures for r&d performed within the business enterprise sector (berd) on the national territory during a given period, regardless of the source of funds. r&d expenditure in berd is shown as a percentage of gdp (r&d intensity).” furthermore, to have a greater granularity of the analysis, three perspectives were considered: (i) business enterprise sector; (ii) government sector; and (iii) higher education sector. this information was complemented with the total number of researchers for the three sectors of activity identified above. eurostat (2019) defines total researchers by sector of performance as “researchers are professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems, and in the management of the projects concerned. fte (full-time equivalent) corresponds to one year's work by one person (for example, a person who devotes 40 % of his time to r&d is counted as 0.4 fte.” the role of r&d expenditure considering its multiple perspectives has been covered in several studies seeking to explore the competitiveness of eu countries (kiselakova et al., 2018; pelikánová, 2019). these three data views correspond to six independent variables, respectively: • rdb – r&d expenditure (% gdp) in the business enterprise sector; • rdg – r&d expenditure (% gdp) in the government sector; • rdhe – r&d expenditure (% gdp) in the higher education sector; • rsb – % of researchers in the business enterprise sector; • rsg – % of researchers in the government sector; • rshe – % of researchers in the higher education sector. figure 1 visually presents the evolution of the r&d expenditure share of gdp and the percentage of researchers in the population considering the three data views defined above. the behavior of these variables allows us to conclude that r&d expenditure and the number of researchers in the business enterprise sector has gradually increased over the last ten years, while the contribution of the government sector and higher education sector has stagnated, remaining relatively constant over the period, with small fluctuations mainly in r&d expenditure in the higher education sector. furthermore, it should be noted that the business enterprise sector has been the main contributor to r&d activities in the eu. this vision is confirmed by berzkalne and zelgalve (2012) and hana (2013) that establish the importance of r&d investments in the competitiveness of companies through the creation of new products, services, or processes. exploring the association between r&d expenditure and the job quality in the european union 12 figure 1 evolution of r&d dimensions in the eu source: eurostat (2019). eurostat – your key to european statistics. available at: https://ec.europa.eu/eurostat/ (accessed 15th july 2019). secondly, it is also necessary to obtain data on the quality of work by considering the following three dimensions: • average number of usual weekly hours of work in the main job (wh). the wb has been explored in studies that intend to investigate the impact of long working hours on job quality (artazcoz et al., 2018). the average number of working hours in the eu has remained relatively steady despite a trend over the last 10 years of a small reduction (average for 2009 was 38.3 hours and for 2018 is 37.9 hours). there are relevant fluctuations with greece as the country with the highest number of 42-hour working hours for 2018 and the netherlands with a value of 30.4 hours; • temporary employees as a percentage of the total number of employees (te). the role of te has been studied from the perspective of exploring its relevance in the economic recovery of the eu countries (ter weel, 2018). according to eurostat (2019), a person is considered a temporary worker if he/she is working for a temporary work agency. temporary work has been growing progressively at an average annual rate of 6.9% since 2009. its maximum values were reached in 2015 and 2016 with a percentage of 12.1 and 12.0, respectively. however, since this period the percentage of temporary workers has been decreasing, and in 2018 the percentage of workers in this situation is 11.6%. • precarious employment as a percentage of the total number of employees (pe). the role of pe has been studied from the perspective of its impacts on lifestyle and health conditions in the eu (matilla-santander et al., 2020). eurostat (2019) establishes that a precarious worker has a short-term contract of up to 3 months. the number of workers in this situation has experienced some increase and represents approximately 2% of workers in the eu. the effects of the global financial crisis in the eu had some impact on this indicator in the period 2010-2015, where there was a growth rate higher than 22% compared to 2009. table 1 shows the evolution of the dependent variables (i.e., wh, te, pe) in the period from 2009 to 2018. table 1 omits the specificities of each country and presents only the eu-27 average for each year (croatia was excluded). of the three indicators, et is almeida, amoedo 13 the one with the highest asymmetry between countries. for 2018, the number of temporary agency workers in spain was 26.9%, while the number of temporary agency workers in romania was only 1.1%. table 1 evolution of wh, te, and pe from 2009 to 2018 year wh te pe 2009 38.3 10.8 1.8 2010 38.2 11.4 2.0 2011 38.1 11.6 2.2 2012 38.0 11.3 2.1 2013 37.9 11.5 2.0 2014 37.9 11.9 2.1 2015 37.9 12.1 2.2 2016 37.9 12.0 2.1 2017 37.9 11.9 2.1 2018 37.9 11.6 2.0 source: own source methods this article uses a quantitative approach for data exploration and analysis. quantitative research allows exploring the relationships between the variables by experimental or semi-experimental methods through the adoption of various statistical techniques (swift and piff, 2014). furthermore, queirós et al. (2017) advocate this methodology also allows confirming the research hypotheses formulated by the researcher and assesses the degree of robustness and reliability of the obtained results. the spss v.21 was used to explore the relationship between the data. the following quantitative methods were applied: • univariate linear regression – a statistical methodology that uses the relationship between two quantitative variables to predict the behavior of a predictive variable from an independent variable (montgomery et al., 2012). the simplest case of linear regression is when we have two variables and the relationship between them can be represented by a straight line. as suggested by montgomery et al. (2012) the outliers were removed to avoid negatively biasing the result of the linear estimation; • multiple linear regression – an extension of the simple linear regression in which several predictors are used to estimating the value of the dependent variable (montgomery et al., 2012). however, in multiple regression models, it is very common the occurrence of highly correlated independent variables which originates estimated regression coefficients with low precision. in these cases, it is useful to reduce the dimensionality of the model. one of the approaches is the adoption of principal component analysis (jolliffe and cadima, 2016); • cluster analysis – a multivariate statistical procedure that serves to identify homogeneous groups in data, based on variables or cases. cluster analysis allows classifying objects based on the observation of similarities and dissimilarities (everitt et al., 2011). according to king (2014), the cluster exploring the association between r&d expenditure and the job quality in the european union 14 analysis should include the following phases: (i) selection of the elements to be grouped; (ii) definition of a set of variables from which the necessary information to group the cases will be obtained; (iii) selection of a measure of similarity or distance between each pair of cases; (iv) choice of an aggregation criterion; and (v) validation of findings. results simple linear analysis table 2 presents a simple linear correlation analysis between the variables under study. an analysis of variance (anova) was performed to compare the distribution of several groups in independent samples. the f test is used to test the hypothesis that the regression model fits the proposed linear models (warne, 2017). a significance level of 5% (α=0.05) was adopted. the results suggest a good fit between the investments in r&d performed by companies and the higher education sector and the number of working hours. these cells are highlighted in table 2. the correlation coefficient for business r&d investment is higher than 0.7, which indicates a strong correlation between the two variables, while the correlation for r&d expenditure by the higher education sector is moderate (0.40 ≤ r ≤ 0.69). however, it was not possible to establish the same association for te and pe. the durbin-watson test was also conducted to test for the presence of autocorrelation in the errors of a regression model (warne, 2017). it is referred by warne (2017) that a durbin-watson score around 2 indicates nonautocorrelation; a value near 0 indicates positive autocorrelation among the variables; and a negative autocorrelation can be found in a value near 4. in situations where there is a good fit in the model, we can verify that the durbin-watson statistic is higher than 2.035 (tabulated reference value considering the sample size and number of terms) indicating there is no autocorrelation between the errors of the linear estimate. table 2 simple linear analysis variable r r square t-value durbinwatson wh (df1 = 1 & df2 = 24) rdb 0.702 0.492 0 2.088 rdg 0.086 0.007 0.676 1.899 rdhe 0.680 0.463 0 2.240 rsb 0.745 0.556 0 2.167 rsg 0.194 0.038 0.342 1.911 rshe 0.500 0.250 0.009 2.258 te (df1 = 1 & df2 = 24) rdb 0.144 0.021 0.482 1.749 rdg 0.040 0.002 0.847 1.675 rdhe 0.101 0.010 0.623 1.712 rsb 0.074 0.005 0.721 1.704 almeida, amoedo 15 rsg 0.170 0.029 0.406 1.775 rshe 0.368 0.135 0.064 1.712 pe (df1 = 1 & df2 = 25) rdb 0.327 0.107 0.096 1.711 rdg 0.266 0.071 0.181 1.788 rdhe 0.181 0.033 0.365 1.649 rsb 0.259 0.067 0.192 1.659 rsg 0.177 0.031 0.378 1.668 rshe 0.110 0.012 0.583 1.669 source: own source multiple linear analysis multiple regression is an appropriate statistical method of analysis when the behavior of a dependent variable is related to several independent variables. according to montgomery et al. (2012), the objective of the regression analysis is to predict the changes in the dependent variable in response to the changes that occur in the various independent variables. in this study, six independent variables (i.e., rdb, rdg, rdhe, rsb, rsg, rshe) and three dependent variables (i.e., wh, te, pe) are considered and tested separately. the principal component analysis was adopted to reduce the number of initial variables without significant loss of information (jolliffe and cadima, 2016). the authors sought to organize the data into three main components (i.e., cp1: rdb + rsb, cp2: rdg + rsg, cp3: rdhe + rshe) to explore the implicit relationship between r&d expenditure and the number of researchers. however, this initial approach proved to be inadequate because the variance inflation factor (vif) was higher than 10. according to darlington and hayes (2016), this situation indicates a high correlation between the components. therefore, the components were reduced to two (i.e., cp1: rdb + rdhe + rsb + rshe, cp2: rdg + rsg), which obtained a vif equal to 3.543. this value is acceptable for multiple linear regression purposes, revealing a relatively low correlation between the components (darlington and hayes, 2016). table 3 shows the results of multiple linear regression considering cp1 and cp2 for the three dependent variables (i.e., wh, te, and pe). the analysis was carried out considering the period 2009-2018, because as stated by aghion and jaravel (2015) and pradeep et al. (2017) the effects of an investment in r&d have economic effects in the medium and long term, so it is expected that the results of this investment will not be visible in the year in which this investment is made. the adjusted r squared is calculated because it provides a vision of the goodness-of-fit for regression models that contain different numbers of independent variables. the findings indicate a good fit of the model (p-value < 0.05) only to estimate the behavior of the dependent variable wh. the adjusted r2 is only relevant for wh, which indicates a moderate correlation between the independent components and the dependent variable wh. the association between r&d, te, and pe was not supported. finally, it is also pertinent to analyze the behavior of the degrees of freedom (df) since the outliers were removed. the removal of outliers occurred mainly in the regression analysis of te and pe due to the asymmetric behavior of several european union countries (e.g. spain has a pe percentage approximately 25 times higher than lithuania or slovenia). in the estimation of pe and te, particularly in the latter case, the number of data to estimate the parameter values was much smaller due to the high presence of outliers. exploring the association between r&d expenditure and the job quality in the european union 16 table 3 multiple linear analysis dependent variable wh (df1 = 2 & df2 = 20) te (df1 = 2 & df2 = 12) pe (df1 = 2 & df2 = 15) cp1 0.279 0.059 0.016 cp2 0.403 0.167 0.068 mean 38 11.61 2.06 std. dev. 0.149 0.390 0.117 r2 0.480 0.409 0.254 adjusted r2 0.426 0.257 0.100 f 8.865 2.846 1.578 p-value 0.002 0.151 0.392 durbin-watson 1.765 1.679 1.801 *p < 0.05 source: own source cluster analysis cluster analysis is a statistical technique used to classify elements and organize them into groups. the idea is that elements within the same cluster are very similar, and elements in different clusters are distinct from each other. in the definition of similarity and difference between countries, the euclidean distance was used, in which the distance between two cases is the square root of the sum of the squares of the differences between the cases for all the variables (mortier et al., 2006). cluster analysis is pertinent due to the asymmetrical behavior of european union countries. in this sense, this cluster analysis aims to understand specific behaviors and explore whether the association between the variables under study is relevant within each cluster. in table 4 the countries were grouped into a total of 6 clusters according to the three dependent variables (i.e., wh, te, pe). table 4 correspondence between countries and clusters countries clusters wh te pe a b c d e f austria x x x belgium x x x bulgaria x x x cyprus x x x czechia x x x almeida, amoedo 17 denmark x x x estonia x x x finland x x x france x x x germany x x x greece x x x hungary x x x ireland x x x italy x x x latvia x x x lithuania x x x luxembourg x x x malta x x x netherlands x x x poland x x x portugal x x x romania x x x slovakia x x x slovenia x x x spain x x x sweden x x x united kingdom x x x source: own source the size of each cluster is relatively identical, except for the wh. here it appears that cluster 1 has only 3 countries (i.e. denmark, germany, and netherlands) that stand out because they have hours of work far below the average of the other eu countries. cluster d and f contain the countries with the highest percentage of temporary and precarious work. after the organization of the cluster countries, the quality of the adjustment and the degree of relationship between the independent and dependent variables in the study were tested for each year (table 5). there are significant differences in behavior between clusters due to the heterogeneity of the eu countries and emerge some slight fluctuations in the quality of adjustment and in the linear correlation over the years within the same cluster. the level of significance of the quality of the adjustment is less than 0.05 in cluster a for the dependent variable wh throughout the considered period (i.e., 2009-2018). this indicates there is an association between r&d and wh in countries where the number of working hours is lower, i.e. r&d investments have contributed to reducing the number of working hours. however, the same relationship is not established for cluster b countries. there is only one more point situation (i.e., cluster c in the year 2015) where sig. f. change is less than 0.05 but does not allow drawing conclusions for the entire 2009-2018 period. it is exploring the association between r&d expenditure and the job quality in the european union 18 pertinent to highlight that durbin-watson values are less than 1 in some clusters (e.g., b and f) in specific years. however, and considering the whole period of 10 years, its impact is residual. table 5 clusters analysis variable cluster r square adjusted r square f change sig. f change durbinwatson wh a 0.521 0.435 8.298 0.007 1.786 b 0.163 -0.306 0.423 0.518 1.667 te c 0.313 0.234 4.114 0.087 1.750 d 0.327 0.194 2.695 0.112 1.812 pe e 0.048 -0.014 0.801 0.406 1.895 f 0.191 -0.052 0.958 0.383 1.497 source: own source discussion the findings revealed a relationship between r&d expenditure and the number of working hours. in this sense, it was possible to confirm the h0 hypothesis that the eu countries with the highest r&d expenses are also those with lower working hours. however, this relationship only applies to r&d expenditures by the business enterprise sector and the higher education sector. the results did not allow us to confirm this relationship for the r&d expenditures carried out by the government sector. according to walterskirchen (2016), a country's productivity increase can be achieved by reducing working hours or increasing real wages. furthermore, pullinger (2014) highlights the role of reducing the number of working hours in the economic development and sustainability. from another perspective, it was not possible to confirm the h1 hypothesis, which means it was not feasible to establish a link between r&d expenses and the percentage of temporary work. the role of temporary work in the economy is not consensual. from one perspective, vergeer and kleinknecht (2014) state the importance of temporary work in reducing labor market rigidities and increasing productivity growth, while the findings to the study by lisi and malo (2017) mention that temporary work has a negative impact on productivity growth, particularly in skill intensity fields. therefore, the relevance of temporary work assumes a very heterogeneous role for each eu country, with some countries, such as romania, bulgaria and baltic countries, where the average te in the last 10 years was less than 5%, while other countries, such as spain, poland, and portugal, exceed 20%. these asymmetries are very relevant and explain the contradictory role of the te in the eu. in the same direction, it was also not possible to confirm the h2 hypothesis, i.e. it was not feasible to establish a relationship between r&d expenses and precarious work. higher investments in r&d have not contributed to a reduction of precarious work. the fight against precarious work is highlighted in european policy as a fundamental element in promoting the quality of employment and in combating precarious lives and health problems (matillasantander, 2020; pembroke, 2019), but the investments in r&d have not made a decisive contribution for this goal. finally, cluster analysis contributed to identifying some patterns of behavior among eu countries. it was possible to identify six clusters considering the number of working hours, and the percentage of temporary and precarious workers. this heterogeneity of almeida, amoedo 19 behavior in european union countries was also previously studied by weresa (2019) in her analysis of the impact of the fourth industrial revolution. in this sense, the data from this study also confirm the heterogeneity and relevance of cluster analysis. the relationship between r&d expenses and the number of working hours is mainly relevant for countries with fewer working hours, i.e. those in cluster 1 (i.e. denmark, germany, and the netherlands) with less than 35 working hours per week. in cluster a, the netherlands stands out with an average working time of 30.4 hours over the last 10 years. however, this does not mean that workers in the netherlands are in precarious employment, as this rate is one of the lowest in the eu. dodds (2017) points out that this statistic is a result of the work culture in the netherlands, whose employees like to set aside a good amount of time for family life and parallel activities. however, this relationship could not be confirmed for cluster b, indicating that this relationship cannot be confirmed for countries with small fluctuations in working hours. finally, the cluster study carried out for the te and pe components did not contribute to confirm these relationships independently of the considered clusters. thus, the h3 hypothesis could not be confirmed for the three considered dimensions (i.e., wh, te, and pe). conclusions the labor market in the eu has undergone major changes, in which companies tend to be increasingly challenging. through this, employees seek to meet the standards and expectations of organizations, always seeking to meet the challenges of the market and live constantly under pressure. for organizations, it is essential to have motivated and committed human resources, therefore, quality of life in organizations becomes an indispensable factor to make employees feel motivated and committed to the objectives and goals of the organization, bringing benefits for the growth and success of the company. the job quality has become the main part of competitiveness in the market, contributing to increasing the employees’ performance and productivity. this study sought to explore the role of r&d expenditure in the work quality in the european union in the period 2009-2018. the results identified a relationship between the increase in r&d expenditure and the number of worked hours, and this association is particularly relevant for countries with the lowest number of working hours in the eu (i.e. denmark, germany, and the netherlands). however, it was not possible to confirm this relationship for temporary and precarious work. this work has both theoretical and practical implications. from a theoretical point of view, it establishes the association between r&d expenditure, weekly working hours, the percentage of temporary work, and the percentage of precarious work. it also explores the relevance of the role of r&d expenditure by companies, government, and the higher education sector. from a practical point of view, the findings are relevant for the establishment of support policies that promote the improvement of the job quality in the eu. however, there are some limitations of this article that should be highlighted, namely: (i) the article considers only the value of r&d expenditure not looking at the quality and impact of that investment on the market; (ii) the value of precarious work was taken from official statistics provided by eurostat, ignoring the existence of informal and undeclared precarious work; and (iii) cluster analysis allows only a superficial analysis of the impact of each country's asymmetry in the eu. as future work, the authors intend to explore other elements in the quality of work, such as non-wage benefits, social protection, working conditions, skills development and training, or work motivation. these elements are relevant to be considered as control variables in the multiple regression model. furthermore, we intend to explore regional aspects of the behavior of some countries to have a more detailed and deeper analysis of clusters, which may consider the regional and contextual specificities of exploring the association between 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(2018), the impact of spillovers on strategic r&d under uncertainty, economic research, vol. 31, no.1, 428-439. microsoft word apostoaie constantin marius_eng.doc romania's foreign trade in 2008 a territorial statistical analysis stângaciu oana ancu a, “vasile alecsandri”university of bacau, romania abstract in this study, i proposed to analyze the territorial structure at county level, of the romanian international trade both overall and by the sections of the combined nomenclature. starting with the values of export and imports trade flows related to each county in romania and using statistical methods of analysis, i determineted the spatial distribution of foreign trade reveal that county poles of competitiveness in this regard. whereas the trade balance or indicators such as coverage of imports by exports is proof that the increase or decrease the competitiveness of an economy's performance, i calculated also for each county these indicators. keywords export fob, cif imports, trade balance, coverage of imports with exports jel codes: c10, f10, f49, o11 introduction befor 1 january 2007, when romania joined the eu, statistical information on foreign trade in goods, both eu countries and with non-member union, were collected by the national customs authority, which is the institution who collected and customs declarations, and based on their established level of exports and imports, according to the statistical system extrastat. however, since 1 january 2007, the intrastat system became operational, so the statistics of international trade in goods is determined by summing data from intrastat statistical system (for intra-eu) and extrastat (for extra-eu trade). when a country becomes a member of the european union (eu) and part of the single market, customs control on the movement of goods between the country and other eu countries disappear and no longer traders must fill in customs declarations for these goods. to replace this source of data was created and developed the intrastat statistical system, managed by the nis to collect information directly from business operators in eu countries exchanged goods with other eu countries. the value of goods exported and imported to set prices based on actual exports fob and cif prices of actual imports. fob price is the price at the border of the exporting country, including the value of the goods, all costs to the point of embarkation, and all fees incurred for the goods to be loaded on board. cif price is the price at the border of the importing country, which includes both components of the fob price and international insurance and transport costs 1. romania's external trade statistics is made in accordance with the methodology used internationally and exported and imported goods have been classified since 1994 by the combined nomenclature (cn). which is also the basis for customs tariffs. 1 collection of romanian foreign trade yearbook, national institute of statistics, bucharest, pg. 8 studies and scientific researches economic edition, no. 15, 2010 280 romania's fob exports romania's fob exports, in 2008, reached the value 33.724.570 thousand euro and the first 5 counties in the top with the largest exports are: bucharest with 6.420.200 thousand euro (19,0% of total exports of the country),timi county with 2.850.065 thousand euro (8,5% of total exports of the country), arge� county with 2.486.200 thousand euro (7,4% of total exports of the country), constan�a county with 2.088.083 thousand euro (6,2% of total exports of the country) and arad county with 1.455.181 thousand euro (4,3% of total exports of the country). 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 g or j g iu rg iu ia lo m ita c ar as -s ev er in s uc ea va t el eo rm an v ra nc ea v as lu i m eh ed in ti b ot os an i c ov as na h ar g hi ta c al ar as i s al aj t ul ce a b uz au b ra ila ia si b ac au d im bo vi ta n ea m t b is tr ita -n as au d d ol j h un ed oa ra a lb a m ar am ur es v ilc ea s at u m ar e ilf ov m ur es b ih or c lu j b ra so v o lt s ib iu p ra ho va g al at i a ra d c on st an ta a rg es t im is b uc ur es ti thousand euro figure 1. fob exports by counties in 2008 source: processing by its own database djs bacau the last 5 places in the hierarchy of counties, with lower export values were situated: gorj county with 36.917 thousand euros (0,1% of total exports of the country), giurgiu county with 89.906 thousands euro (0,3 % of total exports of the country), ialomi�a county with 117.188 thousand euro (0,3% of total exports of the country), cara� severin county with 126.401 thousand euro (0,4% of total exports of the country) and suceava county with 135.513 thousand euro (0,4% of total exports of the country). the other counties; 38,7% bucuresti; 19,0% timis; 8,5% arges; 7,4% constanta; 6,2% arad; 4,3% galati; 4,1% prahova; 4,1% sibiu; 3,9% olt; 3,8% figure 2. export structure in 2008 (%) source: processing by its own database djs bacau in the structure of fob exports by section of the combined nomenclature (nc) in 2008, the highest share of 23,9% was obtained by the section "machinery and mechanical appliances, studies and scientific researches economic edition, no. 15, 2010 281 machinery, appliances and equipment, recorders or sound and images”, and the first 3 counties with large exports in this section are: bucharest (1.418.937 thousands of euros, respectively 17,7% of exports in this section), timi (1.180.091 thousand euros, respectively 14,7% of exports in this section ) and arge� (with euro 728.814 thousand, respectively 9,1%). the second place with a share of 14,7% of total export value is the section "base metals and articles thereof", and the first place in the section is occupied by county gala i with 1.255.705 thousand euro (25.4%), it followed by olt county (697.858 thousand euro, respectively 14,1%) and bucharest (euro 665.554 thousand, respectively 13,5%). section "means of transport" takes third place with a share of total export value by 12,3%, and the county with the largest export in this section is arge� county with 1.420.100 thousand euro (34,3%), followed by constan�a with 401.815 thousand euro (9,7%) and arad county with 348.374 thousand euro (8,4%). in this section arge� county achieve performance to have the largest export on both the section and counties representing 4,2% of exports by country. 3, 5 3, 5 4, 6 4, 6 4, 9 6, 2 6, 5 7, 4 8, 8 9, 1 9, 2 9, 7 11 ,2 12 ,2 12 ,6 14 ,4 15 ,5 18 ,8 19 ,0 19 ,1 21 ,4 22 ,1 29 ,3 29 ,5 29 ,9 30 ,9 31 ,5 35 ,5 35 ,6 35 ,9 37 ,3 38 ,0 39 ,0 41 ,4 44 ,2 47 ,9 48 ,8 6 0, 5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% c on st an ta b ot os an i t ul ce a g al at i s al aj h ar g hi ta o lt v ra nc ea m eh ed in ti v ilc ea ia lo m ita n ea m t b ac au c al ar as i m ur es b ra ila ilf ov s uc ea va a lb a c ov as na g or j g iu rg iu ia si b uz au c ar as -s ev er in b uc ur es ti a rg es b ra so v m ar am ur es b ih or a ra d v as lu i h un ed oa ra p ra ho va t el eo rm an s ib iu s at u m ar e t im is d im bo vi ta b is tr ita -n as au d d ol j c lu j other sections textile products means of transport common metals machinery and electrical applicants figure 3. fob export structure by main section of the cn and by counties in 2008 source: processing by its own database djs bacau the lowest values of exports are found in sections: "animal or vegetable fats and oils (0,3% of total exports), "good not classified "(0,3% of total exports) and" paper and paperboard and articles of them (0,5% of total exports). romania's cif imports romania's cif imports in 2008 reached the value of 57.240.310 thousand euro. bucharest has in this case first among counties with the highest values of imports: 21.123.225 thousand euro, representing 36,9% of total imports in romania, followed far away from the counties: ilfov with 3.747.837 thousand euro (6,5% of total imports), timi with 3.187.598 thousand euro (5,6% of total imports), constan�a with 3.187.527 thousand euro (5,6% of total imports) and sibiu with 2.629.309 thousand euro (4,6% of total imports). studies and scientific researches economic edition, no. 15, 2010 282 0 5000000 10000000 15000000 20000000 g or j t el eo rm an v as lu i m eh ed in ti c ar as -s ev er in ia lo m ita v ra nc ea b ot os an i t ul ce a g iu rg iu c al ar as i b ra ila s uc ea va c ov as na v ilc ea s al aj b ac au b is tr ita -n as au d a lb a b uz au h ar g hi ta n ea m t d im bo vi ta h un ed oa ra d ol j m ar am ur es o lt ia si s at u m ar e m ur es b ih or a ra d b ra so v g al at i a rg es c lu j p ra ho va s ib iu c on st an ta t im is ilf ov b uc ur es ti thousandeuro figura 4. cif import by counties in 2008 source: processing by its own database djs bacau gorj county, with an import value of 60.201 thousand euro has only 0,1% of total imports of the country, thus occupying last place in the ranking counties. with a share of only 0,2% of total imports are counties: teleorman (91.985 thousand euro), vaslui (123.517 thousand euro), mehedin�i (123.995 thousand euro), cara�-severin (125.128 thousand euro) and ialomi�a (140.538 thousand euro) those falling to end ranking. bucuresti ; 36,9% ilfov; 6,5% timis; 5,6% constant a; 5,6% sibiu; 4,6% prahova; 4,4% cluj; 3,9% arges; 3,8% galati; 2,9% the other counties; 25,8% figure 5. import structure in 2008 (%) source: processing by its own database djs bacau in the structure of cif imports by section of the combined nomenclature, as well as exports, the "machinery and mechanical appliances, machinery, appliances and equipment, recorders or sound and images" has the highest weight in total imports by 24,0%, and the first in the section is bucharest with 5.452.048 thousand euro (39,8% of imports in this section), this value is actually the highest value of the imports by sections and counties. far away are counties: timi� (with 1.139.411 thousand euro respectively 8,3%) and arge� (with 924.960 thousand euro, respectively 6,7%). large imports were made also on the section "mineral products", its share being 13,7% of total imports, constanta county holding first place in the section, with 2.050.503 thousands of euro (26,1% of the section imports), second place belonging to bucharest 1.634.217 thousand euro (20,8%) and the third place awarded to the sibiu county with 1.452.845 thousand euros (18,5%). studies and scientific researches economic edition, no. 15, 2010 283 12,5% of the total imports of the country, were performed on the section "means of transport", bucharest again occupying the first position with a value of euro 3.672.657 thousand euro, respectively 51,5% of the imports section, ilfov imported by this section in the amount of 1.082.984 thousand euro (15,2%), followed by arge� with an import value of 496.481 thousand euro (7,0%). 6, 4 8, 2 8, 3 10 ,1 10 ,4 13 ,1 14 ,0 14 ,2 15 ,2 15 ,4 15 ,7 15 ,8 15 ,9 16 ,2 16 ,6 16 ,7 17 ,2 17 ,5 18 ,1 18 ,6 18 ,7 21 ,1 22 ,4 22 ,9 24 ,4 24 ,9 25 ,8 26 ,7 27 ,1 27 ,8 27 ,9 28 ,3 30 ,6 32 ,8 32 ,8 32 ,8 33 ,5 34 ,5 35 ,0 35 ,7 42 ,7 65 ,9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% g al at i b ot os an i v as lu i v ra nc ea c on st an ta m ur es h ar g hi ta s al aj s ib iu p ra ho va m eh ed in ti v ilc ea o lt b ra ila ia lo m ita ilf ov b ac au s uc ea va ia si t el eo rm an g or j a lb a b uz au t ul ce a a ra d c al ar as i b uc ur es ti b ra so v b ih or s at u m ar e d im bo vi ta c ov as na n ea m t h un ed oa ra c ar as -s ev er in b is tr ita -n as au d d ol j m ar am ur es c lu j t im is a rg es g iu rg iu other sections means of transport common metals mineral products machinery and electrical appliances figure 6. cif import structure by main section of the cn and by counties in 2008 source: processing by its own database djs bacau the smaller imports were made in the following sections „ animal or vegetable fats and oils” (0,2%), “ good not classified” (0,2%) and “ wood products (excluding furniture), braids of twing” (0,9%). the trade balance and coverage of imports with exports the aggregate import and export relations between romania and the rest of the world stands out better in trade balance, calculating the balance of trade. to calculate the fob-fob balance of foreign trade operations is required transformations of cif import in fob import by applying a conversion factor cif-fob: 1,0834 coefficient is based on research conducted at a major company profile. -800,0 -700,0 -600,0 -500,0 -400,0 -300,0 -200,0 -100,0 0,0 100,0 200,0 -18000000 -16000000 -14000000 -12000000 -10000000 -8000000 -6000000 -4000000 -2000000 0 2000000 b uc ur es ti il fo v si bi u c lu j c on st an ta pr ah ov a t im is b ra so v b ih or g al at i ia si sa tu m ar e h ar gh ita m ur es d ol j g iu rg iu c ov as na a ra d b uz au su ce av a sa la j d im bo vi ta b ac au n ea m t ia lo m ita g or j v ra nc ea c ar as -s ev er in h un ed oa ra m ar am ur es b is tr ita -n as au d b ot os an i c al ar as i v as lu i t el eo rm an b ra ila m eh ed in ti t ul ce a a lb a a rg es v ilc ea o lt % thousand euro fob-fob balance degree of coverange figure 7. balance of the fob-fob foreign trade operations (thousand euro) and the degree of coverage of fob import with exports (%) in the counties of romania in 2008 source: processing by its own database djs bacau studies and scientific researches economic edition, no. 15, 2010 284 in 2008, romania has recorded a negative balance of 28.289.582 thousand euro. the largest negative balance you find in bucharest (-16.464.702 thousand euro), followed by counties ilfov (-3.404.358 thousand euro), sibiu (-1.532.414 thousand euro), cluj (-1.421.553 thousand euro) and constan�a (-1.365.284 thousand euro). however, in 12 counties, the value of exports was higher than imports, the largest surplus of trade balance is accomplished in olt county (682.313 thousand euro), followed by counties: vâlcea (221.698 thousand euro ), arge� (138.794 thousand euro), alba (98.751 thousand euro) and tulcea (58.945 thousand euro). alongside the trade balance trade, coverage of imports with exports is another indicator that reflects the efficiency of trade. in romania coverage of imports with exports in 2008 was 54,2% and only in bucharest and other 7 counties registering a lesser degree of coverage. the lowest coverage was registered in ilfov ( 16,2%), followed by bucharest (28,1%) , giurgiu (37,3%), cluj (41,0%) and sibiu county with 46,2%. olt is on first place in the hierarchy of counties with the highest coverage (211,9%), on the second place is vâlcea county (157,8%), third place awarded to the teleorman (139,4%) and the next two places in the top 5 counties being held by counties: mehedin�i (137,6%) and tulcea (125,6%). conclusion romania's foreign trade in 2008 mainly revolve around bucharest and economic specificities of each county dictates the structure of external trade flows by them. references 1. harja e. (2009), statistics, matrix rom publishing house, bucharest 2. jaba e. (1998), statistics, economic publishing house, bucharest 3. voineagu v and collaborators (2001), economic statistics, tribune publishing house, bucharest 4. collection of romanian foreign trade yearbook, national institute of statistics, bucharest 5. collection monthly statistical bulletin of the counties, national institute of statistics, bucharest 6. own database of statistical direction of bacau county studies and scientific researches economic edition, no. 15, 2010 285 microsoft word apostoaie constantin marius_eng.doc efficient stocks administration in the frame of the present economic crisis mihai deju, simona elena dragomirescu, abstract the economic-financial crisis made its presence felt through more or less shy signals. all companies from the international and national market started to feel the crisis’s negative effects, several declaring bankruptcy, or diminishing temporary their activity. the consequences are multiples: the unemployment’s rate increase, the decreasing of the purchase power and reducing the goods demand from the luxury ones up to the one for consumption etc. under these circumstances, companies have to avoid the immobilization of financial resources in products stocks that cannot be sold in the near future period, because otherwise would attract the danger of costs increasing, cashing decrease and generation of loses that may endanger the companies capacity of surpassing the present crisis. therefore, all companies, no matter their size, should find during this period means of efficient stocks administration. keywords stocks, administration, efficiency, just-in-time method, economic crisis cod jel: m41 introduction during present economic period, costs decreasing become a purpose for all companies. besides, pogonaru f., the president of the business men association from romania (aoar) declared in an interview that starting with 2009 the main word would be “costs reduction”. 1 from the total costs structure, a significant part is connected to stocks constitution and maintenance. for instance, “in the case of retail companies – a majority in romania – the cost associated to the held stocks constitutes, regularly, the biggest average in its costs.” it is understood, therefore, that in the context of the present crisis, “a rigorous and efficient stocks administration, based on maintaining their lowest level, is on long run an instrument of risks’ administration to which companies are exposed during this period (the liquidities lack risk, costs increase risk, of incomes diminishing, of profitableness decrease)”. 2 objectives followed in stocks administration 1 budescu, f. (2009), pogonaru: 2009, an de reducere a costurilor, 04 february 2009, http://www.ziare.com, accessed on 21 july 2009. 2 cavusoglu, m. and mut, l. (2008), – crizei actuale, 18 november 2008, http://www.crediteuropeimm.ro/informatii. php?info=1024 &type=articole, accessed on 21 july 2009. studies and scientific researches economic edition, no. 15, 2010 44 in stocks administration, the followed objectives are risks minimization, respective the avoidance of stock rupture apparition as well as creation of too bulky stocks, and profitability maximization, meaning the purchasing of minimum costs for stocking and neutralization. to realize it is necessary to take into consideration: consumption rhythm – meaning stocks exits, with influence on the predictions from the supply domain; “any stock is alimented by a supply flux and it is designed for satisfaction of a demand flux”. 3 supply cadence – represents the annual orders numbers through which the materials supply is demanded; in order to realize the stock administration at the lowest costs, the optimal cadence supply should be established. active stock (economic quantity) is the quantity entered in stock at every entrance and afterwards consumed; this depends on the demand’s certainty degree: when is known, the level of the active stock =demand; when is random, the level of active inventory=predicted demand. safety stock – has the purpose of insuring the production activity continuity (the stock rupture avoidance under different circumstances such as a demand bigger than the predicted one). safety average – indicates the consumption time of the safety inventory. critical safety stock (resupply inventory) – represents the stock level in the moment when the order should be launched. the interval between the order’s launching and its delivery date it is called supply interval. under the situation when a delivery should be realized and the stock becomes null or at a certain value (precise), the critical stock becomes minimal. the stock rupture appears when it is consumed without realizing the order. the critical stock comprises the safety inventory, if the latter exists. main costs attracted by products stocking any enterprise follows the stocking costs minimization, in whose componence the following categories of expenses are found: supply cost that represents the acquisition cost (purchase price + transport-supply expenses + other accessory expenses), or the costs of launching an order (administrative expenses, a part of the fix expenses), or the goods’ production costs; tenure cost formed of expenses with stocking (amortization, rents, insurance, security etc.), maintenance expenses, stocks manipulation and insurance, to this a financial component being added, respective the capitals immobilization in stocks. overstocking cost that appears when exists stocks surplus; this receives zero value if in the near period the stock supply is absorbed without loss; rupture stock (the lack of stocks) supposes supplementary expenses with supply from another supplier (more rapid) to which penalties may be added due to clients for not paying their orders in time, special transports, lost sales etc. if the lack of stock affects the internal demand, the consequences may reach to technical unemployment, the rupture cost being proportional to stock lack period; surpass cost intervenes if the enterprise disposes of stocks bigger than supply capacity; under normal activity conditions, the most important among the stocking costs is the lack of stock cost. in practice, the enterprises cannot identify exactly each of these categories of costs (the rupture cost is difficult to evaluate), therefore the determination of an optimum active cost is imposed, as well as the determination of the optimum time interval between two deliveries, the purpose being the optimization of total socking cost. 3 2006), control de gestiune -172. studies and scientific researches economic edition, no. 15, 2010 45 for costs optimization, specific literature presents different mathematical methods, among which we remind: (a) graphical representation – on an axis the order date, delivery date and the delays are followed, and on the other one the stock value as aginst the minimum stock is represented; (b) determinist patterns (certain data)– comprise: wilson’s pattern – that supposes the determination of an optimum supply rhythm, demand and delivery terms are known in advance, the safety stock not being necessary; this pattern does not admit penury. the calculation relations are: ct = supply cost + launching cost + tenure cost (c x ca) (ca x ca/sa) (cs x sa/2) the optimum number of orders in one year: ca cacs n x 2 the optimum interval between 2 orders: x x n t 360 ct = the total yearly stocking cost; c = the unitary acquisition cost, independent from the volumes ordered for every supply; ca = the launching cost attached to every order, independent form volume; cs = the cost of holding a product unit on a certain time period; ca = the yearly constant demand, expressed in pieces; sa = active stock. there should be underlined that the wilson’s pattern is pure an economic one, characteristic to firms from the beginning of the century. the resulted data are based on a constant demand on time unit, undelayed, a constant acquisition cost, a periodical extern and punctual supply rhythm. determinist pattern admitting the materials penury having on its basis wilson’s pattern, starts from the idea that, under certain circumstances, the clients accept to delay their demand (the enterprise may grant different reductions, for it meaning penalties). therefore, the penury cost appears as a component of the total stocking cost. the calculation relations for this care are: ct = supply cost + launching cost + tenure cost + penury cost vc savc pn vc sa cs vc ca cacacct 2 )( 2 22 the optimum value of an order (vcx): pn pncs cs caca vc x 2 the optimum active stock (sax): pncs pn cs caca sa x 2 the determinist pattern supposes that exists a constant demand in time, but it can be postponed, the acquisition cost is constant and the external supply rhythm is periodic and punctual. (c) probabilistic pattern – it comprises the patterns with random demand and fixed economic period, the matrixes patterns applicable to a discreet random demand with fixed period. just-in-time – stocks administration method adapted to present economic conditions studies and scientific researches economic edition, no. 15, 2010 46 “just-in-time” system is a stocks administration principle that allows the their reduction up to the minimum level that allows the maintaining of continuity of activity fluxes developed by companies. applied correctly, this system may lead to a significant improvement of a company’s investments efficiency and profitableness. the system supposes that the products would be ordered or realized exactly in the moment when exist demands, no earlier nor later. in order to realize this aspect, it is vital the existence of a fast communication between the existent stock consumption and new requires of products. the majority of enterprises is oriented for stock administration towards the just-in-time method because the concepts that are at its basis are: simplicity is followed; the quality of process is essential; the work environment is in continuous improvement; the high level of stocks represent a resources immobilization and may cover an unqualified work; any activity or function that cannot add value to the product should be reduced or eliminated; goods should be produced only when there are necessary; staff should be multiqualified and should contribute to efficiency increase and products quality. the implementation of just-in-time operational environment imposes to enterprise the implementation of an operational system that would comprise seven elements: (a) stocks elimination; (b) production’s planning and programming pull-through system; (c) lots fractioning; (d) installations’ fast and inexpensive adjustment; (e) creation of flexible work cells; (f) formation of multiqualified labor force; (g) maintenance of high levels of process quality. but, in order to apply this method, the enterprises should solve other internal problems: adjustment culture (japanese talk about “zero adjustment time”); creation of tight relations with the suppliers; rapid change and adjustment processes for installations; multivalent machines and employees. conclusions under the present crisis conditions, in order to surpass the difficult period and with the purpose of attracting liquidities and diminishing stocks generating costs, the companies should try to apply the “sell what you have” principle launched by dell company and applied with success by many other companies. for stock efficient administration, companies may orientate towards just-in-time method, that would help them to reduce significantly the stocking costs, to avoid the investment of financial resources in hard to sell stocks and, in consequence, to increase their activity efficiency. another aspect important to be taken under consideration in stocks constitution is the application of a differentiated policy in what the supply products is concerned. this should be made taking into consideration their importance in generating profit for the company: according to commercial addition/profit average, the demand/supply frequency, the cashing flux for sold products etc. as consequence, in order to obtain an efficiency of stock administration activity the identification of main types of products from a companies portfolio is important: group a – approximately 10% from the number of products that make to stocking object, but which contribute in proportion of 70% to realization of companies incomes; group b approximately 20% from the number of products whose contribution to company’s performance is also 20%; studies and scientific researches economic edition, no. 15, 2010 47 group c – comprising a very big number of products, approximately 70 % from the total number of products, but whose cumulated contribution to company’s incomes and profits does not surpasses 10%. by realization of such classification, it would be more easy for companies to orientate towards the supply with those products that would assure the highest profit average and that would have the shortest cash flow cycle. in order to support the enterprises the stock administration informatics applications come, already existent on the romanian market, that allow in any moment: stocks visualization with recouping on departments/types of products etc.; stock analysis; establishing of crisis stock; lists of quantitative/value stocks at the current date or any anterior date etc. in conclusion, through a continuous monitoring of stocks and stocking costs, the stock administration activity will gradually transform in an activity of profitableness administration, insuring the romanian companies’ survival and the exist from the present crisis situation. references 1. albu, n. and albu, c. (2003), control de gestiune 2. budescu, f. (2009). pogonaru: 2009, an de reducere a costurilor, 04 february 2009, http://www.ziare.com, accessed on 21 july 2009. 3. caraiani, c. and dumitrana, m. – coordonatori (2005), i control de gestiune 4. cavusoglu, m. and mut, l. (2008), – crizei actuale, 18 november 2008, http://www.crediteuropeimm.ro/informatii. php?info=1024 &type=articole, accessed on 21 july 2009. 5. and mihai, s. (2006), control de gestiune 6. sgârdea, f. (2007), control de gestiune 7. and others (2009), control , editura tipomold studies and scientific researches economic edition, no. 15, 2010 48 studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 90 mostly unknown but still profitable: the lohn system in the north-est region of romania nichifor bogdan vasile vasile alecsandri university of bacău bogdan.nichifor@ub.ro zaiț luminița iulia vasile alecsandri university of bacău zait.luminita@yahoo.com abstract the garment manufacturing sector (and, implicitly, knitwear) was one of the most important areas of the romanian economy during the communist era, satisfying a large part of the existing demand, both in the domestic market and at the external ones. by making a statistic untill the year of 1989, we note that this sector occupied about 10% of romania's industrial output, 30% of the country's exports and 20% of the number of employees in industry. after 1989, this industry experienced several stages of development, but also stagnation due to the conjuncture that the romanian economy crossed. currently, the knitwear market in romania is dominated by legal entities that carry out lohn production activities at the expense of own brand production, the factors favoring this reality being: relocation of lohn businesses from china to countries like: romania, morocco, tunisia, turkey, hungary etc .; high attractiveness of the lohn production system for domestic legal entities, both from an economic perspective and from the perspective of constancy of orders; and so on. this article wishes to highlight the current situation in the knitwear sector in the northeast region of romania, namely the trends from the perspective of the local legal entities working on the lohn production system. keywords production in lohn system; the knitwear market; internal rivalry; relocation of lohn system activities; the power of suppliers and buyers; marketing strategies jel classification m30 the size of the knitwear market in the north-east region according to the latest statistical data available in the north-east region in the year 2015, the specific market for nace code 1439 the manufacture by knitting or crochet of other garments was represented by 52 units, representing 18.71% of the national active units. the territorial distribution of the active national units reveals the tendency of concentration of the legal entities in the north-west (30.22%), north-east (18.71%) and center (16.19%) figure no. 1. at the level of the north-east region, most legal entities are located in neamt county, with a considerable distance from it being bacău and iaşi counties figure no. 2. the concentration trend of the legal entities in neamt county 63.46% of the local active units, originates in the sector tradition in this area, where some of the most famous and old knitwear brands was founded (eg sc ema s.a.). mostly unknown but still profitable: the lohn system in the north-est region of romania 91 figure 1 distribution of active units with nace code 1439 manufacture by knitting or crocheting of other garments by regions of development in romania source: data taken from www.insse.ro and processed by authors figure 2 distribution of active units with nace code 1439 manufacture by knitting or crocheting of other garments on the counties of the north-east region source: data taken from www.insse.ro and processed by authors of the total regional units in the year 2015, 55.77% were micro-enterprises, 28.85% small enterprises, 11.54% medium-sized enterprises and only 3.85% large companies. this structure reveals both the development trend of the sme sector in romania and the particularity of the analyzed sector, the development of small production systems, most of them in the lohn system. the dynamics of the indicator number of local units active in the north-east region (figure 3) reveals a relatively high degree of stability of the market, the annual oscillations in the number of inputs in / out of the sector being weak. in fact, although 18.71% 30.22% 16.19% 5.76% 6.12% 6.83% 9.71% 6.47% north-east north-west center south-east muntenia bucharest-ilfov south-west west 7.69% 13.46% 11.54% 63.46% 1.92% 1.92% botosani county bacau county iasi county neamț county suceava county vaslui county nichifor, zaiț 92 in 2015 as compared to 2010, the regional number of units increased by 8.33%, only 4 new legal entities appeared in the sector. the average growth rate of the analyzed indicator was in the period 2010-2015 1.61%, in which context we can estimate that the entry barriers on the market are high, there being factors that inhibit the access of the newcomers in the analyzed sector. figure 3 dynamics of the number of local units active in the regional market specific to nace code 1439 manufacture by knitting or crocheting of other garments (2010-2015) source: data taken from www.insse.ro and processed by authors to highlight the frequency of penetration in the sector, an analysis was made, from secondary data sources, of the year of setting up the 20 most important regional competitors. of the 20 competitors considered in the analysis, 70% are over 10 years old in the sector and only 20% have an experience of less than 5 years. in 2015, the turnover registered at the level of the national market related to the nace code 1439 manufacture by knitting or crocheting of other garments reached the maximum of 677.5 million lei, slightly decreasing compared to the previous year (1.67%). the regional turnover in the analyzed sector for the year 2015 was estimated at the top limit of 117.68 million lei, representing about 17.4% of the national indicator. as can be seen throughout this article, many organizations have focused on rendering lohn production services, mainly serving external markets, a context in which we consider appropriate to include in analysis the indicator export of articles and accessories clothing from knitwear (from the perspective of the methodology of the national institute of statistics, the value of the export includes also the lohn production activity). according to the latest data available at innse.ro (tempo online), at the level of 2016, the export of knitwear articles and accessories made by the companies in the northeast region reached the ceiling of 67112 thousand euro (the data are provisional). compared to 2015 (export value 67062 thousand euro semi-final data), in 2016 there was a slight decrease in the export of articles and accessories of knitwear (-0.07%). 48 41 46 46 49 52 28 26 30 30 32 33 5 4 5 5 7 7 5 5 5 5 4 6 0 5 10 15 20 25 30 35 40 45 50 55 2010 2011 2012 2013 2014 2015 north-east neamt county bacau county iasi county mostly unknown but still profitable: the lohn system in the north-est region of romania 93 export distribution in the north-east region per months in 2016 (figure 4) reveals a relative stability of external demand for the product category and clothing accessories from knitwear, the peak of orders being recorded in june and july. figure 4 distribution of exports of articles and clothing accessories from knitwear made in the north-east region per months in 2016 (thousand lei) source: data taken from www.insse.ro and processed by authors figure 5 distribution of exports of knitted garments and accessories made in the north-east region, at the level of 2016, by component counties source: data taken from www.insse.ro and processed by authors according to the distribution of clothing and clothing accessories made from knitwear made in the north-east region at the level of 2016, by component counties (figure 5), neamt county had the most intense activity on foreign markets, its share in total the analyzed indicator exceeds 45%. 5326 5141 5512 4452 5065 7117 7187 6158 6114 4997 5095 4898 0 1000 2000 3000 4000 5000 6000 7000 8000 january february march april may june july august september october november december 5.25% 4.52% 13.02% 46.25% 2.90% 28.07% bacau county botosani county iasi county neamt county suceava county vaslui county nichifor, zaiț 94 particularities of the knitwear market in the north-east region an analysis from external sources such as web sites and business directories has allowed us to identify a number of peculiarities of the knitwear market in the north east region as follows: • the trend of large-scale development of lohn production activities at the expense of own brand production. of the 20 regional units analyzed, 60% provide lohn production services for customers located primarily in foreign markets, 30% combine the production of own brands with the production of lohn production services and only 10% of the entities analyzed can boast of their own production system. the production of lohn production services involves, from the perspective of the contractor, the realization of finished products or their components, upon the firm's ordering of a customer, on the basis of the technical specifications, of the raw materials, the materials, the accessories and the patterns provided by him. practically, lohn contracts only involve the use of technical capital and labor within the local firm. the supply of lohn production services experienced an explosive growth in the clothing and knitwear sector in romania, both due to the undeniable advantages in terms of poor fluctuations in the volume of orders and implicit sales, and due to the decrease in the interest of romanian consumers for knitwear, and the fierce competition from substitute products, particularly those imported. • the tendency of local operators to subcontract, to other local firms, a variable volume of external orders or stages in the production process. many regional regional operators, which have a high reputation in foreign markets, honor a number of external orders by resorting to subcontracting to production services provided by other local competitors. there have been many situations in which domestic firms have not refused orders in foreign markets, even if their production capacity would not have allowed them to be honored in time, because of their subcontracting, especially to local partners. in other words, within the framework of the market, the classic competitive relationships have turned into cooperation relations, this fact being due to the concentration of each local operator on 1-2 external outlets and 35 external customers, at lower limits. also, there are often situations in which only certain stages of the production process are subcontracted to local partners (eg product finishing, finished product assembly, product accessory, product packaging, etc.). • developing lohn production activities for customers located in foreign markets. the most preferred markets for lohn service providers are: italy, great britain, spain, germany, france, etc. • the tendency of the regional operators to develop long-term partnerships with a limited number of clients, in which the dependence on the volume sources (customers) is accentuated. • splitting the profile market into two broad categories of operators: organizations that develop integrated production streams (knitting, cutting, fabrication, finishing) and specialized organizations at certain stages of the production process; • the tendency to continuously diversify the portfolio of services (many profile operators are focused on the permanent increase of technical capital, especially with machines that offer the possibility of obtaining different variants of finesse). • the sector of activity is dominated by micro-enterprises and small enterprises, predominantly those with local capital; • the targeting of a small number of domestic operators towards the creation of own brands for the domestic consumer market; mostly unknown but still profitable: the lohn system in the north-est region of romania 95 • numerous specialized organizations have developed and implemented projects to access european funds to obtain funding aimed at increasing technical capital and labor (creation of new jobs); • the profile market is polarized, with the top 3 companies accounting for over 45% of regional turnover. market dominance by a single unit is found in bacău county, where a single organization owns over 80% of county turnover; • the turnover of the first 3 competitors of the regional market was in the range of 11.4 23.6 million lei in 2015. in the context of this analysis, it should be noted that, especially in the case of organizations exclusively focused on the production of lohn knitwear, the maneuvering space is extremely limited in terms of the possible marketing actions, as follows: the company does not own a portfolio of products, but only produces services; does not own its own brands, the tendency being to ignore the domestic consumer market; they practice tariffs for the provision of the production services in the interval negotiated with the different categories of external clients; does not own a channel/network of distribution; does not carry out extensive promotional actions, the most common tools being internet advertising (web site or business directories); participating in international fairs; sales force (the operationalization of small-sized teams that have the role of market prospecting). influencing factors in the knitwear sector in the north-east region considering the particularities of the knitwear market in the northeast region mentioned above, this article aims to identify the factors that favored the current configuration of the sector. without claiming an exhaustive analysis, the following factors of influence can be identified: • relocation of lohn business, starting in 2010, from china to countries such as romania, morocco, tunisia, hungary etc. according to sources like www.expansion.com, as of 2010, lohn clothing production in china has proven to be no longer profitable for major fashion companies, with multiple reasons: ✓ even if the costs in china have increased, it seems that this was not the main problem of the big producers. the main drawback was related to the time span, which is extremely high, between supplying inputs and outputs. basically, according to the available data, this range was somewhere in 3-4 months, the impact on the shelf speed being a disastrous one. in this context, large manufacturers of clothing preferred to sacrifice lower labor costs in favor of shelf-life (the logistics chain being shortened from 5-6 weeks to 3-5 days), a fact that favored the return of the lohn system to the countries of eastern europe; ✓ another reason behind the lohn withdrawal from china was the fact that chinese producers have limited their export capacity and have not received any big orders as a result of the increase in consumption in the domestic market; ✓ in the same direction of relocation reasons, it can also be mentioned mass migrations from the textile industry to sectors offering better remuneration and flexible working conditions; ✓ another reason was the desire of the producers to reduce the unfavorable impact of the exchange rate, as trading operations were then affected by tensions between yuan and dollars; ✓ the reasons for the return of the lohn system in romania, mentioned by most of the foreign producers, were: quality of service; high delivery speed with nichifor, zaiț 96 favorable impact on shelf-life; lower costs compared to the rest of europe. obviously, beyond the reasons that led to the choice of romania by the foreign partners as the preferred location for the development of lohn production, the factors that led to the current configuration of the sector must be identified, namely: • the opening of the local profile operators to the cooperation with the foreign markets, in the context of falling domestic demand for knitwear products; • the development of the lohn production system has helped to increase the attractiveness of the analyzed sector, favoring the expansion of the sme sector. sector penetration proves to be relatively easy from the perspective of regulations, but real barriers are: high level of investment, especially in the case of the development of an integrated production stream; the effect of experience, which is the prestige of the big companies, with a long standing in the sector; access to foreign markets, etc. • tradition in the sector and the existence of a human capital prepared in the field favored the large-scale development of the lohn production system, romania being preferred by external operators; • the level of minimum and average wages was the ground for rapid development of lohn production, with labor costs being considered extremely low by external operators. in this context, it should be specified that the 16% increase in the minimum wage from february 1, 2017, generates an increase in production costs in the case of domestic operators. in this context, there are at least two risk ranges: either lohn production service tariffs are increased, with the risk of reallocating business by external customers to cheaper labor countries; or attempting to maintain relatively constant tariffs, with an impact on the profit of domestic service providers for lohn production. • trade liberalization in the textiles and clothing sector (implicitly knitwear) has stimulated the rapid penetration of the market by foreign operators; • the support by the romanian state, through various measures, of the human resources qualification in the analyzed sector has stimulated both the expansion of the number of active units and the penetration of new foreign markets by the domestic operators; • romanian and european legislation support inter-community exchanges through financial facilities. advantages and disadvantages of the lohn production system the widespread expansion of lohn activities generates both advantages and disadvantages within the analyzed sector. obviously, the advantages and disadvantages of the development of lohn production systems are manifested both at the macroeconomic and microeconomic level. from a macroeconomic perspective, the most important advantages are: a surplus of demand in foreign markets, with a favorable impact on domestic output, exports and unemployment rates (reduction); improving inter-communal relations, and beyond; creating a favorable image at the level of foreign markets, thanks to tradition and experience in the sector; the possibility of expanding the lohn production system and other spheres in the manufacturing industry, etc. from a microeconomic perspective, the most important advantages of lohn production development are: • the certainty of domestically-owned producers of contracts and a weakly fluctuating demand; • relief from the responsibility of purchasing raw materials, materials, accessories, etc. • eliminating the difficulties involved in creating an outlet or penetration mostly unknown but still profitable: the lohn system in the north-est region of romania 97 network within certain outlets; • elimination of the risk of not realizing production or obtaining weak indicators regarding the sales process; • minimizing the effort towards market research in order to align with the trend of fashion; • elimination of tasks of generating creative patterns; • ppresence in different foreign markets, difficult to penetrate with own products (direct export); • significant potential to attract new external customers (without significant market prospecting efforts), thanks to the recommendations made by actual customers. on the other hand, the inconveniences of the lohn production system must also be mentioned. at both macroeconomic and microeconomic level, since lohn activity involves only the workforce in host countries, with production costs being significantly reduced for the beneficiaries, the export of own brands is limited. from a microeconomic perspective, one should mention the disadvantage related to the loss of the domestic producers' connection with the domestic consumption market. conclusions although the knitwear market in the north-east region seems to be a highly competitive one from the point of view of the local active units, named by michael porter (1985) as its internal rivalry, its current configuration (the concentration of a large share of legal entities on production services in the lohn system, the orientation of the organizations on 1-2 external markets and 3-5 corporate clients, the tendency to subcontract to the local partners a volume of the orders obtained in the foreign markets, etc.) allows us to appreciate that one of its most prevalent features is related to the development of collaboration relationships between local producers, to the detriment of classical competition relations. as can be seen from the previous analysis, the production of lohn production services has grown sharply in the knitwear sector in the north-east region, both because of alignment with the national trend the national clothing and knitwear sector folded better on the particularities of the lohn system activity and as a result of the opening of the legal entities in the analyzed area to this type of activity. obviously, the reasons for rapid acceptance and assimilation of this system stem from the many advantages provided by its operationalization, especially as domestic demand for knitwear products has experienced some regression. from the perspective of the above-mentioned factors of influence, we tend to appreciate that, in the short and medium term, despite the increase in the minimum wage in the economy, we will not see any relocation of lohn activities, the romanian sector being extremely attractive to companies in the foreign markets. references brătucu, g., epuran, ghe., gârdan, d.a., bubmas, f., zamfirache, a. (2017), the evolution of textile and clothing industry in romania: an analysis form the perspective of imports and exports determinants, industria textilă, vol. 68, no.2, 147-155. florin, b.i. (2009), features of the international system of production in textiles and clothing industy in romania, managerial challenges of the contemporay society, proceedings, 178-181. hooley, g. j., saunders, j. a. (1993), competitive position: the key to market nichifor, zaiț 98 strategy, london, prentice hall international lambin, j-j. (1994), le marketing strategic (third edition), paris, ediscience international. lambin, j. j, chumpitaz, r., moerloose, ch. (2005), marketing strategique et operationnel. du marketing a l’orientation marche, paris, dunod.. lendrevie, j., lindon, d. (1997), mercator. theorie et pratique du marketing (5-th edition), paris, dalloz. porter, m. e. (1985), competitive advantage, new york, the free press. pickles, j., smith, a. (2011), delocalization and persistence in the european clothing indusrty: the reconfiguration of trade and production networks, regional studies, vol. 45, 167-185. tedlow, r., abdelal r. (2004), theodore levitt’s ,,the globalisation of the markets: an evaluation after two decades’’ in the global market: developing a strategy to manage across the borders, quelch, j.a., deshpande r., new jersey, john wiley sons. legal regulation of the obligations old romanian law, grece legal regulation of the obligations old romanian law, grece and roman ion țuțuianu phd, “vasile alecsandri” university of bacău, romania abstract legal history shows that those who are defined obligation romans definition valid today as a relationship as we submit to a benefit from a third party. their importance lies in the fact that although rooted in ancient as it spread in all legal systems, across time and still keeping the same legal and economic importance. keyword: obligation, law, contract, economic the law appears as a necessity to regulate legal relations. because some legal relations between the parties creates responsibilities, specific term used is that of obligation1 starting from its etyomology latin meaning "to bind" must show that the legal bond between two people, under which a person is entitled to claim from the other side, to execute a particular benefit. obligations, is an independent group of legal rules governing property relations homogeneous and non-property related personnel in the field of economic circuit, relationships that are established in the commercial circulation of material goods accompanying indirect transfer of material from one person to another. obligations may be regarded as the legal form of economic circuit, ie-formula as the dynamics of economic relations. in romanian law, the first legal works as: calimach code in moldova, in annex to the order competition creditors (art. 1974-2012) established how credit recovery and the the court designated as a residence debitor. (art. 1978) to avoid excessive delay abuses art. 1987, provided that the periods do not exceed one year, and against subjective preferences, the user can determine the order of recovery by preemption. he romanian country, the rule of caragea, regulates the obligations in part iii, which contains legal norms: for bargaining, selling, exchanging, renting or leasing, loan, interest, and art. 34-42, dealing with defects and eviction. greek law, there are two sources of obligations: contracts and delicts. if the homeric2 period, law of obligations is characterized by a specific formalism primitive peoples, uttered a series of solemn words later consent to result in a document setting out the precise content of the contract. it is known that by 594 î.hr., before solon3, the debtor was enslaved by legislation only required the debtor to the creditor was. 1 noțiunea de obligație are mai multe sensuri: datoria debitorului, titlu de valoare, înscris constatator, datorii morale. 2 in aceasta perioada(1200i.hr.-800i.hr.. homer , pentru greci reprezenta suma științei și a înțelepciunii iar textele sale aveau o autoritate absolută în toate domeniile.homer a dat grecilor conștiința unității lor de neam și de cultură 3 3 om de stat atenian , legislator ( 640-560 î.h.) considerat printre cei șapte înțelepți ai greciei antice,. reformele sale pun bazele democrații ateniene și realizează un nou cod among the possibilities creditor to secure payment of the debt, greek law practice meet deposit as the amount of money that some other party attaches insurance if you would deny the other side of the contract another means of ensuring the rights of the creditor, the surety. this we find two forms: personal pledge, which was that a third person intervenes between the contracting parties and debtor that if the debtor does not pay at maturity, will pay it for him. and second, the real pledge, which consists in giving a receipt to the lender by the borrower for the latter to sell in case the first does not pay at maturity. another specific greek form of creditor insurance , and showing a great development of law and legal thought, we find: mortgage4-characterized by a debtor giving the best guarantee of a particular creditor fails to heritage property which the creditor but maturity creditor may sell the mortgaged property to recover damages. how mortgage spread very quickly on greek territory, as evidenced by the note that delimited the border terminals and properties that could be seen across the country besades lending buum, the mortgage proved its superiority over other forms of creditor insurance, given that the debtor remains mortgaged working, caring for it as any master of his work while being guaranteed at maturity and creditor rights may sell the property or otherwise use it. meet the existence of greek law and the contract of sale, as being essential elements: seller, buyer, price if the sale was without formalities, making just by consent of the parties, transfer of ownership to take place when the buyer payment by the buyer price highlights conclusion is that all risks of loss or damage to work through, natural disasters, returning buyer, even if not yet paid the price another very common use contract with greek law is the rental. this frequency is due to the many existing foreign citizens in athens were deprived of political rights could not acquire property5 only way to live was renting. the lease was provided with various clauses duration, price, termination. even when provided for in the contract, will not be sold during the rental dwelling and the owner sold them circumvention clause, the tenant can make use of what is called "dike blades"6 to recover damages. a form of land lease rental was that made money or goods but in many cases the tenant gave the owner a share of the harvest, but also hire labor, the small peasants could not face the competition of large owners or creditors and sold their labor in athens7 for the execution of the channels, temples, roads, works contract was used. in this category falls the contract by which one undertakes to train a slave in athens since there were many slaves who lacked any qualification. development of trade with the greeks led to amplify certain financial transactions, for example: credit, monetary circulation. in vi century i..hr., the city-state in ancient greece and temples began to issue its own coins. because each city-state had its own currency, it was necessary to change one currency with another, which can be considered the first foreign exchange. during this period the priests offered farmers loans and some people specialized in trade with money, offering the same services to other social categories. while these lenders, known as the keystone, began charging interest. legislativ, intitulat –constituția lui solon. vezi și fustel de coulanges,, cetatea antică, vol.2, editura meridiane, bucuresti, 1984, p.108 4 din fr. hypothèque 5 această categorie este cunoscută în grecia antică sub numele de meteci. de la cuvântul metoikos, meta= după și oikos locuință. 6 procedeu de adresare către organelle de judecată care s-ar traduce :justețea legii.vezi și aristotel, etica nicomahică, editura științifică și enciclopedică, bucurești, 1988., p. 123. 7 andrei smochină, istoria universală a statului și dreptului, chișinău, 2002, p. 67 development of trade that were more sea trade is linked to a number of risks and this makes the interest is very high, sometimes up to 30%, creating discontent among the population. therefore some greek cities decided to create public banks named the trapeza. these institutions were run and controlled by public officials, based on rules that can be associated first state regulation on banking activity. also increased trade and monetary circulation, leading to the development of various banking transactions, such as bank deposit, consisting of deposit with a bank or moneylender of money that the bank or moneylender concerned must repay on demand. often, however, there is some sort of account between the bank and the citizen, within which citizens make money repeatedly, the bank also raised several times, ending balance at the end only when the debtor and determine who is who is the creditor. greeks developed new contract is a contract company that requires association between two or more persons, with a view to profit, each participating capital, some with goods, others with physical work association agreement stipulates sometimes the regulation of income and bearing damage, generally settling responsibilities in relation to benefits. in addition we recognize contracts set into greek law and contract term and even scarcity of resources has led experts to be retained, we can not omit the proof oratotului demosthenes which a plea has been stated that his departure from sicily nicostel empowered to supervise and manage the business, responding to damage what they could entail the execution, showing the constituent assembly, not free as in the roman world8 research conducted throughout history reveal that the workshops in northern italy9, produced a great deal of common property in the roman world and beyond. closely coupled with the production of goods, the institution has an obligation paramount importance in roman law, which is characterized by a subtle development of all essential legal reports of simple possession of goods, buyers and sellers, lenders and borrowers, contracts, bonds. regulated at a higher level, in terms of legal form and technique, bond roman had great importance for the economic circuit of rome, to strengthen the exploitation of slaves and free sărăcimii, reaching their maximum development during the first centuries of the roman empire, when production goods and commercial transactions peaked. as an institution of law, an obligation arises with private property and social classes. romans claimed that a bond is born either a contract or a misdemeanor. satisfactorily solving practical problems, which required social life in old age, the bonds were not for lawyers particular theoretical concern, but as soon as the production of goods, slavery and trade developed, lawyers were forced to devote material obligations whose importance grew inevitably humor further studies.. as greek law, roman contracts are characterized by a rigorous formalism. most times it was enough to utter certain words solemn, to consider closed. the same procedure applies to verbal contract called stipulation. stipulations begins with a question and answer and the person to be stipulated (creditor) asks the debtor's future (promise) that promises to perform a certain benefit. stipulation may concern not only money but also something. the rule imposes no one can stipulate to another and that was happening was null and void. but so-called literal contract shall be entered in the trade register with the consent of the debtor, you will register each family pater which passed its household income and expenditure. 8 diana dănișor, considerații privind contractul de mandat, accepțiuni și evoluții ale termenului de drept, în revista de științe juridice, p. 217. 9 hadrian daicoviciu, dacia de la burebista la cucerirea romană, editura dacia, cluj, 1972,p.98 the higher trade agreements appear real and consensual. the real acquired legally by submitting work and return work submitted of actual contracts known mutuum, fiduciary deposit, commodate the pledge mutuum-loan is a personal chattels to be consumed by the debtor and the creditor will be repaid in kind and quantity, as a loan of corn, wine, or money, to be used or consumed , and must be replaced with other corn, wine, or money. fiducia is legal operation whereby one or more constitutive transferring real rights, rights instruments, securities or other property rights or a set of such rights, present and future, to one or more trustees they perform with a specific purpose, the benefit of one or more beneficiaries. comodatuum-is a contract whereby one party, called convenience, transmit and free temporary use of another party, called comodatar a good determined that the latter obligation to return it in its individuality, lender deposit-is contract whereby a person named depositor, provides storage to another person, called depozidat a duty thing, but its part, the return of the application. pledge a borrower submits his creditor in order to guarantee a claim possession of something. working movable or immovable, which are subject to collateral will be retained by the lender to pay debt. consensual contracts are terminated by agreement of the parties simply the most common contract in this category was the sale, whereby the seller is obliged to send the buyer, peaceful and lasting possession of something in exchange for a sum of money, called the price. how the property was only for the rich, it is common lease contract whereby a person undertakes to procure another person to its temporary use of a thing or its services, or to perform a particular job, in exchange for money, called merses. trade development was done especially in companies that were the result of agreement between two or more persons who are obliged to put something together to achieve a profit an example is provided by the tablets found in rosia montana, mentioning two contracts of society, which proves that this form of association was widespread throughout the roman empire, being outlined legal personality and characteristic elements by forming a capital.10 one of them is a company to borrow money ended march 28, year 167, for a period of 16 months. being a company usury is an indication that the trade was in full bloom and exchange contract was widespread , being held in maximum latin, i give you for give me.11 i'll give you a slave to paint me a picture or a slave emancipation to give me another one in his place and build a stove you to do me a fence also in roman law, are obligations of offenses, ie facts prejudicial to the slave masters classsanctioned civil or praetorian. public and private classification was made according to the interests that were violated specific or general. and sanctions take this into account so that while the private fined paid by delinquent victim, the public, were sentenced to death or exile. as mentioned civil law offenses: theft, intentional enrichment at the expense of another; damage, defined as damage caused willfully or negligently. in 286 î.hr., was settled that a person wrongfully killed a slave or an animal herd owner had to pay a fine calculated on the highest value on the slave or animal they had in previous offense, insult, offend intentionally made as a free people by words or deeds, and to be subject to a fine of 25 ași12 10 nicoleta rodica dominte, organizarea și funcționarea societăților comerciale, editura c.h.beck, bucurești, 2008. 11 do ut des. 12 monedă romană de aramă sau de bronz, folosită ca unitate monetară between offenses law praetorian mentioned: cunning, deception , whose sanction was made by praetor13; metus, that produced fear of violence, which causes a person to enter into a legal disadvantage them; alienation by the debtor of his own heritage goods at the expense of creditors. in general, roman law stated that a person who has been enriched at the expense of another is required to repay the amount wrongfully acquired. bibliography 1. andrei smochină, istoria universală a statului și dreptului, , chișinău, 2002 2. robert zipf, piața obligațiilor, editura hrema , bucurești, 2000 3. istoria dreptului românesc, editura academiei, bucurești, 1984 4. elena aramă, istoria dreptului românesc, chișinău,1997. 5. hatmanu ioan, istoria doctrinelor juridice, editura fundației românia de mâine, bucurești, 1994. 6. drimba ovidiu, istoria culturii și civilizației, , bucurești, 1990. 7. molcuț emil, drept roman, bucurești, 1997. 8. diaconu c., simion m., istoria statului și dreptului, craiova, 1999. 9. hadrian daicoviciu, dacia de la burebista la cucerirea romană, cluj, 1972. 10. nicoleta rodica dominte, organizarea și funcționarea societăților comerciale, bucurești, 2008. 13 pretor-titlu în roma antică încă din anul 365 î.hr. al conducătorului de armată, care avea și atribuții de judecător microsoft word timiras laura engl. shifts of the demographic order with impact on the physiognomy of the community agro-food market laura cătălina ţimiraş – vasile alecsandri university, bacau, romania abstract the demographic environment at the community market level can be largely described through an emphasized dynamic of the population, result of the extending process, together with the birth of the ageing phenomenon on the population and the decrease in the number of members of a household. these shifts, registered on the community area reflects in the changes in the physiognomy of the markets in general, of the agro-food market in particular, in the context in which given the phisiologic nature of the needs to which these products address – the entire population is formed of actual consumers of the agro-food consumers. keywords demographic environment, population, natural movement, migration movement, structure of the population on environment, sexes, ages, ageing degree of the population. the demographic environment is no doubt a component of the external environment of first class importance for the evolution of markets in general, of the agro-food markets in particular. being represented by the population situated at the level of a certain market, of a certain area of reference, the influence of the demographic environment results firstly from the fact that it is formed from the formative of the demand and at the same time represents a source for labour power for performing economic activities. the agro-food products are destined to satisfy the primarely needs, physiological, to the formulation of demand contribute the entire population in the reference area no matter the socio-economical and demographic characteristics of such. these characteristics of the population from a certain territorial area are though not to be neglected in the analysis of the demographic environment and the its influence on the acts in the market for the reason that they leave mark on the way they manifest and the structure of the demand, as well as on the buying and consumption behaviour of the agro-food products consumers. the components of the demographic environment influence at the same time the demand for agricultural, as well as for food products. the food products are destined exclusively to the consumption of the population, instead the agricultural production is destined equally to the industrial processing and the consumption by the population. thus, part of the agricultural products end up in an not processed shape to the final consumers, by means of country markets or of units that distribute agro-food products, but the most important in the agricultural production is the transactions on the bussiness market, where the holders of the demand are represented by the companies in the food sector. apparently, in the case of agricultural unprocessed products, that are considered commodities for the food industry, the demographic environment could have a small influence. but baring in mind that the food products that resulted from the processing of agricultural products are destined to the consumption of the population, the demand for agricultural products of the processing companies will be strictly determined by the demand made on the consumption 109 studies and scientific researches ‐ economic edition, no. 14, 2009  market. as a conclusion, the demographic market acts directly on the demand for food products and indirectly on the agricultural markets demand. the analysis of the demographic environment implies to know both the number and the evolution tendencies of the population, as well as its structure based on a series of some relevant demographic and social criteria. up to 1st of january 2007 the community area which constitutes of 25 member states, comprised a population of over 450 million inhabitants. thus, after the historic moment – 1st of may 2004, when the czech republic, cyprus, estonia, hungary, latvia, lithuania, malta, poland, slovenia and slovakia have officialy become full members of the european union, the new community area has registered an increase of the population with cca 19%. the new expansion from the beginning of 2007 led to an european union with a population of over 495 million inhabitants, which means a growth of 26.4% in comparison to the number registered at the moment of may 2004 (figure no. 1.). 118.9 126.4 100.0 0 40 80 120 160 eu 15 (392.0 mil. inhabitants*) eu 25 (466.1 mil. inhabitants*) eu 27 (495.3 mil. inhabitants*) % figure no. 1. the number and dynamic of the eu population, result of the expansion from 1st of may 2004 and 1st january 2007 * data from 1st of january 2007; source: adaption by eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) result of the consecutive processes of expansion, the present community area is situated in the first place among the three big markets in the world (eu, usa, japan), from the point of view of dimensions, expressed by the number of population (respectively by the number of potential consumers). in fact eu is the third demographic ensemble in the world, after china and india. table no. 1. the population, area and density of the main demographic ensemble and the main economic powers in the worls, in 2006* specification population (million inhabitants) area (km. 2) population density (inhabitants / km.2) china 1311.40 9596961 136.6 india 1121.80 3287263 341.3 eu – 27 493.23 4403357 112.0 usa 299.10 9629091 31.1 japan 127.80 377873 338.2 * latest official data available; source:eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) the evolution analysis of the population count must be achieved in close connection to the tendencies analysis registered in natural and migration movement of the population. the countries eu – 27 have registered a growth of population, result of both a migration increase, as well as of a natural, positive increase. on the 1st of januray 2010 the population of eu-27 has reached the level of 501.3 million 110 studies and scientific researches ‐ economic edition, no. 14, 2009  inhabitants1, in other words the community agricultural market is consituted of over 500 million actual consumers. table no. 2. the evolution of the total increase of population, natural increase and migration increase at eu-27 level, during 1990-2009 (rates per 1000 inhabitants) indicator year 1990 1995 2000 2005 2009* crude rate of increase 3.352 1.772 2.112 4.146 3.070 crude rate of net migration 1.391 1.395 1.499 3.373 1.879 crude rate of natural increase 1.961 0.378 0.613 0.593 1.190 * forecast data; source:eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) on age groups there is a noticeable overweight of the population with ages between 25-64. much more relevant for highlightening the shifts occurred in the structure of the population on age groups are the indicators that certify the modification that the number owned by each age groupregisters for a certain period of time. in table no. 3 were presented the changes that occurred in the age structure of the population in year 2008, in comparison to year 1990. what is considered a general phenomenon and at the same time alarming because of its intensity is the drop in number of the young population, due to the increase in number of the segment for over 65 years old. we witness thus to a general phenomenon of aging of the population at the entire community area level. table no. 3. structure on age of the population in the eu, in 1990, 2000, 2008 and the change of the structure on ages in 2008 as opposite to 1990 (%) specification age group (years) 0 – 14 15 24 25 44 45 64 65 79 80 and over % in 2008 15.7 12.5 29.0 25.8 12.7 4.3 % in 2000 17.3 13.2 29.8 24.1 12.3 3.3 % in 1990 19.5 15 29.1 22.6 10.6 3.1 +/%, in 2008 as opposite to 1990 -19.5 -16.7 -0.3 14.2 19.8 38.7 source: adaption by eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) in the analysis of the demographic environment of a certain country (groups of countries) especially relevant are o series of indicators who certify the changes occured at the family level or respectively of the household. in table 4 are presented in comparison, the evolution of marriages, divorces, as well as the newly-borns in the period 1990-2007. it is thus noticed the manifestation of a demographic phenomenon as such: the drop in the number of marriages and the increase in number of divorces; in correlation to the drop in number of newly borns (after year 2005 it is though noticed the step into a growing trend of the count of newly borns). table no. 4. the evolution of marriages, divorces as well as of the birth in the eu-27 countries, during 1990-2007 (rates per 1000 inhabitants) years marriages (per 1000 inhabitants) divorces (per 1000 inhabitants) birth rate (live-births per 1000 inhabitants) 1990 6.30 1.6 12.390 1995 5.25 1.8 10.746 1 forecast data. source:eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) 111 studies and scientific researches ‐ economic edition, no. 14, 2009  2000 5.18 1.8 10.598 2005 4.88 2.0 10.436 2007 4.87* n.d. 10.833* n.d. – no data; * forecast data; source:eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) an indicator of demographic nature, but in the same time a measurement means of the standard of living of the population in a certain area, is the life expectancy at birth. being the result of the economic development of a state and implicit of the increase of the living standard, the increase of life expectancy at birth draws shifts of age structure of the population, shifts that occur as any other demographic related phenomenon slowly in time. thus, in the most developed economically countries , that is the countries of eu-15, there is noticed the biggest values of life expectancy at birth, both in the case of feminine population, as well as in that of the masculine population, which leads in time to (and because of the drop or, if the case, the slow increase of birth) to the ageing of the population. instead in the new member countries, the value of this indicator is a lot below the one registered in the countries of the eu-15, as well as under the level reached in some countries that become members starting with 2004 (malta, cyprus, slovenia). a positive thing, which certifies the improvement in the living standards of the population, both in the old and in the new countries in the union is the increase of life expectancy at birth. the increase of life expectancy at birth, influencing the weight of the olders’ segment at the total of the population has important influences on the structure of the agrofood markets (due to the particularities of the buying and consumption behaviour of this sector). table no. 5. the life expectancy at birth of the population in the countries of eu, during 1990 and 2008 (years) country years males females 1990 2000 2008 1990 2000 2008 austria 72.2 75.1 77.6 78.9 81.1 83.0 belgium n.d. 75.1 77.5 n.d. 81.4 83.5 bulgaria n.d. 68.2 69.5 n.d. 75.3 76.6 cyprus n.d. 76.1 n.d. n.d. 81.0 n.d. czech republic 67.6 71.7 74.0 75.4 78.4 80.1 denmark 72.0 74.3 76.3 77.7 79.0 80.7 estonia 64.5 65.1 68.6 74.7 76.0 79.2 finland n.d. 74.1 76.3 n.d. 81.0 83.0 france n.d. 75.3 77.5 n.d. 82.8 84.3 germany n.d. n.d. 77.2 n.d. n.d. 82.4 greece n.d. 75.4 77.5 n.d. 80.5 82.5 hungary 65.1 67.1 69.8 73.7 75.6 77.8 ireland 72.3 n.d. 76.8 77.9 n.d. 81.6 italy 73.6 76.5 78.8 80.1 82.5 84.1 latvia n.d. 64.9 67.2 n.d. 76.0 77.9 lithuania 66.4 66.8 66.3 76.3 77.5 77.6 luxembourg n.d. n.d. 77.6 n.d. n.d. 82.7 malta n.d. n.d. 76.7 n.d. n.d. 82.3 netherlands 73.8 75.5 78.3 80.1 80.6 82.3 poland 66.5 69.7 71.3 75.5 78.0 80.0 portugal 70.6 72.9 75.5 77.5 79.9 81.7 romania 66.6 67.7 69.2 73.1 74.8 76.1 slovakia 66.6 69.1 70.9 75.4 77.2 78.7 112 studies and scientific researches ‐ economic edition, no. 14, 2009  slovenia 69.4 71.9 75.4 77.2 79.1 82.3 spain 73.4 75.6 78.9 80.5 82.5 85.0 sweden 74.8 77.4 79.1 80.4 82.0 83.2 united kingdom 72.9 75.4 n.d. 78.4 80.2 n.d. n.d. – no data; source:eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) so, the eu-27 is a potential market of over 500 million inhabitants, being the third biggest market in the world from this point of view (after china and india) and the biggest among the three big economic powers in the world. as result of the migration phenomenon of the population, but also of a natural positive increase the potential market of the countries in eu registers a slow growth. a severe phenomenon which will also affect the evolution of the market in general is the general ageing of the population. in general the ageing phenomenon is closely connected to the level of economic development of each country, a high living standard determines the increase of the life expectancy of the population and it frequently comes with the drop in the number of births, as a result of large number of divorces, of the number of households consisting of one person, of the more and more implication of women in the economic life and the decrease of time spent for household activities. starting from the tendencies registered at the european demographic environment level one can draw the conclusion that the market of the agro-food products has known an important increase at the community area level (with over 100 million consumers), result of the increase of the number of population as a follow-up os two expanding stages in the years 2004 and 2007; increase sustained also by the positive trend registered in the last few years at the population’s number level on all present countries in the eu. this expansion is also reflected at the level of demand and offer of food products. the changes of the demand and thus of the offer of agro-food products are generated by shifts of the population structure on age groups, respectively the increase of the overweight of old popualtion on the total of the population are forming real opportunities for the companies that aim at this segment of consumers. for example, the olders segment besides the orientation towards what is traditional, put a great weight on the products with a low containt of substances whose excessive use can have negative effects on health (sugar, fats, salt, alcohol). so, the shifts registered in the demographic sturtcure of the population is reflected on the way the demand of the population manifests in the case of certain types pf products, leaving thus a mark on the physiognomy specific to the agro-food market of the eu. bibliography: 1. diaconescu, m. (2003), agro-alimentary marketing, ediţia a ii-a revăzută, editura uranus, bucureşti 2. ţimiraş, c. l. (2007), trends in the evolution of agro-alimentary marketing in the context of eu enlargement, editura edusoft, bacău 3. http://epp.eurostat.ec.europa.eu/portal 113 microsoft word apostoaie constantin marius_eng.doc urban marketing and its impact over the touristic attractiveness of the cities – a conceptual approach elena lidia alexa, „al. i. cuza” university of iasi, romania abstract considering the current issues the urban centers are dealing with, the amplified city competitiveness and the increased demand of qualitative public services, it appears the need to apply new urban management approaches, more oriented toward the market and the current needs of the city. the competitive environment pressure creates the need to pass from an entirely administrative approach to a more managerial one, in all aspects regarding the current problems of the cities. thus, the urban stakeholders borrow more and more often working methods and techniques specific until now only for the private sector, in order to increase the public service’s performance and to sustainable develop their community. urban marketing came as a natural response to the cities needs to bring added value to their urban management strategies. the final objective is to increase the cities attractiveness for different target groups: starting with the current and future inhabitants, continuing with tourists and finishing with potential investors, which by relocating their business, could become a part of the faster and more sustainable urban development. keywords urban marketing, destination marketing, city branding, tourism, touristic attractiveness, competitiveness. jel codes: m 31, l83 introduction in the globalization era, characterized by profound political and economical reforms of which main objective is the increased competitiveness, whether we talk about goods, companies, cities or countries, the proactive attitude and an integrated marketing strategy are a must in order to survive and to develop. now more than ever, cities have become brands of their one, because they are in an endless competition for attention, investments, inhabitants and tourists and the main competitor is no longer the city located a couple of kilometers away, but any city across the globe. tourism is a huge potential and a challenge for urban managers which have to find and assimilate marketing strategies meant to allow the development of touristic functions and of touristic programs designed to bring added value to the cultural attractions for large and small cities alike. cities and regions need competitive strategies in order to attract more tourists, investors and inhabitants and for this they have to make a change in the decision makers’ attitude. the new city is no longer a plain urban conglomerate; it becomes a company, a product, and a market depending on the target group it applies to. studies and scientific researches economic edition, no. 15, 2010 303 destination marketing in the marketing literature, there are two theoretical approaches regarding destination marketing: one concentrates over the successful strategies applied by different entities, while the other one underlines the connection between destination branding and the aspects regarding the impact of the economical and political factors and the effect of the business stakeholder’s involvement over the communities’ development1. although the destination marketing concept is not a new notion, it became more popular in the literature in the 80s, once the cities became more aware of the importance of marketing and promotion impact over their development. thus, destination marketing has many definitions. for example, according to gold and ward, destination marketing is defined as the conscientious use of marketing and publicity in order to communicate selective images of various areas and cities among different target2. the definition focuses on the idea of selecting certain images to be promoted, images and aspects which are meant to increase destinations’ attractiveness; this opinion led to criticism in the marketing literature, most authors questioning whether not this definition refers to the possibility of ignoring or hiding the destination’s negative aspects. the concept of “destination branding” has been extensively explored. after summarizing the evolution of destination branding definitions, blain, levy and ritchie (2005) developed a revised definition that incorporated earlier efforts: destination branding is the set of marketing activities that (1) support the creation of a name, symbol, logo, word mark or other graphic that readily identifies and differentiates a destination; that (2) consistently convey the expectation of a memorable travel experience that is uniquely associated with the destination; that (3) serve to consolidate and reinforce the emotional connection between the visitor and the destination; and that (4) reduce consumer search costs and perceived risk. collectively, these activities serve to create a destination image that positively influences consumer’s destination choice3. branding is therefore considered mutually beneficial from both the supply and demand perspectives. the brand’s ability to differentiate effectively can generate advantages for products and services, such as increased purchase intent4, lower costs5, increased sales, price premiums and customer loyalty 6. among the destination’s advantages are: increased potential to differentiate against places offering similar benefits, increased destination loyalty and increased yield for stakeholders such as local tourism businesses and travel intermediaries. the benefits for travelers include ease of decision making through reduced search costs, reduced perceived risks and possibly the guarantee for an improved experience. in destinations’ case, differentiation is extremely important, giving the fact that the tourism market is the fastest growing economic market, which leads to an increased, more aggressive competition, especially since most destinations offer similar benefits which makes them easily interchangeably. for example, 70% of the international tourists visit only 10 countries, 1bradley, a, hall, t., harrison, m. (2002), “selling cities: promoting new images for meetings tourism”, cities, 19(1), pp. 61–70. 2 gold, jr., ward, sv. (eds.) (1994), place promotion: the use of publicity and marketing to sell towns and regions, john wiley & sons, chichester. 3blain, c., levy, s., ritchie, j.r.b. (2005), “destination branding: insights and practices”, destination management organizations journal of travel research, vol. 43, no. 4, 2005, pp. 328-338. 4 cobb walgren, c. j., beal, c., donthu, n. (1995), “brand equity, brand preferences, and purchase intent”, journal of advertising, 24(3), 1995, pp. 25–40. 5 keller, k. l., “conceptualizing, measuring, and managing customerbased brand equity”, journal of marketing, 57, 1993, pp.1–22. 6 aaker, d. a. (1996), building strong brands, free press, new york. studies and scientific researches economic edition, no. 15, 2010 304 which means that the rest of the tourist destinations compete for 30% of the international arrivals7. urban marketing the extensive urbanization led to the endorsement of the urban marketing concept; after 1990 the term begun to be widely used because of the increased competition between cities eager to attract more tourists, inhabitants, potential investors, all these things leading to a better living standard. the globalization had a direct impact over the public sector which is now required to reinvent itself and to apply strategies and methods which were until now, distinctive for the private sector. more experienced in this area, the united states and several western european countries applied urban marketing in their regional and local strategies and published their experiences as “best practice” models in order that other organizations use it too. among the urban centers that have an adjusted urban marketing system are: new york, paris, barcelona, vienna, berlin, amsterdam etc. thus, in corsico’s opinion, urban marketing is the alignment of the urban politics to the requirements of the local economic stakeholders and to the hopes and expectations of those operating outside of it, in order to better promote the local economy8. another marketing specialist, jan van der meer, considers that urban marketing can be described as a set of activities directed to enhance the correlation between the urban functionalities offer and the demand from its inhabitants, local companies, tourists and other visitors9. the marketing literature focuses on underlining the importance of city development and constant promotion of its elements, the increased competitiveness being an indirect effect of the applied strategies. urban marketing must be designed as a general principle focused on city development, thus, on problems regarding housing, jobs, communications, facilities, environment. it is also characterized by a planning process including all stages of task allocation, current situation, strengths and weaknesses analysis, definition of its’ own level of competitiveness and implementing, monitoring and evaluating the activities. all these must lead to a concurring vision over the city and tasks for all the stakeholders involved in the process. the development based on local potential, significant projects, joint activities and the enhanced image as a whole must represent the goal achieved through the urban marketing process10. in essence, urban marketing implies: to project the adequate combination of community characteristics and services, to establish attractive incentives for current and potential buyers, to create and efficient and accessible products and services delivery system inside the city, to promote the city’s values and the image, so that the potential buyers will be aware of the distinctive advantages of the place. thus, the perception over the cities and their image in the collective mind has become an important active component in their economic success or failure of their development. 7 morgan, n., pritchard, a., pride, r. (2004), destination branding – creating the unique destination proposition, 2nd edition, butterworth-heinemann, oxford. 8 corsico, f. (1994), “urban marketing, a tool for cities and for business enterprises, a condition for property development, a challenge for urban planning”, urban marketing in europe international conference, ave, g. and corsico; f. (eds.), torino incontra, torino. 9 meer, van der jan (1992), the role of urban marketing in the urban management, the european institute for urban comparative studies, erasmus university, rotterdam. 10 koster, a. (1994), “urban marketing – a new approach for town planning and a chance for reactivation of sites in old-industrial regions”, urban marketing in europe international conference, torino incontra, torino. studies and scientific researches economic edition, no. 15, 2010 305 the leaders of different countries, regions, cities begun to realize that a positive image combined with a successful marketing mix is a powerful instrument in the competition for resources and other economic activities. the cities’ management system suffered a change for the better by introducing some elements regarding commercials, public relations, direct marketing and sales promotions11. a key element in urban marketing refers to the difficulty of defining the city’s identity and values in a way that can be widely accepted and easily marketed for all target groups. the challenge is given by the need to create a common identity from values that are not always intangible and which represent the interests of different social and economic groups. city branding must determine how culture, history, economic growth, social development, infrastructure, architecture, landscape and environment, among other components, can be combined in an identity later to be “sold”12. in this process, the decision maker’s role is crucial, and in order for the urban marketing to succeed, a long term vision, both from the marketing and management point of view, is needed13. interchange relationships figure. 1. interchange relationships between the city and the collective groups urban tourism according to the world tourism organization (unwto), tourism is firmly established as the number one industry in many countries and the fastest-growing economic sector in terms of foreign exchange earnings and job creation. specialized literature does not provide a widely accepted definition for urban tourism. however, there are common elements among different authors regarding the concept of tourist, excursionist and the delimitation of the urban area. thus, it is widely accepted that urban tourism refers both to the movement of tourists in cities or urban agglomerations of at least 20.000 people outside their main residence, under the condition of remaining at least one night at the destination and to the tourist travel for at least 24 hours in the urban area, provided that the minimum travel distance is at least 100 km14. world tourism organization considers that urban tourism refers to travels inside cities or areas with a high population density15. if until recently urban tourism was seen as a result of population mobility, for which the city was only a brief stopover on the way to the final destination, at present, due to significant tourism consumer behavioral changes and to extensive changes in the urban management, the city turned into a cultural center, a relaxing place where people shop, meet with friends 11 avraham, eli, daniel, daugherty (2009), ‘‘we’re known for oil. but we also have watercolors, acrylics & pastels: media strategies for marketing small cities and towns in texas” – cities, 26, pp. 331–338. 12 zhang, li, simon, zhao (2009), “city branding and the olympic effect: a case study of beijing”, cities, 26, pp. 245–254. 13 d’angella, francesca, go, m., frank (2009), “tale of two cities’ collaborative tourism marketing: towards a theory of destination stakeholder assessment”, tourism management, 30, pp. 429–440. 14 g. cazes, fr. potier (1996), le tourisme urbain, puf, paris, p. 10. 15 unwto, tourism 2020 vision, volume 7, global forecasts and profiles of market segments, p. 103. offer of the city demand of the various collective groups: citizens, tourists, investors, institutions studies and scientific researches economic edition, no. 15, 2010 306 and spend their free time pleasantly. therefore, one can say that urban tourism is not just a form of tourism, but an integral part, a traditional and distinctive feature of the urban life16. the importance of urban tourism is underlined by the fact that in 1991 was created ect – european cities tourism which is the european association of the urban tourism organizations (former federation of european cities’ tourist offices – fecto) with the overall aim to strengthen city tourism in europe. the purpose of ect is sharing information and knowledge among its members, building opportunities of joint-marketing activities for european cities, and representing city tourism industry interests in eu meetings. according to ipk international17 consulting company, urban tourism is one of the most dynamic forms of tourism. for example, in 2005 over 2004, city breaks segment increased by 20% compared with only 3% for seaside tourism, 8% summer mountain tourism and 12% winter mountain tourism, and the trend is expected to continue in the following years. currently, tourist short term visits in the cities (city breaks) hold a share of 38% of all international travels by europeans, the percentages varying from one country to another. it is estimated that approximately 80% of visits in cities represents pure urban tourism (the motivation is exclusive) and 20% is complementary tourism visiting urban settlements are associated with other forms of holiday spending (seaside, mountains, rural areas, circuits, etc.). the origin and development of this form of tourism is mainly motivated by the change in the tourism purchasing behavior through the fragmentation of holidays, the population revenue growth, the changed motivations for traveling determined by the increased educational level, the bigger demand for business tourism, the amplified mobility, determined by the diversification of transport options. the city break market is currently concentrated on a relatively small number of cities and is fiercely competitive. paris and amsterdam are the most popular destinations, with additional european competition coming from rome, brussels, barcelona, venice, prague, london, and dublin. long haul destinations are also attracting a growing number of visitors. new york is by far the most popular long haul destination.18 the global economic crisis has been strongly associated with a tendency to take holidays at home or in a neighborly country which has a significant impact over the urban tourism market. this trend is widely reported across europe with many local variations. generally, however, it is more intense in northern and western europe than in central and eastern europe, where the local economies have been sometimes so badly affected that even local travel has been curtailed. this may help to explain some of the renewed declines reported in recent months in central and eastern europe, which are neither close enough to western european markets to count as local, nor prosperous enough to benefit from domestic and cross-border tourism19. this overall trend can be counteracted through a more aggressive urban destinations marketing and through restructuring the touristic packages, in order to better adjust them to the needs and requests of the tourism buyers. conclusions tourism is a huge potential and challenge for development of cities. it provides financial resources for the restoration of old buildings and the creation of general infrastructure that 16 frank, howie (2003), managing tourist destinations, thomson learning emea, p. 93. 17 ***ipk international, itb convention market, trends and innovations, 9 january 2006. 18 ***urban tourism and dispersal, produced for the enterprise & lifelong learning committee, the scottish parliament, 12 august 2002. 19 ***europe tourism 2009 – trends and prospects, quarterly report q4/2009, european travel commission. studies and scientific researches economic edition, no. 15, 2010 307 can be used by the local population. through tourism the cultural resources of a place are exploited, assuring, in the same time financial resources for developing other facilities, which, in the end lead to an increased quality of life for the inhabitants. after analyzing the main indicators of the touristic activity in the urban area, it is noticeable that cities have an important percentage in the overall touristic circulation. the future development of this form of tourism is, however, conditioned by the assimilation in the urban management process of marketing strategies meant to allow the development of touristic functions in the main urban localities and of touristic programs designed to bring added value to the cultural attractions for large and small cities alike. urban marketing comes, in this case, as a natural response to the requirements of the city to better answer the market’s needs and to adjust to the dynamics of the tourism industry. references 1. aaker, d. a. (1996), building strong brands, free press, new york. 2. avraham, eli, daniel, daugherty (2009), ‘‘we’re known for oil. but we also have watercolors, acrylics & pastels”: media strategies for marketing small cities and towns in texas” – cities, 26, pp. 331–338. 3. blain, c., s. levy, j.r.b., ritchie (2005), “destination branding: insights and practices”, destination management organizations journal of travel research, 43(4), pp. 328-338. 4. bradley, a, hall, t., harrison, m. (2002), “selling cities: promoting new images for meetings tourism”, cities, 19(1), pp. 61–70. 5. cazes, g. potier fr. (1996), le tourisme urbain, puf, paris. 6. cobb walgren, c. j., beal, c., donthu, n. (1995), “brand equity, brand preferences, and purchase intent”, journal of advertising, 24(3), pp. 25–40. 7. corsico, f. (1994), “urban marketing, a tool for cities and for business enterprises, a condition for property development, a challenge for urban planning”, urban marketing in europe international conference, ave, g. and corsico; f. (eds.), torino incontra, torino 8. d’angella, francesca, go, m., frank, tale of two cities’ collaborative tourism marketing: towards a theory of destination stakeholder assessment, tourism management, nr. 30, 2009, pp. 429–440. 9. gold, jr., sv. ward, (eds.) (1994), place promotion: the use of publicity and marketing to sell towns and regions, john wiley & sons, chichester. 10. howie, frank, (2003), managing tourist destinations, thomson learning emea. 11. keller, k. l. (1993), “conceptualizing, measuring, and managing customerbased brand equity”, journal of marketing, 57, pp.1–22. 12. koster, a. (1994), „urban marketing – a new approach for town planning and a chance for reactivation of sites in old-industrial regions”, urban marketing in europe international conference, torino incontra, torino. 13. meer, van der jan (1992), the role of urban marketing in the urban management, the european institute for urban comparative studies, erasmus university, rotterdam. 14. morgan, n., a. pritchard, r. pride, (2004), destination branding – creating the unique destination proposition, 2nd edition, butterworth-heinemann, oxford. 15. zhang, li, simon, zhao (2009), „city branding and the olympic effect: a case study of beijing”, cities, 26, 2009, pp. 245–254. 16. ***europe tourism 2009 – trends and prospects, quarterly report q4/2009, european travel commission 17. ***ipk international, itb convention market, trends and innovations, 9 january 2006. 18. ***urban tourism and dispersal, produced for the enterprise & lifelong learning committee, the scottish parliament, 12 august 2002. 19. ***unwto, tourism 2020 vision, volume 7, global forecasts and profiles of market segments, p. 103. studies and scientific researches economic edition, no. 15, 2010 308 studies and scientific researches. economics edition, no 33, 2021 http://sceco.ub.ro 18 some aspects regrading the future of financial reporting daniel botez “vasile alecsandri” university of bacău daniel63331@yahoo.com mihaela enachi “vasile alecsandri” university of bacău enachi_mihaela@yahoo.com abstract the financial reporting process is a standardized process by which an entity provides information about its business, which is not considered confidential, in the environment in which it operates, for the purpose of supporting and developing the society in general. for several years, this process has been undergoing a period of transformation that involves including in the reporting process, in addition to financial information, non-financial information that presents aspects of the resources used, the business model and the new value created by entity. thus arose the concept of integrated reporting. in european union, several european directives have been issued setting out the obligation to provide information on the environment, social issues, and personnel. recently, a european union project intended to amend the reporting directives by introducing a new concept, reporting for sustainability. these attitudes pose challenges for professional accountants as the reports need to be audited to express an opinion on the level of assurance in relation to the information provided. keywords financial reporting; integrated reporting; sustainability reporting; integrated reporting assurance jel code m4;, m41; m42 introduction for several years, the business environment has been discussing how financial reporting meets the information needs of stakeholders, called users of financial statements. thus, the term stakeholder was introduced, which designates an interested person regarding the financial information published by a company other than its investors. as a result of these concerns, the term integrated reporting emerged, which quickly became a concept and led to the establishment of the international integrated reporting council iirc, in 2009. the first integrated report was prepared and published in 2002 by the danish company novozymes. the development of a conceptual framework for corporate reporting has been and is one of the aims of the british organization “the prince of wales` accounting for sustainability project”, which developed in 2007 “connected reporting framework”, a new approach in corporate reporting that focuses on information needs of long-term investors and executive management. 2012 was the first year in which the international council for integrated reporting implemented a pilot program. some aspects regrading the future of financial reporting 19 since then, more and more companies are becoming part of this system of information and protection of investors, first, but also of the business environment and society in general. in recent years, there has been a concern among international and regional bodies about changes in corporate reporting, leading to the supplementation of information provided with non-financial and climate-related information. they are already the subject of european directives that change the financial reporting requirements. finally, the increase in the volume and quality of information presented in the corporate reporting process, as well as its different nature, produce changes in the way professional accountants intervene on this information to give users more confidence through insurance missions. which he exercises. what is integrated reporting? integrated reporting is a set of processes and activities that result in a visible and concise result in regular reporting on how the organization's strategy, management, performance, and forecasting allow for long-term value creation and maintenance. a key concept of integrated reporting is, in the long run, a world where integrated thinking is dominant in business practice, both in the public and private sectors, and is supported by integrated reporting as a basis for corporate reporting. “integrated reporting aims to: • improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital; • promote a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an organization to create value over time; • enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies; • support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium, and long term.”1 the conceptual approach of integrated reporting is based on three essential elements: capital, business model and the process of creating and maintaining value. why is capital important? economic theories show that capital is one of the three essential factors of production. this is a factor of production which is not important but in its ability to produce other goods. all organizations depend on a variety of forms of capital to ensure their success. these capitals represent inputs in the business model of the organization and represent, at the same time, outputs, because they are transformed consumed, increased, used (exhausted), modified or other ways that affect all the activities of the value-added organization. an organization uses, in principle, six types of capital: 1. financial capital, which is the total funds available to an organization to be used in the production of goods or services, obtained through financing such as debt, equity or grants, or generated by investment operations; 1https://integratedreporting.org/wpcontent/uploads/2021/01/internationalintegratedreportingframework.pdf https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf botez, enachi 20 2. productive capital, available in the organization for use in the production of goods or the provision of services, in the form of constructions, equipment and infrastructure; 3. human capital, represented by the skills and experience of people and their capacity for innovation, which align and support the conceptual framework of leadership and ethical values, loyalty and motivation; 4. intellectual capital, represented by intangible aspects that provide competitive advantages in the form of intellectual property (patents, copyrights, software, systems, procedures and organizational protocols) or that are associated with the brand and reputation, 5. natural capital, which usually represents inputs to the system and affects all activities of the organization, such as water, land, mineral resources and forests, biodiversity and ecosystem health; 6. social capital, represented by institutions and relationships established within and between each community, interest group and others, to increase collective and individual well-being, in the form of common values and behaviors, “key” relationships, trust and loyalty organization builds, develops and protects them together with business partners. of course, not all of these capitals are equally relevant or applicable in all organizations. the business model is defined in the conceptual framework as “a system of inputs, value-added activities, and outputs, which aim to create and maintain value in the short, medium, and long term.”2 the business model is the heart of an organization that influences and is affected by other elements of the organization. about business-related reporting, an organization should address one or more of the following: • a simple diagram highlighting the elements of the business model together with a clear explanation of their relevance; • a description of all significant and particular aspects of the organization; • explicit identification of the “key” elements of the business; • identification of important external factors; • positioning the organization in the value creation chain; • link to other aspects of reporting, including strategy, risk and financial considerations. value, in the sense of integrated reporting, is the value created for investors, for longterm investors. it is stored in capital and is created or lost because of the internal game of capital, caused by the activities of the organization. organizations can create and maximize value by serving the interests of all stakeholders, including employees, customers, suppliers, creditors, consultants, and the environment. the value created in this way manifests itself in the return to investors through the future cash flow and returns in the economy, environment and society. non-financial reporting requirements discussions on the need for entities to disclose non-financial information to the public, through or separately from the financial reporting process, are not recent. they started when in the economic environment and in society in general, there was a need-to-know information about how entities influence the environment in which they operate, of 2https://integratedreporting.org/wpcontent/uploads/2021/01/internationalintegratedreportingframework.pdf https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf some aspects regrading the future of financial reporting 21 major interest being those related to environmental protection, but also other issues such as how which the activity of the entities influences the local economy. the obligation to report such matters at eu level was established by directive 2014/95 / eu introducing in the framework of directive 2013/34 / eu on annual financial statements, consolidated annual financial statements and reports relating to certain types of undertakings. of the following article: “article 19a non-financial statement 1. large undertakings which are public-interest entities exceeding on their balance sheet dates the criterion of the average number of 500 employees during the financial year shall include in the management report a nonfinancial statement containing information to the extent necessary for an understanding of the undertaking's development, performance, position and impact of its activity, relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, including: (a) a brief description of the undertaking's business model; (b) a description of the policies pursued by the undertaking in relation to those matters, including due diligence processes implemented; (c) the outcome of those policies; (d) the principal risks related to those matters linked to the undertaking's operations including, where relevant and proportionate, its business relationships, products or services which are likely to cause adverse impacts in those areas, and how the undertaking manages those risks; (e) non-financial key performance indicators relevant to the particular business. where the undertaking does not pursue policies in relation to one or more of those matters, the non-financial statement shall provide a clear and reasoned explanation for not doing so. the non-financial statement referred to in the first subparagraph shall also, where appropriate, include references to, and additional explanations of, amounts reported in the annual financial statements.”3 article 20 also introduces the entity's obligation to prepare and publish a corporate governance statement in the directors' report. new attitude in april 2021, a draft directive was published which intends to amend the directives on the reporting of financial and non-financial information, as well as the one on statutory audit and regulation no. 537/2014 on the audit of public interest entities, introducing the expression “sustainability reporting”. thus, directive 2013/34 / eu is amended as follows: “article 19a sustainability reporting 1. large undertakings and, as of 1 january 2026, small and medium-sized undertakings which are undertakings referred to in article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position. 2. the information referred to in paragraph 1 shall contain in particular: (a) a brief description of the undertaking's business model and strategy, including: (i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters; (ii) the opportunities for the undertaking related to sustainability matters; 3 https://eur-lex.europa.eu/legalcontent/en/txt/?uri=celex%3a32014l0095&qid=1625159385907 botez, enachi 22 (iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °c in line with the paris agreement; (iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters; (v) how the undertaking’s strategy has been implemented with regard to sustainability matters; (b) a description of the targets related to sustainability matters set by the undertaking and of the progress the undertaking has made towards achieving those targets; (c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters; (d) a description of the undertaking’s policies in relation to sustainability matters; (e) a description of: (i) the due diligence process implemented with regard to sustainability matters; (ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain; (iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts; (f) a description of the principal risks to the undertaking related to sustainability matters, including the undertaking’s principal dependencies on such matters, and how the undertaking manages those risks; (g) indicators relevant to the disclosures referred to in points (a) to (f). undertakings shall also disclose information on intangibles, including information on intellectual, human, and social and relationship capital. undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and in this process they shall take account of short, medium and long-term horizons.”4 iirc-ifac relationship on accelerating integrated reporting missions in support of the public interest. involvement of the accounting profession5 a comprehensive resolution on expanding integrated reporting missions requires measures to develop baselines for both integrated reporting and global standards for corporate reporting and professional procedures for issuing an assurance on the degree of assurance related to it. iirc and ifac initiated a discussion with professional accountants and users of integrated reports, on increasing confidence in integrated reporting and integrated thinking, and finally, business continuity and sustainable development. the development and evolution of integrated reporting assurance missions is needed to make a significant contribution to the trust and credibility of integrated reporting. 4https://www.europeansources.info/record/proposal-for-a-directive-amendingdirective-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-euno-537-2014-as-regards-corporate-sustainability-reporting/ 5 based on https://www.ifac.org/system/files/publications/files/ifac-iirc-integratedreporting-assurance.pdf https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance.pdf some aspects regrading the future of financial reporting 23 an integrated report, prepared in accordance with the integrated reporting framework developed by the iirc, links all relevant information about the business and its value creation process, including financial, operational, fixed assets, sustainable development (sustainability), environmental issues, social and leadership, in the context of selfmanagement, resource allocation and relationships with management, business model, performance and its perspectives. integrated reporting assurance engagements increase the credibility of the entity's integrated reporting and progress information and develop the regulatory environment for investors. finally, integrated reporting opinions increase the credibility of corporate business reporting, providing a more robust basis for trust in the financial market and society. there is a need for a different approach to professional procedures for issuing an opinion on integrated reporting. the recent emergence of limited assurance missions on integrated reports of some organizations, as well as the iaasb project called extended external reporting (eer) assurance is a good start. however, a better understanding and guidance is needed, on the transition from limited to reasonable insurance, which requires assurance and evidence collection procedures on integrated reporting and other key business processes, including the value creation process. financial auditors and independent practitioners work in professional firms, are well placed to provide high quality assurance assignments on integrated reporting, showcasing their skills in assurance assignments, experience in financial auditing, skepticism, and professional judgment. integrated reporting missions are also a critical element of the future role of professional accountants, opening a career path in which they apply their professional expertise beyond financial information from corporate reporting to information on how to create value in the entity. this involves working in multidisciplinary teams and calling on experts in various subjects. however, integrated reporting has direct implications for the knowledge, skills, and experience of financial auditors, as these commitments will require a wide range of business and information activities. the initiative aims to accelerate the process of ensuring integrated reporting by clearly establishing what this entails for organizations, auditors, and others. progress requires that all actors involved in the corporate reporting system play a role in determining functional assurance. this means that there is a lot to be done by organizations and auditors. the development of integrated reporting insurance depends on the availability of insurance in organizations, on the quality of their financial reporting, processes, and documentation. the planned move to a comprehensive reporting solution, in which the ifrs foundation has an important role to play in developing standards that lead to consistent, comparable, reliable, and reliable information, will in the future ensure that integrated reporting functions. however, to gain a high degree of confidence in integrated reporting, ensuring integrated reporting needs to progress more rapidly and steadily in different jurisdictions. integrated reporting missions have been based for a decade on the international standard on insurance commitments 3000 (isae 3000), which provides a high degree of assurance for all insurance organizations and commitments. it is especially important that isae 3000 contains requirements on quality management and professional ethics both within audit firms and at the commitment level, designed to ensure the quality of missions and the protection of the public interest. in support of the use of isae 3000, the iaasb project on ensuring extended external reporting (eer) is developing additional guidelines. integrated reporting is an example of extended external reporting, and guidelines for this process are a starting point for aligning integrated reporting with developments in the integrated reporting process. botez, enachi 24 in some jurisdictions, such as germany, auditors are already required to obtain reasonable assurance about much of the information in the administrator's report as part of the audit of financial statements, which are called non-financial information and are currently subject to specific verification. in south africa, a combined insurance model has evolved with integrated reporting, which helps coordinate the insurance process between internal and external insurance providers. it involves harmonizing the assurance procedure between different functions such as internal audit, compliance, and risk, with independent external assurance, providing the administration and senior management with a broad (extended) view of insurance and risk management activities on integrated reporting. the provision of integrated reports is progressively developing with the participation of numerous instances of limited insurance on the components of integrated reports, including the selection of references on sustainable development, such as standards issued by ssab -sustainability accounting standards board or gri-global reporting initiative. as part of the audit of financial statements, statutory auditors are already responsible for the application of isa 720 auditor's responsibilities for other information. these responsibilities require the auditor to read and consider the information accompanying the financial statements, such as the administrator's report, and to determine whether there are any discrepancies between the financial statements and this information. the ideal goal is to finally achieve a broad adoption of integrated reporting and reasonable assurance of integrated reporting. to promote the relevance and integrity of information in integrated reporting, used by users in decision-making, a consistent global approach must be developed to build confidence in integrated reporting by ensuring it is based on isa 3000, which is in line with integrated reporting developments. ensuring integrated reporting differs from insuring over other forms of extended reporting (eer) by giving integrated reports a broader future-oriented approach to all elements of a business, such as the core capital built into the resources used and the relationships and support of integrated thinking that ensure best practices. business references play a key role, such as purpose, strategy, risks and opportunities in the operational environment, value creation, resources used and the relationships between them, their own competitive advantages in resource use and value creation and conservation, integrated thinking. the provision of integrated reports may be limited or reasonable, or a combination of them on various aspects of the integrated report. the differences between these two types of insurance are based on the nature and extent of the practitioner's work on the risk of material misstatement of the reporting information, in relation to integrated reporting and other key business processes. both limited and reasonable assurance commitments involve observation, inspection, recalculation, confirmation, use of analytical procedures and questionnaires, management documentation on management, strategy, resource allocation and management relationship with users, business model, risk management and opportunities, performance, and evaluation of their presentation in the integrated report. in the case of limited insurance, evidence is largely obtained by reviewing management documents, questionnaires, observations, and analytical procedures. in the case of this mission, the practitioner obtains an understanding of the integrated reporting process and other key business processes that lead to value creation, to perform procedures to identify the parts of the integrated report where significant misstatements may occur. the practitioner will obtain sufficient and adequate evidence to conclude that he has not identified issues that call into question (have not attracted his attention) the fact that the integrated report is prepared in accordance with the integrated reporting framework. some aspects regrading the future of financial reporting 25 in the case of reasonable assurance, the practitioner's activity includes obtaining sufficient and adequate evidence of the operational effectiveness of the relevant controls, including management controls performed in the integrated reporting process. thus, the practitioner evaluates the design of internal controls and their degree of implementation and operation, with direct reference to the integrated reporting process and other key business processes that lead to value creation. the practitioner will perform procedures to identify and assess the risks of material misstatement in the integrated report and the efficiency of operations and other key business processes, as set out in the integrated report. the practitioner will obtain sufficient and appropriate evidence to conclude whether, in his opinion, the integrated report is prepared correctly, in all material respects, in accordance with the integrated reporting framework. other services may also be provided using ssri standard 4400 commitments based on agreed procedures, which are not insurance commitments and do not express an opinion. however, a report is prepared to management on the actual findings and recommendations, so that they can draw conclusions and make decisions. these commitments can be made to support the accountability of those responsible for the governance provided for in the integrated reporting framework. ensuring integrated reporting is a vital part of corporate reporting and the reporting ecosystem. it is essential that it be seen (addressed) as a component of the system and not as something that is added later. a correct approach leads to improved quality of integrated reporting and business practices. conclusions the process of reporting information of public interest by entities has been constantly changing for several years. since financial reporting, a concept still widely used today, with certain features of corporate reporting, the trend is for all entities to issue integrated reports, to increase the volume and quality of information, to inform how their activity influences the environment in which it operates. this process, which is changing today, creates many and different challenges for all actors involved in the economic and social environment. some, especially important, are addressed to professional accountants. they need to receive them and develop their skills, how to continue their training, reasoning, and attitude in general. references https://integratedreporting.org/wpcontent/uploads/2021/01/internationalintegratedreportingframework.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reportingassurance.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reportingassurance-graphic.pdf european directive 2013/34/ue, https://eur-lex.europa.eu/legalcontent/ro/txt/?uri=celex%3a32013l0034 european directive 2014/95/eu, https://eur-lex.europa.eu/legalcontent/en/txt/?uri=celex%3a32014l0095&qid=1625159385907 https://www.europeansources.info/record/proposal-for-a-directive-amendingdirective-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-andregulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf https://integratedreporting.org/wp-content/uploads/2021/01/internationalintegratedreportingframework.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance-graphic.pdf https://www.ifac.org/system/files/publications/files/ifac-iirc-integrated-reporting-assurance-graphic.pdf https://eur-lex.europa.eu/legal-content/ro/txt/?uri=celex%3a32013l0034 https://eur-lex.europa.eu/legal-content/ro/txt/?uri=celex%3a32013l0034 https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ https://www.europeansources.info/record/proposal-for-a-directive-amending-directive-2013-34-eu-directive-2004-109-ec-directive-2006-43-ec-and-regulation-eu-no-537-2014-as-regards-corporate-sustainability-reporting/ (2 rânduri libere, 11p) accounting practice and intelligent technologies daniela postolache (males), phd. student, „alexandru ioan cuza” university of iasi, romania   abstract our paper presents current theoretical delimitations concerning intelligent technologies. our objective was to determine how intelligent technologies can support accounting practice. our research allowed for establishment of accounting information intelligent systems typology and for placement of these solutions in the sphere of artificial intelligence applications. it is underlined the intelligent technologies contribution to improve accounting processes and activities, in a qualitative approach, from the hermeneutic perspective. the results of our research are useful for researchers in the fields of applied accounting, intelligent systems for accounting, information technology management. also, our study is useful in the activity of accounting experts, given the presentation of new technologies used in their area of interest. keywords accounting intelligent systems, accounting informational system, it management, intelligent informational systems jel codes: d80, m41, m15, o33 introduction among the many theoretical approaches and definitions of the concept of accounting, we consider as very actual the perspective shared by pauline weetman, professor of accounting at the university of edinburgh, according to which, accounting is the process of identification, measurement and communication of financial information about a particular entity, in order to facilitate informed decisions and opinions to users1. accounting must be understood as a set of aggregated knowledge (information), based on principles and postulates verified by economic practice2. in the view of the c.s. warren, j. m. reeve and j. duchac3 (2012), accounting can be defined as an information system that provides users with reports on economic activities and on conditions of running a business. the authors determined the information cycle through the accounting information system, composed of five stages, as shown in figure 1. it is not by chance that the central figure, in the accounting information system, is a computer image. it is recognized that organizations use information technology to counteract to constraints effects established by various social, legal, economic, material and political factors.                                                              1  weetman, p. (2006), financial accounting: an introduction, 4th edition, pearson education ltd., harlow, uk, p. 19  2  horomnea, e. (2008), fundamente ştiinţifice ale contabilităţii.doctrină.concepte.lexicon., tipografia moldova publishing house, iasi, p. 103  3  warren, c.s., reeve j.m., duchac, j. (2012),accounting, 24th edition, cengage learning, mason, usa, p.3  figure 1. accounting as an information system source: c.s. warren, j.m. reeve, j. duchac, (2012),accounting, 24th ed., cengage learning, mason, usa, p.3 in the their paper, introduction to information systems: enabling and transforming business4 rainer, k. and cegielski, c.g., set the constraints affecting the economic environment and the way organizations react to them, using information technology (it), as shown in table 1. we can consider this as a detail view of one half of a swot analysis: threats and opportunities. solution and also opportunities available to organizations to counter threats as excessive accumulation of information and obsolescence, in the context of fast-paced technological innovation, ar given by the intelligent management of data and information, through intelligent technologies and intelligent informational systems. intelligent accounting information system according to negnevitsky5, technologies can be considered as "intelligent" when they are able to achieve human level of performance in some aspects of knowledge processing. in his book, a philosophical and mathematical dictionary6 (1815), the english mathematician charles hutton explains the meaning of the term solution: an answer or a resolution to an existing problem.                                                              4  rainer, k., cegielski c. g. (2011), introduction to information systems: enabling and transforming business, 3rd edition, john wiley & sons, inc., new jersey, p.16  5  negnevitsky, m. (2005), artificial intelligence: a guide to intelligent systems, 2nd edition, pearson education ltd., harlow, uk, p.4  6  hutton, c. (1815), a philosophical and mathematical dictionary, vol. ii, printed by s. hamilton, weybridge, surrey, london, p. 412  table 1. ways to counter constraints using information and communication technologies influential factors typology constraints on the economic environment counter way used tool on-demand made-to-order mass customization social responsibility better data management compliance with government regulations and deregulations ethical issues business aliances societal/legal/political terrorist attacks and homeland security electronic commerce global economy and strong competition strategic systems need for real-time operations customer focus and service (crm), selfservice changing workforce continous improvement efforts (just-in-time, total quality management), km, erp economic powerful customers business process restructuring and management (bpm) technological innovations and obsolescence intelligent data management technology information overload on-demand made-to-order mass customization information and communication technologies (intelligent technologies) source: k.rainer, c.g. cegielski, (2011), introduction to information systems: enabling and transforming business, 3rd edition, john wiley & sons, inc., new jersey, p.16-adaptation given the expressed opinions, we can appreciate that an intelligent solution (known also as intelligent application) involves assisting of human in solving problems, using representations of human thought processes. the „intelligent systems” term is often used for artificial intelligence applications7. organized assembly of data and information and all the procedures and instruments for acquisition, processing and transmission of data and information, using artificial intelligence applications to assist users in carrying out their mission, optimizing decision-making, forms an intelligent information system. depending on the needs of knowledge at different levels of the organization, they may be: • intelligent economical information systems; • intelligent management information systems; • intelligent decision support information systems; • intelligent information systems for strategic management. figure 2. placement and interrelation of technologies in the field of artificial intelligence systems. accounting is an essential component of economic information system, as by specific means and procedures provide: • clarification of business past and present; • guidance on future economic strategy; • relevant analysis facing market; • limiting field of random decisions; • solutions and reasons for decisions. 8 previous opinions lead us to the following definition of intelligent accounting information system: the organized assembly of data, information and knowledge, along with all the                                                              7  andone, i., dologite, d., mockler, r., ţugui, a.(2001), dezvoltarea sistemelor inteligente în economie, economic publishing house, bucharest, p.35  8  horomnea, e. (2008), fundamente ştiinţifice ale contabilităţii.doctrină.concepte.lexicon.,tipografia moldova publishing house, iasi, p. 161  procedures and instruments for acquisition, processing and transmission of data, information and knowledge, using artificial intelligence applications, by the accounting main functions, for assisting the user in order to fulfill its mission, optimizing decision making. the typology of intelligent accounting information systems can be established in view of the main functions of accounting to substantiate decision making, as follows: • intelligent accounting information systems for organizing, recording and processing of data, information, knowledge and recommendations regarding economic phenomena and processes; • intelligent accounting information systems for observation, information, knowledge and learning support; • intelligent accounting information systems for internal control and audit support; • intelligent accounting information systems for economic litigations support; • intelligent accounting information support in forecasting management. in graphical form, place of presented technologies and systems, within applications of artificial intelligence, and relations between them are shown in figure 2. accounting activities and processes facilitated by intelligent technologies according to myers9, in qualitative research, hermeneutics contributes to a profound analysis of social and organizational aspects in management and economics. the author believes that the aim of hermeneutics is to clarify and understand a subject.                                                             the most objective form of hermeneutics is researching the phenomenon from inside, when the subject is familiar to the researcher, who has experience in that area10. from this perspective, we show accounting main activities and processes covered by intelligent technologies. accounting activities and processes refers to the creation, organization, use, management and control of accounting information system. regarding the establishment of information flow, intelligent technologies can assist the following activities: • identifying the optimal structure of information flow for a particular type of entity; • document models selection, according to specific circumstances; • making recommendations on organizing and archiving of documents; etc. establishing optimal methods for collecting and storing data and information provides, to a large extent, the success of the accounting function. with intelligent technology, the following can be achieved more easily: • providing suggestions for organizing accounting journals, appropriate to each subunit; • identify the optimal time for storage of documents in each compartment, using a heuristic knowledge base; setting, thus, deadlines for accounting items registration; • process simulations, for each choice, due the application of different rules of thumb for collecting and storing data; • conceptual design of consolidation algorithms on financial statements, through execution rules; etc. in terms of data and information processing, intelligent technologies may contribute in the following ways: • selection of optimal alternative on the accounting treatment and accounting items, for specific events or documents;   9  myers, m.d. (2009), qualitative research in business & management, sage publications ltd., london, p. 182  10  bleicher, j. (1982), the hermeneutic imagination: outline of a positive critique of scientism and sociology, routledge & k. paul, london, p. 71  • using knowledge base to assist employees in acquiring skills on information and data processing, in choosing the correct judgment on atypical analyzes, or about the destination and content of reports; • uncertainty analysis where data are incomplete, illegible or inaccurate on documents, establishing probabilities and risk level, in terms of accurate image alteration; etc. complexity of intelligent technologies for data, information and knowledge reporting is increased, given the wide variety of accounting reports. we can illustrate as follows: • diagnosis of cash deficit causes and recommending corrective actions; • consulting and simulations in determining purchasing program; • scenarios to assist decision to substantiation budget of incomes and expenses; • knowledge base containing complete explanations and examples of interpretation of international financial reporting standards; • selective distribution of specific accounting knowledge, to assist correct preparation of current reports; • evaluation and analysis of employees professional performance in the financial accounting department; • recommendation of optimal paths of action to achieve management objectives; etc. in terms of administration, audit and control of accounting information system, intelligent systems succeed in: • selection of suitable options concerning possible acquisition and transfer of duties, or for employees position, in the information system; • sensitivity analysis on the impact of information flow changes on information system security; • assistance in determining penalties for non-compliance in reporting tasks, using case-based reasoning, and collection of previous cases; • questionnaires and task lists inferred through execution rules, to assist the audit of accounting information system; • adapting alternative solutions to the specific circumstances of inventories; • incorporate in financial control the knowledge bases containing appropriate actions, for specific situations; etc. conclusions our work emphasizes the importance of using intelligent technologies on accounting activities and processes, bringing in the foreground the wide range of competence of these modern solutions. in this context, in the romanian accounting practice, measures should be taken to implement intelligent systems, as: "computerization of processes, introducing new forms of organization, including advanced management techniques"11. we endorse to these ideas, especially as the international accounting practice brings, undoubtedly, viable solution, for the dynamic and complex context of the current economic environment. the few issues we have described above lead us to agree with the following opinions: "accounting, the science of organization measurement, is at a threshold of change. it either substantially changes or becomes irrelevant as an external corporate measurement. " 12                                                              11  horomnea, e. (2008), fundamente ştiinţifice ale contabilităţii.doctrină.concepte.lexicon., tipografia moldova publishing house, iasi, p. 205  12  vasarhelyi , m.a. (2008), “evolving accounting systems research with business measurement practice—a letter from the editor.”, journal of emerging technologies in account., (5), 1, p. xiii.  references 1. andone, i., dologite, d., mockler, r., tugui, a.(2001), dezvoltarea sistemelor inteligente în economie, economic publishing house, bucharest 2. andone, i., tabara, n., (2006), contabilitate, tehnologie şi competitivitate, romanian academy publishing house, bucharest 3. bleicher, j. (1982), the hermeneutic imagination: outline of a positive critique of scientism and sociology, routledge & k. paul, london 4. curtis, g., cobham, d. (2005), business information systems: analysis, design, and practice, 5th edition, pearson education ltd., harlow, uk 5. ebers, m., ganter, h.d. (2000), “strategic applications of integrated information systems”, business strategy and information technology, edited by ewan sutherland and yves morieux, routledge, london, pp.131-142 6. hagel iii, j., brown j.s. (2001), “your next it strategy”, harvard business review, harvard business publishing 7. horomnea, e. (2008), fundamente ştiinţifice ale contabilităţii.doctrină.concepte.lexicon., tipografia moldova publishing house, iasi 8. hutton, c. (1815), a philosophical and mathematical dictionary, vol. ii, printed by s. hamilton, weybridge, surrey, london 9. maier, r. (2007), knowledge management systems: information and communication technologies for knowledge management, 3rd ed, springer-verlag, berlin 10. myers, m.d. (2009), qualitative research in business & management, sage publications ltd., london 11. naranjo-gil, d. (2004), “the role of sophisticated accounting system in strategy management”, the international journal of digital accounting research, 4, (8), pp. 125-144 12. negnevitsky, m. (2005), artificial intelligence: a guide to intelligent systems, 2nd edition, pearson education ltd., harlow, uk 13. nelson, r.r. (2005) technology, institutions and economic growth, harvard university press 14. patrut, v., rotila, a., ciuraru-andrica, c., luca, m. (2009), “accounting – a semiotic process”, the annals of the university of oradea. economic sciences, xvii, (iii), pp.1105-1112 15. poole, d., mackworth, a. (2010), artificial intelligence: foundations of computational agents, cambridge university press, new york. 16. rainer, k., cegielski c. g. (2011), introduction to information systems: enabling and transforming business, 3rd edition, john wiley & sons, inc., new jersey 17. vasarhelyi , m.a. (2008), “evolving accounting systems research with business measurement practice—a letter from the editor.”, journal of emerging technologies in account., (5), 1 18. warren, c.s., reeve j.m., duchac, j. (2012), accounting, 24th edition, cengage learning, mason, usa 19. weetman, p. (2006), financial accounting: an introduction, 4th edition, pearson education ltd., harlow 20. zack, m.h., (2002), “developing a knowledge strategy”, in: c. w. choo and n. bontis, eds., 2002, the strategic management of intellectual capital and organizational knowledge, oxford university press, new york, pp. 255-276. ias 27 consolidated financial statements – in ias 27 perspective mihai deju phd, “vasile alecsandri” university of bacău, romania abstract the aspects concerning the preparation and publication of the consolidated financial statements have been the subject of the settlement by the committee for international accounting standards (ias) even since 1976 with the publication of ias 3 “consolidated financial statements”. subsequently, the standard has been amended and revised successively, on several occasions. the latest version issued in 2008 includes changes on the accounting of interests that do not control and the loss of control on a subsidiary. the actual version also includes the subsequent amendments resulting from ifrs issued until 31st of december 2010. this paper presents the essential aspects of ias 27 (the actual version) and a practical example of how to elaborate consolidated accounts in accordance with this standard. key-words international accounting standards, ias 27, consolidated financial statements jel code: m41 the preparation and publication of the consolidated financial statements has been the subject of settlement by the committee for international accounting standards (ias) since 1976 with the publication ias 3 “consolidated financial statements” which was replaced in 1989 with ias 27 “consolidated financial statements and accounting of investments in subsidiaries”. this version was reformulated in 1994, in 1998 and 2000. for the purposes of the proper application of the ias 27, there have been developed sic 12 “the consolidationentities with special purpose” (december 1998) and sic 33 “the consolidation and equity method – potential voting rights and the allocation of holdings as equity” (2001). in 2003 iasb issued a new variant of ias 27 with its current title – consolidated financial and individual statements. the council for international accounting standards (iasb) carried out the revision of ias 27 consolidated financial and individual statements in 2003, as part of the project for the improvement of international accounting standards, the purpose of which was reducing the alternatives of subsidiaries’ accounting in the consolidated financial statements and accounting of investments in the financial statements of a parent company, of an associate, or of an investor. in the year 2008, i.a. s. b. in common with the council for financial accounting standards in the usa (f. a.s. b.) brought changes to ias 27, which referred, first of all, to the accounting of interests that do not control, and the loss of control on a subsidiary. in such circumstances, the iasb issued ias 27 (in 2008, with effect from july 2009), together with ifrs 3 “combination of enterprises” and fasb issued the declaration fasb no. 160 “interests which do not control in consolidated financial statements” and the declaration fasb no. 161 “combination of enterprises”. taking into account the fact that the users of a parent company’s financial statements need information concerning the financial position, the result of operations and the changes of the group financial position, as a whole, the council for international accounting standards set as primary objective of ias 27 (the present version) 1: “the improvement of relevance, reliability and comparability of the information supplied by the parent-company in the individual financial statements and in the consolidated financial statements for a group of entities under its control”2. the standard specifies: the circumstances in which an entity should consolidate the financial statements of another entity, subsidiary of the first; the accounting of the changes in the level of participation in a subsidiary’s equity; the accounting of investments in the case of the loss of a subsidiary’s control; the obligation to present information in the financial statements in order to evaluate the nature of the relationship between entity and its subsidiaries. the standard shall apply to the drawing up and presentation of the consolidated financial statements of a group of entities under the control of a parent company as well as for the accounting of investments in subsidiaries, within the entities controlled jointly and within the associated entities, when an entity chooses so, or is required by local regulations, to submit individual financial statements. in the standard, there are defined its main specific terms, such as:  the individual financial statements are those statements presented by a parent company, an investor in an associated undertaking or an associated entity jointly controlled, in which investments are recorded rather on the basis of direct holdings, than on the basis of the results and net assets reported by the company in which the investment was made.  the consolidated financial statements are the financial statements of a group, shown as financial situations of a single economic entity.  the control means the authority to conduct financial and operational policies of an entity, in order to obtain benefits from its activity. the existence of control is highlighted, in general, if the parent company owns (directly or indirectly, through subsidiaries) more than 50 % of the number of votes of an entity, except the cases where it can be clearly demonstrated that this type of property does not mean control. there is control when the parent company owns one-half or less of the number of votes of an entity, if: owns more than 50% of the voting rights, under an agreement with the other investors ; has the authority to conduct financial and operating policies of the entity by the statutes or contract; it has the power to appoint or to replace the majority of the members of board of directors or its equivalent, and if it controls the respective entity; it has the authority to hold a majority of the votes in the meetings of the board of directors or other equivalent body, and the entity’s controls is exercised by it.  a group is a parent company together with all its subsidiaries.  the parent company is an entity that has one or more subsidiaries.  the interests which do not control (minority interest) represent the equity in a subsidiary which cannot be assigned, directly or indirectly, to a parent company, they belonging to other shareholders than those from within the group.  a subsidiary is an entity, including a non-corporative entity (unrecorded legally), a kind of partnership which is controlled by another entity (known as parent company). the reflection of investments in individual financial statements, on holdings in other entities (subsidiaries, jointly controlled entities associated entities) shall be made at cost or in 1 the present version was issued in january 2008, with entry into force in july 2009. it includes the further modifications resulted from the ifrs issued until the 31st of december 2010 2 ceccar (2011), international financial reporting standards – ifrs, the 1st of january 2011, ceccar publishing house, bucharest accordance with ifrs 9 “financial instruments”. the revenue afferent to equity securities are recognized only as the investor receives the amounts of distributions made by the company in which he/she invested from the profits gained by the latter. any advances received in addition to such profits shall be regarded as a return on investment and recognized as a reduction in the investment cost. when a parent company or a subsidiary has the quality of investor in an associated entity (on which it exerts a significant influence) or is associated in a jointly controlled entity, the consolidated financial statements drawn up and submitted in accordance with ias 27 must be in compliance with the provisions ias 28 “investments in associated entities” and ias 31 “interests in joint-venture agreements”. a parent company must submit consolidated financial statements as if the group would be a single entity, including all branches in the consolidation (including those which have different activities). a parent company must not be required to prepare consolidated financial statements, if: it is owned in its entirety, or in part, by another company (with the unanimous agreement of shareholders, including of those who in other conditions do not have the right to vote); the instruments of debt or equity capital are not traded on a public market; it has not been submitted and is not in the process of submitting its financial statements to the commission for the securities or other regulatory body, for the purpose of issuing any type of instruments on a public market; and its parent company (final or intermediary) draws up and publishes the consolidated financial statements available for public use, in accordance with the international financial reporting standards. for the purpose of drawing up the consolidated financial statements, the parent company will use the consolidation procedures specific to the global integration method, combining its financial statements and those of its subsidiaries, item by item, by adding together all the similar assets items, liabilities, equity capital, revenue and expenditure. for the consolidated financial statements to submit financial information on the group, as one economic entity, the following operations will be made: a) the book value of the parent company’s investment company in each subsidiary (the value of the securities of participation) and the part of the parent company of the each subsidiary’s equity are eliminated; b) the distinct identification of the profit or loss of the consolidated subsidiaries concerning the interests that do not control; c) the identification, apart from the equity of the subsidiary and parent company, of the interests which do not control in the net assets of the consolidated subsidiaries. in drawing up the consolidated financial statements, there must be envisaged intra-group transactions, so that the balances, transactions, revenue and expenditure within the group will be entirely removed. the individual financial statements of the parent companyparent and its subsidiaries, used for the purpose of drawing up consolidated financial statements must be drawn up for the same date of reporting. in the case in which the reporting period of the parent company is different from the reporting period of the subsidiary, the latter will draw up additional financial statements at the same date of reporting of the parent company’s financial statements. when this is not possible, adjustments will be made for the effects of transactions or significant events that have taken place between the date of financial statements by the parent company and the date of financial statements of the subsidiary (the difference between the two dates must not be longer than two months). the consolidated financial statements will be drawn up using uniform accounting policies for similar transactions and other events in similar circumstances. in the case in which a member of the group use other accounting policies than those adopted in the consolidated financial statements for similar transactions and other events in similar circumstances, appropriate adjustments will be carried out in the financial statements and then, the respective financial statements will be included in the consolidation. also, the standard distinctly presents aspects characterizing the conditions of loss of control and the rules of accounting applicable to these situations as well as the aspects specific for the accounting of investments in subsidiaries, within the entities controlled jointly and within the entities associated, when they draw up individual financial statements. * * * we shall present as follows a practical example concerning the drawing up of the consolidated accounts in accordance with ias 27 “consolidated and individual financial accounts”. company “m” owns 80% of the voting right of company “f” fact that gives it the right to have an exclusive control. for the drawing up of the consolidated financial statements there will be used the method of global integration. we assume that the financial statements of company “m” and of company “f”, at the end of the financial year, are as follows: balance sheet drawn up on 31st december 2012 items tc “m” tc “f” fixed assets 125.000 68.000 equity securities “f” 40.000 stocks 55.000 42.000 receivables 20.000 35.000 cash 30.000 25.000 total assets 270.000 170.000 social capital 148.000 50.000 reserves 47.000 20.000 result of the financial year 23.000 15.000 debts 52.000 85.000 total equity and debts 270.000 170.000 profit and loss account on 31st december 2012 items tc “m” tc “f” operating revenue 100.000 60.000 financial revenue 10.000 15.000 total revenue 110.000 75.000 operating expenses 80.000 45.000 financial expenses 7.000 15.000 result of the financial year 23.000 15.000 it is considered that between the two companies there were no mutual operations. for drawing up the consolidated annual financial statements by the parent-company (tc “m”), in the consolidation journal, there will be reflected the following operations: a. operations concerning the drawing up of the consolidated balance sheet a) the taking over of the balance sheet items of tc “m” and tc “f”, in proportion of 100%: a1) the taking-over from the parent-company tc “m”: 270.000 125.000 40.000 55.000 20.000 30.000 % fixed assets equity securities “f” stocks receivables cash = % social capital reserves result of the financial year debts 270.000 148.000 47.000 23.000 52.000 a2) the taking-over from the branch-company tc “f”: 170.000 68.000 42.000 35.000 25.000 % fixed assets stocks receivables cash = % social capital reserves result of the financial year debts 170.000 50.000 20.000 15.000 85.000 b) it is registered the elimination of equity securities and the recognition of minority interests: 57.000 % = % 57.000 50.000 4.000 3.000 social capital tc “f” reserves tc “f” result of the financial year tc “f” equity securities “f” minority interests 40.000 17.000 c) it is registered the passage of the quota from reserves and the result of the branch to consolidated equity (80%): 28.000 % = % 28.000 16.000 12.000 reserves tc “f” result of the financial year tc “f” consolidated reserves consolidated result 16.000 12.000 d) it is registered the passage of reserves and the result of parent-company to consolidated equity: 70.000 % = % 70.000 47.000 23.000 reserves tc “m” result of the financial year tc “m” consolidated reserves consolidated result 47.000 23.000 b. operations concerning the drawing up of the consolidated profit and loss account: a) the taking-over in the consolidated profit and loss account of revenues, expenses and the result of the parent-company – tc “m” and the branch – tc “f” (in proportion of 100%): a1) from company tc “m”: 110.000 % = % 110.000 80.000 7.000 23.000 operating expenses financial expenses result of the financial year operating revenue financial revenue 100.000 10.000 a2) from company tc “f”: 75.000 % = % 75.000 45.000 15.000 15.000 operating expenses financial expenses result of the financial year operating revenue financial revenue 60.000 15.000 b) retreatment of the profit and loss account: b1) the result of the financial year of parent-company (tc “m”) is transferred to “the consolidated result”: 23.000 consolidated result = result of the financial year tc “m” 23.000 b2) the result of the branch (tc “f”) is divided between “the consolidated result” and “the result quota for minority parties”: 15.000 % = % 15.000 12.000 3.000 consolidated result quota for minority parties result of the financial year tc “f” 15.000 c. drawing up the consolidated annual financial statements on the consolidation journal: a) consolidation table for drawing up the consolidated balance sheet: consolidation adjustments items taken from tc “m” taken from tc “f” debit credit consolidated balance sheet group „ a ” fixed assets 125.000 68.000 193.000 equity securities 40.000 40.000 stocks 55.000 42.000 97.000 receivables 20.000 35.000 55.000 cash 30.000 25.000 55.000 total assets 270.000 170.000 400.000 social capital 148.000 50.000 50.000 148.000 reserves 47.000 20.000 4.000 16.000 47.000 results of the financial year 23.000 15.000 3.000 12.000 23.000 consolidated reserves 1.000 47.000 63.000 consolidated result 12.000 23.000 35.000 debts 52.000 85.000 137.000 minority interests 17.000 17.000 total equity and debts 270.000 170.000 155.000 155.000 400.000 b) consolidation table for drawing up the profit and loss account: consolidation adjustments items taken from tc “m” taken from tc “f” debit credit consolidated result account group “m” operating revenues 100.000 60.000 160.000 financial revenues 10.000 15.000 25.000 total revenues 110.000 75.000 185.000 operating expenses 80.000 45.000 125.000 financial expenses 7.000 15.000 22.000 total expenses 87.000 60.000 147.000 result of the financial year 23.000 15.000 23.000 15.000 consolidated result 23.000 12.000 23.000 12.000 result quota for minority parties 3.000 3.000 bibliography 1. deju, m. (2008), contabilitate aprofundată. concepte. modele. studii de caz, alma mater publishing house, bacău; 2. feleagă, n., feleagă, l. (2007), contabilitate consolidată. o abordare europeană şi internaţională, economic publishing house, bucharest; 3. ceccar (2011), international financial reporting standards – ifrs, the 1st of january 2011, ceccar publishing house, bucharest. microsoft word apostoaie constantin marius_eng.doc statistical analysis of the structure and dynamics of the number of students in public education over the past two academic years from bacau eugenia harja, „vasile alecsandri” university of bacau, romania abstract bacau public university, represented by the “vasile alecsandri”university from bacau, is the third such center in the region. with more than 7400 students, it represents 7.5% of north-east region and 1.1% of the total country. the number of students registered in the academic year 2009/2010 a positive dynamic in total (11.9%, 792 students) than the previous year. for the university studies, the number of students increased by 5%, dynamics above average recording the faculty of sciences (58.3%), faculty of movement, sports and health (15.1%), faculty of economics (+ 13.3%). the students in the academic program stand for 73.5% of the total, from the masters programs 15.2%, from the postgraduate masters 9.2%, other postgraduate courses 1.5% and 0.6% doctoral school. in the last two years, over 3200 graduate students have completed the university. keywords students, graduates, bachelor degree, university master, postgraduate master, phd, dynamic jel codes: i21, c10 the university education from bacau grew increasingly after the 90s, being outlined as a center of increasingly value to train future specialists needed for the local labor market and beyond. public university education had in the academic year 2008/2009 a share of almost 70% of the total and at the beginning of 2009/2010 there were enrolled 7442 students in all forms of education, 11.9% more than the previous year. a higher dynamics was recorded at the students that pay the university tax, where the number of students increased by 15.7%. according to the latest published statistics, the public university education from bacau ranked third in the northeast region as students number, after iasi and suceava and ranks 17th in the country. total number of students enrolled in university licensing programs this year increased by 5% (263 students) as compared to the beginning of the previous academic year, representing 73.5% of all students. the only decline was recorded in the faculty of engineering (% -14.9 respectively -313 students), the situation is due to the inclusion in the previous academic year of the 5th year for the last promotion of education before implementing the bologna process. studies and scientific researches economic edition, no. 15, 2010 231 2008/2009 2009/2010 license all university students, of which: 5212 5475 5,0 263 faculty of letters 553 593 7,2 40 education day 553 593 7,2 40 faculty of engineering 2104 1791 -14,9 -313 education day 2104 1791 -14,9 -313 faculty of movements sciences, sports and health 677 779 15,1 102 education day 571 568 -0,5 -3 education with reduced frequency 106 211 99,1 105 faculty of sciences 314 497 58,3 183 education day 292 413 41,4 121 education with reduced frequency 22 84 281,8 62 faculty of economics 1492 1691 13,3 199 education day 869 903 3,9 34 înv. frecven redus 41 176 329,3 135 education the distance learning 582 612 5,2 30 teacher training department 72 124 72,2 52 (source: calculation after d.j.s. bacau data) table 1. students enrolled in the license programs, dynamic in the last two years students enrolled at the beginning of academic year dynamics (+/%) dynamics (+/students) 553 2104 1791 677 779 314 497 1492 1691 593 -500 1500 3500 5500 2008/2009 2009/2010 letters engineering movement sciences sciences economics figure 1. students enrolled in the license programs, at the beginning of the university year, by faculties source: calculations after d.j.s data in the bologna cycle, of 4 years, it remained constant the number of students enrolled in mechatronics specialization, and it increased in the specializations: engineering and quality management (82.1%, 23 students), the industrial energy (34.2% +40 students), the food engineering (7.2%, 17 students). the number of students enrolled in other majors decreased and for the energy management and industrial design was no more organized a series in the first year. in the faculty of letters, the total number of students enrolled increased by 7.2% (+40 students), but decreases with 54.8% of the number enrolled in history profile. the faculty of science movement, sports and health recorded increases by 15.1% (102 students), an increase achieved through education made solely on account of low frequency university, while the number of students in the form of daily university decreased slightly (3 students). in the therapy specialization, the number of students enrolled increased by 6.1% (+18 students) in comparison to the beginning of the previous year and physical education studies and scientific researches economic edition, no. 15, 2010 232 and sports increased by 5.5% (+21 students). two new specializations have been established, occupational therapy (24 students enrolled) and sports and motor performance (39 students enrolled). 58,3 15,1 13,3 7,2 5,0 -14,9 -50,0 0,0 50,0 100,0 faculty of sciences faculty of movement sciences, sports and health faculty of economics faculty of letters total students of the universuty faculty of engineering % figure 2. dynamics of the students enrolled in the license programs at the beginning of the university year 2009/2010 unlike 2008/2009) +/-% source: calculations after d.j.s data in the faculty of sciences on the total number of students enrolled increased by 58.3% (+183 students), 66.1% of the increase is on account of the form of daily teaching and 33.9% fr. for the part time teaching, the number of students enrolled increased by 3.8 times (+62 students). increases were recorded in all specialties: informatics with 47.6% (69 students), mathematics with 40% (+20 students) and biology with 9.2% (+11 students). it was also formed a new specialization, ecology and environment, with a total of 83 students enrolled at the beginning of the university year. due to the above, the faculty of sciences experienced in this regard the highest relative dynamics, after dppd. for the faculty of economics was recorded an increase in total number of students enrolled 13.3% (+199 students), 67.8% of the growth being achieved at the expense of the reduced frequency education of accounting and management information systems specialization, 17.1 % due to daily education, 15.1% due to the distance learning marketing specialization. the faculty of economic sciences had at the beginning of the year 53.4% of students enrolled for daily education, 36.2% for id and 10.4% for fr. it was also formed a new specialization, business administration, with a total of 83 students enrolled in early, and the two older specializations have made gains on account id / fr, respectively 14.6% in accounting and administration (+76 students) and 4.1% in marketing (+40 students). for the teacher training department, the number of students enrolled increased by 72.2% (+52 students). on forms of funding, the budgeted number of students decreased by 4.8% on all university, a decrease only because of the disappearance of the fifth year of the faculty of engineering. instead it increased by 11% the number of students paying university tax. studies and scientific researches economic edition, no. 15, 2010 233 225 261 1277 1088 172 188 182 204 122 131 328 332 827 703 505 591 132 293 1370 1560 0 500 1000 1500 2000 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 faculty of letters faculty of engineering faculty of movements sciences faculty of sciences faculty of economics dppd tax budget figure 3. students enrolled in license education, by financing forms source: calculations after d.j.s data of all students in budget education in 2009/2010 for the license education, the faculty of engineering holds 57.8%, 13.9% the faculty of letters, faculty of sciences 10.8%, 10% the faculty of movement, health and sports , the faculty of economics 7% and 0.6% dppd. of all students paying fee, 43.4% are owned by the faculty of economics, 19.6% by the faculty of engineering, 16.5% by the faculty of movement, sports and health, 9.2% by the faculty of letters, 8.2% by the faculty of sciences and 3.1% by the faculty of dppd. overall, it can be said that the number of students enrolled at the “vasile alecsandri " university from bacau in the license programs is high compared to the economic conjuncture and the target population in the process of decline. the total number of students enrolled in the university to university master's programs this year increased 2.6 times(+697 student), due to the start of these programs also in the faculty of engineering, and also because of the existence for the first time of two studies in such programs for all other faculties. (see annexes 5 and 6). at all colleges, it increases the number of graduates because of this issue. for all the students enrolled in the master programs at the beginning of this academic year, 36.5% were graduates from the faculty of economics, 20% from the faculty of movement, sports and health, 16.8% from the faculty of engineering and 13.4% from the faculty of letters and 13.3% from the faculty of sciences. studies and scientific researches economic edition, no. 15, 2010 234 55 105 129 53 103 51 77 39 80 26 47 61 51 123 23 72 135 333 0 50 100 150 200 250 300 350 400 450 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 faculty of letters faculty of engineering faculty of movements sciences faculty of sciences faculty of economics tax budget figure 4. students enrolled in university master programs, by financing forms source: calculations after d.j.s data the number of master students benefiting from budget funds increased almost 2.5 times in total (+296 students), mainly due to the emergence of the first year of studies at the faculty of engineering, as well as of the second year of the other faculties (see annex 6). increases by 2.7 times were observed also at master students in the tax regime (+401 students) for total university. the highest dynamic in this regard was registered at the faculty of economics (+ 2.5 times, +198 students). the total number of students enrolled in the university postgraduate masters programs this year decreased by 20% (-172 students), all the faculties recorded reductions except the faculty of economics in which they increased by 5% (+ 12 students). the largest decreases in both relative and absolute size, have been registered by the faculty of letters (-73%, -58 students) and by the faculty of movement, sports and health (-49%, 96 students). these decreases were mainly due to the emergence of new programs from the 2008/2009 academic type master bologna, which offset the decrease in students enrolled in the postgraduate master's programs, the new bologna license cycle graduates type not being supported by the law postgraduate masters programs . studies and scientific researches economic edition, no. 15, 2010 235 43 21 155 146 57 34 14 14 42 20 37 109 94 150 77 28 22 221 255 1 0 50 100 150 200 250 300 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 20 08 /2 00 9 20 09 /2 01 0 faculty of letters faculty of engineering faculty of movements sciences faculty of sciences faculty of economics tax budget figure 5. students enrolled in the postgraduate master programs, by financing forms source: calculations after d.j.s data the total number of doctoral students enrolled in the university increased in total by 59% (+16 phd), the budgeted seats increasing of 2.2 times (15 phd), and the tax places increasing by 7% (+ a phd). all doctoral students belong to the faculty of engineering, the other departments having no authority to iosud. 13 28 14 15 0 5 10 15 20 25 30 35 40 45 2008/2009 2009/2010 faculty of engineering tax budget figure 6. students enrolled in the doctoral programs, by financing forms source: calculations after d.j.s data studies and scientific researches economic edition, no. 15, 2010 236 the number of students for all forms of education (bachelor, university master, postgraduate master, and postgraduate training courses and doctoral) increased from 6650 students in 2008/2009 academic year, to 7442 students in the 2009/2010 academic year (11, 9%, +792 students). the most relative dynamic is met in the faculty of economic sciences (58.6%,+252 students) and the most absolute dynamic is met in the faculty of sciences (450 students, equivalent to 23.3%). the only college to have been dropped by all is the faculty of engineering (-5.7%, representing -143 students). the decrease was observed bothe at the budget students (-3.7%, -54 students) and at the fee-paying students (-8.3%, -89 students). a decrease was also registered at the number of fee-paying students (-2.8%, -11 students) at the faculty of letters. the number of 7442 students in all forms of education points out clearly the university's increasing development in this regard. if we take into account the economic crisis and the demographic decline, factors acting generally in reducing the number of students, the university development appears stronger. statistical data shows that the number of graduates in 2009 was 1.532 for total university, decreasing by 7.7% (-131 graduates). this decrease was due exclusively to the completion in the previous year of the second generation of students from the license cycle, respectively of 4 years and 3 years for the bologna type, in all specialties, except the faculty of engineering, in which this situation occurred this year and the number of graduates increased 2.2 times. 122,8 -21,3 -34,1 -44,3 -47,3 -10,3 -100,0 -50,0 0,0 50,0 100,0 150,0 faculty of engineering total graduates of the univers ity faculty of letters faculty of movem ent sciences , sports and health faculty of econom ics faculty of sciences % figure 7. dynamics in the number of graduates of the license programs at the end of the university year 2008/2009 unlike 2007/2008) +/-% source: calculations after d.j.s data studies and scientific researches economic edition, no. 15, 2010 237 the share of the graduates in the total university respects the share of students, with the specific aspect mentioned before, of an increase in 2008 in the share of graduates for the faculties of economical sciences of movement, sports and health, and letters, and in 2009 for the faculty of engineering. 18,0 41,4 25,7 19,7 14,5 9,9 8,7 11,0 6,5 44,6 0% 50% 100% 2007/2008 2008/2009 engineering economics movement sciences letters sciences figure. 8. structure of the graduates of the license cycle,by faculties source: calculations after d.j.s data as noted in the analysis of the dynamics of statistical data, public higher education has diversified in both its specializations offered and the level of education, covering the license cycle, master, and in some specialties also the doctoral. the number of students enrolled has a positive dynamics, continuing the upward trend after the 90s. better integration of graduates of public education university in bacau into the labor market and the desire of many high school graduates to pursue a higher form of education, explains the high dynamics in the recent years. the number of 7442 students in all forms of education points out clearly the university's increasing development in this regard. if we take into account the economic crisis and the demographic decline, factors acting generally in reducing the number of students, the university development appears stronger. bibliografie 1. harja, e. (2009), statistic i econometrie, ed. alma mater, bac u 2. harja, e. (2010), marketing, raport de evaluare intern pe anul 2009 al c.r.d.f.c. al universit ii „vasile alecsandri” bac u 3. jaba, e. (2005), statistic , ed. economic , bucure ti 4. institutul na ional de statistic , (2009), anuarul statistic al româniei, bucure ti 5. www.ub.ro 6. www.insse.ro studies and scientific researches economic edition, no. 15, 2010 238 microsoft word tutuianu ion engl. the judicial system of credit banking in moldova lector univ..dr. ţuţuianu ion, university ”vasile alecsandri” of bacau abstract: in the transition period to the market economy, the currency, the bank, the credit, play an important role in the national economy. known since the time of hamurabi, the credit has expanded, experiencing a growth in moldavia as well, along with the growth of commercial activity, represented by loans, credit transaction, the apparition of credit title based mortgaged, but especially after 1834, when the birth of a credit institution was planned, in the form of action based anonymus societies. keywords: money loaner, bank, moldavia especialy after the treaty of adrianopol took place, in 1829, the credit in moldavia started to develop, a long with the ingrease of production of in cities and villages, which lead in turn to the increase of commercial activity. the documents of the age mention as credit operation especially loans and sales on credit, as well as the aparition of credit title based morgages. up to 1834 the birth of a credit institution was planned, in the form of action based anonymus societies , but to no prevail. one can assume that the bailiff acts constituted credit operations, the debts made by the landowners had become so problematic, that it contributed to the bissapearence of this social class around the revolutionary yeard of 1848 the bailiff contributed to the downfall of manymerchats and craftsmen, yomen or peasents who couldn “t pay their debts. sunk in debt, the moldavian landowners tried to avoid economic ruin by creating a foreigm capital style bank, with the aim of obtaining lucrative loans, and to break the monopoly of the local bailifs. in 1847, a group of 20 moldavian boyards got touch with the merchant reinecke, from leipsig, in order to establish a bank called “the german private credit institution”, a bank which would loan the landowners with aleast 2% under the legal interest, which was 10% per yers according to & 1332 of the callimach cod . the bank would loan according to the mortgage system and it would make payment easier through annual andrisations, which in turn implied longer terms, because of the social –political turmoil in 1847-1848 s europe and the unfaudrable climate to establish a credit institution , reinecke consequently suspended his banking proiect in moldavia. also , the young moldavian progresists realized that agriculture, commerce and industry would prosper through cheap credits, which convinced them to include in the revolutionary demand of 28 march 1848 the establishment of a credit bank “in order to ease the tradesmen , so that the commerce may bloom”, as well as “thestrict keeping of the laws that form the basis of the credit”, no motter the status of the person in order to keep “the safety of commercial relation”. 1 1 punctul 16:”păzirea cu sfinţenie pe care se reazemă creditul public, şi aceasta în privirea tuturor fără osebire,pentru siguranţa relaţiilor comerciale”.17.informarea unui tribunalde comerţ la iaşi; codul de comerţ al franţei, consfinţit de regulament, să fie tălmăcit în limba ţării. 18. 123 studies and scientific researches ‐ economic edition, no. 14, 2009  in mai 1848, vasile alecsandri, in manifest in the name of moldavia, of manhood and of god , reinserted the points of the petition of 28 march, further developing then, a long with the ones reffering to the public credit (16) the commercial tribunal(17) and the credit bank (18)2 showing that the lack of a national bank, “ all the profit of trade is in the hands of the bailifs” and that these speculated the people wich “crocked bailiffs”, and to put an end to this system of thieves, establishine a national bank was compulsory, and to satisfy the commercial needs, a credit bank was indispensable. then, mihail kogălniceanu , in august 1848 , published the broshure : „the needs of the national party in moldavia”, edited by request of the revolutionary comitee in moldavia, in which it declared that „promulgating the laws of credit in order to assure the correct payment of ones debt, with no exception in regards of the applicants” as well as “the establishment of a national bank,one of credit and of the exchange houses” were natural demands, for which no further explanation will be necessary.3 the banking issue didn’t incomodate mihail sturdza,4 the one who supressed the revolutionary movement, as suchm he agreed to establish a bank. this beeing sad, on juky, 26, 1848, the brutal ruler who disposed thriftly with the revolutionaries, adressed to the eytraorginary administrative counsel a propostion, in which was stipulated that the payment of the loams should be done accordingly with the legal requiverements of the civil and comercial code, with no exception in regards to status, furthermore, declaring that „in the moment that the capitalists will come to an agreement”, the birth of a bank will take place “in order to facilitate trade”.5 known for his thirst for money, the ruler saw important personal gaines from this business, but nothing took place until a year later, when he abdicated.6 the next ruler , grigore ghica, had to face the difficult situation in which the state was, and had to make huge unfavorable loans in order to fill the state’s coffers. that is way, in order to resolve his financial problems, hi establishes a foreign capital bank, which collapsed one year later, and the local bailiffs continued torule the market. the moldavian market was dominated in those years by a small hand of bankers from iasi and galati, which professed having their firm registered at the treasury and by payng a patent. along with the bankers, there were the bailiffs , which primordial occupation was the currency exchange, as well as other mergantes and even private individuals. the bankers was had foreing relation, benefited also of a steady flow of foreign capital and were to be come the masters of the moldavian economic life and possessed a high influence in the state apparatus. the most influent bank at the time was michael daniel and son 7, which under the reign of mihail sturdza had a very privileged position, as the one who payed the rulers debts , made in order to secure the throne. having strong ties with banks and firms in frankfurt am main, and especially with the rothschilds, the daniel bank obtained the favour of the international finance taicooms, which allowed her to make big profitable business with the greal moldavian landowners and with the mercantes banii de rezervă să fie întrbuinţaţi în formarea unei bănci de scont pentru înlesnirea neguţătorilor în înflorirea comerţului ».textul integral în cornelia bodea, 1848 la români. o istorie în date şi memorii, vol.i, editura ştiinţifică şi enciclopedică, bucureşti,1982,p.359361. 2 textul integral in ibidem,p. 385-397 pe care alecsandri îl semna ca “mădular al comitetului ales de obşte pentru redacţia cererilor sale „. 3 textul publicat la cernăuţi avea 104 p.am folosit textul din ibidem,p.647-682. 4 d. ciurea, moldova sub domnia lui m.sturdza, iaşi, 1947, p. 95. 5 g.zane , cea dintâi bancă naţionalăa moldovei, în arhiva,xxxiii (1926),p.111. 6 vezi şi m.g. romaşcanu, banca naţională a moldovei, bucureşti, 1932, p. 36-37. 7 m.g.rmascanu, zarafia michael daniel, bucuresti, 1933, p. 5. 124 studies and scientific researches ‐ economic edition, no. 14, 2009  in the country.8 the senior manager of the bank was israel chaim daniel, obtained a hich status among the boyards, so much so that he received the rank of finance minister in 1857 from chancellor n.conachi-vogoridi. the michael daniel bank was very prudent in giving credits and only with serious guaranties, which brougnt it prestige and solidity , even if in terms of capital , other enventures over took it. only towards mihail sturdza it showed generousity when he was reigning that is, with all other, prudence9 being its prime feature, in contrast with leiba cahane and moise idel vecsler, wich satisfied easier the demand of a loan, being capable of easily overtaking the other bank in moldavia in terms of yearly net ingrose. the two bankers parted in 1855, continuing separately their businesses leiba cahane maintained a proieminent position , therefore the boyards intrusted it with thousands of “galbeni” into their bank accounts. in many turns , when the coffers ran low, it appealed to leiba cahane10 .having as a partener , the good for nothing alecu ghica, the son of grigore ghica , and with a hefty vienese capital which he invested wisely in moldavia, he offered by the boyards. we have the example of princess olga obolinski, born dturdza , whom not being able to obtain a loan from the national bank of moldavia, in 1857, she obtained the sun of 10.000 galbeni from leiba cahane, by morgaging her doutal estate. this banke would prove ever more impoudent with his banking decisions, which costed him significant damages and eventually bankruptcy in 186911, while his former associate opted for fewer and less risquier endevours. after parting from leiba cahane in 1855, moise idel vecsler, saw himself overshadowed by his former companion, but was to survive among the top bankers in moldavia. from the most important transaction that vecsler overtook, we recall the loans given to iorgu aslan (postelnic) 11.200 galbeni, to nicolae negruţi finance minister 14.000 galbeni, to princess catinca conachi vogoridi 7756 galbeni, to nicolae miu 12.635 galbeni, and also to be found in 1864 in a partnership with michael daniel or with the woodchip trader marcu sin lupu of piatra neamţ. the public appreciation for the banker vecsler ,would become evident in his cooperation with iasi’s city counsel, which assembled the most respected tradesmen and bankers, for deciding on the exchange rate of several cuprencies , in november 1859.12 the iacob neuschotz bank , grew from small exchange operations to major businesses, having among it’s cuents the most influent boyards, and becomes almost as prestigious as michael daniel and son towards the end of 1864. this bank gave in 1855 to the merchant dominic berezniţchi a credit of 10.000 galbeni, ingreased in 1869 to 18 000 galbeni, it gave to costachi ghica vornic, a loan of 11000galbeni and in 1861 , it cessions to iancu alecsandri 13500 galbeni, from david and anton luca goilav.13 the leiba meierhofer bank, which also dealed with estate speculations, brady cereal and salt commerce, but with it’s main activity being loans, quickly affirmed itself at the top in this period . among the clients of this bank we find mostly mercantes, but also boyaros, such as: panait balş , alexandru catargiu, ioan greceanu vornic, alexandru c. sturdza vornic, alecu aslan hatman, but also m.kogălniceanu, who imtitles through a special act this banker to obtain the sums indebted from the military 8 ibidem,p.9-15, 9 dezvoltarea economică a moldovei între anii 1648 şi 1864, editura academiei, 1963, p.386. 10 .gh.m.dobrovici, istoricul datoriei publice a româniei, bucureşti, 1912-1913, p. 61 şi 467. 11 dezvoltarea economică a moldovei, p. 386-387. 12 ibidem, p.388. 13 ibidem, p.388. 125 studies and scientific researches ‐ economic edition, no. 14, 2009  intendency through several advantagedus supplies to the army. even the state treasury makes loans from this bank, agreeing to pay interest above the legal requirements.14 if michael daniel and son and leiba cahane, moise idel vecsler , iacob neuschotz and leiba meierhofer banks dominated the moldavian market at the time , we must remember other bankers from iaşi as well, like avram iţic cofman, avram cohn, solomon ber, the firm w. wechsler, hornstein and wortman, a.m.byk and sons etc. if the banks or the bankers were all in the capital, only in the second commercial city in the country , galaţi, were other bankers with ties outside the country, such as: marcu tal, the abramowitz broters, the schlinger broters, i mendel and i.o.rotemberg, as one can observe , these were jews as well. the abramowitz brothers received the privilege to transfer the tribute to constantinopole, the retribution of “capuchehaei” and the subvention of a french newspaper writer from the officious gazette of the ottoman government. they took 12% interest from the loans given to the molavian state, and for the funds transferred to constantinopole only 0,050%. the schlinger brothers were entrusted with recuperating the funds invested into the bankrupt local office of the moldavian national bank’s15. we mention that in 1856, an office of the otoman bank16 opened in galaţi, the first branch office ever to in moldavia of this importance, the leadership beeing given to a.l.powell, the administrator of the export meathaose and of the meat can factory in galaţi , and to h.a.jakson.the primary objective of this branch office was the export of romanian product , such as wheat and corn, but it also did credit financing. at first , the office adopted an unprivileged stand rowards the goverment, but it soon changed in atitude, after the establishment of the bucarest office, and this time, the romanian goverment makes a loan on 10 of august 1864 from the otoman bank and from the stern brothers in london, consisting in the sum of 718.548 pounds, with a 7% interest and a 2% buffer obliging itself to give back 916.000 pounds. in 1864, the galaţi branch lichidated its properties and was replaced by the branch office of the bank of romania.17 in 1950 , the moldavian government had in mind to establish a privileged bank with german capital with the role of emission , credit and mortgage bank, it’s prime objective giving long term loans , with low onterest. the international stage prohibited the completion of the project until the 7/19 may 1856, when grigore ghica , on the basis of a decision of the rulers counsel, grants friedrich ludwig nulandt, the leader of a credit institute in the dessau dutchy, the privilege to greate an emission , a credit and a mortgage bank, under the firm “the bank of moldavia”, constituted on an anonymous action based society, with a capital of 10.000.000 marks from prussia the bank had exclusivity on emiting bancnotes, with al least a third in gold as back up, the rest being “sinete” and title of commerce , with a three months at most. the bank was authorized to carry credit operations as well, to receive suns or to give sums by morgage etc. the privilege given to the bank extended for 25 years , and would queietly prelomg itself for amother 10 years, if two years prior to the deadline, the government wouldn’t manifest a different opinion . on the pressures of austria, who wanted a vieneese banker in nulandts place, the chancellor teodor balş, didn’t gave his approval for the bank to function without the a greement of the ottomans, wich obligate nulandt to go to constantinopole, where he obtained a letter from the vizir which contained his consent, under the name of “the national bank of modavia”. the bank opened on 12/24 march 1857, later on establishing a brangh office in galaţi. from the beginning, there were many requests for loans, many those in debt transforming their short term debts contracted from other banks or individuals in long 14 ibidem,p. 389. 15 ibidem, p.389-390 16 gh. ravaş, din istoria poporului românesc, bucureşti, 1955,p.41. 17 “curier financiar”, din 18/30 decembrie 1877, p. 342. 126 studies and scientific researches ‐ economic edition, no. 14, 2009  term debts to the national bank with a lower interest. as the debts of the national bank from abroad were long term ones, and its loans being long term ones, especially mortgage loans to be recovered in 17 years, and the fact that the owners couldn’t suppy more fund because of the lack of profibility, the bancnotes couldn’t be put into circulation ove to the lack of the legal metal backup there after, the world economic crisis at the end of 1857 didn’t convinced the german loaners to accep any prolonging, all of which constrained the national bank of moldavia to suspend its payments on 11/23 march 1858, and disappearing after only one year of functioning.18 on 10april 1858, the chancellor n.conachi-vogoridi, approving the government’t report, decided to communicate to the bank that “if in two months it won’tsettle all her debts and the act of concesion”, the privilege will be annulled19. because after the deadline had expired, the bank didn’t resume it’s payments, on the basis of the governments raport from 11/23 june 1858, the chancellor annulled all privilages given to nulandt in 1856, implementing the measures for seem in the commercial code “ in order to assure the persons whom had the right to the bank’s capital.”20 soon, on the 19 of june 1858, the iasi courthouse, section 2, having into fact two complaints made by two bank owners remarked that the national bank of moldavia was unable to pay its does from 11/23 march 1848, and in accord with article 440 from the commercial code , the bank was declared bankrupt. the court named one of its repressentatives, dimitrie filipescu (spatar) as judge comisar of this bankrupsy,as well as two bankruptcy judge extra., one of which being m. kogalniceanu (vornic). as a consequence to the courts decision, the main german creditors of the national bank, send delegates to iasi for negociations, and finally, agreed to give to oasi courthouse, section ii, the sun of 7116 galbeni in cash, and mortgage rights in value of 10.000galbeni this agreement convinced the iasi courthouse, section ii, on 6 november 1848, along with the retraction of the creditors complaints and that “were there isn’t a complain issued by a creditor, one can’t speak of a bankruptcy”, decided to overrule the bankruptcy request previously made. 21the government refused to give back the privilege given to nulandt, subseqvently, the bank couldn’t return to the priveleges lost in 11/23 june 1858. this way , the national bank of moldavia became from a privileged institution , to “establiment private “ credit institution , after long negociations, through a royal decree, confirming its new status, in 186122 under the name of “the bank of moldavia”, lasting until 1877, when its owners decided to liquidate its assets. one can observe that the national bank of moldavia gave loans in totol of 633776 galbeni to 47 debitors, of which the sturdza fanily obtained 120.000galbni, followed by grand boyards, such as rosetti-roznoveanu, ghica , mavrocordat, catargiu, mavrogheni, and cantacuzino among the mortgage owners being alexandru ioan cuza withand m. kogalniceanu with 1000 galbeni, and as a chirografar debitor. at an active of 970108 galbeni, this banks passive was of 1135446 galbeni. from its transformation to its voluntary dissappearence in 1877, the bank of moldavia steadily decreased its operations, having at its core, recovering the loans it gave .23 aside the institutions mentioned and the authorized bankers, there were also the bailiff who speciality was currency exchange, due to the lack of a 18 victor slăvescu, viaţa şi opera economistului nicolae şuţu , 1798-1871, bucureşti, 1941, p. 470-475; g. zane , politica economică a principatelor în epoca unirii şi capitalului străin , în ‚studii”, xii (1959), nr. 1.p. 223-262. 19 buletinul oficial al moldovei din 17 aprilie 1858,p. 121. 20 ibidem, 15 iunie 1858, p. 207. 21 ibidem,adaus la nr. 91 din 13 noiembrie 1858, p. 230 22 monitorul official al moldovei, 21 ianuarie 1861, p. 353-355. 23 c.i.bratianu, istoria politicii noastre monetare a bancii nationale, i, 2, bucuresti, 1932, p.140-147 127 studies and scientific researches ‐ economic edition, no. 14, 2009  national currency in 1831 there were 62 bailif and 7 bankers, for that 1760 only 16 bailif remained and id bankers. the 2 bailif made snall credit transactions, their usual clientele being the small merchants and artisans from the slums, the loans they gave never exceeding 100 galbeni. there were also private individuals, public utilities institutions and even court houses who have made credit operations in this period . the grand boyard loaned thousands of galbeni, but the biggest credit business was made by the jew , josef goldental, remembered in the documents as a nerchant, to whom other aledgedly foreigners came, and whom loaned large sums to the local debitors.. also wealthy medies loaned, but eve these appear mostly with foreien names, such as adalbert rainer dr. teofil gluck. also to be remembered , clerics sucs as: highclergyman anania , highclergyman macarie , then the abbot of “trei ierarhi” monastery in iasi, senior economic advisor vasile dioghenide, sister elisabeta cazimir, archbishop sofronie miclescu, the protestant reverend franche, the evanghelic churc in iasi, issued loans to merchants, estate bailiffs boyards and even to the needy which twey then executed with all the harshness of the law when they didn’t or coucon’t return the money in time. even the ruler, grigore ghica was indebted to the brothers grigore and leon cantacuzino with 10.000 galbeni, the loan being backed-up by the hangu estate from neamt 24 county or to costachi moruz with 4000 carboave25 . even the ruler alexandru ioan cuza gave an annual interest of 5% to the indebted sun of 6000 galbeni to alecu jora26. the sf.spiridon monasteryof iasi loaned the costache sturdza (logofat) in 1850, with 40.000 galbeni, and in the monastery’s buget of 1859 of the debitors reach the sun of 731492 lei27 . becauze the courhouses deposits were suns originating from orphan funds, from the dottery of merried women, from bankrupcyes etc., in order to remain sterile, the court houses placed them into mortgage loans, therefore autting important sums in circulation. these were the institutions and the individuals who made credit operations in moldavia in the middle of the xix century, and in the yars of the principality, on the basis of the legislation which authorized and controlled these financial affairs.28 the union of moldavia and valahia was to put the cornerstones of the modern state of romania, also under the aspect of taz and commercial legislation, so much so a new beginning of the judicial regine of credit operations. the astablishement of the house of economies and consemnations as a state owned bank, with a warrantz for its deposits, would further consolidate the safety of its deposers economies, and banking discipline would follow the blueprint of the europeen nations with tradition and banking stabilitz. 24 buletin official al moldovei, 10 februarie 1850,p.58. 25 idem , 7 iunie 1851,p.179 26 .monitorul official moldovei,7 martie 1861,p.499 27 idem, adaos la nr.67 din 20 august 1859,p.206. 28 vezi si dezvoltarea economica a moldovei, p. 383-398. 128 titlul lucrării emu – “optimum” or “viable” currency area? iulia andreea bucur ph.d, “vasile alecsandri” university of bacău, romania abstract although the increasing heterogeneity as an effect of european union enlargement, referring especially to the last two waves, is perceived as a single internal market and also euro single currency risk, european monetary union represents an important step towards deepening economic integration. controversy on the optimum currency area issue has created difficulties in empirical research effort to find appropriate responses to the emu dilemma: is euro zone an „optimum” or rather “viable” currency area? key-words european monetary union (emu), optimum currency area (oca), euro zone, asymmetric shocks jel code: e42, f15, f33 introduction in 1999, eleven member states of the european union decided to give up monetary autonomy in favor of the european common currency, creating economic and monetary union, which has gradually expanded, reaching now 17 member states. from the theoretical perspective, the achievement of the emu is based on the theory of optimum currency area, reason for which, the present paper aims to analyze the ambitious and, at the same time, the risky european monetary project in the light of this theory. multitude of research on euro zone had oca theory as a starting point, both in terms of individual properties1 (employment and capital, wages and prices flexibility) and in terms of meta-properties2 – the result of individual criteria aggregation, especially synchronization of business, whose evolution after the lunch of the euro has received a special attention. a brief review of the literature on oca theory although some ideas appears milton friedman (1953) and james edward meade (1957) works, oca theory bases are robert mundell (1961) studies which, moreover, introduced the concept of oca referring to the geographical area that would benefit from a single monetary policy under a common currency and fixed exchanges rates. considering optimum currency area as a group of regions characterized by a sufficient mobility tendency to ensure full employment when one region is affected by a shock, mundell (1961) analyzed in his research the conditions that can ensure a proper functioning                                                              1 see lopez, c. and papell, d.h. (2007), berger, h. and nitsch, v. (2008), fratzscher, m., and stracca, l. (2009), campolmi, a. and faia, e., (2011) 2 mongelli, f.p. (2005), what is european economic and monetary union telling us about the properties of optimum currency areas?, journal of common market studies, volume 43, issue 3, pp.607-635 of a monetary union when emu was in draft, sensing challenges that states wishing to participate at the monetary unification has to face with. mundell distinguish the basic properties that define the status of an optimum currency area: the high level of openness of the member states economies, a high mobility of labor and capital, including increased flexibility of wages and prices and, last but not least, the existence of transfers tax where tax revenues are redistributed deployed to areas in recession. all these criteria, given that economies are prone to asymmetric shocks, i.e. not affected by the business cycle synchronous. the classical contributions of ronald mckinnon (1963) and peter kenen (1969) joined mundell’s study. mckinnon considers that as a country is increasingly integrated into international trade, its economy could enjoy more benefits as a result of its membership in a currency area. kenen argues that monetary unions would be more appropriate for countries with diversified economies, so demand or supply shocks affecting a particular sector could be more easily compensated by other sectors. oca issue was also approached and treated by other economists. jeffrey frankel and andrew rose (1998) argue that the optimal currency area implies the existence of a single currency and a common monetary policy, while francesco mongelli (2002) defines the optimal currency area as “optimal geographical area of a single currency or a group of countries which irrevocably fixed exchange rated and will unite”3. in the sense of jacques pelkmans (2003) oca means, in a simplistic manner, “that area for which the cost of giving up exchange rate flexibility or realignment option is lower than the benefits of a common currency”4. more than half a century took place since the foundations of oca theory, which proved to be particularly strong, were laid. along with strengths, we have witnessed in the recent decades to the weaknesses and limitations of the analytical framework (between 1960s and mid-1970) and later, by the mid-1980s, to be pretty much ignore. beyond many weaknesses of oca theory, it has its merit as a “catalyst for analysis”5, without which there exist a systematic control of numerous economic characteristics that define european monetary construction. “optimum” versus “viable” oca theory has evolved simultaneously with european economic integration and there are authors such as filippo cesarano (1985) who argued and demonstrated that what really matters in terms of a currency area is not being “optimal”, but most of all “viable”. initial research in this field belong to mundell (1961) who was particularly concerned about whether the specific considered monetary areas (some regions of the u.s. and canada) are preferable in comparison with the actual situation. on the euro zone viability, numerous studies have been made mainly in the period before treaty of eu entered into force and the detailed planning stages of emu, but there are other studies that reach relatively uncertain conclusions. as concerns whether emu meets the statute of an optimum currency area, the impossibility of a clear answer has led some economists to use alternative expressions such as: “viable currency area”, “feasible currency area” or “advantageous currency area”.                                                              3 mongelli, f.p. (2002), „new” views on the optimum currency area theory: what is emu telling us?, european central bank, working paper series no.138, p.7 4 pelkmans, j. (2003), european integration. methods and economic analysis, second edition, european institute of romania, bucharest 5 mongelli, f.p. (2008), european economic and monetary integration and the optimum currency area theory, economic papers, no. 302, p.8 it considers that the member states of an integrationist group can benefit from each other of a common currency possession only being a member of an optimum currency area, i.e., when their economic structures are similar and there is no risk that asymmetric shocks affecting only some of these countries. however, the economies of the euro area recorded significant differences between the levels of development, which will cause different reactions from external shocks. asymmetric shocks can also cause certain failures from the perspective of business cycles incompatibility, some member states may be quite in the growth phase, others in the decline or stagnation, so that a single monetary policy could not solve the problems of all countries involved6. economists jacques melitz (1995) and michael funke (1997) argue that it is difficult to determine the true nature of shocks and, at the same time, note that the notion of asymmetric shock acquired an exaggerated importance given that hypothesis symmetric shocks versus asymmetric shocks is not an operational one and cannot be tested directly. authors such as david currie, paul levine and joseph pearlman (1996), believes that euro zone behave best towards asymmetric shocks than any other monetary regimes that could have been established in the participating countries. debates on this issue have evolved especially after the results of empirical research of tamim bayoumi and barry einchengreen (1997) which, by creating an index of oca, concluded that germany, austria, belgium and netherlands were the most suitable emu candidates, while the pairs of countries portugal and spain, and also italy and greece could have mutual benefits from monetary unification. also, the two economists believes that there is a “block of northern europe” consists of austria, belgium, denmark, france, germany and netherlands, countries that generally meet symmetric shocks, hypothesis from which the authors derived the idea of european monetary unification in “two speeds”, i.e. the socalled “differentiated integration”. the same conclusion reached juergen von hagen and m. neuman (1994) noting that there are some distortions in exchange rate as a result of asymmetries caused by real shocks. subsequently, funke (1997) states that, although the idea of a “two speeds” european monetary union is questionable in terms of political, monetary unification is the only way to not postpone indefinitely the achievement of the ambitious and grand european project. there are, however, authors who disputed the clear demarcation between “central countries” (more developed) and “peripheral countries” (less developed). as jose vinals (1996) demonstrated, shocks produced in the past for some countries were caused by mismanagement of national monetary policies and also by the effect of replacing the currency and exchange rate developments, and were not caused by the “central” or “peripheral” character of the states concerned7. some benefits and costs of creating emu if the basic criteria of the currency area existence are not fulfilled, the costs of unification are superior to benefits and a system of flexible exchange rates between different currencies is desirable. considering emu a viable monetary area, there can be highlighted certain benefits and costs8 arising from its establishment in europe. one of the advantages of creating the euro zone is related to the necessity to complete the single market with a common currency and thus eliminate the exchange rate fluctuations, reduce risks related to trade and to investment transactions, and eliminate conversion costs                                                              6 cerna, s. (2006), teoria zonelor monetare optime, west university publishing house, p.81 7 vinals, j. (1996), european monetary integration: a narrow or a wide emu?, european economic review, volume 40, issues 3-5, pp.1103-1109 8 european institute of romania (2005), uniunea economică şi monetară, seria micromonografii – politici europene, pp.6-7 and increase transfer speed of monetary flows. however, loss of control and of decisionmaking power on monetary issues is an argument against monetary unification in europe. prices of goods and services transparency, the need for monetary discipline imposed by euro zone economies affecting the inflation decrease, merger financial markets that can lead to economies of scale, higher efficiency and rates of economic growth, strengthening the position of the union within international monetary system and, last but not least, facilitating in achieving the objective to creating political union, are other advantages of creating emu. instead, notable differences on the business cycles and living standards between member states could divide european union in inside and outside euro zone member states, the material costs incurred to replace national currencies with euro, and also the institutional and legislative changes required, can be considered other costs european monetary unification. most emu member states has shown otherwise positive effect predicted by the theory, sometimes posting some delays in economic development. the fact is that, at least to date, in the case of western european single market has not been a major obstacle to monetary unification. starting from the premise of the best existing solution, by identifying factors of influence in assessing whether a national economy is considered ready for monetary integration, oca theory is actually closer to a formal model, empirical research demonstrating the relevance of criteria being insufficient. the decision on whether an economy integration in a common currency area should consider ex ante research completed by ex post ones, that takes into account the dynamic aspects of monetary integration. final remarks in the frame of increasing challenges arising from emu creation until now, eu member economies relatively low capacity to not affect and to maintain economic balance within it leads us to consider inadequate the allocation of optimum currency area term for the euro area, while using terms viable currency area or rather functional which defines a group of countries that may join the monetary union based on minimum conditions, we consider it more appropriate to economic realities of european construction. in the long term, we believe that monetary unification between all eu member states is necessary and possible only in the context of increasing economic integration, with inherent risks, and also of the political will demonstrated by the history of ambitious project became a reality. references 1. berger, h., nitsch, v. (2008), zooming out: the trade effect of the euro in historical perspective, journal of international money and finance, volume 27, issue 8, pp. 1244-1260; 2. campolmi, a., faia, e. (2011), labor market institutions and inflation volatility in the euro area, journal of economic dynamics and control, volume 35, issue 5, pp. 793-812; 3. cerna, s. (2006), teoria zonelor monetare optime, west university publishing house, timişoara; 4. cesarano, f. (1985), on the viability of monetary unions, journal of international economics, no. 19; 5. currie, d., levine, d., pearlman, j. (1996), the choise of „conservative” bankers in open economies: monetary regime options for europe, economic journal, volume 106, issue 435, pp. 345-358; 6. frankel, j., rose, a. (1998), the endogeneity of the optimum currency area criteria, the economic journal, volume 108, issue 449; 7. fratzscher, m., stracca, l. (2009), the political economy under monetary union: has the euro made a difference?, economic policy, volume 24, issue 4, pp. 307-348; 8. funke, m. (1997), the nature of shocks in europe and in germany, economica, london school of economics and political science, volume 64, issue 255, pp. 461-469; 9. von hagen, j., neumann, m. (1994), real exchange rates within and between currency areas: how far away is emu?, the review of economics and statistics, mit press, volume 76, issue 2, pp. 236-244; 10. kenen, p. (1969), the theory of optimum currency areas: an eclectic view, in mundell r.a., swoboda, a. (eds.)., monetary problems in the international economy, university of chicago press, chicago, pp. 41-54; 11. lopez, c., papell, d.h. (2007), convergence to purchasing power parity at the commencement of the euro, review of international economics, vol. 15, nr. 1, pp. 1-16; 12. mckinnon, r. 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(1996), european monetary integration: a narrow or a wide emu?, european economic review, volume 40, issue. 3-5, pp. 1103-1109; 20. ***european institute of romania (2005), uniunea economică şi monetară, seria micromonografii – politici europene. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 19 the statistical analysis of labor market and female labor force characteristics in central and eastern european countries elisabeta jaba department of accounting, business information systems and statistics, faculty of economics and business administration, alexandru ioan cuza university of iași, romania ejaba@uaic.ro christiana brigitte sandu department of accounting, business information systems and statistics, faculty of economics and business administration, alexandru ioan cuza university of iași, romania christiana.balan@uaic.ro aurelian-petruș plopeanu alexandru ioan cuza university of iași, department of interdisciplinary research – humanities and social sciences, romania aplopeanu@gmail.com ioan-bogdan robu department of economics, faculty of economics and business administration, alexandru ioan cuza university of iași, romania bogdan.robu@feaa.uaic.ro marinela istrate department of geography, faculty of geography and geology, alexandru ioan cuza university of iași, romania abstract in this paper we analyze the characteristics of labor markets and female labor force in the countries from central and eastern europe in order to verify the existence of significant differences in female labor participation rate among the countries that experienced the same political and economic system before 1990. the paper seeks to address the following specific objectives: 1) to identify the variables which are strongly correlated with female labor force participation, objective met using correlation analysis; 2) to define clusters of countries based on the determinants of female participation on the labor market, identified previously, using hierarchical cluster method; 3) to verify if the female labor force participation rate differs significantly among the identified clusters by applying the analysis of variance. the results of this study highlight that, in central and eastern europe, we can identify four clusters of countries that share common characteristics of female labor market and female labor force. the analysis of the variation in female labor force participation rate emphasizes different patterns according to identified groups of countries. keywords female employment; labor market; education; religion; hierarchical cluster analysis jel classification c38; e23; i23; z12 introduction we aim to assess female labor force characteristics in relation to labor market characteristics for central and eastern european countries. these countries experienced, in the second half of the 20th century, similar political and social regimes jaba, sandu, plopeanu, robu, istrate 20 defined by planned economies that played an important role in shaping the female employment and influenced the characteristics of female labor force. the high participation rate of women on the labor market in these countries mirrors the twobread winner family scheme that was promoted by the socialist policies (pastore and verashchagina, 2008; jaba, 1979). this pattern evolved differently during the transition to the market economy with defining clusters of countries according to female labor market and female labor force characteristics. the process of privatization of stateowned enterprises and the process of liberalization of wage setting mechanisms implied hard budget constraints for companies in central and eastern european countries with negative consequences on women employment (paci and reilly, 2004; pastore and verashchagina, 2008). nowadays, in europe, the female participation on the labor market is smaller than male participation, and in addition, there are significant differences among countries. recent studies (oecd, 2009; diaz garcia and welter, 2011) have shown the persistent gender gap in employment in the european countries. in many northern european countries, the female activity rate is high, while the female unemployment rate is low (european commission, 2011). on the contrary, in many southern and eastern european countries, the female activity rates are very low, while the female unemployment is very high, in comparison to the average level for the european union. however, the female labor force participation has grown substantially in the last decades (gutierrezdomenech and bell, 2004; dicecio, engemann, owyang and wheeler, 2008; cloin, keuzenkamp and plantenga, 2011). in the netherlands, united kingdom, denmark and germany there was an important increase in female labor market participation, but there are important differences under the influence of various factors (noback, broersma and van dijk, 2013). the gender gap in employment is explained either by the labor force characteristics such as education or by labor market characteristics particular to each country such as the level of development, the revenue and the unemployment rate. for 15 european union countries over the last 20 years, cipollone, patacchini and vallanti (2013) found that female labor market participation is influenced, firstly, by the differences in the labor market institutional settings and, secondly, in social policy. also, for the transition countries, tax rates, tax administration, and policy uncertainty, as well as corruption, play an important role in explaining the results on the labor market (cazes, 2002). furthermore, religion is considered to be a causal factor in explaining many crosscountry differences in female participation on the labor market (norton and tomal, 2009; pastore and tenaglia, 2013). nowadays, the emergent economies in europe experience both political and religious diversity with important effects over the individuals and society (brăilean, 2014). commenting on the complex influence of the religious ideas on the human action, inglehart and baker (2000: 49) consider that “the fact that a society was historically shaped by protestantism or confucianism or islam leaves a cultural heritage with enduring effects that influence subsequent developments”. religion can explain more than one-third of the cross-country variation in female labor force participation rates (norton and tomal, 2009). the present paper focuses on identifying the female labor force and labor market characteristics that are common to central and eastern european countries in order to highlight the existence of similarities among them. there are three main objectives subordinated to the aim of the paper: 1) to identify the variables that are correlated to female labor force participation; 2) to define clusters of homogenous countries according to female labor force and labor market characteristics; 3) to verify the existence of significant differences among clusters of countries defined according to female labor force participation. the results of the study show that central and eastern european countries vary according to the characteristics of labor market and female labor force. based on these the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 21 variables the observed countries have been classified in four clusters that show different patterns regarding the female labor force participation. the remaining part of the paper proceeds as follows: section data and method presents the sample of countries used in the analysis as well as the definition of the labor market indicators. this section also describes the statistical methods applied with the aim of accomplishing the objectives set for this study; section results presents the main findings related to the clusters of countries that share common characteristics of female labor market and female labor force. the differences among clusters of countries regarding female labor force participation rate are also explained by the religious affiliation of the population; conclusion section give a brief summary of the findings and discuss the implications for labor markets’ policies in the region. data and method data for 15 central and eastern european countries (bulgaria, croatia, czech republic, estonia, hungary, latvia, lithuania, macedonia, montenegro, poland, romania, russia, serbia, slovak republic, and slovenia), we have recorded a series of macroeconomic indicators, which characterize both the labor market and the female labor force. these variables which refer to the main characteristics of the labor markets and female participation on the labor market are presented in table 1. data on these variables have been gathered from various sources, mainly from the world bank, imf, and oecd databases, for year 2012. data on labor market and business regulations index have been collected from the economic freedom of the world: 2014 annual report published by fraser institute. data management and analysis were performed using spss 21.0. table 1 variables describing labor market and female labor force characteristics variables explanation variables explanation x1–labor mar ket regulation s index sub-index of the economic freedom of the world (efw). the rating scale ranges from 0 to 10 (higher values represent more flexible regulation) x9–prevalence of foreign ownership the rating scale ranges from 1 to 7 (1 – very rare; 7 – highly prevalent) x2– business regulation s index sub-index of the economic freedom of the world (efw). the rating scale ranges from 0 to 10 (higher values represent more flexible regulation) x10–domestic market size index sum of gross domestic product plus value of imports of goods and services, minus value of exports of goods and services, normalized on a 1(poor) – 7 (best) scale x3–labor market efficiency the rating scale ranges from 1 to 7 (higher values represent more efficient labor market) x11–flexibility of wage determination the rating scale ranges from 1 to 7 (1 – by a centralized bargaining process; jaba, sandu, plopeanu, robu, istrate 22 7 – up to each individual company) x4–trade union density share of employees in trade unions (%) x12–firms with female participation ownership (%) the percentage of firms with a woman among the principal owners (%) x5–gdp per capita gdp per capita expressed in current us dollars x13–female tertiary education enrollment (%) percentage of students enrolled in tertiary education who are female , regardless of age, as a share of the population of the age group that officially corresponds to this level of education x6– intensity of local competitio n the rating scale ranges from 1 to 7 (1 – limited competition in most industries; 7 – intense competition in most industries) x14–share of women employed in the nonagricultural sector (%) the share of female workers in the nonagricultural sector (industry and services), expressed as a percentage of total employment in the non-agricultural sector x7–extent of market dominanc e the characterization of corporate activity on a scale from 1 to 7 (1 – dominated by a few business groups; 7 – spread among many firms) x15–female labor force participation rate (%) the proportion of the female population ages 15 and older that is economically active. female labor force participation consists in all female supply labor used for the production of goods and services during a specified period of time. x8–total tax rate a combination of profit tax (% of profits), labor tax and contribution (% of profits), and other taxes (% of profits) x16–x19–share of persons of a specific religion (%) the share of christians / muslims / agnostics / atheists in the total population of each country source: world bank; imf; oecd; fraser institute methods we propose a methodological approach to identify the differences in female labor force participation rate among the clusters of similar countries according to a set of variables regarding female labor force and labor market characteristics. it consists in the following phases: 1) in the first phase, we identify the variables that are correlated with female labor force participation, using the correlation analysis, namely pearson the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 23 correlation coefficient. from the initial set of variables, we have selected those variables that have a strong correlation with female labor force participation. these variables are considered for the identification of clusters of countries and, therefore, for the explanation of the differences and the similarities among countries from central and eastern europe. 2) considering the labor market and female labor force characteristics, identified previously through the correlation analysis, we cluster the observed european countries into subgroups that have similar patterns. in the literature, there are various algorithms used for data clustering, such as: hierarchical cluster analysis, k-means cluster, and two-step cluster (norusis, 2011). the clustering methods are divided into hard methods (data subsets are mutually exclusive) and fuzzy methods (units are allowed to belong to several clusters simultaneously, with different degrees of membership) (cattinelli, valentini, paulesu and borghese, 2013; palașcă, enea, jaba and roman, 2014). in this study, we apply a hard method, using the agglomerative hierarchical clustering technique. it starts with the countries as individual clusters, and at each step, it merges the closest pair of clusters until only one cluster left. clusters are defined using the squared euclidean distance, which is the sum of the squared differences over all of the variables ( 1 2 , ,..., p x x x ). the formula of the distance between two entities (countries) i and j is the following: 2 2 2 2 1 1 2 2 ( ) ( ) ... ( ) ij i j i j pi pj d x x x x x x       (1) where • ij d is the distance between two countries, i and j. • 1 2 , ,..., i i pi x x x are the observed data for country i on the 1 2 , ,..., p x x x variables; • 1 2 , ,..., j j pj x x x are the observed data for country j on the same set of variables; the distance ij d depends on the units in which the variables 1 2 , ,..., p x x x are measured and is influenced by whichever variable takes numerically larger values. therefore, before applying cluster analysis, the variables are standardized, so that they have mean 0 and variance 1 (tryfos, 1998). the visual representation of the distance at which clusters are combined is displayed through the dendrogram (tan, steinbach and kumar, 2006). the vertical lines of this diagram show joined clusters and the distance at which these clusters are merged. 3) we identify significant differences according to female labor force participation among the identified clusters of countries using the anova method (the analysis of variance). this method allows comparing the clusters’ means, based on independent random samples. we test the null hypothesis that k populations’ means are all equal against the alternative hypothesis that at least two means differ: 0 1 2 1 : ... : at least two of the group means are not equal k h h      the anova method allows quantifying two types of variation: the within groups’ variability, by the sum of squares of the differences between each value and its group mean (sswithin); and between groups’ variation, by the sum of the squares of the differences between the groups’ means and the overall sample mean (ssbetween). in order to test if the difference between the means is attributable to sampling error (the means are approximately equal) or the population means differ, the fisher statistic is used. the f statistic is the ratio of the mean squares of the differences. http://www.sciencedirect.com/science/article/pii/s2212567114004948 jaba, sandu, plopeanu, robu, istrate 24 (k 1) (n k) between between between between within within within within ms ss df ss f ms ss df ss      (2) where: • msbetween is the variance estimate explained by the different groups; • mswithin is the variance estimate due to chance (unexplained); • dfbetween are the degrees of freedom for k groups; • dfwithin are the degrees of freedom for errors within groups. the test of the difference between the means of any pair of populations is conducted using the multiple comparisons tests, namely student-newman-keuls test for pairwise comparisons. when there are three means, this test holds the familywise error rate at 0.05. the test of the difference between the means of two groups, e and f, is the following: e f error x x q ms n   (3) the variation within each cluster of countries is graphically presented using the boxplots. the box-plot diagram shows the range of values of a variable, the range between the middle 50% of the values fall, the median value and it shows whether a distribution is symmetrical or skewed. the most important results of the statistical methods applied in spss are presented in the following section. results and discussions correlations between female labor force participation and the characteristics of female labor force and labor market the analysis starts with a first set of variables proposed by the literature for the description of the characteristics of both labor market and female labor force (see table 1). from the initial set of variables we kept only the variables that are correlated significantly with the female labor force participation rate. in 2012, the eastern european countries are diverse with respect to female labor force participation. it varies among the 15 countries, as it is the highest in russia (57%) and in the baltic countries (55% and 56%), and has the lowest values in macedonia and montenegro (43%) and in serbia (44%). compared to the eastern europe countries, it can be seen that, in europe, northern european countries have higher values (norway – 62%, sweden – 60%, and denmark – 59%), and, in the world, china has even more important female participation rate (64%). in united states of america, the female labor force participation is 57%. there are six variables that are correlated with female labor force participation rate, and all correlations have positive signs. the first two variables are related to female labor force characteristics and the last four variables are related to the labor market characteristics. these variables are: share of women employed in the non-agricultural sector (r = 0.792 with a p-value smaller than 1%). it is considered that female labor-force participation in nonagricultural sector in the developing countries is a key factor for the structural adjustment and to the international competitiveness (karshenas, 1997). moreover, heinegg, melzig and sprout (2007) underline that in the transition countries, the female labor force in services are in as high as in the developed economies. as regarding the share of women employed in the non-agricultural sector in central and eastern europe, macedonia has the smallest percentage (42%), while the baltic countries have the maximum values (54% in latvia and lithuania). the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 25 female tertiary education enrolment (r = 0.731 with a p-value smaller than 1%). there are many studies that emphasize the impact of female education on the structure of labor market. according to mcdaniel (2014), if females continue to outpace men in tertiary enrolment, the effect would be a general decrease of gender gaps in the level of wages and an increase participation in the labor market. however, aboohamidi and chimdi (2013) found out that in egypt, morocco, turkey and pakistan, female tertiary education had a negative effect on female labor participation rate due to activities that did not require complicated knowledge and skills. there is important variation among the observed countries according to female school enrolment in tertiary education. slovenia has the highest percentage of female tertiary education enrollment, comparable to the levels of usa or finland; while in macedonia and romania this indicator show the lowest values among the 15 eastern european countries. gross domestic product per capita (r = 0.690 correlation with a p-value smaller than 1%), measures the total value per capita, in market prices, for the goods and services produced within a country during one year by the national economic and non-residents under alternative exchange rate between the currencies of two countries. several studies demonstrated the macroeconomic impact of the gender divided labor market. it has conclusively been shown that a country may benefit by the fully insertion of women in the labor market (dollar and gatti, 1999). while cuberes and teignier (2012) demonstrated that gender gaps in the labor market may generate gdp per capita losses up to 27% in some regions, other researchers, however, stressed that, in the case of several countries like united states of america, japan, united arab emirates, and egypt, raising the female labor force participation rate to male levels could raise the level of gdp (deanne, hoteit, rupp, sabbagh, 2012). other studies highlighted that female labor force participation rate varies pointing to a u-shaped relationship with per capita income (elborgh-woytek, newiak, kochhar, fabrizio, kpodar, wingender, clements, schwartz, 2013). nevertheless, aboohamidi and chimdi (2013) noted that in egypt, morocco, turkey and pakistan, when gdp per capita raised, the female labor force participation rate declined. gdp per capita in central and eastern european countries is below the level reached by the developed countries in europe. among the 15 observed countries, slovenia is the country with the highest levels of gdp per capita (22,756 usd per capita). however, at european level, gdp per capita is more important, reaching 60,000 usd per capita in denmark. total tax rate (r = 0.620 with a p-value smaller than 5%). the tax system influences the work incentives and the female participation by affecting differently married and single women (jaumotte, 2003). labor market efficiency (r = 0.584 with a p-value smaller than 5%). it is considered that low female employment rate has a negative effect on labor market efficiency because important human capital is diminished and, consequently, low levels of incomes are generated (anker, 1998). intensity of local competition (r = 0.533 with a p-value smaller than 5%). global and local competition is an important factor of employment rate as it has impact on the quality of working life (wilton, 2013). the increasing competition on the labor market, especially for flexible work opportunities in the private sector, requires government strategies for growth in order to reach more women (sands, 2013). the variables defining the structure of the population by religion are poorly correlated with female labor force participation rate. however, the sign of the correlations differs for the four religions considered in the study: the share of christian population and the share of muslim population are both negatively correlated with jaba, sandu, plopeanu, robu, istrate 26 female labor force participation, while the other two religions show a positive effect on the female participation in the labor market. the correlations are: share of christian population (r = 0.030 with a p-value higher than 10%). other studies validated that christian orthodox and muslim women presented a higher risk of non-employment than the agnostics and, in a much greater degree, a probability of employment of 30% to 40% lower than the average level. share of muslim population(r = 0.481 with a p-value lower than 10%). in a crosssection of countries in the period 1985 2005, [12] found that female labor force participation varies depending on the religion practice: it is lower in muslim countries and higher in the protestant ones or where no religion is practiced. share of agnostic population (r = 0.367 with a p-value higher than 10%). share of atheist population (r = 0.233 with a p-value higher than 10%). clusters of countries according to the characteristics of labor market and female labor force since some countries have similar patterns to other countries on some of the characteristics regarding female labor force and labor market, and different patterns on other characteristics, we aim to identify similarities in our data. therefore, we apply the cluster analysis on ten variables identified at the previous step, including four other variables regarding the structure of the population by religion. based on the distance between the pairs of clusters merged at each step, we obtained four groups of countries, as shown in the dendrogram below (figure 1). figure 1 clusters of countries according to determinant factors source: authors’ tabulation in spss 20.0 the solution with four clusters underlines the following groups of countries: cluster 1 (5 countries): bulgaria, croatia, montenegro, romania, and serbia; the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 27 cluster 2 (3 countries): czech republic, estonia, and latvia; cluster 3 (6 countries): hungary, lithuania, poland, russia, slovakia, and slovenia; cluster 4 (1 country): macedonia. the profile of the four clusters is derived using the descriptive statistics of the variables on female labor force and labor market characteristics, by clusters (table 2). table 2 the clusters’ profile according to the labor market and female labor force characteristics cluster mean std. deviation min. max. labor market efficiency 1 4.14 0.227 4.00 4.54 2 4.73 0.396 4.32 5.11 3 4.29 0.128 4.15 4.48 4 4.13 4.13 4.13 gdp per capita (current us dollars) 1 8546.60 3002.124 5907.00 13562.00 2 17698.33 2161.041 15205.00 19032.00 3 16347.16 3542.622 13394.00 22756.00 4 4944.00 4944.00 4944.00 female tertiary education enrollment rate 1 56.76 5.146 51.60 62.70 2 68.66 6.971 64.20 76.70 3 70.65 11.369 55.10 86.00 4 38.50 38.50 38.50 intensity of local competition 1 4.48 0.465 3.90 5.00 2 5.60 0.100 5.50 5.70 3 5.30 0.228 5.00 5.60 4 5.40 5.40 5.40 total tax rate 1 29.62 10.050 19.80 42.90 2 44.46 7.447 35.90 49.40 3 44.13 6.728 32.50 50.70 4 8.20 8.20 8.20 share of women employed in nonagricultural sector 1 47.00 1.870 45.00 50.00 2 51.00 4.358 46.00 54.00 3 49.50 2.588 47.00 54.00 4 42.00 42.00 42.00 christians (%) 1 86.35 8.502 77.67 98.49 2 65.23 8.111 55.93 70.84 3 88.05 4.973 81.25 96.15 4 64.56 64.56 64.56 muslims (%) 1 7.65 6.685 0.42 16.45 2 0.18 0.147 0.01 0.28 3 2.22 4.103 0.01 10.39 4 28.97 28.97 28.97 agnostics (%) 1 4.70 3.238 0.88 9.66 2 29.27 8.340 23.97 38.89 3 7.25 2.955 3.41 11.12 4 5.38 5.38 5.38 atheists (%) 1 1.25 0.978 0.16 2.79 2 4.99 0.376 4.66 5.40 3 2.02 1.613 0.27 4.41 4 1.40 1.40 1.40 source: authors’ tabulation in spss 20.0 jaba, sandu, plopeanu, robu, istrate 28 it can be noticed that, among the four clusters, clusters 2 and 3 have the highest average values for all the characteristics regarding labor market and female labor force. the profile of cluster 2 (czech republic, estonia, and latvia) shows that these countries have a good performance of the indicators that influence female labor force participation. these indicators refer to both labor market characteristics (labor market efficiency, gdp per capita, intensity of local competition, and total tax rate) and to female labor force characteristics (share of women employed in the non-agricultural sector). cluster 2 is also characterized by a greater within cluster heterogeneity according to share of women employed in the non-agricultural sector compared to other clusters. cluster 3 (hungary, lithuania, poland, russia, slovakia, and slovenia) is characterized by the highest level of female tertiary education enrollment rate (70.65%), and also by a higher within cluster heterogeneity according to this characteristic, comparing to the others cluster. countries that belong to cluster 1 (bulgaria, croatia, montenegro, romania, and serbia) lag behind the countries grouped in clusters 2 and 3 with respect to the determinant factors of female labor force participation. regarding the average value of gdp per capita for cluster 1, it can be seen that it is almost half the value for clusters 2 or 3. most of the countries in cluster 1 (romania, bulgaria, montenegro, and serbia) have values of gdp per capita inferior to 10,000 usd (serbia has the lowest level equal to 5,907 usd), the only exception being croatia with gdp per capita around 13,500 usd). within this cluster, bulgaria has the highest value for the variable share of women employed in the non-agricultural sector. comparing to the first three clusters, macedonia (cluster 4) has the lowest levels for almost all the variables, excepting intensity of local competition. among the four clusters, clusters 1 and 3 have the highest percentages of christian population (86.35% in cluster 1 and 88.05% in cluster 3), while cluster 4 (macedonia) has the highest percentage of muslims (28.97%).moreover, cluster 2 has the highest percentage of agnostics (29.27%) as compared to the other clusters. actually, czech republic registers the highest percentage of agnostic population (38.89%) among the 15 countries in the study. the variation of the determinant factors of labor force participation among countries may explain the differences in female participation by clusters. differences in female labor force participation by clusters of countries in central and eastern europe we have tested the differences in the means of each variable among the four clusters using anova method and multiple comparisons tests. the differences among the four clusters are tested with f test, while for pairwise comparisons we used the studentnewman-keuls statistic. the profile of clusters according to female labor force participation rate highlights the highest average female labor force participation rate (53.66%) for cluster 2 (czech republic, estonia, and latvia). the highest within cluster variation according to this variable is obtained for cluster 3. in this cluster, russia and lithuania have the highest participation rates of women on the labor market (57% and 56%, respectively) while hungary has a much lower value (45%), (table 3). in cluster 1, female labor participation rate varies from 49% in romania to 43% in montenegro. the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 29 table 3 the clusters’ profile according to female labor force participation rate cluster mean std. deviation minimum maximum 1 45.80 2.588 43.00 49.00 2 53.66 3.214 50.00 56.00 3 51.66 4.457 45.00 57.00 4 43.00 – 43.00 43.00 source: authors’ tabulation in spss 20.0 the assumption regarding the homogeneity of variances was met (the levene’s test has a significance level higher than 0.05) and therefore the anova results are presented in table 4. table 4 the anova results for female labor force participation rate (%) sum of squares df mean square f sig. between groups 190.933 3 63.644 4.769 .023 within groups 146.800 11 13.345 total 337.733 14 source: authors’ tabulation in spss 20.0 the differences in female labor force participation rate among the four clusters are significant at a level associated to anova f test lower than 0.01. in order to identify the differences for all possible pairs of clusters we apply the posthoc multiple comparisons procedure. because cluster 4 is composed of only one country, this cluster is excluded from the multiple comparisons procedure. based on the results obtained for the student-newman keulstest (table 5) and on the box-plot (figure 2), we notice that there are significant differences between the clusters according to female labor force participation rate. moreover, we can see that these differences are more evident between cluster 1 and the other two clusters. table 5 the results of student-newman-keuls pairwise comparisons test female labor force participation rate cluster n subset for alpha = 0.05 1 2 1 5 45.8000 3 6 51.6667 2 3 53.6667 sig. 1.000 .440 means for groups in homogeneous subsets are displayed. a. uses harmonic mean sample size = 4.286. b. the group sizes are unequal. the harmonic mean of the group sizes is used. type i error levels are not guaranteed. source: authors’ tabulation in spss 20.0 jaba, sandu, plopeanu, robu, istrate 30 clusters 2 and 3 that are characterized by a good performance of the indicators concerning labor market and female labor force characteristics show also the highest level of female labor force participation. furthermore, the association of religion to the clusters shows that religion has shaped differently the female labor force participation. it can be seen that cluster 2 (formed of countries with a high percentage of agnostics and atheists) has important participation rates of female population. these results are consistent with the ones published by pastore and tenaglia (2013). figure 2 the distribution of female labor force participation rate by clusters of countries source: authors’ tabulation in spss 20.0 the positive relationship between female labor force participation and gdp per capita is represented graphically by clusters of countries in the scatter plot (figure 3). the clusters 1 and 4 are characterized by lower gdp per capita and female participation rate levels compared to clusters 2 and 3. figure 3 the distribution of central and eastern european countries, by clusters, according to gdp per capita and female labor force participation rate source: authors’ tabulation in spss 20.0 the statistical analysis of labor market and female labor force characteristics in central and eastern european countries 31 macedonia (cluster 4) is characterized by low values on both variables, gdp per capita and female force participation rate. on the opposite side, cluster 2 has the highest mean values (centroids) both for female participation rate and gdp per capita. in cluster 3, slovenia, the country with the highest level of gdp per capita (22,756 usd) is opposed to hungary, the country with the lowest level of gdp per capita in cluster 2 (13,405 usd). conclusions in this paper we aimed to analyze the characteristics of labor markets and female labor force in countries from central and eastern europe in order to identify differences in female labor force participation rate. to this purpose, we have first selected the characteristics of female labor force and labor market that are highly correlated with female labor force participation rate. in the second step, considering the variables that characterize both female labor force and the labor market, we have identified four groups of countries. finally, we emphasized the disparities among the four clusters according to female labor force participation. the results show, despite the fact that central and eastern european countries had a common body-the socialist policy regarding female employment, the transition period outlined a different female labor market, with specific characteristics of female labor force. we identified clusters of countries with a similar profile of female labor force characteristics that explain the variation in female labor force participation. czech republic, estonia, and latvia belong to the same cluster that is defined by the highest average level of female participation rate and of the indicators describing labor market and female labor force characteristics. in addition, the high participation rate of women on labor market in these countries is associated with high percentage of agnostic population. macedonia and other countries, such as hungary, lithuania, poland, russia, slovakia, and slovenia, have lower participation rates of female population due to the reduced performance of their labor markets. the results of this study would motivate the necessity of creating similar policies that would allow the efficient utilization of a potential important resource and would increase the individuals’ quality of life. references aboohamidi, a. & chidmi b. 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(2013), an introduction to human resource management. 2nd edition, los angeles, sage publications ltd. securities intermediaries 109 studies and scientific researches edition: economics, no. 13 (2008) securities intermediaries ţuţuianu ion, lecturer, phd university of bacău abstract: the utility of comercial intermediation is obvious and represents a result of the needs created in the comercial surroundings. doing comercial transactions on larger and larger scales calls for the need of using intermediaries for enhancing and improving the activity of the economical agent. this way, intermediation appears in between opposite related subjects: the economical agents that offer goods and services, and on the other hand, the persons who need these things. 1. introductory considerations regarding the capital market and securities intermediaries in the contemporary world, the capital market constitutes a component of first importance in the economic life. in romania, the formation of the capital market has represented a necessity, and its development is primarily imposing in the complex process of reorganization and creation of mechanisms which are specific to the market economy. therefore, a modern, competitive economy capable to adapt itself to the current requirements of globalization is not conceivable without the existence and the functioning of an efficient capital market. as it was estimated in the specialty literature „the capital is the sap that feeds the economy, and if the channels through which this sap is circulating are insufficient, inexistent or wrongly cut, the economic progress is questioned”1. through its specific mechanisms, the capital market is focusing and centralizing the capitals, but especially it must offer instruments and products which will ensure the fructification of placements and will cover the risks. the capital market is characterized by dynamism and innovation. it is a market which it is offering the most various investment opportunities and within which success depends on the degree of training and knowledge, skills, competence, flair and courage of each participant. 1 see: gabriela anghelache, „bursa şi piaţa extrabursieră”, publishing house economică, bucharest, 2000, p. 9. defining the capital market, it can be said that this represents the ensemble of relationships and mechanisms by means of which the available and dispersed capitals from the economy are directed towards economical agents or towards any public and private entities that solicit funds.2 the existence of the capital market is determined by the request of capital for current treasury necessities and for investment and therewith it is conditioned by a real process of saving as fundament of the capital offer. the capital market is binding, with the help of brokers, dealers and societies which intermediate security transactions, the issuers of stocks with individual and institutional investors. therefore the capital market it is functioning as a linking mechanism between those whose level manifests a surplus of capital – investors, and those that need the capital – issuers. the capital flows between issuers and investors are emphasized by the emission and the transaction of some specific instruments, respectively, securities. the capital market can be formally defined, like any market, as a „meeting place for the sellers and the purchasers of securities”. 2 see: gabriela anghelache, op. cit., p. 11; for another definition with a different formulation, but, basically, with the same content, also see: gabriela anghelache, carmen obreja, „pieţe de capital şi tranzacţii bursiere”, a.s.e. publishing house, bucharest, 2000, p. 7. securities intermediaries 110 studies and scientific researches edition: economics, no. 13 (2008) but the capital market concept has much deeper connotations which arise from the relations of assigning available resources with the purpose of fructifying them and satisfying the capital request from an economy. from the point of view of its inclusion scope, in specialty literature3 there were structured two visions referring to the capital market: a. – the anglo-saxon vision; b. – the european continental vision4. in the anglo-saxon vision, the capital market it is forming, together with the monetary market something which is called, by using an all-inclusive term, the financial market. in this context, the capital market is synonymous with the market of securities5 and ensures the investment of capital for medium and long terms. the monetary market is attracting and placing the short term capital through the interbank market, the discount market, the market of trade effect, the market of deposit certificates, the market of eurocurrencies, etc. in the european continental vision, the capital market has a complex structure which contains: a. the monetary market; b. – the mortgage market; c. – the financial market. the monetary market is the market of short and medium term capitals, being represented by the interbank market and by the market of negotiable titles of debts. on the interbank market are operating the emissions bank, the commercial banks, specialized banks, the public treasury, economy houses that act as creditors, but also debtors in case of completing own funds. the transactions on this market get the form of „givingreimbursing” credit. on the market of negotiable titles of debts, all the operators are economic agents. the negotiated instruments 3 see, for instance: gabriela anghelache, carmen obreja, op. cit., p. 8. 4 of french origin. 5 securities market. 6 negotiable titles which certify the existence of a deposit account. 7 issued by commercial firms, except credit institutions. 8 issued by the public treasury. 9 issued by financial companies and firms. are: certificates of deposit6, treasury notes7, treasury bills8, short term titles9. the mortgage market is a market particular for the house building financing, on which act the organisms that are giving loans as real estate loans, the refinancing house which ensures the reunifying of the funds from the creditor banks and mortgage banks. this issue mortgage notes whose nominal value is equal to the size of the loan granted to private persons which solicit the necessary loan to build their houses. by their sale on the capital market the mortgage notes transform in liquidities. to reimburse the loan, on the date of payment, the loan beneficiary buys from the market mortgage bills of a value equal to that of the received loan plus interest. the financial market is the market of long term capitals, on which there are issued and transacted securities which act as support of the exchange of capitals. the financial market is the one where are bought and sold financial assets, without changing their nature. it expresses a direct relation between the owner and the user of the funds. the practice in romania is emphasizing the option for the anglo-saxon vision, according to which the capital market is a component of the financial market. the capital market presents itself as a connection mechanism between investors and issuers whose investing decision aims at two complementary objectives: a. profitability, respectively a high degree of capital fructification; b. liquidity, namely a more operative retrieval of the invested capital. the monetary surplus obtained by profitability offers the possibility of new investments in assets with a high degree of liquidity. the improvement of the assets’ structure in the economy and the acceleration of the rotation of the capital invested in these represent a factor which will increase profitability. the capital market has the following characteristics: – it is an open market, meaning that the placement is performed in the great mass of investors and the security values transactions have a public character; securities intermediaries 111 – the market products are medium and long term instruments. on the capital market the money is invested for more than one year, while on the monetary market, resources are used for short term financing; – securities, as market products, are characterized by negotiability and transferability. these can be transferred from one possessor to the other, offering the investor the possibility to sell that product at any time for a price specific to market conditions, or which results from negotiation at a certain moment; – the transaction of securities is not direct, but intermediated. the intermediaries have an important role in what concerns putting in contact the issuers with the investors or the investors which own securities in their portfolio with those that want to buy them. the risk of the investment always belongs to the investors and not to the issuers. 2. the role and the importance of the capital market in the international trade. the capital market is offering modalities to invest, respectively to attract the capital, different than those specific to the banking system. as an alternative to the creation of bank deposits, the investors can purchase securities, and the issuers, in order to contract bank loans, can attract capitals by emission of shares and bonds. from the banks’ point of view, the shares are a „pillow” against income flow variability. these represent a permanent source of funds that do not require fixed payments or interest. the absence of shares implies a dependence upon debts, which leads to the incapacity to reimburse them in due time, in case the results are beyond expectations. the financing based on shares can also ensure funds for the reimbursement of high payment liabilities. the share as part of the issuing company’s patrimony – it carries a risk of capital for the investor, in the way that the incomes brought by the latter vary in accordance with the manner in which that company is administered. if the company is dissolved, the share holder is indemnified only after all the loans shall be reimbursed. thus, the cautious banks usually do not want to grant loans without asking the entrepreneurs to provide sufficient funds of their own. while the ratio between the loaned funds and own funds may vary according to local practices, however there is a limit that not even the banks will exceed. the fixed assets, which represent a substantial part of the balance sheet of an industrial company, should be financed by permanent capital or, lastly, by long term liabilities. short period bank loans seem to be an appropriate financing source, but only until a change in the company’s profitability, a deterioration of the economic situation or a weakness in the financial system entail a credit line reduction. from the entrepreneur’s point of view, the capital presents not only a risk of reduction, but is, also, the mean through which it picks up the fruits of starting and conducting a business. if the company is successful, the entrepreneur’s benefit from dividends and from the increased value of its shares can be much higher than the interest which the banker receives for the granted loan. the need to finance enterprises based on the emission of shares in many countries has been marked by two factors:  the rigid relations between banks and industrial groups;  appeal to government participations, credits and governmental guarantees; frequently the procurement of funds for investment in long term assets is considered as the primary economic contribution of the capital markets. this narrow point of view is ignoring other important contributions which the capital market may have over the economic development: efficiency, competitiveness and the solvency of the financial sector; mobilization of the financial economies; efficiency of assigning investments; firm solvency; decentralization of the property and the distribution of wealth; access of new and formation societies to share financing. potential benefits of the capital markets must be measured against costs and studies and scientific researches edition: economics, no. 13 (2008) securities intermediaries 112 studies and scientific researches edition: economics, no. 13 (2008) other disadvantages. these include the inevitability of the economic cycles and their impact over the capital procurement, the investors’ trust and the strength of the financial system, the dangers of monopoly controls, the instability of prices and of interest rates, periods of high interest rates, after long periods of real negative rates, costs of mediating stock-markets and the institutions of the capital market and the need to regulate a subsector of the financial system. the existence of an active market for shares and other securities10 creates alternatives for the bank system as regards both to depositors and to users of funds. the depositors can compare the incomes they could obtain by investing in shares or bonds with an interest rate for bank deposits, while the firms can compare the cost of different financing sources. as important is also the potential contribution of share markets to the solvency of the financial system. the absence of some viable share markets leads to the growth of the ratio between the societies’ loaned and own funds, thus weakening their structure of capital. this is endangering not only their long term viability, but also the solvency of the institutions from the financial system which grant loans another risk for the banking system is the discrepancy between short term deposits and the credit lines, a risk which is, practically, permanently present. the bond markets which are liquids and assets are, also, helping to diminish one of the most critical problems of finance: availability of long term funds. while the investors want liquidity, the societies and the governments must make sure of the existence of some long term loans which will cover their assets for a long period or, in case of the governments, will finance development projects. precisely for the reconciliation of these conflict situations there is the need of secondary markets. they allow the new emissions from the primary markets to be successful11. insofar as the shares and the bonds represent viable and relatively sure forms of investment offering an attractive income for a long period, they perform two functions:  the shares generate a stimulus to save and invest, opposite to consumption, or to buy lands and real estate properties106 or to search abroad for more profitable investment options. the financial economies are promoted unlike the nonfinancial ones, and the rate of internal economies can grow per ensemble;  the bonds compete with bank deposits that can be subject of interest rates control. this exerts a pressure to maintain the „controlled” interest rates closer to the „market” rates, which is possible to reflect the inflation and the penury of funds. the efficient capital markets are forcing the companies to compete on an equal base for the investors’ funds. the prices can be regarded as „label” for the value the investors associate their investment to. for a long period inadequate decisions of the companies’ management generate dissatisfaction among investors. while closed companies can hide weak performances, at least for a while, open companies cannot afford that. 3. securities brokers on the capital market in romania succinctly, it is considered a securities broker the judicial person which is legally authorized by the national securities commission (cnvm) to exert the mediation of securities with a professional title, as a trade act, or for own purposes (dealer) or for third parties (broker). pursuant to capital market law no. 297/200413 are intermediaries – investment firms authorized by c.n.v.m., credit institutions authorized by the national bank of romania according to the relevant banking legislation, as well as other such entities authorized in member or non-member states to carry out investment services such as those referred to in art. 5 of the law no. 297/2004, namely14: 10 for instance, the bonds. 11studies performed in a number of countries have shown that those who save immediately respond to the changes in the real income rate, at different financial instruments. for instance, when the control over the interest rates of deposits lead to real negative rates, the growth rhythm of deposits has rapidly decreased and grew back, as soon as the rates were positive. 12 by this alimenting the speculations in this sector. securities intermediaries 113 1. core services a) reception and transmission, on behalf of investors, of orders in relation to one or more financial instruments; b) execution of such orders in relation to one or more financial instruments other than for own account; c) dealing in any of the financial instruments for own account; d) managing portfolios of investments in accordance with mandates given by investors on a discretionary, client-byclient basis, when such portfolios include one or more financial instruments; e) the underwriting in any financial instruments and/or the placing of such financial instruments; 2. non-core services: a) safekeeping and administration of financial instruments; b) safe custody services; c) granting credits or loans to an investor to allow him to carry out financial instruments transactions, where the firm granting the credit or loan is involved in the transaction; d) advice to undertakings on capital structure, industrial strategy as well as advice and service relating to mergers and the purchase of undertakings; e) other services related to financial instruments underwriting based on a firm engagement; f) investment advice concerning financial instruments; g) foreign exchange services where these are connected with the provision of the performed investment services. the security societies carry out four great functions on the capital market : 15 generate a mechanism to attract the capital by connecting the persons with money (investors) with those that need the money (issuers – societies, governments); generates a prices mechanism to evaluate the investments; generate a mechanism for investors to transform the investments in liquidities; proliferation of market products in order to carry out all these functions, the security societies are performing services, acting or as intermediaries, or for them to buy/sell securities and offer advice to natural persons, to judicial persons or to governments. pursuant to art. 3 of the law no. 297/2004, the intermediaries which provide investment services in romania shall be registered in the c.n.v.m. register as follows: a) financial investment firms and intermediaries in non-member states, based on the authorization granted by c.n.v.m.; b) credit institutions, authorized by the national bank of romania; c) equivalent of the credit institutions and the financial investment services companies authorized by the competent authorities of the member states. in all official papers, the intermediary must provide, besides its identification data, the number and the date of its being registered with the c.n.v.m. register. the rights granted by the provisions of law no. 297/2004, with subsequent changes and completions, cannot be extended to the services provided as counterparty to the state, the national bank of romania or other public institutions or authorities that perform similar functions, in respect of monetary policy, exchange-rate, public debt and state reserve management. this type of provisions shall be similarly enforced on credit institutions, while compliance supervision shall be carried out by c.n.v.m. compliance with authorization and capital adequacy requirements by credit institutions shall be supervised by the national bank of romania. financial investment services are provided by natural persons acting as agents of investment firms. these agents carry out their activity exclusively for the account of the intermediary whose employee they are and cannot provide investment services for their own account. 13published in the official journal of romania no. 571 of the 29th of june 2004. 14see, art. 5 of the law of the capital market nr. 297/2004. studies and scientific researches edition: economics, no. 13 (2008) securities intermediaries 114 studies and scientific researches edition: economics, no. 13 (2008) no natural or judicial person can provide investment services without being registered with the c.n.v.m. register. c.n.v.m. sets procedures regarding the registration of investment services agents with the c.n.v.m. register as well as regarding their situation of incompatibility. financial investment firms, hereinafter referred to as s.s.i.f are legal persons, established as joint-stock companies, issuers of nominative shares, according to law no. 31/1990, which have as their regular business the provision of investment services and which function only based on the authorization granted by c.n.v.m. s.s.i.f. will be authorized by c.n.v.m. to provide investment services if they cumulatively meet the following conditions167: a) the firm is established under the legal form of a joint-stock company; b) the registered office and the head office, as the case may be, representing the main office where the activity is managed and controlled are established in romania; c) its regular business exclusively refers to the provision of financial investment services; d) the qualification, professional expertise and integrity of managers, directors, auditors and employees within the internal control department comply with the provisions set out in c.n.v.m. regulations; e) evidence of the minimum initial capital, called-up and fully paid-up in cash, according to the investment services provided; f) submission of the business plan, description of the organizational structure and of internal regulations; g) submission of the contract concluded with a financial auditor, member of the financial auditors chamber of romania (cafr) and who fulfils common criteria set up by c.n.v.m. and the financial auditors chamber of romania; h) submission of shareholder structure, evidence of the identity and integrity of significant shareholders; 15 simona fătu, „piaţa românească de capital privită din interior”, vox publishing house, 1998, p. 107. 16see art. 8 of the law no. 297/2004. i) other requirements laid down in c.n.v.m. regulations. the authorization granted by c.n.v.m. to a s.s.i.f. shall clearly mention the investment services which it is allowed to provide according to the legal provisions. where close links exist between s.s.i.f. and another natural or legal person, c.n.v.m. grants authorization to provide investment services to the said s.s.i.f. only if those links do not prevent the exercise of its supervisory functions in compliance with the provisions of this law. c.n.v.m. shall grant authorization to a s.s.i.f. within maximum 6 months from the date when the complete documentation required by the regulations in force has been submitted, or shall issue, provided that the application has been rejected, a motivated decision which may be contested within 30 days from the date of its communication. s.s.i.f. may start its activity on the date authorization has been granted provided that it has also become a member of the investor compensation fund. passing over the organizational part which we shortly have discussed in the former lines, at the end of this study we must also recollect a few words regarding the investment transforming mechanism. thus, it must be well-known that investors wish to transform their monetary liquidness in investment and afterwards, the investment in liquidness, within an environment that wants to be as stable as it is possible. also the securities firms want to perform for their client investment which shall not mean a major loss as regards the investment value. the firms which act on these markets. called security firms create an important mechanism for investors. in case of the securities quoted on a market, the investors can act in the meaning of performing investment or obtaining liquidities, on a daily basis, without suffering a major loss as it comes to the value of the investment (fact which is owed to the transaction mechanism). in other words, there can be external factors which will affect the value of the investment, and also the rumors in the economical world, but generally the value securities intermediaries studies and scientific researches edition: economics, no. 13 (2008) 115 will not drop, simply due to the market mechanism. at the same time it should be noted that securities firms also generate financial products because they study the client’s necessities, offering them various possibilities to invest his money. the securities firms are permanently developing and improving financial instruments which are „cut” according to every client’s specific needs. references: [1] anghelache g., piaţa de capital. caracteristici. evoluţii. tranzacţii, economică publishing house, bucharest, 2004. [2] anghelache g., nan s., badea d., ioacara a., reglementari actuale pe piaţa de capital, economică publishing house, bucharest, 2005. [3] anghelache g., pieţe de capital şi tranzacţii bursiere, didactică şi pedagogică publishing house, bucharest, 1997. [4] anghelache g., bursa şi piaţa extrabursieră, economică publishing house, bucharest, 2000. [5] anghelache g., obreja c., pieţe de capital şi tranzacţii bursiere, ase publishing house, bucharest, 2000. [6] angheni s., volonciu m., stoica c., lostun m.c., drept comercial, oscar print publishing house, bucharest, 2000. [7] badea d.g., piaţa de capital şi restructurarea economică, economică publishing house, bucharest, 2000. [8] bufan r., reorganizarea judiciară şi falimentul, lumina lex publishing house, bucharest, 2001. [9] căpăţînă o., societăţile comerciale, lumina lex publishing house, bucharest, 1991. [10] căpăţână o., ştefănescu b., tratat de drept al comerţului internaţional, vol. ii, academiei publishing house, bucharest, 1987. [11] stanciu d., cărpenaru, procedura reorganizării şi lichidării judiciare, atlas lex publishing house, bucharest, 1996. [12] stanciu d., cărpenaru, drept comercial român, ed. a iv-a, all beck publishing house, bucharest, 2002. [13] cârcei e., funcţionarea şi încetarea societăţilor comerciale pe acţiuni, economică publishing house, bucharest, 1996. [14] ciobanu g., „bursele de valori şi tranzacţiile la bursă”, economică publishing house, bucharest, 1997. [15] chilic-micu b., bursa de valori, economică publishing house, bucharest, 1997. [16] dardac n., basno c., bursele de valori: dimensiuni şi rezonanţe social-economice, economică publishing house, bucharest, 1997. [17] durand m., bursa, humanitas publishing house, bucharest, 1992. [18] fătu s., piaţa românească de capital privită din interior, vox publishing house, 1998. [19] gallois d., bursa – origine şi evoluţie, teora publishing house, bucharest, 1999. [20] popa i., bursa, adevărul publishing house, vol. i şi ii, 1993, 1994. [21] vonica r.p., drept comercial.reorganizarea judiciară şi falimentul, victor publishing house, bucharest, 2001. the concept of infamy in roman law studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 139 internal audit actualities and challenges daniel botez "vasile alecsandri" university of bacău daniel63331@yahoo.com anatol melega ”ștefan cel mare” university, suceava melega.anatol@gmail.com abstract internal auditing plays an important part in the management of corporations, but it has also proved necessary in the more general framework of public interest entities, especially listed entities, given the importance of their activity in society. the different activities that internal auditors perform lead to the creation of added value in the entity in which they operate. in romania, this activity is relatively recent and it involves certain organising and exercising particularities. the internal auditor profession has globally faced the same challenges all the other professions face in regards to the digitalization of the economy. keywords internal audit; corporate governance; digitisation; emerging technologies; integrated insurance jel classifications m42 introduction in romania, internal auditing appeared 20 years ago and it is still in a process of assimilation and transition. it could not have been otherwise, because the internal audit profession developed after the second world war, along with the development of the management, at a time in which in romania such a thing could not have existed. the institute of internal auditors (iia), the first professional body of internal auditors, was established in 1941 in florida, usa, when the construction of modern internal audit is considered to have begun. the roots of this profession are found in the activity of verifying the quality of cereals offered on the market, but its real growth has occurred along with the development of corporations and their need for controls in large geographical areas and whithin thousands of employees. in 1941, victor brink published the first major book on internal auditing, based on his doctoral studies. in the same year, john thurston, internal auditor of the north american company in new york, together with robert milne (his former colleague in the internal audit subcommittee of the association between the edison electric institute and the american gas association) got in touch with brink and created the nucleus and the organizing committee that contacted a small group of internal audit practitioners. they formed together the basis for the establishment of this professional body in america. this is one of the many examples of a professional body that was set up through the free initiative of those who practiced the internal audit activity and wanted to have a forum to represent their interests. about:blank internal audit actualities and challenges 140 in 1941, the year of its establishment, there were only 24 members. after the first year of activity, there were already 104 members. it reached 3700 members in 1957, of which 20% were from outside the usa, thus the institute acquired international value. today, the institute of internal auditors has over 200,000 members worldwide. in 2004 it was established the romanian association of internal auditors (aair), which in 2007 was recognized by the institute of internal auditors (iia). current coordinates of the internal audit today, internal auditing is perceived at the same time as as a function of an entity, as an activity or as a professional mission. according to the institute's definition, the internal audit activity refers to a department, team of consultants or other practitioners that provide independent, objective assurance and consulting services designed to add value and improve an organization’s operations. internal auditing work helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. (iia, 2020) according to the professional doctrine, in an entity there are three lines of defense in the activity of risk management and control. various risks and inefficient control areas can be seen in all entities; their coordinates are constantly and rapidly changing, so these issues must be covered by more activities and more specialists whithin the entity. (iia, 2020) the first line of defense is at the level of operational management. managers at this level are responsible for the operational activity of the entity, for risk management and for the implementation of corrective actions for deficiencies in processes and controls. operational management maintains an effective internal control and conducts risk and control procedures on an ongoing basis. the second line of defense consists of risk management and compliance functions. this line generally includes the following: a risk management function, which assists and monitors the implementation of effective practices by the operational management and assists in defining risk exposure as well as the existence of a risk reporting system throughout entity; a compliance function, which monitors various specific risks, such as non-compliance with the legislation and a control function that monitors financial risks and financial reporting. internal audit is the third line of defense. internal auditors provide the senior management of an entity with comprehensive and detailed assurance based on the highest level of independence and objectivity within the entity. the high level of independence does not apply in the second line of defense. internal auditing provides assurance on the effectiveness of governance, risk management and internal control, including how the first and second lines of defense achieve risk management and control objectives. the entity's board of directors is responsible for organizing the internal audit activity. this activity emerged and developed as a necessity because managers needed their own tool for direct and independent information. globally, the attitudes towards internal auditing are different, depending on many factors. international, regional or state organizations have gradually established, for certain categories of entities, the obligation to organize internal auditing. generally, the most concise definition of internal auditing is that it adds value to the entity. let's see what is the meaning behind this definition. the responsibilities of the internal audit depend on its structure and resources. internal auditors provide an inside look at the entity's strategic risks and advise the board of directors based on their expertise, knowledge of controls and overall perspective on the entity. botez, melega 141 it is not the responsibility of internal auditors to identify and assess the entity's risks, but they do assess the significant risks to validate the procedures by which the entity's management identifies and responds to risks. at the same time, internal auditors evaluate the controls that take place in the entity. the control system is organized at the level of the executive management and it reports to it. the auditors evaluate the efficiency and effectiveness of the internal control system and assure both the executive management and the board of directors that this control is adequate to respond to the risks affecting the organization. internal auditors also ensure the correctness of the financial statements. they make sure that the information meets the quality requirements of the financial information. internal auditors know in detail the objectives of the entity, so they can validate whether the operations, in their entirety, are efficienct and effective. internal auditors are accredited professionals, so they accept and apply the provisions of the code of ethics in which the key references are principles such as integrity, objectivity, confidentiality and competence. they promote ethics and reveal incorrect or illegal behavior. internal auditors also review the entity's processes and procedures closely and assess whether the way they are organized helps the entity achieve its goals. an equally important activity of internal auditors is to assess how the entity complies with the applicable legal provisions, regulations and contractual provisions; they ensure that the entity's management properly addresses these factors. all cases of noncompliance are reported to the board of directors, together with an estimation of the impact that these non-compliances have on the entity. entities own tangible property, human resources and intellectual property. these types of property are evaluated and measures are taken against any form of depreciation. internal auditors assess whether all measures to protect against depreciations such as theft, disasters, illegal activities or other forms of loss are appropriate. they report any deficiencies to the administration and make recommendations. fraud is one of the increasing dangers that is constantly present and that affects all the structures of the entity. it is highly important that internal auditors have access to all information about the entity and have the authority to investigate all matters they deem necessary. at the end of their assignments, internal auditors report their findings and make recommendations on the measures that need to be taken to correct the deficiencies. internal auditors are part of a well-established profession in terms of the skills and competencies that they constantly develop through a continuing training programme for professional development . in order to effectively fulfill their role, internal auditors must anticipate the problems that the entity will face and the need to come up with solutions for them. they must also have a flair for business, think critically and be good communicators, listen carefully, speak intelligently and write clearly. given their diverse role and responsibilities, internal auditors add significant value to the entity. they are the eyes and ears of the board of directors. they are also mediators and stakeholder representatives inside and outside the entity, experts in risk and control, efficiency specialists in emergency checks and troubleshooting. internal auditing in romania the basic reference can be found in law no. 31/1990 on companies in it's up to date form, which in section iv on “financial audit, internal audit and auditors”provides the following: art. 160 (2)companies whose annual financial statements are subject to financial audit, according to the law or to the shareholders' decision, shall organise the internal internal audit actualities and challenges 142 audit according to the norms issued by the romanian chamber of financial auditors. art. 163 (2)(...)the method and procedure of reporting of the internal auditors shall be established according to the rules elaborated by the romanian chamber of financial auditors. (5) the censors or, as applicable, the internal auditors shall notify the members of the board of directors on the irregularities in administration and the infringements of the legal provisions and of the constitutive act; the more important cases shall be brought to the knowledge of the general meeting. art. 164 1 (3) in case of companies where internal auditors were appointed, according to the law, any shareholder shall be entitled to report on the facts which they deem as requiring verification. the internal auditors shall take them into account in drawing up the report to the board of directors, or to the supervisory board, respectively. in case the complaint is made by the shareholders representing, individually or together, at least 5% of the share capital or a lower quota, if provided by the constitutive act, the internal auditors shall be bound to check the facts complained about, and in case they are confirmed, they shall be written down in a report that shall be communicated to the board of directors, or to the supervisory board, respectively, and made available to the general meeting; in this case, the board of directors or the supervisory board, respectively, shall be bound to convene the general meeting. having the above legal provisions as reference, we present the following two findings that we consider necessary. first of all, the romanian legislature established that the financial auditors are in charge of the internal audit activity. financial auditors are members of the romanian chamber of financial auditors which is responsible for the elaboration of norms regarding the organization of the internal auditors' activity and their reporting method. secondly, by assimilating tasks that are usually the responsibility of the auditors, the legislator has established responsibilities for internal auditors that go beyond the standardized professional framework. another legal reference is g.e.o 75/1999 on financial audit activity, which in its current form provides the following: art. 3 (3) the financial audit is performed by financial auditors or audit firms that are authorized according to the provisions of the law and that are members of the romanian chamber of financial auditors, hereinafter referred to as the chamber, and consists mainly of the following activities: (...) e) internal audit, other than public internal audit. art. 5 (3) the chamber mainly has the following attributions: a) regulating and monitoring the activities carried out by its members, provided in art. 3 par. (3) let. b) -e); (4) the chamber elaborates: (...) b) the internal audit norms, other than those of public internal audit; chapter vi internal auditing art. 20 (1) companies whose annual financial statements are subject, according to the law, to the statutory audit are obliged to organize and ensure the exercise of the internal audit activity, according to the law. (2) the internal audit standards applicable to the entities provided in par. (1) are the international internal audit standards issued by the institute of internal auditors of the united states of america and adopted by the chamber. art. 23 those responsible for organizing the internal audit activity, coordinating the works / commitments and signing the internal audit reports must have botez, melega 143 the quality of financial auditor. as a result of these legal responsibilities, the romanian chamber of financial auditors adopted by decision no. 111/2017, the obligatory norms from the international professional practices framework, 2017 edition, issued by the international institute of internal auditors (iia) and translated into romanian by the romanian association of internal auditors (aair), which include: fundamental principles for the professional practice of internal auditing; definition of the internal audit; code of ethics; international standards for the professional practice of internal audit. also, in 2019, the chamber published the second edition of the guide on implementation of international internal auditing standards, developed together with the romanian association of internal auditors, a useful guide for financial auditors who perform internal audit missions. perspectives over internal auditing in the digital era the process of continuous digitization of the economy presents both challenges and opportunities for internal auditing and for the audit profession in general, especially in big data analysis (alles, 2015; constantiou & kallinikos, 2015; syed, gillela & venugopal, 2013), artificial intelligence (ai ) (nowak, lukowicz, & horodecki, 2018) and blockchain technology (white, 2017). for the internal audit to work to the maximum benefit of companies, it must adapt to changes affecting modern business and be prepared to use digital technology. the development of technology leads to innovation in all sectors. the internet of things, blockchains, wireless devices, big data are innovative approaches based on new technologies that lead to new risks. with the development of new technologies, companies are exposed to new risks, and risk management specialists should help companies to ensure the effectiveness of control processes and procedures, without slowing down the pace of innovation development. advanced technologies require fundamental changes in the audit methodology. blockchain technology is a decentralized database that chronologically stores information about transactions of any kind (dai & vasarhelyi, 2017;). the database is available to each member of the network, called a node, which holds an identical copy and validates each new transaction, called a block. through this need for decentralized validation, subsequent unilateral changes to the database are supposed to be impossible, so the blockchain is mainly considered an anti-fraud method (cai & zhu, 2016), even if successful hacks have already existed in the past. because everyone can read the database, the process is also transparent. the complex algorithms underlying blockchain technology and the adaptive nature of artificial intelligence can bring significant benefits through a fundamental restructuring of business processes, but these technologies also create an environment in which securing guarantees should become an integral part of transaction processing. moreover, the lack of standardization in such areas leads to a divergence of principles and recommendations. in order to adapt to the new conditions, the internal audit needs to review its methodology, focusing on a more operational, continuous or real-time type of audit. companies need to invest more in training, resources, tools and standardization. the audit area is undergoing major changes under the influence of the digitalization of all business processes. blockchain technology is likely to revolutionize the field of auditing when it gains critical mass and becomes a common tool for accounting and analysis. a key feature of this technology is a more transparent way of reflecting transactions, which will allow auditing routine operations in real time by default, as well as obtaining a more complete picture of all transactions and identifying unfair actions. blockchain is a technology that, under certain conditions, improves internal audit actualities and challenges 144 transparency and trust. like any other automation tool, it could free financial managers from a range of routine, time-consuming tasks and allow them to focus on more strategic and creative tasks so they can find new ways to add value to the business. however, the accounting of operations is not necessarily a reliable reflection of the financial position and operational activities of a company. firstly, the object of any accounting system is data, and if it is initially insecure, the blockchain will not solve this problem. human touch in the interpretation of data and operation models will continue to be required. the introduction of technology in internal audit missions, as well as the need to analyze a large volume of data, have transformed the profession of an internal auditor. technology and data analysis is still not widely used; there is significant room for development in order to benefit from everything that these innovations offer (kpmg, 2019). with the reduction of data storage costs, the volume of data has increased exponentially in recent decades (breur, 2016). similarly, the speed of data generation has increased rapidly. data generated from various sources, for various purposes and without a consistent form, can include numbers, text, images, audio, videos and many other types of information. therefore, big data is stored in an unstructured way. this is especially true for socializing data (warren, moffitt & byrnes, 2015). big data analysis is a new processing model that makes sense of massive, fast and unstructured data and their transformation into valuable knowledge (constantiou & kallinikos, 2015). more than a simple technological trend, it can be said that the big data era paves the way for new ways of understanding the world and business decision-making (isaca, 2013). from a technical point of view, big data refers to data sets whose size, diversity of format and speed of generation exceed the processing capacities of traditional it infrastructures (iia, 2013), which is a challenge that must be overcome. the main objective of big data analytics is to contribute to better decision making by companies (isaca, 2013). by transferring this concept in the context of supervision, it can be said that the application of the same statistical methods and analytical techniques to audit activities which some authors call audit analytics aims to transpose so that auditors can make a better decision about the audited entities. to be more specific, it becomes possible to understand and quantify risks, test controls and evaluate business processes in a fast and efficient way (pwc, 2013). with the emergence of big data, the main challenge for internal auditing will be the iresult interpretation.krahel and titera (2015) argue that digital auditing is considered to be less intrusive by both auditors and audited companies. big data analysis can improve the relevance of auditor functions tin terms of data collection and reconciliation. in the same line of thinking, lombardi et. al (2014, 2015) concludes that digitalization is changing the audit landscape and will revolutionize the way audit is conducted. moreover, dinesh and juvanna (2017) emphasize that companies need to consider cybersecurity risks by using software in order to ensure corporate security and privacy and to minimize risks. according to porter and heppelmann (2014), competition and increasing pressure to provide their clients with relevant and reliable information are the main factors that determine audit firms to digitize their processes. in order to remain competitive, audit firms must evolve their business models and service offerings by purchasing innovative technologies to propose digital solutions (van den broek & van veenstra, 2018). new technologies are changing the way auditing is conducted by eliminating repetitive tasks. they allow auditors to save a huge amount of time when performing certain procedures (manita, elommal, baudierc & hikkerova, 2020). internal auditing can make use of new technologies for auditing by extracting data automatically, easily and analyzing it through algorithms. in addition, digitization significantly reduces audit costs by developing real-time dashboards that can be botez, melega 145 supported by audit firms to better monitor audit quality. these tools can alert companies in real time if problems are detected. artificial intelligence, robotics and analytics now offer the possibility of significant progress in terms of audit quality. internal auditing will only be able to meet these expectations if it starts to make use of innovative technologies in its activities. auditors should use flexible methodologies to respond to new risks and technologies, in order to monitor the skills and tools needed to achieve more substantial results. thus, in order to respond to the new challenges, kpmg has established a series of directionsthat highlight the areas on which internal auditing should focus so that it can effectively add value throughout the organization and maximize its influence on the company (table 1 ). table 1. internal auditing in the digital age where it is headed how it helps integrated insurance a rapidly changing risk environment, accompanied by a growing need for information for decision-making; -collaboration between insurance providers in order to come up with a common vision on risk; -streamlining of risk assessment and insurance activities to achieve maximum efficiency and coverage; -elaboration and execution of global business risk insurance plans, mobilization of various governance, compliance and audit functions throughout the organization; -encouraging the use of data and data analysis to help assess the constantly developing risk environment cybersecurity -avoiding the costly consequences of data breaches, such as investigations, legal fines, covering customer losses, remedial efforts, loss of time and focus of the executives and the rest of the workers, and potential loss of customers and business; -avoiding reputational damage to the organization, especially with regard to lost customer data; -evaluating the implementation of the revised security models of the technology, such as multi-layered defenses, improved detection methods and encryption of data leaving the network; -reviewing the organization's it security assessment, processes and controls for the protection of intellectual property, the use of industry standards guidelines and recommendations for improvements; emerging technologies -planning the adoption and implementation of cloud storage systems as an alternative to traditional computing methods; -assessing of the use of existing and emerging technological systems of the system in relation to industry standards; -taking into account the governance and controls needed for the digital workforce and related initiatives. internal audit actualities and challenges 146 data analysis and continuous auditing -continuous risk management in real time; -increasing the overall efficiency of audits (frequency, field, etc.); -taking a "deeper dive" into key risk areas by analyzing key data; -facilitating the early detection of possible frauds, errors and abuses; -using the advantages of singleplatform erp systems -assistance in the creation of automatic extraction, transformation and loading (etl) processes, together with the analyses and dashboards generated by the system, monitored by the company according to the specified risk criteria; -evaluating the conformity of the strategic objectives and the company's objectives with the risk management practices; monitoring and prioritizing strategic objectives and risks on an ongoing basis; -the use of data analysis has activated audit programs designed to verify the analysis of basic data and to report risks at the enterprise level; -implementation of automated audit focused on the analysis of root causes and on the managements' responses to risks, including business anomalies and triggering events; source: elaboration after kpmg internal audit (2017) the use of innovations in the audit mission will increase operational efficiency, cost efficiency, control and information quality. these innovations will represent the basis of the decisions made by professionals, reducing the number of errors. data integration and data analysis within compatible technologies, as well as audit tools and techniques at all stages of the audit mission (risk assessment, planning, execution and reporting), add value to the company's internal processes and reduce risks (kpmg, 2019). conclusions internal auditing is in a continuous process of assimilation and adaptation to the current reporting requirements. it represents an important resource and it offers the company an integrated picture of the risk profile. it anticipates new and emerging risks, and helps critical risks to be managed effectively. the internal audit must be able to quickly assess the impact of the digitization process and master each new innovative solution to understand how it will affect the company's risk profile. administration boards want to be aware of the risks associated with new technologies and the methods available to manage those risks. the internal audit is expected consultations on the use of new technologies by companies and recommendations which will contribute to increasing the level of technological innovations within the company. botez, melega 147 references alles, m. g. 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(2013). what is big data and what does it have to do with it audit? available online: https://www.isaca.org/resources/isaca-journal/pastissues/2013/what-is-big-data-and-what-does-it-have-to-do-with-it-audit, visted on 10th of march, 2020. kpmg. (2017). kpmg internal audit: top 10 considerations for 2017, available https://home.kpmg/cn/en/home/insights/2017/03/kpmg-internal-audit-top-10considerations-for-2017.html, visited on 10th of march, 2020. kpmg. (2019). internal audit in the era of continous transformation, available here: https://assets.kpmg/content/dam/kpmg/ro/pdf/2019/sondaj-auditoriinterni_romania_aprilie_2019.pdf ,visited on 10th of march, 2020. about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank internal audit actualities and challenges 148 pwc. (2013). digitale transformation, available online: https://www.pwc.de/de/digitale-transformation.html, visited on 3rd of march, 2020. ***company law no. 31/1990, republished in the official gazette, part i no. 1066 from 17th of november 2004, modified by the following acts: l 302/2005; l 164/2006; l 85/2006; l 441/2006; geo 82/2007; geo 52/2008; l 88/2009; geo 43/2010; geo 54/2010; geo 90/2010; l 202/2010; geo 37/2011; l 71/2011; geo 2/2012; geo 47/2012; l 76/2012; l 255/2013; l 187/2012; l 152/2015; l 163/2018; l 129/2019; l 162/2019. ***g.e.o. no. 75/1999 on the activity of financial audit, republished in the official gazette, part i no. 598 from 22nd of august 2003, modified by the following acts: og 37/2004; l 397/2006; l 26/2010; l 149/2013; l 162/2017 about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank introduction current coordinates of the internal audit importanţa bazei de date în campaniile de marketing direct studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the political actor’s brand in the 2012 bacău electoral campaign cristina cîrtiţă-buzoianu “vasile alecsandri” university of bacău cristina_buzoianu@yahoo.com abstract this paper aims to analyze the image and identity of political actors during an electoral campaign, as these two elements are defining for political marketing in attracting and convincing voters. with that in mind we will monitor the image of the two candidates for the position of mayor in the 2012 electoral campaign in bacău, as it appeared in the written local press. the analysis of the two politicians will be made from the perspective of two preestablished image indicators: the political and the human dimensions. each of the two dimensions has sub indicators pre-established in order to validate the general mediatized image of the candidate. regarding the political dimension we will measure the sub indicators: political communication, attitude towards corruption, interest for civil problems, the ability to negotiate and political project, while the human dimension has the following sub indicators: faith, empathy, morality, honesty, charisma, consistency and leadership. thus, we will try to identify if there are major differences between the two dimensions, for the two candidates, from a quantitative as well as a qualitative perspective. keywords political marketing; communication; brand; image; press. jel classification m31, m37 introduction departing from lance bennett’s belief in “lifestyle politics as identity politics” (bennett , 1998), we consider that the political identity exhibited by a candidate and the social image must be constructed so as that no major discrepancies are registered. today’s electorate is increasingly preoccupied with the lifestyle of political figures, meaning to the expression of an identity that is affirmed within a society characterized through socio-cultural communities that the political system cannot ignore. identity is manifested in symbolic productions: the style of speeches, the rhythm of activities, habits. from the perspective of the evolution of identity, we can observe a slow rhythm, since it is mentally perceived as a trajectory. as a project still under construction, identity needs to be backed by legitimacy, charisma and authority which in turn contribute to the image consolidation of the political actor. in the electoral campaigns of contemporary society informal legitimacy has become stronger than elective legitimacy, which is the main form of representation in a democracy. the diversity of contemporary lifestyles has imposed the political realignment and the extension of multiculturalism, and the diversity of belonging groups makes formulating representative policies even more difficult. therefore political figures have had to look for new criteria for garnering political legitimacy, to surpass the standards policies were based on, performance, sobriety or notoriety and highlighting their political personality. the political image has replaced ideology, and the discursive strategies outweigh political actions. politicians attempt to become 294 the political actor’s brand in the 2012 bacău electoral campaign renowned and use differentiation, association, public participation and repetition in order to send messages. “the political image brand is represented by the totality of signs and personality characteristics that the mass-media induces into political audience, relative to a person that develops constant political activity” (săftoiu, 2003). in fact the political image brand is a relatively simplistic synthesis, a caricature, a figure composed of two or three main characteristics positioning the political personality in the mind of the electorate, once and forever. once this image brand is formed in the consciousness of the political audience politicians will very difficultly make any changes to the perception of the electorate. political journalists aid the phenomena named the hardening of the image brand of politicians. case study our case study aims at monitoring the political brand within the 2012 local political campaign in bacău. in that sense, we have analyzed two local newspapers, deşteptarea and ziarul de bacău, the best rated from the point of view of circulation numbers, in order to establish the visibility of the two candidates to the mayor’s office for the city of bacău: romeo stavarache, pnl and dumitru sechelariu, independent candidate. both had already occupied this position and had experience in local administration. the local electoral campaign was aggressive and involved high investment costs in marketing strategies and techniques, with harsh speeches addressed at the opposing candidate, not lacking in personal attacks and colorful language. the two candidates both had support from the media trusts, with the support of ziarul de bacău and 1 tv bacău for romeo stavarache being particularly well known as well as the other side of dumitru sechelariu having the support of the trust deşteptarea which included tv bacău. by monitoring the two newspapers we intended to verify that the visibility of candidates within the two newspapers was sustained by the positive /negative attitude towards the two candidates. in order to validate these objectives we established two dimensions, one political and one human, in order to correlate political activities, as they were transposed in the local press, with the human profile of the candidate and the way it was perceived by the electorate. within each indicator we established a series of sub-indicators in order to establish the image levels in order to correlate them with media visibility. the political dimension had the following sub-indicators: political communication, attitude towards corruption, interest for civil problems, the ability to negotiate and political projects. the human dimension had the following sub indicators: faith, empathy, morality, honesty, charisma, consistency and leadership. the qualitative analysis was done through source tendency analysis (chelcea, 2001) relative to the analyzed social actor. the analysis of the frequency we can highlight the attitude of the source (expressed through message), which can be positive, negative, or neutral. in order to analyze the tendency we will use the formula: at=(f-d)/t, where: at=the tendency analysis index; f=number of favorable units; d=number of unfavorable units; t=the total number of units. by coalescing the two newspapers there was a total of 384 articles in the two newspapers, that is 200 in deşteptarea and 184 in ziarul de bacău. also, the distribution of each candidate within the two newspapers, relative to the established dimensions, was unequal. in deşteptarea, romeo stavarache had 84 articles, while 295 cîrtiță-buzoianu dumitru sechelariu had 136 articles. conversely, in ziarul de bacău, romeo stavarache had 111 articles, while dumitru sechelariu had 73 articles. 22% 25% 20% 16% 17% 18% 18% 28% 14% 22% 0% 50% 100% po liti ca l c om mu nic at ion at tit ud e t ow ar ds co rru pt ion int er es t f or ci vil pr ob lem s ab ilit y t o n eg oc iat e po liti ca l p ro jec ts political dimension of candidates in ziarul de bacău stavarache sechel ari u figure 1 political dimension of candidates in ziarul de bacau the political dimension of romeo stavarache gathered a number of 50 articles in ziarul de bacău. at the level of sub-indicators, which we established through monitoring in order to make note of the increased attention paid to projects and the way in which the mayor implemented policies within the local communities. the political dimension of dumitru sechelariu gathered 34 articles in ziarul de bacău. 5% 10% 36% 17% 32% 18% 13% 23% 27% 19% 0% 50% 100% po liti ca l c om mu nic at ion at tit ud e t ow ar ds co rru pt ion int er es t f or ci vil pr ob lem s ab ilit y t o n eg oc iat e po liti ca l p ro jec ts political dimension of candidates in deşteptarea stavarache sechel ari u figure 2 political dimension of candidates in deşteptarea 296 the political actor’s brand in the 2012 bacău electoral campaign the political dimension of romeo stavarachein deşteptarea reached a number of 32 articles, while dumitru sechelariu had 68. from a quantitative perspective, the preestablished political dimension sub-indicators in ziarul de bacău reached fairly balanced percentages, without major discrepancies in terms of categories or candidates. the articles referring to the pnl candidate mostly addressed the interest in civil problems with 28% and political projects at 22%, while the other categories reached close percentages with a favorable tendency. from the perspective of a candidate in office this is justifiable, even more so since his electoral campaign highlighted what the administration achieved during his mandate. among the positive aspects we mention: the bacău mayoral office got 40 play areas for the city’s children, the mayoral office signed the financing contract for the most beloved place of the locals, the underground passage of oituz-ştefan guse was inaugurated. in deşteptarea the sub-indicator of the ability to negotiate is maintained at 27% as well as the interest in civil problems at 23%, but the tendency index is generally negative. as a newspaper backed by his counter candidate the main themes broached were those addressing projects of the previous administration aimed at minimizing and attacking political achievements. dumitru sechelariu reached high percentages in ziarul de bacău on the subindicators: attitude towards corruption 25%, political communication 22% and interest for civil problems 20%, though the tendency was generally negative, so the high visibility did not make for a plus in image, but rather the opposite. themes from his previous administration were brought to the fore, and this will also be reflected in the human dimension sub-indicators with 3% for interest in civil matters and 7% for honesty. in deşteptarea the highest percentages were registered by the sub-indicators of interest for civil problems at 36% and political projects at 32% as a counter offer to the counter candidate, with a positive preponderance. from a qualitative point of view, romeo stavarache had an index of 0.30 while dumitru sechelariu had 0,35, with relatively small differences and attacks being present in both newspapers , showing that each candidate tried to promote an electoral offer as well as to attack the image of the other. 7% 12% 3% 7% 15% 20% 36% 10% 7% 14% 15% 12% 17% 25% 0% 50% 100% fa ith em pa th y m or ali ty ho ne sty ch ar ism a co ns ist en cy le ad er sh ip human dimension of candidates in ziarul de bacău stavarache sechel ari u figure 3 human dimension of candidates in ziarul de bacau 297 cîrtiță-buzoianu the human dimension of dumitru sechelariu in ziarul de bacău presented high percentages of leadership and consistency (36% and 20%, but with a negative tendency) and lower for indicators such as morality, honesty and faith. in deşteptarea the human dimension was found in 68 articles. we should note that the same qualities of leadership, charisma and consistency were highlighted with a positive spin in the attempt to improve the candidate’s image. morality and honesty, contested subindicators, at the level of the image, have the same percentage of only 11%. these percentages confirm that sechelariu is known by the electorate, but has image problems regarding his credibility for the voters. the human dimension of romeo stavarache garnered 61 articles in ziarul de bacău and 52 in deşteptarea. the campaign slogan of bacău. home! emphasized idea that bacău was well administered by its leader, the closeness to the electorate and the stereotype of the hard-working leader. the slogan was satirized in by deşteptarea: romica from focşani despairing because the locals will fire him on june 10th. we must underline that throughout the stavarache administration, deşteptarea had contested each and every action and political project, which led to a slow erosion of the newspapers credibility amongst the citizens. according to the expert literature, when constantly opposing the actions of a candidate the only result in the end will be the public’s saturation, and the effect will be reversed: the denials will cause positive reactions. 9% 15% 11% 11% 14% 19% 21% 12% 12% 8% 16% 13% 19% 20% 0% 50% 100% fa ith em pa th y m or ali ty ho ne sty ch ar ism a co ns ist en cy le ad er sh ip human dimension of candidates in deşteptarea stavarache sechel ari u figure 4 human dimension of candidates in desteptarea the human dimension of the candidate dumitru sechelariu was based on the campaign slogan: a local like you or together we’ll bring bacău back to life! through which he was trying to find a communication channel with citizens as well as identify with the problems with which they were faced. this was also apparent from the high percentage of the sub indicator empathy of 15% in deşteptarea. it is interesting that we can find common campaign ideas of the two candidates, common projects, the idea of the hard working leader mixed with a good administrator and this city being seen as a home, so the segment of the public is not essentially different. therefore the 298 the political actor’s brand in the 2012 bacău electoral campaign differences would be determined by the human component, associate with the traits determining the credibility of the candidate in front of the public. from a qualitative point of view there are differences between the two candidates if we analyze the results comparatively for the two dimensions. romeo stavarache has a tendency index of 0.36 for the human dimension, thus surpassing the political dimension index of 0.3, which means a high percentage of the image chapter and electoral credibility, particularly for a candidate in office who diminishes this indicator throughout the mandate. dumitru sechelariu, although he had a higher percentage in the political dimension index, at 0.35, did not confirm here with only 0.27 for the human dimension. in this case the high notoriety was not backed by credibility and therefore the image brand could no longer be saved. conclusions the analysis of the two newspapers and of the candidates shows that there was intense media coverage throughout the 2012 local political campaign, though visibility and the positive attitude towards a particular candidate are not always sustained. nevertheless, the powerful support of the newspapers for each politician in part contributed to the communication with the electorate, so that each candidate could send the desired messages to the public. political campaigns in recent years have demonstrated that elections are not based on rational voting (the best candidate or political program) but rather on the emotional vote that can often surprise even politicians. therefore political marketing strategies can contribute to saving a politician who is in difficulty or can demolish a good image won in time. that is the reason why the mass-media plays an essential role in electoral campaigns as an intermediary between the politicians and the voters. the journalists are transformed into the spokesmen of politicians, succeeding in some situations to persuade the electorate. essentially, political campaigns are not based on politics, but instead on political image. faces with voters mainly concerned with an emotional vote, romanian politicians concentrate their effort on persuasive methods, on constructing an image and political brand, good communication with the mass-media and fewer political programs and projects. therefore the politics of recent years and particularly recent electoral campaigns seemed to the public to be complete theatre scenes, in which the candidates seem successful actors in the attempt to attract voters. it is now essentially not to be effective, but instead to not make major mistakes during the campaign and to maintain the image level you have gained in the common mentality. references bennett, l. (1998), the un-civic culture: communication, identity and the rise of life style politics, political science & politics, xxxi. chelcea, s. (2001), methodology of sociological research: quantitative and qualitative methods, economics publishing, bucharest. esser, f., pfetsch, b. – edit. (2004), comparing political communication, cambridge university press, cambridge. mcnair, b. (2003), an introduction to political communication, polirom publishing, iaşi. săftoiu, c. (2003), political journalism, trei publishing, bucharest. teodorescu, b. (2005), the best of all possible worlds, comunicare.ro publishing, bucharest. 299 microsoft word apostoaie constantin marius_eng.doc improvement of cost calculation in constructions – application of the standard cost method mihaela , jeanina biliana ciurea, ”ef abstract grace to the analysis of several commercial companies effectively performed “on the field”, we could remark the necessity to change the method of cost calculation, our motivation being related to the simplification of calculations and the reduction of the labour volume, but especially the necessity to know in due time the deviations occurred as well as the causes having led to their apparition. the importance of knowing the deviations in due time results from the very basic characteristics of the constructions execution, i.e. the performance of works during several budgetary years, which leads to the modifications of prices and materials, the introduction of new technologies, and to the performance of open air activities, making the execution of constructions works be influenced by the atmospheric condition. but the most important aspect of knowing the deviations is the correct determination of expenses and their inscribing in the corresponding period, in view of determining the result of the budgetary year. our proposal for the enhancement of the method of cost calculation in constructions is the application of the standard cost method in the variant “single standard cost”. keywords construction works, cost calculation, standard cost jel code:m11, m41 introduction the domain of constructions has always had a very important role in the development of national economy, romania following the trend of the countries worldwide in this sector, i.e. of continual development and growth. in supporting our assertion we evoke the official statistic data showing us that, while in 2002 the weight of constructions in the total gdp was of 5.7%, in 2008 it reached 10,5% of the total gdp1, and this happened in the context in which the trade had a weight of 23.3% in the total gdp in 2008, and industry of 22.9%2, and, taking into account the economic crisis, that affected the world economy and implicitly the romanian economy, and led to the failure to reach the predicted data for the domain of constructions, i.e. 14-15% of the total gdp. nevertheless, for the year 2009 one predicted a level of 8-8.5% for the field of constructions in total gdp3, data that will probably inscribe again in the category of failures. at the level of the european union the data regarding the sector of constructions is in similar bad shape, 2009 registering major declines in comparison with 2008, as for instance: germany( -25,6%,january), slovenia (– 22,8%,april), spain (-21,1%, august). romania had the steepest fall in the field of constructions in the entire european union in august 2009, i.e. -29%4. 1 www.insse.ro , 21.02.2009 2 www.sfin.ro , 21.02.2009 3 www.reportereconomic.ro , 20.02.2009 4 www.epp.eurostat.ec.europa.eu , 17.02.2009 studies and scientific researches economic edition, no. 15, 2010 23 the century of speed we live in, the economic crisis that affected the entire world economy, the general development of economic and social life, all triggered the search for and adaptation of the best solutions for the economic life, able to reduce the working time and costs, efforts concretised in the field of accounting by the development and enhancement of the calculation systems, attempt that led to the abandon of the calculation of effective costs, as they were replaced by planned costs, based on predictable consumption of materials and labour, evaluated at present prices or tariffs. by adopting these planned cost the system of cost calculation can reach its two important goals: the control of economic efficiency and the fundamenting of decisional processes. the improvement of the method of cost calculation in constructions starting from the drawbacks of the classic method of cost calculation in constructions, in the attempt to improve the informational-accounting system in the construction companies, we shall seek a modern method of cost calculation able to respond to the needs of an economic entity in the conditions of romanian and international market at the present moment. the method we propose to be implemented in the construction companies is the standard cost method, its advantages compared to the classic method being the following: it allows the operative control of the consumption of the raw materials and labour, through the distinct and permanent follow up of deviations along the entire process of execution of construction works; it allows the performance of both the operative evidence and the accounting one, globally and by causes, from the moment of the apparition of batteries and until the moment of their distribution upon the final result. the applicant of the standard – cost method presents the advantage of rationalising the accumulation work, as the unitary standard cost established in advance is considered real cost, as it is not necessary to calculate the effective cost at the end of each period of administration, the deviations being considered to be deviations form the normal and are passed directly upon results. another advantage of the standard – cost method is that, although it relies on the concept of total costs, classifying the expenses in direct expenditure and indirect expenditure, the method uses also the classification of expenses into variable and fixed expenses, which allows the analysis of costs in relation with the volume of production, but also the calculation of the indicators necessary for the adoption of certain scientifically fundament decisions. from the three variants of application of the standard cost method, i.e. the partial standard cost variant, the single standard cost variant, and the double standard cost variant, we considered that the single standard cost variant is the most appropriate for the needs of the informational accounting system of the construction companies. the motivation of our choice results form the critics brought to the other two variants: the partial standard cost variant allows the establishment of the deviations from the accounting viewpoint only at the end of the administration period, which results in ignoring deviations during the execution of construction works, i.e. the causes having led to their occurrence. another drawback of this variant is that the inventory of the works in course of execution at the end of the period involves a large volume of work; the double standard cost variant expresses the exceeding of consumption under the form of certain efficiency indicators that must me calculated, and not under the form of deviations. then, the works under execution must be assessed at the end of the administration period both against standard cost and against effective cost. from the accounting viewpoint, the variant is extremely laborious as it implies the use of extra accounts for the registration of the standard production costs. in comparison with the other two variants of the standard cost method, the single standard cost variant presents the following advantages: the works in course of execution directly results by means of registering consumptions and studies and scientific researches economic edition, no. 15, 2010 24 execution works in the accounts of calculation at standard cost, eliminating thus the large volume of work triggered by the inventorying of the works in course of execution; it allows the establishment by articles of calculation and by causes of deviations form the standard costs of those effective during the execution of construction works; it uses only the calculation accounts existing in the accounts plan, by breaking down by analytical of the consumptions and deviations. the standard cost method, as its name shows, operates with standards, the standard being defined as a “reference or a norm in measuring performance”5, and the standards established through the method of standard cost are physical or value dimensions with character of norm, established scientifically, based on certain modern method of registration, follow up and analysis of phenomena that take place in the patrimonial unit6. the application of the standard costs method requires the successive realization of the following works: calculation of standard cost and the calculus, follow up and reporting of deviations from standard costs; in order to respond to the management requirements in the control activity, the standard cost must be grounded on the knowledge of the real conditions of patrimonial unit. for the calculus of value standards, our proposal is the use of the indicators provided by the national institute of statistics (ins), and the romania’s national bank (bnr). thus, if in 2009 the inflation rate was estimated to be 3.5%, in reality reaching a percentage of 5.5%, for 2010 the estimated percentage is of 2.76%7, and taking into account that the index of consumption prices (ipc) was of 5.6% on the average in 20098, we propose to consider a 6% index for the calculation of standards. because of the fluctuations registered in the world economy lately, but especially because of the economic crisis that has fully struck the romanian economy, largely affecting the domain of constructions, and even if we were not witnessing all these economic troubles, we dare contradict the theory asserting that standard prices can be calculated as the average of acquisition prices of the previous periods (3-5 years), corrected by the predicted index of price growths caused by inflation, or other predictable factors. our proposal regarding this subject is that value standards should be set by taking into account the average period as being the period immediately prior to the elaboration of price standards (maximum 6 months), and their updating should be made in accordance with the trend of price growth registered in the reference period, but also with the inflation index announced for the period in which the construction works will be carried out. the calculus of the standard cost with direct materials implies the anticipate calculation of the level of expenses corresponding to the execution of construction works. at the basis of determining the standard costs with the direct materials and considering the particular features of carrying out the execution of construction works, there lie, on the one hand, quantitative standards (physical) taken from the technical documentation called works estimates (concrete cubic metres) , as well as the price standards, representing the standard acquisition costs of raw and consumable materials planned to be used in the production process. in our opinion, the appropriate element for the optimum follow up of consumption and deviations from present consumptions is the use of estimates by categories of works, estimates that are to be elaborated for each of the main stages of a construction, i.e. for foundations, brick walling, electric installations, plumbing and heating installations, finishing works. the establishment of standards implies the elaboration of the chart of the quantitative standard cost and the elaboration of the value unitary standards, and then, by combining the two situations, one will obtain the chart of standard cost: 5 r.h.garrison, management accounting. concept for planning, control, decision making, fifth edition, bpi/irwin, 1988, pag.383 6 briciu, managerial accounting theoretic and practical aspects, economic publishing house, bucharest, 2006, pag.170 7 www.insse.ro , 21.02.2009 8 www.bnro.ro, 24.02.2009 studies and scientific researches economic edition, no. 15, 2010 25 table no. 1. list of value standards estimate of works – foundation the calculation of standard cost with the direct labour. the standard cost with direct labour is determined based on labour standards expressed in time norms for each technological operation and based on wages tariffs corresponding to the qualification necessary for the execution of these operations, in other words, one considers the time standards and standard wages tariffs. the time standards are established based on statistic observation, careful and rigorous measurements of the execution mode of production, considering the technical conditions of their execution. the wages tariffs are set based on personnel qualification, the wages tariffs also including the contributions calculated on wages, according to the legislation in vigour, as well as the indemnities due by the company for legal leaves of absence or bonuses for the special labour conditions. the document centralising the data regarding the direct labour necessary in the execution of construction works is, similarly with the case of raw materials and other materials, the general estimate of works. the process of elaborating the chart of standard cost for the direct labour is identical with that of direct materials, finalised with the elaboration of the standard cost chart with direct labour. elaboration of standard calculations for the transport expenditure and equipment expenditure. in this stage we shall separately calculate the standards for transport and the standards for equipment. thus, for the calculation of value standards of expenses with the transport of direct materials, we shall set the standards for ton/km and for the unitary transport price afferent for ton/km. in setting the standards afferent to the equipment directly involved in the process of execution of construction works, we shall establish two standards and the material standard, hours of operation/piece of equipment, and the value standard afferent to one our of operation. elaboration of the standard calculations for the indirect production expenditure takes into account their structure, i.e. the inclusion of expenditure for the upkeep and operation of equipment, the general expenditure, that, added to the standard for direct materials and labour, constitutes the standard of production cost for a certain object of calculation, in the case of execution of construction works, the object of calculation is the construction in se. the elaboration of the standard calculations for the indirect expenditure supposes the organisation of administration accounting by inscribing these expenses into the calculation item “indirect production expenses”, and their calculation is done through the elaboration of budgets for standard overheads. the elaboration of budgets for standard overheads must consider the separation of variable expenses from the fixed ones, the budget of fixed expenses comprising the standard overheads calculated for a single volume of productive activity (the building site for the work x), considered to be unchanged, and the flexible expenditure budget comprises the overheads of the building site for which it is elaborated in relation with different volumes and degrees of activity adopted as standard for the following year. as for the elaboration of the budget of general administration general expenditure, it comprises the expenses with wages and their accessories for the administration and management personnel, office supplies, lighting expenditure, heating and other expenses of this type studies and scientific researches economic edition, no. 15, 2010 26 afferent to the administration and management offices, in general all the expenditure related to the administrative and management personnel of the company. the calculation with the standard cost aims at elaborating the chart of total standard cost (table no. 2): table no. 2. chart of standard costs valid for 2010 estimate per categories of works foundation the following stage in the application of the method of standard cost is the establishment of the deviations from the standard set in the first part. the total standard costs of the planned execution of works are considered normal costs that should be equal to those effectively realised, of the works studies and scientific researches economic edition, no. 15, 2010 27 structure of execution, the specific consumptions of materials, labour, standard prices and tariffs, as well as indirect costs would be identical with those stipulated in the calculation of standards. in reality there occur a series of perturbing factors that trigger the apparition of difference between standard and effective costs. these differences, called “deviations”, can be calculated and highlighted by types of deviations, by stages of execution, by places and causes and promptly presented to the responsible factors in view of making the afferent decisions. similarly with the case of standards determination, the establishment of deviations is done by the main elements comprised in the calculation of standards, i.e.: raw materials and materials, direct labour, transport and direct equipment, indirect expenses. table no. 3. chart of standard costs valid for 2010 estimate per categories of works – foundation the deviations from the standard cost with direct materials occur as a result of the registration of consumptions different from those taken into account when calculating the standard cost or as a result of acquisition prices different form the standard ones. the deviations afferent raw materials and materials monitor two situations. deviations from the standard consumptions and the deviations from the standard costs. the situation of deviations are inscribed periodically, mainly at small period of time, in the “list of deviations form the standard cost” (table no.3), and at the end of the month studies and scientific researches economic edition, no. 15, 2010 28 the are centralised in the report regarding the deviations form the standard cost for direct materials” (table n o. 4). table no. 4. list of deviations from the standard cost for direct materials foundation table no. 5. report regarding the deviation from the standard cost for direct materials the deviations from the standard cost with direct labour. the establishment and analysis of deviations from the standard expenses with direct wages, including the contribution to the afferent social insurance funds and social security fund is an important issue that must be solved during the production process. for the prompt establishment of deviations, the administration accounting and cost calculation must be organised so that it could assure through systematic registration, comparison of labour standard costs with the effective one. the institutions elaborated for the follow up and analysis of deviations are the same as in the case of deviations with raw materials and direct materials. the deviations from the standard costs with direct transport and equipment. like in the case of direct materials and labour, we shall calculate the deviations form standard costs with equipment and direct transport afferent to foundation. the calculus of these deviations is required because, unlike other domains, where the production cost is calculated, being singled out separately, both in the general estimate and in the calculation estimates by objects. moreover, both for transport and for direct equipment one draws up extracts highlighting the total consumption for both calculation objects, but also the afferent unitary value. the values written down in these extract of transport, and equipment extracts, represent the standard of the respective work, any excess or economy from this value representing the positive of negative deviations, according to the situation. the deviations from the indirect standard costs. the indirect costs contain both variable costs (considered proportional with the volume of activity of the centre), as well as fixed costs. they are comprised both in the calculation of standard cost per product (chart of standard cost), as well as in the determination of standard costs afferent to each construction stage according to the estimates per categories of works. the budgetary control of indirect costs must analyse both the influence of the falling within the budgetary stipulations, and the influence triggered by the degree of utilisation of the production of capacity and the efficiency obtained from the consumption of indirect factors afferent to the execution of works. this type of deviations can be grouped in: studies and scientific researches economic edition, no. 15, 2010 29 the deviations from the change of the volume of indirect expenses they can be deviations from the actual budget or deviations from the recalculated budget. the budget of indirect standard costs is elaborated for a volume of standard activity, expressed in natural measurement units that represent in fact the connection factor (of causality) between the indirect costs to realise and the effectively executed works. in most cases one prefers as measuring unit the hour of direct labour. the total deviation from the initial standard budget as it does not take into account the variation of the volume of activity. at a reduced volume of activity with effectively smaller indirect costs we reach the conclusion that the total deviation is favourable, although the indirect costs for each site / stage can be much higher that the distributed standard share. like in the case of direct costs it is necessary to recalculate the initial budget in accordance with the effectively executed works. this budget considered “admissible” comprises the standard costs afferent to the works realised in standard efficiency. deviations from the non-use of the standard capacity of time – they are caused by the underuse or overuse of the production capacity expressed through the volume of activity in labour units, and expresses the volume of unabsorbed or overabsorbed standard fixed costs, depending on the volume of activity realised, in comparison with the standard activity. it was found that if the effective activity is superior to that standard one, it will absorb a supraunitary share of fixed costs, or a subunitary share in the reversed situation. efficiency deviations – they are triggered by the use of a different quantity of work for the realisation of a production unit compared to the standard quantity. conclusions in the present paper we attempted to underline the importance of the constructions domain in the national economy and not only, but we have especially tried to launch an alarm signal on the fact that, although the income from the field of constructions constitutes an important share of the national and eu’s gdp, this domain remained in the rear of romania’s alignment to the european standards. the economic and social evolution is visible in constructions as regards the materials used, the labour executed, the specialisation of workers, in fact the alignment is visible in all the components of the execution of works in construction, less in the economic-financial legislation. we think that, considering the century of speed we live in and the advance in technology, it is inadmissible that, in the field of constructions, one should use lists o materials from the ‘80s, that the legislation in the field should not provide clear norms of elaboration of estimates of works. on the other hand, we think it necessary to also criticise the companies where we conducted our survey. first of all, the registration of expenses in view of calculating the cost is not detailed by direct and indirect expenditure, being practically impossible to exactly determine the share of the indirect expenditure afferent of the built object. another issue we encountered is related to the structuring of the estimates of works. then the use of the classic calculation methods are no longer necessary because we are no longer interested in the centralised production of constructions, the unanimous interest being to obtain profit and, so that this thing may be possible, we must find in due time the deviations occurred, to find the causes having led to their apparition precisely in order to avoid them in the future, and thus to reduce the uneconomical expenses. as the method by orders, method used at present in the field of construction, does not give us the possibility to see the deviations in time for affecting the current result, but by applying this method the result is deformed through unjustifiable passing of deviations to the deviations belonging to another period of administration, we consider that the application of the standard cost method, in the single standard cost variant, would led to the simplification of the calculation, to the clarification in time of deviations and causes having led to their occurrence, but the most important thing would lead to the correct determination of the result of the period. bibliography 1. briciu, managerial accounting. theoretic and practical aspects, economic publishing house, bucharest, 2006, pag.170 studies and scientific researches economic edition, no. 15, 2010 30 2. r.h.garrison, management accounting. concept for planning, control, decision making, fifth edition, bpi/irwin, 1988, pag.383 3. www.insse.ro , 21.02.2009 4. www.sfin.ro , 21.02.2009 5. www.reportereconomic.ro , 20.02.2009 6. www.epp.eurostat.ec.europa.eu , 17.02.2009 7. www.bnro.ro, 24.02.2009 studies and scientific researches economic edition, no. 15, 2010 31 studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 44 do gross national savings and gross capital formation contribute to oman’s economic growth? an empirical study neetu kwatra university of technology and applied sciences -al mussanah, oman kwatra.neetu@gmail.com abstract the purpose is to examine the long-term relationship & cointegration among gross domestic product (gdp), gross capital formation (gfc), and gross national savings (gns) at the current price level in oman. the study has taken secondary data from the last 10 years (2010–2021). the study design is longitudinal. the studies applied the correlogram test to check whether the series are stationary or not. and also, the granger causality test to find the direction of the gdp, gfc, and gns. this study further used the eagle granger residual-based cointegration test and dols approaches to identify the long-run cointegration between gdp and its independent variable. with the application of the correlogram test, it has been found that gdp and gfc are stationary at their current levels, whereas gns is stationary at the first difference. the study reported that there is no significant relationship between saving, capital formation, and economic growth at current prices. however, the finding also that there is no long-run cointegration between gdp at current prices and gns and gfc. as the study is based on the current price which affects nominal gdp, not real gdp. it has been suggested to increase the saving to achieve a constant growth rate. keywords gross domestic product; gross national saving; gross capital formation; cointegration; current; economy jel classification e1-general aggregative models introduction and literature review gulf countries have experienced significant economic growth, primarily driven by the oil sector. this has led to increased revenues, allowing these countries to invest in various sectors such as infrastructure, education, and healthcare. however, relying heavily on the oil sector poses risks due to frequent changes in the price of oil and the finite nature of these resources. consequently, understanding the factors contributing to economic growth beyond the oil sector is crucial for diversifying their economies and ensuring sustainable development. finance map of the world (2013) defined economic growth as an increment in the productivity of goods and services in any country from the previous year. roy harrod (1939) and evsey domar (1946) gave a slow growth model, which suggested that if the government encouraged saving in the country, it would lead to economic growth. they gave a mathematical equation, g = (δy/y) = (s/k), which states that if you increase saving, it will increase output. according to prashanth kanniga (2021), capital formation is the result of saving which further accelerates economic growth by adding the productivity of labor and large-scale production. he also stressed kwatra 45 that if a country increases its saving it can use its resources in the best manner which increase output, reduce unemployment and solve the problem of unemployment and make the economy free from debt. chow (1993) researched that in china. those who have accumulated saving act as an engine for economic growth, saving stimulates fixed capital and the country can achieve high economic growth with sufficient savings. according to (wollasa. l.kumo, 2011) insufficient saving and investment specifically in developing nations is a constraint for economic growth, especially in sub-sahara africa. bakare (2011) used the ols model to investigate the relationship between capital formation and economic growth in nigeria. he discovered that there is a significant positive relationship between national income and saving, which accelerates economic growth, and he suggested that the government promote the habit of saving to have sustained economic growth. c. mphuka (2010) examines the causality between economic growth and saving in zambia using the var model. findings indicate that economic growth and saving are unidirectional, which means economic growth is the cause of saving and not vice versa. nicholas m. odhiambo (2008, 2009) conducted two studies, one in kenya and the other in south africa, to compare the relationship between saving and economic growth. he used causality and co-integration tests to conduct the study. a study proved that there is a significant positive relationship between savings and economic growth. mohan (2006) examined the relationship between economic growth and saving at different levels of income. he collected secondary data from 20 countries and found that growth rate leads to saving in 13 countries, but in other countries, growth rate and saving are bidirectional and cause each other. jagadeesh, d. (2015), investigates the application of the harrod model in the economy of botswana to understand the relationship between saving and economic growth. he used the ardl model to prove his result. the study found that there is a significant relationship between saving and economic growth, and the study also supports the harrod-domar growth model. kaur, s. (2021) found that the gdp of saudi arabia is largely dependent on capital formation and gross savings, and she proved a positive linear relationship between gross capital formation and the gdp of the country. k. r. v. rao (1980): the main objective of this study based on financial planning is to determine how much capital formation and saving have increased in india during the last three decades, which stimulates economic growth. this paper examined the policy of the government as well as the effective utilization of the resources in the country for economic and social welfare. therefore, the main aim of this study is to find the causal relationship and cointegration between gross domestic product (gdp), gross national saving (gns), and gross capital formation (gcf) in the oman economy. this study also focused on whether the behavior of saving and capital formation contributes to the economic growth (gdp at current price) of the oman economy. rationale of the study the above research produced diverse findings addressing the relationship between savings, capital formation, and economic development. while some studies claim that savings lead to economic development, others support savings and growth as being indirectly related. the effects of saving and growth are different in different countries, and they purely depend on whether a country is developed or developing. because percapita income is different among the countries. however, countries with a high rate of saving lead to capital formation and accelerate economic growth indirectly, and some result shows that economic growth causes saving. there is a mixed view about the relationship among the given variables. do gross national savings and gross capital formation contribute to oman’s economic growth? an empirical study 46 oman is a developing nation, and there is a low rate of saving. inadequate saving is a common question in most developing nations, which leads to poor economic growth, a high unemployment rate, and increased poverty. although this study provides insight into whether saving, capital formation, and gdp have a unidirectional, bidirectional, no relationship or all three are independent of each other, it also examines the cointegration of capital formation, saving, and economic growth in the sultanate of oman. therefore, the main objective of this study is to analyze the role of capital formation and saving in the economic development of oman at the current price level. conceptual framework we can derive a mathematical model here based on the growth model given by harrod and domar which is gdp=f (gcf, gns) as per our objective. figure 1 explains the conceptual framework where relationships among gdp, gns, and gcf have been established and the combined impact of gns and gcf on gross domestic product. this figure shows that gdp, gns, and gcf are affecting each other, and gcf and gns jointly affect gdp. figure 1 conceptual framework aims and objectives of the study the main aim of this study is to examine the role of savings and capital formation in the economic development of the sultanate of oman. specific objectives of the study 1. to investigate the causal relationship between gross savings, gross capital formation, and gross domestic product of the country 2. to identify the long-run integration among gns, gcf, and gdp of oman hypotheses of the study for objective -1, we have created six null hypotheses. h0(1)-gdp does not cause gns. h0(2)-gns does not cause gdp. h0(3)-gdp does not cause gcf h0(4)-gcf does not cause gdp. gdp gns and gcf gcf gns kwatra 47 h0(5)-gns does not cause gcf. h0(6)-gcf does not cause gns. for objective 2, we have created two hypotheses. 1. h (0): there is no long-run cointegration among gns, gcf, and gdp. 2. h (1): there is long-run cointegration among gns, gcf, and gdp. research methodology in this study, we have examined the relationship between gdp, gns, and gfc in oman’s economy. the study design is descriptive as we have explained the behavior of the given variables. the study constitutes a longitudinal study as secondary data has been collected over the last 11 years. the research design is descriptive and longitudinal, and a quantitative method has been used to reach our objectives. time series data on gross national savings, gross capital formation, and gdp at current prices covering the period from 2010 to 2021 have been collected from ncsi-oman (table 2). gross domestic product, gross national savings, and gross capital formation are the variables listed in table no. 1 of this paper. the econometric software package eviews for windows is used to process these statistics. table 1 variables of the study variable type variable name dependent gross domestic product at the current price independent gross national savings at the current price independent gross capital formation at the current price table 2 gdp, gns, gcf for the period (2010-2021) time 2010 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 gross national saving at the current price 11 60 7.9 0 13 09 8.5 0 13 11 0.6 0 11 84 4.0 0 67 08. 60 55 02. 90 61 94. 50 94 49. 00 74 57. 90 33 29. 82 58 78. 23 gross fixed capital formation at the current price 85 08. 10 92 93. 80 10 35 4.8 0 10 63 1.3 0 10 29 3.3 0 11 35 2.3 0 10 35 9.5 0 10 72 8.1 0 98 03. 40 92 15. 71 86 87. 47 gdp at current prices 24 99 0.0 2 29 79 7.7 6 33 60 8.6 8 34 58 0.4 4 35 64 2.8 1 30 26 4.3 3 28 88 7.0 4 31 08 9.3 5 35 18 4.0 0 33 85 9.4 0 29 18 7.1 6 33 90 9.8 2 source: ncsi-oman to examine the causality and co-integration among gdp, gns, and gcf, various time series models have been applied. to test whether the data series is stationary or not, the correlogram method has been applied in the study, and further eagle granger residualbased co-integration, and the ols approach has been used. we must determine whether the data series is stationary or not before running the granger causality test and both co-integration tests. all the tests can only be used if the series is stationary. in this study, the correlogram formal method has been used to determine whether the gdp, gcf, and gns time series is stationary or not, which is going to justify the auto-correlation between data sets over various periods with the do gross national savings and gross capital formation contribute to oman’s economic growth? an empirical study 48 help of the e-views program. further, the data will be analyzed using the granger causality and eagle granger cointegration models and the ols model to test the cointegration between the series. data analysis and interpretation in an attempt to find the direction of causality and co-integration between all variables (savings, economic growth, and capital formation) it is important to understand whether the time series are stationary or not. given below is the autocorrelation of the gdp, gns, and gcf in tables no. 3, 4, 5, and 6. sample: 2010-2021, observation-12, lag-3 figure 2 correlogram of gdp at level here the p-value is greater than 0.05, so we can conclude that the data is stationary at the level. even the spikes of autocorrelation are in between the vertical dotted lines, which shows that the data is stationary at the level. sample: 2011-2021, observation-11 after adjustment, lag-3 figure 3 correlogram of gfc at level here p-value is greater than 0.05 so we can conclude that data is stationary at the level. even the auto correlation spikes are also in between the vertical lines which shows that the data series is stationary at level. sample: 2011-2021, observation-11 after adjustment, lag-3 figure 4 correlogram of gns at level here p-value is less than 0.05 so we can conclude that the data series is non-stationary at the level. even the spikes of auto correlation are also outside the vertical lines which autocorrelation partial correlation ac pac q-stat prob 1 0.177 0.177 0.4778 0.489 2 -0.356 -0.399 2.6020 0.272 3 -0.369 -0.258 5.1402 0.162 j autocorrelation partial correlation ac pac q-stat prob 1 0.434 0.434 2.6932 0.101 2 0.114 -0.092 2.8988 0.235 3 -0.185 -0.248 3.5137 0.319 4 -0.279 -0.120 5.1065 0.277 j autocorrelation partial correlation ac pac q-stat prob 1 0.627 0.627 5.6262 0.018 2 0.111 -0.466 5.8212 0.054 3 -0.072 0.250 5.9135 0.116 kwatra 49 shows that the data series is nonstationary at a level. to make it stationary we have created a new series of gns with the first difference as given below in fig no. 5 sample: 2012-2021, observation-10 after adjustment, lag-3 figure 5 correlogram of gns at first difference (dgns) in fig no. 5 here p-value is greater than 0.05 so we can conclude that data is stationary at the first level not at the level. even the spikes are also in between the vertical lines which shows that the dgns is stationary at the first difference. as a result of the correlogram test, we can conclude that gdp and gcf are stationary at the level and dgns stationary at the first difference. further, to perform the causality and co-integration tests, we have used gdp, gcf, and dgns (gross national saving at first difference) to satisfy our above-mentioned objectives. objective-1 sample: 2010-2021, lag-2 figure 6 pairwise granger causality test the granger causality test, as reported in fig. 6, shows that there is no causality between gross national saving, gross capital formation, and gdp. the p-value is greater than the significance level of 0.05, indicating that null hypotheses are accepted. none of the variables is the cause of the other. all variables are independent, which means gdp, dgns, and gcf are not statistically significant. hence, we can conclude that there is no causality among the gdp, dgns, and gcf. additionally, the behavior of dgns and gfc is not able to forecast the behavior of economic growth and vice versa. objective -2 to identify the long-run integration among gns, gcf, and gdp of oman. we have used two tests. the main assumption of this test is all variables should be stationary which we have satisfied by the correlogram test. 1. eagle granger residual-based cointegration test autocorrelation partial correlation ac pac q-stat prob 1 -0.009 -0.009 0.0010 0.974 2 -0.473 -0.473 3.3607 0.186 3 -0.295 -0.394 4.8570 0.183 null hypothesis: obs f-statistic prob. gdp does not granger cause dgns 8 3.85867 0.1481 dgns does not granger cause gdp 0.16497 0.8551 gfc does not granger cause dgns 8 2.50611 0.2291 dgns does not granger cause gfc 0.38108 0.7121 gfc does not granger cause gdp 9 0.71325 0.5434 gdp does not granger cause gfc 0.00792 0.9921 do gross national savings and gross capital formation contribute to oman’s economic growth? an empirical study 50 2. ols (ordinary least square) empirical test-1-eagle granger residual-based cointegration test this test has been performed in three steps step-1 model for eagle granger residual-based test gdp=a+b1 (gcf)+b2 (dgns)+e where a is the intercept, b1 and b2 are the coefficient and e is the error step-2 estimate its residual error. sample-2010-2021 figure 7 residual error of eagle granger residual cointegration test dependent variable gdp step-3 application of unit root test on the error series. as shown in fig. 8, the null hypothesis is error has a unit root, indicating that the error series is non-stationary. in the figure, the p-value is 0.1483, which is more than 0.05 significant level, so hypotheses have been accepted and we can conclude that the error series has a unit root and series is non-stationary at level, which proves gdp, which is a dependent variable, is not co-integrated with saving and capital formation. as the engle-granger test considers the null hypothesis that there is no cointegration, which means there is no correlation between gdp (a dependent variable) and dgns and gcf (an independent variable) in the long run which accepts the null hypothesis of our objective -2 and reject the alternate hypothesis. p residuals from equation with dependent variable gdp modified: 2010 2021 // m akeresids error -3398.1701... -489.93573... 121.497304... 1634.89004... -1426.5551... -2640.8739... -403.06347... 2171.51062... 2010.92121... -693.00742... 3112.78664... kwatra 51 sample-2010-2021 figure 8 unit root test with dependent variable gdp empirical test-2-ols method to test cointegration sample-2012-2021 number of observation-10 after adjustment figure 9 least square method, gdp as the dependent variable, gfc, dgns as the independent variable in this study, the dols approach is also applied to identify dynamic long-run cointegration between gdp and its independent variables. here, the p values of gfc and dgns are greater than 0.05, so the result is insignificant, and we accept the null hypothesis that there is no cointegration among gdp, dgns, and gcf. even the value of r, which is 0.3, is not much and does not count for gdp. value of f-statistics 1.8860, null hypothesis: error has a unit root exogenous: constant lag length: 0 (autom atic based on sic, m axlag=1) t-statistic prob.* augm ented dickey-fuller test statistic -2.474684 0.1483 test critical values: 1% level -4.297073 5% level -3.212696 10% level -2.747676 *mackinnon (1996) one-sided p-values . warning: probabilities and critical values calculated for 20 observations and m ay not be accurate for a sam ple size of 10 augm ented dickey-fuller test equation dependent variable: d(error) method: least squares date: 04/04/23 tim e: 16:33 sam ple (adjusted): 2012 2021 included observations: 10 after adjustm ents variable coefficient std. error t-statistic prob. error(-1) -0.833884 0.336966 -2.474684 0.0384 c 391.5254 611.0750 0.640716 0.5396 r-squared 0.433591 mean dependent var 651.0957 adjusted r-squared 0.362790 s.d. dependent var 2384.839 s.e. of regression 1903.709 akaike info criterion 18.11785 sum squared resid 28992856 schwarz criterion 18.17837 log likelihood -88.58926 hannan-quinn criter. 18.05146 f-statistic 6.124062 durbin-wats on stat 1.721285 prob(f-statistic) 0.038429 variable coefficient std. error t-statistic prob. c 34388.27 9598.617 3.582627 0.0089 dgns 0.542417 0.282997 1.916688 0.0968 gfc -0.144577 0.951461 -0.151953 0.8835 r-squared 0.350177 mean dependent var 32621.30 adjusted r-squared 0.164514 s.d. dependent var 2524.181 s.e. of regression 2307.226 akaike info criterion 18.56880 sum squared resid 37263044 schwarz criterion 18.65958 log likelihood -89.84402 hannan-quinn criter. 18.46922 f-statistic 1.886085 durbin-watson stat 1.445586 prob(f-statistic) 0.221198 do gross national savings and gross capital formation contribute to oman’s economic growth? an empirical study 52 which is above 0.05, which shows that we accept the null hypothesis that gdp, dgns, and gfc do not co-integrate and affect gdp much. so, we can conclude that capital formation and saving do not explain gdp at the current price in the oman economy as per the last 11 years of data. both tests provide the same decision, which means there is no long-term integration between gdp, dgns, and gfc. the finding of the study table 3: hypotheses and their related decision objectives hypothesis p value is greater than 0.05 decision 1 h0(1)-gdp does not cause gns yes accept h0(2)-gns does not cause gdp yes accept h0(3)-gdp does not cause gcf yes accept h0(4)-gcf does not cause gdp yes accept h0(5)-gns does not cause gcf yes accept h0(6)-gcf does not cause gns yes accept 2 h(0)-there is no long-run cointegration among gns, gcf, and gdp yes accept h(1)-there is long-run cointegration among gns, gcf, and gdp yes reject level of significance 5% (0.05) the result shows that oman's economic growth (gdp at current prices) does not cause gns or gcf, and neither gross capital formation nor gross national saving cause gross domestic product as per 2010–2021 data at current prices. and also, there is no longrun correlation between growth, saving, and capital formation at the current price. conclusion we investigate the causal relationship of gdp, gcf, and gns and the long-run impact of gns and gcf on gdp, and for this, the last 11 years of time series were used. it has been concluded that there is no causal relationship among the gns. gdp and dgns mean that the behavior of gdp, national savings, and capital formation cannot be forecasted with each other at the current price level. as a result of objective number 2, it was explained that economic growth is not co-integrated with saving and capital formation with the application of both the model of eagle granger residual-based cointegration and the ordinary least squares method. there is no combined effect of gns and gcf on gdp at the current price of the country in the long run. reference bakare, a. s. (2011). a theoretical analysis of capital formation and growth in nigeria. far east journal of psychology and business, 3(2), 11-24. chow, g. c. (1993). capital formation and economic growth in china. the quarterly journal of economics, volume 108, no 3,809-842. finance map of world. (2013). savings and economic growth, retrieved june 28, 2013, from google: http:// finance. maps of world.com /savings/account/economicgrowth.html. kwatra 53 harrod, r., & domar, e. the solow growth model. jagadeesh, d. (2015). the impact of savings in economic growth: an empirical study based on botswana. international journal of research in business studies and management, 2(9), 10-21. kaur, s. (2021). is gross capital formation and gross savings a component in saudi arabia's economic growth?. international journal of islamic and social sciences (isos), 1(3), 23-27. mohan, r. (2006). the causal relationship between savings and economic growth in countries with different income levels. economics bulletin, 5(3), 1-12. mphuka, c. (2010). are savings working for zambia’s growth?. zambia social science journal, 1(2), 6. odhiambo, n. m. (2010). is financial development a spur to poverty reduction? kenya's experience. journal of economic studies. prashanth kanniga; justin t.s. (2021). the role of saving in the ecnomic development of sultanate of oman. global scientifica journal , 9(5), 1-14. rao, v. k. r. v. (1980). savings, capital formation and national income. economic and political weekly, 965-977. wolassa.l k. (2011), investment efficiency, savings and economic growth in sub saharan africa, retrieved on 5th september 2011, from http://www.politicalarticles .net/blog/ 2011/09/05/ investmentefficiencysavings-and-economic-growth-in-sub-saharan-africa/. (2 rânduri libere, 11 p financial resources of ngos nicoleta ciucescu, phd.student, university "vasile alecsandri" in bacau, romania abstract due to the low funding levels registered in recent years in the ngo sector in romania, many ngos have faced a number of difficulties, some of them have ceased to carry on business. financial position of the governmental sector is poor, especially for large organizations that are strictly dependent on foreign funds. for the good functioning of ngos activity, it is requiring a constant concern for finacial fundraising. the article aims to present the diversity of financial resources of ngos. keywords financial funds, funding, donor, project jel codes: m29 introduction the current situation of the nongovernmental sector can be described as unstable, strictly dependent on grants for specific projects, fact constituing a rare opportunity for most organizations. it should be mentioned that such projects present a limited potential for continuity. at the situation described above there are exceptions, which are reperesented by a very reduced number of organizations with foreign partners or long-term donors, situation which offers the necessary means to balance the resources for substantial periods of time. these discrepancies have as the effect the difficulties on long-term planning, on the improving of services and on the organizational development for any organization being in such a situation. types of ngos’ funding the fundraising methods are varied, and between these the most used in romania are as follows: the application form; the direct request; the donations; the sponsorship; the public funds; the income from own activities; the members fees; the 2 % campaign; the inheritances. the most widely used financial instrument in romania is the application. in order to prepare an application for funding it must carry on the following stages: 1. the identification of the subject for which it is requiring funding; 2. the plan of activities and budget; 3. the identification of the funding resourses; 4. the preparation of the application form itself. the application form is that document which requires money to solve a problem that has been identified by the organization; it seeks to fulfill predetermined objectives for a limited periode of time and which involves some costs. it may have several components, a cover letter to accompany the application, the presentation of the organization, the project summary, the purpose and the objectives established, the evaluation methods, the project budget, the project sustainability, and the necessary enclosures. the direct request is a letter to a potential donor, who may be natural or legal person. in the letter it should revealed the reason for requesting financial support and what is the amount. also, it should be identified a target group to whom have to be sent the letters, whose profile matches the purpose of the project that the organization wants to carry aut. these can be customized and it is preferred to be sent in large numbers because it is the possibility that not everyone can read them. the donation1 is an unilateral contract to be signed in original (logged at public notary), by which one party, called the donor, sends ownership of an asset to other party, called the donee, in irreversibile way without waiting from the latter any counterservice. in practical activity, the acquiring donations faces a number of difficulties, even if it is one of the main sources of funding of ngos. these difficulties are due, on one hand, to some restrictive regulations of the law, on the other hand, to a certain lack of experience from the part of ngos in to make known the projects and the needs. both foundations and other non governmental organizations that need funding must address in order to receive donations, above all to the foundations. currently, foundations supporting ngo projects are especially foreign foundations, precisely because the romanian ones are in the paradoxical situation set out above. the regulations regarding foundations specialized in fundraising, as are mentioned in government ordinance no. 26/2000, it is hoping that will lead to solving this problem. therefore, the most frequent donors are are not individuals, who usually contribute to to support ngos activities by certain special forms of donation, especially public collection to wich i refer below. between donors are not companies because they do not receive any financial incentives from the contract of donation concluded, so they prefer a kind of contract of sponsorship able to give them such facilities. so, a ngo can receive donations in the country or abroad. donations received from the country – most papers reffering to the ways of fundraising stresses the importance of local support in development of projects of ngos. even potential foreign donors are interested to know that the project they intend to suport is encouraged also by donations from the country. therefore, it is not to be neglected the possibilities to obtain funds or material goods by donations received from the country. donations received from abroad – supporting activities of a non governmental organization may be not only internal, but external. however, the receipt of foreign donations implies more precautions. a form of donation is public colection about which in romanian legislation is not a specific regulation. it consist in issuing a call to the public to contribute to the development of a nonprofit activity. this fundraising method do not match any action, so for this reason the actions taken must solve as general possible and the utility of the problem to be understood as soon as possible by the general public. for this purpose, often are implied artistic and cultural figures, because their presence can guarantee of worthiness, thus is shattered public reluctance. therefore, organizing shows for fundraising is in fact a modern variant of public collection. even though these shows are televised or not, they are modern and, in the same time, efficient fundraising instrument, consisting both in amounts obtained as ticket price,                                                              1 ***  consilier, organizaţii non-profit, rentrop&straton, grup de editură şi consultanţă în afaceri, 2000  and those donated by the public on this occasion. for the amounts obtained from the proceeds of the shows organized for humanitarian purposes it is a relief for performance tax. public collection has many advantages, among which may be mentioned simplicity, amounts not to be recorded in authentic contract, as in the case of a donation, public collection being considered handy gifts, which is concluded by simply handing the donated amount or asset. the public collect implies the existence of apreciable initial funds. to be successful such an action it is necessary to take into account several factors such as the welfare of the public, its civic level and the measure in which the public feels involved in the initial project. the sponsorship is the donation by a legal or a natural person, who is actively involved in community in which he develops his activity, of money or material assets to another person or institution for humanitarian or altruistic purpose. in the case when the sponsorship is based on disposal of material goods, these will be evaluated through sponsorship contract valued at the time of their submission to the beneficiary. in other words, the sponsorship is a contract by which two people agree on the transfer of ownership of material assets or financial means in order to sustain some non-profit activities, which are carried aut by one part, called the beneficiary of the sponsorship. the beneficiaries of sponsorship include: every non-profit legal person who carries or will carry out an activity in the: a) cultural, artistic, educational, scientific, humanitarian, religious, sports, protection of human rights, healthcare, social services, environmental protection, economic, social and community development, representing the professional associations, and also in maintainance, restoration, preservation and in enhancement of monuments and historical sites. b) public institutions engaged in activities defined in point a), any person whose activity in the areas referred in point a) is recognized by a legal non-profit organization or a public institution operating in the domain in which the sponsorship is requested. foundations can not conduct business , they just operating from the contributions of the founding members, money obtained from leasing land they own or leasing building from their property. sposorship contract is not the contract of donation or advertising contract. in the case when are not drawn sufficient resources from the private sector or the large public, it is necessary to rely on public funds. the main ways of involvement in supporting the new non-profit sector from the part of goverment in romania are2: 1. direct funding through grants from the state budget. in their turn, this frequent type of support was realized: by own competition programs developed by ministries; at request, by allocations from the budget of ministries. european union countries support by programs the funding of ngos, the latters having just designed to take some of the government functions, solving problems that can not be solved by the executive. foundations retain private character, even they receive state subsidies, which may be granted to non-governmental organizations according to the proposed goal, under legal conditions of funding programs and in conformity with afferent contracts of funding programs and of projects initiated and carried out. the article 38 of government ordinance no. 26/2002, provides that there is a class of nongovernmental organizations which have the right to receive public services, as the privileged right at resources from the the state budget and local budgets, i.e. associations and foundations recognized as being of public utility. according to article 38 of government ordinance no. 26/2002, an association or foundation can be recognized by the government                                                              2  plumb, i., androniceanu, a., (2003), managementul serviciilor publice, editura ase, bucureşti    as public utility if the following conditions are met: a. operating in a general or comunity interest, if any; b. operates for at least three years and made a part of the objectives set; c. submit a report showing previous significant activity by carrying out programs or specific projets to its goal, being accompanied by balance sheets and income and expenditure budgets for the last three years; d. do not record decreases in the value of the assets each year of the original property. both the romanian government and foreign donors prefer concluding financing contracts, on the base of a program, regardless of the field. with ngos than with economical agents, this fact representing un very important advantage of making un association in the form of ngos. financing contracts are concluded but only on the base of detailed programs, which are conditioned as follows: a. to be of interest, addressing vital issues of the day; b. to be real (the financing are concluded more often based on a concret and limited program then one on a large scale); c. to be of interest for financier (the program is realized in collaboration with the ministry of finance and the contract is more likely if the program matches with the strategic policy objectives of the ministry); d. to be feasible (the feasibility is inversily proportional to the magnitude of the project and the strength and prestige of the ngo proposing the project). 2. the governmental mediation by instituting at national level of the international funding programs of the non-profit sector. may be mentioned here external programs from funds of some international public organizations, having as object also romanian non-profit organizations (e.g. phare, usaid, know how fund, sapard). 3. the direct material support provided by the local authorities in this regard, a number of ngos have prevailed of humanitarian missions to seek cooperation of municipalities in obtaining tax incentives to enable their activity. thus, municipalities, prefectures or decentralized services of administration, depending on skills may provide some facilities to non-governmental organizations, such as: offices, reductions or exemptions of rent paying, some equipments (installation of telephones, furniture), lands to build (for orphanages, hospitals, places for worship), free building permits etc. 3. the direct material support provided by the local authorities in this regard, a number of ngos have prevailed of humanitarian missions to seek cooperation of municipalities in obtaining tax incentives to enable their activity. thus, municipalities, prefectures or decentralized services of administration, depending on skills may provide some facilities to non-governmental organizations, such as: offices, reductions or exemptions of rent paying, some equipments (installation of telephones, furniture), lands to build (for orphanages, hospitals, places for worship), free building permits etc. the reality of our country shows that the sponsorship represents a main and viable way to support ngos. this is proven by the fact that till now these organizations were and are supported through sponsorship by businesses from our country and from abroad, according to the law. the revenues from its own activities – ngos can carry out certain economic activities, and revenues thus obtained have marely incidental character to their funding resources. the fact remains that they are organized in the manner prescribed by law for such activities (e.g. in the form of companies organized under the law no. 31/1990, as amended) and are taxed accordingly. economic activities – the ngos are characterized, above all, by their non-profit activity, in the sense that the activities the have never aimed a profit distributed as dividends. ngos seek, by definition, the development of general or community interest and even when they are constituted in the advantage of their members, have as objectives the fulfilment of their par excellance non-patrimonial interests. from this point of view, the law no. 21/1994 was extremely restrictive. only associations, not and foundations, had the right to conduct business and only incidental in relation with the main non-profit activity. therefore, many ngos have faced financial problems because donations and sponsorships (especially in the conditions of a non-encouraging sponsorship law), could not be always sufficient to achieve the objectives. in practice it could often meet situations in which the court accords juridical personality even to some foundations proposing since incorporation carrying out such activities, even if according to the law, the foundations had not the right to do business. even and the tax laws started to admit indirectly that both categories of legal entities may conduct business. but the doctrines keep on insisting on the rule of law still in force. in this contradictory context entered into force the government ordinance no. 26/2000 concerning associations and foundations, published in official gazette no. 39 of 31 january 2000, which regulate explicitly and unitary this issue. according to this ordinance both associations and foundations may conduct economic activities in two forms: a) the direct economic activities these activities can be deployed only with accessory character and only if they are closely related with the primary purpose of the legal person (article 48 of the government ordinance no. 26/2000). these economic activities are organized into units without legal personality and the obtained profit from conducting of these activities will be used to develop and equip these units, either to achieve the main objectives for which the association or the foundation was established. this profit will never be distributed to the members of the association, to the founders or to the board members. regarding the profit tax, the government ordinance no. 76/1994, as amended, also provides, at present, only one excemption. so, are exempted from profit tax payment "economic units without juridical personality of blind organizations, of disabled persons organizations or of persons with disabilities organizations". other economic units established as non-profit organizations are not exempted from income tax, being repealed the provision after the entry in force of the government emergency ordinance no. 217/1999 under which associations anf foundations are profit tax exempted if they use at least 80% of the revenue to achieve the main purpose for wich they were established. b) companies according to article 47 of the government ordinance no. 26/2000, associations and foundations may establish companies. to this purpose, they may be associated with other natural or legal persons, including non-profit legal entities. the establishment of the companies should be only a form of obtaining the income needed to run the non-profit organization. as a result, government ordinance no. 26/2000 provides that the dividends obtained by associations or foundations in activities of such companies, if are not reinvested in the same companies, are used compulsory for the achievement of the purpose of the association or foundations. if an ngo is associated in the frame of a company, it will be obliged to pay tax on dividends, even if they use these dividends to achieve its non-profit objectives. if in the case of direct economic activities, the law requires the condition that they have accessory character and they are in close relation with the main purpose of the legal entity; in the case of the activities organized under the form of companies such a condition is not more imposed. the law does not distinguish between different forms of organizing of companies set up by associations or foundations. it follows that it is permitted to set up any forms provided by the law no. 31/1990, as amended (public limited company,   limited partnership, limited partnership with shares, general partnership, limited liability company). not being imposed also the condition of associating in order to set up a company, it results that it is possible the setting up of a limited liability company whose sole shareholder is the non-profit organization. the government ordinance no. 26/2000 is not applied to trade unions, political parties and religious units. the regime and the conditions of carrying out economic activities by trade unions, political parties and religious units are regulated by special laws. it is also considered that they can not engage any direct economic activities or organized as companies, specialized foundations in fundraising. the solution results from the regulation of these types of foundations as having this exclusive purpose, under the penality of dissolution, to carry out the activity of fundraising. but, in the strict sense of the term, obtaining incomes from economic activities does not represent "fundraising". membership fees represent another source of funding ngos. membership fees are amounts that each memeber pays annually to support the organization. the obligation to pay is provided in statute of non-profit organization as follows: -the amount of the fee, the law stipulates clearly how much is the maximum amount of contributions that can be claimed to members as in the case of article 34, paragraph 3 of the law no. 27/1996, which provides that the amount of contributions paid a year of a person can not exceed 50 minimum salaries in the country. the national minimum salary is taken into account as that existing at the date of january 1 of that year; -the mode of payment, may be designated a person in charge of collecting contributions payable by the members, but can be predict and obligation of paying in a account of nonprofit organization; -the terms of payment, the fees can be paid monthly, but may be estblished other terms (e.g. annually); -sanction, it may be fixed delay increases or progressive disciplinary sanctions (verbal warning, written warning), going till the dismissal from the organization. it is recommended that these sanctions to be set right in the statute in order to not give rising of litigations or tensions between members. it is recommended setting an equal amount of contributions for all members of ngo, but may be provided some advantages for founders. a peculiarity in this matter is related to thr foundations. in their case, the associative element is insignificant.the foundations are not characterized, unlike associations, by associations of several persons with common non-patrimonial purpose, but is characterized by the existence of a patrimony allocated to a non-patrimony purpose, wich is administrated by one or more persons. therefore, the government ordinance no. 26/2000 excludes contributes from the income sources of the foundations. the campaign 2% is the new form of financing available to the romanian organizations, this provision offering the possibility to the taxpayers to direct a part of their income tax to a non governmental organization issued as a result of the government ordinance no. 26/2000. thus for sponsoring a ngo, the taxpayers submit to the financial authority of his residence the form 230 and the taxpayers who obtain in addition to salary other incomes, they must complete the form 200. inheritances-the successions do not represent regular, but incidental fund sources. in the case of testamentary foundations, they are the main source of the patrimony of the foundation, which is constituted even by the testator to the destination of the respective nonpatrimony purpose. the inheritances can be: -universal, case in which the ngo obtains the full set of rights and obligations belonged to the testator; with universal title, case in which the ngo obtains a fraction of the patrimony of the testator; with particular title, case in which ngo obtains one or more assets that were owned by the testator. conclusions fundraising activities are strictly necessary for running activities of an organization. these activities do not involve only request for funds, but also un offer of opportunities adressed to the partners. the important elements to be considered in fundraising are: the written plan with purposes and objectives; the request of a donation; a diversity of fund sources; the allocation of time for fundraising; the allocation of money for fundraising; the commitment of members and board to fundraising activities; the professional approach of funding under the rules of marketing. the diversity of funding gives the autonomy and also financial stability. references boboc, i. (2004), managementul organizaţiilor non-profit, ed. didactică şi pedagogică, bucureşti 2. bryson, j.m. (2002), planificarea strategică pentru organizaţii publice şi nonprofit, ed. arc, bucureşti 3. druker, p. (2006), despre profesiunea de manager, ed. meteor press, bucureşti 4. neagu, c. (2008), udrescu, m., managementul organizaţiei, ed. tritonic, bucureşti 5. nicolescu, o., verboncu, i. (2007), managementul organizaţiei, ed. economică, bucureşti 6. plumb, i., androniceanu, a., (2003), managementul serviciilor publice, ed. ase, bucureşti 7. străinescu, i., ardelean b. (2007), managementul ong, ed. didactică şi pedagogică, bucureşti 8. *** consilier, organizaţii non-profit, rentrop&straton, grup de editură şi consultanţă în afaceri, 2000    microsoft word apostoaie constantin marius_eng.doc evaluation as an organizational growth of a contemporary employee alice magdalena chiţu (soare), brasov, romania adelina roxana chiţu, ph.d, brasov, romania abstract in order to survive and prosper, organizations need to respond in a timely and flexible way to change. organizations are increasingly recognizing that the key to their success is largely contingent upon the capabilities of their employees—their human capital. in order to achieve the results expected regarding the human resource, a organization must have a training department, department that has to consider the need of training, to measure this need so that the management can take the necessary steps to improve the economical status of the organization. keywords organization, training need, measurement, evaluation, people. jel codes: m 12, m 54 the beginning of the second decade of the 21st century, makes that the change remains an enduring theme. in order to survive and prosper, organizations in the private and the public sectors will need to respond in a timely and flexible way to social, technological, economic and political change. this means that a organization’s survival and growth will depend on its ability to cope with the external and internal requirements that these changes will demand. this implies that existing and new staff will need to acquire new knowledge, skills, attitudes and perspectives on a continual basis. organizations are increasingly recognizing that the key to their success is largely contingent upon the capabilities of their employees—their human capital. organizational performance is understandably dependent upon individual performance. as society moves toward increased emphasis on human rights, so organizations are moving toward sharper focus on developing the human potential. organization, in the current economic crisis, in order to survive, must invest in its main strength, namely people, but it can not be efficient in any other way than resorting to training-either with the help of the newly created department or the existing one, or by outsourcing this service. training can be described as a planned and systematic effort to modify or develop knowledge/skill/attitude through learning experience, to achieve effective performance in an activity or range of activities. its purpose, in the work situation, is to enable an individual to acquire abilities in order that he or she can perform adequately a given task or job and realize their potential. it has been seen that there are two major routes into training – the present/reactive route and future/proactive route. there are a number of methods, means and procedures associated with these routes which can help the trainer to investigate performance problems and to identify training and development needs. it is not possible to make a rigid classification because some of the methods could be used at more than one level depending on the nature of the performance problem or future need and on the size of the organization. studies and scientific researches economic edition, no. 15, 2010 329 about needs, as before irrespective of the route into training there should be a clear link between the needs which have been identified and corporate objectives. in reality such a level of sophistication is unlikely to exist in many organizations. nevertheless, by adopting some of the approaches and through an understanding of the perspectives which have been described, trainers can make a positive contribution to organizational effectiveness even though their understanding of the corporate mission and objectives may not have been conveyed to them directly. furthermore, the trainer may be limited by a number of unforeseen or uncontrollable constraints which may not allow a fully comprehensive study of behavioral problems or training needs to be undertaken. in circumstances such as these, the trainer may have to employ very basic methodology and take a number of short cuts that may not be very satisfying. however, there are many situations when a series of swift, professionally conducted interviews is all that is needed to find the critical issues and needs. success on short projects that have an impact can gain a considerable amount of credibility for the trainer which can be put to good use when asking for more time and resources for other projects. trainers should not always be prepared to give in to the ‘quick and dirty’ approach. whatever the outcome of training projects, the trainers are accountable at all levels of their involvement; memories are short when it comes to remembering success and trainers are quick and easy targets when it comes to directing blame. it is not unrealistic to recommend that trainers should be responsible for familiarizing senior managers with the tools of the trainer’s trade. the ability to recognize the systems and subsystems of an organization is an important element in all training and development activities. training and development exists to promote individual and organizational excellence by providing opportunities to develop workplace skills. the design and implementation of effecting training interventions cannot be accomplished without first identifying the various processes operating within the system. one way of looking at it is to envision training as the subsystem that acquaints the people with the material and the technology. it helps them learn how to use the material in an approved fashion that allows the organization to reach its desired output. because growth and change are inherent in organizations, they create a plethora of training needs. the term "learning organization" has become a popular buzzword to describe the way organizations must cope with their dynamic nature. a learning organization is based upon the principle of continuous learning, or a systematic method designed to increase learning within an organization, thereby enabling a more effective response to organizational change. learning organizations emphasize the importance of learning at the individual, team, and organizational levels, thereby increasing the likelihood of further developing a competent and competitive workforce. peter senge defines the term as an organization that is "continually expanding its capacity to create it's future." doing so requires that individuals improve existing skills as well as learn new skills. collectively, these newly acquired or refined skills can accomplish shared organizational goals. and, by anticipating future changes and working toward the knowledge and skills necessary to meet the demands resulting from these changes, the organization can systematically expand its capacity. able people may grow to a point where they are ready for responsibilities beyond their initial assignments. when this happens, the organization can profitably help them develop new, larger capabilities. training has become concerned not only with helping individuals to fill their positions adequately but also with helping entire organizations and subdepartments to grow and develop. thus the title has changed from "training and development" to titles reflecting missions such as "employee development," "organization development," or "human resource development." this trend makes it wise for us to look a bit more closely at the interrelationship of the four inputs: people, technology, materials, and time. studies and scientific researches economic edition, no. 15, 2010 330 training and development, though primarily concerned with people, is also concerned with technology and processes, or the precise way an organization does business. to accomplish the desired final output, an organization requires work. that work is divided among positions; and positions are divided into tasks—and tasks are assigned to people. and there we have our second input: people! to perform their assigned tasks properly, all workers need to master and apply the unique technology governing their tasks. so here's where training enters the picture. civilization has not yet found the way to conceive and run an employee-free organization. nor has it found a magic technology-and-skill potion that can be injected into people. training is concerned primarily with the meeting of two inputs to organizational effectiveness: people and technology. since organizations can rarely find people who are, at the time of employment, total masters of the unique requirements for specific jobs, organizations need a subsystem called "training" to help new employees master the technology of their tasks. training changes uninformed employees into informed employees; training changes unskilled or semiskilled workers into employees who can perform their assigned tasks in the way the organization wants them done; employees become workers who do things "the right way." this "right way" is called a standard—and one major function of training is to produce people who do their work "at standard." in fact, one simple way to envision how training contributes is to look at the steps by which people control their positions: step 1. define the right (or standard) way for performing all the tasks needed by the organization. step 2. secure people to perform these tasks. step 3. find out how much of the task they can already perform. (what is their "inventory" of the necessary technology?) step 4. train them to meet skill gaps—the difference in what they cannot already do and the standard for performing the task. step 5. test them to make certain they can perform their assigned tasks to minimum standards. step 6. give them the resources necessary to perform their tasks. from that six-step process, we can also identify the two remaining inputs: time and material. people can't be miracle workers who create something from nothing. management usually makes some statement about quality; it specifies what the finished product must look like; management also sets quantity standards. the job of the training department is to "output" people who can meet those standards, both in quality and quantity. this description may imply that all training takes place after people are hired but before they are assigned to their jobs. that's obviously not true. just look at the rosters of training programs and you'll see the names of lots of old-timers. one legitimate reason for including old-timers in training programs is that the organization has undergone a major change such as equipment changes, processes change, policies change, and procedures change. thus, veteran employees and new employees alike need training initiatives and benefit from them. when change occurs, an organization will have incumbent workers who no longer know how to do their jobs the new, right way. when people do not know how to do their jobs the right way, there is a training need. people do not usually know how to do the "next job" properly. thus transfers, or the promotions implied in some career-planning designs, imply potential education needs. some organizations have training departments that help prepare for the future. but sometimes we find people in training programs even when the technology hasn't changed, or even when they aren't preparing for new responsibilities. training is a remedy for people who do not know how—not for people who do know how but for one reason or another are no longer doing it. these other problems are performance problems—but they are not truly training problems; therefore, training is not an appropriate solution. studies and scientific researches economic edition, no. 15, 2010 331 the function once known as "training" has had to expand its own technology, strategies, and methodologies. organizations get outputs because people perform tasks to a desired standard. before people can perform their tasks properly, they must master the special technology used by the organization. training is the acquisition of the technology which permits employees to perform to standard. thus training may be defined as an experience, a discipline, or a regimen that causes people to acquire new, predetermined behaviors. whenever employees need new behaviors, then we need a training department. but as we have already noted, training departments do more than merely fill the gaps in peoples' repertoires for carrying out assigned tasks; training specialists are also now involved in career development: developing people for "the next job," for retirement, and for their roles in society outside the employing organization. one can never consider training if there was not an assessment regarding training needs. even if a training activity has almost always a good result upon the people it has acted, it is a costly action than diminishes the profit of an organization. the need itself can not be explained in other way than by thinking that it is helpful to consider two classes of training needs: individual and organizational. the difference is very simple, but it has heavy impact on the response made by the training department. of course, an individual training need exists for just one person, or for a very small population. organizational training needs exist in a large group of employees such as the entire population with the same job classification. that happens, for example, when all clerks must be trained in a new procedure, or all managers in new policy. a manager in a specialized department, however, may develop an individual training need when some new technology is introduced into that field, or when performance as a manager reveals the noncomprehension of one facet of good managerial practice. when new employees enter the organization, it is assumed that they know nothing of policies and procedures, nothing about organizational goals or structures. these deficiencies of knowledge are assumed to apply to all new people. however, there may also be individual needs involving special tasks the newcomer will perform; it is a good idea to "take inventory" to see whether the individual meets the standards for some of the skills necessary to the satisfactory performance of a position. because there may be serious lapses in such areas, some organizations use "certification testing." these might be written exams, performance demonstrations, or both. they are tests requiring the employees to demonstrate their capabilities to perform a specific task or job duty. one training manager describes the process for certification testing this way: "they are used as predictors of job performance to assure the company that employees are ready to perform job responsibilities safely and accurately following the completion of their training." in other words, there is individual testing or assessment before there is organizational assessment. it must be quite apparent that the training manager has many sources of data about potential training needs. training managers keep their eyes on the operation, on key communications, and on personnel moves even as they poll their client population. if there are lots of signals from lots of sources, the training needs (or the need for some performance-problem solution) may exceed the resources available to meet those needs. at such moments, a written policy statement comes in mighty handy. but on what basis does that policy rest? in most organizations, at least four criteria must be considered: costeffectiveness, legal requirements, executive pressure, and the population to be served. the cost of a performance problem can usually be determined. it's relatively easy if one immediately knows the cost of a defective unit. for either the deficiency or the undecided grievances, it's then necessary to compute the cost of the solution: development costs, salary costs, special expenses. a second criterion is the legal requirement. numerous government statutes dictate some of the decisions about what training to offer, like equal-employment legislation, occupational studies and scientific researches economic edition, no. 15, 2010 332 safety and health acts. it may be necessary to introduce programs for which no immediate tangible cost saving can be computed—it's the law. executive pressure is a third criterion. it usually comes from within the organization—and it's a criterion that smart training managers do not ignore. when training managers complain that they don't get support from the top, they should ask themselves how many suggestions from chief executive managers, vicepresidents, or directors they turned down recently—or even in recent years. finally, there is the criterion of population. sometimes this means simply that training goes to the most extensive problem. macro needs may take priority over individual needs. fortunately, it doesn't always need to work that way. the factor of influence and impact must also enter the decision table. possibly the people who perform defectively occupy positions that affect the entire operations— for example, senior managers. performance problems that affect many workers, that are costly, that are related to the law, or that interest executives—all these deserve attention. actual or potential knowledge deficiencies (dk) deserve training. problems stemming from lack of practice (dp) should produce drill, or enforced on-the-job application. problems stemming from other causes are probably deficiencies of execution (de) and nontraining solutions are in order. the human resources department has in the job description to determine the need of training in an organization. this action it is not taken lightly, considering the effort it is needed to maintain such an activityhere we refer to financial cost, time spent, people involvement. in order to realize an efficient activity determining training needs, the organization can apply one or more different formulas to obtain the results needed. we can not state that we know all the formulas that might be used in determining that factor, but we can suggest an easier way to determine it, so that every organization, regardless of it’s growth, can use it. even if we are used to consider that not all information from different cultures are applicable in our country, we consider that in this particular matter it is not the case. skill in writing performance standards, or at least in describing human behavior, is a "must" for all training managers and specialists. some organizations have begun to train managers from all departments in how to define performance standards. one such firm (kemper insurance companies) has conducted workshops so that line managers become trainers for workshops at which still other line managers learn how to develop standards for their subordinates. kemper stresses the importance of developing the actual standards as a joint effort between the manager and the subordinate—not as a product of staff trainers. once the standards are agreed upon by key people in the client department, the training specialist is ready to ask that all-important question: "do the people who must meet these standards possess the knowledge and skill to do so right now?" if the answer is yes, no training is indicated. for newcomers, that seldom happens. they rarely know how to do their new jobs perfectly. for them, we have discovered a training need. it does not follow, however, that newcomers need training in all facets of their positions. even newcomers have some ability and some knowledge, and we call this their "inventory." if we match the inventory against the standard we have set, we have a possible training need. what the employee must do to meet the standard can be represented by the letter m for minimum mastery, or "must do." from this m we subtract the inventory to discover what the newcomer needs to learn to perform properly. the test is somewhat different for employees who are already incumbent in their positions. we can again let m represent what the worker must do; from that we still subtract the i, or inventory. but this time the inventory is what the worker is actually doing now. the difference between the m and the i is a potential training need. we now have a formula for potential training needs: m i = a potential training need. studies and scientific researches economic edition, no. 15, 2010 333 the word "potential" is accurate. why? because with incumbents we are not yet certain that the reason for difference is lack of knowledge or skill. we don't yet know that they do not know how. only if the reason for the difference is their not knowing how do we have a training need. it's helpful to regard the distance between the "must do" and the "is doing" as a deficiency. we can put this into our formula by assigning it the letter d. now our formula looks like this: m i = d. at this stage we are now ready to consider several different types of deficiency. when employees don't know how, we call this dk for "deficiency of knowledge." all dk’s are regarded as training needs. if the difference between the "must do" and the "is doing" stems from other causes, we consider it a "deficiency of execution" and call it a de. what "other causes" might there be? to name a few: lack of feedback, badly engineered jobs, or punishing consequences. de’s are not solvable through training. sometimes people know how to do the job, but have so little practice that they cannot maintain a satisfactory level of performance. this might be called a dp, or "deficiency of practice;" training in the form of drill may solve dp problems. as we have often noted, there is no sense in training people to do what they can already do. training is an appropriate solution to job-related problems for people who have what we call dk (deficiency of knowledge) or dp (deficiency of practice), both of which cause performance problems and deficiencies in knowledge, skills, or abilities. feedback systems are attractive alternatives to training because they motivate workers, are inexpensive, and can be part of the regular management reporting system. first, let's see why feedback is in itself something of a motivator. when employees are able to see their own accomplishments, they have more reason to be interested in their work, more reason to be satisfied with their assignments, a greater sense of being needed, and a keener awareness of their contributions. motivation is a fundamental component of performance. supervisors and managers are responsible for achieving the goals of the organization through leading the performance or efforts of their employees. individual job performance can be summarized as follows: performance = ability x motivation (effort) in this model, performance is the product of ability times motivation: ability = aptitude x training x resources • aptitude refers to current skills and capabilities, education, and previous job experience. • resources are the tools that an employee needs to do the work (e.g., equipment, supplies, the work of other employees, time to complete the tasks, etc.). motivation = desire x commitment • desire means wanting to perform the job, but desire by itself is not enough. an employee who wants to complete a task but who is easily distracted or discouraged cannot perform well (high desire/low commitment). • commitment means being persistent or trying hard to complete a task. however, without desire, an employee could be committed to his/her work but proceed slowly and produce only adequate results (low desire/high commitment). studies and scientific researches economic edition, no. 15, 2010 334 the multiplication symbol (x) demonstrates that all elements are essential. someone with 100 percent of the motivation and 75 percent of the ability needed for a job can perform at above average level. however, an individual with only 10 percent of the ability would not be able to perform acceptably regardless of how motivated he or she is. by finding out the need of training, one can say that the first step is finished: it follows the hard part consisting in training. such an activity can be seen very different, depending on the people to be trained here we must think of their number, age, education level -, the trainers – their personality, state of mind, knowledge regarding the object of training, all these can be disregarded if an organization prefers to collaborate with a specialized company in delivering trainingand not finally the type of information they will have to know at the end of the course. this part, even it is mostly considered as the hard part in a training process, will not be here in question given the extent of the subject. we will try to give to an entrepreneur the possibility to take the matter in his own hands in order to measure the training need but also the effect: alpha and omega. measurement has some other effects, too. the very process of measuring tends to increase the use of the new behaviors. there is an old adage that says, "in organizations, what is important gets measured" and its corollary, "what's measured, becomes important." if any, one element is more important than others in effective measurement, it is selecting the proper thing to count. there's a significant dilemma there. if measurement doesn't count, if it isn't quantitative, then it isn't really measurement. if it counts the wrong things, it is an inappropriate measurement. first, when we measure training achievements, the things we count should represent what we are seeking. that's true whether we measure perceptions, learning, or performance units. next, those things should be inherently valuable. finally, the search itself should develop an increasingly satisfactory performance of those inherently valuable units. the thrust of effective evaluation is to make responsible judgments about important questions. if an improved operation is what the training department wants to contribute, the inquiry must focus on hard data—and the evaluation must indicate whether or not the problem has been eliminated or significantly diminished. it breaks down into these steps: 1. identify an unbearably deficient performance. 2. identify specific units that characterize the problem. 3. count the number of unacceptable units to establish a baseline. 4. establish quantitative goals—a post-program baseline objective. 5. conduct the change program. 6. count the satisfactory and unsatisfactory units after the program. 7. evaluate. is the number of satisfactory units equal to the objective established in step 4? in other words, did the program produce the desired results? if the production of new behaviors is the extent of the training purpose, the evaluation will focus on the demonstrated acquisition and the perseverance of those behaviors. the successive steps are: 1. establish the performance (learning) objectives. 2. establish a desired achievement quota (the number of trainees divided into the number of behaviors acquired successfully). 3. conduct the training or install the change program. 4. test each trainee over each learning objective. 5. compute the actual achievement quota. 6. evaluate. does the actual achievement quota equal or surpass the desired achievement quota? when the mere acquisition isn't what the department wants to evaluate, there are additional steps to evaluate the on-the-job application of the new behaviors: ► wait until a predetermined time and retest the graduates on each of the learning objectives. studies and scientific researches economic edition, no. 15, 2010 335 ► compute the application quota: divide the number of successful demonstrations by the number of graduates. ► evaluate. do the retentions of the new behavior equal the goals established? t&d officers who want to be relevant and accountable seek the hardest possible data from the widest possible range of representative sources. the purpose of training is to change employees: their behavior, opinions, knowledge, or level of skill. the purpose of evaluation is to determine whether the objective was met and whether these changes have taken place. one way to consider the importance of evaluations is to recognize the feedback it provides. feedback can be obtained through self-reporting or by observing the learner. various kinds of evaluations provide feedback to different people such as: ♦employees regarding their success in mastering new knowledge, attitudes, and skills. ♦employees concerning their work-related strengths and weaknesses. evaluation results can be a source of positive reinforcement and an incentive for motivation ♦trainers for developing future interventions and program needs or creating modifications in the current training efforts. ♦supervisors as to whether there is observable change in employees effectiveness or performance as a result of participating in the training program. ♦ the organization regarding return on investment in training. the world of work continues to become more and more complex and for everyone, including trainers, there are many learning curves ahead. the demands inferred by senge (1990), ‘as the world becomes more interconnected and business becomes more complex and dynamic, work must become more learningful’, indicate that there will be a crucial and demanding role for training in the future. there are many techniques, approaches and theories which can be applied in training and no single volume can do justice to them all. what we have done here was an attempt – successfully we hope – to draw attention in one of the most important part of an organization, and that is: training. references 1. biech, e., (2005), training for dummies, wiley publishing inc., indianapolis, indiana 2. bray, t., (2009), the training design manual, second edition, kogan page, philadelphia 3. buckley, r., caple, j., (2009), the theory & practice of training, sixth edition, kogan page, philadelphia 4. dugan, l. (2003), approaches to training and development, third edition, perseus publishing, cambridge. 5. mackey, d., thorne, k., (2003), everything you ever needed to know about training, third edition, kogan page limited, london 6. senge, p (1990), the fifth discipline, doubleday, new york. studies and scientific researches economic edition, no. 15, 2010 336 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 7 regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova vasilica-lăcrămioara ciomârtan statistical county directorate bacau lacri_vasi@yahoo.com abstract knowing the whole population, the role and the place of each person in the reproduction of the population, in the economic and social activity, as well as the correlated analysis on age and sex groups is essential in order to ground economic and social policies. the comparative approach, considering the evolution of the population as well as the main demographic phenomena, aims to assess the demographic situation in bacau county, romania, as well as in the central region of the republic of moldova, over a period of 9 years (2007-2015). in order to quantify the complex demographic situation in the two territorial units for statistics, we took into consideration a relatively small number of indicators, the most relevant ones, which should underline the evolution from a demographic point of view. keywords population; median age; demographic vitality; demographic ageing; demographic dependency ratio jel classification c19; j11; j13; j19 introduction the comparative approach, considering the evolution of the population as well as the evolution of the main demographic phenomena, aims to assess the demographic situation in bacau county, romania, as well as in the central region of the republic of moldova, over a period of 9 years (2007-2015). in order to quantify the complex demographic situation in the two territorial units for statistics, we took into consideration a relatively small number of indicators, the most relevant ones, which should underline the evolution from a demographic point of view. the analysis of the changes in the population size, the modifications within its structure on age and gender groups, determining the relevant indicators for demographic vitality, demographic ageing and demographic dependency ratio are a starting point in drawing up an overview of the more or less “dramatic” situations existing in the two areas. short methodological presentation in order to carry out this comparative analysis, certain methodological aspects need to be clarified, since the different names for certain statistic indicators found in the calculations and the dissemination process in romania and in the republic of moldova are based on the same methodology. ciomârtan 8 thus, the legal permanent resident population calculated and disseminated by the national institute of statistics is registered in moldova as the “stable population”; in fact, this indicator shows the number of people with permanent residence in that area, while the stable population in romania is known as the “present population” in the republic of moldova, showing the number of people living in that area at a certain moment. the tempo-online data base of the nis (national institute of statistics) as well as the data base of the nis in the republic of moldova were the starting point for this analysis which is meant to be a “radiography” of the demographic situation over the period of time 2007-2015 in bacau county and in the central region of the republic of moldova. statistical analysis of the population by age and gender in order to interpret the structure of the population by age groups, three great age groups were taken into consideration: 0-14 years of age, 15-64 years of age and the group aged 65 and over 65. according to the ratio of these age groups, there are three types of population: young, stationary or adult population and elder. a ratio under 20% of the population aged between 0 and 14, together with the growth in time of the percentages for the other age groups show, in the case of bacau county, a population that tends to age. the situation is somehow similar in the case of the central region of the republic of moldova, where the percentage of the young population decreases giving way to the adult population, the percentage of the population over 65 also decreasing. figure no. 1: evolution of the structure on age groups for the population with permanent residence in the central region (republic of moldova) on the 1st of january 2015 source: processing of the data collected from www.statistica.md 6 3 5 6 8 6 2 1 8 5 6 0 9 5 7 7 2 2 7 2 9 7 0 3 7 1 0 1 6 6 8 8 6 1 6 6 7 6 2 5 5 6 6 3 1 5 6 5 1 5 8 7 6 3 6 5 7 3 5 8 8 6 1 0 3 4 3 3 6 9 3 2 4 3 3 8 1 9 0 1 6 1 1 4 1 0 7 6 4 4 0 20000 40000 60000 80000 100000 04 5-9 1014 1519 2024 25-29 3034 3539 4044 4549 5054 5559 6064 6569 7074 7579 8084 85 + years old regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova 9 figure no. 2: evolution of the structure on age groups for the population with permanent residence in bacau county (romania) on the 1st of january 2015 source: processing of the data collected from www.insse.ro – tempo-online the structure of the population by age groups exhibits characteristic features of the demographic ageing process, mainly caused by declining birth rate, which led to a decrease in the young population in bacau county from 17.6% in 2007 to 16.0% in 2015, while in the central region it dropped from 20.0% in 2007 to 17.6% in 2015. in parallel, life expectancy increased leading to a greater number and percentage of adult population (15-64 years old) from 69.0% in 2007 to 70.1% in 2015 in bacau county and from 70.7% in 2007 to 73.3% in 2015 in the case of the central region (moldova). the elder population in bacau county increased during the period of time subjected to this analysis from 13.4% in 2007 to 13.9% in 2015, while in the central region the percentage is slightly decreasing. 0% 25% 50% 75% 100% 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 bacau county the central r egion 17.6 17.4 17.3 17.1 16.9 16.7 16.5 16.2 16.0 20.0 19.4 18.8 18.4 18.1 17.9 17.7 17.6 17.6 69.0 69.2 69.4 69.5 69.7 69.8 70.0 70.2 70.1 70.7 71.3 72.0 72.7 73.2 73.5 73.7 73.6 73.3 13.4 13.4 13.3 13.4 13.4 13.5 13.5 13.6 13.9 9.3 9.3 9.1 8.9 8.7 8.6 8.6 8.7 9.1 65 + 15-64 0-14 figure no. 3: evolution of the structure on major age groups of the population with permanent residence in bacau county and in the central region on the 1st of january (2007-2015) (%) source: processing of the data collected from www.insse.ro and www.statistica.md the median age is an indicator that divides the population of a certain area into two equal-sized groups, the median age being the middle value. on the level of bacau 3 5 6 9 6 4 1 3 6 6 4 2 6 0 5 4 3 9 6 2 4 9 3 2 7 5 9 7 1 3 5 6 4 2 9 6 3 4 6 2 5 8 8 7 5 5 9 1 9 7 4 2 8 5 9 4 8 9 1 2 4 2 2 5 3 3 0 9 7 3 2 4 4 6 1 2 4 3 5 7 1 5 2 0 8 9 2 1 1 0 10000 20000 30000 40000 50000 60000 70000 04 5-9 1014 1519 2024 25-29 3034 3539 4044 4549 5054 5559 6064 6569 7074 7579 8084 85 + years old http://www.insse.ro/ http://www.statistica.md/ ciomârtan 10 county, on 1st january 2015, the median age was 38.6 years old, 3.3 years higher than the one registered on 1st january 2007. if we calculate this indicator for the central region, we notice that the median age on 1st january 2015 is 34.2, merely 1.9 years higher compared to the beginning of 2007. figure no. 4: median age of the permanent resident population in bacau county and in the central region on the 1st of january 2007 and 2015 source: processing of the data collected from www.insse.ro and www.statistica.md analyzing the population by gender ratio according to their residence, we can notice that the female population is higher than the male population. while in bacau county there is an increase in the ratio of the female population from a minimum value of 50.3% in 2007 to 50.5% in 2011-2015, in the central region, during the whole period subjected to this analysis, the percentage of female population was constant (51.1%). 49.7 49.5 48.9 48.9 50.3 50.5 51.1 51.1 0% 25% 50% 75% 100% 2007 2015 2007 2015 bacau county the central region females males figure no. 5: evolution of the population according to their permanent residence on 1st january 2007 and 2015, by gender, in bacau county and in the central region source: processing of the data collected from www.insse.ro and www.statistica.md thus, over the last years, we can see a decreasing trend of the male population ratio on the level of bacau county, from 99 people in 2007 to 98 people in 2015, while in the central region this index has been constant (97 people). however, when correlated to the age groups, we can notice modifications in time of this indicator. thus, while in the case of the young population (0-14 years old) the index for male ratio in bacau county has been constant during the whole period – 105 people , in the case of the stationary population (15-64 years old) there is a slight increase 35.3 38.6 32.3 34.2 29 30 31 32 33 34 35 36 37 38 39 40 2007 2015 bacau county the central region regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova 11 (from 102 during the first 7 years subjected to this analysis to 103 during the last 2 years); in the central region there is a slight increase in both situations, from 105 to 106 in the case of the young population and from 98 to 99 in the case of the adult population. as to the elder population (65 and over 65), we can notice a decreasing trend in bacau county from 75 in 2007-2008 to 70 in 2015 ; in the central region this index of male ratio has a decreasing trend from 63 in 2007-2008 and 61 in 2015. figure no. 6: evolution of the male ratio index in bacau county and in the central region, on 1st january 2007 and 2015 source: processing of the data collected from www.insse.ro and www.statistica.md the comparative analysis of the two areas shows that both in bacau county and in the central region there is a predominantly rural population. while in 2007-2015 we can notice a migration trend from the urban to the rural area on the level of bacau county, in the central region the situation is different, with a slight decrease of the rural population. figure no. 7: evolution of the urbanization index in bacau county and in the central region on the 1st of january (2007-2015) (%) source: processing of the data collected from www.insse.ro and www.statistica.md correlated per age group, we can notice there is no clear decreasing trend of the urban population in bacau county per major age groups. thus, the urbanization index for the young population in bacau county has increased from 39.8% to 41.2%, while in the 99 98 96 96 105 105 105 106102 103 98 99 75 70 63 61 0 20 40 60 80 100 120 2007 2015 2007 2015 bacau county the central region total 0-14 15-64 65 + 48.1 47.8 47.6 47.5 47.4 47.2 47.1 47.0 47.1 19.2 19.1 19.2 19.2 19.3 19.3 19.4 19.5 19.6 0.0 30.0 60.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 % bacau county the central region http://www.insse.ro/ http://www.statistica.md/ ciomârtan 12 case of the adult population the same index has decreased from 52.2% to 49.4%. in the case of the population over 65, the urbanization index is on a clear increasing trend, reaching up to 4.9 percentage points higher in 2015 compared to the value registered in 2007. the urbanization index for the young population in the central region has decreased slightly during the period 2007-2015; in the case of the adult population this index fluctuates, during the last year subjected to the analysis being identical to the value registered on the first year, while in the case of the elder population we can notice an increase from 15.7% to 18.8%. statistical analysis of the indicators concerning the demographic vitality, demographic ageing and demographic dependency in order to describe the demographic vitality of the two areas, we took into consideration: ✓ the ratio of adult fertile women out of the total number of women; ✓ the rate of natural increase or the natural growth rate; ✓ the pearl index for vitality the ratio of adult fertile women out of the total number of women is the percentage of women aged between 15 and 49 within the total female population. 100*100* 0 49 154915        x x xf vf pf pf f f g , pf = female population both in bacau county and in the central region the values of this indicator are over 50%, clearly superior to that of the region; however, in both situations there is a clear downward trend by 1.2 pp in bacau county and by 1.7 pp in the central region. the values of this indicator for the urban and the rural areas of the central region are over 50% during the whole period subjected to the analysis, with a downward trend in both cases, the decrease being more accentuated in the urban area (-4,8 pp in the urban area compared to -0,9 pp in the rural area). 2007 2008 2009 2010 2011 bacau county 99.1 97.2 90.8 85.1 84.3 the central region 93.7 96.0 99.2 92.5 106.1 106.1 120.0 figure no. 8: ratio of adult fertile women out of the total number of women in bacau county and in the central region on the 1st of january (2007-2015) (%) source: processing of the data collected from www.insse.ro and www.statistica.md the situation is slightly different in bacau county, where the ratio of fertile women out of the total number of women in the rural area is below 50% for the period subjected to regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova 13 the analysis, although there is an increase from 45.9% in 2007 to 49.4% in 2015 (the maximal value for this period). the trend of this indicator in the urban area is similar to the situation existing in the whole county, the difference between 2015 and 2007 being of -5.7 pp. the rate of natural increase or the natural growth rate measures the intensity of the natural population growth and is calculated as the difference between the birth rate and the death rate. rmrnrsn  , rn = the birth rate; rm = the death rate. the whole period of time 2007-2015 is marked by a negative ratio of the natural growth rate in bacau county, this rate increasing year after year and reaching a maximum negative value in 2015 (-2.5 per 1000 inhabitants). in the case of the central region, the first 4 years analyzed are marked by a negative natural growth ratio, while in the following 5 years the birth rate was higher than the death rate. figure no. 9: the natural growth rate in bacau county and in the central region during the period of time 2007-2015 source: processing of the data collected from www.insse.ro and www.statistica.md the pearl index for vitality is the ratio between live births and deaths over a certain period of time, usually a year. 100* d nv i v  , nv = live births; d = deaths the vitality index for bacau county has a downward trend during the period of time subjected to the analysis, with values from 99.1% in 2007 to a minimum of 77.9% in 2015. the situation of the central region is favorable, with a continuous upward trend, from the value of 93.7% in 2007 to over 100% in 2011-2015. -0.1 -0.3 -1.0 -1.7 -1.7 -1.8 -1.1 -2.5 -2.3 -0.8 -0.5 -0.1 -1.0 0.7 0.3 0.8 0.5 0.2 -3.0 -2.0 -1.0 0.0 1.0 2.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 bacau county the central region ciomârtan 14 figure no. 10: the pearl index for vitality in bacau county and in the central region during the period of time 2007-2015 (%) source: processing of the data collected from www.insse.ro and www.statistica.md the demographic ageing index shows an increase in the elder population at the expense of the young population. it is calculated as the ratio between the population aged 65 and over 65 and the young population (0-14 years old).          14 0 65 140 65 100* x x x id px px p p i , p= population the literature says that values lower than 40% of this indicator shows a young population, values between 40-44% show a middle-aged population while values of 4852% are characteristic for an aged population. calculated on the level of bacau county for the period of time 2007-2015, this index shows the existence of an aged population, with a minimum value of 75.8% in 2007 up to a maximum value of 87.1% in 2015. considering the rural and the urban areas separately, we can also notice an alarming ageing process of the population, with values over 70%, the ageing index in the rural areas being higher than the ones in the urban areas for the period 2007-2013, while during the last 2 years there were higher ageing indexes in the urban area compared to the rural area. figure no. 11: the ageing index in bacau county and in the central region during the period of time 2007-2015 (%) source: processing of the data collected from www.insse.ro and www.statistica.md 99.1 97.2 90.8 85.1 84.3 83.8 90.3 77.9 80.0 93.7 96.0 99.2 92.5 106.1 102.5 107.3 104.3 101.7 60.0 80.0 100.0 120.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 % bacau county the central region 75.8 76.7 77.3 78.5 79.4 80.6 81.4 83.9 87.1 71.3 73.2 74.6 76.1 77.7 79.9 81.4 85.0 89.5 46.3 47.8 48.3 48.6 48.1 48.3 48.7 49.5 51.5 44.3 46.6 48.6 49.9 50.9 52.4 54.2 56.3 60.0 20.0 40.0 60.0 80.0 100.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 bacau county bacau urban the central region the central region urban http://www.insse.ro/ http://www.statistica.md/ regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova 15 the demographic ageing indicators for the central region had an upward trend during the period of time subjected to the analysis, with values under 50% for the period 20072014 and with a value of 51.5% during the last year. while during the first 2 years the demographic ageing indicators in the rural areas of the region were higher than in the urban areas, during the period 2009-2015 the situation was reversed. calculated per gender, on the level of bacau county, we can notice great differences between the ageing indexes for the female population for the male population, one more evidence for the feminization of the population ageing. the values of this index for the male population in bacau county are in the interval 63.6% and 69.9%, while in the case of the female population the values are very high, varying between 88.6% in 2007 and 97.4% in 2013, the last two years analyzed being marked by values over 100%. while the ageing indicators for the female population in the rural area of bacau county are higher than the ones in the urban area during the whole period of time, the indicators for the male population in the rural area are higher only for the period of time 20082012. figure no. 12: the demographic ageing index per gender in bacau county and in the central region during the period of time 2007-2015 (%) source: processing of the data collected from www.insse.ro and www.statistica.md in the central region too, the demographic ageing indicators for the female population are much higher than the ones for the male population. in the case of men, this index increases from 35.1% in 2007 to 38.1% in 2015, while in the case of the female population the increase is even higher, from 58.1% during the first year analyzed to 65.6% during the last year. the seniority index is the ratio between the number of people aged 80 and over 80 and the number of people aged 65 and over 65. 75.8 76.7 77.3 78.5 79.4 80.6 81.4 83.9 87.1 63.6 64.1 64.2 64.7 65.0 65.9 66.2 67.7 69.9 88.6 90.0 91.0 92.9 94.4 96.1 97.4 100.9 105.2 46.3 47.8 48.3 48.6 48.1 48.3 48.7 49.5 51.5 35.1 36.0 36.3 36.3 35.8 35.9 36.2 36.7 38.1 58.1 60.2 60.9 61.6 61.0 61.3 61.8 62.9 65.6 10.0 30.0 50.0 70.0 90.0 110.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 bacau county bacau -males bacau females the central region the central region males the central region females ciomârtan 16 100*100* 65 80 65 80          x x s px px p p i , p= population in bacau county there is an increase of the seniority index from 16.6% in 2007 to 23.4% in 2015, the values registered in the rural areas being higher than in the urban areas, the values for the female population being higher than the ones for the male population. figure no. 12: the seniority index in the rural and the urban areas in bacau county and in the central region during the period of time 2007-2015 (%) source: processing of the data collected from www.insse.ro and www.statistica.md in the central region there are fluctuations of this index, with an upward trend in the period 2007-2013, from 15.7% to 20.8%, followed by a downward trend during the last 2 years. figure no. 13: the seniority index per gender in bacau county and in the central region during the period of time 2007-2015 (%) source: processing of the data collected from www.insse.ro and www.statistica.md in the central region, the ratio of people aged over 80 out of the population aged over 65 and over was higher in the rural area than in the urban area in 2007-2015. in the case of the central region of the republic of moldova there is also a considerable ratio 13.6 14.4 15.9 16.8 17.9 18.6 19.9 20.3 20.5 18.4 19.6 20.8 21.8 22.7 23.4 24.7 25.3 25.6 13.9 14.9 16.0 16.8 17.5 18.1 19.1 19.1 18.616.1 16.6 17.8 18.7 19.7 20.0 21.2 20.9 20.1 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 bacau urban bacau rural the central region urban the central region rural 1 5 .0 1 6 .2 1 7 .6 1 8 .6 1 9 .4 2 0 .1 2 1 .4 2 2 .0 2 2 .0 1 3 .0 1 3 .5 1 4 .7 1 5 .7 1 6 .6 1 6 .9 1 7 .9 1 8 .0 1 7 .4 1 7 .9 1 8 .7 1 9 .9 2 0 .8 2 1 .8 2 2 .4 2 3 .8 2 4 .1 2 4 .4 1 7 .5 1 8 .1 1 9 .2 2 0 .0 2 1 .1 2 1 .4 2 2 .6 2 2 .1 2 1 .3 0.0 10.0 20.0 30.0 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 bacau county the central region male female regional comparative approaches on population and main demographic phenomena – bacau county of romania versus the central region of the republic of moldova 17 of female population aged 80 and over 80, much higher than in the case of the male population, the disparity between these seniority ratios reaching up to 4.6 pp. the demographic dependency ratio emphasizes the „pressure” of the young population aged 0-14 and of the population aged 65 and over 65 on the active population (aged 1565). 100*100* 64 15 14 0 65 6415 65140               x x x x x px pxp p pp rdd , p= population we are discussing here a potential support ratio. the actual economic dependency ratio involves the active population and the inactive population, irrespective of the age. the demographic dependency in bacau county has an downward trend, from 44.8 young and elder people per 100 adult people in 2007 to 42.6 people in 2015 ; the same trend was registered in the central region (from 41.5 young and elder people per 100 adult people in 2007 to 36.5 people in 2015). figure no. 14: the demographic dependency report in the rural and the urban areas in bacau county and in the central region during the period of time 20072015 source: processing of the data collected from www.insse.ro and www.statistica.md as we can notice in figure 14, the demographic dependency ratios in the rural area are higher than the phenomenon registered in the whole area, in the case of both regions subjected to the analysis, the difference between the rural and the urban areas reaching the value of 6.6 young and elder people per 100 adult people in 2015 in bacau county, while in the central region the difference is even greater than 7.6 people. conclusion the structure per age of the population in bacau county and in the central region shows a slow, continuous demographic ageing process caused mainly by the decrease of birth rate which led to a decrease of the young population (aged 0-14), while the 44.8 44.4 44.1 43.9 43.5 43.3 42.8 42.5 42.6 33.3 33.3 33.6 33.9 34.2 34.6 34.8 35.2 36.0 57.4 56.3 55.2 54.3 53.0 52.0 50.8 49.8 49.2 41.5 40.2 38.8 37.6 36.6 36.0 35.8 35.8 36.5 32.6 31.7 30.6 29.9 29.3 29.1 29.3 29.5 30.4 43.8 42.3 40.9 39.6 38.5 37.8 37.4 37.4 38.0 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 bacau county bacau -urban bacau rural the central region the central region urban the central region rural ciomârtan 18 elder population aged 65 and over 65 increased. we can also notice a more accentuated ageing process in the case of the female population as well as in the case of the rural population. the effects of the ageing process weigh on the seniority indicators, which have an upward trend during the period of time subjected to the analysis. references jaba, elisabeta (1998), statistică, bucureşti, editura economică. mihăescu, constanţa (2003), analiza statistico-demografică: teorie și aplicații, bucureşti, editura economică. vert, constantin (1995), analiza geodemografică – manual practic, universitatea de vest din timișoara. ins, statistics available at www.insse.ro bns, statistic available at www.statistica.md http://www.insse.ro/ http://www.statistica.md/ microsoft word apostoaie constantin marius_eng.doc the road to a free marketlaw, legislation and the entrepreneurship ligia munteanu, “alexandru ioan cuza” university of iasi, romania abstract the development of a country depends on the legal system of that country. romanian aconomy haw knoweded, as many states, different ideologies and govemental methods, the segnificant difference beetween then being the degree of state interventionism in the economy. to obtain a free market, we need a proper legal system, a special guvernmental attitude and a good implementation of the state of law principles and democracy. as we feel the need of change, the state tries to come with new programs and perspectives. the result is a legislative inflation, that scares any antreprenorial initiative. but there is another way of forming new institutions or changing them, more appropriate to the market. this is the way based on practical experience, tradition and responsability. keywords free market, law, legislation, institutions, entrepreneurship. jel codes: d40, k10, k20, k23 introduction „the power corrupse, and absolute power corrups in an absolut way” –these were the words of lord acton, reffering to the relation betwen state and economy in the united kingdom sometime in the xviith century. if today, those who lead us, would have in mind these words, maybe it wouldn’t be so easy any more to speak of the same objectives and advices. along history, the sates experienced many ways of organising the society, from absolutism to socialism, communism, than liberalism, until the democracy witch everybody seems to adopt in our days. these ears are a great experience to learn from. it should give us a general view on what interventionism ment, its effects on social life and on progress itself. the economic is realy important in tranfomation. tranzactions, commerce, economic interest, all these were vectors of the most tragical wars but also the reason for the great unifications. even the european union was buil on the community of cold and steel, a small sector, but vital enough to become more important than the nationalistic ambitions of germany and frace. looking over the different periods in history, a question appears to seek for its unswer. whitch model was best, witch is the most apropriate for economic development, if it is one? in fact, the question is, which of them is able to offer that „whealth of nations”, adam smith was writing about. so, how much state does the economy need? keynes, even thoough he didn’tlike the state in its nature, is forced to recognise it’s active role in economy, in order to resolve the chrises of the time. and in short run, in worked, but on longer orientation, the effects of keynesian measures were not actually as predicted. marx and lenin cammed with the philosophy of the „unique manual”-a single party, a single orientation. these doctrine not only it didn’t lead to progess, but it distroied the realy promising projects and determined a path dependency as strong as it is unwished, that marks the ex-socialist countries even today. studies and scientific researches economic edition, no. 15, 2010 255 liberalism, aplaused by great names like mises, hayek, has woken up the world and the economic spirit. their proposal was a perfect capitalism, were rules are made by competition and efficiency. this was a world in witch the state was far enough from the market, the market is free, an alive institution, capable of rewordng those who deserve it and capabe of rejecting the ones that are not productive. a world leaded by the invisible hand of adam smith. the image of these world is the dream of any economist and their objective. reality thow puts us infront with a strong state, that even in the most liberal countries, knows how to make itself present. liberty and constraint to see the role of the state in the economy, we need to focuse first on two key concepts, that are measurement factors in our case, liberty and coercition. first of all, these terms ar legal ones, but hey are used in every domain. the law, the implementation and protection of teh law is one of the most important atributes of the state, beeing both neccesary and obligatory. in fact, the implications of the state in the economy are bassicly related with the legislative programe. secondly, becouse few economist are concerned with law, as few law practicians read economic books, the two concepts have different definitions in these domains1. this is unjustified, because we cannot speak of a free market if we don’t have legislative relaxation, as well as economic coerciveness is realized by legal norms. the definition of liberty is essential, because many times different people use this word in much other significance as the real one. the concept of liberty that will be used in this paper is the one linked with the economic entrepreneurial spirit, as lord acton, in the beginning of his “history of liberty” defines it: “by liberty i mean assurance that every man shall be protected in doing what he believes to be his duty against the influence of authority and majorities, custom and opinion”2. in other words, he meant the liberty of the entrepreneurial individual to decide upon his production, upon contracts, negotiations and selling points. from here is will emerge the difference between different agents, some of them taking smarter decisions than others, measured in profit and market share. these are the meaning of liberty in the market economy, competitiveness in essence, and not the meaning often cried out by politicians who learned the trick of wrong interpretation of the democratic principles. to understand better what liberty is, the term must by analyzed in comparison with its oppositeconstraint. between these two there is a strong bond, sometimes one being confused with another. there are cases in which constraint is wanted, as in the case of the russian soldiers, which used to say they liked life in the army, because it turned out to be a commended ideal. and for sure there are many cases similar to this one, with individuals that carry out these kinds of sentiments, in different situations. aristotle was the first to divide people in two categories: the ones made to rule and those that must be ruled. but even if some like constraint, it will be an abuse to consider this liberty. and this is because no one can be free from others if the later ones are free to constrain the first. in other words, everyone is “free” if he can constrain in some way other people to refrain from constraining him in some respect3. in this sense, “freedom” and “constraint” are inevitably linked, and this is probably too often forgotten when people speak of “freedom.” in economics, this play with words has great importance in understanding the attitude of the state regarding the market. as long as the state decides in the market, both will find them in a vicious circle. a, action of the state will constrain the market in some way, even if many times these is made in the name of freedom. 1 leoni,b.(1991), freedom and the law, indianapolis, liberty fund, p.10 2 acton, lord (2001), despre libertate, editura institutul european, p.13 3 leoni,b.(1991), freedom and the law, indianapolis, liberty fund, p.36 studies and scientific researches economic edition, no. 15, 2010 256 the market, in its turn, will come in difficult situation, constraining the state to interfere again, creating a new cause-effect cycle. the phenomenon appears as well because the decisions of the leaders are in most of the cases wrong for the market, doing more bad than good, because they are realized on short run and rarely in long oriented term, or based on superficial and false analysis. an ideal form of constraint would be if the market could constrain the state to adopt a lessefaire attitude. in this system, the power will be in the market, economic principles being the ones that would lead the way and not some ordinary legislation. competition also involves that a part will lose, and that is many times wrong understood. to avoid social moves, the state sometimes tries to help all, and intervenes in the market. and it does so because it has in his hands the most powerful weapons to do so: legislative and executive power. the market does not have that. unfortunately, the state decides what the market does through jurist. they want to dictate the road of commerce. the law is and it will remain the most important force of the state, the base of a society. willing or not, the companies must adapt to the national and international law, to survive. the question arises now upon the correctness of the legal system. a significant difference is between law and legislation, after adopting the napoleon code. we can distinguish between the laws of traditions, the common law as it is named in england, the law raised from natural experience, in the court, in front of the judge, from the legal processes of the romans until the complex situations of today. “the difference is the direct consequence of an empiric vision on the world in england and a rational one in france”. one finds the essence of liberty in spontaneity, the other believes in a collective absolute followed project. one is for slow, organic growth, the other for premeditation; one is for a procedure of attempt and error, the other for imposing one single valuable model. the second was also the origin of totalitarian democracy”4. so in the first model the jurisprudence gains importance, the customs are respected; the moral and the judgeless are realized in the name of equity, and not in the name of law. in the second, the laws are not created as a result of the needs on the market, but proposed by some illuminated minds. so new norms appear, apparently in a flexible and adaptive system, but in reality they are far away from the necessities of the individuals, carrying just for the interest of some small forum. more than that, the economic agents have different rules in the morning as they had in the evening, tariffs, obligations that suffocate them. this is not something new, or as we could say at a first look a system characteristic to the developing societies. in their papers, authors like james burnham in the united states of america, professor g. w. keeton in england and also f.a. hayek complain about the weakening of the legislative tradition power of the american congress and the passiveness of the english parliament, caused by the more and more frequent legislative delegations of the executive. as well in romania, we can speak of a massive legislative inflation, thousands of norms that complicate the activity of the companies and block the national parliament. another trough is the human nature. governors are human, and many with strong economic interests. some laws can be accused of having specified, limited and closed objectives. the paradox of the world we live in is that we are ruled by people, and not by the fact that “we are”. machiavelli himself would have failed imagining such a great apparatus of dignifying the will of men and to honor the will of some tiran taking decisions in the protective sphere of the law made by him. we pay tribute to the roman and to the english system of law, but we forget what they meant. the historical experience makes us able to be sure about the effects of the communism, totalitarism, socialism in any form. but, without entering in a political discussion, we should observe the system of the representative democracy. by personal vote, individuals choose a 4 hayek, f.a.(1998), constitu ia libert ii, ia i, institutul european, p. 79 studies and scientific researches economic edition, no. 15, 2010 257 candidate. but never the whole population will choose the same man. the results of the elections, for a part of the people will mean a loss. democracy seems in this way unfair, because those who choose something else are forced to obey the rules of the interest of others. liberty of expression is guaranteed, but not that of action. the conflict seems to be in a double way. first of all, as mises said5, an economy ruled by a hand of leaders will surely collapse. never some men gathered around a table, can know the correct prices, relations, the needs of the productions and consumers, the realities of the market. you have to be in the market to observe that, to feel it. they only can take some measures, they think of taking into considerations the first bad signs of the economy without leaving to the market the job to adjust itself. so even chosen ones can fail in respecting the interests of the citizens that voted them. secondly, those who had different opinions have no way but to apply the new norms. the result is that economic agents find different ways of hiding the real numbers, and here comes the underground economy, the black market, simulated contracts, and corruption. it seems that hobbes was right speaking about the “war of all with all” when he referred to the property rights and individual liberty. the knowledge of the rules is ignorant in 99% of what is going on around. taking just a small example from the romanian experience, let’s make references to the laws of tariffs and taxes. as many governments, as many norms were there in this field, each one striking right in the hard of the small and medium producers. the solution implicated is again, from the individual perspective, that of hiding the numbers. the real profit is known only by the manager. isn’t this destructive economy? how can this become a free market? so there is more than an analogy between free market and the judiciary law that of the judges, just as there is more bound between planned economy and legislation. in the past, the most powerful economies were those of the roman empire and of the anglo-saxon territory. respected tradition, jurisprudence, habits and customs, moral rules respected by everyone. in the roman time, even the translation of property was made in front of the judge without any manuscript. could it be possible today to make a transaction without a written contract? isn’t this feeling of fear and reticence in the market taken from all these brutal interventions from the state? free market, law and responsibility as in state as in the market we must not forget about the human nature. it is true the presumption of professor hayek, that individual knowledge is the most healthy and efficient for the economy. only individuals know what to do and how to decide on the market, what they need to change in the production and that customers need at what prices, when to invest and when to restrain the activity. but the same great economist recognizes the instability of human nature, ruled by feelings, not always honest and correct. so there is a need of general principles, known and respected by all to become imposed for the good of the society. people must know if they do wrong they will pay for their acts. a free market must not confuse opportunities with opportunism and economic growth with avarice. in this since we need law, not legislation, but law. not orders, but laws based on the good principles of the state of law as they were formulated at the origins. the states that evolved to the state of law can be classified in two categories. first of all, are those in which the transformation happened in time, in a natural way, combining practices and morality with habits and customs? from here were formulated and written the legal principles. it is the example of the british experience, “that offers us an interpretation of a civilization growth that constitutes even today the indispensable base of the argument in 5 mises, von l.(1949), human action: a treatise on economics, new haven: yale university press,p.305 studies and scientific researches economic edition, no. 15, 2010 258 favor of liberty”6. the british vision is expressed of the “way in which the nations stumble themselves by institutions created a result of human action, and not the execution of a human project”7. secondly there are the countries that turned to the state of law in a violent way, a drastically movement from the last system, copying the democratic principles without a solid base. the institutionalism demonstrated that the old decisions still order the way we act in present. so the past still has its imprint on our system. the path dependency gives birth to that hybrid combination of democracy, state of law and social or totalitarian practices. the change is difficult but not impossible. at the basis of success stands responsibility, of the government for the society, of the jurists in front of justice, of the economic agents of the market. all together become the responsibility of building a sold future for the society, a strong economy, an efficient legal ground, correct and proper institutions. these institutions we refer at are gowned from the daily practice, from the needs of the market. they are not invented by rulers. from the efforts of individuals, it can grow up something that will always be better that the products of some minds, an emergence of an order as a result of the evaluation and practice8. a free society needs that state functioning for the people, by the people and with the people. the law must be arranged around the general principles, must be natural not imposed, not created. it must be the written form of the customs everyone already acts by. the law must sustain the free market and not compete with it. this should be the role of the state. to be not the guardian of the economy, but the guardian of observed institutions and experienced and from them to complete the law if necessary. the law should be general; a norm should be applicable to most of the situations and in the name of equity. one of the leaders of liberalism intellectuals of the xixth century, benjamin constant, indicates the problem with the correct words describing liberalism as: “systeme de principes”.9 a free society means not only that the whole governmental action is ruled by principles, but there is an ideal accepted as supreme principium, that governs over all legal acts and norms. this means responsibility. the government must permit people to feel both opportunity and wrong option, so they can become responsible as well. in modern times, the feeling of responsibility was weakened by the confidence that the state must help us anytime, that it must offer us a good living, a successful economy, subventions, social money, etc. so it offers a protective umbrella that eliminates the entrepreneurial competitive spirit. the economic agents support themselves because they are capable of following with success their plans, conforming often to a general model of doing things. they prove a regularity in actions that is not the result of command or constraint, but of a common sense and of a habit firmly recognized. the free market should be in dialogue with the state. even if strong, the market also suffers from uncompetitive practices, frauds and abuses. here comes the need of a vertical state, indifferent to individual interest and capable of imposing the law to be respected. respecting general principles must mean sometimes constraint to those that make abuses. they are not seen from the state as abusers, but from the rest of the economic agents in the market. so constraint can only be limited if there is a high degree of voluntary recognition of rules for all. there is also a benefit. in time, survive only the best rules, so change also comes in a natural way in law. 6 hayek, f.a.(1998), constitu ia libert ii, ia i, institutul european, pag.89 7 ferguson,a. (1767), an essay on the history of civil society, edinburgh, p.187 8 menger,k. untersuchungen, cartea iii pp.163-165 apud. hayek,f.a.(1991), constitu ia libert ii, ia i, institutul european, p. 103 9 constant, b.(1874),“despre arbitrariu” in oeuvres politique de benjamin constant, ed.louandre, paris, 1874, p.91-92 studies and scientific researches economic edition, no. 15, 2010 259 conclusions the development of a society is strongly bound with the development and prosperity of the economy. and this is more likely to exist as we approach and tend to a free market, with a free society. the state is fundamental in this construction. any activity, most of all in economics, must adjust with the law. if the legal system suffers from inequity, the whole society will do so. they way norms appear, implemented and respected tells almost everything of the degree of liberty in a society and in the market. for the question how mush state does the economy need, the answer is simple: the free market is called free because it should be that way so no interventionism in the economic field, as tempting it may be. the need for the state is in another place. and that is to assure that the economy is left alone. governments must not be a machinery of laws but an expression of the respect of the fundamental rights and liberties for the citizens. following personal interests, or simply from ignorance, sometimes the state derogates from its purpose, makes abuse of the legislative power it has and goes over the market imposing some norms reasoning the action with “reasons of state”. this is the greatest offence for the society. in this position, the state appears very high in the top, far away from common ignorance, knowing exclusively solutions and therefore throwing them for implementation, apparently inexplicable for all. the expression “reasons of state” is the simplest way of doing what they want without giving any explication and also convincing you that this is the right thing to do. individuals, used to these practices, feel free to blame the state for the failure. the economic agents don’t look for answers in the market; they wait for help from the state, because they think if it created the damage, it must be the one who makes things write again. and again there is interventionism, until the next moment of impasse. if i could understand in some way the meaning of the formula “reasons of state” in the domain of national security, i don’t see how it can be present in the economic decisions. it is only an abuse. actually, whose reasons are those? what mean those reasons? aren’t the leaders sent there by the people, for some program they declared in the elective campaign? so ones at the leading table, they do not become independent, they are most of all meant to represent the interest of the citizens. so the reasons they should claim are, logically, the ones of the citizens. or they should be. the attitude of using that formula and interfering in the market has no logical sense ever. a market can never survive if in some occasions, benefits are given from restraining liberty. the economy does not need the state, but the society needs good institutions. these also must not be organized by the state. they should be raised from necessities, comprising the needs of the market, in time, from tradition, from the efforts of individuals. the medium in which the free market acts is limited by laws. the state should make sure that these laws do not impose anything on the market but the general principles recognized by all, that these laws sustain the, market, like a solid ground without changing its directions. we are today in an era of democracy, state of law, open economy, but i must say that we have much to learn until we truly implement these principles. a free market, a free society is not a simple objective, and neither can it be opened in short time, but it is important to choose the correct road to it. “nothing is more fertile in accomplishments then the art of being free; but also nothing is more difficult than this obedience of liberty.[…] in general, liberty is instituted, in a difficult way, in the heart of storms; it is defined in times of civil discordia; and its benefits can only be appreciated at an older age”. a.de tocqueville studies and scientific researches economic edition, no. 15, 2010 260 bibliografy 1. acton, lord (2001), despre libertate, ed. institutul european 2. bastiat, f. (1946), selected essays on political economy, new york: d. van nostrand co. 3. buchanan, j. (1954), “individual choices in voting and in the market” journal of political economy, london 4. constant, b.(1874),“despre arbitrariu” in oeuvres politique de benjamin constant, ed.louandre, paris 5. ferguson,a. (1767), an essay on the history of civil society, edinburgh 6. hayek, f.a.(1998), constitu ia libert ii, ia i, institutul european 7. hayek, f.a.(1979), law, legislation and liberty, the university of chicago press 8. holdsworth,w.s. (1924), a history of english law, v, london 9. leoni,b.(1991), freedom and the law, indianapolis, liberty fund 10. mill,j.st.(1994), despre libertate, bucure ti, humanitas 11. mill,j.st.(1982), considerations on representative government ,ny: henry holt&co. 12. mises, von l.(1949), human action: a treatise on economics, new haven: yale university press 13. schultz,f.(1946), history of roman legal science, oxford: at the clarendon press,1946 14. www.econlib.com studies and scientific researches economic edition, no. 15, 2010 261 news and insights studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro news and insights on the convergence of ifrs u.s. gaap ionela-cristina breahnă-pravăţ “vasile alecsandri” university of bacău crisspra@yahoo.com diana-maria diaconu1 “vasile alecsandri” university of bacău diaconu.diana_maria@yahoo.com abstract international accounting convergence is a highly complex process that began decades ago, emphasized globalization being the main factor that determined setters, professional bodies, investors to become aware of the importance of completing this process, namely the development and implementation of a common set of standards covering all areas of financial reporting. this objective was initially assumed by the international accounting standards committee (iasc), now the international accounting standards board (iasb).in this respect, at first it is noted the convergence of u.s. standards with the international ones, respectively the convergence of u.s. gaap ifrs standards, that, at least in theory, are not so different from each other, as we can say that, just as ifrs, u.s. gaap were designed as a system of principles-based accounting. in reality, the u.s. standards system has proven to be more of a rules-based accounting system, unlike his international equivalent/counterpart. and the current state of convergence of the two sets of rules still reflects significant differences, plus the opposition of some entities to accept international standards. keywords accounting; convergence; globalization; ifrs; u.s. gaap. jel classification m41 1. introduction in order to develop a common language for the financial reporting, accounting has been at first phase submitted to a harmonization process, a process which later took the form of convergence. initial efforts in achieving accounting harmonization (a process that began after the second world war) aimed to reduce differences in the accounting principles used in the most important capital markets in the world. the most relevant evidence of harmonization process can be considered as the accounting directives issued by european union through its main body: european commission. they were taken more or less in law countries and influenced the accounting systems of countries outside the eu. criticism of the harmonization process the lack of a genuine conceptual basis, the close connection of accounting with taxation, the allowing of existence of a multitude of rules and accounting 1 msc student at ”vasile alecsandri” university of bacau 120 news and insights on the convergence of ifrs u.s. gaap practices have made it to fail. regional harmonization efforts have diminished the differences between accounting practices but could not eliminate them. therefore, giving up accounting harmonization in favor of convergence accounting (starting with the 90s), understood as a process of elaboration of rules, principles and unique concepts, meaning a single set of accounting standards, has proved to be effective, even if the process is not yet fully realized. 2. iasb international accounting convergence process’ catalyst efforts made on accounting convergence line (and previously on harmonization) would not have been possible without the existence of a body of international nature to approximate international accounting practices through a unique set of standards. this responsibility was assumed by the international accounting standards committee (iasc) established in 1973 and reorganized in 2001 as the international accounting standards board (iasb). as mentioned in the constitution of the ifrs foundation, one of the main objectives of the iasb is to achieve full convergence to a single set of global accounting standards of high quality, easy to understand and apply and promote these standards, in other words: do the converge of national accounting standards with international standards (ifrs foundation constitution 2010, http://www.ifrs.org/). the concept of convergence highlights two major areas:  international convergence the process in which the iasb and national bodies issuing accounting standards converge their financial reporting standards in a global set of accounting rules.  convergence of national standards the adoption of international standards as national standards. for example, the accounting standards board (asb) in the uk has developed a strategy for the british regulatory convergence with international accounting standards. without minimizing the importance of convergence of national standards, we believe that the main challenge of the present is international convergence, relevant in this respect being the efforts of the iasb and the u.s. fasb accounting regulatory body (financial accounting standard board), to bring to a common denominator international standards: ifrs (international financial reporting standards), to the u.s.: u.s. gaap (united states general accepted accounting principles). in light of the above, the very phrase “international convergence” is found in specific literature as being connected to convergence project initiated by the two bodies, given its importance. 3. ifrs us gaap convergence in the past decade, fasb and iasb have collaborated through joint projects in order to develop converged standards. fasb issued these standards as u.s. gaap (generally accepted accounting principles), and the iasb has issued as ifrs (international financial reporting standards). with time, it is expected that the two sets of quality standards evolve and become more similar, if not identical. u.s. gaap and ifrs, the two “pillars” of world regulatory accounting, competed certainly over time, for leadership in financial reporting (tabără et al, 2010). however, collaboration has become necessary to both parties, because: ifrs influences u.s. companies as a result of increasing cross-border mergers and acquisitions of businesses, the increasing number of foreign investors, not least by 121 http://www.ifrs.org/ breahnă-pravăț, diaconu policy to require branches of multinationals in the u.s. (and beyond) to prepare financial reports in accordance with ifrs. sua u.s. still has one of the strongest and most developed capital markets in the world, attracting many companies. moreover, continued delays in the decision to adopt ifrs by u.s. influences also decisions taken by other major powers such as: china, japan and india that tend to delay the projects of their convergence to ifrs. 3.1 important steps in ifrs – us gaap convergence united states has taken the first steps in accepting global accounting standards in 1988, when u.s. securities and exchange commission (sec) issued a statement that encouraged the development of international accounting standards. for starters, the two bodies of normalization: iasb, fasb and sec have agreed to work towards establishing a common set of standards, a process known as convergence. in 2002 it signed the norwalk agreement, which formalized the beginning of cooperation between the two bodies: iasb and fasb. cooperation supposed first to identify the main differences between the two systems by 2003 and reduce them by 2005. convergence projects were divided by this time in short-term projects and long-term projects, depending on the given priority. fasb has also started an own research project on issues of international convergence. in 2006, the iasb and fasb have signed a memorandum of understanding, designating a joint committee to develop compatible accounting standards. the target for 2008 was made up of the gap between the two reporting frameworks through short-term projects (joint or individual) aimed at the following areas: fair value, borrowing costs, impairment of assets, income, loans, government grants, research and development, joint ventures, future events, segment reporting . other joint projects, accomplished in a longer period of time, targeting the following 11 items: business combination, consolidation, guidance on measuring fair value, the distinction between debt and equity, performance reporting, employee benefits, revenue recognition, derecognition, financial instruments, intangible assets and leases. in 2007, sec voted unanimously to allow private foreign companies that prepare financial statements in accordance with ifrs in the manner in which they were issued by the iasb, not to achieve their reconciliation to u.s. gaap. in 2008, the two councils have done the update convergence projects established by the memorandum of understanding, analyzing their status and indicating areas where the projects were completed. in 2010 the date on which occurred the second update of the memorandum of understanding fasb and iasb issued a report quantifying convergence progress. in this report, the two councils establish, for the first time, a deadline for completion major projects convergence, namely 30 june 2011. the term was obviously, outdated. at this time, priority joint projects were related to: financial instruments, revenue recognition, leases, fair value measurement and presentation of other comprehensive income elements. for iasb, projects scheduled for completion by the end of june 2011 include: strengthening, insurance and designing effective information requirements concerning derecognition of assets. also in 2010, security and exchange commission in the u.s, started a work plan (the work plan) to examine the possibility of incorporating ifrs into the u.s. reporting system. 122 news and insights on the convergence of ifrs u.s. gaap in april 2011, “was issued the fourth progress report which concluded that the two councils have come close to completing the program set out in the memorandum of understanding. at this time, the vast majority of short-term projects were completed, remaining only three projects (under long-term projects category), but of major importance: financial instruments, revenue recognition and lease accounting.” meanwhile, the sec has taken into account if and when there will be transition from u.s. gaap to ifrs. in november 2011, the sec issued a 56-page report identifying the differences between u.s. gaap and ifrs. the report is considered to be a limited one, since it does not refer to the differences between the two accounting referential in important areas such as: financial instruments, revenue recognition, leases, consolidation and fair value measurement, presentation of financial statements, financial instruments with characteristics of equity contracts insurance and asset derecognition (work plan for the consideration of incorporating international financial reporting standards into the financial reporting system for u.s. issuers a comparison of u.s. gaap and ifrs, 2011, http://www.sec.gov/). the report did not specify the impact of differences between u.s. gaap and ifrs, however noted that u.s. gaap, contains more detailed and specific requirements than ifrs “ifrs contain general principles for transactions in various industries, with specific application limited guidance”. the report issued in april 2012 by the iasb leadership, emphasize that the three projects (set in mi) remaining unfinished, were still under development, in bringing in addition the project on the subject of the insurance contracts, currently under review. the final report issued by the sec in july 2012 relative to the appropriateness of incorporating ifrs into the u.s. accounting system is not favorable, the sec stating that the decision to achieve this purpose can not be taken while the major differences between the two sets of standards are maintained. 3.2 gaap current status of ifrs u.s. gaap convergence process year 2013 started with the creation of a new advisory forum under ifrs foundation which oversees iasb, called accounting standards advisory forum. the purpose of its creation was to expand the possibilities of collaboration of the (international convergence of accounting standards-overview, 2013, www.fasb.org). currently, the members of this forum, bodies representing national and regional accounting normalization (in africa, asia, oceania, europe and america) are in number of 12, the fasb being among them. while convergence future is still uncertain, the three projects pending in the memorandum of understanding financial instruments, revenue recognition and leasing together with the insurance contracts within follow their course. below we present work plans taken into consideration by the two standard setters: iasb and fasb containing timetables for completion of projects in stages. 123 http://www.sec.gov/ breahnă-pravăț, diaconu table 1 the calendar of major iasb fasb joint projects projects set forth in the memorandum of understanding 2013 2014 t4 s1 s2 financial accounting instruments classification and assessment fd depreciation fd hedge accounting r r r leases revenue recognition fd other projects insurance rt r inactive joint projects these projects were reconsidered as having a lower priority ranking. their activation is not expected in the near future 1) accounting for financial instruments – rate liquidity and interest rate 2) conceptual frame (reporting entity; elements; evaluation; recognition) 3) earnings per share 4) emissions trading shares 5) financial instruments with characteristics of investment 6) presentation of financial information (income tax; investment companies) source: fasb project roster & status, 2013, http://www.fasb.org/ abbreviations: fd: final document r: re-deliberations rt: round tables 3.2.1 financial instruments accountancy a) classification and assessment fasb proposal currently made on the classification and assessment of financial instruments differ substantially from those set forth in 2010, which require the submission of most financial instruments at fair value. the new proposal brings forward a mixed approach, respective the opportunity to measure assets and financial liabilities either at fair value or at amortized cost. financial assets will be assessed based on the appropriate estimated cash flows and type of business in which financial assets are managed. financial liabilities will be assessed according to how an entity is expected to be settled (generally, at amortized cost). derivatives will not be subject to assessment mixed approach proposed by fasb, but will continue to be measured at fair value. regulatory submissions made by both bodies (fasb and iasb) will generate similar approaches in the assessment of investments held in bonds and financial liabilities. significant differences remain, however, in the case of equity investments as iasb will allow assessment of the fair value of non-exchange traded other comprehensive income, rather than net income. b) depreciation of financial instruments the model proposed by the fasb requires an entity to recognize a loss of credit based on the current estimation of the contractual cash flows not waited to be 124 http://www.ifrs.org/current+projects/iasb+projects/financial+instruments+a+replacement+of+ias+39+financial+instruments+recognitio/phase+i+-+classification+and+measurement/ http://www.ifrs.org/current+projects/iasb+projects/financial+instruments+a+replacement+of+ias+39+financial+instruments+recognitio/financial+instruments+impairment+of+financial+assetseplacement+of+ias+39+financial+instruments+recog/financial+instruments+impairment+of+financial+assets.htm news and insights on the convergence of ifrs u.s. gaap collected. this supposes recognition of aliquots of credit loses (basis for all financial instruments) since the first day, namely from day one, from the moment of recognition tools. unlike fasb, which proposes a single model for the evaluation of depreciation of financial instruments, the iasb has developed an assessment model that contains two approaches, referring to both losses and expected losses from lending. the proposed model requires recognition of expected losses to financial maturity assets whose credit risk has increased significantly from the initial recognition and the expected loss in the next 12 months for the other financial assets (kpmg, course: ifrs 9 financial instruments, 2013, http://www.kpmg.com). although the model developed by the iasb is similar to its counterpart in that it allows the recognition of credit losses recognized since the time of the instruments, it is estimated that the losses recognized by using the model developed by the iasb is lower than the latter, because it does not make the recognition of losses expected to maturity of employment in certain minimum levels of value. even though the two models are different, their future trends have the same trajectory: the gradual removal from depreciation approach in terms of losses actually incurred. this approach has been criticized in the current financial crisis, considering that allowed entities to record credit losses in too small values to actual and relatively late times in relation to their production. c) hedge accounting although hedging models under both standards have similar principles, there are still some differences in the manner of their application. some differences are arising from the rigor they have international standards compared with the u.s. and others, on the contrary, reflect the flexibility ifrs compared to u.s. gaap. areas where ifrs are more restrictive than u.s. gaap are referring to the nature, frequency and methods for assessing hedge effectiveness. for example, u.s. gaap, provide a simple and quick method that allows an entity to assess that were no ineffective covering against risks and, therefore, to avoid conducting efficiency tests, as well as quantitative measurement of hedge ineffectiveness risks. in contrast, ifrs requires that efficiency against cover risks would be assessed in all cases, and any ineffectiveness is recorded in the profit and loss account. 3.2.2 leases although the two bodies made significant adjustments to projects proposed in 2010, the major challenge in current practice is the virtual recognition in the balance sheet of assets and liabilities arising from leases. agreeing on details, however, including the development of a model for the recognition of income from leasing operations, it is still a challenge (http://www.pwc.com/, u.s. gaap and ifrs convergence: what you need to know about the iasb and fasb’s joint projects). differences between the two types of standards are maintained on the classification of leases and gains recognition from lease-back transactions. currently, the two bodies have not reached consensus on an effective term of issuance of the final draft. in these circumstances, it is expected that the standard issue within the lease to produce later than 2014, the effective date is estimated to be around 2017. 3.2.3 revenue recognition according u.s. gaap, revenue recognition is based on criteria based on fixed or determinable price, which means that in general, contingencies are not recognized as revenue, excepting the moment of their resolution (http://www.pwc.com/, ifrs and us gaap: similarities and differences ifrs, october 2013), however, focuses on the 125 http://www.pwc.com/ breahnă-pravăț, diaconu likelihood that a transaction will generate future economic benefits to the entity and the possibility of measuring a manner reliability of these benefits, including any contingent revenue. these differences lead to unsynchronized moment income relating to the two types of standards. in terms of progress towards convergence, the two accounting regulatory bodies are about to complete standard on revenue recognition. latest updates within the projects: revenue recognition and discontinued operations are expected in the first quarter of 2014. 3.2.4 insurance contracts joint projects in the sphere of insurance contracts that are on the agenda of the two bodies agendas aimed at calculating and annuity and liabilities arising from insurance contracts by estimating future cash flows that are expected to be received, future payable compensation, and other charges laid in insurance. the two bodies have failed to achieve convergence up to present in several major areas. for example, unlike the fasb, iasb continues to believe that the net contractual obligation that returns to insurer must include a specific degree of risk in terms of uncertainty when generating cash flow and amount. redeliberations on this project are expected in the course of 2014, the effective date of the completion of the standard is not yet established. references ernst & young, sec staff releases final report on ifrs, available on http://www.ey.com/publication/vwluassets/devels36_sec_july2012/$file/ devels36_sec_july2012.pdf. fasb international convergence of accounting standards-overview, available on http://www.fasb.org/jsp/fasb/page/sectionpage&cid=1176156245663. fasb, international convergence of accounting standards-a brief history, available on http://www.fasb.org/cs/contentserver?c=page&pagename=fasb%2fpage %2fsectionpage&cid=1176156304264. fasb, project roster & status, available on http://www.fasb.org/cs/contentserver? c=page&pagename=fasb%2fpage%2fsectionpage&cid=1218220137074. hitchins, j., convergence limps on…, available on http://pwc.blogs.com/ifrs/2013/11/convergence-limps-on-in-2002-the-iasband-fasb-signed-up-to-the-goal-of-accounting-convergence-as-part-of-thenorwalk-agr.html. hoogervorst, h., seidman, l. f., iasb-fasb update report to the fsb plenary on accounting convergence, available on http://www.fasb.org/cs/contentserver? site=fasb&c=document_c&pagename=fasb%2fdocument_c%2fdocum entpage&cid=1176159985026. ifrs foundation, ifrs foundation constitution, available on http://www.ifrs.org/the-organisation/ifrs-advisorycouncil/documents/constitutiondec2010.pdf. ifrs foundation, work plan for ifrss as at 26 november 2013, available on http://www.ifrs.org/current-projects/iasb-projects/pages/iasb-workplan.aspx. meeting of the g20 finance ministers and central bank governors 15-16 february 2013 update by the iasb and fasb, available on http://www.financialstabilityboard.org/publications/r_130216b.pdf. 126 http://www.ey.com/publication/vwluassets/devels36_sec_july2012/$file/devels36_sec_july2012.pdf http://www.ey.com/publication/vwluassets/devels36_sec_july2012/$file/devels36_sec_july2012.pdf http://www.fasb.org/jsp/fasb/page/sectionpage&cid=1176156245663 http://pwc.blogs.com/ifrs/2013/11/convergence-limps-on-in-2002-the-iasb-and-fasb-signed-up-to-the-goal-of-accounting-convergence-as-part-of-the-norwalk-agr.html http://pwc.blogs.com/ifrs/2013/11/convergence-limps-on-in-2002-the-iasb-and-fasb-signed-up-to-the-goal-of-accounting-convergence-as-part-of-the-norwalk-agr.html http://pwc.blogs.com/ifrs/2013/11/convergence-limps-on-in-2002-the-iasb-and-fasb-signed-up-to-the-goal-of-accounting-convergence-as-part-of-the-norwalk-agr.html http://www.financialstabilityboard.org/publications/r_130216b.pdf news and insights on the convergence of ifrs u.s. gaap pwc, ifrs and us gaap: similarities and differences, available on http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaapsimilarities-and-differences.jhtml. pwc, us gaap convergence and ifrs: what you need to know about the iasb and fasb's joint projects, available on http://www.pwc.com/us/en/issues/ifrsreporting/publications/ifrs-convergence-joint-projects.jhtml. rotilă, a. (2011), specific accounting regulations and practices, alma mater publishing house, bacău. sec, work plan for the consideration of incorporating international financial reporting standards into the financial reporting system for u.s. issuers. final staff report available on http://www.sec.gov/spotlight/globala ccountingstandards/ifrs-work-plan-final-report.pdf. sec, work plan for the consideration of incorporating international financial reporting standards into the financial reporting system for u.s. issuers a comparison of u.s. gaap and ifrs, a securities and exchange commission staff paper, 16 november, 2011, available on http://www.sec.gov/spotlight/ globalaccountingstandards/ifrs-work-plan-paper-111611-gaap.pdf. tabără, n., horomnea. e., mircea. m. c. (2010), international accounting, second edition, tipo moldova publishing house, iaşi. 127 http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaap-similarities-and-differences.jhtml http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaap-similarities-and-differences.jhtml http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-convergence-joint-projects.jhtml http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-convergence-joint-projects.jhtml (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 70 feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 brînduşa-mariana amălăncei “vasile alecsandri” university of bacau brandusa_amalancei@yahoo.com abstract the gestures of presidential candidates can have an important contribution to the shaping of their mediatized image, together with the other components of nonverbal communication as well as together with words. even more, gestures can have an impact on the evaluation made by a part of the electorate concerning the candidates. starting from the functions of gestures in which the raised index finger is involved, as established by geneviève calbris (1979), we will endeavour to conduct a comparative analysis of the co-verbal gestures made by the two candidates to the presidency of france, ségolène royal and nicolas sarkozy, during their debate on may 2 2007. the identification of these functions does not include the gestures made with the index finger in combination with other facial components, as well as the gestures where the index finger describes lines drawn in space. the article uses as a research method the contents analysis of these gestures and is based on a scheme of categories that comprises the following indicators: designation/localization, important declaration, (drawing) attention to oneself, uniqueness, reference, refusal/negation, opposition/objection, threat/warning, or accusation. keywords gestures; impact; image; the presidential debate; the functions of the index finger jel classification m37 introduction the french presidential debate that took place on may 2, 2007 brought ségolène royal and nicolas sarkozy face to face. prior to this debate, during the entire electoral campaign, both of them had adopted the image of the person who succeeded in life unaided (self-made man/ woman). thus, their campaign speeches revealed the present suffering of the electorate as similar to the past difficulties of the candidates: the troublesome childhood, the hard career debut, the failed first marriage etc. the candidates identified themselves with the suffering citizens but, at the same time, distinguished themselves from them due to the fact that they had managed to overcome their distress. the individual success the electors could identify themselves with represented the essence of this typical character, which is attainable only through personal merit, courage, energy, and tenacity. ségolène royal insisted on her ability of having prevailed over the difficulties of her condition as a woman. due to her qualities, she managed to combine her family life with her public life, to evolve in a political environment considered to be manly and to overcome the troubles caused by the ironic remarks concerning her competences. in effect, in the official campaign show broadcast on may 2, 2007, ségolène royal presented herself as a strong woman and a fighter who wanted to lead the french towards victory. for nicolas sarkozy, to amălăncei 71 succeed meant having the capacity to overcome suffering, as well as being able to live with it. his chief merit was, therefore, that of having the courage to triumph over failure, as well as his aptitude of dominating his suffering and of making it serve his ambition (ballet, 2014). christian delporte (2012) offers details regarding the manner in which the presidential debate was prepared. transmitted by the french television channels tf1 and france 2, the debate was produced by a well-known specialist from the area of political programs, jérôme revon, was moderated by arlette chabot (france 2) and patrick poivre d’arvor (tf1), lasted 2 hours and 40 minutes and took place in the sfp studios of boulogne, in a studio setting of 200 square meters. the socialist candidate, ségolène royal, prepared in her campaign studio. the discourse forms and the language tics of her adversary were analysed, and the manager of the advertising agency ogilvy & mather france advised her regarding the ways of expressing and behaving, insisting on the idea of calmness, concentration and self-restraint in communication. ségolène royal also asked her campaign team to prepare questions that could destabilize her interlocutor. in his turn, nicolas sarkozy gathered his political collaborators at a hotel in corsica, including a socialist official, who had recently joined the opposite party and who knew royal’s weak points quite well and could thus advise him on how to exploit them to the disadvantage of his adversary. sarkozy’s campaign team analysed the most recent televised debates where the socialist candidate was invited. for sarkozy, who had occupied the first position in opinion polls since the middle of january, the risks were very high and he had to show that the duel on may 2 represented only a stage in his campaign. given this reason, he insisted on being present the morning of the debate on france-inter, where he tried to minimize the importance of the duel, claiming serenely that the french do not choose the president of the republic according to the impression they form after a three-hour debate, even if this debate is important. in fact, the presidential debates of 1981, 1988 and 1995 did not influence the results of the final vote either and four days before the decisive vote 87% of the electorate stated that they had already decided whom to vote. however, his campaign team feared that nicolas sarkozy might seem too brutal for the viewers given that his adversary was a woman. the two counter candidates were thus advised to be neither too calm nor too aggressive. even if both of them were accustomed to television studios, nicolas sarkozy had, in christian delporte’s view, the unquestionable advantage of over fifteen years of personal experience in confronting adversaries on television, a type of experience that made him ‘sparkle’ in such meetings. on the other hand, for ségolène royal the presidential campaign represented the moment in which she discovered the polemical debate. as a result, her oratorical qualities were modest but she could make use of the advantages her supporters appreciated, namely, sincerity and humaneness. the importance of gestures for building one’s mediatized image the gestures of the two candidates to the presidency of france (especially nicolas sarkozy’s gestures) employed during the presidential debate of may 2, 2007 represented a topic of investigation for riham el khamissy (2010), who claims that sarkozy’s victory was particularly the result of the gestural image built during his mediatized appearances. riham el khamissy believes that the outward look and gestures of a candidate become as important as his words in the case of televised shows, the quality of being telegenic and charisma being attributes that can contribute feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 72 to the winning of elections. in general, the significance of bodily movements is often revealed by contextual factors (space-time, gesticulator, receiver of the gesture and the word that accompanies it), the words and gestures highlighting their expressiveness reciprocally. the analysis of nicolas sarkozy’s gestures from a pragmatic perspective is considered by the author mentioned above, whose opinion we share, as being the most adequate one for the study of the influence exercised by a candidate on the viewers by means of the outward look and the co-verbal gestures in a determined context. riham el khamissy followed the model offered by geneviève calbris, who investigated a corpus of six televised shows that had lionel jospin as a protagonist, during his prime ministership of france. the study started mainly from the assumption that the recurrence of certain gestures can constitute a clue related to what the gesticulator thinks (calbris, 2003). therefore, by means of his gestures, sarkozy showed, in riham el khamissy’s view, precision and concision (by using the vertical circle made with the thumb and the index finger or the vertical digital tweezers, both being considered gestures indicating rigour), clarity in thinking (by employing gestural enumeration), combativity (by raising the closed fist) and responsibility (by a self-referential gesture with the hand, with or without touching; el khamissy, 2010). guy barrier (2011) also dealt with the analysis of the two candidates’ gestures and he observed that nicolas sarkozy was more expansive gesturally than his counter candidate, who used the table as a background of expression for her movements. as far as their posture was concerned, ségolène royal’s bearing was more upright and more stable, whereas nicolas sarkozy continuously moved his chest sideways. ségolène royal repeatedly placed her left hand on top of her right hand, as françois mitterrand used to do, and her gestures were very discreet until they started debating the issue of disabled children in schools. at that point she started to make indicative gestures with her index finger or ‘chanted’ prosodic gestures combined with a facial expression that transmitted anger. even though her adversary tried to control his pitch, his state of discomfort was indicated by his facial expression (a contracted forehead, raised eyebrows, frequent winking) and by constantly looking down while speaking. we will further attempt to interpret the co-verbal gestures made with the raised index finger by the two candidates during the debate. our approach is based on the contents analysis of these gestures by making reference to the functions that can be associated with them with the aim of supporting the verbal sequences with which these particular gestures are correlated. contents analysis represents, from a sociological perspective, “that specific research method which allows the making of inferences by means of the systematic and objective identification of specific characteristics in a text” (chelcea, 2001) or, from a broader perspective, it can be considered a system for decoding messages, a “technique that aims at describing, with optimal objectivity, precision and generality, what is said about a given subject, in a specific space, at a certain moment” (agabrian, 2006). the objective of our analysis is thus to highlight the functions of gestures made with the raised index finger, on the basis of the model originally discussed by geneviève calbris (calbris, 1979), with special focus on the frequency of these gestures made by the participants to the debate in different contexts and, secondly, with regard to the fact that the exaggerated use of the accusatory index finger by ségolène royal during the “anger scene” made nicolas sarkozy retort (“calm down and do not point your finger at me!”; source: http://www.dailymotion.com/video/xqid78_2007-le-debatamălăncei 73 segolene-royal-et-nicolas-sarkozy_news). when identifying these functions, calbris excludes the gestures made with the index finger in combination with component parts of the face (as, for instance, the index finger raised vertically to the mouth to call for quietness), as well as the pointer finger describing lines in space. thus, the index finger is employed in communication with the following roles: concrete or abstract designation or localization, expressing an important declaration, drawing attention toward the self, expressing uniqueness, specifying by means of restriction or addition, expressing refusal-negation or opposition-objection, or threat-warning. to these we can add the role of making accusations with the index finger. the functions of the index finger were established by calbris on the basis of two converging approaches, which allowed data confirmation, addition to the data and, sometimes, their reciprocal interpretation: a research in which illustrations were associated with a scriptural-graphic message revealing a signification and a test in which, starting from a photographed gesture, the participants interpreted freely its possible significations. more precisely, six partial photographs were selected, with isolated gestures, obtained by cutting them from the global images. the photographs presented the raised index finger without touching the face and the gestures corresponded to different situations: indicating direction (“upward”), indicating quantity (“one”), requesting the turn to speaking or asking for permission (“please”/ “if you would be so obliging”), demanding attention (“listen”), indicating a threat (“be careful!”) and a refusal (“no”). the last two gestures distinguish themselves from the others by their repeated backward and forward movement or up and down movement suggesting threat and left-right suggesting refusal. illustration 1. gestures made with the index finger source: calbris, g., (1979), l’index signifiant, in études de linguistique appliquée. mélange de didactique des langues, no. 35, juillet-septembre, didier érudition, paris, p. 98 concrete or abstract designation or localization. oriented toward the exterior, the index finger functions as an instrument which designates a person or an object, the meaning depending on the situation. for instance, depending on the situation and the mimicry it determines, the same gesture with the index finger pointing at a third person, with the implication “he’s the one”, can correspond to a neutral information, an order, a positive attitude of admiration or a negative attitude of accusation. likewise, the index finger can be used to designate an animate being, whether a human being or an animal, as well as a concrete or abstract object (a forgotten word or idea). as far as localization is concerned, the index finger can indicate a point, a line, a plane, a certain volume etc. the index oriented toward the east signifies, for feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 74 example, “to the right”, “that way”, whereas its orientation toward the north suggests “forward”, “ahead”; oriented downward it means “here”. important declaration. the index finger raised above the head or at the level of the head accompanies a prophetic, solemn or important declaration and stresses discourse segments, thus cadencing words, imposing the message and highlighting certain elements. the importance of the message for the speaker can be rendered by means of his/her willingness to insist or to bring in supplementary or restrictive information. drawing attention to oneself. the index finger raised for a moment above or at the head level also represents a method used for drawing attention to oneself. the gesture is used in different situations to call for a taxi or a waiter, to demand the turn to speaking or to ask for permission to go out etc. the height to which the index is raised and the force with which the gesture is made express the degree of confidence related to the person who wants to attract attention. expressing uniqueness. the raised index with the palm commonly oriented toward the self and the nail oriented toward the exterior constitute the symbolical representation of number one, the gesture being used as a means of insisting or specifying. specifying by means of restriction or addition. the index finger raised from the chest level frontward, more or less vertically, can be used in order to restrict (commonly in correlation with “just”, “it is only...”, “yes, but…” etc.) or to amplify (correlated with “in addition”, “and”, “all the more” etc.) refusal-negation and opposition-objection. in order to express refusal-negation, the index finger is shaken transversally, from left to right. the origin of this gesture lies in stretching the arms on both sides of the body with the aim of obstructing someone’s passing. opposition-objection is indicated by means of the index finger suddenly raised backward, similar to the movement backward made when we want to protect ourselves from a physical attack, simultaneously using our hands in defence. threat-warning. the index finger which seems to be directed most diagonally (the last image in the series of six above) was correlated mostly with threat or warning (13 answers out of 28). this position of the index finger sends to the diagonal plane formed by a hand which seems ready to slap. accusation. the index directed toward a person can be used as an accusatory gesture, unconsciously provoking negative emotions. for the quantitative measurement of the gestures made with the index finger by the two candidates we employed a framework for analysis that delimits the functions of these gestures in the discursive sequence. the quantitative analysis was carried out on the basis of the frequency of the gestures and involved the following aspects: • numbering the occurrence of gestures included in the categories scheme in order to determine total visibility; • numbering occurrence of gestures on each level of the categories scheme, with regard to the two actors. to this end, the categories scheme we intend to monitor includes the following indicators: • designation/localization; • important declaration; • drawing attention to oneself; • uniqueness; • specification; • refusal/negation; • opposition/objection; amălăncei 75 • threat/warning; • accusation. figure 1. gestures with the index finger made by ségolène royal/ nicolas sarkozy in the course of the entire debate we identified a total number of 199 gestures with the index finger, 83 made by ségolène royal and 116 made by nicolas sarkozy. this fact shows a much higher percentage in the case of the masculine candidate, who accumulates 58.29% in comparison with 41.70% in the case of the feminine candidate. figure 2. gestures with the index finger made by ségolène royal the distribution of gestures with the index finger for the feminine candidate reveals major differences in percentage, with royal amassing a significant percentage, feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 76 especially for accusation (34.93%), specification (27.71%) and threat/warning (9.63%). this aspect indicates the predominant combative nature of the candidate, who tries, by means of gestures with a negative connotation, to face the confrontation with a masculine candidate successfully. the equal distribution of 8.43% for the indicators designation/localization and important declaration unfolds the concreteness of ségolène royal’s gestural expressiveness who, when transmitting an important message, makes use of localization, thus attempting to fix the information in the receiver’s mind. the other types of gestures score a low percentage, but we must observe that in royal’s case we can identify all the functions of these gestures: 4.81% for opposition/objection (a relatively low percentage compared to the percentage obtained for accusation and threat/warning, a fact which suggests that royal did not intend to be aggressive with her counter candidate, but only tried to face the confrontation with him successfully), 2.40% for refusal/negation and attention to oneself and 1.20% for uniqueness. these low percental values can be a proof of the fact that ségolène royal did not want to present herself in front of nicolas sarkozy as a female candidate, who could have been expected to show certain delicacy in terms of gestural expression, but more likely as an adversary that was equal to her counter candidate. figure 3. gestures with the index finger made by nicolas sarkozy the distribution of functions associated with gestures made with the index finger by nicolas sarkozy highlights a clear difference, with 35.34% for designation/localization and 32.75% for specification, which demonstrates the prominent affirmative character of gestural expressiveness. an equal percentage of 8.62% was identified in the case of important declaration and threat/warning. the equal distribution of the two functions reveals a certain connection between them, meaning that the important declarations are sometimes backed by threats/warnings, thus maintaining a balance in exploiting affirmative or negative connotations. drawing attention to oneself records in sarkozy’s case a much better percental value of 6.89% as compared to his counter candidate, who recorded a value of 2.40%, a fact which can reveal the politician’s attempt to highlight the inequality between them. amălăncei 77 the functions of gestures with negative connotations, namely, accusation (4.31%) and opposition/objection (3.44%) are less frequently found in sarkozy’s case, who probably avoids to leave the impression of a direct attack on his counter candidate, a situation in which she could have appeared as being victimized. we observe in sarkozy’s case the absence of gestures with the function of refusal/negation and uniqueness, these indicators lacking percental results, a fact which confirms once more his intention of not standing out by marking gender inequality. figure 4. the distribution of functions of gestures with the index finger made by the two counter candidates the comparative analysis of the two counter candidates reveals a different employment of functions of gestures made with the index finger. thus, nicolas sarkozy employs these gestures more commonly for designation/localization (85.41%), whereas ségolène royal, who displays a more combative nature, predominantly employs accusations (85.29%). opposition/objection is equally distributed, both participants to the debate applying it only as a reaction to the counter candidate’s affirmations or gestures. important declarations and threat/warning do not register significant fluctuations, although with regard to these two indicators sarkozy manages to record higher values of 58.82% and 55.55%. conversely, in the case of gestures made with the index finger by ségolène royal all the functions are identified, including those of refusal/negation and uniqueness, which are absent in her counter candidate’s situation. in the case of specification and drawing attention to oneself, nicolas sarkozy dominates the debate with 62.29% and 80%, with easily identifiable moments when this fact becomes clear even at the level of their declarations. feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 78 figure 5. weighting of functions of gestures made with the index finger during the debate between royal and sarkozy the use of functions of gestures with the index finger in the course of the debate between ségolène royal and nicolas sarkozy is unequal if we refer to their quantification in percental values. only three functions stand out with a percentage of over 10%: specification (30.65%), designation/localization (24.12%) and accusation (17.08%). almost equal figures are registered in the case of indicators like threat/warning (9.04%) and important declaration (8.54%) on the one hand, and drawing attention to oneself (5.02%) and opposition/objection on the other hand (4%), while the rest of the functions range between 1% (refusal/negation) and 0.5% (uniqueness). according to ch. delporte (2014), in the french press ségolène royal was appreciated as being “very combative”, unlike nicolas sarkozy, who was considered as “too calm” (le figaro), while the entire debate was described as “tense and abounding in irony” (la corix) or that it “respected its promises” (les échos). after the debate, the press did not designate any winner, preferring to wait for the publication of opinion polls instead. the confrontation between the two candidates to the presidency of france appealed to the french, a large number of people watching it on tv (20.1 million people, with 3.3 million people more than in 1995). however, the real audience figures recorded were certainly higher, the debate being rebroadcast by other channels besides tf1 and france 2 (bfm-tv, i-télé, lcp, france 24, with simultaneous translation in english and arab) and transmitted by the radio (franceinfo, rtl, europe 1) or internet sites (arte, for instance, gathered 46.000 internet users). the francophone viewers were added to them (300.000 belgians), a fact which made prominent the interest of the public for the stake of the french presidential elections. conclusions according to the opinion poll conducted in the evening of may 2 by the opinion way institute for le figaro and la chaîne info and made public on may 3, the debate amălăncei 79 contributed to consolidating sarkozy’s position. the poll was conducted online on a sample of 878 persons (out of the 1,415 initially selected using quota), who watched the televised debate (source: http://tempsreel.nouvelobs.com/politique/elections2007/20070503.obs5364/). the confrontation between the two candidates took place at a particular moment of the campaign, when sarkozy was ascending “slowly but irresistibly” (delporte, 2014) in the electorate’s voting intentions (51-52% corresponding to 22-26 april and 52-53.5% for the period between 30 april and may 2). immediately after the poll was published, ségolène royal’s campaign directors denounced the “reliability” of the survey, which was associated with mere “control operations”. in the first round, 51% of the electors of the candidate proposed by the union for french democracy, françois bayrou (18.57%), considered sarkozy as being “more convincing”, as compared to 35% for ségolène royal, while 24% considered neither of them as convincing. 74% of the electors of the candidate proposed by the national front, jean-marie le pen (10.44%), saw nicolas sarkozy as more convincing compared to 10% in ségolène royal’s favour and 15% for neither candidate. the most important moment of the debate was, for 55% of the respondents, the discussion on the theme of disabled children, whereas among the themes mentioned spontaneously we find nuclear energy in the first position with 8%, which also turned out to be the occasion for a very hot exchange of ideas, followed by education (7%) and pensions (6%). with regard to the themes discussed, ségolène royal was more persuasive when they debated aspects concerning the environment (53% compared to 21%), the status of disabled children in schools (47% compared to 30%), the reduction of social inequality (46% compared to 27%), or the situation of schools (45% compared to 36%), whereas nicolas sarkozy was more convincing in matters of immigration control (65% compared to 13%), fighting against insecurity (60% compared to 17%), supporting economic growth (53% compared to 24%) or the future of the pension system (52% compared to 23%). the candidates scored equally (35%) in the debate concerning the future of the medical system. after the debate, 52% of the respondents favoured nicolas sarkozy as winner of the elections (as compared to 48% before the debate), whereas 37% favoured ségolène royal (as compared to 36% before the debate). drawing a parallel between the functions of gestures made with the index finger in view of their positive or negative connotations, we can conclude that, even though ségolène royal makes fewer gestures in comparison with her counter candidate, she uses them in more than 50% of the cases in order to exercise her attack strategies. on the other hand, in nicolas sarkozy’s case, gestures with negative connotations scored a lower percentage of 17%, a fact that could confirm his prudent behaviour in his confrontation with a female candidate. references agabrian, m. (2006), analiza de conţinut, iaşi, polirom ballet, m. (2014), émotions et élections. les campagne présidentielles françaises (1981-2012), paris, ina éditions calbris, g. (1979), « l’index signifiant », in études de linguistique appliquée. mélange de didactique des langues, no. 35, juillet-septembre, paris, didier érudition, pp. 91-109 calbris, g. (2003), l’expression de la pensée d’un homme politique, paris, cnrs éditions feminine vs. masculine gestural marketing. case study: the french presidential debate on may 2, 2007 80 chelcea, s. (2001), metodologia cercetării sociologice: metode cantitative şi calitative, bucureşti, editura economică delporte, ch. (présentés par) (2012), les grands débats politiques. ces émissions qui on fait l’opinion, paris, flammarion et institut national de l’audiovisuel el khamissy, r. (2010), « l’identité visuelle d’un homme politique », in thélème. revista complutense de estudios franceses, vol. 25, pp. 83-92 *** « un sondage réalisé après le débat royal-sarkozy crée la polémique », available at http://tempsreel.nouvelobs.com/politique/elections 2007/20070503.obs5364/un-sondage-realise-apres-le-debat-royal-sarkozy cree-la-polemique.html (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 41 monetary policy before and after the financial crisis. evidence from inflation targeting countries in central and eastern europe ioana pleșcău phd student faculty of economics and business administration alexandru ioan cuza university of iasi ioana.plescau@yahoo.com abstract the aim of our study is to review the monetary framework and instruments adopted by the inflation-targeting countries in central and eastern europe, from 2005-ownwards. we employ a qualitative approach and develop a comparative analysis of the changes that occurred in the conduct of monetary policy after the 2008 financial crisis. the results highlight that the central banks in our sample have adjusted their policy in order to counteract the effects of the financial crisis and adopt different instruments to fulfill this aim. the contribution of our study is twofold. first, we offer a review of the literature regarding the adjustments in the monetary policy after the crisis and their effectiveness. second, we make a comparative analysis between countries with respect to the path of monetary policy from conventional to unconventional and assess the (potential) way back. keywords monetary policy; inflation targeting; unconventional monetary policy; monetary instruments jel classification e42; e43; e51; e52; e58 introduction in the aftermath of the recent financial crisis, central banks around the world have changed their view regarding how to conduct the monetary policy. we can observe a development and a continuous evolution of the operational framework of monetary policy, with the aim of counteracting the effects of the 2008 financial crisis and, why not, with the aim of preventing the occurrence of a new, even stronger, financial crisis. in this study we look at the monetary policy implemented by the inflation-targeting countries in central and eastern europe before 2008 and we follow the path of the monetary policy instruments after the outbreak of the financial crisis. we choose to conduct this monetary analysis on inflation targeting countries for comparability reasons. inflation targeting is a monetary regime under which a central bank establishes a nominal target for inflation (schmidt-hebbel and carrasco, 2016; mackiewiczlyziak, 2016). also, the monetary authority makes every effort to use the most appropriate instruments and strategy in order to achieve that target. in this monetary framework, a central bank takes into account the projections for the economy and, especially, for the inflation rate when deciding the path of interest rates. in this sense, inflation targeting is a forward-looking regime (mackiewicz-lyziak, 2016). moreover, schmidt-hebbel and carrasco (2016) argue that inflation targeting regime is characterized by a high degree of policy independence, transparency and accountability. furthermore, inflation targeting regime means that the central banks has pleșcău 42 the price stability as a primary objective. however and especially after the 2008 financial crisis, many central banks take into account the financial stability objective. first, we analyze the monetary strategy of the countries under review and its path from conventional to unconventional. second, we offer a comparative analysis of the six countries in our panel. our sample consists of the inflation targeting countries in central and eastern europe, in a chronological order of the year of adopting this regime: czech republic, poland, hungary, romania, serbia and albania. we do not study the case of ukraine, since it has entered in a first phase in the process of adopting inflation targeting regime only recently, in 2016. our research focus is to review the monetary instruments that were used by the monetary authorities of the countries included in our analysis1. monetary policy: the path from conventional to unconventional albania (inflation targeting regime since 2009) albania national bank is the monetary authority in albania. it has also the role of macroprudential supervisor. albania has started using inflation targeting since 2009. in the period of our analysis, the bank of albania had the same inflation target, with the level of 3%, allowed to fluctuate within a band of 1%. the changes that occurred in the operational framework of the albanian monetary policy is related to the steering of interest rate money market since 2009 as an operational objective. bank of albania uses the rate applied in the one-week repurchase and reverse-repo agreements as the main instrument of monetary policy, together with the other three categories of instruments: open-market operations, standing facilities and required reserve rate. moreover, starting with the monetary policy document from 2012, the bank of albania use the liquidity-provisioning operations (the lombard loan) as an additional instrument of monetary policy to sustain the banking system. also, in the monetary policy document for the period 2014-ownwards, bank of albania mentions the forward guidance as an unconventional instrument to complement the traditional ones used until now. the bank of albania pursuit an expansionary monetary policy to counteract the effects of the financial crisis. in 2008 the key policy rate in albania was 6.25% and it was decreased many times until it has reached the current 1.25% level (march 2017) after the 0.25% decrease decided in may 2016. also, as bartlett and monastiriotis (2010) argue, bank of albania used liquidity injections in order to sustain the banking system and the whole economy. czech republic (inflation targeting regime since 1998) czech republic has started to use the inflation targeting regime since 1998. it was the first country in central and eastern europe that have adopted this monetary regime. czech national bank uses a tolerance band of 1% and its inflation target is 2%, as it was announced in march 2007, with de-facto effect starting from january 2010. historically, the target level of inflation has decreased from 6.5% (1998). the primary instrument of monetary policy is the level of interest rate. since the outbreak of the 2008 financial crisis, central bank in czech republic used its conventional instrument to support the economy. in this sense, it has lowered gradually the key interest rate, until it has reached the zero-lower bound in autumn 2012 (cnb, 2013). also, czech national bank (cnb) uses the following additional instruments: open market 1 we use the websites of the national banks as a source for information regarding the monetary policy framewwork monetary policy before and after the financial crisis. evidence from inflation targeting countries in central and eastern europe 43 operations, automatic facilities, liquidity-providing repo operations, minimum reserves, foreign-exchange interventions. following the financial crisis, cnb have started to use some extraordinary liquidity-providing operations. in autumn 2008, the central bank adopted the 2-week and 3-month maturities for the repo operations, as unconventional measures. the 3-month maturity was abandoned in january 2011, but the cnb continues to use the 2-week maturity for the liquidity-providing repo operations. another instrument that was used for unconventional purposes in times of crisis is represented by the foreign-exchange interventions. although they are not the standard instrument in the inflation targeting framework, they can be used in situations when interest rate hits the zero-lower bound. since november 2013, czech national bank have engaged to use foreign-exchange interventions in order to weaken the czech koruna, as an alternative instrument for expansionary monetary policy. the nonstandard measure is known as the exchange rate commitment and it is a one-sided instrument in which cnb only looks after the weakening and not the appreciation of the koruna. this commitment means that cnb sells koruna and buys foreign currency in order to keep the exchange rate close to czk 27/eur. in a statement of the czech national bank board for the press after the monetary policy meeting in february 2017, the central bank mentions that it will continue to use the exchange rate as an unconventional monetary instrument which will be, probably, exited from starting with mid-2017. indeed, in an extraordinary meeting that has taken place in april 2017, cnb has announced that it will stop using the exchange rate commitment and return to the conventional monetary framework which has the interest rate as main instrument and the free-floating exchange rate regime. hungary (inflation targeting regime since 2001) the magyar nemzeti bank (mnb) is the monetary authority in hungary. the mnb has adopted the inflation targeting regime in 2001. since august 2005, the mnb have established a nominal target of 3% and, starting with march 2015, it has also added a fluctuation band of 1% to the established target. the main monetary policy instrument used by the mnb is the 3-month deposit, which is also the key policy rate. also, the mnb use overnight standing facilities and minimum reserve requirements as additional monetary instruments. moreover, in the light of the financial crisis, the mnb have decided to publish its forecasts regarding the determinants that affect the liquidity needs of the banks. since this decisions was taken in september 2010, we can say that liquidity forecast may be seen as an unconventional monetary instrument used by the mnb to support the banking system. furthermore, the mnb have continuously revised its monetary policy instruments2 in its efforts to counteract the negative effects of the financial crisis on the banking system and support its liquidity level. in 2008 the mnb have introduced two lending facilities and loan tenders once a week. also, in october 2008, the mnb adopted an agreement with the european central bank regarding the introduction of an overnight foreign-exchange swap to provide euro liquidity. moreover, in march 2009, the agreement was extended through the introduction of 3-month foreign exchange swap tenders. this last instrument was abandoned in november 2016. in 2012 the magyar nemzeti bank start using a 2-year variable rate loan tender with the interest rate indexed to the key policy rate. these loan tenders were discontinued in april 2013. in addition to this, the mnb used euro sale tenders from october 2014 until january 2015 and swiss franc sale tenders from august to september 2015. in 2016 the mnb introduced a 1-week deposit instruments and a foreign exchange swap with the following maturities: 1-week, 1-month and 3-month. 2 the information regarding the monetary policy instruments used by the magyar nemzeti bank is retrieved from the mnb website. pleșcău 44 another unconventional measure used by the magyar nemzeti bank is the selffinancing programme adopted in april 2014. together with this programme, the mnb revised its instruments and introduced, in june 2014, an interest rate swap and two potential instruments: a 3-year collateralized forint loan facility and an asset swap facility. in addition to this programme, the mnb introduced a market-based lending scheme in january 2016 in order to sustain the bank lending to smes and, furthermore, to stinulate the whole macroeconomy. this lending scheme translated into a lending interest rate swap facility and a preferential deposit facility. poland (inflation targeting regime since 1998) narodowy bank polski (nbp) is the central bank and the monetary authority in poland. it has adopted the inflation targeting regime in 1998 and it has established a nominal target of 2.5% for the inflation rate, allowed to fluctuate within a tolerance band of ±1%. within this monetary framework, the basic instrument used by the nbp is the official interest rate. also, it uses the other monetary instruments as: open market operations, credit-deposit operations and reserve requirement rate. until the 2008 financial crisis, those were mainly the instruments that the nbp use to influence the interest rates and, further on, to preserve price stability and foster economic growth. however, in 2008 the effects of the crisis were felt in poland, also. to overcome these negative effects, the nbp introduces some additional instruments in 2008. in october 2008, the narodowy bank polski adopted the ”confidence pact” (nbp, 2009) and new monetary instruments related to this pact: repo operations to support the liquidity of the banking system, currency swap transactions and fine-tuning operations. regarding these fine-tuning operations, the nbp introduced the short-term nbp bills with 3-day and 2-day maturities. in addition to these measures, the nbp supplemented the basic open market operations and introduced the standing facilities on the initiative of the banks. the measures introduces under the ”confidence pact” have continued in 2009 also. additionally, in 2009 the nbp decided to use structural operations to change the long-term structure of liquidity in the banking sector. in concrete terms, the nbp introduced the possibility of early redemption of the nbp bonds. in 2010, the nbp use the repo operations, but the foreign exchange swap facility was no longer accessed. all in all, narodowy bank polski use the repo operations in 2008, 2009 and 2010 and the foreign exchange swaps in 2008 and 2009 in order to sustain the liquidity of the banking system and to offer support to the economy to overcome the negative effect of the financial crisis. important to mention is the fact that nbp have also constantly lowered the interest rate to reflect the expansionary stance of the monetary policy. romania (inflation targeting regime since 2005) the national bank of romania (nbr) is the monetary authority in romania. it introduced the inflation targeting regime in 2005 and since 2013 it has followed an inflation target of 2.5% together with a fluctuation band of 1% in either direction. to achieve this target, the nbr uses the monetary policy as a primary instrument, together with the other three conventional instruments: open market operations, standing facilities and reserve requirements. in the wake of the crisis, nbr has also decreased the level of interest rate. however, in comparison with the other countries, nbr use a slow rate of reduction for the interest rate. also, nbr use the interventions on the foreign-exchange market as an alternative instrument to overcome the effects of the crisis. moreover, to avoid a deep depreciation of the national currency, nbr sold foreign currencies and made every effort to preserve a relative high interest rate (croitoru, 2014). as criste (2014) argue, after the financial crisis, nbr focused more on macroprudential measures than on unconventional monetary instruments, as the other countries in our review. monetary policy before and after the financial crisis. evidence from inflation targeting countries in central and eastern europe 45 serbia (inflation targeting regime since 2009) national bank of serbia (nbs) conduct the monetary policy in serbia and, since 2009, it engages in preserving the price stability, following an inflation target of 3% with a fluctuation band of 1.5% in either direction. besides using the key policy rate as the main monetary instrument, the nbs also employs open market operations, required reserves, standing facilities and interventions in the foreign exchange market. in addition to these standard instruments, nbs offered in 2009 and 2010 short-term liquidity loans against collateral of securities, in order to support the banking system. since 2011, they are used for managing the bank liquidity. data and analysis the aim of our paper is to analyze the influence of low interest rates (as an unconventional monetary instrument to overcome the crisis) on the economic growth and inflation rate. we conduct a comparative analysis between the inflation targeting countries in central and eastern europe in order to highlight the differences in terms of interest rates and the effects on the macro-economy. 1 2 3 4 5 6 7 8 05 06 07 08 09 10 11 12 13 14 15 albania -6 -4 -2 0 2 4 6 8 05 06 07 08 09 10 11 12 13 14 15 czech republic -8 -4 0 4 8 12 05 06 07 08 09 10 11 12 13 14 15 hungary -2 0 2 4 6 8 05 06 07 08 09 10 11 12 13 14 15 poland -10 -5 0 5 10 15 05 06 07 08 09 10 11 12 13 14 15 romania -5 0 5 10 15 20 05 06 07 08 09 10 11 12 13 14 15 cb policy rate gdp growth inflation (consumer price %) serbia figure 1: the evolution of cb policy rate, economic growth and inflation in the it countries from cee – period 2005-2015 source: own computations our sample consists of the inflation targeting countries from cee region. we analyze information regarding the central bank policy rate, the economic growth (gdp growth) and the inflation rate – cpi (consumer price index). we use the websites of each central bank to obtain data regarding the monetary instruments and the level of interest rates. also, we use the world bank as a datasource for gdp growth and cpi –inflation. pleșcău 46 figure 1 shows the evolution of the main macro-indicators from the inflation targeting (it) countries in central and eastern europe, for each individual cross-section. the dynamics of the central bank policy rate (cb policy rate) shows the expansionary stance of the monetary policy that has been employed after the financial crisis. however, out of the six analyzed countries, only czech republic have reached the zero-lower bound (with a value of 0.05% established since 2012 ownwards). this was the main reason why czech national bank has implemented the exchange rate commitment as an alternative instrument to support the banking system and encourage the economy. moreover, there is an obvious tendency of very low interest rates observed in the analyzed countries especially after the 2011 euro-crisis. regarding the economic growth, there was a drop in the gdp growth rate after the financial crisis that has shown its negative effects especially in 2009. in spite of 2011 debt crisis, the analyzed countries registered an economic recovery in 2010-2011 period. however, figure 1 supports the low inflation paradox, showing low levels of the cpi – inflation rate for period after the financial crisis. -1 0 1 2 3 4 05 06 07 08 09 10 11 12 13 14 15 albania -5 -4 -3 -2 -1 0 1 05 06 07 08 09 10 11 12 13 14 15 czech republic -1 0 1 2 3 4 05 06 07 08 09 10 11 12 13 14 15 hungary -1 0 1 2 3 4 05 06 07 08 09 10 11 12 13 14 15 poland 0 1 2 3 4 05 06 07 08 09 10 11 12 13 14 15 romania -2 0 2 4 6 05 06 07 08 09 10 11 12 13 14 15 serbia real_interest_rate figure 2: the evolution of real interest rate in it countries from cee – period 2005-2015 source: own computations regarding the impact of the unconventional, non-standard measures that were employed by the central banks, we can notice that the economic recovery highlighted in figure 1 supports the fact that credit easing measures have encouraged the gdp growth, although they have little effect on raising the inflation rate. our analysis supports the findings obtained in previous studies regarding the effects of unconventional monetary policy (baumeister and benati, 2010; chodorow-reich, 2014; rogers et al., 2014; engen et al., 2015). another important aspect that is to be analyzed in the context of low interest rates is the evolution of real interest rates, which basically show the relation between nominal monetary policy before and after the financial crisis. evidence from inflation targeting countries in central and eastern europe 47 interest rates and inflation. figure 2 shows that czech republic has negative real interest rates and this highlight the zero-lower bound situation that this country reached after the 2008 financial crisis. romania is the only country out of the six in our sample that did not registered negative values for the real interest rate during the period 20052015. moreover, albania is the only country that has an obvious trend of decreasing real interest rates. conclusion analyzing the evolution of the macro indicators synthesized in figures 1 and 2, we can observe that the non-traditional monetary measures that were employed by the inflation targeting countries in central and eastern europe managed to avoid a deeper economic crisis, after the financial events in 2008. however, there is a high interconnection between the banking systems in cee region, because most of the existing banks are foreign-owned and this was one of the transmitting channels for the effects of the financial crisis. even if the analyzed countries have not implemented strictly-speaking unconventional monetary instruments (as fed and ecb have done using the quantitative easing in case of united states and the eurozone), the central banks have expanded their monetary tools and developed instruments with the aim of easing the credit conditions of the commercial banks, to encourage the crediting activity and to support the liquidity of the banking system. also, the measures adopted after the 2008 financial crisis managed to restore the economic growth and avoided the collapse of the banking system. references bartlett, w., monastiriotis, v. (2010), south eastern europe after the crisis: a new dawn or back to business as usual? london school of economics and political science, research on south eastern europe. baumeister, c., benati, l. (n.d.), unconventional monetary policy and the great recession: estimating the macroeconomic effects of a spread compression at the zero lower bound. international journal of central banking, 9, 165212. chodorow-reich, g. (2014), effects of unconventional monetary policy on financial institutions. brookings papers on economic activity, spring 2014. cnb. (2013), 7th situation report on economic and monetary developments. press conference of the cnb bank board, 7 november 2013. criste, a. (2014), monetary policy adjustments at the global fianancial crisis constraints. hyperion economic journal, 4(2), 3-11. croitoru, l. (2014), politica ratei dobanzii și povara creditelor. retrieved from http://www.bnr.ro/puncte-de-vedere-4011.aspx. engen, e., laubach, t., & reifschneider, d. (2015), the macroeconomic effects of the federal reserve's unconventional monetary policies. board of governors of the federal reserve system. finance and economic discussion series 2015005. mackiewicz-lyziak, j. (2016), active and passive monetary policy in cee countries with inflation targeting: the case of the czech republic, hungary and poland. eastern european economics, 54(2), 133-152. rogers, h., scotti, c. (2014), evaluating asset-market effects of unconventional monetary policy: a cross-country comparison. board of governors of the federal reserve system . international finance discussion paper no. 1101. pleșcău 48 schmidt-hebel, k., carrasco, m. (2016), the past and future of inflation targeting. retrieved from https://www.bcb.gov.br/pec/depep/seminarios/2016_xviiisemanualmetasi nfbcb/smetasxviii-%20klaus%20schmidt.pdf microsoft word apostoaie constantin marius_eng.doc xbrl – revolution in the digital financial reporting of the romanian organizations mihaela enachi, „vasile alescandri” university of bacau, romania abstract the simplification of the transfer of the information from financial statements to the users from different countries, its understanding and correct interpretation before taking decisions require the global unification of the accounting language to optimal fructify the benefits of an efficient and effective communication. thus, a current concern of the specialists is to develop a universal language for financial reporting, the best achievement to date being represented by the xbrl (extensible business reporting language). keywords financial reporting, information user, xml, xbrl, jurisdiction, specification, taxonomy, xarl. jel code: m41 the coming out and the development of the xbrl language xbrl language initiator is charles hoffman, who in april 1998, as a member of american institute of certified public accountants (aicpa) and manager of knight, vale & gregory in tacoma, washington, investigated how the xml (extensible markup language), a standard used in the exchange of structured documents over the internet, can be used for electronic reporting of financial information, beginning to develop financial statements prototypes using this standard. xbrl (extensible business reporting language) is a commercial branded language, based on xml, devised with the aim of establishing standardized protocols for the transmission of accounting information through the internet. […] xml is a metalanguage; in other words, it represents metadata that are essentially data about other data. these metadata play a fundamental role in facilitating the search for information on the internet. […] accordingly, xbrl as an adaptation of xml to the business world should allow financial information to be managed more effectively and efficiently1. developed by an international non-profit consortium, xbrl international, consisting of approximately 550 organizations (including here: professional services and consulting companies, financial services and information providers, software and other technology providers, government and non-profit organizations, accounting and trade organizations), xbrl is an open standard, free of license fees, the consortium members inevitably providing a first access to useful information and offering to those interested some advices about the involvement in the implementation of the language. for the first time, the language was used by aicpa, the american organization of the accounting profession, which is good known, after that being rapidly accepted by many 1 bonsón, e., cortijo, v., escobar, t. (2009), towards the global adoption of xbrl using international financial reporting standards (ifrs), in the international journal of accounting information systems, volume 10, issue 1, march, elsevier, netherlands, pp. 46-47. studies and scientific researches economic edition, no. 15, 2010 49 international organizations. the purpose of xbrl is to facilitate information exchange at global level through the creation of a single vocabulary. so, we can say about xbrl that is a common unified, with specific standards language2. a standardized reporting language helps creating a continuous flux of information between different organizations and enhances the reporting capabilities allowed by technology3. the main types of activities in the progress of which can be used this language are: the internal and external financial reporting of the organizations; the filing of loan reports; the credit risk assessment; the exchange of information between government departments and between other institutions, as central banks; the exchange of other financial and statistical data. the introduction of xbrl language in organizations to introduce xbrl language within a specific organization you need to contact the local xbrl jurisdiction. on the website of the xbrl international consortium can be found information about the current existing jurisdictions worldwide, their role and organization and steps to go in creating new jurisdictions. these entities mentioned above are countries, regions or international organizations focused on the development of xbrl in their area of action, while seeking to contribute to the international development. at this moment there are 25 jurisdictional areas (south africa, australia, belgium, canada, china, korea, denmark, switzerland, france, germany, international accounting standard board (iasb), grc-xml, india, ireland, italy, japan, luxembourg, new zealand, poland, spain, sweden, united arab emirates, united kingdom, romania, usa), of which 19 are established and 6 are provisional (china, switzerland, grc-xml, india, poland, romania). note that xbrl romania provisional jurisdiction was approved on 17 november 2009. the provisional jurisdictions are similar to the start-up organizations with a small working group focused on increasing the interest over the xbrl language in their region and developing an initial taxonomy for local accounting standards. they have two years to become established jurisdictions. the established or active jurisdictions have a large number of members, several working groups and have significantly progressed in the development and promotion of xbrl taxonomy. they vote for the composition of the international steering committee of the xbrl international. the role of jurisdictions is to promote xbrl language, organize or sponsor the creation of taxonomies, especially for the main accounting standards for business reporting in their area of action. they provide an important education and have a marketing role, explaining the benefits of xbrl to the government, private organizations and supporting the implementation of this language. preparing the financial statements in xbrl format xbrl creates a common vocabulary for accurate describing financial-accounting information in its all details for its inclusion in a report taking into account the differences of legal regulations and other regulations4. xbrl use does not imply a new standardization of financial reporting, but compliance with 2 andone, i. (2004), xbrl – a new language for accounting and finance professionals, în revista , 3 stoica, m. (2004), e-business technical framework, în revista , volumul -23. 4 andone, i. (2004), xbrl – a new language for accounting and finance professionals, în revista , studies and scientific researches economic edition, no. 15, 2010 50 existing standards in the field. it is a flexible language designed to support all current aspects of reporting in different countries and industries and its extensible nature allow it to be adjusted in order to meet particular requirements, even at the organizational level. for the clarity and transparency of xbrl models the semiotic problems at the users can be prevented. users know what to expect and what others expect from them5. the idea behind xbrl is a simple one. instead of treating financial information as a block of text, it provides an identifying tag for each data separately. for example <assets> is a tag, resulting from the combination of the word "assets" and signs "<" and ">". there are two types of tags, opening tags, such as that in the example above, and ending tags, as this one </active>. such tags are more than simple identifiers. they describe the structure and meaning of data, providing some information about them, for example if they are monetary ones, percentage or fraction ones. xbrl allows tags to be applied to data, as well as to accounting references and other information, being able to show how the data are correlated one another. xbrl was designed to allow modular representation of financial information. at the lowest level, financial information is divided into the smallest possible elements, stored in a warehouse. any xbrl taxonomy can aggregate the elements of information creating in this way financial statements consistent with any global accounting standard6. to support the development process of xbrl taxonomies and the development process of applications which are xbrl compatible, were elaborated specifications, current version being represented by the xbrl specification 2.1. the specification provides a description of the rules and fundamental principles of the xbrl language. xbrl taxonomies are dictionaries which the language use, consisting of standard descriptions and uniform classification systems for the content of financial statements and other business reporting documents, referring to schemas and files containing the links between elements. the role of xbrl schema is to define the elements (concepts used in documents), giving each a name and describing its features. creating schemas process is realized using xml schema technology and their physical form is represented by a file with .xsd extension. the linkbases between elements, as the second part of the taxonomy, provide information about the relationships between these elements and connects them to specific external resources. there are five different types of such files linkbase: label, reference, presentation, calculation, definition. while the first two files listed are designed to connect elements to external resources, the last three provide a description of relations between elements. these linkbases use two xml technologies, namely, xlink (xml linking languages) which allows the creation of hyperlinks in xml documents and xpointer (xml pointing languages) which allows the localization of specific parts of xbrl and xml documents. while the label connects elements to their expressions in a given language and reference connects elements to standards or regulations in the field for a correct interpretation of the meaning of those elements, the other three files provide information on hierarchy of elements using parent-child relationships (presentation), information on the manner a component participate in a total (calculation) and present a series of pre-defined or self-defined links between elements (definition). as the local jurisdictions have different accounting regulations, each will have its own taxonomy. moreover, the organizations from the area covered by these can undertake an extension of the existing taxonomy, for example, by adding elements that were not described in the basic taxonomy and which are required, changing relations between elements in terms of orders, but according to some strict rules. 5 stoica, m. (2004), xbrl technology in virtual organizations, în revista informatica econo , 6 stoica, m. (2004), business reports based on xbrl, în revista , volumul studies and scientific researches economic edition, no. 15, 2010 51 the business report in electronic format created by using xbrl language rules is called xbrl instance. it is comprised from facts that are defined through the elements of the taxonomy to which it refers, together with their values and an explanation of the context in which they are placed (entity, period, scenario). the creation and publication of the business reporting documents in xbrl format on internet allow them to be accessed for any use by investors, creditors, customers, government and its institutions, employees and their representative groups, public. the basic idea is that through this standard the data collected by the actors of the economic life can be transposed in several formats through automatic processing. one of the objectives of xbrl is the reduction of information asymmetry resulting from incompatible global reporting formats 7. while there are many applications that require that business information to be securely transmitted, maintaining the data integrity and confidentiality, where appropriate, xbrl does not provide, deliberately, none of these mechanisms. its purpose is to allow the transfer of information in an agreed format, being good known the fact that its security can be ensured by a variety of proceedings, such as: signing documents with a private key, encrypting documents etc. also, to increase the confidence in modern reporting of financial information it was created a new modern financial audit reporting standard through the internet. extensible assurance reporting language (xarl), an xml-based extension of xbrl, was designed […] to enable assurance providers to report on the integrity of xbrl-tagged information distributed over the internet and help users and companies place warranted reliance on such financial information8. implementing xbrl language in romania it is known the fact that in romania the electronic communication of financial-accounting information in a pre-defined form is partly allowed (only for some components of the financial statements), and it goes in this form to the local financial administrations or general directorates of public finances. therefore, other users interested in the business of the organization need often to transcribe this information before interpret it, and even the government does not have a sufficient easy to work with source of information. xbrl language isn’t required in romania as a reporting standard yet, but there are efforts in this regard, a first step being represented by the creation of a provisional jurisdiction, which now prepares to launch its website (currently with a content under construction) and for the campaign on getting members, for the beginning in the idea of creating a corporate governance structure within the association. the elaboration of a taxonomy by romania, in compliance with national regulations and in accordance with international accounting/ financial reporting standards (ias/ifrs) allows formalizing the financial statements components and thus their speedy transposition, as we previously mentioned, from the format specific to a country to the format specific to another country, reducing in this way the costs of exchange, conversion, interpretation of information by different users. thus, the introduction of the characteristics of xbrl language automatically generates the processing of the information in accounting, eliminating in this way, through remaking, the 7 premuroso, r.f., bhattacharya, s. (2008), do early and voluntary filers of financial information in xbrl format signal superior corporate governance and operating performance?, in the international journal of accounting information systems, volume 9, issue 1, march, elsevier, netherlands, p. 5. 8 efrim boritz, j., no, w.g. (2005), security in xml-based financial reporting services on the internet, in the journal of accounting and public policy, volume 24, issue 1, january-february, elsevier, netherlands, p. 14. studies and scientific researches economic edition, no. 15, 2010 52 costs and elaborate work that the calculation imposes, the data analysis and comparison. we owe this fact to computers which, once they are equipped with this program, they treat data in an intelligent manner: they acknowledge the information that is contained within a xbrl document, selects it, analyzes it, deposits it and provides the interested users with it9. it is desirable that the implementation of xbrl language in the romania organizations occur involving the government which to provide adequate resources, professional organizations (the body of expert and licensed accountants of romania (ceccar), the chamber of financial auditors of romania (cafr), the general association of economists of romania (ager), the romanian chamber of fiscal consultants (ccf) etc.) and universities which to provide professional support for instruction in the implementation and use of xbrl at the highest levels. the advantages of using xbrl those who can benefit from the use of xbrl format in the financial reporting are those who collect financial information (investors, creditors, stock exchanges, financial information company, statistical institutes, governments etc.) and those who produce this information for internal and external use. like benefits of using this language note: reducing costs and increasing the speed of the processes of collecting, processing and reporting financial information; faster and easier access to information in real time updated, implicitly faster and better taking decisions; process automation, which is leading to simplifying and automating tasks and reducing the possibility for errors to occur; increasing the quality of information and confidence in it for all those involved in its supply or use; improving the relations with users by providing more transparent and friendly to use information; the intelligently treatment of information, being possible its recognition in a xbrl document, selection, analyzing, storing, exchanging with other computers and automated presentation in a variety of forms for users; easy operating with information, even if it is in different languages and performed in accordance with different standards, taking into account the fact that the xbrl language can be very easily adapted. among the main beneficiaries of xbrl adoption by organizations, in romania would be: the government, the finance ministry, the body of expert and licensed accountants of romania, the chamber of financial auditors of romania, the local financial administrations, the general directorate of public finances, the financial-banking system, the interim agencies and bodies of european funds administration, national investors, various economic agents. xbrl has revolutionized business reporting around the world, mainly through its essential advantage consisting in the unification of financial-accounting language, which facilitates the directly and without conversion exchange of information between the actors of the economic life. references 1. andone, i. (2004), xbrl – a new language for accounting and finance professionals, în revista , volum viii, nr. 2(30), pp. 26 2. bonsón, e., cortijo, v., escobar, t. (2009), towards the global adoption of xbrl using international financial reporting standards (ifrs), in the international journal of accounting information systems, volume 10, issue 1, march, pp. 46-60, elsevier, netherlands 9 munteanu, v. (2006), present-day financial statement and the foundation of economic decisions, in romanian economic business review, volume 1, issue 2, romanian-american university, studies and scientific researches economic edition, no. 15, 2010 53 3. efrim boritz, j., no, w.g. (2005), security in xml-based financial reporting services on the internet, in the journal of accounting and public policy, volume 24, issue 1, january-february, pp. 1135, elsevier, netherlands 4. munteanu, v. (2006), present-day financial statement and the foundation of economic decisions, in romanian economic business review, volume 1, issue 2, pp. 7-13, romanian-american university, 5. standarde deschise pentru comertul electronic, în revista informatica , volumul iv, nr. 4(16), pp. 31-41 6. premuroso, r.f., bhattacharya, s. (2008), do early and voluntary filers of financial information in xbrl format signal superior corporate governance and operating performance?, in the international journal of accounting information systems, volume 9, issue 1, march, pp. 1-20, elsevier, netherlands 7. stoica, m. (2004), business reports based on xbrl, în revista , volumul viii, nr. 3(31), pp. 27 8. stoica, m. (2004), e-business technical framework, în revista , volumul viii, nr. 2(30), pp. 22 9. stoica, m. (2004), xbrl technology in virtual organizations, în revista , volumul viii, nr. 4(32), pp. 33 10. http://www.iasb.org/xbrl/ 11. http://www.tryxbrl.com/ 12. http://xbrl.org/ 13. http://xbrl.squarespace.com/ 14. http://xbrlblog.com/ acknowledgements: the project posdru/88/1.5/s/47646 studies and scientific researches economic edition, no. 15, 2010 54 microsoft word apostoaie constantin marius_eng.doc small business financing – an economic growth stimulator lilia ivas, alecu russo balti state university republic of moldova abstract small business is an important lever for solving a whole complex of political, economic and social problems, taking into consideration its effectiveness in society. it attracts population to promote economic reforms, it fulfils the market with goods and services, it creats new job places, it grows entrepreneurial spirit and entrepreneurial culture, developes a careful attitude towards property, forms a progressive structure of the national economy. we can deduce after the research in this article that as an independent and irreplaceable structure, the small and medium enterprise sector in moldova constitutes one of the most efficient levers that contribute at solutioning the economic and social problems. it also is a factor which structurally transforms the economy, consolidates its economic base and its zones, fulfils in an accelerate mode the market with goods and services, attenuates the monopolism and favours competition development, implementation of scientific and technical achievements, the country's increasing export opportunities, , providing new jobs to a large number of people . keywords small business, entrepreneur, competition, financing opportunities, commercial credit, venture type financing, leasing, franchising, financial mechanism. jel code: g32 the evolution of small businesses an indespensible condition of moldovan economy revival in market relations becomes the development of entrepreneurial activity particularly of that special style, innovative, antibirocratic oriented towards new business development search, towards innovation in order to accelerate economic development and achieve maximum profit. in any business any beginning is doomed to failure unless it is driven by a substantive financial contribution. and if the new start is going bad, or rather it does not go at all, we can conclude that there are very few of those who can get this foundation, the credit. banks survive and thrive out of these loans, but, unfortunately, higher interest rates and the conditions imposed by banks (mortgage should exceed the loan, the lack of holiday repayment, very appropriate for a beginner) all these mentioned above are credited impossible for the most "new infants” of business. in our country the problem is amplified by the fact that banking institutions are still weak and can not afford to give anyone credit. money is readily available for those who already have a business and have benefited from loans from the bank, as they have a credit history. but what about others? others need guarantees. and these could come either from other economic agents or from the state. the private business in the republic of moldova has started to unfold and develop in the late 80s, after gorbachev’s liberalization. the first signs of private companies started to appear with the first cooperative fondations. the latter have disappeared with time; instead there appeared ltds, joint stock companies and individual enterprises. studies and scientific researches economic edition, no. 15, 2010 71 after privatization started off there appeared farmers’ associations farmers’ households, etc. the purpose of all those who have started their own business has been to gain own money in a business. and from here the problems commenced. the first problems are linked to the mentality. the new phenomenon of private business was very hard to assimilate. usually such people were regarded with suspicion as people who demolish the society system.but this state of doubt was resolved fairly quickly, and the business started to prosper and with the pioneers in the field, and then the others who wanted to have their own business took the idea. these first problems would seem quite easy for the businessmen who later on encountered more difficult problems. the latter problems would last until our days – relationship with the state and any other state institututions. the state suddenly began to take interest in most of private business activity. this happened after a long time of unnoticing it. there appeared a new pathology at the organs of state – a chronic fear not to let people get rich. and the state began to create obstacles. there emerged higher taxes, frequent controls, excessive hygienic requirements, standards, licensing, permits, etc. for some large enterprises such things were known, or at least easy to fit into them, taking into account their financial strength. meanwhile, small business offers real opportunities to implement creative entrepreneur skills, also the inventiveness and leadership quite necessary and useful qualities in life. small business in moldova, as in most developing countries, has emerged as a result of structural reforms undertaken in the transition from centralized to market economy.according to bizpro moldova project today, almost 90 percent of the country's businesses are small business enterprises, of which 73 percent are micro enterprises and 19 percent are small businesses. currently, small business structure roughly reflects the situation of 2000: there is now predominant commercial activity 45 percent, followed by manufacturing of agricultural raw materials and mining 13 percent, property transactions 11.8 percent, transport and telecommunications – 6.5 percent, construction 5.7 percent. a developed economy is nothing else but healthy companies, business oriented towards a continuous development, with new technology implementation, and what is most important – with a consumer with high purchasing power. something hints to the idea that none of these elements are present, which leads to the bankrupt economy we live in. consumers thus are nothing but a middle class, which is represented in developed countries by private entrepreneurs, people who own small and medium business. if you have a good idea for business, the qualities, strength and energy necessary to achieve it, but you do not have money, it gives you no reason to stop and wait, once they appear. you should give evidence of persistence, insistence, courage to seek, where you really get money necessary for the realization of your plans. in this article we are going to list various methods of raising funds in moldova, to open and manage your business. funding sources so, there are several sources of funding such as: 1) partner search while organizing your company, start looking for a partner who, in your opinion, could fit the role of financial investor. usually, it happens so: you have the idea, and someone else has the money. or vice versa. if you have a good idea, be careful that your idea does not pass to someone else. do the same if you own money. 2) financing venture if you are planning to start a business related to the development and production of knowledge-intensive products, look for long-term investments (5-7 years) of private equity studies and scientific researches economic edition, no. 15, 2010 72 in your capital, which scientifically is called venture funding. in moldova this type is not yet developed, but it can attract outside capital. 3) commercial loan (of goods) commercial loan can be defined as a form of merchandise credit, provided by sellers to buyers with a postponement of payment for goods sold. in other words, if you do not have money to pay for goods, you can get credit. 4) leasing it submits a loan for equipment, with the right of redemption or without it. in moldova there are about 8 leasing companies, of which we should later speak. you can take the machine or equipment necessary to carry out operation in leasing business (if you receive it), spending saved money on promotion or services. 5) franchising franchising is an agreement between business systems through which one party franchiser shall exchange franchise – gives the right to produce and / or market a particular product type (goods), providing services on behalf of and with the franchiser's trademark and having the right to receive technical and organizational support. franchising can be an indirect source (when saving to everything that ought to be acquired after years) or directly (when the franchiser's financially supports you until you set sure) to finance your business. 6) grants and philanthropic contributions the grants are means, provided free by the donor (a fund, a corporation, a government institution or an individual) to a non-commercial organizations or individuals carrying out a specific activity. unlike the loan, grants are not to be returned. to obtain a grant, it is necessary to prepare a project in which to specify how, why, and with whom you want to do that activity. usually, grants are offered for a social project office, but in moldova they are offered to support small business too. thus, there is a chance, but remember that competition for philanthropic funding sources worldwide is very acute. it would be unfortunate to submit some work for nothing. a grant application requires a very thorough preparation. 7) barter one of my acquaintances successfully used barter transactions at the beginning of his business. make a list of those what you would need in business management (besides money), take a directory of businesses and make telephone calls to all companies that sell goods and services you need, offering them a deal barter. the result will exceed all your expectations. 8) loan the loan means to lend goods or money, usually by paying interest. the loan is the source of funds most widespread in moldova. it is given both by banks and non-bank credit institutions. if you need a moderate amount (up to 30,000 lei), then it is better to take credit on an individual. the process of preparing all the necessary documents will occupy several days. also, you can always borrow money from relatives or friends, but you should think about whether such financial relationships will not ruin your friendships. of course, each funding source must be examined in more detail. in moldova, the loans will be redirectioned by 2-4 operators through commercial banks.it is the case to mention that moseff program is not just a line of credit. companies in the program receive assistance in optimizing decisions in the energy sector. besides financing, the ebrd has invited a group of local and international experts led by german company "fichtner", which will help potential benefeciari to choose optimal decisions under investment requirements and most appropriate technical and financial decisions. also, experts will help the clients prepare longstanding demand for participation in the grant program. expert’s group work is funded by the european commission, so technical assistance for potential beneficiaries will be free of change. the group is formed of 6 local studies and scientific researches economic edition, no. 15, 2010 73 and 6 international experts who will work at the enterprise depending on project complexity from 2 to 5 days. credits will be granted for a term of 5-10 years with an interest rate market conditions. loans for projects successfully implemented will have a grant component ranging from 5-20 percent. thus, for effective implementation of projects financed by 25 150 thousand euros, the grant will be 10 percent of the loan amount when applying traditional technologies and 20 percent for use of innovative technologies. in projects funded with amounts of between 150 thousand and 2 million are the same criteria. grant amounts for major projects in renewable energy production will be 15 percent. ebrd representatives points out that sometimes the simplest solutions save significant amounts of energy. a simple solution, for example, is the insulation of buildings. such measures are eligible for the project as the application of modern technologies. it looks a little strange to talk about business or about initiation of some business ideas while the global economic crisis arrived in moldova, but things are not so negative. life does not end at crisis arrival; it simply passes more or less at a lower level. same happens with money: they leave expensive goods and services market in favor of cheaper products. thus, those who could afford more before the crisis, now they have to save, to move from goods and services which are less necessary to those essentials and cheaper. of course, this is not the time to start a business selling yachts, even if moldova has sea ports. it is alsi not any estate business while the construction stalled. in such a case a wayout should be found, a wayout which would resist even the financial situation of our country and will benefit from crisis in moldova. sounds incredible? but not impossible! collection agency is the civilized name of debt repayment process of those who do not pay. with the crisis the number of those who do not wish to pay debts increases: the first group can’t because of crisis objective reasons, the others only are pretending the reason is crisis. agencies do not collect primitively anymore, they thrust on law. this kind of activity in moldova is quite new and is practiced by lawyers in particular. there are several types of collectors. some work only with banks, especially concerning themselves with ustomers who don’t pay. the others are involved insolving the financiary problems among various companies. there are also collectors who work with individuals. time to mention that in moldova there are already several offices of lawyers who deal professionally with debt repayment. alternative energy sources and other ways to save when spending exceeds income more people begin to think how they could save and this is already noticed in moldova. a successful business could become sale or rental of solar batteries for power generation.moldova is a country with most of the sunny season and is therefore we shouldn’t ignore this advantage. taking into account that alternative energy sources are still quite expensive, they can be sold or leased rate. so your bid will benefit more customers. it deserve attention, especially in times of crisis, all that saves water, natural gas, gas, electricity. sales assistance. in times of crisis many things (the second or third tv, luxury car, etc.) lose their timeliness and their owners try in every possible way to sell them. but this is not an easy thing to do, especially it needs time, and during crisis time it is much harder to sell something. the idea is that business is to look for professional buyers through the internet, media or markets, with a certain percentage of sales. tourist agency accesible. even during crisis moldovans will not abandon the rest, especially if they will have no job. simply there will be less money for rest. studies and scientific researches economic edition, no. 15, 2010 74 business idea is to open an accesible travel agency. as travel destinations could serve both localities in the country and neighboring countries ukraine, romania. lombard or microfinance services. when the banks and lending institutions that grant credit to people cease such activity it is appropriate to open a lombard or initiate an activity of microfinancing private persons. psychological assistance. if you are a psychologist or have acquaintances that could start a business, examine the possibility to provide psychological care to businessmen or other wealthy people, who have suffered from the crisis. natural household. even in times of crisis people want to eat. probably the least affected by the crisis will be rural residents and owners of gardens and domestic animals. under these conditions the idea of an agricultural business deserves attention, obviously, if you desire and possess those capabilities. the crisis will not last forever. after the crisis there will necessarily be an increase. those who resist now will now have greater opportunities in future. even if your idea does not mean income right in the time of crisis, go slowly and surely toward the goal, and after the crisis you are to be one of the first in the field you have chosen. personnel redundancy – convenient modality. at first, everything seems simple – you invite the person concerned in the office and notify him of the decision and problem is solved. but things are more complicated, because the legislation requires that the employer to comply with a set of rules and obligations to the employee.moreover, compliance with those rules can create unwanted problems to company. there are several ways to correct dismissal of staff: 1. friendly disposal. in this case the company agreed with the employee on material compensation, preparing the necessary documents and all parties are satisfied. this approach is most effective and simple when redundancy is inevitable, but is rarely encountered. 2. dismissal based on their requests. obviously, the company considers this method the most convenient in terms of money, because it may not pay any compensation, but in this case it is likely to consider further the employee unlawfully dismissed. in this case judicial debate and labor inspection controls are inevitable. it is very important that you do not have any debts to the employee (overtime pay, unused leave, etc.). much easier it is to pay the employee wholly to avoid unwanted problems in the future. 3. dismissal for breach of labor discipline, of course, if there exist premises. this can occur when such serious violations, as come drank in the office, breach of the work, systematic delays, and absences without leave. but if the deviations were not quite so seriousit is most likely thet if going to the court occurs, the employer will be right. where redundancy of good specialists is undesirable, the best solution would be to reduce schedule worktime and give leave for a long term. these measures will help keep qualified personel for better times, but in this case the risk is that these specialists would find another job. in order that the crisis measures do not affect the company follow some expert advice: if you intend to fire some employees, it's good to redundant a few people at once, so that other employees should not in a situation of stress and thinking about who will be next on the list. after the procedure has take place, you should call all employees and explain the reasons for their dismissal. also, the staff must be initiated in the company's future plans and to undertake additional measures for reasons of remaining employees. however, as far as possible there should be taken care of redundant employees. explain that they were fired not because of their fault, but due to adverse circumstances affecting the company. provide a written recommendation and give them all possible assistance. and remember to avoid unwanted situations in the dismissal of staff studiy the labor code of the republic of moldova, cause the person informed is the person protected. studies and scientific researches economic edition, no. 15, 2010 75 bibliography 1) -xiii din 20 mai 1994 2) micului business pentru anii 1999-2000 3) graur e., (2005) cadrul legislativ-factor de incurajare a antreprenorilor la demararea micilor afaceri – -80. 4) doga v., rusu s., graur, e. (2005) aspecte in relansarea micului business din rm in contextul ne // -26. / – p.70-79. 6) erhan v. – – nr.3. –p.111-122. studies and scientific researches economic edition, no. 15, 2010 76 microsoft word apostoaie constantin marius_eng.doc brand leadership in the contemporary economy andreia-gabriela andrei, „al. i. cuza” university of iasi, romania monica elena talabă, „al. i. cuza” university of iasi, romania abstract the brand leadership as a best practice used by ibm, sony, p&g, gap, nestlé, smirnoff, beiersdorf (nivea) and others was highlighted 10 years ago by professors d.a. aaker and e. joachimsthaler who published in 2000 the famous book brand leadership. in the last two years, the growing importance of brand’s human interface and increased influence of information sources such as internet and socialmedia in buying decision led to the proliferation of the brand’s touch points and the emergence of social marketing. marketing is experiencing a profound paradigm shift, because marketers can not control anymore the conversation with consumers through commissionable media. the paper outlines the importance of brand leadership in the context of changes made by social media. overcoming the traditional vision of marketing and management and adopting brand leadership become an imperative for business success in the contemporary economy. keywords brand leadership, brand management, branding, social marketing jel codes: m 31 introduction traditionally, the company's business goals and vision were developed in the board, without a deep analysis of consumer. branding, designed to support the promotion and advertising, was subordinated to the marketing department. the custody of brand used to belong to one department and the custody of staff to another one. so, no close relationship between what brand promises through advertising and how it is delivered, expressed through actions and employees behavior. this model proves to be defective today, being abandoned by successful companies. they provide increased authority to the brand manager and their business strategy is focused on brand. brand is the concern of the top management (ceo or ceo + brand manager). brand-related activities extend across the company, including staff direction, enabling company to deliver the brand promise through all touch points. the brand and the brand strategy, pillars of the organization's plans in a brand-lead business the top management uses brand as a pillar of the organization. all resources are directed to deliver the promised value to consumers and shareholders, ensuring in this way, a healthy growth.. brand strategy gives focus and direction by providing a platform for brand management that enables consistency in all actions and activities related to the brand. a company is brand-lead only when the key decisions are taken well weighing between short-term financial interests versus consistency, ability to maintain brand promise studies and scientific researches economic edition, no. 15, 2010 309 over the time. 1 the brand strategy is the leader when it influence all day-to-day activities, from advertising to the ways in which staff answers the phone or the ways in which pr specialist manage uncontrollable events like rumors, bad online reviews and opinions, or even a dedicated website against the brand. figure.1. the link between the brand and corporate strategy proliferation of internet-based communication channels and social media like blogs, podcasts, online video and social networks give voice to millions of consumer opinions. while mainstream media continues to play a vital role in disseminating information, these social channels are major levers of influence through online conversations, giving rise to a new style of marketing that is characterized by conversation and community. 2 the fact is the failure of marketer’s control in the conversation and increasing the importance of word of mouth, referrals and social marketing. references and opinions of the users have an increasing impact on the brand and sales, indicating as necessary the adoption of social marketing for promoting the own brand in a way that helps in promoting the consumers' and, by extension, the society's well being. social marketing as a social leadership approach which involves the deliberate use of influence and persuasion to move the target market towards a specific course of action. behavioral change is achieved through the creation, communication, delivery and exchange of a competitive social marketing offer that induces voluntary change in the targeted audience, and which results in benefit to the social change campaign’s recipients, partners and the broader society at large.3 such an approach is impossible without a brand-lead business. 1 aaker, d. and joachimsthaler e. (2000), brand leadership: the next level of the brand revolution, the free press, ny 2 society for new communications research (2008), new media, new influencers and implications for public relations, sncr press, usa, pp 6-7 3 dann, s. (2010), redefining social marketing with contemporary commercial marketing definitions, journal of business research, vol.63, no.2, pp 147-153 studies and scientific researches economic edition, no. 15, 2010 310 the customer journey outlines features for brand building constructing the consumer journey means to project a step by step path, begining with consumer’s buying decision process and continuing with consumption process. a growing importance has to be given to information gathering process, but also to the influencers’ dynamics. the consumer journey projection forth a set of questions whose answers outline the features for a successful brand. how complex is the process of information gathering? where and how they are looking for? what communication channels (or media) are specific for my product category? how often customers get informed by mass-media? are common sources of influence outside traditional media mix consultants, agents, intermediaries,direct sales personnel, internet, social media? what is the share of their use? what is consumer confidence which attaches to each source of information? who are the influencers? what is their dynamic? 4 positioning, planing and brand portfolio management position is a guide to develop a competitive and coherent brand, offering a clear view of concrete offer which brand should provide and also of the human part which must be reflected in the brand’s tone and feeling. a clear positioning inspires and guides the company, helping team members to speak the same language. writing a brand plan including objective, strategy, tactics and methods of measurement is the most efficient way to specify and communicate the brand values. branding is more than communication strategy and message. he is not only about communicating his uniqueness and his personality, but mostly about delivering brand promise and communicating it properly, not just empty words. consumers have direct experience with brands, not with their plans. a valuable relationship with customer exists if the brand promise is delivered in an integrated way through products, additional services and message. when it is reflected in organizational culture. a common mistake is the isolated management of brands due to the lack of top coordination. what is best for a particular brand is often harmful for brand portfolio as a whole, resulting in lack of focus, poor market coverage or brands’ cannibalization, inefficiency in logistics or supply, inefficient allocation of resources. business strategy must prevail in defining brand architecture and brand alliances within the organization. links between corporate brand and sub-brands, endorsement and mutual reinforcing can be properly done only in brand-lead company.5 brand strategy and integrated marketing communication marketing and communications serve a common set of brand objectives for generating unity. they are subordinating to the brand strategy and they are coordinating to support each other. because the audiences sometimes misinterpret messages, the management acts in direction of maximizing desired interpretations and minimizing unwanted ones. for being succesful a centralized management of branding, marketing and communication is needed. the consistency of brand and message across all audiences is necessary because all of them should be informed and even involved (employees and shareholders, customers and consumers), and they interact and are interconnected.. advertising, packaging, price and promotions have an important common point: they are controlled by the marketing 4 adamson, a. (2008), branddigital: simple ways top brands succeed in the digital world, palgrave macmillan, ny 5 aaker, d. and joachimsthaler e. (2000), brand leadership: the next level of the brand revolution, the free press, ny studies and scientific researches economic edition, no. 15, 2010 311 department. but there are factors like personnel, rumors and social media conversations that can not be kept under control. social media gives us more opportunities to influence the opinions of hundreds or even thousands of others in discussions about products and companies. consumer-consumer communication produces today a significant share of the amount of information available about products and companies.6 the marketing paradigm is changing. marketers need to target social media users for inducing consumer’s discussions according to the objectives of the brand's performance. references and opinions of the users have an increasing impact on the brand and sales, indicating as necessary for promoting the own brand, the adoption of social marketing as a social leadership approach which involves the deliberate use of influence and persuasion to move the target market towards a specific course of action and achieving behavioral change.7 internal brand alignment brand consistency is provided only when the company personnel is the carrier and promoter of the brand promise. the brand promise is transmitted by people, from ceo to those working on the production line. internal communication policies for encouraging the staff to live the brand are frequently used, but a lot of situations are just about talking about vision with no effect on the business running. the result is just hiding the problems of the organization and employees are disappointed by the company they are working for because of receiving a promise bigger than the offer. practice proves that internal communication policies have a limited role in the staff training and alignment to the brand values. ceo and the brand internalization enthusiastic and charismatic leaders stand behind any strong brand. they firmly believe in brand values. they are naturally followed by employees because they live the brand values, making them authentic and inspiring staff commitment to the brand and thus made brand internalization. “a further advantage of having a focus on brand management and looking more inside the organization is that it gives rise to a corporate persona with a deeply felt set of values enabling the brand to have a clear attitude.” 8 staff alignment to the brand values ensures a constant quality level in delivering the brand promise by any employee (very visible especially in services). conclusions brand-lead business or brand leadership provides a successful management model for facing the recent marketing paradigm shift. brand becomes a top priority for the top management who integrates brand building into the overall business concept. the brand and the brand strategy are the pillars of the organization plans, directing all resources to deliver the promised value in an integrated way, through products, services, communications, personnel behavior and organizational culture. the result is a unique and valuable customer 6 universal mccann (2008), when did we start trusting strangers? http://www.universalmccann.com/global/knowledge/view?id=34 7 dann, s. (2010), redefining social marketing with contemporary commercial marketing definitions, journal of business research, vol.63, no.2, pp 147-153 8 de chernatony, l (2001) from brand vision to brand evaluation, butterworth-heinemann, oxford studies and scientific researches economic edition, no. 15, 2010 312 relationship leading to positive word of mouth and good referrals across social media platforms enabling a competitive social marketing and a healthy brand growth. bibliography 1. aaker, d. and joachimsthaler e. (1999), the lure of global branding, harvard business review, vol.99, no.6, pp. 137-146 2. aaker, d. and joachimsthaler e. (2000), brand leadership: the next level of the brand revolution, the free press, ny 3. aaker, d. (2004), brand portfolio strategy: creating relevance, differentiation, energy, leverageand clarity, the free press, ny 4. de chernatony, l. and cottam, s. (2009) interacting contributions of different departments to brand success, journal of business reaserch vol.62, no.3, pp.297-304 5. de chernatony, l (2001) from brand vision to brand evaluation,, butterworth-heinemann, oxford 6. adamson, a. (2004) to stay on the map, put your customers there first, brandweek 7. adamson, a. (2008), branddigital: simple ways top brands succeed in the digital world, palgrave macmillan, ny 8. adamson, a. (2009), when trying to engage people on the web, timing is everything, forbes, www.forbes.com/2009/06/22/allen-adamson-marketing-cmo-network-adamson.html 9. york, e., (2009) how to make your employees the voice of your brand online, advertising age 10. dann, s. (2010), redefining social marketing with contemporary commercial marketing definitions, journal of business research, vol.63, no.2, pp 147-153 11. society for new communications research (2008), new media, new influencers and implications for public relations, sncr press, usa, pp 6-7 12. the nielsen company (2009) global faces and networked places 13. universal mccann (2008), when did we start trusting strangers? www.universalmccann.com/global/knowledge/view?id=34 studies and scientific researches economic edition, no. 15, 2010 313 microsoft word apostoaie constantin marius_eng.doc statistical analysis of the structure and dynamics of material and human resources in public education over the past two academic years in bacau eugenia harja, „vasile alecsandri” university of bacau, romania abstract the public university education in bacau, represented by “vasile alecsandri” university from bacau has developed over the past two years not only in terms of student numbers, but as human and material resources available to them. after the number of students per teacher, public higher education from bacau is situated on the second place after iasi, the number of teachers representing 1% of the country. the structure by scientific degrees of teachers has improved in the last year, reaching over 36% professors and lecturers and 144 phds. over 55% of the teachers are younger than 40 years. the material basis has improved both quantitatively and qualitatively by putting into use a new building, bringing an additional 27 classrooms and 11 seminar rooms and providing the conditions of modern higher education. keywords teaching staff, phds, students, lecture rooms jel codes: i21, c10 developing a quality high education implies adequate resources, both human and material. of 304 existing teachers in higher education from bacau at the beginning of 2008/2009 academic year, 86.2% belonged to public education. if at that moment the average of the country that was for the number of students per teacher was 28 in total, and in the northeast region of 20 students, bacau county had an average of 25 students / teacher. bacau public education has an average of 20 students / teacher; compared to 19, the average of the region and to 18, the average of the country, and also compared to 55,as the private schools from bacau had. from this point of view, bacau county ranks second in the region, after iasi, in public education. the number of teachers in the public higher education from bacau represents 1.0% of the total country for this form of property, being ranked 15 in the ranking counties. human resources of the university were in a total of 404 persons at the beginning of the academic year 2009/2010, decreasing by 3.6% (-15 persons) prior to beginning. staff reduction occurred in all categories except the auxiliary teaching staff, where it has remained constant at 20 employees. thus, maintenance and operational personnel at the beginning of the academic year was 7.3% lower (-6 persons) and the administrative staff with -4.3% (-2 employees). studies and scientific researches economic edition, no. 15, 2010 239 62,5 19,6 18,8 11,0 10,9 6,9 7,2 63,1 0% 50% 100% 2008/2009 2009/2010 teaching staff maintenance and operational staff administrative personnel auxiliary teaching staff figure 1. structure of the personell at the beginning of the university year (%) source: d.j.s. bac u the number of holder university teachers was at the beginning of this academic year of 255 people, with -2.7% (-7 person) prior to the previous beginning university year. it grew its share in total from 62.5% in 2008/2009 to 63.1% in 2009/2010, due to the decrease in a higher extend in the administrative and maintenance staff. 46 40 43 61 64 63 60 51 39 48 0 100 200 2008/2009 2009/2010 teachers lecturers readers assistants tutors figure 2. teaching staff at the beginning of the university year source: d.j.s. bac u studies and scientific researches economic edition, no. 15, 2010 240 it has increased the proportion of teachers in higher degrees (lecturers and professors) in total, from 33.3% to 36.1%. it is maintained a good proportion of age groups, the teachers share until 40 years being of 55.7% in total, this year. by age and grade comparative education distribution in the past two years is apparent in the following histograms. university year 2008-2009 university year 2009-2010 12 14 15 5 0 5 10 15 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 12 16 15 5 0 5 10 15 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 6 12 12 9 1 0 5 10 15 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 7 17 5 10 4 0 5 10 15 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 4 33 19 1 22 0 5 10 15 20 25 30 35 40 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 40 18 1 1 2 2 0 5 10 15 20 25 30 35 40 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 22 34 22 3 0 5 10 15 20 25 30 35 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 22 32 1 2 3 0 5 10 15 20 25 30 35 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste professor lecturers readers assistent studies and scientific researches economic edition, no. 15, 2010 241 46 5 0 5 10 15 20 25 30 35 40 45 50 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste 34 5 0 5 10 15 20 25 30 35 40 45 50 sub 30 30-39 40-49 50-54 55-59 60-64 65 i peste figure 3. distribution by age groups and by educational degrees of the number of teaching staff at the begining of the last two university years the coverage degree by holding teaching posts decreased from 72% in the2008/2009 academic year to 63.6% this academic year, fall due to the increasing curriculum and students on the one hand and the reductionnumber of teachers on the other hand. if in the license programs in the 2008/2009 academic year about 20 students were per teacher, in this academic year there are about 21.5 students. in all forms of education and existing programs, the average number of students per teacher increased from 25.4 to 29.2. it has increased the level of training and recognition of the university teachers, not only by increasing the number of higher educational degrees, but by completing a doctorate. therefore, the number of phds in science earlier this year was of 144 persons (9.1% over the previous year, respectively 12 persons). the share of the teachers with an academic title of doctor increased in total from 50.4% to 56.5% at the beginning of this academic year. the material basis of the university has developed and modernized considerably this year through further investment and putting into use almost the entire d building, by modernizing and developing the library, the cafeteria, but also housing for students. the number of lecture and classrooms at the beginning of this academic year is 2,7 times higher than the previous year (+27 rooms) and the seminar rooms with 19.6% higher (+11 rooms). 2008/2009 2009/2010 material basis lecture and classrooms 16 43 268,8 27 seminar rooms 56 67 119,6 11 physical education rooms 3 2 66,7 -1 laboratories 38 43 113,2 5 school workshops 3 1 33,3 -2 sport playgrounds 3 5 166,7 2 computers total, of which: 541 853 157,7 312 used in education 516 807 156,4 291 students 464 681 146,8 217 teaching staff 52 126 242,3 74 management used 25 46 184,0 21 connected to the internet 515 687 133,4 172 source: calculations after d.j.s. bacau data table 1. material basis of university "v. alecsandri" in bacau at the beginning of the academic year 2009/2010 and dynamics of the previous year dynamics (%) dynamics (+/ nomber) material basis in early education preparator studies and scientific researches economic edition, no. 15, 2010 242 168,8 66,7 57,7 19,6 13,2 -33,3 -66,7 -100,0 -50,0 0,0 50,0 100,0 150,0 200,0 lecture and classrooms furnished sports computers seminar rooms laboratories ed rooms. physics and sports school workshops % figure 4. dynamics (+/-%) of the material basis at the begining of the university year (2009/2010 unlike 2008/2009) it grew 1.5 times the number of computers in the beginning of this academic year (+312 pieces), 94.6% of them being used in education (84.4% by students and 16.6% by teachers). the number of computers connected to the internet increased by 33.4%, reaching 687 at the beginning of the year. given that the material and equipment investment in the university will continue in this calendar year, it is even more obvious the overall development and modernization of the educational conditions of the “vasile alecsandri” university from bacau. bibliografie 1. harja, e. (2009), statistic i econometrie, ed. alma mater, bac u 2. harja, e. (2010), marketing, raport de evaluare intern pe anul 2009 al c.r.d.f.c. al universit ii „vasile alecsandri” bac u 3. jaba, e. (2005), statistic , ed. economic , bucure ti 4. institutul na ional de statistic , (2009), anuarul statistic al româniei, bucure ti 5. www.ub.ro 6. www.insse.ro studies and scientific researches economic edition, no. 15, 2010 243 the impact of global financial crisis under the romanian financial market 24 the impact of global financial crisis under the romanian financial market ciuraru-andrica cristina, teaching assistant university of bacău abstract: today the most disputed subject is the global financial crisis. laymen and experts say their point of view and wonder when and how will end this "apocalypse" of the financial world. but to understand it, it needs to make it the "radiology", to establish a "diagnosis" and of course an appropriate "treatment", which i tried to "build” in these few words. day in, day out, in the last time, we are assault by a subject that seems endless: financial crisis. it search for reasons, solutions and, why not, for guilty, and finally, when and how it will end this wave that floods, merciless, many regions of earth. of course, some countries floating above the wave, others are struggling with it, while some sit and watch that the wave is not black as it seems. yet the reality is dismal, at least as experts argue, because it is obvious that not everyone "suffering" the same extent from the so-called "global crisis". some say that the rich would have the most to lose, the others that the poor people is most affected, but the truth it feels each of us "by how much and when we need to pull out from our pocket". and yet, for the laymen, the subject is useless, an endless excuse for the bad course of romanian society, because anyway we were not better before the crisis, so haw hard we will whit it? but is it so? of course, the most in the field could not accept that. there must be an explanation for everything, right? so the global crisis has a story too, but before we relate it, let us make familiar this term. because the subject is so noted, is even a site dedicated exclusively to it, called www.crizafinanciară.ro. here we find out that the financial crisis is a term attributed to the situations in which institutions or financial assets suddenly lose a significant part of their value. it is the reality we are witnessing. moreover, the current crisis has also a name apart: the subprime crisis, because it is caused by a sudden decrease of the liquidities on the financial markets, caused by the failure of companies that invested in mortgages subprime (whit high risk). its causes seems that have a beginning since the end of last century, but the top of her was reached in 2007 and 2008, when the crisis has brought to light serious deficiencies in the global financial system and regulatory framework. and yet, if it comes up such signals that notice a future crisis, why do not have taken an attitude? however, now is too late, so us are left only to see where the crisis began, why, what adverse effects brought with her and, of course, how to get out as "least affected" in it. the story of financial crisis begins like this: once upon a time (and of course, still is) a dream land bearing the name of the united states. many people dreamed to be here, where the welfare were at every step. at least some think so! anyway, in such a strong and stable economy in a bad year, 2008, with a history course in preceding years, when more and more americans no longer paid mortgage loans, causing the first bankruptcies of banks specialized in these products, is happened the decline of american banking systems that is propagated everywhere in the world and then began the decline of stocks exchange also. from here until the crisis of the entire u.s. financial market and a global one too, there was only one step. why that? we all know how big were the u.s. influence at least over the majority of the countries. so how "the spark" was light up from the base, "the fire" touched the many countries, more or less dependent on the u.s.a. in this way we could say we found the culprit. but why is it guilty if in all this time managed to dominate the economy of so many countries and that they now are "sisters in suffering" whit it? studies and scientific researches edition: economics, no. 13 (2008) http://www.crizafinanciar%c4%83.ro/ the impact of global financial crisis under the romanian financial market 25 however, in an article on 11 october 2008 of the cotidianul newspaper, adrian deoanca blame alan greenspan, chairman of the u.s. federal reserve from 1987 to 2006, for the outbreak of financial crisis, whose opinion mattered very much in state control of financial market and the using of financial derivatives contracts. they are identified by a contract through one part receives money in exchange of the promise to buy or sell goods or services at a specified time in the future. thus, for a small amount and with a mortgage warranty, an investor can control a higher percentage of shares of a company. these contracts, however, promise to protect the investors from wastage, which has stimulated them to take risks much higher. so they have allowed to assume more mortgages and made bigger loans into account of a future increase. greenspan considered the derivatives contracts "excellent vehicle to transfer risks from those who do not have to take them to those who are willing and able to do so”, but in the opinion of others, were considered "financial weapons of mass destruction hiding danger that can be lethal"(warren buffet), or even potential “h-bomb" (felix rohatyn). all this, in conjunction with more and more lax standards for the approval of mortgage loans, a significant increase of loan incentives (reasonable original terms) and a long-term trend for increasing the price of houses, had determined the american people to ask for burdensome mortgage loans, which evolution was wrong anticipated and that brought him into deadlock. so broke out a “real boom” that was the “spark” of global crisis. from now on follows a whole series of events whose “rein” may not be taken. therefore, many economists argue that, if greenspan would have acted differently in his career, the present crisis of the american economy, could not be exists. and yet: one man to blame for this crisis? we don’t believe it! but everything is possible! very interesting, i found it, the vision of an author named alexander gamanji from moldova republic, about the world economy, captured in an article published on the website of the independent analytical center expert group. he compares the world economy with a turned pyramid. the bottom of the pyramid represents the volume of goods and services, served by cash or non-cash to about 50 trill. usd annually, and the top of it represents the financial derivative securities like all sorts of shares, bonds, treasury bills, etc. the top is about 10 times higher (500 trill. usd) than the bottom, exceeding 10 times the prices of goods and services produced, and for that the author asks him self if this huge bulk of financial derivatives, (fear of international financial stocks too) will fall. the answer has come! our story continues with the bad consequences which had the collapse of many important banks of u.s.a. and the intervention of the state to save others, equally important: panic, desperation and unique moments, in a single word: crisis. lehman brothers’ bankruptcy and merrill lynch’ purchase by bank of america, nationalization of banks fannie mae and freddie mac, rescuing giant aig and citigroup by the american government, collapse the financial world. as well it adds the pull down of the american auto industry, which means one step to a total collapse. however the situation was temporary saved and "the air" which was missing from the u.s. financial market, "the liquidities", was injected at the last minute of the central american federation of banks (fed). liquidity crisis has extended of course in europe too, where the european union, the international monetary fund and world bank have made steps to calm down the situation. in particular, states have begun to issue plans to save their financial institutions. indeed, quite unexpected events that have affected virtually the whole world and whose effects were felt everywhere and unfortunately, in romania too, especially at the bucharest stock exchange, with dramatic decreases of index, which reached minimum historic untouched by two-three years. these events stirred panic among native and foreigner investors, who emphasized the bse crisis, which is under the sign of uncertainty and volatility. it was necessary even a suspension of bse activity, as a measure of protection against excessive fall of stock index. all this took place in october 2008, studies and scientific researches edition: economics, no. 13 (2008) the impact of global financial crisis under the romanian financial market 26 considered by some "fatal month of the financial world" (rareş şofariu, director of research and development of kd capital management, in an interview for wall-street). after such a shock, stock market has begun to recover, with ups and downs, but it is clear that for a total return should past a while. until then stock remains very sensitive being easily influenced, even investors acting instinctively and emotionally. in romania, however, the crisis is felt not only at the stock exchange but also in the banking sector, where near the losses of banks listed on stock exchanges were harden even the terms of the loans by raising interest rates and the volume of file credit. and yet the crisis is in favor to those who have savings, whose storage would make a much bigger gain. since banks need liquidities, interests rate on deposits have increased considerably. in this way, the population has not resorted to massive withdrawals from bank accounts, which has accentuated the gravity of the situation. also romanian banks access to external sources of funding (in principle for the foreign banks' subsidiaries) has a considerable decrease, which led to the measures specified above. also we are witness of an extraordinary depreciation of romanian leu against the euro and even against the dollar, a problem quite serious, with adverse consequences on the romanian economy and of course over the people who bitterly notes how the bills are "fat" over night, and loans in foreign currency simply "get crazy." moreover the situation seems to have a bad ending, the analysts arguing a continuing depreciation of the romanian leu, which is common with other currencies of european countries. this has negative repercussions also on the romanian real estate market, which is in full decline whit trends return, because the banks have hardened the terms particularly for mortgage loans. but for the population, the decrease of houses’ price is more than welcome, especially as we all know how "huge" they have been so far. the crisis has given "slogs" to the national bank of romania which had to save the situation interfering opportunely, but success was not the expected one because the depreciation of the romanian leu continues. as well we are witness, unfortunately, to a wave of dismissals, technical unemployment, reductions of production, etc., cruel consequences of the crisis. so a part of the population is seriously affected and felt fully the effects of the crisis. this may cause an increasing of indebtedness of those who already have banks loans, and implicitly a danger for the credit institutions, by an acute absence of liquidities. since the consumption also fell very much, many firms are threatened with bankruptcy. the series of negative effects may continue. however, according to a report by the world bank as regards the global economic prospects in 2009, romania has the chance to avoid recession, which will affected many countries. our country will accounting even for economic development, but the financial crisis will not pass without leaving traces it too. anyway, the opinions are divided, but how will be, will see it than. one obvious reason of extending the crisis is the globalization which now shows its advantages and disadvantages. but of course these are no longer taken into account viewing her big advantages. though, the expanding of transnational companies has determined that the problems faced by the mother on the original country to be reverberated also to their subsidiaries and on markets in which they operate. this is obvious to us, at least in the banking system, but not only. so the crisis gets access anywhere. "financial apocalypse", as was called the crisis in an article signed antena 3, requires action anti-crisis. our country has made efforts in this regard, starting whit some changes of fiscal code. it is about the suspension of tax payment regarding the transactions on the capital market and also the revenues like interests for term deposits and/or savings instruments, fiscal incentives for research, development and innovation, reduced rate of vat at five percentage points, for housing delivery as part of social policy and other measures such as suspension of the tax pollution, eur1.000 for each unemployed worker hired, reducing social studies and scientific researches edition: economics, no. 13 (2008) the impact of global financial crisis under the romanian financial market studies and scientific researches edition: economics, no. 13 (2008) 27 insurance contributions by 10 percentage points in the next four years, not taxing the reinvested dividends, a five percentage points allowance for taxpayers who pay their taxes 10 days earlier than the term, measures to support small and medium enterprises, etc. certainly these are measures taken at national level but each company individually could take its own measures anti-crisis. many peoples argue that the signs of outbreak of this crisis were known earlier, but nobody wanted to read them, they have been ignored. today we suffer the consequences. there are experts who say that such crises are ordinary because they restore the deficiency mechanisms. sounds like a consolation, but nobody knows the truth. however the national and international financial institutions will have to review the regulatory framework because at the time of crisis he has revealed its deficiencies. even if from the crisis outbreak until today, the situation has come down, the future is not well at all. it takes time for the effects of crisis to be forgotten and even removed, but certainly 2008 will go down in history as an year "that has collapsed all ideologies and economic doctrines and reworded the top of world giants." (diana cioltei, in an article) references: [1] www.antena3.ro [2] www.capital.ro [3] www.euractiv.ro [4] www.expert-grup.org [5] www.mediafax.ro [6] www.standard.ro [7] www.wall-street.ro [8] www.ziare.com http://www.antena3.ro/ http://www.euractiv.ro/ http://www.expert-grup.org/ http://www.mediafax.ro/ http://www.standard.ro/ http://www.wall-street.ro/ on money as an institution and medium of exchange iulia andreea bucur ph.d, ştefan sâmbotin ph.d, “vasile alecsandri” university of bacău, romania abstract in this working paper we attempted to analysis on money combining the economic and the institutional dimension, on the grounds that we cannot refer to money, in the context of analyzing the human society, strictly from a perspective or another, separately. the subject of our paper implies the concept of “money” approach from two perspectives: institutional and functional, so that thematic area concerns the socio-economic sphere and especially the financial-monetary one. keywords money, institution, medium of exchange, direct exchange, indirect exchange jel code: e40 introduction part of the financial system, money has an undeniable role in the organization and functioning of economic processes and mutually conditioning the existence and the development, along with other system components: financial instruments, financial markets, financial institutions and central banks1. the evolution of economies from predominantly natural form, based on barter, exchange economy, competition has driven a major changes to the role performed by money in all aspects of human and economic activity. the monetary phenomenon and, in particular, the concept of money have been a constant concern of many prominent economists such as: d. ricardo, a. smith, j.r. malthus, j.b. say, j.s. mill, l. walras, v. pareto, i. fischer, c. menger, f. bohm-bawerk, a. marchall, k. marx, j.m. keynes, p. samuelson, j.k. galbraith, m. friedman, l.von mises, f. von hayek. in attempts to provide comprehensive explanations of the monetary phenomenon and to define the complex concept of money, the romanian economists v. jinga, c. kiriţescu and others works’ also stands, dedicating extensive chapters for the analysis of the money and its role in the economy, based on the monetary practice generalizations from that historical stage. in the literature and also in current speech there are used both the notion of currency and of money. the term currency, used mostly in the language of french people (monnaie), english people (money), italian people (moneta), means, according to larousse dictionary, “a piece of metal issued by sovereign authority, to serve as a medium of exchange”. etymologically, the term money comes from the name of the goddess junona moneta, wife of jupiter, in whose temple at rome were made the money pieces that celebrated victory over the king of epirus (greece). other nations such as the romanian one (bani) or german one (geld), use in their language the term with a similar meaning as that attributed to the concept of currency,                                                              1 cecchetti c.s. (2006), money, banking, and financial markets, publisher: mcgraw hill irwin, new york, p.2 and according to the explanatory dictionary of romanian language money is “generally equivalent to the value of goods (as a commodity itself); metal or paper currency recognized as a medium of exchange and payment”. etymologically, the romanian term bani provenance is unknown. although for a long time the spheres of the two concepts were not completely overlapping, meaning that the concept of currency was something more comprehensive than money in current conditions, the latter expression has been extended in current speech meaning any instrument of trade, including those that do not have a material existence (scriptural currency or currency of account, electronic currency). money as a medium of exchange most people do not spend much wondering what is money?, the main concern regarding the amount of currency held and ways to enhance it. the absence of a clear comprehensive and lasting universally accepted definition of money can be a result of its evolution of forms and functions. analysis of the money functions is the subject of the differences and even controversies among theorists in time. however, there is a general appreciation that the money meets the following basic functions: medium of exchange, unit of measure, of evaluation and backup tool. while the first two functions mentioned above are preferred in classical analysis, keynes’s analysis considers that the third one explains many economic phenomena. but, these functions are simple corollary of the main function, that of the medium of exchange. we, as human beings exist and live together for more than two million years. currency in its modern forms began to be used by more than three thousand years ago, requiring a long period of time to find that good, in physical shape, which best serves the purpose of medium of exchange. the idea of money as a medium of exchange could stay together, in terms of importance it holds for society, next to the language (referring to writing and speaking) that constitutes the great intellectual discovery in history. without language, the exchange of ideas, regardless of their complexity, it would be impossible. without money, production and exchange of any goods or services would be impossible. neither difficult nor time consuming of ineffective, but simply impossible! in explaining the role of money in the economy it is necessary to achieve a trip time and also ask ourselves: why do people engage in reciprocal exchange? the exchange is the foundation of economic life, without which we can speak of a true economy and human society. the mutual exchange is an agreement between two parties to transfer goods or services of one of them for the other’s good and/or services. thus, both parties enjoy the advantages because each gives a higher value of the asset it acquires by exchange than the renounced one. from aristotel to marx, people wrongly thought that exchange somehow involves an equal value. in reality, the exchange was made only because each participant appreciates the two products in a different order. why is exchange so spread? ultimately, due to the great diversity of nature: the human beings and location of natural resources diversity. every person has a different range of qualities and skills and each natural resource has unique and outstanding characteristics. specialization allows everyone to develop the best of his abilities and enables each region to highlight its own resources. if no one could be a part of exchange and everyone would be required to independently produce all goods, it is obvious that most of the people would not survive and would live under the poverty line. so, the exchange is vital not only for the economy, but for civilization itself, over time, wearing two forms: direct exchange (barter) and indirect exchange. the first mentioned form consists in the exchange of goods or services with other goods or services. the two drawbacks are its indivisibility and lack of coincidence of needs. even when goods are divisible it is generally impossible for the two participants in the exchange to enter into relationship with each other and also exchange items are not always accepted by both parties. in the absence of a mediator of exchange we cannot speak of a transaction. by trial and error, people discovered the path that allows reaching a much larger economy based on indirect exchange. this form require each participant to act instead to sell their product not a commodity which should satisfy a direct need, but another good that can be sold, in turn, for the desired object. although, at first sight, this gives the impression of an awkward and roundabout operation, it is, in fact, that wonderful tool that makes possible the development of human civilization.  the subject matter of the indirect exchange theory is, therefore, the research relation between the means of exchange involving and the goods and services of all types. the existence of indirect exchange involving one party has a mediator always accepted, not for what he stands for, but its usefulness, represented by money. history can tell us where and when there were used for the first time means of trade and how then subsequently increasingly reduced the range of goods used for this purpose. many goods were used as means of exchange: sugar in west indies, salt in abyssinia, cattle in ancient greece, tobacco in colonial virginia, nails in scotland, copper in ancient egypt, grains, pearls, tea, animal skins and pole hooks. over time, gold and silver have reached the stage of money in the frame of free competition on market, removing the other goods from the role of medium of exchange. since the distinction between the wider concept of a medium of exchange and restricted concept of the currency is not clear, but the gradual nature, we cannot reach any consensus on the historical transition from simple means of making money exchange. on a free market, cumulative development from a commodity of a medium of exchange is the only way money could arise. we cannot imagine any other way to generate the money, which can be created only by dynamic processes of a free market. indirect exchange and money exist because the necessary conditions for their existence, namely to facilitate the transactions and individuals’ awareness of the benefits, has been and continues to be present in human society. an essential truth about money is clear from the above, that the money is a commodity. it is not an abstract calculation unit, separated by a concrete good, is not a simply symbol with no value, useful only in trade, there is no debt to society and no guarantee for a stable price level. money is simply a commodity. the only amendment that, unlike other commodities, is required primarily as a medium of exchange. as all goods money assume an existing stock, it faced with requests from individuals to buy and to hold, and “price” is determined by the interaction of total money supply (or stock) with total demand of people to buy and to hold. in an exchange economy, money in the different forms (coins, paper currency, currency or scriptural account, electronic money), is the only instrument used in the transactions, the only means used to acquire goods and services, while serving to regulate the exchange. money has always adapted to the requirements of economic life, being, above all, the intermediate exchange process two distinct transactions: the sale and purchase, separated in time and space just because of its existence. core of the exchange system, money, through its use in transactions, determined that the most complex economic exchanges to become more accessible and efficient, while allowing their amplification. it completed exchanges so that buyers and sellers do not claim each other subsequent claims. this is the main role of the money. the institutional dimension of money affirming that money is the exchange mediator, we refer to the fact that it characterizes a particular exchange system specific to the monetary economies. when talking about money is wrong to understand this concept only in the economic aspect, since money implies an institutional dimension, being inextricably linked to the market. analyzing the money from an institutional perspective, we established as a starting point the presentation of some certain aspects of the concept of institution and attempting to define it first. in j. knight’s view, the institution is a “set of rules that structure social interactions in particular ways. for a set of rules to be an institution the awareness of these rules must be shared by the relevant part of the community or society2. in a more explicit way, d.c. north considers institution “a set of rules, procedures and understanding of ethical behavior and ethical norms designed to constrain the behavior of individuals in order to maximize wealth or utility principles”3. as a result, the institution, manifested both as formal organization as well as social order and informal organization reflecting human psychology, culture, traditions, customs and habits of individuals of society means that set of rules generating in social policy. but, for a set of rules to form an institution is necessary that these rules are shared and accepted by a majority of society members. so, the institution sets the rules, in other words, it represents all the constraints created by individuals to shape human interaction. thus, institutions have the capacity constraint and regulation of behavior in society actors, it is a complex process that involves the development of a series of explicit tasks, such as establishing work rules, monitoring and sanctions. according to north opinion, institutional framework has a major role in economic performance, the presence of transaction costs required by the existence of constraints to trade. in the absence of such constraints as a result of selfish behavior of individuals, the complex process of exchange could take place much more difficult4. the economist c. menger, founder of the austrian school of economics, providing an undeniable theory on the origin of money, and also sought interpretation of the existence of social and economic institutions, especially the development of analysis that only focuses on how certain institutions was specifically designed for well-established. attempted to discover the cause-effect relations to explain the emergence, change and development of fundamental institutions over time, menger is a pioneer in providing theoretical support for the concept of social evolutionary processes. economists consider economic phenomena as results of the interaction of thoughts and actions of countless individuals, human society and the emergence of institutions as an unintended consequence of individual choices pursuing personal interests. menger’s theory on the money illustrates in a forceful manner, its fundamental role which it attributed to the principle of methodological individualism. money regarded as an institution is an abstract notion and comprising on the one hand, formal organizations, such as banking institutions (central banks or by issuing commercial banks), treasury and stock exchanges, and, on the other hand, subjective experience individuals that leads them to achieve personal satisfaction and status that is both intense and persuasive that economists talk about a “money illusion”. being a social-economic tool, indispensable for any economy, money is an historic institution, followed and follows the evolution of human society. the rise or decline of nations have often been deeply marked by the ways to manage money, acted as a factor or development or as an obstacle to development, favoring or hindering, its impact on human communities mirrored into two faces: the obverse and reverse. money is a universal key that opens everything. it has made possible the division of labor. and perhaps most important achievement is that it enormously raised the potential for exemplary among people. people exchange ideas and valuing their ideas using the language with money. in terms of institutional, money is underlying the hierarchical differences between individuals of society, human civilization dividing socio-economic classes. this distinction existing since antiquity that characterized the current society has a strong social stratification, so we talk about three great social classes which are distinguished from each other by strong                                                              2 knight j. (1992), institutions and social conflict, cambridge university press, cambridge 3 north d.c. (1981), structure and change in economic history, norton company, new york 4 north d.c. (1990), institutions, institutional change and economic performance, cambridge university press, cambridge  features: lower class (workers, unemployed, etc.), middle class which included most of the population and the upper class, whose weight is the lowest in society. the latter is also called the ruling class, power or elite class, as individuals are social actors who are holding power and influence in society: political elites, economic, etc.. the main reason that contributed to widening the gap between social classes over time is the emergence of money. given the social reality we all live, a phrase that we face almost daily in our society says that “money is power”. the philosopher, economist and journalist karl marx, author of the famous fundamental work “capital” (1867) considers that money has the power to buy anything, offering full power. hence, the fetishism that confuses wealth with money, mercantilist idea that has left deep scars up nowadays and commonly found in phrases like “money power”, “rule of money”, “sovereignty dollar”. in the nineteenth century, english novelist jane austen presented the money in his novel “pride and prejudice” (1813) as being at the base exemplary and conflicts between individuals. those belonging to high social class have important tools in fighting life: economic power, financial independence, social impact, capacity of belief, building a very extensive social networks and influence, all having as the foundation holding the most important tool: money. however, economic elites are not only about this feature, but they become social elites, political authority exercising functions in society, the basic factor is money. thus, these individuals build and run the company automatically members of society oriented behaviors. this is where the marxist theory is centered on the idea that dominant elites imposing norms and rules of conduct and develop laws that reflect their interests at the expense of the ruling class whose action is diminished opportunity. it follows therefore the strong institutional character of the social-political side, based on individuals’ confidence has proposed a system and a guarantee. in terms of institutional the power of money is based on authority, which has an economic nature, the ability to maintain monetary discipline, financial, tax and also an expanded social and political influence on the strength and stability through government country’s military strength and stability, relations with other states and the ability to implement the system of legal rules in the nation. vital importance and power of money are showed in any social life spheres. for example, money has a significant impact on the level of education and socio-professional status of society depends on the ability of individuals to pursue certain studies that will influence his career. there are also negative effects on the development side of life in normal society consisting of a series of deviant behavior, antisocial, much of which is determined by lack of money. a negative social significance of the money is also included in corruption. therefore, we can see that today, money is not only fulfills the function of mediator exchange of goods and services, but this feature has been extended, the currency can be used to “buy” a higher social status, honor, fairness and trust others. it can also degrade mentality, behavior and structure of enabling human beings to obtain favors by failing society's moral values. however, in addition to negative social aspects, there are undeniable and positive meanings of money and we refer to the acts of social assistance, charity to those in need. money is not only used for negative purposes or getting rich, but it can also be used for positive purposes, to help others. final remarks what is money? it is a medium of exchange. money is not a good that people want to consume, but to use it to facilitate the exchange. what to do with money? money ensures the success of transaction and is always accepted as intermediate element of the exchange. why is currency necessary? money is necessary because people cannot live in peace and prosperity in the absence of exchange. how important is the discovery of money? just look around us. the emergence of the currency was a great advantage to human society. in the absence of a universal medium of exchange would not have been possible a real specialization, no progress of economy beyond the survival level. analyzing money in terms of economic and institutional dimension, we can set out the idea that the two are complementary and also admit that there would be no institutional significance of money if it had not been first economic significance and its functions and in particular, the medium of exchange function. bibliography 1. basno c., dardac n., floricel c. (2001), monedă, credit, bănci, editura didactică şi pedagogică, bucureşti; 2. cecchetti c.s. (2006), money, banking, and financial markets, publisher: mcgraw hill irwin, new york; 3. jinga v. (1981), moneda şi problemele ei contemporane, vol i şi ii, editura dacia, cluj-napoca; 4. kiriţescu c.c. (1982), moneda – mică enciclopedie, editura ştiinţifică şi enciclopedică, bucureşti; 5. knight j. (1992), institutions and social conflict, cambridge university press, cambridge; 6. north d.c. (1990), institutions, institutional change and economic performance, cambridge university press, cambridge; 7. north d.c. (1981), structure and change in economic history, norton company, new york; 8. turliuc v., cocriş v. (1997), monedă şi credit, editura ankarom, iaşi; 9. papadopoulus g. (2008), on money as an institution, de pe http://papers.ssrn.com 10. http://www.dictionareconomic.ro 11. http://misesromania.org final remarks microsoft word timiras, zait engl.     evolution of the eu ecological products market laura cătălina ţimiraş – vasile alecsandri university, bacau, romania luminiţa zaiţ – vasile alecsandri university, bacau, romania   abstract the ecologic products market has registered on the eu countries level a hightened dynamic. yearly there is a growing number of european ecologic labels granted, labels that are only granted to some classes of non-food products, proving this way the orientation of more and more producers towards producing products with a low impact on environment according to the requirements of the consumers on the markets they perform on. in regard to the ecologic food products market there is a significant growth in the consumption of such products and in close connection to their cultivating areas in agreement with the regulations regarding the agricultural ecologic products. the dynamic of the ecologic products is justified by the evergrowing ackowledgment at public opinion level of the necessity to protect the environment, of the role of consuming ecologic products and therefore of giving up the consumption of polluting products that will ensure a longlasting development, by increasing the requirements of the consumers that orientate themselves towards products that can guarantee their present and future safety and security. keywords market, ecologic product, european ecologic label, ecologic agriculture introductive elements the eu ecologic products market is ever extending. result of the increasing requirements of the consumers who become more and more receptive to the assessment criteria of products such as „ecologic”, „biologic”, „unpolluted”, natural”, etc, of the ackowledgment of the public opinion regarding the importance of the environmental protection, ensuring the security and safety of the consumers, more and more producers address the market with products adapted to the new requirements. the competitive advantage of these „healthy” products for the consumer/user, respectively the enviroment in itself is highlightened on the wrap of the market by the ecologic marking, legislation of the european union offering specific labeling schemata of the food1 and non-food2 products. actully, the „ecologic” criterium is for the consumers an inssurance of the product’s quality, thus increasing the notoriety of the producers who are concerned with the problem of a longlasting development.                                                              1 council regulation (ec) no 834/2007 on organic production and labelling of organic products; commission regulation (ec) no 889/2008 of 5 september 2008 laying down detailed rules for the implementation of council regulation (ec) no 834/2007 (http://www.mmediu.ro) 2 regulation (ec) no 1980/2000 of the european parliament and of the council, on a revised community eco-label award scheme; regulation (ec) no 66/2010 of the european parliament and of the council of 25 november 2009 on the eu ecolabel (http://www.madr.ro) 114 studies and scientific researches ‐ economic edition, no. 14, 2009    according to the community legislation for a wide range of non-food products, including cleaning products, paper products, electronic and house-electronic products, products for house and garden, showear, textile, etc and services for camping and tourism there is the european ecologic label applied. the products that contain on their wrappings the european ecologic label are products that on their entire life course from raw material to eliminating/recycling phase or their re-use phase have a low impact on the environment, by protecting the air, water, soil and ozone quality contribute to saving energy, are made of recycling materials, etc. in what the food products are concerned, the ecologic trait (biologic or organic) can be highlightened by the eu organic farming logo. a food product that has the eu logo of “organic farming” on it is made of at least 95% ingredients produced according to the ecologic production method. according to the regulation (ce) no. 834/2007 the organic production is a global system of agricultural management and food production that combines the best environmental techniques, a high level of biodiversity, preserving the natural resources, applying several high standards regarding the welfare of animals and a production technique that observes the preferences of certain consumers for products obtained with the help of some natural substances and processes. figure no. 1. marks showing the biologic trait of products used on the eu market source: http://ec.europa.eu/environment/ecolabel/index_en.htm; http://ec.europa.eu/agriculture/organic/home_ro besides the above-mentioned schemata, at eu level there are used much more ecologic applicable labels for various groups of products. one image regarding the development of market of the non-food ecologic products, respectively those groups of products to whom according to the community regulations can applied the european ecologic label, is highlightened in the hereby article by means of the evolution of european ecologic label number registered at eu level. in what the dimension and evolution of ecologic agro-food products market is concerned, they are sketched in terms of the public consumption, as well as in terms of the areas planted ecologically at eu countries level. the development in the number of european ecologic labels registered at eu level the development of the european ecologic products market is highlightened by the evergrowing number of the ecologic labels registered at eu level. answering to the requirements of the consumers, of the society on the whole, in what the orientation   european ecologic label   organic farming logo 115 studies and scientific researches ‐ economic edition, no. 14, 2009    towards products with a low impact on the environment is concerned, more and more producers have gained the right to use european ecologic labels. in 2010 (month of february) at the level of the 27 eu member-states there were 957 labels registered. the increasing requirements specific to the consumers in the eu countries with a high level of development stand out from this point of view, also, most of ecologic labels being registered in italy, france, germany, spain, denmark and austria. besides the exact number of ecologic labels registered at eu countries level, table no. 1 highlightens the increasing dynamic (at least in the case of the countries for which we have data on) that this pointer has known for the period 2001 – 2010. for example, in italy, the country that registers the highest number of ecologic labels (35,6% per whole labels registered at eu level – 27 in 2010), the end of the analyzed period meant surpassing the year 2001 by 26 times; in france the growth was of 11 times and in germany of 66 times. in february 2010, romania registered 4 ecologic labels, the market for these products being at a starting point (similar to the markets of some countries who just joined the eu). austria 4.4% sweden 2.6% spain 6.7% marea britanie 2.2% portugal 1.4% romania 0.4% italy 35.6% latvia 0.3% lithuania 0.1% malta 0.1% slovakia 0.1% slovenia 0.3% poland 0.8% czech republic 1.5% united kingdom 2.2% netherlands 2.7% republica cehia 1.5% cyprus 0.2% denmark 5.1% estonia 0.2% finland 0.9% france 20.6% germany 6.9% greece 2.5% ireland 2.4% figure no. 2. distribution of the european ecologic trademarks on eu countries, in february (%) source: adaptation after http://www.eco-label.com/romanian table no. 1. the number of ecologic european labels registered in eu countries between 2001-2010 116 studies and scientific researches ‐ economic edition, no. 14, 2009    anul 2001 2002 2003 2004 2005 2006 2007 2008 februarie 2010* european union (27 countries) n.d. n.d. n.d. n.d. n.d. n.d. n.d. 705 957 austria 0 1 2 7 11 12 29 24 42 belgium 1 2 2 2 4 4 6 10 12 bulgaria n.d. n.d. n.d. n.d. n.d. n.d. n.d. 0 0 cyprus n.d. n.d. n.d. 0 0 1 1 1 2 denmark 18 23 28 45 53 55 29 52 49 estonia n.d. n.d. n.d. 0 0 0 0 2 2 finland 2 1 1 2 3 3 5 6 9 france 17 26 30 43 45 50 89 137 197 germany 1 2 4 7 13 21 29 51 66 greece 9 9 10 14 6 16 19 21 24 ireland 1 1 0 0 0 9 11 20 23 italy 13 23 34 54 82 95 160 237 341 latvia n.d. n.d. n.d. 0 0 0 3 3 3 lithuania n.d. n.d. n.d. 0 0 0 0 1 1 luxembourg 0 0 0 0 0 0 0 0 0 malta n.d. n.d. n.d. n.d. 0 1 1 1 1 united kingdom 1 2 2 4 5 7 12 17 21 netherlands 2 2 3 11 11 11 9 17 26 poland n.d. n.d. n.d. 0 2 3 6 8 8 portugal 2 3 4 5 5 6 7 12 13 czech republic n.d. n.d. n.d. 0 1 2 8 13 14 romania n.d. n.d. n.d. n.d. n.d. n.d. n.d. 3 4 slovakia n.d. n.d. n.d. 0 0 0 0 1 1 slovenia n.d. n.d. n.d. 0 0 4 2 3 3 spain 12 12 13 16 19 21 28 41 64 sweden 9 8 10 13 15 16 20 21 25 hungary n.d. n.d. n.d. 0 1 1 2 3 6 n.d. – no data source: eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) http://www.eco-label.com/romanian the consumership of ecologic agro-food products the dynamic of ecologic agro-food products registered in eu countries is accelerated. in spite of the fact that we refer to food products, for which the sales dynamic is often stationery, due to inelastic character of the demand, the “biologic” character imprints on the markets of these products distinctive traits. in fact, we are not talking of an increase in demand of food products, but of a reorientation of such to the healthy products, that will answer to some increased requirements linked to the food safety and security of the population. the european market3 of the ecologic products has reached in 2007 (according to the data we have) the level of 16 billion euro; 4 of the eu countries have registered over 73% from the total of this market, respectively: germany– 5,3 billion euro, great britain – 2,6 billion euro, as well as france and italy – both with 1,9 billion euro.4 between the years 2000 – 2006 one can notice (table nr. 2) increases in the sales of ecologic agro-food products in all eu countries, most of these markets having, approximately, doubled their dimensions. the countries that stand out at eu level by their average shopping for ecologic agrofood products per person are: denmark, austria, germany, great britain and sweden. in romania the ecologic agro-food products had in 2006 a dimension of only 3 million de euro, thus placing itself from this point of view last in the eu countries for which we have data.                                                              3 concerns the entire european market, not only the eu market 4  source: the world of organic agriculture statistics and emerging trends 2009 (http://orgprints.org). 117 studies and scientific researches ‐ economic edition, no. 14, 2009    table no. 2. the development of the average sales and expenses per person for ecologic agro-food products in some eu countries, between the years 2000 – 2006 year 2000 a) 2002b) 2003 b) 2005 c) 2006 d) measurement unit million $ billion euro austria 250 275 0.33 323 450 530 belgium n.d. 0.30 300 n.d. 245 denmark 350 375 0.27 339 307 434 finland n.d. n.d. 212 80 57 france 800 850 1.50 1578 2200 1700 germany 2200 2400 3.00 3100 3900 4600 greece n.d. 0.02 21 50 n.d. ireland n.d. n.d. n.d. 66 n.d. italy 1000 1050 1.38 1400 2400 1900 united kingdom 1000 1050 1.44 1607 2333 2831 netherlands 225 250 0.38 395 419 460 poland n.d. n.d. n.d. 30 20 portugal n.d. n.d. n.d. 50 n.d. czech republic n.d. n.d. 6 12 26.8 romania n.d. n.d. n.d. n.d. 3 slovakia n.d. n.d. n.d. n.d. 4.3 spain n.d. n.d. 144 300 70 sweden 175 200 0.40 420 433 379 hungary n.d. n.d. 18 5.6 7 sales of ecologic agro-food products million euro follow-up table no. 2 year 2000 e) 2002 b) 2003 b) 2005 c) 2006 d) measurement unit austria 40.0 41 40 56 64 belgium n.d. 29 29 n.d. 23 denmark 72.0 50 51 57 80 finland n.d. n.d. 41 15 11 france 14.0 25 27 37 27 germany 31.0 36 38 47 56 greece n.d. n.d. 2 5 n.d. ireland n.d. n.d. n.d. 16 n.d. italy 17.0 24 24 42 32 united kingdom 16.0 24 27 39 47 netherlands 15.0 23 25 29 28 poland n.d. n.d. n.d. 0.8 1 portugal n.d. n.d. n.d. 5 n.d. czech republic n.d. n.d. 1 1.2 3 romania n.d. n.d. n.d. n.d. 0.1 slovakia n.d. n.d. n.d. n.d. 1 spain n.d. n.d. 4 7 2 sweden n.d. 45 47 48 42 hungary n.d. n.d. 2 0.6 1 expenses for ecologic agro-food products/person euro / person source: a) estimated value, international trade centre b) research institute of organic agriculture, switzerland 118 studies and scientific researches ‐ economic edition, no. 14, 2009    c) agra europe; bio plus / fibl market survey: international expert survey; rippin, m and michels (2006) beitrage zum zmp ökomarktworkshop, may 2006 berlin; www.biofach.de; .ökomarkt forum of zmp; hamm, u. (2006) viele bioprodukte schwer zu bekommen. meldung dpa; www.agencebio.org/; www.biomarkt.info; richter, t (2006) neue herausforderungen jenseits der nische. ökologie & landbau, 01/2007; www.biologica.nl; www.ekoland.nl; bio forum vlaanderen; www.ekoconnect.org; williamson, s, cleeton, j and nettleship, t (2006) organic market report. soil association, bristol; lampkin, n, measures, m and s. padel (2006) 2007 organic farm management handbook. university of wales, aberystwyth. d) aberystwyth university/institute of rural sciences; agromilagro research; research institute of organic agriculture, switzerland; central market and price reporting bureau in germany e) research institute of organic agriculture, switzerland / soil association according to: organic agriculture worldwide 2002, the world of organic agriculture statistics and emerging trends, 2003 – 2008 editions (http://www.soel.de/fachthemen/oekolandbau_welt.html) note: although the data presented are not compatible being a result from research done by a large number of organizations, often having an estimate character, it gives a whole image on the development registered by the ecologic products market at eu market level. the development of the areas ecologically cultivated at eu level the areas that are cultivated in the eu countries according to the community regulations regarding the ecologic agricultural have been between the years 2000 2008 in an increasing spread – the growths exceeding sometimes 100% (figure no. 3), proving by that an increase of the ecologic food and beverage offer at the level of reference markets. the countries with the largest ecologic cultivated areas were: italy – 812139 ha., spain – 691196 ha., great britain – 582205 ha., france – 502234 ha., according to the data associated with year 2008. romania has registered in 2008 an ecologic cultivated area of only 71597 ha.5                                                              5 source: eurostat 2010 (http://epp.eurostat.ec.europa.eu/portal).  119 studies and scientific researches ‐ economic edition, no. 14, 2009    93371 117080 230739 10309 502078 242473 26870 242291 143552 54264 139021 134820 502234 266745 812139 582205 46895 691196 246628 108578 0 1e+05 2e+05 3e+05 4e+05 5e+05 6e+05 7e+05 8e+05 9e+05 denmark finland france greece italy united kingdom netherlands spain* sweden hungary** ha 2008 2000 * years 2001 and 2008 ** years 2002 and 2008 figure no. 3. the area of the organic cultures in some eu countries, in 2000 and 2008 source: eurostat 2010 (http://epp.eurostat.ec.europa.eu/portal) a pointer much more relevant regarding the development of the ecologically cultivated areas is the weight factor it has in the total of the agricultural areas used. it is noticeable in almost all eu countries an increase from this point of view, proving thus the tendency of the producers to reorientate towards the ecologic production system and implicitly of adapting to the ever-growing demand for biologic food products. (table no. 3). the biggest areas cultivated with ecologic agriculture per whole used agricultural area have been registered (according to the data associated with the year 2008) in austria, sweden, latvia, estonia, czech republic. there is notice that a part from the new eu members have orientated somewhat towards this type of production, surpassing this way even some old eu member-countries. in the case of romania the weight factor of the ecologically cultivated lands is extremely low (under 1%) in spite of the potential it has from this point of view. 120 studies and scientific researches ‐ economic edition, no. 14, 2009    table no. 3. the weight factor of the are cultivated ecologically per whole the agicultural area used in the eu countries in the period 2000 – 2007 (%) year 2000 2003 2005 2007 european union (15 countries) 3.0* 4.0 4.3* 4.7* austria 8.1 10.0 11.0 11.7 belgium 1.5 1.7 1.7 2.4 bulgaria n.d. n.d. n.d. 0.4 cyprus n.d. n.d. 1.1 1.6 denmark 6.0 6.2 5.2 5.2* estonia n.d. n.d. 7.2 8.8 finland 6.6 7.1 6.5 6.5 france 1.3* 2.0 2.0 2.0 germany 3.2 4.3 4.7 5.1 greece 0.7 6.2 7.2 6.9 ireland 0.6 0.7 0.8 1.0 italy 8.0 8.0 8.4 9.0 latvia n.d. n.d. 7.0 9.8 lithuania n.d. n.d. 2.3 4.5 luxembourg 0.8 2.3 2.4* 2.4* malta n.d. n.d. 0.1 0.2* united kingdom 3.7 4.3 3.8 4.1 netherlands 1.6 2.1 2.5 2.5 poland n.d. 0.2 0.6* 0.5* portugal 1.2 3.2 6.3 6.7 czech republic n.d. 7.0 7.2 8.3 romania n.d. n.d. n.d. 0.8* slovakia n.d. 2.3 4.8 6.1 slovenia n.d. l.d. 4.8 6.0 spain 1.5 2.9 3.2 4.0 sweden 5.7 7.2 7.0 9.9 hungary n.d. 2.7 3.0 2.5 * estimated value n.d. – no data source: eurostat, 2010 (http://epp.eurostat.ec.europa.eu/portal) as a conclusion, the ecologic products market – agro-food and non-food products in eu is an evergrowing market, fact proven by both the orientation of more and more producers towards producing products with low impact on environment, which guarantees the present and future safety and security of the consumers and the increased consumption of these products. in fact, the foundation of the development of these market lies firstly in the changes that appeared at the requirements level of the consumers in eu area, more and more aware of the necessity to protect the environment, but also more and more preoccupied with their health, which led to giving up polluting products, potentially harmfull to health in favour to the ecologic products. bibliography 1. council regulation (ec) no 834/2007 on organic production and labelling of organic products 2. regulation (ec) no 1980/2000 of the european parliament and of the council, on a revised community eco-label award scheme 3. organic agriculture worldwide 2002 4. the world of organic agriculture statistics and emerging trends, 2003 – 2009 editions 5. http://ec.europa.eu/agriculture/organic/home_ro 121 studies and scientific researches ‐ economic edition, no. 14, 2009    6. http://www.eco-label.com/romanian 7. http://ec.europa.eu/environment/ecolabel/index_en.htm 8. http://epp.eurostat.ec.europa.eu/portal 9. http://www.mmediu.ro/departament_mediu/controlul_poluarii/eticheta_ecologica 10. http://www.madr.ro 11. http://orgprints.org 122 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 34 the savings-trade-fiscal gap model: application in selected west african states obukohwo oba efayena department of economics university of nigeria, nsukka, nigeria economix4life@gmail.com ngozi patricia buzugbe department of general studies delta state polytechnic, ogwashukwu, nigeria buzugbengozi@gmail.com abstract with most african economies experiencing adverse economic misalignment in recent times, the need of enhancing the growth process cannot be overemphasized. using a typical savings-tradefiscal gap model, the paper employed panel data estimation method to examine the impact of savings, trade and fiscal gap on economic growth of 15 west african countries. the paper finds a negative relationship between net trade and economic growth, while savings and government expenditure impacts positively on economic performance. the paper thus, among recommended that it is appropriate for all countries to eliminate fiscal dominance from monetary policymaking, reduce public debt and establish institutions that promote and encourage countercyclical fiscal policy, develop their financial systems, establish credibility in fiscal and monetary policy-making as well as encourage trade. keywords fiscal gap; fiscal policy; panel; growth; savings; capital jel classification h51; i32 section title introduction a general belief held in modern society is that economic growth hinges on an effective and efficient financial sector that attract domestic savings and mobilizes funds from external sources. without such a fulcrum in place, productive project remains unexploited. because the financial institutions in most developing economies especially in african are inefficient, growth level has been cut higher levels given appropriate policies. while the financial sector is given much priority in most of such economies, the trade (local and international) and fiscal sectors have received reduced attention in the past. experiences have so far shown that the need for a saving, trade and fiscal model cannot be overemphasized given the failure of most financial institutions in developing economies. this paper will thus examine the empirics of the 3-gap model of savings, trade and fiscal trends. following the introductory part, section 2 develops the typical 3-gap model, section 3 shows an empirical application of the model to the nigerian economy, while section 4 concludes and offer policy recommendation. the savings-trade-fiscal gap model: application in selected west african states 35 the model in a typical developing economy, four flows are identified which include private savers and investors, the financial system, the government, and the foreign sector. it is assumed that private saving is channeled to higher bank deposits, increases in the stock of narrowly defined money, or asset holdings abroad through capital flight. the financial side of the economy is treated as a pure credit banking system. this can be clearly seen in the chenery and strout two-gap model. following assumption of rostow (1956) let p a be bank assets (credit, loans) advanced to the private sector, g a be advances to the government, and r e be the values of foreign reserves. bank liabilities are deposits (d) and narrow money (m). therefore, the banking system balance sheet is; p g r a a e d m    (1) analyzing equation (1) in flow terms, . . . . . p g a a er d m    (2) where a “dot” over a variable denotes its time derivatives, savings (s) is some constant proportion, s, of national income (y) such that s sy (3) but investment (i) defined as a change into the capital stock, k, is in accordance with the acceleration principle measured and assumed to be a constant of the rate of growth of output so that, 1 ( ) t t i k k y y      (4) i k k y    (4 )a where k stands for the marginal capital coefficient or simply the incremental capital output ratio (icor) and  indicates a change in the variable. dividing equation (3) by y yields. i k y k y y y     (5) rewriting (equ. 4) by substituting k for i, i y k y y   (5 )a rewriting y y  as g, the rate of growth of output can be expressed as 1 g k  (6) on the assumptions that k is fixed, based on the assumption that the production function is of fixed proportions, the only constraint to growth is investment capital, hence, is seen as a bottleneck to growth (chenery and strout, 1966). real investment i in turn is the sum of p g i i (private and public capital formation). let g i k be the government’s investment decision. its own capital formation is set as a share of  of obukohwo, ngozi 36 the total capital stock. the value of private investment is ( )g pk and we assume that the banks issue a new loan . p a to finance the increase in private capital; . p a g pk   (7) the overall investment function determining g is presented as a reduced form (depending on credit availability among other factors). let real government current spending g k where  as a proxy for the non-investment fiscal deficit or government dis-savings. the government also borrows abroad. its outstanding stock of loans is f upon which it pays an interest rate r. if the debt growth rate f exceeds the interest rate r, the government turns to the banks to finance the part of its spending it cannot cover with foreign loans expressed below; . g a t pk     (7a) domestic borrowing can be a substantial share of gdp when t is less than zero. debtor country governments owe large foreign obligations but do not own the resources to generate foreign exchange to pay. the outcome is a severe fiscal crunch. finally on the bank asset side, the increase in reserves is . (1 ) e r t au g q pk        (8) where e k   is the ratio of exports (net of competitive imports) to capital stock. imports go only for intermediates goods ( au ) and capital goods (1 )g , and q stands for net acquisition of foreign assets (relative to the capital stock) by the private sector. to describe the saving gap, we assume that saving desired by nationals in the absence of price inflation is directed either to foreign asset accumulation or else to increased bank deposits, such that;   . (1 )(1 ) ( , ) w d q s s u s u pk            (9) where s and ws are the saving rates from profit and wage income flows respectively. ( ) ea ea wb    is the share of intermediate imports respectively in variable cost, so that (1 )(1 )u   is the ration of the wage bill to the capital stock. if the share  of saving flows abroad, the equation above becomes; . (1 ) d su pk   (10) putting equation (2) and (10) together shows that the increase in the supply of narrow money is the savings-trade-fiscal gap model: application in selected west african states 37   . . (1 ) (1 ) (1 ) m g su au g pk e r g su t pk                            (11) where the terms in the bracket represent the balance of payments (net of capital flight) on current and capital account. relative to capital stock, we assume that private investment demand is given by the function; .. 0 ( ) ( ) ( ) g gp i ai d g au k k pk pk               (12) the term au is an instantaneous accelerator, g i k shows that public investment crowds in private capital formation because of complementarities and other external effects. the last term . ( ) g a pk in equation (15) introduces financial crowding-out as a potential counterpoise to direct crowding-in. it is assumed along conventional lines that investment is cut back when government puts pressure on financial markets. specifically, p i falls when a new government borrowing . g a pk grows with respect to the deposit increase . d pk . the rationale could be that banks raise interest rate and tighten credit limits more of their deposit base is absorbed by the government. this simple flow specification is dimensionally equivalent to the quantity theory of money demand and saves the use of asset stock. uniting equation (7), (10) and (12) in its simplified form;  0 (1 ) (1 ) 0g g a s u t                 (13) thus relationship shows that the capital stock growth rate g increases endogenously in response to greater capacity utilization u due to the accelerator and also because higher private saving creates deposits which banks use to finance investments. government investment  has an overall crowding-in effect if 1    . this condition will be satisfied if 1  and if 1  also, an increase in foreign transfers t or a reduction in government dis-savings  cuts back on public borrowing from the banks, again permitting private investment to rise. a third gap, which is the fiscal gap, was also explored for its independent constraining influence on the growth of an economy. to an extent, a fiscal gap can directly constrain economic growth, influence the trade gap and therefore make an indirect impact on the economy. however, the fiscal constraint in a three gap model is often predicted on the assumptions that the public and private investments (blejer and khan 1984; barro obukohwo, ngozi 38 1989) are complementary to each other and the savings are forced through inflation. within the three-gap simulation analysis of foreign resources flows, taylor (1993) convincingly concludes that a ‘substantial realignment in international payments would be required to accelerate the growth for developing nations overall’. employing these assumptions in a two gap framework, bacha (1990) argues that foreign transfers are more important than foreign savings. this explains why the imf and the world bank continues to emphasize on how to contain the inflationary pressures through light fiscal and monetary policies. in less developed countries (ldcs), there exists a market for government bonds however thin it may be while the governments continues to resort to a partial monetization of budget deficits, they also access market borrowing thorough open market operations. model specification analytical framework and empirical model specification this analysis is carried out within a panel data estimation framework. the preference of this estimation method is not only because it enables a cross-sectional time series analysis which usually makes provision for broader set of data points, but also because of its ability to control for heterogeneity and endogeneity issues. hence panel data estimation allows for the control of individual-specific effects usually unobservable which may be correlated with other explanatory variables included in the specification of the relationship between dependent and explanatory variables (hausman and taylor, 1981). the basic framework for panel data regression takes the form: yit = βx 1 it + αz 1 i + 𝜀it (14) in equation 14 above, the heterogeneity or individual effect is zi’ which may represent a constant term and a set of observable and unobservable variables. when the individual effect zi’ contains only a constant term, ols estimation provides a consistent and efficient estimates of the underlying parameters (kyereboah-coleman, 2007); but if zi’ is un-observable and correlated with 𝑋it, then emerges the need to use other estimation method because ols will give rise to biased and inconsistent estimates. similarly for endogeneity issues, it is generally assumed that the explanatory variables located on the right hand side of the regression equation are statistically independent of the disturbance 𝜀it such that the disturbance term 𝜀it is assumed to be uncorrelated with columns of the parameters 𝑋it and 𝑍it as stated in equation (1), and has zero mean and constant variance 𝜎2𝜂 (hausman and taylor, 1981; nakamura and nakamura, 1981). if this assumption is violated, then ols estimation will yield biased estimates of the underlying parameters of β (mayston, 2002). hence, endogeneity problems arise when the explanatory variables are correlated with the disturbance term 𝜀𝑖t (mayston, 2002; nakamura and nakamura, 1981; hausman and taylor, 1981). in order to circumvent these problems, panel estimation techniques of fixed and random effects will be adopted in this study, in addition to the traditional pooled regression estimation. decisions will be made between the fixed and random effect models using the hausman specification test. the panel model for the study is specified thus: egit = β0 + β1x’it + µit (15) where: eg = economic growth x’ = collate of explanatory variables; savings, trade and fiscal gap (government expenditure) β0 = intercept β1 = coefficient of the explanatory variable the savings-trade-fiscal gap model: application in selected west african states 39 µ = error term i = cross-sectional variable t = time series variable (1990-2015) interpretation of regression analysis in this section we employed panel data estimation method to examine the impact of savings, trade and fiscal gap on economic growth of 15 west african countries (benin, burkina faso, cameroon, cape verde, central african republic, cote d’ivoire, gambia, ghana, guinea, liberia, mali, mauritania, niger, nigeria and senegal) from 1990 to 2015. the study considered the pooled regression assuming that the intercept is equal across the countries areas and years. we also assume different intercept for each country and perform both fixed and random effect regressions. this is presented below; table 1 panel results for the savings-trade-fiscal gap model variable pooled fixed effect random effect as 0.502** 0.617** 0.813** nt -0.037 -0.015* -0.009 ge 0.037 0.030 0.027* cons 0.452** 0.719* 0.274* no. of obs 15 15 15 r-square 0.3598 0.2941 0.4571 f-statistics (pvalue) 6.28 (0.011) 4.93 (0.066) 17.31 (0.008) hausman 0.83 (0.8821) note: *, **, *** indicate significance at the 10%, 5% and 1% levels of significance respectively source: eview 8 output table 1 above presents the relationship between savings, net trade and government and economic growth in 15 west african states. the f-statistics value of 6.28 (p<0.05), 4.93 (p<0.05) and 17.31 (p<0.05) show that the independent variables are jointly statistically significant in the pooled, fixed and random estimates in explaining variations in economic growth. the r-square statistics value of 0.3598, 0.2941, and 0.4571 shows that the independent variables jointly account for about 35.9%, 29.4% and 45.7% variation on economic growth in the pooled, fixed and random effect models respectively. going by the hausman test statistics of (0.83) we accept the null hypothesis that differences in coefficient of the fixed and random estimates are not systematic, thus we accept and interpret the random effect model. from the results presented below, a negative relationship exist between net trade and economic growth, while savings and government expenditure impacts positively on economic performance in selected west african states. however, only total savings and government expenditure are significantly related to economic performance. this relationship is statistically significant at 10 % and 5% level respectively. the results above have certain economic implications. for one, aggregate savings and government expenditure in both economies have positively influenced the growth process, but the trade gap has not been favorable. there is a high possibility that both economies import more than they export thus leading to an unfavorable balance of trade. this calls for improved external sector (foreign trade) policies. obukohwo, ngozi 40 concluding remarks with the savings-trade-fiscal gap model fully explained and applied to selected west african economies, it is appropriate for all countries to eliminate fiscal dominance from monetary policy-making, reduce public debt and establish institutions that promote and encourage counter-cyclical fiscal policy, develop their financial systems, and establish credibility in fiscal and monetary policy-making. there is also urgent need to encourage international trade in terms of improved exports. this will result in increased exportation of goods and services which in the long-run will improve the economy. it is imperative to apply the savings-trade-fiscal gap model in a typical economy. references bacha, e.l. (1990), a three-gap model of foreign transfer and the gdp growth rate in developing countries, journal of development economics, 32, 279-296. barro, r.j. (1990), government spending in a simple model of endogenous growth, journal of political economy, 95(5), 103-125. blejer, m., khan, m. (1984) government policy and private investment in developing countries, imf staff papers, 31(2), 379-403. chenery, h.b., strout a. (1966), foreign assistance and economic development, american economic review, 55, 679-733. hausman,, j.a., taylor, w.e. (1981), panel data and unobservable individual effect, econometrica, 49(6), 1377-1398. kyereboah-coleman, a. (2007), the impact of capital structure on the performance of microfinance institutions, journal of risk finance, 8, 56-71. mayston, d.j. (2002), tackling the endogeneity problem when estimating the relationship between school spending and pupils’ outcome, dfee research report 328, department of education and skills, london. nakamura, m., nakamura, a. (1981), a comparison of the labor force behavior of married women in the united states and canada, with special attention to the impact of income taxes, econometrica, 49, 451-489. rostow, w.w. (1956), the take-off into self-sustained growth, economic journal, 66, 25-48. taylor, l. (1993) (eds.) the rocky road to reform, cambridge, mit press. microsoft word apostoaie constantin marius_eng.doc issues regarding environmental protection in romania mirela dr ghicescu –the academy of economic studies bucharest, romania abstract the “environmental protection” activity in our country should be approached by taking into consideration its entire complexity, and the most reliable solutions may be provided only by direct and permanent reference to the vast issue of social development in its entirety. the present work aims to draw attention towards pollution, the main cause of environmental deterioration in romania, as well as towards the management of waste materials, while taking into account the national strategy. in romania, environmental protection is a distinct domain of the national policy, establishing the priority objectives by “the national strategy for environmental protection”, according to the communitarian strategy, as well as to the tendencies and initiatives existing at global level. our country’s efforts over the past years with respect to environmental protection are very important in the framework of contemporary economy and are reflected in the expenses incurred for environmental protection. keywords environment, protection, environmental factors, pollution, expenses incurred for environmental protection, waste materials, recycling, strategy, eco-technologies, the european union jel codes: q 51, q53, q58 pollution – the main cause of environmental deterioration in romania pollution is a major cause of environmental factors deterioration. pollution is the contamination of the environment with materials interfering with human health, life quality or the natural function of ecosystems (living organisms and their life environment). humans’ social and economic activities are mostly liable for the pollution of the environment.1. thus, the environment in our country is affected by pollution, by climatic changes, by the intensive exploitation of natural resources, by land clearing, by the increasing greenhouse gas emissions, by natural disasters, and, last but not least, by the irresponsible behaviour that all of us have towards the environment. the environmental deterioration phenomenon in our country is mostly caused by the pollution of environmental factors (water, air, soil). the waters in our country are mostly polluted overflow of sewage water directly into rivers. the best example in this respect is the danube which, apart from the fact that it enters our national territory with a high degree of pollution, continues to be polluted by untreated waste waters overflowed directly in the rivers in romania. bucharest is one of the major indirect contamination sources of the river and currently remains the only european capital which doesn’t have a waste water purification plant. in addition to bucharest, other over 40 towns have a major contribution to the pollution of surface waters. consequently, romania is one of the greatest nitrate pollutants of the danube basin, being classified as the antepenultimate european country in the field of territorial water protection. currently, romania has no tertiary stage water purification plant able to treat waste waters, purifying the nutrients 1 bran f, ioan i, tric c (2004), the eco-economy of ecosystems and biodiversity, ase publishing house, bucharest, p. 27 studies and scientific researches economic edition, no. 15, 2010 214 content, especially consisting in phosphorus and nitrogen. in the absence of this tertiary stage, the water purification plants do not eliminate nutrients from polluted waters. out of the 397 water purification plants existing in the country, only 14 are according to european standards, having at least a mechanical and a biologic stage. this is the reason why we are classified as one of the last european union member states in the field of water purification, according to “romanian waters” national administration. in our country, air pollution is mostly determined by pollutants (suspension powders, heavy metals) generated by the great industries consuming natural resources and energy, as well as by the development of the transportation field. in 2008, the values of the annual average concentrations of suspension powders exceeded the annual threshold value (40 g/m3) for the protection of human health, mostly in urban areas, as well as in the area of the major industrial pollutants (baia mare, rovinari). high values regarding the concentration of heavy metals were registered in two historical pollution areas, namely in maramure and sibiu counties, namely in the localities baia mare, cop a mic and media , where, in 2008, the annual average concentration of lead exceeded the annual threshold value for the protection of human health (0,5 g/m3). the year 2010 is the first target-term when romania must report certain progresses regarding the implementation of european directives in the field of water management, and part of the towns with over 100.000 inhabitants (bucharest, cluj, ia i, buz u, piatra neam , satu mare, constan a, gala i, timi oara etc.) must complete the works related to the tertiary stage water purification plants. the president of the balkan environmental association, environmental expert fokionas vosniakos, states that the major environmental problem in romania is that of waste waters, for which no biologic treatment is provided. soil pollution is mostly determined by the random storage of residues and waste materials resulted from the metallurgical industry, by the inadequate use of chemical fertilisers in agriculture, by floods, by natural disasters, acid rains and massive land clearing. the soil is subject to pollution such as the other environmental factors, but its recovery is much more difficult compared to water and air, as the self-purification processes are much slower. it is considered absolutely necessary, upon the identification and assessment of soil pollution intensity, to take into consideration the capital function thereof, namely the support and environment provided to terrestrial plants, the main means of vegetal production and the basic means of existence of humans themselves. with respect to non-renewable raw materials natural resources in romania, certain technologies determining the intense pollution of several areas of the country have been and still are exploited and processed; the extraction and use of fossil fuels (coal, mineral oil), mining exploitations, as well as the iron and steel and metallurgical industry, the energetic industry, the chemical industry, the petrochemical industry, the cellulose and paper industry, the building materials industry etc. had a major contribution to the pollution of environmental factors with common pollutants (sulphur dioxide, carbon dioxide, nitric oxides, ammoniac), with heavy metals, depositing powders and suspension powders, as well as other specific pollutants such as formaldehydes, hydrogen sulphide, carbon sulphide, chlorine, chloride etc. the efficient and ecologic conservation and development of energetic resources is extremely important, as the energetic sector, along the entire production chain – transport – distribution – consumption, generates about 90% of the polluting emissions in romania. the issue of waste management recently, the issues regarding environmental protection and especially the recycling of waste materials have become priority matters both for the romanian state, for romanian economy, and for private companies and nongovernmental organisations. unfortunately, environmental protection is not equally important for citizens, although our health, life quality and even the future of the planet mostly depend on our choices and on our care towards the environment. studies and scientific researches economic edition, no. 15, 2010 215 a society where consumption is the major activity, without granting the due importance to recycling, shall be governed by chaos. the uncontrolled circuit of waste materials in the nature, as well as the inadequate storage or destruction of the latter, may determine the deterioration of the environment, by the emergence of toxic emissions and highly concentrated and pollutant waste materials. we initially observe a highly important issue for our country: there are immense quantities of uncollected waste materials in romania. for example, in bucharest, in 2001, the quantity of uncollected waste materials amounted to 1.8 million tons, in 2003 it was reduced to 0.82 million tons, while in 2007 it increased to more than double, amounting to 1.75 million tons. according to a municipality plan, 90% of the waste materials in bucharest should be collected until 2013, 55% of the waste materials resulting from recyclable packaging should be sorted up to the above mentioned term, and 44% of the waste materials resulting from packaging should be recycled until 20122. despite the considerable efforts of the authorities, the selective collection is not recording the corresponding results, not only as a result of the slight education of the citizens, of the lack of a clear legal definition of the liability of each entity taking part in the collection-recycling-development cycle, but also as a result of the small number of waste materials recyclers, leading to the uselessness of all the efforts to separate the waste materials and of all the investments within the system. the statistical data of the national environmental protection agency and of the national institute of statistics indicate that, in 2008, approximately 99% of the waste materials produces in romanian towns were classified in class “b”, most of them being inadequate. out of the 225 deposits existing in the urban area, only 20 deposits meet the european regulations regarding environmental protection and health. in case the obligations towards the european union (e.u.) are not met, romania risks sanctions amounting to hundreds of thousands of euro per day3. the ministry of environment and water management elaborated the “national waste management strategy”, aimed to create the necessary framework for the development and implementation of an integrated waste management system, efficient both ecologically and economically. waste management includes all activities related to the collection, transport, treatment, development and elimination of waste materials. the liability for waste management activities lies with the generators thereof according to the principle stating that “the pollutant has to pay” or with the producers, as the case may be, according to the “producer’s liability” principle. the economic instruments encouraging the reflection of the costs related to waste management activities both in the price of products and in the producers’ status on the market, are actually financial stimulants, on the one hand, and penalties on the other hand, encouraging the waste management activities by means of prevention, reduction and recovery, determining in the same time the elimination of the management practices affecting the environment or opposing the principle stating that “the pollutant has to pay”. for the fulfilment of national and european objectives related to waste management, it is necessary to involve the entire society, represented by the major factors: central and local public authorities (environment, administration, health, industry, finance); waste generators (natural and legal persons); professional associations and research and development institutes; the civil society (consumers, nongovernmental organisations etc.). romania’s efforts for environmental protection in our country, environmental policy represents the system of environmental priorities and objectives, of the methods and instruments necessary for the accomplishment thereof, being 2 www.adevarul.ro, 3 september 2009 3 www.adevarul.ro, 9 june 2009 studies and scientific researches economic edition, no. 15, 2010 216 directed towards the insurance of the sustainable use of natural resources and the prevention of environmental quality deterioration. expenses related to environmental protection represent the economic measure of the efforts the society is making in order to handle the problems generated by the state of the environment, in a certain stage, and they mostly refer to the following activities: air quality protection; water quality protection; waste management; the reduction of noise and vibrations; the protection of natural resources and the conservation of biodiversity; other environmental issues (research-development, education and training, information). expenses at national level include: investments for environmental protection, current domestic expenses (current expenses incurred as a result of own environmental protection activities) and other expenses incurred by the public administration (granted subventions, transfers), excluding current external expenses (expenses related to the purchase of environmental protection services from third parties, as well as the taxes paid for environmental issues). in 2007, environmental protection expenses at national level amounted to approximately lei 11 billion, representing almost 2.7% of the gdp, while in 2008, they amounted to approximately lei 14.3 billion, representing about 2.8% of the gdp4. in2008, the percentage of investments made by specialised producers5 for environmental protection represented 35.0 %, of the total investments, followed by that of the public administration6 (33.4 %) and by that of unspecialised producers7 (31.6 %). the processing industry recorded 41.5% of the total expenses covered by unspecialised producers, while the extraction industry registered 29.6 %, and the sector related to production and the supply of electric and thermal energy registered 18.1%. the evolution of expenses related to environmental protection according to environmental domains8 and producer categories within the period 2007-2008 is presented in table no. 1. 4 www.insse.ro 5 these are the units carrying out environmental protection activities as the main scope of activity 6 it comprises all the units of the local and central public authority providing or financing noncommercial environmental protection services, for individual and collective consumption 7 these are the units carrying out environmental protection activities as a secondary or auxiliary activity to main scope of activity 8 it refers to specific environmental protection activities, namely: air protection, water protection, waste management, soil and underwater protection, the protection of natural resources and the conservation of biodiversity, the prevention of noise and vibrations, other domains (research and development in the environmental field, general environmental management, training etc.) studies and scientific researches economic edition, no. 15, 2010 217 t ab le n o. 1 . e xp en se s re la te d to e nv ir on m en ta l p ro te ct io n ac co rd in g to e nv ir on m en ta l d om ai ns a nd p ro du ce r ca te go ri es w it hi n th e pe ri od 2 00 720 08 t ho us an d l ei c ur re nt p ri ce s y ea r 20 07 y ea r 20 08 ou t o f w hi ch : ou t o f w hi ch : e nv ir on m en ta l do m ai ns t o t a l : u ns pe ci al is ed pr od uc er s sp ec ia lis ed pr od uc er s pu bl ic ad m in is tr at io n t o t a l : u ns pe ci al is ed pr od uc er s sp ec ia lis ed pr od uc er s pu bl ic ad m in is tr at io n a ir p ro te ct io n 1. 13 0. 35 3 80 3. 99 0 44 .6 14 28 1. 74 9 1. 61 9. 27 2 1. 24 2. 60 6 55 .9 84 32 0. 68 2 w at er p ro te ct io n 2. 69 7. 41 5 64 2. 08 5 1. 00 2. 41 7 1. 05 2. 91 3 3. 50 8. 76 7 78 8. 12 0 1. 35 2. 75 1 1. 36 7. 89 6 w as te m an ag em en t 6. 73 5. 35 3 47 9. 85 3 5. 84 3. 42 7 41 2. 07 3 8. 92 7. 76 7 1. 07 2. 45 7 6. 77 8. 03 6 1. 07 7. 27 4 so il an d un de rw at er pr ot ec tio n 95 7. 02 2 17 9. 37 5 27 .4 68 75 0. 17 9 76 0. 80 7 61 9. 36 0 65 .8 17 75 .6 30 pr ev en tio n of n oi se an d vi br at io ns 92 .1 34 19 .0 93 19 .7 28 53 .3 13 32 .5 94 8. 90 0 3. 16 5 20 .5 29 t he p ro te ct io n of na tu ra l r es ou rc es an d th e co ns er va tio n of bi od iv er si ty 25 9. 67 6 11 7. 20 2 39 .3 84 10 3. 09 0 21 2. 14 7 14 1. 97 4 21 .9 00 48 .2 73 o th er en vi ro nm en ta l do m ai ns 82 5. 34 3 50 1. 82 4 62 .3 16 26 1. 20 3 1. 41 6. 73 7 64 3. 10 7 50 .5 82 72 3. 04 8 t ot al e xp en se s: 12 .6 97 .2 96 2. 74 3. 42 2 7. 03 9. 35 4 2. 91 4. 52 0 16 .7 48 .0 91 4. 51 6. 52 4 8. 32 8. 23 5 3. 90 3. 33 2 so ur ce : a da pt at io n ac co rd in g to th e da ta p ro vi de d by th e n at io na l i ns tit ut e of s ta tis tic s, 2 00 720 08 , w w w .in ss e. co m studies and scientific researches economic edition, no. 15, 2010 218 the analysis of data according to environmental domains indicates the fact that in 2007 the “waste management” domain recorded approximately 53.0 % of the total expenses, followed by the “water protection” domain (21,2 %), in 2008 specialised producers incurred the highest expenses related to waste management (approximately 76% of the total expenses in this domain). with respect to water protection, the highest expenses were incurred by the public administration (39.0 %), while the highest expenses related to air protection were incurred by unspecialised producers (76,7 %). the environmental regional operational program (rop) is extremely important for our country, as it represents the document for the programming of structural funds and for cohesion, establishing the strategy for the allocation of european funds for the development of the environmental sector in romania, within the period 20072013. based on the approval of the above mentioned program by the european commission, as of 2007 until 2013, romania benefits of a major financial support aiming the implementation of certain projects for financing investments in the following environmental sectors: drinking water and sewage, waste materials, heat supply, floods and the coast area etc. the e.u. funds granted for the period 20072008 amounted to euro 709.675.328, and the actual amount contracted until 31.12.2008 was euro 700.096.995 (out of which euro 593.997.281 represented the contribution of the e.u.)9. over the past years, romania, as well as most e.u. member states, has been facing the negative effects of climatic changes. floods, drought or land clearing, major thefts and increasing forest fires are affecting our economic activity, our alimentary security, our infrastructure, health or our access to natural resources. at the summit regarding global warming held in copenhagen in 2009, our country proved implication in the fight against global warming by the progresses registered in fulfilling the objectives established by the kyoto protocol within the period 19902007 as well as by the current level of greenhouse gas emissions, which are under the provisioned objective by 37%. however, romania was criticised in copenhagen for being the only e.u. member state which did not grant a substantial budget for the conservation of protected areas and because we have no national authority for the management of these areas. in romania, protected areas represent a little over 5% of the national territory. with respect to our country’s efforts concerning the reduction of greenhouse gas emissions, the report of “climate change performance index 2009 (ccpi) drafted in december 2009 by the greatest ngo’s network in europe (climate action network europe) and by germanwatch organisation, place romania on the 30th out of 60 positions within a top of the countries recording performances in the fight against global warming. this classification includes industrialised countries or countries with emerging economies, which altogether generate 90% of the annual global carbon dioxide emissions. the ccpi study assessed the way in which the 60 countries implement constructive policies in the fight against climatic changes. actually, every country listed in the classification is listed with three quotas regarding the emissions level, the emissions raise tendency and the climate related policy. romania, having been classified on the 42nd position in 2008, is currently on the 30th position, with a score of 52.9. although the 12 positions gained by romania (within one year) may apparently seem to be a remarkable progress concerning the approach of climatic changes, this id mainly due to the commitments under the climate and energy 9 annual report regarding the state of the environment in romania in 2008, the national environment agency, page 330, http://www.anpm.ro/ studies and scientific researches economic edition, no. 15, 2010 219 package adopted by the european parliament in january 2009, namely a more coherent romanian policy in the field of environmental protection.10. our country’s average and long term objectives in the field of environmental protection imply an increased percentage of the departments structuring ecoindustries, regarding both the total added value and the total occupied population, as well as a smaller percentage of energetically intensive departments, concurring with an increased efficiency thereof, related to work productivity and competition. romania aims to promote “clean” technologies in industry, transportation, agriculture and waste management. even though romania presently produces only 11.7 mw based on the exploitation of wind energy, the assessments of the entire wind energy potential represent about 23.000 mw. until 2020, 24% of the gross domestic consumption in romania must be provided by renewable energy sources. with respect to the use of renewable energy sources, romania was the first eastern european country which adhered to the renewable energy and energy efficiency partnership. our country’s potential regarding the production of “green” energy is estimated to approximately 12% solar energy, the major potential areas being the danube delta, dobrogea and câmpia de sud. conclusions environmental protection in our country must be a priority for all the factors implied in economy and in the contemporary reality: the romanian state, nongovernmental organisations and the citizens. in order to prevent environmental deterioration given the pollution generated by the romanian industry, it is necessary to improve the waste management system, by granting certain incentives for the reduction of the generated waste materials and for the maintenance of industrial spoils. this way, we may limit the pollution of the soil, of the surface and underground waters, and we may prevent the deterioration of ecosystems. the investors must be attracted to the abandoned industrial areas, which generated serious deteriorations of the environment and which require rehabilitation solutions based on new investments, such as the town cop a mic . the financial and material efforts shall be considerable, they shall require a long time to enter the economic circuit, but they shall provide a clean environment, as well as jobs for the future generations. investments having an impact over environmental protection are extremely important for the romanian economy. potential investments requiring substantial financial, material and human efforts form the state and from private companies, from nongovernmental organisations, as well as financing from the e.u., are as follows: the production of energy out of agricultural or industrial waste materials or hospital waste materials; the increased production of hydro-energy and renewable energies, as we have a high potential for the production of solar and wind energy; the development of technologies for the collection and storage of carbon dioxide; the implementation of advanced technologies for the collection, processing and recycling of waste materials; the maximum use of rural fuel – biomass – by the use of all residues resulted from wood exploitation, sawdust and other wood debris, as well as agricultural waste materials; 10 climate change performance index 2010 – climate action network europe, december 2009, page 6, copenhagen, http://www.germanwatch.org/ccpi studies and scientific researches economic edition, no. 15, 2010 220 the production of biogas by the methanisation of organic waste (manure, crop foodstuffs, biodegradable waste materials), for them to be used in the heat supply system, in the production of electric current and in the generation of high quality fertilisers for agricultural areas; the reduction of greenhouse gas emissions by the elaboration of certain strategies and action plans for long-term climatic changes. a priority objective is the enforcement of the action plan for promoting ecotechnologies, mostly focusing on the maximisation of efforts to adjust to e.u. plans and on a greater access to finances granted to the units with innovation capacities regarding eco-efficient products and materials. for this purpose, at the level of the national policy concerning environmental strategies, it is necessary to coordinate the measures related to fiscal policy, to state grants policy, to policies regarding small and medium sized enterprises in the field of innovation and research, in order to accomplish the reorientation of the romanian economic structure towards the increased percentage of “clean” economic branches. bibliography 1. bran florina, ioan ildiko, tric carmen (2004), the eco-economy of ecosystems and biodiversity, ase publishing house, bucharest 2. climate change performance index 2010 – climate action network europe, december 2009, copenhagen, http://www.germanwatch.org/ccpi 3. press release no. 212 on 15 october 2009 – expenses related to environmental protection in 2008, the national institute of statistics; bucharest 4. press release no. 212 on 15 october 2008 – expenses related to environmental protection in 2007, the national institute of statistics; bucharest 5. law no. 137/1995 on environmental protection, republished and amended 6. law no. 426 on 18 july 2001 for the approval of government emergency ordinance no. 78/2000 concerning the regime or waste materials 7. annual report regarding the environmental state in romania in 2008 – the national environmental protection agency, http://www.anpm.ro/ 8. the national waste management strategy – ministry of environment and water management, approved by government decision no. 1470/2004 9. www.adevarul.ro studies and scientific researches economic edition, no. 15, 2010 221 studies and scientific researches. economics edition online first, april 2018 2 the role of corporate governance in achieving accounting information quality (field study in the mishraq sulfur state co.) munadhil abd aljabar alsalim cihan university / sulaimani, kurdistan region, iraq munadhil2000@yahoo.com honer mohamed mohamed amin darbandikhan technical institute honar.mohammed@spu.edu.iq ali youssef university of mosul aliyousifmg@gmail.com abstract under the new worldwide changes that were produced by the economic data and technological revolution, corporate governance considered as one of the modern terms. its importance increased in the business sector because it plays a role in managing any company, and protecting the shareholders’ rights. there are several thoughts on the importance of corporate governance. some thought that corporate governance is important in the public sector because it influence the economy. others thought corporate governance is very important in the privet sector. the importance of the term, corporate governance, increased in all institutions and in all advanced and emerging economies in the last few decades especially after the economic and financial crisis that many countries underwent. these crises affected the global financial market; such as, the crisis in southeast asia in 1997. moreover, many major international companies especially the american companies collapsed in fall 2008 because they used complex accounting methods in order to hide their loses and manipulate the rights of people; such as, shareholders, lenders, suppliers, and even the civil society. hence, the governance became one of the important topics that are applied in both privet and public companies. the reason many shareholders lost their trust in the financial market is that companies’ managers and auditors concealed the financial and accounting statements that are applied in all kind of companies. mistrust was created in the financial reports, and it increased anytime one of the huge companies stumbled. therefore, this study shows the overlapping and reciprocal relationship between corporate governance and the accounting information quality. apparently, the accounting information is affected by the rules and mechanisms of governance, and applying it means increasing the trustworthy of the accounting information that are included in financial statements that were prepared for all interested parts. keywords governance; accounting; information; quality; corporate jel classification: m41 hypotheses the first prime hypotheses: there is a statistical relationship in the role of corporate governance in achieving accounting information quality. from the prime hypotheses, other sub-hypotheses are diverged: 1. there is a statistically significant correlation between disclosure, transparency and the quality of accounting information. 2. there is a statistically significant correlation between board responsibilities and the quality of accounting information. 3 3. there is a statistically significant correlation between the principle of shareholders’ rights and the quality of accounting information. 4. there is a statistically significant correlation between the principle of equal treatment of shareholders and the quality of accounting information. 5. there is a statistically significant correlation between the principle of the existence of an effective basic governance framework and the quality of accounting information. the study’s goals the study aims to highlight the corporate governance and its effect on accounting information by achieving the following goals: • clarifying the importance and concept of corporate governance, characteristics and determinants. • understand the objectives and principles of corporate governance. • to determine the quality of accounting information and its impact on the rules of governance. • clarifying the role of corporate governance in the quality of accounting information. • making recommendations based on the results of the study. the importance of the study its importance is gained from the increasing interest in governance and the range of its effect over companies in the last years by researchers and other interested people. also, governance is beneficial because it contributes in achieving accounting reports quality. moreover, this research considered as a scientific contribution that is used to solve problems in particular sectors in order to enhance the role of corporate governance. the method of the study in order to achieve the objectives of this study, the analytical descriptive approach was adopted because it is consistent with the nature, purposes, and the available library resources of the study; hence, this study is purely theoretical. theoretical framework of corporate governance corporate governance concept historians such as adolf barley and gardensmins have addressed the concept of corporate governance in their book “modern society and private equity,” that deals with the performance of modern economic unity, the efficient use of resources, as well as issues related to separation of ownership from management. tridawi was established in 1985 and has played a key role in identifying the causes of misrepresentation of the facts in the financial reports and making recommendations on reducing such incidences. the commission submitted its first report on corporate governance and published it in 1987 in which it called for a sound and independent regulatory environment with objective internal audit that gives a disclosure of the effectiveness of internal control (1). the application of the governance system is based mainly on many laws, regulations, and procedures; such as, corporate laws, capital markets and banks laws, competition and antitrust laws, consumer protection law, tax 4 laws, and labor and environmental protection laws. therefore, there are many definitions related to corporate governance based on the multiplicity of writings and differences of opinion of writers and researchers. the following are some definitions related to the concept of corporate governance. the term "governance" includes many aspects including: 1. wisdom: the guidance required. 2. judgment: it requires control of things by setting standards and restrictions that control the behavior (taleb and al mashhadani, 2011). 3. referencing: to refer to moral and cultural references and experiences obtained through previous experiences. 4. appealing: to appeal to justice, especially when the authority of the administration is twisted and manipulated for the interests of the shareholders. corporate governance is a term that has been given several names in arabic; such, as institutional governance, good governance, or wise management ... etc. however, the most commonly used term in the academic and research aspects are "corporate governance." governance is "the system by which the organization's work is directed and monitored at its highest level in order to achieve its objectives and to meet the standards of responsibility, integrity and transparency." "good governance," is defined by the world bank (1992) “as synonymous with effective and optimal economic management that seeks to answer various private criticisms directed towards the states and institutions. these criticisms question the structural reforms that move in a topdown way that led to institutional vacuum instead of mobilization of capacities and energies that the society is enriched by. good governance, participatory development, human rights, and democracy should be linked. moreover, appointing and defining the respecting of the laws, conducting the public sector, fighting bribery, and reducing excess and overpriced expenses in the administrative and military aspects also should be linked. furthermore, the united nations development program (undp) believes that governance is "the exercise of economic, political, and administrative powers to manage the community’s affairs at all levels.” similarly, the organization for economic co-operation and development (oecd) defined the concept of corporate governance in 1998 as, "the system that directs and regulates the business of the company. in other words, it describes and distributes the rights and duties between different parties in institutions; such as, the board of directors, management, shareholders and stakeholders. also, it sets the rules and procedures that are needed to make decisions regarding the affairs of the company. besides, it sets the objectives and strategies necessary to achieve these decisions, and it sets the follow-up principles in order to evaluate and monitor performance” (oecd, 2008). it also could be defined as, "the set of rules and procedures that determine the decision making, controlling and monitoring processes within the company” (castrasse, 2005). in addition, governance is defined by the international finance corporation (ifc) as, “the system by which companies are managed and controlled” (al-khudairi). governance is, “a comprehensive system that includes measures of good administrative performance and contains indicators on the existence of controlling methods that prevent any related internal or external party in the entity from adversely affecting the activities of that entity; hence, ensuring the optimal use of the available resources to serve the interests of all parties in a fair manner that fulfills the positive role of the institution in the interest of its owners and society as a whole” (unpd, 1997). the characteristics and principles of corporate governance a. corporate governance characteristics: corporate governance has a group of characteristics that are summarized below (fawzi, 2003): 5 1. discipline: that is to follow the proper and correct moral behavior. 2. transparency: that is to present the true picture of everything that happens. 3. independence: that is to eliminate the unnecessary influences and pressures of work. 4. responsibility: that is the presence of reliability of all interested parties in the institution. 5. accountability: that is to be able to evaluate and rate the work of the board of directors and the executive management. 6. justice: that is to respect the rights of the various stakeholder groups in the institution. 7. social responsibility: that is to look at the company as a good economic agent. b. principles of corporate governance: in 1999, the organization for economic co-operation and development (oced) issued five basic principles of corporate governance that involves in the development of legal and institutional frameworks for the governance to be applied in public or private companies these principles are as follows (omar and sayeh, 2011): 1. the principle of shareholders' rights. 2. the principle of equal treatment of shareholders. 3. the principle of the role of stakeholders in corporate governance. 4. the principle of disclosure and transparency. 5. the principle of the responsibilities of the board of directors. determinants of corporate governance there are two sets of determinants that the level of quality and good application of corporate governance depend on, as follows (haddad, 2008): 1) external determinants: the existence of such determinants ensures the implementation of laws and regulations that help to improve the management of the company. this group includes: a) the general climate of the organized investment of the economic activities in the country; such as, laws, legislation, and procedures governing the labor market and companies. b) organizing competition and preventing monopolistic practices and bankruptcy. c) the efficiency of the presence of the financial sector that provides funds needed to establish projects, and the efficiency of the regulatory bodies in the provisions of the control of companies. d) the existence of some self-regulated institutions; such as, professional associations and companies operating in the stock market. e) the existence of private institutions; such as, law offices and financial investment advisory offices. 2) internal determinants: these determinants include: a) principles, instructions, and rules that determine the style and form of decisions within the company. b) the distribution of powers and functions between the general assembly, the board of directors, and the executive directors in order to reduce the conflict between the interests of these parties. c) governance, ultimately, leads to increased confidence in the national economy. d) increase and deepen the labor market to mobilize savings and raise investment rates. e) ensuring the rights of the minority and small investors. f) support and encourage the growth of the private sector, especially its competitiveness. g) assisting projects to obtain financing for their projects and to make profits. h) create jobs. 6 figure 1: principles of corporate governance source: prepared by the researchers using the information provided by majid ismail, “the effect of the application of governance rules on accounting disclosure and quality of financial reports”, an advance submission to fulfill the requirements for master's degree, 2009, p. 19 the importance and objectives of governance the importance of corporate governance and its objectives are discussed below, respectively: 1) corporate governance objectives: corporate governance has many good objectives, including: disclosure and transparency the role of stakeholders in corporate governance equal treatment of shareholders responsibilities of the board of directors shareholders' equity the availability of basic rights. in other words, shareholders have the right to be informed when a decision is made because they have the right to: participate by voting. facilitate active participation. vote in person or in absentia. the disclosure of structures and arrangements. the equal treatment of shareholders. to prevent internal trading of personal image. the disclosure of operations. to work according to complete information. the fair treatment of shareholders. the application of ethical standards. the presentation of policies. the independent substantive judgment. the timely availability of information. the interests are according to the law or agreements. to compensate for any violation of the rights. to develop mechanisms for participation. the timely information. attention to practices. an insolvency framework and another one for creditors. the governance system should ensure the rights of stakeholders as it is defined by law everyone has an interest in the company; such as, shareholders, employees, creditors, customers, and suppliers, as defined by the law, should be given the opportunity to develop the mechanism of participation of employees in improving performance. to provide information to stakeholders in a periodic and timely manner. principles of corporate governance 7 a) achieving transparency, fairness, and protection of shareholders' rights in the company. this is done through establishing rules, regulations, and controls aimed to achieve transparency and justice. b) establishing administrative controls, rules, and structures that grant the right to hold the company accountable before the general assembly, and guarantee the shareholders' rights in the company. c) developing the investment and its flow through deepening the investor confidence in financial markets. d) developing savings, maximizing profitability, and creating new jobs. e) working on increasing the good financial performance through holding the management accountable to shareholders. f) good and effective control of the performance of economic units to develop and improve their competitiveness. g) work to encounter unacceptable behaviors, whether on the material, administrative or moral side. h) providing new jobs. i) attract foreign and domestic investments, and reduce the leaving of national capital abroad. j) the transparency in accounting and financial auditing procedures to reduce and control corruption in the company. k) develop, improve and assist decision-makers; such as, managers and boards to build a strategy that serves the administrative and financial efficiency of the company. 2) the importance of governance the importance of corporate governance is attributed to the efficient use of resources, maximizing the value of the company, and enhancing its competitiveness in the markets in order to enable it to attract local and international sources of finance for expansion and growth, as well as enabling it to create new job opportunities while ensuring the stability of financial and banking markets. hence, achieving the efficiency and economic development required. in addition, the importance of governance can be illustrated through the following points: • emphasizing the responsibilities of the administration, enhancing its accountability, improving accounting, financial, and administrative practices, and emphasizing transparency will help to detect, take due action, and remedy the causes and effects of financial fraud and administrative corruption. • emphasizing the responsibilities of management, strengthening its accountability, protecting the company's assets, protecting the rights of shareholders and others by enhancing their role in monitoring the company's performance and ensuring transparency would help protecting the company and its employees from manipulation, financial fraud, excessive wealth, administrative corruption, crises, and bankruptcy. • improving the performance of the company, its economic value, the value of its shares, improving its accounting, financial and administrative practices, fairness of transactions, and fairness and transparency of its information will strengthen the company's competitive capabilities as well as its ability to attract investment and growth. the quality of the accounting information and the factors affecting it the concept of accounting information quality quality in this field means the credibility of the accounting information that is contained in the financial reports and its benefits to users. in order to achieve this, it 8 must be free from distortion and misleading. also, it must be prepared in the light of a set of legal, directorial, professional, and technical standards in order to achieve the purpose of its use (hammad, 2005). furthermore, accounting information quality means those characteristics that should designate the useful accounting information that is useful for the preparation of financial reports because of its role in assessing the quality of information that result from the application of alternative accounting methods. figure 2 illustrates the accounting information system in its modern sense source: donald e. kieso; jerry j. weygandt; and terry d. warfield, intermediate accounting, tenth edition, 2001. accounting information systems accounting, like other sciences, is governed by a system of its own. this system consists of three main parts: input, processing, and output. like any other system, it is governed by several policies and strict procedures that cannot be exceeded for any reason, regardless of the computerization of the system. factors affecting the quality of financial reports the quality of financial reports is the main objective that companies seek to achieve, but there are a number of factors that affect the process of information production, delivery, and provide the elements of the accounting system, and it can be described below (hussein, 2000): 1) physical components: it includes all physical components such as manual and automated accounting tools and instruments that are used to produce accounting information. 2) human components: the group of people operating the accounting system and its employees. 3) financial components: it includes all funds available to the system and used to carry out its functions and roles. accounting information system 2. accounting session -diagnosis and registration. -registering in the journal. -migration. -trial balance. -settlement restrictions. -closing restrictions -the balance of the audit after closure. -reverse restrictions. 3. the use the worksheet. -entering adjustments. -processing columns of worksheets. -preparation of financial statements. -closing restrictions and vice versa. -closing monthly lists and annual closing 1. accounting information system -basic terms. -the debtor and the creditor -basic equation. -financial statements and equity statements structures. 9 4) database: it contains a set of applied procedures and data necessary to run the system and achieve its objectives. characteristics of the quality of accounting information quality information concepts define the characteristics of useful accounting information, or the basic rules to be used to assess the quality of accounting information. the identification of these characteristics helps officials to develop accounting standards, and to prepare financial statements in evaluating accounting information that result from the application of alternative accounting methods. these characteristics are usually of great benefit to financial reporting officers because it helps them assessing the quality of information that result from the application of alternative accounting methods (al-shirazi, 1990). the accounting information systems are characterized by a number of characteristics, as follows (al-hayali, 2006): 1) appropriate the ability of such information to support decision makers, and its relevance to the problem at hand. also, this information should be appropriate to the financial circumstances of the company, and it must help decision makers to confirm or modify their previous expectations, or be appropriate information for decision-makers to predict future events. 2) temporary the availability of information when we really need to make a decision and it must not be obsolete when it is received, or when there is a desire to use them. 3) accuracy: it means that accurate information needs to be true and error-free. “information resulting from inaccurate data or unreliable sources of accuracy will be misleading to both the beneficiary and the manager; thus, leading the business and the decisionmaking in the wrong direction” (hammad, 2005). 4) speed of obtaining the information this happens by comparing automated data systems with manual. 5) inclusion the degree of perfection of information. this condition is intangible and difficult to measure. 6) clarity the information should be free of ambiguity, and the value of the factor of clarity can be determined. 7) flexibility the ability of the information to intensify in order for it to be used by more than one user. this condition or standard is difficult to measure accurately, but can be evaluated with a wide range. one of the basic characteristic of information is the ability of its users to directly understand it. in order to achieve this goal, it is assumed that users have an appropriate level of knowledge of accounting assets (taleb, 2001). this means: the capability of users to understand the information. a reasonable level of user’s knowledge is assumed. information on important issues should not be ruled out even if they are relatively complex. 8) feasibility the establishment of any rational system must have the positive equation of return on cost; that is, the beneficiary of the system to get the best services with the least effort and time (mubarak and bishousha, 2009). 9) reliability 10 the reliability of accounting information is estimated by the amount of information published in financial reports that are error-free, impartial in presentation, and honest in its perception of economic events and processes. the reliability of accounting information considered as a necessity for individuals who do not have the time and expertise to evaluate the contents of financial reports and to choose the information that is useful to them. 10) comparability: this feature enables those who use financial accounting information to recognize the true aspects of the similarity and difference between the performance of an entity and the performance of other entities over a certain period of time. also, it enables them to compare the performance of the entity itself between different time periods. similarities and differences aspects arise as a result of the similarities or differences in the circumstances and events that affect different establishments, or the circumstances in which the same entity is affected over successive periods of time. for accounting information to be comparable, the following two conditions must be met (saaid, 1996): 1) the ease of presentation and the use of a standardized method of accounting measurement make it easy to evaluate this information. 2) constancy in measuring and presenting the information from time to time. quality of accounting information standards: the quality of accounting information is achieved through the availability of the following criteria: 1) legal standards: many professional institutions in many countries seek to develop and comply with the quality standards of financial reporting by enacting clear and structured legislation and regulations for the work of these institutions, and providing an effective organizational structure that regulates the performance aspects of the entity in accordance with the legal requirements that obligate companies to adequately disclose their performance. 2) censorship standards: the control component is seen as a component of the management process on which both the board of directors and investors are based. the success of this component depends on the existence of effective control that determines the role of the audit committees and the financial and administrative control bodies in organizing the financial treatment, as well as the role of shareholders and related parties in applying the rules of governance by censorship bodies to ensure that their policies and procedures are implemented effectively, and that their financial statements are credible with continuous feedback, risk assessment, analysis of processes, management performance assessment, and the application of laws and regulations. obviously, censorship standards play an important role in modifying the rules of governance. again, the censorship standards are concerned with examining and evaluating the compliance with policies and procedures that facilitate the allocation of resources to improve the efficiency of the establishment and to increase the confidence of users of the financial statements. eventually, that will have an impact on strengthening the positive role of the censorship process. 3) professional standards: accounting professional bodies and boards are interested in preparing accounting and auditing standards to control the performance of the accounting process. consequently, highlighting the concept of management accountability by the owners to check on their investments, and that in turns led to the emergence of the need to prepare financial reports that enjoy a good level of integrity and honesty. in brief, the implementation of the concept of accountability is consistent with the corporate governance approach that requires transparency and disclosure of information and supports the process of communication and cooperation between owners and management; 11 thus, leading to the success of the establishment (alsalim and hama-amin, 2016). 4) technical standards: the availability of technical standards leads to the development of the concept of information quality, which in turn reflects on the quality of financial reports, increases the confidence of shareholders, investors and stakeholders in the company, and leads to increase in the investment. the international accounting standards board (iasb) and the us financial accounting standards board (fasb) have directed several standards that contribute to providing and controlling the qualitative characteristics of the required financial accounting information. therefore, it is clear that the existence of standards to control the quality of financial reports has a significant impact on the development and activation of the role of regulators of governance through the establishment of structures used to regulate the administrative process, the enactment of laws governing the work of companies and ensure the rights of shareholders, and the clarification of the importance of censorship and the role assigned to the external auditor. a censorship system showing the need for accountability would increases investor confidence in the management of the establishment. hence, accounting and auditing are closely related to the rules of governance. in other words, accounting and auditing are among the most scientific and professional fields affected by the principles and procedures of governance. moreover, the principles and procedures of governance play a major role in the development of the accounting and auditing profession through issuing legislations and laws governing the censorship and control processes. corporate governance and its role in achieving the quality of accounting information good governance is the starting point for any discussion about accounting information. also, financial and accounting transparency is only a part of the larger corporate governance framework therefore reliable mechanisms and tools are needed to ensure the quality of the accounting information. in addition to the principle of disclosure and transparency that can be applied from the availability of quality information that directly reflected on the financial market in particular. therefore, through this aspect, it will be tried to address: first: the tools used by governance to enhance the quality of accounting information. second: the interrelationship between governance, disclosure, and the quality of financial reporting. third: the implications of governance rules on disclosure and quality of accounting information in financial reports. corporate governance tools in order to effectively implement corporate governance, mechanisms and tools must be available to help. these tools represent a set of mechanisms, namely the auditing. in this paper it will be focused on the external audit and the audit committee (alsalim, 2016). 1) external audit external auditor adds confidence and credibility to accounting information by providing a neutral and technical opinion on the validity and fairness of the financial statements prepared by the economic units through a report prepared by the external audit annexed to the financial statements. the role of external audit has become essential and effective in the field of corporate governance because it limits the conflict between owners and management of economic unity. in other words, eliminating the procuration problem. it also limits the problem of information asymmetry, particularly 12 between managers and shareholders. furthermore, external audit reduces the problem of congenital deviation in economic units (isa, 2008). 2) audit committee several scientific studies in the united states have shown that the establishment of audit committees within companies will increase the quality of accounting information and reports issued by companies to third parties. the existence of an independent committee to oversee the preparation of financial reports, to strengthen the independence and role of the external auditor, and to ensure the compliance with the principles of governance, will necessarily increase the confidence of investors and other external parties that base their decisions on the basis of this financial information issued by companies in these reports. moreover, many international and financial stock exchanges are now demanding the audit committee in the registered companies to issue a report within the financial reports in order to increase the quality and credibility of the information contained therein. also, the audit committee should ensure that the disclosed accounting information is adequate, and it was prepared in accordance with generally accepted accounting principles (saban and soliman, 2005). through the previous tools, the accounting information can be reached by achieving different criteria for the quality of accounting information. the relationship of governance rules to disclosure and quality of financial reports: the proper application of the principles of corporate governance constitutes an effective input to the quality of financial reports and the resulting information. the application of these principles affects the degree and level of accounting disclosure, which emphasizes that disclosure, transparency and corporate governance are two sides of the same coin, and they affect and influence each other. if disclosure is one of the most important principles of governance, the framework of corporate governance should be disclosed in a manner that is consistent with financial and accounting quality standards. the direct impact of applying the rules of governance is to restore confidence in accounting information by achieving the comprehensive meaning of these information taking into consideration that the information produced by the financial reports are one of the most reliable bases for measuring the size of risks of various types; such as, market risks, liquidity and interest rate risks, and business, management and exchange rates risks. moreover, the application of governance principles has a role in the prediction process that considered as another input that is used to analyze the investment decision in the stock market which depends on a main assumption. this mean assumption infers that each security paper has a real value that can be accessed through accounting information by studying the accounting revenue, the rate of distributions, the growth rate, and some accounting ratios. also, financial reports affect investors' decisions by providing them with information about the companies that put their shares on the financial market before the make a buy or sell decision to support and rationalize that decision. the implications of governance rules on disclosure and quality of accounting information in financial reports: the existence of a strong disclosure system and the quality of accounting information encourage the real transparency of listed companies, and it is considered as a key factor for the shareholders’ ability to exercise their property rights on a well-researched basis. experiments show that accounting disclosure and the quality of accounting information contained in the financial reports are a powerful tool for ascertaining the behavior of companies, and protecting the rights of the investors. in other words, adequate disclosure of information in a timely manner can contribute to attracting capital, and 13 maintaining confidence in the capital markets. additionally, the importance of disclosure and the quality of financial reports are also demonstrated by the increasing need of joint stock companies to be financed by money markets, stock exchanges, and bonds. disclosure is a prerequisite for the establishment of financial markets, which are often overseen by professional or quasi-governmental bodies that require companies that are listed in the financial market to follow procedures, laws, and basic rules that are determined by the profession, so that disclosure and published financial reports will gain credibility for the users and shareholders. figure 3: the role of corporate governance in enhancing the quality of accounting information and its impact on the financial market: source: mohamed ahmed ibrahim khalil, "the role of corporate governance in achieving the quality of accounting information and its implications on the stock market an empirical study", working paper, saudi capital market symposium: a future perspective, king khalid university, p. 13, 14. corporate governance rules different standards of information quality technical standards legal standards reflected on the investor's decision profitability of shares trading stock prices affects the stock market trust in information ability to make a decision rationale in decision-making professional standards regulatory standards 14 view and discuss the results of the field study viewing and studying the concept of corporate governance in achieving the quality of accounting information, and the problems that are exposed to it and hindering its business. a description of the study community: 1) targeted community: a random sample was selected from the study population that of (80) individuals divided between different sections and branches. the sample consisted of about 60 % of the study population. a group of 100 individuals were tested, but only (80) questionnaires were retrieved. 2) how to measure variables: the questionnaire: the questionnaire consists of the following parts: the questionnaire was based on a random sampling method. a sample of some administrative staff of the general company of al-mishraq was chosen, and the questionnaires were distributed among the sample in order for them to express their opinion by the appropriate answer according to likert scale as follows: 1) strongly agree ......... given by the number (5). 2) agree ……............... given by the number (4). 3) neutral...................... given by the number (3). 4) disagree.................... given by the number (2). 5) strongly disagreeable ….....given by the number (1). also, it should be noted that the value (3.4) is the value of the arithmetic mean (weighted average) in this measure since the value of the strongly disagree choice is (1) not (0). thus, it is divided into four categories (1-2), (2-3), (3-4), (4-5). it is clear that the value of each category is (0.8) which is the product of dividing the (4) stages on (5) and not (1). weighted average (arithmetic mean value) level from 1 to 1.79 strongly disagree from 1.80 to 2.59 disagree from 2.6 to 3.39 neutral from 3.4 to 4.19 agree from 4.20 to 5 strongly agree test the validity of the questionnaire first method: the trustworthy of the judges the questionnaire was presented to a group of judges, all of whom are specialists in management and accounting and are from different universities. the views of the judges were met, and the necessary deletions and modifications were made based on the proposals that were made by them. an emphasis was placed on the clarity of the statements, their relevance, and their ability in measuring what they were set up for. based on these views, the questionnaire was prepared in its current form. second method: testing the constancy coefficient in the alpha cronbach method cronbach’s alpha n of items 0.967 20 source: prepared by researchers in light of the results of the statistical program (spss). the stability of the tool means that if the questionnaire is re-applied under similar circumstances, the same results will be obtained. in other words, the answer to the questionnaire would be somewhat the same if it was repeated by the same people at different times. now, this does not mean that the results will be in a perfect match of 15 100%, but may be close to the obtained results. after applying the alpha cronbach index to all of the questions, which are (20) questions, the result of the coefficient of alpha cronbach was (0.967), which indicates the high ability of the study tool to measure what it was designed for. reviewing and distributing the answers: this study can identify the main characteristics of the study sample through the mean, standard deviation, and arithmetic mean. also, it is possible to identify the response direction of the study sample if it is positive, negative or neutral with statistical analysis of the hypotheses of the study and its proof. it consists of the following demands: 1) statistical analysis of the study sections: corporate governance table 1 consists of the questions that include the ideas discussed in the theoretical part of the study which covers the statements that can indicate the role of corporate governance and its application in the company. table 1 shows the average answer for each term. each term with an average above (3.4) is an evidence of the consent of the respondents to that term. also, the approval rate should be more than (60%). table 1 shows the responses of the study sample to the statements related to the role of corporate governance. the mean averages for this variable ranged between (3.36 3.63) with an average of (3.63) and a standard deviation of (0.60). thus, this reflects the convergence of the views of the study sample members. moreover, this aspect includes the approval of the study sample that the company depends on the role of corporate governance in order to exchange information, rely on high-caliber cadres to carry out business, strive to own, and constantly update decisions, and obtain sufficient information about suppliers in order to make proper decisions. in order to know that the respondents agree on the content of the whole aspect, (one sample t-test) must be calculated. table 1: the sample’s response to the role of corporate governance. phrases the scale m e a n s td . d e v ia ti o n r e la ti v e w e ig h t 1 2 3 4 5 s tr o n g ly d is a g re e d is a g re e n e u tr a l a g re e s tr o n g ly a g re e 1 ensure that there is a basis for an effective corporate governance framework. ratio 0 6 24 42 8 3.650 .7647 0.73 repeat 0 7.5 30.0 52.5 10.0 2 guarantee the shareholders' rights ratio 0 10 12 49 9 3.712 .8297 0.74 repeat 0 12.5 15.0 61.3 11.3 3 ensure a fair treatment of shareholders. ratio 1 3 28 36 12 3.687 .8205 0.73 repeat 1.3 3.8 35.0 45.0 15.0 4 ensure the rights of stakeholders with the bank. ratio 1 8 18 40 13 3.700 .9056 0.74 repeat 1.3 10.0 22.5 50.0 16.3 5 ensure disclosure and transparency. ratio 1 5 14 44 16 3.862 .8530 0.77 repeat 1.3 6.3 17.5 55.0 20.0 6 ensure that the board of directors holds accountable before the shareholders. ratio 0 7 27 33 13 3.650 .8583 0.73 repeat 0 8.8 33.8 41.3 16.3 7 ratio 2 9 17 38 14 3.662 .9801 0.7 16 there are administrative controls, rules, and structures that hold the management of the company accountable before the general assembly, and guarantee the shareholders' rights in the company. repeat 2.5 11.3 21.3 47.5 17.5 8 transparency, fairness, and protection of shareholders' rights in the company. ratio 0 11 17 30 22 3.787 1.002 0.75 repeat 0 13.8 21.3 37.5 27.5 9 monitoring the good financial performance by holding the management accountable before the shareholders. ratio 0 16 22 28 14 3.500 1.006 0.7 repeat 0 20.0 27.5 35.0 17.5 10 impose good and effective control over the performance of the economic units in order to develop and improve competitiveness. ratio 2 19 15 36 8 3.362 1.034 0.6 repeat 2.5 23.8 18.8 45.0 10.0 11 transparency in accounting procedures and financial auditing in order to reduce and control the corruption in the company. ratio 3 12 26 30 9 3.375 .9984 0.67 repeat 3.8 15.0 32.5 37.5 11.3 general arithmetic mean 3.63 0.60 0.72 source: prepared by the researchers in the light of the results of the statistical program (spss). this test is used to examine whether the mean variable of one sample is equal to a constant value. in other words, the phrase is considered positive, meaning that the respondents agree with its content, if the calculated value (t) is greater than the tabular value (t) at the appropriate degree of freedom with a level of significance (0.05), or a level of significance less than (0.05), and a relative weight that is greater than (60%). similarly, the phrase is considered negative, meaning that the study sample does not agree with its content, if the calculated value (t) is less than the tabular value (t) at the appropriate degree of freedom with a level of significance less than (0.05), and a relative weight that is less than (60%). finally, the views of the study sample shall be neutral if the level of significance is greater than (0.05) (kathem, 2013). table 2: the value of (t) calculated for the corporate governance role aspect (t) calculated df sig. (2-tailed) mean difference 53.563 79 .000 3.63 source: prepared by researchers in the light of the results of the statistical program (spss) table 2 shows the value of (t) calculated is (53.563) while the value (t) tabular at a degree of freedom (79) is (1.99). therefore, it is clear that (t) calculated is greater that (t) tabular. in other words, the aspect is positive and its phrases were approved on by the study sample. also, the level of significance is smaller than (0.05), and the relative weight (0.72). in other words, the sample members are able to form a clear vision of the direction of this aspect. 17 2) information accounting quality: it contains (9) phrases (questions) containing the ideas that were addressed in the theoretical part of the study, and it is analyzed as follows: table 3: study sample member’s response to the quality of accounting information phrases the scale m e a n s td . d e v ia ti o n r e la ti v e w e ig h t 1 2 3 4 5 s tr o n g ly d is a g re e d is a g re e n e u tr a l a g re e s tr o n g ly a g re e 12 the ability of this information to support decision makers and its relevance to the problem at hand. rate 0 0 21 29 30 4.112 .7954 0.82 repeat 0 0 26.3 36.3 37.5 13 there is a database that contains a set of practical procedures and data necessary to operate the system and achieve its objectives. rate 0 6 11 41 22 3.987 .8493 0.79 repeat 0 7.5 13.8 51.3 27.5 14 accounting information systems help to study the external environment surrounding the company. rate 2 9 22 28 19 3.662 1.042 0.73 repeat 2.5 11.3 27.5 35.0 23.8 15 the company regularly collects information on the financial statements. rate 3 8 20 35 14 3.612 1.01 0.72 repeat 3.8 10.0 25.0 43.8 17.5 16 the company predicts its financial needs continuously. rate 3 11 9 45 12 3.650 1.020 0.73 repeat 3.8 13.8 11.3 56.3 15.0 17 the company evaluates its financial position at various times. rate 5 17 16 35 7 3.275 1.090 0.65 repeat 6.3 21.3 20.0 43.8 8.8 18 financial information systems provide decision makers with the data they need in a timely manner. rate 2 6 26 42 4 3.500 .8113 0.7 repeat 2.5 7.5 32.5 52.5 5.0 19 the company reviews its accounting data through a set of computerized information systems. rate 2 10 22 38 8 3.500 .9277 0.7 repeat 2.5 12.5 27.5 47.5 10.0 20 the information is unambiguous, and the value of clarity factor can be determined. rate 5 4 37 30 4 3.300 .8915 0.66 repeat 6.3 5.0 46.3 37.5 5.0 general arithmetic mean 3.62 0.59 0.72 source: prepared by researchers in light of the results of the statistical program (spss) table 3 shows the responses of the study sample to the statements related to the quality of accounting information. the mean averages for this variable ranged by (3.27 4.11) with an average of (3.62), and a standard deviation of (0.59). this reflects the convergence of the views of the study sample members. thus, this aspect includes the approval that the company reviews its accounting data through a set of computerized 18 information systems. in addition, the company collects information about competencies in order to benefit from the best of them. table 4: the value of (t) calculated for the information accounting quality aspect. source: prepared by researchers in the light of the results of the statistical program (spss) commenting on the quality of accounting information in general and after calculating the value of (t), table (7) shows that the value of (t) calculated is (54.474) and the value of (t) tabular at a degree of freedom of (79) is (1.99). obviously, the value of (t) calculated is greater than (t) tabular, so this indicates that the aspect of information accounting quality is positive, and its phrases were approved by the study sample members. furthermore, the level of significance is smaller than (0.05) and the relative weight is (0.72); indicating that the sample members are able to form a clear vision regarding this aspect. the statistical analysis of the study hypotheses and its proof finding the coefficient of correlation between the role of corporate governance and the quality of accounting information table 5: the coefficient of correlation between the role of corporate governance and the quality of accounting information. variables pearson correlation sig. (1-tailed) number of sample members the principle of disclosure and transparency. .712** .000 80 the principle of responsibilities of the board of directors .640** .000 80 the principle of the rights of shareholders. .712** .000 80 the principle of equal treatment of shareholders. .551** .000 80 the principle of an effective framework for governance. .712** .000 80 the role of governance in information quality. 0.533** 000. 80 source: prepared by researchers in the light of the results of the statistical program (spss). 1) there is a statistically significant correlation between disclosure, transparency and the quality of accounting information. a correlation coefficient was established to determine the relationship between disclosure, transparency and the quality of accounting information. table 5 shows the one-sample test human resources information systems (t) calculated df sig. (2-tailed) mean difference 54.574 79 .000 3.62 19 correlation coefficient is (0.71) and the significance value is (0.000) which is less than (0.05). in other words, there is a strong positive correlation between disclosure and transparency in achieving the quality of accounting information at a level of significance (0.05). this means that the responsibilities of the board of directors and everything that it is made of considered having a strong impact on the quality of the accounting information. 2) there is a statistically significant correlation between the responsibilities of the board of directors and the quality of accounting information. the correlation coefficient was found in order to determine the relationship between the responsibilities of the board of directors and the quality of the accounting information. table (8) shows the correlation coefficient is (0.64) and the mean value is (0.000), which is less than (0.05). this means that there is a strong positive relationship between the responsibilities of the board of directors and the quality of accounting information at a level of significance of (0.05). therefore, the responsibilities of the board of directors and everything that it is made up of considered to have a strong impact on the quality of the accounting information. 3) there is a statistically significant correlation between the shareholders' equity and the quality of accounting information. a correlation coefficient was found to determine the relationship between the shareholders' equity and the quality of accounting information. table 5 shows the correlation coefficient is (0.71) and the significance value is (0.000), which is less than (0.05). this means that there is a strong positive relationship between the shareholders' equity and the quality of accounting information at a level of significance of (0.05). moreover, it means that shareholders' equity is considered to be a strong influence on the quality of accounting information. 4) there is a statistically significant correlation between the principle of equal treatment of shareholders and the quality of accounting information. the correlation coefficient was found to determine the relationship between the principle of equal treatment of shareholders and the quality of accounting information. table 5 shows the correlation coefficient is (0.55) and the significance value is (0.000) which is less than (0.05). this means that there is a strong positive relationship between the principle of equal treatment of shareholders and the quality of accounting information at a level of significance (0.05). hence, the principle of equal treatment of shareholders is considered to have a strong impact on the quality of accounting information. 5) there is a statistically significant correlation between the principle of an effective basic governance framework and the quality of accounting information. the correlation coefficient was found to determine the relationship between the principle of an effective basic governance framework and the quality of accounting information. table (8) shows the correlation coefficient is (0.71) and the significance value is (0.000) which is less than (0.05). this means that there is a strong positive correlation between the principle of an effective basic governance framework and the quality of accounting information at a level of significance (0.05). therefore, the principle of an effective governance framework and everything that it is made up of considered to have a strong impact in achieving the quality of accounting information. 6) there is a statistically significant correlation between the role of corporate governance in the information quality and the quality of accounting information. a correlation coefficient was found to determine the relationship between the role of corporate governance and the quality of accounting information. table (8) shows the correlation coefficient is (0.55) and the significance value is (0.000) which is less than (0.05). this means that there is a strong positive relationship between corporate 20 governance and the quality of accounting information at a level of significance (0.05). eventually, it means that corporate governance has a role in achieving the quality of accounting information. proofing the main hypotheses in order to proof the study’s hypotheses, the following tests were used: 1) r links: the r link is used to measure the strength and direction of the relationship between two quantitative variables; such as, corporate governance and accounting information quality. 2) (r2): it expresses the responsibility of the independent variable for the change that happens in the dependent variable. 3) (t) and (sig): it indicates the rejection of the null hypothesis, or the no relationship hypothesis, and accept the alternative hypothesis if the sig is smaller than (0.05). equivalently, the null hypothesis is accepted if sig is greater than (0.05), and the value of (t) is greater than (2). table 6: the results of the t-test and the r-links test to proof the hypotheses, and to identify the relationship between the role of governance and the quality of accounting information variables t level of significance (sig) r r square the principle of disclosure and transparency 8.566 .000 0.696 0.48 the principle of the board of director’s responsibilities. 4.75 .000 0.64 0.40 the principle of shareholders' equity. 3.531 .000 0.37 0.13 the principle of equal treatment of shareholders. 5.833 .000 0.55 0.30 the principle of an effective governance framework. 8.945 .000 0.71 0.50 the role of governance in information quality. 5.854 .000 0.55 0.30 source: prepared by researchers in the light of the results of the statistical program (spss). • first hypothesis there is a statistically significant relationship between the principle of disclosure and transparency and the achievement of the accounting information quality. the results in table 6 show that the value of (r) indicates a strong correlation between the principle of disclosure and transparency and the achievement of the accounting information quality with an (r) value of (0.69) and an amount of responsibility of (48%), which is a good proportion. as a result, the principle of disclosure and transparency is responsible for achieving the quality of accounting information in a serious and important manner. returning to the principle of disclosure and transparency hypothesis, it could be noticed that the value of (t) was (8.566) and that the value of (sig) was (0.000), which is smaller than (0.05). thus, rejecting the null hypothesis and accepting the alternative hypothesis; there is a statistically significant relationship between the principle of disclosure and transparency and the achievement of accounting information quality. 21 • second hypothesis there is a statistically significant relationship between the principle systems of responsibilities of the board of directors and the achievement of the quality of accounting information. the results in table 6 show that the value of (r) indicates a strong correlation between the principle systems of responsibilities of the board of directors and the quality of the accounting information with an (r) value of (0.64), and an amount of responsibility of (40%) which is considered as a good proportion. as a result, the principle systems of responsibilities of the board of directors are responsible for achieving the accounting information quality in a serious and important manner. returning to the principle systems of responsibilities of the board of directors in achieving the quality of accounting information, it could be noticed that the value of (t) was (4.75) and the value of (sig) was (0.000), which is smaller than (0.05). based on the previous information, the null hypothesis gets rejected, and the alternative hypothesis is accepted; there is a statistically significant relationship between the principle systems of responsibilities of the board of directors and the achievement of the quality of accounting information. • third hypothesis there is a statistically significant relationship between the principle of shareholders' equity and the achievement of the quality of accounting information. the results in table 6 show that the value of (r) indicates a strong correlation between the principle of shareholder’s equity and the achieving of the quality of accounting information with an (r) value of (0.37) and an amount of responsibility of (13%), which is a good proportion. as a result, the principle of shareholders' equity is responsible for achieving the quality of the accounting information in a serious manner. returning to the principle of shareholder’s equity in achieving the quality of accounting information, it could be noticed that the value of (t) was (3.531) and the value of (sig) was (0.000), which is less than (0.05). thus, the null hypothesis gets rejected, and the alternative hypothesis gets accepted; there is a statistically significant relationship between the principle of shareholders' equity and the achievement of the quality of accounting information. • fourth hypothesis there is a statistically significant relationship between the principle of equal treatment of shareholders and the achievement of the quality of accounting information. the results in table 6 show that the value of (r) indicates a strong correlation between the principle of equal treatment of shareholders and the quality of accounting information with an (r) value of (0.55) and an amount of responsibility of (30%), which is considered as a good proportion. as a result, the principle of equal treatment of shareholders is responsible for achieving the quality of accounting information in a serious and important manner. returning to the principle of equal treatment of shareholders in achieving the quality of accounting information, it could be noticed that the value of (t) was (5833) and the value of (sig) was (0.000), which is smaller than (0.05). thus, the null hypothesis gets rejected, and the alternative one gets accepted; there is a statistically significant relationship between the principle of equal treatment of shareholders and the achievement of the quality of accounting information. • fifth hypothesis there is a statistically significant relationship between the principle of the effective basic framework of governance and the achieving of quality of accounting information. the results in table 6 show that the value of (r) indicates a strong correlation between the effective basic framework of governance and the quality of accounting information with an (r) value of (0.71) and an amount of responsibility of (50%), which is a good 22 proportion. as a result, it is clear that the effective basic framework of governance is responsible for achieving the quality of accounting information in a serious and important manner. returning to the principle of the effective framework of governance in achieving the quality of accounting information, it could be noticed that the value of (t) was (8.945) and the value of (sig) was (0.000), which is less than (0.05). hence, the null hypothesis is rejected, and the alternative hypothesis is accepted; there is a statistically significant relationship between the principle of the effective basic framework of governance and the achieving of quality of accounting information. conclusions and recommendations of the study conclusion related to the theoretical aspect the theoretical study reached the following conclusions: corporate governance is a tool that is used to provide the highest quality of information because it relies on a set of tools that provide it with this property. through the external auditor's report, reliable information could be ensured. moreover, through the audit committee, auditor's report gets improved and its independency gets supported. thus, corporate governance can achieve various qualitative characteristics of accounting information in order to rely on these information in making investment decisions. finally, it should be noted that the positive reflection of the application of corporate governance on the quality of accounting information can only be reflected in reality if a number of additional measures were applied which serve as a support for the success of practicing corporate governance and achieving the quality of accounting information; such as, the following procedures: • working with all legal, regulatory and accounting procedures to prepare and submit reports and financial statements that are accurate, clear, credible, and easy to understand, so that reliable decisions can be made. • the activation of control mechanisms in order to prepare and present financial reports and lists; thus, producing accounting information through preparing qualified internal and external auditors who have high ethical values. • defining and explaining the principles of corporate governance for the members of the board of directors, shareholders and auditors because the success of the application of governance in any entity depends heavily on them. • the necessity to activate the role of the competent committees, which operate in the financial markets, in reviewing the reports and financial statements submitted by the listed companies in the stock exchange. conclusions related to the practical aspect 1) there is a statistically significant correlation between corporate governance and its role in achieving the quality of accounting information. a correlation coefficient was found to determine the relationship between the role of corporate governance and the quality of accounting information. furthermore, table (7) shows the correlation coefficient is (0.55) and the significance value is (0.000), which is less than (0.05). it seems, then, there is a strong positive correlation between corporate governance and the quality of accounting information at the level of significance (0.05). hence, corporate governance has a role in achieving the quality of accounting information. 2) there is a statistically significant relationship between governance and its role in achieving the quality of accounting information. the results in table (8) show that the value of (r) indicates a strong correlation between governance and its role in achieving the quality of accounting information with an (r) value of (0.55) and an amount of responsibility of (30%), which is a good proportion. 23 as a result, it is clear that governance has a serious and important role in achieving the quality of accounting information. returning to the hypothesis of governance and its role in achieving the quality of accounting information, it could be found that the value of (t) was (5.854) and the value of (sig) was (0.000), which is less than (0.05). thus, the null hypothesis gets rejected and the alternative one gets accepted; there is a statistically significant relationship between governance and its role in achieving the quality of accounting information. references abdel-aal, tariq. (2007), "corporate governance", aldar al_jamia, second edition, alexandria. abdulsamad, hussein. omar. ali. 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(2001), intermediate accounting, tenth edition, page (68). mubarak, bousha. & bishousha, heba (2009), "the role of the quality of accounting information security in the management of the global financial crisis", the international scientific conference on the implications of the global economic crisis on business organizations. challenges, opportunities and prospects", jordan, 3-5 november, p. 3, 4. 24 matir, raafat hussein (2010), "mechanisms used to strengthen the role of external audit in corporate governance", available at http://site.iugaza.edu.ps/rmotair/files/2010/02/article. omar, azzawi. & sayeh,bouzid (2011), "the role of corporate governance in assessing the efficiency of accounting information systems in accordance with international accounting standards", international scientific forum on accounting reform in algeria, 29-30 november. organization for economic co-operation and development (2008), "using the oecd principles of corporate governance a boardroom perspective", paris. saaid, ibrahim. ahmed (1996), "accounting information systems", dar al-fikr almuasir, damascus. united nations development program (undp) (1997), governance for sustainable human development, undp, policy document ny. clarificări şi propuneri de ameliorare în reglementările contabile româneşti actuale (i) cash advance accounting: accounting regulations and practices aristiţa rotilă, lecturer, university “vasile alecsandri” of bacău, românia abstract it is known the fact that often the entities offer to staff or third parties certain amounts of money, in order to make payments for the entities, such sums being registered differently in the accounting as cash advances. in the case in which the advances are offered in a foreign currency, there is the problem of the exchange rate used when justifying the advance, for the conversion in lei of payments that were carried out. in this article we wanted to signal the effect that the exchange rate, used in the assessment for reflecting in the accounting operations concerning cash advance reimbursements in a foreign currency, has on the information presented in the financial statement. therewith, we signal some aspects from the content of the accounting regulations, with reference at defining the cash advances, meaning, and the presentation in the balance sheet of cash advances, which, in our opinion, impose clarifications. key-words cash advances, exchange rate, differences of exchange rate, operating income, gross result cod jel: m41 analyzing the accounting regulations in compliance with the european directives applicable to economic operators, more precisely the statements concerning the cash advances, as well as the opinions presented in the specialized literature in relation with the reflection in the accounting of cash advances in a foreign currency, we notice that there are some aspects that should be clarified. therefore, in our opinion, at least the following aspects are to be taken into consideration: the exchange rate used for the conversion in lei of payments done in the foreign currency that were paid from cash advances with the occasion of the assessment for accounting the justification (reimbursement) of these payments and also, the influence of the exchange rate on the information presented in the financial statements; the presentation in the financial statements of the amounts, representing cash advances offered according to law and which were not settled until the date of the balance; the content of the accounting structure, called cash advance, or, in other terms, the determination of the cash advances and the account reserved for their registration. about the justification of cash advances in the foreign currency the payments that were done from cash advances may aim different categories of operating expenses, meaning “expenses representing the value of the materials that are not stored, energy and water consumption, maintenance and repairs, insurance bonuses, studies and research developed by third parties, commissions and payments, entertainment, commercial and advertising, goods’ transportation, traveling, posts and telecommunications, other services developed by third parties”1. 1 the order of the public finances minister no. 3055/2009, chapter vii operation of accounts, account 542 “cash advance” in the case in which cash advances are granted in a foreign currency the problem that may appear is of the exchange rate used at the justification of the advance, for the conversion in lei of payments that were carried out. the accounting regulations in compliance with european directives applicable to economic operators, from point 176, paragraph (2), state that “in case of payments in the foreign currency carried out from cash advances, the expenses may be recognized in accounting at the exchange rate from the date the operations were developed or at the rate from the date of the advance reimbursement”. therefore the entities have the possibility to choose the conversion in lei for the expenses done in a foreign currency at the exchange rate from the date written in the documents, that is the payment date, or at the rate from the date of the justification of the advance, ergo the date of submission of expense reimbursement. what will be the effect? will there be different expenses and results? at a first reading of the text of the accounting regulations we will be tempted to believe the fact that the option for one of the two values of the exchange rate will generate an operation expense, higher or lower, and, therefore, will influence the result of the financial year. at a more detailed analysis of these aspects we may observe that no matter the option, the gross result of the financial year will be the same, but there will be a transfer of results from the operating activity to result from the financial activity or the other way around, according to case. naturally the option for a rate or another will lead to recognizing in the accounting some higher or lower operating expenses, according to the exchange rate at which the assessment is done and which is higher or lower. however using an exchange rate which is higher or lower will lead to recognizing some exchange gains or losses related with the foreign currency that the entity holds as cash advances. practically, an increased operating expense, as result of using a higher exchange rate, will be compensated by the appearance of an exchange gain related with the cash advances, and a diminished operating expense, as result of using a lower exchange rate, will be compensated by the appearance of an exchange loss related to cash advances. we will demonstrate the information from above through two examples, the first for the case in which the exchange rate is increasing in time (from the moment when the advance was granted and until the payments are done, that is, up to the moment of the justification) and the second one, for the case in which the exchange rate is decreasing in time. case 1: the advance given to the salaried for his/her traveling abroad was the amount of 1.000 euro, and the total amount of the expenses in a foreign currency, according to the reimbursement of expenses, was of 1.000 euro. the exchange rate evolved in the following way: at the date the advance was granted the rate was of 4, 30 lei/euro; at the date written in the expense documents 4, 32 lei/euro; at the date of the reimbursement of the advance 4, 35 lei/euro. recognizing in accounting the expenses done with the occasion of the travel will be developed using on one hand the exchange rate written in the documents (case 1.a) and, on the other hand, the exchange rate from the reimbursement of the advance (case 1.b). the activity of recording in accounting the operations is presented like in figure no. 1. figure no. 1. reflecting in accounting the operations concerning granting and justifying the cash advance – case 1 it is noticed that, no matter the exchange rate used for recognizing the expenses, the gross result will be influenced by the same value of 4.300 lei, meaning the amount of the payments in a foreign currency from the date of the granting of the advance. this value represents the difference between travel expenses and the exchange gain, meaning 4.320 lei – 20 lei (case 1.a), 4.350 lei – 50 lei (case 1.b). therefore, when we use for the recognition of travel expenses a higher exchange rate, which automatically will generate a higher operating expense, simultaneously, with the increase of the expenses, appears an increase of the financial incomes from owing foreign currency. this increase of operating expenses will be compensated, in the profit and loss account, by the increase of the financial exchange gains, so that the gross result of the financial year will not be influenced by the used exchange rate (higher or lower). however, the travel expenses and the exchange gains are presented in the financial statement, that is, in the profit and loss account, in different areas, the travel expenses relate to the operating activity and the exchange gains belong to the financial activity. therefore, it takes place a diminish of the operating profit together with the increase of the profit from the financial activity. the effects on the profit and loss account are represented by us in figure no. 5. case 2: the advance given to the salaried for traveling abroad was in amount of 1.000 euro, and the total amount of the expenses in a foreign currency, according to the reimbursement of expenses, was of 1.000 euro. the exchange rate evolved in the following way: at the date of the granting of the advance 4, 35 lei/euro; at the date of the documents 4, 32 lei/euro; at the date of the reimbursement of the advance 4, 30 lei/euro. the recognition in accounting of travel expenses will be done, on one hand by using the exchange rate from the date written in the documents (case 2.a) and on the other hand, by using the exchange rate from the date of the reimbursement of the advance (case 2.b). recording in accounting the operations that are represented in figure no.2. figure no. 2. reflection in accounting of operations concerning granting and justifying the cash advance – case 2 it is observed that, no matter the used exchange rate for the recognition of expenses, the gross result of the financial year will be influenced by the same amount 4.350 lei, meaning 4.320 lei (operating expenses) + 30 lei (exchange losses), in the case 2.a, or 4.300 lei (operating expenses) + 50 lei (exchange losses), case 2.b. in order to observe more clearly the effect of the exchange rate taken into consideration for the assessment and for the recognition of the expenses, in the examples from above, the exchange rate used for the crediting of the account 542 “cash advance” is the one from the date when the advance was granted, the rate of the foreign currency. if we treat account 542“cash advances” in the same way as we treat all the accounts through which are shown cash liquidities in a foreign currency, each time we credit the account, the assessment of the currency will be done at the exchange rate from the date of that particular operation (rate of the day) and not at the one when the advance was granted, the rate of the foreign currency. this makes that, at the moment when the advance is being liquidated (be it totally justified on the basis of the documents, be it partially justified on the basis of the documents and the difference being returned at the pay desk) the account must present a balance in lei (due/credit balance), although its balance in a foreign currency is void. this credit/due balance, representing the advantageous/unadvantageous differences of exchange rate that resulted from the existence of advances paid in a foreign currency, will be liquidated, therefore debiting/crediting the account 542 “cash advances”, according to case, in correspondence with one of the accounts 765 “foreign exchange gains” or account 665“foreign exchange losses”. continuing the example from above, in the conditions in which the used rate when crediting the account 542 “cash advances” is the same used for the assessment of the expenses, meaning the one from the date of that certain operation (rate of the day), the registration in accounting of related operations to the granting and justification of the advance is presented like in figure no.3 and figure no. 4. figure no.3. accounting of cash advance, with assessment at the exchange rate of the day – case 1 figure no. 4. accounting of cash advance, with assessment at the exchange rate of the day – case 2 we observe the fact that, up to the end, no matter the exchange rate used at the crediting of the account 542 “cash advance”, the differences of exchange rate of the cash advance, between the rate from the date when the advance was granted (used at the debiting of the account) and the rate from the date of the liquidation of the advance (used at the crediting of the account), will be reflected in the accounting. we have to state the fact that, in the situation in which the justification of the cash advance in a foreign currency is not done until the end of the month when it was granted, the entity will proceed to assess it at the end of the month at the exchange rate of the foreign exchange market, notified by the national bank of romania from that particular last banking day of the month and will recognize in the accounting the exchange gains and losses. therefore, the differences of exchange rate between the date of the liquidation of the advance and the date of the granting of the advance could be completely recognized in the accounting at the justification of the advance or could be presented during a two months period. the influence of the exchange rate used in recognizing the travel expenses (the rate from the date of the documents, that is, the rate from the settlement of advance) on the information presented in the profit and loss account, for one of the cases of our examples, that is case 1, is synthetically presented in figure no.5. we complete the data of the example, considering that in the case in which an entity, which before the recognition of the travel expenses, presented the following situation of the results: operating profit 50.000 lei; profit from the financial activity 2.000 lei. figure no. 5 the influence of the exchange rate used to recognize the expenses, on the information presented in the profit and loss account case 1 it is noted that using a higher exchange rate leads to an increase in operating expenses, that is at a decrease of the operating profit, at the same time with the increase of the financial income, respectively, the increase of profit from financial activities with the same value, in our example, 30 lei. in the above examples we considered that the cash advance granted was sufficient to cover the travel expenses abroad. in practice, however, there are situations where the sum of the amounts paid in currency during the travel abroad is higher than the amount of the cash advance granted, or the travel abroad was made without the person that travels having received a cash advance on departure. in such cases, the entity should recognize a debt in the case of that person for the currency payments made by it. we believe that, for consistency, and in such cases we should apply the same treatment, meaning that the recognition of the expenses can be carried out either at the rate on the day of operation, or at the rate of the submission date of the statement of expenditure. in addition, we must point out the fact that depending on the nature of expenses to be recognized as a result of payments made in foreign currency the cash advances may encounter some matters of taxation, in that the tax outcome or the profit tax could be affected, and therefore the net result of the financial the year. such tax problems can occur in the case of the limited deductibility of expenses, such as for example the entertainment expenses. where payments in foreign currency (cash in advance) are made for entertainment expenses, if the evaluation is done at a higher or lower rate it affects the deductible or nondeductible amount when calculating the taxable income. the definition of cash advances and the related account cash advances are defined in the specialized literature as the amounts assigned by the entity to the staff, administrators or other persons authorized to make payments on its account. substantially the same definition results from the accounting regulations content, which in point 176, paragraph (1), provide that: “cash, available to staff or third parties, in order to make payments on the account of the entity is recorded separate in the accounting books (account 542 “cash advances”)”. from the text above, as well as from the operating rule formulated in the accounting regulations for account 542 “cash advances” it results that cash advances may be paid only in cash. however, in a footnote attached to the account 542“cash advances” in the chart of accounts provided in the accounting regulations prescribed in point 329, it is stated that “in this account shall be recorded also the amounts paid by the card system." therefore such amounts may be made available to the staff or thirds not only in cash but also through the card system. therefore, we find it necessary to temporarily integrate the text of point 176, paragraph (1) and the operating rules for account 542 “cash advances” in order to show that: this account also allows the accounting of “amounts granted by the card system.” also, from the operating rule of the account 542 “cash advances” results that are recorded in this account, among others, in debit the “favorable foreign exchange differences related to foreign currency cash advances recorded at the end of the month and of the year (765)”, and in credit the “unfavorable foreign exchange differences related to foreign currency cash advances, registered at the end of the month and of the year or the liquidation thereof (665).” we find that the rule formulated for the debit omitted the exchange differences recorded at the “liquidation of advances”. therefore, it must be completed the rule regarding the operation of the account, in order to suggest that this account is debited also with the favorable foreign exchange differences registered at the liquidation of the advances made in foreign currency. thus, the rule relating to favorable foreign exchange differences would be: in the debit of account 542 “cash advances” there are “favorable exchange differences relating to foreign currency cash advances recorded at the end of the month and at the closing of the financial year, or their liquidation thereof (765).“ about the presentation of the cash advances in the financial statements regarding the presentation in the financial statements (specifically in the balance sheet) of the cash advances, from the accounting regulations text it results that their balance is not present in the cash but in the debt category, for which they will be transferred from the cash account 542 to account 4282 or 461, according to case. specifically, in point 175, paragraph (3) it is provided that: “the amounts of cash advances granted by law and not reimbursed until the date of the balance sheet, evidenced in the sundry debtors account (461 “sundry debtors”) or debts related to personnel (4282 “other claims regarding the personnel”), depending on the nature of the debt”. we believe, too, that such values are debt type elements rather than elements of cash debt as long as they were advanced to persons who will justify their use or return them. therefore, the transfer of such values from a cash account to a receivables account is justified and, as a result, they will be shown in the balance sheet structure under heading b.ii. debts. of course, after such operations the account 542 “cash advances” would not have a balance and, therefore, would no longer be present in the balance sheet. however, in the content of the same accounting regulations, when the balance sheet structure is presented (point 330, for the extended balance sheet, or point 331, for the abbreviated balance sheet), between the accounts that form the content of the position b. iv. cash and bank accounts (i.e., line 34), the account 542 is included. a statement in this regard from the structure of the extended balance sheet is as follows: figure no. 6 excerpt from the balance sheet structure therefore, is imposed a correction of the content of the position b. iv. cash and bank accounts from the balance sheet structure shown in the accounting regulations, in order to eliminate the 542 account from the accounts listed between brackets. conclusions: we believe that it is important for the entity to clearly state, under the accounting policies manual, the option for one of the two possibilities referring to the rate used in the assessment in order to recognize the expenses incurred in the case of the foreign currency payments from cash advances. this is especially important as such expenses paid from foreign currency cash advances have significant weights and they have values high enough so as to generate significant information. thus the conditioner of the financial statements or the managers could not use the exchange rate to "arrange" information at will, following the increase or decrease in the operating income, respectively, the decrease or increase of the net financial activity. also, the accounting normalization body should intervene on the accounting regulations applicable to the economic operators in order to improve them, integrating them or removing contradictory elements. references 1. ceccar (2010), ghid practic de aplicare a reglementărilor contabile conforme cu directivele europene aprobate prin omfp nr. 3055/2009, ed. ceccar, bucureşti 2. dumitrean, e. (2008), contabilitate financiară, ed. sedcom libris, iaşi 3. moroşan, i. (2010), contabilitate financiară şi de gestiune: studii de caz şi sinteze de reglementări, ed. ceccar, bucureşti 4. pătruţ, v., rotilă, a. (2010), contabilitate şi diagnostic financiar – fundamente teoretice şi aplicaţii practice, ediţia a ii-a revizuită şi actualizată, ed. sedcom libris, iaşi 5. pântea, i., p., bodea, gh. (2008), contabilitatea financiară românească conformă cu directivele europene, ediţia a iii-a, ed. intelcredo, deva 6. ristea, m., dumitru, c.,g., ioanăş, c., irimescu, a. (2009), contabilitatea societăţilor comerciale, vol. 1 şi vol. 2, ed. universitară, bucureşti 7. the accounting law no. 82/1991, republished in the official journal of romania no. 454/ 2008, with subsequent amendments 8. law no. 571/2003, regarding the tax code, with subsequent amendments 9. the order of the public finances minister no. 3055/2009 for the approval of accounting regulations in compliance with european directives, published in the official journal of romania no. 766/2009 and 766 bis/2009, with subsequent amendments 10. the order of the public finances minister no. 2861/2009 for the approval of norms for organizing and performing the inventory of elements such as assets, debts and equity, published in the official journal of romania no. 704/2009 http://www.librarie.net/autor/11872/mihai-ristea http://www.librarie.net/autor/15547/corina-graziella-dumitru http://www.librarie.net/autor/55077/cristina-ioanas http://www.librarie.net/autor/55078/alina-irimescu cash advance accounting: accounting regulations and practices macro-prudentiality and financial stability cristian ionescu, phd candidate, academy of economic studies, romania abstract taking into consideration the fact that financial crises, as a manifestation form of the financial instability, are becoming more and more frequent, complex and severe, it is important to discuss about the macroeconomic prudentiality, in order to protect and save the economy of a country or of a region by the inherent fragility of a very developed financial system. therefore, the paper aims to analyze the following aspects: the macro-prudential regulation (in order to a better understanding of the financial instability process), the development of the macro-prudential vision and instruments (but emphasizing the existing limits) and economic policies (in order to implement an operational macro-prudential regulation). keywords: financial stability, financial crisis, macro-prudential regulation, macro-prudential instruments jel codes: e32, e44, e52, e61, g01, g21 1. introduction the economic reality has shown that macroeconomic stability is not sufficient to acquire financial stability. for example, prior to the crisis, there may be some hidden financial imbalances in the advanced economies, despite stable growth and low inflation. moreover, micro-prudential regulation and supervision, which focus on ensuring safety and soundness of individual financial institutions, may be inadequate because it may not contain the systemwide risks. therefore, it was implemented a macro-prudential supervision in several emerging market economies, in order to safeguard the financial stability. macro-prudential measures are regulatory policies that have the objective of reducing the systemic risks, to ensure stability of the financial system as whole against internal and external shocks, and ensure that it continues to function efficiently. 2. the need for macro-prudential regulation developments in the understanding of the process of financial instability the world economy revealed an instable economic and financial background in the last 30 years: there is a growing of the generic nature of financial crises. although the financial crises (the most severe form of financial instability) are not random, but are different, they have some common features (table 1). table 1. financial crisisphases, nature and features phase of crisis nature example of features primary (favorable) shock diverse deregulation, monetary or fiscal easing, invention, change in market sentiment propagation build-up of vulnerability common – main subject of macro-prudential surveillance new entry to financial markets, debt accumulation, asset price booms, innovation in financial markets, under-pricing of risk, risk concentration and lower capital adequacy for banks, unsustainable macro policy secondary (adverse) shock diverse monetary, fiscal or regulatory tightening, asymmetric trade shock propagation crisis common failure of institution or market leading to failure of others via direct links or uncertainty in presence of asymmetric information – or generalized failure due to common shock policy action common – main subject of crisis resolution deposit insurance, lender of last resort, general monetary easing economic consequences common – scope depends on severity and policy action credit rationing and wider uncertainty leading to fall in gross domestic product, notably investment (source: davis p.; karim d. (2009), macro-prudential regulation – the missing policy pillar, paper presented at the 6th euro-frame conference on economic policy issues in the european union) there are both exogenous and endogenous aspects. the financial instability starts with a primary shock to the economy and financial system that is favorable to growth and investment. but the process of propagation increases the vulnerability of the economy and financial system (which involves the over-extension of balance sheets and the creation of the financial imbalances). balance sheets grow, short term funding increases, leverage falls and mispricing arises. these amplifies the boom and leads to a crisis where a secondary (adverse) shock affects the financial system. there is further propagation in a crisis period (systemic risk) that involves high negative economic consequences (the “costs of instability”). 3 progress of the macro-prudential pillar the development of macroprudential oversight 3.1. tools for macro-prudential analysis “distance to default” measures the credit risk by expressing a firm’s net worth as a ratio of asset price volatility; the higher the ratio, the lower the probability of default. any asset traded on a liquid secondary market can be used in calculating the “distance to default”, because taking into account the assumption of market efficiency, prices will incorporate markets’ forward looking expectations of firm default. but when “distance to default” is computed for the banking sector, it ignores the possibility of regulators intervening properly before default. banking “distance to default” measures reflects the basel regulatory capital requirements. stress tests quantify portfolio movements for unlikely but feasible events. scenario tests simultaneously modify several risks in one direction, emulating historic events or hypothetical scenarios. but limitations arise because probabilities of shocks materializing are not calculated. also, risk parameters are subjectively chosen by managers and impose high computational costs on institutions1. bubble detection searches for bubble premiums, excess volatility and co-integration between dividends and prices. early warning systems generate crisis probabilities using empirical historic data (macroeconomic, financial and structural indicators). early warning systems follows individual time series for previous anomalous associated-with-crises behavior. if an indicator has an anomalously behavior, there can be calculated a crisis probability. some signal extractions for banking crisis prediction are improved by creating composite indicators weighted by their signaling quality. the binary recursive tree technique is used to analyze which non-linear variable interactions make an economy more vulnerable to crisis than others2. liquidity, credit and market risks are potentially nonlinear. the binary recursive tree identifies the most important discriminator between crisis and non-crisis episodes, and creates two nodes which are split into sub-nodes, depending on the behavior of splitter variables’ non-linear interactions with previous splitter variables. this may help in calculating the nodal crisis probabilities. 3.2. the limits of macro-prudential oversight the financial crisis may be only partially foreseen; thus, the regulators may not observe some key feature of the crisis or may not foresee the collapse of the interbank market or the overall magnitude of the effects of a financial crisis. it is also possible that some crucial links from financial instability to the real economy could not be easily observed. therefore, a proper forward looking analysis of events and possible policy responses are essential regarding the longer term concern over the build-up of debt, risks and rising asset prices. the macro-prudential tools are limited. the global early warning systems, although quite performing, were not completely capable of predicting some of the financial crises (although some models had a very high crisis prediction score). it may be possible that financial crises have specific characteristics that are not typical of the common banking crises in both advanced and emerging economies. therefore, it is important to adapt the existing models, adding the specific characteristics of advanced economies. this would improve the macro-prudential analysis. 4. policy issues – an operational macro-prudential regulation 4.1. the broad issue the initial policy objectives of macro-prudential regulation were: a) the early identification of potential vulnerabilities and b) through the public reporting, the encouragement of financial institutions to do stress testing3. there is now a third objective: the encouragement of preventative and remedial policies to prevent financial instability. in the worst case scenario, surveillance should resolve instabilities when preventative and remedial measures fail. but some of the preventative measures (moral suasion and intensified supervision) are not sufficient. therefore, it is important to know if monetary policy can manage asset price bubbles (some central banks consider that monetary policy shouldn’t deflate bubbles, because of the interest rate instrument which is meant to control inflation. but the economic and financial reality suggests there is a need for variation or adjustment in prudential parameters.                                                              1davis p.; karim d. (2009), macro-prudential regulation – the missing policy pillar, the 6th euro-frame conference on economic policy issues in the european union 2 idem  3 barua r.; battaglia f.; jagannathan r.; mendis j.; onorato m. (2010), basel iii: what’s new? business and technological challenges the entire rationale of macro-prudential regulation is that relying on individual bank supervision at a micro level is not sufficient. therefore, one important issue is the manner that should be used in order to link macro-prudential and micro-prudential regulation more effectively. one solution is to design a proper countercyclical regulatory framework (the time series dimension), which includes increasing risk weights for risks that are common across institutions rather than idiosyncratic (the cross section dimension). it is essential that macro-prudential regulation and micro-prudential regulation become more effective in ensuring that risky activities do not move internationally or to weak-regulated financial institutions. 4.2. cross sectional regulation one aspect of macro-prudential regulation is the allowance of cross sectional risks. but not all institutions involve similar systemic risks (these may be large and/or highly connected with other institutions). developing models to measure such systemic importance is a key ongoing task. regulation may impose a tighter regulation and higher capital requirements on systemically important institutions. there may be necessary to impose higher capital charges on behavior that is typically common across banks relative to that which is idiosyncratic, even if the risks to the individual institutions are the same. because banks may involve a “herding” behavior and because there may be a high correlation of balance sheet risk, there should be implemented more severe controls on lending to finance real estate (an important market that often leads to collective losses as asset prices fall). these may involve limits to loan to value ratios, changing the bank reliance on wholesale funds, raising capital requirements for banks etc. macro-prudential problems are threefold: a) bad lending (which determine losses that involve liquidity problems), b) excessive reliance on wholesale markets and c) complex instruments leading to confusion4. because there is an “uncertainty” problem regarding the lack of experience of behavior in downturns, the regulation of complex instruments, an increase in capital held against them, higher capital charges and even the need to justify innovations before introducing are essential, especially if it is taken into consideration the severe damages induced by the majority of asset backed security innovations. 4.3. changes in the structure of regulation the regulation boundary problem involve that effective regulation do not lead to substitution flows towards the unregulated sector. moreover, it is necessary for the regulators to ensure that banks do not move subsidiaries outside the regulatory net. one motive of the severity of the last financial crises was the decision in the 1980s and 1990s to move away from structural regulation (limits on competition, prices and scope of activities for financial institutions) to the concern regarding the efficiency of the financial system. of course, both of them should be taken into consideration by regulators, and the costs and benefits of both should be balanced. efficient financial markets increase welfare, reduce risk premium and raise sustainable output5. they tend to produce financial products that are widely adopted and used before they are stress tested in a recession. therefore, the prudential tightening and the direct controls on bank activities are essential in assuring the financial units health and stability, which finally induces overall financial stability. another important issue is the development of macro-prudential regulation between the central bank and regulator (if they are separate) or within the central bank. regulators outside the central bank are less focused on macro-prudential issues than the central bank. one explanation for this is the higher focus on depositor and investor protection, which leads                                                              4 idem  5 ibidem to a concentration on individual institutions. another explanation is that the central bank will have to manage the initial consequences of systemic risk (using the lender of last resort instrument). therefore, it may be necessary to rebalance the responsibilities between institutions in order to ensure a proper macro-prudential framework. 5. the use of macro-prudential instruments 5.1. macro-prudential instruments the financial crises have shown that not even a perfect conformity with the best practices regarding financial supervision and regulation can ensure macro-financial stability. the lack of a proper analytical framework and the gaps in policy tools have reborn the interest in macro-prudential policies. macro-prudential policy and macro-prudential instruments are the set of measures that aim to monitor, prevent, and address system-wide risks, and minimize the cost of systemic crises6. in order for a macro-prudential policy to be effective, a coherent institutional framework for effective surveillance and policy design and implementation is needed. regarding the macro-prudential instruments, there is no standard taxonomy. the time-series dimension of financial stability is different from the cross-sectional dimension. therefore, macro-prudential tools are twofold: a) the tools that reduce the pro-cyclicality of the financial system (countercyclical capital and provisioning requirements, maximum loanto-value ratios and reductions in securities financing and derivative transactions) and b) the tools that reduce the risk of the common exposures that arise owing to balance sheet interlinkages (net stable funding ratio, limits for maturity mismatches). another macro-prudential tools classification is based on whether they are rule-based (automatic stabilizers) or discretionary; or whether they introduce quantity restrictions or price restrictions7. the bank of international settlements uses a classification linking macroprudential measures with micro-prudential categories (table 2). this is a pragmatic approach, as macro-prudential measures reduce risks at the microeconomic level and because some of the micro-prudential measures are macro-prudential instruments when aiming to address systemic risks. 5.2. developments and types of macro-prudential instruments a macro-prudential instrument is any macro-prudential or micro-prudential measure that is used to address systemic risk. in the category of macro-prudential measures will enter only regulations. table 2: macro-prudential instruments risk measurement methodologies by banks by supervisors risk measures calibrated through the cycle. cyclical conditionality in supervisory ratings of firms; develop measures of systemic vulnerability (e.g. commonality of exposures and risk profiles, intensity of inter-firm linkages) as basis for calibration of prudential tools; communication of official assessments of systemic vulnerability and outcomes of macro stress tests.                                                              6 delgado f.; meza m. (2011), developments in financial supervision and the use of macro-prudential measures in central america, international monetary fund 7 idem  financial reporting accounting standards prudential filters disclosures adjust accounting figures as a basis for calibration of prudential tools; use of less pro-cyclical accounting standards; dynamic provisions. prudential provisions as add-on to capital; smoothing via moving averages of such measures; time-varying target for provisions or for maximum provision rate. disclosures of various types of risk (e.g. credit, liquidity), and of uncertainty about risk estimates and valuations in financial reports or disclosures. regulatory capital pillar 1 pillar 2 systemic capital surcharge; reduce sensitivity of regulatory capital requirements to current point in the cycle and with respect to movements in measured risk; introduce cycle-dependent multiplier to the point-in-time capital figure; increased regulatory capital requirements for particular exposure types (higher risk weights than on the basis of basel ii, for macro-prudential reasons). link of supervisory review to state of the cycle. funding liquidity standards cyclically-dependent funding liquidity requirements; concentration limits; foreign exchange lending restrictions; foreign exchange reserve requirements; currency mismatch limits; open foreign exchange position limits. collateral arrangements time-varying loan-to-value ratios; conservative maximum loan-tovalue ratios and valuation methodologies for collateral; limit extension of credit based on increases in asset values risk concentration limits quantitative limits to growth of individual types of exposures; (timevarying) interest rate surcharges to particular types of loans. compensation schemes guidelines linking performance-related pay to ex ante longer-horizon measures of risk; use of supervisory review process for enforcement. profit distribution restrictions limit dividend payments in good times to help build up capital buffers in bad times. insurance mechanisms contingent capital infusions; pre-funded systemic risk insurance schemes; pre-funded deposit insurance with premium sensitive to macro (systemic risk) in addition to micro (institution specific) parameters. managing failure and resolution exit management policy conditional on systemic strength; trigger points for supervisory intervention stricter in booms than in periods of systemic distress (source: galati, g.; moessner r. (2011), macro-prudential policy – a literature review. bank of international settlements) regarding classification, the instruments can be divided into six categories: 1) traditional measures; 2) sectoral measures; 3) maturity mismatches; 4) credit growth limits; 5) foreign exchange risk and capital inflows; and 6) countercyclical measures (table 3). table 3. classification of macro-prudential tools type of measure measure traditional macro and micro-prudential measures maximum limit on loan to value ratios debt to income ratio reserve requirements sectoral and other specific measures limits on credit concentrations with respect to specific sectors mandatory provisions on exposures to specific sectors maturity mismatches limits on maturity mismatches on bank balance sheets limits on net non-core funding dependence ratio minimum core funding ratio limit credit growth credit ceilings loan-to-deposit limits foreign exchange risk and capital limits on open foreign exchange specific capital requirements for net open foreign exchange reserve requirements on external credit lines to banks specific capital requirements for foreign exchange lending limits to foreign investment by domestic pension funds tax on capital inflows new countercyclical measures dynamic (cyclically based) loan loss provisioning rules cyclically based capital adequacy ratios (source: delgado f.; meza m. (2011), developments in financial supervision and the use of macro-prudential measures in central america, international monetary fund) references: 1. barua r.; battaglia f.; jagannathan r.; mendis j.; onorato m. (2010), basel iii: what’s new? business and technological challenges 2. basel committee on banking supervision (2011), marrying the macro and micro-prudential dimensions of financial stability, bank for international settlements 3. basel committee on banking supervision (2010), the basel committee’s response to the financial crisis: report to the g20, bank for international settlements 4. basel committee on banking supervision (2010), basel iii: international framework for liquidity risk measurement, standards and monitoring , bank for international settlements 5. basel committee on banking supervision (2011), progress report on basel iii implementation, bank for international settlements 6. basel committee on banking supervision (2010), basel iii: a global regulatory framework for more resilient banks and banking systems, bank for international settlements 7. davis p.; karim d. (2009), macro-prudential regulation – the missing policy pillar, paper presented at the 6th euro-frame conference on economic policy issues in the european union 8. delgado f.; meza m. (2011), developments in financial supervision and the use of macroprudential measures in central america, international monetary fund 9. elliott d. (2010), basel iii, the banks, and the economy, the brookings institution 10. galati, g.; moessner r. (2011), macro-prudential policy – a literature review. bank of international settlements 11. resti a. (2002), the new basel capital accord structure, possible changes and micro-and macroeconomic effects, centre for european policy studies 12. resti a. (2004), the new basel capital accord and the future of the european financial system rapporteurs, centre for european policy studies 13. unsal f. (2011), capital flows and financial stability: monetary policy and macro-prudential responses, international monetary fund 14. woolford i. (2011), implementation of basel iii capital adequacy requirements in new zealand, reserve bank of new zealand microsoft word drob catalin engl. the evolution of the project management catalin drob, ph.d, university “vasile alecsandri” of bacau, romania abstract project management has appeared and developed based on scientific management theory during the '50s-'60s of the last century. after the 1990s of the last century, we can say that project management has truly become an independent discipline, which has a huge impact on the success or failure of companies which are engaged in major projects. keywords evolution, scientific management, project management. throughout time, humanity has put in place many grandiose projects. the history of these projects started to be written since 2,500 years bc, with construction of the impressive egyptian pyramids. however, the first projects that have implemented specific aspects of project management were conducted, much later, in the twentieth century, in the united states, along with the revolution of management theories. the roots of project management are related to the appearance and development of scientific management theory, whose promoters were: frederick w. taylor, frank and lillian gilbreth, henri fayol and henry gantt. in 1911, saw the light of printing a reference work which founded this theory: “the principles of scientific management” written by frederick w. taylor. in this paper, f.w. taylor postulated the scientific management principles, which in his opinion, are1: use of scientific methods of work; scientific selection of employees and improving the skills of employees; good cooperation with employees; scientific division of labor in skilled and unskilled labor and its proper allocation between managers and workers. frank and lillian gilbreth had an important contribution to developing scientific management, mainly in the field of industrial psychology. the best known work regarding with this area was written by lillian gilbreth and entitled "the psychology of management" published in 1912. in 1916, appeared another book that had a huge impact on management theory: “administration industrielle et generale” (industrial and general administration), whose author was the french engineer henri fayol, regarded as the founder of classical management theories of organization. in this paper, h. fayol has noted that the basic principles of management should consider2: division of labor, which involves breaking down complex works into simpler and more consistent work and their allocation of specialized workers; 1 turcu, o.l., mironescu, r., drob, c., simionescu gh., feraru, a., stan, a. (2008), management, ed. alma mater, bacău, p. 15; 2 nica, p. (1994), managementul firmei, ed. condor, chişinău, p. 32. 31 studies and scientific researches ‐ economic edition, no. 14, 2009  authority, which is viewed as the legitimate right to give orders; discipline, which implies the respect of the intern rules; unity of command, which means that each employee should receive orders from only one manager; unity of direction, which means that the entire organization to have the same vision and direction to pursue common objectives using a single plane; the subordination of individual interests to those of the organization; remuneration, which must be properly determined according to performance of the workers; centralization, which implies that power and authority are concentrated at the upper levels of the organization's management; hierarchy, which involves establishing an adequate number of hierarchical levels, allowing for efficient movement of information both from the top to its base organization and vice versa; order, which must be set up in the organization so that every employee and material object to have its place and to find there; equity and fairness set up in relations between managers and his staff; staff stability; encouraging initiative; development of team spirit. in the united states, the father of project management is considered henry gantt, who developed a technique of planning and control, called the gantt chart that is currently used in the project management. among major american projects, which considered the application of such principles of management, we can mention3: construction of the giant dam on the colorado river (1931-1936), named hoover dam, in honor of the united states president, herbert hoover. this dam, which has 201 meters thick at the bottom and has 221 meters in height, is still one of the most impressive hydro dams; manhattan project (1942-1945), which led to the production of the atomic bomb and which have involved over 125,000 people etc. starting from the core of the general management theory and from the need to apply the principles, methods and management specific techniques in the projects field, during the '50s and 60's, began to take shape a discipline in its own right, named project management. in the first part of this period, the application of project management in projects was limited mainly in use of the gantt charts. the gantt chart is the simplest and the most popular graphic method used for planning and control activities. this chart is actually a graphical representation of activities to be undertaken within a project, on the time scale. during '50-'60's of the last century, the development of large projects puts in the light the fact that the management methods and techniques used until that time were outdated and that the management theory and practice must be adapted to the specific of the projects. the specialized literature shows that the application for the first time of new methods and techniques of project management was undertaken in 1958, for the polaris project of the u.s. navy's, which involved designing and making of nuclear ballistic missile named "polaris" that can be attached on submarines. thus, within this project was designed and used a new technique for evaluation and analysis of the programs known as pert (program evaluation and review technique), which is commonly used in current projects. this technique involves building a pert chart type, which is a type of network graph 3 drob, c. (2010), management de proiect, ed. alma mater, bacău, p. 9. 32 studies and scientific researches ‐ economic edition, no. 14, 2009  that contains information about project activities, their duration, dependencies between them etc. pert method is characterized by having regard to the risk and uncertainty, using probabilistic estimates for the duration of the activities. pert method use three estimates to assess the duration of an activity: one optimistic, one pessimistic and one considered to be the most likely. around the same time, in a joint venture company founded by dupont and remington rand companies, was introduced for the first time, a specific method of project planning named critical path method, known as cpm. critical path is defined as the minimum duration of the project for which events on the critical path have no time reserve. in the late ‘60s of the last century, in 1969, in united states, was founded the first organization who proposed the promotion and development of the project management: project management institute. '’70-‘90 period of the twentieth century was characterized by the expansion of the hardware and software technology, starting with the launch on the market of the first micro-computers and pcs. in the first part of this period were developed first specifics software for project management, later these becoming cheaper and more available. thus, after creation of the microsoft company in 1975 by bill gates and paul allen and starting with the development in computer technology were founded the first companies that proposed specific software for project management: artemis (1977), oracle (1977), scythian corporation (1979) etc. in 1983, was launched the harvard project manager, considered one of the first integrated software specialized for project management. this program was able to make planning of tasks, budget and resources. subsequently, on the market dedicated to the project management programs appeared and other companies that proposed various solutions for solving specific problems of project management. in 1998, in an article published in "project management journal", was released a top of the most used software for project management. the top 10 positions were occupied as follows4: 1. microsoft project; 2. primavera project planner; 3. microsoft excel; 4. project workbench; 5. time line; 6. primavera suretrak; 7. ca-superproject; 8. project scheduler; 9. artemis prestige; 10. fastracs. after 1995, starting with the widespread diffusion of the internet, the software used for project management began offering the option to connect and work jointly in an intranet or internet network. today, the software for project management, are found in great diversity, both in terms of functions they develop and price that are sold on the market. in the late 90's of the last century, project management institute has proposed a set of standards and practical guidance for this area, that are incorporated in a document known as pmbok (project management body of knowledge), which defines the fundament of management project for several fields, such as engineering, construction, it and so on. 4 drob, c., macarie, f. (2007), management de proiect, ed. alma mater, bacău, p. 57. 33 studies and scientific researches ‐ economic edition, no. 14, 2009  project management institute describes the life cycle of a project through group processes, considering that, in fact, projects consist in a set of processes5. after the 1990s, we can say that project management has truly become an independent discipline, which has an impact that become more important in the success or failure of large companies. once with awareness of benefits that may result from implementation of project management has increased the number of companies that apply the projects management in theirs projects we have developed its fields of application. according with project management institute, in 2006, there were over 200,000 people who have obtained certification recognized by this organization, after passing a rigorous exam based on pmbok standard. the certificate granted by the project management institute offers professional credibility in the project management field for its holders. if initially the project management has found application in the military and the construction field, at present, it has exceeded the boundaries of industrial, making his presence felt in the social or political area. conclusion the appearance and development of the project management has occurred as a consequence of the need to adapt the theory and practice of management to the projects specific. in practice, the application of the tools and techniques of project management is facilitated by the use of specialized software for project management. references 1. drob, c. (2010), management de proiect, ed. alma mater, bacău. 2. drob, c., macarie, f. (2007), management de proiect, ed. alma mater, bacău. 3. nica, p. (1994), managementul firmei, ed. condor, chişinău. 4. project management institute. (2008), a guide to the project management body of knowledge, ediţia a patra, u.s.a. 5. turcu, o.l., mironescu, r., drob, c., simionescu gh., feraru, a., stan, a. (2008), management, ed. alma mater, bacău. 5 project management institute. (2008), a guide to the project management body of knowledge, forth edition, u.s.a., p. 37. 34 studies and scientific researches. economics edition online first, august 2017 1 looking for the best slogan: an analysis of the slogans of the 2016 romanian parliamentary campaign brînduşa-mariana amălăncei “vasile alecsandri” university of bacau, amalancei.brindusa@ub.ro cristina cîrtiţă-buzoianu “vasile alecsandri” university of bacău buzoianu.cristina@ub.ro corina daba-buzoianu national university of political studies and public administration (snspa), bucharest, romania corina.buzoianu@comunicare.ro abstract the paper investigates the slogans released by political parties during the elections for the romanian parliament in 2016, by addressing the way they have been perceived by both political analysts and students enrolled in communication programs. we aim to see how two different target audience evaluate the slogans and how they refer to them. also, we are interested to see what the students remember about the slogans after six months after the end of the campaign, in order to explore if their memories about the slogans had any connection with the political analysts comments made during the elections. keywords communication analysis; romanian parliamentary campaign; young generation’s interest for slogans; image within slogans jel classification m37 a large body of research deals with the image promoted by the candidates and political parties during electoral campaigns, aiming to understand the way politicians used the different topics and approached specific issues in order to gain votes. this has been dealt with by using both quantitative and qualitative studies, in order to analyze the messages and the candidates’ representation from different perspectives. although political campaigns have significantly changed along the years, there is still evidence that they have an important influence in the public’s decision (seidman, 2008), as in some cases, posters, banners and slogans used during a campaign for the elections have turned out to make a difference for some of the candidates. a complex set of factors based on message, picture, colours, background, set up and several others is to be considered to have an impact on the public when making a decision, although the process itself is much larger and with many other important triggers. among the above mentioned, slogans are very important as they transmit a very specific idea and they have a role in shaping the candidate’s image. they are expected to enhance brand awareness and to create and support the image (kohli, 2004). as a familiar and current formula (lee, 2014), short, easy to remember (jaubert, 1985) and to recognize, a slogan draws attention and is meant to incite to action, both through its style and its passionate or rational self-justification it involves (reboul, 1975, 42; mailto:amalancei.brindusa@ub.ro mailto:corina.buzoianu@comunicare.ro looking for the best slogan: an analysis of the slogans of the 2016 romanian parliamentary campaign 2 garric, 1996, 25). slogans are ephemeral, but some of them remain in the collective memory for a long time, sometimes entering in full or partially in everyday language. as widely expressed in the literature on the field, slogans are to be used to only for awareness, but also for creating a positive image, by telling in few words a story (kohli, 2007). depending on the field in which they appear, slogans are divided into political, social and advertising. scholars have not reached a consensus regarding the typology of slogans and therefore some features remain unclear. some scholars note that the advertising and political slogans have too much in common in order to able to consider two different categories (lee, 2014, 80), while others vividly point out that there are many aspects to take into consideration and that political slogans have totally different aims and mechanism (anton, 2006, 24). the political meaning of the term of advertising slogan dates back to 1932, being a political propaganda formula. slogans are part of the category of persuasive political messages, along with the messages from the poll programs and press conferences organized by the politicians, the speeches at the party meetings, the speeches held at election rallies and other political gatherings, posters, advertisements, press releases, interviews and appearances in televised debates (fârte, 2004-2005, 115). successful political slogans as widely mentioned in the existent literature on political communication campaigns, creating a slogan for the political campaign is the result of a team brainstorming, but only one person has the task to reflect on the various proposed variants. slogans should have strong names and call to action. also, slogans should be consistent with the overall communication campaign and should be clear enough to be easy to understand and remember. it is recommended that a slogan be concise, short and accessible in terms of the vocabulary used, and the adjectives it contains reflect the ideological line of the campaign. a good slogan must also be striking and should remain for a long time in the collective memory (joseph, 2012). an important element is the authenticity of the slogan and the perfect link with the image that the political actor already has. significant discrepancies between the slogan and the overall image of the candidate may lead to a fail (teodorescu, 2001, 123). in order to succeed, a slogan may be confronted with the following conditions: the condition of a positive form, the condition of meaning univocity, and the condition of common sense (fârte, 2004-2005, 118). thus, the negative form of a slogan may be a disadvantage for a candidate in motivating electors to vote. finally, it is recommended that the desire to be striking through a slogan has nothing to do with the insoluble formulas, which transgress the framework of the political discourse and which could undermine the sensitivity of certain electors (fârte, 2004-2005). scholars dealing with political campaigns slogans mention that there are several elements that differentiate them among other types of slogans, like advertising ones (sălăvăstru, 1999, 292-305). as they point out, political slogans are dissembled language, as it always says much more. as sălăvăstru argues, an excellent political slogan should always consider the fact that the simplicity is one of the most important features. due to the fact that it aims to reach large audiences and groups of people, political slogans can’t talk about programs, platforms and projects. instead, they should tell a story and call to action, talk about a dream and share the dream with the public. by making visible the candidate’s perspective and way of thinking, the slogans manage to state the position towards the other political opponents. a powerful political slogan needs to include the emotions of the public, as the public should like it and feel it says something about them or about their way of thinking (stoiciu, 2000; magnes, teyssier d’orfeuil, 2013; silnicki, 2016). amălăncei, cîrtiță-buzoianu, daba-buzoianu 3 image within text and slogans in a certain way, by investigating how different publics analyse and interpret the slogans, our papers deals also with the image within text. more precisely, it deals with the image within the slogans used by the candidates in the elections for the romanian parliament in 2016. in doing this, it looks at the representation constructed through text, by having in mind the philosophical relation image-object-subject, in which image stands for representation (mitchell, 2005), as it was previously explored in the analysis of the 2014 elections for the european parliament in romania (oprea & daba-buzoianu, 2015). thus, in the image making process, the relation object-subject is to be seen as a constantly changing phenomenon and also as a process in which the meaning of the object is constructed throughout communication. thus, the meaning of the object is created by the subject and it depends on a variety of elements, widely studied in the literature on the field. for the current study, the focus is not on these elements, although it will be explored in further studies, but on the perception and interpretation given by the participants to the slogan released by the candidates during the 2016 elections for the romanian parliament. as hall (2005) extensively argues, the key element in the process of imaging is the production of meaning, as the message, together with all the other elements in a poster, generate an image. from this point of view, the image to be explored within slogans is the representational component of the message, and not the image as a mental representation. this distinction is quite important as it underlines the conceptual framework of the image, seen in the current paper as the representation transmitted through the messages and deciphered by the public. as the current study is based on a small mixed-methods quantitative analysis, an inquiry about the image of the candidates will not be possible. instead, if we were to consider the complex process of image, we could easily say that the paper refers only to its first stages and explores the representation transmitted to the public. the context of the 2016 parliamentary campaign the year 2016 has brought a series of interesting and unexpected events both in romania and other countries. the very surprising brexit and trump’s election as a president of the usa, together with the political situation in the region (republic of moldova and bulgaria) are worth mentioning examples in this respect. romania was also in line with these tendencies, as 2016 was the first year in the countries’ history when the government was technocrat. the technocrat prime minister, dacian cioloș, was vividly supported by social media users as was considered the best prime minister by the young adults. unlike other campaigns for the romanian parliament, the 2016 campaign was not dominated by powerful political leaders, but rather by the political parties themselves, with one exception the technocrat prime minister in office – dacian cioloș, supported by the national liberal party. as some authors mention, it is quite clear that the 2016 elections meant a vote for the party and not a vote for the candidate, where the strong and well-organized parties had the first chance (grecu, 2017, 135). in romania, the 2016 parliamentary elections were dominated by the legislative changes (law 113/2015; law 78/2016) regarding the electoral system, replacing the mixed, controversial and non-functional uninominal vote with the classical vote based on a list and proportional representation. thus, the discussion about the party supremacy imposing the order of politicians on the list was again brought forward. there were differences from the previous campaigns also regarding the large-scale street banner which was banned, as well as constraints on the funding of political parties (state budget campaign financing, clear specifications for sponsorship and donations). looking for the best slogan: an analysis of the slogans of the 2016 romanian parliamentary campaign 4 method the aim of the paper was to explore the image within the slogans by looking at the way they have been perceived by two audiences: political analysts, commenting on online platforms, and students enrolled in a communication academic program. our intention was to investigate and compare how the two public categories refer to the political slogans. a mixed-methods approach was used: content analysis of the comments posted by the political analysts in two online media platforms: www.agerpres.ro and www.jurnalul.ro and a small survey based on questionnaire with students enrolled in the communication program at university ‘vasile alecsandri’ of bacau. the content analysis was conducted on two online media platforms (www.agerpres.ro; www.jurnalul.ro) in november-december 2016 and aimed to study how the political analysis referred to the political slogans and how they analyzed them. the political analysts posting comments on the slogans of the political candidates are: barbu mateescu, radu magdin, cristian pîrvulescu, marius pieleanu, alfred bulai, bogdan ficeac and antonio momoc. six of them posted on www.agerpres.ro and one on www.jurnalul.ro. the content analysis grid main elements were: topics of the message, the memorability feature of the slogan and the link with the political party and ideology. the questionnaire (n=40) used for the study was applied in may 2017, 6 months after the elections. the students participating to the survey are enrolled in the second year of the communication program at university ‘vasile alecsandri’ of bacau. from a total of 55 students present in class, only 40 agreed to participate to the study. the questionnaire was self-administrated. the participants were aged between 20 and 30. before this, details and the survey were provided to the students. the aim of the study was to investigate the way the slogans were perceived by the participating students, how they were interpreted by them and in what way they considered them successful. we also were interested to see in what way the students taking part to our study were interested in the political slogans and in what way they considered them in line with the image of the candidate. the questionnaire was designed to offer insights about the slogan awareness, as students were asked to match the political slogans with the parties. the low number of participants in the survey is due to the fact that this is a pilot study, to be followed by a larger quantitative one. results and discussion the content analysis of texts posted by the political analysts revealed a general discontent regarding the communication campaigns of the romanian candidates. when characterizing the political slogans, the analysts use the labels: uninspired, lacking identity, tautological, monotonous, which may indicate that they were not designed by communication specialists. in most of their comments, the analysts disagreed with the fact that the main topic chosen by the political actors engaged in the elections was patriotism. the high recurrence of the words romanian and romania was considered inappropriate for a political campaign in an eu member state. an interesting critique was brought up, as some would expect to see a link between the slogans and the political identity and ideology of the party. the absence of this connection or a poor one would lead, say the analysts, to confusion of the public. still, the comments posted by the political analysts do not mention in what way these connections should have been done and in what way would the public be interested to receive slogans comprising ideology messages. according to the analyst radu magdin, the theme romania was used by the majority of the parties, but in many different ways. as the analyst mentions, romania was used in association with leadership, protection, and intelligence. other analysts discuss http://www.agerpres.ro/ http://www.jurnalul.ro/ http://www.agerpres.ro/ http://www.jurnalul.ro/ http://www.agerpres.ro/ http://www.jurnalul.ro/ amălăncei, cîrtiță-buzoianu, daba-buzoianu 5 about the emotions that slogans should trigger and state that the ones used by psd and pnl do not stir any emotion. the dare to believe in romania may trigger a sense of insecurity, while romania ahead and we are romanians are truisms. another critique is linked to the fact the alde’s slogan we give romania back to romanians has nothing to do with the party’s political identity nor with its very recent history. the per slogan we protect romania is according to bogdan ficeac in the tone of the ecological message, but it lacks imagination. moreover, the party failed in the postdecember history to occupy a well-defined place on the political scene, so the idea itself does not convey a credible message. the udmr slogan, transylvania, the future for all of us, is addressed only to a certain electoral segment, the essence of the message being the requirement of territorial autonomy, which is in full agreement with their political program. pmp’s slogan fight for romania is criticised due to the fact that it was previously used in the elections for the eu parliament. the analysts considered that the most successful slogans are: you finally have somebody, slogan belonging to usr, which is better thought to be constructed in terms of novelty (new party, new politicians), but also easier to remember. another positive example is be smart, vote for romania launched by prm, which, by using the english word smart, tries to attract the younger segment, although it may contradict the party’s traditional target audience. in a very interesting way, some of the political analysts tried to evaluate the slogans with a check list, with elements wide spread in both the literature and in the professional activity of political consultants. thus, they consider that most of the slogans failed and were inefficient as were not easy-to-remember, did not call to action and did not consider properly the public segmentation. moreover, as the political analysts mention, this seems to be one of the most important problems of the slogans released by the candidates: addressing everyone and ignoring the core target. by doing this, the messages seem identical in terms of construction, but also from the point of view of the proposed meaning or vision, which either makes no sense or does not bring anything new. as the political analysts mention, the slogans were built around the idea of patriotism, and in many ways are very similar. although the following slogans: dare the believe in romania, romania ahead, we give romania back to romanians, fight to romania, we protect romania are released by different parties, with different identities and ideologies, the slogans have no distinct features and are very difficult to link to a certain political party. the labels similar and no imagination have been used by the analysts to describe the slogans. due to the fact that they all revolve around the same key concept and do not coagulate a memorable force-idea, capable of creating persuasive effects in the collective mentality, there is no hope for call to action. also, the high recurrence of the patriotism topic is considered somehow surprising due to the political context, that does not justify the need for a patriotic message. the current study gathered data from a small survey based on a questionnaire aiming to investigate how students studying communication in their undergraduate program. in line with the comments of the political analysts, 24 of the participants in our quantitative study say that slogans are very important in elections and have a significant role for getting people to vote for you. the students mention that this importance is linked to the fact that a slogan represents the essence of the communication campaign during the elections. 16 of the participants answered that slogans are relevant only if they are complementary with other messages and with the overall image of the candidates and parties. the students participating to our study consider that the slogans should be/have: memorable (24), strong message (14), commercial character (2), while none consider that they should have simplicity and novelty as a feature. still, the majority of the participants consider that the slogans are not inspiring at all. very interesting is the looking for the best slogan: an analysis of the slogans of the 2016 romanian parliamentary campaign 6 fact that 30 of the students remembered that most of the slogans in the elections were built around the theme of change, while only 5 said that they were focused on romania and romanians. this is very much not in line with the comments of the political analysts. thus, although the idea of change is not very visible in the slogans, the students answering our questionnaire remembered it instead of the patriotic recurrent topic, vividly discussed by the political analysts. when asked about the most successful and powerful slogans, the participants choose for evaluation force message criteria and include dare to believe in romania and fight for romania, fact that is contradictory to the evaluation of the political analysts. the slogan you finally have somebody to vote for was considered successful for its novelty, while protect romania and be smart, vote for romania conveyed the idea of security, we are romanians and romania ahead comprise the idea of continuity and we give romania back to romanians referred to the historical past. thus, the participants evaluated as best-designed slogans: dare to believe in romania and be smart, vote for romania, followed by we give romania back to romanians. the slogan be smart, vote for romania, in the case which the word smart was the english word, was considered very appropriate addressing the young public (figure 1). figure 1 among the least successful slogans, the students ticked transylvania, the future for all of us with 10 answers, you finally have somebody and protect romania with 6 answers each, as well as we are romanians, with 5 answers. the large number of references obtained by the udmr slogan is justified by the fact that the message does not concern the whole electorate, but only the ethnic minority traditionally voting for this party. the usr slogan brings an element of novelty by identifying itself with the people that the party proposes on the lists and who are not politicians, but professionals, scientists who are trying to rally the undecided electorate. amălăncei, cîrtiță-buzoianu, daba-buzoianu 7 when asked if they are influenced by the slogan when voting for a party or candidate, 20 respondents think the slogan is important, compared to 10 of them who believe it is an essential element. although, previously, for the question: how important is the slogan in the election campaign? all participants considered it very important or quite important, only half of the total have admitted that the slogan has a direct influence on the vote. the audience is able to evaluate the role and importance of the campaign slogan in terms of communication, but it is not the defining element that inclines the vote balance in a campaign. the students were also asked to associate the slogan with the party that used it in order to determine which of the 9 slogans was remembered and connected to the messages that the political formations had transmitted. it appears that among the most well-known slogans is you finally have somebody (usr) with 21 answers, dare to believe in romania (psd) with 16, and transylvania, the future for all of us (udmr) with 12 answers. the slogans which were less recognized by the students are be smart, vote for romania (prm), with 0 answers, we give romania back to the romanians (alde) with 3 answers, and fight for romania (pmp) with 5 answers. the ranking of the usr slogan on the first position, but also the most remembered and associated with the party that promoted it, show that the targeted segment was the young electorate. the recognition of the udmr slogan is due to the word transylvania which is found within and immediately determines the connection with the political formation. the slogan be smart, vote for romania, of the prm, was confused with we are romanians, of the pru, as a result of the message. thus, although it was appreciated from the point of view of the communicative construction, there was, however, a mismatch with the ideology promoted by the party. the same thing happened with the alde slogan we give romania back to the romanians, which was confused with those of the pnl and pru. we can also see that the slogans of the large parties, such as the psd and the pnl, were well represented, while the message of the small parties did not catch the attention of the young audience. the exception was the usr slogan, which managed to rally the young, but also to remain memorable after the end of the electoral campaign. figure 2 looking for the best slogan: an analysis of the slogans of the 2016 romanian parliamentary campaign 8 regarding the question do you think it is good to have a similarity between slogans? a number of 30 students attending the study believe that it is a mistake, because there is no difference between them, while 10 consider that it is a good idea to create a deliberate ambiguity. through our approach, we aimed to investigate how the political slogans have been interpreted and remembered among the students from the communication study programme. the analysis shows that they are interested in the messages sent by the political parties and the way in which they are conceived and promoted at the level of the young electorate, as well as in connection with the party’s identity. there were slogans that were appreciated, but which, from the students’ perspective, did not suit the political formations, creating confusion among the audience, namely the prm slogan or the alde slogan. at the same time, the thematic similarity that existed between the slogans created confusion, both at the representative level and in terms of being topical in the political context in which we report. although there was an interest in the slogans promoted during the campaign, they were not considered to be defining elements in determining the voting option for a particular party, even though most subjects admit that they do play an important role in promoting parties and candidates. conclusion although the current research is based on a small scale study, it reveals some interesting aspects regarding the way the public refers to the political slogans. first, there are similarities between the existent literature on the field regarding slogans and the opinions expressed by the political analysists and the participants in our survey. in line with the previous studies, it is acknowledged that the slogans should be simple, memorable and adapted to the target audience of the political candidate. still, as expressed by some of the political analysis, the slogans are expected to refer to the political program, although it is widely accepted that this would lead to uninspiring message. secondly, our study pointed out that even though the political analysts underlined that the slogans were too much focused on patriotism and used too many times the words romania and romanians, six months after the elections ended the students remembered that the main topic of the slogans was change. references anton, m. (2006), le discours politique et la manipulation du récepteur, anadiss, 17-51. fârte, gh.-i. (2004-2005), comunicarea politică: aspecte generale şi ipostaze actuale (in english political communication: general issues and current hypostases), argumentum. journal of the seminar of discursive logic, argumentation theory and rhetoric, 3, 101-146. garric, n. (1996), étude des structures linguistico-discursives du slogan publicitaire: activité et modes de quantification, diss, paris 3. grecu, f. (2016-2017), alegeri parlamentare 2016: proporţionalitate, finanţare, scrutin de listǎ, voturi şi mandate parlamentare (in english parliamentary elections 2016: proportionality, funding, list scrutiny, votes and parliamentary mandates), polis, journal of political science, vol. v, no.1(15), 129-144. hall, s. (2005), representation, london, thousand oaks & new delhi, sage publications. jaubert, m.j. (1985), slogan, mon amour, paris, bernard barrault. https://philpapers.org/asearch.pl?pub=11449 https://philpapers.org/asearch.pl?pub=11449 amălăncei, cîrtiță-buzoianu, daba-buzoianu 9 joseph, m. (2012, february 23), comment se construit un slogan de campagne. le figaro. available at http://elections.lefigaro.fr/presidentielle2012/2012/02/23/01039-20120223artfig00739-comment-se-construit-unslogan-de-campagne.php. kohli, c., leuthesser, l., & suri, r. (2007), got slogan? guidelines for creating effective slogans, business horizons, 50(5), 415-422. lee, m. c.-h. (2014), le slogan publicitaire, dynamique linguistique et vitalité sociale: la construction d’une esthétique sociale à travers la communication publicitaire, (doctoral dissertation, université paul valéry-montpellier iii). mitchell, w.t.j. (2005), what do pictures want? the lives and loves of images, chicago, the university of chicago press. muraru, a. (2016-2017), alegerile generale pentru parlamentul româniei din 2016 reflectate în presa internaţională. teme, analize, interpretări i (in english general elections for the romanian parliament in 2016 reflected in the international press. themes, analyzes, interpretations i), polis, journal of political science, vol. v, no.1(15), 61-99. oprea, d.-a., daba-buzoianu, c. (2015), thèmes européens et représentations de l'union européenne: les affiches de la campagne pour les élections européennes 2014, journal of media research, 8(3), 63-76. reboul, o. (1975), le slogan, paris, p.u.f. sălăvăstru, c. (1999), discursul puterii (in english the power discourse), iaşi, institutul european. seidman, s. a. (2008), posters, propaganda, and persuasion in election campaigns around the world and through history, peter lang. silnicki, f. (2016, april 26), slogans politiques: une communication souvent maladroite, lafrenchcom.fr. teodorescu, b. (ed.) (2001), marketing politic şi electoral (in english political and electoral marketing), bucharest, comunicare.ro. stoiciu, a. (2000), comunicarea politică – cum se vând idei şi oameni (in english political communication – how to sell ideas and people), bucharest, humanitas. teyssier d’orfeuil, l., magnes, j.-p. (2013), la méthode coué pour les nuls, paris, éditions first-gründ. thoveron, g. (1996), comunicarea politică azi (political communication today), bucharest, antet. web resources: http://www.agerpres.ro http://www.jurnalul.ro http://elections.lefigaro.fr/presidentielle-2012/2012/02/23/01039-20120223artfig00739-comment-se-construit-un-slogan-de-campagne.php http://elections.lefigaro.fr/presidentielle-2012/2012/02/23/01039-20120223artfig00739-comment-se-construit-un-slogan-de-campagne.php http://elections.lefigaro.fr/presidentielle-2012/2012/02/23/01039-20120223artfig00739-comment-se-construit-un-slogan-de-campagne.php https://www.ceeol.com/content-files/document-299128.pdf https://www.ceeol.com/content-files/document-299128.pdf https://www.ceeol.com/content-files/document-299128.pdf http://www.agerpres.ro/ http://www.jurnalul.ro/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 129 brief analysis on the impact of covid-19 on the european economy costel ceocea “vasile alecsandri” university of bacau, cceocea@sifm.ro, bogdan vasile nichifor “vasile alecsandri” university of bacau, bogdan.nichifor@ub.ro, laura cătălina ţimiraş “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract in the context in which globalization generates chain reactions, the economic disturbances generated by the covid-19 crisis are encountered at the global, european and of course regional level and, due to the novelty of the manifestation of the crisis, the capacity of known economic models to provide quick solutions in this context has proved to be limited. most of the economic imbalances that have occurred are not due to the epidemic itself, but to the measures taken to prevent the spread of this virus. attempts are being made globally to identify exit scenarios from the crisis. such scenarios are the result of individual and collective action by states affected by the pandemic. obviously, the results are different depending on the characteristics, potential, commitment of each of the states / areas affected by the economic crisis and can be evaluated in term of efficiency only after the trigger factor will cease to exist. keywords covid-19, crisis, economic growth, european union, recovery solutions jel classification f01; g01 introduction the current "covid-19" crisis has induced unprecedented imbalances in the flow of channels through which the correlation between supply and demand is made, in those specific to the financial-banking and capital market, so that estimates of the global economic evolution of before the onset of the crisis were completely overthrown. most of the economic imbalances that have occurred are not due to the epidemic itself, but to the measures taken to prevent the spread of this virus. for example, most countries have opted to block activities or self-quarantine as a precautionary measure, encouraging people to stay away from each other, thus closing schools, universities and other public institutions, and placing strict restrictions on both international travel, as well as in internal affairs, also restricting the movement of labor, goods and consumers. due to the pandemic, most countries have closed their restaurants, cinemas, transportation services, hotels, shops and other businesses that required direct contact with the customer. in the context in which almost 100 countries have closed their national borders since march, the movement of people and tourist flows have stopped (mishra, 2020). in a document published in january 2020, the united nations estimated an increase in world gross product of 2.5% by 2020. subsequently, in may 2020, the same organization estimated a decrease of the world economy by 3.2%, and the expected brief analysis on the impact of covid-19 on the european economy 130 production (output) decreases for the period 2020 2021 canceling the output gains of the last four years. the decrease of the world economy by 3% is also estimated by the international monetary fund (mfi, 2020), which also estimates that the us economy will contract by 5.9% this year, the eurozone by 7.5%, and that of developing economies from europe with 5.2% (naharand and farhand, 2020). the world bank, in a darker scenario, estimates a decline in the world economy by 5.2% in 2020, appreciating the current crisis that we are going through as the worst in the last 150 years (see table no. 1) table 1. growth of gdp in global recessions world 1975 1982 1991 2009 2020 1,1 0,4 1,3 -1,8 -5,2 source: world bank group, global economic prospects, june 2020, pp.17. in the context in which globalization generates chain reactions, the economic disturbances generated by the covid-19 crisis, which have not been known before, are encountered globally, and implicitly at european and of course regional level and, due to the novelty of the manifestation of the crisis, the capacity of known economic models to provide quick solutions in this context has proved to be limited. the aforementioned international organizations (imf, wbg, un) based on macroeconomic analyzes have developed forecasts for the recovery from the crisis, estimates indicating that the economy will begin the recovery process starting in mid2020, 2021 being marked by positive economic growth: 5.8% according to the imf, 4.2% according to wbg and 4.1% according to the un. unfortunately, these estimates are marked by uncertainty, both in terms of the risk of the pandemic prolonging and in the sense of the spread for a longer period of time of the economic and financial imbalances generated by it. macroeconomic changes generated by the covid-19 crisis at european level ”the corona virus has shaken europe and the world to its core, testing our healthcare and welfare systems, our societies and economies and our way of living and working together. people have lost their loved ones and their jobs, while plans and futures have been cast into uncertainty. europe was confronted by a public health challenge that quickly became the most drastic economic crisis in its history.” (european commssion, 2020). the three important forms of the economic impact of covid-19 on the global economy are in the opinion of specialists the following (mishra, 2020): 1. direct impact on production. production has already been substantially affected by the shutdown, especially in the area of global industries. other countries are also beginning to feel a direct impact as their own authorities take similar measures. slowing down or blocking production in many countries has effects on exporters to other countries. according to the world bank, even without new outbreaks of disease, these areas are likely to grow slowly in the first half of 2020. 2. supply chain and market "disturbance". many manufacturing companies rely on intermediate inputs imported from china and other disease-affected countries. many companies also rely on chinese sales to achieve financial goals. the slowdown in economic activity, coupled with transport restrictions in the affected countries, is likely to have an impact on the production and profitability of some global companies, especially in manufacturing and the raw materials used in manufacturing. 3. the impact on financial companies and financial markets. temporary disruptions of the access to inputs and / or disruption of production could have ceocea, nichifor, țimiraș 131 negative effects on firms, especially those with inadequate liquidity. traders in financial markets may or may not anticipate or understand correctly which companies may be vulnerable. the increase in risk could show that one or more key financial market players have taken unprofitable investment positions in the current conditions, further undermining confidence in financial instruments and these markets. în termenii rezultatelor economice, recesiunea declanșată de criza covid-19 la nivelul eu este ușor observabilă pe baza evoluției gdp. astfel, începând cu anul 2020, evoluția trimestrială a pib la nivelul ue a înregistrat o scădere cu 3,2%, comparativ cu trimestrul precedent. (figura nr. 1) in terms of economic results, the recession triggered by the covid-19 crisis at eu level is easily observable based on gdp developments. thus, starting with 2020, the quarterly evolution of gdp at eu level decreased by 3.2% compared to the previous quarter. (figure no. 1) figure 1 source: eurostat, 2020 (accesed at 24.06.2020) in the context of the recession, questions about how much the european economy will be affected and how long it will last are inherent. forecasts for the recovery of the eu economy show that after an economic downturn in 2020, in the next year (2021) we will see positive economic growth (table 2), but these estimates are uncertain mainly due to the impossibility of estimating the period. during which the pandemic will manifest. table 2. estimates of economic growth eu 27 estimates ifm estimates ce estimări united nations 2020 2021 2020 2021 2020 2021 -7,1 4,8 -7,4 6,1 -5,5 2,8 source: international monetary fund (2020), european comission (2020), united nations (2020) however, the pessimistic scenarios, which take into account the emergence of a new wave of pandemic, indicate much more pronounced economic declines. for example, in a communication from the european commission of 27 may 2020, it was estimated that the percentage of gdp decline at eu level in the context of a second wave, namely the extension of isolation measures, would be 16% for year 2020. beyond the crisis triggered at the beginning of 2020 by covid-19, the european economy has entered a trend of slowing down the pace of economic growth since 2019 (see figure no. 1) trend that is part of the one manifested globally. thus, the united nations announced in early 2020 that world gross product increased by 2.3% in 2019, 1, 2 0, 9 0, 6 0, 7 0 ,9 0, 1 0, 2 0, 2 0, 1 0, 6 0, 5 0, 2 -0 ,2 0, 1 0, 6 0 ,8 0, 7 0, 6 0, 3 0, 4 0, 3 0, 7 0, 8 0, 7 1, 0 1 ,2 0, 6 1, 1 0, 7 0, 7 0, 5 0, 6 0, 5 -0 ,3 -0 ,5 -1 ,7 -3 ,0 -0 ,1 0, 4 0 ,6 0, 3 1, 0 0, 5 0, 6 0 ,8 0, 1 0, 2 -0 ,3 -0 ,2 -0 ,3 -0 ,1 -0 ,4 -0 ,3 0, 5 0, 4 0, 3 0 ,5 0, 3 0 ,5 0, 5 0, 8 0, 5 0, 5 0, 5 0, 6 0, 4 0, 4 0, 8 0, 7 0, 8 0, 8 0, 8 0, 3 0, 4 0, 3 0 ,5 0, 6 0, 2 0, 3 0, 1 -3 ,2 -4,0 -3,0 -2,0 -1,0 0,0 1,0 2,0 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 q _2 q _3 q _4 q _1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 quarterly evolution of gross domestic product at market prices, in european union (27 countries), (percentage change on previous period) brief analysis on the impact of covid-19 on the european economy 132 this being the lowest growth rate since the crisis of 2008-2009. so the question arises is it the current crisis triggered by covid-19, or was it just an accelerator of the entry into recession. analyzing the evolution of gdp in recent years and, implicitly, the specific one after the onset of the covid crisis, it is found that it presents the specific features of the business cycle, being comparable to the evolution of gdp specific to the period before the penultimate crisis that marked the world economy. comparing the evolution of gdp at the level of the two economic cycles we find that (see figure no. 1): the period preceding the penultimate major crisis (2008-2009) was marked, at eu-27 level, by economic growth in the period 2000-2007 (quarterly changes compared to previous positive gdp periods). at this level we distinguish two periods: 2000 2003 with a declining gdp growth rate and the period 20042007, in which economic growth was more accelerated. since 2007, there has been a slowdown in economic growth and, after this period, starting with the second quarter of 2008, there has been an economic recession, which ended in mid-2009; referring to the period following the crisis, from 2008 to 2009, and the one which preceded the covid-19 crisis (the second economic cycle we are referring to), it can be seen that, similarly, it was marked by economic growth (2010 – 2013) with lower and, in some places, negative gdp growth rates and the period 2013 2018 with comparatively higher gdp growth rates, followed by the slowdown in economic growth starting from the second quarter of 2019 (although it remained a positive one) and recession in the first quarter of 2020. given the similarities in economic developments over the two periods analyzed, we tend to believe that since 2019 the eu economy was on the verge of recession. of course, this evolution of gdp can be largely attributed to the impact that brexit has had on the european economy. therefore, the hypothesis that the emergence of covid-19 is an accelerator of the entry into crisis, which will occur (at a slower pace) even in its absence, is very plausible. an element of differentiation between the two periods of crisis compared is the pace at which gdp fell by more than 3% in one quarter. thus, if in the case of the crisis from 2008 to 2009, a decrease of gdp by 3% (level that represented the maximum point of the crisis) was reached after 4 quarters of negative economic growth; in the current crisis, gdp fell by 3.2% in the first quarter of the recession, precisely because of the way in which the covid-19 crisis has left its mark on the economy. practically, the crisis generated by covid-19 is not similar in terms of disruptions and evolution with any other crisis that the european union has faced, many of its effects not being anticipated. (european commission, 2020) the impact of the covid-19 crisis on the various sectors of activity has not been uniform, with sectors where, within a few months of the onset of the crisis, there have been declines to less than half of activity or more, under the impact, in particular, of protection meassures imposed at the level of governments. the first and most affected sectors were those that involved direct contact with the consumer. they practically collapsed immediately after the onset of the crisis, given that restrictions on the spread of the virus were aimed at limiting it and even ceasing activity. for example, the aviation industry registered a decrease in the number of passengers at european level by 96.8% between january and april 2020 (source: icao uniting aviation, 2020). along with transport, tourism has been one of the leading sectors in terms of the impact of the covid-19 crisis. thus, according to statistical data, in march 2020 at eu level, nights spent at tourist accommodation establishments decreased by 57.6% compared to the same month of 2019. (according to eurostat, 2020) in addition to the sectors where the collapse was immediate, the shock wave spread and continues to spread to other sectors. ceocea, nichifor, țimiraș 133 according to estimates by the united nations industrial development organizationunido, in the industrialized economies of europe, manufacturing production decreased by 4.4% in the first quarter of 2020, compared to the same period last year, a decrease that continues practically a trend manifested in 2019, so previously the covid-19 crisis, triggered as a result of the economic effects generated by brexit as well as other trade restrictions. however, the decrease rate manifested in 2019 is much lower compared to the one manifested in the first quarter of 2020. international trade has also been affected by the covid-19 crisis. in relation to the eu's international trade, it has been on the rise for the last two decades. the manifestation of the covid-19 crisis led to decreases in imports and exports, the international transactions of eu-27 countries reached in april 2020 values by about 28% lower in imports and over 30% in exports than those recorded in april 2019 , being the lowest values in the last 5 years. (eurostat, 2020) similarly at eu level, imports and exports by each of the member states decreased sharply (see figure 2). figure 2 source: eurostat, 2020 (accesed at 24.06.2020) the pandemic affected not only international trade, but trade as a whole, as evidenced by the decline in private consumption. thus, it is estimated that by the end of 2020, at eu level, private consumption will decrease by 8.5% (european commission, 2020). this decline is, on the one hand, alarming in the context of population spending being one of the most important forces of economic growth, but, on the other hand, justifies estimates of the decline in gdp in 2020. for example, in year 2018, for which we have data, private consumption represents 53.4% compared to the gdp value. (european commission, 2020) of course, consumption has changed not only in terms of value, but also in terms of structure. thus, on the one hand, the pandemic generated by covid-19 has led to a decrease in the tendency of the population to spend by reducing, in general, spending on non-essential products and services and, on the other hand, there has been a product orientation toward food (sometimes this category of products exceeds the levels before the onset of the pandemic) and to products for entertainment at home, according to a study conducted in several countries around the world, including europe. (jones, 2020) referring to the evolution of the exchange rate, we find that with the onset of the covid19 crisis, there was a certain instability of it. thus, in eu member states outside the euro area, exchange rate fluctuations have been recorded starting with 2020, in the -2 8, 8 -3 0, 9 -2 8, 6 -1 5, 8 -2 1, 6 -2 1, 9 -2 2, 0 -3 0, 4 -3 7, 2 -3 8, 5 -3 6, 7 -3 3, 7 -3 4, 6 -2 7, 3 -2 8, 7 -4 2, 6 -2 8, 7 -2 7, 8 -1 9, 8 -1 4, 9 -2 9, 1 -3 9, 1 -3 4, 1 -4 1, 4 -3 7, 3 -2 7, 4 -2 5, 9 -2 4, 0 -1 9, 5 -3 7, 9 -1 3, 1 -3 1, 3 -1 7, 3 -1 1, 5 -3 0, 6 -4 0, 6 -4 2, 5 -2 5, 0 -4 1, 6 3, 8 -1 4, 6 -2 1, 5 -4 4, 2 -3 6, 9 -1 7, 4 -1 8, 2 -1 7, 9 -3 0, 2 -3 9, 8 -4 7, 2 -2 9, 7 -4 2, 9 -2 0, 5 -2 0, 0 -50 -40 -30 -20 -10 0 be lg iu m bu lg ar ia cz ec hi a d en m ar k g er m an y es to ni a ir el an d g re ec e sp ai n fr an ce cr oa tia it al y cy pr us la tv ia li th ua ni a lu xe m bo ur g h un ga ry m al ta n et he rl an ds a us tr ia po la nd po rt ug al ro m an ia sl ov en ia sl ov ak ia fi nl an d sw ed en evolution of imports and exports of eu countries in april 2020, compared to the same month of the previous year (+/%) imports exports brief analysis on the impact of covid-19 on the european economy 134 sense of the general devaluation of the national currency against the euro (with the exception of denmark and bulgaria). on the other hand, the euro currency devalued in relation to the american and swiss currencies, a devaluation that manifested itself since 2019, but, at least in relation to the swiss currency, the fall was much steeper after the outbreak of the pandemic. (see figure 3). figure 3 source: eurostat, 2020 (accesed at 24.06.2020) another problem that has arisen in all the economies affected by the covid-19 crisis is that of labor market imbalances. according to estimates made by the international labor organization in may 2020, at european level (northern, southern and western europe), the total working hours decreased by 4.3% in the first quarter of 2020 and by 14, 2% in the second quarter. regarding unemployment, although in the first four months of 2020 eurostat data show that at eu level the unemployment rate did not increase, but even decreased compared to at least the same period of 2019, the imbalances generated by covid-19 will be reflected and in the unemployment rate according to european commission estimates (9% in 2020). the recovery. scenarios there are many scenarios for a recovery from this global crisis. a list of them is summarized by naharand and farhan (2020): 1. the economic recovery in the form of v, ie at the end of the acute period of the pandemic (closure of activities) we will witness a rapid return to economic normalcy. this evolution was also anticipated in romania by the government in the first weeks of the pandemic. although some of the economic data after the lifting of the state of emergency seemed to be encouraging, such as the volume of turnover for retail trade (https://www.money.ro/citu-anunta-inca-odovada-pentru-revenirea -in-your-economy-turnover-volume-for-retail-tradeincreased-compared-to-the-same-period-of-the-previous-year-we-prepare-ec /), subsequent data have suggested rather another type of evolution, less accelerated. the source of such a development is, in the opinion of the supporters, the economic support programs promised at almost all countries affected by the crisis. 90,0 95,0 100,0 105,0 110,0 115,0 20 19 m 01 20 19 m 02 20 19 m 03 20 19 m 04 20 19 m 05 20 19 m 06 20 19 m 07 20 19 m 08 20 19 m 09 20 19 m 10 20 19 m 11 20 19 m 12 20 20 m 01 20 20 m 02 20 20 m 03 20 20 m 04 20 20 m 05 evolution of euro exchange rates monthly data (january 2019 = 100%) swiss franc us dollar bulgarian lev czech koruna danish krone croatian kuna hungarian forint polish zloty romanian leu swedish krona ceocea, nichifor, țimiraș 135 2. u-shaped economic recovery. this development means that it will take longer to return to economic normalcy. this form of recovery seems to be more in line with the situation where the reopening of economies will be progressive and the situation will be different from before the pandemic. the famous nouriel roubini claimed that the return after the current crisis will be in the "u", or even "a little closer to an l" a recession similar to the great depression of the 1930s, with a drastic decline and a stagnation spread over several years, not just for a few quarters. moreover, the same roubini stated that during the global financial crisis (from 2008-2009) production took three years to record a sharp decline. this time it didn't take three years, not even three months. in three weeks we had a sudden collapse on each component (https://www.bursa.ro/nouriel-roubini-revenirea-economica-va-fi-in-u-sauchiar-mai-aproape-de-un-l-87,186,934). 3. w-shaped or double-drained economic recovery means that, after a slight recovery, we will witness a fall again and then a final economic recovery. this development would be possible in the event of the rapid disappearance of the initial effect of the monetary and fiscal measures put in place to combat the coronavirus. 4. l-shaped economic recovery, this being the most unfavorable evolution associated with the pandemic crisis. specifically, such an evolution would mean that the time required to return would be a long one. it is the darkest economic scenario and would involve strong changes not only at the economic but also social level. unfortunately, some specialists appreciate that such a return could be valid for romania as well. thus, the gross domestic product decreased in the second quarter, compared to the first three months of the year, by 12.3%, and compared to the same quarter of 2019 the decrease is 10.5%, according to the national institute of statistics. although this decrease is lower than the average in the european union, 14.4% according to eurostat, we must not forget the dependence of the romanian economy on the most important european economies. such scenarios are the result of individual and collective action by states affected by the pandemic. obviously, the results are different depending on the characteristics, potential, commitment of each of the states / areas affected by the economic crisis. in general, the areas of action in this context are the following (mishra, 2020): 1. fiscal area rich countries have introduced massive health care programs and increased public spending to counter the economic effects of the covid-19 pandemic. for poorer countries, options for fiscal and monetary action are more limited, with an important role that international financial organizations can play here. most developed countries have provided important economic responses to the covid-19 pandemic, accelerating spending and using monetary policy to cushion the shock generated by the closure of some economic sectors. 2. macroeconomic and development policy area in response to the escalating medical emergency and the rapidly deteriorating economic outlook, national authorities and multinational entities around the world are considering unprecedented economic policies. central banks in developed and developing countries have moved aggressively to help avert the crisis, lowering interest rates, injecting liquidity and providing emergency financing for businesses and households. this is also the case in romania, where the national bank has reduced the monetary policy interest rate (https://www.bnr.ro/politica-monetara-4311-mobile.aspx), and the government has developed and implemented projects to support the business environment , such as sme invest. such direct support measures can play an important role in limiting short-term socio-economic effects, while maintaining the capacity for brief analysis on the impact of covid-19 on the european economy 136 prompt recovery. such measures may also include tax deferrals, governmentsubsidized short-term employment incentive schemes, moratoriums on mortgage payments and direct cash payments. very importantly, social protection programs need to reach those most in need during the crisis, with a focus on the elderly and those in vulnerable situations. 3. the area of markets for essential goods and services governments need to address the basic issues of supply and demand for essential goods, in order to prevent shortages and increase prices in the short term. it is essential to ensure the production and distribution of food and medicine, which in turn requires the maintenance of transport and basic public services (water, energy and communications). 4. foreign exchange market area in order to avoid a depreciation of the domestic currency as a result of the cessation of economic activity, such as exports, governments will most likely have to establish controls over foreign exchange transactions. the government must be able to manage foreign exchange reserves by calculating the cash flow needed to finance imports of food, medicine, energy and other basic materials for at least six months, taking into account the dynamics of external debt. 5. area of international organizations international organizations are important players in critical episodes of international politics, with power in mediation, dispute resolution, peacekeeping, sanctions and more. they also help manage various key areas of international interest, from global health policy to monetary policies around the world (abbott and snidal, 1998). the covid-19 crisis has shown how important international institutions in various fields are for collective health and safety. the efforts of the world health organization, the world bank group, the oecd can be key to resolving global crises. they can support concentrated and effective measures in economies that need to address the health, economy, employment and social impact of the pandemic. 6. investment area foreign direct investment (fdi) has become an important factor in the development of capital, in the creation of new jobs, in the transfer of technology and skills from one market to another. some developing countries have seen major benefits from these investments in terms of economic development and rising living standards. fdi can also play a significant role in financing the achievement of the sustainable development goals on basic infrastructure, food security, climate change mitigation and adaptation, health and education. to do this, governments need to mobilize private investment more effectively, channel it into sustainable development sectors and maximize their positive economic, social and environmental impact. such areas of action can lead to the identification of the most effective strategies and concrete actions to solve the crisis generated by the pandemic. obviously, a specific calibration is needed depending on the characteristics of each economy. conclusions in the presented context, knowing the present, the question arises: what will be the longterm impact that the covid-19 pandemic will have on the national and global economic evolution. moreover, we can continue to ask ourselves whether the economic crisis of 2008-2009 or that of 1929-1933 and how to solve them can be a model for estimating the evolution of the economy in the next period. or, given the triggering factor or, as the case may be, the factor that accelerated the entry into the crisis, can the alleged crises be compared? we can also ask ourselves whether it is realistic that the objective (s) of the recovery measures are associated with a return to what was before the crisis (as happened in the 2008-2009 crisis) or the preparation of the economy and policies. ceocea, nichifor, țimiraș 137 sectoral, on new coordinates, completely different to respond to new developments in the world, is rather the solution. of course, the answers will come as time passes and this new phenomenon for the contemporary world will reveal all its surprises. references abbott, kenneth. 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https://www.bursa.ro/nouriel-roubini-revenirea-economica-va-fi-in-u-sau-chiar-mai-aproape-de-un-l-87186934 https://www.money.ro/citu-anunta-inca-o-dovada-pentru-revenirea-in-v-a-economiei-volumul-cifrei-de-afaceri-pentru-comertul-cu-amanuntul-a-crescut-fata-de-aceeasi-perioada-a-anului-precedent-pregatim-ec/ https://www.money.ro/citu-anunta-inca-o-dovada-pentru-revenirea-in-v-a-economiei-volumul-cifrei-de-afaceri-pentru-comertul-cu-amanuntul-a-crescut-fata-de-aceeasi-perioada-a-anului-precedent-pregatim-ec/ https://www.money.ro/citu-anunta-inca-o-dovada-pentru-revenirea-in-v-a-economiei-volumul-cifrei-de-afaceri-pentru-comertul-cu-amanuntul-a-crescut-fata-de-aceeasi-perioada-a-anului-precedent-pregatim-ec/ (2 rânduri libere, 11p) statistical analysis of trade relations of romania with the eu member states harja eugenia phd, vasile alecsandri” university of bacău, romania stângaciu oana ancuţa phd, vasile alecsandri” university of bacău, romania summary this study was done to analyse the structure in teritorial profile of the commercial relations of romania compared to the european union member states for year 2011. based on the value of export and import trade flows for each eu member state with romania and using statistical methods of analysis, there were subjected to processing existing information to determine the spatial distribution of foreign trade in the perspective of key trade partners community market. as indicators such as trade balance and coverage of imports by exports is a proof to the effectiveness of trade relations between romania and the eu member states, there were also calculated the mentioned indicators for each member state. key words fob export, cif import, trade balance, coverage degree of imports with exports jel clasification c10, f10, f49, o11 introduction trade, by its activities nature, is one of the most important sectors of a country or a community of countries, representing a main component in the commensurate level of development of a national economy. meanwhile trade by its functions plays an important social role, as a point of contact between citizens and their local community, through which it circulates the latest information in terms of life styles, schemes and cultural activities. the more developed a country is, the better the quality of life of people in that country, but none has all the material and human resources needed to ensure a good level of competence. this requires the development of exchanges with other countries: on the one hand to export goods that are in excess and in which production they are specialized, on the other hand to import products that are not available at all or in sufficient quantity. romania in the european union has created new opportunities for economic development, but it also required the need to increase the competitiveness of the national products, without which we can not speak anymore about a positive development of the trade balance. opening boarders for trade with goods among member states has raised a new problem concerning the collecting of the foreign trade data inside the member states, without which we could not know the existing situation in this area. therefore they went to collecting statistical data concerning the intra-community statistical data trade directly from the operators who carry out these operations, throughout the intrastat system. fob exports of romania with the eu member states fob exports of romania with the eu member states in 2011 were 32.160 mil euro, the main export states as destination, with a share of 5% of the total being: germany – 8.424 mil euro, meaning 26,2% of total exports towards the comunity market; italy – 5.800 mil euro (18,0% of the total exports of the country), hungary – 2.568 mil euro ( 8,0% of the total exports) and bulgaria – 1.636 mil euro (5,1%) 1 2 2 3 3 5 3 6 5 0 8 0 8 9 1 0 7 1 6 8 1 8 1 2 0 3 3 5 6 6 1 3 7 2 0 7 5 4 9 0 4 9 9 6 1 0 7 5 1 1 0 1 1 4 0 4 1 4 4 8 1 6 3 6 2 5 6 8 3 3 8 0 5 8 0 0 8 4 2 4 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 lu x e m b o u rg la tv ia e st o n ia li th u a n ia m a lt a c y p ru s ir e la n d f in la n d d e n m a rk p o rt u g a l s lo v e n ia s w e d e n g re e c e s lo v a k ia c ze c h  r e p u b li c b e lg iu m a u st ri a p o la n d s p a in n e th e rl a n d s u n it e d  k in g d o m b u lg a ri a h u n g a ry f ra n c e it a ly g e rm a n y   figure 1. fob exports of romania with the eu member states in 2011 (mil. euro) source: processing by the tempo-online other export markets of romania that have a less share, between 1% and 3% of the total exports, are markets that have imported goods from romania, of which value was between 0,3 and 0,9 bil euro: belgium – 904 mil euro, meaning 2,8% of the total exports towards the comunity market, the czech republic – 754 mil euro, with 2,3% of the total exports, slovakia – 720 mil euro (2,2% of the total exports), greece – 613 mil euro (1,9%) and sweden – 356 mil euro (1,1%) and on the last places are states within a longer distance. they receive goods from romania of a value less than 0,4 bil euro: luxembourg – 12 mil euro ( 0,04% from the total exports), lethon – 23 mil euro ( 0,07% of the total exports), estonia – 35 mil euro (0,11%) and lithuania – 36 mil euro ( 0,11%) netherlands 4,4% united  kingdom 4,5% bulgaria 5,1% hungary 8,0% other state 23,3% france 10,5% italy 18,0% germany 26,2%   figure 2. structure of exports by eu countries in 2011 (%) source: processing by the tempo-online cif imports of romania with the eu member states fob imports of romania with the eu member states in 2011 gathered 39.947 mil euro, the main imports, with a share of over 5% of the total coming from germany – 9.405 mil euro, meaning 23,5% of the total imports from the comunity market, italy – 6.251 mil euro (15,6% of total imports), hungary – 4.783 mil euro (12,0%), france – 3.173 mil euro ( 7,9%) and austria – 2.198 mil euro( 5,5%). 1 1 1 8 2 5 5 0 5 7 8 0 1 7 5 2 3 1 3 0 2 3 3 0 3 7 0 4 0 2 5 9 9 9 4 4 1 1 3 6 1 2 6 0 1 2 8 3 1 3 4 8 1 5 8 2 1 7 5 8 2 1 7 3 2 1 9 8 3 1 7 3 4 7 8 3 6 2 5 1 9 4 0 5 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 e st o n ia m a lt a la tv ia lu x e m b o u rg li th u a n ia c y p ru s f in la n d p o rt u g a l ir e la n d s w e d e n s lo v e n ia d e n m a rk g re e c e s lo v a k ia b e lg iu m s p a in u n it e d  k in g d o m c ze c h  r e p u b li c b u lg a ri a n e th e rl a n d s p o la n d a u st ri a f ra n c e h u n g a ry it a ly g e rm a n y   figure 3. fob imports of romania with the eu member states in 2011 (mil. euro)  source: processing by the tempo-online other areas from where romania imports goods have a less share, between 0,4% and 1,3% of the total, at the same time these states exported towards romania goods having a value between 0,4 and 1,3 bil euro: spain – 1.260 mil euro, meaning 3,2% of the total imports from the comunity market, belgium – 1.136 mil euro ( 2,8%), slovakia – 944 mil. euro (2,4%), greece – 599 mil euro (1,5%) and denmark – 402 mil euro (1,0%). states that send goods to the romanian market and have a value less than 0,5 bil euro were: esthonia – 11 mil euro ( 0,03% of the total imports of romania), malta – 18 mil euro ( 0,05% of total imports), lethon – 25 mil euro ( 0,06%) and luxembourg – 50 mil euro ( 0,12%), these holding the last places in the top. netherlands 4,4% poland 5,4% austria 5,5% germany 23,5% italy 15,6% hungary 12,0% other state 25,5% france 7,9%   figure 4. structure of imports by eu countries in 2011 (%) source: processing by the tempo-online trade balance and coverage degree of imports with exports by eu member states export and import commercial flows of romania with the eu member states are most highlighted in the trade balance, determining the external trade operations balance. the external trade balance fob – cif was to determine the differences between exports expressed in fob prices and imports expressed in cif. 5 3 ,7 4 5 ,3 4 9 ,5 8 9 ,6 5 5 ,9 9 2 ,8 7 9 ,9 4 1 ,7 7 9 ,5 7 6 ,2 2 9 ,6 5 5 ,0 8 7 ,4 6 1 ,3 7 8 ,4 2 3 ,1 6 3 ,6 8 9 ,6 9 9 ,3 1 0 2 ,2 1 0 7 ,8 1 0 3 ,4 1 1 2 ,8 1 0 6 ,5 3 0 6 ,1 2 7 4 ,6 ‐2500 ‐2000 ‐1500 ‐1000 ‐500 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 h u n g a ry a u st ri a p o la n d g e rm a n y c ze c h  r e p u b li c it a ly n e th e rl a n d s d e n m a rk b e lg iu m s lo v a k ia ir e la n d s lo v e n ia s p a in f in la n d p o rt u g a l lu x e m b o u rg li th u a n ia la tv ia c y p ru s g re e c e e st o n ia s w e d e n m a lt a b u lg a ri a u n it e d  k in g d o m f ra n c e 0,0 50,0 100,0 150,0 200,0 250,0 300,0   figure 5. international trade balance of fob-cif (million eur) and fob-cif coverage (%) in eu member states in 2011  source: processing by the tempo-online in 2011, in romania there was a negative balance of the external commercial operations with the eu member states of 7.787 mil euro. the highest negative balance is recorded in the commercial relations with hungary ( 2.215 mil euro), this being followed by the ones with: austria ( -1.201 mil euro), poland ( 1.098 mil euro) and germany (-981 mil euro). there can be seen that in the commercial trades with 7 of the 27 eu member states, the value of exports was superior to imports, the highest surplus trade balance being recorded in the relations with france ( +260 mil euro), followed by the united kingdom ( +165 mil euro), bulgaria (+54 mil euro), malta (+32 mil euro), sweden (+26 mil euro), esthonia (+23 mil euro) and greece ( +13 mil euro ). the coverage degree of imports with exports, as the trade balance, is an indicator that reflects the efficiency of international trades. in romania, the coverage degree of imports with exports in 2011 was of 80,5%. the lowest degrees were under 50% and were recorded in the trade relations with luxembourg (23,1%), ireland (29,6%), denmark (41,7%), austria (45,3%) and poland (49,5%). when speaking of commercial trades done with the main international trade partners of romania, the imports are covered in a share of approximately 100%. this way, for italy, the value of the indicator is 92,8%, while for germany the calculated value is less than 89,6%. on the first places of the top states with the highest coverage degree are esthonia (306,1%) and malta (274,6%), and at a higher distance is the united kingdom (112,8%), france (106,5%), bulgaria (103,4%) and greece (102,2%) conclusion to sum up, even if romania has trade relations with all eu member states, most of the international flows are based on some dominant trade partner countries. as geographical orientation, the main export destination countries, as well as areas of imports for romania, in 2011, there were germany, italy, france and hungary. it was remarked that in the trade relations with these four main partners, the imports are covered by exports, or in less extent, as the case of hungary, either to an extent close to 100%, under it germany and italy and over it, france. bibliography 1. harja e. (2009), statistică, ed. matrix rom, bucureşti 2. harja eugenia, „evolution in the export of romania 1991-2008”, revista română de statistică, nr. 6/2009 3. harja eugenia, harja monica, „evolution in the trade balance of romania during 1991-2008” “annals of the university of oradea”; economic science – tom xviii, 2009 4. jaba e. (1998), statistică, ed. economică, bucureşti 5. stângaciu o.a. (2010), romania’s foreign trade in 2008 a territorial analysis, studii și cercetări științifice seria: științe economice, facultatea de științe economice, universitatea bacău, nr. 1 (15) 6. stângaciu o.a. (2010), romania’s foreign trade with the european union in 2008, studii și cercetări științifice seria: științe economice, facultatea de științe economice, universitatea bacău, nr. 1 (15) 7. voineagu v. şi colaboratorii (2001), statistică economică, ed. tribuna economică, bucureşti 8. colecţia anuarul de comerţ exterior al româniei, institutul naţional de statistică, bucureşti 9. colecţia buletinul statistic lunar al judeţelor, institutul naţional de statistică, bucureşti 10. baza de date proprii direcţiei judeţene de statistică bacău (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 118 the nexus between public spending on education and economic growth of kosovo – econometric approach besime ziberi aab university, prishtina, kosovo besime.ziberi@universitetiaab.com mimoza hodaj aab university, prishtina, kosovo abstract the main aim of this study is to analyze the trend of public spending dedicated to education in case of kosovo over the years and to measure the impact of public spending in education on economic growth of kosovo. in order to achieve the goal, the pearson correlation is used and a multifactorial regression model (ols) has been modified and adapted, where we have determined the gross domestic product (gdp) as depended variable and as independent variable in the model conclude: (i) total public expenditure on education (ii) public expenditure on secondary education and (iii) public expenditure on higher education (university). the data used is secondary data from the kosovo’s state budget, ministry of finance and transfers, and kosovo agency of statistics. we come in conclusion that public spending dedicated to the higher education (university) has a positive impact on kosovo's economic growth meanwhile the public spending on secondary education and total public expenditure on education in the model circumstances show no significance. the paper comes with further recommendations on public spending policies dedicated to education in order to influence kosovo's economic growth. keywords public spending; education; economic growth; sustainability; ols jel classification b22; b23 introduction human capital has long been considered the most distinctive feature of the economic system and further work has proven the impact of education on productivity growth empirically. the world economic forum 2016 suggested three channels through which education affects the productivity of a country. first, it increases the collective ability of the workforce to perform existing tasks more quickly. second, secondary and higher education specifically facilitate the transfer of knowledge about new information, products, and technologies created by others (barro & lee, 2010). finally, by increasing creativity, it enhances a country’s ability to create new knowledge, products and technologies (grant, 2017). in general, education as a critical component of a country's human capital increases the efficiency of each individual worker and helps economies increase the value chain beyond manual tasks or simple production processes (wef, 2016). education provides a foundation for development. the foundations on which most of our economic and social well-being is built. it is the key to increasing economic efficiency and social consistency. by increasing the value and efficiency of their the nexus between public spending on education and economic growth of kosovo – econometric approach 119 work, it helps lift the poor out of poverty. it increases the overall productivity and intellectual flexibility of the workforce. helps to ensure that a country is competitive in world markets now characterized by changing technologies and production methods. also, education is one of the main pillars of a healthy and developed society. in order for a country to develop in many dimensions, focusing mostly on the economy, special attention must be paid to the education system. an educated person knows how to distinguish right from wrong and evil from good. those who learn to read and write will provide a better future for their families and their country. in short, education has the power to make the world a better place. regarding the economic development of the country and the various factors that affect it, the well-known scholar (mandela, 2003), has emphasized that increasing the level of education directly has a positive impact on increasing economic development, where according to him: "education is the weapon the most powerful you can use to change the world. " also, (smith, 1776), scottish philosopher and economist for the first time studied the impact of higher education on economic growth followed by (marshall, 1890)/ there are many questions raised by academics, economists, researchers and others about the factors that influence economic growth. many research papers have been made to assess the factors influencing economic growth dedicated to different countries. education seems to be a crucial factor for a nation that promotes economic growth as (friedman, 2002) said: "the profit from raising a child increases not only for the child or his parents, but also for other members of society." the education of my child contributes to your well-being, promoting a stable and democratic society. as (mitra, 2011 puts it, "the better educated population has less unemployment, reduces dependence on the public assistance program, and higher tax revenues.” an entire nation benefits from an educated nation. as (becker, 1993) puts it, "people and society need to make it clear that education is a public benefit when all responsible persons benefit". literature review there are two very basic reasons to expect to find a link between education and economic growth. first of all, at the most general level it is intuitively convincing that living standards have risen so much over the last millennium and especially since the 1800s because of education. people with very limited education often find it difficult to function at all in advanced societies. education is necessary for people to benefit from scientific advancement as well as to contribute to it (stevens and weale, 2004) a lot of studies have given different definitions of how much education affects economic growth. according to (ozturk, 2008), education in every sense is one of the fundamental factors of development. no country can achieve sustainable economic development without substantial investment in human capital. education raises people's productivity and creativity and promotes entrepreneurship and technological advances. moreover, it plays a very important role in ensuring economic and social progress and improving income distribution. education and economic growth: it is not just going to school, but learning something, while it matters (hanushek, 2010), the study found that education has long been seen as an important determinant of economic well-being. education can facilitate the dissemination and transmission of knowledge needed to understand and process new information and to successfully apply new technologies created by others, which in turn promotes economic growth (benhabib, 1994) ziberi, hodaj 120 education is not only about the amount of education the percentage of the population that has completed primary, secondary or tertiary education but also, critically, its quality. (hanushek, e & kimko, d., 2000), for example, find that it is not simply years of schooling, but the quality of schooling (which can be reflected in international exams) that has a significant relationship with economic growth another study on this issue (akbari, 2016) emphasizes that education in every sense is one of the fundamental factors of economic development. no country can achieve sustainable economic development without substantial investment in human capital. education enriches people's understanding of themselves and the world. improves their quality of life and leads to broad social benefits for individuals and society. education raises people's productivity and creativity and promotes entrepreneurship and technological advances. moreover, it plays a very important role in ensuring economic and social progress and improving income distribution. according to (roser & ospina, 2016) stressed that education is widely accepted as a fundamental resource, both for individuals and for societies. indeed, in most countries basic education today is perceived not only as a right but also as a duty. governments are usually expected to provide access to basic education, and citizens are often required by law to achieve education at a certain basic level. education provides a foundation for eradicating poverty and fostering economic development. it is the basis on which a good part of the economic and social well-being of the citizens is built. according to roberts, (2003), the main determinants of a country's standard of living is how well it manages to develop and utilize skills and knowledge, and advance the health and education of the majority of its population. no country has achieved sustainable economic development without significant investment in education and human capital (ozturk 2008), unequal education tends to have a negative impact on per capita income and thus increase poverty in many countries. several recent comparative studies, conducted by (komatsu & rapplee 2017) have made strong statistical claims that improvements in global learning assessments, such as pisa, will lead to higher growth rates of gdp. these claims have provided the main source of legitimacy for policy reforms led by leading international organizations, particularly the world bank and the oecd.as researchers (sparreboom, & staneva 2014) point out, increasing the level of education of the emerging workforce in developing economies will not in itself provide an easy absorption of the highest skilled labor into non-vulnerable jobs. in general, incomes tend to increase in line with workers' educational attainment levels, and those with higher qualifications and / or more work experience can expect to earn more. public expenditures on education include direct expenditures on educational institutions, as well as public education-related subsidies, which are provided to families and administered by educational institutions. this indicator is shown as a percentage of gdp, divided by primary, primary into secondary and tertiary after secondary levels. this indicator shows the priority given by governments in education over other areas of investment, such as health care, social security, defense and security. education expenditures cover expenditures for schools, universities and other public and private institutions that provide or support educational services (oecd, 2020) there are many research papers that assess the link between public funding of education and economic growth in both developed and transition countries. gregorous & ghosh (2007) used heterogeneous panel data to study the impact of government spending on economic growth. their results suggest that countries with high government spending tend to experience higher economic growth. also (cooray, 2009) finds that total government spending on education has no statistically significant effect on economic growth. according to (berger & fisher 2013) states the nexus between public spending on education and economic growth of kosovo – econometric approach 121 can build a strong foundation for economic success and shared prosperity by investing in education. according to (michaelowa, 2000) education increases an individual’s earning potential, but also produces a “grabbing effect” across the economy through positive external series and diagrams on the impact of education at the micro and macro level. the channels by which education can promote growth maybe do not lie to quantity of public spending but on quality of the policy that means where youth end after their education (bexheti & mustafi, 2015). data and methodology contemporary for the realization of this study, a broadly literature both theoretical and empirical is reviewed. the econometric regression model ordinary least square regression (ols) method and the pearson correlation matrix were used as methods for conducting this research. the model defines the dependent variable in our case kosovo's economic growth measured by gross domestic product (gdp) and as independent variable in the model are: (i) total public expenditure on education (ii) the public expenditure on secondary education and (iii) public expenditure on higher education (university).the data used is secondary data from kosovo’s state budget and kosovo agency of statistics. econometrics serves to test the theory based on the data it possesses and then uses the estimates for predictions (gujarati, 2005). (1) in the first equation we have one factorial regression when is dependent variable = is the constant, s the parameter and is the independent variable where the is the error term. = +…… (2) the second equation is multifactorial regression when the is dependent variable = is the constant, are the parameters and , are the independent variables where the is the error term. in our model circumstances the equation takes the following form: = in the following section we will interpret the results form ols regression, pearson correlation and descriptive data related gdp growth in case of kosovo, public expenditures dedicated education sector and other data related our analysis such as employment level by education. results in the continuation in this section we will present the results obtained for gdp growth, public expenditures for education in total, data on expenditures in secondary ziberi, hodaj 122 and higher education (university), as well as the number of employees by level of education and number of educated in the country. the results are obtained through spss program. figure 1 real gdp growth in kosovo (2010-2018) source: secondary data from world bank annual reports. author’s calculations https://data.worldbank.org/indicator/ny.gdp gross domestic product (gdp) as one of the key macroeconomic indicators, is a monetary measure of the market value of all final goods and services produced in a given period of time (callen, 2016). as we see based on the data during the years 2010-2018 presented in graphical form, the gdp growth with the highest positive rate was in 2011 with an increase of 4.38%. while a low rate of economic growth of about 1.22% kosovo had during 2014. during these years in general kosovo has marked economic growth, but with a decrease of 0.40% during 2018. table 1 total public expenditures in the education sector in kosovo (20102019) source: ministry of finance and transfers, author’s calculations. https://mf.rks-gov.net/ju the education sector is the main opportunity of any society to develop economically and to emancipate itself in cultural and political currents. this sector is considered wages and salaries goods and services utilities subsidies and transfers capital expenditures total expenditures 2010 3.081.830 5.523.894 647.657 192.730 24.409.147 35.936.258 2011 4.835.803 4.820.807 817.657 1.205.478 23.138.075 34.817.802 2012 5.836.856 8.214.353 817.667 1.810.478 24.305.411 40.984.755 2013 8.398.666 8.584.529 1.042.857 5.096.812 23.570.184 46.693.048 2014 10.089.035 9.956.656 1.274.157 3.977.404 25.000.000 50.297.252 2015 13.894.269 8.839.083 1.125.259 4.249.926 18.235.000 46.343.537 2016 15.329.774 8.126.473 1.220.259 4.029.059 14.918.673 43.624.238 2017 15.931.068 9.302.672 1.245.259 3.821.929 16.986.920 47.287.848 2018 17.286.141 9.823.419 1.596.459 4.841.929 24.455.678 58.003.626 2019 19.815.991 17.756.888 1.616.459 6.278.498 27.770.485 73.238.320 https://data.worldbank.org/indicator/ny.gdp the nexus between public spending on education and economic growth of kosovo – econometric approach 123 among the most important segments of any country, which aims to be competitive alongside developed countries. however, the education sector continues to be one of the most criticized and most sensitive social spheres in kosovo. if we analyze the expenditures made in education during the last 10 years we see that during the years 2010-2014 a total of 208,729,115.00 euros have been invested, while during the years 2015-2019 a total of 268,497,569.00 euros have been invested. this investment trend indicates a change or increase in the budget by 59,768,454.00 euros for the last 5 years. table 2 public expenditures in higher education (university) wages and salaries goods and services utilities subsidies and transfers capital expenditures total expenses 2010 1.041.415 353.908 386.287 0 0 3.781.610 2011 2.060.434 1.608.248 552.587 0 500.000 4.721.269 2012 2.845.187 3.525.056 526.087 5.000 800.000 7.737.330 2013 5.345.255 4.213.980 787.287 5.000 1.300.000 11.651.522 2014 7.478.149 5.265.213 1.136.787 55.000 1.550.000 15.485.149 2015 8.259.127 4.819.751 1.065.566 2.240.478 2.496.000 18.821.932 2016 9.482.522 4.875.973 991.566 2.445.478 1.750.901 19.546.440 2017 9.855.204 5.182.172 1.021.566 2.365.478 3.006.000 21.430.420 2018 10.882.357 5.802.919 1.304.766 1.655.478 4.121.500 23.767.020 2019 12.654.969 6.532.919 1.304.766 2.040.478 5.670.000 28.203.132 source: ministry of finance and transfers, author’s calculations. https://mf.rks-gov.net/e the second table interprets the data on public expenditures dedicated to higher education in kosovo. from the above table we see that wages and salaries in 2010 were 1,041,415 while in 2019 they reach 12,654,969 which results in an increasing and positive trend. taking into account the expenditures for goods and services, we notice that in 2010 there were 353,908, while in 2019 they reach 6,532,919. municipal expenditures in 2010 were 386,287, while in 2019 they amount to 1,304,766. subsidies and transfers in 2012 were 5,000 and in 2019 amount to 2,040,478. capital expenditures in 2011 were 500,000 while in 2019 they reach 5,670,000. the total expenditures in 2010 were 3,781,610 while in 2019 they reach 28,203,132. the table shows that the trend of public spending dedicated to higher education in general marks an increasing and positive trend. the third table interprets the data on public expenditures dedicated to secondary education in kosovo. from the above table we see that wages and salaries in 2010 were 1,094,130 while in 2019 they reach 4,533,148 which results in an increasing and positive trend. taking into account the expenditures for goods and services, we notice that in 2010 there were 3,113,970, while in 2019 they reach 8,118,959. municipal expenditures in 2010 were 146,500, while in 2019 they reached 254,623. subsidies and transfers in 2010 were 165,730, while in 2019 they reach 197,003. capital expenditures in 2015 were 8,239,000, while in 2019 they reach 22,050,486. the total expenditures in 2010 were 4,520,330, while in 2019 they reach 35,154,218. the table shows that the trend of public spending dedicated to secondary education in total marks an increasing and positive trend. https://mf.rks-gov.net/e ziberi, hodaj 124 table 3 public expenditures in secondary education (2010-2019) wages and salaries goods and services utilities subsidies and transfers capital expenditure s total expenses 2010 1.094.130 3.113.970 146.500 165.730 0 4.520.330 2011 1.558.724 1.827.369 150.200 1.178.478 0 4.714.771 2012 1.644.927 2.404.794 170.500 1.178.478 0 5.397.699 2013 1.704.327 2.398.610 170.500 1.178.478 0 5.451.915 2014 1.309.143 2.246.021 52.300 1.178.478 0 4.785.942 2015 4.064.083 1.737.195 57.623 1.000.000 8.239.000 15.097.901 2016 4.070.404 1.744.496 170.623 74.133 9.167.772 15.227.401 2017 4.096.891 1.831.959 166.623 197.003 9.870.920 16.163.396 2018 4.316.891 1.586.959 234.623 197.005 14.504.178 20.839.654 2019 4.533.148 8.118.959 254.623 197.003 22.050.486 35.154.218 source: ministry of finance and transfers, author’s calculations. https://mf.rks-gov.net/ table 4 employment by highest level of education (%), year and employment status (2013-2019) 2013 2014 2015 2016 2017 2018 2019 without school 0.5 0.3 0.1 2.2 2.1 4.2 3.6 classes i-viii /ix 19.0 17.9 15.0 11.3 13.5 13.8 9.8 vocational secondary education 42.5 40.0 36.2 33.1 36.1 84.9 34.5 high school 13.3 15.7 21.2 27.0 31.7 37.4 28.5 tertiary education 24.7 26.1 27.5 53.2 60.2 68.9 62.8 source: kosovo agency of statistics, author’s calculations https://ask.rks-gov.net/ as we are seeing based on the data in table 4, the higher the level of education, the higher the opportunity to be employed. the percentage for higher education during 2013 is 24.7% in 2014 is 26.1% and in 2015 is 27.5%, where as you can see the percentage only increases from year to year, but during these years we see that we have the highest percentage for employment with vocational education, where in 2013 it is 42.5%, in 2014 it is 40.0% and in 2015 it is 36.2% where we notice that we have a decrease in recent years. while the opportunity for employment without education is quite low with a percentage during 2013 is 0.5%, in 2014 0.3 and in 2015 is 0.1%, which over the years is only decreasing. we see a continuous increase in the percentage for employment at the level of higher education, where in 2016 it reaches 53.2%, in 2017 the employment rate reaches 60.2%, in 2018 this figure reaches 68, 9% and in 2019 it reaches 62.8%. thus kosovo has positive and increasing trend of employment by the level of education. on the other hand this means that this positive trend of employment impact positively the gdp growth. on the other hand a high unemployment rate can have a long-term contribution to low gdp, and can also lead to increased crime, violence, and political instability (ziberi & avdiu, 2020). https://mf.rks-gov.net/ https://ask.rks-gov.net/ the nexus between public spending on education and economic growth of kosovo – econometric approach 125 table 5 results of the regression model according to the coefficient of determination r model summary model r r square adjusted r square std. error of the estimate 1 ,983a ,966 ,946 176542,98272 a. predictors: (constant), total public expenditure on education public expenditure on higher education (university),public expenditures on secondary education source: author’s calculation in the table on the coefficient of determination it is seen that the model is important in our case the coefficient of determination r is 0.983. the value of the coefficient of determination suggests that the model selected in this study is significant. table 6 anova anovaa model sum of squares df mean square f sig. 1 regression 4453973904371,688 3 1484657968123,896 47,635 ,000b residual 155837123743,202 5 31167424748,640 total 4609811028114,890 8 source: author’s calculation based on the anova table we see that the model is significant at the 0.000 significant level. table 7 the importance of variables in the model based on the p-value of the coefficients coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 3772244,650 597263,001 6,316 ,001 total public expenditure on education ,012 ,018 ,116 ,696 ,517 public expenditures dedicated to higher education (university) ,072 ,028 ,702 2,563 ,050 public expenditures dedicated to secondary education. ,024 ,023 ,202 1,037 ,347 a. dependent variable: gdp source: author’s calculations ziberi, hodaj 126 in the table seven we present the values of the coefficients of the variables in the model. we emphasize that the regression model modified and adapted in our study is multifactorial regression (ols) where the dependent variable in the model is gross domestic product (gdp) and independent variables in the models includes:(i) total public expenditures on education,(ii) public expenditures dedicated to higher education (university) and (iii) public expenditures dedicated to secondary education. we present the importance of the variables based on the p-value. we can see that the first independent variable, namely the total public expenditure on education is not significant since the p-value is 0.517 the p-value condition less than 0.05 is not met thus have no impact on dependent variable (gdp). the second independent variable defined in the model, namely public expenditures dedicated to higher education (university) is significant with p-value 0.050 that meets the p-value condition less than or equal to 0.05. in this case we present the importance of the variable emphasizing that an increase per unit of public expenditure dedicated to higher education (university) will have a positive impact on the growth of gross domestic product in case of kosovo exactly will increase the gdp for ,072 (in our model circumstances). the third independent variable in the model defined as public expenditure dedicated to secondary education with p-value 0.347 turns out to be insignificant thus does not explain the impact on gross domestic product. in cases where the independent variables result in a p-value greater than 0.05, the effect of the variables is not explained, but is considered insignificant in the model, specifically in the model conditions. table 8 pearson correlation matrix correlations correlations gdp total public expenditure dedicated to education public expenditur e dedicated to higher education (university ) public expenditure dedicated to secondary education. total employment gdp pearson correlation 1 total public expenditure dedicated to education pearson correlation ,839** 1 public expenditure dedicated to higher education (university) pearson correlation ,979** ,857** 1 public expenditure dedicated to secondary education pearson correlation ,901** ,871** ,883** 1 total employment pearson correlation ,632 ,473 ,514 ,373 1 **. correlation is significant at the 0.01 level (2-tailed). source: secondary data provided by the kosovo budget, data over the years, calculated by the author himself through the ibm spss program the nexus between public spending on education and economic growth of kosovo – econometric approach 127 from the above table we see that gross domestic product (gdp) is strongly and positively correlated to the variable total public expenditures dedicated to education in the value of the pearson coefficient 0.839 also gdp is positively and strongly correlated to the variable public expenditures dedicated to higher education (university) in the value of the pearson coefficient 0.979, gdp is strongly and positively correlated with the variable public expenditure dedicated to secondary education at the value of the pearson coefficient 0.901. it is noticed in our case that gdp is in a positive relationship with the variable employment in total at the value of the pearson coefficient 0.632. the variable of total public expenditures dedicated to education is strongly and positively correlated to the variables public expenditures dedicated to higher education (university) and public expenditures dedicated to secondary education. public expenditure dedicated to higher education (university) is strongly and positively correlated with the variable public expenditure dedicated to secondary education at the value of the pearson coefficient 0.883, also in positive relation with the variable total employment with the pearson correlation 0.473. the variable public expenditure dedicated to secondary education is positively correlated with the variable total employment with the pearson coefficient value 0.373. from the pearson correlation matrix we can conclude in general that gdp in case of our analysis is strongly in relationship with total public expenditure dedicated to education, public expenditure dedicated to higher education (university) and in medium strength of relationship with the variable total employment. thus the policy makers should take into account the importance of quality spending on education. discussion and conclusions in order to have a developed and sustainable economy, it is very important to identify the factors that are most important in this regard, where as one of the main factors is education thus the efficient public spending on education sector is plays a very important role. as discussed above, the state-building process in the republic of kosovo continues to be associated with strategic problems and challenges: unemployment, poverty, corruption, lack of democracy and the miserable situation in the health system. however, education is a challenge and at the same time a major opportunity for kosovo society and institutions. lack of quality and autonomy of higher education institutions, poor infrastructure, insufficient academic staff, lack of research and poor public funding are just some of the problems that are affecting the poor level of this sector. given that our orientations are directed towards a "knowledge society" and "competition society", because only in this way we can integrate into the "labor market" and "market of ideas", the efforts and commitments of kosovo institutions have been insufficient to achieve and meet these goals. the government should increase the productive expenditures dedicated to education, in order to meet the demands of the labor market and act as a catalyst from the degree holders and the labor market. educational policy design should be based on the principle of concrete analysis and research (ziberi, 2020 based on the above conclusion, it is recommended that the country spend more on education in order to encourage economic growth. so more priority should be given to education expenditures because according to the results obtained from the multifunctional regression model we came to the conclusion that higher (university) education affects the growth of gross domestic product in case of kosovo. ziberi, hodaj 128 it is also recommended to increase spending on education, because from the employment data by level of education we saw that the more educated a person is, the more employment opportunities there are, because the chances of an uneducated person being employed are smaller compared to those with a higher level of education. so with higher education the person has the opportunity to be employed in an adequate and non-vulnerable job. references akbari, m. (2016), the role of education in economic development. barro, r. j., & lee, w. (2010), a new dataset of educational attainment in the world, 1950-2010, nber working paper no. 15902. cambridge, ma: national bureau of economic research. becker, g. (1993), seminal work: human capital. benhabib, j. :.-1. (1994), the role of human capital in economic development. 34(2), 143-174. berger n., & p., f. (2013), a well-educated workforce is key to state prosperity. 22(1), 1-14. bexheti, a., & mustafi, b. (2015), impact of public funding of education on economic growth in macedonia. bamberg working paper series. cooray. (2009), the role of education in economic growth, australian conference of economists. 1-27. friedman, m. (2002), the market can transform our schools, new york times,. grant, c. (2017), the contribution of education to economic growth. institute of development studies. gregorous, a., & ghosh, s. (n.d.). fiscal policy in an endogenous growth model with public capital and pollution. 67-84. hanushek, e. &. (2010), education and economic growth, 60-67. komatsu, h. (2017), a new global policy regime founded on invalid statistics? hanushek, woessmann,pisa, and economic growth. mandela, n. (2003), education and economic development. marshall, a. (1890), principles of economics, london, mcmillan. michaelowa, k. (2000), returns to education in low income countries: evidence for africa, university of zurich. mitra, d. (2011), the social and economic benefits of public education. oecd. (2020), education spending. ozturk, i. (2008), the role of education in economic development: roberts, j. (2003), poverty reduction outcomes in education and health, public expenditure and aid, overseas development institute. roser, m., & ospina, o. e. (2016), global growth of education. our world in data. smith, a. (1776), the wealth of nations, new york: library. sparreboom, t. (2014), is education the solution to decent work for youth in developing economies? international labour office. stevens, p. &. (2004), education and economic growth, international handbook on the economics of education. wef, w. e. (2016), global competitiveness raport. ziberi, b. (2020), skills mismatch in the labor market a precondition of brain drain phenomenon in developing countries with special emphasis in microsoft word zait luminita engl. the process of marketing management – between the management marketing activities and the operational marketing zait luminita, university vasile alecsandri din bacău summary: the best known definitions provided to the concept of marketing management, in the last decades of the 21st century have in common – the orientation towards the client and the development of successfull relations with the clients, the substantion and operationalization of the mix of marketing, as the basis of the exchange relation, the involvement of all functional areas inside the organisation in managing relations in order to achieve the long term objectives of the organization – but the main issues are related to four basic activities: analysis, planning, implementing and controlling marketing activities. key words: marketing management, analysis, planning, implementing, controlling. 1. the relation between the levels of organizational structures and the activities of the marketing management process the article has the purpose of identifying the way in which the marketing management, as defined in specialized literature, is a process related to the management of all marketing activities or is related to the operational research in the functional level of the organization. at this point of the analysis, the starting point describing the levels that define the organizational structure of modern companies, in order to emphasize their level, in a logical sequence, the four activities of the marketing management process. deshpande and webster are the first authors that present an organizational structure, in four levels, with the purpose of operationalize the concept of marketing management, namely: corporate level, the division, business unit level and product level. according to these authors: 1. corporate level – the headquarters of the organization – has the purpose of creating a strategic plan to guide all the activities of the organization; it shall take decisions on the amount of resources that are to be allocated to each division, and plan of action (business that are to be developed or removed from the portfolio). 2. in turn, each division establishes a plan related to capital allocation for each business unit in its structure; 3. further on, each business unit develops a strategic plan to generate profitable results 4. finally, each product level (product line, brand) develops a marketing plan to achieve the objectives. despite the innovative theory offered by deshpande and webster, there are others views of the specialists, regarding the number of levels, most of them specifying a succesion of three levels (jain s., 2000; valerică olteanu, 2003; david aaker, 2007; lambin, 2007): 129 studies and scientific researches ‐ economic edition, no. 14, 2009  1. corporate level, known as corporate marketing, whose role is to provide information regarding the consumer and competition in the strategic planning for the management. 2. the strategic unit called strategic marketing, where marketing is to assist the development perspective of the business unit 3. functional level, called operational marketing, where marketing comes to create and implement marketing programs. it should be noted that there are theories that claim that this functional level is called marketing management and is composed of the size of the whole approach of marketing action. 2. the process of marketing management – structure and activities specialized national and international literature offers a wide range of models that captures the components of the marketing management process on the three levels of organizational structure. thus, the first structure of the marketing management process, provided by lamb, hair and mcdaniel in his ”essentials of marketing”, presents the following sequence of phases 1.understanding the mission of the organization and the importance of marketing in fulfilling the mission; 2. establishing the marketing objectives; 3.collecting, analysing and processing information regarding the situation of the organization, reflected in the light of strengths and weaknesses, environmental opportunities and threats; 4. developing a marketing strategy establishing precisely target segments and their specific needs that the organization will try to meet (the target market strategy) and develop optimal marketing activities (marketing mix) in fulfilling the selected target markets. the author considers that marketing mix should combine strategies regarding the product, distribution, promotion and price, in a manner that generates exchanges that satisfy individual and organizational objectives; 5.marketing strategy implementation; 6. quantification of preformances; 7. periodic assessment of marketing efforts, and making changes if necessary. in a brief analysis of the process proposed by lamb, hair and mcdaniel we can locate the four activities of marketing management and the three levels of the organizational structure according to table no. 1.1 table no. 1.1. locating business management components of the marketing concept and the levels of organizational structure in marketing management process defined by lamb, hair and mcdaniel activity analysis strategical planification 3 1; 2; 4 implementation control 5 6; 7 level of organizational structure corporate level business unit level functional level 1 3; 2; 4 5; 6; 7. a more simplified structure of the marketing management process is offered by wright in his work ,,marketing: origins, concepts, environment’’. according to this author, marketing management process is reduced to the three phases with the related activities: 1.marketing planning (a set of objectives, evaluating opportunities, creating marketing strategies, developing marketing plans); 2. implementing marketing plans and programs; 3. controlling plans and marketing programs (measuring results, evaluating progress). 130 studies and scientific researches ‐ economic edition, no. 14, 2009  in a brief analysis of the process proposed by wright we can locate the four activities of marketing management approach and the three levels of the organizational structure according to table no. 1.2 table no. 1.2. locating business management components of the marketing concept and levels of organizational structure in marketing management process defined by wright. activity analysis strategical planification 1 1 implementation control 2 3 level of organizational structure corporate level business unit level functional level it has been not mentioned specific elements of this level 1 2;3 john mullins and orvillle walker, in the “marketing management: a strategic, decision-making approach” propose a more detailed structure, focusing on specific elements of strategic planning, as premises of a rigorous leadership marketing activities, such: 1. external environment analysis aimed at: a. the role of marketing in developing strategies (goals and strategies related to corporate level and strategic units); b. analysis of market opportunities (the 4c – company, context, customer, competitors) emphasizing issues such as understanding market opportunities, consumer behavior, marketing research, marketing segmentation and target selection target, positioning; 2. development of strategic marketing programs (the 4p product, price, placement, promotion), including decisions related to marketing programs and business strategies and decisions related to the 4p; 3. developing strategic marketing programs for selected situations (related strategies in new markets, the growing markets, maturity and decline); 4. implementation and management of marketing programs emphasising on the organizing and planning of the implementation and performance measuring and motivating marketing performances. mullins and walker are the authors that mention the importance of modern informational marketing systems inside an organization, and liable research, in order to support the process of marketing management. under the proposed structure of the two authors, the whole process of management of marketing activity can be reduced to the blending of the three stages (but that includes the majority of specific strategic planning found in the other theories) such as: strategic plan (mission, goals, strategies, portfolio of activities) marketing plan (environmental analysis, marketing objectives, target market selection, marketing mix), implementing and monitoring strategic plans and marketing. in a brief analysis of the process proposed by john mullins and orville walker we can locate the four activities of marketing management approach and the three levels of the organizational structure according to table no. 1.3 table no.1.3. locating business management components of the marketing management concept and levels of organizational structure in marketing management process defined by john mullins and orville walker analysis strategical planification 131 studies and scientific researches ‐ economic edition, no. 14, 2009  activity 1.b 1.a.; 2; 3 implementation control 4 4 level of organizational structure corporate level business unit level functional level 1.a 1.a; 1.b; 2; 3 4 philip kotler in his work “marketing management: analysis, planning, implementation and control”, provides a structure of the management process starting from the definition of marketing activity in an organization according to which: “marketing activity is to analyze market opportunities that arise, studying and choosing target markets, developing marketing strategies, marketing programs, organization, implementation and control of marketing efforts”. thus, the stages of marketing management according to kotler's are: 1. analysis of market opportunities, 2. study and the choice of target markets; 3. developing marketing strategies; 4. developing marketing programs and 5. organization, implementation and control of marketing effort. in a brief analysis of the process proposed by kotler we can locate the four activities of marketing management approach and the three levels of the organizational structure according to table no. 1.4. table no.1.4. locating business management components of the marketing management concept and levels of organizational structure in marketing management process defined by kotler activity analysis strategical planification 1; 2 3; 4 implementation control 5. 5. level of organizational structure corporate level business unit level functional level it has been not mentioned specific elements of this level 1; 2; 3; 4 5 structures of the marketing management process similar to those presented up to this point, are provided and aaker (2007) and richard wilson and colin (2005). as can be seen from the analysis presented above, most marketing experts place the marketing process management across the three levels of organizational structure, capturing, wider or narrower, the four basic activities analysis, planning, implementation and control or their component activities. a structure of the marketing management process, different from those presented so far is the one proposed by sc jain in the work, “marketing, planning and strategy”, where the theory proposed highlights the idea that marketing management is reduced to tactic activities that is specific for the functional level. basically, for the definition of the concept and development of the marketing management process, the author suggests, as a starting point, the approach to strategic planning. jain's theory is based on the following statement to understand the concept of marketing management one must understand the strategic marketing approach. according to this theory, the corporate level, the essential elements in formulating an overall strategic plan are provided by the marketing imputs: competitive analysis, 132 studies and scientific researches ‐ economic edition, no. 14, 2009  market dynamics and external environmental factors. at this point, marketing represents the bridge between the organization and the reference market, current and future information regarding the area of manifestation of the demand, all of these playing an important role in any strategic planning exercise. at the other end of the scale is found, according to the author, the marketing management which, by formulating and implementing marketing programs, supports the idea of strategic marketing, on marketing strategies for the various pairs productmarkets. marketing strategies are developed at the second level of the structure of the organization, namely the strategic units. in a given context, the marketing strategy is built, essentially, by the interposition of three known forces in literature as the 3 c: consumer, competition and corporate. marketing strategies are focused on the identification of specific differentiation elements of the competition through capitalization and improvement in order to provide a superior value to customers. according to the theory proposed by jain between strategic marketing and marketing there are some differences: orientation, philosophy, approach, relationship with environment and other components of the organization, management style needed. but a few questions of particular interest in terms of analyzing the differences, as follows: • according to the author, strategic marketing focuses on choosing the right product for the right markets (growing markets), at the right time. many authors consider, however, that these decisions are not different from those which fall under the area of marketing management. • according to the author, in marketing management the market segments are defined by grouping customers according to the marketing mix variables, while the strategic marketing approach to market segments is formed to identify the group or groups that can provide more economic benefits for the company then those of the competition. to clarify this issue, henderson presents the last manner of grouping as being a strategic sector “a strategic sector is where you can gain a competitive advantage and you can exploit it ... strategic sectors are the key because the reference of any sector is competition'”. • another difference between strategic marketing and marketing management, mentioned by the author, is that the management of marketing resources and objectives of an organization, howsoever defined, are regarded as being uncontrollable variables in the development of the marketing mix. he considers that in the strategic marketing, objectives are sistematically defined, at the different levels of the organization, following a detailed analysis of the imputs. on the other hand, resources are allocated to maximize corporate performance while the results of the strategy are made more broadly. these issues were mentioned by abbell and hammond “the strategic plan of the market is not like ... a marketing plan, is an outline of all aspects of an organization's marketing strategy. moreover, a marketing plan involves the target segments, product policy, communication, distribution and price to meet and satisfy those segments so-called marketing mix segments”. • marketing management considers that the market projections and the position of competitors as being given and seeks to optimize the activity based on this information. on the other hand, marketing strategy seeks to eliminate these threats. despite the arguments offered by jain and the supporters of his theory, most of the literature converge to the concept and structure of marketing management process as described by kotler, a marketing management activity (or the application of marketing philosophy) and not as a set of activities confined to the tactical marketing functions. 133 studies and scientific researches ‐ economic edition, no. 14, 2009  3. conclusions the analysis consists in collecting data and information to ensure the imputs necessary in the knowledge of the external environment (opportunities and threats), of the internal environment (strengths and weaknesses), of the needs manifested in the target markets, of the competitive environment, and of the specific conduct of all stakeholders of activity, from the consumer, dealers and suppliers, competitors to the general public at this stage, the steps associated to marketing research and marketing and the existence of a viable and operational informational system are extremely important. only in this way the organization will be able to identify, understand and capitalize all market opportunities regarding the approach to strategic planning, the literature, be it marketing or management, is full of works that have attempted to trace the coordinates and its operability. the term strategic planning has been used in marketing literature since the early 60’s, many authors tried to capture its real signification. thus, according to marketing literature strategic planning can be defined as “a process of creating and shaping the future of the company, a process that consists of senior management efforts to focus on long term business and enterprise performance through a careful formulation, evaluation and substantiation of strategy”. the definition offered by drummond presents an approach to planning at a corporate level, without mentioning the establishment of strategic and marketing strategy. in view of malcolm mcdonald, strategic planning is” ... the process used to formulate objectives and long-term strategy for the entire company or strategic business unit by linking it with the existing opportunities and resources”. the definition formulated by the author, has the merit of pointing out the approach at both corporate and level of the strategic unit, that includes marketing activities. the author states that the strategic planning approach supports organizations in achieving the targets, managing through viable marketing strategy to put themselves in a more advantageous position over its competitors. for kenneth j. cook, strategic planning or the strategic plan represents, “the organization vision regarding its position and its role in the future ... the key to the entire marketing process”. furthermore, the author comes and offers a detailed description of the strategic plan, in two dimensions: as a written definition – a specific vision of the organization to customers, competitors, employees, investors, activities, as a path to the success of the organization, in terms of its role of guidance. analyzing the last two definitions, we can conclude that the role of the strategic plannification is that of providing the organization a competitive advantage on the market. starting from this idea, organizations wishing to hold a competitive position must be able to continuously adapt to the environmental changes and apply the principles of market-oriented strategic planning. this concept was supported by philip kotler who defined it “ ... as a management process for establishing and maintaining a viable relationship between objectives, training employees and resources of an organization on the one hand, and the market situation, on the other hand”. another author, manfred bruhn offers a demarcation between the marketing and management; the author believes that strategic planning is one of the classic functions of management (analysis, planning, implementation and control), while “the process of marketing planning should be seen as an ideal-type approach'”. according to this theory, strategic planning process does nothing but illustrate how the marketing, as a function of the company, assumes a leadership role in the management of the organization to market. beyond these definitions, strategic planning is a fundamental 134 studies and scientific researches ‐ economic edition, no. 14, 2009  dimension of organizations wishing to position themselves as market-oriented companies, being that component that manages the objectives, capabilities and resources in relation to market opportunities. in conclusion, marketing planning process is a mental process that decides in advance what, when, why, how and who will be responsible for marketing activities. implementation is the key step of the process of marketing management because the operational marketing plan is the basis for achieving the goals of marketing. the plan must be adapted to market conditions and propose a budget for marketing activities. to be effective, a marketing plan must be consistent with the overall strategy of the company, which is why” coordination within the company is essential”. implementation is, in fact, the one that coordinates all the procedures of a plan. kotler believes that the implementation of marketing is “the process that turns marketing plans into action plans and provides support for these plans to be executed in such a way as to achieve the objectives of the marketing plan”. implementation of marketing plans by the marketing manager require the development of certain actions: communication with subordinates to ensure operational action plans, providing guidance and action guides, providing operational resources, surveillance of persons responsible for implementation. monitoring and evaluation are activities geared towards the examination of marketing activities in order to identify the efficiency of the marketing plan. the basic aim of these activities is “the verification of financial and marketing objectives”. in this respect, the organization must be able to make corrective action if the spread between objectives and results is significant. moreover, this step is absolutely necessary “the evaluation of marketing strategies of competitors to ensure the permanence of these actions”. control, according to kotler's, represents the “examination of the results, financial losses or gains, expenses and marketing opportunities persuasion”. marketing control includes formulation of standard performance, verifying the extent to which the proposed performance is achieved, correcting deviations and marketing plans to reformulate, if necessary. bibliography 1. aaker, a.d., strategic market management, johnwiley&sons, inc., 2007. 2. abell, d.f., hammond, j.s., strategic marketing planning, englewood cliff prentice hall, pg.9, 1979 3. bagozzi, r., marketing management, prentice hall, 1998. 4. bruhn, m. orientarea spre clienţi. temelia afacerii de succes, editura economică, bucureşti, 2002. 5. deshpande , r., webster, f.e., organizaţional culture and marketing:defining the research agenda, journal of marketing, vol.53, january, pp.3-15, 1989. 6. drucker, p.f., management: tasks, responsabilities and practices, harper and row, new york, 1973. 7. drummond, g. strategic marketing: planing and control, 2-nd edition, butterworthheinemann, oxford, 2001. 8. etzel, m.j., walker, b.j., stanton, w.j., fundamentals of marketing, 9th editon, mcgrawhill book company, 1999. 9. henderson, b.d., henderson on corporate strategy, harpercollins college div, pg.4, 1979, 0890115265 10. jain s.c. marketing planning & strategy, cincinnati, thomson learning, 2000. 11. kenneth, j.cook – planificarea strategică pentru întreprinderi mici, editura teora, bucureşti, 1998. 12. kohli, a.k., jaworschi, b.j. – market orientation: the construct, research proposition and managerial implications, journal of marketing, vol. 54, issue 2, pp. 1-18, 1990. 135 studies and scientific researches ‐ economic edition, no. 14, 2009  13. kotler, p., marketing management: analysis, planning, implementation and control, new jersy, prentice hall pearson prentice hall, 2004. 14. lamb, charles w., hair, joseph f., mcdaniel, c., essential of marketing, southwestern publishing, 2007. 15. mcdonald, m., marketing strategic, editura codecs, bucureşti, 1998. 16. mullins, j., walker, o., marketing management: a strategic, decision-making approach, 5/e, mcgraw-hill, 2005. 17. richard m. s., wilson, colin strategic marketing management: planning, implementation and control, elsevier butterworth-heinemann amsterdam, 2005. 136 (2 rânduri libere, 11p) overview about project planning cătălin drob, ph.d, „vasile alecsandri” university of bacau, romania abstract the purpose of this article is to present the main aspects regarding project planning. this study is generally based on the fourth edition of the guide to the project management body of knowledge (pmbok guide) developed by the project management institute (pmi) in 2008. according to this edition of pmbok, project planning involves a group of processes required to establish the scope of the project, refine the objectives, and define the actions that must be undertaken to attain the objectives of the project. keywords: project, management, objectives, plan, schedule. jel codes: o21, o22 introduction in accordance with the guide to the project management body of knowledge (pmbok guide) elaborated by the institute of project management (pmi), a project is a temporary endeavor undertaken to create a unique product, service, or result1. generally, a project can be characterized through five basic phases: project initiation project close project execution project monitor and control project planning figure. 1. the basic phases of project management source: adapted from pmi (2008), guide to the project management body of knowledge, fourth edition, p. 40                                                              1   pmi (2008), guide to the project management body of knowledge, fourth edition, project management institute, inc., usa, p. 1   mainly, the initiation phase defines the problem that must to be resolved through the project, defines the objectives, requirements and overall project deliverables and identify the main risks of the project. the starting point in the planning phase are results of the initiation phase, materialized into a document named project charter. project planning planning is considered by many specialists the most important task of the project management. the main components of the planning phase are the following2: objectives, that must be accomplished in a given period of time; the program, that involves define the strategy and the main actions to be undertaken in order to achieve objectives; the schedule, that is a working plan that shows when activities will be started and finished; the budget, that shows expenditures that will be made for achieving the objectives; the forecast, which prefigures the future status of the project; the organization, which refers both to establish the component of the project team and the duties and responsibilities that will be assigned to project team members; the policy, that provides a framework, a general guide for conducting project activities; the procedure, that specifies the chronological sequences in which an activity or an action must be undertaken; the standard, which is a level of performance, unanimous regarded as appropriate or acceptable. during the planning phase, starting from project charter it can proceed to elaborate another important document of the project called project scope statement. this document presents, in detail, the description of the activities to be undertaken under the project, in order to obtain a product or service that meets the requirements requested by the client3. also, the scope statement should include the information about: project description and justification; project objectives/deliverables (the products, services, or results that the project will produce); product scope description (the characteristics, features and functions of the products, services, and/or results that the project will produce); product acceptance criteria (the criteria used for accepting products, services, or other project results); project constraints; main project assumptions etc. after performing the project scope statement the next phase of the project planning is to design the work breakdown structure (wbs). the wbs is used for dividing the project into easily manageable components. the lowest level of the wbs is named work package. the work package (wp) represents a basic work sub-division of the project that is small enough so that the responsibility for its performing to be assigned to one person. the wbs can be structured into different forms, using the phases of the project life cycle (as shown in the following figure), using major deliverables or using subprojects as the first level of decomposition:                                                              2 kerzner, h. (2001) project management: a systems approach to planning, scheduling and controlling, seventh edition, john wiley & sons, inc.,usa, p. 552. 3 desmond, c.l. (2004), project management for telecommunications managers, kluwer academic publishers, usa., p. 36. figure. 2. example of wbs elaborated using phases of the project life cycle as the first level of decomposition source: adapted from pmi (2008), guide to the project management body of knowledge, fourth edition, p. 120 usually, the work breakdown structure is a deliverable-oriented, hierarchical decomposition of the work to be completed during the project. starting of the wbs, the next steps in project planning involve define and sequence activities and estimate their resources and durations. define activities involves the identification of the actions that must be undertaken to produce the project deliverables. for this is necessary to decompose the work packages of the project are into smaller components named activities. the result of the define activities process is the activities list. this list includes all schedule activities that are planned to be undertaken on the project. sequence activities involve the identification of the logic relationships among activities. sequencing can be performed by using different tools and techniques, such as: precedence diagramming method (pdm method), dependency determination, schedule network templates etc. estimate activity resources involve estimating what type and quantity of resources (material, people, equipment etc.) are necessary to perform every activity of the project. this step is considerate critical because it determine the budget of the project. the most used and accurate method for estimating activity resources is based on the work breakdown structure and is known as the bottom-up estimating method. the main result of the estimating activity resources process is the list of requirements for each activity of the project. estimate activity durations is also considerate critical step because the accuracy of the project schedule (that represents next step in the project planning) depends on the accuracy of these estimates. the most used tools to estimate the activities duration are: analogous estimating, parametric estimating and three point estimates. analogous estimating is based on historical information about durations of a previous, similar activities undertaken in other similar projects. phase 1 project wp 1.1.1. d el iv er ab le 1 .1 . wp 1.1.2. wp 1.1.3. wp 1.2.1. wp 1.2.2. d el iv er ab le 2 .1 . d el iv er ab le 1 .2 . wp 2.1.1. wp 2.1.2. wp 2.1.3. d el iv er ab le 3 .1 . wp 3.1.1. wp 3.1.2. wp 3.1.3. phase 3 phase 2 d el iv er ab le 3 .2 . wp 3.2.1. wp 3.2.2. wp 3.2.3. parametric estimating considerate that activity duration can be estimated by multiplying the quantity of work by the productivity rate. three point estimates tool is relative similar with pert (program evaluation and review technique). both methods involve the estimation of three activity durations: most likely, optimistic and pessimistic. the method considers that the duration of an activity can be estimated as an average of the three estimated durations. the next step in project planning consists in the developing schedule of the project. develop schedule is the process that merges all of the work tasks to be performed, their relationships, their estimated durations, and their assigned resources to a calendar4. the project schedule can be presented in summary form or in graphical form (as milestone charts, bar charts or project schedule network diagrams). the schedule provides a basis for monitoring and controlling project activities and for tracking project progress. the next step in project planning refers on developing budget. the budget of the project is the amount of money available to the project team to achieve objectives under the requirements specified by the client. for the determination of the budget, the first step consists in the identification and estimation of the activities cost. after this step, for developing a document called the project budget is necessary to aggregate the individual costs originally estimated. in practice, for determining the budget can be applied some tools and technique, also used in estimating costs, such as reserve analysis. other techniques used for determining budget are: cost aggregation, expert judgment, funding limit reconciliation etc. for example, cost aggregation is used to determine total costs for an entire project starting from estimated cost of the work packages at the lowest level of the wbs until the higher component levels of the wbs. the last step in project planning consists in the developing the supporting plans, such as: quality plan, human resource plan, communications plan, risk management plan, procurements plan. the most important result of project planning is a document called the project management plan. this plan describes how the project is executed, monitored, controlled and completed. the supporting plans can be considered as sub-plans of the project management plan. conclusion many authors are agreed that project planning is the key element for project success. there are some theories and standards regarding project management that have proposed different approach regarding project planning. for example, the project management institute (pmi) has proposed a set of standards and practical guidance for project management, in a document known as the pmbok (project management body of knowledge). the fourth edition of this guide (standard), elaborated in 2008, consider that the project planning refers to the following processes: develop project management plan; collect requirements; define scope; create work breakdown structure; define activities; sequence activities; estimate activity resources; estimate activity durations; develop schedule; estimate costs; determine budget; plan quality; develop human resource plan; plan communications; plan risk management; identify risks; perform qualitative risk analysis; perform quantitative risk analysis; plan risk responses and plan procurements. in this article i tried to present the project planning steps based on the approach proposed by the pmi. in fact, the project planning is relative easy to define in theory, but in practice is more difficult to realize.                                                              4 horine, g.m. (2005), absolute beginner's guide to project management, que publishing, usa, 2005, p. 54. references 1. desmond, c.l. (2004), project management for telecommunications managers, kluwer academic publishers, u.s.a. 2. drob, c. (2010), management de proiect, editura alma mater, bacau 3. horine, g.m. (2005), absolute beginner's guide to project management, que publishing, u.s.a. 4. lewis, j.p. (2007), fundamentals of project management, third edition, amacom books, u.s.a. 5. pmi (2008), guide to the project management body of knowledge, fourth edition, project management institute, inc., u.s.a. 6. verzuh, e. (2003), the portable mba in project management, john wiley & sons, inc., u.s.a. studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 36 effectiveness of capital market derivatives in housing delivery of nigeria emerging market bernard adjekophori department of estate management and valuation, auchi polytechnic, auchi.edo state. nigeria benejis@gmail.com sulaimon olanrewaju adebiyi department of business administration, fountain university osogbo, osun state. nigeria lanre18april@gmail.com abstract the capital market is unarguably the most robust institution in any economy notable for mobilizing the necessary fund for financing long-term productive project. it controls relatively large amounts of capital and represent the largest institutional providing long-term credits for capital project like real estate that requires huge capital outlay. this study therefore, attempts an investigation into the effectiveness of capital market derivatives in housing delivery in lagos. an empirical survey research was conducted in lagos, using a random sampling technique with a structured questionnaire to collect data from 147 respondents comprising 89 stockbrokers and 58 real estate developers in lagos mega-city. data collected were analyzed with spss using descriptive and inferential statistics. the result revealed that 56.7% of the observed variations in housing delivery (r2= 0.567; p< 0.05) is explained by capital market derivatives, which suggests that, proper utilization of capital market derivatives will enhance and improve housing delivery in nigeria. however, this is not been adequately used by developers of real estate projects in the study. thus, the study recommends amongst other remedial steps that a synergetic effort should be created between the capital market and real estate developers which will enhance effective housing delivery, the development of people and the nation. keywords capital market derivatives; housing delivery; finance; emerging market; real estate jel classification g12 1. introduction housing and its finance are topics that are of great interest/concern in any nation developed, developing or emerging market. investment in housing according to buckley (1989) typically amounts to 3% to 8% of gdp and up to 15% to 20% of gross fixed capital formation. studies have asserted that finance is the pillar, pivot, key, cornerstone and the most crucial element in housing investment and the availability of which determines access to other key inputs of land, labour, materials and infrastructure (nubi, 2002; boonybancha; 2002; ogedengbe & adesopo, 2003). the financing of housing is a key element of any housing policy. in general, two objectives should be taken into account in order to make financing options viable and sustainable. thus, the options should offer profitability to market participants, otherwise, it will not be feasible to attract investment, particularly private investment to the housing sector; and secondly, they should be adapted to the potential borrowers’ ability to pay, otherwise, the low-income population will be marginalized from market operations. mailto:lanre18april@gmail.com effectiveness of capital market derivatives in housing delivery of nigeria emerging market 37 therefore, the provision of affordable housing at scale remains a challenge to most countries particularly those in developing country like nigeria. it has become increasingly glaring that most urban population according to nubi (2000), live in dehumanizing housing environment, while those that have access to average housing do so at abnormal cost. housing is essentially necessary to the extent that in some countries is equated with human right (nevova, 2010). habitable housing according to mabogunje (1989) discourage anti-social behavior, promotes healthy living, efficiency, and general well-being of the populace. housing does not only serve as an asset to individual and nation, it also provides man with cover and security (poole, 2003, alhashimi & dwyer, 2004). traditionally, real estate companies, investors and developers in nigeria obtain financing through bank loans. as nigeria is a bank-oriented financial system in which the banking system provides funds for investments in contrast to market-oriented economies like the u.s. with investment to a large extent being financed through the financial markets by various actors; such as private investors and corporations with excess capital. comparably in emerging economies including nigeria few companies fund themselves through the capital market (berggren and silver, 2011). to achieve a successful housing finance and ensure continuous flow of funds, the government set up three main schemes: voluntary scheme, mandatory scheme and government financial transfer to housing (onokube, 2007). as a market for the provision of long-term fund the capital market plays a major role in the administration of these schemes. the capital market is responsible for long-term capital formation and this makes it a good engine that can drive any economy to positive growth and development. the money market however, only provides support to the capital market in the provision of the necessary liquid capital to compliment the total fixed capital. therefore, the capital market is a good avenue for mobilizing huge and long-term capital required for funding housing development and investments. there exist various vehicles/devices available in the capital market for funding real estate projects which include but not limited to property bonds, real estate investment trust (reit), property unit trusts, loan stock and debenture stocks (torty, 2002). property bond is an available device for small investors that cannot achieve their dream of investing in prime properties due to inadequate fund. (emoh & nwachukwu, 2011). such investor will only purchase few units in a fund and invest in prime properties in prime location and cities that have the capacity and potential to grow capital. the global universe of real estate companies has expanded dramatically over the past decade due to the very strong performance of the sector, ongoing equity issuance and a proliferation of reit vehicles across the globe, which has attracted capital into the sector. reits generally allow participants to invest in a professionally-managed portfolio of real estate properties and their business activities are usually restricted to generation of property rental income. the introduction of reits in the us and other developed economies has created a remarkable positive change in real estate finance. this is not yet the case in nigeria, and other emerging nations with reits. there is no doubt that finance is an important factor in real estate development. lack of long-term finance to develop mass housing is a major hindrance to housing for all. after 54 years of nigeria independence, a vibrant mortgage market is yet to be developed (ojo, 2009; yinka, 2011). the existing mortgage scheme that should provide cheaper housing development loan is grossly incapable of satisfying the needs of the populace. kim (1997) and quigley (2000) observed that, where there is no virile financing structure for housing, a market-based housing delivery system will persist. there are enormous benefits and opportunities to developed economies from the aforementioned capital market products, this study wonders if emerging nations adjekophori and adebiyi 38 especially nigeria is also threading this path towards an efficient and continuous housing finance system. the thrust of this study therefore, is to examine the effectiveness of capital market derivatives in housing finance in emerging markets with particularly reference to nigeria. 1.1. statement of the problem one of the major engine of economic growth and development of a nation is its capital market. it impacts positively on the economy by providing financial resources through its intermediation process for the financing of long term projects. hence without an efficient capital market, the economy may be starved of the required longterm fund for sustainable growth. one may perhaps be tempted to ask why emphasis is being placed on finance and especially housing finance. first and foremost, of all man’s basic needs, housing arguably, constitutes and indeed poses the greatest challenge. secondly, a vigorous and buoyant housing sector is an indication of a strong program of national investment and is indeed the foundation of and the first step to future economic growth and social development (ajanlekoko, 2001, folorunsho, khan & olowoyo, 2012). experts have estimated the housing deficit in nigeria as at 2005 to be at between seventeen million (omirin & nubi, 2007; adejumo, 2008); and that a good percentage of nigerian especially the urban dwellers either live in substandard rented apartment or homeless. an estimation of between 42 trillion to 56 trillion naira would be needed to close the deficit gap with an estimate of average cost of n 4.9 million ($14000) (rate of us$1= n350) per housing unit with the exclusion of land value that are very high in the cities. this is almost beyond individual and banks financing option. access to housing finance is thus imperative in the acquisition of housing, but this has always eluded low-income earners a great deal. the implication therefore is that social and economic challenges associated with housing will persist in nigeria if this is not address (adedeji & olotuah, 2012). finance is an essential ingredient of modern day real estate development and most large scale development would not assume their present scale without substantial credit (ogedengbe & adesopo, 2003). thus the capital market presents a viable source for this financial option. the nigeria bond and reits market is still at its infancy therefore still underdeveloped as real estate developer/investors and companies traditionally obtain debt through bank loans. until a few years ago, was reits introduced to nigeria capital market with skye shelter funds and union homes real estate taking the lead in 2007 and 2008 respectively. the positive impact of the successful developed market economies reits and bonds are not seeming to be replicated in nigeria and other emerging nations. furthermore, the role of the capital marker vis-à-vis its products in financing housing and economic development has been subjected to several criticisms (oyejide, 1994; nyong, 1998; osaze, 2000; sule & momoh, 2009; ewah, esang & bassey, 2009; idowu, osagie & nubi, 2011). these various concern and controversies produced mixed result that some researchers argued for positive correlation, others negative correlation and some of the studies are theoretical and qualitative even while other could not authenticate their conclusion with empirical evident. from the foregoing, this paper empirically investigates the challenges and prospects, and establishes the extent to which these capital market derivatives can efficiently and effectively serve as a viable alternative to financing real estate in an emerging economy. effectiveness of capital market derivatives in housing delivery of nigeria emerging market 39 1.2. aim and objectives the cardinal goal of this study is to examine the effectiveness of capital market derivatives in housing delivery in nigeria emerging market. in achieving this aim, the specific objectives are to: (i) identify the capital market derivatives that are available for real estate development in the study area. (ii) assess the extent of use of these derivatives by real estate developers and investors in the study area. (iii) examine developers/investors demand preference for financing real estate with capital market products in the study area. (iv) identify the challenges hampering the use of capital market products in financing real estate investment in the study area. 1.3. research questions in pursuance of the above stated objectives, the study will attempt to answer the following questions. (i) what are the major capital market derivatives available for real estate development in the study area? (ii) to what extent are these derivatives used for real estate financing in the study area? (iii) what is developers/investors demand preference for financing real estate with capital market products in the study area? (iv) what are the challenges militating against the use of capital market derivatives financing for real estate investment in the study area? 1.4. significance of the study quality of housing delivery in any nation is a major index for measuring development and growth. poor housing delivery in nigeria has been a major concern from generation to generation. finance constitutes a fundamental centerpiece in any real estate development and the ability of a developer to mobilize adequate funds for the project determines to a large extent the success of the development. renaud (2004) opined that, where there is a well-structured housing finance system, the city appears well organized. omirin (2007) asserted that, housing construction in nigeria is incremental or progressive sometimes spanning over 15 years where adequate fund is not available. finance therefore, is an all important factor in real estate development and a very critical ingredient to project no matter it nature. thus, it is basically the fulcrum which sustains the lever for development (ogedengbe & adesopo, 2003). thus, there is need to assess capital market derivatives as viable source financing housing delivery. 2. literature review 2.1. overview of nigeria real estate industry the nigeria real estate industry may be described as one of the fastest growing sectors of the economy. whilst it has been described as an unorganized and characterized by various factors that impeded organized dealings such as nonavailability of favorable priced long term bank financing, high interest rates and exorbitant transfer taxes, the real estate industry remains a major contributor to the nigeria economy and the national gross domestic product. the two major drivers of the sector are the high population base and the state of the economy. with over 160 million people, nigeria is the most populous nation in africa. its economies transformation over the few years has increased real gdp adjekophori and adebiyi 40 growth by an average of 6.7% per annum since 2006. nigeria is regarded as a frontier economy with strong potential for development and as such an increasing destination for capital, particularly in the service sector. favourable demographic indices and economic growth make the country an attractive place for property investors, given that the demand for property is determined largely by economic development and demographic trends. 2.2. the housing sector in nigeria rapid urban development has brought about dynamic changes in large cities in developing economies (emoh, oni & egolum, 2013). in sub-saharan african (ssa), nigeria is said to have the highest urban population that exceed most countries in africa according to buckley, faulk & olajide (1994). as the population progress geometrically, the housing sector investment is not moving at the same pace. as noted by sanusi (2003) that government investment in housing sector in the budgetary allocation is less than 3%. while other emerging economies such as thailand and korea have 18% and 14% respectively, of their gdp as investment in housing (saravanan, 2007). housing problems are multifarious and result from a complex interdependency of elements like material, political and socio-economic issues which interact with activities in other sectors of the economy (okunsanya, 1994). however, agboola & olatubara (2003); windapo (2005) and nubi (2005) are of the opinion that factors ranging from difficulty in land acquisition, lack of housing finance, high cost of building materials, problems on existing land policy to poor infrastructure (both physical and financial infrastructures) among other factor working against effective housing delivery in nigeria. but, nubi (2005) and abdulai (2007) recognized finance for housing as the most important and complex factors dwindling people’s aspiration to house ownership as land can be traditionally acquire to build a house. the construction however might be incremental and take a longer period to complete because of finance. in nigeria, public housing production agency effect is currently being felt in both the federal and state governments domain but the informal sector has been active than the government agencies (sanusi 2003; nubi 2005; nubi 2008). about 90% or more of the housing stock are traditionally provided by the private sector (buckley et al, 1994; ajanlekoko, 2001). however, egbu (2007) noted that 54% of residential accommodation is being provided by individual private property developers, 22.7% provided by corporate developers and 22.3% of residential accommodation is provided by government developers. 2.3. the nigerian economy and real estate sector: an overview nigeria achieved economic stability and growth in second half of 2010, with increased growth in the oil and non-oil sectors. growth was attributed to increases in activities of the wholesale and retail trade sector and the federal government’s amnesty development program for the niger delta, which fostered investment in the oil sector. gross domestic product grew to 7.41% compared to 6.7% in 2009 while inflation remained at an average of 12% throughout the year; and foreign direct investment (fdi) fell by 60% from us$6 billion in 2009 to $2.3 billion in 2010. in 2010, activities on both the demand and the supply side in the real estate sector came to a standstill, overall growth of the sector stood at 10.48% in the second quarter of 2010 compared to 10.46% in the corresponding quarter of 2009 with marginal growth achieved as a result of activities in the low end of the market, characterized by small commercial and residential development. there was limited bank lending to major developers and investors, thereby stalling large scale high-end commercial and residential developments. for instance, in the high-end residential locations of lagos effectiveness of capital market derivatives in housing delivery of nigeria emerging market 41 (for example, ikoyi and banana island), property values fell by as much as 40% and by up to 20% in the emerging middle income areas of lekki. property owners are presently willing to accept advance rent for one to two years compared with three years demanded during the property boom. the value of properties in the regeneration neighborhoods of the city continued to appreciate and it has increased by almost 10% by end of 2009. in the third quarter of 2010, the federal government embarked on several initiatives to encourage economic performance and improve investor confidence through the restructuring of the nigerian stock exchange (nse), enhancement of the quality financial institutions to restore depositors and investors’ confidence in the financial system. presently, credit flow for real estate developments has remained limited and new construction and infrastructure projects are almost nonexistent. however, as capital markets stabilize, there would be increased liquidity which would present additional drive for investing in emerging market real estate. regardless of these positive developments, the nigerian economy is confronted by many serious challenges, which include structural imbalance and lack of diversification in the economy which excessively depend on oil revenue, high youth unemployment, poor infrastructure and widespread insecurity. malize (2011) identified other challenges to include those fostered by the global economic meltdown that left capital markets impaired, in addition to crash in oil prices, the niger delta conflict, the boko haram insurgency, the fall of the exchange rate and stock market, which have all negatively impacted the real estate sector. apart from these, the crisis in the banking sector in respect of which the central bank of nigeria (cbn) injected n620 billion (usd 4 billion) in loans and support into nine banks and sacked eight executives for the aggregate non-performing loans that present further challenges for the real estate sector. in recent time, the market is experiencing slump in demand at the high-end and yield is also dropping because investors with loan exposures on real estate investments are being forced to sell. banks are no longer in the lending mode but in a ‘recovery mode’ to recover outstanding debt as a result of real estate financing that is being squeezed further due to limited purchasing power. it has now become very difficult for the investors to service their bank loans, and in so doing causing serious liquidity crisis for the banks and instability in the market. consequently, banks are not eager to finance new projects, leading to excessive appreciations in property valuations in the region of 100 to 300%. however, the demand drive factors play in the market have become ineffective as liquidity in the market arena dried up, and purchasing power of investors turned on a downward trend with less money in circulation (african economic outlook, 2011). 2.4. the nigerian housing market the nigerian housing market full potentials seems to be untapped and undeveloped despite lot of opportunities that abound in the sector. this is basically due to many reasons amongst which include: lack of finance; government policy; lack of infrastructural development and high level of poverty. there is continuous increase in the average price of houses due to increase cost of building materials and inflation in the economy. this has concomitantly, contributed to upward trend in house prices which has significantly affected the number of units of houses constructed annually. the government efforts at addressing the problems have not been successful due to its unsustainable approach of providing houses to the people (gbadeyan, 2011). these houses are grossly inadequate and unaffordable by the larger proportion of the masses for which they are meant for. there are efforts by the private individuals to help in alleviating this housing problem. the bulk of the housing problem is prevalent in urban cities, but there are lots of unoccupied and dilapidated houses in the rural areas. this is due to migration of people from most of these rural areas to urban centers for adjekophori and adebiyi 42 greener pastures. most individuals that are involved in property development build for their own use or are homeowners, while the few ones involved in building for commercial purposes, build shops and space to let for offices because of the high rental income accruing from such commercial properties. the residential developments in most cases are illegal, informal and untitled. this is due to long, undue delay of title registration and laxity in enforcing development control regulations by the official of the urban and regional planning department (fasakin & ogunmakin, 2006). private sector’s contribution towards alleviating this housing problem has been in the forms of individual efforts, cooperative associations, corporate bodies, estate agents, non-governmental organizations’/charity organizations and foreign investors. (gbadeyan, 2011). 2.5. real estate capital structure theory even though corporate capital structure is one of the most researched subjects in economics; little has been done in the field of real estate companies. there are, however, a few scholars whom have studied the subject (gau & wang, 1990; bradley et al., 1998; capozza & sequin, 1999; brounen & eichholtz, 2001; brown & riddiough, 2003; feng et al., 2007; giambona et al., 2008), but unfortunately most cover the american market; and foremost real estate investment trusts (reits), which are under somewhat different judicial conditions, and are taxed differently than ordinary real estate companies. an example of this would be what howe and shilling (1988) found that due to their tax exempt status, reits should have a capital structure with minimal, or no, debt – an irrelevant finding to most swedish and european real estate companies. an interesting discovery by brown and riddiough (2003), however, although related to reits, is that due to the fact that the cost of financing through bonds increased drastically – and non-linear – for bonds with “junk-bond status”; firms on a pursuit of an ideal capital structure, should try to optimizing their debt structure to enable them to receive an investment grade rating and minimize their financing cost. they consequently found that public debt issuing reits tend to cluster just above investment grade ratings (brown & riddiough, 2003). they also suggested a linkage between reits’ average debt maturity and its lease structure, as the lease maturity structure is of great importance to real estate owners’ future incomes and clearly a strategic operational decision. giambona et al. (2008), on the other hand, suggest that this may not be the case: long-term commercial real estate leases usually contain some form of inflation protection, as well as a protection against escalading operating costs; while the matching of short-term leases and shortterm debt increases both the cost and the risk of re-financing; hence, minimizing the importance of matching maturities. they also suggest that factors that affect market interest rates and the ones that change the rent equilibrium differ, along with the fact that short-term leases also increase the option-value for the parties involved – adding to their previous notion (giambona et al., 2008). a non-reit-related study is gau and wang (1990) whom have studied real estate transactions in vancouver, canada, and concluded that transaction-based debt levels for property companies are effected by: borrower’s capital constraints, non-debt tax shields, the absolute cost of debt finance and the cost of financial distress (gau & wang, 1990). moreover, brounen and eichholtz (2001) studied the stock price reactions to announcements by european real estate companies to issue both debt and equity. their study further fuels to the previous research in the field: an announcement of debt issuing is followed by a non-negative price reaction, although modest, and an announcement of equity is exceeded by a significant negative price reaction (brounen & eichholtz, 2001). when comparing the different european countries, they find that companies subjected to higher corporate taxes receive a more effectiveness of capital market derivatives in housing delivery of nigeria emerging market 43 significant negative price reaction when announcing the issuing of equity – in line with the previously mentioned trade-off theory (brounen & eichholtz, 2001). 3. research methods this study used a cross-sectional research design, which allowed the researcher to examine the impact of capital market derivatives on effective housing delivery in nigeria using questionnaires. the nature of analysis used in this study both descriptive and analytical research design. thus, the study uses primary data, a questionnaire to assess how the people perceive the performance of capital market derivatives in housing delivery in nigeria market. the survey was carried out in lagos mega-city. samples represent the number of participants actually selected for this particular study. it may be difficult sampling every member of the population, therefore, from the entire population; a total of 150 respondents comprising 90 stock brokers and 60 developers were selected as the sample size in which the instrument of study was applied. the choice of stock brokers and estate surveyors premised on the fact that the former serve as a major player in the capital market operations and understand the workings of the market, while the later serves as a professional in the housing industry and can provide a reliable and adequate information towards achieving the study`s objectives. the random sampling technique was adopted. a total of 147 questionnaires were returned, and valid for analysis. the analysis of data was done using the statistical package for social sciences (spss) ibm version 20.0. the specification of a model is based on the available information relevant to the objectives of the study in question. here, the predictors are capital market derivatives (bonds, reits, property unit trust, and loan stock and debenture stocks and the dependent variable effective housing delivery in lagos state. the model is stated below; ehd = f{bnd, rts, put,lds } such that; ehd= 0 + 1 bnd+ 2 rts + 3 put + 4 lds + μ where: ehd = effective housing delivery bnd = property bonds rts= real estate investment trusts put = property unit trust lds = loan & debentures stocks e = error term μ i = parameter estimates 4. data presentation, analysis and interpretation 4.1. demographic characteristics of the respondents the table 1 describes the frequency distribution of respondents by demographic status. adjekophori and adebiyi 44 table 4.1 summary of frequency distribution of respondents by demographic status total (n= 147, %=100) variables frequency percentage (%) gender male 123 83.7 female 24 16..3 age below 21years 21-30 years 33 22.45 31-40years 79 53.74 41 – 50 years 28 19.05 51 years and above 7 4.76 marital status single 21 14.3 married 117 79.6 divorced 5 3.4 widowed 4 2.7 educational status secondary 3 2 ond/hnd 21 14.3 b.sc/b.ed/ba 70 47.6 m.sc/m.ed/ma/mba 51 34.7 ph.d 2 1.4 source: field survey, 2015. the results in the table 4.1 show demographic characteristics of respondents to the study , there are more male respondents with 83.7% than female respondents with 16.3%. it shows that more male practitioners in the real estate development are accessible and filled questionnaire. the age category shows that none of the respondents is below the age of 21, indicating that more matured people were sampled in the study area. the age bracket 31-40 years covered over fifty percent of the total respondents, with 53.74% of the respondents in this aged usually categorized as youth; shows that more youths engaged in real estate business in the study area, this was followed by ages of 21-30 years and 41-50 years with 22.45% and 19.05% of the respondents respectively. the remaining 4.76% of the respondents were aged 51 years and above. on the marital status, majority of the respondents were married with 79.6% of respondents, 14.3% were yet to be married while the remaining 6% were divorced and widowed. this showed that the respondents that filled these questionnaires spread across various strata of marital status. the educational status of respondents was in terms of their highest qualification as at the time of this study. high level of education was observed among the respondents with 47.6% were graduates, 34.7% of the respondents specified masters education. respondents with technical education (ond/hnd) were 14.3% and 2% were secondary school certificate holders. 4.2. analysis according to objectives the table 4.2 shows respondent’s preference for the available sources of finance for housing development. the purpose of this is to observe their perception as to which of the sources have the highest preference in terms of ranking and possibly know why effectiveness of capital market derivatives in housing delivery of nigeria emerging market 45 the option/source is preferred. the responses revealed 66.7% of the respondents ranked first position the capital market derivatives. next to this is the pension funds source which represents 14.3% of the respondents. the third and fourth position is shared by commercial and mortgaged sources of funds. the fifth most preferred source of funds for housing development in nigeria is insurance companies while the least preferred (6th) is the funds from friends and family. thus, majority of the respondents preferred capital market funds for housing delivery and it is only in the absent of viable capital market funds that they resolve to other sources. table 4.2 preference of respondents to sources of finance for housing development total (n=147, %= 100) rank sources of finance frequency % commercial banks 10 6.8 3.5 mortgage finance institutions 10 6.8 3.5 insurance companies 5 3.4 5th capital market 98 66.7 1st family and friends 3 2 6th pension funds 21 14.3 2nd source: field survey 2015 table 4.3 showing respondents` perception of statement relating capital market derivatives financing for real estate total (n=147, %= 100) strongly agree agree undecided disagree strongly disagree mean rank statements freq % freq % freq % freq % freq % the existing financing option for real estate is adequate and effective in providing affordable housing in nigeria 1 0.7 3 2.0 7 4.7 42 28.6 94 63.9 1.43 7th the current situation of the capital market products for real estate finance is not favourable for housing affordable delivery 45 30.6 65 44.2 7 4.8 18 12 12 8.2 4.23 5th pension funds if properly channel through the capital market will be a good financing option for real estate project 34 23 105 71.4 2 1.4 3 2.0 3 2.0 4.48 4th reit and 111 75.5 23 15.6 1 0.6 7 4.8 5 3.4 4.89 2nd adjekophori and adebiyi 46 bond in nigeria capital market is not yet properly develop for effective housing delivery financing through bank and equity source is not very adequate affordable housing delivery in nigeria 123 83.7 16 10.9 3 2.0 2 1.4 3 2.0 4.97 1st real estate developers are not aware of capital market derivatives finance source 14 9.5 14 9.5 10 6.8 75 51.2 34 23 2.31 6th real estate can better be finance using capital market derivatives 68 46 33 22.4 24 16 16 10.9 6 4.0 4.52 3rd source: field survey 2015 the table 4.3 describes the perception of stockbrokers and real estate developers on capital market derivatives as it affects housing finance and the housing delivery. on whether financing through bank and equity source is not adequate for affordable housing delivery, the respondents agreed mostly with this statement, with 83.7% and 10.9% strongly agree and agree. this was also ranked 1st among seven different statement used as proxy for capital market derivatives in housing delivery. this infers that respondent in the study area recognizes the fact that capital market derivatives can positively deliver adequate and affordable housing to the people. this will reduce the housing deficit problem in nigeria. the results also revealed that reit and bond in nigeria capital market is not yet properly develop for effective housing delivery; this is represented by respondents’ responses of total of 91.1% that agree to this fact. this shows that despite the current situation of the market, if properly developed, these derivatives will make a great different in the housing finance market. this was ranked 2nd which means that respondents recognized their importance most after the bank and equity. in housing finance generally, the strategic position and advantage of financing through the capital market in the world over cannot be overestimated. in this study too, it was revealed that real estate can better be financed using capital market derivatives with responses of 46% and 22.4% respectively for strongly agreed and agreed position. this ranked 3rd position. this study seeks respondent opinion on pension fund in financing housing project. a good number supported funding of project through the medium but suggested that if properly channeled through the capital market it will be a good finance source towards adequate and affordable housing delivery in lagos state. the responses revealed that majority of the respondent strongly agreed and agreed with 71.4% and 23% respectively. we can deduct from this that developers/investors will be ready to effectiveness of capital market derivatives in housing delivery of nigeria emerging market 47 finance project using pension funds if there is a favorable arrangement for its usage. this also ranked 4th in the hierarchy of the seven statement used as proxy for the variable tested. table 4.4 shows the results for relationship between the variables (dependent and independent variables). the results established that there is moderate relationship between housing delivery and bond with (r = 0.567, p < 0.01). in addition, all other independent variables also revealed positive relationship with effective housing delivery. thus, the present of property bonds, real estate investment trusts, property unit trust, and loan and debentures stocks are essential for effective hosing delivery in nigeria. it further shows that by their association, housing deficit could be reduced. table 4.5 model summary model r r square adjusted r square std. error of the estimate change statistics durbinwatson r square change f change df1 df2 sig. f change 1 .753a .567 .549 .80564 .328 23.795 4 195 .000 2.036 a. predictors: (constant), bnd, rts, put, lds b. dependent variable: effective housing delivery table 4.4 correlations matrix of capital market derivatives and effective housing delivery effective housing delivery bnd rts put lds effective housing delivery pearson correlation 1 0.567** .213** .348** 0.486** sig. (2-tailed) .000 .002 .000 .000 n 147 147 147 147 147 bnd pearson correlation 0.567** 1 .213** .348** .486** sig. (2-tailed) .000 .002 .000 .000 n 147 147 147 147 147 rts pearson correlation .213** .213** 1 .216** .242** sig. (2-tailed) .002 .002 .002 .001 n 147 147 147 147 147 put pearson correlation .348** .348** .216** 1 .351** sig. (2-tailed) .000 .000 .002 .000 n 147 147 147 147 147 lds pearson correlation .486** .486** .242** .351** 1 sig. (2-tailed) .000 .000 .001 .000 n 147 147 147 147 147 **. correlation is significant at the 0.01 level (2-tailed). adjekophori and adebiyi 48 table 4.6 anovab model sum of squares df mean square f sig. 1 regression 61.777 4 15.444 23.795 .000a residual 126.566 195 .649 total 188.343 199 a. predictors: (constant), bnd, rts, put, lds b. dependent variable: effective housing delivery table 4.7 coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 1.011 .561 1.802 .073 bnd .396 .080 .328 4.940 .000 rts .305 .120 .162 2.537 .012 put .034 .083 .026 .411 .002 lds .519 .135 .252 3.846 .000 a. dependent variable: effective housing delivery the regression analysis results as shown in the model summary of tables 4.5 indicates that there is positive relationship between capital market derivatives and housing delivery in nigeria, with r value 0.753, showing strong positive relationship between the independent and dependent variable in the model. the table further revealed that 56.7% of the observed variations in housing delivery (r2=.567) is explained by capital market derivatives. this means that, proper utilization of capital market derivatives will enhance and improve housing delivery in nigeria. the analysis of variance (anova) result in table 4.6 shows that capital market derivatives had significant effect on effective housing delivery, (f = 23.795, p< 0.01).the f-statistics which is used to measure the overall significance of the model. the probability of the f-statistics is less than 0.01 at 1%.durbin watson gives a value of 2.036; which is not farther than the benchmark of 2. 0, this implies that there is no serial correlation in the model. the table 4.7 shows the rate change in the dependent variable that could be caused by the independent variables. from the results, property bonds, property unit trust and loan & debentures stocks can bring a significant change in the housing delivery in nigeria which is all significant at 5%. a unit increase in fund release for real estate development will increase housing delivery by 39.6% for property bonds; 3.4% for property unit trust and 51.9% for loan & debentures stocks. thus, proper injection of funds through this medium will enhance effectiveness of housing delivery in nigeria. the table 4.8 represents the response of respondent for this study with respect to challenges hindering the use of capital markets derivatives for housing finance in the study area. the result also shows the mean and standard deviation of the distributions. a 5 point likert format questionnaire of 1-5 was adopted where 5 is ascribed to strongly agree and 1 to strongly disagree respectively. most of the respondents agreed that there are a lot of challenges inhibiting the use of capital market derivatives for effectiveness of capital market derivatives in housing delivery of nigeria emerging market 49 housing development in and this have drastically affected the available housing stocks and their quality. table 4.8 descriptive statistics on the challenges hindering the use of capital market derivatives financing for housing project. challenges n min max mean standard deviation lack of awareness 147 1.00 5.00 4.1237 .84086 size of investors firm 147 1.00 5.00 4.4742 1.02890 capital market policy. 147 1.00 5.00 4.6186 .76727 lack of credit history 147 1.00 5.00 4.6598 .59674 inability of real estate developers firms to provide acceptable collateral 147 1.00 5.00 4.2137 .74223 high interest rate risk 147 1.00 5.00 4.4742 .67526 development risk 147 1.00 5.00 4.3606 .63229 preference for banks loan 147 1.00 5.00 4.4596 .63901 lack of the understanding of capital market operation 147 1.00 5.00 4.2143 .64732 source, field survey, 2015 table 4.9 measures needed to close the financial difficulty for housing delivery measures n min max mean standard deviation establishing specialized lending institutions for real estate firms 147 2.00 5.00 3.9381 .84086 putting ceilings on interest rates charged on lending funds 147 2.00 5.00 4.1237 .76727 subsidizing interest rates 147 2.00 5.00 4.4742 .59674 establishing special government-assistedfinancing schemes for real estate firms 147 2.00 5.00 4.6186 .67526 establish adequate legal framework and lending policies within which lenders and borrowers can effectively operate 147 2.00 5.00 4.6598 .74223 sharing the risk with other private financial institutions through special arrangements 147 2.00 5.00 4.3606 1.02890 awareness creation of the available derivatives in the capital market for real estate financing 147 2.00 5.00 4.4596 .67221 source: field study, 2015. the table 4.9 represents the response of respondent for this study with respect to measures needed to close the financial difficulty for housing delivery in the study area. the result also shows the mean and standard deviation of the distributions. most of the respondents suggested various measures as presented in the table even as their mean cluster around positives agreements to the suggested measures but some few of the respondents still believe that sharing the risk with other private financial institutions through special arrangements may never be a way out of the financial difficulty for housing development effective housing delivery. 5. conclusion and recommendations this research effort has been able to empirically investigate the effectiveness of the capital market derivatives in housing delivery in lagos state, nigeria, with a view to identifying the challenges and proposing a workable means to improving the current adjekophori and adebiyi 50 situation. the study concluded that capital market and it derivatives in housing delivery is still at its early stage of development in nigeria and the current situation of the market is not encouraging to make it a favorable finance source for housing development at a scale and affordable rate. the housing industry and the capital market should accept the reality that there exists symbiotic relationship between available finance for housing and housing stocks. the value of ‘r’ as calculated shows that there is a significant positive relationship between capital market derivatives and housing delivery in nigeria. the study also recognizes the fact that developers of real estate are not adequately exploring the capital market using their derivatives for effective, adequate and affordable housing delivery and concluded that nigerian capital market seems to be losing out since capital that is supposed to be invested in this laudable venture (real estate) is been tied down and used for other ventures that are not as profitable and secure as the housing project. it can also be concluded as revealed by the study that so many challenges are hindering capital market derivatives from been used for housing finance and delivery in nigeria ranging from policies to others factors and that awareness of the imperativeness and benefits of financing through the capital market is lacking even as this seem to be one of the major way to liberate people from their shackle of financial difficulty for real estate development, a synergetic effort between the market and developers is missing. housing supply in response to its demand remain a daunting challenge in nigeria especially in the study area and finance has long been identified as one of the major issue hindering stocks delivery. effective sources of housing finance are the only way to walk out of the cogwheel of this problem which the capital market seem to be a way out. from the above conclusion, the following recommendations were made: (i) the capital market option should be considered by developers and investors in the housing market and be adequately explored since this can contribute over fifty percent of the required funds needed for housing delivery in any economy. (ii) the capital market operators should channel funds into real estate development and investment to aid housing delivery in nigeria. (iii) a synergetic effort should be created between the capital market and real estate developers this will enhance effective housing delivery in nigeria. (iv) the policies of government on investment of capital market products and the condition required for borrowing should be made flexible and a bit liberal for real estate firms. (v) an enabling environment also needs to be created for both the operators in the capitals market and the real estate developers to ensure optimum service delivery. (vi) the real estate developers firms should also see it as a matter of importance to create or form alliance for them to be effective in their operation and to gain more recognition and trust as well as access to the capital market funds instead of the present finance sources. 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(2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 62 overwiew about the vision, mission, goals and values of nongovernmental organizations nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahoo.com abstract the herein article aims to address several specific aspects regarding the definition of nongovernmental organizations, their vision and mission. also the setting of goals and the presentation of the values of these types of organizations will be presented using a comparative study of literature as a research method. the fields in which nongovernmental organizations operate are very diverse, as are the needs of the community, respectively: education, science, research, culture, social protection, minorities, human rights, environmental protection, child protection, etc. the mission of the organization lies in the ample mentioning of the fundamental goals and of the view regarding the evolution and progress of the organization’s activities, from which the activity field, the market served, as well as the differentiation from other similar organizations, result. nongovernmental organizations are characterized by a great mobility in the manner of action. their operation is dependent on the correct identification of the needs of the community and on their ability to attract the funds required to cover them. a nongovernmental organization can play an essential role within the society by identifying certain courses of action, omitted by the public authorities. they can approach the identified niches by using their own organizational skills and human resources or they can offer assistance to the authorities. keywords vision; goals; community; public utility; nonprofit jel classification m29 introduction the article presents non-governmental organisations in terms of defining their vision and mission of presenting them, and the way of setting objectives and values that ensure their proper functioning. the research method used to achieve those objectives consists of a comparative study of literature. “nongovernmental organisations” represent the romanian semantic and syntactic unit by which the positioning of these organisations is realized, them being distinct from the government and from private organisations focused on obtaining profits, and have the legal attribute of being legally liable for the consequences of the application of the decisions taken on their own behalf. vlăsceanu mihaela (1996, p.98) asserts that non-profit organizations are private in form and public through their finalities, offering communities, for consumption, collective goods or products with public utility (health, educational, cultural, protective services etc.), are guided by the principle of profit non–distributivity between the ones who own them or run them, are independent of the governmental institutions and apparatus, having at their disposal self-governing mechanisms similar to the ones of ciucescu 63 profit organizations, involving the participation of members also in the form of volunteering in a variable, but nonetheless inevitable, proportion. in the category of nongovernmental organizations of public interest or of public utility, those organizations are integrated that by their group, target and activity type, demonstrate a certain vocation for the good of the community. they conduct public interest programs from which the entire community or a large number of its members benefit. 1. aspects regarding nongovernmental organizations nongovernmental organizations don’t have the aim to obtain profit or to access political power, representing those structures, respectively informal groups or natural persons who conduct their activity independently of any public authority. the characteristics of nongovernmental organizations belong on one hand to the public sector, and on the other hand also to the private sector, in the sense that they present the flexibility specific for the private sector and have fewer constraints in activity compared to the public sector. if we consider the set goals, as well as all means used to reach them, respectively the public utility status of nongovernmental organizations, then they are closer to the public sector, than to the private one. this is precisely why nongovernmental organizations represent the ideal partners within the public-private type partnerships. currently, researchers and practitioners worldwide, as well as those from romania have accepted and used the classification developed by johns hopkins university in usa icnpo international classification for non-profit organizations, that divides organizations into 12 major activity groups, namely: culture and recreation, education and research, health, social services, environment, human development and habitat, political and legal lobby, philanthropic and voluntary intermediaries, international, religion, professional and business organizations and other groups that aren’t classified. 2. vision the vision represents an ideal state, respectively the nongovernmental organization’s long-term aspiration to the future, for over 5 years, which configures a possible and desirable development of the respective organization. the vision is expressed concisely and in a manner easy to understand by the staff and by the public, through the medium of a short sentence, and the wording of this sentence is not required to contain quantifiable elements. in my opinion, the vision must be shared and accepted by all members of the organization, must ensure its unity by choosing a common goal, and must offer all members the possibility to be able to identify their interests. this is done through a declaration of commitment. although often between the vision of the organization’s founders and its subsequent evolution a series of deviations occur, the definition of the organization’s vision actually represents a prerequisite for its existence and development. moreover, the mission and the goals of the nongovernmental organization must be established. 3. mission the mission of an organization expresses (nica panaite and iftimescu aurelian, 2002) the raison of that organization in relation to its main partners, the clients. through the overwiew about the vision, mission, goals and values of nongovernmental organizations 64 mission also the specificity of the basic conducted activities is specified and the direction in which they are heading in the future is suggested, sometimes appealing to emotions and feelings. the mission of an organization mirrors the vision of the organization regarding its statute (its credo) and what it aims to realize for a given target, for a longer period – and namely the desired period of existence of the organization. upon its establishment, one always starts from an unmet need of the community, which can constitute the aim of the organization, and so the company’s field of existence. (străinescu, i., ardelean b., 2007, p.23) in my opinion, the mission expresses the aim for which the organization was created and offers an overview regarding what the respective organization is and what it wants to do for the society. a properly formulated mission must answer to the following questions: who is the organization? what does it do? where is it going? the mission is characterized by the fact that it refers to the orientation, perspectives and attitudes of the organization and does not represent an enunciation of certain quantifiable elements to be achieved. mihaela vlăsceanu (1996) emphasizes the first problem faced by a non-profit organization, it refers to the identification and definition of a clear and precise mission, and this implies not only the delimitation of the aims for which the organization was created, but also their formulation in a such manner that the possibility of constant assessment of the obtained performances exists. the wording of the non-profit organization’s mission can greatly influence its launch, since the mission communicates the essence of the organization’s message. consequently, it is recommended that the message of the mission is shortly worded and of a nature to provide a clear overview of the type of activities that it will conduct in the future, without going into details. it is preferable that the mission statement does not exceed one phrase, but that it includes at least the following ideas: organization’s vision (the place where it aims to go, when the mission is completed), fundamental aim (what precisely it wants to obtain, when the mission is completed), what its philosophy reflects, values promoted (the principles that guide the members of the organization in achieving the basic aim). the correct wording of the organization’s mission allows the concomitant realization of several of its roles: ensures the consensus within the organization, on the goals pursued; provides a foundation for motivating the use of the resources in a certain way; develops a unitary view for the allotment of all resources; contributes to the establishment of a harmonious climate within the organization; considers the mission a landmark for those “stakeholders” who can identify themselves with the aims and courses of action of the organization and drives away those who are unable to do so; formulates the aims, the general goals of the organization and facilitates their translation into objectives related to efforts, effects, efficiency, objectives which can be easily evaluated and controlled. ciucescu 65 not only the wording of the mission is important, but also its communication. in this context, in order for the best possible communication of the mission to be ensured, it must: crystallize the views of top managers about the long-term directing of the company; specify the help which the company’s administration will grant middle level managers in order for them to go on the right track; communicate the organizational goal and the fact that the employees have the ability to cause a change in their work; show how the organization prepares for its future orientation (nica panaite and iftimescu aurelian, 2002, p.97-98). the mission statement is made explicitly, in writing. moldoveanu george (2005) covers in his paper “organizational analysis and behaviour” a sub-chapter entitled “mission and stakeholders”. the stakeholders are the ones who have “claims” against the organization, are its supporting “pillars”. the stakeholders can be structured in two groups: a) the internal group, materialized in employees, including the members of the board of directors and managers on functions and activities, who represent the interest of the shareholders in all processes of the organization. b) the external group, formed of individuals and groups which are affected by the organization’s actions, such as clients, consumers, suppliers, governmental structural forms, union missions, competitors, local communities, public elements in general. on the other hand, each nongovernmental organization must present its main goals, namely: goals of action – that establish specific, quantifiable objectives for the organization; goals of imagine – through which the organization makes itself known to the beneficiaries of the market segment for which it wants to work and, respectively, to sponsors it wants to involve, mass-media, general public etc. the vision and aim of a nongovernmental organization do not remain defined once and for all, they can suffer changes, adaptations depending on the existing sociocultural context. for example we will present the vision, mission and aim for a foundation and an association. vision, mission and aim of the civil society development foundation are:  the vision of the foundation for the development of the civil society is one of a strong and influent civil society, with responsible, involved citizens, who promote their interests and values for the good of the communities.  the mission of fdsc is to develop the ability of civil society organizations to act efficiently in the interest of communities.  aim: the foundation for the development of the civil society is an “organization for organizations”, that considers that the development of the nongovernmental sector is in itself an indicator for the state of the community in which the citizens live. in the association "there is a chance," the vision, the mission and aim are:  the vision association "there is a chance": to build a community where everyone has their rights respected.  our mission "there is a chance" is to improve the quality of life of community members in need, at risk of marginalization and social exclusion. overwiew about the vision, mission, goals and values of nongovernmental organizations 66  aim: to develop an alternative offerings / solutions for promoting the rights and capacities of people at risk of marginalization and social exclusion in view of a better life. 4. aims the objectives derive from the vision and mission undertaken by each non-profit organization. the objectives or targets are the endpoints towards which the global or separate activities of the organization are aimed, so that the objectives can be general or specific for different activities / groups of activities. the fundamental objectives constitute the first operational component of the strategy which is formulated starting from the mission and represent those objectives that refer to it as a whole, to the major components of the organization’s activities and regard long horizons, usually 3 – 5 years. depending on their content, the fundamental objectives can be economic and social, and depending on the manner of expression, quantifiable and non-quantifiable. the economic objectives synthesize and commeasures the long term goals considered by the most important stakeholders (earnings per share, share value, profit, profit rate, turnover, work productivity). the social objectives, which are more rarely incorporated in the strategies of organizations, usually refer to the control of pollution, salaries and working conditions of the employees, cooperation with the authorities, customer satisfaction through the quality, reliability, maintainability and price of the offered products and services, and so on. quantifiable objectives enounce the most important existence causes of the organization, while the non-quantifiable objectives reflect concerns for its social responsibilities. neglecting these social responsibilities can have as consequence a series of aspects related to the decrease in the motivation and loyalty of its own employees, which can lead to the deterioration of the organization’s image. for these reasons, any organization must ensure a constant balance between the economic and social objectives. in my opinion, the strategic objectives of the organization are established in all fields, on which not only the survival, but also the success of the organization depend, being indispensable for all hierarchical levels of management. the strategic objectives must be established within an organization so that they are possible to achieve and that they can condition the efficacy of their use in the management process. they should not be set only in terms of “what would be good”, but have to be able to mobilize the entire organization’s potential, even if they refer to external conditions of the organization (objectives related to its position in relation to the competitors or to its aspirations for a certain place within the area in which it conducts its activity) or to internal conditions (objectives related to the desired level of performance). great attention should be given when formulating objectives. if the objectives are formulated properly, than they: 1. will be able to be transformed into specific actions; 2. will provide the direction to take, representing the starting point for more detailed and more specific objectives at the inferior hierarchical levels of the organization; 3. will set long-term priorities; 4. will facilitate the managerial control, because they serve as performance standards in relation to which the performance of the entire organization can be assessed. panaite nica and aurelian iftimescu provide a detailed presentation on setting targets (2002, p.100-103). ciucescu 67 the manner in which the objectives of various organizational entities within a company are established (business units, divisions, departments, workplaces) conditions to a large extent the efficacy of their use in the management process. traditionally, the objectives are established in cascade, meaning that they are imposed from top to bottom, starting from the strategic objectives of the entire organization and going, by breakdown on different component sub-units, up to the workplaces at the bottom of the hierarchal pyramid. of course, proceeding in this manner ensures coherence and convergence to different objectives within the organization. their realism and capacity to mobilize can be however seriously affected, especially in a dynamic and complex environment, as the one many contemporary organizations must cope with. an effective alternative to the traditional manner of setting goals can be constituted by the management through objectives. this is a planning and control system designed and implemented for the first time in the early '50s, by peter drucker, known management professor and consultant. essentially, the management through objectives is a method to convert the general objectives of the organization into specific objectives for the organization’s sub-units and the individuals that compose it, by negotiation between the manager and subordinates, and to evaluate individuals depending on their actual performances and the objectives thus established. for the managers of different sub-units within the organization, individual objectives greatly overlap the objectives of the managed subunits. the process of management through objectives comprises three major stages: establishing the objectives and actions required for their accomplishment; implementing the provided actions and self-control of achieving the objectives; periodical examination by the superiors of individual performances and assessment of the subordinates. the increasing use of management through objectives is determined by its advantages. amongst the most important we mention: the increase of the realism of the organization’s objectives and of its components, the amplification of the employees’ level of motivation, the development of a participative and responsible behaviour of the staff, the closer correlation of rewards (including salary rewards) with individual performances, improving the managers’ use of the working hours, as a result of reducing the supervision and control activities. the advantages of management through objectives are not however universal. in certain cases, the implementation of this system generates a high workload and a high volume of written documents. other times, the system determines the focus of attention on a smaller number of objectives, particularly quantitative, neglecting the others. therefore, management through objectives appears to be efficient especially when applied to managers or specialists in an organization, being likely to generate costs higher than the effects obtained for those with routine tasks. 5. values the values represent a sum of features that give value to things, facts, ideas, phenomena, being, in general, relatively different from one organization to another. nongovernmental organizations are also relatively separated from other types of organizations by a system of own values which can be found in table 1. overwiew about the vision, mission, goals and values of nongovernmental organizations 68 table1. typical values of an ngo responsibility learning competitive differentiation openness compassion partnership diversity priority focus on the clients’ needs dynamism/innovation quality/excellence efficiency respect empowerment mutual development / self-support equal opportunities / equity teamwork equal rights in reaching the potential trust inclusion valuing people integrity source: courtney r, strategic management for voluntary nonprofit organizations, london, new york: routledge, 2002, p.169 conclusions in areas where the market is not functional, and the government is not efficient, there is a third sector in which non-profit organizations conduct their activity. although non-profit organizations can be defined as private organizations, they are distinct from the government and from private organizations focused on obtaining profit. nongovernmental organizations differ from the ones focused on obtaining profit, because they tend to be determined by a specific mission, the property belongs to the organization and is not distributed between shareholders, as in the case of private companies. in most countries of the world, as well as in romania, nongovernmental organizations ordinarily operate as distinct legal persons, but they can also conduct their activity without having any legal personality, as informal groups, in which case the members bear the legal responsibility. for the smooth running of the activities of these organizations it is necessary that the vision, mission, objectives, as well as the values each of them promotes, irrespective of the area in which they conduct their activity, are established and known. the non-profit orientation determines the finding that the management applied in these organizations is a management conveniently adapted to the issues and specificity of the non-profit activity, whose characteristics would be: orientation towards efficiency (rationality), orientation towards objectives, orientation towards marketing. references avram, e., cooper, c. (2008), psihologie organizaţional-managerială. tendinţe actuale, iaşi, editura polirom boboc, i. (2004), managementul organizaţiilor non-profit, bucureşti, editura didactică şi pedagogică bryson, j.m. (2002), planificarea strategică pentru organizaţii publice şi nonprofit, editura arc, bucureşti courtney, r. (2002), strategic management for voluntary nonprofit organization, london, new york, routledge ciucescu 69 green, j. c., griesinger, d. w.(1996), board performance and organizational effectiveness in nonprofit social service organizations, nonprofit management and leaderships medina-borja, a. triantis, k. (2007), a conceptual framework to evaluate performance of nonprofit social service organizations, international journal of technology management, vol. 37, no. 1-2 mironescu r., feraru a. (2012), intellectual capital as a basic resource for a new organizational behavior and economic development, proceedings of the 4rd european conference on intellectual capital, arcada university of applied sciences, helsinki, finland, cd version isbn: 978-1-908272-32-4, cd version issn: 2049-095x , book version isbk: 978-1-908272-31-7, book version issn: 2049-0933 moldoveanu, g. (2005), analiză şi comportament organizaţional, bucureşti, editura economică nanus, b., dobbs, s. (1999), leader who makes a difference. essential strategiesfor meeting the nonprofit challenge., san francisco, josseybass publisher nica, p., iftimescu, a. (2002), management. concepte şi aplicaţii, iaşi, editura sedcom libris nicolescu, o., verboncu, i. (2007), managementul organizaţiei, bucureşti, editura economică nutt, p. c., backoff, r. w. (1992), strategic management of public and third sector organizations, san fransisco: jossey-bass pettinger, r., frith, r. (2008), measuring business and managerial performance. a practical guide, stc ltd. popa, v. (2004), strategii manageriale interorganizaţionale, târgovişte, editura bibliotheca porter, m. (1986), l’avantage concurrentiel, paris, interedition popa, v. (2004), strategii manageriale interorganizaţionale, târgovişte, editura bibliotheca steven ott, j. (2001), understanding nonprofit organization, colorado, westview press străinescu, i., ardelean b. (2007), managementul ong, bucureşti, editura didactică şi pedagogică thomas, l. (2005), capacity building for local ngos: a guidance manual for good practice, london, catholic institute for international relations turcu, o., ciucescu, n., drob, c., feraru, a., mironescu, r., simionescu, gh., stan, a. (2008), management, bacău, editura alma mater verboncu, i. (2006), management, eficiență și eficacitate, management&marketing, the official journal of the society for business excellence vlăsceanu, m. (1996), sectorul non-profit. contexte, organizare, conducere, bucureşti, editura paideia http://www.lumeaong.org/lista-director-ong/47-educatie-civica-responsabilitatesociala/257-fundatia-pentru-dezvoltarea-societatii-civile-bucuresti.html http://www.lumeaong.org/lista-director-ong/47-educatie-civica-responsabilitate-sociala/257-fundatia-pentru-dezvoltarea-societatii-civile-bucuresti.html http://www.lumeaong.org/lista-director-ong/47-educatie-civica-responsabilitate-sociala/257-fundatia-pentru-dezvoltarea-societatii-civile-bucuresti.html nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahoo.com abstract keywords jel classification m29 introduction 1. aspects regarding nongovernmental organizations 2. vision 3. mission 43t4. aims table1. typical values of an ngo conclusions references porter, m. (1986), l’avantage concurrentiel, paris, interedition microsoft word apostoaie constantin marius_eng.doc theories about the financial crises irina-raluca busuioc-witowschi, “alexandru ioan cuza” university of , , romania abstract the financial crises are generally associated with banking crises due to the role they play in their production, transmission and settlement. this paper presents a number of different approaches taken from the specialized literature on the causes that led to the outbreak of the financial crises. keywords financial crisis, banking crisis, monetarism, risk, uncertainty, informational asymmetry jel code : g01, e50 introduction the financial crises represent a major concern for the economists because they are phenomena which raise questions regarding their future evolution, the impact on the world economy as a whole and on each of its sectors. in a globalized economy the financial crisis cannot be isolated to one country alone or to one geographical area as the rebound requires a common effort. to avoid the emergence of future financial crises, we need to identify the factors which trigger them. in the study of financial crisis, different models have been developed if one takes into consideration that the mechanisms which cause the crises are not fully known and their consequences are manifold. thus, in this thesis, i did a review of the specialized literature, presenting different approaches to the financial crises. the banking system has a crucial role in economy because it allows the mobilization of the surplus funds to finance the investments in economy. bhattacharya, thakor1 recent studies show that the banks have a very important role in the linearization of consumership, in the sense that the banks are institutions which facilitate the linearization of consumership by the economic agents through assurance against liquidity shocks. the banking institutions can be seen as a liquidity source which ensures people against shocks, which can affect their needs of consumership2. hence, the banks can facilitate financial crises with the help of activities realized on the financial markets, they can influence the interest rates, the uncertainty on the market as well as the asset prices. the management activity of risk, in its large sense, represents the fundamental activity of the banks3. the banks have to control the inevitable risk of the deposits and of the portfolio of lending. having into consideration the fact that the bankruptcy of a banking institution can have a negative effect on the financial system on the whole, it is necessary to bring under regulation and to supervise the controlling organisms which have to carefully monitor the balance of the banking operations. the specific risks for banking activities ccording to 1bhattacharya, s., thakor, a. (1993), contemporary banking theory, journal of financial intermediation, 3, pp.2-50 2 freixas, x., rochet, j.c. (2008), microeconomics of banking, 2nd ed. the mit press, p.20 3 freixas, x., rochet, j.c. (2008), microeconomics of banking, 2nd ed. the mit press, p.221 studies and scientific researches economic edition, no. 15, 2010 32 heffernan4 are: the credit risk, the market risk which includes the exchanging rate and the interest rate risk, the liquidity risk, the operational risk and the systemic risk. definition of the financial crisis the specialized literature has developed several theories which attempt to explain the financial crises. as each financial crisis is unique in itself, its forms, causes and consequences have been named ‘conclusions’, some of which are quite contradictory and therefore inconclusive. thus, the modern economic theories reject the idea of a general theory of the economic and financial crises, as per they can be incorporated into a universal model. according to these theories, the crises cannot be anticipated so as to bring their negative effects brought to a minimum. according to kindleberger5 crises occur spontaneously as a result of mass psychology or panic. however, history shows that they are closely related to the cyclic nature of the economic processes. economic cycles, whether short, medium or long-termed consist of two phases expansion and recession. the economic literature distinguishes between three types of financial crises: currency, banking and foreign debt crises. but in practice there are no pure forms of such crises; a unique concept in economic theory is that of twin crises – the crises of currency and of the banking sector. thus, kaminsky and reinhart6 define the financial crises according to the forms they take: currency crises, banking crises and twin crises. bordo7 defines the banking crisis as a time of financial distress, which is severe enough to result in partial or complete erosion of capital in the banking system. the banking crisis could be defined as a difficult enough period which leads to erosion in most or all of the capital from the banking system8. the emergence of banking crises is facilitated by the liberalization process in corroboration with an inefficient legal system and a high degree of corruption9. in another approach, mishkin10 defined the financial crisis as a disturbance of the financial markets in which the problems of adverse selection and moral hazard become much worse. thus, a financial crisis represents a sharp deterioration of a group of financial and economic indicators, an imbalance between the supply and demand of money, the fall of asset prices, accompanied by the failures of financial institutions such as banks. monetarist approach for the financial crisis financial crises are seen by the monetarists as a form of manifestation of the banking crises where financial stability is at risk without the intervention of the central bank. according to friedman and schwartz11 the failures of the banks were the result of their state of panic. when a banking institution is in trouble on the market there is a contraction of the money 4 heffernan, s.(2005), modern banking, john wiley & sons ltd, p. 104 5 kindleberger, c. (1978), manias, panics, and crashes: a history of financial crises, new york: basic books 6 kaminsky, g., reinhart, c.(1999), the twin crises: the causes of banking and balance-ofpayments problems, american economic review, 89, 473-500 7 bordo, m., the crisis of 2007 :the same old story, only the players have changed, http://michael.bordo.googlepages.com/the_same_old_story.pdf 8 allen, f., gale, d. (2001), financial contagion, journal of political economy, 108, 133, p.3 9 demirgüc-kunt, a., detragiache, e. (1998), financial liberalization and financial fragility, international monetary fund, working paper 8 10 mishkin, f. (1990), asymmetric information and financial crises: a historical perspective, www.nber.org/papers/w3400 11 friedman, m.,schwartz, a. (1963), a monetary history of the united states, 1867-1960, princeton, nj: princeton university press studies and scientific researches economic edition, no. 15, 2010 33 supply, the public confidence is reduced, and this leads to the development the crisis. so banking crises occur when financial systems become illiquid or insolvent. this type of crisis relates to closures, fusions, acquisitions or assistance on the large-scale from the government. in solving this problem, the monetarists suggest an increase in the amount of money in circulation, and thus leading to the reinflation of the economy in order to counter the monetary reduction. thus, the inflation has been identified as a cause of financial crisis because it is seen as a purely monetary phenomenon. the inflation is related to the interest rate as well as to the money supply and a growth in inflation leads to an increase in the interest rates. consequently, friendman monetarists state their preference for liquidity in the same way that the monetary policies of action do on interest rates to rectify the economic activity. another view developed by meltzer12 is centered on the distinction between the supply of credit and the money supply, giving an effective role to the budgetary deficit. in their view, to have a healthy growth, the monetary policy must be combined with the limitation of the budgetary deficits and with the fiscal pressure. another important idea is that the monetarists did not see a link between the business cycle and the crisis. the steps which the monetary authorities take to influence the demand have a delayed effect. the delay cannot be greater or smaller from one economic cycle to another, thus, because of the time lag, the anti-cyclic politics cannot lead to stability. finally, some monetarists proposed the establishment of a rule which would predetermine the growth of the monetary supply and would ensure monetary stability and economic growth. the hypothesis of financial fragility the theory of the approach to the crisis opposed to the financiers is "the hypothesis of financial fragility", a concept developed by kindleberger and minsky. the concept of ‘fragility’ seeks to clarify the problem of indebtedness during a period of revival. kindleberger13 believes that there are ‘shocks’ in the financial system which have a great impact on profitability in already existent or new sectors. the shocks which open new profit opportunities include events such as the start or the end of a war, a new technology that becomes very popular, or changes in the monetary policy. the borrower or the creditor agents move their finances to new areas of profit, financing the economic boom and supporting the increase in the supply of money. the euphoria of the investors appears and therefore the financial system starts to become fragile. the irrational behavior creates bubbles defined as excessive price increases in many areas. minsky14 developed irving fisher’s approach by introducing the concept of fragility in an attempt to clarify the extent of indebtedness in an economic upswing. he wrote about the way the transition occurs from hedge-type finances to speculative finances and then to the ponzi-type finances. he divides the crisis into five main phases, like the business cycle replacement, euphoria, climax and panic. according to minsky, the events of a crisis begin with the ‘replacement’ which will increase even more the profit opportunities in at least one sector of the economy. as a result, companies invest more and more in this sector, the investment growth leading the economy to the ‘euphoric’ stage. at this stage, the bank will extend the credit expecting higher profits in the sector. the increased investment will lead to a price boost which will create more opportunities for profit, which is called ‘climax’. 12 meltzer, a. h. (1982), rational expectations, risk, uncertainty, and market respones, lexinton books 13 kindleberger, c. (1978), manias, panics, and crashes: a history of financial crises, new york: basic books 14minsky, h. (1972), an evaluation of recent monetary policy, nebraska journal of economics and business, vol. 11, no. 4, pp. 37-56 studies and scientific researches economic edition, no. 15, 2010 34 artificial price increases take place here, the investors earning a maximum profit. there is a small price variation at this level because of the government policy change or because of an increase in interest rates which will lead to ‘panic’. at this stage, the economic activity slows down, and bankruptcies and increased unemployment comes to the surface. the risk and the uncertainty the risk of uncertainty and the risk compared to the uncertainty are two antithetical epistemologies that form the economic theory of the 20th century. the inclusion of risk and uncertainty in the economic theory has raised at least two problems: (1) the definition and delimitation of the concepts of risk and uncertainty, (2) the assessing of risk and uncertainty and the way in which these concepts affect economic decisions. in explaining the financial crisis, knight15 first suggested the economic uncertainty, and not the risk. it is important to distinguish between two concepts. quantify the risk usually reachable but unquantifiable uncertainties. currently, we can appreciate that risk management is an art, developing a genuine culture of risk. the study of ‘economic uncertainty’ can be divided into two main schools (1) mainstream (the keynesian school) and (2) the austrian school. in general, the two schools define uncertainty in the same way, so the uncertainty can be measured by the evaluation of probabilities, of associated risks, as well as of the benefits, every possible result. but the austrian school of economics sustains that uncertainty is applicable to events, implications, such as wars, major changes in political regimes, financial crises, etc. according to the austrian school of economics, the market uncertainty is the main source of stability and innovation. in terms of opportunities for profit, the uncertainty which is in continual change represents, according to knight, a primary source of competitive markets. if all the probabilities have been known and the risk has been diversified, there would be no additional profit and the entrepreneurs would no longer be motivated to do business. the profits are made from innovation and from the search for opportunities. in 1944 john von neumann and oskar morgensten16 realised for the first time the formalized incorporation of risk and of uncertainty in the economic theory (in his "theory of games and economic behavior”). they have developed an objective approach to adopting decisions under conditions of risk, formulating the hypotheses of anticipated utility (expected profit) using the statistic probabilities. another step is made by friedman and markowitz17 who analysed the concept of adversity in connection with risk and in contradiction with the appetite for risk, as well as the relative properties of the anticipated utility. the problem of information asymmetry and the financial crisis a number of researches have been done on the issue of information asymmetry and its relationship with the financial crisis. the information asymmetry means the lack of information between entities which exist on the financial market. all the contracts and transactions are based on information18. in a transaction not all participants are fully informed, or have the same information, and either party may possess information which is not available to others. the most important entities are the debtors and the creditors and the problem of information asymmetry could exist in the financial contracts between them. the 15knight, f.(1921), risk, uncertainty and profit, boston: houghton mifflin, http://www.econlib.org/library/knight/knrup.html 16 morgenstern, o., neumann, j. (1944), theory of games and economic behavior, princeton univerity press 17 markowitz, h.m. (2005),market efficiency: a theoretical distinction and so what?, financial analysts journal, 61 (5): 17–30 18casu, b., girardone, c., molyneux, p. (2006), introduction to banking, financial times press, p.9 studies and scientific researches economic edition, no. 15, 2010 35 borrower has better information than the creditor concerning the productivity of the project or the risks associated with this project, while the creditor lacks this information. in this case, the creditor increases the interest rate, being able to exclude the high-quality borrowers and he may also choose to better rationalize loans rather than increase interest rates in order to avoid adverse selection19. the asymmetric information creates problems in the financial structure in two ways before the closing of the so-called transaction and the adverse selection and also after the closing of the transaction called the moral hazard. the banks may hold private information that has not yet reached the financial market. for example, if a customer asks for a financing, the bank has the possibility to evaluate him because it manages his accounts and can also obtain important information regarding turnover, profitability and indebtedness. therefore, the bank prevents the concealment of information before signing the agreement and thus reduces the asymmetry of information that would lead to adverse selection. the moral hazard is the final result of asymmetric information that results when the transaction takes place. this occurs because of the borrowers who invest in projects with high risk, the creditors having to support most of the loss in case the project fails. such asymmetry as shown later leads to the idea of morality, meaning that intermediaries can reduce monitoring costs and may provide statistical and accounting methods by using specialized services. a careful monitoring of agreements is thus provided and the risk of bankruptcy is also decreased. the banks have a well defined role in lowering information asymmetry as they maintain long term relationships with their customers, through the very nature of the performed functions. mishkin20 identified five reasons for the production of the financial crisis: (1) it raises interest rates (2) it decreases property market (3) the increase of uncertainty (4) the bank is panicking and (5) unexpected drop in the aggregate price level. he said that these five reasons for financial crisis are the result of the problem of information asymmetry. the increase in uncertainty, or higher interest rates and the stock market crash increased the austerity level of adverse selection on the credit market, while the decrease of the net value resulting from a decrease in property market has increased morale, which will eventually lead to a crisis. the theory of financial crisis explains the causes but does not explain how it develops and what those signs of financial crisis are. moreover, the problem of information asymmetry is not the only cause of the financial crisis. the role of government or government policy failure is not taken into consideration in this theory. conclusions the opportunities offered nowadays by the volume and pace of change on the financial markets have proven to be both a source of profit and one of loss. the development of the financial innovations and the hazardous speculations, the lending expansion and the increase in asset prices without an economic base are inevitable, as long as the investors wish to get the best profits. the studies21 have shown that, more often than not, the banking crises have been preceded by an excessive exposure of the banks on the capital and property markets. in these conditions, the occurrence of the financial crises doesn’t represent anything new. there are many causes of the banking crises, but they are generally grouped into three main categories: 19 stiglitz, j.,weiss, a.(1981), credit rationing in markets with imperfect information, the american economic review, vol. 71, no. 3, pp. 393-410 20 mishkin, f. (2001), financial policies and the prevention of financial crises in emerging market countries, nber working paper w8087 21 kaminsky, g., reinhart, c.(1999), the twin crises: the causes of banking and balance-ofpayments problems, american economic review, 89, 473-500 studies and scientific researches economic edition, no. 15, 2010 36 the unfavorable development of the macroeconomic framework; the imprudent behavior and the poor corporate governance of the banks; the authorities’ involvement in the decisions of lending service offered by the banks, namely, the political interference in an activity which must run only on economic criteria. bibliografie 1. allen, f., babus, a., carletti, e. (2009), financial crises: theory and evidence, http://fic.wharton.upenn.edu/fic/papers/09/0915.pdf 2. allen, f., carletti, e. (2006), credit risk transfer and contagion,” journal of monetary economics, 53, 89-111 3. allen, f., gale, d. (2007), an introduction to financial crises, http://fic.wharton.upenn.edu/fic/papers/07/p0720.html 4. allen, f., gale, d. (2001), financial contagion, journal of political economy, 108, 133 5. bordo, m., the crisis of 2007 :the same old story, only the players have changed, http://michael.bordo.googlepages.com/the_same_old_story.pdf 6. bhattacharya, s., thakor, a. (1993), contemporary banking theory, journal of financial intermediation, 3 7. casu, b., girardone, c., molyneux, p. (2006), introduction to banking, financial times press 8. dell’ariccia, g., detragiache, e., rajan, r(2008), the real effect of banking crises, journal of financial intermediation – vol. 17, no. 1, p. 1-144 9. demirgüc-kunt, a., detragiache, e. (1998), financial liberalization and financial fragility, international monetary fund, working paper 83 10. freixas, x., rochet, j.c. (2008), microeconomics of banking, 2nd ed. the mit press 11. heffernan, s.(2005), modern banking, john wiley & sons ltd 12.kaminsky, g., reinhart, c.(1999), the twin crises: the causes of banking and balance-ofpayments problems, american economic review, 89, 473-500 13.kindleberger, c. (1978), manias, panics, and crashes: a history of financial crises, new york: basic books 14. knight, f.(1921), risk, uncertainty and profit, boston: houghton mifflin, http://www.econlib.org/library/knight/knrup.html 15. friedman, m.,schwartz, a. (1963), a monetary history of the united states, 1867-1960, princeton, nj: princeton university press 16. markowitz, h.m. (2005),market efficiency: a theoretical distinction and so what?, financial analysts journal, 61 (5): 17–30 17. meltzer, a. h. (1982), rational expectations, risk, uncertainty, and market respones, lexinton books 18.minsky, h. (1972), an evaluation of recent monetary policy, nebraska journal of economics and business, vol. 11, no. 4, pp. 37-56 19. minsky, h.(2008), stabilizing an unstable economy, mcgraw hill companies 20. mishkin, f. (1990), asymmetric information and financial crises: a historical perspective, www.nber.org/papers/w3400. 21. mishkin, f. (2001), financial policies and the prevention of financial crises in emerging market countries, nber working paper w8087 22. morgenstern, o., neumann, j. (1944), theory of games and economic behavior, princeton univerity press 23. stiglitz, j.,weiss, a.(1981), credit rationing in markets with imperfect information, the american economic review, vol. 71, no. 3, pp. 393-410. studies and scientific researches economic edition, no. 15, 2010 37 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 33, 2021 http://sceco.ub.ro 40 aspects that intervene in the implementation of the new public management florina popa institutul de economie națională, academia română (institute of national economy, romanian academy) florinapopa289@gmail.com abstract appeared in the last decades of the last century, against the background of economic and global developments, determined by the internationalization of production and free movement of capital, the new public management aimed to the transition from the bureaucratic principles of hierarchical setup, to the development of new practices of management . this change had to meet the requirements of the market economy, signifying another form of approach to administration and public management. the purpose of the changes was to reform the public sector organizations, increase their competitiveness and efficiency in the use of resources and the provision of services. the present study propose a short presentation of some opinions of theorists, regarding some limits and dysfunctions, which may occur in the application of the new public management, different from some successes of the changes accomplished. other issues were also addressed, such as the occurrence of reversible trends in the reform process. given the new challenges of society and the increased demands of citizens, the phenomenon requires efforts to find the best practices of the new public management, which to lead to the achievement of the proposed objectives. the research methodology used was the study and processing of ideas from foreign and domestic literature. keywords reform; performance; responsibility; public policies; the new public management; limits; trends jel classification e61; h44; h83; l38. 1. introduction the economic, global developments determined by the internationalization of production and the free movement of capital have generated a series of structural, institutional changes, a context in which the principles of the new public management are also included. (androniceanu and șandor, 2006). emerged in the last decades of the last century, the new concept proposed another form of approach of public administration and management, pursuing a change, a transition from the bureaucratic principles of hierarchical organization, towards the development of new management practices which to meet the requirements of the market economy. (pfiffner, 2004; promberger and rauskala, 2003). the reform of the new public management involves reducing the size of the government and its role, diminishing bureaucracy, decentralization, privatization, adopting market principles, in the delivery of public services, the emphasis on responsibility and performance. (kalimulah, alam, nour, 2012). the purpose of the changes is for the methods and techniques adopted to lead to the reform of public sector organizations, avoiding waste and achieving savings, aspects that intervene in the implementation of the new public management 41 increasing their competitiveness and efficiency in the use of resources and the provision of services. (pfiffner, 2004; promberger and rauskala, 2003). the application of the reforms of the new public management creates conditions for the improvement and modernization of the public sector activity and the introduction of new systematic, methodical, managerial principles. (amar and berthier, 2007) thus, through the new public management, the public sector has access to the management techniques of the private sector whose mechanisms can be established as a model. (pfiffner, 2004; schilder, 2000) the intensity of the introduction of the new public management changes was different, in some situations, the reforms being stronger (united kingdom, new zealand etc.) and, in others, weaker (usa, germany, switzerland etc.) (mönks, 1998). it can be considered that there is no single model of the new public management, a process that manifests itself differently, the width and content being determined by the conditions and particularities of the respective countries. (androniceanu, 2007, calogero, 2010). 2. some opinions of theorists regarding the limits of new public managment in assessing the results of the adoption of the new public management system, different from some successes and changes, the specialists observe difficulties that may result from limits and dysfunctions that may occur in its application, supported by a series of arguments, on which reference is made below. (amar and berthier, 2007). ➢ from the perspective of the correlation between democracy and bureaucracy, the authors nazmul ahsan kalimullah, kabir m. ashraf alam, m. m. ashaduzzaman nour (2012) show that one of the objections to the reforms of the new public management refers to some deviations from the principles of democracy, respectively: ✓ democracy involves the rule of law, legal supervision of markets, exercising control over the bureaucratic system, according to legal regulations. the modern state presupposes a system of bureaucratic norms, according to weber's principles. thus, there is a harmony between bureaucracy and democracy, and the elimination of bureaucracy implies the creation of a new system of government. ✓ the public management reforms have meant reducing the size of government without prove that the phenomenon is a consequence of democratic pressure. the novelties brought to the public sector have led to the decrease of the public responsibility, by contracting the delivery of the services through the private sector, diminishing the involvement of the government. ✓ the scope of government can be diminished by reducing political responsibility, but according to hughes (2003) it is possible that the larger area of the government action to be the consequence of some political demands, expressed democratically. ➢ robinson mark (2015), in the article from old public administration to the new public service. implications for public sector reform in developing countries, shows that taking over some management elements from the private sector (creating executive agencies) has led to weakening democratic principles, not meeting citizens' requirements (considered an essential element of reforms in the public sector ) (minogue, polidano and hulme, 1998). popa 42 ➢ there are opinions that question some elements of the conceptual sphere, such as: ✓ robinson mark (2015) questions considering the concept as a distinct paradigm, appreciating that it is the result of different approaches that have common elements (osborne, 2006). ✓ according to wegrich (2009), the impact of the new public management on efficiency, effectiveness and responsibility is not concretely defined, because the concept is not outlined by a group of concrete ideas. ✓ dwivedi and gow, (1999) draw attention to the non-neutrality of the new public administration, respectively, its ideological character, of neoliberal origins. the image of the citizen is replaced by the figure of the client. ✓ other authors accuse the hybrid character of management methods in the public administration, taking into account the precepts of bureaucracy and the new public administration. in this perspective, the model of the neo-weberian state adopted in europe, in the 2000`s, is perceived, which expresses new models of thinking about the role of the public sector (bouri, 2016). ➢ amar anne; berthier ludovic (2007) points out that some of the basic principles of the new public management raise some debatable aspects: ✓ although the statute of the public office (employment, remuneration, promotion, etc.) is considered rigid, an obstacle in the pertinent management of human resources, in the case of the private sector, can be found a number of constraints, too. in the case of large companies, for certain positions, the collective agreements may be more rigid beside the status of the public office; thus, the autonomy of personnel administration is possible, especially, for small enterprises. ✓ also, in the case of the public sector, there is manifested a certain flexibility, taking into account the large number of work contracts that it manages and on which it has a consistent margin for manoeuvre ✓ the status of the public position motivates the employees through its provisions (remuneration, good working conditions, promotions etc.) and is, also, perfectible on many aspects such as, for example, the mobility and the transition from one public position to another. ✓ certain public sector policies, especially, those that have a social dimension, are considered with more interest in the public sector than in the private one. 3. observations on some dysfunctions the analysts have expressed their views on some of the dysfunctions of the new model of reform. ➢ referring to the ideological character of the new public management, pollit (1990) formulates some criticisms, considering that the new public management model is ideologizing, the probability of some similarities between the public sector and the private one, not having well-founded arguments. the role of the public sector is to provide public services to citizens (and not to customers), which cannot always be concretely defined, through performance indicators and specific objectives. aspects that intervene in the implementation of the new public management 43 ➢ according to mckinney and howard (1998), “the public management cannot be just a simple economic way of maximizing customer satisfaction” because, in the public sector: ✓ clear objectives and performance indicators cannot be set, the market mechanisms cannot be taken over in any of the situations, the operation criterion cannot have only the profit benchmark. the public sector has multiple responsibilities, among which, an equitable redistribution of resources, conformation to constitutional values; ✓ the substantive features of the public sector, continuity at work place, observance of procedures, remuneration corresponding to the position occupied in the hierarchy, fidelity, attachment to the system were deformed and altered; systems that rely solely on the argument of performance and incentives can have the reverse of losing the values of teamwork, of collective responsibility, of individualism; ➢ for the private sector, the evaluation of the activity is of particular importance, without offering the possibility to improve the policies. differently, in the case of the public sector, the evaluation presents difficulties, due to the multiple objectives pursued and the actors, so, setting the level of performance of a public policy or a civil service is a delicate issue; (amar and berthier, 2007) ➢ other authors have criticized the effects caused by fragmentation that have led to the provision of services through several agencies and to the decrease of coherence of decisions at governmental level (denhardt and denhardt, 2000; christensen and lægreid, 2007b). ➢ the creation of autonomous agencies (which took over governmental operations) and the transfer to potential suppliers, of some governmental activities, as well as the measure of staff reduction in state agencies, did not lead, in times of crisis, to positive effects, as (androniceanu, 2007): ✓ no salary savings were achieved due to the granting of compensation, at a high level, to those who were fired; ✓ the reduction of the number of employees meant, also, a decrease in the quality of services; the poor management of retraining and professional reconversion programs has meant great difficulties for those laid off, these increasing the number of the unemployed (larbi, 1995). the situation was due to insufficient concern about the size of human resources, development of technical capacities or initiatives concerning the measures of increasing productivity. (androniceanu, 2007). 4. other elements in the paper le nouveau management public: avantages et limites the new public management: advantages and limits, anne amar and ludovic berthier (2007) points out also other elements, susceptible to comments, that accompany the new public management. the adoption of the new public management encountered a series of oppositions, individual or collective, first of all, of the civil servants, who perceived it in a negative manner, due to the risks it presented, from several perspectives (amar and berthier, 2007): a more or less favorable evolution of the remuneration and guarantees they benefited; popa 44 the uncertainty of the protection of the workplace, the uncertainty of a fair treatment. these two challenges addressed for civil servants are directly related to the risk of arbitrariness in the evaluation of the activity. taking care of the increase of the work rhythm, of the decrease of the staff; fear of losing some of the independence in the activity. there is a distinction between the manifestations, in the political sphere, whose interests develops in the short term, in the electoral rhythm, and the reforms of the new public management, which requires a long time, for implementation and setting. (amar and berthier, 2007) ▪ thus, the individual must redefine his role and position in the process of achievement and delivery public services. the resistance to the introduction of reforms is found in the cultural, political and social representations of the various actors regarding the perspectives of the public sector. (amar and berthier, 2007) ▪ the flow of autonomy obtained by the public agencies, on the expense of the adoption of reforms can mean an increase in uncertainties, stress, with unfavorable effects in the achievement of objectives. (amar & berthier, 2007). ▪ it was observed that the organizational changes did not, always, lead to increasing performance (dunsire et al, 1988), and the participatory management did not manifest itself, constantly. ▪ there was a delay in adopting the methods of the new public management, by incomplete delegation of competencies or delays in the implementation of reforms. (amar and berthier, 2007) ▪ the transition from the weberian administrative system to the new public management system carries out phasing, progressively, without including, at the same time, all services. thus, within the same organization can manifest several ways of management, what can lead to situations of mistrust, misunderstanding, as well as procrastination from civil servants, which can have effects on the results of the organization. (amar and berthier, 2007) ▪ taking over of the principles of the new public management is not manifested, homogeneously, on all the activities of the public sector. there are areas where the incorporation of the methods of the new public management is done without encountering resistance, such as those in which the competition occurs, but also sectors whose characteristics make it difficult their cognition, such as the fields of education, culture. (amar and berthier, 2007) ▪ in the case of the united kingdom, a pioneer in adopting the methods of the new public management, there were situations in which it was not possible the manifestation of an increase in the effectiveness of services, due to officials who had lost some advantages (keraudren, 1993). 5. some reversible trends in the reform process dunleavy et. al. (2006) draw attention to a slowdown regarding the introduction of reforms, as well as the emergence of trends that these become reversible; situation generated by the difficulties appeared in the implementation of the policies, in favour of the citizens, in a coherent form. the reversible nature of some processes could be manifested by: aspects that intervene in the implementation of the new public management 45 ✓ re-absorption by the public sector, of some activities taken over by the private sector, based on contracts; ✓ re-unification of fragmented agencies, which would encourage the promotion of coherent policies. the fragmentation technique implemented by the new public management can have as an effect, the difficulty of adopting some coherent policies, the doubling of some hierarchies. this is the case for three railway regulatory agencies, in united kingdom, covering fragmented areas of the railway sector: safety; infrastructure investments, licensing of transport companies. the efficiency caused by the new public management (by disaggregation and fragmentation) results from cost savings and increased competitiveness, but, also, it attracted the possibility of creating artificial public services, the emergence of some bureaucracies in business, with fields of activity and functions that do not always correspond to the real needs of the society, in the respective area of activity. the use of new informational means, in the exercise of governance, favors the unification of agencies in the approach to public services. it is noted that some authors consider it useful follow-up the reforms of the new public management, and others are oriented towards the return to the traditional form of public administration: ▪ there are opinions which consider that by the complete implementation of the reforms, through the new public management, the quality of the functioning of democracy would increase. this implies increasing transparency, the quality of services, the involvement of politicians, but also the possibility for public administration reform to lead, in some countries, to the expansion of democracy (hughes, 2003). ▪ pollit and bouckaert (2004) argue the need to return to the principles regarding the central role of the state and the representative democracy. for this end, these propose to increase the qualification of employees and the performances of public administration. (bouri, 2016). 6. conclusions the event of the emergence of the new public management presents a special significance for the practice of public administration in the last twenty years, both in the industrially developed countries and in the developing ones (calogero, 2010). in the context of structural, institutional changes and exchanges of experience practiced in the field of political governance, the options of national governments were oriented towards the adoption or taking over of the best practices of international models (androniceanu and șandor, 2006). characteristic of the new concept (new public management) is the interaction of reform procedures which aims at reducing the size of the government and its role, removing bureaucracy, decentralization, privatization, adopting market principles in public service delivery, emphasis on responsibility and performance (kalimullah, alam, nour, 2012). these principles oppose the characteristics of traditional administration, regarding the conditions of employment and promotion, their indeterminate nature, excessive bureaucracy, traditional form of accountability, unfavorable elements to achieve performance (hughes, 2003). regarding the adoption of the principles of the new concept, the specialists make observations concerning some successes of the achieved changes, but also the difficulties that may result from the limits and dysfunctions that may occur in the implementation. (amar & berthier, 2007) popa 46 beside the new challenges of society and the increased demands of citizens, addressed to the new public management, the phenomenon requires efforts to find the best practices, as well as the adoption of methods and tools leading to the fullfilment of the proposed objectives. (amar & berthier, 2007) acknowledgment: the study is a part of the research paper of the institute of national economy, romanian academy ”noul management public, element de modernizare a administrației publice. bune practici europene și posibilități de aplicare în economia româniei” achieved in 2020, by phd. florina popa (coordinator author). references amar a.; berthier, l. (décembre, 2007). le nouveau management public: avantages et limites. the new public management: advantages and limits, gestion et management publics, vol. 5, http://www.airmap.fr/wpcontent/uploads/2018/06/gmp2007_5.4._amarberthier.pdf; androniceanu, a.; şandor a. (2006). ”new public management” impact on the romanian public administration, administraţie şi management public, 6/2006, pp. 93-99, https://ramp.ase.ro/_data/files/articole/6_02.pdf; androniceanu, a.; şandor, a. (2006), impactul ”noului management public” asupra administrației publice din românia, administraţie şi management public, 6/2006, pp.13-16, https://dokumen.tips/documents/impactul-nouluimanagement-public.html; androniceanu a. (2007). new public management, a key paradigm for reforming public management in romanian administration, administraţie și management public nr. 8/2007, pp. 154-161, https://ramp.ase.ro/_data/files/articole/8_05.pdf; bouri m., 2016, le nouveau management public, mémoire de maîtrise, https://www.grin.com/document/494973; calogero m. (2010), the introduction of new public management principles in the italian public sector, transylvanian review of administrative sciences, no. 30e/2010 pp. 30-54, online issn: 2247-8310 | print issn: 1842-2845 https://rtsa.ro/tras/index.php/tras/article/view/167/163; christensen, t. and lægreid, p., eds (2007b). transcending the new public management: the transformation of public sector reforms. burlington, vt: ashgate, isbn 9780754671176, published by routledge; denhardt, robert, b. and denhardt, janet, v. (nov. dec.2000), the new public service: serving rather than steering. public administration review, vol. 60, no. 6, pp. 549–559, published by: wiley; dunleavy, p. and hood, christopher, c. (1994). from old public administration to new public management, public money and management, volume 14, issue 3, https://doi.org/10.1080/09540969409387823; dunleavy, p.; margetts, h.; bastow, s. and tinkler, j. (2006) digital era governance: it corporations, the state and e-government, oxford, oxford university press; dunsire a., hartley k., parker d.; dimitriou b. 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(2003). public management and administration. an introduction. london: macmillan, publisher red globe press; kalimullah nazmul, ahsan; alam kabir m. ashraf; nour, m. m., ashaduzzaman (september 2012), new public management: emergence and principles, bup journal, volume 1, issue 1, pages 1-22, issn: 2219-4851, https://www.researchgate.net/publication/334431600_new_public_manageme nt_emergence_and_principles/link/5d28c718a6fdcc2462da1674/download; keraudren p. (1993) le nouveau management public en grande-bretagne depuis 1979: un échec relatif, revue française de science politique, 18, pp. 655-672; larbi, george, a., (september 1999), the new public management approach and crises states, united nations research institute for social development (unrisd) discussion paper no. 112, geneva; mckinney jerome b. and howard lawrence c. (1998), public administration: balancing power and accountability, 2nd edition 2nd, isbn-13: 978-0275955656; isbn-10: 0275955656; minogue, m., polidano, c. and hulme d. (eds.). (1998). beyond the new public management. changing ideas and practices in governance. cheltenham: edward elgar; mönks j. (1998), ”la nouvelle gestion publique : boîte à outils ou changement paradigmatique ?”, in m. hufty (éds), la pensée comptable:état, néolibéralisme, nouvelle gestion publique, puf et les nouveaux cahiers de l’iued, paris et genève, pp. 77-89. naschold, f. (1996), new frontiers in public sector management: trends and issues in state and local government in europe, berlin: walter de gruyter, doi: https://doi.org/10.1515/9783110809626-003; osborne, stephen, p. (2006). the new public governance? public management review, volume 8, issue 3, pp. 377-388. issn 1471-9037 print/issn 14719045 online 2006 taylor & francis http://www.tandf.co.uk/journals doi: 10.1080/14719030600853022, http://spp.xmu.edu.cn/wpcontent/uploads/2012/12/the-new-public-governance.pdf; pollitt, c. (1990). managerialism and the public services: the anglo-american experience. oxford: basil blackwell, isbn 0631163344, 9780631163343; pollitt, c. and bouckaert g. (2004). public management reform: a comparative analysis. 2nd ed. oxford: oxford university press; pfiffner, james, p. (2004), traditional public administration versus the new public management: accountability versus efficiency, published in institutionenbildung in regierung und verwaltung: festschrift fur klaus konig, a. benz, h. siedentopf, and k.p. sommermann, eds. (berlin, germany: duncker & humbolt, 2004), pp. 443-454, https://pfiffner.gmu.edu/files/pdfs/book_chapters/newpublicmgt.doc.pdf; pfiffner, james, p. (2000), “government legitimacy and the role of the civil service,” in jame p. pfiffner and douglas. a. brook, eds. the future of merit twenty years after the civil service reform act, isbn 978-0-8018-0465-0, publisher woodrow wilson center press with johns hopkins university press, http://mason.gmu.edu/~pubp502/pfiffner-readings-legitimacy.htm; popa florina (2018), centralizare versus autonomie locală în gestionarea resurselor de dezvoltare, editura universitară, bucurești, isbn 978-606-28-0774-0; https://www.researchgate.net/publication/334431600_new_public_management_emergence_and_principles/link/5d28c718a6fdcc2462da1674/download https://www.researchgate.net/publication/334431600_new_public_management_emergence_and_principles/link/5d28c718a6fdcc2462da1674/download https://doi.org/10.1515/9783110809626-003 http://spp.xmu.edu.cn/wp-content/uploads/2012/12/the-new-public-governance.pdf http://spp.xmu.edu.cn/wp-content/uploads/2012/12/the-new-public-governance.pdf https://pfiffner.gmu.edu/files/pdfs/book_chapters/newpublicmgt.doc.pdf http://mason.gmu.edu/~pubp502/pfiffner-readings-legitimacy.htm popa 48 promberger kurt, rauskala iris (2003). new public management an introduction from the uk perspective, working paper 6/2003, http://www.verwaltungsmanagement.at/687/uploads/10657009510.pdf; robinson mark (2015), from old public administration to the new public service. implications for public sector reform in developing countries, undp global centre for public service excellence (gcpse), www.undp.org; schilder, a. (2000), government failures and institutions in public policy evaluation, the case of dutch technology policy, uitgeverij van gorcum, publisher van gorcum & companies, netherlands, isbn 90 232 3637 8, https://books.google.ro/books?id=bglr7pqwvycc&printsec=frontcover&dq= ard+schidler&hl=en&sa=x&ved=2ahukewjdzynyp7xtahwsbhaihbfycm 4q6aewahoecaaqag#v=onepage&q=ard%20schidler&f=false; van de walle steven; hammerschmid gerhard (november 2011), the impact of the new public management: challenges for coordination and cohesion in european public sectors, – halduskultuur 12(2), administrative culture, 12(2): 190209; wegrich, k. (january 2009). “public management reform in the united kingdom: great leaps, small steps, and policies as their own cause.” in shaun goldfinch and joe l. wallis (eds). international handbook of public management reform. cheltenham: edward elgar, 137-154; noul management public – premize, https://www.scritub.com/management/noulmanagement-public-premise3274217.php. http://www.verwaltungsmanagement.at/687/uploads/10657009510.pdf http://www.undp.org/ https://books.google.ro/books?id=bglr7pqwvycc&printsec=frontcover&dq=ard+schidler&hl=en&sa=x&ved=2ahukewjdzynyp7xtahwsbhaihbfycm4q6aewahoecaaqag#v=onepage&q=ard%20schidler&f=false https://books.google.ro/books?id=bglr7pqwvycc&printsec=frontcover&dq=ard+schidler&hl=en&sa=x&ved=2ahukewjdzynyp7xtahwsbhaihbfycm4q6aewahoecaaqag#v=onepage&q=ard%20schidler&f=false https://books.google.ro/books?id=bglr7pqwvycc&printsec=frontcover&dq=ard+schidler&hl=en&sa=x&ved=2ahukewjdzynyp7xtahwsbhaihbfycm4q6aewahoecaaqag#v=onepage&q=ard%20schidler&f=false https://www.scritub.com/management/noul-management-public-premise3274217.php https://www.scritub.com/management/noul-management-public-premise3274217.php microsoft word apostoaie constantin marius_eng.doc correlation cost performance in terms of management accounting dumitru ene, university of wallachia, targoviste, romania abstract management accounting system is a useful tool for enterprise management, which aims to achieve performance piloting enterprise by promoting efficiency and effectiveness. to be successful in today's economic environment requires the use of a calculations system and management costs. purpose of calculating costs is to identify cases not only transfer the cost objects. this approach shows the ability of the system for calculating the cost of providing an analysis linking financial performance of business processes and activities cost sale .the firms use type information in various forms in making decisions. the manager expects the management accounting a permanent assistance before, during and after the action, to define objectives, to understand whether the objectives are relevant and to measure performance. keywords management accounting, cost, value, performance, costing system, financial performance, overall performance, efficiency, effectiveness, the object cost; jel code: m41 current issues in theory and managerial accounting method current issue able to challenge managerial accounting theory and method relate to: a reassessment of the concept and identify key performance indicators characterizing the performance: the concept of 'cost-value'', target cost and cost of activities . analyzed in terms of domain information and a business decision, and shall cause accounts, assist and decide on the company's financial position, economic and financial performance and cash flows arising from investing / finance, employment / resource use, production / distribution of wealth created by an entity that is simultaneously legal, economic and financial. to be efficient in the current economic environment requires the use of a calculations system and management costs. cost calculation goal is to identify the causes not just transfer the cost objects . this approach shows the ability of system for calculating the cost of providing an analysis linking financial performance of business processes and activities. french national accounting council defined the management accounting since 1996, that is designed primarily business needs, it is a part of its information system, providing an economic modeling company in order to meet the objectives of performance measurement and aid in decision making. of its composition are: performance measurement process substantiation methods of decision . chronological stages of the process of performance measurement international federation of accountants (ifac), in "managerial accounting concepts", published in february 1989 and revised in 1998, admits that there are different names in the studies and scientific researches economic edition, no. 15, 2010 55 world of these records, costs for knowledge, decisions and performance evaluation firm grounding. are important but the development and qualitative change in time, management accounting, this conceptual framework developed by ifac, which can be analyzed chronologically into four distinct phases. in the four distinct stages mentioned specific items appear to measure process performance: round that one, before 1950, the emphasis is on determining the costs and their control, the use of budgetary techniques and cost accounting; stage-ii, until 1965, when the emphasis shifted to providing information for planning and management control, the responsibility for providing accounting information and careful analysis of decisions taken on them; stage-iii, until 1985, when attention was focused on reducing loss of resources used in business processes, using techniques of process analysis and cost management; stage-iv, until 1995, when attention shifted to creating value efficiently using resources, using advanced techniques to examine the requirements for creating value, in terms of customer (consumer) ownership, but also to assess the organizational innovation. the current stage of development, managerial accounting (management), shows the international federation of accountants, in its preface conceptual framework, the needs of firms operating in a dynamic environment, competition and competitive. two of the concepts that dominate the modern management of organizations are value and performance. we observe (in romania) this is the statement (in internal or external environment of business) of such value creation for customer and shareholder or achieve global performance claims . these may be just nice words or, conversely, may be a synthesis of the general approach to company management. we can use cost as inducer of value and, depending on the characteristics of competition and how to use the product, cost is considered insufficient for assessing performance, it must be supplemented by using a tool to express the request. recitals above are all many reasons that handle the company must adapt to new conditions that characterize the context in which the undertaking. up to now several decades, productivity growth and cost reduction strategy was a satisfactory and easily implemented organisation. today economic context is another and firm performance is subject to several competitive advantages factors. these is to be declined by the structure so as to be able to act on them and then be able to measure acquired progress .in addition, management tools are closely related to strategy, but also the structure (cut) 1 organization. structure becomes a key performance parameter and a variable to be managed, a lever action for flexibility . the new management is to compel a company built to work across vertical 2. cost is still an inducer of value, but not sufficient for performance evaluation, so depending on the characteristics of competition and how to use the product, use the cost must be supplemented with a tool to express themselves more on request . to rely on the rarity value, management accounting must take into account certain factors such as quality, flexibility and time, which does not deal with traditionally management accounting, but which have become strategic stakes. type companies use cost information in various forms in making decisions. the manager expected of a management accounting permanently assistance before, during and after the action, in order to define objectives, to understand whether the objectives are relevant and to measure performance. cost calculation goal is to identify causes and not just their transfer to the cost objects . this approach shows the ability of computing the cost of providing an analysis linking financial performance of business processes and activities.. costs control and performance measurement activities enterprise management involves measuring costs and performance and their management . for performance measurement is calculated projected costs (standard or exanthema) and compared with realized costs (real or expost). the conditions that characterize the current global economic environment, the most important objective of an accounting system costing studies and scientific researches economic edition, no. 15, 2010 56 seems to be able to estimate involved total product offering. calculating the full cost stakes are high: performance assessment at the centers of responsibility, highlighting the effect of ”chain cuts'' in the case of processes and activities, assess the financial accounting, decision making on products, customers and activities. a modern management characterized by the fact that performance and accountability that are global, collective, and costs must be integrated within the concept of value, involves the use of computer systems and performance measurement. standard cost method has its genesis in sua where appeared in 1901 under the name ''estimated cost system''(the pre-calculated cost), promoting first cost is determined before construction start. standard cost has an pre-calculated cost to assess the performance over a certain period of time . trough ,,estimated cost system ''was transformed in 1918 in ,, standard cost accounting'' (standard cost calculation). performance on a charge there are two conceptual approaches: performance is a measure ability to achieve a goal set a standard by determining the relationship: the real cost – the standard cost . given the favorable or unfavorable context, performance is measured by comparing the deviation cost% activity% deviation. deviation of activity = (actual-activity standard deviation) x 100/ standard activity. abc method considers that a firm is competitive when producing value for its customers, consuming minimal resources . the cost-value tandem is an axle for restructuring the management priority, highlighting the activities that contribute to product development, namely those that affect its characteristics, the customer is ready to pay. the ''nonproductive'' nature attribute an activity that does not relate directly to the final product is still present in the assessment activities of factory. because this case, accounting ignores some activities ( so called '''support''), but which are vectors of performance. method of target costing, target costing aims to reduce costs while taking into account market strategy, production management, human resources management and media relations întrepinderii.raportat value engineering ''target-costing'' as a unitary concept and closed the management cost through functional analysis is oriented to the report, ''value-cost-proceeds cost''. new vision for cross abm's specific processes leads to redefining the concept of performance and yours assessment. the new vision or performance is a multi-vision, which includes issues of cost, terms, benefits and quality of participation in value creation and measurement is considering eliminating its effects on new indicators. the new performance indicators are classified into three categories: -indicators to measure performance; -indicators of management performance; -indicators tracking action plans and progress. measure performance indicators assess the result of activities or processes being addressed in existing information systems, integrated in a multi-vision: the unit cost of an inducer, the average waiting time, customer satisfaction rate, etc.. management performance indicators are defined by means of quality management tools aimed at detecting the causes of failure. indicators for tracking progress brings together all the indicators that allow advance action plan, was recovered in architecture scoreboards and reporting system of enterprise. optimizing performance translates to optimize life cycle that becomes a gestiune.costul not obtained additive, but as a ''measure of value'', which is what the customer is willing to pay for product. the factory not manage to reduce the cost but optimizing the cost-value. cost-volume-procedees model is a profit that studies relations existing between several factors: the price of products, volume or activity levels, unit variable cost, total fixed costs, production structure. the enterprise can change the values of these variables in order to obtain desirable objective. the rely indicators of the model are: margin on variable costs, the margin rate on variable costs, lever operational cost structure. studies and scientific researches economic edition, no. 15, 2010 57 companies must not manage to reduce cost, but cost-value. the solution to optimize the cost-value is method of calculation directly costing. efforts a specialists to find a system calculation , which to ensure: first determine the operational unit cost of production, and on the other hand can easily determine indicators essential grounding for management decisions in the short term resulted calculation directly directly costing. the directly-costing calculation , the indicators that determines, allow management to make decisions to optimize outcome of operation and may provide follow such decisions. there is a correlation between: strategy-performance-management control? i consider that performance measurement is an attribute of management control can not be addressed outside the objectives outlined for each organization. in this issue is clarified two points: -mission for which there is a business? -vision-to which the business is heading? performance is assessed in connection with strategically objectives. the typology of strategies to address the resulting diversity of afacerii.henry mintzberg relizat two groups of strategies in his strategy: towards a general framework (generic srategies: tpward comprehensive framework). the first one divides strategies in static and dynamically. the static strategies is a conservative approach to maintain current market position by focusing on qualitative aspects . the dynamically strategies promote fast or major changes at the enterprise level or at the level of significant activities. the second approach typological has in center development size business and delimit such strategies: penetration starts from existing products and markets and proposes new actions to capture new markets, market development promoting new products on the market or reduce the number market segments but increases the size of their product development increases the amount of products by increasing the use of existing capacity or increase manufacturing lines, the diversification aims to expand the range of products in the same field of work or related fields . vision gives general signs (strategy) of walking an organization and is based on flexibility. the mission describes the basic functions of the organization in terms of goods and services produced and provided to customers (mintzberg). mission and planning are two elements in the connection, the mission has an important role in planning. the organizations can be considered machinery of growth, growth that can be measured differently by : revenues, profitability, return on investment, market share, number of staff , number of products, cash, etc.. a performance measurement system will show the degree to which objectives were achieved entity. performance measurement is related to: spaces of responsibility, size of organization and authority vested in managers without which no motivation.. in this context, performance measurement should be determined by the type of structure an organization to be evaluated. such structures may occur as cost centers, revenue, profits, investment. performance requires a comprehensive vision of internal and external parameters, quantitative and qualitative, technical and human, physical and financial. overall performance assessment integrating multiple levels: for production, for sale, for finance . consistency management indicators retained in each profit center and each operational center and consistent with defined indicators at enterprise level are essential . the center would charge indicators are not always running to be chosen to complete the analysis of its management. there are many cases in which indicators should be changed to optimize overall management . optimizing each subset of the enterprise does not necessarily lead to optimization company, nor to optimize the implementation strategy . choosing appropriate indicators is one of the fundamental responsibilities of management control. what are the main instruments for measuring and managing performance ? modern management organizations operate with two concepts: the value and performance. to assess performance, to be managed value . but value is not measurable and should therefore be reconsidered processes involved in its creation that have a global vision of the interdependence of external and internal parameters, quantitative and qualitative, technical and human resources, management of physical and financial of management. performance is studies and scientific researches economic edition, no. 15, 2010 58 not purely financial and indicators used to date (firm size, profitability and revenue, treasury) condemns the company to position reactive not proactive . the reality is that neither can progress continuously on financial their. financial scandals of recent years have highlighted the limits of financial information to capture all facets of performance. performance is ambiguous and integrator concept assuming equilibrium and causal relationship between internal and external factors of the organization. why not just performance tracked and measured, but must be managed, "we can not thank just count all the fruits of of a tree count. must all contribute to creating a fertile soil and are concerned long-term health of the tree'''3. in the current environment, management control should be to enrich content to allow steering of performance and managing change. organization as complex system, adaptive, with a specific purpose and open to the environment, can be considered as a set of subsystems . in light of management, the company includes subsystem leader (decision), led subsystem (operational) and information subsystem that provides the connection between the first two. purpose system that involves business objectives set by strategy requires a system analysis and performance measurement in decision-making system. building such a system performance analysis should address mainly the following problems: establishing organizational subdivisions must receive information about the performance achieved, specifying the decision centers, and ways of presenting information on activities conducted, coordination organizational subdivisions receiving information about the performance achieved operational subsystem. solve these problems, identify relationships between subsystems, components, highlighting the relevant information to enable decision-operational subsystem and subsystem to achieve the objectives can be fostered by use of statements of performance monitoring and reporting: the dashboard, reporting, balance bibliography 1.albu, n., albu, c. (2003), performance management tools,vol.i and ii, economical publishing house , bucharest 2.serieyx, h. (1999), le zero mépris, dunod, paris 3. www.ub.ro 4. www.infoeuropa.ro studies and scientific researches economic edition, no. 15, 2010 59 studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 59 entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya kimeu muindi moi university a.m.kimeu@vu.nl bernard kibeti nassiuma moi university bnassiuma2@gmail.com enno masurel vrije universiteit amsterdam e.masurel@vu.nl kees van montfort erasmus university rotterdam fam.montfort@planet.nl abstract the purpose of this paper is to examine entrepreneurial competences among female entrepreneurs within the context of developed countries which have been greatly neglected in the same context of emerging economies. this empirical research is based on a survey of 301 micro and small enterprises located in uasin gishu county, kenya, run by female entrepreneurs. its focus is on the following entrepreneurial competences: the need for achievement, locus of control, tolerance of ambiguity, innovativeness, risk-taking propensity, self-efficacy, egoistic passion; goal setting; resilience; trustworthiness; emotional stability; and patience. in measuring entrepreneurial performance, the constructs of firm performance, development of personal wealth, and social performance were used. the findings show that a proper measurement instrument has been applied to check on the constructs of entrepreneurial competences and entrepreneurial performance. the paper makes a finding that entrepreneurial competences do exist among female entrepreneurs in emerging economies. however, it was established that there is hardly any correlation between entrepreneurial competences and entrepreneurial performance. this finding, presents a stimulating area for further research within the contextual framework of emerging economies. the study contributes to the advancement of the literature on entrepreneurial competences and how they relate to the entrepreneurial performance of female entrepreneurs in an emerging economy context. keywords small and micro enterprises; female entrepreneurs; entrepreneurial competences; entrepreneurial performance; firm performance, development of personal wealth; social performance jel classification m19 introduction entrepreneurial competences have been identified as capabilities necessary for the exercise of successful entrepreneurship, and, as such, entrepreneurial competences are often related to the development of small and new businesses (colombo & grilli, 2005). in this article, we undertake an empirical study to determine whether there is an identifiable link between the entrepreneurial competences of the entrepreneur and the entrepreneurial performance of the firm. (onstenk, 2003) argued that proper entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 60 entrepreneurial competences are a basic condition for an individual to start, operate, and sustain a business within a given marketplace. onstenk, (2003) sustained the argument that competent entrepreneurs use knowledge, attitudes, and skills in a manner which allows them to carry out tasks, and solve problems, dilemmas effectively, and contradictions. interest in entrepreneurial competences can be derived from the supposed link between entrepreneurial competences and the start, survival, and growth of an entrepreneurial venture (mitchelmore & rowley, 2010). there is evidence to suggest that it is necessary to have an understanding of the entrepreneurial competences, and that the changing role of the entrepreneur through the various phases of development of firms which supports the development of entrepreneurial competences, and could, therefore, have an effect on successful firm growth (nichter & goldmark, 2009). as cutura, (2006) argues, the critical role of female entrepreneurs in the kenyan economy and their families’ prosperity requires more insight into the development of entrepreneurial competences of these entrepreneurs. hardly has any research been undertaken into the development of the entrepreneurial competences of female entrepreneurs in this part of the world. thus, this paper presents our approach to determine whether such entrepreneurial competences could be a positive predictor of entrepreneurial performance. the latter is described in terms of firm performance, development of personal wealth, and social performance. therefore, the research question we aim to answer in this paper is: to what extent do entrepreneurial competences contribute to the entrepreneurial performance of female entrepreneurs in kenya? notably, the paper is arranged as follows. in section 2, we present the theoretical framework, explain the meaning of female entrepreneurship, entrepreneurial performance, and entrepreneurial competences and formulate a set of hypotheses. the methodology is presented in section 3, and the results are presented in section 4. hypotheses testing is presented in section 5. the paper closes with the discussion in section 6, and conclusion section 7. 1. theoretical framework this section explores the link between female entrepreneurship, entrepreneurial competences, and entrepreneurial performance. it starts with a discussion on female entrepreneurship and the various measurement indicators of what constitutes entrepreneurial performance as used in this paper. then follows a review of entrepreneurial competences as a concept, their link to entrepreneurial performance, and, finally, the hypotheses associated with each identified entrepreneurial competency. 1.1 female entrepreneurship1 the role and importance of female entrepreneurs and their contribution to a country’s economies have been on the increase in last three decades (brooks, donovan, & johnson, 2018; sarri & trihopoulou, 2005). similarly, investigation of factors that impede the growth of female entrepreneurs has also grown, especially in the developing countries due to the existence of different factors that affect them (jennings & mcdougald, 2007; st-arnaud & giguère, 2018). several studies, see creighton et al., (2006); maden, (2015); sadler-smith, hampson, chaston, & badger, (2003) have pointed to other challenges including financial capital, education, professional 1 this paper has been prepared as part of a broader ph.d. series of papers where the section on female entrepreneurship has been retained as the same across all the four papers. muindi, nassiuma, masurel, montfort 61 experience, family responsibilities and gender-related problems. other challenges can also be classified as specific to different contexts and status such as cultural norms and beliefs (jennings & mcdougald, 2007; lock & lawton smith, 2016; naguib & jamali, 2015). female entrepreneurs participate not only in industries where they are traditionally active, but also are taking up active roles in less traditional sectors such as manufacturing, construction, and transportation, as well as in new growth areas such as financial services and communication (bardasi, sabarwal & terrell, 2009; sarri & trihopoulou 2005). in africa, they are more often likely to work in the service industry than male entrepreneurs do (meyer & landsberg, 2015). these authors further argue that females are also more likely to work in government, health, education, and social services than their male counterparts as these sectors, mostly require a lower level of skills and show fewer barriers to entry, and they also have a relatively quick turnover and do not require long-term investments. however, challenges abound that affect female entrepreneurs. these include limited access to start-up capital, government regulations, low levels of education, lack of business knowledge and lack of support during either decline or increase in business activity (vuuren & groenewald, 2007). other challenges are female specific such as lack of business management skills, inter-role conflict, lack of training and education, high-risk averseness, lack of female role models, inequality in access to credit and pressure of childcare responsibilities (jamali, 2009b; lebakeng, 2008). similarly, isaga (2018) reinforced this point by suggesting that female entrepreneurs, just like male entrepreneurs in developing countries, are constrained by a lack of infrastructure; unstable business, economic and political environment and the general lack of entrepreneurship-related training. these business impediments is also attributed to the fact that many female entrepreneurs have low or lack access to formal education, access to real estate for use as collateral and social mobility (creighton et al., 2006; jamali, 2009b). other factors that affect effective performance of female entrepreneurs include, negative perception that entrepreneurship is an appropriate career choice for males and not females; work-family conflict such as the combining of business with family responsibilities due to the pressure to conform to accepted gender roles (jamali, 2009a; jennings & mcdougald, 2007; st-arnaud & giguère, 2018). others like dayhookoomsing (2003), in a study conducted in mauritius, found out that, female entrepreneurs also face difficulties in getting permits as well as accessing markets. brixiová and kangoye (2016) and robb and watson (2012) argued that there is not much difference in firm performance between female-owned and male-owned new ventures provided that this performance is measured appropriately. they further argue that risk aversion and firm size can be adjusted for gender differences. for instance, justo, detienne, & sieger (2015), using a sample size of 219 former entrepreneurs in an attempt to determine why female entrepreneurs fail more than male entrepreneurs, found out that female entrepreneurs are more likely to exit voluntarily and for personal reasons. bardasi et al. (2009) demonstrated that female entrepreneurs owned small firms mostly because they are resource-constrained and industry-constrained. vossenberg (2013) also noted that female entrepreneurs firms are concentrated in crowded areas and lowcost premises, and exhibit growth, employment, and profitability challenges (kiggundu, 2002). entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 62 1.2 entrepreneurial performance2 in this paper, entrepreneurial performance is defined as firm performance, development of personal wealth and social performance, for reasons listed below. firm performance is measured as firm growth in terms of growth in profits, growth in sales, growth in assets, and growth in the number of employed people/employment. development of personal wealth involves the acquisition of wealth at the household level. social performance involves the interaction of the entrepreneur with her community. we, therefore, can define entrepreneurial performance as the achievements delivered by people running their enterprises. so by its very definition measuring firm performance is logical. also measuring the development of personal wealth by the entrepreneur is logical because the entrepreneur is the crucial person within the firm. and as the firm cannot be seen in isolation from its environment, it is also logical that we look at the impact a firm has on the society in which it operates in. see also, (shane & venkataraman, 2000). there are three critical points to consider while measuring the performance of small businesses, such include; the choice of performance indicator, the period under study, and the calculation to be undertaken (delmar, 2006). for example, delmar (2006), advises on the use of employment, sales or annual turnover data to measure performance, mainly because this data is readily available and is seen to be largely noncontroversial from a respondents view. similarly, profits and assets can be used as a measure of growth where the respondent is asked to rate themselves against their closest competitor in the industry or their own performance goals. many indicators, both quantitative and qualitative, may be used to measure the growth of small business (isaga, 2012; koufteros, verghese & lucianetti, 2014). when using quantitative measurements, firm growth has several indicators that can be measured; these include growth in profits, growth in assets, growth in sales and growth in the number of employed people or employment. shepherd et al. (2009) argued that sales growth is the most popular indicator of firm growth followed by employment growth. sales growth is the most popular indicator because entrepreneurs often use this indicator when making business decisions. the employment growth indicator is also deemed appropriate because entrepreneurs are willing to disclose this type of information and it is also easier to recall (isaga, 2017; krueger, reilly, & carsrud, 2000). other authors in their studies of emerging economies have identified growth in the number of employees as the main indicator that is usually provided by entrepreneurs (pouw & elbers, 2012, eijdenberg, paas & masurel, 2015). all the above-mentioned indicators can be measured in terms of objective and subjective ways. gonzález-benito & gonzález-benito (2005) suggested the use of subjective measures because they facilitate the measurement of complex dimensions of performance. delmar, davidsson, and gartner (2003) distinguished perceptual growth and objective growth measures. the main difference between the two is the change as perceived by the small enterprise owner which can be more personal/subjective and the objective side which is measured by actual small enterprise growth, in terms of figures and numbers (eijdenberg et al., 2015). in measuring the development of personal wealth, we have used consumer durables as indicators like buying or building a house, having children in high-cost private schools, acquisition of financial assets (such as stocks, treasury bills, checking accounts, savings bonds & accounts, and trusts), increasing the number of assets (such as rental houses), contribution to employee pension plans, and general household prestige such as having a satellite television. such measures as used in the development of personal wealth vary 2 this paper has been prepared as part of a broader ph.d. series of papers where the section on entrepreneurial performance has been retained as the same across all the four papers. muindi, nassiuma, masurel, montfort 63 from one country to another and may be based on national surveys and primary data, see the example of pouw and elbers (2012). see also carter (2011). in summary, the development of personal wealth, as used in this paper relates to the acquisition of household wealth which depends upon the performance of firms run by the female entrepreneurs; these wealth acquisitions are based at a household level rather than at the firm level. however, as eijdenberg et al. (2015) argued, households in most poverty research efforts in emerging economies have been found to be headed by breadwinners who are often the owners of micro and small enterprises. in operationalizing the social performance of the female entrepreneurs, we measured their interaction with their communities and society. as hanson (2009) argued, female entrepreneurs gauge the success of their businesses as a proportion of the welfare provided to the community through creating a hybrid system of a firm that acts both as a business and as a not-for-profit organization. hanson (2009) identified such nature of female-led firms as one example of the difference between female entrepreneurs and male entrepreneurs. hanson (2009)further argued that female entrepreneurs use their enterprises as a way of conducting voluntary activities in areas in which they operate. we looked at such issues as the welfare of employees, assistance to orphans and the poor, and participation in civic duties such as payment of taxes. entrepreneurial performance has been defined differently by different scholars to include the ability to recognize new market opportunities. others include the realization of such capacities as critical thinking, creativity, reflection, optimism and imagination that supports self-efficacy and self-directed learning in the face of failure (delmar et al., 2003; markman, baron, & balkin, 2005). the lack of definite description of what represents entrepreneurial performance was further confirmed by littunen, (2000), who described the concept to include, among others, existence of innovative behavior, business growth and employee satisfaction. others like hvide and møen, (2007) have established a link between founders personal wealth and start-up performance, others too, have established that, investing in social networks with people inside and outside the firm, achieves growth (franco, haase, & pereira, 2016). further, kusyk & lozano, (2007) in assessing the performance of smes established that it is also logical to focus on the use of non-financial measures in measuring entrepreneurial performance. in this paper, entrepreneurial performance is conceptualized to be determined by the degree of improvement on firm performance, the development of personal wealth and social performance. 2. entrepreneurial competences in our paper, the term “competency’’ is defined as in the oxford english dictionary (oed) as ‘being able to do “something”.’ thus, entrepreneurial competences can, therefore, be seen as necessary personal attributes to perform well as an entrepreneur (shane, locke, & collins, 2003) and man, lau, & chan, (2002) describe entrepreneurial competences as entrepreneurial “motives” or “motivational concepts” and “motivations,” which emphasize how an individual can be described as a successful entrepreneur. other authors may use different terms to describe entrepreneurial competences. the first seven entrepreneurial competences discussed below have been adopted from the work of shane et al., (2003). these are needed for achievement, locus of control, tolerance of ambiguity, risk-taking propensity, self-efficacy, egoistic passion, and goal setting. the additional five competences were added to our study after a pre-study with experts in kenya. these competences include innovativeness, resilience, trustworthiness; emotional stability; and patience. the justification of each choice can be found from entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 64 the scientific sources cited under each competence. we deliberately chose to mention also several old sources to show the origins of these competences. the next subsections explore each specific entrepreneurial competency in turn and then hypothesize why it might have a positive influence on entrepreneurial performance in terms of firm performance, the development of personal wealth, and social performance. in each of the following 12 sections (2.2.1 to 2.2.12), the main hypothesis is presented, and in our analysis section, the testing of the hypotheses is split up into three: one regarding firm performance, one regarding the development of personal wealth, and one regarding social performance. 2.1 need for achievement el-namaki, (1988) and rauch & frese, (2000)posit that individuals who have a higher need for achievement want to offer solutions themselves, set objectives themselves, and strive to meet them through their efforts (isaga, 2012). ismail et al., (2015), agree that persons with a higher need for achievement habitually find their way to entrepreneurship and accomplish their goals better than those with a lower need for achievement. the foundation for this proposition is that people with a higher need for achievement devote a considerable amount of time on how to do a job better, or how to accomplish what they consider significant to them, (antonio, lanawati, wiriana, & christina, 2014). several scholars have supported the idea that the need for achievement is an entrepreneurial characteristic that can be used to differentiate entrepreneurs from other people as well as prosperous from ineffective firms (rauch & frese, 2000). this argument is further sustained by the two meta-analyses piloted by collins, hanges, & locke, (2004) and (rauch & frese, 2007). they found that the need for achievement is significantly linked with both the choice of an entrepreneurial career and firm performance. thus we derive the following hypothesis: h1 need for achievement is positively related to entrepreneurial performance 2.2 locus of control locus of control refers to an individual's seeming ability to affect events in his/her life (isaga, 2018). “internals” have faith in that they have power over outcomes through their talents, efforts, or abilities, while “externals” trust that forces outside their control determine outcomes (rotter, 1966). in the entrepreneurship literature, the locus of control has remained of considerable importance and has been considered to be one of the most vital traits of entrepreneurs (rauch & frese, 2007). the internal locus of control relates to entrepreneurship since entrepreneurs believe that their activities, determine the rewards they achieve (rauch & frese, 2007). internal locus of control is likewise included among the aspects which differentiate successful entrepreneurs from failed ones (poon, 2006;rauch & frese, 2007). entrepreneurs with high levels of internal locus of control believe that they can control outcomes, and therefore, put more effort into realizing the envisioned results, which in turn aids them in initiating an enterprise and run it successfully (isaga, 2012). rotter, (1966) hypothesized that entrepreneurs with an inner locus of control were more likely to strive for accomplishment compared with those with an external locus of control. it is believed that locus of control could be used to differentiate between those who are successful and those who are unsuccessful. therefore, we derive the following hypothesis: h2 locus of control is positively related to entrepreneurial performance muindi, nassiuma, masurel, montfort 65 2.3 tolerance of ambiguity budner, (1962) in a seminal paper, defined tolerance of ambiguity as to the inclination to look at circumstances without precise results as being attractive rather than threatening. thus, tolerance of ambiguity can be conceptualized as a person’s attitude concerning taking risks in decision-making circumstances (sexton & bowman, 1985). while there is a lack of adequate evidence to configure a situation, an ambiguous state of affairs is said to prevail (koh, 1996). consequently, it has been argued that only people with a higher tolerance for ambiguity are able to survive in unstable conditions (chenhall & langfield-smith, 2007). some researchers have shown that entrepreneurs have a considerably higher capacity to tolerate ambiguity than conventional managers (koh, 1996; teoh & foo, 1997). the results are supported by the idea that entrepreneurs adapt to situations and innovation prospects that are less than uncertain, and take the decisive charge for the choices they make (antonio et al., 2014; kadir, salim, & kamarudin, 2012). moreover, researchers have provided robust support for the inference that tolerance of ambiguity is a significant attribute for entrepreneurs (koh, 1996; teoh & foo, 1997).. the challenges and probabilities associated with business advancement are, by their exact nature, erratic. as a result of this, entrepreneurs are required to have a substantial tolerance of ambiguity and view ambiguity as an exciting incentive rather than an understandable risk (frank, 2014). koh, (1996) in his seminal paper, argues that, when there is inadequate evidence to structure a situation, an uncertain situation is said to exist. he further states that a person of high tolerance of ambiguity endeavours to overcome such a situation. (see also norton & moore, 2002; and rose, kumar, & yen, 2006). businesspersons do not only operate in an uncertain setting, and they are willing to seek out and manage uncertainty. thus we derive the following hypothesis: h3 tolerance of ambiguity is positively related to entrepreneurial performance 2.4 risk-taking propensity risk-taking is defined as the “exercise of doing things that comprise of risks to achieve something” (antonites & wordsworth, 2009). in crafting upon this concept, there have been many delineations and conceptions regarding risk-taking (isaga, 2012). from a considered point of view, risk can be termed as endeavouring into the unknown, requiring a relatively large portion of resources or borrowing profoundly (brockhaus, 1980). brockhaus, 1980; leyden, link, & siegel, (2014) and morgan & sisak, (2016) propound the idea that the primary aspect that differentiates an entrepreneur from an appointed employee is the ambiguity and the risk associated with self-employment. built on this argument; therefore, a risk-taker is an individual who seeks out a business idea when the likelihood of succeeding is rather low (segal, borgia, & schoenfeld, 2000). begley and boyd, (1987), in a seminal paper, argued that there was often a need for entrepreneurs to assent to ambiguity concerning financial health, psychological wellbeing, livelihood security, and family relationships. also, some concepts of entrepreneurship regard the entrepreneur as bearing enduring uncertainty. cacciotti, hayton, mitchell, and giazitzoglu, (2016) argue that, individuals who are driven by a higher motivation for achievement would participate in undertakings of intermediaterisk because they offer a challenge and give the impression of being attainable. people who score, extraordinary on the motive to evade failure circumvents common risks (shane et al., 2003). as an alternative, they desire easy and safe activities (because there is an excellent chance of accomplishment) or exceedingly challenging and uncertain ones (since it is stress-free to explain failure devoid of accepting individual blame). accordingly, risk-taking propensity has been well-defined in the entrepreneurship literature as the “inclination to take reasonable risks” (isaga, 2012; entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 66 shane et al., 2003). brockhaus, (1980) and watson and robinson, (2003) propose that risk-taking, alongside with creativity and flexibility, is an enhanced pointer of the probability of starting a business than is attainment motivation as argued by sexton and bowman, (1985) and stewart, watson, carland, and carland, (1999). therefore, we suggest the following hypothesis: h4 risk-taking propensity is positively related to entrepreneurial performance 2.5 self-efficacy overall, the meaning of self-efficacy is comparatively constant across the available literature (isaga, 2012, 2017). bandura, (1977), in a seminal paper, identified selfefficacy as strong ability in one’s capability towards performing a particular task. considerable effort has been concentrated on this aspect since it is assumed that people who have a stronger self-belief have a higher chance of starting a business that succeeds than individuals who have inferior self-efficacy (judge, erez, bono, & thoresen, 2003). furthermore, it can be said that entrepreneurs with a higher level of self-efficacy tend to set challenging targets, keep persisting even in the manifestation of failure, and approach these problematic tasks as challenges to be overcome rather than matters to be avoided (rauch & frese, 2007). shane et al., (2003) argue that: self-efficacy for a precise task has been presented to be an essential predictor of one’s performance and can help illuminate why people of equivalent ability perform differently. these traits of self-efficacy may be critical to the entrepreneurial process since these situations are often uncertain ones in which work, tenacity, and preparation are essential ((shane et al., 2003). due to the dynamic role of self-efficacy, much experiential effort has been made to investigate the effect of this on firm performance (isaga, 2012). likewise, (anna, chandler, jansen, & mero, (2000), baum, locke, and smith, (2001) and baum and locke, (2004) identified a positive relationship between the self-efficacy of entrepreneurs and the development of firms. thus we focus on the role of selfefficacy on entrepreneurial performance is appropriate. baum and locke, (2004) established a robust, active relationship between self-efficacy and work-related performance, demonstrating that self-efficacy is an entrepreneurial feature that might anticipate performance. therefore we derive the following hypothesis: h5 self-efficacy is positively related to entrepreneurial performance 2.6 egoistic passion shane et al., (2003) describes egoistic passion as the fervent, self-centered love for work. they further argue that the ego is a vital motive. the real individualist passionately loves the work; they love the practice of building a business and making it profitable (kamil, oksoy, & ozsoy, 2011). one is inspired to do what is essential within their importance and to do all that is necessary to achieve this (haber & reichel, 2007). when entrepreneurs chase an opportunity, they must also take action that is substantial to make it real and achievable (baum et al., 2001). enthusiasm stimulates the degree to which entrepreneurs pursue to create something great, vital, and essential when they pursue prospects (kamil et al., 2011). the nature of entrepreneurial enthusiasm includes generating money and the yearning to create something new, from start to finish (haber & reichel, 2007). motivation translates into setting high goals for oneself and others (shane et al., 2003). therefore we present the following hypothesis: h6 egoistic passion is positively related to entrepreneurial performance 2.7 goal setting locke and latham, (2006) argue that goal setting is applied effectively on any realm in which an individual or group has some control over some of the endings. they further muindi, nassiuma, masurel, montfort 67 posit that it can be applied not only to work based tasks, but also to domains such as sports and rehabilitation, and can be applied in many other settings. thus, the goals that the entrepreneurs set for each outcome are considerably related to their comparable outcomes (tumasjan & braun, 2012). baum et al., (2001), in their study of architectural woodworking firms, established that development goals were significantly related to the subsequent growth. the quantitative measures of goal difficulty and performance are related to each other (shane et al., 2003). shane et al., (2003) argue that attaining high-set goals require enormous energy and stamina. it can also be said that higher goals can lead to better performance outcomes than modest or low set goals. therefore, we posit the following hypothesis: h7 goal setting is positively related to entrepreneurial performance 2.8 innovativeness innovativeness is an element of human personality which helps entrepreneurs nurture innovations in their firms (isaga, 2012, 2017). it emphasizes a dynamic approach to innovation, such as the entrepreneurs' day-to-day efforts to advance their work processes (utsch & rauch, 2000). due to its dynamic role, many studies have connected innovativeness to entrepreneurship and the development of businesses (isaga, 2012). for instance, koh, (1996) surveyed mba students in hong kong and established that the students who showed higher innovative behavior were more probable to want to start their firm (isaga, 2012, 2017). experiential evidence for this connection has been found in many studies, including those from both western countries and emerging countries, e.g. (gürol & atsan, 2006; & ishfad et al., 2010). from this definition, it is clear that innovativeness is a predictor of intent to start a business (isaga, 2012). subsequently, innovativeness has regularly been found to have a significant influence on the growth of smes. see carland, hoy, boulton, carland, & carland, (1984), which is further reinforced by two meta-analyses, by hult, hurley, and knight, (2004); utsch and rauch, (2000), which specified that innovativeness is related to business performance. the results of the meta-analysis, as mentioned in the above studies showed that innovativeness is among the key aspects that describe an entrepreneur and can be used to differentiate between successful and unsuccessful firms (hult et al., 2004; tajeddini, elg, & trueman, 2013). carland et al., (1984) theorized that entrepreneurs have a disposition for innovative activities, which combine resources in ways that generate profit and growth. in doing so, an entrepreneur has a greater predilection for innovation than other individuals. therefore, we suggest the following hypothesis: h8 innovativeness is positively related to entrepreneurial performance 2.9 resilience studies have suggested that resilience might be a factor in the definition of entrepreneurial success (ayala & manzano, 2014; g. d. markman & baron, 2003). connor and davidson, (2003) define resilience as the human aptitude to adapt in the face of tragedy, strain, and other hardships. resilience can be used to characterize persons who are capable and effortlessly overcome their setbacks quickly, whether related to their lives or career ambitions (zautra, hall, & murray, 2010). entrepreneurs employ resilience as a response mechanism when confronted with hostile situations, and can marshal resources that they often do not envisage that they possess. thus, ayala and manzano, (2014) conclude that resilience embodies a real growth strategy for entrepreneurs. entrepreneurs are not easily discouraged when faced with adversarial situations; their actions are bold, and they fight to attain their goals (powell & baker, 2011). resilient entrepreneurs have better capacity and aptitude to renew themselves over time through innovation and the adjustment to varied and tempestuous changes in the entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 68 environment (sutcliffe & vogus, 2003). connor and davidson, (2003) argue that resilience foresees entrepreneurial success and contributes to the description of why an entrepreneurial action achieves or does not achieve entrepreneurial success. thus we present the following hypothesis; h9 resilience is positively related to entrepreneurial performance 2.10 trustworthiness the cultivation and development of individual relationships lead to the establishment of a shared trust demeanour, promotion of understanding and involvement, and the development of networks between partners (gulati & kellogg, 1998). shenton, (2004) identifies an individual relationship as a bond of trust, responsibility, and customization, all of which can be engendered between formal and informal behaviors. according to tu, hwang, chen, and chang, (2012), dependent on the responsibility of individuals, personal relations may go beyond immediate economic benefits and instead become based on trust and mutual obligation. when individuals start a business, they may acquire encouragement, self-confidence, and mutual support from their families and friends (tu et al., 2012) trust begins with choosing and assigning tasks to trustworthy people and demonstrates the readiness of the entrepreneur to trust (potential) business partners such as suppliers, investors, and customers (caliendo, fossen, & kritikos, 2012). shared trust among trading customers permits for profitable transactions, explicitly when business activities cannot be formalized through contracts (caliendo et al., 2012). the willingness to trust reduces or lowers the risks of entrepreneurial activities. for instance, porta, lopez-de-silanes, shleifer, and vishny, (1997), in a seminal paper, pointed out that entrepreneurs who trust others during business transactions have a better chance of growing their firms. within the entrepreneurial setting, trustworthiness as a personality characteristic refers to the degree that entrepreneurs believe they can rely upon and trust others (caliendo et al., 2012). being in a position to trust other individuals is a precondition for realizing interchange processes in business, mainly when the venture is in its start-up phase, and when, for example, the legal processes are in their formative stages, such as when contracts are yet to signed (caliendo et al., 2012). the willingness to trust reduces or lowers the risks of entrepreneurial activities. the following hypothesis is suggested: h10 trustworthiness is positively related to entrepreneurial performance 2.11 emotional stability the ups and downs of entrepreneurship have its emotional side, so emotional stability is an essential quality for successful entrepreneurs. entrepreneurship as an undertaking is a multifaceted and accumulative process, where psychosomatic and social forces are foremost and may lead to the success or failure of an enterprise (markman, 2003). markman, baron, & balkin, (2005) explain how the failing business venture combined with the ‘obscure-side’ of entrepreneurship could reinforce the entrepreneur’s resistance to a balanced solution, and make the consideration of substitutes painful and non-existent. the following hypothesis is suggested; h11 emotional stability is positively related to entrepreneurial performance 2.12 patience the evolution from a modest operation to a larger one is associated with growth (shane et al. 2003). the question here was whether the entrepreneur could cope with the extra demands both in expertise and competence as well as being able to accomplish the process of development of each scale effectively, as well as maintaining motivation and focus (aldrich & cliff, 2003; carroll & mosakowski, 1987; shane et al., 2003). muindi, nassiuma, masurel, montfort 69 developing such a kind of expertise takes patience. for instance, the entrepreneur needs to recruit workers who are in a position to learn and willingly go through a process of understanding the firm’s products, processes, and competitors (markman & baron, 2003). we, therefore, suggest the following hypothesis: h12 entrepreneurial patience is positively related to entrepreneurial performance 3. methodology in this section, the setting of the study, the selection of the sample, and the development of the questionnaire are dealt with. 3.1 study setting3 kenya’s population is estimated at around 46.9 million in the year 2016, with a projected increase of an estimated one million yearly from 2008 to 2018 (oecd, afdb & undp, 2017). kenya’s gross domestic product (gdp) is estimated to have expanded by 5.8 per cent in 2016 compared with a growth of 5.7 percent in 2015 (oecd et al., 2017). the service industry recorded an improved growth of 13.3 percent in 2016 compared with a contraction of 1.3 percent in 2015. other sectors with significantly enhanced performance were information and communication, real estate, and transport and storage (kenya national bureau of statistics, 2017a). in the year 2014 kenya’s economic status was revised to that of a lower middle-income country. the reclassification placed kenya as an emerging economy following the change in the size of its economy which showed a growth of the gross national income (gni) at about usd 1,160 which surpassed the minimum threshold of usd 1,036 set by the world bank (the world bank, 2016). kenya has an educated and skilled populace and abundant natural resources including hydro and geothermal power (cravo, hornsby, nascimento & santos, 2014). the country’s membership of the east african community and the common market for eastern and southern africa makes kenya a leader in foreign direct investment both for the east african market and the central african market due to increased competitiveness as an investment destination and a communications hub for regional business and commerce (cravo et al., 2014). challenges encountered include the persistent drought in 2016 which impacted negatively on agriculture and the electricity supply (kenya national bureau of statistics, 2017b). annual average inflation reduced to 6.3 percent in 2016 compared with an average of 6.6 percent in 2015, driven by the decline in prices of transportation, housing and utilities, and communication (kenya national bureau of statistics, 2017b). domestic credit, defined as the total amount of bank loans and government borrowing, declined from 20.8 percent in 2015 to 6.4 percent in 2016, mainly on account of reduced credit to the private sector (kenya national bureau of statistics, 2017b; oecd et al., 2017). uasin gishu county, where the data collection for this paper took place, is located in the great rift valley, western kenya, and covers an area of 3,345.2 km2. the county is on a highland plateau with altitudes gently falling from 2700 meters above sea level (forest & kali, 2009). according to the population census of the year 2009, the population in this county was 894,179 and is expected to rise to 1,211,853 in the year 2015, with a projected growth rate of 3.8 per cent by the year 2019. uasin gishu county has relatively high poverty levels, standing at 51.3 percent in the year 2015; this level is comparable with the national rate of 47.2 percent (kenya national bureau of statistics, 2017b). 3 this paper has been prepared as part of a broader ph.d. series of papers where the section on study setting has been retained as the same across all the four papers. entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 70 the empirical study was carried out on a sample of registered female entrepreneurs operating in the retail trade sector of uasin gishu county. experts also recommended the choice of the trade sector. this county is an appropriate place for study because female entrepreneurs are generally highly regarded here, and the county also forms the catchment site of the overall asali project (asali stands for a sustainable approach to livelihoods improvement) which is the primary sponsor of this research. besides, female entrepreneurs comprise an interesting and appropriate study population because of their unique characteristics of high family support and social participation, especially in this part of kenya (de vita, mari & poggesi, 2014). 3.2 questionnaire development the research framework was adapted from koh, (1996), who proposes, amongst other things, that certain entrepreneurial traits incline entrepreneurs towards higher levels of performance that differentiate them from non-entrepreneurs. this argument was also supported by the works of krueger et al., 2000; stephan and pathak, 2016). the variables selected for this investigation are reflected in the hypotheses outlined above. the survey instrument involved the use of a fixed-alternative questionnaire. fixed-alternative inquiries facilitate the ease of scoring to ensure high response rates. (see koh, 1996). such a design facilitates the coding and analysis of data. the survey instrument consists of two parts. the first part measures selected demographic variables; this was meant to develop a profile of the female entrepreneurs (ibid). the second part required the female entrepreneurs to state to what extent each of the twelve entrepreneurial competences applied to them. we presented three propositions per entrepreneurial competency and requested the female entrepreneurs to indicate their level of agreement on all 36 propositions (for details see appendix 1 nos. 601a to 612c) presented with a 5-point likert scale ranging as follows: strongly disagree, disagree, neither agree nor disagree, agree, strongly agree. we acknowledge that our approach was based on self-perception and self-reporting of the female entrepreneurs. each set of three propositions contained one statement that was reverse-scored and placed in between the other two to reduce response bias and the halo effect. preceding scholars have described high internal reliability for such measures (koh, 1996; rose et al., 2006; teoh & foo, 1997). on emotional stability as a competence we used the core self-evaluation scale (cses), as developed by judge et al., (2003), with 3 out of 12 items placed on a 5-item likert scale ranging from “strongly agree” to “strongly disagree.” trustworthiness was measured using the scale used by evans & revelle, (2008), with 3 out of 21 items again placed on a 5-point likert scale. these two measures were also confirmed to be valid by the experts during the pre-data collection exercise (see below). we conducted a pre-study consisting of crucial in-depth informant interviews preceding the main study, which involved the collection of quantitative data. the prestudy reached 30 experts on female entrepreneurship ranging over financial institutions, development civil societies (non-governmental organizations, ngos), national government officials, local government officials, chamber of commerce, female traders associations, and trade licensing officers. no significant changes were recommended for the final items in the questionnaire. the other 30 propositions were adapted from the unpublished work of masurel and groesbeek, (2014) that was based on the master’s thesis of the latter. the propositions were also recommended for adoption by the experts during the pre-study. muindi, nassiuma, masurel, montfort 71 3.3 sampling4 we developed the sampling from the total number of registered businesses in uasin gishu county which stood at 38,245 in the retail trade sector at the time of data collection. to determine the target sample size, we adopted a proportionate percentage of 47.7% as developed and established by cutura (2006) who argued that the proportion of female entrepreneurs in business in kenya at any cohort of micro, small, medium and large average 48% by sample size estimation. thus the number of female entrepreneurs conducting business was 18,242 in uasin gishu county. we conducted interviews in peri-urban centers, rural townships and within eldoret town center. this meant that for every given population of the female entrepreneurs’ everyone had a chance of being interviewed. for example, in urban settings, we interviewed every fourth female entrepreneur, and for the sparsely populated rural areas, we interviewed every second female entrepreneur. eldoret town is the fifth largest town in kenya. it was set up during the colonial government. it is known as a center for agriculture and trade in the western kenya region. it has an urban population of 289,380 as per the 2009 population census. eldoret town forms the main economic hub in western kenya and is the capital of uasin gishu county government. we, therefore, applied simple random technique, which is a sampling technique where there is a known non-zero chance of including the entire unit within the sample and where every respondent within the population has an equal chance of being selected and at the same time allowing for a statistical inference to be made. further, the firms of the respondents from this sample met the following criteria, (1) firms that were formal and registered businesses, (2) firms that were owned and controlled by female entrepreneurs, (3) firms that were more than 3 years old and we also ensured that the firms had complete contact information on the female entrepreneur. however, as time was a major constraining factor, out of the 316 who agreed to participate in the study, 301 were accepted with 15 questionnaires being rejected for incompleteness. 4. results5 the fieldwork took place in april and may 2015. the capital of the uasin gishu county is eldoret, which is a cosmopolitan city and serves as the foremost economic and political capital of north-western kenya. the field-work was divided into two phases. the first phase involved carrying out key informant interviews with various experts in the field of entrepreneurship. the second phase involved data collection, where we divided the county into four areas: the town centers, the outskirts, the peri-urban areas, and the rural townships. in total, we collected data from 301 female entrepreneurs, from table 1 it becomes clear that less than 20 percent of the respondents had basic education (classes 1-8) as their highest form of completed level of education, almost half of the respondents had secondary education (forms 1-4) which was the highest level of education that they had completed. almost one-quarter of the respondents had successfully acquired a college diploma as their uppermost level of education. the other forms of education hardly occurred among our group of respondents. close to a third, 33.2 percent of the respondents reported having had both prior business and management experience, correspondingly. it is important to note that the scores for both experiences are the same. the respondents may not have distinguished between the two. 4 this paper has been prepared as part of a broader ph.d. series of papers where the section on sampling has been retained as the same across all the four papers. 5 this paper has been prepared as part of a broader ph.d. series of papers where the 1st section on results for tables 1 & 2 has been retained as the same across all the three papers. entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 72 from table 1, it also becomes clear that almost half of the respondents were 30 years of age or younger. about one-third of the respondents ranged between 30 and 40 years of age. slightly more than 20 percent were older than 40 years. table 2 presents the profile of the firms. the table illustrates that more than half of the firms have only been in business since 2010. more than 40 percent was already in the business between 2000 and 2010. only a small minority of 1 percent of the firms had already been in business on the old millennium. further, almost half of the firms were located in the town center, whereas more than one-quarter of the firms were located in one of the rural townships. more than 10 percent of the firms were located in the outskirts of peri-urban areas. table 1 entrepreneur profile frequency percent highest level of education no education 4 1.3 basic education (class 1-8) 48 15.9 secondary education (form 1-4) 149 49.5 trade school (certificate holder) 21 7 college diploma 66 21.9 university degree 10 3.3 professional qualification 2 0.7 other 1 0.3 total 301 100 prior business experience with 100 33.2 without 201 66.8 total 301 100 prior management experience with 100 33.2 without 201 66.8 total 301 100 age under 20 years 14 4.7 20 to 30 years 126 41.9 31 to 40 years 99 32.9 41 to 50 years 40 13.3 51 to 60 years 21 7.0 over 60 years 1.0 0.3 total 301 100 muindi, nassiuma, masurel, montfort 73 additionally, more than half of the firms had employed three employees. more than 35 percent of the firms had employed one or two employees. only a small minority employed four to five employees. table 2 firm profile years of founding the business frequency percent 1970 to 1980 3 1 1990 to 2000 22 7.3 2000 to 2010 123 40.9 2010 to 2015 153 50.8 total 301 100 location town centre 140 46.5 outskirts 42 14 peri-urban areas 39 13 rural townships 79 26.2 other 1 0.3 total 301 100 number of people working for the firm 1.0 83 27.5 2.0 23 7.6 3.0 155 51.7 4.0 34 11.3 5.0 6 1.9 total 301 100 in table 3, all 12 entrepreneurial competences were subjected to exploratory factor analysis. nine out of 36 propositions had factor scores of below .7 and were dropped during the factor analysis. eventually, all scale items loaded between .706 and .846. the explained variance ranged from 52.29 percent to 76.91 percent. these measures of explained variance provide additional information beyond that provided by the mean scores and therefore indicate that our instrument was sufficiently reliable to measure entrepreneurial competences, and therefore, we could proceed with further analysis of our data (podsakoff & organ, 1986). see also, gelman & pardoe, (2006) and o’grady, (1982). entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 74 table 3 entrepreneurial competences: factor loadings and explained variance values competence proposition factor loading explained variance need for achievement i never put off important matters until at a convenient time .818 66.96 no matter how difficult a task is, i try to do as best as i can .818 locus of control 67.58 i believe the outcome of many tasks is determined by good or bad fortune .822 i believe when i get what i want it is because i was determined to work hard for it .822 tolerance of ambiguity 59.56 when i am in a situation where i have no control, i feel very anxious .772 i always see the bigger picture .772 risk-taking propensity 71.65 people in our firm are encouraged to take calculated risks with new ideas .846 our firm emphasizes both exploration and experimentation for opportunities .846 self-efficacy 62.95 when i get what i want its mainly because i worked for it .793 when i set important goals for myself, i do not always achieve them .793 egoistic passion 67.81 i love my work .823 i accomplish a lot at work because i love my work .823 goal setting 64.42 i like to commit myself to reach particular results .803 i think it is important to set new business targets regularly .803 innovativeness my firm actively introduces improvements and innovations in our business .706 76.91 my firm seeks out new ways of doing things .804 my firm is creative in its methods of operation .797 resilience i work harder than most people i know .840 muindi, nassiuma, masurel, montfort 75 table 4 presents the findings of the exploratory factor analysis, which was run on the constructs that define entrepreneurial performance. firm performance had one item out of four dropped due to low factor loading (increase in the number of employed people, with a factor loading of .277), three items were retained. development of personal wealth had four items dropped for having factor loadings below 0.7 (i have been able to build/buy or start building a house, i have increased my assets (such as rental houses); i have contributed to my employees’ pension plan (such as nssf and nhif), i have acquired household prestige items (such as satellite television), with only two items being retained. the same process was repeated on social performance, where seven items were dropped (my firm offers industrial attachments, internships to students; my firm uses a formal customers’ complaints register for clients; my firm improves the quality of life in communities where we operate; my firm donates money to charities in the communities where we operate; my firm makes timely payment of taxes; my firm is active within an organization with a social purpose; and my firm offers time and skills in voluntary activities), with only three items being retained. although the majority of items were dropped, the three dimensions of entrepreneurial performance represent distinct constructs, and therefore, we could proceed to conduct a regression analysis (hurley et al., 1997). i have never considered quitting my firm, regardless of the problems i encounter .840 70.57 trustworthiness i anticipate the needs for others .708 59.95 i believe that laws should be strictly enforced .815 i believe that laws should be strictly followed .795 emotional stability 70.40 i am confident i get the success i deserve in life .839 i am able to cope with most of my problems .839 patience 52.29 finding an office job does not take long .723 i expect a quick return on my investment .723 table 4 entrepreneurial performance: factor loadings and explained variance values firm performance factor loading explained variance development of my firm’s profit .815 67.56 development of my firm’s sales .818 development of my firm’s assets .833 development of personal wealth i have managed to take my children to study in a high cost private school .796 63.33 i have managed to acquire financial assets (such as stocks, treasury bills, checking accounts, savings bonds and accounts, trusts) .796 entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 76 table 5 shows the descriptive statistics, mean, standard deviation, and correlation coefficients of all the variables we used in the analysis. an interesting observation was that all the 12 competences had rather high mean scores ranging from 2.93 for “patience” to 4.62 for “trustworthiness.” these high aggregate mean scores may be an indication that the entrepreneurial competences do exist among female entrepreneurs in kenya. there were mixed outcomes on the levels of significance of the correlations. additionally, there were no strong signs of multicollinearity problems in our data. the lack of extraordinary high coefficients (r>0.70) was an indication of the presence of a measure of different concepts, and therefore the regression results presented in table 6 may not be affected by collinearity (pallant, 2010). furthermore, the variance inflation factor coefficients scores were below 10 (for example, 2.292 for patience and 1.274 for innovativeness). tolerance values were higher than .10 (for example, .436 innovativeness and .785 patience) among the independent variables. on the other hand, there was a high degree of correlation among the dependent variables, suggesting that there could be a measurement of the same concept, viz., entrepreneurial performance. however, this high degree of correlations among these variables may not be problematic mainly because they were used to measure entrepreneurial performance independent of each other in the regression models presented in table 6. in carrying out the hypothesis testing, multivariate regression analysis was carried out to assess the contribution of each independent variable in explaining the variance of each entrepreneurial performance, as presented earlier in section 2. 5. hypotheses testing in table 6, as far as the entrepreneurial competence “need for achievement” is concerned, hypothesis 1 is rejected, as we do not see any significance, neither with firm performance, nor with development of personal wealth, nor with social performance. hypothesis 2, on the entrepreneurial competence “locus of control,” is only significant with the aspect of social performance, whereas the other aspects of entrepreneurial performance (firm performance and development of personal wealth) are not significant. therefore, hypothesis 2 is partly accepted. for hypothesis 3, on the entrepreneurial competence “tolerance for ambiguity,” there is no significant relationship with any of the performance indicators. this means that hypothesis 3 is rejected. hypothesis 4 on “risk-taking propensity” as an entrepreneurial competence was found not to be significant with any aspect of performance. this means that hypothesis 4 is rejected. hypothesis 5 on “self-efficacy” as an entrepreneurial competence was significant with only one aspect, namely the development of personal wealth: this means that hypothesis 5 is partly accepted. hypothesis 6 on “egoistic passion” as an entrepreneurial competence has no significant relationship with any performance indicator. social performance my firm supports orphans and the underprivileged in society directly or indirectly through existing institutions .869 69.71 my firm sponsors community activities such as sports, church buildings, culture, and traditional ceremonies. .863 my firm sponsors students in schools. .769 studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 77 table 5 descriptive statistics, mean, standard deviation and correlation coefficients mean std. deviation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 1 age 2.77 1.00 1 2 education 3.47 1.20 -.195** 1 3 business experience 1.67 0.47 -.198** .168** 1 4 employment experience 1.67 0.47 -.247** .021 .611** 1 5 need for achievement 4.41 0.66 .122* .051 -.159** -.089 1 6 locus of control 4.54 0.52 .109 .012 -.101 -.135* .353** 1 7 tolerance of ambiguity 4.51 0.51 .109 .140* -.074 -.087 .339** .303** 1 8 risk-taking 4.18 0.64 .093 .069 -.156** -.161** .121* .328** .246** 1 9 self-efficacy 4.33 0.54 .131* .169** -.023 -.095 .436** .349** .330** .310** 1 10 egoistic passion 4.66 0.54 .016 .026 -.196** -.124* .328** .256** .269** .297** .213** 1 11 goal setting 4.36 0.61 .068 .090 -.040 -.104 .291** .327** .311** .412** .419** .197** 1 12 innovativeness 4.28 0.67 .058 .134* -.150** -.164** .371** .517** .295** .559** .521** .274** .448** 1 13 resilience 4.47 0.70 .113 .177** -.215** -.139* .344** .434** .284** .377** .421** .254** .346** .484 * * 1 14 trustworthiness 4.62 0.46 .125* .116* -.172** -.100 .293** .362** .325** .404** .390** .254** .401** .433 * * .518 ** 1 15 emotional stability 4.45 0.62 .110 .126* -.161** -.081 .437** .415** .290** .453** .382** .400** .344** .449 * * .546 ** .599** 1 16 patience 2.93 1.11 -.033 .107 .034 -.010 .203** .221** .128* .257** .309** .098 .193** .401 * * .265 ** .085 .123* 1 17 firm performance 3.63 0.70 .004 -.029 .049 .130* .115* .129* .057 .045 .154** .025 .153** .172 * * .032 .041 .023 .188 ** 1 18 personal wealth 4.12 0.70 -.028 .056 .142* .097 .000 -.037 .012 .018 .058 .014 .117* .019 -.068 .052 .004 .159** .061 1 19 social performance 2.88 1.30 .012 .055 -.123* -.140* .300** .496** .205** .387** .431** .188** .445** .616 * * .517 ** .385** .336** .487** .272** .107 1 **. correlation is significant at the 0.01 level (2-tailed). *. correlation is significant at the 0.05 level (2-tailed). entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 78 this means that hypothesis 6 is rejected. similarly, hypothesis 7 on “goal setting” as an entrepreneurial competence has no significant relationship with any of the entrepreneurial performance indicators, and thus hypothesis 7 is rejected. hypothesis 8 on “innovativeness” is only significant with social performance. firm performance and the development of personal wealth were not significant. the effect of this means that hypothesis 8 is partly accepted. hypothesis 9 on “resilience” as an entrepreneurial competence had a significant positive relationship with only one aspect of the performance indicators (social performance) and one significant negative relationship with the development of personal wealth. the implication of this is that hypothesis 9 is partly accepted. hypothesis 10 on the entrepreneurial competence “trustworthiness” was partly accepted because only the relationship with social performance appeared to be significant. hypothesis 11 on “emotional stability” as an entrepreneurial competence was rejected because no significant relationship occurred. finally, hypothesis 12 on the entrepreneurial competence “patience” was accepted, as there was a significant relationship with all three indicator’s firm performance, development of personal wealth, and social performance. table 6 regression model results independent \ dependent variable \ variable firm performance development of personal wealth social performance age .018 .013 -.067 education -.023 .019 -.080 business experience -.111 .137 .110 employment experience .306** .050 -.177 need for achievement .033 -.025 .112 locus of control .101 -.082 .426*** tolerance of ambiguity . -.013 -.024 -.141 risk-taking propensity -.068 -.034 -.051 self-efficacy .094 .019* .167 egoistic passion -.007 .053 .117 goal setting .134 .157 .300 innovativeness .126 -.042 .408*** resilience -.091 -.167* .385*** trustworthiness -.015 .183 .328* emotional stability -.073 .017 -.137 patience .083** .124** .267*** r2 .104 .084 .629 adjusted r2 .053 .033 .609 significant coefficients reported p<.05*, p<.01**, p<.001*** table 7 presents an overview of the results of testing the 12 hypotheses. it appears that six hypotheses were rejected; five hypotheses were partly accepted, and only one hypothesis was accepted. muindi, nassiuma, masurel, montfort 79 table 7 summary h1 need for achievement is positively related to entrepreneurial performance rejected h2 locus of control is positively related to entrepreneurial performance partly accepted h3 tolerance of ambiguity is positively related to entrepreneurial performance rejected h4 risk-taking propensity is positively related to entrepreneurial performance rejected h5 self-efficacy is positively related to entrepreneurial performance partly accepted h6 egoistic passion is positively related to entrepreneurial performance rejected h7 goal setting is positively related to entrepreneurial performance rejected h8 innovativeness is positively related to entrepreneurial performance partly accepted h9 resilience is positively related to entrepreneurial performance partly accepted h10 trustworthiness is positively related to entrepreneurial performance partly accepted h11 emotional stability is positively related to entrepreneurial performance rejected h12 patience is positively related to entrepreneurial performance accepted 6. discussion we observe that there was sufficient evidence to conclude that the entrepreneurial competences of female entrepreneurs, as studied in the western context, are hardly related to the entrepreneurial performance of the trade firms in our sample. another observation is that the factor analysis resulted in the dropping of a relatively large number of items. first, it is essential to note that during the factor analysis of firm performance, the scale item on the increase in the number of employees was dropped. this may be because hiring more employees brings with it extra costs to the firm. in that sense, this item of firm growth is different from the growth of profit, sales, and assets that have more to do with the output of the firm, whereas the growth of the number of employees has more to do with the input of the firm. concerning the construct “development of personal wealth,”: four out of six items had to be dropped, and the remaining two items had an adequate explained variance. the four items that were dropped have more to do with the immediate satisfaction of the entrepreneurs, whereas the two remaining items have more to do with the future satisfaction of the entrepreneurs. nevertheless, the two remaining items that have to do with the satisfaction of the entrepreneurs in the future are still very diverse. as far as “social performance” was concerned, seven out of ten scale items were dropped due to low factor loadings. a closer look at the retained scale items leads to the picture, where we suggest that these factors deal with direct-giving to the community by the female entrepreneurs. the group of dropped items could be said to involve a form of indirect giving to the community. entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 80 “social performance” had a partial relationship with the entrepreneurial competences with (5 out of 12 entrepreneurial competences), whereas “firm performance” had virtually no relationship with entrepreneurial competences (1 out of 12 competences), and “development of personal wealth” too had virtually no relationship to entrepreneurial competences (2 positives out of 12 competences). the latter may have to do with the regional economic context in which the entrepreneurs operate. we can posit that this phenomenon may be influenced by the nature of the female entrepreneurs, which is expected to combine commercial goals while simultaneously serving the needs of the communities that they belong to. “patience” is the only entrepreneurial competence that yields an accepted hypothesis. a possible explanation for this can be drawn from the nature of female entrepreneurs in emerging economies who work in very uncertain situations to develop a market presence with low economic power coupled with the predatory activities of more resourceful rivals; to overcome such challenges, it is necessary to have entrepreneurial patience. female entrepreneurs may also endure harsh private difficulties, such as personal and financial liabilities, and long periods of isolation while developing their businesses. the ability to withstand and even overcome such adversity gives entrepreneurial “patience” an essential advantage over other entrepreneurial competences. 7. conclusion in this paper, we have attempted to answer the study question: to what extent do entrepreneurial competences contribute to the entrepreneurial performance of female entrepreneurs in kenya. the answer to this question is predominantly “not”: there is hardly any contribution of the entrepreneurial competences to the entrepreneurial performance. we can state that there is virtually no contribution of the entrepreneurial competences to firm performance and the development of personal wealth. we can also state that there is some contribution of the entrepreneurial competences to the social performance of the entrepreneurs involved. it is critical to note that both the entrepreneurial competences constructs and the entrepreneurial performance constructs are present among the studied trade firms in kenya. the finding that these entrepreneurial competences lack a positive correlation with entrepreneurial performance is not because these constructs cannot be identified, but rather because the entrepreneurial competences have hardly any effect on the entrepreneurial performance. there were two significant limitations to this study. the first major limitation is that we studied only one sector in one region. the second major limitation is that the data collected was based on self-perception and self-reporting of the female entrepreneurs, which could have led to biased outcomes. having studied only one sector, viz. trade, in one region, specifically western kenya, we first recommend that multi-sectoral and inter-regional studies should be conducted to confirm that there is hardly any relationship between entrepreneurial competences and entrepreneurial performance. our second recommendation is that alternative research methods should be used as well, for instance, observation and peer reports. acknowledgements this research was supported by the ms grietje wille legacy under the asali project (a sustainable approach to livelihood improvements), a joint cooperation between vu university, the netherlands and moi university, kenya. we thank the two anonymous reviewers whose comments greatly improved this manuscript. the authors declare no conflict of interest. muindi, nassiuma, masurel, montfort 81 references aldrich, h. e., & cliff, j. e. 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(2010), resilience: a new definition of health for people and communities. handbook of adult resilience. muindi, nassiuma, masurel, montfort 87 appendix 1: research questionnaire firm name: date respondent’s name time gender o male o female email phone # section 1: entrepreneur’s personal information 101 please indicate your age group? 1 under 20 4 41 to 50 2 20 to 30 5 51 to 60 3 31 to 40 6 over 60 102 what is the highest level of education that you have successfully completed? 1 no education 5 college diploma 2 basic education (class 1-8) 6 university degree 3 secondary education (form 1 4) 7 professional qualification 4 trade school (certificate holder) 8 other (please specify): (103) did you run another business prior to starting this one? yes no if yes, for how many years? (years) (104) did you have any experience of management tasks through earlier employment prior to starting your business? yes no if yes, for how many years? (years) (105) do you own more than one business outlets? if yes, how many? (years) no (106) does any member of your family have any experience in running a business? if yes, how many? (years) no section 2: business information (201) indicate your business sector. retail o other o a are you the one running this firm with full responsibilities.. o yes o no b you are running this business as a o i. full owner o ii. partial owner o iii. on behalf of the owner (202) in which month and year was your business founded? (mm) (yyyy) (203) please indicate the total number of people working as at 1st of january 2012 in the following categories: category of people employees 2012 2013 2014 1 full time employees 2 part time employees 3 active owner-managers 4 active family members working in the firm 5 peak workers or casual employed people 6 total number of people working for your firm (205) where is your firm located? 1 town centre 2 estates – (outskirts) 3 peri-urban 4 rural entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 88 section 3: firm performance select only one of the numbers below to indicate how well the statement describes your firm performance. strongly decreased (1) decreased (2) did not increase nor decrease (3) increased (4) strongly increased (5) (301) my firm’s profit in the last three years has (302) my firm’s sales in the last three years has (303) my firm’s assets in in the last three years has (304) my firm’s number of employed people in the last three years has section 4: personal wealth select only one of the numbers below to indicate how well the statement describes your personal wealth. strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (401) during the last three years, i have been able to build/buy or start building a house (402) during the last three year, i have managed to take my children study in an cost private school (403) during the last three years, i have managed to acquire financial assets (such as stocks, treasury bills, checking accounts, savings bonds & accounts, trusts etc) (404) during the last three years, i have increased my assets (such as rental houses) (405) during the last three years, i have contributed to my employed people’s pension plan (such as nssf and nhif) (406) during the last three years, i have acquired household prestige items (such as satellite television) section 5: social performance select only one of the numbers below to indicate how well the statement describes your social performance. strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (4) (501) my firm supports orphans and underprivileged in society directly or indirectly through existing muindi, nassiuma, masurel, montfort 89 institutions has increased in the last three years (502) my firm sponsors community activities such as sports, church buildings, culture, traditional ceremonies. (503) my firm sponsors students in schools. (504) my firm offers industrial attachments, internships to students. (505) my firm uses a formal customers complaints register for clients. (502) my firm improves the quality of life in the communities where it operates. (507) my firm donates money to charities in the communities where we operate. (508) my firm makes timely payment of taxes (509) my firm is active within an organization with a social purpose. (510) my firm offers time and skills in voluntary activities. section 6: entrepreneurial competences please cross the box under the number that best represents the extent to which each statement below best suits your opinion. strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (601a) when i fail to achieve my targets, i feel very bad (601b) i never off put important matters to be done at a convenient time (601c) no matter how difficult a task is, i try to do as best as i can strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (602a) i believe what happens in life depends on what i do (602b) i believe the outcome of many tasks is determined by good or bad fortune (602c) i believe when i get what i want it is because i was determined to work hard for it strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (603a) there is a right and a wrong way of doing almost everything (603b) when i am in a situation where i have no control, i feel very anxious entrepreneurial competences and entrepreneurial performance: empirical insights of female entrepreneurs in kenya 90 (603c) i always see the bigger picture strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (604a) i love my work (604b) i look forward to returning to work when i am away from work (604c) i accomplish a lot at work because i love my work strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (605a) work harder than most people i know (605b) i derive most of my life satisfaction from my work (605c) i have never considered quitting my firm regardless of the problems i encounter strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (606a) i like to commit myself to reach particular results (606b) i think it is important to set new business targets regularly (606c) i do not strive to have certain number of projects in a particular period strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (607a) my life is mainly determined by my own actions (607b) when i get what i want its mainly because i worked for it (607c) when i set important goals for myself, i do not always achieve them strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (608a) the term ‘risk taker’ is considered a positive attribute for people in our firm (608b) people in our firm are encouraged to take calculated risks with new ideas (608c) our firm emphasizes both exploration and experimentation for opportunities muindi, nassiuma, masurel, montfort 91 strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (609a) my firm actively introduces improvements and innovations in our business (609b) my firm seeks out new ways of doing business (609c) my firm is creative in its methods of operation strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) (610a) nding an office job does not take long (610b) pect a quick return on my investment (610c) i could go without a profit for at least six months strongly disagree (1) disagree (2) neither agree nor disagree (3) agree (4) strongly agree (5) i am confident i get the success i deserve in life sometimes i feel depressed (611c) i am capable of coping with most of my problems strongly in accurate (1) inaccurate (2) neither accurate nor inaccura te (3) accurate (4) strongly accurate (5) i anticipate the needs for others i believe that laws should be strictly enforced (612c) i believe that laws should be strictly followed microsoft word apostoaie constantin marius_eng.doc the role of non governmental organizations in monitoring and evaluating public policies, measuring the effects stressing the impact on regional economic policy implementation viorina – maria judeu, agora university of oradea, romania abstract regional policy implementation encounters difficulties and limitations similar to those for other areas of economic policy. the main difficulties are those arising from uncertainty in the gaps of time and the nature of the political climate. as a variant influencing the selection process by which a public interest issue to be solved and the stages of monitoring / evaluation of the implementation of public policies are often part of the current work of ngos. depending on the area of expertise / interest for a particular topic at a time, ngos have chosen to monitor / assess the performance of authorities in implementing a solution to solve a problem, depending on certain parameters. keywords governmental organizations, european policies, economic development, regional disparities. jel codes: l31, l38, r58 regional policy implementation encounters difficulties and limitations similar to those for other areas of economic policy. the main difficulties are those arising from uncertainty in the gaps of time and the nature of the political climate. time creates problems inherent gaps, concerning the implementation of economic policies relating to:1 identify problems that address to the economic policy; describe and implement the best policy; initial effect of policy on the regional economy; side effects multiplier in the regional economy. the effect of these differences in time on the implementation of regional policy can be illustrated, for example, by carrying out a scheme for retraining and job recycling factor, which includes several stages. the first stage would be to identify the problem to the policy. in our example, it is the work factor, in a certain region, which is characterized by a small number of workers with a certain qualification. after identifying the problem, the policy response will be to describe and implement a policy to achieve more local programs for training in occupations found to be in deficit. the policy response needs some time until new qualified employment factor can be effectively employed. only after overcoming this phase, the initial effect of policy may be perceived as increasing the supply of skilled workers for a particular local labor market. secondary multiplier effects will be felt also, but after another interval.2 1 ionescu r, marchis g., uniunea european prezent i perspective ed. didactic i pedagogic , bucure ti, 2004. studies and scientific researches economic edition, no. 15, 2010 244 but reality shows that the time needed to achieve growth in the working of a particular qualification, through regional policies may be large enough so that local and national circumstances to amend and cause a reduction in market demand for skilled local employment factor. uncertainty may also be highlighted on the previous example. thus, one can not know how to develop application for classification that, in the coming years. as a result, policy makers have only incomplete information related to future periods and reduced opportunities for intervention in this area. policy environment: regional policy, and other economic policies are implemented in the context of certain political objectives. thus, measures, anti-unemployment, macroeconomic, will necessarily affect these phenomena and regional levels. moreover, regional policy is a policy response to the wishes of the people voting in a particular territory.3 so if, for example, residents of scotland and the north of england vote labor party in a proportion so large those conservative candidates have no real chance of being elected there will be a very small concern, from any conservative government to financially support these areas. basically, most of the money spent will move to regions of the ruling party honest. measuring the effects of regional policy is basically to compare costs with the results of these policies. the indicator most often used for this purpose is the number of jobs created on the basis of costs incurred in this respect, at regional level. the cost of implementing a specific government regional policy is known and can be easily quantified. where regional policy expenditures are reflected in the classification factor substitution work and location of firms, number of jobs directly created is also easy to estimate. but reality shows that the effects of regional policies are more complex than those related to the number of new jobs created. moreover, the initial costs of regional policy can have positive multiplier effects more difficult to quantify. cost – benefit analysis from the regional policy was introduced by armstrong and taylor, as highlighted in the following table.4 table 1: the main costs and social benefits of regional policies benefits (b) costs (c) b1 the employment factor, production and additional income achieved from increased economic activities; c1 loss of production, income and employment b2 decreased number of migrants, which leads to reduced costs for public sector services and infrastructure implementation c2 infrastructure costs resulting from the effects of regional policy on development of economic activities; b3 decreased number of migrants, which leads to reduced private costs of migration; c3 the costs of moving to a new location of production capacities; b4 decrease externalities c4 increase externalities (e.g.: for environmental protection); b5 fair benefits; c5 administrative costs 2 bachtler j., wren c. ,evaluation of european union, cohesion policy: research questions and policies changes, regional studies, vol 40, no. 2, april 2006. 3cochran ch. l., malone eloise f., public policy, viva books private limited, 2007. 4 armstrong h., taylor j., regional economics and policy, blackwell, 2nd edn., 2000, pp.14 15. studies and scientific researches economic edition, no. 15, 2010 245 benefits (b) costs (c) b6 political benefits c6 political costs the first benefit b1 is the result of regional expenditure policy. these costs have two categories of effects: the direct, the level of economic activity in developed regions and secondary indirect, which takes the form of influence of regional multiplier. regional economic multiplier value is crucial in determining the actual costs of expenditure policies. the multiplier value will be greater; the greater will be the overall positive effect of regional expenditure policy. if the regional expenditure policy is successful, it will have the effect of reducing interregional differences related to employment opportunities and income levels. as a result, the benefits of b2 and b3 will be achieved due to the reduction of interregional migration. where employment opportunities and incomes are higher, more and more immigrants arrive from less developed regions. migration imposes costs for both immigrant (private costs of migrants) and society (social costs of migration). a decrease of interregional migration flows will result in a reduction of migration costs at private and social. private costs are the financial (relating to moving house) and those related to leaving social environment (family and friends). social costs of migration concerns the construction of more housing, schools, hospitals in a given region. the following benefit b4 regional policy from a spatial distribution of the negative externalities, e.g. pollution. if it is considered that pollution has a cumulative effect on the environment, then we will pursue the reduction of the concentration of polluting firms in a given area. b5 benefit refers to the fact that regional policy differences in income and reduced expansion of the income distribution. concentration of revenue from the economic activities in a subsection of the space economy is not fair. therefore, the presence of policies such as progressive income taxes will have a beneficial effect on mitigating inter-regional differences. however, interregional differences in income levels may reveal other sources of spatial inequality such as differences in regional access to better paying jobs, education or health care. finally, an active regional policy allows obtaining and political benefits b6. interregional differences lead to a political cohesion of the whole nation. thus, in italy, northern areas have become allies in politically in the early '90s, as a result of higher fees they are required to pay to support the development of southern regions. therefore, national economic unit will contribute to a political unit. thus, regional politics will get political benefits, as well as economic and social. often, regional policies resulting in the employment of resources that, until then, were not used. in such cases, additional economic activity that will occur will not be independent from political intervention. creating these additional economic activities leading to achievement of economic and social benefits with very low costs. if the resources are drawn from an economic activity to another, regional policy will invoke a certain opportunity cost (c1). political benefit will appear as the net benefit due to the increased economic activity following the direction of resources from less productive activities to the most productive. when regional policy is aimed at transferring resources from productive activities to the least productive, the company will bear a net cost exceeds the benefits obtained. the second category of costs identified in the table (c2), are associated infrastructure elements. thus, in areas predominantly rural infrastructure elements such as, proper roads are not sufficient, while in industrial areas is the question of the road relocation to optimize access. the relocation involves additional items of expenditure. these costs include labor costs moving factor in the new locations of production capacity (c3) and not all cases are covered by funds received from the government. in addition, costs appear to attracting and studies and scientific researches economic edition, no. 15, 2010 246 labor necessary to replace workers who do not want to change jobs, and expenditure on construction of new buildings and modernization of related. all the relocation costs associated with regional policy. when regional policy is aimed at transferring resources from productive activities to the least productive, the company will bear a net cost exceeds the benefits obtained. expenditure category fourth (c4) draw attention to the potential impact of regional policy environment for the benefit of the region analyzed. these costs should be reduced where relocation causes extensive retooling of existing industrial capabilities. cost category (c5) are those related to administrative costs associated with implementing regional policies. the absence of these policies that attract no cost. finally, there are political costs (c6) regional policies related assets, as in regions of northern italy, previously analyzed. in general, regional political costs may be attractive to those who vote (voters) in areas covered by these policy measures. all these elements show that regional policy is not implemented at low cost. it is therefore important to create additional economic activity only to diversify existing ones, and money spent to maximize the benefits available to the region concerned. as a variant influencing the selection process by which a public interest issue to be solved and the stages of monitoring / evaluation of the implementation of public policies are often part of the current work of ngos. depending on the area of expertise / interest for a particular topic at a time, ngos have chosen to monitor / assess the performance of authorities in implementing a solution to solve a problem, depending on certain parameters. the instruments used in this stage vary, depending on the type of method of monitoring / evaluation used, namely:5 quantitative methods (e.g. survey among beneficiaries of public policy measures, measuring dynamic parameters of public policy at the start of the measure to a certain length, etc..), will use appropriate instruments: questionnaire, performance indicators , monitoring the press; qualitative methods, instruments are typical of each type of method: interviews (interview guide), participatory observation (observation form), focus-group site (report discussion group), visits / inspections (report of visit/ inspection etc.). monitoring / evaluation of public policies by the ngos is a democratic mechanism type checks and balances that basically is very useful for closing the public policy cycle. since the results of evaluations made by the organization both initiatives, as well as external actors such as ngos, indicates that a public policy issue has been resolved successfully, then the authority may proceed to resolve the following issues on the agenda. but there are situations in which the problem can be reached on the agenda again in another form, or exactly the same form as originally proposed, the extent of settlement option implemented has not generated the intended results. assessment highlights: extent that the results match those originally fixed implementation; relationship between costs and results; timeliness and content of activities; impact on target groups. in the evaluation, the employee who performed assessment (typically, it must be different from the implementing agency) use performance indicators. these indicators are closely related with the policy objectives and help to measure their achievement. the indicators used in evaluating public policy are classified into several categories: input indicators: measure the resources allocated for implementation of public policies (e.g. staffing, resources, etc.) 5 zaccomer g.p., shift-share analysis with spatial structure: an application to italian industrial districts, transition studies review, springer wien, volume 12, no.1, 2006. studies and scientific researches economic edition, no. 15, 2010 247 outcome indicators: quantifying the results in absolute terms: the number of people vaccinated, etc. number of publications distributed; impact indicators: productivity rate, the share number of university graduates in the labor market, etc. table 2: indicators6 sector used resources results effects process administration number of persons number of documents of public politics better decisions opening to the debates education the report student/professor transition rates between courses of study high level of literacy encourage students to express juridical system budget trialed cases low number or appeals to assist poor defendants police number of police cars number of arrests low rate of criminality respecting the rights prisons costs for each imprisoned number of imprisoned recidive rate preventing abuses health number of assistants according to the size of population number of vaccines low rate of mortality care for the patient social aid social assistants persons under care going outs of the system treatment people with respect measurement / assessment have a number of limitations related mainly to the fact that: provides information only about the results and impact, but does not offer clues about what the way forward (including the prospect of a new problem appeared to be related in connection with public policy proposed for implementation); do not provide information about how to place the implementation (of the process itself); do not provide information about the divergent positions of stakeholders; are usually associated with a dualistic approach (vs. punishment. premiere). bibliography: 1. armstrong h., taylor j., regional economics and policy, blackwell, 2nd edn., 2000, 2. bachtler j., wren c. ,evaluation of european union, cohesion policy: research questions and policies changes, regional studies, vol 40, no. 2, april 2006. 3. cochran ch. l., malone eloise f., public policy, viva books private limited, 2007. 4. gerston n. larry, public policymaking: process and principles, (second edition), center for civic education, 2004. 6 schiavo-campo salvadore, strenghtening performance in public expenditure management, 1995. studies and scientific researches economic edition, no. 15, 2010 248 5. ionescu r, marchis g., uniunea european prezent i perspective ed. didactic i pedagogic , bucure ti, 2004. 6. marchis g., impactul extinderii uniunii europene asupra strategiilor i politicilor regionale. rolul fondurilor structurale, tez de doctorat, a.s.e. bucure ti, 2008. 7. moussis n., access to european union, rixensart, belgium, 2009. 8. schiavo-campo salvadore, strenghtening performance in public expenditure management, 1995. 9. zaccomer g.p., shift-share analysis with spatial structure: an application to italian industrial districts, transition studies review, springer wien, volume 12, no.1, 2006. 10. cia world factbook, 2006 projections, imf, 2005. 11. european commission, building our common future policy challenges and budgetary means of the enlarged union 2007-2013, brussels, 10th of february 2004. 12. european commission, financial perspectives 2007 – 2013, brussels, 14th of july 2004. 13. guvernul româniei, strategia pentru o reglementare mai bun la nivelul administra iei publice centrale 2008 – 2013 document de politic public -, bucure ti, 2007. 14. *** financial perspective 2007-2013, cadrefin 268, 15915/05, council of the european union, brussels, 19 december 2005. 15. http://www.cnp.ro studies and scientific researches economic edition, no. 15, 2010 249 consolidated techniques for groups of enterprises romanian welfare state between excess and failure cristina ciuraru-andrica, “vasile alecsandri” university from bacau, romania abstract: timely or not, our issue can bring back to life some prolific discussions, sometimes diametrical. we strike the social assistance, where, at this moment, is still uncertain if, once unleashed the excess, the failure will come inevitably or there is a “salvation ark”. however, the difference between the excess and the failure of the welfare state is almost intangible, the reason of his potential failure being actually the abuses made until the start of depression. key words: welfare state, social assistance, the exceess of the welfare state, the failure of the welfare state 1. introduction at the beginning, we must say that, sometimes, inappropriately and unjustifiable, the social protection and, especially, the social assistance, like parts of social political, receive a bad connotation, because they are pressing the state against some economical objectives. in reality, these expenses are stringencies in society and proceed from a function of the state: to take care of his citizens. moreover, it is known that, especially, a depression time requires a realistic effort to offset “the costs of change” that the population must to bear. that is way, in this context of living it is nearly justified and legitimate, a big rate of social protection expenses in gdp and also in all public expenditure. unfortunately, this is not quite the thing that is happening in our society: in this time of crisis the public expenditure, and mostly with social protection, are maximally reduced. why? because the public financial resources are more and more diminished and even not enough. this problem should not concern us if we were not, in some way or another, depending on state. it looks like, just right now, in crisis time, he fails to fulfill own vocation, quite when his function, mentioned above, should be most visible. 2. the romanian welfare state: excess or failure? however, there are still voices which maintain that social protection is extreme in romania. such conclusion is probably founded on the wrong association of it with the social assistance, last one being just one way to accomplish the public social protection, using the public social expenditure. even more, a recent study1 (2010, june) made by the research institute for quality of life: after 20 years: options for romania, show that, while the development countries invest more that 30% of gdp for social politics area (which includes social protection too), romania invests only 16.4% of gdp, even less than the half of eu average, being below of all the transitional countries, eu members. the same situation is in the case of the rate of social expenditure in the public budget: 36.5% for romania relative 55.9% eu average. so, the study underlines that the feedback of the romanian government to these problems is 1 http://www.iccv.ro/iccv_romania_dupa_20_de_ani.pdf http://www.iccv.ro/iccv_romania_dupa_20_de_ani.pdf wrong again. by cutting the social budget: remunerations in education, health and social assistance, the pensions and other social benefits of some risk groups, the public budget will not raises the equilibrium. instead these groups will support hardly the price of the crisis. therefore, is justified a higher rate of poverty in our country relative of other eu countries. this conclusion of the analysis, made by research institute for quality of life, may misleading the opinion that increasing the rate of social expenditure will eradicate the poverty and all social inequities still existent. but this increment must be efficiently made by having at the base a real growth of gdp which will allow an important allocation, to the public expenditure and to the social area, especially. an overall view on this study reveals an aspect maybe less accepted by some people: the romanian sector of public social expenditure is deficient. such a conclusion is difficult in our daily context marked, on the contrary, by the solid motivations for privatization, especially in vital economical areas such as education and health, with negative consequences: increasing the social polarization, expanding the poor segment of population which will be condemned to a precarious education and health. then where is the excess? insufficient financing of social expenditure must be analyzed in its structure also, whereas at chapters such as education and health, it is indeed present and accepted. but a sensitive problem is the social assistance expenditure. is this category under financed or here "the excess has found its home”? statistics show that the funds for social assistance are increasing more and more, obviously because the number of social assisted is bigger and the social benefits are more diversified. the evolution of the funds allocated for the social assistance is relevant (figure 1). figure no. 1 social assistance expenditure in public budget vs. social assistance expenditure (in public and local budgets) in billion lei, right scale the source: www.businessday.ro this situation makes us wonder whether such an increase is realistic or hide the abuses and intolerable business interests. on the one hand, this seems paradoxical because is manifested simultaneously with an increase of gdp per capita, in the mentioned period, with more than 100%. it's more than obvious that there were abuses, and social assistance is no longer strictly oriented to those who really need it. the situation is more tragic in the context in which, instead the issues from economic growth to be invested in infrastructure, schools, hospitals or save them for harder times, they have been directed to social causes "wrapped in a false sadness”. on the other hand, maintaining the poverty rate at the highest levels in europe makes us believe that the social assistance costs are justified and moreover, required and unavoidable. certainly not in their entirety, but for the most part, they are the effect of an acute poverty among romanian citizens. http://www.businessday.ro/ so there was an excess where the social assistance was not needed but where it went though without "bother" someone. that is, until recently. now, the “hand of the state” reach “the bottom of the bag" and that forced him "to cut without mercy" even from where would not be moral (in virtue of the principle of social solidarity which should remain constant even when scaffold collapses). this circumspect context, in which is "juggling" with social assistance, created a new interpretation of present crisis. that is linked to the mistakes of the welfare state, sometimes irresponsible, assisting citizens equally irresponsible. such abuses could "prepare and pave" the path to failure. at a recent conference (2010, september 27) titled: "the failure of the welfare state. market solutions to economic crisis", professor valeriu stoica said that indeed we are witnessing at the failure of the welfare state. why? paraphrasing him, it would be at least the following considerations2: 1. encouraging those who do not work in every election year, social assistance has turned into an opportunity to "grab votes" by promises, made to the mentioned category (large by the way), which have materialized sometimes, but with an unrealistic economic base and marked by the desire of political parties for power, violating public balance and breaking the limits. they have encouraged, obviously, inoccupation or at least inhibited any intention of the person to rise from its own situation. 2. increasing the number of public employees the impressive growth of the number of public employees, from 900,000 in 1990 to 1,400,000 on 1 january 2010, has burdened the state and focused his resources on this category. so, in addition to the impressive number of social assisted, the public employees also depend, in one way or another, by the state, being forced to pay, perhaps more than other categories, the consequences of a social assistance, sometimes forced, sometimes exaggerated. 3. discouraging those who still work this consequence of the welfare state is derived from that one mentioned in paragraph 1 and is manifested in the migration of labor to gray or black sectors of the economy, or to other countries better rated, or even relocation companies in bulgaria, for example. 4. obtaining higher, many and unfunded deficits even if, the programs presented, for gain the financing, were relevant and according to reality, once obtained the loan, its main purpose was to cover deficits and current expenses rather than investment. therefore, the objectives were only partially fulfilled. so, as debtor, the welfare state has lost its credibility in front of his donors, because has become extremely uncertain its ability to satisfy the needs of a society more and more polarized, poor and dissatisfied, consuming more than produces. worse is that romania has become someway dependent on external funding, which bonding our future and draining it of its resources. 5. causing the government of those who do not work an do not pay taxes the political parties have made many promises through programs that abound in social protection measures, only to get the power. this has led to ingrate situation that the rules are made not by the productive people. the price paid for winning such an electorate, with public money of course, is precisely this "troubled daily" which every citizen is forced to bear it. so the welfare state creates, deliberately, situations that require a deeper dependence on it, “creating poor", instead of promote politics for “social emancipation of citizens"3. 2 valeriu stoica, eşecul statului asistenţial. cauzele crizei economice, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 3 http://www.observatorcultural.ro/statul-asistential-sau-fabricantul-de-saraci*articleid_8567articles_details.html http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 among the causes listed above could more say that the failure of the welfare state is connect with its irresponsibility in handling tasks sometimes foreign of "his reason to exist" (taking over the huge debts of some private and public enterprises). then, the “infusion of populism” in the last period (of course promoted by politicians greedy for power) is "embedded" the false belief, among the citizens, that, whatever the performance of companies or of persons, the state has to give. where? what sacrifices? it does not matter. the right for social assistance (mentioned even in the constitution) has become a right sometimes “more equal than others" which is allowed without taking into account the real possibilities of economy. thus, however the efficiency of austerity measures that must be taken (even if they incite the voters), they will never be accepted by citizens because "theirs wishes and expectations" must be satisfied by "the great state". whether we admit or not, it is difficult to inhibit the mentality of romanian people, for which the state is like a god that divides good and bad, and not like a manager of resources for the benefit of his citizens4. a belief, which is becoming more evident today, is that the romanian system of social assistance is out-of-date. why? because the public money is randomly threw, without certainly knowing that they reach in the right place. an example of "revival" of the system is promoted by some countries (in latin america), where the social assistance benefits are strongly conditioned by human capital formation5. thus help the social assisted to face the situations which make him a dependent of the state. that it should be the future of social assistance. in this sense, the desire of ludwig erhard could give food for thought: "i want to affirm myself with my own power, i want to wear the risk of live, i want to be responsible for my destiny. you, the state, do only what it takes so i should be able to do all this. you, the state, don’t worry about me, instead gives me the freedom and the needed resources so i be able to assure the destiny and the existence for me and my family"6. a "picture" of the welfare state is illustrated by a very suggestive resemblance: welfare state is dealing with social assisted like a family who raises her children badly. she provides them food and home, but not guide them for a school performance, not underlines their qualities, not accustomed them with the effort. assisted-persons are convinced that others (the state, in this case) are responsible for their lives. both, the children badly raised and the social assisted, will have every reason to be dissatisfied with those who look only not to die of hunger and have a roof over their head. but the welfare state can provide less7. 3. conclusions there is still a chance for the welfare state? if the answer is yes, the state should start by supporting what is really a priority at the moment for romania, allocating resources properly and removing the obvious abuses (social, political, etc.) that "burden" both state and its citizens. such a relevant screening and fully justified before the people can still give a chance for the welfare state. thereby, the romanian government took the first step including in its fiscal budgetary strategy for the period 2011-20138, through the proposed austerity measures, ways to develop and diversify the social services for vulnerable groups, which are not covered by existing ones, and also to 4 idem3 5 theodor stolojan, liberalizarea pieţei muncii şi reforma sistemelor de asigurări şi asistenţă socială, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 6 http://www.ronduldesibiu.ro/economie/ludwig-erhard-economia-sociala-piata/ 7 http://www.observatorcultural.ro/statul-asistential*articleid_5590-articles_details.html 8 http://discutii.mfinante.ro/static/10/mfp/strategbug/strategia_fb_27sept.pdf http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 http://discutii.mfinante.ro/static/10/mfp/strategbug/strategia_fb_27sept.pdf reduce the abuse of social assistance benefits. of course, the promises are making, but to accomplish them ... however we never know. then, releasing the state from the public enterprises and some public services and engage them in the private sector can lead to the transformation of "irresponsible consumers of taxes" in the "payers taxes" by their efficiency and profitability9. we all want prosperity, but do not forget that it is not magically created by the state. paraphrasing ludwig erhard, prosperity for all and prosperity through competition are inseparable parts of the same whole. prosperity for all is the main aim and prosperity through competition is the mean by which achieving the aim. aknowledgements: "this work was supported by the european social fund in romania, under the responsibility of the managing authority for the sectoral operational programme for human resources development 2007-2013 [grant posdru/cpp 107/dmi 1.5/s/78342]". references: 1. theodor stolojan, liberalizarea pieţei muncii şi reforma sistemelor de asigurări şi asistenţă socială, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 5.12.2010 2. tom palmer, the welfare state, more vulnerable to the crisis, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 6.12.2010 3. valeriu stoica, eşecul statului asistenţial. cauzele crizei economice, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 4.12.2010 4. http://discutii.mfinante.ro/static/10/mfp/strategbug/strategia_fb_27sept.pdf accesat la 6.12.2010 5. http://www.iccv.ro/iccv_romania_dupa_20_de_ani.pdf accesat la 5.12.2010 6. http://www.observatorcultural.ro/statul-asistential*articleid_5590-articles_details.html – accesat la 4.12.2010 7. http://www.observatorcultural.ro/statul-asistential-sau-fabricantul-de-saraci*articleid_8567articles_details.html – accesat la 4.12.2010 8. http://www.ronduldesibiu.ro/economie/ludwig-erhard-economia-sociala-piata/ accesat la 5.12.2010 9 tom palmer, the welfare state, more vulnerable to the crisis, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352%20-%20accesat%20la%205.12.2010 http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352%20-%20accesat%20la%204.12.2010 http://discutii.mfinante.ro/static/10/mfp/strategbug/strategia_fb_27sept.pdf http://www.iccv.ro/iccv_romania_dupa_20_de_ani.pdf http://www.observatorcultural.ro/statul-asistential*articleid_5590-articles_details.html http://www.observatorcultural.ro/statul-asistential-sau-fabricantul-de-saraci*articleid_8567-articles_details.html http://www.observatorcultural.ro/statul-asistential-sau-fabricantul-de-saraci*articleid_8567-articles_details.html http://www.ronduldesibiu.ro/economie/ludwig-erhard-economia-sociala-piata/ 1. theodor stolojan, liberalizarea pieţei muncii şi reforma sistemelor de asigurări şi asistenţă socială, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 5.12.2010 2. tom palmer, the welfare state, more vulnerable to the crisis, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 6.12.2010 3. valeriu stoica, eşecul statului asistenţial. cauzele crizei economice, http://www.cadi.ro/index.php/vizualizare/articol/multimedia/352 accesat la 4.12.2010 4. http://discutii.mfinante.ro/static/10/mfp/strategbug/strategia_fb_27sept.pdf accesat la 6.12.2010 5. http://www.iccv.ro/iccv_romania_dupa_20_de_ani.pdf accesat la 5.12.2010 6. http://www.observatorcultural.ro/statul-asistential*articleid_5590-articles_details.html – accesat la 4.12.2010 7. http://www.observatorcultural.ro/statul-asistential-sau-fabricantul-de-saraci*articleid_8567-articles_details.html – accesat la 4.12.2010 8. http://www.ronduldesibiu.ro/economie/ludwig-erhard-economia-sociala-piata/ accesat la 5.12.2010 microsoft word apostoaie constantin marius_eng.doc management immunodeficiency from preuniversity educational system lucica cristea (mitican), „al. i. cuza” university of iasi, romania abstract the educational system finds itself again in the middle of crisis. the quantic progress that people all over the world are waiting for, seems to have met the totally unprepared educational system. the globalization which has led to the increase of interdependence between economic and social systems makes this problem become a worldwide one and consequently, need a global solution. while the usa is looking for the „perfect” teacher and the „ideal” school, europe is still trying to find methods for making the educational system more efficient. a contradiction rises therefore, between the role of school in society that is to form mature personalities, meant to contribute to the economic increase and, implicitly, to the development of society, and the decrease in importance of this activity to the level of any economic activity. the text aims at verifying the hypothesis according to which management immunodeficiency from the preuniversity organizations has the most powerful influence on the increase of crisis within the educational system. how was school plagued by this immuodeficiency? to what extent did the management of these institutions contribute to this? can the efficient decision constitute a remedy in this situation? these are questions that we ought to address to ourselves, even if we are not be able to find the best solution. keywords immunodeficiency, educational management, globalization, efficient decision jel codes: i 20, i 21 the global crisis has school education and learning is a component of culture and civilization history. educational system, a community forward material and spiritual creation of the forerunners in the offspring. the word education is of latin origin, derived from the noun "educatio" which means growth, feeding, growing. education is mandated to prepare the man as active element of social life1. the education is to be conscious development of human potential and the formation of a mature personality type, which correspond to current and future conditions offered by the company. education is key to economic development through quality work, based on the knowledge. through education man can overcome the limitations become a factor in achieving sustainable economic and social development. all these are matters known and collected in this manner by any person, regardless of culture or social position. differences of perception produces dichotomy education formal education curriculum when placed variable. for example, analysis of curriculum at secondary school level in romania, by comparison with standards of professional training (spp) and items applying the graduates, the analyst creates an inconsistent picture or image 1 http://ro.wikipedia.org/wiki/educaţie studies and scientific researches economic edition, no. 15, 2010 337 of cardiograme a severe heart disease. this image crisis is shaped, mainly discordanţele of freedom of design, strong emphasis placed on creativity and modern methods of education offered by the spp's criteria for promotion and graduation examination claiming, among other inaccuracies and a fantastic memory of graduates, to be able to reproduce the whole phrases of alternative textbooks. immanuel kant2, says that a principle of education, which need to consider especially those charged with developing education programs is that the, "children should be educated not according to the present state but the best possible future state of the human genus, ie the idea that humanity and its entire mission. kant's conception of education, developed two centuries ago, is as valid today as then. the company went through profound transformations at that time was caused by industrialization. today the situation is similar: before humanity opens a new horizon, a new bear galactica "to development. economic and social development can not be seen, analyzed and projected, but only in the context provided by global knowledge society, new media and education industries. unfortunately, the concepts of globalization, new economy and knowledge-based society, used so often in recent years have led to decipher but the mitadinage them. romanian school, at least, they understood the only computer that can save us, that this machine is a kind of panacea that can address including lack of vision and preparation of school manager therefore, perhaps, are born increasingly more questions about the position where we are, at this time, the existential focus: what is the role of education in the current circumstances? how can formal education to keep pace with new industry? what is the socio-professional profile of the graduate? principles of pedagogy and educational management, subject to official documents and literature, have undergone profound transformations over time. demanding the same phrases, the same messages constitute the real locks of the mind when the subject is the formal. we are talking thus about the objectives, powers, the correlation between economic development and accumulation of knowledge, socio-professional profile of graduates in the new economy and knowledge society, importance of new media, etc.. moreover, there are increasingly more voices that speak of efficiency and profitability, almost all heart estompând educational phenomenon for a society, role of formal education in shaping and polishing personalities, individuals regarded as 'particles' of a social system. for example submit to the following issue: as a member of the european union, romania has to align the community policy in education. romania to the european commission's recommendations on january 28, 2009, seeks swift implementation of structural reforms under the lisbon strategy, to ensure economic competitiveness based on high productivity, innovation and knowledge3. lisbon strategy, sets out objectives and action plan on economic and social policies at european level: in the period 2010-2020, the european economy will become the most competitive and dynamic economy in the world, based on knowledge, capable of sustainable economic growth, generating new jobs and characterized by greater social cohesion4. objectives of education and training, according to the lisbon declaration5, are: increase the quality and efficiency of education and training in the european union; facilitating access for all to education and training; education and training open to the world. beyond these objectives, which are not unusual, however, must admit that globalization and competitiveness, structural disruption of the labor market have increased functional gap 2 kant immanuel – despre pedagogie, ed. paideia, bucureşti, 2002, p. 21 3 www.edu.ro 4 http://revistacalitateavietii.ro/2009/cv-1-2-2009/13.pdf stoica laura gabriela accesul la educaţia continuă. factor generator de inovaţie socială p. 122-129, accesat ianuarie 2010 5 idem 4 studies and scientific researches economic edition, no. 15, 2010 338 between education and other social sectors, creating new challenges for contemporary education. you must also admit that the growing interdependence of national economies-globalization not only has economic dimensions6, but also political, cultural, educational, religious, etc.. this requires a reassessment of actions to increase the adaptability of the individual to the environment. meanwhile, the attributes that characterize today's social system would not have been possible without the intervention of education, especially formal education. in other words, we are witnessing the necessary objective and consistent relationship between the two phenomena: the cause and effect. the phenomenon known issue education, social change has led, which is no more than effect. this has become concerned for changes required by new circumstances new economy. in the present context created by the new economy, educational system bears a heavy responsibility: to create personalities mature, responsible, open knowledge and intercunoaşterii able to and take risks and initiatives in all areas of socio-cultural activity7. for this reason the view of pierre moeglin admit that, school is once again in crisis "8. once again it is not the first time the organization mandated with training individuals as social subjects, is in crisis. in the 60s of the last century there was a strong inadaptation school to real life problems and then imposed by society. that period was marked by a 'global crisis of education ". philip combs9 noted in this regard that there is a set of functional differences between education and other subsystems of society: in terms of quality education is found that the offer is too low in relation to the application; social needs as human resources are not satisfied with the educational product; methods and educational programs are tailored to the needs of society; dynamic companies against inertia current organizational structure of education systems. educational systems worldwide are tested and are subjects of research for finding solutions to end the crisis. thus, the u.s. is looking, the teacher perfect 'and' ideal school ', european community countries develop new standards of performance and new methods of performance evaluation based on cost-benefit through the process of' benefits quality. these concerns intensified in the formal education believe that there are only confirm the idea of crisis. immunodeficiency educational management in order to establish a diagnosis of educational management, natural is to do the deciphering concepts being operated and the context in which the process takes place. theoretically things is as follows: opinion almost unanimously accepted in the literature is that economic and social transformations imposed by the following company will undoubtedly lead to changes in leadership styles at all levels. the information revolution, which mankind lives today requires new approaches to science management. they are particularly necessary in the educational system, the more apparent that here is formed members of society in general and labor required in the new economy, in particular. one of the directions, declared as a priority in education reform in romania, aims decentralization process, the redistribution of responsibilities, decision-making authority, accountability and resources from central level to the local level, creating an organized education system, given and financed by european regulations. this requires commitment, accountability, vision and strategic thinking, skills and management, that a new type of 6 antonesei liviu – polis şi paideia, ed. polirom, iaşi, 2005, p. 22 7 idem 6 8 moeglin pierre coord. – industriile educaţiei şi noile media, ed. polirom iaşi, 2003, p. 177 9 http://www.avsp.ro/_lisabona.php studies and scientific researches economic edition, no. 15, 2010 339 manager10. the manager must not only vision but also the ability to attract, to combine and coordinate all resources necessary to conduct such a process. • management, that any man with the exponent requires a set of rules and principles needed to manage resources to achieve predetermined objectives. educational management enjoys attention increasingly higher current professional literature. thus, management education has been defined by experts in the field, in many ways. educational management and are given different understanding, being considered theory and practice, science and art design, organization, coordination, evaluation, features educational activities. i jinga11 considers, for example, that management education can be defined as science and art of preparing human resources, to train its staff, according to some finality accepted individual and society. s. cristea points12 that management education, psychological activity is based on three characteristics: management of the primary system (holistic approach to all elements of education and specific applications of management functions at various levels); management of type flying (the best use of educational resources education system, the management functions: planning, organizing, coordinating, monitoring); strategic (future innovative development of the system at different levels of organization). educational management shows a certain mentality, their own way, but an art of management, the training resources, organization elements, which corresponds to the consideration that education is also science and art. regarding immunodeficiency management of school education, we can say that the three concepts immunodeficiency, management and education have a strong axiological load. they either analyzed separately or together are functions of several variables: economic and social context, existing values and promoted in society, economic and social policies in general and educational policies, in particular, etc.. from a health perspective is the reduction of congenital or acquired immunodeficiency state of immunity of the body. when immunodeficiency is marked and durable, it makes the patient very sensitive to opportunistic infections (caused by normally harmless germs and affecting only the bodies weak defense means)13. immunodeficiency educational management of school education, could translate his lack of response to 'germs' freed from the economic, political and social, which deeply affected him, precisely because it was not 'vaccine' against change in time. immunodeficiency educational management at the level of school education, not only evident in romania. this issue affects all countries. it is a disease that disturbs all school systems in the postindustrial era of globalization. one thing we can say with full responsibility: the rapidity of events do not allow the establishment of long-term objectives in education. it was conducive to the adoption of a management change, capable of effective decision. obviously we will not reinvent the wheel and we can not be possessors of miraculous solutions for management education in romania, but we can emphasize certain aspects easy observation and the uninitiated in a field: the literature abounds in deciphering the concepts, the establishment of typologies, the hierarchy and sequence of steps, which are intended miraculous solutions to management in 10 gherman liliana, pănoiu laura managementul resurselor umane, ed. ind. economică, piteşti, 2006, p.10 11 jinga ioan – educaţia şi viaţa cotidiană, ed. didactică şi pedagogică, r.a. bucureşti, 2005, p. 26 12 cristea sorin, pedagogie generală. managementul educaţiei, ed. didactică şi pedagogică, bucureşti, 1996 13 http://www.sfatulmedicului.ro/dictionar-medical/imunodeficienta_3871 studies and scientific researches economic edition, no. 15, 2010 340 general. functions and management principles are taken, analyzed, processed, completed and adapted to various fields. for 20 years we are witnessing a 'reform' in education perpetual, worldwide. in romania, reform is taking the models adopted in different countries of the world and endless discussions on quality, efficiency and performance in education. in terms of organization and coordination, education in romania mangementul not have much to organize and coordinate. unless staff working in the field (and whose analysis we do not now), other resources are lacking or are insufficient or are outdated. appearance of organization and coordination may be similar to that existing in an economic organization, the primary objective of management is the organization to become a leader on the market without prior analysis of competition, held by the force (in terms of posse such a scenario is possible for the education system in romania, which adoptâptând objectives and strategies to achieve them by different systems, without having the necessary resources to be 'removed from the market "in the end? why not? while education is approached as an economic activity so long as it is brought down on any activities which discusses services, providers and beneficiaries about education, why not? suppose that the idea of turning to formal education in a low activity level of service provision is universally accepted. suppose that supported the idea plusvalorii efficiency and education. in this case the starting point in setting goals are not need to analyze the context in which formal education is reported? are discussed more beneficial education social and economic system but the curriculum is adopted in accordance with the beneficiary? what should disclose an analysis of the labor market in romania and beyond? it bears numerous discussions around the idea of skills training to education, so that at the end of the training process can be integrated into society, be able to carry out an activity to add value to the company. but do not discuss private corporate training request educabililor. these issues, among other things could be the questions that should be sought answers. it could be a start in finding ways to improve educational management immunodeficiency. measures taken to date, important measures, as well as the goals and strategies are not likely to provide an improvement in terms of education management at undergraduate level. multiplication of the tasks listed under 'job description' of teacher education, the establishment of the profile, the ideal teacher, high standards, which it must achieve, not to be one managemnetul educational quality and the system is performing. following implementation of teachers surveys (questionnaires were distributed to a total of 150 teachers) working in four high schools in the central and south-eastern romania, schools with different profiles, we obtained the following results on the preparedness of management if the decentralization process of school education: 78% expressed disagreement on decentralization, while only 22% were in favor of it; 64% said that the management of schools is totally unprepared to take over the duties of governor factor, 26% responded that management is prepared for this purpose only at a rate of below 50%, 6% said that management is prepared to this effect of 50% and 4% said that management is prepared in 100% in this respect; 56% said that the performance or lack of performance of educational institution in which they operate is due to management, 44% responded that management has no interference in this regard; 46% said that the influence of organizational climate on performance is evident at 100%, 32% said they exercised influence of 50%, 16% less than 50%, 6% not contribute to organizational climate obtain performance; 76% said that the organizational climate is the responsibility of the institution management, 24% said the responsibility in this regard is not management. conclusions drawn from the application of these questionnaires are: decentralization is perceived by teachers as a measure that will produce negative effects on education; studies and scientific researches economic edition, no. 15, 2010 341 resistance to change, this time is justified by the lack of a quality management both at school level and at local institutions; no one ready to take over management duties imposed by statute governor factor; in the institutions currently unable to prove management with respect to ensuring organizational climate conducive to initiate a process of such complexity as the educational process. decision effective method of combating immunodeficiency management of pre-university education? the decision is a deliberate act, involving rational choice of possible solutions of the problems that considered optimal, with the intention of the desired effect. decision of the standing accompanying management process, materialized ideas, intentions or projects. the decision is the response to a specific problem and is a form of social validation of an action, through the movement of resururselor human, material and money14. in explaining the concept of decision, given the literature, we can deduce its main characteristics:15 • is a core business process management; • is a process of harmonization of goals with resources; • expresses the conceptualization of objectives and concepts to solve the conscious targeting of activities, relations, methodology; • lead to psychosocial factors in solving cases by overcoming contradictions. decision effective means in fact the whole process done in three stages: • preparation of the decision; • the decision; • implementing the decision. a process preceding the decision, in management education, is the performance evaluation. the information provided by performance measurement, enable an analysis of the facts in the issue of assumptions, which may be, or not to be solutions to problems indicated by the analysis. checking assumptions / opinions from the implementation decision is made, continuing to check / control the way in which the decision applies and ending with evaluation of effects. decision effective, requires first a governor / liability factor effectively. it is logical that an organization's effectiveness, its ability to function and, in current circumstances created by the new economy, even survival, depend on the effectiveness of its members, especially the effectiveness of management at all levels. the ability to be effective decision-maker is of paramount importance, in general, but the issue of growing importance particularly because the decision precedes, accompanies and follows the performance review process. approached from this perspective, the effectiveness of the decision may be vital to the organization. the effectiveness of the decision may be limited, in general, the following prejudice and barriers:16 decision-maker believes that he is able to identify all the alternatives and consequences of each alternative; decision-maker can detach the problem; decision-maker believes that it has all relevant information; decision-maker believes that he is able to choose the best solution; inadequate identification problem; 14 puiu alexandru, management, ed. independenţa economică, piteşti, 2004, p. 207 15 tudorică roxana, managementul educaţiei în context european, ed. meronia, bucureşti, 2007, p. 234 16 idem 15, p. 235 studies and scientific researches economic edition, no. 15, 2010 342 there is a limited perspective during the phases of creation and exploration of decision making; inability to hand machines various types of information simultaneously; inability to think logically and methodically; lack of creativity; superficial analysis of the causes; lack of standards; indecision; incorrect dimensioning solutions. knowledge of these prejudices and barriers are of particular importance for improving decision making, especially in pre-university educational organizations, which decision shall be taken at the top and top-down effect. therefore, we consider relevant, in effect, according to peter drucker's about effective decision. effective management, having the capacity to allow the adoption of effective decisions, we believe that is posed by drucker.17 thus, effective decision-maker: • starts from opinions / hypotheses unverified • trying to find out what really brings awareness test • wonder which is the criterion of relevance • consider the traditional method of measuring incorrect • seek feedback before a decision on land • take risks in finding appropriate methods demăsurare • not decide if there is disagreement between the views • opposition sees the middle that allows it to consider alternatives decision-making, as we noted, requires real research. makers effective, off-again, as we used, the facts and the traditional measurement methods, which drucker deemed obsolete and should not require a decision, but would be sufficient simply to adapt. appropriate measurement method can not be found only on the ground, and its adoption involves taking risks because, let's not forget that it starts from the hypothesis, therefore they are not validated by practice. effective decision based on conflicting opinions which are the main suppliers of alternatives. an effective governor must see the opponents of his opinion means which allows to consider alternatives, so it is important that decision-makers to deal with understanding the phenomenon and to assume responsibility for communication, but is concerned about the appearance of justice award. in this way you can avoid, reduce or even solve some state pressure, which could inhibit creativity, imagination, much needed educational process. references: 1. antonesei liviu polis and paideia, polirom, iasi, 2005 2. cristea sorin general education. management education, teaching and pedagogical, bucharest, 1996 3. peter f. drucker post-capitalist society, image publishing, 1999 4. peter f. drucker managing the future, asaba, bucharest 2004 5. peter f. drucker about decision and effectiveness, meteor press, bucharest, 2007 6. gherguţ alois general management and strategic education, polirom iasi, 2007 7. gherman liliana, panoiu laura human resources management, economic ind., pitesti, 2006 8. jinga john education and daily life, teaching and pedagogical, ra bucharest, 2005 9. immanuel kant pedagogy, paideia publishing house, bucharest, 2002 10. moeglin pierre coordinator education and new media industries, polirom, iasi, 2003 11. puiu alexandru management, economic independence, pitesti, 2004 17 drucker f. peter, despre decizie şi eficacitate, ed. meteor press, bucureşti, 2007, p. 143-155 studies and scientific researches economic edition, no. 15, 2010 343 12. tudorici roxana management education in the european context, meronia, bucharest, 2007 13.http://www.avsp.ro/_lisabona.php 14.www.edu.ro 15.http://ro.wikipedia.org/wiki/educaţie 16 http://revistacalitateavietii.ro/2009/cv-1-2-2009/13.pdf stoica laura gabriela, access to lifelong learning. elements of social innovation, p. 122-129, accesed january 2010 studies and scientific researches economic edition, no. 15, 2010 344 template studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 57 labor productivity growth in the eu gap among the member states oana ancuţa stângaciu vasile alecsandri university of bacău anca_stangaciu@yahoo.com abstract in our endeavor to analyze the labor productivity gap among the member states for the period 2000-2015, we started by assessing, on territorial profile, the indicators pertaining to descriptive statistics and the results of the hierarchical cluster analysis. in order to highlight the convergence of labor productivity growth in the eu28, two regression equations have been drawn up, in which the independent variable was labor productivity in 2000, and the dependent variable was the dynamics of the indicator registered in 2015 compared to 2000, respectively its value at the end of the period subjected to the analysis. keywords labor productivity; dendrogram; convergence jel classification c10; e24 introduction on the level of the eu28, there was already a gap on territorial profile in the values registered for labor productivity in the economies of the member states. however, the integration of the central and eastern countries within the european space led to a decrease in the disparities between the west and the east. short methodological presentation according to eurostat, labor productivity measures the amount of goods and services produced by each member of the labor force or the output per input of labor. this index can be measured in a variety of ways. for structural indicators, it may be measured by gross domestic product (gdp), expressed in terms of the purchasing power standard (pps), either relative to the number of employed people or to the number of hours worked. within national accounts and structural business statistics, labor productivity is often defined as the value added per employed person. in this analysis, that measures the gap among the member states, the labor productivity per person by country, calculated as the ratio between the gdp expressed in purchasing power standards (pps) and the aggregate number of employees or self-employed, is used as a percentage of eu28 total-based on million ppscurrent prices. the evolution of the labor productivity gap among the member states during the period 2000-2015, the disparities between the eu member states concerning labor productivity, calculated per country as percentage of the eu total, are significant. thus, during the last 15 years, the amplitude series for labor productivity by country decreased – see figure 1 and table 1. while in 2000 the difference between the highest mailto:anca_stangaciu@yahoo.com stângaciu 58 value registered (179.4% in luxembourg) and the lowest value (23.9% in romania) was of 155.5 percentage points, in 2015 this difference (maximum:185.9% in ireland, minimum:44.2% in bulgaria) was of only 141.7 percentage points, that is 13.8 percentage points lower than in 2000. figure 1 boxplot of nominal labor productivity per person (percentage of eu28 total-based on million pps-, current prices) for the period 2000-2015 source: personal processing of the eurostat available data the decrease of the gap among the members states is also emphasized see table 1 – by the evolution of the standard deviation for the series labor productivity by country during the period 2000-2015. thus, it decreased from 37.960 in 2000 to 27.266 in 2014, and to 30.774 in 2015 respectively. the evolution of the coefficient of the asymmetry skewness, as well as the boxplot for the series distribution – see figure 1 and table 1 – underline the existence of a certain clustering of the countries towards the small values of the series (skewness has positive values for the whole period subjected to the analysis, except for 2001, 2002 and 2003). the same phenomenon can be noticed in the histograms drawn up in figure 2, the distribution of the countries according to the labor productivity quantifying to 15 the number of the member states with a labor productivity below the average of the eu28 (below 100%) and to only 13 the number of the countries with a labor productivity value over 100% (except for 2003, when there were 14 countries with a value over 100%), countries with a high level of development, situated in the north and in the west of europe, which are part of the old europe (eu15), except for greece and portugal. labor productivity growth in the eu gap among the member states 59 table 1 descriptive statistics for nominal labour productivity per person (percentage of eu28 total-based on million pps-, current prices) for the period 2000-2015 source: personal processing of the eurostat available data 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 year n mean std. deviation skewness kurtosis variance minimum maximum 2000 28 90,075 37,960 0,092 -0,461 1440,974 23,9 179,4 2001 28 89,518 35,331 -0,069 -0,784 1248,248 25,5 163,6 2002 28 89,825 34,252 -0,036 -0,779 1173,169 29,1 160,8 2003 28 90,568 33,128 -0,044 -0,696 1097,451 30,7 159,6 2004 28 91,446 32,580 0,006 -0,627 1061,425 34,5 161,7 2005 28 92,300 31,785 0,085 -0,378 1010,295 36,2 165,3 2006 28 93,054 31,868 0,239 0,024 1015,591 36,1 172,9 2007 28 93,861 31,004 0,310 0,200 961,250 37,7 173,7 2008 28 94,057 28,931 0,237 0,078 837,012 39,4 167,6 2009 28 93,875 28,368 0,108 -0,307 804,743 39,5 160,0 2010 28 94,382 28,009 0,278 -0,081 784,530 41,3 161,8 2011 28 94,525 27,845 0,453 0,274 775,338 42,2 165,4 2012 28 94,689 27,027 0,474 0,169 730,464 43,6 161,6 2013 28 94,682 26,767 0,480 0,339 716,460 43,0 163,2 2014 28 94,875 27,266 0,628 0,693 743,409 43,5 167,8 2015 28 95,839 30,774 1,159 2,020 947,016 44,2 185,9 case summaries for nominal labour productivity per person stângaciu 60 2012 2013 2014 2015 figure 2 histogram of nominal labor productivity per person (percentage of eu28 total-based on million pps-, current prices) for the period 2000-2015 source: personal processing of the eurostat available data from the hierarchical cluster analysis (the dendrograms in figure 3) it can be noticed that both in 2000 and in 2015 the diagram has 2 branches (a and b), and branch b has a single leaf (luxemburg) in 2000 respectively two leaves (ireland and luxemburg) in 2015. it can be noticed that branch a is separated into two branches (c and d), of which branch c (for 2015) shows the similarities of labor productivity among the countries in eu15 and branch d the similarities of the value of labor productivity among the countries that entered the eu later. also, the decrease in the height of the branch point, in 2015 compared to 2000, means a decrease of the gap between the countries which are part of the old and the new eu. as to the dynamics of this indicator during the period of time 2000-2015, the dendrogram in figure 3 shows the existence of a group of countries (branch b) with high dynamics of the labor productivity and low values of the indicator in 2000. it should also be noticed that on branch b, romania is the only leaf on branch f, that branch e has 5 leaves and that there are great differences among the eu member state in the dynamics of labor productivity (great oscillations in the height of the branch). 2000 2015 * * * * * h i e r a r c h i c a l c l u s t e r a n a l y s i s * * * * * dendrogram using average linkage (between groups) rescaled distance cluster combine c a s e 0 5 10 15 20 25 label num +---------+---------+---------+---------+---------+ czech republic 3 ─┐ croatia 11 ─┤ portugal 22 ─┤ slovenia 24 ─┼───┐ hungary 17 ─┤ │ poland 21 ─┤ │ slovakia 25 ─┘ ├───────────────┐ latvia 14 ─┐ │ │ lithuania 15 ─┤ │ │ estonia 6 ─┼───┘ │ bulgaria 2 ─┤ │ romania 23 ─┘ ├───────────────────────────┐ greece 8 ─┐ │ │ malta 18 ─┼─┐ │ │ cyprus 13 ─┘ │ │ │ ireland 7 ─┐ │ │ │ italy 12 ─┼─┼─────────────────┘ │ belgium 1 ─┘ │ │ france 10 ─┐ │ │ austria 20 ─┤ │ │ finland 26 ─┤ │ │ sweden 27 ─┤ │ │ netherlands 19 ─┼─┘ │ denmark 4 ─┤ │ united kingdom 28 ─┤ │ germany 5 ─┤ │ spain 9 ─┘ │ luxembourg 16 ─────────────────────────────────────────────────┘ * * * * * h i e r a r c h i c a l c l u s t e r a n a l y s i s * * * * * * * dendrogram using average linkage (between groups) rescaled distance cluster combine c a s e 0 5 10 15 20 25 label num +---------+---------+---------+---------+---------+ spain 9 ─┐ united kingdom 28 ─┤ italy 12 ─┤ finland 26 ─┤ germany 5 ─┼─┐ france 10 ─┤ │ austria 20 ─┤ │ denmark 4 ─┤ ├─────┐ sweden 27 ─┤ │ │ netherlands 19 ─┘ │ │ belgium 1 ───┘ │ lithuania 15 ─┐ │ poland 21 ─┤ │ estonia 6 ─┤ │ hungary 17 ─┤ ├───────────────────────────────────────┐ croatia 11 ─┤ │ │ latvia 14 ─┤ │ │ romania 23 ─┤ │ │ greece 8 ─┼─────┐ │ │ slovakia 25 ─┤ │ │ │ cyprus 13 ─┤ │ │ │ czech republic 3 ─┤ ├─┘ │ slovenia 24 ─┤ │ │ portugal 22 ─┤ │ │ malta 18 ─┘ │ │ bulgaria 2 ───────┘ │ ireland 7 ───┬─────────────────────────────────────────────┘ luxembourg 16 ───┘ a b d c a b c d labor productivity growth in the eu gap among the member states 61 2015/2000 figure 3 dendrogram of nominal labor productivity per person (percentage of eu28 total-based on million pps-, current prices) for the years 2000, 2015 and the dynamics of 2015 compared to 2000 source: personal processing of the eurostat available data the convergence of labor productivity in eu28 the existence of a convergence process of labor productivity on the level of the eu28 can be emphasized through the econometric connection between the nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) for 2000 and its dynamics in 2015 compared to 2000. such an analysis implies drawing up a regression equation, respectively a correlogram, in which the independent variable is the natural logarithm of the nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) for 2000, and the dependent variable is the dynamics of this indicator in 2015 compared to 2000 (2000=100%). the regression equation is as follows: lw2015/2000= α + β ln(lw2000)+ ε where: lw2000 = nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) for 2000 lw2015/2000 = dynamics of the nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) in 2015 compared to 2000 α and β = the parameters of the linear regression equation ε = residual error * * * * * h i e r a r c h i c a l c l u s t e r a n a l y s i s * * * * * dendrogram using average linkage (between groups) rescaled distance cluster combine c a s e 0 5 10 15 20 25 label num +---------+---------+---------+---------+---------+ france 10 ─┐ netherlands 19 ─┤ finland 26 ─┤ austria 20 ─┤ sweden 27 ─┤ denmark 4 ─┼─┐ united kingdom 28 ─┤ │ germany 5 ─┤ ├─┐ spain 9 ─┘ │ │ greece 8 ─┐ │ ├─────────┐ cyprus 13 ─┼─┘ │ │ malta 18 ─┘ │ │ belgium 1 ─┬───┘ ├───┐ italy 12 ─┘ │ │ croatia 11 ─┬─┐ │ │ portugal 22 ─┘ ├───────────┘ ├─────────────────┐ czech republic 3 ─┐ │ │ │ hungary 17 ─┼─┘ │ ├───────────┐ slovenia 24 ─┘ │ │ │ ireland 7 ───────────────────┘ │ │ luxembourg 16 ─────────────────────────────────────┘ │ latvia 14 ─┬───┐ │ lithuania 15 ─┘ ├───────────┐ │ poland 21 ─┬─┐ │ │ │ slovakia 25 ─┘ ├─┘ ├───────────────────────────────┘ bulgaria 2 ─┬─┘ │ estonia 6 ─┘ │ romania 23 ─────────────────┘ a b c d e f stângaciu 62 figure 4 scatterplot of nominal labor productivity per person (percentage of eu28 total -based on million pps-, current prices) for the year 2000 and the dynamics of 2015 compared to 2000; the test report of the regression equation in spss source: personal processing of the eurostat available data as it can be seen in figure 4, there is a very strong dependence between the two indicators, the nominal labor productivity determining its dynamics in proportion of 69.6%. in other words, the lower the labor productivity of a country was in 2000, the greater its dynamics during the period of time subjected to the analysis. on the other hand, since the β coefficient of the regression equation is lower than 0, we can state that on the level of the eu28 member states there is a convergence process of labor productivity. the convergence of labor productivity on the level of the eu28 can also be assessed from the point of view of the structural stability in time of the eu28 member states. this approach, based on the contributions of cantwell (1989) and pavitt (1989), implies drawing up a regression equation where the independent variable is the nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) registered at the beginning of the period of time subjected to the analysis (the year 2000), and the dependent variable is the value of this indicator at the end of the period (the year 2015). the regression equation is as follows: lw2015= α + β lw2000+ ε y = -51,63x + 356,67 r 2 = 0,6962 0 50 100 150 200 250 3,0 3,5 4,0 4,5 5,0 5,5 ln(lw 2000) l w 2 0 1 5 /2 0 0 0 labor productivity growth in the eu gap among the member states 63 where: lw2015 and lw2000 = nominal labor productivity per person by country (percentage of eu28 total -based on million pps-, current prices) for the year 2015 and 2000 respectively α and β = parameters of the linear regression equation ε = residual error figure 5 scatterplot of nominal labor productivity per person (percentage of eu28 total-based on million pps-, current prices) for the years 2000 and 2015; the test report of the regression equation in spss source: personal processing of the eurostat available data on the level of eu28, the relative position of the member states stayed the same on average during the period of time 2000-2015, since the regression parameter β is between 0 and 1 (β=0.72) -see figure 5-, with only slight repositioning of the countries, meaning that there may have been greater increases in the labor productivity in the case of the countries with low values and respectively greater decreases in the case of the countries where there were high values of the indicator. also, the value close to 1 of the β parameter for the regression equation and the great value of the correlation coefficient (r=0.89), indicate the fact that there were no significant changes in the distribution of the labor productivity on territorial profile. y = 0.7197x + 31.016 r 2 = 0.788 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0 0.0 50.0 100.0 150.0 200.0 lw 2000 l w 2 0 1 5 stângaciu 64 conclusions during the last 15 years, the gap among the member states decreased, thus the series amplitude by country being reduced, as well as the value of the standard deviation indicator. we could also notice that there is a certain clustering of the countries towards the low values of the series, with 15 member states having a labor productivity below the eu28 average (below 100%), and 13 countries having a labor productivity over 100%. these results are also validated through the hierarchical cluster analysis. thus, the dendrogram has only 2 branches, one branch has a single leaf (luxemburg) in 2000 and two leaves respectively (ireland and luxemburg) in 2015, while the other branch a is split into two branches, one of which being made up of a single country of the eu15. as to the dynamics during the period 2015-2000, the dendrogram shows the existence of a branch with countries that have a high labor productivity dynamics and low values of the indicator in 2000, while romania is a single leaf on another branch. the information offered by the descriptive statistics concerning the existence of a convergence process on the level of the eu28 is also confirmed by the econometric analysis. thus, on the level of the eu28 member states there was, on one hand, a convergence of the labor productivity during the period of time 2000-2015, and the level of the labor productivity in 2000 determined its dynamics during the period subjected to the analysis in proportion of 69.6%, and on the other hand there were no significant changes in the distribution on territorial profile of the labor productivity, but only slight repositioning of the countries in the general hierarchy. references barro, r., sala-i-martin, x. (1992), convergence, journal of political economy, 100(2). cantwell, j. (1989), technological innovation and multinational corporations, oxford, basil blackwell. hallet, m. (2000), regional specialization and concentration in eu, economic papers – european commision, no. 141. quah, d. (1993), empirical cross-section dynamics in economic growth, european economic review, no. 37. quah, d. (1996), empirics for economic growth and convergence, european economic review, no. 40. pavitt, k. (1989), international patterns of technological accumulation, strategies in global competition, london, croom helm publisher. persson, j. (1994), convergence in per capita income and migration across the swedish counties 1906-1990, institute for international economic stockholm university series seminar papers, no. 601. redding, s. (2002), specialization dynamics, journal of international economics, no. 58(1). stângaciu, o.a. (2012), the mobility of the processes of regional intra-industry specialization in romania, ces working papers, centre for european studies, alexandru ioan cuza university, vol. 4(2). eurostat, data set, available at url (http://ec.europa.eu/eurostat). http://ec.europa.eu/eurostat (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro basic aspects concerning the single conceptual framework ionela-cristina breahnă-pravăţ “vasile alecsandri” university of bacău crisspra@yahoo.com abstract following the creation of a set of concepts, principles and generally accepted international accounting conventions, to which any elaboration, interpretation or enforcement of accounting and financial information would refer, iasc (later iasb) has developed, in 1989, the framework for the preparation and presentation of financial statements that, although inspired from the american one, didn’t address predominantly only to a single category of users (investors), but several categories of representatives of accounting information demand. nowadays, it is now known that international body of accounting normalization iasb (international accounting standards board), cooperates with the american body fasb (financial accounting standards board) for the purpose of developing a single conceptual framework, which is an important phase in strengthening current and future international accounting standardization process. conceptual framework for financial reporting, published in september 2010 by the iasb, replaced the framework for the preparation and presentation of financial statements issued in 1989 and is actually the result of the current process of updating the general framework of the iasb, but also represents the completion of an important stage in the process to develop a single conceptual framework. keywords accounting; globalization; conceptual framework; financial information, iasb; fasb. jel classification m41 1. introduction the initiation of international accounting convergence occurred in 2002, when the accounting normalization international body and the american one made public the initiative of signing a memorandum of understanding – norwalk agreement, act that ultimately represented a compromise with the purpose of adoption high quality compatible solutions for the problems occurring in accounting treatments (dima & şărămăt, 2011). in this sense, the assurance of accounting conceptual frameworks of iasb and fasb has represented and still does a very important goal. the idea of development and use of a conceptual framework emerged and became feasible for the first time in usa, belonging to the american accounting normalization body – fasb. therefore, during 1973-1985 the american conceptual framework is realized, that responds to theoretical and institutional issues of american accounting normalization and formed the basis for the elaboration of accounting frameworks adopted one by one in: canada, australia, united kingdom, as well as by the international accounting body. following the creation of an international accounting doctrine, namely the formulation of fundamental conventions conveying any elaboration, interpretation or application of accounting and financial information rules, iasc developed in 1989 framework for the preparation and presentation of financial statements, inspired 128 basic aspects concerning the single conceptual framework from the american one and often compared to it, being regarded as having its main purpose of leading to solid standards and indicate nature, purpose and limits of financial accounting and statements (feleagă, 1999). however, the iasc framework did not address mainly to a single category of users (investors), but to a wide range of representatives of accounting information demand and has more pronounced explanatory and evaluative character. conceptual framework for financial reporting was issued by iasb in september 2010. it has replaced the framework for the preparation and presentation of financial statements issued in 1989. 2. the need for conceptual framework for iasb, worldwide economic entities prepare financial statements to present to external users, which although appear similar from a country to another, are different in terms of content due to social, economic, legal and cultural factors. these factors lead to the use of different definitions of elements of financial statements and various bases of their evaluation. framework includes theoretical concepts and principles which together constitute the reference system for the preparation and presentation of financial statements for external users, which is what accountancy should be settled as normative accounting theory, therefore, a particular case of general accounting theory. or, in another view, framework is assuming the quality of referential for elaborating the accountancy rules and coherence instrument rules, regulations and procedures of accounting. although the usefulness of such a framework is obvious, national accounting systems do not have each such instrument. accounting conceptual frameworks being anglo-saxon origin, countries that have adopted such tools are mainly the anglo-saxon origin ones: united states, canada, new zealand, australia and the united kingdom etc. however, attempts and achievements have occurred in countries anchored traditionally by legislative and centralized approaches in accounting. therefore, countries which do not have such fundamental piece manifested the tendency of assimilation an internationally recognized accounting framework or arranged the development of their conceptual accounting frameworks. in this respect, we mention french draft conceptual accounting framework developed by the standing committee of doctrine accounting (scda), a body belonging to the order of chartered accountants (oca). the option of a national accounting system to implement a conceptual accounting framework raises some contradictory issues, for example, in our country antagonistic tendencies were registered between the concepts defined by the iasb framework and the european accounting directives. in romania’s case there should be taken into consideration the context given by national-european-international report in terms of building a national accounting system able to meet domestic and international needs. designing a national accounting system represents a complex strategic political process, taking into account the geography of international accounting and particular interests of each country. 3. joined conceptual framework iasb-fasb. past, present and future iasb cooperates with national accounting normalization body, of which an important role in the process of harmonization and convergence is attributed to the american accounting normalization body, the financial accounting standards board (fasb), 129 breahnă-pravăț because the convergence between international standards (ifrs/ias) and the american ones (u.s.gaap), and also to the development of an unique conceptual framework, is perhaps the most important and complex process of contemporary accounting development. 3.1 conceptual framework iasb-fasb. initial joint project it is known that iasb and fasb, bodies with an essential role in the process if accounting standards, have signed an agreement of jointly achieve a common conceptual accounting framework. in fact, the project launched by the two international standardization bodies did not involve the complete rebuilding of conceptual framework as reference accountancy matrix, but aimed a series of aspects such as: • solving by means of this joint framework of common current issues occurring at the level of financial reporting process, both nationally and internationally; • updating of conceptual framework in some of its architectural elements this aspect being also imposed by considerable seniority of the two documents (the international and the american one); • improving and redefining certain concepts, where appropriate: • implementation of concepts firstly applicable to private sector economic operators and secondly, to other private entities from other sectors; • integrating relatively new concepts emerged in standards, such as fair value. thus, in 2005, the project of modernization of the conceptual framework is launched, project structured on eight phases, as follows: • phase a: objective and qualitative characteristics; • phase b: elements and recognition; • phase c: measurement; • phase d: reporting entity; • phase e: presentation and disclosure; • phase f: purpose and status; • phase g: application to not-for-profit entities; • phase h: remaining issues. completing the common conceptual framework, namely the completion of the eight phases, was originally scheduled for 2010. however, lively debates generated by the nature and volume of existing differences, the large number of opinions and requests received for each phase, very tight schedule of the two normalization bodies, the need to complete other more urgent convergence projects, all these lead, firstly, to postponing the data proposed for completion of certain phases, respectively postponing the project deadline itself. this project was suspended in 2012. conceptual framework (2010) is therefore the result of the current process of updating the general framework of the iasb and the process of harmonizing its provisions with those of the american general one issued by fasb financial accounting standards board. conceptual framework version from 2010 contains the first two chapters modified that iasb published (chapters 1 and 3), as a result of the first stage of the joint iasb fasb regarding the accounting normalization linchpin, as follows: • chapter 1 – the objective of general purpose financial reporting; • chapter 3 – qualitative characteristics of useful financial information. regarding the other two chapters, we mention that: • chapter 2 – reporting entity: it is not finalized, but will treat the concept of reporting entity; 130 basic aspects concerning the single conceptual framework • chapter 4 – framework of 1989: the text maintained: contains the text kept from the framework (1989). general conceptual framework deals: • the objective of financial reporting; • qualitative characteristics of useful financial information; • definition, recognition and measurement of structures on which financial statements are prepared; and • concepts of capital and capital maintenance (iasb, 2011, ifrss). as it can be noticed, the new conceptual framework establishes a general purpose for financial reporting, not only for financial statements, as in the case of 1989 version. this objective also represents the basis of the new framework, its other objectives (reporting entity concept, the qualitative characteristics of useful financial information and their constraints, elements of financial statements, recognition, measurement, presentation and disclosure) arising logically from this main objective. the overall objective of financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in the decisions they take on the entity providing resources, decisions involving: buying, selling, or holding of equity and debt and providing or settling loans or other forms of credit (iasb, 2011, ifrss). therefore, decisions factors new framework focus on are: existing and potential investors, lenders and other creditors. general purpose financial reports will try to cover as much of the information needs of a wide range of users as follows: • the main users (corresponding to the following categories of users mentioned in the conceptual framework from 1989 version: present and potential investors, employees, creditors, suppliers, other financial creditors and, subsequent, councilors in discussions concerning investors needs): existing and potential investors; lenders and other creditors; • management of reporting entity; • settlement bodies and members of the public. in connection to the objective related to information on economic resources of a reporting entity, concerning high claims against the entity and the changes of resources and claims in conceptual framework (2010), we mention the following: • the presence of general purpose financial reports information on :  reporting entity’s economic resources and claims over the reporting entity (financial position);  effects of transactions and other events that change the economic resources and claims over the reporting entity (financial performance); • the importance of higher financial performance information (represented by the overall outcome, profit or loss or similar), of the importance given to information about the financial position; • accrual accounting offers positions both on the financial position and financial performance; • the cash flows of a period also provide information on financial performance. qualitative characteristics on financial useful information described by conceptual framework (2010) are structured on two main categories: • fundamental qualitative characteristics:  relevance;  faithful representation: framework 1989 used the term reliability, in order to describe what we call exact representation, according to framework (2010); 131 breahnă-pravăț • amplifying qualitative characteristics:  comparability;  verifiability;  opportunity;  intelligibility. the ranking above is based on the premise that financial information, that do not comply the two fundamental characteristics, are not useful and cannot be made more useful, even though they pass the test of the four qualitative characteristics less important (the amplifying ones). thus, we may mention that the new version of framework kept unchanged certain components of framework (1989), some of the chapters not bearing yet changes, but introduces important changes concerning: • objective reporting/financial statements; • systematization of the users’; the new framework doesn’t bring details on the categories of potential users (investors, employees, financial creditors, suppliers and other trade creditors, customers, state and public bodies, public) or their accountant information necessities (obert, 2011); • the importance degree of information concerning performance, respectively financial position; • structure, systematic and qualitative characteristics of useful information:  concept of credibility is replaced by true representation one;  the prevalence of economic on juridical, prudence and verifiability, conditions associated to credibility in the older framework, are no longer considered characteristics for accurate representation;  the conditions that accounting information must fulfill in order to respond to accurate representation goal are: to be complete, neutral and free from material errors;  prudence was eliminated, due to its contradictory position in relation to neutrality; • concept “accrual accounting” is no longer included in “basis assumptions” paragraph. 3.2 comprehensive conceptual framework of iasb. subsequent individual project year 2012 represented, in fact, the reactivation of iasb project that aimed the framework, via another project that imposed three major changes: • the new project is no longer joint with fasb, but one belonging only to iasb; • the new project has less ambitious goals, the purpose is no longer represented by substantial revision of the conceptual framework, but by approaching those interest zones/phases that were not yet approached or those with significant deficiencies; • the new project does no longer address to preliminary projects interest areas (dp – discussion paper) distinct, but in a single dp. in conclusion, the initial project of jointly achieving by the iasb and fasb of a common conceptual framework is suspended and replaced by individual project of the iasb to achieve a comprehensive conceptual framework. thus, in september 2012, the iasb decided that the new project should focus primarily on: elements of financial statements, evaluation, reporting entity, presentation and publication. and the aim is to achieve a single preliminary draft (dp discussion paper) covering all 132 basic aspects concerning the single conceptual framework areas/phases mentioned above, and no preliminary draft for each of the areas of interest/project phases, as was done until 2012. therefore, in july 2013 the revised draft dp/2013/1 is published “a review of the conceptual framework for financial reporting”, dp open for comment until 14th of january 2014. this project contains proposals to revise and amend certain areas of interest, where it is considered necessary (see table 1 and table 2). such proposals are: • review the definitions of asset and liability; • introduction guidance on recognition and derecognition treatment; • the distinction between equity and debt; • evaluation; • clarify the aim and purpose by other elements of comprehensive income; • establish a framework for the presentation and disclosure (iasb, 2013). after receiving comments, the iasb intends to publish revised draft (exposure draft ed) in the third quarter of 2014 and complete new conceptual framework by september 2015 (deloitte, 2013). table 1 structure and stage for projects concerning the accounting conceptual framework initial project: iasb-fasb comprehensive project on the conceptual framework (2005) current project: iasb only comprehensive project/ conceptual framework comprehensive iasb project (2012) phases status sections (according p/2013/1) appendix (according dp/2013/1) a: objectives and qualitative characteristics completed: dp july 2006, ed may 2008; final chapters september 2010 result: conceptual framework for financial reporting issued by iasb on 28 september 2010 1. introduction a. chapter 1 and 3 from the actual conceptual framework b: elements and recognition incomplete: discontinued in 2012, when the original project was suspended and replaced; many discussions, dp and ep planned, but unissued 2. elements of financial statements b. reporting entity c:measurement incomplete: discontinued in 2012, when the original project was suspended and replaced; many discussions, dp and ep planned, but unissued 3. additional recommendations to define the asset and liability c. the distinction between debts and equity instruments d: reporting entity incomplete: discontinued in 2012, when the original project was suspended and replaced; dp may 4. recognition and derecognition d. effect of strict duty on various classes of instruments 133 breahnă-pravăț 2008, ed – march 2010; final chapters undisclosed e: presentation and disclosure incomplete: discontinued in 2012, when the original project was suspended and replaced; untouched 5. definition for equity and distinction between debts and equity elements e. rights and obligations arising from options and forward contracts concerning an entity’s own shares f: purpose and status incomplete: discontinued in 2012, when the original project was suspended and replaced; untouched 6. measurement f. issued sell options on equity and minority interests g: application to non-for-profit entities incomplete: discontinued in 2012, when the original project was suspended and replaced; untouched 7. presentation and disclosure g. overview on the revised conceptual framework h: remaining issues incomplete: if it were the case; untouched 8. presentation in the comprehensive income situation – profit or loss and other comprehensive income elements h. summary of questions for respondents 9. remaining issues table 2 content sections of iasb only comprehensive project section number issues of content section 1 provides some background information, describes the purpose framework support of iasb in the development and revision of ifrs, requires motivation and justification in the case that a new or revised statement of iasb does not matches the conceptual framework; section 2 clarifies the definitions of assets and liabilities, but also contains other, those associated to revenues, expenditures, receipts, payments etc.; the new conceptual framework will no longer refer to inflows and outflows of expected economic benefits but only to basic resource or obligation; also, the new project deleted from the definitions of these elements the concept of probability; section 3 presents additional guidance on the definitions of assets and liabilities, especially for cases that have raised some issues in the past; special emphasis is put on connection between the concept of current obligation and debt; 134 basic aspects concerning the single conceptual framework section 4 exhibit recognitions requirements/conditions of assets and liabilities, the new framework will additionally provide derecognition conditions, as recommends elimination from balance sheet of those structures that no longer meet the requirements for recognition; section 5 addresses a number of issues regarding equity, further defined as a residual interest, although iasb intends to improve the definition; other aspects of capital items are concerned, revaluation, compliance or non-compliance with certain classes of items in the category of capital; section 6 examine more closely the measurement, describes the objectives of each category/assessment methods, and how we can identify the most appropriate method of assessment; section 7 contains a detailed stronger primary purpose financial statements and explanatory notes, also being presented the relationship between them; section without corresponding in the conceptual framework; section 8 mainly approaches the distinction between profit, loss and other comprehensive income, a definition of these concepts not being included in the conceptual framework; all income and expenses will be presented in profit or loss account, with the exception of the revaluation of assets and liabilities, when they will be reflected on other comprehensive income elements results; section 9 presents a wide variety of problems, from the chapters concerning objective and qualitative characteristics, that remain unchanged, until concepts such as continuity, maintenance of capital that can be reconsidered in the case of launching a hyperinflation project. source: deloitte (2013), http://www.iasplus.com/en/news/2013/07/framework-dp. conclusion the main motivation behind the summarized approach in this paper of the project of creating a comprehensive conceptual framework of the iasb, lies primarily in the fact that this project compared, to other projects of the iasb, has a highly importance for present, but especially for the future of financial reporting at international, european, and national level. even if present paper exhibited only few essential aspects of this very ample project, we hope we have succeeded at least to infer that the future development of the conceptual framework for financial reporting, namely the establishment of a single conceptual framework, will represent perhaps the most important step in future international accounting. references deloitte (2013) iasb publishes discussion paper for a new conceptual framework, available on http://www.iasplus.com/en/news/2013/07/framework-dp. 135 http://www.iasplus.com/en/news/2013/07/framework-dp http://www.iasplus.com/en/news/2013/07/framework-dp breahnă-pravăț dima, ș., şărămăt, o. (2011), a study on the recent developments of iasbs accounting framework, financial audit, 1, year ix, 3-10. feleagă, n. (1999), compared accounting systems, vol. i and ii, economic publishing house, bucharest. iasb (2011), international reporting financial standards (ifrss). official rules issued from 1 january 2012. includes irfss which shall enter into force after 1 january 2011 but does not include the ifrss they replace, part a conceptual framework and provisions, ceccar publishing house, bucharest. iasb (2013) dp/2013/1 a review of the conceptual framework for financial reporting, available on http://www.ifrs.org/current-projects/iasbprojects/conceptual-framework/discussion-paper-july2013/documents/discussion-paper-conceptual-framework-july-2013.pdf. obert, r. (2011), le nouveau cadre conceptuel de l’iasb, revue française de comptabilité, 439. rotilă, a. (2011), specific accounting regulations and practices, alma mater publishing house, bacău. 136 http://www.ifrs.org/current-projects/iasb-projects/conceptual-framework/discussion-paper-july-2013/documents/discussion-paper-conceptual-framework-july-2013.pdf http://www.ifrs.org/current-projects/iasb-projects/conceptual-framework/discussion-paper-july-2013/documents/discussion-paper-conceptual-framework-july-2013.pdf http://www.ifrs.org/current-projects/iasb-projects/conceptual-framework/discussion-paper-july-2013/documents/discussion-paper-conceptual-framework-july-2013.pdf (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 105 recent evolution of market research and public opinion polling business in the eu countries laura cătălina ţimiraş vasile alecsandri university of bacau timiras.laura@ub.ro abstract the purpose of this paper is to highlight the evolution of the market research and public opinion polling business in the eu countries in recent years (after 2010). using the turnover or gross premiums written indicator, it was found that the analyzed business experienced an upward trend over the period 2010-2015, but not for all eu countries, some of them experiencing decreasing of the indicator. at the same time, parallel with the increase of the turnover or gross premiums written at the level of the eu, there was a slight decrease of the number of enterprises and number of persons employed in the market research and the public polling activity, a decrease which was more pronounced at the level of the old eu member states. the paper also seeks to highlight the link between the macroeconomic outcomes and market size of market research and public opinion polling across eu countries, noting the existence of a direct and strong relationship between gross domestic product and turnover or gross premiums written both at eu-28 level and by categories of old and new member states. the analysis was based on official statistical data provided by eurostat. keywords market research and public opinion polling; turnover or gross premiums written; number of enterprises; gross domestic product; eu member states jel classification m31, m39, c10 the increased need for market research is undoubtedly the result of general economic development, increased competition, the dynamism of market phenomena that are often difficult or impossible to estimate, the diversification of the needs of increasingly demanding and sophisticated consumers etc., context in which organizations are forced to support themselves in the decision-making process on this kind of market information. worldwide, according to statista (2017), global revenue of market research business was 44.35 billion u.s. dollars in 2015, rising by over 40% compared to 2010 (31.24 billion us dollars). in total, europe has a significant share, so that in 2015 over 37% of the global revenue of market research business belonged to it. (figure 1) țimiraș 106 figure 1. structure of global revenue of market research business per world regions in 2015 source: own computation after statista, inc. (2017) also among the top five largest market research companies in the world with 2015 global research revenue over 1 billion us dollars, three belong to the eu. (table 1). table 1. the largest operators in global market research activity in 2015 companies revenue (billion u.s. dollars) nielsen holdings n.v., united states 6.17 kantar, united kingdom 3.71 ims health holdings inc. united states 2.92 ipsos sa, france 1.98 gfk se, germany 1.71 source: statista, inc. (2017) methodological aspects the aim of this paper is to highlight the evolution of the market research and public opinion polling business in the eu countries after 2010 and also to analyze the link between the macroeconomic outcomes and market size of market research and public opinion polling across eu countries. the study is based on official statistical data, using, for their analysis, indicators for time series and for studying the links between variables. the size and market dynamics of market research and public opinion polling business at eu level the market size and dynamics of market research and public opinion polling business was assessed using the following indicators: turnover or gross premiums written, as well as number of enterprises, respectively, using the latest available official data provided by eurostat. taking into account the turnover or gross premiums written indicator, the market research and public opinion polling business at eu level reached 18.9 billions in 2015 (up with 5.1 percent compared to 2011). almost 90% of the total turnover was made in the old eu member states (eu-15), while the new member states (bulgaria, czech republic, romania, slovenia, slovakia, latvia, lithuania, croatia, estonia) achieved europe, 37.5% north america, 43.8% asia pacific, 13.1% latin america, 3.9% the middle east and africa, 1.7% recent evolution of market research and public opinion polling business in the eu countries 107 just over 10% of this sum. referring to the number of enterprises in the field of market research and public opinion polling business, in 2014 there were about 36.6 thousand businesses operating in the eu (down with 3.6% compared to 2011), out of which about 74 % belonged to the old eu states, and the number of persons employed in the field amounted to over 189 thousand persons in 2015 (with 1.1% less than in 2011). increasing turnover or gross premiums written on the background of falling number of persons employed shows an increase in the efficiency of work in this field. in fact, this increase in efficiency was reflected only in the old eu member states (where number of people employed declined by 2.4%), the indicator in the new eu member states rising. (table 2 and figure 2) table 2. the evolution of the market research and public opinion polling business at the eu level, respectively in the old and new member states, in terms of turnover or gross premiums written, number of enterprises and number of persons employed country groups turnover or gross premiums written (millions of €.) number of enterprises (enterprises) number of persons employed (persons) 2011 2015 (+ / i n % i n 2 0 1 5 c o m p a re d t o 2 0 1 1 2011 2014 (+ / i n % i n 2 0 1 4 c o m p a re d t o 2 0 1 1 2011 2015 (+ / i n % i n 2 0 1 5 c o m p a re d t o 2 0 1 1 the eu – 15 16028.7 16883.0 5.3 28303 26934 -4.8 160211 156427 -2.4 the new member states of the eu 1996.7 2063.6 3.4 9620 9641 0.2 31089 32709 5.2 european union (28 countries) 18025.4 18946.6 5.1 37923 36575 -3.6 191300 189136 -1.1 source: own computation eurostat (2017) the results obtained from market research and public opinion polling business (turnover or gross premiums written) and allocated resources (number of persons employed) are not evenly distributed among the old and new eu members. thus, according to figure no. 2 in 2015, the old eu member states had 82.7% of total employees and 89.1% of total turnover or gross premiums written, while at eu-15 level 17.3% of employees were employed and the share of total turnover was only 10.9%. țimiraș 108 figure 2. structure of turnover or gross premiums written, number of enterprises and number of persons employed in market research and public opinion polling business at old and new ue states level (%) source: own computation from eurostat (2017) by eu countries, the largest market for research (market research and public opinion polling) in terms of turnover or gross premiums written, belongs to the united kingdom with a value of nearly eur 5.5 billion, followed by other old member states, such as: germany, france, netherlands, italy, spain (but with values below 50% of the level registered in the united kingdom). at the level of the new eu member states, the size of the market is much lower, the largest market the 8th in the eu-28 ranking, being owned by poland (almost 0.6 billion euros). (figure 3) figure 3. turnover or gross premiums written made in market research and public opinion polling business by ue countries in 2015 (millions of €.) source: eurostat (2017) *2014 data over time, the evolution of the markets in the different eu countries was not the same. thus, between 2010 and 2015, changes in the turnover or gross premiums written indicator ranged very broad from increases of over 100% (in ireland, where we are considering the 2010-2014 period), to decreases by more than 60% (for malta). (figure 4) 89.1 73.6 82.7 10.9 26.4 17.3 0% 20% 40% 60% 80% 100% turnover or gross premiums written in 2015 number of enterprises in 2014 number of persons employed in 2015 the eu – 15 the new member states of the ue 5 5 1 3 .5 2 6 0 1 .8 2 2 9 7 .4 1 8 4 4 .7 1 2 5 6 .9 1 0 0 4 .5 9 5 5 .2 5 8 1 .5 4 2 6 .2 3 4 6 .8 2 6 3 .3 2 6 2 .0 2 3 9 .9 2 0 9 .9 1 6 9 .1 1 5 0 .7 1 4 0 .4 1 0 0 .6 9 5 .6 8 9 .8 8 9 .4 8 1 .7 7 0 .9 6 5 .5 5 1 .9 1 8 .7 1 5 .0 4 .0 0 1000 2000 3000 4000 5000 6000 u n it e d k in g d o m g e rm a n y f ra n c e n e th e rl a n d s it a ly s p a in b e lg iu m p o la n d ir e la n d * s w e d e n c z e c h r e p u b li c s lo v a k ia r o m a n ia h u n g a ry a u st ri a d e n m a rk g re e c e l a tv ia f in la n d l it h u a n ia b u lg a ri a s lo v e n ia c ro a ti a p o rt u g a l c y p ru s e st o n ia l u x e m b o u rg m a lt a recent evolution of market research and public opinion polling business in the eu countries 109 figure 4. percentage change in turnover or gross premiums written in market research and polling business in eu-28 countries in 2015 compared to 2010 (+/ in % as compared to 2010) source: own computing from eurostat (2017) * 2014 compared to 2010 ** 2015 compared to 2011 from the perspective of number of enterprises in market research and public opinion polling business, the eu countries with the largest number of operators in 2014 are: netherlands (with more than 6 thousand organizations), followed by: france, italy, spain, united kingdom. (figure 5) figure 5. number of enterprises in market research and public opinion polling business from eu-28 countries in 2014 source: eurostat (2017) note: no data for malta like the turnover or gross premiums written indicator, in the case of number of enterprises in market research and public opinion polling business there have been different evolutions by country. a spectacular increase from this point of view was registered in lithuania (more than 6 times in 2010-2014), with the rest of the countries registering increases ranging from 1.7% to 65.1%. still, in most eu countries there have been recorded decreases in the number of operators. (figure 6) 1 1 5 .6 9 4 .4 7 0 .7 6 4 .9 5 8 .3 5 4 .7 4 8 .2 3 2 .2 2 3 .9 2 1 .0 1 8 .6 1 6 .9 1 5 .8 1 1 .8 3 .7 1 .0 -1 3 .2 -1 5 .6 -1 7 .4 -2 1 .4 -2 1 .8 -2 6 .3 -3 6 .1 -3 9 .0 -4 3 .6 -5 1 .8 -5 9 .4 -6 5 .5 -80 -60 -40 -20 0 20 40 60 80 100 120 140 ir e la n d * l it h u a n ia c y p ru s b u lg a ri a s lo v a k ia s lo v e n ia u n it e d k in g d o m l a tv ia p o la n d g e rm a n y a u st ri a e st o n ia r o m a n ia s w e d e n g re e c e n e th e rl a n d s f in la n d it a ly s p a in f ra n c e c z e c h r e p u b li c * * h u n g a ry p o rt u g a l b e lg iu m c ro a ti a l u x e m b o u rg d e n m a rk m a lt a 6 0 5 9 4 2 0 3 3 5 0 2 3 3 7 4 3 2 3 9 2 6 2 4 2 4 3 3 1 8 9 0 1 7 9 8 1 2 2 8 9 0 5 6 5 6 6 2 2 5 7 6 5 5 5 4 6 4 4 6 1 4 5 4 3 3 0 2 5 3 2 5 3 2 4 6 1 5 6 1 2 4 8 9 2 5 2 4 0 1000 2000 3000 4000 5000 6000 7000 n e th e rl a n d s f ra n c e it a ly s p a in u n it e d k in g d o m p o la n d b e lg iu m g e rm a n y h u n g a ry s lo v a k ia r o m a n ia l it h u a n ia g re e c e c z e c h r e p u b li c s w e d e n b u lg a ri a l a tv ia c ro a ti a s lo v e n ia a u st ri a p o rt u g a l ir e la n d d e n m a rk f in la n d e st o n ia l u x e m b o u rg c y p ru s țimiraș 110 figure 6. percentage change in number of enterprises in market research and polling business in eu-28 countries in 2014 compared to 2010 (%) source: own computation from eurostat (2017) note: no data for malta the link between the macroeconomic outcomes and market size of market research and public opinion polling business across eu countries in 2015 studying the link between the gross domestic product and the turnover or gross premiums written in the market research and public opinion survey business in the 28 eu states, there is a strong link between the level of macroeconomic outcomes and the size of the analyzed market. thus, according to figure no. 7 and table no. 3 it is observed that the bond is direct and strong, the correlation coefficient r being of 0.871. using the fisher test to verify the significance of the determined link, it is found that this is significant for a significance level α of 0.001. (table 3) figure 7. link between gross domestic product and turnover or gross premium writing in market research and public polling business in eu-28 countries in 2015 source: own computation from eurostat (2017) notă: for ireland,it was used turnover or gross premiums written for 2014. similarly, for the new eu members the evaluation of the link between gross domestic product and the turnover or gross premiums written in the activity of market research 5 4 9 .5 6 5 .1 5 7 .6 5 6 .1 1 9 .9 1 8 .3 1 6 .1 1 3 .4 8 .8 3 .0 1 .7 -0 .4 -4 .9 -9 .1 -9 .3 -1 0 .5 -1 0 .8 -1 2 .2 -1 2 .8 -1 4 .7 -1 9 .2 -2 1 .6 -2 2 .6 -2 5 .4 -2 8 .1 -2 8 .6 -4 1 .7 -100 0 100 200 300 400 500 600 l it h u a n ia ir e la n d s lo v a k ia e st o n ia g e rm a n y s lo v e n ia l a tv ia b u lg a ri a n e th e rl a n d s u n it e d k in g d o m r o m a n ia s w e d e n a u st ri a p o la n d d e n m a rk b e lg iu m f in la n d h u n g a ry s p a in it a ly g re e c e f ra n c e c y p ru s c z e c h r e p u b li c p o rt u g a l l u x e m b o u rg c ro a ti a y = 0.0013x + 19.064 r² = 0.7591 0 1000 2000 3000 4000 5000 6000 0 1000000 2000000 3000000 4000000 t u rn o v e r (m il li o n s o f e u ro s) gdp (millions of euros) recent evolution of market research and public opinion polling business in the eu countries 111 and public opinion polling, it was found that the direct nature of the relationship between the two variables is also verified, the intensity of the relationship being stronger for the new member states (the correlation coefficient r calculated for the new eu member states has a value of 0.962, while for the eu-15 it was 0.841). (figure 8 and table 3) in this case, the determined relationships are significant for a significance level α of 0.001, as evidenced by the fisher test. (table 3) eu – 15 new eu member states figure 8. relationship between gross domestic product and turnover or gross premiums written in market research and public polling activity by categories of countries old and new eu member states in 2015 source: own computation from eurostat (2017) notă: for ireland, it was used turnover or gross premiums written for 2014. table 3. relationship between gross domestic product and turnover or gross premiums written in market research and public opinion polling business in eu countries in 2015 countries regressi on equation variation (sum of the squares) c o e ff ic ie n t o f d e te r m in a ti o n (r 2 ) c o r r e la ti o n c o e ff ic ie n t (r ) c a lc u la te d f -v a lu e s ig n if ic a n c e l e v e l t h e o r e ti c a l f v a lu e european union (eu – 28) y = 0.0013x + 19.064 total 37534591.4 75.9 0.871 81.9 0.001 13,74 factorial 28493243.8 residual 9041347.6 eu 15 y = 0.0013x 21.124 total 30733769.4 70.7 0.841 31.4 0.001 17,81 factorial 21736283.0 residual 8997486.5 new eu member states y = 0.0013x + 39.843 total 291088.2 92.5 0.962 135.5 0.001 19,69 factorial 269233.2 residual 21855.1 source: own computation from eurostat (2017) notă: for ireland, it was used turnover or gross premiums written for 2014. it is noted from the above table that the value of the regression coefficient has the same value at the level of the 3 equations determined (0.0013), which shows that both at the y = 0.0013x 21.124 r2 = 0.7072 0 1000 2000 3000 4000 5000 6000 0 5 0 0 0 0 0 1 0 0 0 0 0 0 1 5 0 0 0 0 0 2 0 0 0 0 0 0 2 5 0 0 0 0 0 3 0 0 0 0 0 0 3 5 0 0 0 0 0 t u rn o v e r (m il li o n s o f e u ro s) gdp (millions of euros) y = 0.0013x + 39.843 r2 = 0.9249 0 100 200 300 400 500 600 0 5 0 0 0 0 1 0 0 0 0 0 1 5 0 0 0 0 2 0 0 0 0 0 2 5 0 0 0 0 3 0 0 0 0 0 3 5 0 0 0 0 4 0 0 0 0 0 4 5 0 0 0 0 t u rn o v e r (m il li o n s o f e u ro s) gdp (millions of euros) țimiraș 112 eu-28 and at the eu-15 levels, respectively the new members, on average, there is an increase of 1 billion euro in gross domestic product, related to an increase of 1.3 million euro in the turnover or gross premiums written in market research and public opinion polling business. conclusions this paper highlights how the market for market research and public opinion polling across eu countries has evolved over the last years (2010-2015), as well as the link between the macroeconomic outcomes and the size of this market at the level of the analyzed countries. for the market assessment, the indicators used were: turnover or gross premiums written, number of enterprises and number of persons employed. the analysis was based on the latest available official data provided by eurostat. the market of organizations in market research activity and public opinion polling at the level of the eu registered an increase in the period 2010-2015 from the perspective of the turnover or gross premiums written indicator, the upward trend reaching in 2015 almost 19 billion euros; the old eu members hold over 89% of the total market. in the background of the increase in the turnover or gross premiums written, the number of enterprises and number of persons employed registered a slight involution, which shows an increase in efficiency in this field. market size of market research and public polling organizations business at the level of the analyzed countries is closely related to the macroeconomic results recorded, with a direct and strong link between gross domestic product and turnover or gross premiums written both at eu-28 level, as well as by categories of old and new member states. the determined link shows that, on average, at the level of eu countries, an increase of 1 billion euros of gross domestic product generates an increase of 1.3 million euros of the market research and public opinion polling activity. references boier, r, ţimiraş, l.c. (2006), cercetarea de marketing, iaşi, editura performantica; harja e., ţimiraş l.c. (2009), metode statistice utilizate în cercetarea de marketing, bacau, editura alma mater sincich, t. (1989), business statistics by example. third edition, dellen publishing company ţimiraş, l. (2013), the evolution of the marketing research market on the level of the european union countries, after 2000, studies and scientific researches economic edition, no. 18, pp. 362-366, available at http://sceco.ub.ro/ eurostat (2017), http://epp.eurostat.ec.europa.eu. statista inc. (2017), https://www.statista.com http://ideas.repec.org/s/bac/fsecub.html http://ideas.repec.org/s/bac/fsecub.html http://epp.eurostat.ec.europa.eu/ https://www.statista.com/ microsoft word apostoaie constantin marius_eng.doc depreciation test of fixed assets – necessity, indices of value loss, certainty and frequency of assessment evaluation marinela-daniela manea, valahia university targoviste, romania , valahia university targoviste, romania abstract with the promulgation of ias 36 "depreciation of assets" to ensure a consistent approach of reversible loss of value, removing the specific nationals practices and such the differences what appear as a result of the different treatments. in the chain of procedures for determining the depreciation of an asset/cash generating unit is required first the crossing phase of identification to an possible impaired assets, being necessary for the strict professional reasoning to each business. applying the test impairment is not random and not to all assets of an enterprise. in general, the standard requires for companies to make the impairment tests when there are signs that an asset may be impaired (but annually for intangible assets with an indefinite useful life and commercial fund). the opportunity given by ias 36 " depreciation of assets" to choose in determining of recoverable amount, between two values is not accidental. it is considered that the company can recover the value of its assets through use or market capitalization. however measurement of the two values is a complex process, very expensive for many businesses, own estimates based on management company with a strong subjective load, which is reflected on the certainty and reliability of obtained data. keywords professional judgment; amount of use; net fair value. jel code: m41, g31 depreciation of the romanian accounting sense before harmonization with international accounting standards romanian accounting -before harmonization with international accounting standards, deemed necessary to four times the valuation of property elements namely: the entry into property, the inventory, the closure and out of the assets. impairment of value was addressed through the accounting structures of the nature of provisions and payments. for measurement of the reversible impairment of value, according to romanian accounting standards, attention is stopped on the inventory evaluation. valuation of assets1, at inventory, emphasized, especially in practice, on the quantitative than qualitative side. during the inventory, evaluation of intangibles assets is made on the actual value or utility of each element, called 1 m. ristea, "guide for the understanding and application of international accounting standards ias 36", publishing house ceccar, bucharest, 2004 studies and scientific researches economic edition, no. 15, 2010 77 inventory value determined by the usefulness of the asset in business, by his physical condition and market price. for properties (tangible and intangible) held in inventory depreciation values to take account of depreciation deduction calculated for the purposes of its asset value was given by the net book value of depreciation resulting from the amortization plan unless the actual value was considered to be lower than net accounting value. in closing of the exercise the input value of property is compared with the utility value (present value) determined during the inventory. following this comparison, are resulting two situations: finding some valuable pluses between asset value and input value, which in application of the principle of prudence, there were no record in the accounts; the discovery of weaknesses of value between asset value and input value of property is recorded in the accounts as an exceptional depreciation when depreciation was irreversible or was a provision when impairment was reversible, caused by factors such as: a. the emergence of a moral wear that was not taken into account at depreciation; b. overstatement of fixed assets by applying inappropriate factors when assessing their c. their lack of utility for the enterprise, when the inventory (in storage, not used for activities at the time of inventory, etc...) d. other reasons which determine a current value lower than the value that they were included in the accounts. depreciation was regarded as the equivalent value of irreversible impairment of fixed assets because of the use, of natural factors, technical progress or other causes for impairment with reversible character and temporary to be treated by the provisioning. international standards for financial reporting is treating different depreciation issues. was induced term of depreciated value (deprived value) with another meaning than the frequently used in romanian practice. is prescribed as necessary to reflect an asset in the financial statements at an amount who don’t must exceed the recoverable amount obtained from the use or trading on an active market. the concept was developed precisely to provide a better and reliable reflection of the value of an asset on the balance sheet in the financial statements of an enterprise. and this because, in practice, in many european jurisdictions, although there were statutory obligations of comparing the book value of assets with market value of their requirements were not necessarily applied rigorously. furthermore, some jurisdictions, particularly those with legal tradition-british trade, imposed not reflect depreciation, unless it is made into a permanent and long term. more rigorous approach of ias 36 reflects the fact that authorities have become aware that this was a neglected area in financial reporting. thus, on balance, in accordance with ias 36 is comparing the accounting value of fixed assets to his fair value and present value of estimated cash flows to be generated through use the amount of use. if most of these values are less than the carrying amount, impairment is recognized. the purpose of the above mentioned rule is precisely to prescribe all procedures that apply to an undertaking to ensure that its assets are recorded at a value greater than their recoverable amount. to understand the establishment of the recoverable value from fixed assets we follow the diagram below: studies and scientific researches economic edition, no. 15, 2010 78 what is the situation in romania? by omfp no. 3.055/2009, the evaluation of assets is in line with norms. the valuation in the financial statements is made by respecting the precautionary principle taking into account all adjustments of value due to depreciation. on balance the romanian companies will evaluate the fixed assets by comparing the book value to that determined based on inventory, the less differences between inventory value and net book value is highlighted in the accounts is an additional depreciation if the impairment is irreversible, or is made an adjustment for depreciation or loss of value where impairment is reversible. there is such an alignment of romanian accounting regulations to the provisions of ifrs, recognition of assets at year following their recoverability principle, if we consider the value of inventory as a proponent of market value, and also following good utility for the enterprise. with the promulgation of ias 36 is ensure a consistent approach to reverse the loss of value, removing the specific practices such differences arising as a result of the different treatments. in the chain of procedures for determining the depreciation of an asset/cash generating unit is required first the crossing of identification phase possible impaired assets, is need a strict application of a professional reasoning to each business. applying the impairment test is not random and not all assets of an enterprise. in general, the standard requires that companies to impairment tests when there are signs that an asset may be impaired (but annually for intangible assets with indefinite useful life and commercial fund). standard requirement consider difficult and uncertain the capacity of intangible assets, especially those that are not yet available for use, for generate sufficient future economic benefits to ensure the recoverability of their accounting value, for this are impose annual impairment testing is required of them. for all other assets at each financial reporting date, the company must yes no further action the objective of the enterprise is to generate profit? maximum between current cost potential for use of the asset can be replaced? the asset is used mainly to generate cash inflows? net fair value value of service no no no no yes yes maximum between yes regarding the future economic benefits attached to an asset is expected: a) significant changes occur in the manner or the use of the asset, or b) economic performance of the asset to be lower than initial expectations, or c) the market value of the asset has declined significantly over initial projections, or d) asset is spent physically or morally. studies and scientific researches economic edition, no. 15, 2010 79 determine whether there are circumstances who indicate that depreciation could occur. note that this is not a requirement that the possible depreciation is calculated for all assets at each balance sheet date, which would require a very demanding task for many businesses. it is, rather, the existence of conditions that might suggest an increased risk of impairment to be assessed. thus, on balance it is necessary to identify those assets which, under the conditions considered, may be impaired. the existence conditions, the cues that impairment does not necessarily mean, however, the company should consider the recoverable amount of those assets. how the impairment test is complex process and quite expensive for some companies (difficulties related to the possibility of determining the market value of assets, and no projections of cash flows over the medium term reliable local economic conditions, also to determine the discount rate cash flow is necessary to make the assumptions and make some assumptions that are not always defensible) in measuring the recoverable amount will apply the principle of materiality. if in previous exercises the asset under review was established an recoverable value significantly higher than the net book value, and elapsed time indications that the asset has lost value does not consists of events that leads to reduce this difference, then it is not necessary an re-estimations recoverable amount. example 1: an international transport company is operating with a whole fleet of buses that carry different routes without any of the buses to be dedicated to a route. also, the company owns a truck used for transportation of goods, on request. the tir can be subject to an individual analysis existing the possibility of determine the cash flows generated by its use, and an active market to establish market value of tir's. the latest estimate of recoverable amount of tir's been achieved in 2008 and it exceeded twice book value. the balance of 2009 there were indications that the asset might be impaired, as indicated an impairment but not so severe as to exceed the difference between the estimated recoverable amount and carrying amount of tir 2008's, the company has not considered necessary the recoverable amount reestimations. also, if the asset review will still be used without being in the near future the company intends to dispose of (recoverable value based on value in use), even when the market recorded a change in interest rates which may reduce recoverable amount, the company will not re-estimated recoverable amount: if changes of the market interest rate do not affect the actualizations rate from which were determined using discounted future cash flows in estimating value in use; if there are opportunities to counteract the changes in the discount rate through increases in future cash flows due to, for example, improved market share. the identification of impaired assets provides a standard set of indicators of potential impairment and suggests that they represent a minimum list of factors to be taken into account. the first analysis will take into account signals impairment criteria grouped into: external criteria and internal criteria. criteria’s or external cues are, primarily the result of a technological break at the enterprise, the lower level of activity, reduce product prices degradation future work prospects of the company, changes in the discount rate. internal cues are generated by wear, performance degradation that the assets, adjustments in business activity (restructuring or closure), etc... it's all internal information leading to the idea that in future asset performance will be lower. of the two categories of sources an important and particular attention needs the criteria’s or external sources that are external to the enterprise cannot be influenced by it and management. the simple fact that one or more of the signals above suggests that there may be concerns about the possible impairment of an asset do not necessarily mean that he must undergo surgery for an impairment test. however, in the studies and scientific researches economic edition, no. 15, 2010 80 absence of plausible explanations as to why the signs of possible impairment should not be considered further, resulting that the presence of one or more of these inquiries would require monitoring. the company leaves the assessment signals a possible loss of value by observing the ias 36 considers mandatory annual investigation, all indications of such depreciation “at each reporting date, the entities will check if there are indications of asset impairment. if such signs are identified, the entity shall estimate the recoverable amount of the asset”. possibility afforded by ias 36 “impairment of assets” to choose in determining recoverable amount, the two values is not accidental. it is considered that the company can recover the value of its assets through use or market capitalization. however, the measurement of the two values is a complex, very expensive for many businesses, owns estimates based on management company with a strong subjective load, which is reflected on the certainty and reliability of data obtained. applying the test for impairment of fixed assets, at the end of the reporting period, there are signs of a possible loss of value involved in measuring recoverable amount. the standards, a company has two obvious ways to recover the value of its assets: by turning on an active market or use (as a result of extensive debate ias 36 basis for conclusions, which concluded that the common market assumptions and own modeling company does not provide a full reality, which is why it is chose between the two aggregate maximum consistent with the likely behavior management). in theory, and in most and in practice, a company that makes rational choices would sell an asset if the fair value less costs to sell of it would be more than the use value of the asset and continue to use the asset if the value use would exceed the amount of recovery by sale. thus, the economic value of an asset is measured in the most coherent way in relation to the higher of these two values as the company will retain or dispose of assets in accordance with what appears to be the best and most efficient use of it. the identification of an impairment loss for an asset and measure the recoverable amount should be based on an investment analysis of estimated future cash flows expected to arise from either actively or by using market capitalization as: where, according to information available, the net receivables of sale exceed cash flows from continued use, deciding the asset sale; if, while operating the exploitation treasury flows are lower than initial estimates but the immediate sale involves a low price or if the potential future costs by making the asset can be recovered, the firm will still choose to use the asset. business decision is based on investment results of the analysis above, without the need to establish both values. recoverable amount is the maximum of fair value less costs to sell and value in use, de-advancement net book value by either of the two is sufficient to consider the asset as not impaired. usually, is easier to determine the fair value less costs by sell than use value. in standard definition, fair value less costs by sell is the amount you can get from the sale of an asset in a transaction voluntarily conducted on objective between interested parties in informed choice, minus the cost of disposal. as measured by market, where supply meets the seller's request, estimating the fair value less costs of disposal are often performed with certainty for business. the objective of the company is to identify, on the market, the fair value of fixed assets from which to deduct the costs of removal from service. the savings established by the existence of the specialized markets for assets will not meet significant difficulties, the fair value is relatively easy to estimate for the enterprise. however, though ifrs frequently used notions so as fair value concepts, active market, etc.., the reality of the romanian economy shows that for most assets, no active markets where we can assess the aggregate. it is possible to determine the fair value less costs by sell even if the asset is not traded on an active market. studies and scientific researches economic edition, no. 15, 2010 81 in these circumstances the company will review the information available on possible transactions in the past, with similar assets, which are known the market selling prices, also if any offers made for similar assets and the prices are at levels approximately similar to can make an estimate of the net fair value. without intention to conclude, for many, the concept of fair value does not know only one reality: the market value. this is not, however, only one way to measure the fair value, and providing the most objective because it is based on information outside the company, which it cannot influence in any way. use of assessment techniques is an alternative method of valuation, in the absence of established market price. two approaches can meet, namely: the first is a method of analogy that is to call the market value of an similar asset, showing the distinctive identical or at least similar to those of the asset under review; the second approach is its exploitation of an asset using modeling techniques. the method for determining the value of a property through analogy or similarity is, theoretically valid but in practice this is difficult to realize, since the concept of similar characteristics is often difficult to establish and demonstrate. and yet, sometimes it is not possible to determine the fair value less costs of disposal “in the absence of a basis for credible estimating of amount you could get from selling assets in a transaction conducted between interested parties on objective and informed concerned”. where the asset is not considered a market value or cannot make reliable estimates of the amount you might get an undertaking from the sale thereof, shall require the measurement of value in use. if the measurement of fair value less costs of sell is, often, a certainty for business, it is established, usually, on market the value in use involves estimates and updates in most cases based on subjective values. moreover, its size is specific to each company; through modeling has a much higher degree of subjectivity and is also more difficult to be validated. the use value involves the updating of treasury flows attached to future use of the asset by using an appropriate discount rate. estimating of the future treasury flows involves a high degree of uncertainty is quite subjective and depends entirely on the management team that could be faced with lack of treasury flow projections over the medium term reliable local economic conditions. also, to determine the discount rate of treasury flow is necessary to make hypothesis and make some assumptions that are not always easy to sustain. perhaps that is why the company is required in shaping its forecasts on future treasury flows to estimates based on reasonable assumptions will avoid excessive growth rates of income, significant reductions in costs expected considering the recent experience is a guide correct for the near future. it also will insist on choosing the most appropriate discount rate, knowing the fact that the measure decisively influences its recoverable amount the asset under review. the standard requires that the measure recoverable amount to be made for each activity, the exception is the case when the asset does not generate treasury inflows largely independent of those generated by other assets or groups of assets. for such cases the recoverable amount is calculated on cashgenerating unit to which the asset belongs. bibliography 1. epstein b., abbas a, “ifrs 2008 interpretation and application of international accounting and financial reporting”, ed bmt publishing house, 2009 studies and scientific researches economic edition, no. 15, 2010 82 2. m. manea, “measurement and evaluation concerning the impairment of fixed assets”, university book publishing house, bucharest 2007 3. m. ristea, coordinator, “accounting for depreciation and asset impairment”, tribune publishing house, bucharest, 2009 4. *** ias 36 “impairment of assets”, revised in 2003 studies and scientific researches economic edition, no. 15, 2010 83 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the role of the performance dashboard in the management of modern enterprises simona elena dragomirescu “vasile alecsandri” university of bacău dragomirescu@ub.ro daniela cristina solomon “vasile alecsandri” university of bacău daniela.solomon@ub.ro abstract nowadays, the management of any modern enterprise requires a real-time information system which should allow the continuous and quick display of the data which is critical in order to control the company in the current economic context. the performance dashboard is such an information system. it is made up of quantity, quality or financial management indicators or, in other words, of greatly significant pieces of information put together, which have immediate meaning for the person reading it. we must take into consideration the fact that the data is extremely dense and it is in continuous movement, being used in forming plans, in supporting decisions and in achieving control. the quality of decision and the achievement of performance depend on the quality of the information supplied. that is the reason why, in order to be useful for the decision-making process, the information must be reliable, up-to-date, complete, pertinent and accessible for the decision makers. thus, an efficient performance dashboard is the one that allows the assessment and management of performance by means of the progress methods set in the strategy, and that helps the management face the changes and the challenges in the current economic climate. keywords dashboard; enterprise management; performance and pilotage indicators; control performance jel classification m41 it is not necessary to have a boeing 747 dashboard in order to run a company... it is enough to focus your attention on a handful of indicators... provided that they should be well chosen nathalie mourlot (tableaux de bord) 1. general information concerning the performance dashboards. use, functions, principles the performance dashboard developed on the level of the enterprise encloses global, aggregate information which describes the evolution of the enterprise strategic orientation. the evolution of activities specific to different fields of responsibility is described in the inventory dashboard. the performance dashboards drawn up for the lower levels of hierarchy will be consolidated and condensed into the dashboards for the upper levels of hierarchy. for the highest level of hierarchy, the dashboard will include a general view on the enterprise management, which will be a presentation of the achievements reported to the action plan, and will have as a main objective the control of management and the analysis of the economic and social indicators (tabără et al, 2009). the unity of the dashboards, considering the characteristics of modern management, can be suggestively presented as follows: 166 the role of the performance dashboard in the management of modern enterprises figure 1 dashboard “offer” considering the characteristics of the modern management source: albu, n., albu, c. (2003), instrumente de management ale performanţei, volume ii control de gestiune, economic publishing house, bucharest, p. 126 the performance dashboard seems to be a tool for controlling the action and the responsibilities. from this point of view, its main virtue is that it produces a piece of information almost instantaneously and makes it possible for the main people in charge to act in due time. thus, we can point out the main functions of the dashboard: characteristics of modern management dashboard “offer”  different time dimension due to celerity and a high degree of volatility  it shortens the reaction time, being followed on all levels of the company  knowledge of the enterprise and of the environment  internal and external diagnosis tool  strategic segmentation  information on each segment  defining development or progress  it helps draw up and monitor the strategies, the flexibility and the innovation capacity  diagnosis of the critical success factors  when choosing the indicators, one should start with the critical success factors  decentralization and self-control  the local management of information  performance management  indicators for measuring performance, oriented towards the company partners, towards measuring quality  global view on the company (global productivity, global quality)  global tool (considering as database partial tools: costs, budgets etc.)  coordination of the actors, exploiting creativity  provides dialogue, raises questions in order to find solutions  the need for „contingent”, adapted, supple, quality tools  flexible, adjustable, evolutional tool 167 dragomirescu, solomon figure 2 the functions of the dashboard source: fernandez, a. (2008) les nouveaux tableaux de bord des managers. le projet décisionnel en totalité, on the edit organisation, 4 th édition, http://www.nodesway.com/methode/methode_gimsi_ concevoir_le_tableau_de_bord.htm  informing the manager on the state of the department he/she is running;  warning on any unfavourable situations, on any deviation from normality;  assessing the results achieved in the endeavour to reach the objectives and, implicitly, assessing the quality of the decisions made and of the actions taken in order to make these decisions operational;  the decision-making function, meaning that pertinent information sent in due time to the managers placed on different levels in the company chain of command allow them to substantiate and make proper decisions. (caraiani & dumitrana (coord.) et al, 2005) in order to fulfil these functions, the management dashboard must cover the following principles: its architecture must coincide with the structure of the enterprise; if the action is drawn up according to the chain of command, the architecture of the information system will have to follow the management structure; in order to achieve the desired dashboard, threshold values will have to be set for each indicator, values which have to be considered by those in charge; the information that must be provided will have to be defined, and the rules using those indicators will have to be determined; for each level, the dashboard must also include some collateral information for a better fulfilment of the tasks assigned to the responsibility centres; the dashboard must have an open perspective on the competition, it must take into consideration the performance of the best competitor as reference in guiding the company’s actions; as it is a decision-making tool, the design and the content of the dashboard must be adapted to the personality of its user; a high-performance dashboard supplies in real time indicators, as well as a history of them, which should allow the anticipation of events and the activation of the ones in charge in due time; the periodicity of indicators must be adapted to the frequency of analysis and to the action capability of the ones in charge. this periodicity must allow for a timely reaction. 168 the role of the performance dashboard in the management of modern enterprises the indicators listed in the dashboard for the supervisor must coincide with the ones for the subordinates. 2. the dashboard building process the whole process of drawing up the dashboard of a company involves the following stages: table 1 the construction stages of the dashboard stages description of stages 1. drawing up the management flow chart and naming the ones in charge of devising and ensuring the logistics necessary for the dashboard to be functional the dashboard must follow the existing organizational structure, and not the other way round; the organizational structure must be clear and coherent; in order to draw up the management flow chart, one must set the responsibilities and the functional informal hierarchical chain; set the appropriate methods; assign the responsibilities according to the objectives set. 2. setting the objectives (the key points in the decision-making process) the objectives pertain to the enterprise itself as well as to the tasks of drawing up, filling out, sending and using the dashboard; they are expressed using quantitative and/or qualitative indicators for the enterprise as well as indicators specific to the dashboard; the objectives underline the purpose for which they were drafted and the enterprise must work as a whole as well as on the level of each one of its procedural and structural units; setting some key-points in the decision-making process aims at selecting the main tasks and objectives; starting from the strategic objective of the enterprise, the sub-objectives are set according to the type of centre (cost centre, profit centre etc.); 3. drafting a list of tasks, competences and responsibilities specific for each functional and operational department; the purpose is to allow the personnel to receive the information necessary for achieving their own objectives as well as the objectives of the other departments; 4. setting the indicators choosing the indicators has as a purpose to determine if the objectives are achieved; an important role is that of the indices (relative values of the reports between two quality or quantity indicators); it is recommended to keep a limited number of indicators, as a too great amount of information risks to become inefficient; the indicators must follow the key-points in the enterprise management, must stir the awareness of 169 dragomirescu, solomon stages description of stages the ones in charge and orient the action on short term; 5. collecting the information based on which the indicators are calculated the information based on which the indicators are determined can be collected from different sources; for example, from the cash/management accounts, from statistics and studies carried out on different sectors, from predictions, etc. for some of the indicators, there is available information and consequently they can be determined; a problem occurs when there is a lack of updated information or there is no immediate source that can be used – in this case, based on studying the existing data, we resort to estimations and extrapolations. 6. typing the dashboard and using the information in order to become an efficient tool for management control, the dashboard has to list the information in the way and at the time set in advance and it must be adapted to the characteristics and the information needs of the enterprise; in drawing up and implementing the dashboard, we usually use as a working methodology questionnaires and interviews, and the existing management tools are analyzed; drawing up the dashboard involves establishing beforehand the way in which the information should be presented, the periodicity of drafting the dashboard and of updating the information, the person in charge of drafting it; it is recommended to avoid abbreviations and to mention the units of measure for the indicators; the information supplied must be clear and easy to grasp for the reader; to this purpose, it is recommended to use tables and charts, to present them using different “appealing” colours; the dashboard, due to the information it includes, must allow the users to take immediate and efficient action. source: processing according to caraiani, c., dumitrana, m. (coord.) et al (2005), contabilitate de gestiune şi control de gestiune, infomega publishing house, bucharest, pp. 433-437 the purpose of the performance dashboard in reached by obeying certain principles during the construction stage: coherence – it means that the information offered by the performance dashboard should follow the company’s chain of command and the departments with identical functions placed on the same level in this chain of command should have the same performance indicators, the same definition of the indicators and the same source of information; pertinence – the indicators chosen (the critical ones) should reflect the key points in the performance of the centres, and the data on which these indicators are based should emphasize correctly the achievement of the command centre objectives; 170 the role of the performance dashboard in the management of modern enterprises frequency – it refers to the deadline for drafting the dashboard and to the speed in disseminating it, and it depends on the duration of the life cycle of the decisions and the actions taken in that centre; efficiency – it indicates the dashboard capability of leading to action, to analysing, of correcting and interpreting the deviations as well as taking corrective measures if necessary; standards – they are the objectives, the results of the previous actions and the hypotheses based on which the deviations are set and analysed. 3. types of performance dashboards used in enterprises in the specialized literature and in the economic practice there are many types of dashboards, all based on different classification criteria according to the desired information – limited, referring to a certain procedural or structural part, or broad, referring to all the aspects investigated. we can narrow the range of dashboards to three common types: strategic, tactical, operational. strategic dashboards list information with a high degree of processing, ensure a quick overview on the way the organization works and make it easy to draw certain conclusions, following all the functions of the economic entity in a balanced way (popa & ionescu, 2004). an example of strategic dashboard is presented in figure 3. figure 3 an example of business intelligence strategic dashboard containing actual vs. target analysis and recommended action source: bi dashboards, http://www.bidashboard.org/types/strategic.html the information supplied is used to monitor the progress of the company in achieving the preset objectives. the main performance objective of any enterprise is to ensure the economic, the social and the environmental task. in order to achieve this objective, certain other derived objectives must be achieved first: ensuring the sustainable economic performance of the company, by means of managing simultaneously the levels of uncertainty for the future; meeting the needs and the expectations of those interested by creating value for parties concerned; ensuring the sustainable development. the parties concerned with the achievement of these objectives are: the shareholders, the clients, the users, the enterprise itself, the partners, the employees, the collectivity, the result aimed at being to create value. 171 dragomirescu, solomon tactical dashboards give more details on the information listed in the strategic dashboards, in order to identify the trends in relation to the objectives and the initiatives of the company. there are many factors and values which could be measured by these dashboards, but all of them are reported to the preset objectives. an example of tactical dashboard is presented in figure 4. figure 4 an example of business intelligence tactical executive dashboard in a hotel network source: bi dashboards, http://www.bidashboard.org/types/tactical.html tactical dashboards are drafted for tactical purposes, for monitoring the actions taken within the departments, the projects, the geographical areas, etc. situated on an intermediary strategic level, the tactical dashboards have the role to facilitate the link between the strategic and the operational levels. operational dashboards. unlike the strategic and the tactical dashboards which are conceived for and addressed exclusively to the managers, the operational dashboards are used on operational level (departments) and are addressed to the employees within these departments, seldom to the managers. these dashboards must allow the data analysis, following the history of the data, and based on the information gathered those concerned could make decisions which should lead to the improvement of the present situation. an example of operational dashboard is presented in figure 5. no matter the level on which it is drafted, the information included in the dashboard should be: consistent, which means relevant, synthetic and accurate concerning the field in question; accurate, meaning that they should highlight the economic phenomena and send the information in real time; synthetic, with different degrees of aggregation according to the hierarchic level of the beneficiary; accessible, easy to grasp, clear, explicit; balanced, highlighting the economic phenomena according to their weight in that particular field; expressive, presented as suggestively as possible by means of tables, charts; adaptable, meaning that they should be easily adjusted according to the modifications occurring in the company’s activity; economical, meaning that they should reflect the effects achieved compared to the efforts made. 172 the role of the performance dashboard in the management of modern enterprises figure 5 an example of an operational dashboard for a car manufacturer source: bi dashboards, http://www.bidashboard.org/types/operational.html the tool which is most frequently used in drafting dashboards is microsoft excel, although there are over 50 software products available. excel has the advantage of being a familiar tool, easy to use for drafting, with quick results in a short period of time. 4. performance control by means of the dashboard the control by means of the performance dashboard implies the definition of the performance and pilotage indicators. by means of performance indicators we can measure the level of performance achieved, while the pilotage indicators set the level to which the action plan has advanced. the place of the dashboard in the control process is presented in figure 6. there is a close connection between the two categories of indicators. from this point of view, the dashboard becomes a working tool. four situations may occur connected to these indicators (see figure 7). figure 6 the place of the dashboard in the control process source: caraiani, c., dumitrana, m. (coord.) et al (2005), contabilitate de gestiune şi control de gestiune, infomega publishing house, bucharest, p. 438 forecast objective reaction dashboard measures indicators 173 dragomirescu, solomon figure 7 the connection between the pilotage and the performance indicators source: by author the indicators chosen must be accurate and objective, must vary just as the phenomenon subjected to the measurement, must have identical significance in time and space, they have to be quickly calculated and able to be synthesized when passed to a higher level in the chain of command (albu & albu, 2003). according to their role, the indicators can be: warning indicators – they signal an abnormal state; balance indicators – they highlight a normal state; anticipation indicators – they predict and anticipate possible operational trends, changes, decisions. in order to ensure coherence and visibility to the system of indicators in the dashboard, they can be: financial indicators; activity indicators; cost measuring indicators; profitability indicators; productivity indicators; specific indicators. the indicators must show the results of the actions: formal results– they imply comparing the achievements with the predicted data; derived results – they are the unpredicted consequences of he actions involved; implicit results – they lead to the modification of the competition game, referring to the strategic information. the dashboards can be drafted and developed in order to meet a large range of requirements, starting from monitoring the strategic level of the enterprise, and extending to monitoring and controlling the achievement of the operational objectives on the level of each department. in other words, in conceiving the dashboard we must take into consideration the stages of the management process: formulating the strategy (strategic objectives), planning the means for applying the strategy suggested, assigning the resources, drafting the budgets, the action, the reports, the monitoring, implemented implemented unachieved unachieved achieved achieved unachieved the action plan was achieved, but the performance was not reached (possible cause: underestimating the effort necessary for reaching the action plan was not achieved, but the performance was reached (possible cause: the objective set was not ambitious enough) the action plan was not achieved, and the performance was not reached (this situation shows that the objectives were not reached due to the fact that not enough effort was made) unachieved the action plan was achieved and the performance reached 174 the role of the performance dashboard in the management of modern enterprises the control and the result analysis. most types of dashboards existing on the market take into consideration the stages of the management process until the monitoring stage inclusively. however, the importance of the analysis stage has been reckoned nowadays, and consequently it started to be included in the enterprise dashboard (see figure 8). figure 8 dashboards and performance management source: http://www.dashboardinsight.com/articles/digital-dashboards/fundamentals/dashboards-role-in-abusiness-intelligence-solution.aspx the studies performed (kawamoto & mathers, 2007), which aimed at highlighting the real requirements of the users in the economic field concerning the building/design/offer of information included in the dashboard identified a series of key success factors: a dashboard must be easy to draft with minimum effort, must have a logical structure and offer quick results; defining certain measures using business terms relevant for the parties concerned, which should supply a mixture of operational, financial and company specific data; the dashboard should be a tool meant to facilitate the management process; the dashboard should allow revising and changing the data as often as necessary, according to the economical changes and to the new business conditions (requirement which proved to be the most difficult to meet). from the data presented above, it follows that the performance dashboard is a set of informational elements which should lay the foundation for the decisions made by the company managers, its role being to measure the distance covered, as well as to put into practice the action programmes while taking corrective measures in order to achieve the desired objectives (muntean, 2006). thus, the purpose of the dashboard as a management tool lies in reaching the preset objectives. the dashboard, due to the information it supplies, to the way it is drafted and built as well as to its design, must allow the assessment and the management of performance using the ways of progress set in the strategy, must be a tool for the performance management that should keep up with the changes and the challenges in the current economic context. 175 dragomirescu, solomon references albu, n., albu, c. (2003), instrumente de management al performanţei, vol. ii control de gestiune, economic publishing house, bucharest. caraiani, c., dumitrana, m. (coord.) et. al. (2005), contabilitate de gestiune şi control de gestiune, infomega publishing house, bucharest. fernandez, a. (2008), les nouveaux tableaux de bord des managers. le projet décisionnel en totalité, on the edit organisation, 4 th édition, available on http://www.nodesway.com/methode/methode_gimsi_concevoir_le_tableau_d e_bord.htm. dragomirescu, s. e. (2013), control de gestiune. curs universitar, alma mater, publishing house, bacău. dumitru, m., calu, d. a. (2008), contabilitatea de gestiune şi calculaţia costurilor, contaplus publishing house, ploieşti. kawamoto, t., mathers, b. (2007), key success factors for a performance dashboard, available on http://www.dashboardinsight.com/articles/digitaldashboards/fundamentals/key-success-factors-for-a-performancedashboard.aspx. muntean, m. (2006), analiza echilibrului economico-financiar al întreprinderilor comerciale, edusoft publishing house, bacău. popa, v., ionescu, a., (2004) generarea şi folosirea unor modele de performanţă organizaţională: tabloul de bord strategic global (tbsg) şi tabloul de bord echilibrat (tbe), available on http://www.ecr-uvt.ro/informatii_noutati/pdf/ sesiune_de_comunicari_j.m. juran'/tbsg.pdf. robu, d. m. (1998), controlul de gestiune pe baza de bilanţ, moldova publishing house, iaşi. solomon, d. c., tataru, s. e. (2007), consideraţii privind valorificarea informaţiei contabile în aprecierea performanţei întreprinderii, volume contabilitatea în contemporaneitatea românească, editura edusoft, bacău, pp. 229-238. tabără, n., tataru, s. e. et. al. (2009), control de gestiune. delimitări conceptuale, metode, aplicaţii, tipomoldova publishing house, iaşi. tataru, s. e., solomon, d. c. (2007), tabloul de bord – sistem de control al performanţei întreprinderii, volume contabilitatea în contemporaneitatea românească, edusoft publishing house, bacău. tataru, s. e., solomon, d. c. (2008), performance measurement – an attribute of management control, simpozionul ştiinţific internaţional “economie europeană: prezent şi perspective dimensiunea economico-juridică a integrării româniei în structurile europene şi euro-atlantice”, viii-th edition, suceava, volume 4, pp. 143-146. 176 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 14 regional competitiveness, conceptual elements∗ florina popa romanian academy institute of national economy florinapopa2007@gmail.com abstract in a general sense, competitiveness is conveyed as the ability of a nation to lay the foundations and ensure an economic, social and political environment capable of sustaining the creation of added value, enabling the positioning of a country within global economy, from the perspective of comparing the performances obtained and the growth potential over time. the paper highlights the importance of increasing competitiveness of regional economy and the perspectives for their development. there are exhibited numerous aspects of the competitiveness concept expressed by definitions, formulated by experts that outline features of the phenomenon, as well as the interaction between knowledge and competitiveness. finally, there are also shown some methods for measuring regional competitiveness. keywords regional competitiveness; ability; competition; innovation; knowledge; measuring jel classification f63; r11 1. introduction a successful economic development implies an ongoing upwards process, where a nation’s business environment is evolving in order to support and encourage complex and productive means of competition. the dependence of company competitive advantages on local conjunctures, in the context of a global competition, has led to an increased interest in studying and assessing the concept of territorial competitiveness. in a general sense, competitiveness is conveyed as a complex phenomenon, regarding the ability of a nation to lay the foundations and ensure an economic, social and political environment capable of sustaining the creation of added value. this process enables the positioning of a country within global economy, from the perspective of comparing the performances obtained and the growth potential over time. the increase of competitiveness of regional economies is an essential step in achieving a sustainable development, the existing competitiveness discrepancies representing, according to the opinion of the european union, one of the main reason for regional disparities. ∗this study is a part of the scientific research paper, for the year 2015, „creşterea competitivităţii economice şi specializarea inteligentă la nivel regional în românia”, achieved by a team of researchers of the institute of national economy romanian academy (coordinator phd. daniela antonescu). regional competitiveness, conceptual elements 15 2. conceptual elements of regional competitiveness initially deemed by porter as the ability of a nation to innovate in order to achieve an advantageous position compared to other nations (porter, 1990), the concept of competitiveness was subsequently extended at a regional level, by perceiving the role of microeconomic determinants of prosperity and well-being as, for example, understanding the conditions that determine the competitiveness of a companyits ability to innovate. (porter, 2000) the possibility of innovation diffusion is encouraged by the fact that it occurs and is developed within networks, interposing in the cooperation activities of various entities, and also taking into account the regional abilities. the regional innovation abilities depend on a series of elements, represented schematically, in the figure below: figure 1 determinants of innovation capacity source: adaptation from mempel-śnieżyk, a. (2013), „smart specialisation and clusters in economic growth the innovation may thus be influenced by the performances of r & d activities, the labor skills, the efficiency of education and training institutions, good governance. the management of european potential takes into account the basic contribution of regions in the innovation processes, as the main partners of institutional relations, in the case of universities, r & d institutions, including smes, with an essential role in the europe 2020 strategy perspective. in regional terms, the competitiveness implies the possibility thereof: • to provide conditions, and markets respectively, which allow companies to compete; (beg 1999, huggins, 2003); • to attract and maintain the active status of companies with stable and continuously developing market shares; • to maintain the living standards and foster its evolution (storper, 1997). regions play an important role in organizing and managing economic growth, regional competitiveness is associated with competition in order to win market shares r&i and it infrastr ucture performan ce of the workforce busin ess enviro nment efficient education and training institutio ns technol ogy transfer good gover nanc e finding new resources of creativ potential financing determinants of innovation capacity popa 16 (kitson, martin, tyler, 2004). at the same time, one also notes distinctions between the two situations – competitiveness and competition. at a national or regional level, competitiveness refers to the existence of conditions which enable companies to compete on the local, national markets, while the regions compete in order to provide the best operation spaces, in order to obtain a high rate of productivity, with some refinements (malecki, 2004): •”low road” competition is characterized by low salaries, hard work, reduced taxes, the consequence being a decrease in the ability of a region to perform towards a high skill and good salary economy; •”high road” competition promotes entrepreneurship encouragement policies and economic development based on knowledge, featuring positive results, to the benefit of institutional economic and social activities, capable of leading to well-being. the competition among regions is different from the direct competition occurring between companies. as turok (2004) shows, for the latter, the competition holds both the role of selection mechanism (a company’s strength on the market depends on the production quality and effectiveness), as well as of stimulation (technological increase – competition endurance condition). with regards to the two processes – competitiveness and competition, the specialists kitson, martin, tyler (2004) deem competitiveness as “a complex concept which increasingly focuses on the long term indicators and prosperity dynamics, of the region or city, rather than on the more restrictive concept of competition over market shares and resources”, while “competitive regions and cities are places where both companies and people want to settle and invest.” the competitiveness expresses the ability to adapt to an environment by gaining the upper hand in the competition among entities, while a competitive region also means the territory where the relation between production factors, the changing conditions are used to raise the standard of living for citizens, to attract investors and to encourage area development. within a micro-economic approach, the competitiveness expresses ”the ability of a company to compete, develop and be profitable (sepic, 2005.” usually, however, the process is deemed as a macro-concept, the regional competitiveness being associated with national competitiveness (sepic, 2005), a complex notion which implies numerous aspects expressed by definitions, formulated by experts, as well as by documents issued by european institutions: •”the ability of companies, industries, regions, nations and supranational regions to generate, in terms of international competitiveness, revenue and relatively high employment levels (lengyel, 2002);” •”the ability to generate a capital yield, to increase employment opportunities and to ensure good salaries (krugman, p. 2003);” •”assesses the manner in which nations and enterprises use their powers in pursuit of profit and prosperity (garelli, 2006);” • “the ability of the regional economy to optimize its indigenous wealth in order to compete and prosper on the national and global markets and to adapt to the changes of these markets (martin, 2003).” • ”the ability to produce goods and services complying with the requirements of the international market and, concurrently, maintaining high and sustainable income levels, and more generally, the ability (of regions) to generate high levels of revenue and employment when exposed to external competition. in other words, in order for a region to be competitive, it is important to ensure both job quality as well as quantity. the definition implies the notion according to which, despite the existence of highly regional competitiveness, conceptual elements 17 competitive and uncompetitive companies, the exhibition of some common traits within each region, affects the competitiveness of all firms located there.” • ”a field of economic theory which assesses the facts and policies accounting for a nation’s ability to create and maintain a favorable environment for generating value for enterprises and for increasing the prosperity of citizens (porter, schwab, 2008).” • ”expresses a sustainable increase in the standard of living of a nation or region and, to the extent possible, a decrease in the level of involuntary unemployment. in the industrial sectors, the maintenance and improvement of the global market position represents the main competitiveness criterion.” these definitions outline, as the basic feature of competitiveness, the fact that it represents the ability of nations/regions to mobilize and use the powers at their disposal, at a national/regional level, mainly aimed at: creating and maintaining an environment conducive to the competitiveness of companies in order to achieve added value and profit and to improve the position thereof on the internal and global market; ensuring a dynamics of economic growth at a national/regional level, as well as sustainable nature thereof; producing goods and services compliant with the needs of the internal and international market, increasing market shares in specific areas; the ability to generate high levels of employment and revenue and, consequently, the decrease in unemployment, while the quality and quantity of jobs represents a significant milestone for a region’s competitiveness; ensuring prosperity, achieving a high standard of living. according to porter (1990), the main source of competitiveness is productivity, respectively, the effectiveness of converting inputs into goods and services, the key features being represented by the increase in creativity and knowledge. 2.1. the knowledge – competitiveness connection there is a direct connection between regional entrepreneurship, knowledge and innovation and growth potential, the fundamental element of the competitiveness concept. the endogenous growth theory emphasizes the role of knowledge and innovation, a determining factor of productivity and economic growth in relation to the accumulation of physical capital. both the competitiveness and the endogenous growth underline the essential role played by knowledge and innovation (technical progress) in economic development, as sources (together with the other factors of production and distribution) of economic growth and performance. given the relation with competitiveness and the theories of endogenous growth, knowledge is deemed as innovative and consists of the information and skill capital regarding the creation of new ideas and the connection thereof to commercial values, which would lead to the development of new products. schematically, this interaction is expressed as follows (figure 1): popa 18 figure 2 the knowledge – competitiveness connection source: adaptation from robert huggins, hiro izushi, piers thompson (2013), “regional competitiveness: theories and methodologies for empirical analysis the ability of organizations within a region and their efforts to access knowledge, to use it for economic activities, represents the determining factor of regional growth. given the direct relation with economic performance, regional competitiveness depends on the assets of the business environment in the region (malecki, 2004, 2007), namely, the human capital, innovation potential, quality of local infrastructure, as well as other resources in the area, thus outlining the region’s competitive potential. their impact on company competitiveness is felt by the prosperity of regions, the ability of the same to attract innovative population, to supply high quality cultural elements, an expression of competitive advantage (kitson, m., martin, r., & tyler, p. , 2004). at company level, the competitive advantage implies a better adjustment to the environment compared to the competition, while in regional terms; it implies additional special factors and conditions held by the region compared to competing regions. 3. some methods for measuring regional competitiveness in short, the competitiveness of regions is expressed by the ability thereof to generate an increase in revenue, the level of occupancy (ensuring both the number and the quality of jobs), while taking into account the terms of competition on the external market. in order to assess the national or regional economic performance, economy theorists use several variants for measuring competitiveness, as exhibited by robert huggins, hiro izushi, piers thompson (2013) in the work: “regional competitiveness: theories and methodologies for empirical analysis”: −the establishment of an innovation index for the innovative character of a nation (furman, porter & stern, 2002, porter & stern, 1999); • advantage: benchmarking operation; knowledge receptors components innovation creation and distribution of new ideas transformati on of ideas into values development of new products and processes competitiv eness regional competitiveness, conceptual elements 19 • disadvantage: the subjectivity of the relation between the chosen variable and the innovative character measure of the elements on which economy is based. −defining the knowledge dimension by establishing an index for each of the economic phenomena assessed (castellacii & archiebugi, 2008). • advantage: creates the perspective of a knowledge base assessment of the economy and the avoidance of representing such with a single variable; • disadvantage: does not ensure a benchmark index. − the study of several economy aspects and the issuance of a single composite benchmark index. the studies differ depending on the method for sub-index aggregation (which derives from the various aspects analyzed) into a composite index; − world competitiveness yearbook, imd (2012) studies competitiveness based on the quantitative and qualitative data, classified as sub-factors; each sub-factor being granted the same weight in the composite index: quantitative criterion – two thirds, qualitative criterion, one third; the method implies subjective elements to establish the weights used in aggregation. − competitiveness measurement from two perspectives (aiginger, 2006): • result competitiveness – measured as function of well-being: competitiveness = w (y, s,e), where: y – per capita income; s – social and distribution indicators; e ecological indicators. • process competitiveness– a form of the production function competitiveness = f (k, l, tfp, c, i, t),where: kphysical capital; l – labour tfp – total factor productivity – technical progress c – capacities; i – institutional effects; t trust the emergence of the new theory of growth the theory of economic endogenous growth which takes into consideration other growth hypotheses compared to the ones of the neoclassical model (technological progress – endogenous factor, increasing capital returns, imperfect competition of markets), led to a change in the perspective on the determining factors of competitiveness. the following are considered among the key influence factors: research – development expenses, improvement of technologies and the increase of innovation capacity, education level, human capital investments, all such factors having significant implications for regional competitiveness. (ronald l. martin, 2003.) 4. conclusions regional competitiveness is directly related to the growth theories, the basic element being the presence of companies, entrepreneurs, capable of generating knowledge and innovation, evolution markets, new jobs, to the extent to which the conditions of competition occurrence on chosen markets are ensured. the knowledge of mechanisms and factors determining a growth o competitiveness may constitute a source of performance enhancement, of finding solutions adjusted to the global economic context, in order to develop strategies leading to a sustainable economic growth for states and regions. popa 20 the endogenous approaches regarding regional development, determined by factors such as human capital, education, innovation, are consistent with the opinion according to which regional competitiveness is manifested when a sustainable growth and an improvement of the living standards are achieved. in order to increase economic performances, the eu’s concerns are directed towards creating an environment capable of ensuring increased competitiveness, which implies essential elements, such as: entrepreneurship, human capital, access to financing sources, innovation, information and telecommunication technology. references aiginger, k. (2006), „competitiveness: from a dangerous obsession to a welfare creating ability with positive externalities”. journal of industry, competition and trade, 6(2), 161-177. http://link.springer.com/article/10.1007%2fs10842006-9475-6#page-2 begg, i. (1999). “cities and competitiveness“. urban studies, vol. 36, no.5-6, pag. .795-809. http://usj.sagepub.com/content/36/5-6/795.refs; castellacci, f.; archibugid. (2008), „the technology clubs: the distribution of knowledge across nations”. research policy, vol. 37, issue 10, pag. 16591673http://www.sciencedirect.com/science/article/pii/s004873330800187x; constantin, d.-l. (2006), ”cuantificarea competitivităţii teritoriale. abordări exploratorii în spaţiul internaţional”. analiză şi prospectivă economică no. 3(1)/2006, pag. 72-80, http://www.coeziune.ase.ro/; dimian, gina, c.; danciu, a. (2011), ”competitivitatea naţională şi regională în condiţii de criză. exemple de succes”, economie teoretică şi aplicată volumul xviii (2011), no. 11(564), pp. 56-66, http://store.ectap.ro/articole/663_ro.pdf edmonds, t;, jarvis, t.; mcginness, s. (2000), ”regional competitiveness & the role of the knowledge economy”. house of commons library, research paper 00/73 27 july http://researchbriefings.files.parliament.uk/documents/rp00-73/rp00-73.pdf; furman, jeffrey, l.,; porter, michael, e.; stern, s. (2002), „the determinants of national innovative capacity”. research policy, vol.31, issue 6, 899-933, http://www.sciencedirect.com/science/article/pii/s0048733301001524; garelli, s., „competitiveness of nations: the fundamentals”, http://www.imd.org/uupload/www01/documents/wcc/content/fundamentals.pd f huggins, r. 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(2003), „growth on the periphery: second winds for industrial regions?” the allander series. glasgow, uk: fraser allander institute, http://econpapers.repec.org/article/tafregstd/ regional competitiveness, conceptual elements 21 http://www.strath.ac.uk/media/departments/economics/fairse/media_140850_e n.pdf krugman, p. (1994), ”competitiveness: a dangerous obsession”. foreign affairs, 73(2), pages 28-44. published by the council on foreign relations, https://www.foreignaffairs.com/articles/1994-03-01/competitivenessdangerous-obsession lengyel, i. (2002), „the competitiveness of hungarian regions, in innovation, entrepreneurship”, regions and economic development: international experiences and hungarian challenges (ed. attila varga and lászló szerb), university of pécs, pp. 235-246; malecki, edward, j. (2004), „jockeying for position: what it means and why it matters to regional development policy when places compete”. regional studies, 38(9), pages 1101-1120. http://www.researchgate.net/publication/, www.dx.doi.org/10.1080/; malecki, edward, j. (2007), „cities and regions competing in the global economy: knowledge and local development policies”. epc government and policy, volume 25, no.5, pages 638 – 654, http://www.envplan.com/; martin, ronald, l. (2003), „a study on the factors of regional competitiveness”a draft final report for the european commission directorate-general regional policy, cambridge econometrics, http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/3cr/competiti veness.pdf; mempel-śnieżyk, a. (2013), „smart specialisation and clusters in economic growth”, research papers of wrocław university of economics, issue 324, 2013,economy and space pages 92-103, wrocław, poland, www.depot.ceon.pl; porter, michael, e., (1990), “the competitive advantage of nations”, harvard business review, http://hbr.org/1990/03/the-competitive-advantage-ofnations/ar/1; http://dl1.cuni.cz/pluginfile.php/50387/mod_resource/content/0/portercompetitive-advantage.pdf; porter, michael, e.; stern, s. (1999), the new challenge to america’s prosperity: findings from the innovation index, washington, dc: council on competitiveness, http://www.hbs.edu/faculty porter, michael., e. (2000), ”location, competition, and economic development: local clusters in a global economy”, economic development quarterly, vol.14, no.1, pages 15-34, sage journals, http://edq.sagepub.com/; porter, michael., e. 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(1997), the regional world. territorial development in a global economy, new york, ny: the guilford press, https://books.google.ro; turok, i., (2004) „cities, regions and competitiveness”, regional studies, vol. 38, issue 9, pp. 1069-1083, http://www.tandfonline.com/doi/abs; vincze,m., regional competitiveness in romania, www.m.granturi.ro/src/ zwiech, p., determinants of regional competitiveness, pp. 29-44, http://mikroekonomia.net/system/publication_files/; commission of the european communities (1999), the sixth periodic report on the regions, european union www.ec.europa.eu/regional_policy/sources/slides/deux_en.ppt; commission of the european communities (2001), european competitiveness report 2001, commission staff working paper, brussels, http://aei.pitt.edu/45430/1/sec_(2001)_1705.pdf; european commission (2007), european competitiveness report 2007, commission staff working document. sec (2007) 1444 final, 31 october 2007, http://aei.pitt.edu/45438/1/competitiveness_2007.pdf; european union(2011), regional policy for smart growth in europe 2020, http://ec.europa.eu/regional_policy/information/pdf/brochures/rfec/2011_smart _growth_en.pdf; world competitiveness yearbook, imd (2012), http://www.imd.org/wcc/news-wcyranking/. (2 rânduri libere, 11p) a regional perspective on the spatial concentration in romania’s international trade in 2011 stângaciu oana ancuţa, phd, “vasile alecsandri” university of bacău, romania abstract in this study, i aimed at analyzing the territorial structure of the international trade in romania in 2011 on the level of each development region. starting from the values of the export and import trade flows pertaining to each region of romania and using statistical methods of analysis, we processed the existing data in order to determine the distribution of foreign trade and to emphasize the regional poles of competitiveness from this point of view. since other indexes, such as the trade balance or the import/export coverage ratio, are also marks of competitiveness and of the increase or decrease in the performance of a certain economy, we also calculated these indexes for each region of the country. in order to statistically substantiate the existence of a certain degree of spatial concentration of the romanian international trade in different regions of the country, we resorted to the boxplot graphical representation and to the gini square and the gini index respectively. key words fob export, cif import, trade balance, the import/export coverage ratio, spatial concentration, boxplot, the gini index the jel classification c10, f10, f49, o11 introduction when romania joined the european union, the statistics referring to the international trade in goods were established by adding the data from the intrastat (trade within the eu) and the extrastat (trade outside the eu) statistic systems. the intrastat system was created and developed within the european union, being operated in romania by the national institute of statistics, in order to collect data directly from the business operators in the member states which exchange goods with other member states of the european union, while the extrastat system is operated by the national customs authority, since it is the institution that collected and processed the customs declarations, and the level of the imports and exports between romania and other countries outside the european union was established based on these declarations.1 the statistics for romania’s foreign trade are made up according to the methodology used on international level and according to this methodology the data collected for 2011 is provisional data.                                                              1  the romanian international trade yearbook, the national institute of statistics, bucharest, p. 8   romania’s fob exports romania’s fob exports in 2011 were of 45,040,813 thousand euro, the top 3 regions, with exports of over 7 billiard, are: bucharest ilfov with 8,931,805 thousand euro, which is 19.9% of the total exports of country, south muntenia with 7,617,899 thousand euro (17.0% of the total exports of the country) and the north-west region with 7,025,639 thousand euro (15.7% of the total exports of country). figure 1. fob exports for each development region in 2011 source: processing of the data offered by djs bacau at the middle of the classification are listed 3 other regions which exported goods amounting between 4 and 7 billion euro: the west region with 6,559,602 thousand euro representing 14.6% of the total exports of the country, the central region with 5,775,127 thousand euro (12.9% of the total exports of the country) and the south-east with 4,739,103 thousand euro (10.6% of the total exports of the country), while on the last 2 places, far behind the other regions, with exports lower than 2.5 billion euro, are the following regions: south-west oltenia with 2,251,038 thousand euro (5.0% of the total exports of the country) and northeast with 1,968,564 thousand euro (4.44% of the total exports of the country).   figure 2. the structure of exports for each development region in 2011 (%) source: processing of the data offered by djs bacau romania’s cif imports romania’s cif imports in 2011 reached the amount of 54,823,559 thousand euro. the region bucharest-ilfov is placed once again on top of the regions with the largest amount of imports: 20,409,827 thousand euro, which represents 37.3% of the total imports in romania, being followed by 2 other regions which import goods amounting to about 6.5 billion euro: the north-west with 6,883,851 thousand euro has 12.6% of the total amount of imports and south muntenia with 6,352,269 thousand euro, which is 11.6% of the total amount of imports. figure 3. cif imports for each development region in 2011  source: processing of the data offered by djs bacau 3 other regions, with a value of imports amounting to about 5.5 billion euro, each recording over 10.0% of the total imports in the country, are listed at the middle in the hierarchy of the regions: the west region with 5,930,387 thousand euro which represents 10.8% of the total imports in the country, the south-east with 5,615,786 thousand euro (10.3% of the total imports in the country) and the central region with 5,561,318 thousand euro (10.2% of the total imports in the country). with percentages of under 4.0% of the total imports are the north-east region with 2,134,479 thousand euro (3.9% of the total imports in the country) and south-west oltenia with 1,829,736 thousand euro (3.3% of the total imports in the country), the two of them being situated on the last places in the classification. figure 4. structure of the imports in each development region in 2011(%) source: processing of the data offered by djs bacau the trade balance and the import/export coverage ratio all the export and import relationships of romania with the rest of the world are better underlined in the trade balance, by calculating the balance of the foreign trade operations. calculating this balance of the international trade operations (fob-cif) involved determining the difference between the exports materialized in the fob prices and the imports materialized in cif. figure 5. the balance of the fob-cif international trade operations (in thousands of euro) and the fob-cif coverage ratio (%) for each development region in 2011   source: processing of the data offered by djs bacau in 2011, in romania there was a negative balance of the foreign trade operations amounting to 9,782,786 thousand euro. the highest negative balance was recorded in the region bucharest-ilfov (-11,478,022 thousand euro) followed, at great distance, by the south-east region (-876,683 thousand euro) and the north-east region (-165,915 thousand euro). it can be noticed that in the other 5 regions the value of exports was higher than the value of the imports, the greatest surplus of the trade balance being recorded in south muntenia (+1,265,630 thousand euro), followed by the west region (+629,215 thousand euro), southwest oltenia (+421,302 thousand euro), the central region (+213,809 thousand euro) and the north-west (+141,788 thousand euro). alongside the trade balance, the import/export coverage ratio is another index which shows the efficiency of foreign trade. on the level of the whole country, the degree of import/export coverage ratio in 2011 was of 82,2%, a lower coverage ratio being recorded only in the bucharest-ilfov region. consequently, the lowest coverage ratio, situated beyond the national average, was recorded in bucharest-ilfov (43.8%), while above the national average and below 100.0% were the south-east (84.4%) and the north-east (92.2%) regions. south-west oltenia is on the first place in the hierarchy of the regions with the highest coverage ratio (123.0%), the second place belonging to south muntenia (119.9%), and the third position to the west region (110.6%); on the next two places are the central (103.8%) and the northwest (102.1%) regions. after analyzing figures 2 and 4, we can notice that 52.6% of the total amount of exports, and 61.5% of the total amount of imports, were recorded in only 3 regions; thus, we may ask if there is a spatial concentration of the foreign trade into certain regions of the country. the degree of spatial concentration of the international trade in romania in order to express in figures this phenomenon of international trade spatial concentration in of omania. the degree of concentration by determining a certain coefficient – the gini index. he clustering curves for the export and the import respectively are not close to the diagonal romania, i analyzed the export and the import spatial concentration on different regions r a first analysis implied building the lorentz-gini curve for concentration and, based on it, calculating t of the square, which proves that there is a regional concentration of these trade fluxes, fact also proved by the values calculated for the concentration indexes. the gini index for export concentration, calculating using the trapeze method, is 22.4%, lower than the one calculated for the imports, which is 30.1%, which means that there is an average concentration of the regions into certain groups of values, for the exports as well as for the imports.   figure 6. the concentration curve for the exports and the imports in 2011 source: processing of the data offered by djs bacau anoth lot for each trade flow, export n on the development regions (for this type of analysis, i used the statistical analysis programme spss). er analysis, complementary to the one presented above, involves building a boxp s and imports, according to the distributio figure 7. boxplot for the regional distribution of the exports and imports in 2011 source: processing of the data offered by djs bacau it can be noticed that for the exports as well as for the imports, the spatial concentration of regions tend towards the high values of the exports or of the imports respectively, and that there are no differences between the trade flows concerning the values of the exports and of the imports for the 1, 2 and 3 quartiles; there is a significant difference only between the maximum values of the series (excluding the outliners). at the same time, this graphical representation emphasizes the fact that bucharest-ilfov is an outlier for the series of data pertaining to the imports; in other words, this region differs from the other regions when it comes to the value of the imports. conclusions romania’s foreign trade in 2011 revolves mainly around the bucharest-ilfov region, and on regional level there is a spatial concentration of trade fluxes. statistică economică, ed. tribuna economică, bucureşti colecţia anuarul de comerţ exterior al româniei, institutul naţional de statistică, bucureşti letinul statistic lunar al judeţelor, institutul naţional de statistică, bucureşti d by djs bacau bibliografie 1. harja e. (2009), statistică, ed. matrix rom, bucureşti 2. jaba e. (1998), statistică, ed. economică, bucureşti 3. pascariu g.c., frunză r., stângaciu o.a. (2010), foreign trade of romania – a regional perspective, working papers series – centrul de studii europene, vol. ii, nr. 1, iași 4. stângaciu o.a. (2010), romania’s foreign trade in 2008 a territorial analysis, studii și cercetări științifice seria: științe economice, facultatea de științe economice, universitatea bacău, nr. 1 (15) 5. voineagu v. şi colaboratorii (2001), 6. 7. colecţia bu . data offere8 microsoft word dragomirescu, solomon engl. uva method – innovative approach in economic and strategic management of an enterprise dragomirescu simona elena, university lector, phd candidate university of bacau solomon daniela cristina, university lector, phd candidate university of bacau abstract: uva method has developed starting from the principle “measuring the entire activity of an enterprise with a single unit measure”, announced by georges perrin at the beginning of the ‘50’s. the followed aim is that the method would be simple and, respectively, would avoid the global costs treating. as consequence, a minute analysis is needed for every unit of the process. also, a fundamental principle is imposed: the costs of these activities will generally remain established in relative values at least for the period when major changes in technology do not occur. key-words: modern methods of costs 1. concepts defining as well as georges perrin method, uva 1 method is an indexes procedure, with the meaning that uses for enterprise’s activity measuring and costs determination a nonmonetary unit measure, represented by an index, an equivalent, a characteristic number etc. according to yves levant and olivier de la villarmois, any indexes method is based on the idea of reducing an multi/products/activity enterprise to a single product one or with a low number of family products from the point of view of accountancy analysis; therefore, the production assembly is reduced to a multiple of a standard article, these equivalences being considered stabile. the objectives followed by uva method are: determination of products costs and margins administration; understanding of the process “how do we produce and how do we sell”; measuring of value added by every step; benefit or loss measuring on most elementary level (every realized transaction). it arises that the method “emphasizes the strategic use of costs” and “may make place to some developments that proceed from interesting simulations of strategic plan”. 2 uva method is based on creation of a measuring method for value added – uva – for all functions of an enterprise, using the following reasoning: 3 enterprise shaping by work “ranges” description for all functions; 1 uva means unités de valeur ajoutée – value added unit. 2 bouquin h. „comptabilité de gestion”, economica, 2000, p. 97. 3 dumitru m., calu d.a. – “administration accounting and costs calculation”, contaplus publish house, ploieşti, 2008, p. 214. 25 studies and scientific researches ‐ economic edition, no. 14, 2009  affecting, for every labour place, resources consumption, on the basis of a technical-economic analysis; creation of the unit measure of value added – uva – and calculation for every labour place expressed in uva indexes, aspect that transforms a multiproducts activity enterprise in mono-product activity one; valorisation of every product/activity in “uva equivalents”. there should be underlined the fact that “value added” expression does not have the same meaning as for financial accountancy, but it is referred to, for instance, in the case of a product, to the consumed resources assembly to reach the finite product stage, or, in other words, all efforts of conceiving, industrialising, production, stocking etc. 2. uva method phases adopting the uva method supposes the covering of two phases: method’s construction and exploiting. (1) method construction the functioning of an enterprise corresponds to a network of ranges that is necessary to be shaped for a precise understanding. a range represents a sequence of elementary operations or tasks realised in a certain time span in labour places that operates under certain technical/economic conditions and where a precise established quantity of products is consumed. uva method divides the expenses of an enterprise in three major categories: expenses for products processing; expenses for clients’ services performing; expenses for general enterprise’s functioning. on the basis of a minute and punctual analysis of an enterprise the uva valorisation of every realised transaction is followed, respectively of fabricated products, administrative, commercial and logistics ranges connected to the attended clients. the followed aim is reducing non-attributable expenses to minimum (to less than 10% from the total of expenses). therefore, the uva method construction supposes the establishing of the value added expressed in attributable value unit for: each product, still from its projection, industrialization, production ranges; each service given to client, analyzing the administrative, commercial and logistics ranges. the method’s construction’s period is 4-6 months and supposes the covering of the following phases: (a) uva posts inventory. an enterprise is formed of labour posts, that represent an assembly of material and human means that suppose resources consumption. a uva post represents a labour post that functions with precise determined resources consumption. their inventory should be realized any time that changes occur in resources consumption size or posts are reorganized. (b) defining an entity for value measure. taking into consideration the specific of every enterprise, a measure unit for value added (uva) will be defined, which can be the most sold product, one of the most performed services etc. uva is independent from monetary variation, consisting in reality from an operation manner or from an amount of operation manners at a certain t moment. this aspect leads to a simplification of enterprise’s accounting that, therefore, will produce and sell a single product → uva (value units). (c) uva posts evaluation in units. each uva post will be expressed in units by comparison with the reference post, respectively by comparing direct consumed resources (without arbitrary apportion key) at a t moment, under normal exploitation conditions. in order to realise this comparison, all resources will be 26 studies and scientific researches ‐ economic edition, no. 14, 2009  expressed in monetary units on the basis of data from accountancy and/or technical and economic data. (d) resources evaluation. in this phase, the whole of enterprise’s resources should be allocated to labour posts, separating the expenses in expenses with materials, equipments, maintenance, staff expenses, material base usage expenses etc. after this analysis, approximately 90% from total expenses become direct ones, nonimputable expenses being reduced to minimum. for every separate post will be established a normal activity volume, it resides that to each post a direct resources consumption on assignation unit will revert, named post rate. (e) determination of uva indexes afferent to posts. uva posts cost will be determined in value added unit (uva). the value added unit represents the resources consumption necessary for a post/process/product chosen as representative for the entire activity of the enterprise. this representative post/process/product is considered as basis, and is capitalisation is named basis rate. the sum between post rate of every posed used by uva and post usage time allows the uva operation manner evaluation. from here the uva post index 4 can be established as report between its resources consumption and the one of base process (post rate/basis rate). (f) establishing of uva equivalents of products and processes. it is known that in an enterprise, every product and, respectively, service represents the consumers of operations realised in uva posts at a certain t moment, taking into consideration the fact that a product results form a succession of ranges of conceiving, production, control, while a service results from a succession of administrative, commercial, logistics etc. ranges. as a consequence, every product/service represents uva consumers. in order to establish their equivalents in uva5, there will be first established the uva equivalents for ranges from where it results: uva equivalents of a range = ∑ mobilised uva posts index x mobilisation time uva equivalents of a product/service = ∑ uva equivalents of necessary ranges (g) calculation of uva equivalent of a sell. once established the uva equivalent for products/services, the uva equivalent of a sell/invoice can be established. the total cost of a sell is made of the sold products/services cost6, to which the clients imputable cost is added7. uva equivalents of a sell = ∑ uva equivalents of a products/services mobilised by sell 4 the uva post index presents the major characteristic that it remains stable in time at least as long as the labour post or the resources consumption is not changed. 5 as well as uva indexes, uva equivalents remain stable for as long as changes in uva posts or operative ranges do not occur 6 the costs of sold products or services include all costs with row materials, services and other incorporated purchases to which value added cost is added by enterprise. 7 the costs imputable to clients comprises specific clients costs (with transport, wrapping etc.), to which the value cost added by enterprise to client is added, respectively the commercial cost (prospecting, documentation etc.), administrative cost (recording, invoicing etc.) and logistics cost (hoarding, delivery etc.). 27 studies and scientific researches ‐ economic edition, no. 14, 2009  diagrammatic, construction phase of uva method can be represented as follows: figure 1. graphical representation of uva construction phase method source: http://www.crefige.dauphine.fr/pedagogie/uva/uvanet.htm (2) method’s exploitation in this phase of uva method’s exploitation, the followed objectives are: determination of products/clients/invoices etc. costs; establishing the performance indices and of dashboards that allow the knowledge, in any time, of costs evolution, production and profitableness; determination of result apart for every transaction and outlining of profitableness curve; formulation of long/short term decisions with the purpose of profit’s amelioration, perennial insurance and enterprise’s development. method’s exploitation period is 3-4 months and supposes the covering of the following phases: (a) measuring of the produced value added. for every product/service of an enterprise, no matter that is referred to production side, administrative, logistic, commercial etc., how many value added units are produced is measured. by their summing the value added produced at a certain t moment at the enterprise level is determined: total production in uva = ∑ uva equivalents of products/services realised in a t period (b) uva cost calculation. the cost of a uva is determined for every period, on the basis of data from general accounting from where the purchases incorporable in products and the expenses specific to clients are eliminated. as consequence, the calculation relation is: uva cost = c (a + d) c – the sum of expenses from general accounting a – the sum of purchases incorporable in products quva uva posts uva index of a uva post game operative hoarding research& development production …………. logistics administration commercial …………. uva equivalents of the operative ranges products and servicies/clie nts a product ∑ uva equivalents of the necessary ranges (a uva) a service/client ∑ uva equivalents of the necessary ranges (b uva) uva cost for: a product a service/client enterprise’s total activitaty ∑ products (a uva) ∑ services/ clients (b uva) total uva production (a+b=p) 28 studies and scientific researches ‐ economic edition, no. 14, 2009  d – expenses specific to clients quva – the uva production at a certain moment t the uva cost, once determined, will show the better or worse conditions where the enterprise developed its activity. (c) determination of production costs of a sell and its result. production cost of a sale is calculated by summing: uva equivalent of the respective sale evaluated in uva cost; expenses incorporable in products; expenses specific to clients. comparing the production cost of sale with the value of the respective invoice/sale, the generated result is determined. the calculation relations are: produc tion costs of a sale = uva equivalents of sales x uva cost + expenses incorporated in products + expenses specific to clients sale result = invoice/sale value sale production cost the value added production for a certain t period represents the uva sum of products/clients in that period: quva = qpuva + qcuva production realised from a i article is established starting from the produced quantity multiplied with uva production equivalent of respective article: qpi uva = qpi x ei uva similarly, total production of services invoiced to clients is determined: ∑ = = m j juvauva qcqc 1 the service delivery for j client is established as follows: qcj uva = qcj x ej uva (d) sales profitableness analysis. the results obtained following the sales from an exercise, expressed in absolute value and/or in relative value, may be graphically represented by means of sales profitableness curve, where the starting point is represented by the sale for which the higher loss is registered, while the final point is represented by the sale for which the higher profit is obtained. the uva method allows the outlining of profitableness curve not only for total sales but also detailed for a client of on total clients/products or groups of products or on geographical areas/distribution channels/sales representatives / sales market etc. (with an average profitableness and visual and numerical dispersion). on the basis of analysis of profitableness structure for every element pertinent for enterprise, managers build their action plans, evaluate obtained results, formulate solutions for low sales to become profitable etc. specialists consider that in practice as well as in specific literature, sale cost and result is more pertinent information than global profitableness for a client/ distribution channel. (e) creation of an administration system. in the support of enterprises that apply uva method an informatics program is brought realized by creators of uva 29 studies and scientific researches ‐ economic edition, no. 14, 2009  calculation method, program that will allow method’s exploitation. by means of this program, called profit scanner, managers may visualize, at any moment, profitableness curves on every product/client/geographical area etc., may realize classification of sales, errors’ highlighting. 3. in stead of conclusions … arguments in favour of uva method from the above presented aspects, it resides that uva method represents an instrument used by management in decisions’ fundament. it comes for the support of costs administration control, with the purpose of enterprise’ profitableness management’s amelioration, because the method: allows the evaluation in value added units (uva) for every sale/invoice and calculation of the transaction result – tracing the profitableness curve, the enterprise management team may analyze the sale situation and may intervene in their structure in order to ameliorate the obtained results; helps to creation of performance indicators and dashboards implementation – aspect that leads to knowing and permanent following and at any moment of costs, production, profitableness evolution; becomes an instrument of assistance for strategic decision – by means of prediction simulations that it allows; is useful in the case of complex enterprises8, of any size and activity sector; assures, due to a minute analysis, non-imputable expenses reduction to less than 10% from the total expenses, as consequence the difficulty of incorporating expenses in costs is eliminated on the basis of certain arbitrary repartition keys; answers to problems concerning the difficulty of settling reliable sale prices, margins tighter and tighter due to concurrence intensification; is based on the data provided by general accounting, which means that its implementation does not need a complex and expensive informatics system; supposes implementation, exploitation and maintenance reduced cost; if changes in labour posts structure or in resources consumption do not occur, the uva analysis actualisation is useless to be recovered earlier than 4-5 years. bibliography: 1. bouquin, h. (2000), comptabilité de gestion, economica 2. dumitru, m., calu, d.a. (2008), administration accounting and costs calculation, contaplus publish house, ploieşti 3. http://www.crefige.dauphine.fr/pedagogie/uva/uvanet.htm. 8 the heterogeneity of an enterprise may arise either from products’ diversity or from the one of clients, consumed resources, sales conditions, distribution channels, production means etc. 30 microsoft word apostoaie constantin marius_eng.doc transnational companies and production global networks valentina golea, university politehnica of bucharest nicoleta niculescu , university politehnica of bucharest drago filip niculescu, economist abstract internationalizing a company is an objective process. the historical reality shows that, while developing, the company tends to exceed its local, national and regional limits of business environment, in order to expand its activity into the global economic space, whose formatting is possible through the very company’s movement towards exterior. this process is based on the imminent expansionism of the market forces, their tendencies to invade the environment “unmarketedly”, and to include it in an economic system based on the market mechanism. companies involve themselves in the international production because they have a specific competitive advantage which is best exploited in this way. the advantage can consist in a product or in a brevetted technique, but it may also include management techniques or such as: company’s or its employee’s qualification and expertise. keywords international production, production global networks, transnational company, global competition, business organization, innovation, corporatist strategies jel codes: f13, f23 introduction in spite of certain advantages, companies are not obliged to produce abroad; foreign markets can be supplied through exports or through offering under-license technologies by the foreign producers; or the production process may be subcontracted to some independent companies, possibly authorized to use the company’s technology. however, the development of the production global networks necessarily involves the strategic organization of the transnational transactions within companies or company groups, and not through the market mechanism. despite the fact that the economic globalization is often understood as being only the spread of global markets, the development of the transnational societies and of the production global networks represents something very different: the organization of the more transnational production and distribution within companies and between them, and not through markets. the international markets are not perfect: if they were perfect, the transnational societies and the production global networks would not exist. therefore, the costs determined by the transnational companies’ activities are considerably the paper is carried out within the sectorial operational program for human resources development for 2007-2013, “ invest in people!” cofinanced by european social fund studies and scientific researches economic edition, no. 15, 2010 222 lower if these companies organize the economic activity within the company or through company networks and not through market relations. the restrictions on the international trade, as well as the transport costs stimulate companies to take positions and to produce abroad, instead to export to foreign markets. the transnational societies can organize production at international level in order to make use of the abroad low costs for certain stages of the production process. but the strategic advantages of organizing the international production within the company, not in favor of the independent producers’ sourcing, are given by two factors: the former, prevention of spreading any technological advantage of the corporation to the potential competitors; the latter , as long as the competitive advantage of a transnational company does not lie in only encoded knowledge , but in a series of tacit knowledge and expertise within the company, the optimum way to exploit it, is the intra company production abroad and not the under licensed production or subcontracting abroad. global competition and business organization the transnational companies have developed lately because they have exploited their competitive advantages at international level. in some cases, these advantages come from ladder-economies, from superior management techniques and/or from world sales networks. but the main source of the transnational companies’ competitive advantage has been technological innovation. the transnational companies tend to be the most innovative companies and they are strongly represented in the technologically most dynamic industries. they are responsible for the most private expenses for research and development. moreover, the technological innovation has helped the process of “severing the value chain”, through which a production process can be severed and distributed all over the world. thus, the transnational societies’ expansion reflects both their capacity to innovate and their capacity to exploit it at international kevel. nonetheless, despite the fact that transnational companies dominate the production of many goods and services and their global distribution, their technological and organization advantages have not made them undefeatable regarding competition. in a series of sectors, from electronics to clothes, some small and medium-size enterprises possess the capacity of continual innovation and flexibility, fact that creates a “hyper competition” environment in which only renowned transnational societies stand at defensive positions. therefore, the competitive advantages do not lie on only products and technologies, but depend on the speed at which the innovation is produced and on the speed at which new products (styles, etc.) can be created and distributed. this acceleration of the global competition has been mainly enhanced due to the revolution of “informatics”. these factors have encouraged the growth of the trans-frontier production and distribution networks, being meant to the producer and to the buyer , so that small and medium-size enterprises could get in contact with the largest corporations, making networks capable of innovating and of adapting themselves continually. while the technological innovation becomes more decisive for the competitive advantages of the transnational societies, there are greater entices for organizing production and distribution within the company or within geographically spread company networks that are conducted by transnational societies. j. dunning sustains that this fact leads to a new situation, because the intra company transactions become more important compared with market transactions. there is a paradox here, because, the way the economic globalization has contributed to the global markets evolution, the business globalization has also encouraged the transactions’ substitution on the market through intra companies’ networks and between companies. although the level of the intra company trade is high, it seems to have remained stable as proportion of total trade for the past decade. but, as the trade has grown compared to the world’s income, this tends to suggest a raise in the intra company trade reported to the world production. studies and scientific researches economic edition, no. 15, 2010 223 in spite of the fact that the individual transnational societies vary, regarding their capability to organize production and intra company trade, taken together, they supply the markets all over the world and produce from locations found on all the continents. even if the individual transnational societies do not supply every national market or source from each country, their activities, taken together, have determined a structural evolution to a more intensive global competition due to the expansion of the production global systems. skeptics tend to doubt the existence of these modifications. they claim that even the largest transnational societies often develop the majority of their production, sales, actives, profits and research and development facilities in their origin country and conclude: “ global corporations are national companies with international operations”. other authors, especially m. porter, accept the fact that transnational societies compete at a global level, but they sustain that transnational societies stand rooted in the economic and cultural system of their country; according to this concept, they extract their competitive advantage from the national base mainly, and they apply global strategies to face competition. j. stopford and s. strange, among others, claim that, although this concept highlights significant aspects in the postwar development of transnational societies, a national base becomes insufficient to maintain a corporatist competitive advantage. along years, foreign companies have acquired their own technological advantages. other sources of the competitive advantage, such as superior management techniques, spread themselves in time. different authors – included p. dicken, j. dunning – sustain that transnational societies do not extract the competitive advantage only from intern base but they penetrate, more and more deeply, the world sources of competitive advantage, self-organizing their production at a global scale. their capability to produce in a series of countries and to achieve competitive advantages generated in different locations, confers them a global vision and a global competitive advantage. in the hyper global concept of some authors, like d. julius, k. ohmae and r. reich, transnational societies are “unbound”, circulating rapidly between countries, transferring production and penetrating the sources of the national competitive advantage in order to maximize their profits, often in the detriment of a immobile work force. organization forms of business globalization for the last decades, the global organization of the production and distribution has been intensified within some fundamental industrial sectors. transnational societies have had a central role in this evolution. many european firms have developed their multinational production starting from their intern base, which is, on principle, valid for all japanese manufacturers. the expansion abroad to avoid real or potential protectionism, have been a key-factor in the determination of the japanese and other nationalities’ hesitating companies to produce abroad, but the transnational societies have not expanded abroad only to ensure their access to markets: they have proceeded in this way in order to rationalize their corporate production process through transnational. this fact outlines a central idea, transnational societies have proceeded at setting up transnational business networks including their branches, subcontractors, customers and other industrial companies. but these networks, directed by the manufacturer or the buyer, involve a certain degree of power and decision spreading, so that the classical representation of the transnational societies (and of the multinational production) as a hierarchy structure, vertically integrated, does not reflect the amazing diversity of the present organization forms. w. ruigrok and r. tulder offer a useful typology in order to classify the organization forms of the global production and distribution networks. adapting their typology, we could identify two organization forms that represent the extremes of a spectrum: dispersed production with an intensive central control and dispersed production with a reduced central control. practically, transnational societies (and global production networks) often lie somewhere between these two extremes. studies and scientific researches economic edition, no. 15, 2010 224 the geographically dispersed production found under reduced central control, refers to the transnational production systems in which the production units have a considerable amount of autonomy. historically, this fact has meant producing on their own, it means that companies have placed factories abroad in order to serve local markets, without integrating these operations into the transnational production systems. this is not only a method to penetrate protected markets, as where request conditions vary considerably from one country to another one, there cannot be an efficient strategy for supplying foreign markets. services, especially, are often offered at a local level, instead of maintaining a powerful central control and some transnational societies adopt much more diffused corporation management systems. in order to make the operations efficient abroad, these should be granted a larger autonomy, instead of being imposed a central control; the idea is valid especially for research and development divisions, and also for a larger sphere. in addition, in many sectors, the transnational societies have passed from direct property and control to using, in a larger measure, subcontractor relations with (formally) independent suppliers. the geographically dispersed production found under powerful central control, determines the organization of the global-scale production process as a central level coordinated strategy. this is also the popular perception about huge transnational societies that control production networks all over the world, but the process does not necessarily take place through direct property on the branches abroad. this organization form is frequent, in a certain degree, in ore extraction industry and in agriculture. a part of the processing industry production assemblage is organized on a strict hierarchy production line, operating at transnational level. also, it can be met in the services’ sector: for example, the american firms appeal to data collecting offices in central america and in the carribean, and the european companies do the same, reaching southern asia. it is also available when transnational societies produce a good or a service at local level, still maintaining the central control over production and quality; for many internationally well-known goods and services, the commercial brand ( for example benetton) is created as a constant quality guaranty all over the world. beside these distinct organization forms, global commuting and global focusing corporation strategies can be identified. the global commuting refers to the transnational societies’ capability to commute their production between different locations at the international level as a response to the continually changing market conditions. the global focusing, on the contrary, refers to the corporate strategy to concentrate its production in a low number of places, considered to have the highest long term advantage. many societies, which have a considerable number of subcontractors, have tried to rationalize their activity, developing more intensive relations with a lower number of subcontractors; by contrast, firms with a limited number of subcontractor relations, have tended to expand them. both strategies are ideal types essentially, but they focus on strategic choices firms face as a reaction to global competition’s challenges and opportunities. conclusions business globalization depends, therefore, on the innovation capability of the companies and on their ability to efficiently organize trans-frontier production and distribution networks with the help of the technology progress in communications and of the management techniques. if the multinational production were set up, as in the past, only to elude the commercial barriers, one would expect that its expansion should have been slowed down or even been reduced, because commercial restrictions and transport costs have diminished spectacularly. but it has continued, suggesting that commercial barriers do not explain, only themselves, the increase of the transnational production; firms’ capability to innovate in technology and product fields, is essential. other sources of competitive advantage, such as superior management techniques, spread in time. a range of authors claim that, nowadays, transnational societies do not extract their studies and scientific researches economic edition, no. 15, 2010 225 competitive advantage, only based on their intern base, but they penetrate, more and more, the world sources of competitive advantage, therefore organizing their production at global scale. their capability to produce in a series of countries and to achieve competitive advantages generated in different locations, confers them a global vision and a global competitive advantage. bibliography 1. dicken, p, 1998, global shift (edi ia a iii-a), londra, chapman 2. dunning, j, 1993, the globalization of business, londra, routledge 3. golea, valentina, 2008, managementul afacerilor multina ionale, ed. bren 4. hirst, p. i thompson, g, 1996, globalization in question: the international economy and the possibilities of governance, cambridge, polity press 5. julius, d, 1990, global companies and public policy, londra, pinter 6. mockler, r.,2001, management strategic multina ional, ed. economic 7. ohmae, k, 1990, the borderless world, londra, collins 8. porter, m, 1990, the competitive advantage of nations, londra, macmillan 9. reich, r., 1991, the work of nations: preparing ourselves for twenty-first century capitalism”, new york, simon and schuster 10. ruigrok, w. i tulder, r, 1998, the logic of international restructuring, londra, routledge 11. stopford, j. i strange , s, 1991, rivals states, rivals firms: competition for world market shares, cambridge, cambridge university press studies and scientific researches economic edition, no. 15, 2010 226 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 6 road freight transport entities dealing with the covid-19 pandemic cristina gabriela cosmulese stefan cel mare university of suceava gabriela.cosmulese@usm.ro abstract the road transport business has changed dramatically in the previous three years and will confront new problems in the next years. from the start of the pandemic crisis to the current geopolitical and economic uncertainty, industry players have had to constantly come up with new ways to deal with the paradigm shift and support clients. the aim of this paper is to identify, through a comparative analysis of smes in the road transport sector, if and how they contribute to job creation and what economic contribution they make in romania in the context of the pandemic crisis. for this purpose, through the topfirme.com platform, the economic and financial statements of a sample of 100 enterprises were collected for the period 2016-2020. the study suggests that small firms are significantly more willing than medium and big businesses to endure financial troubles and take remedial steps in this context. however, according to the analysis, the group of tiny firms manages to cope well with uncertainties and shifting market trends in the case of the current study, based on the indicators examined. keywords road freight transport; turnover; average number of employees; debts, smes jel classification l91, m40, f23 introduction road haulage has been nearly vital in the performance of commercial activity from ancient times, but with the passage of time, through refinement and growth, it has asserted itself as a separate field. road freight transport is a critical component of the economy, both microeconomically and macroeconomically. a number of variables, such as the impact on competitiveness, contribution to costs and prices, influence on organizational activities, and so on, justify the economic importance of freight transport at the microeconomic level. a number of macroeconomic factors are in sync: the huge role and importance of transportation in the national economy; the prospect of large-scale specialization of production; and economic progress. from a societal standpoint, transportation activity promotes residents' free mobility; it also produces jobs and contributes to the economy's development (maniu & pantelescu, 2015). road haulage is the primary mode of transport for commodities in romania, particularly over long distances. road freight transport transports a substantial proportion of freight (land transport -26% and logistic truck transport -35%), followed by sea, rail, inland canal, and air freight transport, which ranks last due to high costs (see safefleet, 2019). recent unforeseen events have had a systemic impact on the transport sector, both in terms of passenger and road freight transport, including the eruption of iceland's eyjafjallajökull volcano on 14 march 2010 and the rastatt tunnel collapse on 12 august 2017. furthermore, the eu transport sector has been severely impacted in the previous cosmulese 7 2-3 years by two major crises: the covid-19 outbreak and russia's military intervention against ukraine. not to be overlooked are geopolitical concerns, which affect not only road transport services but also air and sea freight firms, which are suffering from rising fuel prices (bolintin deal, 2022). to minimize the spread of the pandemic, several steps have been used to restrict international and domestic travel, including physical separation, stay-at-home orders, public transportation restrictions, contact tracing and quarantine, and border closures. the lack of coordination of national policies has harmed the transportation sector by restricting cross-border transportation activities, often exacerbating the consequences of the initial shock on citizens and the economy (marcus et al., 2021). in this regard, while an emergency plan has been developed to ensure the continuation of activity in this sector, difficulties have been encountered in terms of providing real-time information, failure to clear deliveries on time, and uncoordinated procedures to obstruct the passage of passengers (various health decals, declarations for entry into own territories) (press release, european commission, 2022). indeed, as viorel leca, general manager of gebrüder weiss in romania, stated, all of these changes have been combined with the need for transportation industry players to keep their teams operational at all times in order to avoid delivery bottlenecks in an extremely difficult labor market, where finding staff has been a real challenge. on top of that, traffic restrictions have had a significant influence. according to some statistics, the sector has historically suffered, and recovery from the 2008 financial crisis has been particularly tough. furthermore, romania's development of this industry has trailed considerably behind that of several other nations in the region, and the gap has grown year after year. we can say that there is a direct link between sector development and infrastructure investment (see stareanatiunii.ro). in terms of smes in the road haulage industry in romania, there were 37,981 enterprises functioning in this area in 2020, accounting for 1.78% of all economic agents in romania (see www.adroltenia.ro). we may say that this is a relatively low percentage, possibly inconsequential, but with a fairly considerable contribution to the evolution and development of other areas of activity such as production and trade, forming a whole and improving the romanian economy's development. the study consists of four main sections: the next section empirical aspects related to the literature review. the third section aims to describe the methodological aspects and the final section focuses on the interpretation of the results, by discussing them taking into account the validation of the research hypotheses, in order to draw the related conclusions. literature review lately, more and more freight companies are carrying out studies to reduce co2 emissions. these studies show that in order to achieve sustainable transport, the use of less polluting modes of transport (such as rail transport) and the optimisation of freight transport systems must be taken into account (pamucar et al., 2022). previous studies (hurduzeu et al., 2021; aivaz et al., 2022) primarily focus on the presentation and analysis of statistics on the performance of romanian smes in comparison to the overall eu sme average, whereas other studies (paprocki & letkiewicz, 2020) make a diagnosis of the situation in road transport while also outlining possible change scenarios. the study conducted by belu and arţavulea (2016) also identifies the main barriers faced by smes in romania, the most significant of which are: bureaucracy and excessive taxation, with a percentage of over 50% among entrepreneurs, elements for corruption, excessive controls, and unfair competition, with a percentage of 40% among entrepreneurs (cnipmmr, 2016). road freight transport entities dealing with the covid-19 pandemic 8 much research is being undertaken to better understand the impact of covid-19 on smes in romania (rusu & nucu, 2020; stefănescu et al., 2022), in which case an analysis of all sectors affected by the pandemic, including transportation, was conducted. some recent studies (scarișoreanu & ghiculescu, 2023) also focus on the exposure of threats in terms of climate change, with the transportation sector representing on the one hand a country's economic growth, the development of global trade relying on this sector (jansuwan et al., 2021), and on the other being one of the major sources of pollution. research methodology we employed mediated data collection methods with the help of the website www.topfirme.com to collect economic and financial data to develop a database consisting of a sample of 100 smes working in the industry of freight transport. thus, we applied statistical approaches based on the acquired data, and the processed data assisted in the building of an economic model using the statistical program spss version 26. in order to establish the sample for the study, we have drawn up a top list of companies from which we have selected the top 100 companies, which are ordered by average number of employees. the following economic and financial indicators were examined for each company from 2016 to 2020: average number of employees, turnover, net profit/loss, revenue, expenses, equity, total fixed assets, current assets, accounts receivable, debts, provisions, and leverage. the current study is consistent with the study conducted by switała and ukasiewicz (2021), in which the authors demonstrated that the destructive effects of the pandemic were felt on the activities carried out in the field of road transport, which could be seen in both reduced demand for transportation services and the worse financial condition of the studied companies. following that, a statistical analysis was carried out, with the use of standard descriptive statistics measures such as frequency distributions, arithmetic means, and standard deviation means, among others. the variables were additionally correlated using multivariate linear regression and the ordinary least squares approach. the spss statistical program was used to analyze the data. results and discussion following the sample of 100 companies, we designed an econometric model with the variable’s turnover, average number of employees, revenues, expenses, current assets, accounts receivable and debts, the values being expressed in ron. according to table 1, the highest correlation is between turnover and current assets (value 0.910). also, there is a strong correlation between the turnover and average number of employees, with a value of 0.861. table 1 correlation matrix turnover average number of employees revenue expenditures current assets accounts receivable debts pearson correlation turnover 1.000 .861 .837 .836 .910 .877 .785 average number of employees .861 1.000 .768 .768 .845 .817 .714 revenue .837 .768 1.000 .998 .819 .835 .728 expenditures .836 .768 .998 1.000 .815 .835 .731 current assets .910 .845 .819 .815 1.000 .968 .831 accounts receivable .877 .817 .835 .835 .968 1.000 .809 debts .785 .714 .728 .731 .831 .809 1.000 source: own processing via spss vs 26 cosmulese 9 the very strong correlation between turnover and current assets is driven by fluctuations in current assets. there is a strong correlation between turnover and the other indicators (average number of employees, revenues, expenses, receivables and payables), as the increase/decrease in turnover is influenced by the situation of each indicator. for example, if revenue falls, receivables and turnover fall, and if the drop is considerable and long-lasting, it is reflected in the year-end result, which should prompt an examination of the management of the activity. the next step after data analysis was the validation of the regression model. thus, the developed model analyses the dependency correlation between turnover and the independent variables: average number of employees, revenues, expenses, current assets, accounts receivable and debts. therefore, the proposed model has the form: turnover = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝐴𝐴𝐴𝐴 𝑜𝑜𝑜𝑜 𝐴𝐴𝑛𝑛𝑒𝑒𝑒𝑒𝑜𝑜𝑒𝑒𝐴𝐴𝐴𝐴𝑒𝑒 + 𝛽𝛽2 ∗ 𝑅𝑅𝐴𝐴𝐴𝐴𝐴𝐴𝑛𝑛𝑛𝑛𝐴𝐴 + 𝛽𝛽3 ∗ 𝐸𝐸𝐸𝐸𝑒𝑒𝐴𝐴𝑛𝑛𝑒𝑒𝐴𝐴𝑒𝑒 + 𝛽𝛽4 ∗ 𝐶𝐶𝑛𝑛𝐴𝐴𝐴𝐴𝐴𝐴𝑛𝑛𝐶𝐶 𝐴𝐴𝑒𝑒𝑒𝑒𝐴𝐴𝐶𝐶𝑒𝑒 + 𝛽𝛽5 ∗ 𝐴𝐴𝐴𝐴𝐴𝐴𝑜𝑜𝑛𝑛𝑛𝑛𝐶𝐶𝑒𝑒 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑟𝑟𝐴𝐴𝐴𝐴𝑛𝑛𝑒𝑒𝐴𝐴 + 𝛽𝛽6 ∗ 𝐷𝐷𝐴𝐴𝑛𝑛𝐶𝐶𝑒𝑒 + 𝜀𝜀 (1) where: o turnover dependent variable of the model; o average number of employees, revenues, expenses, current assets, accounts receivable and debts – independent variables; o α, β1, β2, β3, β4, β5 and β6 – the parameters of the regression model; o 𝜀𝜀 – the random error variable. next, the descriptive analysis of the model variables was carried out and is presented in table 2: table 2 descriptive statistics mean std. deviation n observation turnover 105962144.71 122943437.595 484 average number of employees 283.85 264.721 484 revenue 108685746.05 110879561.529 484 expenditures 104904404.34 109492137.315 484 current assets 27990995.20 36068180.851 484 accounts receivable 23268365.16 26816719.822 484 debts 39704553.42 51321258.750 484 source: own processing via spss vs 26 to conduct the dynamic analysis, we selected the top 10 and last 10 companies in the transportation sector from the database, taking into account the average number of employees, in order to compare the values in 2020 with 2019, assessing the effects of the crisis on economic activity and the contribution of each indicator to turnover (see figure 1). the names of the entities can be seen in annex 1. road freight transport entities dealing with the covid-19 pandemic 10 figure 1 evolution of the sample according to the average number of employees in 2019-2020 source: own processing based on collected data as can be seen in figure 1, both in the case of companies with a higher number of employees (top 10) and in the case of companies with fewer employees (bottom 10) it is visible that this health crisis that started in 2020 has had a negative impact that according to some statistics (national commission for strategy and forecasting, 2020) in the case of the transport sector is expected to have high intensity negative effects, considerably reducing the demand for labour. these decreases in labor demand are critically dependent on the level of income, the expansion of social contacts, the refinement of consumption, or the allocation of financial resources within investment flows, on the one hand, and the presence of complex supply chains, on the other (vasile et al., 2020). the vast majority of the enterprises studied indicate a variation, so that in 2020, due to substantial bottlenecks, each of them was compelled to curtail its activities, resulting in a decline in the workforce. figure 2 evolution of the sample according to the results of the exercise in 20192020 source: own processing based on collected data analysing figure 2, we see that the top 5 companies out of the top 10 of the top 100 companies made a profit in 2020 as opposed to the next 5 companies that also made a loss. in this case, we can see that the last 10 selected companies performed more favourably, with only one company making a loss in the two years, the rest making a profit. in both cases, we see that 80-90% of each company's results reflect the positive or negative effects of this pandemic, which disrupted activity or encouraged openness to new opportunities in their business. cosmulese 11 figure 3 evolution of the sample according to turnover in 2019-2020 source: own processing based on collected data the analysis of turnover shows that in 2020 compared to 2019 turnover shows a slight decrease, which is motivated by the onset of the covid-19 pandemic, when in the period march 2020 may/june 2020 most of the activities were reduced or even interrupted, which had indirect repercussions on the transport sector, as the supply chain is directly linked to this sector. figure 4 evolution of the sample according to accounts receivable in the period 2019-2020 source: own processing based on collected data as far as receivables are concerned, as we can see in figure 4, their percentage is lower in 2020 than in 2019. the decrease in activity has also led to a decrease in receivables, with a much greater fluctuation being observed in the case of the top 10 companies compared to the bottom 10 companies, which denotes that large entities have been much more affected, the impact being more visible on them, also influenced by the number of employees, the amount of debt and a much greater volume of activity. one explanation would be that the group of small entities were perhaps more likely to face financial difficulties and take corrective action than medium and large enterprises. as shown in figure 5 above, the debts of the entities analysed tended to increase for each company, which indicates that with the decrease in receivables (own sources of financing), the entities in question had to turn to a borrowed source of financing in order to be able to carry out their activities in normal conditions. figure 5 evolution of the sample according to debts between 2019-2020 source: own processing based on collected data road freight transport entities dealing with the covid-19 pandemic 12 analysing each of the above figures, which takes into account the evolution of the economic and financial indicators, it can be seen that every company has been affected by this health crisis regardless of its size. it can be seen from figure 1 that companies in this sector maintained their number of employees in 2020, moreover if we refer to the other economic indicators, we find that in some cases their values have not decreased but have been maintained or even increased, which denotes that there is a strong correlation between turnover, number of employees and the rest of the indicators analyzed. tabel 3 model summaryb model r r square adjusted r square std. error of the estimate durbin-watson 1 .937a .878 .877 43198344.637 .968 a. predictors: (constant) average number of employees, revenues, expenses, current assets, accounts receivable and debts b. dependent variable: turnover source: own processing via spss vs 26 according to table 3 we find that for the analyzed model the correlation ratio value is 0.937, which denotes that between the dependent variable turnover and average number of employees, revenue, expenses, current assets, receivables and payables there is a strong intensity of correlation, all of which contribute to their image and development. the value of the determination ratio is 0.878, which means that this linear multiple model is 87.8% explained by the average number of employees, revenue, expenses, current assets, receivables and payables. in the table above we also find the durbin watson coefficient value of 0.968. table 4 below presents information that helps us to validate the model. table 4 anova model sum of squares df mean square f sig. 1 regression 6410459654245576700.000 6 1068409942374262780.000 572.537 .000b residual 890128259146159740.000 477 1866096979342054.000 total 7300587913391736800.000 483 source: own processing via spss vs 26 according to table 5, the components of variation have the following values: estimated explained variation 6.410e+18, estimated residual variation 8.901e+17 and estimated total variation 7.300e+18. the fisher coefficient value is very high, f = 572.537, and the sig. value for the f-test is less than 0.05, so the constructed model explains the significant dependence between turnover, average number of employees, revenue, expenses, current assets, receivables and payables by a multiple linear relationship. this model is 95% validated. table 5 model coefficients model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 690203.555 3289600.872 .210 .834 average number of employees 113865.970 14463.526 .245 7.873 .000 cosmulese 13 revenue -.371 .298 -.335 -1.246 .213 expenditures .658 .303 .586 2.172 .030 current assets 2.523 .258 .740 9.772 .000 accounts receivable -1.279 .318 -.279 -4.018 .000 debts .086 .071 .036 1.216 .225 source: own processing via spss vs 26 with the aid of the coefficients the estimated equation of the model will be constructed, it having the form: turnover = 690203,555 + 113865,970 ∗ 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝐴𝐴𝐴𝐴 𝑜𝑜𝑜𝑜 𝐴𝐴𝑛𝑛𝑒𝑒𝑒𝑒𝑜𝑜𝑒𝑒𝐴𝐴𝐴𝐴𝑒𝑒 −0,371 ∗ 𝑅𝑅𝐴𝐴𝐴𝐴𝐴𝐴𝑛𝑛𝑛𝑛𝐴𝐴 + 0,658 ∗ 𝐸𝐸𝐸𝐸𝑒𝑒𝐴𝐴𝑛𝑛𝐸𝐸𝑟𝑟𝐶𝐶𝑛𝑛𝐴𝐴𝐴𝐴𝑒𝑒 + 2,523 ∗ 𝐶𝐶𝑛𝑛𝐴𝐴𝐴𝐴𝐴𝐴𝑛𝑛𝐶𝐶 𝐴𝐴𝑒𝑒𝑒𝑒𝐴𝐴𝐶𝐶𝑒𝑒 − 1,279 ∗ 𝐴𝐴𝐴𝐴𝐴𝐴𝑜𝑜𝑛𝑛𝑛𝑛𝐶𝐶𝑒𝑒 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑟𝑟𝐴𝐴𝐴𝐴𝑛𝑛𝑒𝑒𝐴𝐴 + 0,086 ∗ 𝐷𝐷𝐴𝐴𝑛𝑛𝐶𝐶𝑒𝑒 2) the econometric interpretation of the model obtained provides the following information on how the variation in turnover is influenced by the influencing factors considered: • if the average number of employees rises by one person while the other variables stay unchanged, turnover rises by 113865,970 ron. this increase in turnover with an increase in the number of employees indicates an increase in the volume of activity while also expanding activity, highlighting the close relationship between turnover and the average number of employees. • if revenues increase by one ron while the other variables remain constant, turnover decreases by 0.371 on average. this situation is only possible when revenues increase while the other revenues that are not from current activity and the operating revenues that make up turnover remain constant or even decrease. • if expenses rise by one ron while all other variables remain constant, turnover rises by 0.658 ron on average, because turnover can be indirectly influenced by specific changes in each activity, such as an increase in selling price or an increase in some fixed or variable expenses, which ultimately affect turnover. • if the current assets increase by one ron while the other variables remain constant, the turnover increases by 2.523 ron on average. we can see a close relationship between the elements that comprise the current assets and their contribution to the increase in turnover, for example, if a company has recorded an increase in trade receivables, we can see that an income has been generated, which also leads to an increase in turnover. • if receivables rise by one ron and all other variables stay constant, turnover falls by 1.279 ron on average. this condition can occur in businesses that report receivables other than trade receivables, such as advances or state budget receivables. • if debts rise by one ron while all other factors remain constant, turnover falls by 0.086 ron on average, which is the result we discover in most circumstances and is also natural from a theoretical standpoint. we observe that in recent years, enterprises have increasingly turned to external financing to ensure the continuity of their operations. analyzing the model obtained, it is observed that turnover is most influenced by the average number of employees, current assets and receivables because all 3 elements work in a close relationship, so once one of the variables changes, the others change, these being the main economic indicators followed in the analysis of a company's performance. turnover is influenced by the average number of employees because the increase or decrease in productivity in most cases is closely linked to the number of employees, we could say that in the road haulage sector, employees are the main factor influencing turnover. road freight transport entities dealing with the covid-19 pandemic 14 table 6 shows information on residual values. the lowest value of the residual is 215546560 and the highest value is 572195904. table 6 residuals statistics minimum maximum mean std. deviation n predicted value 1049632.38 1115737088.00 105962144.71 115204918.286 484 residual 215546560.000 572195904.000 .000 42929193.452 484 std. predicted value -.911 8.765 .000 1.000 484 std. residual -4.990 13.246 .000 .994 484 source: own processing via spss vs 26 according to figure 6a, it can be seen that the error histogram follows a normal distribution, slightly shifted to the right. a. b. figure 6a,b histogram of errors and p-p plot diagram source: own processing via spss vs 26 analyzing the histogram of the errors, it is observed that it has a normal distribution between -0.3 and 3, but slightly shifted to the right which shows that in the analysis of the turnover variable the selected data are correct which led to the illustration of the gaussian bell. according to figure 6b, the p-p plot has shifts with respect to the specific theoretical distribution representing henry's line. also, the representation of the points is more shifted from the theoretical distribution by having an intersection point on the axis which shows that the turnover data is correct since it is ordered upwards we have an ordered distribution. the preceding demonstrates that excellent management and leadership of road haulage smes is mostly dependent on well-organized human resource management. as mentioned in the analysis of the number of employees, i believe they contribute the most to the development of smes in this sector, but with the health crisis that began in 2020, the negative effects began to spread among entities in the transportation sector, which had to limit their activity and reduce the number of jobs. at the same time, we see that the average number of employees, together with the other indicators studied, has a substantial influence on the increase/decrease in turnover. cosmulese 15 on the other hand, given that the pandemic crisis has had a significant impact on all areas of activity, we believe that its effects will be felt in the coming years, a scenario that certainly applies to road freight transport, even though the negative effects have been felt in some cases since 2020. following this investigation, we discovered that entities had a greater proclivity to contract external money to support their activities in 2020 compared to the previous year. the study also reveals that small businesses are more willing than medium and big businesses to endure financial difficulties and adopt remedial steps in this environment. however, the analysis shows that, in terms of the parameters examined, the group of tiny firms manages to cope well with the uncertainties and shifting market trends in the case of the current study. in comparison to the period studied (when bottlenecks and restrictions on cross-border movements were imposed), the situation improved in the following period, namely the second quarter of 2021, and the number of tonne-kilometres carried in the eu increased by 7%, according to statistics eurostat (2022). conclusions the entire globe is debating global catastrophes, from political corridors to academic platforms: a health crisis, an economic and financial crisis, a climate crisis, and a nature disaster. finally, they are all symptoms of the same problem: our unsustainable production and consumption practices. the shock of the covid-19 pandemic has merely shown the global economy's and our society's systemic fragility, with all of its disparities. road freight transport was one of the businesses hardest hit by the coronavirus epidemic in 2020. this is supported not only by our own study findings, but also by statistics data indicating a general drop in demand for road freight transport. conveyance of goods by road. demand for transportation services is projected to increase as limitations are lifted and activity gradually resumes. however, the rate of development will vary based on service providers' sectoral specialization, as well as the rate of recovery in primary markets, investments undertaken to combat the virus, and the sustainability of changes in the road sector. while the covid-19 pandemic caused a marginal decline in turnover in 2020 (more food retail items at the expense of durable goods), 2021 is expected to see not just a recovery but a significant advance based on volume growth and significant transmission of inflationary pressures throughout the supply chain. however, rising raw material, fuel, utility, finance, and labor costs will cause a shift in profit margins. references aivaz, k. a., munteanu, i. f., stan, m. i., & chiriac, a. 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(2020), the effects of the sars cov 2 pandemic on employment. the role of public policies and the resilience of the labour market in the context of adapting the business environment. academia romana, bucharest, romania. national commission for strategy and prognosis, 2020. available at: https://cnp.ro/wpcontent/uploads/2021/09/the_evolution_of_the_main_macroeconomic_indicat ors_in_the_romanian_economy_for_2020_2021_note.pdf eurostat (2022), road freight transport: +7% in 2021 versus 2020.available at: https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220930-2 domeniul transporturilor în 2019 și trenduri pentru 2020. safefleet, 2019. available at: https://blog.safefleet.ro/trenduri-transporturi-2020 https://cnp.ro/wp-content/uploads/2021/09/the_evolution_of_the_main_macroeconomic_indicators_in_the_romanian_economy_for_2020_2021_note.pdf https://cnp.ro/wp-content/uploads/2021/09/the_evolution_of_the_main_macroeconomic_indicators_in_the_romanian_economy_for_2020_2021_note.pdf https://cnp.ro/wp-content/uploads/2021/09/the_evolution_of_the_main_macroeconomic_indicators_in_the_romanian_economy_for_2020_2021_note.pdf https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220930-2 https://blog.safefleet.ro/trenduri-transporturi-2020 cosmulese 17 appendix appendix 1 entities included in the sample no. top 10 entities last 10 entities 1. aquila part prod com s.r.l. doru si florin s.r.l 2. internaţional alexander s.r.l. group concif s.r.l. 3. skiptrans s.r.l. autovest trans s.r.l. 4. duvenbeck logistik s.r.l. capitaly taxi s.r.l. 5. mega trucking timisoara s.r.l. vidaxl center s.r.l. 6. quehenberger logistics rou s.r.l. blue river bucuresti 78 s.r.l. 7. h essers s.r.l. truck supply europe s.r.l. 8. gartner eurotrans romania s.r.l. pro natur s.r.l. 9. dunca expeditii sa lg trans s.r.l. 10. dolo trans olimp s.r.l. giro s.r.l microsoft word apostoaie constantin marius_eng.doc challenging times for competition on the automotive market. the case of european union and romania liviana andreea nimine , “vasile alecsandri” university of bacau, romania abstract the article deals with one of the most important sectors in the european union, the automotive sector seen from the economic as well as from the industrial perspective. as the economic efficiency is usually measured in competition parameters an important part is dedicated to the competition on the motor vehicle market in and outside the european union, on the global market. one of the most important process in auto market field is also brought to attention. furthermore the evolution of automotive market in the european union and romania during the economic crisis are analyzed using clearing figures . keywords competition, european union, automotive market, jel codes: l62, l53, l26 introduction one of the key economic and industrial sectors in europe is the automotive sector (motor vehicle sector). its importance derives from its linkages within the domestic and international economy and its complex value chain. the automotive sector has a turnover of over €780 billion. value added in the automotive sector amounts to around €140 billion, representing about 8% of european manufacturing value added. it directly employs more than 2 million people and is responsible in total for more than 12 million jobs across europe, which is equivalent to about 5.5% of employment in the eu-271. there is something special about the eu, and this special thing is the common market. the existence of this kind of large home market is a major competitive advantage for european manufacturers. despite this important advantage, growth in mature western european markets has been broadly flat in the recent years. this market growth and the market itself collapsed in late 2008 due to deepest economic recession in the post-war era. the visible slowing in the decline and recovery of sorts as of the second quarter of 2009 is mostly due to the introduction of scrapping schemes in 12 member states, with highest incentives and most spectacular results in germany. the industry recovery is forecast to be sluggish and to occur at earliest in second-half of 2010 with most of the projected future increases in vehicle consumption due to come from emerging markets (china, india, russia), where european manufacturers have already a significant presence2. the global motor vehicles market is set to significantly grow in the long term. the estimates are that the global vehicle park will increase from the current 800 million vehicles to 1 commission of the european communities, european industry in a changing world, updated sectorial 2009, brussels, 30.7.2009 sec(2009) 1111 final 2 for further details, see ibidem studies and scientific researches economic edition, no. 15, 2010 262 between 2 billion and 3.5 billion by 2035, mainly in the market segment of smaller and lowbudget cars. in principle, european manufacturers are well placed to take advantage of this market opportunity and community trade policy plays a supportive role in terms of enabling fair market access. cars 21 the commission's modern industrial policy implies the cars 21 (competitive automotive regulatory system for the 21st century) process, which was originally launched in 2005. this process aims to make recommendations for the short-, medium-, and long-term public policy and regulatory framework of the european automotive industry. this framework enhances global competitiveness and employment, while sustaining further progress in safety and environmental performance at a price affordable to the consumer. the creation of stimulating framework conditions take full account of business realities. in the light of the current overall downturn of the global economic environment and the consequent negative effect on consumer confidence this task becomes even more important. the ongoing credit crisis has reached the mainstream sectors of the economy and is having a highly detrimental impact on the vehicle market. why this strong effect? first of all because the motor vehicles are one of the most important consumer goods in terms of total household expenditure and secondly because the demand for cars is highly correlated with the general business cycle. the current economic situation is therefore having an adverse impact on the sales of new vehicles in the european union. the vehicle industry operates world-wide and is one of the drivers of globalization, characterized by the rapid opening of global markets and the ensuing increase and diversity in the movement of capital. the ongoing technological revolution is transforming the automotive industry from a traditional manufacturing-based sector into an increasingly knowledge-based one. domestically, the vehicle industry is taking important and often difficult steps to optimize its cost-base and production processes raising fears related to restructuring and relocation. these factors combined with the need to protect the natural environment, safeguard human health and lives and operate in a high oil price environment have created a situation where industry faces new challenges, responsibilities and opportunities which could alter both the industry and its products. the policy interactions with industry should seek to improve the framework conditions for vehicle production and carefully analyze the cost and competitiveness impacts of future regulatory activity. the commission believes that public policy should be predictable while correctly reflecting the increasingly complex demands of society and anticipating trends in world markets. in line with the better regulation initiative the commission initiated a comprehensive automotive-related regulatory and policy review by setting up the cars 21 high level group, which brought together all the main stakeholders to advise the commission on future policy options . competition on the european auto market the consolidation which occurred in the global automotive industry over the past few decades is now facing a significant decline in real prices for new motor vehicles, successful new entries, significant fluctuations in market shares, increased consumer choice within the various market segments combined with shortening of model life-cycles are evidence of a generally dynamic competitive environment. competitive pressure can be expected to increase further as car manufacturers from emerging countries enlarge their presence on the eu markets. studies and scientific researches economic edition, no. 15, 2010 263 an analyze of the european motor vehicle market must be global and here global means, taking into account the recent difficulties experienced by the main american manufacturers because they have a substantial presence in the european market. these difficulties resulted in the sale of jaguar and land rover to tata motors. the situation in the us further deteriorated culminating in chrysler and general motors undergoing court-supervised bankruptcy with ripple effects on the european markets. while fiat established truly global presence by alliance with chrysler, european subsidiaries of general motors will be acquired by new investors – likely outside by the eu. one of the drivers of further consolidation and new alliances will be linked to overcapacity and a price competitive market, which is likely to lead to as much cost optimization as possible. generally, european manufacturers are doing better than their us competitors, but externally, they face tough competition from japan and south korea. europe's competitiveness as a production location is being threatened by other areas, which are catching up in terms of the supply of educated labour and have fewer restrictions on its flexible use. there has been a rapid build-up of capacity in the emerging asian and eastern european markets (turkey, slovakia, the czech republic, poland, romania), which combined with a world-wide drop in demand as from late 2008 may lead to world over-capacity and stimulate price competition. eu producers are not particularly well equipped for price competition and they tend to position their exports in the premium segments. this poses real strategic challenges for the established car makers. it is extremely important, when analyzing the automotive industry, that we do not view it as a uniform whole because different producers and brands have different histories and legacies, can compete in different market segments and often face different challenges. generally, however, many of these structural problems are related to comparatively low productivity levels, high labour costs and labour market regulations, high fixed costs and overcapacity. these conditions have now been aggravated by the sharp decline in demand. recent record prices in global commodity markets, combined with aggressive price competition among manufacturers, have led many automotive companies to focus on their long term competitiveness by reducing costs and improving internal efficiency. the challenges of a more aggressive international competition will be greater in the longer term. it is important that industry in europe is able to draw on its competitive advantages, which are likely to be in the form of high value added, qualitatively advanced products and services requiring the efficient use of available resources, and a highly educated labour force. when discussing the vulnerability to the financial crisis a very important role has the general access to credit, as between 60% and 80% of new private cars in europe are purchased on the basis of credit financing (often involving automotive companies themselves). tightening credit conditions combined with their impact on asset prices (particularly house prices, significantly affecting the consumers' perception of wealth) and the uncertainty created by the global economic environment has translated into difficult access to credit and low consumer confidence, which in turn has a highly detrimental impact on the vehicle market. the current economic situation is therefore having an adverse impact on the sales of new vehicles in europe. auto market in romania during the economic crisis let us move our attention now from the more general case of european car market to a more particular one, that is the automotive romanian market in time of crisis. apia (association of car producers and importers) admits that 2009 was the “nightmare year for auto market” as 38 car dealers declared the insolvency. these 38 represent almost 10% of a total of 400, but the bad news is that the market is in a continuous contraction and the after sales are also going down. in 2005 the sales reached a boom with a record volume studies and scientific researches economic edition, no. 15, 2010 264 of 256000 cars sold. 2006 brought a 16% raise (to 297000 units) and 2007 a 23% raise (366000 units). these growth determined many investors to enter the auto retail and invest in show rooms that most of the times did not have the after sales services. this tendency continued beyond 2007 as in 2009 15 more dealerships and for 2010 other 20 were scheduled. in real terms, new car sales in romania drive down by 52% in 2009, to 130,193 units, from 270,899 units in 2008, according to data of the association of car producers and importers (apia). as many as 91,457 cars were imported in 2009 and 38,736 units were produced by the largest local automaker dacia . in 2008, there were counted 188,954 imported cars and 81,945 vehicles produced locally. dacia was the best selling brand in 2009, with a market share of 30 percent. it was followed by hyundai (with 10,798 units sold corresponding to an 8.3 percent market share), volkswagen (with 9,441 cars sold and a 7.3 percent market share) and renault (with a 6.9 market share and 8,934 units sold). skoda sold 8,857 cars last year and reached a 6.8 percent market share, being closely followed by ford, with 8,780 units sold and a 6.7 percent market share. some 16,678 commercial vehicles were sold in 2009, down 65.9 percent from the 48,875 units sold in 2008. conclusions it may seem superfluous to say once more that the auto market is a very important chain in the european economic mechanism. nevertheless, as we seen, is a sector extremely vulnerable to the present turmoil. this is a fact well known by the european organisms that are also admitting the great growth potential of this economic sector. these are only some of the reasons for creating special institutions that assure the proper conditions for the development of the auto market and the proper implementation of the competition rules. however the figures show that after a blooming period, the crisis hit very hard the automotive market and once more confirmed the paradigm that “desperate times call for desperate measures” that the european commission is trying to take. references: 1. d.allen, competition policy: policing the single market (in h. wallace and w. wallace-eds., policy-making in the european union,) oxford university press, 1996 2. commission of the european communities (2009), european industry in a changing world, updated sectorial 2009, brussels, 30.7.2009 sec(2009) 3. edward m. graham, j.d. richardson (1997), global competition policy, institute for international economics 4. massimo motta (2004), competition policy, theory and practice, cambridge university press 5. roger j. van den bergh, peter d. camesasca (2001), european competition law and economicsa comparative perspective, intersentia-hart 6. world bank, oecd (1999), a framework for the design and the implementation of competition law and policy 7. leonard waverman, w. s. comanor, akita goto (2002), competition policy in the global economy: modalities of cooperation, routledge studies and scientific researches economic edition, no. 15, 2010 265 microsoft word apostoaie constantin marius_eng.doc product range optimization – case study simona-clara bârsan, research institute for analytical instrumentation cluj-napoca romania mihaela-georgia sima, bucharest chamber of commerce and industry, romania abstract the paper presents the optimizing procedure of the product range manufactured by a company which operates in the area of production and sales of the milling and bakery products. the paper authors have taken this company as an example since the products it manufactures and commercializes address to population and are required to meet both qualitative and quantitative market requirements. after a brief overview of the company, one analyses its production capacity, staff structure and distribution as well as the concern of the company for the employees’ training in its activity field, so as to fulfill all the necessary and required conditions for developing a qualitative activity. the analysis continues with: the cost of the product before optimization, software presentation and computerized optimization procedure, the selection of the products to be optimized, data collection, the optimization procedure, results obtaining and analysis, choosing the optimal solution for the analyzed products analysis and for the future competitiveness of the company. keywords management, marketing, production, market, profit jel codes: m 11 introduction the progress of any society depends to a decisive extent on the efficiency with which its human, natural and financial capabilities resources are used. people have always tried, from each spent unit of labor, human resources or money, to ensure the greatest possible increase of production volume and quality, to obtain increased quantities of material assets and services, which to be later justified by placing them on the market, according to its demands, because only in this way one can achieve strong economic growth, the creation of an advanced economy and, implicitly, default conditions for raising the material and spiritual welfare of the population. summarizing the company the company is active in the sphere of production and marketing of grain mill and bakery. the production profile is represented by cereals processing, bread making and bakery, pastry and confectionery, as well as food packaging. the trading of the manufactured products is carried out through their own sales centers, private or state users. studies and scientific researches economic edition, no. 15, 2010 314 the organizational structure of the company is an essential part of the management system that mostly determines its functionality. in the company's organizational structure, one distinguishes the two main components: management structure and production structure. a. management structure the general meeting of shareholders (gms) is the governing body of the company, having the role to appoint the management board which, in turn, appoints the executive management of the company. in the same order one delegates the competencies as well. the organizational structure of the company is a hierarchical – functional one. b. the production structure of the company consists of: grain mill products manufacturing, bread production, specialty bakery manufacturing and pastry confectionery manufacturing. the company has great potential for production. diagnosis of the technical and productive potential a. manufacture of grain mill – production capacity on the company site one can find: mill i, with a total capacity of 105 t/24 h, re-tech; mill ii, with a total capacity of 200 t/24t, endowed with latest generation equipment, having excellent technical performance provided by the italian company ocrim. this mill was put in service in 1996. technological manufacturing flow and production resources: the manufacturing process of grain mill products and by-products includes the activities of wheat cleaning, conditioning and milling. b. manufacture of bread production capacities and resources. in the company there are 2 sections that have bread production as production object, namely: section i with a capacity of 100 t bread/24 h and section ii with a capacity of 60 t bread/24 h. both are equipped with the basic tools needed for good quality production, using raw and auxiliary materials of high quality. one seeks for obtaining a wide range of bread which, along with traditional bread, would satisfy consumer taste and demands. c. manufacture of bakery specialties production capacities and resources. the production capacity of the workshop is 40 t/24 h; it is equipped with the necessary equipment and the manufacturing activity of the specialty bakery involves the use of raw and auxiliary materials. the obtained products are various, such as: traditional bakery specialties (knot-shaped bread, martyrs, paschal) and products for special occasions (requiem, baptism) are products of reference that face successfully with the competition. d. manufacture of pastry and confectionery production capacities and resources. the pastry and confectionery sector has a special section, re-equipped, with a capacity of 18 t/24 h, as well as a workshop for the preparation of pie sheets, with adequate facilities. products obtained: various confectionery products. table 1 diagnosis of human resources management and use source: company’s hr department staff structure staff distribution on activity types studies share (%) activity share (%) higher 7.5 management and administration 17.5 secondary and apprentice 73.8 production 64.5 gymnasium 18.7 sales and distribution of products 18.0 total 100.0 total 100.0 studies and scientific researches economic edition, no. 15, 2010 315 training and development of staff the company management has always been concerned by the staff training in occupational skills (apprenticeship) and night school qualification, the staff following training courses organized by specialized bodies such as fiatest or puratos training center. in order to implement a new quality management system inside the company, one has made a series trainings for the staff involved in marketing activities, sales and trading, related to: the client trial procedure relationship, customer satisfaction, marketing operational procedures; preventive and corrective actions, the control of nonconforming product general procedures; product maintaining, identification and traceability operational procedures; internal communication operational procedures; records controlgeneral procedure; data analysis operational procedures. regarding the hygiene health training of the staff: the persons coming directly or indirectly in contact with the products are regularly trained by empowered institutes regarding the requirements of specific hygiene norms so as to ensure food security products. cost per product the company management is interested in adopting technical and organizational measures which would determine, on the one hand, the reducing of the product costs and the profitability increase, on the other hand. the costs reducing is determined mainly by the efficient use of material resources, reflected by the specific consumption diminishment, the increase of the production capacity utilization degree, the increase of labor productivity and the elimination of all the causes that generate non-economic consumption. considering the analysis of the internal and external market, with its related trends, as well as its own production capacity, the company management has proceeded to the optimization, using a computer program, of the range of products to be manufactured and distributed to customers. description of the optimization procedure and results: in the conditions of a massive development of the informatics systems, an efficient optimization, of economic nature, may not practically take place without the use of specific computer-assisted methods. they enable the development and, ultimately, the solving of complex mathematical models of the modeled processes, correlated with a precise definition of the optimization objectives and by considering the elements or characteristics that restrict the obtaining of some absolute optimum values. with direct reference to the range optimization of some products, one can consider a "radical" solution, namely the products re-designing, taking into account a series of economic, technological, psychological and, ultimately, management criteria, related primarily to: a closer approach to the consumer requirements, regarding: quality, optimal weight, quality maintaining in time, purchasing power, modern design which increases the attractiveness of the product; efficient use of raw materials, equipment, materials; upgrading or introducing new manufacturing processes, possibly patented, by which to achieve an optimal quality /cost ratio. studies and scientific researches economic edition, no. 15, 2010 316 this approach is however very complex and goes beyond the present paper. the specific approach used in the paper is the mathematical modeling for a given range of existing products, considered "healthy" or "future", for which one establishes concrete conditions of predictable evolution. the solving of the mathematical model leads to the optimal values of the specific parameters of the considered production which, once accomplished, lead consequently to a specific optimum. the mathematical model is linear and the problem is to find an optimum arising from taking into consideration several objective functions. the objective function is therefore expressed in that for n independent variables x 1 ... xn, one should maximize (minimize) the following functions: z1 = a11x1 ... ... ... ... ... ... ... a1nxn, zk = ak1x1 ... ... ... ... ... ... .... aknxn; taking into account the primary restrictions: x 1 0, ... ... ... ... ... ... .. x n 0, and simultaneously, having in view the additional restrictions m = m 1 + m 2 + m 3, out of which: m 1 are like: ai1x1 + ai2x2 + ... ... ... ... ainxn bi (bi 0), i = 1, ... ... .... m 1; m 2 are like: aj1x1 + aj2x2 +... ... ... .. ajnxn bj 0, j = m1+1,…..m1+m2; m 3 are like: ak1x1 + ak2x2 + ... ... ... .. aknxn = bk 0, k = m1+m2+1,……..m1+m2+m3. the set of values x 1 ... x n that satisfies the specified restrictions is called admissible vector and the functions that one wants maximized (or minimized) are called objective functions. finally, the admissible vector that maximizes (minimizes) the objective functions is called optimal admissible vector. overall, the question put in these terms is called multiple objective linear programming (molp). in essence, solving molp algorithm is as it follows: 1 identifying the decision variables of the problem; 2 identifying the problem objectives and formulate in terms of linear equations; 3 identifying the problem restrictions and similarly formulate in terms of linear equations; 4 solving the problem for each of the objectives identified in step 2 so as to determine the optimum values of each objective; 5 reformulating objectives as goals, using the optimal objective values identified in step 4 as target values; 6 for each goal, one creates a deviation function that measures the amount through which each given solution deviates from goal; 7 for each of the functions identified in step 6, one assigns a correspondent share and creates a restriction which requires that the value of the shared deviation function is less than the variable minimax q; 8 solving the resulted problem, in order to minimize the value of q; 9 checking the solution of the problem. if it is unacceptable, one adjusts the shares from step 7 and then goes to step 8. practical problem of optimizing the structure of the company product range cereals are the most important food for humans. about 55% of protein, 15% from fat and 70% from carbohydrates, totalizing 50-55% of the calories consumed worldwide are coming from grain. no other food meets so well the human requirements in nutritional and active principles as cereals. cereal-based foods provide complex carbohydrates, the best source of energy required by the human body, especially for low-fat diets. in addition, they have a rich content of dietary fiber, minerals and vitamins, particularly those in group b. studies and scientific researches economic edition, no. 15, 2010 317 in usa, the recommendations for a healthy diet prescribe that 6 up to 11 servings of the daily food consumption should represent bread, cereals, rice and pasta (one serving means a slice of bread, 30 g of cereals, a cup of cooked rice or pasta). in our country, according to statistics, 74.5% of the people living in cities prefer white wheat flour bread and bakery products, that have low content of nutrients and dietary fiber, but which are the cheapest. due to a growing concern of the consumers for their health and, implicitly, for a healthy diet, one has registered a bigger and bigger demand for bread and bakery products made of less refined flours, mixed grain (wheat, rye, flax, corn, oats, sorghum, soybeans), containing bran, wheat germs or various seeds, dietetic bread for specific affections (diabetes, nutritional diseases, cardiovascular diseases etc. these products are rich in vegetable fibers and have a lower caloric content. in this context, the company offers its customers a wide range of bread and bakery specialties that have appropriate nutritional properties, meeting the requirements of a healthy diet, but, at the same time, which needs to be optimized, so as to better meet the preferences and demands of the consumers, in terms of quality and quantity. for these products there are currently significant limitations related, on the one hand, to the relatively limited "absorption capacity on the market" of some of them and, on the other hand, to the restrictions on the storage capacity of products, currently existing in the company. regarding the first mentioned restriction, this results either from the mentality of consumers and from the important financial limitations of a significant part of the population, leading overall to a massive consumption of white bread at the expense of other kinds. in the product range optimization, one has established the optimization of 7 products. for mathematical modeling and implementation of the optimization program, one has used the economic data provided by the company, corresponding to these 7 products. the used economic data referred to: weight per piece; wholesale price ron/kg; current monthly production (t); direct costs/1000 kg (ron); total expenditures/1000 kg (ron); workers salaries/1000 kg (ron); profit/1000 kg (ron). to optimize the product range, one will calculate the monthly production of each product, corresponding to break-even. the used formula is: q = cf/(p-cv), where q = monthly production corresponding to break-even, cf = total fixed costs for the current monthly production; p = unit price; cv = variable costs per unit. in agreement with the company management, one has established the following optimization objectives, which represent the basis of objective functions modeling: maximization of the profit obtained from making these products; maximization of the workers income; minimization of the total expenditures related to manufacturing products; the restrictions of the optimization problem consist in two categories of issues: imposing limits on storage capacity for bread and bakery specialties; imposing upper and lower limits for the production of each component of the optimization package to production, dictated by certain considerations regarding the market absorption of the product and the lower limit of product yield. one has established the following data of the optimization process: a) variables: x 1 = quantity (tons) of product p 1 x 2 = quantity (tons) of product p 2 ...... x 7 = quantity (tons) product p 7 b) objective functions: 1) maximization of the total profit studies and scientific researches economic edition, no. 15, 2010 318 max f1(x) = 162x1+64x2+774x3+184x4+251x5+96x6+1104x7 2) maximization of the workers income max f2(x) = 92x1+36x2+209x3+208x4+121x5+27x6+1125x7 3) minimization of the total expenditures related to manufacturing products min f3(x) = 1242x1+438x2+5160x3+3690x4+1538x5+660x6+1097x7 c) the restrictions of the model: c1: 1x 1 0.27 (profitable minimum monthly production of product p1) c2: 1x 1 1.10 (production proposed for optimization of product p1) c3: 1x 2 0.15 (profitable minimum monthly production of product p2) c4: 1x 2 0.60 (production proposed for optimization of product p2) c5: 1x 3 2.58 (profitable minimum monthly production of product p3) c6: 1x 3 5.50 (production proposed for optimization of product p3) c7: 1x 4 1.23 (profitable minimum monthly production of product p4) c8: 1x 4 4.50 (production proposed for optimization of product p4) c9: 1x 5 0.67 (profitable minimum monthly production of product p5) c10: 1x 5 1.70 (proposed for optimizing product production p5) c11: 1x 6 0.36 (profitable minimum monthly production of product p6) c12: 1x 6 1.40 (production proposed for optimization of product p6) c13: 1x 7 4.15 (profitable minimum monthly production of product p7) c14: 1x 7 6.00 (production proposed for optimization of product p7) c15:1x1+1x2+1x3+1x4+1x5+1x6+1x7 12 (maximum storage capacity of workshop 1) utilization of the winqsb optimization program and interpretation of results after running the winqsb program (on the goal programming module), one has obtained the following results: table 2. obtained results and optimum solution current (ron) optimum (ron) total profit 2747.24 9676.07 workers income 2154.50 7820.75 total expenditures 25,394.57 89.171,00 source: results generated by mathematical modulation the analysis of the obtained results draws the following conclusions regarding the optimal orientation of production: in general, for the sorts produced in smaller quantities, one requires increases of the current monthly production, as it follows: for p1, from 0.40 t to 0.67 t an increase of 0.27 t (67%); for p2, from 0.20 t to 0.36 t an increase of 0.16 t (80%); for p3, from 0.60 t to 1.23 t an increase of 0.63 t (105%); for p4, from 0.07 t to 0.15 t an increase of 0.8 t (114%); for p5, from 0.10 t to 0.27 t an increase of 1.7 t (170% ). 2) the optimized value for the monthly production of p6 increases significantly as compared with the current monthly production, namely with 2.32 t, respectively from 1.00 t to 3.32 t (232%). 3) a more remarkable increase in relative value is observed for product p7, at which the current monthly production of 1.56 t should increase to the optimal value of 6.00 t per month, representing an increase of 4.44 t (284 %). studies and scientific researches economic edition, no. 15, 2010 319 in conclusion, one can note that for all 7 products, the optimized production is higher than the current one, the most significant differences being registered for the assortments produced in greater quantities. 4) for the optimum values obtained using the winqsb program, one has obtained: a) a maximum profit of 9,676.07 ron, as compared with the current value of 2,747.24 ron, meaning a profit increase of 6,928.83 ron (252%); b) a 263% increase of the workers income, respectively from 2,154.5 ron to 7,820.7 ron; c) a 251% increase of the total expenditures, i.e. from 25,394 ron to 89,171 ron. it is noted that a 251% of the total expenditures corresponds both to a relatively higher increase of the profit (increased by 252%) and to a 263% increase of the workers income. 5) having in view the increase, in absolute value of 63.777 ron, of the total expenditures referred to in paragraph 4) c), one requires the company to find financial resources to cover this increase in expenditures. overall, however, the company will obtain an important increase of profit and workers income. 6) taking into account the fact that overall production for the assortments proposed for optimization increases from 3.93 t to 12 t, one requires the increase of the storage capacity, for a suitable storage of the supplementary production resulted from the optimization process. 7) since the optimal values for products p6 and p7 are significantly higher than the current yields, it is necessary that the company should take appropriate measures towards marketing and promoting such products, so as to lead to their absorption by the market. this thing will be achieved through advertising, publicity etc., the nutritional and diet qualities of the products, benefic for the consumer’s health, being presented in an appropriate manner. one should prevent the situation in which the company manufactures these products, profitable in themselves, but fails in saling them. conclusions the optimization program of the product range has considered a linear mathematical model that used three objective functions considered as the most relevant at company level: maximum profit, maximum workers income, minimum expenditures in which one considered restrictions such as minimum-maximum-type and limited storage capacity for the bakery specialties. the product mix chosen to be optimized includes dietary products that have important contribution of vitamins and fibers useful to human metabolism, corresponding to a healthy diet (p1-p7). the obtained results show significant increases that can be achieved in order to obtain optimum production for products p6 and p7, which indicates that these products are not only "recommended", but also profitable. moreover, the other products are produced in smaller quantities, and the result of the optimization process has led to less significant changes of the production, as compared to the current one. this can be explained by the fact that the mentality of the consumers has not yet assimilated them to a level which could make them widely profitable. one requires a significant management decision related to the development of these types of products which, potentially, can be substantially more required in terms of an appropriate marketing that would highlight the benefits of their consumption. the obtained optimum has had in view the current possibilities of the company, but for a "future" optimization which considers significant expansion of the product range, the company necessitates an appropriate re-tech. in this respect, one should have in view the utilization degree increase of the equipments, raw studies and scientific researches economic edition, no. 15, 2010 320 and auxiliary materials, situation that may significantly change the production /cost ratio for some or most of the considered products. at the same time, the changing of the population mentality regarding the consumption of such products, in respect of approaching the european trends can bring new elements that will have to be taken into account. one mentions that the basis of the proposed optimization remain valid, so as the new optimal values, possible to be obtained, will come from the specifications of some new limits of the restrictions related to the optimization problem. references 1. b anu, gh.., .a., (2004), managementul aprovizion rii i desfacerii, ed. economic , bucure ti 2. chira, a., (2005), sistem de management al siguran ei alimentului conform principiilor haccp, ed. conteca, bucure ti 3. demetrescu, m.c., (2001), metode de analiz în marketing, ed. teora, bucure ti 4. dumitru, i., (2004), marketing strategic o abordare în perspectiva globaliz rii, ed. uranus, bucure ti 5. gheorghi , m., (2001), modelarea i simularea proceselor economice, ed. ase, bucure ti 6. kotler, ph., (1997), managementul marketingului, ed. teora, bucure ti 7. nane , m., (2000), managementul strategic al întreprinderii i provoc rile tranzi iei, ed. all beck, bucure ti 8. nicolescu, o., (2002), strategii manageriale de firm , ed. economic , bucure ti 9. s seanu, a.s, (2005), strategii manageriale în industria de panifica ie, ed. matrix rom, bucuresti 10. x x x strategia na ional de dezvoltare durabil a agriculturii i industriei alimentare “orizont 2025”, www.agriculturaromâniei.ro studies and scientific researches economic edition, no. 15, 2010 321 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro profit tax or income tax? options for fiscal optimization of romanian small companies doina păcurari “vasile alecsandri” university of bacău doinap@yahoo.com abstract entrepreneurs usually seek for solutions to reduce their tax burden. we can speak about tax optimization as long as these solutions are in accordance with the law; if they are not, they obviously fall into the area of fiscal fraud. this paper addresses the issue of taxation applicable to the romanian micro-enterprises. these are small entities that fulfil certain conditions regarding total turnover, equity and domain of activity. although the provisions applying to micro-enterprise taxation were elaborated, among others, with the intention to reduce tax evasion, they also allow the micro-enterprises with losses to avoid tax payment. in a country with low purchasing power and a great number of taxes and fees like romania, the entrepreneurs are tempted to use any kind of method to reduce the payments due to the state budget. the micro-enterprise owners make no exception in this matter. keywords micro-enterprise; profit tax; income tax; tax evasion; fiscal optimization jel classification g30; m10 1. introduction applicable tax on either profit or income is the main taxation method established for romanian legal entities and represents an important source of revenues to the state budget. however, the actual amount of these collected revenues to the budget depends on the legal entities’ degree of compliance in their capacity as taxpayers. it is a fact that a decrease in tax collection may impact on the public services provided by state and even affect the honest taxpayers, as the state will try to further tax these in order to secure budgetary resources (alm, 2012). given the fact that presently, companies are seriously affected by the prolonged economic crisis, their owners have got every incentive to seek solutions to reduce their tax burden. their actions may get to fall into the area of tax evasion or may represent a form of taxation avoidance allowed by law, as shown below. 2. tax evasion and fiscal optimization tax evasion refers to intended total or partial lack of compliance with tax obligations. it means evading tax obligations altogether or dealing with them fraudulently with the purpose of reducing the amounts payable to the state budget. unlike the actions pertaining to tax evasion, fiscal optimization is licit, permitted by law, even if its ultimate goal is still reduction of taxes owed to the budget. fiscal optimization generally aims at placing the taxpayer in a more favourable system of taxation or at reducing their taxable base. 199 păcurari literature contains numerous papers on the topic of tax evasion. a number of articles dealing with the ethics of tax evasion are especially noteworthy, in our opinion. for instance, having analyzed his predecessors’ work on the subject, mcgee (2006) has summarized three basic approaches regarding the ethics of tax evasion. according to the first approach, tax evasion is unethical whatsoever. this is because individuals have obligations towards the state, towards the other members of their community and even towards god, having to show compliance with their leaders’ decisions. the anarchy-based second approach sees tax evasion as ethical whatsoever on the premises that the state is illegitimate, corrupt and vicious because it forces individuals to give up part of their wealth or income. the third approach ascertains that tax evasion is sometimes ethical, namely when the government is corrupt or does not use the public money for the benefit of the people (dell'anno, 2009). tax conformation is primarily determined by fear of state controls and by applicable penalties in case of law infringement. nevertheless, taxpayers’ attitude is also influenced by they way they are treated by the state (feld, 2002) and by the degree of corruption in the politicians who decide economic policies (goerke, 2008; dell’anno, 2009). as for the degree of compliance, the taxpayer’s behaviour may be: • licit with respect to taxation, meaning integral accomplishment of tax obligations; • contravention illicit, that is failure to accomplish tax obligations to some extent, either through ignorance or through tax avoidance actions such as: profit split, tax deferral or shift to a more profitable but wrong taxation method; • penal illicit, involving intended avoidance of tax obligations that results in significant social or economic consequences. the last two are manifestations of tax evasion that make taxpayers liable to fines or penal sanctions, depending on the case. globalized business expansion has been offering new opportunities for corporate tax evasion (alm, 2012), which makes it difficult for all states to fight against the phenomenon. moreover, attitude towards tax evasion often differs from one country to another, depending on religion, individual beliefs and also on the geo-political context (mcgee, 2007, mcgee et al, 2007; robinson & slemrod, 2012). according to some researchers’ opinion, including ho and wong (2008), appropriate public education focusing on ethics would help to increase the degree of tax compliance. 3. taxation of the romanian companies as a general rule, romanian legal entities are due to pay profit tax to the budget. however, if they fall into the micro-enterprise category, payment is due as tax on the obtained incomes. differentiation does not apply to foreign businesses operating in romania, which must pay profit tax irrespective of their size or type of activity. 3.1 profit tax companies due to pay profit tax in romania owe a 16% tax rate which applies to taxable profit computed as the difference between taxable incomes and deductible expenses. non-taxable incomes as well as non-deductible expenses or limited deductible expenses are specified in the fiscal code (2013), a document that has been modified many times since its adoption by law in 2003. profit tax is calculated quarterly based on incomes and expenses realized from the beginning of the fiscal year, which coincides with the calendar year in romania. starting with the second quarter of the year, tax owed to the budget represents the 200 profit tax or income tax? options for fiscal optimization of romanian small companies difference between the tax calculated at the end of the reporting quarter and the tax calculated at the end of the previous quarter. the adjustment of profit tax per fiscal year is to be made before march of the following year, when is the deadline for transmission of the annual profit tax declaration. if losses are recorded, these are to be recovered from the taxable profits in the following quarters within a period of 7 years at the most. unlike most companies that calculate profit tax on quarterly basis, some put into practice “the annual profit tax with anticipatory payments” system. these belong to the banking industry, to which companies willing to do so have been adding since 2013. the method consists in determining the profit tax for the ongoing year through an update by the inflation rate for profit tax payable for the preceding fiscal year. the resulting tax amount is divided by four, which in turn gives the quarterly anticipatory payments. after the fiscal year closure, the annual tax is then concluded and the ensuing differences need to be paid by the deadline for submission of the annual profit tax declaration. 3.2 tax on incomes of micro-enterprises if certain conditions are met, small companies are due to pay income tax (commonly referred to as turnover tax). this is called tax on incomes of micro-enterprises. the tax rate amounts to 3% and the tax is calculated quarterly. the conditions that must be met cumulatively by a company in order to be categorized as micro-enterprise are as follows: c1) it must obtain incomes that are less than the equivalent in national currency of 65,000 euros; c2) it must not get incomes from banking, consulting, management, gambling, insurance/reinsurance activities or from capital markets (except brokers and insurance agents’ intermediation); c3) its capital must be owned by entities other than the state or the local authorities; c4) it must not be in the process of dissolution with liquidation (registered at the trade register or in a court of law). the application of one of the two taxation methods (profit tax or income tax) must take place from the beginning of the fiscal year. compliance to c1 and c2 criteria is verified based on the data recorded at the end of the previous fiscal year. it should be noted that one of the reasons for which consulting and management services were classified as exempt activities is that given their type of activity, they generate significant profits. in other words, they may produce income without much expense and the state would have much to lose if such activity were taxed at 3% of incomes instead of 16% of profit. the other exempt activities are specific to companies supervised by regulating bodies in the banking, insurance/reinsurance and gambling industries. in the case of newly established companies, they will be considered micro-enterprises if they fulfil the condition referring to capital and if they state that incomes less than 65,000 euros are going to be obtained. exceptions to the rule are those newly established companies that declare activity types falling into the exempt category (condition c2) above. yet another exception consists of companies with social capital exceeding 25,000 euros. these may opt for profit tax ever since their establishment, regardless of the estimated or actual turnover. the taxation system is to be maintained only if these companies do not decrease their social capital below the 25,000 euros limit during their existence. 201 păcurari the calculation base for the tax on incomes of micro-enterprises consists of the total revenues achieved during the quarter, less the following income types which are considered non-taxable: o incomes associated with the costs of completed production or services in progress; o incomes from the production of tangible and intangible assets; o subsidies for operating activities; o incomes from provisions and adjustments for depreciation or loss of value; o incomes from cancellation of interest or penalties dealt with as non-deductible expenses when calculating profit tax (if the company paid profit tax in the preceding years); o incomes from indemnifications granted by insurance/reinsurance companies for the damages caused to own stocks or tangible assets. the taxable base is to be reduced if the company buys cash registers for its own needs. thus, their purchase price is to be deducted from the total taxable income in the quarter in which they are put into service, consequently reducing the due tax amount. starting with 2013 (i.e. from the 1st of february, 2013), income tax has been mandatory for micro-enterprises. this taxation method had been optional before and had been considered a facility granted to small businesses, due to its low tax rate and simple calculation procedure. the tax rate has been maintained at a low level (see table 1) since its establishment, noting that in 2010 this taxation method was not put into practice. table 1 evolution of the taxable base of the tax on incomes of micro-enterprises year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 tax rate (%) 1.5 3 3 2 2.5 3 n/a 3 3 3 source: fiscal code, title iv, available online at http://static.anaf.ro/static/10/anaf/legislatie_r/arhiva_cod_fiscal.htm the fiscal code (2013) contains special provisions for the situation in which turnover exceeds the threshold of 65,000 euros during the year. in such case, the company owes profit tax starting with the quarter in which the limit was exceeded. the profit tax will then be calculated based on incomes and expenses made from the beginning of the year. if a micro-enterprise benefits from the income tax system and agrees to maintain it, it will have to make efforts to observe the above conditions, particularly c1 and c2. whenever the company is at risk of breaching one of the two conditions, the managers may at the limit consider solutions for fiscal optimization, be it through inaction in order to avoid the recording of income that would result in exceeding the eur 65,000 limit, be it through avoidance of activities not admitted in the case of micro-enterprises. from a practical viewpoint, these solutions require either refusal of orders / contracts generating future income or law violation by not recording the entire incomes in accounting, in which case we speak of fiscal evasion. in the case of a newly established company which expects to record incomes that will only slightly exceed the expenses, a fiscal optimization solution to avoid tax on incomes of micro-enterprises is advisable. for example, for incomes of 10,000 euros (taxable both in terms of profit tax and tax on incomes of micro-enterprises), to which 9,000 euros correspond in deductible expenses, the income tax amounts to 300 202 profit tax or income tax? options for fiscal optimization of romanian small companies euros (10,000 euros x 3 % ), whereas profit tax is only 160 euros (1,000 x 16%). however, if the new company expects to achieve a high rate of profitability, it is advisable to opt for taxation system applicable to micro-enterprises. 3.3 tax avoidance by the micro-enterprises with losses although the tax rate is not high (currently at 3%), it represents an extra amount to pay for companies with losses. this would not be required if the said companies paid profit tax, hence their desire to avoid this taxation system. analyzing the conditions to be met for inclusion in the micro-enterprise category, it is noted that there are two solutions to avoid tax: s1) capital increase above the 25,000 euro limit; s2) recording revenue from activities such as those referred to under the c2 condition. the other two options involving non-compliance to the c1 and c3 conditions were not taken into consideration. more exactly, the condition c1 would be about exceeding the limit for turnover, which does not depend on the management's decision but on the market situation (it is less plausible for a taxpayer to record fictitious additional income). the breach of the c3 condition would imply that part of the share capital be taken over by the state or the local authorities, thus making this alternative out of easy reach for small businesses . the here above s1 solution requires a significant financial effort for a microenterprise, in circumstances in which many such entities have got a share capital amounting to 200 ron (about 50 euros), the minimum allowable capital in romania. therefore, the most accessible solution is the second, namely recording revenue deemed as unacceptable in the case of micro-enterprises. to put it into practice, it is enough to draw one contract of consultancy alone, irrespective of its size. consequently, tax payment may be avoided without infringing on the law. the only requirement is for the company to include consulting or management services within its activity types. nevertheless, the rules and regulations implementing the fiscal code stipulate that during fiscal inspections the control bodies analyze the form and content of consultancy contracts in order to determine whether they are real or not and to expose any attempts to evade tax. to sum up, fictitious or not properly drawn contracts may generate concern upon inspection conducted by the tax authorities. 4. conclusions subject to the fiscal benefits that may be obtained, a small business may try to implement fiscal optimization solutions in order to fall into or, on the contrary, bypass the micro-enterprise category, depending on the case. this depends on the business’ rate of profitability. micro-enterprises with losses are most motivated to avoid the income tax system. in order to do this, they have two alternatives at hand: increasing their capital or, recording income classified as legally unacceptable, i.e. income from banking, insurance/reinsurance, consulting and management or gambling activities. the first solution is more challenging, as it involves a financial effort and legal formalities to be carried out at the trade register office. in contrast, the second solution is more straightforward and the company willing to put it into practice simply has to include one of the exempt activities within its types of activity. out of these, only the consulting and management activities are within the reach of any business. initially conceived as an optional alternative to taxation in order to support the small businesses, the tax on incomes of micro-enterprises has become less approved of ever since it turned mandatory and since the financial performance of the companies 203 păcurari started to be seriously affected by the economic crisis. in the initial phase, the manager of a firm that met the specific conditions applying to micro-enterprises could select the tax type to observe, thus optimizing his tax burden. however, presently lacking such option, the manager will be tempted to force maintain or breach the said conditions, depending on the case. references alm, j. (2012), measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies, international tax and public finance, 19(1), 54-77. dell’anno, r. (2009), tax evasion, tax morale and policy maker’s effectiveness, the journal of socio-economics, 38, 988-997. feld, l. p., frey, b. s. (2002), trust breeds trust: how taxpayers are treated, economics of governance, 3, 87-99. fiscal code (2013), approved by the law no.571/2003 regarding the fiscal code, with subsequent amendments and supplements, available on http://static.anaf.ro/static/10/anaf/legislatie_r/cod_fiscal_norme_2013.htm (ro). goerke, l. (2008), bureaucratic corruption and profit tax evasion, economics of governance, 9, 177-196. ho, d., wong, b. (2008), issues on compliance and ethics in taxation: what do we know?, journal of financial crime, 15(4), 369-382. mcgee, r. w. (2006), three views on the ethics of tax evasion, journal of business ethics, 67(1), 15-35. mcgee, r. w. (2007), changing attitudes toward the ethics of tax evasion: an empirical study of 10 transition economies, andreas school of business working paper series, 4(april), 1-23. mcgee, r. w., basic, m., tyler, m. (2007), the ethics of tax evasion: a comparative study of bosnian and romanian opinion, andreas school of business working paper series, 10(october), 1-16. robinson, l., slemrod, j. (2012), understanding multidimensional tax systems, international tax and public finance, 19(2), 237-267. 204 microsoft word feraru andreea engleza the concept of knowledge and knowledge the management in the romanian business field andreea feraru, ”vasile alecsandri” university of bacau, romania abstract the concepts of knowledge and knowledge management have a significant position at the business level in romania. their importance is given by a created competitive advantage among organizations. such knowledge is lived and felt experience, the use that may lead to several results. knowledge management was developed as a philosophy and applications by companies, but it offers a number of concepts and models which can be expanded regionally to generate significant positive impact on regional development. that education and knowledge are considered assets of a business productive, as they may be primary factors in making a most valuable product or service. the scope of knowledge management in romania is the process that occurs in the organization and coordination of knowledge of each organization separately. keywords: knowledge, explicit knowledge, tacit knowledge, knowledge economy, knowledge management, in a society dependent on information, but also a larger number of organizations (as an expression of increased communication and complexity of social relations), knowledge seems to be the only power that guarantees social progress, economic and democratic while not eroding. orientation to the capture and assimilation of knowledge is for most organizations the confirmation of a certain functional maturity, consistent with the essence of a informational company that is related. knowledge information contained in a set of working practices, "theories in action", skills, processes and heuristics of the company's employees are now "core" of assessing competence in informational globalized economy. the concept of knowledge knowledge is defined, usually as the power to understand and capture the essence of the facts, recovery certainties and information obtained form of experiences and lessons. the operation of such organizations, are crucial processes designated by the generic term the "3 i", that innovation (creating new knowledge), instructing (learning) (assimilation of new knowledge) and interactive partnership for knowledge. knowledge is a concept that draws rule, much discussion and controversy. the information consists of organized data, while knowledge is the ability to use information effectively, giving him the meaning of "cognitive structures that guide action. to know is to be able. such knowledge is lived and felt experience, the use that may lead to several results. 137 studies and scientific researches ‐ economic edition, no. 14, 2009  knowledge is processed information, which may have a long existance, forward ideas and appear in a certain context, which determines their actual field to be used. as the deposit is not a resource management system, so a lot of information is not a knowledge management system. usually, knowledge represent packages of information produced as a result of individual experiences, and may for this very reason, are most searched for product knowledge in a society in which exchange of data and information held with dizzying speed. using a neil flemming diagram we can say: • a collection of data is not information; • a collection of information is not knowledge; • a collection of knowledge is not understanding; • a collection of facts is understanding the truth. types of knowledge according to specialists, nonaka and takeuchi, knowledge within an organization is classified into two categories explicit knowledge can be explained in words and numbers. these can be easily communicated and distributed in the form of data, scientific formulas, codified procedures or universal principles. in turn this knowledge is classified into structured knowledge and nestructurte. strucurate knowledge is composed of information, data, databases, spreadsheets. adjoins unstructured knowledge in e-mail, images, video and audio selections. tacit knowledge-is personal and hard to formalize, dependent on experience and individual characteristics. they are less concrete than explicit knowledge, are difficult to access and often are not shared with other. in fact many people are unaware of the knowledge they possess or of value to others. as michael polanyi said: "we know more than we can say. polanyi is the founder of modern understanding of tacit knowledge. he sees knowledge as a process in which individual issues and culture interact, in other words the expression of all knowledge is impossible to builted in actual communication as to the facts of a person sitting individual experience. if you classify knowledge according to the purpose and use, knowledge is divided into: -know what this is the fundamental knowledge so that people / groups / organizations know what they know but do not know when and how they apply knowledge to solve problems. -know how is its ability to transform the learned knowledge, knowledge from books, the actual results, tangible in short, to know when to use specific knowledge to solve real problems. -know why they go beyond the state "know how". this knowledge allows individuals to make a step towards "knowing how" and use knowledge, also having the ability to face unknown situations. care-why is self-motivated creativity of employees in a company. it is the only level that can not be supported by knowledge management system but may be supported by reasons or specific human resource management practices. paul david and dominique foray describe four major changes that have led to the knowledge society: accelerating production of knowledge; increase the share of intangible capital to micro and macroeconomic level; innovation has become a dominant activity, and its sources, becoming more diverse; the revolution of instruments in using knowledge. 138 studies and scientific researches ‐ economic edition, no. 14, 2009  the importance of knowledge in knowledge-based economy increasingly many academics, business people, but also policy-makers appreciate that type of company to which mankind is moving a knowledge society, supported by a knowledge economy. the problems were highlighted by new skills and skills needed to integrate the knowledge economy, new geography in which physical distances are no longer constraints, conditions of access to knowledge and information on international, heterogeneous development of science and technology in various sectors, intellectual property rights and knowledge capitalization . in this type of society, new economy, often called knowledge-based economy, owes its appearance to a number of important strengths that act today to change the meaning of business rules and national competitiveness: globalization, the intensity of use of knowledge and information, computer networks and connectivity, and increasing the share of workers with skills to over 80% of the employed population. foundation knowledge economy concept was created by peter drucker. in 1966, he described the difference between the manual worker and the knowledge worker: a manual worker uses his hands to produce "things" and a knowledge worker uses his intelligence to produce ideas, knowledge and information. knowledge economy or knowledge economy is a concept that refers to using knowledge to produce benefits. phrase popularized by peter drucker in his book the age of discontinuity (drucker, 1969). knowledge management in organizations knowledge management field is a branch of knowledge management in charge of carrying out actions on knowledge (knowledge actions), such as organization, blocking, filtering, gathering, storing, sharing, dissemination and use of objects of knowledge (knowledge objects), identified as the information, data, experiences, evaluations, surveys and initiatives. knowledge management involves capturing knowledge where knowledge is created by sharing it and its applications in a production process. knowledge management was developed as a philosophy and applications by companies, but it offers a number of concepts and models which can be expanded regionally to generate significant positive impact on regional development. this is due to the fact that developments in theoretical and applied knowledge management are congruent with the defining elements of the game competitive and competitive type prevalent in business life. a key principle used is that education and knowledge are considered assets of a business productive, as they may be primary factors in making a most valuable product or service. knowledge management, is obtaining the right of individuals to correct information in a timely manner so they can make the best decisions "(gordon petrash). knowledge management is the identification and analysis of knowledge but also the necessary available knowledge and related processes, planning and subsequent control of actions to develop both knowledge and processes necessary to achieve organizational goals (j. kingston, a. macintosh). the definition above implies the need for organizations to: • capture and represent knowledge; • share and reuse knowledge for different applications and different users, this implying that this knowledge should be available where it is needed; • create a culture that encourages knowledge sharing and reuse. 139 studies and scientific researches ‐ economic edition, no. 14, 2009  the scope of knowledge management in romania is the process that occurs in the organization and coordination of knowledge of each organization separately. to every organization that process involves: • grouping knowledge on types of knowledge starting from the primary sources of the organization until the formation of internal memory. • storing knowledge seeking to knowledge stored in knowledge infrastructure of the efficient organization. • classification of knowledge for assessing and granting priorities that reflect the quality and adaptation of knowledge • selection of knowledge, which allows the user to use criteria for identifying the most appropriate knowledge. • disseminate knowledge, through which knowledge stored in various forms (tacit or explicit) are accessed by all members of the organization and even by its stakeholderi-customers, suppliers, etc. determined, we can say that knowledge management is not an end in itself. businesses do not exist in order to propagate and advance knowledge they exist to sell products and services. knowledge management within firms is existing since always in the form of discussions between team mates or by organizing various trainings. nowadays, the concept is applied in a formally organized way, within specialized departments and by the performant it systems support in developing knowledge based management systems must consider some principles of knowledge management: the efficient management of knowledge requires taking into account both people and technology implementing knowledge management requires knowledge-based managers. leadership is essential knowledge management requires improved processes that involve working with knowledge knowledge management is never ending process; knowledge management requires a contract that covers knowledge (eg intellectual property rights) knowledge management requires teaching knowledge management practice is dependent on technology knowledge management is a process, not a product. references: 1. bratianu, c. (2003) managementul strategic. editia a 3-a. craiova, editura universitaria. 2. david p. a. & foray d. (2005) economic fundamentals of the knowledge society, oxford university press. 3. drucker, p. (1988) the coming of the new organization, harvard business review. 4. drucker, p. (1969) the age of discontinuit, harvard business review. 5. kingstone j., macintosh a.(2003) models of trust for knowledge-based government services, springer berlin. 6. nicolescu o., nicolescu l. (2005) economia, firma si managementul bazate pe cunostinte, bucuresti, editura economică. 7. nonaka, i., takeuchi, h. (1995) the knowledge creating company: how japanese companies create the dynamics of innovation. oxford university press, new york. 8. petrash g. (2002) knowledge management. classic and contemporary works, masschusetts institute of tehnology. 9. polanyi, m. (1983) the tacit dimension. gloucester: peter smith. 140 studies and scientific researches ‐ economic edition, no. 14, 2009  10. rosca, i. gh. (ed), (2006) societatea cunoasterii. bucuresti, editura economica. 141 the national bank of romania monetary policy characteristics in addition to the current financial crisis ştefan sâmbotin ph.d, iulia andreea bucur ph.d, “vasile alecsandri” university of bacău, romania abstract considering the starting point for research the central bank key role in economic life, through the implementation of the monetary policy, by exercising prudential control and supervision of commercial banks, the present paper proposes an analysis of the national bank of romania monetary policy coordinates in the frame of the increased intensification harsh effects of the global economic crisis. keywords: e52, e58, g01 global financial crisis, monetary policy instruments, financial stability, prudential indicators, inflation targeting, monetary policy interest rate, credit risk jel code: introduction government intervention is carried out mainly by monetary and fiscal policy, because these policies are compatible with market economy laws and principles of democratic governance. monetary policy meets an important role in preventing and managing financial crises, especially given that most central banks in the world have taken explicit price stability as primary objective, in the context of the globalization of markets, development of non-bank financial intermediation and financial innovation. the impact of the current financial crisis on the romanian banking system the global economic and financial crisis strongly manifested in 2009 represented the dominant context deeply negative where romanian real and financial sector operated. the current account external deficit adjustment has strongly impacted on the companies’ performance, incomes of the economy and on the evolution of financial system, significantly increasing the vulnerability of the economic system. the banking system, with comfortable levels of solvency and liquidity, has absorbed well the crisis shocks but with the cost of a lower performance, of growing risks of dynamics and persistence of non-performing loans, prolonged inhibition of loans demand and a relatively high dependency on external financing. a stabilizing factor has been the funding agreement signed by authorities with european union (eu) and international monetary fund (imf). the prospects of banking system and, generally speaking, of national financial system mostly depend on economic system revival and regional developments. the main characteristics of romanian banking system contain1: 42 credit institutions (out of which 10 foreign bank branches and one credit cooperative); assets: 78,19 billion euro (about 67% from gdp); top five banks own 52,4% of the total assets; the solvency indicator: 14,03%; the foreign shareholding owns the majority of banking capital. the biggest 9 banks with foreign capital (69% of system assets) come from eu. the largest market share belongs to banks with austrian capital (38,1%) and the largest share in aggregate foreign capital belongs to the bank with greek capital; market share: 85,3% credit institutions with majority foreign capital; 7,2% credit institutions with majority domestic private capital; 7,5% credit institutions with majority state-owned domestic capital. in 2008 and in the first quarter of 2009 the structure of romanian banking sector saw no significant changes. the trend of expansion of the activity in the territory and the rise in staff numbers was alleviated in the final part of the year in the context of global crisis. the moderate concentration continues its downward trend. the licensing of a foreign capital bank, bcr banca pentru locuinţe, the establishment of a new branch of depfa bank plc. dublin, the discontinuing activity of banca di roma as a result of a merger, changes in a bank’s shareholding of abn amro bank, currently rbs bank românia s.a., following its being taken over by royal bank of scotland, did not alter the structure of the banking sector. starting with january 2009, citibank românia s.a. changed its bank status – from romanian legal entity with foreign capital into the romaniabased branch of dublin-based citibank europe. at the end of 2008 on romanian territory there were 43 credit institutions compared to 42 in late 2007 of which 32 are authorized by the national bank of romania (nbr) to operate as romanian legal entities, 10 branches of eu banks in a credit cooperative network. at the end of 2008, in romania, there were 43 credit institutions compared to 42 at the end of 2007, out of which 32 were licensed by the nbr to operate as romanian legal entities, 10 branches of eu banking groups and a credit cooperative network. at the end of march 2009, the number of credit institutions was unchanged, the only modification, at structure level, being the new status of citibank. actually the banking sector continued to report positive financial soundness indicators, displaying good capitalization and noticeable financial results. stress testing analyses indicate a solid absorption capacity of moderate shocks. two vulnerabilities are more prominent, being fuelled by the global economic and financial crisis: credit risk and liquidity risk. figure 1. financial intermediation in romania and other member states of eu note: eu countries data used refer to 2008 source: http://www.bnro.ro/statistic-report-606.aspx starting with the latter part of 2008, the loan portfolio quality has seen a sharper deterioration, indicating particularly the slower economic activity and the weaker domestic currency. the deterioration is not even across banks, the largest ones posting higher levels of                                                              1 popa r., evoluţii recente ale indicatorilor de stabilitate financiară caracteristici sectorului bancar din romania în contextul crizei globale, online version on http://www.bnro.ro http://www.bnro.ro/statistic-report-606.aspx overdue and doubtful loans. in spite of the faster worsening of loan portfolios of late, the quality of these portfolios overall is in line with the eu requirements. also the coverage by provisions of non-performing loans in the balance sheets of credit institutions in romania is higher than that reported by several eu member states2. as shown in figure 1, the degree of financial intermediation remains below the european average and below the values recorded by other new eu member state. in the context of the uncertainties as an effect of global crisis and risk aversion of banks, private lending sector has decreased in intensity in spite of monetary policy measures taken by central bank. as i said before, an increasing vulnerability of the romanian banking system is the worsening quality of loans portfolio mainly in the context of economic recession and increasing unemployment, and also due to the high level of interest rates charged by the banks. according to figure 2, banks have enough own resources in order to cover the unexpected credit risk losses, remained uncovered by the provisions and the exploiting of collateral provided by the debtors. 0.2 0.2 0.1 0.2 0.2 0.3 0.5 0.8 0.9 1.0 1.2 1.3 1.4 1.4 1.2 1.1 1.6 2.4 3.2 6.0 9.0 10.5 11.7 13.3 14.1 14.6 0 0.25 0.5 0.75 1 1.25 1.5 1.75 2 2004 2005 2006 2007 sep.08 d ec.08 m ar.09 jun.09 sep.08 d ec.09 jan.10 feb.10 m ar.10 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 overdue loans for more than a day and in for which legal proceedings were initiated / total assets capital left scale overdue loans for more than a day and in for which legal proceedings were initiated / own capital right scale figure 2. the evolution of loans portfolio between 2004 and 2010 source: http://www.bnro.ro/statistic-87.aspx the credit cost has significantly increased because of the worsening economic environment and because of difficulty to raise more rare and more expensive financial resources. the savings have increased in the context of positive interest rates of deposits. the profitability of the banking system has been positive although banks’ profit decreased. no bank from romanian banking sector has not been in payment default during the year 2009. according to figure 3, the net profit sharply decreased in 2009 compared to 2008, but at the beginning of 2009 recorded a slightly increase. prudential and profitability indicators in 2008, even its have slightly deteriorated compared to last year show that the romanian banking system is strong. the new tighter lending conditions have reduced the romanian appetite for lending, considering that the banks had to become more restrictive in lending, starting with customers’ quality. thus the lending of “subprime” it is avoided. the banks need to resume lending when the economic fundamentals justify it, not when the “state” dictates. the business environment is still unstable and the banks cannot be put in a position of a philanthropist. without real “guarantees” banking activity has no place. rather, their exposure to high risks may deepen the economic crisis. the state must become a partner in the fight against the eradication of crisis, cooperation between governments, businesses, banks and central bank is indispensable.                                                              2 nbr (2009), annual report on financial stability, online versiun on www.bnro.ro perc ent figure 3. the evolution of banking system profitability between 2004 and 2010 source: national bank of romania the foreign exchange reserve is consistent, ready to be thrown into the market when it will be need it. the romanian banks haven’t invested so far in “toxic assets”, especially on the european market. romanian banks hold significant reserve requirements at central bank, recently 20% of deposits in ron (at this moment 18%), and for those currency reserve rate is still 40%. this demonstrates that the central bank has enough available cash to gradually pump in the system in case of liquidity crisis. however, there are some negative aspects regarding to the strength of the romanian banking system3:  about 57% of loans are granted in foreign currency, which makes the banks` portfolio sensitive to exchange rate fluctuations;  some macroeconomic indicators have worsening trends, which may cause instability in the external capital flows;  the international situation, especially developments in the foreign exchange markets from region make romania vulnerable, especially in the speculative attacks;  the public is losing confidence in the banking system because of the unethical behavior of some banks, especially in this tense period (increasing interest rates and unreasonable fees);  the existence of banking products with promotional interest and later variable which could affect the future repayment capacity of some customers;  because of the liquidity crisis abroad, some parent banks will pump less money in romanian subsidiaries. in conclusion, in the context of the lack of viable government`s measures for economical recovery, the waves of layoffs in the budget and private environment will affect the banks’ customers portfolio and will lead to a widening balance of non-performing loans and lower savings capacity. consumer demand will drop and at the same time the loan demand. the adjustment of the nbr monetary policy instruments in the frame of the current financial crisis the effects of the international financial crisis have extended over romanian economy. however, in terms of direct impact, the banking system was less affected because it was not                                                              3 http://capraru.finantare.ro/tag/sistemul-bancar-romanesc/ exposed to toxic assets, and because of prudential and administrative measures adopted over the time by the national bank of romania. however, indirectly, the international financial crisis and especially its obvious consequence – the recession in developed countries – is expanding on the romanian economy on multiple channels. on the commercial channel, the international financial crisis slows exports` growth or even reduces them. on the financial channel, it limits the access to external financing, and in this way it restricts the volume of lending, and it causes difficulties in the private external debt service. on the exchange rate channel, the reducing of external financing has been reflected in national currency depreciation. on confidence channel, has been a withdrawal of investors from eastern europe. on the monetary and foreign exchange market, this caused some moments of panic and speculative attacks like the one in october in romania, which has required the intervention of central bank. finally, on the wealth and balance sheet effects’ channel, there is a deterioration of the net assets of the households and companies because of a large share of loans in foreign currency (related with romanian leu’s depreciation) and because of a fall in asset’s prices of real estates and securities from speculative unsustainable values (type “bubble”)4. the propagation of these effects determines a high uncertainty regarding to the developments of economic variables. this helps to turn the crisis by emphasizing the negative effects it has on expectations and by increasing the degree of caution amongst consumers and businesses. in romania, the response to the adverse effects of the crisis cannot be similar to that made by some european countries or to the u.s.. there are some differences between the romanian economy and these economies, which do not allow copying the measures developed there. in essence, it’s about the fact that the romanian economy has a large current account deficit, which indicates its dependence on external financing. we have to choose between orderly reduction of the deficit or its reducing by the market in current conditions of tension and mistrust, with dramatic consequences for exchange rate and economic growth. generally speaking, signing several financing agreements with international institutions as the european commission and european investment bank, in order to compensate the sensitive loss of private capital inflows is welcome. if all these steps will be followed, there is a high probability that the investors improve their perception concerning romania and prefer to invest here more than in other central or eastern europe countries. but the high probability is not equal with the certainty: we cannot exclude the scenario according to which although romanian authorities do what need to be done the foreign investors would not positive react, and treat romania unequal than its neighbors. a danger for implementation of this coherent strategy orderly adjustment of external in balance is made of more and more gloomy forecasts developed by different institutions regarding economic growth of romania and which anticipate a negative growth. the danger consists in the political factor having confidence in these forecasts could treat emotionally this problem, releasing unsightly fiscal and wage measures that could deepen the crisis5. even if it is obvious that several sectors that until 2008 were the motors of economic growth (real estate activities, financial banking activities, imports of automobiles, metallurgy industry, chemical industry, construction industry) will decrease in 2010, but there still are some sectors (it, telecommunications, food products and pharmaceuticals, public services) that can develop and support a positive economic growth. in the same time it takes into account that an effort is necessary to rebuild consumer’s confidence in the economy                                                              4 isărescu m. (2009), românia şi criza financiară internaţională, online version on http://www.bnro.ro 5 isărescu m. (2009), nouă lecţii din actuala criză financiară, online version on www.bnro.ro/document information.aspx http://www.bnro.ro/ evolution, confidence that was sharply decreased (like the consumer confidence index posted by ec) on the background of emotionally treatment of crisis6. at the present the monetary policy strategy of nbr – inflation targeting – is closely connected with the current financial crisis and with the problems that our country has faced. the option for inflation targeting adoption as a monetary policy strategy it was justified by the necessity of achieving a sustainable disinflation. the implementation of inflation targeting strategy was not easy even before the financial crisis appearance and the fiscal dominance, massive capital inflows, nbr net debtor position towards the banking system and monetary policy transmission mechanism combined so that between 2005 and 2007 there were periods when inflation expectations and faster domestic currency appreciation coexisted. this raised a serious dilemma for central bank. increasing interest rates in order to bring expectations at the same level with inflation target attracted more and more foreign capital that caused an unsustainable domestic currency appreciation. at the same time with financial crisis in july 2007 a part of these conditions has disappeared. today nbr tends to be net creditor for the banking system, and foreign capital inflows have diminished significantly. but this does not simplify the implementation of monetary policy. on the contrary, financial crisis increases the volatility on foreign exchange and monetary market and amplifies the slowdown the economical activity. on the one hand the drop of external financing and the existence of a large external imbalance caused domestic currency depreciation that fueling inflation and make necessary a relative high level of interest rate. moreover, the debtors with euro and other foreign currency debts and the entire financial system are vulnerable in front of a significant depreciation of domestic currency. on the other hand a higher interest rate would tend to slow down the economic growth and moreover would create costs for the debtors risking to destabilize the financial sector. in these conditions a delicate problem appears between the objectives of monetary policy: maintaining prices stability and ensuring financial stability. the efficiency of monetary policy for achieving this objective is limited if there is not financial stability. one of the basic macroeconomic principle says that the frictions on financial plan have an important influence on business cycle. today on global plan this thing it is very obvious. world’s central banks try to maintain financial stability and to avoid the economic recession and the depression. romanian experience shows that financial stability has a significant importance for price stability. romania was criticized for disinflation delays. they were due to insufficient structural reforms. our country has achieved an average rate of disinflation of 5.8 percentage points per year between 2000 and 2007, while maintaining financial system stability. but if nbr would be substituted this lack of reforms with a sharper increase of interest rate, the financial situation of companies and households had damaged. and thus the financial stability of banking system had damaged. finally, even the disinflation pace had been, probably, lower than the pace achieved. nbr’s policy regarding foreign exchange intervention was guided by the philosophy that high exchange rate volatility is harmful for both the inflation objective and the financial health of the real and financial sector. as shown in figure 4, current financial crisis has brought an abrupt reversal of the trend of domestic currency appreciation, with important episodes of volatility. as, in the past, foreign currency inflows overestimated domestic currency (romanian leu) well above the level indicated by the fundamental factors of the exchange rate, the reduction of external financing and uncertainty tend to cause the depreciation of the domestic currency undue to fundamental factors of the exchange rate. the reserves bought on foreign exchange market in times of over appreciation are good for intervenes in order to slow down the domestic currency depreciation.                                                              6 isărescu m. (2009), finanţarea dezechilibrului extern şi ajustarea macroeconomică în condiţiile crizei financiare. cazul româniei, online version on http://www.bnro.ro/publicationdocuments.aspx?icid=6885  ja n. 07 a pr .0 7 ju l. 07 o ct .0 7 ja n. 0 8 a pr .0 8 ju l.0 8 o ct .0 8 ja n. 08 o ct .0 8 ja n. 09 a pr .0 9 ju l. 09 o ct .0 9 ja n. 10 a pr .1 0 figure 4. the evolution of exchange rate volatility between jan. 2007 and apr. 2010 source: http://www.bnro.ro/datasets-628.aspx during 2010, the nbr has decided to conduct interventions in the euro area public and private debt securities markets, under a securities markets program, to ensure depth and liquidity in those market segments that are dysfunctional. the objective of this program is to correct the malfunctioning of securities markets and to ensure the proper functioning of monetary policy transmission mechanism. in making this decision, it has taken note of the statement by the euro area government authorities that they “will take all the necessary measures needed to meet their fiscal targets for the current year and in the years ahead in line with excessive deficit procedure” and of the precise additional commitments made by some euro area government to accelerate fiscal consolidation and to ensure the sustainability of public finances. the impact of those interventions will be sterilized by conducting specific operations to reabsorb the liquidity injected through the securities markets program. in addition, the central bank decided to adopt a fixed rate tender procedure with full allotment in regular refinancing operations with a maturity term of 3 months, which will be allocated in may and june. finally, the central bank decided to reactivate, in cooperation with other central banks the temporary liquidity swap lines with the federal reserve system and to resume u.s. dollar liquidity providing operations at terms of 7 and 84 days. these operations will take the form of reversible operations in exchange for eligible collateral for european central bank (ecb) and will be carried out as fixed rate tenders with full allotment. the first of such operations was carried out on the 11th of may, 2010. national bank of romania considers that the above measures are essential to ensure the effectiveness of the monetary policy transmission mechanism. the measures will help to mitigate the spillover of increased financial market volatility, liquidity risk and market distortions in the access to finance in the economy. the sterilization of the interventions in the euro area public and private debt securities markets will ensure that the program for the securities markets does not affect the liquidity and interest rates levels from the money markets. thus, the measures adopted do not affect the monetary policy stance7. conclusions effectiveness of national bank of romania monetary policy has registered a positive trend in recent years by speed and flexibility, as compared with fiscal policy whose implementation requires parliamentary deliberations, central bank interventions in the                                                              7 nbr (2010), buletin lunar bce – mai 2010, http://www.bnro.ro/buletinul-lunar-bce---mai-20105654.aspx banking market and the currency market experienced intensification with beneficial effects for fluctuation interest and exchange rates. since the new law the organization approved in 2004 (law no. 312/2004 on the national bank of romania), the institutional, financial and operational central bank independence has been strengthened. however, the transparency of the institution has become more visible to the public and for professionals by publishing regular reports, newsletters and studies. however, the communication activity with business, academia and media, at central and local, have sufficient reserves to improve and increase, by explaining the objectives, instruments, transmission channels and the impact of monetary policy measures, especially in this period when economic and financial crisis requires drastic austerity measures. consistency, transparency and credibility of monetary and financial policies are critical to eliminate any confusion in the economic and financial environment. references 1. popa r., evoluţii recente ale indicatorilor de stabilitate financiară caracteristici sectorului bancar din romania în contextul crizei globale, http://www.bnro.ro 2. bnr (2009), annual report on financial stability, http://www.bnro.ro 3. http://capraru.finantare.ro/tag/sistemul-bancar-romanesc/ 4. isărescu m. (2009), românia şi criza financiară internaţională, online version on http://www.bnro.ro 5. isărescu m. (2009), nouă lecţii din actuala criză financiară, online version on www.bnro.ro/document information.aspx 6. isărescu m. (2009), finanţarea dezechilibrului extern şi ajustarea macroeconomică în condiţiile crizei financiare. cazul româniei, online version on http://www.bnro.ro/publicationdocuments.aspx?icid=6885 7. nbr (2010), buletin lunar bce – mai 2010, online version on http://www.bnro.ro/buletinullunar-bce---mai-2010-5654.aspx http://www.bnro.ro/ conclusions micro-prudentiality and financial stability cristian ionescu, phd candidate, academy of economic studies, romania abstract given the high degree of importance of issues related to financial instability in modern economies, (financial, economic and social aspects), it is necessary the analysis of the microeconomic components that determine macroeconomic fluctuations, resulting in the visible financial instability. thus, this paper aims to analyze the following aspects: financial fragility, as a measure of financial instability at the microeconomic level; micro-prudential regulation; microeconomic reform measures, which addresses problems related to capital, liquidity, risk management and supervision and market discipline. all these are integrated into the international basel iii framework of the bank of international settlements regulations. in addition, the manner and the time of basel iii implementation of the capital and liquidity-related measures is very important. in addition, the paper aims to analyze the inter-connections and the compromises between capital and liquidity, trying to understand how the two are connected. keywords: financial stability, micro-prudential regulation, basel iii, capital, liquidity, risk jel codes: d04, d53, g01, g21, g32 1. financial fragility, as a measure of financial instability there is a link between asset price bubbles and financial fragility. in the middle of the bubbles build-up are the principal-agent conflicts, because bank managers’ upside-risk payoffs increase in risk, while limited financial liability involves restricted downside-risk losses. through intermediation, investors place borrowed funds into risky assets, which stimulates the borrowers to bid-up asset prices above their fundamental values, finally leading to a bubble, which are propagated by investors’ expectations of higher future credit availability and credit volatility, since this allows higher asset returns via risk transfer1. contagion also implies direct bank linkages, where the borrowing arrangements between banks can lead to domino effects if there is at least one systemic important bank that is not capable of meeting its obligations, sometimes due to depositors run (withdrawing massive funds from the bank). thus, the “rational herding” involves negative externalities. autocorrelations between bank failures means concentrations of failures (contagion). the unusual bank stock price behavior due to “bad news” regarding the banks’ performance shows that contagion is also due to depositors’ behavior as a response to bad news. regarding the definition of financial fragility, there may be used two approaches (both at firm and aggregate level): a) reduced bank profitability and b) increased default probability. one single component do not necessary implies fragility; lower profitability may be a consequence of recession and high risk taking, leading to defaults, but without affecting stability. but both components, considered in the same time, do imply financial fragility.                                                              1 davis p.; karim d. (2009), macro-prudential regulation – the missing policy pillar, the 6th euro-frame conference on economic policy issues in the european union     risk is another important issue. holding assets as claims against other borrowers, financial institutions generate complex interconnections of risk exposures; thus, relative asset and liability values, credit availability and asset prices become interdependent. these externalities are shocks to financial systems that, if amplified, lead to spillovers onto the balance sheets. one solution to the problem of the interlocking balance sheets system in order to solve for asset prices which depend on the creditworthiness of other financial institutions is that each claim should uniquely priced in terms of parameters describing the underlying financial system (current prices of underlying assets, debt levels and structure, and the profile of balance sheet inter-linkages)2. regarding the regulators’ incentives, the regulator’s response to instability is conditioned on the ex-ante probability of asset price collapse; there are two possible situations: if the probability is high, the remedial actions are optimal; if the probability is low, the regulator is forbearing to instability. principal-agent and political motives are two reasons why regulators show forbearance, instead of implementing prompt corrective action. regulators that seek the maximizing of the utility consider forbearance as a strategy where taxpayers bear the costs. regarding the systemic risk, the contagion via market price changes in the context of mark to market (where financial institutions’ active balance sheet management generates a positive relation of leverage and balance sheet size) is also important. regarding liquidity, financial institutions boost liquidity in times of boom, aiming to expansion, while a shock to asset prices led to contractions. there are amplifying mechanisms of liquidity shocks, which lead to the following effects: a) borrowers’ balance sheet effects (determining a loss spiral and margin spiral); b) a lending channel effect (determining hoarding of liquidity); c) runs on institutions and markets; d) network effects. 2. micro-prudential, firm-specific reform measures the micro-prudential reform measures imply stronger capital and liquidity regulation (but not forgetting a more general background that includes improvements in supervision, risk management and governance, a greater transparency and disclosure)3. one major international institution that manages the micro-prudential reform measures is the basel committee on banking supervision, using the basel framework. 2.1. capital the global banking system, before a financial crisis, implies insufficient level of high quality capital. therefore, there are many banks that rebuild their common equity capital bases in the crisis, not before the crisis, where it is most difficult to do so. there are also differences in defining the capital between jurisdictions and the lack of disclosure enables markets to assess and compare the quality of capital across institutions. 2.1.1. proposals regarding capital basel ii regulations considered that the overall level of capital in the system is sufficient, but it is necessary to increase the risk sensitivity in order to promote better risk management and in order to reduce regulatory arbitrage. the main component of basel ii, pillar 1, was in the definition of risk-weighted assets. regulators realized the need to refine the definition of the capital components. but the financial crisis that started in 2008 shown that there is a need redefining the capital (components of tier 1 capital were unable to absorb losses).therefore,                                                              2 idem      3 basel committee on banking supervision (2010), the basel committee’s response to the financial crisis: report to the g20, bank for international settlements the tier 1 capital should include common shares and retained earnings, and the remaining part should include instruments that: a) are subordinated, b) have fully discretionary noncumulative dividends or coupons, c) have no incentive to redeem. moreover, the risk sensitivity assumptions in the case of many transaction types (like securitizations and derivatives) were insufficient during the financial crises. the basel iii regulations underlined the necessity of increasing the quality, quantity and international consistency of the capital base, and increasing the capital requirements for certain types of transactions. it is also necessary the introduction of a non-risk based leverage ratio, in order to diminish the build up of leverage in the financial system. basel iii also intends to reduce the pro-cyclicality of the basel ii framework. 2.1.2. capital base basel iii implies that the regulatory adjustments are applied either to a combination of tier 1 and tier 2 capital or only to tier 1 capital. therefore, tier 1 capital is defined as items that can absorb losses, while tier 2 is defined as capital that can be used to offset losses. tier 3 capital, which offsets the market risk in the basel ii framework, will be entirely eliminated. therefore, there is a greater focus on common equity, the highest quality component of a bank’s capital, while adopting a stricter definition of common equity, requiring regulatory capital deductions to be taken from common equity rather than from tier 1 or tier 2 capital as in basel ii. as a result, it will be impossible for banks to have strong tier 1 capital ratios with limited common equity net of regulatory deductions. thus, higher quality capital means more loss-absorbing capacity, which leads to stronger banks, permitting them to better resist to high stress periods (and even financial instability periods). 2.2. risk coverage in addition to tightening the definition of capital (raising the quality and level of the capital base), basel iii proposes to increase capital requirements for certain types of transactions. it is necessary to make sure that all risks are included in the capital framework. during a financial crisis, it is possible that many of the risks may not be properly covered in the riskbased regime (for example, there may be banks with great volumes of complex, illiquid credit products, but with no adequate capital amount to support the risk). in addition, not including the main on-balance sheet risks and off-balance sheet risks and the derivative related exposures may amplify a financial crisis. therefore, basel iii is introducing a set of enhancements to the capital framework that strengthens the minimum capital requirements for complex securitizations (higher risk weights for re-securitization exposures in order to better reflect the risk of the financial products, raising the capital requirements for certain exposures to off-balance sheet vehicles, the requirement that banks conduct more rigorous credit analyses of externally rated securitization exposures)4. basel iii is also increasing the regulatory capital requirements and is improving risk management for counterparty credit risk (due to deterioration in the credit quality of counterparties that is an important source of credit-related loss). these include: a) using stressed inputs to calculate the capital requirement for counterparty credit default risk; b) new capital requirements, in order to protect banks against the risk of reducing the counterparties’ credit quality.                                                                  4 ibidem 2.3. leverage ratio another essential cause for a financial crisis may be a high leverage in the banking system. in order to reduce the build-up of leverage, basel iii introduces risk-based requirements. the design for the leverage ratio involves: a) regarding the off-balance-sheet items, it will be used a uniform credit conversion factor, with a 10% credit conversion factor for unconditionally cancellable off-balance-sheet commitments; b) regarding the derivatives, it will be introduced a new measure of potential future exposure based on standardized factors. therefore, derivatives will be converted in a consistent manner to a “loan equivalent” amount. 2.4. counter-cyclical capital buffers financial crises involve pro-cyclical amplification of financial shocks. the basel iii countercyclical capital buffer is designed to achieve four objectives: a) reducing/ eliminating cyclicality; b) promoting forward looking provisioning; c) conserving capital for use in periods of stress; d) protecting the banking system from excessive credit growth. the capital conservation buffer will absorb losses during a period of severe stress while the countercyclical buffer will increase the capital conservation range during periods of excess credit growth. the buffer will be “deployed when excess aggregate credit growth is judged to be associated with a build-up of system-wide risk to ensure the banking system has a buffer of capital to protect it against future potential losses.” thus, the countercyclical capital buffers will be deployed in a specific jurisdiction on an infrequent basis, “perhaps as infrequently as once every 10 to 20 years.” national bank regulators will inform banks in advance of their judgment of any “buffer add-on”, giving banks sufficient time in order to achieve the additional capital requirements, while the decreasing a buffer will take place immediately, so that the supply of credit shouldn’t be constrained by the regulatory capital requirements. therefore, internationally banks will take into consideration the geographic location of their credit exposures and compute the buffer add-on for each credit exposure depending on the buffer-in effect from the jurisdiction of the exposures (the buffer will be equal to a weighted average of the buffer add-ons from the jurisdictions of the exposures). in order to give assistance to national banking regulators in every jurisdiction, basel iii uses a methodology in order to provide a common starting reference point, transforming the gap between the aggregate private sector credit and gross domestic product ratio into a buffer add-on (a zero add-on means a credit/gross domestic product ratio near or below the longterm trend; a positive add-on means a credit/gross domestic product ratio that is greater than the long-term trend, where the specific amount represents the excessive credit growth). although the national authorities will not mechanistically react depending on the credit/gross domestic product ratio, they will take it into consideration when applying the judgment in the setting of the buffer in the jurisdictions (also using the best information available in order to reduce the creation and accumulation of the system-wide risk). basel iii considers that a countercyclical buffer within a range of [0%, 2.5%] of common equity or other fully loss absorbing capital will be implemented according to national circumstances, in order to achieve the macro-prudential objective of protecting the banking sector from excessive aggregate credit growth that may lead to a system-wide build-up of risk.     3. liquidity strong capital requirements are a necessary for the banking sector stability (and for the overall financial stability), but they are not sufficient. it is also necessary the introduction of stronger bank liquidity that should reduce both individual level and system wide stress. basel iii involves some common metrics as minimum types of information that supervisors should use in monitoring the liquidity risk of the financial entities. liquidity risk comes from the mismatch between the timings of cash inflows and cash outflows. this is an important issue, especially for the banking sector, where one of the most critical functions of modern banking system is the reallocation of financial resources from the liquid sectors to the illiquid sectors. this framework involves two consequences: a) the banking sector is exposed to a maturity mismatch (the term on which liquid units invest their liquidity is shorter than the term on which illiquid units borrow; the reallocation of the financial resources from one sector to the other involves mismatch of maturities for the banking system in the form of liquidity risk); b) the banking industry is leveraged (banks borrow money from liquid sectors and lend the money to illiquid sectors; therefore, a high leverage increases the impact of the liquidity problem, both on an individual and a system levels. but regulators cannot remove the mismatch liquidity risk from the system. instead, the regulators try to force the banks to build liquid reserves to ensure withstanding the cash imbalances in the case of a financial crisis, until the situation returns to normality. 3.1. the new liquidity requirements basel iii introduces two new ratios (liquidity coverage ratio and net stable funding ratio); these indicate the minimum maintained liquidity, in order to withstand cash obligations in the situation of a financial crisis or financial stress. the liquidity coverage ratio covers the short-time time horizon and it ensures that every bank have enough liquid resources in order to fulfill the cash obligations in the case of a severe financial stress. the liquidity coverage ratio is calculated as following: the net stable funding ratio covers the medium-term time horizon and it ensures the structural balance between maturities of a bank’s assets and liabilities. it aims to prevent banks from exposing themselves to extreme maturity transformation risks by funding medium and long-term assets with very short-term liabilities5 (which may lead to a systemic liquidity shortage when major short-term liquidity channels severely drop down). the net stable funding ratio requires banks to have enough funding for at least one year in order to compensate all cash needs expected to occur. the net stable funding ratio is calculated as following: available amount of stable funding includes cash, equity and liabilities that remain within the bank for at least one year (because of the long contractual maturity or because of their rigidity even if the contractual maturity falls within that year. required amount of stable                                                              5 . barua r.; battaglia f.; jagannathan r.; mendis j.; onorato m. (2010), basel iii: what’s new? business and technological challenges     funding includes the amount of assets that are not reimbursed for at least one year (and which need to be funded for at least one year) and the cash outflows that occur beyond one year (due to the contingent liabilities). there are some instruments that require a 100% stable funding: a) securitize-able assets; b) assets from securitizations; c) securities issued by banks or other financial institutions; d) any security with rating lower than a-. in addition to the liquidity coverage ratio and net stable funding ratio, basel iii includes a set of monitoring tools as minimum types of information that supervisors should use in their monitoring activity: a) contractual maturity mismatch; b) concentration of funding; c) market-related monitoring tools (asset prices and liquidity, cds spreads, equity prices). 4. risk management and supervision stronger capital and liquidity standards must be accompanied by better risk management and supervision, especially in an environment characterized by a continuously rapid financial innovation. therefore, basel iii in regard to the supervisory process emphasizes the importance of several weaknesses revealed in the banks’ risk management processes during financial crisis periods. the solutions taken into consideration include: a) firm-wide governance and risk management; b) capturing the risk of off-balance sheet exposures and securitization activities; c) managing risk concentrations; d) providing incentives for banks to better manage risk and returns over the long term; e) sound compensation practices6. 5. market discipline during a financial crisis, it is often possible that the disclosures provided by the banks about their risk exposures and regulatory capital bases to be deficient and inconsistent. in addition, there is insufficient information regarding the components of capital, making difficult an accurate assessment of the capital quality. therefore, in order to improve transparency and market discipline, basel iii is requiring that banks disclose all elements of the regulatory capital base, the deductions applied and a full reconciliation to the financial accounts7. thus, basel iii aims to ensure that banks disclose clear, comprehensive and timely information regarding the remuneration practices, in order to promote a more effective market discipline. consistency of disclosure requirements should contribute to a higher convergence of practices. 6. implementation timelines of basel iii table 1 illustrates the implementation deadlines of the capital reforms and of the introduction of a global liquidity standard, which will improve the global financial system.                                                              6 basel committee on banking supervision (2010), the basel committee’s response to the financial crisis: report to the g20, bank for international settlements  7 ibidem     table 1. phase-in arrangements (shading indicates transition period) (all dates are as 1 january) (source: basel committee on banking supervision (2010), the basel committee’s response to the financial crisis: report to the g20, bank for international settlements) 7. business impact and challenges: exploring the interplay between liquidity and capital 7.1. exploring interconnections and trade-offs between capital and liquidity over the last 30 years, there were some major changes in the financial sector: the banking sector has become more complex; trading and structured finance has become more spread out and complex; the corporate structure of banks has also become more complex. all these created a more difficult risk measurement and management. although risk management is now seen as a primary component of banks, the reporting tools and risk management functions (such as stress testing) have not been entirely integrated across departments. banks maintained the decentralized it functions that support finance, treasury, business lines and risk management, but they haven’t re-conciliate the data across departments, which created a culture of risk management that failed to view risk in a holistic way. a proper effective risk management system should take a top-down approach to risk measurement and reporting, viewing and managing the interconnections between risk factors at a high level, such that their potential impact on the balance sheet can be properly accounted. this is the manner that basel iii is addressing liquidity risk, recognizing the connections between leverage, capital and liquidity. basel ii implies stress testing of liquidity and capital separately. but a robust and truly risk-based framework should take into consideration the interdependence between the capital risk and liquidity risk. 7.2. misunderstanding how liquidity risk and capital are connected although capital mitigates unexpected losses, it does not mitigate cash flow imbalances (liquidity risk). therefore, if a financial institution faces a liquidity problem, then it needs cash (not capital). if in the case of a liquidity problem the bank uses its reserves to protect itself against liquidity risk and to absorb losses and meet obligations, the value of the bank         and of the capital will decrease, since the bank will be perceived as “riskier”. this way of seeing things implies that liquidity risk and capital are inextricably linked. but basel iii, using liquidity coverage ratio and net stable funding ratio as primary responses to liquidity risk, do not recognize an inextricably link. using a holistic risk management framework, each bank would decide the size of the liquidity buffer and the proper time horizon, based on a proper assessment of the bank’s overall risk appetite. from a best practice governance perspective, if a financial institution has more than the needed amount of liquid assets then the part of the liquidity buffer that is not needed, it has an opportunity cost associated with it. but if the financial institution has less than necessary to maintain stability, then the bank risks bankruptcy. references: 1. barua r.; battaglia f.; jagannathan r.; mendis j.; onorato m. (2010), basel iii: what’s new? business and technological challenges 2. basel committee on banking supervision (2011), marrying the macro and micro-prudential dimensions of financial stability, bank for international settlements 3. basel committee on banking supervision (2010), the basel committee’s response to the financial crisis: report to the g20, bank for international settlements 4. basel committee on banking supervision (2010), basel iii: international framework for liquidity risk measurement, standards and monitoring , bank for international settlements 5. basel committee on banking supervision (2011), progress report on basel iii implementation, bank for international settlements 6. basel committee on banking supervision (2010), basel iii: a global regulatory framework for more resilient banks and banking systems, bank for international settlements 7. davis p.; karim d. (2009), macro-prudential regulation – the missing policy pillar, paper presented at the 6th euro-frame conference on economic policy issues in the european union 8. delgado f.; meza m. (2011), developments in financial supervision and the use of macroprudential measures in central america, international monetary fund 9. elliott d. (2010), basel iii, the banks, and the economy, the brookings institution 10. galati, g.; moessner r. (2011), macro-prudential policy – a literature review. bank of international settlements 11. resti a. (2002), the new basel capital accord structure, possible changes and micro-and macroeconomic effects, centre for european policy studies 12. resti a. (2004), the new basel capital accord and the future of the european financial system rapporteurs, centre for european policy studies 13. unsal f. (2011), capital flows and financial stability: monetary policy and macro-prudential responses, international monetary fund 14. woolford i. (2011), implementation of basel iii capital adequacy requirements in new zealand, reserve bank of new zealand microsoft word apostoaie constantin marius_eng.doc the competences of european union institutions in the trade policy (lisbon treaty) margareta tîmbur, „al. i. cuza” university of iasi, romania abstract the european union is the best known at the world’s leading trade power and the common trade policy is the core of eu external relations. the events of the last years and the extension of the eu to 27 member proved that the functioning system could no longer continue and was requiring a new institutional framework. the lisbon treaty was the right solution. it purposes are to bring changes for the citizens, institutions, external relations foe the consolidation of democracy in eu. this paper attempts to provide an overview of the major revisions introduced by the treaty of lisbon regarding the trade policy. also, it analyses the extension and clarification of eu competence, the greater role of the european parliament and the inclusion of investment policy in trade policy, the voting rules in trade area and the international negotiation of trade agreements. the study describes, as well, the impact of lisbon treaty implementation on the ms which are independent nations, but without power of decision in the common trade policy. keywords common trade policy, european union, intellectual property rights, lisbon treaty, foreign direct investments, trade agreements, treaty establishing the european community, treaty of european union, world trade organization. jel codes: r11, r50, r58 introduction "trade is one of the engines of growth" european union countries are among the founders of modern international trade rules. this system has helped trade relations to run open, predictable and fairly. the european union (eu) is facing new challenges that affect both, individual member states (ms) and the eu as a whole. economic globalization, demographic change, climate change, the need for sustainable energy sources, new security threats and global economic crisis are the current problems which require effective and urgent solutions at european level. this leads to a tight cooperation between ms in all areas, functioning as a whole with common purposes and objectives. thus, the eu is committed to pursue a trade policy that not only stimulates growth and creates jobs in europe, but, also, can help countries and people worldwide to use actively trade as an instrument for development. furthermore, the eu supports the rules of world trade organization (wto), which provides a high degree of legal security and transparency in the world trade. trade was the first area where eu countries agreed to delegate some of its sovereignty and to transfer to the european commission the responsibility to decide in trade relations, including the negotiation of international agreements. consequently, the eu has a common trade policy (ctp) based on uniform rules. studies and scientific researches economic edition, no. 15, 2010 286 the lisbon treaty „the lisbon treaty is not an end in itself, nor is it perfect. it is an improved set of rules to develop eu policy” european parliament president jerzy buzek the lisbon treaty (lt) signed on december 13, 2007 and entered into force on december 1, 2009, is a response with solutions for the listed above dilemmas, taking in account the social, economic and political changes, toward eu is currently undergoing. as a result of negotiations between the ms and the eu institutions, the treaty strengthens the democratic and fundamental values of the union in the form of new rules or amendments to previous rules under the treaty of european union (teu) and the treaty establishing the european community (tec). with regard to basic values, the lt raises the objective of trade integration to the priority level of the eu1. as a whole field of regulation of international trade, the ctp is a policy with an intense dynamic. until now, a short time ago, the issue to act with one voice in wto, the question of the applicability of wto rules and eu competence to sign multilateral trade agreements, were the main conflicting issues of the ctp. today, when multilateralism is in crisis the challenge for the eu is to negotiate and sign international agreements with economic partnerships, which include rules on investment protection, and give unilateral responses to unfair trade practices 2. lisbon treaty extends the domain of trade policy implementation for including, also, the foreign direct investments (fdi) and the intellectual property (ip) instruments, such as trademarks, industrial designs and patents, copyrights, which are the drivers who trigger innovation, growth and competitiveness. before lisbon, investments were considered an area of mixed competence, which meant that the eu and ms could maintain and adopt international investment agreements. for the first time, fdi are included in the scope of the ctp. after entry into force of the lt, eu will have exclusive competence in this area3. accordingly, eu ms will not be able to conclude the so-called bilateral investment treaties (bits) by themselves. concerning the regulations of portfolio investments ms and eu will have a shared responsibility4. moreover, because the lisbon treaty doesn’t specify whether the eu powers for fdi include both investment protection and liberalization, there may be some uncertainty about this. currently, each eu country negotiates its own bilateral investment treaties containing safeguards investments, such as rules on the repatriation of funds and measures to protect against unlawful expropriation. the liberalization of investment regime (ex. reciprocity agreements on national treatment) is clearly within the exclusive competence of the eu. the extension of eu competence on fdi, has not limited only to the liberalization of investment regime, the lisbon treaty granted the powers and investment protection european union. this could have negative consequences for bits in force. eu exclusive competence in this area means that ms lose their competence to (re) negotiate, conclude and implement these investment treaties5. 1 koeb, e. 2008, a more political eu external action: implications of the treaty of lisbon for the eu’s relations with developing countries, ecdpm inbrief, 21, maastricht, pp. 1-16 2 bungenberg, m. (2009), going global? the eu common commercial policy after lisbon, european yearbook of international economic law 2010, springer berlin heidelberg, pp. 123-151 3 krajewski, m. (2005), external trade law and the constitution treaty: towards a federal and more democratic common commercial policy, common market law review, 42, netherlands, pp. 91-127 4 ceyssens, j. (2005), towards a common foreign investment policy? foreign investment in the european constitution, legal issues of economic integration, vol. 32, no. 3, netherlands, pp. 259 291 5 leal-arcas, r. (2007), will eu ms play any role at the wto after the eu reform treaty?, journal on international constitutional law, vol. 2, vienna, pp.75-90 studies and scientific researches economic edition, no. 15, 2010 287 innovation is an essential tool for maintaining competitiveness, growth and employment in the eu. this is why the commission has identified investing in knowledge and innovation as one of the four key priorities. a strong system of intellectual property rights is a driving force for innovation, stimulating investment and facilitating the transfer of knowledge from the laboratory to the marketplace. three significant changes are made regarding voting rules in trade policy. thus, the lt will simplify the existing provisions in earlier treaties. qualified majority voting will be the general rule, but unanimity will apply when a trade agreement will contain provisions which unanimity is required for adoption of internal rules. secondly, the qualified majority will not apply to commitments on cultural and audiovisual services risk prejudicing the eu's cultural and linguistic diversity; commitments on social, educational or health services risk seriously disturbing the national organization of such services and prejudicing the responsibility of ms to deliver them; and, where unanimity is required for the adoption of internal rules (article (art.) 188 c, lt). the lt does not change in depth the ctp, but modernizes it by consolidating certain aspects, confirming that all key aspects of trade policy are the exclusive competence of the eu, including the international agreements on trade in services. the european union institutions and its competences since the european economic community (eec) was set up in 1957, under rome treaty, trade policy was included in the category of common policies. in trade negotiations the eu acts as a single entity, and thus maximizes negotiating power through a very large weight had in all world trade. the fact that the eu actions in trade scope as a single entity does not neglect the any variety of interests of its members. the design of eu's trade policy is made in consultation with representatives of member countries and important decisions are taken even by the trade ministers of those countries. the european parliament (ep), also involved in decision making, contributes to the legitimacy of those decisions. the eu trade policy has as an objective to “encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade” (art. 10a teu). this objective is reinforced and expanded in art. 206 of the treaty on the functioning of the european union (tfeu), which indicates that the eu „shall contribute to (...) the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers”, and art. 133 (tec) that says “common commercial policy is based on uniform principles, particularly with regard to tariff changes, tariff and trade agreements for uniform measures of liberalization, export policy and measures to protect trade including those taken in the event of dumping or subsidies.” this article allows for even greater liberalization: fdi and the “other” barriers are not mentioned in the original article. the latter expression refers to "non-tariff trade barriers" like environmental standards or consumer protections regulations, which are a target for the liberalization policies of, among others, the wto. moreover, the ctp establishes common rules, including a common custom tariff, common import and export procedure, takes uniform measures to liberalize trade and establishes trade defense instruments. trade policy involves all of us, every day, whatever we do and wherever we live. the trade development if properly managed is an opportunity for growth, and the key of eu economic development is to be competitive and to build the business on internationally agreed rules. according to tec and tfeu the development decisions in the eu and institutional skills are the key elements of the ctp, leading to a clear division of political powers between eu and ms in any area of international trade negotiations. thus, according to tec and teu, the trade with goods was within the exclusive competence of eu institutions, the investments in the ms competences and some areas being subject of joint powers, national and eu. studies and scientific researches economic edition, no. 15, 2010 288 regarding the ctp, there is a precise delimitation between functions and roles performed by main institution: parliament, commission, council and ms. european parliament at its origins, the role of the ep was very modest, as it possessed only consultative and supervisory powers, and was therefore formally excluded from the central decision-making process. 6 the ctp authority was delegated to the commission and council and was not predicting formal involvement of parliament in ctp agreements. according tfeu, ep "acceptance" was required for major treaty ratifications, when referring to matters which go beyond trade. according to article 300 (tec), parliament has to give approval only on economic cooperation trade agreements and association agreements before they are concluded by the council and implemented by the commission. ep shared legislative power with council. it had, therefore, the power to adopt european laws (directives, regulations, etc.). the codecision procedure was the ordinary legislative procedure, thus giving equal importance to parliament and eu council in a few areas (transport, environment and consumer protection). two thirds of european laws were adopted jointly by the ep and council; ep had an important responsibility to control the activities of the eu and it was regularly inviting the commission and the council to develop existing policies or to initiate new ones. ep was actively participating in debates on globalization. it was closely supervising the works of wto. also, it was giving his opinion on the outcome of eu negotiations in the wto, through recommendations to the commission, requesting creation of a parliamentary assembly attached wto to enable every citizen to understand the mechanisms of wto and its decisions. in accordance with the lt, the power of ep increased, getting the co-decision power with the council at the same level. in addition, all trade agreements will be approved by parliament, which will be informed of the progress of negotiations on those agreements. what does this mean? • eu's international policies will become more predictable and have more weight on international scene; • greater involvement of ep in negotiating trade agreements will allow public participation in the ratification process and will create greater transparency. thus, the european parliament: •will ratify all trade agreements; •will have greater powers by extending and strengthening the co-decision mechanism; •will have the status of co-legislator of the council (ms), which improves the democratic legitimacy of the eu in an important policy; • will adopt, with the council, the legislation regarding the implementation of ctp. this makes the ep and council to be equal in terms of making decisions in trade policy area. in terms of legislation, this means that parliament should be co-legislator for reviewing antidumping rules or regulations based on the gsp. however, the improvement is partly or fully compensated by the fact that national parliaments lose their right to ratify trade agreements and therefore influence external trade policy. very important role has international trade commission (inta) of the ep, which is responsible for defining and implementing the union's ctp and foreign economic relations, in particular: •financial, economic and commercial relations with third countries and regional organizations; 6 leal-arcas, r. (2008), 50 years of trade policy: good enough or as good as it gets?, irish journal of european law, 15 (no.1 and 2), first lawltd, uk, pp. 157-182 studies and scientific researches economic edition, no. 15, 2010 289 •harmonization measures and technical standards in the areas covered by international legal instruments; •relationships with relevant international organizations and organizations which promote the regional economic and commercial integration outside of the ue; •relations with wto, including its parliamentary dimension. european commission in the negotiating process of ctp issues, european commission is the negotiator representing all ms. to ensure implementation of the ctp measures, the european commission, according to tec and tfeu, recommends to ms the most appropriate methods of cooperation between them in order to avoid the emergence of economic difficulties for some of them and authorizes the adoption of national protection measures, setting out in these cases, proper terms and conditions for its application. treaties are mentioning that in emergency cases the ms may request the commission authorization to take these measures, if they consider necessary to remedy the disparities created by the application of ctp, insuring that such measures do not significantly disrupt the functioning of the internal market. in accordance with the tfeu, tec and lt, european commission: • submits proposals for the implementation of common trade policy; • submits recommendations to the council, where must be negotiated agreements with one or more states or international organizations; • recommends the ways which ms can contribute to the development of ctp; • authorizes ms to adopt necessary protection measures; • it is the sole negotiator – in the end of the negotiation process we have only one agreement instead of 27 sets of commercial rules; • represents the eu ms in the wto to speak with one voice; • represents and defends european interests in the wto judicial system; • is responsible to ensure that the agreements negotiated are compatible with eu policies and rules; • is responsible to ensure that imports entering into the european union are traded at fair prices and do not harm to european companies and their workers; • monitors and ensures the implementation of international agreements by using the wto system and tools which promote and protect trade adopted by the eu; • the officials from general directorate for trade from the european commission are responsible for current negotiations and represent eu, as a whole, in doha round, regularly informing the parliament; • reports, to the special committee the progress of negotiations. regarding the decisional competences under lt, the european commission, in addition to the powers and duties specified in previous treaties, will be required by law as eu executive carrying out trade negotiations to share information with parliament committee regarding international trade, the status and discussions with third countries. ep will be obliged to give its opinion on all international trade agreements, while the approving power remains in the hands of council of ministers. however ep approval seems to slow the whole process. council council holds the key of decision-making power, in terms of legislation and works largely on the principle of consensus, because the qualified majority creates the prerequisites for studies and scientific researches economic edition, no. 15, 2010 290 maintaining the trade policy as a "hostage" of other matters subject to consensus rules, risking that trade policy to be subject of "indirectly veto"7. tec stipulated to the council the right to decide by qualified majority the authorization of commission to represent the community in trade negotiations and to establish its own negotiating mandate in this area. treaty of amsterdam keeps unaltered this community competence, covered by the art. 131-134 tec. as such, ctp is based on uniform principles in terms of changes in tariffs, tariff and trade agreements conclusion, trade liberalization measures, export policy and measures for trade protection (in cases of dumping and subsidies). art. 300(3) (tec) states: "the council shall conclude agreements after consulting the ep, except for the agreements referred to art. 133 (3), including cases where the agreement covers a field for which the procedure referred to, in art. 251 [decision procedure] or that referred to in art. 252 [the procedure of cooperation] is required for the adoption of internal rules. the ep shall deliver its opinion within a time limit which the council may lay down according to the urgency of the matter. in the absence of an opinion within that time limit, the council may act." so, the council: • authorizes the commission to open negotiations and to represent the eu on eu trade agreements with third countries or international organizations; • has the responsibility to ensure compatibility between the negotiated agreements, the policies and the internal rules of ue; • decides through regulations in accordance with the ordinary legislative procedure the common commercial policy; • adopts measures defining the framework of implemented ctp; • can not conclude an agreement if it includes provisions that go beyond the community's internal powers, especially if it leads to harmonization of the laws or regulations of the ms in area in which this treaty rules are out of such an harmonization; • at the end of a round, must approve the results, • states trade policy guidelines based on which the commission outlines and carries out its eu priorities; • may issue directives at any time of negotiations; • approves or rejects trade agreements negotiated by the commission. eu member states in 1994, the european court of justice established the following rules: regulation of foreign trade (in goods and services) is subject to the exclusive powers of eu institutions, ms are keeping the powers (together with the commission) in matters related to trade and liberalization of production factors (non extern services, investments, employment, property rights etc). according to ctp, none state can unilaterally modify the rules and customs regulations or to sign tariff agreements with third countries. these powers assign exclusively to eu bodies8. before the entry into force of the lt, eu ms: • were asking commission the permission to take the necessary measures by themselves; • were having the opportunity to intervene in the conduct of negotiations; • were concluding with eu the trade agreements; • were applying the commercial policy measures. 7 pelkman, (2001) apud vass, a. (2004), protec ionismul european. implica ii pentru românia, ed. economica, bucure ti, pp. 17-20 8 vass, a. (2004), protec ionismul european. implica ii pentru românia, ed. economica, bucure ti, pp 17-20 studies and scientific researches economic edition, no. 15, 2010 291 under lt, national parliaments will not conclude anymore agreements on fdi, besides that they do not involve other issues that may lead to joint agreements9. ms will lose the power to negotiate, conclude and implement such agreements and the union will be responsible for negotiations or negotiations of new or old investment agreements. the complexity of decision making process has emphasized and with the increasing role of ngos involved in the ctp, as a means to promote specific interests. these interest groups, whose economic and financial strength, the persuasion power in legislative structures and adaptation flexibility may degenerate into strong sources to maintain or promote the protectionism in eu10. critics and conclusions on lisbon treaty coloured by neo-liberalism, from the principles its promotes to the policies it advocates, the lt is an extension of those of maastricht and amsterdam. the eu will remain a privileged space for the promotion of neo-liberal policies. however, the current functioning of the union is marked by a profound democratic deficit with a confusion of powers whereby the executive of the union, the commission, has legislative and judiciary powers and the council, a legislative organ, is the assembly of national executives. the main critics addressed to the lt as a whole and to the ctp in particular are the democratic deficit and lack of responsibility. the increased role of the ep, a body directly elected by the european citizens, is not seen as a sufficient guarantee. the decreasing participation of citizens in the eu elections over the years seems to show little interest and failure to mobilize11. many experts indicate that parliament could try to exert greater influence on eu trade policy objectives in accordance with new rules, rather than simply to give its approval at the end of negotiations 12. the main innovation introduced by the lt was to specify the various types of competence that exist in the eu, therefore, the lisbon treaty improved some aspects of the current eu's ctp, but created new (unnecessary) problems. the implication of the union's exclusive competence in trade policy is the assurance of the unitary representation of interests within the wto for the first time in the eu13. the proposed changes tend toward greater centralization of trade policy and toward reducing the ms' influence in trade policy. the art. 24 states „the union may conclude agreements with one or more states or international organizations.“ coupled with the removal of the veto (unanimity) this means that the eu can now agree trade deals with for example the wto without ms consent. therefore, it would not seem plausible to exclude eu ms from ratifying future trade agreements. hence, can be concluded that the eu is not yet ready to bypass its ms in all areas of trade regulation (notably trade issues related to immigration policy) and consequently eu ms will continue to be present in the wto14. parliamentary approval to conduct trade negotiations will slow the whole process. as a result, instead of working 9 bungenberg, m. (2009), going global? the eu common commercial policy after lisbon, european yearbook of international economic law 2010, springer berlin heidelberg, pp. 123-151 10 vass, a. (2004), protec ionismul european. implica ii pentru românia, ed. economica, bucure ti, pp 17-20 11 balan, g. (2008), the common commercial policy under the lisbon treaty, advanced issues of european law, 6th session, dubrovnik 12 bungenberg, m. (2008), the common commercial policy, lisbon paper, presented at the hebrew university jerusalem 13 leal-arcas, r. (2007), will eu ms play any role at the wto after the eu reform treaty?, journal on international constitutional law, vol. 2, vienna, pp.75-90 14 leal-arcas, r. (2008), 50 years of trade policy: good enough or as good as it gets?, irish journal of european law, 15 (no.1 and 2), first lawltd, uk, pp. 157-182 studies and scientific researches economic edition, no. 15, 2010 292 together in the draft amendment to the rules of trade, council and ep will have to agree on the components of new trade agreements15. the main changes to the lt, compared with the nice treaty on the ctp are: as to the structure of the treaty, the base of the ccp is title ii of the part five of the tfeuexternal action by the union (art. 206 and 207); as to the distribution of competences within the eu institutions, the ep becomes a player; national parliaments do not play a role anymore in ratifying trade agreements, as all trade in goods, services, ip and the fdi is exclusive european competence the actual decision making process will be substantially the same; the european parliament, which has no competence in ctp under the nice treaty is now taking action under the co-decision procedure and gives its assent; the qualified majority remains the voting rule in the council, unanimity being required only in the mentioned cases; the international agreements in the field of transport continue to not be covered by the ctp 16. the lisbon treaty makes the union’s ctp more federal, but not necessarily more democratic. the necessity to implement an international agreement of the union will nevertheless put political pressure on the ms to adopt the relevant legislation. the formal competence of the ms to implement an international agreement may in fact not leave the ms a large margin of discretion. bibliography 1. archick, k., mix, d. (2009), policy studies journal, cprs report for usa congress 2. balan, g. (2008), advanced issues of european law, 6th session, dubrovnik 3. bungenberg, m. (2009), european yearbook of international economic law 2010, springer berlin heidelberg 4. ceyssens, j. (2005), legal issues of economic integration, vol. 32, no. 3, aspen publishers, inc., netherlands 5. koeb, e. 2008, ecdpm inbrief, no. 21, ecdpm, maastricht 6. krajewski, m. (2005), common market law review, no. 42, kluwer low international, netherlands 7. lavranos, n. (2009), american society of international law, asil insight, washington dc 8. leal-arcas, r. (2007), florida journal of international law, university of florida levin college of law 9. leal-arcas, r. (2007), journal on international constitutional law, vienna 10. leal-arcas, r. (2008), irish journal of european law, first lawltd, uk 11. leal-arcas, r. (2008), in kierkegaard, s. 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(2008), the common commercial policy under the lisbon treaty, advanced issues of european law, 6th session, dubrovnik studies and scientific researches economic edition, no. 15, 2010 293 20. * the treaty establishing the european community (consolidated version) 21. * the treaty of lisbon 22. * treaty on the functioning of the european union (consolidated version) 23. * the treaty of european union (consolidated version) 24. * wto, (2008), “annual session of the parliamentary conference” 25. http://ec.europa.eu/index_ro.htm 26. http://eur-lex.europa.eu/lexuriserv 27. http://europa.eu/lisbon_treaty/glance/democracy/index_en.htm 28. http://www.consilium.europa.eu/showpage.aspx?id=1&lang=ro 29. http://www.europarl.europa.eu/news/public/default_ro.htm 30. http://www.wto.org/english/tratop_e/tratop_e.htm studies and scientific researches economic edition, no. 15, 2010 294 the use of public relations in projecting an organization's positive image studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 99 the use of public relations in projecting an organization's positive image ioana olariu „vasile alecsandri” university of bacău, faculty of economic sciences ioana_barin_olariu@yahoo.com abstract this article is a theoretical approach on the importance of using public relations in helping an organization to project a positive image. the study of the impact information has on the image of organisations seems to be an interesting research topic. practice has proved that the image of institutions has a patrimonial value and it is sometimes essential in raising their credibility. it can be said that an image is defined as the representation of certain attitudes, opinions or prejudices concerning a person, a group of persons or the public opinion concerning an institution. in other words, an image is the opinion of a person, of a group of persons or of the public opinion regarding that institution. all specialists agree that a negative image affects, sometimes to an incredible extent, the success of an institution. in the contemporary age, we cannot speak about public opinion without taking into consideration the mass media as a main agent in transmitting the information to the public, with unlimited possibilities of influencing or forming it. the plan for the pr department starts with its own declaration of principles, which describes its roles and contribution to the organisation. keywords communication instrument; corporate identity; credibility; mass media; organization image; promotion; public relations jel classification m41 introduction public relations represents an important promotion and communication instrument. although it is less often used, it has a significant potential in raising public awareness and creating preference for a certain product on the market, as well as in repositioning and maintaining products on the market. the main instruments of public relations are publications, demonstrations, news, discourses, activities for public service, written or audio-visual materials, means of constructing corporate identity and telephone services. the planning of public relations activities involves establishing public relations objectives, choosing the appropriate messages and means to transmit them, as well as evaluating the results. a major mass promotion instrument is represented by the activity of public relations – creating good relations with various existing categories of the public, obtaining a favourable media representation, creating a company image in the public perception, and judiciously managing or removing the negative effects of rumours, accounts or unfavourable events that are harmful to the firm. the public relations department can partly or entirely fulfil any of the following functions: maintaining relations with the press or mediating these relations: creating and placing in the press valuable information deemed as newsworthy in order to attract the attention toward a person, product or service. propaganda in favour of products: using public communication tools in order to popularize a firm’s products. public business: building and cultivating relations with the national or local community. olariu 100 lobbying activities: creating and maintaining relations with lawmakers and governmental officials in order to influence legislation and regulations. relations with investors: maintaining relations with shareholders and other categories of persons from the financial community who are equally interested in the organisation. promoting public development: public relations with donators or members of nonprofit organisations in order to obtain financial support of support in the form of voluntary work. the public relations activity is used for promoting a variety of things/matters: products, people, places, ideas, activities, organisations and even countries. companies resort to public relations activities in order to build good relations with the consumers, investors, mass communication means and with the communities where they operate. the role and impact of public relations public relations can have a powerful impact on the public conscience, at a cost price which is far lower than commercial publicity could achieve by means of commercials. if the company can come up with some interesting information, it will be taken over by numerous and varied press means, the effect being the same as that obtained when opting for promotion. the results generated by the intelligent management of the public relations activity can sometimes be spectacular. major public relations tools specialists in public relations make use of more specific instruments, among which news constitutes a very important tool. public relations professionals find or even create favourable news about a firm and its products or people. sometimes, news topics occur naturally; some other times, the specialist in public relations can suggest events or activities that are liable to create such a subject. public discourses can also generate mediatisation for the firm. it has become increasingly common for leaders of companies to answer questions addressed by journalists or to speak during meetings organised by owners’ associations or during sales conferences, while these events can strengthen the firm’s image. another instrument which is specific to public relations is represented by special events: starting with press conferences, visits to spaces where the company operates organised for journalists, inaugurations and fireworks, and ending with laser light shows, hot air balloon launches, multimedia presentations, spectacular manifestations featuring celebrities or educational programmes aimed at reaching certain targeted public groups and raising their interest. mobile marketing – in the form of promotional tours that bring the trademark right in front of the consumer – has become an efficient means of building individualised relationships with targeted consumers. public relations specialists also elaborate written materials aimed at approaching and influencing the targeted markets, among which we find: annual activity reports, brochures, articles, informative bulletins and magazines/publications edited by the company. audio-visual materials such as films, presentations, audio and video cds are equally used as communicational instruments. corporate identity materials can also help in creating a company identity which is immediately recognizable by the public. logos, headers, brochures, inscriptions, standardized forms, business cards, buildings, uniforms and cars that belong to the firm – all of them become marketing instruments when they are appealing, distinctive and memorable. finally, firms can attract the public’s goodwill by contributing financially and with voluntary effort to activities for public service. a firm’s site can also be a good way of maintaining public relations. consumers and other categories of the public can access the website for information as well as for entertaining activities, as such sites are enjoying significant popularity. websites can also be ideal instruments for managing situations of crisis. the use of public relations in projecting an organization's positive image 101 just as in the case of the other promotion tools, by analysing when and how to use public relations for the promotion of a product, the managerial board must establish the objectives of the public relations activity, must choose the public relations messages and the means by which these messages are to be communicated, must implement the public relations plan and it must also evaluate the results. the public relations of a company must be harmonized with all other promotion activities, as a part of the comprehensive effort of integrated marketing communications. public relations involves various programmes destined for the promotion or protection of a firm’s image or of its products on the market. the influence exercised by public relations is based on its distinct characteristics: high credibility level: news and reports seem to be more authentic and more credible than commercials. lack of consumer reluctance: public relations can establish contacts with potential clients who might avoid sales agents and publicity. the message reaches the consumers more likely as a piece of news rather than as a type of communication regarding sales. presentation: public relations, just like publicity, can make the presentation of a firm or product. the public relations activity can contribute to the accomplishment of the following tasks: • it gives assistance when new products are launched on the market; • it gives assistance during actions of repositioning on the market products that have reached their maturity stage; • it contributes to raising interest in a certain category of products; • it contributes to influencing certain target groups; • it defends the products that have faced problems from the public; • it creates a company image in a way which positively affects its products. main decisions made in public relations establishing marketing objectives public relations can contribute to accomplishing the following objectives: • informing the public; • strengthening credibility; • stimulating the sales force and the distributors; • maintaining promotional expenses as a low level. choosing messages and pr means in the next stage, the public relations specialist identifies or elaborates interesting news concerning a product. implementing the public relations plan evaluating results the contribution of public relations is difficult to measure because other promotional tools are used in parallel. if public relations are used before the other instruments then its contribution can be assessed more easily. expositions: the easiest manner of measuring the efficiency of public relations activities is by determining the number of presentations delivered as a part of information means. raising awareness/acquiring knowledge/determining attitudinal changes: a good measurement method is the study of changes occurring in consumers’ awareness/knowledge/attitude toward the product as a consequence of the public relations campaign. contribution to sales and profit: the impact on sales and profit represents the most satisfying indicator, in case it can be obtained. olariu 102 planning and managing public relations activities the role of public relations in the formal planning of an organisation is significant. public relations counsellors help in creating a declaration of organisational principles – thus offering useful advice regarding the public and advice on strategies of accomplishing objectives, as well as on monitoring the organisation’s environment – as a part of establishing the objectives and goals of the organisation available for a year, for five years or for ten years. additionally, the pr department should establish its own objectives and communication goals. some pr communication plans are directly related to the organisation’s plans. even if an organisation does not have plans established for certain periods, the pr department should nevertheless have a general communication plan that fits the annual activities of the organisation. moreover, the pr department needs a communication plan in the case of crises, or at least some general rules for crisis management. the image of organisations managing organisations’ image the creation of an organisation’s image can be realized by applying a certain policy which depends on the managerial style of the organisation’s leader, one the one hand, and on the activity of the employees, on the other hand. this policy is translated in practice by a series of public relations activities that are temporally arranged and which have the aim of forming, changing or maintaining an institution’s image. these are: developing a high-performance management at the level of the institution. the range of activities leading to the success of the organisation depends on its management, but what is nevertheless essential in order to form, change or maintain its image is to carry out a high-performance activity. developing, at the level of the organisation, a strategy of gaining the trust and the sympathies of the company’s own employees. it is a public relations strategy involving the inculcation of the personnel with the institution’s philosophy, in which the central element is understanding its mission. it is important that each employee consider himself/herself as a co-participant in the organisation’s activity and the institution thus appears in their mind as being the one which allows them to fully exercise their inventive or creative spirit and, ultimately, their personality. the activity as such is hard to achieve and entails investing time, patience and passion from the managers’ part, as well as understanding and patience from the part of the employees. running a sustained promotional campaign and, in certain conditions, even an aggressive one. the informative activity must be performed regularly, according to a certain schedule, or periodically, during different shows in the mass media that rank highest in the public’s taste. making recourse to sponsorship. in the public relations activity, sponsoring is one of the commonest methods employed for the creation of a correct and real image of institutions. the first refers to coca-cola, who has been sponsoring the main sports events of the planet for several years (the olympic games, the world cup, etc.) and seeking to give its products an image that is associated with youth, health, with the desire to be the best. the company builds its image on the mosaic principle and the sponsorship of the main sporting events is just a sequence of its public relations activity. the second concerns the eternal rival of coca-cola, pepsi-cola, fear of the unusual impact of sponsoring major cultural and artistic events, and especially known rock and pop music bands. the effect was immediately seen, the image of the company was associated with modernism and youth. the third example relates to the marlboro brand, which managed its image by sponsoring in particular formula 1 motor racing, and managed to create an image the use of public relations in projecting an organization's positive image 103 associated with youth and courage. the three examples reinforce the idea that sponsorship is a very effective way to manage an organization's image. hiring a very well-trained personnel who behave decently and eliminating those that commit acts of deviation or misbehave. organisations’ personnel have an essential role in promoting a trademark image. it can be said that the good functioning of the company and its success largely depend on the quality of the personnel. irrespective of the nature of the company’s activity, the hiring of new members should necessarily take into consideration, among others, the following aspects: the candidate’s temperament; personality features; attitude, aptitudes and psychic abilities; interests, aspirations, wishes; political beliefs; level of professional training; experience for the targeted position; medical condition; extraprofessional activities performed; behaviour in the family and in society; family condition; reasons for seeking employment. all these requirements that a candidate should meet in order to be hired have as a purpose the taking in of people who are welltrained, serious and stimulated by the wish to accomplish their professional goals. maintaining very good relations with the mass media. this is an indispensable condition for success. conclusions the major objective of the public relations activity is that of instituting, among a significant part of the public, a climate of trust in the firm, in its capacity of satisfying the needs and requirements of various consumer and user categories. it is typical of this type of activity to focus increasingly on promoting relations with physical and legal persons, to seek to inspire trust and understanding, to address the public opinion by means of the various categories of the public, to have an activity that has a double direction – toward the public and coming from the public, or to try to win the potential consumers’ sympathy or attachment. there is an unlimited number of events – economic, scientific, cultural, sports – that an enterprise can create and use to its own interest, for highlighting its offer, or for consolidating its own image. it should be added that by means of various forms and specific techniques the public relations activity contributes to the accomplishment of the firm’s various targets, among which we can mention: boosting consumers’ trust in the company’s offer; launching new products on the market; revitalizing, repositioning and re-launching products on the market; creating or maintaining the consumers’/users’ interest in a category of products or services; consolidating the company’s position on various markets; extending the strength of publicity and of various forms of promotion; informing consumers on extending the possibilities of using its products/services; bringing additions to publicity messages; informing, influencing and attracting opinion leaders; bringing additions to and strengthening sales promotions campaigns; forming the enterprise image; raising the company’s prestige and improving its offer by attracting sponsors in promotional activities; differentiating the company’s offer from that of its competitors; stimulating the demand for goods and services. no matter what means and techniques are used, the public relations activity must be correlated with the other promotional variables, integrated in a unitary programme, with a global vision. at the same time, it should be taken into consideration that the efficiency of public relations activities largely depends on the qualitative level of the overall activity of the enterprise. references cutlip, s., center, a., broom, g. (2000), effective public relations, ediția a 8-a, upper saddle river, nj; olariu 104 gregory, a. (2009), planificarea și managementul campaniilor de relații publice, editura polirom, iași; kotler, ph., armstrong, g. (2008), principiile marketingului, editura brandbuilders, bucurești; myers, j.h., (1986), marketing, mcgraw-hill, inc.; newsom, d., vanslyke, t., kruckeberg, d. (2003), totul despre relațiile publice, editura polirom, iași; saffir, l. (2008), pr cu buget restrâns, editura uranus, bucurești; stancu, v., stoica, m., stoica, a. (1998), relații publice, succes și credibilitate, editura concept, bucurești; șerbu, s. (2007), relații publice și comunicare, editura teora, bucureşti; toffler, a. (1995), puterea în mișcare, editura antet, oradea. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 18 benchmarking of the possible impact of romanian and hungarian universities to economic development orsolya gregán university of debrecen gregan.orsolya@gmail.com abstract economic development is associated with innovation, which is why the innovation management practices and systems of the universities became essential. this research aimed to benchmark five romanian and hungarian universities close to the romanian-hungarian border to identify the strengths and weaknesses of the different approaches.the benchmarking included economic data and indicators connected to the innovation of the five biggest universities along the border regions. the analysis was performed using data derived from the higher education word ranking and eurostat. for the qualitative part, the web pages of the universities were analyzed. the research found that although the universities on the hungarian side of the border seem more developed, regional economic development is stronger and more natural on the romanian side of the border. according to the literature, it is clear that geographical factors play an important role in the development of innovation systems. the closing part of this paper makes an attempt to list the possible causes of the results. keywords economic development; university; romania, hungary; cross-border; innovation jel classification o30; o10; m16 introduction during the development of universities, knowledge was always at the center. at first, people got together to transfer knowledge, then in the era of the humboldtian university, research became the second activity to be performed by higher education. in the last few decades, the utilization of the knowledge produced at universities got emphasis and besides exploitation, while sustainability issues are getting more and more important (wallin, 2007). this activity is frequently referred to as the third mission of the universities. as economic development was identified as a must (solow, 1956) and as innovation was identified as a crucial element of economic development (porter, 1998), the role and the nature and level of cooperation of the different actors of the innovation ecosystems started to change, sometimes radically. the end of the 20th century and the beginning of the 21st century are marked by the phenomenon of the entrepreneurial university. the concept started its glamourous career in the united states like many other connecting ones (third mission, technology transfer, or innovation ecosystem) since the bayh-dole act of 1980 (rector & thursby, 2016; siegel & wessner, 2012), which gave technology transfer from universities to industry a boost. the historical basis for that was, that since the land-grant college acts of 1862 and 1890, us universities were open to collaboration with external parties and to modify education and research according to external events, requests and expectations (pinheiro, langa, & pausits, 2015). gregán 19 entrepreneurial universities are in the focus of research and according to the literature, they have to perform several tasks (compagnucci & spigarelli, 2020). although from being a sole supplier of intellectual capital and human resources to being a catalyst the list of the tasks to perform is not the same at different researchers, but there are some, in which almost all can agree (figure 1). figure 1 tasks and stakeholders of entrepreneurial universities (not exhaustive) source: based on the literature review, own compilation researchers question from time to time if there is a „one-size-fits-all” approach, and how the third mission can be performed and managed at the universities (bedő, erdős, & pittaway, 2020; secundo, giustina, de beer, schutte, & passiante, 2017). in figure 1 the dark squares symbolize the main activities of an entrepreneurial university, while the light circles are the main target groups. these are the triple-helix actors complemented with the students and staff as this article’s point of view is the entrepreneurial university’s one. knowledge and technology transfer knowledge and technology transfer were among the first tasks to be embraced by the universities (huberman, 1983) in the framework of the third mission, although the success of the technology transfer offices is controversial (gubitta, tognazzo, & destro, 2015). not solely for this task the university needs to build wide and diverse networks with business / industrial, governmental, and academic stakeholders (triplehelix actors) (leydesdorff & etzkowitz, 1996). entrepreneurial education it is also a must to provide entrepreneurial education for the students and staff. this task contributes to the responsibility of providing educated work staff to the market and to the knowledge transfer activities, too. moreover the actions following entrepreneurial education incubation, acceleration, science parks – can be profitable in the long run (bennett, yábar, & saura, 2017) and they are in favor of networking activities. universities play an essential according to some researchers, central role in the startup ecosystem (diaconu & dutu, 2015). universities’ startup incubators and accelerators provide support and courses for entrepreneurial students and staff. courses benchmarking of the possible impact of romanian and hungarian universities to economic development 20 can include pitch training, business model canvas, prototype building, financials, and marketing, which provide a fast track to entrepreneurship for the startuppers. through mentoring and by filling the gap between research and the market, there is a two-way connection with the local economies. network building networking is essential in any relationship. for being able to cooperate with other actors, trust and communication are among the basic requirements. the network includes the students and the staff of the university, but also the industrial and governmental actors and the widest group is the society itself (bennett et al., 2017). among the networking activities with external stakeholders mentoring, commercialization (patenting), brainstorming, idea competitions, joint projects, and financing can be mentioned. some research even proved that trust within the network of an entrepreneurial team has a significantly positive influence on the likelihood of obtaining seed investment from venture capitalists (huynh, 2019). financing universities also have an important role in the financing and early support of startups (pre-seed financing, venture financing, and investing equity in startups). of course, it is frequently combined with in-kind contributions from the university – like access to research groups and/or infrastructure. sometimes literature defines academic entrepreneurship as narrowly as the commercialization of academic research, some argue that a broader conceptualization – focused on the future forms of value – is historically justified. in this sense academic entrepreneurship is a significant driver of institutional change all over the triple-helix (wadhwani, galvez-behar, mercelis, & guagnini, 2017). strategy, culture and infrastructure these three factors are binding to be successful as an entrepreneurial university. the system of figure 1 works best if the cultural environment is advantageous (del giudice, nicotra, romano, & schillaci, 2017; miller, alexander, cunningham, & albats, 2018; o'shea, allen, morse, o'gorman, & roche, 2007), the infrastructure is appropriate (guerrero, maribel & urbano, 2012; shane, 2004; wright, 2007) and the innovation strategy supports the objectives of the entrepreneurial university (guerrero, maribel, urbano, & fayolle, 2016; guerrero, maribel & urbano, 2019; secundo, g., de beer, fai, & schutte, 2019). according to rolfo and finardi (2014), it was easy for the universities to provide knowledge to be translated into intellectual properties that could be exploited in practical terms. some universities got high-levels in other activities, like patenting, licencing, building science parks or financing startups (mariani, carlesi, & scarfò, 2018). these kinds of activities soon became the indicators of the universities’ contribution to their regions’ economic development (compagnucci & spigarelli, 2020). the concept of a successful third mission depends on three interrelated aspects (i) the institutional framework of the university, (ii) regional factors, like embeddedness and (iii) the activities of the university (compagnucci & spigarelli, 2020). research method this research aims to shed a light on a limited geographical area, which is relatively lagged behind in economic development and innovation terms in the european union. gregán 21 it is the border area of romania and hungary, which countries are both part of the emerging innovators group in the european innovation scoreboard (2022), although the hungarian position is the closest to the group of the moderate innovators (figure 2). figure 2a innovation index by groups source: european innovation scoreboard (european commission, 2022a) based on the world university rankings 2023 of the higher education (the higher education, 2023), there are altogether 35 romanian and hungarian universities on the list. the list was copied, data was cleared and universities located far from the border of the two countries were eliminated from it. then from the remainder 10 universities, the ones with less than 10,000 students (3) and the ones at which there was a duplication of a city (2) were also excluded. in the latter cases, the universities with the better rankings and larger student bodies were kept for the analysis. by the end of the process, five universities became part of the research, which are situated in 4 regions. the university of oradea (oradea) and babes-bolyai university (cluj-napoca) are located in the nuts 2 region of nord-vest, which encompasses six counties in northwestern romania (bihor, satu mare, maramureș, sălaj, cluj, and bistrițanăsăud). benchmarking of the possible impact of romanian and hungarian universities to economic development 22 figure 2b innovation index by regions source: european innovation scoreboard (european commission, 2022a) the western timisoara university (timisoara) is situated in the nuts 2 region of vest, which includes four counties (timiș, arad, caraș-severin, and hunedoara). the university of debrecen (debrecen) is in the észak-alföld region (szabolcsszatmár-bereg, hajdú-bihar, and jász-nagykun-szolnok counties), while szeged the biggest city of the dél-alföld (bács-kiskun, békés, and csongrád-csanád counties) – is the where the university of szeged is situated. as the role of universities in economic development is still not totally understood (bramwell & wolfe, 2008), previous studies examined the impacts of university entrepreneurship and technology transfer. as information is difficult to obtain most of the researchers did case studies (chrisman, hynes, & fraser, 1995; guerrero, m., urbano, cunningham, & organ, 2014; iacobucci & micozzi, 2012; mesny, pinget, & mailhot, 2016) or input–output analysis of specific regions or countries and their universities (goldstein, harvey & drucker, 2006; goldstein, harvey a., 1990) (goldstein 1990) or more sophisticated methods (carree, della malva, & santarelli, 2014). literature found evidence that there is a positive relationship between the universities’ activity and the economic growth of their regions (guerrero, maribel, cunningham, & urbano, 2015; russo, van den berg, & lavanga, 2007). based on the literature review and the available data, the research question was formulated as do entrepreneurial universities have a positive impact on the economic development of their regions in a lagged-behind area? gregán 23 h1: universities’ innovation indicators have a positive effect on the regional economic development figure 3 proposed conceptual framework source: own compilation table 1 summarizes the most important indicators of the analyzed universities. for the level of economic development, we have analyzed the four cross-border regions. economic data is derived from the eurostat (european commission, 2023), while for the data of the universities, the world ranking of the times higher education (the higher education, 2023) data were used. as a first step, the data from the world ranking 2023 was collected and organized, including the scores of industry income, citation and research as these indicators are in close correlation with the development level of the university. research excellence is the most prominent indicator of a university, it reflects a university’s reputation for research excellence among its peers, based on the responses to the annual academic reputation survey. research income is scaled against academic staff numbers and adjusted for purchasing-power parity (ppp). while the productivity of the research is measured by the number of publications published in the academic journals indexed by elsevier’s scopus database per scholar, scaled for institutional size and normalized for subject. citations shows universities’ role in spreading new knowledge and ideas. to measure knowledge transfer a university’s ability to help industry with innovations, inventions and consultancy the indicator of how much research income an institution earns from industry (adjusted for ppp), is scaled against the number of academic staff it employs is used. benchmarking of the possible impact of romanian and hungarian universities to economic development 24 table 1 data of the filtered universities and their regions name region number of students international students (%) world university ranking (2023) impact ranking (2022) number of faculties industry income citation score score for research oradea university nord-vest 15840 6 1501+ na 15 37.1 16.3 12.2 west university of timişoara vest 14527 6 1501+ na 11 37.7 16.8 13.4 babeşbolyai university nord-vest 39811 4 1001-1200 301-400 6 37.5 37.6 16 university of szeged dél-alföld 20023 22 1001-1200 401-600 12 39.6 33.3 15.5 university of debrecen északalföld 29045 22 1001-1200 401-600 13 41.9 29.8 14.3 source: the world university ranking and eurostat (european commission, 2023; the higher education, 2023) gregán 25 results and discussion gross domestic product (gdp) is the most commonly used measure for the economic output in spite of all of its limitations (dowrick, dunlop, & quiggin, 2003). the purchasing power standard per inhabitant in the % of the eu27 average shows the relevant position of a region in the list of the eu countries, as pps is a common currency that eliminates the differences in price levels between countries allowing meaningful volume comparisons of gdp between countries. calculations on a per inhabitant basis allow for the comparison of economies and regions significantly different in absolute size. gdp per inhabitant in pps is the key variable for determining the eligibility of nuts 2 regions in the framework of the european union's structural policy (european commission, 2023). figure 3 regional gross domestic product (pps per inhabitant in % of the eu27 average) source: eurostat (european commission, 2023) it is visible on the chart of the eurostat that three of the regions – home of 4 of the 5 analyzed universities were on the almost exactly same level (44 and 45%) in 2011 regarding the regional gdp (pps per inhabitant in % of the eu27). while északalföld’s line is almost steady in the ten years to 2021, and dél-alföld is only slightly above it, nord-vest was able to develop from 44 to 70% and vest – which was the most developed in this indicator in 2011 from 57 to 75%. the year 2016 was a turning point for the hungarian regions, when their values were even decreasing. it is clear that all of these regions are lagged behind regarding the economic terms in the eu, but the two analyzed romanian regions could reach continuous development. if we analyze participation rates in tertiary education at the regional level, the most shocking fact is that hungary performed better than romania, but the two romanian regions were much above the national numbers, while the situation is the opposite in the case of the two hungarian regions. for this data 2020 was the last year for which all the data were available. it is also true that the four regions of the research are lagged behind the eu27 average, but while both of the romanian regions are highly above the romanian average, the two hungarian regions performed even worse than the romanian average (which is slightly behind the hungarian average). benchmarking of the possible impact of romanian and hungarian universities to economic development 26 figure 4 participation rates in tertiary education at regional level 2020 source: eurostat (european commission, 2023) we can state that the economic development of the romanian regions is faster than the hungarian ones, moreover, the regional participation rates in tertiary education are also higher in nord-vest and vest than in dél-alföld and észak-alföld. having in mind these facts, and the literature analysis according to which there is a correlation between the university’s performance and the regional economic development, it is surprising that regarding the analyzed area there is no real correlation between the indicators of the university and the regional economic indicators (table 2). correlation was found among the % of international students and the industry income, the impact ranking and the gdp in % of the eu average and among the citation score and score for research and world university ranking (negative correlation). one of the limitations of the research is the size of the sample. in figures 5a, 5b, 5c it is visible that the two hungarian universities (blue circles) have a much more massive international student body (size of the circle), and they scored higher in the industry income (figure 5a). in the citation score (figure 5b) and the score for research (figure 5c) the biggest university of the five – babes-bolyai university got the highest ranking. it can be stated based on these facts, that babes-bolyai is the best of the analyzed universities regarding research and its impact. based on the results, the hypothesis of the research is rejected, which means that no correlation was found between the innovation indicators of the universities and the economic indicators of their regions. gregán 27 table 2 correlations of the indicators source: spss benchmarking of the possible impact of romanian and hungarian universities to economic development 28 chart legend information settings value color by country size by % of international students shape by -- label by name fit lines -- legend settings for the charts that follow. some settings do not apply to categorical charts. figure 5a industry income score (2023) and gdp in %of the eu average (2021) source: eurostat and the with the use of spss gregán 29 figure 5b citation score (2023) and gdp in %of the eu average (2021) source: eurostat and the with the use of spss figure 5c score for research (2023) and gdp in %of the eu average (2021) source: eurostat and the with the use of spss benchmarking of the possible impact of romanian and hungarian universities to economic development 30 through qualitative research of the publicly available webpages of the universities, this research aimed to identify the specialties of the universities in entrepreneurial activities. the explanatory research was looking for the signs of the third mission with keywords like „innovation*”, „technology transfer*”, „knowledge transfer”, and „science park*” to get different types of secondary data (like the published websites, publicly available strategic documents, published conference proceedings available in the public domain). not only in english but in hungarian and romanian, too where it was necessary to get access to the information by using translators (deepl and google translate). the most important peculiarities are listed in table 2. table 2 some qualitative data of the filtered universities name region eun partnership tto entrepreneurial activity university of oradea nordvest eunicas centre for management and technological and cognitive transfer societatea antreprenorială studențească west university of timisoara vest unita center for technological transfer and innovation (cttuvt) myuvt babesbolyai university nordvest eutopia ubb tech transfer ubb4society&economy program university of szeged délalföld eugloh directorate for r&d and innovation joint innovation challenges university of debrecen északalföld neurotecheu center for technology transfer and research commercialization idea│buds innovation idea development program source: the webpages of the universities and other public sources during the qualitative analysis the fact that these universities develop similarly regarding innovative activities became evident. all of them are partners in a european university network (eun), which can ensure their long-term embeddedness into an innovative partnership. according to the new european innovation agenda, euns are expert facilitators, which increase collaboration between industry, academia, and research organizations, and help match the supply of knowledge with the requirements of industry for innovation (european commission, 2022b). technology transfer offices are working, although at different levels of the organizational structure. all of these universities are committed to supporting their students and sometimes staff with entrepreneurial activities. conclusions “throughout history universities have enabled their local communities to thrive due to the free and dynamic circulation of people and ideas.” (sergiu-matei lucaci) although most universities have their innovation strategies, these – most of the time – do not cover the issue of the different points of views of the different stakeholders. gregán 31 the european university association’s (eua) newly published innovation agenda 2026 argues that universities should more prominently embody their role as honest brokers (european university association, 2023). the report defines innovation as knowledge co-creation. this involves bringing together perspectives from ethics, politics, technology and regulation and devising independent advice to mediate between different interests and communities. the role of the universities is to ensure that ideas and applications fulfill the expectations of both their developers and users and showing that market exchange does not fully capture the value of impact of innovation (european university association, 2023). seeing the results of our research we have to agree with cooke (1992), who found that geographical location is important in innovation capacity. located near an innovation hub, supports the development, while networking can help a bit for the other actors. neither romania, nor hungary are closed to innovation hubs, which means that networking is a key for them in development. all the analyzed universities are partners in european university alliances, which represents their commitments for building networks. in the latter years, the emerging importance of sustainability as a topic to be addressed boosted even in less developed regions of the european union (compagnucci & spigarelli, 2020), which can be a way forward for the lagged behind regions, too. it is a strong hope for all the people living in less developed areas that as manuel stagars (2014) stated most of the universities have all the elements to build a strong entrepreneurial ecosystem, which is an ideal launch pad for startups. the task is to remove the barriers that prevent the ecosystem from growing. limitations of the research this research focused on a limited geographical area and a limited number of universities. all of these universities have already made steps to be innovative, although no justifiable impact on the economic development was found. for future research based on the results of this research it would be interesting to have a deeper view of the universities programs and their results on the regional economic development. other data can be analyzed and even other regions can be included to get a clearer view about the role of location, the different indicators and the strategy for the future. references bedő, z., erdős, k., & pittaway, l. 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(2007). academic entrepreneurship in europe edward elgar publishing. https://doi.org/10.1007/978-1-4842-0623-2 https://www.timeshighereducation.com/world-university-rankings/2023/world-ranking https://www.timeshighereducation.com/world-university-rankings/2023/world-ranking predisposing factors and barriers in the absorption of eu funds conceptual and operational aspects gheorghe epuran, ph.d, „vasile alecsandri” university of bacău luminița zaiţ, ph.d, „vasile alecsandri” university of bacău bogdan nichifor, ph.d, „vasile alecsandri” university of bacău laura țimiraș, ph.d, „vasile alecsandri” university of bacău abstract: this paper is based on direct research carried out in the territory of trotus valley in order to identify both the absorption capacity in the area, as well as contributing factors and barriers for this process. in fact, the need for the research came from the desire of knowledge of local realities of attracting european funds and to identify the factors that favored the successful completion of projects and the barriers that have led in many cases to abandon the process. key words: pre-accession period, the post-accession eu funds absorption, the absorption capacity of eu funds cod jel: m 39 introduction assumption in assessing the need and opportunity of the absorption of eu funds at national, regional and local coordinates is the integration of romania into the european union. in this context, the importance of european funding programs revolves around alignment to european economic and social cohesion required obviously by the post-accession process and the alignment to the principles of construction of the single european market. romania's experience in attracting and use of structural instruments, both at national and regional level must be assessed in two stages: first we must mention the experience in the pre-accession through the operational programs like: phare, ispa and sapard, on the other hand, now we are in the process of obtaining post-accession related experience through operational programs under the structural and cohesion funds. experience in pre-accession is undoubtedly a factor in the behavior of accessing structural and cohesion funds related programs. however, steps taken by romania, bacau region respectively, in accessing and attracting pre-accession funds are only a starting point, not a milestone in itself. moreover, funding instruments for pre-accession programs are different from those of the structural and cohesion funds. for example, the implementation of phare and ispa programs differs significantly from structural instruments. some similarities are found in the sapard program management and feadr, but the latter serves at present common agricultural policy. pre-accession funds are only a benchmark due to the relatively high absorption in comparison with the corresponding post-accession funds. thus, a brief analysis on the absorption of pre-accession eu funds in the 2000-2006 periods reveals that out of 5,679,000,000 euros allocated by these programs were contracted projects totaling euro 5,110,000,000, which represents a degree of absorption of about 90%. aggregate payments for these projects totaled 3,469,000,000 euros, showing an absorption rate of 70%. these are some favorable results, although there were many obstacles in the absorption of eu pre-accession funding: inconsistency in funding allocation mechanisms (eg phare program has undergone many changes in the mentioned period) and relatively poor management; institutional fragility; delays and communication problems between institutions; bureaucracy; difficult and lengthy procedure for submission and approval of projects; low level of involvement of civil society. on the other hand, absorption of post-accession structural funds reached in 2010, according to data provided by the authority for coordination of structural instruments (acis), the threshold of 15% of the allocation for the period 2007-20101. romanian state's ability to attract and benefit from post-accession technical and financial support will be felt over time and will be measured by the speed with which the romanian economy will adapt and will operate according to the european system. obviously, the ability to align to the european framework requests the development of tools in the analysis of structural and cohesion funds and especially the establishment of a "culture of evaluation" in the sense of developing methods of evaluation and promotion of best practices between member states. the importance and opportunity of post-accession european funding programs, beyond interregional disparities between member states of the european union, must be assessed in the light of the beneficial effects resulting in economic and social areas. whether we refer to programs that support economic development at the macroeconomic level, national and regional levels, whether we consider measures to promote development at the micro level, for operators in the various sectors, support from the european union is clear, one of significant strategic importance. the research conducted within trotus valley aimed, besides highlighting the absorption of european funds in the area, identifying contributing factors and barriers in the steps initiated by both public beneficiaries and the private ones. the need for research came from the desire of knowledge of local realities in attracting european funds, to identify factors that favored the successful completion of projects, barriers that have led in many cases to abandon the process. moreover, the research results will be a real support for improving the methodology and tools to grant funds. research methodology the decision problem that led to the implementation of research was to know the main elements of specificity of the absorption of eu funds for the private beneficiaries of trotus valley territory. purpose of the research was to study the particularities of the absorption of european funds within trotus valley territory. in fact, we aimed: a better understanding of eu funds absorption issues at the local level; to identify the factors that favored launching the absorption of european funds of private beneficiaries; identifying failures during the development process of absorption of eu funds, identifying barriers and reasons which led to the abandonment of attracting funds. the research unit was established being the private beneficiaries of eu funds in trotus valley territory. stated objectives that aimed to identify contributing factors and barriers in the process of absorption of european funds were achieved through analysis of different legal organizational forms: individual, authorized individual, individual enterprise, family business, limited liability company, in the following fields of activity, according to caen: agriculture, beekeeping, manufacturing and livestock. the research carried out on the territory trotus valley have considered all forms of legal organization that developed / submitted at least one project under eu funds, both in the pre-accession and post-accession.                                                              1authority for coordination of structural instruments acis, september 2010. to identify investigated units were used last available official data provided by apdrp bacau. this information was supplemented with data available at the site of northeast development agency. within the territory of trotus valley were submitted by 30 june 2012, a total of 178 projects by private beneficiaries. distribution of projects submitted within trotus valley territory according to legal form is as follows: 13 individuals, 70 authorized individuals; 68 individual businesses, 10 family businesses, 17 limited liability companies. the distribution of the projects submitted within trotus valley by sector of activity is as follows: 119 in agriculture, 14 manufacturing, 4 buildings, 19 livestock, 18 beekeeping, 4 services. the distribution of projects submitted within trotus valley on pndr is as follows: 28 projects on 112 measure; 8 projects on 121 measure, 10 projects on 123 measure, 117 projects on 141 measure, 15 projects on 312 measure. this research is total quantitative one covering about 70% of private beneficiaries who have submitted at least one project to attract eu funds, either in the pre-accession or in the post-accession. reporting unit was made up of the legal representative of the project developed / made to attract eu funds. regarding sample size, given the non-response rate of 30%, it was formed by 124 respondents from the private beneficiaries sectors and from the forms of legal organization mentioned. the distribution of the observation unit, subordinated to the territory of trotus valley, reveals the following: casin (20 beneficiaries), urecheşti (16 beneficiaries), gura vaii (12 beneficiaries), helegiu (12 beneficiaries), soveja (11 beneficiaries) manastirea casin (9 beneficiaries), tg trotus (9 beneficiaries) bârsăneşti (9 beneficiaries) coţofăneşti (8 beneficiaries), bucium (8 beneficiaries), stefan cel mare (7 beneficiaries) and caciulati (3 beneficiaries). research results the first part of the analysis of the absorption behavior within the territory trotus valley is related to identifying time of interest for the process. from this perspective, 70.97% of the surveyed units said that interest was manifested in the post-accession period absorption of eu funds, while only 6.45% of respondents indicated the pre-accession period. the difference of 22.58% was represented by units specifying that interest in eu funds absorption was manifested both in the pre-accession and post-accession periods. the distribution of research units by sector, depending on when the interest for the eu funds absorption came, shows the following (figure 1):  most units in agriculture (70.11%) and livestock (66.67%) mentioned as time for interest to the absorption of eu funds post-accession period;  in construction, manufacturing and agricultural service, all surveyed units indicated that the time for interest to the absorption of eu funds was in post-accession period;  in agriculture (22.99%), livestock (33.33%) and bees (30.77%), interest in eu funds absorption manifested with different weights, both in the post-accession and preaccession period. figure 1 the distribution of the research units on time for interest to the absorption of european funds by sector at the researched collectivity level, the distribution of units based on the number of implemented projects reveals that those which submitted one project are predominant (91.94%). only 5.65% of the studied units proposed two projects, while 2.42% indicated more than 2 projects. distribution of units by the sectors and by the number of projects reveals the following aspects:  all units in manufacturing, construction, beekeeping and services submitted one project for accessing european funds;  the agriculture subordinated units mentioned also submitting 2 projects (6.9%) and more than 2 projects (3.45%), while livestock subordinated units specified with a frequency of 8.33% submitting 2 projects. of particular importance in this analysis has been given to identify the current state of projects carried out trotus valley territory. of all european projects submitted within the analyzed territory 66.42% are under implementation, 17.52% are finalized and 16.06% have been abandoned. it was also observed that only 2.19% of projects in the area are distributed for pre-accession period. a distribution of these stages by sector (figure no. 2) reveals the following:  most of the submitted projects subordinated to agriculture are found in the implementation phase (the post-accession funds) 70%, followed by the abandoned ones (post-accession) 15%;  the units for manufacturing indicated with a frequency of 70% that the projects were abandoned (for the post-accession). only 30% of units have specified the completion of projects in the post-accession.  in construction and agriculture supply all investigated units mentioned project completion (for the post-accession);  most of the units of livestock and beekeeping mentioned the existence of projects implementation for post-accession funds.   figure 2 the distribution of the research units, according to the state of projects and by sector for those research units that said they had abandoned the projects we aimed to identify the reasons that led to this behavior. thus, as can be seen in table 1, only 16.06% of the submitted projects were rejected / abandoned. the main reasons for dropping out, based on frequency, are the following: impossibility to obtain financing (8.03%) increased risk associated with hiring a credit in crisis period (4.38%), complicated procurement procedures (1.46%), hostile legislation (1.46%), increased risk associated with employing own resources (0.73%). table 1 distribution of investigated units on grounds of abandonment abandon reasons a b c d h i j total 8.03% 4.38% 0.73% 1.46% 1.46% 0.00% 83.94% legend: a. impossibility to obtain financing; b. high risk associated with a loan commitment during the economic crisis; c. high risk in personal resources employment, d. complicated procurement procedures, e. difficulty in recovering of own funds due to delayed evaluation / contracting, f. unfavorable relationship with consulting firm, g. commitment of significant financial resources, to no avail, h. hostile legislation, i. closure of activity, j. other reasons distribution of these reasons by the activity sectors (figure 3) reveals the following:  in sectors such as construction, livestock, beekeeping and services the reasons of abandonment have not been mentioned;  the main reason for subordinated agriculture units was the impossibility of obtaining financing (10%);  the main reason for manufacturing units was the credit risk associated with employment loan during the crisis (50%), followed by impossibility to obtain financing (10%) and complicated procurement procedures (10%). figure 3 the distribution of research units, depending on the reasons which led to abandonment of projects and by sector legend: a. impossibility to obtain financing; b. high risk associated with a loan commitment during the economic crisis; c. high risk in personal resources employment, d. complicated procurement procedures, e. difficulty in recovering of own funds due to delayed evaluation / contracting, f. unfavorable relationship with consulting firm, g. commitment of significant financial resources, to no avail, h. hostile legislation, i. closure of activity, j. other reasons the period for the documentation required for accessing european funds was another extremely important variable in the proposed research. within the studied collectivity, most respondents mentioned a period of 1-3 months (48.39%) for preparing the documentation necessary to access european funds, followed by those who specified the range of 3-6 months (28.23%). the distribution of investigated units, depending on the time of documentation by sector (figure 4) reveals the following:  most of the organizations in agriculture and livestock indicated 1-3 months intervals (47.13% and 75%) and 3-6 months (33.33% and 16.67%) for preparing the documentation necessary to access european funds;  in manufacturing, 70% of units have specified a period of 1 month to prepare documentation, the difference of 30% indicating a period of 1-3 months;  in sectors such as construction and services was noted only between 1-3 months;  in beekeeping, in addition to intervals of 1-3 months and 3-6 months, a higher percentage was obtained for the period over 12 months (8.33%). it seems that the documentation period was considered by respondents to be a normal one, without being considered as a barrier to the absorption of eu funds. to more accurately identify potential barriers to the absorption of eu funds, the analysis focused on three areas: the documentation phase, the contracting phase and the implementation phase of eu funds projects. figure 4 the distribution of research units, depending on the time for documentation development and by sector the assessments for claims related to the stage of documentation necessary to access european funds reveals the following:  within the investigated collectivity were considered to be relatively true the following statements:  the requirements of the guidelines for applicants are numerous and in many cases unnecessary;  in most cases, the final form of the documentation is submitted online in the run-up of starting process. in this situation there is a risk of inability to meet the stipulated requirements in record time;  it is very difficult to get credit to cover co-financing;  the documentation required by banks for providing funds is very bushy;  when hiring their own resources (own savings) the risk is very high, as a deterrent in making access to funds.  within the investigated collectivity were considered to be relatively untrue the following statements:  the relations with the selected project designer and consultant are often extremely difficult;  consultant fails to fulfill its promises made at the moment of contact;  the consultant knows in detail the measure within they want to apply a project;  in 90% of cases the project is subject to failure due to the service provided by the project designer (for measures involving construction). the assessments for claims related to the contracting stage shows that within the collectivity were considered to be relatively true only two statements, namely:  “when submitting the project for each applicant, at least one additional requirement or a change appears”;  “when submitting the projects, given the limited time for online charging of the applications, local staff does not effectively manage waiting threads”. the assessments for claims related to the implementation phase of the projects reveals that within studied collectivity were considered to be relatively true only three claims, namely:  “own financial resources or obtained credit are very hard reimbursed, the beneficiary is obliged to pay interest (not deductible)”;  “the documentation for reimbursement of invested amounts in the implementation phase is very bushy and rigid”;  “the selection of suppliers is a cumbersome and lengthy process, which blocks the normal course of the project”. conclusions from those presented in this work it can be identified the barriers in the absorption of eu funds: imposibility to obtain financing, the increased risk associated with a loan commitment during the crisis, complicated procurement procedures; hostile legislation, the high risk associated with employing own resources; excessive bureaucracy in the three stages making documentation, contracting the funding and implementation of the projects. the main predisposing factors identified in the conducted research were: some of the analyzed accessed measures did not involve co-financing (agriculture), favoring the absorption of european funds; informal interpersonal communication played a decisive role in the propagation effect of accessing european funds in the area. references 1. berica, c., factors that influence the low rate of structural funds absorption in romania, ces working papers, vol ii, issue 4, 2010. 2. cojanu,v., dima, a., musetescu, r., pislaru, d., stanculescu, m., cerinte specifice ale gestionarii instrumentelor structurale si implicatiile pentru romania, institutul european din romania, studii de impact, pais ii, 2004. 3. georgescu g., determinants of increasing eu funds absorption capacity in romania, annales universitatis apulensis series economica, vol 2, 2009. ***comitetul interministerial pentru gestionarea fondurilor, 17 martie 2009. ***autoritatea pentru coordonarea instrumentelor structurale acis, septembrie 2010. *** agenţia de dezvoltare regională nord-est, http://www.adrnordest.ro/. *** infocooperarea, ministerul dezvoltării regionale şi turismului, http://www.infocooperare.ro/content.aspx?id30 ***http://www.esimplu.ro/finantari-pentru-imm/fonduri-structurale/noutati/5751-acis-a-publicatstadiul-absorbtiei-fondurilor-structurale-la-31-ianuarie-2012 http://econpapers.repec.org/article/alujournl/ http://econpapers.repec.org/article/alujournl/ http://www.adrnordest.ro/ http://www.infocooperare.ro/content.aspx studies and scientific researches. economics edition, no 26, 2017 http://sceco.ub.ro 45 supply chain analysis and performance assessment of sme fisheries clusters anton a setyawan universitas muhammadiyah surakarta anton.setyawan@ums.ac.id muzakar isa universitas muhammadiyah surakarta muzakar.isa@ums.ac.id m farid wajdi universitas muhammadiyah surakarta farid.wajdi@ums.ac.id syamsudin and sidiq p nugroho universitas muhammadiyah surakarta sidik_nugroho78@yahoo.com abstract study of sme in indonesia related with business networks and performance in these business organizations. in many cases, regional administration in indonesia develops sme business network in the form of clusters. this study analyzes sme fisheries clusters with supply chain analysis. we also develop performance assessment of sme fisheries cluster by using multivariate model. this study involves 62 smes in sragen, central java indonesia. those smes includes in fisheries cluster in the area. our findings show that sme fisheries cluster has in-efficient supply chain. this business clusters have problems in profit setting and delivery time which harm their performance. we measure business performance by using business selling, profit rate and asset growth. we found that cost structure, man power and physical production has positive effects to business performance. keywords supply chain management; sme clusters; business performance; business growth jel classification q13; q18 introduction supply chain management (scm) has grown to be an important aspect of business competitiveness (sohrabpour et al, 2012; cook et al, 2011). cook et al (2011) found that scm has been studied by many researchers to strengthen and develop its validity in numerous industries. archer (2006) discusses implementation of scm in different business organizations. one among important issues related scm implementation in sme (small and medium-sized enterprises). characteristic of sme rely on its differences in efficiency, coordination, collaboration and innovation compare with large business organizations (gracia et al, 2011). cluster approach has been widely known as framework of sme in many emerging economies (karaev et al, 2007). cluster approach ensure sme optimimized their resource in increasing their profitability. sme has very limited resource, therefore sme should strengthen their business networks. cluster approach ensure sme share their resources with their partners. cluster approach and scm are closely related and match as main business strategy in sme development. smes are dominant business organization in emerging economies, hence it is important to develop appropriate business strategies for them. scm considered suitable for sme supply chain analysis and performance assessment of sme fisheries clusters 46 business. the key element of scm is integration of business function, resources and business partners so that their business process allign with overall business objectives (manuj & sahin, 2011). cluster is a form of business network which appropriate for business development for sme. sme’s weakness of resource limitation could be overcome by sharing it with the entire cluster member. gracia et al (2011) analyze the relationship of scm with sme competitiveness in agriculture sector in spain and the important finding is scm could strengthen business network and process. the result of all business strategies is increasing business performance. there are different types of business performance in a company. however, sme uses short term operational factor for performance measurement, such as profit, sales, demand and product turnover (wood, 2007). long term performance measurement in business organization theoretically is better than operational performance (brush et al, 1999). smes very rarely make assessment of long term business performance such as, asset growth, market share, consumer satisfaction and loyalty. lamprinopoulou & tregear (2011) found that sme business performance measurement is related with sme business network. sme cluster and share resource related with marketing performance of sme (lamprinopoulou & tregear, 2011). finding in the study is marketing performance in sme rely on short term operational marketing performance, such as selling and revenue. in sme, business performance measurement has various aspects, although it all related with short term operational performance. this paper analyzes supply chain framework in sme cluster of fisheries. sme of fisheries belongs to agriculture sector. luna & wilson (2015) found that agriculture sector in developing countries has suffered serious problem of oligopoly in their market structure. oligopoly impacts price setting for farmers in agriculture sector (vickner & davies, 2000). in the condition of oligopoly, there are certain middleman and wholesaler with price setting power (cakir & nolan, 2015). this price mechanism could harm farmers, since they receive little portion of profit. the purpose of this paper is to analyze supply chain of the sme cluster to discover the most important part of supply chain in it. determining the most important part of supply chain could attain valuable element in the business networks. we also analyze fisheries sme cluster’s business performance to explain the role of scm in the business process. supply chain management: conceptual framework soon & udin (2011) define supply chain as networks of business in upstream and downstream flows from suppliers to ultimate consumers. from this definition, we could conclude that scm is a network. it involves different kinds of institution which connected and have a inter-dependency. manuj & sahin (2011) describe flows in scm is material and information. information flows in scm is the distinction of this concept to distributions. figure 1 explains scm with its model of dynamic function. scm ensures efficiency in the delivery process of product from suppliers to end customer. it also arranges flows of information from customers to manufacturers (versei et al, 2014). in this process, scm should integrate with marketing intellegence systems. marketing intellegence system consists of market research, analysis of costumer segment and customers relationship management. it organizes types of information on market and customers required by other function in the supply chain. setyawan, isa, wajdi, nugroho 47 figure 1 conceptual framework of supply chain management implementation of scm in sme is relevant since this business organization should develop business network. schulze-ehler et al (2014) found that scm practice in sme should become attitude in order to make sure companies achieve their efficiency. kuah (2002) reveals cluster is an appropriate business network for sme. there are several advantages for sme in a cluster; they are specialization for competence, productivity, sharing resource for innovation and cost efficiency (karaev et al, 2007). sme business performance business performance is a multidimensional measurement. cooley (1979) explains that in sme financial performance is acceptable measurement for business performance. on the other hand, skrinjar et al (2008) develop business performance measurement in sme in to financial and non-financial performance. the problem is non-financial performance in sme rarely be measured. smes do not have competence and resource to measure non-financial performance such as consumer satisfaction, market share, consumer loyalty and market share. hence, most smes assess short term operational performance measurement such as financial and physical productivity performance (wood, 2007; wilson & smith, 1996). sels et al (2006) also develop a linking of productivity and performance measurement in sme with human resource management. however, the method still applying operational human resource approach such as labor intensity and wage. jermias (2008) investigates factors affecting financial performance in manufacturing industry. business strategy and competitive intensity of the industry has positive effect on financial performance in manufacturing strategy. jermias (2008) found that different types of business strategy have different impact to company’s business performance. lamprinopoulou & tregear (2011) have different approach in analyzing business performance for sme. they developed business performance based on marketing performance and business network. lamprinopoulou & tregear (2011) suggest sme should improve their business relationship in the clusters to improve their supply chains efficiency and marketing performance. wood (2007) develops a model for sme business performance measurement by using logistic regression methods with operational and financial performance. in this supply chain analysis and performance assessment of sme fisheries clusters 48 performance measurement model, the independent variables contain of cost structure, business age, number of employees (man power), pricing method, production and marketing activities. wilson & smith (1996) compare two types of economic sectors, they are agriculture and manufacture and found that financial performance, such as sales and profit growth are relevant as dependent variables in business performance model. this study developed several hypotheses to develop assessment of sme business performance. our hypotheses based on models of business performance from wood (2007), wilson & smith (1996) and lamprinopoulou & tregear (2011). h1 cost structure has positive effect on business performance. h2 man power has positive effect on business performance. h3 physical productivity has positive effect on business performance. research methods research design research design in this study is quantitative with survey which involves 62 smes in fisheries. our survey has two purposes, first to identify supply chain management of sme fisheries cluster in sragen central java indonesia, second, to develop business performance assessment model in the sme cluster. we employ multivariate statistic model as the basis of business performance measurement. population and sample population of this study is sme companies in fisheries cluster in sragen central java. this cluster is one among the biggest sme fisheries cluster in central java indonesia. there are more than 130 sme in the cluster. we explore sme fisheries cluster from sragen agriculture agency. we combine two types of sampling methods in this study, they are: simple random sampling and purposive sampling. in the process of sample determination with sample random sampling the result is 85 smes. however, we determine certain characteristics of sme as respondents, they are: sme with more than 2 years business age, experience at least 2 harvest periods and joining sragen agriculture agency assistance program. variables and measurement variables in this study related with business performance assessment model. independent variables in the model are: 1. cost structure is the amount of total cost in a period of cultivation (in idr) 2. man-power is number of sme employees including family member assisting the business (persons). 3. physical production is the quantity of harvest in a period of cultivation (kilograms). dependent variables in the model are: 1. assets are the amount of sme asset related with the business (idr). 2. sales are the amount of sales in every harvest periods (idr). 3. profits are the amount of sme profit in every harvest periods (idr). business performance model estimation we develop three different models of estimation to measure business performance. we employ logarithm model of regression estimation in order to adjust differences in variation of variables in the model, suggested by baltagi (2011; 63). those models of estimation are: setyawan, isa, wajdi, nugroho 49 model estimation 1: log assets = α11 + β11 man power + β12 log cost + β13 physical production + ε11 model estimation 2: log sales = α21 + β21 man power + β22 log cost + β23 physical production + ε21 model estimation 3: log profit = α31 + β31 man power + β32 log cost + β33 physical production + ε31 results and discussions sme clusters fisheries in sragen central java sme clusters in sragen consists of 130 groups of fish farmers. every group has at least 10-25 members fish farmers. there are only 75 percent of smes in this clusters active in running their business. from those 75 smes, there are only 65 groups of fish farmers meet the requirement as our respondents. they have varieties of fish commodities. commonly, in sme cluster of fisheries in sragen raising three kinds of freshwater fish, they are cat fish, parrot fish and goramy fish. table 1 shows important information about those 65 smes fisheries clusters. table 1 key indicators of sme fisheries cluster in sragen key indicators average value number of employee/man power production cost sales assets gross profit productivity 14 persons 72,458,034.48 idr 235,116,491.228 idr 263,536,571.400 idr 135,000,145.500 idr 9,703.760 kg based on the key indicators of sme fisheries cluster in sragen, we found that this business is profitable with level of margin more than 70% gross profit. however, there are certain disparities among fish farmers. our descriptive statistics analysis shows that most of fish farmers have only 25,000,000 idr on sales and 2,900,000 idr on profit. supply chains of sme fisheries cluster in sragen our survey identifies 4 types of business in sme fisheries cluster. they are: 1. suppliers of fish feed and vitamins. 2. fish breeder farmers 3. fish rearing farmers. 4. broker and wholesaler fish farmers. suppliers of fish feed and vitamins are important for sme fisheries cluster since most farmers depend on the quality and price of fish feed to achieve optimum productivity. it’s often in the survey fish farmers make an assessment of profit based on quantity of fish feed in the periods of cultivation. vitamins are not considered important because most of fish farmers in sme fisheries cluster cultivate catfish and this type of fish is pest resistant. fish breeder farmers are not dominant in the clusters. there are only few of them. however, they play important role in the supply chain since the quality of fish harvest depend on the fish fry. most of fish farmers in the cluster have competence to be a breeder. the demand of fish fry is also fulfilled by several suppliers from jogjakarta and east java. supply chain analysis and performance assessment of sme fisheries clusters 50 fish rearing farmers are dominant in the sme fisheries cluster. in the cluster, fish rearing farmers usually join group to share resource such as fish fry, fish feed and vitamins. there is a leader in every group and the leader is farmer with highest capital or else holding information about market condition. every group contains of 10 to 15 farmers and they play an important role in maintain the productivity of sme fisheries clusters. on average sme fisheries produce 9,703 kilogram of fishes every harvest periods or 60 to 70 days. most of groups of fish fearing farmers have the ability to produce 1500 kilograms of fishes in 60 or 70 days with catfish as the dominant commodity. failure of harvest in fish fearing will cause lack of fish supply in the market, and the demand should be fulfilled from east java. broker and wholesaler fish farmers usually a leader in a group of fish fearing farmers. they have direct access to the market, suppliers and financial institution. they also possess power to determine price of fish commodities in local market. however, they play vital role in sustaining the production level of sme fisheries cluster. they provide loan for member of fish fearing farmers in the form of fish fry and fish feed. broker and wholesaler fish farmers usually have a good relationship with local government so that they become an entry point for government agency to organize smes assistance program. figure 2 shows relationship among sme in sragen fisheries cluster. figure 2 smes fisheries cluster in sragen business performance assessment table 2 shows the result of regression analysis with logarithm model. table 2 regression analysis results independent variables and goodnes of fit model estimation 1 (dependent variable: log assets) model estimation 2 (dependent variable: log sales) model estimation 3 (dependent variable: log profit) intercept man power log cost log production r2 f stat 3.720** -0.000079 0.611** -0.0000073 0.312 7.851** 2.863** 0.000256 0.622** 0.0000083** 0.547 20.969** 2.832** 0.011** 0.497** 0.221** 0.467 15.970** notes: ** significant at 0.05 level of confidence setyawan, isa, wajdi, nugroho 51 our models of estimation show different results. model estimation 1, with log assets as dependent variable, resulted just log cost as independent variable which statistically significant has positive effects to the dependent variable. in the model estimation 2, log production and log cost have positive effect on log sales. however, log production has very small coefficient so that it can be ignored. model estimation 3 has the best result. man power, log cost and log physical production has positive effect on log profit. f statistic in all models is statistically significant, whereas the level of r2 is low, so that the goodness of fit of the model is acceptable. models of estimation in this study gives important measurement about sme business information. the result of the model confirms wood (2007) and wilson & smith (1996) findings that short term operation performance in smes could explain their performance better. sme fisheries cluster in sragen have several similar performance characteristics with most sme cluster in developing countries. cost structure is dominant in explaining business performance. srimuk & choibamroong (2015) also found that cost is an important factor in determining investment strategy in smes. it can be concluded that smes could achieve high business performance by optimizing cost efficiency. man-power in smes is partially important. our model of estimation shows that man power has positive effect on profit and sales but irrelevant to increase sme assets. this finding is similar with sels et al (2006) and cooley (1979) conclusions that human resources play vital role to increase business performance. however, man power in smes is also related with employee from family members and low wages. it explains the result of our model that regression coefficient is very small considering the fact that labor in sme fisheries cluster in sragen are underpaid. physical production in this study closely related with profit and does not effect on assets. it means that farmers in this cluster use their profit to consumption or investment instead of growing their assets. there are two reasons for this phenomenon. first, most of farmers in the cluster received small portion of profit. our data on profit shows that the mode of profit is only idr 2,900,000 for every period of harvest. with only small portion of profit, fish farmers are commonly having other business and makes them part time fish farmers. second, fish farmers use their portion of profit for investment for the next period of cultivation, for example; buying fish fry and feed fish or repair the fish ponds. lofving et al (2014) and srimuk & choibamroong (2015) suggests that sme should improve their investment strategy by considering long term impact of their business. this includes make an assessment of return on investment, return on assets and business risks in their business. our model of estimations could be guidance to develop sme business performance measurement. the models show fish farmers business and investment behavior. however, the model of sme business performance measurement gives only short-term operation information about the business. the models could not make a long-term prediction since sme do not have long term data due to weakness in business data storage. most of sme in the cluster do not compile annual financial, business planning and evaluation report. conclusions and implications supply chains analysis of sme fisheries cluster in sragen shows the importance of business network. sme in the cluster could improve their business by sharing resource with their partners. strategic partnership in sme has develop among feed fish and vitamins supplier, fish breeder farmers, fish fearing farmer and broker and wholesaler fish farmers. broker and wholesaler fish farmers become leader in the business network due to their possession of market access, cultivation technology and financial resource. supply chain analysis and performance assessment of sme fisheries clusters 52 they also become a price setter but always considering the interest of smaller farmers. there is a mutual relationship in the supply chains of sme fisheries cluster in sragen. sme fisheries cluster in sragen have a common characteristic in business performance with other sme cluster in developing countries. we develop model of estimation to measure business performance which involves short term operation performance such as man power, cost structure and physical production as independent variables. our operational variables of business performance are assets, sales and profits. in the models, man power, cost structure and physical production have positive effects to business performance. man-power or human resource have small regression coefficient this is due to the fact that human resource has long term effect to business performance, while dependent variables in the model are short term measurement of performance. theoretical implications of this study are, first, this study contributes to the theoretical and conceptual development of supply chain in sme cluster in developing countries. karaev et al (2007) identify such study is very few. the importance contribution of this study related with the emerging of business networking groups in the cluster. there is a leader in every group who plays vital role to the business performance to the group. in the future, researcher should consider measuring the supply chains efficiency. second, business performance measurement in this study contributes to recent issue in sme business performance on the operational variables (wood, 2007; sels et al, 2006). this study employs short term operational business performance which shows the behavior of sme business in their business decisions. in the future, researchers should focus on strategic and long-term performance of sme business. managerial implications of this study are, first, sme managers and owners should develop their business networks. sme cluster is the form of business network which give several advantages for their business. they are: resource sharing of technology, financial aspects and markets. sme cluster also give advantage in achieving optimum productivity. second, sme should develop their business performance and considering long term existence of their business. sme managers and owner in fisheries cluster have to compile their business and investment plan for the future. this study has several limitations; first, supply chain analysis in sme fisheries cluster could not identify suppliers or buyer outside sragen. the clusters related with suppliers from different region such as fish fry suppliers from jogjakarta and purwodadi. these suppliers determine the quality of fish harvest. we could not get more information about these suppliers. we also get limited information about buyer from industry outside sme fisheries cluster in sragen. these limitations are the reason this study could not explain price determination and supply of fish in the local market. second, our models of business performance assessment could not predict long term condition of sme fisheries cluster due to limited information about non-financial performance, such as consumer’s loyalty and satisfaction, market share and competition analysis. references baltagi, b.h. 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(2006), the internal predictors of business performance in small firms a logistic regression analysis, journal of small business and enterprise development, 13(3), 441-453. perceptia medicilor dentisti si a consumatorilor romani privind activitatea de marketing in cadrul serviciilor medicale dentare studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 96 social factors influence from the perspective of dental healthcare services consumers’ behavior iuliana petronela gârdan spiru haret university, bucharest, romania gardanpetronela@yahoo.com daniel adrian gârdan spiru haret university, bucharest, romania danielgardan@yahoo.com gheorghe epuran university transilvania of braşov, braşov, romania epuran.gheorghe@unitbv.ro abstract in case of dental care consumption, a very special influence will have the social factors. this influence, from the level of consumers’ behavior can be analyzed on two distinct levels – that of normatives impose by the social organization particular for the community that the individual live and that of the influences of the social groups that individual are interacting with. dental healthcare services consumption is conditioned at the level of consumption motivations by complex needs which are not confined only to the physiological needs of removing pain caused by a certain dental condition, but are going towards the need of self-image improvement, increasing the appreciation offered by the others group members, the congruence with other consumers decisions within the group (family members, friends, colleagues etc). it is important to note in this context the fact that the influence exerted by consumers exogenous factors (external influences in which we can integrate those from the social groups also) will be combined with the one exerted by endogenous factors (personality, learning process, perceptions, attitudes, motivations etc), representing a continuum that shape consumers and allows in the same time the society shaping by them. the present article proposes a research conducted on dental healthcare services consumers. results revealed the importance that a series of variables like the importance given to image in the workplace, family, friends and colleagues perception towards dental aesthetic, social class has in the context of consumer behavior. it is also noted that the influence of variables is mediated by the importance given to self-image, dental healthcare services consumption being determined by complex needs, consumption motivations being physiological – specific to some medical conditions and psychological – aesthetic or induced by the pressure corresponding to the need to comply with social norms. keywords consumer behavior, dental healthcare services, social factors, self-image jel classification m31 introduction consumer behavior represents a complex assembly of processes being interrelated with each other. in the same time it is the result of internal nature factors and external factors, exogenous to the individuals. processses like perception, motivation, learning, attitudes and personality formation are interrelated and are defining the behavior manifestation. thus all the exogenous factors like family, belonging groups, reference gârdan, gârdan, epuran 97 groups, social class, culture and subculture will be correlated with the endogenous factors. the consumer behavior represents a continuum that involves multiple transformations and a perpetual reference to the environmental changes. as a result, social influences exert their action on multiple fronts – exogenous through the direct influence upon individuals and their answer in order to have a better integration within the assembly of a group norms (belonging or reference), endogenous through complex processes of changing preferences or needs, as a result of different pressures related with social conventions and the joint action of cultural elements. the social interactions presuppose generative relations that induce changes of perceptions and automatically changes at the level of consumers’ actions. the individuals found themselves all the time in an evolving, historic and institutional context, therefore we have to analyse the consumption or buying behavior taking account of this context. from this point of view it has to be mentioned the importance that interactions between individuals and institutions could have in this context. institutions can be defined like being durable social rules and intrinsic conventions systems which are structuring social interactions (hodgson, g.m., 2003, p. 166). money, the legal system, system of measurements, companies, all of this represents institutions whose durability is given by the fact that ussualy they can create stable expectations at the level of others behavior. actually the sum of habits that can be developed are determined by the interactions with these institutions and in the same time they can contribute to the very functioning of these institutions. the habits represent the base for both the reflective behavior and for the unreflective one, and are representing essentially a trend that can be easily transformed in a complex of actions and determine the occurrence of a particular behavior. this duality of exogenous and endogenous influences upon consumers’ behavior sketched a complex landscape that highlights the evolution of social structures from the very dawn of civilization until today. humans can not escape the social framework in which they develop from an early age. in turn, this social framework with all its institutions, social groups of influence, etc., is the effect of human activities and acts of consumption and choices that individuals typically have. from the point of view of healthcare services consumption, these social interactions have new meanings, given by the specific of healthcare services and the needs that are behind consumption motivations. the evolution of healthcare systems itself it’s determinated by the choices that consumers are doing and the behavior that is related with influence groups. on a long run, the consumption processes will self-regulate, and the efficiency of prestations will rise into the direction of a better serving of the social interest. all the spectacular transformations of the modern medical technology, treatment methods and techniques, stand as witnesses of the fact that the social needs combined with individual health care needs of individuals have shaped this area and continue to shape it. in the case of dental healthcare services, we may encounter a consumer behavior largely oriented toward a conspicuous consumption, because of the very high level of the prices, and some exclusive services (regarding dental aestetique). this kind of conspicuous consumption may be trying to affirm also the social status of the person concerned. the dental healthcare services consumption motivations found themselves in the zone of self-image improvement and level of appreciation from others. for this reason the consumer behavior may become atypical – in relation with the purchasing power or other repetitive consumption decisions that the concerned persons can manifest. social factors influence from the perspective of dental healthcare services consumers’ behavior 98 also, given the strong emotional involvement in the case of dental care services, the consumers will have the tendency to seek for the others approval and to integrate themselves in the current opinion stream of the belonging or reference groups. because of the high pressure regarding the consumption decision process, any healthcare service is situated into the zone of consumption influenced by the the opinions of family members or acquaintances. in comparison with other type of services or products, the need of information regarding their own consumption from the members of the reference groups is bigger. in the same time individuals may show a more intense communication with the members of the group in order to connect with the norms and values of the group. literature review concerning influence of socio-economic factors upon the healthcare services consumers’ behavior generally speaking, consumption can be seen according to the paradigm proposed by veblen as being a social activity constrained by social norms and the structure of social classes. from this point of view the relationship between social norms, social groups, social classes, cultural and subcultural traits and consumers’ behavior represents an intrinsic reality based on the social nature of relationships between individuals, and the different types of needs. the well known economist thorstein veblen has point out even from 1889 in his works the fact that in the case of conspicuous consumption, individuals will use it as a mean to express the welfare, power and social status. (vigneron, f., & johnson, l., 1999, p. 5). other specialists point out the fact that the consumption of products that have very high prices is motivated socially, consumers tend in this case to associate these high prices to the prestige and status (berkowitz, e.n., kerin, r.a., hartley, s.w., & rudelius, w., 1992, p. 37). the conclusion can be that conspicuous consumption is ussualy associated with prestigious products and services, the main motivation asscoiated with this type of consumption beeing the wish of individuals to transmit clear informations to the others regarding their social status. the social status is very close related with the role that every individual will assume within the social frame. these roles are developed by individuals within the social groups that they belong, being associated with a certain image and value granted by the other members of the group. there will be brands and products or services that will have from the perception of the consumers the capacity to communicate a certain status, a certain relationship capacity. thus, people will have the tendency to consume products or services capable to sustain their status and to express their social value (vigneron, f., & johnson, l.w., 1999, p. 3). every member of a social group will observe the consumption models of other members from society. in this process, comparisons are made in order to judge the relevant elections of the others and their belonging to a certain status (reinstaller, a., & sanditov, b., 2005, p. 505-531). thereby, the consumer behavior will be determined by the degree in which every individual will be sensible in terms of interpersonal influence (bearden, w., netemeyer, r.g., & teel, j.e., 1989, p. 473-481). the social relations and the status will be than interrelated and both can influence the predispozition of consumers for different type of behavior. (dittmar, h., 1994, p. 561585) in order to express themselves, individuals will adopt different lifestyles and specialists observe that the lifestyle adopted is common with the social group representative for the individual. (starr, m.a., 2009, p. 25-49). gârdan, gârdan, epuran 99 in case of healthcare services consumption, the consumer behavior will be influenced in a very specific way by social factors. this is due to the characterisitics of healthcare services in the first place and also due to the very specific features of the needs related with health issues. social and cultural factors will interact with biological features of every individual and will impact the health condition. from this respect ”the sociocultural model” will encompass elements reffering to: the health and ilness definition of individual and the personal experience regarding this topic, acces to healthcare, the individual response to disease, pain and/or disability, treatment expectations and options, health outcomes (uskul, k.a., 2010). the social determinants reffering to the social norms and social groups beliefs, customes, values etc, will shape the attitude of consumers regarding healthcare and even the healthcare practices specific for a certain region or community. (hahn, a.r., & harris, w.k., 1999) in case of dental healthcare services the positioning of these services at the level of the romanian market is associated with high prices services due to the level of the prices in comparison with other type of services. thus, the consumption related with these services will have the characteristics of a conspicuous one especially for the dental aesthetics services.in this case choosing a certain dental office, having a well established brand image in the premium sector of the market will represent a way to emphasize the social status of the consumer. reasearch methodolgy the research falls within the category of descriptive research. in the case of present research it was used the specific research method based on a field survey questionnaire that represents an established method for this type of research. primary information sources are specially made to achieve the objectives of this research, being any person aged 18 years, residing in bucharest that has resorted to an dental office or clinic in the last 6 months. the sampling consists of persons over 18 years because generally is considered that they can take the decision to purchase. the final number of respondents was 356 persons. the research aimed to identify, describe and analyze the main dimensions of the influence exerted by social norms and economic factors upon dental care services consumer behavior. as research hypotheses have been advanced the following: there is a very strong influence of family, friends or colleagues on the patient's decision to consume a particular dental office services. dental care consumption is determined by the importance of self image; there is a strong correlation between social factors and the importance given to selfimage; membership of a certain social class can determine how dental health services are consumed; social status determines a different consumer behavior for dental health services romanian consumers were affected by the reduction of incomes having in the background the economic crisis which has affected the consumption of dental healthcare services. after administration of questionnaires, univariate and multivariate analysis of information obtained was done through statistical and mathematical analysis software package ibm spss 20.0 social factors influence from the perspective of dental healthcare services consumers’ behavior 100 research results one of the research objectives was related with the determination of belonging and reference groups influence degree upon the consumer behavior. the respondents have been asked about their perception related to the degree in which the way that they are perceived by the family members, friends or colleagues relted with their dental aesthetic counts. the medium score of 4,045 measured with the help of semantic differential scale shows the great importance that the respondents gave to the perception of social groups about their dental aesthetic. another research objective was to determine consumer perceptions in regard to possible changes in healthcare services consumers’ behavior due to changes in the patients’ self-image. the results of the research are showing that the majority of respondents were not affected by major self-image changes as a result of everyday interactions beause of dental diseases. thus, it is possible to exist a dispersion high enough of the severe cases throughout the responses, the phenomenon being normal for a statistics population of normal individuals from a dental medical standpoint (not presenting a bias or an excess incidence of medical very serious cases). figure 1. the degree in which the dental problems affect respondents’ daily life in the case of the extent to which consumption of dental medical servicesis determined by the importance of self-image obtained a score of 3.865 on a differential scale which indicates that the opinion of respondents is that the consumption of dental medical services is largely determined by the importance of the self-image. this result confirms one of the research hypothesis reffering to the degree in which dental medical services consumption is determined by the importance of self-image. overall, the self-image represents a very important element within the psihic life of any mentally healthy individual. therefore responses are important because not only confirms this information that was ample tested in scientific literature from the psychology field (marsh, 1986; sirgy, 1982; baumeister, campbell, krueger, vohs, 2003; ciarrochi, heaven, davies, 2007), but reveals also the fact that self-image is linked with oral health state and appearance of the patients mouthparts. most of the respondents did not suffer from serious illnesses to the present date (59%), but of those who suffered serious condition most of them have been affected by the difficulty to smile (21%), followed by those who have speaking or chewing difficulties (12%). gârdan, gârdan, epuran 101 figure 2. the effects of respondents severe dental diseases it can be seen also a small percentage of 7% of those who said the effect of serious dental diseases they suffered is the diminishing of their self-confidence. this effect is a complex one that has direct connection with consumers self image. diminishing confidence is accompanied in most cases by the alteration of the self-image also (coon, d., & mitterer, j., 2013). the small percentage is eloquent for the situation encountered a small fraction of respondents are affected currently by dental nature issues from the self-image perspective. in assessing how social factors influence dental healthcare services consumer behavior is important to stress the link established between the formation of selfimage and the image or perception of others on individuals in terms of dental aesthetics and compliance with social image equivalent across groups with normality. thus we wanted to determine wheter there is a correlation between the importance given to self-image (as a dependent variable) and variables related with social factors influence 9as independent variables). in order to highlight the impact of social and economic factors on dental healthcare services consumers’ behavior we consider testing these two categories of factors influence upon the importance of consumer self-iamge seen as a mediator for the regulatory pressure of external influences. in this regard it was initially examined the validity of a regression model obtained as a result of testing the social factors influence on the importance of respondents selfimage during consumption. to determine the simultaneous influence of independent variables on the dependent variable multiple linear regression was used. the model is of the following form: csmd = f(fpcid,fpced,ilm,tmoz,cs,ss) + ε or csmd = β0 + β1*fpcid + β2*fpced + β3*ilm + β4*tmoz + β5*cs + β6*ss + ε measurement of all model variables was performed with scaling method called semantic differential scale that leads to the interval type scale. social factors influence from the perspective of dental healthcare services consumers’ behavior 102 figure 3. graphic model of the social factors influence upon the importance of self-image the value for coefficient of multiple correlation (r) is the indicator that summarizes the meaning of the link between variables observed and projected variables based on the regression model for the dependent variable, and in case of the present model, because r has a value of 0.727 it can be seen that it has a value close to 1, which indicates that the relationship between the observed and projected values of the dependent variable is strong, which shows the consistency of the model considered. another very important coefficient to be abalysed in the case of the linear multiple regression model is the coefficient of multiple determination (r squared), which is used to measure the intensity of the relation expressed by the equation of linear regression. the fact that the coefficient has taken value of 0.528 in the present case, means that about 53% of the variance in the dependent variable is explained by the variation of causal variables, and the remaining of 47% variation is presented due to the variation of the residual variable ε. also, the coefficient of multiple determination shows whether multicollinearity exists and therefore this factor must be lower than each of the values of simple correlation coefficients between effect variable and each cause variables. lack of multicolinearity presuppose that causal variables to be independent. (malhotra, nk, birks, df, & wills, pa, 2013) table 1. summary of the information regarding linear multiple regression model model summaryb mod el r r squar e adjusted r square standard error of the estimated variable modified statistics durbinwatson r square modificatio n f modificati on df1 (freedom degrees) df2 ( freedom degrees ) f statistical level meaning modification 1 0.727a 0.528 0.520 0.346 0.528 65.062 6 349 0.000 2.028 dental healthcare services consumption is determined by the importance of self-image (csmd) family, friends or colegues can influence the decision regarding consumption of a certain dental office services (fpcid) the importance of the family, friends or colleagues perceptions regarding the dental aesthetic of the consumers (fpced) the importance of the consumers image within the workplace from the perspective of dental aesthetic (ilm) the degree of choosing the dental medical treatment according to the region customs (tmoz) social class can determine the way in which the dental healthcare services are consumed (cs) social status can detrmine the way in which the dental healthcare services are consumed (ss) gârdan, gârdan, epuran 103 the role of adjusted r squared coefficient is to measure the impact of causal variables once introduced into the model, as adjusted r squared takes account by the number of independent variables and the sample size. in case of the present model, we can say without fail that the last independent variable introduced into the model produced a significant effect in terms of variation in the dependent variable because it appears that the adjusted r squared is close to the value of r square. as the two coefficients r square and adjusted r squared values are close, the regression model can be generalized to the entire population subject to the inquiry. expanding of the envisaged regression model for the entire population studied, would involve a reduction of variance of the dependent variable with a value of 0.008. this value can be seen that represents less than one percent of the variation like the same variable at the level of entire research sample level. analyzing the standard error of the estimated variable, it will show us to what extent there is a residual variable deviation from the average residual variable. the standard error of the estimate for the correlation analyzed amounts to 0.346, a relatively small value which ensures an appropriate degree of prediction, the model being appropriate in these circumstances. the statistical f test provides the possibility to test the statistical significance of the regression model. in the case of f statistical test, the null hypothesis states that the multiple determination coefficient r is 0. f changed represents the result of the amendment that is supported by the f test due to the supplementary variation of r squared due to the inclusion within the model of the last causal variable. the value of f test modification is 65.062 corresponding to a value of (sig. f change change in the level of statistical significance for f) of 0.000 which is less than 0.01, which means that the value of f is statistically significant because the possibility that the value of f to be due to chance is below 0. the hypothesis reffering to the absence of residual variable autocorrelation can be tested using the durbin-watson statistic. this hypothesis regarding the lack of autocorrelation for the residual variable presupposes that measured errors to be independent. in order to take into consideration the persistence of the model, the value of durbinwatson statistic has to be as close as it is possible to the value of 2. if this will have values closer to 1 or 3, the revision of the model becomes necessary for the model related to data analyzed, durbin watson statistics value is 2.028. this value allows us to consider the model valid as regards the lack of autocorrelation in residuals. to determine the predictive ability of the regression model it will be realized the analysis of variance (anova). a. predictors: (constant), do you consider that the social status can determine the way in which dental medical services are consumed? how much do you think that the family, friends or colleagues can influence the consumption decision regarding the services of a dental office? how much does it counts for yop the image at your workplace from the perspective of dental aesthetic?, to what extent do you choose the dental medical treatment according to the local customs corresponding to the region you live in?to what extent does it matters for you the way in which family, friends or colleagues are perceveing you from the point of view of dental aesthetic? do you think that social class can determine how dental healthcare services are consumed? b. the dependent variable: to what extent the dental care services consumption is determined by the importance of self-image for you? social factors influence from the perspective of dental healthcare services consumers’ behavior 104 table 2. the variation analysis for the regression model (anova) anovaa model sum of squares degree of freedom (df) mean square f sig. 1 regresie 279.578 6 46.596 65.062 0.000b residual 249.950 349 0.716 total 529.528 355 a. dependent variable: to what extent the consumption of dental healthcare services is determined by the importance of self-image for you? b. predictors: (constant), do you consider that the social status can determine the way in which dental healthcare services are consumed? to what extent do you think that family, friends or colleagues can influence the decision regarding the consumption of dental care services of a particular dental office? how much doest it counts for you your image within the work place from the perspective of dental aesthetic. to what extentdo you choose the dental medical treatment according to the customes of your residence area? to what extent does in counts for you the way that you are perceived by the family, friends or colleagues from the point of view of dental aestethic? do you consider that the social class can determine the way in which the dental healthcare services are consumed? if the f test value exceeds a value of 1, the predictive ability of the model increases. in case of the present regression model f value is 65.062 with a probability of error equal to 0.000, which is implying a high validity of the model and high capacity of prediction of this model. in the following it will be presented the values of estimated coefficients of the regression equation and also their statistical significance. table 3. informations reffering to the value of the regression model estimated coefficients model unstandardized coefficients standardize d coefficients t sig. 95.0% confidence interval for b b std. error beta lower bound upper bound (constant) -0.579 0.317 -1.827 0.028 -1.202 0.044 family, friends or colegues can influence the decision regarding consumption of a certain dental office services (fpcid) 0.016 0.042 0.014 0.376 0.507 -0.067 0.098 the importance of the family, friends or colleagues perceptions regarding the dental aesthetic of the consumers (fpced) 0.358 0.052 0.317 6.906 0.000 0.256 0.460 the importance of the consumers image within the workplace from the perspective of dental aesthetic (ilm) 0.492 0.068 0.354 7.260 0.000 0.359 0.626 gârdan, gârdan, epuran 105 the degree of choosing the dental medical treatment according to the region customs (tmoz) 0.174 0.033 0.220 5.349 0.000 0.110 0.238 social class can determine the way in which the dental healthcare services are consumed (cs) 0.105 0.050 0.101 2.113 0.035 0.007 0.204 social status can detrmine the way in which the dental healthcare services are consumed (ss) -0.021 0.060 -0.017 -0.356 0.422 -0.139 0.096 a. to what extent the consumption of dental healthcare services is determined by the importance of self-image for you it has been used the least squares method in order to estimate the regression model parameters values, resulting the following regression equation: csmd = -0.579 + 0.016*fpcid + 0.358*fpced + 0.492*ilm + 0.174*tmoz + 0.105*cs -0.021*ss it may be noted that besides social status variable that has an negative influence on the dependent variable, the other causal variables are influencing in a positive way the dependent variable. thus, the importance of self-image in dental health services consumption is positively influenced by: the influence of family, friends and colleagues in the decision of choosing a dental office (+ 0.016); the way that respondents are perceived by family, friends or colleagues in terms of dental aesthetics (+0.358); the importance attached to image within the workplace from the perspective of dental aesthetics (+0.492); area of residence influence on dental medical treatment (+0.174) and social class influence over how dental care services are consumed (+0.105). the coefficients of the regression equation indicate on one hand the dependent variable sense of influence, and on the other hand the intensity with which these are influencing the dependent variable. comparing the regression coefficient values, it appears that most influence is exercised by the variable named importance given to image within workplace from the perspective of dental aesthetics (+0.492) and the variable named the way in which respondents are perceived by family, friends or colleagues from the point of view of dental aesthetics (+0.358). this means that an amendment with one unit of the importance attached to image within workplace from the dental aesthetics perspective, will increase with 0.492 unites the self-esteem. in table no. 3 appears the column called beta that is containing actually the standardized regression coefficients values. this means that through standardization, continuous variables values are transformed into values of a standardized variable following a normal distribution of mean 0 and standard deviation 1. regarding the interpretation of the values, this will be performed similarly to the interpretation of regression coefficients, only if it will be considered a different measure unit, which in case of beta values, is a standard deviation. thus, at the modification with a standard deviation of the variable x 3 (importance given to image within the workplace from the dental aesthetics perspective), the social factors influence from the perspective of dental healthcare services consumers’ behavior 106 dependent variable value (consumption of dental health services is determined by the importance of self-image) is changing with 0.354 standard deviations. the t-student test is performed in order to check whether the estimated parameter values have a real influence on the dependent variable, which means it must be significantly different from 0. in the table no 3 it can be seen that out of two parameters (namely those related with independent variables – influence of family, friends and colleagues regarding the decision of choosing a dental office and variable referring to the social status), all other estimated parameters are significantly different from 0. the probability that the t-student test value to be due to chance being 0.000 (sig.). at the same time, it is important to consider which is the magnitude of t student test value. the value of this test is directly proportional to the influence of the independent variable (related to the regression coefficient for which student t-test was performed) on the dependent variable. if we make the comparison between the values of t-student test it will be found that the maximum value is encountered for the x3 variable regression parameter (importance given to image within the workplace from the dental aesthetics perspective) namely 7.260, which confirms that this variable has the most influence on the dependent variable. for the intercept (the free term, constant), the null hypothesis must be rejected because the significance threshold has the value p = 0.028, a value lower than the 0.05 threshold. with a probability of 95% and a error of 0.317 the intercept is – 0.579. this is situated between the confidence interval [1.202; 0.044]. for the variable x 3 (importance given to image within the workplace from the dental aesthetics perspective) the null hypothesis h 0 must be rejected because the significance threshold p = 0.000 < 0.01. with an error of 0.068, the ilm coefficient will have the value of 0.492. this variable can take values in the confidence interval [0.359; 0.626]. so, variables that have a real influence upon the dependent variable (dental healthcare services consumption is determined by the self-image importance) are: importance given to image within the workplace from the dental aesthetics perspective (t = 7.260, sig. = 0.000); the way that respondents are perceived by the family, friends or colleagues from the point of view of dental aesthetics (t = 6.906, sig. = 0.000); the residence zone influence upon dental medical treatment(t = 5.349, sig. = 0.000) and social class influence upon the way in which dental healthcare services are consumed (t = 2.113, sig. = 0.035). figure 4. regression model histogram gârdan, gârdan, epuran 107 another objective of the research was to determine the respondents’ perception about social class influence on consumers. the given answers have pointed out an average score of 4.079 which means that largely respondents believe that membership to a social class can determine how dental medical services are consumed (about 78% of the respondents chose the response options reffering to ” a large extent” and ”a very large extent”). these results refute the hypothesis h4, which states that less than 28% of respondents considers that membership to a certain social class can determine how dental healthcare services are consumed. these results are eloquent for the perception that romanian dental healthcare services consumers have about the idea of social class, although this is not very clear defined. the responses shows that the differences related to the consumption of dental healthcare services are associated to a certain social stratification, which on the basis of belonging to a certain class could mean the membership to a certain social group with a specific level of incomes and a specific life style. the research has as an objective also to determine the perception of respondents towards the influence exerted by the social status upon dental healthcare services consumption. the received answers are indicating a average score of 4.281 (measured by semantic differential scale with 5 steps), about 85% of the respondents choosing the response options”very much” and” a lot”. thus it becomes evident the consumers perception that is correlated with the one reffering to the social class, namely the consumption of dental healthcare services is influenced by the social position of the individuals, highlighted through class or social status.the social status presuppose asserting and imposing a certain image among social groups of reference. usually, the social status will be associated with the occupation of individuals, their income, determining the net membership to a certain social group corresponding to the specific status. also, a certain status implies a series of obligations and rights specific from case to case. the obtained responses confirm also the h5 hypothesis; because over 46% of the respondents believe that social status determine a different consumption behavior in case of dental healthcare services. by correlating the question reffering to the fact that the social status can determine how dental healthcare services are consumed with the one reffering to the income and respectively with the one reffering to the occupation it can be observed that exists a weak correlation between the influence of the social status and the income of respondents and a strong correlation between social status and occupation. table 4. pearson correlation coeficient used for correlation between social status and respondents’ income verification do you think that social status can determine how dental health services are consumed? which category fits your monthly income do you think that social status can determine how dental health services are consumed? pearson correlation 1 0.399 sig. (2-tailed) 0.042 n 356 356 which category fits your pearson correlation 0.399 1 social factors influence from the perspective of dental healthcare services consumers’ behavior 108 monthly income: sig. (2-tailed) 0.042 n 356 356 table 5. pearson correlation coeficient used for correlation between social status and respondents’ occupation verification do you think that social status can determine how dental health services are consumed? your occupation? do you think that social status can determine how dental health services are consumed? pearson correlation 1 0.743** sig. (2-tailed) 0.007 n 356 356 your occupation? pearson correlation 0.743** 1 sig. (2-tailed) 0.007 n 356 356 **. correlation is significant at the 0.01 level (2-tailed). correlation analysis reveals that respondents with high incomes not necessarily agree with the fact that social status exerts a strong influence on dental healthcare services consumption behavior, while the opinion of the respondents will be very nuanced according to the occupation they have, so that, about 83% of those who declared themselves entrepreneurs considered that the status will influence a lot the dental healthcare services consumption behavior, followed by 67% of those from the category of public figures (presenter, artist etc) and respectively still 67% from the category of self-employed (freelancers). these results confirm that the persons that are aware of their social status (those having occupations presupposing a certain financial independence – entrepreneurs, public persons) are convinced of the fact that this is influencing the dental healthcare services consumption behavior. this information may suggest that, in fact, their own behavior is different from the others, being influenced by the social status held. from the perspective of economic factors influence over the dental healthcare services consumer behavior, the question reffering to the degree in which the consumption of dental care services was affected by the economic crisis, revealed that in a relatively large extent, consumption of dental medical services decreased having in the background the economic crisis (average score of 3.551). in the same register, answers for the question reffering to what extent the consumers have been affected by the prices changing in dental medical services are indicating an average score of 3.506, meaning a relatively strong influence of the prices changes upon the decision to seek dental medical services. the results based on the analyzed answers are showing a strong influence of the economic nature related factor – income-expenditure ratio in terms of dental healthcare services consumption. gârdan, gârdan, epuran 109 conclusions and future research implications putting in common the two types of analysis performed it can be observed that the influence of socioeconomic factors on dental healthcare services consumer behavior is complex, nuanced and subject to a certain dynamics. the research also revealed the importance of self-image, seen as a real catalyst for the superior level consumer needs. self-image is correlated with the image of others about the concerned individual, being influenced essentially by two categories of factors: how the individual relates to his internal standards regarding normality, standards developed as a result of education, culture and interactions with the group members respectively the active feedback that persons who will meet the individual will have as an result of human interaction in real time. the research revealed the way in which the dental aesthetic contributes to the definition of self-image, and thus to the consumption behavior model change, as a result of reactualizations that every individual makes reffering to the others perception upon himself. social groups’ pression on the consumption behavior is nuanced, because the respondents said they were willing to give up in a small extent to the current dental medical treatment as a result of opinions expressed by the family, friends or colleagues. thus it is evident the existence of consumption decisions that are dictated by other considerations, different from the need of confirmation with the opinions or actions belonging of the affiliation or reference group. the workmates opinion and their perception in relation to the individual dental aesthetics represents an important conditioning element of dental care services consumption behavior, thus it appears evident the objective need to comply with the group opinion. consumers who have suffered severe dental diseases so far have been affected by the difficulty to smile and to speak or to chew. it exists also a little percent of the people that have declared that the effect of serious diseases was the diminuation of selfconfidence. thus it becomes evident again the importance of self-image and of interaction with the society from the perspective of dental diseases. consumers believe that the social status determine different consumption behaviors. analysis of the bivariate correlations between status influence and respondents income or their occupation has revealed a weak correlation with the income and a strong one with occupation which indicates that respondents having higher incomes are not necessarily thinking that the social status extert a strong influence upon dental healthcare services consumption behavior, while the opinion of the respondents will be very nuanced according to the occupation they have. in the light of the results, we can point out some possible future research directions: research conducted on a national level with a bigger sample, 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(1999), "a review and a conceptual framework of prestige-seeking consumer behavior." academy of marketing science review, 1(1), 1-15. studies and scientific researches. economics edition, no 32, 2020 http://sceco.ub.ro 48 a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure mihai deju “vasile alecsandri” university of bacău mihai.deju@ub.ro abstract the preparation of annual consolidated financial statements, in the context of the existence of group companies, represents a relatively new problematic issue for accounting practitioners, the world of the academia, as well as for the regulating bodies in the field of accounting. this situation generates intense debates among accounting specialists with the aim of finding practical solutions that facilitate the understanding and correct application of accounting regulations in the area of consolidating accounts. the present article approaches, by means of a case study, the specific aspects related to the consolidation of affiliated entities’ accounts by means of using the global integration method and the direct consolidation procedure. keywords consolidation of accounts; consolidation procedures; global integration; direct consolidation jel classification m41 the drawing up of consolidated financial statements by means of the global integration method, irrespective of the employed procedure (consolidation on levels or direct consolidation) involves the cumulation of the items from the balance sheets and the profit and loss accounts of affiliated entities with the balance sheet items and the items of the profit and loss accounts of the parent company, as well as the making of the following adjustments: the division of the subsidiaries’ equity capital elements between the quota the parent company is entitled to and the quotas for “other shareholders” of the subsidiaries as “interests of minority shareholders”; the accounting recording, as elements of consolidated equity capitals, of the quotas from the equity elements of the subsidiaries that are allocated to the parent company; the separate accounting recording of the quota from the equities that are allocated to “other shareholders” of the subsidiaries as “interests of minority shareholders”; the elimination of the equivalent value of shareholding titles owned by the parent company, directly or indirectly, from the consolidated subsidiaries and the diminishing of the equities of affiliated entities with an equivalent sum. we will further present a case study regarding the consolidation of financial statements of affiliated entities by means of the direct consolidation procedure, starting from the hypothesis that the group is composed of four companies, as follows: the parent company a and the subsidiaries b, c and d. the parent company a owns 70% of the capital and voting rights of company b. company b owns 80% of the capital and voting rights of company c, and company c owns 90% of the capital and voting rights of company d. a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure 49 in this study, we considered that all shareholding titles owned in subsidiaries b, c and d represent ordinary shares and were purchased when the respective companies were established. the study does not present the particularities of accounting treatments corresponding to the reciprocal operations among the companies of the group because they can be the subject of other approaches. taking into account that the parent company has exclusive control over the subsidiaries, in order to carry out the consolidation of their financial statements we will employ the global integration method. we will further present the individual financial statements of the group companies that will be the subject of consolidation, as follows: a) balance sheets of the companies that are part of the group: items of balance sheets company a company b company c company d a. fixed assets 840,000 690,000 460,000 420,000 tangible fixed assets 490,000 450,000 190,000 420,000 shareholding titles 350,000 240,000 270,000 b. current assets, among which: 570,000 340,000 320,000 220,000 stocks 150,000 230,000 130,000 80,000 clients 250,000 60,000 120,000 120,000 cash and bank accounts 170,000 50,000 70,000 20,000 c. advance expenses d. debts – sums that should be paid within a year 190,000 150,000 160,000 130,000 suppliers 65,000 70,000 65,000 50,000 various creditors 125,000 80,000 95000 80,000 e. net current assets/ net current debts (b-d) 380,000 190,000 160.000 90,000 f. total assets minus current debts 1,220,000 880,000 620,000 510,000 g. debts – sums that should be paid over a period exceeding one year 50,000 60,000 50,000 40,000 h. provisions i. advance incomes j. equity capitals subscribed capital 850,000 500,000 300,000 300,000 capital premium reserves from reevaluation reserves 130,000 190,000 130,000 80,000 profit or loss carried forward profit or loss of financial year 190,000 130,000 140,000 90,000 total equity capitals 1,170,000 820,000 570,000 470,000 deju 50 b) profit and loss accounts of companies within the group: income and expense items company a company b company c company d operating income 2,800,000 1,300,000 1,600,000 900,000 financial income 200,000 150,000 230,000 150,000 operating expenses 2,600,000 1,200.000 1,450,000 850,000 financial expenses 174,000 95,000 213,000 93,000 expenses with corporation tax 36,000 25,000 27,000 17,000 profit or loss of financial year 190,000 130,000 140,000 90,000 in order to draw up the consolidated financial statements by means of the direct consolidation procedure, the following stages will be taken into account: stage 1 the establishment of the shareholders’ interest percentage of the parent company (of the group) in each subsidiary, as well as of the interests of minority shareholders: indicators subsidiary b subsidiary c subsidiary d interest percentage of the parent company 70% 56% 50,40% percentage of the interests of minority shareholders 30% 44% 49,60% stage 2. the cumulation of group companies’ balance sheet items and their corresponding accounting recording: 2a. the table regarding the cumulation of the items of the balance sheets of the companies included in the consolidation area is presented below: items of balance sheets company a company b company c company d total a+b+c+d a. fixed assets 840,000 690,000 460,000 420,000 2,410,000 tangible fixed assets 490,000 450,000 190,000 420, 000 1,550,000 shareholding titles 350,000 240,000 270,000 860,000 b. current assets, among which: 570,000 340,000 320,000 220,000 1,450,000 stocks 150,000 230,000 130,000 80,000 590,000 clients 250,000 60,000 120,000 120,000 550,000 -cash accounts and bank accounts 170,000 50,000 70,000 20,000 310,000 c. advance expenses d. debts – sums that must be paid within a year 190,000 150,000 160,000 130,000 630,000 suppliers 65,000 70,000 65,000 50,000 250,000 a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure 51 various creditors 125,000 80,000 95,000 80,000 380,000 e. net current assets/ net current debts (b-d) 380,000 190,000 160,000 90,000 820,000 f. total assets minus current debts 1,220,000 880,000 620,000 510,000 3,230,000 g. debts – sums that should be paid over a period exceeding one year 50,000 60,000 50,000 40,000 200,000 h. provisions i. advance incomes j. equity capitals subscribed capital 850,000 500,000 300,000 300,000 1,950,000 capital premium reserves from reevaluation reserves 130,000 190,000 130,000 80,000 530,000 profit or loss carried forward profit or loss of financial year 190,000 130,000 140,000 90,000 550,000 total equity capitals 1,170,000 820,000 570,000 470,000 3,030,000 2b. accounting recording regarding the cumulation of group companies’ balance sheet items (recording in the balance sheet): 3,860,000 1,550,000 350,000 240,000 270,000 590,000 550,000 310,000 % fixed assets shareholding titles b shareholding titles c shareholding titles d stocks clients cash and bank accounts = % share capital a share capital b share capital c share capital d reserves a reserves b reserves c reserves d profit or loss a profit or loss b profit or loss c profit or loss d suppliers various creditors long-term bank credits 3,860,000 850,000 500,000 300,000 300,000 130,000 190,000 130,000 80,000 190,000 130,000 140,000 90,000 250,000 380,000 200,000 stage 3 cumulation of profit and loss accounts of companies within the group and the making of corresponding adjustments: deju 52 3a. the cumulation table of profit and loss items of the companies included in the consolidation area is presented below: income and expense items company a company b company c company d total a+b+c+d operating incomes 2,800,000 1,300,000 1,600,000 900,000 6,600,000 financial incomes 200,000 150,000 230,000 150,000 730,000 operating expenses 2,600,000 1,200,000 1,450,000 850,000 6,100,000 financial expenses 174,000 95,000 213,000 93,000 575,000 expenses with corporation tax 36,000 25,000 27,000 17,000 105,000 profit or loss of financial year 190,000 130,000 140,000 90,000 550,000 3b. recording of the cumulation of profit and loss items of the companies within the group (recording in the profit and loss account)1: 7,330,000 6,100,000 575,000 105,000 190,000 130,000 140,000 90,000 % operating expenses financial expenses expenses with corporation tax profit or loss a profit or loss b profit or loss c profit or loss d = % operating incomes financial incomes 7,330,.000 6,600,000 730,000 stage 4. the division of the subsidiaries’ equity capitals between the parent company and the minority interests (that do not have control) and the elimination of the equivalent value of the titles of the consolidated companies as well as their accounting recording 4.a. table representing the division of equity capitals and the elimination of the equivalent value of the shareholding titles owned by company a in subsidiary b as a result of direct consolidation by parent company a indicators total subsidiary b part attributed to group a (70%) part attributed to interests of minority shareholders (30%) 1. share capital b 500,000 350,000 150,000 2. elimination of shareholding titles (b) owned by company a -350,000 -350,000 3. divided share capital (1-2) 150,000 150,000 4. reserves b 190,000 133,000 57,000 5. profit or loss subsidiary b 130,000 91,000 39,000 total (3+4+5) 470,000 224,000 246,000 1 note: the cumulation of the income and expenses items is carried out at the level of the profit and loss account a component of consolidated financial statements. a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure 53 4.a1. accounting recording corresponding to the division of the subsidiaries’ equity capitals, the elimination of the shareholding titles owned by subsidiary b and the different representation of the interests of minority shareholders (recording at the level of the balance sheet): 820,000 500,000 190,000 130,000 % share capital b reserves b profit or loss b = % shares owned in affiliated entities (b) consolidated reserves consolidated profit or loss interests of minority shareholders 820,000 350,000 133,000 91,000 246,000 4.a2. division of the financial result (profit/loss) in subsidiary b (recording in the profit and loss account)2: 130,000 91,000 39,000 % profit or loss which is attributed to parent company profit or loss which is attributed to interests of minority shareholders = profit or loss b 130,000 4.b. table representing the division of equity capitals and the elimination of the equivalent value of the shareholding titles owned by subsidiary b in subsidiary c as a result of direct consolidation by parent company a: indicators total subsidiary c part attributed to company a (56%) part attributed to interests of minority shareholders (44%) 1. share capital c 300,000 168,000 132,000 2. . elimination of shareholding titles (c) owned by company b (70%) * 240,000 -168,000 (240,000x70%) -72,000 (240,000x30%) 3. divided share capital (1-2) 60,000 60,000 4. reserves c 130,000 72,800 57,200 5. profit or loss of subsidiary c 140,000 78,400 61,600 total (3+4+5) 330,000 151,200 178,800 * the elimination of shareholding titles in subsidiary c is done on the basis of shareholders’ interest percentage owned by the mother company in subsidiary b (70%). 4.b1. accounting recording corresponding to the division of the subsidiaries’ equity capitals, the elimination of the shareholding titles owned by subsidiary b in subsidiary c and the different representation of the interests of minority shareholders (recording at the level of the balance sheet): 2 the accounting recording is registered in the profit and loss account a component of consolidated financial statements. deju 54 570,000 300,000 130,000 140,000 % share capital c reserves c profit or loss c = % shares owned in affiliated entities (b) consolidated reserves consolidated profit or loss interests of minority shareholders 570,000 240,000 72,800 78,400 178,800 4.b2. division of the financial result (profit/loss) of subsidiary c (recording in the profit and loss account – a component of financial statements): 140,000 78,400 61,600 % profit or loss which is attributed to parent company profit or loss which is attributed to interests of minority shareholders = profit or loss c 140,000 4.c. table representing the division of equity capitals and the elimination of the equivalent value of the shareholding titles owned by subsidiary c in subsidiary d as a result of direct consolidation by parent company a: indicators total d part attributed to company a (50,40%) part attributed to interests of minority shareholders (49,60%) 1. share capital d 300,000 151,200 148,800 2. elimination of shareholding titles (d) owned by company c (56%)* 270,000 151,200 (270,000x56%) 118,800 (270,000x56%) 3. divided share capital (1-2) 30,000 30,000 4. reserves d 80,000 40,320 39,680 5. profit or loss d 90,000 45,360 44,640 total (3+4+5) 200,000 85,680 114,320 *the elimination of shareholding titles in subsidiary d is performed on the basis of shareholders’ interest percentage owned by the mother company in subsidiary c (56%). 4.c1. accounting recording corresponding to the division of the subsidiaries’ equity capitals, the elimination of the shareholding titles owned by subsidiary c in subsidiary d and the different representation of the interests of minority shareholders (recording at the level of the balance sheet): 470,000 300,000 80,000 90,000 % share capital d reserves d profit or loss d = % shares owned at affiliated entities d consolidated reserves consolidated profit or loss interests of minority shareholders 470,000 270,000 40,320 45,360 114,320 4.c2. division of the financial result (profit/loss) of subsidiary d (recording in the profit and loss account – a component of financial statements): a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure 55 90,000 45,360 44,640 % profit or loss which is attributed to parent company profit or loss which is attributed to interests of minority shareholders = profit or loss d 90,000 4.c.3. the transfer of equity capitals’ elements (reserves and profit or loss – in our case) of the parent company to the reserves and the consolidated financial result of group a (recording at the level of the balance sheet): 320,000 130,000 190,000 % reserves a profit or loss a = % consolidated reserves consolidated profit or loss 320,000 130,000 190,000 stage 5 5.a. the drawing up of the register corresponding to the consolidation operations of the balance sheet items carried out in stages 1-4: items of balance sheets cumulated balance sheet items a+b+c+d restatements corresponding to consolidation consolidated balance sheet items (group a) debit credit 1. fixed assets 1,550,000 1,550,000 2. shareholding titles b 350,000 350,000 3. shareholding titles c 240,000 240,000 4. shareholding titles d 270,000 270,000 5. stocks 590,000 590,000 6. clients 550,000 550,000 7. cash and bank accounts 310,000 310,000 total assets 3,860,000 3,000,000 8. share capital a 850,000 850,000 9. share capital b 500,000 500,000 10. share capital c 300,000 300,000 11. share capital d 300,000 300,000 12. reserves a 130,000 130,000 13. reserves b 190,000 190,000 14. reserves c 130,000 130,000 15. reserves d 80,000 80,000 16. consolidated reserves 133,000 72,800 40,320 130,000 376,120 17. profit or loss a 190,000 190,000 18. profit or loss b 130,000 130,000 19. profit or loss c 140,000 140,000 20. profit or loss d 90,000 90,000 21. consolidated profit or loss 91,000 78,400 45,360 404,760 deju 56 190,000 22. interests of minority shareholders 246,000 178,800 114,320 539,120 23. suppliers 250,000 250,000 24. various creditors 380,000 380,000 25. long-term credit 200,000 200,000 26. total liabilities 3,860,000 3,000,000 27. total sums d/c 2,180,000 2,180,000 5.b. the drawing up of the register corresponding to the consolidation operations of the profit or loss account carried out in stages 1-4: income and expense items cumulated incomes and expenses a+b+c+d division of results between group a and interests of minority shareholders consolidated incomes and expenses (group a) debit credit operating incomes 6,600,000 6,600,000 financial incomes 730,000 730,000 operating expenses 6,100,000 6,100,000 financial expenses 575,000 575,000 expenses with corporation tax 105,000 105,000 profit or loss of financial year, among which: 550,000 550,000 profit or loss a 190,000 190,000 profit or loss b 130,000 130,000 profit or loss c 140,000 140,000 profit or loss d 90,000 90,000 profit or loss corresponding to parent company (group a) 91,000 78,400 45,360 190,000 404,760 profit or loss corresponding to the interests of minority shareholders 39,000 61,600 44,640 145,240 total 550,000 550,000 stage 6 after completing the first 5 stages, the parent company prepares the consolidated financial statements, namely, the consolidated balance sheet and the consolidated profit and loss account of group a. a. consolidated balance sheet group a items of balance sheets group of companies a. fixed assets 1,550,000 b. current assets 1,450,000 -stocks 590,000 -clients 550,000 a case study on the consolidation of financial statements of entities affiliated through direct consolidation procedure 57 b. consolidated profit and loss account group a indicators group of companies operating incomes 6,600,000 financial incomes 730,000 operating expenses 6,100,000 financial expenses 575,000 expenses on corporation tax 105,000 profit or loss of the financial year, including the part attributed to shareholders in the parent company 550,000 404,760 part attributed to interests of minority shareholders 145,240 conclusions the simple consultation of the individual financial statements of the companies that are part of the consolidation area of a group, presented cumulatively, does not allow us to create a real picture of the economic-financial situation of the group, taking into account that the reciprocal operations among the companies that are part of the group are not recorded and nor are their consequences. at the same time, the cumulated individual accounts do not provide a truthful image of equity capitals, including the financial results that belong to the shareholders of the parent company, as distinct from the part that is attributed to other “other shareholders” as “interests of minority shareholders” (shareholders of other companies than the parent company or its affiliated entities). the necessity of approaching, by means of a case study, the applicative nature regarding the use of the direct consolidation procedure for the individual financial statements of companies that form a group seems all the more imperative given that the accounting theory and practice do not abound in effective solutions for the application of accounting regulations concerning the preparation of consolidated financial -cash and bank accounts 310,000 c. advance expenses d. current debts – sums that must be paid in less than a year 630,000 -suppliers 250,000 -various creditors 380,000 e. net current assets/ net current debts (b-d) 820,000 f. total assets minus current debts (a+b-d) 2,370,000 g. debts – sums that should be paid over a period exceeding one year 200,000 h. provisions i. advance incomes j. equity capitals 1. share capital 850,000 2. capital premium 3. reserves from reevaluation 4. consolidated reserves (133.000+72.800+40.320+130.000) 376,120 5. profit or loss carried forward 6. consolidated profit or loss of the financial year (91.000+78.400+45.360+190.000) 404,760 interests of minority shareholders (246.000+178.800+114.320) 539,120 total equity capitals 2,170,000 deju 58 statements. this is why we consider that our study can represent a useful guide for accounting practitioners as well as for students in economics that study accounting. confident that the accounting theory and practice can be permanently improved, i am eager to receive proposals or suggestions regarding the problematics approached in the current article. references bogdan, v., fărcane, n., popa, d.n., boloş, m.i. (2011), raportarea financiară la nivelul grupurilor de societăți – repere contemporane, bucurești, editura economică. deju, m. (2019), note de curs contabilitate consolidată – bacău. feleagă, n., feleagă, l. (2007), contabilitate consolidată. o abordare europeană și internațională, bucurești, editura economică. ompf no. 1802/2014 for the approval of accounting standards concerning annual individual financial statements and annual consolidated financial statements, with subsequent amendments and additions. conclusions the simple consultation of the individual financial statements of the companies that are part of the consolidation area of a group, presented cumulatively, does not allow us to create a real picture of the economic-financial situation of the group, ta... the necessity of approaching, by means of a case study, the applicative nature regarding the use of the direct consolidation procedure for the individual financial statements of companies that form a group seems all the more imperative given that the ... confident that the accounting theory and practice can be permanently improved, i am eager to receive proposals or suggestions regarding the problematics approached in the current article. references (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro evolution of the natural growth and the analysis of the seasonality of live births and deaths from romania and bacau county in the last four years eugenia harja “vasile alecsandri” university of bacau eugenia.harja@ub.ro oana-ancuţa stângaciu “vasile alecsandri” university of bacau anca_stangaciu@yahoo.com abstract since 1992, romania's population declined every year naturally, the number of deaths being higher than live births. if in bacau until 2002 we had to deal with natural growth of the population, even if increasingly less, starting that year it emerged more and more the process of decline of the population. in both cases, the phenomenon is more pronounced in rural areas than in urban areas due to more pronounced aging of the rural population. both in the case of live births and deaths it is observed the seasonal oscillation by the months of the year. if in the case of births they are more numerous in the summer months and in decrease in the winter months, the situation is exactly the opposite in the case of deaths. thus from here we have the natural decrease of the population, which increases in the winter months and starts to decline or become slightly positive in july-september. keywords seasonality indices; live births; deaths; natural growth jel classification c10; j10; j11 introduction knowing the evolution in time of the demographic phenomena and the factors that influence it underline its great importance in estimating the population and age structure. if we consider the population as a closed system, without taking into account the migration, its evolution depends on the two demographic phenomena: birth and death rates. the evolution of the birth rate in a country is influenced by existing family policies and it depends on the intention of the couples in terms of the number of children they wish to have. in parallel, mortality depends on the age structure of the population, the state health system, and the general living conditions. in the last years, romania has experienced a birth rate becoming smaller and a higher mortality. the latter was higher due to a poor health system, which could not cope with an aging population and insufficient livelihood means. the opposite evolutions of birth and death rates have led to the worsening decline of the population naturally, from -0,9 ‰ in 2000 at national level and +0,9 ‰, reaching at the end of the period -2,6 ‰ nationally and 1,9 ‰ at county level. these negative evolutions, coupled with a negative migratory growth, led and still lead to a decrease in the population of our country, but also to an unbalanced age structure in favor of the elderly. 45 harja, stângaciu evolution of the live births, deaths and growth rate the monthly evolution of the live births and deaths from the last years can be observed for bacau county compared to romania in figures 1 and 2. 0 5000 10000 15000 20000 25000 30000 ja n10 fe b10 m ar -1 0 ap r10 m ay -1 0 ju n10 ju l-1 0 au g10 se p10 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 fe b11 m ar -1 1 ap r11 m ay -1 1 ju n11 ju l-1 1 au g11 se p11 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 fe b12 m ar -1 2 ap r12 m ay -1 2 ju n12 ju l-1 2 au g12 se p12 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 fe b13 m ar -1 3 ap r13 m ay -1 3 ju n13 ju l-1 3 au g13 se p13 o ct -1 3 n ov -1 3 d ec -1 3 nu m be r live-births deaths figure 1 evolution of the number of live births and deaths in romania, for the months of the years 2010-2013 source: i.n.s., tempo online 0 100 200 300 400 500 600 700 800 900 1000 ja n10 f eb -1 0 m ar -1 0 a pr -1 0 m ay -1 0 ju n10 ju l-1 0 a ug -1 0 s ep -1 0 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 f eb -1 1 m ar -1 1 a pr -1 1 m ay -1 1 ju n11 ju l-1 1 a ug -1 1 s ep -1 1 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 f eb -1 2 m ar -1 2 a pr -1 2 m ay -1 2 ju n12 ju l-1 2 a ug -1 2 s ep -1 2 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 f eb -1 3 m ar -1 3 a pr -1 3 m ay -1 3 ju n13 ju l-1 3 a ug -1 3 s ep -1 3 o ct -1 3 n ov -1 3 d ec -1 3 n um be r live-births deaths figure 2 evolution of the number of live births and deaths in bacau county, for the months of the years 2010-2013 source: i.n.s., tempo online it can be noticed that the evolution of the two phenomenon follow a somewhat similar evolution from year to year. thus, the live births one is higher during summer months and lower as we approach the cold months. this phenomenon has been observed for many years in most of the countries with the same climate. one explanation could be that in the winter months couples retire from the field work, especially in rural areas, focusing more on life of the couple. on the other hand, families where family 46 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro planning works, they want their children to start their life in the spring-summer months in order to grow and develop a little until the cold is coming. in the case of romania, the peaks of the births are july and august and the months of december and february are recorded with a minimum. in bacau county, peak months are from july to september, while the lows are especially february and march. in the case of deaths, the evolution is opposite to the one of births. thus, in the winter months due to unfavorable weather conditions, persons at risk of death (especially children and the elderly) get sick easier and have a higher probability of dying. for this reason we have more naturally decrease during the winter months. 10000 12000 14000 16000 18000 20000 22000 24000 26000 28000 30000 ja n10 f eb -1 0 m ar -1 0 a pr -1 0 m ay -1 0 ju n10 ju l-1 0 a ug -1 0 s ep -1 0 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 f eb -1 1 m ar -1 1 a pr -1 1 m ay -1 1 ju n11 ju l-1 1 a ug -1 1 s ep -1 1 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 f eb -1 2 m ar -1 2 a pr -1 2 m ay -1 2 ju n12 ju l-1 2 a ug -1 2 s ep -1 2 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 f eb -1 3 m ar -1 3 a pr -1 3 m ay -1 3 ju n13 ju l-1 3 a ug -1 3 s ep -1 3 o ct -1 3 n ov -1 3 d ec -1 3 n um be r natural increase + + + figure 3 evolution of the growth rate of the population from romania during 2010-2013 source: own calculations based on data from the institute of statistics from bacau county both in the case of romania and bacau county, the maximum deaths were observed during the months of december and january, but as winter was extended in 2012, deaths peaks were observed also in february-march or even april. following the evolution of the two demographic phenomena, the natural growth rate was negative for most of the year. from figure 3 it can be noticed that the only months in which the country has had a slightly natural increase of the population was in the following months: september 2011 (+518 persons), in august 2012 (+1835 persons), september 2012 (+596 persons ) and august 2013 (+858 persons). the month with the highest natural decrease of the population in the country was december 2013 (-9885 persons). 47 harja, stângaciu 300 400 500 600 700 800 900 ja n10 f eb -1 0 m ar -1 0 a pr -1 0 m ay -1 0 ju n10 ju l-1 0 a ug -1 0 s ep -1 0 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 f eb -1 1 m ar -1 1 a pr -1 1 m ay -1 1 ju n11 ju l-1 1 a ug -1 1 s ep -1 1 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 f eb -1 2 m ar -1 2 a pr -1 2 m ay -1 2 ju n12 ju l-1 2 a ug -1 2 s ep -1 2 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 f eb -1 3 m ar -1 3 a pr -1 3 m ay -1 3 ju n13 ju l-1 3 a ug -1 3 s ep -1 3 o ct -1 3 n ov -1 3 d ec -1 3 n um be r natural increase -+ + + figure 4 evolution of the growth rate of the population from bacau county during 2010-2013 source: own calculations based on data from the institute of statistics from bacau county in the case of bacau county, there are outlined in the chart three periods with a higher natural growth of the population during july-september 2011-2013. the maximum negative figure was observed in march 2012, followed by february 2012 and december 2013. since both births and deaths manifest a clearly seasonal oscillation, we moved on to the statistical analysis of this phenomenon. seasonality indices seasonality indices measure the deviation of the phenomenon from the monthly yearly average. because the repeating graphics of the two demographic phenomena is observed every 12 months, there were calculated mobile averages of 12 terms, and finally these were centered in the right of an initial term, by averaging the two terms. the influence of the trend component was eliminated by dividing the real terms with the centered mobile averages, and in the end, using the arithmetic mean method to calculate the monthly indices of pure seasonality. the calculated indices of seasonality were presented comparatively in figures 5 and 6. in romania, the average number of births per month deviates from the monthly average annually with +14,3% in july, +13,9% in august, +9,2% in september, +7% in october, and in january with +4,5%. practically january contradicts the theory mentioned before. the months recording minimum figures are february, march and april, when the average monthly number of live births was with -12% lower than the annual average. in bacau county, every year, we have with + 20,4% born in august compared to the annual average, with +11,4% in july, +6,8% in september, +6,4% in october, +5,3% in january and with +0,5% in november. the seasonality indices calculated indicate an average number of live births each year less than the annual average with -18,5% in march, -14,6% in april and -4,3% in february. regarding the seasonality indices calculated for deaths, in romania, these indicate an average number of deaths above the annual average during the following months: in 48 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro march with +11,8%, in december +9,4%, in january +8,9%, february +5,4%, in april +3,9% and october with +1%. 80,0 85,0 90,0 95,0 100,0 105,0 110,0 115,0 120,0 125,0 1 2 3 4 5 6 7 8 9 10 11 12 month se as on al ity in de x % romania bacău county figure 5 monthly seasonality indices calculated by the mobile average method for live births during 2010-2013 source: own calculations based on data from the institute of statistics from bacau county 80,0 85,0 90,0 95,0 100,0 105,0 110,0 115,0 120,0 1 2 3 4 5 6 7 8 9 10 11 12 month s ea so n al it y in d ex % romania bacău county figure 6 monthly seasonality indices calculated by the mobile average method for deaths during 2010-2013 source: own calculations based on data from the institute of statistics from bacau county in contrast, an average number of deaths under the annual average were observed primarily in the months of september -15,4%, -8,4% in august, june -7,6% and july 5,1%. 49 harja, stângaciu in bacau county, the seasonality indices calculated for deaths indicate a +11,8% in march, followed by +9,4% in december, +8,9% in january, +5,4% in february, +3,9% in april and +1% in october. the lowest seasonality indices were calculated for the months of september (-16,2%), august (-10%), july (-7,8%) and june (-7,6%). comparing the evolution of the seasonality indices from the two graphs, it can be observed that there are significant differences between the indices calculated for the national level and those calculated for bacau county. conclusions after the 90’s, the number of live births has been declining continuously, without even assuring the simple reproduction of the population. instability of a steady income, women's desire to achieve economic independence from the partner, the migration of young people abroad, are just some of the factors that led to the delay of the moment of bringing a child to life and the decision of couples to have a number small children. on the other hand, the increasing of life duration of the population, on the grounds of an aging population left within the country and poor health system, turned into a slight increase in the number of deaths. the correlated evolution of the two demographic phenomena has led to a continuous negative increase, more pronounced in the country compared to bacau county. it turned out from the monthly evolutions of the past four years that both demographic phenomena have a seasonal component with higher number of births especially in the summer months and a higher number of deaths in the cold months. these evolutions should be taken into account in estimating the population monthly trends when they are produced, if not taken into account economic and demographic policy measures. these measures should stimulate the birth rate on the one hand; on the other hand lead to the improvement of health care and greater attention to prevention and health. if governments that succeed do not take actions in this direction, young, active and in power work force, within the romanian state’s expense, will continue to go abroad, and the country will remain with the elderly, sick and helpless, without a real support. this is unfortunately the trend from the last few years in romania! references barthelemy, p., granier, b., robert, m. (2009), demografie şi societate, institutul european. harja, e. (2009), statistică şi econometrie, bacău, ed. almamater. institutul national de statistica (2014), tempo online, available at http://www.insse.ro/. rotariu, t. (2003), demografie şi sociologia populaţiei, ed.polirom, iaşi. 50 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro relationship marketing in the innovation processes rodica boier “gh asachi” technical university of iaşi rodica_boier@yahoo.com abstract inspired from the context of business-to-business markets, relationship marketing in the context of innovation have been expanded more and more to the consumer markets as well. the paper starts with a review of several most relevant studies on relationship marketing-innovation topic, from the first references to the current complex approaches. the effective stakeholder involvement in the value creation provides a more fertile ground for further successful innovations. all of the variables generating the success of a relationship marketing approach – trust, commitment, communication, seller’s customer orientation and empathy, experience and satisfaction a.s.o. – are also involved, with specific particularities, in the management of the innovation and new product development processes. the paper also outline the different perspectives to understand the relationship marketing-innovation approaches, coming from the product type, its business-to-business or business-to-consumer settings, the specific industry, the actual stage of the market evolution – emerging or mature –, the level of technological novelty as dimension of technological uncertainty, the position/ status and role of stakeholders as part in the relationships, the state of the new product development process in which the interactions occurs or special issues like sustainable innovation, for profit and not-for-profit areas etc. keywords innovation; new product development; relationship marketing jel classification m31 1. literature review there is always a two-way connection between innovation and relationship marketing. on one hand, the newly launched product, conceived together with the stakeholders, is likely to generate satisfaction and, hence, customer loyalty and retention with all known positive consequences. the repeated satisfaction felt by the customer, on the other hand, encourages him to expect even more from the innovative organization in what concerns the successfully launched new products. consequently, the effective consumer involvement in the value creation provides a more fertile ground for further innovation, as result. this idea follows peter drucker’s statement that both marketing and innovation are considered to be the two basic functions of any business enterprise. the value created by the company should be customeroriented, to generate both customer satisfaction and the expected customer relationship value. all of the variables generating the success of a relationship marketing approach are also involved, with specific particularities, in the management of the innovation and new product development processes: trust, commitment, communication, seller’s customer orientation and empathy, experience and satisfaction a.s.o. innovationrelated benefits of the relationship marketing go from the improvement of customer 288 relationship marketing in the innovation processes focus, enhancement of customer knowledge and feedback and improvement of customer solutions to the enablement of product customization and personalization and, this way, better customer attraction, conversion and retention or even winningback lost customers. the mix of relationships also apply to the specific of innovation and new product development. in this respect, according to gummesson (2008), there are market relationships – the classic supplier-customer dyad, supplier-customer-competitior triad and the physical distribution network –, and non-market relationship – the mega relationships as platform for market relationships, concerned with the economy and society in general –, and also nano relationships, conducted at an intraorganizational level. it is always necessary, valuable and interesting to analyse if companies really involve customers and other selected stakeholders in their new product development process, how do they do this, how profound and how long is the involvement and what results it produces, according to each phase of the innovation process. as the reality shows, new products’ rate of failure continues to be high despite the fact that efforts for innovation and marketing of new products has become increasingly important to the companies’ profitability. and, the primary reason for failure is still the poor understanding of the complex nature of customer needs, values and behaviors. conversely, the companies’ ability to orient themselves in successfull interactions with their individual customers will differentiate them in the future. that’s why bhalla urges for a process of „rethinking marketing and innovation” (2011). when developing a new product, it is crucial for the new product development team to make sure they deeply understand the relational context analysis. the domain is still developing, despite several interesting researches (fang et al., 2008; tuli et al., 2007; franke, 2006; lagrosen, 2005) that have discussed methods and benefits of interacting with customers and other stakeholders. inspired from the context of industrial market, innovation and relationship marketing have been expanded more and more to the consumer markets as well. many academic research focused on the transactional context of the new product development, but a growing flow of research still demonstrate the importance of relationship marketing for the innovating companies (lyu, 2012; talet, 2012; brito, 2011). a strong body of literature deals with innovation and the relationship marketing specific approaches. while relationships orientation reflects a company's ability to interact with its customers and other stakeholders to take advantage of information obtained from them through successive interactions to achieve customers’ loyalty through customer satisfaction regarding the new product, the innovation and new product development becomes a central issue in collaborative relationships between companies. for instance, heide and john (1990) investigated determinants of joint action in alliances between buyers and sellers and developed a formative scale with three items to operationalize the dependent variable joint action, one of those being the component testing/ prototyping (heide and john, 1990). later, anderson et al. (1994) described a business network emerging when a new product is developed and tried together with customer companies. at a higher level of generality, ramani and kumar (2008) linked the relationship marketing with innovation and stated that it „is a process for developing innovation capability and providing a lasting competitive advantage”. finally, several authors (malhotra & singh, 2010; laukkanen and pasanen, 2008; mavri et al., 2008) placed ‘innovativeness’ alongside other relationship marketing constructs such as mutual trust, commitment, experience, satisfaction, loyalty etc. as results from a comprehensive inventory made by agaryia (2013). 289 boier 2. perspectives on the innovation–relationship marketing approach in the innovation processes, the relationship marketing is applied in a diversity of instances, each of them with their corresponding particularities. this diversity is comes from the product type, its business-to-business or business-to-consumer settings, the specific industry, the actual stage of the market evolution – emerging or mature –, the level of technological novelty as dimension of technological uncertainty, the position/ status and role of stakeholders as part in the relationships, the state of the new product development process in which the interactions occurs or special issues like sustainable innovation, for profit and not-for-profit areas etc. for instance, athanassopoulos (2000) demonstrates that customer satisfaction is a function of innovation, but individual customers do not value product innovation as much as business customers do this. or, nambisan (2009) proposes collaboration platforms for social innovations that require collaboration among diverse networks of nonprofits, government agencies, corporations, and private citizens. interesting interactivites in new product development occur at the level of product novelty, on the one hand, with the embeddedness of the new product in the customer's business environment, on the other hand. according to bonner (2010), customer interactivity is positively related to customer information quality when developing highly innovative products, but not when developing modifications or extensions of existing products. in this respect, customer interactivity was found to be positively related to information quality for highly embedded product, but not for low embedded product. during the new product development process, a complex set of relationship approaches develops between producer and customer. in a buyer-seller context, interactions have to be optimized in order to obtain as best as allocation of resources, by matching a particular relationship approach to the appropriate situational context. interaction management in customer integrated innovation is an opportunity for companies to supply relational service to customer and to improve customer value and relationship quality (sun et al., 2010). but companies also need to understand how to ensure the best relational environment so that to provide the best sourcing of ideas from outside the company and even outside the industry, insights and knowledge from customers and end users, suppliers and competitors, universities, independent entrepreneurs, investors, inventors, scientists a.s.o. besides the traditional internal sources of innovation value chain (hansen, 2007), crosspollination (evans 2005; eisenhardt, 2000) and external sources (von hippel, 2005; kim, 2004; chesbrough, 2003), which involve a vast and dense relational network, have gained ground and become essential solutions (ex. linux), both involving a big and dense relationship network. it has been fully proven, the most successful product development efforts match a set of fully understood customer problems to a cost-competitive solution to those problems. therefore, the key is to talk to customers using appropriate methods and asking questions that customers can answer and that can provide information useful for the development of the new product (griffin, 2013). if the objective of the customer relationship management is to find, get, and retain customers (choy, 2003), yet it is, ultimately, a tool for understanding customer needs and behaviors. to make sure that product decisions reflect real-world needs, the customer must be brought into the design process. integrating research, development and marketing is a good way to do that (rust, 2010). understanding customer needs which drive significant product innovation is particularly challenging for the organizations developing new products. thus, it is important to identify the dimensions of the customer interaction process which lead to more proactive organizations. in a business-to-business setting, customer interactivity 290 relationship marketing in the innovation processes is conceptualized as a multi-dimensional construct consisting of bidirectional communications, participation, and joint problem solving during the projects of new product development. high levels of product innovation activity are occurring through key companies leading and developing networks (perks, 2011). the main components of such an interaction orientation can be the customer concept, the interaction response capacity, customer empowerment, and customer value management (ramani, 2008). although the general strategy of developing long-term relationships is known to enhance supplier performance, it is already proven that different customers have different degrees of attraction as partners. based on a transaction-cost analysis (how organizations can obtain maximum utility from their relationships with other organizations), athaide and rochard (2009) propose for the innovating companies to manage a portfolio of relationship approaches with buyers during the process of new product development because, from its three basic components – a bilateral approach, relying on a mutual exchange of information, a buyer-guided approach, and a seller-guided approach –, no one is universally desirable. according to athaide’s model, criteria to adopt a specific approach being both buyer-related (perceived buyer knowledge and prior relationship history) and innovation-related (product customization and technological uncertainty) characteristics, on the one hand, and behavioural dimensions (product co-development, pre-installation product knowledge generation, buyer education, installation support and post-installation product knowledge generation), on the other hand, the outcomes to be evaluated will be the overall seller’s relationship satisfaction. last but not least, it is useful to approach relationship marketing in the innovation processes in its broadest sens of the roles involved – customers but also other stakeholders (consumers, suppliers, retailers, wholesalers etc.). moreover, the whole range of aggregation levels in the relationship interactions must be considered – actions, episodes, sequences, relationships and partner base –, as hierarchical levels that range from a single individual exchange to the entire relationship portfolio of a firm (holmlund, 2004). references agaryia, ak., deepali, s. (2011), what really defines relationship marketing? a review of definitions and general and sector-specific defining constructs, journal of relationship marketing, 10(4), 203-237. anderson, j.c., haskansson, h., johanson, i. (1994), dyadic business relationships within a business network context, journal of marketing, 58 (october), 115. atahaide, ga., rochard rk. (2009), managing seller–buyer relationships during new product development, journal of product innovation management, 26, 566-577. athanassopoulos, da. (2000), customer satisfaction cues to support market segmentation and explain switching behaviour, journal of business research, 47, 191-207. bhalla, g. (2011), collaboration and co-creation: new platforms for marketing and innovation, new york, springer science+business media, llc. bonner, j. m. (2010), customer interactivity and new product performance: moderating effects of product newness and product embeddedness, industrial marketing management, 39(3), 485-492. 291 boier brito, c. (2011), relationship marketing: old wine in a new bottle?, innovative marketing, 7(1), 66-77. chesbrough, h. (2003), open innovation: the new imperative for creating and profiting from technology, boston, harvard business school press. choy, kl., lee, wb., lo, v. (2003), design of an intelligent supplier relationship management system: a hybrid case based neural network approach, expert systems with applications, 24, 225–237. drucker, p. (1954), the practice of management, new york, harper & row publisher. eisenhardt, k.m., galunic, d.c. (2000), coevolving: at last, a way to make synergies work, în harvard business review, 78(1), 91-100. evans, p., wolf, b. (2005), collaboration rules, harvard business review, julyaugust, 96-104. fang, e., palmatier, rw., evans, kr. (2008), influence of customer participation on creating and sharing of new product value, journal of the academy of marketing science, 36, 322–336. franke, n. (2006), finding commercially attractive user innovations: a test of lead-user theory, journal of product innovation management, 23(4), 301315. griffin, a. (2013), obtaining customer needs for product development, in kahn, kb. (2013), the pdma handbook of new products development, 3rd edition, hoboken, nj, wiley, 2010, 213-230. gummesson, e. (2008), total relationship marketing: marketing management, relationship strategy, crm, and a new dominant logic for the value-creating network economy, 3rd edition, oxford, butterworth-heinemann, elsevier ltd. hansen, mt., birkinshaw, j. (2007), the innovation value chain, harvard business review, harvard business review on inspiring & executing innovation, boston, harvard business school publ. co., 89-118. heide, jb., john, g. (1990), alliances in industrial purchasing: the determinants of joint action in buyer-supplier relationships, journal of marketing research, 27 (february), 24–36. holmlund, m. (2004), analyzing business relationships and distinguishing different interaction levels, industrial marketing management, 33, 279– 287. kim, c., mauborgne, r., (2004), blue ocean strategy, boston, harvard business school press. laukkanen, t., m. pasanen (2008), mobile banking innovators and early adopters: how they differ from other online users? journal of financial services marketing, 13(2), 86-94. lagrosen, s. (2005), customer involvement in new product development: a relationship marketing perspective, european journal of innovation management, 8(4), 424 – 436. lyu, jr-j., chao, hl., chen, cw., huang, ly. (2012), developing a customer relationship management model for better health examination service, nang yan business journal, 1-06, 38-46. malhotra p., singh b. (2010), an analysis of internet banking offerings and its determinants in india, internet research, 20(1), pp. 87-106. mavri, m., ioannou, g. (2008), customer switching behaviour in greek banking services using survival analysis, managerial finance, 34(3), 186-197. nambisan, s. (2009), virtual customer environments: it-enabled customer coinnovation and value co-creation, in nambisan, s. (ed.), information 292 relationship marketing in the innovation processes technology and product development, annals of information systems, 5(2), 109-127. perks, h., moxey, s. (2011), market-facing innovation networks: how lead firms partition tasks, share resources and develop capabilities, industrial marketing management, 40(8), 1224–1237. ramani, g., kumar, v. (2008), interaction orientation and firm performance, journal of marketing, 72(1), 27-45. rust, rt., moorman, c., bhalla, g. (2010), rethinking marketing, harvard business review, 88(1), 94-101. sun, h., yau, hk., mingsuen, ek. (2010), the simultaneous impact of supplier and customer involvement on new product performance, journal of technology management & innovation, 5(4), 70-82. talet, an. (2012), km process and crm to manage customer knowledge relationship management, international proceedings of economics development & research ipedr, vol. 29, singapore, iacsit press, 60-67. tuli, kr., kohli, ak., bharadwaj, sg. (2007), rethinking customer solutions: from product bundles to relational processes, journal of marketing, 71(3), 1-17. von hippel, e. (2005), democratizing innovation, the mit press, cambridge, massachusetts. 293 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 22, 2015 http://sceco.ub.ro 55 a theoretical approach of the supply process nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahoo.com abstract in a permanently changing economy, organizations need to achieve more goals with fewer resources in order to remain competitive. a key component in this effort is the design and coordination of distribution and supply networks. each product has a particular distribution channel to the end customer, which is often long and complex. the supply process has an important contribution to achieving results of economic, industrial and productive organizations and has direct responsibilities related to reducing costs. this article aims to present some of general questions relating to the supply process, such as the definition, classification, stages and phase of the supply process using a comparative study of literature as a research method. the article also presents a variety of information that underlying the preparation of approved vendors list. keywords customer; supply; resources; purchase; approved vendors jel classification m0 introduction to achieve this article the research method used is a comparative study of literature. the supply is one of the component activities of commercial function through which businesses fall in economic relations with other companies. the material resources supply is that activity through which it provides the necessary elements for work with a view to obtaining a higher profit for organizations. the supply is essential in any business organization, manufacturing or industrial, especially in situations where material resources have a high share in the cost of production, or when the range of the supplied articles is large or when the market for such products suffer fluctuations between demand and offer. 1. definition, classification and supply stages the supply is a very complex activity that involves a laborious decision-making process that defines any action that aims procurement of goods and services necessary for the production processes, service delivery and sale of goods to the population. the supply includes all activities carried out within the enterprise version to ensure all resources necessary to the optimum version of its activity. in organizing the chain of activities in economic organizations, industrial production or the supply of material resources, we can mention a few technical terms that define specific actions the supply process, such as: the purchase is the phase of the supply process reflected in a monetary transaction which falls between prelude (which include the following: identification of the necessary material resources and setting of deadlines a theoretical approach of the supply process 56 and quantities purchased) and the following actions (which include the following: negotiating the supply and material resources to effectively in the enterprise). the purchase is phase of supply process in which the transfer of ownership of material resources from supplier to customer, using payment instruments. -supply, which constitutes the final action of the supply process with material resources, through which the shift towards consumption of material resources purchased from the supplier; basic actions that make up the supply activity are: the issuance of deposits required quantities of material resources; working with power points amounts and schedule. depending on the activities to be carried supplies and material resources to the nature of these resources or services necessary industrial enterprise, the following types of supply main activity: supply production base, which deals with procurement of all types of material resources needed to conduct the current business of the undertaking, namely: raw materials, components, sub-assemblies, parts, measuring instruments and control collaboration for the execution of components or technological operations, electricity, fuel and lubricants and packaging, consumables etc.; the supply for investment, which relates to procurement of equipment necessary for physical development in accordance with the investment objectives of enterprise development strategy; collaboration for supplied delivery material resources transport, if providers do not provide this service, or delivery of finished products to customers; technical cooperation for the realization of benefits, intellectual or otherwise, as: maintenance, logistical benefits, computer programming, market research, surveillance and security, etc. dumitru m. (2005) presents a range of influences and circumstances on which they perform upon organization supplies: generate administration costs involved salary; requires financial resources to obtain materials, components, equipment and services; add value to the product by value analysis, negotiation and supply strategy; generate revenue by selling surplus material, in counterpart arrangements or sales leaseback type; has the authority to decide on the determinants of profit; has its own budget; reducing costs is a proper performance evaluation criterion. supply process consists of several stages. these stages are: establish what needs must be met and the products to be purchased; searching and selecting the suppliers that will allow meeting the needs expressed; purchase constitutes the third stage, depicting the result of her confrontation between supplier and buyer. the last stage is the one that refers to the period after making the purchase action. presentation stages of the supply process and the content phase shown in table no.1. ciucescu 57 table no.1 the main stages of the supply process for production material resources source: brabie gheorghe (2001), logistică industrială, editura junimea, iași, pp.50 2. objectives and supply specific activities the main objective of supply (stan, a. 2012) is focused on providing complete, comprehensive and timely economic unit with the appropriate technical resources quality materials and equipment in place and deadlines. to achieve this objective more specific activities are carried out such as: identifying and fixing the amount and structure of materials and energy for the design parameters of activity of the organization. this is done by studying and collecting information on energy and material resources needed for all consumer destinations throughout range, layout and quality. technical and economic substantiation of the plan and the programmes for the supply of material and energy. for this purpose shall be used and the manufacturing plan, the rules for the whole structure of manufacturing needs for other destinations of use of material resources, the structure and level of existing stocks, own resources during the period covered by the foundation. step stage name content phase step 1 information on material resources and suppliers collecting preliminary information on material resources and suppliers. suppliers interested potential customers to provide all required step 2 launch of the order the staff in charge of the buying process launching purchase order requesting the required material resource. step 3 registration order to the supplier and the shipment of goods supplier achieved record order and sending material resources required quantity and at the agreed term step 4 invoice payment on delivery of materials / goods provider sends the customer invoice, containing the following data: quantity delivered, payment due date and amount. step 5 recording material resources goods received from the supplier is registered and added to the existing stock. step 6 the invoice verification invoice received is checked from the point of view of the correspondence between the quantity of materials/products entered into it and actually received. step 7 invoice payment on the basis of verified payment invoice by the supplier. a theoretical approach of the supply process 58 sizing based technical documentation economic consumption and energetic resource materialswork provides the technical elements for calculating energy and material needs and is focused on the elaboration of specific consumption norms analytical, technical and economic grounded: by using these technical regulations consumer prevents irrational consumption, waste of materials and energy and thus unduly increasing economic costs. develop material and energy balances which help to highlight how the use of resources, as well as tracing their concrete form during processing. base is the foundation of these instruments manufacturing programs and rules specific consumption estimated in the technical and economic documentation for the execution of the products, works or services. sizing on economic grounds and stocks lots of material resources for command and supply; the action is complex in nature, being justified by the importance of its economic aspect that is highlighted not only by the amount of material resources but also by spending it generates whose weight is 25-30% over the average value of stocks. this action it shall be attached to the establishment of quantitative levels or timing calendar of supply orders. the domestic and foreign market exploration of resources and materials for energy and real sources and potential location to be used. the action involves the issuance of invitations to tender, investigations at fairs and exhibitions, international and domestic commodities exchanges, studying commercial catalogues, leaflets, flyers, other sources of information and publicity, commercial representations, dialing units specializing in the commercialization of products and materials, the collection and use of reusable materials. the choice of material resources and technical equipment that meet the best characteristics for consumer applications, presents the best delivery conditions etc. choosing suppliers whose offer presents the best economic conditions and ensure certainty in future deliveries on short or long term. the choice of sources of supply will be made after several criteria including significant are those who are considering the quality of resource materials, terms, the distance of transmission, the possible form of transport used, the price level, potential suppliers, distribution channels used, etc. elaboration of strategies in the purchase of resources in relation to the market of internal and external supply. the action is carried out after prior analysis of the characteristics of market supply, suppliers, of influencing the purchasing strategy. testing the reliability of suppliers you select in order to highlight moral uprightness, guarantees enjoyed by business, the seriousness in complying with obligations and solvency. fleshing out relations with suppliers chosen, action involving the establishment, through the agreement, all conditions will delivery between partners. completion of your purchase is done by issuing orders and conclusion of commercial contracts. -stock tracking of contracts of insurance material, preparation of charts tracking stock supplies suppliers and resources. ensure normal conditions reception lots of incoming materials suppliers; this involves setting up special discharge spaces reception rooms appropriate technical means, to set up commissions reception reception and organization of work; their formations of workers for conducting these operations . securing storage spaces, equipping them with adequate furniture, internal organization of traffic flows, choosing efficient storage systems, storage operationssetting of material resources in the storerooms and warehouses; in the same vein is ciucescu 59 the inclusion of views of the resource entries received and accepted, so the conditions of storage and conservation required by the nature of the material stored and theft prevention, fire safety. organize system serving rhythmic material resources consumption subunits of the organization consistent with manufacturing programs; in this framework shall ensure the development of programs optimal movement consumption correlation moments of liberation transmission of material from deposits subunits consumer ones that are actually necessary, staggering judicious in time of serving to prevent expectations, the overcrowding service points, blocking internal transport, loading irregular workers in warehouses. a systematic check of the actual evolution of stocks in relation to limits to avoid adverse economic consequences that it may cause overstocks or lack of materials in stock on economic activity of the enterprise, its financial situation. monitoring and control of materials and energy resource consumption destinations. this activity aims to prevent consumption beyond the limits set by calculation wastage during transport and storage of non-compliance with technological discipline or original destination of use of material resources. 3. the approved vendors list in order to establish this list needed some information which can be grouped into several categories. the first category refers to data provider identification (name, address, telephone/fax:) another category is the nature of the provider's activity, services or products concerned and also their detailed specification. as regards the evaluation criteria, they may cover: a) certiffied company management systems: * iso 9001 : 2008; * iso 14001 : 2005; * ohsas 18001: 2008; b) ce certification for products supplied: * all products are certified; * 50 % of products are certified supplied; * certification pending; c) an independent department of technical control / inspection products; d) how to monitor the quality of raw materials and/or sub-assemblies they purchase, namely: * control of documents attesting; * check at reception; * third party inspection. e) verifying the quality of finished products before shipment to beneficiaries; f) a system of evaluating their suppliers; g) the existence of a procedure for handling non-conformities; h) handling of complaints regarding the quality of products: * product remediation; * replacement product; * amount paid for the product return. i) specification complaint deadline: * 24 hours; * 48 hours; * more. a theoretical approach of the supply process 60 k) specification of the term / payment terms agreed: delivery, 30 days, 60 days; other l) specification agreed payment methods: * cash; * payment order; * cec; * promissory note; m) a minimal amount / orders; n) to customers specifying your traditional facilities: * discounts; * priority delivery; * free shipping; * payment term; o) technical documentation accompanying your products provided: * yes; * no; * on demand; p) accompanying documentation as required by law provided your products: * yes; * no; * on demand; q ) providing post sales collateral for supplies? yes; no r) deadline for providing product specification order: * 24 hours; * 5-7 days; * 15-30 days; * > 30 days; s) ensuring the supply of the product ordered at your destination: * yes; * no; * on demand. before launching a contract when the need arises procurement is established the necessary raw materials, materials, equipment to be purchased and the services or works to be subcontracted. the supply of raw materials, components, equipment, machinery and subcontracting activities or services necessary for the performance of contracts, must be made known recording of supply, which includes at least the following: identification of products, services or works to be supplied/sub; deadlines for the completion of works supply or subcontractors; potential subcontractors; quality requirements for products, services, contracted work; conditions required for subcontractors; the applicable editions of the specifications and drawings (if deemed necessary). conclusions the conclusions of this article will be focused on the following areas: highlighting the essential aspects of the procurement process; summary of key information for a proper development of the supply process; ciucescu 61 mention of issues concerning of purchased product verification for optimal completion of the supply process. regarding the procurement process can be summarized as following: the organization must ensure that purchased product conforms to specified purchase requirements and that the product supplied complies with the requirements specified supply. type and extent of control applied to the supplier and purchased product must depend on the effect of purchased product on subsequent product realization or the final product; the organization must evaluate and select suppliers geared their ability to supply product in accordance with the requirements of the organization; it is appropriate to establish criteria for selection, assessment and reassessment . must maintain records of the results of evaluations and any necessary actions arising from the evaluation. also, in the interests of good conduct of the process it is necessary to supply the following details of the outcome of the procurement information: information should describe the product for supply of stocked including, where appropriate, requirements for approval of product, procedures, processes and equipment. information should describe the product for supply of stocked including, where appropriate, requirements for staff qualifications. information should describe the product for supply of stocked including, where appropriate, requirements for quality management system . the organization must ensure that the specified requirements are adequate supply before communicating them to the supplier. for an optimal completion of the procurement process must be given two points that refer purchased product verification, including: the organization must establish and implement the inspection or other activities necessary to ensure that the product supplied meets the requirements specified supply. -when the organization or its customer intends to perform verification at the supplier, the organization should specify the information to supply arrangements envisaged verification and method of product release. references bălan, c. (2006), logistica: parte integrantă a lanţului de aprovizionare livrare, bucureşti, editura uranus brabie, gh. (2001), logistică industrială, iași, editura junimea dumitru, m. (2005), managementul logisticii. elemente teoretice şi practice, craiova, editura sitech gattorna, j., l. (1999), managementul logisticii şi distribuţiei, bucureşti, editura teora ilieș, l., logisticasursă de competitivitate, management & marketing, pp.93102, available at http://www.managementmarketing.ro/pdf/articole/8.pdf patriche, i. (2008), managementul tranzacţiilor comerciale, negocierilor, contractărilor şi achiziţiilor publice, bucureşti, editura universitară popa, v. (2004), strategii manageriale interorganizaţionale, târgovişte, editura bibliotheca stan, a. (2012), logistica mărfurilor, bacău, editura alma mater. a theoretical approach of the supply process nicoleta ciucescu “vasile alecsandri” university of bacau ciucnico@yahoo.com abstract keywords jel classification m0 introduction 1. definition, classification and supply stages 2. objectives and supply specific activities 3. the approved vendors list conclusions references brabie, gh. (2001), logistică industrială, iași, editura junimea solvency ii: implicaţiile aplicării pe piaţa româneasca de asigurări studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro solvency ii: the implications of its application on the romanian insurance market ioan marius ciotină1 “alexandru ioan cuza” university of iaşi ianis20032002@yahoo.com abstract solvency ii is a european directive whose purpose is to update the regulations concerning the insurance market. this is more than a set of rules on the solvency of insurance companies and is a comprehensive set of rules on the entire insurance market from solvency, liquidity and information asymmetry between actors to an insurance transaction. the aim of this article is to present the implications of applying solvency ii in romania and the changes that will occur on the insurance market. we also present the advantages of moving from the current regulation, namely solvency i to solvency ii directive, both by comparative analysis between both directly and through analysis of test results qis5 applied in romania. we will also show the current situation of the insurance market by emphasizing evolution and the solvency margin of solvency for the last six years from 2007, the year before the financial crisis and in 2012, the year for which there last available data. keywords solvency ii; insurance market; risk insurance jel classification g22 introduction the purpose of the solvency ii project is to update the regulation framework concerning the european insurance market. in this paper we present the framework that led to the need to develop this directive and underlying structure. we will also show the implications of its adoption in the insurance market in romania and changes. next we show test results of qis5 in romania and the solvency margin of solvency in the last six years under the regulation applied to the solvency i. considerations concerning the structure of solvency ii one of the main objectives of the european union is to achieve a truly single market. the first rules on insurance date back since the 1970's and, subsequently, updates have been applied on the convergent markets (eling et al., 2007). since these regulations have become obsolete at the end of the 1990's, a decision was taken to revise them, and in parallel to develop the basel ii regulation, which applies in the banking system. the european parliament had a two-staged approach, respectively solvency i (which became applicable in 2004), which updated the thresholds (existent since 1970) regarding the necessary capital for insuring solvency, 1 phd student “alexandru ioan cuza” university of iaşi, faculty of economics and business administration 96 ciotină without changing the computing method, and solvency ii, a substantial reform of the supervision structures and practices. solvency is the ability of a company to stand payments that may occur, irrespective of their value. in parallel with the process of drawing solvency ii, other evaluation frameworks have been created concerning capital and solvency, in countries such as the great britain, switzerland, or holland. also, the international association of insurance supervisors (iais) started working in the direction of insuring the convergence of the various analysis systems of solvency in the insurance field. among these, solvency ii is the most important, as this regulation will apply to the entire european insurance market. solvency ii is based on three pillars, which are also present in basel ii. the first pillar focuses on the financial aspects, such as the value of capital in a balance sheet, the payment obligations and assets of a company. moreover, pillar i includes two capital indicators, respectively the solvency capital requirement (scr), which can be computed either through a standard approach or using the internal models of insurance companies. the standard approach of the scr indicator includes a single formula, which needs to be applied by all insurance companies, irrespective of their size, portfolio, or geographical location. nevertheless, the insurers may opt for designing their own computing model, which would better fit their risk profile, but this would have to be approved by the supervision entities. the accepted value of scr is 99.5%. the second indicator in the solvency ii directive is the minimum capital requirement (mcr). not insuring the mcr triggers the intervention of the supervision entities (solvency ii, art. 136), which leads to the conclusion that the mcr indicator refers to a minimum capital level that guarantees a certain safety for the insurers. a similar philosophy is applied by basel ii (basel committee on banking supervision, 2004), as a stimulus for companies to improve their risk policies. up until now, the most significant progresses have been achieved in the regulation of pillar i. pillar ii and pillar iii refer to diminishing the asymmetry of the information between the agents involved. the reason for regulating an insurance market is often related to its imperfections, such as the agency issue and obtaining information, which can be rather costly (klein, 1995). the agency issue refers to the information asymmetry between the owners or managers of the insurance companies, on the one hand, and the owners of insurance policies on the other. this asymmetry can be solved by collecting and distributing more information, which implies a certain cost. it is generally accepted that a regulation in the field of insurance should be designed so as to increase the market competitiveness as much as possible. one of the elements of and effective and competitive market is the fact that all the participants who operate on the respective market have access to relevant information. in this sense, one of the regulations aims at increasing the discipline on the market, requiring the reporting of information in order to efficiently manage the market risks. professor jacques sijben concludes that the so-called early intervention procedure and the solving process, which is the basis of pillars ii and iii, is much more stable and effective than the capital demands. solvency ii from the perspective of its application in romania after several delays, the application of solvency ii in romania will become compulsory starting with 2016, so that, beginning with 2015, insurance companies will have to report to the financial supervision authority concerning the situation of the implementation of the new norms on solvency and capital. the new rules, much stricter than those currently applicable, will generate important movements on the market. 97 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the most significant modification brought by solvency ii compared to the present regulations that apply on the romanian insurance market, respectively the solvency i directive, is considering six new risk categories in determining the solvency of insurance companies. for now, this indicator is computed according to the exposition of the insurer and to the estimated damages, but after the application of solvency ii, the analysis will also include the subscription, liquidity, concentration, market, credit, and strategic risks. following the implementation of the solvency ii directive, solvency will become the most important indicator in evaluating an insurance company. at present, this evaluation is done according to the volume of the gross commissions subscribed, that is, to the volume of insurance sales. by introducing the market and strategic risk in computing the solvency of insurance companies, such a company will also be evaluated according to the country where it performs its activity. thus, two companies in different countries, having the same portfolio of products and with the same volume of sales, will be evaluated differently, according to the business environment in each country. concentration risk refers to focusing the entire products portfolio only on specific types of insurance, such as car insurance. subscription risk is related to the type of customers of an insurance firm and to their degree of exposure to risk – the higher their risk, the higher the risk taken by the insurance company. romania is one of the most exposed countries in europe to catastrophes, and a first step in harshening the conditions concerning solvency was taken in 2012, when new rules were introduced concerning reinsurance, but only for calamity insurance. with the implementation of solvency ii, additional conditions will apply concerning the necessary capital for insurance companies, in order to insure enough solvency, which will affect the entire insurance market. another modification refers to the type of model used to compute solvency. if, at present, the approach based on historical data is the only one used, solvency ii introduces the model based on historical data as well as on the risk factors that may have effects, such as natural disasters. in what concerns the asset portfolio, solvency ii recommends investing only in financial instruments implying risks that are easy to evaluate, identify, and manage. it also suggests diversifying the asset portfolio in order to reduce risk. at a european level, the supervising european committee from insurance and occupational pensions (ceiops) organized the fifth quantitative impact study, called qis5. of the 3,600 insurance companies in europe, 65% participated in the qis5test. in romania, 18 insurers took part in qis5, owing approximately 93.9% of the gross commissions subscribed for life insurance and 79.8% for general insurance. the results of the qis5 test for romania can be synthesized as follows: • considering the transition from the present solvency regime to solvency ii, which at a global level may be characterized by an increase in capital requirements, a decrease in the value of the technical reserves and a raise in the need for eligible costs, we can notice that the financial position of the insurance sector in romania remains stable. the necessary capital surplus, resulted according to the technical specification of the qis5 test, is only 17.47% of the current need; • according to the quantitative results and observations obtained within the qis5 test, we can draw the conclusion that the design of solvency ii was extremely sustained. nevertheless, in order to insure compatibility, the evaluation methodologies for the technical reserves (defining the limits for insurance contracts, computing the risk margin) and for the delayed taxes, additional analyses were required; • qis tested if the system is correctly calibrated, that is, if the value of 99.5% for scr is correct for a period of one year. generally, although the results proved 98 ciotină it, some areas have been identified where additional calibration is required, such as: the catastrophe risk, commissions and technical reserves for general insurance; • the high participation ratio of the insurance companies to qis5 gives a positive message on the fact that the insurance sector is preparing to apply the new supervision system. although the insurers' qis5 reports show that certain aspects should be improved (data quality, it systems, the human resource training system), there were several positive signals, and all the participants stated that they will be ready upon the entrance into force of the new supervision system. the application of solvency ii brings a series of benefits both for the insurer and for the insured. for the insurer, we list benefits such as: a drop in the losses suffered by the insured, permission to use own evaluation models, fewer costs and increased flexibility, strict supervision that facilitates the very fast adaptation of the capital to the requirements; for the insurer, we can mention: a drop in the bankruptcy risk for the insurer, a diminution of insurance commissions, a diversification of the products, as well as their correlation to personal needs (novac & badea, 2008). characterization of the solvency of insurance companies for the period of the pre-adoption of solvency ii in order to stress the changes brought by the introduction of solvency, ii we must present the current solvency status of insurance companies, under the regime of solvency i. the most important indicators used are the solvency margin and the degree of solvency. the available solvency margin is an indicator computed as the difference between the value of the assets and the value of the liabilities of a company, and it is in fact the shareholder's equity of the insurer. this indicator has constantly increased since 2007 until 2011, when we witnessed a drop, which persisted in 2012. looking at the two insurance categories, the tendency was similar, with only one exception: in 2012, the solvency margin for life insurance increased by 33,138,346 lei, respectively by 3.22%. table 1 present market developments related to the solvency margin of romania in the period 2007-2012. table 1 evolution of the solvency margin available for the romanian insurance market, for the period 2007-2012 available solvency margin (lei) 2007 2008 2009 2010 2011 2012 life insurance 666.682.358 944.393.619 1.199.193.246 1.219.431.465 1.028.915.044 1.062.053.390 general insurance 1.615.625.237 1.856.450.935 2.012.033.024 2.125.511.889 2.038.318.791 1.939.918.788 source: www.csa-isc.ro besides the available solvency margin, another important indicator is the minimum solvency margin, which is the minimum capital that an insurer must own at all times; if its value is lower, it means an impossibility to pay the obligations to the insured. dividing the available solvency margin by the minimum solvency margin, we obtain the degree of solvency, which must be higher than one in order to have sufficient solvency for making any required payments. this indicator had an oscillating 99 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro evolution for the analyzed period. for life insurance, the degree of solvency dropped in 2008 to 3.64, and in 2009 it reached 4.46. two drop years followed, respectively to 4.29 in 2010, 3.93 in 2011, and 3.94 in 2012. for the six analyzed year, the degree of solvency of general insurance dropped from 2.38 for 2007 to 1.97 in 2012. these evolutions were caused by a decrease in the insurance commissions subscribed, which have dropped since the beginning of the financial crisis. nevertheless, as the insurance commissions diminished, the paid damages went up, which made for the insurance companies to have negative results from the basic activity, resulting in lower solvency. table 2 presents the evolution of solvency for the insurance market in romania between 2007 and 2012. table 2 evolution of the degree of solvency of the insurance market in romania, for the period 2007-2012 degree of solvency 2007 2008 2009 2010 2011 2012 life insurance 3.85 3.64 4.46 4.29 3.93 3.94 general insurance 2.38 2.14 2.15 2.21 2.13 1.97 source: www.csa-isc.ro conclusions for the insurance field, the obvious effects of the crisis, besides the financial problems, consisted in higher liquidity and insolvency risks. these aspects are approached based on the principles that constitute the regulations of solvency ii. after multiple delays, solvency ii will be compulsory for the entire romanian market and will determine numerous changes for insurance companies. although a capital level correlated with the risk profile, a more careful supervision of the taken risks, as well as an increase in the degree of responsibility are required, the measure can also determine, in a first stage, for some insurance companies to encounter difficulties in attracting the additional capital needed. nevertheless, de degree of meeting the qis5 test shows that the actors on the market are aware of the benefits of the new regulation and declare themselves prepared to apply it. references basel committee on banking supervision (2004), international convergence of capital measurement and capital standards: a revised framework, bank for international settlements, basel (june). butaci, c. (2013), modeling the risk in agreement with the solvency ii regulations and possible implications on the romanian insurance market, ovidius university annals, economic sciences series, xiii (2), 548-552. commision of the european communities (2008), amended proposal for a directive of the european parliament and of the council on the taking-up and pursuit of the business of insurance and reinsurance (solvency ii), available at http://ec.europa.eu/internal_market/insurance/docs/solvency/proposal_en.pdf. eling, m., schmeiser, h., schmit, j. (2007), the solvency ii process: overview and critical analysis, risk management and insurance review, 10, 69-85. 100 ciotină european insurance and occupational pensions authority, public consultation on the set 1 of the solvency ii guidelines, available at https://eiopa.europa.eu/ consultations/consultation-papers/index.html. klein, r. w. (1995), insurance regulation in transition, journal of risk and insurance, 62, 363-404. novac, l. e., badea, d. (2008), supervision on the single european insurance market interaction between regulation and competition, analele universităţii din oradea – seria ştiinţe economice, xvii (3), 410-414. sijben, j. j. (2002), regulation versus market discipline in banking supervision: an overview – part 2, journal of international banking regulation, 4, 55-71. wang, l. (2013), the implications of solvency ii to insurance companies, theses and dissertations, paper 480. 101 realizarea sistemului operaţional studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro selling, delivery and trade marketing – an operational trident of the distribution system ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com abstract this paper highlights the way in which a distribution system can be made operational in fmcg, starting from the interaction between three components of the system: selling, delivery and trade marketing. on this basis, i have categorized the improvement opportunities of each component, using the appropriate key performance indicators (kpis) of the system objectives. the optimal configuration of instruments and successful interaction of these components, improve the distribution system contribution to company performance. a specific system, defined for solving marketing problems, must be designed according to this purpose, and in this regard, all the significant elements and relationships must be subordinate to the objective by which it will achieve the desired solution. business objectives achievement can be measured as effectiveness the degree to which objectives were achieved, or as efficiency the degree to which objectives have been achieved in the available resources. for evaluating the effectiveness with which an operative marketing system turns its sources into necessary results to solve a problem, it requires certain criteria to measure performance. these three elements: selling, delivery and trade marketing, are a trident of distribution which can lead to an optimal approach of market opportunities. keywords key performance indicators; selling; delivery; trade marketing jel classification m31 1. defining performance measures if choosing an alternative action or alternative systems of marketing actions that are to be made on a rational basis, it is necessary to measure the degree to which various alternatives meet predetermined objectives, or, in other words, measuring the effects that these alternatives have on the objectives. specifying a measure for efficiency and effectiveness performance of the decision, is closely related to determining the objectives and constraints which are always embedded in a composite endpoint. since the problem structuring phase, is imperative to define measurements for the action alternatives performance. kpis are analytical indicators, selected as the most illustrative in monitoring key activities and processes for organizations, providing an overview on performance. using kpis facilitate organizational learning, improve key operations, capabilities and processes, enabling decision makers to work towards achieving the desired results. distribution system objectives are:  distribution system selected by outlet groups should be made operational for selling; delivery and trade marketing;  to ensure common understanding of the key considerations in making the chosen system operational;  to agree issues related to selling. the key performance indicators (kpis) are the following: sales force deployment; sales forecasting and order management; 332 selling, delivery and trade marketing – an operational trident of the distribution system  to agree issues related to delivery. agreed kpis are the following: network structure and product flows; transportation; warehousing and inventory management.  to agree issues related to trade marketing. the kpis are the following: point of purchase (pop); merchandising and trade promotions. the appropriate indicators which correspond to these goals, highlights the results of each component. for their shape are needed inputs that are ordered by sections according the below sequence. 2. selling 2.1. overview sales force deployment the objective is to serve each segment in the market (outlet groups, channels, outlet types) with a targeted sales approach, appropriate resources and organization, tailored sales force skills, incentives and support. required inputs are:  distribution system selection by outlet group;  retail data;  sales forecast. key performance indicators are: call duration by outlet type and call frequency by outlet and route. the purpose of these two indicators is to track actual calls versus requirements. another indicator is represented by the effective calls by representatives. the purpose is to monitor sales representative effectiveness. the last key performance indicators are objective versus actual sales and planned versus actual calls. the purpose of these two indicators is to check target fulfillment of sales force. 2.2. overview sales forecasting the objective is to implement an accurate sales forecast with a clear consensus process (to agree on “one number”) and interfaces to planning activities. required inputs are historic sales data. sales forecasting data are important inputs for: inventory management; sales goals and order management. two approaches are recommended for sales forecast:  bottom up (primarily built on field data) is short term, serves as input for delivery planning;  top down (based on bottom up data and assumptions for demand change) is long term and is used for asset decisions and budgeting. forecasting strongly depends on the market. new markets without historic data have to rely on assumptions, other countries’ experiences, available data etc. established markets can rely on historic data, unless they select a new distribution system. key performance indicators are sales forecast error and variability of sales forecast compared to demand variability. the purpose of these indicators is to measure sales forecasting accuracy. 2.3. overview order management the objective is to customise order taking procedures and conditions by outlet group, implement a smooth order management process and provide the best practice cash management according to the conditions in the market. 333 olariu required inputs are:  distribution system selection by outlet group  credit/accounts receivable history by customer this document concentrates on managerial issues, relating to order management. key performance indicators are the following: order frequency by customer and order size by customer. the purpose of these indicators is to track actual orders versus requirements. other indicators are the percent of orders on time and the percent of order fill. the purpose of these indicators is to monitor order effectiveness. the last indicator is represented by working capital utilization (the sum of the cost of inventory plus trade credit), whose purpose is to measure the working capital employed in the company's trading activities. 3. delivery 3.1. overview network structure & product flow the objective is to establish an effective and efficient network of facilities (distribution centres, warehouses and depots), thereby improving product flows, shortening delivery time and decreasing out-of-stocks. network structure refers to physical location of distribution system components. it is different from route structure, which is a sales and transportation management issue. required inputs are:  distribution system selection  sales forecasting  current network cost optimisation of network structure is precondition before warehousing, transportation and inventory management can be improved. while the network optimisation can be approached through spreadsheet modelling/linear programming, only a specific software program will provide ideal solutions with limited efforts. a key performance indicator is the number of deliveries/day (planned versus actual), whose purpose is to track delivery performance against targets. other key performance indicators are percent of deliveries on time and percent of volume delivered on time. the purpose of these indicators is to monitor delivery effectiveness. other kpis are the following: the drop size track actual drop size versus requirements and the number of drops/route per customer type – the purpose is to monitor route performance the last indicator is the percent of out-of-stocks in distribution centres/at retail, whose purpose is to measure “out-of-stocks” as key critical distribution measure in delivery. 3.2. transportation operationalising transportation involves evaluating both infrastructure and processes. the objective is to determine the appropriate resources, routes, depth of transportation function ownership and monitoring mechanisms to effectively deliver products to the customers. required inputs are: distribution system selection by outlet type/channel; current network structure and outsourcing decisions; retail data and customer satisfaction measurements (csm). making transportation operational applies only if the delivery and transportation activities are assumed directly by a specific company or controlled by that. there are two dimensions of transportation: 334 selling, delivery and trade marketing – an operational trident of the distribution system  primary transportation: from factory to warehouse/distribution centre;  secondary transportation: from distribution centre to retail/wholesale. primary transportation key performance indicators are the following: percent of ontime deliveries; percent of vehicle capacity utilization and percent of fleet utilization. the purpose of these first indicators is to monitor effectiveness of transportation. other primary transportation key performance indicators are the following: percent of product losses and percent of damaged product. the purpose of these indicators is to track product loss. the last kpi is the percent of cost / km, which measures transportation efficiency. secondary transportation key performance indicators are: the percent of invoices not delivered; percent of on-time deliveries; percent of complete deliveries and percent of vehicle capacity utilization. the purpose of these indicators is to monitor effectiveness of transportation. another indicator is the number of calls / day, whose purpose is to track product loss. the last indicators are the cost / call and cost / km, whose purpose is to measure transportation efficiency. 3.3. overview warehousing the objective is to determine the appropriate storage equipment, storage space design, layout design, warehousing technology, and warehouse material handling processes to effectively and efficiently expedite movement of products through the warehouses required inputs are:  distribution system selection by outlet type/channel  current network structure and outsourcing decisions making warehousing operational applies only if the warehousing activities are assumed directly by a specific company. there are five dimensions in warehousing: the first one is layout design; the question whose answer must be found is which facility layout will minimize total product movement and retrieval times? the second one is storage space design: the question whose answer must be found is what design will enable efficient capacity usage? the third one is storage equipment: the question whose answer must be found is what type of racking is most appropriate? the fourth one is handling technology: the question whose answer must be found is what type of handling equipment is most appropriate? the last dimension of warehousing is represented by finished goods handling processes: the question whose answer must be found is which should be the warehousing processes and how should they be organized to effectively and efficiently move products in the warehouses? key performance indicators are: percent of floor space utilization; percent of cube space utilization (warehouse capacity utilization). the purpose of these indicators is to track effectiveness of warehouse layout. other kpis are percent of out of stocks in warehouses (measure out-of-stock as key distribution effectiveness indicator); percent of product losses in warehouses; percent of product damages in warehouses; percent of orders with picking errors; average vehicle unloading time and average vehicle loading time. the purpose of these indicators is to monitor effectiveness of material handling. the purpose of the last two kpis: average orders/operator/day and average vehicles/operator/day, is to check the operator performance. 3.4. overview inventory management the objective is to maintain appropriate inventory levels to ensure sufficient stocks under all circumstances while minimising inventory carrying costs. 335 olariu required inputs are: distribution system selection; sales forecasting and operational design of other “delivery” components. inventory management must be operational in conjunction with transportation and warehousing, as all of them involve mutual tradeoffs in effectiveness and efficiency. a key performance indicator is the percent of accuracy of inventory (physical versus system) – the purpose of this indicator is to monitor inventory accuracy. the purpose of other kpis indicators, such as inventory level at distribution centre counter to target; forward stock in outlet and inventory holding cost, which measures inventory costs; is to track inventory levels (control of targets). 4. trade marketing tailor trade promotions and merchandising to outlets according to the strategy, set and monitor performance, define activities and responsibilities and co-ordinate purchase of material. required inputs are:  distribution system selection  marketing/brand plan  retail classification  sales forecasting key performance indicators are: percent of share of shelf at outlets; percent of floor space in outlets; facing in outlets and percent of stores with basic planograms. the purpose of these indicators is to monitor effectiveness of merchandising activities. planned counter to actual promotions / merchandising – the purpose is to measure implemented value-added distribution against targets. the purpose of knowing the percent of returns and store checks is to track freshness. the choice of these performance indicators is a crucial stage in the analysis process, because the final result will depend on them, representing the basis on which the final decision regarding the distribution strategy will be taken. for evaluating the effectiveness with which an operative marketing system turns its sources into necessary results to solve a problem, it requires certain criteria to measure performance. these three elements: selling, delivery and trade marketing, are a trident of distribution which can lead to an optimal approach of market opportunities. references ballou, r.h. (1992) business logistics management: third edition, englewood cliffs, new jersey: prentice-hall international, inc. daellenback, h. (1994) system and decision-making; a management science approach, john wiley & sons. gary l. l.; kotler, ph., sridhar moorthy k. (1992) marketing models, prentice hall inc. lapin, l. (1991) quantitative methods for business decisions – with cases, harcourt brace jovanovich publishers and its subsidiary, academic press. oakshott, l. (1997) business modelling and simulation, pitman publishing. rosenbloom, b. (1991) marketing channels. a management view: 4-th edition, chicago: the dryden press. stasch, s.f. (1972) system analysis for marketing planning and control, glenview, scott, foresman and comp. stern, l., w. & el-ansary a.i. (1996) marketing channels: 5-th edition, upper saddle, nj: prentice-hall international, inc. 336 ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com 1. defining performance measures 2. selling 2.1. overview sales force deployment 2.2. overview sales forecasting the objective is to implement an accurate sales forecast with a clear consensus process (to agree on “one number”) and interfaces to planning activities. 2.3. overview order management 3. delivery 3.1. overview network structure & product flow 3.2. transportation 3.3. overview warehousing there are five dimensions in warehousing: 3.4. overview inventory management 4. trade marketing references microsoft word apostoaie constantin marius_eng.doc the evaluation of the link between talent and potential of human resources daniel dăneci-pătrău, university spiru haret, romania abstract the term “talent”, assigned to distinctive employees was certainly the past years leitmotif. nowadays, the organizations need performance and for this reason they turn their attention towards the instruments which help them discover and explore the potential in people. in a context in which the crisis affects directly the labor market and the employees are more and more afraid of the possibility of losing their jobs, the incertitude and the insecurity appear more often. especially, in these times, the need for continuous feedback, particularly connected to the decisions taken by the management, to the results of the company, to the adopted strategy and the way in which it reflects itself in the employees’ activity, is felt by all employees, no matter their role or their position. in this article, i presented the personal profile of the successful manager and the execution stages with the related conclusions in an evaluation program for the potential of the human resources in a sales company. keywords human resources, potential analysis, leadership, feedback, performance evaluation jel codes: m 12, m 51 introduction the economical context has lead to a significant decline of the positions opened on the labor market, in parallel with the reorganization which a lot of organizations were forced to do. the consequences never stopped to appear, in the way that, at the present time, there are a lot of experienced candidates, who worked in managerial positions and who are searching for jobs. some organizations froze the hiring, and the ones with positions opened for recruitment, concentrate on abilities, multiple competences and expertise proven in a certain field. on the labor market, this fact means that those candidates who possess abilities and proven expertise are the most wanted. in what regards me, because of the field i work in, that is to say university education but also because of the numerous collaborations with companies from the financial-banking field, what i did, do and probably will do in the future is to study people’s behavior that are successful, and also people’s behavior that haven’t reached success yet. an important element in such research process is to highlight the undertaken actions, the path taken by the successful employees. this kind of information can be considered as a reference point to success for the employees less successful. the potential can be regarded in this way: it starts from the premise that each person has potential.1 somehow, during life, some individuals succeed to develop it, and some do not. if a person is labeled as a potential possessor, a company can easily realize if it is necessary and 1 jeffrey, a.m. (2008) strategic human resources management, publishing house south-western, college, p 81 studies and scientific researches economic edition, no. 15, 2010 345 especially useful to invest in him. having this information about an employee, an organization knows on what position to promote him, how it can help him develop himself and what is the apogee for him to reach. moving from “potential” to “talent”, i would like to make some specifications concerning this term, too. there are people, for example, sportsmen or artists that possess some developed abilities and can reach performance in a field, about who, we say they have talent. personally, i don’t believe we are all “talents”. it is for this reason i don’t believe in the phrase “the war for talents”.2 i’d rather consider that the great companies which respect themselves need efficient managers, well trained and qualified specialists. to continue this idea i will add a specification regarding the behavior of employees considered talents. there are companies, known on the market as being competitive, that form inside a centre of ambitious employees. the ones who wish to work in this kind of organizations are guided by the wish of building a successful career, a social status and earning a lot of money. this type of employees shows in some cases a special behavior, adequate to stars and makes difficult the managers’ activity. although, it is not the attitude that confirms their performance, but the fact that those employees are competitive and well trained. if an employee wishes to have success in what he does, he must know that this objective can not be accomplished only on what he does in the company. it requires the effort of those with who he interacts, leadership abilities for a project and the capacity to motivate the ones around him. there is also a trap in which the employees with special results can fall, the moment when they announce their results bragging. on other side, there is no rule that the most ambitious employees to have the highest potential degree. the manager’s personal profile the department of human resources in a company, generally tends, to balance as a role between two extremes very often met and namely: operational role and strategic role. but the financial crisis which takes place in this moment globally and which expresses in romania too, makes that this the perfect moment for the role of the department of human resources to grow, becoming a strategic partner in solving problems connected to the crisis and in planning objectives at an organization level. the least cited concept in the national management of the human resources, the inside communication, is in fact one of the most important and defines the sum of all means and ways of communication used in a company. even though a lot of people consider it as single directed, the inside communication presents in fact two types of orientations: vertically between top management and the great mass of employees and horizontally between departments or entities in collaboration and not in subordination. in this context of development of inside communication in a company which should stimulate development of the potential of human resources, in agreement with rosemary harrison3 (2009), i suggest the development of programs for the employees and their families, which should emphasize on the encouragement of the “open doors” politics, the constant feedback, at any organizational level in order to create efficient communication paths leading to a relaxed atmosphere at work. 2010 will be the year when the management of employees’ performance will be done progressively, and the mechanisms of compensation according to performances have a strategic importance. on their basis, the organizational structure will be remodeled to range the best the business needs. therefore, the compensation plan and the financial results that are deeply connected to the manager’s personal profile will stand as a foundation for the 2 effron, m., gandossy, r., goldsmith m. (2009), human resources in the 21-st century, publishing house wiley, new york, p 25 3 harrison, r. (2009), learning and development, publishing house cipd, fifth edition, edinburgh, p.76 studies and scientific researches economic edition, no. 15, 2010 346 performance analysis of the employees, being the key-indicator for the succeeding development in the company. through the manager’s personal profile we understand a complex preparation and theoretical-professional forming process performed by him beforehand in his pre-managerial life. the theoretical training and the educational forming include four general action fields, more exactly: educational-social training, general-cultural training, special professional training and additional professional training. not only is the theoretical training important in the formation of the manager’s final profile but also the practical-applicative. that social environment at the begging of the managerial activity and the professional practice fulfilled by the manager, completes his leader personality. this accomplishment of the manager’s professional profile by practical-applicative training can be achieved through: companies, for which the manager has worked, projects drawn by the manager, following the execution of the works designed personally or by others and the various experiences of chief-manager (project manager, lecturer, head office, departmental head, etc). a good superior manager can only be the professional-specialist, possessing managerial knowledge, acquired or innate, as shown also in figure 1. the two sides have to coexist, and as the company develops or the manager’s position increases the managerial ladder, the use of professional knowledge leaves space for the managerial one. studies and scientific researches economic edition, no. 15, 2010 347 figure. 1. the manager’s professional profile source: n. postavaru, c. andrei (2006) the management of human resources, publishing house matrix rom, bucharest, p. 60 this accomplishment of the manager’s professional profile by practical-applicative training can be achieved through: companies, for which the manager has worked, projects drawn by the manager, following the execution of the works designed personally or by others and the various experiences of chief-manager (project manager, lecturer, head office, departmental head, etc). a good superior manager can only be the professional-specialist, possessing managerial knowledge, acquired or innate, as shown also in figure 1. the two sides have to coexist, and as the company develops or the manager’s position increases the managerial ladder, the use of professional knowledge leaves space for the managerial one. the professional profile of a manager is a complex notion, resulted from the symbiosis of the professional and practical training with its moral-psychological characteristics (which appear mostly, as a result of the education received in family, school, society, friends, media factors), as well as self-training and innate features of the individual. it follows that the successful manager has a specific profile, which, in order to be known, has to be extensively studied, and in order to be formed, it has to be well polished on each side, sides that are plenty and about which, it’s hard to tell when they got clean and polished enough. generally, it’s hard to know when managerial training finishes, but when it starts, namely and the most receptive age the childhood because then, all the information is new. that’s why, throughout his forming and affirmation, the manager has to prove that he has a certain “spine”, meaning he can handle problems that can appear within the company or during life. these are the ideal managers, that any field of activity needs, which can create or organize stable companies, solid, viable on long term, companies that have to have as purpose the quality, the efficiency and the profit. these objectives can be realized only by theoretically and practically well trained managers, with professional experience, and superior moralpsychic characteristics. so, the manager’s professional profile has to be looked at in every aspect, because he is not only a professional, but also a very good organizer, leader, economist grounded in social-economical realities of the present economical life. execution stages of evaluation program of human resources potential a first condition in evaluating the potential of an employee is that that he has to accomplish his task successfully. on the other side, it is also important how he does it, namely: relaxed, without a high stress level, surpassing his objectives on a longer period of time. evaluating the potential of human resources is an important stage in performance management, which has to represent a priority for any successful organization. implementing a performance management system with a constant support from the top management has to include several stages4, namely: setting goalswhere we want to get to and what instruments are necessary; checking the implications of this kind of system upon the processes carried out in the company, but also upon the employees; establishing a communication and acceptance plan of the new concept by those upon whom the impact is direct; effective implementation. developing a performance evaluating system has as principal purpose obtaining a unitary system in which the performance and the achievement of every employee have to be periodically evaluated. in the following i will present a sustainable sales counseling draft where i participated and that i have recently implemented. the proposed innovative concept consisted of three basic 4 marchington m., wilkinson a, (2009), human resource management at work, publishing house cipd, edinburgh, p. 121 studies and scientific researches economic edition, no. 15, 2010 348 overlapping elements: estimating the potential by online surveys, individual coaching and training. the client for whom we realized this program was a sales company from germany. at the bottom of the proposed solution was an ethical concept of the sustainable sales advising, namely: a long term relationship with the client, with gaining opportunities for both parties. the project has taken place during three months, between july-august, 2009. first, the company’s administrators have selected the groups of sales employees, according to their professional knowledge (new hired sales agents and experimented sales agents); 12 in each group. later, a potential analysis with pc pep5 support of the imde company from switzerland was realized. evaluation software of potential pep is an instrument which helped us to make the difference between efficient employees and the less efficient ones. one of the persons responsible for the program has individual discussed and supported coaching sessions with each of the selected employees. the groups’ evaluation has taken place and the results have been discussed with the sales managers and with the company’s administrators. according to drawn profiles (strengths and weaknesses), a sales training with specialists from a profile company from stuttgart was conceived and later executed (4-5 days with each group). next step was the participants neutral and anonymous questioning about the quality of the coaching and training. following data collection, the following information was highlighted: 80% of the participants agreed with coaching; 90% began to have different attitudes in clients’ relationship; the training quality was positively evaluated by 95% of the participants. in order to measure the ability of attracting, developing and keeping exceptional perfectionists within the company, as to orient it towards results with strong brands and motivated employees, the next program stage was implemented, namely a survey designed to assess whether the employees are satisfied with the various dimensions underlying organizational culture: communication, job& carrier, manager’s quality, working environment, remuneration and benefits’ system. to each dimension has corresponded a question set and each employee received a copy to fill in -having the possibility to remain anonymous, exactly for encouraging feedback providing, uninfluenced by any kind of pressures or external factors. the results were collected from all employees and an analysis upon every aspect corresponding to the organization’s culture was made through the employees’ point of view. general analysis has enabled the provision of detailed reports, be it deducted on departments, be it on the type of position occupied within the organization. compiled feedback at the end of the survey was shared to the employees, who were invited to participate to free discussions within focus-groups through which they have once again the possibility to express their opinion towards the actions that the company has to perform in order to increase the competitiveness and productivity corroborated with the employees’ satisfaction increasing level, referring to dimensions evaluated through survey. with the employees’ help and as a result of these discussions within the focus-groups, action plans which especially concerned the aspects with a lower satisfaction level were created. the plans were later communicated to the entire organization, following that the organization to periodically use all available communication channels in order to present the stage of their implementation. conclusions after a period of three months, the success factors were measured again through the help of the potential analysis with pc pep support. among the changes observed inside the company at the end of the past year and the begging of this year, there can be mentioned: 5 pc pep is an evaluating software program of human resources’ potential created by imde company from switzerland studies and scientific researches economic edition, no. 15, 2010 349 the significant improvement of values in all main dimensions (resilience, motivation, work organization, behavior in relation with clients, leading the discussion concerning sale, training), two points on average on a basic scale of six points. compared to the results of the first analysis of potential, when 10 employees were “low performer” and two were top sales consultants, the result of the second one, made at the end of the last year, after the sales agents received individual coaching and training, was one “low performer” and 11 top sellers. regarding the participants’ sales figures, they have increased in the second half of the year 2009 with about 5% compared to the average of other sales agents from similar companies. in future, a real battle on the corporate battle field is expected. the stake will be to attract and maintain the new generation. for the new companies, it becomes increasingly challenging to succeed to keep up with the needs and expectations of potential employees’ generation, born after 1978, the y generation or the “millenials”. precisely why, organizational culture has to be seen as a part of the business success, its efficient management being able to quickly impel business results. in the current context and in accordance with the scenario imposed by those who are to become employees in the near future, the human resources department within the companies has to become more flexible in addressing the various needs of a multi-generational workforce. bibliography 1. effron,m., gandossy, r., goldsmith m. (2009), human resources in the 21-st century, ed. wiley, new york 2. harrison, r. (2009), learning and development, editura cipd, fifth edition, edinburgh 3. jeffrey,a.m. (2008) strategic human resources management, ed. south-western,college pub, boston 4. marchington m., wilkinson a, (2009), human resource management at work, ed. cipd, edinburgh 5. postăvaru, n., andrei c. (2006), managementul resurselor umane, ed. matrix rom, bucureşti 6. www.mindmaster.ro studies and scientific researches economic edition, no. 15, 2010 350 microsoft word apostoaie constantin marius_eng.doc the impact of rules on economic activity veronica coca, “al. .i. cuza” university of iasi, romania1 abstract the aim of this paper is to present the importance of the rules, the importance of those rules that influence economic activity. it will be presented the institutions starting from the "rules of the game" until the "rule of law". then it will be explained the concept of "spontaneous order" and the importance of that order in society. for a good economic activity, we need a “good governance”. it will be explained what this means good governance and how addiction affects about institutional change. keywords rules, governance, path dependence, order, institutions jel codes: h11, h50, e61 introduction from a long time ago, people have been trying to find the perfect city, perfect state, perfect society and perfect institution. even in primitive societies, there was no chaos. to can communicate and to produce, there were rules; there was a self-imposed framework as a condition of survival. today, the condition for a good business establishment is the membership to an economic system. the concept of economic system is influenced by judgments, which reflect the doctrinal options and experience of observers. for newinstitutionalists, the key roles in economic development are the institutions. over the time, in economic theory, are used different definitions and interpretations of the term institution. starting from the everyday language, which often is confused with the organization and till to north's definition, which presented institutions as a rule of the game or constraints created by the people to emphasize human interaction1, the institution represents the key, the governor of the economic activity. new institutional economics examines the community's various effects and determinants of the institutional change. in the new-institutionalism current, institutions can be defined by rules commonly accepted and used to structure interactions, different situations and to penalty the mechanism in case of non-compliance with these rules. this trend, newinstitutionalism, appeared as a reaction, or rather as a supplement to neoclassicism and economic welfare and is a heterodox approach. why we need rules? the rules (institutions) are the heart of the analysis, carried out on the market and in conditions of limited rationality (bounded rationality). individuals do not act purely rationally as the neoclassic theory tended to show and for this reason we need institutions. 1 north d. (2003), institu�ii, schimbare institu�ional �i performan� economic , ed. �tiin�ific , chi�in u, p.11 studies and scientific researches economic edition, no. 15, 2010 201 they are seen as rules of the game for human interaction, but the questions which often arise are how are occurring and how these institutions can change the behavior of individuals.2 the free market is that one that can achieve efficient resource allocation, that’s the reason the term should not be confused with the economic governance of state intervention or with the social planning. we require rules for living together for the simple reason that without them we would surely fight. we would fight because the object of desire for one individual would be claimed by another. rules define the private spaces within which each of us can carry on our own activities. we require rules in society because, without them, life would indeed be “solitary, poor, nasty, brutish, and short”, as thomas hobbes told us more than three centuries ago. the most familiar association for the word “rules” is with “games”. all games have rules that define the parameters within which play takes place—the actions allowed by the players, the equipment used, the means of settling disputes, the way in which the winner is determined, and so on. that is the association with the game and also adam smith emphasized the importance of the “laws and institutions” of economic order. the relevance of rules is best exemplified by reference to the familiar example of commonproperty resource utilization, the “tragedy of the common”. if utility maximization is describes the behavior of users, the “common” will be predictably overgrazed. the market is alleged to “fail” in generating efficient usage of the scarce resource. the problem is not with the workings of the market process, but with the rules within which the users operate. a change in the rules so that the scarce resource is separately and privately owned, along with means for enforcing and protecting individuals in rights of ownership, will remove the inefficiency. the example suggests that economists' proclivity to look at outcomes rather than at the rules that generate such outcomes has been a source of profound confusion. reform of results or outcomes comes about through reform of the rules rather than through manipulation of the outcomes directly. friedrich von hayek analyzed and demonstrated the existence of two types of social order, a spontaneous order and constructed order. spontaneous order is not a feature of the anarchic society, it is a complex development of society around a coordinator principle of human action; it is the institutional set of rules that govern human relations. he divides the rules in those informal rules discovered by trial and error and rules established by rational political decisions. hayek said that society can’t function only in the spontaneous order. essential is the rule of law. a society can’t be governed by the power of state, but by the legitimate power of law, the law developed as an evolutionary system, not a built system by the state. he spokes about the system of rules codifying informal conventions of individuals. epistemological, the view of hayek is based on methodological individualism, in which the main actor is the individual and not the whole society or the state. 3 in any group, collaboration will always rest both on spontaneous order as well as on deliberate organization. the two kinds of order will coexist in every society of any degree of complexity, but this doesn’t mean that we can combine them in any manner we like. what we find in all free society is that, although groups of men will join in organizations for the achievement of some particular ends, the co-ordination of the activities of all these separate organizations, as well as of the separate individuals, is brought about by the forces making for a spontaneous order. the family, the farm, the firm, the corporation and the various association and all public institutions including government, are organizations which in turn are integrated into a more comprehensive spontaneous order. what we need for a good governance? 2 kasper w., streit m. (1998), institutional economics: social order and public policy, cheltenham, u.k. pp. 27-41 3hayek, f. a. (2006), the road to serfdom, ed. humanitas, bucure�ti, p.25 studies and scientific researches economic edition, no. 15, 2010 202 more and more often appears in economic literature the term of governance. if in the 1970s we have only a few references to the term, in 2008, it appeared in the literature about 30,000 times. the term economic governance means the structure and functioning of the legal and social institutions that support economic activity and economic transactions by protecting property rights, enforcing contracts and taking collective action to provide physical and organizational infrastructure.4 good governance is needed to secure three essential prerequisites of market economies. good governance is required to ensure security of property rights, the enforcement of contracts and collective actions. without security of property rights, individuals will lack the incentives to save and invest, because they will fear that others will deprive them of the fruits of these activities. they will also forgo capital market trades to achieve efficient allocation of assets, because they will fear for the principal and not just the return on the capital they invest in others’ enterprises. 5 economic transactions promise gains to all voluntary participants. but each party may lose if the other fails to fulfill its promised role in the transaction, but instead acts opportunistically. fear of such counterparty cheating may prevent people from entering into the contracts, and mutual gains will go unrealized. much private economic activity depends on an adequate provision of public goods and the control of public “bads.” in this is included not just physical but also institutional and organizational infrastructure. provision of social safety nets, facilitation of internalization of externalities, and the control of public bads. all involve problems of collective action to avoid free-riding. good economic governance thus underpins the whole smithian process whereby individuals specialize in different tasks and then transact with one another to achieve the full economic potential of the society. as a first reaction might be said that good governance requires a good government, but authors such as dixit, vanderbilt, grief, greenspan admitted that alternative institutions can be used to ensure good governance. the authors argue that government itself may violate private property, and even to not perform his duties. this situation is possible in less-developed countries or those in transition, but even in developed economies, governments cannot achieve full governance. hence private institutions exist to serve similar goals. they work on specific niches where the government cannot work. in a free society, governed by the rights and responsibilities of citizens, the vast majority of transactions require trust and reputation. trust is essential attribute of the capitalist market. but other social institutions of economic governance also exist in almost all countries. they function especially in niches that the government serves poorly, or not at all. sometimes they work better than the formal law, because they have better expertise or information. and they are essential for guarding against the government’s own misbehavior. 6 if authors such as grief, dixit, ostrom believes that these alternative institutions should be a solution for good governance, the constitutionalists authors (buchanan, tullok, voigt) demonstrated that a government (leviathan as hobbes calls it) is efficient as long as he provides a higher utility to a situation of anarchy, and that government is the agent of citizens. one problem facing the constitutionalists is the information asymmetry always the government (leviathan) will have an advantage over individuals. for this reason, the assumptions on which they rely and which are hard-core site in this area relate to methodological individualism, rational choice, homo economicus behavior and democratic foundations. 4 dixit a. (2009), governance institutions and economic activity, american economic review, 99(1), pp.5–24 5 field e. (2007), entitled to work: urban property rights and labor supply in peru, the quarterly journal of economics, 122(4), pp. 1561-1602 6 greenspan a. (2007), the age of turbulence, the penguin press, new york, p.256 studies and scientific researches economic edition, no. 15, 2010 203 the individual is the last source of value and this is the reason why the individual should have autonomy, but this does not mean that it will be isolated from others preferences; collective action are seen as a sum of values and mutual influences. rational choice means the choice of alternative situations, ordering them to their preferences and without restrictions from the outside. if in the neoclassical economics, homo economicus was seen as an individual acting on its own, rational and selfish, constitutionalists economists wonder why this postulate is not true for those involved in politics. they can’t admit that a person can act in the market, rational, selfish, and only pursuing their own interests and in politics he is purely altruistic.7 decisions should be taken by unanimous choice, at least as far as possible, since only so there are no complaints from those left outside the law. individuals are the last source of value and decision making must take account of this fact and not by supraindividualistic body like state. 8 path dependence changing institutions has a great influence on the proper course of business; institutional change is a key component of economic dynamics. but once chosen a particular path of development, this will have path dependence. after an institutions change, the costs to adapt to the new institutions will be higher and will raise problems. often the rules come from an unconscious cognitive process, become like a routine. these rules should not necessarily be express, or written, but the people have accepted due to a custom practiced by all individuals (such as driving a car on the right side of the road). 9 another problem that the institutionalists are debating is whether these institutions can develop into other forms and how they may be subjected to possible reforms. on that issue there can be observed in the literature, contradictory ideas. while north consider the transaction an exchange of goods and the transaction depended on the characteristics of institutions, williamson puts transaction characteristics to choose the most effective governance structures. the two authors do not accept the idea of an ideal form of organization. north explains how institutional changes affect economic change and how some good institutions may be effective for some and inefficient for some others. the link between economic change and institutional change is the efficiency to adapt to new institutions and shows the degree of compatibility between the economic environment and new social and political institutions. one of the central themes of the new political economy is a theoretical and empirical explanation of alternative institutional arrangements and their influence on political decisions. the insitutionalists are not denying classical or neoclassical methods; they gave to the economy a social representation, integrating in the analysis the direct sciences and human sciences.10 conclusion following the ideas presented above, we concluded that only romantic anarchists may believe that there is a natural harmony between individuals, which can eliminate all conflicts 7 persson t., tabellini g. (2006), democracy and development, american economic review, 96(2), pp. 319–324 8 buchanan j. (1987), the constitution of economic policy, the american economic review, no. 77, pp.243-250 9 frey b. (1990), institutions matter, european economic review no. 34, pp. 443–449 10 besley t. (2007), the new political economy, economic journal no.117, pp. 540-557 studies and scientific researches economic edition, no. 15, 2010 204 in the absence of rules. we need institutions to live and define our private space in which we operate. these institutions are represented by the invisible hand of the state, or there are the rules of law, or are unwritten practices, but practiced over time. institutions are the key of the existence and function of a society. the influence of a specific set of rules puts the mark on a system, and changing them will not lead immediately to a different result; the path dependence makes the system to have a long term orientation. references 1. besley t. (2007), the new political economy, economic journal no.117, pp. 540-557 2. buchanan j. (1994), choosing what to choose, journal of institutional and theoretical economics, 150(1), pp. 123–135 3. buchanan j. (1987), the constitution of economic policy, the american economic review, no. 77, pp. 243–50 4. dixit a. (2009), governance institutions and economic activity, american economic review, 99(1), pp.5–24, http://www.aeaweb.org/index.php, accesat la data de 20/07/2009 5. field e. (2007), entitled to work: urban property rights and labor supply in peru, the quarterly journal of economics, 122(4), pp. 1561-1602, http://www.mitpressjournals.org/doi/abs/10.1162/qjec.2007.122.4.1561, accesat la data de 17/07/2009 6. frey b. (1990), institutions matter, european economic review no. 34, pp. 443–449 7. frey b.(1994), moral and institutional constraints, journal of institutional and theoretical economics,150(1), pp. 136–141 8. greenspan a. (2007), the age of turbulence, the penguin press, new york 9. greif a.(2008), contract enforcement and institutions among the maghribi traders: refuting edwards and ogilvie, stanford university department of economics; cesifo (center for economic studies and ifo institute for economic research) working paper 2350, 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1153826, accesat la data de 10/07/2009 10. hayek, f. a. (2006), the road to serfdom, ed. humanitas, bucure�ti 11. kasper w., streit m. (1998), institutional economics: social order and public policy, cheltenham, u.k. 12. north d. (2003), institu�ii, schimbare institu�ional �i performan� economic , ed. �tiin�ific , chi�in u 13. ostrom e. (1990), governing the commons, cambridge university press, cambridge 14. persson t., tabellini g. (2006), democracy and development, american economic review, 96(2), pp. 319–324 15. voigt s., kiwit d. (1998), the role and evolution of beliefs, habits, moral norms, and institutions, merits and limits of markets, berlin 16. voigt s. (1997), positive constitutional economics: a survey, public choice no. 90, springer netherlands 17. williamson o. (2005), the economics of governance, american economic review, vol. 95(2), pp.1-18 studies and scientific researches economic edition, no. 15, 2010 205 some aspects concerning the atributes of conducting 20 some aspects concerning the attributes of conducting ciucescu nicoleta, assistant university of bacău abstract: the activity of the management has a millennial existence, during it have been realized multiple progresses which have contributed to the developement of the society in its assembly. the evolution of the human society makes possible the progress in the science of conducting. in all kinds of companies, without keeping into account their domain of activity (industry, trading, tourism, agriculture etc.) or their dimensions, it appears the atributes of the conducting. in each organization the attributes of the conducting are present at all hierarchical levels. each manager disposes on authority, power, responsability; they differ sensibly from a hierarchical level to another. each manager have to manifest a sentiment of duty to the achievement of the objectives of the organization, correlated with those of himself. all managers from an organisation have authority. on one hand, the authority represents that right of the manager to take decisions, by which are allocated the resources and are consumed resources and, on another hand, that right to ask to the personnel the achievement of the objectives of the organization. the authority is a tool of the manager giving him the possibility to command, to ask to someone to do or not to do something, and, finally, to maintain the organization as entity. it pulls out its roots in the formal position in the frame of the organization and it can be delegated, in the sense that it can be surrended temporary or definitively, totally or partially. the approach of the authority may be made in a double hypostasis: official authority; professional authority. the official authority overtakes the decisional liberty in the sense of the possibility of the implication by the intermedium of the decisions, having as target the finding of some solutions with wich is confronting the organization. it is influenced both by the content of some normative documents, as well as by the decisions with internal organizationa character. the professional authority refers to the assembly of knowledges, aptitudes and qualities to be possessed by the manager in order to achieve successfully the job he was appointed. this depends in a series of components as, for example: the accumulated experience in the the activity of management, the training from the professional point of view, conceptual aptitudes – the capacity to assure the strategic orientation of the organization, and the human aptitudes – the capacity to develop human relations, his social and psichological aptitudes etc. the psichological value of the adopted decisions by the managers from every hierarchic level is confered by the professional authority. in order to become effective, the authority may be accepted as it is, in the sense that the subalternes have to recognize the right of the conductor to take decisions and to apply them, assuring a good cooperation between subalterns. in the speciality literature it have been identified three essential types of authority:  line – of decision on all the essential activities precised in the missions of the organisation. the lines of direct authority constitute the basic organizational structure and define both the hierarchic levels as well the existing relations between them. the decision lines represent, also, the communication and reporting lines in the organization.  staff – reffers to the technical support, advising, researches and developing – all these sbordinated to the essential activities. studies and scientific researches edition: economics, no. 13 (2008) some aspects concerning the atributes of conducting 21 from this category may be mentioned a series of composing elements, between them may be reminded the personnel management, the financial and logistical parts, the systemic relations, the research, the development, all contributing to the achievement of the mission of the organization.  functional bent to some specialised objectives and targets which, it may say, are not essential or auxiliary. the functional authority is delegated to the specialised persons in a certain domain which, usually, endorses methodologies and working procedures for another sectors of activity. in the most cases, the functional authority is manifesting outside the conventional hierarchies and conventional organizational structures. to exemplify, it may mention those situations in which, the institutions, responding to the guard and extinction of fires, take decisions inside the organization (they accord the working authorisation, go till to apply sanctions for the unobservation the security conditions), even if they are not in the structure of the system. similarly, are the cases of the sanitary or the institutions responding for the civil defence, working protection etc. the exercising of the authority is strongly influenced by the combined actions of the following factors: the colaborators, when the assigned charges and assigned atributions of the job can not be fulfilled without their implication; the subordinates may recognize the right of the manager to take decisions and to apply them; the organization itself by its established practices and rules. the degree of the authority with wich is invested a person is specified in the poste chart. [1] the authority is a concept strongly bent with that of the power. it is necessary the specification that the authority can not be confounded with the power. the power is a wider concept expressing the capacity (ability) of the persons and groups to convince or the influence, conception and actions of other persons with which are in working relations. the power, iteself, is not "good" or "bad". its influence may be in a positive sense, if it sanctions or limits the lack of efficiency in actions, but, also, in negative sense, if it blocks the actions by different methods manipulating the groups. in other words, the power is the ability to influence the behaviour of others and represents that characteristic of the interpersonal relations having as basis a combination of the authority, native qualities and resources. the power may be, also, interpreted or understood as that aspiration to the resources of the organization, the pleasure to command, to be listened or to reward others for the benefit of the groups or of the whole organization. in his book "power: the inner experience", david mcclelland defines the need of power as the wish to have an influence on others and is maturing concomitant during: involving of other persons in initiated or developed actions; giving help or advices to others; controlling others; actions producing emotions to others; preoccupations to the reputation.[2] according to some studies, having as aim the determination of the human models starting from the men which have obtained power, it were identified two categories, as follows: the person eager of power having a series of characteristics (ambitious, agresive, unscrupulous, neurotic, full of inferiority complexes; the person considered beneficial, which may be characterized by: high capacity to synthetize and analyse, calm, affable, which influence the others to realize the objectives of the organization, use efficiently the resources and, even, makes anothers to feel theirself stronger. the american psichologistst john french and bertram raven have identified five sources of the power at the level of the organization, exlaining the fact that the power is found in the position occupied in the organization and the resources which he disposes. the sources of power are as follows: the power as award, the coercitive studies and scientific researches edition: economics, no. 13 (2008) some aspects concerning the atributes of conducting 22 power, the legitimate power, the power as reference, the power of the expert. the power as award represents that capacity to influence the behaviour of the people by the intermediate of the awards, having as aim the obtaining of positive effects and the prevention of those negative. this may be realized by one of the following ways of action: the increase of wages, the promotion on another poste, giving new equipments, according bonuses, the evaluation of the performances, increasing responsabilities, recognition. by the mean of this capacity, the manager has the force to administrate the positive valences of another persons, perceived as they are. the coercitive power represents the capacity to sanction, to apply punishments or to determine unpleasant consequences. in the frame of the organization, those detaining different hierarchical positions exerce their coercitive power by the possibility to reduce the wage, to retrograde, to block the promotion, to distribute unsuitable working charges and may compel by threatening, verbal reprimands going till dissmissing etc. this source of power depends on the fear to be sanctioned when you do not respect the rules, the directives and the politics of the organization. the management of the organization is accomplished in this situation by generating fear and tensions. the legitimacy is another source of power. the legitimate power is confered by the position, the poste or the role had in the frame of the organization and represents the capacity to influence the behaviour by the authority. the legitimate power is in a tight relation with the power to reward or to sanction (the official person may reward or sanction), but differs from it because the legitimacy does not depend on the relations with anothers, but rather on the position from the hierarchy of the authority in the organization. to exemplify it may take in discussion two cases: -legitimacy due to the position – from a family, the eldest person; legitimacy due to a title of doctor in medicine etc. the legitimate power which can have persons in a organization increases proportional with the promotion in the hierarchy. the source of the legitimacy is given by the authority manifested inside and outside of the organization, respectively, the dominant values of the group or of the society, the acceptance of the social structures and, of course, the recognition of a person or of a group having the power, creating the obligation to accept the power and to be influenced. the social education stays at the basis of the fact that the persons from the organizations have the disponibilities to submit theirself, so, it contributes to the functioning of the legitimate power. in the frame of the contemporary society, it is ascertained a greater and greater erodation of the traditional legitimacy. the referential power represents the capacity to influence the behaviour of the people by identification and goes from the attraction of the simpathy of anothers. a such power is based on the identification of the employees with the managers, but the conduction is exerced by using the personal atraction. because the atractivity and the charismatic qualities of one person, it is born the desire of another person to identify himself with this one. to exemplify, it may remind the promotion agencies realizing advertising which make appeal to the diverse celebrities from the world of fashion sport, showbiz and anothers. the way in which is underlined and maintained the referential power depends in a great part on the interpersonal relations which are established, being able to impulse the admiration and the sympathy of others. it is very important the creation and the maintaining of the sympathy because this can influence us in the sense to accept easier diverse opinions and points of view of another persons which gained our sympathy. the subordinates want to identify theirself with the charismatic chief before to studies and scientific researches edition: economics, no. 13 (2008) some aspects concerning the atributes of conducting studies and scientific researches edition: economics, no. 13 (2008) 23 take into account the power to award, to sanction or his legitimacy. in each organization, indifferently of the hierarchical position detained by each member, it may assert the fact that each from them may be admired and sympathised, that makes us to conclude that the legitimate power is more accessible in comparison with all other types of power. the expertise power is based on a very good knowledge in the activity domain of the manager. in an organization, the expertise power represents a valuable trump for the managers, because is associated with the efficiency in the work and exists independently with the hierarchical position, but its importance is recognized by implication of the staff from the lower levels in taking decisions at the upper levels of the management. more the charges to be fulfilled are important, more they are complex and more difficult to realize, more the expertise power becomes accessible. the experts are considered as having knowledge and the understanding qualified in well defined domains. in the organizations, the specialists from the functional compartiments have expertise power in their domains. the responsability represents the duty to justify the actions or their failures. in function of of the results, each manager will be awarded or sanctioned, after case, having in view the principles and the rules from the organizations, as well as the wage politics of the organization. but, also, the responsability represents the realization of the charges of the poste in an appropriate way. the resposability has to be understood as a mutual obligation person – organization, in the sense that each employee implies in the realization of the objectives of the organization, but the organization, at its turn, invests in the person. the relation must be mutual profitable, but it may be deteriorated if one of the part does not manifest full interest in exercising the responsability in realising the needs of other part. it may identify responsabilities which derive, on one part, from the realizing the functions of the management, and, on other hand, responsabilities refering to the elaboration, foundation and the transmitting of the decisions. it may specify, at last, the fact that the power, authority and responsability have to be correlated. references: [1] turcu, o., et alli, management, editura alma mater, bacău, 2008, p.144; [1] mcclelland d., power: the inner experience, irgvinton publishers, new york, 1975. apud zorlenţan, t., burduş, e., căprărescu, g., managementul organizaţiei, editura economică, bucureşti, 1998, p.520; [2] bennis, w., nanus, b., liderii. strategii pentru preluarea conducerii, business tech international press, bucureşti, 2000. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro insights into qualitative variables assessment in marketing research laura țimiraș “vasile alecsandri” university of bacău lauratimiras@yahoo.com abstract in this paper we present a number of issues to be taken into account in assessing the marketing qualitative variables. thus, the opinions, the preferences, the attitudes, etc. of the consumers are qualitative variables whose measurement requires the use of different scales presented in the literature and, where appropriate, the researcher must develop scales adapted to the particularities of the study undertaken. using a certain scale it is not random action. the literature presents both comparative methods and non-comparative scaling methods. each of these categories generates certain types of information, and also they are complementary in the evaluation of various products, brands, organizations etc. thus, if in a non-comparative scaling method can get information about how a product is evaluated (favorable or unfavorable, for example) by the respondents, comparative scaling method allows us to determine where that product is in a series of investigated competing products. another aspect to be taken into account in the construction of the scales is the number of levels used. it is intended to obtain information with high degree of detail, but without the risk of increasing the rate of non-response due to inability of respondents to make assessments through scales with too many levels. finally, the expression used to collect information from respondents is essential in obtaining accurate and comparable information, with the emphasis on avoiding ambiguity in drawing scales. keywords marketing research; qualitative characteristics; scales jel classification m31 introduction the study of consumer behavior is one of the areas of study of prime importance of marketing research. thus, in marketing research the evaluation of qualitative variables attitudes, expectations, intentions to buy, opinions, preferences, requirements, reasons and criteria considered in choosing the products, brands, retail units etc. and their importance – occupy a significant share of total variables investigated. normally, the presented variables are evaluated using nominal scale which allows only the classification of investigated subjects / stimuli, often insufficient for the researcher in the study of marketing phenomena. accordingly, preference for certain competing products can be assessed on a nominal scale dividing those products into two categories those that are preferred and not preferred by respondents. but researcher wants to ensure greater product differentiation, depending on the intensity of respondents' preferences. for that one can build its own measuring instruments (scales). thus, through scaling can be achieved hierarchy or can be measured "psychological distance" between the investigated stimuli depending on the variables that apparently only allowed making classifications. the marketing literature presents a number of methods of scaling that can be used to assess qualitative variables, but the researchers are able to build their own scale based 236 țimiraș on objectives, level of detail of information they wish to obtain, the characteristics of the sample, respondents' ability to evaluate certain stimuli on a scale with more or less levels determined by the awareness of subjects regarding investigated product etc. scaling methods in marketing literature over time various scale methods have been developed to assess qualitative variables in order to better adapt to the specific investigated problems and increase the accuracy in measuring the investigated variables. some of the most common methods are summarized below. semantic differential is a scale with typically 5 or 7 levels inserted between two bipolar attributes (e.g., from very favorable to very unfavorable). investigated subject is asked to indicate on the scale the level corresponding to his opinion about the investigated stimulus. likert's scale requires the respondent expressing agreement or disagreement with a series of statements made with respect to the investigated issues. stapel's scale is a scale of ten levels, five with plus sign and five with a minus sign, where investigated subjects are asked to indicate the level on the scale that best fits their opinion on the investigated stimulus. the fishbein-rosenberg model is a complex scaling method that enables the evaluation of investigated stimuli taking into account the attitude of the investigated subjects in terms of investigated stimuli from the perspective of each evaluation criterion and the importance attributed to these criteria in forming attitudes toward studied stimuli. constant sum scale is a scale that involves dividing by the researched subjects of a certain amount (usually 10 or 100) between investigated stimuli, according to their own judgments about them. rank ordering method aims to achieve hierarchies of investigated stimuli. in this sense, all stimuli are presented to the investigated subjects and they are asked to rank according to their own assessment. paired comparisons method is also used to rank the investigated stimuli. the studied stimuli are presented in pairs to investigated subjects, asking them to indicate which of them they appreciate more, being considered "probably the easiest and most reliable method for ranking" (cohen, 2009). if the first four presented methods involve evaluating each studied stimulus (product, brand, organization, etc..) independently of the other (non-comparative scaling methods) constant sum scale, rank ordering method, paired comparisons method are part of comparative methods of scaling, results (hierarchy of stimuli investigated) having significance only in comparative context. using different scales depending on the particular research as we mentioned above depending on the particular research one can use one or more of the listed scaling methods or also can build other scales to meet the requirements of the study. it should be noted that comparative scaling methods can be complementary to other methods; the use of both comparative and a non-comparative scaling methods may lead to a deeper analysis of assessments/preferences/opinions to different stimuli. thus, non-comparative scaling methods involve evaluating each stimulus independently of others, while comparative methods involve evaluating stimuli through comparison (as their very name indicates). considering the valuation of consumer assessments of certain competing products, non-comparative scaling methods allow, for each product, to know whether these 237 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro respondents have favorable or unfavorable evaluations, as appropriate. further comparison can be made between goods which have been subject to investigation at different times. thus, if a research result for a given product a discovers unfavorably evaluation of the consumers, and in another study for a competing product b consumer evaluations are favorable, the correct interpretation is that the product b is positively appreciated by the consumers and the product a is not appreciated, product b being situated in a better position than product a in the reference market in terms of consumer evaluations. on the other hand, comparative methods allow the knowledge of the hierarchy of products in terms of respondents' assessments, whether they are favorable appreciation or unfavorable. more specifically, the first place owned by a product among competing products doesn’t mean that the assessments of respondents are necessarily favorable to it (the product can hold first place between products that respondent did not appreciate) and n-th place between n compared products does not mean that product is not appreciated by the respondents (it can hold the last place of n highly rated products by respondents). the results obtained by applying comparative scaling methods can be used only in the context of generated compared context. accordingly, whether through a research were studied three competing products a, b, c, and the generated hierarchy is: first place b, second place c, third place a and in another research were studied other two competing products, d and e with the following hierarchy: first place d, second place – e, based on the results of the two research one cannot compared together the results regarding the five products (a, b, c, d, e) and cannot draw conclusions like: product a (third place obtained in the first research) is less appreciated than the product d (first place obtained in the second research), each of these products having other items of comparison. also, if the products were evaluated with the help of a non-comparative scaling method, the results for each of the five products might point unfavorable or favorable assessment, comparative scale methods not being able to provide such information. the combined use of comparative and non-comparative scaling method is particularly useful in cases of evaluated products where the assessments of respondents are relatively close. thus, starting from the evaluation of three brands in terms of consumer appreciation using, for example, a 5-level scale from very unfavorable (score 1) to the very favorable (score 5) (semantic differential), there is a possibility that all 3 brands to receive from a respondent "score" 5 (actually proving very good reviews from the respondent for all three stimuli). however, the respondent consumes one particular brands. this demonstrates that although all three brands were rated with "very favorable", one of them stands out from the other two in terms of respondents' preferences. in this context, using comparative scale methods can determine which brand is preferred, which is the one that precedes it etc. thus, requiring, for example, from respondents to assess simultaneously the three brands and establish their hierarchy in terms of preferences (rank ordering method) one will get results that will attest the brand that comes first, which is the second and which is on the third place (which is not contrary to the result obtained by non-comparative scaling method that revealed very positive feedback for all brands, especially since in this case non-comparative scale differentiation capacity is relatively low ). regarding the number of levels of the assessment scale, the researcher will always want to obtain information with a greater degree of detail (using scales with large number of levels). of course in this case we refer to non-comparative scales category. on the other hand, too many levels of scale sometimes make the respondent tired and even make him unable to indicate the corresponding level on the scale for his likes/opinions/preferences etc. more specifically it is easy to specify whether or not we consider a product (two-level scale), being relatively more difficult to "point" on a scale with five levels (from level 1 "very unfavorable" to level 5 "very favorable") 238 țimiraș and is even difficult to indicate a certain level on a scale with 10 levels. in this case, however, there are differences from one category of respondents to another. there are respondents who know in greater measure the product thus making it easier to achieve its evaluation on a scale with a larger number of levels, however, respondents who know to a lesser extent a rated product will be placed in a difficult situation where ask to use scales with number high of levels. the major differences in this regard are recorded in business markets and respective in consumer markets. if in the case of business markets, potential customers know in detail the product and may evaluate each characteristics of it, even on a scale with the high number of levels (for example, stapel scale), in the consumer markets, goods are little known in particular in terms of their characteristics. it is thus advisable to use scales with a small number of levels (e.g. up to 5 levels) in the evaluation of consumer products. on the other hand, the degree of knowledge of end consumer product in the market depends on the nature of the product. depending on the degree of involvement in the purchase, frequency of use, the nature of need they meet etc. characteristics of end consumer products can be known in a greater or lesser extent by them. finally, there are types of consumers that are characterized by the desire to be informed and involved in studying in detail the offers of the market, this category being therefore able to evaluate various characteristics of products using scales with several levels, and uninformed consumers who most likely will not make judgments on such a scale, in the best case being able to classify products using scale with two levels: yes/no, i prefer/i do not prefer. in the present context in assessing qualitative characteristics, the researcher will consider the construction of scales with the number of levels that can be used to collect data in a more accurate and complete manner thus leading to a balance between the desire of the researcher to obtain detailed information and the ability of the respondents to give it. special attention in the construction of the scales that will be the basis for assessing various marketing phenomena should be given not only to the number of levels of scale but also to how to request information from the respondents. the modality used in asking for data in order to avoid ambiguity is crucial in the approach of collecting the information that reflects reality. for example, considering the importance of the "price" feature in the decision to purchase a particular product x, one may choose to use a 4-level scale from "very important" (4) to "unimportant" (1). in this case, there is a risk of confusion, i.e. the same value on the scale has different meanings for respondents. considering for example value 4 on the scale, it could be indicated by both the respondents who are very sensitive to price, without sacrificing quality (the category of those seeking the best quality at the lowest price), and by those devoted exclusively to the price even at the expense of quality (accept a lower quality product for a low price). an alternative to this scale could be much clearer formulation on investigated matters, asking the respondents to express their agreement or disagreement (likert's scale), for example: "i always buy superior products in terms of quality but looking at the sales price ","i buy cheaper products even if their quality is lower ", etc. in the same manner, if you want to determine whether respondents are loyal to a particular brand is preferable to avoid questions like "are you loyal to brand x?, a consumer “yes” answer being given because it consumes only brand x, or where appropriate, consumes most common brand x. therefore, to avoid confusion one can use statements such as "i always buy brand x", "if i don`t find brand x i postpone buying", "if i cannot find another brand i buy brand x" etc. respondents being asked to indicate agreement/disagreement to these statements. in this way we can clearly identify the category of those who consume only studied brand, those who prefer to consume the brand, but if, for example, is not available they opt in for another brand. 239 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the language used also has to be adapted to the understanding of the respondents, technical language, strictly specialized, being used only for research on organizational consumer. in conclusion, measuring qualitative variables requires a process of comparison and a choice of between several types of scales corresponding to the necessity of ongoing research. you can combine both comparative and non-comparative scaling methods in order to know the consumer options to different stimuli and to generate hierarchies in light of the findings, especially when evaluation of stimuli is difficult by using the non-comparative scaling methods. the number of levels of the used scales will be determined according to the knowledge of the respondents' ability to differentiate higher or lower levels of stimulus intensity that have certain properties. thus, given characteristics of the business market, one may be used for his evaluation a scale with higher number of levels (i.e. 1 to 10), but the researches in end consumers market will use scales with smaller number of levels, corresponding to the lower awareness of the full features of the product. finally, in order to obtain accurate, comparable data, in the evaluation of qualitative variables should be avoided ambiguity in the expression used to collect information and should be used of an accessible language to all categories of respondents. references aaker, d. a., kumar, v., day, g.s. (1998), marketing research, 6th edition, john wiley & sons, inc. ajzen, i., fishbein m. (2008), scaling and testing multiplicative combinations in the expectancy–value model of attitudes, journal of applied social psychology, 38, 9, 2222–2247. american marketing association dictionary (2014) on the webpage https://www.ama.org/resources/pages/dictionary.aspx boier, r, ţimiraş, l.c. (2006), cercetarea de marketing, iaşi editura performantica cătoiu, iacob (coordonator) (2002), cercetări de marketing, editura uranus, bucureşti. cohen, e. (2009), applying best-worst scaling to wine marketing, international journal of wine business research, volume 21, number 1, 8-23. gilmore, a., mcmullan, r. (2009), scales in services marketing research: a critique and way forward, european journal of marketing, volume 23, number 5/6, 640-651. kumar, v., aaker, d. a., day, g.s. (1999), essentials of marketing research, john wiley & sons, inc. malhotra, n.k. (2004), marketing research an applied orientation. fourth edition, upper saddle river, new jersey, pearson education. 240 in this paper we present a number of issues to be taken into account in assessing the marketing qualitative variables. thus, the opinions, the preferences, the attitudes, etc. of the consumers are qualitative variables whose measurement requires the u... scaling methods in marketing literature disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 116 studies and scientific researches edition: economics, no. 13 (2008) disloyal commercial competition and the jurisdictional responsibility in the romanian and e.u. law system ţuţuianu ion, lecturer phd university of bacău abstract: the esential element of market economy is competition. foresights of comercial competition are also included in the treaties made with third party states, which are not part of the eu. besides that, romania has taken over several firm obligations regarding competitional policies, even by common european agreement on the 1st of february 1993. in this agreement, the progressive elimination of discrimination between romanian economical agents and commons is being provided for, in matters of supplying and distribution conditions of merchandise. this is one of the few things solved regarding this chapter. for the existence of a functional market economy, an undistorted competitional environment remains the main condition, beside the freedom for mobility of merchandise, persons, services and capital. respecting the standards of the competition ensures economical progress, protection of consumer interests and enables competition of products and services.”1 any contrary action towards honest usability in industrial activity and commercializing of products, procedure of work or performing services is by definition called non-legal commercial competition2, being in contradiction with the honest competition, being understood as the unconfined battle between businessmen, fought with honest ways meaning to use those rules which although lead towards the elimination of a merchant from the market, are based on legal methods that offer advantages in price, quality, modernity or utility for commercial clients.3 the romanian law system stipulates this aspect of jurisdictional responsibility for neglecting the rules and principles of honest competition way before adhering to the european union. in 1968 the romanian government has ratified the convention of paris for industrial property protection from the 20th of march 1883 and revised in 1 see aurelia cotutiu-georgeta valeria sabau, 2 legea nr. 11/1991art.2 3 see o. manolache, regimul juridic al concurentei in dreptul comunitar, editura all, bucuresti, 1997. stockholm 19674. this one is better known under the name of the union convention of paris (conventia de uniune de la paris). the state of romania has adhered to the convention of paris in october the 6th 1920, the ratification being done on march the 13th 1924. the ratification made in 1968 was the result of the revision of the 1967 convention, by respecting the rule of ratification for each amendment that was to come. another important international contract in this matter is the general agreement on tariffs and trade (gatt) signed at geneva 1947 and entered into force on the 1st of january 1948. the aim of this agreement is basically to regulate the dumping and the subventions for export trade. the regulations of the gatt where completed by adopting the antidumping code, with a last amendment at geneva, 12th of april 1979. the romanian government became a member of the gatt agreement in 1972 and ratified it in 1972. the anti-dumping code was ratified in 1980. furthermore we have to state that on the 12th of april 1979 there has also been signed the anti-subvention and counterbalance measures code5, but which romania did not sign, taking into account the political and economical system during that time. 4 decretul nr. 1177/1968, in buletinul oficial nr. 1 din 6 ianuarie 1969 – decree nr 1177/1968, in official journal nr. 1 from january the 6th 1969 5 titus prescure, curs de dreptul concurentei comerciale, editura rosetti, 2004, p. 33-34; aurelia cotutiu-georgeta valeria sabau, op. cit. p. 58-60 disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 117 studies and scientific researches edition: economics, no. 13 (2008) but the romanian constitution also stipulates the government’s obligation towards providing protection of loyal competition.6 the 1991 constitution stipulated that “romania’s economy is a market economy”7, and the constitution from 1993 maintains the same concept but under the following formula: “1. romania’s economy is a market economy, based on free initiative and competition. 2. the government has to provide: a) freedom of trade, protection of loyal competition, the making of a favorable environment for developing the factors of production; b) protecting national interests in economical, financial and currency related activities; c) stimulation of national scientific and technological research, of art and copy right protection; d) exploitation of natural resources, in agreement with national interest; e) rebuilding and protecting the environment, as well as maintaining the ecological balance; f) creating the necessary conditions for a better living; g) setting in progress of regional development policies in agreement with the objectives of the european union”. because the negotiations for romania’s adhering to the european union where already going on, the constitutional specification became mandatory, taking into 6 art. 135, alin.2, lit. a 7 art. 134 of the 1991 constitution had the following content: 1. romania’s economy is a market economy 2. the government had to provide for: a. freedom of trade, protection of loyal competition, the making of a favorable environment for developing the factors of production. b. protecting national interests in economical, financial and currency related activities; c. stimulation of national scientific research; d. rebuilding and protecting the environment, as well as maintaining the ecological balance; e. creating the necessary conditions for a better living. account the european integration at the end of article nr. 135. comparing to what was used to be constitutional term of romanian economy under the communist regime, the 1991 constitution clearly stated the splitting from the centralized and statist economy system, the way the communist constitutions from 19488 and 19659 where mentioning, and the 2003 constitution made an important step towards consolidating the vision of free economy in agreement with the economy policies of the european union. it was exactly the union convention from paris that in art.1 forces the member countries towards repression of disloyal 8 the first communist constitution stated in art. 5: “the national economy of the people’s republic of romania includes three social and economic formations: the socialist formation, the small productions of merchandise and the private-capitalist formation. art. 6. the basis of the social and economical socialist formation is the socialist property over the production ways, which either embodies the shape of the states property (common wealth of the people), or the shape of the cooperative-collectivist property (the collective farm property or the co-operative farmer organizations). in the national economy system exploitation of human beings by human being is liquidated. the socialist system, to whom the lead in the national economy of the peoples republic of romania belongs, is the basis for the development of the country on the way of socialism. the state of people’s democracy, proclaiming the construction of socialism as it’s main duty, continuously enforces and spreads the socialist formation, and provides the uninterrupted growth of material well being, cultural level of working class people. art. 13. the economical life of the people’s republic of romania develops according to the governments plan of national economy, in the interest of building socialism, uninterrupted growth of material and cultural well being of working class people, enforcement of the national independency of the country and defending ability. art 14. in the people’s republic of romania, external commerce is a state monopoly”. 9 the second communist constitution stated the same concepts, with a more emphasized formulation. art. 5. “the national economy of romania is a socialist economy, based on socialist property over the means of production. in the peoples republic of romania, exploitation of human beings by human being is forever cancelled and the socialist principle of repartition by quantity and quality of labor is being carried out instead. labor is an honorable duty for every citizen of the country.” disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 118 studies and scientific researches edition: economics, no. 13 (2008) competition and towards providing effective protection for the citizens, against disloyal competition, stating in art. 10 and a half § 2 that market economy is a general function of the state, and an act of disloyal competition means any act within industrial or commercial matter done without honest ways. the convention foresees an obligation towards member countries “to provide the citizens of the union an effective protection against disloyal competition” and to forbid through internal measures any deeds that may disrepute the industry, products, industrial or commercial activity of a competitor, false statements that can disrepute the industry/enterprise, the products, the industrial or commercial activity of a competitor, as well as the indications or statements which could be, by being used in practice for commerce, susceptible to confusing the public mass regarding the origin, way of fabrication, characteristics, abilities or quantity of goods. therefore, the member state of the convention is obliged to legally regulate the elimination of disloyal competition, as well as whatever may distort it from it’s licit purpose. (art. 10 and a half § 1). other countries have also implemented regulations concerning disloyal competition. in germany for instance, where the old civil code was regulating the responsibility for damage, came up a special law in 1896 for repressing disloyal competition, in 1909 coming a new one, this time for fighting disloyal competition. this law received amendments in 1965 and 1969, and on the 1st of march 1992 it has been legislated for being spread in the whole country.10 it was exactly in the first article where the german law stated that “anyone who may carry out an act of dishonest competition during commercial interactions, can be forced to end those and pay for damage.” france and italy do not have a special law regarding disloyal competition. judgment of such acts in these countries is being done according to the common right towards misdemeanor liability on civil level, to which 10 yolanda eminescu, concurenţa neleală. drept român şi comparat, ed. lumina lex, bucureşti, 1995, p. 4 the stipulations of penal law, as well as various dispositions concerning objects of industrial property. neither england does have any special law against disloyal competition. such acts are being judged by the penal law, and in the contrary, norms regarding liability for illicit acts are being applied.11 starting with the political and economical changes in east-european countries through the fall of communist regimes, it had been imposed that on this side of the continent there should also be new regulations regarding competition, meaning that those countries’ statist economy should also accommodate to free market economy. poland was the first post-communist country to adopt a law concerning monopoly practice on the 24th of february 1990, being inspired from the german legislation. in hungary, on the 5th of december 1990, the law concerning interdiction of disloyal commercial deeds appeared, which replaced the communist law from 1984, and bulgaria has adopted the law regarding protection of competition on the 2nd of march 1991, which clearly aimed at the disloyal competition. czechoslovakia also adopted in 1991 the law concerning the protection of economical competition, and the commercial code was completed.12 romania used to have a tradition regarding the legislation of dishonest competition, which had only been interrupted by the communist legislation. the first norms that could serve as a support towards liability concerning the commercial competition right, where stated in the civil code from 1865, art. 99813, considered to be the foundation of civil misdemeanor liability, as a liability of common right. in agreement with the statements of this article, misdemeanors and quasi-misdemeanors regarding commercial competition where sanctioned and the damage was solved, as to the specific misdemeanor regulations. it has been stated about this 11 ibidem, p. 5-17 12 ibidem, p. 17 13 any deed of a person that may cause prejudice to another, forces the one who made the mistake to fix it. this was only the translation of art. 1382 from the french civil code: „tout fait quelconque de l’homme, qui cause a autrui un dommage, oblige celui par la faute duquel il est arrivé, a la réparer ». disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 119 studies and scientific researches edition: economics, no. 13 (2008) doctrinarian system that it “has the shortcoming that it had to apply, with an extensive interpretation, the general rules of the liabilities born through misdemeanor and quasi-misdemeanor, the practice of competition as a phenomenon with economical preponderancy, to which its particularities are not reducible to the jurisdictional treatment that occurs to the civil illicit deeds.14 this legislation though, was to be enriched on this subject matter in 1984, by the law for itinerant commerce, in 1932 with the disloyal competition law, which had confusion and indication of false origin as a primary act of disloyal competition, and in 1937 with the decree for regulation and control over the cartels, through which measures of origin where being regulated, dedicated to stop monopoly agreements.15 starting with the political and economical changes from 1989, constitutional and legislative measures where being imposed in this subject matter as well, meant to direct the free competition intercourses towards normality and honesty. this is how normative documents were made main and usual in commercial competition’s area. law no. 12/1990 pointing towards the protection of the population against illicit commercial activity, law that was republished in 1991 modified and completed. law no. 15/1990 regarding state’s economic unities reorganizations as autonomous entities and commercial corporations; law no. 26/1990 regarding commerce’s register with ulterior changes and add-inns; law no.31/1990 regarding commercial corporations with ulterior changes and fill-inns. law no. 11/1991 regarding the disproof of unfair competition, modified through law 298/2001; law no.64/1991 regarding invention license. law no. 129/1992 regarding industrial drafts and draw’s protection; the government’s ordinance no.228/1992 regarding the protection of national producers and the intern market of disloyal competition that results from the import of some products at a dumping or subsidized price as well as the 14 octavian căpăţână, dreptul concurenţei comerciale. concurenţa onestă, editura lumina lex, bucureşti, 1992, p. 30 15 ibidem, p.31 export at lower price than the one on the internal market, as well as the commune commands of the finance and commerce’s departments no. 127/1992 and no.128/1992 emitted in the application of the government’s ordinance no. 228/1992, law no. 21/1996 regarding competition modified through government’s emergency orderly no. 121/2003 approved its self through low no. 184/2004; law no. 31/1996 regarding state’s monopoly; law 84/1998 referring to brand’s and geographic indications law no. 143/1999 regarding public assistance modified and completed through law no. 603/2003; law no. 148/2000 regarding advertising modified and completed through law no. 283/2002. it must be mentioned that the presented normative paper’s list that contains targets regarding commercial competition is complete and finally in that number of normative papers that regard settlements in competition’s area is on the increase, especially that our country has engaged to adopt normative paper packets that will make it compatible with the european union’s directive and legislation regarding the competition area. it must be mentioned that not all the normative papers that contain targets regarding competition’s settlements refer exclusively to this problem, but the targets are dispersed in more normative papers that have as the central goal other subjects than competition 16. in romania the intern justice paper that clears the dumping and export’s subsidies problems is the government’s ordinance no.228/1992 regarding the protection of national products and the intern market of the unfair competition resulted from the import of products at a dumping or subsidies price as well as the export at prices lower than on the internal market, paper that clears: repressing measures of the unfair competition at the export and import as well as safeguarding measures of the national interests regarding the import of subsidies products, dumping prices, than measures to prevent the complains from the countries where romania exports products regarding 16 titus prescure, op. cit., p. 32 disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 120 studies and scientific researches edition: economics, no. 13 (2008) dumping prices as well as the contravention sanctions that can be applied for the commitment of disloyal competition’s facts. the same paper was creating the import and export supervise department that has a department for other dumping taxes, compensatory taxes and safeguarding measures, and a prices department. according to the constitution’s statements, the multilateral conventions had became intern right that romania had adhered or ratified in competition’s area as the european agreement by romania’s association at the european community and associated states ratified it through law no. 20/1993. the interim agreement referring to commerce and facts was related with the commerce between romania, the european economic community and the coal and steel’s economic community ratified through low no. 16/1993 as well as the agreement between the states members of the free exchange european association (feea) and romania, ratified through low no. 19/199317. the aim of anti dumping laws is to protect the national industries from the effect of lower than normal value prices for import. the main substation of the necessity of antidumping settlement is that the foreign producers can use selling at high prices on the international protected markets to counterpoise small prices made exports against other market’s competition although this practice is considered against the competition and is sanctioned by law no. 21/1996. the anti-dumping settlements follow to avert this danger by establishing an accessory tax for the imports in the dumping regime at the price difference between the export price and the natural value of the product18. if the romanian’s economical politics legislation including the commercial competition has agreed with the european’s union legislation in the area or is considered to harmonize this legislation, all is in concordance with the constitutional conditions regarding the integration into the european union from article 148: “1 the adhesion of romania at the organic 17 octavian căpăţână, op. cit. p. 27-28 18 titus prescure, op. cit. p. 131-132 conventions of the european union, with the aim of transferring some attributions to the common institutions as well as exert with the other member states of the competences stated into this convention, it’s made through the law adopted into the common conference of the deputy chamber and the senate with a majority of 2/3 from all the deputies and senators. 2. pursuant the adhesion the foresights of the constitutive conventions of the european union as well as other common settlements having an imperative character are preferential towards the contrary stipulations from the internal law system to comply with all of the adhesion conditions. the statements of paragraph 1 and 2 are applied adequate for the reviewed papers of the organic conventions of the european union as well. the parliament, romania’s president, the government and the judiciary guarantee the fulfillment of the obligations that result from the foresights of the adhesion convention and paragraph’s 1 and 2. 5. the government passes on to the two chambers of the parliament the drafts of the imperative papers before this are submitted to be approved by the european union’s institutions.’’ although romania’s constitution forecasted these things since 2003 it’s known that the talks of romania’s adhesion of the european union were advanced but not final19 and the law system was already adapted to the european adhesion, romania legislatively acting like a common country. it must be remembered that the convention for establishing an european constitution concluded between the member states government’s conference officials from october 26, 2004 although it’s ratification through referendum or congressmen votes was difficult, it had section 5, rules regarding competition (art. iii, 161-166)20, subsection 2, helps given by member states (art.iii, 167169)21. rules of the common convention regarding competition are a corollary of the common stipulations referring to free 19 to look at tratatul privind aderarea româniei la uniunea europeană, editura all beck, bucureşti 2005 20 ibidem, p. 454-456 21 ibidem, p. 456-458 disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system 121 studies and scientific researches edition: economics, no. 13 (2008) circulation of products so the aim of the stipulations is to assure a free competition that promotes free circulation of products and stop restriction regarding common market’s functioning that can affect the commerce between member states, general inters of corporations and consumers. rules regarding competition are original in the stipulations that refers at the accomplishment of an internal market characterized by removing obstacles in free circulation of products, persons, jobs and capitals between member states, a regime that guarantees the integrity of competition, approachment of national legislation necessary for the well function of the common market. the members of the european union have the obligation, in the making of the common objectives, that their action for setting the economical rules should adapt to the principle of an open market economy in which competition is free. any norms aiming to stop, restrict or denaturate competition, may result in a malfunctioning common market or creating discontinuation in the intra-common relationships that are conceived and adapted towards satisfying a market economy. if the european union finds that a difference between the settled agreements through law, rules or administrative action from a member state misrepresents the terms of competition in the common market and that misrepresentation has to be eliminated, proceeding by consulting the member states, and if this consultation is not closed by an agreement of elimination of the respective misrepresentation, the council of the european union decides for the necessary directives, and the comission, joined by the council of the european union can take any measure present in the european union treaty.22 the main content of the commercial competition in the european union can be found in title vi. common norms concerning competition, fiscality and approach of legislation (chapter 1.rules of competition, art. 81-89) of the treaty 22 also see octavian manolache, drept comunitar, ediţia a iv-a, editura all beck, p. 296-398 establishing the european community.23 article 81 of the treaty declares interdicted as incompatible with the common market all the agreements between enterprises, decisions made between asociates of enterprises and concentrated actions that may affect commerce between states and that result in stopping, restriction or distortion of competition within the common market, especially those that: directly or indirectly settle the selling or buying prices or any other commercial conditions; limit or control production, market technical evolution or investments; spread the markets or supplying sources; apply some different conditions to equivalent transactions with other commercial partners, this way placeing them in a competitional disadvantage; make agreements upon contracts depending on the acceptance from the other part of some extra obligations, which throught their nature, or by commercial habits, don’t have anything to do with such contracts. the following paragraph stipulates that any agreements or decisions forbidden by the first paragraph have zero rights to exist. same goes for paragraph 3, that declares the statements from the first paragraph as inaplicable in the following cases: to any agreement, agreement category or enterprise; to any concentrated actions or category of concentrated actions, that contributes to perfection of production, distribution of goods or to promovation of technical and 23 the actual text is in fact the strengthened text of the treaty establishing the economic european community, signed in rome, 25th of march 1957, set into force on 1st january 1958. the treaty was amended by the single european act , 17-28 of february 1986, through the treaty concerning the european union at maastricht on the 7th of february 1992, by the treaty from amsterdam 2nd of october 1997, as well as by the nisa treaty from the 26th of february 2001, that amends the treaty concerning the european union, the institutive treaties of the european communities and certain auxiliary acts. see the romanian text of the treaty establishing the european union in “documente de bază ale comunităţii şi uniunii europene, ediţia a ii-a coordonată de valentin constantin, polirom, 2002, p. 17148” off the treaty concerning the european union (the maastricht treaty), p. 153-194, and of the amsterdam treaty, p. 197-199, as well as the internal regulation of the european unionn council from the 31st may 1999, p. 203-216, of the internal regulation of the european community comission from the 29th of november 2000, p. 219-228. disloyal commercial competition and the jurisdictional responsibility in theromanian and eu law system studies and scientific researches edition: economics, no. 13 (2008) 122 economical progress, as long as an equitable part of the resulting benefits will be allocated to the consumers, and which: don’t force the related enterprises any restrictions that are not esential to creating objectives; that don’t give such enterprises the option to eliminate competition regarding a substantial part of the discussed products. from the analysis of the mentioned article it can be concluded that stopping, restriction or distortion of the competition, a necessary condition of the commerce affection from the member states, and not an effect, especially because the ways of the agreements, decisions or actions are indicated. therefore, as a result, the rule is one of the development of some fair jurisdictional relationships within the commercial circuit. the vast majority of the agreements, decisions or actions don’t tend to restrict competition, without even being necessary to apply the mentioned exceptions. for antisocial deeds stated within the legislation of competition, contraventional liability has been implemented, beside the patrimonial liability, through law no. 11/1991, government’s ordinance nr. 2/2001 and law no. 268/2002. the disluyal competition offence results in penal liability for the perpetrator, to whom, beside the special dispositions, can be applied the disopsitions of the penal procedure code. penal and contraventional liability for the same deed are excluded, yet can civil action in disloyal competition coexist with administrative and penal liability. references: [1] prescure t., curs de dreptul concurenţei comerciale, editura rosetti, 2004; [2] manolacheo., manolache o., regimul juridic al concurenţei în dreptul comunitar, editura all, bucureşti, 1997; [3] eminescu y., concurenţa neleală. drept român şi comparat, ed. lumina lex, bucureşti, 1995; [4] cotuţiu a, sabău g.v., drept român şi comunitar al concurenţei; [5] vasilescu b., concurenţa neloială sancţionată de legea nr.11/1991, în revista de drept comercial, nr.10/2007. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro analysis of the marriages and divorces seasonality in romania compared to bacau county during 2010-2013 eugenia harja “vasile alecsandri” university of bacau eugenia.harja@ub.ro abstract it is known that the number of marriages concluded in general in a geographic area follows a cyclical trend due primarily to religious factors. in this study we wanted to test whether this assumption is maintained in the past four years. on the other hand, we wanted to look at the indices of seasonality in romania compared to those calculated for bacau county to see if there are significant differences. the same aspects were analyzed for the divorce evolutions, to identify whether there is a seasonal trend in this case as well. after applying the methods of arithmetic mean and the mobile averages, there were calculated the seasonality indices and concluded that marriages are clearly cyclical developments every 12 months, with a peak in the third quarter, respectively in august, when the number is 3,5 times higher than the monthly average yearly in bacau county and 2,3 times for romania. in the case of divorces, the evolution is oscillatory, but without identifying a seasonal component. the average monthly number of divorces per 100 marriages is 29 in romania and 36 in bacau, with a maximum of 202 in the county of bacau, observed in march 2010. keywords marriage; divorce; mobile average; seasonality indices jel classification c10; j10; j11 role of family policies and the influence of the religious phenomenon over demographic developments demographic changes in romania since the '90s led to changes in the age groups, emphasizing the growing imbalance in recent years. decrease in the proportion of young people and the increase of elderly in the total population has many repercussions on the labor market and social effects that can hardly be stopped. for a balanced development of population by age groups, policy measures to stimulate the birth rate are necessary, and this is linked on the other hand to the cultural aspects of the population, being greatly influenced by traditions and especially the religious factor. even if the behavior of many young people has changed in recent years towards family and marriage, culture and religious traditions in our country are still a strong influence for birth. in recent years, more and more young people prefer to live in a consensual union, delaying the time to formalize their relationship through marriage. with all these changes in behavior, most prefer to raise their children in the legal framework of marriage, respecting the church canons and traditions. for this reason marriage has influence on birth, and the family policies are designed to encourage childbirth. a young and renewed population and provide ensures a dynamic and a balance both economically and socially to a state, while an aging population causes major imbalances in this regard. 38 harja family policies are designed to encourage families and to make sure that families with children have an average income per person close to the families without children. a special role in this regard is owned by the church, which does not accept legally unmarried couples, this still being a powerful influence in the determination of young people to formalize their relationship and give birth to children within marriage. a child born out of marriage is often rejected by society, which is why most couples keep the traditional model of marriage. the influence of the religious factor can be well observed in the history of the moment of conclusion of most marriages, which take into account the periods of fasting and legal holidays, when the church prohibits formalizing religious marriages. or, as most youngsters prefer to formalize legally the marriage on the same day, or at least after a few days after the religious formalization, it can be observed that every year, the peak months of the number of marriages formalized are exactly those after the periods of fasting. these issues will be statistically demonstrated in the third part through the application of calculation methods of the seasonal fluctuations. evolution in the number of marriages and divorces during 2010-2014 after the 90’s, the number of marriages has been in continuous decline in romania, mainly due to the decrease in population and behavioral modification of the couples. thus, in romania the number of marriages decreased by 44,2% in 2013 compared to 1990 and in bacau county it has almost halved. meanwhile, the number of divorces in the country has been constant, around 30.000 annually, while in bacau county it has grown over time, the years 1998 and 1999 almost doubling compared to 1990. i was saying that in time people's behavior towards marriage has changed, this can be noticed after the age of spouses at marriage. most young people desire to make a career first, and on the other hand the increase of the professional activity of women, made that the formalizing of first marriages to be postponed. thus, in romania the average age for the first marriage increased in conclusion for husband from 25 years in 1990 to 29,6 years in 2012 (+4,6 years), and for the wife from 22 years to 26,4 years (+4,4 years). the average age for the first marriage is lower in bacau county, for the husband it increased from 24,7 years in 1990 to 29,3 years in 2012 (+4,54 years), and for the wife from 21,7 years to 25,6 years in 2012 (+3,9 years). the situation is different in the two areas of social life, the average age is higher in urban than in rural areas with at least a year for spouses and at least two years for wives, both in bacau county and the national average. at the end of the period, the average age for the first marriage for husband nationally was 30 years in urban areas (bacau, 29,7) and 28,9 in rural areas (bacau, 28,7) and for the wife, of 27,3 years in urban areas (bacau, 26,7) and 24,8 years in the rural area (bacau, 24,). accordingly, it increased over time as well the average age of marriage in general, from 26,9 years, the national average for husband, to 31,6 years at the end of the period, and for the wife from 23,7 years to 28,2 years. environment and sex differences are preserved in this case. for both husband and wife, the structure of the marriages after the first legal one has changed. in both cases, at the date of marriage, if in the 90s around 88-89% of spouses had never been married before, about 2% were widowed and 8-9% were divorced, at the end of the period there were married around 85% of the spouses, slightly above 1% were widowed, and between 13-14% were divorced. in parallel with the formalizing of marriages, other legal unfold. if the number of divorces in the country has remained somewhat constant annually, the number in bacau county has increased. bacau county divorce rate increased from 1,32% in 1990 to almost 2% during 2010-2011 and 1,58% in 2012. currently, the rate is nearly two times higher in urban than in rural areas (2,16% in urban and 1,11% in rural 39 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro areas), compared to the 90s when it was 2,15% in urban areas and only 0,58% in rural areas, the difference being in significant decrease in the last 24 years. divorce rate in bacau county had a parabolic trend in the last 24 years, both overall and on the two areas, with a maximum during 1998-2000. in terms of age structure of the spouses at the time of divorce, it changes slightly in favor of older ages, this because it increased the age of marriage. if in the 90s 23,2% of divorced wives were below 24 years, in 2012 only 9,3% of them are found in this age group. group of 40-44 years, the proportion of divorced women was about 9% in the early years, as today to rise to 16%. in all age groups after 40 years the share of divorces has increased. table 1 average monthly number of marriages and divorces in romania and bacau county during 2010-2013 month marriages monthly average divorces monthly average number of divorces at an average of 100 marriages romania bacau county romania bacau county romania bacau county january 3998 147 2149 132 54 90 february 4239 126 2965 100 70 80 march 3753 95 3345 125 89 132 april 5748 139 2901 136 50 98 may 9153 240 2985 125 33 52 june 9703 236 2949 124 30 52 july 15864 506 1837 112 12 22 august 21198 1011 2062 89 10 9 september 15384 417 2194 44 14 11 october 10825 262 2467 62 23 23 november 5292 143 2737 76 52 53 december 3991 141 2676 127 67 90 monthly yearly average 9095 288 2605 104 29 36 source: own calculations based on data from i.n.s., tempo online in the last four years, every 100 new marriages celebrated nationwide in november, another 29 have been unfolded, the average for bacau being higher, respectively 36. march is the most harmful in this regard, in bacau county being over 1.3 times more divorces than marriages. if we analyze the structure of divorces by duration of marriage, there is noticed a decrease in the share of divorces to marriages of up to four years, maintaining or even decreasing the share of those with a duration of 5-14 years, a slight increase of 1519years and a major growth in the ones that lasted 20 years and over. 40 harja 0 5000 10000 15000 20000 25000 ja n10 f eb -1 0 m ar -1 0 a pr -1 0 m ay -1 0 ju n10 ju l-1 0 a ug -1 0 s ep -1 0 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 f eb -1 1 m ar -1 1 a pr -1 1 m ay -1 1 ju n11 ju l-1 1 a ug -1 1 s ep -1 1 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 f eb -1 2 m ar -1 2 a pr -1 2 m ay -1 2 ju n12 ju l-1 2 a ug -1 2 s ep -1 2 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 f eb -1 3 m ar -1 3 a pr -1 3 m ay -1 3 ju n13 ju l-1 3 a ug -1 3 s ep -1 3 o ct -1 3 n ov -1 3 d ec -1 3 n um be r marriages divorces figure 1 evolution of the number of marriages and divorces in romania by month during 2010-2013 source: i.n.s., tempo online 0 200 400 600 800 1000 1200 ja n10 f eb -1 0 m ar -1 0 a pr -1 0 m ay -1 0 ju n10 ju l-1 0 a ug -1 0 s ep -1 0 o ct -1 0 n ov -1 0 d ec -1 0 ja n11 f eb -1 1 m ar -1 1 a pr -1 1 m ay -1 1 ju n11 ju l-1 1 a ug -1 1 s ep -1 1 o ct -1 1 n ov -1 1 d ec -1 1 ja n12 f eb -1 2 m ar -1 2 a pr -1 2 m ay -1 2 ju n12 ju l-1 2 a ug -1 2 s ep -1 2 o ct -1 2 n ov -1 2 d ec -1 2 ja n13 f eb -1 3 m ar -1 3 a pr -1 3 m ay -1 3 ju n13 ju l-1 3 a ug -1 3 s ep -1 3 o ct -1 3 n ov -1 3 d ec -1 3 n um be r marriages divorces figure 2 evolution of the number of marriages and divorces in bacau county by month during 2010-2013 source: i.n.s., tempo online thus, in 2012, the structure of divorces by the duration of marriages was the following: 2,4% after one year, 6,1% after two years, 6,7% after 3 years and the same after 4 years, 24,8% after 5-9 years, 16,1% after 10-14 years, 12% after 15-19 years and 20,9% after 20 years and over. 41 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro regarding the structure of divorces by the number of remaining minor children after divorce, the share of divorced couples without children increased and the share of all other groups decreased during the last 24 years. at the end of the period, 55,3% of divorced couples nationwide had no minor child, 31,6% had one child, 11,1% had 2 children, 1,4% had 3 children, 0,4% had 4 children and 0,2% of the total had 5 children and over. the same issues are found in the county of bacau. in graphs 1 and 2 can be observed the monthly evolution of the number of marriages and divorces in the past four years, compared to the national level and bacau. fluctuations by months are similar especially for the marriages where the seasonal factor is clear. calculation of the seasonality indices as shown in the two graphs shown above, especially in the case of the monthly evolution of marriages, it emerges a cyclical component. this makes the number of marriages to be higher in summer and lower in the winter. on the one hand couples prefers formalizing their marriage and celebrating it in warmer months, but on the other hand, the religious factor puts also a mark. it is known that during all the days of fasting and religious holidays priests don’t officiate marriages. marriages during these periods of prohibition are only civil marriage, not religious. as most young people prefer to have the civil marriage at the same time with the religious one, the large flow of marriages is visible soon after the major periods of fasting. because of this reason, immediately after easter feast, generally starting with may, the number of marriages is exploding. during june there are three weeks of st. peter and paul feast, then again it is free for religious celebration of marriage until early august, when another two weeks of feast. in addition, august is the peak month of holidays, which increases the number of marriages, especially if we take into account the young people left to work abroad, not few, who prefer to return to the country in the month of leave and to celebrate their marriage. the second part of november and most of december comes again with a long period of feast, which correlated with the cold season, lead to a massive decline in the number of marriages. following their monthly evolution, it can be observed easily the seasonality of this phenomenon, the chart having every year almost the same trend. for this reason, i have calculated forward the seasonality indices through the mobile average method. there were calculated mobile averages of 12 terms, as seasonal factor always occurs after 12 months and then were calculated mobile averages centered of two mobile averages each. the weighted average was further applied and seasonality indices were obtained, whose evolution can be seen from the graphs number 4 and 5 romania versus bacau county, both for marriages and divorces. if in among the country six months a year, from may to october, the number of marriages is over the annual monthly average in only three months bacau manifest this phenomenon (july-september), but in the middle month the gap is well above the national average. peak month when marriages are formalized remains in august, a month in which the phenomenon of seasonal factor deviates more than 2,3 times the national monthly average and more than 3,5 times in the county of bacau. 42 harja 0,0 50,0 100,0 150,0 200,0 250,0 300,0 350,0 400,0 1 2 3 4 5 6 7 8 9 10 11 12 month s ea so n al it y in d ex % romania bacău county figure 3 monthly indices of seasonality calculated through the method of mobile averages for marriages during 2010-2013 source: own calculations based on data from i.n.s. 0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 1 2 3 4 5 6 7 8 9 10 11 12 month s ea so n al it y in d ex % romania bacău county figure 4 monthly indices of seasonality calculated through the method of mobile averages for divorces during 2010-2013 source: own calculations based on data from i.n.s. seasonality indices make the number of marriages in july to be 74,4% higher than the monthly average annually on a national level and 75,4% in the county of bacau, and for september to be +69,1% at national level and +44,5% in bacau county. 43 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro in the case of divorces, the seasonal factor is found in a lesser extent, given that the official date of divorce is given on the final sentence, which may take several years from the time of bringing the action. we could consider that in a lesser extent, the seasonal factor may be influenced during the summer holidays when fewer legal actions are generally prosecuted in court, otherwise, they being found throughout the year. conclusions after the 90’s, marriages generally tended to decrease, both because of the reduction in population due to migration, and the change in the behavior of couples. more preferred to reserve more time for career and stable living, then to found legally a family and to think about future children. the woman has become more independent, wanting to achieve professional and financial status, to not depend on a man, which is why the average age at first marriage increased over time, leading inevitably to the increase in the average age of mothers at first childbirth. couples wish to bring stability to the lives of future children, which is why, with all the freedom after the 90’s, as well as due to the tradition, culture and education and the religious factor, the vast majority wanted to formalize their relationship and to widen their family in a legal framework. in the case of marriages, it is clearly observed, for years, an influence of both seasonal and religious norms that make their number to be much higher in the summer months after the completion of the periods of fasting. not the same can be said in the case of divorces, the seasonal factor is found in a smaller extent and can be linked only with the smaller number during the summer months, and months when courts generally have vacation. monthly seasonality evolution of marriages will surely manifest many years from now because of the factors underlying the choice of the date of their celebration. references barthelemy, p., granier, b., robert, m. (2009), demografie şi societate, institutul european. harja, e. (2009), statistică şi econometrie, bacău, ed. almamater. institutul national de statistica (2014), tempo online, available at http://www.insse.ro/. rotariu, t. (2003), demografie şi sociologia populaţiei, ed.polirom, iaşi. 44 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro game theory: minimising the cost of capital vs. maximising the return of investors brindusa tudose petre andrei university of iasi brindusatudose@gmail.com abstract the application of game theory to financial transactions focuses on two categories of stakeholders: users of financing (firms) and providers of financing (investors). the core of game theory consists in the strategy that a partner is able to build starting from the possible decisions of the other partner (each party having opposing interests). in fact, we deal here with a cooperative game in which both opponents seek to maximise their own chances of winning. the article aims to highlight the manner in which mathematical game theory is transposed in the field of corporate finance by balancing the firm’s objectives (maximising market value by minimising the cost of raising capital) and the investors’ objectives (maximising returns on investments). the intended novelty of this paper lies in developing a model for optimising a firm’s financial structure and assessing it in terms of investors’ interests. keywords financial structure; optimisation criteria; cost minimisation; profit maximisation jel classification g32; c70 introduction the issue of firms’ financing has been and continues to be one of the most hotly debated topics for a variety of analysts/researchers, not necessarily finance experts (for instance mathematicians, psychologists, economists). their works have focused on the optimal mix of the two sources of financing (internal and external), in order to secure the success of major objectives undertaken by management; hence, the financing decision – one of the key decisions in financial management – emerges as a genuine challenge. most of the theories formulated so far have built analytical frameworks for grounding, understanding and implementing firms’ capital structure policies. however, the theories developed have certain limitations, which have posed challenges for further research and experienced varied and wide-ranging debates, with key concepts re-emerging in novel forms (tudose, 2013). inaugurated by emile borel (1921) but comprehensively laid out in only 1944 by john von neuman (a mathematician) and oskar morgenstern (an economist), the mathematical theory of games opened up a highly diverse research field. lately, we have observed increasing interest by finance researchers in reassessing theories of finance against the background of game theory. with reference to the above, it must be emphasised that certain mathematicians have argued that “mathematical game theory has a broad applicability in the field of financial transactions, yet raises problems related to building specific functions and deliver concrete solutions for various models and classes of determinist or probabilistic financial transactions” (purcaru, 1998). the main objective undertaken in this paper is to show how the mathematical game theory is transposed in the field of corporate finance by balancing the firm’s 103 tudose objectives (maximising market value by minimising the cost of raising capital) and the investors’ objectives (maximising returns on investments). when a firm posts minimum cost of capital it is essential to ascertain not only the context that enabled it to achieve this objective but also the extent to which investors were able to achieve their goals too. landmarks in specific research the adequacy of capital structure represents a major decision for any firm; this is because the decision is founded not only on the need to maximise shareholder returns, but also on the need to ensure the firm’s capacity to cope with its competitive environment. the views on the optimal financial structure have varied over time; going beyond the irrelevance theory, it has been recognised that there is a link between capital structure and firm value. the idea proposed 10 years ago, arguing that “there is no universal theory of the debtequity choice, and no reason to expect one” (myers, 2001), reoriented research to the level of empirical analyses. as far as the firm is concerned, its financial structure is designed based on certain criteria (toma & alexandru, 2003) as follows: the firm’s rate of return; the cost of raising capital; maximum debt carrying capacity and the flexibility of the financial structure; risk; resource allocation; firm’s objectives. additionally, other criteria may be considered (tudose, 2006) including: the size of the firm; the weakening of shareholders’ controlling power (in case of new share issues); technology risk (which may be offset by leasing equipment); adjusting repayment methods to the firms’ financial constraints (certain reimbursement methods may be more convenient even if costlier); loan granting procedures (depending on the urgency of the financing needed, a more expensive alternative may be accepted that provides faster access to funding); loan guarantees being demanded (firms that are unable to deliver the required guarantees must opt for other types of lending, higher priced, but less stringent in terms of collaterals required). one of the domains of optimization applicability is represented by the financial structure. as the structural elements are variable, they can be combined in such a manner in which the maximization of the firm’s value will be attained. in other words, the optimization of the financial structure can lead to an improvement of the organization and of firms function. by accomplishing this objective favourable premises will be created for both shareholders and creditors; this will have a positive impact on the future development of the firms. however, when dealing with the optimization issue, in terms of economic theory, must not be adopted a fixed, rigid attitude. as long as the maximization and the minimization are matters of dynamics, the ratio between the useful output and the superior quality input will define the premises of optimization. when an firm records its maximum level of efficiency, and thus the minimum cost level of the capital (the optimum level), it is compulsory to express the environmental circumstances – exterior and interior environment, financial or of any other nature – that allowed the accomplishment of this objective. methodology of the research approaching the issue from the firm’s perspective, we acknowledge that it is possible to determine the optimal state (based on the cost of raising capital from different sources) by using linear optimisation models. for these purposes, we will build a company finance structure optimisation model, based on the weighted average cost of 104 game theory: minimising the cost of capital vs. maximising the return of investors capital criterion. we will simultaneously explain the extent to which investors (financing providers) are able to achieve their objectives. the value of a financial transaction – v(i,f) – is not perceived in similar fashion by investors (i) and the firm (f); whereas investors aim to maximise the rate of return of their investment, the firm seeks to minimise the cost of raising capital. because investors and the firm do not act independently, one might argue that both parties will focus on a strategy that will diminish (as much as possible) the effects of the other party’s strategy. a financial transaction (investment for investors, capital raising for firms) is optimal (or mutually advantageous, both for the firm and for the investors) if the strategies m 10 and m20 are in place to ensure that: )i,f(vmaxmin)f,i(vminmax 1m2m2m1m = approaching the issue from the firm’s perspective, we acknowledge that it is possible to determine the optimal state (based on the cost of raising capital from different sources) by using linear optimisation models. in order to solve the linear programming problem, i will start from an admissible basic solution (forming a finite set) and will subsequently identify the solutions in order to minimise or maximise a particular function. presentation of the model the milestones propose are: a) defining the target function (required to perform the optimisation); b) defining the system of equations/inequalities specific to the financial structure to be optimized, in terms of the cost of financing; c) defining the linear optimisation problem; d) solving the problem. defining the target function (required to perform the optimisation) that can be achieved as follows: f(x) = weighted average cost of capital → minimum, or .mink cc c k cc c )x(f i ip i p ip p → + + + = , where: cp = equity capital, ci = debt capital, kp = cost of equity capital, ki = real cost of debt capital (taking into account any tax shields). as linear programming models only allow linear (minimum or maximum) optimisation functions, we must redefine the optimisation function. consequently, by using x 1 to denote the ratio )cc(c ipp + and x 2 for the ratio )cc(c ipi + , the optimisation function becomes: .minkxkx)x(f i2p1 →+= , where the costs of the two types of capital are known, and x 1 and x 2 are the variables (the unknowns). 105 tudose defining the system of equations/inequalities specific to the financial structure to be optimized, in terms of the cost of financing a) firms have access to two main types of financial resources, own capital or equity and borrowed capital or debt, respectively; as regards the level of accessibility, it should be noted that a firm can finance itself with 100% equity, but cannot finance themselves with 100% debt. the first equation of the system reflects the financial structure: 1 cicp ci cicp cp = + + + according to the previously employed notation, the equation can be reformulated as follows: 1xx 21 =+ b) own capital – after making an investment financed exclusively by own capital, the level of equity cannot exceed the sum of the initial own capital (cp0) and the value of the investment (i). consequently, the second component of the system will be an inequality: )ic(c 0pp +≤ or )ic( )cc( c )cc( 0p ip p ip +≤+ + or )ic(x)cc( 0p1ip +≤+ . c) borrowed capital – after the investment is made – cannot exceed the sum of the initial borrowed capital and the value of the investment (in case the investment was financed exclusively by borrowed capital). the third component of the system will also be an inequality: )ic(c 0ii +≤ or )ic( )cc( c )cc( 0i ip i ip +≤+ + or )ic(x)cc( 0i2ip +≤+ . from the standpoint of the creditor/investor who seeks to maximise his profit, this transaction is only justified if it involves a premium aligned with the level of risk he is taking. once loan is agreed, it is argued that both parties (the firm and the investors) have achieved their goals. d) borrowed capital – after the investment is made – cannot exceed double the value of own capital (a prerequisite for ensuring the survival of the company and its financial balance). cp2ci ≤ or )cc( cp )cc(2 )cc( c )cc( ip ip ip i ip + +≤ + + 106 game theory: minimising the cost of capital vs. maximising the return of investors or )cc(x2x)cc( ip12ip +≤+ . the inequality can be tested by factoring in the known amount of the projected investment; therefore it is not indispensable in defining the system of equations/inequalities. defining the linear optimisation problem defining linear optimization problem involves aggregating of the previous relationships shown:        ≥ +≤+ +≤+ =+ 0x,x )ic(x)cc( )ic(x)cc( 1xx 21 0i2ip 0p1ip 21 .minkxkx)x(f i2p1 →+= solving the problem by incorporating in the model only two variables (x1 and x2), the system may be solved either graphically or by using the primary simplex algorithm or based on the two-phase optimisation method (just as to the matrix of the equation system one may or may not add elementary transformations to construct a unit matrix) (reitano, 2010). limits of the model minimising the cost of the firm’s equity capital must not be viewed in absolute terms, must not represent an objective in itself; rather this goal must be aligned with a broader focus on improving the financial structure and maximising the firm s value. the financial structure of a company which does not pay dividends (zero cost of equity) cannot serve as a reference for optimisation. a firm which pays a high number of dividends does not necessarily have an unfavourable financial structure (onofrei, 2009). the concerns regarding increasing the rate of return on equity do not derail the company from the path of optimising its financial structure. due to their higher return, a company’s shares will be more attractive to investors and the increased share price will have “have a positive effect on the market value of the company” (vernimmen, 2009). nor can the cost of debt capital be considered as an absolute reference. each creditor requires a target rate of return in exchange for providing access to his financing source. considering that investors (creditors) have several options for investing their capital, they will opt for the investment type offering a risk premium, the rate of return in excess of a risk-free return rate. the model we developed is based on a single-criterion optimisation. in practice, the cost of capital is not the sole determining factor in financial decisions. building a model that should enable a multi-criterion optimisation of the firm’s financial structure will constitute a future focus of research for us. 107 tudose conclusions the defined model reinforces the claim that the mathematical game theory has an extensive area of application in the field of financial transactions, at the same time overcoming the issues that may arise in constructing specific functions; the concrete solutions for the function f(x): the weighted average cost of capital → minim will enable the determination of solutions for the optimisation function of the type max m1 min m2 v(i,f) = min m2 max m1v(f,i). the equilibrium state of the game is defined by the finite set of strategies identified for each actor. the purely financial premises that constitute the base for achieving an optimum capital structure are: knowing the cost of the financing sources and the fluctuation of the interest rate; knowing the typology of the enterprises because, depending on their dimension, the organisations have access to different sources of financing; knowing the financing needs of the enterprises; knowing the weight of participation for different financing sources at the enterprise level; knowing the financial environment at a macroeconomic level and of the financial-monetary policies – fiscal, monetary, credit, income – promoted in a given length of time; we also include here the degree of development and functionality of the capital markets because through them the enterprises can attract resources corresponding to various time horizons; knowing the behaviour of the parties that participate on the financial market and their willingness to take risks; knowing the psychological implications of indebtedness, because the financial structure of an enterprise will be greatly influenced by the attitude of the financial decision-makers regarding the possibility of falling into debt. references myers, s. (2001). capital structure, the journal of economic perspectives, 15(2), p. 81-102. onofrei, m. (2009), guvernanța financiară corporativă, bucurești, editura wolters kluwer. purcaru, i. (1998), matematici financiare, bucurești, editura economică. reitano, r. (2010), introduction to quantitative finance, cambridge, mit press. toma, m., alexandru f. (2003), finanțe și gestiune financiară de întreprindere, bucurești, editura economică. tudose, m. b. (2006), gestiunea capitalurilor întreprinderii. metode de optimizare, bucurești, editura economică. tudose, m. b. (2013), ”real effects of the firm financing and risk management”, in abordări conceptuale și metodologice ale proceselor economice, bucurești, editura academiei române. vernimmen, p. coord. (2009), finance d’entreprise, 7ème édition, paris, dalloz. 108 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the impact of risk of poverty on segments of the market in romania marcela-cornelia danu “vasile alecsandri” university of bacău marceladanu@ub.ro abstract in the present work i presented the risk of poverty in romania considering the economic and social determination. i highlighted that poverty in romania, is a mix of economic, educational, cultural etc. factors and reinforced by the lack of family or social support. among the most significant correlative causes of poverty are: lack of money-unemployment, low salaries, lack of money, lack of food-hunger, deprivation, misery, lack of culture, lack of housing, disease, decay, addictions, political causes, individual causes, etc. i analyzed the dynamics of the decision-making behavior of the population of romania both as a whole and as segments of the market, in terms of age, sex, residence environment, etc. in the market acts, regarding the purchase and consumption decision. the approach and treatment of the poverty must be understand regarding to the systemic economic-social-psychologically interaction. the impact of risk of poverty on the segments of the market is reflected in the production of goods and services; increasing of this type of risk lead to diminishing and modifying the request and further lead to diminishing supply, business failure, etc. keywords risk of poverty; segments of the market; unemployment; consumer behaviour; consumption; consumption expenditure jel classification e21; e24; f15; i32; j19 premises and levels of poverty in europe the economic and financial global crisis, starting in the third quarter of 2007, he made his presence felt on the european continent during the year 2008. the impact of the crisis has been severe, manifesting itself over the entire societal system; the economic, social, political, natural, psychological etc. dimensions were affected each one in different shapes and sizes, resulting the negative effects with mutual determination and interdependences spread in time and space. although the european economy has exceeded the phases of crisis and economic recession, the statistical data shows that by the end of 2013, this “refitting”, yet, is in a slow pace [sustainable development in the european union, http://epp.eurostat.ec.europa.eu/]. the premises of the risk of poverty in different sizes and level of gravity are, in reality, the forms of economic and financial crisis, like this: − lack of credit and asset price drop; decrease of the demand of consumers; increasing the savings of household; lowering the investment of firms and households; decreased international trade; decreased of gdp/capita; the raising government debt; 27 http://epp.eurostat.ec.europa.eu/ danu drop the level of the employment, principally in the case of young people and men; the reduction in labour productivity; drop the level of industrial production in response to diminishing demand. increasing the level of unemployment and long-term unemployment, having economic, social and psychological impact on those who are in this situation. at eu level, as a whole, the risk of poverty has fallen even if the premises were not favorable; for the age groups 18-24 years and 25-49 years, the risk of poverty has slightly increased. the intensity of poverty has increased, more for the segment of the male population and for the middle-aged persons. the decrease in financial potential of the private donors has determined the decrease in financial support of the aid to those affected by poverty. if during the 2005 2008 the risk of poverty has fallen, since 2008 the risk of poverty has affected more and more persons, so that in the 2012 have been exposed to the risk of poverty or social exclusion with 8.7 million people more than in 2008. in absolute figures, in the 2008 the number of people exposed to the risk of poverty was 115.7 million and during the 2012 124,4 million (approx. 25% of the population of eu). against the background of the crisis and the economic recession, the poverty in general, monetary poverty in the main, those severe materials deficiencies, lack of jobs have marked the economic, social and personal life and last but not least the psychic balance so much desirable, of a large part of the european population. it is considered that “the current levels of poverty and social exclusion endanger the objective of europe 2020 strategy of the eradication of poverty, which is intended to reduce by at least 20 million number persons confronted with the risk of poverty and social exclusion by 2020". the monetary poverty is the main form of poverty in the eu. in the 2012, this affect 17.1% of the total population of eu. of total number of those affected by poverty, in the 2012, a significant number of 85.3 million people, has been affected by a risk of monetary poverty. the situation is worrisome because it highlights an increase of 5.7 % compared to the 2008. what's more, this indicator has increased almost continuously from the 2005, therefore, before the economic and financial global crisis comes, and his evolution was accelerated after the 2009. another form of manifestation of poverty is the material privations. if in the previous period of crisis, respectiv between the 2005-2008, the number of affected people with severe materials privations in the eu decreased by approx. 12 million, in the 2012 approx. 51 million people were affected by this "disease" (10.3 % of the eu population), their number increasing during the 2008-2012 with 23.18 %. regarding to the income inequality, during the 2005-2012, it has recorded small changes. in 2012, the richest 20% of the eu population were revenue representing more than 38% of national income/adult equivalent, respective 5 times more than the poorest 20% of eu population (their weightings being approx. 8% of the population). the labour market in the eu is still marked by instability, from this point of view sustainability being placed in uncertainty. in 2012, the number of people living in household with very low work intensity was 36.9 million (9.8% of the eu population in the ages of 0 and 59 years), growing up with 7.58% from 2008. the economic inactivity is a significant premise of risk of poverty. the unemployment is a determinant key of economic and social health of the population. in eu, between the 2004-2008, the long-term unemployment rate had a downward trend. beginning to 2008, the rate has risen again, in 2012, reaching peak of 4.6 percent. although the gender disparities have been mitigated during the 2006-2011, the gross earnings per hour carried out of women were in 2011, with 16.2% lower than those of men. 28 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro coordinates of the risk of poverty in romania in a national environment affected by the transition toward a market economy, and more recently, by the transition toward the economic and financial crisis, the risk of poverty has reached in our country the highest levels, after bulgaria. although the crisis manifested at the large scale in romania too, the dynamic of the number of people exposed to the risk of poverty was relatively favorable (tab.1), the share of the exposed persons have fallen from 45.9% in 2007 to 41.7% in 2012 [www.eurostat.com, 15.06.14]; however, the size of the weighting of persons exposed to this type of risk is a reason for concern in so far as, the segments of the young population under 18 years (52.2 % in 2012) respective 18-24 years (45.6 % in 2012) are the most affected. table 1 people at risk of poverty or social exclusion by age, in romania (%) years 2007 2008 2009 2010 2011 2012 total 45.9 44.2 43.1 41.4 40.3 41.7 less than 18 years 50.5 51.2 52.0 48.7 49.1 52.2 from 18 to 24 years 43.3 44.2 42.7 42.1 44.4 45.6 from 25 to 49 years 39.2 38.5 38.3 37.8 37.8 38.5 from 50 to 64 years 47.2 44.0 43.6 42.3 38.5 40.8 65 years or over 57.7 49.2 43.1 39.9 35.3 35.7 source: processed by www.eurostat.com, 15.06.14 by analysing a risk of poverty on the basis of the age and sex, we notice that in the preceding year of the crisis in romania, 2007, the share of poor women it was greater than that of the men; it is also interesting that the share of the men who were poor, in all the segments of the age of less than 50 years, it has been higher than the share of the women from the same segments of the age; instead, for the segments for more than 50 years, the women held the highest weightings of exposure to poverty. in 2012, the last year of the analysis, the situation on the segments of the age has become more difficult for the segment of women than for the segment of men, they predominantly to the almost all the segments of the age with the exception of segment 18-24 years (fig.1,2). an important criterion in studying the impact of risk of poverty on the behavior of the consumption of individuals is their employment situation (tab.2). from this point of view, of all the segments of the age employed, the most exposed at the risk of poverty is the segment of the young people between the ages 18 and 24; the situation got worse, so that, if in the 2007, 42.3 % of the young employees were exposed to the risk of poverty, in 2012 the share increased by more than 10%. for other segments of the age, possible employee, the situation has sensitive improved. 29 http://www.eurostat.com/ danu figure 1 & 2 people at risk of poverty or social exclusion by sex and age, in romania (%) source: processed by www.eurostat.com, 15.06.14 table 2 people at risk of poverty or social exclusion by status and age – employed persons, in romania (%) status and age 2007 2008 2009 2010 2011 2012 employed persons from 18 to 24 years 42.3 49.3 48.8 45.6 52.8 52.7 employed persons from 25 to 49 years 32.7 32.1 32.6 32.1 32.3 32.2 employed persons from 50 to 64 years 35.4 34.3 34.3 33.9 31.4 33.7 employed persons 65 years or over 73.1 60.0 47.9 55.4 57.6 47.6 source: processed by www.eurostat.com, 15.06.14 taking into account all the criteria referred to, respective age, sex, persons employed, during the 2007-2012 (fig.3.,4), we notice that the employed men in the segment 1824 years have recorded a deterioration of the economic situation, the exposure to the risk of poverty increasing far beyond the 2010. for the segment of the age 25-49, in the entire period of the analyzed time, the exposure to the risk of poverty has been greater for male, employee segment. the segment of the age 50-64, employed persons, is more affected by this risk in case of the women, but the trend was declining throughout the period. the segment of over 65 years is less significant from this point of view of the employment possibility, recording in the case of men a downward trend of the weighting of those affected, and, in the case of women, after an increase in crisis period, a decrease from the 2011. although the situation of poverty is very difficult for the entire society, regardless of which would be the segment of the market, this has a great dimension due the negative propagated effects, in the case of persons not employed. in this situation, the principal cause of the poverty in general, of the monetary poverty and material deprivation, in particular, it is the unemployment. for the persons not employed, the exposure to the risk of unemployment is equivalent, for the most part, with exposure to a risk of poverty. the greatest exposure to the risk of poverty was registered in 2007 in the case of the 25-49 years old but very high weights are for the all segments of the population (tab.3). it is significant that although the crisis has affected all the 30 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro economic entities, this type of risk decreased in the case of unemployed by the year 2011, increasing again in 2012, but not to the levels of 2007. figure 3 & 4 people at risk of poverty or social exclusion by status, sex and age – employed persons, in romania (%) source: processed by www.eurostat.com, 15.06.14 the only segment of the population whose exposure to the risk of poverty has increased in 2012 compared with 2007 is the specific to the fullness period in an individual's active life, respective 25-49, from 64.3% to 65.9%. table 3 people at risk of poverty or social exclusion by status and age – not employed persons, in romania (%) status and age 2007 2008 2009 2010 2011 2012 not employed persons from 18 to 24 years 43.9 40.6 39.0 39.7 40.7 43.3 not employed persons from 25 to 49 years 64.3 63.0 61.8 61.5 60.9 65.9 not employed persons from 50 to 64 years 55.5 51.4 50.4 49.2 44.7 47.4 not employed persons 65 years or over 56.2 48.4 42.9 39.3 34.5 35.1 source: www.eurostat.com, 15.06.14 taking into account, at the same time, the criterion: occupational-status unemployed, sex and age, we noted (fig.5.,6): the most exposed at risk of poverty are, for the whole analized time, the unemployed people, men, in the 25-49 years segments, closely followed by the women of the same age segment; a vulnerable segment of age to this type of risk is the one between 50 and 64 years old, the most vulnerable in the case of the unemployed women and less vulnerable in the case of the unemployed men; both the men and the women from young people segment (18-24 years old) are in large proportion, over 40% of the young population, exposed to the risk of poverty but in less proportion than the segments of age referred to; the segment of over the 65 years age, not employed is the most exposed to this risk, regardless of gender of person. from the economic, social, psychological point of view it is important to the persons in this situation but reduced size of this segment of population given retirement from economic life of most people after 65 years, it does not create the great problems of the macroeconomic scale. another criterion of the segmentation of the market is the degree of urbanization. statistical data show that the exposure to the risk of poverty is the most “powerful” in 31 danu the case of persons residing in areas with low population density. in our country, in the 2007, 56% of the population resident in human settlements with low density was affected by this risk; the dynamic of this indicator has been declining up to the year 2011 and increased again in 2012 (tab.4). figure 5 & 6. people at risk of poverty or social exclusion by status, sex and age – not employed persons, in romania (%) source: processed by www.eurostat.com, 15.06.14 a high risk of poverty has occurred in the 2007, in the case of persons residing in places with medium density (55%), significantly reducing up to the 2012, at 35,7%. the lowest values of this type of risk are specific to the resident population in localities with high density and the concentration of the population. the reason: accessibility of workplaces, commercial areas, multiple and diversified choices. table 4 people at risk of poverty or social exclusion by degree of urbanisation, in romania (%) degree of urbanisation 2007 2008 2009 2010 2011 2012 densely-populated area 29.6 28.9 29.8 29.4 28.4 29.5 intermediate urbanised area 55.0 43.2 35.4 35.9 39.5 35.7 thinly-populated area 56.0 53.6 51.1 48.7 47.4 54.8 source: www.eurostat.com, 15.06.14 the poverty is one of the contemporary romanian economy problems as a result of types of produced risk (system of risks) during this time or having the lost premises in the history of this places and to the people from this space. the psychological dimension of the poverty is not one to ignore, on the contrary; both from the causal point of view as well as that effects. the cultural coordinates of individuals, the fundamental values respect for work, honesty, involvement, devotion and desire to take risks, always searching the formula of life who brings the material satisfaction and fulfillment spiritual are notable to counteract the risk of poverty. an important role has, however, the quality of the national business environment economic, social, legislative, political by the macroeconomic policies initiated and implemented in each stage of the development of the economy. by cohabitation of the two sizes endogenous, personal and exogenous (national, international) – the risk of poverty can be reduced, as far as possible, or heal with the economic policies and social protection policies. 32 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the effects of poverty on consumption in romania due to increasing of the macroeconomic instability, the decrease in the level of income, purchasing power, etc. the economic crisis manifested in romania has left deep traces in a large part of the country's population, decreasing the standard of living, its quality of life. even now at the 8 years from the accession of romania to the eu, the economic and social disparities persists and spreads over the entire economic system. diminishing the purchasing power of the population, installation of poverty for a significant part of the population, poverty of youth, the unemployment and the problems generated by it, life carried on the edge of subsistence for the majority of the rural population, the material deprivations of pensioners etc. have changed the consumption patterns resulting in reduced of the products and services demand for the population, reduction of supply. the reality reflects that the average of the consumption expenditure of the romanians are comparable, within the eu, only with those of the bulgarians (stanciu, 2010). the comparisons between the consumption basket of romanians and other european shows both the poor content of this as well as the very large gaps between the romanians and the other europeans, in the consumption of goods and services for health, education, culture, entertainment, etc. in the economic crisis years, the options of the consumers at least those which reflect more intense the subjective stimuli act of consumption have been obviously affected, due to the socio-economic barriers. it was noted that as a general rule, in the most prosperous years, most consistent segments of consumers will be able to exercise more freely the power options, the economic pressure may be low but in the last few years most of the population of romania "understand the socio-economic restrictions imposed on more intense". the pattern of national average consumption recorded the deviations of the values of its analytical indicators, in relation to the normal propensity for consumption of the population adopting certain pattern of consumption. these deviations were manifested not only in the consumption of food goods but also at the level of compulsory payments (tax) or utilities costs. consumer behavior of the population was folded on the objective conditions of life of household and depending on macroeconomic policies. the main trends and phenomena in the past 20 years, from this point of view, were the following (stanciu, 2010): polarization of the acces of population to goods and services consumption; in the 1990s, romania took the last place in europe in terms of acces of the majority of population to necessary goods and services for a decent life; the population belonging to vii-x deciles of income, showed a consumist type behavior, with extreme emphases during of economic growth since the year 2000; national consumption pattern has recorded the highest weights of the consumption expenditure in terms of food consumption; the main characteristics of the national consumption model derived, for the most part, the behavior of households of employees, but also of that of the households centred on the agricultural activities, total or partially. the situation has not fundamentally changed in recent years marked by the economic crisis. by analysing the 3 segments of the population, during the 2007-2011, reflected in segments of consumer at the level of the romanian market respective unemployed persons, farmers, pensioners, i found that: the monetary expenses of the segment of unemployed persons have evolved on a increasing trend, from 1154.5 lei/ month/ household at 1631.34 lei/ month/ household (fig.7); 33 danu the total consumption expenditure of the segment of unemployed persons have had a positive dynamic, increasing from 931.84 lei/ month/ households at 1310.60 lei/ month/ household (fig.7); in the composition of the expenditure of consumption, food goods exceed, in all the years of analysis, 45% of the total consumption, to which is added approx. 8% concerned of the consumption of alcoholic beverages and tobacco, all these by highlighting the extremely low standard of living (fig.8); the expenditure for housing service, utilities, etc. occupy the following position recording a consistency increase in the last years, reflecting the concern about this segment of the population to ensure not only the survival but also the safety of home; the expenditure on clothing and footwear recorded the largest decrease signifying the low concern of the segment of unemployed for clothing and image; the transport and communication expenditure have not seen a downward trend but were placed at approx. 5% of consumption of this segment; the expenditure on education are very low in all the years, 0.7% in 2011, reflecting a significant barrier in training young people from these household. figure 7 & 8 dynamic of the expenditure – case of unemployed, in romania lei/ % source: processed by www.insse.ro notable for the identification of the behaviour consumer to those exposed to the risk of poverty, is the segment of farmers. in this situation, during the 2007-2011, the financial expenditure have had an increasing trend, from 1228.89 lei/ month/ household to 2002,3 lei/ month/ household much surpassing the financial situation very precarious of the unemployed persons (fig.9). total consumption expenditure of farmers have seen a significant increase, with 50.28 %, from 779.4 lei at 1171.32 lei. in the composition of expenditure of consumption (fig.10), the food expenditure decreased from 56.5% to 54.4% to which is added 9% respective 9.4% expenditure on alcoholic beverages and tobacco; these expenditure have the largest weights in the total consumption compared with other segments of consumers and illustrates the precariously character of the life of the majority population of the rural roumanian environment, mainly. a small proportion hold the expenditure on clothing, down from 5.8% to 4.9% and the housing maintenance and furniture expenditure 3.2% in 2011. the percentage 1.8% of total consumption allocated in 2011, to health and 0.2% allocated to education confirms the lifestyle remained at the level of the basic needs of the individual and very large discrepancies compared with the developed countries of the eu. 34 http://www.insse.ro/ studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the segment of pensioners had, as well as other segments of the population, a trend of increasing the monetary expenditure, from 1170.31/ month/ household to 1805.36 lei/ month/ household (with 54.26%) (fig. 11). figure 9 & 10. dynamic of the expenditure – case of farmers, in romania lei/ % source: processed by www.insse.ro figure 11 & 12. dynamic of the expenditure – case of pensioners, in romania lei/ % source: processed by www.insse.ro the total consumption expenditures have increased from 880.99 lei to 1330.71 lei (51.04%) highlighting increasing prices on products in the consumer basket. in the structure of the consumption (fig.12), prevails, as in other cases affected by the risk of poverty, food expenditure, totaling, in 2011, 49.9%. the expenditure on housing, water, electricity, gas and other fuels occupies a high, much higher percent than the other segments presented in this paper, respective 17.1% in 2007, 17.9% in 2011. the concern for the strict needs of housing but also the discipline of payment of the utilities are the main reasons of the weights in the structure of consumption. a significant share compared to other segments of the population, occupy the health expenditure, 8% in 2011, justified by the age specific issues. as in other cases, the expenditure for cultural services, education, communications, etc. dealing with small or very small weights, declining in the years marked by crisis. by analysing the situation of the three segments of consumers exposed at risk of poverty, we notice at least one conclusion: the high consumption of food goods, 35 http://www.insse.ro/ http://www.insse.ro/ danu determined both by the model of consumption, quantity and the high price levels. in our country, the pattern of food consumption of the population is characterised by (stanciu, 2010): relatively high weighted of the food expenditure in total expenditure of consumption, due to the relatively high of prices of food; relatively high weighted of the food consumption of agricultural production of their own households (reduced marketing of the rural economy); an excessive consumption of cereals and potatoes food with relatively low nutrient potential and an increased risk for the emergence of diabetes, under stress intense; an excessive consumption of alcohol, tobacco and fats, having the negative effects such as: incidence of diseases such as cancer, cardio-vascular diseases, tuberculosis and diseases of nutrities; alcoholism causes serious psycho-social problems; at least 2.5 % of the population of the country is suffering from malnutrition chronic; the relatively low presence of the indigenous ecological markets in the formation of daily food basket of households. over the last years, people of romania has allotted approximately half of the expenditure of consumption in foods more than half, in the very difficult economic years (55.8% in 2001), and between 45-50% in the most prosperous years, by placing our country among the european countries with a strong tension pattern of consumption at the level of consumption of the various chapters of the expenditure, primarily caused the food chapter. conclusions the economic and financial contemporary crisis has deepened the problem of poverty and multiplied both the causes and its effects. some and others interferes in the eu system and, further, in the system of world economy. therefore, the poverty, is not only a point problem, with the point resolutions. furthermore, the causes are not only economic but combined economic, social, political, social, psychological, naturals. always, however, prevailing the economic nature of poverty but causes and its effects too. it is a european problem, unfortunately developed once to the crisis, and no solution yet. in romania, the poverty reflect not only a precarious economic and social situation of those in question but also the discrepancies between social segments of the society level, the discrepancies deeping by the economic and social policies insufficient folded on romanian reality, on the national culture, and especially on the natural, human, spiritual potential of the country. references constantin, m., alecu, i. (2012), cheltuielile și consumurile alimentare din românia, revista română de statistică trim. i/2012 – supliment. european commission (2013), european social statistics, 2013 edition available at www.eurostat.com. european commission, sustainable development in the european union, available at http://epp.eurostat.ec.europa.eu/. intitutul national de statistica, anuarul statistic 2012, available at http://www.insse.ro/cms/ro/content/anuarul-statistic-2012, 2011. 36 http://www.eurostat.com/ http://www.insse.ro/cms/ro/content/anuarul-statistic-2012 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro stanciu, m. (coord) (2010), consumul populației din românia, editura omnia uni sast, brașov. 37 microsoft word apostoaie constantin marius_eng.doc absorption capacity of structural funds in romania popa florina, the institute of national economy abstract the ability to finance and absorb more efficiently eropean union funds has an important role in the process of real convergence of romania, reported to the european union, and recovery of gaps to other member states. the study reveals both the essential elements of the absorption capacity and cofinancing, as well as the challenges related to structural funds absor ion. finally, we try a case study on romania, with regard to the degree of european funds absorption, made on the basis of statistics, in development (2007-2011). keywords structural funds, degree of absorption, co-financing. jel codes: r0, r38, r58 general approach the absorption of european union funds, sensitive issue for the current stage of development of romania, is an important process for the real convergence that romania must meet in relation to european union, recovering the gaps from other member states. absorption capacity expresses the degree to which a country is able to spend effectively and efficiently, the financial resources allocated through the structural funds. achieving this objective depends on the one hand, on the ability of the institutional system established by that state to administer the funds in question, and on the other hand, on the beneficiaries potential to whom they are addressed, to create projects and to co-finance. to be eligible for assistance from structural instruments of the european union, does not necessarily guarantee the success of romania, but the key is represented by its capacity to fund and to absorb funds in an effective manner, respecting all the conditions laid down in regulations on structural instruments. at a country level the are three aspects of capacity: macroeconomic, administrative, financial. macroeconomic absorption capacity is defined in relation to gross domestic product, which involves: limiting the yearly structural and cohesion funds amount of which a member state may benefit at 4% of gdp1; the need to increase budget expenditures as a result of accession; since 2007 romania have had to ensure the budget expenditures to 2% of gdp higher than the previous period2, 1 coord. gheorghe oprescu institutul european din românia – studiile de impact iii analiza capacit ii de absorb ie a fondurilor europene în românia citeaz „regulamentul consiliului nr.1260/1999 , www.ier.ro 2 idem 1 studies and scientific researches economic edition, no. 15, 2010 266 determined strictly by the obligations undertaken in the context of european integration, respectively: the contribution of romania to the european union budget, the amounts allocated from the national budget for co-financing of some measures and priorities financed by european union funds. administrative absorption capacity it refers to the ability of central and local authorities to prepare plans, projects and programs in a timely manner, to organize an effective partnership, to meet the administrative obligations, to finance and supervise the implementation process, avoiding irregularities. to strengthen the administrative capacity, there are necessary investments to help improve the policy and decision-making process, at the level of public management, create the performance of the institutional system, competence and motivation of human resources, improvement of quality standards in the provision of public services. fulfilling these elements can make the public central and local authorities, important players in the process of funds absorption. this implies: institutional development. it is needed an institutional convergence able to absorb european union funds and to ensure good governance at all levels, to interact effectively with governance at european union level, wich means strengthening the administrative capacity to ensure the necessary co-financing by local authorities. for romania, there has been created a number of appropriate institutional structures; the coordinator of management authorities which manages the structural funds is the ministry of economy and finance. for each operational programme there are management organizations, represented by ministries. qualification and motivation of human resources refers to the ability to estimate and recruitment of necessary personnel, his qualification, providing in advance, an experienced and motivated personal being one of the determining factors for successful funds management. transparency in the management of european funds. without the existence of a system for monitoring the european union financed projects, can not be made effective coordination of them. this includes: responsibilities and tasks sharing to institutions or to their units and departments, taking into account the phases related with the stages of the structural funds running: management, programming, implementation, monitoring and evaluation. each country organizes its institutional structure according to the local specific; the purpose is the efficient use of community funds. one of the new changes emerging in the public administration principles is the intercommunality concept. the measure consists in cities and regions joining for the purpose of necessary budgetary resources establishing, to support major infrastructure projects. cooperation of local authorities makes it possible to run large projects, at european standards, where each, severally, would not have the necessary resources. financial absorption capacity it expresses the central and local authorities opportunities to co-finance programs and projects supported by the european union, to plan and ensure such internal contributions in annual budgets, to collect them from the partners involved in a project or programme. co-financing, a factor of influence of absorption capacity, constitutes a basic principle of cohesion policy and it considers the supplementing of the community assistance grants, by the financial contribution of member states. the beneficiaries of structural funds must support some of the costs of drawing up and implementing the proposed projects, and funds may come from government resources of public central and local authorities, other state resources, or private funds. studies and scientific researches economic edition, no. 15, 2010 267 romanian ability of co-financing involves government responsibility to ensure the cofinancing of costs with implementation of cohesion policy; this commitment of both technical and political kind, is to identify co-financing problems that beneficiaries encounter and to take necessary measures. the aim is both to find solutions for ensuring the necessary funding, and to create conditions to attract private investment. public co-financing is ensured from the central or local budgets of state, by other public institutions or associations of public institutions. if the budgetary resources are insufficient, may resort to borrowing from the domestic or foreign bank market. as regards the effort to co-finance of the public local authorities and of the local council (as a regulator) and hall (as executive), there are a noticeable number of issues that characterize the possibilities of absorption in this sector. a) the need for increased resources for funding generated by several factors: increased responsibilities without a corresponding allocation of resources. the promoted decentralization by the process of integration requirements, as well as the local political imperatives brought to public authorities, more delegated powers, not always accompanied by appropriate resources allocated; massive investment requirements resulted from the accession to the european union, in particular, in the environment and infrastructure area, where local public administrations will have to contribute through necessary co-financing, to obtain community funds. b) main sources of co-financing which may be considered by local governments, consist of: increasing the amount of own resources from tax incomes, based on the increase of local taxation base, which means the local economic power growth; raising loans. c) banks have an important role in providing funds for applicants who need them, to supplement their own sources while financial institutions offer is materialized into the loan and bank letters guarantee. d) the conditions for loans obtaining by local authorities, as well as their capacity of loans repayment, involve take into consideration several issues: the level of local authorities indebtedness is limited, so that they can not trust credits or letters of bank guarantee if the annual debt service for the whole portfolio, is achieving a rate of 20% of the own revenues3; the loans repayment source is from their own revenues, rates, interests and commissions and it must be reflected in the structure of local budgets expenditures, throughout the loan. case study. the degree of european union funds absorption in romania romania's capacity to absorb european funds, has proved to be reduced, and the comparison with other member states at a similar moment, draw a warning, regarding the modest place occupied by romania, in comparison with other european countries. thus, in the first year of accession, according to analysis made by the romanian national bank, the rate of absorption was only 21,7%, while other admitted countries in 2004, like the czech republic, poland, slovakia, hungary, recorded a nearly double, around 42% in the year in question. in that romania managed to draw only 0,440 billion euros in 2007, in the allocated amount of 2,0 billion euros, while the contribution to the european union budget was 1,2 billion euros, put our country in a situation of net contributor; also, it is the only member state that found in this situation4. data below, shows the years staggering of romania's contribution to the european union budget, compared with the allocated amounts. 3 idem 1 4is rescu mugur (2008), atragerea fondurilor europene în românia i perspectiva economico–financiar în 2008, banca na ional a româniei, www.bnr.ro; studies and scientific researches economic edition, no. 15, 2010 268 table nr.1 total allocated european union funds and the contribution of romania to the european union budget 2007-2011 2007 2008 2009 2010 2011 mld. eur % în pib mld. eur % în pib mld. eur % în pib mld. eur % în pib mld. eur % în pib 1total allocated european union funds 2,0 1,7 2,9 2,2 3,9 2,5 4,3 2,5 4,5 2,4 2 the contribution of romania to the european union budget 1,2 1,0 1,4 1,0 1,2 0,8 1,3 0,8 1,3 0,7 sursa: mugur is rescu(2008)– “atragerea fondurilor europene în românia i perspectiva economico – financiar în 2008”, banca na ional a româniei, ministerul economiei i finan elor, institutul na ional de statistic , comisia na ional de prognoz , www.bnr.ro in graphical below representations, the purpose is to strive for the change of net absorption ("+") and, respectively, net contribution ("-"), depending on the drawn funds, considered both at the actual amount (in 2007) and at virtual values, per year. notice: fa – funds wich are allocated to romania cr – romanian contribution ft – drawn funds an/cn = ft –cr, in which: an = net absorption, if ft-cr > 0 (ft>cr) cn = net contribution, if ft-cr < 0 (ft<cr) year 2007 fa = 2,0 billion € cr =1,2 billion € it is considered fft function, defined on the [0, 2] interval, representing all the possible values of ft, with values in the [-1,2, 0,8] interval, representing all the possible values of an / cn. fft: [0, 2] [-1,2, 0,8] f(ft) = an/cn = ft-cr. fig. 1 net contribution (-), neutral position, net absorbtion (+), for 2007 -1,2 -0,76 0 0,2 0,8 -1,2 -1 -0,8 -0,6 -0,4 -0,2 0 0,2 0,4 0,6 0,8 0 0,44 1,2 1,4 2 ft an/cn an/cn studies and scientific researches economic edition, no. 15, 2010 269 own chart. data from: mugur is rescu( 2008)– “atragerea fondurilor europene în românia i perspectiva economico – financiar în 2008”, banca na ional a româniei, ministerul economiei i finan elor, institutul na ional de statistic , comisia na ional de prognoz , www.bnr.ro and virtual data. notice: ft = 0,44 billion € effectively drawn amount in 2007, cn = -0,76 billion € – net contribution in 2007. if ft takes values in the range [0, 1,2) net contribution if ft = 1,2 neutral position; if ft takes values in the range (1,2, 2] net absorption. year 2008 fa = 2,9 billion € cr = 1,4 billion € fft: [0, 2,9] [-1,4, 1,5] f(ft) = an/cn = ft-cr. a n / c n 1 , 4 0 , 7 0 0 , 6 1 , 5 2 1 , 5 1 0 , 5 0 0 , 5 1 1 , 5 2 0 0 , 7 1 , 4 2 2 , 9 f t a n / c n fig.2 net contribution (-), neutral position, net absorbtion (+), for 2008 own chart.. data from : mugur is rescu (2008)– “atragerea fondurilor europene în românia i perspectiva economico – financiar în 2008”, banca na ional a româniei, , ministerul economiei i finan elor, institutul na ional de statistic , comisia na ional de prognoz , www.bnr.ro and virtual data. notice: if ft takes values in the range [0, 1,4) net contribution if ft = 1,4 neutral position; if ft takes values in the range (1,4, 2,9] net absorption. year 2009 fa = 3,9 billion € cr = 1,2 billion € fft: [0, 3,9] [-1,2, 2,7] f(ft) = an/cn = ft-cr. a n /c n 1 , 2 0 , 6 0 0 , 8 2 , 7 1 , 5 1 0 , 5 0 0 , 5 1 1 , 5 2 2 , 5 3 0 0 , 6 1 , 2 2 3 , 9 f t a n / c n fig. 3 net contribution (-), neutral position, net absorbtion (+), for 2009 studies and scientific researches economic edition, no. 15, 2010 270 own chart.. data from: mugur is rescu (2008)– “atragerea fondurilor europene în românia i perspectiva economico – financiar în 2008”, banca na ional a româniei, , ministerul economiei i finan elor, institutul na ional de statistic , comisia na ional de prognoz , www.bnr.ro and virtual data. notice: if ft takes values in the range [0, 1,2) net contribution if ft = 1,2 neutral position; if ft takes values in the range (1,2, 3,9] net absorption. year 2010 fa = 4,3 billion € cr = 1,3 billion € fft: [0, 4,3] [-1,3, 3] f(ft) = an/cn = ft-cr a n / c n 1 , 3 0 , 7 0 1 , 7 3 2 1 , 5 1 0 , 5 0 0 , 5 1 1 , 5 2 2 , 5 3 3 , 5 0 0 , 6 1 , 3 3 4 , 3 f t a n / c n fig. 4 net contribution (-), neutral position, net absorbtion (+), for 2010 own chart.. data from: mugur is rescu (2008)– “atragerea fondurilor europene în românia i perspectiva economico – financiar în 2008”, banca na ional a româniei, ministerul economiei i finan elor, institutul na ional de statistic , comisia na ional de prognoz , www.bnr.ro and virtual data. notice: if ft takes values in the range [0, 1,3) net contribution if ft = 1,3 neutral position; if ft takes values in the range (1,3, 4,3] net absorption. in the above examples we have imagined theoretical situations, where, in the the given interval of drawn values, the absorbed amounts would be equal to "0"; equal to the payable sum as the contribution to european union funds; equal to the sum allocated to romania; as well as two other intermediate values. favorable situation, that is net absorption, appears only when the drawn amounts are greater than the contribution to european funds. conclusions one of the challenges of governance is to ensure maximum efficiency in linking policy, by the minimum intervention of state in the economy, in particular, paying attention to the regional and national level specific, seeking an efficient allocation of resources and priorities establishing. to overcome obstacles and, ultimately, to meet the post-accession challenges is required the fulfil of purposes, such as: regional development by creating the conditions necessary to stimulate economic growth of less developed regions, the promotion of sustainable economic and social development. there is requirement of necessary investments in infrastructure, transport, energy, social studies and scientific researches economic edition, no. 15, 2010 271 investment (health, education), environment, tourism investments. in fulfilling of these objectives, there is rop (regional operational programme) with any destinations on the priority axes. government must find solutions to ensure the level of public co-financing and to create conditions to attract private capital investment. romania has the opportunity to decide the rate of funding per project taking into account the balance of the all operational program in question; therefore, authorities should decide the extent of supporting projects, at 100% of community assistance, to be taken on the sectors which have real value added in the process of economic development, or in the sectors where the potential beneficiaries have difficulty in providing their share of cofinancing. it is essential the training and developing of professional stable civil servants, to contribute to a more efficient administrative system and to the improving of relations between the administration and civil society. values that the public function and civil servants management must take into account are the professionalism, performance of civil servants, administrative transparency, and neutrality in political, team spirit. given the difficulties of local governments to ensure necessary co-financing resources, the easiness for local governments access to financing, by taking the measure to increase the debt ceiling, would mean a concrete granted support for them, conditional on the existence of guarantees property insurance; these measure should be taken with caution, so as not to reach the situation where the government is obliged to support the effort for repayment of loans. in essence, one can say that the use of european union funds is an opportunity for economic development of romania, in the context in which their use would mean an annual influx of capital with a significant share in the gross domestic product. reference: 1.barascu magda (2006), nivelul de absorb ie nu se situeaz la nivel suficient, studiu pais ier, www. euractiv. ro, www ier ro; 2.barascu magda (2006), totul despre fondurile structurale, www.euractiv.ro; 3.david cristian, importan a fondurilor structurale pentru dezvoltarea local i regional în românia, www.aor.ro; 4.folcut gabriela (2007), fondurile structurale sporesc atractivitatea româniei, www.standard.ro; 5.is rescu mugur (2008), atragerea fondurilor europene în românia i perspectiva economico– financiar în 2008, banca na ional a româniei, www.bnr.ro; 6.oan daniel, is rescu: d m mai mult la ue decât încas m, www.cotidianul.ro 7.oprescu, gheorghe (coordonator), analiza capacit ii de absorb ie a fondurilor comunitare în romania, institutul european din românia, www.ier.ro; 8.manole florin (2006), importan a înt ririi capacit ii institu ionale în crearea condi iilor pentru absorb ia fondurilor, gardianul, www.gardianul.ro; 9.manole florin (2006), dezvoltarea institu ional , esen ial pentru absorb ia fondurilor structurale, gardianul, www.gardianul.ro; 10.marinov vasil, bahloul hachemi, slay ben (2006), structural funds and the new member states: lessons learned, www.undp.bg, www.developmentandtransition.net; 11.ministerul educa iei i cercet rii, direc ia organism intermediar pos dru (2006), principiul parteneriatului din perspectiva fse, buletin informativ pos dru nr.4, http://www.umftgm.ro, www.eufinan are.info; 12.pa a florina (2007), reforma institu ional în administra ia public , economie i administra ie local , nr.6; 13. tefan dan (2008), comentariu la studiul publicat de bnr – absorb ia fondurilor europene la mai pu in de jum tate fa de ungaria i polonia, cronica român , www.cronicaromân .ro; 14.(2008), primul an al româniei în uniunea european , raport anual, www.sar.org.ro; 15.programul opera ional asisten tehnic capacitatea de absorb ie, www.fonduri.structurale.europene.ro; 16.(2006), despre procesele prealabile acces rii fondurilor, www.managerul.ro, hotnews.ro; 17.cadrul na ional strategic de referin 2007-2013. sintez , www.mefromania.ro; studies and scientific researches economic edition, no. 15, 2010 272 18.(2007), fondurile structurale – o povar paradoxal . românia va avea 30 miliarde de euro greu de cheltuit, www.finan aretransparen .ro; 19.(2008), danuta hubner – românia trebuie s respecte regulile în gestionarea fondurilor uniunii eueopene, www.euractiv.ro; 20. (2008), perioada de înc lzire în absorb ia fondurilor mai ine un an”, www.dailybusiness.ro; 21.http://media.hotnews.ro; 22.(2008), strategia na ional anticorup ie în administra ia public local pentru perioada 20082010”, www.e-transport.ro; 23.(2007), fondurile europene post-aderare”, www.ccia-es.ro; 24.(2005), primul ministru – c lin popescu t riceanu dezbaterea privind reforma administra iei publice locale, www.gov.ro . 25.(2007), absorb ia fondurilor europene este condi ionat de informatziarea administra iei publice locale, bucuresti, ascenta, www.prwave.ro, www.ascenta.ro; 26. atragerea fondurilor europene e una dintre cele mai importante probleme ale româniei, bussiness standard, www.bussinessstandard.ro. studies and scientific researches economic edition, no. 15, 2010 273 microsoft word apostoaie constantin marius_eng.doc modeling and simulation of economic processes bogdan alexandru brumar, alma mater university of sibiu, romania abstract in general, any activity requires a longer action often characterized by a degree of uncertainty, insecurity, in terms of size of the objective pursued. because of the complexity of real economic systems, the stochastic dependencies between different variables and parameters considered, not all systems can be adequately represented by a model that can be solved by analytical methods and covering all issues for management decision analysis-economic horizon real. often in such cases, it is considered that the simulation technique is the only alternative available. using simulation techniques to study real-world systems often requires a laborious work. making a simulation experiment is a process that takes place in several stages. keywords integration of economic process, ontology, transition system, optimization methods. jel codes: c 63 general issues concerning technologies of economic simulation in this new millennium application integration concepts, techniques and technologies have become couples being able to sustain rapid economic change. to isolate the context of the complexity of integrating applications, such tactics and technology, this new phase will be referred to the integration of economic processes. responding to change has rapidly become the number one problem of economic processes. pressures for change occurring in all directions, and how the response of economic processes is quickly discernible results. once the organization acquires and develops new applications to keep in touch with change, enterprise application integration (eai) is a major tool to integrate existing applications (raţiu-suciu, 1999). moreover, in many cases the approach is oriented tactical and technology, by making simple bridges between one application and another. although the immediate problem was solved, the base than the new wave of change. it appears as a constantly changing economic environment and support that the it environment. time restrictions, in particular, determines the reuse of existing systems and climate change is driven by the need for a strong architectural foundation to enable the prompt, try to define the field of applications in this context becomes more complicated. implementation of specific components of economic processes distributed systems customers and partners throughout the value chain. relations must be established and separated very quickly. economic integration is not a phenomenon purely technical substance, it needs a hierarchy of economic processes, applications and technical levels, with shared concepts and interfaces between them to be accepted by all participants. it recommends a service oriented approach to establish mutual agreement between the economic and it. ultimately, success depends on the adequacy of the fundamental economic and it goals. it strategy needs to be aware of all the factors affecting the decisions of economic integration processes such as configuration of economic processes, their borders and place where change studies and scientific researches economic edition, no. 15, 2010 322 is most likely to occur. understanding economic goals, such as merger and acquisition strategies or cost and increase efficiency, appears as a fundamental key (popescubogdăneşti, 1999). in general, the scientific study of a system or phenomenon can be done by doing real or artificial. economic, real experimentation is rare because it involves high costs and risks, while artificial testing, although sometimes requires great intellectual and financial effort, will ensure that real situations with sometimes catastrophic implications. for such problems, disciplines such as: systems theory, decision theory, operational research, economic cybernetics, etc. use appropriate mathematical models. often in such cases, it is considered that the simulation technique is the only alternative available. using simulation techniques to study real-world systems often requires a laborious work. making a simulation experiment is a process that takes place in stages. the main stages of the simulation are: analysis and synthesis systems and processes;; conception and model design; scheduling model simulation; validation of the simulation model; simulation itself; analysis and results implementation. economic modeling provides managers vigorously its side (“science of driving”), multiple ways of reconciling the resources (material, human, financial) available to the objectives formulated for a certain period of time, giving him the opportunity to find and to decide “better” and “faster” without distorting reality (stoica m., 1994). the process of transition from the real system to model simulation obtaining information about the system “before” it can be done in concrete is possible with simulation technology. simulation is a technique for making computer numerical experiments, involving construction of mathematical and logical models that describe the behavior of a real system (or of its components) over a period of time. simulation needs to generate inputs and taking into account the internal states of the system by appropriate algorithms to determine the outputs and to describe over time the internal state of the system. while not providing exact solutions (but sub-optimal), simulation is an effective research technique for complex economic issues at company level, can not be studied analytically (economic-mathematical methods of optimization). using simulation to obtain several versions of a decision of the manager will choose the best corresponding current circumstances at some point. consequences of real experience, without experience "simulated", can sometimes be harmful to business management. if an existing system (company, enterprise), its behavior can be provided by a simulation model that highlights the effect of the change of parameters describing the system. the simulation work involved three major elements, namely the real system, model, computer and two relations: relations modeling and simulation relations. “real system” is human perception system. the “real model” means the replacement of real system and corresponds, in principle, with the original system. the “abstract model” made the transition from “real system” to “real model”. it replicates the real system by decomposing basic system parts and establishes links between them. the validation is done by determining the consistency of data from the real and model provided. because in real systems trends are influenced by random causes whose effect must be demonstrated in the simulation model, one of the important mathematical problems of numerical simulation is generated using computer statistical selection of the various random variables and statistical processes (văduva i., 1983). studies and scientific researches economic edition, no. 15, 2010 323 another important issue related to building simulation models is the evolution of states cronometrării simulated system. simulation algorithm must contain a variable called “simulation time” which is subject to a finite number increases during the simulation. today attention is given to simulation of economic activity. known methods for generating random variables of different types of mathematical models for simulation of economic processes and to build practical simulation models are now software packages and specialized computer languages. simulation is the technique of making computer experiments, involving the use of mathematical and logical models that describe the behavior of a real system (or some of its components) over a period of time. known variants of simulation: simulation type game and monte carlo analysis. simulation type game refers to those situations that are characterized by a “conflict” between partners or between humans (which must take certain decisions) and nature (which offers more human variants that he will choose the one convenient). simulation type game has broad applications in problems of organization and management of economic activity. analysis of monte carlo simulation is a technique related to problems with more than random. monte carlo analysis was shaped as a field of mathematics itself, in connection with the settlement of purely deterministic problem that can not be solved by deterministic methods (văduva i., 1983). simulation models are classified into: deterministic, stochastic, static and dynamic. deterministic models are those for which all variables are nealeatoare, operational characteristics of such models will be assumed by some form equations instead of probability density. there are plenty of ways to solve for them and because of this simulation technique is not always required to solve them. stochastic models are those in which at least one variable input is random and therefore one of the operational characteristics is given by a density distribution. these models are more complicated than the deterministic, analytical techniques appropriate for their resolution is too low, and thus they will occupy an important place among the simulation models. static models are those which do not explicitly take into account the variable time. most of them are deterministic and their solutions can be obtained analytically. dynamic models are those which take account of variation and interaction while the variables considered and are therefore appropriate simulation of economic systems. simulation models are usually stochastic and dynamic models. decision support systems decision support system (dss) is essentially a coherent set of tools used in making decisions. the idea of multidimensionality, ie taking into account multiple criteria simultaneously leading inevitably to issues studied in class classification problems. to solve such a class of problems (identified in the literature by the so-called problem type) is called becoming more methods, techniques and tools (so-called procedures) mathematics, statistics and informatics. the following are some methods of calculation useful in solving problems most common type in the economic activity that incorporates: statistical analysis of experimental data, optimization in modeling complex decision-making, planning and control complex network projects, cost analysis -benefit analysis, simulation of complex decision (business / management games) etc.. experience shows that industrialized countries using economic and mathematical models and software performance coefficients results in significant increases in load capacity, significant reduction in stocks of materials, cuts transportation costs, saving material resources, financial, human and simplification collection operations and data processing. the objectives pursued by the use of ssd's in the disciplines of the curriculum are: studies and scientific researches economic edition, no. 15, 2010 324 economic integration mathematical models and computer facilities provided by the economic processes in research and research processes; training of users and implementers of ssd and reusable software applicable economic and technical management of production processes; training mathematical thinking (in essence triad model algorithm product program) that will allow the study of real problems and realistic solutions in terms of efficiency; usually models are classified into: verbal models, graphical models, mathematical models (raţiu-suciu c., 2002). in the literature are distinguished different classes of models: physical models, analogical, symbolic, mathematical, economic and mathematical, etc. an economic-mathematical model provides essential information to substantiate the decision cycle: forecast-simulation-optimization. modeling complex process of decision the complexity of economic processes requires detailed study of the issue decisions that take into account multiple criteria simultaneously. decision theory emerges as a subject of study around the years 1950 and from the outset and aims to become an effective logical decisions. depth studies in this area and complexity that require calculations made in a timely manner had a great impact on what we call today's decision support systems. decision theory considers that a decision process is characterized by the following elements: • decision criteria (points of view from which examines the issue); • the objective to be aimed; • decision-maker, that person or group of persons who seek to make the decision to achieve the best conditions of the objective or objectives; • set containing all possible alternatives for action to achieve the objectives considered; • crowd possible states, each state representing the complex of conditions that cause a certain impact for a particular alternative and a clear objective; • alternatives including possible consequences set exactly how many alternatives there are consequences (single state a condition of certainty), or several possible consequences of each alternative (more possible states conditions of risk or uncertainty); • utility they expect to achieve a decision-maker from certain consequences. current trends in the enterprise computerization the term "information society" is used to describe current changes (mutations) in all fields (economy, politics, culture, education, health, legal, trade, etc.). following widespread use of it & c. information society is to support computer networks providing access to digital data stored in text, sound and images (multimedia). intemetul, originally designed as a global information network, has become the global communications platform that provides storage of huge volumes of data and information and quick access to prices ever lower. the transition to information society divides traditional organizations and businesses in modern organizations using it & c and systems for businesses. great software producers (microsoft, ibm, etc..). develops technologies that allow building applications that operate in rural internet / intranet. for this purpose a company's computer system includes the following modules: entreprise relationship planning erp, which is a system that integrates key business processes that occur in business, namely: finance, resources management, purchasing, planning and monitoring production, sales. studies and scientific researches economic edition, no. 15, 2010 325 customer relationship management crm (the entire complex of interactions between the enterprise and its customers). crm facilitates the provision of services via internet, telephone, atm / kiosk etc.. e-commerce (e-business) business online in internet-access website of erp. ebusiness can take one of the forms: business-to-business (b2b), business-toconsumer (b2c), supply chain management (scm). business intelligence (bi) applications for collecting, storing and processing data for decision making. bi applications include activities such as: • decision suport systems ssd • online analytical processing olap • data warehouse • data mining. crm systems and e-business erp components interact to perform desired functions. in this respect, e-business (b2c or b2b) calling erp components for processing or processed by the erp data are regularly archived and processed data warehouse using olap tools, etc.. the test results are used by components bi to make decisions and to develop business plans. the enterprise is a system (a living organism) to evolve after its development law, in any business identified the following subsystems: research development, commercial, production, personnel and finance accounting. cropping system into subsystems (areas of study) is made as functions of the enterprise (popescu-bogdăneşti, 1999). the main task undertaken by the management company is to coordinate transformations in the sub set to achieve performance targets proposed in the system, provided it is known that any transformation entails changes. within each subsystem, within any enterprise, activity base has a specific frequency. for operational management activities necessary to ensure that the basic cycle activity can be collect and process data for the preparation of the decision together with the development, communication and tracking to implementing decisions relating to business cycles analyzed. in any company who has mastered the information flows ensured success. software development – concepts the development of computers, have built software for them, software that are increasingly complex. therefore, development cost, maintenance and use of a software system for solving problems has become quite expensive. current methodology for dealing with the computer is encoded in a program in computer memory. implementation of this program is described by repetitive structure: while((pc). opcode≠ halt) execute (pc); pc:=next(pc) here, pc is an index which is the current instruction address value of the program, execute () performs the operation encoded in instruction and function next () determines the address of next instruction program. computer programs are based on the repetitive structure when used for troubleshooting. the current trend is that a soft approach to human logic to solve problems. this approach must be accompanied by a learning methodology that uses previous experience to develop intuitive software system that solves a class of problems facing the areas. this can be achieved by a methodology of solving the problem where users manipulate computer processes instead of data representation and machine operations, following the logic of the problem instead to follow the logic machine running the program. handling processes computer users will have a higher level of abstraction, which are solutions to sub-problems of the problem data. it follows as a consequence that computer users must be provided maintenance populated specification mechanisms, tools and independent software components. studies and scientific researches economic edition, no. 15, 2010 326 specification mechanisms allow the user to adapt the issue without a formal framework, the tools are used to generate the correct software components correct specifications, independent software components are universal algorithms outside the scope of the class of problems specified and they operate on structures data generated by the tools and functions in the specification. programming languages be used to express the software system architecture that solves a class of problems in terms of independent components compatible with pse (problem solving environment). raţiu-suciu (1999) proposed a new application development methodology based on separation of the functionality of the software system architecture developed by this system. the system architecture is described by the language of description of architectures (architecture description language-adl), while the functionality of the system still is described by any high level programming language or low. adl's used by the computer user is problem-oriented field and is built to the highest level of vocabulary, which preprezintă problem domain ontology. each ontological term used by the adl is associated with one or more independent software components and these components implement functionality. current research led to the development of architecture description languages, a language such as that presented by garlan which was based on the following ontology: one area of application is characterized by a lot of software architecture called styles. a style specifies a family of related systems and defines a vocabulary of designs and types of elements which constitute the theme of values. types of elements determined to define a style are: components are computational units of the system. the components are equipped with interfaces called ports. connectors represent interactions between components. connectors are provided with interfaces called roles. systems, wich are graphs whose nodes are components and edges are connectors. system topology is defined by attaching explicit roles of ports and connectors to attach ports roles components connectors. an element can have one or more descriptions in terms of other elements, descriptions called representations. it contains a hierarchical description of architectures in terms of other architectures. an element can have one or more properties that represent semantic information. an element can have one or more constraints as system architecture can be developed while maintaining baseline. a problem solver uses a domain to express problem-oriented adl system architecture that solves the problem. an interpreter examines the architectural expression, localized functions that implement various components of the architecture, creating processes developed by these components and compose these processes in a process represented by architectural expression that solves the problem (văduva i., 1983). an environmental problem solving (problem solving environment pse) refers to a range of problem identified by: (1) a collection of specification mechanisms; (2) instruments operating mechanisms for specifying data and transforming them into corresponding operations parts; (3) components to solve classes of problems through universal algorithms in terms of data and transactions generated by the instruments. there is a dynamic relationship between the specifications, tools and components, where the tools can be used as components and parts can be used as instruments. the effect of this approach is a hierarchical methodology where problem-solving algorithms are decomposed in terms of more primitive algorithms above are implemented (raţiu-suciu c., 2002). studies and scientific researches economic edition, no. 15, 2010 327 the first step in the development of a language is to establish the ontology language and the second step in the development of language is the combination of ontology nodes with computational significance. but these are matters which are subject of another study of mine. conclusions in general, the scientific study of a system or phenomenon can be done by doing real or artificial. in the economic field, real experimentation is rare because it involves high costs and risks, while the artificial testing, although sometimes requires great intellectual and financial effort, will ensure that real situations with sometimes catastrophic implications. as long as the key instrument for achieving economic integration is the implementation representation of flows, classical design principles remain valid. sequencing activities to identify which services should be listed first (not necessarily the same) and should be used consistently (raţiu-suciu, 2002). for all these the programmers have created models and architectures, which in the early new millennium have resulted in managers dedicated software. it is about the formal languages, based on which they were created economic modeling and simulation. bibliography 1. popescu-bogdăneşti, c. (1999), sistemul informaţional al firmei în mediu concurenţial, ed. tribuna economică, bucureşti. 2. raţiu-suciu, c. (2002), modelarea şi simularea proceselor economice. teorie şi practică. ediţia a ii-a, ed. economică, bucureşti. 3. raţiu-suciu, c., luban, f., hîncu, d., ene, n. (1999), modelarea şi simularea proceselor economice. lucrări practice. studii de caz. teste de autoevaluare. ediţia a ii-a. ed. didactică şi pedagogică, bucureşti. 4. stoica, m., raţiu-suciu, c., mincu, c. (1994), modelarea microeconomică; ştiinţă & artă, ed. aisteda-omega press, bucureşti. 5. văduva, i., stoica, m., odăgescu, i. (1983), simularea proceselor economice, ed. tehnică, bucureşti. 6. www.boc-eu.com studies and scientific researches economic edition, no. 15, 2010 328 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro conceptual delimitations regarding the sales forecasting methods. case study for the seasonal coefficient method simona elena dragomirescu “vasile alecsandri” university of bacău dragomirescu@ub.ro daniela cristina solomon “vasile alecsandri” university of bacău daniela.solomon@ub.ro abstract one of the most important stages in the budget drafting process is the sales forecasting. as a matter of fact, the sales affect the whole activity of a company, their variation being considered the main risk factor for the performance and the financial position of the company. sales forecasting starts with analyzing the turnover over a longer period of time. it includes all the studies and calculations made in order to determine the potential market to which the company can get access, as well as the part of it that the company is estimated to cover. there are several methods for planning the amount of sales, each company being able to choose one or more such methods. all the sales forecasting methods have advantages and disadvantages; however, in practice it was proved that most large companies use a combination of several methods. however, when there are seasonal variations each year, the seasonal coefficient method is used in order to forecast the sales. the exemplification of this method is done on the level of an production industrial company. keywords sales budget; sales forecasting; sales forecasting methods; seasonal coefficient method jel classification m41 sales forecasting – the starting point in drafting the budget in the budget drafting process, the starting point is forecasting the sales activity. the sales budget is the forecast expressed in numbers for the company sales on types of products and services and/or groups, on quantities and prices, on destinations and periods of time. they will be regrouped on clients, regions, countries. the importance of drafting such a budget is given: on long term, by setting the investment plan and the financing plan; on medium term, by setting the expense budget pertaining to advertising and promotion; on short term, by determining the production level, the procurement plan, improving the workforce. in this context, we consider the sales budget as a support budget allowing the coordination of the other budgets. considering the time span criterion, there can be long-term or short-term forecasting. long-term forecasting is based on research done not only on the goods and services existing on the market, but also on the analysis of the existing or the virtual market needs in that particular field. on short term, the forecasting is limited to allowing for the external constraints imposed by the market, the competition or by the purchasing 102 dragomirescu, solomon power, as well as the internal constraints imposed by the company’s trade policy, the trade methods and by the current production capacity. in order to ensure the long-term success of the company, it is vital to have an accurate sales forecast. in the context of the information society, the modern organization cannot survive without having realtime information, from both inside and outside its (bucur, 2007). under these conditions, marketing studies will be done on the external environment (the general economic situation, the company’s position compared to the competition, the price level, the clients’ behavior and so on), as well as on the internal environment (the normal production capacity, the trade policy, the pricing policy etc.). presentation of the sales forecasting methods, according to the specialized literature the estimation of sales requires setting the level of the future sales, from the point of view of quality and value, considering the trends and the restrictions imposed to the company, as well as the general policy of the company. in order to avoid the empiricism of the forecasts, it is necessary to carry out some rational research. thus, the data processing and analysis must be done based on a logical, rational method. there are several methods for planning the sales volume, each company being able to choose one or more of them. as all the methods have both advantages and disadvantages, in practice it was ascertained that most great companies use a combination of these methods. a series of methods are presented in the specialized literature, among which we mention: the causal approach, when several variables with causal effect on the prospective sales are identified; the noncausal approach, according to which the planning is done by analyzing the data of the previous periods of time, based on the idea that the future results will follow the trend of the previous results; the direct method, which requires certain simple projections, without taking into consideration the trends of the industry within which the company functions and competes; the indirect method, as the opposite of the direct method, starts from the trends of the industry in order to forecast the percentage rate that the company aims to reach within the industry; the assessment methods (the manager’s opinion method or the information achieved from the sales staff or from the sales supervisors); the easiest forecasting methods, are based on the manager’s opinions, who collects the information directly from the executive board members, or on the projections of the sales staff/ sales department managers, the ones who get information concerning the demand directly from the consumers; some of the advantages of applying the assessment methods are that they are less time-consuming and less expensive; a great disadvantage is that they are based on opinions and not on facts; the statistical methods, as opposed to the assessment methods, are based on technical knowledge and on statistical applications; examples of such methods: the trend analysis, the analysis of the correlations, the preset goal method, the industry analysis method, the production line analysis, the analysis of the final user. according to the nature of the factors considered to be the origin of the phenomenon, the sales forecasting methods are divided into: qualitative methods, which research the phenomena and try to explain them based mostly on intuition (investigations based on questionnaires, marketing studies or polls and so on); 103 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro quantitative methods, which start for statistical data expressed in figures when setting the forecasts. in this category are included methods such as the linear adjustment, the correlation, the mobile average method, the seasonal coefficient method. the linear adjustment and the correlation can be applied in researching the general trends of the sales evolution, when the trend is linear. in those cases in which the linear adjustment is not suitable for setting the trend, the mobile average method can be applied, which is based on the idea that the forecast pertaining to a month or a year is an average of the sales for the previous months, any contingent fluctuations counterbalancing each other. when there are seasonal variations every year, in order to forecast the sales we resort to the seasonal coefficient method. theoretical aspects concerning the seasonal coefficient method in case there are seasonal variations every year, the estimation of the sales volume from the point of view of value and quantity is achieved using the seasonal coefficient method. the range of the seasonal variations is generally proportional to the trend. the seasonal coefficients can be set as trend reports, chains of reports, simple methods. thus: the trend report method requires setting some monthly average values of the real value reports and of the adjusted values calculated using method of least squares; the chain of reports method requires certain more complex stages, this method pertaining to the exponential trend cases; the simple methods require determining the monthly average values reported to the average of all the months. no matter which method is used, the seasonal coefficients calculated will be used to influence the monthly adjustment equation. case study concerning the sales forecasting in the case of a production industrial company, using the seasonal coefficient method within the “alfa” industrial company, the sales evolution in the case of product “x”, for the period of time 2010-2013 is as follows: table 1 historical data concerning the sales of product “x” years months 2010 2011 2012 2013 january 525 345 465 495 february 1.110 900 1.260 1.125 march 2.250 2.025 2.400 2.475 april 3.150 3.375 2.130 3.225 may 2.250 3.150 2.925 2.775 june 2.625 2.625 3.450 2.400 july 2.475 2.325 2.775 2.625 august 1.800 1.800 2.100 1.350 september 1.200 975 1.125 1.095 october 825 600 825 900 november 465 330 525 495 december 225 180 180 210 source: data from „alfa” production industrial company 104 dragomirescu, solomon graphic, the diagram of the sales evolution is presented in the following figure: figure 1 diagram of the sales evolution source: own calculations, based on the historical data concerning the sales of product “x”, for the period of time 2010-2013 the curve has a conical shape showing the seasonal evolution of the sales volume, the highest values being listed in the spring-summer months, and the lowest ones in the autumn-winter months. in order to do the forecast for 2014, we must go through the following stages:  calculating the total annual sales and the monthly average based on the real data: table 2 total annual sales and the monthly averages years 2010 2011 2012 2013 total annual sales 18.900 18.630 20.160 19.170 monthly sales average 1.575 1.553 1.680 1.598 source: data from „alfa” production industrial company  setting the monthly total values for the whole year 2013: table 3 monthly total values months monthly total values cumulated for the year 2013 january 495 february 1.620 march 4.095 april 7.320 may 10.095 june 12.495 july 15.120 august 16.470 september 17.565 october 18.465 november 18.960 decembers 19.170 source: own calculations, based on data from “alfa” production industrial company 105 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro  drawing up the table of the moving totals for the year 2013: table 4 table of the moving totals months moving totals for the year 2013 january 20.190 february 20.055 march 20.130 april 21.225 may 21.075 june 20.025 july 19.875 august 19.125 september 19.095 october 19.170 november 19.140 december 19.170 source: own calculations, based on data from “alfa” production industrial company  the sales evolution is graphically presented based on the historical data (table 1), as well as on the data concerning the cumulated monthly totals (table 3) and the table of the moving averages (table 4). figure 2 graphical representation of the sales evolution source: own calculations, based on data from “alfa” production industrial company  in order to determine the linear adjustment, we mark “xi” – the rank of the months of the four years and “yi” – the monthly sales (table 1). applying the method of least squares and determining the values of x and y , we calculate the coefficient for the line “a” according to the formula: ∑ ∑ = = −− = n i i i n i i x yyxx a 1 2 1 )()( 106 dragomirescu, solomon table 5 calculations necessary for setting the coefficient of the linear adjustment according to the first calculation formula xi yi xi x yi y (xi x ) (yi y ) (xi x ) 2 1 525 -23,50 -1.076,25 25.291,88 552,25 2 1.110 -22,50 -491,25 11.053,13 506,25 3 2.250 -21,50 648,75 -13.948,13 462,25 4 3.150 -20,50 1.548,75 -31.749,38 420,25 5 2.250 -19,50 648,75 -12.650,63 380,25 6 2.625 -18,50 1.023,75 -18.939,38 342,25 7 2.475 -17,50 873,75 -15.290,63 306,25 8 1.800 -16,50 198,75 -3.279,38 272,25 9 1.200 -15,50 -401,25 6.219,38 240,25 10 825 -14,50 -776,25 11.255,63 210,25 11 465 -13,50 -1.136,25 15.339,38 182,25 12 225 -12,50 -1.376,25 17.203,13 156,25 13 345 -11,50 -1.256,25 14.446,88 132,25 14 900 -10,50 -701,25 7.363,13 110,25 15 2.025 -9,50 423,75 -4.025,63 90,25 16 3.375 -8,50 1.773,75 -15.076,88 72,25 17 3.150 -7,50 1.548,75 -11.615,63 56,25 18 2.625 -6,50 1.023,75 -6.654,38 42,25 19 2.325 -5,50 723,75 -3.980,63 30,25 20 1.800 -4,50 198,75 -894,38 20,25 21 975 -3,50 -626,25 2.191,88 12,25 22 600 -2,50 -1.001,25 2.503,13 6,25 23 330 -1,50 -1.271,25 1.906,88 2,25 24 180 -0,50 -1.421,25 710,63 0,25 25 465 0,50 -1.136,25 -568,13 0,25 26 1.260 1,50 -341,25 -511,88 2,25 27 2.400 2,50 798,75 1.996,88 6,25 28 2.130 3,50 528,75 1.850,63 12,25 29 2.925 4,50 1.323,75 5.956,88 20,25 30 3.450 5,50 1.848,75 10.168,13 30,25 31 2.775 6,50 1.173,75 7.629,38 42,25 32 2.100 7,50 498,75 3.740,63 56,25 33 1.125 8,50 -476,25 -4.048,13 72,25 34 825 9,50 -776,25 -7.374,38 90,25 35 525 10,50 -1.076,25 -11.300,63 110,25 36 180 11,50 -1.421,25 -16.344,38 132,25 37 495 12,50 -1.106,25 -13.828,13 156,25 38 1.125 13,50 -476,25 -6.429,38 182,25 39 2.475 14,50 873,75 12.669,38 210,25 40 3.225 15,50 1.623,75 25.168,13 240,25 41 2.775 16,50 1.173,75 19.366,88 272,25 42 2.400 17,50 798,75 13.978,13 306,25 43 2.625 18,50 1.023,75 18.939,38 342,25 44 1.350 19,50 -251,25 -4.899,38 380,25 45 1.095 20,50 -506,25 -10.378,13 420,25 46 900 21,50 -701,25 -15.076,88 462,25 47 495 22,50 -1.106,25 -24.890,63 506,25 48 210 23,50 -1.391,25 -32.694,38 552,25 1.176 76.860 -49.500,00 9.212,00 source: own calculations, based on data from „alfa” production industrial company 107 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro according to another formula, the coefficient for the line “a” can be determined as follows: ∑ ∑ = = ⋅− ⋅⋅−⋅ = n i i n i ii xnx yxnyx a 1 22 1 table 6 calculations necessary for setting the coefficient of the linear adjustment according to the second calculation formula xi yi xi 2 xi • yi xi yi xi 2 xi • yi 1 525,00 1,00 525,00 26 1.260,00 676,00 32.760,00 2 1.110,00 4,00 2.220,00 27 2.400,00 729,00 64.800,00 3 2.250,00 9,00 6.750,00 28 2.130,00 784,00 59.640,00 4 3.150,00 16,00 12.600,00 29 2.925,00 841,00 84.825,00 5 2.250,00 25,00 11.250,00 30 3.450,00 900,00 103.500,00 6 2.625,00 36,00 15.750,00 31 2.775,00 961,00 86.025,00 7 2.475,00 49,00 17.325,00 32 2.100,00 1.024,00 67.200,00 8 1.800,00 64,00 14.400,00 33 1.125,00 1.089,00 37.125,00 9 1.200,00 81,00 10.800,00 34 825,00 1.156,00 28.050,00 10 825,00 100,00 8.250,00 35 525,00 1.225,00 18.375,00 11 465,00 121,00 5.115,00 36 180,00 1.296,00 6.480,00 12 225,00 144,00 2.700,00 37 495,00 1.369,00 18.315,00 13 345,00 169,00 4.485,00 38 1.125,00 1.444,00 42.750,00 14 900,00 196,00 12.600,00 39 2.475,00 1.521,00 96.525,00 15 2.025,00 225,00 30.375,00 40 3.225,00 1.600,00 129.000,00 16 3.375,00 256,00 54.000,00 41 2.775,00 1.681,00 113.775,00 17 3.150,00 289,00 53.550,00 42 2.400,00 1.764,00 100.800,00 18 2.625,00 324,00 47.250,00 43 2.625,00 1.849,00 112.875,00 19 2.325,00 361,00 44.175,00 44 1.350,00 1.936,00 59.400,00 20 1.800,00 400,00 36.000,00 45 1.095,00 2.025,00 49.275,00 21 975,00 441,00 20.475,00 46 900,00 2.116,00 41.400,00 22 600,00 484,00 13.200,00 47 495,00 2.209,00 23.265,00 23 330,00 529,00 7.590,00 48 210,00 2.304,00 10.080,00 24 180,00 576,00 4.320,00 1.176 76.860,00 8.024,00 1.833.570,00 25 465,00 625,00 11.625,00 source: own calculations, based on data from “alfa” production industrial company based on the data in the tables above, we calculate: 50,24 48 176.11 === ∑ = n xi x n i and 25,601.1 48 00,860.761 === ∑ = n yi y n i replacing with the calculated values, we can set a = 5,37. the equation of the line is determined by the formula: y y = a (x x ). so, we obtain y – 1.601,25 = -5,37 (x 24,50) and hence y = -5,37 • x + 1.732,82.  we calculate the adjusted values for the period of time considered (2010-2013) based on the equation of the line determined previously. table 7 table of the adjusted values months adjusted values for the years 2010 2011 2012 2013 january 1.727,45 1.663,01 1.598,57 1.534,13 february 1.722,08 1.657,64 1.593,20 1.528,76 108 dragomirescu, solomon march 1.716,71 1.652,27 1.587,83 1.523,39 april 1.711,34 1.646,90 1.582,46 1.518,02 may 1.705,97 1.641,53 1.577,09 1.512,65 june 1.700,60 1.636,16 1.571,72 1.507,28 july 1.695,23 1.630,79 1.566,35 1.501,91 august 1.689,86 1.625,42 1.560,98 1.496,54 september 1.684,49 1.620,05 1.555,61 1.491,17 october 1.679,12 1.614,68 1.550,24 1.485,80 november 1.673,75 1.609,31 1.544,87 1.480,43 december 1.668,38 1.603,94 1.539,50 1.475,06 source: own calculations, based on data from “alfa” production industrial company  we determine the seasonal coefficients, reporting the real sales values (table 1) with the calculated adjusted values (table 7): table 8 seasonal coefficients years months 2010 2011 2012 2013 january 0,303916 0,207455 0,290885 0,322658 february 0,644569 0,542941 0,790861 0,735891 march 1,310647 1,225587 1,511497 1,624666 april 1,840663 2,049305 1,346006 2,124478 may 1,318898 1,918941 1,854682 1,834529 june 1,543573 1,604366 2,195047 1,592272 july 1,459979 1,425689 1,771635 1,747775 august 1,065177 1,107406 1,345309 0,902081 september 0,712382 0,601833 0,723189 0,734323 october 0,491329 0,371591 0,532176 0,605734 november 0,277819 0,205057 0,339834 0,334362 december 0,134861 0,112224 0,116921 0,142367 source: own calculations, based on data from “alfa” production industrial company  setting the correction coefficients, by reporting the total seasonal coefficients calculated for each month to the number of years considered, resulting the monthly average values for the four years: table 9 correction coefficients months total seasonal coefficients for the four years correction coefficients january 1,124915 0,281229 february 2,714262 0,678565 march 5,672396 1,418099 april 7,360451 1,840113 may 6,927050 1,731762 june 6,935259 1,733815 july 6,405077 1,601269 august 4,419973 1,104993 september 2,771727 0,692932 october 2,000829 0,500207 109 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro november 1,157073 0,289268 december 0,506373 0,126593 source: own calculations, based on data from “alfa” production industrial company  analyzing the evolution of sales during the four years, based on the calculations presented above, we can extrapolate the trend of the sales evolution. in order to forecast the sales volume for 2014, we mark the rank of the months from 49 to 60 and we calculate the adjusted values, which will be corrected afterwards using the correction coefficients, thus resulting the following values: table 10 forecast values of the sales volume for 2014 months of 2014 xi adjusted values for 2014 correction coefficients values for the sales volume forecast for 2014 january 49 1.469,69 0,281229 413 february 50 1.464,32 0,678565 994 march 51 1.458,95 1,418099 2.069 april 52 1.453,58 1,840113 2.675 may 53 1.448,21 1,731762 2.508 june 54 1.442,84 1,733815 2.502 july 55 1.437,47 1,601269 2.302 august 56 1.432,10 1,104993 1.582 september 57 1.426,73 0,692932 989 october 58 1.421,36 0,500207 711 november 59 1.415,99 0,289268 410 december 60 1.410,62 0,126593 179 source: own calculations, based on data from “alfa” production industrial company graphic, the diagram of the sales evolution, based on the historical data for the period of time 2010-2013 plus the sales volume forecast for 2014, is presented in the following figure: figure 3 diagram of the sales evolution source: own calculations, based on data from “alfa” production industrial company conclusions business managers always had to pay attention to the efficient resource management, to that purpose using the planning and the budgets; it has become even more important in the current economic context. this period of crisis is regarded by some specialists as a recession stage of the economic cycle, thus a normal stage in the market economy. consequently, it is natural that all the performance indicators should have loses. under these conditions, we recommend drawing up a budget system, as it 110 dragomirescu, solomon helps managers in achieving the strategic objectives they have set. while on decisionmaking level we use a scoreboard including the main budget indicators, on operational level we use the detailed budget. the budget that influences all the other budgets is the sales budget. in order to sell, it is necessary to have a supply of goods which, in order to be produced, require raw materials, workforce, equipment, etc. building the sales budget requires forecasting the sales volume (the sales programme) as well as the selling prices per unit. the specialized literature describes many sales forecasting methods. as to the preference of applying a certain method within a company, each method has advantages and disadvantages; however, in practice it was proved that a combination of several methods should be used. after setting the forecasted sales volume and associating it to the selling price per unit, the annual and the global forecasts for the sales budget on the level of the whole company, we can allocate the monthly and quarterly values, on groups of products or on groups of purchasers, also taking into consideration the seasonal variation. the importance of building the sales budget lies in the fact that it later allows the exercise of control, the managers being subsequently able to decide on: the achievement of the forecasts in the next periods of time, changing the pricing policy, organizing promotional campaigns, training the employees, and so on. references albu, n., albu, c. (2003), control de gestiune, vol. ii, bucharest, editura economică. anthony, r. n., govindarajan, v. (2007), management control systems, twelfth edition, mcgraw hill international edition. bucur, i. a. (2007), costurile producerii şi raportării informaţiei financiar-contabile, in pătruţ, v. (ed.) contabilitatea în contemporaneitatea românească (275284), edusoft publishing house, bacău. caraiani, c., dumitrana, m. (coord.) et al (2008), contabilitate de gestiune şi control de gestiune, ediţia a ii-a, bucharest, editura universitară. dumitru, c. g., ioanăş, c. (2005), contabilitatea de gestiune şi evaluarea performanţelor, bucharest, editura universitară. gervais, m. (2005), contrôle de gestion, 8e édition, collection gestion, paris economica. iacob, c., ionescu, i. (1999), controlul de gestiune la nivelul firmei, bucharest, editura tribuna economică. ionaşcu, i., filip, a. t., mihai, s. (2006), control de gestiune, ediţia a ii-a, bucharest, editura economică. rachlin, r. (2007), sistemul complet de bugete ale firmei. ghid practic şi formulare de lucru, ediţia a ii-a, bucharest. solomon, d. c., bucur, i. a. (2013), aspects of financial equilibrium analysis and its implications in management decisions, studies and scientific researches economics edition, 18, 221-230, available at http://sceco.ub.ro/ index.php/sceco/article/view/226. tabără, n., tataru, s. et al (2009), control de gestiune. delimitări conceptuale, metode, aplicaţii, iaşi, editura tipomoldova. tabără, n., dragomirescu, s. e. (2009), bugetul de vânzări instrument al controlului de gestiune în contextual crizei economice actuale (partea i), contabilitatea, expertiza şi auditul afacerilor, 9, 50-54. tabără, n., dragomirescu, s. e. (2009), bugetul de vânzări instrument al controlului de gestiune în contextual crizei economice actuale (partea a ii-a), contabilitatea, expertiza şi auditul afacerilor, 9, 26-31. 111 (2 rânduri libere, 11p) studies and scientific researches. economics edition online first, august 2017 1 specific operations for accounts’ homogenization with a view to consolidation mihai deju “vasile alecsandri” university of bacau mihai.deju@ub.ro abstract the preparation of annual consolidated financial statements by group companies represents a relatively new problematic issue for regulating bodies, the world of the academia, as well as for accounting practitioners. the current national and international accounting standards undergo a continuous change and updating to the economic and judicial reality of the business environment which, in turn, goes through a permanent transformation because of the globalization of national economies. these novelties raise the necessity of debates organized by accounting specialists with the aim of finding solutions that respect legal regulations related to the preparation of financial statements for consolidation. the present article approaches accounting aspects related to the operation of adjusting individual financial statements that are the object of consolidation. keywords amortization/depreciation; accounts’ homogenization; different accounting policies jel classification m41 accounting standards regarding the preparation of annual consolidated financial statements1 stipulate a series of rules concerning the homogenization of the financial statements of the entities that are to be consolidated, as follows: a) when an entity included in the consolidation perimeter/scope (group member) employs, for similar transactions and events under similar circumstances, other accounting policies than those adopted in the case of annual consolidated financial statements, in order to ensure conformity to the group accounting policies, before being included in the consolidated financial statements, the individual financial statements of the respective entity must be adjusted in the corresponding manner; b) the entity that prepares the annual consolidated financial statements must apply the same evaluation methods as in the case of its own annual financial statements, which means that the assets and the liabilities of the entities included in the consolidation perimeter/scope will be evaluated by means of the same methods when they are included in the annual consolidated financial statements, methods which the 1 accounting standards regarding annual individual financial statements and annual consolidated financial statements, approved by ompf no. 802 dated december 29 2014, published in the official gazette of romania, no. 963 dated december 30 2014, part 8.6, pos.517-522. ⃰ consolidation can also be carried out on the basis of cash flows (see marian săcărin, “contabilitate aprofundată”par. consolidation modes, p. 228). specific operations for accounts’ homogenization with a view to consolidation 2 entity that prepares consolidated financial statements also uses for drawing up its own annual financial statements, respectively its annual consolidated financial statements; c) în the case of assets which were adjusted to fair market value, only for fiscal purposes, the annual consolidated financial statements will include them only after eliminating the respective adjustments. we can thus conclude that the annual individual financial statements of the entities included in the consolidation perimeter/scope, i.e. subsidiaries, associated entities or entities over which common control is exercised and which use evaluation methods or accounting policies that differ from those applied when drawing up annual consolidated financial statements, must be restated (adjusted) obligatorily and waivers from this requirement are accepted only in exceptional cases. possible waivers or exceptions are presented and justified in explanatory notes for annual consolidated financial statements. in the case of consolidation on the basis of accounts aggregation ⃰ , adjustments are made both for the differences corresponding to the current financial year and for the differences corresponding to the previous financial years, with the mentioning that the adjustments corresponding to the previous financial years affect equities (reported result, reserves, etc.) and the adjustments corresponding to the current financial year affect its financial result. the operations regarding the adjustments that occur when including the financial statements in the consolidated accounts of the entities that are part of the consolidation scope involve accounting reasoning that practitioners should perform with significant judgment and professional competence. we will further present the accounting treatment corresponding to the various types of adjustments (restatements) occurring as a result of different amortization or depreciation policies. a. company “b” purchased on the 25th of december 2010 a vehicle that cost 160,000 lei. according to the company’s depreciation policy, the firm will depreciate the respective fixed asset in a straight line manner, over a period of five years. starting with the 1st of january 2013, company “b” becomes a subsidiary of company “a”, with the latter having the intention to include the former in the scope of consolidation. company “a” (the parent company), according to its own policies regarding the depreciation of tangible fixed assets, has its own rule concerning the same category of fixed assets, respectively a working period of 8 years and a straight line depreciation type. given the different depreciation policies used by the parent company and its subsidiary for similar tangible fixed assets, at the time of the consolidation, company “a” will start adjusting (restating) the annual consolidated financial statements prepared by company “b” (subsidiary) in compliance with the accounting standards regarding consolidated financial statements in effect, which were previously mentioned. the differences between the depreciation calculated according to the accounting policies of the parent company and the depreciation calculated by the subsidiary in line with its own accounting policies used for preparing annual consolidated financial statements, are presented as follows: deju 3 n o. financ ial year depreciation calculated by company “a” (consolidating parent) depreciation calculated by company “b” subsidiary differences of depreciation ⃰ annual accumul ated annual accumul ated annual precedin g accumul ated 1 2011 20,000 20,000 32,000 32,000 -12,000 -12,000 2 2012 20,000 40,000 32,000 64,000 -12,000 -12,000 -24,000 3 2013 20,000 60,000 32,000 96,000 -12,000 -24,000 -36,000 4 2014 20,000 80,000 32,000 128,000 -12,000 -36,000 -48,000 5 2015 20,000 100,000 32,000 160,000 -12,000 -48,000 -60,000 6 2016 20,000 120,000 160,000 20,000 60,000 -40,000 7 2017 20,000 140,000 160,000 20,000 40,000 -20,000 8 2018 20,000 160,000 160,000 20,000 20,000 ⃰ note: the differences of depreciation (annual and cumulated) are calculated between the (annual and cumulated) depreciation determined in compliance with the accounting policies of the parent company and the depreciation calculated by the consolidated company (company “b”, the subsidiary). the accounting treatment regarding the restatement of differences between the depreciation calculated in compliance with the policies of the parent company and the depreciation calculated by its subsidiary, at the time of the consolidation, is the following: 1. in the first year of consolidation, i.e. in 2013, the difference of depreciation corresponding to the current year (-12,000 lei) will be recorded as depreciation reduction, on the basis of the current result by means of depreciation expenses, and the preceding differences of depreciation (corresponding to 2011 and 2012) will influence equities (retained earnings/reserves), as follows: 2814 “depreciation of other tangible fixed assets” = % 6811 “operating expenses related to the depreciation of fixed assets” 106 “reserves” 36,000 12,000 24,000 in the financial years 2014 and 2015 the accounting rationale is the same, hence: 2. in the financial year 2014: 2814 “depreciation of other tangible fixed assets” = % 6811 “operating expenses related to the depreciation of fixed assets” 106 “reserves” 48,000 12,000 36,000 3. in the financial year 2015: 2814 “depreciation of other tangible fixed assets” = % 6811 “operating expenses related to the depreciation of fixed assets” 106 “reserves” 60,000 12,000 48,000 specific operations for accounts’ homogenization with a view to consolidation 4 4. in the financial year 2016, in the accounting records of the subsidiary, the vehicle is entirely depreciated. in the consolidated accounts there should be recorded, for the current period, a supplement for expenses with depreciation corresponding to the annual depreciation quota established in compliance with the policies of the parent company (+20,000 lei) and there should be adjusted the depreciation calculated in excess of what is due in previous financial years for the sum of 60,000 lei, as follows: 6811 “operating expenses related to the depreciation of fixed assets” = 2814 “depreciation of other tangible fixed assets” 20,000 2814 “depreciation of other tangible fixed assets” = 106 “reserves” 60,000 5. the same restatement entries shall be recorded in the subsequent financial years (2017 and 2018), until the vehicle shall be entirely depreciated in agreement with the accounting policies of the parent company: in 2017 6811 “operating expenses related to the depreciation of fixed assets” = 2814 “depreciation of other tangible fixed assets” 20,000 2814 “depreciation of other tangible fixed assets” = 106 “reserves” 40,000 in 2018 6811 “operating expenses related to the depreciation of fixed assets” = 2814 “depreciation of other tangible fixed assets” 20,000 2814 “depreciation of other tangible fixed assets” = 106 “reserves” 20,000 b. at the end of the financial year n, company a, a subsidiary of company b, purchases a tangible fixed asset which is worth 150,000 lei. in the individual accounts of the subsidiary, it is depreciated in a straight line manner, over a period of ten years, whereas the accounting policies of company b also stipulate a straight line depreciation but over a period of six years. at the end of the financial year n+3, the fixed asset is sold at a price of 125,000 lei. differences of depreciation, resulting after the subsidiary company applies different accounting policies for similar transactions and events under similar circumstances, corresponding to the three financial years, are as follows: deju 5 financial year depreciation calculated in compliance with the accounting policies of the parent company depreciation calculated in compliance with the accounting policies of the subsidiary difference annual accumulated annual accumulated current accumulated n+1 25,000 25,000 15,000 15,000 10,000 10,000 n+2 25,000 50,000 15,000 30,000 10,000 20,000 n+3 25,000 75,000 15,000 45,000 10,000 30,000 company b will adjust the annual financial statements of subsidiary company a when preparing the annual consolidated financial statements, as shown below: adjustment of the financial statements of the subsidiary company: a) in the financial year n+1 in this financial year, the depreciation of 15,000 lei recorded by the subsidiary shall be increased with the sum of 10,000 lei. after the increase of the depreciation, the net value of the tangible fixed asset in the consolidated financial statements is of 125,000 lei, whereas in the individual financial statements of the subsidiary it has a value of 135,000 lei. the accounting recording corresponding to the adjustment is as follows: 6811 “operating expenses related to the depreciation of fixed assets” = 281 “depreciation of tangible fixed assets” 10,000 in the financial years n+2 and n+3, besides supplementing the expenses with the depreciation corresponding to the current financial year, the differences of depreciation corresponding to the previous financial years will also be adjusted, as follows: b) in the financial year n+2: % 6811 “operating expenses related to the depreciation of fixed assets” 106 “reserves”f = 281 “depreciation of tangible fixed assets” 20,000 10,000 10,000 c) in the financial year n+3 % 6811 “operating expenses related to the depreciation of fixed assets” 106 “reserves” f = 281 “depreciation of tangible fixed assets” 30,000 10,000 20,000 as a result of the fixed asset’s sale by the subsidiary, at the end of the financial year n+2, its financial result shall be restated as follows: a) the financial result corresponding to the fixed asset’s sale operation, as it is recorded in the books and financial statements of the subsidiary is shown below: revenues from sale of fixed assets (7583) 125,000 accounting value of fixed assets (212) 150,000 specific operations for accounts’ homogenization with a view to consolidation 6 accumulated depreciation at the time of sale 45,000 net book value (unamortized value 6583) 105,000 result obtained after sale of fixed asset 20,000 b) the financial result, in line with the accounting depreciation policy of the company that prepares consolidated financial statements (parent company b), obtained from sale of the fixed asset by the subsidiary: revenues from sale of fixed assets (7583) 125,000 accounting value of fixed assets (212) 150,000 accumulated depreciation at the time of sale 75,000 net book value (unamortized value 6583) 75,000 result obtained after sale of fixed asset 50,000 the financial result reported in the subsidiary’s financial statements (which are the object of the consolidation) shall have to be increased with the difference of 30.000 lei by deducing the expenses with the disposed assets, because the subsidiary recorded an unamortized value corresponding to the sold tangible asset of 105,000 lei as compared to 75,000 lei, which should have been the value recorded in agreement with the depreciation policy applied by the parent company. accounting entries of the financial result adjustment in the financial statements of the subsidiary are as follows: 281 “depreciation of tangible fixed assets” = 6583 “operating expenses related to disposed assets” 30,000 c. subsidiary company “a” recorded as intangible fixed assets, at the beginning of the financial year n, set-up costs/expenses of 60,000 lei. these expenses have to be amortized in a straight-line rate, over three years. however, in the consolidated accounts, the set-up costs are recorded as expenses of the financial year when they were spent. the entity that performs the consolidation shall have to adjust the financial statements of the subsidiary a, as follows: a) in the financial year n: because in the case of the company that prepares the annual consolidated financial statements the set-up costs/expenses are not capitalized, the consequences of their capitalization by the subsidiary will be eliminated: 2801 “amortization of set-up expenses” = 6811 “operating expenses related to the amortization of fixed assets” 20,000 6xx * “expenses” = 201 “set-up expenses” 60,000 * set-up expenses shall be recorded here, in agreement with their economic nature (charges, taxes corresponding to the services of registering the company at the registry of commerce, advertising etc.) deju 7 b) in the financial year n+1, according to the accounting rationale, adjustments will be made both for the differences corresponding to the current year and for the amortization difference corresponding to the previous year. 2801 “amortization of set-up costs” = 106 “reserves” 20,000 2801 “amortization of set-up costs” = 6811 “operating expenses related to the amortization of fixed assets” 20,000 c) in the financial year n+2 – (the last year of amortization) the accounting rationale is similar to the one corresponding to financial year n+1, as shown below: 2801 “amortization of set-up costs” = % 6811 “operating expenses related to the amortization of fixed assets” 106 “reserves” 60,000 20,000 40,000 conclusions as it can be concluded from the contents of the approached theme, accounting standards specific to the consolidation of financial statements by group companies represent for specialists, both theoreticians and practitioners in the field of accounting, an issue undergoing full dynamic and which requires permanent debate with a view to finding the most adequate implementation solutions. the adjustment of the individual financial statements of companies included in the consolidation scope (subsidiaries, associated entities or entities controlled in common) and which “employ different accounting policies for similar transactions and events under similar circumstances” represents a compulsory requirement that needs to be put into practice by accountants. in this context, regulating or normative institutions from the field of accounting, professional associations and the academia should offer models and solutions for solving practical situations that require conformity to the group’s accounting policies. references accounting law no.82/91 republished in the official gazette of romania no. 454/2008, with subsequent amendments and additions. companies law, no. 31/90 republished in the official gazette of romania, part i, no. 1066 dated 17 november 2004 with subsequent amendments and additions. deju mihai (2013), contabilitate aprofundată-curs universitar, alma mater, bacău. ompf no. 1802 dated 29 december 2014 for the approval of accounting standards concerning annual individual financial statements and annual consolidated financial statements, published in the official gazette of romania, no. 963/ dated 30 december 2014, with subsequent amendments and additions. ompf no. 897/2015 for the approval of methodological norms concerning the reflection in accounting of the main operations of merger, partition, dissolution specific operations for accounts’ homogenization with a view to consolidation 8 and liquidation of companies as well as of the withdrawal or exclusion of certain associates from companies, with subsequent amendments and additions. studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro analysis on the entropic model of the intellectual capital. case study of the smes in the north east region andreea feraru “vasile alecsandri” university of bacau andreea_feraru26@yahoo.com roxana mironescu “vasile alecsandri” university of bacau roxy_mironescu58@yahoo.com ovidiu leonard turcu “vasile alecsandri” university of bacau ovidiuturcu@gmail.com abstract the intellectual capital in its dynamic approach focusses on the development of the entropic model, which expresses the dynamic transformation of the theoretical intellectual capital in a concrete and useful intellectual capital. the aim of the present paper is to perform a detailed analysis of the intellectual capital inside the smes of the north-est region of the country. it also speaks about the influence of the main integrators of the intellectual capital, divided into three elements: the cognitive, the emotional and the spiritual capital, about how they are acting as a field of forces upon the basic components of the intellectual capital, such as knowledge, intelligence and values and how they determine the generation and development of the intellectual capital in the eastern analyzed smes. both jobs and teams inside the analyzed smes are stimulating the development of the intellectual skills, which reduces the need for involving the external experts, by appealing only those specialists who could transform the tacit knowledge into explicit knowledge. the organizational communication provides the necessary information and contributes to the establishment of a fair climate and of the effective relationships between managers and employees, between work mates, and also with the people outside the organization. keywords intellectual capital; knowledge; intangible resources; small and medium enterprises; new competitive economy jel classification m10 introduction the conceptual development of the intellectual capital was made from two different but converging directions. the first direction was generated by the need to increase the competitive ability of the company and achieve strategic advantages in the more competitive markets by intensively capitalizing the intangible resources. among these resources the attention has focused on information and knowledge, trademarks and patents, on the organizational behavior and the oriented organizational culture towards excellence. in other words, the question is how an intangible resource management can be more efficient inside a company in order to increase its competitiveness. the second direction was generated by the evident tendency to strengthen the company’s success ratio between the market value and the growing financial value. 155 mailto:andreea_feraru26@yahoo.com mailto:roxy_mironescu58@yahoo.com feraru, mironescu, turcu the overwhelming majority of the authors treat the intellectual capital as a organizational resource, structured as follows: the human capital, the structural capital and the relational capital. regardless of the titles used, the mentioned static models speak about the manifestations of the organizational intellectual capital, long after its occurrence (stewart, 1998; roos et al., 1997; sveiby, 1997; andriessen, 2004). therefore, all these studies have a static nature, they design a taxonomy on a real date and not a dynamic reality in its progress. the most commonly used classification is the one which divides the intellectual capital into three components: human capital, relational capital (customers) and structural capital. stewart attributes this taxonomy to leif edvinsson from skandia and to hubert saint onge. however, it should be noted that leif edvinsson, according to the market value scheme divides the intellectual capital into human and structural capital, which consists of the customer capital and organizational capital, the latter being composed of the innovative capital and the capital processes. although it seems to be well structured, this classification uses groups of entities that are not well enough defined, nor unique. for example, the structural capital includes the organizational capital, although the structure is part of an organization and not vice versa (brătianu, 2006). thus, more and more authors use, in their efforts, the empirical classification of the intellectual capital divided in human, structural (organizational) and relational capital (customers). in the context of an economy in continuous transformation and evolution, the most important resource of any company is the human capital. but the mere presence of a number of employees is not enough for build the value of an organization, the human resources represents and there actually is a competitive advantage, by the staff quality, by their skills, abilities, knowledge and their orientation towards performance and success. is it enough the employees' involvement and a performance-oriented environment that stimulates creativity and innovation to succeed in the long term business? surely it is not enough because as an organization is not alone on the markets, it acts in a complex environment and it is directly or indirectly linked to various organizational players in the entire world (stakeholders, customers, suppliers, shareholders, public institutions etc.). that is why the relational component of the intellectual capital is as important as the human and structural components. the organization should focus its efforts on financial and human topics and on maintaining long term relationships with all the business partners, with the target markets and with the society, in its expanded interpretation. the entropic model, a new and modern perspective on the intellectual capital the new knowledge society is characterized by strong nonlinear and dynamic processes. for the organizations, in order to survive and become more competitive in an uncertain future, in a foreign changing environment, it should be necessary to promote the nonlinear system. they operate with very good results in the linear areas of our work, as the valorization of our intellectual capital. in other words, the organization is regarded as a variety of force fields that interact with each other and act on the primary constituents of intellectual capital: knowledge, intelligence and values, for the generation and the development of the intellectual capital. the intellectual capitulation is a vague and somewhat confusing concept; its limits are not well defined, and interact with the common interpretation of the human capital concept. for example, stewart considers the intellectual capital as "the sum of all the things that everybody in a company know, that gives it a competitive advantage," or "the intellectual capital is made by its raw material knowledge, information, intellectual property, know how that can be used to create wealth. it may be the collective brainpower "(stewart, 1998). it is enough to analyze the andriessen's 156 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro theory or other contributions in this field (andriessen, 2004). in many of these, the intellectual capital of an organization includes: human, structural and organizational capital, relational or customer capital. the human capital is fundamental because it is the source of innovation and renewal, and it represents the employees' capabilities to provide solutions for the customers. the structural capital of an organization make possible all those relationships that facilitate the change of the intellectual potential into concrete actions, in order to create such a value which is reflected in the products and services offered by the organization to the markets. the relational capital represents the value of the relationships we have with the organization (stewart, 1998, p.110). this general structure of the intellectual capital is a static and holistic one, it does not show how the value of the potential capital increases and how to transform a large part of the existing capital in action and value. the wide range of definitions and approaches to the concept of intellectual capital show their importance, but at the same time, the difficulty of expressing something as "untouchable". davenport th. and laurance prusak's definition presented in stewart's book named "intellectual capital the new wealth of organizations", is the following: “some intellectual matter that has been formalized, captured and used to produce an asset of greater value” (davenport and prusak, 2000). but this definition is not very clear in terms of the tacit knowledge, which is very difficult to express and to share with others. in the same book there is another definition, which did more than describe the role of the intellectual capital inside an organization, rather than defining it: "the knowledge that exists in an organization that can be used to create a competitive advantage" (stewart, 1998). leif edvinsson, skandia, and pat sullivan define the intellectual capital as "knowledge that can be converted into value" (sveiby, 2001). it is a very simple definition, but it is not necessarily a comprehensive interpretation. as it can be seen from the above definitions, it is quite complicated that a definition containing some few words can capture the essence of the concept of intellectual capital and to provide a complete picture of the conceptual and practical essence. therefore, both practitioners and researchers in the field prefer to use as a starting point in their approaches different classifications of the intellectual capital components. for example, there are few models of measurement / evaluation of the intellectual capital that do not use such a classification we mentioned above. davenport's and prusak's vision about knowledge is that it derives from the intellectual work. knowledge is defined as "a continuous mix standard experiences, values, contextual information and expertise that enable the creation of a framework for evaluating and incorporating new information and experiences" the knowledge has its roots in the minds of the connoisseurs. the authors highlight the fact that the knowledge of an organization is embedded not only in documents and databases, but are also in processes, practices, standards. "in the opposite side of the individual knowledge, there is the organizational knowledge that is very dynamic: there is variety of forces which are working on it" (davenport and prusak, 2000). knowledge is dynamic if it is created as a result of the social interactions between individuals and organizations. the intelligence, in its classical vision, is the cognitive ability of an individual. in 1983 gardner has introduced a new concept, namely multiple intelligence, which is defined, in his view as "multiple intelligences theory that involves a passage to the plural concept of intelligence”. intelligence is the ability to process a particular type of information and it has its origins in biology and human psychology" (gardner, 2006). the values are beliefs about what is right or wrong and what is important in life, being fundamental to define the behavioral model, especially in the process of making decisions: "values are more important to take a decision than the alternatives. just ask yourself why you should make the effort to choose an alternative than to simply leave it to the chance. the answer must be the alternatives which have 157 feraru, mironescu, turcu different consequences for your value system" (brătianu, 2009). the essence of our personality and value put its mark on the way one behave and on his actions, it is deeply rooted in our childhood education, it also can be considered as a system of beliefs about a person's relative value, of a place, of an event or a thing relative value, as we are parts of a cultural matrix and we get all this cultural, ethical, moral and religious substance from the family, school, church, community, university and/or the organization where we work. therefore, each value represents the learned concept during our life. unlike other models, the entropic model captures the dynamic transformation of the intellectual capital from a potential intellectual to an useful capital, as in physics the energy models reflects the transformation the potential energy of a body or of a mechanical system into kinetic useful energy. in a first stage, the individual contributions of each employee in the form of knowledge, ways of thinking, emotions, behavior patterns and values are transformed into organizational capital with the help of the integrators. the entropic model of the intellectual capital suggests a new approach of the entire structure of the organizational intellectual capital, including integrators and vision, as a leading force. the innovation and learning in the organization are the main mechanisms of the intellectual capital renewal. the new model is based on the assumption that the organizational intellectual capital is a complex and dynamic system, fueled by the integrators and lead by vision. the model of the entropic intellectual capital has been created by bratianu and published progressively in a series of papers (bratianu, 2008; bratianu & orzea, 2013). this new entropic intellectual capital includes four main ideas: the organizational intellectual capital is a result of complex interactions and of the dynamics between three fields: the cognitive knowledge field, the emotional knowledge field and the spiritual knowledge field; the organizational intellectual capital is conceived as both a potential and as an operational capability. the potential intellectual capital can be transformed into operational intellectual capital through integrators. the operational intellectual capital can be also transformed into intellectual capital potential through the dynamic capabilities of the organization; the organizational intellectual capital is conceived as a complex adaptive system that includes dynamic capabilities needed for adaptation and renewal, especially through innovation and learning; the organizational intellectual capital is projected towards a vision for the future, mainly, in order to obtain a competitive advantage (brătianu et al., 2012). in any organization, there are three fields of knowledge: knowledge of the field of cognitive, emotional and spiritual components, which are in a continuous dynamic evolution. this means that some form of information may be transformed into another kind of information, as in the case of physics, where a physical form of energy may be converted into another form of energy under the action of a force field. this force field is able to integrate individual knowledge (cognitive, emotional, and spiritual), individual energy and personal motivation. the energy and the motivation of the organization is more than the sum of all the individuals' energies and motivations. this combining process is highly nonlinear, and the final result heavily depends on the power of the integrative forces. the fields of knowledge are strongly nonlinear and uneven and changing each field generates streams of knowledge that can be converted into knowledge transfer processes when individual and organizational barriers can be overcome. every form of knowledge can be processed by a specific intelligence, so that the entire organization gets a final result, namely organizational intellectual capital. a schematic representation of this complex is shown in figure 1. 158 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro figure 1 the integrating model of the intellectual capital, in a sketchy presentation. source: bratianu & orzea, 2013, p.137 in this new perspective, the companies that have the same potential intellectual capital may have different results if they have different levels of the operational intellectual capital as a result of the different work performed by their organizational integrators. thus, an organization cannot ask people to be creative by applying a simply managerial authority. all the managers can do is to create the favorable climate, the feeling of freedom, of security, to develop creativity, innovation, they can create an oriented toward knowledge organizational culture. a strong organizational culture that appeal intelligences, the individual values and generates a spirit of excellence, may achieve the development of the intellectual capital with a great potential for innovation and creativity. this culture can be built by strengthening the importance of creating new knowledge, not just in meetings but also through the introduction of performance criteria related to knowledge creation and rewarding the employees who succeed to achieve the goals imposed by the performance criteria. individualized rewards can be developed, in order to recognize the creativity and knowledge creation inside the organization. closely linked to a strong organizational culture there is the trust among the employees. informal meetings, both at work and outside the enterprise, lead to the building and developing a sense of trust between the employees and therefore, it can increase the amount of new knowledge created. when individuals face, in an informal environment, certain common challenges, each of them creates and thinks the problem and the solution in terms of his individual thought patterns. thus, the result is a symbiosis of perspectives and variety and these perspectives facilitate the “creative abrasion” the "creative abrasion" is accomplished by creating an atmosphere where ideas are continuously being challenged and new interpretations are constantly made. the idea of "creative abrasion" is specific for the collaborative team environment. an example of successful "creative abrasion" is in the design of the first macintosh computer. in setting out to create the macintosh, steve jobs assembled a diverse team composed of musicians, artists, and others. all of them were qualified as efficient software people as well, but it was their other more creative talents that jobs valued. (http://monstahsoxfan.blogspot.ro/2012/02/creativeabrasion.html). a symbiosis is required and this is achieved through discussions between employees, where opinions are informally exchanged, while building a sense of trust and informal relations. 159 feraru, mironescu, turcu study on the integrators of the intellectual capital in the smes from the north east region the objective of this research was to identify the internal major factors which influence the intellectual capital management in the present and the future for the smes in the north east region. the existence of the organizational integrators, for creating the entropic model of the intellectual capital, such as the motivating and stimulating systems, the organizational culture based on creativity and innovation, the team working and the powerful values there are the main aspects this study has wanted to underline. this research is part of a larger inquiry upon the features of the intellectual capital of the north eastern smes, during 2013. the method used in this paper work is based on a questionnaire to a sample of 120 top managers of the smes in the north east region, coming from various fields of activity, operating on the market for more than two years. the management of information and the data collection was conducted in the middle of 2013. the main objectives of the present study were: what are the most important values the managers coming from the analyzed smes recognize; the emotional and the relational capital are recognized and valued inside the smes?; what are the strategies for the future management of the intellectual capital in these smes; what are the tools of the organizational culture to keep the employees appreciated and motivated to efficiently work and to generate knowledge and performance. in the romanian business environment a great importance is allocated to the organizational culture and the organizational mission and vision, during the processes of generating and developing the intellectual capital and the organizational knowledge. based on this principle, the smes’ managers were questioned about the existence of a set of professional and ethical values among their employees. the results can be seen in the following graphic (see graph.1): 74% 26% yes no graphic 1 the companies distribution by the existence of professional and ethical values source: original illustration analyzing the obtained responses one can see that 74% of respondents have a set of well-defined professional and ethical values, also learned and practiced by the employees, on the opposite side, 26% of respondents have a set of values, but they are not acquired by their employees. the main professional and ethical values for those 74% of respondents there are: (see graphic 2) 160 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro graphic 2 the most important values and professional ethics adopted in the studied enterprises. source: original illustration from the above it can be said that in the respondents' top professional values and ethics are the concern for high quality products and services with a share of 21% followed by the creativity and innovation with 13%, the integrity has obtained 8%, the performance and work team 6% of the total amount of responses of the managers who recognized values and ethics. the trend to invest in human resources is the consequence of the current economic crisis, because the difficult conditions require the existence of the efficient, skilled and adaptable employees, responsibly acting in such an environment. only the those smes which will realize the importance of the organizational culture influence upon the each employee's fundamental values, will survive and will leave values over the time, not just some product / service or profits. the employees' skills and their intellectual abilities are considered as personal characteristics that employees need to perform work, related to the hierarchical occupied positions. within these, certain aspects can be included, such as education, technical and professional knowledge, academic qualifications, training and experience needed by the employees, the manual and intellectual skills, the interpersonal skills and the ability to work in leadership teams. a vital element of the evaluation of the intellectual capital is the need to harmonize the exceptional powers and attributes of the employees with the changing demands of the held position, and thereby to influence their behavior. it should be noted that the employees are the human capital of an organization, but not the organization itself, therefore managers must bear in mind that this wrong approach may determine the employees to leave the organization, generating an imbalance of the internal intellectual capital. thus, deeply knowing and understanding the primary constituents (the employees' skills and their intellectual ability) are the major premise for underlying the valuation of the human capital. 0 0,1 0,2 0,3 initiative spirit customers loyalty a strong brand management of the talented people team working performance integrity keeping promises creativity and innovation the quality better than the customers expect 161 feraru, mironescu, turcu 11 9 5 8 3 5 2 0 2 4 6 8 10 12 14 < 25 2534 3544 4559 > 60 < 25 2534 3544 4559 > 60 masculin feminin spiritual competences emotional competences cognitiv competences graphic 3 the employees’ assessment based on cognitive, emotional and spiritual competences source: original illustration employees of smes surveyed are valued by: 66.67% of men aged over 60 primarily appreciate the employees by their cognitive skills, compared to 50% of women the same age; 50% of women under 25 and over 60 years appreciate the employees by their emotional competencies, compared to 42.85% of men aged between 25-34; 50% of women aged between 25-34 considered the spiritual powers another employee' criterion of evaluation and assessment, unlike 40% of men under 25. an enumeration made by the interviewed managers about the main methods used to motivate employees of the companies they run can be seen in graphic 4: to promote the company's employees salary increases occasional premiers other forms of employee motivation graphic 4 the motivating and stimulating strategies in the smes analyzed source: original illustration from the analysis we can see that a majority of smes effectively use the strategies to motivate and stimulate the employees, with a rate of 34.37% for the promotion, followed by 31.25% salary increases and occasional awards 28.12%. analyzing the information obtained from the actual data collection and from the processing in our conducted research, we found that: the businesses are striving to reward their employees' work and to retain them as much as it is possible in order to benefit of their individual skills. the great importance of the human capital in the structure of the intellectual capital is given 162 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro by the involvement of all its components in performing any activity carried out by the surveyed smes in the north east region of the country; the open cultures encourage people to share common ideas and knowledge, thus using various communication channels. also, an open culture is one where people participate due to a sense of commitment and solidarity; the interviewed managers recognized that the existence of the values is well known, it is accepted and embraced by the employees and it helps to raise the level of loyalty and attachment to the company targets. people can be more motivated to achieve common goals, which would lead to a high efficiency and high performance, by sharing common values and objectives; managing agreeable and effective relationships with customers should be, added to the value provided and incorporated in merchandises, an important tool to generate their loyalty; the value of the relationships the organization has with its customers has to be improved with the stakeholders' relations without any organization could not survive. thus, the relational capital becomes an intangible asset that is based both on maintaining the best possible relations with the other smes in the north east region of the country, with individuals or groups and the development of these relationships that contribute to the performance improvement of the analyzed smes. the relational capital is also important because it helps in increasing the value of the human and structural capital, due to the ability of the smes from the north east region of the country to interrelate with their stakeholders in a positive manner; the valorization of the spiritual, the emotional and cognitive intellectual capital can increase the power of the brand for certain open markets of the analyzed smes; the intellectual capital, whether it is practical or not, it exists in any organization, active or inactive; it does not matter the form it is presented, it certainly influences the quality of the human resources and the whole organization for its market image, conclusions in the knowledge economy the main challenge is to build, to combine and to integrate thousands of employees' knowledge in an organizational background. this means to create an environment where knowledge can be acquired, transferred and easily used. therefore, the modern organizations are willing to accept the new challenges coming from the knowledge economy, but they will need to evolve towards becoming generating organizations, integrative ones and not least, protecting knowledge organization. investing in knowledge lead to productivity and an efficiency more and more growing. the need for training, manifested by the employees' majority reflects the desire to encourage them to directly or indirectly share knowledge with their team mates and it is perhaps the most natural way to transmit knowledge from one individual to another. the competitiveness of the north eastern smes on the regional, national and international markets depends on the managers' favorable attitude about the importance of managing the intellectual capital that is why it becomes important and necessary to create a powerful organizational culture, as a favorable field for the entropic model of the intellectual capital. 163 feraru, mironescu, turcu references andriessen, d. (2004), making sense of intellectual capital – designing a method for the valuation of intangibles, butterworth-heineman, burlington (ma) and oxford (uk). brătianu, c. (2006), un model de analiză a capitalului intelectual organizațional, management & marketing, vol. 1, nr. 3. brătianu, c. (2009), the frontier of linearity in the intellectual capital metaphor, electronic journal of knowledge management, vol. 7, issue 4. brătianu, c., dima, a.m., vasilache, s., orzea, i. (2012), nonlinear integrators and intellectual capital dynamics. bucureşti : editura curtea veche. bratianu, c., orzea, i. (2013), the entropic intellectual capital model, knowledge management research & practice, (2013) 11, 133–141. davenport, t.h. si prusak, l. (2000), working knowledge, harvard business school press, boston. gardner, h. (2006), multiple intelligences, new horizons, new york. stewart, t. (1998), intellectual capital, the new wealth of organizations, london, nicholas brealey publishing house. sveiby, k.e. (2001), intellectual capital knowledge management, available at http://sveiby.com/articles/intellectualcapital.html. roos, g., roos, j. (1997), measuring your company’s intellectual performance. long range planning, special issue on intellectual capital, vol. 30, no.3. 164 http://sveiby.com/articles/intellectualcapital.html studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro theoretical framework of advertising some insights bogdan nichifor “vasile alecsandri” university of bacău bnichifor@gmail.com abstract advertising as a tool of communication, but mostly as a marketing tool is subject to many theories and explanatory and normative models. its contents and performed functions are not yet defined in general recognized theory. present article focuses on the analysis of advertising in terms of its specific persuasive effort and communication process. advertising seen as a process is based on the general scheme of the marketing communication process, with a number of specific features related to its content. the persuasive effort is related to creation of favorable attitudes or reinforcing existing attitudes. this process of persuasion is closely linked to the concept of attitude. most theories of advertising have explored the connection between persuasion and attitude, identifying possible responses that the receiver can give to advertising information. following lines develop these two important aspects associated with advertising theory, even if they are not the only issues that are debated in the literature. keywords advertising; theory; persuasion; models; effects jel classification m30 introduction advertising can be considered a variable created by convergent interest expressed in the two major scientific areas: communication and marketing. with origins in the academic and the practice, advertising was tackled on the one hand, as a means of communication required by those involved in the current economic activities, on the other hand, and the solution to communicational problems of various organizations the media, for example. advertising and communication, in general, are components of contemporary economic and social system. in today's society, advertising has evolved into a complex system of communication, important for both organizations and the general public. the ability to deliver messages carefully prepared to its targets gave over time to advertising a major role in marketing programs of most organizations. different companies, starting from the multinational firms and local firms attaches increasing importance of advertising in order to present their products and services to important markets. in functioning market economies, consumers have learned to use the advertising information in their purchase decisions. a coherent and functional analysis of advertising can be done by calling a vision that incorporates two levels: the descriptive one, which considers issues related to the need to define and differentiate advertising from other marketing tools of communication, and the normative one, that captures the conditions that advertising must meet so that marketing goals can be achieved. the need for strategic vision regarding advertising can be seen as an example of covering the normative aspect of the analysis, while the advertising features and forms can be aspects of the descriptive analysis. the 180 nichifor following considerations are the result of analysis made by the interpenetration of the two levels. defining the advertising the interest regarding advertising resulted in the creation of a body of knowledge that includes vision more or less converging on the role of advertising. the first concrete result took the form of definitions associated with this concept; the definitions tend lately to emphasize same fundamental characteristics: advertising is a communicational paid effort, its financial supporter is identifiable, and the sent message is impersonal. definitions released over the years have been numerous, each of those who have proposed to define the concept participating with elements that have helped shape the content of the concept. marketing literature in romania proposed a number of definitions of this concept, operating as appropriate with a more or less explicit view. thus it is estimated that advertising is "a set of actions aimed at presenting oral or visual indirect (impersonal) message about a product, service or company by any identified supporter (payer) " (popescu et al, 1994). according to a more recent definition, advertising "is a communication technique that involves running a complex persuasive process, for whose realizations are used a number of specific tools, able to cause psychological pressure on the concerned public. the initiator of the advertising communication actions is the sponsor, who in order to achieve communication objectives, wants to send an impersonal message to a well-defined audience regarding the enterprise, its products or services." (popescu, 2004). as the literature in romania, the foreign definitions of advertising are numerous. thus, advertising is defined as "the paid and media intermediated attempt to convince" (o'guinn et al, 2003) or, according to other authors as "a form of structured and impersonal communication, composed from information, usually persuasive in nature, regarding the products, in the broad sense, paid by an identifiable sponsor and transmitted through various media" (arens, 2002). starting from descriptive analysis of advertising, we can highlight a number of its features: 1. primarily, advertising is a form of impersonal communication, the associated messaging being transmitted by means of extremely large addressable media (the mass media). impersonal nature of it is given in the opinion of the some authors by the lack of immediate feedback from the receivers (belch and belch, 2002). 2. advertising is persuasive in nature. the goal of those using advertising is to persuade the public to adopt a product, service, idea, etc. 3. advertising is paid by a sponsor. in the opinion of some authors this feature is even a condition which clearly distinguishes advertising from other forms of marketing communication. publicity, for example, does not fall under the definitions above (o'guinn et al, 2003). 4. the subject of this form of marketing communication consists of both tangible and intangible products (services, ideas). these are not all of the advertising features, but they give only outline that is necessary in delimitation from other elements of marketing communication. in this respect, the above definitions add a possible point at which advertising discussions should start. 181 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro advertising communication process advertising seen as a process is based on the general scheme of the marketing communication process, with a number of specific features related to its content. thus, from the above lines we could see that one of the characteristics is that advertising uses impersonal communication media (television, radio, press, etc.). joining these characteristics with other leads to a specific pattern in which the advertisement is created, sent and received by the target audience. the model shown in figure 1 captures the content of marketing communication mediated by the media. this model explains that the advertising is a finality of a process that involves both institutions and individuals. the process includes two components: production and reception, between them intervening mediation process function, which consists, on the one hand, in the accommodation, which concerns how the communication objectives of sponsor and needs, expectations and attitudes of consumers interact and negotiation, on the other hand, which reflects the manner in which the receptor understands advertising. figure 1 model of mediated communication production accommodating and negotiation message intention reception interaction between the announcer, target audience, agency, media and other social institutions generated by the production of advertising message historical data, the personality and image of the sponsor, the purpose of communication as formative elements of the context of message reception individual message decoding the attributed significance at individual and collective level source: thomas o'guinn, chris allen, richard j.semenik, advertising and integrated brand promotion, 3e, south-western college publishing, 2003 p. 14. barbara stern from rutgers university proposes another model of advertising communication, considering that it is a structured form of the literary text, something that clearly distinguishes from spontaneous interpersonal communication (arens, 2002). the elements of advertising communication process are those above, except that fact that these elements are multidimensional. thus, through these dimensions, communication process elements are found either in the surrounding reality or in virtual reality. beyond these common elements specific to most definitions associated with advertising, there are a number of elements with which this concept and practical approach is differentiated from other forms of communication and marketing specific instruments. in the first position are found structural elements of all forms of communication source, message, medium, receiver, feed-back and noise, but also others related, on the one hand, to the external realities of communication consumer attitudes and competitive environment, and on the other hand, the need for effective communication repetition and the need to coordinate communication (nan and faber, 2004). it is therefore important to analyze these elements in order to emphasize the theoretical characteristics individualizing advertising. 182 nichifor variables related to the source of communication in advertising refer to its characteristics and their potential impact on attitudes. over time, a number of features of the source of communication have won the attention of specialists: credibility, attractiveness and power. they aim particularly one that effectively communicates the message and less the one who creates or produces the message. credibility as a source of communication feature can be approached from two perspectives: the expertise and confidence (petty et al, 1983). expertise is the degree of experience and knowledge of the source in relation to a particular issue, while trust refers to the probability that the source to issue information in a sincere manner. attractiveness can be addressed in turn in terms of three dimensions: pleasure, similarity and physical attractiveness. the third characteristic of the source, i.e. power, keep the position of the source as a potential generator of rewards or penalties for the receiver communication. all these features of the source appear to be more or less important to different types of communication. thus, in the case of interpersonal communication the power seems to be the characteristic that exercises a high influence on the communicative purpose, in turn, in advertising, credibility and trust appear to be more important. variables related to the message are equally important in trying to identify the features of advertising communication. they refer to the type of used message, as well as to aspects of form or style. regarding the type of used message, exactly the type of call that is put on the receiver there are three broad categories into which they fall: ethos call type, pathos call type and logos call type (nan and faber, 2004). ethos type calls occur when the receiver focuses more on communication and less on the message source. this is especially the case of interpersonal communication where participant’s direct link favors this process. pathos type calls involves that the source to invoke rational or emotional arguments in the message in order to have an effect on the receiver. advertising is a type of communication that often involves such a speech, well known being this approach attempts to influence the various structural elements of consumer attitudes. logos call type is invoking arguments drawn from general recognized principles, being first specific to public information. in terms of form and style of the message, one can discuss items such as: the order of the arguments, the type of conclusion, argument repetition (severin and tankard, 1997). of these, the repetition is what confers advertising its distinctiveness from interpersonal communication. thus, it tends to use the repeated exposure to the same message in order to influence the audience. variables related to media can also provide a criterion for differentiate advertising from other forms of communication. studies in this direction have insisted on distinguishing characteristics of the different channels used for personal or impersonal communication. whatever media one chooses, the originator of the communication intends to send a message to be perceived and understood by the audience. as with the interpersonal or public communication, particular message to be transmitted by advertising will be adapted to the characteristics of the media. what differentiates advertising from other forms of communication is the overriding interest in ensuring the coordination and control of messages sent through various media. this is especially true in the current context in which the need for coordination is closely linked to communication effectiveness and impact (thorson and moore, 1996). variables that define the receptor and its response differentiate advertising from certain forms of communication. thus, as in the case of public or interpersonal communication, the impact of advertising is largely influenced by a number of features of the receptor, such as: gender, age, income, personality, attitude, lifestyle, etc. the answer or feed-back it is the differences that can operate on different forms of communication. direct and repeated feed-back is a characteristic of interpersonal communication, while the impersonal, indirect and less immediate feedback is a characteristic of advertising and public communication. 183 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro another structural element of communication is the noise. it can be defined as any issue that interferes with the message. marketing communication in general is considered a form of communication where the noise is very present. it is due to factors related, on the one hand, to the receiver: psychological barriers, and on the other hand, to the context in which the communication take place: cultural, physical, competitive factors etc. (epuran, 2002). unlike interpersonal or public communication, in advertising the most intense noise is due to competitive messages. in today's highly competitive markets, the number of messages promoting similar products, marketed under different brands, is very high and as a result, there is interest of the communication initiator to detach the message and to avoid interference with competing messages. from the above lines can be seen that advertising as a form of communication has a number of characteristics. how the consumer sees the advertising information, the effect of repetition, the need to coordinate messages and the "noise" are the cornerstone of the process of communication that give shape to advertising. if the receiving mode or the effects of repetition are factors that have accompanied advertising throughout its development, the need for coordination and communicative context are a novelty factors that have aroused the interest of specialists. advertising as a persuasion tool beyond these issues, related to communicational perspective on advertising, another dimension is related to the effort of conviction, typical to advertising. most definitions of advertising, otherwise presented in the previous lines, underline its persuasive character. the goal of those using this type of marketing communication is to create favorable attitudes or reinforce existing attitudes so that they obtain a purpose in the form of purchase of a product or a brand. this process of persuasion is closely linked to the concept of attitude. most theories of advertising have explored the connection between persuasion and attitude, identifying possible responses that the receiver can give to advertising information. explanations are not always convergent, but they provide an overview of how consumers respond to advertising stimuli. thus, considering consumer behavior as a cybernetic-type behavior, which involves a series of inputs, processing and outputs, and seeing advertising as a part of those entries, one will be achieve advertising effects similar to logic shown in figure 3 (kotler, 2000). as highlighted in this framework, advertising is an entry for consumer. message content, media planning and repetition are at the same time inputs and components of a strategy that has the role of triggering the receptor reaction mechanisms. reaction mechanisms can be internal components of the black box, such as cognitive or emotional reactions, and external, visible through a displayed behavior: acquisition loyalty, etc. the knowledge of the effects of advertising usually involves identifying those internal or external customer-specific side effects that led to the emerging of certain theories regarding the response to advertising. the starting point in the assessment of the effects of advertising belongs, apparently, to st. elmo lewis, who developed in 1898 the famous aida model (attention interest desire action). since then, however, the literature has shown many other opinions in this regard. among the most popular theories on consumer reaction to information of a promotional nature are (vakratsas and amble, 1999): • market response theory; • cognitive response theory; • affective response theory; 184 nichifor • persuasive hierarchy theory; • theory of minimal involvement; • integrative theory. figure 3 the conceptual framework in studying the effects of advertising source: demetrios vakratsas, tim ambler – how advertising works: what do we really know?, journal of marketing, vol.63, january 1999. market response theory is based on the assumption of a direct relationship between advertising and buying behavior, measured by sales, market share and brand choice. this excludes the presence of intermediate effects that may occur at the consumer level, for example expressing brand loyalty by number of repeated acquisitions and not through a psychological predisposition of the individual. the theory has two dimensions: aggregate and individual. aggregate dimension of the theory is based on the relationship between market data regarding advertising spending or the audience, on the one hand, and brand sales or market share, on the other hand. individual dimension points toward the choice of individually brand or number of exposures necessary to generate individual or household purchasing behavior. cognitive response theory assumes that advertising has the ability to influence the relative importance that individuals attach to various attributes of the product, purchase decision being purely rational (thorson and moore, 1996). the primary role of advertising is to provide utilities related to information or search costs. the model considers that on the market there are two major categories of goods: those involving consumer experience and those related to the search process. the goods in the first category are characterized by the fact that they involve the need for repeated use so that the consumer can assess their quality. the second category can be easily evaluated on the basis of objective criteria such as price, prior use not being necessary. this classification, however, is problematic because numerous goods involve both consumer experience and search. cognitive response theory is the basis of the link between advertising and price elasticity of demand. on the one hand, high quality and product differentiation entail, advertising inputs message content, media plan, repetition filters motivation, ability, involvement consumer cognitive affective behavior consumer behavior selection, use, loyalty, preference 185 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro in accordance with the theory of strength of the market, a decrease in price elasticity of demand, especially visible in the case of products involving the experience and, on the other hand, according to the information theory, actively seeking information by consumers generates an increase in sensitivity to price (bagwell, 2005). studies in this direction have led to results that seem to confirm both theories (vakratsas and amble, 1999; reed and ewing, 2004). an obvious consequence of the theory of cognitive response is that by which the sponsors attempts to create an effective advertising, using initially unique selling proposition, and then the product positioning in the market. affective response theory is a different approach from that previously shown by the fact that it focuses on the emotional response that advertisement can generate (holbrook and o`shaughnessy, 1984). according to this theory, consumers form their preferences based on pleasure, feelings or emotions arising from exposure to the message, the objective characteristics of the product playing a less important role in this direction (gardner, 1985). it is also required repeated exposure to the advertisement to determine the desired effects, but this repeated exposure can lose effectiveness when the frequency exceeds a certain level (wear in wear out effect). this affective response takes into account, on the one hand, the promoted brand and, on the other hand, the advertisement itself. the creative concept may be largely based on melody, whose emotional effects are recognized. the problem with this theory is the impossibility of separating the affective effect from the cognitive ones. although it is undeniable that advertising induces affective effects, they cannot however be detached by the cognitive ones. persuasive hierarchy theory assumed that in order to influence sales advertising should generate a number of effects on the consumer. such effects are generated in a particular order, the first being considered as preconditions and at the same time, being the most important. it is believed that these effects are: cognitive effects, emotional effects and behavioral effects. also occur, a number of factors with mediating role: the degree of involvement and attitude toward message. involvement has been an object of intense study addressed in the literature. it can be defined as the personal degree of importance given to a product or situation, including the perceived risk in the purchase (reed and ewing, 2004). the degree of involvement usually varies from high to low, without considering, however, that it can be addressed simply by this dichotomy. in fact, the degree of variation is constant from one end to the other. according to this theory, there were a number of models. elaboration likehood model was proposed by richard e. petty and john t. cacioppo, they considering that consumer response is cognitive one that can take two directions, one related to the evaluation of product attributes and the other referring to the execution of the message (lee and schumann, 2004). both directions follow the cognitiveaffective response. another model aimed at intermediate effects that advertising generate, is that proposed by deborah macinnis and bernard j. jaworski c. (smith and yang, 2004). according to them, at the consumer level occurs six levels of mental processing, which are the following: 1. analysis of the characteristics which have the effect of affective mood 2. primary classification with affective transfer effects 3. analysis of meanings, whose effect is an heuristic analyze 4. integration of information, with primary persuasive effects 5. assuming the roles with persuasive effects of empathic nature 6. processes of construction with effects of self-persuasion. the presented theories and models refer to the importance of involving as the moderator element in the advertising communication. minimal involvement theory is an alternative response to the model promoted by hierarchy theory persuasive. according to this theory, the consumer response to advertising involves the following stages: cognitive response, behavioral response and affective response. the experience is one that has the greatest importance in the 186 nichifor formation of preferences and the role of advertising is to reinforce consumer habits and experience. andrew sc ehrenberg is the one who proposed in 1974 awarenesstest-reinforce model based on the theory of minimal involvement (barry, 1987). this model implies that the consumer buying behavior has a high degree of regularity and predictability, the habits having a significant impact on the choice of the brand more than advertising and other forms of communication. integrative theory supports the presence of the cognitive, affective and behavioral effects, but the order in which these effects occur is dependent on a number of factors such as: the product, the level of involvement and the context of the acquisition. based on this theory have been developed a number of models. the fcb grid proposed by richard vaughn considers two dimensions required in the categorization of products: level of involvement, which can be high and low, and type of motivation of the individual, being either cognitive or affective (vaughn, 1980). level of involvement related to this model refers therefore to product category, not to a brand or a particular situation. the implications of this operating pattern are related to the type of used advertising. all these theories claim the presence of different effects of the advertising effort (weilbacher, 2001). however, they are different in that the stresses to a greater or lesser extent a given type of effect, whether cognitive or emotional. the similarity, on the other hand, is related to emphasize given to the concept of experience. latest opinions on the issue suggests that the three effects are unbreakable and should be addressed not as a hierarchy, but rather as dimensions of a complex reality that characterizes the consumer and his reaction to the phenomenon of advertising (vakratsas and amble, 1999). conclusions advertising approach is based, as we have seen, on a variety of theories and explanatory models. whether they define how advertised is developed in social or individual, or explain how it affects the lives and behavior of the individual in his capacity as consumer, they have the merit providing new directions and perspectives of development of advertising practice. it can be said that advertising has been and remains a very important area of interest, this being due to its impact on human society in general and given its communication impact. the multitude of theories and models express very clear that the study of advertising was not static, but dynamic closely linked to socio-economic development. we are currently witnessing reconsideration of its conceptual framework, a number of specialists talking even about new advertising. references arens, william f. (2002), contemporary advertising, 8/e, mcgraw hill/irwin, boston. bagwell, kyle (2005), the economic analysis of advertising, available at http://www.columbia.edu/~kwb8/papers.html. barry, thomas e. (1987), the development of the hierarchy of effects: an historical perspective, current issues and research in advertising. belch, george e., belch, michael a. (2002), advertising and promotion: an integrated marketing communications perspective, mcgraw hill/irwin, boston. epuran, gheorghe (2002), comunicarea în afaceri – strategii, tehnici, modele de decizie, ed. alma mater, bacău. 187 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro gardner, meryl paula (1985), mood states and consumer behavior: a critical review, journal of consumer research, vol. 12, december. holbrook, morris b., o`shaughnessy, john (1984), the role of emotion in advertising, psychology and marketing, no. 1. kotler, philip, armstrong, gary, cunningham, peggy h. (2000), principles of marketing, fifth canadian edition, prentice hall. lee, eun-ju, schumann, david w. (2004), explaining the case of incongruity, marketing theory, vol. 4 (1/2). nan, xiaoli faber, ronald j. (2004), advertising theory: reconceptualizing the building blocks, marketing theory, vol 4 (1/2). o'guinn, thomas, allen, chris semenik, richard j. (2003), advertising and integrated brand promotion, 3e, south-western college publishing. petty, richard e., cacioppo, john t., schumann, david (1983), central and peripheral routes to advertising effectiveness: the moderating role of involvement, journal of consumer research, vol. 10 l september. popescu, ioana c. (2004), comunicarea în marketing, editia a ii-a, editura uranus, bucureşti. popescu, ioana c., şerbănică, daniel, balaure, virgil (1994), tehnici promoţionale, ed. metropol, bucureşti, reed, peter w., ewing, michael t. (2004), how advertising works: alternative situational and attitudinal explanations, marketing theory, vol. 4 (1/2). severin, werner j., tankard, james w. jr. (1997), communication theories: origins, methods, and uses in the mass media (4th edition), longman. smith, robert e., yang, xiaojing (2004), toward a general theory of creativity in advertising: examining the role of divergence, marketing theory, vol. 4 (1/2). thorson, esther, moore, jeri (1996), integrated communication: synergy of persuasive voices, mahwah, nj: lawrence erlbaum. vakratsas, demetrios, amble, tim (1999), how advertising works: what do we really know?, journal of marketing, vol.63, january. vaughn, richard (1980), how advertising works: a planning model . . . putting it all together, journal of advertising research, 20(5): 27-33. weilbacher, william m. (2001), point of view: does advertising cause a ”hierarchy of effects”?, journal of advertising research, vol. 41, december. 188 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 37, 2022 http://sceco.ub.ro 35 share of the population with higher education in bacau rank of the county in romania eugenia harja “vasile alecsandri” university of bacău eugenia.harja@ub.ro oana-ancuța stângaciu “vasile alecsandri” university of bacău stangaciu@ub.ro daniela măgirescu bacău county statistics office daniela.magirescu@bacau.insse.ro abstract the present paper starts from the analysis of the degree of education in higher education in romania in recent years and the highlighting of the gaps between the member states of the european union, with an emphasis on the existing imbalances between the different areas of the country. thus, if the european commission defined as desirable a "european education area" in which by 2030 at least 45% of young people aged between 25 and 34 will have graduated from a university education program, in romania the latest data indicate a level below 23% and slightly decreasing in recent years, compared to the european average of 41.2%. the last population census from the end of 2021 indicates for the north-east region a proportion of only 14.6% of the population aged 20 and over who have completed higher education in the total population of this age group, being the last region in the country, but also from the eu. the dynamics between the last two censuses confirm the lowest increase in this indicator for the poorest region, with +21.4% compared to the romanian average of +25%. within the region, bacău county, with an average of 13.2% at the last census, has the lowest dynamics not only in the region but also in the country, with an increase of only 11.1% of this proportion. keywords higher education; territorial disparities jel classification m41 romanian higher education in the current european context one of the priority objectives of the european union was and remains to increase the level of education in higher education among the population, this being the main influence in the formation of a competitive workforce and the economic development of the member states. although education is a priority area for romania as well, education continues to face a high degree of underfunding. thus, although through the education law, romania committed to allocating a minimum of 6% of gdp to education, this percentage is far from being achieved, being currently slightly over a third of the proposed target. even though the funds allocated to education have registered slight increases in recent years, they were insufficient in the conditions of a high degree of inflation and the need, thus reaching the lowest percentage of the gdp allocated for this year. the effects of investments in education are seen over time and not immediately, as they are considered among the most effective investments. due to the poor financing of romanian education, the gaps between the member states are share of the population with higher education in bacau rank of the county in romania 36 increasing. thus, if the eu proposed as a target for the year 2023 the increase of the share of higher education graduates among young people aged 25-34 to 45%, romania is currently at the bottom of the ranking, with a percentage of only 23%, decreasing in the last three years. according to official data, in 2021 romania had a share of 18.8% of the population with higher education in the total population between 25 and 64 years old, compared to the eu average of 33.6%, being the last country in the distribution of member states in office by this indicator. this share registered an increase of 28.77% compared to 2011, while the eu average experienced an increase of 32.25%, thus deepening the gaps between the lowest level in our country and the highest level observed in finland (2011) and ireland (2021), gap increasing from 2.7 times to over 2.8 times. figure 1 share of the population with higher education (tertiary education (levels 5-8)) in total population 25 years 64 years, in the years 2011 and 2021, in eu27 member states (%) source: personal processing of the eurostat available data the discrepancies between member states can be clearly seen in figure 1, and in the future we expect an increase in these gaps due to an even lower allocation of gdp for education in recent years. as romania is one of the poorest countries in the eu, without higher education funding, with a population having a standard of living well below the average, it will remain far from one of the priority areas on the eu agenda, "ensuring a higher education accessible on a large scale, more favorable to inclusion and increasing its degree of interaction with society"1. disparities in the level of higher education between romania's regions and counties if there are large gaps between the member states of the union regarding the level of higher education of the population, the same disparities are also observed within the country, the degree of development being a primary influencing factor. thus, the poorest regions also have the lowest share of the population that has completed higher education in the total population aged 20 and over, the discrepancies being accentuated between the last two censuses, according to figure 2. 1 resolution of the european parliament of 11 november 2021 on the european education area 14 ,6 15 ,0 1 8, 0 18 ,2 18 ,6 2 1, 0 23 ,6 17 ,2 16 ,2 27 ,7 23 ,3 25 ,4 19 ,2 27 ,7 25 ,1 31 ,9 29 ,7 36 ,9 33 ,7 39 ,3 32 ,1 3 4, 6 33 ,5 34 ,8 3 7, 7 37 ,0 3 9, 2 18 ,8 20 ,0 24 ,9 26 ,4 27 ,9 29 ,3 29 ,6 31 ,1 31 ,7 32 ,1 33 ,2 34 ,6 34 ,6 39 ,0 40 ,3 40 ,7 40 ,7 41 ,2 42 ,0 42 ,3 43 ,1 44 ,9 45 ,4 46 ,7 47 ,0 50 ,5 5 2, 7 0,0 10,0 20,0 30,0 40,0 50,0 60,0 r o m an ia it al y c ro at ia c ze ch ia sl o va ki a h u n ga ry b u lg ar ia p o rt u ga l m al ta g e rm an y p o la n d g re e ce a u st ri a la tv ia sl o ve n ia sp ai n fr an ce es to n ia d e n m ar k fi n la n d n et h e rl an d s b e lg iu m li th u an ia sw ed en c yp ru s lu xe m b o u rg ir el an d 2011 2021 eu27 2011 (25,4%) eu27 2021 (33,6%) harja, stângaciu, măgirescu 37 figure 2. share of the population with higher education in the total population aged 20 and over, at the 2011 and 2021 population censuses, by regions (%) source: personal processing of the ins – tempo online available data between the two censuses, all regions registered increases in this indicator, the country's average being +25%, the north-east region having the lowest dynamics (+21.6%), which led to a slight increase in the gap maximum among counties from 2.8 times higher in the bucharest-ilfov region compared to the northeast in 2011 to 2.82 times in 2021. in 2021, the northeast region had a 14.6% share of those with higher education in the total population aged 20 and over, compared to the country's average of 20.5%, being in last place in the eu from this point of view. within the north-east region, bacăul was in fourth place from this point of view, after the counties of iași (22.1%), suceava (13.5%) and neamț (13.3%), although the last county specified does not have a university center. the indicator experienced a positive dynamic between the two censuses, in all counties of the country, between +11.1% and +76.1%, with bacău county in last place with only +11.1% (+1.3 points percentage), well below the average of romania (+25%) and the north-east region (+14.6%). if in 2011 bacău was in 26th place in the country, in 2021 it dropped to 32nd place in terms of the share of those with higher education in the total population aged 20 and over, an observation also seen in figure 3. two comparative maps show that although the weights have increased in all counties, the most deficient areas remain those in the east and southeast of the country. this situation is obviously closely related to the degree of economic development of different areas in the country, the more developed counties being much more attractive from the point of view of the offer on the labor market and the salary for graduates of higher education. without a real policy of priority allocation of education funds to poorer areas, the discrepancies between counties observed in both figure 3 and 4 will be maintained or even increased, to the detriment of the eu's desired equal access to education and high quality training of workforce. perpetuating the financing of higher education according to criteria that favor areas with large university centers will lead to widening the gaps between counties, instead of a harmonious development of the entire national economy. the eu reports confirm the fact that romania has the worst result regarding the equity of education.2 2 education and training monitor 2022, published by the european commission share of the population with higher education in bacau rank of the county in romania 38 census 2011* census 2021* * values truncated to one decimal place figure 3 share of the population with higher education in the total population aged 20 and over, at the 2011 and 2021 population censuses, by county (%) source: personal processing of the ins – tempo online available data in the north-east region, the area known to be one of the poorest in the european union, as in all areas with an impoverished population, higher education is based more on budgeted places, a small part of those who would like to attend a college that can afford to pay a fee, proof and high dropout from the first year and beyond. it can be seen from figure 3 that including the county of iași, a strong and traditional university center, it ranks 8th in the country, with a share of only 22.1% of higher education graduates in the total population aged 20 and over, compared for example with brașov county, a smaller county, where higher education developed more in the years after the revolution. if in 2011 half of the country's counties were below 12.4% share of those with higher education, in 2021 the median level increased to 15.5%, but it can be seen from figure 4 that the number of counties that make the grade also increased discordant, the gap between the minimum and maximum level remaining around 4.65 times. harja, stângaciu, măgirescu 39 figure 4. boxplot of the distribution of counties according to the share of the population with higher education in the total population aged 20 and over, at the population censuses of 2011 and 2021 source: personal processing of the ins – tempo online available data trying to explain these trends, we also analyzed the evolution of the population aged 20 and over in romania, which is decreasing in almost all the counties of the country (with the exception of ilfov, bistrița-năsăud and suceava). for the whole country, the reduction of this population segment between the two censuses was -5.6% (-882,725 people), and in bacău county it changed by only -1.8% (-8,358 people). decreasing the population of the age group of 20 years and over, in the conditions of the increase in the number of graduates with higher education, we would expect an increase in the share of those who have completed such studies in total, but this is not valid in all the counties of the country. figure 5. the population aged 20 and over, at the 2011 and 2021 population censuses, by county source: personal processing of the ins – tempo online available data as can be seen in figure 5, bacăul records a reduction of the population in this segment by -1.8%, and the number of those with higher education increases by only 9.1% (+5,038 people), compared to +18% average of the country and +18.8% average of the northeast region. although the population reduction is one of the smallest in the country, being the 2nd county with a small decrease in the population aged 20 and over, the increase in the number of those with higher education is +9.1% (+5,038 people). share of the population with higher education in bacau rank of the county in romania 40 this, given that in most counties the dynamic is over +17% (between +3.2% and +30.8%), without taking into account ilfov county where the increase is over 2.4 times, motivated by the proximity of the capital and the daily commute to it of a large number of highly qualified people. bacău county, the 9th county in terms of the population aged 20 and over (without the municipality of bucharest), is the 16th county in terms of the number of people aged 20 and over who have completed a form of higher education, this gap between the ranks of the two indicators, also highlighting the fact that it is a disadvantaged county in terms of higher education, although it has a university center. analyzing the link between the rate of growth/decrease of the population aged 20 and over (xi) and the rate of the share of those with higher education in the total population aged 20 and over (yi), results in a link of medium intensity, (rx,y =0.668), the dynamics of the population in this age segment determining only 44.67% of the dynamics of the share of those with higher education. therefore, other influencing factors prevail, such as: the degree of development and attractiveness of the area, the allocation of education funds with priority to these areas, to the detriment of the areas left behind, thus deepening the already existing discrepancies. another factor would certainly be the migration of the highly qualified labor force, to the areas with high attractiveness in terms of the offer of better paid work and the possibilities of spending free time. from figure 6, bacău county can be seen as being at the lowest extreme in terms of the dynamics of the share of those with higher education in the total population aged 20 and over, with a reduction of the population in this age group by -1, 8% between the two censuses, but an increase of only 11.1% in the share of those with higher education, well below the country's average of +25%, being the last county for this indicator. figure 6. scatterplot between the dynamics (+/%) of the population aged 20 and over and the dynamics (+/%) of the share of the population with higher education in the total population aged 20 and over between the last two censuses, by county source: personal processing of the ins – tempo online available data if we consider that the reduction of the population aged 20 years and over in most counties is based in somewhat similar proportions on the reduction of the birth rate and the elderly population, we would expect to a certain extent that a greater reduction of this population group lead to a greater increase in the share of those with higher education in total, due to new graduates from 2011-2021. among the counties with university centers, brașov (3% population and +30.8% share with higher education), sibiu is above the regression line, with below-average population reductions, but with above-average dynamics in the share of those with higher education (-2.9% and +29.1% respectively). harja, stângaciu, măgirescu 41 although bacăul has a university center with a tradition in the region of moldova, with attractiveness mostly for the young people of the area, due to a small number of budgeted places and the high degree of poverty, most of them cannot afford to pay the school fees for the places with a fee offered, this being one of the reasons why the share of the highly qualified population in total is the lowest in the country. for this reason, the state should support more areas of this kind, both from the economic point of view and from the point of view of the development of existing universities, in order to reduce the gaps between the different counties and not to make them worse in the future. the evolution of the number of universities and faculties by county and the link between them and the share of the population with higher education in total the number of higher education institutions in the country decreased year by year, from 101 in 2014 to 88 in 2021 (-12.9% and -13 universities, respectively), amid the disappearance of some private universities that could no longer against the competition becoming unattractive. in the comparative maps over time in figure 7, the disappearance of university institutions from the counties of satu-mare and carașseverin can be observed, most of them being concentrated separately in the capital, followed by the counties of cluj, iași and timiș. the north-east region loses 3 universities, reaching a total of 11 in 2021, and bacău county remains constant with two universities, one state and one private. 2014 2021 figure 7 number of higher education units in 2014 and 2021, by county source: personal processing of the ins – tempo online available data regarding the number of faculties, it decreases from 583 in 2014 to 543 in 2021 (-6.9% and respectively -40 faculties), most being concentrated in bucharest (149), followed by cluj counties ( 49) and iasi (44), each with over 40 faculties. a second group of counties with over 20 faculties is in descending order: timiș (38), constanța (24), bihor (22) and brașov (22). share of the population with higher education in bacau rank of the county in romania 42 2014 2021 figure 8. number of faculties in 2014 and 2021 by county (by faculty location) source: personal processing of the ins – tempo online available data from figure 8 you can see the similarity between the two maps, especially in the case of botoșani and ialomița counties, which remain without any faculty, and tulcea county, which gains a faculty compared to 2014. bacău county ranks 10th in terms of number of universities and on the 18th place with the 6 faculties, along with gorj and caraș-severin counties. r2=62,5% (all counties) liniar (p=0,00) r2=34,0% liniar (p=0,00) figure 9. scatterplot between the average number of faculties from 2014-2021 and the share of the population with higher education in the total population aged 20 and over at the 2021 population census, by county source: personal processing of the ins – tempo online available data analyzing the link between the number of faculties and the share of people with higher education in the total population aged 20 and over, it results that the first variable determines the second in a proportion of 62.5%, the difference of 37.5% being the influence other factors. this result is largely influenced by the large university centers, bucharest, iasi, cluj and timiș. excluding these counties, the number of faculties no longer remains a significant influencing factor on the variation in the share of those with higher education in total, causing its variation to be only 34%. conclusions from everything presented, it follows that romania is far from the european targets regarding the level of education in higher studies among the population, worsening even more the already existing inequities between different areas of the country, with consequences also on the deepening of the gaps in the economic and social development of them. number of faculties number of faculties harja, stângaciu, măgirescu 43 access to higher education for the widest possible category of young people, from all areas of the country, would only raise the level of qualification of the future workforce, which would reflect on a more advanced economy towards which all member states are aiming. the european parliament encouraged education, constantly emphasized the development of higher education and the link between it and employment, with the objective of increasing to 45% the share of young graduates between the ages of 25-34 in the total population of this age segment, or romania is currently even slightly below 23%. also, the european target is to reach by 2030 a 50% share of people who have completed higher education in the total population aged 30 and 34, another target that romania will certainly not be able to achieve by continuing the policy of underfunding education in general and especially of the superior one. the europe of 2020 was intended to be "a competitive europe with smart growth", the gaps between the different regions of the eu still exist, with the richest regions experiencing important growth and the poorest having a harder time reaching european targets. this is also the case of the north-east region, known as one of the least developed of the eu regions, both from an economic point of view and the level of education of the population, regardless of which age segments we analyse. precisely for this reason, it would be appropriate to assign greater importance to this region, in the priority allocation of more important funds to this area, for all areas of economicsocial life, of course, and higher education. in conclusion, in order for romania to be integrated into an "educated europe", a coherent strategy for the development of higher education is needed, providing sufficient funds for it, reducing the burden on universities to cover these gaps and prioritizing measures to increase the quality of teaching. references harja, e., stângaciu, o.a., (2009) "analiza datelor statistice utilizând spss" editura alma mater. stângaciu, o.a., harja, e., (2014), "gender demographic disparities in bacau county " studies and scientific researches. economic edition, the university “vasile alecsandri” of bacău, nr. 20/2014, available at url: (http://sceco.ub.ro/index.php/sceco/article/view/269 ) consiliul național de statistică și prognoză a învățământului superior, (2022), propunerea cnspis privind metodologia de alocare a cifrei de școlarizare pe domenii universitare pentru studii universitare de licență, master și doctorat în anul 2018/2019, available at url: (https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocarecifrei-de-%c8%99colarizare-pe-domenii-universitare ) ministerul educației, (2022), notă de fundamentare privind aprobarea cifrelor de școlarizare pentru învățământul preuniversitar de stat și pentru învățământul superior de stat în anul școlar/universitar 2022-2023, available at url: (https://www.edu.ro/sites/default/files/nota_fundamentare_proiect_hg.pdf ) resolution of the european parliament of 11 november 2021 on the european education area education and training monitor 2022, published by the european commission european commission (2023) eurostat, data set, available at url. (http://ec.europa.eu/eurostat) ins tempo online (2023), data set, available at url. (http://statistici.insse.ro:8077/tempo-online/ ) http://sceco.ub.ro/index.php/sceco/article/view/269 https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocare-cifrei-de-%c8%99colarizare-pe-domenii-universitare https://www.edu.ro/consultare-public%c4%83-proiectul-metodologiei-de-alocare-cifrei-de-%c8%99colarizare-pe-domenii-universitare https://www.edu.ro/sites/default/files/nota_fundamentare_proiect_hg.pdf http://ec.europa.eu/eurostat http://statistici.insse.ro:8077/tempo-online/ microsoft word apostoaie constantin marius_eng.doc romanian legal rules and promotion of tourism in the community ion tutuianu, “vasile alecsandri” university of bacau, romania abstract: in the context of eu enlargement, was normal and record tourism market development and competition. but tourism market works best when no participant's able to dictate terms. otherwise, market monopolization occurs causing regression, generating serious disputes and contradictions. therefore it proceeds to adoption and use of special legislative measures at national and community to counter these trends. the role falls to the state to be the organizer of the optimal conditions for tourism market development through the application of economic laws and removing barriers, promoting basic levers of the tourism market: demand, supply and competition as a way of confrontation between the owners of tourist offers and market demand . keywords tourism, tourist, rules, community jel codes: k20, k33 concepts of "tourism and tourist" the vast majority of dictionaries mentions occurring because of etymologically the word "travel" comes from the english word 'tour' (travel) or to tour, to make the tour (to travel, make a journey of wandering), was created in england around the 1700s, to describe the work of the voyage to europe in general and france in particular. also, turn the english term derives from the french word “tour” (travel, walk, move outdoors) was later adopted by the vast majority european languages, with the purpose of relaxation, recreation, leisure. french term ties are much deeper, it derived from the greek word "tournos" and from the latin "turnus" meaning the whole circuit, unlike "peripliu" which refers to a circuit, but only at sea around an island, country, continent or around the earth. was acceptable and if jewish origin of the word 'tour', in ancient hebrew word 'tour' the concept of travel, discovery, recognition, mining. based on these speculations linguist, late last century and this century, the word gets real scientific definition. thus, tourism can be defined as a phenomenon related to leisure travel, knowledge of places and people. making their appearance at the end of the nineteenth century tourist phenomenon is characterized by an accelerated growth in recent decades, reaching, at the beginning of xxi century, a separate economic activity, which was constantly expanding. increases in tourist activity started to appear and the first attempts to develop theoretical concepts that define the concepts of travel and tourism. strong tourism development after 50 years has led to increasing concern to define the social and economic phenomenon of contemporary society, is currently make efforts to develop a studies and scientific researches economic edition, no. 15, 2010 295 definition that covers all of its specific elements which are consistent with changes in economic and social environment. in this respect, the international conference on tourism and tourism statistics, in ottawa, in june 1991 gave a new interpretation of the basic concepts of tourism: thus, tourism can be defined as a business person who travels outside his usual environment for less than a specified period of travel whose principal purpose is other than the exercise of an activity remunerated from the place of visit. the term "normal environment" is meant to exclude travel and travel within the place of strength routine, and the phrase "less than a specified period of time" is meant to exclude long-term migration, and ultimately not the term "exercise of an activity remunerated from the place visited" is intended to exclude the phenomenon of migration for employment. located in close interdependence with the term "tourism", the concept of "tourist" has received great attention of specialists in tourism, tourism experts of the national league considering any person who travels for 24 hours or more in a country his home country is not stable. widening international tourist traffic and shaping tourism as a separate economic activity has created global coordination problem of tourist activity. close international collaboration in tourism, is simplified by the world tourism organization (o.m.t.) which took over in 1975 international positive experience of cooperation of the international union of official travel organizations (uioot). the fundamental objective of world tourism organization is "promote and develop tourism in order to contribute to economic expansion, international understanding, peace and prosperity, and the universal respect and observe human rights and fundamental freedoms without distinction of race, sex, language or religion. in romania, the most important role in coordinating activities at the national interest is the ministry of tourism. tourism is an activity that reflects and combined effort with several economic sectors. given this, increased tourist activity causes the development of national economy (industry, agriculture, transport, trade) is tourism is a more dynamic element of the global economic system. certainly the emergence of tourism activity creates jobs, both in specific areas of activity tourism and in other branches. besides the obvious economic importance to them, and tourism are important socially, manifested as an active means of raising education and training, culture and people, recreation, relaxation, but recovery of strength and potential work, rest, motion, and climatic balneary treatments, helping to maintain physical health of the population. forms of tourism with practice and trade wars that have pushed people beyond the influence of the social group which were started and the journey, thus locating it in the primitive village. ancient greeks desire was to facilitate and to gain security for visiting remote towns, contracts concluded by mutual visits, with people of the same occupation, using "sumbolonul", which is basically the precursor passport when you sail. to visit the holy places, healing baths and festive games held at regular periods, the travel between the greek states were relatively large masses of people involved. in the middle ages more traveling merchants, ambassadors, priests and for religious pilgrims visiting the holy places. an impressive number of passengers was composed of scientists, artists, journeymen and students headed to universities and cultural centers, although the roads were unsafe. a french monk, named aimeni picaud wrote the first guide and trained in 1130 ad pilgrims to reach santiago de compostela, along a road as less difficult. developing trade led to the development of commercial travel and the consecration of trade studies and scientific researches economic edition, no. 15, 2010 296 routes, roads linking east with west europe, the development of passenger traffic with the effect of development communications and the hospitality industry: in the sixth century and seven century and slower but in the eighth century, a very fast pace. phenomenons being among which were imposed in the contemporary era tourist activity grew dramatically, representing a feature of the last century and especially the second half. numerous studies have sought to detect trends in technical and economic development made in recent years highlighting the extraordinary range of technical changes, economic and social, in terms of years to come. potential natural and man-is "source" of various forms of tourism, which under the conditions of our country are united in a wide range. in romania the main categories of tourist resources and generate basic forms of romanian tourism: mountain tourism (recreation, winter sports, hiking, speoturism, climbing, scientific knowledge, etc.), spa (spa treatment, climatic, rest), the season (rest , health spa, leisure, sports), hunting and fishing, tourism and leisure sports, cultural tourism (knowledge, educational and instructive), business, scientific, etc. congress. the most comprehensive classification considered co retrieval enables both tourists and incentive travel preferences tourism and tourist-generating resources. community and national rules on promoting tourism u tourism policy e with the signing of the accession treaty, romania entered its last stage its road to european union apartenten a. the consequence of this issue is on the one hand, there is commitment and complying with the romanian authorities documents governing economic activities, political, social, and secondly, people are increasingly reporting the parameters that characterize the living conditions of residents of eu countries , advanced countries, which have a real market economy, and operating based on a true democracy. in subsequent years, romania had to meet all the requirements of integration, but only in areas of legislation and economics, but participants in economic life: producers, entrepreneurs, traders, service providers and ultimately consumers, to form a basis gâdire and action of subjects like european union countries. an important role in the mechanism of competitive consumer plays. once a country's economic development, consumer role becomes more complex he is confusing a number of imbalances that affect it in various aspects, but particularly in general economic and socially. by means provided by law, the state protects citizens as consumers in ensuring1 unhindered access to the necessary products and services, informing them complete and accurate correction of the characteristics of the goods / services, defense and enforcement of rights and interests of consumers against unfair practices. like other aspects of human life, tourism can not remain outside the scope of impact-induced change, the most important issue is how we use your free time has changed a lot, adding quantitative dimensions of being qualitative. tourism professionals need to adapt all this free time, change using imagination, creativity and innovation2. i have to stress role of tourism supply, demand supply is perceived as an "image" constructed by combining and synthesizing all information received by each tourist potential. the european union in hospitality and tourism activity is regulated by a series of directives, regulations, decisions and recommendations3. given the above, we intend to overview the current state of the problem of eu regulations 1 bojin e., tribuna economica,nr.3/1998,p.17. 2 ileana raducan, dorina tanasescu, tribuna economica, nr.3/1998, p. 35. 3 iuliana mihalcea, pachet documentar targul national de turism, bucuresti,2002. studies and scientific researches economic edition, no. 15, 2010 297 and romania. the european commission has recognized 25 years ago still important role of tourism in the european economy, which is why more and more engaged in actions in support of other institutions like parliament, european council, the committee and economic and social committee. after the first wave of accession on 1 may 2004, the number of eu member states increased to 25, its surface is increasing by 25% and 20% population. with this expansion manifested special interest for tourism in the newer states there also some obstacles such as low investment in this sector, infrastructure unsatisfactory terms of traffic, poor quality services, weakness in terms of marketing site. it is estimated that over the medium term new members will contribute considerably to change business travel in europe. issues of tourism and consumer rights tourism fulfills multiple functions, namely: economic, social, political and even educational perspective is given to the objectives to be achieved in this area through tourism. whatever attention should be focused on the consumer sector and its needs, and could achieve success by keeping the fundamental values that are distinct quality and related experiences, values that are constantly adapting to changing market trends. understanding of consumer and its perpetual learning process and tourism demand is changing some of the prerequisites for success4. the tourist industry based globalization increasingly computerized distribution and striving to provide quality products, therefore standardization is a necessity here, and could notice a risk which is the standardization of tourism, how appealing can experience travel, the variety and novelty to offer if it is subject to standardization? while tourism demand is increasingly fragmented and difere iat (sports, theme trips, vacations ethnic, etc.).. current consumer expects the same extent as such (which can be achieved through standardization) and differentiation. as consumers, tourists interests focuses, in particular around their physical safety and economic and legislative aspects. tourists have generally a wide range of measures designed to protect consumer interests as a whole, and are covered by the commission directorate general for health and consumer safety5. while physical safety is an important issue, as nobody wants to think about holiday safety distinctly linked to the overall quality of service, many safety issues can be found in protection legislation consumer6 in late 2000 the council of europe through political agreement and improved regulations on product safety measures that are available to consumers in the hotel. a field example is the council recommendation on fire safety system in hotels (86/666/cee), where a set minimum requirements for fire safety in hotels. in general, tourist interests are identical with those of any consumer and its interests are protected by law. however, the tourism activity are some aspects which need special protection, many details of the legislation in the eu member states can be found in "travel packages", "holiday packages and packages for tours. from below we see how these regulations have evolved as concrete. thus the council directive 90/314/eec on the same level make rules and regulations 4 lohmann m., new demand factors in tourism, european forum for tourism, budapest,2004. 5 http:/europa.eu.int/comm./dgs/health_consumer/index_eu.htm. 6 tomescu ada –mirela, botezat elena, tendencies of consumer”s protection in romania, 14th igwt congres, beijing, 2004, p. 436. studies and scientific researches economic edition, no. 15, 2010 298 relating to "travel package" aiming to establish common minimum standards for consumer protection but also to develop general rules on contractual terms for "travel package . also, the organizer of this package is required to demonstrate that it can repatriate the money and consumer insolvency. sesns in this example, once a decision march 12, 2002, the european court of justice concluded that article 5 of this directive should be interpreted as: the consumer should be entitled to compensation if he suffers a loss due to the lack of an intangible benefit or improper benefits services included in the "package holiday". more information about the rights of the citizen in the european single market space, or when a person tries to exercise their rights in the single market faces obstacles in the national government of a member state, and the obstacles they consider unjustified, that citizen can call a system of free assistance. the system consists of contact points for citizens.7 all tourists have been developed various travel guides, but also a web page dialog "dialogue with citizens". of particular importance in promoting products such as sustainable environmental guarantee is to make these products. consumer familiarity with a particular brand can solve multiple problems in terms of quality, especially in an era of globalization is to say a "comfort" psychological even for a tourist to find a familiar brand to thousands of miles from home. specific example here is the blue flag quality mark to be applied worldwide beaches that meet some standard indicators. regulations on the promotion of tourism for the most part, the romanian legislation is, at present, harmonized with eu directives provisions, established itself in this respect to recall that until now, the romanian legislation has been harmonized with eu directives relating to: • general product safety • misleading and comparative advertising • providers liability for damages arising from defective services • indication of prices, content and package travel, unfair terms in contracts, privacy, consumer health and safety. to support the romanian consumer, the state is bound by its institutions as to protect consumers from these unscrupulous organizations that ignoring the law and the unwritten rules of trade can afford to bring products to market with a low-quality products and even make life-threatening, health and consumer safety. the most important measures have been identified, and must be taken in romania to ensure that the market can be launched only those products that meet the requirements are: •adoption of necessary legislation allowing sanctions against fraud and failure to comply with legal requirements; • establishment of specialized laboratories, public or private, to be able to certify that products comply with legal requirements; • instruct inspectors to check products already on the market; • establish control programs will have to indicate which products will be controlled within a certain time and frequency and nature of control. as the legislative work in recent years have adopted laws specifically to harmonize with eu regulations. of this we can mention: • hg 681/2001 on the establishment, organization and functioning of the interministerial committee for market surveillance and consumer products and services (edit gd 449/2000); law on the approval of o.g. nr.58/2000 nr.37/2002 amending and supplementing 7 http;/europa.eu.int/comm./dgs/internal_market/encpoints/index.htm; studies and scientific researches economic edition, no. 15, 2010 299 ordinance 21/1992 on consumer protection, directive 92/59/ec contains provisions on general product safety, and the ordinance no.87 / 2000 on producer responsibility for damage caused by defective products based, harmonized with directive 85/374/ec; • order nr.531/2001 of the president ancp on the establishment, organization and functioning of the committee on unfair terms; • order nr.532/2001 nacp president on the establishment, organization and functioning of the commission for product safety, • law no. amendment of law no. 65/2002. 193/2000 on unfair terms in contracts concluded between traders and consumers; • law no. 283/2002 amending and supplementing law no. 148/2000 on advertising; • law no. 322/2002 regarding the approval of government emergency ordinance no. 146/2001 for completing government ordinance no. 21/1992 on consumer protection; • order no. 516/2005 of 12/04/2005 to approve the marketing framework contract packages; • government decision no. 412/2004 on the organization and functioning of the ministry of transport, constructions and tourism, as amended, under the government ordinance. 107/1999 on trading travel packages, approved with amendments by law no. 631/2001, as amended, having regard to the proposals of the national association of travel agencies; • government decision no. 238/2001 on the conditions for patent licensing and tourism. supervisory actions on consumer compliance laws on security products and services is the national authority responsible for consumer protection and enforcement purposes in the field anpc has taken on: • introducing the new media laws, to be known to both consumers and the operators concerned and of infringements of the legislation in force; • development of specific control procedures for goods and services, which deals including the correct application of the laws in that field; • professional training of inspectors by considering the special cases, solved by law enforcement matters; • advising consumers and traders on specific issues of consumer protection. although the romanian market moving more and more travel guides, in english language sites offering tourist information and they are more numerous, and as sites to promote romanian tourism resources in the languages of the world are increasingly numerous believe that information is not sufficient. for example, concrete, romanian tourist areas are tourist information points as little information or materials (maps, brochures, leaflets, guidebooks) are not sufficient. conclusions as noted there are numerous data, publications, regulations currently relate to the tourism activity. like other industries in romania are good practices more or less known and applied. rather than being educated necunoscându their rights, romanian consumer is subject to, and this time, to abuse. a policy can support the government to correct these shortcomings by allowing the creation of free competition, but also the rules by which all tour operators and other service providers in this area strive to provide quality services, while leading to selection . local plan is another plan which should take something more than before, local authorities recovered it must understand that / interests and welfare of the communities they represent, it is intended to facilitate collaboration of all directly or collaterally interested in developing this work so special is that tourism in romania still has untapped potential and a very strong economically. studies and scientific researches economic edition, no. 15, 2010 300 besides all the rules to be adopted and respected, we must not forget that competition and the enlarged eu market will not resist than those who provide efficient and quality service. it says "no guarantee for success, but opportunities for everyone."8 bibliografie 1) bojin, e. tribuna economic , , 1998; 2) r ducan, i.; t n sescu, d.; tribuna economic , nr.31 1998; 3) ban, o.; tomescu, a.; „urban touristic resources. oradea municipality–romania”, opatija, croatia, 2004; 4) mihalcea, i. ; pachet documentar târgul national de turism, bucuresti, 2002; 5) * * * pagina web a ce – dg enterprise/ unit d.3 si unit d. 2 ; 6) http://europa.eu.int/comm/dgs/health_consumer/index_en.htm 7) tomescu, a.; botezat, e.– “tendencies of consumers’ protection în romania”, 14th igwt congress, beijing, 2004 8) http://europa.eu.int/comm/dgs/health_consumer/index_en.htm; 9) http://europa.eu.int/comm/dgs/internal_market/en/cpoints/index.htm; 10) http://europa.eu.int/citizens; 11) http://europa.eu.int/comm/enterprise/services/tourism/tourismpublications/documents/befyou go.pdf; 8 lohmann m., demand factors in tourism, european forum for tourism, budapest, 2004. studies and scientific researches economic edition, no. 15, 2010 301 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro aspects of financial equilibrium analysis and its implications in management decisions daniela cristina solomon “vasile alecsandri” university of bacău daniela.solomon@ub.ro iulia andreea bucur “vasile alecsandri” university of bacău iuliaandreea.bucur@gmail.com abstract considering the impact of risk factors in the economic environment, this study provides to all users of financial information a possible pattern for analyzing the financial equilibrium, designed to clarify the importance of dynamic analysis of indicators characterizing the financial equilibrium of an enterprise, expressed on absolute values, especially for managers in decision-making on future work, aimed at achieving pre-established strategic and tactical objectives. practice has shown that the management cannot be based on intuition and routine but on a scientific analysis, on a thorough knowledge of the existing situation, as well as on the identification of vulnerabilities and opportunities for development. in order to promote a rational policy concerning business growth and achieving economic and financial satisfactory results, the company’s management grants a special importance to the financial diagnosis. the support of financial analysis is the balance sheet that allows developing financial diagnosis on the financial equilibrium conditions and creditworthiness, objectives that allow the evaluation of the independence of the firm and its market value. keywords balance sheet; financial equilibrium; liquidity; working capital; necessary working capital; net treasury jel classification m41; m51 1. introduction theory and practice of financial management of the enterprise recognizes three objectives: financial stability, profitability and economic growth. assessment of basic financial equilibrium of a company is subject to any financial analysis, regardless of the category of users to whom it is intended. in light of shareholder interests it is considered that financial equilibrium is respected if the return on such investment balances the risk they are exposed to. this representation of financial equilibrium is directly related to the objective of shareholders that consists of maximizing the enterprise value. in light of the interests of company managers, assessing financial equilibrium is connected, as in the case of shareholders too, to the objective of maximizing the enterprise value, at which there are added financial equilibrium flexibility criteria, economic growth, financial autonomy and power. for company’s creditors, assessing the financial balance is related with getting their claims reimbursed and receives the proper remuneration. creditors are based on a static analysis of patrimony type and on providing guarantees paying higher importance on concepts of solvency, liquidity of assets and chargeability of debts, as well as different ways to quantify the ability to repay. 221 solomon, bucur traditionally, financial analysis is aiming to detect how to achieve financial equilibrium on the short term (objective of the balance sheet analysis) and cash accumulation steps, namely profitability of the company (objective of the analysis based on the income statement). the balance sheet summarizes heritage status of the company at a given time, while profit and loss account allows identifying of economic and financial flows of input, processing and output of the considered period. financial and economic analysis, through the analysis of financial equilibrium indicators has the purpose of valorification the information provided by accounting on the basis of which conclusions will be drawn on the effectiveness of activity of the entity. good organization of treasury management is an essential element of the success of any business, that cannot run normally if the entity does not have cash to pay its obligations when due. the approach ends with determining the strengths and weaknesses concerning the company’s activities and measures to be applied in order to achieve short and long term objectives. for the study of indicators characterizing financial equilibrium there are used quantitative research methods (positivist) and qualitative. among quantitative research methods are used methods of examination and measurement of phenomena, since the aim is to collect accounting information to interpret the following results, and numerical methods due to the fact that the analytical results will be obtained by applying certain formulas calculation. “qualitative research methods are due to the need of scientific observation of human interaction and specific skills in one area or another.” (andone et al, 2013) financial equilibrium indicators, namely the net situation, working capital, necessary working capital, net treasury, must answer to questions related to “financial health” of society and its security margin, the correlation between the duration of receivable and payment term debts, and how the company manages the availability of bank accounts and into cash, namely the existence of financial equilibrium by rhythmic collection of receivables and rapid rotation of current assets, this being the central point of our approach. 2. general considerations on financial equilibrium indicators generally, the equilibrium means stability of a situation, a harmony between the components of a system, which on a financial plan involves harmonizing financial resources of the entity with its financial needs (paraschivescu et al, 2013). financial equilibrium can be defined by the company's ability to secure payment of debts previously contracted without interruption, including debt incurred in implementing the current object of activity, or tax law, in its collections, such that it can avoid the risk of bankruptcy (căruntu, 2011). 2.1 balance sheet a starting point in determining the financial equilibrium indicators the support of financial equilibrium is the balance sheet analysis, the main event of financial reporting that may be in the form of painting in which economic goods, rights and obligations of the entity are presented in the form of a tie, reflecting the balance of assets and liabilities or as property list, model imposed by the romanian accounting reform concerning the accounting regulations compliant with directive iv of the eec, international accounting standards and international financial reporting standards. 222 aspects of financial equilibrium analysis and its implications in management decisions being prepared based on the accounting year-end balance sheet should provide information needed to calculate the economic and financial equilibrium indicators as well as information about property management company. information provided by balance sheet is indispensable to financial analysis by the fact that it helps determine financial equilibrium, liquidity and solvency of an economic entity and to make comparison analyses concerning company’s position relative to its main competitors. in specific literature we can identify the following types of balance sheet used in the financial analysis: financial balance sheet, functional balance sheet, “pool de fonds” balance etc. financial balance sheet is a traditional financial analysis support which ends with the description of company’s assets with the purpose of heritage evaluation that may interest both owners and lenders. the logic is based on the criterion of increasing liquidity of asset and increasing chargeability of passives. intuitively, it is understood that the financial equilibrium of the company depends, on the one hand, on its chargeability degree of obligations, and, on the other hand, on the degree of liquidity of their rights; their liquidation is a means of honoring them others (colasse, 2009). increasing liquidity of active stations is their availability of increasingly high for them to become “liquid” and to meet the needs of the company, at the forefront of asset there are fixed values (intangible assets, tangible, financial), the least liquid that are called stable or permanent allocations, then there are mentioned the more liquid elements, called temporary or cyclical allocation (stocks, receivables, availability). ranking passive positions in the order of increasing chargeability signifies the fact that funding source chargeability is related to its maturity, the first posts being the slowest in chargeability, namely own equity, then loans for a long time known as financial liabilities. these, together with equity capital, form permanent (stable) equity. it follows then all other debts faster due (suppliers, lenders, short term loans, social and tax obligations) with a maturity of less than one year contracted for the current operating activities that are also called debt service. building financial accounts, from the balance sheet, imply compliance with the principles and rules that allow ordering according to short and long term criterion. among the constituents of the balance sheet, the distinction between those that remain on the enterprise disposal on the long-term (over one year) and those that belong only for short-term (under one year). given that the financial statement is optical closure based, unlike the balance sheet based on the fundamental concept (principle) business continuity, financial balance sheet construction involves a series of corrections to items in the balance sheet, such as: removing items fictitious asset or non-values (elements that have no economic value in liquidation case and items that represent activated expenses, such as constituation expenses, research and development expenses etc.) elimination of existing assets and liabilities in the balance sheet adjustment (items which relate to future periods and will not exist in the event of closure). achieve financial balance sheet imply making corrections based on information from related and principles of assessment and regrouping posts according seniority criterion. the failure to comply with the principle of financial equilibrium by financing assets from temporary resource, it shows triple nature risks, namely: interest rate risk, materialized in the fact that any increase in market interest rates applied to new loans erode the company’s performance; refinancing risk, linked to banks’ ability to refuse further funding company given that a company has no financial stability is risky for the bank; the risk of losing the company decision-making autonomy in relation to the bank, unable tied loan company to recontracted absolutely required loans for its operation (mironiuc, 2009). 223 solomon, bucur from the analysis in terms of criticism and chargeability appeared functional analysis that has been developed by the bankers authors meunier, barolet and boulmer in 1970 and promoted by the central bank balances in france in the 1970s (colasse, 2009). the construction of functional balance sheet that regroups the major functions of the company: investment, mining, finance, treasury, is based on a set of principles and rules created in order to highlight the uses and resources appropriate to each operating cycle of the company, the grouping of posts being related to the operations of posts made by the company in relation to the nature, purpose or function. design principles for functional balance sheet refers to the following aspects: expression balance sheet posts to net value (the original value), which requires the inclusion of amortization and provisions in equity, being the enterprise’s self-financing resources, the concept of stability that takes into consideration the duration heritage stations, they differ from the concept of consistent financial balance sheet; a long-term loan will remain in financial assets of the company, regardless of its maturity, as long-term debts that will not be written as short-term debts, regardless their maturity; in structuring functional balance stations should be considered the damage principle that allows describing life cycles that make up the enterprise and financial equilibrium arising from them so you can see how they used her resources. the structure allows highlighting two categories of uses in assets, one related with the actual operation and another independent from the production cycle, and in passive two categories of resources, some generated by operating and some others, without connection to it. in the context of functional analysis from 1980s faced criticism on the role assigned to the treasury that it is not only the result of reconciling the need for working capital and working capital so it appeared the balance sheet “pool de fonds” or “economic balance sheet” (colasse, 2009) which provides information on the funding policy and enterprise’s investment without giving too much information on the risk of bankruptcy. regardless of optics in which the assessment is made, the balance sheet is the “starting point” in asseser’s activity, but “can only give information with static character, insufficient for a complete assessment, because it expresses heritage asset items carrying values (book values), without taking into account normal market conditions in the determination of fair market value” (petrescu, 2012). balance sheet as o.m.p.f. (order of the ministry of public finance) no. 3055/2009 is adapted and meet financial analysis oriented on management, based on ordering assets according to increasing liquidity, and capitals in decreasing chargeability order (debts to be paid within a period of up to one year before the debt to be paid in a for more than one year, followed by equity). type “list” balance sheet approved by the order of the ministry of public finance no. 3055/2009 highlights the net heritage situation or net debt computed as two divisions sheet: e. net current assets, respectively net current liabilities, that highlights the existing ( + ) and deficit () of working capital; f. total assets current liabilities, which put in evidence heritage situation, uninfluenced by debt situation with pay maturity more than 1 year. these indicators offers useful information about the situation of firms, being appreciated by specialists, easy to understand and use in comparative analysis even by less prepared staff in conducting complex financial and economic analysis. 224 aspects of financial equilibrium analysis and its implications in management decisions 2.2 indicators of financial equilibrium financial equilibrium is the ideal state that every company aspires and for its assessment we start from calculating the following indicators expressed in absolute values: net asset presentation, working capital, necessary working capital and net treasury (petrescu, 2012). a. net assets presentation expresses the book value of the rights owners, shareholders and creditors have on the company: net asset presentation = assets total liabilities in the case of the winding, the net situation becomes equal to the sum of net equity and expresses the value of activities at a time, its value being determined by excluding deferred income and provisions: net asset presentation = ( total assets current liabilities ) debts over 1 year provisions net asset presentation = position f g – h the increase of the net situation would increase the equity and results in increasing profitability and financial independence of the company. b. working capital (wc) characterize the balance/imbalance of financial enterprises at a given time, expressing the permanent capital surplus over the value of net immobilised assets, which serves to finance current assets, particularly those intended to operate. by working capital the financial health of an economic entity is estimated and the financial equilibrium conditions are measured, therefore, “the financial equilibrium resulting from the confrontation of liquidities that determines the flow of future receipts and chargeability obligations that determine future payments” (păvăloaia, 2009). there are two ways of determining the working capital: a) difference: working capital = permanent capital net immobilised assets b) direct: working capital = net current assets/ net current liabilities = position e the amount of working capital can be positive or negative and reflects the existence or absence of a safety margin firms. increased working capital can be determinate on the one hand by increased permanent capital (emission of new shares, bonds, new long-term loans) and on the other hand by reduced net assets (titles sales, disinvestment and assets assignment). enterprise security margin increases, a greater proportion of current assets being financed from permanent equity. depression of the working capital is caused by depression of permanent capital (term loans or bonds reimbursement) and increased net assets (investments). a revolving stationary fund reflects stagnation of the company that can be temporary or on long term, having different causes. theoretically, a revolving fund should be positive, which does not mean that in some cases there cannot be a negative working capital without compromising the proper functioning of the enterprise. 225 solomon, bucur  a positive working capital of the company signifies the maintaining of financial equilibrium, allowing to ensure a minimum level of circulation assets strictly necessary for its function (minimum stocks, minimum credit union fund) current asset being higher than short-term liabilities (net current assets > short term debts) in the sense that on the account of payable asset there can be paid short-term debts, equivalent with the fact that permanent resources are provided to cover at least the stable users.  a null revolving fund translates a pressure on liquidities and corresponds to a certain weakness of the company in terms of solvency.  a negative working capital is a signal of not-payment risk for the enterprise, which will have plenty of good permanent equity financing to assure assets or has lower short-term debt that will not be able to pay. this issue frequently occurs in the retail sector, where the rate of inventory turnover is very fast (under one month) and there are significant supplier credits. in practice, it is generally thought that the working capital industrial enterprise has to represent the value of 1-3 months turnover. analysis of working capital must be completed with the study of necessary working capital. c. the need for working capital is a dynamic indicator of financial equilibrium, its size is dependent on several factors: the nature of the activity sector, operating cycle duration, the level and evolution of turnover, rate of inflation, the cost of production level, the operating liabilities arising from obligations of the enterprise to suppliers, staff, state budget (mironiuc, 2009). necessary working capital include, on the one hand, stocks (raw materials, finished and semi-products) whose value enclose manufacturing costs and, on the other hand, claims to be funded from working capital. necessary working capital (nwc) reflects the current equilibrium of the company, more unstable than the working capital and it is determined as the difference between current assets (exclusive availability) and short term debts (excluding current bank loans) as shown in formula: = necessary working capital (nwc) inventories receivables customers prepaid expenses debt under 1 year current bank loans income in advance + – + + necessary working capital (nwc) designates the enterprise’s financial needs, generated by the execution of repetitive operations that make current operating cycle of the company (buy, sales, pay their salaries), whose total cost should be at least partially covered by stable resources (working capital). it represents money that must run in the enterprise to ensure the operation, financing according assets that ask expenses that will be recovered from customers when paying bills. the need for working capital can be positive or negative. if:  nwc > 0, reflects a surplus of assets resulting from the acceleration of receipts and payments relaxation, namely a favourable difference between the duration of the recovery of claims and the payment of providers and is a normal situation where the result of the increasing demand for financing investment of the operating cycle. economic practice has shown, however, that when the need for working capital is greater than zero indicates a negative gap between inventory liquidation and collection of receivables and operating liabilities liability for the 226 aspects of financial equilibrium analysis and its implications in management decisions purposes of revenue slowdown and accelerate payments, a situation that is not conducive to the development firms.  nwc < 0, reflects an additional temporary resources toward current assets, temporary necessities being smaller than the temporary resources that can be mobilized. the situation is favourable if one is consequence of acceleration of rotation of current assets, to emergency the receipts and relaxations used to pay otherwise; it can only be the result of temporary disruptions in supply and renewal of stocks. in industrial enterprises it registers an nwc > 0, being necessary a net working capital of exploitation which is to be financed, and for distribution companies nwc < 0, are net financing resources, mining resources being higher borrowing. d. net treasury (nt) shows the amount of money availability in an entity at a time, bank accounts or cash, being related to short-term financial transactions whose purpose is to provide resources for financing economic activity company. positive net treasury represents the most conclusive expression of an activity effective. determination of net treasury is achieved by the difference between: a) working capital (wc) and necessary working capital (nwc): nt = wc – nwc b) treasury active passive treasury directly: nt = accounts receivable balances and investment availabilities credit balances of short-term loan accounts, including account 512 the negative net treasury underlines the financial imbalance generated by the slow rotation of current assets, non-collection of receivables and appealing to foreign financial resources to ensure the conduct of business, leading to limitation of financial autonomy of the entity, stagnation or lack of further development, unfavourable situation. treasury appears while the negative working capital is less than required for working capital cash loans that are greater than the availability of the firm reflecting mismanagement and poor economic condition. the positive net treasury indicates financial balance, rhythm collection of receivables and current assets and rapid rotation occurs when the demand exceeds the working capital, namely when the availability of the cashier and bank loans exceeding treasury. the positive net treasury expresses a surplus funding that enriches the treasury and guarantees that the company operates in terms of efficiency of the existence of reserves in bank accounts and cash. thus, creditors can always ensure that the company has at any time the possibility of financial debt repayment. colasse (2009) summarizes four cases evolving type of working capital (wc) and the need for working capital (nwc) (assuming that working capital changes only under the influence of the self-cash flow presented in table 1). the importance of financing decision lies primarily in providing short-term financial equilibrium, which means providing liquidity to meet commitments, that repayment of debts maturing in the near future. secondly, the question of launching investment firm that lead to development opportunities. this case involves the financing of longterm development, conditioning results in the future growth and maintaining financial equilibrium. in general, the increase of own funds shall be made on the reserves of the favourable results obtained, and the cash contribution. it is also not neglected the selffinancing capacity of an enterprise that shapes the internal resources of these equity (stable resources) (mociar, 2013). 227 solomon, bucur table 1 evolution of working capital, the necessary working capital and net treasury case no. 1 growth in profitability  the need for working capital remains strictly proportional turnover  working capital grows faster than turnover  treasury negative at first, becomes positive good management of its various components a good self-financing capacity and good profitability good management of its various components a good self-financing capacity and good profitability this is the case of enterprise whose growth is accompanied by a strengthening of financial equilibrium. case no. 2 bad run growth  the need for working capital grows faster than turnover  working capital increased slightly in relation to turnover  treasury remains negative (deficit increase cash) an inadequate management of its various components poor self-financing capacity and profitability an inadequate management of its various components poor self-financing capacity and profitability this is the case of enterprise in growth, but manages bad its operating cycle. case no. 3 uncontrolled stagnation  the need for working capital continues to increase turnover when stalled  working capital decreases  treasury positive at first, becomes negative an inadequate management of its various components poor self-financing capacity and profitability this is the case of an enterprise that is stagnant, loss-making, which reduces the working capital but fails to reduce the need for working capital. case no. 4 administred recession but loss generator  the need for working capital is rigorous development of turnover, decreasing in proportion to it  working capital decreases due to the decrease of turnover that generates losses.  treasury positive at first, becomes negative poor self-financing capacity and profitability it is the case of a recession enterprise that generates losses but still better manage their working capital, but whose stable resources gradually become insufficient. source: colasse, b. (2009), analiza financiară a întreprinderii, translated by tabără, n., tipo moldova publishing house, iaşi, pp.130-132 the principle to be applied to treasury management should be synonymous with that which applies to any other resources: “minimize the size according to the needs you 228 aspects of financial equilibrium analysis and its implications in management decisions have to cover and achieve maximum effectiveness, by investing cash in investments that would reflect its unique characteristics” (helfert, 2006). 3. conclusions financial economic analysis is the tool by which managers know the situation at a time, the past one and can predict the future development of society by providing accurate and timely information in order to support decision-making and operational processes. financial equilibrium can be considered as (popa, 2009): a. permanent imperative for any company in the sense that maintaining solvency is a restriction currently required to the company. if there are delays in payment of debt, or any mismatch, it may lead to injury and there is an urgent need for a correction; b. absolutely imperative that cannot be missed under any circumstances. for example, an enterprise from the economic practice that is in a difficult period can choose to give up some goals for growth, economic or social objectives, but may not waive the insurance objective of maintaining financial stability, the solvency objective that provides financial survival. net treasury as part of the financial balance has the role to inform managers about the degree of financial autonomy and the liquidity available to the company, which by default will allow repayment of debt and achieving efficient investments both money market and the financial one. the importance of net cash flows from that it shows the amount of money available in an entity at a time, being related to short-term financial transactions whose purpose is to provide resources for financing the company’s business. determining net treasury involves calculation of working capital and necessary working capital, which make up the trio of financial equilibrium indicators, based on a horizontal balance sheet analysis that establishes correlations between efficient use of assets and financing them. we concluded that it is very important to know the evolution of the indicators presented, because the company must follow the trend registered for an efficient management, being able to detect in time any inconsistency in optimal intervals and disruptive cases of normality, in order to improve the situation. management decisions should be based on economic-financial values that characterize the company’s performance and position. managers can effectively place available funds in order to strengthen market position and increase the company’s financial autonomy. references andone, i., georgescu, i., toma, c., solomon, d. c. (2013), metodologia şi etica cercetării ştiinţifice în contabilitate şi sisteme informaţionale, tehnopress publishing house, iaşi. căruntu, c. (2011), profitability and financial stability, annals of “constantin brâncuşi” university of târgu jiu, economy series, 3, 195-204. colasse, b. (2009), analiza financiară a întreprinderii, translated by tabără, n., tipo moldova publishing house, iaşi. helfert, e. (2006), techniques of financial analysis a guide to value creation, bmt publishing house, bucharest. 229 solomon, bucur mironiuc, m. (2009), analiză economico-financiară, “alexandru ioan cuza” university publishing house, iaşi. mociar, i. (2013), managementul financiar şi finanţarea internă a întreprinderii, gestiunea și contabilitatea firmei, 1, tribuna economică publishing house, bucharest, available on http://tribunaeconomica.ro/blog/?p=908# sthash.lufyup48.dpuf. order of the ministry of public finance no. 3055/2009 approving the accounting regulations compliant with the european directives, published in the official journal of romania no. 766 bis of november 10, 2009 (ro). paraschivescu, d., păvăloaia, w., radu, f., fotache, g., patraşcu, l., bordeianu, g. d., grosu, o. (2013), contabilitate: fundamente, aplicații, istorie și personalități, tehnopress publishing house, iaşi. păvăloaia, w., păvăloaia, d. (2009), analiza economico-financiară, tehnopress publishing house, iaşi. petrescu, s. (2012), evaluarea economică și financiară a întreprinderii. conceptemetode-procedee, tehnopress publishing house, iaşi. popa, i. l. (2009), analiză economico-financiară, mirton publishing house, timişoara. solomon, d. c. (2004), analiza statica a echilibrului financiar pe baza bilanţului, buletin ştiinţific, 2, year vii, “george bacovia” university of bacău, 291-300. 230 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 13 stock market performance and the augmentation of frontier economies: a comparative scrutiny of nigeria &mauritius godsday edesiri okoro department of accountancy, faculty of management sciences, nnamdiazikiwe university, awka, anambra state, nigeria. edesirioracle@yahoo.com abstract this paper provides a comparative analysis on stock market performance and augmentation of frontier economies: nigeria and mauritius. using a paired-samples t-test statistical modusoperandi, data of market capitalization and gross domestic product were obtained from the central bank of nigeria statistical bulletin and annual financial services commission statistical bulletin of mauritius during 2006-2010. the findings revealed that stock market performance for mauritius was superior to nigeria and same for gdp. in addition, the negativity shows that stock market performance has a negative impact on economic progress in nigeria and mauritius. this may be due to the fact that frontier markets give attention to money market while relegating stock market to the background. on this note, since stock market contributes significantly to economic growth, efforts by both governments should be that of developing policies aimed at further strengthening stock market. these policies should not be ‘written-policies’ but policies that can be put into practice. also, market capitalization can be stimulated by encouraging investments in stock market. this can be done by ensuring investors are fail-safe of their investments. when investors perceive a safety of their investment, they may want to commit their resources and in turn make the economy to flourish. keywords stock market performance; economic growth, market capitalization; gdp; nigeria; mauritius jel classification m4 introduction there is the general assumption that the rate of economic growth of a nation depends on a linkage to sophisticated financial market. as noted by adewuyi and olowookere (2011) the financial market (stock market) is a segment of a country’s financial system where the main article that is traded is medium and long-term financial instruments. these instruments traded in the stock market are commonly described as ‘securities’ because investors have the self-confidence on the repayment of their principal whether now or in the future. stock market according to chiwuba and amos (2011) provides channel for resource mobilization, risk diversification, securitization and determination of cost of capital for project evaluation that affects economic growth. prior empirical evidence depicts that developed economies have explored two channels through which resources can be mobilized: money and capital market (samuel, 1996; demirguc-kunt and roos, 1996). this is however not the case in frontier markets like nigeria and mauritius where emphasis has always been placed on money market with little attentiveness on stock market (nyong, 1997) which is the main engine that drives the financial system in most leading economies of the world. mailto:edesirioracle@yahoo.com stock market performance and the augmentation of frontier economies: a comparative scrutiny of nigeria &mauritius 14 it is interesting to note that the link between stock market performance and economic growth in the past has generated passionate hullabaloo amongst stock market researchers in developed, emerging, frontier and outliers markets (akinifesi 1987; samuel, 1996; demirguct-kunt and ross, 1996; levine and sara, 1996; obadan 1998; onosode, 1998; emenuga 1998, edesiri and ejuvbekpokpo, 2012; and edesiri, 2014).this case is not different for nigeria and mauritius which is believed to be classified as an emerging or frontier market. one way of resolving this tumult in stock market research is through conducting an investigation into emerging, frontier and outlier capital markets since there is the general assumption that developed economies have efficient stock market. thus, this paper provides a comparative analysis on stock market performance and the augmentation of two frontier markets: nigeria and mauritius so as to resolve the passionate arguments that have rocked stock market research in nigeria, mauritius and the world over. this paper is sectionalized into: empirical foundation, empirical model, discussion of results and concluding remarks. empirical foundation there are vast stock market researches that have shown that capital markets have the ability to affect economic growth and development in nigeria, mauritius and the world over. in spite of the bulk of empirical evidence over the decade, a comparative analysis on nigeria and other frontier stock markets like mauritius has not been established. a number of studies have shown that stock market positively affect economic activities. quite a few studies have shown that stock market contributes to economic growth and development in frontier market like nigeria (see adewuyi and olowookere, 2011; kolapo and adaramola, 2012; adetayo and sajuyigbe, 2012; oke and adeusi, 2012; benedict and emmanuel, 2013; owolabi and ajayi, 2013; atoyebiet.al., 2013) and in mauritius (hartmut, peter, josef and volker, 2005; nowbusting, 2009; nowbusting, ramsohok and ramsohok, 2010; seetanah, sannassee and lamport, 2012; seetanah, sawkut, sannasee and seetanah, 2012; svirydzenka and petri, 2014). in nigeria, adewuyi and olowookere (2011) descriptively assessed the contribution of capital market to economic development in nigeria. the study found that capital market has significantly impacted on the development of the nigerian economy such that it promotes and provide opportunities for investment diversification as well as improvement in service delivery. kolapo and adaramola (2012) tested the relationship between the nigerian capital market and economic growth during the period 1990 – 2010. the variables used were gross domestic product (proxy for economic growth), market capitalization, total new issues and total listed equities and government stocks (proxies for capital market). applying johansen cointegration and granger causality test, the study found that the nigerian capital market and economic growth are co-integrated. implying that a long run relationship exists between capital market and economic growth in nigeria; also, the study found no causation between economic growth and capital market except for market capitalization that have no reverse causation with gross domestic product. adetayo and sajuyigbe (2012) examined the effect of nigerian capital market on economic growth and development during the period 1990 through 2011, using the ordinary least square estimation technique. the result found a significant relationship between capital market and economic growth. oke and adeusi (2012) studied the impact of capital market reforms on economic growth during the period 1981 to 2010 in nigeria using the ordinary least square estimation method and the okoro 15 johansen co-integration test. the study suggests that capital reforms positively impact on the economic growth in nigeria. owolabi and ajayi (2013) examined the relationship between capital market and economic growth in nigeria using the ordinary least square (ols) technique during the period 1971-2010. the study showed a positive relationship between economic growth and gross capital formation, foreign direct investment, capital market index and debt overhang, suggesting that capital market affect economic growth in nigeria. benedict and emmanuel (2013) explored the economic analysis of capital market performance and economic growth in nigeria. the study used a multiple regression and vector auto-regression model to capture the impact of capital market on economic development and the transmission mechanism between the all share index, value of shares traded and number of deals. the augmented dickey fuller tests indicated that the variables are non-stationery but became stationary after taking the first differences implying that the variables follow a random walk. the proof from johansen co-integration test suggests a long run equilibrium relationship between capital market and economic development in nigeria, thus, implying that capital market affect economic development in nigeria. atoyebiet.al.,(2013) investigated the impact of capital market on economic growth in nigeria using annual data from 1981 to 2010 in a linear regression (ordinary least square) and non-linear regression (vector auto-regression) models. the linear regression equation found that market index and capitalization are statistically significant while the non-linear regression indicate a long run relationship between stock market and real gdp. the implication is that capital market impact on economic growth in nigeria. in mauritius, there are no studies that have established a comparative analysis in mauritius and other frontier capital markets like nigeria. the numerous studies in mauritius have been that of the relationship between capital market and economic growth. for instance, hartmut, peter, josef and volker (2005) investigated the place of international capital market integration and education choice on economic growth. the study adopted the structural estimation technique. using foreign direct investment as measure for capital inflows, the study suggests that when there is an increase in the net capital inflows in response to higher education, economic growth is influenced. nowbusting (2009) ascertained how certain variables (foreign direct investment, gross capital formation and government expenditure) affect stock market (stock traded ratios). using natural logarithm of the variables inter-alia, the empirical evidence shows that these macroeconomic variables significantly affect stock market and in turn economic growth. seetanah, sannassee and lamport (2012) theoretically explore how export diversification influence economic growth and found a bi-causal relationship between diversification and growth in mauritius such that human capital and foreign direct investment are the major determinants of exports diversification. seetanah, sawkut, sannasee and seetanah (2012) empirical tested the relationship between stock market development and economic growth in mauritius using panel var analysis. the findings of the study indicated that stock market development is a determinant of economic growth. in addition, it was discovered that the growth rate of stock market to economic growth is lower when compared to other factors that determine economic growth in mauritius. the study on a multivariate analysis of financial development and growth by nowbusting, ramsohok and ramsohok (2010) suggest that financial development positively impacts on economic growth in mauritius, although its impact is fairly minimal on the economy. svirydzenka and petri (2014) study seek to question the drivers of growth in mauritius using growth accounting to evaluate the sources of past growth and project potential ranges of growth through 2013. the study found that improvement in savings and investment in the capital market has the stock market performance and the augmentation of frontier economies: a comparative scrutiny of nigeria &mauritius 16 tendency to influence economic performance, although improvement in the efficiency of social spending and public enterprises reforms, investments in education among others are determinants of economic performance. concluding this empirical review, we have however observed that there are empirical studies on capital market performance and economic growth in mauritius. also, we acknowledged that there is no empirical evidence on a comparative analysis of the capital market performance and economic growth of nigeria and mauritius. thus, this study was carried out to analyze stock market performance and the augmentation of two frontier economies: nigeria and mauritius as well as resolving the hullabaloo on frontier stock markets researches. empirical model this paper presents the empirical results of stock market performance and the augmentation of frontier economies: nigeria and mauritius. however, in order to do this, we employed a paired-samples t-test (pst) statistical technique. the test variables are market capitalization (mrcap) and gross domestic product (gdp) of both countries. data of market capitalization and gross domestic product was obtained from the central bank of nigeria statistical bulletin and in the case of mauritius; data of market capitalization and gross domestic product was sourced from the mauritius financial services commission annual statistical bulletin. we believe that gdp is a measure of economic growth and market capitalization measures the aggregate performance of capital market of a country. the study period is during 2006 – 2010 for both countries. discussion of results we presented the descriptive statistics (mean, standard deviation and standard error of mean) of the variables and inferential statistics (paired-sample test statistics) in tables 1-3. table 1 paired samples descriptive statistics: mrcap example of table n mean std. dev. std. error mean mrcapnig 5 8962922000 3064502819 1370487324 mrcapmau 5 145716995601 31518160890 14095350059 source: spss output, 2015 table 1 presents the descriptive statistics of market capitalization for nigeria and mauritius so as to see the difference between the performances of both stock markets. as shown above, the mean of 145716995601 suggests that market capitalization (mrcap) of mauritius is greater than nigeria with mean value 8962922000. the above scenario is further captured in the standard deviation and standard error of mean with value 31518160890 and 14095350059 for mauritius respectively which is greater than nigeria with mean and standard deviation of 3064502819 and 1370487324 respectively. mrcap was reported in millions of naira for nigeria and mauritian rupee for mauritius. we have however found that the magnitude in the difference of the mean is not moderate for both countries. okoro 17 table 2: paired sample descriptive statistics: gdp n mean std. dev. std. error mean gdpnig 5 24459447 5917678 2646466 gdpmau 5 195053000 110548403 49438749 source: spss output, 2015 table 2 shows the descriptive statistics of gross domestic product for nigeria and mauritius in order to ascertain the differences in economic prosperity of both countries. as could be seen above, the mean of 195053000 implies that economic growth of mauritius was better off than nigeria with mean value of 24459447. the above position was further reflected in the standard deviation and standard error of mean with value 110548403 and 49438749 respectively for mauritius which is greater than nigeria with mean and standard deviation of 5917678 and 2646466 respectively. gdp was reported in millions of naira for nigeria and mauritian rupee for mauritius. table 3: paired sample test t df sig(2tailed) mean diff. 95% confidence interval of the diff lower upper pair 1: mrcapnig mrcapmau pair 2: gdpnig gdpmau -10.246 -3.576 4 4 .001 .023 -136754073601 -170593553 -173810016392 -303046942 -99698130810 -38140164 source: spss output, 2015 table 3 reports the paired-sample test for nigeria and mauritius stock market performance (mrcap) and economic growth (gdp). from the above table, it could be seen that the asymptotic significance of .001 and .023 is lesser than our chosen significance level α = 0.05. however, this implies that stock market performance and economic growth for nigeria and mauritius is significantly different, i.e. mrcap (t4 = -10.246, p<0.05) and gdp(t4 =-3.576 p<0.05). taking a closer look at the result, an additional factor could be found. the negative sign attached to the coefficient of market capitalization suggests that in nigeria and mauritius, market capitalization have negatively affected the level of economic growth. this is not surprising since developed economies like the us, uk, china, spain among others explore money and capital market while frontier markets like nigeria and mauritius harness only money market with little consideration on capital market which is the main engine that drives the financial system in most leading economies of the world. concluding remarks the analysis of data has provided us with some insightful revelations. first we discovered that stock market performance for mauritius was superior to nigeria. the same was also reported for economic growth. this was captured by the descriptive statistics, although the growth rate was stronger in mauritius. second, the negativity calls to mind that stock market performance has a negative impact on economic progress in nigeria and mauritius. this may be due to the proposition that frontier markets give attention to the money market while relegating stock market to the background. the negative sign represents severe inference for the management of stock market performance and the augmentation of frontier economies: a comparative scrutiny of nigeria &mauritius 18 both countries’ economy because stock market is a major institution in the financial system while gdp is a fundamental macroeconomic variable that most governments pursue rigorously. on this note, since capital market contributes significantly to economic growth, efforts by both governments should be that of developing policies aimed at strengthening the capital market. these policies should not be ‘paperpolicies’ but policies that will be put into practice. there should be routine check on how these policies in the market are formulated and implemented. in addition, market capitalization should be stimulated by encouraging investments in the capital market. this can be done by ensuring that investors fail-safe of their investments. when investors perceive a security standpoint of their investment, they may want to commit more of their resources and this in turn will further strengthen economic growth. references adeniyi, o.a. 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(2014). mauritius: the drivers of growth—can the past be extended? international monetary fund, african department, imf working paper, wp/14/134,pp.1-40. studies and scientific researches. economics edition, no 23, 2016 http://sceco.ub.ro 20 appendix output of paired sample t-test t-test pairs=mrcapnig gdpnig with mrcapmau gdpmau (paired) /criteria=ci(.9500) /missing=analysis. dataset0] paired samples statistics mean n std. deviation std. error mean pair 1 mrcapnig 8962922000.0000 5 3064502818.82233 1370487324.02529 mrcapmau 145716995601.0000 5 31518160898.58333 14095350059.00164 pair 2 gdpnig 24459446.8960 5 5917677.74323 2646465.94056 gdpmau 195053000.0000 5 110548402.46019 49438748.54100 paired samples correlations n correlation sig. pair 1 mrcapnig & mrcapmau 5 .580 .305 pair 2 gdpnig & gdpmau 5 .670 .216 studies and scientific researches. economics edition, no 26, 2017 http://sceco.ub.ro 23 budgeting, budgetary control and performance evaluation: evidence from hospitality firms in nigeria patrick amaechi egbunike department of accountancy, nnamdi azikiwe university, awka, anambra state, nigeria amaechiegbunike@yahoo.com amaka nkiru unamma phd. student, department of accountancy, nnamdi azikiwe university, awka, anambra state, nigeria amakaunamma@gmail.com abstract this study was carried out with the view to address two fundamental issues: first, to determine if there is any association between budget, budgetary control and performance evaluation; second, to ascertain if there is any significant variation in the budget, budgetary control and performance evaluation measures of hospitality firms in nigeria. the study employed descriptive design and primary data (questionnaire) was the major source of data collection. questionnaire was administered to a total of six hundred (600) employees of ten (10) selected hospitality firms in nigeria. the data obtained were analyzed using both descriptive and inferential statistics. findings indicated that budget and budgetary control could serve as an avenue through which hospitality firms in nigeria can be evaluated. in addition, it was revealed that there is a significant variation in the budget, budgetary control and performance evaluation of hospitality firms in nigeria. on the basis of the findings, it was recommended that hospitality firms in nigeria should carry out performance evaluation on every aspect of their budget and budgetary activities as a way of ensuring that budgeted outcomes are met. also, budgetary costs should be a basis of choosing the most-fit performance evaluation technique for hospitality firms since such performance evaluation systems can provide economic benefits of different sorts to them. keywords: budgeting; budgetary control; hospitality companies; performance; evaluation techniques; budgeted outcome; actual outcomes; costs jel classification h61; h69; h83 introduction in economic principle, there is the general assumption that human wants are numerous but the resources to satisfy them are inadequate and there is every tendency to waste or under-utilize the inadequate resources by human factor concerned in the production of goods and services. it is imperative for organizations to produce at a minimum cost so as to continue their production cycles and make sufficient revenues for stakeholders. this scenario is peculiar to all industries in nigeria, especially those of the hospitality companies industry where strategies are needed in order to survive. the hospitality industry is a broad class of fields within the service industry that encompasses lodging, event planning, theme parks, transportation, cruise lines and so on. thus, hospitality management needs an effective tool that can help them forecast the major changes which are likely to affect the organization both in the present and future. budgeting, which is a tool of planning and control, becomes indispensable for the hospitality companies in nigeria and the world over. mailto:amakaunamma@gmail.com budgeting, budgetary control and performance evaluation: evidence from hospitality firms in nigeria 24 according to lambe, lawal and okoli (2015), budgeting is a key policy instrument for public management and management of firm; it is a familiar activity to many as it is practiced in our private lives as well as in businesses, government and voluntary groups. the chartered institute of management accountants (cima) (2000) sees budget as a financial or qualitative statement prepared and approved prior to a defined period of time for the purpose of attaining a specified objective. egbunike (2014) believes that budget is a comprehensive and coordinated plan expressed in financial terms for the operations of an enterprise for some specific period in the future. lucey (2003) defined a budget as a quantitative expression of a plan of action prepared for an organization as a whole in order for them to carry out certain functions such as sales and production or for financial resources items such as cash, capital expenditure, man-power purchase and others. budgetary control as noted by the institute of cost and management accountants (1998) is the establishment of budgets relating the responsibilities of executives to the requirements of a policy and the continuous comparisons of actual with budgeted outcomes, either to secure by individual action, the objectives of that policy, or to provide a basis for its revision. in the same vein, batty (1982) sees budgetary control as a system which utilizes budget as a means of planning and controlling all aspects of the organization. the philosophy underlying budget and budgetary control therefore is that they serve as indicators of costs and revenues linked to the daily operational activities of project managers, a means of providing information and supporting management decisions throughout the year and monitoring and controlling the organization, particularly in analyzing the differences between the budgeted and actual. consequently, budgeting and budgetary control are needed for evaluating the performance of an organization. on the basis of the above, this study was carried out with the view to address two fundamental concerns: first, to determine if there is any relationship between budget/budgetary control and performance evaluation of hospitality companies in nigeria; second, to ascertain if there is any significant variation in the budget, budgetary control and the performance evaluation among hospitality companies in nigeria. in order to address these two fundamental concerns, we hypothesized as follows: ho: there is no significant association between budget, budgetary control and the performance of hospitality companies in nigeria. h2: there is no significant variation in the budget, budgetary control and the performance evaluation among hospitality companies in nigeria. review of related literature in this paper, the review of related literature encompassed the conceptual issues and theoretical framework. conceptual issues a. the concept of budget and characteristics omolehinwa (2002) sees budget as a plan in an organization expressed in monetary terms and subject to the constraints imposed by the participants and the environments, indicating how the available resources of the organization may be utilized in order to achieve whatever the objectives of the organization. according to brown and howard (2002), it is a predetermined statement of management policy during a given period which provides a standard for comparison with results actually achieved. also, buyers and holmes (1984) defined budget as a financial and/or quantitative statement prepared and approved prior to be pursued during that period for the purpose of attaining a given objective. to cope (1994), it is a comprehensive plan expressed in financial terms by egbunike, unamma 25 which an operating programme is effective for a given period of time (usually one year) including estimates of the services, activities and projects comprising the programme, resultant expenditure requirement and the resources usable for their support. laynetwor (2004) posits that budgeting is the only comprehensive approach to managing an organization and if utilized with sophistication and good judgment, the objectives of the organizations can be achieved. budget recognizes fully, the dominant role of managers and provides a framework for implementing the fundamental aspects of scientific management as management by objectives (mbo), effective communication, participative management, dynamic control, continuous feedback, responsibility accounting, management by exception and management flexibility. therefore, a good budget may be characterized with the following attributes: • participation – it involves as many people as possible in drawing up a budget; • comprehensiveness – it embraces the whole organization; • standards – it is based on established standards of performance; • flexibility – it gives room for changing circumstances; • feedback – it constantly monitor performance; and • analysis of cost and revenue – allows cost and revenue analysis on the basis of product lines, departments or cost centres. b. the concept of budgetary control budgetary control can be viewed as a system of controlling cost which embraces the preparation of budget, coordinating the department and establishing responsibility, comparing actual performance with budgeted and acting upon results to achieve maximum profitability (brown & howard, 2002). as observed by lockyer (1983), budgetary control is a part of the overall system of responsibility accounting within an organization, as costs and revenues are analyzed in accordance with areas of personal responsibilities of the budget holders through permitting financial monitoring. the chartered institute of management accountants (2000) sees budgetary control as the process of comparing the actual outcomes with the planned outcomes and reporting on the variations. there are basic stages in budgetary control processes and they include setting of predetermined standards, measurement of actual performance against pre-determined standards and corrective measures if necessary to bring the actual performances in line with the pre-determined standard. thus, the overall purpose of budgetary control is to assist managers’ plan and control the use of resources in systematic and logical manner to ensure that they achieve their financial objectives. for budgetary control to be effective, the following essentials/features must be in place: • a sound and clearly defined organization with a clearly defined manager’s responsibility; • an effective accounting record keeping and procedures; • support and commitment of top management for the budgetary control system in place; • training of managers in the development, interpretation and use of budgets; and • flexibility of budgets to ensure revision of budgets where amendments are needed to make them appropriate and useful. c. overview of performance evaluation performance evaluation is pivotal to an organization such that it can be used to ascertain if the budget and budgetary control instituted achieves the expected outcomes during a specified period of time. performance evaluation is a tool for appraising how well an organization has performed. in order to appraise such organizations, managers need to determine what an organization is supposed to accomplish. according to egbunike budgeting, budgetary control and performance evaluation: evidence from hospitality firms in nigeria 26 (2014), the evaluation process may consist of two variables: organizational performance data and benchmark that creates a framework for evaluating performance. the benchmark has to do with the standards based on performance of similar agencies/industrial standards/political expectations. the whole aim of performance evaluation therefore is to determine how efficient an organization is able to put into use, the resources at its disposal. efficiency is determined by observing performance output and outcome achieved considering the number of people involved in the process (productivity per person) and cost data (capturing direct cost as well as indirect). performance evaluation can also be utilized to validate business successes, justifying additional resources, earning customers, stakeholders and staff loyalty and win recognition inside and outside the organization (siyanbola, 2013). theoretical framework there are numerous theories that can be used to explain budget and budgetary controls: walker’s progressive theory, the principal-agent model and budget theory, punctuated equilibrium theory of budgeting among others. however, the theoretical framework of this paper was premised on the above three theories. a. walker’s progressive theory walker was concerned with the standard of living in cities and the ability to pay for it. walker’s progressive budget theory centered on the premise that the means to decide how to allocate between options was through the “utilitarian ideal” or indifference point in economic theory as applied to government budgets. walker advanced her belief that the ideal of marginal utility was desirable, but it needed to be applied according to the progressive – values” or “human nature values (beckett, 2002). b. the principal-agent model and budget theory at the heart of public budgeting are relationships among those who provide agency services and those who allocate resources to service providers. in order words, those who make claims on governmental resources are agents and those who allocate and ration the resources are principals. in this relationship, the principals contract with agents to provide services to the public, and the main focus for all those involved is the contract (i.e. the budget) itself (forrester, 2002) c. punctuated equilibrium theory of budgeting baumgartner and jones (1993) established their concept of “punctuated equilibria” that addresses both incremental and large budget changes. it asserts that there is a state of equilibrium followed by a punctuated change followed again by equilibrium. the state of equilibrium is during quiet periods of incremental change. punctuations are breaks from the equilibrium norm. punctuated equilibrium theory involves environments of stability shifting into environments of instability (jordan, 2002). thus, in order to establish equilibrium in terms of budget changes, the budget and budgetary control measures put in place by an entity becomes pivotal to the overall performance system of ensuring stability of environment. on the basis of the above theories, we provided a theoretical model for the study below: egbunike, unamma 27 figure 1. theoretical model methods this study employed descriptive design and primary data was the major source of data collection. primary data was collected through the use of semi-structured questionnaires and was developed with five-point scale rating. the ratings for each category is strongly agree (5), agree(4), not sure(3) and disagree (2) strongly disagree(1). primary data was mainly employed due to the fact that it was impossible to access the performance data of hospitality companies in nigeria. the cronbach alpha reliability coefficient technique was used to establish the internal consistency of the research instrument. thirty (30) respondents who are not from the study area constitute the test group and yielded a cronbach alpha of 0.76. the population of the study covered all hospitality companies. however, ten hospitality companies were purposively selected as the sample of the study. in view of the fact that management and supervisors participate in the budgeting process, questionnaires were distributed mainly to these groups and these formed the respondents of the study. thus, a total of six hundred (600) questionnaires were administered on a face-to-face basis so as to facilitate immediate return of the completed questionnaires and ensured an unbiased sampled population. the questionnaire obtained were analyzed using both descriptive (frequency counts, mean and standard deviation) and inferential statistics (pearson correlation and t-test). mean and standard deviation was used to validate the items in the questionnaire. a mean above 2.50 is valid for such questionnaire item. on the other hand, the pearson correlation was employed in order to ascertain the association between budgeting, budgetary control and the performance of hospitality companies in nigeria and the ttest was used to ascertain if there exists, any significant variation in the budget/budgetary controls and performance evaluation techniques employed by hospitality companies in nigeria. results first, we reported the frequency counts with respect to the departments of the respondents; second, we analyzed the mean and standard deviation responses; and third, pearson correlation and t-test result in line with the hypotheses of the study was done. budget in hospitality industry budgetary control in hospitality industry performance evaluation in hospitality industry budgeting, budgetary control and performance evaluation: evidence from hospitality firms in nigeria 28 table 1. departments of the respondents department frequency percentage administrative 144 24.0% accounts 177 29.5% front office/desk 89 14.8% food/beverages 65 10.8% house keeping 80 13.3% maintenance 45 7.5% total 600 100% source: field work, 2017 table 1 captures the frequency counts with respect to the departments of the sampled hospitality companies used in the study. it is evident that 144 (24.0%) and 177 (29.5%) of the respondent sampled were from administrative and accounts departments respectively while 89 (14.8%) and 80 (13.3%) from front office/desk and housekeeping departments respectively. only 65 (10.85) and 45 (7.5%) were sampled from food/beverages and maintenance. table 2. mean scores of budget, budgetary control and performance evaluation (n=600) s/n items mean sd. decision 1 budgets motivate managers to achieve objectives and thereby establish control within the organization 3.18 .880 valid 2 budget committee exists within the organization 3.36 .840 valid 3 budgeting process is duly followed by management 3.30 .830 valid 4 budgetary controls assist management assess the level of performance 3.54 .840 valid 5 budgetary controls contribute positively to the performance of your organization 3.28 .820 valid 6 budgeting has assisted organization in making optimal use of its resources 3.11 .960 valid 7 need for proper training of managers before they can effectively utilize budgetary control techniques 3.29 .830 valid 8 budgetary control is an effective mechanism for financial planning and control 3.31 .860 valid 9 internal control is a tool for effective budgetary control? 3.29 .830 valid 10. every profit-making organization should have effective budgeting and budgetary control 3.67 .870 valid grand mean 3.33 .855 valid source: field work, 2017 table 2 shows the mean scores of budget, budgetary control and performance evaluation. however, the mean result revealed that all the 10-itemed questions scored above the benchmark of 2.50. also, item 10 have the highest mean score of 3.67 with egbunike, unamma 29 standard deviation of .870. this means that every profit-making organization should have effective budgeting and budgetary control. however, items 1, 2, 3, 4, 5, 6, 7, 8 and 9 have their means within the range of 2.50-3.49. this means that all the items are useful in establishing the association between budget, budgetary control and performance evaluation of hospitality companies in nigeria. this position was further supported by the grand mean of 3.33 and standard deviation of .855 which is also above the 2.50 benchmark. table 3. pearson correlation for budget, budgetary controls and performance evaluation (n600) variables mean score sd vif tol t-cal t-tab df budget & budgetary control (n=600) 19.62 4.4 1.00 1.00 0.79 0.19 598 performance evaluation (n=600) 15.08 6.52 source: author’s computation, 2017 (r=0.79, p <.05) the result as summarized in table 3 shows that the calculated pearson correlation value of 0.79 is greater than the tabulated value of 0.19. therefore, the null hypothesis is rejected and the alternative hypothesis which states that there is significant association between budget, budgetary control and the performance of hospitality companies in nigeria is accepted. this implies that budget and budgetary controls can be employed as a mean of evaluating the performance of hospitality companies in nigeria. table 4. t-test result of budget, budgetary control & performance evaluation(n=600) test value = 2 t df sig. (2tailed) mean difference 95% confidence interval of the difference lower upper budget/budgetary control 4.819 2 .001 118.69167 64.4817 172.9016 performance evaluation 4.621 2 .001 132.92917 69.6192 196.2391 source: author’s computation, 2017 the p-value is 0.001 and therefore, the difference between the two means is statistically significantly different from zero at the 5% level of significance. however, there is sufficient evidence (p = 0.001) to suggests that on the average, the sampled hospitality companies on the variation in the budgeting, budgetary control varies as regards to performance evaluation. this result is supported by the computed t-values (budget/budgetary control 4.819 and performance evaluation: 4.621) which is significantly higher than the tabulated value (t-tab: 1.660). this led to the rejection of the null hypothesis and acceptance of the alternative hypothesis that there is a significant variation in the budget, budgetary control and the performance evaluation among of hospitality companies in nigeria. budgeting, budgetary control and performance evaluation: evidence from hospitality firms in nigeria 30 conclusion performance evaluation is fundamental to every profit-making organization in that it can be employed as a means of ascertaining if the budget/budgetary control measures of organizations achieve the expected results during a specified time-span. thus, performance evaluation is a tool for appraising how well an organization has performed. consequently, this study was carried out with the view to address two fundamental issues: first, to determine if there is any association between budget/budgetary control and performance evaluation of hospitality companies in nigeria; second, to ascertain if there is any significant variation in budget/budgetary control and performance evaluation measures among hospitality companies in nigeria. the study employed descriptive design and primary data (questionnaire) was the major source of data collection which was administered to a total of six hundred (600) employees of ten (10) selected hospitality companies in nigeria. the analysis of the study revealed that all the items in the questionnaire were useful in establishing the association between budget/budgetary control and performance evaluation among hospitality companies. more interestingly, it was found that budget/budgetary control is a means of evaluating the performance of hospitality companies in nigeria. furthermore, it was revealed that there is a significant variation in the budget/budgetary control and the performance evaluation of hospitality companies in nigeria. on the basis of the findings, it was recommended that hospitality firms in nigeria should carry out performance evaluation on every aspect of their budget and budgetary activities as a way of ensuring that budgeted outcomes are met. also, budgetary costs should be a basis of choosing the most-fit performance evaluation technique for hospitality firms since such performance evaluation systems can provide economic benefits of different sorts to them. references batty, j. (1982). management accounting. london: macdonald and evans ltd. beckett, j. (2002). early budget theory: the progressive theory of public expenditure in khan, a. and hildreth, w.b (eds.). budget theory in the public sector. london: quorum books. brown j.l. & howard, l.r. (2002). principles and practice of management accounting. london: macdonald and evans ltd. buyers & holmes. g (1987). principles of cost accounting, (4th ed.). united states: cassel limited. chartered institute of management accountants (2000). management accounting official terminologies. cima. cope, o.k. (1994). operations analysis: the basis for programme budgeting, performance budgeting and unit cost accounting for government unit. usa: chicago press. egbunike, p.a (2014). management accounting techniques and applications. (revised edition), anambra: nimo-rex charles and patrick limited. forrester, j. (2002). the principal-agent model and budget theory in khan, a. and hildreth, w.b (eds.) budget theory in the public sector. london: quorum books. institute of cost and management accountants (1998). financial operations in a developing economy. ican news . jordan, m.m. (2002). punctuated equilibrium: an agenda-based theory of budgeting in khan, a. and hildreth, w.b (eds.) budget theory in the public sector. london: quorum books. egbunike, unamma 31 lambe, i., lawal, m., & okoli, t. ( 2015). a systematic review of budgeting and budgetary control in government owned organizations. research journal of finance and accounting, 6(6), 1-10. laynetwor, a. (2004). budgeting and budgetary controls, (2nd ed.). auckland: blue shark press limited. lockyer, k. (1983). fundamental of budget preposition ethics: a development. new york: mcgraw-hills book company lucey, t. (2003). management accounting. new york: dp publication. omolehinwa, (2002). work-out management accounting, (2nd ed.). great britain: handmann publishing. siyanbola, t.t. (2013). the impact of budgeting and budgetary control on the performance of manufacturing company in nigeria. journal of business management and social sciences research, 2(12), 8-16. contribuţia uniunii europene la convergenţa mondială a raportării financiare studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro about the financial reporting on the capital markets in the european union: requirements of using the ifrs and the equivalence of third country accounting standards aristiţa rotilă “vasile alecsandri” university of bacău rotila11@yahoo.com abstract the need to build a single european market and to ensure the competitiveness of the community capital markets led to the involvement of european union in the convergence process taking place on a global level in the realm of financial reporting. this paper is a study on financial reporting for the capital markets in the european union by analyzing the accounting standards that need to be applied. specifically, this paper highlights a number of issues concerning: the adoption of ias / ifrs in the european union and their compulsory aspect in preparing the consolidated financial statements for the companies listed on a regulated market; the requirement’s extension of using the ifrss adopted in the european union to the issuers of certain third countries involving a public offer of securities in european union or performing transactions with securities on a community regulated market; the establish of a mechanism for the determination of equivalence of certain third country accounting standards with ifrss in force at european level and, consequently, the possibility of using by some third country issuers, in preparing the consolidated financial statements submitted to the european markets, recognized national standards as equivalent to adopted ifrs. keywords accounting; standards; convergence; equivalence; ifrs; european union; third country jel classification m41 1. introduction in order to accelerate the creation of an integrated assets market meant to work in a real, equilibrated and efficient manner in the european union immediate measures needed to be taken in the field of financial communication. the european commission adopted the ias/ifrs standards and it imposes their application for elaboration of the consolidated financial statements of the european societies that are marketable on a regulated market. later, the request regarding the use of the ias/ifrs standards adopted in the european union also comprised the issuers from third countries who come with a public offer of securities in the union or who transact securities on a communitarian-regulated market. moreover, at a european level, a mechanism for the determination of the equivalence of accounting national standards from third countries to the ias/ifrs standards adopted in the european union was established. therefore, the securities issuers from third countries are allowed to apply the national accounting standards of certain third countries that are recognized as being equivalent to the adopted ifrs when elaborating consolidated financial statements presented on the european markets. 211 rotilă 2. about adopting the ias/ifrs standards in the eu and the obligatory character of their use because the requests regarding the financial reporting established by the european directives concerning the accounting were not able to ensure the high transparency and comparability level of the financial reports requested both by investors and by the surveillance authorities for all the marketable communitarian societies, the completion of the legal framework applicable for the marketable societies became necessary for the elaboration of their consolidated financial statements. at the same time, it was important for the financial reporting norms applied by the communitarian societies from the financial markets to be accepted internationally and to represent real global standards. this involves a high convergence of the accounting standards, the final target being the making of a unique set of accounting standards used at a global level and based on principles, standards that are meant to ensure the making of a coherent and homogenous financial reporting. in some specialists’ opinion (granier, 2003, page 2), these worldwide-recognized standards should facilitate at the same time the international transactions and the unification of the capital markets. hence, aiming to harmonize the financial information presented by societies whose titles are admitted for transactions on the regulated market of a member state and in order to ensure a high transparency and comparability level of the financial statements and, therefore, an efficient and competitive functioning of the communitarian capital markets and the making of a unique market, the european union decided to adopt and use international accounting standards. for this reason, the regulation (ec) no. 1606/2002 of the european parliament and of the council of 19 july 2002 on the application of the international accounting standards (also called the “ias regulation”) was adopted. based on the ias regulation, when elaboration the consolidated financial statements the societies that are regulated by the internal law of a state that is a member of the european union and whose securities are admitted for transactions on a regulated market of any member state must apply the ias/ifrs standards adopted by the european union for each financial year that starts on january 1st 2005 or after this date. at the same time, the ias regulation (art. 5) empowers the member states to impose or authorize the application of this framework in case of the consolidated financial statements of the societies whose titles are not admitted for transaction on the regulated market of a member state as well as in case of the individual financial statements, no matter whether the society is admitted or not for transaction on a regulated market of the european union. after adopting the ias regulation, different countries introduced the ias/ifrs standards directly in the national accounting regulations. this obviously proves that one of the objectives of this regulation, namely that of encouraging the convergence of the accounting standards so that the ias/ifrs standards are internationally accepted and become real global standards is in the process of accomplishment. at the same time, in order for the european accounting directives not to represent a barrier in the way of application of the international standards starting with 2005, they were subject to modernization. the ias/ifrs adoption in the european union is made according to procedure that was established by the ias regulation, by following a process in stages finished with the elaboration of a regulation (ec) by the european commission and its publishing (including the adopted standard) in the official journal of the european union. the ias/ifrs adoption in the european union implies the approval by means of a mechanism endowed with a double structure (with two levels): a political (regular) level, assured by an accounting regulatory committee arc; a technical level, the european financial reporting advisory group – efrag, with a technical expert group – teg and a supervisory board. efrag must provide the assistance and 212 about the financial reporting on the capital markets in the european union: requirements of using the ifrs and the equivalence of third country accounting standards competence requested for the evaluation of the ias/ifrs norms and for the guidance of the commission as regards the opportunity to modify or not the european law in force. moreover, in order to guide the commission as regards the objectivity and neutrality of the efrag notices regarding the adoption of the ifrs standards and of the ifric interpretations, in july 2006 (by decision 2006/505/ce of the commission, published in the official journal of the eu, l199/2006) a group of accounting experts called the standards advice review group sarg was established. in july 2003, the accounting regulatory committee advised the european commission to adopt all the ias and interpretations (sic) in existence on 14 september 2002, except those referring to the financial instruments (ias 32 financial instruments: disclosure and presentation, ias 39 financial instruments: recognition and measurement and their interpretation: sic 5, sic 16 and sic 17) because they are in process of major revision as part of the improvement project of the international accounting standards board (iasb). taking into account this recommendation, the european commission adopted all the existing standards and interpretations, seen the mentioned exceptions, by regulation (ec) no. 1725/2003 (published in the official journal of the eu l 261/2003). subsequently, by regulation (ec) no. 2086/2004 and 2237/2004, the reviewed versions (2003) of the ias 32 and ias 39 standards (with two exceptions: the provisions on the use of the fair value option and certain provisions relating to hedge accounting) were also adopted. also, the new international financing reports standards (from ifrs 1 to ifrs 13, except ifrs 9) and interpretations (from ifric 1 to ifric 20, except ifric 3, which was revoked before becoming effective) issued by iasb after 14 september 2002, as well as the reviewed variants or some amendments or improvements brought to the already existing standards were adopted. as regards the ifrs 9, both the date for the efrag notification and the approval date by arc were postponed (see efrag, 2013). we must say that the regulation (ec) no. 1725/2003 regarding the adoption of the international accounting standards (including subsequent amendments and completions) was replaced by the regulation (ce) no. 1126/2008, which includes the consolidated text of all the ias/ifrs standards, as well as the sic/ifric interpretations that were adopted at a communitarian level until 15 october 2008, except the ias 39 standard, of which certain parts were omitted (namely certain provisions relating to hedge accounting). therefore, all the regulations issued after this date for the adoption of new standards appear as regulations “amending regulation (ec) no. 1126/2008 [...]”. in some authors’ opinion (gîrbină & bunea, 2007), the adoption of the international referential by the european union “is a result of a strategic option which answers the convergence objective”. 3. extended requests regarding the use of the ifrs adopted in the eu the obligation regarding the use of the ias/ifrs adopted by the european union in the elaboration of the financial reports was later extended over the issuers of third countries as well, by means of two regulations, namely: by means of the regulation regarding the prospectus (regulation (ec) no. 809/2004), for the appliance in case of the third countries issuers who make a public offer of securities in the eu as well; this regulation brings into force the directive 2003/71/ec of the european parliament and of the council (called “the directive regarding the prospectus”); 213 rotilă by means of the directive regarding transparency (directive no. 2004/109/ec of the european parliament and of the council), for the appliance in case of the third countries issuers whose titles are transacted on a regulated market from the eu. these regulations stipulate that the issuers from third countries must present the financial information /financial statements elaborated according to the ifrs adopted pursuant to regulation (ec) no. 1606/2002 or according to the national accounting standards from a third country (the gaaps of the third country) that are the equivalent of these standards. the information /financial statements that are not elaborated according to the adopted ifrs or the gaaps from a third country that are the equivalent of these standards must be presented as reformulated financial information /financial statements. we must say that through its recommendation of june 2005 the committee of european securities regulators (cesr) considered that, on the whole, the gaaps of the united states, canada and japan are equivalent to ifrs adopted in the eu pursuant to regulation (ec) no. 1606/2002, subject to certain conditions like providing extra information and, in certain cases, supplementary financial statements. in this recommendation, cesr explains that equivalent does not mean identical and it considers that certain differences between the gaaps of third countries and the ias/ifrs would not lead to the making of different decisions regarding the investments. the possibility to use the national accounting standards from a third country without having to reformulate the financial information /financial statements initially was the object of a transitory exemption until 1 january 2007. then, considering the efforts of the national authorities of accounting normalization in canada, japan and the united states of america, as well as the efforts of other jurisdictions and taking into account the continuous efforts regarding the convergence to the ifrs, it was agreed to postpone this date for another two years. for this aim, in december 2006, the commission adopted two judicial measures regarding the use of the information elaborated according to certain internationally accepted accounting standards by the issuers from third countries, namely regulation (ec) no. 1787/2006/ec amending the regulation (ec) no. 809/2004; the commission decision no. 2006/891/ec regarding the use of the information elaborated according to the internationally accepted accounting standards called “decision according to the directive regarding transparency”) by securities’ issuers from third countries. according to these dispositions (decision 2006/891/ec, art.1, and the regulation (ec) no. 809/2004, art. 35, paragraph (5a), as amended by the regulation (ec) no. 1787/2006/ec), the issuers residing in a third country can use the gaaps of a third country in the elaboration of the historic financial information included in a prospectus submitted to a competent authority before 1 january 2009 (according to the regulation regarding the prospectus), respectively in the elaboration of annual and semestrial consolidated financial statements for all the financial years that start before january 2009 (according to the directive regarding transparency), without having to reformulate them or to provide a description of the differences between the ifrs adopted pursuant to regulation (ec) no. 1606/2002 and the gaaps according to which these financial information /financial statements were elaborated when one of the following conditions is accomplished: the notes that are attached to the financial statements contain an explicit and unreserved statement regarding the conformity of the financial information /financial statements with ifrs, according to ias 1 presentation of financial statements; the financial information /financial statements are elaborated according to the gaaps of either canada, japan or the united states of america; 214 about the financial reporting on the capital markets in the european union: requirements of using the ifrs and the equivalence of third country accounting standards the financial information /financial statements are elaborated according to the gaaps of a third country, other than canada, japan or the united states of america and the following conditions are accomplished: 1) the given authority of the third country which is responsible with the national accounting standards has publicly engaged itself to realize the convergence of these standards to the ifrs before the beginning of the financial year (during which the prospectus was submitted or for which the financial statements is reported); 2) the said authority has established a work programme which demonstrates the intention to progress towards convergence before 31 december 2008; and 3) the issuer proves that the conditions mentioned at points 1) and 2) are accomplished. during this 2 year period, the commission’s main task is to keep an active dialogue with the authorities in question from the third countries, to carefully supervise the evolution of the convergence between the ifrs and the gaaps of canada, japan, the united states and other countries that have established a convergence program (in order to be sure that it is able to make a decision about the equivalence at least six months before 1 january 2009) and, even more, to actively monitor the evolution of the authorities in question from the third countries in order to eliminate the reconcilement obligations imposed to the eu issuers who enter the financial markets from a third country. at the same time, during this period, the commission must regularly inform the committee of european securities regulators and the european parliament about the progresses regarding the convergence between the ifrs and the national accounting standards of the previously mentioned third countries about the progresses regarding the elimination of the reconcilement obligations imposed to the eu issuers in these third countries. 4. the definition of equivalence and the institution of the equivalence mechanism of the accounting standards in order to establish if the gaaps of a third country are equivalent to ifrs adopted in the eu, was necessary, first, to elaborate a definition of the equivalence and establish a mechanism for the determination of equivalence. according to the european legislation (namely the regulation regarding the prospectus and the decision in conformity with the directive regarding transparency) such obligations fell on the european commission that also had the obligation to establish the equivalence of the third countries gaaps, according to a certain calendar (at least 6 months before 1 january 2009). as regards each of the above mentioned aspects, the commission must refer to the committee of european securities regulators (cesr). following the first consultation, cesr proposed the following definition of equivalence that, in the commission’s opinion, provides adequate criteria for the defining equivalence “for equivalence’s purposes, investors should be able to make a similar decision irrespective of whether they are provided with financial statements based on ifrs or on third country gaap” (see commission of the european communities, 2007). given the objectives of “the directive regarding the prospectus” (directive no. 2003/71/ce), of assuring that the investors are able to make a documented evaluation of an issuer’s assets and debts, financial position, results and prospectus and the objectives of “the directive regarding transparency” (directive no. 2004/109/ec), of allowing the investors to make a documented evaluation of the financial statement of the issuers’ whose securities are admitted to be transacted on a regulated market, the 215 rotilă equivalence had to be defined by reference to the investors’ ability to make a similar evaluation of the financial position and of the prospectus, no matter whether the financial statements are elaborated according to the accounting standards of a third country or according to the ifrs. hereupon, in 2007, the european commission published a regulation by which it establishes the conditions according to which the gaaps of a third country may be considered to be equivalent to ifrs and a mechanism for the determination of equivalence is constituted. this is about the commission regulation (ec) no. 1569/2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities, pursuant to directives 2003/71/ec and 2004/109/ec of the european parliament and of the council (published in the official journal of the eu no. l 340/2007). by virtue of this regulation (art.2) the generally accepted accounting principles of a third country may be considered equivalent to ifrs adopted pursuant to regulation (ec) no. 1606/2002 “if the financial statements drawn up in accordance with generally accepted accounting principles of the third country concerned enable investors to make a similar assessment of the assets and liabilities, financial position, profit and losses and prospects of the issuer as financial statements drawn up in accordance with ifrs, with the result that investors are likely to make the same decisions about the acquisition, retention or disposal of securities of an issuer”. the decision on the evaluation of third country gaaps equivalence can be made by the commission: upon request of the competent authority of a member state, upon request of an authority that is responsible for the accounting standards or for the supervision of the market from a third country or on its own initiative. the regulation stipulates specific and transitory dispositions for third countries that – before 30 june 2008 – publicly committed themselves to accomplish the convergence of the national accounting referential to the ifrs until 31 december 2011 or, together with the european union, came to an agreement of mutual acknowledgement before 31 december 2008. in other words, a new extension of the derogation granted to the securities issuers from the third countries regarding the use of the ifrs (between 1 january 2009 and 31 december 2011) is made. the issues regarding convergence are the object of the discussions representing the dialogue between the regulation authorities and, for this purpose, the commission and the authorities of the third countries in question are in regular contact. the commission must regularly inform the committee of european securities regulators and the european parliament on the evolution of the discussions between the regulatory authorities and on the progresses in the way of convergence to the ifrs of the third countries. 5. the national accounting standards recognized as equivalent to ifrs adopted by the eu the efforts regarding the convergence and the progresses registered in some countries determined the committee of european securities regulators (later, from 1 january 2011, replaced by the european securities and market authority – esma), respectively the european commission to consider that it is advisable for the gaaps of certain third countries to be regarded as equivalent to ifrs adopted by the eu. therefore, the securities issuers from third countries are allowed to apply the national accounting standards of certain third countries that are recognized as being equivalent to the adopted ifrs when elaborating consolidated financial statements presented on the european markets. as we already showed, even from 2005, the committee of european securities regulators considered that, each taken as a whole, the gaaps from the united states, 216 about the financial reporting on the capital markets in the european union: requirements of using the ifrs and the equivalence of third country accounting standards canada and japan are equivalent to ifrs adopted by the eu (subject to certain conditions) and they were temporarily admitted in order to be used in the elaboration of the information for the reporting on the regulated markets from the eu. after the constitution of the equivalence mechanism, in its advice on the equivalence of the accounting standards from the united states of america, japan and china and then canada and south korea, then india (issued in march, cesr/08-179, in may, cesr/08-293, and in november 2008, cesr/08-859) to the ifrs, the committee of european securities regulators advised the european commission to recognize the gaaps from the united states of america and the gaaps from japan as being the equivalents of the ifrs in force at an european level and to temporary accept, at a communitarian level, the financial statements elaborated based on the gaaps from china, canada, south korea and india, until no longer than 31 december 2011. therefore, in december 2008, the commission adopted the regulation (ec) no. 1289/2008 regarding the amendment of the regulation (ec) no. 809/2004 and the decision no. 2008/961/ec, which establishes that starting with 1 january 2009 the issuers from third countries present the financial information elaborated according to any of the following accounting standards: the ifrs adopted by the eu pursuant to regulation (ec) no. 1606/2002; the ifrs, provided that the notes to the audited financial statements that form part of the historic financial information contain an explicit and unreserved statement that these financial statements comply with the ifrs according to the ias 1 presentation of financial statements; the gaaps from the united states of america; the gaaps from japan. at the same time, by regulation (ec) no. 1289/2008 and by decision no. 2008/961/ec the commission authorizes the issuers of the third countries to elaborate their financial statements according to the gaaps from china, canada, south korea and india, before the financial years that start with 1 january 2012 or after this date, without having to reformulate the historic financial information comprised in a prospectus (stipulated by the regulation (ec) no. 809/2004, annex i point 20.1; annex iv point 13.1; annex vii point 8.2; annex x point 20.1 or annex xi point 11.1) or the obligation (stipulated by the regulation (ec) no. 809/2004, annex vii point 8.2a; annex ix point 11.1; or annex x point 20) to provide a narrative description of the differences between the ifrs adopted by the eu and the gaaps according to which such information is elaborated. in february 2009 and in june 2010, the commission asked the committee of european securities regulators to provide a technical evaluation of the registered progresses for the convergence of their accounting standards or for the adoption of the ifrs in the countries where eu granted a transition period when passing to the ifrs (china, canada, south korea and india) and the reports were presented by the cesr in june 2009 (report cesr/09-472), respectively in november 2010 (report cesr/10-1301). although the validity period regarding the conditions in which the equivalence for the gaaps from china, canada, south korea and india was to be granted was going to expire on 31 december 2011, the commission evaluated the utility and functioning of the equivalence mechanism and it concluded that this should be extended for a 3 year period, respectively until 31 december 2014. for this reason the commission delegated regulation (eu) no. 310/2012 (which amended the regulation (ec) no. 1596/2007) was adopted. also, the commission implementing decision no. 2012/194/eu (which amended the decision no. 2008/961/ec) was issued, establishing that from 1 january 2012 the gaaps from china, canada and south korea are considered to be equivalent to ifrs adopted by the eu pursuant to 217 rotilă regulation (ec) no. 1602/2002 and the transition period is extended by three years, until 31 december 2014, to grant the issuers from third countries the possibility to elaborate their consolidated financial statements according to the gaaps from india. in the making of this decision, the commission considered the technical evaluation presented by the cesr in its report from november 2010 regarding the said countries and the updated information referring to china and india received from esma in may 2011. as about india, we need to mention that after an investigation made on the scene in january 2011, esma observed that the accounting standards present several differences in comparison with the ifrs and, therefore, there are uncertainties regarding the calendar of application of a reporting system according to the ifrs. apart from the third countries whose gaaps are considered to be equivalent to ifrs adopted in the eu, there are several countries like australia, hong kong, new zealand, singapore, south africa, who have already fully adopted or implemented the ifrs. in their case, is no need for a decision on equivalence by the european commission. also, there are several developed economies that want to adopt the ifrs (which have undertaken to converge their accounting standards to ifrs or to adopt them). in their case the european commission, assisted by the esma, will continue to monitor the situation, to evaluate and support their efforts. 6. conclusions the approached aspects represent actions carried on at a european level and that, together with the european directives’ modernization, prove that the european union is firmly engaged on the line of a global financing reporting system and it is strongly involved in the global convergence process of financial reporting. the european commission welcomes all the initiatives that create the necessary conditions for the ifrs to become global standards. the efforts and the registered progresses as regards the convergence to the ifrs from certain third countries determined the european authority for securities and markets and the european commission to consider that their accounting standards are equivalent to ifrs adopted in the eu and, therefore, to allow their use in the elaboration of the consolidated financial statements for financial reporting on the capital markets from the eu member states. therefore, for the financial reporting on a regulated market of the eu, the european societies use the ifrs adopted in the eu when it comes of the elaboration of their consolidated financial statements, while the societies from the third countries can use either the ifrs adopted in the eu, or the ifrs adopted by the iasb, or the accounting standards of third countries that are considered to be equivalent to ifrs adopted in the eu. references commission of the european communities (2007), first report to the european securities committee and to the european parliament on convergence between international financial reporting standards (ifrs) and third country national generally accepted accounting principles (gaaps), [com(2007) 405 final], brussels, 6.7.2007, available on http://ec.europa.eu/internal_market/ accounting/docs/com-2007-0405_en.pdf. committee of european securities regulators (2008), cesr’s advice on the equivalence of chinese, japanese and us gaaps (cesr/08-179), march 2008, www.esma.europa.eu. 218 http://ec.europa.eu/internal_market/%20accounting/docs/com-2007-0405_en.pdf http://ec.europa.eu/internal_market/%20accounting/docs/com-2007-0405_en.pdf about the financial reporting on the capital markets in the european union: requirements of using the ifrs and the equivalence of third country accounting standards committee of european securities regulators (2008), cesr’s advice on canadian and south korean gaaps (cesr/08-293), may 2008, available on www.esma.europa.eu. committee of european securities regulators (2008), cesr’s technical advice to the european commission on indian gaap (cesr/08-859), november 2008, available on www.esma.europa.eu. decision no. 2006/891/ec of the commission on the use by third country issuers of securities of information prepared under internationally accepted accounting standards, published in the official journal of the eu no. l 343/2006. decision no. 2008/961/ec of the commission on the use by third countries’ issuers of securities of certain third country’s national accounting standards and international financial reporting standards to prepare their consolidated financial statements, published in the official journal of the eu no. l 340/2008, with subsequent amendments by means of the commission implementing decision no. 2012/194/eu published in the official journal of the eu no. l 103/2012. directive 2003/71/ec of the european parliament and of the council of 4 november 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending directive 2001/34/ec, published in the official journal of the eu no. l 345/2003 (eu). directive 2004/109/ec of the european parliament and of the council of 15 december 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending directive 2001/34/ec, published in the official journal of the eu no. l 390/2004 (eu). efrag (2013), the eu endorsement status report, position as at 12 september 2013, available on http://www.efrag.org/websites/uploadfolder/1/cms/files/ endorsement%20status%20report/efrag_endorsement_status_report__12_ september_ 2013.pdf. epstein, b. j., jermakowics, e. k., wiley (2007), ifrs 2007: interpretarea şi aplicarea standardelor internaţionale de contabilitate şi raportare financiară, bmt publishing house, bucharest. european commission (2010), report to the european securities committee and to the european parliament on convergence between international financial reporting standards (ifrs) and third country national generally accepted accounting principles (gaaps), [com(2010)292 final], brussels, 4.6.2010, available on http://ec.europa.eu/internal_market/accounting/docs/com-2010292/com-2010-292_en.pdf. feleagă, (malciu), l., feleagă, n. (2005), contabilitate financiară: o abordare europeană şi internaţională, vol. i, infomega publishing house, bucharest. gîrbină, m. m., bunea, şt. (2007), sinteze, studii de caz şi teste grilă privind aplicarea ias (revizuite)–ifrs, vol. i., ceccar publishing house, bucharest. granier, r. (2003), les normes comptables internationales, deuxième partie: la mise en oeuvre, revue écho-gestion, nº 3, déc. regulation (ec) no. 1126/2008 of the commission adopting certain international accounting standards in accordance with regulation (ec) no. 1606/2002 of the european parliament and of the council, published in the official journal of the eu no. l 230/2008. regulation (ec) no. 1569/2007 of the commission establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to directives 2003/71/ec and 2004/109/ec of the 219 http://www.efrag.org/websites/uploadfolder/1/cms/files/%20endorsement%20status%20report/efrag_endorsement_status_report__12_september_%202013.pdf http://www.efrag.org/websites/uploadfolder/1/cms/files/%20endorsement%20status%20report/efrag_endorsement_status_report__12_september_%202013.pdf http://www.efrag.org/websites/uploadfolder/1/cms/files/%20endorsement%20status%20report/efrag_endorsement_status_report__12_september_%202013.pdf http://ec.europa.eu/internal_market/accounting/docs/com-2010-292/com-2010-292_en.pdf http://ec.europa.eu/internal_market/accounting/docs/com-2010-292/com-2010-292_en.pdf rotilă european parliament and of the council, published in the official journal of the eu no. l 340/2007, with subsequent amendments by means of the commission delegated regulation (eu) no. 310/2012, published in the official journal of the eu no. l 103/2012. regulation (ec) no. 1606/2002 of the european parliament and of the council of 19 july 2002 on the application of international accounting standards, published in the official journal of the eu no. l 243/2002. regulation (ec) no. 1725/2003 of the commission adopting certain international accounting standards in accordance with regulation (ec) no. 1606/2002 of the european parliament and of the council, published in the official journal of the eu no. l 261/2003. regulation (ec) no. 809/2004 of the commission implementing directive 2003/71/ec of the european parliament and of the council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements, published in the official journal of the eu no. l 149/2004, with subsequent amendments by means of the commission regulation (ec) no. 1787/2006 (jo l 337/2006), the commission regulation (ec) no. 1289/2008 (jo l 340/2008) and the commission delegated regulation (eu) no. 311/2012 (jo l 103/2012). rotilă, a. (2007), consideraţii privind modernizarea directivelor contabile în contextul adoptării ias/ifrs în uniunea europeană, in the volume of the scientific symposium contabilitatea şi tehnologiile informaţiei şi comunicării, edusoft publishing house, bacău, 87-94. rotilă, a. (2011), reglementări şi practici contabile specifice, alma mater publishing house, bacău. 220 2. about adopting the ias/ifrs standards in the eu and the obligatory character of their use 3. extended requests regarding the use of the ifrs adopted in the eu 4. the definition of equivalence and the institution of the equivalence mechanism of the accounting standards (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 30 aspects regarding functional strategies in romanian organizations nicoleta ciucescu “vasile alecsandri” university of bacau ciucescu.nicoleta@ub.ro costel ceocea “vasile alecsandri” university of bacau costel.ceocea@ub.ro ovidiu-leonard turcu “vasile alecsandri” university of bacau ovidiuturcu@ymail.com andreea feraru-prepeliță “vasile alecsandri” university of bacau andreea.feraru@ub.ro raluca-alexandra ceocea “gheorghe asachi” university of iasi raluca.ceocea@gmail.com abstract this paper is a theoretical approach of the importance of functional strategies use by organizations in order to reach set targets. functional strategies are closely linked to the changing competitive environment. functional strategies may be the competitive advantage of each company. these strategies contribute to the implementation of the integrated business strategy of the company. they are the foundation for achieving the company's strategic intent. functional strategies clarify the corporate and business strategies of a company or business unit. in contemporary times, these strategies offer a series of more specific details on the way in which key functional areas shall be managed in the near future by operations managers. through functional strategies, managers make decisions and carry out actions acquiring higher competencies in different business functions (marketing, financial, operational, human resources) in accordance with corporate strategies and on business level. if corporate strategies and strategies on business level are developed by managers, strategies may be prepared for the functional areas of each business unit. the development of functional strategies may fluctuate from formal to informal. within larger organizations that carry out complex operations there may be several strategies regarding each major function. smaller organizations may usually function with lesser policies, and most of them may be informal. keywords business; competitive environment; strategies; managers; business unit jel classification m10 functional strategy concept in specialized literature, the functional strategy concept has been defined by many specialists in the field. a selection of several definitions is presented below. thompson a. jr. and strickland a.j. (1987), concur that “functional strategy refers to the managerial game plan for a certain functional activity, business process or key department within a business. the marketing strategy of a company, for example, mailto:costel.ceocea@ub.ro mailto:ovidiuturcu@ymail.co mailto:andreea.feraru@ub.ro ciucescu, ceocea, turcu, feraru-prepeliță, ceocea 31 represents the management game plan for the management of the marketing part of the business. the new product development strategy of a company represents the managerial game plan to maintain the company’s product rage fresh and in line with what buyer is looking for.” according to pearce j.a. and robinson r.b. (1997) „a functional strategy is a shortterm game plan for a key functional area within a company. such strategies clarify the large strategy, offering more specific details on the way in which key functional areas shall be managed in the near future.”. according to naneș m. (2000), “functional strategies are more specific than business strategies. they are set on the level of the company’s functional areas (marketing, manufacture, financial, research-development, etc.). they target shorter time horizons (1 year or less than 1 year).” wheelen t.l. and hunder j.d. (2000) give the following definition: „the functional strategy is the approach that a functional area has in order to reach the objectives and corporate strategies of the business unit through the maximization of resource productivity. it is concerned with the development and building of a distinctive competence to offer a company or a business unit a competitive advantage. just as a multidivisional corporation has several business units, each with its own business strategy, each business unit has its own set of departments, each with its own functional strategy.” in this context, we can say that for a business unit that develops through the application of a competitive strategy of differentiation through products with a high quality level, proper functional strategies shall be required: in the field of manufacture, to provide manufacture services with expensive equipment and raw materials, that allow the products to be of high quality; in the marketing field, to create attractive advertising campaigns for end customers that “draw” products to these customers through the distribution channels; in the human resource area, to hire employees and provide trainings for them so that they obtain a higher qualification level. corporate and business strategies lay at the base of functional strategies that are functionally and operationally implemented in the organization. this strategy refers to the functioning with one single function and activities implied by it. this is a level of strategy operation and decisions taken on this level are called tactical decisions. according to nicolescu o. and verboncu i. (2007), “partial strategies are characterized by: they refer to certain activities of the company; they are characterized by focusing mainly on the best or on the most deficient components of the company, using relatively limited resources; they usually focus on programs or plans on specific areas; they are approved either on the level of participative management, or by higher executive management of the organization.” according to jones g.r. and hill c.w.l. (2012), “functional strategy is an action plan to consolidate functional and organisational resources of an organization, as well as its coordination abilities, in order to crease basic competencies.” according to burduș e. (2017), “partial strategies include derived objectives, options from various fields of the organization’s activity, engage a part of the potential the organization has, and in general, only affect the field for which they were prepared.” functional strategies indicate the way in which objectives on the level of functional areas will be achieved, as well as strategies that will be prepared on organization and business units’ level. through functional strategies, companies and business units can aspects regarding functional strategies in romanian organizations 32 acquire a series of distinctive competencies that give them sustainable competition advantages. key features of a functional strategy to better understand functional strategy, we shall present a synthesis of several of the most important features of functional strategy. among these key features we can list the following: regarding the time frame, the strategy on business level has a long time horizon, while functional strategies target short time horizons. the functional strategy has to be in accordance with the global strategy of the organization. functional strategy focuses on what should be immediately for the global strategy to function efficiently. functional strategies should be interconnected, as well as connected to the global strategy of the organization. the focus of functional strategy is dictated by the strategy of the parent business unit. functional strategy is conceived to act to reach the corporate objectives of the business unit with the help of all existent resources for profit maximization. functional strategy has a narrower coverage than business strategy. it contains important details of the general business plan by setting actions, approaches and practices that are to be used in the management of a certain functional area. functional strategy is more specific and guides towards action, since it clarifies what should be done in every functional area in order to reach corporate objectives. functional strategy refers to the function, department, division of the organization. functional strategy is the action plan to manage a main subordinate activity within a business. functional strategy targets the development and cultivation of a distinctive competence to offer an organization or a business unit a competitive advantage. functional strategy may be different from one region to another. functional strategies help to implement global strategy. these divide the global strategy in action. a functional strategy supports the strategy on business level, which in its turn supports the strategy on corporate level. functional strategies should be subordinate to and consistent with the longterm objectives and global strategy. functional strategies should be synchronized among them so as to contribute together to the achievement of the organization’s global strategy. implementation of these strategies involves a large range of decisions that should be taken regarding functional areas. functional strategies are most often focused on the external environment. within functional strategies, there may be several sub-functional areas. functional strategies are detailed statements on the methods or activities that shall be used to reach short-term objectives and set competitive advantage. types of strategies under this title, we shall succinctly approach types of functional strategies existent in romanian strategies. ciucescu, ceocea, turcu, feraru-prepeliță, ceocea 33 the following types of functional strategies can be distinguished in specialized literature: marketing strategies; production/operation strategies; financial strategies; human resource strategies. they are presented as diagram in image 1. image 1 types of functional strategies source: nica, p., neștian, a., iftimescu, a., et.al. (2008), managementul organizației. concepte și practici, editura sedcom libris, iași, pp. 203 marketing strategies through marketing strategies the most important action methods are set for each of the four component elements of the marketing mix, namely price, product, distribution and promotion. “representing the essence of the marketing activity of an enterprise or a strategic business unit strongly focused on market, the marketing mix includes the main elements of the four ps namely product/service offered, price or price range, promotion of sales and distribution, namely all wholesalers, retailers, transport and storage system.” a successful marketing strategy is characterized by the following aspects: flexibility, in the sense that within a marketing plan there can be changes occurring due to various situations that occur and have to be taken into consideration; the plan being a flexible one will be able to adaptation to the needs and situations that have changed along the way. comprehensive – the marketing plan should take into consideration as many details as possible before its implementation aspects regarding functional strategies in romanian organizations 34 consistency – the marketing plan will be successfully used if it has been lined through the marketing strategy with the other functional strategies; therefore the general objective on organization level and on the business unit level can be achieved. rationality – in order to reach general objectives, the marketing plan should run in a logical manner so that the marketing strategy is more efficient. the formulation and implementation of the marketing mix are the basis of the marketing strategy that comprises: product strategy, price strategy, distribution strategy, promotion strategy. “product strategies represent the main directions on which the enterprise can mobilize its human, material and financial potential in order to reach the economicfinancial indicators it has set for itself. within these strategic directions, the products represents the main object on which all within these strategic directions, the product is the central object on which all the driving forces of the company and the environment act. as part of the policy, product strategies are at the same time part of the overall strategic arsenal of the company.” product strategy may occur in an organization in two distinct situations: managers develop the product line by extending the product range, namely adding new articles; these actions contribute to the increase of sale volume, and on the other hand a larger range of products offers the possibility to satisfy more clients. managers reduce the product range, and in the context of increasing the quality, the company addresses more select clients through its products. price strategy targets on setting the prices for the products created/ services delivered, in order to support the competition strategy selected. in case the manufacture company introduces a new product on the market, it may choose one of the two basic variants: skimming price strategy or penetration pricing strategy “skim pricing” is mainly used in case the product is new and competitors are few. by using this strategy the aim is to apply a higher price in the beginning that will gradually decrease for the purpose of winning different market segments. skim price strategy is used due to the following reasons: in the first phase, demand for the product is not elastic, until the products take a good position on the market. in the initial phase, demand for the product is not known, and the high price helps cover production cost. in the beginning, there is a high capital demand to manufacture the product that leads to a high production price. moreover, a large amount is invested in promotion activities that are also added to its cost. when the product is at a higher price, this will easily cover manufacture and promotion costs. penetration pricing aims to stimulate demand increase for the new product by charging a lower price. this is achieved by attracting a large part of the market from the early stages of the life cycle. penetrating pricing strategy gives the company the possibility to accumulate significant productivity gains, as a result of demonstrating the experience effect and secure a dominant position over competitors through a market share higher than theirs. penetration pricing strategy has the result of lower shortterm profits; nevertheless higher profits result, as market share increases. the reasons why romanian organizations use penetrating prices are the following: ciucescu, ceocea, turcu, feraru-prepeliță, ceocea 35 the new offered product of the company is already supplied by other wellknown brands and the low price will draw customers to the product, customers who are already familiar with other brands. higher sales of product in short time intervals; restrict the access of newcomers to the market. distribution strategy consists in romanian organizations making decisions regarding the channels, systems and types of distribution that will be used to reach the highest possible number of customers. through the distribution strategy the distribution network that will be used to reach the business sales objectives is designed. the better these decisions, the more will the company bring products to its customers in the best way possible. this way, the customers will have access to the products in the easiest and most confortable way possible, which translates into higher sales level and consequently profit increase. consequently, the distribution strategy makes it possible to define the main selling points depending on the customers it serves and the type of products it sells. at the same time, it allows the setting of the way in which the transfer and transportation of the product will be carried out. such a strategy may foresee the organization of an own distribution network, or using specialized distribution channels, with a higher or lower intermediary links. promotion strategy can be found on the level of romanian organization either as “pushing” or “pulling” strategy. “promotion is a combination of methods used to generate public awareness, identity, confidence, desire and conviction about a product, and ultimately its adoption and usage by the general public.” “push” strategy entails that the organization, through the marketer promotes the product only to the following participant to the distribution process that will continue this strategy with the following members of the distribution channel until the products is directly promoted to potential customers. this strategy is especially used by manufacturers who send their sale staff to discover new sale points and new customers. therefore, each member of the distribution channel pushes the product to the next participant, until the product reaches the client. the method through which the product is pushed through the distribution channels to the end customers are: discounts offered to distributors, special offers at the sale point, advertising in professional publications destined to distributors. pull strategy involves the carrying out of certain marketing activities, especially advertising and promotion on consumer market. direct advertising campaigns have the purpose to inform and motivate consumers. they will be targeted towards the end user, to determine him to request products from the distributors. in the end the brokers will have to order the products from the manufacturers. promotional strategy uses promotion techniques and combines them in promotional mixes by using the resources it has in order to fulfil its objectives, while at the same time adapting to the consumers’ needs. the strategy selected by the company will be found in the promotional action plan, in the promotion budget, and last but not list in the content of the promotional mix. production/ operation strategies production/ operation strategies indicate how and where the products or services of the organization will be manufactured/ delivered, as well as the way in which the customized relationships with the suppliers will be set. aspects regarding functional strategies in romanian organizations 36 manufacturing strategy sets a set of manufacture objectives (cost, quality, delivery and flexibly of products) and action of an industrial organization in order to ensure the sustainable advantage over the organization’s competitors. the manufacturing strategy should be compatible with the business strategy. according to bohosievici c. (2001) “the formulation of the manufacturing strategy by an industrial organization consists in establishing the manufacturing objectives, identifying and evaluating the major decisions on the expected manufacturing structure (production capacity, facilities, technologies and vertical integration), as well as on the manufacturing infrastructure (quality system, planning and production control, organization, human resources management, information systems architecture). manufacturing strategy has a difficult purpose, since it has to: provide manufacturing support for product orders on a market segment, at a lever better than the competitors; foresee superior manufacture processes that give the company distinct advantages over its competitors. manufacture integration strategy may be more or less pronounced, depending on the complexity of the manufactured product, or service provided to customers, in the sense that the components of the product /service may be fully created within the organization, or purchased from specialized suppliers for such components. this type of strategy clearly specifies the degree of vertical integration of production processes. at the same time, through production/operation strategies the location of plants/offices where the basic operations of the company are carried out, are also clarified. relocation (moving) is a strategy frequently used by multinational companies, in the sense that these set the locations of factories/offices in countries or regions with an attractive work force potential (concerning cost and qualification level). purchasing strategies set the long-term relationships with raw material suppliers, suppliers of components and other elements necessary in the production process, that are to be purchased from outside. there are three alternative strategies that can be taken into account, namely: purchase from multiple sources, purchase from a single source, and purchase from parallel sources. organizations analyse the advantages and disadvantages each of these strategies have, for the purpose of obtaining the best benefits. “single source purchasing is a deliberate choice of the company and should not be confused with the strategy generated by the monopoly position of the supplier on the market.” financial strategies the financial strategy is a component of the general strategy of the organization and includes all financial objectives of the company in the medium and long term, the main methods to achieve it, as well as the necessary financial resources. financial strategies set the action ways that shall be undertaken in the financial area to support promoted competition strategies. these focus mainly on the obtaining of funds for the financing of investments and dividend management. the financial strategy aims to align financial management with the overall and business objectives of an organization in order to gain a competitive advantage. the financial strategy seeks to answer the following questions: how much funding is necessary? when is the fund necessary? ciucescu, ceocea, turcu, feraru-prepeliță, ceocea 37 how should funds be collected? what are the means to use and manage funds? financial plans and policies cover three important areas: sources of funding, use of funds and management of funds. fund sources include the owner’s capital, loans from the public through shares and bonds and loans form financial institutions. financial plans and policies are connected to capital requirements, the desired capital structures, reserves and redundancy and relationship with creditors. fund collection is the first and most important requirement for the set-up of any business that includes a very careful planning. in this context, the answers to the following questions should be found: how much financing should be available for the start-up? when is the financing needed? for how long is the financing needed? what guarantee can be offered to obtain the financing? can a certain property be offered for the start-up, in exchange for the investment? on the long-run, are there two financing options from internal or external sources? the financing of the start-up may be done through internal sources, the come from within the organization (personal sources – savings or inheritance of the entrepreneur, loans from friends or family and credit cards, profits retained and share capital invested by the founder) and external sources such as external fund suppliers (loan capital, share capital and risk capital). depending on the weight provided for these sources, a low or pronounced borrowing strategy may result. some small and medium companies prefer to limit themselves to internal investment financing options in order to make sure that they have no return problems and keep the family control on the business. the strategy for a higher indebtedness degree strategy is still frequently used by most companies that have a good economic yield and are engaged in major investment programs. fund use involves that the funds may be used to make investments, offer loans and advances and provide dividends to the shareholders. funds should be used efficiently. financial plans and policies assign funds to achieve various strategies related to the extension of business and granting of dividends to shareholders. fund management contributes to the optimum use of funds. plans and policies on this level target the management of cash and credits, tax planning and accounting budget. in conclusion, financial plans and policies are very important, as they determine the sources, use and management of funds that help project implementation. human resource strategy human resource strategy is an integral part of the organization’s strategy and a requirement for the success of the strategy on organization level. the achievement of strategic objectives is based on the efficient use of the resources available to the organization. human resources – that means the ones that can coordinate, combine and use other resources are very important in the strategic system of the organization. russu c., (1999) underlines the importance of human resources and functional personnel strategies. according to him “taking into account the importance of human resources for the level of performance and competitiveness of the company’s activities as a whole, no other area of functional strategies and policies is as vital as that regarding the employees of the company. the fulfilment of this role by the personnel function makes it necessary to solve numerous specific problems, based on judicious functional strategies and derived policies.” aspects regarding functional strategies in romanian organizations 38 functional human resource strategies actually target all activities specific to the staff function. “several activities can be delimited within the human resource function: staffing forecast; personnel training; personnel selection; personnel employment; personnel assessment; personnel motivation; development of employees’ career; personnel improvement; personnel promotion; protection of employees (labour protection and social security); remodelling the culture of the organization.” we selectively present some of the aspects regarding functional policies and strategies related to the activities presented above. thus, staffing forecast is the object of extended functional strategies that include the actual assessment of human resources either within the company or outside the business unit, the interpretation of staffing forecasts regarding future development of the organization and defining the development strategies for existent staff and recruitment of new candidates. recruitment of staff is done depending on policies that significant differ from one period to the other, due to the development of the organization, and the occurrence of new activities carried out by it, loss of employees, internal changes caused by the evolution of company requirements. policies regarding the integration of new employees aim to harmonize, as much as possible, the personality of future employees with that of individuals and integrating groups within the organization. policies regarding staff assessment should be as rigorous as possible, while at the same time insuring a high level of objectiveness to eliminate possible conflicts that may occur between heads and subordinates. these policies aim to determine the real performances of employees, as well as their potential, indicate if progresses or regresses have been registered in comparison to the previous assessment, link the wages to the level of performance, set improvement requirements for the purpose of a possible promotion. a complex functional strategy regards the training and continuous training of human resources in romanian organizations. this strategy should cover all aspects related to continuous and accelerated growth of knowledge that is specifically generated by modern technical and scientific progress. policies regarding staff promotion include a series of aspects, such as promotion criteria, internal promotion principle, setting promotion plans that clearly indicate what the promotion possibilities and real chances are for individual employees to be promoted, etc. a functional human resource strategy should consider the syndicate – management relationship, since this is a very important factor that can influence not only functional policies, but also business performance. since human resource strategy is part of the general strategy of the organization, it should be agreed on and approved by the general management of the organization. there are two endorsement and setting methods for the human resource strategy: in the case of decentralized organizations the strategic objectives of human resources are established by the management of the organization and the human resources manager; the human resources manager has full freedom to establish the mode of action and the intermediate deadlines, provided that the ciucescu, ceocea, turcu, feraru-prepeliță, ceocea 39 strategic objectives of human resources are met at the desired level and within the established deadline; in the case of centralized organizations all elements of the strategy are established at the level of the organization's management based on the proposals and variants offered by the human resources manager who will implement the selected strategy. conclusions functional strategies operationalize the global strategy of the organization (company or its strategic business unit), they specify the necessary details regarding the way the organization should act to implement the strategy selected. clarifying the corresponding details through functional strategies allows all its members to understand the overall strategy and explain parts of the strategy that target specific areas (fields). the main purpose of each functional strategy consists in reaching the objective on a corporate and business level, in the specific functional area through an optimum assignment of available resources in order to increase the profit of the organization. functional strategies in the field of marketing should guide marketing managers so as to profitably sell products /services on the target market in order to reach the objectives of the business. marketing strategies should be prepared, presented and implemented for each component of the product, price, distribution and promotion marketing mix. production/operation functional strategies should guide decisions regarding the conversion process of input to output with added value, namely the operational system of the organization, by obtaining an optimum balance between investments and operations, production and location, the planning of installations and planning of short-term processes. the functional strategies of operations should be coordinated with the marketing strategy and at the same time be integrated with components of the financial strategy such as capital budget and investment decisions, as well as human resource strategies. financial functional– we should keep in mind that while most functional strategies guide their implementation within a short time frame, in the case of financial functional strategies, the time frame varies since strategies in this field direct the use of financial resources to support the business strategy, long term and annual objectives. financial strategies with a longer time frame offer financial managers guidelines regarding long-term capital investments, to use financing through liability, assign dividends and leverage position of the organization. the operational strategies conceived to manage working capital and short-term assets are more immediate. long-term financial strategies usually guide capital acquisition in the context that priorities rarely change over time. another major financial strategy is the allocation of capital which sets out the priorities and timetable for major investments in facilities, projects, procurement and / or people, as is the case with growth-oriented strategies. human resources functional strategies– in the process of developing and implementing the functional human resources strategy, it is necessary to verify to what extent the objectives set in the field of human resources are always current and whether the measures derived from them have been properly fulfilled. the implementation of a human resources strategy is important because it defines how well the human resources processes works within the organization and ensures that aspects regarding functional strategies in romanian organizations 40 they are in line with the organization's objectives. every organization is unique and therefore its needs are unique. the integration of the hr strategy with the business strategy is significant for the success of the organization. we can stress that hr strategy that is incorporated in the business strategy of the organization does not only serve to reach organization objectives, but is also a key source for competitive advantage. there is no “magic recipe” for the success of the human resource strategy; the type of approach should be in accordance with the profile of the organization and its general strategy. in conclusion, the role of functional strategies is essential because: it offers support for the general business strategy; it clarifies the way in which functional managers will work to insure a higher performance in their functional fields. references balaure, v. et al, (2002), marketing, (ediția a doua, revăzută și adăugită), bucurești, editura uranus bălan, c., (2006), logistica, (ediția a iii-a revăzută și adăugită), bucurești, editura uranus bohosievici, c., (2001), strategia de fabricație, chișinău, editura tehnica-info burduș, e., (2017), tratat de management, (ediția a iii-a), bucurești, editura pro universitaria jones g.r., hill c.w.l. (2012), strategic management: an integrated approach, cengage learning myers, j.h., (1986), marketing, new york, mcgraw-hill book company naneș, m., (2000), managementul strategic al întreprinderii și provocările tranziției, (ediția a iii-a), bucurești, editura pro universitaria nica, p., neștian, a., iftimescu, a., et. al. (2008), managementul organizației. concepte și practici, iași, editura sedcom libris nicolescu o., verboncu i., (2007), managementul organizației, editura economică, bucurești thompson a. jr., strickland a.j. (1987), strategic management. concept and cases, (4th edition), mcgraw-hill higher education pearce, j.a., robinson, r.b, (1997), strategic management: formulation, implementation, and control, irwin, mcgraw-hill pettinger, r., (2007), introduction to management, (fourth edition), palgrave macmillan, new york russu, c., (1999), management strategic, bucurești, editura all beck wheelen, t.l., hunder, j.d., (2000), cases in strategic management, prentice hall financial functional– we should keep in mind that while most functional strategies guide their implementation within a short time frame, in the case of financial functional strategies, the time frame varies since strategies in this field direct the us... jones g.r., hill c.w.l. (2012), strategic management: an integrated approach, cengage learning thompson a. jr., strickland a.j. (1987), strategic management. concept and cases, (4th edition), mcgraw-hill higher education pearce, j.a., robinson, r.b, (1997), strategic management: formulation, implementation, and control, irwin, mcgraw-hill pettinger, r., (2007), introduction to management, (fourth edition), palgrave macmillan, new york russu, c., (1999), management strategic, bucurești, editura all beck wheelen, t.l., hunder, j.d., (2000), cases in strategic management, prentice hall 43 studies and scientific researches. economics edition, no 36, 2022 http://sceco.ub.ro conceptual causal framework to assess the impact of covid 19 on energy transition cristina gabriela cosmulese stefan cel mare university of suceava gabriela.cosmulese@usm.ro abstract the current crisis demonstrates the critical role that energy plays in our lives. the vulnerability of some of us in relation to an essential daily service illustrates that public policies need to be strengthened to deliver a resilient and fair market in which the consumer takes centre stage. the pandemic has given rise to additional imbalances that risk further undermining social cohesion and the mechanisms of democracy. in this context, it is necessary to develop a solidarity pact to protect the most vulnerable in the context of current and future crises and to address growing social inequalities with a focus on the health and well-being of vulnerable populations. the aim of this paper is to build through data analysis some arguments on the impact of legislative measures applied in romania on the phenomenon of poverty that must be taken into account in any approach to the concept of energy poverty, according to the literature, the recommendations of european institutions and the experiences of other countries. keywords covid 19, energy poverty, domestic energy consumption, vulnerable and energy-poor populations, romania jel classification k32, q43 introduction the coronavirus outbreak shows once again that energy and energy services are essential ingredients for a safe, healthy and decent life. energy poverty, commonly understood as the inability to provide the necessary levels of energy services in the household (padmanaban, sharmeela, sivaraman & holm-nielsen, 2021), means living in a home that is difficult to bring up to an optimal temperature level (whether this means heating during cold seasons or cooling in summer) or where cooking or providing fresh food needs are constrained due to higher costs relative to income and poor energy efficiency of the building and home equipment. in addition to affordability and efficiency, fuel poverty is also about difficult access to alternative, clean and safe sources. energy poverty is thus recognised as a complex challenge with significant social impacts, which requires the commitment of policy makers to address. energy poverty also implies exposure to a number of vulnerabilities. energy-poor people are more vulnerable to physical health risks such as respiratory, cardiovascular and other diseases with a documented impact on increased mortality, but they are also more exposed to mental illness (thomson, snell & bouzarovski, 2017). at the same time, energy poverty is associated with a variety of problems related to inequality and social (in)justice (reames, 2016), access to education (banerjee, mishra & maruta, 2021) and well-being in general (grey, jiang, nascimento, rodgers, johnson, lyons & poortinga, 2017). with all its effects, the phenomenon has a differential impact on women and other vulnerable groups. all these issues are highly topical during the coronavirus pandemic. conceptual causal framework to assess the impact of covid 19 on energy transition 44 the current coronavirus crisis has wider than public health effects, with profound and long-lasting socio-economic consequences (nicola, alsafi, sohrabi, kerwan, al-jabir, iosifidis & agha, 2020). the pre-existing factors leading to energy poverty have been amplified throughout this time, with falling or lost incomes and rising bills due to increased energy consumption (jiang, van fan & klemeš, 2021). at the national level, domestic energy consumption (figure 1) shows a fairly sharp quarter-on-quarter variation, but it can be seen that since joining the eu, romania has also reduced its electricity consumption, which is in line with the eu strategy to reduce final energy consumption. from a medical point of view, the combination of the effects of the virus with preexisting medical conditions, some of which are also associated with energy poverty, is well documented. in whatever form it manifests itself, fuel poverty is now putting increased pressure on household budgets and public finances, amplifying the need to better understand it and identify targeted measures for those affected. figure 1. the evolution of electricity consumption in romania during the period 1990–2021 source: romania energy information, https://www.enerdata.net/estore/energy-market/romania/ as shown in the above figure, domestic electricity consumption also increased slightly in 2020 compared to 2007 (0.28%), partly due to eu requirements to reduce energy consumption and also to increase energy efficiency (soava, mehedintu, sterpu & grecu, 2021). as governments take increasingly stringent measures to halt the spread of the pandemic, despite their inability to predict how it will evolve over the coming months, the energy world prepares to face economic uncertainties and anticipate possible failures. one question prevails above all: what will be the impact of the health crisis on the energy transition? one thing is certain, and that is that the 'green' transformation of the energy sector is far from complete. the contribution of renewables to total energy demand is still limited and so far, represents a tiny percentage even if we include hydropower. in addition, it is not obvious that the total costs of renewable energy will fall in the future. while electricity generation costs have fallen dramatically, putting most renewable technologies in the cost range of fossil alternatives (irena, 2020), there are additional costs resulting from the increasing penetration of variable energy sources (wind and solar) into the electricity grid (such as energy storage costs and an increased role for https://www.enerdata.net/estore/energy-market/romania/ cosmulese 45 balancing markets). finally, in the transport sector, oil is not really challenged by lowcarbon alternatives. moreover, the pandemic may lead to changes in business and household habits. smart work helps reduce global demand for oil products by putting downward pressure on oil prices. telemarketing, which companies have stimulated as a result of curbs, reduces demand for oil products (for transport) while increasing demand for sources that meet domestic energy demand (such as gas and electricity); in addition, constraints on the movement of people and goods related to covid-19 restrictions may cause companies to shift production back within national borders, partly reducing their participation in global value chains (see www.rivistaenergia.it). overall, the lack of investment in low-carbon technologies and the persistent energy price gap can reverse the decarbonisation process. estimates using historical data show that rising prices of some commodities stimulate the use of substitutes, such as in the case of oil and coal (carnazzi, 2017). indeed, in the energy sector, the combined effect of weak carbon pricing mechanisms and lower gas and coal prices may have slowed the growth of renewables, and in the transport sector, the persistence of high crude oil prices may accelerate biofuel-based decarbonisation. in the current context, this scenario is slowly materialising, which would lead to a reversal of the trend observed in recent years of increasing the share of renewables in the energy mix, spurred by the sharp rise in oil prices, as was the case in 2007-2008, when political and economic support was used to try to combat climate change and mitigate technological progress in these sectors (see www.eca.europa.eu). another view, supported by simulations carried out by the breakthrough institute, states that the trajectory of global carbon emissions is not consistent with future climate neutrality. as can be seen in figure 2 in general, emission reductions related to economic crises have been followed by subsequent increases, and even if a worst-case pandemic scenario were to occur, emission reductions would not be sufficient to place the international community on a trajectory consistent with climate neutrality. figure 2. climate geopolitics source: breakthrough institute, https://thebreakthrough.org/energy the contraction in emissions is likely to be temporary, as seen after the 2009 financial crisis: even in the case of a prolonged stall following a new wave of covid-19 (blue line in figure 2), the emissions trend is far from that needed to reach neutrality after 2050 (orange line). https://thebreakthrough.org/energy conceptual causal framework to assess the impact of covid 19 on energy transition 46 the immediate impact of the covid-19 crisis on energy-poor households in europe the recession triggered by global bottlenecks has begun to deepen pre-existing inequalities across the world's economies as they have faced soaring unemployment (hirsch, 2020), the failure of many businesses and a fall in household incomes (abrihan, 2020). various economic analyses expect the number of unemployed in europe to double (strauss, 2020) to an estimated 7.6%, and a reduction in wages and working time with an impact on household budgets in the short and medium term. in romania, the unemployment rate has been rising throughout the months of the crisis, reaching 5.2% in june (insse, 2020) and, according to some sources, a real level above the european level since the end of march, showing sustained upward trends (cornea, 2020). the unemployed are joined by two other categories of people. firstly, those affected by technical unemployment, which peaked at more than one million people in april (900,000 in may) and has since risen to 596,000 following the new regulations accompanying the measures to gradually reopen the economy (cornea, 2020). secondly, people on childcare leave (188,514 people in june, including people on childcare leave as a result of measures to stop the pandemic). for both categories, incomes have been reduced by at least 25% over several months if we also take into account the threshold limits in the legislation (see. http://mmuncii.ro) we are therefore witnessing a generalised fall in income while residential energy consumption has increased, amid the increase in time spent at home as a result of the decree imposing the state of emergency, work at home and the suspension of classes throughout the education system. internationally, a study by the international energy agency (see https://www.iea.org) in more than 30 countries in march-april 2020 estimates a 40% increase in residential electricity consumption compared to previous years, while gas consumption has fallen slightly due to warmer temperatures for the period. as regards residential energy consumption in our country, no data are yet available, but taking into account that the period of the emergency coincided with periods of high outdoor temperature variations, we can also estimate a slight increase in gas and wood consumption for heating and cooking compared to similar periods in previous years, higher in areas with lower temperatures. in terms of impact on household budgets, at an average annual electricity consumption per household of around 1600 kwh (see www.odyssee-mure.eu), an average final price before the liberalisation period of around 0.65 lei/kwh and a 40% increase in electricity consumption can result in additional average monthly expenditure of 35 lei on electricity alone, not taking into account possible increases in heating and cooking fuel bills and in the context of decreasing incomes. increased expenditure will result in more people being in a state of energy vulnerability, especially as the number of households supported by heating assistance during the cold season has been steadily decreasing since 2012, as incomes have increased and the ceilings in the legislation have not been updated. with the uncertainties of the pandemic's evolution, where some states have moved from initial forecasts of economic stabilisation towards more fluctuating and long-lasting trends (abdelkafi & refas, 2021), at least some of the drivers of reduced income and increased energy consumption will continue for an uncertain period of time, being anticipated at national level by regulations from the ministry of labour to support economic agents (see www.mmuncii.ro). however according to a study by invest energy, the new law on the vulnerable consumer continues to leave unaddressed dimensions deeply connected to the causes and symptoms of energy poverty (see www.investenergy.ro). the impact varies by sector and demographic segment, but it is becoming increasingly clear that those most affected by this crisis are the most vulnerable and marginalised groups (elderly, disabled, women, children, minorities, people with informal status, rural people, single people, single parents, etc.) who overlap to a large extent with those cosmulese 47 for whom the impact of energy poverty is disproportionate (see inclusion and social dignity operational programme, 2022). the cost engager action brings together researchers, experts and practitioners concerned with fuel poverty in europe who are exploring the link between the experiences of fuel poor households and their trust in institutions and social networks (see grossmann, jiglau, dubois, sinea, martínconsuegra, dereniowska & varo, 2021). published papers have identified a variety of categories that exhibit relevant individual and group vulnerabilities depending on the national context. relative to the sectors affected, vulnerable workers in retail and hospitality are the first victims of the sudden economic shutdown. in the same context, according to an nbr study, the sectors on which the covid-19 pandemic is expected to have a high impact are part of the manufacturing industry employing a large mass of unskilled workers, the textile industry and service operators such as transport, tourism operators, cultural activities, which together are fundamental sectors of the economy and whose difficulties are expected to give rise to knock-on and long-term effects (laboş, 2020). the result is a context which is conducive to the overlapping of several causes of vulnerability, accentuating the precariousness of already vulnerable people, but also bringing new households into a situation of prioritizing expenditure and therefore difficulty in paying energy bills. the covid-19 crisis also exacerbates gender inequalities, which are themselves deeply rooted in the causes and experiences of energy poverty (dubey, 2022). the typical structure and characteristics of households in our country expose women and children in particular to the need for reliable, clean and uninterrupted energy consumption and thermal comfort throughout the year. their increased presence in the home exposes them to the environmental pollution that comes from increased energy consumption during this period. in addition, perhaps more than ever, access to energy is closely linked to access to education or the labour market, as online schooling or working from home have become either alternative options to resort to in health emergencies or the only options for children and adults to continue their schooling or work. beyond the formal frontline sectors, the oecd (2020) draws attention to the need to protect workers in informal markets, which do not benefit from any support mechanism in times of crisis, but are among the most vulnerable consumers. moreover, the studies draw attention to the social and spatial distribution of vulnerability and energy poverty, highlighting the widespread manifestations at the level of society (the difficulties faced by post-communist countries compared to western countries), but also the existence of pockets of poverty, particularly in urban areas, which produce a lock-in effect in which vulnerability is perpetuated in a vicious circle that gives rise to a dynamic of deep socioeconomic degradation. such environments, such as ferentari (bucharest) or pata rât (clujnapoka), to refer to the best known, are contexts where energy poverty is a multidimensional phenomenon, which combines with other vulnerabilities among which informality plays a central role (teschner, sinea, vornicu, abu-hamed & negev, 2020). here we find sub-optimal housing conditions, overcrowded and visibly dilapidated dwellings, and it is to be expected that, with the health crisis, the state of precariousness here will become more acute. the development of the pandemic is causing uncertainty at all levels of activity, generating significant psychological pressures on individuals (sawyer, sherriff, bishop, darking & huber, 2022). an insse (2020) experimental study of the first weeks of the coronavirus crisis assesses its impact through the expectations of economic agents in various sectors of activity and highlights the high degree of uncertainty about the development of activities in each of these sectors. the inability to anticipate a secure and steady income in the future, combined with the effects of quarantine and stress arising from the need to reconcile professional and personal activities, can result in significant psychological costs such as anxiety, depression or conceptual causal framework to assess the impact of covid 19 on energy transition 48 reduced decision-making capacity, etc (vancea & apostol, 2021). given the evidence on the psychological effects of energy poverty, situational factors can become an important amplifying element. previous fuel poverty situations are now exacerbated. some people are forced to live in conditions of low thermal comfort, lacking the energy services to provide them with fresh food or running hot water. for others, more than ever before, work, education or household activities become challenges to consider when prioritising expenditure. despite the necessary initiatives (decree of the president of romania no. 195) to cap prices during the state of emergency, the situation of those already disconnected for non-payment or those accumulating debts to suppliers remains uncertain. the physical response capacity of companies and relevant institutions has been reduced during this period. physical distance also means more difficulties in seeking and receiving help, either from official social services or from family and friends. moreover, for most vulnerable consumers there are no support policies in place, partly because of incomplete legislation, partly because of a failure to recognise the phenomenon as a whole in companies' commercial policies. under-represented minorities remain outside emergency measures. legislation recognises vulnerable consumers on the grounds of low income or age. for them, heating aid is granted only in the winter months and under a combination of restrictive criteria. social tariffs are also highly restrictive (jiglau et al., 2017). moreover, measures that have been considered in many countries (see https://energy-poverty.ec.europa.eu/index_en) and which have provided an additional safety net for consumers, such as temporary bans on disconnections or financial support mechanisms in times of crisis, have so far been lacking in our country. it is time to think about the right to energy and energy services for all governments all over the world have taken increased measures to increase protection for the population and minimise the costs of the crisis in the hope that economies will recover as quickly as possible (hesselman, varo, guyet & thomson, 2020). however, much more needs to be done to protect the vulnerable. social solidarity and energy services must continue to operate at full capacity, including in the context of the crisis, so as not to impede people's access to energy, support schemes and a dignified life. flexible and sustained measures are needed to maintain the incomes of people who have lost their jobs or are facing difficulties in absorbing the shock of the crisis and maintaining their purchasing power. there is also a need for mechanisms to identify households and companies that have run into difficulties paying their bills due to the effects of the crisis and mechanisms to ensure that they can continue to do business, whether this involves a rethink of policies on social tariffs, subsidies and state aid, or mechanisms to reschedule payments or a rethink of pricing options at companies. as consumers become more vulnerable and use more energy, easy access to financial support must become the norm. indeed, the covid crisis has highlighted the negative consequences of legislation's narrow understanding of vulnerability and its sources. a thorough understanding of the concept of vulnerability including vulnerability in relation to energy services is needed in order to develop targeted and effective instruments. beyond legislation, vulnerability cannot be understood and tackled in practice without making social support systems more effective, especially those under local authorities (oecd, 2020), as they know local communities and the problems they face best. household energy costs must be affordable and predictable, avoiding shocks not only for vulnerable consumers but for the population in general and not only in exceptional situations. in this respect, consumers, especially with the liberalisation of the energy market, must be provided not only with good quality services, but also with cosmulese 49 contractually agreed protection mechanisms for unforeseen situations where household bill payment difficulties may arise. given the limited ability of consumers to understand the technical language in which contracts are drawn up, good faith on the part of companies and oversight by the regulator to protect consumers are essential to establishing lasting relationships based on trust between both parties to the contract. it is also necessary to introduce performance criteria for companies that take into account the market regulator's policies on vulnerable consumers. identifying tools to disseminate and reward good practice may be beneficial in this respect. social tariffs or heat subsidies are transitional mechanisms towards generalised energy efficiency measures, but they need to be updated to take account of income indexation, i.e. to adapt consumption bands to rational volumes, while the criteria for granting them should be fair and non-restrictive. specific rules must therefore be applied that can operate and produce effects both during the covid-19 crisis and beyond the quarantine period. limiting disconnections from energy services. although during the state of emergency, utility prices were capped, no action was taken to ban disconnections (see https://righttoenergy.org/). at present, the measure is only in place for those whose health depends on being connected to support appliances. but the measure is needed as a safety net for a much wider category of consumers and for a longer period of time, not just during an emergency or alert state. given the long-term effects that economic imbalances have on household budgets, it is necessary to take this measure at least until payments are paid, while preventing the accumulation of debts to providers. in times of crisis, it is necessary to set minimum consumption levels to ensure that households can cover their basic needs, especially those related to health emergencies such as those in the context of the current crisis (household hygiene, personal hygiene, access to information for information, work, education, etc.). after this period, the ceilings must be changed in such a way as to prevent situations where disconnections cause social hardship. mechanisms for managing or cancelling debts can only be adopted in cooperation between government, regulator and utility companies. the quality of housing and amenities and access to diversified and affordable resources are two of the most pressing issues, recognised as such by the un's inclusion of them among the sustainable development goals (see http://roaid.ro/) thus, providing decent housing with adequate and uninterrupted access to energy must be a priority in the national economic recovery plan and in view of the objectives of the european green pact. housing quality is about more than energy efficiency, but for now the priority remains to retrofit while keeping housing costs affordable for households (grossmann, 2019). the proposed wave of renovation should be applied fairly and inclusively to ensure that even the poorest citizens live in energy-efficient housing. also, with 80% of rural households heating with firewood without access to alternative, affordable and clean sources, national economic recovery plans should integrate improved energy access as a priority for action, taking into account a reasonable minimum energy standard for all dwellings (as proposed in directive (eu) 218/844). conclusion the covid crisis highlights and amplifies the problems related to access to energy, but it is important to remember that for at least a quarter of the population of romania and over 10% of the population of europe, these problems existed before the crisis and will persist beyond it. therefore, it is necessary to conceptualise and implement in legislation the right to energy for all citizens, as well as to operationalise it into a mechanism that will ensure continuous access to affordable, secure and clean energy services for all citizens. a fair distribution of the costs of the pandemic between conceptual causal framework to assess the impact of covid 19 on energy transition 50 households, the state and economic actors is necessary to protect the energy vulnerable population. further research and development efforts are also needed to better investigate and understand the impact of such global crises on vulnerable and energypoor populations. also, a special fund for energy poverty, managed by the state as a guarantor of citizens' rights, can take on the burden of bills when households default, protect households from the consequences of macroeconomic imbalances and be a source of investment in infrastructure and housing efficiency. the mechanisms for accessing this fund must be flexible and fair so that the economic interests of energy suppliers are not affected and the fund does not become a pretext for non-payment of bills. the modalities for replenishing this fund can also be explored with representatives of suppliers and consumers. the permanent operation of such a safety 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(2020), extreme energy poverty in the urban peripheries of romania and israel: policy, planning and infrastructure. energy research & social science, 66, 101502. thomson, h., snell, c., & bouzarovski, s. (2017), health, well-being and energy poverty in europe: a comparative study of 32 european countries, international journal of environmental research and public health, 14(6), 584. vancea, f., & apostol, m. ş. (2021), changes in mental health during the covid-19 crisis in romania: a repeated cross-section study based on the measurement of subjective perceptions and experiences, science progress, 104(2), 00368504211025873. https://www.reuters.com/article/us-health-coronavirus-eu-jobs/mckinsey-predicts-near-doubling-of-unemployment-in-europe-iduskbn2210uz https://www.reuters.com/article/us-health-coronavirus-eu-jobs/mckinsey-predicts-near-doubling-of-unemployment-in-europe-iduskbn2210uz studies and scientific researches. economics edition, no 34, 2021 http://sceco.ub.ro 58 fiction books in the multimodal society. new modes of communication and marketing practices in the book industry andreia-irina suciu “vasile alecsandri” university of bacău suciu.irina@ub.ro brînduşa-mariana amălăncei “vasile alecsandri” university of bacău amalancei.brindusa@ub.ro mihaela culea “vasile alecsandri” university of bacău culea.mihaela@ub.ro abstract the development of digital technologies, new media, multimodal forms of expression and transmission of information that now characterize the multimodal age we are living in has inevitably affected the activity of the book industry with all the components and parties involved. this article presents some of the latest strategies developed by authors, publishers and sellers in order to present, advertise and, ultimately, sell their books, especially books of fiction. it then narrows down the discussion to contemporary english author nicola barker who, in her novel h(a)ppy (2017) illustrates the concept of multimodality in fiction by employing a system of varied choices to communicate meaning, ranging from language, image, colour, typography to music. keywords digitalization; multimodal(ity); book branding; marketing strategies; commodity; fiction books; nicola barker jel classification m39 1. introduction. the digitalization and commodification of culture in the multimodal era with the evolution of digital technologies and the development of a marked visual culture, the twenty-first century can be considered a characteristically multimodal era, one that involves several different modes of expression, transmission of and access to information. contemporary people are permanently challenged visually from all directions and in many ways – always invited to look at tvs, laptops, displays, billboards, mashes (while, as we shall see, multimodal literature also invites us to look through things). digitalization has thus created new types of readers and has changed readers’ expectations from a book, meaning that these expectations go beyond “the monomodality of the printed page as a display of printed letters” (hallet, 2018). the new media have also influenced the communication and transmission of information and the book industry also embraces the opportunities provided by them. the book itself, as a cultural artefact, has been challenged into changing not only its content but its form as well. in the context in which even tattoos have become pieces mailto:suciu.irina@ub.ro mailto:suciu.irina@ub.ro suciu, amălăncei, culea 59 to listen to by help of an app1, any product laid on page has had to greatly reconsider the manner of delivery. additionally, on a market in which ebooks and audiobooks have gained important ground2, in which “electronic, holographic and video art” is a new category of products included by booksellers in their offer and holographic books are used as educational tools3, new products have appeared on the market so as to meet the needs of demanding readers. this article presents some of the latest strategies developed by authors, publishers and sellers in order to present, advertise and, ultimately, sell their books, especially books of fiction, in an age that witnesses a worrying decline in book reading.4 the events organized to celebrate the uk world book day in 2020, on the 5th of march, for example, took into account the benefits offered by technology and sought to respond to this crisis found especially among the young, proposing “in schools, stadiums, and tv studios, in bedrooms, bookshops, libraries, and prisons, hundreds of thousands of stories” to be “shared across the uk and ireland”. fiction writers themselves, like nicola barker, a contemporary english novelist, have adjusted themselves to the current times, creating (printed) novels that invite readers to benefit from a stimulating reading act which, in effect, becomes a multisensorial experience. 2. the publisher’s and seller’s strategies: book branding and marketing strategies in the book industry the necessary adaptation of authors, publishers and sellers to the principles and demands of the contemporary market has also integrated books to the business arena. efforts to find the successful formula that would generate satisfactory sales and profits involve branding and marketing the book efficiently. branding, as a business practice, has become an important component of marketing and, in turn, it has inevitably reached the book industry, too. all the strategies employed by those involved in the industry, a part of which are also illustrated and analysed in this article, can be considered elements of a book branding process, which are skillfully and constantly improved in order to keep the pace with the latest demands and trends. the book as a commodity employs innovative features in order to make people want to buy it: design, format, promotional activities and a rich collection of features – which are further discussed in this article – which are part of the product’s identity and make it identifiable and appealing on the market. brands and branding processes have constituted the object of research mainly for marketing specialists. however, a cultural approach to brands is also possible as long as brands are part of the wider cultural fabric (heding et al., 2009). similarly, morris b. holbrook and elizabeth hirschman (1993) have also pointed out a clear relation between marketing practices and cultural products, thus launching the concept of cultural marketing which integrates consumer behaviour within the dimensions of culture. therefore, the relation between marketing practices and the socio-cultural context or cultural products opens an insightful perspective for analysing the complex phenomena of cultural production, marketing, and consumption. for example, by better interpreting cultural practices, we can better grasp the social meanings that customers attach to their patterns of consumption. 1 https://www.cbc.ca/life/wellness/tattoos-you-can-hear-are-thing-now-and-we-may-see-more-body-techexperimentation-soon-1.4160544. 2 https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-and-audiobook-sales-by-ukpublishers-to-all-time-high-covid, accessed december 20, 2021. 3 https://www.nexar.cl/en/soluciones/recursos-digitales-educativos/libros-holograficos/, accessed december 18, 2021. 4 https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-in-sharp-decline-nationalliteracy-trust/, accessed december 20, 2021. https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-and-audiobook-sales-by-uk-publishers-to-all-time-high-covid https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-and-audiobook-sales-by-uk-publishers-to-all-time-high-covid https://www.nexar.cl/en/soluciones/recursos-digitales-educativos/libros-holograficos/ https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-in-sharp-decline-national-literacy-trust/ https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-in-sharp-decline-national-literacy-trust/ fiction books in the multimodal society. new modes of communication and marketing practices in the book industry 60 branding as a commercial practice has existed for hundreds of years, and has turned into a modern concept, promoted by a science as well as an art (franzen & moriarty, 2009) starting with the former half of the 20th century (clifton et al., 2003), being applied to almost anything, from products and services to companies, ngos, people and even countries. books, too, take advantage of the common business branding process that enables the building of brands, as defined by al ries & laura ries (2000), and also come close to s. anholt’s (2007) definition of branding as a process of creation, planning, and communication of the name and identity with the aim of building and managing reputation. though studies present the multisensory nature of reading and handling books especially with reference to old books (spence, 2020), educational studies introduce multimodality in classes of english (albers & sanders, 2010) or they introduce analysis of contemporary books that exploit the multisensorial nature of books and reading (baron, 2021) and speak about visual literacy or multimodal literacy (serafini, 2013). thus, the commodity that the fiction book is (mcaleer, 1992, chpt. 2 “books are a commodity: the commercialization of popular fiction” of his study; raven, 2009, “the book as a commodity”, chpt. 3 in suarez & turner, 2009) moved from traditional formats towards new (commercial) ways of attracting the public. therefore, printing and publishing had to increase their commercial ingenuity (raven, 2009) or “‘commodity-style’ publishing techniques” were employed so as to bring exposure of the product and increase sales (mcaleer, 1992). the complexity of such a process comes from the fact that books are not just any type of commodity, they comply simultaneously with 8 principles (lesser in allington et al., 2019): (1) modes of textual production and reproduction interact and overlap; (2) books are mobile crossing physical borders and passing jurisdictions (“posing problem for political, religious and economic authorities”); (3) books are not just containers of words, they “can support community formation, religious affiliation, cultural identification, or personal development”; (4) their spread has always been regulated or tried to be controlled by the authorities; (5) they are produced out of combination of reasons: economic/financial, artistic/cultural, personal-psychologic, etc.; (6) book selling is an economically-risky business; (7) book trade is connected to the forming of a canon of national literature and imposed copyright policies; (8) landmark texts positively evaluated by historians and critics play a smaller part in the history of the book in comparison to some more mundane, material texts. while studies on book publishing have multiplied simultaneously with new media of production/transmission of information in general, or book promotion/selling in particular, we observe that there is a permanent doubling of the pragmatic and the artistic. pragmatic as it may be, book selling starts with the artistic act of writing, readers/buyers will hold in their hands/listen to in their ears/watch on their screens a cultural artefact. those strategies that make books sell combine semi-pragmatic and semi-artistic perspectives, thus blending the artistic with the pragmatic sources of book selling success. the great number of existing studies or guides for publishing houses and authors alike, offering advice with the purpose of selling books in the traditional printed form or as ebooks or audiobooks, for selling and promoting fiction or nonfiction works proves that there is a rising interest in developing the book industry so as to respond to the advances in technology and the latest demands of society (cole, 2003; higgs, 2011; lansky, 2011; camacho, 2013; weber, 2013; penn, 2014; baverstock, 2015; stapilus, 2016; baverstock et al., 2020). such studies regard the product that the book is and the act of selling in terms of: expense and profit(ability), competition, advertising/promoting, distribution, sales and sellers, mediums and media, author– reader contact; target markets, buyer types, marketing plan, press release, selfsuciu, amălăncei, culea 61 promotion and internet marketing; developing online platforms (blogs, using social networking, doing teleseminars, promotion through videotechnology); the print on demand advantage and quickly correcting/adapting your product to a new market; the blessing and curse of online reviews, building one’s own site and an online press kit, multimedia as tool for self-promotion and podcasting for publicity; book-based vs. author-based marketing, copyright and piracy, financials (costs, investment, cashing in); understanding the market; finding a niche, delivery formats, improving metadata, seo – search engine optimization etc., in so many ways that reflect the commercial spirit the book market is now prone to. baverstock et al.’s model of book marketing (2020) speaks about customer orientation and innovation, they combine the emotional response to books with the pragmatics of publishing, and also analyze format (from hardback, to paperback, ebook and audiobook). baverstock (2015) also speaks in her seminal study about the ps model or marketing mix: product, price, promotion, place, personnel/people, process, period of time, physical evidence. thus, she speaks about a checklist which any seller (the author himself or a professional seller) should have in mind to achieve so as to sell books successfully: (1) a product for which the most popular format should be sought for (printed form – hardcover or paperback, ebooks, audiobooks with cds or for online listening); (2) the right people – the product should be worked upon by the right people, and feedback should be taken from people involved (sellers and buyers alike); (3) pricing policies – apart from the demand and value for money that should guide pricing policies and that the author speaks about, we also include the practising of different prices for ebooks, audiobooks vs. physical books, (for instance, ebooks and kindle formats may be sensitively cheaper), audiobooks (when made available) may be quite a bargain when offers/special deals are made to the general public but especially to subscribers to specialized sites and apps (and we speak from the position of the consumer of such products); additionally, pre-orders of books have important price reductions and represent a win-win situation/transaction for the seller/author (who is ensured the sale) and for the buyer/reader who is given a considerable discount); (4) the right promotional approach – the most efficient promotional approach has to be decided for the specific product and in the case of books the following are mentioned: free extras over a certain sum, vouchers, guaranteed refund, e-mail alerts/newsletters; to all these we add promotional offers that might include package deals, for online purchases, loyalty points on purchase or on writing reviews (we are the beneficiary of such policies practiced by an online seller in romania), occasional promotions/raffles for loyal/subscribed customers, discounts for books in the wish list (we have also benefitted from such a promotion from an international bookseller); (5) the right way – the creative strategy that is used so to put the product in; (6) the right time – the author only gives examples for books in the field of education (which should be launched at the beginning of the school/academic year), but we can give as appropriate times for book launching: the holiday season, book fair seasons, anniversary editions/releases; (7) the right place for distributing info materials or for actually selling the product has to be thought in terms of customer friendliness, accessibility and safety. we could also include to these (8) security of payment (in online purchases) and (9) pick up opportunities (free, if possible, shipping/home delivery, pick up points/easy boxes) for online purchases. from the perspective of the market demand, electronic word-of-mouth (ewom) is increasingly replacing traditional marketing, which implies a radical change concerning the brand communication strategy. there is a growing tendency now for consumers to appreciate the advice and recommendations of internet users, even though these are anonymous, to the detriment of advertising messages, and the buying decision is influenced by the information found by means of search engines, social networks, blogs, websites etc. thus, the reviews about a book on a specialized website are the fiction books in the multimodal society. new modes of communication and marketing practices in the book industry 62 expression of the collective intelligence of internet users, who become prescribers (scheid et al., 2019). this way, the power of consumers grows, they express their opinions, evaluate products and become (part of) the media (michel, 2017), enthusiasts and experts have the possibility of asserting their viewpoints and communication becomes more interactive and is based on the distribution and exchange of information. advertising, presentations and pre-views are also central components of the marketing strategies. strong publicity is many times the key to selling a book: from the announcements on the cover that the book/author is an award-winning product, or a bestseller in its first edition, presentations on tv/the youtube or any other media channel where the author is interviewed, (s)he is reviewed, or (s)he reads from their own creations, or special web presentations as in the case of arundhati roy’s the ministry of utmost happiness (2017) which has a presentation web page5 which is intriguing to say the least, all these are strategies through which the work and the author are more strongly introduced to the public. 3. authorial ploys: multimodality in contemporary fiction in an age dominated by static or moving images and sounds (music, tv programmes, podcasts and audiobooks), fiction requires and acquires a new form so as to keep pace with the multimodal media society. novelists too have had to adapt to the numerous changes in society due to digitalization and the “tyranny” of the image with regard to its look, form and content. readers of fiction are also well catered for nowadays, by means of multimodal fiction, a type of fiction that uses more media to render information, going far beyond the classical printed text and exploiting typography, graphics, but also including kinesics and the auditory dimension in the act of reading. the innovative use of multimodality thus assists the publisher’s and the seller’s marketing strategies mentioned above. the new multimodal texts (from bills to textbooks and other scientific works, commercial fliers, newspapers and magazines, etc. especially online) (bateman, 2008, 7) have urged changes in the fiction writing process in terms of transmitting information. the innovative arrangement of information on the page, the typographical experiments with the printed matter and the involvement of other media offer an enhanced sensorial experience and transform the book into a new good adapted to the contemporary market. experiment and multimodality in particular have managed to transform the printed novel into a more appealing product for the contemporary reader, who seems to be increasingly attracted to the audio-visual. authors and publishers have witnessed the necessity of adapting their fiction books to the current necessities and set them in line with the multimodal nature of “texts” in the new media society. cited among the first theorists of multimodality, gunther kress and theo van leeuwen, in their reading images: the grammar of visual design (1996), focused on “composite or multimodal texts”, which represent “any text whose meanings are realized through more than one semiotic code” (1996). in their studies, critics have a common denominator in the manner in which they regard the production of meaning: meaning is created through the integration of semiotic modalities of transmitting meaning within a given text (baldry & thibault, 2006). these semiotic modalities are viewed as functioning within a system in which resources are used in a certain manner, thus fulfilling certain functions in particular contexts. john bateman designs his own model of understanding multimodality by putting previous theory in a comprising model – the “gem model” (“genre and multimodality”) according to which any multimodal production becomes a “multi 5 http://www.theministryofutmosthappiness.com/, accessed december 18, 2021. http://www.theministryofutmosthappiness.com/ suciu, amălăncei, culea 63 layered semiotic artefact” and can be analysed on more levels (bateman, 2008): the gem base (the basic elements present on a page), layout base (how the page is spatially composed in terms of layout and structure); rhetorical base (relationships between the basic elements on a page and their communicative purpose); navigation base (elements involved in the navigation and access to the page and which determine ‘movement’ around the page); genre base (the patterns that enable text grouping by type). multimodality is obvious in “forms of narrative practice that exploit more than one semiotic channel (e.g., words and images, or utterances and gestures) to evoke a storyworld” (herman, 2009). ruth page expands the perspective and speaks of the semiotic mode in the analysis of multimodality as “a system of choices used to communicate meaning. what might count as a mode is an open-ended set, ranging across a number of systems including but not limited to language, image, color, typography, music, voice quality, dress, gesture, spatial resources, perfume, and cuisine” (page, 2010). alison gibbons, too, regards multimodal novels as a mixture of the linguistic and visual dimension: “multimodality is the coexistence of more than one semiotic mode within a given context” (2012). multimodality is also reader-targeted and involves a special reading experience: “the two semiotic modes collaborate in the literary act, and thus both the verbal and visual influence the reader’s creation of, and potential immersion in, an imagined text-world” (id.). additionally, “since multimodal novels exploit the visual surface of the page to communicate their story, the readerly performance of transportation from the discourse-world and submersion into the text-world is not as fixed as with traditional literary forms”. thus, “multimodal texts demand a dynamic reading strategy in which the reader must ‘toggle’ between the mediating textual surface and cognitive worlds” (id.). gibbons speaks about readers constantly “moving between worlds” (id.) – we could, therefore, speak about a movement from textual surface to content depth. alison gibbons mentions additional techniques defining multimodality, such as: multisensory perception – by this, we are supposed to understand that the practice of reading multimodal literature can be seen as closer to our experiential processing of reality when compared to more conventional novels (gibbons, 2012); they involve multiple sensory stimuli as verbal and pictorial recognition activate different areas of the brain; in this new type of writing, sensory faculties such as sight, hearing, smell, taste, or touch can be activated and engaged; videlicet, word and image act in synchronicity, engaged in the production of a shared textual meaning (id.). gibbons also introduces other tools or techniques, such as: embodiment, visual perception (with the introduction of principles: proximity, similarity, continuity, closure, smallness), double deixis, figured-transworlds, and lamination. confronted with the necessity to appeal to readers and sell their books well, authors have expanded the modes of expression and communication regarding them. experiments with form and with various forms of transmission of meaning and expression have increased. it is thus obvious that the novel written after the first decade of the twentieth century exemplifies these strategies in what reader engagement is concerned. to give only a few examples, books manage now to stimulate us visually by means of coloured words (mark danielewski’s house of leaves (2001) is among the first novels to have highlighted words in different colours throughout the entire novel), or layout of text on the page (raymond federman’s double or nothing (1971/1998) has parts of texts written in a manner which reminds rather of chemical formulas than of fiction writing); they also sometimes stimulate us auditorily – nicola barker proposes to the readers of her novel h(a)ppy (2017) to listen to agustín barrios’ guitar concert while reading the novel, an experience which would enhance the process of perception thus making a novel an upgraded type of product; readers are also occasionally stimulated kinetically – even a novel written as far back as 1969 such fiction books in the multimodal society. new modes of communication and marketing practices in the book industry 64 as b. s. johnson’s the unfortunates (1969/1999) engages readers at a kinetic (and cognitive) level to combine the sections of the novel – the book comes in a box, with 27 sections, with only the first and the last marked clearly with “first” and “last” and the other ones, as stated by the author in the note on the right part of inside of the box, are left at the reader’s will to be arranged/combined and read in whatever order they want. more recent examples of the sort in which the visual and the kinetic are engaged can be found in works such as jonathan safran foer’s novel extremely loud & incredibly close (2005) which challenges readers to flip pages so as to obtain, in the manner similar to cartoon-making in the 1960s, an image in which an individual throws himself/falls off a building – but, oddly enough, the images are arranged by the character/author in reversed order, thus reversing the throw/fall. adam thirlwell’s kapow! (2012) makes the readers unfold pages which seem to transform the book in an accordion. the novel created in the digital age seems to be compelled to experiment with typographical innovations, sound, image and kinesics, which, of course go beyond the dimension of form and are key to understanding narrative composition and have a major function in the meaning-making process. this is because such a novel innovatively benefits from the combined working of linguistic and visual strategies along with those regarding sound, as we shall further examine. 4. nicola barker’s exploitation of multimodality contemporary english fiction writers have also adapted to the new trends and calls regarding the book as a cultural artefact. in line with contemporary multimodal fiction, nicola barker’s novel h(a)ppy (2017) is a good example of the manner in which the printed novel draws attention to the medium and the way in which it assists the content’s interpretation, while seeking to engage the reader in the act of reading-cumexperiencing in diverse ways. thus, h(a)ppy appears as an avant garde niche work of multiple semiotic modes: typography, words, images and sound/music (for example, we are invited to listen to agustín barrios’ guitar music while reading the novel). the visual and graphic elements of multimodal fiction prevent readers from engaging with the imagined content of the narrative in a sustained manner and entail “bistable reading strategies, whereby the surface and texture of a book’s pages also become a significant dimension of literary meaning” (gibbons, 2012). the author’s innovative use of multimodality is triggered, on the one hand, by the exigent demands of a public used more and more to consume images and to be stimulated visually and, on the other hand, by the attempt to render the complexity of the aesthetic, emotional and mental processes in a variety of modes. from another perspective, typographical elements, taken separately and in conjunction, function as instruments in a large orchestra – the concert of the book which is, therefore, more complex the more instruments there are. the immersion into multiple levels of the novel is enhanced by the imagistic elements that support the linguistic content. through multimodal novels, the physical and sensorial interaction of the readers with the book becomes stronger – they feel more poignantly the emotions of the character by means of colour (through the markings of words from the emotional sphere in pink or purple), they are carried through the reading in a slower or faster pace depending on the musical part they listen to (either from the guitar concert or from kora music that they might search for, as we have done). their reading experience is enriched and given intensity to and a supplementary dimension is added to the written and the visual, confirming once more that words do not suffice anymore. suciu, amălăncei, culea 65 the book is now “an object of faith” (watkins, 2020) due to the explosion of typographical elements6. we are thus encouraged to believe in the power of everything there is on page to transmit. moreover, barker goes beyond the artful employment of typography and adds the auditory dimension, which is very important both for readers and the main character, who is encouraged to play the guitar as a means of escaping anxiety. the reader’s sensory experience is thus heightened. 1.1. the auditory dimension the graph (the surveillance device in this dystopian world through which the youth are monitored and simultaneously controlled) seems to be “listening” to the youth’s thoughts and also, by recording them, to be making the readers “listen” to the characters’ thoughts. additionally, the auditory dimension suggested by the author to the readers in her introduction to the novel – the proposal to listen to agustín barrios’ guitar concert, or the kora instrument that is introduced in the novel – engages readers in a synesthetic experience. gibbons refers to this engagement as a “perceptual fluctuation between looking at the material surface of the page and looking through the page to immerse oneself in its content” (2012) supplemented in barker’s novel by listening to the proposed material. the sensation induced by the aural dimension is very strong, providing the reader with new experiences, from anxiety, frenzy, play to a form of emotional dynamism which is supposed to draw the reader closer to the character’s mind frame. the author’s suggested musical background for reading the novel enthrals readers by engaging them in a more dynamic, sometimes frenzied, reading – we can testify from our experience of reading the novel while listening to barrios’ concert and also the suggested african music, that the tribal kora music is energizing, liberating and seems to stimulate ebullience. the auditory dimension is important from two perspectives: the effect this music produces on readers at a sensorial level and the support it brings to the understanding of the meanings transmitted (about the characters, at the level of the ideas communicated and at the level of narrative technique). supplementing reading with listening to music also adds an accompanying emotional dimension: we are invited before page 1 of the novel to listen to an instrumental material while reading the book. the auditorily-enhanced experience of reading enriches the reader and creates precisely what is forbidden in the text – emotion. “it is only by means of music that the paraguayans can communicate their emotion to the outside world”, we read on page 206 of the novel (author’s capital letters) (a secondary narrative is created through the presence of the paraguayans and a story from a tribe). thus, we understand that this is the frenzy, the frantic search that the character engages in. in a heavily technologized world, the youth are supposed to lead their lives between imposed parameters, with mira as their representative. however, they are desperately trying to live the experience of uniquely felt emotions, the experience of a unique speed and rhythm in perceiving the world. tonkin (2017) believes that “an occult musical theme drifts through her dystopian architecture”. the experience we had while reading with the music on the background was that of floating above a world that is stifling and abusive, running frolickingly towards another less oppressive dimension. at times, we had the impression of entering a frenzy of feelings that we did not know whether to attribute to the simple pleasure of listening to this guitar music, or to the despair which we could feel more strongly regarding mira’s inability to play what she wanted on her guitar, to feel what she wanted. as for the rhythm, while listening to the music we felt that we were running, that we were in a chase towards an unknown destination, but we vitally felt that we wanted to escape from somewhere. and then another part followed 6 the analysis of typographical elements in barker’s novel represents the work of another article pending publication: culea, mihaela; suciu, andreia-irina (2021), typographical artifices in nicola barker’s h(a)ppy, pending publication. fiction books in the multimodal society. new modes of communication and marketing practices in the book industry 66 that would calm us down, would soothe our unease. the kora pieces proposed in chapter 6 have, to a large extent, the same effect, but they seem to imbue the listener with more primitive beats, they seem to plunge the reader into a dimension of more instinctual urges. barker seems to manage to perform on her readers the “oral adjustment” (barker, 2017, 104). 4.2. supplementing words with images this is a very complex and appealing process of making the book “speak” through another medium than the written word. various images formed by some words, the image of a kora (an instrument) and of a stave (barker, 2017, 53, 54), pattern writing (words forming on a page the image of a guitar, from whose sound hole the word “love” comes out, for example, (barker, 2017, 116), the visualization of the greek letter “phi” (in 2 representations: φф) (id., 233), but which in mira’s interpretation resembles an egg, split in half, from which twins are formed, or it resembles the hemispheres of a brain (meant to lead us towards the theme of the splitting of the self), the presentation of some sort of calculus page, recording and presenting, at the same time, aspects connected to the production of sound (see the graphs, staves, charts, diagrams, figures, symbols, atom chain-like drawings on p. 241), supporting images (see the image of the bell-shaped cathedral, id., 253). all these promote an active process of visualization of thoughts, they add up to the semiotic process of transmitting meaning and introduce to us “a protagonist who breaches the limits of speech” (darlington, 2020). the strongest of all of these is, of course, the image of the cathedral (barker, 2017, 253), which best illustrates the juxtaposition of the outside world (a world of figures, quotas, ratios, formulas or algorithms as they are used by the system to monitor and then adjust deviations) and mira’s inner world (here, from all the external stimuli she manages to create and give shape to her own world). illustrated through a cathedral (which is also one of agustín barrios’s seminal works), her inner world is the equivalent space of quiet, peace and harmony. the symbol stands for the figure of the woman, and is ultimately a space of reclusion and of dialogue with one’s self. the cathedral also symbolizes faith, hope and motherhood, and in the end mira metaphorically gives birth to her new self when coming out of the cathedral “in the hush of possibility” (barker, 2017, 279). in what the proceess of supplementing words with pictures is concerned, we consider worth mentioning at this point the rise of the graphic novel in the last two decades and not only in the sector of children’s books. apart from comic books, graphic novels were written by acclaimed authors such as neil gaiman. 4.3. transforming words into images/picturizing barker shows tremendous inventiveness and visual power by this extremely impressive visual artifice. barker transforms words – for example “fizz” (barker, 2017, 126) and “war” (id., 171) – into a special type of word–image that communicates graphically its very meaning or an idea/emotion associated with its image. this is how bubbles come out of the word “fizz” to render the fact that mira’s mind is made to “fizz” at the strange narrative; at the same time, drops of blood drip from the word “war” coloured, obviously, in red, when mira feels the struggle/the war between the two sides of her – mira a. and mira b. – with the “i” caught in between and trying to emerge. in the end, the author uses the image of some soap bubbles which “entrap” words (id., 278), as a means of escaping the reading of the graph. therefore, words can be seen as the one entrapping us by the force of their message, but, equally it can be our inner force that can shatter them just like we would shatter the fragile, fleeting soap bubbles. the messages imposed on people suciu, amălăncei, culea 67 by an abusive system are threatening to engulf us, with their force, but they can be made transitory and insubstantial if the victims fight back and seek means of resistance and defeat. conclusions were we to find a justification for such narrative practices, we think we would find the sources and/or functions of such type of writing practices at two ends of the axis on which the book is supposed to travel/be transmitted from the author to the reader/buyer – one end would have an artistic purpose, while the other could be interpreted pragmatically, (at least partially rooted) in the spirit of the business world: (1) meeting the contemporary writer’s need to express himself/herself through more vehicles/more media of perception and achieve a more complex artistic “purging”; (2) trying to attract the post-millennial reader who has lost the propensity to the traditionally written works and needs further visual and sensorial stimulation, thus bringing “narrative entertainment” to (a) new level(s); (3) conditioning and simultaneously inviting the reader through such new products to a new type of reading, combining the symbolical, emotional and cognitive with the sensorial and forcing him/her to a multiple decoding; (4) exceeding traditional modes of expression and activating the readers experientially; (5) creating new forms of artistic/narrative expression which are grounded in the contemporary way of experiencing and rendering the world/reality around; (6) skillfully making the book an attractive, salable product in an age that calls for new and innovative ways of planning, creating and presenting fictional or non-fictional texts. references i. multimodal, visual and experimental novels barker, n. (2017), h(a)ppy, london, william heinemann. danielewski, m. (2001), house of leaves, second edition, london, doubleday. federman, r. (1971/1998), double or nothing, second edition, fc2 (fiction collective two), illinois. foer, j. s. (2006), extremely loud & incredible close, london, penguin books. johnson, b. s. (1969/1999), the unfortunates, london, picador. thirlwell, a. (2012), kapow!, london, visual editions. ii. critical studies albers, p.; sanders, j. (2010), literacy, the arts and multimodality, national council of teachers of english. allington, d.; brewer, d.; colclough, s.; echard, s.; lesser, z. (2019), the book in britain. a historical introduction, west sussex, wiley blackwell. anholt, s. (2007), competitive identity. the new brand management for nations, cities and regions, london, palgrave macmillan. baldry, a.; thibault, p. j. (2006), multimodal transcription and text analysis. a multimodal and coursebook, sheffield, equinox publishing ltd. baron, n. (2021), how we read now: strategic choices for print, screen and audio, new york, oxford university press. bateman, j. (2008), multimodality and genre: a foundation for the systematic analysis of multimodal documents, london, palgrave macmillan. fiction books in the multimodal society. new modes of communication and marketing practices in the book industry 68 baverstock, a.; bradford, r.; gomzalez, m. (eds.) (2020), contemporary publishing and the culture of books, london & new york, routledge taylor & francis group. baverstock, a. (2015), how to market books, 5th edition, london & new york, routledge taylor & francis group. camacho, a.s. (2013), successfully marketing your novel in the 21st century, 2nd edition, maryland, intrigue publishing llc. clifton, r.; simmons, j. et al. (2003), brands and branding, london, profile books ltd. cole, d. (2003), the complete guide to book marketing, revised edition, new york, allworth press, culea, m.; suciu, a.i. (2021), typographical artifices in nicola barker’s h(a)ppy, pending publication. darlington, j. (2020), free speech and digital discourse in nicola barker’s h(a)ppy, lublin studies in modern languages and literature, vol 44, no 2, lublin, maria curie-sklodowska university press, pp. 99–112. franzen, g; moriarty, s.e. (2009), the science and art of branding, 1st ed., london, routledge. gibbons, a. (2012), multimodality, cognition, and experimental literature, london, routledge, taylor & francis. hallet, w. (2018), reading multimodal fiction. a methodological approach, anglistik, vol. 29, issue, 1, pp. 25–40, available at url https://angl.winterverlag.de/article/angl/2018/1/4. heding, t.; knudtzen, c. f.; bjerre, m. (2009), brand management: research, theory and practice, london, taylor & francis e-library. herman, d. (2009), basic elements of narrative, malden and oxford, wileyblackwell, a john wiley & sons, ltd. publication. higgs, d. (2011), the self-publisher’s marketing guide. how to successfully market your self-published book, victoria, palmer higgs investments pty ltd. holbrook, m. b.; hirschman, e. c. (1993), the semiotics of consumption. interpreting symbolic consumer behavior in popular culture and works of art, berlin and new york, mouton de gruyter. kress, g.; van leeuwen, t. (1996), reading images: the grammar of visual design, new york & london, routledge. lansky, d. (2011), book marketing made easy. simple strategies for selling your nonfiction online, pennsylvania, desktop wings inc. mcaleer, j. (1992), popular reading and publishing in britain: 1914–1950, new york, oxford university press. michel, g. (2017), au cœur de la marque. les clés du management de la marque, 3e edition, paris, éditions dunod. page, r. (ed.) (2010), new perspectives on narrative and multimodality, new york & london, routledge, taylor & francis. penn, j. (2014), business for authors. how to be an author entrepreneur, the creative penn ltd. raven, j. (2009), the book as a commodity, in suarez, michael f.; turner, michael (eds.), the cambridge history of the book in britain, vol. v, pp. 85–117, new york, cambridge university press. ries, a.; ries, l. (2000), the 22 immutable laws of branding, london, profile business. scheid, f.; fontugne, w.; vaillant, r.; de montaigu, g. (2019), le marketing digital: développer sa stratégie numérique, 2e édition, paris, éditions eyrolles. https://angl.winter-verlag.de/article/angl/2018/1/4 https://angl.winter-verlag.de/article/angl/2018/1/4 https://www.amazon.fr/willy-fontugne/e/b07qm2qt7f/ref=dp_byline_cont_ebooks_2 https://www.amazon.fr/renaud-vaillant/e/b007t0gdp0/ref=dp_byline_cont_ebooks_3 https://www.amazon.fr/gr%c3%a9goire-de-montaigu/e/b007t0g6dy/ref=dp_byline_cont_ebooks_4 suciu, amălăncei, culea 69 serafini, f. (2013), reading the visual: an introduction to teaching multimodal literacy, new york, teachers college press. spence, c. (2020), the multisensory experience of handling and reading books, brill, available at url https://brill.com/view/journals/msr/33/8/articlep902_4.xml?language=en. stapilus, r. (2016), what sells books? which strategy works for your book?, oregon, ridenbaugh press. tonkin, b. (2017), ‘h(a)ppy’ by nicola barker – everybody hertz, financial times, 21st of july 2017, available at url https://www.ft.com/content/3a758f6e-67de11e7-9a66-93fb352ba1fe. watkins, s. (2020), contemporary women’s post-apocalyptic fiction, london, palgrave studies in contemporary women’s writing. weber, s. (2013), plug your book! online book marketing for authors, book publicity through social networking, second edition, weber books. https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-andaudiobook-sales-by-uk-publishers-to-all-time-high-covid, accessed december 20, 2021. https://www.nexar.cl/en/soluciones/recursos-digitales-educativos/libros-holograficos/, accessed december 18, 2021. https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-insharp-decline-national-literacy-trust/, accessed december 20, 2021 http://www.theministryofutmosthappiness.com/, accessed december 18, 2021. https://brill.com/view/journals/msr/33/8/article-p902_4.xml?language=en https://brill.com/view/journals/msr/33/8/article-p902_4.xml?language=en https://www.ft.com/content/3a758f6e-67de-11e7-9a66-93fb352ba1fe https://www.ft.com/content/3a758f6e-67de-11e7-9a66-93fb352ba1fe https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-and-audiobook-sales-by-uk-publishers-to-all-time-high-covid https://www.theguardian.com/books/2020/nov/14/pandemic-drives-ebook-and-audiobook-sales-by-uk-publishers-to-all-time-high-covid https://www.nexar.cl/en/soluciones/recursos-digitales-educativos/libros-holograficos/ https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-in-sharp-decline-national-literacy-trust/ https://publishingperspectives.com/2020/03/uk-2020-world-book-day-reading-in-sharp-decline-national-literacy-trust/ http://www.theministryofutmosthappiness.com/ clifton, r.; simmons, j. et al. (2003), brands and branding, london, profile books ltd. ries, a.; ries, l. (2000), the 22 immutable laws of branding, london, profile business. studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 72 business opportunities in romania: infomediary, link between government institutions and the business environment luminița-iulia zaiț ,,vasile alecsandri” university of bacău luminita.zait@ub.ro abstract in many fields of activity of the national economy, the legislative basis is one that is constantly changing, being numerous situations in which the impact of legislative initiatives is unfavorable for business environment, and not only that. in this context, the representatives of the business environment, directly affected, can express their opinion by participating in public debates, thus appearing, in their case and for others, the real need for correct, complete, and real-time information in relation to the various events/debates organized by the various public bodies. at this stage, infomediaries intervene providing monitoring, collection, analysis, and synthesis services of data of interest, from different fields of activity, from multiple formal and informal sources found in the virtual environment, offering real support in the involvement of interested parties in the public decision-making process. the article wants, starting from the existing theoretical support in the literature, to highlight the particularities of the specific market in romania, the emphasis being on identifying the attractiveness of this field of activity and, implicitly, the competitiveness of the active units of the profile. keywords infomediary; informational content; public affairs; interested parties; transparency and accessibility of information; influencing the decision jel classification m41 concept the category of infomediary that is the subject of this article is represented by legal entities from the private sector in romania, which offer monitoring, collection, analysis, systematization, and dissemination of informational content from the virtual environment, from various fields of activity, with an emphasis on initiatives amendment of the legislation in the eu space, respectively in romania. these are infomediary that provide integrated services (the provision of informational content legislative initiatives, media monitoring, stakeholder monitoring, etc., transmitted in real time, through personalized communication alert sent by email, respectively the provision of reports on fields of interest of the client and specialized consultancy) to different market segments, formed by private legal entities from various sectors of activity of the national economy. literature review the concept of infomediary was introduced by hagel and rayport (1997) to describe the activity of a broker or agent that supports users in the management of a vast volume of information regarding the market, offering the targeted entities, at the same time, protection regarding their own data. mailto:luminita.zait@ub.ro zaiț 73 later the concept was used in specialized literature invoking the traditional library activity; it was considered that the infomediary can be assimilated to an intermediary that helps readers in the search for books of interest (cronin, 1998). in 2006, yang and wong considered that the role of infomediaries is to collect and organize the information of interest, representing the link between the representations of information demand and their providers. in the same direction of conceptualizing the notion, the work of fisher (2010) can also be mentioned, who considers that the informediary are those intermediaries who facilitate access to aggregated information, collected from multiple sources, which they provide to interested parties. from the point of view of this author, the information intermediaries represent a bridge between the information pool and the different categories of interested parties. this idea was also mentioned in 2004 by knauf and david who emphasize the role of intermediaries in the creation and development of sustainable relationships with different categories of stakeholders, on the one hand, and with information providers, on the other. the rapid development of the internet in the 21st century favored the replacement of traditional intermediaries with information intermediaries, the latter taking many forms: web portals, such as business directories, virtual communities, search engines, social media platforms, etc. (song and zahedi, 2002). called infomediaries or cyber journal providers (sarkar, butler and steinfield, 1995), this category of intermediaries represents the interface between users and information providers. the best example in this situation is represented by the amazon platform, a meta market that virtually connects sellers and buyers around the world (meck, 2001). even if the appearance of the concept is mainly related to commercial activity, with infomediary having the role of collecting information about the market and creating profiles on the specific targets, which they later market to representatives of the business environment, the notion covers a wider area of action. for example, the operationalization of the concept can also be found in the social-humanitarian sphere, with infomediaries acting as collaborators or organizers within aid networks. such a situation was recorded in the case of the 2015 earthquake in nepal when certain private associations acted as intermediaries in crisis management, developing collaboration platforms with volunteers from the digital environment, humanitarian agencies, the nepalese army, government agencies, doctors, etc. . (thapa et al, 2017). because information intermediaries are, in fact, service providers (sein and furuholt, 2009), they are found in many spheres of action, managing, monitoring and providing information from the public and private spheres. the present work is focused on highlighting the role of infomediaries in monitoring, collecting, managing and providing information from the public sector, with reference to the profile market in romania. in recent years, public institutions around the world, including those in romania, have focused their attention on increasing the transparency of their own activities, as a premise in developing sustainable relationships with interested parties (the business environment, citizens, private associations, ngos uri etc.), on the one hand, respectively as a driving factor in economic, social and political development, on the other hand. it must be specified, however, that despite the large-scale provision of informational content by public sector institutions, with minimal restrictions, in order to increase transparency, it is extremely difficult to use in the decision-making process, for multiple reasons: they have a format specific, with specialized, technical terms, which refer to broad areas of activity, markets or time horizons, difficult to understand and analyze by stakeholders (conradie and choenni, 2014; sieber and johnson, 2015; janssen and dwivedi, 2015 ); in certain situations the information content is incomplete or completely missing in electronic format, generating a certain level of inequality of access to information (castor, 2014; gurstein, 2011); in certain states, on certain public business opportunities in romania: infomediary, link between government institutions and the business environment 74 sector activities, access to information, even if it is available in digital format, is hampered by the bureaucratic phenomenon or is restricted for reasons of national interests and security (boyera and iglesias, 2014; davies et al., 2013); another barrier in the use of information from the public sector, by the different categories of interested parties, is represented by the quality of the information and the relevance for practitioners, which suffer from the perspective of accuracy, collection procedures and aggregation methods, analysis periods, etc. (o'hara, 2012; heeks, 2006); the low level of technical skills and it infrastructure at the level of different categories of stakeholders is another factor that mitigates the impact of information content in the decision-making process (gurstein, 2011; warschauer, 2002). the transformation of public data into useful information, which can contribute substantially to the individual or collective decision-making process, with added value, involves, as previously stated, a third component in the value chain, namely information intermediaries. in this situation, infomediary are generally private legal entities that monitor, collect, process and provide public sector data. the transformation of data into accessible, useful and adapted information by activity sector, market or sub-market involves analysis approaches, compilation of data from different information sources, aggregation of information, etc. (janssen and zuiderwijk, 2014). obviously, in the specialized literature and practice, there are numerous categories of infomediaries that access and process data from the public sector, each of these categories having different objectives and targets. according to the authors johnson and greene, the infomediaries that provide informational content from the public sector are: government agencies/state institutions, the private sector, non-governmental organizations, interest groups and virtual communities, academia and researchers, media representatives. in the category of government infomediaries there are information providers at the level of different central or local departments that process primary data and provide information with added value (jassen and ziuderwijk, 2014; jetzek, avital and bjornandersen, 2013). these structures process primary data and carry out aggregate analyses, the added value consisting precisely in the accessible and adapted content according to the profile of the different interested parties (fumega, 2014; graves and hendler, 2013). examples of content provided by these structures are: interactive maps, graphs, tables and applications, databases, sector/market/niche studies, etc. the private sector is considered, from the perspective of the infomediary model, the most important representative of data demand in relation to state institutions, on the one hand, and the pillar of information content supply in relation to the various categories of stakeholders, citizens or legal entities. in the category of information intermediaries coming from the private environment, you can find both private legal entities and people who, using existing data sources in the online and offline environment, create informational content adapted to the specific targets. the informational content provided by this category of infomediary differs depending on the targets – citizens, natural persons in their capacity as buyers, representatives of the business environment from various sectors of activity, representatives of the commercial sector, etc. for example, informational content for citizens consists of mobile applications for different areas of interest, web platforms such as business directories that provide real-time information, databases, applications for gps carpooling, interactive maps, etc. on the other hand, in the case of business representatives from different sectors of activity, the informational content offered by infomediaries can take the form of: economic/statistical databases, etc., sectoral/market/niche studies, market segments and customer profiles. customers, zaiț 75 market behaviors and their dynamics, monitoring and information on legislative initiatives in the field, etc. unlike the first two categories, ngo-type infomediaries are focused on providing informational content in areas such as education, health and other social fields (grave and hendler, 2013). it should be noted that, as the literature and practice reveals (gray and darbishire, 2011, davies, 2014), this category enjoys a preferential collaboration with state institutions, on the one hand, and a high level of trust from stakeholders, on the other hand. even though this category usually includes small groups of news media, their importance comes from the thematic content of information covering domestic priorities and issues (davies, 2014). these include data analysis, reports and studies on health and education, interactive maps and mobile applications for identifying points of interest for citizens, etc. research infomediaries are academics and consultants who use data sources provided by public institutions for the purpose of creating academic/research papers and reports on various areas of interest. unlike the previous categories, the purpose of the analysis of this grouping is to offer, based on the data provided by public institutions, solutions for improving the actions and services offered by the public sector. it should also be mentioned that in the case of this category, primary research attracts secondary analysis steps thus generating a high value of the informational content, through the permanent accumulation of new information. media representatives, generally journalists, are the infomediary who access data from the public sector for the purpose of informing citizens, offering syntheses accessible to extremely different age and education segments. the rapid development of social media platforms had an extremely favorable impact in the process of distributing information to citizens, their high accessibility favoring the involvement of citizens in online debates on various topics (davies, 2010). in the specialized literature (mejabi et all., 2014; roy, 2014; sapoka, 2014; fumega, 2014), there is even a subcategory of this group, namely data journalists, who process data provided by public institutions and distribute summaries of interest to citizens. beyond this classification, each of the mentioned categories performs a series of functions in the value chain, as follows: facilitates access to information from different sources, supports interested parties in understanding and applying the information content, supports the use of knowledge in the decision-making process, supports the innovation process in different areas of interest, etc. in some situations, the tendency of infomediaries to influence the decision-making process in the public sector is even observed, requesting the creation and provision of new databases, according to their own needs. practically, as mentioned in the specialized literature (davies et all. 2013, davies 2014), the role of certain infomediaries is not only limited to the use of data from the public system and the provision of informational content, but also extends to the decision-making sphere. this is the case of the private media, which provide an extremely wide range of services, known in practice as public affairs: the collection of a high volume of information disseminated over a wide period of time; compiling information from multiple sources; collecting and systematizing public events in a field of interest; labeling of information by negative, positive, neutral categories; identifying the subject of a news item from a fixed list of subject areas; generation of specific reports; anticipating the user's interest in certain information, depending on his previous search/request behavior; the operationalization of a virtual assistant – charboot; assistance and specialist advice, etc. the context of action of infomediary in romania in many areas of activity of the national economy, the legislative environment is one that is constantly changing, being numerous situations in which the impact of legislative initiatives is unfavorable for the business environment, and not only that. business opportunities in romania: infomediary, link between government institutions and the business environment 76 in this context, the representatives of the business environment, directly affected, can express their opinion by participating in public debates, thus showing the real need for accurate, complete, and real-time information in relation to the various events/debates organized by the various public bodies. at this stage, infomediaries intervene providing monitoring, collection, analysis and synthesis services of information of interest, from different fields of activity, from multiple formal and informal sources found in the virtual environment, offering real support in the involvement of interested parties in the public decision-making process. the democratization of the functioning of state institutions has made possible the access to the decision-making process of a wide range of interested factors, regardless of their legal status or the interest they represent. democratization favored the operationalization of some political and institutionalized mechanisms – consultations, petitions, memos, hearings, etc. through which private institutions, economic agencies, business associations, non-governmental organizations, etc. they can address the decision-makers, to convey their position on a certain issue. against this background and in this general context, the political decision is subject to continuous, organized and concerted pressures, aspects that allow, in the end, that the decision on a text of law or an administrative act no longer belongs fully and exclusively to the decision-maker in the system public, but also to an interest expressed by other parties in the private environment. thus, the decision-making process is subject to multiple influences: some come from other state institutions, in the form of opinions or points of view, while others can come from any private person, who does everything in his power, for example, to convince the decision-maker from the potential adverse effects of his decisions. in the context of integration into the european union, romania has aligned itself with the policies and requirements of the single market, adopting rules that favor both the transparency of the decision-making process and the increase in the degree of involvement of civil society in the decision-making process in the sphere of public policies, by asserting and supporting its own interest, at the level of the two major national decision-making systems, namely the parliament and the executive, as follows: at the parliament level:  transparency: both the plenary sessions and the sessions of the two chambers, the chamber of deputies and the senate, are public, any person having the right to attend and follow the debates and the vote. the entire legislative process is public, on the website of the two bodies the entire process of adopting the law can be followed in detail, starting with the form of the initiator, the related documentation and various opinions or reports of the specialized commissions or of some institutions involved, the council legislature, competition council, etc. and ending with the form sent for promulgation to the president of romania. practically, there is no stage or decision taken or point of view expressed (the services in the structure of the two chambers are obliged to make available to those interested the transcripts of the meetings, and the websites of the two chambers include video recordings) in the adoption process of a law that is not accessible to those interested.  influence of the decision: the possibility of the interested parties to influence the public decision at the level of the romanian parliament is guaranteed not only by the constitutional right to the petition, art. 51 of the constitution, but especially by the regulations of the two chambers of the parliament of romania, regulations that not only recognize the legitimacy of the representation of personal or group interests in the process of adopting the zaiț 77 laws, but also establish the mechanisms by which those interested can assert their legitimate interests. . thus, according to art. 55 para. 2 of the regulation of the chamber of deputies and art. 60 para. 3 of the regulation of the senate of romania, in the works of the commissions, different interested parties (representatives of non-governmental organizations and professional associations, specialists and representatives of the business environment, etc.) can participate. at the level of central and local administration:  transparency: ensuring and guaranteeing the transparency of the decisionmaking act through: law 52/2003 on decision-making transparency in public administration; law 544/2003 on free access to information of public interest; government ordinance no. 27/2002 regarding petition resolution activities; law 62/2011 on social dialogue.  influencing the decision: law 544/2003 on free access to information of public interest; in this context, the steps taken in the self-regulation process of advocacy and public affairs activities should also be mentioned: the creation of a code of ethics for practitioners in advocacy and public affairs activities; development of a transparency register of advocacy and public affairs activities; establishment of a supervisory commission of the transparency register. the components of the specific action market of infomediaries – the demand and supply of information from the public environment in order to highlight the size of the analyzed market, an analysis of the two components related to a market is absolutely necessary: supply and demand. figure 1 the components of the relationship system specific to the infomediaries action market source: own model business opportunities in romania: infomediary, link between government institutions and the business environment 78 the offer, in the case of the analyzed market, is represented by all legal entities that monitor, collect, analyze and systematize existing data in the virtual environment, respectively offer personalized informational content (caen 6311 data processing, web page management and related activities), while the analysis of the request will reveal the broad coordinates of the market (for-profit legal entities from multiple fields of activity of the national economy, respectively non-governmental organizations and professional associations). the starting point for easy understanding of this market, and identification of the binding position of infomediaries, will be the chain, as can be seen in figure no. 1. the suply analysis (the size and dynamics of the suply, respectively the short -term and medium -term evolution tendencies) according to the latest data available in tempo online and in various business directories, the analyzed market (specific market for caen class 6311 data processing, web page management and related activities) reached, at the national level, at the end of 2021, the ceiling of 3 billions lei . in the dynamics, according to figure number 2, it can be seen that the analyzed market is one that is continuously growing. compared to the reference year 2010, in 2021 the turnover related to the profile market increased more than 4 times. the average growth rate of the market in the period 2010-2021 reveals the same trend of annual increase of the indicator (+13.9%). also, compared to 2020, in 2021 the turnover within the caen 6311 class increased by 17.8%. figure 2 turnover, in dynamics, related to the national market specific to caen class 6311 data processing, web page management and related activities, millions of lei source: processed data taken from tempo online at the level of the year 2021, the indicator number of active units within the national profile market (caen class 6311 data processing, web pages and related activities) reached the ceiling of 3956 legal entities1. 1 idem zaiț 79 figure 3 the number of active units, in dynamics, within the national market specific to caen class 6311 data processing, web page management and related activities source: processed data taken from tempo online in dynamic figure number 3, and at the level of the actual indicator of active units, the same upward trend is observed. the average growth rate between 2010-2021 was +8.5%, while, compared to the reference year-2010, in 2021 the indicator increased approximately 2.5 times. compared to the previous year, in 2021, the number of active profile units increased by 23.3%. the annual increase of the number of profile units argues the attractiveness of the analyzed market., taking the certainty of manifesting the request from the targets. distribution of units related to the caen class 6311 data processing, web pages and related activities, by size categories from the perspective of the staff (figure 4), reveals the domination of the micro-enterprises (between 0-9 employees), the field of activity analyzed by this time of size. figure 4 distribution, by size categories, of the units related to the caen class 6311 data processing, web pages and related activities, 2020 source: processed data taken from tempo online business opportunities in romania: infomediary, link between government institutions and the business environment 80 figure 5 the average number of employees, in dynamic, within the national market specific to the caen 6311 data processing, the administration of web pages and related activities source: processed data taken from tempo online the attractiveness of the analyzed field is also argued by the size of the average number of employees employed at the level of specialized units. thus, at the level of 2021, the average number of employees employed in the analyzed field reached the ceiling of 10,018 people, in a slight decrease compared to the previous year (-2%). the average growth rate of the indicator in the period 2010-2021 was +5.31%. in the context of the analysis presented above, the following mention must be made: the caen class analyzed (6311 data processing, web page administration and related activities) covers several activities, in which context it is observed that, of the total number of active national units per class, less of 1% are specialized in mediating informational content between state institutions and the business environment. in fact, an analysis of the most important direct competitors, without wanting to be exhaustive, reveals the existence of a total of 20 legal entities profiled strictly on public affairs services, most of them being transnational companies. obviously, we cannot appreciate that the analyzed niche is not an attractive one from the perspective of absorption potential, but we identify a series of barriers to its penetration, as follows:  the investment required to develop a business in the field of public affairs activities, based on the existence of an online platform, amounts to 100,000 120,000 euros. from this perspective we appreciate that the market entry barriers are high.  the effect of experience: it is usually the prerogative of companies with tradition in the profile market, which have clearly defined outlets and created over time. moreover, as previously specified, most of the operators active on the romanian market are transnational companies, which enjoy high know-how and notoriety. from this perspective, we appreciate that the market entry barriers are relatively high.  the correspondence, in the case of the analyzed companies, between the length of time in the market and the market share at the level of 2021 reveals the tendency for the dominance of the profile market by operators with experience in the sector (66.7% of the profile market operators have between 10 and 20 years of zaiț 81 experience in the sector, the share of those with less than 10 years of experience being 22.3%).  another factor that can brake the development of the analyzed niche is also represented by substitutable service bidders. in general, this category, although it does not offer integrated services, covers the request for information content on certain levels (media monitoring, social networks, etc.).  given the level of innovation that defines the services traded within the profile market, respectively the relative reluctance of potential customers regarding their utility, we appreciate that another factor that brakes the rapid penetration of the analyzed niche is represented by the power exercised by the potentials. customers. beyond these potential barriers, we appreciate that the analyzed market has a significant potential for growth, the arguments supporting this information being presented previously. demand analysis (size and dynamics of demand, sectors likely to become users of public affairs services) analyzing the client portfolios of the most important profile operators, we identify, as representatives of the demand for public affairs services, the following market segments: profit-making legal entities from the private, national and transnational environment, predominantly from the category of large enterprises; non-governmental organizations; professional associations. in general, the for-profit legal entity clients are representatives of the highly regulated fields of activity, namely: the pharmaceutical market, the financial-banking market, the insurance market, the tobacco and alcoholic beverages market, the packaging market, the energy market, the telecommunications market, the it, the market for private health services, etc. the market potential in this segment is huge if the reluctance to newness found in the business environment can be overcome in a global manner. thus, we identify, in broad terms, the broad limits in which the demand for public affairs services can be manifested, at the national level (the data are related to the year 2020):  food producers (caen division 10 food industry) – 85 legal entities;  producers of alcoholic beverages (caen division 11 manufacture of beverages) – 19 legal entities;  manufacturers of tobacco products (caen division 12 manufacture of tobacco products) – 3 legal entities;  packaging manufacturers (caen group 172 manufacture of paper and cardboard articles);  manufacturers of pharmaceutical products (caen division 21 manufacture of basic pharmaceutical products and pharmaceutical preparations) 14 legal entities;  producers and suppliers of electricity and thermal energy (division 35 production and supply of electricity and thermal energy, gas, hot water and air conditioning) – 58 legal entities;  telecommunications service providers (division 61 telecommunications) – 29 legal entities;  it service providers (division 62 service activities in information technology) – 81 legal entities;  financial-banking service providers (division 64 financial intermediaries) – 4 legal entities;  insurance service providers (division 66 activities auxiliary to financial intermediation, insurance activities and pension funds) – 2 legal entities; business opportunities in romania: infomediary, link between government institutions and the business environment 82  private health service providers (division 86 activities related to human health) – 21 legal entities. an important component of the market for public affairs services is represented by nongovernmental organizations and professional associations. in romania, currently, approximately 270 non-governmental organizations operate in various fields: economic and social development, representation of business and professional interests, international cooperation, education, health, culture, etc2. also, approximately 50 professional associations from different fields of activity of the national economy are currently active3. references boyera, s., iglesias, 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(1995), intermediaries and cybermediaries: a continuing role for mediating players in the electronic marketplace, journal of computer-mediated communication, vol.1, no. 3, pp.1-14. sein, m.k., furuholt, b. ( 2009), intermediaries in ict4d: the other i, prooceedings of the association for information systems 2nd annual sig globdev workshop, decembrie, phoenix, pp.1-15. sieber, r.e., johnson, p.a. (2015), civic open data at a crossroads: dominat models and current challenges, government informaton quarterly, vol. 32, no. 3, pp. 308-315. song, j., zahedi, f. (2002), a theoretical framework for the use of web infomediaries, proceeding amcis 2002, pp. 2250-2256. http://www.firstmonday.org/ http://www.opendataresearch/org/project/2013/%20freedomforum http://www.opendataresearch/org/project/2013/%20freedomforum business opportunities in romania: infomediary, link between government institutions and the business environment 84 thapa, d., budhathoki, n.r., munkvold, b.e. (2017), analizyng crisis response through actor-networktheory: the case of kathmandu living labs, communicatons of the association for information systems, vol. 41, pp.414428. warschauer, m. (2002), reconceptualizing the digital divide, first monday, vol. 7, no. 7. yang, c.c., wong, r. (2006), measuring success factors of e-commerce informediary, proceeding of the pacific asia conference on information systems, pp.1-14. zapata, f.g., heeks, r. (2015), understanding multiples roles of intermediaries in open government data, proceedings of the 13th international conference on social implication of computers in developing countries, sri lanka, pp.1-10. lista ong-urilor înregistrate la camera deputaților, available at http://www.cdep.ro/informatii_publice/ong2015.chest_aprobate lista asociațiilor profesionale, available at https://www.roaliment.ro/lista-asociatiiprofesionale/ tempo online, available at http://statistici.insse.ro:8077/tempoonline/#/pages/tables/insse-table asociația registrul român de lobby, cadrul legal al activității de lobby în românia, available at http://www.registruldelobby.ro/legea-lobby-ului.html http://www.cdep.ro/informatii_publice/ong2015.chest_aprobate https://www.roaliment.ro/lista-asociatii-profesionale/ https://www.roaliment.ro/lista-asociatii-profesionale/ http://statistici.insse.ro:8077/tempo-online/#/pages/tables/insse-table http://statistici.insse.ro:8077/tempo-online/#/pages/tables/insse-table in many areas of activity of the national economy, the legislative environment is one that is constantly changing, being numerous situations in which the impact of legislative initiatives is unfavorable for the business environment, and not only that. in this context, the representatives of the business environment, directly affected, can express their opinion by participating in public debates, thus showing the real need for accurate, complete, and real-time information in relation to the various ... the democratization of the functioning of state institutions has made possible the access to the decision-making process of a wide range of interested factors, regardless of their legal status or the interest they represent. democratization favored th... against this background and in this general context, the political decision is subject to continuous, organized and concerted pressures, aspects that allow, in the end, that the decision on a text of law or an administrative act no longer belongs full... in the context of integration into the european union, romania has aligned itself with the policies and requirements of the single market, adopting rules that favor both the transparency of the decision-making process and the increase in the degree of... at the parliament level:  transparency: both the plenary sessions and the sessions of the two chambers, the chamber of deputies and the senate, are public, any person having the right to attend and follow the debates and the vote. the entire legislative process is public, on... “prima casă” – produs bancar sau produs social studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the impact of the legislative environment on the european parliamentary elections in romania diana magdalena prihoancă “vasile alecsandri” university of bacău dianaprihoanca@yahoo.com abstract the accession of romania to the european union on the 1st of january, 2007, after the accession treaty, signed on the 25th of april, 2005, was ratified by all the member states of the union, led to changes in the legislative environment governing the electoral market. our country organized in may 2014, for the third time, elections for the european parliament. the election system practiced in romania does not provide incentives for candidates to develop a competitive election bid, explained in detail to the electorate, so the performance during the mandate can be assessed. the romanian representatives in the european parliament are elected under a system of closed national list vote, which reduces the power of voters to distinguish the candidates in the vote. at the european union level, there is not a unique voting system adopted, in the context that most member states practice competitive electoral systems, in which candidates have the opportunity to differentiate themselves by an electoral offer. keywords electoral system; the european parliamentary elections; electoral threshold; political party; independent candidate; european parliament jel classification m31; m38 following the events of 1989, the communist state structures were abolished, and a political pluralism was restored. the romanian communist party disappeared, old existing political parties until 1947 reappeared in modified forms, and new ones have been set up (teodorescu, 2001). the electoral act of 1990 and the constitution of 1991 provided that the parliament should consist of the chamber of deputies and the senate. the parliament is elected by a universal, equal, direct and secret, freely expressed vote (teodorescu, 2001). the politico-legal environment refers to all laws, government agencies and pressure groups that influence and limit the freedom of action of organizations and individuals in a given society (kotler, 1998). the political component of this environment, the result of the previous elections, is very important in the political marketing in general, and in the election one, especially. the identification of the electoral constituencies that, traditionally, are the fief of a particular party, the climate of stability or instability in which the elections take part, the opportunities taken by the candidate to convey his/her political message to the voters are examples of issues that should be considered in determining the electoral strategies of a party or candidate (zaharia, 2001). the accession of romania to the european union on the 1st of january, 2007, after the accession treaty, signed on the 25th of april, 2005, was ratified by all the member states of the union, led to changes in the legislative environment governing the electoral market. 222 prihoancă therefore, the need to elect representatives of romania in the european parliament led to a law that stipulates their organization and development. the first legislative act has appeared since january, 2007 – the law no. 33 of 16th of january, 2007 related to the organization and development of the european parliament elections. on the occasion of the three polls of the european elections (2007, 2009 and 2014) the law number 33 was amended substantially in its technical aspects, from the composition of the electoral lists to the form of the finding records of the voting results. changes have been made every time by the government emergency ordinances: the government emergency ordinance 1/2007 on certain measures for the organization and development of the elections for the european parliament; the government emergency ordinance 8/2007, for the amendment of art. iv of the government emergency ordinance 1/2007 and art. 92, paragraph (1) of law no. 33; the government emergency ordinance 15/2007 on certain measures concerning the election of the romanian members in the european parliament in 2007 the government emergency ordinance 84/2007 for amending and supplementing the law no. 33/2007, for amending art. iv section (6) of the government emergency ordinance 1/2007 and for amending art. 3 of the government emergency ordinance no. 15/2007; the government emergency ordinance 11/2009 and the government emergency ordinance 55/2009 amending and supplementing the law no. 33/2007; the government emergency ordinance 4/2014 on the operationalization of the electoral register and amending law no. 33/2007, as well as measures for the proper organization and conduct of elections to the european parliament in 2014. the government decisions establishing the reference day for the election of the romanian members in the european parliament (gd 79/2014, gd 216/2009) are added to the above mentioned government emergency ordinances. if we look at the general implications of the legislation on the electoral system we can say that there is not a unique voting system adopted in the european union, context in which, most of the member states practice the competitive electoral systems, in which candidates are able to differentiate themselves by the election offer. each member state is free to establish its own electoral system for the european parliamentary elections within the following limits: • it should be a proportional system (where the number of seats won by a political party to be proportional to the number of votes received; • it should be organized in the form of a party list or as the single transferable vote; • several districts in the country may be organized whether this partition will not affect the proportionality of the election results; • the electoral threshold cannot be higher than 5%. these limitations arise from the need of the european parliament to reconcile the two demands that partially diverge: • the representation of minorities, which recommends a proportional voting system; • operation based on political family ideologically oriented, a goal that can be achieved by imposing filters when submitting the candidates’ applications. regarding the voting systems used in those 28 european union member countries, they differ from state to state, both in terms of the allocation of seats among 223 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the candidates, and the voter’s ability to decide which candidate is elected. at the european elections of may, 2014 there were four different versions practiced: a. a proportional voting system based on the party lists involves choosing a multiple number of candidates on a single electoral list. the party list can be: a.1. closed – the party establishes the order of candidates on the list, and they are elected by the party's electoral score in the order they were placed on the electoral list; a.2. open the voters are forced to put the candidates on the list in the order of their preferences, this order resulting from the vote of those who opt for that party. finally, the order of candidates on the list is determined by the number of individual votes received by each candidate; this voting system is also called "compulsory preferential voting" because if the voter does not express a vote for a particular candidate on the list, the vote is canceled; a.3. semi-open – the party establishes the order of candidates on the list, but the voters have the opportunity to vote for a favorite and to place him/her on the leading places on the list; this voting system is called "optional preferential voting" because the voter can vote the list submitted by the party, by accepting the order already established, the preferential voting for a particular candidate being possible, but not mandatory. b. the voting system by a single transferable vote is effective in districts with a relatively small number (3-5) seats to be assigned. the applications are individual, each voter has to rank the candidates from the electoral district in order of preference constituency, having the freedom to include in his/her own "top", candidates representing different political parties. table 1 presents the number of features of the electoral systems in the european union, namely: 22 of the 28 member states practice a single electoral district; 15 member states do not impose electoral thresholds while 13 impose, of which 10 countries opt for the highest permitted variant, 5%; the most used method of distribution of seats is the d'hondt method1 (in 15 states), followed by various other combinations; the country with most european parliament members is germany 96, followed by france 74, the u.k. and italy 73, spain 54 and poland 51. opposite is malta, luxembourg, estonia and cyprus each with 6 representatives in the european parliament. the regulatory environment that characterizes the electoral market of the 2014 european elections is also specific by the following matters: they are the first elections since the european union has 28 members, after the adherence of croatia in july 2013; the total number of the european parliament members for the 2014-2018 legislature will be 751; in 4 of the 28 states it is not allowed the citizens’ vote from abroad czech republic, ireland, malta and slovakia; the estonians abroad are the only ones who can vote by three ways: vote by post, at the estonian embassy in that country, or by e-mail; 4 countries belgium, cyprus, greece and luxembourg voting is mandatory; 1 the most known method of the seats distribution, developed by the belgian jurist and mathematician victor d'hondt in 1878. in d'hondt victor’s option the series of divisors consists of the integer numbers: 1, 2, 3, 4 ... n. each party participating in elections corresponds to an average of votes determined by dividing the votes to be distributed to 1,2, ... n seats which are to be granted. the party that obtains the highest average gains the seat. the result is favorable for the big parties and unfavorable to the small ones. (sorescu, a., pârvulescu, c. 25 +2 electoral models) 224 prihoancă the minimum age for voters is 18 years, except austria, where it is 16 years old. table 1 particularities of the electoral system of the u.e. member states for the euro parliamentary elections in 2014 no. member state constituencies allocation of seats electoral threshold number of meps 1. austria 1 d’hondt method 4% 18 2. belgium 4 (3 linguistic districts) d’hondt method no 21 3. bulgaria 1 hare-niemeyer method no 17 4. cyprus 1 d’hondt method no 6 5. croatia 1 d’hondt method 5% 11 6. denmark 1 d’hondt method no 13 7. estonia 1 d’hondt method no 6 8. finland 1 d’hondt method no 13 9. france 8 d’hondt method 5% 74 10. germania 1 sainte-lague method 5% 96 11. greece 1 hare method 3% 21 12. ireland 4 transferable single vote no 11 13. italy 5 hare method no 73 14. lithonia 1 sainte-lague method no 8 15. lithuania 1 hare-niemeyer method 5% 11 16. luxemburg 1 d’hondt method/hagenbach-bischoff no 6 17. malta 1 transferable single vote no 6 18. netherlands 1 d’hondt method no 26 19. poland 13 d’hondt/hare-niemeyer method 5% 51 20. portugal 1 d’hondt method no 21 21. united kingdom 12 d’hondt method/ transferable single vote no 73 22. check republic 1 d’hondt method 5% 21 23. romania 1 d’hondt method 5% 32 24. slovakia 1 d’hondt method 5% 13 25. slovenia 1 d’hondt method 4% 8 26. spain 1 d’hondt method no 54 27. sweden 1 sainte-lague method 5% 20 28. hungary 1 d’hondt method 5% 21 source: data operated according to www.elections.eu/.../in-the-member-states/.../electoral-law in romania, the european union member state since the 1st of january, 2007, the legislative rules above mentioned require to the electoral system the following features: (www.elections.eu/ro/in-the-member-states/ro/electoral-law) • for the political parties the representation is proportional on the closed lists, supported by 200,000 signatures and independent candidates, the support of 100,000 signatures nationwide. the lists can include up to 10 more candidates than the number of seats allocated to our country. in 2014 the maximum is 42 candidates on the list of a political party; • the allocation of seats is done in two steps: (1) the calculation of the electoral threshold and the national election coefficient, and (2) the allocation of mandates for the selected lists within the national constituency by d'hondt method; 225 http://www.elections./ http://www.elections./ studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro • the registration deadline for candidates’ applications to the central electoral bureau is at least 60 days before the elections; • the incompatibilities with the duties of a mep are: the ombudsman, magistrates, active officers in the army, police and other public officials, including those with a special status, deputies and senators in the romanian parliament; • the right to vote have all the romanian citizens who have reached the age of 18 years, including on the election day and all the e.u. citizens resident or domiciled in romania, which are in the possession of their voting rights; • the right to run for the european parliament elections have all the romanian citizens who are at least 23 years old on election day, and all the e.u. citizens resident or domiciled in romania, which are in the possession of their rights to be elected; • voting is not compulsory and there is no penalty; • the campaign starts 30 days before the election, and funding is done according to the law 334/2006 on the financing of political parties and election campaigns; • the threshold is 5% of the total valid votes nationally expressed. based on these legal issues and in compliance with all legal regulations above mentioned, statistically speaking, the three polls of the european elections held in our country are presented in tables 2, 3 and 4. one aspect that can be noticed is that in 2009 the number of candidates (parties and independent candidates) was lower, both compared to 2007, due to simplifications of the party system, and competed to 2014. in 2014 580 people ran for the european elections, of which 8 are independent, the rest coming from 15 political parties. there are four political parties psd alone or in various alliances, pnl, pd or pdl and udmr that obtained meps mandates to all the three editions of the european elections. to these a fifth independent party is joined by pld in 2007, prm in 2009 and pmp in 2014 and one seat is for an independent candidate laszlo tokes in 2007, elena basescu in 2009 and mircea diaconu in 2014. table 2 the results of the parliament elections on 25th november, 2007 no. electoral actor votes (%) mandates number % 1. pd 28.81 13 37.14 2. psd 23.11 10 28.57 3. pnl 13.44 6 17.43 4. pld 7.78 3 8.57 5. udmr 5.52 2 5.72 6. png 4.85 7. prm 4.15 8. l. tokes 3.44 1 2.86 9. pc 2.93 10. pin 2.43 11. pnțcd 1.38 12. romi party 1.14 13. socialist alliance 0.55 14. green party 0.38 source: http://www.sferapoliticii.ro/sfera/136/art04-radu.html 226 prihoancă table 3 the results of the parliament elections on 7th june, 2009 no. electoral actor votes (%) mandates number % 1. psd+pc 31.07 11 33.33 2. pd-l 29.71 10 30.30 3. pnl 14.52 5 15.15 4. udmr 8.92 3 9.10 5. prm 8.65 3 9.10 6. e. băsescu 4.22 1 3.03 7. pnțcd 1.45 8. a. pavel 1.03 9. civic force 0.40 source: http://www.sferapoliticii.ro/sfera/136/art04-radu.html table 4 the results of the parliament elections on 25th may 2014 no. electoral actor votes (%) mandates number % 1. psd+unpr+pc 37.6 16 50 2. pnl 15 6 18.75 3. pdl 12.23 5 15.62 4. udmr 6.3 2 6.25 5. pmp 6.2 2 6.25 6. diaconu mircea 6.8 1 3.12 7. ppdd 3.67 8. prm 2.7 9. civic force 2.6 10. per 1.15 11. national alliance of agricultures 0.95 12. pnțcd 0.89 13. green party 0.34 14. new republic party 0.27 15. social justice party 0.24 16. socialist alternative party 0.17 source: data operated according to www.gandul.info/politica/rezultate-finale-bec-alegeri-europarlamentare2014-lista-oficiala-a-europarlamentarilor-romani-12661387 and www.realitatea.net/alegerileeuroparlamentare-2014-primele-rezultate-oficiale-anun-ate-de-bec_1447788.html finally, after numerous european elections law changes, we can say that the last two editions in romania were practically held based on other legal rules than the election of 7th june 2007, except for circumstances which theoretically at least, should not be repeated the vote on closed lists. the election process for the designation of representatives in the european parliament is characterized by a massive absenteeism. 30% threshold was exceeded by only 2.16% in 2014, while in 2007 and 2009 the national turnout at the central electoral bureau was 29.12% and 27.21% respectively. references kotler, ph. et al. (1998), principiile marketingului, editura teora, bucurești. teodorescu, b. et al. (2001), marketing politic și electoral, editura snspa, bucureşti. sorescu, a., pârvulescu, c. – 25+2 modele electorale, apd, 2006. zaharia, r. (2001), marketing social-politic, editura uranus, bucureşti. 227 http://www.gandul.info/politica/rezultate-finale-bec-alegeri-europarlamentare-2014-lista-oficiala-a-europarlamentarilor-romani-12661387 http://www.gandul.info/politica/rezultate-finale-bec-alegeri-europarlamentare-2014-lista-oficiala-a-europarlamentarilor-romani-12661387 http://www.realitatea.net/alegerile-europarlamentare-2014-primele-rezultate-oficiale-anun-ate-de-bec_1447788.html http://www.realitatea.net/alegerile-europarlamentare-2014-primele-rezultate-oficiale-anun-ate-de-bec_1447788.html studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro gândul (2014), rezultate finale bec alegeri europarlamentare 2014. lista oficială a europarlamentarilor români, available at www.gandul.info/politica/rezultatefinale-bec-alegeri-europarlamentare-2014-lista-oficiala-a-europarlamentarilorromani-12661387 realitatea.net (2014), alegerile europarlamentare 2014. rezultatele oficiale, anunțate de bec, available at www.realitatea.net/alegerile-europarlamentare-2014primele-rezultate-oficiale-anun-ate-de-bec_1447788.html radu, a. (2009), alegeri europarlamentare, experienţa românească available at www.sferapoliticii.ro/sfera/136/art04-radu.html. 228 http://www.realitatea.net/alegerile-europarlamentare-2014-primele-rezultate-oficiale-anun-ate-de-bec_1447788.html http://www.realitatea.net/alegerile-europarlamentare-2014-primele-rezultate-oficiale-anun-ate-de-bec_1447788.html the fiscal frame of national transport services assimilated to intra-communitarian goods transport, accesory services and afferent mediations services 77 the fiscal frame of national transport services assimilated to intra-communitarian goods transport, accessory services and afferent mediation services pravăţ ionela-cristina, assistant university of bacău abstract: the unrolling of properly intra-communitarian goods transport services may depend in many cases or be in tight connection with other services performance, such as: national transport services, accessory services (loading, unloading, handling, weighing, sorting, goods storage) or the mediation services concerning the intra-communitarian goods transport or accessory services. the categories of services above mentioned are remarked through a series of specific fiscal aspects, aspects that will be presented in this paper, both from a theoretical point of view, and from the point f view of some short examples. 1. the national transport assimilated to intra-communitarian transport the national transport, from a departure point up to a arrival point, both from romania’s territory, is assimilated to an intra-communitarian goods transport, with the condition that the national transport will be in direct connection with intra-communitarian transport. meaning, even a transport made inside the same country may be framed in the category of “intra-communitarian transport”, in the case when it is connected from a properly intra-communitarian transport. for instance, the transport realized from the border of a member state up to the arrival point established inside the country is classified as intra-communitarian transport, if it is performed according to a transport from a country belonging to european union. in order for the national transport to enter under the incidence of intracommunitarian goods transport regulation, this should respect the following conditions: the contract or any other document afferent to transport should exist in the moment of concluding the intracommunitarian goods transport; the person that performs the national transport assimilated to intra-communitarian goods transport should action in the place of the person who orders or realizes the intracommunitarian goods transport; the goods will depart from romania in the same state in which they were at the beginning of the transport assimilated to intracommunitarian goods transport. example no. 1: s.c. intracom transport s.r.l., established and registered in vat purposes in romania, transports goods from suceava to bucharest (between two towns in romania), for s.c. medro s.r.l., established and registered in vat purposes for romania as well. the goods will be transported from bucharest to sofia, in bulgaria. if the conditions above mentioned are respected and the national transport part is in direct connection with the intracommunitarian transport, then the national goods transport, from suceava to bucharest, will be assimilated to intra-communitarian goods transport and will enter under the incidence of the rules afferent to it. example no. 2: mondofrance society, established and registered in vat purposes for france, transports goods from france (paris) to romania (buzau), for ascorom s.r.l. society from romania. the goods are initially transported by train to romania, in bucharest, and then are domestically transported, by road, to buzau (final destination). if the conditions above mentioned are respected and the national transport part is in direct connection with the intracommunitarian transport, then the national goods transport, from bucharest to buzau, studies and scientific researches edition: economics, no. 13 (2008) the fiscal frame of national transport services assimilated to intra-communitarian goods transport, accesory services and afferent mediations services 78 will be assimilated to intra-communitarian transport and will also enter under the incidence of the rules afferent to it. taking under consideration the fact that under these types of cases, as already mentioned, the national transport is assimilated to intra-communitarian transport and submitted to the fiscal rules specific for the latter, the place of the national transport performance would be:  the departure place of the transport, if the beneficiary does not communicate a registration code in vat purposes, the taxing being realized in that member state from where the goods departured, the invoice containing vat;  the member state where the beneficiary is established, respective another member state, if the beneficiary communicates a registration code in vat purposes available in the member state where is established, or in any member state (with the exception of the state where the performer is situated), the taxing being realized in that member state where the vat code is available and not in the transporter’s state, the invoice being issued without vat. 2. services accessory to intracommunitarian goods transport services accessory to goods transport, in general, intra-communitarian goods transport, in particular, consist of: loading, unloading, handling, weighing, sorting, goods storage. the place of performance of the accessory services for an intracommunitarian goods transport is normally the place where the services are actually performed. by exception, if the services are performed for a beneficiary that communicates a registration code in vat purposes available in another member state than the one where the services are effectively performed, the performance place is represented by the member state that issued the vat code, in whose basis the services were performed to the beneficiary. the person obliged to vat purpose in romania is, normally, the services’ performer. by exception, the person obliged to vat purpose is the beneficiary, in the following cases: the services performer is not established in romania, even if is registered in vat purposes in romania; and the beneficiary is registered in vat purposes in romania. example: s.c. intracom transport s.r.l., established and registered in vat purposes in romania, transports goods from spain (castellon) to romania (bucharest) for s.c. medro s.r.l. society, established and registered in vat purposes in romania as well. the transport operation will be realized on water from castellon to rome, and from here the transport is realized on road. in this situation the accessory services intervene, respective the loading/unloading performed by a society established and registered in vat purposes in italy. to the latter the registration code in vat purposes in romania is communicated by s.c. medro s.r.l.. the applicable fiscal treatment is the following: in this case, because the beneficiary society communicated its vat registration code available in romania, the place of performance will be considered romania and not italy, and the beneficiary will tax the operation in romania, by inverse taxation. the beneficiary, s.c. medro s.r.l., will receive an invoice without vat, but will highlight in accountancy both deductible and collected vat in vat deduction. 3. the mediation services concerning the intra-communitarian goods transport and the accessory services the mediation services represent that category of services that are performed by a person (mandatory) that takes action in the name of another person (mandate). the mediation service is practically a performance of services made by mandatory for the mandate. in consequence, in the case of intracommunitarian goods transport may appear situations where, by different reasons, the supplier or beneficiary is under the impossibility of making on their own the studies and scientific researches edition: economics, no. 13 (2008) the fiscal frame of national transport services assimilated to intra-communitarian goods transport, accesory services and afferent mediations services studies and scientific researches edition: economics, no. 13 (2008) 79 transport and sues to intermediaries that can find, for them, a society that will realize effectively the goods transport. the performance place for the mediation services connected to an intracommunitarian goods transport is considered to be the member state where the goods transport begins or, by exception, the member state that attributed the vat code in whose basis the service was performed, if the service is performed for a beneficiary that communicates a valid vat code (with prefix) from another member state than the one from where the intra-communitarian goods transport began. the performance place for the mediation services of the accessory services for an intra-communitarian goods transport is considered to be the place where the accessory services are effectively performed or, by exception, the member state that attributed the vat code in whose basis the service was performed to beneficiary, if the service performed to a beneficiary that communicates a valid vat code (with prefix) from another member state than the one where the accessory services were effectively performed. the person obliged to vat payment in romania for mediation services connected to accessory services of an intracommunitarian goods transport or for the mediation services connected by accessory services to an intra-communitarian transport that takes place in romania is normally the performer. by exception, the person obliged to vat payment is the beneficiary, if the following conditions are simultaneously satisfied: the performer is not established in romania, even though he is registered in vat purposes in romania; the beneficiary is registered in vat purposes in romania. example: s.c. x s.a. society established and registered in vat purposes in romania, purchases goods from a society from bulgaria, goods that follows to be transported on water from bulgaria to romania. s.c. x s.a. mandatates the s.c. y s.r.l., society also established in romania, to find a society that would perform the goods handling and loading on the ship in bulgaria. s.c. y s.r.l. makes contact to the z society from bulgaria for this service. the applicable fiscal treatment is the following: under this condition, s.c. y s.r.l. performs a mediation service afferent to accessory services for intra-communitarian goods transport, that takes place in romania. y is the person obliged to vat payment in romania because is established and registered in vat purposes in romania. s.c. y s.r.l will issue towards s.c. x s.a an invoice with vat 19%, quota available for romania references: [1] dumitrana, m., jalbă, l., duţă, o., accountancy in trade and tourism, university publish house, bucharest, 2008; [2] popa, a.f., popa, n., the excises and taxes settled by the fiscal code, contaplus publish house, bucharest, 2008; [3] popa, a.f., radu, g., popa, n., iordan-brăduţ, c., the fiscal code in the context of european adhesion: practical guide for comprehension and appliance, contaplus publish house, bucharest; [4] *** the order of the public finances ministry no. 1752/2005 for approving the accountancy settlements according to european directives, published in official monitor, part i no. 1080 from 30/11/2005 with subsequent changes and completions; [5] *** law no. 571/2003 concerning the fiscal code, published in official monitor no. 927/23.12.2003; [6] *** law no. 343/2006, for changing and completion the law no. 571/2003 concerning the fiscal code, published in official monitor no. 662/01.08.2006; the fiscal frame of national transport services assimilated to intra-communitarian goods transport, accesory services and afferent mediations services 80 [7] *** the order of the national agency of fiscal administration’s president no. 3/2007 concerning the request procedure of the fiscal registration in vat purpose for traders that register in vat purposes from the establishing, published in official monitor no. 19/11.01.2007; [8] http://infotva.mfinante.ro; [9] http://codfiscal.net. studies and scientific researches edition: economics, no. 13 (2008) http://infotva.mfinante.ro/ http://codfiscal.net/ studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro decision-making strategies regarding logistics organization ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com abstract in the face of higher costs of operation and increasing pressures from customers for better service, the logistics organization must adapt to meet the challenge. an understanding of the factors that make organizations effective, and a knowledge of how these factors interrelate, are the first steps towards developing the system for a firm’s customers. logistics organizations must of necessity become more cost and service efficient. an understanding of the factors that affect a firm’s organizational effectiveness, along with strategies to reveal weaknesses or deficiencies, can help create more efficient logistics systems. organizational changes form the basis for procedural modifications that can reduce costs or improve service. many firms have shown significant improvements in their logistics cost-service mix as a result of organizational changes. logistics organizations are generally structured along the following lines: strategic versus operational, centralized versus decentralized and line versus staff, in various combinations. there is no single ideal organizational structure, but there are important elements that comprise an effective organization. in general, the factors contributing to organizational effectiveness can be categorized as organizational characteristics, environmental characteristics, employee characteristics, and managerial policies and practices. keywords decision; effectiveness; logistics; organization; strategy jel classification m31 introduction an organization can and should establish a mission statement to define its overall purpose for existence. on an organizational level, mission statements provide a foundation upon which a company develops strategies, plans and tactics. it defines the basic purpose of an organization and identifies the parameters under which the firm will operate (fuller, o’connor and rawlinson, 1993). forms need a clear statement of purpose in order to develop the best combination of activities that must be performed in day-to-day operations of the enterprise. in sum, the logistics mission statement is an important document to guide the planning, implementation, and control of a firm’s logistics activities (grant et al., 2006). components of an optimal logistics organization many factors can influence the effectiveness of a logistics organization. in general, the factors contributing to organizational effectiveness can be summarized as: organizational characteristics; environment characteristics; employee characteristics and managerial policies and practices (grant et al., 2006). 196 olariu organizational and environmental characteristics structure and technology are the major components of a firm’s organizational characteristics. structure refers to the relationships that exist between various functional areas: interfunctional (marketing, finance, operations, manufacturing, logistics) or intrafunctional (warehousing, traffic, purchasing, customer service). the relationships are frequently represented by a company’s organization chart. examples of structural variables are decentralization, specialization, formalization, span of control, organization size and work-unit size. technology refers to the mechanisms used by an organization to transform raw inputs into finished outputs. technology can take several forms, including variations in the materials used, and variations in the technical knowledge brought to bear on goal-directed activities. the effectiveness of the organization is influenced by factors internal and external to the firm. internal factors, which are more or less controllable by the logistics executive, are known as organizational climate. sometimes, this is referred to as corporate culture. external factors, sometimes referred to as uncontrollable elements, include the political and legal, economic, cultural and social, and competitive environments. employee characteristics the keys to effective organizations are the employees who “tick the boxes” on the organization chart. the ability of individuals to carry out their respective job responsibilities ultimately determines the overall effectiveness of any organization. all employees possess different outlooks, goals, needs and abilities. these human variations often cause people to behave differently, even when placed in the same work environment. moreover, individual differences can have a direct bearing on two important organizational processes that can have a marked impact on effectiveness. these are organizational attachment, or the extent to which employees identify with their employer, and individual job performance. without attachment and performance, organizational effectiveness becomes all but impossible. managerial policies and practices policies at the macro (entire company) level determine the overall goal structure of the firm. policies at the micro (departmental) level influence the individual goals of the various corporate functions, such as warehousing, traffic, order processing and customer service. macro and micro policies in turn affect the procedures and practices of the organization. the planning, coordinating and facilitating of goal-directed activities – which determine organizational effectiveness – depend on the policies and practices adopted by the firm at the macro and micro levels. a number of factors can aid the logistics executive in improving the effectiveness of the organization. six of the most important factors that have been identified are: strategic goal setting; resource acquisition and utilization; performance environment; communication process; leadership and decision-making and organizational adaptation and innovation. strategic goal setting involves the establishment of two clearly defined sets of goals: the overall organization goal or goals, and individual employee goals. both sets must be compatible and aimed at maximizing company-employee effectiveness. resource acquisition and utilization includes the use of human and financial resources, as well as technology, to maximize the achievement of corporate goals and objectives. the performance environment is concerned with having the proper organizational climate to motivate employees to maximize their effectiveness and, subsequently, the effectiveness of the overall logistics function. strategies that can be utilized to develop a goal-directed performance environment include proper employee selection and placement, training and development programmes, task design and performance 197 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro evaluation, combined with a reward structure that promotes goal-orientated behaviour. one of the most important factors influencing logistic effectiveness in any organization is the communication process. without good communications, logistics policies and procedures cannot be effectively transmitted throughout the firm, and the feedback of information concerning the success or failure of those policies and procedures cannot take place. communication flows within the logistics area can be downward, upward or horizontal. comparable to the importance of effective communication in an organization is the quality of leadership and decision-making expertise exercised by the senior logistics executive. if the top executive is a highly capable and respected individual who makes thoughtful, logical and consistent decisions, then the logistics organization that reports to him or her is also likely be highly effective. conversely, a logistics organization led by an executive who lacks the necessary leadership and decision-making skills will not usually be as efficient. organizational adaptation and innovation. the environment that surrounds the logistics activity requires constant monitoring. as conditions change, logistics must adapt and innovate to continue to provide an optimal cost-service mix to the firm and its markets. examples of fluctuating environmental conditions include changes in transportation regulations, service requirements of customers, degree of competition in the firm’s target markets, economic or financial shifts in the marketplace and technological advances in the distribution sector. it is important that adaptation and innovation not be haphazard and unplanned. an effective organization must exhibit stability and continuity; it must find a unique offering it can deliver to the market and stick with it to provide customer value. an approach to developing an optimal logistics organization logistics organizations evolve and change. as an executive attempts to structure a new logistics organizational unit or perhaps restructure an existing one, he or she should proceed through the following steps or stages: research corporate strategy and objectives; organize functions in a manner compatible with the corporate structure; define the functions for which the logistics executive is accountable; know his or her management style; organize for flexibility; know the available support systems and understand and plan for human resource allocation so that it complements the objectives of both the individual and organization. corporate objectives overall corporate strategy and objectives provide the logistics activity with long-term direction. they provide the underlying foundation and guiding light for each functional component of the firm – finance, marketing, production and logistics. the logistics must support the overall corporate strategy and objectives. it is imperative that logistics executives completely understand the role their activity will play in carrying out corporate strategy. furthermore, the logistics organizational structure must be compatible with the primary objectives of the firm. corporate structure while the specific organizational structure of the logistics activity is affected by the overall corporate structure, logistics is increasingly being centralized. in reporting relationships, logistics will typically report to the marketing group if the firm is a consumer goods company and to manufacturing/operations/administration if the firm is primarily an industrial goods producer. logistics is often a separate organizational 198 olariu activity reporting directly to the ceo in firms that have a combination of consumer and industrial goods customers. this practice is growing as the strategic importance of logistics is more widely recognized. functional responsibilities identifying a clear definition of the function of the logistics organization can be difficult, especially if the function has been restructured from an organizational structure having a traditional responsibility. it is important to most of the logistics subfunctions housed under a single division or department. full functional responsibility in one department allows the firm to implement the concepts of integrated logistics management and total cost trade-offs. management style almost as important as the formal structure of the organization is the management style of the senior logistics executive. many firms have undergone significant changes in personnel, employee morale and productivity as a result of a change in top management. organizational restructuring does not necessarily have to occur. the style or personality of the senior logistics executive, and to a lesser degree his or her lower-level managers, influences the attitudes, motivation, work ethic and productivity of employees at all levels of the organization. management style is a vital ingredient to the success of a firm’s logistics mission and is one of the primary reasons that many different organizational structures can be equally effective. flexibility and support systems any logistics organization must be able to adapt to the changes that will inevitably occur. unresponsive and unadaptable organizations typically lose their effectiveness after a period of time. while it may be difficult to anticipate future changes in the marketplace or the firm, the logistics organization must be receptive to those changes and respond to them in ways that are beneficial to the firm. the nature of the logistics activity makes support systems essential. the logistics organization cannot exist on its own. there must be a variety of support services as well as support specialists available to aid the logistics department or division. human resource considerations perhaps the most important component of an effective logistics organization is people. it is the people who ultimately determine how well the company operates. therefore, employees’ skills and abilities, pay scales, training programmes, selection and retention procedures, and other employee-related policies, are vital to the structuring or restructuring of a logistics organization. logistics managers are essential to a successful organization. productive and efficient employees must be effectively led. managers must possess certain important qualities or characteristics: personal integrity and an awareness of business ethics, the ability to motivate, planning skills, self-motivation, managerial control, effective oral communication, supervisory ability, problem-solving ability and self-confidence (murphy and poist, 1991). successful organizations are those that blend the optimal combination of organizational structure, planning process, people and style. conclusions as companies have extended their supply chains internationally, they have been forced to confront the issue of how to structure their global logistics organization. in their different ways, these companies have moved towards the same conclusion: 199 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro effectiveness in global logistics can only be achieved through a greater element of centralization. this in many respects runs counter to much of the conventional wisdom, which tends to argue that decision-making responsibility should be devolved and decentralized at least to the strategic business unit level. this philosophy has manifested itself in many companies in the form of strong local management, often with autonomous decision making at the country level. the strategic structuring and overall control of logistics flows must be centralized to achieve worldwide optimization of costs. references christopher, m. (2005), logistics and supply chain management – creating value adding networks, ft prentice-hall, london. droge, c., germain, r. (1998), the design of logistics organizations, the logistics and transportation review, vol. 34, no. 1, 25-37. fuller, j.b., o’connor, j., rawlinson, r. (1993), tailored logistics: the next advantage, harvard business review, vol. 72, no. 3, 87-98. grant, d.b., lambert, d.m., stock, j.r., ellram, l.m. (2006), fundamentals of logistics management, new york, mcgraw-hill education. kanter, r.m., stein, b.a., jick, t.d. (1992), the challenge of organizational change – how companies experience it and leaders guide it, new york, free press. kueng p., krahn a.j.w. (2004), building a process performance measurement system: some early experiences, journal of scientific&industrial research, 2004. murphy, p.r., poist, r.f. (1991), skill requirements of senior-level logistics executives: an empirical assessment, journal of business logistics, vol. 12, no. 2, 83-7. roberts, j. (1990), formulating and implementing a global logistics strategy, international journal of logistics management, vol. 1, no.2. steers, r.m. (1977), organizational effectiveness: a behavioral view, santa monica, ca: goodyear. 200 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro an exploratory research on relationships with stakeholders in innovation rodica boier “gh asachi” technical university of iaşi rodica_boier@yahoo.com abstract high levels of product innovation activity are occurring through key companies leading and developing stakeholders networks. thus, an innovating company will be always interested to know the degree to which component suppliers are willing to form partnerships by participating in its new products development process. recognized as an effective opportunity for innovation, value co-creation allows the company to use relationships with customers and other stakeholders during the generating process, to create a space for mutual learning, cocreation and co-design, in which the stakeolders become an integrated part of the innovation and design process not only as a simple informants.the objective of the study was to describe the way that companies follow in their efforts to innovate involving the stakeholders. relationships initiated, developed and maintained in this respect were studied on three romanian companies that activate in the design and development of enterprise resource planning (erp) software solutions. they also deliver consultancy, implementation and postimplementation services for the products they sell. as source of information were used discutions conducted with directors of marketing from the three companies and also with several stakeholders involved in the innovation processes. several similarities was found and described, for relationships specific to each category of stakeholder. keywords innovation; new product development; relationship marketing; value co-creation; stakeholders jel classification m31 1. introduction in the innovation processes, the relationship marketing is applied in a diversity of contexts, each of them with their corresponding particularities. these differences come from the product type – its business-to-business or business-to-consumer settings –, the specific industry, the actual stage of the market evolution – emerging or mature –, the level of technological novelty as dimension of technological uncertainty, the position/ status and role of stakeholders as part in the relationships, the state of the new product development process in which the interactions occurs or special issues like sustainable innovation, for profit and not-for-profit areas etc. (alam, 2012; atahaide and rochard, 2009; bhalla, 2011, bonner, 2010; carbonell et al., 2009; franke, 2006; füller et al., 2011; grönroos, 2011; gustafsson et al., 2012; hoyer et al., 2010; ind and coates, 2013; kuusisto and riepula, 2011; lagrosen, 2005; lambert, 2011; lau, 2011; lehtimäki et al., 2012; lynch and o’toole, 2010; nambisan, 2009; piller et al. 2011; rust et al. 2010; sofianti et al. 2010; tanev et al., 2011; zacharias, 2011). interaction management in customer integrated innovation is an opportunity for companies to supply relational service to customer and to improve customer value and relationship quality (sun et al., 2010). but companies also try to understand how 282 an exploratory research on relationships with stakeholders in innovation to ensure the best relational environment so that to provide the best sourcing of ideas from outside the company and even outside the industry, insights and knowledge from customers and end users, suppliers and competitors, universities, independent entrepreneurs, investors, inventors, scientists a.s.o. for the organizations developing new products it is particularly challenging to understand customer needs which drive significant product innovation. thus, it is important to identify the dimensions of the customer interaction process which lead to more proactive organizations. in a business-to-business setting, customer interactivity is conceptualized as a multi-dimensional construct consisting of bidirectional communications, participation, and joint problem solving with stakeholders during the projects of new product development. high levels of product innovation activity are occurring through key companies leading and developing stakeholders networks. more and more often seller and a buyer enter into a relationship to mutually undertake the development of an innovative product. the new product development relationships generate a „cooperative competency” (sivadas and dwyer, 2000) and involve the product co-design, product co-development, joint problem solving a.o. in this context, a strong chapter of the relationship marketing regards the interactions between sellers and buyers during the new product development process when customizing the products. thus, an innovating company will be always interested to know the degree to which component suppliers are willing to form partnerships by participating in its new products development process. three key areas of positive influences on supplier intention for early supplier involvement are found by labahn and krapfel (2000) as being the customer’s exchange behavior, the structure of dependence in a relationship, and the technology factors. recognized as an effective opportunity for innovation, value co-creation allows the company to use relationships with customers and other stakeholders during the generating process, to create a space for mutual learning, co-creation and co-design, in which the stakeolders become an integrated part of the innovation and design process not only as a simple informants. 2. three case studies the objective of the study was to describe the way that companies follow in their efforts to develop new products involving the stakeholders. relationships initiated, developed and maintained in this respect were observed on three romanian companies that activate in the design and development of enterprise resource planning (erp) software solutions. they also deliver consultancy, implementation and post-implementation services for the products they sell. the source of information were the discutions conducted with directors of marketing from the three companies and also with several stakeholders involved in the innovation processes. several similarities was found, as described in the following ideas. these specific companies were choosen for the study on the basis of their product portfolios, being in a constant and dynamic evolution. for instance, a new product was launched on the market at every approximativelly 5 years. the main benefits brought to the customers consistes in an easy and fast access to the accounting and management information, freedom to run on under different operating systems, and the interconnectivity of modules and connectivity with peripheral devices used in accounting management. step by step, new products resulted from the diversification of the core product, and this evolution required constant adjustment to different use environments. accumulating a rich history of experience and cooperation, the companies have constantly increased its value through the rapid implementation of 283 boier the requirements and ideas coming from the diverse range of customers, collaborators and partners. the product has had a constant upgrading thus there appeared many improved versions of the core product. in support of this effort to innovate new products, an extensive and constantly active innovation relationship network was set up, a real engine that enabled the permanent improvement of the system. the innovation network management has relied in its specific interactions on the essential principles of relationship marketing, i.e. involvement, trust-based relationship and constant communication among partners, long-term customer satisfaction. in all of these three case studies, the partnership is made up of the huge number of individual end users, companies, authorized distributors, and other partners such as professional associations, colleges and universities with programs of study in the field. the three companies surveyed considered their customers to simultaneously play different roles in relation to the new product – executive managers and top managers, the distributors, computer operators and it specialists. for each of these categories, special relationship marketing actions where developed and implemented. the customer’s executive managers who operate especially the outputs, the product reports and analysis areas, are a key partner in the innovation relationship network. their involvement occurs at different stages of the process: in the pre-analysis and analysis stage, where the product can be adjusted to specific needs, then, through checks and tests performed by employees. they are less involved in the postimplementation phase, especially if the provision with solutions, reports etc. has reached its maturity. an increased relationship networking with the managers is once again achieved when the business growth is accompanied by an upgrading of the application configuration additional users, additional necessary modules etc.). the cycle is resumed with their involvement in pre-assessment, analysis and implementation assessment. on the other hand, since the customer as buyer expects to benefit from a more effective and efficient product, the relationship networking with top managers focuses strictly on the level of satisfaction or, in certain cases, dissatisfaction on the matter. the value chain also includes the distributors who are involved throughout the entire process of innovation, in a complex and continuous relational system. because of their status as “value added services providers“, rather than just customers, the innovating companies considers them as business partners, who act like a real, active and effective interface with final customers. consequently, the added value allocated to them was dimensioned so that to keep them motivated to build, maintain and develop the appropriate relationships with the customer, including in the postimplementation stage. the distributors’ trust was further consolidated through their active involvement in the front-end stages, when the attention focuses on how to stimulate the input flow that represents the customers’ requirements, the inputs translation into technical language, the joint analysis/ assessment of the necessary and possible solutions, the making of improvements, tests and implementation at the customer’s location. it is interesting, and demonstrated by experience, that the satisfaction of this type of active involvement exceeds in many cases the strict financial satisfaction.the relationships established carefully gave the distributors the feeling of belonging to a family that is solid, cohesive, reliable, competitive, innovation-driven, that is at the forefront of trends both in technology and performance marketing practice. the customer’s computer operators, on the other hand, are involved in the current operational phase. the experience accumulated from the relationship with the computer operators proved that reactions to change may range from inertia to hostility 284 an exploratory research on relationships with stakeholders in innovation or even violent rejection in some instances. regardless of their nature – be they ‘pro’ or ‘against’ – the company was interested in gathering the reactions either directly from their supporters or indirectly from the client representatives of the companies’ authorized dealers who maintain the customer relationships. the management of the customer relationship means to collect, analyze, respond and give the adequate solution to customer feedback by approaching each situation either directly or indirectly. the it specialists, are always in the ”front line” of erp system implementation. they detect and send the problems in real time. they are particularly valuable in the relationship as they do not create technical communication barriers, they can correctly describe the it processes and have an adequate understanding of possible solutions. their involvement is direct both in the implementation and post-implementation phases in that they provide the interface for support. they detect, localize and report the ‘bugs’, receive debugged versions, check them in actual use and confirm their correction, provide application architecture solutions, hardware/software solutions that are better adjusted to the actual use of the application. last but not least, an important actor in the innovation relationship network of the company is represented by the related professional associations. they offered valuable ideas on several aspects such as the improvement of product architecture, interface ergonomics, compliance to legislation, adjustments to the unprecedented turbulence in the romanian financial-accounting legislation in the transition and post transition period etc. good relationships developed and maintained with the professional associations were sustained through sponsorship and promotional pricing practices, or substantial discounts from price list offered to members. since the commercial success of a new product depends heavily on the compatibility between product and consumer, the innovating companies hadopted a proactive attitude by getting involved in the education of the prospective users. product use rights for wm and wme were given to universities and high schools programmes in accounting and management information. accommodating future users with a specific application during their school years creates a beneficial, solid information chain with favourable long-term outcomes. support in installation and maintenance and training of lecturers was provided. the essential issue in this relationship was to monitor the transmission of accurate and complete information on the product, on its extensive use, near the full of its capacity. careful selection of instructors with the appropriate expertise was crucial to the success of building and maintaining the relationship. on a continuous basis, the flkow of new ideas for innovative solutions were gathered, discussed, analyzed and jointly tested, all along of these processes. references alam, m.r. (2012), relationship marketing: perspectives and implications, international journal of business economics&management research, 2(3), 195-199. atahaide, g.a., rochard r.k. (2009), managing seller–buyer relationships during new product development, journal of product innovation management, 26, 566-577. bhalla, g. (2011), collaboration and co-creation: new platforms for marketing and innovation, springer science+business media, llc, new york. 285 boier bonner, j.m. (2010), customer interactivity and new product performance: moderating effects of product newness and product embeddedness, industrial marketing management, 39(3), 485-492. carbonell, p., rodríguez-escudero, a.i., pujari, d. (2009), customer involvement in new service development: an examination of antecedents and outcomes, journal of product innovation management, 26(5), 536-550. franke, n. (2006), finding commercially attractive user innovations: a test of lead-user theory, journal of product innovation management, 23(4), 301315. füller, j., hutter, k., faullant, r. (2011), why co-creation experience matters? creative experience and its impact on the quantity and quality of creative contributions, r&d management, 41(3), 259-273. grönroos, c. (2011), a service perspective on business relationships: the value creation, interaction and marketing interface, industrial marketing management, 40(2), 240-247. gustafsson, a., kristensson, p., wittel, l. (2012), customer co-creation in service innovation: a matter of communication?, journal of service management, 23(3), 311-327. hoyer, w.d., chandy, r., dorotic, m., krafft, m., singh, s.s. (2010), consumer cocreation in new product development, journal of service research, 13(3), 283-296. ind, n., coates, n. (2013), the meanings of co-creation, european business review, 25(1), 86-95. kuusisto, a., riepula, m. (2011), customer interaction in service innovation: seldom intensive but often decisive. case studies in three business service sectors, international journal of technology management, 55(1/2), 171-186. labahn, d.w., krapfel, r. (2000), early supplier involvement in customer new product development: a contingency model of component supplier intentions, journal of business research, 47, 173–190. lagrosen, s. (2005), customer involvement in new product development: a relationship marketing perspective, european journal of innovation management, 8(4), 424 – 436. lambert, d.m. (2011), measuring value in co-creation in business-to-business relationships, otago forum, 3, 99-127. lau, a. k.w. (2011), supplier and customer involvement on new product performance: contextual factors and an empirical test from manufacturer perspective, industrial management & data systems, 111(6), 910 – 942. lehtimäki, t., pääkkönen, t., oinonen, m., ojansivu, i., salo, j. (2012), industrial co-innovation process: relational approach, the xxiii ispim conference – action for innovation: innovating from experience, 17-20 june, barcelona, spania. lynch, p., o’toole, t. (2010), a critical episode analysis of the dynamics of the interaction atmosphere in a new product development relationship, the industrial marketing and purchasing journal, 4(2), 106130. nambisan, s. (2009), virtual customer environments: it-enabled customer coinnovation and value co-creation, in nambisan, s. (ed.), information technology and product development, annals of information systems, 5(2), 109-127. piller, f., ihl, c., vossen, a. (2011), customer co-creation: open innovation with customers, in wittke, w., hanekop, h (ed.), new forms of collaborative 286 an exploratory research on relationships with stakeholders in innovation innovation and production on the internet. an interdisciplinary perspective, universitätsverlag göttingen, 31-62. rust, r.t., moorman, c., bhalla, g. (2010), rethinking marketing, harvard business review, 88(1), 94-101. sivadas, e., dwyer, f.r. (2000), an examination of organizational factors influencing new product success in internal and alliance-based processes, journal of marketing, 64(1), 31-49. sofianti, t.d., suryadi, k., govindaraju, r., prihartono, b. (2010), customer knowledge co-creation process in new product development, in proceedings of the world congress on engineering 2010, vol. i, june 30july 2, london, u.k. sun, h., yau, h.k., mingsuen, e.k. (2010), the simultaneous impact of supplier and customer involvement on new product performance, journal of technology management & innovation, 5(4), 70-82. tanev, s., ruskov, p., georgiev, l., bailetti, t. (2011), a business intelligence tool for studying value co-creation and innovation, information technologies and control, 1, 2-9. zacharias, n. (2011), an integrative approach to innovation management patterns of companies’ innovation orientation and customer responses to product program innovativeness, gabler verlag, springer fachmedien, heidelberg. 287 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro information technology and romanian higher education evidence on linked dynamic bogdan nichifor “vasile alecsandri” university of bacău bnichifor@gmail.com abstract the link between education, in general, and information technologies is one that does not necessarily have to be demonstrated. but it is interesting to see the specific link that is established between these two components of modern society. in recent years, part-time education forms tend to occupy an increasingly important position in the romanian higher education from the perspective of the total number of students opting for distance learning or traditional part-time learning. this development occurred amid expansion of information technology more and more households have internet access and frequency of its use is increasing from year to year – in the context in which forms of part – time learning require the use of this means of information and communication. on this background more and more people over 25 years become interested in further developing their studies, including employed persons opting for further studies, increasing the share of students over 25 years in total students and the share of employed population over 25 years with higher education in total in respective age group. keywords tertiary education; part-time education; information technology; access to internet; employed population jel classification m30 objectives in the context of accelerated progress of information technology and the growing pressure of employers for highly educated and skilled workers it is interesting to view how the higher education is linked with the evolution and use of information technology. development and widespread use of information technology in romania has enabled emergence of distance learning and traditional part-time learning, targeting persons whose activities do not allow following courses with frequency. thus, more and more people, including employed population, continue their education by enrolling in higher education after 25 years. this article aims to highlight some of the main factors influencing the development and widespread use of information technology in romanian higher education. for this purpose it was intended to identify the evolution over time in part-time education and its place in higher education as a whole, the degree of access of the general public, especially of the employed population, to higher education throughout life, while highlighting the use of information resources. an overview on education information technology links both in europe and in romania, integrating information technology into the formal education system is a result of economic and social environment requirements. 171 nichifor the dynamic of technological development was the expansion factor of the formal continued education system. in the past 10 years, we have seen a significant increase in the number of adults who have returned to formal education system in order to expand areas of expertise, or to develop new skills. in this sense, at first glance, we might consider that the exodus of adults returning to formal education is a direct consequence of increased qualified workforce demand manifested by companies stimulated by the pressure for productivity of the global economy. this assessment is based, on the one hand, on the high number of transnational which have expanded their operations in romania and, on the other hand, on the tendency of alignment with global practices exhibited by local organizations. in this direction, we may mention the efforts made by organizations in various sectors towards improving skills related to human resources. assuming that the quality of the workforce is the key component in increasing productivity and efficiency of a company, many local and transnational organizations have started investing in human resources training programs (badescu and deji, 2004). this phenomenon was highly visible, at least until the end of 2008, in areas such as banking and financial services, insurance, provision of utilities (water, gas, and electricity), catering etc. this has forced the return of the adults into the formal education system in order to obtain the necessary job qualifications. if in romania the interest to study the development by continued study is recent, the global and european literature granted since the end of the twentieth century a particular importance to researches aimed to study the impact of information technology on long-term educational process. in this respect, friedman in an article published in 1999 said that “the involvement of information technology in education will be the second largest application after the internet'' (friedman, 1999). many authors claimed, at the same time, that the rapid development of web technology has favored the emergence of platforms to support distance education process. the usability of hypermedia web-based materials provided appropriate framework to create a new formal learning environment that supports a wide variety of interactive activities (paquette et al., 1995). based on its fundamental characteristics simultaneity, interactivity and direct feedback – the web promotes student tutor interaction (friedman, 1999) reducing, at least in perception, space problem in distance learning (pei-luen et al., 2005). at the same time, president of sci solutions in education and training, rodney everhart, believed that the exodus of adults returning to studies will generate over the next 10 years an agglomeration of university-type education institutions, promoting the development of distance learning and on-line learning programs (morrison, 1999). in fact, these two authors were advocates of extending the formal education system with on-line and distance learning, their arguments being both economic (reduced costs) and time and flexibility of approach related, and of course to associated with the changes imposed by economic globalization. in the context of the proposed analysis is absolutely necessary a coherent delimitation of areas involving information technology in education. according to a report provided by the oecd in 2005, the integration of information technology in education knows many forms (oecd, 2005), as follows: • interrelated courses with information technology, which involves integrating in the traditional educational process the related instruments; • dependent course on information technology courses, which necessarily require integration tools for the traditional educational process; • mixed modules: increasing the share of educational activities in the online environment; • e-learning courses, which involves running the educational process exclusively on line. 172 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the emergence of information technology in education, in its many forms, has been supported by organization for economic cooperation and development (oecd), this organization pointing toward main advantages: accessibility, flexibility, cost and quality (kurt and stéphan, 2005). divergent view compared to previous was provided by a teacher from oregon university, greg bothun. according to the opinions of the author, the system of higher education should resist the temptation to become an entrepreneurship-led educational system, criticizing excessive focus on cost reduction (bothun, 1999). in fact, according to this author, the expansion of the educational system in the online environment is supported, erroneously, by the consideration that the word knowledge is synonyms with the word information. it should be noted that the author does not address the importance of integrating information technology in learning, but its status as a training instrument. while the global and european educational system focused on developing study programs in the online environment, in romania increased demand for adult education services was satisfied by developing distance learning programs within public universities, on the one hand, and within private universities, on the other hand. in fact, distance education is the one that has experienced the fastest growing and most extensive presence because it is the only form of learning designed to be based on “a large social applicability of electronics, computer, internet and other derivatives” (tomescu, 2008). developing curricula in the online environment has not evolved similar to that in global developed systems, barriers in this respect being: low number of households with pcs, low number of households with internet access, low level of population interest in following online studies etc. in this context, in the year 2010, 58% of universities in romania used elearning solutions in teaching and similar activities, and among those not using such solutions, 68% said that they intend to develop such systems in the near future (crahmaliuc, 2010). another factor that favored the development of ict based training, both globally and nationally, is the government policy. the governments of most states in europe and worldwide, encourages lifelong learning which is considered a viable instrument that boost productivity and stimulate progress in the labor market. reaching the most common macroeconomic objective sustainable economic growth can be done, according to foreign literature studies, by increasing productivity through absorption of more productive equipment, a better prepared workforce and creating new knowledge (stiglitz, 2002). integrating ict into the education system brings forward a new concept, “the knowledge economy'', based on “knowledge, creativity, innovation and entrepreneurship” (kozma, 2005). much of the literature consider that an important pillar of the new economy is the continued education and this claim is supported by the reality of developed countries knowledge-based economies which are built on innovation and a strong education system. to support the above, it may be mentioned approach started in the year 2007 by the world bank, to promote the four pillars in the development of knowledge-based economies (world bank, 2005). • encouragement of the population for education in order to create, share and use knowledge in continuous improvement of process skills; • a modern information infrastructure capable to facilitate the effective communication, dissemination and processing of information and knowledge; • a strong innovation system created from companies, research centers, universities and other stakeholders, with the role of supporting the sustainable development of the knowledge economy; 173 nichifor • an institutional policy and a coherent set of economic decisions that stimulate resource mobilization and entrepreneurship in the dissemination and use of knowledge. although romania is making small steps to align with european practices, the efforts made in this direction must be appreciated, we refer here to the legal framework for promoting continued education (order no. 353/2003 and 5202/2003 regarding the authorization by ministry of education of continuing education institutions, order 501/2003 and 5253/2003 on the certification of trainers, national strategy for continued professional training, 2005-2010 short and medium term strategy for continued professional training, national action plan for employment, 2006-2010 national reform plan, 2007-2013 national development plan, 2007-2013 strategic reference framework, operational program human resources development and so on). research methodology the work is a study based on secondary data sources, that statistical information from eurostat and romania national institute of statistics. we used last available official data disseminated through websites of listed institutions. we used in our analysis structure indicators and time series indicators, which have revealed the dynamics in part-time education and learning after the age of 25 years. we also used the structure and intensity indicators for highlighting access to information technology in the higher education institutions and the intensity of its use in households and by population. according to the eurostat methodology lifelong learning is directed toward people aged 25-64 years. not having statistics for this population on the proportion of those who have pursued higher education, we used in our analysis the indicators that refer to the population over 25 years. the indicators refer to tertiary education levels 5 and 6, accordingly to isced (international standard classification of education the unesco 1997). education level 5 refers to university education and the level 6 to postgraduate education (insse). research results in recent years, in romania, public access and frequency of use of specific means of information technology have increased considerably. thus, during 2007 2013, the share of households owning computers increased from approximately 31% to over 55%. being directly dependent on the level of equipping of households with computers and internet, the access to internet also boomed from 14% in 2006 to 58% in 2013. the level of usage has also witnessed an upward trend, so that the total population aged 16-74 years in 2013, 58% used this means of information and communication, compared with 26% in 2006. table 1 pcs household facilities, internet access and its use, in romania between 2006 and 2013 year households having access to a computer, at home percentage of households** households with internet access percentage of households*** individuals* who have ever used the internet percentage of individuals*** 2006 n.d. 14 26 2007 31.4 22 29 174 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro 2008 35.0 30 33 2009 42.2 38 38 2010 44.2 42 43 2011 46.8 47 46 2012 52.0 54 52 2013 55.8 58 58 * refers to population age from 16 to 74 years source: ** national institute of statistics – tempo online (www.insse.ro), ***eurostat in 1999-2012 period, in romania has been a significant increase in the number of students in part-time forms of higher education (except the last few years). the number of students enrolled in first and second stage of tertiary education (levels 5 and 6) just in part-time forms recorded from 1999 to 2012 a dynamic that far surpasses the total number of students enrolled to these levels of education. in this context, the share of the number of students enrolled in part-time educational forms reported to the total number of students increased from about 13% in 1999 to over 17% in 2012 (in 2009 this indicator was 36,5%). the year 2010 marks a general involution of the total number of students, including the part time forms of education. table 2 evolution of students in tertiary education levels 5 and 6, the total and part-time forms in romania from 1999 to 2012 year total number of students students enrolled in the part-time education the share of students enrolled in parttime education forms in total number of enrolled students (%) 1999 407.720 52.442 12,9 2000 452.621 61.571 13,6 2001 533.152 100.695 18,9 2002 582.221 119.801 20,6 2003 643.911 147.045 22,8 2004 685.718 153.528 22,4 2005 738.806 172.125 23,3 2006 834.969 216.559 25,9 2007 928.175 272.929 29,4 2008 1.056.622 378.839 35,9 2009 1.098.188 400.906 36,5 2010 999.523 240.551 24,1 2011 871.842 108.673 12,5 2012 705.333 120.465 17,1 source: adapted from eurostat regarding the age structure of students in tertiary education (isced levels 5 and 6), there is an increase in the share of people over 25 years, the dynamics of the latter being well ahead the growth registered by the number of students in general (i.e. the increase is approximately 1.7 times for the total number of students and about 3 times for those over 25 years, in 1999-2012 period). this dynamic of the category of people aged over 25 years who are mostly employed (over 60% of population between 25 and 74 years was employed, in 2013, according to eurostat data) has most likely has been possible because of easy access to online communication resources which thus allowed the development of those forms of education that did not involve continuous presence of student in specific learning locations. 175 nichifor 10 0. 0 11 1. 0 13 0. 8 14 2. 8 15 7. 9 16 8. 2 18 1. 2 20 4. 8 22 7. 7 25 9. 2 26 9. 3 24 5. 1 21 3. 8 17 3. 0 10 0. 0 11 7. 4 19 2. 0 22 8. 4 28 0. 4 29 2. 8 32 8. 2 41 2. 9 52 0. 4 72 2. 4 76 4. 5 45 8. 7 20 7. 2 22 9. 7 0 100 200 300 400 500 600 700 800 900 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 % total number of students students enrolled in the part-time education figure 1 dynamics of students enrolled in tertiary education levels 5 and 6, total and part-time in romania from 1999 to 2012 (1999 = 100%) source: adapted from eurostat table 3 evolution of students over 25 years old enrolled in tertiary education (isced levels 5 and 6) in romania from 1999 to 2012 year students the share of students over 25 years old in total students (%) the dynamics students over 25 years old (% compared to 1999) 1999 71.406 17,5 100,0 2000 76.209 16,8 106,7 2001 97.735 18,3 136,9 2002 115.540 19,8 161,8 2003 161.817 25,1 226,6 2004 184.847 27,0 258,9 2005 213.974 29,0 299,7 2006 261.322 31,3 366,0 2007 310.334 33,4 434,6 2008 358.104 33,9 501,5 2009 403.886 36,8 565,6 2010 370.361 37,1 518,7 2011 286.500 32,9 401,2 2012 210.555 29,9 294,9 source: adapted from eurostat confirming the idea presented above, the statistics reveal that in romania the number of employed persons aged over 25 years (25-74 years), graduates 5 and 6 levels of education significantly increased along with the decrease in the total number of employed in this age category. it is evident, therefore, that the increase in the number of employed graduates took place as a result of the training period they were active at work (at least for some of them). in this context, the part-time learning through the use of specific technologies was undoubtedly a base in the educational process. 176 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro table 4 evolution of the employed population between 25 and 74 years old, total and levels 5 and 6 graduate category in romania from 1999 to 2013 year employed population between 25 and 74 years old (thousands) employment of 25 74 years old population graduated from tertiary education (thousands) the share of employed persons with higher education in total employed population of 25-74 years old (%) 1999 9.481,8 891,6 9,4 2000 9.411,2 915,7 9,7 2001 9.362,3 980,9 10,5 2002 8.555,9 984,5 11,5 2003 8.458,7 942,3 11,1 2004 8.349,9 1.049,9 12,6 2005 8.286,3 1.110,5 13,4 2006 8.509,8 1.215,6 14,3 2007 8.573,6 1.247,2 14,5 2008 8.593,0 1.337,3 15,6 2009 8.491,6 1.369,1 16,1 2010 8.519,0 1.422,8 16,7 2011 8.461,5 1.544,3 18,3 2012 8.618,0 1.602,5 18,6 2013 8.642,7 1.647,3 19,1 source: adapted from eurostat -8 .8 -9 .1 -0 .7 -1 .3 -9 .8 -1 0. 8 -1 1. 9 -1 2. 6 -1 0. 3 -9 .6 -9 .4 -1 0. 4 -1 0. 2 -1 0. 8 84.8 79.7 73.2 59.6 53.6 50.0 39.9 36.3 24.6 17.8 5.72.7 10.410.0 -20 0 20 40 60 80 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % total employed population between 25 and 74 years old total employed population between 25 and 74 years old with high education degree figure 2 occupied population dynamics of 25 to 74 years old, total and high education graduates in romania from 1999 to 2013 (1999 = 100%) source: adapted from eurostat 177 nichifor conclusions the use of information technology in the tertiary education in romania has generated the developing of different forms of distance and part-time learning and also made a significant contribution to the further intensification of education by pursuing higher education after the age of 25 years. thus, there is an visible increase after 1999 (except the last few years) in the students number who are taking part in the forms of part time and distance learning with a growth rate which far exceeded the growth rate of the total number of students, in the same time with the sensible growth of the number of people over 25 years who are studying. these phenomena are in fact interdependent – the existence of the flexible forms of education in terms of training time and place has generated an increase in the demand for them among the employed, which resulted in the development of these forms of education because of the increasing number of students. on the other hand, the emergence and development of the forms of part time and distance learning are directly dependent on the development and use of information technology. in fact, for most of those who work and those who are in search for a job, further studies would not be possible in the traditional face-to-face education system because it implies the presence of students at certain times and in certain places. references badescu, m. and deji, a. (2004), skills audit survey românia, european training foundation. bothun, g. (1999), cyberprof: the university in the next millennium, educom review, 34 (5), available at http:/www.educause.edu/ir/library /html/erm9954.html. crahmaliuc a. (2010), 58% dintre universităţile din românia utilizează soluţii de elearning, elearning romania, 67, available at http://www.elearning.ro. european commission, eurostat, available at http://epp.eurostat.ec.europa.eu. friedman, t.l. (1999), next it’s e-ducation, new york times, available at http:/www.nytimes.com. gal-ezer, j. and lupo, d. (2002), integrating internet tools into traditional cs distance education: students' attitudes, computers & education, 38 (4), 319329. kozma, r. (2005), national policies that connect ict-based education reform to economic and social development, human technology, 1(2), 117-156. kurt, l. and stéphan, v.l. (2005), the impact of ict on tertiary education: advances and promises, organisation for economic cooperation and development (oecd), michigan conference “advancing knowledge and the knowledge economy” 10-11 january 2005, washington dc. morrison, j.l. (1999), higher education in 2010: an interview with rodney l. everhart, available at http:/horizon.unc.edu.ts.vision/1999-11asp. oecd (2005), e-learning in tertiary education. where do we stand?, oecd, paris. paquette, g., ricciardi-rigault, c., bourdeau, c., paquin, c. and liégeois, s. (1995), modelling a virtual campus environment for interactive distance learning, proceedings of ed-media international conference, graatz, austria, june. pei-luen, p.r., qin, g., li-mei, w. (2008), using mobile communication technology in high school education: motivation, pressure and learning performance, computers & education, 50 (1), 1-22, available at http://www.science direct.com/science/article/pii/s0360131506000601. stiglitz, j. and walsh, c. (2002), principals of macroeconomics (3rd ed.), new york, norton. 178 http://www.elearning.ro/ http://epp.eurostat.ec.europa.eu/ studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro tomescu, s.a. (2008), învăţământ deschis la distanţă: abordare sociologică, elearning romania, 24, available at http://www.elearning.ro. world bank (2007), building knowledge economies: advanced strategies for development, washington, dc. 179 http://www.elearning.ro/ abstract crahmaliuc a. (2010), 58% dintre universităţile din românia utilizează soluţii de elearning, elearning romania, 67, available at http://www.elearning.ro. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro basel iii impact on banking sector and smes financing florin mihai magda “babes bolyai” university cluj – napoca florin.magda28@yahoo.com abstract financial crisis devastating consequences and effects started in 2008, lead to several reactions coming from the most important international organizations and entities. this article aims to present in a logic manner, synthetic, and easily understand why these prudential reactions occurred and implemented on international level, under a new basel iii framework. moreover, this article shall encompass also regulation environment for its implementation on the european level, known as crd iv. this article is actual and important by identifying and underlines main measures applicable in present, their implementation schedule, as well as possible effects especially in smes financing. although their effects are not yet entirely known, creates heated debates and discussions, as consequences may be major for banks and financial entities, as well as for each actor who is playing on economic environment where financing is need. i consider that all my personal conclusions and opinions on this article are important for readers, clarify and bringing into the light, simply and friendly the issues of banking environment and impact of financing under the new basel iii framework, and also presenting few measures in avoiding negative possible effects. keywords basel iii; crd iv; crisis; reform rules; systemic risk; smes financing jel classification g21; g28; g29; g32; e44 introduction considering it is very important to know which are main regulations under the new basel iii framework on the international level, but merely which borderlines on the european level are, making it possible, by this article we are bringing updated knowledge for this field, built synthetic in one material. unlike other previous writings belonging to foreign authors, aiming just several chapters in this large area of interest, or generally treating parts, this article may be considered complex, as it unite all important aspects dealing with new basel iii framework and regulation package crd iv, without neglecting to treat their application in romania. our desire was to be a logical structure, dealing with a chronological chain of events, presented concisely in order to permit and clarify to readers about reasons leading financial crisis occur in the year of 2008, how great international entities reacted, what is birth of basel iii framework, and why it is important to apply all over the world, and perspectives involved. moreover, in this article, alongside the descriptive connotations which present in a personal manner main causes generating one of the greatest global crisis, or identify national regulation permitting implementation new basel iii framework, offer to the reader a possibility to face the complex issues of limitations and future effects to produce in respect of implementation schedule of new regulations, and generate even 112 magda questions, reflections, and possible answers regarding next capability of banking to finance of smes. it were smes that have brought in discussion, as economic grow and level of living depend on their fate, their future developing capacity, obviously incurring a capital accumulation, leading national and european economy draining. basel iii background and overview according to bank for international settlements (2010), basel committee on banking supervision based on participation of central bank governors’ group and supervision heads (ghos) have agreed upon general framework of the basel iii, in september of 2009, when settled to enhance the three pillars of the basel ii framework. basel committee has appointed cross-border bank resolution group to present particular proposals even since march of 2010. these consultative documents have compound the basis of the commission answer to financial crisis and are part of global initiatives intended for strengthening financial reform system, as approved by g20 leaders. subsequently, supervising departments heads have agreed upon keydesign elements of reform package of july 2010, and had several meetings for measures calibration and enforcement. basel iii birth can be graphically presented in a very suggestive way by figure1. figure 1 basel committee: birth of basel iii source: iordan-constantinescu, n. (2012), crd iv and implementation on european level of requirements of basel iii, “romania where to? challenges of the new framework basel iii” conference presentation, organized by national bank of romania occurring causes for crisis of 2008, and basel iii framework, as reaction to all these were several, but most important of them are as follows: imbalances occurred globally on macro and microeconomic level; insufficient ruled and supervised banking policy and financial framework (in usa, but also in other countries); subprime credits crisis, and speculative balloon initiated under earning desire, based on doubtful assets; great risks assuming coming from higher profits desire, on financial entities and banks, under conditions of highly indebtedness level of borrowers and underestimated risk; 113 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro financial innovation without precedent, based on non-liquid assets (mortgages) transformed in liquid assets and moving away from traditional banking; lower management of risk, exercised even from supervising authorities side. as stated by walter (2011), general secretary of basel committee on banking supervision, main reasons for introducing basel iii framework are: • devastating consequences of banking crisis: there is a large range of evidence proving that each major crisis had a banking crisis as epicenter. specialists showed that a banking crisis effects are devastating by reducing economic production even to 60% from gross domestic product existing before the crisis. • banking crisis frequency: unfortunately, a banking crisis costs are severely high, as well as their frequency. starting with 1985, there were more than 30 banking crisis in member states of basel committee, corresponding to a probability of 5% of facing a banking crisis in one member state in one year. • basel iii framework benefits exceed the costs of implementing: as a strong and resilient banking system is the cornerstone for sustainable economic growth, having long-term beneficial effects. unlike of basel ii (2004), basel iii (2010) has no major changing in previous framework approaching, but mostly complete mutually, capital ratio numerator simplify and consolidate, and macro prudential components were introduced dealing with regulating framework. in a synthesized manner, the basic structure of basel iii remains unchanged with three mutually reinforcing pillars (rajesh, 2012): pillar 1: minimum regulatory capital requirements based on risk weighted assets (rwas) maintaining capital calculated through credit, market and operational risk areas. pillar 2: supervisory review process regulating tools and frameworks for dealing with peripheral risks that bank face. pillar 3: market discipline increasing the disclosures that banks must provide to increase the transparency of banks. mainly, the objective of basel iii framework is to improve the banking sector ability to harm economy by an excessive risk. basel iii regulations, rules and directions as stated by cardone-riportella (2011) main general framework provided of basel iii is presented as follows: • firstly, the quantitative and qualitative level of capital was raised substantially, with emphasis on “common equity”. capital needs must be the highest quality for better absorbing shocks by losses incurred from everywhere; • secondly, basel iii is introducing a simple leverage ratio, which shall act as a barrier for measure on risk basis. this measure appears to be crucial for entire framework strengthening, assuring a common-sense control of proposed results, simple, easy to comprehend, in this general reform of risks control; • the third reform of basel iii, is based on using capital reserves. conservation reserve provide a strong impulse to banks, for their capital 114 magda strengthening in favorable times, and in time, this reserve might help banks as a buffer against threats due to a rapid increase of credits amount1; • lastly, principles of liquidity risk management and global standards for liquidity shall help banks in efficiently deal with this risk, by maintaining a proper liquidity reserves. actually, the most important reforms of basel committee on banking supervision basel iii (2010) provide: i) firstly, base capital quality, coherence, and transparency shall be raised according to table 1. table 1 calibration of the capital framework capital requirements and buffers (all numbers in percent) capital (%) common equity tier 1 tier 1 capital total capital minimum 4.5 6 8 conservation buffer 2.5 minimum + conservation buffer 7.0 8.5 10.5 countercyclical buffer range 0-2.5 source: basel committee on banking supervision basel iii (december 2010, review june 2011), a global regulatory framework for more resilient banks and banking systems, www.bis.org information of table above shows that: tier 1 (level 1 of capital): is the predominant capital form of tier 1 and must include common shares and retained earnings; tier 2: capital instruments will be harmonized; tier 3 capital will be removed. ii) secondly, covering degree of capital risk will be strengthened by: promoting of integrated management of market, and also counterparty credit risk; adding of cva (credit valuation adjustment) as assessment adjusting of credit, for lowering the risk from counterparty credit downgrade; strengthening capital requirements for counterparty credits exposure coming from banks derivative instruments, repo, and securities financing transactions; capital reserves raising for a back-up of these exposures; providing incentives for a better strengthen and manage the risk of counterparty credits exposures; improving standard management of risks on counterparty credits including by showing the wrong risks management. iii) thirdly, committee will introduce a leverage ratio as a supplementary measure for basel ii framework, which designated to attract additional guarantees against risk of model, and risk of assess error by completing the measures based on risk with a simple measure, based on gross exposures. iv) fourthly, commission will introduce a pack of measures for encourages capital reserves accumulation in good times, used in stress periods for “reducing procyclicality and promoting countercyclical buffers”: 1 a capital preservation buffer of 2.5%, composed by tier 1 common shares, provided as a minimum share condition. implementation stages of this preservation buffer shall start with 1 january 2016 and shall be fully enforced from 1 january 2019. 115 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro a) achieving macro prudential objective largely, for protection of banking sector to periods of credit rising in excess done by: using information projected in large periods, for assessing probability of default (pd); loss given default (lgd) recommended in basel ii framework, becomes now mandatory; improving of risk functions, to transform estimates of losses in regulation regarding capital needs; stress tests organized by banks themselves. b) promoting of stronger practice of provisioning by making changes in accounting standards, especially regarding the approach of expected losses (el) (usually, the value el: = lgd * pd * ead where lgd means lost given default, pd means probability of default, ead means exposure at default) v) fifthly, the committee introduces a global standard of minimum liquidity for active international banks, providing that liquidity ratio to be covered for 30 days and to be sustained by a structural liquidity ratio for a longer term, named net stable funding ratio. in january of 2012, committee, by a declaration permit banks to pass below their needed liquidity level as settled by liquidity covering ratio, during stress periods. after year of 2010, by reforms of basel iii framework it was tried, by the moment of debates, to achieve several percentage ratios: 7% to 9.5% (4.5% plus 2.5% (as conservation buffer) plus 0 to 2.5% (as seasonal buffer)) for own capitals belonging to common shareholders (common equity) and of 8.5% to 11% for tier 1 and 10.5% to 13% for total capital. these regulations and stages intended for implementation is presented in figure 2. figure 2 basel iii regulations and implementation stages source: basel committee on banking supervision basel iii (december 2010, review june 2011), a global regulatory framework for more resilient banks and banking systems, www.bis.org subsequently changes occurred on basel iii framework, by requesting to banks a capital adequacy ratio of at least 7% until the year of 2019, while at european level a decision for achieving a threshold of 9% until the end of june of 2012. 116 magda basel iii implementation in europe by crd iv the goal of crd iv (capital requirements directive) is to minimize negative consequences of companies in bankruptcy by assuring that companies possess sufficient financial resources for covering the risk associated with their business. crd iv is the fourth amending of this regulation. each amendment appears to strengthen the prudential framework for individual entities and respond financial stability concerns, which appeared during banking crisis. crd iv is composed by two regulating instruments: capital requirements directive (crd); capital requirements regulation (crr). as stated by romanian financial supervising authority (asf): regulation package crd/crr iv (composed by european directive no. 2013/36/eu which needs implementation member states legislations and respectively regulation eu no. 575/2013 with direct enforcement in european union member states legislation) do represent implementation on european community level of the basel iii framework of basel committee for banking supervision, a framework settling new capital requirements for financial entities, as response to crisis cases last years have occurred; adopting process of regulation package crd/crr iv has terminated during 2013, on june 27, 2013 by publishing in the official journal of european communities of directive no. 2013/36/eu regarding access to activity of credit entities and prudential surveillance of credit entities, and investment companies, as amending of directive 2002/87/ec and abrogation of directives 2006/48/ec and 2006/49/ec and regulation eu no. 575/2013, all these being enforceable starting with the date of january 1, 2014; regulation package crd/crr iv represents the legal framework ruling prudential activity, surveillance framework, and prudential requirements enforceable to credit entities and investment entities from member states of european union. according to crd/crr iv, for assure that investment entities have an internal capital proportional to assumed risks, mostly appropriate as distribution, quality, and quantity, several cooperative governing providing are imposed to be enforced for prevent assuming excessive risks, and to be monitor by supervising authorities. moreover, similar requirements have been introduced for credit entities and investments companies, providing the obligation to possess, among the own funds, of a damper countercyclical capital for guarantee that this is under accumulation in times of economic raising, a sufficient capital base for losses absorbing during crisis periods. regulation basis for the package crd/crr iv on domestic and european level is presented below in table 2. table 2 domestic and european regulation framework afferent crd iv regulation issuer subject of regulation ue legislation directive 2013/36/ue obs. amends directive 2002/87/ec and revoke directives 2006/48/ec and 2006/49/ec european parliament and the council on 26 june 2013 access to credit entities activity and prudential surveillance of credit entities and investment companies regulation no. 575/2013 european parliament and the council on 26 june 2013 prudential requirements for credit entities and investment companies modifying of regulation (eu) no. 648/2012 117 http://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2013:176:0001:0337:ro:pdf studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro regulation regarding standards 12.05 2013 (eu) european parliament and european commission technical standards for enforcement regarding reports in surveillance of entities according to regulation (eu) no. 575/2013 of european parliament and council national regulation (romania) oug no. 99/2006 obs. published in official journal, part i, no. 1027/27.12.2006 govern of romania credit entities and capital adequacy law no. 227/2007 obs. for enforcement of oug no. 99/2006 romanian parliament credit entities and capital adequacy oug no. 113/2013 obs. amending and completing of oug no. 99/2006 govern of romania credit entities and capital adequacy regulation asf no. 3/2014 obs. applying of oug 99/2006 and regulation eu 575/2013 asf council credit entities and capital adequacy decision no.44/ 20.02.2014 obs. for applying of providing of article 126 of emergency govern ordinance no. 99/2006 govern of romania credit entities and capital adequacy (source: author’s compilation) basel iii impact on sme’s financing constraints on borrowing were defined by oecd (2006), as occurring when smes cannot obtain funds from banks, or any other funding providers, even though they have capacity to use these funds in a productive way. in a case when economic viable projects might be narrowed even abandoned for financing difficulties, all these constraints have a potential of severe negative consequences in innovation and development. the great difficulty in accessing of credits smes facing with, in comparison with large companies consists in actual differences in their risk profile, as well as in asymmetric of information present between smes and a credit entity (oecd, 2006). from smes side it might be difficult to convince banks about quality of business plans, especially for new established companies facing with a great effort to build a reputation able to determine a low risk, and this also due to crisis of 2008. it was really encountered a repulsion of many smes regarding the issue of credit (risky economic climate, high costs and warranties). from the bank side, costs involved in financial valuation and smes monitoring is acting like a discouraging factor in funding this branch. for great banks, often prefer credit transactions having as basis companies financial status as information source. moreover, in most cases smes possess few warranties than needed for comfort and safeguard of potential creditors (bce, 2007). personal sources of funding from the owner of smes at its start-up, personal assets have proven to be important sources financing obtaining after year of 2008. to all these, warranty system developed in some countries, like fngc imm (national credit guarantee fund for smes) in romania, sflg in uk (uk small firms loan guarantee scheme) jasmec cgs (credit guarantee system for japan small and medium enterprise corporation) in japan, may be added. among these issues, during transition to new reforms of basel iii regarding banking capitalization requirements, is possible to us to observe an appetite lowering of commercial banks, or a quite suspicion in smes funding, under condition of considering small and medium-sized enterprises as maximum risk. nevertheless, in romania, by banking system transition to accounting ifrs system, large amounts of 118 http://www.asfromania.ro/files/capital/legi/legea-227-2007.pdf http://www.asfromania.ro/files/capital/crd4/oug_113_2013.pdf http://www.asfro.ro/files/capital/regulamente/2014/regulament%20asf%20nr.3-2014%20privind%20unele%20aspecte%20legate%20de%20aplicarea%20oug%20nr.%20992006.pdf http://www.asfromania.ro/files/capital/decizii/2014/decizia%20nr.%2044-20.02.2014.pdf magda money have released from provisioning, and in plus there was vienna 2.0 initiative by which great financial groups (of austrian origin) have agreed upon continuing to fund romanian economy, including after the crisis occurring in 2008. from the globalization point of view, it is predictable that banking sector to restrict continuously as economic and financial environment will become more unfriendly to smes, and small banks can’t afford to loan smes under the new regulations. conclusions and perspectives governors’ council, appreciate that economic expectations for euro zone encounter high risks in a way of decrease, especially taking in account existing tensions on several financial markets from euro zone, and to potential spillover effects on the real economy, the euro zone is still lying within. according to my opinion, basel iii framework regulation implementing in our country must tuned with finding the best leverage economically and legislative for stimulate lending especially to smes, taking in regard their major role they play in economy, and coming after a severe crisis period when capitals almost perished, or vanished at all. this is why i consider in coming back of smes lending as done mainly by: financing costs lowering (by decrease of robor and of intervention interest bnr is practicing on, decreasing of romania cds according to achieved economy growth, including a decrease of interest margins the main banks are practicing in romania) alongside the liquidity raising on the market (by lowering of mandatory minimum provisions on lei and currencies imposed to commercial banks), raising the rate in european funds absorbing, the success of govern financing programs, but mostly the new ones achievement (as the fact minimis support is almost unfunctional in present), the offer of special warranty systems for smes activating in agriculture sector. references asf council, regulation asf no. 3/2014 regarding issues in enforcement of oug 99/2006 and regulation eu 575/2013. basel committee on banking supervision (2004), basel ii: revised international capital framework available at www.bis.org. basel committee on banking supervision (december 2010, review june 2011), basel iii: a global regulatory framework for more resilient banks and banking systems, www.bis.org. basel committee on banking supervision (2010), international regulatory framework for banks (basel iii), http://www.bis.org/bcbs/basel3.htm. cardone-riportella, c. et al, (2011), what do basel capital accords mean for smes?, working paper, 10, universidad carlos iii de madrid. european parliament and council (2013), directive 2013/36/eu, available at http://eurlex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2013:176:0338:0 436:ro:pdf. european parliament and council (2013), regulation no. 575/2013, available at http://eurlex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2013:176:0001:0 337:ro:pdf. european parliament and council (2013), regulation regarding standards (eu), available at http://www.asfromania.ro/files/international/anunturi/regulament %20aplicare%20standarde_12.05.pdf. govern of romania (2006), oug no. 99/2006, published in official journal, part i, no. 1027/27.12.2006. 119 http://www.asfro.ro/files/capital/regulamente/2014/regulament%20asf%20nr.3-2014%20privind%20unele%20aspecte%20legate%20de%20aplicarea%20oug%20nr.%20992006.pdf http://en.wikipedia.org/wiki/basel_committee_on_banking_supervision http://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2013:176:0001:0337:ro:pdf http://www.asfromania.ro/files/international/anunturi/regulament%20aplicare%20standarde_12.05.pdf http://www.asfromania.ro/files/capital/crd4/oug_99_2006.pdf studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro govern of romania (2013), oug no. 113/2013 regarding several budget measures for completion of govern emergency ordinance no. 99/2006, published in official journal, part i, no. 830/ 23.12.2013. govern of romania (2014), decision no.44/20.02.2014, available at http://www.asfromania.ro/ files/capital/decizii/2014/decizia%20nr.%204420.02.2014.pdf government of united kingdom (1981), (sflg) loan support scheme for small business. iordan-constantinescu, n. (2012), crd iv and implementation on european level of requirements of basel iii, “romania where to? challenges of the new framework basel iii” conference presentation, organized by national bank of romania. natani, m., riding, a. (2005), credit guarantee schemes: a tool to promote sme growth and innovation in the mena region report and guidelines 2011, mena-oecd investment programme working paper, available at http://www.oecd.org/mena/investment/47245991.pdf. rajesh, g. (2012), basel iii accord basel 3 norms, available at http://www.allbankingsolutions. com/banking-tutor/basel-iii-accord-basel-3norms.shtml. romanian parliament (2007), law no. 227/2007, available at http://www.asfromania.ro/files/ capital/legi/legea-227-2007.pdf. ştefan, c. (2013), noul cadru de reglementare a sistemului bancar la nivelul ue, colocviul “spre o nouă arhitectură de supraveghere a piețelor financiare în uniunea europeană”, available at http://www.bnr.ro/document information.aspx?id document=15313&directlink=1. walter, s. (2011), basel iii: stronger banks and a more resilient financial system, conference on basel iii, financial stability institute, basel. 120 http://www.asfromania.ro/files/capital/crd4/oug_113_2013.pdf http://www.asfromania.ro/files/capital/decizii/2014/decizia%20nr.%2044-20.02.2014.pdf http://www.asfromania.ro/files/capital/legi/legea-227-2007.pdf basel committee on banking supervision (2004), basel ii: revised international capital framework available at www.bis.org. basel committee on banking supervision (december 2010, review june 2011), basel iii: a global regulatory framework for more resilient banks and banking systems, www.bis.org. basel committee on banking supervision (2010), international regulatory framework for banks (basel iii), http://www.bis.org/bcbs/basel3.htm. (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro value of the net treasury and its implications on the financial stability of the company daniela cristina solomon “vasile alecsandri” university of bacău daniela.solomon@ub.ro iulia andreea bucur “vasile alecsandri” university of bacău iuliaandreea.bucur@gmail.com abstract practice proved that the management process cannot be based on routine and intuition, but on scientific analysis, on deep knowledge of the actual situation, as well as on identifying the vulnerabilities and the development opportunities. the economic and financial analysis performed by means the net treasury has the role of using the information supplied by accounting, based on which conclusions will be drawn on the efficiency of the activity performed within an entity. the importance of the net treasury arises from the fact that it shows the amount of liquid assets of an entity at a certain moment in time, being connected to the short-term financial operations, the purpose of which is to ensure the resources necessary to finance the company’s economic activity. the net treasury synthetically reflects the method of achieving financial stability within the company on long and short term. our endeavour ends by determining the strengths and the weaknesses in the activity of a trading company, as well as the measures that are to be applied on short and on long term in order to achieve the present objectives. keywords working capital; working capital requirement; net treasury; cash-flow; financial stability jel classification m41; m51 introduction the analysis of the financial stability, as a goal and a means for the company management, is essential in order to get high economic results in the case of companies which work in the present-day business environment. the purpose of this analysis is to identify and measure the imbalances which come up on the level of the cash flow, as well as the factors triggering them. the starting point in drawing up a financial diagnosis is the study of the financial structure of the balance sheet, which has an important role in defining the conditions for the financial stability of a company; in other words, they define the capacity of ensuring a company’s solvability in order to prevent the risk of bankruptcy. a critical analysis on the way of achieving financial stability will show us that this stability is absolutely necessary, since it is a benchmark according to which decisions concerning the company’s activity are made on internal as well as on external level. knowing the structure of the company’s financial position, reflected in the balance sheet, knowing the ratios of the groups of elements (the fixed and the circulating assets, the equities, the long-, mediumor short-term liabilities) of the working capital, the working capital requirement and the net cash, which measure the 130 solomon, bucur evolution of the activity and the company’s financial health is a requirement when managing a company, in order to achieve financial management. determining the net treasury requires calculating the working capital and the working capital requirement, which make up the trio of indicators that denote financial stability, indicators determined after analyzing the horizontal balance sheet which sets correlations between the efficient use of the assets and the way they are financed. in fact, at a certain point, a company may have high profitability and then, in order to extend its activity, investment becomes necessary. the cash fluxes generated by the investment activity, in case they were not accurately calculated, may affect the need of financial resources expected during the normal functioning of the current activity. this study started from the idea that the company works in a dynamic environment, the opportunities and the constraints of which are continuously changing, which requires a proper reaction within the company in order to maintain the stability, emphasizing the fact that each stage of development involves altering the existing stability in order to achieve future stability, and that each present imbalance should include the premises for a new state of stability, situations which can only be overcome by achieving an efficient productive activity which should generate profit. research methodology in order to reach the objectives formulated concerning the topic treated here, the study was based on certain methods of scientific research. the fundamental purpose of the methodology is to help us understand not only the broad definitions of the concepts of working capital, working capital requirement, net treasury, cash flow, but also the importance and the influence these indicators have within the company, all this based on a practical example. for the study of the net treasury we use quantitative (positivist) and qualitative research methods. among the quantitative research methods, we used the phenomena examination and measurement methods, since the purpose of studying the net treasury analysis is to collect accounting information in order to do an interpretation of the results achieved, as well as numerical methods, due to the fact that the analysis results will be achieved after applying certain calculation formulas. as a qualitative method used in this research, we have the case study. thus, we start from the real case of an economic entity in the field of trade, we interpret the results gathered in the period of time 2004-2013 and we set the steps to follow in order to improve the “financial health” of this entity. general considerations concerning the analysis of the economic and financial stability the economic and financial analysis is the instrument based on which the managers get to know the company’s situation at a certain moment in time as well as the previous situation and they can anticipate the future evolution of the company, by supplying accurate and opportune information in order to support the decision-making and the operational processes. the balance sheet is the main financial report which reflects the way in which the balance between the assets and the liabilities in the balance sheet is achieved, as well as the way of covering the financial needs using the available resources (equities, debts) (petrescu, 2012). financial stability is the state at which every company aims, and in order to assess it we start from calculating the financial stability indicators: the working capital, the 131 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro working capital requirement so that, in the end, we can determine the level of the net treasury. the financial working capital (fwc) is that part of the permanent capital used to finance the current assets, determined by the difference between the amounts that are to be cashed and the amounts due, as well as by the time span between the due date when the current assets must be turned into cash and the average time in which shorttern debts are due (spătaru, 2010). the way of calculating this indicator consists in two procedures, emphasized using the formulas no. 1, 2 or 3, respectively: a) through difference: starting from the information supplied in the upper part of the balance sheet: fwc = (equities + medium and long term debts) – fixed assets (1) using the information supplied in the lower part of the balance sheet: fwc = current assets – short term debts (2) b) directly: wc = net current assets/net debts = item e in the balance sheet (3) the working capital requirement (wcr) is the difference between the temporary needs and the temporary sources, designating the financial needs generated by the repetitive operations which require payments necessary for the current activity, and it is the difference between the current assets (only liquid assets) and the short-term debts (only current bank credits). the method for calculating this indicator can be seen in formula no. 4. wcr = (stock + accounts receivable + prepaid expenses) – (debts due in less than 1 year – current bank credits + deferred income) (4) the net treasury (nt) is the balance account of the liquid assets existing in the company’s patrimony at a certain moment in time, which can be seen in the bank accounts or in the cash accounts (petrescu, 2010). the positive net treasury is the result of the company’s financial stability. we can determine this indicator of stability by reading the horizontal balance sheet, as we can see in formulas no. 5 and 6: a) the top part: nt = fwc– wcr (5) b) the bottom part: nt = liquid assets – liquidity credits (6) the relationships listed above convey the value of the net treasury at the end of the financial year, which can differ from the value of the net treasury at the moment of the assessment; that is why it is useful to assess the variation of the net treasury (∆nt= cash flow) calculated according to formula no.7 and used in the dynamic analysis of the financial stability in order to estimate the future cash flows in which the potential investors are interested. ∆nt= ∆fwc ∆wcr (7) where: ∆nt = the variation of the net treasury, calculated as the difference between the value of the net treasury at the end of the period subjected to the analysis (nt1) and the value of the net treasury at the beginning of the same period (nt0), ∆nt= nt1nt0 . ∆fwc = variation of the financial working capital. ∆wcr = variation of the working capital requirement. case study concerning the implications of the net treasury level in assessing the financial stability of s.c. alfa s.a. s.c. alfa s.a. is a company situated in bacau, listed at bucharest stock exchange, which deals with retail trade of food and non-food products, renting commercial property to other trading companies dealing in the field of food trade and food services. in order to study the evolution of the net cash, we started from the study of the annual balance sheets of the company for the last ten years, starting with 2004 and ending in 2013. 132 solomon, bucur analysis of the financial working capital of s.c. alfa s.a. the data necessary for the analysis of the working capital is presented in table 1. table 1 analysis of the financial working capital indicators financial year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1. equities 3007624 3111526 3141245 3222358 4253659 4424411 4432148 4561664 4562506 4515756 2. debts due in over 1 year 7682 7682 7682 23526 23526 1102864 1079628 0 0 0 3. permanent capitals (1+2) 3015306 3119208 3148927 3245884 4277185 5527275 5511776 4561664 4562506 4515756 4. net fixed assets 1961249 2485709 2563319 2475012 2642958 3706219 3813249 2677297 2576502 2430144 5. current assets 3237108 2315370 2157478 2316517 2476709 2482402 2374437 2451906 2709321 2555018 6.prepaid expenses 0 69 74 9433 6869 7908 7037 2817 1172 13527 7.temporary needs (5 + 6) 3237108 2315439 2157552 2325950 2483578 2490310 2381474 2454723 2710493 2568545 8. debts due under 1 year 2183051 1681940 1571944 1555078 849351 669254 682947 570356 724489 482933 9.deferred income 0 0 0 0 0 0 0 0 0 0 10.temporary resources(8+9) 2183051 1681940 1571944 1555078 849351 669254 682947 570356 724489 482933 11. net current assets/ net current debts (e) 1054057 633499 585608 770872 1634227 1821056 1698527 1884367 1986004 2085612 12. financial working capital (fwc) (3-4) or (7-10) 1054057 633499 585608 770872 1634227 1821056 1698527 1884367 1986004 2085612 variation of the working capital ∆fr (ron) -420558 -47891 185264 863355 186829 -122529 185840 101637 99608 indexes % 60,10 92,44 131,64 212,00 111,43 93,27 110,94 105,39 105,02 growth rate % -39,90 -7,56 31,64 112,00 11,43 -6,73 10,94 5,39 5,02 source: annual balance sheets of s.c. alfa s.a. and the author’s calculations, 2014 diagram, the evolution of the financial working capital of s.c. alfa s.a. is presented in figure 1. figure 1 evolution of the financial working capital at s.c. alfa s.a. source: own calculations, based on the historical data for the period of time 2004-2013 133 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro during the period of time subjected to the analysis, the working capital has positive but fluctuating values, which is a relatively favorable situation for the company. the permanent sources manage to finance all the permanent allocations, also leaving a surplus for financing the cyclical needs (renewing the current assets). companies have to avoid the immobilization of financial resources in products stocks that cannot be sold in the near future period, because otherwise would attract the danger of costs increasing. (deju & dragomirescu, 2010) the value of the working capital has a downward trend in 2005 and 2006, while in the next period of time it increased reaching in 2009 the amount of 1821056 ron. in 2010, the value of the working capital decreases by 6.73% compared to 2009, but it is still positive. during the last three years, we can notice a favorable evolution of this indicator, which reached its maximum value in 2013, when it amounted to 2085612 ron. the company has enough permanent capital to ensure the financing of fixtures in case of unexpected events, during the last 3 years its level consisting only in equities (the value of the medium and long-term debts being 0 for the period of time 2011-2013), the company choosing to appeal to long-term financing using only its own resources. although the working capital has a fluctuating trend, the amount of the current assets which can be turned into cash is higher than the short-term debts, which means that there is a favorable situation of solvability. this way, the company has a margin of safety which protects it from the effects of any disturbance in the influx-outflow cycle. analysis of the working capital requirement for s.c. alfa s.a. the data necessary for the analysis of the financial working capital requirement is presented in table 2. during the period of time subjected to the analysis (except for 2004), the working capital requirement had positive values and increasing values with negative effects for the financing of the company’s activity, situation which is unfavorable for the company due to the unfavorable disparity between the cashing of the accounts receivable and the payment of debts. the maximum level of the financing requirement was registered in 2011 when it amounted to 2067901 lei. table 2 analysis of the working capital requirement at s.c. alfa s.a. indicators financial year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1. current assets 3237108 2315370 2157478 2316517 2476709 2482402 2374437 2451906 2709321 2555018 2. cash and bank accounts 1513550 885195 951366 1264986 1825111 1980500 1905095 1923407 2107130 2065090 3. cyclical needs (stocks+accounts receivable) (1-2) 1494074 2226331 2189879 1957372 2428548 2443911 2527053 2638257 2455376 2450666 4.prepaid expenses 0 69 74 9433 6869 7908 7037 2817 1172 13527 5.cyclical needs + prepaid expenses 1494074 2226400 2189953 1966805 2435417 2451819 2534090 2641074 2456548 2464193 6.cyclical resources 2183051 1681940 1571944 1555078 849351 669254 682947 570356 724489 482933 7.working capital requirement (5-6) -688977 544391 617935 402294 1579197 1774657 1844106 2067901 1730887 1967733 variation of the working capital requirement ∆wcr (ron) 1233368 73544 -215641 1176903 195460 69449 223795 -337014 236846 indexes % 279,01 113,51 65,10 392,55 112,38 103,91 112,14 83,70 113,68 growth rate % 179,01 13,51 -34,90 292,55 12,38 3,91 12,14 -16,30 13,68 source: annual balance sheets of s.c. alfa s.a. and the author’s calculations, 2014 134 solomon, bucur diagram, the evolution of the financial working capital requirement at s.c. alfa s.a. is presented in figure 2. figure 2 evolution of the financial working capital requirement at s.c. alfa s.a. source: own calculations, based on the historical data for the period of time 2004-2013 the working capital requirement was reduced by 34.90% in 2007, compared to 2006, and by 16.30% respectively in 2012 compared to 2011, with favorable trends due to the decrease in the cyclical needs (stocks + accounts receivable) and to the increase in the liquid assets, which suggests that less and less of the temporary needs are financed using permanents resources. the working capital requirement shows the current stability of the company, it is rather fluctuant, more unstable than the working capital, and it depends on the turnover, the inventory turnover, the time span between the cashing due date and the payment due date. although it is impossible to recommend a certain level for the working capital requirement, s.c. alfa s.a., as a trade company and service provider, should have a working capital requirement as low as possible, or even a negative one if possible. analysis of the net treasury of s.c. alfa s.a. the data necessary for analyzing the net treasury is presented in table 3. table 3 analysis of the net treasury of s.c. alfa s.a. indicators financial year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.financial working capital (fwc) 1054057 633499 585608 770872 1634227 1821056 1698527 1884367 1986004 2085612 2. working capital requirement (wcr) -688977 544391 617935 402294 1579197 1774657 1844106 2067901 1730887 1967733 3. net treasury (nt) (2-1) 1743034 89108 -32327 368578 55030 46399 -145579 -183534 255117 117879 ∆nt= variation of the net treasury = cash-flow (ron) -1653926 -121435 400905 -313548 -8631 -191978 -37955 438651 -137238 indexes % 5,11 -36,28 1140,16 14,93 84,32 -313,75 126,07 139,00 46,21 growth rate % -94,89 -136,28 1240,16 -85,07 -15,68 -413,75 26,07 239,00 -53,79 135 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro suggestively, the evolution of the financial stability indicators for s.c. alfa s.a. is presented in figure 3. figure 3 evolution of the financial stability indicators at s.c. alfa s.a. source: author’s calculations in the case of the company analyzed here, the net treasury evolution is a fluctuating one, the highest level being registered during the first year subjected to the study (in 2004 it amounted to 1743034 ron). comparing the financial working (fwc) capital with the working capital requirement (wcr), in order to determine the net treasury, we could notice the following situations: fwc> wcr, during the period of time 2004-2005, 2007-2009, 2012-2013 the net treasury is positive, which shows the fact that there is excess financing, a cash surplus, which is a proof of the efficient activity, denoted by the existence of liquid assets in the bank account and in the cash desk. under these conditions, we can speak of the company’s short-term financial autonomy. the positive net treasury shows excess financing, a growth of cash, and it is a guarantee that the company functions efficiently, having liquid assets in the bank accounts and in the cash desk. thus, creditors have a guarantee that the company could pay its debts at any time. fwc < wcr, during the period of time 2006, 2010, 2011, the net treasury is negative, which means that there is a financial imbalance manifested in a cash deficit which should be covered by accessing new short-term credits in order to finance the imbalance, which is a proof of the defective management and of a precarious economic state. the dynamic analysis shows the fluctuating levels of the cash flow (variations of the net treasury): lower in 2007, 2012 and even negative during the rest of the period, reaching its lowest level in 2008, when it amounted to 313548 ron. the highest level of the cash flow was in 2012, when there was a level of the net treasury variation of +438651 ron. conclusions the net treasury, as factor of the financial stability, has the role of informing the mangers concerning the degree of financial autonomy and the level of liquid assets of their company, which will implicitly allow paying the debts as well as doing some efficient investments on the money market as well as on the financial market. 136 solomon, bucur calculating and the assessing the net treasury is important since: it reflects the ratability of the activity carried out by the company when the net treasury is positive as the result of a favorable evolution of the influx and outflow, of the investments made using the cash surplus; it helps setting the best moment for short-term bank loans, when the cash is negative, loans which will be allotted for financing the current asset deficit. the analysis of the financial stability of s.c. alfa s.a. emphasizes the fact that the scientific tools allow us to picture the current situation and point out the measures that need to be taken for a good progress of the company’s activity. although highly contested, the statistical analysis based on the study of the balance sheet does not lead to total ignorance of this traditional tool of the financial analysis, due to the fact that it provides irreplaceable data concerning the economic stability. according to our objective, we can emphasize the fact that the company has an oscillating evolution, it does not manage to cover the working capital requirement using the permanent working capital during the whole period of time subjected to the analysis, thus resulting a negative net cash; however, the situation improves during the last two years, when the value of the cash is positive, meaning that there was a cash surplus and it was not necessary to resort to credits. if s.c. alfa s.a. will continue its activity and will improve its resource management, the managers and the creditors will be able to have the guarantee that their book debt will be paid back, and they will be fairly paid according to their own participation to the economic activity. references andone, i., georgescu, i., toma, c., solomon, d. c. 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(2012), evaluarea economică și financiară a întreprinderii. conceptemetode-procedee, iaşi, editura tehnopress. 137 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro petrescu, s. (2010) analiză și diagnostic financiar-contabil. ghid teoreticoaplicativ, ediția a iii-a, revizuită și actualizată, bucharest, editura ceccar. robu, v., anghel, i., şerban, e. c. (2014), analiza economico-financiară a firmei, bucharest, editura economică. solomon, d. c., bucur, i. a. (2013), aspects of financial equilibrium analysis and its implications in management decisions, studies and scientific researches. economic edition, 18, 221-230, available at http://sceco.ub.ro/index.php/ sceco/article/view/226. solomon, d. c. (2004), analiza statică a echilibrului financiar pe baza bilanţului, buletin ştiinţific, vii (2), “george bacovia” university of bacău, 291-300. spătaru, l. (2010) analiza economicofinanciară. instrument al managementului întreprinderilor, ediţia a ii-a, bucharest, editura economică. 138 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro particularities regarding the reflection of foreign currency transactions in financial statements ionela-cristina breahnă-pravăţ “vasile alecsandri” university of bacău crisspra@yahoo.com abstract the structure and the constituent parts of financial statements are regulated at a national level, mainly by accounting regulations compliant with european directives ̶ o.m.p.f. no. 3055/2009, but also by accounting regulations compliant with international financial reporting standards applied by the trading companies whose securities are rated on a regulated capital market ̶ o.m.p.f. no. 1286/2012. from this latter point of view, an important role is played by ias 1 “presentation of financial statements”, respectively ias 21 “the effects of changes in foreign exchange rates”. therefore, this study aims to describe a series of theoretical and practical aspects regarding the particularities of presenting elements generated by foreign currency transactions in financial statements, which are prepared in compliance with the romanian accounting regulations ̶ balance sheet, profit and loss account, cash flow statement, statement of changes in equity, explanatory notes. the paper also approaches the effect of changes in foreign exchange rates, respectively the accounting recognition of exchange differences, which are specific to different foreign currency operations, according to national regulations (and implicitly, to european directives), but also according to international regulations (ifrs). keywords foreign currency transactions; financial statements; exchange rate; exchange rate differences; european directives; ifrs jel classification m41 general aspects regarding the presentation of foreign currency operations in financial statements the purpose of financial statements, including those prepared and published by entities which deploy economic operations of foreign trade, consists of the following considerations regarding the synthetic documents: • it represents the main informing element for the current and potential investors, for the intern and international business partners, who are directly interested in the entity’s activity, in its financial balance, as well as in its recorded results; • the presented information is fundamental for taking decisions and performing analyses by the entity’s management; • it represents the basis for calculating microeconomic, macroeconomic and sectorial economic indicators, which are the basis for future statistical data and prognoses. in order to finish the activity of preparing and publishing financial statements, the entity that performs economic operations of export trade must also undergo a series of stages, such as: collecting data from supporting documents, recording the economic 75 breahnă-pravăţ operations in accounting records, tracking the operations by drawing up specific account books (day book, general ledger, inventory book), carrying out the closing worksheet accounting and, finally, preparing the financial statements. the ground rule states that, in romania, accounting is to be kept only in romanian and in the national currency and the accounting recognition of the foreign currency operations is kept both in the national and the foreign currency. in this context, the main particularity which characterises the entities that perform international economic transactions consists in recording in accountancy the expressed operations, quantified in another type of currency from the national one (into foreign currency), a particularity which presents a series of difficulties which may consist in: determining the exchange rate used in the conversion/translation of foreign currency into the national one, the manner of recording in accountancy and of presenting the effects of changes in the foreign exchange rate in financial statements, changes which arise in different stages of the accounting cycle etc. in the lines that follow, we will take into consideration only four of the five components of the financial statements, since we consider that there is a more visible and accentuated incidence of particularity in case of transactions in foreign currency, respectively concerning the preparation and presentation of operations of foreign trade. the balance sheet reflects the financial position of the entity on the basis of its assets (economic resources controlled by companies), of equities and debts (funding sources), as well as on the basis of assets and debts resulted from foreign currency transactions. profit and loss account reflects the company’s performance, by means of cost structures/charges, revenues, respectively of results, including those associated with foreign trade operations which fit into the category of foreign currency transactions. the cash flow statement illustrates the changes of the financial position, by means of cash flows, respectively of profits and payments associated with activities of exploiting, investing and funding. the explanatory notes must contain information regarding the methods of evaluation applied to different elements of annual financial statements and also methods used in calculating value adjustments. according to national accounting regulations compliant to european directives, a foreign currency transaction is a transaction which is expressed or needs settlement into another currency that is not the national one (leu) including transactions resulted when an entity: • buys or sells goods or services whose price is expressed in foreign currency; • borrows or loans funds, and the sums that are to be paid or cashed are expressed in foreign currency; or • purchases or hands over assets in another manner, contracts or pays off debts expressed in foreign currency. in order to ensure the implementation of rules regarding the accounting of foreign currency transactions, they have to be accounted at the foreign exchange rate, issued by the national bank of romania, at the current date of the operation, and the claims and debts expressed in lei (ron), whose settlement is done according to the exchange rate of a foreign currency, are assimilated into the elements expressed in foreign currency. presentation of the elements generated by foreign currency transactions in the balance sheet and in the profit and loss account in a balance sheet, the evaluation of claims and debts both expressed in foreign currency and with settlement in lei, according to the exchange rate, is done at the foreign currency exchange rate issued by the national bank of romania, valid at end 76 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro of the fiscal year. in order to be presented in the balance sheet, the value of the claims, evaluated as such, is diminished by the adjustments for the loss of value. cash and other similar values are evaluated in the balance sheet at the current exchange rate issued by the national bank of romania valid at the date of the fiscal year end. consequently, the romanian accounting regulations compliant with european directives establishes the following rules of presenting the monetary and nonmonetary items, expressed in foreign currency for each date the balance sheet: • monetary items that are expressed in foreign currency (liquid assets and other assimilated items, such as credentials and bank deposits, claims and debts in foreign currency) must be evaluated and presented in the annual financial statements using the foreign exchange rate issued by the national bank of romania, valid at the end of the fiscal year; favourable or unfavourable exchange rate differences between the exchange rate of the foreign currency market, issued by the national bank of romania on the registration date of claims or debts in foreign currency, or at the exchange rate that they are registered in accountancy, and the exchange rate valid on the date of the fiscal year end are to be registered as revenues or expenses of exchange rate differences, as appropriate; for the claims and debts expressed in lei, whose settlement is done accordingly to the exchange rate of a given foreign currency, the possible favourable or unfavourable differences which arise from their evaluation are registered as revenues or other financial expenses, as appropriate; • non-monetary items purchased with foreign currency and registered as historical cost (immobilizations, stocks) must be presented in the financial statements using the foreign exchange rate valid on the date that the transaction is performed; • non-monetary items purchased with foreign currency and registered as fair value (for example, revaluated tangible assets) must be presented in the annual financial statements at the given value. according to o.m.p.f. no. 3055/2009 with subsequent amendments, the term monetary items refer to the liquidities and assets/ debts to be received/ paid in fixed or measurable sums. a monetary item’s main feature is the right to receive or the obligation to pay a fixed or definable number of monetary units. romanian accounting regulations compliant to european directives have also imposed a series of presentation rules for the monetary and non-monetary items expressed in foreign currency at the end of each month, as it follows: • at the end of each month, liquid assets and other treasury stock, such as government bonds in foreign currency, credentials and deposits in foreign currency are evaluated at the exchange rate of the foreign currency market, issued by the national bank of romania, beginning with the last banking day of the month in question; the registered rate differences are recognised in accountancy as revenues or expenses of the exchange rate, as appropriate; • the exchange rate differences that arise from reimbursing claims and debts in foreign currency that are rated differently as compared to the exchange rates in which they were initially registered, in the course of a month or to those that are currently registered in accountancy, must be acknowledged in the current month, as revenues or expenses from exchange rate differences (case a): if the claim or debt in foreign currency is settled in the course of the same month in which it appeared, the entire exchange rate difference is acknowledged in that month; case b): if the claim or debt in foreign currency is settled during a following month, the exchange rate difference acknowledged each month, up until the month of settlement, is determined taking into consideration the exchange rate modification in the course of each month); 77 breahnă-pravăţ • the value differences that appear along with the settlement of claims and debts expressed in lei, according to a exchange rate different from the one at which they were initially registered, in the course of a month or to those that are currently registered in accountancy, must be acknowledged in the current month, as revenues or expenses from exchange rate differences (case a): if the claim or debt in foreign currency is settled in the course of the same month in which it appeared, the entire exchange rate difference is acknowledged in that month; case b): if the claim or debt in foreign currency is settled during a following month, the exchange rate difference acknowledged each month, up until the month of settlement, is determined taking into consideration the exchange rate modification in the course of each month; therefore, relating to the reflection of exterior trade transactions in the balance sheet, respectively in the profit and loss account, from what is mentioned above, it results that: • in the balance sheet, the monetary items have to be presented at the exchange rate of the fiscal year end; • in the balance sheet, the non-monetary items have to be presented at the exchange rate of the date of the last accounting recognition; • in the profit and loss account are presented the differences resulted from updating the monetary items or from settling claims and debts in foreign currency, or whose reimbursing is done according to a given exchange rate, differences that are registered in accountancy as revenues or expenses from exchange rate differences, respectively as revenues or financial expenses; and the profit and loss account is connected with the equity modifications statement, through the information regarding the reported result and the result of the financial year, according to filip & muţiu (2007). • in the case of interim financial situations, as well as those elaborated in the course of a fiscal year, for diverse purposes, one must consider the exchange rate of the last day of the month for the monetary items expressed in foreign currency, respectively for claims and debts in foreign currency or whose settlement is done according to an exchange rate. presentation of the elements generated by foreign currency transactions in cash flows statement and notes in what the cash flows statement is concerned, there is the problem of whether to acknowledge, or not, the exchange rate differences as cash inflows or cash outflows. in this respect, due to the fact that cash flows do not include movements between the elements that constitute liquid assets or liquid assets equivalents, but they include inflows and outflows of funds, the exchange rate differences which appear in different situations are considered to be unrealised in regard to the criteria that form the basis of the cash flows statement. furthermore, if we take into consideration their connection with the generated transactions, there can be identified two categories: realised exchange rate differences, which correspond to the settlement of transaction, respectively encashment or payment and unrealised exchange rate differences, which correspond to a failure of settlement up until the date of drawing up the cash flows statement, as stated by filip & muţiu (2007). nevertheless, it is considered that the only category of exchange rate differences that can affect the cash flows statement is the one resulted from the updating of cash and cash equivalents expressed in foreign currency, at the fiscal year end, and at exchange rate of that particular date. with regard to the explanatory notes, it should be mentioned that for the elements included in the annual financial statements that are or have been initially expressed in 78 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro foreign currency, there must be presented the conversion basis used to express the national currency. thus, note no.10 “further information” shall mention these conversion bases used for expressing assets, liabilities, incomes and charges in the national currency, and which were initially expressed in a foreign currency. recognition of exchange rate differences in terms of romanian accounting regulations compliant with european directives as stated above, according to accounting regulations compliant with european directives approved through o.m.p.f. no. 3055/2009, a foreign currency transaction is a transaction which is expressed in or is in need of settlement in another currency, that is not the national one, including transactions resulted when an entity buys or sells goods or services whose price is expressed in foreign currency or purchases or hands over assets in a different manner, contracts or acquits debts expressed in foreign currency. thus, in an attempt to synthesize, in accountancy, we initially proceed as follows: • generally, a foreign currency transaction should be registered in accountancy at the exchange rate issued at the current date, by the national bank of romania; • financial leasing debts expressed in foreign currency, as well as financial leasing debts expressed in lei, but with settlement in accordance with the exchange rate of a foreign currency, is registered at the exchange rate of the foreign currency market issued by the national bank of romania, at the date when the funding was approved. later on, as already mentioned, according to romanian accounting regulations, exchange rate differences may appear in the following situations: a. at the end of each month, when according to o.m.p.f. no. 3055/ the measurement of claims and debts in foreign currency is done, at the exchange rate issued by the n.b.r./ national bank of romania, in the last banking day of that particular month, with the presentation of the exchange rate differences in corresponding income or expenditure accounts. thus, the exchange rate differences which may appear when settling claims and debts in foreign currency and claims and debts in lei, but whose settlement is done by relating to a foreign currency, shall be highlighted in the current month in which they appear. the present provision is of use both in terms of reflecting the economic reality in the quarterly calculation of the income tax, but most of all in the case of trading companies which choose, for different reasons, a different type of fiscal year from the calendar year, to ensure the comparability between data and information comprised in the financial statements, as julian (2010) states. b. at the end of the fiscal year, when the existing claims and debts are converted at the exchange rate of december 31st, the exchange rate difference is represented by the difference between the historical rate and the rate from december 31st in the current fiscal year. this is also treated as financial income or financial expense, as it was made obvious in the previous example. c. at the end of the fiscal year an obligatory updating of the liquid assets in foreign currency takes place, at the exchange rate valid for december 31st, the exchange rate difference resulting from the difference between the rate at the date when the foreign currency was recorded by the entity and the rate from december 31st. this type of difference also generates the recording of a financial income or expense in the company’s accounting books. 79 breahnă-pravăţ d. a more special case which cannot be associated to any of the above, but which deserves to be mentioned is the one regarding the modification of the exchange rate between the date of cashing an advance and the date of delivering goods or offering services. for example, in the case of cashing some advance before the delivering of goods or offering of services, the exchange rate used to calculate the tax base for vat, at the date of cashing the advance, will also remain unchanged at the date of closing the operation. example: a trading company possesses in its bank account, at the end of the fiscal year n+1, €1.500 resulting from the settlement, respectively the cashing of a claim on the date of 19.11. n+1, at an exchange rate of 4,5 ron/euro. on 31.12.n the exchange rate is of 4,4 ron/euro. the recognition of the value of the exchange rate difference of 150 ron is necessary, by debiting the 665 account “expenses regarding exchange rate differences”. recognition of exchange rate differences in terms of accounting regulations compliant with the ifrs. the application of the ias 21 “the effects of changes in foreign exchange rates” the main objective of ias 21“the effects of changes in foreign exchange rates” is to prescribe the manner in which foreign currency transactions and foreign operations are included in financial statements, as well as the manner in which the financial statements are converted in a presentation currency, and the main problems would be:  what exchange rate (rates) should be used and  the manner in which the reporting of the effects of changes in foreign exchange rates in financial statements should be done. ias 21 “the effects of changes in foreign exchange rates” can be applied:  for the recognition of transactions and balances in foreign currency, except transactions with foreign currency financial instruments;  when converting the financial results and positions related to foreign operations, that are included in the entity’s financial situations through different consolidation methods (global integration, proportional integration or the equity method);  when converting the results and financial position of an entity into a presentation currency. according to ias 21, a foreign currency transaction is a transaction that is expressed or is in need of settlement in foreign currency, including the resulted transactions, when an entity:  buys or sells goods or services whose price is expressed in foreign currency;  borrows or loans funds, and the sums that are to be paid or cashed are expressed in foreign currency; or  purchases or hands over assets in another manner, contracts or acquits debts expressed in foreign currency, through other methods than the above mentioned. according to ias 21 “the effects of changes in foreign exchange rates”, a foreign currency transaction is registered at the moment of initial recognition in the functional currency, using the exchange rate between the functional currency and the foreign one, valid on the date of performing the transaction. the functional currency is considered to be, according to ias 21 “the effects of changes in foreign exchange rates”, the currency of the main economic environment in which the entity operates. in other cases, the used exchange rate is a medium one, calculated for a specific reference period, this being applied to all foreign currency transactions, performed in that period of time. 80 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro ias 21 “the effects of changes in foreign exchange rates” states that at the end of each reporting period:  foreign currency monetary amounts shall be converted/translated using the closing rate;  non-monetary items expressed in foreign currency and evaluated on the basis of historical cost shall be converted/translated using the exchange rate at the date of the transaction;  non-monetary items expressed in foreign currency and evaluated on the basis of fair value shall be converted/translated at the exchange rate that existed when the fair values were measured. example of initial recognition: at the date of 10.04.n, a trading company exports merchandise/goods which are worth €40.000. the exchange rate varied in the course of april, registering the following values: 4,3 ron/euro, at the date of 01.04.n; 4,4 ron/euro, on 10.04.n; 4,55 ron/euro, at the date of 15.04.n and 4,55 ron/euro, at the date of 30.04.n. the sale shall be recognised using the exchange rate at the date of the transaction, meaning at the exchange rate of 4,4 ron/euro: clients = merchandise sale revenue 176.000 ron if, from practical reasons, the company decides to use for all the transactions carried out in april a medium rate calculated for this month, then the sale shall be recognised at a medium exchange rate = 4,45 ron (per euro). clients = merchandise sale revenue 178.000 ron subsequent accounting treatments regarding the exchange rate differences exchange differences that may arise at the moment of settlement of monetary items or of reporting a company’s monetary items at different exchange rates than the ones at which they were initially recorded, or than the ones at which they reported in the previous financial statements, shall be recognised in profit or loss (as revenue or expenses) in the period in which they arise. the 2011 version of ias 21“the effects of changes in foreign exchange rates” eliminates the limited option of the previous version, according to which there was the possibility of capitalizing exchange rate differences resulted from a depreciation or an amortization of currency, against which there was no possibility of hedging. these differences being now also recognised in profit or loss, the capitalization of exchange rate differences is not allowed in any other circumstances. example: if we take into consideration the information from the first part of the previous example, two situations may arise: case a: when the performance and settlement of a transaction take place in the same fiscal year, the cashing of a €40.000 claim takes place, at the date of 03.10.n, at an exchange rate of 4,5 ron/euro. therefore, knowing that the sale was invoiced at an exchange rate of 4,4 ron/euro, we will record the settlement of the claim and the recognition of difference at a favourable rate of: foreign currency bank accounts = % 180.000 ron clients 176.000 ron revenues from currency differences 4.000 ron case b: when the performance and settlement of a transaction take place in different fiscal years, the exchange difference recognised in each fiscal year that intervenes until the moment of settlement is determined by taking into account the exchange rate changes that arise during each fiscal year. 81 breahnă-pravăţ it is considered that on 31.12.n there was an exchange rate of 4,45 ron/euro, and the claim is due to be cashed on 15.02.n+1, at an exchange rate of 4,55 ron/euro. therefore, knowing that the sale was invoiced at an exchange rate of 4,4 ron/euro, we shall initially record the recognition of exchange rate differences at the end of fiscal year n and, subsequently, the settlement of the claim and the recognition of a favourable rate difference: -recognition of exchange rate differences at the end of fiscal year n: clients = revenues from currency differences 2.000 ron -settlement of claim and recognition of favourable exchange rate difference: foreign currency bank accounts = % 182.000 ron clients 178.000 ron revenues from currency differences 4.000 ron conclusions as we have seen, the reflection of economic operations conducted in foreign currency (export trade operations, intra-community trade etc.), including the presentation in accountancy of the elements generated by such transactions, is characterised by a series of particular elements which depend on the decision regarding the used exchange rate, or on the manner in which the accounting recognition of the effects of changes in foreign exchange rates, respectively of exchange rate differences, is done. references filip, c. i., muţiu, a. i. (2007), prezentarea operaţiunilor de import-export în situaţiile financiare, gestiunea şi contabilitatea firmei, 5, 13-18. iasb (2011), international reporting financial standards (ifrss). official rules issued from 1 january 2012. includes irfss which shall enter into force after 1 january 2011 but does not include the ifrss they replace, part a conceptual framework and provisions, bucharest, editura ceccar. julean, m. (2010), aspecte privind diferenţele de curs valutar, finanţe publice şi contabilitate, 2. legea contabilităţii nr. 82/1991, republicată, cu modificările şi completările ulterioare. ministerul finanţelor publice (2009), ordinul nr. 3055/2009, pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei, partea i, nr. 766 din 10.11.2009. ministerul finanţelor publice (2012), ordinul nr. 1286/2012, pentru aprobarea reglementărilor contabile conforme cu standardele internaționale de raportare financiară, aplicabile societăților comerciale ale căror valori mobiliare sunt admise la tranzacționare pe o piață reglementată, publicat în monitorul oficial al româniei, partea i, nr. 687 din 04.10.2012. pătruţ, v., rotilă, a. (2010), contabilitate şi diagnostic financiar. fundamente teoretice şi aplicaţii practice, iaşi, editura sedcom libris. popa, a. f. et al. (2007), studii practice privind aplicarea standardelor internaţionale de raportare financiară în românia, bucharest, editura contaplus. pravăţ, i. c., răileanu, a. s. (2008), exchange rate differences in foreign trade. accountant and fiscal treatments applied in the frame of romania’s adhesion 82 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro to european union, annals of the university of craiova economic science series, 36 (5), 2457-2465. ristea, m., dumitru, c. (2007), exchange rate variation’s effects – practice guide, firm administration and accountancy, 3. 83 microsoft word apostoaie constantin marius_eng.doc romania’s foreign trade with the european union in 2008 stângaciu oana ancu a, “vasile alecsandri” university of bacau, romania abstract in this study, i proposed to analyze the spatial concentration of international trade flows between romania and the european union both overall and by the sections of the combined nomenclature. using statistical analysis methods such as square and gini’s index or onicescu informational energy, i concluded that romania’s main trade partners are italy, germany and france and trade relations with these 3 countries are characterized by exchanges of good to cover, generally a wide range of products. keywords export fob, cif imports, trade balance, concentration of foreign trade: gini index, onicescu informational energy jel codes: c10, f10, f49, o11 romania's fob exports with eu romania's fob exports in 2008 amounted to 33.724.570 thousand euro, of which 70,4% of total exports were destined for eu member states. analyzing figure 1 is apparent, first, that romania's main export markets were germany (23,5% of the country's total exports), italy (21,9% of total exports of the country), france (10,5% of total exports of the country) and hungary (7,2% of total exports of the country) and secondly that romania is focus on a few export partner contries (in 5 state romania exporting 69,0% of total export) given that romania’s export markets are all eu member states. germany 23,5% italy 21,9% france 10,5% hungary 7,2% bulgaria 5,9% uk 4,7% other country 26,4% figure 1. the structure of the export by member states of the eu, in 2008 (%) source: processing by romanian foreign trade yearbook, national institute of statistics, bucharest evolution in exports by sections of the combined nomenclature studies and scientific researches economic edition, no. 15, 2010 274 the main sections of merchandise for exports in 2008 were: machinery and electrical appliances (24,0% of the total). from the total section, in the last three years, over 82,0% were exports towards eu; base metals (14,7% of the total), of which almost 60% in the eu states. almost 50% were exports of pig-iron, iron and steel, and 23% products of pig-iron, iron and steel; vehicles (12,4% of the total), increasing in the last three years. of the total, over 60% were exports towards eu states; textiles (10,5% of the total). this stood for between 21-26% of the exports in the period 1996-2004, being in a visible decrease in the last 3-4 years. exports to the eu represent between 90-94% of the total; mineral products (9,4% of total exports from last year, compared to 14,5% at the beginning of the period). if the share of the member states was 6,9% in 1991, 24% in 1992, it increased to 36% in the last year. over 97% of the total exports of this section represent fuel and mineral oils, and only 1,4% salt, stone, lime, cement; plastics (5% of total exports, 70% of that being exports to the member states); chemical products (4,2% of total exports, down from a peak of 9,7% in 1992). the member states, from 20-25% share in the early years, rose to almost 50% in the last year. of a total section, 34% represent exports of fertilizers, 23% of organic products, inorganic products 16%, 7-8% pharmaceuticals and essential oils. romania's cif imports with eu cif imports in romania in 2008 the value of 57.240.310 thousand euro, of which 69,1% of total imports had the provenance area of the eu member states. germany is the main source of imports for romania (23,6% of romania's total imports), followed by italy (16,4% of total imports), hungary (10,7% of total imports) and france (8,2% of total imports). as to the exports, it appears that the largest share (65,9%) of romania’s imports comes from the first 5 partener countries, even trough romania import goods from all eu member states. germany 23,6% italy 16,4% hungary 10,7%france 8,2% austria 7,0% netherlan ds 5,4% other countries 28,6% figure 2. the structure of the import by member states of the eu, in 2008 (%) source: processing by romanian foreign trade yearbook, national institute of statistics, bucharest evolution in imports by sections of the combined nomenclature the main sections of import in 2008 were: machinery and electrical applicants (24% of the total). of the total section, in the last two years, about 80% were imports from the e.u.; means of transport (12,4% of the total), increasing in the past two years. of the total, over 86% were imports from the e.u.; common metals (11,3% of the total), of which about 65 in the e.u. almost 34% were imports of products made of raw iron, iron, steel, and 33% of raw iron, iron and steel; studies and scientific researches economic edition, no. 15, 2010 275 chemical products (8,3% of total imports, down from about 8% during 2000-2003 to 7,5% in subsequent years). member states, from approximately 64% share in the years around 2000, have reached nearly 80% last year. of the total section, 40% stands for imports of pharmaceuticals, 11% of essential oils, 10% of colored extracts, 7% of soap and washing preparations. textile products (6% of the total). they were between 15-16,5% of the imports in 2000-2002, being in a visible decrease in the last 3-4 years, reaching 7-8%. imports from the e.u. represent 82% of the total in the last year, standing in all these years around 80%; mineral products (13,9% of total imports last year, maintaining approximately at the same level compared to the beginning of the period). if the share of the member states was 6,4% in 2000, it rose to 11,5% in the last year. over 85% of total imports of this section is represented by fuel and mineral oils and around 9% by salt, stone, lime, cement; plastics (5,7% of total imports, of that over 80% being imported from the states); concentration of foreign trade the usage of statistical methods to study the phenomena of concentration can complete the analysis of the structure of foreign trade, both by sections and by e.u. member states. measuring the degree of concentration can be done both through numerical and graphical methods. the graphical way supposes the construction of a graphical curve of concentration – lorentz-gini curveand based on it, we can find out the degree of concentration by determining a coefficient gini index. 0 20 40 60 80 100 0 50 100 t he c um ul at iv e sh ar e of e xp or t an d im po rt the cumulative share of the eu member states export import % % figure 3. the concentration curve of exports and imports in 2008 source: processing by romanian foreign trade yearbook, national institute of statistics, bucharest the concentration curve is the graphical representation of the q variable depending on the variable p, where p represents the relative cumulative herds of the e.u. states, and q stands for the global, cumulative and relative values of import and export. the concentration curve, constructed by unifying the points of coordinates, is shown in a square, also known as gini's square. the degree of concentration may be approximated depending on the size of the area of concentration, namely, the farthest the curve of concentration from the square’s diagonal, the higher the concentration surface, thus the disparities between the e.u. countries for the exports and imports, and the concentration degree of the country is stronger. in our case, the gini’s square highlights a high degree of concentration of the foreign trade by e.u. member states; the concentration degree being slightly higher for imports than for studies and scientific researches economic edition, no. 15, 2010 276 exports. from the graph there can be detached three distinct qualitatively types of states. thus, for the intra-community exports are the following three groups: 1. the group of the few, 15,4% of the e.u. states (germany, italy, france and hungary), to which are focused most of romania's exports, 58,7%. 2. the middle group, a more balanced one, comprising 19,2% of the states (bulgaria, the united kingdom, spain, austria and poland) to which are exported 20,9% of the total intra-community exports of romania; 3. the group of the most to which less is exported, thus towards 65,4% of the union states (all the 17 remaining states) there is exported only 20,4% of the total intra-community exports of romania. for imports, the three groups are formed as follows: 1. the group of the few, 19,2% of the e.u. (germany, italy, hungary, france and austria), to which are focused most of the intra-community imports of romania, 68,8%. 2. the middle group, more balanced, comprising 11,6% of the states (netherlands, poland and czech republic) from which is imported 13,9% of the total intra-community imports of romania; 3. the group of the most from which less is imported, from 69,2% of the e.u. states (all the 18 remaining states) is imported only 17,3% of the total intra-community imports of romania. gini index of concentration is a synthetic indicator of the concentration of a distribution and is defined as a relation between two surfaces: area of concentration the area between the curve of concentration and the diagonal of the gini square and the area of the square. the value of the index of concentration is always between 0 and 1, respectively between 0% and 100%, reflecting the variation in the degree of concentration of the phenomenon from a null concentration to a maximum one. the index of concentration calculated for export is 55% and for import is 61%, confirming a very high degree of concentration of the foreign trade of romania with the e.u. states. the same analysis was done by sections, both for export and import. applying the onicescu method (the corrected formula of calculation, denoted by e) to analyze the degree of concentration of exports and imports from romania by sections, for each state, resulted that in the final year of the analysis, there was a very small level of concentration of exports and imports on certain sections. where gi is the share of import / export from a section of the total import / export of a country, and n is the number of sections, 19 in our case. in total, the onicescu informational energy was 0,089 for exports and of 0,095 for imports, highlighting a relatively uniform distribution of the imports and exports by sections. the highest degrees of concentration were recorded in luxembourg for exports, the concentration index being 0,77. basically in this case, 88% of the exports of romania towards luxembourg were performed in a single section, means of transport. same issue in the case of ireland, where the index is 0,41 and 65% of the exports to this state were done also with means of transport. 1 1 1 12 n n g e i studies and scientific researches economic edition, no. 15, 2010 277 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 h ol an d s pa in t ot al e xp or ts p or tu g al s w ed en ita liy a us tr ia f ra nc e g re ec e p ol an d li th ua ni a h un g ar y b el g iu m s lo va ki a b ul g ar ia e st on ia g er m an y c ze ch r ep ub lic s lo ve ni a la tv ia d en m ar k u ni te d k in g do m c yp ru s f in la nd m al ta ir el an d lu xe m bu rg export import figure 4. concentration of the foreign trade by sections of the combined nomenclature and by member states of the eu, in 2008 (the value of the onicescu informational energy the corrected formula) source: processing by romanian foreign trade yearbook, national institute of statistics, bucharest next i applied the same formula for the onicescu energy, but with other meanings: gi is the share of each state in the import / export of a total section and n is the number of partner states, respectively 26. it was obtained the concentration graph below, which expresses the degree of concentration of external trade by member states, within each section of the combined nomenclature of products. the highest degrees of concentration, both for import and export are observed in the following sections: footwear, where the onicescu informational energy is 0,43 for export and 0,47 for import. this is mainly due to the majority share of exports to italy (66% of the total) followed by germany (10%) and in the case of imports 70% of the total come from italy and 8% from germany; raw hides, tanned, where the onicescu informational energy is 0,41 for export and 0,52 for import. in this case, 64% of romania's exports go to italy and 10% to germany. meanwhile, 72% of the imports come from italy and 8% from germany; mineral products, where the onicescu informational energy is somehow higher for the export (0,20) than for imports (0,07). of the total mineral products exported around 43% go to bulgaria and 15% to hungary and slovenia. imported, they come up to 27% from poland and 21% from hungary; in the other sections we can not speak of a high degree of concentration by states, but there can be emphasized some partners with slightly higher shares of external trade in those products. thus, in the case of: textiles, 36% of exports have as destinations italy, 22% germany, 12% france and 11% the united kingdom. as imports, textiles are mainly from italy (40%) and germany (22%), being visible in this case the influence of lohn production, which makes exports to depend on imports; wood products are intended mainly to italy (30%), germany (9%) and spain (9%) and as imports they come up to 25% from germany, 15% from poland, 15% from austria and also 15% from hungary; paper and articles of paper are exported to more than 23% to france, 19% to italy, 13% to bulgaria and 12% to greece. as imports, they are mainly from germany (22%), italy (16%) and poland (11%); food products are exported mainly to italy (29%), bulgaria (16%) and hungary (14%) and as imports them come from: hungary (20%), germany (16%) and poland (11%) studies and scientific researches economic edition, no. 15, 2010 278 mineral products are exported mainly to bulgaria (43%), slovenia (15%) and hungary (15%). imports are mainly originated from poland (27%) and hungary (21%); chemical products are exported mainly to italy (21%), germany (16%), hungary (13%) and imports come from germany (21%), france (13%) and italy (8%); plastics are exported mainly to germany and italy (18% each), france and hungary (12% each), while imports came from germany (25%), italy (14%) and hungary (12%) . 0,000 0,100 0,200 0,300 0,400 0,500 0,600 a rt ic le s of s to ne p la st ic s pr od uc ts b as e m et al s v eg et ab le p ro du ct s c he m ic al p ro du ct s m is ce lla ne ou s p ap er li ve a ni m al s w oo d ar tic le s p re pa re d fo od st uf fs m ac hi ne ry a nd e le ct ri ca l ap pl ia nc es m ea ns o f tr an sp or ta tio n o pt ic al in st ru m en ts t ex til es f at s m in er al p ro du ct s g oo ds n ot c la ss ifi ed i n c .n . r aw s ki ns f oo tw ea r t o t a l xiii vii xv ii vi xx x i ix iv xvi xvii xviii xi iii v xxii viii xii export import figure 5. concentration of the foreign trade by member states of the eu and by sections of the combined nomenclature in 2008 (the value of the onicescu informational energy-the corrected formula) source: processing by romanian foreign trade yearbook, national institute of statistics, bucharest conclusion in conclusion, even though romania's trade goods are made with more than 200 different countries, most international trade is focused on several dominant partner countries. geographical orientation as the main destination of exports, respectively, area of origin of romanian imports in 2008 were eu member states and between these major trading partners of romania were italy, germany and france. trade with these 3 countries are characterized by exchanges of goods that generally cover a wide range of products, but at the same time romania has trading partners such as luxembourg and ireland where exchanges of goods have specialized in certain products. references 1. harja e. (2009), statistics, matrix rom publishing house, bucharest 2. jaba e. (1998), statistics, economic publishing house, bucharest 3. voineagu v and collaborators (2001), economic statistics, tribune publishing house, bucharest 4. collection of romanian foreign trade yearbook, national institute of statistics, bucharest 5. collection monthly statistical bulletin of the counties, national institute of statistics, bucharest 6. own database of statistical direction of bacau county studies and scientific researches economic edition, no. 15, 2010 279 the influence of formal communication in the process of accessing european funds studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the influence of formal communication in the process of accessing european funds luminița zait “vasile alecsandri” university of bacău zait.luminita@yahoo.com abstract present article aims, based on direct research, to identify of main sources of information in the process of accessing european funds. performed within trotus valley, bacau, the proposed research provides pertinent information from the perspective of the main sources of influence on the manifestation of interest in accessing funding and in terms of highlighting the influence of various socio-demographic variables on such information sources. according to the romanian experience of accessing european funds, apparently formal communication efforts prove ineffective, being less reliable and stimulating compared to the informal interpersonal communication. because most of the potential beneficiaries of eu funds precept this process as one dominated by sinuous and powerful bureaucracy, we tend to believe that in the expressions of interest in accessing eu funds, formal communication only meet the cognitive structure of attitude, affective and conative entering under the influence of informal communication. keywords formal communication; informal interpersonal communication; accessing eu funds; absorption of european funds; public campaigns jel classification m37 introduction in the context of twenty-first century, marketing communications, along with other components of the mix, has a significant impact on the efficiency of activity of the different market players, regardless of sector. it is well known that adequate promotion of goods and / or services is the engine that supports both full information approach of the targets and the entire sales process. starting from these premises, this article seeks to identify the extent to which formal marketing communication, both interpersonal and impersonal influence the process of accessing eu funds. according to the procedures for accessing european funds, any project, regardless of the accessed program, involves steps to inform the target audience. obviously the tools palette varies by: type of beneficiary public or private, the importance of the project (especially in terms of estimated budget), the scale of the project through the non-financial achieved results etc. for example, in the case of public beneficiaries, on certain categories of funds and programs, the range of communication tools is extremely wide, from outdoor advertising and media channels to different materials (brochures, flyers, leaflets, etc..). on the other hand, it is known that, in accessing european funds, informal interpersonal communication is preferred by potential beneficiaries to the detriment of formal approaches. 251 zaiţ research methodology decisional problem that led to the realization of the study was the knowing the degree of access to european funds in the trotuş valley territory, bacau. the purpose of the research was to study the particularities of the absorption of european funds within trotuş valley. thus one of the objectives in this research was to identify the impact of marketing communication on the approach of accessing european funds, namely the influence of informal interpersonal communication on this process. research unit was formed by private beneficiaries of eu funds. stated objectives that focused on identifying sources of information in the absorption of eu funds were reached after analyzing the various enterprises legal forms – natural person, certified self-employed, individual enterprise, family enterprise, limited liability company from following caen1 activities: agriculture, apiculture, manufacturing and livestock. in the research carried out on the territory trotuş valley we have considered all forms of legal organization that developed/submitted at least one project under the eu funds, both in the pre-accession and post-accession of romania to eu. to identify the investigated units were used last available official data provided by apdrp bacau. this information was supplemented with data available in the site northeast development agency. in the trotuş valley territory were submitted by 30 june 2012 a total of 178 projects by private beneficiaries. distribution of projects submitted within trotuş valley by legal form of organization was as follows: 13 natural persons; 70 certified self-employed; 68 individual enterprises; 10 family enterprises; 17 limited liability companies. distribution of projects submitted within trotuş valley by sector were as follows: 119 in agriculture; 14 manufacturing; 4 in construction; 19 animal livestock; 18 apiculture; 4 services. distribution of projects submitted in trotuş valley territory by type of program was as follows: 28 projects on 112 program; 8 projects on 121 program; 10 projects on 123 program; 117 projects on 141 program; 15 projects on 312 program. this research is a total quantitative one, covering about 70% of the private beneficiaries who filed at least one project to attract eu funds, either in the preaccession or in the post-accession. reporting unit was composed of the legal representative of the beneficiaries of the developed / applied project in order to attract eu funds. regarding sample size, given the non-response rate of 30%, it was 124 respondents from the private beneficiaries from all the sectors and all forms of legal organization. the distribution of the observation units in the towns subordinated to trotuş valley territory reveals the following; casin (20 beneficiaries) urecheşti (16 beneficiaries), gura valley (12 beneficiaries) helegiu (12 beneficiaries) soveja (11 beneficiaries) casin monastery (9 beneficiaries), tg trotus (9 beneficiaries), barsanesti (9 beneficiaries) , coţofăneşti (8 beneficiaries), bucium (8 beneficiaries), stefan cel mare (7 beneficiaries) and caiuti (3 beneficiaries). the research results in the studied community, the main source of influence in the expression of interest in eu funds absorption was represented by campaigns conducted by local and county authorities (41.94%), followed by the encouragement of relatives and acquaintances 26.61% (figure 1). distribution of research units by sector, according to the sources of influence in the expression of interest in eu funds absorption (figure 1) reveals the following: 1 nomenclature of economic activities 252 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro • most agriculture organizations specified as sources of influence in the expression of interest the encouragement of relatives and acquaintances (34.48%) and information provided by local and county authorities information campaigns (35.63%); • in manufacturing, in addition to information provided by local and county officials information campaigns (40%), were mentioned, with a high frequency of occurrence, the encouragement of local public authorities (30%); • in construction only source of influence in the expression of interest in eu funds absorption was the encouragement of relatives and acquaintances, while in services in agriculture was the information campaigns carried out on by the local and county authorities; • in livestock and apiculture dominant as sources of influence were also information campaigns run by local and county authorities (83.33% and 46.15%). figure 1 distribution of research units, according to the sources of influence in the expression of interest in the absorption of european funds by sector note: a. information provided by local and county authorities in order to encourage potential beneficiaries (information campaign) b. information provided by national authorities in order to encourage potential beneficiaries (information campaign) c. encouragement by local authorities d encouragement by relatives and acquaintances e. positive examples provided by the local, county and national authorities f. positive examples provided in county and national media g. direct contact with applicants that have implemented projects h. other reasons ........................................................................................................................................ the distribution of research units by the forms of organization, depending on the studied variable (figure 2) shows dominance on all forms of organization of information campaigns carried out by local and county authorities (50% natural person, 30.77% certified self-employed, 4.9% individual enterprise, 100% family enterprise and 58.33% limited liability company). at the level of natural person (25%), certified self-employed (30.77%) and individual enterprises (26.53%), important was the encouragement of relatives and acquaintances. encouragement of local authorities held third position in the list of 253 zaiţ sources of influence for natural person (12.25), certified self-employed (17.31%), individual enterprise (12.24%) and limited liability company (16.67%). figure 2 distribution of research units, according to the sources of influence in the expression of interest in eu funds absorption, by the forms of organization note: a. information provided by local and county authorities in order to encourage potential beneficiaries (information campaign) b. information provided by national authorities in order to encourage potential beneficiaries (information campaign) c. encouragement by local authorities d encouragement by relatives and acquaintances e. positive examples provided by the local, county and national authorities f. positive examples provided in county and national media g. direct contact with applicants that have implemented projects h. other reasons ........................................................................................................................................ an important dimension of research was the identification of differences, by age, in the hierarchy of sources of influence. thus, as shown in figure 3, depending on the studied variable, it is observed that: • the most important source of influence for respondents aged between 18-30 years, 31-40 years and 51-60 years was the information campaigns carried out by local and county authorities (45.54%, 66.67% and 53.57%). positions 2 and 3 in the hierarchy of sources of influence are for these age groups: encourage by relatives and acquaintances, respectively local authorities for the groups 31-40 years and 51-60 years, and encouragement by local authorities and direct contact with applicants for the category 18-30 years. • the respondents aged 41-50 years and over 60 years mentioned, with the highest frequency of occurrence, as the reason for the start of european projects, encouragement offered by relatives and acquaintances (32.65% and 53.33%). distribution of respondents by level of education, depending on the studied variable (figure 4) reveals the following: • most important source of influence in absorption interest was represented, for all levels of education, the campaigns conducted by local and county authorities; 254 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro • people with 8 classes and those with 10 classes and professional studies have been influenced also by public and county authorities encouragement and those offered by relatives and acquaintances (33.33% and 22.22% for 8 classes, 27.27% for 10 classes , 19.23% for professional education); • respondents with post-secondary and university studies were influenced by positive examples provided by the government (16.67% for those with postsecondary studies) and positive examples provided by the media (10.72% for those with university education). figure 3 distribution of respondents according to the sources of influence in the manifestation of interest in eu funds absorption, by age note: a. information provided by local and county authorities in order to encourage potential beneficiaries (information campaign) b. information provided by national authorities in order to encourage potential beneficiaries (information campaign) c. encouragement by local authorities d encouragement by relatives and acquaintances e. positive examples provided by the local, county and national authorities f. positive examples provided in county and national media g. direct contact with applicants that have implemented projects h. other reasons ........................................................................................................................................ distribution of respondents by gender, according to the sources of influence in accessing european funds (figure 5) reveals the dominance of information campaigns carried out by local and county authorities, both for men (43.82%) and women (37.14). men responded better to the encouragement provided by relatives and acquaintances (26.97% vs. 25.71%), while women felt better on encouragement by local authorities (17.14% vs. 13.48%). moreover, men have been influenced by national information campaigns, while women gave high credibility of information provided by applicants of similar projects. 255 zaiţ figure 4 distribution of respondents according to the sources of influence in the manifestation of interest in eu funds absorption, by level of education note: a. information provided by local and county authorities in order to encourage potential beneficiaries (information campaign) b. information provided by national authorities in order to encourage potential beneficiaries (information campaign) c. encouragement by local authorities d encouragement by relatives and acquaintances e. positive examples provided by the local, county and national authorities f. positive examples provided in county and national media g. direct contact with applicants that have implemented projects h. other reasons ........................................................................................................................................ figure number 5. distribution of respondents, depending on the sources of influence in the expression of interest in eu funds absorption, by gender variable note: a. information provided by local and county authorities in order to encourage potential beneficiaries (information campaign) b. information provided by national authorities in order to encourage potential beneficiaries (information campaign) 256 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro c. encouragement by local authorities d encouragement by relatives and acquaintances e. positive examples provided by the local, county and national authorities f. positive examples provided in county and national media g. direct contact with applicants that have implemented projects h. other reasons ........................................................................................................................................ conclusions research conducted within trotuş valley revealed that despite low experience in attracting european funds, failure cannot be blamed on inadequate formal communication but other factors must be considered such as: subjective factors specific to individual or objective factors related to the complexity and bureaucratic characteristic of the approach. furthermore, research has revealed that in many cases, formal communication approach was the one who encouraged beneficiaries to access european funds. from the research results it was observed that the main source of influence in the expression of interest in eu funds absorption was represented by campaigns conducted by local and county authorities in expense to informal interpersonal communication (encouragement by relatives and acquaintances, positive examples provided by different categories of applicants, public system or media representatives). from the perspective of the influence of demographic variables on interest in the absorption of eu funds, it was noted that in the age range of 18-40 years the main source of information was the formal communication information campaigns carried out by local and county authorities. on the other hand, respondents aged over 40 years were influenced to a greater extent by information obtained informally (encouragement offered by relatives and acquaintances). in the context of the proposed analysis we conclude that the impact of formal communication is significant within accessing european funds. if in the business sphere, the role of marketing communication tends to strike a balance between affective and the conative component of the internal structure of attitude, in the space of accessing european funds dominant component is cognitive information. references cojanu,v., dima, a., musetescu, r., pislaru, d., stanculescu, m. (2004), cerinte specifice ale gestionarii instrumentelor structurale si implicatiile pentru romania, institutul european din romania, studii de impact, pais ii. esimplu.ro, acis a publicat stadiul absorbtiei fondurilor structurale la 31 ianuarie 2012, available at http://www.esimplu.ro/finantari-pentru-imm/fonduristructurale/ noutati/5751-acis-a-publicat-stadiul-absorbtiei-fondurilorstructurale-la-31-ianuarie-2012. georgescu, g. (2009), determinants of increasing eu funds absorption capacity in romania, annales universitatis apulensis series economica, vol 2. timiras, l. (2007), evoluţia marketingului agroalimentar din românia în contextul extinderii uniunii europene, editura edusoft, bacău. timiras, l., boier, r. (2006), cercetarea de marketing, editura performantica, iaşi. 257 http://econpapers.repec.org/article/alujournl/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro the tax system and taxpayers behavior brindusa tudose affiliation petre andrei university of iasi brindusatudose@gmail.com gabriela tiplic administrative economic college no. 1, iași gabriela_tiplic@yahoo.com abstract the aim of the paper was to examine the behavioural coordinates of tax subjects and the intensity of the interaction between taxpayers and authorities. research on the behaviour of subjects of the tax system is justified given the tension existing between taxpayers, on the one hand, and the tax system, on the other. the tax systems of the world have been classified into two models: antagonistic and synergistic. as long as in romania the tax elements have been and continue to be an overwhelming burden on taxpayers, their behaviour has evolved and adjusted to a negative outlook. this type of behaviour, associated with the behaviour of tax authorities built on lack of trust and virulent anti-tax avoidance strategies, has generated a tense and antagonistic tax environment. keywords tax system; tax subjects; tax behaviour; antagonism; synergy jel classification h30 introduction in order to understand and assess the behaviour of tax subjects, it is essential to have thorough knowledge of the particular aspects entailed by the tax system. to sum up the developments in the literature in the field, two approaches stand out: a) the limitative approach, according to which the tax system is interpreted either in terms of the body of law regulating taxation elements (condor, 1994) or in terms of the sum of taxes and duties collected from taxpayers (hoanţă, 1997); this approach lays emphasis only on an intermediate objective of the tax system (regulation, i.e. the collection of tax obligations and the provision of financial resources to the public budget); b) the extensive approach, according to which the tax system involves a set of requirements and principles regarding the level, apportionment and collection of taxes and the socio-economic objectives of tax policy; this novel view argues that the tax system incorporates not only the taxation concepts, principles, methods and procedures but also the institutional setup intended to mobilise, apportion, collect and allocate the collected budget revenues (corduneanu, 1998; moraru et al., 2007; boglea, 2010). based on these two approaches, we subscribe to the idea that the tax system is more than a mere compendium of arid tax laws and economic data; it represents the expression of intra-community relations between individuals, between taxpayers and their governments (cordes et al., 2005). 109 tudose, tiplic the structuralist approach predetermines us to admit that a tax system is comprised of three elements: a) taxation; b) the tax authority and taxpayers (including their behaviour); and c) the interactions between the subjects in the system. taxation – a factor exerting a major impact on tax subjects’ behaviours in the area of legal approaches (şaguna, 2003; tulai, 2003; florescu et al., 2005), taxation is viewed as the sum of legislative regulations on tax obligations. moving beyond the scope of economic approaches, taxation covers a larger area, incorporating not only regulations on tax obligations, but also the principles, rules and practices of the establishment and collection of taxes (zaharia, 2002; văcărel, 2006). given that two large groups of actors interact in the tax sphere, the behavioural approach defines taxation in terms of the relations between government authorities, on the one hand, and tax payers, whether private individuals or legal persons, on the other, recognising that the notions of taxation and tax are two faces of the same coin (ţâtu et al. 2004). although it has been defined and interpreted as having several meanings, we shall retain only the common core of all the debates: taxation cannot be separated from taxes (as a generic term) 1. consequently, in order to properly grasp taxation one needs to understand the tax elements that compose it. elements of taxation are the obligatory payments (transfers) that taxpayers must make in the amount, within the deadline and in compliance with the conditions laid down in the legislation in force. to avert any negative effects, taxation must be designed in such a way as to meet the following requirements: ensure economic efficiency and social equity; contribute to the mitigation of macroeconomic imbalances; simplify operations for the collection of tax, contribution and duties; and create the necessary framework to prevent fraud and tax evasion (tudose, 2008). the elements of taxation reflect a variety of practices. from the perspective we are interested in, the most relevant criterion is the substance and the form (the apportionment and collection) based on which elements of taxation are classified as direct and indirect. the elements of direct taxation are established nominally, private individuals and/or legal persons being liable for tax depending on their income or wealth, taking into account their capacity to pay and the size of the taxable base. such elements of direct taxation are nominative (taxpayers are identified clearly and unambiguously), have a definite amount and a clearly determined payment deadline 2. this category includes: a) real, objective or product taxes, determined by assets owned by the taxpayer (land, buildings, and vehicles); b) personal or subjective taxes, levied on income or wealth, linked to the personal situation of the tax subject. the elements of indirect taxation reflect the amounts that are due to the budget on the sale of goods or provision of services, being included in the selling prices and their respective rates; they are paid into the public budget by producers, traders or service providers and are incurred by the final consumers of taxable goods and services. compared to direct taxes, indirect taxes have the following features: the tax burden is regressive (as it takes a larger share of the income of low-income taxpayers); they are inequitable (they are not set in line with the capacity to pay3); they deliver high tax revenues (as they depend on sales volumes); and they are voluntary to a certain extent 1 we used the notion of tax as a generic term, yet we must note that not all elements of taxation take the form of tax (there can also be duties and contributions). 2 the direct proportionality between the amount of tax and the size of the taxable base must be understood as follows: less tax is paid on a smaller taxable base, while more tax is paid on a larger taxable base. for example, vehicle tax is lower for means of transport with a low cylinder capacity and higher for means of transport with greater cylinder capacity. 3 for instance, a beggar or a millionaire pay equal value-added tax when buying a loaf of bread. 110 the tax system and taxpayers behavior (those who incur them pay tax in so far as they purchase goods and services whose price includes indirect tax elements). unlike the elements of direct taxation (levied on income or wealth), elements of indirect taxation are targeted on how income and wealth are spent. this category includes: a) general consumption taxes, applicable to all categories of goods and services (vat) and special duties applied only to certain categories of goods (excise, custom duties) and services (administrative, consular, legal, etc.). tax subjects and their behaviour over time, taxation elements have prompted discussions and disputes, especially due to the contradictory interests of the government and taxpayers. for example, direct taxation elements are preferred by the government because they are fair (taking into account the personal situation of the individual) and deliver high tax revenues, while tax rate adjustments do not result in changes in the size of the taxable base. the drawbacks of such taxes stem from the slow rate of collection, the complexity of taxation and higher likelihood of fraud. taxpayers do not appreciate this type of tax obligations as they incur them straightforwardly and discourage them from making additional revenue (inceu et al., 2008). as for the elements of indirect taxation, the government prefers to enact them thanks to the fast collection rate, low collection costs, reduced opportunities for fraud and higher tax yield. on the contrary, taxpayers view them as unfair (as they apply to consumption) and blame them for the “burden” placed on the “shoulders” of the impoverished population, whose income is (almost) exclusively allocated for consumption (bistriceanu et. al., 2001). the compromise solution was to enact lower tax rates on basic necessities (as in the case of vat on food and bread, respectively, in romania). despite being unpopular and snubbed by taxpayers of modest financial means, indirect taxation elements continue to contribute a larger share in the accumulation of tax revenue in developing nations. in contrast, in developed countries, elements of direct taxation contribute to a greater extent to the accumulation of tax resources. this is because in developing countries, due to poor economic performance, income and wealth are comparatively lower than in developed countries (consequently, the amount of resources drawn from elements of direct taxation is lower) (văcărel, 2006); moreover, tracking those making profits or income is more difficult and costly, while elements of indirect taxation (vat, excise, customs duties) are easy to quantify, cheap to collect and inexpensive to cash in; this is because the latter are included in the selling price of products or services, and any discontent triggered by a potential increase is not directed at the government (as in the case of elements of direct taxation) but at business operators. taxpayers (also called tax subjects) are natural or legal persons liable to pay a share of their revenue or property to the public budget. for each individual taxation element the legal framework lists the taxpayer categories. the tax authority is represented by those specialised entities that set in motion the taxation mechanism in order to secure the ultimate goal. its role is to implement tax policy and adjust it to the national and international economic context. being tasked with collecting tax obligations as effectively as possible, the tax authority aims to identify those taxpayers who evade payment of tax obligations and to enforce statutory penalties. the structure and operation of the tax system bears the mark of the tax policy enacted by a state, during a given period of time. by incorporating the principles, mechanisms and procedures of taxation and of funding budget expenditures, tax policy shapes the tax system in structural terms (corduneanu, 1998). 111 tudose, tiplic research on the behaviour of subjects of the tax system is justified given the tension existing between taxpayers, on the one hand, and the tax system, on the other. the existing literature indicates that although evidence has been provided to support the need to study human psychology as a means to explain economic reality, in practice it has not received the attention it deserves (the proof being the crises that mankind has faced). specifically, in our case, we are interested in the influence of psychology on the tax decisions of taxpayers; this is because the interaction shapes specific behaviours. taxpayers’ tax behaviour has been defined as the manner in which they, under the influence of endogenous and exogenous factors, choose to act in relation to tax obligations, to react to tax policy and to interact with other taxpayers and the tax authorities (bătrâncea, 2013). the attitude towards tax obligations may be positive (generating tax compliance behaviour, based on respecting the letter and the spirit of the law) or negative (triggering non-compliant tax behaviour). along the same line, it has been acknowledged that there are two types of behaviour for the compliance case (kirchler et al., 2008): a) voluntary compliance, which is achieved when the payment of tax obligations was made on the basis of certain moral motivations, to fulfil certain civic duties and b) forced compliance, which is manifested if payment of tax obligations is made out of a desire to avert any negative consequences stemming from failure to pay. studies (muehlbacher et al., 2011; wahl et al., 2010) have shown that the trigger of voluntary compliance is trust in authorities, whereas the trigger of forced compliance is the perception that the authorities use their power to exercise controls, to detect fraudsters and to punish them. relatively recent studies (franzoni, 2000) reveal that achieving the phase of tax compliance is premised on meeting four conditions cumulatively: a) reporting all income; b) accurate determination of tax liabilities; c) the timely filing of tax returns; d) payment within the deadline laid down in the applicable legislation. failure to meet any of these conditions generates non-compliant behaviour which predetermines evasion. according to this approach, tax evasion emerges as the method by which taxpayers respond to tax pressure when it exceeds a certain threshold deemed acceptable for starting, maintaining and developing a business or in relation to their wealth or current income (dinga, 2009). similar to tax compliance, non-compliance takes two forms: a) lawful noncompliance, resulting in lawful tax avoidance (exploiting loopholes in the tax legislation in order to reduce the tax obligations payable to the public budgets) and b) unlawful non-compliance, leading to tax fraud, i.e. the intentional violation of legislation through failure to act (such as failure to report all revenues) or through deliberate actions (applying for reimbursement of vat on the basis of fictitious invoices) (james and alley, 2002). analyses of tax behaviour also devote particular attention to the connection between trust and tax fraud. studies have shown that low trust in authorities is correlated with high levels of tax fraud (richardson, 2008). the analysis of behaviour should also focus necessarily the opposite side: the conduct of tax authorities. this is outlined as the tax authority prioritises its goals: to create a cooperative environment where all taxpayers meet their tax obligations (by facilitating the payment of tax obligations for taxpayers and reducing the potential options for evading payment of obligations) or to collect taxes and duties with maximum efficiency (bătrâncea, 2013). although shown as separate options, the two objectives are mutually presupposed. due to the diverse cultural, economic and political profiles (which individualise each particular state) there is no set of standard rules on the behaviour of the authorities. instead, it has been universally acknowledged that there is a set of principles that 112 the tax system and taxpayers behavior authorities should respect and from which they should not deviate. collectively named the principles of taxation, they were laid down very early (smith, 1965) and have been constantly revised in order to eliminate arbitrariness in the field of taxation. currently, four categories of principles are being discussed (văcărel, 2006): tax equity principles; financial policy principles; economic policy principles; and socialpolitical principles. unfortunately, these principles are interpreted from the standpoint of those who hold political power and are applied in accordance with the respective doctrines (social -democratic, liberal, etc.). interactions between the tax system subjects the intensity of the interaction between taxpayers and authorities oscillates between two poles: from rejection/challenge to support/communication/collaboration. depending on the position between the two poles, the tax systems of the world have been classified into two models: antagonistic (marked by the mutual distrust of taxpayers vs. tax authority) and synergistic (based on mutual respect and trust). the tax system that dominates an antagonistic environment is characterised by the lack of mutual trust between taxpayers and the tax authority. the latter suspects taxpayers of tax evasion, treating them as potential evaders. in turn, taxpayers view the tax authority as a sort of “policeman” constantly on the lookout for “criminals”. in such a climate, taxpayers become uncooperative and reluctant, being concerned that the tax authority uses its power coercively. this complex of factors and behaviours facilitates inevitably the slide from the lawful to the unlawful sphere of activities (i.e. tax fraud). studies have revealed that amid persecution and coercion and lack of support/collaboration a “paradigm of constraint” arises (alm and torgler, 2011), with many taxpayers being tempted to become tax frauds. the tax system where a synergistic environment dominates is one where mutual respect and trust prevail. the tax authority makes itself available to the taxpayers, viewing them as its “customers”, and shows its willingness to provide tax advisory services. taxpayers see a partner in the tax authority that advises them in order to avoid tax law violations; as such, they have a positive view of the control and sanction activity (viewing at as justified). in such a climate, taxpayer compliance is achieved largely on a voluntary basis. particular aspects of the romanian tax system the starting point for identifying the particular features of romanian tax system is the analysis of the structure of taxation elements. the analyses conducted (tudose, 2008) show that the tax systems enacted have undergone changes in the structure of the instituted taxes and duties. in this respect, the elements of direct taxation have had an ever lower share in the formation government budget revenues, whereas the share of elements of indirect taxation has expanded. the situation is justified by the fact that the massive increase in public spending could not be matched by increased resources drawn from direct taxes (due to the decline in the volume of the taxable base and the taxpayers’ power). under these circumstances, it can be seen clearly that tax equity (often discussed by politicians in each of the five governments, even included as an objective on their platforms) has deteriorated in the period after december 1989. as long as the tax elements have been and continue to be an overwhelming burden on taxpayers, their behaviour has evolved and adjusted to a negative outlook. this type of behaviour, associated with the behaviour of tax authorities built on lack of trust and virulent anti-tax avoidance strategies, has generated a tense and antagonistic tax environment. 113 tudose, tiplic a deloitte report published in march 2012 on the degree of certainty of tax systems placed the romanian climate in the “police–criminal” pattern, ranking romania in the “club” of the least certain states in the emea region (europe, middle east, africa). the causes that generated this situation include: the frequency of legislative changes and the deficient relationship between taxpayers and authorities, caused by the lack of transparency, low availability and inadequate training of staff. that is why, in order to improve the interaction between tax subjects in romania, steps should be taken to ensure: the simplification of the legislative framework and consistency in tax administration procedures, the reduction in the number of tax obligations, and a review of the attitude of tax authorities (which must become more cooperative, transparent and respond more promptly to taxpayers’ requests). conclusions this paper presents the coordinates that enable the analysis of the behaviours of tax subjects. the main conclusions drawn from the body of the paper are: a) taxpayers’ behaviour is determined by specific factors such as the level and structure of taxation, the degree of openness, communication and transparency of the tax authority, the level of culture and education, etc.; b) the behaviour of the authority tax is dependent on the cultural, economic and political profiles of each state; c) the interactions between tax subjects can be framed in according to two models: antagonistic and synergistic; d) the tax climate in romania is tense, marked by the mutual distrust of tax subjects and falls into the antagonistic pattern. in light of the above, we consider that the study delivers a double utility: a) scientific, as it presents the state of knowledge in the field and b) practical, as it can serve as a reference for mitigating tensions generated by the conduct of taxpayers, on the one hand, and the tax authority, on the other. the study represents a starting point in developing more extensive future explorations seeking to identify and quantify the impact of the determinants of the behaviour of tax subjects in romania. references alm, j., torgler, b. 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(2002), finanţe publice, cluj-napoca, editura george bariţiu. 115 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 25, 2017 http://sceco.ub.ro 113 the advertising market of european union countries – the evolution in recent years laura cătălina ţimiraş vasile alecsandri university of bacau timiras.laura@ub.ro abstract this paper seeks to highlight how the eu advertising market has evolved in recent years, as well as the link between the macroeconomic outcomes of the analyzed countries and the size of this market. according to the analyzed statistical data provided by eurostat in recent years for which we have data, the advertising market (assessed by the turnover or gross premiums written indicator) registered an upward trend in the eu, with the old eu members accounting about 90% of the total market, and the new member states just over 10%. the number of market operators also increased, with about 75% of them operating at the level of the old eu members. the size of the advertising markets at the level of the analyzed countries is closely linked to the recorded macroeconomic outcomes, with a direct and strong link between the gross premiums written and the gross domestic product. the link has been studied both across eu countries and separately for the two categories of old states (eu 15) and new eu members. keywords advertising market; turnover or gross premiums written; number of enterprises; gross domestic product; eu member states jel classification m31, m37, c10 highlights on the size of the global advertising market the emergence and development of advertising is strictly related to market developments, increased competition, increased and diversified consumer demands. thus, in the context of general economic development, the advertising market has evolved to reach impressive dimensions. for example, in 2015, according to statista, inc. (2017), the global advertising market expressed in global advertising spending amounted 513.56 billion us dollars, with an ascending trend, from 412.54 billion us dollars in 2010 (which represents an annual average increase of about 4.5%). according to estimates for the coming years (emarketer, 2016), the advertising market will continue the upward trend, with total advertising spending for 2020 being valued at over 720 billion us dollars. the largest advertising markets in the world, according to estimates for 2016 (statista, inc., 2017) are: united states, china, japan, united kingdom, germany, brazil, south korea, france, australia and canada, global ad market being estimated at 537 billion us dollars. (table 1) țimiraș 114 table 1. world's largest advertising markets in 2016 country advertising expenditure for 2016– estimated values (billion u.s.) country advertising expenditure for 2016– estimated values (billion u.s.) 1. united states 190.84 6. brazil 13.20 2. china 80.24 7. south korea 11.56 3. japan 37.68 8. france 11.46 4. united kingdom 26.10 9. australia 11.06 5. germany 22.07 10. canada 9.05 source: statista, inc. (2017) in fact, the global advertising market is highly concentrated; the top 10 countries in the world (3 of which belong to the eu), accounting for 77% of the world's advertising market, with the rest of the countries accounting for only 23%. (figure 1) figure 1. the structure of the global advertising market by country in 2016 (% in global advertising spending – estimated values) source: personal processing from statista, inc. (2017) advertising expenditure are huge both at macroeconomic level (as shown in the table above) and at micro level for some of the big corporations. for example, in 2016, brands with the largest allocated advertising budgets in the world are shown in table 2, their expenditure exceeding the value of 8 billion us dollars. table 2. top of the largest advertising budgets in the world in 2016 brand advertising budget for 2016 (billion u.s.) brand advertising budget for 2016 (billion u.s.) pampers 8.3 lexus 3.6 gillette 8.3 toyota 3.6 l’oreal 8.2 samsung 3.3 chevrolet 5.1 nike 3.2 louis vuitton 4.4 google 3.2 ford 4.3 american express 3.1 coca-cola 4.0 t-mobile 2.9 amazon 3.8 nissan 2.8 sony 3.7 verizon 2.7 at&t 3.6 chase 2.7 sursa: wadlow, t. (2016), top 20 companies with the biggest advertising budget, business review europe united states, 35.5% china, 14.9% japan, 7.0% united kingdom, 4.9%germany, 4.1% brazil, 2.5% south korea, 2.2% france, 2.1% australia, 2.1% canada, 1.7% other countries, 23.0% http://www.businessrevieweurope.eu/authors/102/tom-wadlow the advertising market of european union countries – the evolution in recent years 115 methodological aspects the aim of this paper is to highlight the evolution of the advertising market in the eu countries in recent years and also to analyze the link between the macroeconomic outcomes and the size of this market. the study is based on official statistical data, using, for their analysis, indicators for time series and for studying the links between variables. the size and dynamics of the eu-wide advertising market for the assessment of the size and dynamics of the advertising market, was used data regarding turnover or gross premiums written as well as number of enterprises, respectively number of people employed in advertising. the analysis was based on the latest official data provided by eurostat. the eu-wide advertising market, expressed by the turnover or gross premiums written indicator, reached € 153 billion in 2015 (up 6.4% from 2011) of which almost 90% was held by the old states eu (eu-15), while the new member states (bulgaria, czech republic, romania, slovenia, slovakia, poland, hungary, malta, cyprus, latvia, lithuania, croatia, estonia) had just over 10%. in 2014 there were almost 264.000 operators on this market (up by about 10% over 2011) and more than 967.000 workers in the field. of the total operators registered in 2014, about 75% belonged to the old eu states (eu-15). (table 3 and figure 2) table 3. evolution of the eu-wide advertising market, respectively old and new member states in terms of turnover or gross premiums written, number of enterprises and number of persons employed country groups turnover or gross premiums written (millions of €.) number of enterprises (enterprises) number of persons employed (persons) 2011 2015 (+ / i n % i n 2 0 1 5 c o m p a re d t o 2 0 1 1 2011 2014 (+ / i n % i n 2 0 1 4 c o m p a re d t o 2 0 1 1 2011 2015 (+ / i n % i n 2 0 1 5 c o m p a re d t o 2 0 1 1 the eu – 15 128453.6 136871.9 6.6 177161 196158 10.7 771326 786534 2.0 the new member states of the ue 15734.8 16609.9 5.6 63719 67708 6.3 169574 180638 6.5 european union (28 countries) 144188.4 153481.8 6.4 240880 263866 9.5 940900 967172 2.8 source: personal processing from eurostat (2017) by comparing the results obtained (turnover or gross premiums written) and the allocated resources (number of persons employed) there is a gap between the old and the new eu members. thus, in the year 2015, 81.3% of the total number of employees in the eu advertising made 89.2% of the total turnover or gross premiums written, while 18.7% of them achieved only 10.8% of the total turnover or gross premiums written (indicators for new members). (figure 2) țimiraș 116 figure 2. structure of turnover or gross premiums written, number of enterprises and number of employed persons in advertising for old and new eu members (%) source: personal processing from eurostat (2017) referring to the size of the advertising market from the perspective of turnover or gross premiums written, by eu countries, the united kingdom ranks first with a value of nearly 38 billion euros, followed by other old member states, such as germany, france, spain, italy etc., most of the new eu members being at the end of the ranking from this point of view. (figure 3) figure 3. turnover or gross premiums written made from advertising in the eu28 countries in 2015 (millions of €) source: eurostat (2017) *2014 data in dynamics, the period 2010-2015 was marked by different developments from one country to the other, with the most spectacular increases (more than 60%) recorded in estonia, ireland (where, due to the lack of available official data, the dynamics was determined for the 2010-2014 period) and the united kingdom. greece and portugal 89.2 74.3 81.3 10.8 25.7 18.7 0% 20% 40% 60% 80% 100% turnover or gross premiums written in 2015 number of enterprises in 2014 number of persons employed in 2015 the eu – 15 (the old states) the new member states of the ue 3 7 8 6 8 .4 2 3 8 2 1 .7 1 8 8 7 8 .1 1 5 3 1 9 .7 1 1 4 4 6 .9 6 6 6 2 .5 6 4 3 1 .6 5 5 4 9 .6 4 7 0 3 .5 4 5 4 9 .3 3 0 4 0 .2 2 2 6 1 .0 1 5 7 5 .7 1 5 5 3 .2 1 3 9 5 .9 1 3 6 3 .7 1 3 1 1 .5 1 2 7 2 .5 1 1 6 0 .0 5 6 8 .0 5 2 1 .8 4 7 5 .7 3 9 0 .2 3 6 2 .5 3 4 7 .3 2 7 5 .8 2 3 7 .9 1 3 7 .5 0 5000 10000 15000 20000 25000 30000 35000 40000 u n it e d k in g d o m g e rm a n y f ra n c e s p a in it a ly p o la n d n e th e rl a n d s s w e d e n b e lg iu m a u st ri a c z e c h r e p u b li c d e n m a rk f in la n d ir e la n d * r o m a n ia p o rt u g a l g re e c e h u n g a ry s lo v a k ia b u lg a ri a c ro a ti a m a lt a s lo v e n ia l it h u a n ia l a tv ia e st o n ia l u x e m b o u rg c y p ru s the advertising market of european union countries – the evolution in recent years 117 show the largest decreases in this market (over 40% for greece and over 30% for portugal). (figure 4) figure 4. percentage change in turnover or gross premiums written from advertising in eu-28 countries in 2015 compared to 2010 (+/in% as compared to 2010) source: personal processing from eurostat (2017) * 2014 compared to 2010 ** 2015 compared to 2011 note: no data for malta in terms of number of enterprises, the hierarchy of eu countries is different in 2014, the first places being occupied by netherlands, followed by germany, both with over 30.000 operators, spain and france with more than 25.000 operators. (figure 5) figure 5. number of enterprises in advertising in eu-28 countries in 2014 source: eurostat (2017) note: no data for malta 6 7 .8 6 3 .7 6 2 .4 5 9 .7 3 0 .4 2 0 .9 1 8 .8 1 4 .4 9 .2 7 .9 0 .1 -0 .1 -0 .4 -0 .8 -1 .3 -2 .1 -3 .4 -5 .7 -8 .3 -9 .0 -9 .2 -1 0 .4 -1 1 .4 -1 2 .2 -1 8 .1 -3 0 .9 -4 3 .9 -60 -40 -20 0 20 40 60 80 e st o n ia u n it e d k in g d o m ir e la n d * l it h u a n ia s lo v a k ia g e rm a n y p o la n d l a tv ia a u st ri a s w e d e n n e th e rl a n d s l u x e m b o u rg b u lg a ri a d e n m a rk s lo v e n ia b e lg iu m f in la n d r o m a n ia c ro a ti a it a ly c y p ru s s p a in h u n g a ry c z e c h r e p u b li c * * f ra n c e p o rt u g a l g re e c e 3 1 8 0 2 3 1 6 7 2 2 7 3 1 1 2 6 5 5 0 2 0 4 2 3 1 8 4 6 6 1 5 9 6 5 1 5 6 0 4 1 3 3 6 0 9 2 4 9 6 8 8 9 6 2 6 6 5 9 3 2 5 5 5 0 4 4 8 0 3 7 1 9 3 4 2 4 3 1 6 5 3 0 0 6 2 5 4 1 1 9 2 8 1 7 9 6 1 5 1 7 1 2 5 9 9 7 0 4 2 8 3 5 3 0 5000 10000 15000 20000 25000 30000 35000 n e th e rl a n d s g e rm a n y s p a in f ra n c e p o la n d u n it e d k in g d o m it a ly c z e c h r e p u b li c s w e d e n a u st ri a r o m a n ia s lo v a k ia b e lg iu m h u n g a ry g re e c e p o rt u g a l f in la n d b u lg a ri a l it h u a n ia d e n m a rk l a tv ia c ro a ti a s lo v e n ia ir e la n d e st o n ia l u x e m b o u rg c y p ru s țimiraș 118 in most eu countries, there is an increase in the number of enterprises in advertising, with the largest increases being recorded in lithuania and ireland, while greece and portugal have also experienced the largest decreases. (figure 6) figure 6. percentage change in number of enterprises in advertising in eu-28 countries in 2014 compared to 2010 (%) source: personal processing from eurostat (2017) note: no data for malta the link between the macroeconomic outcomes and the size of the advertising market at eu level in 2015 there is a close link between the level of eu macroeconomic outcomes and the size of the advertising market. thus, studying the correlation between the gross domestic product and the gross premiums written from the advertising activity carried out by the 28 eu states, we can see that there is a direct and strong link between them, the value of the correlation coefficient r being 0.9367. also, applying the significance test t we obtain a calculated value t = 13.64, which for a significance level α = 0.0001 and 26 degrees of freedom attests a significant correlation coefficient (the corresponding theoretical value t is 4.587). (figure 7 and table 4) figure 7. link between gross domestic product and turnover or gross premium writing in advertising in eu-28 countries in 2015 source: personal processing from eurostat (2017) note: for ireland has been used turnover or gross premiums written for 2014 1 1 6 .7 8 8 .2 3 8 .6 3 4 .4 2 8 .6 2 5 .3 2 4 .3 2 2 .3 1 9 .8 1 6 .3 1 5 .0 9 .4 7 .5 5 .9 5 .6 -0 .5 -1 .0 -1 .6 -3 .0 -3 .3 -4 .6 -5 .2 -5 .6 -8 .0 -1 0 .1 -1 3 .8 -1 5 .2 -40 -20 0 20 40 60 80 100 120 140 l it h u a n ia ir e la n d l a tv ia n e th e rl a n d s e st o n ia g e rm a n y f ra n c e s lo v a k ia u n it e d k in g d o m s lo v e n ia p o la n d r o m a n ia a u st ri a s p a in c z e c h r e p u b li c l u x e m b o u rg f in la n d it a ly b u lg a ri a h u n g a ry c y p ru s d e n m a rk s w e d e n b e lg iu m c ro a ti a p o rt u g a l g re e c e y = 0.01x + 230.112 r2 = 0.8774 0 5000 10000 15000 20000 25000 30000 35000 40000 0 1000000 2000000 3000000 4000000 t u rn o v e r o r g ro ss p re m iu m s w ri tt e n ( m il li o n s o f e u ro s) gdp (millions of euros) the advertising market of european union countries – the evolution in recent years 119 similarly, studying the link between gross domestic product and the gross premiums written from advertising activity by category of countries the old and the new eu member states, we can see in both cases the manifestation of direct and strong links, for a level of significance with the level of 0.0001. in comparison, there is a stronger link between the two variables for the new eu member states (correlation coefficient r calculated for the new eu member states with the value of 0.9791 compared to 0.9197 corresponding to the eu 15 countries). (figure 8 and table 4) eu – 15 new eu member states figure 8. relationship between gross domestic product and turnover or gross premiums written in advertising by categories of countries old and new eu members in 2015 source: personal processing from eurostat (2017) note: for ireland has been used turnover or gross premiums written for 2014 table 4. link between gross domestic product and turnover or gross premium writing made from advertising in eu countries in 2015 countries r e g r e ss io n e q u a ti o n c o e ff ic ie n t o f d e te r m in a ti o n ( r 2 ) c o r r e la ti o n c o e ff ic ie n t (r ) c a lc u la te d v a lu e t c n u m b e r o f d e g r e e s o f fr e e d o m s ig n if ic a n c e l e v e l t h e o r e ti c a l v a lu e t european union (eu – 28) y = 0.01x + 230.112 0.8774 0.9367 13.641 26 0.0001 4.587 eu 15 y = 0.01x + 67.592 0.8458 0.9197 8.444 13 0.0001 5.513 new eu member states y = 0.0153x 116.944 0.9586 0.9791 15.959 11 0.0001 5.921 source: personal processing from eurostat (2017) note: for ireland has been used turnover or gross premiums written for 2014 it is noted from the above table that the value of the regression coefficient has the same value at the level of equations determined for eu-28 and eu-15 (0.01) and was 0.0153 for the new eu member states. these values show that both at the eu-28 and at the eu-15 levels, on average, there is an increase of 1 billion euro in gross domestic y = 0.01x + 67.592 r2 = 0.8458 0 5000 10000 15000 20000 25000 30000 35000 40000 0 5 0 0 0 0 0 1 0 0 0 0 0 0 1 5 0 0 0 0 0 2 0 0 0 0 0 0 2 5 0 0 0 0 0 3 0 0 0 0 0 0 3 5 0 0 0 0 0 t u rn o v e r o r g ro ss p re m iu m s w ri tt e n (m il li o n s o f e u ro s) gdp (millions of euros) y = 0.0153x 116.944 r2 = 0.9586 0 1000 2000 3000 4000 5000 6000 7000 0 5 0 0 0 0 1 0 0 0 0 0 1 5 0 0 0 0 2 0 0 0 0 0 2 5 0 0 0 0 3 0 0 0 0 0 3 5 0 0 0 0 4 0 0 0 0 0 4 5 0 0 0 0t u rn o v e r o r g ro ss p re m iu m s w ri tt e n ( m il li o n s o f e u ro s) gdp (millions of euros) țimiraș 120 product, related to an increase of 10 million euro in turnover or gross premium writing made from advertising; and, also, at the new eu member states level, related to an increase of 15,3 million euro in turnover or gross premium writing made from advertising. conclusions this paper has attempted to capture both the evolution of the eu-wide advertising market beyond 2010 and the link between the macroeconomic outcomes of the member states and their level of economic development. thus, the eu advertising market accounted for over € 153 billion in terms of turnover or gross premiums written in 2015, with almost 90% owned by the old eu countries. during the period 2011-2015, the indicator showed an upward trend, but this was also not the case for individual states (some of them declining). as far as the number of enterprisers in advertising is concerned, there were almost 244.000 organizations in the community space in 2014, of which almost 75% belonged to the old member states. there is a close link to the level of community space between the macroeconomic outcomes such as the gross domestic product and the size of the advertising market assessed based on the turnover or gross premiums written indicator, with higher macroeconomic outcomes being associated with larger advertising markets. references harja e., ţimiraş l.c. (2009), metode statistice utilizate în cercetarea de marketing, bacau, editura alma mater nichifor, b. (2014), global advertising market – the dynamics of the last decade, studies and scientific researches economics edition, no. 20, pp. 196-202, available at http://sceco.ub.ro/index.php/sceco/issue/view/12 sincich, t. (1989), business statistics by example. third edition, dellen publishing company wadlow, t. (2016), top 20 companies with the biggest advertising budget, business review europe, available at http://www.businessrevieweurope.eu delloite (2016), the economic contribution of advertising in europe. a report for the world federation of advertisers, available at https://www.iqads.ro/articol/37572/publicitatea-stimuleaza-crestereaeconomica-in-uniunea-europeana emarketer (2016), worldwide ad spending: emarketer's updated estimates and forecast for 2015–2020, available at https://www.emarketer.com eurostat (2017), http://epp.eurostat.ec.europa.eu. statista inc. (2017), https://www.statista.com http://ideas.repec.org/s/bac/fsecub.html http://sceco.ub.ro/index.php/sceco/issue/view/12 http://www.businessrevieweurope.eu/authors/102/tom-wadlow http://epp.eurostat.ec.europa.eu/ https://www.statista.com/ microsoft word apostoaie constantin marius_eng.doc organizational trust or beyond appearances maria irina dromereschi, „al. i. cuza” university of iasi, romania abstract people and organizations to whom i am giving life to have an enormous need to trust and be trustworthy. trust represents a fragile asset who needs to be invested in, which is difficult to obtain and takes time to obtain it, but which can be easily broken. paradoxically, it is a universal trade currency, world-widely understood and appreciated. the relations based on trust are those which determine a company to grow and create a competitive advantage. trust generates trust. it is the one that inspires and motivates, requires the preservation of a certain set of values, mainly sincerity, fairness, perseverance and a real preoccupation for meeting the needs of other people. keywords organizational trust, forms of organizational trust, patterns of organizational trust, values of the organization. jel codes: d23, j53. introduction the word ‘trust’ comes from latin and it means “in good faith”. trust comes with experience. experience starts with a grain of trust. the shortest definition of trust seems to be having faith in one person’s integrity and abilities. a partnership based on trust is one in which it is acceptable to make mistakes in order to carry on the relationship. trust is based on credibility. we trust somebody when we feel that that person has the means to achieve what he has promised or what it necessary to be achieved. the necessary means include fair competence and behavior. we tend to believe that trust is inspired by a person. but this is only a part of trust. francois de la rochefoucauld said that “the trust we put in ourselves makes us feel the trust in others” thus, trust is a two-way street. it is not enough to invest trust in someone / the others. the reciprocal is necessary or at least the feed-back. these things are probably easier to be seen in personal relations but invisibly they are amplified in costs, respectively in the revenue of the organization. if when we hire the focus is put on the candidates’ skills, the key to the best performances lies in their attitudes. full of altruism, douglas mcgregor stated in 1960 in ‘the human side of enterprise” that trust is ‘knowing that you will not take disloyal advantage of me, deliberately or accidentally, being aware or not. i can put my situation, my status, my esteem, my relations, my job, my career and even my life into your hands’. even if it is far more optimistic than we could afford nowadays, we need to admit that there are situations when we could not think to do otherwise. trust, from preoccupation to subject of study and research beyond the subjectivity attributed to trust, this is more than a preoccupation, it is a subject of research from various reasons. the one that concerns us is the organizational dimension of this concept and not only for the psychological implications but for those economic and social, too. after 1960, there was a qualitative progress of understanding the phenomenon of studies and scientific researches economic edition, no. 15, 2010 351 trust after combining interdisciplinary efforts – psychology, sociology, law, economics, political science. its direct applicability to the organizational and managerial problem is more recent. we can see a progressive increase of interest and importance of the phenomenon of trust in political science. even if its social connotations had been inferred since ancient times (confucius 551-479 b.c.), the evolution of the concept took place progressively by being aware of its role at all levels: personal – individual, interpersonal, institutional – organizational and social. misztal, b.a. (1996) in trust in modern societies states that this interest is manifest due to the fact that the society is aware that “the bases for social cooperation, solidarity and consensus have been eroded and thus we need to find new alternatives”. the accentuation of interdependencies in a world of more and more specialized role-plays, the institutions with or without previous bookkeeping calculus show that we are vulnerable precisely to what is supposed to be implicit in a relation – trust. the erosion of citizens’ trust in society, as a result of the erosion of the social concepts more or less modern (languages, games, money, liberties, nations, governments, universities, corporations and all the other institutions) remains a problem of present times. psychologists have initially associated it to generosity. (deutsch m. 1958). generosity is circumcised to trust together with a part of its attributes. morton deutsch in trust and suspicion, connected the phenomenon of trust to behavioral predictability, whereas hovland and its partners (1953) stated that the most important feature of trust is motivation. starting with the ’60, together with the development of human resources attributions, the problem of interpersonal trust has been analyzed in the work context, expanding it subsequently to the organizational level. the author starts from situational aspects (actions and situations) and not from the dispositional ones (attitudes, personality) because the first ones can be easily expressed quantitatively through indexes like the cooperation ratio and trust in situations such as ‘the prisoner’s dilemma’ with applications in the theory of games (nash’s equilibrium) taking into consideration the risk factor in choosing the strategy, the principle being as follows: a low risk indicates higher degree of cooperation and implicitly trust. in the following years, the studies and researches began to expand on structure, interdependence and relation between trust and cooperation from interpersonal level to the organizational one. the process character of trust begins to be made obvious, and it is restated by zand d. (1972) by the gradual and self-assertive character. the 70’s and the 80’s brought only an evolution of the previous concepts adding new components to the structure of trust, respectively: altruism (frost t. and partners 1978), reasoning, business sense and character (gabbaro l. 1978) and respect (webber, 2002). the year of 1996 is important due to the most comprehensive synthesis on this subject, published by r.m. kramer and t.r. tyler: trust in organizations: frontiers of theory and research. the beginning of the new millennium brings a close-up of the institutionalization of research activities. three international workshops were organized on the theme ‘trust in and between organizations’ (amsterdam 2001, 2003 and 2005) which reunited specialists from a wide variety of disciplines. the year of 2001 brought about the first specific organization, first international network on trust (fint). organizational trust the increasing interest in the concept of organizational trust has the following arguments: 1.it is in the interest of the performance of the organization (dirks and ferrin, 2001); 2.it has a positive effect on results, cooperation and work efficiency, moderating directly or indirectly, acting over the main determinants of performance (zaheer and partners, 1998); 3.it increases the advantages of the companies which develop trust from inside (the internal climate) to outside (external partners)(kets de vrie, 2001); 4.the organizations with a high level of trust (internal) will be more successful, more adjustable and more innovating than the ones with low levels of trust (shockley-zalabak, 2000); studies and scientific researches economic edition, no. 15, 2010 352 5.it becomes an important aspect for those companies which are in competition on the world markets where incertitude and risk are high and the partners’ culture, values and goals can be very different (huff & kelley, 2003); 6.the benefits of trust can be found on social and economic levels, on national and international levels, ‘anywhere in the world, trust facilitates economic cooperation’ (james & sycuta, 2004). a close look over the orientation of studies and research in this field shows the existence of three qualitative leaps: 1.passing from believing that trust is a trait belonging to the field of personality psychology to considering it as being located in the context of social-economic life; 2.passing from the correlation of trust with two-three psycho-organizational and managerial variables to its progressive correlation to all variables that hint at organizational behaviors; 3.passing from the predominantly theoretical perspective to the predominantly practicalapplicable perspective. the organizational trust has gained the interest of several sciences (psychology, sociology and economics) which offered their instruments in order to find a definition that is both comprehensive and precise, offering in fact the valences of this concept born from an extremely dynamic reality. in economic terms, the organizational trust is acknowledged as that expectancy related to the way in which the other party will behave in a possible transaction or / and in confrontation with risk. a party binds itself to rely on the other in order to attain a certain goal, the degree of the anticipated risk being one of the game rules, each part having something to gain in the final result of the transaction. whatever the definitions may be, they have in common three elements: the anticipation of a behavior (prediction of an expected behavior), the natural effect of the probability calculus (the expectancy of a relation which will function) and assuming the risk (vulnerability). the forms of organizational trust require several criteria of classification. 1.if we take into consideration the way in which the risk is assumed, trust can be: selfrevealing, contractual and of safety (by ‘reading’ the other’s intentions; it has a marked intuitive character); 2.if we take into consideration the degree to which trust has been cultivated within a personal relation: trust based on calculus (calculus based trust – ctb) and trust based on identification (identification-based trust – ibt); 3.if we take into consideration the criteria of depth / intensity of relations, we can have trust based on abstention / prevention (in poor consolidated relations and as a rule in the incipient ones), trust based on knowledge (requires holding adequate information and an experience with previous actions) and trust based on identification (requires the existence of an emotional connection). without the specific criteria (to order several types) but considering only the specific types, there have been identified the following: strategic trust (an expectation related to somebody else’s behavior regarding a specific action), generalized trust (the inclination to trust most people as a personality feature) and particularized trust (given on the basis of some common characteristics with those of a group or of a people network having as background the affiliation to that specific group). models of organizational trust the applicative character of research and preoccupation with organizational trust did not delayed the occurrence of some explanatory models of the phenomenon. each of these models is the result of knowledge, experience and application field where it is recommended. douglas, creed and miles (1996) elaborated the model of mutual evaluation of trust (see picture 1). studies and scientific researches economic edition, no. 15, 2010 353 picture.1. the model of mutual evaluation of trust source: douglas, w., creed, e., miles, r.e. (1996), trust in organizations – a conceptual framework linking organizational forms, managerial philosophies and opportunity costs of control în kramer, r.m., tyler, t. (ed.), trust in organizations, frontiers of theory and research, sage publications, londra according to this model, individuals keep mental agreements regarding the history of trust related to the behaviors that involved them and the others. the parties involved in the relation evaluate, consciously or unconsciously, the level of trust starting from clues, signals coming from the communication and behavior of the others. each party wishes to know if the other party could affect the state of welfare, if it has an opportunistic orientation or one towards the satisfaction of the common interest. this model has the advantage of unconscious processes, underestimated by the other models, processes which can foresee trust, and the disadvantage of not giving the proper attention to common formal objectives and work cooperation. mayer, davis and schoorman (1995) elaborated a model of moderators of trust (see picture 2). picture.2. the model of moderators of trust source: mayer, r.c., davis, j.h., schoorman, f.d. (1995), an integration model of organizational trust, the academy of management review briarcliff manor, iulie, vol.20, iss. 3, p.709-835 mayer, davis and schoorman consider that the dynamics of the nature of trust consists in the multiplication of investment in trust in positive receivers (favorable results) and in obtaining unfavorable results, respectively distrust in negative receivers.trust or distrust are though results mediated by the ‘lens’ of the perception of abilities, good will, integrity and situational context. the model is oriented towards the finalities of relations, catches the progress, takes into consideration the moderators of trust and the circumstances but it does not include the common needs of the individuals. jones and george (1998) elaborated a model of experience of trust (see picture 3). person person clues, signs, signals favorable results trust perceptions of: *abilities *good will *integrity *situation assuming the risk of trust unfavorable results distrust studies and scientific researches economic edition, no. 15, 2010 354 picture.3. the model of experience of trust source: jones, g.r., george, j.m. (1998), the experience and evolution of trust: implications for cooperation and teamwork, the academy of management review, 23, 3, p. 531-546 the fundament of this model lies in the system of the individual’s values. the values are brought forward by principles, together guiding the individual’s behaviors. the values are subjective and internal whereas the principles are objective and external. on a long term the values can change if the individual makes new acquisitions of knowledge and attitudes which he associates with positive or negative experiences in the relations he has been involved in. in spite of their fluctuation, inclinations and emotions have a major role in creating a first impression which is the starting point for trust and relations. the model presents interest for the business environments characterized by quick decisions, incertitude and a high level of risk. it has the advantage of sustaining the role of previous experience, the existence of some different personality structures and the disadvantage of over-evaluation of the importance of first impressions. the same authors developed the model of the continuum of trust by introducing a new premise to the model of experience of trust, respectively the conditioned trust. this premise appears due to the fact that trying to know the system of values of another takes time and supplementary efforts of communication. taking into consideration the moment t0 of a relation of conditional trust, the parties can evolve towards an unconditional trust or towards giving up the relation. (see picture 4). we may say that the conditional trust is the minimum starting point from where a relation or partnership can be built, even if supervision and control are required at first. the aspect that the model considers to be implicit is the desire of each party to build a relation which corresponds mainly to the authors’ vision than to reality. the target of this model is achieving unconditional trust. this is not translated thorough the congruence of values or / and principles but through creating positive affective states of mind of friendship that are sufficient for the observance of the parties’ roles and maximum concentration on task. the model catches the evolution in time of relations and together with the model of experience of trust offers a more satisfactory image of the way in which trust appears and develops in relations. t = 0 distrust conditional trust unconditional trust picture 4. the model of continuum of trust past experience, knowledge attitudes (the object of emottional states, beliefs, knowledge) values (guiding principles) trust current effects long term effects inclinations, emotions studies and scientific researches economic edition, no. 15, 2010 355 source: jones, g.r., george, j.m. (1998), the experience and evolution of trust: implications for cooperation and teamwork, the academy of management review, 23, 3, p. 531-546 the model of equation of trust proposed by galford and drappeau (2003) is an equation of instrumental value for the leader of an organization. the model postulates the existence of some dimensions of trust under the conditions when the leader has the necessary abilities to create trust in organizations and these abilities are inter-connected. (see picture 5). picture.5. model of equation of trust source: galford, r., drappeau, a. (2003), the trusted leader: bringing out the best in your people and your company, simon&schuster adult publishing group the five abilities of a leader should be: aspirations (the leader’s ability to identify the peoples’ aspirations, aspirations which determine them to work), abilities (ability to aquire the resources that are necessary for the organization and to offer the individuals a vision in perspective), actions (the power not to let the diversions, crises, bankruptcies to appear), alignments (stability, consistency between aspirations and abilities, aspirations and actions, abilities and actions), articulation (preoccupation in maitaining a permanent communication with the colleagues, subordinates, with the entire organization). as a common feature of the concept of resistance there are summerized fear, skepticism, frustration and the views of ‚we-and-them’ type. beyond the ideal portrait such a leader should have, the model has the merit of orientation towards ballance as well as the complex, studied correlation of some abilities which require a long process of formation. the general model of trust in organizationsis proposed by zlate si avram (2005). (see picture 6). personal needs, group needs, organizat ional needs personal experience looking for partner familiar associate with success; or unfamiliar familiar associate with failure trust assuming of trust distrust avoidance failure success organizatio nal trust = aspir ation s resistance abilit ies actio ns align ment articu lation ∑ studies and scientific researches economic edition, no. 15, 2010 356 picture 6. the general model of trust in organizations source: zlate, m., avram, , e. (2005), the organizational trust – some theoretical issues, journal of organizational psychology, vol. v, no. 2-3, p. 11-30 its merit is that of reconsidering the needs of the individual and of correlating them with those of the group and organizations offering a two-exit construct: trust and distrust but without the absence of trust. the subject of this model can take both ways for different types of relations. the key-elements are intentionality justified by the experiences of previos relations and assuming the trust as premise for a possible successful relation. the model of the two romanian authors starts from the premise that trust is initiated, is assumed and is developed starting from the individual, group and organizational needs in the objective context of work tasks, avoiding to put emphasis on the leader’s role and considering that each of the employees has a different set of abilities to relate. organization based on trust the establishing of the organizational climate in the vision of koys d. and de cotis t. (1991) can be done by investigating eight dimensions: cohesion, trust, resources, support, acknowledgement, seriousness and innovation. in the organizational context , they defined trust as the perception of freedom of open communication with those from the superior levels of the organization about the delicate and personal problems, considering that it is normal not to break the confidential character of such discussions. the institute of personnel and development (ipd) suggests in the declarationd entitled people make the difference (1994) that the edification of trust is the only basis which can lead to an assumed commitment because „inside too many organizations, the difference between what is said and what is done undetermines the feeling of trust, generates skepticism among employees and shows contradictions in the managerial plan”. in 1997 shaw r. in his work trust in the balance defines trust as „the conviction that those who we rely on will rise to the level of our expectations”, our expectations being „the extent to which we consider that the person in cause takes responsability in fulfilling our tasks”. the organization with a high level of trust was described by fox a. (1973) in beyond contract as that community where employees share certain objectives or values, have all the feeling of some obligations on a long-term towards each other, offer themselves spontaneous support, without calculating in detail how much it costs them or pretending to be returned the favour, communicate sincerely and without restrictions, are ready to put their life into somebody else’s hands, give one another the presumption of not being guilty regarding any doubt it might occur regarding the good will and personal motivation. an ideal situation, theoretical and normative, may appear. reality proves us that trust is in most cases a presumtion of the one who has it. it depends largely on the its possessor ability to manage it efficiently and adequately and even more when we consider trust an instrument of organizational politics. we should not overlook the cultural horizon (space and time) where we talk about trust. sako m. (1994) in the informational requirement of trust in supplier relations: evidence from japan, the u.k. and u.s.a., admits that trust has the quality of a „cultural norm which can be but rarely created deliberately” because any technique of inducing trust undermines the foundation of this feeling like a recipe with specific ingredients recognizible only by those educated to perceive them. trust is a result of a judicious management. (thompson m. 1998). starting from the premise that it exists, management has the responsability to develop it by personal example and by a permanent preoccupation to know and anticipate the employees’ expectations. managers would not know how to manage a resource they do not know and could not multiply a capital that is valuable but volatile. more explicitly, trust lies in the employees’ availability to involve consequently in the activity of the organization, activity which managers know and evaluate, developing permanently the quality of relations inside the studies and scientific researches economic edition, no. 15, 2010 357 organizations they lead. anticipating a new, more institutionalized dimension of trust in the rythm of changes at the end of the xxth century, herriott (1998) gives it the role of mediating the relations and support among employees and employers and less the role of an instrument of managing the personnel or the processes. he admits that trust can be lost but, becoming an assumed component of the values of the organization, he develops a four-step program to regain it, addressed mainly to management but implemented on the organization. the consacration of trust has as binder „knowledge”, which is an acknowledgement and acceptance from both parties of the needs and interests of the other one by creating a percetion of seriousness. trust and its place among the organization values no job description requires us to protect the values of the organization. though, they are our anchors from the first up to the last working hour. this means that we have the responsability to put all those values in all our decisions and all the actions we take. we will frequently observe the importance of integrity, honesty, consistency and loyalty. the way in which we behave expreses the values we believe in. if there are differences between the personal values and those of the organization, a compromise should be made. the problem becomes „how much moral and emotional dissonance can we take?”. on the contrary, when the individual values and those of the organization tend to congruence, performances will soon appear. the term of value correlates the organizational behavior to the personal one. it refers to what people feel that is correct, good, moral, personal and important. anita roddick, the founder of body shop (1991) underlined the importance of incorporating the values in the daily operationalization of business. conceptually known as „values-led leadership”, it is based on the idea that organizations must take responsability for their employees and for the community/society that makes their existence possible. another concept, derived but inspired by values is that of „values-led management”. it refers to the loyalty that the management inspires to its employees and clients. it is not by chance that fukuyama (1995) prefers to turn his analyses towards the visible, behavioral aspect of trust. thus, the shared values and norms can be: integrity, the quality of being worthy of respect/pride, compasion and understanding, promptness in action, agreement/consent and procedural justice. other psycho-organizational variables which contribute to the foundation of trust are: competence, vision, justice/rightousness, safety, security and stability at the workplace, socialization, learning, support and respect. the research on trust and its effects in the organozational environments has an acute practical and applicational character starting from the elements of each organization, tending to combine the newest theoretical approaches with the most efficient models. surely, as long as trust can bring benefits to the organization, it will be integrated in its indexes of performance. bibliography 1. armstrong, m.(2003) management of human resources, codecs publications, bucharest 2. avram, e., cooper, c.l. (2008) organizational-managerial pshychology. present tendencies. polirom publishing, iaşi 3. douglas, w., creed, e., miles, r.e. (1996) ”trust in organizations a conceptual framework linking organizational forms, managerial philosophies and the opportunity cost of control” in kramer, r.m.,tyler, t. (ed.) trust in organizations, frontiers of theory and research, sage publications, london 4. fukuyama, f (1995), trust: the social virtues and the creation of prosperity, the free press, new york. 5. galford, r., drappeau, a.(2003), the trusted leader: bringing out the best in your people and your company, simon&schuster adult publishing group. studies and scientific researches economic edition, no. 15, 2010 358 6. herriot, p., hirsh, w. and riley, p. (1998) trust and transition: managing the employment relationship, wiley, chichester 7. jones, g.r., george, j.m. (1998), “ the experience and evolution of trust: implications for cooperation and teamwork”, the academy of management review 8. koys, d., de cotis, t. (1991) inductive measures of organizational climate, human relations 9. mayer, r.c., davis, j.h., scoorman, f.d.(1995), “an interrogation mode of organizational trust”, the academy of management review briarcliff manor, iulie, vol. 20 10. mcgregor, d. (1960) the human side of enterprise, mcgraw-hill, new york 11. misztal, b.a.(1996) trust in modern societies, polity press, cambridge 12. thompson, m. (1998) trust and reward, in trust, motivation and commitment: a reader, ed. s. perkis and st.j.sandrigham, strategic remuneration research centre, farringdom, london studies and scientific researches economic edition, no. 15, 2010 359 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro an analysis of the fiscal convergence criteria in the european union in terms of the sustainability iulia andreea bucur “vasile alecsandri” university of bacău iuliaandreea.bucur@gmail.com simona elena dragomirescu “vasile alecsandri” university of bacău dragomirescu@ub.ro abstract although the convergence criteria in the maastricht treaty led to the creation of the emu and the euro area has resisted more than some of its critics believed, in the context of major macroeconomic imbalances, the issue of nominal convergence has been the subject of numerous research. this paper aims to analyze the capacity of fiscal criteria to reflect the ability of eu member states to achieve economic development for the integration in the emu and to comply strict fiscal policy that governing its operation. in the context of certain technical deficiencies of fiscal criteria, we analyzed the developments of budget deficit and gross public debt in the eu during 2000 and 2012. the results show that until 2007 the eu economies were able, overall, to meet the budget deficit criteria, but due to the financial crisis and the prolonged slowdown in economic growth, the fiscal balance had an unfavorable evolution since 2008, while the evolution of the gross public debt has worsened increasingly. due to this pressure situation on the sustainability of public finances, examining the adoption, application and enforcement of the fiscal policy rules expressed by the evolution of the fiscal rule index for the period 2000-2011, the importance of rules in the fiscal management of the union and especially of the euro area appears increasingly obvious. keywords european union; euro area; convergence criteria; fiscal deficit; gross public debt; fiscal policy; stability and growth pact; sustainability; fiscal rule index jel classification e62; f15; f36; h6 1. introduction as a result of the economic crisis that started in 2008 and led to the deterioration of worldwide public finances, the budget issues are on the agenda again. fiscal deficits arising in this context cause the public debt to rise sharply. moreover, the public debt of eu member states stood at a high level even before the onset of the crisis. in order to support countries affected by the european debt crisis, besides the financial aid from the international monetary fund (imf), a temporary rescue mechanism was created on may 9, 2010 by the euro area member states: the european financial stability facility (efsf). in october 2010, it was decided to create a permanent rescue mechanism, the european stability mechanism (esm) which came into force on october 8, 2012. from this moment, the esm will be the main instrument to finance new programs. in parallel with the esm, efsf will continue the ongoing programs for greece, portugal and ireland. from july 1, 2013, the efsf can no longer engage in new financing programs or enter into new loan agreements. esm is now the only and permanent mechanism to meet new demands for financial assistance from the euro area member states. 137 bucur, dragomirescu one fact is certain, that in the literature there is a consensus on the need for fiscal measures, both short and long term, on the one hand, in order to protect fiscal sustainability (fiscal rules inspired by neo-classical principles fall into this category) and, on the other hand, in order to stabilize the macroeconomic fluctuations (fiscal rules guided by the neo-keynesian principles of fiscal management) (marneffe et al, 2011). the incapacity of maastricht fiscal criteria, to reflect the ability of member states in achieving the economic development for the integration in the emu and to compliance strict fiscal policy that governing its operation, is the main reason of our intention to highlight some limiting aspects. in the context of certain technical deficiencies of the fiscal criteria, based on the available data on eurostat, we analyzed the developments of fiscal deficit and gross public debt of the eu-27 and ea-17 member states, during the period 2000-2012. the results allow us to say that overall during the period of time 2000-2007, the eu27 and the ea-17 failed to meet the budget deficit criterion, but due to the financial crisis that began in 2008 and the prolonged slowdown in economic growth, the fiscal balance had an unfavorable evolution so far. meanwhile, gross public debt situation overall has worsened increasingly since 2008 until 2012. because of this pressure on fiscal sustainability, analyzing the adoption, implementation and compliance of fiscal policy rule expressed by fiscal rule index (fri) for the period of time 2000-2011, the results on the evolution of this composite indicator highlights the increasingly importance of rules in the fiscal management of the eu and especially of the euro area. this paper is structured as follows: section 2 presents the fiscal framework in the european union, giving the necessity for fiscal rules and the stability and growth pact in the context of certain limiting aspects of the fiscal criteria set by the maastricht treaty. an overview of the fiscal position in the eu-27 and ea-17 is presented in section 3. given that fiscal sustainability of the eu member states, and particularly of those of the euro area, is under stress in section 4 we present an overview of fiscal management applied in these countries based on the adoption, implementation and compliance of fiscal policy rules expressed by a summary indicator of fiscal outcomes, fiscal rule index. section 5 contains the summary of our research and the main findings of our results. 2. fiscal criteria – a stabilizing factor or a barrier to the sustainable economic growth in the european union? 2.1 the necessity of fiscal rules and the stability growth pact despite the european economic community initiative in 1975 to develop a series of measures of constraint for fiscal policy, were still needed seventeen years until the first set of binding supranational fiscal rules was introduced by the maastricht treaty in 1992. thus, into the structure of the nominal convergence criteria along with the monetary component expressed by indicators reflecting price, exchange rate and longterm interest rate developments, there is a fiscal component too expressed by indicators reflecting the situation of gross public debt and budget deficit. outlines conditions set specific limits which the acceding countries must demonstrate that they meet with a stable and sustainable basis. due to the treaty on fiscal developments, second indent of article 140(1) requires: “the sustainability of the government financial position finances; this will be apparent from having achieved a government budgetary position without a deficit that is excessive as determined in accordance with article 126(6)”. article 126(2) and (3) of 138 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability the excessive deficit procedure, states that if an eu member state does not fulfill the requirements for fiscal discipline, the commission shall prepare a report, especially if: “i. the ratio of the planned or actual government deficit to gdp exceeds a reference value (set at 3% of gdp), unless the ratio has declined substantially and continuously and reached a level that comes close to the reference value, or if the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value; ii. the ratio of government debt to gdp exceeds a reference value (set at 60% of gdp), unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace.” given the experience of eu member states joining the emu, there are two approaches to the reference values for the criteria in the treaty: a flexible one in order to facilitate some states insufficiently prepared to join the emu, for political reasons (it is known that the policy objectives are not sufficiently convergent with the economic ones) and a rigid one in order to block the access of countries that do not meet the convergence conditions. as the eu expanded towards the central and eastern europe, these criteria have been interpreted in increasingly strict order not to endanger the euro area. thus, if the only criteria that have benefited from a strict interpretation are the monetary ones, we cannot say the same about the fiscal criteria, which were interpreted in a certain flexible way, although they are considered the most difficult to fulfill. as there are benchmarks clearly stipulated in the treaty, the excessive deficit procedure allowed a certain action space to the european council. therefore, although, unlike european commission report 1998, ime report draws attention to the high levels of gross public debt in italy in 1997 (121.6% of gdp) and in the same year in belgium (122.2% of gdp), both documents were the basis for the council decision on the introduction of the euro in 11 countries. also, due to the remarkable progress made by greece, in the context of applying a restrictive fiscal policy, namely reducing the budget deficit from 3.1% of gdp in 1998 to 1.3% of gdp in 2000, and the downward trend of the gross public debt in the same period of time 1998-2000, well above the reference value, but lower than the level recorded by belgium and italy in 1997, the council accepted its participation in emu, based on reports of the commission and the ecb in 2000. given repealed by the council of some earlier decision on the existence of excessive deficits, the fiscal criterion was considered met. later in 2003, the council, acting on a recommendation from the european commission, said that both france and germany had excessive deficits. therefore, the commission proposed to improve the procedure, making a new recommendation to bring back two of the member states within the limits. but a qualified majority in the council was not reached in favor of this recommendation, a situation that has led to an impasse with great uncertainty about the further application of european fiscal rules. in this context and in response to international criticism, the stability and growth pact (sgp) (entered into force in 1997), which should provide adequate guidance on limiting government borrowing contracted by eu member states, has been revised in 2005 with the intention of eliminating the existing uncertainty caused by the situation in 2003. firstly, the new pact introduced medium-term objectives appropriate to the circumstances of each member state, taking into account gross public debt as a share of gdp and growth potential specific to each state. this implies that countries with low levels of debt and higher growth potential are allowed to maintain higher deficits in the medium-term (deutsche bundesbank, 2005). furthermore, member states with a relatively low level of public debt could follow a budgetary structural deficit of 1% 139 bucur, dragomirescu of gdp on the medium term, while the member states with higher gross public debt should pursue a balanced budget or a small surplus. moreover, member states should advance annually by 0.5% of gdp towards achieving the medium-term objective and if the economic growth is higher than expected, the rate of advancement should not exceed half of one percent of gdp in order to allow low efforts during a possible recession. thus, long-term debt as a percentage of gdp will decrease and eventually will approach zero. secondly, the reviews focus on structural and sustainable correction of the deficits. since deficits depend on gdp growth, the business cycle has a major impact on them taking into account not only a possible decline in economic growth, but the duration of the economic crisis. cyclical fluctuations are removed from the calculation of the structural deficits, thus providing a better picture of the real situation of public finances in a particular member state (de haan et al, 2003). thirdly, member states are exempt from the excessive deficit procedure regardless of the rate of negative growth. fourth, the time span in which excessive deficits should be corrected has been extended from one to two years (marneffe et al, 2011). in general, it is considered that the supranational pact was weakened, demonstrating its limitations in the context of the current climate, of severe and prolonged global and especially of european economic crisis, being a necessary but not sufficient tool for the harmonization of national economies. eurosceptics in denmark and sweden often invokes the weakening pact as a reason not to adopt the euro. one of the main critical issues concerns the sanctions of the revised pact, their impact being limited only in comparison to the threat of exclusion from the euro area. moreover, they are the subject of a lengthy discretionary decision making process attended by even those countries (de haan et al, 2003) and the imposition of a sanction may have a pro-cyclical effect that would worsen the situation of a country. another critical issue is the increased flexibility of the revised pact, which involves considerable disadvantages (buti, 2006). while a considerable series of factors is necessary to be taken into account in assessing whether a deficit is excessive, there are gaps and the judgment is quite complicated. thus, fiscal rule is less transparency and simple (alves & afonso, 2007; verde, 2006). regarding public debt the pact is clearly a step backwards comparing to the maastricht treaty due to the limited contextual approach, without specifying clear sanctions for breaching the reference value (de haan et al, 2003). finally, the numerical values of its objectives remain arbitrary and counterproductive in terms of countercyclical fiscal stabilizing policy (marneffe et al, 2011). 2.2 some technical deficiencies of fiscal developments as monetary criteria, the premises which underlie fiscal stability criterion are related, on the one hand, to the promotion of economic growth by reducing the uncertainty in economic activities and, on the other hand, to limiting the risk of destabilizing social conflicts in economic life. increasing budget deficits and gross public debt generates the crowding-out effect of private consumption and investment spending, limiting long-term growth opportunities. so the fiscal burden for households and businesses is maintained, with negative effects on economic efficiency and international competitiveness (bukowski, 2006). the introduction of this criterion contributed undoubtedly to the acceleration of fiscal reforms in the european union, but studies and research in the field mentioned some technical deficiencies regarding fiscal developments. for example, the reference values of fiscal rules were considered to be arbitrary and insufficiently supported by economic theory and practice. maastricht treaty refers in 140 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability a brief way to the average budget deficit and average gross public debt as shares in gdp of the european community member states in 1991, by 4.3% and 61.7% respectively. since the average public investment within the ec was 3% of gdp during the period 1974-1991, the golden rule was associated with the reference value for the budget deficit (buiter et al, 1993). the fact that in the 1990s, the eu countries average value of government debt to gdp could be at the level of 60% was reason to adopt this value as an index reference (de grauwe, 2003). however, there is no justification for considering these values as optimal for the union as a whole, and especially for the candidates, but rather they were adopted as a result of the insistence of germany to prevent a situation where excessive growth budget deficit and gross public debt would lead to higher interest rates across the union. as regards gross public debt, the treaty has not provided a contextual approach to the specific situation of each country on the level of the indicator, although countries with a higher debt as a share of gdp shows a threat with a much higher potential for affecting the union stability. moreover, research has shown more satisfactory results in the case of a rule concerning balanced budget expressed as a linear function of public debt, unlike the rule of a constant benchmark (basci et al, 2007). also, a budget deficit and gross public debt above the reference values of 3% of gdp and 60% of gdp, regarded as having a negative connotation, does not imply automatically macroeconomic imbalances. thus, while the budget deficit and/or gross public debt increase, even as the limits are exceeded, due to a process of intensification of government investment and reduce taxation, with beneficial effects on stimulating private initiative, this dynamic is considered to be a sustainable (triandafil, 2011). noteworthy are unclear formulations reflected in article 126(2) and (3) of the treaty that mentions the excessive deficit procedure: firstly, “substantially and continuously”, not being specified a certain percentage, secondly, “the excess over the reference value is only exceptional and temporary”, not being exactly specified the exceptional conditions and a maximum period of time, and thirdly, “the ration is sufficiently diminishing and approaching the reference value at a satisfactory pace” not being precisely detached a certain value and a time horizon. 3. an overview of fiscal positions in the european union and euro area macroeconomic stability and balanced and sustainable economic growth in the european union and especially in the euro area requires as a prerequisite the existence of solid and sustainable public finances as the single monetary policy cannot react to the specific situation for each country and the repercussions due to their unsustainable fiscal policies are more powerful, as clearly the current crisis demonstrated. all these require increased responsibility regarding fiscal developments in the union member states. with the decreasing of the global economy and the current persistent financial tensions in the euro area, its member states experienced various problematic situations generated by a brisk increase of the budget deficit and gross public debt as a share of gdp and also by the economic downturn, which highlight the restrictive nature of the two indicators. for their analysis we used the statistical data available on eurostat for the period 2000-2012. we excluded croatia (analysis (the 28th eu member state from july 1, 2013) due to the unavailability of certain statistical data regarding the considered indicators. average share of budget deficit to gdp in the eu-27 and ea-17 have increased during the considered period from 0.6% in 2000 up to 6.9% in 2009, situation that will improve later, reaching down to 3.9% in 2012 (table 1). we also note a broadly 141 bucur, dragomirescu similar situation in the euro area, the share of budget deficit to gdp being much lower than the eu-27, which highlights the mismanagement of public finances including countries in the euro area. table 1 fiscal balance in eu-27 and ea-17, 2000-2012 (% of gdp) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 belgium 0.0 0.4 -0.1 -0.1 -0.1 -2.5 0.4 -0.1 -1.0 -5.6 -3.7 -3.7 -4.0 bulgaria -0.5 1.1 -1.2 -0.4 1.9 1.0 1.9 1.2 1.7 -4.3 -3.1 -2.0 -0.8 czech republic -3.6 -5.6 -6.5 -6.7 -2.8 -3.2 -2.4 -0.7 -2.2 -5.8 -4.7 -3.2 -4.4 denmark 2.3 1.5 0.4 0.1 2.1 5.2 5.2 4.8 3.2 -2.7 -2.5 -1.8 -4.1 germany 1.1 -3.1 -3.8 -4.2 -3.8 -3.3 -1.6 0.2 -0.1 -3.1 -4.2 -0.8 0.1 estonia -0.2 -0.1 0.3 1.7 1.6 1.6 2.5 2.4 -2.9 -2.0 0.2 1.1 -0.2 ireland 4.9 1.0 -0.3 0.4 1.4 1.6 2.9 0.2 -7.4 -13.7 -30.6 -13.1 -8.2 greece -3.7 -4.5 -4.8 -5.6 -7.5 -5.2 -5.7 -6.5 -9.8 -15.7 -10.7 -9.5 -9.0 spain -0.9 -0.5 -0.3 -0.3 -0.1 1.3 2.4 2.0 -4.5 -11.1 -9.6 -9.6 -10.6 france -1.5 -1.5 -3.1 -4.1 -3.6 -2.9 -2.3 -2.7 -3.3 -7.5 -7.1 -5.3 -4.8 italy -0.8 -3.1 -3.1 -3.6 -3.5 -4.4 -3.4 -1.6 -2.7 -5.5 -4.5 -3.8 -3.0 cyprus -2.3 -2.2 -4.4 -6.6 -4.1 -2.4 -1.2 3.5 0.9 -6.1 -5.3 -6.3 -6.4 latvia -2.8 -2.0 -2.3 -1.6 -1.0 -0.4 -0.5 -0.4 -4.2 -9.8 -8.1 -3.6 -1.3 lithuania -3.2 -3.5 -1.9 -1.3 -1.5 -0.5 -0.4 -1.0 -3.3 -9.4 -7.2 -5.5 -3.2 luxembourg 6.0 6.1 2.1 0.5 -1.1 0.0 1.4 3.7 3.2 -0.7 -0.8 0.1 -0.6 hungary -3.0 -4.1 -9.0 -7.3 -6.5 -7.9 -9.4 -5.1 -3.7 -4.6 -4.3 4.3 -2.0 malta -5.7 -6.3 -5.7 -9.0 -4.6 -2.9 -2.7 -2.3 -4.6 -3.7 -3.5 -2.8 -3.3 netherlands 2.0 -0.2 -2.1 -3.1 -1.7 -0.3 0.5 0.2 0.5 -5.6 -5.1 -4.3 -4.1 austria -1.7 0.0 -0.7 -1.5 -4.4 -1.7 -1.5 -0.9 -0.9 -4.1 -4.5 -2.5 -2.5 poland -3.0 -5.3 -5.0 -6.2 -5.4 -4.1 -3.6 -1.9 -3.7 -7.5 -7.9 -5.0 -3.9 portugal -3.3 -4.8 -3.4 -3.7 -4.0 -6.5 -4.6 -3.1 -3.6 -10.2 -9.8 -4.3 -6.4 romania -4.7 -3.5 -2.0 -1.5 -1.2 -1.2 -2.2 -2.9 -5.7 -9.0 -6.8 -5.6 -3.0 slovenia -3.7 -4.0 -2.4 -2.7 -2.3 -1.5 -1.4 0.0 -1.9 -6.3 -5.9 -6.3 -3.8 slovakia -12.3 -6.5 -8.2 -2.8 -2.4 -2.8 -3.2 -1.8 -2.1 -8.0 -7.7 -5.1 -4.5 finland 7.0 5.1 4.2 2.6 2.5 2.9 4.2 5.3 4.4 -2.5 -2.5 -0.7 -1.8 sweden 3.6 1.5 -1.3 -1.0 0.6 2.2 2.3 3.6 2.2 -0.7 0.3 0.2 -0.2 united kingdom 3.5 0.4 -2.1 -3.5 -3.5 -3.4 -2.8 -2.8 -5.0 -11.4 -10.1 -7.7 -6.1 european union 27 0.6 -1.5 -2.6 -3.2 -2.9 -2.5 -1.5 -0.9 -2.4 -6.9 -6.5 -4.4 -3.9 euro area 17 -0.1 -1.9 -2.7 -3.1 -2.9 -2.5 -1.3 -0.7 -2.1 -6.4 -6.2 -4.2 -3.7 source: eurostat in the context of an oscillatory evolution, we note that between 2007 and 2009 the share of fiscal deficit to gdp in the eu-27 and ea-17 is situated on a more pronounced negative trend. after that period until the present, amid a sustained fiscal consolidation, member states have significantly reduced their deficits (figure 1). figure 1 fiscal balance in eu-27 and ea-17, 2000-2012 (% of gdp) source: own calculations, based on the data available on eurostat the dominance government consumption expenditures below 20% of gdp in most of the states, and in the eu and the euro area (figure 2), the recent developments in the countries of central and eastern europe and, in particular, the collapse of euro area member states caused by excessive level of public debt generated by the gradual accumulation of substantial budget deficits, demonstrate that if the level of debt and the share of negative budget balance to gdp increased in parallel with the recording 142 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability massive spending directed towards consumption, the macroeconomic imbalance is obvious. figure 2 government consumption expenditures in eu-27 and ea, 2000-2012 (% of gdp) source: own calculations, based on the data available on eurostat note: euro area: ea11-2000, ea12-2006, ea13-2007, ea15-2008, ea16-2010, ea17 significant share of government consumption expenditures in gdp, in detriment of investment indicates a certain lack of discipline in the fiscal policy (figure 3). figure 3 government investment expenditures in eu-27 and ea, 2000-2012 (% of gdp) source: own calculations, based on the data available on eurostat note: euro area: ea11-2000, ea12-2006, ea13-2007, ea15-2008, ea16-2010, ea17 extremely high levels of debt and long-term impact of aging will probably cause pressure on public expenditures to persist beyond the current fiscal adjustment. regarding the gross government debt as a share of gdp (table 2), its lowest level during the period 2000-2012, with an average of 5.5% of gdp in estonia, state that joined the eu in 2004 and became member of emu in 2010, followed by luxembourg, with an average of 9.4% of gdp on the same period. a rigorous management of public debt is seen in countries such as denmark, finland and sweden, where the emergence of financial turmoil has led to an increase in debt over the imposed convergence criterion of 60% during the period. the majority states that joined the eu in 2004 and 2007, namely: slovenia, slovakia, latvia, lithuania, poland, czech republic, bulgaria and romania, have a low level of government debt, in some of the countries being below the level of the states that joined the eu in the first waves. 143 bucur, dragomirescu table 2 gross government debt in eu-27 and ea-17, 2000-2012 (% of gdp) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 average belgium 107.8 106.5 103.4 98.4 94.0 92.0 87.9 84.0 89.2 95.7 95.7 98.0 99.8 96.1 bulgaria 72.5 66.0 52.4 44.4 37.0 27.5 21.6 17.2 13.7 14.6 16.2 16.3 18.5 27.0 czech republic 17.8 23.9 27.1 28.6 28.9 28.4 28.3 27.9 28.7 34.6 38.4 41.4 46.2 29.9 denmark 52.4 49.6 49.5 47.2 45.1 37.8 32.1 27.1 33.4 40.7 42.7 46.4 45.4 41.6 germany 60.2 59.1 60.7 64.4 66.2 68.6 68.0 65.2 66.8 74.5 82.5 80.0 81.0 68.6 estonia 5.1 4.8 5.7 5.6 5.0 4.6 4.4 3.7 4.5 7.1 6.7 6.1 9.8 5.5 ireland 37.0 34.5 31.8 31.0 29.4 27.2 24.6 24.9 44.2 64.4 91.2 104.1 117.4 43.4 greece 103.4 103.7 101.7 97.4 98.6 100.0 106.1 107.4 112.9 129.7 148.3 170.3 156.9 116.1 spain 59.4 55.6 52.6 48.8 46.3 43.2 39.7 36.3 40.2 54.0 61.7 70.5 86.0 51.9 france 57.3 56.9 58.8 62.9 64.9 66.4 63.7 64.2 68.2 79.2 82.4 85.8 90.2 68.5 italy 108.6 108.3 105.4 104.1 103.7 105.7 106.3 103.3 106.1 116.4 119.3 120.7 127.0 110.1 cyprus 59.6 61.2 65.1 69.7 70.9 69.4 64.7 58.8 48.9 58.5 61.3 71.5 86.6 64.5 latvia 12.4 14.1 13.6 14.7 15.0 12.5 10.7 9.0 19.8 36.9 44.4 41.9 40.6 18.7 lithuania 23.6 23.0 22.2 21.0 19.3 18.3 17.9 16.8 15.5 29.3 37.8 38.3 40.5 23.6 luxembourg 6.2 6.3 6.3 6.2 6.3 6.1 6.7 6.7 14.4 15.5 19.5 18.7 21.7 9.4 hungary 56.1 52.7 55.9 58.6 59.5 61.7 65.9 67.0 73.0 79.8 82.2 82.1 79.8 66.4 malta 53.9 58.9 57.9 66.0 69.8 68.0 62.5 60.7 60.9 66.5 66.8 69.5 71.3 63.8 netherlands 53.8 50.7 50.5 52.0 52.4 51.8 47.4 45.3 58.5 60.8 63.4 65.7 71.3 55.2 austria 66.2 66.8 66.2 65.3 64.7 64.2 62.3 60.2 63.8 69.2 72.3 72.8 74.0 66.6 poland 36.8 37.6 42.2 47.1 45.7 47.1 47.7 45.0 47.1 50.9 54.9 56.2 55.6 46.8 portugal 50.7 53.8 56.8 59.4 61.9 67.7 69.4 68.4 71.7 83.7 94.0 108.2 124.1 72.0 romania 22.5 25.7 24.9 21.5 18.7 15.8 12.4 12.8 13.4 23.6 30.5 34.7 37.9 21.3 slovenia 26.3 26.5 27.8 27.2 27.3 26.7 26.4 23.1 22.0 35.2 38.7 47.1 54.4 30.3 slovakia 50.3 48.9 43.4 42.4 41.5 34.2 30.5 29.6 27.9 35.6 41.0 43.4 52.4 39.3 finland 43.8 42.5 41.5 44.5 44.4 41.7 39.6 35.2 33.9 43.5 48.7 49.2 53.6 42.9 sweden 53.9 54.7 52.5 51.7 50.3 50.4 45.3 40.2 38.8 42.6 39.4 38.6 38.2 45.5 united kingdom 40.5 37.3 37.1 38.7 40.3 41.7 42.7 43.7 51.9 67.1 78.4 84.3 88.7 50.5 european union 27 61.8 60.9 60.3 61.9 62.2 62.7 61.5 58.9 62.2 74.5 80.0 82.4 85.2 66.7 euro area 17 69.2 68.2 68.0 69.2 69.6 70.3 68.6 66.4 70.2 80.0 85.4 87.3 90.6 73.7 source: eurostat if until the onset of financial imbalances countries such as ireland and the uk have failed to show adequate control of public finances, accounting indebtedness below the reference value of 60%, once the financial crisis hit, their level shows an alarming increase reaching up to 117.4% in ireland in 2012 and up to 88.7% in the uk in the same year. under the impact of the financial crisis, government debt to gdp increased in belgium, france, germany, portugal, reaching in 2012 values higher than the limit set, of 99.8%, 90.2%, 81.0% and 124.1%. with of poor management of government debt to gdp in the period before the financial crisis, the emergence of financial turmoil generated unprecedented inflammation indebtedness in greece and italy. greece appears as the state with the highest level of budget deficit over the period 2000-2012, reaching in 2011 the value of 170.3% of gdp. like greece, italy has a high degree of fiscal indiscipline that even in the period before the financial turmoil experienced debt ratios to gdp of over 100%. for italy, this situation is in opposition to the that of the fiscal balance, with some exceptions, was kept within the convergence criterion limit, not recording sharp slippage under the impact of the financial crisis, which cannot be said for greece. also, we find that in 2012 more than half of eu member states exceed the limit imposed by the treaty (figure 4). 144 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability figure 4 gross public debt in eu-27, 2012 (% of gdp) source: own calculations, based on the data available on eurostat moreover, we find two extremely interesting aspects (figure 5): on the one hand, the fact that the average gross public debt share of gdp in ea-17 is higher than in the eu-27, a situation that reflect significant indebtedness of the euro area member states than in other eu member states, while the trend in the both cases continuously growing since 2007 and, on the other hand, during the period 2000-2012 the average level of debt for both the eu and emu exceeds the reference value of 60%. figure 5 average of gross public debt in eu-27 and ea-17, 2000-2012 (% of gdp) source: own calculations, based on the data available on eurostat so, we can appreciate that overall during the period of time 2000-2007, the eu-27 and the ea-17 failed to meet the budget deficit criterion, but due to the financial crisis that began in 2008 and the prolonged slowdown in economic growth, the fiscal balance had an unfavorable evolution so far. meanwhile, gross public debt situation overall has worsened increasingly since 2008 until 2012. 4. the national numerical fiscal rules in order to be a good tool for adjusting economic processes, fiscal policy must be effective. unfortunately, there are some aspects that limit its ability to be effective and which are arising from a reduced flexibility due to information, political and social reasons, such as (bukowski, 2006): 145 bucur, dragomirescu • the insufficient information that government has about the evolution of economic growth; • difficulties in achieving a parliamentary consensus concerning the changes in the size of the fiscal deficit and budget structure; • a long time for preparing and discussing fiscal changes; • social barriers in increasing taxation or limiting the government expenditures; • the specificity of government expenditures due to their ease of growth at the expense of reduction. • the contradictory situation between the political cycle and the rational fiscal policy. fiscal sustainability in the eu member states, and especially of the euro zone, is under stress. this requires the implementation of fiscal policy rules that establish specific numerical targets for budget aggregates, namely a permanent constraint on fiscal policy expressed by a composite indicator of fiscal outcomes (e.g. public budget balance, public debt, government expenditure development, government revenues development, and others). in this respect, the economic policy committee attached to ecofin council prepared for eu member states a data set of fiscal rules since 1990, under which it is calculated the fiscal rule index (fri) which summarizes information regarding on: the legal basis of the rule, the space for a review, mechanisms for monitoring the compliance and implementation of the rule, the existence of pre-defined enforcement mechanisms and media visibility rule. figure 6 shows the evolution of the composite index for the eu-27 member states during the period 2000-2011. figure 6 fiscal rule index in eu-27, 2000-2011 source: european commission if we analyze the evolution index in the ea-17 for the same period, we see that euro area countries show significant variations of fri that should not manifest in a single currency area. 146 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability figure 7 fiscal rule index in ea-17, 2000-2011 source: european commission during the considered period, there is a slight increase growth of the average of fri in the eu and the euro area (figure 7), suggesting the growing importance of fiscal rules in the fiscal management of the eu and euro area. however we identify a weaker fiscal management in the euro area comparing to that applied in other eu member states but non-ea. figure 7 fiscal rule index in ea-17 comparing to eu-27 and non-ea member states, 2000-2011 source: own calculations, based on the data available on eurostat the advantage of such an approach seems quite obvious, as national policymakers would maintain the autonomy to design an effective fiscal policy and appropriate circumstances. given the positive effects of fiscal reforms already initiated, the commission considers as priorities at national and eu levels the following: • further differentiated fiscal consolidation, given the specificities of each eu economy, favoring economic growth; • careful resumption of lending to the economy; • promoting growth and competitiveness today and in the future; • approaching the issues concerning the unemployment and the social consequences of crisis; • modernization of public administration. 147 bucur, dragomirescu 5. conclusions highly controversial, convergence criteria, both from the perspective of economic theory and empirical research in the field, cannot be considered without doubt a barrier to economic growth. by introducing benchmarks and penalties for overcoming them, fiscal stability criterion has the merit of having introduced some fiscal discipline in the eu member states, being one of the important factors, along with others, of macroeconomic stabilization and balanced economic growth. in the context of certain technical deficiencies of the fiscal criteria, analyzing the developments of fiscal deficit and gross public debt of the eu-27 and ea-17 member states, during the period 2000-2012 we can say that overall during the period of time 2000-2007, the eu-27 and the ea-17 failed to meet the budget deficit criterion, but due to the financial crisis that began in 2008 and the prolonged slowdown in economic growth, the fiscal balance had an unfavorable evolution so far. meanwhile, gross public debt situation overall has worsened increasingly since 2008 until 2012. analyzing the adoption, application and enforcement of the fiscal policy rule expressed by fiscal rule index, for the period 2000-2011, using the data available on the european commission, the results on the evolution of this composite indicator highlights the increasingly importance of rules in the fiscal management of the eu and especially of the euro area. it is obvious that public finances in the european assembly, overall, face major challenges arising from the need to reduce the level of indebtedness in the context of bleak economic growth prospects, of the pressure on long-term expenditures and of fiscal burden which is already quite high. given the long-term challenges of fiscal sustainability, reviewing the effectiveness of public expenditures is extremely important, while promoting the consolidation of a set of measures of income that are efficient and pro-growth. references alves, r. h., afonso, o. (2007), the “new” stability and growth pact: more flexible, less stupid?, intereconomics: review of european economic policy, springer, 42(4), 218-225. basci, e., ekinci m. f., yulek, m. (2007), on fixed and variable fiscal surplus rules, emerging markets finance and trade, m.e. sharpe, inc., 43(3), 5-15. bucur, i. a. (2013), convergenţă şi divergenţă în procesul integrării economice europene, alexandru ioan cuza university publishing house, iaşi. buiter, w. h., corsetti, g., roubini, n. (1993), maastricht’s fiscal rules, economic policy, 16, 58-100. bukowski, s. i. (2006), the maastricht convergence criteria and economic growth in the emu, quaderni del dipartimento di economia, finanza e statistica, 24, 1-16. buti, m. (2006), will the stability and growth pact succeed? an economic and political perspective, dg ecfin, european commission, series european economy economic papers, 241, 1-25. buti, m., giudice, g. (2002), maastricht’s fiscal rules at ten: an assessment, journal of common market studies, 40(5), 823-847. de grauwe, p. (2003), unia walutowa, pwe, warszawa. de haan, j., berger, h., jansen, d. j. (2003), the end of the stability and growth pact?, cesifo working paper, 1093. european comission (2013), communication from the commission annual growth survey 2013, available on http://eur-lex.europa.eu/lexuriserv /lexuriserv.do?uri=com: 2012:0750:fin:en:html 148 an analysis of the fiscal convergence criteria in the european union in terms of the sustainability european comission, economic and financial affairs (2013), available on http://ec.europa.eu/ economy_ finance/db_indicators/fiscal_governance /fiscal_rules /index_en.htm european financial stability facility (2013), available on http://www.efsf.europa.eu/ kopits, g., symansky, s. (1998), fiscal policy rules, imf occasional paper, 162, washington, international monetary fund. triandafil, c. m. (2011), the analysis of the convergence criteria. empirical perspective in the context of the sustainable character highlight, working papers of national institute of economic research, 111205. verde, a. (2006), the old and the new stability and growth pact a long with the main proposals for its reform: an assessment, transition studies review, 13(3), 475-496. 149 table 1 fiscal balance in eu-27 and ea-17, 2000-2012 (% of gdp) figure 1 fiscal balance in eu-27 and ea-17, 2000-2012 (% of gdp) figure 2 government consumption expenditures in eu-27 and ea, 2000-2012 (% of gdp) figure 3 government investment expenditures in eu-27 and ea, 2000-2012 (% of gdp) note: euro area: ea11-2000, ea12-2006, ea13-2007, ea15-2008, ea16-2010, ea17 table 2 gross government debt in eu-27 and ea-17, 2000-2012 (% of gdp) figure 4 gross public debt in eu-27, 2012 (% of gdp) figure 5 average of gross public debt in eu-27 and ea-17, 2000-2012 (% of gdp) figure 6 fiscal rule index in eu-27, 2000-2011 figure 7 fiscal rule index in ea-17, 2000-2011 figure 7 fiscal rule index in ea-17 comparing to eu-27 and non-ea member states, 2000-2011 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro some considerations on cloud accounting doina păcurari “vasile alecsandri” university of bacău doina.pacurari@ub.ro elena nechita “vasile alecsandri” university of bacău enechita@ub.ro abstract cloud technologies have developed intensively during the last years. cloud computing allows the customers to interact with their data and applications at any time, from any location, while the providers host these resources. a client company may choose to run in the cloud a part of its business (sales by agents, payroll, etc.), or even the entire business. the company can get access to a large category of cloud-based software, including accounting software. cloud solutions are especially recommended for small companies that do not have enough financial resources to invest in the it infrastructure and in expensive accounting software. however, a special attention is required in the case of sensitive data, which should not be placed in a public cloud. all these aspects need to be discussed with the students, who should acquire the qualifications needed for operating with cloud applications. our paper considers all the above issues regarding cloud computing for accountants and suggests some possibilities to approach these topics with the students. keywords cloud computing; cloud accounting; accounting services; small companies; romanian accounting students jel classification m41; m15 1. introduction in the mod 90s, the appearance of multimedia and collaborative software stimulated the ict companies to create infrastructures which were designed to host complex applications and web pages. after this period, things evolved rapidly and new concepts, such as social networks, appeared. the novelty of cloud computing stands in the way technology and informational services are offered: from distance and only on request. as expected, among the solutions developed by cloud providers we also find accounting applications, whose advantages are numerous and overcome the disadvantages. this is the reason why more and more managers make the shift towards the accounting under cloud. these changes in the business environment also raise new challenges for the teachers who train students in accounting and information systems. our paper presents some basic concepts related to cloud computing technology and the modifications it implies in organizing and managing an accounting company, and also connects these issues to some approaches that might be considered in the work with the students. 193 păcurari, nechita 2. cloud computing features cloud computing consists in a set of applications, data storage, and computing process services, which are delivered by a provider in remote mode, from locations that the client is not aware of and which are accessed only on request. there are three main cloud delivery models of services:  infrastructure as a service (iaas) – the provider owns the infrastructure and makes it available to the users, who are allowed to use and configure the resources directly, according to their needs, running on them operation systems and applications;  platform as a service (paas) – the provider offers to the developers access to a platform on which they implement and test their applications;  software as a service (saas) – the provider delivers final applications that users may access, usually through a web browser, without being allowed to modify them (except some configuring and customizing options). among the technologies that made cloud computing possible we count grid computing, server virtualization, and dynamic planning (mihalache, 2011). as well, the experience gained in management of large infrastructures and service-oriented architectures is fundamental. but cloud computing integrates all these and brings new features such as self-service, dynamic scaling (vaquero et al, 2011), and pay per use (youssef, 2012). cloud computing advantages include:  cost reduction, as long as the computing infrastructure and licenses for os are no longer required, and neither is the human resource qualified in it. the users only need to buy ready-to-use services;  scalability, allocation and de-allocation of resources made available by the providers are done in accordance with the needs of the users;  increased adaptation to new, specific demands such as storage or overload requirements (), or to the need of high computing performance, due to the flexibility of infrastructure and software architecture;  flexibility, in case of low availability and experience in exploiting the logistics of web site hosting;  improved remote access and collaboration between users (employers, employees and clients as well), who can work wherever they are, on any device with internet connection;  quality of services, as far as the provider are experienced companies, with highly qualified personnel and up to date os and applications;  low risk on data storage and the possibility of data recovery in case of unexpected events, as the providers manage the information in specialized data-centers;  controlled access of the resources in the cloud, as the user may plan its demands to the provider and therefore minimize its costs (the value of monthly payments depends on what is effectively performed). however, beside the advantages there are also several aspects that may arise and generate disadvantages for the users. these are mostly related to data security, issues regarding the property and the continuity of services (du & cong, 2010). data security appears as a problem because data are transmitted, processed and stored in a third location, which is not known by the data owner. there is a fear of the user that its data could be intercepted by those who have access in the data centers. if these fears are motivated or not, it’s the time who will validate. for now, the countries which are more advanced in using cloud computing try to protect their users by implementing specific standards (zissis & lekkas, 2012; khan et al, 2013; ristov et al, 2012). in usa, the national institute of standards and technology 194 some considerations on cloud accounting (www.nist.gov) created a workgroup for cloud computing security and published a list of security and authentication protocols, such as: xml encryption syntax and processing, transport layer security, key management interoperability protocol si security content automation protocol (alali & yeh, 2012). at the eu level, the strategy of the european commission (european commission, 2012) also envisages better standards in this field, as well as the broadening of cloud computing use in the private sector, but especially in the public sector, with the aim of making it efficient. standards are essential in order to achieve a large adoption of the cloud computing services. the issue regarding the property rights equally concerns data, infrastructure and applications. in the traditional approach, both hardware and software are in-house, while in cloud computing the approach is different. for example, although the data introduced, processed, and stored belong to the user, he does not have an entire control over them, as data are stored in a data center, whose location is unknown. conversely, although the system and the applications belong to the cloud provider, the user could also come up with claims related to the property rights on the adaptations specific for its business that he may realize in order to customize the cloud services for his own clients. looking at the continuity of services, the risk may arise from interruptions in the provider’s activity. no matter weather he cuts-off his business or transfers it to another company, there will be a disruption period which may seriously affect the activity of users. interruptions may also appear if internet connectivity is not available, but this are usually short in duration and cannot be reproached to the provider. 3. cloud computing for business and accounting as underlined above, the benefits of cloud computing are important, though recommending this technology as a solution to be considered. for a company, the main convenience would be reducing costs with the it infrastructure. instead of making investments, the company could space out the payments while using cloud infrastructure and paying a monthly rent. due to the flexibility of cloud solutions, the company may use the cloud resources according to its needs, therefore the renting costs would be proportionate to the volume of the transactions done in a certain period, hence with the corresponding income (alali & yeh, 2012). hereby, the financial flow can be improved. however, cost reduction cannot be estimated but after a careful analysis of the prices applied by the providers, which are not very low, for the most part. it is expected that the market will equilibrate these prices, as the number of the cloud services providers grows. the start-up companies, as well as the smes which still do not posses their own infrastructure, are most favoured by the existence of cloud computing services and can easily decide on what to ask for (gupta et al, 2013). these entities do not need to develop an it department and its personnel. the companies that have such structures and have already purchased it systems and software need to run a very careful analysis before leaving the traditional way and dropping out the infrastructure and inhouse applications. besides recovering the investments, they have to consider the issues related to data processing under cloud. an incompatibility between systems is quite possible, making the transfer of the historical data infeasible and thus requiring a disjunctive solution. although cloud computing offers three types of resources – infrastructure, data storage and applications – these are interdependent and the clients cannot access them 195 păcurari, nechita separately. for instance, the provider cannot render data storage without making available the necessary infrastructure and specific databases applications. sometimes, several providers cooperate in order to deliver an united solution under cloud. in such cases, compatibility is required between providers, which leads to the necessity of standards. under any circumstances, cloud computing architecture is essential (yoo, 2011), because it influences the access to the network and the interconnectivity of data centers. cloud computing also allows companies to run supporting applications which can improve the businesses, such as: sales and purchase inventory, launch and tracing routines for the production area, human resources applications, or communication and media solutions (ruiz-agundez et al, 2012). a type of business which can highly benefit from cloud computing is that implying sales through agents or through stores spread across a territory. for such cases, applications under cloud allow online communication between any two points, gathering of data and their centralization in real time, regarding stocks, sales, and cashing. managers may see the whole database at any moment, from any place, and thus may have a better control on the activity of the company (weinhardt et al, 2009). practically, the cloud can facilitate the access to an enterprise resource planning with high performances for the company, based on a monthly rate. as can be easily concluded from the above, through accessing cloud computing as an utility, the companies can highly improve their efficiency and capacity to respond to the demands of the clients. lately, this quick response capacity can make a big difference in the business environment. the accountancy of a company may also become much easier to run through cloud computing services. in this case we speak about cloud accounting, a modern concept in the processing of the accounting data. the accounting software is made available online for the company and may be accessed from any mobile device. this way, the company benefits from excellent applications, latest modern technologies, and automated updates. but most of the users are interested in the resilience of the service offered by cloud and in data security. therefore, providers are also concerned by these issues and demand the standardization, which would certainly raise the clients’ trust in cloud services. this attitude is shared by the international organizations for standardization, be they involved in delivering standards in it (such as cloud security alliance, european network and information security agency, cloud standards customer council, the european telecommunications standards institute, distributed management task force, open cloud consortium), or dealing with auditing. it appears that, regarding the audit, the accountants would prefer a model based on assurance (instead of one relying on regulations) and a more important role in the market for the accounting profession (du & cong, 2010). the main issue with the standards is that their development takes too long, when comparing with the evolution of cloud computing services. anyway, the professionals who must provide services for the companies which use more and more the information technologies, are permanently challenged. moreover, it is under question if the accountability standards still respond the present-day requirements. the accounting standards have developed based on the traditional, manually operated processes (vasarhelyi, 2012). nowadays, there are new possibilities to measure and inventory the economic values, and to access the information online, while managers may get data and explicit reports in real time, without needing accountability knowledge for understanding them. the novel concepts of continuous reporting, continuous monitoring, and continuous assurance () question the problem of usefulness of professional standards. 196 some considerations on cloud accounting 4. the education for accounting the graduates of the accounting study programmes have to acquire the competencies that they need in order to deal with the main challenges raised by their profession:  modifications of the accounting regulations, but especially those in the field of taxation. as for romania, the amendments of the taxation legislation are very frequent and cause difficulties both to the managers of the economic entities and to the specialists in accounting;  the rapid changes that information technology brings in the clients’ business and, consequently, in accountability. if the shift from the manual processes in accounting to the computerized stage has been more easy to understand and accept, the current evolutions in it lead to thorough modifications in accounting. the study programmes in accounting usually include, in their curricula, courses in informatics and ict. those in accounting and information systems in romania include several disciplines in this field, such as: basics of information technology, databases, programming languages, office automation, design and audit of information systems, management information systems, etc. there is a permanent concern regarding the necessity to update the content of these disciplines. in line with the current trends, the courses should include information regarding cloud computing technologies, cloud architecture, data security, and other related issues. the students are very much opened to new ideas and approaches and can easily adapt to the new requirements, if they are given the basic information and skills. the use of mobile devices and technologies should be extended to the teaching and learning processes, and they would certainly be successful. the challenges that the accounting profession arises require a permanent training effort from the students, both during the faculty period and after. it is important that teachers lead their students towards individual learning and research, thus helping them to get used to search for information on their own. after graduation, the study must continue because the knowledge acquired in school may become outdated very soon, due to the overall evolution of science and technology, and to the specific progress in accounting. that is why both universities and professional bodies invite practitioners to attend modern, up-to-date courses. a well trained, open-minded graduate will manage to adapt and comply with the new conditions, no matter the modifications that may emerge and affect the accounting profession. conclusions the accounting applications implemented under cloud allow the accountants to work with and for their clients from any time and any place, which is an essential need in the actual framework of globalization. but it seems that the trends in information and communication technologies and the rapid evolution of this leading field have a greater impact on accounting, than it may look at a first sight. the post-factual character of the traditional accounting, which still holds today, will no longer be accepted when the cloud solutions will provide managers and employees with information and reports in real time. the role of the specialist in accounting could be somehow restricted, therefore he needs to bring its participation and input in supporting management with the interpretation of synthetic information, with financial analyses, as well as with other services that require a high qualification. under these circumstances, the students in accounting must be trained to be prepared to cope with new challenges of the accounting profession, besides those linked to the frequent changes in the accounting and tax regulations. this facet could be improved if the disciplines in the field of informatics will receive proper attention, and the 197 păcurari, nechita mobile devices will be intensively used in education, in regular learning activities. the competencies that the students acquire have to offer them the possibility to deal with the challenges arising from business internationalization and, inferentially, from the internationalization of accounting. references alali, f. a., yeh, c. l. (2012), cloud computing: overview and risk analysis, journal of information systems, 26(2), 13-33. du, h., cong, y. (2010), cloud computing, accounting, auditing, and beyond, the cpa journal, 80(10), 66-70. european commission (2012), unleashing the potential of cloud computing in europe, available online on http://ec.europa.eu/information_society/activities/ cloudcomputing/docs/com/com_cloud.pdf. gupta, p., seetharaman, a., raj, j. r. (2013), the usage and adoption of cloud computing by small and medium business, international journal of information management, 33, 861-874. khan, a. n., kiah, m. l. m., khan, s. u., madani, s. a. (2013), towards secure mobile cloud computing: a survey, future generation computer systems, 29(5), 1278-1299. mihalache, a. s. (2011), cloud computing, ovidius university annals. economic sciences series, xi(2), 782-787. ristov, s., gusev, m., kostoska, m. (2012), cloud computing security in business information systems, international journal of network security & its applications, 4(2), 75-93. ruiz-agundez, i., penya, y. k., bringas, p. g. (2012), cloud computing services accounting, international journal of advanced computer research, 2(2), 717. vaquero, l. m., rodero-merino, l., buyya, r. (2011). dynamically scaling applications in the cloud, acm sigcomm computer communication review, 41(1), 45-52. vasarhelyi, m. a. (2012), financial accounting standards should not matter: it’s just a layer, journal of information systems, 26(2), 1-11. weinhardt, c., anandasivam, w. a., blau, b., borissov, n., meinl, t., michalk, w., stößer, j. (2009), cloud computing a classification, business models, and research direction, business & information systems engineering, 5, 391-399. yoo, c. s. (2011), cloud computing: architectural and policy implications, review of industrial organization, 38, 405-421. youssef, a. (2012). exploring cloud computing services and applications, journal of emerging trends in computing and information sciences, 3(6), 838-847. zissis, d., lekkas, d. (2012), addressing cloud computing security issues, future generation computer systems, 28(3), 583-592. 198 the possibilities for the creation of a language xml for the formalization of the accounting records 73 the possibilities for the creation of a language xml for the formalization of the accounting records popescu aurora doctoral school of the academy of economics bucharest abstract: during the nineties the main trend in the development of the applications was the supply of support and accessibility for the computers connected on the internet to a wide range of informational resources (data basis, applications). a witness in this are the numerous languages and technologies which permit an easy development of the applications for the processing of data bases with a simple web browser as, for example, the script languages asp, php, jsp etc. many changes took place in the last years regarding the informational needs or the equipments used by different users. so, today not only the computers are connected on the internet, but also a wide range of equipments as mobile phones and many home utility devices. as a result of these needs, it became an imperative necessity the conception of an universal language that be understood by all these diverse equipments. xml is the answer to this requirement, this language representing a new step in the development of the informational epoch. xml appeared as a consequence of the limits of the html (the language of the web pages), this last one being incapable to use data for other applications. flexibility is one of the fundamental features of the present business environment. in this sense it is an imperative requirement that the economic information or other data be available on pc connected both to the company’s network and to other locations. at the same time, the data supplied by these systems should be permanently actualized in concordance with the momentarily economic situation of the company. the world wide web is the service capable to offer the support for such informational systems . these are going to be accessed with the help of a traditional web browser. the present technologies allow the realization of some complex programs , that allow connection to data basis and that generate dynamically the web pages. the development of xml began in 1996 and from february 1998 xml became a recommendation of w3c . but only apparently this technology is young. before xml there was sgml, created at the beginning of 1980, an iso standard from 1986 and used on a large scale in projects which involved big documentation. in 1990 html was born. so xml’s designers took over the power of processing developed by sgml and the facility in use of html. but some evolutions are hardly distinguished from revolutions...we should also mention that while sgml is mainly used for technical documentations and less for other kinds of data, in the case of xml takes place the opposite thing. xml allows the definition of a new document format combining and reusing other formats. xml is a program capable to store data from various sources, including structured and semi-structured documents, relational data basis and containers of objects. as a method of presentation for these data it is used a self-descriptive hierarchical representation which provides the possibility to present the data without losing their semantics and which can be easily interpreted by applications. so an application which receive an xml document can interpret it in different ways, can filter it by content or can restructure it depending on the needs of the respective application. this feature of selfdescription and the particularity of the structure make from xml an ideal language for representation and for data exchange. because of the hierarchical modality of storage we can use the quality of the parents and children knots to inherit or to have its own attributes. when the documents are stored and represented in xml format, the content of it can be queried in order to be studies and scientific researches edition: economics, no. 13 (2008) the possibilities for the creation of a language xml for the formalization of the accounting records 74 extracted, analyzed and synthesized. but the efficiency of the extraction of these data depend on the way these are stored and on the application that perform this operation. the documents entry-centered use the meta-language xml for the transport of data. they are designed to understood at machinelevel. it has no importance for the application or for the data base if these data are stored or not, for a period, in an xml file. examples of entry-orientated documents are : orders of sale, flight hours, scientific data, stockexchange quotations. these entry-orientated documents have a regular structure, precisely defined data (the smallest independent unit of information is an attribute or a token – pcdata) and could have a mixed content. the order in which the data appear has a significance only at the validation of the document. the types of data from the documents which use an entry-centered representation can come both from the interior of the data base (in this case it is intended an exposition of the data base in a xml format) or from the exterior of the data base (in this case it is intended a storage of the information in a data base). xml or extended markup language is in fact the brother of html (hyper text markup language). a number of similitude exists between the two languages – they have a commune origin ,sgml – standard generalized markup language, a general language, which offer to the users the possibility to organize the data in an electronic format , with the help of some mechanisms similar to those from a classical grammar. in fact html uses a set of tags by which is defined the way how the information will be posted on the web browser used. the set of tags of a html language is finite and is generated with the help of sgml technology. in these conditions there is no possibility to chose a particular set of tags, an important limitation in some cases. so it is inadequate the use of html language to transport applications that work with data basis. unlike html, xml offer the user the possibility to define his particular set of tags in order to format a document. this flexibility is a necessary element in the definition of the electronically specialized documents. sgml is a complex language, difficult to be used on a large scale, and xml represents a simplified solution. in xml a particular set of tags is possible and the significance of the information is more evident and can be easy taken up by other applications. for example, if from a catalogue it is wanted to be extracted the data related to products and prices , the method of work will be different in the two languages. in the case of the use of html, the modality of the extraction of the data is artificial, without clear marks regarding the information regarding the price or the product name. in the case we use xml to define a catalogue of products, we will have fixed marks representing ‘price’ and ‘product’ tags, in order to extract the data . as a conclusion, we can say that html defines the way in which the information is displayed and points out the form and the appearance of information, while xml treats in particular the definition and storage of information. html is used to create web pages and xml is going to be the technology that facilitate the exchange of information between data basis. like html files , xml uses the text format to store the information , in this way it is possible the transport of data on any platform or device. xml provides support for specification and validation of the complex documents with the help of dtd (document type definition) schema format. the principal elements of a xml technology are the following: the xml file which includes the set of tags and the information transmitted with the help of it the declaration of the validity rules and of the types of data contented in the document with the help of dtd language (data type declaration). with dtd will be defined the set of tags used to mark the document, as well as the validity rules for the data included in the document, if necessary. studies and scientific researches edition: economics, no. 13 (2008) the possibilities for the creation of a language xml for the formalization of the accounting records 75 dtd has the role to validate the content and the structure of the xml file. if for xml it is optional, in the case of sgml documents that section is compulsory. in present there is a number of dtd dedicated to specialized fields: hl 7 specific to the healthy field or mathml specific to the documents which include mathematical operations. with the help of these pre-created dtd the information can be organized more efficient in particular domains. xsl style sheets are used to display the data from a xml file to a browser. the style sheets have a similar role to formatting declarations in the css files (cascading style sheet). in this way it can be established a tabular structure to display data, colors, fonts as well as other elements for formatting the data included in a xml file. some specifications regarding the xml file :  the first line of the file specifies the version of the program and the codification of the characters used in the file  at the beginning of the xml file , one can still set the definition and formatting rules of the data in dtd language, but this is an optional element. there are two possibilities to introduce the dtd declarations :directly in the xml file, or to insert them in a distinct file with this extension.  there can be introduced, in the beginning of the file too, references towards the style sheet xls, establishing that how to format the document.  the proper beginning of a xml file is marked by the tag ‘root’, which has a similar function to the tag <html> specific to the html language(for example the tag root is represented by <catalogue_prices>).  the xml file, similar to html file, is well-balanced as regards the tags used. in this sense, for every start-up tag it will be a similar one which will end the respective element (for example, in the case of a ‘root’ tag the xml will be ended by the declaration <catalogue_prices>. what relation is between xml and the data basis? there is a simple answer: xml is the easiest and most efficient way by which data can be transported on internet. xml is a kind of envelope, a container where the information from the data base is encapsulated and distributed on the internet and the data stored in these files will be available to any device on any platform. in the past, for the transportation of data between different platforms there were used text files in which the data were separated by comma or by other special character. beginning with xml this past way of transfer became old fashioned. compared to the other ways of data transfer xml has the advantage of simplicity, an efficient organization of information and the possibility to display the information on any platform or device. because of the penetration of the internet in the most diverse fields, we could conclude that there are no more independent data basis, but only interconnected data basis. for an example we propose the following scenario: a player on the stock exchange wants to obtain the daily stock exchange quotations displayed on the stock exchange site. the memorizing of data regarding the stock exchange quotations in a data base on a personal computer (for example in access) can take place as follows: the user files a request to the data base web server asking for the desired stock quotations ; the web server transfer the request to the data base server in the form of a sql inquiry and this last server sends back the specified set of entries; the data sent by the server are packed and delivered in xml format to the client via the web server; the data are taken up on the user’s pc that sent up the request and transferred on the data base which contains statistical data related to the stock exchange quotations. this scenario represents a simple example of interdependence and communication related to the internet and xml technology. the points 2 and 3 in this scenario tend to unify. in this sense the most data base administration systems have incorporated facility of export of data in xml studies and scientific researches edition: economics, no. 13 (2008) the possibilities for the creation of a language xml for the formalization of the accounting records studies and scientific researches edition: economics, no. 13 (2008) 76 format and is no more necessary to use collateral applications. access xp provides the possibility to easily export data in xml format, including in this sense a set of facilities . to perform that operation one has to select a table or an inquiry in the data base, and then chooses from the file menu the option export , selecting in the dialog box an xml file format. on the displayed window there is the possibility to establish a series of options regarding the export of the data in an xml file format as follows: the characteristics set used to create the file (utf 8 represents the 8 bit characteristic set unicode); establish if it will be created the scheme to describe the data included in the xml file, a function similar to the one of the dtd language , aiming to verify the data integrity in the file xml; there is also the possibility to establish if it will be created a style spreadsheet destined to establish the way the information will be displayed from the xml file on the web browser; access has a similar function by which one can import data sent in a xml format in an access data base. conclusions xml is a high important technology which permits an increased interchangeability of information between different systems. in a world in which the internet has an overwhelmed importance and where there is a multitude of devices connected to the internet, xml represents a technology with the help of it the data can be transferred on the most various platforms. xml is independent of a hardware and software platform, being a meta-language easy to be used in the definition of a new types of documents by a formal specification. out of these reasons, xml is the central element for the development of many applications or for different data administration systems. references: [1] buraga s., tehnologii web, polirom, 2006; [2] bourret, xml and database, campus xlm-2005 [3] obasanjo d, an exploration of xml in database management systems, 2001 [4] bansal v, alam a, study and comparison of techniques to efficiently store and retrieve xml data [5] bray t, paoli j, sperberg-mcqueen cm, and maler i, extensible markup language (xml) 1.0 (second edition) ,october 2000, 2005 [6] www.25hoursaday.com/storingandqueryingxml.html [7] www.w3.org [8] www.xml.com http://students.info.uaic.ro/%7eevalica/papers/dbxml/www.cs.duke.edu/%7evkb/advdb/xmldatabase/documents/finalreport.doc http://www.25hoursaday.com/storingandqueryingxml.html http://www.w3.org/ http://www.xml.com/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 41 the evolution of the capital market in romania in the context of the covid-19 pandemic cătălin drob “vasile alecsandri” university of bacău, calea mărășești 156, bacău, 600115, romania catad@ub.ro valentin zichil “vasile alecsandri” university of bacău, calea mărășești 156, bacău, 600115, romania valentinz@ub.ro cosmin grigoraș “vasile alecsandri” university of bacău, calea mărășești 156, bacău, 600115, romania cosmin.grigoras@ub.ro vlad ciubotariu “vasile alecsandri” university of bacău, calea mărășești 156, bacău, 600115, romania vlad.ciubotariu@ub.ro andreea feraru “vasile alecsandri” university of bacău, calea mărășești 156, bacău, 600115, romania andreea_feraru26@yahoo.com abstract the purpose of this study is to emphasize the main aspects regarding the evolution of the capital market in romania in the context of the covid-19 pandemic. this study tries to present the main aspects which marked the evolution of the national capital market in the last period. the domestic capital market went through a delicate period during the beginning of 2020, since in times of crisis the stock markets react emotionally and thus, are recorded relatively important fluctuations. although the covid-19 pandemic created a lot of uncertainty in the capital market, the end of 2020 brought back optimism among investors. in 2021, the d domestic capital market recovered all the decreases registered in 2020 and ended this year with very good results. keywords capital market, bucharest stock exchange, stock market indices, covid-19 pandemic jel classification d53; d73; h12; h57: e44 introduction the financial market consists of all the relationships and mechanisms through which the creation and trading of financial assets, such as shares, bonds, derivative financial instruments, currencies, etc. are performed. there are several ways to classify the financial market, but if we consider only the lifetime of financial assets (securities), we distinguish two components of the financial market, namely: the money market and the capital market. the money market is a shortterm and very short-term financial market (less than a year) where the demand and mailto:valentinz@ub.ro the evolution of the capital market in romania in the context of the covid-19 pandemic 42 supply of money (financial assets) are confronted, which is adjusted to a certain specific price (interest rate). the capital market is that component of the financial market on which the demand and supply of capital, materialized in securities with a maturity of more than one year, is confronted. in turn, the capital market is divided into primary market and secondary market. the primary market is the market where new issues of securities are negotiated for the first time. once securities are put in circulation in the primary market, they are subject to secondary market transactions. the effective functioning of the secondary market is realized through negotiations markets or organized markets such as the stock exchange. (drob, 2014). romanian capital market in romania, the capital market has had a discontinuous evolution. founded in 1881 and officially opened on december 1st, 1882, the bucharest stock exchange created the premise for the development of the domestic capital market. this development has been accentuated by the creation of an appropriate legislative framework. with the establishment of the communist regime in romania after the second world war and the start of the process of nationalization of the national economy, the bucharest stock exchange lost its object of activity and closed in july 1948. after 1989, with the change of the communist regime in romania and the transition to a market economy, the premises for the reopening of the bucharest stock exchange were created. this resumed operations on april 1st, 1995. currently, on the bucharest stock exchange, domestic companies can be admitted on the main market (regulated market) or the aero market (bvb's alternative trading system). the main market is dedicated to joint-stock companies with equity of more than eur 1 million and which are at least 3 years old. the aero market has been operating since 2015 and is dedicated to younger companies (or those who do not meet the conditions for admission to the main market) and smes. shares and bonds can be issued on both the main market and the aero market (www.bvb.ro 10.01.2022). in addition to the two markets for domestic companies, within bvb also operates a market dedicated to international companies, called smt intl. each stock exchange has its system of stock market indicators that express the performance of that stock exchange. the main stock market indices with which bvb operates are: the bet (bucharest exchange trading) index, which reflects the overall trend of the prices of the most liquid shares traded on bvb. the number of companies included in the calculation of the bet index is variable, with a minimum of 10 and a maximum of 20 companies; the bet-c index, which reflects the overall price trend of all shares traded on the bvb; the bet-fi index, which reflects the evolution (the price changes) of the sifs (financial investment companies) listed on the bvb; the bet-tr index, which reflects both the evolution of the prices of the most liquid companies (excluding sifs) and the dividends paid by them. the bet-xt index, which reflects the change of the prices of the 25 most traded companies on the bvb regulated market, including sifs. the bet-ng index, which reflects the evolution of the share prices of companies operating in the energy field, etc. http://www.bvb.ro/ drob, zichil, grigoraș, ciubotariu, feraru 43 recent evolution of the capital market in romania after the reopening of the bucharest stock exchange in 1995, were recorded increases in the capital market until 1997, followed by a significant decline of the romanian companies shares traded on bvb, both in value and duration. the end of the year 2000 is the moment when the reversal of the trend of the evolution of the stock market was realized. since then, the evolution of this market has been a positive one until the beginning of the economic-financial crisis of 2008. the year 2008 was one of the most difficult years on the capital market in romania. thus, the official index of the bucharest stock exchange, bet, lost 70.5% of its value in 2008. the capital market recorded a significant recovery in 2009 and stagnation in 2010. since 2010, the evolution of the value of the share transactions on the regulated market of the bvb recorded an increase till 2014 and a decrease in 2015, followed by a new increase until 2017 and a decrease in 2018 and especially in 2019. synthetically, the evolution of the value of the share transactions and the stock market capitalization, on the regulated market of the bvb, from 2010 to 2019, is presented in the followings table and graphs: table 1. the evolution of the value of the share transactions and the stock market capitalization at bvb, on the regulated market of the bvb, from 2010 to 2019 year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 share transactions value (billion euros) 1,3 2,3 1,7 2,5 2,9 2 2,1 2,6 2,5 2 stock market capitalization (billion euros) 23,9 16,4 22,1 30 29 32,2 32,3 35,3 30,7 37,8 fig. 1. the evolution of the value of the share transactions on the regulated market of the bvb, from 2010 to 2019 fig. 2. the evolution of the value the stock market capitalization at bvb, from 2010 to 2019 the year 2020 was a difficult year for romania from an economic point of view due to the negative economic effects generated by the covid-19 pandemic. this pandemic broke out in late 2019 in china and has since spread rapidly around the world. in romania, the first person infected with the sars-voc-2 virus was detected on february 26th, 2020. the covid-19 pandemic had a strong impact on the evolution of the capital market at the beginning, due to investors' fears about the evolution of the pandemic, especially at the pandemic beginning. it is well known that market uncertainty leads to the volatility of the financial instruments with which the market operates. with the appearance of the news about the new coronavirus, the bucharest stock exchange lost in the first three months of 2020, 13 billion euros from the capitalization, registering at the same time depreciation of the traded shares. also in the first quarter of 2020, bvb's stock market indices depreciated massively compared to the level recorded at the end of 2019, the the evolution of the capital market in romania in the context of the covid-19 pandemic 44 most important stock market index of bvb decreasing by 23,6%, in tune with the decreases recorded in other international stock exchanges. european union stock market indices also ended the first half of 2020 below prepandemic levels, with two exceptions (denmark and latvia). regarding bvb, in the first half of 2020, the stock market indices were below the level registered in december 2019, because of the reduction of economic activity in many sectors of activity. however, since april 2020, there has been recorded a growing trend in the value of these indices, amid measures to support the economy announced by the government and investor confidence in the rapid revitalization of the national economy deeply affected by the covid pandemic (joldeş c., 2020). for the romanian capital market, the date of september 21st, 2020, meant a very important moment because, on that day, romania was promoted to the status of emerging market. this moment had a very positive impact on bvb. thus, in september 2020, transactions with the shares of companies listed on the bse exceeded by more than 260% the value of transactions recorded in august 2020, while the average daily liquidity increased in september 2020 by about 3.5 times compared to the value recorded in august 2020. analysing the performance achieved by bvb throughout the year 2020 reveals both negative and positive aspects. the negative aspects concern the decline in bvb's main stock market indices and market capitalization (from 37.8 billion euros to 31.7 billion euros) compared to the levels recorded at the end of 2019. the positive aspects aim at reaching absolute bvb records in 2020 in terms of trading value on the main segment (3.77 billion) and average daily liquidity, with all types of financial instruments (over eur 15 million). in summary, the evolution of the main stock market indices of bvb in 2020 is presented in the following table: table 2. the evolution of the bvb indices, from december 2019 to december 2020 bvb indices [mil. euro] dec 2019 jan 2020 feb 2020 mar 2020 apr 2020 may 2020 jun 2020 jul 2020 aug 2020 sep 2020 oct 2020 nov 2020 dec 2020 bet 7.273 7.312 6.603,7 5.50 6,2 5.74 1,4 6.26 0,7 6.23 1,1 6.04 1,8 6.47 6,7 6.44 4,7 6.08 3,6 6.63 9,2 7.01 1,5 bet-fi 21.590,2 23.28 0,1 20.55 0 17.7 38,8 18.1 15,7 19.7 57,5 19.1 99 18.9 30,6 18.7 81,1 18.7 40,7 17.3 99,8 17.4 96,4 19.1 85,2 bet-tr 15.043,1 15.12 3,9 13.65 7,1 11.3 88,6 11.8 75,3 13.1 69,5 13.3 53,5 13.0 16,8 13.9 48,6 13.8 73,8 13.2 17,1 14.4 32,7 15.2 53,7 bet-xt 662,5 670,2 600,5 503,7 524, 8 571, 5 564, 1 548, 2 581, 8 575, 9 541 584, 2 619, 1 bet-ng 569,7 544,4 487,5 416,7 443, 3 491, 3 474, 6 454, 7 494, 7 468, 2 446, 7 485, 2 492, 9 the first quarter of 2021 was a very favourable one for bvb. bet, bet-tr and betxt stock market indices exceeded the values recorded at the end of 2019 and the market capitalization of 36.4 billion euros, well above the value recorded at the end of 2020 (31.7 billion euros) was close to the value pre-pandemic (€ 37.8 billion), at the end of this quarter. also, the second quarter of 2021 was very good for bvb. at the end of this quarter, all bvb stock indices exceeded pre-pandemic values and the market value of local companies listed on bvb's main market exceeded the level reached before the onset of the coronavirus pandemic. in the second semester of 2021, the bvb stock market indices continued their upward trends, amid the economic recovery after the shock generated by the onset of the covid pandemic in romania in early 2020. drob, zichil, grigoraș, ciubotariu, feraru 45 at the end of 2021, we can say that bvb had a very good year, the value of the main stock market index (bet) registering an increase of over 30% compared to the value recorded at the end of 2020 and over 25% compared to the value recorded at the end of 2019. the other stock market indices of bvb also recorded values higher than both the values recorded at the end of 2019 and the values recorded at the end of 2020. fig. 3. the evolution of the bet index of bvb from dec. 2019 to dec. 2020 table 3. the evolution of the bvb indices, from january to december 2021 bvb indices [mil. euro] jan 2021 feb 2021 mar 2021 apr 2021 may 2021 jun 2021 jul 2021 aug 2021 sep 2021 oct 2021 nov 2021 dec 2021 bet 7.362,3 7.287, 2 7.910, 7 8.019 ,1 8.090 ,1 8.391 ,1 8.385 ,6 8.592 8.899 ,9 8.868 ,5 8.580 ,2 9190 ,4 bet-fi 20.078,3 20.68 9,7 21.407 ,8 21.34 3,7 21.35 9,9 23.20 4,6 22.85 3,3 22.63 7,6 23.35 6,3 22.46 2,1 22.46 7,7 2285 8,3 bet-tr 16.016,1 15.85 5,7 17.217 ,2 17.45 3,2 17.95 2,5 18.83 0,4 18.89 1,8 19.52 4,7 20.35 4,5 20.27 5,5 22.46 7,7 2101 4,7 bet-xt 650,7 648 695,7 705,5 707,7 738,4 735,5 751,5 782,1 782,4 752,8 798,6 bet-ng 538 538,5 564,9 573,4 555,4 551,4 542 549,2 588 625,8 566,7 627,7 regarding the bond issues at bvb, in the 2 years after the outbreak of the covid pandemic, we can say that they recorded record levels, well above the values recorded in previous years. thus, in 2020, 6 issues of government securities and 11 issues of bonds took place at bvb, with a total value of about 1.1 billion euros and in 2021, the total value of both state and corporate bond issues exceeded 1.6 billion euros well above the value recorded in 2019 (417 million euros). this highlights the fact that investors in bvb are no longer so much interested in the level of return on investment, but rather in the lower risk of the bonds. the evolution of the capital market in romania in the context of the covid-19 pandemic 46 fig. 4. the evolution of the bet index of bvb from dec. 2019 to dec. 2021 synthetically, the evolution of the bond transactions and, on the regulated market of the bvb is presented in the following table and graph: table 4. the evolution of the bond transactions and, on the regulated market of the bvb, from 2010 to 2021 year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 bond transac tions value (million euros) 620 128 321 314 216 645 301 342 469 417 1070 1635 fig. 5. the evolution of the bond transactions and, on the regulated market of the bvb, from 2010 to 2021 drob, zichil, grigoraș, ciubotariu, feraru 47 if we compare the evolution of the capital market since the onset of the covid pandemic and so far with the evolution of the number of daily cases of people infected with the sars-cov-2 virus in romania (chart no. 6), no causal relationship can be identified. if the evolution of the number of daily cases of people infected with the sars-cov-2 virus in romania, so far, has been characterized by an oscillating evolution, with 4 large peaks (waves), the evolution of the capital market in romania, after the onset of the covid pandemic it was a steep downward trend until the beginning of the second quarter of 2020, after which the capital market entered an upward trend, timid at the beginning and stronger at the end of 2021. fig. 6. total cases per day (https://covid19.geo-spatial.org/statistici/statisticigenerale?chart=cazuri-pe-zile (12.01.2022)) conclusions the evolution of the romanian capital market in the context of the covid-19 pandemic was marked by a sharp decrease of the bvb's stock indices, at the beginning of 2020 amid uncertainties regarding the evolution of this pandemic worldwide and nationally. with the announcement and implementation of the first measures to recover the economy severely affected by the lockdown imposed by the national authorities, the romanian capital market gradually recovered, recovering the losses recorded at the beginning of 2020. by the end of 2021, all bvb's indices recorded values much higher than the values recorded before the covid pandemic broke out. romania's promotion to the status of an emerging market, in 2020, was a big step forward for the domestic capital market. this statute created the premises for attracting new investors to the romanian capital market and the favourable conditions that would lead to the further development of this market. references drob, c., “recent evolution of the capital markets in romania”, studii si cercetări ştiinţifice, seria ştiinte economice, facultatea de știinte economice, universitatea “vasile alecsandri” din bacău, no. 20 / 2014, pp. 122-127 https://covid19.geo-spatial.org/statistici/statistici-generale?chart=cazuri-pe-zile https://covid19.geo-spatial.org/statistici/statistici-generale?chart=cazuri-pe-zile the evolution of the capital market in romania in the context of the covid-19 pandemic 48 joldeş c. c., impactul covid -19 asupra pieței de capital din românia: o evaluare a indicelui bet și a acțiunilor brd, snp, tlv, fp & snp, revista de studii financiare, vol. v, nr. 9, nov. 2020, pp. 109-131. https://covid19.geo-spatial.org/statistici/statistici-generale?chart=cazuri-pe-zile (12.01.2022) oecd (2021), oecd capital market review of romania 2021: mapping report, oecd capital market series. http://www.oecd.org/corporate/oecd-capital-market-review-romania.htm (10.01.2022) www.bvb.ro (10.01.2022) theoretical considerations on the intra-communitary trade statistic system 81 theoretical considerations on the intra-communitary trade statistic system pravăţ ionela-cristina, assistant university of bacău răileanu adriana-sofia, teaching assistant economic sciences academy bucharest abstract: with the integration into the european union, in romania has also been implemented the intrastate statistical system that is based on gathering information on intra-communitary acquisitions and deliveries directly from the economic agents involved in these activities. in the present paper we briefly present a number of legislative issues regarding: the implementation of the intrastate system in romania, persons required to provide statistical data in this regard, the intrastate declaration and threshold values of intra-communitary trade under which economic operators are relieved to convey this statement. after the adhesion to european union, the statistic data collecting system concerning goods trade with other countries has two components: statistic system intrastate – intracommunitarian trade statistic system statistic system extrastate – extracommunitarian trade statistic system because, in the moment when romania become a member state of the european union and a component of the unique market, the romanian merchants did not have any longer the obligation of filling in the customs declaration for the goods commercialized with other member states, the customs control on the commercial exchanges between romania and other member states of the eu disappeared. therefore, in order to substitute the disappearance of this data source, the intrastate statistic system was implemented, a system that supposes the collecting of the information straight from the economic operators from the eu countries that realize goods exchange with other eu member state. at the level of european union, the intrastate statistic system was operational starting with the 1st of january 1993 and has on its basis a series of settlements that are applied to all eu member states: the council settlement no. 638/2004 concerning trade statistics between eu member states and the commission settlement no. 1982/2004 concerning the implementation of council settlement no. 638/2004. in romania, intrastate system is used starting with the 1st of january 2007, the date of romania’s adhesion to european unions. for this, the national institute of statistics elaborated the completion norms of the intrastate statistic declaration, approved in 2007, for their appliance in 2008 [president’s order ins no. 748, published in official monitor no. 879/21.12.2007]. persons that provide intrastate statistic data are obliged to provide statistic data intrastate the economic operators that fulfill simultaneously the following three conditions: they are registered with vat purposes; they realize goods exchanges with other eu member states; the total yearly value of goods exchanges with other eu member states, meaning the total value of entries, respective of dispatching, surpasses the intrastate value threshold established every year for the two categories of fluxes. the main document throughout which the persons that fulfill the above mentioned conditions declare statistic data separately about entries (the fluxes of goods that arrive from other eu member states towards romania) and dispatching (the fluxes of goods that exist from romania towards other studies and scientific researches edition: economics, no. 13 (2008) theoretical considerations on the intra-communitary trade statistic system 82 eu member states) is the intrastate statistic declaration. in rapport with the moment when the value threshold for those two categories of fluxes is surpassed, there are two categories of operators: economic operators that in the previous year surpassed the value thresholds established for the current year will transmit the intrastate declaration for all the months of the year; economic operators that surpass the value thresholds during the year will transmit the intrastate declaration starting with the month when the value thresholds were surpassed. for an operator that is currently provider of statistic data, the obligation of filling in the intrastate declaration disappears in the moment when, after an entire year, this has not reached a cumulative level of intracommunitarian goods exchanges, superior to the effectual intrastate threshold. the value intrastate thresholds the statistic thresholds represent the value limits of intra-communitarian exchanges beyond which the economic operators are exonerated from transmitting the intrastate declaration. these are separately established, and it can bear different values for intra-communitarian goods entries and dispatching and are yearly published in the romania’s official monitor, at the end of the anterior year to the one when the value thresholds are effectual. the intrastate value thresholds established by national institute of statistics for 2008 are the following: for intracommunitarian entries 300.000 ron, and for intra-communitarian dispatching 900.000 ron. intrastate declaration intrastate declaration is always handed in until the 15th of the month that follows the reference one, on electronic support, at the national institute of statistics, by using two electronic manners of filling in and transmitting the information, respective the on-line and off-line intrastate declaration. as it may be seen from the table below, the intrastate statistic declaration may be transmitted under two forms, the standard declaration and the extended declaration. therefore, it is possible for an operator to hand in the standard declaration for a certain category of fluxes and the extended declaration for the other flux, if the fluxes are situated on different categories. table no.1. example of statistic declaration according to annual value of intra-communitarian goods exchanges declaration type entries dispatching there is no obligation of sending the statistic declaration intrastate < 300.000 ron < 900.000 ron the standard declaration – all information are completed, less the statistic value ≥ 300.000 ron < 10.000.000 ron ≥ 900.000 ron < 20.000.000 ron the extended declaration – where all the information are completed, including the statistic value ≥ 10.000.000 ron ≥ 20.000.000 ron source: president’s order ins no. 748, published in official monitor no. 879/21.12.2007. the interstate statistic declaration does not have to he written down for the following cases [economic tribune magazine, no.26/03.2008, bucharest, p. 23]: a) services trade; b) goods in simple transit; c) temporary goods movements; d) goods movements for/after reparation and/or sustenance; e) goods exchange with those territories of eu member states that do not belong to the statistic territory of eu member states; f) exchanges of goods in the frame of triangular trade, in the situation when the studies and scientific researches edition: economics, no. 13 (2008) theoretical considerations on the intra-communitary trade statistic system 83 goods no not enter on the romanian territory from other eu member states or there are not sent from romania towards other eu member state. references: [1] hinkelmann e. (2001), foreign trade dictionary, teora, bucharest; [2] *** economic tribune magazine no. 26/03.2008, bucharest; [3] *** fiscal code, completed and modified with law no. 343/17.07.2006; [4] *** law no. 86/2006 concerning customs code of romania, published in o.m. no. 350/2006; [5] president’s order ins no. 748, published in official monitor no. 879/21.12.2007; [6] www.intrastat.ro. studies and scientific researches edition: economics, no. 13 (2008) http://www.intrastat.ro/ the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania 84 studies and scientific researches edition: economics, no. 13 (2008) the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania rotilă aristiţa, lecturer, phd university of bacău abstract: the body of expert and licensed accountants of romania (ceccar) is the institution that manages the romanian accountancy profession. at the same time, by elaborating the professional standards for a whole range of services offered by accountants, standards that are references when it comes to appreciating the quality of the services provided by this professional category, ceccar fulfilling the role of organism of normalization for its members. this role „is subordinated to the quality of elaborated standards and to the credibility of the organization”. the change of our country’s economic, social and political system, in december 1989, has consequently imposed changes regarding the status of some professions, including that of accountancy profession. as a natural consequence, it was necessary for the professional institution to be re-organized, after a long period of inactivity, institution that represented, form 1921 to 1951 the romanian accountancy profession. the existence of professional accountants organism was officially acknowledges together with conferring juridical personality according to the court order no. 22 form 10th july 1992; this institution was given the title the body of expert and licensed accountants of romania1. although there are references to the specific activities of the accountancy profession since 1990-1991, in company law no. 31/1990 and accounting law no. 82/1991, the settlement of this profession is done much later, together with the making and endorsement of the government ordinance no. 65/1994 on the organization of the expert accountant and licensed accountant practice, approved and amended by law no. 42/1995. as soon as these regulations, which 1 in efforts to re-establish ceccar must be retained and the following points: setting up the general association of accountants and technical experts from romania, in january 1990; setting up, through modification of the registration at january 1990, of two independent bodies: the body of experts accountants and the body of technical experts, in october 1991. have officially marked the beginning of free and independent profession of expert accountant and licensed accountant, come into being, the following were approved:  regulations concerning the exams organized to become on expert accountant and licensed accountant (hg no. 316/1995);  regulations concerning the organization and the working of ceccar and the code of ethics and professional conduct for expert and licensed accountants (ceccar ruling no. 1/1995). subsequently, on the basis of government ordinance no. 75/1999 concerning the activity of financial audit, a new institution has appeared, chamber of financial auditors of romania – cfar (professional organization of public use without lucrative purpose), that has been given the function of managing the activity of financial audit. so, from this moment on, by the settlement of the law, two separate structures are known: on one hand, the profession of expert accountants and licensed accountants managed by ceccar, on the other, the profession of financial auditor managed by cfar. among the consequences of such an approach, trough which, in fact, has taken place a „taking over of the activity of the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania 85 studies and scientific researches edition: economics, no. 13 (2008) financial audit from the expert accountant”, we get2:  the illegal taking over of a right previously gained by the expert accountants;  violation of the principle of loyal competition by eliminating the expert accountants from the audit market;  forcing the expert accountants to make further financial efforts including passing needles exams, once again and taking up different stages of preparation (the quality of being on expert accountant and licensed accountant, and also the quality of financial auditor, are gained only by on the basis of exams). as this was not enough – elimination of financial audit as an activity that could be done by the expert accountant, by government ordinance no. 71/2001 concerning the organization and practicing of the activity of fiscal consulting, approved with changes and completions by law 198/2002, a new „chamber„ has appeared, „the chamber of fiscal consultants” – cfc (professional organization of public use, legal entity without lucrative purpose) that has as a purpose ”coordinating the activity of fiscal consulting and protecting of its members rights when practicing the quality of fiscal consultant”. so, a new profession appears that of fiscal consultant. as a consequence, another activity is „taken away” from the expert accountant, the government ordinance no. 71/2001, stipulating, in art. 26, the following: „on the day of validating the present ordinance, all the stipulation of art. 6, letter e, which refer to the implementation of fiscal activity, are repealed din government ordinance no. 65/1994 […]”. but nothing can justify such measures of limiting the expert accountant’s tasks. together with the changes brought to the government ordinance no. 65/1994 by the government ordinance no. 17/2007, the expert accountant is given back his right, that is the expert accountants „can practice the activities of financial audit and fiscal consulting, following the specific regulations 2 horomnea e., fundamentele ştiinţifice ale contabilităţii. doctrină. concepte. lexicon, editura tipo moldova, iaşi, 2008, p. 345. of these activities” [art. 6(1), introduced by government ordinance no. 17/2007, has became art. 7 in government ordinance no. 65/1994 republished in 2008). the two organisms, cfar and cfc, follow the imposed rule („following the specific regulations of these activities”), that is the expert accountant must repeat all the conditions imposed by the access to the quality of financial auditor, respectively the quality of fiscal consultant. such on interpretation is equal to the cancellation of the above effect. so from a “whole” were “extracted” two activities components financial audit and fiscal consulting achieving “a distinct regulation of these” in a way that “derange”, respectively “through illegal confiscation of the two activities from the preoccupations of the expert accountant, through the exclusivist and monopolistic nature of these regulation [...] and especially the adverse consequences on protection of the public interest, being two activities executed independently and which, in this way, were placed under control officials” 3. the body of expert and licensed accountants of romania, the institution that manages the accountancy profession in romania, independent, non-governmental, non-profit and of public interest „watches and acts in order for the romanian professional accountants to satisfy the requirements of the market, of the business environment, of the public interest”. on of the aspects that characterizes the accountancy profession of romanian is the fact that „the voice of civil servants within the system of governmental representation of the profession is still too loud” being signaled „significant situations of conflict of interests and incompatibilities, especially regarding civil servants, but also the politicians”. also, „when it comes to the accountancy profession, there are unjustified institutional parallelisms”4. 3 discursul domnului marin toma, preşedintele ceccar, la congresul al xvii-lea al profesiei contabile din românia, revista contabilitatea, expertiza şi auditul afacerilor, nr. 11/ 2008, p. 14. 4 toma m., potdevin j., elemente de doctrină şi deontologie a profesiei contabile, ed. ceccar, bucureşti, 2008, p. 15. javascript:lnk('18097'); the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania 86 studies and scientific researches edition: economics, no. 13 (2008) ceccar has remarkably developed on a national scale, being represented in all the 42 counties by territorial branches. the members of the ceccar5 are 49.197 of professional accountants, 30.311 being active members (11.732 self-employed and 18.579 employed in industry, trade, education etc.) and 18.886 non-active members. the effective members according to their function are: expert accountants 17.705; licensed accountants – 7.203; companies with foreign or mixed capital – 57; companies with national capital – 5.346. the ceccar mission is to serve the public interest, to strengthen the national accountancy profession and to support the strong development of the national economy by establishing and promoting the enforcement of high quality professional standards convergent with the international standards, and by revealing problems of general concern in which the professional expertise is important6. the main objectives that assure the accomplishment of the ceccar mission are:  providing the quality of the services performed to the economy;  the initial education and continuous professional development of the professional accountants;  ethics and deontological behaviour of the professional accountants. as a member of international federation of accountants – ifac, ceccar is committed to carry out the ifac objective of developing and strengthening of an accountancy profession coordinated at international level with harmonized standards. also, ceccar has to ensure that professional accountants keep on developing and maintaining the professional competences required by the users of their services. for this purpose there have been elaborate 5 tabloul membrilor ceccar la 31 mai 2008 în raportul consiliului superior privind activităţile desfăşurate de ceccar în anul 2007 şi semestrul i 2008, nr. 100091/19 august 2008, p. 59. 6 standardul profesional nr. 38 privind dezvoltarea profesională continuă a profesioniştilor contabili, pct. 4, în programul naţional de dezvoltare profesională continuă, ediţia a iii-a, revizuită, editura ceccar, bucureşti, 2008, p.5. professional standards in line with international standards issued by ifac. by elaborating the professional standards no. 38 concerning the continuing professional development of professional accountants, ceccar has assumed the following obligations7: to promote programmes of permanent education for the professional accountants; to facilitate the access of the professional accountants to opportunities and resources of continuous professional development; to establish standards of developing and maintaining the necessary professional competence to protect the public interest; to monitor and implement the continuous development and the maintaining professional competence of professional accountants. the norms contained in the professional standard no. 38 were established on the basis of the international education standard (ies) no.7 issued by ifac, according to that the institutions which are members have to implement a requirement of continuous professional development as a component of the professional accountant’s statute in economy and society. ceccar supplies national programmes of education and development to the professional accountants across the economy through the national program of continuous development of romanian professional accountants, which is on in the 42 counties with the help of the branches of the body. among the attributions of the ceccar, there is also the elaborating and publishing of norms regarding the professional activity and ethics behaviour of experts and licensed accountants, of the professional guidelines in the field of financial accounting. by elaborating the professional standards for the whole range of services provided by the profession of accountant, ceccar has the role of normalization for its members, professional accountants. this role, of the normalized ceccar for its members 7 ibidem, pct. 11, p. 7. the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania 87 studies and scientific researches edition: economics, no. 13 (2008) and the representative of the romanian accounting profession, „is subordinated to the quality of elaborated standards and to the credibility of the organization” 8. the professional standards elaborated by ceccar are references for assessing the quality of the services provided by the professional accountants. at present, there are the following professional standards9 issued by ceccar, corresponding to the different services (missions) provided by professional accountants:  professional standard no. 21: mission of book-keeping, preparation and presentation of financial statements;  professional standard no. 22: mission of examination the accounting, preparation and presentation of financial statements;  professional standard no. 23: the activity of auditor in companies;  professional standard no. 24: missions of financial audit and the conceptual framework on the standardized missions of the expert accountant;  professional standard no. 35: the accounting expertise;  professional standard no. 36: missions of internal audit performed by experts accountant;  professional standard no. 39: mission of consulting regarding the enterprise establishment after sustained efforts to align the policies of ethics and professional deontology of the members to the stipulations of ifac code of ethics10, ceccar adopted the international code of ethics of professional accountants, the 2005 version, issued by 8 toma m., ceccar – vehicul pentru dezvoltarea profesiei contabile din românia, mesajul preşedintelui ceccar în raport anual 2006 al ceccar, p. 4. 9 prior to their publication has been issued, by ceccar, norms for professional missions, namely: norms of financial audit and certification of the balance sheet (1995); national norms of audit and related services (1999); professional norms (2000); norm concerning accounting expertise (2002) and others. 10 in 2002, ceccar managed to align the policies of ethics and professional deontology of the members to the stipulations of ifac code of ethics, in a national code of ethics revised and reclassified under the new edition (at that time) issued by ifac. ifac, as basis of the ethical requirements of romanian professional accountants or, in other words, as their own national code of ethics for romanian professionals accounting (the 4th edition), imposed to be respected when it come to achieve the professional services performed in romania, starting whit january, 1st, 2007. aware of the “great challenge” generated by ias / ifrs and faced by the professional accountants, the professional organism ceccar, with the help of french and italian accountants, has trained a great number of trainers in the field of international standards, specialists of high professional competences, coming from different fields of activity. these have finally contributed to the training of the professional accountants to understanding and applying ias / ifrs. also, to help the professional accountants when applying the knowledge of the facts, the accounting regulations harmonized with the european directives and international standards, ceccar has elaborated „professional guides” for understanding and application of every ias11. at an international level, ceccar has a good partnership with the international accounting standards board iasb and the international federation of accountants ifac. on the basis of their mutual trust, ceccar has received the right for translation and publication in romania, under its signature, of the following standards:  international financial reporting standards, editions 2005 2007;  international standard on auditing, edition 2007;  international public sector accounting standards, edition 2005. also ceccar has involved in the translation into romanian (having the given license by iasb) of the project “ifrs for small and medium-sized entities”, renamed “ifrs for private entities”, so the romanian professional accountants could to be active part in the international process of standardization trough making comments. 11 it is a collection of 32 volumes, published in 20032004. the authors of these “professional guides” are, with some exceptions, university teachers. the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania studies and scientific researches edition: economics, no. 13 (2008) 88 so, true to the principles engraved in the statutes of the european and international organisms, to which it is a member12, ceccar has supported and will continue to support the knowing and applying of international accounting standards / international financial reporting standards and international standards on auditing, in order for “the capital markets in romania to have a high quality reporting and the business environment and governmental sector to use a unique language”. not without importance for the professional accountants are the ceccar congresses, held, according to a tradition of inter-war period, every two years, beginning with 1994. the congresses of the expert accountants and licensed accountants in romania are "real forums of discussion, schools of thinking and perception of the realities of the accountancy profession in romania or anywhere else in the world” 13. each of these ceccar congresses has settled “a topic of reflection”, of great interest and actuality, around which there has been debate, as follows:  romanian accountancy profession role and importance in the transitional phase to the market economy (1994);  the market and the products of the romanian accountancy profession (1996);  romanian accountancy profession and the public interest (1998);  romanian accountancy profession at the boundary between millennia (2000);  regulation and deregulation in accountancy (2002);  harmonization or convergence of international accounting standards (2004);  accountancy profession and globalization (2006); 12 ceccar is recognized as a member of the following bodies: ifac, fee, fidef, seepad, fcm, cilea, the edinburgh group, ecgi, ceplis. moreover, representatives of ceccar are part of the management structures of some regional bodies, namely: fidef, fcm, seepad, cilea. 13 botez d, tradiţii, actualităţi şi perspective ale profesiunii contabile din românia, editura sedcom libris, iaşi, 2005, p. 115.  the accountancy profession: between regulation and public interest (2008). these events, where, apart from a large representation of the romanian accountancy profession, a lot of guests participate, together with european and international personalities, represent opportunities to analyse the phases of development of this profession, its place and role in the economic and social space, the place and role of ceccar within the institutional framework created in our country after december 1989, with the purpose of establishing the directions in which the romanian professional accountants should act so as they could always know what is actual and modern regarding the changes on european and international levels. the body of expert and licensed accountants of romania organism of representation and normalization for profesional accountants of romania 89 references: [1] botez d, tradiţii, actualităţi şi perspective ale profesiunii contabile din românia, editura sedcom libris, iaşi, 2005 [2] ceccar, album 85 de ani de la înfiinţarea corpului experţilor contabili şi contabililor autorizaţi din românia, editura ceccar, bucureşti, 2006 [3] ceccar, cod etic naţional al profesioniştilor contabili, ediţia a iv-a revizuită, editura ceccar, bucureşti, 2007. [4] ceccar, programul naţional de dezvoltare profesională continuă, ediţia a iii-a, revizuită, editura ceccar, bucureşti, 2008 [5] ceccar, raportul consiliului superior privind activităţile desfăşurate de ceccar în anul 2007 şi semestrul i 2008, înregistrat sub nr. 100091/19 august 2008 [6] discursul domnului marin toma, preşedintele ceccar, la congresul al xvii-lea al profesiei contabile din românia, revista contabilitatea, expertiza şi auditul afacerilor, nr. 11/ 2008 [7] dobroţeanu l., dobroţeanu c. l., binomul „contabilitate şi audit” în perioada postrevoluţionară, revista audit financiar, nr. 10/2006 [8] horomnea e., fundamentele ştiinţifice ale contabilităţii. doctrină. concepte. lexicon, editura tipo moldova, iaşi, 2008 [9] toma m., ceccar – vehicul pentru dezvoltarea profesiei contabile din românia, mesajul preşedintelui ceccar în raport anual 2006 al ceccar [10] toma m., potdevin j., elemente de doctrină şi deontologie a profesiei contabile, editura ceccar, bucureşti, 2008 [11] *** ordonanţa guvernului 65/1994 privind organizarea activităţii de expertiză contabilă şi a contabililor autorizaţi, republicată în monitorul oficial al româniei nr. 13 /2008. [12] *** ordonanţei de urgenţă a guvernului nr. 75/1999 privind activitatea a audit financiar, republicată în monitorul oficial al româniei nr. 598/2003 [13] *** ordonanţa guvernului nr. 71/2001 privind organizarea şi exercitarea activităţii de consultanţă fiscală, publicată în monitorul oficial al româniei nr. 538/2001. studies and scientific researches edition: economics, no. 13 (2008) javascript:lnk('21484'); (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro considerations on the treatment of qualitative characteristics of accounting information at the international level and in various national accounting systems ionela-cristina breahnă-pravăţ “vasile alecsandri” university of bacău crisspra@yahoo.com abstract the qualitative characteristics of accounting information presented by financial-accounting reports represent a concept which was subsequently introduced in the national legal accounting framework and, as a rule, the national conceptual frameworks represent the documents by means of which these quality criteria are established. at a worldwide level, there are more international or national organisms that have an important role in the elaboration of accounting standards in general and more specifically in the formulation of qualitative characteristics of financial reporting. we find two important ones among them, and these are: international accounting standards board, which creates and promotes international financial reporting standards (ifrs), and financial accounting standards board, which elaborates generally accepted accounting principles (us gaap). however, at the level of each country a standardizing authority decides the rules for producing the financial reports and the qualitative characteristics that must be respected by the information contained in these documents. in this context, this paper aims to present a few general considerations concerning the treatment of the qualitative characteristics of the financial-accounting information in different accounting systems, such as the american one, or the british, french, german, romanian ones, with insistence on the international approach to qualitative characteristics. keywords accounting system; standardizing institution; conceptual framework; financial information; qualitative characteristics jel classification m41 general aspects concerning the qualitative characteristics of information contained in financial statements economic organisations produce financial-accounting information which is made available to the users. generally, this information is formalized by accepting certain rules or regulations, a framework, a structure, but there are also cases in which this information is not formalized and respects a series of minimal requirements. in the present paper we will focus on the type of accounting information that must strictly comply with certain rules, that is the formalized one which is most often presented by the so-called financial statements. the preparation, transmission, interpretation and use of financial-accounting and economic information represent, in fact, the very essence of the accounting science, and this is, in the view of the american institute of certified public accountants, the process of identifying, measuring and communicating economic information, with the purpose of allowing information users to take decisions on a well-informed basis, as rajasekaran and lalitha (2011) affirmed. 66 breahnă-pravăţ in order to be useful for the various types of users, this accounting information must respect a series of qualitative features. in general terms, the concept of quality has a relatively complex meaning. when we say quality, we refer, first of all, to the quality of an object, product or service, which represents its defining feature or sum of traits that make that object or commodity be what it is and not something else. from this perspective, every object has its own quality, and the term cannot be used to signify a value relation or something similar. as a result, in order to establish if an object is indeed what it is considered to be, it must be subjected to a series of requirements or standards which must be met so that it could be useful to the beneficiary. in financial reporting, by quality we refer to a neo-concept, a concept which is consecutive to that of accounting or financial standard and circumscribes the latter. thus, when we approach the concept of accounting information quality we must take into account that this type of information must also respect a series of characteristics so that, just as in the case of a commodity or service, it should be useful to the representatives of accounting information demand. qualitative characteristics in the international accounting reference framework the reporting entity must respect certain quality criteria regarding the accounting information generated by financial-accounting reports. at the same time, these quality norms contribute to the identification of the information types that can be useful to the representatives of accounting information demand. from the perspective of the international organism for accounting standardization, iasb, the fundamental qualitative characteristics – that accounting information must comply with in order to be useful to existing or potential investors, money lenders or other creditors in their decision-making processes – are relevance and faithful representation. besides these two, the financial information must also conform to the so-called enhancing qualitative characteristics, namely, comparability, verifiability, timeliness and understandability. the application of the latter set must be maximized when possible. however, the enhancing qualitative characteristics, if taken individually or in a group, cannot offer use-value to the information if that information is irrelevant or inaccurately represented. additionally, according to the conceptual framework for general purpose financial reporting, a general constraint that influences the information offered by the financial reporting is represented by the cost of obtaining such information, in the sense that the benefits generated by the reporting of information should exceed, as much as possible, the costs for its preparation and use. the general conceptual framework for financial reporting – the basis for the international standardization of accounting information qualitative characteristics the general conceptual framework (2010) represents, in fact, the result of the current process of actualizing the general framework of iasb and of the process of harmonizing its provisions with those of the american general framework issued by the financial accounting standards board (fasb). it refers to aspects such as the objective of financial reporting, qualitative characteristics of useful accounting information, the definition, recognition and measurement of the elements from which financial statements are constructed, as well as the concepts of capital and capital maintenance (iasb, 2011, ifrss). 67 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro fundamental qualitative characteristics as we have previously mentioned, the two essential qualitative characteristics established by iasb are relevance and faithful representation. a. relevance in order to be useful, the information must be relevant for the decision-making needs of the users. such an item of information is relevant if it can make a difference in the decision-making processes of the users, thus helping them evaluate past events, understand the present ones and anticipate the future ones, confirming or correcting their anterior measurements. the difference in the decision-making processes can occur if the financial information has a predictive and/or confirmatory value. prediction and confirmation represent interdependent activities and qualities. financial information has a predictive value for its users when it allows the anticipation or prediction of the entity’s future results so that it could take advantage of certain opportunities and react accordingly in adverse situations. the confirmatory value occurs when the financial information offers a feedback concerning certain past expectations, confirming, altering or disproving it. the relevance of the information is influenced by its nature and materiality. in some cases, the nature of the information is sufficient for determining its relevance. for instance, the reporting of a new production or sale segment can affect the evaluation of the risks and opportunities the entity confronts with, no matter the importance of the results obtained by the new division in the reporting period. in other situations, both the nature and the materiality are important. it is the case of stock quantities for each of the main categories of products which are adequate for the business. the information is significant if its omission or incorrect reporting could influence the users’ economic decisions taken on the basis of the financial information regarding the reporting entity. the significance level/limit depends on the value or extent of the element or error, under the specific circumstances of omission or incorrect reporting. thus, the significance level provides a limit or cut-off point rather than a primary qualitative characteristic needed by the financial information in order to be considered useful. b. faithful or exact representation financial information must represent exactly and faithfully the phenomena, transactions or other types of events it intends to represent. in order to achieve this objective, any financial information must be complete, neutral and free from error. the information included in financial reports must be complete, given certain limits, both considering its materiality (or physical aspect) and the costs involved (the financial aspect). more precisely, it must include all the descriptions and explanations which are necessary for the user to understand the depicted phenomenon. the financial information must be neutral, meaning that it should lack any bias, it should not be manipulated either favourably or unfavourably, so there must be no influence exerted in their selection and presentation. financial information is not neutral if, through the selection or presentation of information, it can influence the making of decisions or some judgment with the purpose of obtaining a certain result instead of another one, or in the absence of relevant information, or when certain insignificant or even false aspects are highlighted, etc. bias is, therefore, a certain form of intentional error, either by omission or other means, with the purpose of determining a certain decision on the user’s part and, implicitly, a certain transaction (or the failure of making one). exact representation does not involve exactness in all respects. this means that the financial information that is free from error represents an item of information that describes a phenomenon without errors or omissions, so the process used to produce the information is selected and applied to the capital without any errors (iasb, 2011, ifrss). 68 breahnă-pravăţ enhancing qualitative characteristics according to the general conceptual framework, understandability, comparability, timeliness and verifiability are qualitative characteristics that enhance the usefulness of relevant and faithfully represented information. they contribute to the selection of one manner out of two alternatives that must be used in order to describe a phenomenon if we take into consideration that both are equally relevant and faithfully represented. a. understandability an essential quality of the information described by financial statements is that of being easy to comprehend by its users, starting from the idea that financial reports are prepared for users who have sufficient knowledge of business and economic activities and who study or analyse the information with the proper diligence. it may sometimes happen that even well-informed and diligent users need to seek the aid of an advisor in order to understand the information regarding complex economic phenomena (iasb, 2011, ifrss). b. comparability the information supplied by a reporting entity is useful if it can be compared with similar information about other entities (comparability in space) and with similar information about the same entity for some other period (comparability in time). a specific requirement that assists in achieving comparability is consistency. hence, users need to be informed of the accounting policies and their modifications because an objective comparison can only be made by using the same methods. however, the need of achieving comparability differs from uniformity and should not become an impediment or deterrent to the modernization of existing standards. c. verifiability verifiability helps assuring users that the information provided faithfully represents the economic phenomena it seeks to represent. verifiability entails that different knowledgeable and independent observers could reach general agreement, although not necessarily complete consensus, that a certain description constitutes faithful representation. in order to be verifiable, the quantified information need not be a single point estimate. a range of possible values and the corresponding possibilities can also be verified (iasb, 2011, ifrss). verification can be of two types: • direct verification – the verification of a value/amount or other representations by means of direct observation; • indirect verification – the verification of inputs for a model, formula or other technique; the recalculation of results by using the same methodology. d. timeliness if unjustified delays in reporting information occur, the information can lose its relevance for users. in other words, financial information needs to be available for decision-making users at the right time so that this information could influence their decisions. as a rule, the degree of timeliness is inversely proportional to the time that passes after the information is produced, but there are also items of information that continue to be timely for a longer period. 69 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro qualitative characteristics of accounting information in other national accounting systems the american approach to qualitative characteristics valid until 2010 in 1978, the american accounting standardization organism, fasb, published a document entitled statement of financial accounting concepts (sfac), a document which, in its introduction, presents the objectives, hypotheses and qualitative characteristics of financial statements. sfac is divided into more sections, each section containing well-defined items of information as follows:  sfac 1 objectives of financial reporting by a business enterprise;  sfac 2 qualitative characteristics of accounting information;  sfac 5 recognition and measurement in financial statements;  sfac 6 elements of financial statements;  sfac 7 using cash flow information and present value in accounting measurements. sfac 2, qualitative characteristics of accounting information, establishes a certain hierarchy of the qualitative characteristics of accounting information, based on its usefulness for decision-making purposes. this objective is achieved by respecting certain qualities such as:  primary characteristics: o relevance: capacity to make a difference in a decision; o reliability: information is reasonably free from error and bias;  secondary characteristics, mentioned in sfac 2: o comparability: enables users to identify similarities and differences; o consistency: conformity from period to period. the figure below summarizes the qualitative qualities by fasb approach presented in sfac 2, qualities available until 2010, when the single conceptual framework was published: figure 1 qualitative characteristics according to fasb norms valid until 2010 source: spiceland, d., sepe, j., tomassini, l., intermediati accounting, student edition, available at http://highered.mheducation.com/sites/0072994029/student_view0/ebook/chapter1/chbody1/qualitative_ch aracteristics_of_accounting_information.html) 70 breahnă-pravăţ the british approach to qualitative characteristics the former british organism for accounting standardization attempted to elaborate a conceptual framework in 1975. to this end, it published a document entitled corporate report. with reference to the british system, the framework is significantly different from the american one. later, in 1990, the new standardizing institution, asb, attempted to define a conceptual framework published with the title of statement of principles for financial reporting. however, the first elements of a conceptual framework were published in 1991 and were inspired by the iasc model, the british final version being published in 1999 with the following sections or chapters:  objectives of financial statements;  entities that prepare financial statements;  qualitative characteristics of financial information;  elements of financial statements;  recognition criteria in financial statements;  measurement criteria in financial statements;  presentation of financial statements;  accounting for interests in other entities. as far as the qualities of financial information are concerned, they are equivalent, to a great extent, to the ones presented by fasb and iasb. fundamental qualities are:  relative importance;  relevance;  reliability. secondary qualities, whose absence makes information usefulness debatable, are:  comparability – it involves the permanence of methods, disclosure of accounting policies and compliance with accounting norms;  understandability implies reasonable knowledge of accounting on the part of the users and an adequate presentation of the information. the french approach to qualitative characteristics the french general framework is generally represented by regulations concerning the establishment and presentation rules of annual accounts defined by a specific document entitled general accounting plan. in 1999, the french national accounting council elaborated a new version of the general accounting plan which was presented in the form of a code. the code is divided into articles, a situation which is similar to a legal framework, and contains five chapters:  title i – object and principles of accounting – refers to the application by any natural person or legal entity of accounting norms if they are subject to the legal obligation of drawing up annual accounts. in this chapter there is no reference to the necessity of producing information for users.  title ii – definition of assets, liabilities, income and charges – has a conceptual character but, as in the case of the first title, it does not make any reference to information provided by financial statements or to information users.  title iii – accounting recognition and valuation rules – this part discuses the date, valuation and accounting recognition manner for assets and liabilities, as well as for charges and income.  title iv – keeping, structure and functioning of accounts – this title represents one of the most original elements of the french standardizing system and discusses the accounts plan. 71 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro  title v – synthesis documents – presents models of proposed annual accounts, namely, the standard, abridged and expanded ones. the french conceptual framework is in a process of expanding and tends to get very close to the american one. if the standardization and regulation of individual accounts still continues to be constrained by the notion of patrimony, the standardization and regulation of group/collective accounts, under the influence of the viith european directive, subsequently updated by directive no. 34/2013, offers those who prepare financial statements various possibilities to go beyond the traditional patrimonial framework (colasse, 2007). when analysing the quality of financial statements, the following hierarchy emerges: faithfulness, regularity/uniformity, honesty – with the meaning of respecting the rule of caution. the following table presents a comparative analysis of the qualitative characteristics of accounting information, namely, explicit and implicit characteristics, which are found in the french accounting legal regulations. table 1 qualitative characteristics of accounting information according to the french general accounting plan qualitative characteristics gap individual accounts gap consolidated accounts regularity * verifiability implicit (regularity) implicit (regularity accounting options unknown (contrary to regularity) * comparability * * exhaustiveness * * relative importance * * permanence of methods * * relevance (influences the users’ decisions) * * prudence/caution * * faithful representation * undefined * undefined neutrality connected to fiscal policies * balance advantages/costs unknown implicit respecting terms unknown unknown comprehension/understandability inexplicit inexplicit priority of funds over form unrecognized * reliability regularity + honesty regularity + honesty (source: quoted from walton, p., haller, a., raffournier, b. (2003), international accounting, 2nd edition, thompson, london, pp. 129-152) the romanian approach to qualitative characteristics according to the romanian regulations, the four qualitative characteristics of the information contained in financial statements are: understandability, relevance, credibility/reliability and comparability. the qualitative characteristics that must be respected by the financial-accounting information, in compliance with the accounting norms that are applied in romania, are presented in the figure below: 72 breahnă-pravăţ figure 2 qualitative characteristics according to romanian norms source: toma, c. (2011), contabilitatea financiară, tipo moldova, iasi, p. 126. conclusions as we have shown in this article, at a global level we can identify the tendency of harmonization and even convergence of the qualitative characteristics of the information contained in accounting-financial reports. however, differences still exist in the expression, structuring, presentation and standardization of qualitative criteria regarding accounting-financial information. the table below briefly presents the structure of the qualitative characteristics established by the accounting systems analyzed in our study: table 2 qualitative characteristics of accounting information in various countries accounting system main standardizing organism qualitative characteristics romania  mfp –the ministry of public finances understandability; relevance; credibility comparability. france  anc – accounting standards authority: unique standardizing organism in accounting faithfulness; regularity; honesty. great britain  frc – financial reporting council: a “collective creation” of the accounting professionals, the financial community and the government; it manages five councils, including the asb (accounting standards board)  main qualities: relative importance; pertinence/relevance and reliability.  secondary qualities: comparability; understandability. usa  fasb –financial accounting standards board: a private organism that is responsible with establishing the generally approved accounting principles for the usa  primary qualities: relevance; reliability;  secondary qualities: comparability; consistency. 73 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro references colasse, b., avec la collab. le lesage, c. (2007), introduction á la comptabilité, 10e édition, paris, economica. breahnă-pravăţ, i. c. (2013), basic aspects concerning the single conceptual framework, în revista studies and scientific researches economics edition, 18, 128-136. feleagă, n. (1999), sisteme contabile comparate, vol. 1, bucharest, editura economică. iasb (2011), international reporting financial standards (ifrss). official rules issued from 1 january 2012. includes irfss which shall enter into force after 1 january 2011 but does not include the ifrss they replace, part a conceptual framework and provisions, bucharest, ceccar publishing house. iasb (2013), dp/2013/1 a review of the conceptual framework for ministerul finanţelor publice, ordinul nr. 3055/2009, pentru aprobarea reglementărilor contabile conforme cu directivele europene, publicat în monitorul oficial al româniei, partea i, nr. 766 din 10.11.2009. obert, r. (2011), le nouveau cadre conceptuel de l, iasb, revue française de comptabilité, 439. rajasekaran, v., lalitha, r. (2011), financial accounting, new delhi, published by dorling kindesley licensees of pearson educational in south asia, available at http://books.google.ro/books?id=qp3xnpolo7wc&printsec=frontcover&dq= rajasekaran,+v.,+lalitha,+r.++financial+accounting&hl=ro&sa=x&ei=vmy2u92dk6qv7aanxygwca& ved=0cccq6aewaa#v=onepage&q=rajasekaran%2c%20v.%2c%20lalith a%2c%20r.%20-%20financial%20accounting&f=false. ristea, m., dumitru, c., ioanăş, c., irimescu, a. (2009), contabilitatea societăților comerciale, vol. i, bucharest, editura universitară. rotilă, a. (2011), reglementări și practici contabile specifice, bacău, editura alma mater. spiceland, d., sepe, j., tomassini, l., intermediati accounting, student edition, available at http://highered.mheducation.com/sites/0072994029/student_ view0/ebook/chapter1/chbody1/qualitative_characteristics_of_accounting_info rmation.html. tabără, n., horomnea, e., mircea, m. c. (2010), contabilitatea internaţională, ediţia a ii-a, iaşi, editura tipo moldova. toma, c. (2011), contabilitatea financiară, iaşi, editura tipo moldova. 74 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro regulation and enforcement of competition policy liviana andreea niminet vasile alecsandri university of bacau liviananiminet@yahoo.com abstract competition policy starts by shaping a legislative framework. this is aimed to establish boundaries for conducting competition and also sets limits of licit and illicit demarcation, for competitive and anticompetitive practices. the romanian competition law has a divalent approach and it aims to provide specific behavioral conditions in order to stimulate and protect free-market competition, with the ultimate goal of developing a balanced, efficient and competitive economy. our country’s competition policy is based on punishing the behavior. there are three such types of anti-competitive behavior, namely: agreements between undertakings, abuse of dominant position and mergers and other concentrations between undertakings. recent practice proved that this “enforcement-conduct-punishment” structure is not necessary the best way to address competition and it is high time for authorities to switch both regulation and enforcement of competition from the “classical perspective” towards concepts like “competition advocacy” and “soft power” and give competition policy a new, reshaped face. keywords competition policy; regulation; enforcement; competitive; anticompetitive practices jel classification k20; l40 1. introduction a highly spread definition for competition policy is the use of theoretical paradigms by entities with supervisory role of the economy based on the principles and methods of strategic and considering the effects obtained with the aim to promote and maintain effective competition for efficient resource allocation (moşteanu t., 2010). the first step in implementing competition policy is shaping a legislative framework to establish boundaries for conducting competition that sets limits of licit and illicit demarcation, the concurrency and anticompetitive. regulating competition in romania was established by law 21/1996 (entered into force on 1 february 1997). the above mentioned law has a twofold approach: on the one hand, from businesses perspective it aims to realize the significance of competition freedom, on the other hand it aims to establish a state policy promoted by special authorities designated with the role of finding the natural way to fulfill conditions of competition. the main objectives of the competition act is to provide specific behavioral conditions to stimulate and protect free-market competition, with the ultimate goal of developing a balanced, efficient and competitive (moşteau t., 2004) economy not only at state level but also on the global one. all these objectives are to ensure social welfare and to create consumers protection. in terms of law addressability it has in view, as stated in art. 2 paragraph 1, the undertakings or associations of undertakings (natural persons or legal entities) by romanian or foreign nationality who by their deeds or acts causing effects of 18 nimineț restricted commercial free-market competition and central government and local organisms that by the measures they take influence market operations, having effects on competition except when these measures serve other law enforcement or protection of a capital interest. 2. competition policy enforcement in romania competition policy in our country is based on punishing the behavior. there are three such types of anti-competitive behavior, namely: agreements between undertakings, abuse of dominant position and mergers and other concentrations between undertakings. 2.1. agreements between undertakings are prohibited all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or result in prevention, restriction or distortion of competition on the market in romania or, where applicable, a part of this market. the law specifically refers to the following: the establishment directly or indirectly of selling prices inclusive of other trading conditions limiting or controlling production or markets, technical development or investment; share of markets or sources supply applying dissimilar conditions to equivalent transactions in relations with trading partners, thus causing some of them a competitive disadvantage; -contracts subject to acceptance by the other parties of a supplementary clause, by their nature or according to commercial wears, not related to the subject of the contracts -concerted participation with rigged bids in auctions or other forms of competitive tendering eliminating other entrants, limiting or preventing access to the market or free competition from other companies and agreements not to buy from or sell to certain undertakings without reasonable motivation. are exempted by law from applying those understandings and categories of agreements, decisions or category of decisions by associations of undertakings, concerted practices or categories of concerted practices that meet the following three conditions: contribute to the production or distribution of goods or to promoting technical progress or, where appropriate, economic, while allowing consumers a fair share of the resulting benefit participants in understanding, decision or concerted practice does not restrict indispensable for achieving these business objectives offers no possibility of eliminating competition on a substantial part of the concerned market. eu involvement is to establish regulations by the european council or the european commission to ensure the proper application of article 101 paragraph 3 of the treaty on the functioning of the eu, regulations set exceptions for categories of agreements, decisions by associations of undertakings or concerted practices. these types of exceptions are known as block exemption regulations / block whenever agreements or concerted practices or decisions, as appropriate, or fall into the categories listed or meet the three cumulative conditions set out above, they are considered legal without any notification made by the parties or the issuance of a 19 regulation and enforcement of competition policy decision by competition council. to the extent that agreements, decisions or concerted practices affecting trade between member states, the council of competition law applies not only romanian, but on the functioning of the european union, given article 101 of the treaty. the burden of proof in all cases rests on competition council. practice reveals a variety of anticompetitive practices that firms use to obtain competitive advantages. legal agreements between undertakings are divided into two categories namely: a) understanding legal structures, namely those agreements express or tacit agreements between undertakings b) understanding legal unstructured includes concerted practices of economic agents to adapt to the conduct of competitive environment a) form of guilt in committing these practices is the intention, and in this form they are covered by the law. there are certain practices that admit guilt as a form of guilt that is limiting production, markets, technical development or investment. the essential condition for the practice to be banned is that it significantly affects the competitive environment. agreements between companies can target supply of raw materials, production conditions, business or any other element of the market. these arrangements should aim to eliminate competition between participants by restricting production, rising prices, sales area sharing. if you were to look at things through the prism of firms, it is clear that the motivation of such practices could increase business efficiency through economies of scale through standardization of products, reducing the risks of creating new products or entering new markets. yet this practice is neither a moral, ethical or legal alone. arrangements can take two forms namely express when found by writing or silent when there is no written record. concerted practice is defined as the manifestation of economic competitors in the relevant market, adopts a similar behavior with the effect of restricting, preventing or distorting competition in the absence of collusion between them. in practice, an express agreement between operators in an industry may take the form of a cartel aimed at maximizing profits by controlling the output of each firm and the selling price. after their purpose or market sharing cartels may target the imposition prices. an example of economic concentration is decision 148/2006 of the competition council. in fact cross lander usa inc. company has gained control over sc aro sa campulung under contract for the sale of shares. council decision was that according to the law, namely article 11 paragraph 2, letter b) of law 21/1996 on competition in the acquisition of sole control over sc aro sa campulung by cross lander usa inc. 1 is an economic concentration. an economic classification of agreements distinguishes between: • horizontal agreements which concern economic operators at the same level of economic processes (e.g. agreements between producers, agreements between distributors) • vertical agreements concerning operators at different levels of the same economic process (e.g. agreements between manufacturers and distributors of the same product). horizontal agreements usually have a greater affect on the competitive environment while vertical agreements in certain circumstances may have beneficial 1 cross lander usa inc. changed its name to global vehicles usa inc., as it results from the name changing certificate issued by the state secretary of nevada usa, certificate anexed to the letter of response of the competition council no. die/1083/21.06.2006. 20 nimineț effects for competition such as economic efficiency, or effects on consumers and, therefore, fall within the categories exempted from the competition act as shown above. in this subject analysis, agreements between car manufacturers can take the following forms: • agreements for the purchase of licenses for different models, services, vertical relationships with suppliers and distributors, exchange of parts and mechanical parts, in terms of disposal and recycling and last but not least, the agreements relate to financing activities automotive supplies; • joint projects correspond to a commitment that two manufacturers undertake mutually to share responsibilities and funding research and development into productive investments directly involved. there are such consortia in japan, usa (uscar) and the european union (eucar). also to be noted the agreement between psa and ford on developing a new diesel engine generation, renault and g.m. • co enterprises (joint venture) in joint projects, respecting autonomy of builders: association with local partners or other manufacturers. note here the association with renault toyota in sofasa after 1990 for columbia. in the 80’s japanese implantation started in north america with associations: general motors for toyota (nummi) and suzuki (cami) chrysler for mitsubishi (diamondstar) and ford for mazda (auto alliance) • financial holdings in the capital of builders: e.g. pre-crisis situation at the time when ford owned 33.3% of mazda, gm owned 20% of the capital of suzuki, daimler chrysler had mitsubishi under control by 37%, nissan 15% of renault's capital, although the latter holds 44% of japanese manufacturer capital, and so on; • mergers and acquisitions partnerships between manufacturers and insurers. they are a special case because trademark policy refers to the positioning of car manufacturers ensured regarding the quality of post acquisition. 2.2. dominant position abuse abuse of dominant position is a serious anti-competitive practice with a variety of forms ranging from the imposition of price, the use of predatory pricing or discriminatory setting unequal conditions to equivalent transactions made by those who hold a large economic power on market and aim to eliminate direct competitors. at european level ecj has defined dominance as "position of economic strength enjoyed by an undertaking which enables it to hinder the maintenance of effective competition on the relevant market, thus giving power to behave independently of its competitors, its clients and in the end-to-consumer ". obtaining an important position in a market is a very important strategic objective for many competitors, an objective that can be achieved by adopting appropriate marketing strategies. once gained this position through consistent and appropriate marketing tactics, it can become a position of market dominance. one should clearly understand that dominant position of a trader in a market, is not unlawful in itself. law only penalizes abuse of dominance. but it is easy to assume that holding a dominant position the firm is tempted to speculate that by adopting a specific competitive behavior. if, however, other competitors will be able to counteract its actions through thoughtful marketing action than there will be no dominant position held by the entity in question. it is considered that a firm is dominant if, on the relevant market, it can act largely independently (mereuţă c., 2004). 21 regulation and enforcement of competition policy in order to determine the position on the market first market segments should be measured. ecj case law considers that a market share of 75% maintained for a long period of time proves the existence of a dominant position. if market share is between 40 and 75% then to establish abuse of dominance other elements are needed. in romania the law prohibits the abuse of a dominant position by one or more undertakings on the romanian market or in a substantial part of the market. are considered abusive one of the following actions: direct or indirect imposition of certain unfair prices for sale or purchase or other unfair trading conditions and refusing to deal with suppliers or beneficiaries limiting production, markets or development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions between business partners, thus causing some of them a competitive disadvantage the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to usage trade have no connection with the subject of such contracts; -practicing over pricing or practicing predatory pricing to eliminate competitors or export sale below cost, to bridge the gap by imposing higher prices to domestic consumers exploitation of the dependence of another enterprise to an such organization or enterprise that does not have an alternative in conditions equivalent and ground breaking contractual relations partner refusal to submit to unjustified commercial conditions. an analysis of anticompetitive practices shown on the abuse of a dominant position can only be done very carefully and considering each case. let us take the example of price competition that has long been a strategy of major companies in an attempt to gain a significant share of the market. businesses engaged in a "price war" over a period of time, which have the effect of eliminating competitors. in some situations, a price below cost can be a strategic option when you want to enter a new market, attracting a segment of consumers, eliminating stock products, conducting promotional campaigns etc. price predation is usually practiced by a dominant undertaking in the relevant market, which aims to eliminate a competitor and involves either selective price reductions or impose a price that is not profitable. conditional sales are another situation worthy of attention since they involve selling a product subject to the purchase of another product that could be purchased on terms more favorable from another supplier or when a service provider is subject to the purchase of a product or the provision of other service. as in the case of agreements between undertakings and abuse of dominant position which affects trade between member states competition council applies the eu treaty provisions, namely art. 102. until proven otherwise works the assumption that if the cumulative share or shares in the relevant market in the period, not exceed 40% we cannot speak of a dominant position that can be abused. 2.3. economic concentrations in the law understanding is considered to be concentration the lasting change of control resulting from: 1) merger of two or more undertakings which were previously independent undertakings or parts thereof, 2) acquisition by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, direct or indirect control over one or several undertakings or parts thereof. 22 nimineț 3) concentration is also creating an entirely sustainable company which functions as an autonomous economic entity. summarizing, we can say that the concept of merger shall circumscribed three categories • mergers, • acquisitions by acquiring control, • concentrative joint venture creation. let us have a look at each of these types of mergers. mergers can take many forms: • fusion by merger when two or more companies merge into a new undertaking. following is terminated two original businesses and generates a new agent • merger by absorption in the situation when a trader is embedded by another undertaking. the last of them, the one that encompasses retain legal personality, while the first, the embedded ceases to exist as a legal entity; • de facto merger when two or more independent economic agents, yet maintaining legal personality, combine their operations creating a competitive group that is manifested as a single economic entity, in the absence of a legal act. the purpose behind creating a merger may be different going from a desire to increase economic efficiency, increase market power, the desire for diversification, expansion of geographical markets and to avoid for reasons of insolvency. oecd classified mergers as it follows: • horizontal merger refers to the association between competitors (which produce and sell the same products in the relevant market). if they are representative of size, horizontal mergers may reduce competition in the market, often under the supervision of competition. authorities • vertical mergers occur between economic agents operating in various stages of production, from raw materials to finished products in the distribution phase, their effect is reflected usually in economic efficiency, although some may have anti-competitive impact • conglomerate mergers which take the form of an association of undertakings in unrelated sectors. through a merger may enhance market power or create market power as it can facilitate its exercise, to the extent that it significantly increases the degree of market concentration and if it leads to a concentrated market, defined and measured correctly. mergers, which don’t significantly increase the degree of market concentration or do not lead to this result usually, do not require further analysis of relevant institutions it is also required a mention about the latest form of economic concentration achieved namely by creating a sustainable company which functions as an autonomous economic entity entirely. when the creation of a joint venture by the merger described in 1) has as its object or effect the coordination of the competitive behavior of undertakings that remain independent, they are analyzed on the compatibility with a normal competitive environment according to art 101 of the treaty on the functioning of the union. this analysis follows a series of criteria. the first refers to the situation where two or more companies retain, to a large extent activities in the same market as the joint venture or in a market upstream or downstream from that of the joint venture or a neighboring market closely related to this market. another criterion relates to verify whether the coordination which is the direct consequence of the creation of joint undertakings concerned the possibility of eliminating competition in a substantial part of the goods or services concerned. 23 regulation and enforcement of competition policy 3. conclusions the first step in implementing competition policy is shaping a legislative framework that establishes boundaries for competition, for “within law” and “above law” actions. regulating competition in romania has a twofold approach: on the one hand, from businesses perspective it aims to realize the significance of competition freedom, on the other hand it aims to establish a state policy promoted by special authorities designated with the role of finding the natural way to fulfill conditions of competition. the main objectives of the competition act is to provide specific behavioral conditions to stimulate and protect free-market competition, with the ultimate goal of developing a balanced , efficient and competitive economy both at state level and on the global one. primary beneficiary is social welfare that ultimately ensures consumers protection. competition policy in our country is based on punishing the behavior. there are three such types of anti-competitive behavior, namely: agreements between undertakings, abuse of dominant position and mergers and other concentrations between undertakings. recent practice proved that this “conduct-punishment” structure is not necessary the best way to address competition and it is high time for authorities to deal more with concepts like “competition advocacy” and “soft power” when it comes about competition policy. references glossary of industrial economics, competition law and policy (2010), published under the auspices of the general secretariat of the organization for economic cooperation and development. mereuţă, c. (2004), abuzul de poziţie dominantă în legislaţia română, profil: concurenţa, no.2. moşteanu, t. (2000), concurenţa. abordări teoretice şi practice, bucureşti, editura economică. motta, m. (2004), competition policy: theory and practice, cambridge publishing house. nimineţ, l.a. (2009), european competition in time of crisis. to be or not to be, studies and scientific researches, economicedition, issue 14, p.67-71. niminet, l.a. (2012), turmoil on the automotive market: insight perspective, brand, vol.3, no.3, p.81-84. nimineţ, l.a. (2014), changing the economic parameters of competition environment, lambert academic publishing (lap). 24 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro legislative framework of broadcasting in romania and in the european union diana magdalena prihoancă “vasile alecsandri” university of bacău dianaprihoanca@yahoo.com brândușa-mariana amălăncei “vasile alecsandri” university of bacău brandusa_amalancei@yahoo.com abstract romania’s adherence to the european union implied the previous and entire acceptance of the community acquis in force on 31st of december 1999. our country didn’t request any period of transition or of derogation in this meaning, being among the first states from east europe that regulated the audio-visual department, after the occidental model. in order to harmonize the romanian legislation with the european standards, the national council of the audio-visual department adopted and transposed a whole range of acts and decisions that we will try to synthesize in our paper. in the adoption of the acquis, the nac has to watch whether the adopted decisions are conform to the progress at european level. it is necessary to continue strengthening the administrative capacities of nac to ensure a transparent and predictable implementation of the regulatory framework in the field of audiovisual policy. in romania, the normative acts that regulate aspects concerning general advertising and promotional communication through television are: advertising act and the broadcasting act. keywords community acquis; regulations on broadcasting; advertising law; the national audiovisual council; transposition of directives jel classification m3 the european union has shown quite a few times that communication plays a vital role in its construction, although it almost always comes back to the problem of living together without belonging to the same culture. however, we consider that this culture represents a true reflection of the personality of each individual, born of enculturation, but also of "acculturation", that is to say, the contact with other cultures. despite its difficulty, the communication between representatives of different cultures often leads to the emergence of a common reality, the only one able to guarantee the cohesion of multicultural societies. similarly to these companies, the european union owes some cohesion to its inhabitants who share a common reality through communication (dacheux, 1994). at the institutional level, the development of the communication policy of the union is a task of the european commission whose specialized body "general direction of broadcasting, information, communication and culture" (dg x) puts emphasis on the distinction between information and communication. it was found that the informational policy fails to convince europeans that from the taken actions benefits the assembly of the community. this failure explains the reasons for which the european information was trusted to the media and the commission had to develop an audiovisual communication. 229 prihoancă, amălăncei the instruments of the audiovisual policy are the adopted documents under article 151 (4) of the treaty establishing the european community (1992). these instruments aim specifically the cultural aspects, that is, to respect and promote the diversity of european cultures. the weight of the audiovisual becomes even stronger as it corresponds to the use of an "image strategy" and economic policy of the community. so, the audiovisual sector combines properly and unitarily the cultural, social and economic aspects. therefore, the starting point of any analysis of policy applicable to broadcasting must be the recognition of the important role played by this sector in our society, but also the need to ensure a balance between the free market and the protection of general interest. the development of the audiovisual policy of the european union has two fundamental objectives, which are pursued in taking into account the cultural dimension of the audiovisual sector: (pascal and vlad, 2004) establishing and maintaining the activity of a genuine european area for audiovisual services; consolidate the industry of european programs. the action of the european union in the audiovisual sector is essentially based on two pillars: a legislative pillar to organize the movement of television broadcasts within the european area (the "television without frontiers") and a financial pillar to support the audiovisual sector and designed to facilitate the circulation of european creations (the media program1) –two action moods, normative and incentive, to defend european cinematographic and audiovisual creation and the promotion of the use of these works within the union and outside. the union has therefore positively influenced, both at management level and development level. the reference instrument for regulation of television in europe for over fifteen years, the twf directive, has contributed to the diversity and growth of this sector, reconciling the cultural and economic objectives. however, the emergence of new audiovisual media services has imposed a redefinition of the european regulatory framework. the newlyproposed directive "audiovisual media services" reflects the need to extend the field of application of present regulations to all audiovisual content services, regardless of technology or distribution platforms used. (www.robertschuman.eu/question_europe.php?num=qe-48#ancre_25) to join the european union, romania has fully accepted the community acquis in force starting december 31st, 1999 and has not requested any transitional period or a waiver being able to fully practice on the date of its adherence. in fact, romania was among the first countries in eastern europe to adopt a regulation of broadcasting and a modern regulatory body, according to the western model. in order to harmonize the romanian legislation on regulations and standards of the european union, the national audiovisual council (nac) has adopted and implemented a series of actions and decisions. this board is an autonomous public authority and guarantor of the public interest in the field of audiovisual communication. 1 the media i(1990-1995) and ii(1996-2000), despite the relatively modest means of intervention had a positive balance sheet. the new versions structured around media plus and media training (20012005, extended until 31st december 2006). media plus financially supports actions of development, distribution and promotion, while media training aims to strength entraining in the fields of writing, financial and commercial management, and new technologies. media 2007, a unique program combining the section for the development, distribution and promotion, and those relating to training, began in 2007and will end in 2013. 230 http://www.robert-schuman.eu/question_europe.php?num=qe-48%23ancre_25 http://www.robert-schuman.eu/question_europe.php?num=qe-48%23ancre_25 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro in its reports, the european commission noted the progress made by romania lately regarding chapter 20: "audiovisual culture and policy." as for audiovisual policies, the european convention on trans-frontier television was ratified and its amending protocol was signed in february 2003. the regulatory authority in this area, the cna has continued to adopt decisions in order to practice the broadcasting act. following the adoption of this law in july 2002, the romanian legislation is largely aligned with the acquis. amendments of technical order which should be made to the broadcasting act specifically target the jurisdiction and limitation of retransmission. romania has also continued to strengthen its administrative capacities in the field of broadcasting to ensure the foreseeable, transparent and efficient implementation of the legislative framework related to audiovisual policies. the ratification of the european convention on trans-frontier television and the adoption of a considerable number of decisions considering the broadcasting act represents significant progress made by romania in the field of audiovisual and mentioned in various country reports. the continuation of the implementation of the tsf directive has been possible thanks to the decisions adopted by the can, decisions concerning freedom of retransmission, advertising and teleshopping, the right to reply, the promotion of audiovisual creation and delivery of audiovisual license. following the adoption of law no. 504/2002 on broadcasting, the enactment by the council of europe of the act concerning the ratification of the european convention on trans-frontier television and on the protocol amending the convention, romania fulfills the requirements to participate media plus program (2001-2005) – program that encourages the development, distribution and promotion of european works. this program aims to improve the competitiveness in the european audiovisual industry with a series of measures relating to vocational training, the development of production projects, distribution and promotion of film and audio-visual programs. (www.europa.eu/scadplus/leg/fr/lvb/l24224.htm.) the position of cna as an independent authority has also been strengthened by the development of the phare project ro 0107.02 (2002-2004): "the adoption and implementation of the acquis in the audiovisual field the improving of elaboration of policies and the development of administrative capacities", whose objectives include: developing and implementing a policy of balanced and proportionate audiovisual to ensure free competition and pluralism; increasing the general awareness regarding the adoption and implementation of the acquis; enhanced nac in developing legislative projects and in the implementation of policies in accordance with harmonized legislative framework of the audiovisual; facilitation for members of parliament, government and professionals to know and understand the contents of the acquis and standards, guidelines and principles in the european audiovisual; more knowledge among the general public about the consequences of harmonization of the romanian audiovisual on european standards. (www.cna.ro/img/pdf/primul_pr_phare.pdf) the reports of monitoring and the reports of evaluation confirm that all of these goals have been achieved. given the positive progress of phare ro 0107.02 project co-funded by national grants, which ran from 2002 to 2004, and which referred in particular to provide technical and material support, the nac was able to conduct a second phare project phare 2004/016-772.03.15.01, from 2007 to 2008, fully funded, this time by european funds. this second project aimed to deepen and broaden skills in the romanian audiovisual sector. the central objective was to enrich the experience and knowledge of the members of nac and of the specialized personnel of the community acquis in the audiovisual sector. the program included an analysis of 231 prihoancă, amălăncei the audiovisual market in romania in terms of four specific studies: behavior, habits and satisfaction of viewers and listeners, the influence of television on children, the impact of advertising on children and the impact of media on voting behavior of the public. the continuing education courses offered at nac and proposed to its staff were devoted to the themes of protection of miners, respect for human dignity, public interest, media pluralism and quality of information. in the same time, there were envisioned internships in it initiation and english courses. the program included study visits nearby the regulatory authorities of other european states, conferences and workshops. during the project, four information bulletins on the latest international developments in the audiovisual sector have been published. at the end of the program there has been a media campaign for the protection of minors in the audiovisual field. it was found that between 15 january 2007 and 14 february 2008, all actions in this project were successful. the framework law in the romanian audiovisual sector was revised in october 2003. the revision has particularly strengthened the position of nac which increased the mandate of its members from 4 to 6 years in order to enlarge its political independence but it has also helped to clarify the sanction procedures and to introduce the possibility of more nuanced and proportionate actions. in 2004, the administrative capacity of nac has augmented through a training on european legislation and on technical skills of control. in 2005, romania has largely aligned its legislation with the community acquis, adopting two amendments still to be made to the audiovisual law concerning the competences and freedom of reception. nevertheless, the principle of nondiscrimination based on nationality concerning television broadcasting is not respected. this is due to the adoption of a law on cinematography which includes an obligation for all romanian broadcasters to reserve a share of at least 5% of broadcasting time for romanian films. (www.europa.eu/scadplus/leg/fr/lvb/ e20108.htm.) therefore, romania should complete its alignment, while continuing to strengthen its administrative capacities. in december 2007, the commission presented a revision of the "television without frontiers", whose main objective is to modernize the existing rules so as to reflect technological and commercial development of the european audiovisual sector. the directive also aims to alleviate the current regulations, especially with regard to advertising and distinguishes between "linear" (traditional television, internet, mobile telephony) and "non-linear" (television and information on request). invited by the commission to relax these regulations, states of the european union have made little progress in adapting their national legislation. the deadline to finalize the implementation of these changes has been established in december 2009. it is estimated having a single market for all audiovisual media services in europe. the only one to fully implement the new eu rules on audiovisual was romania. on 25 november 2008 it adopted a new government decree amending its 2002 law on broadcasting in order to incorporate the measures of the new european directive there. this regulation provides to producers and suppliers of television programs the opportunity to have an easier access to a financing from new forms of audiovisual advertising such as the split screen or product placement, licensed in all programs except newscasts, documentaries and television programs. an easier interruption of diffusion programs will be achieved through the abolition of the rule requiring 20 minutes between advertising breaks. this regulation aims to strengthen the european television sector and the audiovisual one creating fair competition conditions for audiovisual media services "without borders". 232 http://www.europa.eu/scadplus/leg/fr/lvb/ studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the liberalization options offered by the directive have been fully exploited by our country especially regarding the placement of products. at the time of the official notification of these changes, the commission will verify whether the 2007 directive was fully respected in romania. in the adoption of the acquis, the nac has to watch whether the adopted decisions are conform to the progress at european level. it is necessary to continue strengthening the administrative capacities of nac to ensure a transparent and predictable implementation of the regulatory framework in the field of audiovisual policy. in romania, the normative acts that regulate aspects concerning general advertising and promotional communication through television are: advertising act and the broadcasting act. the law no. 148/2000 on advertising, adopted by the senate of romania on 29th of june 2000 and published in the official gazette no. 359 of 2 august 2000, has as its goal the protection of consumers of goods and of services, but also of producers, traders or persons providing services. the regulations contained in the text of this act apply to the content of advertising messages regardless of the means of communication. as for advertising broadcast by radio and television, the conditions laid down therein are complemented by the broadcasting act. the advertising act contains four chapters. chapter i contains general provisions concerning radio and television advertising, the definitions of specialty terms, the features of advertising and prohibitions concerning ads. chapter ii deals with misleading and comparative advertising. chapter iii includes special provisions for certain products (tobacco, alcoholic beverages, narcotic and psychotropic substances, weapons, explosives and drugs). chapter iv outlines the penalties for noncompliance with this law. the law no. 504/2002 on broadcasting, which transposes into our legislation the prejudices of the "television without frontiers", was adopted june 27th, 2002, amended and supplemented by law no. 402 of 7th october 2003 and published in the official gazette no. 709 of 10 october 2003. structured into eight chapters, it defines the specialty terms and the broadcasting quality, regulating on the one hand, the freedom of communication on the romanian territory of television programs and radio broadcasters who are under the jurisdiction of states members of the european union, and on the other hand, the right of everyone to freely receive television programs (chapter 1). the law regulates also the functioning of the national audiovisual council (members, functions, duties, etc. chapter 2), sets the content of audiovisual communication (regulations regarding the transmission of advertising and teleshopping through interim television, advertising of certain products such as cigarettes, drugs and alcoholic drinks, etc. (chapter 3) establishes the legal regime of property in the field of broadcasting, but also the fact that the measure of audience and of quotas will be conducted in accordance with standards and to the international use through specialized agencies, designated after an auction (chapter 4), covers all aspects related to licenses and authorizations of the audiovisual sector components, time spent, situations where the nac or the national regulatory authority for communications may revoke the license (chapter 5), specifies the limits of the right to exclusivity (the last three chapters). thus, under article 83, every person has the right to receive information, by audio or audiovisual means, on any issue or event of public interest, the contraventions and penalties for non-compliance of this act, respectively, transitional and final provisions. the law no. 504/2002 was also completed by law no. 116 of 19thmay 2008, published in official gazette no. 384 of 21stmay 2008. 233 prihoancă, amălăncei in 2000, the nac has also adopted a series of decisions on marketing communication via television to align domestic legislation with eu legislation on broadcasting: decision no. 65 of 23rd may 2000 on compulsory standards for advertising, teleshopping and sponsorship in the audiovisual sector; decision no. 21 of 28th january 2003 on advertising and teleshopping for medicines, medical treatments, nutritional supplements; decision no. 22 of 28th january 2003 dealing with the rules of advertising and teleshopping (political advertising, advertising offices of lawyers and notaries, advertising for alcoholic beverages and food); decision no. 36 of 13th february 2003 on the schedule of advertising for distilled alcoholic beverages; decision no. 38 of 18th february 2003 on political advertising and publicity related to exercising certain professions. the content of decisions no. 21, 22, 36 and 38 was subsequently included in the decision no. 123 of 30th june 2003, amended and supplemented by decision no. 17 of 5th february 2004 concerning the dissemination of advertising and teleshopping, but also the promotion of medicines; decision no. 187 of 3rd april 2006, the most recent decision by the nac updated by decision no. 335/2006, 194/2007, 516/2007, 762/2007, 1105/2007 and 50/2009 and effective from february 3rd, 2009, containing the code for content regulation of broadcasting. the seventh title of this decision, sponsorship, advertising, teleshopping, regulates the advertising for alcohol, food, drugs, political advertising, advertising on exercising certain professions, teleshopping programs. (www.cna.ro/decizia-nr-nr187-din-3-aprilie.html) to meet its obligations as a member state of the european union, reported also to the commitment of romania as a signatory of the final acts of the regional radio communication conference in geneva, organized by the international telecommunication union (itu), the romanian government adopted in june 2013 the hg 403 strategy for transition from terrestrial to digital terrestrial television and implementing digital multimedia services nationwide. this process must be completed by 17 june 2015 and will involve not only technical changes, but will require upgrading audiovisual landscape, bringing introduction of new regulations to ensure efficient use of radio spectrum, achieved by migrating to digital television, and starting information campaigns that will facilitate the understanding of what is required for the transition and subsequent achievement (http://www.cna.ro/hotrare-nr-403-din-19-iunie-2013.html). during 2012 – 2014, cna decisions targeted communication activity on electoral market. at the elections held for different structures were adopted following acts: decision no. 586 of july 10, 2012 to reflect on the radio and television the referendum on impeaching the president of romania decision no. 738 of 1 november 2012 on the principles and rules of election campaign for the chamber of deputies and the senate, through audiovisual media services decision no. 185 of 20 march 2014 on the rules of conduct in audiovisual campaign for the election of romanian members in the european parliament decision no. 255 of april 8, 2014 on the principles and rules of conduct in audiovisual partial parliamentary elections. in conclusion, we can say that the romanian legislation is largely aligned with the acquis, although some adjustments have to be made on the law of audiovisual. it is also needed to ensure the alignment with the acquis in all decisions applicable to the law. romania must also comply with certain legislative and administrative provisions 234 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro laid down in directive 2010/13/eu of the european parliament and of the council of 10th march 2010 concerning the provision of audiovisual media services (directive "audiovisual media services"). at latest 19th december 2011, and every three years, the commission shall submit to the european parliament, the council and the european economic and social committee a report on the application of this directive. references consilul naţional al audiovizualului, fostul cod audiovizual care a fost în vigoare până la data de 10 martie 2011, available at http://www.cna.ro/decizia-nr-nr187-din-3-aprilie.html. consilul naţional al audiovizualului, hotărâre nr. 403 din 19 iunie 2013, available at http://www.cna.ro/hot-rare-nr-403-din-19-iunie-2013.html. dacheux, é. (1994), les stratégies de communication persuasive dans l’union européenne, l’harmattan, paris. europa – syntheses de la legislation de l`ue, media plus (2001-2006): programme d'encouragement au développement, à la distribution et à la promotion des œuvres européennes, available at http://europa.eu/legislation_summaries/ audiovisual_and_media/l24224_fr.htm fondation robert schuman (2006), la politique audiovisuelle de l'union européenne, available at www.robertschuman.eu/question_europe.php?num=qe-48#ancre_25. pascal, i., vlad, m. (2004), cultura şi politica în domeniul audiovizualului, centrul de resurse juridice, bucureşti. 235 http://www.robert-schuman.eu/question_europe.php?num=qe-48%23ancre_25 http://www.robert-schuman.eu/question_europe.php?num=qe-48%23ancre_25 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro fundamental aspects of communication management, in the case of public administration dorian pocovnicu interdisciplinary doctoral school in marketing, “transilvania” university of braşov dorianpocovnicu@yahoo.com abstract efficient communication is one the most important instruments used for the purpose of generating change inside and outside an organization. it can contribute to adjusting attitudes and the manner of approaching the present and future challenges and to changing behavioral patterns. the mission and the objectives of organizational communication are highly interrelated with organizational change and environment characteristics, in which the organization functions. the communication performed by the public administration institution outside is an institutional communication, extra-organizational, which presents the following purposes: strengthening its image, stimulating an environment of trust and affinity from the citizens (kotler & lee, 2007). we are of opinion that the management of communication performed by a public administration institution features three fundamental aspects, relevant for institutional communicators when designing and managing the institutional communication: communication efficiency, communication process and the implications of the new information and communication technologies (ict) for this process. keywords communication management; efficiency of communication process; institutional communication; organizational culture; ict; public services jel classification m31; m38 introduction the special part communication holds in ensuring the functionality and efficiency of the institution’s activities is mainly generated by: the volume, complexity and diversity which can be estimated for the institution’s objectives and its subsystems, due to the impact of the national and international environment variables; the profound changes within the dimensional and functional characteristics of the modern organization/institution; the groups and how they are designed and how they function within the organization, considering the role communication plays in spreading and amplifying the connections between the members of the groups and in consolidating the cohesion between them; the managerial activity and the structural pattern of work-time into sequences which allow for problem solving and operational solutions to be performed by specific departments. the communication performed by the public administration institution towards the exterior is an institutional communication, extra-organizational by which the following objectives are framed: strengthening the institutional imagery; stimulating a cohesive and coherent communicational climate and maintaining a trust and sympathetic relation with specialized audiences, such as citizens and stakeholders. public administration institutions aim to gain, through communication, the following effects: identification – what is necessary for the institution to ensure its notoriousness 210 pocovnicu and to have its competence acknowledged; information – the social bodies within society must be informed upon the administrative actions of the institution; achieving a social education – befits the most important part a public institution plays within society. communication management, at the level of public administration institutions, presents three fundamental aspects fundamental aspects, relevant for institutional communicators when designing and managing the institutional communication: communication efficiency, communication process and the implications of the new information and communication technologies (ict) for this process. pragmatic and relational aspects of communication efficiency, in the case of public administration institutions one of the most important aspects of institutional communication is efficiency or performance. in the context of a highly unstable environment, communication efficiency is capital for the common activities of an institution. performance in institutional communication can be defined by the performance level achieved for the three communicational pillars, namely: interpersonal communication, internal communication and external communication. its analysis presents as starting point the emphasis on the characteristics of public institutions, as organizational entities. the theories of public administration assert the fact that these types of entities are, in fact, the subject of political authority and, unlike private organizations, the level of public authority is much higher. the higher level of responsibility required by political authority presents a deeper impact upon the structure and the processes from within the public institutions. several features of public institutions have been emphasized as important factors in evaluating communication efficiency. these are: clarity of objectives, bureaucracy level, organizational culture and organization size (pandey& garnett, 2006). clarity of objectives or their ambiguity represents one the most important characteristics of public institutions. unlike the individual, the organization, and especially the public institution, presents a higher number of objectives, thus adding to the costs equation a new item, namely the absences of a clear hierarchy of the preferred means of achieving the goals. the diversity of objectives often entails a potential conflict between them. this is why the ambiguity of objectives is often associated with the presence of multiple and diverse objectives. it is within this frame that the literature converges towards the importance of the clarity characteristic when dealing with the results of a public institution. it generates direct effects upon the accuracy and the consistency of the communication between the institution and its specialized audiences. negotiating conflicts when setting up the objectives and increasing their accuracy entails positive outcomes for key aspects of communication, such as: information dissemination, influencing attitudes, promoting awareness and persuading the audiences to act or not in a certain way. the concept of bureaucracy can be defined as “a set of rules, regulations and procedures applied with authority which generate the need for conformity but which do not serve the originating purpose for which they have been designed” (bozeman, 1993). a more recent definition states that it represents “a set of compulsory rules designed by management levels with a negative impact on the organization interests” (pandey&kingsley, 2000). the bureaucracy within an institutional structure creates negative effects such as: diminishing the benefits for the target group and the separation within the labor process. the effects of bureaucracy on communication efficiency manifest on two directions. the first one implies that the rigid rules and procedures negatively influence the existence, emergence and the capacity of the communication channels by which information is communicated. the second one 211 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro denotes that bureaucracy inhibits personal motivation to seek for or to provide the necessary information. studies performed on bureaucracy and on the effects upon institutional communication have proved that excessive formality leads to diminishing the usage potential of informal channels used for identifying the useful information for an institution (shrader, lincoln & hoffman, 1989). in most cases, efficient communication means less usage of formal channels. centralization, another trait of bureaucracy, also carries weight on communication efficiency. thus, a high level of centralization generates a lower level of communication, a lower time and a lower level of feedback. even though the importance of organizational culture on the institution results is acknowledged, there are few studies to show the impact of organizational culture upon the existence and performance of public institutions. most of the studies in this domain have focused on the analysis of the concept communicational climate. it can be defined as “the set of perceptions individuals present in connection with an organization”. the domain literature focused on a series of traits, such as: trust, disclosure, credibility, accuracy and frequency of communication. other definitions for organizational climate extend the conceptual boundaries by inserting several elements, such as: organizational structure, individual responsibility, support, rewards and sanctions, performance standards, resolving conflicts and organizational identity (pincus & rayfield, 1989). organization size, most often defined as the number of employees, can also be responsible for communication efficiency. on one side, communication becomes difficult when dealing with big institutions or complex structures, but on the other side, the same big institutions present at their disposal resources, expertise and highly significant budgets to use within the communication process. research has shown that there is a variable dependency between organization size and communication efficiency. thus, big organizations present a high number of hierarchical levels and it is this additional filtering of the communication process that affects its accuracy and speed (garnett, 1992). the size of the institution can have a positive impact on communication if it is backed up by stability and efforts to expand the communication expertise and the available resources. communication process in public administration – key factor for an efficient management of the public institutional system the communication process in public administration can be considered a key factor in efficiently performing the social and economic functions of this system, responsible for implementing public policies. the quality of the informational relations between the subjects of public administration processes is determined by a set of factors, and its influence is exerted upon the entire system of the public administration organization. moreover, the same quality impacts the informational flows within the entire system of public authority. recent research has shown that the communication quality within the same system of public administration is influenced by using modern forms of communication promoted by the new ict. in the communication process, the relation public administration – citizens represents the core of the public administration act. the entities which are responsible with communication, namely the public clerk (as a sender) and the citizen (as a receiver) present clear objectives: the sender informs, persuades, guides, captures interest and must be efficient whereas the receiver is attentive, willing to understand, to capture and assimilate the information (mcknigh, 2005). from a structural approach, the relation between public administration institutions and the citizens envisages the following aspects: the possibility of a fast and easy access to information and to the public services for the local population; improving service 212 pocovnicu quality offered to customers; providing public services directly to the citizens and in a lesser degree through intermediaries, such as agencies or other types of clerks; ensuring a climate of trust and understanding between public administration institutions and citizens; participation of citizens in the process of local decision making and in managing the public institutions; promoting the participation and involvement of citizenry in local democracy and urban development. modern administrations give priority to their objectives regarding citizen services development, providing quality, consistent and up-to-date information and creating the necessary tools for an active participation of any citizen in the administrative and political decisions he is affected by. achieving these objectives especially rely on the new information and communication technologies (ict) (baciu, n.d.). the public clerk plays a special part in the organization and development of the communication process inside the public administration institution, and depending on how well he promotes the communicational act one can analyses the efficiency of his/her activity and the quality of achieving the established objectives. generally, public administration domain requires that the public clerk presents a high level of professionalism, absolute ethics, professional and private, a high level of education, physical skills and qualities. public institutions which use a citizen-oriented approach create the possibility for a trustworthy climate to take shape within the administrative system. this trust creates a solid ground for citizens and state authorities so that, by working together, to solve local issues. after gathering information from citizens, the local officials of an administration have the obligation to listen and to take into consideration their opinions. during the last ten years, framing the idea that citizens must be considered as clients has become more important in the rationale and actions of public authorities (see law 215/2001 of local public administration). therefore, clients have the right to demand from the public suppliers services which satisfy their needs rapidly, accessible, at a low price but a high quality and also offered with politeness. this rule applies especially to the administration, as a supplier of basic public services. performing a public service is not an isolated activity, but a part of a complex relation between administration, society and citizens, on several pillars, because it is dynamic and because administration itself is a complex organism (androniceanu, 2002). implications of information and communication technologies’ development on the communication processes inside public administration lately, more and more governments of developing countries have published ambitious proposals for reform of their own administrative systems by using new information and communication technologies (ict). these type of proposals have been identified on the agenda of transnational organizations such as the european union or the g7. although these initiatives differ considerably, from a domain and implementation context point of view, they reflect, undoubtedly, the existence of a general consensus regarding the possibilities offered by the new ict. the rising synergy between information technology and telecommunications will allow governments to become more flexible when dealing with collecting and using of information. the new means of administration and information communication allow governments to avoid the dilemma between cost reduction and quality increase, thus creating and administrative structures which function better and cost less. more important, the new interaction channels open up the communication path between governments and citizens, paving the way towards increased transparency, higher responsibility and 213 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro opening up governments to accessible forms of citizens’ participation (wescott, pizarro & schiavo-campo, 2000). within the last decade, local and national agencies, especially from developed countries, have begun to implement ict for an increasing palette of public service. these applications focus on two objectives: achieving major improvements in reaction speed, in efficiency and public service accessibility and bringing governments closer to citizens. the potential benefits of the new technologies for the public services provided by public administration institutions are (dutton, 1996): cutting down administrative costs; quicker and more precise response to request and data base interrogations, including outside normal working hours; data access to all levels and structures of administration, from any location; increasing government capacity; assistance to local and national economies by facilitating the interface government – business stakeholders and an additional tool for public feedback. ict are not yet used on a large scale by the governments of developing countries in order to solve issues, such as: information exchange between administrative structures; documents flow until approval; digital filling up of online forms; access to public information; gathering feedback by public clerks and providing answers in due time; archiving of documents; publishing statistical results, etc. the printed form of the documents still prevails and the phone still represents the main tool used for prompt action. conclusions improving the activity and communication in public sector can be achieved, in a complementary manner, by adopting instruments which have long been used by the private sector, so that the performance of the institution’s activity may increase in efficiency. converting the improvement techniques of specific methods and technique from the private sector represents social innovation trend within public institutions. therefore, from the point of view of communication management in public administration institutions, the clarity of objectives may be considered the equivalent of smart acronym, used in project management, where s stands for specific, m for measurable, a for accessible, r for realists and t for time frame. this acronym is a feature of the new public management approach, namely a management based on public institution performance correlated with the established objectives. the level of bureaucracy and organization size is two elements, considered important in evaluating the communication process of a public institution. the economic crisis has forced several public institutions to downsize personnel and to increase the tasks/employee for the remaining personnel. in such a context the bureaucratic surplus affects the efficiency communication/inter-department and communication/intra-department. a proficient solution for reducing bureaucracy and maintaining the communication efficacy at either department or institution level is represented by inter-relating the new ict with the two elements, so that delivering the public service by the public institution is not affected. even so, managing the new ict is a complex process, which requires keeping in the system new public clerks with a medium and advanced level of ict knowledge, so that performance in communication and in public service delivery does not remain a desideratum. as for the communication process, during the last ten years, the paradigm shift in perceiving the citizens as clients has become more important in the way the public authorities think and act. changing the procedural paradigm of public institutioncitizen communication has entailed positioning the relation citizen-institution on certain hybrid conceptual pillars, within which information, public policy benefits and 214 pocovnicu delivered services have started to be considered as hybrid products, objectified, standardized or adapted to the specific need of target groups and audiences. when dealing with the communication mix, the public administration institutions can benefit from using the new icts and the social media networks, such as promoting the institutions initiatives, informing the citizens and the potential beneficiaries of the public services, achieving a real dialogue with the citizens and improving the internal communication processes. it is on this background that we consider the following future research strands in using social media by public administration institutions: shifting from ict to social media – change of paradigm and of concept; a more efficient interaction with the citizens – how, when and who to be in charge; a better management of crisis situations and improving the institutional imagery and brand. references amalancei, b-m., manole v., epuran gh. (2009), communication et relations publiques dans l’union européenne, annals of faculty of economics, university of oradea, faculty of economics, vol. 4(1), pages 542-546, may. androniceanu, a. (2002), management public, editura economică. banciu, d., servicii de informare pentru cetăţeni în societatea informaţională, available at www.acad.ro/pro_pri/doc/st_f00.doc. bozeman, b. (1993), a theory of government “red tape”, journal of public administration research and theory, 3 (3). dutton, william h., ed. (1996), information and communication technologies: visions and realities, oxford university press. garnett, james l. (1992), communicating for results in government: a strategic approach for public managers, san francisco: jossey-bass. kotler, p., lee, n. (2007), marketing in the public sector. a roadmap for improved performance, wharton school publishing, new jersey. mcknigh, k. m. t et al. (2005), psychology, psychologists, and public policy, 1 ann. rev. clinical psychol. 557, 567. pandey, s. k., kingsley, g.a. (2000), examining red tape in public and private organizations: alternative explanations from a social psychological model, journal of public administration research and theory, 10 (4). pandey, s.k., garnett, j.l. (2006), exploring public sector communication performance: testing a model and drawing implications, public administration review, january february. pincus, j. d., rayfield, r.e. (1989), organizational communication and job satisfaction: a metaresearch perspective, in progress in communication sciences, edited by brenda dervin and melvin j . voigt, norwood, nj, ablex. shrader, c.b., lincoln, j.r., hoffman, a.n. (1989), the network structures of organizations: effects of task contingencies and distributional form, human relations, 42 (1). wescott, c., pizarro, m., schiavo-campo, s. (2000), to serve and to preserve: improving public administration in a competitive world. guidelines, handbooks, and manuals, chapter xix, asian development bank. 215 fundamental aspects of communication management, in the case of public administration studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro an overview on retail reverse logistics ioana olariu “vasile alecsandri” university of bacau ioana_barin_olariu@yahoo.com abstract this article is a theoretical approach on retail reverse logistics. environmental concern and the current marketing strategy have spurred retailers to implement strategies to facilitate product returns from end customers. reverse logistics, indicating the process of this return flow, encompasses such activities as the movement of returned products, facilities to accommodate returned items, and overall remedy process for returned items. the retail industry, under great competitive pressure, has used return policies as a competitive weapon. grocery retailers were the first to begin to focus serious attention on the problem of returns and to develop reverse logistics innovations. grocery retailers first developed innovations such as reclamation centers. reclamation centers, in turn, led to the establishment of centralized return centers. centralizing returns has led to significant benefits for most firms that have implemented them. over the last several years, retailers have consolidated. now, more than ever, reverse logistics is seen as being important. this reverse distribution activity can be crucial to the survival of companies, because the permanent goodwill of the company is at stake. businesses succeed because they respond to both external and internal changes and adjust in an effective manner to remain competitive. keywords competitive advantage; network design; outsourcing; retail activity; reverse logistics jel classification m31 introduction if no goods or materials are being sent "backward", the activity probably is not a reverse logistics activity. reverse logistics also includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. it also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery. therefore, reverse logistics is: „the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal”. more precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. reverse logistics has become a managerial priority because of the assets/value involved and the potential impact on customer relations (daugherty et al., 2005). customers expect their vendors to be willing and able to handle returns (daugherty et al., 2003). in today’s competitive retail environment, patrons often choose one retailer over another based on the retailer’s returns policy. products are returned for a wide range of reasons including defects or damage, customer dissatisfaction, and, especially in the business-to-business context, lower than projected sales (barsky and ellinger, 2001). 189 olariu importance of reverse logistics reverse logistics is important as it has direct impact on the bottom line (stock, 1998; mason, 2002). lowering product quality, as a consequence of sourcing goods from emerging economies, liberal returns polices, buyer’s remorse, the rise of internet and home shopping and obsolescence linked to shortening product life cycles are a number of factors that have led to rise in this phenomenon (bernon and cullen, 2007). the costs of dealing with returns are disproportionate compared to forward logistics and it has been likened to a process that goes the wrong way down a one way street as typically supply chains are optimized around forward logistics (lambert and stock, 1982). it has been recognised that effective supply chain management can enhance customer value and reduce operating costs (christopher, 2005). this view is supported by tibben-lembke (2002) who suggests that many techniques have been discovered to maximise the effectiveness and efficiency of forwards logistics and that companies and researchers are just at the beginning to appreciate the important differences and how to best structure reverse logistics operations. autry (2005) builds upon this by stating that reverse logistics is not optional but mandatory. many companies do not appreciate the importance of reverse logistics to the business whilst only a few have implemented business wide practices aimed at minimising the effects of returns. mollenkopf et al. (2007) specifically call for research on returns management which incorporates perspectives from the accounting and finance function, an area that has previously received little attention. management aspects of retail reverse logistics the scope of reverse logistics throughout the 1980s was limited to the movement of material against the primary flow. as time moved on, more sophisticated definitions began to emerge and rogers and tibben-lembke (1998) defined reverse logistics as “the process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value, or proper disposal”. however, this definition is still somewhat limited as many products are returned to a point of recovery and not their origin (de brito and dekker, 2002). in recent years, a number of definitions have emerged. the reverse logistics association (2009) refer to the term reverse logistics “as all activity associated with a product/service after the point of sale, the ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources”. it should be noted that reverse logistics is not a homogeneous subject but an umbrella term that encompasses a number of different operational contexts. the supply chain council (2008) identify types of returns flows, namely; return of defective products, return for maintenance, repair and overhaul of products and return of excess products, manage. more recently, the issue of sustainability has added a further dimension with manufactures and retailers in certain markets find that they are now obliged by law to take back their products at the “end of life” and recycle them (walther and spengler, 2005). retail reverse logistics describes the activity of returning goods back through the supply chain with a focus on retailers. raimer (1997) indicated that returns are, and always have been, a fundamental part of retailing. this can originate from a customer returning a product to a retail outlet or a commercial decision to withdraw the product for sale. although retail reverse logistics is not a new concept, the growth of the internet and home shopping has seen a marked rise in the volumes of products being returned (rowley, 2000; wheatley, 2002; mukhopadhyay and setoputro, 2004). in addition, many grocery retailers have recently increased the level of non-grocery lines in their stores. the management of reverse logistics systems typically have a number of key differences from forward or outbound systems. tibben-lembke and 190 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro rogers (2002) highlighted a number of factors where differences occur. they cited the ability to forecast volumes, transport systems being “many to one” rather than “one to many”, product quality not uniform, unclear disposition routes, costs not directly visible and speed not considered a priority. this suggests that the managerial aspects for reverse logistics are not the same as for outbound. indeed, richey et al. (2005) make the case that reverse logistics deserves special attention in terms of labour due to the lack of standardisation and that management should be focused on innovative ways to handle returns. they also conclude that there may be enough exceptions to warrant the development of customised technology. these differences attract higher costs due to the special nature and non-conformity of the operational characteristics. in addition to these costs, the asset value of a returned product is normally significantly lower than the original cost of the item while timing of returns can have implications on the liquidity for retailers as they can generate periodic negative cash flows (horvath et al., 2005). physical network design the studies on network design focus on the design of logistics structures for shipping used/returned products back to facilities. consumers expect to trade in an old product when they buy a new one. different products may be returned at different stages of their life cycles. they may go for remanufacturing, repair, reconfiguration, and recycling as per the most appropriate disposition decision. collection is the first and a very important stage in the recovery process, where product types are selected and products are located, collected, and, if required, transported to facilities for rework and remanufacturing. inspection/sorting may be carried out either at the point/time of collection itself or afterwards (at collection points or at rework facilities). collected items generally need sorting. inspection/sorting illustrates the need for skill in the sorting of used products. this may or may not be combined with preprocessing. preprocessing may be in the form of sorting, segregation, partial or complete disassembly or minor repair and refurbishing activities. it may be carried out either at collection centers or at rework facility depending upon the technological and economic factors. location and distribution are the most important and critical area of reverse logistics that is assuming greater importance day by day. capacity decisions in general aim at providing the right amount of capacity at the right place and at the right time. longrange capacity is determined by the size of the physical facilities that are built. in general, facility decisions are affected by estimated returns (assuming infinite markets), costs, competitors’ behavior and other strategic and operational considerations (moise, 2008). four management aspects are relevant when considering physical network design (bernon, rossi and cullen, 2009). facility location a significant body of literature addresses the network design aspects of reverse logistics. good network design can optimise transportation, reduce inventory, order processing and warehousing costs related to returns (amini et al., 2005). blumberg (2005) distinguish different models according to the nature of products (traditional waste, hightech and low-tech products, consumer goods) and the independency between forward and reverse flows, while srivastava and srivastava (2006) presented a conceptual model focused on the estimation of returns for different categories of products, in order to make decisions related to location and capacity of facilities. the contribution from fleischmann (2001) was to create a generic facility location model for reverse logistics networks. other authors have subsequently developed quantitative models to extend the knowledge on network design (gomes salema et al., 2007; kara et al., 2007; lieckens and vandaele, 2007). min et al. (2006) discussed 191 olariu the aspect of centralised versus decentralised return centres to minimise overall operating costs, while lieckens and vandaele (2007) considered inventory holding costs, lead times related to product’s cycle time. blackburn et al. (2004) evaluated network design from the perspective of the time value of products. he compared the requirements of high and low clock speed industries where the life cycle of products is a key factor in the design of reverse logistics networks. viewed in this way, network configuration is a tradeoff between speed and cost efficiency. for products with short product life cycles a responsive supply chain is required to maximise the opportunity for re-use before they become obsolete. outsourcing other researchers have considered the benefits of outsourcing returns operations to third-party logistics providers as a mechanism to reach higher levels of efficiency, economies of scale, knowledge of dealing with returns (krumwiede and sheu, 2002; sarkis et al., 2004; min and ko, 2008) and access to capabilities, such as, specialist information technology (richey et al., 2005). managing reverse flows normally requires different network infrastructure, handling equipment infrastructure and information systems (ko and evans, 2007). third party logistics service providers are companies who provide a range of logistics activities for their clients. they might operate distribution centres, manage the delivery of the product through their transport fleets or undertake value-adding services such as re-packing. another model for the coordination of complex networks that has been proposed is the idea of a fourth-party logistics (martin christopher, 2005). the fourth-party logistics would assemble a coalition of the ‘best of breed’ service providers and using its own information systems capability, ensure a cost-effective and sustainable supply chain solution. green supply chain management green supply chain management incorporates environmental thinking into supply chain management (srivastava, 2007). outsourcing reverse distribution to logistics service providers has the benefit of less fuel consumption, less packaging and the opportunity to reach the critical mass of goods, as investigated in e-commerce (sarkis et al., 2004). there was recognition that reverse logistics networks are not as efficient as forward logistics and the use of third-party logistics companies could lessen the environmental impact (bernon, rossi and cullen, 2009). the green supply chain management literature suggests that the main concern for logistics and supply chain managers is how to embed green concerns into decision-making practices (wu and dunn, 1995). in terms of green supply chain management and reverse logistics, srivastava (2008) suggests field research around best practices in the area of reverse logistics may help decision-makers come up with “solutions for various strategic, tactical and operational aspects”. the fieldwork that we undertook as part of the development of our conceptual framework highlights the need to focus on returns avoidance as well as creating better value from assets when returns do occur. information technology daugherty et al. (2005) found that reverse logistics information technology capabilities have a direct and positive impact on economic performance and stated that significant technology support is needed due to the nature of reverse logistics operations. similar to the influence that industry clock speed has on network design, the rate of product innovation also has an impact on the information technology requirements as fast clock speed industries will require effective information support. closs and savitskie (2003) provide empirical evidence that information technology is a major differentiator of logistics performance. this view is supported by daugherty 192 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro et al. (2002) who suggest that “managers will need to apply sophisticated support to maintain satisfaction levels across the supply and efficiently handle and redistribute inventory as necessary”. organizational integration daugherty et al. (2003) recognised that “developing a relationship orientation involving trading partner trust and commitment is one to facilitate better reverse logistics program performance and respond to customer return-related demands”. golicic and mentzer (2006) proved the indirect and positive influence that trust, commitment and dependence have on relationship value, through relationship magnitude. the benefits of supply chain integration have been discussed by numerous authors in the supply chain literature (stevens, 1989; frohlich and westbrook, 2001; bagchi and skjoett-larsen, 2005; christopher, 2005; mitra and singhal, 2008; sha et al., 2008; van hoek et al., 2008). haozhe et al. (2009) proved the dimensions of integration to be connectivity and simplification, developing scales to describe them, by both an internal and an external perspective. return policies also exist between retailers and manufacturers. yao et al. (2005) suggest that retailers are much more willing to order higher quantity of goods, if the manufacturer applies a liberal return policy. in many cases, there is no penalty placed on retailers to return excess inventories as they receive a full credit (padmanabhan and png, 1995). indeed, manufacturers often stipulate return policies that encourage bulk purchases without considering the reverse logistics impacts (emmons and gilbert, 1998). performance measurement ravi and shankar (2005) identify several barriers to reverse logistics programmes including the lack of appropriate performance measurement. a significant body of literature exists covering performance measurement systems and frameworks (kaplan and norton, 1992; neely et al., 2000). however, there is little in this regard relating to retail reverse logistics. daugherty et al. (2002) identified both operating and financial measures for effectively managing recovered asset and inventory investment. autry et al. (2001) undertook a survey which identified environmental regulatory compliance, customer relations, recovery of assets, cost containment, profitability and inventory investment as reverse logistics related performance measures. richey et al. (2005) building on autry’s earlier work considered operational performance measures including, ease of obtaining a return authorisation, length of time for credit processing, handling of reconciliation of charge backs, quality of rework or repair, timeliness of rework or repair. conclusions operating effective reverse logistics programs is a critical part of retail business, because the programs often represent the firm’ s most visible and possibly final effort at recovering value from a service failure. reverse logistics practices vary based on industry and channel position. industries where returns are a larger portion of operational cost tend to have better reverse logistics systems and processes in place. in the book industry, where great change in the industry structure has occurred in the last few years, returns are a major determinant of profitability. successful retailers understand that managing reverse logistics effectively will have a positive impact on their bottom line. industries that have not had to spend much time and energy addressing return issues are now trying to make major improvements. 193 olariu references autry, c.w. (2005), formalization of reverse logistics programs: a strategy for managing liberalized returns, industrial marketing management, vol. 34 no. 7, 749-57. bernon, m., cullen, j. (2007), an integrated approach to managing reverse logistics, international journal of logistics: research & applications, vol. 10 no. 1, 41-56. bernon, m., rossi, s., cullen, j. (2011), retail reverse logistics: a call and grounding framework for research, international journal of physical distribution & logistics management, vol. 41, no. 5, 484-510. blackburn, j.d., guide, v.d.r. jr, souza, g.c., van wassenhove, l.n. (2004), reverse supply chains for commercial returns, california management review, vol. 46 no. 2, 6-22. blumberg, d.f. (1999), strategic examination of reverse logistics & repair service requiresments, needs, market size, and opportunities, journal of business logistics, vol. 20 no. 2, 141-59. blumberg, d.f. (2005), introduction to management of reverse logistics and closed loop supply chain processes, crc press, boca raton, fl. carter, c.r., ellram, l.m. (1998), reverse logistics: a review of the literature and framework for future investigation, journal of business logistics, vol. 19 no. 1, 85-102. christopher, m. (2005), logistics and supply chain management – creating value adding networks, ft prentice-hall, london. closs, d.j., savitskie, k. (2003), internal and external logistic information technology integration, international journal of logistics management, vol. 14 no. 1, 6376. daugherty, p.j., autry, c., ellinger, a. (2001), reverse logistics: the relationship between resource commitment and program performance, journal of business logistics, vol. 22, no. 1, 107-23. golicic, s., mentzer, j. (2006), an empirical examination of relationship magnitude, journal of business logistics, vol. 27 no. 1, 81-108. haozhe, c., daugherty, p., landry, t. (2009), supply chain process integration: a theoretical framework, journal of business logistics, vol. 30 no. 2, 27-46. krumwiede, d., sheu, c. (2002), a model for reverse logistics entry by third-party providers, omega, vol. 30 no. 5, 325. lambert, d.m. and stock, j.r. (1982), strategic physical distribution management, richard d. irwin, homewood, il; min, h., ko, h. (2008), the dynamic design of a reverse logistics network from the perspective of third-party logistics service providers, international journal of production economics, vol. 113 no. 1, 176-92. moise, m. (2008), the importance of reverse logistics for retail activity, amfiteatru economic, no. 24, 192-209. mollenkopf, d., russo, i. and frankel, r. (2007), the returns management process in supply chain strategy, international journal of physical distribution & logistics management, vol. 37, no. 7, 568-92. prahinski, c., kocabasoglu, c. (2006), empirical research opportunities in reverse supply chains, omega, vol. 34, no. 6, 519-32. ravi, v., shankar, r. (2005), analysis of interactions among the barriers of reverse logistics, technological forecasting and social change, no. 72, pp. 1011-29; richey, r.g., chen, h., genchev, s.e., daugherty, p.j. (2005), developing effective reverse logistics programs, industrial marketing management, vol. 34, no. 8, 830-40. 194 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro richey, r.g., genchev, s.e., daugherty, p.j. (2005), the role of resource commitment and innovation in reverse logistics performance, international journal of physical distribution & logistics management, vol. 35, no. 4, 233-57. rogers, d.s., tibben-lembke, r.s. (1998), going backwards: reverse logistics trends and practices, reverse logistics executive council, reno, nv. rogers, d.s., tibben-lembke, r.s. (2001), an examination of reverse logistics practices, journal of business logistics, vol. 22, no. 2, 129-48. skinner, l.r., bryant, p.t., richey, r.g. (2008), examining the impact of reverse logistics disposition strategies, international journal of physical distribution & logistics management, vol. 38, no. 7, 518-39. srivastava, s.k. (2007), green supply chain management: a state of the art literature review, international journal of management reviews, vol. 9, no. 1, 53-80. srivastava, s.k. (2008), network design for reverse logistics, omega, vol. 36, 53548. srivastava, s.k., srivastava, r.k. (2006), managing product returns for reverse logistics, international journal of physical distribution & logistics management, vol. 36, no. 7, 524-46. stevens, g.c. (1989), integrating the supply chain, international journal of physical distribution & materials management, vol. 19, no. 8, 3. tibben-lembke, r.s., rogers, d.s. (2002), differences between forward and reverse logistics in a retail environment, supply chain management: an international journal, vol. 7, no. 5, 271-82. 195 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro why don’t you come over? – a different way to promote romania monica pătruţ “vasile alecsandri” university of bacău monicapatrut@yahoo.com abstract investing in the country brand represents a strategic priority as it consolidates the image and international reputation of the respective members. although romania started to invest in this long-term process in 1996, the promotional actions have lacked coordination and efficiency. the romania’s country image is insufficiently shaped and the country brand index study conducted in 2012 confirms it by placing our country on the last positions. we shall show in this study that by exploiting the collective intelligence principle and the involvement of the net generation’s representatives, many echoing campaigns can be created in the virtual environment. the country brand is being built rather by means of every individual’s involvement, by what we do and what we say every day. “why don’t you come over?” campaign, which has contributed in an unexpected way to improve romania’s image by spreading humor in the virtual space, should show all actors responsible that there may be successful promotion patterns. keywords promotion campaign; country brand; user-generated content; romania; gândul newspaper (the thought) jel classification m37 an inefficient promotion ...for an ever surprising romania a country image reflects the manner in which we perceive that country as a tourist destination, as well as a place for investment or as a source of origin of goods. as van ham noted (2001), a bad or lack of a reputation represents a serious handicap for a country who has been trying to remain competitive in the international arena. the image and reputation therefore become essential components of a strategic arsenal of a state. we shall start this article by making a summary of romania’s efforts to create and promote its own country image. this concept occupies a central position in the area of international public relations, the specialists in this field having agreed that a positive national image is a benefit which leads to attracting foreign investment, developing tourism and cordial relations with other countries (curtin & gaither, 2008). following this pattern, as it can be seen in table 1, romania has promoted at random various different components which contribute to the creation of a country image: tourism, brancusi, eminescu, “made in romania” products, george enescu music festival and various trade fairs. each of the institutions involved has promoted its activities by itself, on the conventional media channels, and romania’s image campaigns lacked the most basic coordination (nicolescu, 2008) and that they were far from being effective in the creation and strengthening of the country brand. 201 pătruț table 1 the best-known promotion campaigns initiated by institutions in romania year name of the campaign/product domain initiators 1996 eterna şi fascinanta românie (eternal and fascinating romania) tourism romanian government 2001 românia, mereu surprinzătoare (romania, ever surprising) tourism ogily & mathers romania. 2004 românia, o destinaţie atractivă pentru investiţiile străine (romania, an attractive destination for foreign investments) foreign investments romanian agency for foreign investments 2005 imaginează-ţi românia ! (fancy romania!) tourism group of initiative to promote romania’s country image 2005 romanian cultural institute (institutul cultural român) external politics ministry of external affairs 2005 deceniul cultural roman (romanian cultural decade) external politics ministry of external affairs 2006 romania, fabulous spirit ministry of external affairs 2006 mari români (famous romanians) cultural romanian television 2007 made in romania products romanian dairy industry association , romanian meat association and national vineyard growers and wine producers , violet advertising 2007 fabricat în românia (made in romania) products chamber of commerce of romania 2007 romania, your business partner foreign investments romanian agency for foreign investments 2008 hola, soy rumano! (hello, i’m a romanian.) repairing country’s image agency for governmental strategies 2008 românia. piacere di conoscerti (romania, nice to meet you / always a pleasure to know you) repairing country’s image agency for governmental strategies 2009 romania -the land of choice tourism ministry of tourism 2010 explore the carpathian garden tourism ministry of tourism source: author’s data specialists in the field of public relations (dolea & ţăruş, 2009) are drawing an alarm signal, warning that it is not enough to find out that romania is unfavorably associated with dracula, ceausescu, stray dogs, pickpockets, street children, rromi and communism. it is not enough to accuse and say that romania has got a negative or shapeless country image. “a country is a complex ‘product’ and the process of assigning a coherent meaning to this product is multilateral and it is difficult to achieve” (dolea & ţărus, 2009). romania’s efforts for discovering and promoting its own image in the world should be continued and organized much better. as illustrated in the study entitled country brand index (2012), carried out on a sample of 118 countries, the results obtained so far have been almost insignificant, our country being placed only on the 100th place. state institutions and citizens should understand that a successful brand is considered to be “an essential national 202 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro wealth” (olins, 2006) and for reaching it, “it takes more than a slogan, some colours and a distinctive logo” (olins, 2006). web 2.0. a better environment for promoting the country brand slowly, but surely, brands have learned to use the power of the internet for their advantage. facilitating the distribution of information and the connection between the people, on the one hand, and offering speed and a huge capacity for the distribution of messages, on the other hand, the internet is the most hospitable host which allows consumers and brands to have a dialogue on equal terms. web 2.0 technologies allow internet-consumers to generate content, chat online and build different types of relations. online interactions with consumers may have different intensities, starting with information and interaction and ending with relationships and involvement (fisher-buttinger, vallaster, 2011). exploiting the collective intelligence principle and the internauts’ desires to collaborate and to stay connected all the time (leadbeater, 2010), brands may also interact with virtual communities formed by expert users and information multipliers or opinion leaders. the interaction models considered to be successful are the following: entertainment hunters for viral campaigns, virtual worlds and webisodes, creative contributors to the realisation of assessment portals, reviews and tops, collaborative editing, inventive experts for product improvement and innovation or their testing and, lastly, open-source collaborators which plan, manage, and complete projects launched by the companies (crowdsourcing). (fisher-buttinger, vallaster, 2011). this revolution of virtual participation and collaboration has given rise to the phenomenon wikinomics (tapscott and williams, 2010), phenomenon which, by means of participating production, promises to exploit human abilities, ingenuity and intelligence much quicker and more efficient than they have been exploited so far over the course of the history. the romanians’ wish to get actively involved in creating the country brand and not to assist passively at the failed attempts of the government or mass-media is highlighted by the study entitled romanians’ perception on romania’s country image (2013). starting from a questionnaire with 23 questions which was promoted in the online environment and applied on a sample consisting of 223 persons, 47% of them being bloggers, the participants in the study underlined the fact that beyond the governmental strategies and the more or less successful media campaigns, the country brand is being built rather by means of every individual’s involvement, by what we do and what we say every day (see figure 1). brand strategies have not given the expected results yet. for the european citizens, romania’s main characteristics are largely the same: a poor and corrupt country, a country in which fraud, theft and high criminality are often met a country with a communist background, an unsafe and possibly dangerous country. there are also found old traditions and customs, special landscapes and beautiful forests, poor children and orphans who live on the street or in orphanages. participants in this study emphasize the imperativeness with which romania has to create a unique and competitive identity and shows the availability of the young people involved in the online environment to contribute to creating the country brand. a virtual success story: why don’t you come over? trigger factor the unfavorable image of romania is also due largely to the negative actions of some of the romanians who went to work abroad and an ongoing influence in this 203 pătruț direction by the international press against the lack of firm reactions from the romanian authorities. the most famous case over the last year is the one caused by the british government’s intention to launch a campaign to discourage romanians and bulgarians to come to the uk starting from 1 january 2014, after clearing restrictions on the labor market. figure 1 answers for the question about the greatest responsibility for achieving the romanian brand source: http://brandstorming.blogalinitiative.ro/studiu-de-caz/ce-cred-romanii-despre-romania the british newspaper, the guardian, has started a campaign, don’t come to britain!, to discourage possible romanians and bulgarians emigrants who could come to work in the united kingdom by using stereotypes, such as romanians and bulgarians are “pickpockets, scam artists and scroungers”. although the romanian and bulgarian europarliament members have sent a letter to the president of the european commission, jose manuel barroso, blaming the british government’s intention to launch a campaign to discourage the romanians and bulgarians to come in the uk, on 27 january 2013, the british newspaper invited readers to join this campaign and create slogans and posters to discourage immigration (see a selection of them in figure 2). the well-known messages of the british campaign have been the following: “don’t come to britain! it’s full ....of alcopops, asbestos, bad housing, bishops, the british, chavs, closer magazine, corrupt politicians, cuts, the daily mail, dodgy who do you believe has the greatest responsibility for achieving the romanian brand? 1.80% 2% 4.50% 20.20% 26.50% 31.40% 35% 35.90% 43.50% 54.30% 58.70% 69.10% 0.00% 20.00% 40.00% 60.00% 80.00% 1 the romanians ministry of tourism the media in romania government celebrities ministry of foreign affairs romanian bloggers president tv stars european union another do not know 204 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro scientists, dogging, drugs with stupid names, drunks, dying bees, dying trees etc. we hate ourselves – we’ll probably hate you too.” “great (used to be) britain. the biggest dump. go to australia instead!” “the sky in uk is this color for 8 months a year. try miami instead!” “grey britain is a stinky, wet, racist tramp. france is even worse. but they have better/cheaper booze.” -“come here and clean the loo. britain is full of horrible jobs we employ foreigners to do. you’re welcome!” “great britain. land of opportunities. restrictions apply.” figure 2 british slogans and posters to discourage immigration source: http://www.theguardian.com/uk/gallery/2013/jan/29/immigration-britain-ministersgallery#/?picture=403153052&index=0 205 pătruț “it’s better where you are. fancy hanging on the beach with david cameron and observing dead seagulls? neither do we. britain is shit“. the suggestions sent to the daily newspaper the guardian by its readers for the antiimmigration campaign, which the uk government thought about, have stressed the unpleasant country-specific conditions and have gradually turned into an irony at the united kingdom and at the politicians who, without studying any official sources, resorted to alarming speeches which promoted figures of hundreds of thousands of romanian immigrants to invade the united kingdom on 1 january 2014, a fact denied by the reality. ... and a prompt, really funny and effective reaction on 30 january 2013, in response to the campaign initiated by the guardian, the gândul newspaper and gmp advertising launched the campaign why don’t you come over? by means of which they invited the british to come to romania. designed as a campaign to change attitudes (newsom, turk & kruckeberg , 2003), why don’t you come over? campaign intended to improve romania’s image by presenting the real situation in our country and discourage discrimination of romanians caused by promoting stereotypes in the british tabloids. mihai gongu, manager of the gmp advertising (michael, 2013), shows the situation as a “fight” between the british readers of the guardian and the romanians who read the gândul newspaper. while the former are invited to submit reasons why living in uk is not nice, romanians have to find arguments to support that living in romania is wonderful, giving the british reasons to come here. in order to involve the internet readers in this campaign, those from the gândul newspaper have launched a facebook application where users can produce their own print. after typing a message of no more than 65 characters, the application automatically generates a print and posts on the facebook profile of the user a message “like and share up to london!” this is my reply to the ‘don’t come in england!’ british campaign (see a selection of the most successful posters in figure 3). 206 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro figure 3 successful posters in why don’t you come over? campaign source : http://whydontyoucomeover.gandul.info/ designed as a positive campaign (newsom, turk & kruckeberg , 2003), why don’t you come over? intends, at an early stage, to identify with humor the advantages of romania over the united kingdom: more beautiful girls, cheaper beer and better food, the idyllic landscape also appreciated by prince charles. based on the message "we may not like britain, but you will love romania. why don't you come over?", in the second stage of the campaign, the british are invited to find a “couch” offered by the romanians to spend a few days in romania and convince themselves of the truth in the posters’ messages. in addition, on the www.whydontyoucomeover.co.uk website, a special section was added where employers romanian could offer available jobs to the british. readers’ involvement in the campaign was beyond expectations for those who initiated it: 300 posters in the first two days. posters designed by the readers of the gândul newspaper enjoyed a real success within the online environment, being posted and accessed in the most popular social networks (https://www.facebook.com/ whydontyoucomeover). the pr digital campaign can be considered successful because it has generated over 5 million views in the romanian press (printed, online, radio, tv) and more than 100 materials in international press (see also table 2) and received several awards and nominations both in the country and abroad. table 2 ‘why don’t you come over?’ campaign’s results ‘why don’t you come over?’ campaign’s results media impressions worldwide: 87 million gandul fb engagement rate hit a record 37% media impressions in romania : 5.1 million gandul fb “talking about this” grew by 137% www.whydontyoucomeover.co.uk views : 110 000 free media exposure : euro 2 million impressions on fb : 2.1 million in romania alone gandul readership increased by 30% source : http://www.youtube.com/watch?v=gzzb8c0eho4 207 http://www.whydontyoucomeover.co.uk/ pătruț many representatives in the advertising industry or in the romanian press have praised this campaign and its effects. we mention here the comment of the wellknown journalist, cristian tudor popescu, who considers that this campaign has produced a “short-circuit” among peoples. “the government of the united kingdom, in its indolence, tells people to keep away from the romanian....whereas the british mock their own government. when a british says he/she voted for tony blair, david cameron and boris johnson, but he/she has not left the uk yet because he/she does not use public transportation, it is clear that the british behave as in caragiale: they say things that seem clear on the surface, but they mean the opposite. and they are doing it with a great sense of humor. all uk readers referred to great britain not as great britain, but grey britain” (schiau, 2013). the journalist has also praised the romanians who were involved in the campaign and have contributed decisively to its success by using their sense of humor as a tool for communication: “imagine what reaction would our ministry of foreign affairs have had: a patriotic, stiffly, like ‘come on, really, do you think that we don’t have what to eat in romania?’. instead of this reaction, which would have been null on an international level, we have a reaction which uses an extremely efficient weapon of communication and manipulation, namely humor. therefore, the campaign has proved to be overwhelming, viral reaching up to huffington post, channel 4 or associated press”(schiau, 2013). the romanian internauts have continued to have a dialogue with the british even after the end of the “do not come to england!” campaign. although they have not had the same effect at (inter)national level, it is worth mentioning two small communication episodes: “let’s talk football! ” (for the steaua bucharest chelsea match, 7 march 2013) and “upon seeing the final elections results, charles took the first plane to romania” (after the victory announcement of the extremist, farage nige, in the european parliament elections in uk, 2014) (costache, 2014). a success managed by the net generation the involvement of the net generation’s representatives in carrying out the “why don’t you come over?” campaign has brought results beyond the initiators’ expectations. their participation in creating funny posters and messages and distributing them in their own networks of “n-fluence” (tapscott, 2011) has led to record figures: over 1.500.000 impressions on facebook, 49.000 on twitter, more than 17.000 impressions on blogs and in comments, over 60.000 comments in the romanian press online (vlădescu, 2013). this should show all those responsible in promoting romania’s image that they may involve the net generation’s representatives in this mission at any time. being creative and funny, they can complete all the work in the offline environment and help transforming the romanian brand into a success story because they are interconnected and influential on the social networks to which they belong, generating content, creating communities (van dijck, 2009) cooperating, therefore, breaking all the geographical barriers. references costache, m.c. 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(2013), cristian tudor popescu, despre campania “why don’t you come over”: „reacţia românilor e de premiul nobel, e umor, nu băşcălie”. cum a ajuns hamlet faţă în faţă cu becali, available at http://www.gandul.info/stiri/cristian-tudor-pope... (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 49 some public policy instruments initiated in romania in the covid-19 context florina popa academia română, institutul de economie națională, bucurești florinapopa289@gmail.com abstract ensuring the convergence in the process of the romanian economic and social environment adaptation, to the requirements of internal market of european union, but also the alignment of public policies with good practices of european union, led to the emergence of new types of policies and instruments, for different fields of implementation, in the new conjuncture. as a consequence the covid-19 pandemic crisis, governments all over the world, imposed restrictions intended for the protection of population, with effects on the economic and social life. in romania, the government's intervention policies consisted of actions aimed at preventing the collapse in the national economy, materialized in plans, programs and measures, supported by laws and government decisions, which constitutes as basic instruments of the period 20202021. the present paper tries to present, in a synthetic manner, two essential public policy instruments used in romania, to combat the negative effects caused by pandemic crisis, respectively, national recovery and resilience plan and national reform programme 2021. the conclusions and proposals which ends the paper express the essence of the results obtained. the research methodology used was the documentation from specialty literature, focus on significant issues, synthesis and processing of information, through the author’ own interpretation. keywords pandemic crisis; public policies; instruments, economic consequences, recovery and resilience. jel classification o20; o21; o29 1. introduction in romania, the emergence of new more complex domains for public policy implementation, formed on the basis of the new requirements of development led to the extension of their scope, that enriched with a wide range of policies and instruments directed towards new fields of activity. financing public polices needs internal financial resources (stoica c. and moisoiu c., 2007, p. 520). the alignment of public policies with good practices of european union, caused by the requirements of european union led to the emergence of new types of policies and instruments, for different fields of implementation, to answer the new conditions of development. among others, it has been aimed at ensuring the convergence in the process of the romanian economic and social environment adaptation, to the requirements of internal market of european union (stoica and moisoiu, 2007, p. 521). it could be highlighted more situations of public policy-making (stoica and moisoiu, 2007, p. 520): ⇒ development of certain policies already known, such as trade policy, monetary and fiscal policy; some public policy instruments initiated in romania in the covid-19 context 50 ⇒ new policy making, in the new conjuncture of development: regional development policy and competition policy or other public policies, such as those of knowledge-based economy; ⇒ the possibility that the component elements of a certain policy to become public policies, such as the food security policy. ⇒ new policy making, by joining with other types: the policy of development through external trade, policy of development through poles of competitiveness. public policy elaborating, administration and implementation aims at sustaining the optimal running of some sectors of activity and elimination of malfunctions of activity (stoica c. and moisoiu c., 2007, p. 520). following the request of the european commission, the world bank, in romania, the public policy term was institutionalized. this has undergone changes in the administration level, which have materialized in the "transition from a perspective oriented towards keeping institutions, to one oriented towards the results of their activity"1. the main institutions and authorities concerned in the process of public policy formulation, at the national level, are: the parliament, legislative council, the cabinet of prime minister, general secretariat of the government (gsg), public policy units (ppu) at ministers′ level, the permanent inter-ministerial councils2. the proposals concerning public policies precede the stage of elaboration of the normative acts for their application. for that purpose, the elaboration of the appropriate legislative framework is initiated and finalized, at the level of government and relevant bodies3. in romania, there have been concernments for the development of legislative 1guvernul româniei, mai anfp, p. 11, politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță, http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20poli tici%20publice.pdf; 2guvernul româniei mai anfp, p. 11, 12, politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță, http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20poli tici%20publice.pdf.; fundația paem alba; ace-es, bucurești (asociația consultanților și experților în economie socială românia) (2019), p. 18, manual de bune practici internaționale cu privire la metode de participare și influențare a politicilor publice , perioada de elaborare: ianuarie 2019 – aprilie 2019, uniunea europeană fondul social european, guvernul româniei, poca (programul operațional capacitate administrativă competența face diferența!), instrumente structurale 2014-2020, https://www.paemalba.ro/wp-content/uploads/2019/05/manual-de-bune-practici-.pdf; 3fundația paem alba; ace-es, bucurești (asociația consultanților și experților în economie socială românia) (2019), p. 18, manual de bune practici internaționale cu privire la metode de participare și influențare a politicilor publice , perioada de elaborare: ianuarie 2019 – aprilie 2019, uniunea europeană fondul social european, guvernul româniei, poca (programul operațional capacitate administrativă competența face diferența!), instrumente structurale 2014-2020; guvernul româniei, mai anfp, p. 11, politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță, http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf https://www.paemalba.ro/wp-content/uploads/2019/05/manual-de-bune-practici-.pdf popa 51 framework for the public policy formulation, at central level. the normative framework (h.g. 775/2005) regulates the procedures for ”elaborating, monitoring and evaluation of public policies at central level”4. also, ”public policy units (ppu) have been created at the level of ministries” 5. among the public policies in romania, it can be exemplified: trade policy, monetary and fiscal policy, regional development policies, competition policy (stoica c. and moisoiu c., 2007, p. 520). 2. public policies, instruments developed for sustaining national economy, in pandemic crises the world economic consequences of the covid-19 pandemic crisis have been significant, affecting the economic growth in the context of the restrictions imposed by government measures to protect the population. the effect was felt throughout the production circuit, with an impact on jobs, incomes, the evolution of demand and supply6. the government's intervention policies consisted of actions aimed at preventing the collapse in the romanian economy, initiatives to help companies and provide the necessary resources to finance companies, measures taken to keep the jobs of employees who have suffered temporary interruptions, public investment in order to http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20poli tici%20publice.pdf; hotărârea de guvern nr. 775 din 14 iulie 2005 pentru aprobarea regulamentului privind procedurile de elaborare, monitorizare şi evaluare a politicilor publice la nivel central, monitorul oficial nr. 685/29 iulie 2005, https://legislatie.just.ro/public/detaliidocumentafis/63743; regulament din 14 iulie 2005 privind procedurile de elaborare, monitorizare şi evaluare a politicilor publice la nivel central, aprobat de hotărârea de guvern nr. 775 din 14 iulie 2005, monitorul oficial nr. 685 din 29 iulie 2005, https://legislatie.just.ro/public/detaliidocumentafis/63744; cosmin stoica, cristian moisoiu (2007), p. 521, importanţa politicilor publice în dezvoltarea social-economică a româniei; 4fundația paem alba; ace-es, bucurești (asociația consultanților și experților în economie socială românia) (2019), p. 18, quotes h.g.775/2005, in manual de bune practici internaționale cu privire la metode de participare și influențare a politicilor publice , perioada de elaborare: ianuarie 2019 – aprilie 2019, uniunea europeană fondul social european, guvernul româniei, poca (programul operațional capacitate administrativă competența face diferența!), instrumente structurale 2014-2020; guvernul româniei, mai anfp, p. 11, quotes h.g.775/2005, in politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță,; 5fundația paem alba; ace-es, bucurești (asociația consultanților și experților în economie socială românia) (2019), p. 18, manual de bune practici internaționale cu privire la metode de participare și influențare a politicilor publice , perioada de elaborare: ianuarie 2019 – aprilie 2019, uniunea europeană fondul social european, guvernul româniei, poca (programul operațional capacitate administrativă competența face diferența!), instrumente structurale 2014-2020; guvernul româniei, mai anfp, p.12, politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță,; 6guvernul româniei, planul național de investiții și relansare economică (the national plan for investments and economic recovery npier) – iulie 2020, p.11; òscar jordà, sanjay r. singh, and alan m. taylor (2020), the long economic hangover of pandemics history shows covid-19’s economic fallout may be with us for decades, finance & development f&d magazine, june 2020, vol. 57, number 2, international monetary found june 2020, https://www.imf.org/external/pubs/ft/fandd/2020/06/pdf/longterm-economic-impact-of-pandemics-jorda.pdf; http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf https://legislatie.just.ro/public/detaliidocumentafis/63743 https://legislatie.just.ro/public/detaliidocumentafis/63744 https://www.imf.org/external/pubs/ft/fandd/2020/06/pdf/long-term-economic-impact-of-pandemics-jorda.pdf https://www.imf.org/external/pubs/ft/fandd/2020/06/pdf/long-term-economic-impact-of-pandemics-jorda.pdf some public policy instruments initiated in romania in the covid-19 context 52 balance the economy, affected by the interruption of the activity of some economic sectors.7 these interventions have materialized in plans, programs and measures, have been supported by laws and government decisions, included in national plans and programs which are made up as basic instruments of the period 2020-20218. 2.1. national recovery and resilience plan at european union level, a financial instrument, #nextgenerationeu, was developed with a value of eur 750 billion9,, a distinct component of the european union's longterm budget (eur 1074.3 billion)10, with the aim of supporting member states' action to combat the negative effects caused by the covid-19 pandemic crisis, manifested at health, economic, social level. from the € 750 billion for next generation eu, € 672.5 billion11 is the sum allocated by the european commission, to the recovery and resilience mechanism, which is a source of funding for recovery and resilience plans drawn up by european union member states. the amounts of the recovery and resilience mechanism (rrm) budget are divided into two segments12: • grants approximately 312.5 billion euros; • loans of up to 360 billion euros. the diagram below shows the share of the recovery and resilience mechanism in the nextgeneration eu financial instrument (figure 1): through the recovery and resilience mechanism, romania has the prospect of benefiting from grants amounting to 14.248 billion euros and loans of approximately 14.935 billion euros, these amounting to 29.2 billion euros13. the national recovery and resilience plan (nrrp) is an instrument that each member country must elaborate in order to access the amount allocated by the european commission, to the recovery and resilience mechanism (rrm). within national recovery and resilience plan, there have been established the priority areas for investment, to combat the effects of the crisis, create opportunities for economic recovery, increase resilience to the negative factors. the national recovery and resilience plan for romania (rnrrp), a strategic document, aims to achieve the development objectives of our country, according to the 7guvernul româniei, planul național de investiții și relansare economică (the national plan for investments and economic recovery npier) – iulie 2020, p.4; 8guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (the national recovery and resilience plan for romania – nrrp), partea i; 9guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (pnrr) (the national recovery and resilience plan for romania nrrp), https://mfe.gov.ro/pnrr/; 10guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (pnrr) (the national recovery and resilience plan for romania nrrp), https://mfe.gov.ro/pnrr/; 11guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (pnrr) (the national recovery and resilience plan for romania – nrrp), https://mfe.gov.ro/pnrr/; 12guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (pnrr) (the national recovery and resilience plan for romania – nrrp), https://mfe.gov.ro/pnrr/; 13guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (the national recovery and resilience plan for romania – nrrp), https://mfe.gov.ro/pnrr/; https://mfe.gov.ro/pnrr/ https://mfe.gov.ro/pnrr/ https://mfe.gov.ro/pnrr/ https://mfe.gov.ro/pnrr/ https://mfe.gov.ro/pnrr/ popa 53 priority requirements of the european union, against the background of economic and social recovery from the negative consequences generated by the covid-19 pandemic, at national, european and world level. through this instrument, at the level of our country, it is ensured the alignment with the general objective of the rrm14, according to regulation 2021/241 of the european parliament and of the council, of 12 february 2021, art.415. figure 1 the nextgenerationeu programme source: guvernul româniei, ministerul investițiilor și proiectelor europene, planul național de redresare și reziliență al româniei (pnrr) (national recovery and resilience plan for romania – nrrp), https://mfe.gov.ro/pnrr/ at the level of our country, the general objective is “the development of romania by carrying out essential programs and projects that support the resilience, the level of preparedness for crisis situations, the adaptability and growth potential, through major reforms and key investments with funds from the recovery and resilience mechanism.”16. the reform and public investment proposals are based on the country specific recommendations 2019-2020 and are to be implemented till 2026. 14guvernul româniei, ministerul investițiilor și proiectelor europene, p. 2, planul național de redresare și reziliență al româniei (the national recovery and resilience plan for romania – nrrp) (28 octombrie 2021), facada6fdd5c00de72eecd8ab49da550.pdf (gov.ro), ”the overall objective of the mechanism is to promote the economic, social and territorial cohesion of the european union by improving resilience, degree of preparedness for crisis situations, adaptability and member states `growth potential, by remission of social and economic impact of crisis in question [...], by supporting the green transition, by contributing to the achievement of the union`s climate goals for 2030, established in article 2, point 11 of the regulation (eu) 2018/1999 and in compliance with the eu's goal of achieving climate neutrality by 2050, as well as the digital transition, thus contributing to upward economic and social convergence, [...] encouraging the creation of high-quality jobs, contributing to the union's strategic autonomy alongside an open economy and creating european added value” (guvernul româniei, ministerul investițiilor și proiectelor europene, planul național de redresare și reziliență al româniei (28 octombrie 2021), https://mfe.gov.ro/wpcontent/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf; facada6fdd5c00de72eecd8ab49da550.pdf (gov.ro), p. 2; 15guvernul româniei, ministerul investițiilor și proiectelor europene, p. 2, planul național de redresare și reziliență al româniei (the national recovery and resilience plan for romania – nrrp) (28 octombrie 2021), quotes regulation 2021/241 of the european parliament and of the council, of 12 february 2021, art.4, https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf; facada6fdd5c00de72eecd8ab49da550.pdf (gov.ro); 16guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (the national recovery and resilience plan for romania – nrrp), p. 2; loans grants other programs 312,5 billions euro 360 billions euro 77,5 billions https://mfe.gov.ro/pnrr/ https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf some public policy instruments initiated in romania in the covid-19 context 54 the principles of implementation of the national recovery and resilience plan17 consist in the equitable distribution of funds, means economic recover through investments and reforms at the level of the whole country. an equitable allocation of resources can lead to the preservation and capitalization of heritage. the principle of decentralization works which means that central and local authorities take responsibility for carrying out reforms, in order to achieve the green and digital transition and increasing resilience18. national recovery and resilience plan for romania (nrrp) has six pillars comprising fifteen areas associated with them. table 1 the pillars of national recovery and resilience plan for romania pillar component budget19 1.green transition. aims to investment commitment towards reforming and introducing new green technologies and capabilities20 to align the objectives of the european union to combat the negative effects of climate change, ensure the economic long-term growth, invest in creating new jobs and preserve energy security. c1.water management 1.462 million euros c2.forests and biodiversity protection 1.173 million euros c3.waste management 1.239 million euros c4.sustainable transport 7.620 million euros c5.wage of renewal 2.200 million euros c6. energy 1.620 million euros 2. digital transformation. objectives are pursued with a view to increasing the union's resilience and ensuring global competitiveness. by reforms and investments it is aimed at the penetration of digital technologies in public services, the creation of poles for innovation in the digital field21. c7.digital transformation 1884.96 million euros 17guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (the national recovery and resilience plan for romania – nrrp), p. 2 – 3; 18guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) (the national recovery and resilience plan for romania – nrrp), p. 3; 19guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) partea i, (the national recovery and resilience plan for romania – nrrp) pp. 9, 11, 16, 19, 21, 22, 23; 26; 28, 30; 20guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) partea i, (the national recovery and resilience plan for romania – nrrp), pp. 4, 5; 21guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (28 octombrie 2021) partea i, (the national recovery and resilience plan for romania – nrrp), pp. 4, 5; popa 55 3. smart, sustainable and inclusive growth. objectives are pursued, such as: recovery and long-term growth in the european union. measures are provided in the field of entrepreneurship, social economy, infrastructure development and mitigation of the negative consequences of the covid-19 crisis. c8.fiscal reform and pension reform 456.93 million euros c9.support for private sector, research, development and innovation 2558.63 million euros 4. social and territorial cohesion. reforms for economic recovery by: mitigating the effects of poverty and reducing unemployment, creating new jobs, paying attention to disadvantaged groups through social inclusion, social protection systems. measures are targeted to the application, as balanced as possible, at the whole european union, to avoid lagging some areas of it. c10.local fund 2100 million euros c11.tourism and culture 449.01 million euros 5. health, as well as economic, social and institutional resilience. improving the management capacity of public health funds, increasing investments in health infrastructure, reforms in the social field, improving the selection process for hiring and advancing civil servants. c12. health 2450.01 million euros c13.social reforms c14.good governance 196.74 million euros 165.6 million euros 6. policies for the new generation. improvements in infrastructure, efficiency, ensuring equitable access to education. c15. education 3605.97 million euros source: processing data from guvernul româniei, ministerul investițiilor și proiectelor europene – planul național de redresare și reziliență al româniei (the national recovery and resilience plan for romania – nrrp) (28 octombrie 2021), partea i, facada6fdd5c00de72eecd8ab49da550.pdf (gov.ro) https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf; 2.2. national reform programme (nrp) 2021 the national reform program (nrp) is another instrument with the significance of a "framework platform", designed to initiate policies to address the problems observed in the european semester. the elaboration of nrp 2021 is regulated by “regulation no. 1175/2011 amending regulation no. 1466/97 on strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies"22. the european semester 2021 is directly related to the recovery and resilience mechanism (rrm). for accessing funds from the mechanism, member states initiate national recovery and resilience plans (nrrp). 22guvernul româniei, programul național de reformă (the national reform programme), 2021, https://ec.europa.eu/info/sites/default/files/2021-european-semester-national-reform-programmeromania_ro.pdf, p. 6, quotes regulamentul nr. 1175/2011 de modificare a regulamentului nr. 1466/97 art. 2-a, para. (2), lit. (d); https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://mfe.gov.ro/wp-content/uploads/2021/10/facada6fdd5c00de72eecd8ab49da550.pdf https://ec.europa.eu/info/sites/default/files/2021-european-semester-national-reform-programme-romania_ro.pdf https://ec.europa.eu/info/sites/default/files/2021-european-semester-national-reform-programme-romania_ro.pdf some public policy instruments initiated in romania in the covid-19 context 56 national reform plan (nrp) 2021 is complementary to national resilience and recovery plan for romania and has a scheme corresponding to the six pillars that make the recovery and resilience mechanism23. the programs and measures contained in the nrp 2021 support the green transition, the digitization process, increasing employment degree, stimulating long-term economic development, as well as other measures in the field of health, education and social protection. the interventions included in the programme are expressed through priority policies on areas of activity, each of them oriented towards directions of action. fiscal-budgetary policy. this section referring to the fiscal-budgetary policy of the national reform programme 2021 is interrelated to pillars and components of the national recovery and resilience plan24: ⇒ pillar iii, component c8 and ⇒ pillar ii, component c7. the green transition. this policy concerning the green transition is correlation with the national recovery and resilience plan for25: ⇒ pillar 1, components 1-5; ⇒ pillar ii, component 7; ⇒ pillar iii, component 9; and ⇒ pillar iv, component 10. energy. in the national recovery and resilience plan, the energy policy corresponds to26: ⇒ pillar i, components 5-6 and ⇒ pillar iii, component 9. digital transformation. the correlation in the national recovery and resilience plan can be found in27: ⇒ pillar ii, component 7, ⇒ pillar iii, components 8 and 9, ⇒ pillar v, components 12 and 14, ⇒ pillar vi, component 15. business environment and competitiveness. correlation in the national recovery and resilience plan can be found in28: ⇒ pillar i, components 4 and 6, ⇒ pillar ii, component 7, ⇒ pillar iii, components 8 and 9, ⇒ pillar iv, component 11 and ⇒ pillar v, component 14. transport. in national recovery and resilience plan, the field of transport is interrelated to29: 23guvernul româniei, programul național de reformă (the national reform programme), 2021, p. 6; 24 guvernul româniei, programul național de reformă (the national reform programme), 2021, p.26; 25 guvernul româniei, programul național de reformă (the national reform programme), 2021, p.34; 26 guvernul româniei, programul național de reformă (the national reform programme), 2021, p.41; 27 guvernul româniei, programul național de reformă (the national reform programme), 2021, p. 48; 28 guvernul româniei, programul național de reformă (the national reform programme), 2021, p. 61; 29guvernul româniei, programul național de reformă (the national reform programme), 2021, p. 67; popa 57 ⇒ pillar i, components 4 and 6; and ⇒ pillar iv, component 10. research, development, innovation. this area is interrelated to30: ⇒ pillar iii, component 9. labor market, social inclusion and the fight against poverty. the policies addressed in this sector labor market, social inclusion and fight against poverty are correlated with national recovery and resilience plan31: ⇒ pillar i, component 1 and 5, ⇒ pillar ii, component 7, ⇒ pillar iii, component 8, ⇒ pillar iv, component 10 and 11, ⇒ pillar v, components 12-14, ⇒ pillar vi, component 15. health. the correlation of the field health in nrrp, is found in32: ⇒ pillar v, component 12 and ⇒ pillar 2, component 7. strengthen administrative capacity and other governmental measures. the correlation of the field strengthen administrative capacity and other governmental measures in national recovery and resilience plan is found in33: ⇒ pillar v, component 14; ⇒ pillar i. component 5; ⇒ pillar ii. component 7; ⇒ pillar iii, component 9; ⇒ pillar iv, component 10. education and skills. complementarity of the field education and skills with national recovery and resilience plan, is done with34: ⇒ pillar vi, component 15. in essence, the national reform programme shows the priorities of the reform in the main areas, whereby there are taken into account both a continuity of the reforms of the previous stage and the provision of new measures motivated by the requirements of the economic and social recovery process within the post-pandemic period. the provisions of national reform programme are complementary to those of national recovery and resilience plan, which is, also, a strategic instrument considering the reformes required for recovery and growth35. 3. conclusions in romania, along with the alignment with the good practices of european union, the emergence of new more complex domains for public policies implementation, formed on the basis of the new requirements of development led to the extension of their scope, that enriched with a wide range of policies and instruments directed towards new fields of activity (stoica c. and moisoiu c., 2007, p. 520, 521). 30guvernul româniei, programul național de reformă (the national reform programme), 2021, p.73; 31guvernul româniei, programul național de reformă (the national reform programme), 2021, p.85; 32guvernul româniei, programul național de reformă (the national reform programme), 2021, p.93; 33guvernul româniei, programul național de reformă (the national reform programme), 2021, p.114; 34guvernul româniei, programul național de reformă (the national reform programme), 2021, p.132; 35guvernul româniei, programul național de reformă (the national reform programme), 2021, p.6; some public policy instruments initiated in romania in the covid-19 context 58 the proposals concerning public policies precede the stage of elaboration of the normative acts for their application. for that purpose, the elaboration of the appropriate legislative framework is initiated and finalized, at the level of government and relevant bodies in romania, there were concernments for the development of legislative framework for the public policy formulation, at central level 36. the world economic consequences of the covid-19 pandemic crisis have affected the economic growth in the context of the restrictions imposed by government′s measures to protect the population. the effect was felt throughout the production circuit, with an impact on jobs, incomes, the evolution of demand and supply37. the consequences felt in economic and social field, in romania and the magnitude of the pandemic challenges draw attention on the potential of resilience to the shocks of the crisis, at institutional and economic level38. the government's intervention policies consisted of actions aimed at preventing the collapse in the romanian economy, initiatives to help companies and provide the necessary resources to finance companies, measures taken to keep the jobs of employees who have suffered temporary interruptions, public investment in order to balance the economy, affected by the interruption of the activity of some economic sectors.39 these interventions have materialized in plans, programs and measures, have been supported by laws and government decisions, included in national plans and programs which are constituted as basic instruments of the period 2020-202140. acknowledgment: the study is a part of the research paper of the institute of national economy, romanian academy,”abordarea efectelor economice ale crizei covid-19 36fundația paem alba; ace-es, bucurești (asociația consultanților și experților în economie socială românia) (2019), p. 18, manual de bune practici internaționale cu privire la metode de participare și influențare a politicilor publice , perioada de elaborare: ianuarie 2019 – aprilie 2019, uniunea europeană fondul social european, guvernul româniei, poca (programul operațional capacitate administrativă competența face diferența!), instrumente structurale 2014-2020; guvernul româniei, mai anfp, p. 11, politici publice, uniunea europeană fondul social european; guvernul româniei ministerul administrației şi internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță, http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20poli tici%20publice.pdf; 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internelor; inovație în administrație programul operațional "dezvoltarea capacității administrative", „creşterea capacităţii funcţionarilor publici din ministerul apărării naţionale şi agenţiei naţionale a funcţionarilor publici de a gestiona procesele de management strategic instituţional şi de proiect, în contextul dezvoltării şi întăririi rolului funcţiei publice” cod smis nr. 22857 administrație și apărare – parteneriat pentru performanță, http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20material e%20de%20formare%20politici%20publice.pdf. unitatea de politici publice secretariatul general al guvernului (2004), manual pentru elaborarea propunerii de politici publice, unitatea de politici publice, http://www.politicipublice.ro/uploads/manual_elaborare_propunere_politici_p ublice.pdf; hotărârea de guvern nr. 775 din 14 iulie 2005 pentru aprobarea regulamentului privind procedurile de elaborare, monitorizare şi evaluare a politicilor publice la nivel central, monitorul 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https://ec.europa.eu/info/sites/default/files/2021-european-semester-national-reform-programme-romania_ro.pdf https://ec.europa.eu/info/sites/default/files/2021-european-semester-national-reform-programme-romania_ro.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.anfp.gov.ro/r/doc/2015/proiecte/incheiate/mapn/3.%20materiale%20de%20formare%20politici%20publice.pdf http://www.politicipublice.ro/uploads/manual_elaborare_propunere_politici_publice.pdf http://www.politicipublice.ro/uploads/manual_elaborare_propunere_politici_publice.pdf https://legislatie.just.ro/public/detaliidocumentafis/63743 some public policy instruments initiated in romania in the covid-19 context 60 regulament din 14 iulie 2005 privind procedurile de elaborare, monitorizare şi evaluare a politicilor publice la nivel central, aprobat de hotărârea de guvern nr. 775 din 14 iulie 2005, monitorul oficial nr. 685 din 29 iulie 2005, https://legislatie.just.ro/public/detaliidocumentafis/63744. regulation (eu) 2018/1999 on the governance of the energy union and climate action, https://www.legislation.gov.uk/eur/2018/1999/contents; https://www.iea.org/policies/11773-regulation-eu-20181999-on-the-governance-ofthe-energy-union-and-climate-action; regulation (eu) 2021/241 of the european parliament and of the council of 12 february 2021 establishing the recovery and resilience facility, official journal of the european union, 18.2.2021, l 57, https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:32021r0241; regulation (eu) no 1175/2011 of the european parliament and of the council of 16 november 2011 amending council regulation (ec) no 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, official journal of the european union, l 306, 23.11.2011, https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:32011r1175&from=en the council of the european union, council regulation (ec) no 1466/97 of 7 july 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, 13.12.2011, https://eurlex.europa.eu/lexuriserv/lexuriserv.do?uri=consleg:1997r1466:201112 13:en:pdf . https://legislatie.just.ro/public/detaliidocumentafis/63744 https://www.legislation.gov.uk/eur/2018/1999/contents https://www.iea.org/policies/11773-regulation-eu-20181999-on-the-governance-of-the-energy-union-and-climate-action https://www.iea.org/policies/11773-regulation-eu-20181999-on-the-governance-of-the-energy-union-and-climate-action https://eur-lex.europa.eu/legal-content/en/txt/pdf/?uri=celex:32021r0241 https://eur-lex.europa.eu/legal-content/en/txt/pdf/?uri=celex:32021r0241 https://eur-lex.europa.eu/legal-content/en/txt/pdf/?uri=celex:32011r1175&from=en https://eur-lex.europa.eu/legal-content/en/txt/pdf/?uri=celex:32011r1175&from=en https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=consleg:1997r1466:20111213:en:pdf https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=consleg:1997r1466:20111213:en:pdf https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=consleg:1997r1466:20111213:en:pdf studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro lifelong learning as a premise for building the learning organization in the romanian smes roxana mironescu “vasile alecsandri” university of bacau, roxy_mironescu58@yahoo.com andreea feraru “vasile alecsandri” university of bacau andreea_feraru26@yahoo.com catalin drob “vasile alecsandri” university of bacau totanul@yahoo.com abstract to become more competitive, the smes in our study should encourage learning at all the organizational levels, meaning becoming learning organizations. the lifelong learning has become a vital necessity of the contemporary society, it is a theoretical principle and it acts to describe a specific reality of our century. the lifelong education should not be conceived as a mere preparation for life but as an important dimension, a continuous existential one, whose duration is overlapped with the life span. this research aims to capture the boundaries, inside the smes, where the organizational culture acts as an impulse for learning. the used investigation method was based on the findings and attitudes revealed by a questionnaire survey, on a systematic observation upon the phenomena and from the synthesis of some previous studies in this area. the paperwork emphasizes the importance of the strategic orientation towards knowledge management, stressing that the main advantage that such an economic entity as a sme can have is the ability to systematically and continuously exploit the obtained knowledge. the organizational learning may be even a means to achieve certain strategic objectives. keywords learning organization; organizational culture; knowledge management; intellectual capital; lifelong learning jel classification m10 introduction the learning organization is the tool for adaptation to the knowledge economy in its dynamic route. as an effect and a cause of the globalization, as an effect of the dramatic increase of the technological innovations, the explosion of knowledge has transformed everything, from how the goods and services production may be done, to the state's role, the public sector size and its valences, to reinventing the concepts of the market economy and of the capitalism. peter senge (senge, 1999) is devoted to the change which ensures learning and to the learning that facilitates the change, both for people and organizations. nowadays, we can build "the learning organization", as an formal background where people continually expand their capacity to create the results they truly desire, where new patterns of thinking are encouraged, where the collective aspiration is free and where people are continually learning how to learn together (senge, 1999). to do this, managers must learn to detect abilities and how to properly use them. 145 mailto:roxy_mironescu58@yahoo.com mailto:andreea_feraru26@yahoo.com mironescu, feraru, drob the emergence of the idea of "learning organization" is explained by concepts such as "learning society", a definition which was conducted by donald schön (schön,1991). he provided a theoretical framework for the relationship between life experiences in the context of change and of the permanently growing need for learning. the loss of the stability in the social, economic or cultural practice has oriented our society and all its institutions towards a continuous transformation. we must learn to understand, to guide, to influence and to manage these transformations, in other words we must become the learning upholders. humanity must aware of the development of the organizations which are “learning systems”, as systems able to contribute to their own continuous transformation. donald schön, followed by chris argyris (argyris,1978) developed a set of important concepts regarding the organizational learning. of a special importance for the further development of this concept was their interest in the feedback of learning, learning in a double loop feedback. the productivity and the competitiveness are general functions of the knowledge generation and of the information processing; firms and territories are organized in worldwide production, management and distribution networks production, the basic economic activities are global and all that induces the ability to consistently work in real time, at a planetary scale. the education is no longer limited to what is accomplished in school, but it continues after graduation (post-school education, postgraduate, various forms of training, including self-education), the permanent education do not identify itself with any of the institutions of adult education, but it can be presented as a complex and dynamic system, benefiting from a range of educational and organizational conditions and a proper staff able to prepare and to facilitate the lifelong learning concept. problem statement managers may think that leading their organizations towards learning is only a matter of articulating a clear vision, giving employees the right incentives, and providing means of training. this assumption is not merely flawed—it’s risky in the face of the intensified competition, of the technological advances and of the shifts in customer preferences. organizations need to learn more than ever as they confront these amount of forces. each company must necessarily become a learning organization. there is not a consensus among experts in defining "learning organization", therefore, we only cited certain definitions, given over the time: • "the organizations that have clear objectives, rules of monitoring and the capacity for learning new behaviors derived from the exploration of the past experiences" (cyert and march ,1963); • "the organizations characterized by thinking more deeply about the organizational problems, related to the restructuration through their individuals" (simon, 1969); • "the organizations that develop the understanding of the reality, carefully noting the results” (hedberg, 1981); • "the organization where a group of people work together, to achieve improvement of their collective skills and capabilities , in order to obtain the desired results" (senge, 1990); • “a type of organization which is always able to provide, innovate and find more effective means for its goals achievement" (mahapatro, 2010). however, the potential of the adult learning has not been yet fully exploited: participation in lifelong learning greatly varies and it is unsatisfactory in many e.u. countries, and well below the e.u. targets. generally speaking, the eu-wide strategy for cooperation in education and training is provided in "et 2020", a strategic document adopted in may 2009. containing certain actions at all the levels of the 146 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro education and training systems, this programmatic document highlighted four major objectives, such as: • promoting the lifelong learning and encouraging the students’ mobility; • improving the quality and the efficiency of the education and training; • promoting the equity, the social cohesion and the active citizenship; • enhancing the creativity, innovation and the entrepreneurship. this compendium includes certain official documents issued by the three main decision-making bodies of the e.u.: the european commission, the european council and the european parliament, as follows: the strategy for european cooperation in education and training (strategic framework for eu cooperation in e&t 2020, 2000); the documents to put into practice the e.u. programs to support the policy framework for education and lifelong learning; the lifelong learning strategies; the higher education reform; the policy framework of the university-business dialogue; programs that support higher education, including the bologna process; support programs for adult education and training; programs supporting the adult initial education; measurement of the progress in education and training (statistics, indicators and benchmarks overview). the education and the training policies have received a boost with the adoption of the lisbon strategy in 2000, the overall european program focusing on the economic growth and on the job creation. this strategy recognized knowledge, innovation and business and the educational environment they generate, as the most valuable assets of the e.u., especially in the context of the increasing global competition. so, the e.u.'s member states and the european commission have strengthened the cooperation which started in 2009, with a “strategic framework for the european cooperation in education and training” (strategic framework for eu cooperation in e&t 2020, 2000), as a follow-up to the early education. the long-term strategic objectives of the e.u.'s education and training policies are: • making the lifelong learning and the mobility become a reality; • improving the quality and the efficiency of the education and training; • promoting equity, social cohesion and active citizenship; • enhancing the creativity and the innovation, including entrepreneurship, at all levels of the education and training. as we refer to the romanian realities, in the last twenty years, the adult learning and education were upgraded and this field of activity was also influenced by the major reforms that have occurred in the romanian socio-economic and legal conditions. the purpose of these reforms was to raise the level of education and improve the school education with the extension of education, reducing drop-out rates near the eu's average, and develop the adult education. the adult education and lifelong learning has become a key component of this system, which appears to be affected by the fundamental changes in the internal socio-economic realities. the socio-economic context in romania is quite paradoxical: while gdp and the primary statistical data related to employment reflects the fact that we are close to the e.u. average, the actual trends, for example, on the adult participation in learning lifelong indicates that social and regional problems are quite serious. the country joined european union at the 1st january 2007. despite the implemented reforms during the last twenty years, romania remains dependent on the pendulum effect, concerned to stabilize the financial areas, the public administration, the regional planning and the development systems. at the present, as a result of these reforms and changes, romanian society experiences a severe economic, social and individual crisis, a confusion of values, ethics and beliefs. the demographic figures and trends for the former socialist countries such as romania signal that the social and the economic transformation is followed by a significant decline in population, together with an unequal distribution of the welfare. 147 mironescu, feraru, drob the romanian population is expected to significantly age till 2050 and the unemployed retired ratio is growing quickly. the trends influence the mobility and the migration towards other countries in europe or elsewhere and the impact of the social instability makes the adult learning and education to be difficult and challenging. these issues are, all together, real problems and the national programmes have made great efforts, trying to improve the active living and ageing, focusing on urging older people to re-enter to the labor market and in the community life. another important factor in the romanian society and economy is the external migration that has impacted the adult learning and education. since e.u. accession, a significant part of the economically active population has moved for employment in better-paying countries and, as a consequence, fields of activity like constructions, tourism, health and some others are struggling with a lack of human resources in the labor market. we can mention here the important brain-drain to the uk or canada, usa. the romanian economy has turned into a market-oriented open economic structure. since the accession to the e.u., the romanian economic and social policies, such as the national programmes involving the adult education, have been developed to help economic regeneration, to reduce the high unemployment rate through social policies, and to create a balance between the economic interests and the social needs for stability. the topic of the new skills and new basic skills, according to the white paper on education and to the memorandum on lifelong learning, demonstrates the need for developing the adult education and the lifelong learning, especially for those people over 35 years old, with basic illiteracy or functional illiteracy, and with prior difficult experiences in education or in training programmes (often because of the unemployment or retirement). purpose of study the research aims to capture the boundaries where the organizational culture acts as an impulse for learning inside the smes, especially in the present, in romania. we wanted to underline where is the limit of understanding of the importance of training inside the organizations and the level of tolerance of bad habits transferred in performance costs. the innovative culture is based on transmitting information towards people. managers who require sustainable results know they should give something in exchange, they must update the information able to "talk" about the interests, the concerns, the values and the principles of the company, about its successes and failures, about the common present, past and future, about people, their results and dreams. regardless of the method chosen, either regular newsletter addressed to all the employees, or a wall panel, or special regular events, informal meetings or annual conferences, the managers have a duty to transmit information in the system, the more diversified the better. it is desirable to share more positive information, but all the information can transmit large and relevant messages, beyond the conscious to the employees. as medium and long term effects, the employees will understand what and why they are required to do, mainly special or new things, they will understand change as an organizational constant, how to act or react independently, facing the changes, but in accordance with the organizational values, what decisions to take in the right time. and so, people learn to generate solutions, to be creative, to come up with new ideas. the employees understand that in today's society they are paid for the usual tasks but also for their creativity. they are paid for the proper execution processes, or production, but also they are paid to be alert, to notify changes or opportunities and generate ideas and added value. who understands this environment remains innovative, remains in the market, who do not understand will continuously contribute to a non-business attitude and will end up by leaving the organization. there are 148 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro enough theoretical considerations related to the design of an organizational culture encouraging the development of “learning organization” and the lifelong learning for the employees. the romanian culture of the adult education has a long and agitated history. the specialized institutions continuously tried to educate more and more people and to disseminate professional knowledge, mainly towards the country sides. the practical adult education was far more advanced than any early theoretical construction trying to describe the education and learning of adults. certain modern ideas about the adult education and the adult learning were theorized only from the beginning of the 20th century and were strongly influenced by the psychological and sociological approaches in the science of education, such as studies made by the romanian social institute (rsi) founded by dimitrie gusti. after the world war ii, the adult and their continuous education was dominated by the vocational aspects and by the sociocultural organizations specialized in leisure activities combined with education and training. in the recent times, the adult education has become a developing and changing part of the educational system. until 2000, the changes undertaken demonstrated that there was a lack of governmental plans, few structural actions that could prevent incidental moves, and too many ambiguous responses from the labor market regarding the shift to a new social, economic and political system. in the last ten years, the governmental actions shifted towards a more coherent strategic development. after the change of the regime in 1989, two periods of adult education had a significant impact on later developments: • 1990 1993, when there was a decreasing attention paid to finding out ways of the general chaos of an upside-down political system. adult education was almost forgotten; only some minor changes were made in order to prevent radical reform; • 1993 1997, there was a phase of rebuilding, that focused on the adult education strategy. the state implemented a framework for a new and decentralized educational and training environment. as the system of the adult education can change and develop freely, it became fragmented, making it difficult for the officials to have any impact; • after 2000, the government intended to implement the standards for the evaluation of the adult education providers, action mentioned in the action plan on adult learning in romania. the national agency for evaluation and occupational standards and the national council for evaluation and academic accreditation support these efforts. another key issue targeted in adult education development is the professional development of the adult educators. in order to aid the development of a good quality learning, it is essential to promote the training of trainers and managers for a better adult education and training. because the cultural elements determine strategies, goals and operating modes, a healthy organization is less defined by the means of the financial return, but through the c.s.r., involving knowing and responding to the sustainability issues. much discussed in the business world, the concept of a "learning organization" is a organization able to create, acquire and transfer knowledge and able to change its behavior, to reflect new knowledge by healthy insights. there is a strong relationship between the organizational culture, the practices of health protection and the human factor productivity, a relationship so strong that investing in people is seen as a wise strategy for achieving and maintaining high levels of business success. 149 mironescu, feraru, drob methods the methods were based on the interpretation of the opinions and attitudes as results of a questionnaire survey, a systematic observation of the concrete phenomena and synthesis of some previous studies in this area. the research was conducted by investigating a number of 1086 smes from all the fields of activity in the north east region of romania where we can find about 10,43% of the total number of smes from all over the country. methodological explanations: we used the stratified random type of inquiry, which reduced the sample weight in the homogeneous segments of the smes (such as those in the field of services) and enlarged weight for the heterogeneous segments (such as the industrial smes), thus ensuring a high quality of information and a high degree of accuracy in treating the investigated realities. significant aspects: the analyzed sample contains young companies, with up to 5 years of experience in business (34.4%), the most common of the surveyed smes are organized as limited companies; the number of smes acting in the trade field, services, industry, tourism, transport and construction is prevalent and representative. the overall objective of the survey was to define the role of the lifelong learning in achieving performances inside the smes and the influence exercised by the organizational culture upon these performances. the specific objectives of the survey questionnaire are based on: • the perception of the knowledge-based economy and society among the surveyed smes managers; • which is the correlation between the concepts of knowledge based economy and society and the smes performances, in 2012; • how the success factors of smes are defined and if among them we can find the employees’ and managers' training; • if the criteria for the appreciation of the employees’ competence include their professional skills and their willingness to continuously improve their knowledge; • what are the main issues related to the lifelong learning at the workplace and which is the financial support of this educational activity for adults. we also based on the observations done several years, since 2009, upon the smes business and social behavior. findings and results regarding the managers’ information and their adjustment to the trends towards the knowledge-based economy and society, from this analysis, a percentage, quite low, of 33,72%, results from the surveyed firms, where these concepts are known. in the north-east region, these concepts are known and used by 34.32% of the interviewed managers. the concept of knowledge based economy and society is perceived as a way to obtain performance only by the medium companies, having at least 15 years of activity, in the field of services and being conducted by well and high educated managers. the appreciation of the smes managers regarding the key-factors for a successful business, underlines that the two first placed requirements are linked to the employees and their loyalty, skills and competence, as in table 1. there is a tight connection between the age of the company and the perception about success, that is why younger firms appreciated the human resources’ characteristics to be very important, while the aged companies (over 15-20 years activity) considered other factors to be of greater importance. unfortunately, among the main competitive advantages, the innovating capacity of 150 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the company is mentioned on the last place, only 2,16% of managers considering it as a path to overcome the competition, after some other factors, such as: quality of the results, lower prices, the employees ‘qualification, distribution channels. table 1 statistical data about the success factors in the analyzed smes. competent and skilled employees 31,80% business partnerships 31,70% market opportunities for the products/services 22,80% loyal and satisfied employees 10,70% support-services for the employees’ charges management 1,80% others 1,20% c om pe te nt a nd sk ill ed em pl oy ee s b us in es s pa rt ne rs hi ps m ar ke t op or tu ni tie s fo r th e pr od uc ts /s er vi ce s lo ya l a nd sa tis fie d em pl oy ee s s up po rt -s er vi ce s fo r th e em pl oy ee s ch ar ge s m an ag em en t o th er s 31,8% 31,7% 22,8% 10,7% 1,8% 1,2% figure 1 the graphic image of the main successful factors of the smes source: original illustration about the employees ‘appreciation criteria that managers of smes in the north east region use, we can mention: • the involvement in the organizational problems; • the experience; • the sense of responsibility; • knowledge and held skills; • the business competence; • the teamwork skills; • the consciousness; • the loyalty towards the company; • the capacity to make continuous efforts; • the intelligence; • the respectful behavior; • the recommendations; • the languages skills; • the professional skills; • the graduated school. in the smes in the north east region managers attach certain importance to the training programmes and to the continuous education. figure 2 explains the analysis of smes in the north east by the number of working days per employee dedicated to 151 mironescu, feraru, drob the training, in 2012 and their position among the smes from all over the country, treated by the same criteria: 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% ne s-e s s-v v n-v center bucuiresti/lf ov no day 1-5 days 6-10 days more 10 days figure 2 average number of days devoted to the employees ‘training in the smes in romania. source: original illustration from figures presented above, it can be easily seen that an important part of the smes in romania, regardless of the region they belong, do not consider the human resources training activities as to be very important, and the lowest percentage have been registered, for the over 10 days allocated to human resources training activities, which demonstrates the efforts made by the employers for training; while the majority of smes have crossed through a difficult period, caused by the deep economic crisis in romania and in other european countries. the north east region is characterized by the highest ratio of the companies that have allocated about 1-5 days for the employee training. 9% 12% 33% 46% more 10 days 6-10 days 1-5 days 0 day figure 3 average number of days devoted to the employees’ training in the smes in the north-east region of romania. source: original illustration the results of this inquiry reflect a low availability to spend money for the implementation of lifelong education programmes, only maximum 2,19% of the income being yearly allocated to these activities, at the national level, in the north east region this percentage being larger, about 5,23% of the yearly income. to reinforce the idea that the managers of the smes in the north east region of the country are concerned about the human resources development, they facilitate the 152 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro employees’ participation to various programs to enable them in acquiring new attitudes, new knowledge and skills through large learning experiences, we presented the national situation about the days allocated to the training programmmes (see figure 3). the employees of smes in the north east region who possess knowledge protect their knowledge resources and they devote to lifelong learning, not only for the employers’ benefits, but also for themselves, in order to maintain and to increase their market value and, perhaps, to become indispensable for the employers. in this matter, the employee and the employer have different perspectives on the value of knowledge. the smes in the north east part of the country can be designed as certain constructive learning organizations and the learning processes, both in organizations and for the individuals, are able to influence the way forward, through planned interventions. conclusions given the relatively low level of understanding and use of the concepts and tools of the knowledge-based economy and society, as a result of the data analysis, it is necessary for the policy makers in romania to understand that the transition to the new economy is imminent and they must create appropriate policies and strategies to encourage the development of this type of economy. the potential of the adult learning in the north-east region of romania has not been yet fully exploited, in the analyzed last year: the participation in lifelong learning programmes varies greatly and it shows like unsatisfactory, in many romanian smes, as well as below the eu's target for the average participation in lifelong learning (15% by 2020, for adults aged between 25-64 years old). in 2012, the average participation for the noted companies was under 5%. the overall trend of the participation to long life leaning programmes is negative. participation also decreases substantially in the case of low-skilled and older adults. we concluded also that it is necessary that some programmes focusing on the teaching and study need lecturers attending courses for adult education and “alternative” education, as well as increasing the number of the organizations delivering these services, leaving the formal framework of the school or university. it aims to develop the adult education sector, as well as enable more people to accept learning experiences. the lifelong learning has been recognized as an essential element of the european higher education area since the european education ministers met in prague, in 2001. the prague communiqué signals that in a europe built on a knowledge-based society and economy, lifelong learning strategies are necessary to face the challenges of competitiveness, for the use of new technologies and to improve social cohesion, for equal opportunities and for a good quality of life. since then, the need to embed lifelong learning within higher education has been growing in its awareness, if we are to confront ourselves to the challenges of the future. in 2012, the romanian officials’ opinions and communiqués reaffirmed the role of the lifelong learning as one of the most important factors in meeting the needs of a changing labor market, and stressed the central role of the higher education institutions in transferring knowledge and strengthening regional development, including the continuous development of competences and the reinforcement of knowledge alliances. 153 mironescu, feraru, drob references argyris, c., & schön, d. (1978), organizational learning: a theory of action perspective, reading, mass: addison wesley. cyert, r.m., and j.g. march. (1963), a behavioral theory of the firm, oxford: blackwell. hedberg, bo (1979), how organizations learn and unlearn, arbetslivscentrum. mahapatro b., (2010), human resources management, new age international (p) ltd., publishers, new delhi. schön, d. a. (1991), the reflective turn: case studies in and on educational practice, new york: teachers press, columbia university. senge, p. m., (1999), the fifth discipline. the art and practice of the learning organization, random house, london. senge, p. m. (1990), the fifth discipline: the art and practice of the learning organization, doubleday, new york. simon, h.a. (1969), the sciences of the artificial, cambridge, mit press, first edition. 154 http://en.wikipedia.org/wiki/the_fifth_discipline http://en.wikipedia.org/wiki/the_fifth_discipline (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro statistical analysis of the seasonal variation of moldovan migrants’remittances during the period 2003-2013 christiana balan “alexandru ioan cuza” university of iasi christiana.balan@uaic.ro elisabeta jaba “alexandru ioan cuza” university of iasi ejaba@uaic.ro ion pârţachi academy of economic studies of moldova ipartachi@ase.md boris chistrugă academy of economic studies of moldova bchistruga@ase.md abstract as a consequence of the increased number of moldovan migrants, the volume of remittances inflows to moldova raised steadily. previous studies on labor migration and remittances in republic of moldova underline both the role of remittances in generating increased consumption of the population and its impact on the economic development of the country. in this paper, we aim to analyze the variation of money transfers of moldovan migrants in order to estimate the trend of the remittances inflows and the seasonal variations under the impact of the global crisis. the data on remittances are available from the national bank of moldova, on a monthly basis, for the time span 2003-2013. the study’s results highlight an upward trend and the seasonal variation of money transfer of moldovan migrants for the considered time span. keywords migration; remittances; economic growth; moldova; trend; seasonal variation jel classification f22; f24; o15; c22 introduction international migration of labor force is a key issue of the european and global labor markets. a very important feature of the migration process is the money that migrants transfer to their families. workers’ remittances represent an important source of external development finance. the literature on migration underlined the positive and negative sides of remittances. in developing countries, remittances represent a stable financial flow and have a counter-cyclical effect during the economic crisis (oecd, 2005). in some developing countries, the remittances flows are larger than public and private capital flows (oecd, 2005; mushtaq, 2007). remittances play a major role in reducing poverty and increasing economic growth (pantiru et al., 2007; goschin et al., 2011). the positive effect of remittances is highlighted either when they are used for supporting children’s education or finance health expenses or when they are used for consumption or buying houses or other investments. remittances stimulate demand 7 balan, jaba, pârțachi, chistrugă for other goods and services thus having a positive effect on the economy and have multiplier effects, especially in countries with high unemployment (oecd, 2005). furthermore, remittance receipts imply foreign currency inflows that allow a country to pay for imports and repay foreign debt. on the other side, chami et al. (2008) argue that, despite their role in increasing households’ disposable income, remittances do not lead automatically to higher investments and output growth. remittances may also have some negative effects on a country’s economy. they may reduce recipients’ motivation to work, and thus slow down growth. moreover, remittances may increase income inequality in the recipient country. in the paper we aim to estimate the trend of the remittances inflows and the seasonal variations, for republic of moldova, during the period 2003-2013. the rest of the paper is structured as follows. section 2 presents the characteristics of the remittance inflows and their importance for republic of moldova as described in previous studies on this topic. section 3 explains both the data used in the analysis and the techniques applied for the decomposition of seasonal time series considering an additive model. section 4 illustrates the main results of time variation analysis on remittances, underlying the seasonal pattern of transfers’ inflows. final section draws the main conclusions of the study. labor migrants’ money transfers in republic of moldova the migration flows of moldovan citizens increased in the last years due to the economic unfavorable situation in their own country. the economy of the republic of moldova faced important changes during the transition process that affected population in a negative way. the structural transformations implied by the market economy generated inflation, unemployment, economic crisis and, thus, determined a part of the population to look for better living and working conditions abroad (cebotari et al., 2012).estimations about the number of moldovan migrants presented in iom (2008a) and in lücke et al. (2007) show that in mid-2006 approximately 345,000 individuals are migrant workers (25.4% of the economically active population in moldova). however, iom (2008a) show that other studies such as schwartz (2007) estimates that the number of moldovans abroad may exceed 800,000 persons. the moldovan migrants are mainly qualified workers with secondary education or incomplete higher education (moşneaga, 2000).the principal destination country for moldovan migrants is russia (65.8%), followed by italy (8.1%), as shown by the results of the survey carried out by cbs-axa in 2008 and presented in iom (2008b).an important characteristic of the moldovan migrant workers is the seasonality of the migration process especially for the workers in the construction sector, for example in russia (ghencea & gudumac, 2004). due to the intensity of the migration phenomenon and the domestic economic situation, republic of moldova is one of the world countries with a very high dependence on remittances. the money transfers sustain consumption as they increase the disposable income of the labor migrants’ families in the home country. the money transfers often surpass both the foreign direct investment and the development assistance (kring, 2008, siegel and lücke, 2009).the money remitted is used mainly for daily needs or for buying apartments, used cars, housing or land (sander et al., 2005).there are different methods to transfer money, either through formal channel (express transfer services and services offered by banks) or by informal channels. the formal channel is preferred by the majority of the migrants (75.8%) as shown in the report of iom (2009). however, banks are attracting more of the volume of transfers in order to increase the banks’ available capital for loans for entrepreneurs. the migrants’ preference for the methods of remittances transfer is assessed by several 8 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro studies, such as siegel and lücke (2013), lücke et al. (2009), lücke et al. (2007), kring (2008), sander et al. (2005). pantiru et al. (2007) present both the economic and social effects of migration and highlight their positive and negative impact on the country’s development. they argue that remittances have led to an increase of imports and stimulated inflation. the perception of the moldovan population regarding the impact of remittances is mainly positive. more than half (51.6%) of the people surveyed on the issue of migration in moldova in 2008 believe that migrants can contribute to moldova’s development by sending money home, thus ensuring subsistence incomes for families. however this positive consequence is limited only to consumption increase (iom, 2009). in the same time, more than a quarter of the respondents (26.9%) consider that moldovans’ remittances may represent a source for the economic development through investments in business. the negative consequences of remittances are perceived less significant, as only 1% of the surveyed population believe that remittances have negative impact on inflation (iom, 2009). data and method data the data represent the money transfers from abroad in favor of individuals made via the national banking system of republic of moldova. the data are available from the national bank of moldova 1. the data on remittances sent home by migrants are available on a monthly basis for the period january 2003 – september 2013. the original currency amounts are expressed in us dollars at the official exchange rate of the national bank of moldova at the date of transfer. data include settlements with banks from the republic of moldova, excluding the banks located in the transnistrian region (national bank of moldova, 2013). the persons that send/receive money can be of any nationality. the data on money transfers include both the money transferred by moldovan migrants and other foreign exchange transfers. the data concerns both the total inflows (us$ millions) and the currency structure of inflows via international money transfer systems. the currency structure of inflows is presented according to the three currencies used to remit the money (us dollar, euro and russian ruble). the most important international money transfer operators in republic of moldova, in 2013, are: allure, anelik, avers, blizko, coinstar money transfer, contact, interexpress, leader, migom, moneygram, poşta rapidă, privat money, ria money transfer, smith&smith, strada italia, unistream, western union, xpress money, zolotaya korona, etc. (national bank of moldova, 2013). method the classical statistical analysis of time series implies the study of the changes in time in the evolution of a phenomenon due to the influence of specific factors. thus, we can identify the time series’ components, which are: the long term tendency, the seasonal component, the cycle component and the residual component. in order to 1the authors would like to thank the department of balance of payments from the national bank of moldova for making available the data on money transfers from january 2003 to september 2013 for this study. data on money transfers from abroad in favor of individuals from january 2007 to september 2009 are available on bnm webpage, in the statistics section, the international accounts of the republic of moldova subsection at http://www.bnm.md/en/external_operations_via_banc_system 9 balan, jaba, pârțachi, chistrugă study the different components, the time series concerning the remittances inflows can be decomposed using an additive model (the appropriate model was chose after the graphical analysis of the data), such as: tttt s)t(fcy ε+++= ,t = 1, …, n. where: ct– cyclical component; f(t) – trend component; st– seasonal component; εt–error component. the seasonal component (st) is characterized by constant periodicity, n,...,t,ss dtt 1)( =∀= + , where d is the period of the seasonal component (jaba, 2002; cormier, 2009). the trend component represents the long term tendency of a time series, the law of evolution of a phenomenon and it is noted by f(t)the trend component assesses the effect of factors with long term influence. the trend analysis implies the elimination of seasonal, cyclical and irregular variations from the time series (pârţachi & caraivanova, 2007).the trend is estimated by applying a moving average filter specially used to eliminate the seasonal component and to reduce the noise (jaba, 2002; brockwell & davis, 2002).the moving average has the following expression, in the case of even period (d=2p): d/yy...yyy...yyy ptpttttptptt )2 1 2 1 ( 1111 +−++−+−− ++++++++= , p<t ≤ n–p the moving averages are used to estimate the seasonal component, by calculating first the differences: tt yy − (for the additive model). then, the seasonal indices (ik) are computed as the average of the differences, using observations only for period k, where k = 1, …, d. by adjusting the seasonal indices, the seasonal factors are obtained, for the additive model, as the difference between the seasonal index and the average of all seasonal indices: d,...,k,i d iŝ d k kkk 1 1 1 =−= ∑ = . the sum of the seasonal factors equals 0( d,...,k,ŝ d k k 10 1 ==∑ = ). the seasonal component is removed from the original series in order to produce the deseasonalized time series (seasonally adjusted series): n,...,t,ŝyd ttt 1=−= . the trend is re-estimated from the deseasonalized data in order to have a parametric form of the trend, such as the linear trend: n,...,t,tbbŷt 110 =+= ., where the time variable t is the exogenous variable. the cyclical component (ct) reflects the long term cyclical influence that is nonrandom. the random component ( t ε ) represent the residual or the noise component and it is stationary. it reflects the deviations from the ideal non-stochastic model. the expectation of the error variable equals 0. the residual component is estimated by: n,...,t,ŝŷy kttt 1=−−=ε . the estimation of the seasonal component of the time series on remittances and the generation of the deseasonalized series are accomplished using the seasonal decomposition procedure in spss. the sequence procedure is used to plot the original and the seasonal adjusted time series. in order to estimate the trend from the seasonally adjusted series, the curve estimation procedure was applied. the results of the data treatment are presented in the following section. 10 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro results the evolution of transfers’ inflows shows that the time series present an upward trend over the considered time span and that there is a strong seasonal variation of the transfer inflows (figure 1). a number of peaks are evident, the increases and decreases in the transfers’ inflows repeat almost in the same month every year, thus showing clear evidence of an annual pattern. moreover, it can be noticed a break in the time series at the end of 2008. the sudden drop in money transfers of moldovan migrants can be explained by the economic and financial crisis that had a negative impact on the remittances. due to the break in series, the overall time span is split in two periods: before the crisis (january 2003 – december 2008) and after the crisis (january 2009 – september 2013). the data show that the magnitude of the time series is not increasing with the level of the series, therefore the decomposition model is considered to be additive. figure 1 the evolution of monthly transfer inflows (us$ millions) of moldovan migrants during the period 2003 – 2013 source: authors’ results with spss package in order to measure the variations due to seasonality in contrast with trend and cycle effects, we determine the seasonal component by removing other effects. the moving average filter is applied and the seasonal factors are obtained (table 1). for both time spans, january is the month with minimum values of remittances along each year. january follows december which is a month with more important money transfers as compared to the previous months or the next following it. the reason for this seasonal pattern is that december is the period of winter holidays when persons have high expenses for the traditional winter celebrations; therefore, migrants send more money to their home families during this month. table 1 seasonal factors estimated for the two time spans: before the crisis and after the crisis month before the crisis after the crisis january -19.89 -37.43 february -15.89 -27.34 march -3.99 -7.27 april 1.12 -7.57 may -3.18 -1.14 11 balan, jaba, pârțachi, chistrugă june 5.19 6.26 july 7.39 16.90 august 11.04 10.81 september 6.30 17.80 october 5.28 12.57 november 0.41 3.99 december 6.23 12.41 source: authors’ results with spss package before the crisis, the highest transfers’ inflows are registered in august, followed by july and september. after the crisis, the money transfers become quite high in july each year and they reach a peak in september, while in august the transfers drop considerably, compared to the previous month. this may be explained by the fact that august is the period of summer holidays and the temporary employees are working less during this month. therefore, we can notice a change in the seasonal pattern of transfers, before and after the crisis, regarding the months with peak amounts of money sent back home. the influence of the seasonal factors becomes more important during the after the crisis time span. if the seasonal variations are removed from the periodic time series, the seasonally adjusted series or the deseasonalized series is obtained. the original series for the remittances inflows, the seasonally adjusted series and the smoothed trend-cycle component are plotted against the periods in figure 2. (a) (b) figure 2 the original series for remittances inflows, the deseasonalized series and the trend-cycle series before the crisis (a) and after the crisis (b) source: authors’ results with spss package comparing the real transfers level and the seasonally adjusted level, we can notice that the adjustment process correct the variations due to seasonality within the years. the seasonally adjusted data are smoother than the actual data but it is still presents the same trend and cycle general effects as the original data. for both time spans, the graph of the deseasonalized data shows a clear upward trend and suggests the presence of a linear trend function. the seasonally adjusted series allows isolating the trend component and analyzing it independently of the seasonal component. thus, the deseasonalized series is used for re-estimating the trend that can be extrapolated in order to make predictions or simulations. 12 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the trend is re-estimated by a linear regression model and the intercept and the slope are estimated using the least squares method. the deseasonalized series and the linear trend are plotted in figure 3 and the estimated coefficients are presented in table 2. (a) (b) figure 3the seasonally adjusted series and estimated linear trend before the crisis (a) and after the crisis (b) source: authors’ results with spss package for both time spans, the linear trend models are statistically significant. the slope is significant for both models, while the intercept is significant only for the model corresponding to the years after the crisis. the slope is higher for the before the crisis model, showing a more important increase in monthly remittances during the time span prior to the crisis. after the crisis, the monthly increase in money transfers is still significant but it is smaller compared to the period before 2009. table 2 the regression coefficients for the two time spans: before the crisis and after the crisis before the crisis after the crisis intercept 5.019 (3.220) 93.173*** (1.728) slope 1.824*** (0.077) 0.752*** (0.052) adjusted r square 88.8% 78.9% note: *** (sig. < 0.1%) source: authors’ results with spss package the crisis impact on remittances is highlighted by the reduced pace of the increase of the money transfers. the global crisis had impact on trade, construction and manufacture sectors, thus moldovan migrants experienced declining employment opportunities and wages beginning with2009 (lücke et al., 2009). indeed, the remitted amounts during the period 2009-2013 are smaller than the remitted amounts in 2008. the monthly transfers via international money transfer operators represent, on average, approximately 78% of the total monthly transfers. the maximum value is observed in october 2012 (90.45%) while the minimum value (46.88%) is noticed in march 2004. the share of money transfers via international money transfer operators increased persistently during the period january 2007 – september 2013. 13 balan, jaba, pârțachi, chistrugă the structure of the inflows via international money transfer operators shows different trend patterns according to the three currencies: us dollar, euro, and russian ruble (figure 4). figure 4 the currency structure of inflows via international money transfer systems source: authors’ results with spss package the money remitted in us dollars shows a declining trend, while the inflows in russian ruble follow an upward trend. the trend for the inflows in euro is constant though it is declining in the last three years. the divergence in the inflows’ evolution by currency highlights the variation in the dynamics of the transfers’ inflows and of the labor migration patterns. conclusion the paper aimed to analyze the money transfers of moldovan migrants during the period 2003-2013 using monthly data. the remittances sent by labor migrants to important especially for sustaining consumption income of their families in the home country. the global crisis had impact on sectors employing low-to-medium-skilled jobs, thus affecting moldovan migrants. during the observed time span, the impact of the economic crisis on transfers’ inflows is obvious. the trend pattern is similar before and after the crisis, but the slope is different between the two periods. the remittances seasonality is shown by increases and decreases that repeat every year. the lowest level is registered in january each year, while the highest level of money transfers is registered in the summer months. the seasonal pattern of the time series changes under the impact of the crisis with respect to the amplitude of the seasonal variations. therefore, after the crisis, the trend slowed down, while the seasonal variations increased. the structural variation of the transfers’ inflows by currency underlines important trend changes, the money transfers in russian ruble have raised, while the transfers in euros and us dollar have decreased. 14 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro references brockwell, p.j., davis, r. (2002), introduction to time series and forecasting, 2nd edition, springer-verlag, new york. cebotari, s., budurina-goreachi c., xenofontov, i. (2012), current migration tendencies of moldova population towards the european area, postmodern openings, 3(1), pp. 123-137. chami, r., barajas, a., cosimano, t., fullenkamp, c., gapen, m., montiel, p. (2008), macroeconomic consequences of remittances, international monetary fund occasional paper, 259, imf, washington dc. cormier, c. (2009), previziunea economic pe termen scurt. metode de analiză si previziune a seriilor de timp, ed. universităţii „alexandru ioan cuza” din iaşi. ghencea, b., gudumac, i. (2004), labour migration and remittances in the republic of moldova, moldova microfinance alliance – marketing and research department, chişinău. goschin, z., roman, m., popa, a. (2011), determinants of romanian international migrants' remittances, ersa conference papers, european regional science association. iom (2008a), migration in moldova: a country profile, international organization for migration. iom (2008b), how moldovan households manage their finances – knowledge and practices. survey report 2008. international organization for migration mission to moldova, chisinau. jaba, e. (2002), statistica, ed. a 3-a, ed. economică, bucureşti. kring, t. (2008), moldovan migrants in italy: remittances and the role of the labour market partners, international labour office, november 2008, budapest. lücke, m., mahmoud, t.o., pinger, p. (2007), patterns and trends of migration and remittances in moldova, international organization for migration, chişinău. lücke, m., mahmoud, t.o., steinmayr, a. (2009), labour migration and remittances in moldova: is the boom over? – trends and preliminary findings from the iom‐cbsaxa panel household survey 2006‐2008, international organization for migration mission to moldova, chişinău. moşneaga, v. (2000), moldova, ucraina, românia: integrarea europeană şi migraţiunea forţei de muncă, editura cartes, chişinău. mushtaq, h. (2007), remittance flows to and from the eu, eurostat methodologies and working papers, theme: economy and finance, european commission. national bank of moldova (2013), money transfers from abroad made in favor of individuals, january-september 2013, national bank of moldova bulletin, november 5, 2013, available at http://www.bnm.md/files/index(3470).pdf oecd (2005), trends in international migration.annual report 2004, oecd. pantiru, m. c., black, r., sabates-wheeler, r. (2007), migration and poverty reduction in moldova, development research centre on migration, globalisation and poverty, working paper, c10, february 2007, university of sussex. pârţachi, i., caraivanova, s. (2007), statistica social-economică, editura academiei de studii economice a moldovei, chişinău. sander, c., nistor, d., bat, a., petrov, v., seymour, v. (2005), migrant remittances and the financial market in moldova, document prepared for usaid (basis/crsp), february. schwartz, r. (2007), exploring the link between migrant communities abroad (mca) and moldova, international organization for migration, chişinău. 15 balan, jaba, pârțachi, chistrugă siegel, m., lücke, m. (2009), what determines the choice of transfer channel for migrant remittances? the case of moldova, kiel institute for the world economy working paper, no. 1515, april. siegel, m., lücke, m. (2013), migrant transnationalism and the choice of transfer channels for remittances: the case of moldova, global networks, 13, 1, pp. 120–141. acknowledgement this work was co-financed from the erasmus mundus action 2 – strand 1 2009–2013 emerge project postdoctoral grant at the academy of economic studies of moldova, republic of moldova, 1st of september 2013 – 1st of march 2014. 16 studies and scientific researches. economics edition, no 18, 2013 http://sceco.ub.ro the importance of management and leadership in a changing business environment roxana mironescu “vasile alecsandri” university of bacau roxy_mironescu58@yahoo.com abstract change is a factor of impact on managerial functions especially upon those related to the coordination and training of the human resources. change management is a broad spectrum of means, referring to different types of change , however, it is generally used in the processing management and in the strategic management, in the information management , including the electronic one. the analysis of changes inside the organization is very important , these changes allow the organizations to be more adaptable and innovative. however, some changes may suddenly occur and will independently act of the managers’will. if we are talking about the human change, then we should mention that the importance of this dimension of the organizational change is essential. the way people relate to change can be affected by the position they occupy inside the organization and the attitudes they adopt facing the change influence the role that they assume with the greatest ease in the change processes. leadership and the organizational culture are in a tight relationship. manager evaluates its business, in addition to a number of work processes and products, and the cultural environment too, so conducive, in his view, that it should activate and record the organizational and work performance. keywords change; resistance to change; performance; managers; leaders; change management jel classification m10 1. introduction most experts consider the management to be an economic field of synthesis, but in the recent decades due to its deeper and deeper implication in some located beyond the limits of economics fields of activity, make it intersect with cultural decision within transnational corporations where the organizational culture differently evolves face to the country of origin or in certain cultural institution, as a production unit, specialized in aesthetic values or in their dissemination. the symbiosis between culture and management is appropriate and beneficial , the two fields influencing each other. some of the most significant consequences of the culture on the management processes may be: providing the general background for the applicability of management, managerial creativity enhancing, optimizing the decision-making process of forecasting and consulting, identifying and capitalizing on opportunities arising from the external environment. in a complementary process, the infusion of the scientific management in the institutions of culture and education, hospitals or public administration may lead to ensure an efficient organizational climate to boost the overall cultural phenomenon, to a more judicious allocation of the resources, which are already poor in the mentioned fields of activity. in this context, the importance of trained and dedicated leadership and the management knowledge they possess, becomes as a maximum significant criterion for any present organization. 248 the importance of management and leadership in a changing business environment 2. conceptual approaches according to the modern approaches, managers are primarily administrators: make-up business plans, analyze and establish budgets, control the way the work tasks are fulfilled and the development program parameters . administrator status is opposite to the employees’ wishes who do not want to be managed, but to be led. on the other hand, leaders determine the change inside the organizations and also at the human individuals level. between management and leadership there is a subtle difference: if management is a necessary function of any organization or business , leadership establishes a relationship between the leader and the led, which can stimulate the smooth running of the activities of the organization. effective management involves the daily monitoring and achievement of the business objectives, solving problems in the proper time, the management of the departments within the limits imposed by their budgets, work meetings, negotiations. leadership has a business perspective, it creates ideas , motivates employees and becomes imperative when changes in internal or external environment threatens the stability of the organization. thus, management can be considered an executive function (planning, conceiving budgets, evaluates, mediates), while leadership is a special type of interpersonal relationship (selects values, motivates, coaches, build like ideal models or typologies). an american specialist appreciates that management is based on a large amount of scientific information ("80% science") and only on a small part of inspiration and creativity ("20% art"), while leadership is based on its opposite (" only 80% art and 20% science") . leadership can be studied, it can be improved, but one cannot ignore the innate qualities of the people involved in this process. folk wisdom says: "champions do not become champions in the ring, they just get there the recognition". the success is assured by the talent, completed with training, practice, perseverance and continuous development, therefore, leadership is not an option, it can not be delegated or obtained by someone through the acquired titles. the leader is that respected person by those around her, that willingly followed person, the individual whom to trust, beyond the conferred by the title of the position held or the exercised authority. the history is full with examples of leaders, exceptional people, who appear, sometimes, out of nowhere, which solves certain desperate situations or obtain impossible victories. they correspond to the human need to have heroes, to look at the positive patterns of behavior, they derive from the people’s desire to be dependent on an authentic ruler. beyond these psychological considerations, the need for true leaders is an important topic of the present moment in the romanian economy and society. the organizations of today are tightly managed, as a rigid response to the turbulent conditions existing in the external business environment. it should be an ideal situation where the manager can determine his employees to follow him by their own will. the reality is, however, a little different: managers force their employees to leave their comfort zone, so they turn either rebels or become bored and unmotivated. another real argument that pleads against leadership is the managers, no matter how competent they are stagnant, restricted because of the limitations in achieving urgent immediate tasks and objectives. management and leadership complement each other, the success accomplished in one of the positions, however, does not guarantee the success in the complementary position. there are no known methods to train and to grow strong leaders. the training, including the practice in romania, focusses on the people training to solve everyday practical problems. in this way, it inhibits the development of a leadership scale. at the same time, the presence of a leader with a strong personality make an opposition to a manager development, as a confrontation between pragmatism and disorder, between mechanistic and inspiration. encouraging the creation and training of the leaders is one of the fundamental problems of postrevolutionary romanian economy, marked by strong changes. 249 mironescu leadership is a complex activity. some management experts focuss their efforts upon developing native personality of the leaders, others focuss upon the development of a management team or upon the management by objectives. anyway, the manager must be able to lead a group of individuals, but also to be able to adopt a different style of leadership based on the team entities’ personalities. the effectiveness of leadership consists of a mix of traits, such as intelligence, selfconfidence, initiative, excellent communication, the ability to abstract and generalize situations and events, the ability to correctly perceive the essence of the different phenomena. generally speaking, " to be a leader" is synonymous with "to set an example" to follow, because the subordinate individuals are tempted to follow, step by step, that personality considered to be a model of professionalism and existence. in the 60s and 70s, researchers formulated two major coordinates of the leadership behavior, based on the managerial behavior, explained by the model-grid blake or on the three-dimensional managerial behavior model (3-d) reddin: leader acts to achieve initial control tasks, to encourage the employee in accepting the minimum level of performance of such tasks ; once reaching this minimum level of performance, the manager rewards performance through an emphasis on human relationships by providing the human resources attention, support and direct encouragement. with the maturation of the assumption of the tasks and of the enhance the work performance, the manager increasingly offers more autonomy by delegation and trust. this management model is dynamic, it provides a guide to different behavior, both for the diversity of employees’ personalities and for the complex levels liable for the fulfillment of work tasks. quoting fred fielder:" the best description of a perfect leader would be that character, who use intuition or training, know how to control the proper environment"; and we could add "effective control proper environment", according to the management style and to the best leadership methods, related to his own personality. even if managers and leaders are different human types, they have nuanced attitudes face to goals, career, relationships with the others and with themselves, in such spectacular changes we live and work in, a fusion of the two philosophies of the rulers may be not only necessary but also feasible and perfect. the leader is called to intensify a whole mechanism of interests, hopes, motivations and organizational energies in an unique amazing direction, to differentiate from other similar organizations, but also to obtain the long awaited benefits. the managerial vision of the organization, originally designed by its leader, will live step by step, as an integrator and an accelerator of a fully participative climate predisposed to great performance due to the manager’s pragmatism and the the leader’s inspiration. a technicist leader type will particularly ensure the effectiveness of the organizational activities by the specific approach of his mission, the charismatic leader will prove to be a crucial factor in stimulating the creative energies in challenging undertaking commitments. the two patterns of a leader can be combined, by original methods, according to the management style, taking into account the features and the abilities of each implicated individual. despite all the difficulties of each typology of leadership (the lack of a precise definition of the institutional organizational framework, in the practice of the control, certain deficiencies to achieve a real participative management etc.), experienced and talented managers will always be able to require nuanced behaviors, developing harmoniously in both senses of the leadership. lewin since 1951 suggests that any change or innovation can be understood through three successive stages: freezing, changing or moving (turning) and refreezing. lewin believes that organizations are essentially stable structures, and the change is the 250 the importance of management and leadership in a changing business environment process where the organizations move between different stable stages. the model has been criticized for “a static vision of the organization”. lippit (renewal organization, 1982) cites the organizational crisis phases, such as: shock, defensive awareness, adaptation and change. elizabeth kubler -ross (1970) establishes similarities between the managerial model of the change management and people's reactions when they are sick, unexpectedly informed of an incurable illness: denial, rebellion, bargaining, depression and finally acceptance. the manager/leader may be interested in either performance of the change made by a person or in the average performance over a group of people. if an individual is the target of change the changing effort requires can be different from that the effort needed for collective change. in an attempt to change the behavior of a person is necessary to know certain details about that individual, and the plan for change must be adapted according to his needs, values, background and interests. if the target change but the performance is aiming the group (daily results in the activity , the presence at the work place, absence rates and abandoning employment income), the strategy is oriented towards collective change of a significant number of people a large number of people and organizations face with the appearance of the collective change versus the individual change. for example, the officials in charge of traffic safety are concerned with the rate of accidents and deaths around the holidays. at the same time, these people are concerned that their own children to be safe .the change strategies, individually or collectively applied, are always tailored to the men. when a change occur, this is due to the fact that the people’s performance is declined. sometimes people speak and write as if “organization” is a tangible entity, different from the people who compose it. in this respect, it is common expression “ the organization has suffered a decrease in sales or production”. but the organization is an abstraction organizations do not change in their behavior, although a change in the structure of the organization or its processes can impact on the organizational behavior. in fact, what it appears is a group of people who share consciously or unconsciously the same common guidelines and decide to change their behavior. a strategy to produce change is always oriented towards influencing the human behavior. 3. change management and the manager’s/leader’s role in changing change management refers to the adoption of such mutations in a planned, structured and organized environment. the most important topic of the change management is a set of questions such as: how do we make the organization more innovative, more competitive and more productive? what are the required changes? what are the performances measures us trying to adopt? why do people feel the need to be more creative? an important question concerning the organizational change is "why the organizations change?" and the answer can be, as follows: because of the poor performance they have; to adapt to the changes form the external environment; to achieve or to maintain a competitive advantage (such as better prices , high quality) compared to the market competitors; to put into practice an innovation. organizational change can be continuous (progressive developments, accurate adjustments, incremental adaptations) or discontinuous (rupture or radical changes), depending on the evolution of the environment. people do not engage in the changing behavior than when faced with a need for change. this need is felt like an emotional discomfort that decreases as the need is satisfied. one of the important change occurs when a manager feels the need to improve the results, the but subordinates do not have the same need. in the past, managers have tried to make people feel the need to 251 mironescu change trying to create feelings of fear, guilt, crisis or the complex of reward punishment. when these forces are set in motion, the need is to cope with the induced conditions, but not to change behavior in order to improve performance. it's easy to generate a need for change in the terms of the managerial targets: 1) provide clear and accurate information about the need for change; 2) allow the others to engage in planning change; 3) allows people to experience a form of reward for their involvement in the change. we can also say that two sources are determining the organizational change: the external sources – the change is initiated or imposed by actors and interest groups outside the organization; the internal sources – the change starts with individuals and groups such as shareholders, managers, employees. another fundamental question concerning the subject of the change might be: "what it can changed inside the organizations?" the most frequent changes are: the objectives and strategies; the technologies; the human resources; the organizational structures; the environment. kurt lewin believes that change is a work in a dynamic equilibrium, where various forces are pushing to amend the parameters consecrated inside the organization, but at the same time, they provide a strong resistance to any change of the system, treated as a whole or in its components. among the most important determinants of the organizational change, it could be taken into consideration: the technological change, the high rate of obsolescence of the products, the improved working conditions, and the avalanche of the new information. and the resistance to change is induced by many factors, such as: the outdated attitudes, the individual or collective mental patterns of acting or thinking, disinterest, the fear facing of the unknown and the new, the fear of a possible failure, a low degree of professionalism, the destructurated labor forces. defining a work team as a group of people working independently to achieve common objectives, where its members are responsible for the accomplishment of the objectives, we can conclude that, through certain collective effort, teams can pass over the sum of the individual performance and over their members’ private objectives. effective teams develop useful mechanisms to maximize their performance. we list some features of building a work team, as follows: team members must share a sense of power; they have a high score of selfconfidence; team members show superior motivation and a volitional attitude. in terms of communication within a team of high potency, their members were close to each other during a conversation, a meeting or an interview; they supported one another in argumentation and talked about their successes with pride. in terms of communication within a team of high potency, their members were close to each other during a conversation, a meeting or an interview; they supported one another in argumentation and talked about their successes with pride. the members of a team that lacks a shared sense of power embarrassed smile when they are asked about their achievements, they are scattered throughout the room, often contradict each other, related to a particular topic. in the teams with a deep sense of solidarity, their members talk about "we" and "us", while in the teams with low cohesion it is about "me", "i" facing to "them". concerning the autonomy in the work teams, it refers to the freedom, the discretion and the control their members can give evidence and can experience. performing 252 the importance of management and leadership in a changing business environment teams are free to use their resources to exploit the opportunities and take quick decisions without needing the superviser’s or a chief’s approval. these teams have the discretion of the major decisions, the so-called "sense of impact" that occurs when the team efforts converge and have a positive impact on the stakeholders’ interests. today the human resources managers develop the "sense of the impact" beyond the simple verbal statements, but in certain concrete ways, accordingly with profitable and flexible plans. the reactions from the internal and external clients help to strengthen the “sense of the impact”. what is really needed in order to achieve a strengthened team and to increase its effectiveness? first of all, it is necessary, but not sufficient, that each member has his proper management, the team autonomy, as one of the four dimensions of the team cohesion. many studies have revealed the importance of the autonomy, as an unique factor, to enhance and to strengthen the work teams. when the management style, the production and service systems, the social structures, the organizational and human resource policies and all together create major obstacles to the effectiveness of work teams, even those welded, with a strong group cohesion, will have major difficulties to handle the corporate twists. when a leader is expressing considerations, such as: ”nothing is not really changed here, the workers are the same obsolete people, we are doing the same old procedures, only the name is different” it means that the company has implemented a very narrow version of a teamwork, without a broad vision on the organizational context. other studies suggest that we can not expect managers to suddenly act totally different, just because they were told and they were forced to work in an organization based on the teamwork. those companies able to invest in education and lifelong learning are most likely to receive the benefits of the consolidated teams. inside those companies, the performing leaders benefit from a period of training or mentoring with the purpose of facilitating their function, before being appointed to managerial positions, this practice could be translated by "everyone in the company x can be the leader and is waited to be a leader in a certain perspective of time or “i will never ask anyone to do what i could never ever do”. other organizational aspects consist in the change occurred in the operational systems, which must be accompanied by corresponding changes in the control system to achieve the success of an intervention in order to strengthen group cohesion. other research indicates that people will start to change if the need is felt by a respected and important person. it is not unusual for people to adopt behavior change by themselves. this is especially true regarding the organizational behavior. if the employees know that certain important people inside the organization supports the idea of change, they are not averse to the idea. yet even after the start of changing behavior it is necessary to continue the needed change. one can talk about a model of change, about resistance to change and about how you can prevent this resistance .the context of change is the situation in which necessary to cause a change in the organization. no matter what kind of change is about the process tends to enroll in a pattern. management must recognize that change is needed, a proper method should be identified and applied for changing and leaders/managers are called and have the choice to find a proper method to produce change. 4. conclusions. the topic of change is a dimension of content, but also another dimension, that of processing. therefore, there are at least three emerging theoretical and methodological approaches of change management: managing it in a reactive or in a proactive sense, the existence of certain expertise and professional practice areas 253 mironescu (with the practitioners’ in changing dependent variable level of skills and abilities) and consecration of some methodological tools, consisting of patterns, techniques, methods and other tools, able to reveal the true causes, the effects and the ways to maintain a favorable climate inside the change processes. to properly work, the manager must be familiar with the critical situation, involving the change. a stage which involves the diagnosis of the current situation becomes imminent. in our country, the problem of the interaction between management and leadership is particularly acute, starting from the required definition of these two concepts, to the different structures and qualities of the categories in question. in the decades of application of the socialist organization principles in the romanian economy and society , it has been proliferated a deliberate and natural selection, promoting a human typology of manager, such as the obedient bureaucrat, the demagogue, the duplicitous, lacking strong culture, the false authoritarian and the dishonest one. certain qualities such as initiative, responsibility, independence, original way of perceiving reality were declaratively stated, but at the same time, there were classified as "reactionary," "imperialistics". unfortunately, those bad fundamentals characteristics mentioned above have been maintained since 1990, till now, entire generations of men, invested with the status of managers were and are still marked by this poor philosophy. current socio-economic configuration has led to the existence of two types of leaders, both as less competitive: the bureaucratic manager and the business entrepreneur type. we believe that human resources management policies are likely to increase solidarity within work teams; therefore, it is necessary that managers and leaders assume clear responsibilities in this area. in many organizations these kind of decisions have been delegated to the human resources team. often, the teams analyze and select the new members of the organizations. about the integration of newcomers, the work teams take responsibility for their guidance in terms of regulations and rules, it entrusts with its own procedures for assessing achievement of the individual performance, applying rewards or sanctions, as appropriate, for the disobedient workers. the members in certain sales team have also developed processes to performance evaluation; taking into account the customer feedback and the specific content for their performance evaluation are equally treated. there are many models of organizational change process stages, but one of the best known is that of references bennis, w., benne k.d., holt, r. c. (1969), the planning of change, rinehart and winston, new york. change management [wiki], available on http://en.wikipedia.org./wiki/change management. codecs (2002), putere, conducere şi schimbare, managementul schimbării. mandru, b., adaptarea instituţională si managementul schimbării, available on http://bogdanmandru.wordpress.com/management-organizationalmanagementul-schimbarii-in-organizatii/. scullion, h., linehan, m. (2005), international human resources management, palgrave mac millan, new york. tompkins, p.k. (1987), translating organizational theory: symbolism over substance, beverly hills, ca sage. zecheru, v.(2001), management în cultură, ministerul culturii şi cultelor, centrul pentru formare, educaţie permanentă şi management în domeniul culturii, bucureşti, românia. 254 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 36, 2022 http://sceco.ub.ro 16 the nexus between imports and economic growth in south africa: a disaggregated approach mercy. t. musakwa university of south africa tsile.musa@gmail.com p. vacu university of south africa vacunp@unisa.ac.za n. odhiambo university of south africa odhianm@unisa.ac.za / nmbaya99@yahoo.com abstract in this study, the causal relationship between disaggregated imports and economic growth is investigated in south africa. the study was motivated by the need to establish how south africa can achieve the growth trajectory that is much needed by the country to achieve sustainable development goals. the study applied the autoregressive distributed lag (ardl) approach to cointegration and the ecm-based granger causality test on annual time series data covering the period from 1988 to 2021. the findings confirmed a bidirectional causality between all measures of imports and economic growth, thereby confirming the significance of imports in buttressing economic growth. the findings point to the important role that imports play in achieving sustainable growth and development. keywords imports; south africa; intermediate goods; consumer goods, capital goods, economic growth, autoregressive distributed lag (ardl), causality jel classification f41; f43; c32 introduction the role of imports on economic growth has received little attention from researchers in recent decades. instead, export and economic growth studies have taken center stage among researchers. most of the studies support the export-growth hypothesis, which has resulted in policymakers focusing on policies that support exports, and less support for imports. imports are viewed as a drain on the economy; hence most countries have implemented policies to control imports. among the few studies that have examined the causality between imports and economic growth, mixed results have been confirmed. some studies found a bidirectional causality (see, cetintas and barisik, 2009; ahmed, cheng and messinis, 2011; mishra, 2012; chang, simokengne and gupta, 2014; aluko and abadale, 2020); some studies support the export-growth hypothesis (see, bakari and mabrouki, 2017; aluko and abadale, 2020; usman and bashir, 2022); some confirmed import-growth hypothesis (see, chang, simo-kengne and gupta, 2014; aluko and abadale, 2020); and yet some found no causal relationship between the two (see awokuse, 2008; rani and kumar, 2018; aluko and abadale, 2020). the mixed results from the extant literature make generalisation of the results from different studies inappropriate in informing south africa’s import-economic growth policies. the objective of this study, therefore, is to mailto:vacunp@unisa.ac.za musakwa, vacu, odhiambo 17 establish if the import-led growth hypothesis holds for south africa. this study investigates the causal relationship between economic growth and imports using aggregated and disaggregated import data: consumer goods, intermediate goods, and capital goods. the use of disaggregated data will shed light on the categories of imports that are beneficial to economic growth in south africa and those that are not. the study is divided as follows; section 2 provides a brief overview of imports in south africa; section 3 outlines the empirical studies that have investigated the relationship between economic growth and imports; section 4 describes the estimation techniques, and data analysis and presentation of empirical findings are outlined in section 5. section 6 concludes the study. an overview of south africa’s imports imports contribute significantly to south africa’s economy, accounting for almost 30% of the total gross domestic product. the country’s reliance on imports can be seen through the increasing amount of goods and services imported into the country and the widening trade deficit. the total value of imports of goods and services has increased over the last decade from $96.8 billion in 2010 to $113.1 billion in 2021 (south african reserve bank, 2021). the increase is mainly driven by, among other factors, the increase in the imports of mining and manufacturing products (south african reserve bank, 2021). in terms of the trade balance, the country recorded a positive trade balance in the early years of the post-apartheid period (unctadstat, 2015). however, the dominance of exports started declining due to changes in the rand exchange rate as it is one of the factors that contributed to the high level of exports in the country (tips, 2006). in 2004, imports started growing faster than exports, which, in turn, led to a trade deficit. according to the industrial development corporation (2013), the import increase was due to the increase in household consumption expenditure and public sector infrastructure investment during the same period. the increase in the cost of production due to the economic recession in 2008 also compounded the trade deficit and the increase in the import penetration ratio (vacu, 2019). in 2020, the country started recording a surplus, despite the negative effect of covid-19 on local production. the importance of imports for economic growth in south africa is also confirmed by the rising import penetration ratio, which measures the share of domestic demand that is satisfied by imports. figure 1 shows trends of import penetration ratio over the period from 1995 to 2021. as shown in figure 1, the import penetration ratio has increased over the years with fluctuations. in 1995, the country relied on imports for the satisfaction of 20% of its domestic demand. this increased to 33% in 2008 and declined marginally to 27% in 2021. according to vacu (2019), the increase in the import penetration ratio in south africa was driven by the manufacturing sector, as manufactured goods make up a large percentage of imports in the country. south africa trades with both developing and developed countries in the world, with developed countries being the main source of its imports. estimates from unctadstat (2021) show that the top six sources include china, germany, india, the united states of america, the netherlands, and italy, with china accounting for the largest share (30%), followed by germany (14%). in terms of merchandise imports, south africa’s imports are largely manufactured goods, which account for 83.3%, followed by food items at 7.5% (unctadstat, 2021). the nexus between imports and economic growth in south africa: a disaggregated approach 18 0% 5% 10% 15% 20% 25% 30% 35% figure 1: south africa’s import penetration ratio (1995-2021) source: world bank database and author’s computation in terms of policy development, south africa has gone through various trade policy reforms since the country’s accession to democracy. this has led to a number of import-related policy reforms, such as the removal of quantitative restrictions and a reduction in the number of ad valorem tariffs. according to vacu (2019), these reforms have allowed the country to actively participate in international trade by establishing bilateral, unilateral, and intra-regional trade agreements with other countries. literature on the import-growth nexus the causal link between imports and economic growth has received little attention from both researchers and policymakers. the existing empirical literature confirm mixed results, with some studies supporting the existence of a causal link between the two variables, while some confirmed that there is no causal link. the results from studies that found a causal link between imports and economic growth can be grouped into three categories. the first category comprises studies that support the import-led hypothesis (bakari and mabrouki, 2017; aluko and abadale, 2020). this includes studies such as ahmed, cheng and messinis (2011), who tested the import-led growth hypothesis in sub-saharan african countries, particularly ghana, kenya, nigeria, south africa, and zambia. the study employed the granger causality test and found a unidirectional relationship running from imports to economic growth in the case of kenya, nigeria, and zambia. using the autoregressive distributed lag model (ardl) and granger causality test and annual data covering the period 1971 to 2009, islam, hye, and shahbaz (2012) also found similar results in 62 selected countries. bakari and mabrouki (2017) carried out a similar study for pamana. the study applied the granger causality test on time series data covering the period from 1980 to 2015. the findings confirmed a unidirectional relationship between running from imports to economic growth. aluko and abadale (2020) examined the import-economic growth nexus in 26 selected african countries from 1990 to 2015. the study employed the toda-yamamoto granger causality test and found similar results for the case of angola, mauritius, and tunisia. usman and bashir (2022) used the bc granger causality test in the case of china, india, and g7 countries and confirmed similar results. the second category includes studies that confirmed the existence of a causal link running from economic growth to imports. this group comprises studies such as, among others, chang, simo-kengne, and gupta (2014), who carried out a similar musakwa, vacu, odhiambo 19 study in nine provinces of south africa. the study employed the panel granger causality test and used annual data covering the period 1996 to 2011. the findings confirmed a unidirectional causal relationship between the two variables flowing from economic growth to imports in gauteng, mpumalanga, northwest, and western cape. aluko and abadale (2020) also found that economic growth granger causes imports growth in the case of burundi, congo republic, ghana, kenya, mali, south africa, and togo. studies in the third category found a bidirectional relationship between the two variables. this includes, among others, studies such as ramos (2001), who examined the causal link between imports and economic growth in portugal. the study employed annual data covering the period from 1865 to 1998. the findings confirmed a feedback effect between the two variables. similar results were confirmed by awokuse (2008), who carried out a similar study using the case of argentina and colombia. the study applied the granger causality test on time series data covering the period from january 1993, april 2000 in the case of argentina, and january 1994, to april 2002 in the case of colombia. cetintas and barisik (2009) also found a feedback effect in the case of 13 transition economies. the study applied a panel granger causality on time series data covering the period from february 1995 to april 2006. for japan and south korea, zang and baimbridge (2011) also found similar results. the study applied the granger causality test on annual data covering the period from 1963 to 2003 for south korea and 1957 to 2003 for japan. ahmed, cheng, and messinis (2011) found a similar feedback effect in south africa. in the case of india, mishra (2012) studied the dynamics of the relationship between imports and economic growth from 1970 to 1971 and 2009–2010 using the granger causality test and confirmed a feedback relationship between imports and economic growth. rahman and shahbaz (2013) examined the causal link between the two variables in pakistan over the period from 1990 to 2010. the study used the autoregressive distributed lag (ardl) bounds testing approach and vecm granger causality approach. the findings from the granger causality test suggested the existence of a bidirectional causal relationship between the two variables, with imports having a stronger effect on economic growth. this concurs with the results from chang, simokengne, and gupta (2014) in the case of kwazulu natal in south africa and aluko and abadale (2020) in the case of swaziland. studies that found no causal relationship between the two variables include studies such as, among others, awokuse (2008), who tested the import-led growth hypotheses for peru using the granger causality test over the period january 1990 to april 2002. rani and kumar (2018) also carried out a similar study for brics from 1967 to 2014. the study used the panel granger causality test and found no causal relationship between the two variables. the findings from aluko and abadale (2020) confirmed the same results for benin, botswana, cameroon, egypt, gambia, guineabissau, madagascar, malawi, morocco, namibia, nigeria, senegal, sierra leone, tanzania, and uganda. a similar finding was also confirmed by chang, simokengne, and gupta (2014) in the case of the eastern cape, limpopo, free state, and northern cape of south africa. table 1: a summary of empirical studies on the causality between economic growth and imports. author and date country title econometric techniques and period results empirical studies that found a unidirectional causal relationship running from imports to economic growth the nexus between imports and economic growth in south africa: a disaggregated approach 20 ahmed, cheng and messinis (2011) sub-saharan countries (kenya, nigeria and zambia) the role of exports, fdi and imports in development: evidence from sub-saharan african countries ecm based granger causality test imports economic growth islam, hye and shahbaz (2012) 62 selected countries import‐economic growth nexus: ardl approach to cointegration autoregressive distributed lag model (ardl) and ecm based granger causality test 1971 to 2009 imports economic growth bakari and mabrouki (2017) pamana impact of exports and imports on economic growth: new evidence from panama granger causality test 1980 to 2015 imports economic growth aluko and obadale (2020) 26 african countries (angola mauritius and tunisia) import-economic growth nexus in selected african countries: an application of the toda-yamamoto granger non-causality test toda-yamamoto granger noncausality test 1990-2015 imports economic growth empirical studies that found a causal relationship running from economic growth to imports chang, simokengne and gupta (2014) south africa gauteng, mpumalanga, northwest, and western cape the causal relationship between imports and economic growth in the nine provinces in south african: evidence from panel granger causality tests panel granger causality test 1996 to 2011 economic growth imports aluko and abadale (2020) 26 african countries (burindi, congo republic, ghana, kenya, mali, south africa and togo) import-economic growth nexus in selected african countries: an application of the toda-yamamoto granger non-causality test toda-yamamoto granger noncausality test 1990-2015 economic growth imports empirical studies that found a bidirectional causal relationship between imports and economic growth to imports ramos (2001) portugal exports, imports, and economic growth in portugal: evidence from causality and cointegration analysis ecm based granger causality test 1865 to 1998 importseconomic growth economic growth imports awokuse (2008) argentina and colombia trade openness and economic growth: is growth export-led or import-led? ecm based granger causality test january 1993, april 2000 and january 1994, to april 2002 importseconomic growth economic growth imports cetintas and barisik (2009) 13 transition economies export, import and economic growth: the case panel granger causality 1995: february to importseconomic growth musakwa, vacu, odhiambo 21 of transition economies 2006: april economic growth imports zang and baimbridge (2011) south korea and japan exports, imports and economic growth in south korea and japan: a tale of two economies granger causality test 1963 to 2003 and 1957 to 2003 importseconomic growth economic growth imports ahmed, cheng and messinis (2011) sub-saharan countries (south africa) the role of exports, fdi and imports in development: evidence from sub-saharan african countries granger causality test importseconomic growth economic growth imports rahman and shahbaz (2013) pakistan do imports and foreign capital inflows lead economic growth? cointegration and causality analysis in pakistan. granger causality test 1990 to 2010 importseconomic growth economic growth imports empirical studies that found a bidirectional causal relationship between imports and economic growth to imports awokuse (2008) peru trade openness and economic growth: is growth export-led or import-led? granger causality test january 1993, april 2000 and january 1994, to april 2002 no causal relationship chang, simokengne and gupta (2014) south africa kwazulu natal the causal relationship between imports and economic growth in the nine provinces in south african: evidence from panel granger causality tests panel granger causality test 1996 to 2011 economic growth imports rani and kumar (2018 brics is there an exportor import-led growth in brics countries? an empirical investigation panel granger causality 1967 and 2014 no causal relationship aluko and abadale (2020) benin, botswana, cameroon, egypt, gambia, guineabissau, madagascar, malawi, morocco, namibia nigeria, senegal, sierra leone, tanzania and uganda import-economic growth nexus in selected african countries: an application of the toda-yamamoto granger non-causality test toda-yamamoto granger noncausality test 1990-2015 no causal relationship the nexus between imports and economic growth in south africa: a disaggregated approach 22 methodology model specification this study used the autoregressive distributed lag (ardl) approach to cointegration and the ecm-based grander causality framework to examine the causal relationship between economic growth and imports. the ardl approach was extended by pesaran, smith, and shin (2001). some of the benefits of using this approach in this study is that; the results obtained are in the short and long runwhich is important for policies that are time specific for south africa. the approach is also robust in a small sample (solarin and shahbaz, 2013), proving to be appropriate for this study. the ardl approach does not require all variables to be integrated of the same order (see pesaran et al., 2001). the models used in this study are specified as follows: gdpp =f(ip,gfcf, exch, ir) where ip captures import proxies measured by consumer goods (cg) in model 1, intermediate goods (ig) in model 2, capital goods (kg) in model 3, and total imports (ti) in model 4; gross fixed capital formation (gfcf); exchange rate (exch); gross domestic product per capita (gdpp); and interest rate (ir). the ardl model specification of this model is given in equations 1 to 5 musakwa, vacu, odhiambo 23 is a constant; are coefficients; and are error terms. equation 6 -10 specifies the ecm model the nexus between imports and economic growth in south africa: a disaggregated approach 24 ecm = error term are the error correction term coefficients and are error terms. data sources and definition of variables this paper investigates the causal relationship between imports and economic growth using disaggregated import data. import of consumer goods (cg), intermediate goods (ig), capital goods (kg), and total imports (ti) were retrieved from quantec easy data. gross domestic product per capita (gdpp), exchange rate (exch), gross fixed capital formation (gfcf), and interest rates were extracted from world development indicators. data sources for the employed variables are presented in table 2 below. empirical results although the ardl does to require unit root testing, in this study, dickey-fuller generalised least square (df-gls) (elliott et al., 1996.) and phillip and perron (pp)(1988) unit root tests were carried out. this was done to ascertain that the variables included in the four models are integrated of order zero or one. the ardl falls away if variables have a high order of integration above one. table 2: unit root test dickey-fuller generalised least square (dfgls) phillip and perron (pp) root test variabl e stationarity of all variables in levels stationarity of all variables in first difference stationarity of all variables in levels stationarit y of all variables in first difference musakwa, vacu, odhiambo 25 withou t trend with tren d withou t trend with trend withou t trend with trend withou t trend with trend cg -0.192 2.072 5.259** * 5.160** * -0.397 1.338 4.838** * -4.788*** ig -0.562 2.542 5.847** * 5.638** * -0.680 2.532 6.053** * -5.862*** kg -0.934 1.510 4.980** * 4.946** * -1.267 1.380 4.838** * -4.788*** ti -0.535 2.153 5.461** * 5.275** * -0.768 2.138 5.326** * -5.185*** gfcf -2.400 1.403 3.397** * 3.728** -1.649 1.648 3.928** * -3.860** exch -0.855 2.781 4.842** * 4.938** * -0.933 2.556 6.441** * -6.318** fdi -3.364 3.260 6.895** * 7.081** * 3.397** 3.260 * 6.895** -6.852*** ir -0.904 2.481 5.724** * 6.372** * -2.659 2.717 6.460** * -6.983*** note: *, ** and *** denote stationarity at 10%, 5% and 1% significance levels, respectively. cointegration test after confirming the order of integration, cointegration is tested on models 1 -4 functions. when the calculated f-statistics is above the upper bound, cointegration is confirmed; if the f-statistics is below the lower bound, no long-run relationship is confirmed; and when the f-statistics fails in between the upper and lower bound, the results are inconclusive. in this study, this outcome is treated as no cointegration confirmation. cointegration results are presented in table 3. the nexus between imports and economic growth in south africa: a disaggregated approach 26 table 3: cointegration results dependent variable function f-statistic cointegration status panel 1: model 1 (consumer goods as a measure of imports) cg f(cg| gdpp,gfcf,exch, ir) 4.739** cointegrated gfcf f(gfcf| cg, gdpp,exch, ir) 3.903* cointegrated exch f(exch| cg, gdpp,gfcf, ir) 1.365 not cointegrated gdpp f(gdpp| gfcf,exch, cg, ir) 3.651* cointegrated ir f(ir| gfcf,exch, gdpp, cg) 2.383 not cointegrated panel 2: model 2 (intermediate goods as a measure of imports) ig f(ig| gdpp,gfcf,exch, ir) 7.705*** cointegrated gfcf f(gfcf| ig, gdpp,exch, ir) 3.015 not cointegrated exch f(exch| ig, gdpp,gfcf, ir) 4.3003** cointegrated gdpp f(gdpp| gfcf,exch, ig, ir) 4.077** cointegrated ir f(ir| gfcf,exch, gdpp, ig) 2.237 not cointegrated panel 3: model 3 (capital goods as a measure of imports) kg f(kg| gdpp,gfcf,exch, ir) 7.359*** cointegrated gfcf f(gfcf| kg, gdpp,exch, ir) 1.827 not cointegrated musakwa, vacu, odhiambo 27 exch f(exch| kg, gdpp,gfcf, ir) 2.744 not cointegrated gdpp f(gdpp| gfcf,exch, kg, ir) 7.111*** cointegrated ir f(ir| gfcf,exch, gdpp, kg) 2.045 not cointegrated panel 4 : model 4 (total imports as a measure of imports) ti f(ig| gdpp,gfcf,exch, ir) 6.005** cointegrated gfcf f(gfcf| ig, gdpp,exch, ir) 3.423 not cointegrated exch f(exch| ig, gdpp,gfcf, ir) 1.942 not cointegrated gdpp f(gdpp| gfcf,exch, ig, ir) 4.839** cointegrated ir f(ir| gfcf,exch, gdpp, ig) 4.779** cointegrated asymptotic critical values (unrestricted intercept and no trend) critical values 1% 5% 10% i (0) i (1) i (0) i (1) i (0) i (1) 3.74 5.06 2.86 4.01 2.45 3.52 note: *, ** and *** denote stationarity at 10%, 5% and 1% significance levels, respectively. causality results table 4: ecm-based causality results for models 1-4 panel 1 model 1: consumer goods as disaggregated measure of imports model 2: intermediate goods as disaggregated measure of imports ∆i p ∆g fcf ∆ex ch ∆g dpp ∆ir ec m (t∆ip ∆g fcf ∆e xc h ∆g dpp ∆ir ec m (tthe nexus between imports and economic growth in south africa: a disaggregated approach 28 stat) stat) ∆ip 8.67 8*** [0.0 06] 9.05 1*** [0.0 06] 4.93 6*** [0.0 16] 0.0 11 [0.9 14] 0.47 9*** [5.21 6] 9.17 8*** [0.0 07] 4.92 3** [0.0 35] 5.65 2*** [0.0 15] 1.9 88 [0.1 70] 0.48 0*** [6.40 5] ∆gf cf 3.3 27 * [0. 08 1] 8.79 3*** [0.0 07] 9.67 9*** [0.0 04] 3.7 38** [0.0 26] 1.5 17 [0.2 29] 4.16 4* [0.0 51] 5.34 6** [0.0 29] 4.1 44* [0.0 52] ∆ex ch 3.8 82 ** [0. 03 5] 4.10 3** [0.0 29] 0.71 5 [0.4 08] 1.6 82 [0.2 07] 3.4 05** [0.0 50] 4.26 0** [0.0 26] 2.85 6 [0.1 04] 1.0 12 [0.3 24] ∆gd pp 9.8 34 *** [0. 00 1] 7.14 3** [0.0 13] 8.78 2*** [0.0 06] 0.0 34 [0.8 55] 0.22 9** [2.26 0] 4.6 76** [0.0 01] 6.90 3** [0.0 14] 4.22 8** [0.0 50] 0.8 01 [0.3 79] 0.35 1*** [3.13 3] ir 0.3 94 [0. 53 6] 3.82 4** [0.0 38] 0.03 1 [0.8 61] 0.24 6 [0.8 77] 1.5 41 [0.2 26] 4.75 2** [0.0 18] 1.26 7 [0.2 99] 2.74 8 [0.1 10] panel 2 model 3: capital goods as disaggregated measure of imports model 4: total imports as an aggregate measure of imports ∆i p ∆g fcf ∆ex ch ∆g dpp ∆ir ∆ti ∆g fcf ∆e xc h ∆g dpp ∆ir ∆ip 4.90 4*** [0.0 08] 4.16 2*** [0.0 07] 9.08 7*** [0.0 06] 0.3 55 [0.5 60] 0.29 0*** [5.81 0] 8.63 6*** [0.0 04] 9.23 3*** [0.0 05] 6.32 0*** [0.0 00] 1.9 28 [0.1 76] 0.57 9*** [6.97 1] musakwa, vacu, odhiambo 29 ∆gf cf 0.3 03 [0. 58 7] 3.40 3* [0.0 50] 5.02 6** 3.8 37* [0.0 36] 1.5 70 [0.2 21] 4.69 3** [0.0 39] 4.90 4** [0.0 35] 4.0 65* [0.0 54] ∆ex ch 7.9 96 *** [0. 00 2] 7.36 4*** [0.0 03] 0.78 5 [0.3 84] 1.1 88 [0.3 22] 4.9 76** [0.0 16] 5.45 4** [0.0 11] 0.20 3 [0.6 56 10. 919 [0.4 13] ∆gd pp 6.8 10 *** [0. 00 0] 3.52 2* [0.0 71] 9.45 8*** [0.0 05] 1.3 36 [0.2 58] 0.53 7*** [7.89 8] 5.6 82** [0.0 12] 8.58 4*** [0.0 07] 7.25 9** [0.0 12] 0.8 34 [0.3 69] 0.60 3* [6.62 3] ir 0.8 37 [0. 36 9] 3.96 1** [0.0 32] 1.11 7 [0.3 432] 1.64 4 [0.2 12] 1.0 18 [0.3 23] 4.49 1** [0.0 22] 1.15 5 [0.3 31] 1.93 4 [0.1 76] note: *, ** and *** denote stationarity at 10%, 5% and 1% significance levels, respectively. the results reported in panel 1 of table 4 for model 1 confirm a bidirectional causality between consumer goods imports and gdp per capita in both the short and long run. these results are consistent when imports are measured by intermediate goods. the results confirm a reinforcing effect between consumer goods and gdp per capita and intermediate goods and gdp per capita, irrespective of the timeframe considered. an increase in gdp per capita stimulates more imports of consumer goods and, in return, an increase in the import of intermediate and consumer goods, leading to improved household welfare. these results are not unique to south africa alone. aluko and abadale (2020) found the same results in a study on swaziland; rahman and shahbaz (2013), in a study on pakistan, confirmed the same results as ahmed, cheng, and messinis (2011) in a study on sub-saharan african countries. other results presented for model 1 confirmed a :i) bidirectional causality between imported consumer goods and gross fixed capital formation in the short run and a unidirectional causality from gfcf to imported consumer goods in the long run; ii) a bidirectional causality between imported consumer goods and exchange rate in the short run and a unidirectional causality from imported consumer goods to exchange rate in the long run; iii) no causality was conformed between imported consume goods and interest rate, implying in south africa, consumers do not rely on borrowed funds to finance imported products; iv) a bidirectional causality between gdpp and gross fixed capital formation, supporting the major role that is played by investment in gross fixed capital formation in buttressing economic growth; v) a unidirectional causality from exchange rate to gdpp in the short run and the long run; vi) no causality between gdpp and interest rates in both the short and the long run; vii)a the nexus between imports and economic growth in south africa: a disaggregated approach 30 bidirectional causality between exchange rate and gfcf in the short run, showing the importance of capital goods imports on economic growth in south africa; viii) a bidirectional causality between gfcf and interest rate in the short run; and ix) no causality between exchange rate and interest rates. for model 2, the finding reported in table 4, panel 1, where imports are measured by intermediate goods (ig), confirmed a: i) unidirectional causal flow from gfcf to ig in both the short and the long run; ii) a bidirectional causality between ig and exchange rate in the short run and a unidirectional causal flow from exchange rate to ig in the long run; iii) no causality between ig and interest rate, regardless of the time considered; iv) a bidirectional causality between gdpp and gfcf in the short run and a unidirectional causal flow from gfcf to gdpp in the long run; v) a unidirectional causal flow from exchange rate to gdpp in the short run and in the long run, confirming the reliance of south africa on international trade; vi) no causality was confirmed between gdpp and interest rate in the short run and the long run; vii) bidirectional causality between gfcf and interest rate in the short run; and viii) bidirectional causality between gfcf and interest rate, implying a reliance of domestic investors on borrowing money from the banks to support their businesses; and ix) a unidirectional causal flow from interest rate to exchange rate. the results reported in table 4, panels 2, where imported capital goods and total imports are used as imports measures, respectively, confirm a bidirectional causality between capital goods and gdpp in the long run and in the short run, and a bidirectional causality between gdpp and total imports irrespective of the time considered. the findings from this study are consistent with the theory were imports of capital goods lead to higher economic growth as the capital goods increase the production capacity. the findings from this study are consistent with results from ahmed, cheng and messinis (2011) in sub-saharan african countries; zang and baimbridge (2011) in a study on south korea and japan; cetintas and barisik (2009) in 13 transition economies. other results reported for model 3 confirmed i) unidirectional causal flow from gfcf to capital goods imports (kg) in both the short and long run; ii) a bidirectional causality between kg and exchange rate in the short run, and iii) a unidirectional causal flow from exchange rate to kg in the long run, confirming the reliance of south african investors on buying capital goods from other countries; iv) no causality between kg and interest rate; iv) unidirectional causal flow from exchange rate to gdpp in the short run and the long run; v) bidirectional causality between gdpp and gfcf in the short run and a unidirectional causal flow from gfcf to gdpp in the long run, confirming the positive long term impact the investment in capital goods has on economic growth; vi) no causality was confirmed between gdpp and interest rate in the short run and the long run; vii) a bidirectional causality between gfcf and exchange rate in the short run; viii) a unidirectional causal flow from gfcf to interest rate in the short run; and ix) no causality between exchange rate and interest rate in the short run and in the long run. other results reported for model 4, where total imports are used as a measure of imports, confirmed a: i) unidirectional causal flow from gfcf to ti in the short run and the long run; ii) bidirectional causality between ti and exchange rate in the short run and a unidirectional causal flow from exchange rate to ti in the long run; iii) no causality between ti and interest rate; iv) a bidirectional causality between gdpp and gfcf in the short run and a unidirectional causal flow from gfcf to gdpp in the long run; v) unidirectional causal flow from exchange rate to gdpp in the short and long run; vi)no causality between interest rate and gdpp in both the short run and the long run; vii) a bidirectional causality between gfcf and exchange rate in the short musakwa, vacu, odhiambo 31 run; viii) a bidirectional causality between gfcf and interest rate in the short run, and ix) no causality between exchange rate and interest rate in the short run. the findings from this study confirmed a bidirectional causality between imports and gdpp across all measures of imports at an aggregate level and at a disaggregate level and irrespective of the timeframe consideredshort run or long run. thus, a mutually reinforcing effect between imports and gdpp was confirmed across all measures on imports. this indicates the importance of the policymakers in south africa to support imports, especially intermediate goods and capital goods because they help to boost production in the economy. further, apart from the negative impact that consumer goods have on the balance of payments according to economic theory, this study found a mutually beneficial relationship with economic growth. conclusion this study investigated the causal relationship between imports and economic growth in south africa using data from 1988 to 2021. the study used disaggregated import data – consumer goods, intermediate goods, capital goods, and total imports as an aggregate measure for imports. economic growth was measured by gross domestic product per capita. the study was motivated by the need to establish the causal relationship between economic growth and imports, especially using disaggregate data that has received little attention in the extant literature. further, most studies focused on export, neglecting the role of imports on economic growth. using the ardl approach to cointegration and the ecm-granger causality test, the study found a bidirectional causality between imports and economic growth irrespective of the import measure used and time considered – short run or long run. thus, imports play an important role in stimulating economic growth in south africa, and in return, economic growth results in an increase in imports. it can be concluded that south africa benefits immensely from imports despite the belief that imports drain resources from the country in comparison to exports. therefore, it can be concluded that south africa does not follow a distinct import or export-growth hypothesis but rather a mutual relationship – the export-import growth hypothesis. based on this finding, it is recommended that the south african government implements policies that support imports of categories, such as import of consumer goods, apart from import of capital goods and intermediate goods that promote the national development agenda. references ahmed a d., cheng. a. e and messinis. g. (2011). ‘the role of exports, fdi and imports in development: evidence from sub-saharan african countries’, applied economics, vol 43 no 26, pp. 3719-3731, doi: 10.1080/00036841003705303. aluko, o.a., obadale, a. (2020). ‘import-economic growth nexus in selected african countries: an application of the toda-yamamoto granger non-causality test.’ zagreb international review of economics & business, vol. 23 no 2, pp.117128. doi: https://doi.org/10.2478/zireb-2020-0016. awokuse t., o. (2008). ‘trade openness and economic growth: is growth exportled or import-led?’ applied economics, vol 40 no 2, pp.161-173. bakari, s., and mabrouki, m. (2017). ‘impact of exports and imports on economic growth: new evidence from panama.’ journal of smart economic growth. vol. 2 no 1, pp. 67-79. https://doi.org/10.2478/zireb-2020-0016 the nexus between imports and economic growth in south africa: a disaggregated approach 32 cetintas,h and barisik, s. 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(2011). ‘exports, imports and economic growth in south korea and japan: a tale of two economies. applied economics, vol 44 no 3, 361-372. university of south africa microsoft word patrut vasile engl. contributions to positioning accounting in relation to scientific research vasile pătruţ, prof., dr., “vasile alecsandri” university of bacău abstract the paper approaches some epistemological and methodological aspects of scientific research in accounting, such as: the distinction between accounting research and scientific research in accounting; the products, dynamics and mechanism of scientific creation; scientific research as a fundamental premise of scientific creation; the challenges and conditions of scientific creation; the double standing of accounting, as object and result of the research, in relation to scientific research. key words accounting research, knowledge, research, scientific research, discovery, invention, innovation. sprung from the need to efficiently know and manage the economic values separated in a patrimonial way, accounting asserted itself, within the general process of knowledge, as a double aspect: as practical activity and as scientific theory. its long history traces an evolution as going “predominantly from practice to theory, where practical experience has been the one anticipating and shaping the theory and method of accounting”1, that is, the science of accounting. in both of the meanings of the term, accounting has, in our minds, the same object and method and what differs is the level where we stand which is the action level in the first case, respectively the level of the mind, of thought, scientific reflection in the second case. distinctions can also be made concerning the object and result of each of the two structures. thus, whereas in the case of accounting as practical activity the object is represented by the movements of concrete values of a clearly defined patrimonial entity and the product is constituted by financial-accounting data regarding that entity, therefore particular statements relative to particular cases, with no scientific relevance, in the case of accounting as scientific theory the object is constituted by the movements of values occurring generally within the patrimony of any entity and the product of the research is constituted by the theoretical statements (which are likely to represent scientific knowledge). accounting research versus scientific research in accounting within accounting as a practical activity based on the theoretical and methodological principles elaborated by its scientific theory field, practitioners carry out what is called accounting research. by using the devices of the accounting method, it approaches exhaustively the (economic, legal, administrative or natural) facts which generate movements of values influencing thus the patrimony of a determined entity 1 călin, o., ristea. m. (2002), bazele contabilităţii, editura genicod, p. 5. 89 studies and scientific researches ‐ economic edition, no. 14, 2009  (organization) and which it seizes, quantifies, eventually recording the respective data; then, these data are processed leading thus to accounting data in the form of some specific indicators and their communication by means of financial-accounting reports with a view to using them. scientific research in accounting can be achieved separately from accounting research and it selectively approaches facts concerning the patrimony, in general, of different entities (organizations) and the way in which these facts are treated in the accounting practice with a view to elaborating, by means of specific techniques, general theoretical statements which make up the scientific theory of accounting. the techniques used in this case are related to the methodology of scientific research, unlike the techniques used in accounting research which are related to the accounting method. the things mentioned so far lead to the conclusion that accounting research and scientific research in accounting are distinguished by object and method, as well as by purpose. scientific research – a basic premise of scientific creation the motive of the scientific research is generally constituted by knowledge and the need to expand it. as far as knowledge is concerned, it is a “reflex of human curiosity, but also the imperative for survival”2. enlarging upon this idea, the authors of the respective paper – rightfully – claim that “man would have probably never become an animal aware of its own value had it not been driven from the very beginning towards knowledge. the fact that the initiation was realized at the urging of an inner force is no longer important. similalrly, there is no particular significance for research in the fact that in the beginning knowledge was achieved towards itself or towards the exterior world of man himself. we may be right in admitting as being more plausible the hypothesis of the beginning of knowing the exterior world, also the one where the most powerful threats might have come from, but also the sources and resources for survival.” knowledge is the sensory-logical reflection characteristic of a human being. man’s knowledge activity represents, according to the dictionary of philosophy3, a unity dialectical process of sensory and rational, empirical and theoretical knowledge. empirical knowledge is the reflection of the object into the process of unmediated (or mediated by tools and devices) interaction between the subject and object, its specific methods being observation, description etc.. at this level the data which establish the object’s external manifestations are collected. theoretical knowledge is a process of deepening knowledge through thought, getting to the essence, seizing internal connections, causes and laws which govern the structure of the object. it occurs on the basis of processing the data obtained by empirical knowledge through methods such as analysis and synthesis, induction and deduction etc. the information acquired in the process of knowledge is structured and fixed in specific reflection forms: sensations, perceptions and representations characteristic of sensory knowledge, notions, judgements, arguments (in logical terms), or concepts, ideas, theses, theories, theoretical systems and other theoretical statements (in epistemological terms) characteristic of rational knowledge. concerning human knowledge, its philosophical theory, its gnoseology distinguishes between common knowledge and scientific knowledge. thus, common knowledge is 2 zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 17. 3 * * * (1978) dicţionar de filozofie, editura politică, bucureşti. 90 studies and scientific researches ‐ economic edition, no. 14, 2009  identified as the normal, spontaneous, random, generally human manner of reflecting reality that “allows us to use our natural senses in order to identify the explicit dimensions of the world (the apparent reality)”4. on the contrary, scientific knowledge goes beyond the reality perceivable at the limit of the natural senses. scientific knowledge is systematic, organized (controlled), based on rigor (that is, principles, rules, procedures, arguments etc.) and is specialized in different domains. other differences concerning the two types of knowledge concern the type of knowledge results presentation and the recipients. within the frame of common knowledge, it contributes unconsciously, unwillingly and spontaneously to the increase of the knowledge patrimony with experimental knowledge which is naturally transferred between generations. on the other hand, the results of scientific knowledge materialized into theoretical and practical-applicative generalizations are externalized, that is, formalized and stored in an external memory by implementation into different technical supports and thus making them transferable among generations, regions, distinct structures etc. usually, the results of scientific knowledge are delivered at a price to those who are to benefit from their exploitation. depending on how real facts are involved in the research, the authors of the cited paper distinguish among three levels of scientific knowledge: the empirical level, the theoretical level and the application level. the empirical level seizes the facts, events, emotions, manifestations which represent the reality of the domain under study and identifies the basic and elementary data in the form of empirical data. since these data are the result of a professional finding (belonging to a specialist in the field) and are subjected to recording in a manner and with tools characteristic of the field, the data or information thus obtained characterize what we call “scientific facts”. therefore, real facts become scientific once they have entered a specialized action of recording and processing where specialized conceptual and methodological tools are used. so, through the intervention of the specialized conscious (the specialist), which operates with a specialized, formed, acquired, learned etc. language, there occur transformations as the ones below: figure 1. the facts – data relationship the theoretical level establishes the general and generalizable components of the field, that is, notions (concepts), statements, laws, theses and hypotheses. “in the case of the disciplines in the pragmatic fields of efficient action, where accounting is also 4 zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 17. real facts scientific facts scientific data (information) empirical data become become 91 studies and scientific researches ‐ economic edition, no. 14, 2009  included, at this level (the theoretical one) there are principles and general rules of action for enterprise, sector, activity field and/or time span”5. the application level, which is located in the area of the occurrence of real facts, yields solutions and recommendations, techniques and procedures etc. through the application of some corresponding theory. this level establishes application rules and norms, principles and methods, as well as the related know-how elements. “it is the efficient action component from scientific knowledge, the one which teaches one how to do what one knows to do. it is about the descriptions and prescriptions needed to effectively carry out the practical activity”6. the scientific research in accounting as an applicative science par excellence aims particularly at its application level. table 1. the levels of scientific research location area characteristic elements operating at this level empirical level the interface between perceptions refined by previously acquired specialized knowledge and the reality of the field as subject of knowledge in itself real facts empirical data scientific data (information) scientific facts theoretical level general and generalizable elements of the field (the interface between the rational conscious and the factual reality) notions (concepts theoretical statements ideas hypotheses theses scientific law theory application level the area of real facts occurrence application rules application norms principles methods know-how elements scientific creation in the form of discoveries, inventions or, on the edge, innovations, contributes to the expansion of human knowledge which, itself a scientific creation as well, may constitute the purpose of scientific research. discovery means achieving new knowledge concerning the objective reality, entering so far unexplored areas as well as understanding certain facts which – although already reported – had not overcome the stage of the gross detail yet7. as a discoverer of new truths or as creator of new theories, the human individual or the knowing agent extends the area of human knowledge or suggests the restructuring of the previously known knowledge in the light of new principles. in terms of their predictability, discoveries fall into two categories, expected or unexpected. expected discoveries are the ones assiduously searched for, being simultaneously the concern of several researchers. discoveries of this type belong to development and 5 zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 23. 6 zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 26. 7 dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj, p. 9. 92 studies and scientific researches ‐ economic edition, no. 14, 2009  application researches. in this case, scientific research represents the purpose / objective and the result of what is called scientific research. this research looks into something about which there is some minimal idea, about which one may formulate a hypothesis based on known or suspected facts or events, something which can be logically or emotionally deduced but which needs testing, validation or collecting evidence sufficient for eliminating the risk of counterfeit. spontaneous findings, mainly belonging to fundamental researches, open horizons that could not have been suspected before, as a result of chance. in this case, discovery being the role of hazard, researching means looking for something nobody knows anything. the invention consists in finding a new technical procedure or in building an instrument which, in turn, may support the progress of knowledge and the mastery of nature by man. through knowledge we explore not only reality, as in the case of discoveries, but also the horizon of possible objects, as in the case of inventions. both aspects of creation imply novelty, priority, originality, a way of thinking and of acting which occurs for the first time in the history of science. what distinguishes them is the fact that discovery concerns real facts, already existing but unknown, whereas invention represents constructions of man previously inexistent. the object of discovery is nature or society and that of invention is human activity. these two are indissolubly connected because the invention – of some device, technique or procedure – closely follows or precedes the discovery of a fact, an objective law. science advances through discovery, technique through invention, and both of them interact. the efficiency of the discovery is measured in ideas while that of the invention in work, action techniques, but both of them are indispensable to progress, to innovation. innovation understood, of course, as a change applied within a filed, a system where, through the introduction of novelty or through the application of a discovery, an invention or a simple innovation is achieved. innovation is, according to the dex, novelty, change, transformation, namely the solving of some technical or work organization problem with a view to improving work (productivity), technical improvement or streamlining of the solutions applied. therefore, discovery, invention and novelty lead to innovation. we shall further present several aspects concerning the dynamics and mechanism of scientific creation. from the scientists’ analyses of their own creations, of the way in which they made a discovery, there often resulted “hypertrophies of some factor which participate harmoniously to the act of creation. thus, the unilateralization of the intuitive moment has led to identifying creation with adventure, with hazard, with chance. conversely, the exaggeration of the importance of methodical conscious activity systematically carried out according to an organized plan has led to the creation of a false image of scientific creation as a rational and fully controllable process, fundamentally opposed to artistic creation. in fact, says the author cited above, it is a similar process in both circumstances, with different modes of presentation. this is always followed, in the case of science, by a conscious checking and analysis of its products”8. there are two premises which allow the correlation of discovery, creation with the subjective side: creativity understood as a complex of skills and as a feature of the spirit, and orienting the creating interest towards creative activity, based on some motivation. the first one represents the potential of creation. the second one fulfils the triggering function for investigation. this is why it marks the outset of elaborating the discovery and supports the process during the subsequent activity. 8 dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj, p. 13. 93 studies and scientific researches ‐ economic edition, no. 14, 2009  in the dynamics of scientific research, a. f. osborn, cited by d. dumitraşcu9, distinguishes the following stages: 1) orientation: raising an issue; 2) preparation: accumulating specific data; 3) analysis: classifying available data; 4) ideation: issuing alternative ideas; 5) incubation: the stop needed to trigger illumination (intuition); 6) synthesis: assembling found data; 7) evaluation: criticizing the ideas obtained. the solution to a problem may be obtained based on a systematic thinking, as well as through intuition, both of these implying, however, stages of accumulation, incubation and intense thinking. creation needs a prior preparatory period that begins with posing the problem and therefore, with establishing the field of investigation. the starting point cannot be absolutized because we are neither exclusively driven by bacon’s assertion that “science begins with observation”, nor by that of k. popper according to whom “science begins with the problem”. the preparation consists in taking possession of the factual material from the explored area and the ceaseless concern towards the problem. “constantly thinking about the respective object, knowing that one goes to bed with one idea in mind and wakes up still with it” are the words by which i. p. pavlov revealed his experience. thus, constant research activity appears to be a first act of creation in science. the central moment of creation is the hatching of the original idea. in order for this to occur, it requires a particular tensioning of the intellect, a “forma mentis” favourable to the outbreak. this is achieved due to: 1) numerous favourable influences: associations of ideas, analogies or contrasts suggested by certain words or images, sometimes accidentally perceived; 2) focusing attention or simplifying thought by way of graphic representations, intuitive drawings; 3) systematizing the material in successive stages; 4) noticing contradictions and discrepancies; 5) trying and logicization; 6) discussing the data of the problem; 7) physical states of the cortical activity, those moments of transition between sleep and wake, or of dreaming with no defined objective. the last stage of creation is verifying the original idea. this testing is done, first of all, at the level of the argument, applying the first censorship which separates the feasible from the impossible, the value from absurdity. then confronting the new idea with the observation and experiment material brings about another, more decisive verification. finally, its practical application and use to the benefit of mankind constitutes the last point of control which certifies and assesses the discovery. the creative cycle ends inducing nevertheless, by coming back to the solid ground of practice, new trajectories in knowledge. creative dynamics is not restricted to the three schematic moments, presented above. the transition towards discovery is done, usually, by successive movements, alternative shifts from hypothetical truths to objective truths. based on the things we have just analysed, it results that scientific creation is influenced by the following factors: imagination (fantasy) – the central prerequisite of originality, with a significant weight in inventing hypotheses; intuition (unconscious reason); reasoning (rational thinking); chance (hazard), as a factor which can act either positively or negatively upon scientific creation; systematic research, as a deliberate activity of searching for something, the answer to a question respectively, the solution to a problem. by synthesizing, the mechanism of scientific creation can be represented as follows: 9 ibidem, p. 15. 94 studies and scientific researches ‐ economic edition, no. 14, 2009  figure 2. the dynamics of scientific creation having the question / problem (identified through the proponent’s own experience) based on some rich imagination (that kaleidoscopic fantasy which ensures the diversity and novelty of viewpoints) one infers (invents by way of “unconscious reason”) hypothesis / assumption: (an assumption, temporary explanation, based on some known facts, connections and laws concerning certain relations between phenomena, the cause or the internal mechanism which produce them) is subjected to verification through logical demonstration, rational thinking and/or practical application, experiment accidentally, by chance, as a result of hazard no within systematic research as a deliberate searching activity is the hypothesis confirmed? yes false hypothesis thesis: answer/solution (hypothesis proven to be true, a form of scientific theory) 95 studies and scientific researches ‐ economic edition, no. 14, 2009  taken together, the largest number of discoveries has resulted from a deliberate, systematic activity and not from intuitions or accidental observations. they have developed as a result of a step-by-step activity handed down from generation to generation. creation cannot be achieved, neither in science nor in art, without a constant concern about a certain problem. if it is true that searching for means finding, then we will have also to agree with the corollary “researching means discovering”. only by being actively involved in a field of the research activity, without counting on hazard, can one have the possibility of being served by it, at a certain moment. therefore, scientific creation implies searching for the answer to a question, it requires scientific research. this relation between scientific research and scientific creation results from the very dynamics of the latter. indeed, this dynamics implies: (1) seizing some question that we would like to have or obtain an answer to, (2) suggesting an answer as a necessary assumption, the answer becoming thus a hypothesis, the hypothesis being the starting point of what we call scientific research, (3) verifying whether the hypothesis is confirmed or false, that is, scientific research. “scientific research is the systematic, structured and coherent search, based on specific and specialized systems of encoding and on a methodology designed to find what becomes novelty, innovation, invention or discovery. it, the scientific research, aims at finding out something (1) about whose existence nothing is known or (2) about which facts or events connected relationally, empirically or logically are known but for which there is not enough evidence, nor sufficient arguments, demonstrations, logical connections or irrational deductions”10. in the case in which something about which nothing is known is being searched for, where it is rather, on the edge, the role of chance, of some hazard which suddenly confronts the factual or relational unknown with the character fated to make the discovery, in this case we are rather dealing with a specious research but which is regarded by many to be the “real” one11. in the theory of knowledge and in epistemology, scientific research is regarded as a logical process of looking for explanations by systematically formulating and testing statements and systems of statements and by building, rebuilding, strengthening or developing the theory on the basis of and within which it is carried out. scientific research, for empirical studies where the continuous relating to facts, events or relations which are part of the natural reality is compulsory, formulates hypotheses, builds theoretical events and confronts these systems to natural reality, experience, by way of observation and experiment. generally, what is characteristic of scientific research is the idea of theorization and implicitly of theoretical generalization, a notional reflection with the help of abstractions, of objective reality. this does not mean that scientific research should not include development research or application research where the first level does not belong to elaborating concepts, theoretical statements and theories, but rules and norms of application, methods, know-how elements. any of the sciences uses, in achieving its objective, different methods, their ensemble which is based on the system of the most general laws and principles of the respective science constituting what is called the methodology of that science. with this meaning, the word method is also sometimes used. the same methodology concept is also used with another meaning, that is, to designate the science or theory of methods. “there is a particular methodology of the various sciences which represents the way 10 preluat şi adaptat din zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 79. 11 preluat şi adaptat din zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 79. 96 studies and scientific researches ‐ economic edition, no. 14, 2009  of operating with the methods characteristic of each science and with those borrowed from related or interfering disciplines and a general methodology of science, of knowledge, the philosophical part which contains the methods applicable in all domains or, in any case, which meet with a high degree of generality”. the prerequisites and conditions of scientific creation developing further the idea of scientific discovery as the main form of scientific creation, we shall see which are its prerequisites and conditions. in order to state a law or to describe a fact scientifically so that it may have the value of a discovery, first of all it needs to reflect reality exactly. a discovery that is not true, is not … a discovery12. this condition eliminates error and forgery from science. in elaborating the discovery, all the rules of research must be obeyed, ensuring objectivity to the content transmitted and fairness to the demonstrative device used. its value is even greater as it gets closer and closer to the objective truth. by definition, discovery consists in: a significant gnoseologic moment, knowing the signification of the new fact. it cannot be confused with the simple description of facts, it is not restricted to this perceptive aspect. claude bernard (in caiet de note. editura ştiinţifică, bucureşti, 1969) pointed out that “discovery is the new idea which arises in connection with a found fact”. only recorded and left unexploited, the original observation cannot have the value of a discovery. “the gross fact does not teach us anything by itself. this does not mean that science denies all of its values but that it files it and keeps it as a premise of future discoveries”13. another prerequisite for discovery is generalizability, according to the specific nature of science which operates with general laws and principles. the concrete fact is nothing than the impulse of scientific knowledge, it does not achieve science itself. therefore, discovery implies a leap from the mere “to see” to the priceless “to understand”14. recognition of a discovery is conditioned by its diffusibility. a discovery known only by its creator is inexistent to science. each new contribution gains value only by being increasingly spread around, by being taken over and developed. however, besides the originality of the idea, multiple other factors characteristic of the informational cycle are involved such as the broadcasting sphere of the language in which the discovery is published, the interrelations among countries and scientists etc. moreover, “it is not enough to make a discovery or briefly describe it, but the new data need to be processed up to a point where others will accept the idea and continue the work” (selye, m. – de la vis la descoperire. editura medicală, bucureşti, 1968). to that effect, d. dumitraşcu mentions that: “darwin himself was not the first one who noticed the law of the evolution of species, pasteur himself did not state the microbial theory for the first time. but they are credited to have developed the concepts to which their names have been attached, substantiating them scientifically and bringing them to the field of practical application”15. applicability is another criterion of value for discovery. the correctness of this criterion is undeniable, but not knowing it we cannot overlook the historically conditioned nature that the use of discoveries often implies. anyway, a discovery should, sooner or later, reflect positively upon man. the moment discoveries are made, the contribution they can bring may remain hidden, as was, for example, the 12 zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti, p. 10. 13 dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj, p. 12. 14 dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj, p. 12. 15 dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj, pp. 12-13. 97 studies and scientific researches ‐ economic edition, no. 14, 2009  situation with the discovery of nuclear fusion, at a time when the concept of nuclear power had not yet crystallized. accounting – both object and product of scientific research in terms of scientific research, accounting is, we believe, both its object and product. as practical activity and everything that this implies, accounting is an object of scientific research and, as scientific theory, accounting is a research product. as object of scientific research, there may be considered such aspects of accounting practice as the ones covered by the following questions: what is there subjected to accounting observation and processing?, respectively, the movements of values which define the object of accounting and the related structures: assets, equity, expenditure, revenue, costs, results etc.; where is accounting organized and carried out?, respectively, the accounting entities; what is accounting organized and carried out for?, respectively, the aim and objectives of accounting, producing and providing quality data, appropriate to the decision-making process, as well as the degree of using these data; for whom?, respectively, the users of accounting data and the satisfaction degree of their informational needs; who?, respectively, the processors of accounting information, the responsibilities and the professional staff appropriate to fulfill the accounting function of the organization; how?, respectively, the actual methodology and technique for fulfilling effectively the accounting function of the entity, namely: methodological and organizational principles, accounting procedures (documentation, evaluation, accounts system, accounts balance, computation, inventory, balance sheets and all the other synthesis documents and financial reports, economic and financial analysis etc.), accounting norms and standards etc.; with what?, respectively, the material resources required by the accounting activity, including characteristic equipment and disposables, proper space etc.; how well was the entity’s accounting performed?, respectively, the way in which information was certified through financial audit etc. like any other science, accounting, too, achieves a dialectical unity by integrating two essential components: theory and scientific method. theory consists in the accumulated knowledge fund transformed into a rationalized form of concepts and laws, and the method is the way of operating with these in order to keep on expanding knowledge. as a scientific discipline, accounting represents a “system of principles which underlie the way of knowing and managing the economic values in a system, that is: (1) a system of principles and knowledge which explains the connections and relations among the components of the patrimony and, on this base, provides information about how the patrimony should be managed efficiently and, (2) at the same time, methodologically speaking, it elaborates work techniques for performing accounting as an activity, a system of collecting, processing, storing, sending and analysing data concerning the financial position and the performance of the patrimonial entity. in order to constitute itself as a science, it should: have a proper field of research, namely, an area of reality that no other sciences research or that is researched from other viewpoints, that is, its own object of research; use scientific methods in investigating its object; 98 studies and scientific researches ‐ economic edition, no. 14, 2009  reach general truths, a well-rounded theory by way of which it may explain the researched reality (nature, society, thought) in a more profound way, or support practice. as a form of human knowledge, accounting has had, for a long time, the nature of an empirical knowledge, in that it directly, explicitly and exclusively counted on experience and not on theoretical generalization. with the structuring and establishment of acquired knowledge into notions, categories, judgements, arguments, hypotheses and theories characteristic of rational knowledge, the transition from empirical knowledge to theoretical (systematic) knowledge takes place. therefore, theoretically approached, accounting is nowadays regarded as a scientific discipline in the field of social sciences, claimed by two families of sciences: economics and management sciences16. insofar as one accepts the idea that, by vocation and besides the fact that it is a social practice, accounting is also a science in that it defines its object, its method, it states its own scientific theory. references 1. dumitraşcu, d. (1974), trepte spre ştiinţă, editura dacia, cluj 2. zaiţ, d., spalanzani, a. (2006), cercetarea în economie şi management; repere epistemologice şi metodologice, editura economică, bucureşti 3. feleagă, n., malciu, l, bunea, şt. (2002), bazele contabilităţii. o abordare europeană şi internaţională, editura economică, bucureşti 4. ionaşcu, i. (2003), dinamica doctrinelor contabilităţii contemporane. studii privind paradigmele şi practicile contabilităţii, editura economică, bucureşti 5. ionaşcu, i. (1997), epistemologia contabilităţii, editura economică, bucureşti 6. călin, o., ristea. m. (2002), bazele contabilităţii, editura genicod 7. * * * (1978) dicţionar de filozofie, editura politică, bucureşti 16 ionaşcu, i. (2003), dinamica doctrinelor contabilităţii contemporane. studii privind paradigmele şi practicile contabilităţii, editura economică, bucureşti, p. 35. 99 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro risk and foreign direct investment in romania cătălin drob „vasile alecsandri” university of bacau catad@ub.ro abstract this paper tries to present the main categories (types) of risks that affect the inflows of foreign direct investment (fdi) in romania, such as: country risk, political risk, economic risks, sovereign risks and so on. fdi is an important factor contributing to the economic development and to the economic growth of a country. in order to recuperate its economic handicap as compared to the other countries in the eu, romania needs a massive inflow of foreign capital, especially in the form of direct investment. the paper also presents the evolution of fdi inflows in romania and how they were influenced by the main factors affecting the fdi. in principle, between risk and the level of fdi inflows there is a direct dependency relationship: the higher the risk is in a country, the lower the level of fdi inflows is in that country. this is demonstrated by the empirical studies regarding fdi. these studies show that countries with high risk have major difficulties in attracting foreign investment. therefore, it is important to identify very precisely the main risks that may affect the level of fdi inflows in romania, in order to propose and implement strategies to mitigate these risks and to attract more foreign direct investment in romania. keywords economic development; risks; crisis; foreign direct investment; economic growth; romania jel classification o11; p45 introduction according to the imf’s balance of payments and international investment position manual 6th edition (2009), along with oecd’s benchmark definition of foreign direct investment 4rd edition (2008), fdi is defined as: “direct investment is a category of cross-border investment associated with a resident in one economy (the direct investor) based on control and influence”. as stated by imf in the balance of payments and international investment position manual 6th edition (2009), a direct investment enterprise is considered “an entity subject to control or a significant degree of influence by a direct investor”. fdi is considered an important factor contributing to the economic development and to the economic growth of a country. therefore, in order to recuperate its economic handicap as compared to other developed countries from eu, romania needs of important inflow of foreign capital, especially in the form of direct investment, so as drob and mironescu has shown (2007). in order to explain the dynamic of the international investments’ development have been developed several theories. maybe, the most known theory concerning fdi is the “oli” (ownership, location and internalization) theory (paradigm/model) proposed by john h. dunning. as stated by dunning (1997), fdi are determined by three main factors (advantages):  the advantage of ownership right, especially concerning intangible assets; 139 drob  the advantage of internalization (if is cheaper to manufacture the product abroad instead of selling the production license to a company abroad;  the advantage of the location (if the manufacturing of the products abroad is more profitable than exporting those products). also, dunning (1997) has identified four main categories of motivation for investment abroad: resource-seeking, market-seeking, efficiency-seeking and capability-seeking. the theories concerning fdi considered that the most important factors which determined the level of fdi are: the labor costs in the host country relative to the origin country; the management skills and the level of qualification of the workforce in the host country. the size of demand/market of the host country; the level of economic and infrastructure development of the host country; the level of taxes/incentives in the host country; the geographical distance between host country and origin country etc. risks of fdi the notion of risk is defined in theory, in different mode, but almost all the definitions about risk underline the fact that the risk is linked by uncertainty and by probability (the probability of occurrence of an event). for example, iso 31000:2009 defines risk as “effect of uncertainty on objectives” as stated by international organization for standardization (2009). no matter how well managers are informed, they can’t eliminate the uncertainty and implicitly the presence of the risk. therefore, it is necessary to take into account all type of risks in the moment in which managers take investment decisions. relationship between fdi and risk is very complex. in the case of fdi, must be taken into consideration the specific risks from the country in which will be realized these investments. these risks generate so-called country risk. the country risk refers to the overall risk faced a foreign investor. this is a composite concept that includes several categories of risks as stated by meldrum (2000): political risk; expropriation risk; economic risk; transfer risk; sovereign risk; exchange rate risk; location or neighborhood risk. political risk can be defined as an adverse consequence to certain political events. factors that determine the size of this risk are: democracy; political (in)stability; control degree of the market by the state; size of the public sector; existence and manifestation of nationalist groups and / or terrorist; corruption; relations with neighboring countries; (in)stability in neighboring countries etc. some authors consider that political risk includes, among others, the risk of expropriation or nationalization. political risk can be divided into two categories: macro political risk and micro political risk. if the macro political risk affects all fdi (at the country host level), the 140 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro micro political risk affects only several fdi with specific characteristics like nationality, activity domain, geographical area etc. political risk is one of the major risks that affect the inflow of fdi but not all factors that determine the size of this risk affect the inflow of fdi in the same way. the most important factors concerning political risk that attracts fdi are: political stability, democracy, low-level corruption, lack of internal ethnic and political tensions etc. economic risk can be defined as the risk of occurrence of a major change in economy or concerning economic growth rate, which would have major consequences, especially in terms of the expected return of foreign investment. factors that determine the size of this risk are: the inflation rate, the gdp size, the size of wage costs, the volume and structure of domestic production, the volume and structure of imports and exports, etc. for example, a high inflation rate in the host country affects the future return of foreign investment because this return will be smaller due to high inflation. transfer risk is the risk that can be generated by a government decision to restrict capital movements (repatriation of profits, dividends or capital). if in country host, the transfer risk is high, the foreign investor is not very interested to invest in this country. sovereign risk is the risk that may occur when the host government to foreign direct investment does not meet its financial obligations related to a government loan or related to a loan / credit guaranteed by government. exchange rate risk is defined as a consequence of exchange rate variability on the company's value and on its business operations. high exchange rate variability affects the fdi because it’s very difficult to realize a realistic financial plan for these fdi. some authors take into account other categories of risk: financial risk and commercial risk. financial risk show the risk that a country will not be able to repay its foreign liabilities and commercial risk is viewed as “the aggregated effects of operational, business and financial risks”, so as gentile and valahu has shown (2003). country risk assessment at the international level, the country risk assessment is made by some commercial suppliers of country risk information such as: bank of america world information services; business environment risk intelligence (beri) s.a. control risks group (crg); economist intelligence union (eiu); euromoney magazine; international country risk guide (icrg); political risk services etc. political risk services is a model for assessing political and country risk and international country risk guide is a method used to assess political, financial and economic risk. the other way whereby foreign investors can assess the country risk is through sovereign ratings. the most known ratings agencies which provided is sovereign ratings are standard & poor's, moody's investor services and fitch ratings. the standard & poor's agency use a combination of upper letters (a, b, c and d ) and signs “+” and “-” to designate the country rating (is used a scale from aaa to d). the highest rating (aaa) represent the lowest probability of default (d). the moody's investor services agency use for scoring combinations of letters (a, b, c, a, b and c) and numbers (1,2 and 3). for example, for moody's investor services agency, aaa – means the lowest risk and c – means the highest risk. 141 drob when a company intends to invest abroad, it may take into account an indicator (index) proposed by the heritage foundation: index of economic freedom. this index measures economic freedom of countries based on trade, business and investment freedom. depending on the value of this index, the economies of countries can be considered free (score between 100 – 80), mostly free (score between 79,9 – 70), moderately free (score between 69,9 – 60), mostly unfree (score between 59,9 – 50) or repressed (score between 49,9 – 0). risk and fdi in romania for foreign investors, romania is a destination heeded that offers a number of advantages such as: big domestic market in this region of the world; skilled labor and relatively cheap; member country of n.a.t.o. and u.e.; legislation compatible with the acquis communautaire; lack of ethnic tensions. even if, theoretically, there are many arguments in favor of the decision to invest in romania, in a report elaborated by the world bank in 2013 (doing business reports), romania is only 72nd in the world in terms of the ease with which it can doing business in our country. after 1989, the evolution of fdi in romania was at first quite shy. thus, between 1990 and 2000, the cumulated amount of fdi in romania reached the level of $7,3 billion, level that was far away from the real potential of the economy and from the level registered of neighboring countries at that time: poland ($39 billion), hungary ($21,5 billion) czech republic ($12,5 billion), as drob and mironescu has shown (2007). this low level of fdi registered between 1990 and 2000 can be explained through the distrust of foreign investors, which was caused by the uncertainty of investment and business environment, by unstable legal, institutional and politic frame, by corruption, by bureaucracy etc. since 2004, there has been a spectacular increase in the level of fdi in romania. this increase can be explained by the increased confidence of foreign investors in the romanian business environment, an important role being romania's integration into nato and eu structures. another explanation for the increased volume of fdi inflows is to create the legal framework to promote direct investment with significant impact on the economy. in 2008 has recorded the absolute level in terms of foreign direct investments in romania (9.5 billion euro). getting this record was based on improving the business environment, the introduction of the flat tax, increasing the confidence of foreign investors in romania. in the coming years, with the onset of the global financial crisis, in romania, the volume of fdi inflows declined drastically. although the local economy recovered in 2011, foreign investors rushed to come to romania. this caution is due, first, uncertainty about the global economy and regional. evolution of fdi in romania is shown in the following figure: 142 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro figure 1 the evolution of fdi between 2000 and 2012 in romania (eur billion) many experts believe that the global financial and economic crisis is far from over. in these circumstances, foreign investors are quite cautious and less willing to invest in this region of the world in general and romania in particular. regarding romania's country risk assessment by rating agencies, lately observed an improvement in the rating of our country by international rating agencies. with romania's euro-atlantic integration, international agencies revised their assessments of our country. currently, the major international rating agencies include romania in the category of countries recommended as a potential destination for foreign investment. for example, in 2014, standard & poor's (which was the agency most demanding in terms of sovereign risk assessment of romania) has improved romania's rating from “bb +” to “bbb –” (from "junk" category to “investment grade” category). this rating increase is a signal that the investment risk in romania is becoming smaller. in the 2014 ranking based on the indicator proposed by the heritage foundation (index of economic freedom), romania is among the countries with economies “moderately free” (ranked 62 with 65.5 points) with poland (ranked 50 t with 67 points), hungary (ranked 51 with 67 points) and bulgaria (ranked 61 with 65.7 points). the current position is for romania one satisfactory if we consider that in 2005 our country was framed by the heritage foundation in the category of countries with “not free” economy. also in 2014, the company coface considered to be the leading company in the field of credit insurance has published its ranking of countries according to country risk. in this ranking, romania is included in the category of countries with unstable economic environment. according coface, in present, in romania, the political instability, the low absorption rate of european funds and the corruption are considered among the main factors that affect investment environment. from the above it follows that in assessing country risk and can be used several methodologies. every company or agency specializing in country risk assessment uses its own methodology. however, regardless of the company that made the country risk assessment and regardless of methodology used, can be observed, in general, in recent years, growth for romania's rating. this growth for romania's rating can explain, to a point, increasing of the volume of fdi in our country until 2008. though romania's country risk remained at a satisfactory level after 2009, fdi volume decrease can be attributed mainly due national and international economic environment still confused by strong economic and financial crisis. 143 drob conclusions relationship between fdi and risk is very complex due to many factors that determine country risk. in principle, the higher country risk is, the lower is the appetite for foreigners to invest in that country. country risk can be decomposed into several categories such as: political risk, economic risk, and transfer risk, sovereign risk etc. in recent years, romania has improved much in the eyes of foreign investors. romania's country risk fell considerably and thus the risk of investing in romania has become smaller. this has seen growth year on year, until 2008, fdi inflows in romania. after 2008, with the onset of the global financial crisis, the fdi inflows dropped significantly, almost every year, compared to the record level achieved in 2008. this significant decrease can be attributed to some risk factors, particularly political factors (political instability, corruption) and economic factors (uncertainty about the evolution of regional and national economy, etc.) that affect quite strongly the economic and investment environment in romania. after all, foreign investor is the one who decides where, when and how to invest. this decision may be based on the risk of the country in which wants to invest, but it matters a lot the inclination toward risk of the investor. assuming a high risk may be the cause of a big failure but also may be the cause of a resounding success. references drob, c. (2007), theoretic aspects concerning foreign direct investment, mocm, no.13, volume ii, p. 207-210, bacau, alma mater publishing house. drob, c. (2011), general and specific aspects regarding the relationship between uncertainty, irreversibility and investment, journal of engineering studies and research, no.4, volume 17, p. 41-44, bacau, alma mater publishing house. drob, c., mironescu, r. (2007), the evolution of the foreign direct investment in romania, mocm, no.13, volume ii, p. 211-214, bacau, alma mater publishing house. dunning, j. h. (1977), trade, location of economic activity and the mne: a search for an eclectic approach, in bertil ohlin, per-ove hesselborn, and per magnus wijkman, eds., the international allocation of economic activity, p. 395-418, london. gentile a., valahu, p. (2003), political risk insurance helps investors push projects ahead, the us-china business council. international monetary fund (2009), balance of payments and international investment position manual, 6th edition, washington, dc, usa. international organization for standardization (2009), iso 31000:2009: risk management principles and guidelines, geneva, switzerland. meldrum, d.h. (2000), country risk and foreign direct investment, business economics, vol. 35, p. 33-40. organisation for economic co-operation and development (2008), oecd benchmark definition of foreign direct investment, oecd publishing, paris, france. 144 http://www.google.ro/search?hl=ro&tbo=p&tbm=bks&q=inauthor:%22international+monetary+fund%22 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro subsequent events and their importance in drawing up annual financial statements daniel botez “vasile alecsandri” university of bacău daniel6331@yahoo.com abstract subsequent events, called so because they are recorded after the closing date of financial year, must be recorded and taken into account in drawing up the financial statements. some of them can fundamentally changing financial position of the entity or provide information to users absolutely necessary for their decisions. accounting treatment in this situation is provided for by international standard of accounting isa 10 “events after the reporting period”, whose provisions are taken to a large extent in national accounting standards. for financial auditor, investigating how the subsequent events are presented in the financial statements shall constitute a procedural obligation. auditor`s procedure is based on the provisions of an specific international standard on auditing, isa 560 “subsequent events”. he shall be required to satisfy itself that in the financial statements shall be presented all treatment and appropriate information concerning subsequent events. keywords subsequent events; financial statements; financial audit jel classification m40; m42 subsequent events through the prism of accountants from an accounting point of view, the treatment of subsequent events is provided for by international accounting standard ias 10 “events after the reporting period”. the objective of standard is to prescribe when an entity should adjust its financial statements for subsequent balance sheet date events and presentation of information which should be an entity with regard to the date on which it has been authorized publication of financial statements with respect to the events after the balance sheet date. direct consequence is that an entity should not be to draw up financial statements on the basis of assumptions concerning business continuity if subsequent events indicates that this assumption in not suitable. subsequent events are those events, both favorable and unfavorable, which occur between balance sheet date and the date on which it has authorized its publication financial statements. may be identifies two types of events: 1. those which are proof of the conditions that existed to the balance sheet date (subsequent events which lead to adjust financial statements); and 2. those which provide information on conditions that may arise after the date of balance sheet (subsequent events that does not lead to an adjustment of financial statements). subsequent events shall include all events up to the date on which it is necessary to authorize publication of financial statements, even if those events taking place after public declaration of profit or other financial information selected. 60 botez an entity is to adjust the amounts recognized in its financial statements to reflect subsequent events when they bring new information relating to situation existing at the time of closing financial year. for example, settlement of a dispute on court judgment. also, bankruptcy a customer for whom the entity had an adjustment for depreciation led directly to its registration. an entity shall not be required to adjust the amounts recognized in its financial statements to reflect subsequent events that do not lead to adjustment financial statements. in this situation subsequent events must be presented in note. for example, events which call into question a problem concerning business continuity. subsequent events through the prism of financial auditor from the point of view of financial auditor, such intervention on subsequent events is provided for by international standard on auditing isa 560 “subsequent events”. auditor`s objective are: a) obtaining sufficient appropriate audit evidence on the extent to which events occurring between the date of financial statements and auditor`s report date which provide for an adjustment or the presentation in the financial statements are reflected, as appropriate, in those financial statements, in accordance with the general financial reporting applicable framework; and b) the provisions of answers appropriate to the deeds of which the auditor becomes aware after the auditor`s report date, which, if it had been known to the auditor at that time, could have been determined the auditor to modify auditor1s report. the auditor also should perform audit procedures designed to obtain sufficient appropriate audit evidence, according to which events occurring between the date of financial statements and auditor1s report date which provide for an adjustment or the presentation in the financial statements have been identified. in accordance with the assessment of the risk by auditor, audit procedures may include procedures necessary to obtain sufficient appropriate audit evidence, which involves a review or test accounting records or transactions which take place between the date of financial statements and auditor`s report date. the auditor shall carry out the procedures designed to obtain sufficient evidence as appropriate so that they cover the period between the date of financial statements and auditor`s report date, as far as possible, as close as possible to the data. the auditor also has to take into account the risk assessment by auditor in determination of the nature and extent of such audit procedures, which should include the following: a) obtain an understanding of any proceeding on which the management has established to ensure that the subsequent events are identified; b) inquiry management, and where appropriate, persons charged with governance, with regard to the production any further event that could affect financial statements; c) the reading minutes, if any, of entity owners meetings, management and persons charged with governance which took place after the date of financial statements query with regard to the matters discussed at such meetings for which there are not yet available minutes. d) the reading of most recent interim financial statements for entity, if there is one. if, as result of procedures carried out the auditor identifies events that provide for an adjustment or presentation in the financial statements, the auditor must be able to determine so far as such an event is reflected, as appropriate, in those financial statements, in accordance with the general financial reporting applicable framework. 61 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro case study the company abc closed financial year to 31 december 2013. general meeting of shareholders has been convened for 28 february 2014. the threshold of materiality for financial statements as a whole was fixed by auditor at 100.000 ron. for the first time on 20 february it is found that: 1. on 14 january 2014, has been identified a significant fraud. debts in the amount of 125.000 ron, recorded in the accounts of fictitious suppliers have been paid in bank accounts established by an employee of the company. events have occurred within the last seven months. the employee was dismissed immediately; they have been initiated legal proceedings against him. the employee has recorded in placeholder different services on behalf of expenditure in services from a third party. fictitious bills did not include vat. 628 = 401 125.000 other expenses with third party suppliers after he operated fictitious payment in the accounts, where he raised money. 401 = 5121 125.000 suppliers bank account 2. on 20 december 2013, a customer has initiated legal proceedings against the company in relation to a breach of contract. on 29 december 2013, the lawyers of entity has announced that is unlikely that it will be found responsible; therefore they have not been adjusted financial statements, but the situation was presented in notes. on 29 january 2014, the court found the company responsible for breaking a contractual clause and established payment of damages amounting to 130.000 ron. products supplied, worth 200.000 ron, have been returned. sale of the products has been registered under normal conditions 4111 = % 238.000 customers 701 200.000 revenue from sale 4427 38.000 output vat 3. on 19 february 2014, a customer has ceased its activity by financial difficulties. he has a debt to the company of 2.500 ron. the board of directors considered that the amount is not relevant and established that is not necessary to adjust. debt instruments has been registered as normal commercial operation 4111 = % 2.500 customers 701 2.101 revenue from sale 4427 399 output vat procedures carried out by the management as results of these findings, the management company has taken following steps: 1. fraud was committed by the employee during the course of the financial year. fraud, errors and irregularities that appear before the date of end-of-year but that are discovered only beyond the year closed suppose adjusting elements and, therefore, 62 botez financial statements would need to be modified according to the fraudulent activity to the end of the year. to highlight this fact the entity registered a claim on former employee with the value of 125.000 ron. 461 = 754 125.000 sundry debtors debtors income by correcting such result for the year. 2. at the end of the year, the company of such entry in notes about the debt was lacking. however, after the end of the financial year, the court found the company liable for breach of contract. judicial procedure was initiated on 20 december 2013 (with 10 days before the end of financial year). they were, therefore, evidence about the conditions existing at the end of the year. ias 10 requires that these conditions are to be taken into account in order to determine whether or not you have recognized a debt. in this case, financial statements require an adjustment for that has been fulfilled criteria for the recognition of a provision for litigation. as a result, the entity has amended financial statements by recording a provision for litigation in value of 130.000 ron and corrected information properly in the explanatory notes. 6812 = 1511 130.000 expenses provisions for litigations 3. cessation of a client to a recent date from the date of closure of the exercise indicates a high probability of unpaid and represents, therefore, a further event. as a result, had to be recorded an adjustment for doubtful debts of 2.500 ron, but the entity considered amount irrelevant and did not change their accounts. procedures carried out by the financial auditor fraud, risk factors of fraud are referred to into international standard on auditing isa 240 “auditor`s responsibility for fraud in an audit of financial statements”. that fraud has taken place within entity increases the risk of material misstatement due to fraud. as a result, the auditor must apply supplementary procedures. audit procedures which must be carried out in order to ensure that fraud has been correctly identified and accounted in the financial statements include: • recalculation of sums involved; in doing the recalculation values laid down by the entity, the auditor also carried out investigations and found out that the amount of 50.000 ron representing fictitious payment has not been included in the accounts drawn up by that entity. • discussions with the management of the way in which such a fraud took place and why it took seven months to discover fraud (controls should be able to prevent, detect and correct material distortions in a short period of time); by reviewing and applying supplementary procedures for the assessment of internal control, the auditor finds that there is a procedure to provide that payments must be approved by at least two persons and that any new supplier must be assessed by an assessment record. the establishment in circumstances in which the accounting officer has discovered fraud and what working procedures and control (if equipped) contain weaknesses that have allowed employee to commit fraud by this procedure the auditor also found what are the weaknesses of the system of internal control which permitted that the fraud is discovered so late. • perform procedures by the fund on operations in the vicinity of closing the long entries (in particular those close together, or at the end of the year); 63 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro • confirm directly with the suppliers of the balances and transactions for the period covered by audit as a result of carrying out these procedures have not been found errors; • review invoices for the purchase and increase professional skepticism and investigation with respect to their authenticity; • review files relating to human resources to find evidence of disciplinary proceedings taken against employee. this will also confirm compliance with laws and regulations, in particular in relation to the present legislation employment and retention of funds; • testing of controls to identify any other weaknesses which may indicate management employees or fraud; • obtaining written statements from management on fraud issues; • discussions with the lawyer’s entity with regard to the possibility of recover funds diverted. measures, as determined by auditor on fraud issues • additional adjustment of the financial statements by the recording of additional claims on an employee for fraud of 50.000 ron 461 = 754 50.000 sundry debtors debtors income • inclusion in your letter to those charged with governance weaknesses have been observed with regard to internal control. procedures carried out by auditor on judicial proceedings • obtaining a copy of the judgment and other correspondence confirming that the entity has been found guilty and must pay for damage customer or verification of confirmation of payment to the customer; • to ensure that a provision has already been admitted to the original decision of the company; • to ensure that the value of provision is reasonable in relation to its judgment; • obtaining a written statement from management by confirming treatment of provision. completing letter concerning statements made in writing by management in accordance with international standard on auditing isa 580 “written representation” with his opinion on his guilt and the confirmation of lodging entity provision. procedures carried out by auditor on uncertain • discuss customer management reason for which an adjustment has not been registered; • finds that the amount in question in immaterial for financial statements and, under the circumstances in which this amount remains immaterial and at the stage of completion, to express an unqualified opinion; • adjusting financial statements by the formation of a provision for doubtful debts customer for 2.500 ron. 6814 = 491 2.500 expenses adjustments for debtors 64 botez references accounting reglementations in accordance with the european directives, approved by omfp 3055/2009, with completions and modifications. ceccar (2010), guide for application omfp 3055/2009, bucharest. international accounting standard ias 10 “events after the reporting period”. international standard on auditing isa 560 “subsequent events”. 65 the role of small business in economic development of european economy studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the role of small business in economic development of european economy ştefania anca stan „vasile alecsandri” university of bacau anca_stan68@yahoo.com abstract small businesses provide catalytic benefits to the economy. they contribute to national output, and to the society as a whole, beyond the spending and profit they generate. the role of smes is crucial for the european economic recovery – their number, employment capacity and value added constitute a large share of the european economy. providing the right conditions in which smes can flourish is paramount for ensuring a sustained recovery and achieving prosperity for all eu citizens. there is no single agreed definition of an sme. early definitions of ‘small’ businesses were largely qualitative. smes are generally considered to be non subsidiary, independent firms which employ fewer than a given number of employees. for many small businesses, going global is no longer just an interesting to do – it is essential to the long – term health and performance of the company. across the eu policies are being developed at regional, national and transnational government level that see smes as the only positive way of creating employment and generating increased local growth for the community. keywords small and medium enterprises; innovation; entrepreneurship; economic development; globalization jel classification m10 introduction small businesses provide catalytic benefits to the economy. they contribute to national output, and to the society as a whole, beyond the spending and profit they generate. small business demonstrated its durability during the 1970s and 1980s in particular. at the time, foreign competition led to a decline of basic, large-scale manufacturing companies in such industries as steel, automobiles, and textiles. in the new global economy, services became relatively more important while manufacturing became less important, and that meant a growing role for small companies, which traditionally have dominated many service sectors. but some economists saw additional reasons why small business would become a more important part of the economic landscape. in the highly competitive and rapidly changing global economy, they argued, companies that could innovate, customize products, and adapt quickly to changing circumstances would have an edge. small business, with less hierarchical management systems and less unionized workforces, seemed to have just these strengths. what is more, small businesses got an extra boost because declining transportation costs and the emergence of the internet made it easier than ever for them to compete on the global stage. 165 mailto:anca_stan68@yahoo.com stan defining the sme there is no single agreed definition of an sme. early definitions of ‘small’ businesses were largely qualitative. smes are generally considered to be non subsidiary, independent firms which employ less than a given number of employees. this number varies across countries. the most frequent upper limit designating an sme is 250 employees, as in the european union. however, some countries set the limit at 200, while the united states considered smes to include firms with fewer than 500 employees. small firms are mostly considered to be firms with fewer than 50 employees while micro-enterprises have at most ten, or in some cases, five employees. financial assets are also used to define smes. in the european union, a new definition came into force on 1 january 2005 applying to all community acts and funding programmers as well as in the field of state aid where smes can be granted higher intensity of national and regional aid than large companies. the new definition provides for an increase in the financial ceilings: the turnover of medium – sized enterprises (50-249 employees) should not exceed eur 50 million: that of small enterprises (10-49 employees) should not exceed eur 10 million while that of micro firms ( less than 10 employees) should not exceed eur 2 million. alternatively, balance sheets for medium, small and micro enterprises should not exceed eur 43 million, eur 10 million and eur 2 million, respectively. table 1 eu definition of smes company category employees turnover balance sheet total micro <10 < 2 million euro < 2 million euro small <50 <10 million euro <10 million euro medium sized <250 <50 million euro <43 million euro in addition to satisfying the criteria for the number of staff and one of the two financial thresholds, an sme must be independent: to this end, the new definition distinguishes between autonomous enterprises, partner enterprises and linked enterprises. finally, the new definition, introducing precise financial thresholds for microenterprises, thus recognizes the essential role of the latter in the economy. small businesses are frequently dominated and controlled by one person. the entrepreneur or owner-manager has an overwhelming influence on all aspects of the firm’s direction, development and performance. this can be both strength and a weakness. business decisions are often personal decisions and the logic of the balance sheet and rational economic criteria may not always apply. most firms begin small and remain small throughout their life cycle. a very small percentage grows to moderate size. a smaller minority grows to be large and even fewer become giant firms. these are the so-called gazelles whose contributions to employment and growth constitute modern legends. changes in technology, markets, and values will encourage the evolution of new types of firms. the sme business environment in europe the 20 million european smes play an important role in the european economy. these are mostly micro-enterprises and in 2012 employed approximately 86.8 million people. this represents 66.5% of all european jobs for that year. micro-enterprises provide just under a third of that total employment figure. the sme sector as a whole 166 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro delivered 57.6% of the gross value added generated by the private, non-financial economy in europe during 2012. table 2 enterprises, employment and gross value added of smes in the eu -27, 2012 criteria micro small medi um smes large total number of enterprises number 18.783.480 1.349.730 222.6 28 20.355.839 43.454 20.399.2 91 % 92,1% 6,6% 1,1% 99,8% 0,2% 100% employmen t number 37.494.458 26.704.352 22.61 2.906 86.814.717 43.787.013 130.601. 730 % 28,7% 20,5% 17,3% 66,5% 33,5% 100% value added at factor costs million euros 1.242.724 1.076.388 1.076 0.270 3.395.383 2.495.926 5.891.30 9 % 21,1% 18,3% 18,3% 57,6% 42,4% 100% in terms of demography, european smes followed a different path from that of large companies. in 2009, the number of large firms dropped by almost 1.800 units to circa 42.400. figure 1 shows the evolution of number of smes compared to the number of large firms. figure 1 number of enterprises, eu-27, 2008-2012 source: dimitri gagliardi et al. (2013), a recovery on the horizon? final report, annual report on european smes 2012/2013, available at http://ec.europa.eu/enterprise/policies/sme/factsfigures-analysis/performance-review/files/supporting-documents/2013/annual-report-smes-2013_en.pdf the number of smes began to grow again only in 2010 and in 2012 had not recovered to its 2009 level. the number of smes grew between 2009 and 2010 by almost 1 million firms, reaching 21 million, after a relatively small drop in 2009. from 2010 onwards, the total number of smes continued to fall, although at a slower rate. in 2012, the number of smes returned to the levels of 2008, but there were still 389.000 fewer smes than 2009. the small firm can easily adjust to even the most dynamic changes in the market. as they change they even improve their profit pictures. smes accounted for 66.5% of all european jobs in 2012. in the sector such as real estate, accommodation and food services, professional, technical and research 167 stan activities and construction, the sme share of total employment is over 80%, whilst in other sectors such as electricity, gas, mining and quarrying and administrative and support services, the sme share is well below 50% of total employment. the period 2009-2012 proved extremely challenging for employment in smes. between 2008 and 2010, sme shod lost 1.5 million jobs. the majority of the job-loss was experienced by the micro-enterprises and small business (figure 2). figure 2 employment in smes, eu -27, 2008-2012 source: dimitri gagliardi et al. (2013), a recovery on the horizon? final report, annual report on european smes 2012/2013, available at http://ec.europa.eu/enterprise/policies/sme/factsfigures-analysis/performance-review/files/supporting-documents/2013/annual-report-smes-2013_en.pdf in 2012, smes lost 610.000 jobs, and the trend for each sme size band can be characterized as follows: micro-enterprises performed well between 2008 and 2010, but they showed a negative trend in 2011 and 2012; the trend for small enterprises was negative throughout the period; the major source of job losses in 2009 was in medium sized enterprises. the overall contribution of smes to total eu-27 value added was more than 57% in 2012. this contribution differs markedly across sectors and by enterprise size. figure 3 shows the contribution to gross valued added by size. figure 3 gross value added in smes, eu-27, 2008-2012 source: dimitri gagliardi et al. (2013), a recovery on the horizon? final report, annual report on european smes 2012/2013, available at http://ec.europa.eu/enterprise/policies/sme/factsfigures-analysis/performance-review/files/supporting-documents/2013/annual-report-smes-2013_en.pdf as we can see, micro-enterprises experienced the largest loss in 2009, in 2010 some of this loss was recouped, but in 2012 loss circa 14 billion in value added. small and medium sized enterprises experienced the same dynamics. 168 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro small business in the 21st century in modern economies economic activity by small firms is increasingly important for achieving economic growth. in the new context of the revolution of knowledge, of the passage from the economy dominated by the physical, tangible resources to the economy dominated by knowledge, the small and medium company becomes the main microeconomic pawn. the globalization of the small enterprise will most likely be the most important development in international business as we begin the new millennium. globalization – the growing impetus to think and act on a worldwide scale – will continue to modify and mold the environment for small business over the next decade and beyond. the globalization of the company means that more and more new firms must export from their inception in order to be competitive. but they will profit from globalization only if it gives them access to new markets. to be competitive, smes may have to identify niche markets. small firms, including many start-ups, are identifying foreign markets and foreign sources of supply though the internet as important parts of their strategies for growth and success. because of the internet, small businesses are also facing more foreign competition in the products and services they both provide and purchase. the competition from abroad puts strong pressure on small business in terms of efficiency, price, quality, cost control, marketing, expertise, customer satisfaction, and innovativeness. small firms will prosper on the internet or come to view it as another fixed cost necessary to maintain their present client base in an open question. this aspect of the small business environment will continue to evolve as small firms develop more creative and profitable uses for the internet. the next decade will see an increase in the connectivity between and among organizations and markets. already, firms are electronically connected with their customers and vendors. connectivity is fostering the development of new organizational relationships among entities. alliances of small firms, self-employed individuals, and larger organizations connected by advanced computer and communications technologies are allowing geographically diverse organizations to interact and work creatively to produce goods and services all over the world. increased flexibility and connectivity will both allow and require small business to be more responsive to their customers’ particular needs. the development and design of new customized products will both give small firms an advantage and put pressure on them to produce customized products with greater speed than ever before. small firms must diversify to a greater extent to maximize their ability to respond rapidly to new demands for products and services. changes in technology, markets, and values will encourage the evolution of new types of firms. advances in computers, software, communications, and related technologies are already affecting the form and operational structure of both existing and emerging enterprises. clusters of competencies and strategic alliances – with selfemployed individuals, small firms, and representatives of larger organizations often connected primarily by computer and communications networks and often working at great distances from each other – are expected to increase rapidly in number and importance over the next decade. these clusters can be created quickly, can work intensely on projects or a series or projects, and can just as quickly be disbanded. the self-employed individuals and small organizations included in these strategic alliances or clusters of competencies can, for a time, perform almost like traditional businesses. for small businesses and entrepreneurs to be successful over the next decade and beyond, an educated and trained work force must be available. most small firms now identify labor shortages and the ability to obtain skilled labor at reasonable rates as their number one problem. entrepreneurship education for students must focused on developing student’s skills to start their own ventures, or a more enterprising attitude 169 stan to different situations: developing more creative, innovative approaches to learning, school work and the school community; developing in students the self – esteem, confidence and positive attitudes necessary for consideration of entrepreneurship or self – employment as a viable career option; developing in students the attitudes, skills and behaviors to succeed in work – force entry and career progression; developing in students the positive attitudes, skills and behaviors needed for integration into the community and participation in its development. conclusion competition is the essential ingredient in the european business environment. it encourages businesses to make efficient use of resources. people will patronize efficient businesses rather than their inefficient rivals, so the efficient firms flourish and the inefficient ones go out of business. the small business sector is regarded as a fundamental ingredient in the establishment of a modern, progressive and vibrant economy. there are a number of reasons why there is considerable interest in the creation, management, dynamics and contribution of small businesses:  small firms help to diversify a nation’s economic base and provide it with the opportunity of responding to a variety of market conditions;  the creation of a new business venture provides an opportunity to transcend social inequality and the unemployment trap;  the presence of small firms in an economy is an expression of healthy and necessary competition against the excesses of big business and monopoly power and exploitation;  small firms are better able to adapt to changing and sometimes disruptive economic circumstances. due to its flexibility, the sector is in an advantageous position to face challenges and changes. it is ideally poised to attract both technology and funds to generate rapid growth and sustained process of technology upgradation and quality improvement;  small firms are the natural avenues for self-development and individual achievement, being the natural expression of entrepreneurship. across the eu policies are being developed at regional, national and transnational government level that see smes as the only positive way of creating employment and generating increased local growth for the community. references gagliardi, dimitri et al. (2013), a recovery on the horizon? final reportannual report on european smes 2012/2013, available at http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performancereview/files/supporting-documents/2013/annual-report-smes-2013_en.pdf marzocchi, c., ramlogan, r., gagliardi, d. (2013), brief on sme financing 2012/2013, annual report of european smes, manchester institute of innovation research mbs, the university of manchester. uk available at http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performancereview/files/briefs/sme-financing-brief-2013-final_en.pdf nummela, n. (2011), internatinal growth of small and medium enteprise, routhdge, ny. u.s. small business administration (sba) (2000), the third millennium: small business and entrepreneurship in the 21th century, available at www.sba.gov/advo/. 170 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro public relations in public administration: role and management, in a socio-political marketing context dorian pocovnicu interdisciplinary doctoral school in marketing, “transilvania” university of braşov dorianpocovnicu@yahoo.com abstract many agree that pr and marketing are at their best when used together, when it comes to local public administration institutions there is the need for both an individual and symbiotic approach of the two. taking into consideration that public interest organizations act within public space, pr represents a public communication strategy. thus they present the role of generating a climate and state of social normality and, especially in democratic societies, pr plays the part of generator of communication flows between public institutions, citizens and stakeholders. in a social-political marketing context, envisaged as an aggregate of processes, with a multiple purpose, the generator which is pr must unfold coherently for each of the processes. it is our purpose in this paper to depict the pr role and management in the case of one local public administration institution (bacau prefect institution), in a socio-political marketing context. keywords public relations; communication process; participative democracy; citizens jel classification m31; m38 introduction public relations in public administration must be approached from a broader perspective, as the endeavor set into motion by an organization with the explicit purpose of establishing sympathetic relations with the audience (dagenais, 1999). from another perspective, as a strategic instrument of communication, public relations refer to all the measures of institutional communication initiated by an organization, designed to promote all its accomplishments and an improved image of the institution from the point of view of its target audiences, both internal and external (elected representatives and those belonging to government organizations, union representatives, media groups, general public) (lamizet & silem, 1997). the most important characteristics of public relations are (thomlison, 2000): deliberation the pr activity presents an intentional character, it is the result of specific research and targets informing, influencing and obtaining a response from the audience; planning – the resources of any organization are limited, both human and financial alike, and also from the point of view of equipment and time; performance – the efficiency of the pr team and its results are directly linked to the performance of the client organization. ignoring or endangering the public interests by an organization burdens the results of pr strategies; bilateral communication – pr is grounded in taking over the information from within the environment in which the organization operates, diffusing new information and following their feedback; public interest – the motivation of pr activity is to satisfy the audience needs, and not 216 pocovnicu necessarily to gain at any cost benefits for the organization; management frame – the higher the decision level regarding pr, the higher their efficiency is. presenting a multitude of objectives – and this is due to their complexity , pr represents an effective technique for fading out the negative effects which might be imposed by the rhythm of current changes upon the activity of the institution, thus playing in this context an important part in encompassing how the economic activities can better adapt to different audiences or markets. the main objectives in pr, especially in the case of public institutions are: gaining the trust of the general public regarding the institution and the services provided; knowing and anticipating the expectations of the current and potential audience; stimulating the opinion leaders; engaging the audience through various activities, programmes and events; consolidating the relations with mass media, private institutions, agencies and ngos; developing an institutional image within cultural environments; ensuring transparency for the institutions’ actions towards a specific audience; complementing the weaknesses of other communication forms used by the public administration institution. pr activity, at the level of a public institution, is oriented towards promoting public interest (thomas, 1995). this does not mean that public relations ignore the interests of the organization. what is specific to pr is that any decision is fundamented within the importance given to respecting public interest (steyn, 2006), among other elements. as one may easily notice, pr is essentially a communication activity. if pr refers to the management of communication between an organization and its target audience, based on public interest, the ones in charge with communication from within the public institution must constantly be in close proximity of the target audiences, they should be capable of differentiating their communication needs and they must design and convey messages according to the target audiences characteristics and follow the feedback accordingly. role and management of pr in public administration institutions should we consider that public interest organization act specifically within public space, pr could be considered a public communication strategy. pr, as a public communication strategy, generates a climate and state of social normality. especially in democratic societies, pr plays the part of generator of communication flows between public institutions, citizens and stakeholders, so that public institutions could become acquainted with the real concerns of the citizens and that the citizens, in return, could trust the institutions and the public officers (iacob & cismaru, 2003). pr is highly important for public institutions because it provides the opportunities for a real communication with the audiences. they begin to show interest towards local issues, as these issues influence, directly or indirectly their interests. nowadays no government, company or institution can function efficiently without the knowledge of their working environment, namely the workers, partners and clients. without proper external connections, neither does democracy. the voter must be aware of how it functions, to have the proper knowledge on the decisions made for him and in his name, to be prepared in order to take fully advantage of the rights and opportunities democracy provides. pr must engage citizens in knowing their rights and obligations during any kind of government. this is required from both central and local public administration. organizations, including public institutions, depend on their environment due to several aspects of their activity: unfolding of action plans, identifying operational funding, the freedom to accomplish their mission etc. these organizations, in order to prosper and to fulfill their objectives, must keep track of the following aspects (cutlip, 1994): accepting public responsibility as compelled by a more interdependent 217 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro society – this is the source of pr thinking in management and the source of ethical behavior; to communicate, despite all obstacles, with the designated target audience, even if it is often distant and diverse – this aspect explains pr approach as a specialized function of management; to gain integration within the communities they were designed to create and to serve – this aspect defines the purpose of management and the specific praxis of pr. anticipating and monitoring changes, constantly measuring environment indicators, having clear and distinguishable representations, the pr department can provide the institution in due time the necessary time for planning, in order for it to be more proactive than reactive to the changes in the environment. being efficiently connected to the environment changes requires from the institution a management of communicational and relational flows towards three large categories of audiences: internal audience, entities from close proximity and mass-media. internal communication is focused on the internal audience of each institution and presents as main target the task of providing information on the organization status, on its practices and policies regarding organizational development. in these recent times of fast pace in organizational change, internal communication is essential for managing the reluctance to change (better still, for the communication therapy applied to the reluctance to change) and for constructively influencing the general public behavior. shortcomings in internal communication are directly embedded within the organizational climate, and the salient indication of an internal communication deficit is reception of information by the internal audience not through internal communication channels, but through external communication channels, especially through mass-media. the mass-media relations from the proximity of the institution envisage primarily the relations with the local community (environment from which organizations gather their resources, especially human resources, which reflect the economic effects (pop, 2000), social and ecologic alike) as well as the relations with the national and international environment. media relations are mixed with the above mentioned domains, but still they are an independent domain. once the risk of adversity between institutions and media is overcome, the media relations are built upon the logic of partnership, of mutual advantageous benefits: the media has access to information useful for the public, and the institutions, through their pr structures, promote their specific messages. the media relations represent, for government organizations which constitute their budget from public sources, an explicit domain of the public act of information (media informs the public opinion), thus the highlight upon the prompt and complete offer of information regarding the public activity of the public institutions. no matter the domain, public information policy of the institutions may be reactive (i.e. simply reacting to information already in the media, either mass or public) or active (the institutions are prepared at any time for disseminating messages through internal and external channels of communication). an offensive policy in the media relations entails the following aspects: knowing the profile of the media; establishing the contact and maintaining an informational flow towards the media, using pr techniques; monitoring and evaluating the media messages. all of the above explain and justify the establishment of pr structures. all of these informational and relational flows are achieved in the context of specific traits of pr, which manifest in the public institutions environment (wilcox et.al, 1992): deliberation – informing, influencing and gaining a response from the audience; planning – any institutions’ resources are limited, thus their planning must be connected to the importance of the activities; performance – the pr team efficiency and its results determine the performance of the institution in retrospect to the client; bilateral communication – gathering information from the environment in 218 pocovnicu which the institution operates, sending out new information and follow up on the feedback; public interest – the fundamental purpose of pr is to satisfy the needs of the audience; managerial frame – the efficiency of the pr activities depend upon the quality of management. when dealing with management, a useful tool for performing is the systemic model or public relations, where by analyzing it one can identify and order its components (stancu, n.d.). we shall focuse only on three such elements, namely: pr structure, communication strategy and pr process. the pr structure encompasses groups, (un)official institutions which develop and engage in public relations and/or persuasive actions. the term itself refers to public relations institutions, presidential staff, etc. a system of public relations presents a complex structure, designed to handle demands and pressures. the second component, namely the communication strategy, is designed by the superior levels of the institutional hierarchy and covers the guidelines of the pr actions, the objectives to be met, the restrictions and the available resources. the problem of communication planning is not new, as it has been used with remarkable results in domains such as propaganda and advertising in the course of history. the pr process is the third component of the system and represents the “hot” area of pr actions. what is being communicated by means of information actions and pr are informations and meanings, coded through different forms: language, gestures, symbols, etc. role and management of pr in bacau prefect institution – a study case synthesis public relations service (department, office) is a structure within public administration institutions which supplies a public service of local interest, providing relations and informations useful to citizens regarding the current activity of the council, city hall, as well as other central institutions (presidency, parliament, government) and represents a two-way means of communication, allowing the institution to make its intentions known and the citizens to be consulted upon public issues of special interest. first of all, this represents the basis for a two-way communication, between citizens and local public administration, thus contributing to removing communication obstacles. secondly, as it is a public service, the pr office relies upon the general principles of organizing and functioning of public services (popescu, 2003): the principle of continuity – the activity must be permanent; the principle of reality – the public service must exist and must provide the results as demanded by the public authority; the principle of quantification – the result of the public service activities must be measurable, in order for a quick and correct evaluation of the modus operandi to be possible; the principle of permanent adaptability – represents the necessity for creating and developing the public service under public control, thus the personnel which supplies this service can be changed in the interest of good management; the principle of equality – it is necessary that all citizens are treated the same, discrimination is not allowed. the prefect institution of bacau county is a public institution, a legal entity with a specific budget and assets. the prefect is the government representative at a local level. the prefect guarantees that the law is abided and the public order is ensured at local level, his/her activity having as basis the following principles: legality, impartiality, objectivity, transparency, free access to public information, efficiency, responsibility, specialization, citizen oriented. taking into consideration the administrative tasks at local level, the prefect institution is conditioned by the efficiency and coherence of the communication processes which 219 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro are developed. as it is the case for other public institutions, the prefect institution encounters several categories of audiences, where the citizenry represents the main target audience. analyzing the organizational structure of the institution, we have observed that it contains specialized entities for the communication process, which are responsible for developing pr strategies. thus, the main organizational structure responsible for this aspect is the information, public relations and secretary department, which, according to our research, presents several communication attributions equivalent to the administrative attributions designated by the national legislation for the institution. what we have also noticed is the following aspect: several communication tasks and activities which entail a specialization of the communication and pr processes, according to specific communication objectives, are not as salient as they should. another structure is actually responsible for the pr activity, without it being named as such. the department we refer to is the prefect chancellery, which present attribution that denote specific organizational aspects traditionally associated to the pr responsible from within such an institution: anticipating the reactions of public opinion and feedback analysis; management guidance; establishing and implementing pr programmes and evaluating them; monitoring the press and the media relation; coordination of internal communication; event planning; identifying organizational problems and ensuring the communicational links between management and internal and external audiences. going beyond the formal aspects of communication, we have analyzed the website of the institution also. we have noticed that there is a keen interest for the interaction with the target audiences, namely the citizenry and mass-media. there are two such sections/menus on the website: citizen relation and press office, which bear the responsibility to gather information from the public and to send information towards the media. what was also noticeable was the interest of the institution for the quality of the relation with the citizens and for the institutional imagery that the citizen hold, thus using a permanent survey on the website from where specific information related to pr activities are extracted. conclusions no matter the means and techniques used, the pr activity must be handled in direct correlation with other communication alternatives, which are at the disposal of the public institution, all of which must be envisaged strategically and framed within a global and coherent vision. in the meantime, one must take into consideration the fact that pr can only be efficient as long as the entire activity of the institution is performed at a superior qualitative level. references amalancei, b-m., manole v., epuran gh. (2009), communication et relations publiques dans l’union européenne, annals of faculty of economics, university of oradea, faculty of economics, vol. 4(1), pages 542-546, may. cutlip, s. (1994), effective public relations, prentice-hall. dagenais, b. (1999), le métier de relationniste, sainte-foy, les presses de l’université laval. iacob, d., cismaru, d.m. (2003), relații publice. eficiență prin comunicare, editura comunicare, bucurești. lamizet, b., silem, a. (19970, dictionnaire encyclopédique des sciences de l’information et de la communication, paris, ellipses. 220 pocovnicu pop, d. (2000), introducere in teoria relatiilor publice, editura dacia, cluj-napoca. popescu l. g. (2003), comunicarea in administraţia publica, editura tribuna economica, bucurești. stancu valentin , strategii şi tehnici de relaţii publice, suport curs, şcoala naţională de studii politice şi administrative. steyn, b. (2006), contribution of public relations to organizational strategy formulation, in toth, e.l. (ed.), the future of excellence in public relations and communication management. challenges for the next generation. mahwah, nj: lawrence erlbaum. thomas, j.c. (1995), public participation in public decisions: new skills and strategies for public managers, san francisco, ca: jossey-bass publishers. thomlison, t.d. (2000), an interpersonal primer with implications for public relations, in j.a. ledingham & s.d. bruining (eds.), public relations as relationship management: a relational approach to public relations, mahwah, nj: lawrence erlbaum associates. wilcox, dennis l., ault, phillip h., agee, warren k. (1992), public relations – strategies and tactics, harper collins, new york. 221 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the institution of accounting normalisation in romania – history and present aristiţa rotilă “vasile alecsandri” university of bacău rotila11@yahoo.com abstract the institution of accounting normalization at a national level can essentially be as public, private and mixed. on its nature depend the way of accepting/imposing the accounting norms and also the character of these norms, character which can be more or less restrictive. the present article is a study regarding the institution of normalization of accounting in romania from the beginning (when the process of normalizing the romanian accounting began) to present, following its changes through two stages which have marked the evolution of our country in the second half of the 20th century and beginning of the 21st century: the stage of socialism, having a centralized economy, and the stage of transition to a market economy, which started right after the 1989 revolution. within post-revolutionary stage, under the ministry of finances, the institution of accounting normalization in romania, a mixed organism was created, which sums up a large series of “actors” interested in the accounting information and has the role of allowing those actors to involve into the process of normalization, which would let the romanian accounting normalization pass from an exclusively public approach to a mixed one. keywords accounting; institution; normalization; norms; ministry of public finances jel classification m41 introduction it is known that accounting information should be accessible to a large number of users. to meet their needs, the production of accounting information, the disclosure of the financial statements and its publication must be made according to certain rules and regulations through the implementation of which information that meet certain qualitative characteristics, should be obtained. therefore, it arises the need for accounting normalization. to achieve the objectives of the normalization of accounting, development and improvement of accounting, is necessary a credible institution of accounting normalization (ristea, 2009). the national institution of the normalization of accounting can essentially be public (of the state), private (of the accounting profession) or mixed. taking into account the possibility of the acceptance of accounting norms by the affected parties, dependent on the nature of the institution normalizing and the balance of forces in the conflicts of interest, ie the ratio of public and private contribution, acceptance being forced or voluntary, or both at the same time, one can speak of two major forms of normalization, the resulting combination of them and a third form, mixed, ie (rotilă, 2011): the legal normalization or the regulated approach called political or public; the professional normalization, called pragmatic approach, and the normalization of mixed type (feleagă & ionaşcu, 1998), achieved through cooperation between the public and private factors. 121 rotilă the normalization of accounting in romania, an exclusively public normalization, started in the first year of planned management of the national economy, 1949, its evolution being marked by the economic, social and political romanian society and also by the global developments. it is considered that the process of normalization of accounting in our country started with the development and implementation in 1949 of the chart of accounts for industrial enterprises, approved by the resolution of the council of ministers no. 1636 from 10th december 1948, although previously there had been some concerns on this issue, which were reflected in the university courses and in scientific communications of specialists. we are going to present the evolution of institution of accounting normalization in romania from the beginning (when the process of normalizing the romanian accounting began) to present, structured on two stages which have marked the evolution of our country in the second half of the 20th century and beginning of the 21st century: the stage of socialism (since 1949), having a centralized economy, ruled by the one and only central national plan, and the stage of transition to a market economy, which started right after the 1989 revolution. the end of the 20th century represents for the romanian system of accounting a fresh start, entering a new stage of development and perfectionism tightly connected to the trends manifested in europe and also, worldwide. bodies involved in romanian accounting normalization in the period of centralized economy (1949-1989) during the planned economy, the normalizing of accounting was exclusively the privilege of the state, represented by the ministry of finances, inside of which a specialized direction was created. the organism charged with normalizing the accounting was, thus, the direction of norming of accounting evidence (direcţia normării evidenţei contabile), founded by the decision of the council of ministers no. 1636 from december, 10th, 1948, concerning the compulsory introduction of normed accounting. prior to this organism had been, since 1947, the permanent council for the norming of the industrial and commercial accounting, set as part of the ministry of the industry and commerce. in time, the name of this direction changed as following: the direction of norming and guiding of accounting (decree no. 30/1949), the direction of rationalizing and accounting evidence (the resolution of the council of ministers no. 753/1957), the direction of the evidence and accounting reports (decree no. 840/1964), the direction of methodology and the guiding of the accounting (decree no. 784/1969), the direction of norming, methodology and the guiding of the accounting (decree no. 123/1973). it must be mentioned that the term used between 1947 and 1970 was that of “norming of the accounting evidence”, not “normalization of the accounting”. through the direction of norming of accounting evidence were assured not only the working out of methodological norms for running out the accounting but also the guiding and the control of the way those norms were applied in the socialist units. in working out those norms and passing them forward, this organism co-worked with: state committee of planning, central direction of statistics, national bank as well as the directions of accounting within the economic ministries. the roles of the direction of norming of accounting evidence which were, in fact, the issue of normalizing, were the following (the resolution of the council of ministers no. 1636/1984, art.5): ▪ working out the charts of accounts for norming the accounting; ▪ working out the instructions for proper and uniform application of the charts of accounts; 122 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro ▪ noticing the proposals of the economic ministries regarding: modification of charts of accounts, introduction of new accounts within the on-going plans, applying the instructions referring to analytical accounts made by economic ministries; ▪ working out the integrated patterns of periodical accounting situations (balance sheet, accounts of losses and profits, accounting reports etc); ▪ working out the proposals of standardizing the forms of accounting (registers, sheets etc) ▪ noticing the accounting interpretations of laws and regulations and working out the instructions for their application from the point of view of accounting; ▪ studying and proposing measures of any type that should be taken by the economic ministries for organizing and norming the accounting. later, as it was natural, taking into account the evolutions recorded in economy, the new problems raised concerning the accounting, the roles of the ministry of finances practiced through the direction of methodology and guiding of the accounting expanded, including also: ▪ working out integrated norms and rules regarding the organizing and running out the accounting; ▪ working out methodological norms for planning, the accounting of expenses and the calculation of costs within different fields of activity, together with state committee of planning, central direction of statistics and the other central organisms; ▪ working out the catalogue, the form of presentation and the circuit of common and general financial-accounting documents, specific to different fields and subfields of activity; ▪ establishing the forms of accounting and the methods of analytical accounting of material values which are used in economy; ▪ working out the patterns of documents and programmes for financialaccounting works so they can be accomplished using technical methods of calculation. ▪ centralizing and analyzing the accounting reports of the central organisms; ▪ organizing the activity and guidance of the accounting expertise bodies. at the level of economic ministries, directions of accounting were organized which, beside adapting the methodological norms elaborate by the ministry of finances to the specific of the field or the subordinate units, were also meant to provide: ▪ modification of the chart of accounts applicable to the units subordinate to those specific ministries (introduction of new accounts / subaccounts), with the approval of ministry of finances; ▪ dividing the chart of accounts into analytical accounts, corresponding to the specific of the subordinate units and, in the same time, guidance for applying the chart of accounts and other elaborate norms regarding the organization and running out of the accounting; ▪ guidance and professional control of the financial activity of the subordinate units, of the way of functioning of the accounting; ▪ verifying, analyzing, approving and centralizing the accounting registers, their balance sheets; working out the financial planning works. we can appreciate that another two organisms were also involved in the activity of normalizing the accounting, namely: the commission for organizing and rationalizing the primary accounting, founded in 1950 by the resolution of the council of ministers no. 43/1950, which had as purpose organizing, rationalizing, guiding and controlling the primary accounting in enterprises, economic organizations and state institutions; the governmental commission for rationalizing the system of 123 rotilă accounting in the socialist units, founded with the purpose of applying the programme concerning the rationalizing the accounting system in the socialist units (approved by the resolution of the council of ministers no. 1719/1971), at the level of ministries, central organisms and local councils functioning subcommissions of improving the informational system. it must also be noticed the fact that, within this period, the profession of the accountant was not involved, in any way, in the process of normalizing the accounting. as long as, after the establishing of the communist regime, the free initiative was replaced by the guided economy, the existence of an organism of the profession of accountant, a profession known as liberal, was becoming almost impossible (ceccar, 2006, pp. 75). so that, during the four decades of socialist economy, the body of licensed accountants and expert accountants in romania did not really exist, being eliminated in march 1951, by the decree no. 40, march 10th, given by the great national assembly, following the resolution of the council of ministers no. 201 from 1951, march 8th. the institution of accounting normalization in the post-revolutionary stage since 1989, romania has witnessed many changes, and the transition from centrally planned economy to a market economy, in which transactions are determined by supply and demand, not government intervention, called for deeper economic reforms. these reforms required appropriate adjustments in the organization and management of accounting of the economic operators, therefore, a reform of the accounting system in all its elements, such as objectives, fundamental accounting principles, rules and methods of basic accounting, detailed accounting procedures, was also expected. regarding the institution of accounting normalization in our country, there were no significant changes immediately after 1989. the normalization of accounting has remained the exclusive prerogative of the state, all being done through the ministry of economy and finance, the general direction of accounting established by the government decision no. 328/1991. among the main roles of this ministry, one is identified as being referred to the normalizing of accounting, namely "drawing general, legal and institutional framework on accounting". the name of this ministry changed after 1991, becoming the ministry of finance (government decision gd no. 788/1992), after that, the ministry of public finances (gd no. 18/2001), then ,the ministry of economy and finances (gd no. 386/2007) and, since 2009, its name has been the ministry of public finances (gd no. 34/2009). in its organizational framework is found only one direction with responsibilities in the development of accounting regulations for both the private and public sectors, or two such directions, one for the private sector and the other for the public sector. at present, the normalization of accounting in romania is being administered by the ministry of public finance through the direction of legislation and accounting regulations (according to gd no. 34/2009), assisted by the accounting and financial reporting council. in annex no. 2, gd no. 34/2009, the accounting and financial reporting council is within the operating activities which function by the ministry of public finance. the duties of this ministry when it comes to the normalization of accounting, are set by the accounting law no. 82/1991 (article 4), which states that "the ministry of public finances shall work out and put forward norms and regulations concerning the accounting, chart of accounts, financial statements models, common registers and forms regarding the financial and accounting activities, methodological norms for 124 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro establishing their use." it will also "work out and put forward norms concerning the single-entry accounting" with "consulting the specialized professional bodies." the accounting law no. 82/1991 (article 4, al.3) says that organisms that regulate and supervise certain specific sectors (banking, insurance, private pensions sector and the sector of capital markets), have also an important role in the normalization of accounting. the accounting norms and regulations applicable to entities within these sectors are developed by the national bank of romania (banca naţională a româniei bnr), the national securities commission (comisia naţională a valorilor mobiliare cnvm), the insurance supervisory commission (comisia de supraveghere a asigurărilor csa), the supervisory commission of private pensions system (comisia de supraveghere a sistemului de pensii private csspp), all this approved by the ministry of public finances. it should be noticed that, according to the government emergency ordinance no. 93/2012, the bnr, csa and csspp were abolished, the roles and prerogatives of these bodies being taken over by the financial supervisory authority (autoritatea de supraveghere financiară asf), the newly established body. asf exercises the powers of licensing, regulation, supervision and control over the bodies of the three sectors activity: the sector of financial instruments and investments, the sector of insurance-reinsurance, and the sector of private pensions system. considering the above, the mission of the ministry of public finance concerning the normalization of accounting, including its relation to other bodies with regulatory powers in accounting field, can be synthetically rendered as in figure 1. figure 1 bodies with regulatory powers in accounting in romania source: adapted from rotilă, a. (2011), reglementări şi practici contabile specifice, alma mater publishing, bacău, p. 30 as it is known, since 1994, romanian accounting has undergone a profound reform, which meant, from the point of view of a regulatory and practical plan, implementing a "new accounting system", a dualist system, inspired from the west european continental system. through this system was triggered the alignment of romanian accounting norms to eu accounting norms, using as a model the french experience. the application of this "new accounting system" has been prepared since 1992, 125 rotilă meaning that the ministry of economy and finance, through the direction of accounting, prepared a draft on the regulation on the application of the accounting law, which was experienced in the first trimester of 1993 in a number of 70 trading companies and autonomous regies in within various industries. the experiment was approved by government decision no. 575/22 september 1992. once the approval of experimenting the project on accounting rules and methodologies was given, by gd no. 575/22 september 1992,it was ordered the founding of the consultative college of accounting (colegiului consultativ al contabilităţii), under the ministry of economy and finances, and the assurance, by these two bodies, of specialized staff trained following a certain schedule. the consultative college of accounting, as an organism of consultation and analysis in the process of working out the norms and regulations of accounting, and due to its composition, was meant to let be actively involved, in the normalizing of accounting, all those interested in the accounting information. the composition of the council, approved by the government decision together with the approval of the regulation of organization and functioning of the consultative college of accounting, is presented in figure 2. initially approved by government decision no 575/1992, the regulation was replaced in 2002 with new regulation, approved by government decision no 1449 of december 12, 2002, and then were also reviewed the attributions, organization, operation and the financing of the college. figure 2 the composition of the consultative college of accounting although the attributions of the consultative college of accounting would have allowed it a strong involvement in the process of normalizing of accounting, in the period that followed, in reality, the role of this organism was limited; basically, the ministry of economy and finances through the direction of accounting regulations held full power in terms of accounting normalization. to develop the institutional framework of accounting and the accounting profession in 2005, it is established, through the reorganization of the consultative college of accounting (hg nr. 401/2005), the accounting and financial reporting council (consiliul contabilităţii şi raportărilor financiare – ccrf), an independent 126 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro oversight organism which ensures the convergence of national regulations and practices in the field of accounting and financial auditing to the regulations applicable in the european union. the work of this organism aims to increase the confidence of users of information in the financial reporting and corporate governance. in order to develop the national accounting standards, the regulation of organization and functioning of ccrf (approved by government decision no. 401/2005, modified and completed by gd no. 141/2006) stipulates the organization of two distinct departments within the council (article 6, par. 4): ▪ the department for the development of the national accounting standards for the private sector; ▪ the department for the development of the national accounting standards for the public sector. immediately after the founding, within the ccrf were established a number of committees and working groups. ccrf is led by a superior board composed of representatives of key institutions with regulatory powers in accounting and financial audit, involved in the implementation of the country action plan in order to improve the financial reporting in romania, as well as representatives of the business and academic media. the composition of the superior board, referred to in article 4, al. (2) of the regulation of organization and functioning of the accounting and financial reporting council approved by the government decision no. 401/2005, modified and completed by gd no. 141/2006, is presented in figure 3. figure 3 the composition of the superior board of ccrf the operative organism of the council is the executive committee, composed of five technical directors with great experience in accounting and financial auditing, and management financial accounting. besides these, within the executive committee there is a technical secretariat consisting of three persons (employees of the ministry of public finances). through these structures, correlated to the basic objectives of the council, is accomplished the activity of monitoring and supervision in accounting and financial audit field, carried out to improve the quality of financial reporting. it should be taken into account that, at this stage, the accounting profession has some involvement in the normalization of accounting. the professional organisms are involved in the activities led by the ccrf, through the active participation of their 127 rotilă representatives in both the superior board meetings of ccrf and also in the working commissions of the ccrf, where designated specialists of these bodies are required to participate in debates and consultations on developing / improving legislation on the field. conclusions the normalization of accounting in romania, a normalization of public type, started in the first year of the planned management of the national economy (1949), as the consequence of the need to ensure the control on the integrity of socialist property and the pursuit of the state plan. the december 1989 events created the premises of the economic reform and, consequently, of the reorganization of the romanian accounting system, also marking the normalization of accounting. in fact, it is achieved the passing from the normalization of accounting of a soviet specific accounting system in which the normalizing was solely the prerogative of the state, achieved by the ministry of finance, direction of norming of accounting evidence, to another model of normalization, specific to an accounting system of western european inspiration. in this accounting system, the normalization is also the prerogative of the state, being done by the ministry of public finances, but under this ministry was also created a joint organism of normalizing of accounting, which brings together a wide range of "actors" interested in accounting information, namely the consultative college of accounting, later become, through reorganization, the accounting and financial reporting council. besides the ministry of public finances which is the institution of the normalization of accounting in romania, there are also other organisms that regulate and supervise certain specific sectors (banking, insurance, private pensions and capital markets). the normalization of romanian accounting tends to work out in the mixed type. thus, the mixed type normalization is becoming a reality sooner or later, depending on the extent to which other parties interested, especially the professional accountancy organisms, will be permitted to become involved in the process of normalization. these parties are already represented in the organism created for this purpose, the accounting and financial reporting council. references camera auditorilor financiari din românia (2012), raport 2012, available at http://www.cafr.ro/uploads/raport%202012%20ro-1617.pdf. ceccar (2006), album 85 de ani de la înfiinţarea corpului experţilor contabili şi contabililor autorizaţi din românia, bucharest, editura ceccar. ceccar (2012), raport anual 2012, available at http://ceccar.ro/ro/wpcontent/uploads/2012/06/raport-anual-2012-romana.pdf. decizia consiliului de miniştri nr. 1636 din 10 decembrie 1948, referitoare la introducerea obligatorie a contabilităţii normate. decretul consiliului de stat nr. 784/1969 privind organizarea şi funcţionarea ministerului finanţelor, with subsequent amendments by decretul nr. 123/1973. feleagă, n., ionaşcu, i. (1998), tratat de contabilitate financiară, vol. i, bucharest, editura economică. hotărârea guvernului nr. 575/1992 cu privire la cu privire la experimentarea noului sistem de contabilitate şi constituirea colegiului consultativ al contabilităţii. 128 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro hotărârea guvernului nr. 1449/2002 privind aprobarea regulamentului de organizare şi funcţionare a colegiului consultativ al contabilităţii. hotărârea guvernului nr. 401/2005 privind înfiinţarea consiliului contabilităţii şi raportărilor financiare prin reorganizarea colegiului consultativ al contabilităţii, with subsequent amendments by hotărârea guvernului nr. 141/2006. legea contabilităţii nr. 82/1991, republished, with subsequent amendments. ordonanţa de urgenţă a guvernului (oug) nr. 93/2012 privind înfiinţarea, organizarea şi funcţionarea autorităţii de supraveghere financiară . ristea, m., dumitru, c. g., ioanăş, c., irimescu, a. (2009), contabilitatea societăţilor comerciale, vol. i, bucharest, editura universitară. rotilă, a. (2011), reglementări şi practici contabile specifice, bacău, alma mater publishing house. 129 http://www.librarie.net/autor/11872/mihai-ristea http://www.librarie.net/autor/15547/corina-graziella-dumitru http://www.librarie.net/autor/55077/cristina-ioanas http://www.librarie.net/autor/55078/alina-irimescu studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro the influence of macroeconomic conditions on credit risk: case of romanian banking system iulia andreea bucur “vasile alecsandri” university of bacău iuliaandreea.bucur@gmail.com simona elena dragomirescu “vasile alecsandri” university of bacău dragomirescu@ub.ro abstract this paper aims to explore the interactions between macroeconomic conditions, such as: real gdp growth rate, inflation rate, market interest rate, broad money supply, foreign exchange rate fluctuation and unemployment rate, and credit risk in romanian banking sector during 2008-2013. the interrelations of indicators’ complexity imply a multidimensional statistical analysis in order to find a relation between the macroeconomic conditions and the credit risk. our regression analysis findings confirm the hypothesis according to which the money supply growth rate and the market foreign exchange rate are negatively related with credit risk and the unemployment rate is positively related with it. furthermore, our findings revealed that the credit risk is significantly and negatively affected by the exchange rate fluctuation and significantly and positively affected by the unemployment rate. the results do not indicate a significant relationship between credit risk and real gdp growth rate. keywords credit risk; non-performing loans; romanian banking system; macroeconomic determinants jel classification e44; e51; g21; f41 introduction nowadays, a highly significant role, even vital, in an economy is played by the financial institutions. the stability of the financial system is the basis of the modern macroeconomic policy and, at the same time, a prerequisite for strong economic growth (rajaraman & vasishtha, 2002; kroszner, 2007) and welfare (kristo, 2013), which ensure macroeconomic stability and enable strong financial institutions (bairamli & kostoglou, 2010). risk takes many forms, each affecting the economic activity on a lesser or greater extent (solomon & muntean, 2012). the recent international crisis stressed the magnitude that financial institutions vulnerabilities can have on the economy in the frame of monitoring and managing credit risk (agnello, furceri et al, 2011; vogiazas & nikolaidou, 2011). one of the areas of risk management, credit risk management is fundamental for minimizing credit loss (santomero, 1997), therefore the financial institutions develop their own models in order to decrease credit risk (poudel, 2013). this risk often reaches high levels that affect individual commercial banks, the financial system and also the economy as whole (de guimaraes e souza & feijo, 2011). moreover, due to the fact that, among various risk in a bank, credit risk depends on the bank asset quality and the primary cause of bank failures (gup & kolari, 2005; bhattacharya & roy, 2008; samad, 2012), it is crucial to identify the drivers of the 84 bucur, dragomirescu credit risk, especially macroeconomic ones, that are considered to play a significant role on this matter (demirguc-kunt & detragiache, 1998; llewellyn, 2002), and may affect the stability of the banking system and also to quantify their influence. in the context of the turmoil in international financial market caused by the global crisis and of the risk aversion of banks and given that the romanian banking system is dominated by foreign-owned commercial banks, since the second half of 2008, the lending process is restricted considerably, especially in retail, credit became less accessible and more expensive and the deposit rate is reduced. also, the deterioration loan portfolio quality, mainly due to rising unemployment and to the high level of interest rate, increases the vulnerability of the romanian banking system. however, banks have sufficient own resources to cover any unexpected losses from credit risk remained uncovered by the provisions made and realization of collateral to the borrowers (bucur, 2013). factors such as unemployment and uncertainties in the labor market, reduced income, restricted exports, diminishing fdis, decrease in the market value of land and buildings affect the performance of credit institution (nbr annual report, 2009). romanian banking sector, with levels of capitalization, solvency and liquidity consistent with prudential requirements (nbr annual report, 2010), absorbed the shock of crisis fairly well, but with the price of a more reduced performance, of the risk associated with particular emphasis on the dynamics and persistence of nonperforming loans (npls), of prolonged inhibition of credit demand and of a relatively high dependence of external financing. in 2011 and also in 2012, commercial banks operating in romania had to face with deteriorating economic potential and foreign exchange market developments, with the increasing of the credit risk ratio and of nonperforming loans and also with the gradual implementation of the new basel iii requirements (nbr annual reports, 2011, 2012). in 2013 the appropriate level of the main prudential indicators allowed the banking sector to face with major difficulties increasing npls ratio (figure 1) and also with the necessity of optimizing the loan portfolios to prepare the implementation of basel iii. thus, the banks focused more on the non-performing exposure management solutions and less on the resumption of lending process in terms of the sustainability (nbr annual report, 2013). figure 1 trend of npls rate and credit risk ratio in romania, 2008-2013 source: own calculations, based on the data available on nbr figure 2 proportion of national and foreign currency lending in romania, 2008-2013 source: own calculations, based on the data available on nbr moreover, the high proportion of foreign currency lending (figure 2), especially euro, mainly to households elevates the credit risk profile of the romanian banking 85 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro institutions while the stressed liquidity reflected in credit to deposit ratio may lead to a tighter credit supply (vogiazas & nikolaidou, 2011). in our study, based on the aggregate available data on national bank of romania (nbr) and eurostat, we explore the links between credit risk ratio in romanian banking sector and macroeconomic determinants, such as: economic and business cycle, inflation, market interest rate, money supply and exchange fluctuation, unemployment, during the period of time 2008-2013. given the complexity of the macroeconomic indicators, a statistical analysis was performed in order to find a relation between the macroeconomic conditions and the credit risk ratio. our regression analysis findings confirm the hypothesis according to which the money supply growth rate and the market foreign exchange rate are negatively related with credit risk and the unemployment rate is positively related with it. furthermore, our findings revealed that the credit risk is significantly and negatively affected by the exchange rate fluctuation and significantly and positively affected by the unemployment rate. our results do not indicate a significant relationship between credit risk ratio and real gdp growth rate. the paper is structured as follows. section 2 reviews the theoretical framework regarding the issue of macroeconomic determinants of credit risk. data and methodology of the study are presented in section 3, followed in section 4 by the empirical analysis completed by explaining the influence of independent variables on the credit risk ratio as dependent variable. section 5 contains a brief summary of our research and the concluded remarks driven by the results obtained and their interpretation. literature review due to the fact that the availability of published data regarding banking sector increased significantly, many researchers have begun to turn their attention on loan portfolio quality. some of them consider npls as “financial pollution” with harmful effects for economic growth and welfare as well (gonzales-hermosillo, 1999; barseghyan, 2010; zeng, 2011). moreover, the studies show that country-specific credit risk determinants have become more important for the emerging economies in the recent period of globalization and less important for industrial economies (mileris, 2012b). without neglecting the effects of microeconomic (banking-sector) factors on the npls (credit to total deposit ratio, capital adequacy ratio, return on asset and return on equity, net interest margins, net income, interbank loans), in the light of the empirical literature reviewed, the analysis of the factors that influence the loan portfolio quality is based on the hypothesis that banks’ credit risk is sensitive to macroeconomic environment, such as: business cycle, price stability, broad money supply, market interest, foreign exchange fluctuation and even unemployment. the literature mentions a diversity of macroeconomic factors, both internal and external (sinkey & greenawlat, 1991) that play a significant impact on loan quality. important changes in the macroeconomic conditions of a country are observed in both economic and business cycle. it has been ascertained that banks becomes vulnerable and credit risk increases during the stagnation and recession period than during the economic growth one (hardy & pazarbasioglu, 1998) and also due to an increasing level of aggregated indebtedness (fainstein & novikov, 2011). thus, whereas some researchers found in their studies a negative relationship between gross domestic product (gdp) and credit risk (salas & saurina, 2002; jimenez & saurina, 2006; das & ghosh, 2007; gunsel, 2012; louzis, vouldis & metaxas (2012); thiagarajan, auuapan et al, 2011; zribi & boujelbene, 2011; castro, 2013), while others found no relationship between real gdp growth rate and loan portfolio 86 bucur, dragomirescu quality in case of austrian banking system (kalirai & scheicher, 2002), of subsaharan africa banking system (fofack, 2005), in case slovenian banking system aver (2008) or, more recently, in case of nepalese banking industry (poudel, 2013). inflation also affects the performance of the banking sector. a rise in inflation in the context of cyclical downturns negatively affects the efficiency of the banking sector, whereas the hyper-inflation may affect the assets and equity of banks (fofack, 2005). there are authors that suggest that the influence of the inflation rate on the profitability of the financial institutions depends on whether the expenses increase faster than inflation (athanasoglou & brissimis et al, 2008). a positive relationship between inflation and credit risk was identified by some authors in north cyprus (gunsel, 2012) and euro area member states (rinaldi & sanchis-arellano, 2006). on the contrary, other researchers identified a negative relation between inflation and npls in case of hong kong banking system (shu, 2002), of tusian banking system (zribi & boujelbene, 2011), of romanian banking system (vogiazas & nikolaidou, 2011), or in case of solvenian banking system (aver, 2008; bofondi & ropele, 2011; castro, 2013) or nepalese banking industry (poudel, 2013). in his research, fofack (2005) found that inflation is not significant in explaining the dynamics of npls loans, especially for african financial community (cfa) countries. also valahzaghard et al (2012) found no significant relationship between inflation rate and credit risk in iran. the economic growth can be positive influenced by the accelerating board money supply (berk & bikker, 1995). thus, considering that increasing money supply will decrease the interest rate and create the opportunity of cheaper funds and also the ability of debtors to honor their financial obligations and this will contribute to decreasing npls (ahmad & ariff, 2007). the influence of board money supply growth rate on credit risk was analyzed by some authors that found a negative relationship between the considered variables in case of malaysian banking system (ahmad, 2003), in case of austrian banking system (kalirai & scheicher, 2002), in a case of romanian banking system (vogiazas & nikolaidou, 2011) or nepalese banking system (poudel, 2013). instead, there are studies that revealed a positive relationship between money supply growth rate and credit risk for italian banking system (bofondi & ropele, 2011), or for cfa countries (fofack, 2005). the real interest rate affects the debt burden, which means that its effect on the credit risk should be positive: increasing interest rates will lead to a higher nlps ratio (gonzalez-hermosillo, 1997; aver, 2008; louzis, vouldis & metaxas, 2012; nkusu, 2011). similar results, significant and positive relationship between credit risk and real effective interest rate, was found in case of sub-saharan africa (fofack, 2005), italian banking sector (quagliariello, 2007) and also in case of greece, ireland, portugal, spain and italy (castro, 2013). instead, other studies do not identify any relevant correlation between interest rate and credit risk, as in australia (ali & daly, 2010). one of the main determinants of economic instability is the exchange rate volatility (zameer & siddiqi, 2010). the appreciation of foreign currencies against the national one generates higher prices for imported inputs which affects the prices of the final goods. thus, as a result of exchange rate depreciation, the demand for loans increases in order to support the additional expenditure (ngerebo, 2011). castro (2013) identified that real effective exchange rate is negative related with loan portfolio quality for greece, ireland, portugal, spain and italy from 1997 to 2011, by zribi & boujelbene (2011) for tunisian banking system, by gunsel (2012) for north cyprus, by vogiazas & nikolaidou (2011) for bulgaria and also by fofack (2005). other studie have not identified any relationship between foreign exchange fluctuation and nlps ratio, such as: kalirai & scheicher (2002) for austria and aver (2008) for slovenia. 87 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro measures of unemployment appear to be a good predictor of problem loans all countries (gambera, 2000), so there are many studies that analyze the influence of the unemployment rate on the credit risk. analyzing possible factors influencing romanian bank asset quality, as well as the contagion effect of the greek crisis, nikolaidou & vogiazas (2013) found that along with money supply, loan growth and the greek loan loss provisions, the unemployment influence loan portfolio quality significantly. louzis, vouldis & metaxas (2012) explored the greek banking industry in pre-crisis period and discovered that the besides the impact of gdp growth rate and lending rates, unemployment have a strong negative influence on credit risk. also valahzaghard et al (2012) analyze the unemployment rate influence on loan portfolio quality in the banking system of iran and their results indicate no significant relationship between unemployment rate and credit risk. data and methodology of the study data as mentioned before, the aim of our study is to identify the possible factors that influence aggregate credit risk in the romanian banking system and to quantify their impact. for our empirical research, we chose to collect macroeconomic aggregate data, in order to tackle possible problems of disaggregate data unavailability. thus, based on the aggregate available data on national bank of romania (nbr) and eurostat, we explore the links between annual credit risk ratio in romanian banking sector and macroeconomic determinants, such as: annual real gdp growth rate, annual inflation rate, annual board money supply growth rate market, annual market interest rate, annual foreign exchange rate fluctuation and annual unemployment rate, during the period of time 2008-2013. we selected the variables taking into consideration the indicators presented and used in the previous research, for reasons of comparability of the results. te dependent variable, credit risk ratio, is calculated on the basis of prudential reporting into force on the classification of loans (are classified only the loans for which minimum capital requirements for credit risk are determined) (nbr annual report, 2013). in the interpretation of the nbr, credit risk for romanian banking system is defined as the gross exposure related to nonbank loans and interest under “doubtful” and “loss” to total loans and interest classified related to nonbank loans excluding off-balance-sheet items. methodology given the interrelations of macroeconomic indicators complexity, a descriptive and a multidimensional statistical analysis was performed in order to find a relation between the macroeconomic conditions and the credit risk ratio. the multiple regressions complete model is: εβα +⋅+= xy (1) where: y is the dependent variable, representing the credit risk ratio, x is the independent variable, α is the constant parameter and ε is the residual value. based on the empirical research, we test the following hypothesis: the real gdp growth rate, the broad money supply growth rate and the foreign exchange rate fluctuation are negatively related with credit risk, whereas the inflation rate, the market interest rate and the unemployment rate is positively related with credit risk. 88 bucur, dragomirescu empirical analysis descriptive statistics the descriptive statistics for the dependent and independent variables (table 1, figures 34) indicates the deterioration of the loan portfolio quality in romanian banking sector, credit risk ratio (crr) ranging from a minimum value of 5.95% registered in 2008 to a maximum one of 32.14% in 2013, with a mean value of 19.19%, amid the wide range for real gdp growth rate (rgdpgr) of 13.90%, for broad money supply growth rate (bmsgr) of 14.80% and for foreign exchange rate fluctuation (exchrf) of 15.90%. the mean value for market interest rate (minr) is 13.24% where the maximum level is 17.47% in 2008 and minimum one is 9.14% in 2013. also, the statistics indicates an average value for inflation rate (infr) of 5.33%, while its trend is a decreasing one, from the maximum value of 7.90% registered in the initial year of the considered period down to a the minimum value of 3.2% in the last year, 2013. in this context, we notice that the evolution of annual unemployment rate (unemr) was unfavorable; romania registered a level of 5.80% in 2008 which increased up to 7.40% in 2012, fact that can affect the credit risk. table 1 descriptive statistics of variables in the sample variable n range (%) minimum (%) maximum (%) mean (%) std. deviation (%) skewness (%) statistic std. error crr 6 26.19 5.95 32.14 19.19 8.94 -0.101 0.845 rgdpgr 6 13.90 -6.60 7.30 1.00 4.69 -0.525 0.845 infr 6 4.70 3.20 7.90 5.33 1.78 0.029 0.845 bmsgr 6 14.80 2.69 17.49 8.59 4.92 1.236 0.845 mintr 6 8.33 9.14 17.47 13.24 3.18 0.351 0.845 exchrf 6 15.90 -0.80 15.10 4.97 6.54 0.806 0.845 unemr 6 1.60 5.80 7.40 6.95 0.60 -1.906 0.845 source: own calculations based on the nbr and eurostat available data figure 3 trend of crr comparing to gdp growth rate, inflation and unemployment in romania, 2008-2013 source: own calculations, based on the data available on nbr and eurostat figure 4 trend of crr comparing to money supply, interest rate and exchange rate in romania, 2008-2013 source: own calculations, based on the data available on nbr and eurostat 89 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro econometric results in this unit we will test the hypothesis formulated before, using the same indicators for estimate the impact of the macroeconomic conditions on the credit risk in the romanian banking sector, for the same period 2008-2013. the data base used in the regression analysis is process using the spss, in two steps: a univariate regression, in order to identify those conditions with the higher influence on the credit risk in romanian banking system, and a multivariate model, in order to identify and estimate a cumulative impact of macroeconomic determinants on the credit risk. in testing the hypotheses, both processes involve writing the equation for the model, estimating the parameters of the regression equation and interpreting the connection between the variables according to the sign and the value of the parameters for the regression model, as well as testing the significance of the regression parameters. due to the complexity of the phenomena, we analysed combined data using the correlation table from which we obtain information regarding the existence and direction of the relationships between the considered variables (table 2). table 2 correlations of variables in the sample crr rgdpgr infr bmsgr mintr exchrf unemr crr pearson correlation 1 -.010 -.845* -.636 -.963** -.736 .816* sig. (2-tailed) .985 .034 .175 .002 .095 .048 rgdpgr pearson correlation -.010 1 .206 .495 -.115 -.338 -.441 sig. (2-tailed) .985 .695 .319 .829 .513 .381 infr pearson correlation -.845* .206 1 .727 .810 .382 -.630 sig. (2-tailed) .034 .695 .102 .051 .454 .180 bmsgr pearson correlation -.636 .495 .727 1 .660 .417 -.815* sig. (2-tailed) .175 .319 .102 .153 .411 .048 mintr pearson correlation -.963** -.115 .810 .660 1 .847* -.768 sig. (2-tailed) .002 .829 .051 .153 .033 .074 exchrf pearson correlation -.736 -.338 .382 .417 .847* 1 -.643 sig. (2-tailed) .095 .513 .454 .411 .033 .168 unemr pearson correlation .816* -.441 -.630 -.815* -.768 -.643 1 sig. (2-tailed) .048 .381 .180 .048 .074 .168 source: own calculations based on the nbr and eurostat available data notes: *. correlation is significant at the 0.05 level (2-tailed) **. correlation is significant at the 0.01 level (2-tailed) so we can identify a significant relationship between credit risk ratio and market interest rate (-0.963), inflation rate (-0.845) and unemployment rate (0.816), a moderate relationship between the dependent variable and exchange rate fluctuation (-0.736) and money supply growth rate as well (-0.963). a not significant relationship is indicated between credit risk ratio and real gdp growth rate (-0.010). regarding the direction of the relationship we can observe that all the considered independent variable, except unemployment rate, are negatively related with credit risk ratio. the results of the regression analysis between the considered independent variables and the dependent one (table 3) clearly indicate that, due to the value of r2, there is no significant relationship between the real gdp growth rate and credit risk in the romanian banking system during 2008-2013 (r2=0.000). 90 bucur, dragomirescu table 3 results of the regression analysis between independent variables and credit risk ratio ndependent variable model anova coefficients r2 (r square) std. error of the estimate f test f test significance (sig.) beta coefficient (β) t test – β t test significance (sig.) rgdpgr 0.000 9.99497 0.000 0.985 -0.010 -0.019 0.985 infr 0.714 5.34893 9.968 0.034 -0.845 -3.157 0.034 bmsgr 0.404 7.71434 2.715 0.175 -0.636 -1.648 0.175 mintr 0.909 2.69662 50.957 0.002 -0.963 -7.138 0.002 exchrf 0.542 6.76348 4.736 0.095 -0.736 -2.176 0.095 unemr 0.665 5.78189 7.954 0.048 0.816 2.820 0.048 source: own calculations based on the nbr and eurostat available data the results of the analysis concerning the evolution of the dependent variable under the influence of the regression factor and of the residual factor, calculated by means of the f test, considering the high values of f in all the regression equation, as well as the sig. value of f, lower than 0.05 in case of inflation rate, market interest rate and unemployment rate, reflects the fact that the connection between the respective variables and credit risk is significant, during the considered period. also the test of the parameters in all regression equations using student test confirms, due to the sig. value of t which is lower than 0.05 for the same independent variables mentioned before, that there is a significant connection between them and the dependent variable. in other words, the value of β line corresponds to a significant connection between the evolution of inflation rate, market interest rate and unemployment rate and the evolution of credit risk ratio during 2008-2013 in the romanian banking sector. with a degree of confidence of 90.5% we can say that the exchange rate fluctuation also reflects a significant connection with the credit risk ratio. our regression analysis findings confirm the hypothesis according to which the money supply growth rate and the market foreign exchange rate are negatively related with credit risk and the unemployment rate is positively related with it (table 4). table 4 results of the testing research hypothesis independent variable symbol expected sign (hypothesis) pearson correlation regression analysis result h=0 h≠0 h=0 h≠0 real gdp growth rate rgdpgr – √ x √ x not significant inflation rate infr + x √ x √ significant and negative broad money supply growth rate bmsgr – √ x √ x significant and negative market interest rate mintr + x √ x √ significant and negative foreign exchange rate fluctuation exchrf _ √ x √ x significant and negative unemployment rate unemr + √ x √ x significant and positive source: own calculations based on the nbr and eurostat available data according to the results before, we performed a regression using as dependent variable the credit risk ratio and as independent variables exchange rate fluctuation and unemployment rate. the equation is: εββα +⋅+⋅+= unemrexchrfy 21 (2) 91 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro table 5 results of the regression analysis to test the influence of exchange rate and unemployment rate on credit risk ratio model anova coefficients r2 (r square) std. error of the estimate durbinwatson f test f test significance (sig.) beta coefficient (β) t test β t test significance (sig.) equation (2) 0.742 5.86399 1.007 4.311 0.131 exchrf -0.361 -0.943 0.415 unemr 0.584 1.524 0.225 source: own calculations based on the nbr and eurostat available data as we can observe, the results of the regression analysis to test the influence of exchr and unemr on crr indicate a relatively meaningful relationship between variables (r2=0.742), but with a degree of confidence of 87%. the durbin-watson level of 1.007 suggests a positive serial correlation. according to the results for the independent variables, we can say that as foreign exchange rate fluctuation increases (the national currency appreciates) the credit risk diminishes, while an increased unemployment rate will increase the credit risk. conclusions many studies focus their attention on the issue of the loan portfolio quality, especially over the last years, in the context of the turmoil in international financial market caused by the global crisis. based on the aggregate available data on national bank of romania and eurostat, this paper explore the interactions between macroeconomic conditions, such as: real gdp growth rate, inflation rate, market interest rate, broad money supply, foreign exchange rate fluctuation and unemployment rate, and credit risk in romanian banking sector during 2008-2013. due to the interrelations of indicators’ complexity, a multidimensional statistical analysis was performed in order to find a relation between the macroeconomic conditions and the credit risk ratio. our regression analysis findings 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(2011), the factors influencing bank credit risk: the case of tunisia, journal of accounting and taxation, 3 (4), 70-78. 95 figure 2 proportion of national and foreign currency lending in romania, 2008-2013 figure 1 trend of npls rate and credit risk ratio in romania, 2008-2013 table 1 descriptive statistics of variables in the sample figure 4 trend of crr comparing to money supply, interest rate and exchange rate in romania, figure 3 trend of crr comparing to gdp growth rate, inflation and unemployment in romania, 2008-2013 independent variable symbol expected sign pearson correlation regression analysis result h=0 h≠0 h=0 h≠0 real gdp growth rate – √ x √ x not significant inflation rate + x √ x √ significant and negative broad money supply growth rate – √ x √ x market interest rate + x √ x √ foreign exchange rate fluctuation _ √ x √ x unemployment rate + √ x √ x 2008-2013 table 2 correlations of variables in the sample table 3 results of the regression analysis between independent variables and credit risk ratio table 4 results of the testing research hypothesis table 5 results of the regression analysis to test the influence of exchange rate and unemployment rate on credit risk ratio studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro information techonology and lifelong education – implications on the eu employed population laura țimiraș “vasile alecsandri” university of bacău lauratimiras@yahoo.com abstract the quality and the skills of human resources are important factors in the success of every organization wherever it act. moreover this is really true in a very competitive market such as european union. in the european union the number of persons who are taking part in high education studies after the age of 25 years has seen an upward trend in recent years, increasing thus the share of employed graduates of tertiary education in total employment over 25 years. this increase is generated by the access to education forms adapted in terms of time and location of training. the appearance and development of these forms can be explained by the use of information technology (internet access). statistics show that in the eu, household access to the internet and its frequency of use was also increasing, approximately 80% of all persons aged 16 to 74 years have ever used this information and communication tool. keywords tertiary education; students; employed population; information technology; internet access jel classification m30 objectives today, the problem of employment of eu population is quite a debated subject. the most evident problems relate to youngest category of population, that of young people under 25, but equally to employees over this age. in this quite problematic context of labor market, this article aims to take a picture of the evolution of the lifelong learning process of eu population, especially of those employed. we concentrate on the case of tertiary education in the context of the development and expansion of information technology. accordingly, it is intended to highlight the extent to which the eu population, and especially the employed population aged 25 years followed a higher education degree as a consequence of the emergence and development of forms of part-time learning, which is much more suited to people who want flexibility in terms of time organization and choice of training location. it has been also aimed to highlight any differences between eu member states in terms of the intensity with which the lifelong training phenomenon manifests among the employed population, namely the existence of association between the intensity of its manifestation and public access to the internet. literature review since the early 70s, global academic promote the idea of the informal education approach, without proposing substantial changes in the formal process. new form of learning was perceived as an element of complementarity, which have the capacity to 241 ţimiraş provide those interested with the knowledge and skills to adapt to a changing environment (sharples, 2000). it's essentially, as highlighted by benteley in 1998, a long-term approach through which individuals become their own managers in an informal learning process. the process of assimilation and integration of information technology in education has been the subject of numerous processes initiated at eu level. european union's interest toward the creation of a modern education environment has seen its peak in june 2002, while promoting eeurope initiative, announcing the transition to the knowledge economy. the use of information technology in formal educational processes aimed at achieving eu objectives as follows: improving curricula, educational sustainable development of educational resources in the online environment, creating and developing e-learning platforms, promoting formal continued education etc. the approach initiated by the european union in creating a knowledge-based economy continued in 2005 under the initiative “i2010 a european information society for growth and employment'”, context in which it has been promoted as fundamental sustainable economic factors two key concepts: information and innovation. the year 2009 brought to the forefront a new document et 2020 strategic framework for european cooperation in education and professional training (council of the european union, 2009) which promote the impact of education process on the basis of information technology over the economies of eu members. particular attention was given in this document to promoting the access to adult education through concept of “lifelong learning”. the concept of “lifelong learning” enjoys a wide interest among specialists in the field, both in academia and in practice. according to the eu, life long learning is a continuous training approach involving action at three levels: initial training, ongoing training and continued education''. taking into consideration the target of the new concept, namely those over 25 years old, knapper and cropley mentioned individual dimension of the concept, namely “planning own learning methods depending on availability and personal motivations” (knapper c. and cropley, 2000) according to the specialists the concept of “lifelong learning” can be operationalized through various methods, from traditional classroom “face to face” type to different forms incorporating information technology distance learning, joint education and elearning. as can be seen, distance learning, being directly correlated with the integration of the technology into the educational process, is a part of lifelong learning concept, this idea being supported by numerous specialists in the field (bates, 1999; garrison, 1999; niper, 1989; peters, 2001; kose, 2010). it should be noted, however, that between distance education and e-learning there is a number of differences, which are extremely important in the context of the proposed analysis, as follows: • distance learning, which appeared according to bell and tight in the midnineteenth century, involves the physical separation of the person trained to the trainer at certain stages of educational process (bell and tight, 1993]. on the other hand, e-learning is a concept of the twentieth century, involving the use of information technology to achieve a wide range of educational objectives, ranging from its integration in the traditional process training to one exclusively online environment. • the target of distance education is the adults who have “family responsibilities and limited time” (peters, 2001). on the other hand, the target in e-learning education is extensive, targeting formal process, from primary education up to the postgraduate education. • global and european theory and practice shows much higher costs for e-learning education versus the distance learning (bates, 2001; ryan, 2002). 242 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro major differences between the two forms of learning can be observed in the member states of the european union according to the level of economic development, the development of the education system, the acceptance shown by the population to new and so on. in romania compared to other eu countries concentration can be observed in the form of distance learning at the expense of e-learning. in other words, the analyzed concept lifelong learning captures a society in which many levers are operationalized in the scope of learning for all ages. according to the opinions of various authors (aspin and chapman, 2000; fischer, 2001) learning process is not limited to formal institutions, but it extends to all areas of activity of individuals (work, home, etc.). beyond the simple definition of the concept of lifelong learning, academic raises numerous questions to identify the results of this process, namely: what is the connection between this approach and formal learning process? what are its results and how can these be quantified? and so on. it seems that although academia has no big problems in defining the concept, barriers arise when quantifying results generated by it. even if the desired results have been identified the assimilation of knowledge, skills and capabilities it seems that it is more difficult to quantify the assimilation manner of lifelong learning. in this respect, two british authors (jiusto and dibiasio, 2006) noted that the process of lifelong lerning cannot be measured until the person has passed all stages of life that involves the acquisition of knowledge and skills. in the same direction of the identification of the results of lifelong learning may be mentioned the article proposed by klamm et al. (2007), according to whom the concept captures “openness to learning opportunities, a process that involves initiative and independence in the acquisition of knowledge, responsibility, creativity, long term orientation and ability to use problem-solving skills. research methodology the work is a study based on secondary data sources from eurostat. we used in our analysis structure indicators and time series indicators which have revealed the evolution of tertiary education process throughout the life in the eu countries and the eu population access to information technologies, namely the frequency of internet use. according to the eurostat methodology the people included in the lifelong training is those with age between 25 and 64 years. not having data on tertiary education for this age group, we considered in highlighting the intensity of lifelong education the students over 25 years old and working population of 25-74 years. according to isced international standard classification of education unesco 1997, tertiary education includes level 5, namely higher education, and level 6, namely postgraduate education (taken after www.insse.ro). regardless of the time of accession to the eu of different countries, the indicators used in this analysis were aggregated for all the years covered by the study for all 28 present states. research results in eu countries there has been a rapid expansion of public access to the internet, coupled with increased utilization of it. thus, according to eurostat data, at the eu countries (except croatia) from 2005 to 2013, the share of households with internet access increased from 48% to 79%, mainly due to strong increases registered in the new eu states. closely related to access to the internet, its usage has grown, so the share of persons with age between 16 and 74 years who have ever used the internet 243 ţimiraş has gone from 60% to 79% in the indicated period. bothe in the case of internet access in households and in terms of the intensity of its use, the old eu countries stand largely above average throughout the considered period. on the other hand, the largest increases were recorded in the states belonging to the former communist bloc. table 1 household access to the internet and internet use in the eu countries households with internet access percentage of households individuals who have ever used the internet percentage of individuals* 2005 2010 2013 2005 2010 2013 belgium 50 73 80 61 81 84 bulgaria n.d. 33 54 n.d. 49 59 czech republic 19 61 73 37 72 80 denmark 75 86 93 86 90 96 germany 62 82 88 71 83 87 estonia 39 68 80 64 78 84 ireland 47 72 82 45 73 82 greece 22 46 56 27 48 64 spain 36 59 70 50 68 76 france n.d. 74 82 n.d. 80 86 croatia n.d. 56 65 n.d. 58 71 italy 39 59 69 n.d. 56 64 cyprus 32 54 65 36 55 68 latvia 31 60 72 49 71 78 lithuania 16 61 65 39 65 71 luxembourg 65 90 94 71 92 95 hungary 22 60 71 40 68 76 malta 41 70 79 43 64 72 netherlands 78 91 95 82 92 95 austria 47 73 81 60 77 84 poland 30 63 72 42 65 68 portugal 31 54 62 37 54 67 romania n.d. 42 58 n.d. 43 58 slovenia 48 68 76 n.d. 72 77 slovakia 23 67 78 58 83 85 finland 54 81 89 77 89 94 sweden 73 88 93 88 93 96 united kingdom 60 80 88 72 87 92 european union (28 countries) n.d. 70 79 n.d. 73 79 n.d. – no data * refers to population between 16 and 74 years old source: adapted from eurostat regarding the lifelong learning, it has been a positive evolution in the european union, the number of people between 25 and 64 years old who attended some form of training (last 4 weeks, prior to survey) increasing from 7.1% in 2002 to 10,4% in 2013. the highest values were recorded in denmark (more than 31% of the 244 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro population between 25 and 64 years old following a training form in 2013), followed by sweden and finland (values around 28% and, respectively, 25 % in 2013), while the lowest values (until 2% in 2013) were registered in bulgaria and romania (according to eurostat data). figure 1 participation rate in education and training (last 4 weeks) of total population between 25 and 64 years old in eu – 28 countries in 20022013 source: adapted from eurostat much more accelerated has been the evolution of higher education (levels 5 and 6 of education, isced classification), so from 2000 to 2012 there has been an increase in number of students over 25 years old who continue tertiary studies with more than 37,8% (at the eu, except croatia) a rate that exceeded the growth rate of the total number of students in tertiary education levels 5 and 6 (respectively, 26,2%), thus increasing the share of this age group (over 25 years) in total students number (according to eurostat data). ranked first in terms of share of are: finland, sweden, denmark, austria, and, on the other hand, in france, croatia, poland, belgium, lithuania, malta and bulgaria there is a lowest trend for further tertiary studies after the age of 25 years. the largest increases in this indicator (share of students over 25 years old in total number of students) were recorded in greece, cyprus, slovakia, ireland, romania, czech republic, spain and in luxembourg, united kingdom, germany, latvia, denmark, italy and sweden the share of students over 25 years old in total number of students has been declining, in 2000-2012 period. table 2 evolution of the number of the students over 25 years old in tertiary education levels 5 and 6, in the eu in the period 2000 to 2012 countries the number of students over 25 years old in 2012 (thousand) the share of students over 25 years old in total number of students (%) 2000 2005 2010 2012 belgium 113 18 23 23 24 bulgaria 81 23 26 27 28 czech republic 144 20 33 33 33 denmark 148 57 63 56 54 germany 1310 52 46 42 45 7.1 8.4 9.1 9.5 9.4 9.3 9.3 9.2 9.1 8.8 9.0 10.4 6 8 10 12 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 % 245 ţimiraş estonia 27 28 39 37 40 ireland 61 18 21 31 32 greece 328 5 27 47 49 spain 764 26 35 40 39 france 429 18 21 19 19 croatia 35 20 20 22 italy 604 32 31 31 31 cyprus 11 12 19 30 33 latvia 33 39 44 36 34 lithuania 47 22 34 29 27 luxembourg 2 100 41 hungary 133 29 40 35 35 malta 3 24 28 25 28 netherlands 264 28 28 26 33 austria 196 51 40 51 52 poland 450 22 21 21 22 portugal 146 32 36 39 37 romania 211 17 29 37 30 slovenia 32 27 34 33 31 slovakia 72 18 30 34 33 finland 174 50 52 55 56 sweden 248 56 58 56 55 united kingdom 956 45 46 41 38 european union (28 countries) 7024 n.d. 34 34 35 n.d. – no data source: adapted from eurostat in total for full-time and part-time employed population over 25 years old, we can see that from 2000 to 2013 there is an increase in the share of employed persons with higher education. accordingly, the number of employed people (all isced, 1997) increased during the period considered by 10,1% (at the eu except croatia), while employment in of people with higher education degree by 59,1%, according to eurostat data. this development shows that at least some of the employed population continued their studies along with running their own occupation, which is justified by the easy access of eu population to information technology and thus the possibility of following forms of education that not imply the presence in certain locations and certain time period. it stands out the old member states in terms of the share of people with higher education in total employment, the majority of these countries recording values above the eu average. the first places are occupied by malta, poland, portugal, luxembourg, romania and ireland, this with the largest increases of noted indicator (share of employed persons with higher education in total employed population of 25-74 years) between 2000 and 2013. comparing the evolution of the employed population with higher education in total population, and changes in the share of households with internet access in the countries analyzed (for the period 2005 to 2013), it appears that in most countries that have known values above the eu average of one of the indicators were recorded values above average for the second the indicator. thus, lithuania, czech republic, 246 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro slovakia, greece, poland, latvia, portugal, malta, cyprus, ireland and italy showed values above the eu average in terms of both indicators. on the other hand, in denmark, the netherlands, belgium and germany both indicators were below the eu average. table 3 evolution of full-time and part-time employment for 25-74 year old population levels 5 and 6 graduate education in the eu between 2000 and 2013 countries full-time and part-time employment for 25-74 year old population levels 5 and 6 graduate education in 2013 (thousands) share of full-time and part-time employment levels 5 and 6 graduate education in total employment (all isced 1997 levels) of 25-74 years (%) 2000 2005 2010 2013 belgium 1,786.20 34.2 38.0 41.8 42.5 bulgaria 866.1 24.0 27.2 28.7 31.3 czech republic 1,071.00 13.8 15.4 19.2 23.1 denmark 872.1 28.4 36.6 35.8 37.8 germany 11,546.90 27.1 29.0 30.5 31.9 estonia 240.3 34.8 37.8 40.4 n.d. ireland 813 26.0 33.3 43.6 47.3 greece 1,176.50 21.2 24.8 28.5 33.8 spain 6,645.60 28.8 n.d. 37.8 41.5 france 8,870.8 25.8 29.3 33.9 n.d. croatia 336.9 n.d. 20.2 23.4 25.8 italy 4,340.40 13.0 15.5 18.3 20.3 cyprus 152.1 29.4 32.3 38.6 43.7 latvia 301.8 22.5 24.3 32.1 36.7 lithuania 505.3 48.6 30.9 41.1 42.4 luxembourg 102.5 21.9 31.2 39.0 45.6 hungary 1,017.50 18.6 22.0 25.1 27.4 malta 38.6 8.7 17.1 20.6 25.4 netherlands 2,673.40 28.1 34.0 n.d. 37.8 austria 857.0 17.4 20.9 22.0 n.d. poland 4,675.90 15.1 22.6 n.d. 32.4 portugal 920.6 10.3 14.4 17.5 22.0 romania 1,647.30 9.7 13.4 16.7 19.1 slovenia 280.7 18.9 23.7 28.3 33.3 slovakia 503.7 13.6 17.6 20.9 23.1 finland 991.8 37.0 38.9 42.8 45.3 sweden 1,666.90 32.1 n.d. 36.7 39.7 united kingdom 11,268.80 28.7 32.9 39.1 43.1 european union (28 countries) 66,169.80 n.d. 26.8 30.5 33.4 n.d. – no data (source: adapted from eurostat) 247 ţimiraş figure 3 relative change of the full-time and part-time employment of 25-74 years old, total (all isced, 1997) and for category 5 and 6 levels of education in the eu countries (without croatia) in the period 2000 to 2013 (+ / in% compared with 2000) (source: adapted from eurostat) so, for a total of 14 countries for which we have full data in 20 is detected the existence of a specific association between two indicators evolutions, thereby possibly confirming that the expansion technology was one factor among others that made possible the continuation of education for the category of employed people. table 4 dynamics of share of households with internet access and share of fulltime and part-time employment with higher education in total employed population of 25-74 years old in 2013 compared with 2005 (%) countries dynamics of share of households with internet access dynamics of share of employed population with higher education in total employed population of 25-74 years old belgium 160.0 111.7 bulgaria n.d. 115.2 czech republic 384.2 149.6 denmark 124.0 103.2 germany 141.9 110.2 estonia 205.1 0.0 ireland 174.5 142.1 greece 254.5 136.1 spain 194.4 n.d. croatia n.d. 127.5 france n.d. n.d. 0. 0 2. 5 4. 5 9. 5 15 .8 22 .0 26 .4 31 .0 36 .5 40 .8 44 .2 49 .4 54 .5 59 .1 0. 0 1. 2 1. 5 2. 6 3. 2 5. 2 7. 4 9. 5 10 .9 9. 7 9. 3 9. 9 10 .1 10 .1 0 10 20 30 40 50 60 70 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 % full-time and part-time employment for 25-74 year old population, levels 5 and 6 graduate education full-time and part-time employment for 25-74 year old population (all isced 1997 levels) 248 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro italy 176.9 130.6 cyprus 203.1 135.3 latvia 232.3 150.7 lithuania 406.3 137.2 luxembourg 144.6 145.9 hungary 322.7 124.5 malta 192.7 148.7 netherlands 121.8 111.0 austria 172.3 0.0 poland 240.0 143.4 portugal 200.0 152.9 romania n.d. 142.2 slovenia 158.3 140.6 slovakia 339.1 131.1 finland 164.8 116.2 sweden 127.4 united kingdom 146.7 131.1 european union (without croatia) 164.5 124.6 n.d. – no data (source: adapted from eurostat) after all the assessments, we can say that the impact of information technology on the educational system and the dynamics of absorption of the adult population in lifelong learning will see the same trend in the near future, resulting in changes in all associated activities: research, teaching and learning, organization, organization and operating framework, legislation etc. regarding the evolution of the number of employed adults in lifelong learning, we tend to think that we will see a relative stagnation in the developing states. for example, in romania we expect a reduction in the number of adults that return to formal learning system, such as distance learning, as a result of strictly objective factors: the impact of economic crisis on living standards and the purchasing power, increased tuition taxes in distance learning programs, low labor demand in large and very large organizations etc. references aspin, d. n., chapman, j. d. (2000), lifelong learning: concepts and conceptions. international journal of lifelong education, 19(1), 2-19. bates, a.w. (1999), managing technological change: strategies for academic leaders, san-francisco, jossey bass. bates, a.w. (2001), national strategies for e-learning in post-secondary education and training, paris, international institute for educational planning, unesco. bell, r. tight, m. (1993), open universities: a british tradition, buckingham, the society of research into higher education & the open university press. bentley, t. (1998), learning beyond the classroom: education for a changing world. london, routledge. candy, p. (1991), self-direction for lifelong learning: a comprehensive guide to theory and practice, jossey-bass, san francisco, california. council of the european union (2009), council conclusion on a strategic framework for european cooperation in education and training et 2020, 249 ţimiraş 2941th education, youth and culture council meeting, brussels, 12 may, 2009. ec (2000), memorandum on lifelong learning, commission of european communities, brussels. european commission, eurostat, available at http://epp.eurostat.ec.europa.eu. fischer, g. (2001), lifelong learning and its support with new media, international encyclopedia of social and behavioral sciences, no 41, retrieved june 7, 2007, from, http://l3d.cs.colorado.edu/~gerhard/papers/iesbs2001.pdf. garrison, d.r. (1999), will distance education disappear in distance studies? a reaction, journal of distance education, 14(2), 10–13. jiusto, s., dibiasio, d. (2006), experiential learning environements: do they prepare our students to be self directed, life long learnings?, journal of engineering education, july, 195-204. klamma, r., chatti, m.a., duval, e., hummel, h., hvannberg, e.h., kravcik, m., law, e., naeve, a., scott, p. (2007), social software for life-long learning, educational technology & societ, 10 (3), 72-83. knapper c., cropley a.j. (2000), lifelong learning in higher education, london, kogan page. köse u. (2010), a blended learningnext term model supported with web 2.0 technologies, procedia social and behavioral sciences, 2 (2), 2794-2802. institutul naţional de statistică, tempo – online time series (www.insse.ro). niper, s. (1989), third generation distance learning and computer conferencing, in: mason, r. and kaye, a. (eds.), mindweave: communication, computers and distance education, oxford, pergamon press, 63–73. peters, o. (2001), learning and teaching in distance education: analysis and interpretations from an international perspective london, kogan page. ryan, y. (2002), emerging indicators of success and failure in borderless higher education, london, the observatory on borderless higher education. sharples, m. (2000), the design of personal mobile technologies for lifelong learning, computers and education, 34, 177-193. u.s. department of education (2002), a profile of participation in distance education: 1999–2000, washington d.c., national center for educational statistics. 250 http://epp.eurostat.ec.europa.eu/ http://www.insse.ro/ lauratimiras@yahoo.com abstract (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro features of small business development in the cis countries: does institutional environment affect nataliia ostapenko taurida national v. i. vernadsky university natayal107@mail.ru abstract the article analyzes the development of small businesses at the national level through a comparative analysis between the former soviet countries – ukraine, russia, belarus, kazakhstan, uzbekistan, and kyrgyzstan. these countries are comparable by the previous path dependence (the period of the ussr, communism), by the position of the geographical location, as well as by similarity of cultural development. as can be seen from the analysis, which was conducted in article, the quantitative characteristics of small business development in the above countries are similar, based on the dependence on foreign markets and conditions in national economies. however, qualitative indicators of small business development in these countries are different. these differences can be attributed to the activities of the institutional environment (formal and informal institutions) and its impact on the national economy. conclusions about the effectiveness of quality of development of small business sector through the analysis of its contribution to the national economy are done. keywords small businesses; the trajectory of previous development; institutional environment; gdp; development; growth rate; share jel classification e020; m10 introduction the importance of the small business sector can be shown through its role in the economies of developed countries (about 50% of gdp). however, in the ukrainian national economy model its development has not yet reached the required level (about 15 % of gdp), that is why the question about identification of major barriers functioning of small business in the economy as well as appropriate ways to its stimulation remains to be actual. particular attention should be paid to the influence of the institutional environment for the development of small businesses, because these characteristics are a reflection of a particular model of the economy and are subject to change over a long period of time. literature review the studies of the influence of domestic institutional environment for the development of small businesses are empirically carried out mainly on the results of ratings of international organizations (vasiltsіv, 2009; golovko, 2011; nureyev, 2010), and are based on the analysis of regulations in this area (yurkiv, 2012). investigation of the influence of the institutional environment for the operation of the most complex enterprises is reflected in the works of foreign researchers: commander s. et al. (2008) came to the conclusion that the institutional environment (according to 51 ostapenko surveys of individual enterprises and according doing business) has little impact on performance, which in turn, explains the subjectivity of data; estrin et al. (2005), had investigated the possibilities and limitations for business development, defined among them the institutional environment and the characteristics of people who entered into changes; the main obstacles in the way of institutional environment of development of small businesses were studied in work of polishchuk l. (2013); aidis r. (2006) identified the main barriers for the small business sector in various stages of transition and among influencing factors on the initial conditions of a particular country were identified geographical factors, cultural and institutional legacy of central planning. however, questions about depending of vector of small business development from the previous path-dependence as well as from changes in the institutional environment in the national economy have been still covered in the scientific literature insufficiently. aim of this research is to determine the degree of influence by the institutional environment on the development of small businesses. this analysis was planned to conduct for the post-soviet countries, because they are similar by variations of reform from single paths dependence way. small business development is dependent process (from the position of neo-institutional theory) from a trajectory of previous development. many scholars have noted the importance and significance of the previous trajectory of development for the subsequent choice of institutional way. aslund (2005) argues that russia, ukraine and kazakhstan experienced the appearance of large business groups able to influence political decision-making, while in the smaller cis states these actors did not emerge. kazakhstan started the catchingup reforms already in the late 1990s, russia in the early 2000s and ukraine in the second half of the 2000s. the shape of graphs for three countries is relatively similar (which is to be expected, since they represent reform variations within one particular model of post-socialist economies). although, as noted by libman a. (2006), most cis states created the formal framework for markets including private property, corporate and contract law and similar institutions there are still important problems with both completeness and consistence of these formal norms and, more important, with their implementation and enforcement, as well as with corruption, deficit of trust and low quality of governance. estrin s. et al. (2005) stated, that the development of the entrepreneurial sector is sensitive to the institutional environment with a sharp distinction between the more market-oriented economies of central and eastern europe and slower and more erratic pace of change in the former soviet union. successful entrepreneurship depends not only on initial conditions in the transition economies but also on the speed and consistency with which the reform process has been applied. growth in the private sector share was caused by privatization of existing firms as well as the emergence of entirely new enterprises. in this work i test hypothesis about the possibility of studying of changes in the institutional environment and their influence on economic processes through the analysis of post-soviet countries, because they have a common trajectory of the previous development (during the soviet era), they are similar by geographic location and cultural factors (as noted by aidis r. (2006) factors influencing the initial conditions of the country). as noted sterjneva m. (1999) the region still united by social integration factors, such as the russian language, shared values, informal interpersonal communication network, common customs and ways of doing business, and so on. but at the same time in these countries at the moment small business sector are developing differently. 52 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro empirical results exploring the importance of the institutional environment in the development of the small business sector and the national economy we may refer to overseas studies. in the work of estrin s. et al. (2005) noted, that the development of entrepreneurship is basic mechanism of transformation (a period of economic and institutional changes) of post-communist countries, and institutional environment affects the speed of change. countries with policy implementation gaps may have advanced business law on books but reality may be different due to informal institutions, this creates problems for comparison of ‘real’ levels of institutional development between countries. in a study of paul g. hare (2001) ways of influence of institutional environment for economic development were determined as "institutional environment affects behavior of enterprises in different ways, and results of changes in the behavior of enterprises leads to different economic outcomes". polishchuk l. (2013) had conducted comparison of general laws of development of the sme sector in the early stages of post-communist reforms noted that the rapid expansion of the private sector in the period after the liberalization of the economy was typical for most of the countries with economies in transition. on the first stage of development of small business this sector had been relatively insensitive to the institutional structure of the country. but over time of economic reformation and restructuring the transient sources of "easy money" were closed, and small businesses were forced to change their modes of operation and to find sustainable sources of income, which makes it dependent from the institutional structure. consequently, the end stage of "filling in the gaps", when institutional relevance has increased dramatically, had become an important point of bifurcation for small businesses. beyond this point, the trajectory of previous development of this sector in the various countries began to diverge. in view of this, it is expedient to study the influence of the institutional environment on small business sector after the initial stage of transition economies. in confirmation of this it should also be noted that during the 1992-99 years in ukraine most basic market rules didn’t work (von hirschhausen and opitz, 2001). therefore the period was selected for study since 2000. determining the impact of institutional factors on the development of small business sector the quantitative growth (chain) of small businesses in post-soviet countries was analyzed (figure 1.) as quantitative indicators of business reflects the characteristics of the institutional environment, which affecting the behavior of this subjects. however, increasing of number of small firms may also be driven by legalization of gray and black markets of enterprises, and by the formation of paper enterprises (estrin et al., 2005). as can be seen from figure 1, the process of quantitative development of small enterprises is quite similar between the post-soviet countries. this can be explained by the economic location of countries, as well as by globalization of the world economy. peak of chain growth of the number of small enterprises in ukraine, belarus and kyrgyzstan fell on 2006 year, what could be justified by dynamics of development of the economies of these countries, and for russia and kazakhstan this peak began in a year later in 2007. you can also note the general trend of falling of growth rates in 2009 year due to the complexity of the development of small enterprises in the global crisis. therefore, from this study it’s clearly that although the quantitative parameters of the small business sector are special for every economy, in the dynamics for close countries they may experience certain common characteristics. analyzing the growth (basic) in the number of small businesses between chosen countries it could be stated that the trajectory of quantitative growth in many countries during the study period is also similar (figure 2.). 53 ostapenko figure 1 growth rate (chain) of small businesses in the cis countries source: compiled by the author according to “review of status of small business in the kazakhstan republic”, available at: http://www.damu.kz/145; agency of statistics of the kazakhstan republic, available at: http://www.stat.gov.kz; federal state statistics service of the russian federation, available at: www.gks.ru; official site of the national statistical committee of ukraine, available at: http://www.ukrstat.gov.ua; the national statistical committee of the belarus republic, available at: http://belstat.gov.by; the national statistical committee of the kyrgyz republic, available at: http://www.stat.kg/;the state committee of statistics of uzbekistan, available at: http://www.stat.uz as can be seen from figure 1, the process of quantitative development of small enterprises is quite similar between the post-soviet countries. this can be explained by the economic location of countries, as well as by globalization of the world economy. peak of chain growth of the number of small enterprises in ukraine, belarus and kyrgyzstan fell on 2006 year, what could be justified by dynamics of development of the economies of these countries, and for russia and kazakhstan this peak began in a year later in 2007. you can also note the general trend of falling of growth rates in 2009 year due to the complexity of the development of small enterprises in the global crisis. therefore, from this study it’s clearly that although the quantitative parameters of the small business sector are special for every economy, in the dynamics for close countries they may experience certain common characteristics. analyzing the growth (basic) in the number of small businesses between chosen countries it could be stated that the trajectory of quantitative growth in many countries during the study period is also similar (figure 2.). at the same time in ukraine since 2008 slowing of growth of small businesses began, even though the legislative extension of the classification criteria of small businesses (as a result of which some medium-sized enterprises had already come under the category of small, which in turn should significantly increase its number (the commercial code of ukraine, 2008). it could be noted that slowing growth in the number of small businesses the most early started in ukraine. this phenomenon can be determined by influence of the global financial crisis on the economy. on the basis of this speculation small business in ukraine, unlike in other post-soviet countries, was the most susceptible to changes in the external markets and worldwide. noting that small businesses in ukraine are tax havens for big business, the amount of this reduction should have been expected. 54 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro figure 2 growth rate (basic to the 2000/2001 data) of small enterprises in the cis countries source: compiled by the author according to “review of status of small business in the kazakhstan republic”, available at: http://www.damu.kz/145; agency of statistics of the kazakhstan republic, available at: http://www.stat.gov.kz; federal state statistics service of the russian federation, available at: www.gks.ru; official site of the national statistical committee of ukraine, available at: http://www.ukrstat.gov.ua; the national statistical committee of the belarus republic, available at: http://belstat.gov.by; the national statistical committee of the kyrgyz republic, available at: http://www.stat.kg/;the state committee of statistics of uzbekistan, available at: http://www.stat.uz from this graph (figure 2.) point of bifurcation could be distinguished its 2006-2008 years. in these years the period of stable development of business was replaced by period of crisis. and after this period stable development of the small business sector purely in the national economy can be seen as the negative impact of external environment was offset. after this period in belarus, kazakhstan and russia stable development of small business continued, whereas in the other studied countries growth slowed. for further analysis of the features of the development of small business in the current model of the institutional environment, the analysis of the dynamics of the qualitative development of small enterprises was done (by the dynamics of the share (%) of small businesses in gdp of post-soviet countries (figure 3)). as can be seen from comparative figure 3, in ukraine the dynamics of growth of share of small enterprises in sales volumes increased significantly in 2006, which was caused by the entry into force of the new classification criteria for small businesses, due to what this indicator began to reflect not only the share of small enterprises, but also parts of former medium. therefore, leveling changes in statistical records, this analysis is based on the calculation of the share of small business in gdp by criteria of 2008, which was conducted in work of dmitrieva v. (2011) (in figure its indicator ukraine-2). after the adoption of these explanations, it can be stated that the dynamics of the share of small enterprises in ukraine's gdp is similar to their dynamics in kyrgyzstan. however, in kyrgyzstan it is possible to determine it by that kyrgyzstan is the smallest of compared countries by dynamics of growth of small businesses in the economy. and in ukraine, the growth rate of small businesses only in 2009 was declined to kyrgyzstan level. in this case, in closest russia small businesses more dynamic gave economic effect. in belarus, kazakhstan, and uzbekistan it can be traced quite similar dynamics of economic effect of the activity of small enterprises during the compared period. 55 ostapenko figure 3 growth rate (base to the 2000/2001 data) the share of small enterprises in the gdp of the countries of the cis source: compiled by the author according to “review of status of small business in the kazakhstan republic”, available at: http://www.damu.kz/145; agency of statistics of the kazakhstan republic, available at: http://www.stat.gov.kz; federal state statistics service of the russian federation, available at: www.gks.ru; official site of the national statistical committee of ukraine, available at: http://www.ukrstat.gov.ua; the national statistical committee of the belarus republic, available at: http://belstat.gov.by; the national statistical committee of the kyrgyz republic, available at: http://www.stat.kg/;the state committee of statistics of uzbekistan, available at: http://www.stat.uz for a more complete analysis of the qualitative development of small business sector in the national economy of ukraine and comparison with the development of this sector in other countries with similar trajectory of development, correlation analysis of the rate of growth of quantitative and qualitative development of small businesses was carried out (table 1). table 1 correlation between growth rates (basic) of number of small businesses and their share in gdp countries correlation basic year uzbekistan 0,97 2000 belarus 0,89 2000 kyrgyzstan 0,85 2001 russia (up to 2008) 0,82 1998 kazakhstan 0,75 2001 ukraine 0,71 1998 ukraine -2 -0,82 2000 source: compiled by the author according to “review of status of small business in the kazakhstan republic”, available at: http://www.damu.kz/145; agency of statistics of the kazakhstan republic, available at: http://www.stat.gov.kz; federal state statistics service of the russian federation, available at: www.gks.ru; official site of the national statistical committee of ukraine, available at: http://www.ukrstat.gov.ua; the national statistical committee of the belarus republic, available at: http://belstat.gov.by; the national statistical committee of the kyrgyz republic, available at: http://www.stat.kg/;the state committee of statistics of uzbekistan, available at: http://www.stat.uz the correlation coefficient for the russian federation had been calculated up to 2008, as in 2008 economic crisis started, which significantly influenced the reduction in the share of small enterprises in the gdp, and in 2008 a new federal law was introduced "about development of small and medium enterprises in russian federation", which 56 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro changed the criteria for classifying enterprises to small. therefore, for the purity of research and leveling influence on it of such factors in the russian federation correlation was calculated until 2008. as can be seen, these coefficients of correlation between quantitative and qualitative development of small enterprises there is strong correlation in some post-soviet countries is a (uzbekistan, belarus, kyrgyzstan). at the same time in kazakhstan and russia correlation between the studied parameters is also on significant level. in ukraine, it could be observed a moderate relationship between the basic growth rates of the number of small businesses and their share in the gdp, but this relationship can be explained by a sharp increase in the share of small business in gdp in 2006, as a result of conversion to the new criteria. but this dependence is completely leveled, given the effect of the new criteria (2008) when quantity of small businesses and their share in gdp calculated according to these criteria throughout the studied period (correlation -0.82). in this case, the correlation coefficient is very strong and negative, indicating inefficient development of the small business sector in the economy, as growth in the number of small businesses does not increase the share of this sector in the country's gdp. confirmation of the hypothesis about the effectiveness of small business development through the relationship between the number of small businesses and their share in gdp is confirmed by analysis on the cross-correlation the highest correlation is observed in the case of 0 lag. the main conclusion from two conducted analyzes of small business sector of ukraine can be done-small enterprises in the national economy develops at inefficient level, even compared with neighboring countries. in the economies with similar path dependence over two decades very different models of effectiveness of small business development in the national economy were formed. given that the transition countries have different levels of market memory (round, 2009) and different levels of integration in the soviet command economy (mickiewicz and estrin, 2011) it is not surprising that in these countries business sector develops differently. this can be confirmed by scase (2003), who offered a different dichotomy, namely by entrepreneurs’ commitment to business growth. he argues that in transition economies a large proportion of business owners are “proprietors” who use profits for private consumption rather than reinvest into business. thus, even though sme numbers may be high, they do not necessarily constitute a growth engine, as their motivation is different from that of their west european counterparts. as noted melnyk a. et al. (2012), the nature of the transformations can be of two types: evolutionary and stimulated by the state. since the investigated countries are characterized by the common trajectory of the preceding development, and they developed independently only over a small period of time (22 years), then we can talk about the transformations stimulated by the state. therefore, in the paper we assume that precisely government actions to change the institutional environment are stimulants of changes in the development of the small business sector. lack of effective institutions and opportunistic behavior of the officials led to an informal culture, which explains why entrepreneurial capabilities and intentions are at a lower level than in other countries. countries with gaps in policy implementation may have progressive laws for business on paper, but in reality they may vary due to the action of informal institutions. although in cis countries there are still problems with the formation of formal rules and, more importantly, their implementation and coercion, as well as with corruption, lack of confidence and poor quality control, as noted by libman a. (2006). the conflict between formal and informal institutions as alternative sets of norms of behavior is one of the most debated issues in modern transitional and developed economies (libman, 2013). however, while the formal institutions can be formed 57 ostapenko quickly, informal institutions, which contradict them, may take more time to reform (stiglitz, 2001). conclusions based on this research, the following conclusions could be made: geographical location, cultural traditions, institutional trajectory of the previous development, as well as serving institutional environment affect the vector of development of small businesses. and as a consequence, it should also be treated with caution on import of institutions from one country to another. small business in the existing institutional environment evolves inefficient in ukraine, even compared to close countries by the initial conditions of the institutional environment. we can talk about the inefficiency of the existing formal rules and mechanisms for their enforcement, as well as their inconsistencies with established for a long time informal norms of behavior. the current institutional environment in ukraine promotes the formation of ineffective behavior of entrepreneurs, which is reflected in the results of the development of small enterprises in the national economy. it is necessary to pay more attention to the basic steps to reduce corruption, to eliminate bureaucratic barriers to business formation and growth, as well as to improvement of the formal rules of the game and bring them into alignment with the informal norms of behavior in ukraine. exploring the importance of the institutional environment in the development of the small business sector and the national economy we may refer to overseas studies. in the work of estrin s. et al. (2005) noted, that the development of entrepreneurship is basic mechanism of transformation (a period of economic and institutional changes) of post-communist countries, and institutional environment affects the speed of change. countries with policy implementation gaps may have advanced business law on books but reality may be different due to informal institutions, this creates problems for comparison of ‘real’ levels of institutional development between countries. references aidis, r. (2006), entrepreneurship in a changing environment: analyzing the impact of transition stages on sme development, available at: http://www.ncsb2006.se/pdf/do% 20environmental% 20influences.pdf aslund, a. (2005), comparative oligarchy: russia, ukraine and the united states, case studies and analyses 296. commander s., svejnar j., tinn k. (2008), explaining the performance of firms and countries: what does the business environment play?, discussion paper, 1 (e), 23 p. damu entrepreneurship development fund jsc (2014), review of status of small business in the kazakhstan republic, available at: http://www.damu.kz/145 dmitrieva v. (2011), problems of statistics of small business development, economic analysis, no. 8, pp. 66-73. estrin, s., meyer e. k., bytchkova m. (2005), entrepreneurship in transition economies, the oxford handbook of entrepreneurship, forthcoming oxford university press, 47 p. federal law (2007), about development of small and medium enterprises in the russian federation, available at http://www.rg.ru/2007/07/31/biznes-doc.html 58 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro golovko, m. v. (2011), about efficiency of the institutional environment of small business, available at http://www.erce.ru/internet-magazine/magazine/28/404/ libman, a. (2006), government-business relations and catching up reforms in the cis, the european journal of comparative economics, vol. 3, n. 2, pp. 263288. libman, a. (2013), institutional competition in the post-soviet space, available at http://mpra.ub.uni-muenchen.de/10936/ melnyk, a. et al. (2012), the structural transformation of the national economy: problems of diagnosis and institutional support, ternopol: tneu, 532. mickiewicz, t., estrin, s. (2011), “entrepreneurship in transition economies: the role of institutions and generational change”, dynamics of entrepreneurship, pp. 181-208. nureyev, r.m. (2010) “institutional environment of the russian business the effect of a rut”, available at: http://uisrussia.msu.ru/docs/nov/ leontief/2010/nureev.pdf paul, g. hare (2001), “institutional change and economic performance in the transition economies”, session ii of the unece spring seminar, geneva, 7-8 may. polishchuk, l. (2013), “small businesses in russia: institutional environment”, available at: http://www.businessenvironment.org/dyn/be/docs/58/wp240.pdf round, j. (2009), transitional economies. in kitchin, r. and thrift, n. (eds.) international encyclopaedia of human geography, elsevier, oxford, pp. 355 – 360. scase, r. (2003), entrepreneurship and proprietorship in transition: policy implications for the sme sector. in mcintyre, r.j., and dallago, b. (eds): small and medium enterprises in transitional economies, houndmills, basingstoke and new york: palgrave macmillan. sterjneva, m. (1999), the european union and the cis: a comparative analysis of institutions, moscow scientific community. fund, 266 p. stiglitz, j. (2001), frontiers of development economics: the future in perspective, world bank; oxford university press usa. vasiltsіv, t.g. (2009), improvement of institutional environment of small business development in small cities, research and analysis quarterly review "strategic priorities", 3 (12), pp. 184-190. verkhovna rada of ukraine (2014), the commercial code of ukraine, available at zakon.rada.gov.ua von hirschhausen, c., and opitz, p. (2001), power utility re-regulation in easteuropean and cis transformation countries (1990-1999): an institutional interpretation, available at http://www.hks.harvard.edu/hepg/papers/discussion_paper_tu.pdf yurkiv n.j. (2012), characteristics of the institutional environment in the context of economic security business in ukraine, businessinform, no 5, pp. 90-92. 59 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 20, 2014 http://sceco.ub.ro marketing and innovation – a relationship approach rodica boier “gheorghe asachi” technical university of iaşi rodica_boier@yahoo.com abstract this paper deals with innovation from a relationship marketing perspective, the company's ability to maintain interactions with its stakeholders, to take advantage from the information achieved, and this way to create new products and generate loyalty through customer satisfaction. the analysis of innovation from a relationship establishment standpoint can only be viewed interdisciplinary at its core, with research and development, design, management, and marketing being symbiotically combined, with focus on stakeholders’ involvement. the paper reviwes the most significat literature in the area. there is a two-way connection between relationship marketing and innovation. on one hand, the newly launched product, conceived together with the stakeholders, is likely to generate satisfaction and, hence, customer loyalty and retention, with all known positive consequences. on the other hand, the repeated satisfaction felt by the stakeholder encourages him to expect even more from the innovative organization in what concerns the successfully launched new products. this way, the effective stakeholder involvement in the value creation process provides a strong basis for further innovation. keywords relationship marketing; innovation; new product development; stakeholders; innovation networks jel classification m31 introduction many years ago already peter drucker asserted that marketing and innovation are considered to be the two basic functions of any business enterprise. the value created by the company should be customer-oriented, to generate both customer satisfaction and the expected customer relationship value. the paper deals with innovation from a relationship marketing (rm) perspective. the rate of new product (np) failure continues to be high despite the fact that innovation and marketing have become increasingly important tools for the companies’ profitability, and the primary reason remains the still poor understanding of the complex nature of customer needs, values and behavior. because, in the future, organizations will be more and more differentiated by their capability to successfully interact with their stakeholders, customers first, it will be valuable to analyse if companies really involve them in their new product development (npd) process, how do they do this and what results it produces. in this respect, bhalla urges for a real process of „rethinking marketing and innovation” (2011, p. 123-143). 154 marketing and innovation – a relationship approach the relationship orientation in innovation. a literature review there is a growing body of literature that deals with innovation and rm. a relationships orientation in innovation reflects a company's ability to maintain interactions with its stakeholders, to take advantage from the information achieved, this way to create nps and generate loyalty through customer satisfaction. in this context, the term „stakeholders” refers to the primary interested entities – consumers, customers, suppliers, employees, shareholders, regulators and the community, as well as the society at large (hult et al., 2011). all of them can participate, through specific relationships, to the complex process of value co-creation, managed by the innovative organisation. innovation and npd is an important issue in collaborative relationships between organizations. heide and john (1990) investigated the determinants of joint action in alliances between buyers and sellers, one of those being the component testing/prototyping. the development of a business network that emerged when a np was developed and tried together with customer organizations was also described by anderson et al. (1994). ramani and kumar (2008) linked the rm with innovation at a higher level of generality and stated that rm „is a process for developing innovation capability and providing a lasting competitive advantage” (p. 27). lately, some authors have included „innovativeness” along with other general rm constructs, as mutual trust, satisfaction, experience, loyalty, commitment etc., as reflected by a substantial inventory created by agaryia and singh (2011, p. 207-224). when developing a np, it is crucial to include the relational context analysis. in this respect, several researchers (fang et al., 2008; tuli et al., 2007; franke, 2006; lagrosen, 2005) have discussed methods and benefits of interacting with customers and other stakeholders, but the domain is still developing. inspired from the context of industrial market, rm and innovation have been expanded more and more to the consumer markets as well. there is a two-way connection between rm and innovation. on one hand, the newly launched product, conceived together with the stakeholders, is likely to generate satisfaction and, hence, customer loyalty and retention, with all known positive consequences. on the other hand, the repeated satisfaction felt by the stakeholder encourages him to expect even more from the innovative organization in what concerns the successfully launched nps. this way, the effective stakeholder involvement in the value creation process provides a strong basis for further innovation. it is critically important in innovation the approach in the broadest sense of mr – customers but also other stakeholders involved. similarly, there is to be considered the whole range of aggregation level in relationship interactions – actions, episodes, sequences, relationships, and partner base –, as hierarchical levels that range from a single individual exchange to the entire relationship portfolio of a company (holmlund, 2004). on the other hand, as far as innovation in itself is concerned, it must be viewed in its broad complexity of forms, including practices, processes, and systems relating to products, services, it, etc. in such perspective, the analysis of innovation from a relationship establishment standpoint can only be viewed interdisciplinarily at its core, with r&d, design, management, and marketing being symbiotically combined, with focus on stakeholders involvement. the rm practice in innovation can be found in a wide variety of circumstances, each characterized by corresponding particularities. this diversity can be attributed to the type of product (b2b or b2c), to the industry specifics, to the actual stage of the market evolution – emerging, mature or decreasing –, the level of technological novelty as dimension of technological uncertainty, to the status and role of the stakeholders in their role of relationship builders, to the npd process status in which the relationship takes place, or to special issues like sustainable innovation, for profit 155 boier and not-for-profit areas s.a. for instance, athanassopoulos (2000) demonstrates that customer satisfaction is a function of innovation, but individual customers do not value product innovation as much as b2b customers. or, nambisan and baron (2009) propose collaboration platforms for social innovations that require collaboration / relationships among diverse networks of nonprofits, government agencies, corporations, and private citizens. all the variables that ensure the rm success can be found, with their specificity, in the management of the np: commitment, trust, seller’s customer orientation and empathy, experience and satisfaction, communication a.s.o. more specific, innovation-related benefits of the rm go from the improvement of customer focus, enhancement of customer knowledge and feedback and improvement of customer solutions, to the enablement of product customization and personalization and, this way, better customer attraction, conversion and retention or even winning-back lost customers (richards and jones, 2008; spekman and carraway, 2006; tanner et al., 2005; thomas et al., 2004; thomas et al., 2004; sabri, 2003; zikmund et al., 2002; verhoef, 2003; sheth and sharma, 2001; winer, 2001, sheth et al., 2000). the mix of relationships, as seen by gummesson (2008), also apply to the specific of innovation. relationship innovation could appear through market relationships – the classic supplier-customer dyad, the supplier-customer-competitior triad and the physical distribution network –, but also through non-market relationship, with two levels – the mega relationships (platform for market relationships, concerned with the economy and society in general) –, and nano relationships (intraorgannizational relationships) (p. 38-39). dimensions of the relational approach in innovation as overwhelmingly demonstrated, the most successful innovation and npd efforts match a set o fully understood customer problems to a cost-competitive solution to those problems (griffin et al., 2012; rust et al., 2009). more and more these days, the stakeholders are attracted in the design process, where marketing and r&d are fully integrated. during the npd process, a complex set of relationship approaches develop between producer and stakeholders, especially the customers. interaction management in customer integrated innovation is an opportunity for companies to supply relational service to customer and to improve customer value and relationship quality (sun et al., 2010, p. 56-57). but companies also need to assess how to best ensure their capability to enable the most fruitful atmosphere from a relationship building standpoint in order to source meaningful ideas from outside the company and even outside the industry, insights and knowledge from customers and end users, suppliers and competitors, universities, independent entrepreneurs, investors, inventors, scientists a.s.o. besides the classical internal sources of the innovation value chain (hansen and birkinshaw, 2007), “cross-pollination” (evans and wolf, 2005; eisenhardt and galunic, 2000) and external sources (von hippel, 2005; kim and mauborgne, 2004; chesbrough, 2011 and 2008) have established themselves equally as viable solutions, both of them involving at the same time a large and also deep network of professional relationships. perks and moxey (2011) highlighted that high levels of product innovation activity primarily occur in companies leading and developing networks. because understanding customer needs driving product innovation is vital for np developers, it is important for them to identify that dimensions of the relationship process able to make the organization more proactive. in a b2b setting, customer interactivity is conceptualized as a multidimensional construct consisting of bidirectional communications, participation, and joint problem solving during npd projects (bonner, 2010). in the same context, ramani and kumar (2008) studied the 156 marketing and innovation – a relationship approach main components of such an interaction orientation as been the customer concept, the interaction response capacity, customer empowerment, and customer value management. interesting npd relationships develop when faced with the level of novelty, on the one hand, and with the embeddedness of the np in the customer's business environment, on the other hand. according to bonner, customer interactivity is positively related to customer information quality when developing highly innovative and highly embedded products, but not when developing modifications or extensions of existing, low embedded products. although the general strategy of developing long-term relationships is known to enhance supplier performance, it is already proven that some customers are still more attractive partners for the supplier, comparing with others. therefore „the selection of the cooperation partners has to be made consciously and carefully. lead users, financially attractive customers, and close customers are attractive interaction partners.” (gruner and homburg, 2000, p. 11). based on a transaction-cost analysis (how organizations can obtain maximum utility from their relationships with other organizations), athaide and rochard (2009) propose for the innovative company to manage a portfolio of relationship approaches with buyers during the npd because, from its three basic components – a bilateral approach, relying on a mutual exchange of information, a buyer-guided approach, and a seller-guided approach –, no one is always desirable. in their model, the criteria to adopt a specific approach being both buyer-related (perceived buyer knowledge and prior relationship history) and innovation-related (product customization and technological uncertainty) characteristics, on the one hand, and behavioural dimensions (product co-development, pre-installation product knowledge generation, buyer education, installation support and post-installation product knowledge generation), on the other hand, the performance to be finally evaluated will be the overall innovator’s relationship satisfaction. relationship marketing along the npd process the process of co-innovation borrows from the npd process descriptions of the multi-stages frameworks (fang et al., 2008; alam, 2005 and 2002), with the classic phases of idea generation and screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing and commercialization. customer involvement at certain stages of co-innovation is more beneficial than at others. regarding the distribution of rm along the stages of the npd process, in both the breadth and the degree of involvement, researchers are divided. traditionally, customer involvement has been suggested to be beneficial firstly in the initial – ideation – and final stages – testing (gruner and homburg, 2000; enkel et al., 2005; lagrosen, 2005; urban and von hippel, 1988). this invites the possibility that the customers' opinions will be lost or at least diluted during the intermediate stages of the process (campbell et al., 2007). lagrosen (2005) suggests that the emphasis should be in early stages of the process for the transactional customer relationsships, in the early and in the testing stage and occasionally only in other stages for the facilitative customer relationships, and a longitudinal one, in all stages for the integrative customer relationships. new studies sustain more and more the last approach, in which companies seek to engage customers to innovate throughout the entire innovation process (carbonell et al., 2009). in this respect, stump at al. (2002) tray to offer even a decision guide for managers to help them deciding where and how much to engage interactions with buyers in different stages of the npd process. 157 boier regarding the new service performance, the impact of customers involvement is independent of the stage of the development process, despite the different roles played by them (kuusisto and riepula, 2011). this provides support for cooper’s (2011) advice to seek and develop customer relationships (input and feedback) at every step of the way throughout the entire development process, from beginning to end. this is found to be especially true for companies developing technologically innovative services or for situations of innovating during technological turbulences (carbonell et al., 2009). based on three characteristics proposed by diener and piller (2010) – the stage in the innovation process, the degree of collaboration, and the degrees of freedom for the tasks assigned to customers –, piller et al. (2011) describe eight ideal types of co‐creation with customers, as follows: idea contests, idea screening through customers, product-related discussion forums, and communities of creation for idea generation, at the front end of the innovation process, and toolkits for user innovation, toolkits for customer co-design by configuration in mass-customization settings, virtual concept testing/trading, and communities of creation for problem solving, as network or community-based cocreation, at the back end of the innovation process (p. 11-15). related to the distribution of rm along the stages of the npd process, lehtimaki (2012) proposes a typology of co-innovation processes according to the breadth and depth of customer involvement: a customized (solution) selling-type, which involve the customer more or less throughout the co-innovation process, but not deeply, a testing focused type aiming to receive information and feedback from the customers, and a truly cooperative type meaning an intensive cooperation between the involved parties throughout the npd process. lynch and o’toole (2010) also describe the dynamics of the interaction atmosphere of a dyadic npd project, with two levels of the analysis – the change in the interaction atmosphere and the identification of the process dynamics that most impact in the studied case. all of this can be used in other settings to handle the npd interaction atmosphere by collaborating parties (p. 126). new capabilities for rapid and inexpensive customer interactions to all stages of the npd process comes today from ict tools, that allow web-based methods like information pump, fast polyhedral adaptive conjoint estimation, interactive webbased conjoint analysis, virtual concept testing on the web, securities trading of concepts a.s.o. (dahan and hauser, 2002). this way, customers are enabeled to learn their own preferences and, in the same time, the npd team to understand complex feature interactions of the virtual products designed by customers. conclusions because, in the future, organizations will be more and more differentiated by their capability to successfully interact with their stakeholders, customers first, it will be valuable to analyse if companies really involve them in their new product development (npd) process, how do they do this and what results it produces. there is a growing body of literature that deals with innovation and rm. as overwhelmingly demonstrated, the most successful innovation and npd efforts match a set o fully understood customer problems to a cost-competitive solution to those problems (griffin et al., 2012; rust et al., 2009). more and more these days, the stakeholders are attracted in the design process, where marketing and r&d are fully integrated. during the npd process, a complex set of relationship approaches develop between producer and stakeholders, especially the customers. because understanding customer needs driving product innovation is vital for np developers, it is important for them to identify that dimensions of the relationship process able to make the organization more proactive. 158 marketing and innovation – a relationship approach references agaryia, a.k., singh, d. 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(2002), customer relationship management: integrating marketing strategy and information technology, john wiley & sons, hoboken, nj. 161 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 6 clustering based bibliometric analysis of the business performance concept anatol melega stefan cel mare university of suceava melega.anatol@gmail.com veronica grosu stefan cel mare university of suceava veronica.grosu@usm.ro anamaria geanina macovei stefan cel mare university of suceava anamaria.macovei@usm.ro daniel botez vasile alecsandri university of bacau daniel63331@yahoo.com abstract business performance, as a whole, represents the main concern for financial information users, as a risk assessment tool meant to establish the effectiveness and efficiency of the work performed. over time, there was an ongoing challenge related to business performance analysis. the purpose of this research is to identify and examine the interdependency relations between the determining factors in the bibliometric analysis of the published literature, when the main topic is business performance. therefore, to reach this purpose we pursued the following objectives: o1bibliometric coupling analysis of the scientific papers published on the web of sciences and scopus databases, which addressed the business performance topic by means of clustering; o2 – identifying the correlations between research projects already in place and highlighting research projects not yet approached by researchers, creating new research niches, impacting the development of the performance model applied to current demands. keywords performance, research field, bibliometrics, bibliographic coupling analysis. jel classification m40 introduction academic journals have an important role in disseminating results and knowledge among stakeholders. according to morgan (1985), academic journals have a significant role, as they legitimize and control „the nature of what needs to be considered as valid research”. thus, for many researchers (for example, hu and collab. 2013; leonidou and collab. 2010; malhotra and collab. 2005; nel et al. 2011, melega, 2022) the review of papers published in academic and conference journals represents a significant research project, highlighting and making a full use of the scientific production in various fields of research. the majority of bibliometric analyses are based on content analysis, which represents, according to yale and gilly (1988), „the most valid way of determining the editor’s/ reviewer’s preference”. bibliometric studies contribute to the identification and establishment of research niches, for the purpose of outlining and predicting new research niches, which were either underexplored or not explored at all. melega, grosu, macovei, botez 7 following on from that, to achieve the bibliometry of scientific papers whose research topic is centered on business performance, environment performance, economic performance and global performance, we analyzed the scientific literature in the web of sciences and scopus databases, while using vosviewer and spss softwares as analysis tools. table 1. key concepts and number of scientific papers published in the web of science and scopus databases key concepts searched on web of science research results key concepts searched on scopus research results total business performance 69.471 business performance 2.471 71.942 source: prepared by the author according to the data in table 1.1, we can easily notice that the number of papers focusing in their research on business performance in the two databases, web of science and scopus, is quite significant, especially when looking at web of science with about 69,471 papers. the large number of publications in the web of science database is due to the fact that this is one of the largest databases globally, covering more than 12,200 scientific journals and 160,000 conferences for which the isi index is being calculated. literature review businesses are the engine of the economy, their main purpose being to reach a maximum level of performance by achieving the objectives established. business performance refers to its management’s effectiveness and efficiency in using resources to reach the objectives established. so, a high-performance company is a company who succeeds in reaching its goals, at minimum cost, without wasting resources. each entity establishes its own performance assessment indications. national and international regulations require entities to disclose in the notes to financial statements certain financial performance indicators, such as: liquidity, solvency, cost-efficiency, etc. stakeholders, comprising: creditors, investors, managers, staff, etc. have a special interest in the financial performance of the entity. each group has its own interest in considering the financial performance of a business. in our scientific endeavor, for a better knowledge of the general trends within the scientific papers and also to identify the relevance of the studies centered on ”business performance”, we have set out the meta-analysis below, in table 2. according to mullen (1989), regular review and meta-analysis comprise significant advantages related to ”accuracy”, „objectivity” and ”replicability”, compared to narrative review. to carry out the meta-analysis, we selected the most relevant papers of the web of science database, using aș a research filter the number of citations and paper relevance. table 2. summary of impact studies in the researched field autor/ authors year of publication research purpose and results research timeliness and impact clustering based bibliometric analysis of the business performance concept 8 yang, c.c. 2012 the purpose of the research is to examine the impact of environmental management on business environmental performance and, in general, of the performance of taiwan shipping companies. based on factors analysis, the author identified three critical dimensions of environmental management: environmental management practices, environmental management audit and investment in environmental management. to examine the effects of environmental management on environmental performance and business performance, the author developed a structural equation model (sem). results showed that environmental management had significant positive effects on environmental performance and on business performance, however, environmental performance showed no relation to business performance. this research has a high impact, proven by the number of citations: 15 citations in web of science and 17 citations in other databases. also, based on relevance, after applying this filter, the paper was ranked the first ”highly cited”1 hung, k. p., chou, c. 2013 researchers examined the direct effects of acquiring and exploiting external technology on business performance. a questionnaire was used as an analysis tool, which was sent to 176 high-tech manufacturing companies in taiwan. the research results showed that the purchase of external technology has a positive impact on companies’ performance, while the contrary happens when exploiting external the paper has a high impact, given the relevance of the topic. the accelerated digitization process, that can be noticed lately, affects entity’s sustainability. the timeliness and relevance of the paper is also due to the number of citations: 178 in web of science and 11 in other databases. ”highly cited” 1 ”highly cited” –beginning with march / april 2021, this ranking is granted to papers and publications who obtained enough citations to place them on the top 1% in the academic field of social sciences, generated based on a threshold of citations per field and year of publication. melega, grosu, macovei, botez 9 technology. this study also shows that the purchase of external technology enhances the relation between external technology exploitation and business performance. camison, c., villarlopez, a 2014 authors examined the relation between business innovation and technology innovation capabilities and their effect on entity’s performance. they conducted a survey on 144 industry companies in spain, modelling a system of structural equations. results revealed that business innovation favors the enhanced technology innovation capacity of the company and that both business innovation, as well as technological capacities related to products and processes can lead to higher business performance. the relevance of the paper is given by the timeliness of the topic, namely „technology innovation”. we also need to outline that the paper has a citation index of 365 in web of science and 431 in scopus. ”highly cited” saeidi, s.p., sofian, s., saeidi, p., saeidi, s.p., saaeidi, s.a. 2015 researchers examined the relation between corporate social responsibility (csr) and business performance. the authors consider sustainable competitive advantage, reputation and clients’ satisfaction as three significant mediators in the relation between csr and business performance. the results related to 205 manufacturing and consumer products companies in iran show that there is an entirely mediated relation between csr and business performance. the positive effect of csr on business performance is due to the positive effect of csr on competitive advantage, reputation and clients’ satisfaction. according to the citation index, this paper has 459 citations in web of science and 522 in scopus. ”highly cited” clustering based bibliometric analysis of the business performance concept 10 inkinen, h. 2016 authors examined the literature in the field that approached the view that management practices impact business performance. at the time of publication, this was the first rigorous review of the literature on km practices and business performance. that study highlights that entities should give consideration to specific km management skills and business agreements to obtain sound performance. authors also mention that specific management attributes and business agreements are susceptible of supporting business performance by a more effective and efficient use of resources. the relevance of the paper is given by the number of citations in web of science – 121 citations, thus obtaining the „highly cited” badge. lins, k.v., servaes, h., tamayo, a. 2017 researchers examined the effects of csr activities on business performance, in the context of the economic crisis of 2008-2009. they noticed that the increase of social capital resulted from the csr activities is important in times when confidence in corporations decreased and that, under normal circumstances, any social capital benefits are already deducted from an entity’s share price. in the same time, authors are of the opinion that social capital, besides financial capital, can be a decisive factor of business performance. the paper has a number of 445 citations in web of science and a very high reference -„highly cited”. kim, k.h., kim, m.,qian, c.l 2018 authors examined the relation between corporate social responsibility and business performance from the competitive point of view. by analyzing the reports of 113 us according to the citation index, the paper was cited 95 times in the web of science database. „highly cited”. melega, grosu, macovei, botez 11 companies, they reached the conclusion that csr activities have a positive influence on business performance, namely on financial performance, when the company is conducting a high number of competitive actions. aydiner, a.s., tatoglu, e., bayraktar, e., zaim, s., delen, d. 2019 taking into account the fundamentals of the view oriented towards resources, authors examined the effects of ba (business analytics) adoption on the performance of business processes. based on the data collected from 204 medium and high level business directors across various industries, the results of this empirical study show that ba adoption has a positive effect on the business process performance. according to the citation index, the paper has 48 citations in web of science and 57 in scopus. -„highly cited”. huayu shen, mengyao fu, hongyu pan, zhongfu yu & yongquan chen 2020 the purpose of this paper is to analyze the covid-19 impact on the outcomes of listed chinese companies. the results of the study showed that business performance is negatively impacted by the covid-19 pandemics. this negative impact on business performance is more significant when the investment scale or the sales revenues of a company are lower. business performance is affected by crisis situations. managers tend to postpone investments when risks are increasing or in times of uncertainty, thus the momentum of business sustainability is affected. the study is extremely relevant since it is one of the first publications to have associated covid-19 pandemics with business performance. following the use of the ”relevance” filter in web of science, this paper took the first place, with a number of 86 citations. ”highly cited” clustering based bibliometric analysis of the business performance concept 12 wang, z.n., cai, s.h., liang, h.g., wang, n.x., xiang, e.w. 2021 the purpose of this study is to explore the influence of intellectual capital (ic) on business performance, taking into account the mediating role of innovation speed and quality. results show that human capital, structural capital and relational capital, are positively related to innovation speed and quality, which, in turn, facilitate the operational and financial performance of a company. since it is one of the first studies to have investigated the way in which ic is able to influence business performance by the mediating effects of innovation speed and quality, this study not only contributes to the hdm literature on ic and innovation, but also offers managers information on how to align their hrm strategies and practices to develop ic when targeting innovation and performance outcomes. according to the citation index of web of science, the paper was cited 73 times. ”highly cited” source: prepared by the author performance is an evanescent concept, since it takes over various meanings in various contexts, even within the same company. from the lexicographic point of view, the term of performance has its origins in latin from the word „performare”, being taken over in french as „performance” which means „to accomplish, to execute”. the term was taken over in english, with the same meaning „to perform”. the explanatory dictionary of the romanian language defines performance as „an outstanding achievement in a field of activity” or „a very good, exceptional and valuable result”. therefore, business performance actually relates to the company’s results within a reference period. in the economic practice, the term of „performance” was assigned a series of definitions, considered in the light of three dimensions: • the achievement of the established objectives; • the value created by the entity; • the efficiency and productivity of the entity. in the opinion of the authors albu and albu (2005) „the notion of performance has an abstract character, and its definition is many times related to other concepts: effectiveness, efficiency and value”. some authors define performance from the perspective of created value, for example stern, shiely and ross (2001) consider it „an uncertain level of a business potential, obtained following the enhancement of the value-cost relation and which renders the entity competitive in certain strategic areas”. the definition of performance in a dependency relation to the value created is also supported by lorino (1995), who states that ,,performance represents for a business what contributes to the improvement of the value-cost couple and not only what contributes to cost reduction and value increase”. in other words, business performance is its capacity to create value at a minimum cost. in the end, financial performance seen by virtue of value creation can be attributed to publicly listed companies. for publicly listed companies, value creation is an important condition for stakeholders, outlining their economic stability. performance reflects the business capacity to generate operational cash flows, a condition on which economic stability is based in order to create value for shareholders. depending on business productivity and efficiency, according to niculescu (2003) „an entity is, in theory, performing if it is productive and efficient, in the same time”. some authors, for example imbrescu and hațegan (2011) state that performance cannot be melega, grosu, macovei, botez 13 considered solely in terms of productivity and efficiency, since „efficiency can express performance (when the report is greater than one), and productivity can also describe the production work of an entity which may be non-performing”. other authors define performance from the perspective of achiving objectives. bourgulnon (1995) opinions that „the one achieving their objectives is performing”. however these approaches, to analyse business performance from the point of view of achieving predefined goals, can represent a subjective assessment, since every entity has its own set of goals and their achievement might to be seen as a performance by some shareholders. for example, the entity x sets a goal to make a 1 million usd profit during the financial year; by referring to the definition of performance, considered based on the goals achieved, we can say the entity fulfilled its level of performance by the achievement of its goal. but, form my point of view, this is not right since, when assessing business performance based on the level of goals achievement, we also need to assess resource consumption or business sacrifice involved in their achievement. also, the goals need to be correlated and reported to the competitors’ or market level, taking into account business size and industry. according to lebas (1995), the definition of performance by assessing the achievement of the goals „is incomplete, since it is limited to the definition to performance characteristics, without looking for an operational means”. in conclusion, a less exhaustive definition of performance, depending on the objectives achieved, can be the following: the effectiveness with which the business is managing its resources for the purpose of achieving its predefined goals. results and discussions as mentioned before, business performance, as a whole, represents the main concern for financial information users, representing a risk assessment tool meant to establish the effectiveness and efficiency of the work performed. over time, there has been an ongoing concern to assess business performance. thus, to get a glimpse of the main research trends on business performance, with the help of vosviewer we examined the key words in the abstracts of 69.471 papers published on the web of science platform and 2.471 papers in the scopus database (see illustration 1.1) concerning business performance. illustration 1 – key words network related to business performance sursa: prepared by the author by using vosviewer clustering based bibliometric analysis of the business performance concept 14 the illustration 1 shows 8 interdependent groups (clusters), focused on the study of business financial performance. the image in illustration 1 confirms that the groups of topics which are part of the clusters 1-6 cover relatively independent topics of the literature. the largest number of key words approach relations set out in the illustration are between publications belonging to the same cluster. moreover, the illustration shows us that the groups 1, 2, 3, 4, 5 and 6 (illustrated in red, green, light and dark blue and purple) are more strongly connected than the other groups. out of the 8 groups, the groups 7 and 8 (marked with yellow) seem to be the most independent. considering that scientific production is influenced by correlations between key terms, their frequency, as well as their citation number in scientific publications, based on the data provided by the vosviewer software, we developed an econometric model, allowing us to identify correlations between the already existing research trends and to highlight the research topics that were not approached. 1 2 3 4tl cluster l o ncα β β β β= + + + + , where tl total links; l – links; o – occurrences; nc – standardized number of citations. total links or the total power of the link sets out the number of publications when the two words appear. the variable link outlines to co-occurrence connections between the two key words. according to the vosviewer manual, each link has a power, represented by a positive numerical value. the greater this value, the stronger is the link. the occurrence variable outlines the number of articles where the key words appears or their frequency. the standardized number of citations represents the citation number of the document divided by the average citation number of all the documents published in the same year and included in the databases used by vosviewer. the standardization has a correction feature, since older documents had more time available to be cited compared to more recent documents. table 3. correlations related to total links and links, cluster, occurrence, citation number tl cluster l o nc pearson correlation tl 1.000 -.140 .996 .955 .075 cluster -.140 1.000 -.138 -.098 .077 l .996 -.138 1.000 .940 .089 o .955 -.098 .940 1.000 .004 nc .075 .077 .089 .004 1.000 sig. (1tailed) tl . .006 .000 .000 .091 cluster .006 . .007 .040 .086 l .000 .007 . .000 .056 o .000 .040 .000 . .471 nc .091 .086 .056 .471 . n tl 319 319 319 319 319 cluster 319 319 319 319 319 l 319 319 319 319 319 o 319 319 319 319 319 nc 319 319 319 319 319 source: prepared by the author by using ibm spss statistics, version 26 melega, grosu, macovei, botez 15 according to the data in table 3., in terms of correlations between the key terms examined from the two databases (web of science and scopus) we can notice that there is a very strong correlation between the tl variable (total links) and the l (links) and o (occurrence) variables, in the amount of 0,997 and respectively 0,897. in other words, the total number of links between key words is influenced by the frequency of their occurrence within publications and also by the links they generate within and outside the cluster. in contrast with what was previously stated, we can notice, based on the data in table 3, a weak correlation between total links and the number of citations and cluster variables, in the amount of 0,090 and -0,186, which highlights that many publications are centered around the same key terms which do not create other variables to form other clusters, namely other research niches. table 4. model summary model r r square adjusted r square std. error of the estimate durbinwatson 1 .998a .996 .996 1.342 1.873 a. predictors: (constant), nc, o, cluster, l b. dependent variable: tl source: prepared by the author using ibm spss statistics, version 26 r-squared, according to the data in table 4 has a value of 0.996 which explains the strong relation between the dependent variable total links and the independent variables nc, o, cluster and links. the variation of independent variables nc, o, cluster and links, their increase or decrease implicitly implies the variation of the dependent variable total links. the strong link between variables can be explained by the fact that the total number of key word links is generated by the their frequency of apparition, as well as by the number of clusters creating new links, that is new research niches which were not highlighted or were less exploited. table 5. regression coefficients coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -2.570 .188 -13.661 .000 cluster -.031 .017 -.007 -1.895 .059 l 1.080 .014 .844 75.295 .000 o 1.811 .125 .161 14.486 .000 nc -.010 .078 .000 -.127 .899 a. dependent variable: tl source: prepared by the author using ibm spss statistics, version 26 the estimated equation of the multiple linear regression model, consistent with the coefficients of the model in the table, is the following: 2, 570 0, 031 1, 080 1, 811 0, 010tl cluster l o nc= − − + + − according to the data in table 1.4, the number of total links is greatly influenced by occurrence, followed by links, the standardized number of citations and clusters. if we consider this from the logical point of view, the number of key word apparitions in other papers creates new links which implicitly lead to an increase in the cluster number and the number of publications where two key words appear together (total links). the increase in the standardized number of citations leads to an increase in the cluster clustering based bibliometric analysis of the business performance concept 16 number, which can imply new research niches (emerging topics) moving away from the old network and developing a new one, usually an independent one or, in very rare cases, one having few connections with the neighboring clusters. this causes a decrease in the number of total links, since the development of a new cluster deliberately leads to the breaking down of the network by the creation of a new one, of enhanced interest or more up to date, consisting of an emerging topic. table 6. residuals statisticsa minimum maximum mean std. deviation n predicted value .96 183.52 18.20 20.598 319 residual -10.163 4.542 .000 1.334 319 std. predicted value -.837 8.026 .000 1.000 319 std. residual -7.573 3.385 .000 .994 319 a. dependent variable: tl source: prepared by the author using ibm spss statistics, version 26 by applying residual statistics we identified the topics, or the subjects which do not fit the model, more precisely which have been largely considered and exploited in the research literature: performance, dynamic performance, performance ratings, reliability. in other words, a significant part of the scientific production orbits around these key terms, which are no longer relevant. the following research topics were identified, that continue to fit the model: business, differentiation, empiricalexamination, profitability. in practice, future research on business performance shall orbit around the terms mentioned before, as they stand for subjects which were less exploited, either because of their lack of relevance or because they were simply overlooked by researchers. in terms of research literature characteristics, most research studies conducted between 1976-2021, covered areas such as: management (36.782 papers), economics (15.425 papers), finances (12.164 papers) and business (30.236 papers). illustration 2 – research literature profile based on research areas 39% 16% 13% 32% management economics finance business illustration 3 – global evolution of the number of publications source: web of science – result analysis (www.apps-webofknowledge-com) scopus result analysis (https://www-scopus-com) the scientific record comprises a large number of papers addressing the study of business performance. it should be noted that most of the researchers mainly focus on the numerical study of performance indexes (value), especially of the financial performance, overlooking the factors affecting this performance. http://www.apps-webofknowledge-com/ https://www-scopus-com/ melega, grosu, macovei, botez 17 conclusions based on the bibliometric analysis, we can conclude that the majority of the studies focus on the analysis and assessment of business performance, more specifically on: economic performance, social performance and environmental performance. most of the publications relied on qualitative type research methods, usually on the definition of the concept and of the determining factors. it is also necessary to clarify that, until now, no general model of assessing global business performance was identified, except for the integrated reporting which aims at constituting an integration model of financial and non-financial business outcomes. the evaluation and measurement of business performance is a complex process, which primarily requires the assessment of determining factors and of the environment in which the business carries out its activity. studies and research literature illustrate that business performance is influenced by a series of factors such as: the economic state of the country (ntim, 2009); corporate governance practices (reddy, 2010; chugh, meador, kumar, 2009); business characteristics, in particular: size (love, rachinsky, 2007); growth rate, dividends, liquidity (gurbuz, aybars, kutlu, 2010); sales level (forbes, 2002); leverage, exports, location, size and efficient management significantly affected business performance (panagiotis and konstantinos, 2008). in this regard, we put forward the idea that it is imperative, when assessing/ measuring the performance of a business, for the factors previously stated to be taken into consideration. we also note that this procedure is required especially when a comparison between businesses is carried out, businesses coming from two completely different backgrounds. by ignoring the analysis of the factors having determined business performance, the report obtained will practically distort reality. references albu, n., albu, c. (2005). practical solutions of work efficiency and organizational performance increase. ceccar publishing house, bucharest, romania. aydiner, a.s., tatoglu, e., bayraktar, e., zaim, s., delen, d. (2019). business analytics and firm performance: the mediating role of business process performance. journal of business research, 96, pag. 228-237. bourguignon, a. (1995). peut-on définir la performance? revue francaise de comptabilite, july-august. camison, c., villar-lopez, a. (2014). organizational innovation as an enabler of technological innovation capabilities and firm performance. journal of business research, 67(1), pag. 2891-2902. chugh, l.c., meador, j.w., kumar, a.s. (2009). corporate governance and firm performance: evidence from india. journal of finance and accountancy. dex. (n.d.). performance. accessed on january 25, 2021: https://dexonline.ro/definitie/performanta. forbes, k.j. (2002). how do large depreciations affect firm performance? palgrave macmillan 49(1):214-238. gurbuz, a.o., aybars, a., kutlu, o. (2010). corporate governance and financial performance with a perspective on institutional ownership: empirical evidence from turkey. j. appl. manage. account. res. 8:21-38. huayu shen, mengyao fu, hongyu pan, zhongfu yu, yongquan chen. (2020).the impact of the covid-19 pandemic on firm performance. emerging markets finance and trade, 56:10, 2213-2230, doi: 10.1080/1540496x.2020.1785863. hung, k. p., chou, c. (2013). the impact of open innovation on firm performance: the moderating effects of internal r&d and environmental turbulence. technovation, 33 (10-11), pag. 368-380. https://dexonline.ro/definitie/performanta clustering based bibliometric analysis of the business performance concept 18 imbrescu, c.m., hațegan, c.d. (2011). accountancy and economic and financial performance. studia universitatis ”vasile goldiș”, arad, economic sciences series, 21, part ii. inkinen, h. (2016). review of empirical research on knowledge management practices and firm performance. journal of knowledge management, vol. 20 no. 2, pag. 230-257. kim, k.h., kim, m.,qian, c.l. (2018). effects of corporate social responsibility on corporate financial performance: a competitive-action perspective. journal of management, 44(3), pag. 1097-1118. lebas, m. (1995). qui, il faut definir la performance. revue francaise de comptabilite, july august. lins, k.v., servaes, h., tamayo, a. (2017). social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis. the journal of finance 72, 1785–1824. lorino, p. (1995). le déploiement de la valeur par les processus’. revue française de gestion, pag. 55-71. love, i., rachinsky, a. (2007). corporate governance, ownership and bank performance in emerging markets: evidence from russia and ukraine. siteresources-worldbank. working paper, http://siteresources.worldbank.org/dec/resources/corporate_governnace_o wnership_and_bank_performance.pdf. melega, a. (2021). bibliometric analysis of scientific production regarding the harmonization of accounting in brics emerging economies. european journal of accounting, finance & business, 10(1), 11-20. mullen, b. (1989). advanced basic meta-analysis. hillsdale: lawrence erlbaum associates. niculescu, m. (2003). global strategic diagnosis. economic publishing house, bucharest, romania. panagiotis, g. l., konstantinos, s. s. (2008). factors affecting firms’ performance: the case of greece. global business and management research, 2(2&3), 184198. reddy, k. (2010). the relationship between corporate governance practices and financial performance in new zealand: an empirical investigation. the university of waikato. saeidi, s.p., sofian, s., saeidi, p., saeidi, s.p., saaeidi, s.a. (2015). how does corporate social responsibility contribute to firm financial performance? the mediating role of competitive advantage, reputation, and customer satisfaction. journal of business research, 68( 2), pag.341-350. stern, j.m., shiely, j.s., ross, i. (2001). the eva challenge implementing valueadded change in an organization, wiley publishing, 2001, p.45. wang, z.n., cai, s.h., liang, h.g., wang, n.x., xiang, e.w. (2021). intellectual capital and firm performance: the mediating role of innovation speed and quality. international journal of human resource management, 32(6), pag.1222-1250. yang, c-c. (2012). the effect of environmental management on environmental performance and firm performance in taiwanese maritime firms. int. j. shipping and transport logistics, vol. 4, no. 4, pp.393–407. https://www.emerald.com/insight/search?q=henri%20inkinen https://www.emerald.com/insight/publication/issn/1367-3270 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro dimensions of the market risk marcela-cornelia danu “vasile alecsandri” university of bacău marceladanu@ub.ro abstract the present work presents the concept approach and the types of the market risks, considering the representatives of the two correlative dimensions of the market: the supply and the demand. this approach dissociates from the other ways to define and to manage the market risks by the message that it communicates: all the types of risk caused by the market activities are market risks. these are anthropic risks, based on information and decision. from the point of view of source, the market risks or the decisional risks have the actions of the deciders (natural person or legal person) to achieving the personal goals or mission or the objectives of the firm which they represent. the market risks are those which pose a threat to the attainment of the major objectives or purposes and to maximizing of advantages: the utility for the consumer and profit for the enterprise. the results of the dynamic interdependences are determined by the optimal management of each type of risk, taking into account the system of risks and the potential for transformation of the risk-cause in risk-effect and vice versa. keywords the market risk; risks of the consumer; the risks of the suppliers; perceived risk; assumed risk jel classification d11; d21; l21; m21; m31 the market risk in the context of the fundamental objectives of the market exponents while, for the most firms, the fundamental objective is to maximizing the profit, the most of the actions which generating the entrepreneurial risks have as source this objective (danu, 2001). from the point of view of risks of the consumer, they have as essential purpose the maximizing satisfaction of the consumption needs by using of the limited resources it has at its disposal, and therefore maximizing the economic utility on the basis of the principle of hedonist. the market risk, entrepreneurial type shall be determined, in the main, by (colson, 1995): decisions of the public bodies in the area of taxation; techniques of production informatics system, research and development, etc.; structural factors in the business organization, absorption, merger, etc.; characteristics of the reference market diversification, competition, context; material, financial, human and informational potential of the enterprises. the market risks, risks of the consumer type are influenced by the direct factors such as: nature and situation of the consumer; value and accessibility of information in the purchasing process; the type of the decision be taken into account. in general, the characteristics of the market risks are: 17 danu represents the resultant of the deciders (entrepreneurs or consumers), deriving from their rational choice, given the attention to maximizing the effects and minimizing the efforts. decisions taken regarding the risk are different from one company to another, from one consumer to another, depending on the specific conditions that make available the internal environment of the company, the relationships to the elements of external environment, due to the personality of the decider (as a consumer or individual entrepreneur), its qualities, skills, and last but not least to its mental, emotional, affective availability, to accept it or not, to be indifferent to risk. the market risk is separable, both the consumer and the enterprise, having the possibility to decide his assumption by allocating the adequate budgets (for example, at a firm, to launch a new product, to organize a promotional campain, to realize a research project, etc.); the effects of these risks are quantifiable and predictable over time, so that deciders can meet with a relatively high probability, the positive or negative implications involved in achieving them. for example, once it is taken risky decision to launch a new product, shall constitute the budget dedicated to this activity, shall be carried out the prototype technical and the acceptability testing. if the trials are fairly conducted and accurately expresses the reality (how the consumer perceives the new product, image and the degree of acceptability of the product to consumers), the enterprise has an possibility to do eventual correctives in terms of technical parameters, qualitative parameters, from point of view of prices, etc., or may decide even to abandon the product before the commitment of some expensive investments; the market risks can be, and are controllable. the treatment of these risks is done in the case of the entrepreneurial risks by applying the financial, managerial, marketing, human resources strategies, etc., and in the situation of the consumer, through the permanent information as far as possible, complete, correct, realistic information and by the education through media credibility; the range of the market risks, whether they are entrepreneurial, either with the base to the consumer, it is extremely vast, concretely no sector of activity or purchase made by the consumer, in which such risks to be absent. regarding to the entrepreneurial risks, it should be noted that, here included are those which related to the purchase decision, therefore as a consumer. the motivation to include the risk of buying into this group and not in the group of the consumer, shall be given, on the one hand, of the decisional element belonging the enterprise, and on the other hand, because the act of consumption specific of the enterprise is not its goal; the main objective is the achievement of maximum profit. risks of the consumer the needs felt, the desired values of the consumer are final aims. whether they are concrete or abstract nature, they may be satisfied, usually, through a wide range of possibilities (in particular the abstract) but their realisation, in some cases, it is not possible (blythe, 1998). this is the reason for which the consumer shall specify series of secondary purposes that provides the necessary structure to make the purchasing decision or in other words, establish priorities. previous experience of the subject is important; those without previous experience will difficulty rank the purposes, will be repeated attempts, many unsuccessful, will assume a series of hazards, which unfortunately will have a negative impact on them. the process to find the best solution to problems of sale purchase is influenced by the information about the product or service, a level which the consumer can ensure 18 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro by experience or/and the degree of interest in connection with the product or with the process of choice. for the inexperienced buyer revolves a great risk attached to the purchasing of product. he has, by definition, summaries specialized knowledge about the products they intend to purchase them. with motivation of establishment of the hierarchy of purposes, the consumers will try to reduce the risk, in this way each secondary purpose having a certain percentage of risk. the risks perceived by the consumers in the process of buying are: (roselius, 1971): physical risks caused by the products whose consumption or use may pose hazards to health, environment, etc. for example, buying a car with brake system failure, a hair dryer or a mixer with technical defects, etc. financial risks caused by the loss, wasting money either by replacement or repair of a new purchased product either his purchasing at a unreasonably, high price. for example, buying a car that crashes quickly, or watching a theatre, performance below the expected value to the consumer, etc. the risk of lost time due to the difficult acquisition, product failure, times affected by the consumer returns to the supplier or manufacturer, repair, temporary replacements, etc. the risk of expected performance. for example, purchasing the book by a brand whose contents are not up to expectations, a medication whose effects are not the expected, etc. risk of image (psycho-social), reflecting consumers ' disappointment towards himself in connection with the purchase or weakness into the social environment. for example, buying the clothes in a circle of friends who appreciate the negative, or a property located in an area with poor reputation, etc. the only viable way to reduce the risk perceived by the consumer before the purchase decision, is the information under all forms accessible and credible. recourse to the informations is all the more important as perceived risk is higher. economic theory of information allowed the conceptualization of the problem, for example, in the case in which the consumer is exposed only to the financial risk, caused by purchasing of the product at a price too high. by reporting decreasing the purchasing price, which would necessitate supplementary information, to the additional information using, and by weighting it with desired purchase importance, we can compare the result obtained with the cost (measured in time devoted additional information) driven by obtaining the supplement information. additional information will be justified only if hoped gain exceeds the cost of the supplement of information. conclusions: for product or service placed on the top of hierarchy of preferences or priorities, the additional information are cost effective; the greater inertia at the bigger consumers toward individual consumers; consumers for which budget does not allow always, or often, additional information, and for whom time is assigned with a very high value, will not consider such a model. consumers have a wide range and variety of methods for reducing the risk. in accordance with the model of roselius, focused on purchasing process of the consumer, have been reflected a few ways to reduce risk of the consumer, in relation to financial risk, risk of loss time, physical risk, psychologically risk (risk of image). the proposed methods to reduce or even avoid the risk are: 1. choosing a recommended brand by experts or people from the individual's entourage, celebrities, etc.; 2. loyalty for the recognized brand, which the consumer already knowing the produced satisfaction; 19 danu 3. choosing the product or the mark having a reputation, prestige, so having a brand; 4. personal testing; 5. the reputation of point of selling, buying a mark distributed from a favorable image store; 6. evaluation of the samples provided free of charge to consumers in the prepurchase stage; 7. guarantee the change of goods or refund the value; 8. use of tested brands, officially approved by the competent body; 9. visits to the various points of sale and compare the characteristics of several brands; 10. buying a brand of a model's more expensive or more elaborate; 11. opinion approved (communication of 'word of mouth'), request the opinion of others on products or presented brands. the results of the carried out research have highlighted, in summary, that individuals front attachment brand known, its image in the producing or distributors firms are decisive, regardless of the type of risk to which we are referring. figure 1 methods of reducing the risk perceived in the decision to purchase source: processed roselius, t. (1971), consumer rankings of risks reduction methods, journal of marketing, vol. 35 (january, 1971), pp. 56-61. other detached conclusions are: the least approved are: the personnel test, guaranteeing repayment of the value of the goods and the acquisition due to the high price; this research has highlighted the way in which consumers use different methods of risk reduction based on conjectural statements; 20 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro for physical risk, only brand loyalty, purchase a recognized brand and official approval provided favorable answers. roselius, his first research of this kind, however, require additions and nuanced interpretations taking into account the various types of products or services, new types of risk specific to the current economy and conjectural statements different from a geographic, economic, political, to another. to reduce the risk and simplifying the process of decision making, 'the experience' consumers switch from search phase, to the assessment, culminating with the selection of the optimal alternative. in the phase of search, the consumer is informed to the desired product, stores where he can purchase, or the place where the service is supplied; the sources of information must be relevant, reliable, knowledgeable. to minimise the risks at the stage of the assessment, the consumer must take into consideration the key criteria that defines the product or service in line with its expectations, the negative criteria which should be insisted, and the significant differences compared to the products that satisfy the same need. in the last step, the selection, as consumer expectations to be better met, and the agreed to be as close as possible to the one he want (minimum tolerance), is aimed at: (a) in the case of purchase of known, familiar products: operation of the product to be the best; the choice of approved alternatives by the circle of knowledge, friends, family; taking into account the promotion measures designed to inform, persuade and remind purchase that product; and (b) in a situation of purchase of new products: caution, behavior observation product to other buyers, recommendation, supervised opinion. making the decision to purchase, the perceived risk is one of the factors that may arise and change the intent of purchase. perceived risk varies according to the money allocated to the purchase, acquisition and insecurity of self-confidence that the buyer (kotler, 1998). given the feelings of apprehension, uncertainty, risk which the consumer will feel in connection with the acquisition of the product, the task of the deciders is to find factors leading to enforcement of these feelings (the anticipated level of income of the family, the estimated cost and the expected advantages of that product, loss of job, etc.), providing information and support to minimize the perceived risk. all purchases, and particularly those important, results in the post-purchase with the so-called cognitive dissonance or discomfort which means that, as a matter of fact, the consumer is not fully satisfied with his purchase. it is, therefore, of the negative dimension of the assuming risk, time in which the consumer under the empire of the certain mental statuses and influenced by a number of social, cultural, personal factors (age, occupation, lifestyle, income, personality), is dissatisfied with certain shortcomings of the selected mark and by the fact that he lost the advantages that it can give he buying other brands (cost of opportunity). the managers of producing and commercial firms must know very well the needs of the consumer, to anticipate changes in tastes, preferences, generally all of the factors that could influence purchasing behaviour, with a view to launching attractive offers on the target market (danu, 2001). an interesting aspect of the risk in the decision-making process of purchase, it is about the new products. as a result of inter-personal communication, of a consumer specific traits, as well as intrinsic characteristics of the new products, the people they adopt differently. of these, the consumers placed in innovators category are the most interesting for the enterprise and to the success or failure of product on the market. the innovators are regarded as adventurers, looking for new ideas, assume all risks in connection with that product, to any of their size. early buyers quickly adopt the new ideas, but assuming risk is more cautious. anyway, these two categories of consumer assumes most of the risk, but for the company are the first signs of confirmation or 21 danu cancellation of the product from the market and the first creators of income for that product. most of the early shows wariness and most of the late show skepticism in the purchase decision. the laters, strongly attached to tradition, customs, habits, they are suspicious in the face of change, adopting the product just after he became part of the tradition. thus, in the decision-making process of buying new products, taking into account the heterogeneous structure of solvent demand, the assumed risk decrease to the last category of the product consumer – the laters. the perceived risk by the consumer in the purchasing process has many more sides than those highlighted here; variety of situations, places and times in which manifests the intentions of buying of the market with many types and distinct segments, creates as many particular cases of the manifestation of the risks. in the abundant markets, in which the demand for the products and services is wide and diverse, the risks encountered by the consumer shall not be less than those assumed by consumer located on a poor market but the chances for achieving them and the severity of consequences, if to achieve them, are smaller. low diversification, the impermeability to new, low competition, etc. places the consumer face of the few alternatives to choose from where, the greater risks undertaken. for goods breadline necessary, the consumer perceives low or ignore potential risks which may assume by their acquisition; in the case of the other, the purchase decision follows a longer or shorter depending on the characteristics of the product, of the consumer and not in the last row of the environment in which coexist both representatives of the demand as well as those of the supply. risks of the supplier if to the consumer, the fundamental purpose is maximizing the utility, in the case of the supplier producer or merchant, he wants to ensure continuing of his business, not at the limit of survival, but by maximizing profits. in achieving this goal, the entrepreneur has encountered a number of risks, some of them caused by the action of the natural forces, environmental variables, part of the internal source of the enterprise. to be able to develop and deploy at the firm, the strategic viable plans, folded on diverse requirements of the market, the managers must first identify the opportunities and threats from the external environment, and the strengths and weaknesses, 'offered' by the internal environment. threats or risks faced by the company from the outside, can be (kotler, 1998): the actions of the competition. for example, a competitor announces the launch of a new product, backed by a offensive promotional campaign; the difficulties, conflicts, pressure at the level of distribution channels. increased competition at the level of distribution channels or within the same channel or in different sequences thereof, may negatively influence the possibilities of distribution of company products; the demographic changes, migrations of the population from one area to another, with repercussions in decreasing areas of market and increase another, changes in age structure, place of residence, level of education, socio-professional level, etc.; the unfavourable social and political conjuncture. in countries where political instability is high and protest movements are frequent, the activity of the firms is heavily affected and the major purposes, difficult to achieve. the mission of the managers is to predict the probability of each of these risks and the effects they may cause. some of these risks are threats for some businesses and occasions or opportunities for others. 22 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro among the weaknesses of the firm which influence it success, we can mention: low position in the reference market; the range of products disparity to the real requirements of the market (too high or too low); reduced sale in the large market; low promotional activity of the products or services; bad management, oriented toward the past, based on intuition and quackery, etc. in the elaboration of development strategies aimed at increasing profitability, entrepreneurs have at their disposal, the possibilities (kotler, 1998): increasing productivity and increasing the volume of activity. and for one and for the other alternative action, the risks that may obstruct the fulfilment the purpose of maximizing profits, are numerous. if it follows the path of productivity growth, risks that may lead to deviations from the objectives, are stemming from difficulty or impossibility of reducing costs (investment, fixed, variable) or the increase in margins (the change of the range of products and services, rising prices, rising the adding value). in terms to reducing the costs fixed, variables and investments, possibly by restricting activity or by accelerating operational processes, among the risks that influence these action lines are: old production technologies, with high degree of wear, non-performing, weak productive, clunky, arhythmic supplies, with considerable expense, capital immobilized in oversized of the raw materials, slow operations of production and selling, poorly qualified manpower, hardly adaptable to the new organizational structures and inadequate production, bureaucratic and inflexible management, with conservative tint etc. it should be noted that risks referred to are not spontaneously and for the most part are not resultant of immediate decision: they reflect ways of thinking and action by the managers, their ability to respond to demands of the environment and to a dynamic market. all of these risks are the result of only a single type of risk: the risk of a lead, organize, and schedule as much as possible the production and the human resources. changing the assorted structure, the appropriateness of the structure to the peculiarities of the market, to the characteristics of the targeted market segment, may be limited to risks as: the technologies that do not allow the expansion, increasing the range of products, or involving additional costs not recovered through revenue, estimated, hence the impossibility of increasing the profitability; specific risk of marketing researches aimed to the knowledge of the market, its current requirements and anticipating the future, unfavorable economic conditions for optimal supply, consistent with the production, deterioration of the international economic relations of the company with other companies with the traditional internal or external partners, unfit political conjecture to establish long-standing relationships with foreign partners both on the import of raw materials as well as to ensure market selling products, etc. , the risk of legislative, non nepermissive to the enlargement and development range of activities of the firm, etc. raising the prices, alternatively of the increase in the profit margin, is possible only if it is used with caution, taking into account the nature of the goods or service, the competitive context and it evolution (in numerical terms but also of the action force), changing the mindsets of consumers, the purchasing power of the reference market. in this regard, to implement the strategic approach, the risk of competition and the risk of the consumer's image are the most significant types of risk which must be taken into account. adding the value to a product or a service should be the strengths of the strategy of the company's. it is imposed by the diverse needs of the consumers and a stronger competitive environment, in which the identification of the product and the 23 danu differentiation of the mass of similar products on the market are by far the most important objectives to be attained in the direction of maximizing profitability. as in the case of application of the other measures to growing the profit, the technological risks, the financial risks, the marketing risk, may strongly determine the attainment of the continuity and success of the company on the market. increasing the profitability may also occur by increasing the volume of activity of the company. in turn, this has as sources of achievement: the behaviour towards competitors (winning the competition, purchasing customers competitors), increase of production capacities, but also creative activities, such as: addressing to the new segments of the market, to the new markets, renewing and diversifying production. as obstacles to the achieving these objectives, the risks that interferes are: risk of quality of products, various types of financial risk, risks arising from research and development activities of the company, risk of marketing, social risks, etc. increasing the profitability of the firm can be accomplished by extending its activity beyond national area the more the limited increasing of the internal market, increasing competition at this market and increase the risk of operating on a particular market (determined by differen cycles which characterise the political and economical life of a country), oblige the companies which are willing to ensure high profitability, to enter on the international market too. at the same time, it manifest the assuming of the risks which involves all the firms in the system of the world economy. managers need to anticipate the risks, the obstacles to conduct the operations on foreign markets. main risks which may adversely affect the company on the international market are (sasu, 1998): very large foreign debts. high rates of indebtedness, inflation, unemployment in some countries have contributed to political instability and currency, restricting trade and business exposure to a number of risks. the inability of these countries is an obstacle for supplier firms. the instability of the exchange rate of a currency influences the competitiveness of the company operating on the international market. in a situation where the national currency is weak, it is favourable to the export activity; if on the contrary the national currency is strong, domestic competition will be stimulated. instability of governments and the restrictive practices imposed by them. the unstable economic environment of the countries with favorable potential of the market involves high risks of expropriation, nationalization, repatriation of profits. also for governments that impose certain restrictions, risks deriving from these practices are: a certain degree of control over the activity of the firm, the majority participation in the capital of domestic enterprises, using the national employment, limitations to the transfer of technology, compliance with local rules, limiting production intended for export, etc. such practices are in some emerging development countries while the developed countries impose more qualitative conditions. in addition to non-tariff barriers designed to protect the national industries, for the company that does business on the international market are tariff barriers (large import duties). the cultural conflicts, starting with those pertaining to language and ending with those due to traditions, the local customs require researches of the international relationships system. these barriers have effects, such as: the difficulties of communication with a foreign partner, the impossibility of standardisation of products and the need to adapt it to the specific requirements of the local population. wars, terrorism, and corruption. the local conflicts, increasing proportions of the terrorism in many places of the world, the corruption of officials involved in commercial transactions between countries, these are political risk, social risk (or combined) many of them having the economic motivation, affecting the involvement 24 studies and scientific researches. economics edition, no 19, 2014 http://sceco.ub.ro of companies in international business. to these are added the technological piracy which endanger the image of firms. risk of image is a different type of significant risk in the current context of economic world system. four of the five directors believe that their company reputation is the most valuable asset (european risk briefing, 2013). however, against the background of changes generated by economic and financial crisis world, they believe that the trend is to increase the risks associated with the reputation. moreover, increasing the rate of threats over the reputation of the firm increases the difficulty to manage it. the globalization and the legal system are considered to be the main sources of risk of image to firms. these are just some of the problems of contemporary society in which the risks with small or medium intensity and severity, manifested at the local level or in relatively small areas, may turn in risks of great gravity and intensity at regional or even global scale. once is assumed the task to extending abroad in order to obtain a profit, managers need to adopt an active attitude, facing to the market, aimed to the identification and anticipation of the foreign consumers needs. to overcome the physical national borders, the firm must know whether it will be able to do it and on the thorough knowledge of the peculiarities and characteristics of foreign consumer, whether it will be able to communicate with consumer and will be able to receive his feed-back and if will be able to adapt to the foreign business environment. and because the answers to his questions will evidently be placed under the sign of uncertainty, insecurity, he will be victorious assumed or defeated assumed of all those risks. the ability, competence and spirit of successful business depends on his undertaking; successful which does not mean survival but performance and profitability. if in estimating of the risks specific to the consumer, we have had in view the way he perceives risks, their degree of diversity, the intensity and the effects on individual, in the case of enterprises, making decisions becomes possible by appealing to a wide range of methods and techniques of decision-making, which are assigned to a particular model of decision-making, differential treatment in relation to the typology of the involved situation. conclusions regardless of whether we find ourselves in the situation of the consumer, or in the firm situation, supplier of goods and services, they are both in double hypostasis: to assume the risk and “to create” the risk. the consumer and the firm have well defined targets. but reaching them is difficult and fraught with dangers; some of them are beyond of the decider, others partly or wholly involved him. the end result is often difficult to anticipate. real life and not a theoretical existence demonstrates that measurements, quantifications are necessary, but not sufficient when we evaluate the impact of those unwanted danger upon us as individuals. the actual costs of risks are infinitely greater than those which are strictly subject to the financial sphere; larger through the time to which they relate, and by spreading them in space, and by the effect of propagation on the other risks, with other costs. however, the life is not fulfilling, may not tends toward perfection, without incorporation and the taking over him. 25 danu references ace group (2013), reputation at risk, ace european risk briefing, available at http://www.acegroup.com/global-assets/documents/europecorporate/thought-leadership/ace_reputation_at_risk_july_2013.pdf blythe, j., (1998), comportamentul consumatorului, editura teora, bucureşti. colson, g. (1995), gestion du risque, e.a.a., paris. danu, m. c. (2001), riscul în afaceri, editura plumb, bacău. kotler, ph. (1998), principiile marketingului, editura teora, bucurești. roselius, t. (1971), consumer rankings of risks reduction methods, journal of marketing, vol. 35 (january, 1971), pp. 56-61. sasu, c. (1998), marketing internațional, editura polirom, iași. 26 (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 36, 2022 http://sceco.ub.ro 6 the transfer pricing file and tax controversies an empirical study anatol melega ștefan cel mare university of suceava, romania melega.anatol@gmail.com mărioara molociniuc (hritcan) ștefan cel mare university of suceava, romania hritcan.maria@usm.ro anamaria geanina macovei stefan cel mare university of suceava, romania anamaria.macovei@usm.ro abstract transfer pricing is a real challenge for both tax regulators and multinationals who use this procedure, in most cases to erode the tax base. the purpose of this paper is to analyse the tax practices and regulations of countries applying oecd transfer pricing regulations. to this end, the profiles of 69 countries on the application of transfer pricing regulations and methods of assessing the transfer pricing file have been analysed. the research results indicate that countries with developed economies and high tax burdens have more rigid transfer pricing tax regulations, the aim of which is to prevent tax evasion through transfer pricing. at the same time, emerging economies with a more lenient tax system do not pay particular attention to transfer pricing, but provide clear regulations on the methods of assessing the transfer pricing case. at the other end of the spectrum there are weakly developed countries, which apply oecd transfer pricing regulations but are flawed in their practical application. the results of the research are of real use both to national and international regulators and to multinationals applying transfer pricing in intra-group transactions. keywords transfer pricing; tax controversies; fiscal burden; tax evasion. jel classification m40 introduction the accelerated development of the world's economies has intensified the process of internationalisation of companies, with an increase in the number of multinationals, which play an important role in the growth and sustainable development of countries. multinationals and their subsidiaries are an important link in the world economy, accounting for about a third of global gross domestic product and world output. multinationals are also important sources of foreign direct investment for emerging and developing economies. to make themselves more attractive to multinationals, governments around the world have adopted various strategies such as: upgrading infrastructure; easing tax regulations; adopting international accounting standards; adopting regulations to ensure their investment security; reducing investment restrictions, etc. multinationals are more likely to open subsidiaries in countries that have a more lenient tax regime and at the same time are rich in natural resources and cheap labour. these characteristics are attributed to emerging economies, which are melega, molociniuc (hritcan), macovei 7 the main recipient of fdi inflows due to abundant natural resources and a low tax burden. multinationals have been involved in various financial scandals over the years, which have strained the international economic system. most of the financial scandals in economic history are related to false reporting of earnings (waste management scandal 1998), falsification of financial results (worldcom scandal 2002, healthsouth scandal 2003), manipulation of stock market prices (american insurance group scandal 2005), etc. the rise of multinationals has highlighted a weak link in the international tax field, namely the taxation of their profits. to protect investors and prevent tax avoidance, national and international regulators have therefore joined forces to draw up guidelines on the taxation of multinationals and transfer pricing, which is one of the most widely discussed international tax issues. multinationals often resort to transfer pricing, which represents the value of intra-group transactions, as the simplest and most common method of tax minimisation by multinationals to erode the tax base. basically, through transfer pricing, multinationals transfer the tax base artificially by redistributing the indicators that make up the tax base among the multinational's subsidiaries. due to tax synergies, multinationals using transfer pricing manage to use a preferential tax regime without violating national and international law. the application of transfer pricing by multinationals in the absence of clear tax mechanisms and policies regulating its use reduces the state's ability to collect budget revenues and at the same time gives multinationals a free hand for economic crime. in this regard, the oecd has developed "transfer pricing guidelines for multinational enterprises and tax administrations", which has a dual purpose, for governments "to ensure that multinationals' profits are not artificially transferred from their jurisdiction and that the tax base reported by multinationals in their country reflects the economic activity carried out there" and for multinationals to ensure "that the risk of economic double taxation is limited" (oecd, 2022). this guide is used in 69 jurisdictions around the world, which is also the focus of our research. in addition, the oecd transfer pricing guidelines "provide guidance on the application of the arm's length principle, which is the international consensus on the valuation of cross-border transactions between associated enterprises" (oecd, 2022). therefore, the aim of our research is to analyse the profile of countries applying oecd transfer pricing tax practices and regulations and to highlight the main issues in multinational taxation. thus, to achieve the proposed aim we have outlined the following objectives: o1: analysis of the determinants of transfer pricing; o2: analysis and evaluation of transfer pricing tax regulations and practices in the 69 jurisdictions applying the oecd guidelines. the results of the research are of real use to both national and international regulators and multinationals applying transfer pricing in intra-group transactions. the limitations of the research are that due to the rather large sample and its non-homogeneity (countries are from different economies: predominantly developed, emerging, developing and underdeveloped economies) the results of the study are too general. literature review the issue of taxation of multinationals has attracted the attention not only of national and international tax regulators, but also of researchers, who are examining the effects of transfer pricing on the level of development of countries and its impact on the global foreign direct investment circuit (melega et al., 2023). at the same time, some researchers have focused their attention on the usefulness of transfer pricing methods recommended by tax regulators. for example kardos et al. (2016) analysed transfer pricing methods and concluded that although tax authorities provide multinationals the transfer pricing file and tax controversies an empirical study 8 with a multitude of methods, their use in practice is cumbersome due to the lack of transaction history and level of legal regulation. according to the oecd guide, multinationals can apply one of five methods for transfer pricing, namely: "the comparable uncontrolled price method (cup), the resale price method (rpm), the cost plus method (cpm), the net transaction margin method (tnmm) and the transaction profit split method (tpsm)" (see table 1). in applying transfer pricing methods, multinationals should take into account the "arm's length principle, which is a commonly used expression to refer to transactions in which two or more unrelated parties agree to do business, acting independently and in their own interest" (oecd, 2022). table 1. oecd transfer pricing valuation methods method explanations and definitions the cup method "the cup method compares the price charged for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparable circumstances. if there is any difference between the two prices, this may indicate that the conditions of the commercial and financial relations of the associated enterprises are not arm's length, and that the price in the uncontrolled transaction may need to be substituted for the price in the controlled transaction" (oecd, 2022). the resale price method "the resale price method begins with the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. this price (the "resale price") is then reduced by an appropriate gross margin (the "resale price margin"), determined by reference to gross margins in comparable uncontrolled transactions, representing the amount out of which the reseller would seek to cover its selling and other operating expenses and, in light of the functions performed (taking into account assets used and risks assumed), make an appropriate profit" (oecd, 2022). the cost plus method "the cost plus method begins with the costs incurred by the supplier of property or services in a controlled transaction for property transferred or services provided to an associated enterprise. an appropriate mark-up, determined by reference to the mark-up earned by suppliers in comparable uncontrolled transactions, is then added to these costs, to make an appropriate profit in light of the functions performed and the market conditions" (oecd, 2022). the transactional net margin method "the transactional net margin method ("tnmm") examines a net profit indicator, i.e. a ratio of net profit relative to an appropriate base (e.g. costs, sales, assets), that a taxpayer realises from a controlled transaction (or from transactions that are appropriate to aggregate) with the net profit earned in comparable uncontrolled transactions" (oecd, 2022). melega, molociniuc (hritcan), macovei 9 the transactional profit split method "the transactional profit split method first identifies the combined profits to be split for the associated enterprises from the controlled transactions in which the associated enterprises are engaged. in some cases, the combined profits will be the total profits from the controlled transactions in question" (oecd, 2022). source: oecd (2022) transfer pricing methods have been developed with the aim of providing multinationals with legal tools for intra-group transfers and at the same time to exclude and prevent economic crime. the multitude of transfer pricing methods is to the advantage of multinationals as it gives them the possibility to optimise intra-group transactions and thus avoid sanctions from tax regulators. according to radolovic (2012), "the decision making process on transfer pricing optimization has two dimensions that need to be taken into account: the optimization dimension in terms of available capacity, tax laws of countries, available market and other indicators of the individual company and the dimension of international transfer pricing regulation in line with the oecd guidelines." therefore, in order for multinationals to benefit from optimal transfer pricing and competition, transfer pricing assessment methods must examine all the sides mentioned by radovic (2012). of the many methods available to multinationals, they must use the one that corresponds to their business and provides an objective assessment of the transaction price and tax base, but in practice, they aim to use methods that lead to profit maximisation and tax minimisation, i.e. to shape a good image and position in the market. based on the assumption that "the application of different transfer pricing methods affects the amount of the tax base", šupuković (2021) analysed the possibilities of tax avoidance in transactions between the parent company and subsidiaries within the group, concluding that "the application of different transfer pricing methods affects the amount of the tax base of each business entity, thus confirming the basic assumption of the paper and that the study of transfer pricing is not exact, and in this context, the choice of the final transfer pricing solution should be based on several possible outcomes, i.e. comparable market prices." in practice, the lack of an international framework for taxing multinationals and of clear transfer pricing regulations provides niches for tax base erosion and tax avoidance through transfers to subsidiaries operating in tax havens. the solution to combat economic crime through transfer pricing is to establish a single global tax rate and reduce the tax burden, which is the main incentive for transactions to tax havens. as lucian (2010) argues, "tax evasion is the result of inadequacies in the law, of the methods of enforcement, of the lack of provision for the main causes of evasion or of a tax policy considered excessive by taxpayers", and in order to prevent and combat it, national and international bodies must commit to drawing up common regulations that do not constrain or provide taxpayers with loopholes for such practices. in this regard, the oecd, through pillar ii of international tax reform, has come up with a proposal to tax multinationals at a minimum of 15%, a rule that applies to multinationals and groups of companies with combined financial revenues of more than eur 750 million per year (european commission, 2022). the effectiveness of this reform will be felt when all the world's governments have implemented this resolution, which is currently applied by 137 countries. an important effect of the 15% minimum tax on multinationals will be the one that it will reduce the number of transfer pricing transactions. at the same time, the new tax rule will contribute to increasing tax revenues in most of the economies that will apply this rate and will contribute to achieving sustainable development goal (sdg) target 17.1: "mobilise and strengthen domestic resources, including the transfer pricing file and tax controversies an empirical study 10 through international support to developing countries, to improve domestic capacity to collect taxes and other revenues" (sdgs, 2022). according to lassourd (2022), "the impact of global minimum tax rules will depend on their interaction with domestic tax policies and how different countries change their tax regimes as a result." in this vein, the following research questions emerge: q1: do tax regulations and policies for assessing and establishing transfer pricrs correspond to the current economic developments and the needs of multinationals and governments in collecting tax revenues objectively? q2: do existing tax regulations and policies for assessing and establishing the transfer prices eliminate and prevent any form of tax avoidance? research methodology the present research is a quantitative questionnaire-based research, i.e. the oecd "transfer pricing country profile" questionnaire, which provides data on transfer pricing regulations, methods, documentation and agreements, making possible the a comparative analysis of transfer pricing in 69 jurisdictions (see table 2). the oecd questionnaire was applied individually to each country and outlines the level of transfer pricing regulation in each economy and their compliance with the oecd guidelines. the questionnaire consists of both open and restricted questions, which were analysed using quantitative methods. table 2. countries included in the analysis korea, rep. china jamaica chile ireland switzerland ukraine angola dominican republic georgia uruguay germany new zealand senegal nigeria tunisia italy france austria russia argentina papua new guinea brazil cameroon belgium denmark maldives albania honduras columbia costa rica usa iceland mexico panama netherlands india israel portugal sweden armenia romania kenya africa southern spain malta luxembourg indonesia bulgaria turkey greece lithuania mary great britain finland peru malaysia croatia hungary poland slovakia latvia slovenia czech republic estonia japan singapore australia canada norway source: developed by the author in order to analyse the level and quality of tax regulations and practices in the 69 selected jurisdictions and to answer the research questions, using multiple linear regression, we defined a quality index of transfer pricing tax regulations and practices (qqtpr), which was also considered the dependent variable of the model. seven independent variables were established as independent variables based on the oecd questionnaire, reflecting the methods, regulations and tax and legal practices of transfer pricing establishing and assesment (see table 3). the linear regression model was defined by the function: melega, molociniuc (hritcan), macovei 11 , i=1,..,n. where, n is the sample size. based on the selected variables (see table 3), the linear regression equation was defined as: table 3. description and definition of independent variables in research variables description iqtpr quality index of transfer pricing regulations and tax practices alprp the arm's length principle and defining related parties lcitpr level of comparability of information for transfer pricing purposes rtpriav regulations for determining the transfer price of intangible assets, intangible values gitav guidance specific to intragroup transactions with low added value ftr financial transactions regulations tprd transfer pricing documentation regulations adj adjustments at the end of the year and secondary adjustments source: developed by the author in this research we used multiple linear regression because it is an essential tool for diagnosing and identifying problem cases, and the aim of our research is to identify the strengths and weaknesses of tax valuation and transfer pricing regulations and practices in the 69 jurisdictions, which apply oecd transfer pricing regulations. at the same time, as aiken et al. (2003) state, multiple regression (mr) analysis provides flexibility for modelling data and examining relationships between predictor (independent) variables and the dependent variable. result and discussions the regulation of transfer pricing has become an important topic for national and international regulators, this subject initiating various discussion platforms for the development of an appropriate legal framework for the objective assessment of transfer prices in order to avoid any form of tax avoidance. the non-taxation of multinationals' income is the main concern of political actors and professionals involved in tackling transfer pricing issues. at the same time, existing tax regulations on transfer pricing taxation are strongly criticised (rogers & oats, 2022) and are the subject of debates among regulators and practitioners as to their effectiveness and their adaptability to recent geopolitical changes. the lack of clear transfer pricing regulations, puts transfer pricing professionals in a difficult position, because according to rogers and oats (2022) they "require substantial practical knowledge and experience accumulated over time, including not only the theoretical application of the alp (the arm's length principle), but also the agreements reached in practice." the quality of tax regulations and practices for assessing and setting transfer prices has negative effects not only on the efficiency of the state in collecting its revenues, but also on the flow of foreign direct investments. according to de mooji and liu (2018) "unilateral adoption of transfer pricing regulations can have a negative impact on actual investment by multinationals.” given the importance of transfer pricing to the international business environment, transfer pricing regulations are reviewed and supplemented annually. for example, the latest revisions have come with explanations of the range of competition used to determine the market price of a good the transfer pricing file and tax controversies an empirical study 12 or service, so regulators are trying to eliminate any dispute over the correct application of transfer pricing rules and principles. the introduction and extension of transfer pricing regulation helps to reduce the risk of tax avoidance by limiting the transfer of profits between businesses. reidel and zin (2014) argue that this behaviour of the authorities is not surprising, as the introduction of "anti-avoidance measures to prevent taxpayers from adjusting transfer prices for tax purposes" ensures the efficiency of the state in revenue collection, thus preventing the development of largescale ecomic crime. table 4. model summaryb model r r square adjusted r square std. error of the estimate durbinwatson 1 .753a .568 .518 .288017 1.382 a. predictors: (constant), adj, lcitpr, rtpriav, tprd, gitav, ftr, alprp b. dependent variable: iqtpr source: developed by the author therefore, according to the data in the above table, we can see that the predictor variables quality index of transfer pricing regulations and tax practices; the arm's length principle and defining related parties; level of comparability of information for transfer pricing purposes; regulations for determining the transfer price of intangible assets, intangible values; guidance specific to intragroup transactions with low added value; financial transactions regulations; transfer pricing documentation regulations; adjustments at the end of the year and secondary adjustments influence the quality index of transfer pricing regulations and tax practices, the dependent variable, in a proportion of 56.8% (see table 4). in practice, the current level of transfer pricing regulation in the analysed 69 jurisdictions is covered to the extent of 56.8%, which shows that current regulations do not fully cover this area. lack of regulation also leads to increased economic crime through transfer pricing. table 5. anovaa model sum of squares df mean square f mr 1 regression 6.645 7 .949 11.444 .000b residual 5.060 61 .083 total 11.706 68 a. dependent variable: iqtpr b. predictors: (constant), adj, lcitpr, rtpriav, tprd, gitav, ftr, alprp source: developed by the author the model designed to assess the quality of tax valuation and transfer pricing regulations and practices for the 69 jurisdictions was validated as the sig. significance threshold value is 0.000 , which is below the 0.05 threshold (see table 5). table 6. coefficientsa model unstandardized coefficients standardiz ed coefficient t mr melega, molociniuc (hritcan), macovei 13 s b std. error beta 1 (constant) .059 .191 .312 .756 alprp .536 .236 .578 2.270 .027 lcitpr -.134 .070 -.366 1.918 .060 rtpriav .132 .129 .126 1.028 .308 gitav .004 .141 .003 .026 .980 ftr .089 .137 .084 .648 .519 tprd .267 .153 .239 1.744 .086 adj .135 .102 .147 1.332 .188 a. dependent variable: iqtpr source: developed by the author according to the regression coefficients, the regression equation is outlined as: the quality of tax regulations and practices for assessing and setting transfer prices, according to the correlation table, is influenced by the predictor variables in the following order: the arm's length principle and defining related parties (alprp), level of comparability of information for transfer pricing purposes (lcitpr), transfer pricing documentation regulations (tprd), adjustments at the end of the year and secondary adjustments (adj), regulations for determining the transfer price of intangible assets, intangible values (rtpriav), financial transactions regulations (ftr), guidance specific to intragroup transactions with low added value (gitav). the application of the arm's length principle and the comparability of information are essential elements in the correct and objective determination of transfer prices. according to the model data, it can be seen that the arm's length principle is applied and the comparability of information, i.e. the history of transactions, is taken into account in setting and assessing transfer prices in the 69 jurisdictions, allowing for objective and market-based transfer pricing. at the same time, it is noted that there are overlaps in the 69 jurisdictions in terms of regulations and practices for setting and valuing transfer prices of intangible assets, financial transactions and low value added intra-group transactions. at the same time, from the analysed sample, which includes countries from different types of economies and levels of development, it is evident that countries with developed economies and high tax burdens have more rigid transfer pricing tax regulations aimed at preventing tax evasion through transfer pricing, while emerging economies do not pay particular attention to transfer pricing, but provide clear regulations on the methods of assessing the transfer pricing record, while underdeveloped countries, which apply oecd transfer pricing regulations, are lagging behind in their practical application. thus, according to our results, we succeed in answering our research questions q1 and q2, concluding that tax regulations and policies for transfer pricing assessment and determination do not correspond to economic actuality and the needs of multinationals and governments in the objective collection of tax revenues, and fail to prevent and eliminate tax evasion. the transfer pricing file and tax controversies an empirical study 14 figure 1 histogram and plot regression source: developed by the author according to the figure above, it can be seen that the histogram distribution of the variable quality index of transfer pricing regulations and tax practices is a multimodal distribution, because several variables were analyzed in the model, which have a normal distribution, and the distribution of the trend line on the q-q plot of the variable is non-homogeneous. conclusions the level and quality of transfer pricing regulation is a key factor in preventing and combating tax evasion. therefore, national and international regulators should join forces to identify and establish clear rules and standards that leave no room for interpretation and are easy to apply in practice. setting a minimum tax rate of 15% for multinationals can be a start in discouraging multinationals from applying transfer pricing to erode the tax base. the effects will only be felt once all governments around the world will commit to adopt oecd transfer pricing rules into national regulations, thus creating a common front in the fight against economic crime. our research has shown that the arm's length principle is applied in 69 jurisdictions for setting and assessing transfer prices and that comparability of information like transaction history, is taken into account, allowing for objective and market-based transfer pricing. at the same time, the results of the research show that there are overlaps across the 69 jurisdictions in the regulation and practice of transfer pricing of intangible assets, financial transactions and low value-added intra-group transactions. at the same time, from the analysed sample, which includes countries from different types of economies and levels of development, it is evident that countries with developed economies and high tax burdens have more rigid transfer pricing tax regulations aimed at preventing tax evasion through transfer pricing, while emerging economies do not pay particular attention to transfer pricing, but provide clear regulations on the methods of assessing the transfer pricing record. regarding the underdeveloped countries, which apply oecd transfer pricing regulations, they are lagging behind in their practical application. in the same vein, the results of the research indicate that current tax regulations and policies for assessing and establishing transfer prices do not correspond to the current melega, molociniuc (hritcan), macovei 15 economic situation and the needs of multinationals and governments in the objective collection of tax revenues, and fail more or less to prevent and eliminate tax evasion. references aiken, l.s., west, s.g., pitts, s.c. (2003), multiple linear regression. handbook of psychology. hoboken, nj, usa: wiley, pp. 481-507. https://doi.org/10.1002/0471264385.wei0219 de mooji, r., liu, l. (2018), at a cost: the real effects of transfer pricing regulations, imf working paper wp/18/69. european commission. (2022), fair taxation: commission welcomes agreement on minimum taxation of multinationals, available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7674 kardos, p., uhliar, m. (2016), transfer of intellectual property and transfer pricing, 8th international scientific conference on managing and modelling of financial risks, ostrava, czech republic. lassourd, t. (2022), what does the global minimum tax deal mean for developing countries? available at: https://www.iisd.org/articles/global-minimum-tax lucian, r.d. 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(2022), transfer pricing: changing views in changing times, accounting forum, vol. 46, pp. 83-107. šupuković, v. (2021), influence of transfer prices on tax evasion, economy and market communication review, vol. 11, iss. 1, pp. 227-239. sustainable development solutions network (2022). target 17.1 of the sdgs, available at: https://indicators.report/targets/17-1/ https://doi.org/10.1002/0471264385.wei0219 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7674 https://www.iisd.org/articles/global-minimum-taxhttps://doi.org/10.1787/0e655865-en https://indicators.report/targets/17-1/ (2 rânduri libere, 11p) studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 61 promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 laura cătălina ţimiraş “vasile alecsandri” university of bacau, timiras.laura@ub.ro abstract european quality schemes used at community level have the role of ensuring the legal protection of agri-food products and alcoholic beverages, thus having an important promotional role. thus, consumers perceive the products whose names are protected by means of quality schemes as having a higher value, which results in increased sales, but also in other benefits of a quantitative and qualitative nature for the producers and the area of origin. this article presents, in the first part, some aspects with regard to the impact, from a marketing perspective, of the use of quality schemes, using in particular information from literature, and subsequently renders the situation in the eu countries, at the level of 2022, regarding the number of products protected under the various quality schemes, by country and by category of protected product, using official information. several quality schemes are used in the european union: geographical indications (protected designation of origin, protected geographical indication, geographical indication), traditional speciality guaranteed, mountain product, product of eu's outermost regions, but this paper refers only to products whose name was protected via geographical indications and traditionals speciality guaranteed. keywords european quality schemes, geographical indications, traditional speciality guaranteed, european union jel classification l15, m31, q13 introduction in the literature related to the promotion of agri-food products, in addition to other specific promotion techniques (advertising, sales promotion, public relations, etc.), also used for other categories of goods, there are also distinctive signs regarding quality. on the territory of the european union, according to current legislation, the following quality schemes are used (according to https://agriculture.ec.europa.eu/farming/geographical-indications-and-qualityschemes/geographical-indications-and-qualityschemes-explained_ro, accessed on 27.08.2022): • geographical indications, which include: o protected designation of origin pdo (for food and wine) o protected geographical indication pgi (for food and wine) o geographical indication – gi (for spirit drinks); • traditional speciality guaranteed – tsg; • mountain product; • product of eu's outermost regions; in accordance with regulation (eu) no 1151/2012, promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 62  ”designation of origin is a name which identifies a product: originating in a specific place, region or, in exceptional cases, a country; whose quality or characteristics are essentially or exclusively due to a particular geographical environment with its inherent natural and human factors; and the production steps of which all take place in the defined geographical area”. […]  ”geographical indication is a name which identifies a product: originating in a specific place, region or country; whose given quality, reputation or other characteristic is essentially attributable to its geographical origin; and at least one of the production steps of which take place in the defined geographical area. […]  a name shall be eligible for registration as a traditional speciality guaranteed where it describes a specific product or foodstuff that: results from a mode of production, processing or composition corresponding to traditional practice for that product or foodstuff; or is produced from raw materials or ingredients that are those traditionally used.” mountain product refers to products manufactured in mountainous areas, in difficult natural conditions. product of eu's outermost regions refers to products from regions of the eu that face difficulties due to remoteness and insularity, which sometimes also involve difficult geographical and meteorological conditions. (according to https://agriculture.ec.europa.eu/farming/geographical-indications-and-qualityschemes/geographical-indications-and-quality-schemes-explained_ro, accessed on 27.08.2022). products protected by geographical indications and traditional specialties guaranteed are registered in the register of the names of agricultural products and foodstuffs, wine, and spirit drinks that are registered and protected across the eu – eambrosia. globally, the eu has been at the forefront of promoting the protection of product names for wines, spirits and agricultural products, with considerable emphasis on promoting 'traditional' methods of food production in rural areas. (deacon, 2018). some aspects of the impact of the use of quality schemes from a marketing perspective although the main purpose for which the quality schemes were developed was the legal protection of products, their promotional role is indisputable, this article generally referring to products whose name has been protected through pdo, pgi, gi, tsg. thus, uzelac, mijatović and lukinović (2022), specified that, through the legal protection conferred, the quality schemes protect the producers of counterfeit products (surrogates on the market), thus giving the right to the exclusive use of the protected names of the products. also, the promotion of products based on their protected origin leads to an increase in their market value, as a result of the trust that consumers have in these products. favorable appreciation / increased consumer confidence in these products is highlighted in numerous papers. for example, russo, bilucaglia, circi, bellati, valesi, laureanti, licitra and zito (2022), specified that products with origin certification are perceived as more durable, safer and of better quality. other studies have demonstrated that labeling systems regulated by eu legislation, which establish strict requirements regarding food product standards (such as: geographical indications and traditional specialties guaranteed) are obviously appreciated by consumers (gracia and demagistris, 2016). geographical indications offer economic benefits to the holder of the respective right, as well as to the place of origin / environment of provenance of the product (sitepu, 2018), their main function being the recognition and protection of the specifics of the producing regions, contributing to the preservation of heritage (flores and falcade, 2019). https://agriculture.ec.europa.eu/farming/geographical-indications-and-quality-schemes/geographical-indications-and-quality-schemes-explained_ro https://agriculture.ec.europa.eu/farming/geographical-indications-and-quality-schemes/geographical-indications-and-quality-schemes-explained_ro țimiraș 63 thus, with their implementation, the quality schemes (geographical indications, traditional specialties guaranteed) played an important role in the recovery of a large and diverse amount of traditional agricultural and food products, as well as in preventing the disappearance of other products. in fact, in the absence of these quality schemes many of the currently protected products would be lost or at least not marketed outside their regional and national borders (bonadonna, macar, peira and giachino, 2017). practically, "traditional" foods constitute an important part of european cultural heritage (harriet deacon, 2018), traditional products have a significant role in promoting a region, representing communication vectors in terms of features, customs, traditions, identity and part of the experience of the region (traditional food products play a significant role in marketing of a region as a vehicle of communicating a place's features, customs, traditions, identity and part of the region's experience) (florek and gazda, 2021). a study carried out in poland, among producers who have adopted different product labeling schemes, highlighted that the impact that food quality labels have on their own activity is particularly materialized in the increase of profits, sales volume and sales prices. thus, the producers declared that the adoption of food quality labels offers opportunities for improving the market and access to distribution channels, product acceptance, increasing production, sales and profits, the positive perception of consumers towards their own products and improving the image of the producer. (jakubowska, wierzejski and lewicki, 2021) the increased market success of products whose name has been protected through various quality schemes (pdo, pgi, gi, tsg) is also evidenced by the evolution of their sales. thus, according to the data provided by and-international, for the years 2010 and 2017, food products and alcoholic beverages recorded sales at the eu level in the amount of eur 77,148 million, which represents an increase compared to 2010 by 41.5%. table 1. sales value of products under pdo, pgi, gi, tsg, in ue* countries in 2010 and 2017 (million eur) year 2010 2017** change 2017/2010 (%) wines (pdo + pgi) 29630 39418 33.0 agricultural products and foodstuffs 16603 27339 64.7 pdo + pgi 16603 24950 50.3 tgs 0 2389 spirit drinks (gi) 8249 10347 25.4 aromatised wine (gi) 31 43 38.7 total 54513 77148 41.5 source: taken and processed after and international study for dg agri, 2019 *including great britain **2017 is the last year for which we found official data available at the time of this work. by category of agri-food products, it can be seen that the highest sales at the level of the eu countries were recorded by: "cheeses", "meat products" and "beers", in terms of products with geographical indications and respectively "meat products" at products protected as traditional specialties guaranteed. promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 64 figure 1. structure of sales value of agricultural products and foodstuffs under pdo and pgi in 2017 figure 2. structure of sales value of agricultural products and foodstuffs under tsg in 2017 source: processed after and international study for dg agri, 2019 the number of agri-food products and alcoholic beverages belonging to eu countries protected by quality marks (pdo, pgi, gi, tsg), in 2022 regarding the number of names of agro-food products and alcoholic beverages protected by quality marks, it registered, at the level of the eu countries, an upward trend, in the context of the increased interest in obtaining protection for new and new products. in the year 2022, a number of over 3300 agricultural and food products, including alcoholic beverages, belonging to the countries of the european union were protected by means of geographical indications and traditional specialties guaranteed, most of them being represented by wines (over 48%) and food and agricultural products (44%) (table 2). table 2. the number of agri-food products and alcoholic beverages belonging to protected eu countries, by categories of quality schemes and products, in 2022 (number of products registered on 27.08.2022) product category number of products % in total wine (pgi, pdo) 1614 48.70 pdo 1176 pgi 438 food and agricultural products (pgi, pdo, tsg) 1458 44.00 pdo 635 pgi 763 tgs 60 spirit drinks (gi) 242 7.30 total 3314 100% source: elaborated by author based on eambrosia database (accessed on 27.08.2022) cheeses, 36.0% meat products, 15.9% beers, 13.3% fresh meat (and offal), 11.9% fruit, vegetable sand cereals, 7.8% fresh fish, molluscs, and crustaceans, 4.4% bread, pastry, cakes etc., 2.3% oils and fats, 2.2% other products, 6.1% cheeses, 1.6% meat products, 63.4% prepared meals, 0.3% fresh meat (and offal), 0.5% bread, pastry, cakes etc., 0.6% other products, 33.6% țimiraș 65 the number of wines, belonging to eu countries, protected by geographical indications, by country according to the information entered in the eambrosia database, in 2022, more than 1,600 wines belonging to eu countries were protected by pdo (72.9%) or pgi (27.1%). the distribution of pdo or pgi wines by country is presented in figure no. 3. 526 437 147 143 54 53 45 40 38 27 18 18 17 13 11 10 0 100 200 300 400 500 600 ita ly fr an ce g re ec e sp ai n b ul ga ria r om an ia g er m an y po rtu ga l h un ga ry a us tri a c ro at ia o la nd a sl ov en ia r ep ub lic c ip ru b el gi a figure 3. the number of wines belonging to eu countries protected by quality marks (pdo, pgi), by country, in 2022 (as of 27.08.2022) note: for 1 product, the registration application was submitted by two states, being reported under the law of both states source: elaborated by author based on eambrosia database (accessed on 27.08.2022) there is a high concentration regarding countries and the number of wine protected names, thus, approximately 60% of the total number of protected names at the community level are registered in italy (32.6% of the total) and france (27.1%). greece (9.1%) and spain (8.9%) also stand out in the hierarchy of eu countries from the perspective of the number of wines protected by pdo or pgi. the number of agricultural and food products, belonging to eu countries, protected by geographical indications and traditional specialties guaranteed, by country according to eambrosia, almost 1400 agricultural and food products, belonging to eu countries, were protected at the community level in 2022, their distribution by country being presented in figure no. 4. the countries with the most agricultural and food products protected through pdo or pgi are italy (22.5%), france (18.5%) and spain (14.5%). the categories of agricultural and food products that register the most products protected by geographical indications are "fruit, vegetables and cereals, fresh or processed" (more than a quarter of the total products protected by means of these categories of quality schemes) and "cheeses" ( 17%). promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 66 315 259 202 142 113 93 36 34 30 30 23 16 16 14 11 10 10 9 8 8 8 7 3 3 2 0 50 100 150 200 250 300 350 ita ly fr an ce * sp ain * po rtu ga l gr ee ce ge rm an y cr oa tia ** po lan d* ** hu ng ar y cz ec h re pu bl ic sl ov en ia* * au str ia be lg ia sl ov ak ia ol an da ci pr u su ed ia ro m an ia de nm ar k irl an d li tu an ia* ** fi nl an d bu lg ar ia le to ni a lu xe m bo ur g figure 4. the amount of agricultural and food products belonging to eu countries protected by geographical indications, by country, in 2022 (as of 27.08.2022) note: for a number of 5 products, the application for registration was submitted by two states, being reported under the law of both states. source: elaborated by author based on eambrosia database (accessed on 27.08.2022) figure 5. structure of the number of names of agricultural and food products belonging to eu countries, protected by geographical indications, by product category, in 2022 (as of 27.08.2022) source: adapted by author based on eambrosia database (accessed on 27.08.2022). also, in 2022, 60 agricultural and food products, belonging to eu countries, were protected by means of traditional specialty guaranteed, according to the eambrosia database, their distribution by country being shown in figure 6. țimiraș 67 10 5 5 4 4 4 4 3 3 3 3 2 2 2 2 2 1 1 0 2 4 6 8 10 12 po la nd bu lg ar ia be lg ia ita ly sp ai n o la nd a sl ov en ia a us tri a fi nl an d le to ni a sl ov ak ia fr an ce h un ga ry po rtu ga l su ed ia li tu an ia ro m an ia cz ec h re pu bl ic figure 6. the amount of agricultural and food products belonging to eu countries protected by traditional specialty guaranteed, by country, in 2022 (as of 27.08.2022) source: elaborated by author based on eambrosia database (accessed on 27.08.2022) in the case of products protected through the stg, poland stands out with the most protected products, followed, equally, by bulgaria and belgium. figure 7. structure of the number of names of agricultural and food products belonging to eu countries, protected by traditional specialties guaranteed, by product category, in 2022 (as of 27.08.2022) source: adapted by author based on eambrosia database (accessed on 27.08.2022) by means of traditional specialties guaranteed, products belonging to the categories "bread, pastry, cakes, confectionery, biscuits and other baker's wares" (25%) and "meat products (cooked, salted, smoked etc.)" (21.7%) were especially protected. the number of spirits, belonging to eu countries, protected by geographical indications, by country in the spirits category, over 240 products were protected at the eu level in 2022, through geographical indication, the countries with the most protected names being: france, germany and italy. (figure 8) promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 68 53 36 34 19 15 13 12 10 10 9 9 7 6 5 4 3 3 2 2 2 1 1 0 10 20 30 40 50 60 fr an ce ge rm an y ita ly sp ain gr ee ce hu ng ary bu lga ria au str ia be lgi a* ro ma nia po rtu ga l li tua nia cr oa tia ol an da slo ve nia su ed ia irl an d ci pru fin lan d po lan d slo va kia es ton ia figure 8. the amount of spirits, belonging to eu countries, protected by geographical indication, by country (as of 27.08.2022) note: for a number of 12 products the application for registration was submitted by two or more states, being reported under the law of all those states. source: elaborated by author based on eambrosia database (accessed on 27.08.2022) making a comparison between the share held by the eu member countries (including the united kingdom and excluding estonia and latvia, for which we do not have data) in total names protected by means of geographical indications (excluding aromatised wine), as well as the share in total sales (sales value ) based on the information of 2017 (the last for which we have official data on sales at the level of eu countries), we observe a direct connection between the value of the two indicators (see figure no. 9). it is therefore obvious that a greater number of products protected by quality schemes is associated with higher sales of this product category and, implicitly, with a whole series of other advantages both for the producers and for the environment of origin of the products so after as we stated before. țimiraș 69 5 94 5.15 2.16 2.06 1.97 1.75 1.72 1.40 1.37 1.18 1.02 1.02 0.89 0.64 0.57 0.48 0.32 0.29 0.29 0.25 0.16 0.10 2.47 11.61 10.30 0.11 0.29 0.53 1.25 0.29 1.25 0.17 0.08 0.58 2.11 0.13 0.03 0.03 0.18 0.04 0.30 1.33 0.07 0.02 portugal germany united kingdom bulgaria romania hungary austria slovenia czech republic croatia belgia poland olanda slovakia cipru lituania denmark finland suedia irland luxembourg malta % in total sales valu % in total number o geographical indicat countries figure 9. the share held by some of the member states in total sales value* and in total geographical indications* registered at the level of eu countries, in 2017 * excluding aromatised wine source: elaborated by author based on and international study for dg agri conclusions the use of distinctive quality marks is both a means of protection and promotion of agri-food products, bringing real benefits to consumers, producers and the environment in which they were produced. in an extremely synthetic presentation, if for the consumer the distinctive signs of quality represent a means of identifying the products (made in a certain area or according to a traditional recipe) and of guaranteeing the quality, for the producer, the products protected by means of the schemes quality also bring financial benefits, in the sense that, enjoying a higher perceived value, they are sold at higher prices, which means higher profits, sales markets (internal, but especially external), benefits in terms of image etc. in addition, these quality schemes bring real promotion of agricultural products and alcoholic beverages through european quality schemes in eu countries for the year 2022 70 benefits for the environment of origin, in the sense that they represent real tools for promoting the values of the areas to which they belong. the number of names protected by quality marks (pdo, pgi, stg, gi) at the european level reached 3314 in 2022 (27.08.2022), of which 48.7% represented wines, 44% food and agriculture products and 7 .3% spirit drinks. among the member countries, italy and france stand out in particular with the most protected names, both in terms of wines, as well as food and agricultural products, and in the category of spirits, france, germany and italy are in the first places in the eu. also, in the top of the countries with a large number of products protected by means of geographical indications are spain, greece and portugal. referring to the guaranteed traditional specialties, their number at the level of the eu countries amounted to 60 on the same date previously indicated, in first place among the member countries, with the largest number of protected products being located in poland. at the level of the eu countries, there is a real link between the sales made for these categories of products and the number of products protected by these schemes, a larger number of protected products being associated with higher sales and (starting from those presented previously) with benefits additional for producers and area / country of origin. references bonadonna, a., macar, l., peira, g., giachino, c., (2017), the dark side of the european quality schemes: the ambiguous life of the traditional specialities guaranteed, quality access to success, volume 18, no. 156, pp. 102-108 deacon, h. (2018), safeguarding the art of pizza making: parallel use of the traditional specialities guaranteed scheme and the unesco intangible heritage convention, international journal of cultural property, volume 25 issue 4, pp. 515 542 florek, m., gazda, j. (2021), traditional food products—between place marketing, economic importance and sustainable development, sustainability, no. 13, 1277 flores, s.s., falcade, i. (2019), innovation, competitiveness and sustainability factors for evaluation and prospection of geographical indications in brazil, bio web of conferences, volume 12, 41st world congress of vine and wine gracia, a., de-magistris, t. (2016), consumer preferences for food labeling: what ranks first?, food control, volume 61, pp. 39-46 (available at: https://www.sciencedirect.com/science/article/abs/pii/s0956713515302024) knežević, n., ranilović, j., cvetković, t., grbavac, s., palfi m. (2021), vegetable byproducts in the european food legislative framework, croatian journal of food technology, biotechnology and nutrition, volume 16 (3-4), 2021, pp. 115-122 jakubowska, d., wierzejski, t., lewicki, w. (2021), perception of food quality labels: an empirical analysis among traditional food producers in poland, european research studies journal, volume xxiv, special issue 3, pp 243259 russo, v., bilucaglia, m., circi, r., bellati, m., valesi, r., laureanti, r., licitra, g., zito, m. (2022), the role of the emotional sequence in the communication of the territorial cheeses: a neuromarketing approach, foods, no. 11, 2349 sitepu, f.y. (2018), the potential of geographical indications and its legal protection, volume 52, e3sweb of conferences, csspo 2018, (available at: https://www.e3sconferences.org/articles/e3sconf/pdf/2018/27/e3sconf_nrm2018_00017.pdf) https://www.cambridge.org/core/journals/international-journal-of-cultural-property https://www.cambridge.org/core/journals/international-journal-of-cultural-property/issue/a36590c2174aae38deacb35e5e73fbc1 https://www.cambridge.org/core/journals/international-journal-of-cultural-property/issue/a36590c2174aae38deacb35e5e73fbc1 https://www.sciencedirect.com/journal/food-control https://www.sciencedirect.com/journal/food-control/vol/61/suppl/c https://www.sciencedirect.com/science/article/abs/pii/s0956713515302024 https://www.e3s-conferences.org/articles/e3sconf/pdf/2018/27/e3sconf_nrm2018_00017.pdf https://www.e3s-conferences.org/articles/e3sconf/pdf/2018/27/e3sconf_nrm2018_00017.pdf țimiraș 71 ţimiraş, l (2019), protection and promotion of agricultural and food products at european union level through european quality, eastern european journal for regional studies, volume 5, issue 1, pp. 78-95 uzelac, o., mijatović, d. m., lukinović, m. (2022), the role of branding agricultural products in better market valorization, economics of agriculture, volume 69, no. 2, pp 613-625 european commission (2019), study on economic value of eu quality schemes, geographical indications (gis) and traditional specialities guaranteed (tsgs) final report, written by and-international (available at: https://op.europa.eu/en/publication-detail/-/publication/a7281794-7ebe-11eaaea8-01aa75ed71a1) regulation (eu) no 1151/2012 of the european parliament and of the council of 21 november 2012 on quality schemes for agricultural products and foodstuffs (available at: https://eur-lex.europa.eu); https://agriculture.ec.europa.eu/farming/geographical-indications-and-qualityschemes/geographical-indications-and-quality-schemes-explained_en. https://agriculture.ec.europa.eu/farming/geographical-indications-and-quality-schemes/geographical-indications-and-quality-schemes-explained_en https://agriculture.ec.europa.eu/farming/geographical-indications-and-quality-schemes/geographical-indications-and-quality-schemes-explained_en european quality schemes used at community level have the role of ensuring the legal protection of agri-food products and alcoholic beverages, thus having an important promotional role. thus, consumers perceive the products whose names are protected b... mountain product refers to products manufactured in mountainous areas, in difficult natural conditions. product of eu's outermost regions refers to products from regions of the eu that face difficulties due to remoteness and insularity, which sometime... table 1. sales value of products under pdo, pgi, gi, tsg, in ue* countries in 2010 and 2017 (million eur) source: taken and processed after and international study for dg agri, 2019 *including great britain **2017 is the last year for which we found official data available at the time of this work. by category of agri-food products, it can be seen that the highest sales at the level of the eu countries were recorded by: "cheeses", "meat products" and "beers", in terms of products with geographical indications and respectively "meat products" at ... the number of agri-food products and alcoholic beverages belonging to eu countries protected by quality marks (pdo, pgi, gi, tsg), in 2022 the number of wines, belonging to eu countries, protected by geographical indications, by country according to the information entered in the eambrosia database, in 2022, more than 1,600 wines belonging to eu countries were protected by pdo (72.9%) or pgi (27.1%). the distribution of pdo or pgi wines by country is presented in figure no. 3. figure 9. the share held by some of the member states in total sales value* and in total geographical indications* registered at the level of eu countries, in 2017 * excluding aromatised wine template studies and scientific researches. economics edition, no 36, 2022 http://sceco.ub.ro 34 the influence of urbanization and gender on the health status in european union oana ancuţa stângaciu vasile alecsandri” university of bacău, romania stangaciu@ub.ro abstract in our endeavor to analyze the influence of urbanization and gender on self-perceived health status among the member states, we started by using an assessment scale, with a score ranging from 1 to 5 points for the 5 levels pertaining to the health status, as well as by determining an average score of the health status for each member state, by gender or by degree of urbanization. ranking the scores, building crosstabs and determining the kendall and spearman coefficients were the fundamental methods used in analyzing the influence of urbanization and gender on the health status in european union (eu), and the results confirmed the fact that there is a connection between these variables. thus, the population living in “cities” (where we have the highest degree of urbanization) tended to rate their health better than the population living in “rural” areas (where we have the lowest degree of urbanization), and the males tended to rate their health better than females. keywords health status; gender; degree of urbanization; kendall and spearman coefficients. jel classification c10; i10 introduction the health status of the population is an important priority of the european union (eu), its health policies involving, among others, improving the legislation in the field, promoting a healthy lifestyle, while determining certain factors that might influence the health status of the population has always been a topical issue. short methodological presentation according to eurostat, the data on self-perceived health come from eu statistics on income and living conditions (eu-silc) which relate to 2021 as reference year and cover persons aged 18 years and over. these data focus on two key indicators describing the levels and distribution of health status: self-perceived health gives an overall assessment by respondents of their health in general; chronic morbidity assesses the presence of a long-standing illness or health problem. in the present study, we used the first indicator of the eu-silc survey – self-perceived health – which gives an overall assessment by respondents of their health in general. the distribution of population by health status, degree of urbanization and gender in eu-27 in 2021, according to the eurostat data, on the level of the european union (eu-27) – see figure 1– most of the population over the age of 18 (68.2%) stated that they have stângaciu 35 a good and very good health status (21.7% “very good” and 46.5% “good”), 22.8% have a “fair” state and only 9.0% of the population over the age of 18 believe they have a poor state of health, answering “bad” or “very bad”. figure 1. the distribution of population aged 18 and over by health status in eu-27 in 2021 (%) source: personal processing of the eurostat available data from the point of view of the variable “gender”, as we can see in in figure 2, in eu27 65.8% of the female population aged over 18 answered that their health is “good” and “very good”, while the percentage of the male population which consider themselves to be healthy is 70.9%, by +5.1 pp higher than the female population. in contrast, when it comes to the poor state of health, 9.9% of the female population stated that they are in “bad” and “very bad” health, while only 8.0% of the male population believe their health is not good (by -1.9 pp lower than the percentage of the female population). females males figure 2. the distribution of population aged 18 and over by health status and gender in eu-27 in 2021 (%) source: personal processing of the eurostat available data considering the distribution of the population over 18 according to their health status and the degree of urbanization -see figure 3we can notice that 70.1% of the population living in “cities” state they are in “good” and “very good” health, which is by +1.8 pp higher than the percentage of the population living in “towns and suburbs” (68.3%) and by +4.8 pp higher than the population in “rural areas” (65.3%). the population over 18 which say that their health is “bad” and “very bad” represents the influence of urbanization and gender on the health status in european union 36 9.8% of the total population living in “rural areas” – the highest percentage compared to the other forms of urbanization, 8.9% of the population in “towns and suburbs” and only 8.4% of the population living in “cities”. cities towns and suburbs rural areas figure 3. the distribution of population aged 18 and over by health status and degree of urbanization in eu-27 in 2021 (%) source: personal processing of the eurostat available data in territorial aspect, on the level of the 27 eu member states there are differences concerning the distribution of the population according to their health status. thus, in ireland over 80.0% of the population aged over 18 (80.8%) stated that they are in “good” and “very good” health, and similar percentages (close to 80.0%) can be found in greece (77.8%), cyprus (76.7%) and luxembourg (76.1%). on the other hand, in countries such as lithuania, latvia and portugal, the percentage of the population with “good” and “very good” health is under 50.0%, more exactly 47.5%, 48.6% and 49.3% respectively. consequently, there are great difference between the two countries (ireland and lithuania), where we registered the highest and respectively the lowest percentage of the healthy population, to be more specific 33.3 pp (see figure 4). figure 4. the distribution of population aged 18 and over by health status and average score in eu member state in 2021 source: personal processing of the eurostat available data stângaciu 37 a similar situation can be found in the case of the population which declared to be in poor health. in 8 member states, more than 10.0% of the population aged over 18 believe they are in “bad” and “very bad” health, with the highest percentages in croatia (14.3%), lithuania (13.5%) and portugal (13.5%). in contrast, the lowest percentages of the population with poor health are registered, naturally, in the countries in which the percentage of the healthy population is higher, that is malta (only 4.0% of the population over 18 stated they are in “bad” or “very bad” health), netherlands (5.3%) and ireland (5.3%) (see figure 4). in order to synthesize the health status of the population in eu-27 and that of the member states, we used a 5-point assessment scale, with a health score ranging from 1 to 5 points as follows: 5 points for “very good” health, 4 points for “good” health, 3 points for “fair” health, 2 points for “bad” health and 1 point for “very bad” health. determining the average score for the health status on member state, gender or degree of urbanization can provide an overall picture of self-declared health status, the values closer to five indicating the fact that the population perceive themselves as being in good health, while values closer to 1 indicate poor health. on the level of the eu and the member states, we can notice in figure 4 an average scores between 3 and 4, which means that the health status is between “good” and “fair”. on the average, the health status of the population over 18 living in the european union is almost “good”, as the average score is closer to 4 (3.8 points). in territorial aspect, the countries with the highest scores, over 4.0, meaning that their population is in “good” health, are ireland (4.2 points), greece (4.2 points) and cyprus (4.2 points), while the countries with the lowest score, that is 3.4 points, are lithuania, latvia and portugal, fact which means that in these countries the health status of the population is a little higher than “fair”. the influence of urbanization on the health status in order to analyze the influence of urbanization on the health status of the population, we calculated the average score of the health status for each eu member state according to the variables pertaining to urbanization: “cities” (the highest degree of urbanization), “towns and suburbs” (medium degree) and “rural” (low degree). figure 5. the average score of health status by degree of urbanization in eu member state in 2021 source: personal processing of the eurostat available data the influence of urbanization and gender on the health status in european union 38 thus, we can notice in figure 5, in eu-27 the highest score is the one in “cities” (3.83 points), followed by “towns” (3.78 points), and the lowest score can be found in “rural” areas (3.74 points). such ranking of the variables pertaining to urbanization shows the fact that the percentage of people who consider themselves to be healthy is higher in “cities” compared to the “rural” areas; on the average, we can conclude that, according to their own assessment, the health status of the population living in ”cities” is better than that of the ones living in ”rural” areas. the highest scores of the health status by degree of urbanization are registered, as expected, in ireland, as in this country we also have the highest total score. the results are as follows: for “towns and suburbs” 4.28 points, for “cities” 4.19 points and for “rural” 4.12 points. it should be noted that in the countries with the highest total average scores, ireland, greece and cyprus, the ranking of the variables pertaining to urbanization is slightly different from the eu-27 average. thus, on the first place, with the highest score are the “towns and suburbs” and not the “cities” as it is the case in the eu-27, on the second place are the “cities” and on the third place the “rural” (see figure 5). a first step in analyzing the connection between the degree of urbanization and the self-perceived health status for the population over the age of 18 was building a crosstab, in spss, between the degree of urbanization and the hierarchy of the degree of urbanization according to the health status score (see table 1 and annex), and it points out the following aspects: in most eu member states (20 states) the variable “cities” is on the first place with the highest score of the health status, in 6 member states it is on the second place of the hierarchy, while in only one members state it has the lowest value, thus being on the third place. the variable “towns and suburbs” is on the first place of the hierarchy in 5 member states, while in most states (16 of them) it is on the second place, and in 6 states it is on the third place. the population in the “rural” areas in most eu member states (in 20 states) has the lowest score of the health status in the hierarchy of the degree of urbanization, thus being on the third place, while in only 2 states it is on the first place, and in 5 states it is on the second place. table 1. crosstabulation between degree of urbanization and the hierarchy of the degree of urbanization according to the health status score; the report from spss. source: personal processing of the eurostat available data a first conclusion of the crosstabulation analysis would be that there is a direct connection between the 2 variables considered the degree of urbanization and the health status of the population aged over 18-, meaning that the higher the degree of urbanization, the better is the health status of the population. stângaciu 39 table 2. correlation between degree of urbanization and the hierarchy of the degree of urbanization according to the health status score; the kendall and spearman coefficients report form spss source: personal processing of the eurostat available data a second step in analyzing, for a scientific substantiation of the correlation between the two variables, we determined the kendall's and spearman's rank correlation coefficients in spss (see table 2). as a result of the analysis, we can state with 100% probability that there is quite a close direct connection between the degree of urbanization and the health status of the population, the degree of urbanization determining the health status of the population at a rate of 68.5% (spearman coefficient). the influence of gender on the health status using the same methodology as the one used in analyzing the influence of the degree of urbanization on the health status of the population, we determined the average score of the health status by gender (for “males” and “females” respectively) for each one of the eu member states. figure 6. the average score of health status by gender in eu member state in 2021 source: personal processing of the eurostat available data the influence of urbanization and gender on the health status in european union 40 on european union level, the highest score can be found in the case of “males” (3.82 points), while in the case of “females” there is a lower score (3.74 points). such a hierarchy of the gender variables shows us the fact that the percentage of the male population that consider themselves to be healthy is higher than the one of the females; on the average, we can state that the health status of the male population, according to their own statements, is better that the one of the females (see figure 6). as it can be seen in figure 6 and in table 3, in all the eu member states, the highest scores of the health status are in the case of the male population, thus maintaining, in territorial aspect, the conclusion drawn on the level of the whole european union, that the health status of the male population, according to their own statements, is better that the one of the females. table 3. crosstabulation between gender and the hierarchy of the sexes according to the health status score; the report from spss. source: personal processing of the eurostat available data even if the scores of the male population are higher than the ones of the female population, we should notice that, in territorial aspect, there are great differences between the scores of the “males” and those of the “females”. thus, in countries such as bulgaria and romania the differences between the scores of the “males” and those of the “females” are quite large (of 0.17 points), while in ireland and austria the difference is insignificant (of only 0.01 points). table 4. correlation between gender and the hierarchy of the sexes according to the health status score; the kendall and spearman coefficients report form spss source: personal processing of the eurostat available data since in all the eu member states the score of the males is higher than the one of the females (see table 3 – males are on the first place, while females are on the second place), the kendall's and spearman's rank correlation coefficients (see table 4) determined in spss, confirm, with 100% probability, that there is a direct stângaciu 41 determining connection between the gender variable and the health status of the population, the gender of the interviewee determining the health status declared at a rate of 100% (spearman coefficient). conclusions in 2021, most of the population aged over 18 in the eu (68.2%) declared that they are in good and very good health, from the perspective of the “gender” variable, 70.9% of the male population declared that the are in “good” and “very good” health, while the rate of the female population with the same answer is lower; according to the degree of urbanization, 70.1% of the population living in “cities” stated that their health is “good” and “very good”, percentage which is higher that the one of the population living in “towns and suburbs” or ofthe ones in the “rural areas”. determining the average score of he health status provides us with a synthetic view of the self-declared health status, and thus we can state that, on the average, the health status of the population aged over 18 in the european union is almost “good”, as the average score is close to 4 (3.8 points). the states with the highest scores, over 4, are ireland, greece and cyprus, while the states with the lowest score (3.4 points) are lithuania, latvia and portugal, fact which shows that in these states the health state of the population a little higher than “fair”. analyzing the influence of the degree of urbanization and of gender on the selfperceived health status of the population, analysis performed by building a crosstab and determining the kendall and spearman coefficients, certifies the fact that there is a connection between these two variables and the health status. thus, the population in “cities” tended to rate their health better than the population in the “rural” areas, the degree of urbanization determining the health status of the population at a rate of 68.5% , and males tended to rate their health better than females, the gender of the person determining the self-declared health status at a rate of 100%. references adeyi, o., chellaraj, g., goldstein, e., preker, a., ringold d. (1997), "health status during the transition in central and eastern europe: development in reverse?” health policy and planning, volume 12, issue 2, 1997, pages 132– 145, available at url: https://academic.oup.com/heapol/article/12/2/132/690858?login=false cyril s., oldroyd, j., renzaho, a. (2013), "gender and health: an update on hypotheses and evidence”, bmc public health volume 13, article number: 513 (2013), available at url: https://link.springer.com/article/10.1186/1471-2458-13-513 harja, e., stângaciu, o.a., (2009) "analiza datelor statistice utilizând spss" editura alma mater. varì, r., scazzocchio, b., d'amore, a., giovannini, c., gessani, s., masella, r.(2016), "gender-related differences in lifestyle may affect health status”, annali dell’istituto superiore di sanità,vol. 52 no. 2 (2016), pages 158-166, available at url: https://annali.iss.it/index.php/anna/article/view/417/245 verbrugge, l.m. (1985), " urbanisation, urbanicity, and health: a systematic review of the reliability and validity of urbanicity scales”, journal of health and social behavior, vol. 26, no. 3 (sep., 1985), pp. 156-182 (27 pages), available at url: https://www.jstor.org/stable/2136750 https://academic.oup.com/heapol/article/12/2/132/690858?login=false https://link.springer.com/article/10.1186/1471-2458-13-513 https://annali.iss.it/index.php/anna/article/view/417/245 https://www.jstor.org/stable/2136750 the influence of urbanization and gender on the health status in european union 42 eurostat, health in the european union – facts and figures eurostat, data set, available at url. (http://ec.europa.eu/eurostat) annex: the hierarchy of health status by degree of urbanization and gender in eu member state in 2021 hierarchy of health status by degree of urbanization gender cities towns rural males females eu 27 1 2 3 1 2 belgium 2 3 1 1 2 bulgaria 1 2 3 1 2 czechia 1 3 2 1 2 denmark 1 2 3 1 2 germany 1 2 3 1 2 estonia 1 3 2 1 2 ireland 2 1 3 1 2 greece 2 1 3 1 2 spain 1 2 3 1 2 france 1 3 2 1 2 croatia 1 2 3 1 2 italy 2 1 3 1 2 cyprus 2 1 3 1 2 latvia 1 2 3 1 2 lithuania 1 3 2 1 2 luxembourg 1 2 3 1 2 hungary 1 2 3 1 2 malta 3 2 1 1 2 netherlands 1 3 2 1 2 austria 2 1 3 1 2 poland 1 2 3 1 2 portugal 1 2 3 1 2 romania 1 2 3 1 2 slovenia 1 2 3 1 2 slovakia 1 2 3 1 2 finland 1 2 3 1 2 sweden 1 2 3 1 2 source: personal processing of the eurostat available data http://ec.europa.eu/eurostat studies and scientific researches. economics edition, no 35, 2022 http://sceco.ub.ro 19 digital marketing in post-pandemic conditions raluca-alexandra ceocea “gheorghe asachi” university of iasi raluca.ceocea@gmail.com costel ceocea “vasile alecsandri” university of bacau costel.ceocea@ub.ro ovidiu-leonard turcu “vasile alecsandri” university of bacau ovidiuturcu@ymail.com nicoleta ciucescu “vasile alecsandri” university of bacau ciucescu.nicoleta@ub.ro andreea feraru-prepeliță “vasile alecsandri” university of bacau andreea.feraru@ub.ro abstract as the covid-19 pandemic affected the entire world, companies had to develop new techniques and practices to adapt to digital transformation, there came a need for change, for a restructuring of organizational management policy with reference to marketing and communication processes and strategies, organizational procedures, as well as for an awareness of the new technologies that are the bridge towards the online environment. new innovative technologies are the enablers of efficiency and working time reduction, with a focus on automation and systematization. our aim is to highlight the impact of digitalization on business marketing, the importance of the company’s position and mentality in relation to the current context, as well as the changes in consumer behaviour. the dynamics and fast pace of current trends changes in marketing increase the need to be open about the implementation and adoption of new communication technologies and tools. in this context, organizations must take into account the remodelling of marketing strategies that should be streamlined taking into account intra-organizational and strategic management challenges. therefore the study aims to outline the implications of digital marketing on the post-pandemic management of companies, and comes up with suggestions related to the allocation of resources in terms of digitalization, that may have a positive impact on improving operational tasks, effectiveness and efficiency through automation. keywords business, digitalization, company mentality, consumer behavior jel classification m39 1. intra-organizational challenges and solutions of marketing and communication strategies during covid-19 as the covid-19 pandemic affected the entire world, companies had to develop new techniques and practices to adapt to digital transformation, so they had to restructure organizational management (marketing and communication processes and strategies, organizational policies and strategies) as well as keep up to date with new technologies that are the bridge to the online environment. this paper aims to develop the impact of mailto:raluca.ceocea@gmail.com mailto:costel.ceocea@ub.ro mailto:ovidiuturcu@ymail.co mailto:andreea.feraru@ub.ro ceocea, ceocea, turcu, ciucescu, feraru-prepeliță 20 digitalization on business marketing, the importance of the market positioning and the mentality of the entire company, given the current context1. furthermore, it aims to outline the digital marketing and management implications during the pandemic and highlight the major significance of resource allocation in terms of digitalization, which carries with it a positive impact on improving operational tasks, effectiveness and efficiency through automation2. due to financial hardships, many small to medium-sized companies were forced to close business if they were based on a rigid business model that could not easily adapt to crisis situations. meanwhile large companies that had a budget behind them to support them, managed to remodel their processes and strategies towards the online environment. at the same time, the new dynamics has proven to be a (pragmatic) challenge for businesses from the point of view of assessing intra-organizational cohesion, responsibility to meet set targets and internal communication. although digitwise is not a large company, due to its flexible organizational culture, it managed to use this period to expend and reshape itself, taking this period as an opportunity. companies that have implemented business models based on principles to build a flexible organization able to quickly react to unpredictable changes have made progress in increasing productivity and efficiency in this period. an example in this case is digitwise. a key element for success has proven to be the quick answer to change, adapting business models based on technology to function at a remarkable speed to meet customer needs. any company is responsible for its own success or lack thereof, depending on its interaction with the external environment, its positioning on the market, the quality of its services and products and the way in which it communicates with potential customers. with this in mind, digitwise had to conceptualize and deliver a marketing and communication strategy that everyone in the organization understood, based on the demands of customers and external factors. this requires an overview of the interrelationships between all the organization's activities and resources and the assessment of the impact of the covid-19 crisis on organizational performance and the external environment. this paper aims to provide a comprehensive overview of the on-going global digitalization practices within organizations, with a focus on marketing and communication strategies, to highlight the importance of designing and implementing solid digital infrastructures within organizations and to highlight the perennial challenges and solutions of the digitization process during the pandemic, using digitwise as an example. new digital infrastructures, along with the multitude of information from the online environment, as well as recent technological innovations provide significant progress in terms of the effectiveness of business operations and the increase of employee productivity due to the automation of repetitive tasks with the help of software robots1. according to a study from 2021 conducted by deloitte3, 63% of business leaders resorted to automation to answer to the covid-19 pandemic, while 73% of organizations show interest in process automation technologies, one third higher than the previous year. digitwise is one of these companies, an early adopted or process automation for raising the efficiency of resources as a response to post-pandemic changes. for example, the accounting processes were automated in 2022 with the help of a software robot. it has the role to replace the work of an accountant, cutting down company costs. we can see how this pandemic has accelerated the pace of digital transformation, thus pushing digitwise to adopt the following solutions: digital marketing in post-pandemic conditions 21 1.1. robotic automation: the company cut costs by improving operational efficiency. it implemented software bots that replace repetitive, time-consuming processes, thus giving staff time to focus on creative and important goals. the adoption of software bots has a positive impact on the company considerably reducing its need for labour force and implicitly cutting down the costs associated to it. complementing the above, a study conducted in 2021 by deloitte3 found that robotic automation is the most widespread type of automated technology, with a rate of 78%. 1.2. adoption of digital infrastructure – creation of new internal and external cooperation systems: the new digital infrastructures adopted by digitwise such as video conferencing, remote work, e-learning, etc., allowed a renewing of marketing and communication channels, an unique client experience and convenient work methods, allowing an improved customer connectivity. 1.3. exploration of new business channels which can be easily scaled by implementing an automated sales framework: considering the notion of business scalability, digital marketing has come up with a revolutionary solution for companies. here we would like to introduce the concept of sales funnel. although the sales funnel concept is not a new one, the covid-19 pandemic has prompted the vast majority of companies to move towards this structure. the ideal for organizations is to adopt a complete and efficient sales funnel that is easy to scale. moreover, using an automated sales funnel is one of the simplest and most direct methods of generating leads (prospects, i.e. contacts) and doing lead nurturing (the process of creating and cementing a relationship with prospects at each stage of sales the funnel). sales funnel, in mot-a-mot translation is: funnel for sales, or automated sales framework. digital marketing institute defines this concept as a buying/acquisition process through which companies lead customers through when purchasing products, solutions or services4. a sales funnel is divided into steps, starting at the top with the “awareness” stage and concluding with the purchase. the entire process has the purpose of taking the lead through each step, turning it from prospect to converted client (paying). this way, organizations can create a fully automated system that manages to generate constant sales. to better understand how a sales funnel is explained, we should also mention marketing automation in general. the term ‘marketing automation’ was first coined by little5. these systems have been created for organizations that faced a large volume of data that were automatically collected from the online environment. thus, the main purpose of these automation systems was to react in an adaptive manner to choices made by customers online. one of the most popular definitions circulated is that of burga and kelly6 who define marketing automation as the technology that focuses on defining, planning, segmenting and measuring marketing campaigns, allowing marketing and sales functions to cultivate leads with customized content at a high level in order to attract and retain customers. in the post covid-19 pandemic scenario, s&ma (sales & marketing automation) is expected to influence and reinvest organizations and relationships management, as companies need to re-assess their marketing and sales strategies, contextualizing it to the new “normal” after the passing of the pandemic. baig et al.7 , iterates that in this period, digital channels will be considered not only for low-value products, but also for new or recurrent purchases in the b2b ( business to business) area: 70% of organizations are open to managing procurement processes ceocea, ceocea, turcu, ciucescu, feraru-prepeliță 22 completely remote (from home) for contracts up to $50k. the same author emphasizes the key role of s&ma in mapping the customer journey in the online environment with the purpose of benefiting from the new trends that are quickly evolving in the postpandemic scenario, such as the need for real-time communication. for these reasons, it is expected that one of the effects generated by covid-19 is the acceleration of automation adoption8. 1.4. risk management implementation – prevention measures: 1. to ensure business sustainability it is important to have a plan to anticipate and react to unforeseen situations. principles implemented and recommended by digitwise: establishing a comprehensive plan that addresses challenges that may arise during the pandemic or unforeseen situations, and resolving these situations so that activities and objectives within the organization are not affected. this can be achieved with good coordination, trust and transparency throughout the company. 2. building brand credibility by prioritizing authentic, compassionate communication with prospects and customized content. 3. the introduction of rigid organizational structures can be problematic for maintaining the company’s organizational vitality, since trends change at a rapid pace and there is the need for adaptation and openness to the adoption of new technologies1. building an organizational culture that advances and encourages digital transformation is necessary to maintain a high market position. the advantages obtained from the integration of innovations in in daily work processes are huge.. for this reason, organizations must develop and implement a resilient and adaptable business model oriented towards digitization. digitwise has adopted from an early stage an organizational culture based on the values mentioned above, thus creating a trustful environment where communication was put on the forefront, thus facilitating a flexible and equal environment for everyone. due to this approach and the principles presented above, digiwise managed to adapt to any unforeseen situation. moreover, with the help of such an automated sales framework, digitwise completely replaced its sales department, reducing the company’s costs, and allowing easy business scalability. 2. changes in consumer behavior the current crisis has radically changed consumer behaviour and marketing approaches. a major change in consumer behaviour can be observed around the notion of loyalty, and method of purchase. although many companies use different approaches for optimizing conversion, the impact of covid-19 pandemic has amplified the attempt and need for marketers to satisfy the customer on a psychological level to facilitate conversion (sale). at the same time, customer retention seems to be more difficult while gaining new customers seems to be easier than in previous years. thus, this radical change required organizations to review, modify their marketing strategies and accentuated the search for certain new communication methods in order to increase customer engagement in the digital environment. all this, in view of strategic financial objectives and operational targets1. in order to maintain an efficient communication with clients, many companies have implemented marketing practices and paid campaigns that interact with them constantly, providing empathy and support. digital marketing in post-pandemic conditions 23 for this purpose, we come with certain suggestions that organizations may take into consideration when preparing their marketing and communication strategies, already implemented and tested by digitwise: 2.1. vision and strategy: in digitwise’s view, an essential component for successful digital marketing is the delivery of a pleasant online experience. for this, it had to readjust its communication and marketing strategies, to be ready to operate in a digital environment where everything is built around a complex journey of the user/customer. with the use of a sales framework, we can compare it to a puzzle, where every step of the framework is a piece of the puzzle. to be able to build the whole puzzle, each piece must be in its right place. the same with the funnel, each step should be gone through in chronological order by the customers to get the expected result. 2.2. online presence: the use of social networks and digital platforms is an important element with which companies can convey relevant information and maintain a strong positioning of their brand. “if you are not online, you don’t exist – over 80% of users look for a business online before making a purchase decision. if you don’t have a website, you have no chance to get a quote of this huge market” states dimitrie baitanciuc9, co-founder & ceo of brizy. he further states that “over 50% of prospects do not trust a company that has no online presence”. at the same time, balio & casais10 use a consumer's level of social media interaction with brand content to gauge their level of interest, brand loyalty and current position in the funnel. digitwise understood the importance of online presence and used all possible digital channels to create connections with potential customers, maintain a transparent communication, in real time. 2.3. segmentation and customization: providing customized digital communication is of the outmost importance. thus, organizations should deliver a unique message to customers that match their preferences, behaviours and needs. digitwise uses audience segmentation to deliver customized content and experience for each type of customer. 2.4. innovation: it is essential to update, modify or launch new services or products that incorporate new functionality that meet customer expectations. companies can raise brand image and reputation by developing new products customized according to the feedback received from clients1. digitwise revises its clients’ feedback and any content submitted by the client/ prospect in order to identify problems and offer solutions. 2.5. paid campaigns: digitwise launched marketing campaigns to instil safety, support and empathy and increase brand reliability, and build a closer relationship with the target audience. at the same time, the use of marketing in social networks helps companies to easily spread information about the products or services offered and increase customer retention through tactics such as: content marketing, email marketing, retargeting campaigns. ceocea, ceocea, turcu, ciucescu, feraru-prepeliță 24 2.6. measuring the performance of paid and organic efforts: the use of paid campaigns in conjunction with new data analytics applications, helps companies analyse, identify and gain a deeper understanding of customer behaviour, preferences and needs. we would like to mention the importance of performance indicators, also called kpis11 (key performance indicators) that are an efficient tool to measure business performance in accordance with the main objectives set by it. the purpose of these indicators is to monitor the progress of a business over a set period of time and facilitate decisionmaking for the development of the company. for examples, possible kpis of the marketing department may be: conversion rate, revenues registered following the launch of paid online campaigns, number of downloads of an application, etc. setting these parameters helps the business offer its employees a clear vision on the set strategy and objectives to be reached. 2.7. content revision: since the e-commerce world is changing, marketplaces move at a faster pace, and the “work from home” concept is gaining weight, there are multiple opportunities for potential customers to use more content in the online environment. for this, the use of content that provides value to the customer is already a standard. that being said, digitwise revises current content, so as to lay more importance on the behaviour of the consumer looking for more value. . such content may be: content related to the protection of the environment, bio / echo products, equality of rights, animal protection, “green” practices, etc. educational, informative content that offers value to the client, comparison charts that provide in-depth information, “how to” video content that may encourage consumers to create a relationship with products, services and companies. any type of content that strengthens brand trust and solidifies the consumerbusiness relationship. other examples may be: whitepapers, case studies, etc. 2.8. web user experience: re-adapting the layout of existing web pages to better accommodate the needs of the new consumer. for this, the most effective testing method for digitwise is continuous a/b testing of different elements presented, from the shade of the page, to the text, images, buttons used, etc. even this testing can be automated by the many platforms that offer a/b testing. 2.9. content marketing: the use of social platforms and communication applications can be seen as a business tool through which companies can achieve their goals by providing content to customers in a dynamic way. statista.com counted in 2020 the figure of 4.57 billion people active on the internet, representing 59% of world population at that time. at the same time, desjardins12 reports 5 billion searches (online searches) in a single day, 500 million tweets, 294 bullion emails sent and 65 billion whatsapp messages. the vital component identified in these statistics is the concept of 'content marketing'. here are some varied definitions to better understand its applicability: “content marketing, aș defined by the interviewees, refers to processes of creating and delivering content (i.e., text messages, pictures, videos, animations) to digital marketing in post-pandemic conditions 25 target customers în ways that add value and engages them in relationships with the company”13. “content marketing is a technique of creating and distributing relevant and valuable content to attract, acquire, and relate to a well-defined and understood target audience, with the goal of generating customer profit and create customerbrand engagement and loyalty”14. the content marketing concept has been existing for a very long time, and has evolved during the years, with a major increase in the pandemic and post-pandemic times. ayush, g. k., gowda, r., & rakshith gowda, k. m.15 report a major impact of covid 19 pandemic on digital content consumption, in a positive way. people use more and more digital content, on a daily basis16. thus, content marketing has become a vital element in all digital marketing aspects. lou, c., & xie, q.17 research the content marketing concept in depth, concluding that it enhances consumer experience and indirectly helps cement client loyalty. at the same time bowden, j. and mirzaei, a.18, claim that, content marketing is the motor generating engagement on different digital channels. thus, the relationship built between brand and consumer is a main motivator of interaction on behaviour, affection, cognitive and social level, as the researches states in their 2021 study. at the same time, a positive aspect of content marketing is underlined by lopes, a. r., porto, i. p. a. m., & casais, b.19 who identify a high profitability and low long-term cost following the adoption of this type of strategy. a good example is digitwise who manages, through its content marketing strategy, to connect, involve and engage its audience. we see how all these researches indicate the need, which has become standard, to have 'content marketing' implemented in the strategy of any company. 2.10. use of email marketing: we would like to mention some of the benefits pointed out by the company digitwise in relation to the use of email marketing: 10.1 customization of messages depending on the target audience; 10.2 lower costs in comparison to other marketing channels; 10.3 automation of sent messages; 10.4 audience segmentation. 2.11. building the avatar of the ideal customer: consumer awareness is a vital element of any business. successful marketers know the needs of their prospect and the most efficient way to make their product/service available. consumer awareness goes further than the simple demographic data or income level. in order to create such a “client avatar” data such as: hobbies, preferences, objections, personality type are collected. moreover we also look at consumer’s buying behaviour. for this, it is important to look towards the type of person that is most inclined to need/ have the product or service provided. the reason why the purchase is made, and how often the product or service will be needed (it will be purchased again soon, or never) for whom the purchase was made (for themselves or for somebody else) and where this purchase will be completed (on the website, social networks, physical store, by phone, etc.). digitwise generates 3 different avatars of the ideal client, segmenting the audience and creating different communication strategies for each of them. through this segmentation and customization one can see an increase of communication techniques efficiency and its results through the actions of the customer in the purchasing process. for example, a lower interaction rate with the ad and link opening, a significant increase of clicks on the ad, an increase of app downloads a better conversion data and implicitly, ceocea, ceocea, turcu, ciucescu, feraru-prepeliță 26 a lower cost. 2.12. marketing analysis – competitors and market analysis: an in-depth understanding of the current context, trends and market players as well as their successful strategies is a key element in any conceptualization of marketing strategies. 2.13. setting the vision, mission and long-term objectives: the company may face challenges in becoming a leader in its field without these clearly set elements. digital transformation is a process of integrated digital technologies in business activities and strategies that may lead to an improved operational efficiency. without a doubt, the “perfect receipt” from the point of view of marketing tactics is more difficult to reach during these hard time, but not impossible, as everything moves at a fast pace, and what worked 2 months ago may no longer work at present. in order to discover the proper channels where the audience is and the proper content, companies need constant testing and optimization. 3. the change of post covid mind-set although many nations are still consumed by disturbances caused by the pandemic, there are some key tendencies that can be identified concerning the behaviour of citizens all over the world. among there we can mention: 1. increased digital adoption: significantly, people are switching to digital platforms to meet their daily needs. the consumer mentality has been changed during the 2 years of restrictions caused by the covid-19 pandemic, with users getting used to the comfort offered by increased digitization. therefore marketers need to adapt accordingly and provide a better user experience. 2. consumers invest more time in making purchases from companies that share the same values as them, so companies must move towards sustainable and inclusive growth. this requires changing the current organizational structure to maximize the contribution of all people. moreover, organizational values that prove not to be harmful to the environment are what today's consumer is moving towards, according to a rigorous online study20. despite this pandemic crisis, digital communication and collaboration tools shall become a common practice and a normality accepted on global level. post-covid mind-set changes mentioned above, are also identified as audience segmenting by ey future consumer index21 following a 5-stage study in 20 countries, conducted in 2021. the study identifies the following segments: a. affordability first (32% of consumers); b. health first (25%); c. planet first (16%); d. society first (15%); e. experience first (12%). organizations need to consider all the aspects mentioned above in order to be successful. although in the past the marketing strategy could be the independence from organizational processes and company culture, post-covid consumer demands and considers as standard: greater transparency, complete symbiosis between how the product/service is carried out, how the company is organized, what resources it uses and how it uses them, the impact on the environment, impact degree on personal heath, what it claims to sell and what it actually sells, etc. digital marketing in post-pandemic conditions 27 such a connection is not new, discussions on organizational culture and management reported to the marketing strategy are held in numerous studies, such as hatch m. j. and schultz m.22 more recently, wu huang23, studies that reach this conclusion that is more and more prominent: a complete symbiosis between organizational culture, organizational management and marketing strategy brings the consumer closer to the company, and implicitly closer to conversion. post-pandemic effects have accelerated this need and turned it into a new standard. 4. conclusions this case study seeks to demonstrate the impact of digitization on marketing, the importance of the positioning and mentality of the entire company as well as the changes in consumer behaviour in relation to the current context, taking the digitwise company as an example. following the study, it has been demonstrated that a company with organizational culture based on transparency and flexibility managed to withstand, and even more so, expand in such difficult times. one of the key elements was the communication channel opened on internal level, so that company could be aware of the worries and needs of each employee, tending to everyone’s needs, creating a level of employee satisfaction and operating more efficiently. another aspect of digitization impact is the automation of company processes. by implementing an automated sales framework, digitwise completely replaced its sales department, reducing company costs and allowing business scalability. in the end, we can see how digitization has had a positive impact on companies who managed to remain open to new trends. at the same time, through statistics accepted on academic level, the study managed to demonstrate that consumer behaviour was altered, so that companies had to reshape their marketing and communication strategies adapting them to consumer’s needs and wishes, taking into consideration inter-organizational challenges and strategic management. 5. study limitations the field of digitization is a vast one, which constantly adapts from one day to the next. this study uses academically accepted definitions to support and highlight the decisions made by digitwise in a post-pandemic context. the study has its limitations, strictly using the example of the company digitwise, which does not incorporate the risks and difficulties encountered by all existing companies. moreover, it is located in romania, another aspect that can influence the difficulties or opportunities that a company may encounter. this study is written and edited by the two authors, who in turn may be affected by bias, being directly involved in digitwise company, the company on which this case study is supported. moreover, the definitions and webography/ bibliography are in romanian or english language, and there may be slight nuances that may be lost in translation. in conclusion, the subject tackled by this study, although very detailed, may benefit from additional analysis, 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[online]. available: https://mention.com/en/blog/adapting-your-conversion-funnel-in-a-post-covidlandscape/. accessed in 2022. wu, l.-f., huang, i.-c., huang w.-c. and. du p.-l., "aligning organizational culture and operations strategy to improve innovation outcomes: an integrated perspective in organizational management," journal of organizational change management,, vol. 32, no. 2, pp. 224-250, 2019. company presentation: digitwise is a romanian marketing company active in the field of digital marketing collaborating with clients all over the world. the impact of the pandemic on the company gave rise to the need for organizational management restructure and the implementation of new digital solutions in order to be able to cope with the rapid changes of post-pandemic consumer behaviour. this was an extraordinary opportunity to grow and adapt to new needs, and implement the automation that has already become a standard.